TIDMXPS
RNS Number : 9218C
XPS Pensions Group PLC
24 June 2021
24 June 2021
XPS Pensions Group plc
Final results for the year ended 31 March 2021
XPS Pensions Group plc ("XPS" or the "Group"), the Pensions
Advisory and Administration business, is pleased to announce its
full year results for the year ended 31 March 2021 ("FY 2021")
.
Financial Highlights:
Continuing operations FY 2021 FY 2020 Change YoY
Pensions Actuarial and Consulting
Revenue GBP60.7m GBP58.8m 3%
----------- ----------- ------------
Pensions Investment Consulting
Revenue GBP11.6m GBP9.6m 21%
----------- ----------- ------------
Total Advisory Revenue GBP72.3m GBP68.4m 6%
----------- ----------- ------------
Pensions Administration Revenue GBP46.8m GBP42.9m 9%
----------- ----------- ------------
Total Pensions Revenue GBP119.1m GBP111.3m 7%
----------- ----------- ------------
SIP GBP5.6m GBP6.1m (8%)
----------- ----------- ------------
NPT GBP3.2m GBP2.4m 35%
----------- ----------- ------------
Total Revenue GBP127.9m GBP119.8m 7%
----------- ----------- ------------
Adj. EBITDA(1) GBP32.0m GBP30.4m 5%
----------- ----------- ------------
Total profit before tax GBP11.4m GBP11.1m 3%
----------- ----------- ------------
Basic EPS 4.4p 3.6p 22%
----------- ----------- ------------
Adj. diluted EPS 9.8p 9.6p 2%
----------- ----------- ------------
Full year dividend 6.7p 6.6p 2%
----------- ----------- ------------
(1) Adjusted measures exclude the impact of acquisition related
amortisation, share based payments, exceptional costs and the fair
value adjustment to contingent consideration
-- Total revenue growth of 7% driven by strong client demand
across all Pensions divisions; organic growth of 6% YoY
o Pensions Advisory growth of 6%, with each division growing -
Actuarial & Consulting grew 3% and Investment Consulting by
21%
o Pensions Administration grew by 9%
-- Strong growth in NPT assets which passed through GBP1bn milestone during year
-- Adjusted EBITDA(1) up 5% year on year broadly in line with revenue growth
-- The Group did not take up any of the Government Covid-19
support loans nor did we furlough any of our staff
-- High level of cash conversion maintained - operating
cash-flow conversion of 113% leading to net debt/adjusted EBITDA(1)
of 1.74x at 31 March 2021 (31 March 2020: 1.98x)
-- Statutory profit before tax up 3% YoY
-- Statutory basic EPS up 22% YoY
-- Adjusted diluted EPS(1) of 9.8p is up 2% YoY
-- Board proposes a final dividend of 4.4p bringing the total
dividend for the year to 6.7p, up 2% YoY
Operational Highlights:
-- Resilient response to Covid-19, with shift to home working
implemented rapidly at the start of the year and strong client
service maintained throughout
-- Focus on staff wellbeing and mental health - winner of Gold
award (overall winner) at the Business Culture awards and strong
staff feedback / approval (94% agreeing XPS is a good place to
work)
-- Regulatory backdrop driving client demand, with GMP projects
increasing as FY 2021 progressed and a strong pipeline developed
for FY 2022. New Pensions Bill and associated regulatory changes
should continue to drive demand
-- New business wins in each division despite opportunities
being suppressed by the pandemic with pipeline now growing.
Favourable market backdrop - continued trend for first time
outsourcing of administration
-- New 'post pandemic' flexible approach to working developed,
'My XPS, My Choice', which has been warmly welcomed by staff and
will be rolled out from 1 August 2021
Paul Cuff, Co-CEO of XPS Pensions Group, commented:
"We are extremely pleased with the Group's performance which was
achieved against the backdrop of the pandemic, and all the
challenges it created. Key to this was re-engineering business
processes to support near 100% home working and we are enormously
proud of how our staff rose to the challenge. Our focus throughout
has been on their well-being and supporting their morale and mental
health, as well as the well-being of our clients and other
stakeholders. We did not make any redundancies as a result of the
pandemic nor did we furlough any of our staff.
We have continued to adapt our working practices and invest in
the business through the development of 'My XPS My Choice', a
framework to provide more choice to our people about how they work
going forward. We believe this will enhance our reputation as a
great place to work, enabling us to continue to attract and retain
talent in our business."
Ben Bramhall, Co-CEO of XPS Pensions Group, commented:
"The performance during the year was pleasing, and I want to say
a huge thank you to our staff for the resilience and
resourcefulness they showed during the pandemic to ensure we
continued to deliver strong client service throughout.
The outlook for the business is positive as we continue to
invest in our people and services. In particular, we anticipate
strong demand as we help clients address the challenging regulatory
environment, including the pending overhaul of funding regulations,
GMP equalisation and the consequences of the finalised CMA Review.
Our growing new business pipeline also provides an opportunity for
us to continue growing our market share."
Outlook
The FY 2021 results demonstrate the resilience of our business,
with a high proportion of our revenues being non-discretionary and
recurring as they are received for essential services. As such, we
remain well protected against scenarios in which the pandemic
continues to disrupt economic activity.
Part of our strategy is to grow the services we provide to
existing clients in response to regulatory and market changes where
clients need support. At the current time, the volume of regulatory
change is high across a variety of areas. A new Pensions Bill
became law in early 2021 and is expected to lead to changes in the
way that schemes are funded and regulated. This will impact each of
our Advisory clients, and all will need support in due course.
There are numerous other regulatory changes that we expect will
lead to continued strong client demand, including working through
GMP equalisation, which drives activity in both our Advisory and
Administration businesses.
Another part of our strategy is to grow through gaining market
share. After strong momentum at the end of FY 2020, new logo
opportunities in the Pensions Actuarial & Consulting and
Pensions Administration businesses slowed significantly during FY
2021 as processes were put on hold during the pandemic. This will
impact the new business contribution to growth in the near-term -
however we are seeing signs of the pipeline strengthening. New
business opportunities in Pensions Investment Consulting have
remained strong throughout, driven in part by the CMA Review
remedies being implemented.
M&A is also a core part of our strategy. We have
successfully integrated each of the three 'bolt-on' acquisitions we
have done in recent years. We operate in a fragmented market, with
a scalable platform and a strong infrastructure, and as such we are
well placed to grow through further M&A.
Overall, the Group is well positioned to emerge from the
pandemic and be able to take advantage of favourable end market
dynamics and the busy regulatory backdrop for pensions. The Group
is well placed to continue to deliver at least mid-single digit
percentage organic growth in revenues over the medium term. The
Group has traded in line with expectations in the first two months
of the financial year.
Analyst and Investor Presentation
A presentation will be held for equity analysts and investors
today at 08:30 a.m. (BST) via a Zoom webinar. Those analysts and
investors wishing to attend are asked to contact Nick Hennis at
Camarco on +44 (0)74 3210 4506 or at nick.hennis@camarco.co.uk
.
-Ends-
For further information, contact:
XPS Pensions Group
Charlotte West
Head of Corporate Communications +44 (0)20 3725 7024
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)74 3210 4506
Notes to Editors:
XPS Pensions Group plc is the largest pure pensions consultancy
in the UK, specialising in pensions actuarial & consulting,
pensions 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 1,500 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 900,000 scheme
members.
Forward Looking Statements
This announcement may include statements that are
forward-looking in nature. Forward-looking statements involve known
and unknown risks, assumptions, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Group to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are
made only as at the date of this announcement. Nothing in this
announcement should be construed as a profit forecast. Except as
required by applicable law, regulation or stock exchange rules, the
Group undertakes no obligation to update, revise or change any
forward-looking statements to reflect events or developments
occurring after the date such statements are published.
CO-CHIEF EXECUTIVES' REVIEW
An unprecedented year
Our year began as the pandemic was unfolding and the country
went into lockdown with all the associated uncertainty, so it is
particularly pleasing to report a strong revenue performance,
demonstrating the resilience of our business model and strong
client base. Key to this was re-engineering the business processes
to deliver with almost everyone working from home and we are
enormously proud of how our staff rose to this challenge. Our focus
throughout has been on their well-being - not only making sure they
had the right technology to do their job but also on supporting
their morale and mental health.
As the year rolled on, it became even more important to maintain
momentum as many staff struggled with isolation and home schooling
so our work with the Mental Health Foundation, and lots of
initiatives aimed at creating a sense of togetherness, were
critical to ensuring that our teams felt well looked after and that
they continued to look after their clients successfully. Now there
is a change of mood and a sense of excitement building as we look
forward to society opening up again, and for us this is happening
against both market and regulatory opportunities for the
business.
To make sure we have a motivated and engaged workforce as we
move into the next phase of our development, we are launching 'My
XPS My Choice', a framework to let our people choose how they want
to work going forward, whether in the office, at home or a hybrid.
Our senior staff will have a responsibility to protect our social
capital as we still need to engender teamwork, develop our junior
staff and maintain our innovative culture but we want to offer
choice and flexibility, measuring output not input and ensuring we
are a modern 21st century employer.
We firmly believe that our culture translates directly into how
we perform as a business so it was particularly satisfying to win
not only the Best Business Culture Transformation Initiative at the
Business Culture Awards 2020, but to also win the overall Gold
Award for the entire event. External recognition of the importance
we place on our culture and values was also reflected in the Gold
award we won in the employee engagement category at the 2020 UK
Employee Experience Awards.
A strong financial performance
Our results bear testament to the strength of our business. We
provide essential services to clients and whilst we had to adapt to
the challenges presented by the pandemic, we responded well. Total
revenue increased 7% to GBP127.9 million (FY 2020: GBP119.8
million) driven by organic growth in all three pensions divisions
along with the full year effect of the acquisitions of Royal London
Corporate Pensions Services and Trigon Pensions.
Adjusted EBITDA increased 5% to GBP32.0 million and statutory
profit before tax also increased 3% to GBP11.4 million. This is a
pleasing outcome for the year, as it was delivered despite the
challenges of Covid-19, which did impact on our efficiency in some
areas of the business and also slowed some new business
opportunities that we would otherwise have expected to see.
We saw growth in both of the consulting businesses that together
make up our Advisory business. In Pensions Actuarial and
Consulting, revenue was up 3% on last year at GBP60.7 million (FY
2020: GBP58.8 million), largely driven by new business won in 2020
coming on stream in H1 and growing activity on GMP equalisation in
H2. In Pensions Investment and Consulting, strong growth reflected
the excellent new business success we have been achieving for a
sustained period of time, and also strong client demand for advice
in volatile financial markets. Revenues increased by 21% to GBP11.6
million (FY 2020: GBP9.6 million). The expansion of this team is
yielding results as we now have the scale to target bigger
mandates, with a number of large mandates won in H2 that will help
us to continue to grow in this area.
In Pensions Administration, revenue increased by 9% to GBP46.8
million (FY 2020: GBP42.9 million), underpinned by new contracts
won prior to the pandemic coming on stream.
We also saw strong growth in National Pensions Trust ('NPT'),
our defined contribution master trust. Assets under management grew
by 69%, to over GBP1.0bn, with growth underpinned by transfers into
the trust and annual contributions in respect of active members. We
are continuing to invest in the NPT proposition and have a healthy
pipeline of opportunities.
Our SIP business saw revenues decline by 8%, caused by the
reduction in the bank base rate at the beginning of the pandemic,
and the decline in economic activity over the year. However, the
underlying performance of the business was good, with strong new
business momentum in H2, and it is well placed to achieve organic
growth in the coming year.
Regulation continues to drive change
Our clients are facing multiple changes in pension regulation
and we will continue to work closely with them to help them comply
with the evolving environment and protect the interests of their
members. The most significant area of new regulation is the
Pensions Schemes Act 2021 which will bring in new funding
requirements and provide greater safeguards for defined benefit
schemes. These regulations will increase the pressure on many
scheme-sponsors and keep pensions high on the corporate agenda.
The outcome of the Competition and Markets (CMA) Review
continues to drive opportunities in the area of fiduciary
management oversight. During FY 2021, we won 32 new appointments to
provide independent oversight of fiduciary appointments. These
appointments are pleasing in their own right, and also because they
build new relationships that potentially open up wider
opportunities for the Group.
Another increasingly busy area is GMP equalisation, where recent
court cases have given rise to the need to make adjustments to
defined benefit schemes where historically men and women have not
been treated equally. This is a highly technical area and we have
developed market leading, pragmatic approaches that have both
successfully delivered projects in FY 2021 and have generated a
strong pipeline of work for the years ahead.
Market developments provide potential opportunity
There are still a number of pension schemes where the
administration is provided by the sponsor through an 'in-house'
team. In recent years there has been a trend to outsource the
administration of these schemes to a specialist third party
provider. This has been a strong driver of growth for the Pensions
Administration division historically.
The pandemic made it harder still for small in-house teams to
provide pensions administration which could potentially accelerate
the outsourcing trend of recent years as scale becomes more
important to control costs and provide access to technology.
The trend to consolidation and mergers within the industry
continues and as one of the largest independent firms in the
market, we are well placed to benefit from these market
dynamics.
Delivering on our strategic priorities
Whilst we have seen some deferral of new business activity and
discretionary projects as trustees and sponsors focused on dealing
with the pandemic, we continued to make good progress on delivering
our strategic priorities. Our ambition is to become the pre-eminent
independent mid-tier pensions consulting firm and the XPS brand and
footprint means we now offer a clearly differentiated alternative
to the 'Big 3'.
We continue to broaden our services both in relation to defined
benefit schemes, where we deployed our member profiling techniques
to help clients understand the potential impact of Covid-19 on
pension scheme longevity, and defined contribution schemes where we
have developed a variety of new services aimed at supporting
clients with the changing regulatory backdrop. Ongoing investment
in our award winning software, Radar, yielded benefits for both
clients and the business, gaining external recognition once again,
winning 'Actuarial Software of the Year' for the second year
running.
With the exception of the Investment Consulting division where
we achieved a strong new business performance, winning new clients
has been slower during the year due to the pandemic. Despite this,
we have still achieved success where opportunities have arisen. In
Pensions Administration, we were delighted to win the first time
outsourcing of a GBP2bn+ defined benefit scheme from the IT sector,
and we will take on this role early in our new financial year. In
early 2021, we were appointed as Actuarial and Investment advisors
to a GBP2.5bn+ defined benefit scheme in the hospitality sector.
The market is beginning to open up again and our pipeline is
strengthening - these wins and our prior track record give us
confidence that we will continue to gain market share during the
year ahead.
It was a strong year for NPT, with 69% year on year growth in
assets to over GBP1bn, driven by transfers in, contributions and
investment returns. This is another area of the business where we
continue to invest in technology to develop a market leading
platform for the future.
The two businesses we acquired in 2019, Trigon and Royal London
Corporate Pensions Services, were successfully bedded in during the
year and are now fully integrated and delivering positive returns.
Further growth through M&A remains a strategic priority. We
look for transactions that will be a good cultural fit, easy to
integrate, and with a strategic upside. A good example of this is
the Kier Pensions Unit in 2018, which boosted our presence in the
public sector administration market. This continues to open further
opportunities for us, and we were delighted this year to win the
all-Wales Police pensions administration contract.
People
We have assembled a strong and experienced management team that
has served the business well during these uncertain times. We are
grateful for their perseverance and commitment as the pressures of
the year ebbed and flowed and for the resilience and flexibility of
all our people - they deserve our heartfelt thanks.
In addition to Sophia Singleton who joined us as Head of Defined
Contribution, a further key appointment during the year was the
recruitment of our first Chief Information Officer, Jonathan
Marchant, who joined us from Paypoint in May 2021. Jonathan will
have a broad remit to drive all aspects of our technology agenda,
from cyber-security to innovation in how we deliver services to
clients.
This was the inaugural year for our Values in Practice Awards,
celebrating people and teams who have gone above and beyond in the
way they looked after each other and clients and truly embodied our
values. One of the highlights of the year was reading through the
more than 80 submissions nominating teams and individuals - it made
us hugely proud to see so many examples of people truly rising to
the challenges the pandemic had thrown at us. Presenting the awards
to the winners was a hugely enjoyable and somewhat emotional moment
for all involved.
Building a sustainable business
As our business grows, our ambition is to ensure that we do so
in a responsible and sustainable way. We recognise that this is a
journey and we are working on embedding principles of ESG and
sustainability throughout XPS with a strong focus on collaboration
and robust governance.
We have a strong societal purpose to help make pension schemes
safe and secure for the members who will rely on them for financial
security in later life. We continue to deploy innovative solutions
and use of proprietary technology to achieve better outcomes for
our clients and pension scheme members. We aim to be a good
corporate citizen and participate in industry debates to shape
better policies and more effective governance of our industry.
We also work very hard to protect and enhance the wellbeing of
our employees, and this guides our decision-making. When the
pandemic struck, our priority from the beginning was the safety and
well-being of our colleagues, clients and other stakeholders. We
worked hard to ensure we could support our clients whilst at the
same time keeping our people in good spirits, well supported and
with a strong feeling of inclusion and togetherness. We understood
that everyone was facing challenges, but everyone's challenges were
different.
We sent weekly voice messages to all staff providing a personal
update about how things were. XPS produced bespoke videos on all
aspects of working from home, on mindfulness, positivity, sleep and
simple practical things to help; we put in place policies to
support people. We did not furlough anyone, re-deploying staff
where necessary. Colleagues who could not work because of Covid-19
- directly or indirectly because of looking after vulnerable
dependents, or for childcare reasons - remained on full pay so they
could concentrate on what they needed to do.
We created XPS communities around things we all love such as
films, music, or exercise. To help during the depths of winter and
lockdown 3, we even offered staff a 3-month Netflix subscription to
help them through the dark nights at home.
In our annual staff survey, 94% of our people agreed that we are
a good company to work for and, as mentioned above, in November we
won the Business Culture Award Gold Award for our commitment and
success in inclusive culture and values.
Our environmental journey continues - we have ambitious goals
and are developing plans to make us carbon neutral in the future.
The re-engineering of the business processes undertaken during the
past year has given us a more sustainable foundation to take this
forward.
We have established a Board Sustainability Committee that is
responsible for the sustainability strategy and providing oversight
of the Group's performance against the sustainability framework.
The Sustainability Committee is chaired by Non-Executive Director
Sarah Ing and further details of its composition and activities can
be found on our website and on pages 16 to 20 of the annual
report.
Outlook
The FY 2021 results demonstrate the resilience of our business,
with a high proportion of our revenues being non-discretionary and
recurring as they are received for essential services. As such, we
remain well protected against scenarios in which the pandemic
continues to disrupt economic activity.
Part of our strategy is to grow the services we provide to
existing clients in response to regulatory and market changes where
clients need support. At the current time, the volume of regulatory
change is high across a variety of areas. A new Pensions Bill
became law in early 2021 and is expected to lead to changes to the
way that schemes are funded and regulated. This will impact each of
our Advisory clients, and all will need support in due course.
There are numerous other regulatory changes that we expect will
lead to continued strong client demand, including working through
GMP equalisation, which drives activity in both our Advisory and
Administration businesses.
Another part of our strategy is to grow through gaining market
share. After strong momentum at the end of FY 2020, new logo
opportunities in the Pensions Actuarial & Consulting and
Pensions Administration businesses slowed significantly during FY
2021 as processes were put on hold during the pandemic. This will
impact the new business contribution to growth in the near-term -
however we are seeing signs of the pipeline strengthening. New
business opportunities in Pensions Investment Consulting have
remained strong throughout, driven in part by the CMA Review
remedies being implemented.
M&A is also a core part of our strategy. We have
successfully integrated each of the three 'bolt-on' acquisitions we
have done in recent years. We operate in a fragmented market, with
a scalable platform and a strong infrastructure, and as such and
are well placed to grow through further M&A.
Overall, the Group is well positioned to emerge from the
pandemic able to take advantage of favourable end market dynamics
and the busy regulatory backdrop for pensions. The Group is well
placed to continue to deliver at least mid-single digit percentage
organic growth in revenues over the medium term. The Group has
traded in line with expectations in the first two months of the
financial year.
FINANCIAL REVIEW
It was another strong year of growth for the business as Group
revenues grew 7% year on year with 6% organic growth year on year.
Adjusted EBITDA grew 5% year on year translating into a 17%
increase in adjusted operating cash-flow. Statutory profit before
tax grew 3% year on year.
The business adapted well to remote working in response to the
Covid-19 pandemic and the financial results are a testament to the
hard work and dedication of all our colleagues as they continued to
serve clients well and looked after each other. During what has
been an incredibly challenging year for all, we are proud to have
stood by our colleagues and continued to serve all our
stakeholders. We did not furlough any staff or make any pandemic
related redundancies and neither did we take up any other financial
help on offer from Government, other than the automatic deferral of
the VAT payment at the start of the pandemic which applied to all
companies in the UK.
Significant accounting matters
Adjusted numbers
We continue to show "adjusted" numbers in our results to better
reflect the underlying business performance. The "adjusted" numbers
exclude exceptional and non-trading items such as the amortisation
of acquired intangible assets as well as share-based payment costs.
The exceptional and non-trading items are disclosed in the notes to
the financial statements. This alternative performance measure may
not be similar to those defined by other entities but help to
explain the progress within the underlying business.
Group income statement
FY 2021 FY 2020 Change
GBPm GBPm %
--------- ---------
Revenue
Pensions Actuarial & Consulting 60.7 58.8 3%
Pensions Investment Consulting 11.6 9.6 21%
--------- --------- --------
Total Advisory 72.3 68.4 6%
Pensions Administration 46.8 42.9 9%
SIP 5.6 6.1 (8%)
NPT 3.2 2.4 35%
--------- --------- --------
Total Revenue 127.9 119.8 7%
--------- --------- --------
Adj. EBITDA (1) 32.0 30.4 5%
Depreciation & Amortisation (4.9) (4.2) (17%)
--------- --------- --------
Adj. EBIT (1) 27.1 26.2 3%
Exceptional & non-trading
items (13.9) (12.8) (9%)
Net finance expense (1.8) (2.3) 22%
--------- --------- --------
Profit before tax 11.4 11.1 3%
Income tax expense (2.4) (3.7) 34%
--------- --------- --------
Profit after tax 9.0 7.4 22%
--------- --------- --------
(1) Adjusted measures exclude the impact of exceptional and
non-trading items: acquisition related amortisation, share based
payments, corporate transaction costs, restructuring costs and
other items considered exceptional by virtue of nature, size and
incidence.
Revenue
Total Group revenues grew 7% year on year with all divisions
apart from SIPP achieving year on year growth.
Pensions Actuarial and Consulting is the Group's largest
business. Despite the challenges of working from home as well as a
lack of new business pitches in the first half of the year owing to
the pandemic, the division achieved 3% year on year growth in
revenues.
Pensions Investment Consulting had another strong year with a
number of new client mandates as well as continued growth in FM
oversight appointments following the CMA ruling in 2019. Revenues
in this division grew 21% year on year.
Pensions Administration revenues grew 9% year on year with a
number of new client wins coming on stream during the year.
Pensions Administration accounted for 37% of the Group revenues (FY
2020: 36%).
SIP revenues were down 8% on prior year, primarily due to the
reduction in the bank base rate. The National Pensions Trust
('NPT') business has performed well with revenue growing 35% year
on year; with a faster-than-expected recovery in asset prices, as
well as additional asset transfers; total assets under management
are now over GBP1.0 billion.
Operating costs
Total operating costs (excluding exceptional and non-trading
items) for the Group grew by 8% or GBP7.4 million year on year. The
main drivers for the cost increases are an increase in headcount as
the business grows (1,325 FTE v 1,203 last year), continued
investment in IT (particularly cyber security), higher bonus cost
in light of the strong financial performance and the full year
impact of the two bolt-on acquisitions in FY 2020. This was
partially offset by lower travel and entertainment costs.
As a result, the Group's adjusted EBITDA grew by 5% year on
year. Adjusted EBITDA margin was 25%; (FY 2020: 25%). Statutory
profit before tax grew by 3% year on year.
Exceptional and non-trading items
Exceptional and non-trading items in the year totalled GBP13.9
million (FY 2020: GBP12.8 million). Amortisation of acquired
intangible assets amounted to GBP6.6 million (FY 2020: GBP7.1
million). Share based payment charges were GBP4.9 million (FY 2020:
GBP2.2 million) driven mainly by a higher expectation of vesting
compared to the prior year. Exceptional costs arising as a result
of the Covid-19 pandemic were GBP2.0 million (FY 2020: GBP0.3
million). GBP1.0 million of this was spent on providing IT
equipment such as laptops, monitors etc. to all our staff, some of
whom were entirely office based prior to the pandemic. The other
GBP1.0 million is a non-cash charge for significantly higher than
normal holiday pay accrual as the holiday cycle was disrupted by
the pandemic and a higher than normal level of holiday was carried
forward at the end of the holiday year in December 2020. The
holiday pay accrual will unwind during FY 2022 and the resulting
benefit will also be shown within exceptional items as a credit in
FY 2022. Restructuring costs of GBP0.4 million (FY 2020: GBP1.9
million) were incurred on the integration of bolt on acquisitions
completed in the prior year. The Group also incurred corporate
transaction costs of GBP0.2 million (FY 2020: GBP0.9 million) in
the year. This was partially offset by an exceptional credit of
GBP0.4m in respect of the contingent consideration no longer
payable for the Trigon acquisition.
Tax credit on the exceptional and non-trading items was GBP2.3
million (FY 2020: GBP0.1 million).
See notes to the financial statements for further information on
the items detailed above.
Net finance costs
Net finance costs for the year were GBP2.0 million (FY 2020:
GBP2.4 million). The decrease reflected the lower net debt in the
year, and the reduction in the bank base rate.
Taxation
A tax charge of GBP4.7 million (FY 2020: GBP3.8 million) was
recognised on adjusted profits (before exceptional and non-trading
items) which represents an effective tax rate of 19% (FY 2020:
16%). The Group also recognised a tax credit of GBP2.3 million (FY
2020: GBP0.1 million) on exceptional and non-trading items, which
resulted in an overall tax charge for the year of GBP2.4 million
(FY 2020: GBP3.7 million). The tax credit on exceptional and
non-trading items was only GBP0.1m in FY 2020 due to an increase in
the enacted tax rate from 17% to 19% and the related revaluation of
deferred tax liabilities on the Group's intangible assets. The
increase in corporation tax expected in FY 2024 to 25% will drive
an increase in tax charges in FY 2022, once the rate has been
enacted as the deferred tax liabilities are revalued at the higher
rate.
Our businesses generate considerable tax revenue for the
Government in the UK. For the year ended 31 March 2021, we paid
corporation tax of GBP3.3 million (FY 2020: GBP3.5 million); we
collected employment taxes of GBP22.8 million (FY 2020: GBP19.7
million) and VAT of GBP20.2 million (FY 2020: GBP16.5 million).
Additionally, we have paid GBP1.2 million (FY 2020: GBP1.1 million)
in business rates. The total tax contribution of the Group was
therefore GBP47.5 million (FY 2020: GBP40.8 million).
EPS
The Basic EPS for FY 2021 is 4.4p (FY 2020: 3.6p). The year on
year increase is mainly due to the higher profits as well as a
higher tax credit of GBP2.3m on exceptional and non-trading items
in FY 2021.
Adjusted fully diluted EPS of 9.8p was delivered in FY 2021 (FY
2020: 9.6p), an increase of 2% year on year.
Dividend
A final dividend of 4.4p is being proposed by the Board (FY
2020: 4.3p). The final dividend, if approved, which amounts to
GBP9.0m (FY 2020: GBP8.8m), will be paid on 23 September 2021 to
those shareholders on the register on 27 August 2021.
Cash flow, capital expenditure and financing
31 Mar 2021 31 March 2020
Non-GAAP cash-flow GBPm GBPm
-------------
Operating
Adjusted EBITDA 32.0 30.4
Change in net working capital 4.9 0.6
Other (0.7) (0.1)
------------- ---------------
Adjusted operating cash-flow 36.2 30.9
------------- ---------------
OCF conversion 113% 102%
Financing & tax
Net finance expense (2.1) (1.8)
Taxes paid (3.3) (3.5)
(Repayment of) / Proceeds from new
loans (11.5) 13.3
Repayment of lease liabilities (2.6) (2.0)
Share related movements (3.4) 0.3
------------- ---------------
Net cash-flow after financing 13.3 37.2
------------- ---------------
Investing
Acquisition (net of disposals) (0.2) (7.1)
Capex (2.9) (3.4)
Restricted cash (NPT) (0.5) (0.3)
------------- ---------------
Net cash-flow after investing 9.7 26.4
------------- ---------------
Dividends paid (13.4) (13.4)
Exceptional items (2.1) (4.1)
------------- ---------------
Movement in cash (5.8) 8.9
------------- ---------------
Net debt 50.4 56.1
Leverage 1.74x 1.98x
FY 2021 has been another year of strong cash performance for the
Group. Adjusted operating cash flow increased by GBP5.3 million
driven by a GBP1.6 million increase in EBITDA and a GBP4.3 million
improvement in net working capital. Other items were an outflow of
GBP0.7 million compared to an outflow of GBP0.1 million in FY 2020.
Overall, this resulted in adjusted operating cash flow conversion
of 113% compared to 102% in the prior year.
Taxes paid in the year were GBP0.9 million higher than the
income statement charge due to the current year tax credit in
relation to exceptional items in the year which is largely a
deferred tax.
During the year, the Group repaid GBP11.5 million of the RCF.
Capital expenditure in the year amounted to GBP2.9 million (FY
2020: GBP3.4 million) with GBP0.7 million spent on leasehold
improvements and office fit-outs and the remaining GBP2.2 million
on IT equipment and software enhancements.
After paying GBP13.4 million in dividends and GBP2.1 million of
exceptional costs, the Group cash balance decreased by GBP5.8
million year on year to close at GBP8.6 million. The Group had
drawn down GBP59 million of its GBP80 million RCF at 31 March 2021,
resulting in a net debt of GBP50.4 million, a decrease of GBP5.7
million year on year.
The existing revolving credit facility (RCF) of GBP80 million
matures in December 2022. In June 2020 an additional GBP10 million
was agreed with the lending banks in order to provide the Group
with greater financial flexibility to navigate the potential
challenges posed by the Covid-19 crisis. This additional facility
was not required and was exited in March 2021.
Going concern
Details on the Directors continuing to adopt the going concern
basis in preparing the Financial Statements can be found in the
Viability Statement in the Strategic Report in the Annual Report.
The Directors have confirmed that, after due consideration, they
have a reasonable expectation that the Company and the Group have
adequate resources to continue in operational existence for the
foreseeable future. For this reason, they continue to adopt the
going concern basis in preparing the financial statements.
Subsidiary undertakings
The subsidiary undertakings of the Group in the year are listed
in note 34 in the Annual Report.
Snehal Shah
Chief Financial Officer
23 June 2021
Principal Risks and Uncertainties
The Group recognises the need to take risk to help its customers
achieve their objectives and achieve commercial success - seeking
to take risk where it has the skills to exploit that risk and can
manage it within risk tolerance. It seeks to avoid risk where it
sees it as unrewarded or it cannot be well managed or
understood.
Over the last year our risk management frameworks have been
fundamental to enabling us to react effectively to the Covid-19
pandemic. The controls in place allowed us to support the pivot to
higher numbers of staff working from home, whilst maintaining the
protections in place to continue to serve our clients in a robust
manner. These controls were reviewed throughout the year and have
been enhanced to address the changes in the external threat
environment such as the worldwide increase in phishing and
ransomware attacks. Whilst parts of our supply chain were impacted
we had sufficient resilience designed and in place to ensure we
maintained our high levels of service to our clients and the
members we support, whilst at the same time protecting our
staff.
In addition to this we have continued to develop our overall
risk management capabilities to improve our ability to detect,
understand and manage our risks. Significant developments since the
last report include:
-- The appointment of a Head of Assurance who is responsible for
co-ordinating the assurance activities within the Group (AAF, ISO
etc.) and ensuring opportunities to enhance controls are
effectively implemented.
-- The re-appointment of PwC to support the internal audit
programme, as agreed with the Audit and Risk Committee.
-- The introduction of a new Third Party Assurance framework,
which tiers suppliers and uses risk-based questionnaires to
validate the appropriate controls frameworks are in place.
-- The embedding of the Executive level Risk Management
Committee to monitor existing risks, discuss new risks and agree
prioritisation of mitigation activities.
-- The expansion of the dedicated Information Security team,
including the introduction of several additional technical security
enhancements.
-- The development of the Environmental Management System to
manage our impact on the environment and support SECR and TCFD
reporting.
The Group continues to operate a three lines of defence model
which supports the promotion of effective risk management and seeks
to prevent risk taking that exceed the Group's appetite.
The Board, with the support of the Audit & Risk Committee,
have identified the principal risks that could materially impact
the Group's ability to achieve its objectives and deliver its
strategy.
These include general business risks that are faced by the Group
and are comparable to those that would be faced by similar
businesses operating in the pensions sector. These general business
risks include:
-- Political/ Economic/ Social - Risks created by the political,
economic/ financial and social environment in which we operate,
e.g. war, demographic trends, pandemics, Government influence on
business, currency changes, market volatility, interest rates,
liquidity.
-- Competition - Risks of change on demand side of business due
to changes in customer demands or competitors, likely to influence
entire industry e.g. aggressive competitor pricing, consolidation
trends, major technological innovation, substitute technologies.
These changes may not directly affect the Group but could influence
the entire industry.
-- Legal and Regulatory - Risks associated with the criminal and
civil judicial processes and contract law e.g. not identifying
changes required by new legislation, increased litigation in a
particular field, environmental impacts, industrial accidents.
The material risks and uncertainties which are either unique to
the Group or apply to the pensions industry in which we operate are
detailed below. They are not set out in any priority order, nor do
they include all those associated with the Group. Specific risks
that are material to XPS Group are:
Principal Description Key Mitigations
Risk
Strategy Risks linked to the assumptions The Board approves and regularly reviews
of future development the Group's strategy in conjunction
and size of pensions market with budgets, targeting long term
used to develop the strategy increases in shareholder value and
or business model or business ensuring robust independent challenge.
portfolio, e.g. poor data,
group think, lack of diversity Key decisions are assessed against
of opinions. risk appetites for key Group risks
with a Risk Management framework in
place to identify and escalate where
strategic decisions may have unintended
impacts.
--------------------------------------- -------------------------------------------------------
Strategic Risks linked to assessing, The Board regularly reviews the Group's
Planning and evaluating, planning and strategy, supported by the Executive
Execution executing the strategy, with responsibilities assigned for
e.g. poor budgeting and the delivery of initiatives and provision
planning, inadequate or of regular progress updates.
misleading communications,
poor management of change Specific project management resources
or projects. are used to deliver large scale change
initiatives, allowing risks to delivery
of initiatives to be clearly identified
at planning stage along with mitigations.
--------------------------------------- -------------------------------------------------------
Financial Risks relating to the The Group has a highly qualified and
performance failure to monitor and experienced financial reporting team.
appropriately manage the There is an extensive financial controls
financial performance framework in place and key controls
of the Group on an ongoing are regularly reviewed by internal
basis which could lead and external audits. The Group undertakes
to poor management decisions, detailed bottom-up budgeting and reforecasting
higher costs and/or inaccurate exercises with the final budget and
external financial reporting reforecast approved by the Board.
Management information is published
on a regular basis and the Executive
Committee reviews the financial performance
of the Group at least monthly. The
Board receives and scrutinises financial
performance of the Group at each Board
meeting.
--------------------------------------- -------------------------------------------------------
Errors Risks relating to material The Group recruitment process ensures
mistakes made by staff, only high calibre staff are recruited
including the non-compliance who are then supported by training
with established procedures, programmes. Staff use standardised
e.g. failure to calculate documented processes and checklists
benefits correctly, not for key processes.
following peer review Higher risk work is identified with
processes. peer review and additional signoff
required, with regular quality audits
to confirm processes are being followed
correctly.
Insurance arrangements are in place
to limit the loss should an error
occur, with root cause analysis used
to identify where controls can be
improved.
--------------------------------------- -------------------------------------------------------
Theft and Risks relating to the The Group deploys robust physical
Fraud (Financial, safeguarding of Group and systems access controls, along
Physical Assets) and Client financial and with enforcing segregation of duties
physical assets from malicious to preventing individuals from making
actors e.g. stealing physical fraudulent payments or transfers.
assets, deliberate misrepresentation These controls are supported with
leading to fraud, theft staff vetting, training and awareness
from Group or Client bank and are regularly independently audited.
accounts. Insurance arrangements are in place
to protect against larger claims.
--------------------------------------- -------------------------------------------------------
Information/ Risks relating to the The Group has an Information Security
Cyber Security confidentiality, integrity Management System (ISMS) in place
and availability of information to ensure that risks are identified
assets including IT systems, and managed effectively. This includes
e.g. Unauthorised access a range of technical controls, a dedicated
or disclosure of staff Information Security Team, and a 24/
or client information, 7 Security Operations Centre. These
denial of access to systems are supported by regular independent
or data required, business audits and penetration tests.
continuity incidents caused All staff are provided with comprehensive
by equipment breakdown/ policies and guidance, with awareness
fire/ flood. of key topics reinforced with regular
training initiatives, e.g. Phishing
Awareness.
The Group has a range of Business
Continuity capabilities in place to
minimise impact of incidents impacting
the Groups' data, facilities or systems.
These include documented plans which
are tested regularly.
--------------------------------------- -------------------------------------------------------
Staff/ Human Risks relating to our The Group's recruitment strategy is
Resources people, e.g. compensation, to seek professional, experienced
retention, succession and qualified staff utilising robust
planning, skills and competence, staff recruitment and selection processes.
management capability. This is supported by comprehensive
training, development and performance
management processes, with longer
term incentives in place to aid retention.
Regular key staff reviews ensure succession
planning is kept up to date and remains
appropriate.
Staffing requirements are considered
as part of strategy and budgeting
process to ensure alignment with business
plans.
--------------------------------------- -------------------------------------------------------
Third Party Risks relating to the The Group has a formal selection process
Supplier/ use of third parties to that ensures due diligence is carried
Outsourcing support our operations, out, which is proportionate to the
e.g. poor due diligence risk of the potential failure of the
and selection processes, third party.
failure of a supplier The approvals and signing framework
to follow agreed upon also ensure contracts include key
procedures, financial risks relating to services provided
failure of supplier resulting and risks identified are managed and
in inability to deliver accepted prior to agreements being
service. signed. This is supported by ongoing
monitoring of key third parties, including
SLA's and financial status.
Where there is a reliance on a single
supplier, contingency plans are in
place to protect against failure.
--------------------------------------- -------------------------------------------------------
Client Engagement Risks relating to the The Group client engagement process
provision of poor service ensures that expectations are matched
or advice to clients, to Group capabilities. Regular ongoing
e.g. advice that is not dialogue with clients ensures that
clear, not understood the services provided meet their
by the client, poorly requirements
presented or using out and continue to be appropriate to
of date technologies, their specific needs.
but not errors. Client surveys are used to gather
feedback and identify trends and insights.
--------------------------------------- -------------------------------------------------------
Business Conduct Risks that could lead The Group's Mission, Vision and Values
and Reputation to a breach of acceptable clearly set out the tone from the
conduct or ethics and/or top, highlighting to all staff the
impact the Group's brand, conduct and ethics that are expected
image or reputation, failure from them at all times. This is supported
to ensure services are by a recruitment strategy that seeks
appropriate for client's professional, experienced and qualified
needs, discrimination, staff who fit with Groups values.
poor response to a Cyber Due diligence of third parties considers
Incident or client complaint. supply chain risks, ensuring that
only suppliers that comply with their
legal obligations are selected.
The Group has an Incident Management
processes in place to ensure that
it is able to effectively respond
to significant events that could impact
its brand or reputation, which is
regularly tested.
--------------------------------------- -------------------------------------------------------
Covid-19 (Coronavirus)
The outbreak of the Covid-19 virus significantly altered normal
business operating conditions during 2020. The Group adapted its
operations in order to keep staff safe and was able to continue
client servicing without interruption. Our existing business
continuity plans and technology infrastructure ensured a resilient
response to the pandemic was possible. All staff have been subject
to home working periods and throughout have maintained our client
service and other obligations. The Executive Covid-19 Crisis Team
was convened at the outset of the pandemic to oversee key decisions
and continues to meet on a regular basis to agree and co-ordinate
the mitigating actions required. Assessment of the potential
impacts of Covid-19 on the Group's principal risks has been
regularly completed, with oversight from the Risk Management
Committee and input from the Audit and Risk Committee. Although the
external conditions created significant challenges, our strong
control environment and prompt management actions has resulted in
resilient and stable residual risk positions across the
organisation's risk profile. There is still uncertainty with regard
to the medium- and long-term consequences of Covid-19, particularly
with regard to the potential implications for markets and
economies. The Group continues to review the external environment
and monitor any potential horizon risks.
The Directors confirm that they have carried out a robust
assessment of the principal risks facing the Group, including those
that would threaten its business model, future performance,
solvency or liquidity. The principal risks are those listed above.
The Directors do not believe there to be any additional emerging
risks that are not already addressed within the principal risks and
uncertainties section.
The Directors confirm in the Directors' Responsibility Statement
in the annual report that they consider that the Annual Report,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Group's
position, performance, business model and strategy. This Strategic
Report has been approved by the Board and signed by order of the
Board:
Paul Cuff Ben Bramhall
Co-chief Executive Officer Co-chief Executive Officer
23 June 2021 23 June 2021
INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF
XPS PENSIONS GROUP PLC ON THE PRELIMINARY STATEMENT OF ANNUAL
RESULTS
As the independent auditor of XPS Pensions Group plc we are
required by UK Listing Rules to agree to the publication of the
company's preliminary statement of annual results for the year
ended 31 March 2021 which includes the Financial Highlights, the
Operational Highlights, the Co-Chief Executives' Review, Financial
Review, Principal Risks and Uncertainties, and summarised financial
statements.
Use of our report
This report and our auditor's report on the company's financial
statements are made solely to the company's members, as a body, in
accordance with Chapter 3 of part 16 of the Companies Act 2006 and
the terms of our engagement. Our audit work has been undertaken so
that we might state to the company's members those matters we have
agreed to state to them and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the company and the company's members as a
body, for our audit work, for our auditor's report on the financial
statements or this report, or for the opinions we have formed.
Responsibilities of directors and auditor
The directors of the company are responsible for the
preparation, presentation and publication of the preliminary
statement of annual results in accordance with the UK Listing
Rules. We are responsible for agreeing to the publication of the
preliminary statement of annual results, having regard to the
Financial Reporting Council's Bulletin "The Auditor's Association
with Preliminary Announcements made in accordance with the
requirements of UK Listing Rules".
Status of our audit of the financial statements
Our audit of the annual financial statements of the company is
complete and we signed our auditor's report on 23 June 2021. Our
auditor's report is not modified and contains no emphasis of matter
paragraph.
Our auditor's report on the full financial statements contained
the following information regarding key audit matters and how they
were addressed by us in the audit, our application of materiality
and the scope of our audit.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the
Group and its environment, including the Group's system of internal
control, and assessing the risks of material misstatement in the
financial statements. We also addressed the risk of management
override of internal controls, including assessing whether there
was evidence of bias by the Directors that may have represented a
risk of material misstatement.
The Group comprises the Parent Company, seven trading
subsidiaries, all of which are considered to be significant
components, and five intermediate holding companies all based in
the United Kingdom, together with a Jersey based trust company
controlled by the Parent Company, which contains the Group's
Employee Benefit Trust. Full scope audits of all entities were
carried out by the Group audit team given the statutory audit
requirements for all components.
Key audit matters
Key audit matters are those matters that, in our professional
judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant
assessed risks of material misstatement (whether or not due to
fraud) that we identified, including those which had the greatest
effect on: the overall audit strategy, the allocation of resources
in the audit, and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these
matters.
Key audit matter How the scope of our audit addressed
the key audit matter
Revenue recognition
The accounting
policy for The Group generates We identified the Group's revenue
revenue is revenue from pension streams and tested that the related
disclosed advisory, administration revenue recognition policy is in
in note 1 and investment consulting accordance with the requirements
of the consolidated services as well as of the applicable accounting standards.
financial providing SSAS and
statements. SIPP services. We reviewed revenue transactions
to identify transactions which are
The segmental Accounting standards outside the normal revenue cycle.
information require the identification We then agreed a sample of any such
relating of the separate performance transactions to underlying documentation
to Group obligations embedded to gain an understanding of the transaction
revenue is in a contract, and and check that the related revenue
disclosed the allocation of had been appropriately recognised.
in note 7 the transaction price
to the consolidated to these performance We tested a sample of revenue transactions
financial obligations. Revenue for each material income stream by
statements. is only recognised agreeing back to timecard data, invoice
when performance and receipt of payment to check the
obligations existence of revenue and that it
have been met. was accurately recorded.
Identification
of the separate performance We agreed a sample of accrued income
obligations and price to pre year-end timecard data to
allocation is complex check existence of revenue. We tested
and involves judgement. the recoverability of a sample of
There is a risk that accrued income through to its subsequent
incorrect revenue billing and cash receipt. For any
is recognised due unpaid items we considered the recoverability
to the judgements of these by reference to customers'
involved in the application payment trends historically.
of the applicable
accounting standards. We tested deferred income on a sample
basis by re-calculating deferrals
The significant revenue based on invoice amounts and periods
risk revolves around to which they relate, agreeing consistency
the of these periods year on year, agreeing
existence and valuation these to supporting documentation
of revenue residing and reviewing SSAS income for revenue
within deferrals not made.
accrued income at
the year-end for the Where contracts exist, for a sample
Pensions, we have checked that revenue is being
Advisory and Consulting recognised in accordance with the
streams. terms of the contract as well as
the requirements of applicable accounting
Billing occurs monthly, standards.
quarterly or, in the
case of We tested the completeness of timecards
SSAS services, annually. recorded within the timecard system
Services may be billed and the subsequent recognition of
in arrears, as in related revenue by reconciling the
the case of pensions timecards recorded to the amounts
advisory work noted billed and written off, agreeing
above, or in advance any material exceptions noted to
as is the case with underlying support. In addition,
SSAS revenue. The completeness of timecards is addressed
manual nature of the though our data analytics testing
SSAS deferral creates by identifying outliers for example
a significant risk missing employees.
in the calculation
of the deferred income
element of this revenue. Key observations:
Our testing did not identify any
material misstatements in the amount
Whilst not considered of revenue recognised or issues with
part of the significant the revenue recognition policy and
risk, completeness judgements made.
of revenue is considered,
particularly where
revenue is captured
based on the timecard
system. There is a
risk that incomplete
revenue is recorded
within the accounting
system.
------------------------------ --------------------------------------------------------------
Going concern
The accounting Due to the level of Our procedures included:
policy for judgement applied * Assessing the Directors' going concern assessment and
going concern by management in their forecasts including the reasonableness of their
is disclosed going concern assessment assumptions applied and reverse stress case
in note 1 as a result of the sensitivities using our knowledge of the business;
of the consolidated ongoing Covid-19 pandemic,
financial we considered going
statements. concern to be a key
audit matter. * Assessing the reasonableness of the underlying
forecast model against the Directors' historical
forecast accuracy, including an assessment of the
period to May 2021 actuals against budget;
* Reviewing the terms and period of the Group's bank
facility agreement and consideration of the
sufficiency of the facility available;
* Considering the Group's compliance with banking
covenants and related headroom in light of the
Directors' reverse stress test assessment;
* Considering the options available to management to
mitigate the impact of reverse stress test scenarios
and whether such actions are within their control;
and
* Considering the adequacy of the disclosures in the
financial statements against the requirements of the
accounting standards and consistency of the
disclosure and the forecasts and reverse stress test
assessment prepared by the Directors.
Key observations:
Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually
or collectively, may cast doubt on
the Group and the Parent Company's
ability to continue as a going concern
for a period of at least twelve months
from when the financial statements
are authorised for issue.
------------------------------ --------------------------------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and
performing our audit, and in evaluating the effect of
misstatements. We consider materiality to be the magnitude by which
misstatements, including omissions, could influence the economic
decisions of reasonable users that are taken on the basis of the
financial statements.
In order to reduce to an appropriately low level the probability
that any misstatements exceed materiality, we use a lower
materiality level, performance materiality, to determine the extent
of testing needed. Importantly, misstatements below these levels
will not necessarily be evaluated as immaterial as we also take
account of the nature of identified misstatements, and the
particular circumstances of their occurrence, when evaluating their
effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality
for the financial statements as a whole and performance materiality
as follows:
Group financial statements Parent company financial
statements
2021 2020 2021 2020
--------------- --------------- ---------------- ----------------
Materiality GBP568,000 GBP546,000 GBP240,000 GBP240,000
--------------- --------------- ---------------- ----------------
Basis for determining 5% of profit before 42% of Group 44% of Group
materiality tax materiality materiality
-------------------------------- ---------------- ----------------
Rationale for We determined profit Capped at 42% (2020:
the benchmark before tax as our benchmark 44%) of Group materiality
applied for materiality on given the assessment
the basis that profit of the components aggregation
before tax is a key risk.
performance indicator
used by the market.
-------------------------------- ----------------------------------
Performance GBP404,000 GBP382,000 GBP168,000 GBP168,000
materiality
--------------- --------------- ---------------- ----------------
Basis for determining 70% of overall materiality based on our knowledge
performance of the Group and Parent Company, history of
materiality errors in previous periods and management's
attitude to proposed adjustments
--------------------------------------------------------------------
Component materiality
We set materiality for each component of the Group based on a
percentage of between 1% to 95% of Group materiality dependent on
the size and our assessment of the risk of material misstatement of
that component. Component materiality ranged from GBP6,500 to
GBP540,000. In the audit of each component, we further applied
performance materiality levels of 70% of the component materiality
to our testing to ensure that the risk of errors exceeding
component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them
all individual audit differences in excess of GBP23,000 (2020:
GBP22,000). We also agreed to report differences below this
threshold that, in our view, warranted reporting on qualitative
grounds.
Procedures performed to agree to the preliminary statement of
annual results
In order to agree to the publication of the preliminary
statement of annual results of the company we:
-- checked the accuracy of extraction of the financial
information in the preliminary statement from the audited financial
statements of the company;
-- considered whether any "alternative performance measures" and
associated narrative explanations may be misleading; and
-- read the management commentary and considered whether it is
in conflict with the information that we have obtained in the
course of our audit.
Andrew Radford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
23 June 2021
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2021
Year ended 31 March 2021 Year ended 31 March 2020
Trading Non-trading Total Trading items Non-trading Total
items and and
exceptional exceptional
items items
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Revenue 3 127,931 - 127,931 119,753 - 119,753
Other operating
income - 421 421 - - -
Administrative
expenses (100,848) (14,092) (114,940) (93,488) (12,824) (106,312)
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Profit/(loss)
from operating
activities 27,083 (13,671) 13,412 26,265 (12,824) 13,441
Finance income 4 3 - 3 8 - 8
Finance costs 4 (1,857) (188) (2,045) (2,378) - (2,378)
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Profit/(loss)
before tax 25,229 (13,859) 11,370 23,895 (12,824) 11,071
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Income tax
(expense)/credit 5 (4,741) 2,334 (2,407) (3,812) 140 (3,672)
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Profit/(loss)
after tax and
total
comprehensive
income/(loss)
for the year 20,488 (11,525) 8,963 20,083 (12,684) 7,399
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Memo
EBITDA 32,011 (7,124) 24,887 30,430 (5,671) 24,759
Depreciation and
amortisation (4,928) (6,547) (11,475) (4,165) (7,153) (11,318)
Profit/(loss)
from operating
activities 27,083 (13,671) 13,412 26,265 (12,824) 13,441
Pence Pence Pence Pence
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Earnings per Adjusted Adjusted
share
attributable to
the ordinary
equity holders of
the Company:
Basic earnings
per share 7 10.0 - 4.4 9.9 - 3.6
Diluted earnings
per share 7 9.8 - 4.3 9.6 - 3.6
Consolidated Statement of Financial Position
31 March 31 March
2021 2020
Note GBP'000 GBP'000
----------------------------------------------- ------ ---------- ----------
Assets
Non-current assets
Property, plant and equipment 3,197 3,017
Right-of-use assets 12,228 12,965
Intangible assets 204,784 210,601
Deferred tax assets 767 669
Other financial assets 1,780 1,300
----------------------------------------------- ------ ---------- ----------
222,756 228,552
----------------------------------------------- ------ ---------- ----------
Current assets
Trade and other receivables 34,635 34,708
Cash and cash equivalents 8,623 14,432
43,258 49,140
----------------------------------------------- ------ ---------- ----------
Total assets 266,014 277,692
----------------------------------------------- ------ ---------- ----------
Liabilities
Non-current liabilities
Loans and borrowings 6 58,876 70,186
Lease liabilities 9,612 10,269
Provisions for other liabilities and charges 1,678 1,550
Deferred income tax liabilities 16,390 17,561
----------------------------------------------- ------ ---------- ----------
86,556 99,566
----------------------------------------------- ------ ---------- ----------
Current liabilities
Lease liabilities 2,458 2,538
Provisions for other liabilities and charges 1,384 1,543
Trade and other payables 25,140 19,349
Current income tax liabilities 1,410 994
Deferred consideration - 757
----------------------------------------------- ------ ---------- ----------
30,392 25,181
----------------------------------------------- ------ ---------- ----------
Total liabilities 116,948 124,747
----------------------------------------------- ------ ---------- ----------
Net assets 149,066 152,945
----------------------------------------------- ------ ---------- ----------
Equity and liabilities
Equity attributable to owners of the parent
Share capital 103 102
Share premium 116,797 116,797
Merger relief reserve 48,687 48,687
Investment in own shares held in trust (2,563) (529)
Accumulated deficit (13,958) (12,112)
----------------------------------------------- ------ ---------- ----------
Total equity 149,066 152,945
----------------------------------------------- ------ ---------- ----------
Consolidated Statement of Changes in Equity
for the year ended 31 March 2021
Merger
relief Investment in Accumulated Total equity/
Share capital Share premium reserve own shares deficit (deficit)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 1
April 2019 102 116,795 48,687 (167) (9,014) 156,403
Comprehensive
income and
total
comprehensive
income for
the year - - - - 7,399 7,399
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Contributions
by and
distributions
to owners:
Share capital
issued - 2 - - - 2
Dividends paid
(note 8) - - - - (13,412) (13,412)
Shares
purchased by
Employee
Benefit Trust
for cash - - - (499) - (499)
Share-based
payment
expense -
equity
settled from
Employee
Benefit Trust - - - 137 637 774
Share-based
payment
expense -
IFRS 2 charge
in respect of
long-term
incentives - - - - 2,132 2,132
Deferred tax
movement in
respect of
long-term
incentives - - - - 146 146
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total
contributions
by and
distributions
to owners - 2 - (362) (10,497) (10,857)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 31
March 2020 102 116,797 48,687 (529) (12,112) 152,945
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 1
April 2020 102 116,797 48,687 (529) (12,112) 152,945
Comprehensive
income and
total
comprehensive
income for
the year - - - - 8,963 8,963
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Contributions
by and
distributions
to owners:
Share capital
issued 1 - - - - 1
Dividends paid
(note 8) - - - - (13,480) (13,480)
Dividend
equivalents
paid on
exercised
share options - - - - (441) (441)
Shares
purchased by
Employee
Benefit Trust
for cash - - - (3,170) - (3,170)
Share-based
payment
expense -
equity
settled from
Employee
Benefit Trust - - - 1,136 (973) 163
Share-based
payment
expense -
IFRS 2 charge
in respect of
long-term
incentives - - - - 4,082 4,082
Deferred tax
movement in
respect of
long-term
incentives - - - - 3 3
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total
contributions
by and
distributions
to owners 1 - - (2,034) (10,809) (12,842)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 31
March 2021 103 116,797 48,687 (2,563) (13,958) 149,066
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Consolidated Statement of Cash Flows
for the year ended 31 March 2021
Year ended
31 March Year ended
2021 31 March
2020
Note GBP'000 GBP'000
-------------------------------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Profit for the year 8,963 7,399
Adjustments for:
Depreciation 974 856
Depreciation of right-of-use assets 2,892 2,567
Amortisation 7,609 7,895
Finance income 4 (3) (8)
Finance costs 4 2,045 2,378
Share-based payment expense 4,082 2,132
Other operating income (421) -
Income tax expense 5 2,407 3,672
-------------------------------------------------------------------- ------ ------------ ------------
28,548 26,891
-------------------------------------------------------------------- ------ ------------ ------------
Increase in trade and other receivables (36) (1,100)
Increase in trade and other payables 6,040 1,284
Decrease in provisions (373) (78)
34,179 26,997
-------------------------------------------------------------------- ------ ------------ ------------
Income tax paid (3,304) (3,539)
-------------------------------------------------------------------- ------ ------------ ------------
Net cash inflow from operating activities 30,875 23,458
-------------------------------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Finance income received 4 3 8
Acquisition of subsidiaries, net of cash acquired (336) (7,544)
Disposal of healthcare business 104 427
Purchases of property, plant and equipment (1,154) (2,021)
Purchases of software (1,743) (1,377)
Increase in restricted cash balances - other financial assets (480) (300)
-------------------------------------------------------------------- ------ ------------ ------------
Net cash outflow from investing activities (3,606) (10,807)
Cash flows from financing activities
Proceeds from the issue of share capital net of share issue costs 1 2
Proceeds from new loans net of capitalised costs - 13,250
Repayment of loans (11,500) -
Payment relating to extension of loan facility (188) -
Sale of own shares 163 774
Purchase of ordinary shares by EBT (3,170) (499)
Interest paid (1,562) (1,630)
Lease interest paid (335) (197)
Payment of lease liabilities (2,566) (2,046)
Dividends paid to the holders of the parent (13,480) (13,412)
Dividend equivalents paid on exercise of share options (441) -
-------------------------------------------------------------------- ------ ------------ ------------
Net cash outflow from financing activities (33,078) (3,758)
-------------------------------------------------------------------- ------ ------------ ------------
Net (decrease)/increase in cash and cash equivalents (5,809) 8,893
Cash and cash equivalents at start of year 14,432 5,539
-------------------------------------------------------------------- ------ ------------ ------------
Cash and cash equivalents at end of year 8,623 14,432
-------------------------------------------------------------------- ------ ------------ ------------
In the Consolidated Financial Statements for the year ended 31
March 2020, depreciation of right-of-use assets had been included
within amortisation. The prior year column above has been restated
to show this amount on a separate line.
Additionally, there have been prior year adjustments to
provisions and trade and other receivables relating to an insurance
reimbursement asset. The prior year movements for these categories
have been restated to reflect this. This adjustment is within net
assets in the Statement of Financial Position and there is no
change in the previously reported total net assets or reserves.
Notes to the Consolidated Financial Statements
for the year ended 31 March 2021
1 Accounting Basis
The financial information set out in this document does not
constitute the Company's statutory accounts for the years ended 31
March 2021 or 31 March 2020. Statutory accounts for the year ended
31 March 2021, which were approved by the directors on 23 June
2021, and 31 March 2020 have been reported on by the Independent
Auditors. The Independent Auditor's report on the Annual Report and
Financial Statements for years ended 31 March 2021 or 31 March 2020
were unqualified, did not draw attention to a matter by way of
emphasis, and did not contain a statement under 498(2) or 498(3) of
the Companies Act 2006.
The statutory accounts for the year ended 31 March 2021 will be
delivered to the Registrar of Companies in due course and will be
posted to shareholders shortly, and thereafter will be available
from the Company's registered office at Phoenix House, 1 Station
Hill, Reading, RG1 1NB and from the Company's website
www.xpsgroup.com .
The financial information set out in these results has been
prepared using the recognition and measurement principles of
International Accounting Standards, and International Financial
Reporting Standards and Interpretations adopted pursuant to
Regulation (EC) No 1606/2002 as it applies in the European Union
(collectively Adopted IFRSs). The accounting policies adopted in
these results have been consistently applied to all the years
presented and are consistent with the policies used in the
preparation of the financial statements for the year ended 31 March
2020. New standards, amendments and interpretations to existing
standards effective for the first time for periods beginning on (or
after) 1 April 2020, which have been adopted by the Group have not
been listed, since they have no material impact on the financial
statements.
2 Non-trading and exceptional items
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Corporate transaction costs (1) (226) (870)
Restructuring costs (2) (367) (1,904)
Settlement of historical contractual dispute - (381)
Other exceptional costs (3) (2,028) (336)
------------------------------------------------ ------------ ------------
Exceptional items (2,621) (3,491)
Contingent consideration write back (4) 421 -
Share-based payment costs (5) (4,924) (2,180)
Amortisation of acquired intangibles (6) (6,547) (7,153)
Exceptional finance costs (3) (188) -
----------------------------------------------- ------------ ------------
Non-trading items (11,238) (9,333)
------------------------------------------------ ------------ ------------
Total before tax (13,859) (12,824)
------------------------------------------------ ------------ ------------
Tax on adjusting items (7) 2,334 140
------------------------------------------------ ------------ ------------
Adjusting items after taxation (11,525) (12,684)
------------------------------------------------ ------------ ------------
(1) Costs associated with aborted acquisitions of GBP226,000
(2020: GBP870,000 relating to acquisitions by the Group).
(2) Costs related to the integration of prior year acquisitions
of GBP367,000 (2020: GBP1,904,000, which also included costs
relating to exiting the IT transitional services agreement linked
to the Punter Southall acquisition in January 2018).
(3) Other exceptional costs of GBP2,028,000 were incurred as a
result of one off impact of Covid-19 on the business. This includes
an increase in holiday pay accrual due to higher carry forward of
annual leave by employees of GBP966,000 (2020: GBPnil), one off
costs incurred in enabling home working for all employees (mainly
IT costs) of GBP966,000 (2020: GBP265,000), and dual running costs
relating to a delayed office move of GBP96,000 (2020: GBP71,000).
GBP188,000 of exceptional finance costs (2020: GBPnil) were
incurred in renegotiating the covenants and additional GBP10
million RCF in light of the Covid-19 pandemic. The non-cash charge
for the holiday pay accrual arose as the holiday cycle was
disrupted by the pandemic and a higher than normal level of holiday
was carried forward at the end of the holiday year in Dec 2020. It
is expected that a significant proportion of the holiday pay
accrual will reverse out in the year ending 31 March 2022, as the
Group has changed its holiday policy in the year to align the
holiday year with the accounting year and as a result there will be
no cash outflow in respect of this charge. The reversal of the
accrual in the next financial year will also be treated as an
exceptional credit. Due to its one off nature, the size of the
holiday pay accrual in the year ended 31 March 2021 as well as the
corresponding reversal in the next financial year, it is deemed
appropriate to disclose the amount separately from the underlying
business performance.
(4) Contingent consideration revaluation credit of GBP421,000
relating to the reduction in the deferred cash-settled
consideration for the Trigon acquisition (2020: GBPnil).
(5) Share-based payment expenses are included in non-trading and
exceptional costs as they are a significant non-cash cost which are
excluded from the results for the purposes of measuring performance
for PSP awards and dividend amounts. Additionally, the largely
non-cash charges go directly to equity and so have a limited impact
on the reserves of the Group. They are therefore shown as a
non-trading item to give clarity to users of the accounts on the
profit figures that dividends and PSP performance are based on.
(6) During the year the Group incurred GBP6,547,000 of
amortisation charges in relation to acquired intangible assets
(customer relationships and brand) (2020: GBP7,153,000).
(7) The tax credit on non-trading and exceptional items of
GBP2,334,000 (2020: GBP140,000) represents 17% (2020: 0%) of the
non-trading and exceptional items incurred of GBP13,858,000 (2020:
GBP12,824,000). This is different to the expected tax credit of 19%
(2020: 19%), as not all non-trading and exceptional items are
allowable for tax.
3 Operating segments
In accordance with IFRS 8 Operating Segments, an operating
segment is defined as a business activity whose operating results
are reviewed by the chief operating decision-maker ('CODM') and for
which discrete information is available. The Group's CODM is the
Board of Directors.
The Group has one operating segment, and one reporting segment
due to the nature of services provided across the whole business
being the same: pension and employee benefit solutions. The Group's
revenues, costs, assets, liabilities and cash flows are therefore
totally attributable to this reporting segment. The table below
shows the disaggregation of the Group's revenue, by product
line.
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Pensions Actuarial & Consulting 60,687 58,802
Pensions Administration 46,813 42,945
Pensions Investment Consulting 11,585 9,551
National Pension Trust ('NPT') 3,239 2,393
SIPP (1) 5,607 6,062
------------ ------------
Total 127,931 119,753
============ ============
(1) Self Invested Pensions (SIPP) business, incorporating both
SIPP and SSAS products
4 Finance income and expense
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Interest income on bank deposits 3 8
Finance income 3 8
------------------------------------- ------------ ------------
Interest expense on bank loans 1,171 1,746
Other costs of borrowing 317 315
Interest on leases 340 288
Other finance expense 29 29
Finance expenses - trading 1,857 2,378
------------------------------------- ------------ ------------
Exceptional finance costs (note 2) 188 -
------------------------------------- ------------ ------------
Finance expenses 2,045 2,378
------------------------------------- ------------ ------------
Other costs of borrowing largely represent the amortisation
expense of capitalised loan arrangement fees on the Group's bank
debt.
5 Income tax expense
Recognised in the statement of comprehensive income
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Current tax expense
Current year 3,785 3,687
Adjustment in respect of prior year (112) (549)
---------------------------------------------------- ------------ ------------
Total current tax expense 3,673 3,138
Deferred tax (credit)/expense
Origination and reversal of temporary differences (1,266) 534
---------------------------------------------------- ------------ ------------
Total income tax expense 2,407 3,672
---------------------------------------------------- ------------ ------------
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Profit for the year 8,963 7,399
Total tax expense 2,407 3,672
--------------------------------------------------------------- ------------ ------------
Profit before income tax 11,370 11,071
--------------------------------------------------------------- ------------ ------------
Tax using the UK corporation tax rate of 19% (2019: 19%) 2,160 2,103
Non-deductible expenses 1,002 225
Other operating income not taxable (80) -
Fixed asset differences (85) -
Adjustment in respect of prior periods (112) (549)
Amounts credited directly to equity or otherwise transferred 3 146
Excess relief on exercise of share options (481) (7)
Effect of tax rate change - 1,754
--------------------------------------------------------------- ------------ ------------
Total tax expense 2,407 3,672
--------------------------------------------------------------- ------------ ------------
The standard rate of corporation tax in the UK was 19% (2020:
19%). Deferred tax assets and liabilities have been measured at the
rate they are expected to unwind at, using a rate substantively
enacted at 31 March 2021, which is not lower than 19% (2020: 19%).
Deferred tax not recognised relates to finance expense losses in a
prior year and their future recoverability is uncertain. At 31
March 2021 the total unrecognised deferred tax asset in respect of
these losses was approximately GBP1.2m (2020: GBP1.2m).
The Chancellor has confirmed an increase in corporation tax from
19% to 25% in the March 2021 budget. This is to take effect from 1
April 2023. As this rate was substantively enacted post year end,
no adjustment has been made to the deferred tax values in these
financial statements. This will however affect deferred tax rates
in future years.
6 Loans and borrowings
Due
Due within between Due after Sub-total
1 year (current) 1 and 2 years 2 years (non-current) Total
31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Drawn Revolving Credit Facility - 59,000 - 59,000 59,000
Capitalised debt arrangement fees - (124) - (124) (124)
Sub-total - 58,876 - 58,876 58,876
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Capitalised debt arrangement fees
shown as current assets on
balance sheet (186) - - - (186)
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Total (186) 58,876 - 58,876 58,690
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Due within Due
1 year between Due after Sub-total
(current) 1 and 2 years 2 years (non-current) Total
31 March 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Drawn Revolving Credit Facility - - 70,500 70,500 70,500
Capitalised debt arrangement fees - (186) (128) (314) (314)
Sub-total - (186) 70,372 70,186 70,186
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Capitalised debt arrangement fees
shown as current assets on
balance sheet (186) - - - (186)
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Total (186) (186) 70,372 70,186 70,000
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
The book value and fair value of loans and borrowings are not
materially different.
Terms and debt repayment schedule
Amount Year of
31 March 2021 GBP'000 Currency Nominal interest rate maturity
Revolving Credit Facility - A 38,000 GBP 1.5% above LIBOR 2022
Revolving Credit Facility - B 21,000 GBP 1.5% above LIBOR 2022
----------------------------------- --------- ---------- ----------------------- ----------
Amount Nominal interest Year of
31 March 2020 GBP'000 Currency rate maturity
Revolving Credit Facility - A 38,000 GBP 1.75% above LIBOR 2022
Revolving Credit Facility - B 32,500 GBP 1.75% above LIBOR 2022
------------------------------- --------- ---------- ------------------- ----------
At 31 March 2021, the Group had drawn down GBP59,000,000 (2020:
GBP70,500,000) of its GBP80,000,000 Revolving Credit Facility. The
Revolving Credit Facility available to the Group was increased by
GBP10,000,000 to GBP90,000,000 in June 2020 due to uncertainties
arising from the Covid-19 pandemic, this additional GBP10,000,000
was not required and was therefore cancelled in March 2021.
The related fees for access to the facility are included in the
consolidated statement of comprehensive income.
Capitalised loan-related costs are amortised over the life of
the loan to which they relate.
Bank debt is secured by way of debentures in the Group companies
which are obligors to the loans. These are XPS Reading Limited, XPS
Consulting (Reading) Limited, XPS Pensions Consulting Limited (and
its subsidiaries), Xafinity Pensions Consulting Limited (and its
subsidiaries), Xafinity SIPP Services Limited, and XPS Holdings
Limited (and its subsidiaries). The security is over all the assets
of the companies which are obligors to the loans.
The Group is in the early stages of discussions on refinancing,
as the current facility ends in December 2022. It is expected that
this process will be completed by the next balance sheet date, and
so the new facility will be based on a replacement rate for LIBOR.
It is not yet known what that rate will be.
7 Earnings per share
31 March 31 March
2021 2020
GBP'000 GBP'000
Profit for the year 8,963 7,399
------------------------------------------------------ ---------- ----------
'000 '000
------------------------------------------------------ ---------- ----------
Weighted average number of ordinary shares in issue 204,392 203,301
Diluted weighted average number of ordinary shares 209,850 208,219
Basic earnings per share (pence) 4.4 3.6
Diluted earnings per share (pence) 4.3 3.6
------------------------------------------------------ ---------- ----------
The calculation of basic earnings per share is based on the
earnings attributable to ordinary shareholders divided by the
weighted average number of shares in issue during the period.
Share awards were made to the Executive Board members and key
management personnel in each year since the year ending 31 March
2017, these are subject to certain conditions, and each tranche of
awards vest 3 years after the award date. Dividend yield shares
relating to these awards will also be awarded upon vesting of the
main awards. Further shares have been issued under SAYE share
schemes in the years ending 31 March 2018 and 2019, these will vest
in the years ending 31 March 2021 and 2022 respectively. These
shares are reflected in the diluted number of shares and diluted
earnings per share calculations.
Adjusted earnings per share
Total Total
31 March 31 March
2021 2020
GBP'000 GBP'000
Adjusted profit after tax (note 6) 20,488 20,083
Adjusted earnings per share (pence) 10.0 9.9
Diluted adjusted earnings per share (pence) 9.8 9.6
---------------------------------------------- ---------- ----------
8 Dividends
Amounts recognised as distributions to equity holders of the
parent in the year
31 March 31 March
2021 2020
GBP'000 GBP'000
---------------------------------------------------------------------------------------------- ---------- ----------
Final dividend for the year ended 31 March 2020: 4.3p per share (2019: 4.3p per share) 8,795 8,738
---------------------------------------------------------------------------------------------- ---------- ----------
Interim dividend for the year ended 31 March 2021: 2.3p (2020: 2.3p) per ordinary share was
paid during the year 4,685 4,674
---------------------------------------------------------------------------------------------- ---------- ----------
13,480 13,412
---------------------------------------------------------------------------------------------- ---------- ----------
The recommended final dividend payable in respect of the year
ended 31 March 2021 is GBP9,025,000 or 4.4p per share (2020:
GBP8,800,000).
The proposed dividend has not been accrued as a liability as at
31 March 2021 as it is subject to approval at the Annual General
Meeting.
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------------------------------------- ---------- ----------
Proposed final dividend for year ended 31 March 2021 9,025 8,835
------------------------------------------------------- ---------- ----------
The Trustee of the Xafinity Employee Benefit Trust has waived
its entitlement to dividends.
The Company statement of changes in equity shows that the
Company has positive reserves of GBP12,555,000. Therefore there are
sufficient distributable reserves in XPS Pensions Group plc in
order to pay the proposed final dividend.
9 Cautionary statement
This announcement may include statements that are
forward-looking in nature. Forward-looking statements involve known
and unknown risks, assumptions, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Group to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking statements. These forward-looking statements are
made only as at the date of this announcement. Nothing in this
announcement should be construed as a profit forecast. Except as
required by applicable law, regulation or stock exchange rules, the
Group undertakes no obligation to update, revise or change any
forward-looking statements to reflect events or developments
occurring after the date such statements are published.
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END
FR FXLLLFQLXBBZ
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June 24, 2021 02:00 ET (06:00 GMT)
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