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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Xps Pensions Group Plc | LSE:XPS | London | Ordinary Share | GB00BDDN1T20 | ORD GBP0.0005 |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 1.00 | 0.39% | 255.00 | 255.00 | 258.00 | 258.00 | 241.00 | 250.00 | 118,881 | 16:29:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Pension,health,welfare Funds | 166.79M | 15.84M | 0.0763 | 33.42 | 529.24M |
From Apr 2021 to Apr 2024
TIDMXPS
RNS Number : 9218C
XPS Pensions Group PLC
24 June 2021
24 June 2021
XPS Pensions Group plc
Final results for the year ended 31 March 2021
XPS Pensions Group plc ("XPS" or the "Group"), the Pensions Advisory and Administration business, is pleased to announce its full year results for the year ended 31 March 2021 ("FY 2021") .
Financial Highlights:
Hot Features
Premium
Continuing operations FY 2021 FY 2020 Change YoY
Pensions Actuarial and Consulting
Revenue GBP60.7m GBP58.8m 3%
----------- ----------- ------------
Pensions Investment Consulting
Revenue GBP11.6m GBP9.6m 21%
----------- ----------- ------------
Total Advisory Revenue GBP72.3m GBP68.4m 6%
----------- ----------- ------------
Pensions Administration Revenue GBP46.8m GBP42.9m 9%
----------- ----------- ------------
Total Pensions Revenue GBP119.1m GBP111.3m 7%
----------- ----------- ------------
SIP GBP5.6m GBP6.1m (8%)
----------- ----------- ------------
NPT GBP3.2m GBP2.4m 35%
----------- ----------- ------------
Total Revenue GBP127.9m GBP119.8m 7%
----------- ----------- ------------
Adj. EBITDA(1) GBP32.0m GBP30.4m 5%
----------- ----------- ------------
Total profit before tax GBP11.4m GBP11.1m 3%
----------- ----------- ------------
Basic EPS 4.4p 3.6p 22%
----------- ----------- ------------
Adj. diluted EPS 9.8p 9.6p 2%
----------- ----------- ------------
Full year dividend 6.7p 6.6p 2%
----------- ----------- ------------
(1) Adjusted measures exclude the impact of acquisition related amortisation, share based payments, exceptional costs and the fair value adjustment to contingent consideration
-- Total revenue growth of 7% driven by strong client demand across all Pensions divisions; organic growth of 6% YoY
o Pensions Advisory growth of 6%, with each division growing - Actuarial & Consulting grew 3% and Investment Consulting by 21%
o Pensions Administration grew by 9%
-- Strong growth in NPT assets which passed through GBP1bn milestone during year -- Adjusted EBITDA(1) up 5% year on year broadly in line with revenue growth
-- The Group did not take up any of the Government Covid-19 support loans nor did we furlough any of our staff
-- High level of cash conversion maintained - operating cash-flow conversion of 113% leading to net debt/adjusted EBITDA(1) of 1.74x at 31 March 2021 (31 March 2020: 1.98x)
-- Statutory profit before tax up 3% YoY -- Statutory basic EPS up 22% YoY -- Adjusted diluted EPS(1) of 9.8p is up 2% YoY
-- Board proposes a final dividend of 4.4p bringing the total dividend for the year to 6.7p, up 2% YoY
Operational Highlights:
-- Resilient response to Covid-19, with shift to home working implemented rapidly at the start of the year and strong client service maintained throughout
-- Focus on staff wellbeing and mental health - winner of Gold award (overall winner) at the Business Culture awards and strong staff feedback / approval (94% agreeing XPS is a good place to work)
-- Regulatory backdrop driving client demand, with GMP projects increasing as FY 2021 progressed and a strong pipeline developed for FY 2022. New Pensions Bill and associated regulatory changes should continue to drive demand
-- New business wins in each division despite opportunities being suppressed by the pandemic with pipeline now growing. Favourable market backdrop - continued trend for first time outsourcing of administration
-- New 'post pandemic' flexible approach to working developed, 'My XPS, My Choice', which has been warmly welcomed by staff and will be rolled out from 1 August 2021
Paul Cuff, Co-CEO of XPS Pensions Group, commented:
"We are extremely pleased with the Group's performance which was achieved against the backdrop of the pandemic, and all the challenges it created. Key to this was re-engineering business processes to support near 100% home working and we are enormously proud of how our staff rose to the challenge. Our focus throughout has been on their well-being and supporting their morale and mental health, as well as the well-being of our clients and other stakeholders. We did not make any redundancies as a result of the pandemic nor did we furlough any of our staff.
We have continued to adapt our working practices and invest in the business through the development of 'My XPS My Choice', a framework to provide more choice to our people about how they work going forward. We believe this will enhance our reputation as a great place to work, enabling us to continue to attract and retain talent in our business."
Ben Bramhall, Co-CEO of XPS Pensions Group, commented:
"The performance during the year was pleasing, and I want to say a huge thank you to our staff for the resilience and resourcefulness they showed during the pandemic to ensure we continued to deliver strong client service throughout.
The outlook for the business is positive as we continue to invest in our people and services. In particular, we anticipate strong demand as we help clients address the challenging regulatory environment, including the pending overhaul of funding regulations, GMP equalisation and the consequences of the finalised CMA Review. Our growing new business pipeline also provides an opportunity for us to continue growing our market share."
Outlook
The FY 2021 results demonstrate the resilience of our business, with a high proportion of our revenues being non-discretionary and recurring as they are received for essential services. As such, we remain well protected against scenarios in which the pandemic continues to disrupt economic activity.
Part of our strategy is to grow the services we provide to existing clients in response to regulatory and market changes where clients need support. At the current time, the volume of regulatory change is high across a variety of areas. A new Pensions Bill became law in early 2021 and is expected to lead to changes in the way that schemes are funded and regulated. This will impact each of our Advisory clients, and all will need support in due course. There are numerous other regulatory changes that we expect will lead to continued strong client demand, including working through GMP equalisation, which drives activity in both our Advisory and Administration businesses.
Another part of our strategy is to grow through gaining market share. After strong momentum at the end of FY 2020, new logo opportunities in the Pensions Actuarial & Consulting and Pensions Administration businesses slowed significantly during FY 2021 as processes were put on hold during the pandemic. This will impact the new business contribution to growth in the near-term - however we are seeing signs of the pipeline strengthening. New business opportunities in Pensions Investment Consulting have remained strong throughout, driven in part by the CMA Review remedies being implemented.
M&A is also a core part of our strategy. We have successfully integrated each of the three 'bolt-on' acquisitions we have done in recent years. We operate in a fragmented market, with a scalable platform and a strong infrastructure, and as such we are well placed to grow through further M&A.
Overall, the Group is well positioned to emerge from the pandemic and be able to take advantage of favourable end market dynamics and the busy regulatory backdrop for pensions. The Group is well placed to continue to deliver at least mid-single digit percentage organic growth in revenues over the medium term. The Group has traded in line with expectations in the first two months of the financial year.
Analyst and Investor Presentation
A presentation will be held for equity analysts and investors today at 08:30 a.m. (BST) via a Zoom webinar. Those analysts and investors wishing to attend are asked to contact Nick Hennis at Camarco on +44 (0)74 3210 4506 or at nick.hennis@camarco.co.uk .
-Ends-
For further information, contact:
XPS Pensions Group Charlotte West Head of Corporate Communications +44 (0)20 3725 7024 Liberum (Joint Broker) +44 (0)20 3100 2222 Richard Crawley Robert Morton Cameron Duncan RBC Capital Markets (Joint Broker) +44 (0)20 7653 4000 James Agnew Jonathan Hardy Jamil Miah Media Enquiries: Camarco Gordon Poole +44 (0)20 3757 4997 Nick Hennis +44 (0)74 3210 4506
Notes to Editors:
XPS Pensions Group plc is the largest pure pensions consultancy in the UK, specialising in pensions actuarial & consulting, pensions investment consulting and pensions administration. The XPS Pensions Group business combines expertise, insight and technology to address the needs of both pension trustees and sponsoring companies for over 1,500 pension schemes on an ongoing and project basis. These clients include 25 schemes with over GBP1bn of assets, and we undertake pensions administration for over 900,000 scheme members.
Forward Looking Statements
This announcement may include statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by applicable law, regulation or stock exchange rules, the Group undertakes no obligation to update, revise or change any forward-looking statements to reflect events or developments occurring after the date such statements are published.
CO-CHIEF EXECUTIVES' REVIEW
An unprecedented year
Our year began as the pandemic was unfolding and the country went into lockdown with all the associated uncertainty, so it is particularly pleasing to report a strong revenue performance, demonstrating the resilience of our business model and strong client base. Key to this was re-engineering the business processes to deliver with almost everyone working from home and we are enormously proud of how our staff rose to this challenge. Our focus throughout has been on their well-being - not only making sure they had the right technology to do their job but also on supporting their morale and mental health.
As the year rolled on, it became even more important to maintain momentum as many staff struggled with isolation and home schooling so our work with the Mental Health Foundation, and lots of initiatives aimed at creating a sense of togetherness, were critical to ensuring that our teams felt well looked after and that they continued to look after their clients successfully. Now there is a change of mood and a sense of excitement building as we look forward to society opening up again, and for us this is happening against both market and regulatory opportunities for the business.
To make sure we have a motivated and engaged workforce as we move into the next phase of our development, we are launching 'My XPS My Choice', a framework to let our people choose how they want to work going forward, whether in the office, at home or a hybrid. Our senior staff will have a responsibility to protect our social capital as we still need to engender teamwork, develop our junior staff and maintain our innovative culture but we want to offer choice and flexibility, measuring output not input and ensuring we are a modern 21st century employer.
We firmly believe that our culture translates directly into how we perform as a business so it was particularly satisfying to win not only the Best Business Culture Transformation Initiative at the Business Culture Awards 2020, but to also win the overall Gold Award for the entire event. External recognition of the importance we place on our culture and values was also reflected in the Gold award we won in the employee engagement category at the 2020 UK Employee Experience Awards.
A strong financial performance
Our results bear testament to the strength of our business. We provide essential services to clients and whilst we had to adapt to the challenges presented by the pandemic, we responded well. Total revenue increased 7% to GBP127.9 million (FY 2020: GBP119.8 million) driven by organic growth in all three pensions divisions along with the full year effect of the acquisitions of Royal London Corporate Pensions Services and Trigon Pensions.
Adjusted EBITDA increased 5% to GBP32.0 million and statutory profit before tax also increased 3% to GBP11.4 million. This is a pleasing outcome for the year, as it was delivered despite the challenges of Covid-19, which did impact on our efficiency in some areas of the business and also slowed some new business opportunities that we would otherwise have expected to see.
We saw growth in both of the consulting businesses that together make up our Advisory business. In Pensions Actuarial and Consulting, revenue was up 3% on last year at GBP60.7 million (FY 2020: GBP58.8 million), largely driven by new business won in 2020 coming on stream in H1 and growing activity on GMP equalisation in H2. In Pensions Investment and Consulting, strong growth reflected the excellent new business success we have been achieving for a sustained period of time, and also strong client demand for advice in volatile financial markets. Revenues increased by 21% to GBP11.6 million (FY 2020: GBP9.6 million). The expansion of this team is yielding results as we now have the scale to target bigger mandates, with a number of large mandates won in H2 that will help us to continue to grow in this area.
In Pensions Administration, revenue increased by 9% to GBP46.8 million (FY 2020: GBP42.9 million), underpinned by new contracts won prior to the pandemic coming on stream.
We also saw strong growth in National Pensions Trust ('NPT'), our defined contribution master trust. Assets under management grew by 69%, to over GBP1.0bn, with growth underpinned by transfers into the trust and annual contributions in respect of active members. We are continuing to invest in the NPT proposition and have a healthy pipeline of opportunities.
Our SIP business saw revenues decline by 8%, caused by the reduction in the bank base rate at the beginning of the pandemic, and the decline in economic activity over the year. However, the underlying performance of the business was good, with strong new business momentum in H2, and it is well placed to achieve organic growth in the coming year.
Regulation continues to drive change
Our clients are facing multiple changes in pension regulation and we will continue to work closely with them to help them comply with the evolving environment and protect the interests of their members. The most significant area of new regulation is the Pensions Schemes Act 2021 which will bring in new funding requirements and provide greater safeguards for defined benefit schemes. These regulations will increase the pressure on many scheme-sponsors and keep pensions high on the corporate agenda.
The outcome of the Competition and Markets (CMA) Review continues to drive opportunities in the area of fiduciary management oversight. During FY 2021, we won 32 new appointments to provide independent oversight of fiduciary appointments. These appointments are pleasing in their own right, and also because they build new relationships that potentially open up wider opportunities for the Group.
Another increasingly busy area is GMP equalisation, where recent court cases have given rise to the need to make adjustments to defined benefit schemes where historically men and women have not been treated equally. This is a highly technical area and we have developed market leading, pragmatic approaches that have both successfully delivered projects in FY 2021 and have generated a strong pipeline of work for the years ahead.
Market developments provide potential opportunity
There are still a number of pension schemes where the administration is provided by the sponsor through an 'in-house' team. In recent years there has been a trend to outsource the administration of these schemes to a specialist third party provider. This has been a strong driver of growth for the Pensions Administration division historically.
The pandemic made it harder still for small in-house teams to provide pensions administration which could potentially accelerate the outsourcing trend of recent years as scale becomes more important to control costs and provide access to technology.
The trend to consolidation and mergers within the industry continues and as one of the largest independent firms in the market, we are well placed to benefit from these market dynamics.
Delivering on our strategic priorities
Whilst we have seen some deferral of new business activity and discretionary projects as trustees and sponsors focused on dealing with the pandemic, we continued to make good progress on delivering our strategic priorities. Our ambition is to become the pre-eminent independent mid-tier pensions consulting firm and the XPS brand and footprint means we now offer a clearly differentiated alternative to the 'Big 3'.
We continue to broaden our services both in relation to defined benefit schemes, where we deployed our member profiling techniques to help clients understand the potential impact of Covid-19 on pension scheme longevity, and defined contribution schemes where we have developed a variety of new services aimed at supporting clients with the changing regulatory backdrop. Ongoing investment in our award winning software, Radar, yielded benefits for both clients and the business, gaining external recognition once again, winning 'Actuarial Software of the Year' for the second year running.
With the exception of the Investment Consulting division where we achieved a strong new business performance, winning new clients has been slower during the year due to the pandemic. Despite this, we have still achieved success where opportunities have arisen. In Pensions Administration, we were delighted to win the first time outsourcing of a GBP2bn+ defined benefit scheme from the IT sector, and we will take on this role early in our new financial year. In early 2021, we were appointed as Actuarial and Investment advisors to a GBP2.5bn+ defined benefit scheme in the hospitality sector. The market is beginning to open up again and our pipeline is strengthening - these wins and our prior track record give us confidence that we will continue to gain market share during the year ahead.
It was a strong year for NPT, with 69% year on year growth in assets to over GBP1bn, driven by transfers in, contributions and investment returns. This is another area of the business where we continue to invest in technology to develop a market leading platform for the future.
The two businesses we acquired in 2019, Trigon and Royal London Corporate Pensions Services, were successfully bedded in during the year and are now fully integrated and delivering positive returns. Further growth through M&A remains a strategic priority. We look for transactions that will be a good cultural fit, easy to integrate, and with a strategic upside. A good example of this is the Kier Pensions Unit in 2018, which boosted our presence in the public sector administration market. This continues to open further opportunities for us, and we were delighted this year to win the all-Wales Police pensions administration contract.
People
We have assembled a strong and experienced management team that has served the business well during these uncertain times. We are grateful for their perseverance and commitment as the pressures of the year ebbed and flowed and for the resilience and flexibility of all our people - they deserve our heartfelt thanks.
In addition to Sophia Singleton who joined us as Head of Defined Contribution, a further key appointment during the year was the recruitment of our first Chief Information Officer, Jonathan Marchant, who joined us from Paypoint in May 2021. Jonathan will have a broad remit to drive all aspects of our technology agenda, from cyber-security to innovation in how we deliver services to clients.
This was the inaugural year for our Values in Practice Awards, celebrating people and teams who have gone above and beyond in the way they looked after each other and clients and truly embodied our values. One of the highlights of the year was reading through the more than 80 submissions nominating teams and individuals - it made us hugely proud to see so many examples of people truly rising to the challenges the pandemic had thrown at us. Presenting the awards to the winners was a hugely enjoyable and somewhat emotional moment for all involved.
Building a sustainable business
As our business grows, our ambition is to ensure that we do so in a responsible and sustainable way. We recognise that this is a journey and we are working on embedding principles of ESG and sustainability throughout XPS with a strong focus on collaboration and robust governance.
We have a strong societal purpose to help make pension schemes safe and secure for the members who will rely on them for financial security in later life. We continue to deploy innovative solutions and use of proprietary technology to achieve better outcomes for our clients and pension scheme members. We aim to be a good corporate citizen and participate in industry debates to shape better policies and more effective governance of our industry.
We also work very hard to protect and enhance the wellbeing of our employees, and this guides our decision-making. When the pandemic struck, our priority from the beginning was the safety and well-being of our colleagues, clients and other stakeholders. We worked hard to ensure we could support our clients whilst at the same time keeping our people in good spirits, well supported and with a strong feeling of inclusion and togetherness. We understood that everyone was facing challenges, but everyone's challenges were different.
We sent weekly voice messages to all staff providing a personal update about how things were. XPS produced bespoke videos on all aspects of working from home, on mindfulness, positivity, sleep and simple practical things to help; we put in place policies to support people. We did not furlough anyone, re-deploying staff where necessary. Colleagues who could not work because of Covid-19 - directly or indirectly because of looking after vulnerable dependents, or for childcare reasons - remained on full pay so they could concentrate on what they needed to do.
We created XPS communities around things we all love such as films, music, or exercise. To help during the depths of winter and lockdown 3, we even offered staff a 3-month Netflix subscription to help them through the dark nights at home.
In our annual staff survey, 94% of our people agreed that we are a good company to work for and, as mentioned above, in November we won the Business Culture Award Gold Award for our commitment and success in inclusive culture and values.
Our environmental journey continues - we have ambitious goals and are developing plans to make us carbon neutral in the future. The re-engineering of the business processes undertaken during the past year has given us a more sustainable foundation to take this forward.
We have established a Board Sustainability Committee that is responsible for the sustainability strategy and providing oversight of the Group's performance against the sustainability framework. The Sustainability Committee is chaired by Non-Executive Director Sarah Ing and further details of its composition and activities can be found on our website and on pages 16 to 20 of the annual report.
Outlook
The FY 2021 results demonstrate the resilience of our business, with a high proportion of our revenues being non-discretionary and recurring as they are received for essential services. As such, we remain well protected against scenarios in which the pandemic continues to disrupt economic activity.
Part of our strategy is to grow the services we provide to existing clients in response to regulatory and market changes where clients need support. At the current time, the volume of regulatory change is high across a variety of areas. A new Pensions Bill became law in early 2021 and is expected to lead to changes to the way that schemes are funded and regulated. This will impact each of our Advisory clients, and all will need support in due course. There are numerous other regulatory changes that we expect will lead to continued strong client demand, including working through GMP equalisation, which drives activity in both our Advisory and Administration businesses.
Another part of our strategy is to grow through gaining market share. After strong momentum at the end of FY 2020, new logo opportunities in the Pensions Actuarial & Consulting and Pensions Administration businesses slowed significantly during FY 2021 as processes were put on hold during the pandemic. This will impact the new business contribution to growth in the near-term - however we are seeing signs of the pipeline strengthening. New business opportunities in Pensions Investment Consulting have remained strong throughout, driven in part by the CMA Review remedies being implemented.
M&A is also a core part of our strategy. We have successfully integrated each of the three 'bolt-on' acquisitions we have done in recent years. We operate in a fragmented market, with a scalable platform and a strong infrastructure, and as such and are well placed to grow through further M&A.
Overall, the Group is well positioned to emerge from the pandemic able to take advantage of favourable end market dynamics and the busy regulatory backdrop for pensions. The Group is well placed to continue to deliver at least mid-single digit percentage organic growth in revenues over the medium term. The Group has traded in line with expectations in the first two months of the financial year.
FINANCIAL REVIEW
It was another strong year of growth for the business as Group revenues grew 7% year on year with 6% organic growth year on year. Adjusted EBITDA grew 5% year on year translating into a 17% increase in adjusted operating cash-flow. Statutory profit before tax grew 3% year on year.
The business adapted well to remote working in response to the Covid-19 pandemic and the financial results are a testament to the hard work and dedication of all our colleagues as they continued to serve clients well and looked after each other. During what has been an incredibly challenging year for all, we are proud to have stood by our colleagues and continued to serve all our stakeholders. We did not furlough any staff or make any pandemic related redundancies and neither did we take up any other financial help on offer from Government, other than the automatic deferral of the VAT payment at the start of the pandemic which applied to all companies in the UK.
Significant accounting matters
Adjusted numbers
We continue to show "adjusted" numbers in our results to better reflect the underlying business performance. The "adjusted" numbers exclude exceptional and non-trading items such as the amortisation of acquired intangible assets as well as share-based payment costs. The exceptional and non-trading items are disclosed in the notes to the financial statements. This alternative performance measure may not be similar to those defined by other entities but help to explain the progress within the underlying business.
Group income statement
FY 2021 FY 2020 Change
GBPm GBPm %
--------- ---------
Revenue
Pensions Actuarial & Consulting 60.7 58.8 3%
Pensions Investment Consulting 11.6 9.6 21%
--------- --------- --------
Total Advisory 72.3 68.4 6%
Pensions Administration 46.8 42.9 9%
SIP 5.6 6.1 (8%)
NPT 3.2 2.4 35%
--------- --------- --------
Total Revenue 127.9 119.8 7%
--------- --------- --------
Adj. EBITDA (1) 32.0 30.4 5%
Depreciation & Amortisation (4.9) (4.2) (17%)
--------- --------- --------
Adj. EBIT (1) 27.1 26.2 3%
Exceptional & non-trading
items (13.9) (12.8) (9%)
Net finance expense (1.8) (2.3) 22%
--------- --------- --------
Profit before tax 11.4 11.1 3%
Income tax expense (2.4) (3.7) 34%
--------- --------- --------
Profit after tax 9.0 7.4 22%
--------- --------- --------
(1) Adjusted measures exclude the impact of exceptional and non-trading items: acquisition related amortisation, share based payments, corporate transaction costs, restructuring costs and other items considered exceptional by virtue of nature, size and incidence.
Revenue
Total Group revenues grew 7% year on year with all divisions apart from SIPP achieving year on year growth.
Pensions Actuarial and Consulting is the Group's largest business. Despite the challenges of working from home as well as a lack of new business pitches in the first half of the year owing to the pandemic, the division achieved 3% year on year growth in revenues.
Pensions Investment Consulting had another strong year with a number of new client mandates as well as continued growth in FM oversight appointments following the CMA ruling in 2019. Revenues in this division grew 21% year on year.
Pensions Administration revenues grew 9% year on year with a number of new client wins coming on stream during the year. Pensions Administration accounted for 37% of the Group revenues (FY 2020: 36%).
SIP revenues were down 8% on prior year, primarily due to the reduction in the bank base rate. The National Pensions Trust ('NPT') business has performed well with revenue growing 35% year on year; with a faster-than-expected recovery in asset prices, as well as additional asset transfers; total assets under management are now over GBP1.0 billion.
Operating costs
Total operating costs (excluding exceptional and non-trading items) for the Group grew by 8% or GBP7.4 million year on year. The main drivers for the cost increases are an increase in headcount as the business grows (1,325 FTE v 1,203 last year), continued investment in IT (particularly cyber security), higher bonus cost in light of the strong financial performance and the full year impact of the two bolt-on acquisitions in FY 2020. This was partially offset by lower travel and entertainment costs.
As a result, the Group's adjusted EBITDA grew by 5% year on year. Adjusted EBITDA margin was 25%; (FY 2020: 25%). Statutory profit before tax grew by 3% year on year.
Exceptional and non-trading items
Exceptional and non-trading items in the year totalled GBP13.9 million (FY 2020: GBP12.8 million). Amortisation of acquired intangible assets amounted to GBP6.6 million (FY 2020: GBP7.1 million). Share based payment charges were GBP4.9 million (FY 2020: GBP2.2 million) driven mainly by a higher expectation of vesting compared to the prior year. Exceptional costs arising as a result of the Covid-19 pandemic were GBP2.0 million (FY 2020: GBP0.3 million). GBP1.0 million of this was spent on providing IT equipment such as laptops, monitors etc. to all our staff, some of whom were entirely office based prior to the pandemic. The other GBP1.0 million is a non-cash charge for significantly higher than normal holiday pay accrual as the holiday cycle was disrupted by the pandemic and a higher than normal level of holiday was carried forward at the end of the holiday year in December 2020. The holiday pay accrual will unwind during FY 2022 and the resulting benefit will also be shown within exceptional items as a credit in FY 2022. Restructuring costs of GBP0.4 million (FY 2020: GBP1.9 million) were incurred on the integration of bolt on acquisitions completed in the prior year. The Group also incurred corporate transaction costs of GBP0.2 million (FY 2020: GBP0.9 million) in the year. This was partially offset by an exceptional credit of GBP0.4m in respect of the contingent consideration no longer payable for the Trigon acquisition.
Tax credit on the exceptional and non-trading items was GBP2.3 million (FY 2020: GBP0.1 million).
See notes to the financial statements for further information on the items detailed above.
Net finance costs
Net finance costs for the year were GBP2.0 million (FY 2020: GBP2.4 million). The decrease reflected the lower net debt in the year, and the reduction in the bank base rate.
Taxation
A tax charge of GBP4.7 million (FY 2020: GBP3.8 million) was recognised on adjusted profits (before exceptional and non-trading items) which represents an effective tax rate of 19% (FY 2020: 16%). The Group also recognised a tax credit of GBP2.3 million (FY 2020: GBP0.1 million) on exceptional and non-trading items, which resulted in an overall tax charge for the year of GBP2.4 million (FY 2020: GBP3.7 million). The tax credit on exceptional and non-trading items was only GBP0.1m in FY 2020 due to an increase in the enacted tax rate from 17% to 19% and the related revaluation of deferred tax liabilities on the Group's intangible assets. The increase in corporation tax expected in FY 2024 to 25% will drive an increase in tax charges in FY 2022, once the rate has been enacted as the deferred tax liabilities are revalued at the higher rate.
Our businesses generate considerable tax revenue for the Government in the UK. For the year ended 31 March 2021, we paid corporation tax of GBP3.3 million (FY 2020: GBP3.5 million); we collected employment taxes of GBP22.8 million (FY 2020: GBP19.7 million) and VAT of GBP20.2 million (FY 2020: GBP16.5 million). Additionally, we have paid GBP1.2 million (FY 2020: GBP1.1 million) in business rates. The total tax contribution of the Group was therefore GBP47.5 million (FY 2020: GBP40.8 million).
EPS
The Basic EPS for FY 2021 is 4.4p (FY 2020: 3.6p). The year on year increase is mainly due to the higher profits as well as a higher tax credit of GBP2.3m on exceptional and non-trading items in FY 2021.
Adjusted fully diluted EPS of 9.8p was delivered in FY 2021 (FY 2020: 9.6p), an increase of 2% year on year.
Dividend
A final dividend of 4.4p is being proposed by the Board (FY 2020: 4.3p). The final dividend, if approved, which amounts to GBP9.0m (FY 2020: GBP8.8m), will be paid on 23 September 2021 to those shareholders on the register on 27 August 2021.
Cash flow, capital expenditure and financing
31 Mar 2021 31 March 2020
Non-GAAP cash-flow GBPm GBPm
-------------
Operating
Adjusted EBITDA 32.0 30.4
Change in net working capital 4.9 0.6
Other (0.7) (0.1)
------------- ---------------
Adjusted operating cash-flow 36.2 30.9
------------- ---------------
OCF conversion 113% 102%
Financing & tax
Net finance expense (2.1) (1.8)
Taxes paid (3.3) (3.5)
(Repayment of) / Proceeds from new
loans (11.5) 13.3
Repayment of lease liabilities (2.6) (2.0)
Share related movements (3.4) 0.3
------------- ---------------
Net cash-flow after financing 13.3 37.2
------------- ---------------
Investing
Acquisition (net of disposals) (0.2) (7.1)
Capex (2.9) (3.4)
Restricted cash (NPT) (0.5) (0.3)
------------- ---------------
Net cash-flow after investing 9.7 26.4
------------- ---------------
Dividends paid (13.4) (13.4)
Exceptional items (2.1) (4.1)
------------- ---------------
Movement in cash (5.8) 8.9
------------- ---------------
Net debt 50.4 56.1
Leverage 1.74x 1.98x
FY 2021 has been another year of strong cash performance for the Group. Adjusted operating cash flow increased by GBP5.3 million driven by a GBP1.6 million increase in EBITDA and a GBP4.3 million improvement in net working capital. Other items were an outflow of GBP0.7 million compared to an outflow of GBP0.1 million in FY 2020. Overall, this resulted in adjusted operating cash flow conversion of 113% compared to 102% in the prior year.
Taxes paid in the year were GBP0.9 million higher than the income statement charge due to the current year tax credit in relation to exceptional items in the year which is largely a deferred tax.
During the year, the Group repaid GBP11.5 million of the RCF. Capital expenditure in the year amounted to GBP2.9 million (FY 2020: GBP3.4 million) with GBP0.7 million spent on leasehold improvements and office fit-outs and the remaining GBP2.2 million on IT equipment and software enhancements.
After paying GBP13.4 million in dividends and GBP2.1 million of exceptional costs, the Group cash balance decreased by GBP5.8 million year on year to close at GBP8.6 million. The Group had drawn down GBP59 million of its GBP80 million RCF at 31 March 2021, resulting in a net debt of GBP50.4 million, a decrease of GBP5.7 million year on year.
The existing revolving credit facility (RCF) of GBP80 million matures in December 2022. In June 2020 an additional GBP10 million was agreed with the lending banks in order to provide the Group with greater financial flexibility to navigate the potential challenges posed by the Covid-19 crisis. This additional facility was not required and was exited in March 2021.
Going concern
Details on the Directors continuing to adopt the going concern basis in preparing the Financial Statements can be found in the Viability Statement in the Strategic Report in the Annual Report. The Directors have confirmed that, after due consideration, they have a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the foreseeable future. For this reason, they continue to adopt the going concern basis in preparing the financial statements.
Subsidiary undertakings
The subsidiary undertakings of the Group in the year are listed in note 34 in the Annual Report.
Snehal Shah
Chief Financial Officer
23 June 2021
Principal Risks and Uncertainties
The Group recognises the need to take risk to help its customers achieve their objectives and achieve commercial success - seeking to take risk where it has the skills to exploit that risk and can manage it within risk tolerance. It seeks to avoid risk where it sees it as unrewarded or it cannot be well managed or understood.
Over the last year our risk management frameworks have been fundamental to enabling us to react effectively to the Covid-19 pandemic. The controls in place allowed us to support the pivot to higher numbers of staff working from home, whilst maintaining the protections in place to continue to serve our clients in a robust manner. These controls were reviewed throughout the year and have been enhanced to address the changes in the external threat environment such as the worldwide increase in phishing and ransomware attacks. Whilst parts of our supply chain were impacted we had sufficient resilience designed and in place to ensure we maintained our high levels of service to our clients and the members we support, whilst at the same time protecting our staff.
In addition to this we have continued to develop our overall risk management capabilities to improve our ability to detect, understand and manage our risks. Significant developments since the last report include:
-- The appointment of a Head of Assurance who is responsible for co-ordinating the assurance activities within the Group (AAF, ISO etc.) and ensuring opportunities to enhance controls are effectively implemented.
-- The re-appointment of PwC to support the internal audit programme, as agreed with the Audit and Risk Committee.
-- The introduction of a new Third Party Assurance framework, which tiers suppliers and uses risk-based questionnaires to validate the appropriate controls frameworks are in place.
-- The embedding of the Executive level Risk Management Committee to monitor existing risks, discuss new risks and agree prioritisation of mitigation activities.
-- The expansion of the dedicated Information Security team, including the introduction of several additional technical security enhancements.
-- The development of the Environmental Management System to manage our impact on the environment and support SECR and TCFD reporting.
The Group continues to operate a three lines of defence model which supports the promotion of effective risk management and seeks to prevent risk taking that exceed the Group's appetite.
The Board, with the support of the Audit & Risk Committee, have identified the principal risks that could materially impact the Group's ability to achieve its objectives and deliver its strategy.
These include general business risks that are faced by the Group and are comparable to those that would be faced by similar businesses operating in the pensions sector. These general business risks include:
-- Political/ Economic/ Social - Risks created by the political, economic/ financial and social environment in which we operate, e.g. war, demographic trends, pandemics, Government influence on business, currency changes, market volatility, interest rates, liquidity.
-- Competition - Risks of change on demand side of business due to changes in customer demands or competitors, likely to influence entire industry e.g. aggressive competitor pricing, consolidation trends, major technological innovation, substitute technologies. These changes may not directly affect the Group but could influence the entire industry.
-- Legal and Regulatory - Risks associated with the criminal and civil judicial processes and contract law e.g. not identifying changes required by new legislation, increased litigation in a particular field, environmental impacts, industrial accidents.
The material risks and uncertainties which are either unique to the Group or apply to the pensions industry in which we operate are detailed below. They are not set out in any priority order, nor do they include all those associated with the Group. Specific risks that are material to XPS Group are:
Principal Description Key Mitigations
Risk
Strategy Risks linked to the assumptions The Board approves and regularly reviews
of future development the Group's strategy in conjunction
and size of pensions market with budgets, targeting long term
used to develop the strategy increases in shareholder value and
or business model or business ensuring robust independent challenge.
portfolio, e.g. poor data,
group think, lack of diversity Key decisions are assessed against
of opinions. risk appetites for key Group risks
with a Risk Management framework in
place to identify and escalate where
strategic decisions may have unintended
impacts.
--------------------------------------- -------------------------------------------------------
Strategic Risks linked to assessing, The Board regularly reviews the Group's
Planning and evaluating, planning and strategy, supported by the Executive
Execution executing the strategy, with responsibilities assigned for
e.g. poor budgeting and the delivery of initiatives and provision
planning, inadequate or of regular progress updates.
misleading communications,
poor management of change Specific project management resources
or projects. are used to deliver large scale change
initiatives, allowing risks to delivery
of initiatives to be clearly identified
at planning stage along with mitigations.
--------------------------------------- -------------------------------------------------------
Financial Risks relating to the The Group has a highly qualified and
performance failure to monitor and experienced financial reporting team.
appropriately manage the There is an extensive financial controls
financial performance framework in place and key controls
of the Group on an ongoing are regularly reviewed by internal
basis which could lead and external audits. The Group undertakes
to poor management decisions, detailed bottom-up budgeting and reforecasting
higher costs and/or inaccurate exercises with the final budget and
external financial reporting reforecast approved by the Board.
Management information is published
on a regular basis and the Executive
Committee reviews the financial performance
of the Group at least monthly. The
Board receives and scrutinises financial
performance of the Group at each Board
meeting.
--------------------------------------- -------------------------------------------------------
Errors Risks relating to material The Group recruitment process ensures
mistakes made by staff, only high calibre staff are recruited
including the non-compliance who are then supported by training
with established procedures, programmes. Staff use standardised
e.g. failure to calculate documented processes and checklists
benefits correctly, not for key processes.
following peer review Higher risk work is identified with
processes. peer review and additional signoff
required, with regular quality audits
to confirm processes are being followed
correctly.
Insurance arrangements are in place
to limit the loss should an error
occur, with root cause analysis used
to identify where controls can be
improved.
--------------------------------------- -------------------------------------------------------
Theft and Risks relating to the The Group deploys robust physical
Fraud (Financial, safeguarding of Group and systems access controls, along
Physical Assets) and Client financial and with enforcing segregation of duties
physical assets from malicious to preventing individuals from making
actors e.g. stealing physical fraudulent payments or transfers.
assets, deliberate misrepresentation These controls are supported with
leading to fraud, theft staff vetting, training and awareness
from Group or Client bank and are regularly independently audited.
accounts. Insurance arrangements are in place
to protect against larger claims.
--------------------------------------- -------------------------------------------------------
Information/ Risks relating to the The Group has an Information Security
Cyber Security confidentiality, integrity Management System (ISMS) in place
and availability of information to ensure that risks are identified
assets including IT systems, and managed effectively. This includes
e.g. Unauthorised access a range of technical controls, a dedicated
or disclosure of staff Information Security Team, and a 24/
or client information, 7 Security Operations Centre. These
denial of access to systems are supported by regular independent
or data required, business audits and penetration tests.
continuity incidents caused All staff are provided with comprehensive
by equipment breakdown/ policies and guidance, with awareness
fire/ flood. of key topics reinforced with regular
training initiatives, e.g. Phishing
Awareness.
The Group has a range of Business
Continuity capabilities in place to
minimise impact of incidents impacting
the Groups' data, facilities or systems.
These include documented plans which
are tested regularly.
--------------------------------------- -------------------------------------------------------
Staff/ Human Risks relating to our The Group's recruitment strategy is
Resources people, e.g. compensation, to seek professional, experienced
retention, succession and qualified staff utilising robust
planning, skills and competence, staff recruitment and selection processes.
management capability. This is supported by comprehensive
training, development and performance
management processes, with longer
term incentives in place to aid retention.
Regular key staff reviews ensure succession
planning is kept up to date and remains
appropriate.
Staffing requirements are considered
as part of strategy and budgeting
process to ensure alignment with business
plans.
--------------------------------------- -------------------------------------------------------
Third Party Risks relating to the The Group has a formal selection process
Supplier/ use of third parties to that ensures due diligence is carried
Outsourcing support our operations, out, which is proportionate to the
e.g. poor due diligence risk of the potential failure of the
and selection processes, third party.
failure of a supplier The approvals and signing framework
to follow agreed upon also ensure contracts include key
procedures, financial risks relating to services provided
failure of supplier resulting and risks identified are managed and
in inability to deliver accepted prior to agreements being
service. signed. This is supported by ongoing
monitoring of key third parties, including
SLA's and financial status.
Where there is a reliance on a single
supplier, contingency plans are in
place to protect against failure.
--------------------------------------- -------------------------------------------------------
Client Engagement Risks relating to the The Group client engagement process
provision of poor service ensures that expectations are matched
or advice to clients, to Group capabilities. Regular ongoing
e.g. advice that is not dialogue with clients ensures that
clear, not understood the services provided meet their
by the client, poorly requirements
presented or using out and continue to be appropriate to
of date technologies, their specific needs.
but not errors. Client surveys are used to gather
feedback and identify trends and insights.
--------------------------------------- -------------------------------------------------------
Business Conduct Risks that could lead The Group's Mission, Vision and Values
and Reputation to a breach of acceptable clearly set out the tone from the
conduct or ethics and/or top, highlighting to all staff the
impact the Group's brand, conduct and ethics that are expected
image or reputation, failure from them at all times. This is supported
to ensure services are by a recruitment strategy that seeks
appropriate for client's professional, experienced and qualified
needs, discrimination, staff who fit with Groups values.
poor response to a Cyber Due diligence of third parties considers
Incident or client complaint. supply chain risks, ensuring that
only suppliers that comply with their
legal obligations are selected.
The Group has an Incident Management
processes in place to ensure that
it is able to effectively respond
to significant events that could impact
its brand or reputation, which is
regularly tested.
--------------------------------------- -------------------------------------------------------
Covid-19 (Coronavirus)
The outbreak of the Covid-19 virus significantly altered normal business operating conditions during 2020. The Group adapted its operations in order to keep staff safe and was able to continue client servicing without interruption. Our existing business continuity plans and technology infrastructure ensured a resilient response to the pandemic was possible. All staff have been subject to home working periods and throughout have maintained our client service and other obligations. The Executive Covid-19 Crisis Team was convened at the outset of the pandemic to oversee key decisions and continues to meet on a regular basis to agree and co-ordinate the mitigating actions required. Assessment of the potential impacts of Covid-19 on the Group's principal risks has been regularly completed, with oversight from the Risk Management Committee and input from the Audit and Risk Committee. Although the external conditions created significant challenges, our strong control environment and prompt management actions has resulted in resilient and stable residual risk positions across the organisation's risk profile. There is still uncertainty with regard to the medium- and long-term consequences of Covid-19, particularly with regard to the potential implications for markets and economies. The Group continues to review the external environment and monitor any potential horizon risks.
The Directors confirm that they have carried out a robust assessment of the principal risks facing the Group, including those that would threaten its business model, future performance, solvency or liquidity. The principal risks are those listed above. The Directors do not believe there to be any additional emerging risks that are not already addressed within the principal risks and uncertainties section.
The Directors confirm in the Directors' Responsibility Statement in the annual report that they consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Group's position, performance, business model and strategy. This Strategic Report has been approved by the Board and signed by order of the Board:
Paul Cuff Ben Bramhall Co-chief Executive Officer Co-chief Executive Officer 23 June 2021 23 June 2021
INDEPENT AUDITOR'S REPORT TO THE SHAREHOLDERS OF
XPS PENSIONS GROUP PLC ON THE PRELIMINARY STATEMENT OF ANNUAL RESULTS
As the independent auditor of XPS Pensions Group plc we are required by UK Listing Rules to agree to the publication of the company's preliminary statement of annual results for the year ended 31 March 2021 which includes the Financial Highlights, the Operational Highlights, the Co-Chief Executives' Review, Financial Review, Principal Risks and Uncertainties, and summarised financial statements.
Use of our report
This report and our auditor's report on the company's financial statements are made solely to the company's members, as a body, in accordance with Chapter 3 of part 16 of the Companies Act 2006 and the terms of our engagement. Our audit work has been undertaken so that we might state to the company's members those matters we have agreed to state to them and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for our auditor's report on the financial statements or this report, or for the opinions we have formed.
Responsibilities of directors and auditor
The directors of the company are responsible for the preparation, presentation and publication of the preliminary statement of annual results in accordance with the UK Listing Rules. We are responsible for agreeing to the publication of the preliminary statement of annual results, having regard to the Financial Reporting Council's Bulletin "The Auditor's Association with Preliminary Announcements made in accordance with the requirements of UK Listing Rules".
Status of our audit of the financial statements
Our audit of the annual financial statements of the company is complete and we signed our auditor's report on 23 June 2021. Our auditor's report is not modified and contains no emphasis of matter paragraph.
Our auditor's report on the full financial statements contained the following information regarding key audit matters and how they were addressed by us in the audit, our application of materiality and the scope of our audit.
An overview of the scope of our audit
Our Group audit was scoped by obtaining an understanding of the Group and its environment, including the Group's system of internal control, and assessing the risks of material misstatement in the financial statements. We also addressed the risk of management override of internal controls, including assessing whether there was evidence of bias by the Directors that may have represented a risk of material misstatement.
The Group comprises the Parent Company, seven trading subsidiaries, all of which are considered to be significant components, and five intermediate holding companies all based in the United Kingdom, together with a Jersey based trust company controlled by the Parent Company, which contains the Group's Employee Benefit Trust. Full scope audits of all entities were carried out by the Group audit team given the statutory audit requirements for all components.
Key audit matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified, including those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit, and directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter How the scope of our audit addressed
the key audit matter
Revenue recognition
The accounting
policy for The Group generates We identified the Group's revenue
revenue is revenue from pension streams and tested that the related
disclosed advisory, administration revenue recognition policy is in
in note 1 and investment consulting accordance with the requirements
of the consolidated services as well as of the applicable accounting standards.
financial providing SSAS and
statements. SIPP services. We reviewed revenue transactions
to identify transactions which are
The segmental Accounting standards outside the normal revenue cycle.
information require the identification We then agreed a sample of any such
relating of the separate performance transactions to underlying documentation
to Group obligations embedded to gain an understanding of the transaction
revenue is in a contract, and and check that the related revenue
disclosed the allocation of had been appropriately recognised.
in note 7 the transaction price
to the consolidated to these performance We tested a sample of revenue transactions
financial obligations. Revenue for each material income stream by
statements. is only recognised agreeing back to timecard data, invoice
when performance and receipt of payment to check the
obligations existence of revenue and that it
have been met. was accurately recorded.
Identification
of the separate performance We agreed a sample of accrued income
obligations and price to pre year-end timecard data to
allocation is complex check existence of revenue. We tested
and involves judgement. the recoverability of a sample of
There is a risk that accrued income through to its subsequent
incorrect revenue billing and cash receipt. For any
is recognised due unpaid items we considered the recoverability
to the judgements of these by reference to customers'
involved in the application payment trends historically.
of the applicable
accounting standards. We tested deferred income on a sample
basis by re-calculating deferrals
The significant revenue based on invoice amounts and periods
risk revolves around to which they relate, agreeing consistency
the of these periods year on year, agreeing
existence and valuation these to supporting documentation
of revenue residing and reviewing SSAS income for revenue
within deferrals not made.
accrued income at
the year-end for the Where contracts exist, for a sample
Pensions, we have checked that revenue is being
Advisory and Consulting recognised in accordance with the
streams. terms of the contract as well as
the requirements of applicable accounting
Billing occurs monthly, standards.
quarterly or, in the
case of We tested the completeness of timecards
SSAS services, annually. recorded within the timecard system
Services may be billed and the subsequent recognition of
in arrears, as in related revenue by reconciling the
the case of pensions timecards recorded to the amounts
advisory work noted billed and written off, agreeing
above, or in advance any material exceptions noted to
as is the case with underlying support. In addition,
SSAS revenue. The completeness of timecards is addressed
manual nature of the though our data analytics testing
SSAS deferral creates by identifying outliers for example
a significant risk missing employees.
in the calculation
of the deferred income
element of this revenue. Key observations:
Our testing did not identify any
material misstatements in the amount
Whilst not considered of revenue recognised or issues with
part of the significant the revenue recognition policy and
risk, completeness judgements made.
of revenue is considered,
particularly where
revenue is captured
based on the timecard
system. There is a
risk that incomplete
revenue is recorded
within the accounting
system.
------------------------------ --------------------------------------------------------------
Going concern
The accounting Due to the level of Our procedures included:
policy for judgement applied * Assessing the Directors' going concern assessment and
going concern by management in their forecasts including the reasonableness of their
is disclosed going concern assessment assumptions applied and reverse stress case
in note 1 as a result of the sensitivities using our knowledge of the business;
of the consolidated ongoing Covid-19 pandemic,
financial we considered going
statements. concern to be a key
audit matter. * Assessing the reasonableness of the underlying
forecast model against the Directors' historical
forecast accuracy, including an assessment of the
period to May 2021 actuals against budget;
* Reviewing the terms and period of the Group's bank
facility agreement and consideration of the
sufficiency of the facility available;
* Considering the Group's compliance with banking
covenants and related headroom in light of the
Directors' reverse stress test assessment;
* Considering the options available to management to
mitigate the impact of reverse stress test scenarios
and whether such actions are within their control;
and
* Considering the adequacy of the disclosures in the
financial statements against the requirements of the
accounting standards and consistency of the
disclosure and the forecasts and reverse stress test
assessment prepared by the Directors.
Key observations:
Based on the work we have performed,
we have not identified any material
uncertainties relating to events
or conditions that, individually
or collectively, may cast doubt on
the Group and the Parent Company's
ability to continue as a going concern
for a period of at least twelve months
from when the financial statements
are authorised for issue.
------------------------------ --------------------------------------------------------------
Our application of materiality
We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could influence the economic decisions of reasonable users that are taken on the basis of the financial statements.
In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole and performance materiality as follows:
Group financial statements Parent company financial
statements
2021 2020 2021 2020
--------------- --------------- ---------------- ----------------
Materiality GBP568,000 GBP546,000 GBP240,000 GBP240,000
--------------- --------------- ---------------- ----------------
Basis for determining 5% of profit before 42% of Group 44% of Group
materiality tax materiality materiality
-------------------------------- ---------------- ----------------
Rationale for We determined profit Capped at 42% (2020:
the benchmark before tax as our benchmark 44%) of Group materiality
applied for materiality on given the assessment
the basis that profit of the components aggregation
before tax is a key risk.
performance indicator
used by the market.
-------------------------------- ----------------------------------
Performance GBP404,000 GBP382,000 GBP168,000 GBP168,000
materiality
--------------- --------------- ---------------- ----------------
Basis for determining 70% of overall materiality based on our knowledge
performance of the Group and Parent Company, history of
materiality errors in previous periods and management's
attitude to proposed adjustments
--------------------------------------------------------------------
Component materiality
We set materiality for each component of the Group based on a percentage of between 1% to 95% of Group materiality dependent on the size and our assessment of the risk of material misstatement of that component. Component materiality ranged from GBP6,500 to GBP540,000. In the audit of each component, we further applied performance materiality levels of 70% of the component materiality to our testing to ensure that the risk of errors exceeding component materiality was appropriately mitigated.
Reporting threshold
We agreed with the Audit Committee that we would report to them all individual audit differences in excess of GBP23,000 (2020: GBP22,000). We also agreed to report differences below this threshold that, in our view, warranted reporting on qualitative grounds.
Procedures performed to agree to the preliminary statement of annual results
In order to agree to the publication of the preliminary statement of annual results of the company we:
-- checked the accuracy of extraction of the financial information in the preliminary statement from the audited financial statements of the company;
-- considered whether any "alternative performance measures" and associated narrative explanations may be misleading; and
-- read the management commentary and considered whether it is in conflict with the information that we have obtained in the course of our audit.
Andrew Radford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, UK
23 June 2021
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2021
Year ended 31 March 2021 Year ended 31 March 2020
Trading Non-trading Total Trading items Non-trading Total
items and and
exceptional exceptional
items items
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Revenue 3 127,931 - 127,931 119,753 - 119,753
Other operating
income - 421 421 - - -
Administrative
expenses (100,848) (14,092) (114,940) (93,488) (12,824) (106,312)
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Profit/(loss)
from operating
activities 27,083 (13,671) 13,412 26,265 (12,824) 13,441
Finance income 4 3 - 3 8 - 8
Finance costs 4 (1,857) (188) (2,045) (2,378) - (2,378)
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Profit/(loss)
before tax 25,229 (13,859) 11,370 23,895 (12,824) 11,071
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Income tax
(expense)/credit 5 (4,741) 2,334 (2,407) (3,812) 140 (3,672)
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Profit/(loss)
after tax and
total
comprehensive
income/(loss)
for the year 20,488 (11,525) 8,963 20,083 (12,684) 7,399
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Memo
EBITDA 32,011 (7,124) 24,887 30,430 (5,671) 24,759
Depreciation and
amortisation (4,928) (6,547) (11,475) (4,165) (7,153) (11,318)
Profit/(loss)
from operating
activities 27,083 (13,671) 13,412 26,265 (12,824) 13,441
Pence Pence Pence Pence
------------------- ------ -------------- -------------- ----------- --------------- -------------- -----------
Earnings per Adjusted Adjusted
share
attributable to
the ordinary
equity holders of
the Company:
Basic earnings
per share 7 10.0 - 4.4 9.9 - 3.6
Diluted earnings
per share 7 9.8 - 4.3 9.6 - 3.6
Consolidated Statement of Financial Position
31 March 31 March
2021 2020
Note GBP'000 GBP'000
----------------------------------------------- ------ ---------- ----------
Assets
Non-current assets
Property, plant and equipment 3,197 3,017
Right-of-use assets 12,228 12,965
Intangible assets 204,784 210,601
Deferred tax assets 767 669
Other financial assets 1,780 1,300
----------------------------------------------- ------ ---------- ----------
222,756 228,552
----------------------------------------------- ------ ---------- ----------
Current assets
Trade and other receivables 34,635 34,708
Cash and cash equivalents 8,623 14,432
43,258 49,140
----------------------------------------------- ------ ---------- ----------
Total assets 266,014 277,692
----------------------------------------------- ------ ---------- ----------
Liabilities
Non-current liabilities
Loans and borrowings 6 58,876 70,186
Lease liabilities 9,612 10,269
Provisions for other liabilities and charges 1,678 1,550
Deferred income tax liabilities 16,390 17,561
----------------------------------------------- ------ ---------- ----------
86,556 99,566
----------------------------------------------- ------ ---------- ----------
Current liabilities
Lease liabilities 2,458 2,538
Provisions for other liabilities and charges 1,384 1,543
Trade and other payables 25,140 19,349
Current income tax liabilities 1,410 994
Deferred consideration - 757
----------------------------------------------- ------ ---------- ----------
30,392 25,181
----------------------------------------------- ------ ---------- ----------
Total liabilities 116,948 124,747
----------------------------------------------- ------ ---------- ----------
Net assets 149,066 152,945
----------------------------------------------- ------ ---------- ----------
Equity and liabilities
Equity attributable to owners of the parent
Share capital 103 102
Share premium 116,797 116,797
Merger relief reserve 48,687 48,687
Investment in own shares held in trust (2,563) (529)
Accumulated deficit (13,958) (12,112) ----------------------------------------------- ------ ---------- ---------- Total equity 149,066 152,945 ----------------------------------------------- ------ ---------- ----------
Consolidated Statement of Changes in Equity
for the year ended 31 March 2021
Merger
relief Investment in Accumulated Total equity/
Share capital Share premium reserve own shares deficit (deficit)
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 1
April 2019 102 116,795 48,687 (167) (9,014) 156,403
Comprehensive
income and
total
comprehensive
income for
the year - - - - 7,399 7,399
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Contributions
by and
distributions
to owners:
Share capital
issued - 2 - - - 2
Dividends paid
(note 8) - - - - (13,412) (13,412)
Shares
purchased by
Employee
Benefit Trust
for cash - - - (499) - (499)
Share-based
payment
expense -
equity
settled from
Employee
Benefit Trust - - - 137 637 774
Share-based
payment
expense -
IFRS 2 charge
in respect of
long-term
incentives - - - - 2,132 2,132
Deferred tax
movement in
respect of
long-term
incentives - - - - 146 146
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total
contributions
by and
distributions
to owners - 2 - (362) (10,497) (10,857)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 31
March 2020 102 116,797 48,687 (529) (12,112) 152,945
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 1
April 2020 102 116,797 48,687 (529) (12,112) 152,945
Comprehensive
income and
total
comprehensive
income for
the year - - - - 8,963 8,963
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Contributions
by and
distributions
to owners:
Share capital
issued 1 - - - - 1
Dividends paid
(note 8) - - - - (13,480) (13,480)
Dividend
equivalents
paid on
exercised
share options - - - - (441) (441)
Shares
purchased by
Employee
Benefit Trust
for cash - - - (3,170) - (3,170)
Share-based
payment
expense -
equity
settled from
Employee
Benefit Trust - - - 1,136 (973) 163
Share-based
payment
expense -
IFRS 2 charge
in respect of
long-term
incentives - - - - 4,082 4,082
Deferred tax
movement in
respect of
long-term
incentives - - - - 3 3
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Total
contributions
by and
distributions
to owners 1 - - (2,034) (10,809) (12,842)
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Balance at 31
March 2021 103 116,797 48,687 (2,563) (13,958) 149,066
---------------- --------------- --------------- --------------- --------------- --------------- ---------------
Consolidated Statement of Cash Flows
for the year ended 31 March 2021
Year ended
31 March Year ended
2021 31 March
2020
Note GBP'000 GBP'000
-------------------------------------------------------------------- ------ ------------ ------------
Cash flows from operating activities
Profit for the year 8,963 7,399
Adjustments for:
Depreciation 974 856
Depreciation of right-of-use assets 2,892 2,567
Amortisation 7,609 7,895
Finance income 4 (3) (8)
Finance costs 4 2,045 2,378
Share-based payment expense 4,082 2,132
Other operating income (421) -
Income tax expense 5 2,407 3,672
-------------------------------------------------------------------- ------ ------------ ------------
28,548 26,891
-------------------------------------------------------------------- ------ ------------ ------------
Increase in trade and other receivables (36) (1,100)
Increase in trade and other payables 6,040 1,284
Decrease in provisions (373) (78)
34,179 26,997
-------------------------------------------------------------------- ------ ------------ ------------
Income tax paid (3,304) (3,539)
-------------------------------------------------------------------- ------ ------------ ------------
Net cash inflow from operating activities 30,875 23,458
-------------------------------------------------------------------- ------ ------------ ------------
Cash flows from investing activities
Finance income received 4 3 8
Acquisition of subsidiaries, net of cash acquired (336) (7,544)
Disposal of healthcare business 104 427
Purchases of property, plant and equipment (1,154) (2,021)
Purchases of software (1,743) (1,377)
Increase in restricted cash balances - other financial assets (480) (300)
-------------------------------------------------------------------- ------ ------------ ------------
Net cash outflow from investing activities (3,606) (10,807)
Cash flows from financing activities
Proceeds from the issue of share capital net of share issue costs 1 2
Proceeds from new loans net of capitalised costs - 13,250
Repayment of loans (11,500) -
Payment relating to extension of loan facility (188) -
Sale of own shares 163 774
Purchase of ordinary shares by EBT (3,170) (499)
Interest paid (1,562) (1,630) Lease interest paid (335) (197) Payment of lease liabilities (2,566) (2,046) Dividends paid to the holders of the parent (13,480) (13,412) Dividend equivalents paid on exercise of share options (441) - -------------------------------------------------------------------- ------ ------------ ------------ Net cash outflow from financing activities (33,078) (3,758) -------------------------------------------------------------------- ------ ------------ ------------ Net (decrease)/increase in cash and cash equivalents (5,809) 8,893 Cash and cash equivalents at start of year 14,432 5,539 -------------------------------------------------------------------- ------ ------------ ------------ Cash and cash equivalents at end of year 8,623 14,432 -------------------------------------------------------------------- ------ ------------ ------------
In the Consolidated Financial Statements for the year ended 31 March 2020, depreciation of right-of-use assets had been included within amortisation. The prior year column above has been restated to show this amount on a separate line.
Additionally, there have been prior year adjustments to provisions and trade and other receivables relating to an insurance reimbursement asset. The prior year movements for these categories have been restated to reflect this. This adjustment is within net assets in the Statement of Financial Position and there is no change in the previously reported total net assets or reserves.
Notes to the Consolidated Financial Statements
for the year ended 31 March 2021
1 Accounting Basis
The financial information set out in this document does not constitute the Company's statutory accounts for the years ended 31 March 2021 or 31 March 2020. Statutory accounts for the year ended 31 March 2021, which were approved by the directors on 23 June 2021, and 31 March 2020 have been reported on by the Independent Auditors. The Independent Auditor's report on the Annual Report and Financial Statements for years ended 31 March 2021 or 31 March 2020 were unqualified, did not draw attention to a matter by way of emphasis, and did not contain a statement under 498(2) or 498(3) of the Companies Act 2006.
The statutory accounts for the year ended 31 March 2021 will be delivered to the Registrar of Companies in due course and will be posted to shareholders shortly, and thereafter will be available from the Company's registered office at Phoenix House, 1 Station Hill, Reading, RG1 1NB and from the Company's website www.xpsgroup.com .
The financial information set out in these results has been prepared using the recognition and measurement principles of International Accounting Standards, and International Financial Reporting Standards and Interpretations adopted pursuant to Regulation (EC) No 1606/2002 as it applies in the European Union (collectively Adopted IFRSs). The accounting policies adopted in these results have been consistently applied to all the years presented and are consistent with the policies used in the preparation of the financial statements for the year ended 31 March 2020. New standards, amendments and interpretations to existing standards effective for the first time for periods beginning on (or after) 1 April 2020, which have been adopted by the Group have not been listed, since they have no material impact on the financial statements.
2 Non-trading and exceptional items
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Corporate transaction costs (1) (226) (870)
Restructuring costs (2) (367) (1,904)
Settlement of historical contractual dispute - (381)
Other exceptional costs (3) (2,028) (336)
------------------------------------------------ ------------ ------------
Exceptional items (2,621) (3,491)
Contingent consideration write back (4) 421 -
Share-based payment costs (5) (4,924) (2,180)
Amortisation of acquired intangibles (6) (6,547) (7,153)
Exceptional finance costs (3) (188) -
----------------------------------------------- ------------ ------------
Non-trading items (11,238) (9,333)
------------------------------------------------ ------------ ------------
Total before tax (13,859) (12,824)
------------------------------------------------ ------------ ------------
Tax on adjusting items (7) 2,334 140
------------------------------------------------ ------------ ------------
Adjusting items after taxation (11,525) (12,684)
------------------------------------------------ ------------ ------------
(1) Costs associated with aborted acquisitions of GBP226,000 (2020: GBP870,000 relating to acquisitions by the Group).
(2) Costs related to the integration of prior year acquisitions of GBP367,000 (2020: GBP1,904,000, which also included costs relating to exiting the IT transitional services agreement linked to the Punter Southall acquisition in January 2018).
(3) Other exceptional costs of GBP2,028,000 were incurred as a result of one off impact of Covid-19 on the business. This includes an increase in holiday pay accrual due to higher carry forward of annual leave by employees of GBP966,000 (2020: GBPnil), one off costs incurred in enabling home working for all employees (mainly IT costs) of GBP966,000 (2020: GBP265,000), and dual running costs relating to a delayed office move of GBP96,000 (2020: GBP71,000). GBP188,000 of exceptional finance costs (2020: GBPnil) were incurred in renegotiating the covenants and additional GBP10 million RCF in light of the Covid-19 pandemic. The non-cash charge for the holiday pay accrual arose as the holiday cycle was disrupted by the pandemic and a higher than normal level of holiday was carried forward at the end of the holiday year in Dec 2020. It is expected that a significant proportion of the holiday pay accrual will reverse out in the year ending 31 March 2022, as the Group has changed its holiday policy in the year to align the holiday year with the accounting year and as a result there will be no cash outflow in respect of this charge. The reversal of the accrual in the next financial year will also be treated as an exceptional credit. Due to its one off nature, the size of the holiday pay accrual in the year ended 31 March 2021 as well as the corresponding reversal in the next financial year, it is deemed appropriate to disclose the amount separately from the underlying business performance.
(4) Contingent consideration revaluation credit of GBP421,000 relating to the reduction in the deferred cash-settled consideration for the Trigon acquisition (2020: GBPnil).
(5) Share-based payment expenses are included in non-trading and exceptional costs as they are a significant non-cash cost which are excluded from the results for the purposes of measuring performance for PSP awards and dividend amounts. Additionally, the largely non-cash charges go directly to equity and so have a limited impact on the reserves of the Group. They are therefore shown as a non-trading item to give clarity to users of the accounts on the profit figures that dividends and PSP performance are based on.
(6) During the year the Group incurred GBP6,547,000 of amortisation charges in relation to acquired intangible assets (customer relationships and brand) (2020: GBP7,153,000).
(7) The tax credit on non-trading and exceptional items of GBP2,334,000 (2020: GBP140,000) represents 17% (2020: 0%) of the non-trading and exceptional items incurred of GBP13,858,000 (2020: GBP12,824,000). This is different to the expected tax credit of 19% (2020: 19%), as not all non-trading and exceptional items are allowable for tax.
3 Operating segments
In accordance with IFRS 8 Operating Segments, an operating segment is defined as a business activity whose operating results are reviewed by the chief operating decision-maker ('CODM') and for which discrete information is available. The Group's CODM is the Board of Directors.
The Group has one operating segment, and one reporting segment due to the nature of services provided across the whole business being the same: pension and employee benefit solutions. The Group's revenues, costs, assets, liabilities and cash flows are therefore totally attributable to this reporting segment. The table below shows the disaggregation of the Group's revenue, by product line.
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Pensions Actuarial & Consulting 60,687 58,802
Pensions Administration 46,813 42,945
Pensions Investment Consulting 11,585 9,551
National Pension Trust ('NPT') 3,239 2,393
SIPP (1) 5,607 6,062
------------ ------------
Total 127,931 119,753
============ ============
(1) Self Invested Pensions (SIPP) business, incorporating both SIPP and SSAS products
4 Finance income and expense
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Interest income on bank deposits 3 8
Finance income 3 8
------------------------------------- ------------ ------------
Interest expense on bank loans 1,171 1,746
Other costs of borrowing 317 315
Interest on leases 340 288
Other finance expense 29 29
Finance expenses - trading 1,857 2,378
------------------------------------- ------------ ------------
Exceptional finance costs (note 2) 188 -
------------------------------------- ------------ ------------
Finance expenses 2,045 2,378
------------------------------------- ------------ ------------
Other costs of borrowing largely represent the amortisation expense of capitalised loan arrangement fees on the Group's bank debt.
5 Income tax expense
Recognised in the statement of comprehensive income
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Current tax expense
Current year 3,785 3,687
Adjustment in respect of prior year (112) (549)
---------------------------------------------------- ------------ ------------
Total current tax expense 3,673 3,138
Deferred tax (credit)/expense
Origination and reversal of temporary differences (1,266) 534
---------------------------------------------------- ------------ ------------
Total income tax expense 2,407 3,672
---------------------------------------------------- ------------ ------------
Year ended Year ended
31 March 31 March
2021 2020
GBP'000 GBP'000
Profit for the year 8,963 7,399
Total tax expense 2,407 3,672
--------------------------------------------------------------- ------------ ------------
Profit before income tax 11,370 11,071
--------------------------------------------------------------- ------------ ------------
Tax using the UK corporation tax rate of 19% (2019: 19%) 2,160 2,103
Non-deductible expenses 1,002 225
Other operating income not taxable (80) -
Fixed asset differences (85) -
Adjustment in respect of prior periods (112) (549)
Amounts credited directly to equity or otherwise transferred 3 146
Excess relief on exercise of share options (481) (7)
Effect of tax rate change - 1,754
--------------------------------------------------------------- ------------ ------------
Total tax expense 2,407 3,672
--------------------------------------------------------------- ------------ ------------
The standard rate of corporation tax in the UK was 19% (2020: 19%). Deferred tax assets and liabilities have been measured at the rate they are expected to unwind at, using a rate substantively enacted at 31 March 2021, which is not lower than 19% (2020: 19%). Deferred tax not recognised relates to finance expense losses in a prior year and their future recoverability is uncertain. At 31 March 2021 the total unrecognised deferred tax asset in respect of these losses was approximately GBP1.2m (2020: GBP1.2m).
The Chancellor has confirmed an increase in corporation tax from 19% to 25% in the March 2021 budget. This is to take effect from 1 April 2023. As this rate was substantively enacted post year end, no adjustment has been made to the deferred tax values in these financial statements. This will however affect deferred tax rates in future years.
6 Loans and borrowings
Due
Due within between Due after Sub-total
1 year (current) 1 and 2 years 2 years (non-current) Total
31 March 2021 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Drawn Revolving Credit Facility - 59,000 - 59,000 59,000
Capitalised debt arrangement fees - (124) - (124) (124)
Sub-total - 58,876 - 58,876 58,876
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Capitalised debt arrangement fees
shown as current assets on
balance sheet (186) - - - (186)
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Total (186) 58,876 - 58,876 58,690
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Due within Due
1 year between Due after Sub-total
(current) 1 and 2 years 2 years (non-current) Total
31 March 2020 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Drawn Revolving Credit Facility - - 70,500 70,500 70,500
Capitalised debt arrangement fees - (186) (128) (314) (314)
Sub-total - (186) 70,372 70,186 70,186
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Capitalised debt arrangement fees
shown as current assets on
balance sheet (186) - - - (186)
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
Total (186) (186) 70,372 70,186 70,000
------------------------------------ ------------------- ---------------- ----------- ---------------- ----------
The book value and fair value of loans and borrowings are not materially different.
Terms and debt repayment schedule
Amount Year of
31 March 2021 GBP'000 Currency Nominal interest rate maturity
Revolving Credit Facility - A 38,000 GBP 1.5% above LIBOR 2022
Revolving Credit Facility - B 21,000 GBP 1.5% above LIBOR 2022
----------------------------------- --------- ---------- ----------------------- ----------
Amount Nominal interest Year of
31 March 2020 GBP'000 Currency rate maturity
Revolving Credit Facility - A 38,000 GBP 1.75% above LIBOR 2022
Revolving Credit Facility - B 32,500 GBP 1.75% above LIBOR 2022
------------------------------- --------- ---------- ------------------- ----------
At 31 March 2021, the Group had drawn down GBP59,000,000 (2020: GBP70,500,000) of its GBP80,000,000 Revolving Credit Facility. The Revolving Credit Facility available to the Group was increased by GBP10,000,000 to GBP90,000,000 in June 2020 due to uncertainties arising from the Covid-19 pandemic, this additional GBP10,000,000 was not required and was therefore cancelled in March 2021.
The related fees for access to the facility are included in the consolidated statement of comprehensive income.
Capitalised loan-related costs are amortised over the life of the loan to which they relate.
Bank debt is secured by way of debentures in the Group companies which are obligors to the loans. These are XPS Reading Limited, XPS Consulting (Reading) Limited, XPS Pensions Consulting Limited (and its subsidiaries), Xafinity Pensions Consulting Limited (and its subsidiaries), Xafinity SIPP Services Limited, and XPS Holdings Limited (and its subsidiaries). The security is over all the assets of the companies which are obligors to the loans.
The Group is in the early stages of discussions on refinancing, as the current facility ends in December 2022. It is expected that this process will be completed by the next balance sheet date, and so the new facility will be based on a replacement rate for LIBOR. It is not yet known what that rate will be.
7 Earnings per share
31 March 31 March
2021 2020
GBP'000 GBP'000
Profit for the year 8,963 7,399
------------------------------------------------------ ---------- ----------
'000 '000
------------------------------------------------------ ---------- ----------
Weighted average number of ordinary shares in issue 204,392 203,301
Diluted weighted average number of ordinary shares 209,850 208,219
Basic earnings per share (pence) 4.4 3.6
Diluted earnings per share (pence) 4.3 3.6
------------------------------------------------------ ---------- ----------
The calculation of basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period.
Share awards were made to the Executive Board members and key management personnel in each year since the year ending 31 March 2017, these are subject to certain conditions, and each tranche of awards vest 3 years after the award date. Dividend yield shares relating to these awards will also be awarded upon vesting of the main awards. Further shares have been issued under SAYE share schemes in the years ending 31 March 2018 and 2019, these will vest in the years ending 31 March 2021 and 2022 respectively. These shares are reflected in the diluted number of shares and diluted earnings per share calculations.
Adjusted earnings per share
Total Total
31 March 31 March
2021 2020
GBP'000 GBP'000
Adjusted profit after tax (note 6) 20,488 20,083
Adjusted earnings per share (pence) 10.0 9.9
Diluted adjusted earnings per share (pence) 9.8 9.6
---------------------------------------------- ---------- ----------
8 Dividends
Amounts recognised as distributions to equity holders of the parent in the year
31 March 31 March
2021 2020
GBP'000 GBP'000
---------------------------------------------------------------------------------------------- ---------- ----------
Final dividend for the year ended 31 March 2020: 4.3p per share (2019: 4.3p per share) 8,795 8,738
---------------------------------------------------------------------------------------------- ---------- ----------
Interim dividend for the year ended 31 March 2021: 2.3p (2020: 2.3p) per ordinary share was
paid during the year 4,685 4,674
---------------------------------------------------------------------------------------------- ---------- ----------
13,480 13,412
---------------------------------------------------------------------------------------------- ---------- ----------
The recommended final dividend payable in respect of the year ended 31 March 2021 is GBP9,025,000 or 4.4p per share (2020: GBP8,800,000).
The proposed dividend has not been accrued as a liability as at 31 March 2021 as it is subject to approval at the Annual General Meeting.
31 March 31 March
2021 2020
GBP'000 GBP'000
------------------------------------------------------- ---------- ----------
Proposed final dividend for year ended 31 March 2021 9,025 8,835
------------------------------------------------------- ---------- ----------
The Trustee of the Xafinity Employee Benefit Trust has waived its entitlement to dividends.
The Company statement of changes in equity shows that the Company has positive reserves of GBP12,555,000. Therefore there are sufficient distributable reserves in XPS Pensions Group plc in order to pay the proposed final dividend.
9 Cautionary statement
This announcement may include statements that are forward-looking in nature. Forward-looking statements involve known and unknown risks, assumptions, uncertainties and other factors which may cause the actual results, performance or achievements of the Group to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. These forward-looking statements are made only as at the date of this announcement. Nothing in this announcement should be construed as a profit forecast. Except as required by applicable law, regulation or stock exchange rules, the Group undertakes no obligation to update, revise or change any forward-looking statements to reflect events or developments occurring after the date such statements are published.
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END
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June 24, 2021 02:00 ET (06:00 GMT)
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