This article first appeared on GuruFocus .
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Revenue Growth:13% increase year-on-year.
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Adjusted EBITDA Growth:9% increase, with underlying growth of 15% when normalized for one-off projects and acquisitions.
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EPS Performance:Adjusted diluted EPS of 22.3p, up 8% and 4% ahead of consensus.
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Dividend:Final dividend of 9.1p, up 11% year-on-year, making the full-year dividend 13.2p, also up 11%.
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Advisory Revenue Growth:20% year-on-year, with 8% organic growth excluding acquisitions.
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Administration Revenue Growth:5% growth, 18% when excluding one-off projects.
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Operational Cash Flow Conversion:91% with future guidance between 90% to 95%.
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Net Debt:GBP 46.2 million with a covenant leverage of 0.64 times.
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CapEx Guidance for FY27:GBP 12 million to GBP 13 million.
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Staff Costs Increase:18% increase, with 9% due to headcount growth.
Release Date: June 18, 2026
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 13% revenue growth and a 9% increase in adjusted EBITDA, surpassing market expectations by nearly 5% at the EPS level.
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The company achieved a 15% growth in EBITDA when normalizing for one-off projects and acquisitions, demonstrating strong underlying business performance.
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XPS Pensions Group PLC successfully integrated the Polaris acquisition, expanding its addressable market and opening up wider opportunities.
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The company won four major industry awards, enhancing its brand reputation across various business lines.
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XPS Pensions Group PLC maintained a healthy culture, evidenced by a high employee Net Promoter Score and recognition as the best medium-sized firm in the UK at the UK Business Culture Awards.
Negative Points
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The increase in National Insurance (NI) costs was significant, impacting the company's financials.
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Despite strong performance, the company faces challenges with the insurance consulting team, which remains relatively small and may require scaling up.
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The market is dominated by small pension schemes, which may lead to a reduction in the number of schemes over time as they buy out, potentially impacting future revenue streams.
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The company anticipates a slowdown in organic growth rates due to decreasing inflation and the maturation of high-margin businesses.
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XPS Pensions Group PLC's leverage ratio and financial firepower for M&A are constrained by the need to maintain a balance between debt and equity.
Q & A Highlights
Q: The opportunities you mentioned on the pension surplus work that's about to kick off is when do you think the bulk of the work happens? Also, how well resourced are you to take on this work, and what are your thoughts on M&A in the insurance consulting market? A: The surplus regulations provide a gentle tailwind rather than a big bang moment. Draft regulations are available, and clients are considering them, with some ready to release surplus by 2027. Regarding resourcing, staff turnover is just over 10%, and we recruit into entry-level roles, expanding channels like apprenticeships. On M&A, we are interested in acquisitions that would accelerate us into wider markets, particularly in insurance consulting, to enhance our scale and credibility.
Q: Can you talk about the headwinds and tailwinds for margin improvement and your available firepower for M&A? A: The Aurora development will lead to OpEx savings and increased efficiency in our administration business. While a mix of business could lead to margin contraction, consensus shows improvements year-on-year. For M&A, we have financial firepower, targeting one to one and a half times leverage, and are focused on bolt-ons that expand capabilities, particularly in life and general insurance consulting.
Q: In your conversations with clients, how does AI come up, and is there an impact on pricing expectations? How do you compare with the big three players in AI investment? A: Most client conversations about AI focus on safety, data processing, and GDPR compliance. The pensions regulator has emphasized governance. We haven't seen pricing pressure yet, as automation is viewed positively. Regarding competitors, we believe we are ahead, with tangible AI tools that have impressed clients.
Q: Can you discuss the revenue achieved with Polaris in FY26 and the pipeline for insurance consulting revenue? Also, what excites you about FY27, and what should we expect for ShareCount? A: Polaris revenue was about GBP16 million, slightly above expectations. A significant project with a bulk annuity provider demonstrated revenue synergy. The pipeline for insurance consulting is healthy, with renewed supplier agreements and increased demand. For FY27, we're excited about surplus and run-on opportunities. ShareCount will be managed to protect against dilution, with capital deployment focused on M&A.
Q: On the medium-term outlook, is there an international expansion plan, and is there a pivot towards consulting more generally? A: There is no intentional international expansion in pensions, but in financial services consulting, there is potential for international growth. While we are broadening our services, much of it remains actuarial consulting work, particularly for insurance companies.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
