Shaping better
financial futures
XPS Pensions Group plc
Annual Report and Accounts 2024
Strategic report
Highlights
2
At a glance
4
Investment case
5
Business model
6
Markets overview
8
Our strategy
10
Co-Chief Executives’ review
12
Stakeholder engagement
18
Sustainability
20
Task Force on Climate-related
Financial Disclosures
35
Non-financial and sustainability
information statement
40
Chief Financial
Officer’s review
41
Principal risks
and uncertainties
47
Governance
Chairman’s introduction
54
Board of Directors
56
Board and Committee composition
and operation
58
Nomination Committee
63
Audit & Risk Committee
66
Sustainability Committee
70
Directors’ remuneration report
72
Annual report on remuneration
85
Directors’ report
96
Directors’ responsibility statement
100
Financial statements
Independent
auditor’s report
101
Consolidated statement
of comprehensive income
109
Consolidated statement
of financial position
110
Consolidated statement
of changes in equity
111
Consolidated statement
of cash flows
112
Notes to the consolidated
financial statements
113
Statement of financial
position – Company
146
Statement of changes
in equity – Company
147
Statement of cash
flows – Company
148
Notes to the financial
statements – Company
149
Company information
154
XPS Pensions Group plc Annual Report and Accounts 2024
We are a forward-looking, ambitious business
We are a leading independent pensions
consulting and administration services
firm and strive to be the best provider
of services to the UK pensions market.
Our purpose
Why we exist
We exist to shape and support safe,
robust and well-understood pension
schemes for the benefit of people
and society.
Our vision
What we want to achieve
We will constantly challenge the
pensions industry to improve
and achieve better outcomes
for members.
Our mission
What drives us
We strive to be leaders in pensions,
investment consulting and administration
with brilliant people and leading
technology delivering better outcomes
for pension scheme members and
rewarding careers for our people.
Contents
Our strategic framework
for growth
Strategic report
1
XPS Pensions Group plc Annual Report and Accounts 2024
Our strategic priorities
Our values
Fundamental values that drive decision making
Read more on page 10
We are
ambitious
We do the
right thing
We are
agile
We are
helpful
We are
experts
Our strategy
How we will achieve our vision
Our strategy is centred around
four key pillars, while remaining
focused on achieving
profitable growth.
Sustainability supports the Group’s mission
and strategy. It is embedded into our business
model so that by delivering on our mission to
be leaders in pensions, investment consulting
and administration, we are able to achieve
better outcomes for all our stakeholders.
Our refreshed sustainability framework helps
us focus on “shaping a better future” for those
stakeholders, in line with our purpose to shape
and support safe, robust and well-understood
pension schemes. Building on our reputation as
a responsible business, our framework drives
positive outcomes for our people, environment,
community, clients and members.
Read more on page 20
Our sustainability framework
Being a responsible business
Strengthening
our
communities
Protecting
our
environment
Supporting
our clients
and members
Empowering our people to thrive
Regulatory
change
Expand
services
Grow
market share
Mergers and
acquisitions
2
XPS Pensions Group plc Annual Report and Accounts 2024
Highlights
Financial
Revenue1
+21%
FY 2024
£196.6m
FY 2023
£162.3m
Proposed full year dividend
FY 2024
10.0p
FY 2023
8.4p
+19%
Adjusted EBITDA2
FY 2024
£54.8m
FY 2023
£41.4m
+32%
Adjusted diluted earnings per share3
FY 2024
15.1p
FY 2023
12.2p
+24%
FTE employees4
FY 2024
1,712
FY 2023
1,570
+9%
1 Group revenue growth excluding the NPT business disposed of
in November 2023. Revenue growth including the NPT business
was 20%. See note 7 in the financial statements.
2 Adjusted EBITDA excludes the impact of share-based payment
costs, fair value adjustments of contingent consideration, and
exceptional costs. This also excludes the results of the NPT
business disposed of during the year. Adjusted EBITDA including
the results of the NPT business was £55.3 million (FY 2023:
£42.4 million).
3 Adjusted diluted earnings per share is based on adjusted profit
after tax, which excludes the impact of amortisation of intangible
assets, share-based payment costs, fair value adjustment of
contingent consideration, exceptional costs, and the tax impact of
these items (see note 6 in the financial statements). This also excludes
the results of the NPT business disposed of during the year. Adjusted
diluted earnings per share including the NPT business was 15.3p
(FY 2023: 12.6p).
4 As at year end.
5 Excluding lease liabilities.
6 Profit before tax in FY 2024 benefits from the gain on sale of the
NPT business. Excluding this, FY 2024 profit before tax would have
been £30.0 million, a 57% increase on the prior year.
7 Basic EPS in FY 2024 benefits from the gain on sale of the NPT
business. Excluding this gain, FY 2024 basic EPS would have been
10.5p vs 7.7p, a 36% increase on the prior year.
Profit before tax6
FY 2024
£62.5m
FY 2023
+227%
£19.1m
Basic EPS7
FY 2024
26.2p
FY 2023
+240%
7.7p
FY 2024
Net debt5
FY 2023
£55.3m
-75%
£14.0m
FY 2024
Strategic report
3
XPS Pensions Group plc Annual Report and Accounts 2024
Operational
£2.8bn
2023: £2.1bn
Value of liabilities over
which we provided risk
transfer advice
88
2023: 81
Number of schemes with
over £1bn of assets
1.1m
2023: 1.0m
Members under
administration
+31 eNPS
2023: +33
High eNPS score for
the second year in a row
Maintain carbon
neutral status for
third year in a row
£5.5m
2023: £4.9m
Continuing investment in
software assets to drive
operational efficiencies and
improve customer experience
Sustainability
Awards
35%
2023: 31%
Senior management positions
held by women
36
2023: 23
Number of clients in sustainable
funds, representing £2.6bn AUM
60%
2023: 40%
Proportion of electricity
that is renewable
4
XPS Pensions Group plc Annual Report and Accounts 2024
At a glance
What we do
XPS Group is a leading independent pensions consulting
and administration business in the UK. We have benefits of scale
– we have a breadth of experience to draw on and can invest
in solutions for the benefit of our clients – yet we remain agile,
able to respond quickly as the world around our clients shifts.
Welcome to XPS Group
1
Actuarial Consulting
We help make sure
there is enough
money in schemes
2
Investment Consulting
We advise on where
to invest the assets
3
Pensions Administration
We keep all the records,
communicate with
members and pay
the pensions
Pensions
We provide pragmatic advice
that addresses the specific and
often complex challenges faced
by UK pension schemes and their
corporate sponsors.
www.xpsgroup.com/what-we-do/
pensions-advisory/
Investment
We provide clear and
independent investment advice
which we help clients implement
quickly and effectively.
www.xpsgroup.com/what-we-do/
investment-consulting/
Administration
Our award-winning pensions
administration service puts
scheme members at the heart
of everything we do.
www.xpsgroup.com/what-we-do/
administration/
Self Invested Pensions
XPS Self Invested Pensions is
an award-winning SIPP and
SSAS pension provider, trustee
and administrator, which has
specialised in self invested
pensions for more than 40 years.
www.xpsselfinvestedpensions.com
Our services
15
UK locations
Our 15 locations give us access
to employees, expertise
and clients across the UK.
1,700+
Employees
Our 1,700+ employees with market
leading experience and knowledge
and pride themselves on the highest
delivery standards to solve our
clients’ needs.
>1,400
Pension scheme clients
We build strong relationships
with our clients, which lead
to repeat business and
opportunities to cross-sell.
The foundations of a thriving business
Strategic report
5
XPS Pensions Group plc Annual Report and Accounts 2024
Investment case
Diversified and stable
client base
• We have long-standing relationships with
a large and diverse client base, consisting of
over 1,400 clients. We have a strong brand
and have won multiple industry awards for
our client service.
Read more on page 13
1,400+
clients
Top ten clients represent
18% of revenue
Benefit from regulatory
and market change
• There are c.£1.5 trillion of liabilities of private
UK defined benefit pension schemes and
a rapidly growing defined contribution
market. Regulatory developments are driving
increased client activity and demand for
our services.
Read more on page 8
>£2.5bn
size of annual fee market
Track record of
revenue growth and
improving margins
• XPS has delivered year on year profitable
revenue growth, through a range of
macroeconomic conditions, since listing
on the London Stock Exchange.
Read more on page 41
28%
adjusted EBITDA margin
Trusted expertise
and highly engaged
colleagues
• The outstanding expertise and client service
focus of our colleagues are widely relied upon
and highly valued by our clients. We have high
client satisfaction scores and our people think
XPS is a great place to work.
Read more on page 22
98%
of our people
think XPS is a great
place to work
Non-cyclical and
recurring revenues
with inflation linkage
• Our services are typically provided on
the basis of an open-ended engagement
with clients, and are compliance driven to
a statutory timetable. They are therefore
required in all parts of the economic cycle.
We have a high degree of visibility of
our revenue.
Read more on page 8
>90%
repeat recurring revenue
across the business
Strong cash
conversion and
growing dividends
• XPS has a robust balance sheet, consistently
high cash conversion and has a progressive
dividend policy. Since listing in 2017,
£91 million has been paid in dividends.
Read more on page 41
0.3x
covenant leverage
Opportunities for
earnings enhancing
M&A and scale up
• We have a proven track record of successful
earnings enhancing M&A which demonstrates
our ability to execute deals that are aligned to
our corporate strategy.
Read more on page 17
6
acquisitions
since listing in 2017
Why invest in XPS?
6
XPS Pensions Group plc Annual Report and Accounts 2024
Our resources
Business model
Our people
Experts in their fields, our people drive
the business. They’re the innovators, the
problem-solvers, the forward-thinkers,
and that’s why we invest in them.
Our culture
Values driven, employee centric,
inclusive, friendly, meritocratic –
our culture empowers our business.
Our technology
We invest in technology to deliver our
services efficiently, and to bring clarity
and understanding to the complex
problems we help to solve.
Our financial strength
We are consistently profitable with
the financial resources to invest in the
development of services to anticipate
client needs.
XPS Group’s unique proposition is our ability to
add value across our business. Our people, culture,
technology and financial strength make this possible.
Delivering strong and stable growth
Specialist insight and expertise:
Our team of experts brings deep knowledge
and experience to the table.
Exceptional quality service and tailored solutions:
We pride ourselves on delivering a quality
service. Whether it’s administration, consulting
or investment-related services, we tailor our
solutions to meet the unique needs of our clients.
Our culture: Our culture and values guide us
in everything we do and help us make a positive
and sustainable impact with all stakeholders.
Diverse client base: XPS serves a diverse
range of clients, including large corporate
schemes, public sector funds, smaller pension
arrangements and other financial institutions.
Strong brand: Our strong award-winning
brand sets us apart from our competitors and
communicates our values and brand promise
as well as building client trust and loyalty.
Our competitive advantage
Strategic report
7
XPS Pensions Group plc Annual Report and Accounts 2024
Value for all stakeholders
How we create value
Clients
• Specialist insight and expertise leading
to better outcomes for all stakeholders
• High-quality service and tailored solutions
• Value for money
Read more on page 32-33
1,400
clients
Our people
• Stimulating working environment and
attractive career prospects
• First-class training and support towards
professional qualifications
• Competitive remuneration and benefits
Read more on page 22-26
+31
employee Net
Promoter Score
Shareholders
• Track record of growing revenues, profits
and dividends – more than £91 million paid
in dividends since listing in 2017
• Non-cyclical demand for services
• Highly predictable revenues
• Strong cash generation
Read more on page 18-19
19%
growth in
dividends in
FY 2024
Community and environment
• Positive impact on communities through
supporting local and national charities
• Open and fair relationships with
regulators and suppliers through
regular engagement
• Carbon neutral across Scope 1, 2 and 3
emissions and on the path to net zero
Read more on page 27-31
60%
renewable
electricity with
commitment for
100% by 2030
Advisory
• Actuarial advice
• Investment strategy
• Insurance consulting
• Risk management
• Regulatory compliance
• Governance support
Administration
• Private sector
• Public sector
• Regulatory compliance
• Self Invested Pensions
• Master trust administration
8
XPS Pensions Group plc Annual Report and Accounts 2024
Competitive landscape and market opportunities
Markets overview
A highly visible defined benefit market complemented
by a rapidly growing defined contribution market.
All weather growth
The solutions and services we provide to pension scheme
clients continue to be in demand regardless of the
economic cycle. After all, whatever the macroeconomic
backdrop, members of pension schemes require correct
payments to be made into their accounts at the right
time. Lots of our other core services are needed against
all backdrops too. Combine this with standard industry
practice for client contracts to incorporate annual
price increases in line with a measure of inflation, and
the pensions services markets in which we operate
can be termed “all weather” or “non-cyclical”. Because
of this, our markets have historically kept pace with
inflation, growing at between 3% and 4% per annum.
Today, however, market growth is outpacing inflation.
Two key long-term structural drivers are fuelling this –
regulatory and market change.
Our markets
In terms of size, the UK pensions services industry is
worth approximately £2.5 billion per annum. Fees are
generated across four key segments of the market:
• Administration: ensures scheme members receive the
pensions they are owed when they are due. Services
include record keeping, calculations, communications
and payroll services;
• Actuarial: for defined benefit pension schemes,
actuaries calculate if a pension scheme’s promises to
members (liabilities) can be met by its assets over time.
Services include monitoring the financial position of a
pension scheme and recommending courses of action
to protect scheme members and sponsors against
financial risk;
• Investment: provides advice on which asset strategy
should be deployed to enable a pension scheme’s
liabilities to be met over the long term, balancing
seeking good returns whilst avoiding taking
undue risk; and
• Employer covenant: assesses the financial strength of
the employer in relation to its ability to meet its pension
obligations, which feeds into the level of investment risk
that can be taken.
It is the essential nature of the services provided that
gives the pensions industry its all weather growth qualities.
All weather: pension schemes constantly need all the
above services. Members must receive payments on
time. A scheme’s capacity to meet its obligations to the
members requires continual monitoring. Investment
strategies need implementing and frequent reviewing.
The financial strength of scheme sponsors has to be
assessed regularly.
Growth: growth over and above the historical, all
weather rate is generated when a fundamental shift
in the operating environment has taken place either
through regulatory and/or market change. Whenever
change takes place, pension scheme trustees and
corporate sponsors require advice on how best to
navigate the new world so that members’ pensions
are protected. The workflows generated can often be
spread over several years. Furthermore, with every new
regulatory change/market shift, the delivery of pensions
services becomes that much more complex. Not only
does this drive fee market growth but also outsourcing
opportunities, as internally administered schemes
look to offload their administrative responsibilities to
third-party specialists, such as us.
How regulatory changes drive markets
Regulations require pension scheme trustees and
sponsors to seek support across all four areas outlined
above. The regulatory landscape is, however, constantly
evolving. In recent years pension schemes have had
to respond to a series of new regulations: The Pension
Schemes Act 2021 - covering how schemes should be
funded and how company sponsors treat schemes during
M&A activity; the Task Force on Climate-related Financial
Disclosures (TCFD) - requiring trustees to improve the
quality of governance and reporting of climate-related
risks and opportunities; GMP equalisation – correcting
the unequal treatment of men and women in relation
to a small part of pension schemes dating back to the
1980s/90s; and the CMA Review – recommending
trustees seek independent advice where they use certain
types of asset manager.
Each of the above continues to generate demand for
solutions and services. New guidance is expected too –
a New Funding Code covering the Pensions Regulator’s
expectations around how to ensure members are
protected over the longer term, building on a Single
Code of Practice that came into effect in March 2024
that will increase governance requirements for trustees.
This increased regulatory oversight of pension scheme
trustees is therefore likely to be a key driver of growth
for years to come.
Strategic report
9
XPS Pensions Group plc Annual Report and Accounts 2024
How markets drive growth
Markets are also expected to be a source of growth
for the industry over the next few years, particularly
following the change that has taken place in recent years
from a low to high interest/inflationary rate environment.
This has largely been positive for pension schemes –
deficits caused by near-zero interest rates have either
been sharply reduced or replaced by surpluses. A switch
from a large to small deficit or from a deficit to a surplus
represents a material change in circumstances, one
that requires advice and potentially action to lock in
a scheme’s improved financial position via de-risking
so that members’ benefits are safeguarded. Options
with regard to corporate sponsor contributions or how
best to make use of any surplus will also likely need to
be considered.
The effects of the new regime are being reflected in the
de-risking market – bulk annuity volumes are forecast
to rise to £50–60 billion by 2025, a step up from the
previous £30 billion a year level, and with private sector
pension liabilities alone standing at £1.3 trillion, ample
scope remains for further growth in bulk annuity volumes
over the long term.
What does this mean for service providers such as XPS?
Whether they take the form of a buy-in (where a pension
scheme buys an insurance policy to secure part or all of
the promises made to members) or a buy-out (where the
pension scheme is eventually wound up after 100% of the
liabilities have been insured), bulk annuities generate a
wide range of work streams from the provision of advice
to transaction broking services, and, on the other side
of a buy-in/buy-out transaction, there typically sits an
insurance company. As the bulk annuity market grows,
therefore, so too does the overlap between the pensions
and insurance industries. Insurers require support
when they take on the responsibility of protecting and
administering members’ benefits. They also have to
meet regulatory requirements and manage risks such
as inflation, longevity and demographics. Insurance
companies are therefore increasingly becoming another
source of market-driven growth for the sector.
The fragmented nature of the workplace pensions market
represents another growth opportunity. Considerable
scope exists for XPS, one of the largest mid-tier
companies, to continue capturing market share, both
organically and inorganically, particularly as XPS is
strongly differentiated from its larger competitors.
A new normal
During the period of low-to-near-zero interest rates that
followed the global financial crisis, regulatory change was
the primary source of activity. Today, markets too are
driving new opportunities for pension schemes and with
them strong demand for our services. The overall number
of schemes may be reducing, but opportunities are being
created for XPS in the insurance market and, in turn, for
us to maintain our track record of all-weather growth.
Competitive landscape1
Opportunity for mid-tier firms
to win clients of the Big 3
• Technology
• Investment in services
• Value for money
• Driven by Independent Trustee
5,063
2
(Private sector) UK defined benefit schemes
c.£1.3tn
2
Total liabilities
£2.5bn+
3
Pensions advisory services market p.a.
Big three
Mid-tier firms
Small firms
700
600
500
400
300
200
100
0
Mercer
WTW
Aon
XPS
LCP
Barnett Waddingham
Capita
Isio
Hymans Robertson
Buck
Broadstone
First Actual
Redington
Revenue (£m)
1 Professional Pensions article “The UK’s biggest pension consulting
firms by revenue” issued 21 February 2024 based on figures taken
from latest available company accounts.
2 Source: Pensions Protection Fund Purple Book 2023 as at 31 March 2023.
3 Management estimate.
Fragmented marketplace: opportunity to grow
Workplace pensions is a fragmented market which offers a considerable potential to grow by increasing market share,
either organically or via M&A. Sitting beneath the big three players for whom workplace pensions are not 100% of their
business, XPS is one of the largest mid-tier companies and so is well placed to continue to grow market share.
10
XPS Pensions Group plc Annual Report and Accounts 2024
Our strategy
Our strategic priorities
Delivering our purpose and growing profitably.
Our strategy has been designed to deliver our societal purpose – to shape and support safe, robust and well-understood
pension schemes for the benefit of people and society – and at the same time achieve profitable growth. Thanks to
the hard work and dedication of our people, we have executed effectively on our strategy, which has created the scale
and the agility to deliver best-in-class solutions to pension schemes of all sizes. We have the track record of providing
thought leadership to the industry and regulators, and we have the proprietary technology and partners in place to
achieve better outcomes for members and society as a whole.
Our strategy is based around four strategic pillars:
Trustees, corporate sponsors and
members of pension schemes all need
ongoing advice and support to navigate
the evolving regulatory environment.
We see our role as not only a provider
of solutions to help deal with change,
but also as a contributor to the
regulatory debate.
Expansion of our services is not just
centred around adding new solutions to
our full-service offering but also increasing
the number of services we provide to
each of our clients as well as expanding
into new markets. The growing overlap
between the pensions and insurance
industries is a clear avenue of growth,
one that can be captured by continually
expanding our offering, leveraging
technology and forging partnerships.
Progress
We helped clients prepare
for the new Single Code of
Practice and continued to
roll out our GMP equalisation
solution. We have also been
working on a large one-off
project to develop technology
to implement the McCloud
judgement. We participated
alongside the regulator,
the UK government,
HM Treasury and the
Institute for Fiscal Studies
in discussions focused
on how pension scheme
assets can best be invested
into productive finance.
We commenced working
with several new and
existing clients to explore
how they can invest in
productive finance.
Priorities for FY 2025
• Meet McCloud judgement
project commitments within
the statutory timeframe
• Prepare clients for the
new Single Code of
Practice and Funding
and Investment Code
• Further roll-out of GMP
equalisation solution
• Continue work
on productive
finance approach
Key risks
• Include third-party supplier/
outsourcing issues, errors,
theft and fraud and strategy
Progress
We launched our AI Driven
Actuary (AIDA) tool, which
speeds up the process of
assessing member options.
We launched a strategic
partnership with specialist
UK insurer The Pensions
Insurance Corporation (PIC) to
enable small pension schemes
to access insurance solutions.
We established a strategic
partnership with SEI to create
a market-leading master trust
following the sale of our NPT
business to SEI. Our de‑risking
activity continued to generate
advisory work with insurance
companies that have taken on
client pension scheme liabilities.
Priorities for FY 2025
• Grow the PIC and SEI
partnerships
• Roll out new products
such as our AIDA tool
across our client base and
further expand our data
analytics capability
• Pursue further growth
in our de-risking
practice, including to
win more external and
internal mandates
• Continue to expand
our services to
insurance companies
Key risks
• Include strategic planning
and execution, financial
performance, information/
cyber security, staff/
human resources, client
engagement and business
conduct and reputation
£100bn
the amount of surplus
that could be invested
into productive finance
via our straightforward
and safe approach
32,000
the number of public
sector pension members
covered by the
McCloud Judgement
40
no. of risk transfer
engagements during
the year
£10m
revenue from risk
transfer engagements
Regulatory change
Expand services
Strategic report
11
XPS Pensions Group plc Annual Report and Accounts 2024
Winning mandates from pension
schemes and sponsors with which
we do not already have a relationship
(“new logo”clients) represents a clear
route to growing our market share.
Increasingly we will also be looking
to grow our share in the insurance
consulting market.
Progress
Through our Market Force
initiative and supported by
a strong brand reputation
built from our client centric
approach to services, we
secured several new client
wins including the John Lewis
Partnership (JLP) Scheme,
Stallantis, Cadbury, Mencap
and Delta. These wins helped
increase the number of
members under administration
to 1.1 million. Winning the
JLP Scheme served as an
endorsement of our new
proprietary cloud‑based
Aurora administration platform.
We have had success in winning
new mandates within Advisory
as well, with 40 risk transfer
engagements with new clients.
Priorities for FY 2025
• Grow and convert new
business pipeline via
continued roll-out of Market
Force Initiative
• Continue focus on first-time
outsourcing and public
sector opportunities within
Administration
Key risks
• Include strategic planning
and execution, errors
and third-party supplier/
outsourcing issues
We are one of the largest mid-tier
independent pensions services providers
in the UK, but the market in which we
operate is fragmented. By acquiring
businesses, we can increase our scale
and capabilities in specialist areas and
in the process grow our market share.
Progress
We integrated the FY 2023
acquisition of Penfida Limited,
an established covenant
advisory business.
Priorities for FY 2025
• Ongoing evaluation of
potential acquisitions and
other opportunities that
meet our investment and
strategic criteria
Key risks
• Include financial
performance and business
conduct and reputation
21%
organic revenue growth
excluding the NPT
business disposed of part
way through the year
165,000
the number of members
in the JLP Scheme
<10%
our current
market share
6
the number of
acquisitions since
listing in 2017
Grow market share
Mergers and acquisitions
12
XPS Pensions Group plc Annual Report and Accounts 2024
Growing track record
“We are proud of
our people. Without
their commitment
and effort, we would
not be reporting a
seventh successive
year of record
revenue growth.”
“Growth has
been across all
business lines and
our profitability has
continued to reap the
benefits of operational
gearing with profits
growth outpacing
our revenues
once again.”
Co-Chief Executives’ review
Our last Annual Report, for the
year ended 31 March 2023, set out a
tremendous set of results - a record
year for the Group, delivering strong
revenue growth with operational
gearing coming through.
With this we had delivered revenue growth in every
year since we listed in 2017, in turn building on a much
longer track record of continuous growth before that.
This growth is set against a wide range of macro/
geopolitical backdrops: macro – from the low-to-near-
zero interest rates and inflation when we listed to the
high rates and prices of today; and geopolitical – Brexit,
the pandemic and conflict in Europe. To have delivered
uninterrupted revenue growth throughout was, in our
view, testament to the dependable nature of the pensions
markets in which we operate, the resilience of our
business model and the excellence and commitment
of our people.
The question was; how to follow our best year? The answer
was to go one better still, and this latest 12-month period
is a stand-out in its own right. Growth at the revenue
level has been strong across the board. All four main
divisions (Pensions Actuarial & Consulting; Pensions
Investment Consulting; Pensions Administration; and SIP)
have recorded double-digit top-line growth. Typically, in
any given year, one division outperforms. This year, the
investment we have made in our services, together with
the significant regulatory and structurally driven end
market activity, has delivered uniform growth which has
also been boosted by the headline level of inflation flowing
through to our fees. That same combination also lies
behind a second consecutive year of improved operational
gearing for the Group, with an accelerating trend of
earnings growing faster than revenues.
Paul Cuff
Co-Chief Executive Officer
Ben Bramhall
Co-Chief Executive Officer
Not only are we growing our revenues, but our profitability
too, and we are continuing to grow sustainably. FY 2024
is the third successive year that we have been carbon
neutral. It is also the second consecutive year that we
have achieved an employee Net Promoter Score (eNPS)
of more than 30, a level viewed as exceptional for
professional services businesses. We were also named
one of the Best Places to Work 2023 by The Sunday
Times. As well as monitoring employee engagement and
wellbeing, the survey tracked the best places to work
for women, members of the LGBTQIA+ community,
disabled employees, ethnic minorities and younger and
older workers.
Growing profitability
Total Group revenues of £199.4 million for FY 2024
represent a 20% increase on FY 2023’s £166.6 million.
Excluding NPT, Group revenues were £196.6 million
(FY 2023: £162.3 million), representing an increase of
21%. This is the second year in a row that total revenues
have grown by 20% – previously, annual growth had
been in the mid-to-high single digits. We view this step
change in growth as a product of the high-inflationary
environment and strong end markets. We also believe
we are reaping the benefits of the investments we have
made over the years in our technology, resources and
platform. We have built up our capabilities across all
of our key service areas so that the increased breadth
and scale of our offering allows us to deliver an ever-
expanding set of solutions to our clients. It also enables us
to win new mandates on pension schemes of significant
size, such as the John Lewis Partnership (JLP) Scheme,
which was awarded to us during the year. The high
proportion of organic revenue growth (19%) is further
evidence that the investment in our internal capabilities is
bearing fruit (the remaining growth arose from last year’s
Penfida acquisition).
Strategic report
13
XPS Pensions Group plc Annual Report and Accounts 2024
In addition, this is the second successive year that the
Group has benefited from operational gearing, whereby
earnings growth has outpaced that of revenues – FY
2024 adjusted EBITDA excluding the NPT business sold
in November 2023 grew 32% to £54.8 million (FY 2023
on a comparable basis: £41.4 million); statutory profit
before tax increased 227% to £62.5 million (FY 2023:
£19.1 million) on the back of strong operational
performance as well as the gain on disposal of the NPT
business; and adjusted diluted EPS grew 21% year on
year to 15.3p in FY 2024 (FY 2023: 12.6p). Excluding
the NPT business, the equivalent adjusted fully diluted
EPS grew by 24% to 15.1p in FY 2024 (FY 2023: 12.2p).
This latter measure is suppressed by the increase in
corporation tax. As with revenues, earnings are benefiting
from the investments we have made into our platform
and capabilities. We expect this to continue in the
years ahead.
In terms of balance sheet, following the sale of NPT
during the year for an initial cash consideration of
£35 million, a significant portion of the Group’s existing
debt facilities has been repaid. Having low debt gives us
additional flexibility to invest further in the business, both
organically and inorganically. Under the terms of the NPT
sale, contingent consideration of up to £7.5 million may
be paid to the Group, subject to business performance
over the two years following completion.
Based on the strength of our financial performance and
our balance sheet, we are proposing a 19% increase in
the total full-year dividend for the year in line with our
progressive dividend policy.
As mentioned earlier, growth at the divisional level has
been across all areas of the business posting double-
digit increases in full-year revenues: Pensions Actuarial &
Consulting up 21% to £93.4 million (FY 2023: £77.4 million);
Pensions Investment Consulting up 13% to £20.3 million
(FY 2023: £18.0 million); Pensions Administration up 25%
to £71.9 million (FY 2023: £57.5 million); and SIP up 17%
to £11.0 million (FY 2023: £9.4 million). All of our divisions
have benefited from contractual fee increases in line with
various inflationary measures.
Awards
In another award winning year,
we have earned a number of
prestigious awards for great client
service, innovation and looking
after our people.
Recognition for highest level of
innovation, performance of third party
administration service to occupational
pension schemes.
Recognition for the excellent provision
of service to evaluate, select and
monitor fiduciary managers.
This award acknowledges the
initiatives we have undertaken
that best promote diversity and
inclusion for our colleagues, as well
as contributed to industry-wide
initiatives.
We won the Best Pensions Adviser
of the Year recognising our expertise
and innovation in corporate advice
to defined benefit and defined
contribution pension schemes.
Radar – Our actuarial software
won Software of the year at the
Actuarial Post awards for the second
year running.
XPS/Penfida won the Sponsor
Covenant Provider of the Year at the
Pensions Age Awards.
XPS has been named as one of
the Best Places to Work 2023 by
The Sunday Times.
XPS successfully retained signatory
status to the UK Stewardship Code for
the third consecutive year.
14
XPS Pensions Group plc Annual Report and Accounts 2024
Co-Chief Executives’ review continued
Growing profitability continued
Specific drivers of growth beyond this are:
Pensions Actuarial & Consulting: the switch from a low
to a high interest rate/inflationary environment has driven
a need for advice. Clients require guidance on how best
to navigate the new macro backdrop and reset their
strategies accordingly. In some cases, this has involved
de-risking, fuelling further strong growth in risk transfer
revenues. De-risking activity also continues to generate
work directly for insurance companies as they take on
pension scheme liabilities.
Pensions Investment Consulting: further tailwinds were
experienced from the autumn 2022 gilt market crisis,
leading to strong demand for portfolio rebalancing work
and hedging strategy reviews as well as new mandates
for independent oversight of fiduciary managers.
Pensions Administration: several new client wins late
in the previous financial year came on stream during
this year and increased the number of members under
administration to 1.1 million. During the year we won
John Lewis Partnership (JLP) with approximately 165,000
members, a new client that will transition between now
and 2025. This win represents a major endorsement of
both our offering and our new Aurora platform which
we launched during the year on time and on budget.
Aurora is a cloud-based proprietary system that drives
efficiencies, further bolsters security and provides clients
and members with enhanced online access.
We also won work in the public sector including a one-off
project to support schemes to implement the McCloud
judgement on behalf of approximately 32,000 members.
We have assigned material resources to this project to
ensure we meet the 2025 delivery target.
SIP: strong organic growth and a full-year contribution
from our inclusion on the panel of recommended SIPP
providers for St James’ Place, one of the UK’s leading
financial advisers, have both been tailwinds. So too has
the high bank base rate as, in line with standard industry
practice, our SIP business is paid in part through interest
generated from client deposits, although we have elected
to cap this at a level that is currently well below prevailing
rates and caps our peers typically have in place.
National Pensions Trust (NPT): following the November
2023 sale of NPT to SEI, a best-of-breed service provider,
we continue to provide a wide range of services to both
NPT and SEI. The rationale behind the sale is to create
a market-leading master trust for the benefit of clients
and members. Under the strategic partnership with SEI,
we will continue to provide pensions administration and
consultancy services.
Growing markets
Our end markets are large, growing, predictable and, as
our long track record of revenue growth demonstrates,
non-cyclical. This is primarily due to the presence of two
key structural drivers.
Ongoing regulatory change: recent years have seen
much activity on the regulatory front including the
Pension Schemes Act 2021, which focuses on how
corporates finance their arrangements and how schemes
are treated following M&A; the 2018 GMP equalisation
ruling that trustees must correct the unequal treatment
of men and women in relation to elements of defined
benefit schemes that built up in the 1980s/90s; and
the CMA Review which recommended schemes seek
independent advice about fund managers engaged on
a fiduciary management basis. Further change is on
the horizon, including a new Funding Code due no later
than September 2024, which may have quite a profound
impact on how pension schemes operate.
Changes to rules and regulations governing pension
schemes have a lasting effect. Often bespoke advice is
required to understand how changes affect individual
schemes with the significant flows of business generated
tending to run for several years. Furthermore, as the
regulatory landscape gets more complex, in-house
schemes can be open to outsourcing administration
to specialist partners such as us.
Ongoing market-driven change: similar to regulation,
when there is lasting change in financial markets,
clients require advice on how best to navigate the new
environment. The fundamental shift from low to high
interest/inflation rates has largely been positive for
pensions schemes – the aggregate funding level across all
UK defined benefit schemes has improved by c.20% over
the last 2 years. As schemes look to lock in their surpluses
and/or consider their options, demand for the services
we provide, such as de-risking, rises. The number of
schemes in the pensions eco-system is declining as they
transfer out their liabilities to insurers but it’s a gradual
headwind for the industry and it continues to create a
surge in demand for de-risking advice.
The bulk annuities market is one area that is benefiting from
the move by pension schemes to de-risk and offload liabilities
– bulk annuity transaction volumes are currently between
£50-60 billion a year, compared to £30-40 billion previously.
“The pensions and insurance world
are increasingly overlapping, offering
us a major avenue of growth, not just
one for tomorrow, but also today too.”
Ben Bramhall
Co-Chief Executive Officer
Strategic report
15
XPS Pensions Group plc Annual Report and Accounts 2024
Regulatory change as a driver of activity: providing
thought leadership, XPS is often at the heart of the
regulatory debate and therefore well placed to offer
up-to-date guidance and advice. This year, we have been
involved in discussions with the Pensions Regulator,
the UK Government, HM Treasury and the Institute
for Fiscal Studies on how to drive greater investment
of pension scheme assets into productive finance.
Our research proposal “How DB pension schemes can
support UK growth and protect members” sets out how
regulations and a code of practice could deliver £100
billion in surplus to benefit members and the economy.
While discussions on our straightforward and safe
approach continue, we are already helping schemes
benefit now and are building relationships with sponsors
of large schemes (£1 billion plus) with which we are
exploring run-on for their DB pensions.
Growing market share: the overall fee market stands at
over £2.5 billion and has historically grown 3-4% per year,
although, recently, this rate has picked up due to inflation
and elevated levels of regulatory and market change.
Based on full-year revenues of £199.4 million, our market
share stands at 8%. Considerable scope remains for us to
increase this and, as our 21% revenue growth for the year
shows, this is what we are doing.
“We’re excited to be at the heart of
the debate with the UK Government
regarding how pensions can safely
invest in productive finance, and to
assist our clients in benefiting from the
opportunities generated.”
Paul Cuff
Co-Chief Executive Officer
As de-risking via bulk annuities or other insurance
solutions increases, so too does the overlap between the
pensions and insurance industries. Like all pension scheme
clients, insurers need best-in-class advice and solutions.
Working with insurance companies is therefore a long-
term growth opportunity for the business.
As the above demonstrates, there is no shortage of
growth opportunities to go for within our markets. To
maximise the opportunity set before us, we have in place
four core strategic pillars.
16
XPS Pensions Group plc Annual Report and Accounts 2024
Growing markets continued
Growth through expanding services: the increasing
overlap between the pensions and insurance industries
as well as broader life insurance opportunities outside of
bulk annuities offer clear avenues of growth. To capture
this, we need to ensure we have a continually expanding
offering. Technology plays a key role here both in terms
of maximising the commercial value of our proprietary
solutions in new ways and in developing new platforms.
The year under review saw us pioneer the use of AI in our
industry. Our AI Driven Actuary (AIDA) tool revolutionises
the assessment of member options for pension schemes
by quickly analysing large volumes of members’ data
and providing clear information on which members are
eligible for, and likely to engage with and benefit from,
member options. The tool simplifies and accelerates
the process for clients and trustees and allows action to
be taken at speed when needed, either on buy-out or
more generally to ensure fairness to members as market
conditions change. Because it can be used by schemes
of all sizes, AIDA helps trustees give more choice to
all members.
Partnerships are another route to capturing market-
driven growth. In line with this, we have been working
with one of the leading UK bulk annuity providers to
create a solution that enables small pension schemes to
access insurance solutions efficiently.
“We have a successful track record of
identifying, acquiring and embedding
businesses. We look at potential M&A
opportunities that meet our investment
criteria and strategic objectives as and
when they arise. As our sub 10% market
share demonstrates, however, we have
plenty of organic growth to go for.”
Ben Bramhall
Co-Chief Executive Officer
Co-Chief Executives’ review continued
This will involve us providing wide ranging support -
including pricing, transition and administration services.
The partnership serves as another demonstration of the
growing overlap between the pensions and insurance
industries and with it the expanding opportunity
set before us. To better reflect our growing overlap
between the pensions and insurance industries and the
expanding opportunity set ahead of us, we are making
a small change to our brand identity to trade as XPS
Group. There will be no change to our legal registered
company name.
Strategic report
17
XPS Pensions Group plc Annual Report and Accounts 2024
Growth through M&A: alongside the range of organic
growth opportunities, we have a successful track record
of identifying, acquiring and integrating businesses.
We look at potential M&A opportunities that meet our
investment criteria and strategic objectives as and when
they arise. As our sub 10% market share demonstrates,
however, we have plenty of organic growth to go for.
As we expand our services in tangential markets such
as insurance consulting, the M&A landscape stretches
beyond the pensions advisory and administration space.
Growing sustainably
Growing track record, growing profitability, growing
markets - all are key to the XPS investment case. So too
is growing sustainably. By growing sustainably, we can
secure the long-term future of the Group.
To grow sustainably, we need to safeguard the wellbeing
of our people and our environment.
People: the year under review saw the number of our
people grow by more than 100 to over 1,700.
We are proud of all our people for the contributions they
have made to the success of the Group over the years
and to the record set of results we are reporting today.
We are also proud of our people for what they do outside
of their everyday work - volunteering, fundraising, and
participating in or leading the many DEI networks that
are active across the Group. Regarding this last point,
we are particularly proud of the high DEI (90%+) score
we registered as part of our employee survey. DEI was
also one of the criteria assessed by The Sunday Times as
part of its evaluation process. We view our subsequent
inclusion in the publication’s list of Best Places to Work as
recognition of our ongoing commitment to ensure that all
our people feel valued and included at XPS.
Environment: FY 2024 was the third year in which XPS
has been a carbon-neutral business. As with previous
years this was achieved through continued reduction in
our own emissions as well as the purchase of UN-approved
carbon credits that cover Scope 1 and 2 emissions, as well
as Scope 3 emissions produced by suppliers.
Our ultimate aim is to achieve a significant reduction in our
direct carbon footprint. In 2023, we submitted our net zero
ambitions to the Science Based Targets initiative for review
and certification. Our approach is to source 100% of our
electricity from renewable sources by 2030 and promote
a low-carbon culture amongst staff and suppliers.
Outlook
The regulatory and market drivers behind our dependable
business model remain in place. The scale and reputation
we have built in our markets, the thought leadership
we provide on regulatory issues and the proprietary
technologies and solutions we have developed, position
us well to capitalise on the long-term opportunities in
front of us. We have seen continued strong demand of
our services since the beginning of the year and maintain
an active new business pipeline. We have continued to
grow market share, but with this still under 10% there is
considerable scope for us to grow further.
The increasing overlap between the pensions and insurance
industries through bulk annuities as well as broader life
insurance opportunities offer further meaningful avenues
of growth. To better reflect our growing overlap between
the pensions and insurance industries and the expanding
opportunity set ahead of us, we are making a small change
to our brand identity to trade as XPS Group*.
We are proud to be joining the FTSE 250 effective from
24 June which is a significant milestone for XPS and is
a testament to the hard work of our colleagues and the
backing of our clients and shareholders.
The strong momentum from FY 2024 has continued
into the new financial year and we remain confident in
delivering against our expectations for the current year.
Paul Cuff
Ben Bramhall
Co-Chief Executive Officer
Co-Chief Executive Officer
19 June 2024
19 June 2024
* No change to our legal registered company name.
“Our performance is on the rise, as
evidenced by increasing revenues,
improved operational efficiency,
progress toward carbon neutrality,
and higher employee Net Promoter
Scores. This consistent growth across
our primary indicators reflects our
commitment to excellence and
sustainable development.”
Paul Cuff
Co-Chief Executive Officer
18
XPS Pensions Group plc Annual Report and Accounts 2024
Stakeholder engagement
Section 172 Statement
Stakeholder engagement is central to the Group’s
strategy and sustainable success. The Board of Directors
of the Company acts in good faith to promote the
long-term success of the Company for the benefit of
its members as a whole, taking into account the factors
as listed in Section 172 of the Companies Act 2006:
a. the likely consequences of any decision in the
long term;
b. the interests of the Company’s employees;
c. the need to foster the Company’s business
relationships with suppliers, customers and others;
d. the impact of the Company’s operations on the
community and the environment;
e. the desirability of the Company maintaining
a reputation for high standards of business
conduct; and
f. the need to act fairly as between members of
the Company.
The Company’s purpose, values and culture are
established by the Board and embedded throughout
the Group and key decisions made.
When making key decisions, the Board is careful to
consider the interests and priorities of stakeholders, and
the consequences the decisions may have. The Board
recognises that stakeholders have differing interests and
gives careful consideration to balancing the views of all
stakeholder groups.
You can read about the Group’s principal risks and
key mitigations, including those in relation to clients,
employees and suppliers, on pages 47 to 52.
Key interests
Engagement strategy
Clients
• Products and services
• Service performance
and efficiency
• Competitiveness and value
• Compliance and
data protection
• Sustainable products
The Company engages with clients through key contacts who work day to
day with the clients. We also complete client satisfaction surveys every two
years, and the Board reviews the results. We hold conferences, webinars
and training exercises for clients throughout the year, of which we see a
fantastic uptake.
Ben Bramhall (Co-CEO) is Scheme Actuary on some of our largest client
accounts, and Paul Cuff (Co-CEO) also works on corporate advisory projects
from time to time.
Shareholders
• Financial performance
and growth
• Dividends
• Timely and relevant
communications
• Sound corporate governance
and stewardship
• Strategy aligned with
long‑term sustainability
and value creation
We engage with our shareholders in various ways throughout the year
including results roadshows hosted by the Executive Directors, and regulator
meetings with analysts, investors and potential investors.
The Investors section of the XPS website is updated throughout the year,
to include useful information for our shareholders.
The Board also attends the Annual General Meeting and is available to
answer shareholder questions. This year the Board also attended the
General Meeting held in March 2024.
Margaret Snowdon OBE, as the Remuneration Committee Chair, engages
through consultation and meetings with major shareholders in relation
to executive remuneration. This year, Margaret and Alan Bannatyne, as
Chairman, engaged with the Company’s 20 largest shareholders in relation
to the updated Directors’ Remuneration Policy, approved at the March 2024
General Meeting.
The Board recognises that a small number of shareholders voted against
Director re-elections and the Directors Remuneration Policy during the year,
and the Chairman and the Senior Independent Director have engaged at
length to understand their views.
Regulators
• Transparency and openness
• Proactivity and engagement
in consultation
• Compliance with regulation
and legislation
The Company works with the regulators by responding to requests
and consultations, submitting returns and attending industry meetings.
Margaret Snowdon OBE is an adviser to The Pensions Regulator and
regularly updates the Board on industry developments.
In November 2023, we completed the sale of NPT. We engaged with the
regulator as required throughout the disposal and approval was granted
prior to completion of the sale.
The FCA Consumer Duty has continued to be a pertinent issue for the
Board this year, and during the year the role of Consumer Duty Champion
was handed over from Margaret Snowdon OBE to Aisling Kennedy
(Non‑Executive Director). Aisling has engaged with the relevant teams
and subsidiary Boards to oversee the Group’s compliance with Consumer
Duty regulation.
Engaging with our stakeholders
Strategic report
19
XPS Pensions Group plc Annual Report and Accounts 2024
Key interests
Engagement strategy
Employees
• Engagement
• Reward
• Career opportunities
• Training and development
• Wellbeing
• Equality, inclusion and diversity
• Work-life balance and flexibility
Margaret Snowdon OBE is appointed as the Designated Employee
Engagement Non-Executive Director. Margaret is Chair of the Employee
Engagement Group (EEG) and updates the Board after each EEG meeting.
Employees complete an annual employee survey, the results of which are
analysed in detail and shared with the Board, and an action plan is agreed.
An external and anonymous whistleblowing hotline is available to employees
24/7; any reports can be escalated to the Board as required. You can read
more about employee engagement on pages 22 to 26.
During the year, Imogen Joss (Non-Executive Director) supported the
Group’s Values in Practice awards as Chair to the panel.
Suppliers
• Responsible procurement
and ethics
• Fair contract and payment terms
• Cost efficiency and value
The Group has a designated Procurement team and an external company
which engages with and carries out due diligence on its suppliers. We conduct
formal and transparent tender processes when required. An annual review
of existing suppliers, which provide services that are deemed as higher
risk (i.e. process large amounts of our data or have access to our offices),
is completed in addition to quarterly performance reviews with key
suppliers, and the Board is made aware of any issues in relation to supplier
performance or agreements. Our Supplier Code of Conduct communicates
what we expect from our suppliers. The Board annually approves the XPS
Modern Slavery Statement.
Communities,
charities and
environment
• Local and worldwide social
and environmental impact
• Health and safety
The Sustainability Committee is a Committee of the Board, and the majority
of members are Board members. The Committee Chair updates the Board
following each meeting. You can read the Committee report on pages 70
and 71. XPS is excellently positioned to ensure our positive impact is wider
than the Group itself as we advise our clients on sustainable investments;
you can read about this on pages 32 and 33. You can read the Group’s TCFD
report on pages 35 to 39, and our commitment to net zero on pages 28 and
29. You can also read about our community support on page 27.
Example of stakeholder key interests being considered and impacting decisions during the year:
Executive Directors’ remuneration:
Shareholders – Our shareholders’ key interests are the
growth of the Group and value creation. The Group
Chairman and Remuneration Committee Chair engaged
extensively throughout the year to understand our
shareholder views and introduced an element of bonus
deferral into the approved Directors’ Remuneration Policy
as a result of shareholder feedback.
Employees – Employees are interested in the alignment
of employee and Executive remuneration. The Board
engages on this topic via the Employee Engagement
Group, chaired by the Remuneration Committee Chair.
Regulators – We pride ourselves on our high standards of
corporate governance and compliance, including linked
to Executive remuneration.
National Pension Trust sale:
Shareholders – The proceeds of the sale of NPT were
used to reduce net debt, further strengthening the
Group’s balance sheet.
Employees – As part of the transaction, a small
number of XPS employees transferred to become
employees of the acquiring firm. It was important to us
to ensure cultural alignment of the Company and their
new employer, SEI.
Clients – We continue to support NPT and SEI
with a wide range of services including pensions
administration and consultancy services, for the
benefit of clients and members of the trust.
Regulators – The transaction was subject to regulatory
approval, we engaged proactively and effectively with
the regulator to ensure a smooth transaction, in line
with all regulatory requirements.
Snehal Shah
Chief Financial Officer
20
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability supports the Group’s mission and strategy.
It is embedded into our business model so that by
delivering on our mission to be leaders in pensions,
investment consulting and administration, we are able
to achieve better outcomes for all our stakeholders. This
is not just for our clients and members, but also for our
colleagues, the communities in which we operate and
the environment.
Reviewing our material issues
Last year, XPS conducted a dynamic materiality review
to assess whether the material issues underpinning our
sustainability framework were still relevant. The process
involved engaging with internal stakeholders as well as
conducting a thorough peer and landscape review. This has
resulted in a re-confirmation of our material issues.
Driving sustainability action
Ultimate responsibility for our sustainability strategy
rests with the Board of Directors. Oversight of the
implementation, progress and performance of the
strategy has been delegated by the Board to the
Sustainability Committee. You can read a report on
the activities of this Board Committee, which met five
times last year, on pages 70 and 71. Supported by
Executive sponsor Snehal Shah, a dedicated Working
Group is responsible for implementing the sustainability
framework as well as measuring and reporting progress
and performance.
Sustainability
Shaping a better future
“Doing the right thing lies at the heart of XPS. In line
with this, during the year we reviewed what is material
to our business and stakeholders, strengthened our
sustainability framework and continued to advance
sustainability across our business, working closely
with clients, communities and colleagues as we did so.”
Our material topics
Governance:
Business ethics and values
Corporate governance
Cyber security and data privacy
Human rights and modern slavery
Clients:
Sustainable products and services
Responsible investment
Advising clients and members
Environment:
Climate change and our environment
Environmentally friendly culture
People:
Employee engagement
Inclusion, equality and diversity
Learning and development
Employee health and wellbeing
Communities:
Community engagement
Charitable giving
Supply chain engagement
Our purpose is to shape and support safe, robust and well-understood
pension schemes for the benefit of people and society. It follows,
therefore, that sustainability is integral to delivering on our purpose.
With this in mind, we made significant progress towards further
embedding sustainability across our business last year.
Strategic report
21
XPS Pensions Group plc Annual Report and Accounts 2024
XPS promotes a diverse and inclusive culture, enabling people to realise their fullest potential.
Material issues
Employee engagement, inclusion, equality and diversity, learning & development, employee health & wellbeing
Empowering our people to thrive
Strengthening our framework
Building on the findings of the materiality assessment, we refreshed our sustainability framework to ensure it reflects
our corporate priorities. Working with external advisers, we developed a stronger narrative around “shaping a better
future” within the framework as well as clear ambitions for each of its pillars.
Being a responsible business
XPS has a culture of strong governance that minimises risk, upholds high standards in
conduct and complies with legal standards.
Material issues
Business ethics & values, Corporate governance, Cyber security & data privacy, Human rights & modern slavery,
Supply chain management
Strengthening
our communities
XPS contributes to the
local communities near our
offices, working together
for a better future.
Material issues
Community engagement,
Charitable giving
Protecting
our environment
XPS works to mitigate
climate change by
minimising its impact on
the environment.
Material issues
Climate change & environment,
Environmentally friendly culture
Supporting our clients
and members
XPS supports its
clients and members to
optimise outcomes.
Material issues
Sustainable products & services,
Responsible investment, Advising
clients & members
Ambitions and targets
Empowering our people to thrive
XPS promotes a diverse and inclusive culture, enabling people to realise their full potential
Ambitions and targets:
• Reach 37% female senior managers by 2028
• Maintain employee approval rating of at least 90%
Strengthening our communities
XPS supports the people living near our business operations with the challenges they face
Ambitions and targets:
• Increase our charitable giving and employee volunteering
Protecting our environment
XPS works to mitigate climate change by minimising its impact on the environment
Ambitions and targets:
• Achieve net zero by 2050
Supporting our clients
and members
XPS supports its clients and members to optimise outcomes
Ambitions and targets:
• Maintain satisfaction level of at least 80%
• Encourage sustainable investment
22
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability continued
Empowering people to thrive
Our people are fundamental to our success. XPS is committed to fostering
a positive and collaborative work environment, one in which all our people
are valued members of diverse and inclusive teams. Our goal is to enable
colleagues to flourish and excel.
We empower colleagues to take control of their careers,
whilst aligning with organisational goals. An important part
of this is considering the specific needs of each individual
so that their full potential can be unlocked and positive
outcomes can be achieved. As such our strategy is to
foster a culture of autonomy and trust within a diverse and
inclusive workplace. We do this by clarifying our vision and
goals, encouraging open feedback, supporting colleagues
to set personal and professional targets and recognising
and celebrating their achievements. This way we help
our people to meet their goals and at the same time we
maintain a strong and resilient talent pool and pipeline.
Engaging our people
XPS believes creating a positive and collaborative
work environment is essential to achieving business
success and meeting client expectations. Engaging
with colleagues through various channels, such as the
Employee Engagement Group, ensures that their voices
are heard and their interests are considered in the
decision-making process, while regular communication
from leadership, including regular messages from our
Co‑CEOs and town halls, promotes transparency and trust.
The use of tools such as “The Happiness Index”, a
comprehensive feedback platform, exemplifies the
Group’s commitment to constant improvement and
employee wellbeing. Tools such as these not only provide
a platform for and facilitate continuous feedback, but
also drive engagement and organisational agility. They also
ensure employees are motivated to contribute to the
overall success and sustainability of the business.
“XPS has cultivated an environment where “doing the
right thing” and trust are not just valued, they are the
bedrock of our culture. It is an ethos that empowers
colleagues to contribute meaningfully, driving impactful
innovations that resonate across our organisation and
beyond, and helps shape a better future.”
Rachel Gillion
HR Director
The positive feedback received from XPS colleagues is
a testament to the Company’s commitment to creating
a supportive and rewarding work environment. With 98%
of employees affirming that XPS is a good place to work
(FY 2023: 98%) along with a 99% commitment rate to the
Company’s success (FY 2023: 99%), our culture fosters
a strong sense of belonging and dedication.
Our Values in Practice (VIP) Awards, which have now
been running for four years, provide us with a formal
platform with which to recognise and reward employees’
contributions, further embedding the values of excellence
and teamwork within the Company’s culture. This year we
had over 110 nominations from across the business.
In terms of incentivising employees, we have adopted
a comprehensive approach to ensure personal
achievements are aligned with the Company’s broader
business objectives. Our holistic strategy, which
includes bonus schemes, share plans and competitive
remuneration packages, motivates colleagues, and also
aligns their efforts with the Company’s goals, fostering
a unified drive towards continued success and growth.
Promoting learning and development
This year, our commitment to empowering colleagues in
their career development journey has been stronger than
ever. Through increasing the suite of third-party learning
and development opportunities, we have seen our
colleagues flourish and our organisation thrive.
Strategic report
23
XPS Pensions Group plc Annual Report and Accounts 2024
The Group’s learning and development approach centres
around nurturing the skills our people need to execute
our organisational strategy effectively. Our goal is
twofold: firstly, to establish a strong pipeline of emerging
talent; secondly, to prepare future senior leaders. Both goals
are achieved by fostering behaviours that are aligned with
our core values.
In addition to our graduate Actuarial and Administration
programmes, we continued to support early career talent
through our fast-growing apprenticeship programme.
Apprentices are integral to every aspect of our business
and by the end of FY 2024 we had welcomed 111
apprentices across various disciplines, an 85% increase
on the previous year.
We already have an established induction programme,
but FY 2024 saw us launch our internal XPS Mentoring
Programme to help individuals become their best
and to encourage a high-performance culture that is
underpinned by continuous learning and development.
Currently, we have 40 pairs engaged in this programme.
We support the development and career aspirations of
our people at all levels through technical training as well
as management development programmes for our more
senior colleagues. Support is also provided for colleagues
studying for professional qualifications via bespoke
technical programmes across all areas of our business.
During FY 2024, we recorded over 31,000 hours of
training, 13% higher than FY 2023.
98%
think “XPS is a good place to work”
111
apprentices at XPS in FY 2024
31,000+
hours of training in FY 2024
24
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability continued
Empowering people to thrive continued
XPS is committed to promoting equality, diversity and inclusion in
the workplace. We foster a culture of belonging, where everyone
within XPS is encouraged to share, with confidence, their opinions
and ideas in a way that respects the value of our differences.
Improving gender equality
Our journey towards a more diverse workplace is marked
by tangible actions and measurable progress. Last year,
for example, XPS launched its gender equality plan.
Endorsed by the Co-CEOs, the plan sets out specific
measures to drive diversity. To underline this, we became
a signatory of the Women in Finance Charter in FY 2024
and we set ourselves the target to have 37% female
representation in senior management by 2028. We are
already making progress here – by the end of FY 2024,
35% of our senior management positions were held by
women (FY 2023: 31%).
Progress is also being made in terms of closing the mean
gender pay gap across the Group – this was reduced
by a further 2.1% to 22.1% last year. We also rolled out
mandatory diversity training for managers, respectful
behaviour training for all colleagues and internal and
external mentoring programmes, and we reviewed our
people policies to ensure family-friendly commitments
such as flexible working, the buying and selling of holiday
and swapping bank holidays are firmly established across
the Group.
Disability
(63.0% staff disclosure)
Yes
8.5%
No
53.3%
Undisclosed
37.0%
Disability diversity at XPS
Age distribution
<20
2%
21-30
30%
31-40
25%
41-50
24%
51-60
16%
61+
3%
Age diversity at XPS
Sexual orientation
(71.6% staff disclosure)
Heterosexual
63.1%
LGBT+
4.1%
Prefer not
to say
4.4%
Undisclosed
28.4%
Ethnicity
(85.8% staff disclosure)
White
72.9%
Ethnic
minority
10.7%
Prefer not
to say
2.1%
Undisclosed
14.2%
Sexual diversity at XPS
Ethnic diversity at XPS
Gender diversity at XPS
Males
Females
No.
%
No.
%
Board
5
56%
4
44%
Group
890
50%
904
50%
Excludes
NEDs
Partners & Managing Consultants
85
65%
45
35%
Other employees
802
51%
859
49%
Strategic report
25
XPS Pensions Group plc Annual Report and Accounts 2024
Promoting disability inclusion
In addition to gender, we enhanced our approach to
disability inclusion. We have put in place a workplace
adjustment policy. We provide reasonable adjustments
for disabled job applicants and we guarantee interviews
for disabled candidates who meet the essential job
requirements. We were recognised for our efforts
by achieving Disability Confident Employer Level 2
in FY 2024.
Becoming a menopause-friendly employer
Last year, XPS initiated comprehensive menopause
training for managers, focusing on engagement, culture
enhancement and policy improvement. Additionally, we
launched new tools and guidance on our intranet. We also
spread awareness with the introduction of menopause
champions. As a result, XPS achieved Menopause in the
Workplace accreditation in FY 2024.
Celebrating inclusion and diversity
Alongside our diversity action, XPS promotes an inclusive
workplace so that everyone feels welcome and involved.
Actions taken include investing in our six employee
networks. Over the course of the year, our networks
organised over 23 webinars with experts covering issues
such as gender equality, menopause, mental health,
disability, neurodiversity, ethnicity and LGBTQIA+.
Our networks also ran monthly discussion groups and
podcasts where colleagues share their views on subjects
including allyship and what inclusion means to them.
Reflecting our colleagues’ efforts to foster a culture of
inclusivity, we were honoured to receive the Diversity and
Inclusion Excellence Award at the UK Pensions Awards
last year.
4.6/5 stars
XPS rating on Glassdoor for diversity and inclusion
Our partnerships
See more information about our partners on our website:
www.xpsgroup.com/sustainability/employees/
“Being recognised with the
Diversity and Inclusion Excellence
Award at the UK Pensions Awards
underscores our commitment
to promoting diversity and
inclusion within both XPS
and the broader industry.”
Charlotte West
Head of Employee Engagement
26
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability continued
Empowering people to thrive continued
Driving health and wellbeing
Our commitment to colleague wellbeing underpins our
efforts to foster a supportive environment for all at XPS.
Our comprehensive approach includes providing our
employees with the resources, tools and advice they
need to achieve a healthy body and mind, a fair work-life
balance, healthy relationships and sound finances. In our
FY 2024 survey, we observed a promising improvement
in work-life balance. Favourable work-life balance scores
increased by 4%, a positive result that can be attributed
to several strategic actions taken by XPS:
• The business proactively focused on allocating
resources and recruiting to bridge gaps. By strategically
addressing talent shortages, we ensured that
colleagues received the necessary support.
• Our flexible working arrangements empowered
colleagues to balance their professional and personal
commitments effectively to help achieve a healthier
work-life equilibrium. We gave colleagues the option to
use bank holidays flexibly as well as greater flexibility
around their precise working hours between 8.00am
and 6.30pm. Colleagues are also able to reduce their
working hours if it suits their personal needs. We were
early adopters of the new legislation on the rights
for employees around flexible working and paid and
unpaid leave.
• We have actively promoted an environment where
colleagues can have transparent conversations about
work-life balance with their line managers. We have
launched wellness initiatives that address physical,
mental, financial and emotional wellbeing, recognising
that a balanced life encompasses more than just work.
Looking ahead
For FY 2025, we will continue to invest in tailored
training and development initiatives to encourage
continuous learning, upskilling and increased use of
technology (including AI). Our focus is on health and
wellbeing centres, enhancing manager effectiveness
with an emphasis on people skills and providing robust
support for team wellbeing, prioritising employee
mental health through wellness events and cultivating
an environment of active listening.
Action plans developed in response to the FY 2024
employee engagement survey target key areas such
as career progression, learning and development and
a request for stronger office communities. Inclusion
and diversity efforts continue to shape our culture.
Strategic report
27
XPS Pensions Group plc Annual Report and Accounts 2024
Strengthening our communities
XPS is deeply committed to supporting its local communities,
not just because the talent we need to attract (and therefore
our continued success) depends on the communities in which
we operate, but also because it is the right thing to do.
Our proactive approach aims to create positive change.
Through active community involvement, fundraising
initiatives and responsible supplier management, we
can collaboratively tackle the challenges our local
communities face.
Encouraging volunteering
The XPS Volunteering Initiative was successfully launched
in FY 2023 and we were able to increase our support
of local communities further in FY 2024. As part of the
Initiative, 40 employees from across the country took
the opportunity to take a day’s paid leave to take part
in a volunteering activity organised by XPS (FY 2023:
15 colleagues). Activities ranged from beach cleaning
in Lough Shore, Northern Ireland, to renovating a
community centre in Leeds and handing food parcels to
the homeless in London.
Supporting communities financially
At XPS, we support charities nationally. We also
undertake fundraising activities for charities in the local
communities where we operate. Last year, we introduced
a matched fundraising commitment to encourage our
employees to support charities of their own choosing.
As part of our commitment, funds raised are matched
by XPS up to a certain value.
During the year, more than 50 employees and teams
raised funds for 30 different charities including the
Roxburghe House Day Care Centre, Portsmouth
Down Syndrome Association, Maddy’s Mark and many
more. In total, the Group contributed over £67,000
(FY 2023: £58,000).
“I am proud that we increased our employee
volunteering last year. It has a measurable impact on
engagement for our people and of course delivers
positive impacts for our charitable partners.”
Charlotte West
Head of Employee Engagement
From abseiling down buildings and running marathons
to head shaving and sleeping out, our employees have
gone above and beyond to raise money for these worthy
causes and more. Our biggest fundraising effort this year
saw employees raise over £5,000 for Macmillan Cancer
Support in September, a sum which was matched by
the Company.
Creating a sustainable supply chain
We continue to improve procurement governance to
extend our diversity and sustainability goals further into
the supply chain. In FY 2024, we updated the Supplier
Code of Conduct to include references to modern slavery
and over the coming years we will include environment,
social and governance and diversity, equity and inclusion
references too.
Looking ahead
As part of our ongoing commitment to strengthening our
local communities, we plan to expand our volunteering
opportunities further. Upcoming initiatives include local
conservation projects, job coaching with Business in
the Community and career planning sessions in schools.
From a procurement point of view, we will continue to
include additional sustainability considerations in our
Supplier Code of Conduct.
30
charities supported in FY 2024
28
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability continued
Protecting our environment
We are focused on mitigating our environmental impact and
promoting a green and stable future for our business and
communities through effective stewardship. Through decisive
and meaningful actions, especially regarding our climate impacts,
we are building a strong foundation for a sustainable future.
As part of our commitment to have a positive impact on
the environment, XPS deployed the XPS Planet Group,
a Group-wide Environmental Management System,
to address our environmental risk and compliance
obligations as well as drive performance. The XPS Planet
Group, which was externally certified to ISO 14001 in
seven of the Group’s offices by the end of FY 2024
(FY 2023: four), utilises the integrated risk management
and internal control framework to manage risks. We are
aiming to obtain certification for all our office locations
by the end of FY 2025.
“This year we formally submitted our climate
plan and commitments to the Science Based
Targets Initiative (SBTi), a major milestone in
our journey to net zero.”
Matt Wellbelove
Environmental System Manager
Developing our net zero pathway
Last year, XPS developed a net zero roadmap in accordance
with current scientific demands to limit warming to a level
consistent with a 1.5˚C core temperature increase by 2100.
This formed the basis for the formal submission of our
ambitions to the Science Based Targets initiative (SBTi)
for review and certification. Our submission underscores
our dedication to operating in a manner that is both
environmentally responsible and economically sustainable.
In future we anticipate that, with the support of the SBTi,
we will be in a position to disclose our net zero pathway
in more detail.
Our net zero journey to date
July 2022
First TCFD disclosure
June 2023
XPS commits to
100% renewable
electricity by 2030 and
alignment with SDGs
December 2023
XPS officially submits
its near-term target
setting framework
to the SBTi
October 2021
Carbon neutrality achieved for
the first time across our entire
value chain for the
FY 2020–FY 2021 period
Strategic report
29
XPS Pensions Group plc Annual Report and Accounts 2024
60%
60% of our square footage is supplied by
certified renewable energy in FY 2024
Our future goals
2030
Achieve 100%
renewable electricity
2040
Achieve complete phase-out of
natural gas in all properties
2035
Reduce direct emissions by 60%
and indirect emissions in supply
chain by 40%
We are currently working towards hitting the interim
milestones we have set ourselves: achieving 100%
renewable electricity by 2030; and retiring gas heating
from our direct emissions inventory by 2040. Our climate
ambition therefore relies on our continued efforts to
secure renewable electricity and heating sources for our
offices, and also the deployment of efficient property
technology. By the end of FY 2024, 60% of our electricity
consumption across our estate was generated from
renewable sources.
Additionally, we recognise we must tackle our indirect
emissions by applying greater scrutiny to our suppliers,
evolving our product offering and improving our
technological efficiency.
Our approach is to deliver net zero at the soonest
opportunity whilst avoiding adverse impacts on our
operations, quality and cash flow. In line with this
and for the third year in a row, FY 2024 saw us offset
our remaining direct and indirect greenhouse gas
emissions. retiring high quality Gold Standard carbon
credits for sustainable projects that support the
group’s commitment to global sustainability and the
UN’s Sustainable Development Goals. Our most recent
projects include investment in sustainable biofuel
solutions and clean wind energy.
30
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability continued
Improving our environmental performance
Reducing our emissions in FY 2024
During FY 2024, XPS achieved a fourth successive year
of combined Scope 1 and 2 carbon reductions, owing to
our focused transition to renewable electricity and more
sustainable properties. We made the strategic decision to
decommission two of our legacy properties - Wokingham
and Bristol Cote House - as the facilities no longer aligned
with our brand ethos or sustainability objectives, or met
our threshold for commercial justification.
Scope 1 emissions for FY 2024, relating to gas-fuelled
heating, increased slightly due to the changing carbon
intensity of natural gas as a result of the Ukraine war. We
expect this to decrease next year to reflect a full year
without the two legacy properties mentioned above.
Scope 2 emissions for FY 2024 decreased year on year
due to more efficient equipment and office capacity use.
Adjusted for renewable electricity, they decreased even
more as we increased our renewable consumption.
There was a slight increase in FY 2024 in Scope 3
emissions from business travel and employee commutes.
This can be attributed to the resurgence of office‑based
work following the Covid-19 pandemic and the expansion
of our business. Nonetheless, emissions from travel have
maintained a significant downturn compared to the
baseline figures of FY 2020, with the intensity of travel
emissions per full‑time equivalent employee continuing
to decline year over year.
Annual greenhouse gas emissions and energy use data from UK-based activities under SECR for FY 2024:
FY 2024
FY 2023
FY 2022
Scope 1 emissions (tCO2e)
161
157
212
Scope 2 emissions – Defra location based (tCO2e)
193
215
350
Scope 2 emissions adjusted for renewable energy1
1061
1851
350
Energy consumption used to calculate emissions (kWh)
1,812,093
1,976,286
2,655,443
Scope 3 emissions (tCO2e)
1,191
1,189
1,928
Total gross emissions
1,545
1,561
2,490
Total net emissions
1,458
1,531
2,490
Intensities
FY 2024
FY 2023
FY 2022
Revenue intensity – Scope 1 & 2 (tCO2e/£m)
1.7
2.1
3.2
Revenue intensity – Scope 1, 2 & 3 (tCO2e/£m)
7.7
9.2
14.2
FTE intensity – Scope 1 & 2 (tCO2e/FTE)
0.2
0.2
0.3
FTE intensity – Scope 1, 2 & 3 (tCO2e/FTE)
0.9
1.0
1.4
Notes:
All activities are UK based. tCO2e = tonnes of CO2 equivalent. Unless otherwise noted all conversion to carbon is based on current Department
for Education, Food and Rural Affairs (‘Defra’) factors. Calculations are made in accordance with the SECR guidance and the GHG Protocol.
FTE = Full time employees as at 31 March 2024.
1 XPS has transitioned to certified renewable energy in a number of its locations, enabling the Group to claim zero-emissions relating to
associated energy consumption, as per the market-based accounting method. In addition to the progress made on renewable electricity,
our market-based Scope 2 emissions declined further last year, reflecting the adoption of the more accurate supplier “fuel-based”
conversion rate as supported by the GHG Protocol. This conversion rate uses data direct from suppliers (where available) to better estimate
non‑renewable supply. We have applied this methodology to prior disclosures and found that a discrepancy of less than 1% occurred.
Strategic report
31
XPS Pensions Group plc Annual Report and Accounts 2024
Embedding sustainability in our culture
Integrating a sustainability philosophy and embedding
a green culture throughout the business is fundamental
to the Group achieving its environmental ambitions.
The business continues to incentivise the green cultural
transition by offering benefits as part of the Group’s
salary sacrifice options including cycle to work, electric
car and tree planting schemes.
During the past year, XPS organised its first
environmentally focused volunteering day, led and
organised by our local XPS Planet Group Champions.
The successful pilot scheme contributed to the
development and roll-out of the new Group-wide
Volunteering Policy, which encourages and facilitates
local volunteering across the UK for causes that are
meaningful to our colleagues whilst continuing to align
with the Group’s culture and values.
Looking ahead
For FY 2025, we will continue to develop our net zero
roadmap, which will be submitted for verification with
the SBTi. In addition, we will focus on gaining additional
ISO 14001 certifications across our property portfolio.
We will continue to develop and deploy our sustainable
procurement policies. We will also prepare the business
ahead of forthcoming environmental and climate
regulatory demands such as the IFRS Sustainability
disclosure standards S1 and S2 and Transition Plan
Taskforce disclosure requirements.
32
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability continued
Supporting our clients and members
We are trusted advisers of pension funds on which millions of people depend.
To support our clients best, we aim to develop long-term partnerships with
them. Sustainability and stewardship increasingly play an important role in
these partnerships. During the year, we made significant steps to integrate
sustainability considerations further into our service offering.
Our goal is to help clients and scheme members achieve
positive long-term outcomes. Our culture and values
help us promote sustainable services for our clients.
We incorporate sustainability into our client services and
solutions, and we ensure sustainability considerations
are embedded in all our investment research and advice.
We also focus on keeping all our clients’ money safe from
scams and fraud.
Helping clients navigate sustainability
Sustainability considerations are embedded into all
the investment recommendations and client advice
we provide for the £104 billion assets we have
under advisement. We deliver detailed sustainability
reporting to all clients. In addition to feedback on their
sustainability ratings, we detail wider sustainability
factors (such as exposure to sin industries, climate
transition alignment and engagement on sustainability
across the portfolio) as well as carbon emissions
reporting. We have partnered with a market-leading
climate change data provider so that we can provide
enhanced reporting and analysis of climate change
risks – we have used this to support certain clients with
their regulatory climate change reporting requirements,
aligned with the Task Force on Climate-related Financial
Disclosures (TCFD) framework.
“The investment markets play a significant role in
addressing pressing societal challenges such as climate
change, and considering these issues is key to ensuring
secure long-term outcomes for scheme members. We
provide our clients with comprehensive information and
advice on sustainability considerations to inform how they
manage their schemes.”
Alex Quant FIA
Head of ESG Research – Investment
During the year, we carried out our fourth annual
sustainability ratings exercise, which involved reviewing
227 funds run by 53 investment managers. In the interest
of transparency and raising the bar for the industry, we
provided feedback to all those managers who submitted.
We also held follow-up face-to-face meetings with those
managers who received a red rating, as well as many
others, to discuss areas for improvement.
Driving sustainable investment
For those clients who wish to go further, we have
a growing number of buy-rated funds that target
environmental and social outcomes alongside their
financial objectives. In FY 2024, we formalised our
Impact Designation, which is a label we award funds
that achieve our Sustainable Designation but go further
by having explicit non-financial targets alongside
their financial objectives. For example, funds that set
net zero targets can earn our Sustainable or Impact
Designations. We awarded three investment funds
our Impact Designation. We have now awarded our
Sustainable Designation to 39 funds across all asset
classes (FY 2023: 34) to help our clients meet their
financial objectives whilst targeting long-term social
and environmental outcomes.
At the end of FY 2024, XPS had 36 clients in sustainable
funds representing £2.6 billion (FY 2023: 23 clients,
£1.9 billion) in assets under advisement.
Strategic report
33
XPS Pensions Group plc Annual Report and Accounts 2024
£104bn
assets under advisement with XPS clients
39
funds awarded Sustainable Designation by XPS
10,000+
members’ transfers protected by XPS
Creating a sustainable pensions industry
In FY 2024, we joined the Net Zero Investment Consultant
Initiative and we worked to action the commitment we
have made to take net zero considerations to all our
investment clients and to embed these into our research
framework. We also retained our status as a signatory of
the UK Stewardship Code, having been successful at the
first time of asking in 2021. We contributed to a number
of public consultations relating to sustainability issues,
including the DWP Taskforce for Social Factors guidance
and the FCA consultation on Finance for Positive
Sustainable Change.
Keeping members safe
We remain focused on keeping the members of the
pension funds we administer safe. Our Scam Protection
Service continues to support trustees and our clients’
members by identifying and managing suspicious activity
in relation to transfers. In particular, our Scam Protection
team uses a phone call with scheme members to obtain
robust information about their transfer and uses this
to identify any suspicious activity. In addition, XPS is
an advisory member of the Pension Scams Industry
Board. Our service goes beyond what is required in the
regulations and we continually look out for trends in
behaviour to help spot warning signs of new potential
scams. Our Scam Protection Service has helped protect
over 10,000 members’ transfers to date, totalling over
£2 billion.
To minimise social engineering threats, XPS rolled out
Abnormal Email Security, which uses AI and behaviour
analysis to detect malicious emails. In FY 2024, all our
colleagues undertook mandatory training on protecting
client, employee and corporate information, including
regular phishing awareness exercises. Our Information
Security Management System (ISMS) was certified to
ISO 27001 in FY 2022 and the effective deployment of
our ISMS is independently verified through our Cyber
Essentials Plus certification and BitSight risk scoring.
We recognise that many pension members we deal with
may be experiencing one or more vulnerabilities, and
that we must take care to listen to our customers’ needs
and identify when we should apply an extra duty of care.
Our Dealing with Vulnerable Customers Policy provides
guidance to all employees around vulnerabilities our
customers may experience, barriers they may face when
dealing with professional service providers such as us,
and what we can do to make our services as accessible
and inclusive as possible, adapting to customers’ specific
needs wherever possible.
Looking ahead
For FY 2025, our focus remains on further embedding
sustainability within the advice and services we give to
our clients, whilst keeping on top of the fast-evolving
regulatory landscape.
34
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability continued
Being a responsible business
Good governance underpins both our approach to sustainability and the
purpose and strategy of our business. At XPS, we pride ourselves on our
strong culture and values, which are fully integrated throughout our business.
Both our culture and values promote the right behaviours, whilst delivering
our strategy and supporting our stakeholders.
Ensuring strong governance
We are proud to comply with the UK Corporate
Governance Code. Starting at the top of our business
and our Board of Directors, we uphold high standards
of governance. This year, we strengthened our Board
with the appointment of two additional Non-Executive
Directors, and are proud to have maintained the gender
diversity of our Board at 44% female. You can read more
about the governance and composition of our Board on
pages 56 to 62.
During the year, we also continued to demonstrate our
sustainability commitments by including sustainability
within our Executive Directors’ bonus objectives and
share incentive award vesting criteria. You can read about
remuneration on pages 72 to 95.
100%
compliance training rate in FY 2024
Maintaining a culture of compliance
We have core policies and procedures in place that
ensure we uphold high standards of governance and
act as a responsible business with all our stakeholders in
mind. Our Business Code of Ethics outlines the principles
and values that we expect all our people to adhere to
in relation to matters such as treating customers fairly,
inclusion and diversity, financial crime and dealing with
vulnerable customers. We also have an Anti-Bribery and
Corruption Policy in place, outlining our zero tolerance
for activities and behaviours that are not in line with our
values, especially in relation to financial dealings.
Each year, all our employees are required to
complete modern slavery training, which outlines
the expectations of our business and our suppliers
to behave in a way that is respectful of human rights.
This year our supplier onboarding process has been
strengthened and adherence to our Supplier Code
of Conduct is now a condition of doing business
with XPS. We publish our Modern Slavery Statement
annually and you can read it on our website at
https://www.xpsgroup.com/modern-slavery-statement/.
All our employees are required to complete an annual
programme of compliance training, covering topics such
as financial crime, bribery and corruption, insider trading,
modern slavery, data protection and cyber security.
During FY 2024, the 100% training completion rate across
the Group was maintained (FY 2023: 100%).
Strategic report
35
XPS Pensions Group plc Annual Report and Accounts 2024
Task Force on Climate-related Financial Disclosures
This report includes disclosures consistent with the TCFD framework and all
11 TCFD recommendations (pursuant to LR 9.8.6 R (8)). The most recent TCFD
and FCA-related guidance has been considered and appropriately informs
the content of this disclosure. Some elements of disclosure refer to extracts
within this report that should be read in conjunction with this disclosure.
This report, together with the statements throughout this report, meets the
requirements of TCFD.
Governance
a) Describe the
board’s oversight of
climate‑related risks
and opportunities.
XPS recognises that strong risk governance is fundamental to the success of the business
including those risks relating to the environment and climate change. XPS utilises a
number of traditional management committees to ensure risks within the business are
appropriately controlled including the Sustainability Committee, Risk Management
Committee, Audit & Risk Committee and the Remuneration Committee.
The Board-level Sustainability Committee, chaired by Non-Executive Director Sarah Ing,
provides a dedicated mechanism for sustainability-related risks and opportunities, such
as climate, to be reported to the Board on at least a quarterly basis. The Committee
is also responsible for establishing the XPS sustainability framework, overseeing its
implementation and the ongoing monitoring of progress on related topics. You can find
a detailed report of Sustainability Committee on pages 70 and 71.
The Risk Management Committee and Audit & Risk Committee are integral to the
governance structure within the business. These Committees are responsible for Group
risk management and the internal control framework and have oversight of identified
risks, including those relating to climate change. You can find a detailed report on the
Risk Management Committee and Audit & Risk Committee on pages 66 to 69.
The Remuneration Committee determines executive remuneration including approval of
executive incentive schemes, which incorporate sustainability performance objectives.
You can find a detailed report on the Remuneration Committee on pages 72 to 95.
b) Describe
management’s
role in assessing
and managing
climate‑related risks
and opportunities.
The Group manages all risk in an integrated fashion, including those relating to climate,
via its risk management and internal control framework which is detailed on page 48.
The Group’s sustainability framework, which incorporates the Group’s climate risk,
strategy and ambitions, is integrated within all management-level decision-making ensuring
sustainability and climate considerations around risks and opportunities are an appropriately
weighted input into group-level decision making, strategy, budgeting, objectives, remuneration
and, where appropriate, major capital expenditures and acquisitions.
The Group’s certified Environmental Management System acts as the unified mechanism
to report relevant climate-related progress to management as well as the Board via its
regular auditing activities, data analytics and assessments, helping to assess the success
of mitigating climate-related risk.
Management has established a Sustainability Working Group that brings together,
on a regular basis, representatives from across the business to monitor progress and
performance on managing climate-related risks and opportunities.
Strategy
a) Describe the climate-
related risks and
opportunities the
organisation has
identified over the
short, medium, and
long term.
XPS’s definition of short, medium and long term is aligned with those defined by
the Group’s net zero trajectory and informed by the Science Based Targets initiative
boundaries: short term being 0–5 years, medium term being 5–10 and long term being
anything 10 years and over.
36
XPS Pensions Group plc Annual Report and Accounts 2024
Strategy continued
a) Describe the climate-
related risks and
opportunities the
organisation has
identified over the
short, medium, and
long term. continued
In the short term up to 2030, the climate-related risk profile for XPS remains consistently
low across different climate change scenarios, with the swiftest transition to a 1.5-degree
pathway posing the greatest risk. This is due to the expected demands for enforced
technological upgrades affecting equipment, early retirement of properties and
additional compliance needs requiring additional investment and resource posing a
capital and reputational risk whilst navigating an anticipated negative reaction within the
marketplace due to the capital required globally to transition at pace. The sustainability
framework and net zero commitment of XPS are strategically designed to transition at
pace and enable the Group to act proactively and to operate effectively in adverse swift
transition environments. There is an opportunity within slower moving transitions for
XPS to bolster its reputation and client appeal and retention by acting in advance of the
marketplace as well as opportunities to make efficiency related savings. Early adoption
of new technology, yet to be determined, is likely to be accompanied by a risk to
capital and effectiveness. XPS will ensure new technology is appropriately assessed
before any deployment so that the Group’s investment and operations are protected
and appropriate.
In the mid-term, spanning from 2030 to 2035, the Group’s comprehensive plan for
achieving net zero will most likely pre-emptively mitigate major climate-risks from the
global shift in the timeframe. There is some expectation that markets will recede in
this period due to legislation and transitional activities posing both a cash flow and
compliance risk as well behavioural changes potentially influencing consumer selection.
The cost of business in general is expected to increase posing a potential risk to
profitability but the Group currently expects this incremental cost to be immaterial to
its operations and the cost of the XPS transition to sustainable energy and facilities to
present a low impact on XPS cash flow and operations.
Looking further ahead, from 2035 to 2050, XPS anticipate to be working on the
addressing and eradicating the Group’s residual emissions, with a heavy reliance on
technological advancements for carbon capture, removal, and sequestration. The
efficiency and affordability of such technologies are currently uncertain, presenting
a potential risk of capital demands. A successful XPS transition will be reliant upon
local infrastructure achieving its own ambitions. This presents a risk of XPS failing to
achieve its net zero objectives and generating excessive residual emissions. A risk of
significant carbon taxation is viable in this period and may pose a significant potential
risk should XPS fail to meet its net zero objectives due to internal or external influencing
factors. Potential market downturn during this period is likely to impact global cash flow
potentially affecting profitability. XPS plans to significantly reduce emissions ahead of
this scenario, forecast to require modest treatment for residual emissions, reducing the
potential for considerable outlay.
Task Force on Climate-related Financial Disclosures continued
Strategic report
37
XPS Pensions Group plc Annual Report and Accounts 2024
a) Describe the climate-
related risks and
opportunities the
organisation has
identified over the
short, medium, and
long term. continued
In all scenarios beyond 2050, there will be a significant increase in adverse climate
events impacting many industries and societies including agriculture, accommodation,
infrastructure, logistics and manufacture. It is likely that some of these impacts
are already unavoidable. XPS does not expect its direct operations to be critically
impacted by these events. However, XPS does expect the cost of business to increase,
significantly for the Group’s supply chain operating or investing in vulnerable industries
or geographies. There is a risk that these suppliers, or those with connections to these
suppliers, experience service interruptions or significantly increased cost of service which
may impact the Group’s ability to provide services itself. XPS plans to manage this risk
and its supply chain carefully in the interim to reduce its third-party risk in this area. The
Group’s supply chain risk is currently considered low due to the type of services procured
and the geographic suppliers selected however XPS will continue to deploy its approach
to further minimise this risk by seeking suppliers that reflect the long term XPS morals
and have sufficiently resilient operations ensuring XPS continue to have a robust supply
chain. The most optimistic outlooks foresee a considerable reduction in GDP and market
conditions. XPS currently consider its operations to be financially equipped and robust
to operate effectively in these conditions; however, the financial landscape is yet to be
foreseen and trading conditions are anticipated to be universally impacted posing a
potential risk to the XPS operations and its capital.
Opportunities have been identified within the Group’s analysis which suggest XPS’s
proactive approach will bolster the Group’s reputation and facilitate client retention
and appeal within the marketplace as well as offering cost saving opportunities by
deploying more efficient technology. Opportunities are most beneficial in slower
moving marketplaces.
For more information, see the Risk Management section on pages 47 to 52 and refer to
the Environment section of the Sustainability section on pages 28 to 31.
38
XPS Pensions Group plc Annual Report and Accounts 2024
Task Force on Climate-related Financial Disclosures continued
Strategy continued
b) Describe the impact
of climate-related
risks and
opportunities on the
organisation’s
businesses, strategy,
and financial planning.
The Group’s sustainability framework ensures that climate-related risks and
opportunities are considered within Group-level decision making, strategy, budgeting,
objectives, remuneration and, where appropriate, major capital expenditures and
acquisitions. Whilst some mitigating steps will require proactive action by XPS, the Group
anticipates a considerable volume of the XPS transition to net zero will be delivered with
the adaptation of the market and infrastructure.
Recognising the Group’s risks, opportunities and commitments as an input, the Group
acknowledges the adaptations required, specifically within the Group’s key climate
risks such as the XPS supply chain - ensuring XPS suppliers complement XPS’s net zero
trajectory, use of technology in XPS offices and applications - allowing XPS to reduce
energy consumption to a level consistent with a 1.5 degree scenario, selection of property
- ensuring XPS facilities are suitably efficient and environmentally friendly to the Group’s
surroundings, and the Group’s approach to investments - ensuring investments meet the
Group’s moral commitments and their actions align with the XPS 1.5 degree ambitions.
The Group’s sustainability framework ensures that these mitigation steps are taken
without a material financial impact on revenues and assets and act at an appropriate
pace. Whilst the transitional steps present the anticipated need for modest additional
investment and resource at the outset posing a low risk, the business anticipates energy
efficiencies and long-term cost savings to be delivered post transition.
XPS expect an increased risk of environmental and climate compliance demands and
associated disclosure expectations in the short to medium term which will require
additional resource and investment, however, the Group currently believe its strategy
is prepared, well equipped and financially able to make such a transition resulting in
a managed low risk to the business.
The opportunities that exist up to 2050 present XPS with a potential to bolster its
reputation resulting in improved client appeal and retention whilst its transition to green
technology and buildings is likely to offer long term cost savings relating to a more
efficient operation.
c) Describe the resilience
of the organisation’s
strategy, taking into
consideration
different climate
related scenarios,
including a 2°C or
lower scenario.
XPS considers that its business model and operations are resilient in the most common
climate change scenarios.
In order to assess the resilience of the Group, three different commonly used climate
scenarios were used: a rapid change aimed to curtail warming at 1.5 degrees; an orderly shift
to a 2-degree limit and a scenario where the transition is only partially successfully, leading to
temperature rises beyond 2 degrees. XPS scenario analysis model assessed conceivable risks
and opportunities, including those listed in Table A1.1 of the TCFD Implementation Guidance,
in each decade to 2100 in differing paces of transition to understand the conceptual
materiality and impact to the business considering transitional and physical risks and
opportunities. Using data and projections from, but not limited to, scientific papers published
by IPCC, Institute and Faculty of Actuaries and BNEF as an input, the Group has been able to
determine key opportunities and risks likely to be faced in the future.
The Group has committed to an ambitious pathway informed by scientific data, aiming
to achieve emissions associated with a maximum temperature rise of 1.5 degrees
Celsius. This approach is expected to be proactive, outpacing the broader market and
statutory obligations, thereby establishing the Group as strong and adaptable to swift
climate-related demands, as well as changes in legislation and consumer behaviour. By
prioritising the transition of the business’s highest risks, such as the Group’s engagement
with renewable energy sources, preparing to meet forthcoming compliance obligations
and ensuring financial resilience to market downturns, XPS is strategically positioning
itself favourably across conceivable climate outcomes.
Pensions are an inherently stable product that can withstand economic downturns and
market volatility, maintaining a consistent demand due to their essential nature. Guided
by scenario analysis, the Group is assured that the XPS business structure, financial
resources, and strategic approach are currently resilient and sufficiently robust.
XPS scenario analysis suggest that a smooth transition, likely to result in a 2˚C
temperature rise, is the most favourable pathway for XPS and global markets. A rapid or
delayed reaction is likely to result in unfavourable market conditions potentially impacting
XPS’s capital and profitability.
Strategic report
39
XPS Pensions Group plc Annual Report and Accounts 2024
Risk management
a) Describe the
organisation’s
processes for
identifying and
assessing climate
related risks.
The Group’s integrated approach identifies, manages and addresses all risks, climate and
otherwise, in a consistent manner as specified with in the Risk Management and Internal
Control Framework section of this report on pages 47 to 52.
The Group deploys a plan, do, check, act procedure which the ISO 14001 certified
Environmental Management System utilises within its identification and assessment of
climate risk in accordance with the established risk framework. The Environmental Risk
Register contains an assessment of all of the risks contained within table A1.1 of the TCFD
Implementation Guidance as a minimum as well as other risks identified as part of the
risk management process. The assessment considers the short-, medium- and long-term
effect a risk may constitute to capital, revenue, reputation, environmental performance,
business continuity and information security. Climate risks often present a risk in multiple
facets which are assessed individually in a consistent and integrated manner with
traditional risks to ensure appropriate and consistent weighting, treatment and priority
is applied based upon a risk’s materiality. Utilising the existing risk matrix and framework,
climate assessments are repeatable and consistent with risk management processes
facilitating a unified approach to treatment, management, acceptance or rejection of
a risk. The approach is aligned for climate and other risks and enables the group to
effectively identify any material risks to its operation and capital. A similar approach is
deployed to establish opportunities, assessing the risk to benefit ratio and enabling the
business to ascertain the most beneficial pathways and actions available to it.
Specifically relating to climate, existing and emerging regulatory requirements are
managed as an emerging risk as well as the possible change in market appetite.
b) Describe the
organisation’s
processes for
managing climate
related risks.
c) Describe how
processes for
identifying, assessing
and managing climate
related risks are
integrated into the
organisation’s overall
risk management.
Metrics and targets
a) Disclose the metrics
used by the
organisation to assess
climate related risks
and opportunities in
line with its strategy
and risk management
process.
XPS actively manages and monitors its sustainability performance to ensure the business
is acting upon its framework and ambitions. XPS’s most recent SECR disclosure can be
found on page 30.
The success of the XPS climate ambition requires top-down management and
implementation. To support this approach 10% of executive remuneration is tied to the
Group’s annual emissions and the performance against the Group’s carbon objectives.
XPS has not established internal carbon pricing but it is continuing to assess the benefits
of carbon pricing within the landscape.
The most prevalent KPI within the climate space for XPS’s is the Group’s carbon inventory.
The XPS carbon footprint is measured and reported using the Greenhouse Gas Protocol
methodology and aligned with ISO 14064, measuring comprehensive emissions sources such
as travel emissions, energy consumption, energy sources, waste generation, waste treatment,
water treatment, water consumption and downstream emissions within the Group’s
supply chain.
XPS has committed to the SBTi target framework, which provides the business with
a clear and unambiguous pathway to a science-based net zero status. Utilising the
1.5˚C emissions corridor, XPS has set emissions performance objectives for all identified
emissions sources. Any non-conformance with the approved transition corridor is treated
as a risk and managed and addressed within the above-mentioned risk process.
Prior to verification of the Group’s transition plan, it would not be suitable for XPS to disclose
draft targets in full detail; however, the high-level journey and anticipated milestones are
disclosed on pages 28 to 29. Key objectives include the transition to renewable electricity
seeking zero electricity emissions by 2030, the transition to green heating methods resulting
in zero heating emissions by 2040 and the reduction of supply chain emissions by 40% by
2035 initially and 90% by 2050 subject to approval. Noted objectives are measured via KPI
performance of tCO2e generated and represent absolute reductions as required by the IPCC
and SBTi frameworks. Performance targets/KPIs have been established annually between
2024 and 2030 and 5 yearly thereafter, in an accelerating fashion that aligns with the SBTi
emissions corridor. Carbon emissions are quantified using industry standard methods aligned
with the Greenhouse Gas Protocol, ISO 14064 and the SBTi. The information disclosed in this
report and being developed internally all refers to a base year of FY 2020.
Internally, the Group is developing its transition plan approach to ensure compliance with
forthcoming regulation such as the anticipated Transition Plan Taskforce and ISSB.
b) Disclose Scope 1,
Scope 2 and, if
appropriate, Scope 3
greenhouse gas
(GHG) emissions, and
the related risks.
c) Describe the targets
used by the
organisation to
manage climate related
risks and opportunities
and performance
against targets.
40
XPS Pensions Group plc Annual Report and Accounts 2024
Non-financial and sustainability information statement
This section of the Annual Report and Accounts constitutes
the XPS Group Non-Financial and Sustainability Information
Statement, produced to comply with Sections 414CA and
414CB of the Companies Act 2006.
The following table sets out where, within our Annual Report and Accounts, we provide further detail on matters
required to be disclosed under the sections above. In particular, it covers the impact we have on the environment, our
employees, social matters, human rights, anti-corruption and anti-bribery matters, policies pursued and the outcome
of those policies, and principal risks that may arise from the Company’s operations and how we manage these, to the
extent necessary for an understanding of the Company’s development, performance and position and the impact of
its activity.
Reporting requirement
Relevant policies, documents,
or reports that set out our approach
Section(s) and page(s)
Anti-bribery and corruption
• Bribery and gifts policy
• Whistleblowing policy
• Financial crime policy
See our “Being Responsible
Business” section on page 34
Business Model
Business Model, see page 6
Employees
• Recruitment and selection policy
• Inclusion and diversity
• Flexible working policy
• Harassment and bullying
prevention policy
• Grievance policy
• Health and safety policy
• Agile working policy
• Family friendly policy
• Sabbatical policy
See our “Empowering our people to
thrive” section on page 22-26
Environmental matters
• Environmental policy
See our “Protecting the
environment” section on page 28-31
Description of principal risks
and impact on business activity
Helping the transition to a
sustainable low-carbon economy:
Risk management – see page 47
Principal risks - see pages 49-52
Respect for human rights
• Data privacy policy
• Modern slavery policy1
• Information & cyber security policy
See our “Being a Responsible
Business” section on
page 34 and our website
www.xpsgroup.com/modern-
slavery-statement
Social matters
• Matched fundraising
• Corporate volunteering policy
See our “Strengthening our
Communities” section on page 27
Non-financial key
performance indicators
Operating responsibly for all our
stakeholders, see page 20-34
Strategic report
41
XPS Pensions Group plc Annual Report and Accounts 2024
Chief Financial Officer’s review
The business has continued to perform strongly with like-for-like revenues growing 21% year on year (20% including
revenues from the National Pension Trust (NPT) business, which was disposed of in November 2023). All divisions
have posted strong year on year growth driven by high client demand for our services. Operational gearing has also
continued to come through with adjusted diluted EPS and adjusted EBITDA growth exceeding revenue growth for
the second consecutive year. We disposed of the NPT business for a consideration of £35.0 million and used the
proceeds to reduce net debt – further strengthening the balance sheet and providing greater flexibility for continuing
our growth trajectory. We have continued to develop our own administration platform which will further enhance our
operational gearing in the future.
Group income statement
Adjusted(1)
As reported
FY 2024
£m
FY 2023
£m
Change
%
FY 2024
£m
FY 2023
£m
Change
%
Revenue
Pensions Actuarial & Consulting
93.4
77.4
21%
93.4
77.4
21%
Pensions Investment Consulting
20.3
18.0
13%
20.3
18.0
13%
Total Advisory
113.7
95.4
19%
113.7
95.4
19%
Pensions Administration
71.9
57.5
25%
71.9
57.5
25%
SIP
11.0
9.4
17%
11.0
9.4
17%
NPT
—
—
—
2.8
4.3
(35%)
Total revenue
196.6
162.3
21%
199.4
166.6
20%
EBITDA
54.8
41.4
32%
79.8
35.1
127%
Depreciation & amortisation
(5.8)
(5.5)
(5%)
(12.8)
(12.4)
(3%)
EBIT1
49.0
35.9
36%
67.0
22.7
195%
Net finance expense
(4.5)
(3.6)
(25%)
(4.5)
(3.6)
(25%)
Profit before tax
44.5
32.3
38%
62.5
19.1
227%
Income tax expense
(11.4)
(6.0)
(90%)
(8.3)
(3.3)
(152%)
Profit after tax
33.1
26.3
26%
54.2
15.8
243%
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. They also
exclude the Group’s NPT business, which was sold in November 2023. See note 6 for details of exceptional and non-trading items.
Strong financial performance delivering
on our growth strategy
Snehal Shah
Chief Financial Officer
42
XPS Pensions Group plc Annual Report and Accounts 2024
Revenue
Total Group revenues grew 20% year on year, 19%
organically. Excluding NPT, total Group revenues grew
21% year on year.
Pensions Actuarial & Consulting is the Group’s largest
business, accounting for 47% of Group revenues in
FY 2024. The division achieved 21% year on year growth
in revenues, due to high client activity levels driven by
continued regulatory changes, expansion of our service
offering, in particular; Risk Transfer, and inflationary
increases in fees.
Pensions Investment Consulting had another strong year
with continued demand driven by regulatory changes as
well as inflationary fee increases. Revenues in this division
grew 13% year on year.
Pensions Administration revenues grew 25% year on
year with a number of new client wins coming on stream
during the year and increased levels of project work
such as GMP equalisation and the McCloud judgement
rectification. As with the Advisory business, inflationary
increases in fees also helped to drive the growth in the
year. Pensions Administration accounted for 36% of the
Group revenues (FY 2023: 35%).
SIP revenues were up 17% on prior year, due to strong
underlying sales, and increases in commission due to the
base rate increases in the year.
The NPT business was sold in November 2023.
Operating costs
Total operating costs (excluding exceptional and non‑trading
items) of £150.0 million (FY 2023: £129.7 million) grew by
16% year on year. The main drivers for the cost increases
are an increase in headcount as the business grew (1,712
FTE v. 1,574 last year), inflationary/market driven pay
increases, higher bonus cost commensurate with the
strong financial performance, and inflationary increases
in other operating costs.
Adjusted EBITDA
Despite the continuing inflationary pressures on our
costs, the Group has delivered further operational
gearing with adjusted EBITDA growing by 32% year
on year - ahead of the Group adjusted revenue
growth of 21%. Adjusted EBITDA margin was 27.9%
(FY 2023: 25.5%).
Adjusted profit before tax grew by 38% year on year
benefiting from the strong trading and continued
operational gearing.
Exceptional and non-trading items
Exceptional and non-trading items excluding the gain on
sale of NPT in the year totalled £15.0 million (FY 2023:
£14.2 million). Amortisation of acquired intangible assets
amounted to £7.0 million (FY 2023: £6.9 million).
Share-based payment charges were £6.3 million
(FY 2023: £4.7 million) with higher levels of vesting
expected due to the strong financial performance of the
Group and a higher National Insurance charge resulting
from the Group’s strong share price.
The Group also incurred corporate transaction costs
of £1.7 million in the year, which related to contingent
consideration in respect of the acquisition of Penfida
Limited (FY 2023: corporate transaction costs of
£2.9 million, of which £2.1 million was in relation to the
acquisition of Penfida Limited and £0.8 million related
to contingent consideration). The maximum contingent
consideration of £3.4 million would be payable on the
second anniversary of the acquisition subject to business
performance which includes retention of clients as well as
continued employment of key employees. As continued
employment is one part of the contingent consideration
test, according to IFRS 3, the entire contingent
consideration must be treated as a post-transaction
employment cost accruing over the deferment period of
two years. The contingent consideration is material in size
and it is one-off in nature. As such, in line with the Group’s
accounting policies, it has been classified as an exceptional
item. If the entire contingent consideration is not payable
at the end of the two-year period, any resulting credit will
also flow through the exceptional category.
Tax on the exceptional and non-trading items was a credit
of £3.2 million (FY 2023: £2.9 million). This is driven by the
unwinding of deferred tax liabilities linked to intangible
assets acquired in previous periods, deferred tax relating
to share-based payments, and corporation tax on
corporate transaction costs.
In November 2023 the Group disposed of its NPT
business. The exceptional gain on the disposal totalled
£34.6 million and was offset by related corporate
transaction fees of £2.1 million. More information on
the transaction can be found in notes 6 and 7 of the
consolidated financial statements as well as in the
Co‑Chief Executives’ Review.
Net finance costs
Net finance costs for the year were £4.5 million
(FY 2023: £3.6 million). The increase is due to the higher
bank base rate during the year compared to the prior
year. The loan balance was significantly reduced in the
year following the sale of the NPT business; this led to
lower interest costs in the second half of the year.
Taxation
A tax charge of £11.5 million (FY 2023: £6.2 million)
was recognised on adjusted profits. This represents an
effective tax rate of 26% (FY 2023: 19%). The Group
also recognised a tax credit of £3.2 million (FY 2023:
£2.9 million) on exceptional and non-trading items,
which resulted in an overall tax charge for the year of
£8.3 million (FY 2023: £3.3 million). The increase in the
corporation tax rate in FY 2024 to 25% drove an increase
in tax charges in the year compared to the prior year.
Chief Financial Officer’s review continued
Strategic report
43
XPS Pensions Group plc Annual Report and Accounts 2024
Our businesses generate considerable tax revenue for the
UK government. For the year ended 31 March 2024, we
paid corporation tax of £11.3 million (FY 2023: £4.9 million);
we collected employment taxes of £32.1 million (FY
2023: £27.0 million) and VAT of £31.9 million (FY 2023:
£24.7 million). Additionally, we have paid £1.3 million
(FY 2023: £1.2 million) in business rates. The total tax
contribution of the Group was therefore £76.6 million
(FY 2023: £57.8 million), which equates to 38% of revenue
(FY 2023: 35%). Corporation tax paid in the year was
higher due to the fact that the Group is now considered to
be very large for tax payment on account purposes, and so
an element of prior year tax was paid as well as the current
years full year estimated liability. In FY 2025 corporation
tax payments will normalise and will be in line with the
related income statement charge.
EPS
Basic EPS for FY 2024 grew 240% year on year to 26.2p
(FY 2023: 7.7p) owing to the strong financial performance
of the Group and the gain on disposal of NPT. Basic EPS
for the year excluding the gain on disposal of the NPT
business is 10.5p. which gives growth in the year of 36%.
Adjusted fully diluted EPS grew 21% year on year to
15.3p in FY 2024 (FY 2023: 12.6p), enabled by the strong
revenue growth as well as delivery of further operational
gearing in the business. Excluding the NPT business sold
in November 2023, the equivalent adjusted fully diluted
EPS would be 15.1p in FY 2024 (FY 2023: 12.2p), showing
growth of 24%.
Dividend
A final dividend of 7.0p is being proposed by the Board
(FY 2023: 5.7p). The final dividend, which amounts to
£14.6 million (FY 2023: £11.8 million), will be paid on
23 September 2024 to those shareholders on the register
on 23 August 2024.
Cash flow, capital expenditure and financing
Non-GAAP cash flow
31 March 2024
£m
31 March 2023
£m
Operating
Adjusted EBITDA
55.3
42.4
Change in net working capital1
2.4
(0.3)
Adjusted operating cash flow (OCF)²
57.7
42.1
OCF conversion
104%
99%
Financing & tax
Net finance expense
(4.3)
(3.3)
Taxes paid
(11.3)
(4.9)
Repayment of/proceeds from new loans
(44.0)
4.0
Repayment of lease liabilities
(2.7)
(3.0)
Share-related movements
(7.7)
(1.0)
Net cash flow after financing
(12.3)
33.9
Investing
Disposal/(acquisition)
34.5
(8.3)
Capex
(7.5)
(5.4)
Net cash flow after investing
14.7
20.2
Dividends paid
(18.0)
(15.3)
Exceptional items
—
(1.8)
Movement in cash
(3.3)
3.1
Net debt3
14.0
55.3
Leverage
0.27x
1.38x
1 Change in net working capital exclusive of corporate transaction costs detailed in note 6 to the consolidated financial statements.
2 Appendix 2 provides a reconciliation of this figure to the operating cash flow presented in the consolidated financial statements.
3 Net debt constitutes long-term borrowings and contingent consideration, less cash. See note 24 to the consolidated financial statements
for a reconciliation of this figure.
44
XPS Pensions Group plc Annual Report and Accounts 2024
Cash flow, capital expenditure and financing continued
FY 2024 has been another year of strong cash performance
for the Group. Adjusted operating cash flow increased by
£15.6 million driven by a £12.9 million increase in adjusted
EBITDA and a £2.7 million decrease in net working capital
year on year. Overall, this resulted in adjusted operating
cash flow conversion of 104% compared to 99% in the
prior year.
Taxes paid in the year of £11.3 million (FY 2023: £4.9 million)
were significantly higher than the prior year. During the year
the Group became a “very large company” as defined by
HMRC for corporation tax purposes, meaning tax is due in
the year to which it relates rather than six months in arrears
as has previously been the case. Therefore, this re-base, as
well as the increase in headline rate from 19% to 25%, has led
to the increase.
During the year, the Group repaid £44.0 million of the
RCF. £0.2 million was spent on extending the current loan
facility for a further year (to October 2026). Interest paid
on the loan balance amounted to £3.9 million (FY 2023:
£3.0 million), and £0.3 million was paid on interest relating
to leases in the year (FY 2023: £0.3 million), offset with
£0.1 million of interest income received. Capital expenditure
in the year amounted to £7.5 million (FY 2023: £5.4 million)
with £1.9 million spent on leasehold improvements and
office fit-outs and the remaining £5.6 million on software
development, enhancements to our platforms, cyber
security, and other IT equipment. £2.7 million relating to
leases was paid in the year (FY 2023: £3.0 million).
In November 2023, the Group sold its NPT business for
cash consideration of £35.0 million, and an additional
£2.0 million in respect of the completion balance sheet;
£2.1 million was paid out in transaction-related fees, and
a further £0.4 million was paid out relating to contingent
consideration for prior year acquisitions.
The Group spent £5.6 million (FY 2023: £2.2 million) on
acquiring its own shares via its EBT, to be used to settle
employee share options as they vest. £0.6 million (FY
2023: £0.5 million) was paid to employees as dividend
equivalents on the vesting of share options as well as
incurring £1.5 million of employer’s National Insurance.
After paying £18.0 million in dividends, the Group cash
balance decreased by £3.3 million year on year to close at
£10.0 million. The Group had drawn down £24 million of its
£100 million RCF at 31 March 2024, resulting in net debt of
£14.0 million, a decrease of £41.3 million year on year.
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 35 in the Annual Report.
Snehal Shah
Chief Financial Officer
19 June 2024
Chief Financial Officer’s review continued
Strategic report
45
XPS Pensions Group plc Annual Report and Accounts 2024
Appendix: Reconciliation of reported/statutory results
to alternative performance measures (APMs)
In order to assist the reader’s understanding of the financial performance of the Group, it continues to present a range
of results metrics to demonstrate its performance. These include those presented in accordance with International
Accounting Standards (IFRS) and APMs. APMs exclude specific exceptional and non-trading items as set out in note 6
of the consolidated financial statements.
An explanation of the Group’s key APMs has been detailed below:
APM
Closest equivalent
statutory measure
APM definition and purpose
Adjusted EBITDA
Profit/loss from
operating activities
Definition: Earnings before interest, tax, depreciation and
amortisation excluding exceptional and non-trading items and
excluding the NPT business disposed of in November 2023 as
if a discontinued operation – see note 7 to the consolidated
financial statements.
Purpose: A recognised APM which has been central to the business
over many years and through different ownership structures.
It allows the Group to monitor the underlying trading performance
of the business without the impact of external and exceptional and
non-trading factors distorting the figures.
OCF conversion
Net cash from
operating activities
Definition: The conversion of adjusted EBITDA into cash.
Purpose: Measures how well the Group is managing its operating
cash flows. Unlike net cash from operating activities, it excludes the
impact of tax and exceptional and non-trading items and therefore
allows for a direct and like for like comparison to the Group’s key
profit related APM, adjusted EBITDA.
Adjusted
diluted EPS
excluding the NPT
business
Diluted earnings
per share
Definition: Reflects the profit after tax, adjusted to remove the impact
of exceptional and non-trading items and the NPT business disposed
of in November 2023. Details of this can be found in note 6 of the
consolidated financial statements as well as in the reconciliations on
the following page of this Chief Financial Officer’s review.
Purpose: Presents an EPS measure used more widely by
investors and analysts and more in line with how the Group’s
dividends are calculated.
Leverage
Cash and cash
equivalents
Definition: Leverage ratio showing the amount of third-party debt
excluding leases (net of cash held) relative to last twelve months
adjusted pro-forma EBITDA.
Purpose: Management can measure exposure to reliance on third-
party debt. Leverage is the key measure in reporting to the Group’s
banks and driving the interest rate margin which is added to SONIA
to determine the all-in rate payable.
A reconciliation of the Group’s APMs to their closest statutory measures has been provided below:
1. Adjusted EBITDA excluding NPT
31 March 2024
£m
31 March 2023
£m
Profit from operating activities
67.0
22.7
Depreciation and amortisation
12.8
12.4
Gain on disposal of NPT business1
(32.5)
—
Trading EBITDA in respect of NPT business1
(0.5)
(1.0)
Other exceptional and non-trading items
8.0
7.3
Adjusted EBITDA excluding NPT
54.8
41.4
46
XPS Pensions Group plc Annual Report and Accounts 2024
Appendix: Reconciliation of reported/statutory results to alternative performance
measures (APMs) continued
A reconciliation of the Group’s APMs to their closest statutory measures has been provided below continued:
2. OCF conversion
31 March 2024
£m
31 March 2023
£m
Profit from operating activities
67.0
22.7
Depreciation and amortisation
12.8
12.4
Other exceptional and non-trading cash items2
8.0
7.3
Gain on disposal of NPT business
(32.5)
—
Trading EBITDA
55.3
42.4
Net cash from operating activities
42.9
34.5
Income tax paid
11.3
4.9
Cash exceptional and non-trading items3
3.5
2.7
Adjusted operating cash flow
57.7
42.1
OCF conversion
104%
99%
3. Adjusted diluted EPS excluding NPT
31 March 2024
£m
31 March 2023
£m
Profit after tax and total comprehensive income for the year
54.2
15.8
Adjustment for exceptional and non trading items (net of tax)2
(20.7)
11.3
Profit after tax from operating activities for NPT business1
(0.4)
(0.8)
Adjusted profit after tax
33.1
26.3
Dilutive weighted average number of shares ('000)
219,621
216,071
Adjusted diluted EPS excluding NPT (pence)
15.1
12.2
4. Leverage
31 March 2024
£m
31 March 2023
£m
Cash and cash equivalents
10.0
13.3
Bank debt
(24.0)
(68.0)
Contingent consideration
—
(0.6)
Net debt⁴
(14.0)
(55.3)
Trading EBITDA
55.3
42.4
Impact of IFRS 16 ignored for bank covenants purposes5
(3.0)
(2.9)
Pro-forma impact of M&A transactions in year6
(0.5)
0.6
Adjusted EBITDA for covenant
51.8
40.1
Leverage
0.27x
1.38x
1 See note 7 of the consolidated financial statements.
2 See note 6 of the consolidated financial statements.
3 This is the cash element of exceptional and non-trading items: National Insurance on share-based payments (note 13 of the consolidated
financial statements) and transaction costs relating to the NPT disposal in note 7 of the consolidated financial statements (FY 2023:
National Insurance on share-based payments and other corporate transaction costs).
4 See note 24 of the consolidated financial statements.
5 The Group’s banking facilities agreement ignores IFRS 16 for covenant test purposes. Debt excludes lease-related liabilities and to be on
a consistent basis adjusted pro-forma EBITDA includes rent-related costs as an operating expense unlike in the statutory income statement
where they are treated as depreciation of right-of-use assets with a related financing cost.
6 Pro-forma-related adjustments reflect the impact of M&A-related transactions as if they had been included for the whole financial
year. The FY 2024 adjustment is to reflect the NPT sale taking place on 1 April 2023 (i.e. it removes the EBITDA that the NPT business
contributed between 1 April 2023 and the point it was sold on 20 November 2023. The FY 2023 adjustment is to present the contribution
that the Penfida acquisition would have made had the business been acquired on 1 April 2022 rather than the actual acquisition date of
20 September 2022.
Chief Financial Officer’s review continued
Principal risks and uncertainties
Strategic report
47
XPS Pensions Group plc Annual Report and Accounts 2024
The risk management controls frameworks deployed across the Group
continues to be developed and enhanced, ensuring it supports the growth
of the business. Effective risk management provides the Group with
fully articulated risks, enabling us to identify and embrace opportunity.
They also ensure that internal controls are reviewed and developed to
protect the Group and its customers from new and developing threats
such as cyber crime.
Over the last year our risk management and internal
controls frameworks have continued to operate effectively,
enabling us to respond to the evolving risks inherent
in day-to-day operations, alongside new opportunities
and initiatives. The Group’s risk environment is regularly
reviewed by senior management alongside the internal
controls frameworks in place. This ensures that they
continue to be effective, and enhancements to address
changes in the external threat environment are considered.
Internal and external assurance frameworks support
this, ensuring regular, planned reviews to validate
control design and effectiveness, as well as highlighting
opportunities for further improvements. Cyber crime
continues to be a key focus for senior management,
recognising the threats to the Group from phishing,
ransomware and supply chain attacks.
We continuously develop our risk management capabilities
to support the Group and address the evolving threats in
our market. Since the last report there have been a number
of significant enhancements, including:
• the rollout of a new Risk Management Policy which
provides clear articulation to all staff of how the
key components of the Group’s risk management
framework support its objectives. The introduction
of new risk reporting templates will further support
the business to articulate its risk profile, alongside
highlighting and reporting on the effectiveness of
key internal controls. This has been supported by
an externally facilitated risk review project with
senior management, resulting in a refreshed Group
risk register;
• the enhancement of the existing external assurance
frameworks to ensure that they continue to meet the
developing needs of the business. This supported the
recertification to the PASA pensions administration
standard and the successful triennial ISO 27001
information security audit;
• the development of the existing Risk team, through
the recruitment of an additional subject matter expert,
alongside supporting existing team members to
achieve and maintain this status. This ensures that the
Group can effectively maintain its risk and controls
frameworks and provide effective expert support and
challenge to business areas as required;
• the development of the existing ISO 27001 information
security frameworks to recognise new and emerging
threats. This included those inherent with the in-house
development of the Aurora platform and the controls
frameworks required to support ongoing secure design,
development and implementation;
• the development of the Group’s ability to effectively
respond to a major cyber incident. This was done
through the introduction of Board-down testing,
supported by an ongoing programme of activities to
ensure operational resilience capabilities are in place,
maintained and tested on a regular basis;
• the development of the internal controls frameworks
in place to manage key risks such as fraud through
the introduction of updated policies and guidance.
This includes the identification and documentation of
key controls as well as mandated controls, escalation
and reporting processes;
• the development of the existing third-party assurance
framework, recognising the importance of supply chain
risk in relation to cyber and business resilience risks;
• the development of the Environmental Management
System to both identify and manage our impact on the
environment. This includes supporting TCFD reporting,
assessment of the risks associated with climate change,
and the Group’s net zero strategy; and
• the ongoing development of the executive-level Risk
Management Committee to support the identification
of new and emerging risks as part of its quarterly
meeting cycle. This includes inviting external experts
to facilitate horizon scanning and deep dives on
specific topics.
Managing risk effectively
48
XPS Pensions Group plc Annual Report and Accounts 2024
Board of Directors/Audit & Risk Committee
Operational Management
First line
Control of risks
Confirmation of
control effectiveness
Strategic overview
of controls
Key activities
Outcomes
• Implement governance, risk
and control frameworks
• Measure and manage
project performance
• Manage risk (within agreed
risk appetite)
• Design governance, risk
and control framework
• Monitor adherence
to framework
• Provide timely,
balanced information
• Review framework application
objectively
• Offer independent oversight
of first and second lines
Senior management/Risk Management Committee
Risk Management
Second line
Internal Audit
Third line
The Group continues to operate a three lines of defence
model which supports the promotion of effective risk
management taking into account the Group’s risk
appetite. The Board, with the support of the Audit &
Risk Committee, has 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,
or liquidity.
• Competition – risks of change to the demand side of
the business due to changes in customer demands
or competitors, likely to influence the entire industry,
e.g. aggressive competitor pricing, consolidation
trends, major technological innovation, or 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,
or industrial accidents.
• Environmental – risks associated with climate-related
change, how these changes can impact business
models and how businesses in turn can manage the
impact of their operations on the environment.
Principal risks and uncertainties continued
Strategic report
49
XPS Pensions Group plc Annual Report and Accounts 2024
The material risks and uncertainties which are either unique to the Group or apply to the pensions industry in which it
operates 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:
Strategy
Description
Key mitigations
Rationale for change
Risks linked to the assumptions
of future development and
size of pensions market used
to develop the strategy or
business model or business
portfolio, e.g. poor data,
group think or lack of diversity
of opinions.
The Board approves and regularly reviews the Group’s
strategy in conjunction with budgets, targeting long-
term increases in shareholder value and ensuring robust
independent challenge.
Key decisions are assessed against risk appetites for key
Group risks with a risk management framework in place
to identify and escalate where strategic decisions may
have unintended impacts.
Stable
Strategic planning and execution
Description
Key mitigations
Rationale for change
Risks linked to assessing,
evaluating, planning and
executing the strategy, e.g.
poor budgeting and planning,
inadequate or misleading
communications or poor
management of change
or projects.
The Board regularly reviews the Group’s strategy,
supported by the Executive with responsibilities assigned
for the delivery of initiatives and provision of regular
progress updates.
Specific project management resources are used to
deliver large-scale change initiatives, allowing risks to
delivery of initiatives to be clearly identified at planning
stage along with mitigations.
XPS has continued to
build out its frameworks
to design and successfully
deliver market-leading
innovation and technology
change. This continues to be
evidenced by the ongoing
rollout of the new Aurora
administration system.
Financial performance
Description
Key mitigations
Rationale for change
Risks relating to the failure
to monitor and appropriately
manage the financial
performance of the Group on
an ongoing basis which could
lead to poor management
decisions, higher costs
and/or inaccurate external
financial reporting.
The Group has a highly qualified and experienced
financial reporting team. There is an extensive
financial controls framework in place and key controls
are regularly tested by internal and external audits.
The Group undertakes detailed bottom-up budgeting
and reforecasting exercises with the final budget and
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 the financial performance of the
Group at each Board meeting.
The Group has continued to
improve its budgeting and
forecasting frameworks,
supporting growth. This is
evidenced by consistent
delivery of financial results
in line with or ahead of
market consensus.
Change during the year:
Increased risk
Stable
Improving
Links to strategy:
Regulatory change
Expand services
Grow market share
Mergers and acquisitions
50
XPS Pensions Group plc Annual Report and Accounts 2024
Errors
Description
Key mitigations
Rationale for change
Risks relating to material
mistakes made by staff,
including non-compliance with
established procedures, e.g.
failure to calculate benefits
correctly or not following peer
review processes. These may
not crystallise immediately
and only become apparent
a number of years after
completion of work.
The Group recruitment process ensures only high-calibre
staff are recruited, who are then supported by training
programmes. Staff use standardised documented
processes and checklists for key processes.
Higher risk work is identified with peer review and
additional sign-off 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. Root cause analysis is used to
identify where controls improvements are required,
which are monitored through to implementation.
Stable
Theft and fraud (financial and physical assets)
Description
Key mitigations
Rationale for change
Risks relating to the
safeguarding of Group and
client financial and physical
assets from malicious actors,
e.g. stealing physical assets,
deliberate misrepresentation
leading to fraud or theft from
Group or client bank accounts.
The Group deploys robust physical and systems access
controls, along with enforcing segregation of duties to
prevent individuals from making fraudulent payments
or transfers.
These controls are supported with staff vetting, training
and awareness and control frameworks are regularly
independently audited.
Insurance arrangements are in place to protect against
larger claims.
Controls frameworks
continue to be developed
to manage this risk,
addressing controls
enhancements identified
through audits and internal
risk assessments. We
continue to see attempts
to impersonate pension
scheme members,
albeit in small numbers.
These attempts are
identified and prevented
through the existing
controls frameworks.
Links to strategy:
Regulatory change
Expand services
Grow market share
Mergers and acquisitions
Principal risks and uncertainties continued
Change during the year:
Increased risk
Stable
Improving
Strategic report
51
XPS Pensions Group plc Annual Report and Accounts 2024
Information/cyber security
Description
Key mitigations
Rationale for change
Risks relating to the
confidentiality, integrity and
availability of information
assets including IT systems,
e.g. unauthorised access
to or disclosure of staff or
client information, denial of
access to systems or data
required or business continuity
incidents caused by equipment
breakdown/fire/flood.
The Group has an Information Security Management
System (ISMS) in place to ensure that risks are identified
and managed effectively. This includes a range of
technical controls policies and procedures, supported by
a dedicated Cyber Security team, and a 24/7 Security
Operations Centre. These are supported by regular
independent audits and penetration tests.
All staff are provided with comprehensive policies
and guidance, with awareness of key topics reinforced
with a programme of training and testing initiatives,
e.g. phishing awareness. The Group has dedicated
business continuity frameworks and capabilities to
minimise the impact of incidents affecting the Group’s
data, facilities or systems. These frameworks include
incident management capabilities to allow the Group
to effectively coordinate and communicate with
stakeholders in the case of a significant incident.
The Group has continued
to develop its capabilities,
recognising the continued
evolution of this risk.
These activities are
supported by regular
threat assessments to
ensure controls continue to
address new and emerging
threats. The annual cyber
programme plans the
implementation of new
technical controls to meet
these threats. It also takes
into account the findings
of regular penetration
and purple team testing.
Additional assurance is
provided through the
existing certification
frameworks including ISO
27001 and Cyber Essential
Plus certifications and
by having appropriate
insurance policies in place.
Staff/human resources
Description
Key mitigations
Rationale for change
Risks relating to our people,
e.g. compensation, retention,
succession planning, skills
and competence and
management capability.
The Group’s recruitment strategy is to seek professional,
experienced and qualified staff utilising robust staff
recruitment and selection processes. 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 the strategy and
budgeting process to ensure alignment with business plans.
Stable
Third party supplier/outsourcing
Description
Key mitigations
Rationale for change
Risks relating to the use
of third parties to support
our operations, e.g. poor
due diligence and selection
processes, failure of a supplier
to follow agreed upon
procedures or financial failure
of supplier resulting in inability
to deliver service.
The Group has a formal selection process that ensures due
diligence is carried out, which is proportionate to the risk
of the potential failure of the third party. The approvals
and signing framework also ensure contracts include key
risks relating to services provided and risks identified are
managed and accepted prior to agreements being signed.
This is supported by ongoing monitoring of key third
parties, including SLAs and financial status.
Where there is a reliance on a single supplier,
contingency plans are in place to protect against
impacts of outages or failure.
Stable
52
XPS Pensions Group plc Annual Report and Accounts 2024
Client engagement
Description
Key mitigations
Rationale for change
Risks relating to the provision
of poor service or advice to
clients, e.g. advice that is not
clear, not understood by the
client or poorly presented or
uses out of date technologies,
but not errors.
The Group client engagement process ensures that
expectations are matched to Group capabilities. Regular
ongoing dialogue with clients ensures that the services
provided meet their requirements and continue to be
appropriate to their specific needs.
Client surveys are used to gather feedback and identify
trends and insights.
Stable
Business conduct and reputation
Description
Key mitigations
Rationale for change
Risks that could lead to a
breach of acceptable conduct
or ethics, impacting the Group’s
brand, image or reputation.
Failure to ensure services are
appropriate for client’s needs,
any discrimination, or a poor
response to a cyber incident
or client complaint.
The Group’s mission, vision and values clearly set out the
tone from the top, highlighting to all staff the conduct
and ethics that are expected from them at all times.
This is supported by a recruitment strategy that seeks
professional, experienced and qualified staff who fit
with the Group’s values. Due diligence of third parties
considers supply chain risks, ensuring that only suppliers
that comply with their legal obligations are selected.
The Group has 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.
Stable
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 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.
Principal risks and uncertainties continued
Links to strategy:
Regulatory change
Expand services
Grow market share
Mergers and acquisitions
Change during the year:
Increased risk
Stable
Improving
Strategic report
53
XPS Pensions Group plc Annual Report and Accounts 2024
Viability Statement
The Group’s business activities, together with the factors
likely to affect its future development, performance
and position, are set out in the reports referred to in the
Overview section on page 96 of the Directors’ Report.
The Directors have assessed the long-term prospects of the
Group based upon business plans and cash flow projections for
the three-year period ending 31 March 2027. The three-year
period was chosen as it is considered the longest time
frame over which any reasonable view can be formed. The
forecasts and cash flow projections being used to assess going
concern cover the period up to October 2025. A 16-month
period from the sign-off of the accounts is used for the going
concern review as the Group produces more detailed budgets
and forecasts for this time frame which have proved to be
very reliable in the past. October is typically the lowest point
in the Group’s working capital and cash cycle, which is why
the going concern review extends to October 2025.
The Group’s current revolving credit facility extends to
October 2026, which is within the viability period. Based
on the previous refinancing experience and the financial
strength of the Group, the Directors are confident that
a new facility will be in place before the current facility
comes to an end.
The forecasts prepared have been comprehensively stress-
tested by using simulation techniques involving sensitivity
analysis. The stress-testing involved removing revenue
relating to a large part of customers discretionary spend
from the Group’s revenue forecasts. A high percentage
of the Group’s revenue relates to compliance work which
is non-discretionary. Mitigating actions, which include
reducing certain non-fixed costs were also factored into the
stress-testing.
In forming their opinion, the Directors have performed a
robust assessment of the principal risks and uncertainties
facing the Group as set out on pages 47 to 52. In addition,
note 2 on page 121 of the accounts includes the Group’s
objectives, policies and processes for managing its
capital, its financial risk management objectives and its
exposure to credit risk, liquidity risk and market risk.
The Directors believe that dramatic changes in the
future development and size of the pensions market
which underpin the strategy of the Group as well as risks
relating to cyber security including ransomware attacks
could threaten the longer-term viability of the Group.
These risks have been considered in detail, including
potential mitigating actions and the direction of travel
for these specific risks, on pages 49 to 52.
The Group had £10 million of cash at 31 March 2024 and a
£100 million committed financing facility with an accordion
of £50 million until October 2026. At 31 March 2024,
£24 million of this facility was drawn. The facility is subject
to two covenants: net leverage and interest cover. These
covenants are forecast to be met throughout the viability
period. Further details of the financial position of the Group,
its cash flows, liquidity position and borrowing facilities are
described within the financial statements and notes.
Having reviewed the identified risks, the Directors are
confident that the business is robust and resilient enough
to tackle any challenges that may arise over the three-
year viability period in relation to the Group’s exposure to
credit risk, liquidity risk and market risk.
With regards to market risk, the Directors have assessed
the current market conditions and the potential impact of
regulatory changes, as discussed in the market overview
section on pages 8 to 9. The Directors assessment of the
market is that there is considerable opportunity, and any
risks identified are managed by the Group’s risk strategy
and are not considered to be a material risk to the
Group’s viability over the next three years.
The current economic situation and inflationary
environment is not a significant risk to the Group as
increases in costs are largely protected against by the
Group’s contractual ability to increase revenue from
customers by an amount linked to inflation. The Group
has a strong balance sheet, access to financial resources
and long-term growth prospects. As a consequence, the
Directors believe that the Group is well placed to manage
its business risks successfully.
Even in the worst-case scenarios considered plausible by the
Directors, the cost reduction actions available to the Group,
the reduction of non-essential capital expenditure and the
management of working capital are expected to be effective
and sufficient to ensure the continued viability of the Group.
After making enquiries, the Directors have formed a
judgement, at the time of approving the financial statements,
that there is a reasonable expectation that the Group
has adequate resources to continue in operational
existence and meet its liabilities as they fall due over the
assessment period. For this reason, the Directors continue
to adopt the going concern basis in preparing the financial
statements. At the same time, the Directors also considered
the appropriateness of adopting the going concern basis
of accounting in preparing the financial statements and the
Directors’ identification of any material uncertainties to the
Group’s and the Parent Company’s ability to continue to
do so over a period of at least 12 months from the date of
approval of the financial statements.
This Strategic Report has been approved by the Board
and signed by order of the Board:
Paul Cuff
Co-Chief Executive Officer
19 June 2024
Ben Bramhall
Co-Chief Executive Officer
19 June 2024
54
XPS Pensions Group plc Annual Report and Accounts 2024
“The Board’s primary focus is leading the XPS Group to
deliver sustainable and profitable growth, and long-term
value for our shareholders, whilst upholding high standards
of corporate governance.”
Seven consecutive years of revenue growth may steal
the headlines at the front end of this Annual Report,
but it is not the only track record that we are proud of.
We are also building a record of growing sustainably,
particularly in terms of shaping and supporting safe
pension outcomes as well as being rated highly by our
people. Underpinning these is our adherence to high
corporate governance standards. Overseeing a culture of
strong governance is the Board’s responsibility; leading
by example is key.
Appointments
Leading by example starts with the make-up of the
Board itself. In December 2023, we welcomed
Imogen Joss and Martin Sutherland as Independent
Non-Executive Directors after a comprehensive
appointment process. Both have high-level leadership
and oversight experience and skill sets that complement
those of the existing Directors, thereby ensuring the
Board continues to have the resources it needs to
discharge its responsibilities effectively.
Directors’ remuneration
Leading by example also concerns how Directors are
remunerated. During the year, we undertook an extensive
consultation exercise, which saw myself and Margaret
Snowdon OBE, Chair of the Remuneration Committee,
engage with our 20 largest shareholders accounting for
c.85% of the Group’s issued share capital. The resultant
new Directors’ Remuneration Policy, which takes on
board shareholder views and introduces an element of
bonus deferral, was approved by shareholders at the
March 2024 General Meeting.
Continual improvement
As a Board, we recognise high governance standards are
there to be continually improved upon. In line with this,
we have commenced the process of incorporating the
changes included in the new UK Corporate Governance
Code, which was published in January 2024, ready for
this to apply to XPS in FY 2026. For now, the following
report outlines how the Company has applied the main
principles of the 2018 Corporate Governance Code
(the “Code”), and how it has complied with all relevant
provisions of the Code during the reporting period.
Alan Bannatyne
Chairman
19 June 2024
Alan Bannatyne
Chairman
Chairman’s introduction
Robust corporate governance is vital
for sustainable growth and success
The Board is committed to maintaining high standards of corporate
governance, with an increasing focus on sustainability.
Governance
55
XPS Pensions Group plc Annual Report and Accounts 2024
Statement of compliance with the UK Corporate Governance Code 2018
In FY 2024, the Company has applied the principles and complied with the provisions of the UK Corporate
Governance Code 2018 as they applied to it as a “smaller company” (defined in the Code as being a company
below the FTSE 350), during the year. The Code is publicly available at www.frc.org.uk.
Further information on how the Company has applied the five overarching categories of the principles can be
found on the following pages:
(i)
Board leadership and Company purpose: pages 56 to 60;
(ii) division of responsibilities: pages 60 to 61;
(iii) composition, succession and evaluation: pages 56 to 62;
(iv) audit, risk and internal control: pages 66 to 69; and
(v) remuneration: pages 72 to 95.
56
XPS Pensions Group plc Annual Report and Accounts 2024
Board of Directors
The Board is composed of nine members, consisting
of the Chairman, three Executive Directors and five
Independent Non-Executive Directors.
Appointed: April 2014
Committee membership
n/a
Key strengths
• Qualified actuary with
25 years of experience
in the pensions
industry and Scheme
Actuary to a number of
large pension schemes
• Responsible for the
day-to-day operation of
the business, including
provision of services
to existing clients,
revenue generation
and the Group’s
people strategy
Key experience
• Eight years at KPMG
• 18 months leading
pricing and deal team
at Lucida, a former
bulk annuity provider
Current external listed
company directorships/
key appointments
• None
Meetings attended
13/14
Appointed: October 2016
Committee membership
n/a
Key strengths
• Qualified actuary
with 20+ years of
experience in the
pensions industry
• Responsible for raising
the profile of XPS in
the market, generating
new business and
the Group strategy
with regard to M&A
opportunities and
technology investment
Key experience
• Partner at KPMG
2008–2016
• Head of KPMG London
pensions team prior to
joining XPS
Current external listed
company directorships/
key appointments
• None
Meetings attended
14/14
Appointed:
November 2022
Appointed to Board:
January 2017
Committee membership
Key strengths
• Chartered accountant
• Recent and relevant
financial experience
Key experience
• Qualified with Deloitte
& Touche
• Previous Commercial
Manager of Primecom
and Financial Director
of Foresight – both
subsidiaries of Primedia
• 20+ years at Robert
Walters plc, Group
Financial Controller
2002–2007, Chief
Financial Officer
2007–2023
Current external listed
company directorships/
key appointments
• None
Meetings attended
12/12
Ben Bramhall
Co-Chief
Executive Officer
Appointed: November
2022
Appointed to Board:
January 2017
Committee membership
Key strengths
• 40+ years of
experience in the
pensions industry
Key experience
• Partner and director
level positions with
leading employee
benefit consultancies
• Previous Non-
Executive Director
of The Pensions
Regulator
• Appointed an OBE
in 2010 and received
many awards for
her contribution to
pensions
Current external listed
company directorships/
key appointments
• Non-Executive
member of Phoenix
Group With Profits
Committee
• Advisory Board
member of Moneyhub
Financial Technology
Limited
• Chair of Pension
Scams Industry Group
• President of
the Pensions
Administration
Standards Association
Meetings attended
13/13
Appointed: July 2019
Committee membership
Key strengths
• Chartered accountant
with 25+ years of
experience
Key experience
• Ten years with PwC
• Senior finance roles
including Group
Financial Controller,
Head of Investor
Relations and Finance
Director for Integration
at Ladbrokes plc
2009–2017
• Interim Director
(Finance & Corporate
Governance) at
Parkdean Resorts
Ltd and Interim
Director of Finance
& Investor Relations
at Countrywide plc
2017–2019
Current external listed
company directorships/
key appointments
• None
Meetings attended
14/14
Paul Cuff
Co-Chief
Executive Officer
Snehal Shah
Chief Financial Officer
Alan Bannatyne
Independent
Non‑Executive
Chairman
Margaret
Snowdon OBE
Senior Independent
Non‑Executive
Director
Governance
57
XPS Pensions Group plc Annual Report and Accounts 2024
Key to Committee membership
Chair
Member
Audit & Risk
Remuneration
Nomination
Sustainability
Appointed: May 2019
Committee membership
Key strengths
• Chartered accountant
• 30+ years of
experience in financial
services including
audit, corporate
finance, investment
banking and asset
management
• Previously a top-
rated equity research
analyst covering the
UK general financial
services sector and
also founded and ran a
hedge fund investment
management business
• Non-Executive
Director of Gresham
House plc until
December 2023, where
she chaired the Audit
Committee
Current external listed
company directorships/
key appointments
• Senior Independent
Non-Executive
Director of Marex
Group since July 2021
where she chairs the
Audit & Compliance
Committee
• Non-Executive
Director of CMC
Markets plc since
September 2017,
where she chairs
the Remuneration
Committee
• Non-Executive
Director of City of
London Investment
Group plc
Meetings attended
14/14
Sarah Ing
Independent
Non‑Executive
Director
Appointed:
December 2023
Committee membership
Key strengths
• Experience working for
a range of technology
and information
services companies
Key experience
• Senior Independent
Director of Gresham
Technologies plc
until 2020
Current external listed
company directorships/
key appointments
• Chair of Grant
Thornton UK LLP
since 2021, where
she was previously
Non‑Executive
Director from 2017
to 2021
• Senior Independent
Non-Executive
Director of Fintel plc
since 5 January 2021,
where she chairs
the Nomination,
Remuneration and
ESG and Wellbeing
Committees
• Non-Executive
Director of Envetec
Sustainable
Technologies
since 2022
• Non-Executive
Director of SThree plc
since 2022
• Non-Executive
Director of IPSX since
2017, where she chairs
the Remuneration
Committee
Meetings attended
2/4
Appointed:
December 2023
Committee membership
Key strengths
• Delivering growth in
services and consulting
businesses through
product innovation,
market diversification
and geographical
expansion
• Extensive international
experience at senior
management and
director level
Key experience
• Chief Executive Officer
of Reliance Cyber Ltd
2020–2023
• Chief Executive Officer
of De La Rue plc
2014–2019
• Managing Director of
Detica Ltd 2008–2014
Current external listed
company directorships/
key appointments
• Chair of Logiq
Consulting Ltd
since 2023
• Non-Executive
Director of Forterra plc
since 2017
• Non-Executive
Director of Alliance
Pharmaceuticals
Ltd since 2023,
where he chairs
the Remuneration
Committee
Meetings attended
3/4
Appointed: February
2023
Committee membership
Key strengths
• Experienced Irish
qualified actuary
• A wealth of experience
across consulting,
insurance companies
and professional
bodies
Key experience
• Head of Life & Health
Pricing UK at Swiss Re
until 2020, where she
spent eight years
Current external listed
company directorships/
key appointments
• Non-Executive
Director of State Street
Fund Services (Ireland)
since 2021, where
she chairs the Audit
Committee
• Non-Executive
Director of Athora
Ireland plc since 2020,
where she chairs the
Risk Committee
• Chair of ECCU
Assurance Company
since 2023, where she
has served as Director
since 2018
• Non-Executive
Director of White
Horse Insurance
Ireland since 2021
• Non-Executive
Director of the
Irish Auditing
and Accounting
Supervisory Authority
since 2020
• Chair of Irish charity
MABS Support CLG
Meetings attended
14/14
Aisling Kennedy
Independent
Non‑Executive
Director
Imogen Joss
Independent
Non‑Executive
Director
Martin Sutherland
Independent
Non‑Executive
Director
58
XPS Pensions Group plc Annual Report and Accounts 2024
Board and Committee composition and operation
The Board is composed of nine
members, consisting of the Chairman,
three executive Directors and five
Independent Non-Executive Directors.
The Company complied with the provisions of the
Code for smaller companies below the FTSE 350 which
requires the composition of the board of directors of a
UK listed company to include at least two independent
non-executive directors (excluding the chairman).
We acknowledge that the Group will become a
constituent of the FTSE 250 effective from 24 June 2024.
We will report on our compliance with the Code, as this
now applies, within our next annual report and accounts.
Imogen Joss and Martin Sutherland were appointed as
Independent Non-Executive Directors as of 7 December
2023, following a recruitment process supported by
Russell Reynolds Associates. Other than supporting the
recruitment of the Group’s Chairman and Non-Executive
Directors, Russell Reynolds Associates has no other
connection to the Group.
The Board considers that the Chairman, Alan Bannatyne,
Senior Independent Director, Margaret Snowdon OBE,
and Non-Executive Directors, Sarah Ing, Aisling Kennedy,
Imogen Joss and Martin Sutherland, are each independent
of management in character, judgement and opinion and
are free from relationships or circumstances that could
affect their judgement. The Board benefits from the wide
experience of its Non-Executive Directors. Biographical
details of all Board members are given on pages 56 to 57.
Board Committees
The Audit & Risk Committee’s role is to assist the Board
in discharging its oversight responsibilities by reviewing
and monitoring the following: the integrity of the financial
information provided to shareholders; the effectiveness
of the Company’s system of internal controls and risk
management; the external audit process and auditor; and
the processes for compliance with laws, regulations and
ethical codes of practice.
Further details are given in the Audit & Risk Committee Report on
pages 66 to 69
The role of the Remuneration Committee is to assist
the Board to fulfil its responsibility to shareholders to
ensure that the Remuneration Policy and practices of the
Company reward fairly and responsibly, with a clear link
to corporate and individual performance, having regard to
sustainability and statutory and regulatory requirements.
The Committee recommends the policy the Board should
adopt on executive remuneration and, within the terms
of the Directors’ Remuneration Policy approved by
shareholders at the AGM in March 2024, determines and
agrees with the Board the levels of remuneration for each
of the Executive Directors, the Company Chairman and
the Group’s Executive Committee.
Further details are given in the Remuneration Report on pages 72
to 95
The role of the Nomination Committee is to undertake
an annual review of succession planning and ensure that
the membership, composition and diversity of the Board
and its Committees, including the balance of skills, remain
appropriate. The Committee also reviews the outcome of
the annual Board effectiveness review to determine any
changes required.
Further details are given in the Nomination Committee Report on
pages 63 to 65
The role of the Sustainability Committee is to support
the Board’s oversight responsibilities of the Company’s
environmental, social and governance impact and
initiatives. The Committee oversees practices, reporting
and communication in relation to factors that have
a material impact on business strategy, business
performance and the long-term sustainability of
the Group.
Further details are given in the Sustainability Committee Report on
pages 70 and 71
Written terms of reference for each Committee are
subject to annual review and periodic updating to reflect
any changes in legislation, regulation or best practice.
The terms of reference for the Committees are available on
the Company’s website at www.xpsgroup.com/investors/
corporate-governance/committees/.
The Company complies with the Code provision that a
smaller (defined as below FTSE 350) UK listed company’s
remuneration and audit committees should comprise at
least two independent non-executive directors and that
the nomination committee should comprise a majority
of independent directors. The Company Chairman is not
a member of the Audit & Risk Committee, in compliance
with the Code. Each Chair reports on the business of
their previous Committee meeting at the next scheduled
Board meeting.
Executive Committee
The Co-Chief Executive Officers operate an Executive
Committee to support them in the performance of their
duties, including the development and implementation
of strategy and the day-to-day operational management
of the business. During the year the Committee was
comprised of the Executive Directors, Chief Information
Officer, Head of Advisory, Managing Director of
Administration, Head of Investment, General Counsel
and HR Director.
Governance
59
XPS Pensions Group plc Annual Report and Accounts 2024
Group governance at a glance
Board composition
Independence
Gender
Non-Executive tenure
Age
Ethnicity
Non-Executives 67%
Executives
33%
Male
56%
Female
44%
Less than
3 years
50%
3–6 years
17%
6+ years
33%
41–50
33%
51–60
45%
61+
22%
White
89%
Minority
ethnic group
11%
Board members’
key skills:
Mergers and acquisitions
Risk management
Financial reporting
Workforce engagement
Prior FTSE experience
Pensions industry
Cyber security
Technology
Investor relations
Marketing
Corporate governance
Environmental and social
sustainability
Business development
Operational management
Board operation and meetings
Decisions on operational matters are delegated by
the Board to the Executive Directors, consistent with
the schedule of matters reserved for Board approval.
In advance of scheduled Board meetings, each Director
receives documentation providing updates on Group
strategy, finances, operations and business development.
The Board meets at least seven times a year and at
other times as and when necessary. During the year, all
Board meetings were attended by all Directors, with the
exception of meetings where conflicts of interest were
present, or prior commitments prevented attendance.
The Board reviews the business strategy for the year
ahead at the beginning of each financial year and
receives strategy updates at each Board meeting.
At least once a year the Board will hold a strategy session
to discuss and review business strategy in depth.
The Directors are expected to attend all meetings of the
Board and any Committees of which they are members,
and to devote sufficient time to the Company’s affairs to
fulfil their duties as Directors. Non-Executive Directors
each need to commit to a minimum of 28 days of service
per year to the Company. The Board is satisfied that
each Non-Executive Director commits sufficient time to
the Company.
60
XPS Pensions Group plc Annual Report and Accounts 2024
Board and Committee composition and operation continued
Board operation and meetings continued
Non-Executive Directors remain in regular contact
with the Chairman, whether in face-to-face meetings
or by telephone, to discuss matters relating to the
Company and on occasion meet without the Executive
Directors present.
If a Director is unable to attend a meeting, they will still
receive Board papers before the meeting and they are
encouraged to submit any comments to the Chairman
or Company Secretary to ensure that their views are
recorded and taken into account during the meeting.
The Director will also receive the minutes and matters
arising in the usual way in order to ensure that they are
fully informed.
The Board is ultimately responsible for the effectiveness
and monitoring of the Group’s system of internal controls.
The Audit & Risk Committee’s role is to assist the
Board with its oversight responsibility by reviewing and
monitoring the Company’s system of internal controls.
It met four times in the financial year and at its meeting
in June 2024 considered the internal controls assurance
framework used during the financial year, concluding that
it was sound and appropriate for the business.
Directors are reminded at the commencement of each
meeting to notify the Board of any conflicts of interest.
Any actual or potential conflicts of Directors with the
interests of the Company that arise must be disclosed
for consideration and, if appropriate, authorisation by
the Board in accordance with the Company’s Articles
of Association. The Board may authorise conflicts and
potential conflicts, as long as the potentially conflicted
Director is not counted in the meeting quorum and does
not vote on the resolution to authorise. Directors are
required to notify the Group Chairman when a
conflict or potential conflict does arise in order that
Board authorisation can be considered. If the Board
determines that a conflict or potential conflict can be
authorised, it may impose additional conditions on the
Director concerned.
A formal induction programme has been developed
and tailored for any new Directors joining the Board.
The Chairman, with the support of the Company
Secretary, ensures that the development and ongoing
training needs of individual Directors and the Board as
a whole are reviewed and agreed following the annual
performance evaluation of the Board, its Committees
and individual Directors.
Directors may seek independent professional advice
at the Company’s expense where they consider it
appropriate in relation to their duties. All Directors
have access to the advice and services of the
Company Secretary.
Embedding culture
At XPS, our values are embedded in everything we
do. The Board recognises the importance of its role in
setting the tone and monitoring of the Group’s culture,
championing the behaviours we expect to see and
embedding these throughout the Group. In addition to
the Board, the Executive Committee upholds our values
and ensures that the importance of compliance and
integrity is recognised at all levels throughout the Group.
Division of responsibilities
The Board is focused on providing entrepreneurial and
sustainable leadership to the Group. It is responsible
for directing and controlling the Group and has overall
authority for the effective and prudent management and
conduct of the Group’s business and the Group’s strategy
and development. The Board monitors performance and
is responsible for ensuring that appropriate financial and
human resources are in place for the Group to meet its
objectives, and takes the lead in setting and embedding
the Group’s culture, values and standards. The Board
is also responsible for ensuring the maintenance of a
sound system of internal control and risk management
(including financial, operational and compliance controls,
and for reviewing the overall effectiveness of systems in
place), and for the approval of any changes to the capital,
corporate or management structure of the Group.
There is a formal schedule of matters reserved for Board approval
which is subject to annual review and published on the Company’s
website: www.xpsgroup.com
The matters reserved for the Board include:
• the Group’s long-term objectives, business strategy
and risk appetite;
• the Company’s policies, culture, values and standards;
• annual business plans, budgets and forecasts;
• extension of the Group’s activities into new business or
geographic areas;
• changes in capital structure and any form of fundraising
or asset securitisation;
• major changes to the corporate structure, including
material acquisitions and disposals;
• interim and annual financial statements and
dividend policy;
• material guarantees, indemnities and letters of comfort;
• the Group’s system of internal control and risk management;
• contracts which are material strategically or by reason
of size or duration;
• calling of shareholder meetings and related documentation;
• changes to the membership of the Board and
its Committees;
• Remuneration Policy for the Directors and
senior management;
• introduction of new share incentive plans or major
changes to existing plans; and
• the Company’s overall corporate governance arrangements.
Governance
61
XPS Pensions Group plc Annual Report and Accounts 2024
Board division of responsibilities
Paul Cuff
Ben Bramhall
Margaret Snowdon OBE
Alan Bannatyne
Alan Bannatyne
Chairman
• Leads the Board and manages the effective
leadership and governance of the Board
• Provides direction and focus on business
strategy, performance, value creation
and accountability
• Ensures the Board establishes a strategy that
facilitates the entrepreneurial development
of the Group and promotes the long-term
sustainable success of the Group’s approach
• Ensures clear structure for effective operation
of the Board and its Committees
• Sets Board agenda and ensures sufficient time
is allocated to promote effective debate to
support sound decision making
• Ensures the Board receives precise, timely and
clear information
• Encourages Directors to contribute fully to
Board discussions, ensuring sufficient challenge
of major proposals
• Meets with the Non-Executive Directors
independently of the Executive Directors
• Leads the process for evaluating the
performance and development needs of the
Board, its Committees and individual Directors
• Leads the Board succession planning process
and chairs the Nomination Committee
• Acts as a sounding board for the Co‑CEOs on
important business issues
• Ensures the Board sets the risk appetite it is
willing to take in the implementation of strategy
• Ensures effective communication with
shareholders to ensure that the Board
understands their views on governance and
performance against the strategy
• Ensures effective communication with other
key stakeholders
Paul Cuff
Co-Chief Executive Officer
• Primarily responsible for raising the profile
of XPS in the market and generating new
business, both in traditional service areas and
in the development of new services as the
market evolves
• Develops the Group’s strategy with regard to
M&A opportunities and technology investment
Ben Bramhall
Co-Chief Executive Officer
• Primarily responsible for the day-to-day
operation of the business, including the
provision of services to existing clients, revenue
generation and the Group’s people strategy
• Develops the Group’s internal strategy to
pursue large opportunities within the market
• The Board considers that the Co‑CEO
structure works well with clear accountability
of roles between the Executive Directors
Margaret Snowdon OBE
Senior Independent
Non-Executive Director
• Acts as a sounding board for the Chairman and
other Directors
• Leads the annual review of the Chairman’s
performance
• Leads any Non-Executive Director meetings
without the Chairman present
• Acts as an additional point of contact for
shareholders, if they have concerns that
contact through the normal channels have
failed to resolve or for which such contact
is inappropriate
Co-Chief Executive Officers
• The Co-CEOs have worked together for over
20 years, having both started their careers as
trainee actuaries at Punter Southall, before
spending many years in the same team at KPMG
• Their long friendship and history of working
together, and their complementary skill sets,
make the Co‑CEO arrangement a success
• The Co-CEOs report to the Chairman and the
Board and are responsible for jointly leading
the Group’s business and managing it in
accordance with the business plan approved
by the Board, the Board’s overall risk appetite,
the Group policies approved by the Board and
its delegated authorities, and all applicable
laws and regulations
• The Co-CEOs, with the support of the CFO,
recommend budgets and forecasts for
Board approval, lead the investor relations
programme and maintain a dialogue with
the Chairman on significant business
developments and strategy issues
• Both Co-CEOs have leadership roles on
large clients
62
XPS Pensions Group plc Annual Report and Accounts 2024
Board and Committee composition and operation continued
Annual General Meeting
The Company’s Annual General Meeting (AGM) will take
place at 1.00pm on Thursday 5 September 2024 at the
Group’s Reading office. The AGM notice setting out the
resolutions to be proposed at the meeting and including
explanatory notes, together with this Annual Report and
Accounts, will be available on the Company’s website
(www.xpsgroup.com) and distributed to shareholders
who have elected to receive hard copies of shareholder
information at least 20 working days prior to the date of
the meeting.
Voting at the AGM will be conducted by way of a poll
and the results will be announced through the London
Stock Exchange Regulatory News Service and made
available on the Company’s website. All Board members
are expected to attend the meeting and the Chair of each
of the Board’s Committees will be present to answer any
questions put to them by shareholders.
2023 AGM and 2024 GM
At the Company’s 2023 Annual General Meeting all
resolutions were passed and there was strong support
for the Directors’ Remuneration Report reflecting the
application of the 2020 Directors’ Remuneration Policy.
Ahead of the 2023 AGM, the Company withdrew the
resolution to seek shareholder approval of the Directors’
Remuneration Policy 2023 in favour of continuing to
engage with shareholders.
The Remuneration Committee then continued to
undertake an extensive shareholder consultation, ahead
of the policy being approved at the March 2024 General
Meeting (GM). During the consultation, the Group’s 20
largest shareholders, covering c.85% of the Company’s
issued share capital and key proxy advisory firms, were
invited to meet with the Chairman and the Remuneration
Committee Chair. The policy approved at the GM is
effectively a continuation of the previously approved
policy, introducing an element of bonus deferral in
line with evolving market practice, reflecting that the
overwhelming majority of shareholders consulted felt
that the existing policy was appropriate. The Board
acknowledges that the policy received less than 80%
support at the GM, and recognises that a small number
of shareholders have differing views.
Following the 2023 AGM, during which the resolutions
to re-elect Alan Bannatyne (Chairman) and Margaret
Snowdon OBE (Senior Independent Non-Executive
Director and Remuneration Committee Chair) received
below 80% support, the Company has appointed two
additional Independent Non-Executive Directors, Imogen
Joss and Martin Sutherland to further strengthen the
Board, and continued to engage with shareholders
regarding Board composition.
Board evaluation
The Board acknowledges that the Code requires regular external Board evaluations (as a company below the FTSE
350) and conducted an external Board evaluation in 2023, facilitated by Ceradas Limited. All Board members engaged
with the process, in addition to a number of the senior management team. Ceradas Limited has no other connections
to the Company or the Directors.
In 2024, the Board completed an internally facilitated evaluation, using questionnaires agreed by the Chairman and
Company Secretary. The Senior Independent Director also met with each Board member to appraise the performance
of the Chairman. The Board discussed the outcome of the evaluation at the May 2024 Board meeting, and agreed
actions as follows:
• the Remuneration Committee to receive increased internal support from the HR function;
• the Nomination Committee to agree the best way to ensure smooth transition when the Chairman and Senior
Independent Director reach nine years’ tenure in January 2026; and
• the Sustainability Committee to report formally to the Board annually.
2023 Board evaluation outcomes and progress
The 2023 externally facilitated evaluation, supported by Ceradas Limited, identified the following areas for
improvement; progress is reported as follows:
Actions from the 2023 evaluation
Improvements
The Board agenda to be developed to optimise the focus
of discussions.
The Board’s agenda has been re-ordered and a clearer
focus on strategic items established.
Nomination Committee to consider planning for
Non‑Executive Director succession in the next three years.
In recognition of the Group’s Chairman, Alan Bannatyne,
and Senior Independent Director, Margaret Snowdon OBE,
reaching nine years’ tenure in January 2026, the Nomination
Committee appointed two additional Independent
Non‑Executive Directors to the Board in December 2023.
The Nomination Committee reviews the Board, including
Non-Executive Director, succession plan bi-annually.
More formal feedback from the Employee Engagement
Group to be shared with the Board.
The Designated Employee Engagement Non-Executive
Director, Margaret Snowdon OBE, feeds back to the Board
after each Employee Engagement Group meeting.
Governance
63
XPS Pensions Group plc Annual Report and Accounts 2024
Alan Bannatyne
Chair of the Nomination Committee
Nomination Committee
This year, we strengthened our Board further with the
recruitment of two additional Non-Executive Directors who
bring excellent skill sets to complement the Board.
Dear Shareholder,
I am pleased to present the report of the Nomination
Committee for the year ended 31 March 2024.
The Committee has met four times during FY 2024
and all meetings were attended by all members of the
Committee. The Committee intends to continue to
meet at least twice annually with additional meetings
as required. The members of the Committee are
Margaret Snowdon OBE, Sarah Ing, Aisling Kennedy and
myself as Chair.
The Nomination Committee assists the Board in
determining the composition and make-up of the Board,
including its skills, knowledge, experience and diversity.
It is responsible for developing and maintaining a formal,
rigorous and transparent procedure for identifying
appropriate candidates for Board appointments and
making recommendations to the Board.
The Committee is also responsible for keeping under
review the leadership needs of the Group, both Executive
and Non-Executive, and for ensuring that succession
planning focuses on the continued ability of the Group
to deliver its strategic goals and compete effectively.
The terms of reference of the Committee are reviewed
annually and available on the Company’s website,
www.xpsgroup.com.
Succession planning for a sustainable future
Committee membership
Attendance
Chair
Alan Bannatyne
4/4
Members
Margaret Snowdon OBE
4/4
Sarah Ing
4/4
Aisling Kennedy
4/4
64
XPS Pensions Group plc Annual Report and Accounts 2024
Non-Executive Director appointments
During the year, the Nomination Committee reviewed
the composition of the Board and Committees and the
Non-Executive Director succession plan and agreed to
commence a search for two additional Non-Executive
Directors. The recruitment process was led by the
Nomination Committee and external search firm Russell
Reynolds Associates, with which the Group and the
Directors have no other connections. Following the
completion of a successful recruitment process, we were
delighted to welcome Imogen Joss and Martin Sutherland
to the Board on 7 December 2023. Imogen and Martin also
joined the Remuneration and Audit & Risk Committees
at the same time. The Committee is satisfied that the
Board and its Committees have the right balance of skills,
experience, independence and knowledge required.
Recruitment process
• The Nomination Committee identified key skills required.
• Russell Reynolds Associates commenced a search
for candidates.
• A shortlist of candidates was drawn up by Russell
Reynolds Associates.
• Alan Bannatyne, Group Chairman and Nomination
Committee Chair, interviewed a number of candidates.
• The Nomination Committee interviewed Imogen Joss
and Martin Sutherland.
• The Executive Directors met with Imogen Joss and
Martin Sutherland.
• All Directors fed back at a Nomination Committee
meeting, and agreed to appoint both Imogen Joss
and Martin Sutherland as Independent Non-Executive
Directors and members of the Remuneration and Audit
& Risk Committees.
Board evaluation
During the year, an internally facilitated Board evaluation
was completed; further details of the process and
the outcomes can be found on page 62. The Group
conducted an externally facilitated Board evaluation
supported by Ceradas Limited in 2023, and will continue
to conduct an externally facilitated evaluation every
three years going forward as required by the Corporate
Governance Code.
Succession planning
During the year, the Nomination Committee reviewed
detailed succession plans covering the roles considered
key to the business, including those of the Executive
Directors, the Non-Executive Directors and the Executive
Committee. The Committee is satisfied that the
contingency and talent management plans in place for
key positions are appropriate and has agreed that the
Group’s succession planning will be kept under review,
at least bi-annually.
Induction programme and training
A formal tailored induction for Non-Executive Directors is
in place supported by a programme of training to further
their knowledge of the Group, its business, culture,
operations, employees and governance and to ensure
awareness of their regulatory duties and obligations
as a Director of a UK premium listed company.
Nomination Committee continued
Governance
65
XPS Pensions Group plc Annual Report and Accounts 2024
Diversity, equality and inclusion
I am proud to confirm that XPS complies with the
requirements of the FCA’s diversity listing rules, with
over 40% female representation on our Board (44%),
one senior board position held by a female and one Board
member from an ethnic minority background. Whilst
we recognise that XPS has further progress to make
in relation to the diversity of our Board and executive
management, we are pleased to have made progress
in recent years and continue reporting compliance with
the listing rules. We have also committed to 37% of our
senior management team being female by 2028 and are
pleased to report good progress this year, with female
representation increasing to 35% (FY 2023: 31%).
The Company has an established Inclusion and Diversity
Committee, championed by Non-Executive Director
Margaret Snowdon OBE and chaired by a senior female
within the Group. The Committee has made great
progress, has a significant impact across the business and
is a key channel of communication and engagement for
employees and management. You can read more about
the Group’s I&D strategy and commitment to further
progress on page 25 of our Sustainability Report.
The Company acknowledges that there remains a gender
pay gap within the business which reflects a higher
proportion of males in higher paid roles than females.
Whilst this is partly a challenge of the UK industry in
which the Company operates, with a male‑dominated
actuarial profession, the Board believes it has a
responsibility to promote change, both within XPS and
the industry more generally. The Group continued to
recruit into the apprentice scheme during the year and
hopes this continues to improve the diversity of the
Group and profession in the future.
The Board believes that no individual should be
discriminated against, whether for reasons of gender,
ethnicity or other grounds that restrict social inclusion,
and this extends to Board appointments, which it
considers should be made on merit and on the basis
of ensuring an appropriate balance of skills and
experience within the Board. The Board recognises
that greater diversity, in the widest sense of diversity
of race, experience and approach, can generate a more
diverse perspective on issues which, in turn, has the
ability to benefit Board effectiveness through improved
discussions and better decisions.
Alan Bannatyne
Chair of the Nomination Committee
19 June 2024
Table 1. Reporting table on sex/gender representation as at 31 March 2024
Number
of Board
members
Percentage
of the
Board
Number
of senior
positions
on the Board
(CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
Men
5
56%
4
7
78%
Women
4
44%
1
2
22%
Not specified/prefer not to say
—
—
—
—
—
Table 2. Reporting table on ethnicity representation as at 31 March 2024
Number
of Board
members
Percentage
of the
Board
Number
of senior
positions
on the Board
(CEO, CFO,
SID and Chair)
Number in
executive
management
Percentage
of executive
management
White British or other White (including minority White groups)
8
89%
4
8
89%
Mixed/multiple ethnic groups
—
—
—
—
—
Asian/Asian British
1
11%
1
1
11%
Black/African/Caribbean/Black British
—
—
—
—
—
Other ethnic group, including Arab
—
—
—
—
—
Not specified/prefer not to say
—
—
—
—
—
Executive management is defined as the XPS Executive Committee.
This data was obtained from HR data held by the Group.
66
XPS Pensions Group plc Annual Report and Accounts 2024
Audit & Risk Committee
Sarah Ing
Chair of the Audit & Risk Committee
The Audit & Risk Committee continues to provide independent
oversight of the Group’s financial reporting procedures,
risk management and internal control framework.
Membership of the Committee
Imogen Joss and Martin Sutherland were appointed to
join the Board and the Committee in December 2023,
and the Committee members are now Margaret Snowdon
OBE, Aisling Kennedy, Imogen Joss, Martin Sutherland
and me. The Board is satisfied that the Audit & Risk
Committee as a whole has competence relevant to the
sector in which the Company operates and that I have
recent relevant financial experience as can be seen in
our biographies included on pages 56 and 57 of the
Annual Report.
The Executive Directors are invited to each meeting
as well as the Company’s Non-Executive Chairman,
Chief Information Officer, Head of Risk, General
Counsel, Financial Controller, and other members of
the management team as the agenda dictates.
The Committee’s performance evaluation was conducted
as part of the wider Board evaluation, you can read about
this on page 62.
Delivering independent oversight
Committee membership
Attendance
Chair
Sarah Ing
4/4
Members
Margaret Snowdon OBE
4/4
Aisling Kennedy
4/4
Imogen Joss
1/1
Martin Sutherland
1/1
Dear Shareholder,
I am pleased to present the report of the Audit &
Risk Committee for the year ended 31 March 2024.
The Committee met four times during FY 2024
and intends to continue to meet at least three times
annually. All meetings were attended by all members
of the Committee.
Significant accounting matters considered during the year
Matters considered
The Group has significant intangible assets on the
balance sheet in the form of goodwill, customer
relationships, brands and software. The intangible
assets have to be reviewed for impairment at least
annually or if there are any indicators of impairment.
Action
The carrying value of all indefinite life assets is tested
for impairment annually. In reaching its conclusion that
the treatment adopted is appropriate, the Committee
has reviewed the forecasts, key assumptions and
methodology adopted by management. BDO LLP’s
findings have also been considered by the Committee
in reaching its conclusions over the appropriateness
of the treatment within the financial statements.
Carrying value of goodwill and intangible assets
Governance
67
XPS Pensions Group plc Annual Report and Accounts 2024
Matters considered
Depending on the income stream and the nature
of the engagement, the Group recognises revenue
on either time cost incurred, fixed fee or rateably
over the period of providing the relevant services.
Billing is mainly in arrears and occurs monthly
or quarterly.
Action
The Committee reviewed the approach to revenue
recognition including the process for accrued and
deferred revenue. The Committee receives regular
updates on ageing of accrued revenue and trade
receivables. The Committee has also considered
the conclusions reached by BDO LLP as part of its
audit of this area and is satisfied that management
has adopted appropriate processes and controls
over revenue recognition, accrued revenue and
trade receivables.
Revenue recognition, accrued income and trade receivables
Matters considered
During the year, the Group disposed of its defined
contribution master trust, National Pension Trust (NPT).
The transaction completed on 20 November 2023
for an initial consideration of £35 million with an
additional £7.5 million payable contingently based on
the future performance of NPT.
The trade and transaction-related income and costs
are not presented as a discontinued operation on
the face of the consolidated income statement, as
the NPT business does not meet the criteria set
out in IFRS 5 (it does not constitute a separate
cash‑generating unit).
Further information can be found in note 7 to the
financial statements on page 123.
Action
The Committee has reviewed management’s
assessment of the fair value of the assets and
liabilities disposed of and the resulting profit
on disposal. The Committee has reviewed the
disclosures in respect of the disposal and considers
the accounting and disclosures to be appropriate.
Business disposals
Matters considered
The Group classifies certain items in the income
statement as exceptional/non-trading to allow a
clearer understanding of the underlying trading
performance of the business.
Exceptional and non-trading items in the year totalled
£15.0 million (FY 2023: £14.2 million). For more details,
see note 6 to the financial statements on page 123.
Action
As part of its assessment that the treatment of
exceptional/non-trading items in the financial
statements is appropriate, and consistent with the
Group’s accounting policies and with the guidance
issued by the FRC, the Committee has considered
each of the items treated as exceptional/non-trading
and challenged, where necessary, the treatment
adopted by management. The Committee has also
considered the conclusions reached by BDO LLP as
part of its audit in this area and is satisfied.
Presentation and disclosure of exceptional and non-trading items
Matters considered
The Group received a letter from the FRC
disclosing the results of a review undertaken of the
Annual Report and Accounts for the year ended
31 March 2023. Whilst the FRC suggested some
improvements could be made to aid a reader’s
understanding of the accounts, it was also clear
that it did not have any specific questions or
queries to raise.
Action
The Group has considered all points raised by
the FRC and has implemented changes in the
31 March 2024 Annual Report and Accounts where
appropriate. The Committee, in consideration with the
Group’s auditors, has reviewed the changes made by
the Group and has sent an acknowledgement to the
FRC in response to their letter.
Letter from the Financial Reporting Council (FRC)
68
XPS Pensions Group plc Annual Report and Accounts 2024
Auditor
The Committee is responsible for making recommendations
to the Board regarding the appointment of its external
auditor and its remuneration. BDO LLP has been the
Group’s auditor since 2014. The Group audit partner is
required to rotate after a maximum of five years; the
current audit partner, Andrew Radford, was appointed in
September 2020, and BDO LLP have begun the process
to identify a successor, to ensure appropriate handover
of the audit partner. During FY 2021, the Committee
undertook an audit tender exercise and BDO LLP were
retained as the Company’s auditor.
The Committee is responsible for making ran assessment on
the independence of the Company’s auditor, BDO LLP. In
addition, the auditor has internal processes, which include
peer reviews, to ensure that independence is maintained.
The Committee will review the level of audit fees and
non-audit fees on an ongoing basis. See note 5 to the
financial statements on page 122.
The Committee has reviewed the approach to the annual
audit at a meeting that the auditor attended ahead of the
start of fieldwork. The auditor then attended a further
Committee meeting at the completion stage of the audit
to present its findings.
There is an open line of communication between the
Chair of the Audit & Risk Committee and the audit
engagement partner, and a closed session between the
Audit & Risk Committee and the audit partner is held at
the beginning of each Committee meeting, without the
Executive Directors and management team present.
The audit partner is also invited to attend the Committee
meetings for the duration of the meeting. The Committee
assessed the effectiveness of the external audit process
by obtaining feedback from parties involved in the
process, including management and the external auditor.
Based on this feedback and its own ongoing assessment,
the Committee remains satisfied with the efficiency and
effectiveness of the audit.
After due and careful consideration, the Committee
remains satisfied with the effectiveness and independence
of BDO LLP and has recommended to the Board that
BDO LLP be reappointed as the Company’s auditor.
Internal Audit
The Internal Audit function is provided using a
co‑sourcing agreement, with PwC reappointed in 2020
after a retender as it had been in place since 2017.
It offers independent oversight of operational and risk
management activities, with audit reports and relevant
findings presented to the Committee. This year it focused
on the Group’s anti-money laundering (AML) controls and
the integration of the recent Michael J Field acquisition,
with no significant control weaknesses identified.
The Internal Audit program is integrated with the existing
framework of internal and external assurance activities,
e.g. CE+, AAF, IoA QAS, which are carried out by the
Risk and Compliance teams. These activities focus on
the design and effectiveness of internal controls for
key processes.
Audit & Risk Committee continued
Governance
69
XPS Pensions Group plc Annual Report and Accounts 2024
“The robust risk management and
internal control framework deployed
across the XPS Group ensures visibility
of existing and emerging risks.”
Sarah Ing
Chair of the Audit & Risk Committee
Annual Report review
A final draft of the Annual Report is reviewed by the
Committee prior to consideration by the Board and the
Committee considered whether the 2024 Annual Report
was fair, balanced and understandable and whether it
provided the necessary information for shareholders to
assess the Group’s position and performance, business
model and strategy.
The Committee was satisfied that, taken as a whole, the
Annual Report is fair, balanced and understandable and
provides the necessary information.
Effective 24 June 2024, the Group will become a
constituent of the FTSE 250. The FRC’s minimum
standard for Audit Committees and the External Audit
will now apply to the Group on a comply or explain basis.
We will report on this as required within our next annual
report and accounts.
Risk management and internal control
The existing risk management and internal control
framework deployed across the Group continues to
be developed and enhanced to ensure it manages
existing and emerging risks to the XPS Group. Effective
communication of risk appetites and key controls
are supported by clear direction from executive
management, which drives a strong risk culture and
active engagement from staff.
The framework supports a standardised risk management
approach across all businesses and support functions in
the Group, enabling clear and consistent reporting. This
includes a clear articulation of the key controls required
to ensure risks are managed within their stated appetites.
The use of a common approach for all risk types
covers the full spectrum of the Group’s activities,
and supports the achievement of the organisation’s
objectives. The framework also highlights key processes
and controls, supporting their regular review, with
amendments made as required to reflect the findings of
these reviews. All review findings are recorded centrally
to ensure identified improvements are implemented
consistently across the Group. Executive management
is provided with regular updates on the Group’s overall
risk profile and actions required to keep within appetite.
This is supported by a rolling programme of deep dives
on specific risks at the Risk Management Committee.
These meetings are held on a regular basis and support
the Audit & Risk Committee to ensure that the risk
management and internal control framework meets the
needs of the Group’s stakeholders.
The Risk function supports all businesses within the
Group, ensuring that best practice is applied consistently.
The team is also responsible for co-ordinating the
existing assurance frameworks across the Group, to
ensure all risks and controls are considered and assessed
appropriately. These assurance activities include
certifications to ISO 14001 and ISO 27001, AAF 01/20, IIP
and the IoA Quality Assurance Scheme (QAS). In addition
to these, the Group has also maintained accreditation
against the PASA pensions administration standard.
The Audit & Risk Committee regularly reviews the wider
internal control processes as part of its meeting cycle.
The Committee enlists external support from specialist
advisers to support these reviews when appropriate.
To recognise the importance of operational resilience and
protection of Group and client assets from cyber risks,
the Committee considers this as a standing item at each
meeting. This includes the performance of key controls
and the independent assurance frameworks in place.
Whistleblowing
The Group has a clear, formalised Whistleblowing Policy
and procedure available to all staff in order to raise
concerns about perceived wrongdoing, non-compliance
with our own standards, regulatory requirements and/
or the law. This policy was reviewed this year. We have
a confidential helpline, run by a third party, Expolink, in
order that staff can report any concerns or perceived
shortcomings within our operations without fear of
sanction or disadvantage. The helpline is promoted
through the intranet and posters. Incidents are reported
and then reviewed by the Board at the next scheduled
meeting, or sooner if required. The Group’s Audit & Risk
Committee reviews the policy and process annually to
ensure they remain fit for purpose.
Sarah Ing
Chair of the Audit & Risk Committee
19 June 2024
70
XPS Pensions Group plc Annual Report and Accounts 2024
Sustainability Committee
Sarah Ing
Chair of the Sustainability Committee
We are embedding sustainability across the business to support our purpose:
to shape and support safe, robust and well-understood pension schemes
for the benefit of people and society. This year we focused on reviewing
our strategic approach to sustainability as well as further developing our
environmental, community and clients and members programmes.
The membership of the Committee
The membership of the Committee during the year
was Margaret Snowdon OBE (Senior Independent
Non Executive Director), Aisling Kennedy (Independent
Non-Executive Director), Snehal Shah (CFO), Charlotte
West (Head of Employee Engagement), Adrian
Davison (Head of Risk), Alex Quant (Head of ESG for
the Investment business) and myself as Chair. Martin
Sutherland (Independent Non-Executive Director
appointed to Board on 7 December 2023) attended the
Committee meeting in January 2024 and Imogen Joss
(Independent Non-Executive Director appointed to the
Board on 7 December 2023) attended the Committee
meeting in March 2024 as part of their Board induction
process. Imogen has joined the Committee as a member
since 1 April 2024.
The focus of the Committee
During the year, the Committee tracked the performance
on the Group’s key sustainability issues: our employees,
our environment, our communities, our members and
clients and our governance. Its work plan included the
following focus areas:
1. Refreshed materiality assessment
In an effort to ensure the Group’s sustainability
framework continues to be relevant, the Committee
provided oversight on the completion of a dynamic
materiality assessment. As part of the process, key
stakeholder groups were asked to review which
sustainability issues they thought were priorities and
how they felt the Group was performing on them.
The Committee discussed the findings of the materiality
assessment twice and approved a refreshed set of
material issues, which are included on page 20.
Strengthening our approach to sustainability
Committee membership
Attendance
Chair
Sarah Ing
5/5
Members
Margaret Snowdon OBE
5/5
Aisling Kennedy
5/5
Snehal Shah
5/5
Charlotte West
5/5
Adrian Davison
5/5
Alex Quant
4/5
“This year we refreshed our materiality and
strengthened our sustainability framework by
taking into account the views and interests of
key stakeholders.”
Dear shareholder,
I am pleased to present the report of the Sustainability
Committee for the year ended 31 March 2024.
The Committee met five times during the year and
all meetings were attended by all members, with the
exception of one meeting due to planned annual leave.
The Committee intends to continue to meet at least
twice yearly with additional meetings as required.
The Sustainability Committee takes into account the views
and interests of all key internal and external stakeholders
of the Group. Its role is to set the sustainability framework,
oversee its implementation and drive improvements in
reporting and communication in relation to environmental,
social and governance (ESG) factors that have a positive
impact on the business strategy and performance of
the Group.
Governance
71
XPS Pensions Group plc Annual Report and Accounts 2024
2. Strengthened sustainability framework
The Committee continued to oversee the development
of the Group’s sustainability framework during the year.
We took note of the key insights from the materiality
assessment, which identified, inter alia, that stakeholders
perceived the Group’s impact on people and the
environment to be strong, and that its impact on the
community leaves room for improvement. In addition,
stakeholders recognised that internal and external
communication of the Group’s strategic framework
could be improved to drive engagement.
Over the year, we guided the update of the sustainability
framework. As shown on page 21, the framework was
reshaped to display our priorities clearly, building on
the foundation of good governance. We also supported
the adoption of a stronger communications framework
around the narrative of “shaping a better future” and of
ambition statements that outline our direction of travel.
3. Oversaw sustainability initiatives
A strong focus for the Committee this year was to
provide oversight of the Group’s activities on key
priorities such as the environment, community and clients
and members. We reviewed:
• progress on our net zero commitment and approved
a detailed roadmap;
• performance on embedding sustainability
considerations in our support to clients and
members including compliance with the UK
Stewardship Code; and
• charitable giving in the Group and, after reviewing
alternatives, agreed to maintain the current approach.
Looking ahead
At a high level, the focus for the year ahead includes:
• overseeing the further integration of our sustainability
framework across the Group, including stronger
and more frequent communication to internal and
external stakeholders;
• continuing to play a critical friend role in reviewing
progress and performance, including the development
of a regular sustainability dashboard for the Board;
• monitoring the Group’s existing and emerging
sustainability risks and opportunities and updating our
approach where necessary;
• introducing a refreshed charitable giving policy to
provide a more strategic approach to our current
charitable giving practice; and
• continuing to engage with our key internal and
external stakeholders to receive feedback on our
sustainability performance.
At the end of this report, all that remains is for me
to thank the members and the attendees of the
Sustainability Committee for their hard work and
contributions. I have handed the chair over to Aisling
Kennedy, who took over the reins from 1 April 2024.
The terms of reference of the Committee are reviewed
annually and are available on the Company’s website,
www.xpsgroup.com.
Sarah Ing
Chair of the Sustainability Committee
19 June 2024
Board of Directors
Sustainability Committee
Sarah Ing
Chair of the
Sustainability Committee
Non-Executive Director
Margaret
Snowdon OBE
Senior
Independent
Non-Executive
Director, Chair of
EEG and
member of
I&D Committee
Adrian Davison
Head of Risk
Responsible for
environmental
strategy
Alex Quant
Head of ESG for
the Investment
business
Responsible for
representing client
interests
Supported by resources from across XPS and external consultants
Aisling Kennedy
Independent
Non-Executive
Director
Snehal Shah
Chief
Financial Officer
Executive sponsor
for sustainability,
responsible for
representing
investor views
Charlotte West
Head of
Employee
Engagement
Responsible for
employee
engagement
and I&D strategies
72
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ remuneration report
The overall Remuneration Policy is designed to promote the long-term
success of the Group whilst ensuring it does not support inappropriate
risk taking. The Remuneration Committee has developed the Directors’
Remuneration Policy with the following principles in mind:
Remuneration at a glance
Aligned with shareholders – in order to motivate
Executive Directors and incentivise the delivery of
sustained performance over the long term, and to
promote alignment with shareholders’ interests.
Aligned with financial performance – to motivate
Executive Directors and support the delivery of the
Group’s financial and strategic business targets.
Aligned with colleagues – by striving for as consistent
as possible an approach between the Executive Directors
and senior management.
Aligned with clients – the continued strategy to be
the best provider of services to the UK pensions market,
as a one stop shop for everything trustees and employers
need in this market, at the same time as achieving sustainable
growth through investing in client services, technology
and staff, demonstrates the commitment to providing an
agile, high-quality and market-leading service that puts
client satisfaction at the heart of the business.
Competitive – remuneration packages are reviewed
annually and benchmarked by reference to the external
market. This allows us to attract and retain highly talented
people, who know that good performance will
be rewarded.
Designed to encourage retention and to reward
performance – deferred variable remuneration does
not give rise to any immediate entitlement. Long-term
incentive awards normally require the participant to be
employed continuously by the Group until at least the
third anniversary of grant in order to vest in full.
Governance
73
XPS Pensions Group plc Annual Report and Accounts 2024
FY 2024
FY 2025
Fixed pay
Base salary
Co-CEOs
CFO
£356,048
£300,745
Pension
Co-CEOs
CFO
Average employee
6%
6%
6%
Benefits
Benefits currently include permanent health
insurance, life insurance, private medical insurance
and car allowance.
Shareholding
Actual level % of base salary at 31 March 2023
Ben Bramhall
Paul Cuff
Snehal Shah
817%
465%
35%
Annual bonus
2024 annual bonus
Co-CEOs
CFO
£534,072
£375,931
100% of maximum
100% of maximum
150% of salary
125% of salary
Long-term incentive plan
2021 PSP estimated outcome*
Co-CEOs
CFO
100%
100%
Performance conditions:
EPS – 75%
TSR – 25%
Subject to two-year holding period.
Malus and clawback provisions apply.
* Vesting 1 July 2024.
Fixed pay
Base salary
Co-CEOs
CFO
Average employee
£372,070
£321,797
4.5%
7%
5.8%
Pension
No change for FY 2025.
Benefits
No change for FY 2025.
Shareholding
Actual level % of base salary at 31 March 2024
Ben Bramhall
Paul Cuff
Snehal Shah
533%
317%
116%
Annual bonus
2025 annual bonus
Co-CEOs
Maximum
150% of salary
CFO
Maximum
125% of salary
Bonus delivery
Beyond 100%
of salary
delivered in shares
Long-term incentive plan
Anticipated award grants
as % of base salary
Co-CEOs
CFO
150%
125%
Group adj. PBT
75%
Personal objectives 25%
Bonus
elements
EPS
70%
TSR
20%
ESG
10%
Performance
conditions
Shareholding requirement
489,016 shares
B. Bramhall
P. Cuff
S. Shah
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
821,374 shares
150,902 shares
967,191 shares
B. Bramhall
P. Cuff
S. Shah
0%
100%
200%
300%
400%
500%
600%
700%
800%
900%
1,699,549 shares
66,830 shares
Shareholding requirement
74
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ remuneration report continued
Margaret Snowdon OBE
Chair of the Remuneration Committee
The Remuneration Committee continues to ensure a robust link
between the execution of strategy, reward and performance and
is committed to fairness and transparency.
Dear Shareholder,
The Directors’ Remuneration Report for the year ended
31 March 2024 contains:
• my annual statement;
• the Directors’ Remuneration Policy, which was
approved at the March 2024 General Meeting; and
• the annual report on remuneration which describes how
the Directors’ Remuneration Policy has been applied in
FY 2024 and how it will be implemented in FY 2025.
At the 2024 AGM, in addition to the voting resolution on
the advisory vote on the Directors’ Remuneration Report,
there will be a resolution asking shareholders to approve
the new deferred bonus plan rules.
Operational highlights
During the year ended 31 March 2024, we produced an
excellent year of robust financial performance. At a Group
level, revenues increased 20% year on year and adjusted
fully diluted EPS rose 21% year on year. This was delivered
in a year where employee engagement and client
satisfaction remained high.
The Company’s strong operational and financial progress
was reflected in the share price and value delivered to
our shareholders. XPS ended the year as one of the
top performers in the FTSE All-Share, delivering a total
shareholder return of over 50% across the year.
Engaging with our stakeholders
Shareholders
At last year’s Annual General Meeting held on
7 September 2023, the Remuneration Committee was
pleased that shareholders approved the Remuneration
Report with 85% of votes for.
Aligning remuneration with sustainable success
Committee membership
Attendance
Chair
Margaret Snowdon OBE
5/5
Members
Alan Bannatyne
5/5
Sarah Ing
5/5
Aisling Kennedy
5/5
Imogen Joss (appointed 7 December 2023)
2/2
Martin Sutherland (appointed 7 December 2023)
2/2
Governance
75
XPS Pensions Group plc Annual Report and Accounts 2024
The resolution to approve the Directors’ Remuneration
Policy was withdrawn from the AGM in favour of continuing
to engage with shareholders, as outlined on page 62.
We undertook an extensive consultation with our 20
largest shareholders in the lead up to the General Meeting
held on 7 March 2024 where the Directors’ Remuneration
Policy 2024 was approved with 76% of votes in favour.
This 2024 Policy is effectively a continuation of the
previously approved policy, introducing an element of
bonus deferral in line with evolving market practice,
reflecting that the overwhelming majority of shareholders
consulted felt that the existing policy was appropriate.
The Board acknowledges that 19.5% of the Group’s total
issued share capital was voted against the resolution
and recognises that a small number of shareholders have
differing views. I would like to thank those shareholders
that participated in the consultation and will continue to
engage as appropriate in the future.
Employees
The Employee Engagement Group, which I chair as
XPS Group’s Designated Employee Engagement
Non‑Executive Director, considers Executive Directors’
remuneration, taking account of employee views.
The Employee Engagement Group was set up with
the purpose of providing an “employee voice” to the
Board by raising any matters or issues highlighted by
employees. It is a forum for employees to share ideas
and concerns with the Board in a consultative manner
and is not a decision-making group. One area of focus
for the Employee Engagement Group is reward and
remuneration of Executive Directors; members are asked
to provide feedback on the Directors’ Remuneration Policy
and Executive Director objectives. The group improves
engagement between the Board and XPS employees.
Wider workforce remuneration
We continue to review the remuneration arrangements
for the wider workforce and take these into account when
considering remuneration arrangements for the Executive
Directors and other members of senior management.
The Remuneration Committee also reviewed the Group’s
gender pay gap analyses and action plans. I have also
continued to play an active role throughout the year on
the Group’s Inclusion & Diversity Committee, in addition
to chairing the Employee Engagement Group.
Annual bonus payments for FY 2024
The financial element of these bonuses is based on Group
profit before tax (PBT). The reported Group adjusted PBT
for FY 2024 has resulted in a bonus payment of 100% of
the maximum for this element of the bonus.
The Committee determined that the strategic objectives
had been fully met which therefore led to a bonus outturn
of 100% of the maximum for the Co-CEOs and CFO.
When considering the appropriateness of the bonus
outturn, the Committee was mindful that this was only
the second maximum bonus payment since IPO (in 2017)
and that in three of the previous six years the bonus had
been reduced, with the agreement of the Co-CEOs, from
the formulaic outcome.
% of salary
% of
maximum
Ben Bramhall
150%
100%
Paul Cuff
150%
100%
Snehal Shah
125%
100%
Vesting outcomes for the 2021 PSP awards
The July 2021 PSP award is subject to underlying
EPS performance and relative TSR performance.
The estimated overall vesting of the award is expected
to be 100% of maximum.
The Committee considers that the policy operated
as intended during FY 2024 and that remuneration
outcomes are consistent with the Group performance
and appropriately reflect performance delivered for our
shareholders over the respective periods. The Committee
felt that no discretion needed to be applied for these
remuneration outcomes. With regard to the PSPs, the
Committee considers that the increase in share price
from the date of grant is aligned to the underlying
performance of the business.
Operation of the Directors’ Remuneration Policy
for FY 2025
Looking forward into FY 2025, we have given consideration
to actions on pay matters which we regard as appropriate
and designed to support shareholders’ interests over the
long term.
When reviewing the Executive Directors’ salaries, the
Committee considered the matter holistically, taking
into consideration the roles outlined above, the impact
of salary increases on total remuneration and increases
applicable to the wider workforce along with the strong
absolute and relative performance of the Group.
The Committee agreed to award salary increases for
the Co-CEOs of 4.5% and the CFO’s salary has been
increased by 7%, reflecting performance and the
expansion of the role across risk and sustainability.
This compares with an average increase over the year
awarded to all staff of 5.8%.
The resultant salaries for the Executive Directors remain
low against similarly sized companies, and annual target
remuneration is low in comparison to senior leadership
and senior client facing roles at some of the Group’s
competitors, which include Big 4 accounting firms and
other equity partnerships.
The maximum bonus opportunities for the Co-CEOs
and CFO will remain unchanged at 150% and 125% of
salary respectively.
The PSP awards due to be made in July 2024 will revert
to the normal award levels of 150% and 125% of salary for
the Co-CEOs and CFO respectively.
76
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ remuneration report continued
Operation of the Directors’ Remuneration Policy for FY 2025 continued
Component of
remuneration
Summary of approach
Base salary
and benefits
Base salary and benefits are reviewed annually on 1 April in light of a number of factors,
including the approach to salary reviews more generally across the Group and the performance
of the individuals and the Company. The base salaries of the Co-CEOs have been increased by
4.5% for FY 2025 and the CFO’s salary has been increased by 7%, reflecting performance and
the expansion of the role across risk and sustainability. This compares with an average increase
over the year awarded to all staff of 5.8%.
Ben Bramhall – £372,070
Paul Cuff – £372,070
Snehal Shah – £321,797
The increase since 1 April 2018 remains below that of the general level of salary increases across
the Group since then:
1 April
2019
1 April
2020
1 April
2021
1 April
2022
1 April
2023
1 April
2024
Annualised
Co-CEOs
0%
0% 9.0% 6.0%
7.0%
4.5%
4.4%
Average staff
3.0%
3.2%
3.2%
5.9%
12%
5.8%
5.5%
Pension
Defined contribution/cash supplements of 6% are paid and are aligned with the levels available
for new employees. This is well below the rate provided to many employees who have joined the
business through the acquisitions we have made.
Annual bonus
Payable subject to the achievement of challenging financial/strategic/personal performance
conditions. These are expected to incorporate sustainability, culture and technology-based
goals. Malus and clawback provisions apply.
Maximum bonus opportunity:
Ben Bramhall – 150% of salary
Paul Cuff – 150% of salary
Snehal Shah – 125% of salary
Bonus above 100% of salary will be paid in shares, deferred over two years.
Long-term
incentives
Annual awards of performance shares. Shares vest, subject to the achievement of the
performance conditions, after three years and are subject to a further two-year holding period.
Malus and clawback provisions apply.
Maximum grant levels FY 2025:
Ben Bramhall – 150% of salary
Paul Cuff – 150% of salary
Snehal Shah – 125% of salary
All-employee
share plans
Executive Directors are entitled to participate in all of the Company’s employee share plans,
including the Share Save Plan, on the same terms as other employees.
Share ownership
guidelines
Executive Directors are subject to a minimum shareholding requirement of 200% of salary with
a requirement to maintain a shareholding post cessation of employment at 200% for one year
and 100% for a second year.
The Chairman’s and the Non-Executive Directors’ fees
Following a review, the Committee recognised that the fee
paid for the Chairman of the Board was considerably lower
than typically paid at companies of a similar size to XPS
Group. Therefore, effective 1 April 2024, the Chair’s fee was
increased to £150,000. This fee is still below the typical
Chair fee for comparable sized UK listed businesses.
The Board reviewed the fees paid to the Non-Executive
Directors. The base fee for Non-Executive Directors
remains unchanged at £60,000 p.a. The Board approved
an increase to the additional responsibility fee levels
resulting in a fee of £15,000 p.a. for the Chair of the
Audit & Risk Committee and £10,000 p.a. for each of the
Senior Independent Director, Chair of the Remuneration
Committee and Chair of the Sustainability Committee.
These represent the first increases to Non-Executive fee
levels since IPO.
I trust that you find this report to be informative and
transparent and I hope to receive your support for
our decisions this year as described in the Directors’
Remuneration Report at the AGM. I am keen to
encourage ongoing open dialogue with our shareholders
on executive remuneration and welcome all engagement.
Margaret Snowdon OBE
Chair of the Remuneration Committee
19 June 2024
Governance
77
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ Remuneration Policy
This Remuneration Policy, which has been approved by the Board, contains the material required to be set out in the
Directors’ Remuneration Report for the purposes of Part 4 of The Large and Medium-sized Companies and Groups
(Accounts and Reports) (Amendment) Regulations 2013, which amended The Large and Medium-sized Companies
and Groups (Accounts and Reports) Regulations 2008 (the “DRR Regulations”).
The Directors’ Remuneration Policy as set out in this section of the Directors’ Remuneration Report was approved in
March 2024 and took effect for all payments made to Directors with effect from the conclusion of the General Meeting
at which it was approved. The Policy as approved can be found at xpsgroup.com/investors/shareholder-information/
agms-and-general-meetings. We have reproduced it below for the convenience of our shareholders.
Element and purpose
Policy and operation
Maximum
Performance measures
Base salary
The core element of
pay, reflecting the
individual’s position
within the Company
and experience
The base salary of each Executive Director
takes into account the performance of each
individual and is set at an appropriate level
to secure and retain the talent needed to
deliver the Group’s strategic objectives.
Salaries are reviewed annually on 1 April
and are influenced by: information from
relevant comparator groups (referencing
the Group’s competitors and public
companies in other industries); the
performance of each individual Executive
Director; and average increases for
employees across the Group as a whole.
Annual increases will not
exceed 7.5% + RPI or the
average increase of
employees across the
Group in any given year,
whichever is higher.
The level of increase
may deviate from this
maximum in the case of
special circumstances,
for example increases
in responsibilities or
promotion. As an
example, this may
occur if the market
capitalisation of the
Company increases as
the shares are “re‑rated”
by investors such that
the comparator
group changes.
In this scenario, the Board
would consider the
increase and the
performance of the
Company. Other
elements of remuneration
may also change. In these
cases, any exceptional
increase will not exceed
20% of salary a year.
n/a
Benefits in kind
To provide market-
competitive benefits
valued by recipients
Benefits currently include permanent
health insurance, life insurance, private
medical insurance and car allowance and
may also include other benefits in the
future. In certain limited circumstances,
relocation allowances may be necessary.
All benefits are subject to annual
review to ensure they remain in line with
market practice.
Benefits (excluding any
relocation allowances)
may be provided up to
an aggregate value of
normally £35,000
for each Executive
Director (indexed
to inflation).
n/a
Pension
To provide
retirement benefits
Executive Directors participating in the
pension plan benefit from matching annual
Group contributions of 6% of base salary.
Executive Directors are entitled to take all
or part of their pension contributions as a
cash allowance.
The maximum
employer’s contribution
(or cash supplement) is
6% of salary.
Executive Directors’
employer’s contribution
levels are aligned to the
contribution levels for the
majority of the workforce.
n/a
78
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ remuneration report continued
Element and purpose
Policy and operation
Maximum
Performance measures
Annual bonus
To motivate
Executive Directors
and support the
delivery of the
Group’s financial
and strategic
business target
over a one-year
operating cycle
Annual bonus plan levels and the
appropriateness of measures are reviewed
annually to ensure they continue to
support our strategy. Once set,
performance measures and targets will
generally remain unchanged for the year,
except to reflect events (e.g. corporate
acquisitions, other major transactions)
where the Committee considers it to be
necessary in its opinion to make
appropriate adjustments.
For financial years commencing following
the approval of this Policy, bonus payments
of up to 100% of salary are to be paid as
cash with amounts in excess of this
deferred into shares for two years.
The value of the deferred awards may be
increased to reflect the value of dividends
that would have been paid in respect of any
record dates falling between the grant of
awards and the expiry of any vesting period.
Clawback and malus provisions apply as
explained in more detail in the notes to this
Policy table.
The maximum annual
bonus opportunity is
150% of base salary. For
FY 2025, the maximum
opportunity will be 150%
of base salary for the
Co-CEOs and 125% for
the CFO.
Bonuses will be payable subject
to the achievement of
performance conditions which
will be set by the Remuneration
Committee.
The targets may be financial
and/or personal and strategic.
The intended weighting of
these measures is not less than
60% financial. Where a sliding
scale of targets is used,
attaining the threshold level of
performance for any measure
will not typically produce a
payout of more than 20% of the
maximum portion of overall
annual bonus attributable to
that measure, with a sliding
scale to full payout for
maximum performance.
Bonus payments will also be
subject to the Committee
considering that the proposed
bonus amounts, calculated
by reference to performance
against the targets,
appropriately reflect the
Company’s overall
performance and
shareholders’ experience. If the
Committee does not believe
this to be the case, it retains the
discretion to adjust the bonus
outturn accordingly.
Performance
Share Plan
To motivate
Executive Directors
and incentivise the
delivery of sustained
performance over
the long term, and to
promote alignment
with shareholders’
interests
Awards under the PSP may be granted as
nil/nominal cost options which vest to the
extent performance conditions are satisfied
over a period normally of at least
three years.
Awards will vest at the end of the specified
vesting period at the discretion of the
Remuneration Committee and are subject
to a further holding period of two years (or
such shorter period so that the period
from the date of grant until the end of the
holding period will be equal to five years).
The PSP rules allow that the number of
shares (or the cash equivalent) subject to
vested PSP awards may be increased to
reflect the value of dividends that would
have been paid in respect of any record
dates falling between the grant of awards
and the expiry of any vesting period.
Clawback and malus provisions applied are
explained in more detail in the notes to this
Policy table.
The market value of
shares to be awarded to
Executive Directors in
respect of any year will
normally be up to 150%
of base salary, with
awards of a maximum of
200% allowable in
exceptional
circumstances.
The Remuneration Committee
may impose such conditions as
it considers appropriate which
must be satisfied before any
award will vest.
All awards made to Executive
Directors will be subject to
performance conditions which
measure performance over a
period normally no less than
three years.
No more than 25% of awards
vest for attaining the
threshold level of
performance.
The formulaic outcome
of all PSP performance
measures will also be subject
to the Committee considering
that the proposed levels,
calculated by reference to
performance against the
targets, appropriately
reflect the Company’s
overall performance and
shareholders’ experience. If the
Committee does not believe
this to be the case, it retains the
discretion to adjust the PSP
outturn accordingly.
Directors’ Remuneration Policy continued
Governance
79
XPS Pensions Group plc Annual Report and Accounts 2024
Element and purpose
Policy and operation
Maximum
Performance measures
Share ownership
guidelines
To promote
stewardship and to
further align the
interests of
Executive Directors
with those of
shareholders
The share ownership guidelines encourage
Executive Directors to build or maintain (as
appropriate) a shareholding in the Company.
If any Executive Director does not meet
the guideline, they will be expected to
retain up to 50% of the net of tax number
of shares vesting under any of the
Company’s discretionary share incentive
arrangements (including any deferred
bonus shares) until the guideline is met.
Any performance vested shares subject to
a holding period and any shares awarded
in connection with annual bonus deferral
will be credited for the purpose of the
guidelines (discounted for anticipated
tax liabilities).
Executive Directors will be required to
maintain a shareholding in the Company
for a two-year period after stepping down
from that position, being in the first year,
the lesser of the guideline level or the
Executive Directors’ actual relevant
shareholding at leaving and reducing to
50% of this requirement in the second year.
For the purpose of this requirement,
the Executive Directors’ actual relevant
shareholding will include shares vesting
under any of the Company’s discretionary
share incentive arrangements (including
any deferred bonus shares) from awards
granted after the 2020 AGM but excludes
shares acquired and the release of shares
under share incentive plans where the grant
occurred prior to the adoption of the Policy.
The Committee will retain the discretion to
remove the holding requirement if it is
deemed to be inappropriate.
No maximum level but
not less than 200% of
base salary for any
Executive Director.
n/a
All-employee
share plans
To facilitate and
encourage share
ownership by staff,
thereby allowing
everyone to share in
the long-term
success of the
Company and align
interests with those
of shareholders
The Executive Directors will be entitled
to participate in all of the Company’s
employee share plans, including the
Share Save Plan, on the same terms
as other employees.
These all-employee share plans are
established under HMRC tax-advantaged
regimes and follow the usual form for
such plans.
The maximum
participation levels for
all-employee share plans
will be the limits for such
plans set by HMRC from
time to time. However,
the Company may
impose lower limits on a
scheme‑by-scheme basis.
Consistent with normal
practice, such awards
would not be subject to
performance conditions.
80
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ remuneration report continued
Element and purpose
Policy and operation
Maximum
Performance measures
Chairman and
Non-Executive
Directors’ fees
To enable the
Company to recruit
and retain Company
Chairs and Non-
Executive Directors
of the highest
calibre, at the
appropriate cost
The fees paid to the Chairman and
Non‑Executive Directors aim to be
competitive with other listed companies of
equivalent size and complexity.
The fees payable to the Non-Executive
Directors are determined by the Board,
with the Chairman’s fees determined by
the Committee. No Director participates
in decisions regarding their own fees.
The Chairman and Non-Executive
Directors do not participate in any new
cash or share incentive plans.
The Chairman and Non-Executive
Directors are entitled to benefits relating
to travel and office support and such
other benefits as may be considered
appropriate.
The Chairman is paid a single fee for the
role, although he will be entitled to an
additional fee if he is required to perform
any specific and additional services.
Non-Executive Directors receive a base
fee for the role. Additional fees are paid for
acting as Senior Independent Director,
Chair of the Audit & Risk, Remuneration or
other Board Committees or Designated
Employee Engagement NED to reflect the
additional time commitment. They will be
entitled to an additional fee if they are
required to perform any specific and
additional services.
The aggregate fees and
any benefits of the
Chairman and Non-
Executive Directors will
not exceed the limit from
time to time prescribed
within the Company’s
Articles of Association
for such fees, currently
£500,000 p.a. in
aggregate.
Any increases in fee
levels made will be
appropriately disclosed.
n/a
Notes to the Policy table
1. Stating maxima for each element of the
Remuneration Policy: The DRR Regulations and
related investor guidance encourage companies
to disclose a cap within which each element of
the Directors’ Remuneration Policy will operate.
Where maximum amounts for elements of
remuneration have been set within the Policy, these
will operate simply as caps and are not indicative of
any aspiration.
2. Travel and hospitality: While the Committee does
not consider it to form part of benefits in the normal
usage of that term, it has been advised that corporate
hospitality, whether paid for by the Company or
another, and business travel for Directors (and
in exceptional circumstances their families) may
technically come within the applicable rules, and
so the Committee expressly reserves the right to
authorise such activities.
3. Past obligations: In addition to the above elements of
remuneration, any commitment made prior to, but due
to be fulfilled after, the approval and implementation
of this Remuneration Policy will be honoured.
4. Malus/clawback: The Committee may apply malus
(being the ability to withhold or reduce a payment/
vesting) and clawback (the ability to reclaim some
or all of a payment/vesting) to an award under the
annual bonus or PSP where there are circumstances
which would justify such action.
The relevant circumstances where these powers of
recovery may operate include:
• the Company materially misstated its financial
results for any reason and that misstatement would
result or resulted either directly or indirectly in
an award being granted or vesting to a greater
extent than would have been the case had that
misstatement not been made;
Directors’ Remuneration Policy continued
Governance
81
XPS Pensions Group plc Annual Report and Accounts 2024
• the extent to which any performance target and/or
any other condition was satisfied was based on an
error, or on inaccurate or misleading information
or assumptions which resulted either directly or
indirectly in an award being granted or vesting to a
greater extent than would have been the case had
that error not been made;
• circumstances arose (or continued to arise) during
the vesting period (including any holding period) of
an award which would have warranted the summary
dismissal of the participant; or
• there is a sufficiently significant impact on the
reputation of the Company (including a Company
failure) to justify the operation of malus or clawback.
Normally, clawback can operate for up to two years
following the vesting of an award.
5. Performance conditions: The performance-related
elements of remuneration take into account the Group’s
risk policies and systems, and are designed to align the
senior executives’ interests with those of shareholders.
The Committee reviews the metrics used and targets
set for the Group Executive Directors and senior
management (not just the Executive Directors) every
year, in order to ensure that they are aligned with the
Group’s strategy and to ensure an appropriate level
of consistency.
6. Differences between the policy in respect of
remuneration for Directors and the policy on
remuneration for other staff: While the appropriate
benchmarks vary by role, the Company seeks to apply
the philosophy behind this policy across the Company
as a whole. Where the Group’s pay policy for Directors
differs from its pay policies for groups of staff, this
reflects the appropriate market rate position and/or
typical practice for the relevant roles. The Company
takes into account pay levels, bonus opportunity
and share awards applied across the Group as
a whole when setting the Executive Directors’
Remuneration Policy.
7. Committee discretions: The Committee will operate
the annual bonus plan and PSP according to their
respective rules and the above Remuneration Policy
table. The Committee retains discretion, consistent
with market practice, in a number of respects, in
relation to the operation and administration of these
plans. This discretion includes, but is not limited to,
the following:
• the selection of participants;
• the timing of grant of awards;
• the size of an award/bonus opportunity subject to
the maximum limits set out in the Remuneration
Policy table and the rules of the relevant plan;
• the determination of performance against targets
and resultant vesting/pay-outs;
• discretion required when dealing with a change of
control or restructuring of the Company;
• determination of the treatment of leavers based on
the rules of the relevant plan and the appropriate
treatment chosen;
• adjustments required in certain circumstances
(e.g. rights issue, corporate restructuring events
and special dividends); and
• the annual review of performance measures,
weightings and targets from year to year.
In addition, while performance measures and targets
used in the annual bonus plan and PSP will generally
remain unaltered, if events occur which the Committee
determines would make a different or amended target
a fairer measure of performance, such amended or
different targets can be set provided they are not
materially more or less difficult to satisfy, having
regard to the event in question.
Any use of the above discretion would, where relevant,
be explained in the Annual Report on Directors’
Remuneration and may, where appropriate and
practicable, be the subject of consultation with the
Company’s major shareholders.
The Committee may make minor amendments to the
Remuneration Policy set out above for regulatory,
exchange control, tax or administrative purposes or
to take account of a change in legislation, without
obtaining shareholder approval for that amendment.
82
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ remuneration report continued
Directors’ Remuneration Policy continued
Remuneration policy on recruitment
The Company’s recruitment remuneration policy aims
to give the Committee sufficient flexibility to secure the
appointment and promotion of high-calibre executives
to strengthen the management team and secure the skill
sets to deliver our strategic aims.
In terms of the principles for setting a package for a new
Executive Director, the starting point for the Committee
will be to apply the Remuneration Policy for Executive
Directors as set out above and structure a package in
accordance with that policy. Consistent with the DRR
Regulations, any caps contained within the Policy for
fixed pay do not apply to new recruits, although the
Committee would not envisage exceeding these caps
in practice unless absolutely necessary.
The annual bonus plan and PSP, including the maximum
award levels, will operate as detailed in the general
Remuneration Policy in relation to any newly appointed
Executive Director. For an internal appointment, any
variable pay element awarded in respect of the prior
role may either continue on its original terms or be
adjusted to reflect the new appointment as appropriate.
For both external and internal appointments, the
Committee may agree that the Company will meet
certain relocation expenses as it considers appropriate.
For external candidates, it may be necessary to make
additional awards in connection with the recruitment to
buy-out awards forfeited by the individual on leaving
a previous employer. Any recruitment-related awards
which are not buy-outs will be subject to the limits of
the annual bonus plan and PSP as stated in the general
policy. Details of any recruitment-related awards will be
appropriately disclosed.
For any buy-outs the Company will not pay more than
is necessary in the view of the Committee and will be
limited in value to what the Committee considers to
be a fair estimate of the value of the awards foregone.
The Committee will in all cases seek, in the first instance,
to deliver any such awards under the terms of the existing
annual bonus plan and PSP. It may, however, be necessary
in some cases to make buy-out awards on terms that
are more bespoke than the existing annual bonus
plan and PSP.
All buy-outs, whether under the annual bonus plan,
PSP or otherwise, will take due account of the service
obligations and performance requirements for any
remuneration relinquished by the individual when leaving
a previous employer.
The Committee will seek, where it is practicable to do
so, to make buy-outs subject to what are, in its opinion,
comparable requirements in respect of service and
performance. However, the Committee may choose to
relax this requirement in certain cases, such as where the
service and/or performance requirements are materially
completed, or where such factors are, in the view of
the Committee, reflected in some other way, such as
a significant discount to the face value of the awards
forfeited, and where the Committee considers it to be
in the interests of shareholders.
Service contracts
Executive Directors
Ben Bramhall and Paul Cuff entered into a service
agreement with the Company that was effective upon
Admission and dated 16 February 2017. Snehal Shah
entered into a service agreement with the Company that
was effective 28 May 2019, the date of his employment
beginning, although Snehal was not appointed as Chief
Financial Officer until FCA approval was received on
9 July 2019. The policy is that each Executive Director’s
service agreement should be of indefinite duration,
subject to termination by the Company or the individual
on no more than 12 months’ notice.
The service agreements of all Executive Directors, which
are available for inspection at the Company’s registered
office, comply with this policy:
• the Executive Directors’ service agreements are
terminable by either party on not less than nine months’
written notice for the Co-CEO, six months for the CFO
or immediately upon payment in lieu of notice, and
contain a garden leave clause; and
• in each case any payment in lieu of notice will
be calculated by reference to base salary and
contractual benefits only, and will not include any
entitlement to bonus.
Chairman and Non‑Executive Directors
The appointments of Alan Bannatyne and Margaret
Snowdon OBE are subject to the terms of letters of
appointment agreed between each of them and the
Company dated 24 January 2017, the appointment
of Sarah Ing is subject to the terms of a letter of
appointment dated 19 March 2019, the appointment
of Aisling Kennedy is subject to the terms of a letter
of appointment dated 22 February 2023 and the
appointments of Imogen Joss and Martin Sutherland
are subject to the terms of letters of appointment dated
7 December 2023. They are not entitled to receive any
compensation on termination of their appointment
(other than payment in respect of a notice period where
notice is served) and are not entitled to participate in
the Company’s share plans, bonus arrangements or
pension schemes.
They are entitled to be reimbursed all reasonable
out‑of‑pocket expenses incurred in the proper
performance of their duties.
Their appointment may be terminated at any time
upon three months’ written notice by either party
and with immediate effect in certain circumstances.
The appointment may also be terminated pursuant to
the Articles or as otherwise required by law. They are
subject to retirement by rotation every three years under
the Articles but intend to retire and submit themselves
for re-election by shareholders each year at the Annual
General Meeting.
Governance
83
XPS Pensions Group plc Annual Report and Accounts 2024
Remuneration policy on termination
The Committee will consider treatments on a termination
having regard to all of the relevant facts and circumstances
available at that time. This policy applies both to any
negotiations linked to notice periods on a termination and
any treatments that the Committee may choose to apply
under the discretions available to it under the terms of
the annual bonus plan and PSP. The potential treatments
on termination under these plans are as follows:
Annual bonus plan
If an Executive Director resigns or is dismissed for cause
before the bonus payment date, the right to receive any
bonus normally lapses (unless the Committee determines
otherwise). If an Executive Director ceases employment
before the bonus date because of death, injury, ill
health, disability or any other reason determined by the
Committee, such bonus will be payable as the Committee
in its absolute discretion determines taking into account
the circumstances for leaving, time in employment and
performance. Similar treatment will apply in the event of
a change in control of the Company.
Deferred bonus awards are normally preserved in all leaver
cases (unless an Executive Director ceases employment due
to gross misconduct or gross negligence) but release will
not typically be accelerated, except in the case of death in
service. The Committee has the ability to release a leaver’s
awards early in exceptional circumstances.
Performance Share Plan (PSP)
The Committee’s Policy is in accordance with the rules
of the Performance Share Plan 2017. If, during the
performance or vesting period, a participant:
• resigns or is dismissed for cause, awards will normally
lapse in full; and
• ceases to be employed due to death, ill health, injury
or disability, retirement with the agreement of the
participant’s employer, redundancy, the sale or transfer
of the participant’s employing company or business
out of the Group (other than on change of control),
or for other reasons specifically approved by the
Committee, the award shall be retained and will vest
at the normal vesting date (unless the Committee
exercises its discretion to allow awards to vest early on
cessation in exceptional circumstances) to the extent
that the Committee determines. The Committee will
determine the extent to which an award will vest taking
into account the extent to which the performance
conditions have been met and, where appropriate,
the period that has expired to the date of cessation.
If a participant ceases employment during the holding
period, performance-vested awards will normally be
retained and vest as normal at the end of the holding
period (unless the Committee exercises its discretion to
allow awards to vest early on cessation in suitable cases).
The all-staff Share Save scheme provides treatments for
leavers in line with HMRC rules for such plans.
The Company has the power to enter into settlement
agreements with Directors and to pay compensation
to settle potential legal claims.
In addition, and consistent with market practice, in
the event of the termination of an Executive Director,
the Company may make a contribution towards that
individual’s legal fees and fees for outplacement
services as part of a negotiated settlement.
Any such fees will be disclosed as part of the detail
of termination arrangements.
External appointments
The Company’s policy on external appointments permits
an Executive Director, subject to the approval of the
Chairman, to serve as a Non-Executive director for
normally no more than one other organisation where
this does not conflict with the individual’s duties to the
Company. When an Executive Director takes such a role,
they may be entitled to retain any fees which they earn
from that appointment.
Statement of consideration of employment
conditions elsewhere in the Company
The Committee receives regular updates on overall pay
and conditions in the Company which enable it to take
the wider workforce remuneration into account when
setting the policy for executive remuneration. Whilst
the Committee does not consult directly with employees
as part of the process for reviewing executive pay, the
Committee does receive insights from the broader
employee population via an employee engagement
group. Accordingly, the Committee confirms that the new
Policy has been designed with due regard to the policy
for remuneration of employees across the Group.
The Remuneration Policy for other employees is based
on broadly consistent principles as described above.
Annual salary reviews across the Company take into
account Company performance, relevant pay and
market conditions and salary levels for similar roles
in comparable companies.
Other members of senior management participate in
similar annual bonus arrangements to the Executive
Directors, although award sizes vary by organisational
level. Share incentive awards may also be granted to
a broader population than the Executive Directors
although the award sizes and terms of the awards vary.
The Company operates discretionary bonus schemes
for eligible groups of employees under which a bonus
is payable subject to the achievement of appropriate
targets. All eligible employees may participate in the
Company’s Share Save scheme on identical terms.
Statement of consideration of shareholders’ views
The Committee considers shareholder views received
during the year and at each AGM, as well as guidance
from shareholder representative bodies more broadly,
when determining the Remuneration Policy and its
implementation. The Committee seeks to build an active
and productive dialogue with investors on developments
on the remuneration aspects of corporate governance
generally and it will consult with major shareholders in
advance of any material change to the structure and/or
operation of the Policy and will seek formal shareholder
approval for any such change if required.
84
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ remuneration report continued
100%
19%
19%
40%
40%
100%
£354
£408
£408
£676
£849
£849
Minimum
Minimum
Minimum
£2,000
£1,800
£1,600
£1,400
£1,200
£1,000
£800
£600
£400
£200
£0
£1,600
£1,400
£1,200
£1,000
£800
£600
£400
£200
£0
In line with
expectations
In line with
expectations
In line with
expectations
Maximum
Maximum
Maximum
Total fixed pay
Annual bonus
Performance Share Plan
Share performance growth
Maximum with share
price growth
Maximum with share
price growth
Maximum with
share price growth
£1,617
£1,617
£1,480
£1,239
£1,942
£1,942
100%
48%
48%
48%
33%
33%
33%
35%
35%
35%
29%
29%
29%
40%
33%
33%
33%
17%
17%
17%
19%
25%
25%
25%
21%
21%
21%
Ben Bramhall —
Co-Chief Executive Officer
£’000s
Snehal Shah —
Chief Financial Officer
£’000s
Paul Cuff —
Co-Chief Executive Officer
£’000s
Directors’ Remuneration Policy continued
Illustrations of application of the Directors’ Remuneration Policy
The charts below show how the Remuneration Policy set out above will be applied for Executive Directors in FY 2025
based on three performance scenarios and using the assumptions below.
Minimum
Consists of base salary, benefits and pension:
• base salary is the salary to be paid in FY 2025;
• benefits measured as benefits paid in FY 2024; and
• pension measured as the defined contribution or cash allowance in lieu of Company
contributions of 6%.
Target
Based on what the Executive Director would receive if performance were in line with
expectations or on target (excluding share price appreciation and dividends):
• annual bonus: consists of the on-target bonus (50% of maximum opportunity used
for illustrative purposes); and
• PSP: consists of the threshold level of vesting (25% vesting) under the PSP.
Maximum
Based on the maximum remuneration receivable (excluding share price appreciation
and dividends):
• annual bonus: consists of maximum bonus of 150% of salary for the Co-CEOs and 125%
of salary for the CFO; and
• PSP: consists of the face value of awards (150% of base salary for Co-CEOs and 125%
of base salary for the CFO) under the PSP.
Maximum with 50% share
price growth
As the Maximum scenario plus the value resulting from a share price growth of 50% in
relation to the PSP award.
Governance
85
XPS Pensions Group plc Annual Report and Accounts 2024
Annual report on remuneration
Remuneration Committee membership
The Remuneration Committee is chaired by Margaret Snowdon OBE, who is Senior Independent Non-Executive
Director. Alan Bannatyne, Sarah Ing, Aisling Kennedy, Imogen Joss and Martin Sutherland are also members of the
Committee. Imogen Joss and Martin Sutherland were appointed to the Committee in December 2023. The Committee
meets at least twice a year and at such other times as the Chair of the Committee shall require or as the Board may
direct. The Committee met five times during the year. All members attended every Committee meeting they were
eligible to attend throughout the year.
Other individuals, such as the Co-Chief Executive Officers, the Chief Financial Officer, the HR Director and external
professional advisers, were invited to attend for all or part of any meeting as and when appropriate and necessary.
The purpose of the Committee is to establish a formal and transparent procedure for developing the Remuneration
Policy in accordance with the Code and to set the remuneration of the Chairman and selected individuals with due
account taken of all relevant factors such as individual and Group performance as well as remuneration payable by
companies of a comparable size and complexity.
The Committee has formal terms of reference which are reviewed annually and can be viewed on the Company’s
website: www.xpsgroup.com.
Advisers
FIT Remuneration Consultants LLP (FIT), signatory to the Remuneration Consultants Group’s Code of Conduct,
was appointed by the Committee. FIT has been retained to provide advice to the Committee on matters relating
to executive remuneration. FIT provided no other services to the Company and, accordingly, the Committee was
satisfied that the advice provided by FIT was objective and independent. FIT’s fees in respect of FY 2024 were £73,958
(FY 2023: £54,282). FIT’s fees are charged on the basis of the firm’s standard terms of business for advice provided.
The following (audited) section provides details of how the Directors were paid during the financial year to 31 March 2024.
Director
Salary/fees
£
Taxable
benefits 1
£
Bonus 2
£
Long-term
incentives 3
£
Pension 4
£
Total
remuneration
£
Total
fixed pay
£
Total
variable pay
£
Executive Directors
Ben Bramhall
2024
356,048
13,320
534,072
748,403
19,985
1,671,828
389,353
1,282,475
2023
332,755
12,993
499,133
598,029
18,701
1,461,611
364,449
1,097,162
Paul Cuff
2024
356,048
13,120
534,072
748,403
19,985
1,671,628
389,153
1,282,475
2023
332,755
12,793
499,133
598,029
18,701
1,461,411
364,249
1,097,162
Snehal Shah
2024
300,745
12,872
375,931
526,797
17,069
1,233,414
330,686
902,728
2023
281,070
12,523
316,203
412,702
15,994
1,038,492
309,587
728,905
Non-Executive Directors
Alan Bannatyne⁵ –
Chairman of Board and
Chair of Nomination
Committee
2024
120,000
—
—
—
—
120,000
120,000
—
2023
100,398
—
—
—
—
100,398
100,398
—
Margaret Snowdon
OBE – Chair of
Remuneration
Committee, Senior
Independent NED and
Designated Employee
Engagement NED
2024
75,000
—
—
—
—
75,000
75,000
—
2023
72,822
—
—
—
—
72,822
72,822
—
Sarah Ing –
Chair of Audit & Risk
and Sustainability
Committees
2024
75,000
—
—
—
—
75,000
75,000
—
2023
70,644
—
—
—
—
70,644
70,644
—
Aisling Kennedy⁶
2024
60,000
—
—
—
—
60,000
60,000
—
2023
6,250
—
—
—
—
6,250
6,250
—
Imogen Joss7
2024
19,048
—
—
—
—
19,048
19,048
—
Martin Sutherland7
2024
19,048
—
—
—
—
19,048
19,048
—
Tom Cross Brown8
– former Chairman
of Board
2023
52,727
—
—
—
—
52,727
52,727
—
Total
2024 1,380,937
39,312 1,444,075 2,023,603
57,039 4,944,966
1,477,288 3,467,678
2023
1,249,421
38,309
1,314,469
1,608,760
53,396 4,264,355
1,341,126
2,923,229
86
XPS Pensions Group plc Annual Report and Accounts 2024
Annual report on remuneration continued
Advisers continued
1 Each of the Executive Directors is entitled to a range of benefits, comprising permanent health insurance, life insurance, private medical
insurance and car allowance. The Non-Executive Directors do not receive other benefits.
2 No element of annual bonus was deferred in respect of bonuses shown.
3 The outturn for the July 2021 PSP which vests in July 2024 is expected to be 100% and the vesting share price has been estimated at
219.33p, based on the three-month average share price ended 31 March 2024. The grant share price for the award was 138p and accordingly
the relevant figures are reflective of an increase of 59% in the Company’s share price comparing the award price to the vesting price. Details
of the performance measures and targets applicable to the 2021 PSP are set out on page 87. The outturn for the November 2020 PSP which
vested on 30 November 2023 was 66% and the value has been updated reflecting the actual vesting share price of 237p and the dividend equivalents.
4 Pension values shown all relate either to pension contributions or to cash allowances in lieu of pension.
5 Appointed Non-Executive Chairman on 30 November 2022.
6 Appointed to the Board on 22 February 2023.
7 Appointed to the Board on 7 December 2023.
8 Stepped down from the Board on 8 September 2022.
FY 2024 annual bonus (audited)
The Executive Directors’ annual bonus targets were set at the beginning of the financial year. The financial targets which
account for 75% of the annual bonus were set based on Group PBT. The Group PBT targets set are shown below.
Threshold
£’000
Target
£’000
Maximum
£’000
Actual
£’000
Payout
(% of this
element)
Group adj. PBT (75% of potential)
36,066
37,384
38,672
44,975
100%
The personal performance goals which account for 25% of the annual bonus were agreed with each Executive Director
and were based on a range of strategic and other objectives set at the start of the year. The targets were principally
designed to focus and reward the Executive Directors for accomplishing strategic goals which directly support the
Company’s strategy. Details of the measures and performance, to the extent they are not commercially sensitive, are
outlined below.
Ben Bramhall and Paul Cuff – Co-CEOs
Measure
Target
Performance
Assessment
Maintain high level of staff
satisfaction and morale
Maintain high employee
satisfaction score in
employee survey
Exceptional employee Net Promoter Score
of +31 achieved
100%
Progress inclusion and
diversity agenda
Reduce gender pay gap
Increase females in
senior management roles
Median and mean gender pay gaps fell by
0.6% and 2.1% respectively between April
2023 and 2024
Significant increase in the percentage of
females in the senior management team
achieved
100%
Maintain high level of
client satisfaction
Continued effectiveness of
client care program
High level of client
retention to be maintained
Client retention remained very high with no
material client losses due to service quality
Client care programme continues to be
embedded across the client base
100%
Pursue and execute accretive
M&A opportunities
Execute smoothly any
opportunities approved
by the Board
Successful sale of National Pension Trust
achieved with a smooth transition for staff
and clients, and positive feedback from
shareholders. Strategic partnership with
acquirer has been maintained
100%
Technology
Smooth client transition
onto new administration
platform to commence
Transition commenced and remains largely
on track against the plan
100%
Governance
87
XPS Pensions Group plc Annual Report and Accounts 2024
Snehal Shah – CFO
Measure
Target
Performance
Assessment
Support improved KPIs and
financial analysis of performance
in certain business areas
Improved financial
reporting to the Board
and Executive Committee
Significant improvement made with granular
management information leading to better
business decisions
100%
Maintain OCF conversion
Above 90%
Achieved
100%
Debt reduction
Continue de-leveraging
Debt reduced during the year and NPT sale
resulted in de-leveraging to below 0.5x at
the end of the year
100%
Continue to drive strong
shareholder interest and
engagement in XPS
Meet with non-holders
and secure at least two
new institutional investors
Met with over 50 non-holders and in
excess of 15 new institutional investors
added in the year
100%
Each objective is measurable (albeit some detail has been removed given the commercially sensitive nature), with
target achievement levels evidenced by activities and outcomes. The Remuneration Committee then assessed performance
against each objective in each category on the basis of evidenced outcomes and rated the level of achievement.
In light of the high standards of attainment of each of the Executive Directors, the Remuneration Committee assessed
that performance against the targets had been met in full and would result in 100% of maximum for this element of
bonus to be payable to the Co-CEOs and CFO.
This results in an outcome in aggregate of 100% of maximum for the Co-CEOs and CFO.
Outcomes
Weightings
Ben
Bramhall
Paul
Cuff
Snehal
Shah
Financial performance (% of this element)
75%
100%
100%
100%
Strategic performance (% of this element)
25%
100%
100%
100%
Total actual performance outcome (% of maximum)
100%
100%
100%
Total actual performance outcome (% of salary)
150%
150%
125%
Total actual performance outcome (£)
£534,072
£534,072
£375,931
Statement of Directors’ shareholding and share interests (audited)
For each Director, the total number of Directors’ interests in shares at 31 March 2024 was as follows:
Director
Ben
Bramhall
Paul
Cuff
Snehal
Shah
Alan
Bannatyne
Margaret
Snowdon
OBE
Sarah
Ing
Aisling
Kennedy
Imogen
Joss
Martin
Sutherland
Number of ordinary
shares held as at
31 March 2024
821,374
489,016
150,902
36,594
30,303
15,000
—
—
—
Share ownership
requirement
(% of salary)
200%
200%
200%
n/a
n/a
n/a
n/a
n/a
n/a
Share ownership
requirement met?
Y
Y
N
n/a
n/a
n/a
n/a
n/a
n/a
Holding as % of
March 2023 salary
533%
317%
116%1
n/a
n/a
n/a
n/a
n/a
n/a
Number of ordinary
shares held as at
31 March 2023
1,699,549
967,191
66,830
36,594
30,303
15,000
—
—
—
1 In line with the Directors’ Remuneration Policy, Snehal Shah will retain 50% of vested shares until he reaches the 200% ownership requirement.
The shareholdings above include those held by Directors and their respective connected persons. There were no
changes in the Directors’ interests in shares between 31 March 2024 and 19 June 2024.
Under the share ownership guidelines, the Executive Directors are required to build and maintain a shareholding
equivalent to at least 200% of salary and are required to maintain a shareholding for a period after leaving the Board.
88
XPS Pensions Group plc Annual Report and Accounts 2024
Annual report on remuneration continued
Awards granted in the year under the PSP (audited)
The following nominal cost option PSP awards were granted in July 2023.
These awards vest in 2026 subject to performance relating to a mix of adjusted EPS, relative TSR and ESG-related
targets. The details of these targets are shown in the “Outstanding share plan awards” section below.
Director
Date of grant
Basis of award
(% of salary)
Face value of
awards at grant 1
Number of
shares under
award
Date of
vesting
Ben Bramhall
17 July 2023
175%
£623,084
333,200
July 2026
Paul Cuff
17 July 2023
175%
£623,084
333,200
July 2026
Snehal Shah
17 July 2023
150%
£451,117
241,239
July 2026
1 Based on the share price of £1.87 on 14 July 2023.
Outstanding share plan awards (audited)
Details of all outstanding PSP awards made to Executive Directors are set out below:
Director
Date of grant
Exercise
price
Interests held
at 31 March
2023
Interests
awarded
during the
year
Interests
vested during
the year
Interests
lapsed during
the year
Interests held
at 31 March
2024
Vesting
period
Ben
Bramhall
30 November 2020
0.05p
348,387
—
230,632 1
117,755
—
November
2023
1 July 2021
0.05p
341,217
—
—
—
341,217
July 2024
1 July 2022
0.05p
383,948
—
—
—
383,948
July 2025
17 July 2023
0.05p
—
333,200
—
—
333,200
July 2026
Paul Cuff 30 November 2020
0.05p
348,387
—
230,632 2
117,755
—
November
2023
1 July 2021
0.05p
341,217
—
—
—
341,217
July 2024
1 July 2022
0.05p
383,948
—
—
—
383,948
July 2025
17 July 2023
0.05p
—
333,200
—
—
333,200
July 2026
Snehal
Shah
30 November 2020
0.05p
240,423
—
159,160 3
81,263
—
November
2023
1 July 2021
0.05p
240,181
—
—
—
240,181
July 2024
1 July 2022
0.05p
270,260
—
—
—
270,260
July 2025
17 July 2023
0.05p
—
241,239
—
—
241,239
July 2026
1 On 12 December 2023, Ben Bramhall exercised awards over 230,632 shares granted on 30 November 2020 and sold 108,807 shares to
settle resultant tax and social security obligations. The closing share price on the day of exercise was £2.20.
2 On 11 December 2023, Paul Cuff exercised awards over 230,632 shares granted on 30 November 2020 and sold 108,807 shares to settle
resultant tax and social security obligations. The closing share price on the day of exercise was £2.20.
3 On 11 December 2023, Snehal Shah exercised awards over 159,160 shares granted on 30 November 2020 and sold 84,072 shares to settle
resultant tax and social security obligations. The closing share price on the day of exercise was £2.20.
Governance
89
XPS Pensions Group plc Annual Report and Accounts 2024
Vesting outcomes for the FY 2022 PSP awards (granted in July 2021)
These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in July 2024 subject
to performance relating to: (i) adjusted earnings per share (EPS) targets as to 75% of the award; and (ii) relative total
shareholder return (TSR) targets as to the remaining 25% of the award.
The details of the EPS and TSR target ranges and performance against them are shown in the table below.
Diluted adjusted EPS for the three-year period to the end of FY 2024
Portion of award vesting
Compound annual growth in EPS (CAG) of less than 3% above CPI
0%
CAG of 3% above CPI
25%
CAG of between 3% and 7% above CPI
Between 25% and 100% on a straight-line basis
CAG of 7% or more above CPI
100%
Actual performance1:
CAG of 12.6% above CPI
100%
1 Measured by normalising for the impact of IFRS 16 and on a constant tax rate basis, to ensure the outturn is an accurate reflection of
operational performance.
XPS Group’s TSR ranking vs a comparator group of companies
Portion of award vesting
Below median
0%
Median
25%
Between median and upper quartile
Between 25% and 100% on a straight-line basis
Upper quartile
100%
Actual performance2:
Above upper quartile threshold
100%
2 Based on performance to the end of May. This is an estimate as TSR performance will be measured to the third anniversary of the date of
grant which is 1 July 2024.
The TSR comparator group consists of the constituents of the FTSE Small Cap Index (excluding investment trusts) at
the start of the performance period.
Based on the above the expected percentage of the total award vesting is 100% of maximum. Details of the shares
under award and their estimated value (based on the three-month average share price at 31 March 2024 of 219.33p
per share) are as follows:
Executive
Maximum
number of
shares
Number
of shares
to vest
Number
of shares
to lapse
Estimated
value
vesting
£ 1
Ben Bramhall
341,217
341,217
—
748,403
Paul Cuff
341,217
341,217
—
748,403
Snehal Shah
240,181
240,181
—
526,797
1 Based on the three-month average share price to 31 March 2024.
The awards also receive the value of dividend equivalents.
90
XPS Pensions Group plc Annual Report and Accounts 2024
Annual report on remuneration continued
FY 2023 PSP awards (granted in July 2022)
These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in 2025 subject to
performance relating to: (i) adjusted earnings per share (EPS) targets as to 75% of the award; and (ii) relative total
shareholder return (TSR) targets as to the remaining 25% of the award. The EPS target range was set considering both
the internal and external expectations for EPS performance over the next three years. The details of the EPS and TSR
target ranges are shown in the table below.
Diluted adjusted EPS1 for the three-year period to the end of FY 2025
Portion of award vesting
Compound annual growth in EPS (CAG) of less than 5%
0%
CAG of 5%
25%
CAG between 5% and 10%
Between 25% and 100% on a straight-line basis
CAG of 10% or more
100%
1 Measured on a constant tax rate basis, to ensure the outturn is an accurate reflection of operational performance.
XPS Group’s TSR ranking vs a comparator group2 of companies
Portion of award vesting
Below median
0%
Median
25%
Between median and upper quartile
Between 25% and 100% on a straight-line basis
Upper quartile
100%
2 The TSR comparator group consists of the constituents of the FTSE Small Cap Index (excluding investment trusts) at the start of the
performance period.
FY 2024 PSP awards (granted in July 2023)
These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in 2026. These
awards comprised a main award of 150% and 125% of salary for the Co-CEOs and the CFO respectively and a one-off
additional award of 25% of salary.
Vesting of both awards will be based on the measures as summarised in the tables below, with performance measured
over a three-year period.
For the main award, there are three performance criteria, with the vesting of 70% of the shares under this award
subject to EPS performance, 20% subject to relative total shareholder return and the remaining 10% is based on
a reduction of the Company’s CO2 emissions.
The details of the target ranges are shown in the table below.
Diluted adjusted EPS1 for the three-year period to the end of FY 2026
Portion of award vesting
Compound annual growth in EPS (CAG) of less than 5%
0%
CAG of 5%
25%
CAG of between 5% and 10%
Between 25% and 100% on a straight-line basis
CAG of 10% or more
100%
1 Measured on a constant tax rate basis, to ensure the outturn is an accurate reflection of operational performance.
The EPS target range was set considering both the internal and external expectations for EPS performance over the
next three years.
XPS Group’s TSR ranking vs a comparator group² of companies
Portion of award vesting
Below median
0%
Median
25%
Between median and upper quartile
Between 25% and 100% on a straight-line basis
Upper quartile
100%
2 The TSR comparator group consists of the constituents of the FTSE Small Cap Index (excluding investment trusts) at the start of the
performance period.
Governance
91
XPS Pensions Group plc Annual Report and Accounts 2024
XPS Group’s CO2 emissions3 for the three-year period to the end of the FY 2026
Portion of award vesting
Below 20% reduction
0%
20% reduction
25%
Between 20% and 30% reduction
Between 25% and 100% on a straight-line basis
30% or more reduction
100%
3 The CO2 emissions are based on Scope 1 and 2 emissions and will be calculated on an emissions per number of employees basis.
For the additional award, vesting is fully based on EPS performance. The details of the EPS target range is shown in
the table below.
Diluted adjusted EPS1 for the three-year period to the end of the FY 2026
Portion of award vesting
CAG of 10%
0%
CAG of between 10% and 15%
Between 25% and 100% on a straight-line basis
CAG of 15% or more
100%
1 Measured on a constant tax rate basis, to ensure the outturn is an accurate reflection of operational performance.
The EPS performance range of the additional award was set to ensure vesting will occur only once the EPS element
of the main award has vested in full.
External Board appointments
The Executive Directors did not hold any external directorships during the year. The approved Directors’ Remuneration
Policy makes provisions for them to retain any fees for one appointment.
Payments to past Directors (audited)
There were no payments to past Directors in the financial year FY 2024 (FY 2023: £nil).
Payments for loss of office (audited)
No payments were made to any Director in respect of loss of office in the financial year FY 2024 (FY 2023: £nil).
Review of past performance and CEO remuneration table (unaudited)
The graph below shows the TSR of the Company and the FTSE Small Cap Index (excluding investment trusts) over
the period from admission to 31 March 2024. This is considered an appropriate comparator for XPS Group, which was
a constituent of the FTSE Small Cap Index during the year.
31 Mar
2017
31 Mar
2018
31 Mar
2019
31 Mar
2020
31 Mar
2021
31 Mar
2022
31 Mar
2024
31 Mar
2023
15 Feb
2017
70
90
110
130
150
170
190
210
230
XPS Pensions Group plc
FTSE Small Cap excl. investment trusts
Total Shareholder Return (rebased to 100p)
Total shareholder return
Source: Refinitiv Eikon (an LSEG product)
92
XPS Pensions Group plc Annual Report and Accounts 2024
Annual report on remuneration continued
Total shareholder return continued
The table below shows the Co-CEOs’ single total figure of remuneration since admission and the level (as a percentage
of maximum award) of payouts under the incentive plans:
Single total
figure of
remuneration
Annual bonus
payout as %
of maximum
Long-term
incentive
vesting rates
as % of
maximum
2024
Ben Bramhall
£1,671,828
100%
100%¹
Paul Cuff
£1,671,628
100%
100%¹
2023
Ben Bramhall
£1,461,611
100%
66%
Paul Cuff
£1,461,411
100%
66%
2022
Ben Bramhall
£893,195
79%2
38%
Paul Cuff
£892,995
79%2
38%
2021
Ben Bramhall
£692,741
68%
21%
Paul Cuff
£692,541
68%
21%
2020
Ben Bramhall
£569,272
30% 3
40%
Paul Cuff
£569,272
30% 3
40%
2019
Ben Bramhall
£362,803
12% 4
n/a
Paul Cuff
£362,803
12% 4
n/a
2018
Ben Bramhall
£546,138
79%
n/a
Paul Cuff
£545,724
79%
n/a
2017
Ben Bramhall
£286,882
31%
n/a
Paul Cuff
£4,179,695
31%
n/a
1 The vesting rate relates to the July 2021 award that is due to vest in July 2024 and is, in part, based on estimated vesting levels at 31 March 2024.
2 The bonus was reduced with the agreement of the Co-CEOs from the formulaic outcome of 86%.
3 The bonus was reduced with the agreement of the Co-CEOs from the formulaic outcome of 50%.
4 The bonus was reduced with the agreement of the Co-CEOs from the formulaic outcome of 54%.
Percentage change in remuneration of Directors and employees (unaudited)
The table on page 93 presents the year on year percentage change in remuneration received by each Director,
compared with the change in remuneration received by all XPS Group staff.
The percentage changes are impacted where a Director has been in role for part of a year and for Non-Executive
Directors are reflective of changes to individual committee and other responsibilities, as well as adjustments to
fee levels.
Governance
93
XPS Pensions Group plc Annual Report and Accounts 2024
Percentage change in
remuneration from
31/03/2020 to 31/03/2021
Percentage change in
remuneration from
31/03/2021 to 31/03/2022
Percentage change in
remuneration from
31/03/2022 to 31/03/2023
Percentage change in
remuneration from
31/03/2023 to 31/03/2024
Base
salary
%
Benefits
%
Bonus
%
Base
salary
%
Benefits
%
Bonus
%
Base
salary
%
Benefits
%
Bonus
%
Base
salary
%
Benefits
%
Bonus
%
Ben Bramhall
0%
—
127%
9%
2%
27%
6%
18%
29%
7%
3%
7%
Paul Cuff
0%
(2)%
127%
9%
2%
27%
6%
18%
29%
7%
3%
7%
Snehal Shah
20%1
23%1
177%
9%
2%
27%
6%
17%
29%
7%
3%
19%
Tom Cross Brown
0%
—
—
0%
—
—
(56%)2
—
—
—
—
—
Alan Bannatyne
0%
—
—
0%
—
—
34%³
—
—
20%3
—
—
Margaret Snowdon OBE
4%
—
—
0%
—
—
4%
—
—
3%
—
—
Sarah Ing
14%4
—
—
0%
—
—
9%
—
—
6%
—
—
Aisling Kennedy
—
—
—
—
—
—
—
—
—
860%5
—
—
Imogen Joss6
—
—
—
—
—
—
—
—
—
—
—
—
Martin Sutherland6
—
—
—
—
—
—
—
—
—
—
—
—
All UK employees
3.2%
(8)%
68%
5.9%
(12)%
14%
10%
6%
46%
8.4%
15%
11%
1 Snehal Shah was appointed as a Director on 28 May 2019; accordingly, the percentage difference shown represents a comparison between
a full year (FY 2021) and a part year (FY 2020).
2 Tom Cross Brown stepped down as a Director on 8 September 2022; accordingly, the percentage difference shown represents
a comparison between a full year (FY 2022) and a part year (FY 2023).
3 Alan Bannatyne was appointed as Chairman on 30 November 2022, previously Non-Executive Director; accordingly, the percentage
difference shown represents a partial year of the increased fee (FY 2023) and a full year (FY 2024).
4 Sarah Ing was appointed as Non-Executive Director on 17 May 2019; accordingly, the percentage difference shown represents a comparison
between a full year (FY 2021) and a part year (FY 2020).
5 Aisling Kennedy was appointed as Non-Executive Director on 22 February 2023; accordingly, the percentage difference shown represents
a comparison between full year (FY 2024) and a part year (FY 2023).
6 Imogen Joss and Martin Sutherland were appointed to the Board on 7 December 2023.
CEO pay (unaudited)
The table below sets out the pay ratios for the Group Co-Chief Executive Officers in relation to the equivalent pay for
the lower quartile, median and upper quartile employees (calculated on a full-time basis).
Year
Method
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
2024
Option A
Total pay ratio
53:1
39:1
25:1
2023
Option A
Total pay ratio
40:1
29:1
21:1
2022
Option A
Total pay ratio
31:1
22:1
15:1
2021
Option A
Total pay ratio
27:1
19:1
13:1
2020
Option A
Total pay ratio
24:1
13:1
11:1
Notes
The Company determined the remuneration figures at each quartile with reference to a date of 31 March 2024.
The Group used calculation option A as this is widely regarded as the method resulting in the most robust analysis.
The calculation is based on full-time equivalent salary calculated on the same basis as the single figure table.
This year the ratios have increased compared to the previous year. This increase reflects the increase in the Co-CEOs’ single figure of
remuneration for 2024, which can be found on page 90.
The Committee has reviewed the employee data and believes the median pay ratio to be consistent with the pay, reward and progression
policies for the Company’s UK employees over the period.
The total pay and benefits and the salary component of total pay and benefits for the employee at each of the
25th percentile, median and 75th percentile are shown below:
25th percentile
Median
75th percentile
Salary
£28,740
£48,617
£57,000
Total pay and benefits
£31,845
£60,109
£65,757
94
XPS Pensions Group plc Annual Report and Accounts 2024
Annual report on remuneration continued
Relative importance of spend on pay (unaudited)
The table below details the change in total staff pay between FY 2023 and FY 2024 as detailed in note 10 of the
financial statements, compared with distributions to shareholders by way of dividends, share buy-backs or any
other significant distributions or payments. These figures have been calculated in line with those in the audited
financial statements.
£’000
FY 2024
FY 2023
%
change
Total gross staff pay
97,467
83,009
17
Distributions to shareholders
18,025
15,331
18
Statement of shareholder voting (unaudited)
The table below shows the outcome of the binding vote on the Directors’ Remuneration Policy at the General
Meeting held on 7 March 2024 and the advisory vote on the FY 2023 Directors’ Remuneration Report held on
7 September 2023.
AGM resolution
Votes for
%
Votes against
Votes withheld
Directors’ Remuneration Policy
131,060,632
76.44
40,386,688
4,362,067
Directors’ Remuneration Report
162,820,119
84.71
29,399,220
35,033
Implementation of Policy for FY 2025 (unaudited information)
This section provides an overview of how the Committee is proposing to implement the Remuneration Policy in the
year ending 31 March 2025.
Base salary
Base salaries are as follows with effect from 1 April 2024:
• Ben Bramhall – £372,070;
• Paul Cuff – £372,070; and
• Snehal Shah – £321,796.
Benefits in kind
Benefits will be paid in line with the Directors’ Remuneration Policy. Details of the benefits received by Executive
Directors are set out in the single figure table on page 90. There is no intention to introduce additional benefits
in 2024/25.
Pension
Contribution rates are currently 6% of base salary. Contributions may be made as cash supplements in full or in part.
These contributions are in line with those for the majority of employees in the Group.
Annual bonus
Bonus maxima of 150% of salary will be applied for the Co-Chief Executive Officers and 125% for the Chief Financial
Officer. Bonus payments up to 100% of salary will be paid as cash with amounts in excess of this deferred into shares
for two years.
The performance weightings are as follows: 75% of the bonus will be payable by reference to performance based on
adjusted PBT, with performance against personal/strategic targets determining the extent to which the remaining 25%
of the overall bonus opportunity is payable.
In addition:
• no bonus will be payable unless the Committee is satisfied that the Company’s underlying performance
warrants it; and
• as set out in the Policy table, bonus payments will also be subject to the Committee considering that the proposed
bonus amounts, calculated by reference to performance against the targets, appropriately reflect the Company’s
overall performance and shareholders’ experience. If the Committee does not believe this to be the case, it may
adjust the bonus outturn accordingly.
Owing to the Board’s concerns about commercial sensitivity, we do not believe it is in shareholders’ interests to
disclose any further details of these targets on a prospective basis. However, the Company is committed to adhering
to principles of transparency and will, provided disclosure of targets is not deemed to be commercially sensitive, make
appropriate and relevant levels of disclosure of bonus targets and performance against these targets for the FY 2025
bonus in next year’s report. The targets will be set to ensure both consistency and fairness to all stakeholders.
Governance
95
XPS Pensions Group plc Annual Report and Accounts 2024
PSP awards
It is intended that the PSP awards will be made in FY 2025. The award levels will be no more than 150% of salary for
the Co-CEOs and 125% for the CFO.
Vesting of the awards will be based on three performance criteria, with the vesting of 70% of the shares subject to
EPS performance, 20% subject to relative total shareholder return and the remaining 10% based on a reduction of the
Company’s CO2 emissions.
The details of the target ranges are shown in the table below.
Diluted adjusted EPS1 for the three-year period to the end of FY 2027
Portion of award vesting
Compound annual growth in EPS (CAG) of less than 5%
0%
CAG of 5%
25%
CAG of between 5% and 10%
Between 25% and 100% on a straight-line basis
CAG of 10% or more
100%
1 Measured on a constant tax rate basis, to ensure the outturn is an accurate reflection of operational performance.
The EPS target range was set considering both the internal and external expectations for EPS performance over the
next three years.
XPS Group’s TSR ranking vs a comparator group2 of companies
Portion of award vesting
Below median
0%
Median
25%
Between median and upper quartile
Between 25% and 100% on a straight-line basis
Upper quartile
100%
2 The TSR comparator group consists of the constituents of the FTSE Small Cap Index (excluding investment trusts) at the start of the
performance period.
XPS Group’s CO2 emissions3 for the three-year period to the end of FY 2027
Portion of award vesting
Below 20% reduction
0%
20% reduction
25%
Between 20% and 30% reduction
Between 25% and 100% on a straight-line basis
30% or more reduction
100%
3 The CO2 emissions are based on Scope 1 and 2 emissions and will be calculated on an emissions per number of employees basis.
Minimum shareholding requirement
To align the interests of Executive Directors with those of shareholders, they are required to build and maintain
significant holdings of shares in the Group over time. The minimum shareholding requirement for Executive Directors
is 200% of base salary for the Co-CEOs and for the CFO.
In addition, Executive Directors will be required to maintain their full minimum shareholding requirement for one year
post-cessation of employment, and hold 50% of the requirement for a second year.
The Chairman’s and the Non- Executive Directors’ fees
The following fee levels become effective from 1 April 2024.
Alan Bannatyne receives an annual fee of £150,000 for his role as Board Chairman.
The Non-Executive Directors are entitled to a fee of £60,000 p.a., with an additional fee of £15,000 p.a. for the
Chair of the Audit & Risk Committee and £10,000 p.a. for each of the Senior Independent Director, Chair of the
Remuneration Committee and Chair of the Sustainability Committee. The Designated Employee Engagement
Non‑Executive Director receives an additional £5,000 p.a.
This report was reviewed and approved by the Board of Directors on 19 June 2024 and was signed on its behalf by:
Margaret Snowdon OBE
Chair of the Remuneration Committee
19 June 2024
96
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ report
The Directors present their Annual Report on the activities of
XPS Pensions Group plc (the “Group”), together with the audited
financial statements for the year ended 31 March 2024.
The Governance section on pages 54 to 100 forms part
of this Directors’ Report. Other requisite components of
this report are set out elsewhere in this Annual Report.
The Strategic Report provides information relating to the
Group’s activities, its business and strategy, engagement
with stakeholders, the principal risks and uncertainties
faced by the business and environmental and employee
matters. These sections, together with the Statement
of Corporate Governance and Directors’ Remuneration
Report, provide an overview of the Group and give an
indication of future developments in the Group’s business,
so providing a balanced assessment of the Group’s
position and prospects. These reports and this Directors’
Report have been drawn up and presented in accordance
with, and in reliance upon, applicable English company
law and any liability of the Directors in connection with
such reports shall be subject to the limitations and
restrictions provided by such law. XPS Pensions Group
plc is a member of the FTSE All-Share Index, trading
under the ticker symbol XPS.
The table on page 99 details where certain other
information, which forms part of the Directors’ Report,
can be found within this Annual Report.
Going concern
Please refer to the Going Concern Statement in the
Strategic Report on page 44 and the Viability Statement
on page 53 for details on the assessment carried out by
the Directors with regard to going concern.
Results and dividend
The Group’s audited financial statements for the year
ended 31 March 2024 are set out on pages 109 to 145
and the Company’s audited financial statements are set
out on pages 146 to 153. The Group’s profit after taxation
for the year ended 31 March 2024 was £54.2 million (FY
2023: £15.8 million). An interim dividend of 3.0p per
ordinary share (FY 2023: 2.7p) was paid on 5 February
2024. The Directors recommend a final dividend for the
year of 7.0p per ordinary share (FY 2023: 5.7p) to be paid
on 23 September 2024 to shareholders on the register on
23 August 2024.
Further information regarding dividend policy and
payments can be found in the Financial Review on page
43 and in note 36 to the financial statements on page 145.
Post balance sheet events
There have been no significant post balance sheet events
to report since 31 March 2024.
Directors
The current Directors of the Company, with summaries
of their key strengths and experience, are set out in the
Governance section on pages 56 and 57. Directors on the
Board during the year and up to the date of this report
are as follows:
Alan Bannatyne
Ben Bramhall
Paul Cuff
Snehal Shah
Margaret Snowdon OBE
Sarah Ing
Aisling Kennedy
Imogen Joss (appointed 7 December 2023)
Martin Sutherland (appointed 7 December 2023)
Details of the Directors’ service contracts are shown in
the report of the Remuneration Committee on page 82.
Details of share options granted to Directors and the
interests of the Directors in the ordinary shares of the
Company are set out in the Remuneration Report on
pages 87 to 91.
In accordance with its Articles of Association, the
Company made qualifying third-party indemnity
provisions for the benefit of its Directors against any
liability that attaches to them in defending proceedings
brought against them, to the extent permitted by
company law, which were in place throughout the year
and remain in force at the date of this report. In addition,
Directors’ and Officers’ liability insurance cover was
maintained throughout the year at the Company’s
expense and remains in force at the date of this report.
Governance
97
XPS Pensions Group plc Annual Report and Accounts 2024
Information
Location within Annual Report
Likely future developments in the business of the Company
Strategic Report (pages 8 to 17)
Inclusion and diversity
Sustainability (pages 24 and 25), Nomination Committee
(page 65)
Employee involvement
Sustainability (pages 22 to 26), Co-Chief Executive Officers’
Review (page 17) and S172 Statement (pages 18 and 19)
Directors’ share interests
Directors’ Remuneration Report (pages 87 and 88)
Emissions and energy consumption
Strategic Report (page 30)
Financial risk management objectives and policies
Note 2 to the financial statements (page 122)
Directors’ regard to foster business relationships
Strategic Report (page 18)
Capital structure
The Company’s issued ordinary share capital and total
voting rights at 31 March 2024 and the date of this report
were 207,544,975 ordinary shares (each with a par value
of 0.05p and all fully paid). There were no ordinary shares
held in treasury. As at 31 March 2024 1,512,760 ordinary
shares were held in the Employee Benefit Trust, and as at
the date of this report, 1,388,956 shares were held in the
Employee Benefit Trust. Further details of the Company’s
issued share capital are given in note 29 of the financial
statements on page 140.
The Company’s ordinary shares rank pari passu in
all respects with each other, including for voting
purposes and for all dividends. Each share carries the
right to one vote at general meetings of the Company.
Further information on the voting and other rights
of shareholders, including deadlines for exercising
voting rights, are set out in the Company’s Articles
of Association and in the explanatory notes that
accompany the Notice of the Annual General Meeting,
which are available on the Company’s website at
www.xpsgroup.com.
Restrictions on shares
The Company’s ordinary shares are freely transferable
and there are no restrictions on the size of a holding.
Transfers of shares are governed by the provisions of
the Articles of Association and prevailing legislation.
The ordinary shares are not redeemable; however, the
Company may purchase any of the ordinary shares,
subject to prevailing legislation and the requirements
of the Listing Rules.
The Directors are not aware of any agreements
between holders of the Company’s shares that may
result in restrictions on the transfer of securities or on
voting rights. Awards of shares under the Company’s
Performance Share Plan incentive arrangement are
subject to restrictions on the transfer of shares prior
to vesting.
As at the date of this report, the Trustee of the Group’s
Employee Benefit Trust holds 1,388,956 ordinary shares in
the Company but has waived its entitlement to dividends
and does not seek to exercise the voting rights on
those shares.
Major interests in shares
The table on page 98 shows the interests in shares
(whether directly or indirectly held) notified to the
Company in accordance with Chapter 5 of the Disclosure
Guidance and Transparency Rules as at 31 March 2024
and 31 May 2024 (being the latest practicable date prior
to publication of this Annual Report).
Appointment and retirement of Directors
The Board may from time to time appoint one or more
additional Directors so long as the total number of
Directors does not exceed the limit of 12 prescribed in
the Articles of Association. Any person so appointed will
retire at the next Annual General Meeting and then be
eligible for re-election. The UK Corporate Governance
Code recommends that all Directors be subject to
annual re-election by shareholders. All Directors will
offer themselves for re-election at the 2024 Annual
General Meeting.
Powers of Directors
The business of the Company shall be managed by the
Directors, who may exercise all powers of the Company,
subject to legislation, the provisions of the Articles
of Association and any directions given by special
resolution. The Articles of Association contain specific
provisions governing the Company’s power to borrow
money and also provide the powers to issue shares and
to make purchases of its own shares. In accordance
with the authorities granted at the 2023 Annual General
Meeting, the Directors are authorised, within certain
limits, to allot shares or grant rights to subscribe for
shares in the Company and to make market purchases of
the Company’s own shares representing up to 10% of its
share capital at that time. Details of the proposed renewal
of authorities of the Directors are set out in the Notice of
the 2024 Annual General Meeting.
98
XPS Pensions Group plc Annual Report and Accounts 2024
Political donations
No political contributions were made, or political
expenditure incurred, by the Company and its
subsidiaries during the year (FY 2023: £nil).
Provisions on change of control
The Company is subject to a change of control provision
in the following significant agreement:
The Company’s £100 million agreement with HSBC Bank
plc, National Westminster Bank plc, Bank of Ireland
and Citibank in multicurrency revolving facilities, with a
further uncommitted facility of up to £50 million, includes
a customary provision for a lending counterparty to
amend, alter or cancel the relevant commitment to the
Group following a change of control of the Company.
The Company does not have agreements with any
Director or employee that would provide specific
compensation for loss of office or employment resulting
from a takeover, except that provisions of the Company’s
Performance Share Plan incentive arrangement may
cause awards to vest on a takeover.
Articles of Association
A copy of the full Articles of Association is available
on the Company’s website. The Company’s Articles of
Association may only be amended by a special resolution
of shareholders in a general meeting.
Auditor and disclosure of information to the auditor
In accordance with Section 418 of the Companies Act
2006, each of the Directors who were members of
the Board at the date of the approval of this report
confirms that:
• so far as the Director is aware, there is no relevant
audit information of which the Company’s auditor is
unaware; and
• the Director has taken all steps that they ought to have
taken as a Director to make themselves aware of any
relevant audit information and to establish that the
Company’s auditor is aware of that information.
The Company’s auditor, BDO LLP, has expressed its
willingness to continue in office and the Board has
agreed, based on the recommendation of the Audit & Risk
Committee, that a resolution for its reappointment will be
proposed at the forthcoming Annual General Meeting.
Annual General Meeting
Details of the forthcoming Annual General Meeting
are given in the Statement of Corporate Governance
on page 62.
Directors’ report continued
At 31 March 2024
At 31 May 2024
Shareholder
Number of
ordinary
shares
Percentage of
total voting
rights
Number of
ordinary
shares
Percentage of
total voting
rights
Gresham House Asset Management
33,471,239
16.13
33,471,239
16.13
Abrdn
19,325,366
9.31
21,458,916
10.34
Schroder Investment Management
15,534,549
7.48
15,560,013
7.50
J.P. Morgan Asset Management
13,913,853
6.70
15,595,917
7.51
BlackRock
12,292,158
5.92
12,332,856
5.94
Premier Miton Investors
11,816,361
5.69
10,263,839
4.95
Governance
99
XPS Pensions Group plc Annual Report and Accounts 2024
Listing Rule (LR) disclosures
For the purposes of LR 9.8.4CR, the information required to be disclosed by LR 9.8.4R can be found in the
following locations:
Item
Location
Interest capitalised
None
Publication of unaudited financial information
Not applicable
Details of long-term incentive schemes
Details of the Company’s long-term incentive scheme can
be found in the Remuneration Committee Report on page 76
Waiver of emoluments by a Director
None
Waiver of future emoluments by a Director
None
Non-pre-emptive issues of equity for cash
Not applicable
Non-pre-emptive issues of equity for cash in relation to major
subsidiary undertakings
Not applicable
Contracts of significance in which a Director is or was interested None
Provision of services by a controlling shareholder
Not applicable
Shareholder waiver of dividend for the year and future dividends Dividend waiver by the Trustee of the Group’s Employee
Benefit Trust – see page 97 of this report
Agreements with controlling shareholder
Not applicable
The Directors’ Report was approved by the Board of Directors of XPS Pensions Group plc.
By order of the Board:
Snehal Shah
Chief Financial Officer
19 June 2024
100
XPS Pensions Group plc Annual Report and Accounts 2024
Directors’ responsibility statement
The Directors are responsible for preparing the Annual
Report and accounts in accordance with applicable laws
and regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the
Directors are required to prepare the Group financial
statements and have elected to prepare the Company
financial statements in accordance with UK-adopted
International Financial Reporting Standards. Under
company law the Directors must not approve the financial
statements unless they are satisfied that they give a true
and fair view of the state of affairs of the Group and
Company and of the profit or loss for the Group and
Company for that period. In preparing these financial
statements, the Directors are required to:
• select suitable accounting policies and then apply
them consistently;
• make judgements and accounting estimates that are
reasonable and prudent;
• state whether they have been prepared in accordance
with UK-adopted International Financial Reporting
Standards subject to any material departures disclosed
and explained in the financial statements;
• prepare the financial statements on the going concern
basis unless it is inappropriate to presume that the
Company will continue in business; and
• prepare a Directors’ Report, a Strategic Report and a
Directors’ Remuneration Report which comply with the
requirements of the Companies Act 2006.
The Directors are responsible for keeping adequate
accounting records that are sufficient to show and explain
the Company’s transactions and disclose with reasonable
accuracy at any time the financial position of the
Company and enable them to ensure that the financial
statements comply with the Companies Act 2006 and,
as regards the Group financial statements, Article 4
of the IAS Regulation. They are also responsible for
safeguarding the assets of the Company and hence for
taking reasonable steps for the prevention and detection
of fraud and other irregularities.
The Directors are responsible for the maintenance and
integrity of the corporate and financial information
included on the Company’s website. Legislation in
the UK governing the preparation and dissemination
of financial statements may differ from legislation in
other jurisdictions.
Statement of the Directors in respect of the
Annual Report and accounts
As required by the UK Corporate Governance Code, the
Directors confirm that they consider that the Annual
Report and accounts, taken as a whole, is fair, balanced
and understandable and provides the information
necessary for shareholders to assess the Group’s
position and performance, business model and strategy.
When arriving at this position the Board was assisted by
a number of processes, including the following:
• the Annual Report is drafted by appropriate senior
management with overall co-ordination by Internal
Communications and Company Secretarial teams to
ensure consistency across sections;
• an extensive verification process is undertaken to
ensure factual accuracy;
• comprehensive reviews of drafts of the Annual Report
are undertaken by members of the Executive Board
and senior management team; and
• the final draft is reviewed by the Audit & Risk
Committee prior to consideration by the Board.
Responsibility statement
The Directors confirm that to the best of their knowledge:
• the Group financial statements, prepared in accordance
with UK-adopted international accounting standards,
give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Group; and
• the Annual Report includes a fair review of the
development and performance of the business and the
financial position of the Group and the Parent Company
as a whole, together with a description of the principal
risks and uncertainties that they face.
Snehal Shah
Chief Financial Officer
19 June 2024
XPS Pensions Group plc Annual Report and Accounts 2024
Financial statements
101
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s affairs as
at 31 March 2024 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with UK adopted international
accounting standards and as applied in accordance with the provisions of the Companies Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.
We have audited the financial statements of XPS Pensions Group plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 March 2024 which comprise the Consolidated Statement of Comprehensive Income,
Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity, Consolidated Statement
of Cash Flows, Statement of Financial Position – Company, Statement of Changes in Equity – Company, Statement
of Cash Flows – Company, Notes to the Consolidated Financial Statements and Notes to the Financial Statements
– Company, including a summary of material accounting policies. The financial reporting framework that has been
applied in their preparation is applicable law and UK adopted international accounting standards and as regards the
Parent Company financial statements, as applied in accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable
law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit
of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the
Audit & Risk Committee.
Independence
Following the recommendation of the Audit & Risk Committee, we were appointed by the Directors on 27 February 2013
to audit the financial statements for the year ended 31 March 2014 and subsequent financial periods, noting the listing
of the Parent Company in the year ended 31 March 2016. The period of total uninterrupted engagement including
retenders and reappointments is 11 years, covering the years ended 31 March 2014 to 31 March 2024. We remain
independent of the Group and the Parent Company in accordance with the ethical requirements that are relevant to
our audit of the financial statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest
entities, and we have fulfilled our other ethical responsibilities in accordance with these requirements. The non-audit
services prohibited by that standard were not provided to the Group or the Parent Company.
Independent auditor’s report
to the members of XPS Pensions Group plc
XPS Pensions Group plc Annual Report and Accounts 2024
102
Independent auditor’s report continued
to the members of XPS Pensions Group plc
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of
accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment
of the Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included
the following procedures:
• Assessing the reasonableness of assumptions in preparation of cash flow forecasts, with consideration of historical
performance, review and challenge of revenue growth rate assumptions and the Group’s ability to meet working
capital requirements over the going concern period;
• Assessing the current period actuals against the prior period forecasts and also assessing the period to May 2024
actuals against current period forecast to determine forecasting ability;
• Assessing the Directors’ going concern assessment and mathematical accuracy of cash flow forecasts and
sensitivities used in respect of the worst case and reasonable downturn scenario models using our knowledge of
the business;
• Reviewing the terms and period of the Group’s bank facility agreement and consideration of the sufficiency of the
facility available throughout the going concern period;
• Considering the Group’s compliance with banking covenants and related headroom in light of the Directors’ worst
case scenario modelled;
• Considering the options available to the Directors’ to mitigate the impact of the worst case scenario 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 with the forecast and worst case scenario.
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 significant 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.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about
whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Other matters
The corresponding figures in the Statement of Cash Flows – Company are unaudited.
Overview
Coverage
89% (FY 2023: 81%) of Total EBITDA less gain on disposal
89% (FY 2023: 96%) of Group revenue
(EBITDA – calculated as profit before tax, less depreciation, amortisation and finance costs)
Key audit matters
2024
2023
Valuation of contract assets - accrued income
Materiality
Group financial statements as a whole
2024: £1,410,000 based on 3% of Total EBITDA less gain on disposal
2023: £1,000,000 based on 3% of Total EBITDA
XPS Pensions Group plc Annual Report and Accounts 2024
Financial statements
103
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.
Significant components:
Component
Type of work performed
XPS Pensions Group plc
Full scope audit
XPS Pensions Consulting Limited
Full scope audit
XPS Pensions Limited
Full scope audit
XPS Investment Limited
Full scope audit
XPS Administration Limited
Full scope audit
All components are located in the UK and are centrally managed and controlled.
Non-significant components:
Other than the five significant components noted above, there were 12 other components within the Group which
formed part of our Group audit.
The following two non-significant components were subject to a full scope audit on account of them being part
of a non-small group and being entities that do not avail themselves of a parental guarantee from audit under s479A
of the Companies Act 2006:
Component
Type of work performed
XPS SIPP Services Limited
Full scope audit
XPS Consulting (Reading) Limited
Full scope audit
All 10 of the remaining non-significant components were subjected to group procedures on revenue balances,
procedures on financial statement area balances greater than the materiality thresholds, and desktop review
procedures. All audit work on all entities (significant or non-significant) was undertaken by the Group audit
engagement team.
Climate change
Our work on the assessment of potential impacts on climate-related risks on XPS Pensions Group plc’s operations and
financial statements included:
• Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks
and their potential impacts on the financial statements and adequately disclose climate-related risks within the
Annual Report;
• Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how
climate change affects this particular sector; and
• Review of the minutes of Board, Audit & Risk Committee and Sustainability Committee meetings and other papers
related to climate change, and performed a risk assessment as to how the impact of the Group’s commitment as set
out in the Strategic Report may affect the financial statements and our audit.
We challenged the extent to which climate-related considerations, including the expected cash flows from the initiatives
and commitments have been reflected, where appropriate, in the Directors’ going concern assessment and viability.
We also assessed the consistency of management’s disclosures included as ‘Statutory Other Information’ including
Task force Climate-Related Financial Disclosures (TCFD) and the Streamlined Energy and Carbon Reporting (SECR)
within the financial statements and with our knowledge obtained from the audit.
Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted
by climate-related risks and related commitments.
XPS Pensions Group plc Annual Report and Accounts 2024
104
Independent auditor’s report continued
to the members of XPS Pensions Group plc
An overview of the scope of our audit continued
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
Valuation of
contract assets –
accrued income
Refer to Note 1, Note
8 and Note 21 of the
Financial Statements.
The Group has a total contract assets – accrued
income of £16.7 million (FY 2023: £16.4
million) as disclosed in note 21 of the financial
statements.
Valuation of contract assets – accrued
income was considered a fraud risk due to
the recognition being highly subjective and
involving management’s judgements around
the amount of revenue to be billed in the future
and the subsequent recovery of the revenue
being uncertain.
Management’s judgement relates to the time
recorded against each client project versus the
amount billed, as well as other factors including
expected recoverability levels based on past
experience, the nature of the work undertaken,
and to what extent the performance obligations
have been met.
The risk around the valuation of contract
assets – accrued income has been determined
to be both over and understatement through
judgements made by management in its
valuation at year end, or in recording time that
relates to work performed in the financial year
that is not included in contract assets - accrued
income at year end.
This results in the valuation of contract assets
– accrued income being assessed as an area of
significant risk of material misstatement and
therefore a key audit matter.
Year-end valuation was assessed by selecting
a sample of contract assets - accrued income
balances from the accrued income listing and
agreeing the inputs in the calculation back
to contracts with the customers, underlying
timesheet data from the time recording system
and where possible, subsequent invoices raised
post year end with related statement of activity,
to assess the reasonableness of the judgement
applied by management in the valuation.
In addition, where possible, we agreed our
sample to subsequent cash receipt in the bank
statements to assess the reasonableness of the
judgement applied by management in assessing
the recoverability of the balances.
We also compared the time recorded in the
March 2024 monthly timesheet report as
extracted from the timesheet recording system,
to the time recorded in the accrued income
listing to assess if the valuation of accrued
income was understated based on omitted
time worked.
We tested the operating effectiveness of the
relevant control over the time recording system.
Key observations:
Based on the procedures undertaken, we
did not identify any evidence that suggests
that the judgement applied by management
is inappropriate.
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.
XPS Pensions Group plc Annual Report and Accounts 2024
Financial statements
105
Our application of materiality continued
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
2024
2023
2024
2023
Materiality
£1,410,000
£1,000,000
£1,057,000
£750,000
Basis for
determining
materiality
3% of Total EBITDA
less gain on disposal
3% of Total EBITDA
4% of Company Net
Assets capped at 75%
of Group materiality.
4% of Company Net
Assets capped at 75%
of Group materiality.
Rationale for the
benchmark applied
EBITDA less gain on disposal is considered to
be the benchmark that is of the most interest to
the majority of users of the financial statements
based on investor and stakeholder expectations.
75% of Group materiality given the assessment of
the component’s aggregation risk.
Performance
materiality
£1,057,000
£700,000
£790,000
£525,000
Basis for
determining
performance
materiality
75%
70%
75%
70%
Rationale for the
percentage applied
for performance
materiality
These thresholds are based on our knowledge of the Group and Parent Company, control environment
over financial reporting, history of misstatements in previous periods and management’s attitude to
proposed adjustments.
Component materiality
For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, apart
from the Parent Company whose materiality is set out above, based on a percentage of between 32% and 60%
(FY 2023: 36% and 62%) of Group materiality dependent on the size and our assessment of the risk of material
misstatement of that component. Component materiality, apart from the Parent Company, ranged from £450,000
to £850,000 (FY 2023: £360,000 to £620,000). In the audit of each component, we further applied performance
materiality levels of 75% (FY 2023: 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 & Risk Committee that we would report to them all individual audit differences in excess of
£56,000 (FY 2023: £40,000). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The Directors are responsible for the other information. The other information comprises the information included
in the Annual Report and Accounts other than the financial statements and our auditor’s report thereon. Our opinion
on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated
in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the financial
statements, or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated.
If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether
this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have
performed, we conclude that there is a material misstatement of this other information, we are required to report
that fact.
We have nothing to report in this regard.
XPS Pensions Group plc Annual Report and Accounts 2024
106
Independent auditor’s report continued
to the members of XPS Pensions Group plc
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability and
that part of the Corporate Governance Statement relating to the Parent Company’s compliance with the provisions of
the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the
Corporate Governance Statement is materially consistent with the financial statements, or our knowledge obtained
during the audit.
Going concern
and longer-term
viability
• The Directors’ statement with regards to the appropriateness of adopting the going concern
basis of accounting and any material uncertainties identified set out on page 44 and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this
assessment covers and why the period is appropriate set out on page 53.
Other Code
provisions
• The Directors’ statement is fair, balanced and understandable as set out on page 100;
• The Board’s confirmation that it has carried out a robust assessment of the emerging and
principal risks set out on page 52;
• The section of the annual report that describes the review of effectiveness of risk management
and internal control systems set out on pages 47 to 52 ; and
• The section describing the work of the Audit & Risk Committee set out on pages 66 to 69.
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit, we are required
by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as described below.
Strategic report
and Directors’
report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for
which the financial statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Directors’ report have been prepared in accordance with
applicable legal requirements.
In light of the knowledge and understanding of the Group and Parent Company and its
environment obtained in the course of the audit, we have not identified material misstatements
in the Strategic report or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly
prepared in accordance with the Companies Act 2006.
Matters on which
we are required
to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies
Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate
for our audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration report
to be audited are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibility statement, the Directors are responsible for the preparation
of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as
the Directors determine is necessary to enable the preparation of financial statements that are free from material
misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the Parent
Company or to cease operations, or have no realistic alternative but to do so.
XPS Pensions Group plc Annual Report and Accounts 2024
Financial statements
107
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error
and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the
economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line
with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:
Non-compliance with laws and regulations
Based on:
• Our understanding of the Group and the industry in which it operates;
• Discussion with management and those charged with governance; and
• Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations.
We considered the significant laws and regulations to be the applicable accounting framework, UK tax legislation,
Listing Rules, Companies Act 2006, and labour regulations and tax laws in key territories which the Group operates in.
The Group is also subject to laws and regulations where the consequence of non-compliance could have a material
effect on the amount or disclosures in the financial statements, for example through the imposition of fines or
litigations. We identified such laws and regulations to be the health and safety legislation, employment law, consumer
protection laws and regulations, and the Financial Conduct Authority regulations, including client money rules.
Our procedures in respect of the above included:
• Review of minutes of meeting of the Board of Directors for any instances of non-compliance with laws
and regulations;
• Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws
and regulations;
• Review of financial statement disclosures and agreeing to supporting documentation;
• Involvement of tax specialists in the audit; and
• Review of legal expenditure accounts to understand the nature of expenditure incurred.
Fraud
We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk
assessment procedures included:
• Enquiry with management and the Audit & Risk Committee regarding any known or suspected instances of fraud;
• Obtaining an understanding of the Group’s policies and procedures relating to:
• Detecting and responding to the risks of fraud; and
• Internal controls established to mitigate risks related to fraud.
• Review of minutes of meetings of the Board of Directors for any known or suspected instances of fraud;
• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;
• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of
material misstatement due to fraud; and
• Performing an assessment of the Group’s IT environment and as part of this work, we tested the operating
effectiveness of financial systems including the general ledger system and the time recording system. We also
tested IT application level controls in relation to the time recording system in revenue.
XPS Pensions Group plc Annual Report and Accounts 2024
108
Auditor’s responsibilities for the audit of the financial statements continued
Extent to which the audit was capable of detecting irregularities, including fraud continued
Fraud continued
Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of
controls, specifically the risk of management overriding the control environment to either overstate or understate the
EBITDA reported, and to overstate or understate the valuation of contract assets - accrued income.
Our procedures in respect of the above included:
• Selecting a sample of journal entries throughout the year which met a defined risk criteria, and testing these by
agreeing to supporting documentation;
• In response to the risk of fraud in contract asset – accrued income, performing the procedures set out in the ‘Key
Audit Matters’ section of this report; and
• Assessing in aggregate, material estimates and judgements made by management that affect EBITDA for bias.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team
members who were all deemed to have appropriate competence and capabilities and remained alert to any indications
of fraud or non-compliance with laws and regulations throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting
one resulting from error, as fraud may involve deliberate concealment by, for example, forgery, misrepresentations
or through collusion. There are inherent limitations in the audit procedures performed and the further removed
non‑compliance with laws and regulations is from the events and transactions reflected in the financial statements,
the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part 16 of the
Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent Company’s members
those matters we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than the Parent Company and the Parent
Company’s members as a body, for our audit work, for this report, or for the opinions we have formed.
Andrew Radford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
19 June 2024
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Independent auditor’s report continued
to the members of XPS Pensions Group plc
XPS Pensions Group plc Annual Report and Accounts 2024
Financial statements
109
Consolidated statement of comprehensive income
for the year ended 31 March 2024
Year ended 31 March 2024
Year ended 31 March 2023
Note
Trading
items
£’000
Non-trading
and
exceptional
items1
£’000
Total
£’000
Trading
items
£’000
Non-trading
and
exceptional
items 1
£’000
Total
£’000
Revenue
8
199,432
—
199,432
166,596
—
166,596
Other operating income
4
—
92
92
—
197
197
Operating expenses
9
(149,960)
(15,128) (165,088)
(129,652)
(14,413) (144,065)
Gain on disposal
7
—
32,538
32,538
—
—
—
Profit/(loss) from operating activities
49,472
17,502
66,974
36,944
(14,216)
22,728
Finance income
14
50
—
50
10
—
10
Finance costs
14
(4,543)
—
(4,543)
(3,596)
—
(3,596)
Profit/(loss) before tax
44,979
17,502
62,481
33,358
(14,216)
19,142
Income tax (expense)/credit
15
(11,483)
3,169
(8,314)
(6,215)
2,910
(3,305)
Profit/(loss) after tax and total
comprehensive income/(loss) for the year
33,496
20,671
54,167
27,143
(11,306)
15,837
Memo
EBITDA
55,295
24,536
79,831
42,448
(7,334)
35,114
Depreciation and amortisation
(5,823)
(7,034)
(12,857)
(5,504)
(6,882)
(12,386)
Profit/(loss) from operating activities
49,472
17,502
66,974
36,944
(14,216)
22,728
Pence
Pence
Pence
Pence
Earnings per share attributable to the
ordinary equity holders of the Company:
Adjusted
Adjusted
Profit or loss:
Basic earnings per share
34
16.2
—
26.2
13.2
—
7.7
Diluted earnings per share
34
15.3
—
24.7
12.6
—
7.3
1 See note 6 for additional information regarding non-trading and exceptional items.
The notes on pages 113 to 145 form part of these financial statements.
XPS Pensions Group plc Annual Report and Accounts 2024
110
Consolidated statement of financial position
as at 31 March 2024
Note
31 March
2024
£’000
31 March
2023
£’000
Assets
Non-current assets
Property, plant and equipment
16
3,976
3,079
Right-of-use assets
17
8,892
9,684
Intangible assets
18
208,070
212,103
Other financial assets
20
—
1,847
220,938
226,713
Current assets
Trade and other receivables
21
50,922
43,765
Cash and cash equivalents
22
10,005
13,285
60,927
57,050
Total assets
281,865
283,763
Liabilities
Non-current liabilities
Loans and borrowings
23
23,386
67,310
Lease liabilities
17
7,295
7,234
Provisions
27
1,802
1,869
Trade and other payables
25
—
845
Deferred income tax liabilities
19
15,593
18,445
48,076
95,703
Current liabilities
Lease liabilities
17
1,872
2,701
Provisions
27
1,914
2,009
Trade and other payables
25
43,722
31,218
Current income tax liabilities
26
427
2,280
Contingent consideration
28
—
568
47,935
38,776
Total liabilities
96,011
134,479
Net assets
185,854
149,284
Equity
Equity attributable to owners of the Parent
Share capital
29
104
104
Share premium
30
1,786
1,786
Merger relief reserve
30
48,687
48,687
Investment in own shares held in trust
30
(2,925)
(1,350)
Retained earnings
30
138,202
100,057
Total equity
185,854
149,284
The notes on pages 113 to 145 form part of these financial statements.
The financial statements were approved by the Board of Directors on 19 June 2024 and were signed on its behalf by:
Snehal Shah
Chief Financial Officer
19 June 2024
Registered number: 08279139
XPS Pensions Group plc Annual Report and Accounts 2024
Financial statements
111
Consolidated statement of changes in equity
for the year ended 31 March 2024
Share
capital
£’000
Share
premium
£’000
Merger
relief
reserve
£’000
Investment
in own
shares
£’000
Accumulated
(deficit)/
retained
earnings
£’000
Total
equity
£’000
Balance at 1 April 2022
103
116,804
48,687
(4,157)
(17,002)
144,435
Profit after tax and total comprehensive income for the year
—
—
—
—
15,837
15,837
Contributions by and distributions to owners:
Share capital issued
1
1,786
—
—
—
1,787
Share premium reduction
—
(116,804)
—
—
116,804
—
Dividends paid (note 36)
—
—
—
—
(15,331)
(15,331)
Dividend equivalents paid on exercised share options
—
—
—
—
(549)
(549)
Shares purchased by Employee Benefit Trust for cash
—
—
—
(2,200)
—
(2,200)
Share-based payment expense – equity settled from
Employee Benefit Trust
—
—
—
5,007
(4,137)
870
Share-based payment expense – IFRS 2 charge (note 13)
—
—
—
—
3,892
3,892
Deferred tax movement in respect of share-based payment
expense (note 19)
—
—
—
—
258
258
Current tax movement in respect of share-based
payment expense
—
—
—
—
285
285
Total contributions by and distributions to owners
1
(115,018)
—
2,807
101,222
(10,988)
Balance at 31 March 2023
104
1,786
48,687
(1,350)
100,057
149,284
Balance at 1 April 2023
104
1,786
48,687
(1,350)
100,057
149,284
Profit after tax and total comprehensive income for the year
—
—
—
—
54,167
54,167
Contributions by and distributions to owners:
Dividends paid (note 36)
—
—
—
—
(18,025)
(18,025)
Dividend equivalents paid on exercised share options
—
—
—
—
(576)
(576)
Shares purchased by Employee Benefit Trust for cash
—
—
—
(5,621)
—
(5,621)
Share-based payment expense – equity settled from
Employee Benefit Trust
—
—
—
4,046
(4,019)
27
Share-based payment expense – IFRS 2 charge (note 13)
—
—
—
—
4,910
4,910
Deferred tax movement in respect of share-based payment
expense (note 19)
—
—
—
—
1,167
1,167
Current tax movement in respect of share-based
payment expense
—
—
—
—
521
521
Total contributions by and distributions to owners
—
—
—
(1,575)
(16,022)
(17,597)
Balance at 31 March 2024
104
1,786
48,687
(2,925)
138,202
185,854
The notes on pages 113 to 145 form part of these financial statements.
XPS Pensions Group plc Annual Report and Accounts 2024
112
Consolidated statement of cash flows
for the year ended 31 March 2024
Note
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Cash flows from operating activities
Profit for the year
54,167
15,837
Adjustments for:
Depreciation
16
892
897
Depreciation of right-of-use assets
17
2,887
2,854
Amortisation
18
9,061
8,635
Finance income
14
(50)
(10)
Finance costs
14
4,543
3,596
Gain on sale of business
7
(34,639)
—
Loss on disposal of right-of-use assets
17
117
—
Share-based payment expense
13
4,910
3,892
Other operating income
4
(92)
(197)
Income tax expense
15
8,314
3,305
50,110
38,809
Increase in trade and other receivables
(7,462)
(3,432)
Increase in trade and other payables
11,993
3,603
(Decrease)/increase in provisions
(379)
442
54,262
39,422
Income tax paid
(11,331)
(4,866)
Net cash inflow from operating activities
42,931
34,556
Cash flows from investing activities
Finance income received
14
50
10
Acquisition of subsidiary, net of cash acquired
28
(405)
(8,268)
Purchases of property, plant and equipment
16
(1,851)
(640)
Purchases of software
18
(5,655)
(4,814)
Increase in restricted cash balances – other financial assets
20
—
(33)
Disposal of business
7
37,035
—
Net cash inflow/(outflow) from investing activities
29,174
(13,745)
Cash flows from financing activities
Proceeds from the issue of share capital
—
1,787
Proceeds from loans net of capitalised costs
8,000
11,000
Repayment of loans
(52,000)
(7,000)
Payment relating to extension of loan facility
(200)
—
Sale of own shares
27
870
Purchase of ordinary shares by EBT
(5,621)
(2,200)
Interest paid
(3,905)
(2,985)
Lease interest paid
(331)
(311)
Payment of lease liabilities
(2,754)
(2,957)
Dividends paid to the holders of the Parent
36
(18,025)
(15,331)
Dividend equivalents paid on exercise of share options
(576)
(549)
Net cash outflow from financing activities
(75,385)
(17,676)
Net (decrease)/increase in cash and cash equivalents
(3,280)
3,135
Cash and cash equivalents at start of year
13,285
10,150
Cash and cash equivalents at end of year
22
10,005
13,285
The notes on pages 113 to 145 form part of these financial statements.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
113
Notes to the consolidated financial statements
for the year ended 31 March 2024
1 Accounting policies
XPS Pensions Group plc (the “Company”) is a public limited company incorporated in the UK. The principal activity
of the Group is employee benefit consultancy and related business services. The registered office is Phoenix House,
1 Station Hill, Reading RG1 1NB. The Group financial statements consolidate those of the Company and its subsidiaries
(together referred to as the “Group”).
Basis of preparation
These consolidated financial statements have been prepared in accordance with UK-adopted International Accounting
Standards. The consolidated financial statements have been prepared under the going concern basis.
The preparation of financial statements in accordance with the requirements of International Financial Reporting
Standards (IFRS) requires management to exercise its judgement in the process of applying the Group’s accounting
policies. There are no critical accounting estimates within these financial statements. The areas involving a higher
degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial
statements, are disclosed at the end of this section.
The significant accounting policies adopted in the preparation of the financial statements are set out below.
The policies have been consistently applied to all the periods presented, unless otherwise stated.
Functional and presentation currency
The financial statements are presented in British pounds which is the Company’s functional currency. Figures are
rounded to the nearest thousand.
Measurement convention
The financial information is prepared on the historical cost basis.
Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if
all three of the following elements are present: power over the investee; exposure to variable returns from the investee;
and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts
and circumstances indicate that there may be a change in any elements of control.
The consolidated financial information presents the results of the Company and its subsidiaries (the “Group”) as
if they formed a single entity. Intercompany transactions and balances between Group companies are therefore
eliminated in full.
The consolidated financial information incorporates the results of business combinations using the acquisition method.
In the statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially
recognised at their fair values at the acquisition date, with the exception of right-of-use assets and lease liabilities,
which are measured at the present value of the lease liability discounted at acquisition date incremental borrowing
rate (a rate that represents the amount that would be charged to acquire an asset of similar value for a similar period),
with an adjustment to right-of-use assets to reflect favourable/non-favourable lease terms. The results of the acquired
operations are included in the consolidated statement of comprehensive income from the date on which control is
obtained. They are deconsolidated from the date on which control ceases.
Property, plant and equipment
Property, plant and equipment are stated at historical cost less accumulated depreciation. For items acquired as
part of a business combination, cost comprises the deemed fair value of those items at the date of acquisition.
Depreciation on those items is charged over their estimated remaining useful lives from that date.
Depreciation is charged to profit and loss in the statement of comprehensive income on a straight-line basis over the
estimated useful lives of each part of an item of property, plant and equipment. Estimated useful lives are as follows:
• Office equipment
3 to 10 years
• Leasehold improvements
Over the remaining life of the lease
• Fixtures and fittings
3 to 10 years
XPS Pensions Group plc Annual Report and Accounts 2024
114
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
1 Accounting policies continued
Going concern
IFRS accounting standards require the Directors to consider the appropriateness of the going concern basis when
preparing the financial statements. The Directors have taken notice of the Financial Reporting Council guidance,
“Guidance on the going concern basis of accounting and reporting on solvency and liquidity risks”, which requires
the reasons for this decision to be explained.
Management has prepared cash flow forecasts up to 31 October 2025, which the Directors have approved.
These include the 12-month period from the date of approval of these financial statements. These forecasts show
that during that period the Group is expected to generate sufficient cash from its operations to settle its liabilities
as they fall due without the requirement for additional borrowings. This period has been chosen as October is the
lowest point in the Group’s working capital and cash cycle. Inflationary increases have been modelled using the
OBR inflation forecasts for that period, and interest rate increase has been included in the forecasts based on latest
market projections.
The Group’s banking facility is in place until October 2026 and gives the Group access to a revolving credit facility of
£100 million with an accordion of £50 million. The facility is subject to two covenants – net leverage and interest cover.
These covenants were not breached during the financial year, nor are any breaches expected in the cash flow forecast.
The Group does not have any non-financial covenants.
Management has also performed some scenario modelling to further assess the liquidity of the Group. Firstly,
management has modelled a scenario at which the banking covenants could potentially be breached, which is
the point where going concern could be threatened. In this worst case scenario, revenue is modelled to decrease
significantly, partially offset with a reduction in staff bonuses. The headroom between this scenario and current
performance, and the budget, is significant and a decrease of this magnitude is considered to be extremely unlikely.
In addition, the Group has several additional cost reduction and cash preservation levers it could utilise, which
include managing staff costs through a hiring freeze or reduction in workforce, a reduction in capital expenditure,
and a reduction of dividends if this worst case scenario was to happen. Another scenario modelled was a reasonable
downside scenario, where no growth is experienced in revenues not related to compliance. The result of this
reasonable downside scenario was that even with no actions to reduce costs in line with the revenue decrease, the
Group remained profitable and complied comfortably with its banking covenants. This reasonable downside scenario
is considered to be very unlikely, as historically the Group has always performed discretionary work for its customers.
The Directors have reviewed the historical accuracy of the Group’s budgets. The Group’s performance was compared
to the budget, and actual revenue was within 1% of the forecast figure, and adjusted EBITDA was within 4% of the
forecast figure. Actual results were ahead of forecast in both cases. This demonstrates that the Group’s forecasting
process is at a sufficient standard to be able to place reliance on it when making a going concern assessment.
Post‑year-end trading is in line with forecasts. The Directors, after reviewing the Group’s budget and longer-term
forecast models, including the worst case scenario referred to above, conclude that the Group has adequate resources
to continue in operational existence for the foreseeable future and they continue to adopt the going concern basis of
accounting in preparing these annual financial statements.
In terms of the wider macroeconomic and financial situation, the increase in the rate of inflation has fallen significantly
since the prior year although management is monitoring the situation with Russia and Ukraine as well as Israel,
Palestine and Iran as any further escalations could trigger further price increases with potential for related interest rate
increases. The Group does have protection for any increases in the inflation rate built into customer contracts, which
stipulate that the price charged can be increased by an inflationary amount. Pricing on indexation-linked contracts
continues to be reviewed and was uplifted accordingly as the contracts were renewed throughout the current year
and into the following year. The Group demonstrated its ability to perform strongly in a high-inflation environment
in both the prior and current years. Whilst higher interest rates have led to higher finance expenses, this has been
modelled in the Group’s forecasts and is not considered a significant risk, especially since the Group has paid down
a significant portion of its debt in the year.
Intangible assets and goodwill
Goodwill represents amounts arising on acquisition, being the difference between the cost of the acquisition and the
net fair value of the identifiable assets and liabilities acquired on a business combination. Identifiable intangibles are
those which can be sold separately or which arise from legal rights regardless of whether those rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating units for
the purposes of impairment testing and is not amortised. It is tested annually for impairment.
Externally acquired intangible assets are stated at cost less accumulated amortisation and impairment losses.
Acquired software is valued based on replacement cost valuations where identifiable or at cost less accumulated
amortisation and impairment. Internally produced software is valued at cost less accumulated amortisation
and impairment.
Customer relationships are valued based on the net present value of the excess earnings generated by the revenue
streams over their estimated useful lives.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
115
1 Accounting policies continued
Intangible assets and goodwill continued
Amortisation is included in operating expenses in the statement of comprehensive income over the estimated useful
lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life, such as goodwill,
are systematically tested for impairment at each balance sheet date. Other intangible assets are amortised from the
date they are available for use. Estimated useful lives are as follows:
• Goodwill
Indefinite life
• Customer relationships1
10 years, straight-line method
• Brands
10 years, straight-line method
• Software
5 to 10 years, straight-line method
1 Except for pensions and investment customer relationships acquired as part of the Punter Southall acquisition and customer relationships
recognised in 2013, and the Penfida customer relationships recognised on acquisition in 2023, all of which have an estimated useful life of
20 years, on a straight-line basis.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill or intangible assets not ready for use, are not subject
to amortisation and are tested annually for impairment. Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the
purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable
cash inflows (cash-generating units). Non-financial assets other than goodwill that suffered an impairment are
reviewed for possible reversal of the impairment at each reporting date.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose for
which the asset was acquired.
Amortised cost
Amortised cost includes non-derivative financial assets where they are held within a business model whose objective
is to hold the financial asset in order to collect contractual cash flows and those contractual terms give rise to cash
flows on specified dates that are solely payments of principal and interest on the principal amount outstanding.
These assets are included in non-current assets if their maturity is greater than 12 months. Trade receivables are stated
initially at fair value then measured at amortised cost less provisions for impairment. The Group applies the IFRS 9
simplified approach to measuring expected credit losses using a lifetime expected credit loss provision. The expected
loss rates are based on the Group’s historical credit losses experienced over the three-year period prior to year end.
The historical loss rates are then adjusted for current and forward-looking information on macroeconomic factors
affecting the Group’s customers. Any impairment required is recorded in the statement of comprehensive income.
Cash and cash equivalents comprise cash balances
Restricted cash is cash which the Group is not entitled to receive, withdraw, transfer or otherwise deal with the
deposit, save as expressly permitted by the blocked account agreement during the security period. The blocked
account agreement is required due to regulatory rules on master trusts. The security period is the period beginning
on the date of the deed and ending on the date on which the beneficiary is satisfied that the secured liabilities have
been irrevocably and unconditionally paid and discharged in full and all agreements which might give rise to secured
liabilities have terminated. The restricted cash had been included in non-current assets as it is expected that the
cash will remain in the blocked account for more than 12 months after the end of the reporting period. As such, it is
not included in cash and cash equivalents in the consolidated statement of financial position and the consolidated
statement of cash flows. This balance was disposed of in the year as part of the NPT sale, and so the Group does not
hold any restricted cash balances at 31 March 2024.
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability
was acquired. The Group’s accounting policy for each category is as follows:
Fair value through profit or loss
The Group does not currently have any liabilities which fall into this category.
Other financial liabilities
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to
initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and
redemption value being recognised in the statement of comprehensive income over the period of the borrowings on
an effective interest basis. When borrowings are extinguished, any difference between the cash paid and the carrying
value is recognised in the statement of comprehensive income.
XPS Pensions Group plc Annual Report and Accounts 2024
116
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
1 Accounting policies continued
Financial liabilities continued
Other financial liabilities continued
Trade payables and other short-term monetary liabilities represent liabilities for goods and services received by the
Group prior to the end of the financial year which are unpaid. The amounts within trade payables are unsecured.
They are initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.
Provisions
The Group has provisions for the following items:
• dilapidations provisions relate to the estimated cost to put leased premises back to the required condition
expected under the terms of the lease. These include provisions for required dilapidations along with provisions
where leasehold improvements have been made that would require reinstatement back to the original status
on exit. These are uncertain in timing as leases may be terminated early or extended. To the extent that exits
of premises are expected within 12 months of the end of the year they are shown as current;
• professional indemnity provisions relate to complaints against the Group. The amount provided is based on
management’s best estimate of the likely liability. These are recognised as a gross amount, with any amounts
covered by insurance recognised as an asset within current assets, in line with IAS 37; and
• social security costs provisions represent estimates of the Group’s National Insurance contributions liability on the
cost of the Group’s Performance Share Plans and Senior Equity Plans.
Employee Benefit Trust (EBT)
As the Group is deemed to have control of its EBT, it has been aggregated within the accounts of XPS Pensions Group
plc, and therefore consolidated for the purposes of the consolidated financial statements. The EBT’s investment in the
Group’s shares is deducted from equity in the consolidated statement of financial position as if it were treasury shares.
Consideration paid (or received) for the purchase (or sale) of these shares is recognised directly in equity. The cost
of shares held is presented as a separate reserve (the “investment in own shares”). As the shares are typically used to
satisfy vested share options, the difference between the option cost and the weighted average cost of the shares is
charged to retained earnings.
The equity-settled share-based payment expense represents the amount of share awards made by the EBT on behalf
of the sponsoring entity (XPS Pensions Group plc).
EBT equity-settled awards, which vest immediately on issue, are measured at the fair value of the shares issued on
the date of the award, representing the bid price of the shares. The share-based payment expense is charged to the
consolidated statement of comprehensive income.
Revenue
Revenue, which excludes value added tax, represents the value of employee benefit consultancy and related business
services supplied. Revenue is derived mainly from sales made in the United Kingdom. Revenue derived from outside
the United Kingdom is immaterial.
Amounts recognised as revenue but not yet billed are reflected in the consolidated statement of financial position as
contract assets. This is work where there is no unconditional right to receive the cash, but work has been performed
in line with performance obligations. Amounts billed in advance of work performed are recognised as deferred income
and presented in the statement of financial position as contract liabilities.
Performance obligations and timing of revenue recognition
Performance obligations in contracts with customers are typically satisfied as services are rendered. Where work
performed in a period has not yet been billed, the value of this will be included in contract assets - accrued income at
the period end. In most cases, revenue is recognised on an over time basis. This is because effort has been expended
by the business on fulfilling the performance obligations in the contract and the contracts would require payment for
time and effort spent by the Group on progressing the contracts in the event of the customer cancelling the contract
for any reason other than the Group’s failure to perform its obligations under the contract. Invoices are in most cases
raised monthly, based on timesheet data for Pensions actuarial and consulting and Pensions investment consulting.
For Pensions Administration services, invoices are typically raised monthly based on services provided. Work relating
to the McCloud judgement in Pensions Administration services has been billed in advance. Payment is typically due
30 days from date of invoice. Additionally, the Group has a SSAS and SIPP business which provides services to small
self-administered pension schemes and self-invested pensions plans. The Group also receives income on corporate
and customer bank deposits within the SSAS and SIPP business based on a rate linked to the Bank of England base
rate. The Group also provided a defined contribution master pension trust for employers offering “full freedom and
choice”, called the National Pension Trust (NPT). Income from this NPT business is linked to the value of assets under
management. The NPT business was disposed of in the year (see note 7).
The Group has a number of customers who are on a fixed price contract. This contract covers a number of services
(pensions actuarial, administration and investment), most of which are ongoing and therefore require no revenue
recognition adjustment to the regular invoice issued to the customer. These are recognised monthly at the time of
billing, as the benefit the customer receives as the work is done is largely in line with the amount billed each month.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
117
1 Accounting policies continued
Revenue continued
Performance obligations and timing of revenue recognition continued
For some fixed price customers, an element of the fixed fee includes the triennial valuation of their defined benefit
pension schemes, which is a distinct performance obligation. Under IFRS 15, the Group has assessed these contracts
and has determined that an adjustment is needed to recognise the revenue for the performance obligation relating
to the triennial valuations in the specific periods that the work is undertaken.
For the fixed fee customers where an adjustment is required, payment is made monthly over a three-year period.
The revenue recognition for triennial valuations takes place over the 15-month period after the valuation date, so
there can be up to 35 months’ variance between the date of billing and revenue recognition. Any variance between
the timing of payment and the timing of revenue recognition will be recognised as either a contract asset (where
the performance obligations met to date exceed the value billed from the contract to date), or as a contract liability
(where the value billed to date from the contract exceeds the performance obligations met to date).
Determining the transaction price and allocating amounts to performance obligations
For the contracts where an adjustment is required, the Group has identified the element of the fixed fee that is
attributable to the triennial valuation. This has been calculated based on the expected time required to perform these
obligations for each specific customer. To ensure that the revenue is allocated to the relevant period, the Group has
determined the time span for the triennial valuation work, and the separate stages of this work. A percentage has
been applied to each stage, based on the proportion of total effort.
Judgement is required for these contracts in determining the value attributable to the triennial valuation work, and
also to the stage of completion at each reporting period. The judgements made are based on experience, and have
been validated by comparison to timesheet data to measure work performed over the three year contract window.
For the McCloud work being performed by the Administration business, judgement is required to assess the cost
to complete and therefore the revenue to be recognised at a point in time.
The remainder of revenue from fixed fee contracts is recognised on a monthly basis, as the services provided tend
to be evenly spread over the life of the contract.
Services provided under contracts which do not include a fixed fee are recognised at a price quoted within the
contract which typically varies depending on the level of seniority of the employee providing the service. Commission
income is recognised on renewal of scheme membership, as the performance obligations are met at the time the
contract is won or renewed with the insurer.
There are no significant judgements relating to revenue recognition for the SIP business.
Alternative performance measures (APMs)
The Group presents APMs within its annual report and accounts, these APMs are not defined under the requirements
of IFRS. These include those that are visible from the consolidated statement of comprehensive income and the
following key APMs: adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, and cash
conversion. Management believes that the presentation of these APMs provides stakeholders with additional
information on the underlying performance of the business, as well as aiding comparability between reporting periods
by adjusting for factors which affect IFRS performance measures. These APMs are not a substitute for or superior to
IFRS measures. The Group’s APMs are defined, explained and reconciled to the nearest statutory measure within the
Chief Financial Officer’s review.
Exceptional and non-trading items
To assist in understanding its underlying performance, the Group has defined the following items of pre-tax income
and expense as exceptional or non-trading as they either reflect items which are exceptional in nature or size or are
associated with the amortisation of acquired intangibles. Items treated as non-trading or exceptional include:
• profits or losses on disposal of assets or businesses, which are considered to be non-trading in nature as these do
not reflect the underlying performance of the Group. These transactions tend to be material in value, and the timing
can be uncertain. The impact on the financial statements can be significant and can distort certain key performance
indicators, such as basic EPS;
• corporate transaction and restructuring costs are considered to be exceptional in nature as these can be material
and are not a reflection of the underlying performance of the Group. The timing of these costs can vary and amounts
can differ significantly year on year, which can have a distortive impact on the statutory measures of performance;
• amortisation of acquired intangibles is considered to be non-trading as this is a material number and does not
reflect the underlying performance of the Group, and users of the accounts expect to be able to assess the
profitability and growth of the Group excluding this figure. Additionally this is a significant non-cash cost;
XPS Pensions Group plc Annual Report and Accounts 2024
118
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
1 Accounting policies continued
Exceptional and non-trading items continued
• changes in the fair value of contingent consideration – these movements do not reflect underlying trade and the
timing of these items can be significantly different from the date of the original transaction to which they relate.
They do not reflect the underlying performance of the Group as a whole;
• expenses relating to deferred consideration deemed as post-acquisition remuneration under IFRS 3 are considered
to be exceptional in nature. Without the link to continuing employment, these costs would have been treated as
consideration and are material;
• share-based payments, which are considered a non-trading cost as they are a significant non-cash cost which are
excluded from the results for the purposes of measuring performance for PSP awards and also dividend amounts.
Additionally, the large non-cash-related credits go directly to equity and so have a limited impact on the reserves
of the Group; and
• the related tax effect of these items.
Any other non-recurring items are considered individually for classification as non-trading or exceptional by virtue of
their nature or size.
The separate disclosure of these items allows a clearer understanding of the trading performance on a consistent and
comparable basis, together with an understanding of the effect of non-recurring or large individual transactions upon
the overall profitability of the Group.
The non-trading items have been included within the appropriate classifications in the consolidated income statement.
Further details are given in note 6.
Leases and payments
Identifying leases
The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for
a period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:
(a) there is an identified asset;
(b) the Group obtains substantially all the economic benefits from use of the asset; and
(c) the Group has the right to direct use of the asset.
The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights,
the contract is not identified as giving rise to a lease.
In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group
considers only the economic benefits that arise from use of the asset, not those incidental to legal ownership or other
potential benefits.
In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs
how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be
made because they are predetermined due to the nature of the asset, the Group considers whether it was involved in
the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the
period of use. If the contract or portion of a contract does not satisfy these criteria, the Group applies other applicable
IFRSs rather than IFRS 16.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
• leases of low-value assets; and
• leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term,
with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is
not readily determinable, in which case the lessee company’s incremental borrowing rate on commencement of the
lease is used. Other variable lease payments are expensed in the period to which they relate.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received,
and increased for the amount of any provision recognised where the Group is contractually required to dismantle,
remove or restore the leased asset (typically leasehold dilapidations – see note 27).
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the
balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line
basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to
be shorter than the lease term. When the Group revises its estimate of the term of any lease (because, for example, it
reassesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount
of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount
rate that applied on lease commencement.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
119
1 Accounting policies continued
Leases and payments continued
Identifying leases continued
The carrying value of lease liabilities is also revised when the variable element of future lease payments dependent
on a rate or index is revised; however, this will use the original discount rate. In both cases an equivalent adjustment
is made to the carrying value of the right-of-use asset, with the revised carrying amount being amortised over the
remaining (revised) lease term.
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature
of the modification:
• if the renegotiation results in one or more additional assets being leased for an amount commensurate with the
standalone price for the additional rights of use obtained, the modification is accounted for as a separate lease
in accordance with the above policy;
• in all other cases where the renegotiated lease increases the scope of the lease (whether that is an extension to the
lease term, or one or more additional assets being leased), the lease liability is remeasured using the discount rate
applicable on the modification date, with the right-of-use asset being adjusted by the same amount; and
• if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability
and right-of-use asset are reduced by the same proportion to reflect the partial or full termination of the lease with
any difference recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount
reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments
discounted at the rate applicable on the modification date. The right-of-use asset is adjusted by the same amount.
For contracts that both convey a right to the Group to use an identified asset and require services to be provided to
the Group by the lessor, the Group has elected to account for the entire contract as a lease, i.e. it does not allocate any
amount of the contractual payments to, and account separately for, any services provided by the supplier as part of
the contract.
When the Group revises its estimate of the term of any lease (because, for example, it reassesses the probability
of a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to
reflect the payments to make over the revised term, which are discounted at the same discount rate that applied
on lease commencement.
Where the lease liability changes due to change in lease term (for example, due to utilisation of an extension option)
a new discount rate is used. This rate is determined as the interest rate implicit in the lease for the remainder of the
lease term, if that rate can be readily determined, or the Group’s incremental borrowing rate at the date of reassessment
if the interest rate implicit in the lease cannot be readily determined. The same rate is used for changes in index rates.
Share-based payment costs – Performance Share Plan and Senior Equity Plan
Share-based payment costs as referred to throughout these financial statements are a long-term employee benefit.
The Group operates equity-settled, share-based compensation plans, under which the entity receives services from
the Executive Directors and certain senior employees in consideration for equity instruments of the Group. The fair
value of the services received in exchange for the grant of the awards is recognised as an expense. The total amount
to be expensed is determined by reference to the fair value of the awards granted:
• including any market performance conditions (for example, an entity’s share price); and
• excluding the impact of any service and non-market performance vesting conditions (for example, profitability and
remaining a Director for a specified period of time).
The Senior Equity Plans (SEPs) do not have any market performance conditions or non-market performance vesting
conditions, they only have service vesting conditions. The fair value for SEPs is the share price on the date of grant.
The total amount expensed to the Group is recognised over the vesting period of the award. Where a share award
is cancelled, the share-based payment charge is accelerated at that point in time and all remaining unvested charge
is immediately expensed to the Group.
Where a share award includes dividend equivalents, these are included within the IFRS 2 charge described above.
The Group may settle these via cash or shares.
See the Employee Benefit Trust (EBT) policy above for information on the EBT element of share‑based payment costs.
XPS Pensions Group plc Annual Report and Accounts 2024
120
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
1 Accounting policies continued
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in profit and loss in the
statement of comprehensive income except to the extent that it relates to items recognised in equity, in which case
it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively
enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are
not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities that affect neither
accounting nor taxable profit other than in a business combination and differences relating to investments in
subsidiaries to the extent that they will probably not reverse in the foreseeable future. The amount of deferred tax
provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities,
using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available
against which the asset can be utilised.
Changes in accounting policies – new standards, interpretations, and amendments effective from 1 April 2023
New and amended standards and interpretations issued by the IASB that apply for the first time in these annual
financial statements do not impact the Group as they are either not relevant to the Group’s activities or require
accounting which is consistent with the Group’s current accounting policies. These include:
• IFRS 17 Insurance Contracts;
• Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates
and Errors);
• Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12 Income
Taxes); and
• International Tax Reform – Pillar Two Model Rules (Amendment to IAS 12 Income taxes) (effective immediately upon
the issue of the amendments and retrospectively).
The Group has reflected changes within its accounting policies as a result of implementing “Disclosure of Accounting
Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality
Judgements)”. No material changes resulted from this.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not effective for 2024, and therefore
have not been applied in preparing XPS Pensions Group’s financial statements. They are not expected to have a
material impact on the Group’s consolidated financial statements. These include the following amendments effective
for the year beginning 1 April 2024:
• Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases);
• Classification of Liabilities as Current or Non-Current (Amendments to IAS 1 Presentation of Financial Statements);
• Non-Current Liabilities with Covenants (Amendments to IAS 1 Presentation of Financial Statements); and
• Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial
Instruments: Disclosures).
The following amendments are effective for the period beginning 1 April 2025:
• Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates).
The Group is currently assessing the impact of these new accounting standards and amendments, but currently
does not anticipate that these will drive any material changes to the Group’s consolidated financial statements.
The other standards, interpretations and amendments issued by the IASB (of which some are still subject
to endorsement by the UK) but not yet effective are not expected to have a material impact on the Group’s
consolidated financial statements.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
121
1 Accounting policies continued
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions within the course of business. Estimates and judgements are
continually evaluated based on historical experience and other factors, including expectations of future events that
are believed to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed
on an ongoing basis. In the future, actual experience may differ from these estimates and assumptions. Significant
judgements are separately identified where applicable. The Directors have reviewed the accounting estimates and
judgements made, and have determined that there are two critical judgements. The first relates to the valuation of
contract assets – accrued income within the unbilled element of pensions, investment and administration services.
The second critical judgement relates to the disposal of the NPT business. There are no critical estimates.
Management will make a judgement as to whether a project is in an accrued or deferred position at the end of each
month/reporting period. This judgement is based on the time recorded against each client project versus the amount
billed, as well as other factors including expected recoverability levels based on past experience, the nature of the
work undertaken, and to what extent the performance obligations have been met, all in line with IFRS 15.
The NPT business disposal was a significant transaction for the Group and resulted in a material gain. However, it has
not been presented as a disposal of a discontinued operation. A discontinued operation must be a component of an
entity that has been disposed of. A component is defined within IFRS 5 as a cash-generating unit (CGU), and cannot
be smaller than a CGU. The NPT business did not form a single CGU; it was incorporated within CGU 1. Therefore, the
Group cannot present the sale of the NPT business as a disposal of a discontinued operation.
2 Financial risk management
XPS Pensions Group’s operations expose it to a variety of financial risks including credit risk, liquidity risk, market risk
and the effects of changes in interest rates on debt. The Group has in place a risk management programme that seeks
to limit the adverse effects on the financial performance of the Group by monitoring levels of debt finance and the
related finance costs.
The Group’s principal financial instruments comprise sterling cash, lease liabilities and bank loans together with trade
receivables and trade payables that arise directly from its operations.
Risk management policies are established for the XPS Pensions Group of companies and the Group Audit & Risk
Committee oversees how management monitors compliance with these policies and procedures and reviews the
adequacy of the risk management framework in relation to the risks faced by the Group. Further details relating to
the current year position are provided in note 31.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty, including brokers, to a financial
instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.
Due to the nature of the business, the majority of the trade receivables are with trustees of pension schemes and large
institutions and losses have occurred infrequently over previous years.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s
approach to managing liquidity is to ensure, as far as possible, that the Group will have sufficient liquidity to meet its
liabilities when due, within the going concern period, under both the normal and worst case scenario modelled. Cash
flow forecasts are updated daily and reviewed regularly by management. Trade debtor balances are managed to
ensure debtors are kept to terms as much as is possible, and management ensure sufficient cash is available to meet
expected cash outflows. The Group has significant headroom within its current revolving credit facility.
Market risk
Market risk is the risk that changes in market prices will affect the Group’s income or the value of its financial
instruments. Market risk comprises three elements – interest rate risks, foreign exchange risks and pricing risks.
Interest rate risks are discussed in the cash flow interest rate risk below. The Group is exposed to movements in
interest rate in its net finance costs and also in a small element of its operating revenue. Loans and borrowings are
based on a rate linked to SONIA. The Group earns income in relation to client deposits as well as interest income on
its own deposits.
The Group’s financial instruments are currently in sterling; hence, foreign exchange movements do not have a material
effect on the Group’s performance.
Pricing risks are considered to be low – an element of resetting fees regularly includes an inflation measure, but as this
is contractual it does not present a significant risk to the Group.
The Group does not hold its own position in trading securities, being involved only in arranging transactions on behalf
of its clients.
The Group does not engage in holding speculative financial instruments or derivatives. Further quantitative disclosures
are included in note 31.
XPS Pensions Group plc Annual Report and Accounts 2024
122
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
2 Financial risk management continued
Cash flow interest rate risk
XPS Pensions Group is exposed to cash flow interest rate risk in two main respects: firstly, corporate and client bank
deposits, which earn interest at a variable rate, although not at a material level; and secondly, interest expense arising
on the revolving credit facility at a margin over SONIA.
3 Capital risk management
The Group is focused on delivering value for its shareholders whilst ensuring the Group is able to continue effectively
as a going concern. Value adding opportunities to grow the business are continually assessed, although strict and
careful criteria are applied.
The policy for managing capital is to increase shareholder value by maximising profits and cash. The policy is to set
budgets and forecasts in the short and medium term that the Group feels are achievable. The processes for managing
capital are regular reviews of financial data to ensure that the Group is tracking the targets set and to reforecast as
necessary based on the most up-to-date information. This then contributes to XPS Pensions Group’s forecast which
ensures future covenant test points are met. The Group continues to meet these test points and they have been
achieved over the last year.
Due to the nature of some of the services provided, two subsidiaries within the Group were regulated by the Financial
Conduct Authority (FCA) during the year. They are required to hold a minimum level of capital and this is monitored
on a monthly basis. Formal compliance returns are submitted to the FCA in line with their reporting requirements.
The Group was compliant with its capital requirements throughout the year.
4 Other operating income
Other operating income arose from the revaluation of the contingent consideration in the year for the MJF acquisition
in February 2022. The balance of the contingent consideration was paid by the Group in August 2023. Since this is
not considered to be part of the main revenue-generating activities of the Group, the Group presents this income
separately from revenue.
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Contingent consideration fair value adjustment (note 28)
92
197
5 Auditor’s remuneration
During the period the following services were obtained from the Group’s auditor at a cost detailed below:
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Audit services
Fees payable in respect of the Parent Company and consolidated accounts
394
328
Fees payable in respect of the subsidiary accounts
166
252
560
580
Audit-related services
42
36
Other assurance services
12
12
Other non-audit services
10
30
Total
624
658
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
123
6 Non-trading and exceptional items
Year ended 31 March 2024
Year ended 31 March 2023
Note
Total
before
tax
£’000
Tax on
adjusting
items 6
£’000
Adjusting
items after
taxation
£’000
Total
before
tax
£’000
Tax on
adjusting
items 6
£’000
Adjusting
items after
taxation
£’000
Corporate transaction costs1
(1,718)
(212)
(1,930)
(2,871)
216
(2,655)
Exceptional items
(1,718)
(212)
(1,930)
(2,871)
216
(2,655)
Contingent consideration write back2
4
92
—
92
197
—
197
Share-based payment costs3
13
(6,376)
1,623
(4,753)
(4,660)
1,370
(3,290)
Amortisation of acquired intangibles4
18
(7,034)
1,758
(5,276)
(6,882)
1,324
(5,558)
Gain on disposal5
7
32,538
—
32,538
—
—
—
Non-trading items
19,220
3,381
22,601
(11,345)
2,694
(8,651)
Total
17,502
3,169
20,671
(14,216)
2,910
(11,306)
1 The Group incurred total corporate transaction costs of £1,718,000 (2023: £2,871,000) in the year, of which £1,689,000 (2023: £845,000)
related to amounts owed to the vendor as earn out in respect of the acquisition of Penfida Limited. The maximum payout of £3,379,000
would be payable on the second anniversary of the acquisition subject to business performance which includes retention of clients as well
as continued employment of key employees. As continued employment is one condition of the share purchase agreement, then according
to IFRS 3, the entire additional amount must be treated as a post-transaction employment cost accruing over the deferment period of two
years to September 2024. This additional amount is material in size and it is one-off in nature. As such, in line with the Group’s accounting
policies, it has been classified as an exceptional item. If the entire amount is not payable at the end of the two year period, any resulting
credit will also flow through the exceptional category. Additionally, the Group incurred £29,000 (2023: £2,026,000) of costs relating to
other potential M&A activities explored by the Group during the year. The prior year included costs relating to the acquisition of Penfida
Limited and other potential M&A opportunities explored by the Group in the year. The overall transaction costs are material and do not
reflect the underlying performance of the Group. Users of the accounts expect these costs to be disclosed separately, to aid visibility of
underlying performance. The timing of these costs can also vary and is normally not aligned with the related benefits of the transaction.
2 The contingent consideration write back relates to the revaluation of the contingent consideration for the Michael J Field (MJF) acquisition
(note 4). This income is deemed to be exceptional in nature as it is linked to a payment set out in the business transfer agreement for the
MJF acquisition in February 2022. This income is not related to underlying business performance and so is disclosed as non-trading income.
Management does not include this figure in income when reviewing overall business performance. There are no further payments to be
made in respect of this acquisition.
3 Share-based payment expenses and related National Insurance are included in non-trading and exceptional costs as they are significant
non-cash costs which are excluded from the results for the purposes of measuring performance for PSP/SEP awards and dividend amounts.
Additionally, the largely non-cash-related credits 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.
4 During the year the Group incurred £7,034,000 of amortisation charges in relation to acquired intangible assets (customer relationships and
brand) (2023: £6,882,000). As this figure is material, and is linked to non-trading activity, management excludes this cost when reviewing
and reporting on the underlying performance of the Group. Similarly, users of the accounts expect to be able to assess the profitability and
growth of the Group excluding this figure.
5 The gain on disposal relates to the NPT business disposal disclosed in note 7. This is a material figure which does not reflect the underlying
performance of the Group and is non-recurring. This gain has a significant impact on basic EPS (26.2p including this gain, 10.5p excluding it).
6 The tax credit on exceptional and non-trading items of £3,169,000 (2023: £2,910,000) represents 18% (2023: 20%) of the exceptional and
non-trading items incurred of £17,502,000 (2023: £14,216,000). This is different to the expected tax charge of 25% (2023: credit of 19%),
as various adjustments are made to tax including for deferred tax and the exclusion of amounts not allowable for tax – in particular the gain
relating to the sale of the NPT business in the year.
7 Gain on disposal
On 20 November 2023, the Group sold the NPT business to SEI. The sale is intended to create a market-leading
defined contribution proposition for employers and pension scheme members. The sale creates a strategic partnership
between XPS Pensions Group and SEI, under which the Group will provide wide ranging services to continue to
support NPT and SEI.
The total cash consideration payable to the Group is up to £42.5 million, comprising £35.0 million initial consideration
and contingent consideration of up to £7.5 million based on business performance over two years. This £7.5 million has
not been recognised as the threshold for recognition has not been met at 31 March 2024.
The transaction positions the SEI Master Trust to continue delivering best-of-breed service at increased scale in
partnership with NPT. The Group will continue to provide high-quality pensions administration and consultancy
services to NPT and SEI which will ensure continuity of service to the members and clients. SEI will benefit from
enhanced opportunities in the growing master trust space and XPS will benefit as a strategic partner of SEI.
XPS Pensions Group plc Annual Report and Accounts 2024
124
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
7 Gain on disposal continued
The post-tax gain on disposal was determined as follows:
Year ended
31 March
2024
£’000
Cash consideration received
37,035
Total consideration received and net cash inflow on disposal
37,035
Net assets disposed
Intangible assets
(353)
Other financial assets – restricted cash
(1,847)
Trade and other receivables
(305)
Trade and other payables
109
(2,396)
Corporate costs in relation to disposal
(2,101)
Pre-tax gain on disposal
32,538
Related tax expense
—
Gain on disposal
32,538
The amount reflected as the gain in the consolidated statement of cash flows is the £37,035,000 proceeds, less the
£2,396,000 adjustment for balance sheet items disposed of.
Note 1 references the critical judgement applied to this transaction. Had this been treated as a discontinued operation,
then the disposal of this business would have been presented as a profit on discontinued operation within the
statement of comprehensive income, along with the trading results for the NPT business. The results of the NPT
business are shown below.
Year ended 31 March 2024
Year ended 31 March 2023
Trading
items
£’000
Non-trading
and
exceptional
items
£’000
Total
£’000
Trading
items
£’000
Non-trading
and
exceptional
items
£’000
Total
£’000
Revenue
2,759
—
2,759
4,332
—
4,332
Operating expenses
(2,374)
—
(2,374)
(3,451)
—
(3,451)
Gain on disposal
—
32,538
32,538
—
—
—
Profit from operating activities
385
32,538
32,923
881
—
881
Finance costs
(9)
—
(9)
—
—
—
Profit before tax
376
32,538
32,914
881
—
881
Income tax expense
(94)
—
(94)
(175)
—
(175)
Profit after tax
282
32,538
32,820
706
—
706
Memo
EBITDA
454
32,538
32,992
1,013
—
1,013
Depreciation and amortisation
(69)
—
(69)
(132)
—
(132)
Profit from operating activities
385
32,538
32,923
881
—
881
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
125
8 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
31 March
2024
£’000
Year ended
31 March
2023
£’000
Pensions Actuarial & Consulting
93,411
77,388
Pensions Administration
71,929
57,444
Pensions Investment Consulting
20,316
18,009
SIP1
11,017
9,423
NPT2
2,759
4,332
Total
199,432
166,596
1 Self Invested Pensions (SIP) business, incorporating both SIPP and SSAS products.
2 The NPT business was sold on 20 November 2023 (note 7) and so revenue in the year is up to that date.
9 Operating expenses
Included in the operating profit for the year are the following:
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Expenses by nature
Staff costs (note 10)
120,357
101,436
Depreciation and amortisation
12,840
12,386
Short-term and low-value lease costs
308
222
Premises costs (excluding rent accounted for under IFRS 16 Leases)
3,233
2,870
Professional fees
7,652
6,993
IT costs
13,167
10,731
Exceptional items
29
2,026
Other general business costs
7,502
7,401
Total
165,088
144,065
10 Staff numbers and costs
The average number of people employed by the Group (including Directors) during the year, analysed by category,
was as follows:
Year ended
31 March
2024
Number of
employees
Year ended
31 March
2023
Number of
employees
Operational
1,557
1,435
Administration
137
125
Sales and marketing
27
24
Total
1,721
1,584
XPS Pensions Group plc Annual Report and Accounts 2024
126
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
10 Staff numbers and costs continued
The aggregate payroll costs of these persons were as follows:
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Wages and salaries
95,425
81,142
Social security contributions
10,175
8,913
Defined contribution pension cost
4,650
4,009
Other long-term employee benefits
2,042
1,867
Post-acquisition remuneration (note 6)
1,689
845
Share-based payment costs (note 13)
6,376
4,660
Total
120,357
101,436
11 Employee benefits
Defined contribution plan
The Company operates a defined contribution pension plan. Outstanding contributions at the year end were £nil
(2023: £nil).
12 Directors’ emoluments
The Directors were remunerated for their services by the Group and their emoluments are disclosed below.
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Aggregate emoluments excluding gain on exercise of share options
2,854
2,626
Gain on exercise of share options
2,024
987
Company contributions to defined contribution pension scheme
30
30
Total
4,908
3,643
Share-based payment expense for Directors was £1,233,000 (2023: £894,000).
Year ended
31 March
2024
Number of
Directors
Year ended
31 March
2023
Number of
Directors
At 31 March 2024, retirement benefits are accruing to the following number of Directors under:
Defined contribution pension schemes
3
3
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
The emoluments of the highest paid Director, including benefits and share-based payment charge
1,379
1,194
13 Share-based payment costs
The Group operates a number of equity-settled share-based remuneration schemes for employees: Performance Share
Plans (PSP) for Executive Directors and other key senior personnel, and Deferred Share Plans (DSP) for key senior
personnel from July 2020. In July 2023, the name of the DSP was changed to Senior Equity Plan (SEP). All references to
SEP throughout these notes relate to both DSP and SEP awards as they are identical in all but name. All employees are
also eligible to participate in the Save as You Earn (SAYE) scheme, the only vesting condition being that the individual
remains an employee of the Group over the savings period. PSP schemes are no longer issued to employees other than
Executive Directors; any staff PSP figures in this note relate to outstanding vested options not yet exercised.
The Executive PSP award expense relates to annual awards over shares that vest subject to certain stretching
performance conditions, measured over a three-year period. Maximum “normal” grant level is 150% of salary, capped
at a maximum of 200% in exceptional circumstances. Malus and clawback provisions apply. The fair value of awards
granted during the year was determined using certain assumptions around vesting. More information about the
Executive PSP can be found in the Remuneration Report section of this Annual Report.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
127
13 Share-based payment costs continued
The only vesting criterion for the SEP is a service criterion. The fair value of awards under this scheme was determined
using the share price on the date of grant.
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
PSP awards, SEP awards and SAYE scheme
4,910
3,892
Social security cost on PSP awards and SEP awards (note 27)
1,466
768
Total share-based payments
6,376
4,660
The fair value of Executive PSP options granted during the period was calculated using different methods for different
elements – the Black-Scholes method for the EPS and ESG elements, the Stochastic method for the TSR element, and
the Chaffe method for the holding period. There is no change in the valuation methodology since the prior year. In the
year there was also an additional award which is solely based on an EPS target. The fair value for this additional award
was calculated using the Black-Scholes method. The inputs to the model were as follows:
Year ended 31 March 2024
Year ended 31 March 2023
70%
earnings
per share
(EPS)
10%
environmental,
social and
governance
(ESG)
20%
relative
total
shareholder
return
(TSR)
Two-year
holding
period
Additional
award:
100%
earnings
per share
(EPS)
75%
earnings
per share
(EPS)
25%
relative
total
shareholder
return
(TSR)
Two-year
holding
period
Weighted average exercise price
of options issued during the
period (pence)
0.05
0.05
0.05
0.05
0.05
0.05
0.05
0.05
Expected volatility (%)
n/a
n/a
36.44%
37.02%
n/a
n/a
38.80%
37.03%
Expected life beyond vesting
date (years)
3
3
3
2
3
3
3
2
Risk-free rate (%)
n/a
n/a
4.88%
4.64%
n/a
n/a
1.81%
1.77%
Dividend yield (%)
—
—
—
—
—
—
—
—
For the TSR element, the volatility is calculated over the period of time commensurate with the remainder of the
performance period immediately prior to the date of grant. For the holding period, this is calculated over the period
commensurate with the holding period immediately prior to the date of grant.
The risk-free rate is calculated using the rate of interest obtainable from government securities (i.e. gilts in the UK)
over a period commensurate with the expected term. For the holding period the risk-free rate is the rate obtained
over a term equal to the vesting period plus the holding period.
No SAYE options were granted during the period. The fair value of SAYE options granted during the prior year
was calculated using the Black-Scholes valuation method. The inputs to the model were as follows:
Year ended
31 March
2023
Weighted average exercise price of options issued during the period (pence)
104.0
Expected volatility (%)
47.95%
Expected life beyond vesting date (years)
3.34
Risk-free rate (%)
1.61%
Dividend yield (%)
4.90%
The volatility assumption has been calculated over the period of time commensurate with the expected award term
immediately prior to the date of grant.
XPS Pensions Group plc Annual Report and Accounts 2024
128
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
13 Share-based payment costs continued
As at 31 March 2024, in respect of the Group’s ordinary shares of 0.05p each, 2,886,258 Executive PSP options had
been granted and remained outstanding, at an exercise price of 0.05p per share, 178,655 staff PSP options had been
granted and remained outstanding, at an exercise price of 0.05p per share, 6,565,064 staff SEP options had been
granted and remained outstanding, at an exercise price of 0.05p per share, 786,870 SAYE options had been granted
and remained outstanding, at an exercise price of 111p per share, and 2,263,496 SAYE options had been granted and
remained outstanding, at an exercise price of 104p per share. The table below includes dividend equivalent shares on
the PSP and SEP option figures where applicable.
2024
Weighted
average
exercise
price
(pence)
2024
Number
2023
Weighted
average
exercise
price
(pence)
2023
Number
Executive PSP
Outstanding at 1 April
0.05
3,037,475
0.05
3,098,236
Granted during the year
0.05
948,483
0.05
1,084,873
Forfeited during the year
0.05
(327,860)
0.05
(572,818)
Exercised during the year
0.05
(620,424)
0.05
(553,445)
Cancelled during the year
0.05
(21,715)
0.05
(19,371)
Outstanding at 31 March
0.05
3,015,959
0.05
3,037,475
Staff PSP
Outstanding at 1 April
0.05
329,242
0.05
3,335,675
Forfeited during the year
0.05
(3,869)
0.05
(752,892)
Exercised during the year
0.05
(135,716)
0.05
(2,177,334)
Cancelled during the year
0.05
(4,750)
0.05
(76,207)
Outstanding at 31 March
0.05
184,907
0.05
329,242
Staff SEP
Outstanding at 1 April
0.05
6,306,014
0.05
3,976,462
Granted during the year
0.05
2,590,302
0.05
2,392,868
Forfeited during the year
0.05
(84,425)
0.05
(63,316)
Exercised during the year
0.05
(1,887,415)
—
—
Cancelled during the year
0.05
(66,059)
—
—
Outstanding at 31 March
0.05
6,858,417
0.05
6,306,014
SAYE
Outstanding at 1 April
110.79
3,173,969
88.61
4,430,966
Granted during the year
—
—
104.00
2,381,306
Forfeited during the year
105.61
(50,382)
94.91
(70,384)
Exercised during the year
87.47
(29,081)
78.01 (3,405,601)
Lapsed during the year
—
—
82.51
(39,784)
Cancelled during the year
106.01
(44,140)
106.14
(122,534)
Outstanding at 31 March
111.17
3,050,366
110.79
3,173,969
The exercise price of options outstanding at 31 March 2024 ranged between £0.0005 (i.e. the nominal value of an
ordinary share) in the case of the PSP and SEP and £1.110 in the case of the SAYE scheme (2023: £0.0005 to £1.110).
Their weighted average contractual life was three years (2023: three years), and their weighted average exercise price
was £0.25 (2023: £0.32).
Across all schemes, of the total number of options outstanding at 31 March 2024, 403,985 (2023: 356,263) had vested
and were exercisable.
The weighted average fair value of each option granted during the year was £1.74 (2023: £1.24). The weighted average
exercise price for exercisable options was 0.05p per share (2023: 0.26p per share). The weighted average share price
at the date of exercise for share options exercised during the year was £1.88 (2023: £1.33).
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
129
14 Finance income and expense
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Interest income on bank deposits
50
10
Finance income
50
10
Interest expense on bank loans
3,629
2,758
Other costs of borrowing
542
498
Interest on leases
323
290
Other finance expense
49
50
Finance expense
4,543
3,596
Other costs of borrowing largely represent the amortisation expense of capitalised loan arrangement fees on the
Group’s bank debt.
15 Income tax expense
Recognised in the statement of comprehensive income
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Current tax expense
Current year
10,133
5,153
Adjustment in respect of prior year
(131)
(223)
Total current tax expense
10,002
4,930
Deferred tax credit
Origination and reversal of temporary differences
(2,231)
(1,403)
Adjustment in respect of prior year
543
—
Effect of tax rate changes
—
(222)
Total income tax expense
8,314
3,305
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Profit for the year
54,167
15,837
Total tax expense
8,314
3,305
Profit before income tax
62,481
19,142
Tax using the UK corporation tax rate of 25% (2023: 19%)
15,620
3,637
Non-deductible expenses
510
74
Other operating income not taxable
(23)
—
Gain on disposal not taxable
(8,135)
—
Fixed asset differences
(70)
39
Adjustment in respect of prior periods
412
(223)
Effect of tax rate change
—
(222)
Total tax expense
8,314
3,305
The standard rate of corporation tax in the UK was 25% (2023: 19%). The average effective tax rate was 13% (2023: 17%).
The average effective rate in the year is impacted by the non-taxable gain on sale of the NPT business. Excluding
this, the effective tax rate was 28%. This is higher than the standard rate due to the impact of costs not allowable for
tax. 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 2024, which is 25% (2023: 25%). Deferred tax not recognised relates to £6.7 million
(2023: £6.7 million) of finance expense losses in a prior year and their future recoverability is uncertain. At 31 March 2024
the total unrecognised deferred tax asset in respect of these losses was approximately £1.7 million (2023: £1.7 million).
£521,000 (2023: £285,000) of current year tax, and £1,167,000 (2023: £258,000) of deferred tax was recognised
directly in equity; this relates to employee share options accounted for under IFRS 2.
XPS Pensions Group plc Annual Report and Accounts 2024
130
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
16 Property, plant and equipment
Leasehold
improvements
£’000
Office
equipment
£’000
Fixtures
and fittings
£’000
Total
£’000
Cost
Balance at 1 April 2023
3,502
1,595
901
5,998
Additions
992
733
64
1,789
Disposals
(38)
(248)
(59)
(345)
Balance at 31 March 2024
4,456
2,080
906
7,442
Accumulated depreciation
Balance at 1 April 2023
1,755
739
425
2,919
Depreciation charge for the year
424
355
113
892
Disposals
(38)
(248)
(59)
(345)
Balance at 31 March 2024
2,141
846
479
3,466
Net book value
Balance at 1 April 2023
1,747
856
476
3,079
Balance at 31 March 2024
2,315
1,234
427
3,976
Leasehold
improvements
£’000
Office
equipment
£’000
Fixtures
and fittings
£’000
Total
£’000
Cost
Balance at 1 April 2022
3,217
1,472
891
5,580
Acquired through business combinations
—
59
17
76
Additions
285
511
(7)
789
Disposals
—
(447)
—
(447)
Balance at 31 March 2023
3,502
1,595
901
5,998
Accumulated depreciation
Balance at 1 April 2022
1,440
639
314
2,393
Acquired through business combinations
—
59
17
76
Depreciation charge for the year
315
488
94
897
Disposals
—
(447)
—
(447)
Balance at 31 March 2023
1,755
739
425
2,919
Net book value
Balance at 1 April 2022
1,777
833
577
3,187
Balance at 31 March 2023
1,747
856
476
3,079
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
131
17 Leases
Nature of leasing activities (in the capacity as lessee)
The Group leases a number of properties in the UK. In some instances the rent is reviewed and may be reset
periodically to market rental rates. In other cases the periodic rent is fixed over the lease term. The Group also leases
certain items of equipment (photocopiers). Leases of photocopiers comprise only fixed payments over the lease
terms. The percentages in the table below reflect the current proportions of lease payments that are either fixed or
variable. The sensitivity reflects the impact on the carrying amount of lease liabilities and right-of-use assets if there
was an uplift of 5% on the balance sheet date to lease payments that are variable.
31 March 2024
Lease
contracts
Number
Fixed
payments
%
Variable
payments
%
Sensitivity
£’000
Property leases with periodic uplifts to market rentals
8
—
85
± 337
Property leases with fixed payments
7
11
—
—
Leases of plant and equipment
19
4
—
—
34
15
85
± 337
31 March 2023
Lease
contracts
Number
Fixed
payments
%
Variable
payments
%
Sensitivity
£’000
Property leases with periodic uplifts to market rentals
7
—
83
± 309
Property leases with fixed payments
11
16
—
—
Leases of plant and equipment
1
1
—
—
19
17
83
± 309
The Group sometimes negotiates break clauses in its property leases. On a case-by-case basis, the Group will consider
whether the absence of a break clause would expose the Group to excessive risk. Typically factors considered in
deciding to negotiate a break clause include:
• the length of the lease term; and
• whether the location represents a new area of operations for the Group.
At 31 March 2024 and 31 March 2023, the carrying amounts of lease liabilities are not reduced by the amount of
payments that would be avoided from exercising break clauses because on both dates it was considered reasonably
certain that the Group would not exercise its right to break the lease. Total undiscounted lease payments of £6,747,875
(2023: £6,170,938) are potentially avoidable were the Group to exercise break clauses at the earliest opportunity.
XPS Pensions Group plc Annual Report and Accounts 2024
132
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
17 Leases continued
Nature of leasing activities (in the capacity as lessee) continued
Right-of-use assets
Land and
buildings
£’000
Cars
£’000
Office
equipment
£’000
Total
£’000
At 1 April 2023
9,640
—
44
9,684
Additions
2,576
476
—
3,052
Depreciation
(2,740)
(103)
(44)
(2,887)
Effect of modification to lease terms
(311)
—
—
(311)
Disposal of lease
(627)
(19)
—
(646)
At 31 March 2024
8,538
354
—
8,892
Right-of-use assets
Land and
buildings
£’000
Office
equipment
£’000
Total
£’000
At 1 April 2022
10,824
103
10,927
Additions
616
—
616
Depreciation
(2,795)
(59)
(2,854)
Effect of modification to lease terms
309
—
309
On acquisition
686
—
686
At 31 March 2023
9,640
44
9,684
Lease liabilities
Land and
buildings
£’000
Cars
£’000
Office
equipment
£’000
Total
£’000
At 1 April 2023
9,880
—
55
9,935
Additions
2,359
476
—
2,835
Interest expense
304
18
1
323
Effect of modification to lease term
(311)
—
—
(311)
Disposal
(511)
(19)
—
(530)
Lease payments
(2,915)
(114)
(56)
(3,085)
At 31 March 2024
8,806
361
—
9,167
Lease liabilities
Land and
buildings
£’000
Office
equipment
£’000
Total
£’000
At 1 April 2022
11,565
115
11,680
Additions
616
—
616
Interest expense
287
3
290
Effect of modification to lease term
82
—
82
On acquisition
534
—
534
Lease payments
(3,204)
(63)
(3,267)
At 31 March 2023
9,880
55
9,935
31 March
2024
£’000
31 March
2023
£’000
Short-term lease expense
285
211
Low-value lease expense
23
11
Aggregate expense for short-term leases
308
222
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
133
17 Leases continued
Nature of leasing activities (in the capacity as lessee) continued
The maturity of the lease liabilities is as follows:
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Up to 3 months
471
817
Between 3 and 12 months
1,401
1,884
Between 1 and 2 years
1,640
1,742
Between 2 and 5 years
3,869
4,135
More than 5 years
1,786
1,357
9,167
9,935
The cash flows above are discounted and reconcile back to the lease liability. For the undiscounted cash flows, please
see note 31.
18 Intangible assets
Group
Goodwill
£’000
Customer
relationships
£’000
Brands
£’000
Software
£’000
Total
£’000
Cost
Balance at 1 April 2023
125,367
130,484
295
14,589
270,735
Adjustment to prior year business combination
(71)
—
—
—
(71)
Additions
—
—
—
5,450
5,450
Disposals
—
—
—
(1,420)
(1,420)
Balance at 31 March 2024
125,296
130,484
295
18,619
274,694
Accumulated amortisation
Balance at 1 April 2023
—
55,254
99
3,279
58,632
Amortisation for the year
—
6,838
196
2,027
9,061
Disposals
—
—
—
(1,069)
(1,069)
Balance at 31 March 2024
—
62,092
295
4,237
66,624
Net book value
Balance at 1 April 2023
125,367
75,230
196
11,310
212,103
Balance at 31 March 2024
125,296
68,392
—
14,382
208,070
Group
Goodwill
£’000
Customer
relationships
£’000
Brands
£’000
Software
£’000
Total
£’000
Cost
Balance at 1 April 2022
121,818
125,269
6,036
10,807
263,930
Acquired through business combinations
3,549
5,215
295
—
9,059
Additions
—
—
—
4,879
4,879
Disposals
—
—
(6,036)
(1,097)
(7,133)
Balance at 31 March 2023
125,367
130,484
295
14,589
270,735
Accumulated amortisation
Balance at 1 April 2022
—
48,527
5,980
2,623
57,130
Amortisation for the year
—
6,727
155
1,753
8,635
Disposals
—
—
(6,036)
(1,097)
(7,133)
Balance at 31 March 2023
—
55,254
99
3,279
58,632
Net book value
Balance at 1 April 2022
121,818
76,742
56
8,184
206,800
Balance at 31 March 2023
125,367
75,230
196
11,310
212,103
XPS Pensions Group plc Annual Report and Accounts 2024
134
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
18 Intangible assets continued
Material customer relationship assets are broken down as follows:
31 March 2024
31 March 2023
Remaining
UEL
years
Net book
value
£’000
Remaining
UEL
years
Net book
value
£’000
Acquisitions prior to January 2018 (CGU 1)
9
16,028
10
17,820
Punter Southall actuarial (CGU 2)
14
38,104
15
40,869
Punter Southall administrative (CGU 3)
4
3,699
5
4,677
Kier (CGU 3)
5
1,423
6
1,734
XPS Pensions RL Limited (CGU 1)
6
1,574
7
1,879
XPS Pensions Trigon Limited (CGU 1)
6
1,202
7
1,417
Michael J Field (CGU 1)
8
1,538
9
1,743
Penfida Limited (CGU 4)
19
4,824
20
5,085
Software assets held by the Group comprise internally generated or enhanced software for use in providing
services to customers. The largest group of software assets relates to the Administration business, specifically the
development of an in-house administration system. Software disposals in the year related to software disposed of
as part of the NPT disposal (see note 7), and software which has reached the end of its useful economic life and is
no longer in use.
Impairment test
Goodwill represents the excess of the consideration over the fair value of the net assets acquired on the purchase of
the subsidiary companies listed in note 35, as well as goodwill which has arisen on the purchase of trade and assets
by the Group. In accordance with IFRS, this balance is not amortised and is subject to annual impairment reviews.
The carrying value of goodwill was assessed based on the four cash-generating units that were identified in
prior years.
The four CGUs to which goodwill has been allocated are:
CGU 1 – former Xafinity businesses, and Royal London, Trigon and Michael J Field acquisitions;
CGU 2 – PS Actuarial;
CGU 3 – PS Admin; and
CGU 4 – Penfida.
The cash-generating unit at each year end was assessed on the basis of value in use using the following assumptions,
which reflect past experience of the Group:
2024
2023
CGU 1
CGU 2
CGU 3
CGU 4
CGU 1
CGU 2
CGU 3
CGU 4
Discount rate pre-tax
12.6%
12.6%
12.6%
12.6%
13.1%
13.1%
13.1%
13.1%
Terminal rate after period 8
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
2.0%
Period on which detailed forecasts
are based
3 years
3 years
3 years
3 years
3 years
3 years
3 years
3 years
Growth rate during detailed forecast
period (average)
10.4%
8.5%
30.2%
20.8%
7.7%
8.8%
31.2%
9.4%
Growth rate applied beyond
approved forecast period to year 8
5%
5%
5%
5%
5%
5%
5%
5%
The discount rate comprises two elements, the cost of debt and the cost of equity, to derive a blended cost of capital
demanded by all providers of capital. The cost of equity is based on the following components:
• beta: calculated to estimate how volatile the Group’s equity is compared to the FTSE SmallCap index;
• risk-free rate: using a ten-year UK government bond yield as a proxy for the risk-free rate;
• equity risk premium: the implied rate as at 31 March 2024 is used to assess the price of risk in equity markets; and
• small company premium: an additional size premium is applied to the Group’s cost of equity to account for extra risk.
The cost of debt represents the cost of capital for the Group’s drawn revolving credit facility and is based on average
borrowings during the year.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
135
18 Intangible assets continued
Impairment test continued
The cash flows used for the value in use calculations incorporate the impact of inflation, and future assumptions
regarding inflation which are based on the latest outlook from the UK government.
The growth rate beyond the forecast period is based on a blend of average growth rates experienced by the Group
and management’s assessment of industry and macroeconomic outlooks. Such forecast rates have been accurate
in the past, so the Directors believe they will be sufficiently representative of actual results.
The growth rate is applied for up to eight years; this is due to the longevity of the customer relationships held by the
Group. The growth rate of 5% is higher than the terminal rate due to expectations of market conditions and higher
inflation in the medium term.
The impairment exercise demonstrated that there was significant headroom in all CGUs on this basis, particularly in
CGUs 1, 2 and 3, and so the Directors are satisfied that no impairment has arisen during the financial period.
Goodwill allocated to cash-generating units:
2024
£’000
2023
£’000
Goodwill – XPS Pensions Consulting Limited, Xafinity SIPP Services Limited, Xafinity Pensions
Consulting Limited and subsidiaries, XPS Pensions (RL) Limited, XPS Pensions (Trigon) Limited (CGU 1)
30,007
30,007
Goodwill – XPS Investment Limited, XPS Pensions Limited (CGU 2)
79,314
79,314
Goodwill – XPS Holdings Limited, XPS Administration Holdings Limited, XPS Administration Limited (CGU 3)
12,497
12,497
Goodwill – Penfida Limited (CGU 4)
3,478
3,549
Total
125,296
125,367
Sensitivity analysis of assumptions
The Group performed further sensitivity analysis by recalculating the fair value of the net assets of the Group on a
worst case basis. For the Group, the worst case would be breaching the banking covenants on leverage, as that could
lead to the Group’s revolving credit facility being withdrawn. The size of the impact on revenue to reach this point
was considered, alongside mitigating factors that the Group would take if necessary. This analysis showed that this
potential worst case scenario is considered unlikely to materialise and so there was no requirement for impairment.
The Group has also assessed the sensitivity of the discount rate and growth rates used in the impairment testing and
determined that these were not sensitive.
19 Deferred income tax
Analysis of the breakdown and movement of deferred tax during the year is as follows:
Balance at
1 April 2023
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
31 March
2024
£’000
Property, plant and equipment
226
93
—
319
Capital gains
943
—
—
943
Other temporary and deductible differences – share-based payments
(1,806)
(526)
(1,167)
(3,499)
Other temporary and deductible differences – other
(10)
506
—
496
Customer relationships
19,092
(1,758)
—
17,334
18,445
(1,685)
(1,167)
15,593
Balance at
1 April 2022
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
Acquired
in period
£’000
31 March
2023
£’000
Property, plant and equipment
90
136
—
—
226
Capital gains
943
—
—
—
943
Other temporary and deductible differences – share-based payments
(1,087)
(461)
(258)
—
(1,806)
Other temporary and deductible differences – other
(12)
2
—
—
(10)
Customer relationships
19,032
(1,304)
—
1,364
19,092
18,966
(1,627)
(258)
1,364
18,445
Deferred income tax assets are recognised to the extent that the realisation of the related tax benefit through future
taxable profits is probable. 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 2024, which is not lower than 25% (2023: 25%).
XPS Pensions Group plc Annual Report and Accounts 2024
136
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
20 Other financial assets
Following the sale of the NPT business, the restricted cash held of £1,847,000 was transferred to the new owners of
the NPT. In the prior year, this restricted cash was presented as a non-current financial asset. This restricted cash was
held by the Group as security for the NPT. For the NPT to gain approval to operate by the Pensions Regulator, the
Group was required to demonstrate it could support the NPT in any eventuality. The Group therefore placed cash into
a restricted bank account, which the trustees of the NPT are able to access in certain circumstances. There were no
lifetime expected credit losses associated with this cash balance.
21 Trade and other receivables
31 March
2024
£’000
31 March
2023
£’000
Trade receivables
27,650
21,642
Less: provision for impairment of trade receivables
(602)
(363)
Net trade receivables
27,048
21,279
Contract assets – accrued income
16,706
16,407
Contract assets – amounts recognised for triennial reviews
1,355
1,475
Total contract assets
18,061
17,882
Total financial assets other than cash and cash equivalents carried at amortised cost
45,109
39,161
Prepayments
5,530
4,498
Other receivables
283
106
Total trade and other receivables
50,922
43,765
The carrying value of trade and other receivables carried at amortised cost approximates to fair value.
31 March 2024
Current
£’000
Past due
0–30 days
£’000
Past due
31–90 days
£’000
Past due
more than
90 day
£’000
Total
£’000
Expected loss rate
0%
1%
7%
41%
Gross carrying amount
20,046
4,788
1,867
949
27,650
Loss provision
72
50
129
389
640
Amendment for specific bad debt provision
(72)
(50)
(129)
213
(38)
Total
—
—
—
602
602
31 March 2023
Current
£’000
Past due
0–30 days
£’000
Past due
31–90 days
£’000
Past due
more than
90 days
£’000
Total
£’000
Expected loss rate
0%
1%
4%
18%
Gross carrying amount
16,402
3,395
1,177
668
21,642
Loss provision
32
21
51
123
227
Amendment for specific bad debt provision
(32)
(21)
(51)
240
136
Total
—
—
—
363
363
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected credit
loss provision for trade receivables and contract assets. The expected loss rates are based on the Group’s historical
credit losses experienced over the three-year period prior to the period end. The historical loss rates are then adjusted
for current and forward-looking information affecting the Group’s customers.
Once the IFRS 9 approach has been calculated, the Group then calculates a specific debt provision based on age of
debt and specific client knowledge. The provision is then adjusted to take this detail into account.
Of the March 2023 contract asset balance relating to triennial reviews of £1,475,000, £1,246,000 was billed in the year,
reducing the brought forward amount. A further £1,126,000 of revenue was recognised in the year. There are no other
significant movements in the contract assets balance in the year. The March 2024 contract asset balance is expected
to be billed in the year ending 31 March 2025 (£1,119,000), the year ending 31 March 2026 (£223,000) and the year
ending 31 March 2027 (£13,000).
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
137
22 Cash and cash equivalents
31 March
2024
£’000
31 March
2023
£’000
Cash and cash equivalents per statement of financial position
10,005
13,285
Cash and cash equivalents per statement of cash flows
10,005
13,285
The balance is comprised solely of cash at bank and on hand.
23 Loans and borrowings
31 March 2024
Due within
1 year
(current)
£’000
Due
between
1 and 2
years
£’000
Due after
2 years
£’000
Sub-total
(non-
current)
£’000
Total
£’000
Drawn revolving credit facility
—
—
24,000
24,000
24,000
Capitalised debt arrangement fees
—
—
(614)
(614)
(614)
Total
—
—
23,386
23,386
23,386
31 March 2023
Due
within
1 year
(current)
£’000
Due
between
1 and 2
years
£’000
Due after
2 years
£’000
Sub-total
(non-
current)
£’000
Total
£’000
Drawn revolving credit facility
—
—
68,000
68,000
68,000
Capitalised debt arrangement fees
—
—
(690)
(690)
(690)
Total
—
—
67,310
67,310
67,310
The book value and fair value of loans and borrowings are not materially different.
Terms and debt repayment schedule
31 March 2024
Amount
£’000
Currency
Nominal interest rate
Year of
maturity
Revolving credit facility
24,000
GBP
1.25% above SONIA
2026
31 March 2023
Amount
£’000
Currency
Nominal interest
rate
Year of
maturity
Revolving credit facility
68,000
GBP
1.85% above SONIA
2025
At 31 March 2024 the Group had drawn down £24,000,000 (2023: £68,000,000) of its £100,000,000 revolving
credit facility. The Group’s revolving facility agreement is for £100 million with an accordion of £50 million.
This facility had a four-year term which started in October 2021. In April 2023, a one-year extension to the term was
agreed, extending it to October 2026. Interest is calculated at a margin above SONIA, subject to a net leverage test.
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
Pensions Group plc, XPS Consulting (Reading) Limited, XPS Financing Limited, XPS Reading Limited, XPS Pensions
Consulting Limited, XPS SIPP Services Limited, XPS Holdings Limited, XPS Pensions Limited, XPS Investment Limited,
XPS Administration Holdings Limited and XPS Administration Limited. The security is over all the assets of the
companies which are obligors to the loans.
24 Reconciliation of liabilities arising from financing activities
31 March
2023
£’000
Cash
flows
£’000
Other
non-cash
changes
£’000
Non-cash
change:
new leases/
interest
this year
£’000
31 March
2024
£’000
Drawn revolving credit facility
68,000
(44,000)
—
—
24,000
Capitalised debt arrangement fees
(690)
(200)
276
—
(614)
Interest payable on long-term borrowings
49
(3,905)
—
3,901
45
Lease liabilities
9,935
(3,085)
—
2,317
9,167
Total liabilities from financing activities
77,294
(51,190)
276
6,218
32,598
XPS Pensions Group plc Annual Report and Accounts 2024
138
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
24 Reconciliation of liabilities arising from financing activities continued
31 March
2022
£’000
Cash
flows
£’000
Other
non-cash
changes
£’000
Non-cash
change:
new leases/
interest
this year
£’000
31 March
2023
£’000
Drawn revolving credit facility
64,000
4,000
—
—
68,000
Capitalised debt arrangement fees
(967)
—
277
—
(690)
Interest payable on revolving credit facility
57
(2,985)
—
2,977
49
Lease liabilities
11,680
(3,267)
—
1,522
9,935
Total liabilities from financing activities
74,770
(2,252)
277
4,499
77,294
Net debt for bank reporting purposes:
31 March
2024
£’000
31 March
2023
£’000
Drawn revolving credit facility
24,000
68,000
Contingent consideration
—
568
Less: cash
(10,005)
(13,285)
Net debt
13,995
55,283
For banking covenant purposes, net debt includes any amounts owed as contingent consideration but excludes
lease liabilities.
25 Trade and other payables
31 March
2024
£’000
31 March
2023
£’000
Trade payables
2,839
4,752
Accrued expenses
17,215
14,561
Accrued earn out consideration relating to Penfida
2,534
845
Interest payable
89
49
Other payables
495
471
Total financial liabilities excluding leases, loans and borrowings
classified as financial liabilities at amortised cost
23,172
20,678
Other payables – tax and social security payments
2,411
2,178
Other payables – VAT
7,358
5,892
Contract liabilities
10,781
3,315
Total trade and other payables
43,722
32,063
Due within one year or less
43,722
31,218
Due between one and three years
—
845
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost
approximates to fair value.
In the prior year, the Penfida accrued earn out consideration was disclosed as a non-current liability; however, in the
current year this is a current liability as payment is due within 12 months of the year end.
The March 2024 contract liability balance is expected to be recognised in the year ended 31 March 2025
(£10,435,000), 31 March 2026 (£250,000) and 31 March 2027 (£96,000). Of the March 2023 contract liability balance
of £3,315,000, £3,011,000 was recognised in revenue in the year to 31 March 2024, £251,000 will be recognised in the
year to 31 March 2025, and £53,000 will be recognised in the year to 31 March 2026.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
139
26 Current income tax liabilities
31 March
2024
£’000
31 March
2023
£’000
Tax payable
427
2,280
427
2,280
27 Provisions for other liabilities and charges
31 March 2024
Social
security
costs on
PSP/SEP
£’000
Dilapidations
£’000
Professional
indemnity
£’000
Total
£’000
Balance at 1 April 2023
1,155
1,911
812
3,878
Provisions made during the year
1,466
317
923
2,706
Provisions used during the year
(764)
(675)
(986)
(2,425)
Provisions released unused during the year
—
(200)
(243)
(443)
Balance at 31 March 2024
1,857
1,353
506
3,716
Due within one year or less
954
454
506
1,914
Due after more than one year:
Between one and three years
903
73
—
976
Over three years
—
826
—
826
1,857
1,353
506
3,716
31 March 2023
Social
security
costs on
PSP/SEP
£’000
Dilapidations
£’000
Professional
indemnity
£’000
Total
£’000
Balance at 1 April 2022
995
1,631
391
3,017
Provisions made during the year
765
247
558
1,570
Provisions used during the year
(605)
(44)
(93)
(742)
Provisions released unused during the year
—
(116)
(44)
(160)
On acquisition
—
193
—
193
Balance at 31 March 2023
1,155
1,911
812
3,878
Due within one year or less
658
539
812
2,009
Due after more than one year:
Between one and three years
497
288
—
785
Over three years
—
1,084
—
1,084
1,155
1,911
812
3,878
Social security costs (National Insurance) are payable on gains made by employees on exercise of share options
granted to them. The eventual liability to National Insurance is dependent on:
• the market price of the Group’s shares at the date of exercise;
• the number of options that will be exercised; and
• the prevailing rate of National Insurance at the date of exercise.
Dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the lease
in accordance with the lease terms. The cost is recognised within the depreciation of the right-of-use asset over the
remaining term of the lease. The main uncertainty relates to estimating the cost that will be incurred at the end of
the lease.
The dilapidations provision will be utilised after the end of the lease of the asset to which it relates.
The Group is involved in a small number of potential professional indemnity claims. The amount provided represents
the Directors’ best estimate of the Group’s liability, after having taken legal advice. Uncertainties relate to whether
claims will be settled out of court or if not whether the Group is successful in defending any action. Because of the
nature of the disputes, the Directors have not disclosed future information on the basis that they believe that this
would be seriously prejudicial to the Group’s position in defending the cases brought against it. The provision relating
to potential professional indemnity claims is updated depending on the status of each individual claim.
XPS Pensions Group plc Annual Report and Accounts 2024
140
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
28 Contingent consideration
Balance at
1 April
2023
£’000
Fair value
adjustment
£’000
Settled in
year
£’000
31 March
2024
£’000
Contingent cash consideration
568
(92)
(476)
—
568
(92)
(476)
—
Balance at
1 April
2022
£’000
Fair value
adjustment
£’000
Settled in
year
£’000
31 March
2023
£’000
Contingent cash consideration
765
(197)
—
568
765
(197)
—
568
The contingent cash consideration liability recognised at 31 March 2023 relates to the Michael J Field acquisition
in February 2022. The liabilities were calculated based on terms agreed in the business purchase agreement for
Michael J Field, which were dependent on certain revenue and cost targets being met in the 12 months following the
acquisition date. A final settlement of £476,461 was paid in the year, with the remaining balance being recognised as
other operating income in the statement of comprehensive income.
The amount disclosed in the cash flow is the £476,461 noted above, net of £71,000 received from the sellers of Penfida
Limited, due to a purchase price adjustment received in 2024.
29 Share capital
31 March 2024
31 March 2023
Ordinary
shares
’000
Ordinary
shares
£’000
Ordinary
shares
’000
Ordinary
shares
£’000
In issue at the beginning of the year
207,443
104
205,151
103
Issued during the year
102
—
2,292
1
In issue at the end of the year
207,545
104
207,443
104
31 March 2024
31 March 2023
’000
£’000
’000
£’000
Allotted, called up and fully paid
Ordinary shares of 0.05p (2023: 0.05p) each
206,032
103
206,427
103
Shares held by the Group’s Employee Benefit Trust
Ordinary shares of 0.05p (2023: 0.05p) each
1,513
1
1,016
1
Shares classified in shareholders’ funds
207,545
104
207,443
104
The number of shares allotted in the year is 101,835 (2023: 2,291,669).
The Group has invested in the shares for its Employee Benefit Trust (EBT). These shares are held on behalf of
employees and legal ownership will transfer to those employees on the exercise of an award. This investment in own
shares held in trust is deducted from equity in the consolidated statement of changes in equity.
30 Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve
Description and purpose
Retained earnings/
accumulated deficit:
All net gains and losses recognised through the consolidated statement of comprehensive
income.
Share premium:
Amounts subscribed for share capital in excess of nominal value.
Merger relief reserve:
The merger relief reserve represents the difference between the fair value and nominal value
of shares issued on the acquisition of subsidiary companies.
Investment in own shares:
Cost of own shares held by the EBT.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
141
31 Financial instruments
The fair values and the carrying values of financial assets and liabilities are the same.
Credit risk
The maximum exposure to credit risk at the reporting date was:
Carrying
amount
31 March
2024
£’000
Carrying
amount
31 March
2023
£’000
Trade receivables
27,650
21,642
Provision for impairment of trade receivables
(602)
(363)
Net trade receivables due
27,048
21,279
Contract assets – accrued income
16,706
16,407
Contract assets – amounts recognised for triennial reviews
1,355
1,475
Cash and cash equivalents
10,005
13,285
Non-current financial asset
—
1,847
Total
55,114
54,293
Credit risk mitigation
The ageing of trade receivables at the reporting date was:
31 March
2024
£’000
31 March
2023
£’000
Not past due
20,046
16,402
Past due 0–30 days
4,788
3,395
Past due 31–90 days
1,867
1,177
Past due more than 90 days
949
668
Total
27,650
21,642
Movement in impairment allowance for trade receivables
Balance at start of the year
363
330
Increase during the year
510
359
Receivable written off during the year as uncollectable
(107)
(105)
Reversal of allowances
(164)
(221)
Balance at end of the year
602
363
The Group prepared a forward-looking impairment model using a provision matrix based on historical data.
Using this, the Group believes that an impairment allowance of £602,000 (2023: £363,000) is adequate in respect
of trade receivables. Those debts which have not been provided against are considered recoverable by the Group.
In accordance with IFRS 9, the expected credit loss (ECL) model was used to calculate the impairment loss.
The Group has considered whether any provision needs to be made for credit losses on contract assets, and
concluded that there are none.
Cash flow risk
The Group is exposed to cash flow interest rate risk in two main respects. Firstly, corporate and client bank deposits,
which earn interest at a variable rate, although not at a material level. Secondly, interest expense arising on the Group’s
revolving credit facility at a margin over SONIA.
Interest rate risk
The interest rate on the Group’s revolving credit facility is a margin over SONIA and as such the Company is at risk
from SONIA increases. The sensitivity of the interest rate risk has been assessed and it is not material.
XPS Pensions Group plc Annual Report and Accounts 2024
142
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
31 Financial instruments continued
Liquidity risk
Liquidity risk arises from the Group’s working capital and the finance charges and principal repayments on its debt
instruments. It is the risk the Group will encounter difficulty in meeting its financial obligations as they fall due.
The following table sets out the contractual maturities (representing undiscounted cash flows) of financial liabilities:
Up to 3
months
£’000
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
31 March
2024
£’000
Trade and other payables
23,172
—
—
—
—
23,172
Leases
555
1,604
1,888
4,321
1,952
10,320
Loans and borrowings
—
—
—
24,000
—
24,000
Bank interest
396
1,127
1,522
973
—
4,018
24,123
2,731
3,410
29,294
1,952
61,510
Up to 3
months
£’000
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
31 March
2023
£’000
Trade and other payables
20,678
—
—
—
—
20,678
Leases
1,009
2,067
1,926
4,337
1,500
10,839
Loans and borrowings
—
—
—
68,000
—
68,000
Bank interest
1,000
3,425
3,936
2,364
—
10,725
Deferred consideration
568
—
—
—
—
568
23,255
5,492
5,862
74,701
1,500
110,810
The Group does not have any concerns over meeting its liabilities as they fall due, as the forecasts prepared indicate
sufficient cash receipts in each period to cover liabilities.
Capital risk
The Group’s objective when managing capital is to maximise shareholder value whilst safeguarding the Group’s ability
to continue as a going concern. Total capital is calculated as total equity in the statement of financial position.
Management of capital
31 March
2024
£’000
31 March
2023
£’000
Total equity
185,854
149,284
32 Notes supporting statement of cash flows
Cash and cash equivalents for the purposes of the statement of cash flows comprise:
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Cash at bank available on demand
10,005
13,285
33 Related party transactions
Key management emoluments during the year
Key management personnel are those persons having authority and responsibility for planning, directing and
controlling the activities of the Group, being the Board of Directors.
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Emoluments
4,509
3,310
Share-based payment
1,233
894
Company contributions to defined contribution pension plans
30
30
Social security costs
530
376
6,302
4,610
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
143
33 Related party transactions continued
Non-executive emoluments during the year
Year ended
31 March
2024
£’000
Year ended
31 March
2023
£’000
Emoluments
368
303
Social security costs
45
39
413
342
34 Earnings per share
31 March
2024
£’000
31 March
2023
£’000
Profit for the year
54,167
15,837
31 March
2024
’000
31 March
2023
’000
Weighted average number of ordinary shares in issue
206,760
205,448
Diluted weighted average number of ordinary shares
219,621
216,071
Basic earnings per share (pence)
26.2
7.7
Diluted earnings per share (pence)
24.7
7.3
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.
Reconciliation of weighted average ordinary shares in issue to diluted weighted average ordinary shares:
Year
ended
31 March
2024
’000
Year
ended
31 March
2023
’000
Weighted average number of ordinary shares in issue
206,760
205,448
Dilutive impact of share options vested up to exercise date
940
802
Dilutive impact of PSP and SEP options not yet vested
9,226
7,920
Dilutive impact of dividend yield shares for PSP and SEP options
1,246
1,069
Dilutive impact of SAYE options not yet vested
1,449
832
Diluted weighted average number of ordinary shares
219,621
216,071
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 three 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 2022 and 2023, these will
vest in the years ending 31 March 2025 and 2026 respectively. These shares are reflected in the diluted number of
shares and diluted earnings per share calculations.
Adjusted earnings per share
31 March
2024
£’000
31 March
2023
£’000
Adjusted profit after tax
33,496
27,143
Adjusted earnings per share (pence)
16.2
13.2
Diluted adjusted earnings per share (pence)
15.3
12.6
The adjusted profit after tax is taken from the trading column of the income statement, and excludes the impact of the
exceptional and non-trading items disclosed in note 6.
XPS Pensions Group plc Annual Report and Accounts 2024
144
Notes to the consolidated financial statements continued
for the year ended 31 March 2024
35 Subsidiaries
The following are the wholly owned companies consolidated within the financial statements of XPS Pensions
Group plc:
Company name
Company
number
Principal activity
Registered address
XPS Financing Limited
08279274
Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
The subsidiaries below are indirectly owned by other Group companies:
Company name
Company
number
Principal activity
Registered address
XPS Reading Limited
08279362
Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS Consulting (Reading) Limited
08287502
Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS Pensions Consulting Limited
02459442
Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS SIPP Services Limited
SC069096
Employee benefit
consultancy
Scotia House, Castle Business Park, Stirling, Stirlingshire
FK9 4TZ
Xafinity Pensions Consulting Limited 04436642
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Xafinity PT Limited
00232565
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Entegria Limited
05777554
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Xafinity Pensions Trustees Limited
01450089
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Hazell Carr (AT) Services Limited
SC420031
Employee benefit
consultancy
Scotia House, Castle Business Park, Stirling, Stirlingshire
FK9 4TZ
Hazell Carr (SG) Services Limited
01867603
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Hazell Carr (ES) Services Limited
02372343
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Hazell Carr (PN) Services Limited
00236752
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Hazell Carr (SA) Services Limited
SC086807
Dormant
Scotia House, Castle Business Park, Stirling, Stirlingshire
FK9 4TZ
Xafinity Trustees Limited
04305500
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Xafinity Employee Benefit Trust 2013 n/a
Trust
JTC Trustees Limited, Elizabeth House, 9 Castle Street,
St Helier, Jersey JE4 2QP
XPS Holdings Limited
04807951
Holding Company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS Administration Holdings Limited
09655671
Holding Company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS Administration Limited
09428346
Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS Investment Limited
06242672
Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS Pensions Limited
03842603
Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS Pensions (RL) Limited
05817049
Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
XPS Pensions (Trigon) Limited
12085392
Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
MJF Pension Trustees Limited
03394648
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
MJF SSAS Trustees Limited
04089958
Dormant
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Pensions Software Solutions Limited 11482474
Software
development
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Penfida Limited
08020393
Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
145
35 Subsidiaries continued
Subsidiary audit exemptions
The following UK subsidiary undertakings are exempt from the requirements of the Companies Act 2006 (the “Act”)
relating to the audit of individual accounts by virtue of Section 479A of the Act.
Company name
Company number
XPS Financing Limited
08279274
XPS Reading Limited
08279362
Hazell Carr (AT) Services Limited
SC420031
XPS Holdings Limited
04807951
XPS Administration Holdings Limited
09655671
XPS Pensions (RL) Limited
05817049
XPS Pensions (Trigon) Limited
12085392
Pensions Software Solutions Limited
11482474
Penfida Limited
08020393
The Company will guarantee all outstanding liabilities that these subsidiaries are subject to as the financial year ended
31 March 2024 in accordance with Section 479C of the Act, as amended by the Companies and Limited Liability
Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012. In addition,
the Company will guarantee any contingent and prospective liabilities that these subsidiaries are subject to.
36 Dividends
Amounts recognised as distributions to equity holders of the Parent in the year
31 March
2024
£’000
31 March
2023
£’000
Final dividend for the year ended 31 March 2023: 5.7p per share (2022: 4.8p per share)
11,825
9,763
Interim dividend for the year ended 31 March 2024: 3.0p (2023: 2.7p) per ordinary share was paid
during the year
6,200
5,568
18,025
15,331
The recommended final dividend payable in respect of the year ended 31 March 2024 is £14.6 million or 7.0p per share
(2023: £11.8 million or 5.7p per share).
The proposed dividend has not been accrued as a liability as at 31 March 2024 as it is subject to approval at the Annual
General Meeting.
31 March
2024
£’000
31 March
2023
£’000
Proposed final dividend for year ended 31 March 2024
14,630
11,825
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 £166,081,000.
Therefore there are sufficient distributable reserves in XPS Pensions Group plc in order to pay the proposed
final dividend.
37 Ultimate controlling party
The Directors do not consider that there is an ultimate controlling party.
XPS Pensions Group plc Annual Report and Accounts 2024
146
Statement of financial position – Company
as at 31 March 2024
Note
31 March
2024
£’000
31 March
2023
Restated
£’000
31 March
2022
Restated
£’000
Assets
Non-current assets
Investments
5
38,478
33,831
29,681
Trade and other receivables
6
259,006
243,660
229,163
297,484
277,491
258,844
Current assets
Trade and other receivables
6
—
5
5
Cash and cash equivalents
7
1,623
1,704
—
1,623
1,709
5
Total assets
299,107
279,200
258,849
Liabilities
Non-current liabilities
Trade and other payables
8
44,464
41,257
42,366
44,464
41,257
42,366
Current liabilities
Trade and other payables
8
—
204
—
Current tax liabilities
9
3,294
1,273
744
3,294
1,477
744
Total liabilities
47,758
42,734
43,110
Net assets
251,349
236,466
215,739
Equity and liabilities
Share capital
10
104
104
103
Share premium
11
1,786
1,786
116,804
Merger relief reserve
11
48,687
48,687
48,687
Investment in own shares
11
(2,925)
(1,350)
(4,157)
Other reserve
11
37,616
32,969
28,818
Retained profit
11
166,081
154,270
25,484
Total equity
251,349
236,466
215,739
The notes on pages 149 to 153 form part of these financial statements.
Under Section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own
statement of comprehensive income. The profit for the financial year of the holding Company, as approved by the
Board, was £33,855,000 (2023: £31,450,000).
These financial statements were approved by the Board of Directors on 19 June 2024 and were signed on its behalf by:
Snehal Shah
Chief Financial Officer
19 June 2024
Registered number: 08279139
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
147
Statement of changes in equity – Company
for the year ended 31 March 2024
Share
capital
£’000
Share
premium
£’000
Merger
relief
reserve
£’000
Investment
in own
shares
£’000
Other
reserve
£’000
Retained
profit
£’000
Total
£’000
Balance at 1 April 2022 (as previously stated)
103
116,804
48,687
—
28,818
28,073
222,485
Adjustment for aggregation of Employee
Benefit Trust
—
—
—
(4,157)
—
(2,589)
(6,746)
Balance at 1 April 2022 (as restated)
103
116,804
48,687
(4,157)
28,818
25,484
215,739
Comprehensive income and total comprehensive
income for the year (as restated)
—
—
—
—
—
31,450
31,450
Contributions by and distributions to owners
Share capital issued
1
1,786
—
—
—
—
1,787
Share premium reduction
—
(116,804)
—
—
—
116,804
—
Shares purchased by Employee Benefit Trust
for cash
—
—
—
(2,200)
—
—
(2,200)
Share-based payment expense – equity settled
from Employee Benefit Trust
—
—
—
5,007
—
(4,137)
870
Share-based payment expense – IFRS 2 charge
in respect of long-term incentives
—
—
—
—
3,893
—
3,893
Deferred tax movement in respect of long-term
incentives
—
—
—
—
258
—
258
Dividends paid
—
—
—
—
—
(15,331)
(15,331)
Total contributions by and distributions to owners
1
(115,018)
—
2,807
4,151
97,336
(10,723)
Balance at 31 March 2023 as restated
104
1,786
48,687
(1,350)
32,969
154,270
236,466
Balance at 1 April 2023
104
1,786
48,687
(1,350)
32,969
154,270
236,466
Comprehensive income and total comprehensive
income for the year
—
—
—
—
—
33,855
33,855
Contributions by and distributions to owners
Shares purchased by Employee Benefit Trust
for cash
—
—
—
(5,621)
—
—
(5,621)
Share-based payment expense – equity settled
from Employee Benefit Trust
—
—
—
4,046
—
(4,019)
27
Share-based payment expense – IFRS 2 charge
in respect of long-term incentives
—
—
—
—
4,910
—
4,910
Deferred tax movement in respect of
long-term incentives
—
—
—
—
(263)
—
(263)
Dividends paid
—
—
—
—
—
(18,025)
(18,025)
Total contributions by and distributions to owners
—
—
—
(1,575)
4,647
(22,044)
(18,972)
Balance at 31 March 2024
104
1,786
48,687
(2,925)
37,616
166,081
251,349
The balance at 1 April 2022 has been restated following an accounting policy change in the year to aggregate the
Employee Benefit Trust (EBT) within the Company. Further information on this change can be found in note 1. The impact
on opening retained earnings of £2,589,000 is due to the loss on disposal of shares incurred by the EBT when
shares acquired at market value were used to satisfy share options at nominal value in prior periods. The change in
policy lead to a £44,000 reduction in comprehensive income for the year ended 31 March 2023 (£31,494,000 before
the restatement).
The appropriate filing of interim accounts showing sufficient reserves to pay the £15,331,000 dividend was undertaken.
The notes on pages 149 to 153 form part of these financial statements.
XPS Pensions Group plc Annual Report and Accounts 2024
148
Year ended
31 March
2024
£’000
Year ended
31 March
2023
Unaudited
Restated
£’000
Cash flows from operating activities
Profit for the year
33,855
31,450
Adjustments for:
Finance income
(15,876)
(7,090)
Finance costs
2,727
1,339
Income tax expense
3,294
1,101
Dividend income
(24,000)
(26,800)
Net cash inflow from operating activities
—
—
Cash flows from investing activities
Finance income received
17
—
Net cash inflow from investing activities
17
—
Cash flows from financing activities
Purchase of ordinary shares by the EBT
(5,621)
(2,200)
Loans with related parties
5,523
3,904
Net cash (outflow)/inflow from financing activities
(98)
1,700
Net (decrease)/increase in cash and cash equivalents
(81)
1,704
Cash and cash equivalents at start of year
1,704
—
Cash and cash equivalents at end of year
1,623
1,704
The prior year has been restated due to the accounting policy change to aggregate the Employee Benefit Trust within
the XPS Pensions Group plc Company financial statements. Previously, no cash flow statement was presented as XPS
Pensions Group plc does not hold a bank account. However, as the EBT holds a bank account for the purposes of
acquiring shares in the Group on behalf of XPS Pensions Group plc, a cash flow statement has been presented, along
with the comparative year.
The dividends are paid from a subsidiary company, as the Company itself does not hold a bank account.
The notes on pages 149 to 153 form part of these financial statements.
Statement of cash flows – Company
for the year ended 31 March 2024
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
149
Notes to the financial statements – Company
for the year ended 31 March 2024
1 Accounting policies
XPS Pensions Group plc (the “Company”) is a public company incorporated in the UK. The principal activity of the
Company is that of a holding company. The registered office is Phoenix House, 1 Station Hill, Reading RG1 1NB.
Basis of preparation
These financial statements have been prepared in accordance with UK-adopted International Accounting Standards.
The financial statements have been prepared under the going concern basis.
The preparation of financial statements in accordance with the requirements of International Financial Reporting
Standards (IFRS) requires the use of certain critical accounting estimates. It also requires management to exercise its
judgement in the process of applying the Company’s accounting policies. The Company makes certain estimates and
assumptions regarding the future. Estimates and judgements are continually evaluated based on historical experience
and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
There are no critical judgements or estimates to disclose.
The prior year cash flow statement is unaudited. This is because in the prior year, the Employee Benefit Trust (EBT)
was unaggregated, and the Company itself does not hold a bank account. Due to the aggregation of the EBT in the
year (see below for more detail), a cash flow statement has been presented in these financial statements, along with a
comparative year.
Measurement convention
The financial statements are prepared on the historical cost basis.
Investments in subsidiaries
Investments in subsidiaries are carried at cost, plus capital contributions to the Group’s subsidiary companies in
respect of share-based payment charges and related deferred tax, less any provisions for impairment.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders,
this is when paid and in the case of final dividends, this is when approved by the shareholders at the Annual
General Meeting.
Taxation
Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in profit and loss in the
statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which
case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively
enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.
Change in accounting policy: aggregation of Employee Benefit Trust
In the year, management has reviewed the accounting treatment of its Employee Benefit Trust (EBT). Accounting
standards in this area provide no clear guidance and so it is down to management to determine the most appropriate
way to present the EBT. Under the previous permitted accounting policy, the EBT was excluded from the financial
statements of XPS Pensions Group plc. Management have decided that it is appropriate to aggregate the assets and
the liabilities of the EBT within XPS Pensions Group plc. This decision has been made to provide users of the accounts
with more transparency over the EBT and its transactions. XPS Pensions Group plc currently gifts the EBT with cash
(via another Group entity) and instructs the EBT to use this cash to purchase XPS Pensions Group plc shares from
the market. These shares are then used to settle vested employee share options. As the EBT can only operate on the
explicit instruction of XPS Pensions Group plc, the EBT is acting as an agent of XPS Pensions Group plc and therefore
meets the criteria for aggregation. As the EBT holds cash balances where it has not yet fulfilled the wishes of XPS
Pensions Group plc, aggregation allows management to disclose this cash balance in the Company-only financial
statements, providing more information to users of these accounts.
This change has had no impact on the Group’s consolidated financial statements, as the EBT was previously
consolidated within the Group accounts. The change impacts XPS Pensions Group plc’s Company-only financial
statements, and therefore as a result of this change, the prior year statement of financial position and statement of
changes in equity have been restated. Additionally, a cash flow statement is now disclosed for the Company, as the
EBT holds a bank account.
Changes in accounting policies – new standards, interpretations, and amendments effective from 1 April 2023
New and amended standards and interpretations issued by the IASB that apply for the first time in these annual
financial statements do not impact the Company as they are either not relevant to the Company’s activities or require
accounting which is consistent with the Company’s current accounting policies.
XPS Pensions Group plc Annual Report and Accounts 2024
150
Notes to the financial statements – Company continued
for the year ended 31 March 2024
1 Accounting policies continued
New standards and interpretations adopted and not yet adopted
A number of new standards, amendments to standards and interpretations are not effective for 2024, and therefore
have not been applied in preparing XPS Pensions Group plc’s financial statements. These standards, interpretations
and amendments issued by the IASB (of which some are still subject to endorsement by the UK) but not yet effective
are not expected to have a material impact on the Company’s financial statements.
2 Financial risk management
The Company is a holding company and has limited exposure to financial risks. Details of the financial risks
management are contained in the Group accounts (note 2) and details of their application to the Company are
included in Company note 13.
3 Capital risk management
The Company is a holding company and will apply the risk management policies of the Group contained in the Group’s
financial statements.
4 Staff numbers and costs
The Company had no employees other than Directors in the year to 31 March 2024 (2023: nil).
No Directors received remuneration for their services to the Company during the year. Directors were remunerated
for their services to the Group by a subsidiary company. See Group accounts note 12 for more information.
Pension contributions of £nil (2023: £nil) were paid on behalf of the Directors in the Company.
5 Investments in subsidiaries
31 March
2024
£’000
31 March
2023
£’000
31 March
2022
£’000
At the beginning of the year
33,831
29,681
26,345
In relation to XPS Pensions Consulting Limited
2,765
2,403
1,894
In relation to XPS SIPP Services Limited
94
100
89
In relation to XPS Pensions Limited
1,040
983
818
In relation to XPS Administration Limited
618
560
454
In relation to XPS Investment Limited
114
80
65
In relation to XPS Pensions (RL) Limited
11
14
11
In relation to XPS Pensions (Trigon) Limited
5
10
5
At the end of the year
38,478
33,831
29,681
Subsidiary
Ownership
Country of
incorporation
Class of
shares
held
Principal
activities
Registered address
XPS Financing Limited
100%
England and Wales
Ordinary
Holding
company
Phoenix House, 1 Station Hill,
Reading, Berkshire RG1 1NB
The additions to investments during the year represent amounts in respect of Performance Share Plan and Senior
Equity Plan awards.
All other subsidiaries disclosed in note 35 of the Group accounts are indirectly owned by other Group companies.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
151
6 Trade and other receivables
31 March
2024
£’000
31 March
2023
Restated
£’000
31 March
2022
Restated
£’000
Receivables due from related parties
259,006
243,660
229,163
Other receivables
—
5
5
Total
259,006
243,665
229,168
Non-current receivable
259,006
243,660
229,163
Current receivable
—
5
5
Total
259,006
243,665
229,168
The prior year has been restated as a result of the aggregation of the Employee Benefit Trust (EBT). Had the EBT
not been aggregated, then the current year receivable would have increased by £27,860,000 to £275,493,000 as at
31 March 2024, the 31 March 2023 receivable would have increased by £13,776,000 to £247,633,000, and the balance
at 31 March 2022 was £233,857,000, an increase of £16,734,000 in the year. The receivable at 31 March 2023 would
have been restated from £251,335,000 to £247,635,000 to reflect an error in the way the EBT received funds after
September 2022.
7 Cash and cash equivalents
31 March
2024
£’000
31 March
2023
Restated
£’000
31 March
2022
£’000
Cash and cash equivalents per statement of financial position
1,623
1,704
—
Cash and cash equivalents per statement of cash flows
1,623
1,704
—
The prior year has been restated as a result of the aggregation of the Employee Benefit Trust (EBT). The EBT holds a
bank account, and the amounts above represent the cash held within this account.
8 Trade and other payables
31 March
2024
£’000
31 March
2023
Restated
£’000
31 March
2022
Restated
£’000
Payables due to related parties
44,464
41,257
42,366
Other payables
—
204
—
Total trade and other payables
44,464
41,461
42,366
Non-current payable
44,464
41,257
42,366
Current payable
—
204
—
Total
44,464
41,461
42,366
The prior year has been restated as a result of the aggregation of the Employee Benefit Trust (EBT). Had the EBT not
been aggregated, then the current year payable would have increased by £6,282,000 to £45,588,000 as at 31 March
2024, the 31 March 2023 payable would have decreased by £1,003,000 to £39,306,000, and the balance at 31 March
2022 would have been £40,309,000, an increase of £1,997,000 from the balance at 31 March 2021.
9 Current tax liabilities
31 March
2024
£’000
31 March
2023
£’000
31 March
2022
£’000
Corporation tax payable
3,294
1,273
744
10 Share capital
Details on the share capital of the Company are contained in the Group financial statements.
XPS Pensions Group plc Annual Report and Accounts 2024
152
Notes to the financial statements – Company continued
for the year ended 31 March 2024
11 Reserves
Reserve
Description and purpose
Share premium:
Amount subscribed for share capital in excess of nominal value.
Other reserve:
The other reserve represents the amount in respect of the equity-settled awards made by the Employee
Benefit Trust to subsidiary companies as instructed by the Company.
Merger relief
reserve:
The merger relief reserve represents the difference between the fair value and nominal value of shares
issued on the acquisition of subsidiary companies.
Investment in
own shares:
Cost of own shares held by the EBT. See note 12 for more information.
Retained profit:
All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
12 Investment in own shares
31 March
2024
£’000
31 March
2023
Restated
£’000
31 March
2022
Restated
£’000
Balance at 1 April
1,350
4,157
2,563
Acquired during the year
5,621
2,200
3,325
Utilised during the year
(4,046)
(5,007)
(1,731)
Balance at 31 March
2,925
1,350
4,157
Investment in own shares represents the cost of shares in the Company purchased in the market and held by the
Employee Benefit Trust (EBT) to satisfy awards under the Group’s employee share option plans (see note 13 to the
Group’s consolidated financial statements).
During the year, 3,067,346 (2023: 1,691,703) shares with a total value of £5,621,000. (2023: £2,200,000) have been
purchased by the EBT. 2,570,801 (2023: 3,844,709) shares were used in the year to satisfy vested employee share
options. The number of ordinary shares held by the EBT at 31 March 2024 was 1,512,760 (2023: 1,016,215).
13 Financial instruments
The fair values and the carrying values of financial assets are the same. All restated amounts in the note below relate
to the aggregation of the EBT (see note 1).
Credit risk
The maximum exposure to credit risk at the reporting date was:
Carrying
amount
31 March
2024
£’000
Carrying
amount
31 March
2023
Restated
£’000
Carrying
amount
31 March
2022
Restated
£’000
Receivables due from related parties
259,006
243,660
229,163
Loans from related parties are repayable on demand. Credit risk for receivables due from related parties has not
increased significantly since their initial recognition.
Liquidity risk
The Company does not have any significant liquidity risk, as its receivables and payables are all with related parties.
Interest rate risk
The Company does not have any significant interest rate risk, as its receivables and payables are all with
related parties.
Financial statements
XPS Pensions Group plc Annual Report and Accounts 2024
153
13 Financial instruments continued
Capital risk management
As part of XPS Pensions Group, the Company is focused on delivering value for its shareholders whilst ensuring the
Group is able to continue effectively as a going concern. Total capital for the Company comprises total equity.
The policies for managing capital are to increase shareholder value by maximising profits and cash. The policy is to
set budgets and forecasts in the short and medium term that the Company ensures are achievable. The processes
for managing capital are regular reviews of financial data to ensure that the Company is tracking the targets set and
to reforecast as necessary based on the most up-to-date information. This then contributes to XPS Pensions Group’s
forecast which ensures future covenant test points are met. XPS Pensions Group continues to meet these test points
and they have been achieved over the last 12 months. Further information can be found within the consolidated
financial statements of XPS Pensions Group plc.
Management of capital
31 March
2024
£’000
31 March
2023
Restated
£’000
31 March
2022
Restated
£’000
Total equity
252,779
236,466
215,739
14 Related party transactions
Amounts receivable from/(payable to) related parties at the balance sheet date
31 March
2024
£’000
31 March
2023
Restated
£’000
31 March
2022
Restated
£’000
Loans to related parties
259,006
243,660
229,163
Loans from related parties
(44,464)
(41,257)
(42,366)
214,541
202,403
186,797
Movement in loans to related parties in the year are as follows:
31 March
2024
£’000
31 March
2023
£’000
31 March
2022
£’000
Interest income
15,860
7,090
3,565
Increase in loans to related parties
(24,515)
(19,393)
(16,241)
Intercompany dividends received
24,000
26,800
27,000
15,345
14,497
14,324
Of the increase in loans to related parties, £5,525,000 (2023: £3,900,000) was cash funded to XPS Pensions Group
plc. The rest of the movements were non-cash.
Movement in loans from related parties in the year are as follows:
31 March
2024
£’000
31 March
2023
£’000
31 March
2022
£’000
Interest expense
(2,684)
(1,295)
(690)
(Increase)/decrease in loans from related parties
(523)
2,404
(2,232)
(3,207)
1,109
(2,922)
All of the increase in loans from related parties in the current and the prior year were non-cash movements.
All transactions with related parties are made in the ordinary course of business and balances outstanding at the
reporting date are unsecured. Loans are repayable on demand and accrue interest at a rate in line with the Group’s
bank borrowing rate. 6.50% was applied in the year (2023: 3.96%). All related parties are part of XPS Pensions Group.
15 Ultimate controlling party
The Directors do not consider that there is an ultimate controlling party.
XPS Pensions Group plc Annual Report and Accounts 2024
154
Company information
Registered office and Directors’ address
Phoenix House
1 Station Hill
Reading
Berkshire
RG1 1NB
Company Secretary
Sarah Rixon
Financial adviser and broker
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Financial adviser and broker
RBC Capital Markets
100 Bishopsgate
London
EC2N 4AA
Legal advisers to the Company
Macfarlanes LLP
20 Cursitor Street
London
EC4A 1LT
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Bankers
HSBC Bank plc
Level 7, Thames Tower
Station Road
Reading
RG1 1LX
Citibank N.A.
Citigroup Centre
33 Canada Square
Canary Wharf
London
E14 5LB
National Westminster Bank plc
250 Bishopsgate
London
EC2M 4AA
The Governor and Company of the Bank of Ireland
40 Mespil Road
Dublin
Ireland
D04 C2N4
Notes
www.xpsgroup.com
XPS Pensions Group plc’s commitment to environmental issues is
reflected in this Annual Report, which has been printed on Arctic
Snow, an FSC® certified material. This document was printed by Park
Communications using its environmental print technology, which
minimises the impact of printing on the environment, with 99% of dry
waste diverted from landfill. Both the printer and the paper mill are
registered to ISO 14001.
Registered office
Phoenix House
1 Station Hill
Reading
Berkshire
RG1 1NB
T: 0118 918 5000
www.xpsgroup.com