TIDMXPS
RNS Number : 0484L
XPS Pensions Group PLC
28 April 2020
28 April 2020
XPS Pensions Group plc
FY 2020 Pre-close trading update
Full year results in line and strong cash generation
XPS Pensions Group plc ("XPS" or the "Group"), the Pensions
Advisory and Administration business, today issues a trading update
(unaudited) for the year ended 31 March 2020 ("FY 2020") ahead of
its full year results which are expected to be released on 25 June
2020. The Group notes the 26 March 2020 FCA, PRA and FRC joint
announcement associated with the ongoing developments of COVID-19
and will continue to assess the expected reporting date.
Trading update for FY 2020
The Board is pleased to report that the results for the Group
for FY 2020 will be broadly in line with its expectations. Total
revenues were up 9% year on year. Underlying this, the Pensions
Administration business grew by 15% and the Pensions Investment
Consulting business grew by 18%. Revenues for the Pensions
Actuarial & Consulting business grew by 4%, with the division
returning to modest growth in H2. The results for both the Pensions
Actuarial & Consulting and Pensions Administration businesses
reflect the impact of the Royal London acquisition, which completed
on 31 May 2019, and the Trigon acquisition, which completed on 31
October 2019.
Although revenues were strong, costs were also slightly ahead of
expectations, and consequently profit is anticipated to be broadly
in line with the Board's expectations.
Strong balance sheet
Cash collection improved significantly in the second half of the
year due to improved processes and it is expected that cash
conversion will be in line with the market guidance provided at the
interims. As a result, the Group's year end leverage (pre IFRS 16
basis) is expected to be broadly in line with the Board's
expectations.
The Group has an RCF of GBP80 million to December 2022. At 31
March 2020, GBP9.5 million of this facility remained undrawn and
cash balances were c.GBP14 million. In addition the Group has
agreed an amendment to its revolving credit facility with its
lending banks (subject to final documentation), which provides the
Group with greater financial flexibility and increased liquidity
(an additional GBP10 million) to navigate the potential challenges
posed by the COVID-19 crisis.
COVID-19 response
From the beginning of the COVID-19 crisis, ensuring the health
and safety of our employees has been our top priority, and
alongside that there has been a strong focus on ensuring we can
continue to provide a strong level of service to clients.
During February, we established a dedicated COVID-19 response
team, comprising senior leaders from all business divisions and
central functions. This group oversaw a transition to a model of
almost entirely remote working, with processes re-engineered and
upgrades to IT systems made to enable this. This operating model
was tested and developed before the full lockdown, and was put into
full effect immediately that the lockdown was implemented by the
Government.
Since the transition to a remote working model was
implemented:
-- Over 98% of our 1,203 FTE employees are working effectively
and entirely at home, with only a small number of staff still
attending offices for some essential tasks such as receiving
post.
-- In Administration, the business unit that required the most
significant changes in its operating model, performance has been
positive. Our SLAs for client tasks have remained high, and all
pension payrolls have continued to run successfully. We have
received positive feedback from clients and pension scheme members
about how we have maintained our high service levels.
-- In Pensions Actuarial & Consulting and Investment
Consulting, demand for our services has continued as we have
supported clients navigating their way through very challenging
times for pension schemes. We have delivered this advice
effectively through remote working and via online meetings.
We have taken prudent actions to conserve cash, reduce costs and
manage the business through the crisis. The Board has decided at
this stage not to furlough any staff. Demand for our services has
remained high, and we have been able to redeploy the small number
of staff whose roles are not currently needed (such as office
managers) to other useful roles in the business. As part of
scenario planning, we have also identified further cost reduction
actions which can be enacted swiftly if required, with improved
Management Information providing early warning signs of any
potential revenue impact.
A key focus for management throughout this time has been the
mental health and wellbeing of our staff. We have put in place a
number of initiatives in this regard, keeping people connected
formally and informally, and we have provided a lot of online
support and training. We have also provided very regular updates
containing reassurance and encouragement from senior management
which are cascaded throughout the Group.
The Board would like to thank our staff for their resilience,
and is very proud of the 'can do' attitude our staff have shown in
looking after each other and our clients very well in this highly
unusual time.
Outlook
We continue to provide support to our clients in very
challenging times for them and client activity levels have
generally held up well since the lockdown. Looking to the potential
impact of COVID-19 on FY21 and beyond, the Group's underlying
business remains resilient, with around 80% revenue being
non-discretionary, recurring and received for essential services,
with a high degree of visibility.
In the short term, we expect demand for our discretionary
services to continue as pension trustees need advice and support
throughout the COVID-19 crisis. This is particularly the case in
the Investment Consulting division where we advise clients on asset
allocation decisions. However, some project revenues might decline
as Trustees and Corporates focus solely on COVID-19 and essential
regulatory tasks and defer other projects such as GMP equalisation.
Deferred projects would be expected to return as the country comes
through the COVID-19 crisis.
We expect external new business opportunities to slow as
processes are put on hold. We have seen some processes proceed,
with pitch meetings being held by video conference, but volumes are
lower than normal.
In addition, the COVID-19 crisis has had a negative impact on
revenues in our SSAS/SIPP and NPT businesses (7% of FY20 revenues),
as these have been impacted by recent market movements.
The Group's strong financial position, coupled with a
well-established market position means it remains well placed to
weather the present crisis and to continue driving growth and
market share gains over the medium term, against a favourable
competitor and regulatory backdrop. The macro-economic outlook is
very uncertain, and with only around one month of trading during
the COVID-19 crisis it is too early to provide accurate guidance
for FY21. We will provide a further update on outlook at our
scheduled full year results announcement in late June 2020.
CEO comment
Paul Cuff commented:
"We are pleased with the progress made by the Group this year.
It was a year of healthy growth for the Group as a whole, with
industry recognition through a number of awards and a number of
exciting new business wins. We were also pleased to welcome new
colleagues to the Group through our two acquisitions.
The year concluded with the onset of the COVID-19 crisis.
Throughout this, our number one priority has been the safety and
well-being of our staff. We have successfully re-engineered the
Group's activities such that all of our services can be delivered
remotely, and I have been hugely impressed by the resilience and
dedication our teams have shown. We have continued to deliver a
very high level of service to our clients and scheme members at the
very time they have needed us the most, and I want to thank all my
colleagues for their continued hard work during these challenging
times."
-Ends-
For further information, contact:
Enquiries:
XPS Pensions Group
Paul Cuff +44 (0)7980 826032
Liberum (Joint Broker) +44 (0) 20 3100 2222
Richard Crawley
Robert Morton
Cameron Duncan
RBC Capital Markets (Joint Broker) +44 (0)20 7653 4000
James Agnew
Jonathan Hardy
Jamil Miah
Media Enquiries
Camarco
Gordon Poole +44 (0)20 3757 4997
Nick Hennis +44 (0)20 3781 8330
Notes to Editors:
XPS Pensions Group plc is the largest pure pensions consultancy
in the UK, specialising in pensions actuarial & consulting,
investment consulting and pensions administration. The XPS Pensions
Group business combines expertise, insight and technology to
address the needs of both pension trustees and sponsoring companies
for over 1,200 pension schemes on an ongoing and project basis.
These clients include 25 schemes with over GBP1bn of assets, and we
undertake pensions administration for over 800,000 scheme
members.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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