In This Article:
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Revenue Growth: 23% increase, all organic.
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Adjusted EBITDA Growth: Up 37% year-on-year.
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Adjusted EPS Growth: Increased by 53% year-on-year.
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Adjusted EBITDA Margin: Improved by 2.8 percentage points to 27.2%.
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Leverage: Reduced from 1.55 times to 0.37 times.
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Interim Dividend: 3.7p, up 23% year-on-year.
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Total Operating Costs: Increased by 18%, below the 23% revenue growth.
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Adjusted Operating Cash Inflow: GBP 26.1 million, 84% OCF conversion.
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CapEx: Just over GBP 4 million, with full-year guidance between GBP 8 million to GBP 9 million.
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Net Debt: GBP 22.4 million as of September 30, 2024.
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Actuarial and Consulting Revenue Growth: 17% increase.
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Administration Revenue Growth: 40% increase.
Release Date: November 21, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
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XPS Pensions Group PLC (LSE:XPS) reported a strong half-year with a 23% revenue growth, driven by high client demand and regulatory changes.
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The company achieved a 37% increase in adjusted EBITDA and a 53% rise in adjusted EPS, benefiting from lower debt levels.
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XPS Pensions Group PLC has been recognized for its strong brand and culture, winning multiple awards and achieving entry into the FTSE 250.
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The company has made significant progress in transitioning administration clients onto its new Aurora platform, enhancing operational efficiency.
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XPS Pensions Group PLC has a strong focus on organic growth and has been successful in expanding its service offerings, particularly in high-margin areas like risk transfer work.
Negative Points
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Higher inflation has contributed to growth, but it also presents challenges in managing costs and maintaining margins.
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The company faces potential impacts from the national insurance increase, estimated to add GBP2.5 million in costs annually from FY26.
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There is a reliance on project work for revenue growth, which may not be sustainable in the long term as some projects, like McCloud remedy work, are one-off.
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The competitive landscape remains intense, with ongoing consolidation in the industry potentially affecting market dynamics.
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XPS Pensions Group PLC's expansion into the insurance consulting market is still in its early stages and may require significant investment and time to become a substantial revenue stream.
Q & A Highlights
Q: Can you provide the proportion of work that is time and materials versus recurring work, and the progress on client transfers to Aurora? A: Snehal Shah, CFO: The recurring work is on a fixed fee contract that increases with inflation, while project work like risk transfer is time and materials. This year, growth is mainly from project work. Benjamin Bramhall, Co-CEO: About 15% of our clients have moved to Aurora, with the transition expected to complete by FY27. Paul Cuff, Co-CEO: We've increased recruitment of junior staff, focusing on school leavers, which has been successful.