We do the
right thing
Annual Report and Accounts 2022
XPS Pensions Group Annual Report and Accounts 2022
Contents
Strategic Report
Overview 2
Investment case 5
Business model 6
Market overview 10
Our strategy 12
Co-Chief Executives’ review 14
Sustainability 22
Chief Financial Ocer’s review 36
Task Force on Climate-related
Financial Disclosures 40
Non-Financial Information Statement 43
Principal Risks and Uncertainties 44
Governance
Chairman’s governance report 50
Board of Directors 52
Group Governance at a Glance 54
Board and Committee Composition
and Operation 54
Division of Responsibilities 57
Engaging with our stakeholders 59
Board eectiveness 61
Nomination Committee 62
Audit & Risk Committee 64
Sustainability Committee 68
Directors’ remuneration report 70
Directors’ report 91
Directors’ responsibility statement 95
Financial Statements
Independent Auditor’s Report 96
Consolidated Statement
of Comprehensive Income 103
Consolidated Statement
of Financial Position 104
Consolidated Statement
of Changes in Equity 105
Consolidated Statement of Cash Flows 106
Notes to the Consolidated
Financial Statements 107
Statement of Financial Position
– Company 142
Statement of Changes in Equity
– Company 143
Statement of Cash Flows – Company 144
Notes to the Financial Statements
– Company 145
Company Information 149
1XPS Pensions Group Annual Report 2022
Strategic report
We exist to shape and support
safe, robust and
well-understood
pension schemes
for the benefit of
people and society.
XPS Pensions Group Annual Report 20222
What we want to achieve
We are a forward-looking, ambitious business.
We are a leading independent pensions and
administration consulting firm – the best place for
people to work, and the best partner for our clients.
Our values
We are
ambitious
We do the
right thing
We are
agile
We are
helpful
We are
experts
Our strategic priorities
Regulatory
change
Expand
services
Grow
market share
Mergers &
acquisitions
Our sustainability framework focuses on...
Governance
Our
employees
Our
clients
Our
communities
Our
environment
Read more on page 24
Read more on page 12
Read more on page 22
3XPS Pensions Group Annual Report 2022
Strategic report
Financial highlights Operational highlights
• Significant new client wins including
being appointed pensions advisory
partner by BT Group plc
• Partnership announced with abrdn plc
tolaunch a UK DB master trust
• Acquisition of Michael J Field Consulting
Actuaries to expand our SIP business
• Investment in developing our proprietary
administration platform to drive
operational eciencies in the future
• Developed our services including
member analytics, GMP, trustee
governance / secretarial services,
risktransfer
• Winner of Actuarial Consulting Firm of
the Year and Investment Consulting Firm
of the Year at the Professional Pensions
UK Pensions Awards 2021
• Strong client survey results with 93%
ofclients ‘satisfied’ or better
• Excellent sta survey results with 95%
ofsta agreeing or strongly agreeing
that XPS is a good place to work
• We became carbon neutral and continued
to be a signatory to the Stewardship
Code for our investment advice
+8%
FY 2022 £138.6m
FY 2022 £34.1m
FY 2022 10.2p
FY 2022 1,442
FY 2022 7.2p
FY 2022 £54.6m
FY 2022 £16.9m
FY 2022 4.6p
FY 2021 £127.9m
FY 2021 £32m
FY 2021 9.8p
FY 2021 1,325
FY 2021 6.7p
FY 2021 £50.4m
FY 2021 £11.4m
FY 2021 4.4p
Revenue
+7%
Adjusted EBITDA
1
+4%
Adjusted diluted earnings per share
2
+9%
FTE Employees
3
+7%
Proposed full year dividend
+8%
Net debt
4
+48%
Profit before tax
+5%
Basic EPS
1 Adjusted EBITDA excludes the impact of share-based payment costs, fair
value adjustments of contingent consideration, and exceptional costs.
2 Adjusted diluted earnings per share from continuing operations. It
is based on adjusted profit after tax, which excludes the impact of
amortisation of intangible assets, share-based payment costs, fair value
adjustment of contingent consideration, exceptional costs, and the tax
impact of these items. See Note 6 in the financial statements.
3 As at year end.
4 Excluding lease liabilities.
XPS Pensions Group Annual Report 20224
At a glance
Scale, agility and
expertise
Pensions
We provide pragmatic advice that addresses
the specific and often complex challenges
faced by UK pension schemes and their
corporate sponsors.
www.xpsgroup.com/what-we-do/
pensions-advisory/
Investment
We provide clear and independent
investment advice which we help clients
implement quickly and effectively.
www.xpsgroup.com/what-we-do/
investment-consulting/
Administration
Award winning, client and member focused
pension scheme administration.
www.xpsgroup.com/what-we-do/
administration/
National Pension Trust
The National Pension Trust (NPT) is a
multi-employer defined contribution master
trust offering members full retirement
flexibilities. Economies of scale and cutting
edge technology means charges are low for
members and there are no ongoing costs
foremployers.
www.nationalpensiontrust.com
XPS Pensions Group is a leading
pensions consultancy and administrator
in the UK. We have benefits of scale
– we have a breadth of experience to
draw on and can invest in solutions
for the benefit of our clients – yet we
remain agile, able to respond quickly
asthe world around our clients shifts.
As the only UK pensions specialist listed
on the London Stock Exchange Main
Market, we have the flexibility to think
and act dierently.
Employees
1,500+
Pension scheme clients
>1,500
Our locations
UK Locations
16
Our 16 locations give us
access to staff, expertise
and clients across the UK.
What we do Our services
Self Invested Pensions
XPS Self Invested Pensions is an award
winning SIPP and SSAS pension provider,
trustee and administrator, which has
specialised in self invested pensions for
more than 40 years.
www.xpsselfinvestedpensions.com
5XPS Pensions Group Annual Report 2022
Strategic report
Investment case
Top ten clients represent 16%
ofrevenue
1,500+
clients
Well positioned in a sustainable market with favourable
market trends
There are c.£2trillion of liabilities of private UK defined benefit pension schemes
and a rapidly growing defined contribution market. Regulatory developments
are driving increased client activity and demand for our services.
Read more on page 10
Track record of positive financial performance and
dividendyield
XPS has delivered year-on-year revenue growth, through a range of
macroeconomic conditions, for the past five years since listing on the London
Stock Exchange.
Read more on page 36
Trusted expertise and highly engaged colleagues
The outstanding expertise and client service focus of our colleagues is widely
relied upon and highly valued by our clients. We have high client satisfaction
scores and our people think XPS is a great place to work.
Read more on page 26
Non-cyclical and recurring revenues
Our services are typically provided on the basis of an open-ended engagement with
clients and are compliance-driven to a statutory timetable. They are therefore required
in all parts of the economic cycle. We have a high degree of visibility of our revenue.
Read more on page 11
Opportunities for earnings enhancing M&A and scale up
We have a proven track record of successful earnings enhancing M&A
which demonstrates our ability to execute deals that are aligned to our
corporate strategy.
Read more on page 14
Strong cash conversion and growing dividends
The Group has a robust balance sheet, consistently high cash conversion and
has continued to pay two-thirds of adjusted profit in dividends each year
since listing.
Read more on page 36
Diversified and stable client base
We have long-standing relationships with a large and diverse client base,
consisting of over 1,500 clients. We have a strong brand and have won multiple
industry awards for our client service.
Read more on page 14
£2bn+
size of annual fee market
23%
90%+
5
96%
Long dated liabilities in UK defined
benefit schemes
Revenue CAGR over the last
fiveyears
Repeat recurring revenue across
thebusiness
Acquisitions since listing in 2017
95%
of our people think XPS is a great
place to work
Why invest
in XPS?
Adjusted operating cash conversion
XPS Pensions Group Annual Report 20226
Business model
Our mission
To be a sustainable business that allows us to build long-term relationships with our clients,
oers a great place to work for our people and delivers value to all our stakeholders.
Inputs
Our people
Experts in their fields, our people drive
the business. They’re the innovators, the
problem-solvers, the forward-thinkers
andthat’s why we invest in them
Our culture
Employee-centric; inclusive; friendly;
meritocratic – our culture empowers
our business
Our technology
We invest in technology to deliver our
services eciently, and to bring clarity
andunderstanding to the complex
problems we help to solve
Full service,
independent oering
Large, highly visible
and growing workplace
pensions market
Non-Cyclical and recurring
revenues + better outcomes for
pension scheme members
Robust and
predictable
growth
XPS Pensions Group is a leading pensions consulting and administration business
focused on UK pension schemes.
7XPS Pensions Group Annual Report 2022
Strategic report
Outputs
Blue-chip client base
High levels of service
Innovative solutions
Thought leadership
Strong award-winning brand
Value for all stakeholders
Clients
•
Specialist insight and expertise leading
tobetter outcomes for all stakeholders
• High-quality service and tailored solutions
• Value for money
Employees
•
Stimulating working environment and
attractive career prospects
• First-class training and support towards
professional qualifications
• Competitive remuneration and benefits
Shareholders
•
Track record of growing revenues, profits
and dividends – more than £57 million
paidin dividends since listing in 2017
• Non-cyclical demand for services
• Highly predictable revenues
• Strong cash generation
Other stakeholders
•
Communities
• Employee involvement in fundraising
andvolunteering
• Positive impact on communities through
supporting local and national charities
• Regulators and suppliers
• Establishing open and fair relationships
• Regular engagement and communication
XPS Pensions Group Annual Report 20228
Business model continued
Building on our
expertise...
Since we appointed XPS as our
pensions partner, it’s developed an
online platform that enables us to truly
work as an extension of each other’s
team. This sharing of technology,
knowledge, training and infrastructure
is a novel way of working together
which we hadn’t seen proposed before
by any other consultancy.”
Shan Abdullah,
Senior Finance Lead, Pensions Risk, BT Group plc
9XPS Pensions Group Annual Report 2022
Strategic report
Creating an “industry-first” advisory
partnership model with BT Group plc
In 2021 BT wanted to completely change the way it worked with its advisers.
We met with BT to understand its needs in detail and it was clear that
the traditional advisory model would not work for it, so we reinvented
our advisory model to make XPS virtually part of the BT in-house team.
Wedidthis by giving BT:
Access to staff
We deployed XPS
staff across grades
to provide BT
with instant access
to resource, as if
they are part of
the BT team.
Access to research
We provide direct
access to our
in-house pensions,
regulatory and
investment research
capabilities.
Access to
modelling tools
We have made our
internal actuarial,
benefit and
investment models
available to the
BT team to do its
ownanalysis.
Access to advice
We provide BT
with focused
adviceit can
rely on – the
timing and scope
are agreed with its
in-house team.
...delivering at
scale
XPS Pensions Group Annual Report 202210
Market overview
At XPS, we cover all things workplace pensions related. We help trustees and employers
run pension schemes for the benefit of both current and former employees. We provide
advice to trustees and corporate sponsors, and we support scheme members in a way
that is relevant, innovative and easily digestible. We deliver services and solutions that
are designed to protect the value of pension schemes. Above all, we work to ensure all
members receive their pensions in full.
Large market
Of the £2.7 trillion private
sector market, defined benefit
(DB) schemes, where employers
promise members a specified
pension on retirement, account for
£2.3trillion. Defined contribution
(DC) schemes, where employees
and employers’ contributions are
invested with the proceeds used
to buy a pension and/or other
benefits at retirement, account
for the remaining £0.5 trillion.
DB schemes are rarely offered to
employees these days; however,
they will still require advice
and services for many years to
come to ensure good outcomes
for members who have built
up promises in these schemes.
DCrepresents the future.
In terms of fee market size across
workplace pensions advice and
administration, covering both DB
and DC, this is estimated at over
£2billion per annum.
DB or DC
DB schemes were workplace
pensions’ vehicle of choice until
the mid-1990s. By this point,
many established schemes had
grown considerably in size, both
in terms of assets and the pension
promises made by employers.
Atthe same time, new regulations
were adding to the funding
and administrative demands on
employers. Retrospective changes
were made that gave members
more protection at a big cost to
employers – for example, in the
early 1990s it became mandatory
for pension promises to be inflation
linked all the way to retirement.
Increasingly deemed too expensive
by employers, DB schemes began
to close firstly to new joiners in the
late 1990s and then a decade or
so later to the further build-up of
benefits for existing members.
Today, half of all private sector DB
schemes remain open to building
benefits, while an even smaller
proportion still allow new joiners.
The run-off of these schemes will
happen over a very long period
of time; some members will still
be receiving benefits in 50 to 60
years’ time.
As DB schemes closed to the
build-up of employees’ pensions,
DC schemes opened. Essentially
tax-efficient savings accounts
funded by contributions that
will one day provide long-term
income streams, DC transfers the
risk associated with providing
retirement income away from
the employer to the employee.
They do not transfer away the
responsibilities of employers
and trustees. As with DB, DC
schemes still need to be safely and
securely administered. Trustees
still need advice. Members still
have to be engaged and informed,
arguably more so as retirement
income is dependent on the size
of contributions and investment
performance, as opposed to the
promises ofemployers.
Scale, agility and
expertise
11XPS Pensions Group Annual Report 2022
Strategic report
Long dated
Whether DB or DC, the ultimate
goal of workplace pensions
remains the same – to provide
members with the optimal financial
outcome on retirement. While each
pension scheme is different and
requires advice that is relevant
to it, for as long as a scheme
exists, it will continue to require
actuaries, such as XPS, and the
services they provide, to navigate
the ever-changing regulatory,
governance and market landscape
so that members receive the
retirement income they expect.
The market for the provision of
workplace pensions services to
both trustees and companies is
therefore long dated.
Highly visible
Whatever the prevailing macro
environment, pension schemes
require up-to-date advice and
solutions, and there are core
compliance requirements they
must adhere to on an ongoing
basis. This generates highly visible
and recurring revenue streams – for
example c.90% of XPS’s revenues
are repeat/recurring. As a result,
the workplace pensions market
is largely independent of the
economic cycle and, by definition,
is defensive.
Growing
Defensive does not mean the
c. £2billion fee market, which
typically grows each year at
least at the rate of inflation, lacks
growth drivers. Long term growth
drivers include:
• De-risking schemes via buy-ins
and buy-outs;
• master trusts/consolidation
vehicles, that enable smaller
schemes to benefit from
economies of scale;
• ongoing regulatory change,
requiring new advice to be
given and new solutions to
bedeveloped;
• administration outsourcing, that
provides a solution for internally
administered schemes weighed
down by an ever-complex
regulatory landscape; and
Workplace pensions market
innumbers
Overall value in terms of assets
1
£2.7tn
Annual fee market value
3
>£2bn
5,220
Number of DB schemes
2
£80bn
Size range of DB schemes Private
sector/PPF eligible - £80bn to less
than £1m
1,370
Size of DC market - Number of single
trust DC schemes
4
23.4m
Number of members in DC
schemes in private sector
occupational pension
1,4
Sources:
1 https://www.ons.gov.uk/economy/investmentspensionsandtrusts/bulletins/
fundedoccupationalpensionschemesintheuk/july2021toseptember2021
2 https://www.ppf.co.uk/sites/default/files/2021-12/PPF_PurpleBook_2021.pdf
3 Professional Pensions.
4 DC trust: scheme return data 2021 to 2022 | The Pensions Regulator https://
www.thepensionsregulator.gov.uk/en/document-library/research-and-
analysis/dc-trust-scheme-return-data-2021-2022
• ESG-overlayed investment
advice, that is becoming more
and more important.
So too is the competitive landscape
of the market. Below the three
big players, for whom workplace
pensions are just one area of
business, are more agile mid-tier
players, such as XPS, for whom
workplace pensions represent near
100% of business activities.
Significant room remains for market
share growth for mid-tier firms,
either organically or through
consolidation opportunities.
Societally important
The market exists to help pension
schemes deliver promises made
and to give underlying members
financial security in retirement.
Italso has a role to play in promoting
sustainable/responsible business
practices via the trillions of assets
under management/advisory.
Pensions and ESG represent
two of the most pressing issues
confronting society today. The
workplace pensions market can
positively impact both of these.
XPS Pensions Group Annual Report 202212
Our strategy
Our
strategic priorities
We are a forward-looking and ambitious business.
Our objective is to be the pre-eminent UK focused pensions consulting and administration firm. One that
offers a clearly differentiated alternative to the Big 3 – able to operate at scale and yet agile enough to
provide clients with superior service at better value than our larger rivals.
Our strategy is to deliver our objective, while remaining focused on achieving profitable growth, and is
centred around four key pillars.
Regulatory change
Whenever there is regulatory
change, our clients need bespoke
advice and support. Periods of
significant regulatory upheaval
are therefore drivers of market
growth. Today, more regulatory
change is taking place, or is in the
pipeline, than at any time in the
past 20 years.
Expand services
We provide a full range of
services that pension trustees and
corporate sponsors need. But
for many clients, we only provide
one service and could deliver
more. Expanding our current
service offerings to existing
clients represents a significant
opportunity, as does developing
new services that help deliver
better outcomes for members.
We also have strong analytical
and administration skills that can
be deployed more widely than
the pensions industry and this
presents an opportunity for us
togrow and diversify.
Progress
During the year, further mandates were won from a number of large schemes for our end to
end GMP equalisation solution. We helped our clients to adapt to the Pension Schemes Act
2021 and we continued to develop solutions in line with the evolving funding regulations.
Our market leading approach on GMP won us wide ranging mandates including on some
large schemes outside of our existing client portfolio.
Progress
We continued to add new solutions to our offering, including Member Analytics and
Mortality Analytics tools. We also invested in our Trustee Secretarial Services Unit and
appointed a Head of Trustee and Governance Services. In March 2022, we announced
a strategic alliance with abrdn plc to launch a UK DB master trust that will deliver a
one-stop shop solution for small- and medium-sized legacy DB pension schemes,
generate cost savings and improve governance and member benefit security.
Priorities for FY 2023
Advise and support client response to
recent regulatory changes such as the
Pension Schemes Act 2021. Ensure clients
are prepared for upcoming New Funding
Code (expected end-2022) and Single
Code of Practice. Continue roll-out of
GMP equalisation solution.
Key risks
• Third party supplier/outsourcing
• Strategy
• Errors
• Theft and fraud
Priorities for FY 2023
Launch UK DB master trust with abrdn plc
Continued growth of our de-risking
practice including delivering large
insurance transactions
Continued growth in Trustee
Governance Services
National Pension Trust being introduced
across our client base
Key risks
• Strategic planning and execution
• Financial performance
• Information/cyber security
• Sta/human resources
• Client engagement
• Client engagement
• Business conduct and reputation
140
Phase 1 GMP equalisation
reports issued
£5.1m
Revenue from GMP equalisation work
212
Member analytics mandates
inthe year
£1.3bn
NPT assets under management
13XPS Pensions Group Annual Report 2022
Grow market share
We seek to grow our business
by winning ‘new logo’ clients
– those pension schemes and
sponsors with whom we have no
existing relationship.
Progress
Our Market Force Initiative generated multiple new business leads from the large
pension schemes targeted. Several of these were converted during the year in both
advisory and pension administration including Wood Group, Mitchells & Butlers and
the BT Group.
Priorities for FY 2023
Continue roll-out of Market Force
Initiative to grow and convert new
business pipeline.
Key risks
• Strategy
• Errors
• Third party supplier/outsourcing
• Strategic planning and execution
8%
Organic revenue growth
47
Client schemes with over £1bn assets
Mergers and Acquisitions
We operate in a fragmented
market. Being one of the
largest mid-tier independent
companies in the sector, there
is an opportunity to grow
our market share through the
acquisition of businesses that
can boost our scale and capability
in certain specialist areas.
Progress
Acquisition of specialist SIPP and SSAS provider, Michael J Field Consulting Actuaries,
which complements our existing capabilities and expands the reach of our offering to
awider base of clients and financial advisers.
Priorities for FY 2023
Continue to evaluate potential
acquisitions that meet investment and
strategic criteria.
Key risks
• Financial performance
• Business conduct and reputation
4
Bolt on transactions in the last 4 years
£14m
Earnings enhancing capital deployed
Strategic report
XPS Pensions Group Annual Report 202214
Co-Chief Executives’ review
Delivering long-term
sustainable
growth
As I look back over the last five years, I
am extremely proud of how far we have
come, but I’m even more excited about
the future. We are a market leading firm
with great solutions for clients, andhave
created a really strong platform for
growth for the benefit of our people
andall our stakeholders.”
Paul Cu,
Co-Chief Executive Ocer
Five years as a publicly traded
company – five years of growth
The increase in revenue this year to
£139 million represents a significant
2.7x increase in the size of our
business and the highest level
of year on year organic growth
since our public listing in 2017. We
were appointed pensions advisory
partner by BT Group plc, the UK’s
largest corporate pension scheme;
we developed our partnership
with abrdn plc to launch a UK
defined benefit (DB) master
trust; we became carbon neutral
across the entire value chain; we
acquired Michael J Field Consulting
Actuaries – the year under
review is not short of significant
corporatemilestones.
There was another major
achievement during the year
though, one that was neither
strategic, financial nor operational:
February 2022 marked the
five-year anniversary of our
admission to the premium segment
of the London Stock Exchange. As
with all anniversaries, this provides
an opportunity to reflect on how
far we have come since listing.
On admission, we became
the UK’s only publicly listed
pensions actuarial, consulting and
administration company. We still
are today. What has changed is the
scale and breadth of our business.
In 2017, the Group had 450
employees, generated revenues
and adjusted EBITDA of £52 million
and £17.5 million respectively
and had a client base of c. 400.
Five years on, XPS employs
1,500 people, is reporting annual
revenues and adjusted EBITDA
of £138.6 million and £34.1million
We are focused on improving profitability and delivering long-term sustainable growth
for our shareholders whilst taking into account the interests of all stakeholders. We
have continued to make progress across our four strategic pillars and are focusing
on building XPS into the pre-eminent independent pensions actuarial, consulting and
administration business we set out to build.
14
15XPS Pensions Group Annual Report 2022
Strategic report
We continue to deliver strong organic
revenue growth, with FY 2022 showing
the highest operating result since our
listing in 2017 reflecting our market
position as a high-quality provider
inthepensions market.”
Ben Bramhall,
Co-Chief Executive Ocer
respectively and has more than
doubled the number of clients
to over 1,500. Furthermore, our
client base now includes the likes
of BT Group, evidence that, after a
period of investment, XPS has the
platform and profile to attract and
service the largest mandates.
In our 2017 Annual Report, we
stated that being publicly owned
would give “us access to capital
to pursue our strategic vision of
becoming the pre-eminent mid-tier
firm, whether through acquisitions
or other forms of investment”.
Inline with this, growth over the
last five years has been generated
both via acquisition, most notably
through the Punter Southall merger
in 2018, and organically. This year’s
c. 8% increase in organic revenues
is the highest level of organic
growth we have reported since
listing. Our programme of investing
for the future is delivering, and this
year’s adjusted diluted EPS is 52%
above that when we listed.
As with the previous 12 months,
growth in FY 2022 was achieved
against the backdrop of the
pandemic. This is testimony to the
strength of our end markets, which
are largely independent of the
economic cycle, and the resilience
of our business model, which
revolves around the provision of
essential non-discretionary services
to pension scheme sponsors and
trustees. Strong end markets,
resilient business models, innovative
solutions, and proprietary technology
are not enough though. The results
we are reporting today would
not have been possible without
the commitment, support and
professionalism of our people, all
of whom work tirelessly to deliver
better outcomes for our clients
andpension scheme members.
This is our societal purpose: helping
to make pension schemes safe
and secure for the members so
that they can rely on them for
financial security in later life. It is
because of our people that we can
achievethis.
Financial performance:
highest organic revenue
growth since listing
With total Group revenues up
8.4% to £138.6 million (FY 2021:
£127.9million), the year ended
31March 2022 saw us maintain our
track record of reporting at least
mid-single digit revenue growth
every year since our listing in 2017.
Within Advisory (Pensions
Actuarial and Consulting and
Pensions Investment Consulting),
revenues grew 7.1% to £77.4 million,
while Administration revenues were
up 8.5% to £50.8 million.
XPS Pensions Group Annual Report 202216
Co-Chief Executives’ review continued
Financial performance: highest
organic revenue growth since
listing continued
Pensions Actuarial and Consulting
grew revenues 4.9% to £63.7million
(FY 2021: £60.7million) thanks to
further GMP equalisation work and
new client mandates, including
Mitchells & Butlers and Michelin,
aswell as BT Group.
New client wins and continued
demand for support and advice
from our existing customer
base drove an 18.1% increase in
revenues in Pensions Investment
Consulting to £13.7 million (FY
2021: £11.6 million). The division
continues to benefit from the
CMA review into the way that
some of the biggest firms in our
market recommended their own
fiduciary management products
to their clients, the outcome of
which has been a requirement for
independent advice and oversight
to be obtained from firms like ours.
This has created wide-ranging
opportunities which we continue
to capitalise on. We are also seeing
increased demand for ESG-aligned
investment advice and expect this
to gather pace in the years ahead.
Pensions Administration revenues
grew 8.5% to £50.8 million (FY 2021:
£46.8 million), helped by new client
wins. We see significant scope
to secure further outsourcing
mandates and so we continue to
invest in and develop the platform.
Momentum at National Pension
Trust (NPT), our defined contribution
(DC) master trust, continues
to build with assets under
management growing 22% to
over £1.3 billion. As with last year,
growth was driven by transfers
into the trust and by annual
contributions from active members.
We see exciting opportunities
for NPT, which delivers bespoke
solutions for clients via a common
platform. Interms of investment
returns, NPT’s default investment
strategy was the year’s top performer
in themaster trust universe.
The number of clients in our SIP
division grew during the year
driving a 9% growth in revenues.
The recent Michael J Field
acquisition strengthens our SIP
platform and is expected to help
drive organic growth in the years
ahead. Almost all of this year’s 8%
revenue growth was generated
organically – our highest rate of
organic growth in the five years
since we listed. This record growth
rate underpins our belief that,
following a capital-intensive period,
the benefits of the investments
we have made are increasingly
driving financial performance.
For example, our programme of
investing in people, technology
and acquisitions has historically
resulted in revenue growth
outpacing earnings. Now that we
have a scalable and highly cash-
generative platform in place that
wins major mandates, we have
significantly narrowed the historical
revenue/earnings gap this year
and in future expect it to improve
further. Adjusted EBITDA for the
year increased 7% to £34.1million
(FY2021: £32.0 million), while
statutory profit before tax rose
48% to £16.9million (FY 2021:
£11.4million) and adjusted
diluted EPS rose 4% to 10.2p
(FY2021: 9.8p).
As with previous years, the strong
financial performance we are
reporting today is a reflection
of the structurally driven end
markets in which we operate
and the four-pillared strategy
weareimplementing.
17XPS Pensions Group Annual Report 2022
Strategic report
The Group continues to win significant
blue-chip clients. Landmark appointments
such as adviser to BT Group plc are
testament to the strength of the XPS
brand and our drive to continually
generate innovative ideas tohelp
our clients.
Paul Cu,
Co-Chief Executive Ocer
During the year we made significant
investments in technology,
particularly in our administration
business. We acquired proprietary
technology that we will develop
during FY 2023 and deploy in
the years beyond. The focus of
this investment is to continually
improve client service and drive
efficiency in our business. We
are also focused on developing
online portals that will improve
the experience of members of our
pension scheme clients.
Counter-cyclical
and growing markets
Our market is the provision of
consulting and administration
services to DB pension schemes,
the liabilities of which run off over
many decades. In the DC space,
we also provide administration
and consulting services, alongside
our own master trust solution. The
fee market in which we operate
is large at over £2 billion and
growing at a rate of between 3%
and 4% per annum. Growth comes
from the expansion of services to
existing clients, either in response
to regulatory change or through
cross-selling, net new client wins
and inflation-linked fees.
Whether small changes in, for
example, tax rules or more
fundamental changes such as
a new funding regime for DB
schemes, clients require bespoke
advice and guidance on how
change affects them. Periods of
significant regulatory upheaval are
therefore drivers of market growth.
Today, in response to corporate
scandals, such as BHS and Carillion,
more regulatory change is taking
place or is in the pipeline than
at any time in the past 20 years.
Pension schemes have risen up the
corporate agenda and with them
the need for the specialist and
non-discretionary services XPS
Group provides. A glance at current
regulatory drivers highlights the
level of change at play:
• the Pension Schemes Act 2021
– focuses on how corporates
finance their arrangements
and how schemes are treated
following M&A;
• New Funding Code (expected
end of 2022) – will impact how
pension schemes are funded;
• GMP equalisation – November
2020’s ruling that companies
must correct the unequal
treatment of men and women in
relation to a small (but overlooked)
part of 80s/90s pension schemes
continues to generate work that
will take years to complete;
• Single Code of Practice (upcoming)
– will likely increase trustees’
governance requirements;
• Task Force on Climate-related
Financial Disclosures (TCFD)
– pension schemes are having
to satisfy new requirements
focused on improving the quality
of governance and reporting in
respect of climate-related risks
and opportunities; and
• CMA Review – continues
to provide tailwinds via
the independent advice
recommendation.
The ever-changing regulatory
landscape not only increases the
scope of advice and services we
provide to our existing clients, it
also generates opportunities to
win outsourcing mandates from
internally administered schemes.
Regulation is making pension
administration more and more
complex for in-house teams, so too
are cyber security and GDPR.
Outsourcing, which involves the
transfer of schemes and teams
to businesses like XPS, provides
a solution. We are a recognised
leader in this area – at XPS,
we estimate we have executed
around half of all administration
outsourcings in the last decade.
Regulatory change, particularly
with regards to governance
arrangements, is also driving
growth in the DC market. XPS
Group helps in two ways: we
work with trustees to improve
governance through our growing
DC consulting practice; and we
offer a solution via NPT, our own
consolidation vehicle.
Progress across
our four strategic pillars
It is one thing to operate in a large,
long dated, and growing market,
but another to maximise the
opportunity. We strive to achieve
this by implementing a strategy that
is centred around four key pillars:
Regulatory change as a driver
of activity: by leveraging our
expertise, we offer clients bespoke
advice and support whenever
there is regulatory change. We are
doing this in the GMP equalisation
space. Here our market-leading,
proportionate, and pragmatic
approach won mandates from a
number of large schemes during
the year, both from our own clients
and from those of other firms.
As well as growing our revenues,
winning work such as this generates
cross-selling opportunities.
XPS Pensions Group Annual Report 202218
Co-Chief Executives’ review continued
Progress across our four strategic
pillars continued
Growth through expanding
services: the year under review
saw us add to our offering. We
have added Member Analytics,
which analyses demographics and
behaviours and how these can best
be served, and Covid-19 Analytics,
which provides market-leading
analysis on the long-term impact
of the pandemic. In addition, we
formally established a Trustee
Governance offering, which takes
on pension scheme governance
and management, and won
competitively tendered new
appointments in the market. In
addition, we are now providing DC
consulting services to a growing
number of clients, and we continue
to invest in additional functionality
in our Radar risk analysis software.
We have also added two senior
hires to our growing risk transfer
practice, which is an area of
the market that we expect to
growsignificantly.
In March 2022, we announced a
strategic alliance with abrdn plc to
launch a UK DB master trust in Q2
2022. The master trust is believed
to be the first developed and
launched jointly by an independent
pensions consultancy and a leading
global asset manager. It will deliver
a one-stop-shop solution covering
all the services required to run
small and medium-sized legacy DB
pension schemes and is expected
to generate cost savings and
improve governance and member
benefit security.
Growing market share: Based
on full year revenues of £138.6
million, XPS Group’s market share
stands at 6-7%. Considerable
room remains for further growth.
Maintaining a healthy pipeline of
business opportunities across all
service lines is key and our “Market
Force” initiative generated multiple
new business leads from the large
pension schemes targeted. Several
of these were converted during
the year in both Advisory and
PensionsAdministration.
Growth through M&A: the
market in which we operate is
fragmented. Significant scope
remains to grow market share via
acquisition. We have a long track
record of successfully integrating
new businesses, including
Punter Southall in 2018 and the
smaller bolt-on acquisitions of
Kier Pensions Unit, Trigon and
Royal London Corporate Pension
Services that followed. All of these
were executed with high employee
and client retention. We are
constantly evaluating businesses
that match our key investment
criteria, including cultural alignment,
capability enhancement and
cross-selling opportunities. One
such business was acquired in the
second half of the year – Michael
J Field Consulting Actuaries, a
specialist SIPP and SSAS provider
that complements our existing
capabilities and expands the reach
of our offering to a wider base of
clients and financial advisers.
To capitalise on the opportunities
around us, we continue to hire more
people. The recruitment market is
competitive but our reputation as
an employee centric business with a
strong focus on culture means we are
well placed.”
Ben Bramhall,
Co-Chief Executive Ocer
Delivering for our people
XPS is only as good as its people.
Our societal purpose helps us
attract, inspire and retain talent.
So too does our corporate culture:
employee centric; inclusive; friendly;
and meritocratic. We do not,
however, take the above for granted.
Our people deliver for us. We must
deliver for them. In line with this,
we constantly strive to ensure our
working arrangements and practices
are embedded with a high level of
flexibility, inclusivity and care. Our
aim is to ensure all our people feel
they belong at XPS and that they
have the opportunity to progress
on merit. The launch of our flexible
working model, My XPS, My Choice,
during the year is one example of
the importance we place on looking
after our people. So too is our
annual employee survey, the results
of which were highly encouraging
with 95% of respondents agreeing
that XPS is a good place to work,
an improvement on the previous
year’s 94%.
The year also saw us train over
50 members of staff as Mental
Health Allies to provide confidential
in-house counselling; sign up to
independent counselling service,
Unum; host a wide variety of team
events, societies and fundraisers, as
well as women and LGBT+ networks;
celebrate Black History Month; and
hold our second Values in Practice
Awards, which recognises people
and teams who have gone above
and beyond.
We value all our people, and thank
them for delivering yet another
successful year. We would like
to personally thank Jonathan
Bernstein who, after holding
various roles within the Group,
most recently as Chief Operating
Officer, retired during the year.
The Board and management
team thank Jonathan for his
valuable contribution to the XPS
journey and we wish him a long,
healthy and happy retirement.
Jonathan’s responsibilities have
been reallocated among existing
management as well as to our
first ever Chief Information Officer
(CIO), Jon Marchant. Jon, who has
over 20 years’ experience, most
recently as CIO at PayPoint, has
been appointed to drive our tech
strategy forward.
19XPS Pensions Group Annual Report 2022
Strategic report
As we announced following year
end, Tom Cross Brown will retire as
the Group’s Chairman following the
AGM in September 2022. On behalf
of the Board, we would like to
thank Tom for his commitment and
contribution since his appointment
as Chairman in January 2017.
Tom has seen XPS through a
transformational period and we
wish him well for his retirement.
Welook forward to working with
the new Chair when appointed.
Growing sustainably
As one of the leading pensions
consultancies in the UK, XPS is
in a strong position to promote
sustainable/responsible business
practices across its customer
as well as its supplier base – the
£140 billion or so of assets under
XPS investment advisory provide
substantial collective purchasing
power to drive positive change.
While our investment consulting
business delivers market-leading
ESG-aligned investment advice,
it is important that XPS leads
by example. During the year we
became carbon neutral following
the purchase of UN-approved
carbon credits. As well as Scope
1 and 2 emissions from our own
activities, these cover Scope 3
emissions produced by suppliers
when serving XPS.
Achieving carbon neutrality
through the purchase of carbon
credits does not represent the sum
of our ambitions. It is one step of a
journey. The next is to reduce our
direct carbon footprint.
Outlook
The FY 2022 results demonstrate
the continued resilience and
predictability 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 protected against the
impact of the wider global political
and economicsituation.
We expect the demand for our
services to remain high as we help
our clients navigate the complex
and evolving regulatory backdrop.
We have continued to develop
service lines to meet client needs,
including in the areas of scheme
governance and in risk transfer
where we have invested in our
team. Recent client wins and a
strong pipeline of opportunities
will support further growth in the
coming year.
We remain mindful of the current
inflationary backdrop but remain
confident in our business model
to be able to minimise the impact
of inflationary pressures on profits
whilst still maintaining investment
in our market leading products,
platform and people. Many of
our contracts have mechanisms
by which our fees automatically
increase in line with inflation,
and we will maintain a focus on
overall efficiency and a disciplined
approach to pricing our services.
The Group has made a good start
to the new financial year, and we
remain confident in delivering
against market expectations for the
current year.
Paul Cuff
Co-Chief Executive Officer
22 June 2022
Ben Bramhall
Co-Chief Executive Officer
22 June 2022
XPS Pensions Group Annual Report 202220
A strong trusted adviser for the
Mitchells & Butlers Trustees
The Trustees of the two Mitchells & Butlers defined benefit schemes appointed XPS in 2021,
wanting advisers that could be proactive and joined-up and bring strategic clarity to the
future of the plans.
When bulk annuity pricing drastically moved in favour of the Executive Plan we immediately
responded with expertise, innovation and collaboration to secure the full buy-in for its 700
members only nine months into our appointment.
The Trustees have since engaged us for administration, secretarial and governance services,
allowing us to further demonstrate the depth and quality of our services and our people.
Welook forward to our ongoing work with the Mitchells & Butlers team and the Trustees
toput their members first.
Case study
An
innovative
plan...
21XPS Pensions Group Annual Report 2022
Strategic report
...executed with
agility
XPS is truly joined up across its advisory teams and
uses trustee friendly technology to deliver expert
advice. Transacting the full scheme buy-in so quickly
was testament to the quality of the advice and the
people at XPS, supporting us to deliver an excellent
result for our members and sponsor.”
Lee Miles,
Pensions Controller & Deputy Treasurer, Mitchells & Butlers
XPS Pensions Group Annual Report 202222
Supporting
sustainable
pensions
Sustainability
Our purpose
We exist to shape and support
safe, robust and well-understood
pension schemes for the benefit
of people and society.
Our sustainability framework
and ambitions
Our sustainability approach is overseen
by the Sustainability Committee, a
Committee of the Board established
in 2021 and chaired by Non-Executive
Director Sarah Ing (details of the
Committee’s composition and
activities can be found on
pages 68-69).
Our sustainability framework, which
has been in place since 2020,
evolves with market practice and we
continue to develop our approach
to meet the needs and expectations
of all our stakeholders. This year
has seen us further embed ESG and
sustainability principles throughout
XPS. Strong progress has been
made in a number of areas, but we
recognise we are on a journey that
will continue as our sustainability
approach matures.
This year our Sustainability
Committee has focused on
developing our ambitions in relation
to the five framework pillars. Key
sustainability ambitions and targets
are outlined on the right:
for the benefit of all
Being a responsible business has never been more important than it is today, but it
has always been a priority for us. Doing the right thing is at the core of our business
strategy. It is how we operate across all our activities.
Our purpose puts people and society at the heart
of our business. By looking after the long-term
financial wellbeing of millions of people in UK pension
schemes, we provide services that have an important
societal value.
We use the term Sustainability and ESG
interchangeably within the business, but the
fundamental principles are strongly aligned and
embedded within our strategy. Whether it is fully
integrating ESG in to all our pension investment
advisory services, building a strong culture with
commitment to inclusion, equality and diversity or
doing our bit for the environment – we have made
significant progress on our Sustainability strategy.”
Snehal Shah,
Chief Financial Ocer
23XPS Pensions Group Annual Report 2022
Strategic report
Our sustainability framework
Focusing on
governance
Goal: Continue to operate to a high standard of corporate governance
Material topics: Business ethics and values, corporate governance, cyber security and
data privacy, human rights and modern slavery
Ambitions and targets:
• Continue to comply with corporate governance code principles which apply to
FTSE350 companies
• At least 40% of the Board to be female by 2027
• Set meaningful targets linking executive pay to non-financial performance metrics
anddisclose progress against these objectives each year
Focusing on
ouremployees
Goal: Create a supportive environment where employees can thrive
Material topics: Employee engagement, inclusion, equality and diversity, learning and
development, employee wellbeing
Ambitions and targets:
• Maintain 90% minimum engagement score on “XPS is a good company to work for”
• Achieve 90% engagement score on “XPS is inclusive and values each person for what
they bring to the Company”
• At least 30% of senior management to be female by 2027
Focusing on
ourclients
Goal: Help clients and scheme members achieve positive long-term outcomes
Material topics: Sustainable products and services, responsible investment
Ambitions and targets:
• Committed to offering sustainable solutions to 100% of investment clients
• Continue to publish market leading thought leadership and positively raise
industry standards
• Ambition to see integration of ESG in our clients’ holdings/funds improve over time,
based on our fund ESG ratings
Focusing on
ourcommunities
Goal: Create a positive impact wherever we operate
Material topics: Community engagement, charitable giving, supply chain management
Ambitions and targets:
• Increase our charitable giving by introducing our matched donations scheme
• Continue to review our supplier due diligence programme to include more
ESG-relatedexpectations
• Continue to support our employees in volunteering and other activities that benefit
thecommunities that we operate in
Focusing on
ourenvironment
Goal: Reduce our impact on the environment and help others do the same
Material topics: Energy usage and climate change, environmentally friendly culture
Ambitions and targets:
• Reduce direct and indirect emissions consistent with a low carbon Paris
Agreement-aligned economy
• Continue to develop our carbon offsetting strategy, with the aim of achieving
independently verified net zero status
• Continue to roll out ISO 14001 certification to XPS offices
• Work with landlords to switch to using renewable energy wherever possible in 2022/23
• Develop our response to managing climate-related risk and opportunity
XPS Pensions Group Annual Report 202224
Our values
We are
ambitious
XPS is an ambitious business.
We’re aiming high to achieve our purpose of benefiting people and society. We have
ambitious goals for our clients, our industry and ourselves. This means leading our industry
in thought, action and opinion. It means we are progressive and think differently about
pensions. We invite bold thinking and actions within our business, and we give each person
the support they need to become their very best.
We are
agile
We’re forward thinking, innovative and quick-moving.
When we see a better and more sustainable way to do something, we make change happen.
We don’t just follow the way things have always been done in our industry. We take a fresh
look and find new ways of achieving the best outcomes for our clients, while benefiting
people and society
We are
helpful
We build and sustain great relationships with our clients and with each other.
This means we’re always ready and willing to help out. Clients and colleagues know they can
trust us. We listen and we are helpful. Ultimately, we’re out to make people’s lives better and
we play an active role across our industry and wider society to help achieve this. We work
hard together, we support each other, and we have fun together.
We are
experts
We know our stuff and we each bring something special to our collective knowledge.
We make a point of cultivating our individual expertise and diversity of thought – and we use
it, share it and support each other for the benefit of our clients and colleagues every single
day. We understand the responsibilities that come with our skills and abilities, so we each put
them to good use and build on them with constant learning.
We do the
right thing
We’re inclusive, approachable, honest and fair, both with our clients and each other.
We value everyone’s unique contribution, recognising and rewarding hard work. We act with
integrity and honesty, speaking up if something doesn’t meet our standards.
By following these values we’ll grow responsibly and sustainably, for everyone’s benefit.
Sustainability continued
Focusing on
governance
We’re committed to being a responsible business, one that meets the highest
standards of ethics and professionalism. Doing the right thing is a core value at XPS.
Ethicalbehaviour and integrity are embedded within our culture.
Culture and values
Our culture defines our interactions with all of our stakeholders – clients, shareholders, regulators, employees,
contractors, suppliers, communities, charities and the environment. The interests of all our stakeholders shape
our decision making and business model, and are vital to our ongoing ability to achieve our goals. Read more
about how we engage with our stakeholders on pages 59 and 60.
Our values drive everything we do in the business. They unite us as a company, inspire us and help us attract
new talent. In FY 2022, we further developed our values to ensure they are fully aligned with our commitments
to inclusion and diversity, and sustainability.
This year we ran our “XPS Values in Practice” Awards for the second time, celebrating the values and the people
who have lived them this year in a way that reflects their importance to us.
25XPS Pensions Group Annual Report 2022
Strategic report
Business ethics
We believe that high standards of
business ethics and a consistency
of approach positively impact our
operations. They also enhance our
reputation. It is therefore important
that, in the first place, we select
people who want to do the right
thing and then we give them the
support they need throughout their
careers with the Group. In line with
this, all employees have access to
our Business Code of Ethics. This
outlines the principles and values
that we expect all our people
to adhere to in relation to areas
such as harassment and bullying,
treating customers fairly, inclusion
and diversity, financial crime and
dealing with vulnerable customers.
In addition, all employees
complete an annual programme
of mandatory training. Topics
include financial crime, bribery and
corruption, insider trading, modern
slavery, data protection, and cyber
security. This training is managed
and monitored by the Compliance
and Information Security teams.
Our values are fundamental
to delivering our mission. We
therefore have a zero tolerance
for any activities or behaviours
that are not in line with our values.
Furthermore, we have an anti-
bribery and corruption policy that
is supported by a whistleblowing
process and, where necessary,
proportionate and independent
investigation and follow-up of any
matters, the conclusions of which
may be reported.
Corporate governance
We operate to a high standard of
corporate governance, which is
centred around strong engagement
with all stakeholders. We comply
with the UK Corporate Governance
Code 2018. Please refer to pages
54 to 61 for our Statement of
Corporate Governance. Please refer
to our Sustainability Committee
Report on page 68 for detail on our
governance structure around ESG.
Cyber security and data privacy
XPS has a comprehensive information
security programme in place which
incorporates effective policies and
technical controls to safeguard our
customers’ information.
Our regular assessment of cyber
risks drives our targeted investment
in our cyber security capabilities.
This is supported by our Information
Security Management System
(ISMS) which is certified to ISO
27001. The effective deployment of
the framework of controls is
independently verified through our
Cyber Essentials Plus certification.
All information security risks are
reported into and discussed by
the Audit & Risk Committee. These
discussions consider the results of
the Group’s programme of cyber
assurance activities, effectiveness
of key controls and action plans to
address any identified weaknesses.
All colleagues undertake ongoing
mandatory training on protecting
client, employee and corporate
information, including regular
phishing awareness exercises.
This training is supported by
regular communications with staff
to raise awareness on how we can
safeguard customer information.
Human rights and modern slavery
We aspire to conduct business in
a way that values and respects
the human rights of all our
stakeholders. We comply with
all relevant legislation, including
the UK Modern Slavery Act. Our
annual modern slavery statement
is available to read on our website
www.xpsgroup.com/modern-
slavery-statement/. All XPS
employees have also completed
awareness training on modern
slavery during the year.
This year we have introduced
a Supplier Code of Conduct
which clearly outlines how we
expect suppliers to act when
providing services to us. This
can be found on our website
www.xpsgroup.com/sustainability/
governance/. The Code contains
our commitments and expectations
around human rights and social
responsibilities, discrimination,
freedom of association,
environmental protection
andhealth and safety.
XPS Pensions Group Annual Report 202226
Sustainability continued
Our people are our most important asset. Because of this we continually strive to make
XPS an employer of choice and a place where colleagues can thrive in their careers.
Throughout the year, we have strengthened our approaches to inclusion and diversity,
employee engagement and flexible working.
Focusing on our
employees
of colleagues completed
the survey
77%
of colleagues agree XPS
is a good company to
work for
95%
of colleagues approve
of our new flexible
working approach
91%
Employee engagement
During the year we continued
to strengthen communication
channels, both to allow colleagues’
input into decisions that may affect
their interests and to share key
information regularly.
Our Employee Engagement Group
(EEG), chaired by Non-Executive
Director Margaret Snowdon OBE,
continued to meet on a regular basis,
facilitating direct communication
between employees and the Board.
This was supported by our annual
engagement survey and shorter
themed surveys throughout the year,
plus a new anonymous feedback
channel which complements our
whistleblowing process.
During the year, our engagement
survey showed improved sentiment
on several issues including mental
health, inclusion and diversity and
flexibility. Following the results,
action plans were put in place
to address some of the issues
raised, namely around career
progression, resourcing and
rewardandrecognition.
For the first time, we invited the
EEG to discuss and provide input
into the personal objectives of the
Co-CEOs for the year ahead. This
gives staff the opportunity to help
ensure senior management focus
on things that matter to employees.
With many of us working from
home or in a hybrid way, we
continued to make improvements
to our internal intranet to provide
colleagues with regular updates. A
weekly Friday message from the
Co-CEOs also informs colleagues
of the latest business updates,
celebrates successes and helps
maintain motivation.In addition, a
Co-CEO roadshow, business
update webinars and regular email
communications keep colleagues
up to date with factors affecting
Company performance. They also
provide opportunities to acknowledge
our people’s valued contribution to
that performance. We continue to
drive business performance by
incentivising colleagues through
our bonus schemes and employee
share plans.
Learning and development
Our learning and development
offering continues to be a strength
at XPS, with a wide range of
professional training, workshops
and mentoring available for
colleagues at all levels.
During the year we
delivered over
17,500 hours
of training across
a wide range of
professional and
technical courses
A particular focus this year was
line manager training and support,
with a range of sessions focused on
upskilling line managers, from senior
leadership to first-time managers, in
both hard and soft skills.
Support was provided for
employees studying for professional
qualifications via bespoke technical
programmes across all areas
of our business. We continued
to support early career talent
through our graduate Actuarial
and Administration programmes
and Advisory apprenticeships.
Wealso introduced a new induction
programme and an improved
probation toolkit to support new
joiners to XPS.
All XPS colleagues work to an
annual performance management
cycle and all have access to
aperformance-related bonus
scheme that is based around clear
objectives stemming from Group
business objectives.
27XPS Pensions Group Annual Report 2022
Strategic report
Inclusion and diversity
We are committed to a culture of “belonging” at XPS, where differences are valued and respected, where all
colleagues can be their true selves at work and where we can all contribute to, and be recognised for, creating
the best possible XPS. Non-Executive Director Margaret Snowdon OBE is the Board member responsible for
inclusion and diversity.
During the year we launched our inclusion and diversity (I&D) framework, following input from the Diversity
Working Group, the EEG, and our Employee Networks. Working with inclusion specialists, ‘Inclusive Group’
and our people, we identified what was important to colleagues, clients and other stakeholders, where we
could make a difference and what our key priorities are. This work resulted in the creation of our I&D strategy,
which focuses on four key areas: our culture, fair processes, attraction and retention and I&D within society.
Clearpriorities have been set in each area.
At XPS we have five Employee Networks that lead our inclusive programme of events and campaigns:
This year we reviewed several diversity-related policies, including the I&D, Parental Leave, Family-friendly,
Menopause, Harassment and Bullying Prevention, and Recruitment Policies. Every employee attended diversity
awareness training, delivered by external specialist SceneChange. There were extended sessions for line managers
and partners, who are expected to lead by example, uphold the highest of standards and ensure decisions are fair
and free from bias.
XPS continued to support I&D awareness days throughout the year with an inclusive programme of events and
campaigns led by our five Employee Networks. Highlights this year included celebrating International Women’s
and Men’s Days, Pride Month, Black History Month and our Be Yourself at Work campaign. A number of workshops
were held during the year, including on LGBTQ+ Allyship, the importance of self-promotion for women’s careers,
menopause awareness and confidence when speaking up.
Our inclusion and diversity framework focuses on:
Our culture
Creating an environment of belonging through
awareness raising, setting clear expectations,
active learning and celebrating difference
Fair processes
Ensuring decisions are based on merit, and
that all colleagues are recognised for their
contributions, through fair and unbiased
processes and open communication
Attraction and retention
Sharing our inclusive practices and culture
to attract and retain the best talent
I&D within society
Driving an inclusive culture across society using our
influence and participation in industry networks
and events, and supporting and developing
inclusive and diverse leadership at XPS
28 XPS Pensions Group Annual Report 2022
Sustainability continued
Focusing on our employees continued
Inclusion & Diversity continued
In our 2021 engagement survey, 85% of staff said they felt they “belong” at XPS. We are using this as a baseline for
measuring the impact of our inclusion and diversity activities going forward.
The survey results also show that the percentage of staff who agree that the XPS leadership team is committed to
equality, diversity and inclusion has increased over the last four years to 89%.
Since 2017, XPS has been part of the Actuarial Mentoring Programme (AMP), a cross-company mentoring
programme designed to improve diversity within the actuarial profession. We have been members of the 30%
Club, a business campaign aiming to boost the number of women in board seats and executive leadership roles
in companies all over the world, for the last four years and use our internal mentoring programme to help develop
gender equality.
Percentage of staff who agree that the XPS leadership team
is committed to equality,diversity and inclusion
2021
2020
89% 86%
2019 2018
73% 66%
29XPS Pensions Group Annual Report 2022
Strategic report
XPS is a member of:
Group
Total: 1,510
Gender split data
Multi-generational split
<20 1%
21-30 32%
31-40 25%
41-50 23%
51-60 15%
60+ 3%
Employees who have
disclosed they have
a disability
4.8%
Disability
2022
2021
Male 743
Female 767
Male 682
Female 698
Partners
Total: 71
2022
2021
Male 54
Female 17
Male 56
Female 17
Board
Total: 7
2022
2021
Male 5
Female 2
Male 5
Female 2
Other employees
Total: 1,432
2022
2021
Male 684
Female 748
Male 621
Female 679
Gender pay gap
We continued to work to improve our gender pay gap, which has reduced for the third consecutive year since
reporting began. Our efforts are particularly focused on four key areas:
• evolving our culture so that everyone can be their true selves and feel they belong at XPS;
• ensuring our processes are fair and that we provide equality of opportunity where decisions are based on
objectivity and merit;
• demonstrating we are an inclusive employer to attract and retain a diverse range of people; and
• helping to drive a more inclusive culture across wider society.
We believe that the initiatives we are undertaking under these four key areas will help reduce our gender pay gap.
Whilst meaningful change takes time, we are moving in the right direction. Our full gender pay gap report can be
found on our website: www.xpsgroup.com//gender-pay-gap-reports.
XPS Pensions Group Annual Report 202230
Sustainability continued
Focusing on our employees
continued
Our approach to flexible working
FY 2022 was another year
where the Covid-19 pandemic
dominated our approach to how
we work as an organisation, and to
employeewellbeing.
A consultation exercise was
launched in response to the second
Covid-19 lockdown to explore how
XPS colleagues prefer to work.
Theresults revealed there was
noconsensus view, but highlighted
employees felt their working
environment had a significant
impact on both their mental health
and productivity. My XPS, My
Choice has been developed to
respond to the desire for greater
flexibility and allows colleagues to
have more say in how and where
they choose to work. This exercise
has also allowed us to review how
we use our offices, with some
spaces being repurposed to allow
for greater collaboration
andconnection.
My XPS, My Choice will be kept
under review as we continue the
journey out of the pandemic,
but there is no doubt the future
is one of increased flexibility for
colleagues in how and where they
do their work, which we welcome
wholeheartedly.
Employee wellbeing
All XPS colleagues benefit from
a wide range of wellbeing and
mental health supports. These
include options for private medical
insurance, permanent health
insurance, critical illness and life
cover, occupational health, access
to counselling and other support
via an Employee Assistance
Programme, and a second medical
opinion service.
We also have trained volunteers
from across the business, our
Mental Health Allies, who promote
positive mental health, listen to
colleagues who are experiencing
mental health issues and provide
guidance on accessing
appropriate support.
In FY 2022, we continued to take
our employee wellbeing offering
online, and colleagues were
invited to a series of Mental Health
Webinars facilitated by Mental
Health at Work. This year we
also launched our Disability and
Neurodiversity Network, aimed at
raising awareness of issues that
may affect colleagues and their
families, and reducing stigma within
the workplace.
We also recognise the importance
financial wellbeing plays, and to
support colleagues we hosted
a series of webinars run by The
Money Charity, aimed at raising
awareness and giving guidance
around issues including budgeting,
credit, borrowing and debt, wills
and future planning.
People policies
XPS’s wide range of HR policies are
in place to protect the employment
rights of all XPS colleagues. These
include a Recruitment Policy, Training
and Development Policy, Grievance
Policy, Flexible Working Policy, and
Family Friendly Policy. All policies
are available to employees via our
intranet. Our line managers are
responsible for ensuring compliance
with our policies, with support from
the HR team.
31XPS Pensions Group Annual Report 2022
Strategic report
Responsible investing
XPS has a deep understanding of
ESG and its growing importance in
investment decisions. This enables
us to offer expertise and advice to
our clients on how best to integrate
these factors into their investments.
We recognise that one size does
not fit all when it comes to ESG
and stewardship. We work with our
clients to understand their specific
beliefs and priorities to ensure our
advice and solutions are tailored
to their unique needs. Through our
responsible investing framework,
we provide trustees with practical
steps they can take to meet their
responsible investing objectives
and, at the same time, generate
long-term sustainable returns for
their members.
ESG and sustainability
are embedded into
our investment
recommendations and
client advice, covering
£140bn
of assets under advice
XPS has developed its own ESG
fund rating system to ensure full
consideration of ESG factors is
given in all recommended funds.
Using a detailed questionnaire and
face-to-face meetings to assess a
manager’s overall philosophy, how
ESG is integrated into investment
decisions within the given fund,
climate change risk management
and stewardship, our rating
system also provides us with
acomprehensive range of funds
which offer sustainable objectives
above and beyond a responsible
approach. We encourage all clients
to take this approach as we believe
considering sustainable themes will
improve long term outcomes.
We also provide detailed feedback
to all investment managers we
have assessed on ESG, identifying
specific areas where they have
not scored well so as to drive
improvements in their processes
and practices. Improvements (or
the lack of) are captured in our
annual review and, where relevant,
in between the annual assessment
cycle. By continuously improving
the practices of investment managers
to support effective ESG risk
management and directing finance
towards the global green transition,
XPS is well positioned to make a
positive impact on wider society.
Scam Protection Service
Our Scam Protection Service was
ideally placed to help trustees
meet the expected requirements of
the new transfer value legislation
contained within the Pension
Schemes Act 2021. Our Scam
Protection Team uses a phone
call with scheme members to
obtain robust information about
their transfer, and can identify any
suspicious activity early on in the
process. The service also identifies
additional key scam warning flags
as set out in the Pensions Scams
Industry Group (PSIG) Code of
Good Practice in Combating
Pension Scams, plus a number
of bespoke flags that XPS has
identified from its own experience.
Protecting vulnerable customers
We recognise that many pension
members we deal with may
be experiencing one or more
vulnerabilities, and that we must
take care to listen to our customers’
needs and identify when we should
apply an extra duty of care so as
not to make a situation worse.
Our Dealing with Vulnerable
Customers Policy provides clear
guidance to all employees around
vulnerabilities our customers may
experience, barriers they may face
when dealing with professional
service providers such as us,
and what we can do to make our
services as accessible and inclusive
as possible, adapting to customers’
specific needs wherever possible.
All customer facing employees also
complete annual online training to
embed their knowledge and skills
inthis area further.
Our Scam Protection
Service has
helpedprotect
7,100 members
transfers, totalling over
£1.6bn
Focusing on our
clients
Through our role as trusted advisers, we aim to develop long-term partnerships
with our clients. We are clear that the only way for us to do this is to always ensure
that we do the right thing for them in the long term. This is the number one objective
given to all our people. It is a key driver of our culture and shapes the way we interact
with stakeholders.
XPS Pensions Group Annual Report 202232
Sustainability continued
Focusing on our clients continued
FY 2022 responsible investing highlights
July
Development of a carbon dashboard, giving
clients a clear view of their carbon footprint
and forward-looking climate risk exposure
June
Ten green-rated sustainable
funds on offer, giving schemes options
for investment solutions which align to
sustainable objectives including the low
carbon transition
September
Approved as signatory to the new UK
Stewardship Code, validating the strength
of our process and activities in practice
September
Assessment and feedback provided to over
50 investment managers across over 190
funds. In 2021, we published the results of
our ESG fund rating review for the first time.
This set out the summary of ratings across
asset classes and identified specific areas of
improvement needed across the board. This
transparency to the market helps investment
managers understand where their ratings sit
relative to others as well as highlighting the
broader market areas for improvement that
they can act upon
October
Launched a Responsible Investment
Policy, ensuring ESG and sustainability
are embedded into all our investment
recommendations and client advice
November
Established Climate & Environmental
Solutions Team, comprising senior members
from our Investments and Pensions
Actuarial teams
November
Eight thought leadership pieces published
on ESG specifically, and two webinars
dedicated to sustainability hosted
Ongoing
Provided training on ESG and climate
change issues for Trustees to inform advice
based on their specific beliefs, helped
clients meet climate change reporting
requirements, integrated climate risk into
valuation documents and explored mortality
scenarios for physical and transition risks
XPS Investment is a participant in the Investment Consultants Sustainability Working Group, and an Influencer
member of Pensions for Purpose. We continue to be a signatory to the UN PRI, and the UK Stewardship Code.
Read more about our approach to responsible investing and ESG integration, and how we help our clients in our
in-depth 2021 Stewardship Code report: www.xpsgroup.com/sustainability/clients/
April
Internal training for all investment
colleagues, which has enabled us to share
knowledge and advice with clients on
embedding ESG and climate risk factors
XPS Pensions Group Annual Report 2022
Strategic report
33XPS Pensions Group Annual Report 2022
Community engagement
XPS continues to encourage
employee involvement in fundraising
and volunteering activities which
benefit our local communities. This
year we also focused on supporting
school students and individuals in
their early careers, by providing
various opportunities to undertake
work experience at XPS.
As well as offering work experience
to secondary school students
within our Administration business,
we also offered the opportunity
for university students to join our
Investment Team for a week to
gain a valuable insight into the
workplace, as part of the upReach
Investment Springboard Project.
upReach supports high-potential
students from less-advantaged
backgrounds, who may not
otherwise be able to access high
quality work experience within
professional environments. The
group of students were introduced
to a wide range of investment topics
and worked on a skills-based group
project, which they presented back
to the XPS team.
To demonstrate our commitment
to supporting charities, we will be
launching a Matched Fundraising
Policy. As well as matching funds
raised for our recognised charity
partners, XPS will match funds
raised by XPS colleagues for any
registered charity.
Charitable giving
Over the past year, XPS continued
to support some of our key charity
partners – Tax Help for Older People,
the Mental Health Foundation and
TeamPolice. Acombined total of
over £45,000 was raised for these
three charities alone.
XPS colleagues also took part in
numerous fundraising activities
throughout the year, including
a Steps Challenge in aid of the
Mental Health Foundation, various
Olympic themed fundraising events
and a Christmas fundraiser in aid
of Freedom from Torture and
Rainbow Migration.
Focusing on our
communities
Like all businesses, XPS is a part of the communities in which it operates. It is therefore
only right that we continue to encourage employee engagement in activities which
benefit those beyond our organisation.
We are clear that the only way for us to do this is to always ensure that we do the right
thing for them in the long term. This is the number one objective given to all our People.
It is a key driver of our culture and shapes the way we interact with stakeholders.
Our charity partners
XPS Pensions Group Annual Report 202234
Sustainability continued
Energy usage and climate change
As a professional services
business, XPS is a relatively low
environmental impact business
compared to other industries.
We are, however, committed to
reducing emissions associated
with our own operations and
encouraging the reduction
of emissions throughout our
value chain.
XPS has taken a number of
significant steps during this
reporting period to improve our
environmental performance,
including deploying an
Environmental Management
System (EMS) across the Group,
becoming carbon neutral and
developing a Carbon Reduction
Plan in alignment with the 2015
Paris Climate Accords.
As part of our journey to limit our
environmental impacts and help
clients and stakeholders move
towards a more sustainable future,
XPS made the significant step of
achieving carbon neutrality across
its entire value chain for FY 2022.
Excess emissions were ultimately
offset with the acquisition of
high-quality carbon credits from
the UN Climate Now Initiative, a
trusted, verified and PAS 2060
compliant scheme. To ensure our
response to the climate emergency
is appropriate, credible and
sustainable, we have chosen to
align our carbon reduction plans
with ISO 14064, the international
standard for quantifying
greenhouse gas emissions.
In Q2 2022 LRQA, an established
certification and assurance
company, will be completing a
review of XPS Group’s carbon
reduction plans to the ISO
14064framework.
XPS understands that offsetting
alone is not a long-term solution.
We are motivated to continue
to achieve significant long-term
reductions in our environmental
impact through the further
development of our internal
Environmental Management
System and its quality of output.
XPS is ambitious in its strategy
to achieve this, aiming to fully
align with a Paris-aligned pathway
well ahead of the 2050 UK
milestone. The business is currently
developing interim targets to
facilitate this and is pursuing the
adoption of independently verified,
industry-leading frameworks within
the next reporting period.
Our TCFD disclosure and more
detail on our operational efforts to
reduce emissions can be found on
pages 40 to 43.
Focusing on our
environment
Doing the right thing is a fundamental aspect of our Company culture and a key driver
of our environmental approach. We recognise the need for all parts of the business to
take responsibility for the impact our activities have on the environment. This way we
aim to reduce our impacts so that we may have a more stable future, both financially
and environmentally.
35XPS Pensions Group Annual Report 2022
Strategic report
An environmentally friendly culture
In early 2022, the EMS was certified to the international ISO 14001 standard across three of our sites. Reporting
into our Information Security & Environmental Management Steering Committee, as well as the Board
Sustainability Committee, the EMS provides a framework for us to monitor, manage and ultimately reduce our
environmental impact.
In tandem with the EMS, we implemented an Environment Policy and established objectives for the Group
to reduce our environmental impacts. In addition, the EMS has been assigning Environmental Champions in
each office to assist in driving environmental awareness and initiatives as well as identifying and progressing
localopportunities.
Furthermore, regular green initiatives, training videos and media are shared internally via news bulletins and the
dedicated Environmental intranet page to increase awareness of our policies and to encourage the business to
engage in internal initiatives.
In the forthcoming reporting period, the EMS has appropriately high ambitions. These are aimed at raising internal
awareness through events, seminars and activity days, increasing local business volunteering days within our
community, bringing additional offices into the scope of certification to ISO 14001 and collecting higher quality
data to assist in the reduction of XPS’s long-term environment impact.
Annual greenhouse gas emissions and energy use data for FY 2022:
(tCO
2
e)
1,2
FY 2022
3
FY 2021
3
FY 2020
3
Scope 1 emissions 215 212 267
Scope 2 emissions 230
4
350 548
Energy consumption used to calculate above emissions (kWh) 2,334,261 2,655,443 3,329,067
Scope 3 emissions 1,522
5
1,928
6
—
Total Emissions 1,967 2,490 815
Carbon intensity FY 2022 FY 2021 FY 2020
Carbon Intensity per £m revenue
Scope 1 + scope 2 emissions intensity (tCO
2
e/£m) 3.2 4.4 6.8
Scope 1, scope 2 & Scope 3 emissions intensity (tCO
2
e/£m) 14.2 19.5 —
Carbon Intensity per human resource
7
Scope 1 + scope 2 emissions intensity (tCO
2
e/employee) 0.3 0.4 0.7
Scope 1, scope 2 & scope 3 emissions intensity (tCO
2
e/employee) 1.4 1.9 —
Notes:
1 Unless otherwise noted (note 4), all conversion to carbon rates
is based on current Department for Education, Food and Rural
Affairs (‘DEFRA’) factors.
2 tCO
2
e = tonnes of CO
2
equivalent.
3 All activities are UK-based.
4 XPS has transitioned to certified renewable energy in a number
of facilities in the period. Calculated scope 2 emissions are
determined by Market Based data where available and Location
Based (note 1) factors otherwise.
It has been determined the company’s transition to renewable
energy avoided 16.4 Tonnes of CO
2
e in the period based upon KWH
conversion rates provided by DEFRA and this figure reflects this.
5 Scope 3 emission figures for FY 2022 include business travel,
employee commuting and domestic energy usage to support
staff working from home. XPS have significantly developed the
understanding of its scope 3 energy emissions which has resulted
in a significant reduction in disclosed emissions for this period.
6 For the FY 2021 reporting period Pilio assisted XPS in their Scope
3 calculations using a number of assumptions where required to
calculate the impact of the pandemic’s restrictions. XPS have since
collected improved data on its workforce’s remote activities which
indicate a lower energy consumption for the FY 2022 period.
7 Based on Full time employees only.
Like-for-like comparisons between Scope 1 and 2
emissions against the previous reporting period
show a reduction of 117.3 in emissions data across the
Group’s offices. This reflects the fact a majority of
staff worked from home in response to government
Covid-19 guidance so the energy consumed in these
offices was lower.
The increase in domestic emissions due to staff
working from home has been calculated and included
in Scope 3 emissions data for FY 2022. This results
in an overall increase in emissions since the previous
year, although like-for-like comparisons are not
applicable as this is the first year Scope 3 data have
been included.
XPS Pensions Group Annual Report 202236
Chief Financial Ocer’s review
Strong and
sustainable
The business has performed very well with revenues growing 8% year
on year, nearly all of which was organic. The revenue growth has been
delivered efficiently, with total staff cost growth now below revenue
growth. We have continued to invest in areas such as risk transfer and
member analytics and made capital investment in developing our own
administration platform which will further enhance our operational
gearing in the future.
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. These alternative performance measures may not be similar
to those defined by other entities but help to explain the progress within
the underlying business.
A third consecutive year of operating
cash conversion in excess of 95%
demonstrates the highly cash generative
nature of our business. We have
increased the full year dividend by
7%, underlining our confidence in the
Group’s prospects.”
Snehal Shah,
Chief Financial Ocer
It was pleasing to see another year of strong and resilient growth as Group revenues
grew 8%, almost all organic and our highest rate of organic growth since listing in 2017.
Growth in all divisions saw adjusted EBITDA up 7% year on year.
organic growth
37XPS Pensions Group Annual Report 2022
Strategic report
Group income statement
FY 2022
£m
FY 2021
£m
Change
%
Revenue
Pensions Actuarial & Consulting 63.7 60.7 5%
Pensions Investment Consulting 13.7 11.6 18%
Total Advisory 77.4 72.3 7%
Pensions Administration 50.8 46.8 9%
SIP 6.1 5.6 9%
NPT 4.3 3.2 34%
Total revenue 138.6 127.9 8%
Adj. EBITDA
1
34.1 32.0 7%
Depreciation & amortisation (5.3) (4. 9) (8%)
Adj. EBIT
1
28.8 27.1 6%
Exceptional & non-trading items (9.8) (13.9) 29%
Net finance expense (2.1) (1.8) (17%)
Profit before tax 16.9 11.4 48%
Income tax expense (7. 5) (2.4) (213%)
Profit after tax 9.4 9.0 4%
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. See note 6
for details of exceptional and non-trading items
Revenue
Total Group revenues grew 8% year
on year with all divisions achieving
year on year growth.
Pensions Actuarial and Consulting
is the Group’s largest business.
The division achieved 5% year on
year growth in revenues, due to
high client activity levels driven by
continued regulatory changes as
well as further new business wins
for the Group.
Pensions Investment Consulting
had another strong year with a
number of new client mandates
as well as continued growth in
fiduciary management oversight
appointments following the CMA
ruling in 2019. Revenues in this
division grew 18% year on year.
Pensions Administration revenues
grew 9% year on year with a
number of new client wins coming
on stream during the year, and
increased levels of project work.
Pensions Administration accounted
for 37% of the Group revenues
(FY2021: 37%).
SIP revenues were up 9% on prior
year, as strong underlying sales
helped offset the impact of the
bank base rate reduction in the
first half of the year, while the
recent base rate increases will
have a positive impact on revenues
looking forward. The acquisition
of the trade and assets of Michael
J Field Consulting Actuaries
(“Michael J Field”) completed in
February 2022, and we are pleased
that the integration of the business
is progressing well.
The National Pension Trust (NPT)
business has performed well with
revenue growing 34% 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 £1.3 billion.
Operating costs
Total operating costs (excluding
exceptional and non-trading items)
for the Group grew by 9% or
£9.0million year on year. The main
drivers for the cost increases are
an increase in headcount as the
business grows (1,442 FTE v 1,325
last year), continued investment in
IT (particularly cyber security), and
higher bonus cost in light of the
strong financial performance.
As a result, the Group’s adjusted
EBITDA grew by 7% year on year.
Adjusted EBITDA margin was
25% (FY 2021: 25%). Statutory
profit before tax grew by 48%
year on year.
XPS Pensions Group Annual Report 202238
Chief Financial Ocer’s review continued
Exceptional and non-trading items
Exceptional and non-trading items
in the year totalled £9.8million
(FY2021: £13.9million). Amortisation
of acquired intangible assets
amounted to £6.6million (FY 2021:
£6.5million). Share-based payment
charges were £3.9million (FY 2021:
£4.9million). An exceptional credit
in the year of £1.0million was due
to the unwinding of an exceptional
holiday pay accrual made in the
prior year. The Group also incurred
corporate transaction costs of
£0.3million (FY 2021: £0.2million)
in the year.
Tax on the exceptional and non-trading
items was £2.5million (FY 2021:
credit of £2.3million). The large
increase is due to the revaluation
ofdeferred tax liabilities as a
consequence of the increase in
corporation tax from 1 April 2023
to25%.
See note 6 to the financial
statements for further information
on the items detailed above.
Net finance costs
Net finance costs for the year were
£2.1million (FY 2021: £2.0million).
Taxation
A tax charge of £5.0million (FY
2021: £4.7million) was recognised
on adjusted profits (before exceptional
and non-trading items) which
represents an effective tax rate
of 19% (FY 2021: 19%). The Group
also recognised a tax charge of
£2.5million (FY 2021: credit of
£2.3million) on exceptional and
non-trading items, which resulted in
an overall tax charge for the year of
£7.5million (FY 2021: £2.4million).
As previously disclosed, the
increase in corporation tax in FY
2024 to 25% has driven an increase
in tax charges in the year now that
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 2022, we
paid corporation tax of £3.9million
(FY2021: £3.3million); we collected
employment taxes of £22.5million
(FY 2021: £22.8million) and
VAT of £21.3million (FY 2021:
£20.2million). Additionally, we
have paid £1.2million (FY 2021:
£1.2million) in business rates.
The total tax contribution of the
Group was therefore £48.9million
(FY2021: £47.5million).
Cash flow, capital expenditure and financing
Non-GAAP cash flow
31 March 2022
£m
31 March 2021
£m
Operating
Adjusted EBITDA 34.1 32.0
Change in net working capital (0.7) 4.4
Other (0.6) (0.7)
Adjusted operating cash flow 32.8 35.7
OCF conversion 96% 112%
Financing & tax
Net finance expense (1.5) (2.1)
Taxes paid (3.9) (3.3)
Proceeds from/(repayment of) new loans 3.9 (11.5)
Repayment of lease liabilities (2.7) (2.6)
Share-related movements (3.3) (3.4)
Net cash flow after financing 25.3 12.8
Investing
Acquisition (net of disposals) (1.5) (0.2)
Capex (7.9) (2.4)
Restricted cash (NPT) — (0.5)
Net cash flow after investing 15.9 9.7
Dividends paid (14.1) (13.4)
Exceptional items (0.3) (2.1)
Movement in cash 1.5 (5.8)
Net debt 54.6 50.4
Leverage 1.74x 1.74x
39XPS Pensions Group Annual Report 2022
Strategic report
EPS
The basic EPS for FY 2022 is 4.6p
(FY 2021: 4.4p). The higher profit
before tax is largely offset by the
increase in tax due to the future
rate change.
Adjusted fully diluted EPS of
10.2p was delivered in FY 2022
(FY 2021: 9.8p), an increase of 4%
year on year.
Dividend
A final dividend of 4.8p is being
proposed by the Board (FY
2021: 4.4p). The final dividend,
if approved, which amounts to
£9.7million (FY 2021: £9.0million),
will be paid on 22 September
2022 to those shareholders on the
register on 26 August 2022.
Cash
FY 2022 has been another year of
strong cash performance for the
Group. Adjusted operating cash
flow decreased by £2.9million
driven by a £2.1million increase
in EBITDA offset by a £5.1million
reduction in net working capital.
Other items were an outflow
of £0.6 million compared to an
outflow of £0.7million in FY 2021.
Overall, this resulted in adjusted
operating cash flow conversion
of 96% compared to 112% in the
prior year.
Taxes paid in the year were
£3.6million lower than the income
statement charge as the current
year tax charge includes a large tax
charge in deferred tax due to the
future rate increase.
During the year, the Group drew
down £5.0million of the RCF. A
new facility was negotiated in the
year, for four years from October
2022 at a margin above SONIA.
The new facility is for £100million,
with an accordion of a further
£50million.
Capital expenditure in the year
amounted to £7.9million (FY 2021:
£2.4million) with £0.8million spent
on leasehold improvements and
office fitouts and the remaining
£7.1million on software development,
enhancements to our platforms
cyber security and other
ITequipment.
After paying £14.1million in
dividends and £0.3million of
exceptional costs, the Group cash
balance increased by £1.5million
year on year to close at £10.1million.
The Group had drawn down
£64million of its £100million RCF
at 31 March 2022, resulting in a net
debt of £54.6million, an increase of
£4.2million year on year.
Going concern
Details on the Directors continuing
to adopt the going concern
basis in preparing the financial
statements can be found in the
Viability Statement in the Strategic
Report in the Annual Report. The
Directors have confirmed that,
after due consideration, they have
a reasonable expectation that the
Company and the Group have
adequate resources to continue
in operational existence for the
foreseeable future. For this reason,
they continue to adopt the going
concern basis in preparing the
financial statements.
Subsidiary undertakings
The subsidiary undertakings of the
Group in the year are listed in note
35 in the Annual Report.
Snehal Shah
Chief Financial Officer
22 June 2022
XPS Pensions Group Annual Report 202240
TCFD
Governance
Board oversight and management’s role in assessing and managing climate-related risks and opportunities.
XPS considers climate change and the transition to a low carbon future as a key material risk to the business.
As such, our Board Sustainability Committee is responsible for XPS’s sustainability strategy and for 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 pages 68 and 69.
At the management level, climate risk is overseen by the Information Security & Environmental Management
Steering Committee. The Committee meets quarterly to review aspects and impacts, and legislation
updates, and to provide management with a regular opportunity for review. Outputs are then fed into both
the Sustainability and Audit & Risk Committees for review and approval of any actions, objectives or policy,
whichthen feed back to the XPS Board (see pages 64 to 67 for an update from our Audit & Risk Committee).
Environmental governance structure and responsibilities
Task Force on Climate-related
Financial Disclosures (TCFD)
XPS Board
• Ultimate accountability for long-term
viability of the Group
• The Group’s long-term objectives, business
strategy and risk appetite
• The Company’s overall corporate
governance arrangements
Audit & Risk Committee
• Oversight of XPS’s emissions data,
reduction targets and planned pathways
and actions
• Oversight of ISO and PAS accreditation
Sustainability Committee
• Oversight of the Company’s ESG impact
and initiatives
• Development and delivery of Group
sustainability strategy
• Improving practices, reporting and
communication in relation to ESG factors
• Maintaining oversight of the views and
interests of all key stakeholders of the
Company, internal and external
Risk Management Committee
• Oversight and approval of EMS objectives
Information Security & Environmental
Management Steering Committee
• Reviewing and monitoring climate-related
risks at least annually
• Reviewing environmental aspects
and impacts
• Monitoring legislation updates
• Providing management review of the
implementation of EMS
• Risk assessment and scenario analysis
Sustainability and Risk team members
• Providing ESG expertise to
variousCommittees
• Implementation of Environmental
Management System
• Engaging with XPS colleagues to champion
sustainability across the Group
• Supporting our XPS Environmental Champions
XPS Board
Overall business strategy,
ambition and objectives
Information Security & Environmental
Management Steering Committee
Operational EMS management steering
Environmental Management System
Operational control
Strategic
overview of
controls
Environmental
audit
Sustainability
Committee
Environmental strategy
Audit & Risk
Committee
Environmental risk
management
Environmental
and climate
risk and
opportunities
Environmental
performance
review (metrics
and targets)
Risk Management Committee
Environmental risk management
41XPS Pensions Group Annual Report 2022
Strategic report
Strategy
Overview of our climate-
related risks and opportunities,
and impact on strategy and
financial planning
Meeting the required emissions
reduction to stay within a Paris-
aligned pathway and the changing
climate itself present both risks and
opportunities for XPS Group.
The nature of our business as a
UK-based professional services
provider means that, in the short
term, we are more exposed
to transitional risks such as
uncertainty in markets, increased
expectations from stakeholders
and the potential for increased
costs. In the medium term (five
to ten years), we would expect to
see some impact from increased
pricing of GHG emissions or costs
associated with transitioning to
lower emissions technologies
or buildings. In the longer term
(ten plus years), we can expect
to see more physical risks from
extreme weather events impacting
our direct operations, although
disruptions to supply chains may
be felt sooner.
In relation to opportunities, we
expect to see increased demand
for our advisory and actuarial
services in response to market
changes and increased regulation,
as well as from pension schemes
requiring additional disclosure.
Thiscreates opportunities for
increased market share as we
develop both our response
within our own operations and
our investment and advisory
business models to drive ESG and
sustainability-informedapproaches.
XPS is responding to climate
risks and opportunities via our
sustainability framework, as well
as our business continuity and
financial planning.
Using scenario analysis to
consider the resilience of our
organisational strategy
Climate scenario analysis was
undertaken by our risk team and
peer reviewed by the Information
Security & Environmental Management
Steering Committee. This exercise
aimed to provide the business with
an effective measurement of both
the significance and the timeliness
of climate-related risks XPS may
face up to 2080.
As part of a comprehensive risk
analysis exercise, we first assigned
climate risk scores to climate-related
risks and opportunities to better
understand the significance of
each for our business. These scores
were combined with predicted risk
influence evaluation per decade,
allowing the business to analyse
when impacts may materialise and
pose the most risk, or present the
most opportunity, to XPS.
This risk analysis exercise was
applied across four climate
scenarios designed by the Network
for Greening the Financial System
(NGFS), which uses data input
from the IPCC. Each scenario
contained risks and opportunities
that developed at varying pace
throughout the model.
This exercise generated a final
Risk Materialisation metric for
each scenario, allowing XPS to
understand both the significance
of an array of potential risks as well
as the projected timeliness of those
risks taking effect.
We have provided high-level
examples of risks from each of
thefour scenarios:
Scenario 1:
Rapid transition to net zero
• Significant transitional
risk and possible
assetretirement
• Short-term market shock
Scenario 2:
Timely transition staying
below 2°C
• Low transitional risk due to
smoother implementation
• Lower short-term
market shock
Scenario 3:
Delayed transition
• High transitional risk likely
between 2035 and 2050
due to reactive policy
implementation
• Low short-term market
shock: however, large
shock in 2040
Scenario 4:
Failed transition
• Low transitional risk in the
short term
• High long-term climate risk
• High opportunities
• Long-term market decline
A timely transition, which aligns
to warming levels staying below
2°C, currently presents the least
material risk overall to XPS, as
illustrated in the chart overleaf.
XPS Pensions Group Annual Report 202242
Strategy continued
Scenario analysis comparisons
We believe XPS has strong resilience to climate-related risks, as a result of the nature of our business,
ourbusiness continuity and financial planning and the balance of risk and opportunity embedded within
ourbusiness model.
Risk management
Our process for identifying, assessing and managing climate-related risks
As part of this year’s implementation of our Environmental Management System (EMS), a full business-wide
risk assessment was completed. This considered a wide range of transitional and physical risks to the business,
along with potential impacts and likelihoods, to enable us to determine a rating for each risk in the short,
medium and long term.
Identified material climate/environmental risks were then integrated into the pre-existing risk framework
weutilise for business and information security risks.
Process for managing climate-related risks within XPS:
TCFD continued
2020 2030 2040 2050 2060 2070 2080
(1) Rapid transition (2) Timely transition (3) Delayed transition (4) Failed transition
Risk materiality
Material risks are agreed, and risk appetites assessed, by the Audit & Risk Committee.
Where appropriate, risks are also fed into the Sustainability Committee.
All risks undergo management review via the Information Security and Environmental Steering
Committee which agrees risk priority scoring based on the Group’s pre-existing Risk Matrix.
All risks are filtered through to the Risk Management Committee.
The Environmental Management System (EMS) operation identifies climate and environmental risks
and maintains a Group EMS Risk Register. EMS risks are scored pre-controls, post-controls and
additionally at five and ten-year intervals. These risks are somewhat driven by scenario analysis.
43XPS Pensions Group Annual Report 2022
Strategic report
Metrics and targets
Please see page 35 for our disclosure of Scope 1, 2 and 3 greenhouse gas (GHG) emissions, and commentary
onmetrics used.
Having introduced our EMS this year, we are now working on establishing clear direct and indirect emissions
reduction targets and actions, consistent with a low carbon Paris Agreement-aligned economy. A Carbon
Reduction Plan, incorporating science-based targets, will be shared with the Sustainability Committee for review
in 2022. We will seek to reduce our carbon offsetting as we implement this plan.
In the short term, we will continue to roll out ISO 14001 certification to XPS offices, which provides independent
audit of our EMS system and objectives. We will also work with landlords in our leased properties to switch to
using renewable energy wherever possible in 2022/23.
Read more about our response to climate change and our pledge to remain carbon neutral on pages 34 to 35.
Non-Financial Information Statement
The Companies Act 2006 requires us to disclose certain non-financial information in the Annual Report and
Accounts. This information can be found on the following pages:
Reporting matters Information to understand our policies and impacts
Environmental matters Focusing on our environment, see page 34
Employees Focusing on our employees, see pages 26 to 30
Respect for human rights Focusing on governance, see page 25
Social matters Focusing on our clients, see pages 31 to 32
Focusing on our communities, see page 33
Anti-bribery and corruption Focusing on governance, see page 25
Description of principal risks and impact of business activity Our principal risks and uncertainties, see pages 44 to 49
Description of our business model Our business model, see pages 6 to 7
Non-financial key performance indicators Our sustainability framework, see page 23
XPS Pensions Group Annual Report 202244
Principal risks and uncertainties
Managing risk
eectively
Robust and eective Risk Management ensures the Group is able to deliver
successful outcomes for our customers, supporting delivery of consistent financial
results. The frameworks in place allow the Group to clearly understand its risk
profile and adapt to new threats and opportunities in an agile way, supporting
further growth. These frameworks also provide the information needed to ensure
the appropriate skills, expertise and internal controls are in place and maintained
tomanage risks on an ongoing basis.
Over the year the Group has looked
to improve its risk management
capabilities and enhance its ability
to identify, evaluate and monitor
its principal risks. This has included
supporting our ability to address
the challenges presented by the
ongoing Covid-19 pandemic and
other changes to the external
threat environment such as the
continuing increases in phishing
and ransomware attacks.
Significant enhancements to the
risk management framework since
the last report include:
• the development of our existing
assurance frameworks in place to
ensure they continue to provide
independent validation of key
controls and their effectiveness.
This included the move to the
new AAF 01/20 framework,
expanding the scope of our
ISO 27001 certification and the
introduction of annual Cyber
Essentials Plus certification;
• completing the integration of
our Environmental Management
System into existing risk
frameworks, supporting
compliance with regulatory
obligations such as TCFD and
enabling the Group to gain
ISO14001 certification:
• the development of the
Executive level Risk Management
Committee, including the
expansion of attendees to include
the CFO and new CIO;
• the expansion of the dedicated
Information Security team,
including the introduction of
several additional technical
security enhancements; and
• the development of the third
party assurance framework, to
ensure that supply chain risks
are managed and operational
resilience plans are in place
andeffective.
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 exceeds
theGroup’s appetite.
The Board, with the support of the
Audit and Risk Committee, has
identified the principal risks that
could materially impact the Group’s
ability to achieve its objectives and
deliver its strategy.
These include general business
risks that are faced by the Group
and are comparable to those
that would be faced by similar
businesses operating in the
pensions sector. These general
business risks include:
• political/economic/social –
risks created by the political,
economic/financial and social
environment in which we
operate, e.g. war, demographic
trends, pandemics, Government
influence on business, currency
changes, market volatility,
inflation, interest rates
andliquidity;
• competition – risks of change on
the demand side of the business
due to changes in customer
demands or competitors, likely
to influence entire industry, e.g.
aggressive competitor pricing,
consolidation trends, major
technological innovation and
substitute technologies. These
changes may not directly affect
the Group but could influence the
entire industry; and
• 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 and industrial accidents.
45XPS Pensions Group Annual Report 2022
Strategic report
Board of Directors/Audit & Risk Committee
Operational Management
First line
Control of risks
Confirmation of
control eectiveness
Strategic overview
of controls
Key activities
Outcomes
• Implement governance, risk
and control frameworks
• Measure and manage
projectperformance
• Manage risk (within agreed
risk appetite)
• Design governance, risk
andcontrol framework
• Monitor adherence
toframework
• Provide timely,
balancedinformation
• Review framework
application objectively
• Oer independent
oversight of first and
second lines
Links to strategy:
Regulatory change
Expand services
Grow market share
Mergers and acquisitions
Senior management/Risk Management Committee
Risk Management
Second line
Internal Audit
Third line
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:
Strategy
Description
Risks linked to the
assumptions of future
development and size
of pensions market used
to develop the strategy
or business model or
business portfolio, e.g.
poor data, group think,
or lack of diversity
of opinions.
Key mitigations
The Board approves and regularly reviews the
Group’s strategy in conjunction with budgets,
targeting long term increases in shareholder value
and ensuring robust independent challenge.
Key decisions are assessed against risk appetites for
key Group risks with a risk management framework
in place to identify and escalate where strategic
decisions may have unintended impacts.
Rationale for change
Stable
Change during the year:
Increased risk
Stable
Improving
XPS Pensions Group Annual Report 202246
Principal risks and uncertainties continued
Strategic planning and execution
Description
Risks linked to assessing,
evaluating, planning
and executing the
strategy, e.g. poor
budgeting and planning,
inadequate or misleading
communications, or poor
management of change
or projects.
Key mitigations
The Board regularly reviews the Group’s strategy,
supported by the Executive with responsibilities
assigned for the delivery of initiatives and provision
of regular progress updates.
Specific project management resources are used to
deliver large scale change initiatives, allowing risks
to delivery of initiatives to be clearly identified at
planning stage along with mitigations.
Rationale for change
XPS has recruited Jon Marchant in
the new role of Chief Information
Officer. The CIO is instrumental
in driving and co-ordinating
technology development.
This has included the introduction of
a single Development and Delivery
team that co-ordinates and delivers
business initiatives across the Group.
Financial performance
Description
Risks relating to the
failure to monitor and
appropriately manage the
financial performance of
the Group on an ongoing
basis which could lead
to poor management
decisions, higher costs
and/or inaccurate external
financial reporting.
Key mitigations
The Group has a highly qualified and experienced
financial reporting team. There is an extensive
financial controls framework in place and key
controls are regularly tested by internal and external
audits. The Group undertakes detailed bottom-up
budgeting and reforecasting exercises with the final
budget and reforecast approved by the Board.
Management information is published on a regular
basis and the Executive Committee reviews the
financial performance of the Group at least monthly.
The Board receives and scrutinises the financial
performance of the Group at each Board meeting.
Rationale for change
The Group has progressively
improved it’s budgeting and
forecasting frameworks. These
improvements are evidenced
through consistent delivery of
financial results in line with or ahead
of market consensus.
Errors
Description
Risks relating to material
mistakes made by
staff, including the
non-compliance with
established procedures,
e.g. failure to calculate
benefits correctly, or
not following peer
reviewprocesses.
Key mitigations
The Group recruitment process ensures only high
calibre staff are recruited, who are then supported
by training programmes. Staff use standardised
documented processes and checklists for
keyprocesses.
Higher risk work is identified with peer review
and additional sign-off required, with regular
quality audits to confirm processes are being
followedcorrectly.
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.
Rationale for change
Stable
Change during the year:
Increased risk
Stable
Improving
Links to strategy:
Regulatory change
Expand services
Grow market share
Mergers and acquisitions
47XPS Pensions Group Annual Report 2022
Strategic report
Theft and fraud (financial and physical assets)
Description
Risks relating to the
safeguarding of Group
and client financial
and physical assets
from malicious actors,
e.g. stealing physical
assets, deliberate
misrepresentation
leading to fraud, or theft
from Group or client
bank accounts.
Key mitigations
The Group deploys robust physical and systems
access controls, along with enforcing segregation
of duties to preventing individuals from making
fraudulent payments or transfers.
These controls are supported with staff vetting,
training and awareness and are regularly
independently audited.
Insurance arrangements are in place to protect
against larger claims.
Rationale for change
Recent audits of key controls have
identified areas that can be improved
and these recommendations
have been actioned to further
enhanceframeworks.
Whilst we continue to see attempts
to impersonate pension scheme
members, controls are identifying
and preventing these.
Information/cyber security
Description
Risks relating to the
confidentiality, integrity
and availability of
information assets
including IT systems, e.g.
unauthorised access to
or disclosure of staff or
client information, denial
of access to systems or
data required, or business
continuity incidents
caused by equipment
breakdown/fire/flood.
Key mitigations
The Group has an Information Security Management
System (ISMS) in place to ensure that risks are
identified and managed effectively. This includes a
range of technical controls, a dedicated Information
Security team, and a 24/7 Security Operations
Centre. These are supported by regular independent
audits and penetration tests.
All staff are provided with comprehensive policies
and guidance, with awareness of key topics
reinforced with 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 Group’s data, facilities or systems.
These include documented plans which are
testedregularly.
Rationale for change
Whilst the external cyber threat level
continues to increase, the Group’s
capabilities to deal with these have
been significantly enhanced.
This includes the expansion of the
Information Security team, and
additional protective technologies,
with independent assurance
provided through Cyber Essentials
Plus certification.
New DRaaS and BaaS capabilities
give the Group strengthened
capabilities to deal with
ransomware attacks.
Sta/human resources
Description
Risks relating to
our people, e.g.
compensation, retention,
succession planning, skills
and competence, and
management capability.
Key mitigations
The Group’s recruitment strategy is to seek
professional, experienced and qualified staff utilising
robust staff recruitment and selection processes.
This is supported by comprehensive training,
development and performance management
processes, with longer-term incentives in place
toaidretention.
Regular key staff reviews ensure succession planning
is kept up to date and remains appropriate.
Staffing requirements are considered as part of the
strategy and budgeting process to ensure alignment
with business plans.
Rationale for change
Stable
Change during the year:
Increased risk
Stable
Improving
Links to strategy:
Regulatory change
Expand services
Grow market share
Mergers and acquisitions
XPS Pensions Group Annual Report 202248
Principal risks and uncertainties continued
Third party supplier/outsourcing
Description
Risks relating to the
use of third parties to
support our operations,
e.g. poor due diligence
and selection processes,
failure of a supplier to
follow agreed upon
procedures, or financial
failure of supplier
resulting in inability to
deliver service.
Key mitigations
The Group has a formal selection process that
ensures due diligence is carried out, which is
proportionate to the risk of the potential failure of
the third party.
The approvals and signing framework also ensure
contracts include key risks relating to services
provided and risks identified are managed and
accepted prior to agreements being signed. This
is supported by ongoing monitoring of key third
parties, including SLAs and financial status.
Where there is a reliance on a single supplier,
contingency plans are in place to protect
against failure.
Rationale for change
Stable
Client engagement
Description
Risks relating to the
provision of poor service
or advice to clients,
e.g. advice that is not
clear, not understood
by the client, or poorly
presented or uses out of
date technologies, but
not errors.
Key mitigations
The Group client engagement process ensures that
expectations are matched to Group capabilities.
Regular ongoing dialogue with clients ensures that
the services provided meet their requirements and
continue to be appropriate to their specific needs.
Client surveys are used to gather feedback and
identify trends and insights.
Rationale for change
Stable
Business conduct and reputation
Description
Risks that could
lead to a breach of
acceptable conduct or
ethics, impacting the
Group’s brand, image
or reputation. Failure
to ensure services are
appropriate for client’s
needs, any discrimination,
or a poor response
to a cyber incident or
clientcomplaint.
Key mitigations
The Group’s mission, vision and values clearly set
out the tone from the top, highlighting to all staff the
conduct and ethics that are expected from them at
all times. This is supported by a recruitment strategy
that seeks professional, experienced and qualified
staff who fit with the Group’s values.
Due diligence of third parties considers supply chain
risks, ensuring that only suppliers that comply with
their legal obligations are selected.
The Group has incident management processes in
place to ensure that it is able to effectively respond
to significant events that could impact its brand or
reputation, which is regularly tested.
Rationale for change
Stable
49XPS Pensions Group Annual Report 2022
Strategic report
Covid-19 (Coronavirus)
The Covid-19 pandemic continued
to impact normal business operating
conditions during 2021. The business
continuity and technology
infrastructure put in place at the
initial outbreak in 2020 continued
to keep staff safe and support
continued client servicing without
interruption. All staff have been
subject to home working periods
and throughout have maintained
our client service and other
obligations. Assessment of the
potential impacts of Covid-19 on
the Group 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 proactive
management actions have resulted
in resilient and stable residual risk
positions across the Group’s risk
profile. There is still uncertainty
with regard to the medium and
long-term consequences of
Covid-19, particularly with regard
tothe potential implications for
markets and economies. The Group
continues to review the external
environment and monitor any
potential horizon risks.
Geopolitical risk
The Group has assessed the
risk of the current geopolitical
situation. The Group does not have
any clients in Russia, or business
relations with Russian owned firms.
Therefore, there is no significant
risk to the Group as a result of the
current climate.
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 confirm in the
Directors’ Responsibility Statement
on page 95 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
ofthe Board:
Paul Cuff
Co-Chief Executive Officer
Ben Bramhall
Co-Chief Executive Officer
Viability Statement
The Group’s business activities, together
with the factors likely to affect its future
development, performance and position,
are set out in the reports referred to in
the Overview section on page 91 of this
Directors’ Report.
The Directors have assessed the long
term prospects of the Group based
upon business plans and upon cash flow
projections for the three-year period
ending 31 March 2025. The three-year
period was chosen as it is considered
the longest time frame over which any
reasonable view can be formed. The
forecasts and cash flow projections being
used to assess going concern cover the
period up to June 2023. A 12 month period
from the sign-off of the accounts is used
for the going concern review as the Group
produce more detailed budgets and
forecasts for this time frame which have
proved to be very reliable in the past.
These forecasts have been
comprehensively stress-tested by using
simulation techniques involving sensitivity
analysis. The stress-testing involved
removing revenue relating to a large part
of customers discretionary spend from
Group revenues from the forecasts. A
high percentage of the Groups revenue
relate to compliance work which is non-
discretionary. Mitigating actions, which
include reducing certain non-fixed costs
were also factored into the stress-testing.
In forming their opinion, the Directors
have performed a robust assessment of
the principal risks and uncertainties facing
the Group as set out on pages 44 to 49.
In addition, note 2 on page 117 of the
accounts includes the Group’s objectives,
policies and processes for managing its
capital, its financial risk management
objectives and its exposure to credit risk,
liquidity risk and market risk.
The Directors believe that dramatic
changes in the future development
and size of the pensions market which
underpin the strategy of the Group as well
as risks relating to cyber security including
ransomware attacks could threaten the
longer term viability of the Group. These
risks have been considered in detail,
including potential mitigating actions and
the direction of travel for these specific
risks on pages 45-48.
The Group had £10 million of cash
at 31March 2022 and a £100 million
committed financing facility with an
accordion of £50 million until October
2025. At 31 March 2022, £64 million of
this facility was drawn. The facility is
subject totwo covenants: net leverage
and interest cover. These covenants
are forecast to be met throughout the
viability period. Further details of the
financial position of the Group, its cash
flows, liquidity position and borrowing
facilities are described within the financial
statements and notes.
The current economic situation and
inflationary environment is not a
significant risk to the Group as increases
in costs are largely protected against
by the Group’s contractual ability to
increase revenue from customers by an
amount linked to inflation. The Group
has a strong balance sheet, access
to financial resources and long-term
growth prospects. As a consequence,
the Directors believe that the Group is
well placed to manage its business risks
successfully.
Even in the worst case scenarios
considered plausible by the Directors,
the cost reduction actions available to
the Group, the reduction of non-essential
capital expenditure and management
of working capital are expected to be
effective and sufficient to ensure the
continued viability of the Group.
After making enquiries, the Directors
have formed a judgement, at the time
of approving the financial statements,
that there is a reasonable expectation
that the Group has adequate resources
to continue in operational existence and
meet its liabilities as they fall due over the
three-year assessment period. For this
reason, the Directors continue to adopt
the going concern basis in preparing
the financial statements. At the same
time, the Directors also considered the
appropriateness of adopting the going
concern basis of accounting in preparing
the financial statements and the Directors’
identification of any material uncertainties
to the Group and the Parent Company’s
ability to continue to do so over a period
of at least 12 months from the date of
approval of the financial statements.
XPS Pensions Group Annual Report 202250 XPS Pensions Group Annual Report 2022
Chairman’s governance report
Robust corporate governance
is vital and provides a
sustainable
platform
for success and
growth of the Group
As our excellent
financial results
demonstrate, XPS
employees continued
to provide an
exceptional level of
service to our pension
scheme clients and
their underlying
members, despite
the disruption and
challenges we all faced.”
Tom Cross Brown,
Chairman
51XPS Pensions Group Annual Report 2022
Governance
XPS’s
stakeholders’
interests were key
to the decisions
the Board made
during the year.”
Covid-19 pandemic
For the second consecutive year,
the Covid-19 pandemic prevented
physical Board meetings for the
majority of the reporting period.
Through regular virtual meetings,
the Board and its members
were still able to carry out their
duties effectively and we were
delighted to hold one in-person
Board meeting before the year
end. The same was clearly true for
our employees. As our excellent
financial results demonstrate, XPS
employees continued to provide
an exceptional level of service to
our pension scheme clients and
their underlying members, despite
the disruption and challenges we
all faced.
Board composition
There were no changes to the
Board during the review period
to report. However, as announced
post year end in April 2022, I have
taken the decision to retire from
my role as Chairman of the Group.
I will therefore not be standing for
re-election at this year’s Annual
General Meeting, which is to be
held on 8 September 2022, and
will retire from the Group at the
conclusion of the meeting. A
process to identify and appoint
my successor is underway
and this is being led by the
NominationCommittee.
My successor in the role of Chair of
the Board will be joining a Group
that takes its responsibilities to all
stakeholders and wider society
extremely seriously and one that
continually strives to improve
itself at all levels at all times. It
has been a pleasure to be a part
of XPS’s journey since its IPO in
2017 and I wish my successor,
the rest of the Board and all XPS
employees continued success in
the years ahead.
The report below outlines how the
Company has applied the main
principles of the 2018 Corporate
Governance Code (the “Code”),
and how it has complied with all
relevant provisions of the Code
during the reporting period.
Tom Cross Brown
Chairman
22 June 2022
Statement of compliance with the UK Corporate Governance Code
In 2021, the Company has
applied the principles and
complied with the provisions of
the UK Corporate Governance
Code 2018 as they apply to it as
a “smaller company” (defined in
the Code as being a company
below the FTSE 350). The
Code is publicly available at
www.frc.org.uk.
Further information on how the
Company has applied the five
overarching categories of the
principles can be found on the
following pages:
(i) Board leadership and
Company purpose: pages
52 to 53;
(ii) division of responsibilities:
pages 57 to 58;
(iii) composition, succession
and evaluation: pages 54,
61 and 63,
(iv) audit, risk and internal
control: pages 64 to 67; and
(v) remuneration:
pages 70 to 90.
XPS Pensions Group Annual Report 202252
Board of Directors
Tom Cross Brown
Independent
Non-Executive Chairman
Appointed: January 2017–
September 2022
Committee membership
Key strengths
• Mergers and acquisitions,
strategy, financial reporting,
listed company experience,
investor relations and corporate
governance are noted as Tom’s
key skills
Key experience
• CEO of ABN AMRO Asset
Manager until 2003
• 21 years at Lazard Brothers &
Co. until 1997, CEO 1994–1997
• Non-Executive Chairman of
Pearl Assurance plc 2005–2009
• Non-Executive Chairman
of Just Retirement Group
2006–2016
• Non-Executive Director of
Artemis Alpha Trust plc
2006–2018
• Non-Executive member of
Management Committee,
Artemis Investment
Management LLP 2011–2018
Current external listed
company directorships/
keyappointments:
• None
Meetings attended:
11/11
Paul Cu
Co-Chief
Executive Ocer
Appointed: October 2016
Ben Bramhall
Co-Chief
Executive Ocer
Appointed: April 2014
Committee membership
N/A
Key strengths
• Qualified actuary with
20+years of experience
inthepensions industry
• Responsible for raising the
profile of XPS in the market,
generating new business and
the Group strategy with regard
to M&A opportunities and
technology investment
• Mergers and acquisitions,
strategy, pensions industry and
investor relations are noted as
Paul’s key skills
Key experience
• Partner at KPMG 2008–2016
• Head of KPMG London pensions
team prior to joining XPS
Current external listed
company directorships/
keyappointments:
• None
Meetings attended:
11/11
Committee membership
N/A
Key strengths
• Qualified actuary with
20+years of experience
inthepensions industry
• Responsible for day-to-day
operation of the business,
including provision of services
to existing clients, revenue
generation and the Group’s
people strategy
• Mergers and acquisitions,
strategy, pensions industry,
risk management, workforce
engagement, investor relations,
business development and
operational management are
noted as Ben’s key skills
Key experience
• Eight years at KPMG
Current external listed
company directorships/
keyappointments:
• None
Meetings attended:
11/11
Key to Committee
membership
Chairman
Member
Audit & Risk
Remuneration
Nomination
Sustainability
The Board is composed of seven members, consisting of the Chairman,
three Executive Directors and three independent Non-Executive Directors.
53XPS Pensions Group Annual Report 2022
Governance
Snehal Shah
Chief Financial Ocer
Appointed: July 2019
Margaret Snowdon OBE
Independent
Non-Executive Director
Appointed: January 2017
Alan Bannatyne
Senior Independent
Non-Executive Director
Appointed: January 2017
Sarah Ing
Independent
Non-Executive Director
Appointed: May 2019
Committee membership
Key strengths
• Chartered accountant with
20+years of experience
• Mergers and acquisitions,
post-deal integration, strategy,
risk management, financial
reporting, listed company
experience, investor relations,
corporate governance and
operational management are
noted as Snehal’s key skills
Key experience
• Ten years with PwC
• Senior finance roles including
Group Financial Controller,
Head of Investor Relations and
Finance Director for Integration
at Ladbrokes plc 2009–2017
• Interim Director (Finance &
Corporate Governance) at
Parkdean Resorts Ltd and
Interim Director of Finance
& Investor Relations at
Countrywide plc 2017–2019
Current external listed
company directorships/
keyappointments:
• None
Meetings attended:
11/11
Committee membership
Key strengths
• 40+ years of experience
inpensions industry
• Mergers and acquisitions,
strategy, risk management,
workforce engagement,
pensions industry, corporate
governance, business
development, investment
strategy, technology, customer
service, trusteeship and
operational management are
noted as Margaret’s key skills
Key experience
• Partner and Director level
positions with leading
employee benefit consultancies
• Previous Non-Executive Director
of The Pensions Regulator
• Appointed an OBE in 2010 and
received many awards for her
contribution to pensions
Current external listed
company directorships/
keyappointments:
• Non-Executive member
ofPhoenix Group With
ProfitsCommittee
• Advisory Board member
of Moneyhub Financial
Technology Limited
• Trustee of The Pension
SuperFund
• Chair of Pension Scams
Industry Group
Meetings attended:
11/11
Committee membership
Key strengths
• Chartered accountant
• Recent and relevant
financialexperience
• Strategy, risk management,
financial reporting, listed
company experience, investor
relations and corporate
governance are noted as
Alan’skey skills
Key experience
• Qualified with Deloitte & Touche
• Previous Commercial Manager
of Primecom and Financial
Director of Foresight – both
subsidiaries of Primedia
• Group Financial Controller of
Robert Walters plc 2002–2007
Current external listed
company directorships/
keyappointments:
• Chief Financial Ocer of
Robert Walters plc since
March2007
Meetings attended:
11/11
Committee membership
Key strengths
• Chartered accountant
• 30+ years of experience in
financial services including
audit, corporate finance,
investment banking and
assetmanagement
• Mergers and acquisitions,
financial reporting, investor
relations and risk management
are noted as Sarah’s key skills
Key experience
• Previously a top-rated equity
research analyst covering the
UK general financial services
sector and also founded and
ran a hedge fund investment
management business
Current external listed
company directorships/
keyappointments:
• Non-Executive Director of CMC
Markets plc since September
2017, where she chairs the
Remuneration Committee
• Non-Executive Director of
Marex Group since July 2021
where she chairs the Audit &
Compliance Committee
• Non-Executive Director of
Gresham House plc since
September 2021, where she
chairs the Audit Committee
Meetings attended:
11/11
XPS Pensions Group Annual Report 202254
Board and Committee Composition and Operation
Group governance at a glance
Board composition
Independence
Gender
Non-Executive
tenure
Non-Executive
gender
Age
Ethnicity
Non-Executives 57%
Executives 43%
Male 71%
Female 29%
3–6 years 75%
Less than
3 years 25%
Male 50%
Female 50%
41–50 42%
51–60 29%
61+ 29%
White 86%
Minority
ethnic group 14%
5
5
4
3
6
7
7
6
4
4
7
7
7
Environmental and social sustainability
Mergers and acquisitions
Risk management
Financial reporting
Workforce engagement
Prior FTSE experience
Pensions industry
Cyber security
Investor relations
Marketing
Corporate governance
Business development
Operational management
Board composition
and independence
The Board is composed of
seven members, consisting of
the Chairman, three Executive
Directors and three independent
Non-Executive Directors. The
Company complies with the
provisions of the Code for smaller
companies below the FTSE 350
which requires the composition
of the board of directors of a UK
listed company to include at least
two independent non-executive
directors (excluding the chairman).
The Board concluded that Tom
Cross Brown met the independence
criteria set out in the Code on his
appointment as Chairman. Tom
Cross Brown will not stand for
re-election at the next Annual
General Meeting in September
2022 and will retire as the Group’s
Chairman as of conclusion of the
AGM. The Nomination Committee
has commenced the recruitment
process for asuccessor.
The Board considers that
Non-Executive Directors Alan
Bannatyne, Margaret Snowdon
OBE and Sarah Ing are each
independent of management in
character, judgement and opinion
and are free from relationships or
circumstances that could affect
their judgement. One of the
Non-Executive Directors, Alan
Bannatyne, acts as the Senior
Independent Director.
The Board benefits from the wide
experience of its Non-Executive
Directors. Biographical details of all
Board members are given on pages
52 and 53.
Board members with core/secondary skill
55XPS Pensions Group Annual Report 2022
Governance
Board Committees
The Audit & Risk Committee’s role
is to assist the Board in discharging
its oversight responsibilities by
reviewing and monitoring the
following: the integrity of the
financial information provided to
shareholders; the effectiveness of
the Company’s system of internal
controls and risk management;
the external audit process and
auditor; and the processes for
compliance with laws, regulations
and ethical codes of practice.
Further details are given in the
Audit & Risk Committee Report
onpages 64 to 67.
The role of the Remuneration
Committee is to assist the Board
tofulfil its responsibility to shareholders
to ensure that remuneration policy
and practices ofthe Company
reward fairly and responsibly, with
a clear linkto corporate and
individual performance, having
regard to statutory and regulatory
requirements. The Committee
recommends the policy the Board
should adopt on executive
remuneration and, within the terms
ofthe Directors’ Remuneration
Policy approved by shareholders at
the AGMin September 2020,
determines and agrees with the
Board the levels of remuneration
for each of the Executive Directors,
the Company Chairman and
designated senior management
below Board level. Further details
are given in the Remuneration
Report on pages 70to 90.
The role of the Nomination Committee
is to undertake an annual review of
succession planning and ensure
that the membership, composition
and diversity of the Board and its
Committees, including the balance
ofskills, remain appropriate. The
Committee also reviews the outcome
of the annual Board effectiveness
review to determine any changes
required. Further details are given
in the Nomination Committee
Report on pages 62 and 63.
The role of the Sustainability
Committee is to support the
Board’s oversight responsibilities
of the Company’s environmental,
social and governance impact and
initiatives. The Committee intends
to improve practices, reporting
and communication in relation to
factors that have a material impact
on business strategy, business
performance and the long-term
sustainability of the Group.
Further details are given in the
Sustainability Committee Report
on pages 68 and 69.
Written terms of reference for
each Committee are subject
to annual review and periodic
updating to reflect any changes
in legislation, regulation or best
practice.The terms of reference for
the fourmain Board Committees
are available on the Company’s
website at www.xpsgroup.com/
investors/corporate-governance/
committees/.
The Company complies with the
Code provision that a UK listed
company’s remuneration and audit
committees should comprise
at least three independent
non-executive directors and that
the nomination committee should
comprise a majority of independent
directors. The Company Chairman
is not a member of the Audit &
Risk Committee, in compliance
with the Code. Each Chair reports
on the business of their previous
Committee meeting at the next
scheduled Board meeting.
Executive Committee
The Co-Chief Executive Officers
operate an Executive Committee to
support them in the performance
oftheir duties, including the
development and implementation
ofstrategy and the day-to-day
operational management of the
business. During the year the
Committee was comprised of
the Executive Directors, Chief
Information Officer, Head of
Advisory, Managing Director
of Administration, Head of
Investment, General Counsel
andHR Director.
XPS Pensions Group Annual Report 202256
Board and Committee Composition and Operation continued
Board operation and meetings
Decisions on operational matters
are delegated by the Board to the
Executive Directors, consistent with
the schedule of matters reserved
for Board approval. In advance of
scheduled Board meetings, each
Director receives documentation
providing updates on Group
strategy, finances, operations
and business development. The
Board meets at least seven times
a year and at other times as and
whennecessary.
The Board reviews the business
strategy for the year ahead at the
beginning of each financial year
and receives strategy updates
at each Board meeting. At least
once a year the Board will hold a
strategy session to discuss and
review business strategy. The
Directors are expected to attend
all meetings of the Board and any
Committees of which they are
members, and to devote sufficient
time to the Company’s affairs
to fulfil their duties as Directors.
Non-Executive Directors each need
to commit to a minimum of 28 days
of service per year to the Company.
The Board is satisfied that each
Non-Executive Director commits
sufficient time to the Company.
Non-Executive Directors remain in
regular contact with the Chairman,
whether in face-to-face meetings
or by telephone, to discuss matters
relating to the Company and
on occasion meet without the
Executive Directors present.
If a Director is unable to attend
a meeting, they will still receive
Board papers before the meeting
and they are encouraged to submit
any comments to the Chairman
to ensure that their views are
recorded and taken into account
during the meeting. The Director
will also receive the minutes and
matters arising in the usual way
in order to ensure that they are
fully informed.
The Board is ultimately responsible
for the effectiveness and
monitoring of the Group’s system
of internal controls. The Audit &
Risk Committee’s role is to assist
the Board with its oversight
responsibility by reviewing
and monitoring the Company’s
system of internal controls. It met
four times in the financial year
and at its meeting in June 2022
considered the internal controls
assurance framework used during
the financial year, concluding that
it was sound and appropriate for
thebusiness.
Directors are reminded at the
commencement of each meeting
to notify the Board of any conflicts
of interest. Any actual or potential
conflicts of Directors with the
interests of the Company that arise
must be disclosed for consideration
and, if appropriate, authorisation by
the Board in accordance with the
Company’s Articles of Association.
The Board may authorise conflicts
and potential conflicts, as long as
the potentially conflicted Director is
not counted in the meeting quorum
and does not vote on the resolution
to authorise. Directors are required
to notify the Group Chairman
when a conflict or potential conflict
does arise in order that Board
authorisation can be considered.
If the Board determines that a
conflict or potential conflict can
be authorised, it may impose
additional conditions on the
Director concerned.
A formal induction programme
has been developed and tailored
for any new Directors joining the
Board. The Chairman, with the
support of the Company Secretary,
ensures that the development and
ongoing training needs of individual
Directors and the Board as a whole
are reviewed and agreed following
the annual performance evaluation
of the Board, its Committees and
individual Directors.
Directors may seek independent
professional advice at the
Company’s expense where they
consider it appropriate in relation
to their duties. All Directors have
access to the advice and services
of the Company Secretary.
Embedding culture
The Board recognises the importance of its role in setting the tone of the Group’s culture, championing
the behaviours we expect to see and embedding these throughout the Group. In addition to the Board,
the Executive Committee upholds our values and ensures that the importance of compliance and
integrity is recognised at all levels throughout the Group. At XPS, our values are embedded in everything
we do; you can read more about our values on page 24.
We are
ambitious
We do the
right thing
We are
agile
We are
helpful
We are
experts
57XPS Pensions Group Annual Report 2022
Governance
Division of Responsibilities
Board responsibilities
The Board is focused on providing entrepreneurial and
sustainable leadership to the Group. It is responsible
for directing and controlling the Group and has overall
authority for the effective and prudent management
and conduct of the Group’s business and the Group’s
strategy and development. The Board monitors
performance and is responsible for ensuring that
appropriate financial and human resources are in place
for the Group to meet its objectives, and takes the
lead in setting and embedding the Group’s culture,
values and standards. The Board is also responsible
for ensuring the maintenance of a sound system
of internal control and risk management (including
financial, operational and compliance controls, and
for reviewing the overall effectiveness of systems in
place), and for the approval of any changes to the
capital, corporate or management structure of the
Group. All Directors devote sufficient time to their
roles. There is a formal schedule of matters reserved
for Board approval which is subject to annualreview
and published on the Company’s website:
www.xpsgroup.com.
The matters reserved for the Board include:
• the Group’s long-term objectives, business strategy
and risk appetite;
• the Company’s policies, culture, values
andstandards;
• annual business plans, budgets and forecasts;
• extension of the Group’s activities into new business
or geographic areas;
• changes in capital structure and any form of
fundraising or asset securitisation;
• major changes to the corporate structure, including
material acquisitions and disposals;
• interim and annual financial statements and
dividend policy;
• material guarantees, indemnities and letters
of comfort;
• the Group’s system of internal control and
riskmanagement;
• contracts which are material strategically or
byreason of size or duration;
• calling of shareholder meetings and
relateddocumentation;
• changes to the membership of the Board
anditsCommittees;
• remuneration policy for the Directors and
seniormanagement;
• introduction of new share incentive plans or major
changes to existing plans; and
• the Company’s overall corporate
governancearrangements.
There is a clear division of key responsibilities between
the Chairman and the Co-CEOs.
Board division of responsibilities
Tom Cross Brown
Chairman
• Leads the Board and manages the effective
leadership and governance of the Board
• Provides direction and focus on business strategy,
performance, value creation andaccountability
• Ensures the Board establishes a strategy that
facilitates the entrepreneurial development
of the Group and promotes the long-term
sustainable success of the Group’s approach
• Ensures clear structure for effective operation of
the Board and its Committees
• Sets Board agenda and ensures sufficient time is
allocated to promote effective debate to support
sound decision making
• Ensures the Board receives precise, timely and
clear information
• Encourages Directors to contribute fully to Board
discussions, ensuring sufficient challenge of
major proposals
• Meets with the Non-Executive Directors
independently of the Executive Directors
• Leads the process for evaluating the performance
and development needs of the Board, its
Committees and individual Directors
• Leads the Board succession planning process and
chairs the Nomination Committee
• Acts as a sounding board for the Co-CEOs on
important business issues
• Ensures the Board sets the risk appetite it is
willing to take in the implementation of strategy
• Ensures effective communication with
shareholders to ensure that the Board
understands their views on governance and
performance against the strategy
• Ensures effective communication with other
keystakeholders
XPS Pensions Group Annual Report 202258
Division of Responsibilities continued
Co-Chief Executive Officers
• The Co-CEOs have worked together for over 20 years, having both
started their careers as trainee actuaries at Punter Southall, before
spending many years in the same team at KPMG
• Their long friendship and history of working together, and their
complementary skill sets, make the Co-CEO arrangement a success
• The Co-CEOs report to the Chairman and the Board and are
responsible for jointly leading the Group’s business and managing it in
accordance with the business plan approved by the Board, the Board’s
overall risk appetite, the Group policies approved by the Board and its
delegated authorities, and all applicable laws andregulations
• The Co-CEOs recommend budgets and forecasts for Board approval,
lead the investor relations programme and maintain a dialogue
with the Chairman on significant business developments and
strategy issues
• Both Co-CEOs have leadership roles on large clients
Paul Cuff
Co-Chief Executive Officer
• Primarily responsible forraising
the profile ofXPS in the
market andgenerating new
business,both in traditional
service areas and in the
development of new services
asthe market evolves
• Develops the Group’s
strategy with regard to
M&A opportunities and
technologyinvestment
Ben Bramhall
Co-Chief Executive Officer
• Primarily responsible for the
day-to-day operation of the
business, including the provision
of services to existing clients,
revenue generation andthe
Group’s peoplestrategy
• Develops the Group’s internal
strategy to pursue large
opportunities within the market
Alan Bannatyne
Senior Independent
Non-Executive Director
• Acts as a sounding board
for the Chairman and
other Directors
• Leads the annual review of the
Chairman’sperformance
• Leads any Non-Executive
Director meetings without the
Chairman present
• Acts as an additional point
of contact for shareholders,
if they have concerns that
contact through the normal
channels have failed to resolve
or for which suchcontact
isinappropriate
• Chair of the Audit &
Risk Committee
Board division of responsibilities continued
59XPS Pensions Group Annual Report 2022
Governance
Engaging with our stakeholders
S172 Statement
Stakeholder engagement is
central to the Group’s strategy and
sustainable success. The Board of
Directors of the Company acts in
good faith to promote the long-
term success of the Company
for the benefit of its members as
a whole, taking into account the
factors as listed in Section 172 of
the Companies Act 2006:
a. the likely consequences of any
decision in the long term;
b. the interests of the
Company’semployees;
c. the need to foster the
Company’s business
relationships with suppliers,
customers and others;
d. the impact of the Company’s
operations on the community
and the environment;
e. the desirability of the Company
maintaining a reputation for
high standards of business
conduct; and
f. the need to act fairly as
between members of
the Company.
The Company’s purpose, values
and culture are established by the
Board and embedded throughout
the Group and key decisions made.
When making key decisions,
the Board is careful to consider
the interests and priorities
of stakeholders, and the
consequences the decisions
may have. The Board recognises
that stakeholders have differing
interests and gives careful
consideration to balancing the
views of all stakeholder groups.
You can read about the Group’s
principal risks and key mitigations,
including those in relation to
clients, employees andsuppliers,
on pages 44 to 49.
Key interests Engagement strategy
Clients
• Products and services
• Service performance
and efficiency
• Competitiveness and value
• Compliance and data protection
• Sustainable products
The Company engages with clients through key contacts
who work day to day with the clients. We also complete client
satisfaction surveys every two years and the Board reviews the
results. We are pleased that our client survey this year shows
that clients are very positive, with 93% of clients “satisfied”
or better and 86% of clients likely to recommend XPS. We
also hold conferences, webinars and training exercises for
clients throughout the year. We work with clients to establish a
relationship that works for them; an example of an innovative
way in which we have collaborated with BT plc to satisfy its
requirements can be found on page 9.
Shareholders
• Financial performance and growth
• Dividends
• Timely and relevant communications
• Sound corporate governance and
stewardship
• Strategy aligned with long-term
sustainability and value creation
We engage with our shareholders in various ways throughout
the year including meetings with investors and results roadshows
hosted by the Executive Directors and regular calls with
analysts, investors and potential investors. The Investor section
of the XPS website was updated and improved during the
year, to include useful information for our shareholders. The
Board also attends the Annual General Meeting and is available
to answer shareholder questions. Sarah Ing is appointed as
the designated Shareholder Engagement Non-Executive
Director. Sarah attends the Company’s results presentations
for analysts and shareholders. Sarah meets and speaks to
shareholders and prospective investors as well as sell side
analysts. The Remuneration Committee Chair engages through
consultation and meetings with major shareholders in relation
to executiveremuneration.
Regulators
• Transparency and openness
• Proactivity and engagement
in consultation
• Compliance with regulation
and legislation
The Company works with the regulators by responding to
requests and consultations, submitting returns and attending
industry meetings. Margaret Snowdon is an adviser to The
Pensions Regulator and regularly updates the Board on
industry developments.
XPS Pensions Group Annual Report 202260
Engaging with our stakeholders continued
Key interests Engagement strategy
Employees
• Engagement
• Reward
• Career opportunities
• Training and development
• Wellbeing
• Equality, inclusion and diversity
• Work-life balance and flexibility
Margaret Snowdon is appointed as the Designated Employee
Engagement Non-Executive Director. Margaret is Chair of the
Employee Engagement Group (EEG) and updates the Board
after each EEG meeting. Employees complete an annual
employee survey, the results of which are analysed in detail
and shared with the Board, and an action plan is agreed. An
external and anonymous whistleblowing hotline is available to
employees 24/7; any reports can be escalated to the Board as
required. Employees have been at the forefront of the Board’s
discussions and considerations in relation to the Covid-19
pandemic and the My XPS, My Choice trial. You can read
moreabout employee engagement on pages 26 to 30.
Suppliers
• Responsible procurement and ethics
• Fair contract and payment terms
• Cost efficiency and value
The Group has a designated Procurement team and an
external company which engages with and carries out due
diligence on its suppliers. We conduct formal and transparent
tender processes when required. An annual review of existing
suppliers, which provide services that are deemed as higher
risk (i.e. process large amounts of our data or have access to
our offices), is completed in addition to quarterly performance
reviews with key suppliers. The Board annually approves the
XPS Modern Slavery Statement. Our Supplier Code of Conduct
communicates what we expect from our suppliers.
Communities,
charities and
environment
• Local and worldwide social
and environmental impact
• Health and safety
The Sustainability Committee is a Committee of the Board,
and 50% of members are Board members. The Committee
Chair, Sarah Ing, updates the Board following each meeting.
You can read the Committee report on pages 68 and 69. XPS
is excellently positioned to ensure our positive impact is wider
than the Group itself as we advise our clients on sustainable
investments; you can read about this on pages 31 and 32. XPS
has reported on TCFD this year; you can read this on pages 40
to 43. XPS achieved carbon neutrality in 2021; you can read
more about this on pages 34 and 35. You can also read about
our community support on page 33.
Examples of stakeholder key interests being considered and impacting decisions during the year:
My XPS, My Choice:
Employees – The initiative was formed following the pandemic
resulting in all employees working from home for a period of
time; we engaged with employees throughout the pandemic to
understand how employees work most efficiently. We engaged
via the EEG, surveys and discussions between employees and
line managers and formed this innovative initiative. A trial
was completed, and employees were consulted throughout.
91% of employees were satisfied or better in relation to their
initial experience of the new flexible working model (Employee
survey 2021).
Clients – The satisfaction of and efficiency for clients remain
of paramount importance and were monitored throughout the
pandemic and the trial. 77% of clients were “very satisfied”
with XPS (Client satisfaction survey 2021).
Shareholders – It is important that our shareholders continue
to see the Group’s growth in-line with consensus, and to
achieve this we must retain the talented people we have
by offering an attractive and flexible way of working to
ouremployees.
Environment – The nature of the flexible working initiative
has resulted in less travel to offices, and therefore less
environmental impact as a result of travel.
Michael J Field Consulting Actuaries acquisition:
Shareholders – Our shareholders’ key interests are the
growth of the Group and value creation. It is with this
in mind that part of the XPS strategy is growth through
acquisition.
Employees – Through the acquisition, we welcomed new
employees to the Group. It is important to us that these
employees feel welcomed and integrated as quickly
and effectively as possible, with as minimal disruption
aspossible.
Clients – The clients we welcomed as a result of the
acquisition are important to us and the success of
the acquisition. We aim to ensure minimal impact and
disruption to our new clients, whilst developing the
relationships and access to XPS’s experience, offerings
and skills.
Regulators – We ensure that we meet all regulatory
requirements when conducting an acquisition.
61XPS Pensions Group Annual Report 2022
Governance
Board eectiveness
Annual General Meeting
The Company’s Annual General Meeting (AGM) will take place at 12pm on Thursday 8 September 2022 at the
Group’s Reading office. The AGM notice setting out the resolutions to be proposed at the meeting and including
explanatory notes, together with this Annual Report and Accounts, will be available on the Company’s website
(www.xpsgroup.com) and distributed to shareholders who have elected to receive hard copies of shareholder
information at least 20 working days prior to the date of the meeting. Voting at the AGM will be conducted by
way of a poll and the results will be announced through the London Stock Exchange Regulatory News Service
and made available on the Company’s website. All Board members are expected to attend the meeting and the
Chair of each of the Board’s Committees will be present toanswer any questions put to them by shareholders.
Board evaluation
The Board acknowledges that the Code requires regular external Board evaluations (as a company below FTSE
350) and conducted an external Board evaluation in 2020, facilitated by Ceradas Limited. The next externally
facilitated evaluation will be conducted in 2023.
In 2022, the Board conducted an internal evaluation conducted by the Company Secretary and Chairman, using
questionnaires and covering all aspects of Board effectiveness, including the Committees of the Board. All Board
members completed the evaluation.
2022 outcome
The overall outcome of the evaluation process was positive. The following actions were identified to further
improve the effectiveness of the Board:
• the handover and succession of the Chair role following Tom Cross Brown’s retirement in September 2022 will
be a key focus for the Board in the year ahead;
• relations and communications with shareholders will continue to develop, including the potential for new
introductions when the Group’s new Chair is appointed; and
• the Board will continue to develop engagement with Group employees, including re-introducing Non-Executive
Director and employee networking sessions (previously halted due to Covid-19).
Review of Chairman’s performance
The Non-Executive Directors, in addition to their role of constructively challenging and facilitating the development
of the Group’s strategy, meet annually to evaluate the performance of the Chairman, led by the Senior Independent
Director. The Senior Independent Director also engages with the Executive Directors separately for their
feedback. As the Chairman, Tom Cross Brown, has confirmed his intention to retire and not stand for re-election
at the 2022 AGM, the directors are focused on recruiting a successor and ensuring an orderly handover.
2021 evaluation outcomes and progress
The 2021 evaluation identified the following areas for improvement, which have been improved as follows:
Actions from 2021 Improvements
The Board will consider other mechanisms for shareholder
engagement, including holding a capital markets day, and
would develop the Group’s Investor Relations function with
external support.
The Group has appointed an external firm to support with
investor relations and a capital markets day will be held in
future. The Remuneration Committee Chair has been in
touch with the Group’s largest investors and agreed to
maintain regular dialogue in relation to remuneration policy
and practices.
The Board will work cohesively to continue key strategic
themes and continue to hold an annual Board
strategysession.
A strategy meeting was held and attended by all Board
members, where effective and engaging discussions
werehad.
XPS Pensions Group Annual Report 202262
Nomination Committee
Succession planning
for a sustainable future
The Committee supports the Board by
reviewing the comprehensiveness and
reliability of assurances on governance,
riskmanagement, the control environment
and the integrity of the financial statements
and the Group’s Annual Report.
Committee membership Attendance
Chair
Tom Cross Brown 2/2
Members
Alan Bannatyne 2/2
Sarah Ing 2/2
Margaret Snowdon OBE 2/2
Attending by invitation
Co-Chief Executive Officers
Chief Financial Officer
Dear Shareholder,
I am pleased to present the report
of the Nomination Committee for
the year ended 31 March 2022. The
Committee has met twice during
the 2021/22 financial year and all
meetings were attended by all
members of the Committee. The
Committee intends to continue to
meet at least twice annually with
additional meetings as required.
The Nomination Committee
assists the Board in determining
the composition and make-up
of the Board, including its skills,
knowledge, experience and
diversity. It is responsible for
developing and maintaining a
formal, rigorous and transparent
procedure for identifying
appropriate candidates for
Board appointments and making
recommendations to the Board.
The Committee is also responsible
for keeping under review the
leadership needs of the Group,
both Executive and Non-Executive,
and for ensuring that succession
planning focuses on the continued
ability of the Group to deliver its
strategic goals and compete
effectively. The terms of reference
of the Committee are reviewed
annually and available on the
Company’s website,
www.xpsgroup.com.
63XPS Pensions Group Annual Report 2022
Governance
Board changes
The members of the Committee
are Alan Bannatyne, Margaret
Snowdon OBE, Sarah Ing and me.
Members of the management team,
including the Executive Directors,
are invited to Committee meetings
as the agenda dictates.
During the year, the Committee
reviewed the size of the Board,
the balance between Executive
and Non-Executive Directors and
the diversity of the Board, and
was satisfied with the composition
and balance of skills, experience,
independence and knowledge of
the Board and each Committee.
Chairman succession
Following the year end, I informed
my fellow Directors of my intention
to retire and not stand for re-election
at the September 2022 AGM.
The Nomination Committee,
led by Margaret Snowdon, has
commenced its search for a
successor and I have not partaken
in the search or decisions
surrounding this. As part of the
recruitment effort, the Committee
has considered and reviewed
the skill set and experience of
all Directors to identify any skills
gaps following my retirement. The
Committee has engaged external
search firm Russell Reynolds, with
which the Group and Directors
have no other connections. The
Group will keep stakeholders
updated by public announcement
as the search progresses. The
identified successor will chair the
Nomination Committee following
their appointment.
Board effectiveness evaluation
During the year, an internally
facilitated Board effectiveness
evaluation was completed; further
details of the outcomes can be
found on page 61. The Group
intends to conduct an externally
facilitated effectiveness review in
2023, three years following the
prior external evaluation.
Succession planning
During the year, the Nomination
Committee reviewed detailed
succession plans covering the roles
considered key to the business,
including those of the Executive
Directors and the Executive
Committee. The Committee is
satisfied that the contingency and
talent management plans in place
for key positions are appropriate
and has agreed that the Group’s
succession planning should be kept
under review, at least bi-annually.
We conduct Leadership Development
Centres to develop our future
senior leaders.
Induction programme and training
A formal tailored induction for
Non-Executive Directors is in place
supported by a programme of
training, to further their knowledge
of the Group, its business, culture,
operations, employees and governance
and to ensure awareness of their
regulatory duties and obligations as
a Director of a UK premium
listed company.
Diversity, equality and inclusion
The Company has an established
Diversity Working Group, championed
by Non-Executive Director
Margaret Snowdon and chaired by
a senior female within the Group.
The group has made great progress
and has a significant impact across
the business and is a key channel of
communication and engagement
for employees. You can read more
about the Group’s I&D strategy
on page 27.
The Company acknowledges
that there remains a gender pay
gap within the business which
reflects a higher proportion of
males in higher paid roles than
females. Whilst this is partly a
challenge of the UK industry in
which the Company operates,
with a male-dominated actuarial
profession, the Board believes it
has a responsibility to promote
change, both within XPS and the
industry more generally. The Group
introduced an apprentice scheme
during the year and hopes this
continues to improve the diversity
of the Group and profession in
the future.
The Board believes that no
individual should be discriminated
against, whether for reasons
of gender, ethnicity or other
grounds that restrict social
inclusion, and this extends to
Board appointments which it
considers should be made on merit
and on the basis of ensuring an
appropriate balance of skills and
experience within the Board. The
Board recognises that greater
diversity, in the widest sense of
diversity of race, experience and
approach, can generate a more
diverse perspective on issues
which, in turn, has the ability
to benefit Board effectiveness
through improved discussions and
better decisions.
You can find information
regarding the Group’s gender
balance, including senior
management, on page 29
inthesustainability section.
Tom Cross Brown
Chair of the Nomination Committee
22 June 2022
XPS Pensions Group Annual Report 202264
Audit & Risk Committee
Delivering
independent oversight
The Audit & Risk Committee continues
to provide independent oversight of the
Group’s financial reporting procedures,
risk management and internal control
framework.
Committee membership Attendance
Chair
Alan Bannatyne
4/4
Committee members
Sarah Ing
4/4
Margaret Snowdon OBE 4/4
Dear Shareholder,
I am pleased to present the report
of the Audit & Risk Committee for
the year ended 31 March 2022. The
Committee met four times during
the 2021/22 financial year and
intends to continue to meet at least
three times annually. All meetings
were attended by all members of
the Committee.
Membership of the Committee
The members of the Committee are
Sarah Ing, Margaret Snowdon OBE
and me. The Board is satisfied that
the Audit & Risk Committee as a
whole has competence relevant to
the sector in which the Company
operates and that Sarah Ing and
I have recent relevant financial
experience as can be seen in our
biographies included on pages 52
and 53 of the Annual Report.
The Executive Directors are
invited to each meeting as well
as the Company’s Non-Executive
Chairman, Chief Operating Officer,
Head of Risk, General Counsel,
Financial Controller and other
members of the management team
as the agenda dictates.
65XPS Pensions Group Annual Report 2022
Governance
Significant accounting matters considered during the year
Matters considered
Depending on the income stream and the nature of
the engagement, the Group recognises revenue on
either time cost incurred, fixed fee or rateably over
the period of providing the relevant services. Billing is
mainly in arrears and occurs monthly or quarterly.
Action
The Committee reviewed the approach to revenue
recognition including the process for accrued and
deferred revenue. The Committee receives regular
updates on ageing of accrued revenue and trade
receivables. The Committee has also considered
the conclusions reached by BDO as part of its
audit of this area and is satisfied that management
has adopted appropriate processes and controls
over revenue recognition, accrued revenue and
tradereceivables.
Revenue recognition, accrued income and trade receivables
Matters considered
The Group has significant intangible assets on the
balance sheet in the form of goodwill, customer
relationships, brands and software. The intangible
assets have to be reviewed for impairment at least
annually or if there are any indicators of impairment.
Action
The carrying value of all indefinite lived assets
is tested for impairment annually. In reaching
its conclusion that the treatment adopted is
appropriate, the Committee has reviewed the
forecasts, key assumptions and methodology
adopted by management. BDO’s findings have also
been considered by the Committee in reaching
its conclusions over the appropriateness of the
treatment within the financial statements.
Carrying value of goodwill and intangible assets
Matters considered
During the year, the Group acquired the trade
and assets of Michael J Field Consulting Actuaries
for cash consideration of £1.5 million and up
to £1.5million in contingent consideration. All
acquisitions are assessed under IFRS 3 where
applicable, and a purchase price allocation (PPA)
exercise isundertaken.
Action
The Committee has reviewed management’s
assessment of the fair value of the assets and
liabilities acquired and resulting goodwill from
the acquisition. The Committee has reviewed
the disclosures in respect of the acquisition and
considers the accounting and disclosures to
beappropriate.
Business combinations
Matters considered
The Group classifies certain items in the income
statement as exceptional/non-trading to allow a
clearer understanding of the underlying trading
performance of the business.
Exceptional and non-trading items in the year
totalled £9.8 million (FY 2021: £13.9 million). For
more details, see note 6 to the financial statements
on page 119.
Action
As part of its assessment that the treatment of
exceptional/non-trading items in the financial
statements is appropriate, and consistent with the
Group’s accounting policies and with the guidance
issued by the FRC, the Committee has considered
each of the items treated as exceptional/non-trading
and challenged, where necessary, the treatment
adopted by management. The Committee has also
considered the conclusions reached by BDO as part
of its audit in this area and is satisfied.
Presentation and disclosure of exceptional and non-trading items
XPS Pensions Group Annual Report 202266
Audit & Risk committee continued
The updated risk management
framework rolled out during the year
has been supported by a strong culture,
active engagement from sta and clear
direction from Executive Management.”
Alan Bannatyne,
Chair of the Audit & Risk Committee
Auditor
The Committee is responsible for
making recommendations to the
Board regarding the appointment
of its external auditor and its
remuneration. BDO LLP has been
the Group’s auditor since 2014. The
Group audit partner is required
to rotate after a maximum of five
years; the current audit partner,
Andrew Radford, was appointed in
September 2020.
The Committee is responsible for
making recommendations on the
independence of the Company’s
auditor, BDO LLP. In addition, the
auditor has internal processes,
which include peer reviews, to
ensure that independence is
maintained. The Committee will
review the level of audit fees and
non-audit fees on an ongoing
basis. See note 5 to the financial
statements on page 118.
The Committee has reviewed
the approach to the annual audit
at a meeting that the auditor
attended ahead of the start
of fieldwork. The auditor then
attended a further Committee
meeting at the completion
stage of the audit to present its
findings. There is an open line of
communication between the Chair
of the Audit & Risk Committee and
the audit engagement partner.
The Committee assessed the
effectiveness of the external audit
process by obtaining feedback
from parties involved in the
process, including management
and the external auditor.
Based on this feedback and its
own ongoing assessment, the
Committee remains satisfied with
the efficiency and effectiveness of
the audit.
After due and careful consideration,
the Committee remains satisfied
with the effectiveness and
independence of BDO LLP and has
recommended to the Board that
BDO LLP be reappointed as the
Company’s auditor.
Internal Audit
The Internal Audit function is
provided using a co-sourcing
agreement, with PwC reappointed
in 2020 after a retender as it
had been in place since 2017. It
offers independent oversight of
operational and risk management
activities, with audit reports and
relevant findings presented to the
Committee. This year it focused
on the Group’s fraud controls and
no significant control weaknesses
were identified. The Internal
Audit programme is supported
by a number of regular assurance
activities which are carried out by
the Risk and Compliance teams,
which look at the design and
effectiveness of internal controls
for key processes.
Annual Report review
A final draft of the Annual Report
is reviewed by the Committee prior
to consideration by the Board and
the Committee considered whether
the 2022 Annual Report was fair,
balanced and understandable and
whether it provided the necessary
information for shareholders to
assess the Group’s position and
performance, business model
and strategy. The Committee was
satisfied that, taken as a whole, the
Annual Report is fair, balanced and
understandable and provides the
necessary information.
Risk
XPS Group has continued to
enhance its risk management
framework. This is supported by a
strong culture, active engagement
from staff and a clear direction
from Executive Management.
The standardised risk management
framework supports a common
approach across all businesses and
support functions in the Group.
This includes a clear articulation
of the key risks, the appetite the
Group has for each of these and
the controls that are in place to
manage these risks within their
stated appetites.
The framework embraces the
whole spectrum of activities
andmeasures addressing risk
(identification, evaluation, treatment,
reporting and monitoring) which,
taken together, support the
achievement of the organisation’s
objectives. The underlying
processes and control procedures
are regularly reviewed and amended
to reflect the findings of the
process, including improvements
inoperational administration,
regulatory compliance, legislative
changes and changes in the
external threatenvironment.
67XPS Pensions Group Annual Report 2022
Governance
A reporting framework has been
deployed as part of this work which
provides Executive Management
with regular updates on our overall
risk profile and detailed reports
on risks that may require action
to keep within appetite. This
framework includes information on
relevant key risk indicators as well
as summarising root-cause analysis
reviews for incidents and errors.
The Risk Management Committee
continues to meet on a regular
basis to discuss risks and issues as
well as ensuring that the framework
is meeting the needs of the Group’s
stakeholders. This Committee also
acts as the mechanism by which
risks reported at business level can
be considered in the context of
the Group and whether escalation
is required.
The central Risk team supports
all businesses within the Group
and ensures best practices are
applied consistently. This team is
also responsible for co-ordinating
the existing external assurance
programme across the Group,
to ensure all risks and controls
are considered and assessed
appropriately. These assurance
activities include certifications to
ISO 14001 and ISO 27001, AAF
01/06, IIP and the IoA Quality
Assurance Scheme (QAS).
The Audit & Risk Committee
regularly reviews the wider internal
control processes and enlists
external support to review and
test when it is deemed necessary.
Recognising the importance of
the protection of data assets and
business resilience, the Committee
considers these specific risks at
each of its meetings, along with the
development of the frameworks to
effectively manage them.
We are pleased to note that our
risk management frameworks
have proved effective in allowing
the Group to successfully manage
the impact of the ongoing Covid-19
pandemic, allowing us to continue
to keep staff safe and support
continued client servicing
withoutinterruption.
Whistleblowing
The Group has a clear, formalised
Whistleblowing Policy and procedure
available to all staff in order to raise
concerns about perceived
wrongdoing, non-compliance with
our own standards, regulatory
requirements and/or the law. This
policy was reviewed this year. We
have a confidential helpline, run by
a third party, Expolink, in order that
staff can report any concerns or
perceived shortcomings within our
operations without fear of sanction
or disadvantage. The helpline is
promoted through the intranet and
posters. Incidents are reported and
then reviewed by the Board at the
next available meeting or sooner if
appropriate. The Group’s Audit &
Risk Committee reviews the policy
and process annually to ensure
they remain fit for purpose.
Alan Bannatyne
Chair of the Audit & Risk Committee
22 June 2022
XPS Pensions Group Annual Report 202268
Sustainability Committee
Aligning strategy
with sustainability
Our core purpose as a business is to
shape and support safe, robust and
well-understood pension schemes for
the benefit of people and society. We are
ambitious in our goals to create sustainable
financial futures for as many people as
possible, and use our influence to integrate
ESG considerations throughout the
pensions industry.
Committee membership Attendance
Chair
Sarah Ing
3/3
Committee members
Margaret Snowdon OBE
3/3
Snehal Shah 3/3
Charlotte West 3/3
Adrian Davison 3/3
Alex Quant 2/3
Created during the 2020/21
financial year, the role of the
Sustainability Committee is to
improve practices, reporting
and communication in relation
to environmental, social and
governance (ESG) factors that
have a material impact on business
strategy and performance and
the long-term sustainability of
the Group. The Committee has
oversight of the views and interests
of all key stakeholders of the
Group, internal and external.
Membership of the Committee
The members of the Committee
are Margaret Snowdon OBE
(Independent Non-Executive
Director), Snehal Shah (CFO),
Charlotte West (Head of Employee
Engagement), Adrian Davison
(Head of Risk), Alex Quant (Head
of ESG for the Investment business)
and me. Alex Quant joined the
Committee during the year. Other
Board members and members of
the management team are invited
to meetings as the agenda dictates.
The Committee met three times
during the 2021/22 financial year
and all meetings were attended by
all members, with the exception
of one meeting due to a prior
engagement. The Committee
intends to continue to meet at
least twice yearly with additional
meetings as required.
The focus of the Committee
During the year the Committee
provided oversight and challenge
on a number of sustainability issues
within the Group’s key areas of
focus – governance, our employees,
our clients, our communities and
our environment.
69XPS Pensions Group Annual Report 2022
Governance
1. Launch of I&D strategy
The Committee oversaw the
implementation of the I&D strategy,
which was launched to XPS
colleagues in November 2021. The
strategy has four main pillars with
clear ambitions and measurable
actions in place to achieve these.
Progress has already been made in
the reporting year on a number of
key actions.
2. Development of
environmentalstrategy
The Committee provided
oversight on the carbon
offsetting project, having
reviewed the implementation of
the Environmental Management
System and associated
Environment Policy.
3. Development of our responsible
investment solutions
A strong focus for the Committee
this year was to provide oversight
of the Group’s development
of its responsible investment
offering and implementation
of the Responsible Investment
Policy. Input was given on a range
of issues including training and
development within the Investment
team, strategy, our position in the
market to influence and educate,
and communication.
4. Shaping sustainability reporting
This year the Committee discussed
a number of external sustainability
frameworks and standards.
The Committee also reviewed
sustainability reporting best
practice and considered feedback
from proxy advisers on XPS’s ESG
performance, incorporating this
into our sustainability framework
where appropriate.
At a high level, the focus for the
year ahead includes:
• providing oversight for further
development and integration
of our sustainability strategy,
including the development of
our sustainability framework
and reporting to include
clear commitments, KPIs and
measurement thereof. See pages
22 to 35 of the Strategic Report
for our current reporting on
sustainability matters;
• continuing to review and provide
challenge on activities carried
out by the business, underpinned
by our sustainability strategy;
keeping best practice under
review; referring to thought
leadership; and monitoring
the Group’s position regarding
relevant emerging sustainability
issues; and
• providing oversight and
challenge on the continued
integration of climate risk into
our risk management processes,
and the development of our
carbon reduction plan and
associated targets.
The terms of reference of the
Committee are reviewed annually
and are available on the Company’s
website, www.xpsgroup.com.
Sarah Ing
Chair of the Sustainability Committee
22 June 2022
Board of Directors
Sustainability Committee
Sarah Ing
Chair of the
Sustainability Committee
Non-Executive Director
Margaret
Snowdon OBE
Non-Executive
Director and Chair
of EEG and
I&D Group
Additional Board member
responsible for providing
expertise across all areas
Adrian Davison
Head of Risk
Responsible for
environmental strategy
Snehal Shah
Chief
Financial Officer
Executive sponsor
for sustainability,
responsible for representing
investor views
Alex Quant
Head of ESG for the
Investment business
Responsible for
representing client interests
Charlotte West
Head of Employee
Engagement
Responsible for
employee engagement
and I&D strategies
Supported by resources from across XPS
XPS Pensions Group Annual Report 202270
Directors’ remuneration report
Remuneration
at a glance
Aligned with shareholders –
inorder to motivate Executive
Directors and incentivise the
delivery of sustained performance
over the long term, and to promote
alignment with shareholders’ interests.
Aligned with financial
performance – to motivate
Executive Directors and support
the delivery of the Group’s financial
and strategic business targets.
Aligned with colleagues –
bystriving for as consistent as
possible an approach between
the Executive Directors and senior
management.
Aligned with clients – the
continued strategy to become the
pre-eminent pensions consulting
and administration firm in the UK
at the same time as achieving
sustainable growth through investing
in client services, technology
and staff demonstrates the
commitment to providing an agile,
high-quality and market-leading
service that puts client satisfaction
at the heart of the business.
Competitive – remuneration
packages are reviewed annually
and benchmarked by reference to
the external market. This allows us
to attract and retain highly talented
people, who know that good
performance will be rewarded.
Designed to encourage retention
and to reward performance –
deferred variable remuneration
does not give rise to any immediate
entitlement. Long-term incentive
awards normally require the
participant to be employed
continuously by the Group until at
least the third anniversary of grant
in order to vest in full.
The overall Remuneration Policy is designed to promote the long-term
success of the Group whilst ensuring it does not support inappropriate
risk taking. The Remuneration Committee has developed the Directors’
Remuneration Policy with the following principles in mind:
71XPS Pensions Group Annual Report 2022
Governance
Our Executive Directors’ remuneration at a glance
Key features of the policy How we implemented the policy
Fixed pay Salary
and benefits
Annual increases will not exceed
7.5% + RPI (April 2022: 11.1%) or
the average increase of employees
across the Group in any given year,
whichever is higher.
Increases of 6% applied effective
1 April 2022 as the second
phase of a market adjustment
following Remuneration
Committee confirmation of
continued strong corporate
andindividualperformance.
Short-term variable pay
Financial/functional
and personal objectives
set with reference to
business plans approved
by the Board.
Cash bonus The maximum opportunity for
2021/22 is 150% of salary and
potentially payable in cash and
deferred shares.
Bonus is payable subject to the
achievement of performance
conditions (financial and personal
objectives) which will be set by the
Remuneration Committee. Malus
andclawback provisions apply.
The Co-CEOs were awarded
119% of salary and the CFO
was awarded 89% of salary, as
determined by the Remuneration
Committee. These payments
amounted to 79% of maximum.
Bonuses were paid on financial
performance as well as personal
objectives (detailed on pages
82 and 83).
Long-term variable pay
Stretching performance
conditions measured
over a three-year period
with a further two-year
post-performance
holding period.
Performance conditions
based upon adjusted
earnings pershare/TSR
to comparatorgroup.
XPS
Performance
Share
Plan (PSP)
Maximum “normal” grant level is
150% of salary.
Malus and clawback
provisions apply.
Aligned with long-term business
strategy to become the pre-eminent
pensions consulting and administration
firm in the UK and delivery of
shareholder value due to strong
cash generation and non-cyclical
demand for services.
The September 2019 PSP award
is subject to underlying EPS
performance and relative TSR
performance. The overall payout
for the award is equal to an
estimated 38% of maximum.
Share ownership
guidelines
Share
ownership
guidelines
Minimum shareholding of 200%
of base salary for any Executive
Director with requirements
applying for a two-year period post
termination of employment.
Remuneration at a glance: payoutcomes for the year
2021/22 fixed remuneration
Base salary Pension
Co-CEOs CFO Co-CEOs CFO
£313,920 £265,160 6% of salary 6% of salary
These pension contributions are in line with the average contribution levels across the Group.
Annual bonus
The financial element of these bonuses is based on Group profit before tax (PBT). The reported Group adjusted
PBT for 2021/22 resulted in a bonus payment of 89% of the maximum for this element of the bonus. When
combined with the performance against strategic objectives, this led to formulaic bonus outturn of between
86 and 87% of the maximum. However, the Executive Directors volunteered that the Remuneration Committee
reduce the level of bonus payable from this formulaic outcome to 79% of maximum to be consistent with bonus
outcomes in the wider firm. Further details of financial and personal objectives can be found on page 82.
£m
Threshold
£’000
Target
£’000
Maximum
£’000
Actual
£’000
Payout
(% of this
element)
Group adj. PBT (75% of potential) 26,140 26,522 26,864 26,750 89%
XPS Pensions Group Annual Report 202272
Directors’ remuneration report continued
Aligning remuneration with
sustainable success
The Remuneration Committee continues to
ensure a robust link between the execution
of strategy, reward and performance and is
committed to fairness and transparency.
Margaret Snowdon OBE
Chair of the Remuneration Committee
Committee membership Attendance
Chair
Margaret Snowdon OBE
4/4
Committee members
Tom Cross Brown
4/4
Alan Bannatyne 4/4
Sarah Ing 4/4
Attending by invitation
Co-CEOs
CFO
HR Director
Dear Shareholder,
The Directors’ Remuneration
Report for the year ended 31 March
2022 contains:
• my annual statement;
• the annual report on
remuneration which describes
how the Directors’ Remuneration
Policy has been applied in the
2021/22 financial year and how
it will be implemented in the
2022/23 financial year; and
• the Directors’ Remuneration
Policy which remains unchanged
since it was approved at
the 2020 AGM.
Operational highlights
During the year ended 31 March
2022, we produced another year of
robust financial performance. At a
Group level, total revenues grew 8%
year on year. The Group delivered
adjusted diluted earnings per
share of 10.2p.
Engaging with our stakeholders
Shareholders
At last year’s Annual General
Meeting held on 7 September 2021,
the Remuneration Committee
was pleased that shareholders
approved the Remuneration
Report with 99.28% of votes for.
We are grateful for the ongoing
shareholder engagement and
constructive feedback allowing
us to ensure we are able to reflect
the views of shareholders in the
decisions that the Remuneration
Committee makes.
Employees
The Employee Engagement Group,
which I chair as XPS Group’s
Designated Employee Engagement
Non-Executive Director, considers
Executive Directors’ remuneration,
taking account of employee views.
73XPS Pensions Group Annual Report 2022
Governance
The Employee Engagement Group
was set up with the purpose of
providing an “employee voice” to
the Board by raising any matters or
issues highlighted by employees. It
is a forum for employees to share
ideas and concerns with the Board
in a consultative manner and is
not a decision-making group. One
area of focus for the Employee
Engagement Group is reward
and remuneration of Executive
Directors; members are asked to
provide feedback on the Directors’
Remuneration Policy and Executive
Director objectives. The group
improves engagement between the
Board and XPS employees.
The Directors’
RemunerationPolicy
The current Directors’
Remuneration Policy was approved
by shareholders at the 2020 AGM
and therefore will be due for
renewal at the 2023 AGM. The
Remuneration Committee will
consult with major shareholders
and the voting guidance services
well in advance in relation to
the Policy.
The changes to the
operationofthe Directors’
Remuneration Policy
As outlined last year, due to base
salaries being low against the
FTSE Small Cap market and other
similarly sized companies the
Remuneration Committee therefore
decided to increase the base
salaries of the Executive Directors
in two phases:
• 9% with effect from 1 April 2021.
This was the first increase for
three years and is below the
general level of increases for
employees across the Group over
the period since 1 April 2018; and
• 6% with effect from 1 April 2022
(subject to continued strong
performance, both corporate
andindividual).
These increases still leave target
and maximum total remuneration
for all the Executive Directors
below the market median.
The Committee has also agreed to
amend the approach to measuring
EPS performance under the PSP.
Due to the current volatility of inflation rates, the Committee determined
to remove the link with CPI when measuring EPS performance. For the
2022 awards, this will now be measured on an absolute growth scale.
Remuneration of the Executive Directors for 2022/23
The table below summarises our intended approach to the remuneration
of the Executive Directors for 2022/23.
Component of
remuneration Summary of approach
Base salary
and benefits
Base salary and benefits are reviewed annually on 1 April
inlight of a number of factors, including the approach to
salary reviews more generally across the Group. In line
with the phased approach outlined last year, the base
salaries of the Co-Chief Executive Officers have been
increased by 6% for the 2022/23 financial year:
Ben Bramhall – £332,755
Paul Cuff – £332,755
Snehal Shah – £281,069
The increase since 1 April 2018 remains below that of the
general level of salary increases across the Group since then:
1 April
2019
1 April
2020
1 April
2021
1 April
2022 Total
Co-CEOs 0% 0% 9.0% 6.0% 15.5%
Average staff 3.0% 3.2% 3.2% 5.9% 16.2%
Pension
Defined contribution/cash supplements of 6% are paid.
This is well below the rate provided to many employees
who have joined the business through the acquisitions we
have made.
Annual bonus
Payable subject to the achievement of challenging
financial/strategic/personal performance conditions.
These are expected to incorporate sustainability, culture
and technology-based goals. Malus and clawback
provisions apply.
Maximum bonus opportunity:
Ben Bramhall – 150% of salary
Paul Cuff – 150% of salary
Snehal Shah – 112.5% of salary
Long-term
incentives
Annual awards of performance shares. Shares vest, subject
to the achievement of the performance conditions, after
three years and are subject to a further two-year holding
period. Malus and clawback provisions apply.
Maximum grant levels:
Ben Bramhall – 150% of salary
Paul Cuff – 150% of salary
Snehal Shah – 125% of salary
All-employee
share plans
Executive Directors are entitled to participate in all of the
Company’s employee share plans, including the Share
Save Plan, on the same terms as other employees.
Share ownership
guidelines
Executive Directors are subject to a minimum shareholding
requirement of 200% of salary with a requirement to
maintain a shareholding post cessation ofemployment
at200% for one year and 100% for a second year.
Annual bonus payments for2021/22
The financial element of these bonuses is based on Group profit before
tax(PBT). The reported Group adjusted PBT for 2021/22 has resulted in
abonuspayment of 89% of the maximum for this element of the bonus.
Whencombined with the performance against strategic objectives, this
ledto a formulaic bonus outturn of 86% of the maximum for the Co-CEOs
and 87% for the CFO. However, the Executive Directors volunteered that
the Remuneration Committee reduce the level of bonus payable from
this formulaic outcome to 79% of maximum to be consistent with bonus
outcomes in the wider firm.
XPS Pensions Group Annual Report 202274
Directors’ remuneration report continued
Annual bonus payments for2021/22 continued
On this basis, the bonus outturn for 2021/22 for the Executive Directors is
asfollows:
Executive Director
% of
salary
% of
maximum
Ben Bramhall 119% 79%
Paul Cuff 119% 79%
Snehal Shah 89% 79%
Vesting outcomes for the 2019PSPawards
The September 2019 PSP award is subject tounderlying EPS performance
andrelative TSR performance. The estimated overall payout for the award
is equal to 38% of maximum.
The Committee considers that the Policy operated as intended during
2021/22 and that remuneration outcomes are consistent with the Group
performance and appropriately reflect performance delivered for our
shareholders over the respective periods. Other than the adjustment to
the bonus outturn mentioned above, the Committee felt that no further
discretion needed to be applied for these remuneration outcomes.
Other activities to note
The Remuneration Committee reviewed the Group’s gender pay gap
analyses and action plans. I have also continued to play an active role
throughout the year on the Group’s Diversity Working Group, in addition
to chairing the Employee Engagement Group.
I trust that you find this report to be informative and transparent and I
hope to receive your support for our decisions this year as described in
the Directors’ Remuneration Report at the AGM. I am keen to encourage
ongoing open dialogue with our shareholders on executive remuneration
and welcome all engagement.
Margaret Snowdon OBE
Chair of the Remuneration Committee
22 June 2022
We were pleased to be given an early
opportunity to comment on the Co-
CEOs’ personal objectives for FY 2023.
We discussed various topics including
sustainability, inclusion and diversity, gender
pay gap, and employee engagement metrics.
As in previous years, we were asked to review
the Directors’ Remuneration Report and put
forward our views on future changes.”
Abigail Fletcher,
XPS EEG Representative
75XPS Pensions Group Annual Report 2022
Governance
Directors’ Remuneration Policy2020
This Directors’ Remuneration Policy, which has been approved by the Board and shareholders, has been
prepared in accordance with Part 4 of The Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013, which amended The Large and Medium-sized Companies and Groups
(Accounts and Reports) Regulations 2008 (the “DRR Regulations”).
The Directors’ Remuneration Policy as set out in this section of the Directors’ Remuneration Report was
approved in 2020 and took effect in respect of all payments made to Directors from the conclusion of the
2020AGM at which it was approved. The Policy as approved can be found at www.xpsgroup.com/investors/
results-reports-and-presentations/. We have reproduced some of the main sections of the Directors’
Remuneration Policy here for the convenience of our shareholders even though we have not, asenvisaged
before the engagement process with investors, made any changes to it.
Summary of decision-making process and changes to Policy
The Remuneration Committee’s review of the Directors’ Remuneration Policy followed a robust process which
included discussions on the content of the Policy at Remuneration Committee meetings during the year. The
Committee considered the input from management and independent advisers, as well as consulting with major
shareholders and proxy and advisory services. The input from investors was critical in influencing our view that
we should work within the Policy as approved in 2020.
Element and purpose Policy and operation Maximum Performance measures
Base salary
The core element of
pay, reflecting the
individual’s position
within the Company
and experience
The base salary of each Executive Director
takes into account the performance of
each individual and is set at an appropriate
level to secure and retain the talent needed
to deliver the Group’s strategic objectives.
Salaries are reviewed annually on 1 April
and are influenced by: information from
relevant comparator groups (referencing
the Group’s competitors and public
companies in other industries); the
performance of each individual Executive
Director; and average increases for
employees across the Group as a whole.
Annual increases will
not exceed 7.5% + RPI
or the average increase
of employees across
the Group in any given
year, whichever is
higher. The level of
increase may deviate
from this maximum in
the case of special
circumstances, for
example increases in
responsibilities or
promotion. As an
example, this may
occur if the market
capitalisation of the
Company increases
asthe shares are
“re-rated” by investors
such that the
comparator
groupchanges.
In this scenario, the
Board would consider
the increase and the
performance of the
Company. Other
elements of
remuneration may also
change. In these cases,
any exceptional
increase will not
exceed 20% of salary
ayear.
n/a
Benefits in kind
To provide market-
competitive benefits
valued by recipients
Benefits currently include permanent
health insurance, life insurance, private
medical insurance and car allowance and
may also include other benefits in the
future. In certain limited circumstances,
relocation allowances may be necessary.
All benefits are subject to annual review to
ensure they remain in line with market practice
.
Benefits (excluding any
relocation allowances)
may be provided up to
an aggregate value of
normally £30,000 for
each Executive
Director (indexed
toinflation).
n/a
XPS Pensions Group Annual Report 202276
Directors’ remuneration report continued
Element and purpose Policy and operation Maximum Performance measures
Pension
To provide
retirement benefits
Executive Directors participating in the
pension plan benefit from matching annual
Group contributions of 6% of base salary.
Executive Directors are entitled to take all
or part of their pension contributions as a
cash allowance.
The maximum
employer’s contribution
(or cash supplement) is
6% ofsalary.
Executive Directors’
employer’s
contribution levels
arealigned to the
contribution levels
forthe majority of
theworkforce.
n/a
Annual bonus
To motivate
Executive Directors
and support the
delivery of the
Group’s financial
andstrategic
business target
overa one-year
operating cycle
Annual bonus plan levels and the
appropriateness of measures are reviewed
annually to ensure they continue to support
our strategy. Once set, performance
measures and targets will generally remain
unchanged for the year, except toreflect
events (e.g. corporate acquisitions or other
major transactions) where the Committee
considers it to be necessary in its opinion
to make appropriate adjustments.
The Remuneration Committee retains the
flexibility to pay annual bonus outcomes in
cash and/or deferred shares (which may
allow for dividend roll-up). The number of
shares (or the cash equivalent) subject to
deferral may be increased to reflect the
value of dividends that would have been
paid in respect of any record dates falling
during the deferral period.
Clawback and malus provision applies as
explained in more detail in the notes to this
Policy table.
The maximum annual
bonus opportunity is
150% of base salary.
For 2022/23, the
maximum opportunity
will be 150% of base
salary for the Co-CEOs
and 112.5% of salary for
other Executive
Directors.
Bonuses will be payable
subject to the achievement
ofperformance conditions
which will be set by the
Remuneration Committee.
The targets may be financial
and/or personal and strategic.
The intended weighting of
these measures is not less
than 60% financial. Where a
sliding scale of targets is
used, attaining the threshold
level of performance for any
measure will not typically
produce a payout of more
than 20% of the maximum
portion of overall annual
bonus attributable to that
measure, with a sliding scale
to full payout for maximum
performance. Bonus
payments will also be subject
to the Committee considering
that the proposed bonus
amounts, calculated by
reference to performance
against the targets,
appropriately reflect the
Company’s overall
performance and
shareholders’ experience.
Ifthe Committee does not
believe this to be the case,
itretains the discretion to
adjust the bonus
outturnaccordingly.
Summary of decision-making process and changes to Policy continued
77XPS Pensions Group Annual Report 2022
Governance
Element and purpose Policy and operation Maximum Performance measures
Performance
Share Plan
To motivate
Executive Directors
and incentivise the
delivery of sustained
performance over
the long term, and to
promote alignment
with shareholders’
interests
Awards under the PSP may be granted as
nil/nominal cost options which vest to the
extent performance conditions are
satisfied over a period normally of at least
three years.
Awards will vest at the end of the specified
vesting period at the discretion of the
Remuneration Committee and are subject
to a further holding period of two years
(or such shorter period so that the period
from the date of grant until the end of the
holding period will be equal to five years).
The PSP rules allow that the number
of shares (or the cash equivalent) subject
to vested PSP awards may be increased to
reflect the value of dividends that would
have been paid in respect of any record
dates falling between the grant of awards
and the expiry of any vesting period.
Clawback and malus provisions applied are
explained in more detail in the notes to this
Policy table.
The market value of
shares to be awarded
to Executive Directors
in respect of any year
will normally be up to
150% of base salary,
with awards of a
maximum of 200%
allowable in
exceptional
circumstances.
The Remuneration Committee
may impose such conditions
as itconsiders appropriate
which must be satisfied
before any awardwill vest.
All awards made to Executive
Directors will be subject to
performance conditions
which measure performance
over a period normally no less
than three years. Awards in
2022 will be subject to EPS
and relative TSR performance
weighted 75/25%.
No more than 25% of awards
vest for attaining the threshold
level ofperformance.
Formulaic outcome of all PSP
performance measures will
also be subject to the Committee
considering that the proposed
levels, calculated by reference
to performance against the
targets, appropriately reflect
the Company’s overall
performance and shareholders’
experience. If the Committee
does not believe this to be the
case, it retains the discretion
to adjust the PSP
outturnaccordingly.
Share ownership
guidelines
To promote
stewardship and to
further align the
interests of
Executive Directors
with those of
shareholders
The share ownership guidelines encourage
Executive Directors to build or maintain (as
appropriate) ashareholding in the Company.
Minimum shareholding of 200% of base
salary for any Executive Director.
If any Executive Director does not meet the
guideline, they will be expected to retain
up to 50% of the net of tax number of shares
vesting under any of the Company’s
discretionary share incentive arrangements
(including any deferred bonus shares) until
theguideline is met.
Executive Directors are required
tomaintain a shareholding in the Company
for a two-year period after stepping down
from that position, being in the first year
the lesser of the guideline level or each
Executive Director’s relevant shareholding
at leaving and reducing to 50% of this
requirement in the second year.
For the purpose of this requirement, the
relevant shareholding will include shares
vesting under any of the Company’s
discretionary share incentive arrangements
(including any deferred bonus shares) from
awards granted after 8 September 2020,
but excludes shares acquired and the
release of shares under share incentive
plans where the grant occurred prior to
this date. The Committee retains the
discretion to remove the holding
requirement if it is deemed to
beinappropriate.
n/a n/a
XPS Pensions Group Annual Report 202278
Directors’ remuneration report continued
Element and purpose Policy and operation Maximum Performance measures
All-employee
share plans
To facilitate and
encourage share
ownership by staff,
thereby allowing
everyone to share in
the long-term
success of the
Company and align
interests with those
of shareholders
The Executive Directors will be entitled to
participate in all of the Company’s
employee share plans, including the Share
Save Plan, onthe same terms as
otheremployees.
These all-employee share plans
areestablished under HMRC tax-
advantaged regimes and follow the usual
form for such plans.
The maximum
participation levels for
all-employee share
plans will be the limits
for such plans set by
HMRC from time to
time. However the
Company may impose
lower limits on a
scheme-by-scheme
basis.
Consistent with normal
practice and/or HMRC
requirements, such awards
would not be subject to
performance conditions.
Chairman and
Non-Executive
Directors’ fees
To enable the
Company to
recruitand retain
Company Chairs
andNon-Executive
Directors of the
highest calibre, at
theappropriate cost
The fees paid to the Chairman and Non-
Executive Directors aim to be competitive
with other listed companies of equivalent
size and complexity.
The fees payable to the Non-Executive
Directors are determined by the Board,
with the Chairman’s fees determined by the
Committee. No Director participates in
decisions regarding their own fees.
The Chairman and Non-Executive Directors
do not participate in any new cash or share
incentive plans.
The Chairman and Non-Executive Directors
are entitled to benefits relating to travel
and office support and such other benefits
as may be considered appropriate.
The Chairman is paid a single fee for the
role, although he will be entitled to an
additional fee if he is required to perform
any specific and additional services.
Non-Executive Directors receive a base fee
for the role. Additional fees are paid for
acting as Senior Independent Director,
Chairs of the Audit, Remuneration or other
Board Committees or Designated
Employee Engagement Non-Executive
Director to reflect the additional time
commitment. They will be entitled to an
additional fee if they are required to
perform any specific and
additionalservices.
The aggregate fees
and any benefits of the
Chairman and Non-
Executive Directors will
not exceed the limit
from time to time
prescribed within the
Company’s Articles of
Association for such
fees, currently
£500,000 p.a.
inaggregate.
Any increases in fee
levels made will be
appropriately disclosed.
n/a
Summary of decision-making process and changes to Policy continued
Notes to the Policy table
1. Stating maxima for each
element of the Remuneration
PolicyThe Regulations and
related investor guidance
encourage companies to
disclose a cap within which
each element of the Directors’
Remuneration Policy will
operate. Where maximum
amounts for elements of
remuneration have been set
within the Policy, these will
operate simply as caps and are
not indicative of any aspiration.
2. Travel and hospitalityWhile the
Committee does not consider
it to form part of benefits
in the normal usage of that
term, it has been advised that
corporate hospitality, whether
paid for by the Company or
another, and business travel for
Directors (and in exceptional
circumstances their families)
may technically come within
the applicable rules, and so the
Committee expressly reserves
the right for the Committee to
authorise such activities.
3. Past obligations In addition
to the above elements of
remuneration, any commitment
made prior to, but due to be
fulfilled after, the approval
and implementation of this
Remuneration Policy will
behonoured.
4. Malus/clawbackThe
Committee may apply malus
(being the ability to withhold or
reduce a payment/vesting) and
clawback (the ability to reclaim
some or all of a payment/
vesting) to an award under the
79XPS Pensions Group Annual Report 2022
Governance
annual bonus or PSP where
there are circumstances which
would justify such action. The
relevant circumstances where
these powers of recovery may
operate include:
• the Company materially
misstated its financial results
for any reason and that
misstatement would result
or resulted either directly or
indirectly in an award being
granted or vesting to a greater
extent than would have been
the case had that misstatement
not been made;
• the extent to which any
performance target and/or any
other condition was satisfied
was based on an error, or
on inaccurate or misleading
information or assumptions
which resulted either directly
or indirectly in an award being
granted or vesting to a greater
extent than would have been
the case had that error not
beenmade;
• circumstances arose (or
continued to arise) during the
vesting period (including any
holding period) of an award
which would have warranted
the summary dismissal of the
participant; or
• there is a suciently significant
impact on the reputation of the
Company (including a Company
failure) to justify the operation
of malus or clawback.
Normally, clawback can operate
for up to two years following the
vesting of an award.
5. Performance conditionsThe
performance-related elements
of remuneration take into
account the Group’s risk
policies and systems, and are
designed to align the senior
executives’ interests with those
of shareholders. The Committee
reviews the metrics used and
targets set for the Group
Executive Directors and senior
management (not just the
Executive Directors) every year,
in order to ensure that they
are aligned with the Group’s
strategy and to ensure an
appropriate level of consistency.
6. Differences between the Policy
in respect of remuneration
for Directors and the policy
on remuneration for other
staff While the appropriate
benchmarks vary by role, the
Company seeks to apply the
philosophy behind this Policy
across the Company as a whole.
Where the Group’s pay policy
for Directors differs from its
pay policies for groups of staff,
this reflects the appropriate
market rate position and/
or typical practice for the
relevant roles. The Company
takes into account pay levels,
bonus opportunity and share
awards applied across the
Group as a whole when setting
the Executive Directors’
Remuneration Policy.
7. Committee discretionsThe
Committee will operate
the annual bonus plan and
PSP according to their
respective rules and the above
Remuneration Policy table. The
Committee retains discretion,
consistent with market practice,
in a number of respects, in
relation to the operation and
administration of these plans.
This discretion includes, but is
not limited to, the following:
• the selection of participants;
• the timing of grant of awards;
• the size of an award/bonus
opportunity subject to the
maximum limits set out in the
Remuneration Policy table and
the rules of the relevant plan;
• the determination of
performance against targets
and resultant vesting/payouts;
• discretion required when
dealing with a change of
control or restructuring of
theCompany;
• determination of the treatment
of leavers based on the rules
of the relevant plan and the
appropriate treatment chosen;
• adjustments required in certain
circumstances (e.g. rights
issues, corporate restructuring
events and special dividends);
and
• the annual review of
performance measures,
weightings and targets from
year to year.
In addition, while performance
measures and targets used in
the annual bonus plan and PSP
will generally remain unaltered, if
events occur which the Committee
determines would make a different
or amended target a fairer
measure of performance, such
amended or different targets
can be set provided they are not
materially more or less difficult to
satisfy, having regard to the event
in question.
Any use of the above discretion
would, where relevant, be
explained in the Annual Report on
Directors’ Remuneration and may,
where appropriate and practicable,
be the subject of consultation with
the Company’s major shareholders.
The Committee may make minor
amendments to the Remuneration
Policy set out above for regulatory,
exchange control, tax or
administrative purposes or to take
account of a change in legislation,
without obtaining shareholder
approval for that amendment.
XPS Pensions Group Annual Report 202280
Annual report on remuneration
External appointments
The Company’s policy on external
appointments permits an Executive
Director, subject to the approval of
the Chairman, to serve as a Non-
Executive Director for normally no
more than one other organisation
where this does not conflict with
the individual’s duties to the
Company. When an Executive
Director takes such a role, they may
be entitled to retain any fees which
they earn from that appointment.
Statement of consideration of
employment conditions elsewhere
in the Company
The Committee receives regular
updates on overall pay and
conditions in the Company which
enables it to take the wider
workforce remuneration into
account when setting the policy
for executive remuneration. Whilst
the Committee does not consult
directly with employees as part of
the process for reviewing executive
pay, the Committee does receive
insights from the broader employee
population via an Employee
Engagement Group. Accordingly,
the Committee confirms that the
new Policy has been designed
with due regard to the policy for
remuneration of employees across
the Group.
The remuneration policy for
other employees is based on
broadly consistent principles as
described on pages 75 to 78.
Annual salary reviews across
the Company take into account
Company performance, relevant
pay and market conditions and
salary levels for similar roles in
comparablecompanies.
Other members of senior management
participate in similar annual bonus
arrangements to the Executive
Directors, although award sizes
vary by organisational level. Share
incentive awards may also be
granted to a broader population
than the Executive Directors
although the award sizes and terms
of the awards vary. The Company
operates discretionary bonus
schemes for eligible groups of
employees under which a bonus is
payable subject to the achievement
of appropriate targets. All eligible
employees may participate in the
Company’s Share Save Plan on
identical terms.
Statement of consideration of
shareholders’ views
The Committee considers
shareholder views received
during the year and at each
AGM, as well as guidance from
shareholder representative bodies
more broadly, when determining
the Remuneration Policy and its
implementation.
The Committee seeks to build an
active and productive dialogue with
investors on developments on the
remuneration aspects of corporate
governance generally and it will
consult with major shareholders
in advance of any material change
to the structure and/or operation
of the Policy and will seek formal
shareholder approval for any such
change if required. Shareholders’
views have directly led to the
Remuneration Committee’s
decisions on pay in 2022.
Remuneration Committee
membership
The Remuneration Committee
is chaired by Margaret Snowdon
OBE, who is an Independent
Non-Executive Director. Tom
Cross Brown, Alan Bannatyne and
Sarah Ing are also members of
the Committee. The Committee
meets at least twice a year and
at such other times as the Chair
of the Committee shall require
or as the Board may direct. The
Committee met four times during
the year. All members attended
every Committee meeting
throughout the year.
Other individuals, such as the
Co-Chief Executive Officers, the
Chief Financial Officer, the Chief
Operating Officer, the HR Director
and external professional advisers,
were invited to attend for all or
part of any meeting as and when
appropriate and necessary.
The purpose of the Committee is to
establish a formal and transparent
procedure for developing the
policy on remuneration in
accordance with the Code and
to set the remuneration of the
Chairman and selected individuals
with due account taken of all
relevant factors such as individual
and Group performance as well
as remuneration payable by
companies of a comparable size
and complexity.
The Committee has formal terms
ofreference which are reviewed
annually and can be viewed
onthe Company’s website:
www.xpsgroup.com.
81XPS Pensions Group Annual Report 2022
Governance
Advisers
FIT Remuneration Consultants LLP (FIT), signatory to the Remuneration Consultants Group’s Code of Conduct,
wasappointed by the Committee. FIT has been retained to provide advice to the Committee on matters relating
to executive remuneration. FIT provided no other services to the Company and, accordingly, the Committee was
satisfied that the advice provided by FIT was objective and independent. FIT’s fees in respect of the 2021/22
financial year were £63,902 (2020/21: £68,649). FIT’s fees are charged on the basis of the firm’s standard terms
of business for advice provided.
Service contracts
The Executive Directors’ service contracts are of indefinite duration. Tom Cross Brown, Alan Bannatyne and
Margaret Snowdon’s current three-year appointment terms expire on 23 January 2023. Sarah Ing’s current
three-year appointment term expires on 17 May 2025. Tom Cross Brown has confirmed his intention to retire
following the conclusion of the 2022 AGM; the Nomination Committee has commenced the recruitment process
for a successor.
The following (audited) section provides details of how the Directors were paid during the financial year to
31March 2022.
Director
Salary/fees
£
Taxable
benefits
1
£
Bonus
2
£
Long-term
incentives
3
£
Pension
4
£
Total
remuneration
£
Total
fixed pay
£
Total
variable pay
£
Executive Directors
Ben Bramhall 2022 313,920 11,017 371,995 159,536 17,860 874,328 342,797 531,531
2021 288,000 10,813 293,760 83,893 16,275 692,741 315,088 377,653
Paul Cuff 2022 313,920 10,817 371,995 159,536 17,8 60 874,128 342,597 531,531
2021 288,000 10,613 293,760 83,893 16,275 692,541 314,888 377,653
Snehal Shah 2022 265,160 10,736 235,661 132,116 15,467 659,140 291,363 367,777
2021 243,270 10,555 186,102 — 13,930 453,857 267,755 186,102
Non-Executive Directors
Tom Cross Brown
– Chair of Board and
Chair of Nomination
Committee
2022 120,000 — — — — 120,000 120,000 —
2021 120,000 — — — — 120,000 120,000 —
Alan Bannatyne –
Chair of Audit & Risk
Committee and Senior
Independent Director
2022 75,000 — — — — 75,000 75,000 —
2021 75,000 — — — — 75,000 75,000 —
Margaret Snowdon –
Chair of Remuneration
Committee and
Designated Employee
Engagement NED
2022 70,000 — — — — 70,000 70,000 —
2021 70,000 — — — — 70,000 70,000 —
Sarah Ing –
Chair of Sustainability
Committee
2022 65,000 — — — — 65,000 65,000 —
2021 60,873 — — — — 60,873 60,873 —
Total 2022 1,223,000 32,570 979,651 451,188 51,187 2 ,737,596 1,306,757 1,430,839
2021 1,145,143 31,981 773,622 167,786 46,480 2,165,012 1,223,604 941,408
1 Each of the Executive Directors is entitled to a range of benefits, comprising permanent health insurance, life insurance, private medical
insurance and car allowance. The Non-Executive Directors do not receive other benefits.
2 No element of annual bonus was deferred in respect of bonuses shown. Their current beneficial shareholdings are shown on page 83.
3 The outturn for the September 2019 PSP which vests in September 2022 is expected to be 38% and the vesting share price has been
estimated at 134.26p, based on the three-month average share price ended 31 March 2022. The grant share price for the award was 115p and
accordingly the relevant figures are reflective of an increase of 17% in the Company’s share price comparing the award price to the vesting
price. Details of the performance measures and targets applicable to the 2019 PSP are set out on pages 84 and 85. The outturn for the July
2018 PSP which vested on 26 July 2021 was 21.3% and the value has been updated reflecting the actual vesting share price of 143.5p and the
dividend equivalents.
4 Pension values shown all relate either to pension contributions or to cash allowances in lieu of pension.
XPS Pensions Group Annual Report 202282
Annual report on remuneration continued
2021/22 annual bonus (audited)
The Executive Directors’ annual bonus targets were set at the beginning of the financial year. The financial
targets which account for 75% of the annual bonus were set based on Group PBT. The Group PBT targets set
are shown below.
Threshold
£’000
Target
£’000
Maximum
£’000
Actual
£’000
Payout
(% of this
element)
Group adj. PBT (75% of potential) 26,140 26,522 26,864 26,750 89%
The personal performance goals which account for 25% of the annual bonus were agreed with each Executive
Director and were based on a range of strategic and other objectives set at the start of the year. The targets
were principally designed to focus and reward the Executive Directors for accomplishing strategic goals which
directly support the Company’s strategy. Details of the measures and performance, to the extent they are not
commercially sensitive, are outlined below.
Ben Bramhall and Paul Cuff – Co-CEOs
Measure Target Performance Assessment
Maintain high level of employee
engagement and oversee
successful development and
implementation of My XPS, My
Choice, the Company’s new
fully-flexible working policy
Employee satisfaction
scoreabove 80%
The 2021 employee survey indicates 95% of
employees agree that XPS is a good company
to work for and 79% of employees believe the
My XPS, My Choice framework is working well.
78%
Implementation of plan to enhance
Group’s technology strategy
Progress against delivery
ofimplementation plan
A full review of options for the future was
completed and implementation of the
strategy has progressed significantly.
76%
Enhance the Group’s I&D strategy New I&D strategy to be
implemented
The new I&D strategy was rolled out across
the Group. The 2021 employee survey
indicates that 89% of staff agree that XPS is
committed to I&D.
100%
Increase in client satisfaction Increased client
satisfaction score
The 2021 client satisfaction score remained
constant with the previous survey. Given the
disruption caused by Covid-19 and the
transition to a new working model, this is
regarded a strong result.
60%
Snehal Shah – CFO
Measure Target Performance Assessment
Maintain strong cash conversion
andfurther optimise the client
billing cycle
OCF conversion above 90%
at year end
OCF conversion of over 90% achieved for the
full year. Progress on reducing Days Sales
Outstanding (DSO) achieved.
80%
Develop strategic three to five-year
forecasting model
Present forecasting model
to Board
The five-year forecast strategic model has
been developed and reviewed by the Board.
100%
Further development of KPIs for
businesses to increase visibility
ofefficiency
KPI dashboard to be
developed
The divisional dashboard has now been
developed and delivered.
80%
Review of broking arrangement
andincrease number of
newshareholders
Broking arrangement to be
reviewed and meet with
non-holders during the year
Broking arrangement review and transition
completed smoothly. A number of non-holders
met with and XPS market profile widened.
100%
Improve shareholder
communicationand investor story
Increased level and
qualityof shareholder
communication
Increased engagement with current
shareholders and potential new shareholders
and increased analyst coverage achieved.
90%
Each objective is measurable (albeit some detail has been removed given the commercially sensitive nature),
with target achievement levels evidenced by activities and outcomes. The Remuneration Committee then
assessed performance against each objective in each category on the basis of evidenced outcomes and
rated the level of achievement. It also takes the view that, although the Executive Directors have personal
accountabilities, their performance and activities are interconnected. For this reason, the Remuneration
Committee assessed the performance of the Executive Directors collectively and in the round and hence the
performance outcome is the same.
In light of the high standards of attainment of each of the Executive Directors, the Remuneration Committee
assessed that performance against the targets would result in 79% of maximum for this element of bonus to be
payable to the Co-CEOs and 80% to the CFO.
83XPS Pensions Group Annual Report 2022
Governance
This results in a formulaic outcome in aggregate of 86% of maximum for the Co-CEOs and 87% for the CFO.
However, the Executive Directors volunteered that the Remuneration Committee reduce the level of bonus
payable from the formulaic outcome to 79% of maximum to be consistent with bonus outcomes in the
wider firm.
Outcomes
Weightings
Ben
Bramhall
Paul
Cuff
Snehal
Shah
Financial performance (% of this element) 75% 89% 89% 89%
Strategic performance (% of this element) 25% 79% 79% 80%
Total formulaic performance outcome (% of maximum) 86% 86% 87%
Total actual performance outcome (% of maximum) 79% 79% 79%
Total actual performance outcome (% of salary) 119% 119% 89%
Total actual performance outcome (£) £371,995 £371,995 £235,661
1 The Executive Directors volunteered that the Remuneration Committee reduce the level of bonus payable from 86% of maximum for the
Co-CEOs and 87% for the CFO, to 79% of maximum to be consistent with bonus outcomes in the wider firm.
Statement of Directors’ shareholding and share interests (audited)
For each Director, the total number of Directors’ interests in shares at 31 March 2022 was as follows:
Director
Ben
Bramhall
Paul
Cuff
Snehal
Shah
Tom Cross
Brown
Alan
Bannatyne
Margaret
Snowdon
Sarah
Ing
Number of ordinary shares heldas at
31March2022 1,618,848 886,490 — 38,861 36,594 30,303 15,000
Share ownership requirement (% of salary) 200% 200% 200% n/a n/a n/a n/a
Share ownership requirementmet? Y Y N n/a n/a n/a n/a
Holding as % of March 2022salary 639% 350% —%
1
n/a n/a n/a n/a
Number of ordinary shares heldas at
31March2021 1,591,699 856,763 — 38,861 36,594 30,303 15,000
1 In line with the Directors’ Remuneration Policy, Snehal Shah will retain 50% of vested shares until he reaches the 200% ownership
requirement. Snehal’s awards remain unvested at present.
The shareholdings above include those held by Directors and their respective connected persons. There were no
changes in the Directors’ interests in shares between 31 March 2022 and 22 June 2022.
Under the share ownership guidelines, the Executive Directors are required to build and maintain a shareholding
equivalent to at least 200% of salary and are required to maintain a shareholding for a period after leaving
the Board.
Awards granted in the year under the PSP (audited)
The following nominal cost option PSP awards were granted in July 2021.
These awards vest in 2024 subject to performance relating to: (i) adjusted EPS targets as to 75% of the award;
and (ii) relative TSR targets as to the remaining 25% of the award. The details of these targets are shown in the
“Outstanding share plan awards” section on page 84.
Director Date of grant
Basis of award
(% of salary)
Face value of
awards at grant
1
Number of
shares under
award
Date of
vesting
Ben Bramhall 1 July 2021 150% £470,880 341,217 July 2024
Paul Cuff 1 July 2021 150% £470,880 341,217 July 2024
Snehal Shah 1 July 2021 125% £331,450 240,181 July 2024
1 Based on the share price of £1.38 on 30 June 2021.
XPS Pensions Group Annual Report 202284
Annual report on remuneration continued
Outstanding share plan awards (audited)
Details of all outstanding PSP awards made to Executive Directors are set out below:
Director Date of grant
Exercise
price
Interests held
at 31 March
2021
Interests
awarded
during the
year
Interests
vested during
the year
Interests
lapsed during
the year
Interests held
at 31 March
2022
Vesting
period
Ben
Bramhall
26 July 2018 0.05p 241,340 — 51,405 189,935 — July
2021
18 September 2019 0.05p 313,043 — — — 313,043 September
2022
30 November 2020 0.05p 348,387 — — — 348,387 November
2023
1 July 2021 0.05p — 341,217 — — 341,217 July 2024
Paul Cuff 26 July 2018 0.05p 241,340 — 51,405 189,935 — July
2021
18 September 2019 0.05p 313,043 — — — 313,043 September
2022
30 November 2020 0.05p 348,387 — — — 348,387 November
2023
1 July 2021 0.05p — 341,217 — — 341,217 July 2024
Snehal
Shah
18 September 2019 0.05p 259,239 — — — 259,239 September
2022
30 November 2020 0.05p 240,423 — — — 240,423 November
2023
1 July 2021 0.05p — 240,181 — — 341,217 July 2024
Notes:
1 On 27 July 2021, Ben Bramhall exercised awards over 51,405 shares granted on 26 July 2018 and sold 24,256 shares to settle resultant tax
and social security obligations. The closing share price on the day of exercise was £1.395.
2 On 30 July 2021, Paul Cuff exercised awards over 51,405 shares granted on 26 July 2018 and sold 21,678 shares to settle resultant tax and
social security obligations. The closing share price on the day of exercise was £1.475.
3 The highest mid-market price of the Company’s ordinary shares during the year ended 31 March 2022 was £1.515 and the lowest was £1.18.
The year-end price was £1.24.
Vesting outcomes for the 2019/20 PSP awards (granted in September 2019)
These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in September
2022 subject to performance relating to: (i) adjusted earnings per share (EPS) targets as to 50% of the award;
and (ii) relative total shareholder return (TSR) targets as to the remaining 50% of the award.
The details of the EPS and TSR target ranges and performance against them are shown in the table below.
Diluted adjusted EPS for the three-year period to the end of FY 2022 Portion of award vesting
Compound annual growth in EPS (CAG) of less than 3% above CPI 0%
CAG of 3% above CPI 25%
CAG of between 3% and 7% above CPI Between 25% and 100% on a straight-line basis
CAG of 7% or more above CPI 100%
Actual performance
1
:
CAG of 2.9% above CPI 0%
1 To ensure a like-for-like comparison, the impact on EPS of IFRS 16 and of the use of shares held by the EBT following the IPO to settle bonus
payments has been neutralised to ensure the outturn is an accurate reflection of operational performance.
85XPS Pensions Group Annual Report 2022
Governance
XPS Pensions Group’s TSR ranking vs a comparator group of companies Portion of award vesting
Below median 0%
Median 25%
Between median and upper quartile Between 25% and 100% on a straight-line basis
Upper quartile 100%
Actual performance
2
:
Between median and upper quartile 76%
The TSR comparator group consists of the constituents of the FTSE Small Cap Index (excluding investment
trusts) at the start of the performance period.
2 Based on performance to the end of March. This is an estimate as TSR performance will be measured to the third anniversary of the date of
grant which is 18 September 2022.
Based on the above the expected percentage of the total award vesting is 38% of maximum. Details of the
shares under award and their estimated value (based on the three-month average share price at 31 March 2022
of 134.26p per share) are as follows:
Executive
Maximum
number of
shares
Number
of shares
to vest
Number
of shares
to lapse
Estimated
value
vesting
£
Ben Bramhall 313,043 118,956 194,087 159,536
Paul Cuff 313,043 118,956 194,087 159,536
Snehal Shah 259,239 98,510 160,729 132,116
1 Based on the three-month average share price to 31 March 2022.
The awards also receive the value of dividend equivalents.
2020/21 PSP awards (granted in November 2020)
These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in 2023 subject
to performance relating to: (i) adjusted earnings per share (EPS) targets as to 50% of the award; and (ii) relative
total shareholder return (TSR) targets as to the remaining 50% of the award. The EPS target range was set
considering both the internal and external expectations for EPS performance over the next three years. The
details of the EPS and TSR target ranges are shown in the table below.
Diluted adjusted EPS
1
for the three-year period to the end of FY 2023 Portion of award vesting
Compound annual growth in EPS (CAG) of less than 3% above CPI 0%
CAG of 3% above CPI 25%
CAG of between 3% and 7% above CPI Between 25% and 100% on a straight-line basis
CAG of 7% or more above CPI 100%
1 Measured by normalising to allow for the use of shares held by the EBT to settle bonus payments and the impact of IFRS 16, to ensure the
outturn is an accurate reflection of operational performance.
XPS Pensions Group’s TSR ranking vs a comparator group
2
of companies Portion of award vesting
Below median 0%
Median 25%
Between median and upper quartile Between 25% and 100% on a straight-line basis
Upper quartile 100%
2 The TSR comparator group consists of the constituents of the FTSE Small Cap Index (excluding investment trusts) at the start of the
performance period.
XPS Pensions Group Annual Report 202286
Annual report on remuneration continued
2021/22 PSP awards (granted in July 2021)
These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in 2024 subject
to performance relating to: (i) adjusted earnings per share (EPS) targets as to 75% of the award; and (ii) relative
total shareholder return (TSR) targets as to the remaining 25% of the award. The EPS target range was set
considering both the internal and external expectations for EPS performance over the next three years. The
details of the EPS and TSR target ranges are shown in the table below.
Diluted adjusted EPS
1
for the three-year period to the end of FY 2024 Portion of award vesting
Compound annual growth in EPS (CAG) of less than 3% above CPI 0%
CAG of 3% above CPI 25%
CAG between 3% and 7% above CPI Between 25% and 100% on a straight-line basis
CAG of 7% or more above CPI 100%
1 Measured by normalising for the impact of IFRS 16, to ensure the outturn is an accurate reflection of operational performance.
XPS Pensions Group’s TSR ranking vs a comparator group
2
of companies Portion of award vesting
Below median 0%
Median 25%
Between median and upper quartile Between 25% and 100% on a straight-line basis
Upper quartile 100%
2 The TSR Comparator Group consists of the constituents of the FTSE Small Cap Index (excluding investment trusts) at the start of the
performance period.
External Board appointments
The Executive Directors did not hold any external directorships during the year. The approved Directors’
Remuneration Policy makes provision for them to retain any fees for one appointment.
Payments to past Directors (audited)
There were no payments to past Directors in the financial year FY 2022 (FY 2021: £nil).
Payments for loss of office (audited)
No payments were made to any Director in respect of loss of office in the financial year FY 2022 (FY 2021: £nil).
Review of past performance and CEO remuneration table (unaudited)
The graph below shows the TSR of the Company and the FTSE Small Cap Index (excluding investment trusts)
over the period from admission to 31 March 2022. This is considered an appropriate comparator for XPS
Pensions Group, which is a constituent of the FTSE Small Cap Index.
31 Mar
2017
70
80
90
100
110
120
130
140
150
31 Mar
2018
31 Mar
2019
31 Mar
2020
31 Mar
2021
31 Mar
2022
XPS Pensions Group plc FTSE Small Cap Excl. Investment Trusts
Total Shareholder Return (rebased to 100p)
Total shareholder return
Source: Refinitiv Datastream
87XPS Pensions Group Annual Report 2022
Governance
The table below shows the Co-CEOs’ single total figure remuneration since admission and the level (as a
percentage of maximum award) of payouts under the incentive plans:
Single total
figure of
remuneration
Annual bonus
payout as %
of maximum
Long-term
incentive
vesting rates
as % of
maximum
2022 Ben Bramhall £874, 328 79%
1
38%
2
Paul Cuff £874,128 79%
1
38%
2
2021 Ben Bramhall £692,741 68% 21.3%
Paul Cuff £692,541 68% 21.3%
2020 Ben Bramhall £569,272 30%
3
40.3%
Paul Cuff £569,272 30%
3
40.3%
2019 Ben Bramhall £362,803 12%
4
n/a
Paul Cuff £362,803 12%
4
n/a
2018 Ben Bramhall £546,138 79% n/a
Paul Cuff £545,724 79% n/a
2017 Ben Bramhall £286,882 31% n/a
Paul Cuff £4,179,695 31% n/a
1 The bonus was reduced with agreement of the Co-CEOs from the formulaic outcome of 86%.
2 The vesting rate relates to the September 2019 award that is due to vest in September 2022 and is, in part, based on estimated vesting
levels at 31 March 2022.
3 The bonus was reduced with the agreement of the Co-CEOs from the formulaic outcome of 50%.
4 The bonus was reduced with the agreement of the Co-CEOs from the formulaic outcome of 54%.
Percentage change in remuneration of Directors and employees (unaudited)
The table below presents the year on year % change in remuneration received by each Director, compared with
the change in remuneration received by all XPS Pensions Group staff.
Percentage change in remuneration
from 31/03/2020 to 31/03/2021
Percentage change in remuneration
from 31/03/2021 to 31/03/2022
Percentage
change in base
salary
%
Percentage
change in
benefits
%
Percentage
change in
bonus
%
Percentage
change in base
salary
%
Percentage
change in
benefits
%
Percentage
change in
bonus
%
Ben Bramhall 0% — 127% 9% 2% 27%
Paul Cuff 0% -2% 127% 9% 2% 27%
Snehal Shah 20% 23% 177% 9% 2% 27%
Tom Cross Brown 0% — — 0% — —
Alan Bannatyne 0% — — 0% — —
Margaret Snowdon 4% — — 0% — —
Sarah Ing 14% — — 0% — —
All UK employees 3.2% 1% 68% 5.9% (2)% 14%
1 Snehal Shah was appointed as a Director on 28 May 2019; accordingly the percentage difference shown represents a comparison between a
full year (FY 2021) and a part year (FY 2020).
2 Sarah Ing was appointed as Non-Executive Director on 17 May 2019; accordingly the percentage difference shown represents a comparison
between a full year (FY 2021) and a part year (FY 2020).
XPS Pensions Group Annual Report 202288
Annual report on remuneration continued
CEO pay
The table below sets out the pay ratios for the Group Co-Chief Executive Officers in relation to the equivalent
pay for the lower quartile, median and upper quartile employees (calculated on a full-time basis).
Year Method
25th percentile
pay ratio
Median
pay ratio
75th percentile
pay ratio
2022 Option A Total pay ratio 31:1 22:1 15:1
2021 Option A Total pay ratio 27:1 19:1 13:1
2020 Option A Total pay ratio 24:1 13:1 11:1
Notes:
1 The Company determined the remuneration figures at each quartile with reference to a date of 31 March 2022.
2 The Group used calculation option A as this is widely regarded as the method resulting in the most robust analysis.
3 The calculation is based on full-time equivalent salary calculated on the same basis as the single figure table.
4 This year the ratios have increased compared to the previous year. This increase reflects the increase in the Co-CEO single figure
remuneration for 2022, for which can be found on page 87.
5 The Committee has reviewed the employee data and believes the median pay ratio to be consistent with the pay, reward and progression
policies for the Company’s UK employees over the period.
The total pay and benefits and the salary component of total pay and benefits for the employee at each of the
25th percentile, median and 75th percentile are shown below:
£ 25th percentile Median 75th percentile
Salary £26,203 £36,471 £51,969
Total pay and benefits £28,333 £39,232 £57,905
Relative importance of spend on pay (unaudited)
The table below details the change in total staff pay between FY 2021 and FY 2022 as detailed in
note 10 of the financial statements, compared with distributions to shareholders by way of dividend, share
buybacks or any other significant distributions or payments. These figures have been calculated in line with
those in the audited financial statements.
£’000 FY 2022 FY 2021
%
change
Total gross staff pay 68,222 63,379 8
Distributions to shareholders 13,831 13,480 3
Statement of shareholder voting
The table below shows the outcome of the binding vote on the Directors’ Remuneration Policy at the Annual
General Meeting held on 8 September 2020 and the advisory vote on the 2020/21 Directors’ Remuneration
Report held on 7 September 2021.
AGM resolution Votes for % Votes against Votes withheld
Directors’ Remuneration Policy 160,263,927 96.06 6,575,827 3,625
Directors’ Remuneration Report 163,527, 249 99.28 1,180,103
5,141,754
89XPS Pensions Group Annual Report 2022
Governance
Implementation of Policy for 2022/23 (unaudited information)
This section provides an overview of how the Committee is proposing to implement the Remuneration Policy in
the year ending 31 March 2023.
Base salary
Base salaries are as follows with effect from 1 April 2022:
• Ben Bramhall – £332,755
• Paul Cuff – £332,755
• Snehal Shah – £281,069
Benefits in kind
Benefits will be paid in line with the Directors’ Remuneration Policy. Details of the benefits received by Executive
Directors are set out in the single figure table on page 81. There is no intention to introduce additional benefits
in2022/23.
Pension
Contribution rates are currently 6% of base salary. Contributions may be made as cash supplements in full or
inpart. These contributions are in line with those for the majority of employees in the Group.
Annual bonus
Bonus maxima of 150% of salary will be applied for the Co-Chief Executive Officers and 112.5% for the
ChiefFinancialOfficer.
The weightings are as follows: 75% of the bonus will be payable by reference to performance based on adjusted
PBT, with performance against personal/strategic targets determining the extent to which the remaining 25% of
the overall bonus opportunity is payable.
In addition:
• no bonus will be payable unless the Committee is satisfied that the Company’s underlying performance
warrants it; and
• as set out in the Policy table, bonus payments will also be subject to the Committee considering that the
proposed bonus amounts, calculated by reference to performance against the targets, appropriately reflect
the Company’s overall performance and shareholders’ experience. If the Committee does not believe this to be
the case, it may adjustthe bonus outturn accordingly.
Owing to the Board’s concerns about commercial sensitivity, we do not believe it is in shareholders’ interests
to disclose any further details of these targets on a prospective basis. However, the Company is committed to
adhering to principles of transparency and will, provided disclosure of targets is not deemed to be commercially
sensitive, make appropriate and relevant levels of disclosure of bonus targets and performance against these
targets for the 2022/23 bonus in next year’s report. The targets will be set to ensure both consistency and
fairness to all stakeholders.
XPS Pensions Group Annual Report 202290
Annual report on remuneration continued
Implementation of Policy for 2022/23 (unaudited information) continued
PSP awards
It is intended that the PSP awards will be made in 2022/23. There are two performance criteria and they are
based on EPS and relative TSR performance. In 2022 the vesting of three-quarters of the shares under award
will be subject to EPS performance and the remaining quarter subject to relative total shareholder return.
Theawards will normally vest three years after grant based upon performance. Due to the current volatility
ofinflation rates, the Committee determined to remove the link with CPI when measuring EPS performance.
Thedetails of the EPS and TSR target ranges are shown in the table below.
Diluted adjusted EPS for the three-year period to the end of FY 2025 Portion of award vesting
Compound annual growth in EPS (CAG) of less than 5% 0%
CAG of 5% 25%
CAG of between 5% and 10% Between 25% and 100% on a straight-line basis
CAG of 10% or more 100%
1 Measured on a constant tax rate basis, to ensure the outturn is an accurate reflection of operational performance.
The EPS target range was set considering both the internal and external expectations for EPS performance over
the next three years.
XPS Pensions Group’s TSR ranking vs a comparator group of companies Portion of award vesting
Below median 0%
Median 25%
Between median and upper quartile Between 25% and 100% on a straight-line basis
Upper quartile 100%
The TSR comparator group consists of the constituents of the FTSE Small Cap Index (excluding investment
trusts) at the start of the performance period.
The award levels will be no more than 150% of salary for the Co-CEOs and 125% for the CFO.
Minimum shareholding requirement
To align the interests of Executive Directors with those of shareholders, they are required to build and maintain
significant holdings of sharesin the Group over time. Theminimum shareholding requirement for Executive
Directors is 200% of base salary for the Co-CEOs and for the CFO.
In addition, Executive Directors will be required to maintain their full minimum shareholding requirement for one
year post-cessation of employment, and hold 50% of the requirement for a second year.
The Chairman’s and the Non-Executive Directors’ fees
Tom Cross Brown receives an annualfee of £120,000 for his role asBoard Chairman.
The Non-Executive Directors are entitled to a fee of £60,000 p.a., with an additional fee of £10,000 p.a. for
theChair of the Audit & Risk Committee and £5,000 p.a. for each of the Senior Independent Director, Chair of
the Remuneration Committee, Chair of the Sustainability Committee and Designated Employee Engagement
Non-Executive Director.
This report was reviewed and approved by the Board of Directors on 22 June 2022 and was signed on
itsbehalf by:
Margaret Snowdon OBE
Chair of the Remuneration Committee
22 June 2022
91XPS Pensions Group Annual Report 2022
Governance
Directors’ report
The Directors present
their Annual Report on the
activities of XPS Pensions
Group plc (the “Group”),
together with the audited
financial statements for the
year ended 31 March 2022.
The Governance section on
pages 50 to 90 forms part of
this Directors’ Report. Other
requisite components of this
report are set out elsewhere in this
Annual Report.
The Strategic Report provides
information relating to the
Group’s activities, its business
and strategy, engagement with
stakeholders, the principal risks and
uncertainties faced by the business
and environmental andemployee
matters. These sections, together
with the Statement of Corporate
Governance and Directors’
Remuneration Report, provide an
overview of the Group and give an
indication of future developments
in the Group’s business, so
providing a balanced assessment of
the Group’s position and prospects.
These reports and this Directors’
Report have been drawn up and
presented in accordance with, and
in reliance upon, applicable English
company law and any liability of
the Directors in connection with
such reports shall be subject to
the limitations and restrictions
provided by such law.
XPS Pensions Group plc is a
member of the FTSE All-Share
Index, trading under theticker
symbol XAF.
The table on page 92 details
where certain other information,
which forms part of the Directors’
Report, can be found within this
Annual Report.
Going concern
Please refer to the Going Concern
Statement in the Strategic Report
on page 39 and the Viability
Statement on page 49 for details
on the assessment carried out
by the Directors with regards to
going concern.
Results and dividend
The Group’s audited financial
statements for the year ended
31March 2022 are set out on
pages103 to 141 and the Company’s
audited financial statements are
set out on pages 142 to 148. The
Group’s profit after taxation for
the year ended 31 March 2022 was
£9.2million (FY 2021: £9.0 million).
An interim dividend of 2.4p per
ordinary share (FY 2021: 2.3p)
was paid on 3 February 2022.
The Directors recommend a final
dividend for the year of 4.8p per
ordinary share (FY 2021: 4.4p) to
be paid on 22 September 2022
to shareholders onthe register
on 26 August 2022. Further
information regarding dividend
policy and payments can be found
in theFinancial Review on page
39 and in note 36 to the financial
statements on page 141.
Post balance sheet events
There have been no significant
post balance sheet events to report
since 31 March 2022.
Directors
The current Directors of the
Company, with summaries of their
key skills andexperience, are set
out in the Governance section
on pages 52 and53. Directors on
the Board during the year and
up to the date of this report are
as follows:
Tom Cross Brown
Ben Bramhall
Paul Cuff
Snehal Shah
Alan Bannatyne
Margaret Snowdon OBE
Sarah Ing
Details of the Directors’ service
contracts are shown in the report
ofthe Remuneration Committee
on page 81.
Details of share options granted to
Directors and the interests of the
Directors in the ordinary shares
of theCompany are set out in the
Remuneration Report on pages
83 to 86.
In accordance with its Articles of
Association, the Company made
qualifying third party indemnity
provisions for the benefit of its
Directors against any liability that
attaches to them in defending
proceedings brought against
them, to the extent permitted
by company law, which were in
place throughout the year and
remain in force at the date of this
report. In addition, Directors’ and
Officers’ liability insurance cover
was maintained throughout the
year at the Company’s expense
and remains in force at the date of
this report.
XPS Pensions Group Annual Report 202292
Directors’ report continued
Directors continued
Information Location within Annual Report
Likely future developments in the business of the Company Strategic Report (pages 12 to 13)
Equality and diversity Sustainability (pages 27 to 28) , Nomination Committee
(page63)
Employee involvement Sustainability (page 26), Co-Chief Executive Officers’ Review
(pages 18 to 19), S172 Statement (pages 59 to 60) and
Statement of Corporate Governance (page 51)
Directors’ share interests Directors’ Remuneration Report (page 83)
Emissions and energy consumption Strategic Report (page 35)
Financial risk management objectives and policies Note 2 to the financial statements (page 117)
Directors’ regard to foster business relationships Strategic Report (page 59)
Capital structure
The Company’s issued ordinary
share capital and total voting
rights at 31 March 2022 and the
date of this report were 205,151,471
ordinary shares (each with a par
value of 0.05p and all fully paid).
There were no ordinary shares
held in treasury. 3,169,221 ordinary
shares were held in the Employee
Benefit Trust as at 31 March 2022
and the date of this report. Further
details of the Company’s issued
share capital are given in note
28 of the financial statements
onpage 134.
The Company’s ordinary shares
rank pari passu in all respects with
each other, including for voting
purposes and for all dividends.
Each share carries the right to
one vote at general meetings of
the Company. Further information
on the voting and other rights of
shareholders, including deadlines
for exercising voting rights, are set
out in the Company’s Articles of
Association and in the explanatory
notes that accompany the Notice of
the Annual General Meeting, which
are available on the Company’s
website at www.xpsgroup.com.
Restrictions on shares
The Company’s ordinary shares are
freely transferable and there are no
restrictions on the size of a holding.
Transfers of shares are governed
by the provisions of the Articles
of Association and prevailing
legislation. The ordinary shares
are not redeemable; however,
the Company may purchase any
of the ordinary shares, subject
to prevailing legislation and the
requirements of the Listing Rules.
The Directors are not aware of
any agreements between holders
of the Company’s shares that
may result in restrictions on the
transfer of securities or on voting
rights. Awards of shares under the
Company’s Performance Share Plan
incentive arrangement are subject
to restrictions on the transfer of
shares prior to vesting.
As at the date of this report, the
Trustee of the Group’s Employee
Benefit Trust holds 3,169,221
ordinary shares in the Company
buthas waived its entitlement
todividends and does not seek
toexercise the voting rights on
thoseshares.
Major interests in shares
The table on page 93 shows
the interests in shares (whether
directly or indirectly held) notified
to the Company in accordance
with Chapter 5 of the Disclosure
Guidance and Transparency Rules
as at 31 March 2022 and 31 May
2022 (being the latest practicable
date prior to publication of this
Annual Report).
Appointment and retirement
ofDirectors
The Board may from time to time
appoint one or more additional
Directors so long as the total
number of Directors does not
exceed the limit of 12 prescribed
in the Articles of Association.
Any person so appointed will
retire at the next Annual General
Meeting and then be eligible for
re-election. The UK Corporate
Governance Code recommends
that all Directors be subject to
annual re-election by shareholders.
Tom Cross Brown will retire as
the Group’s Chairman at the
conclusion of the 2022 Annual
General Meeting and therefore will
not stand for re-election. All other
Directors will offer themselves for
re-election at the 2022 Annual
General Meeting.
93XPS Pensions Group Annual Report 2022
Governance
Powers of Directors
The business of the Company shall
be managed by the Directors, who
may exercise all powers of the
Company, subject to legislation,
the provisions of the Articles of
Association and any directions
given by special resolution. The
Articles of Association contain
specific provisions governing
the Company’s power to borrow
money and also provide the
powers to issue shares and to
make purchases of its own shares.
In accordance with the authorities
granted at the 2021 Annual
General Meeting, the Directors
are authorised, within certain
limits, to allot shares or grant
rights to subscribe for shares in
the Company and to make market
purchases of the Company’s own
shares representing up to 10% of its
share capital at that time. Details of
the proposed renewal of authorities
of the Directors are set out in
the Notice of the 2022 Annual
General Meeting.
Political donations
No political contributions were
made, or political expenditure
incurred, by the Company and its
subsidiaries during the year (FY
2021: £nil).
Provisions on change of control
The Company is subject to a
change of control provision in the
following significant agreement:
The Company’s £100 million
agreement with HSBC Bank plc,
National Westminster Bank plc,
Bank of Ireland and Citibank in
multicurrency revolving facilities,
with a further uncommitted facility
of up to £50 million, includes a
customary provision for a lending
counterparty to amend, alter or
cancel the relevant commitment
to the Group following a change of
control of the Company.
The Company does not have
agreements with any Director
or employee that would provide
specific compensation for loss of
office or employment resulting
from a takeover, except that
provisions of the Company’s
Performance Share Plan incentive
arrangement may cause awards to
vest on a takeover.
Articles of Association
A copy of the full Articles of
Association is available on
the Company’s website. The
Company’s Articles of Association
may only be amended by a special
resolution of shareholders in a
general meeting.
Auditor and disclosure of
information to the auditor
In accordance with Section 418
of the Companies Act 2006,
each of the Directors who were
members of the Board at the
date of the approval of this report
confirms that:
• so far as the Director is
aware, there is no relevant
audit information of which
the Company’s auditor is
unaware; and
• the Director has taken all steps
that they ought to have taken as
a Director to make themselves
aware of any relevant audit
information and to establish that
the Company’s auditor is aware
of that information.
The Company’s auditor, BDO
LLP, has expressed its willingness
to continue in office and the
Board has agreed, based on the
recommendation of the Audit &
Risk Committee, that a resolution
for its reappointment will be
proposed at the forthcoming
Annual General Meeting.
Annual General Meeting
Details of the forthcoming Annual
General Meeting are given in
the Statement of Corporate
Governance on page 61.
At 31 March 2022 At 31 May 2022
Shareholder
Number of
ordinary
shares
Percentage of
total voting
rights
Number of
ordinary
shares
Percentage of
total voting
rights
Gresham House Asset Management 30,617,621 14.92 31,520,183 15.36
Punter Southall Financial Management 22,543,887 10.99 22,543,887 10.99
Fidelity International 18,102,738 8.82 18,326,170 8.93
Schroder Investment Management 14,724,367 7.18 14,724,367 7.18
Premier Miton Investors 12,681,795 6.18 13,138,795 6.40
Tellworth Investments 10,642,009 5.19 10,082,086 4.91
Montanaro Asset Management 10,275,000 5.01 10,275,000 5.01
XPS Pensions Group Annual Report 202294
Directors’ report continued
Listing Rule (LR) disclosures
For the purposes of LR 9.8.4CR, the information required to be disclosed by LR 9.8.4R can be found in the
followinglocations:
Item Location
Interest capitalised None
Publication of unaudited financial information Not applicable
Details of long-term incentive schemes Details of the Company’s long-term incentive scheme can
be found in the Remuneration Committee Report on page 73
Waiver of emoluments by a Director None
Waiver of future emoluments by a Director None
Non-pre-emptive issues of equity for cash Not applicable
Non-pre-emptive issues of equity for cash in relation to major
subsidiary undertakings
Not applicable
Contracts of significance in which a Director is or was interested None
Provision of services by a controlling shareholder Not applicable
Shareholder waiver of dividend for the year and future
dividends
Dividend waiver by the Trustee of the Group’s Employee
Benefit Trust – see page 92 of this report
Agreements with controlling shareholder Not applicable
The Directors’ Report was approved by the Board of Directors of XPS Pensions Group plc.
By order of the Board:
Snehal Shah
Chief Financial Officer
22 June 2022
95XPS Pensions Group Annual Report 2022
Governance
Directors’ responsibility statement
The Directors are responsible for
preparing the Annual Report and
the Group financial statements in
accordance with applicable laws
and regulations.
Company law requires the
Directors to prepare financial
statements for each financial year.
Under that law the Directors are
required to prepare the Group
financial statements and have
elected to prepare the Company
financial statements in accordance
with UK adopted International
Financial Reporting Standards.
Under company law the Directors
must not approve the financial
statements unless they are satisfied
that they give a true and fair view
of the state of affairs of the Group
and Company and of the profit or
loss for the Group and Company
for that period. In preparing these
financial statements, the Directors
are required to:
• select suitable accounting
policies and then apply
themconsistently;
• make judgements and accounting
estimates that are reasonable
and prudent;
• state whether they have been
prepared in accordance with UK
adopted International Financial
Reporting Standards subject
to any material departures
disclosed and explained in the
financialstatements;
• prepare the financial statements
on the going concern basis unless
it is inappropriate to presume
that the Company will continue
inbusiness; and
• prepare a Directors’ Report, a
Strategic Report and Directors’
Remuneration Report which
comply with the requirements
ofthe Companies Act 2006.
The Directors are responsible for
keeping adequate accounting
records that are sufficient to
show and explain the Company’s
transactions and disclose with
reasonable accuracy at any
time the financial position of the
Company and enable them to
ensure that the financial statements
comply with the Companies Act
2006 and, as regards the Group
financial statements, Article 4 of
the IAS Regulation. They are also
responsible for safeguarding the
assets of the Company and hence
for taking reasonable steps for the
prevention and detection of fraud
and other irregularities.
The Directors are responsible for
the maintenance and integrity
of the corporate and financial
information included on the
Company’s website. Legislation in
the UK governing the preparation
and dissemination of financial
statements may differ from
legislation in other jurisdictions.
Statement of the Directors in
respect of the Annual Report
As required by the UK Corporate
Governance Code, the Directors
confirm 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 and
performance, business model and
strategy. When arriving at this
position the Board was assisted by
a number of processes, including
the following:
• the Annual Report is drafted by
appropriate senior management
with overall co-ordination
by Internal Communications
and Company Secretarial
teams to ensure consistency
across sections;
• an extensive verification process
is undertaken to ensure
factual accuracy;
• comprehensive reviews of
drafts of the Annual Report
are undertaken by members of
the Executive Board and senior
management team; and
• the final draft is reviewed by the
Audit & Risk Committee prior to
consideration by the Board.
Responsibility statement
The Directors confirm that to the
best of their knowledge:
• the Group financial statements,
prepared in accordance with UK
adopted international accounting
standards, give a true and fair
view of the assets, liabilities,
financial position and profit or
loss of the Group; and
• the Annual Report includes a
fair review of the development
and performance of the business
and the financial position of the
Group and the Parent Company
as a whole, together with a
description of the principal risks
and uncertainties that they face.
Snehal Shah
Chief Financial Officer
22 June 2022
XPS Pensions Group Annual Report 202296
Opinion on the financial statements
In our opinion:
• the financial statements give a true and fair view of the state of the Group’s and of the Parent Company’s
affairs as at 31 March 2022 and of the Group’s profit for the year then ended;
• the Group financial statements have been properly prepared in accordance with UK adopted international
accounting standards;
• the Parent Company financial statements have been properly prepared in accordance with UK adopted
international accounting standards and as applied in accordance with the provisions of the Companies
Act 2006; and
• the financial statements have been prepared in accordance with the requirements of the
Companies Act 2006.
We have audited the financial statements of XPS Pensions Group plc (the ‘Parent Company’) and its subsidiaries
(the ‘Group’) for the year ended 31 March 2022 which comprise Consolidated Statement of Comprehensive
Income, Consolidated Statement of Financial Position, Consolidated Statement of Changes in Equity,
Consolidated Statement of Cash Flows, Statement of Financial Position - Company, Statement of Changes in
Equity - Company and notes to the financial statements, including a summary of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK adopted
international accounting standards and as regards the Parent Company financial statements, as applied in
accordance with the provisions of the Companies Act 2006.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s responsibilities
for the audit of the financial statements section of our report. We believe that the audit evidence we have
obtained is sufficient and appropriate to provide a basis for our opinion. Our audit opinion is consistent with the
additional report to the audit committee.
Independence
We were appointed by the directors on 28October 2016 to audit the financial statements for the year ending
31 March 2017, and subsequent financial periods. The period of total uninterrupted engagement including
retenders and reappointments is six years, covering the years ending 31 March 2017 to 31 March 2022. Prior to
the listing of the Parent Company, we were auditors for the three years ending 31 March 2014 to 31 March 2016.
We remain independent of the Group and the Parent Company in accordance with the ethical requirements
that are relevant to our audit of the financial statements in the UK, including the FRC’s Ethical Standard as
applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in accordance with
these requirements. The non-audit services prohibited by that standard were not provided to the Group or the
Parent Company.
Conclusions relating to going concern
1
In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’
assessment of the Group and the Parent Company’s ability to continue to adopt the going concern basis of
accounting included:
• Assessing the Directors’ going concern assessment and forecasts including the reasonableness of their
assumptions applied and reverse stress case sensitivities using our knowledge of the business;
Independent auditor’s report
to the members of XPS Pensions Group plc
97XPS Pensions Group Annual Report 2022
Financial Statements
Conclusions relating to going concern
1
continued
• Assessing the reasonableness of assumptions, by review and challenge, through enquiry and consideration
of historical performance, applied by management in preparation of cash flow forecasts, including growth
assumptions and movements in headcount and base costs, and the Group’s ability to meet working capital
requirements over the going concern period.
• Assessing the reasonableness of the underlying forecast model against the Directors’ historical forecast
accuracy, including an assessment of the period to May 2022 actuals against forecast;
• 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;
• 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.
Based on the work we have performed, we have not identified any material uncertainties relating to events or
conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s
ability to continue as a going concern for a period of at least twelve months from when the financial statements
are authorised for issue.
In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we
have nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements
about whether the Directors considered it appropriate to adopt the going concern basis of accounting.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the
relevant sections of this report.
Overview
Coverage
1
100% (2021: 100%) of Group profit before tax
100% (2021: 100%) of Group revenue
100% (2021: 100%) of Group total assets
100% (2021: 100%) of Group EBITDA (EBITDA - calculated as profit before tax, less depreciation,
amortisation and finance costs)
Key audit matters
2022 2021
Revenue recognition
Going concern
Going concern is no longer considered to be a key audit matter because the Group and Parent
Company have continued to trade profitability with very little disruption to their activities during the
Covid-19 pandemic.
Materiality
Group financial statements as a whole
2022: £900,000 based on 3% of EBITDA.
2021: £568,000, based on 5% of profit before tax.
1 These are areas which have been subject to a full scope audit by the group engagement team
XPS Pensions Group Annual Report 202298
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, nine trading subsidiaries and five intermediate holding companies
which are 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.
The intermediate holding companies were not considered significant components, but were subject to full scope
statutory audits to materiality thresholds below group materiality.
Three of the nine trading subsidiaries were considered to be significant components for the purpose of the
Group opinion and full scope audits were carried out by the Group audit team. We performed testing of the
consolidation and related consolidation adjustments posted in preparation of the Group financial statements.
For five of the remaining subsidiaries, which were considered to be non-significant components, we performed
full scope audit procedures for Group purposes, all performed to materiality thresholds below Group materiality.
For the smallest subsidiary which was acquired in the period, a desktop review has been performed, as the
balances are not material to the Group.
All Group audit work and subsidiary procedures were performed by the Group audit team.
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
revenue is
disclosed in
note 1 of the
consolidated
financial
statements.
The segmental
information
relating to
Group revenue
is disclosed in
note 8 to the
consolidated
financial
statements.
The key audit matter is the
significant risk of fraudulent
overstatement or understatement
of accrued income at the year end.
This risk is specific to revenue from
pension advisory and investment
consulting services.
There is a risk that incorrect revenue
is recognised due to the judgements
involved in the application of the
applicable accounting standards,
in this case specifically being
the valuation of accrued income
at year end.
To consider the risk of over or understatement of accrued income
and the associated revenues, we analysed fluctuations in recorded
production levels based on the timesheet system against the amounts
recognised as revenue in the month to calculate a recovery rate on
the time recorded in the month. Using data analytics we then isolated
outliers in the data around the year-end, investigating identified
outliers for evidence of fraudulent manipulation of revenues around
the year-end. We also performed a series of data quality tests, in
order to validate the timesheet data in the system that underlies the
recognition of accrued income, and therefore revenue, and tested the
underlying IT controls over the finance system and timesheet system.
We tested IT controls in order to place reliance on the data within the
finance and timesheet systems.
We tested accrued income by selecting a sample of accrued income
transactions, agreeing back to contract with the customer, underlying
timesheet data, invoice, and subsequent receipt of payment.
We tested management’s fee analysis control which operated
throughout the year, which is designed to identify any material error
in revenue.
Using data analytics we identified outliers in the journals population
for testing journals that were posted to revenue and accrued income,
reviewing any postings outside of the group’s expected revenue
journal postings. For such items identified we agreed journals to
supporting documentation.
Key observations:
Based on the procedures undertaken, we consider that revenue arising
from pension advisory and investment consulting services has been
recognised appropriately.
Independent auditor’s report continued
to the members of XPS Pensions Group plc
99XPS Pensions Group Annual Report 2022
Financial Statements
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
2022 2021 2022 2021
Materiality £900,000 £568,000 £360,000 £240,000
Basis for
determining
materiality
3% of EBITDA 5% of profit before tax 40% of Group
materiality
42% of Group
materiality
Rationale for the
benchmark
applied
EBITDA is
considered to be the
benchmark that is of
the most interest of
all the users of the
financial statements
based on investor
and stakeholder
expectations.
We determined profit
before tax as our
benchmark for
materiality on the basis
that profit before tax is
a key performance
indicator used by the
market.
40% of Group materiality
given the assessment
of the components
aggregation risk.
42% of Group
materiality given
the assessment of
the components
aggregation risk.
Performance
materiality
£650,000 £404,000 £252,000 £168,000
Basis for
determining
performance
materiality
72% 71% 70% 70%
These thresholds are based on our knowledge of the Group and Parent Company, control environment
over financial reporting, history of 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 71% and 73% of Group
materiality dependent on the size and our assessment of the risk of material misstatement of that component.
Component materiality ranged from £200,000 to £675,000, with aggregation risk considered. 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
£40,000 (2021:£23,000). We also agreed to report differences below this threshold that, in our view, warranted
reporting on qualitative grounds.
Other information
The directors are responsible for the other information. The other information comprises the information
included in the Annual Report and Accounts other than the financial statements and our auditor’s report
thereon. Our opinion on the financial statements does not cover the other information and, except to the
extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit,
or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent
material misstatements, we are required to determine whether this gives rise to a material misstatement in the
financial statements themselves. If, based on the work we have performed, we conclude that there is a material
misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
XPS Pensions Group Annual Report 2022100
Independent auditor’s report continued
to the members of XPS Pensions Group plc
Corporate governance statement
The Listing Rules require us to review the Directors’ statement in relation to going concern, longer-term viability
and that part of the Corporate Governance Statement relating to the parent company’s compliance with the
provisions of the UK Corporate Governance Code specified for our review.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements of
the Corporate Governance Statement is materially consistent with the financial statements or our knowledge
obtained during the audit.
Going concern
andlonger-term
viability
• The Directors’ statement with regards to the appropriateness of adopting the going concern basis of
accounting as set out on page 39 and any material uncertainties identified; and
• The Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment
covers and why the period is appropriate as set out on page 49 of the financial statements.
Other Code
provisions
• The Directors’ statement on fair, balanced and understandable set out on page 95;
• The Board’s confirmation that it has carried out a robust assessment of the emerging and principal
risks set out on page 49;
• The section of the annual report that describes the review of the effectiveness of risk management
and internal control systems set out on pages 44-49; and
• The section describing the work of the Audit Committee set out on pages 64-67
Other Companies Act 2006 reporting
Based on the responsibilities described below and our work performed during the course of the audit,
we are required by the Companies Act 2006 and ISAs (UK) to report on certain opinions and matters as
described below.
Strategic report
and Directors’
report
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic report and the Directors’ report for the financial year for which
the financial statements are prepared is consistent with the financial statements; and
• the Strategic report and the Directors’ report have been prepared in accordance with applicable
legalrequirements.
In the light of the knowledge and understanding of the Group and Parent Company and its environment
obtained in the course of the audit, we have not identified material misstatements in the Strategic report
or the Directors’ report.
Directors’
remuneration
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared
in accordance with the Companies Act 2006.
Matters on which
we are required
to report by
exception
We have nothing to report in respect of the following matters in relation to which the Companies Act
2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for our
audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ remuneration report to be
audited are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit.
Responsibilities of Directors
As explained more fully in the Directors’ responsibility statement, the Directors are responsible for the
preparation of the financial statements and for being satisfied that they give a true and fair view, and for such
internal control as the Directors determine is necessary to enable the preparation of financial statements that
are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the Group or the
Parent Company or to cease operations, or have no realistic alternative but to do so.
101XPS Pensions Group Annual Report 2022
Financial Statements
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our
opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise
from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
Extent to which the audit was capable of detecting irregularities, including fraud
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures
in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities,
including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is
detailed below, these apply to the parent and components:
We gained an understanding of the legal and regulatory framework applicable to the Group and the industry
in which it operates, and considered the risk of acts by the Group which were contrary to applicable laws and
regulations, including fraud. We considered the significant laws and regulations to be the Companies Act 2006,
applicable accounting standards, labour regulations, the Financial Conduct Authority’s regulations and the
Listing Rules.
We assessed the susceptibility of the financial statements to material misstatement, including fraud and
discussed among the audit engagement team how and where fraud might occur in the financial statements
and any potential indicators of fraud. We considered our knowledge of the nature of the industry, control
environment and business performance including the design of the Group’s remuneration policies, and
key drivers for Directors’ remuneration and performance targets. We considered the fraud risk areas to be
management override and revenue recognition, specifically the valuation of accrued income at the year end.
In response to the risk of management override, we tested the appropriateness of journal entries made
through the year and post year end, by applying specific criteria to detect possible irregularities and fraud, we
performed a detailed review of the Group’s year-end adjusting consolidation entries, and assessed whether
the judgements made in significant accounting estimates (such as the recoverability of accounts receivable,
the valuation of accrued income, the completeness of provisions, recoverability of intangible balances and the
valuation of share options) were indicative of potential bias.
Our procedures in response to the risk of fraud in revenue recognition are set out in the Key Audit Matters
section above.
Our procedures also included, but were not limited to:
• agreement of the financial statement disclosures to underlying supporting documentation;
• enquiries of management, Head of Risk, the Board and the Audit Committee concerning instances of fraud
and errors, and actual and potential litigation and claims;
• enquiries of the compliance department including the Head of Compliance and Money Laundering Reporting
Officer concerning instances of fraud;
• review of minutes of Board meetings throughout the year for any instances of fraud or error; and
• obtaining an understanding of the control environment in monitoring compliance with laws and Regulations.
We also communicated relevant identified laws and regulations and potential fraud risks to all engagement
team members and remained alert to any indications of fraud or non-compliance with laws and regulations
throughout the audit.
Our audit procedures were designed to respond to risks of material misstatement in the financial statements,
recognising that the risk of not detecting a material misstatement due to fraud is higher than the risk of not
detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery,
misrepresentations or through collusion. There are inherent limitations in the audit procedures performed and
the further removed non-compliance with laws and regulations is from the events and transactions reflected in
the financial statements, the less likely we are to become aware of it.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.
XPS Pensions Group Annual Report 2022102
Independent auditor’s report continued
to the members of XPS Pensions Group plc
Use of our report
This report is made solely to the Parent Company’s members, as a body, in accordance with Chapter 3 of Part
16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Parent
Company’s members those matters we are required to state to them in an auditor’s report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than
the Parent Company and the Parent Company’s members as a body, for our audit work, for this report, or for
the opinions we have formed.
Andrew Radford (Senior Statutory Auditor)
For and on behalf of BDO LLP, Statutory Auditor
London, United Kingdom
22 June 2022
BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).
103XPS Pensions Group Annual Report 2022
Financial Statements
Consolidated Statement of Comprehensive Income
for the year ended 31 March 2022
Year ended 31 March 2022 Year ended 31 March 2021
Note
Trading
items
£’000
Non-trading
and
exceptional
items
£’000
Total
£’000
Trading
items
£’000
Non-trading
and
exceptional
items
£’000
Total
£’000
Revenue 8 138 ,622 — 13 8 ,622 1 27, 9 3 1 — 1 2 7, 9 3 1
Other operating income 4 — — — — 421 42 1
Operating expenses 9 (109, 826 ) (9,808 ) (119, 634 ) (10 0, 8 4 8 ) (1 4 ,0 9 2 ) (1 1 4 , 9 4 0 )
Profit/(loss) from operating activities 28 ,79 6 (9,808 ) 18 ,988 2 7, 0 8 3 (13 , 67 1 ) 1 3 , 412
Finance income 14 — — — 3 — 3
Finance costs 14 (2 ,047 ) — (2 ,0 47 ) (1, 8 57 ) (1 8 8 ) (2, 0 4 5 )
Profit/(loss) before tax 2 6 , 74 9 (9,808 ) 16,941 25, 2 29 (1 3 , 8 59 ) 1 1 , 3 70
Income tax (expense)/credit 15 (4 , 9 8 8 ) (2 , 5 3 0 ) (7, 5 1 8 ) (4,741 ) 2, 33 4 (2 , 4 07 )
Profit/(loss) after tax and total
comprehensive income/(loss) for the year 21 , 761 (12 , 338 ) 9,423 20,4 8 8 (11, 525 ) 8 ,963
Memo
EBITDA 3 4 ,13 9 (3 , 2 2 9 ) 30, 910 32,01 1 (7, 1 2 4 ) 24 , 8 8 7
Depreciation and amortisation (5, 34 3 ) (6 , 579 ) (11,9 22 ) (4 , 9 2 8 ) (6 , 5 47 ) (11,475 )
Profit/(loss) from operating activities 28 ,79 6 (9,808 ) 18 ,988 2 7, 0 8 3 (13 , 67 1 ) 1 3 , 412
Pence Pence Pence Pence
Earnings/(loss) per share attributable to the
ordinary equity holders of the Company: Adjusted Adjusted
Profit or loss:
Basic earnings per share 34 10.7 — 4.6 10.0 — 4.4
Diluted earnings per share 34 10. 2 — 4.4 9.8 — 4.3
The notes on pages 107 to 141 form part of these financial statements.
XPS Pensions Group Annual Report 2022104
Consolidated Statement of Financial Position
as at 31 March 2022
Note
31 March
2022
£’000
31 March
2021
£’000
Assets
Non-current assets
Property, plant and equipment 16 3 ,1 87 3 ,1 97
Right-of-use assets 31 1 0, 927 12, 228
Intangible assets 17 206, 800 20 4 ,78 4
Deferred tax assets 18 1,0 99 76 7
Other financial assets 19 1, 814 1 ,7 8 0
Current assets
Trade and other receivables 20 3 8 , 7 76 34,635
Cash and cash equivalents 21 1 0,1 50 8 , 623
Total assets 272 ,75 3 266 ,014
Liabilities
Non-current liabilities
Loans and borrowings 22 63,3 09 5 8 , 876
Lease liabilities 31 8, 935 9, 612
Provisions for other liabilities and charges 26 1, 781 1,678
Deferred income tax liabilities 18 20,0 65 1 6, 39 0
Current liabilities
Lease liabilities 31 2 , 745 3,094
Provisions for other liabilities and charges 26 1, 236 1,384
Trade and other payables 24 27,275 24 , 5 0 4
Current income tax liabilities 25 2 , 207 1 , 41 0
Deferred consideration 27 765 —
Total liabilities 128 ,3 18 116, 948
Net assets 144, 435 149,06 6
Equity and liabilities
Equity attributable to owners of the parent
Share capital 28 103 1 03
Share premium 29 116,804 1 1 6 , 797
Merger relief reserve 29 4 8 , 687 4 8 , 6 87
Investment in own shares held in trust 29 (4 ,1 57 ) (2 , 5 6 3 )
Accumulated deficit 29 (1 7, 0 0 2 ) (13,958 )
Total equity 144, 435 149,066
The notes on pages 107 to 141 form part of these financial statements.
The Financial Statements were approved by the Board of Directors on 22 June 2022 and were signed on its behalf by:
Snehal Shah
Chief Financial Officer
22 June 2022
Registered number: 08279139
105XPS Pensions Group Annual Report 2022
Financial Statements
Consolidated Statement of Changes in Equity
for the year ended 31 March 2022
Share
capital
£’000
Share
premium
£’000
Merger
relief
reserve
£’000
Investment
in own
shares
£’000
Accumulated
deficit
£’000
Total
equity/
(deficit)
£’000
Balance at 1 April 2020 102 11 6 , 797 4 8 , 6 87 (52 9 ) (12,112 ) 152, 9 45
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 36) — — — — (1 3 , 4 8 0 ) (1 3 , 4 8 0 )
Dividend equivalents paid on exercised share options — — — — (4 4 1 ) (4 4 1 )
Shares purchased by Employee Benefit Trust for cash — — — (3 , 1 70 ) — (3 , 1 70 )
Share-based payment expense – equity settled from
Employee Benefit Trust — — — 1 ,13 6 (97 3 ) 163
Share-based payment expense - IFRS 2 charge in respect
of long-term incentives (note 13) — — — — 4,0 82 4 ,08 2
Deferred tax movement in respect of long-term incentives
(note 18) — — — — 3 3
Total contributions by and distributions to owners 1 — — (2 , 0 3 4 ) (1 0 , 8 0 9 ) (1 2 , 8 42 )
Balance at 31 March 2021 103 1 1 6 ,797 4 8 , 6 87 (2 , 5 6 3 ) (13,958 ) 149,06 6
Balance at 1 April 2021 103 11 6 ,797 4 8 , 6 87 (2 , 5 6 3 ) (13,958 ) 149,06 6
Comprehensive income and total comprehensive income
for the year — — — — 9, 42 3 9, 42 3
Contributions by and distributions to owners:
Share capital issued — 7 — — — 7
Dividends paid (note 36) — — — — (13,831 ) (13,831 )
Dividend equivalents paid on exercised share options — — — — (26 8 ) (2 6 8 )
Shares purchased by Employee Benefit Trust for cash — — — (3 , 3 24 ) — (3 , 3 24 )
Share-based payment expense – equity settled from
Employee Benefit Trust — — — 1 ,7 3 0 (1 , 70 4 ) 26
Share-based payment expense - IFRS 2 charge in respect
of long-term incentives (note 13) — — — — 3, 3 43 3 , 343
Deferred tax movement in respect of long-term incentives
(note 18) — — — — (7 ) (7 )
Total contributions by and distributions to owners — 7 — (1 , 5 9 4 ) (12, 467 ) (1 4 , 0 5 4 )
Balance at 31 March 2022 1 03 116,804 4 8 ,6 87 (4 ,1 57 ) (1 7, 0 0 2 ) 14 4,435
The notes on pages 107 to 141 form part of these financial statements.
XPS Pensions Group Annual Report 2022106
Consolidated Statement of Cash Flows
for the year ended 31 March 2022
Note
Year ended
31 March
2022
£’000
Year ended
31 March
2021
1
£’000
Cash flows from operating activities
Profit for the year 9,423 8 ,9 63
Adjustments for:
Depreciation 16 8 42 9 74
Depreciation of right-of-use assets 31 3 ,04 6 2, 892
Amortisation 17 8 ,03 4 7, 6 0 9
Finance income 14 — (3 )
Finance costs 14 2 ,0 47 2,045
Share-based payment expense 13 3,3 43 4,0 82
Other operating income 4 — (4 2 1 )
Income tax expense 15 7, 5 1 8 2, 4 07
Increase in trade and other receivables (3, 9 82 ) (3 6 )
Increase in trade and other payables 2 , 315 5,45 3
Decrease in provisions (65 ) (373 )
Income tax paid (3, 8 62 ) (3 , 3 0 4 )
Net cash inflow from operating activities 28 ,659 30, 288
Cash flows from investing activities
Finance income received 14 — 3
Acquisition of other intangible assets 7, 27 (1,469 ) (33 6 )
Disposal of healthcare business — 104
Purchases of property, plant and equipment 16 (1,05 0 ) (1,348 )
Purchases of software 17 (6,820 ) (1 , 4 1 9 )
Increase in restricted cash balances – other financial assets 19 (3 4 ) (4 8 0 )
Net cash outflow from investing activities (9,37 3 ) (3 , 476 )
Cash flows from financing activities
Proceeds from the issue of share capital net of share issue costs 28 7 1
Proceeds from loans net of capitalised costs 5, 895 —
Repayment of loans (2 ,00 0 ) (1 1 , 5 0 0 )
Payment relating to extension of loan facility — (1 8 8 )
Sale of own shares 26 163
Purchase of ordinary shares by EBT (3 , 3 2 4 ) (3 , 1 7 0 )
Interest paid (1, 222 ) (1 , 5 6 2 )
Lease interest paid (2 99 ) (2 8 3 )
Payment of lease liabilities (2 , 74 3 ) (2 ,1 6 1 )
Dividends paid to the holders of the parent (1 3, 8 31 ) (1 3 , 4 8 0 )
Dividend equivalents paid on exercise of share options (26 8 ) (4 4 1 )
Net cash outflow from financing activities (1 7, 7 5 9 ) (32, 621 )
Net increase/(decrease) in cash and cash equivalents 1 , 527 (5 , 8 0 9 )
Cash and cash equivalents at start of year 8,62 3 14, 432
Cash and cash equivalents at end of year 21 1 0,1 50 8 , 623
1 Purchases of property, plant and equipment and software of £0 .1 million in investing activities and lease payments of £0. 5 million in financing
activities previously incorrectly presented as a movement within trade and other payables (which impacts operating cash flows), have been
reclassified as the amounts were unpaid at the year end (net of amounts unpaid at the previous year end). A corresponding adjustment has
been made to working capital movements. This change has no overall impact on the total movement in cash and cash equivalents in the year;
it is just a reclassification of the movement.
The notes on pages 107 to 141 form part of these financial statements.
107XPS Pensions Group Annual Report 2022
Financial Statements
Notes to the Consolidated Financial Statements
for the year ended 31 March 2022
1 Accounting policies
activity of the Group is employee benefit consultancy and related business services . The registered office
is Phoenix House, 1 Station Hill, Reading, RG1 1NB . The Group financial statements consolidate those of the
Company and its subsidiaries (together referred to as the “Group”).
Basis of preparation
These financial statements have been prepared in accordance with UK adopted International Financial
Reporting Standards. There were no changes to accounting policies on adoption of UK IFRSs. The consolidated
financial statements have been prepared under the going concern basis.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Group’s accounting
policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and
estimates are significant to the financial statements, are disclosed at the end of this section.
The principal accounting policies adopted in the preparation of the financial statements are set out below. The
policies have been consistently applied to all the periods presented, unless otherwise stated.
Functional and presentation currency
The financial statements are presented in British pounds which is the Company’s functional currency. Figures
are rounded to the nearest thousand.
Measurement convention
The financial information is prepared on the historical cost basis except for the measurement of contingent
consideration.
Basis of consolidation
Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an
investee if all three of the following elements are present: power over the investee; exposure to variable returns
from the investee; and the ability of the investor to use its power to affect those variable returns. Control is
reassessed whenever facts and circumstances indicate that there may be a change in any elements of control.
Defacto control exists in situations where the Company has the practical ability to direct the relevant activities
of the investee without holding the majority of the voting rights. In determining whether defacto control exists
the Company considers all relevant facts and circumstances, including:
• the size of the Company’s voting rights relative to both the size and dispersion of other parties who hold
voting rights;
• substantive potential voting rights held by the Company and by other parties;
• other contractual arrangements; and
• historical patterns in voting attendance.
The consolidated financial information presents the results of the Company and its subsidiaries (“the Group”) as
if they formed a single entity. Intercompany transactions and balances between Group companies are therefore
eliminated in full.
The consolidated financial information incorporates the results of business combinations using the acquisition
method. In the statement of financial position, the acquiree’s identifiable assets, liabilities and contingent
liabilities are initially recognised at their fair values at the acquisition date, with the exception of right-of-use
assets and lease liabilities, which are measured at the present value of the lease liability discounted at acquisition
date incremental borrowing rate (a rate that represents the amount that would be charged to acquire an
asset of similar value for a similar period), with an adjustment to right-of-use assets to reflect favourable/non-
favourable lease terms. The results of the acquired operations are included in the consolidated statement of
comprehensive income from the date on which control is obtained. They are deconsolidated from the date on
which control ceases.
XPS Pensions Group Annual Report 2022108
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
1 Accounting policies continued
Property, plant and equipment
Property, plant and equipment are stated at historic cost less accumulated depreciation. For items acquired as
part of a business combination, cost comprises the deemed fair value of those items at the date of acquisition.
Depreciation on those items is charged over their estimated remaining useful lives from that date.
Depreciation is charged to profit and loss in the statement of comprehensive income on a straight-line basis
over the estimated useful lives of each part of an item of property, plant and equipment. Estimated useful lives
are as follows:
Office equipment 3 to 10 years
Leasehold improvements Over remaining life of the lease
Fixtures and fittings 3 to 10 years
Going concern
Accounting standards require the Directors to consider the appropriateness of the going concern basis when
preparing the financial statements. The Directors have taken notice of the Financial Reporting Council guidance
“Guidance on the going concern basis of accounting and reporting on solvency and liquidity risks” which
requires the reasons for this decision to be explained.
The Directors have prepared cash flow forecasts up to 31 March 2024, which includes the 12 month period
from the date of approval of these financial statements. These forecasts show that during that period the
Group is expected to generate sufficient cash from its operations to settle its liabilities as they fall due without
the requirement for additional borrowings. For the year ended 31 March 2023, the Directors have modelled a
scenario at which the banking covenants would be broken, which is the point where going concern would be
threatened. The headroom between this scenario and current performance, and the budget, is significant and a
decrease of this magnitude is considered to be extremely unlikely.
The Group negotiated a new banking facility in the year which will be in place for four years from October
2021. This facility gives the Group access to a Revolving Credit Facility of £100 million with an accordion of £50
million. The facility is subject to two covenants - net leverage and interest cover. These covenants were not
breached during the financial year, nor are any breaches forecast.
The Directors have reviewed the historical accuracy of the Group’s budgets. The Group’s performance was
compared to the budget, and actual revenue was within 2% of the forecast figure, and adjusted profit after tax
was within 0.4% of the forecast figure. This demonstrates that the Group’s forecasting process is at a sufficient
standard to be able to place reliance on it when making a going concern assessment. Post-year-end trading
is in line with forecasts. The Directors, after reviewing the Group’s budget and longer-term forecast models,
including the worst case scenario referred to above, conclude that the Group has adequate resources to
continue in operational existence for the foreseeable future and they continue to adopt the going concern basis
of accounting in preparing these annual financial statements.
The Group does not have any clients in Russia, and so has not had any direct impact from the sanctions or
restrictions imposed on Russian owned firms. The main impact on the Group of the current global situation
therefore is the high level of inflation currently being experienced in the UK, and also the related increase in
interest rates. The Group is confident of being able to minimise the impact of inflationary pressures on profits
through a continued focus on overall efficiency and a disciplined approach to pricing.
Intangible assets and goodwill
Goodwill represents amounts arising on acquisition, being the difference between the cost of the acquisition
and the net fair value of the identifiable assets and liabilities acquired on a business combination. Identifiable
intangibles are those which can be sold separately or which arise from legal rights regardless of whether those
rights are separable.
Goodwill is stated at cost less any accumulated impairment losses. Goodwill is allocated to cash-generating
units for the purposes of impairment testing and is not amortised. It is tested annually for impairment.
Externally acquired intangible assets are stated at cost less accumulated amortisation and impairment losses.
Acquired software is valued based on replacement cost valuations where identifiable or at cost less
accumulated amortisation and impairment. Internally produced software is valued at cost less accumulated
amortisation and impairment.
109XPS Pensions Group Annual Report 2022
Financial Statements
1 Accounting policies continued
Intangible assets and goodwill continued
Customer relationships are valued based on the net present value of the excess earnings generated by the
revenue streams over their estimated useful lives.
Brands valuation is based on net present value of estimated royalty returns.
Amortisation is charged to profit and loss in the statement of comprehensive income over the estimated useful
lives of intangible assets unless such lives are indefinite. Intangible assets with an indefinite useful life, such
as goodwill, are systematically tested for impairment at each balance sheet date. Other intangible assets are
amortised from the date they are available for use. Estimated useful lives are as follows:
Goodwill Indefinite life
Customer relationships* 10 years, straight-line method
Brands 10 years, straight-line method
Software 3 to 5 years, straight-line method
* Except for Pensions and investment customer relationships acquired as part of the Punter Southall acquisition and customer relationships
recognised in 2013, all of which have an estimated useful life of 20 years, on a straight-line basis.
Contingent consideration
Contingent consideration is included in cost at its acquisition date fair value and is classified as a financial
liability, remeasured at fair value subsequently through profit or loss. Contingent consideration classified as
equity is not remeasured.
Impairment of non-financial assets
Assets that have an indefinite useful life, for example goodwill or intangible assets not ready for use, are not
subject to amortisation and are tested annually for impairment. Assets that are subject to amortisation are
reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may
not be recoverable. An impairment loss is recognised for the amount by which the asset’s carrying amount
exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell
and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which
there are separately identifiable cash inflows (cash-generating units). Non-financial assets other than goodwill
that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date.
Financial assets
The Group classifies its financial assets into one of the categories discussed below, depending on the purpose
for which the asset was acquired.
Amortised cost
Amortised cost includes non-derivative financial assets where they are held within a business model whose
objective is to hold the financial asset in order to collect contractual cash flows and those contractual terms give
rise to cash flows on specified dates that are solely payments of principal and interest on the principal amount
outstanding. These assets are included in non-current assets if their maturity is greater than 12 months. Trade
receivables are stated initially at fair value then measured at amortised cost less provisions for impairment. The
Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected
credit loss provision. The expected loss rates are based on the Group’s historical credit losses experienced over
the three-year period prior to year end. The historical loss rates are then adjusted for current and forward-looking
information on macroeconomic factors affecting the Group’s customers. Any impairment required is recorded in
the statement of comprehensive income within operating expenses.
Cash and cash equivalents comprise cash balances and call deposits.
Restricted cash is cash which the Group is not entitled to receive, withdraw, transfer or otherwise deal with
the deposit, save as expressly permitted by the blocked account agreement during the security period. The
blocked account agreement is required due to regulatory rules on Master Trusts. The Security Period is the
period beginning on the date of the deed and ending on the date on which the beneficiary is satisfied that the
secured liabilities have been irrevocably and unconditionally paid and discharged in full and all agreements
which might give rise to secured liabilities have terminated. The restricted cash has been included in non-current
assets as it is expected that the cash will remain in the blocked account for more than 12 months after the end
of the reporting period. As such, it is not included in cash and cash equivalents in the Consolidated Statement
ofFinancial Position and the Consolidated Statement of Cash Flows.
XPS Pensions Group Annual Report 2022110
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
1 Accounting policies continued
Financial liabilities
The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the
liability was acquired. The Group’s accounting policy for each category is as follows:
Fair value through profit or loss
This category comprises contingent consideration. The contingent consideration is carried in the consolidated
statement of financial position at fair value with changes in fair value recognised in the consolidated statement
of comprehensive income.
Other financial liabilities
Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent
to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between
cost and redemption value being recognised in the statement of comprehensive income over the period of the
borrowings on an effective interest basis. When borrowings are extinguished, any difference between the cash
paid and the carrying value is recognised in the statement of comprehensive income.
Trade payables and other short-term monetary liabilities represent liabilities for goods and services received
by the Group prior to the end of the financial year which are unpaid. The amounts within trade payables are
unsecured. They are initially recognised at fair value and subsequently carried at amortised cost using the
effective interest method.
Provisions
A provision is recognised in the statement of financial position when the Group has a present legal or constructive
obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required
to settle the obligation. If the effect is material, provisions are determined by discounting the expected, risk
adjusted, future cash flows at a pre-tax risk-free rate.
Dilapidations provisions relate to the estimated cost to put leased premises back to the required condition
expected under the terms of the lease. These include provisions for required dilapidations along with provisions
where leasehold improvements have been made that would require reinstatement back to the original status
on exit. These are uncertain in timing as leases may be terminated early or extended. To the extent that exits of
premises are expected within 12 months of the end of the year they are shown as current.
Professional indemnity provisions relate to complaints against the Group. The amount provided is based on
management’s best estimate of the likely liability. These are recognised as a gross amount, with any amounts
covered by insurance recognised as an asset within current assets, in line with IAS 37.
Social security costs provisions represent estimates of the Group’s National Insurance contributions liability on
the cost of the Group’s Performance and Deferred Share Plans.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are
shown in equity as a deduction, net of tax, from the proceeds.
Retirement benefits: defined contribution schemes
Contributions to defined contribution pension schemes are charged to the consolidated statement of
comprehensive income in the year to which they relate.
Employee Benefit Trust (EBT)
As the Group is deemed to have control of its EBT, it is treated as a subsidiary and consolidated for the purposes
of the Consolidated Financial Statements. The EBT’s investment in the Group’s shares is deducted from equity in
the consolidated statement of financial position as if it were treasury shares. Consideration paid (or received) for
the purchase (or sale) of these shares is recognised directly in equity. The cost of shares held is presented as a
separate reserve (the “investment in own shares”). Any excess of the consideration received on the sale of these
shares over the weighted average cost of the shares sold is credited to retained earnings.
The equity-settled share-based payment expense represents the amount of share awards made by the EBT on
behalf of the Company as instructed by the Company.
EBT equity-settled awards, which vest immediately on issue, are measured at the fair value of the shares issued
on the date of the award, representing the bid price of the shares. The share-based payment expense is charged
to the consolidated statement of comprehensive income.
111XPS Pensions Group Annual Report 2022
Financial Statements
1 Accounting policies continued
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity
shareholders, this is when paid, and in the case of final dividends, this is when approved by the shareholders at
the Annual General Meeting.
Revenue
Revenue, which excludes value added tax, represents the value of employee benefit consultancy and related
business services supplied. Revenue is derived mainly from sales made in the United Kingdom. Revenue derived
from outside the United Kingdom is immaterial.
Amounts recognised as revenue but not yet billed are reflected in the statement of financial position as accrued
income (contract assets for adjustments relating to fixed fees as described below). All performance obligations
have been satisfied. Amounts billed in advance of work performed are deferred in the statement of financial
position as deferred income (contract liabilities for adjustments relating to fixed fees as described below).
Performance obligations and timing of revenue recognition
Performance obligations in contracts with customers are typically satisfied as services are rendered. In most
cases, revenue is recognised on an over time basis. This is because effort has been expended by the business
on fulfilling the performance obligations in the contract and the contracts would require payment for time and
effort spent by the Group on progressing the contracts in the event of the customer cancelling the contract
for any reason other than the Group’s failure to perform its obligations under the contract. Invoices are in
most cases raised monthly, based on timesheet data for Pensions actuarial and consulting work and Pensions
investment consulting. For Pensions Administration services, invoices are typically raised monthly based on
services provided. Payment is typically due 30 days from date of invoice. The services by the Group range
from actuarial and investment consultancy to administration of pension schemes. Additionally, the Group has a
SSAS and SIPP business which provides services to small self-administered pension schemes and self-invested
pensions plans. The Group also provides a defined contribution master pension trust for employers offering
“fullfreedom and choice”, called the National Pension Trust.
The Group has a number of customers who are on a fixed price contract. This contract covers a number of
services (pensions actuarial, administration and investment), most of which are ongoing and therefore require
no revenue recognition adjustment to the regular invoice issued to the customer. These are recognised monthly
at the time of billing, as the benefit the customer receives as the work is done is largely in line with the amount
billed each month.
For some fixed price customers, an element of the fixed fee includes the triennial valuation of their defined
benefit pension schemes, which is a distinct performance obligation. Under IFRS 15, the Group has assessed
these contracts and has determined that an adjustment is needed to recognise the revenue for the performance
obligation relating to the triennial valuations in the specific periods that the work is undertaken.
Additionally, some of the fixed fee contracts include an element for investment strategic reviews. This is
a distinct performance obligation, which has been assessed under IFRS 15 and it was determined that an
adjustment is required to recognise the revenue for this performance obligation in the specific periods that the
work is undertaken.
For the fixed fee customers where an adjustment is required, payment is made monthly over a three-year period.
The revenue recognition for triennial valuations takes place over the 15-month period after the valuation date,
so there can be up to 35 months variance between the date of billing and revenue recognition. For strategic
reviews, the variance can also be up to 35 months, depending on the timing of the review within the three-year
contract window. Any variance between the timing of payment and the timing of revenue recognition will be
recognised as either a contract asset (where the performance obligations met to date exceed the value billed
from the contract to date), or as a contract liability (where the value billed to date from the contract exceeds
theperformance obligations met to date).
XPS Pensions Group Annual Report 2022112
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
1 Accounting policies continued
Revenue continued
Determining the transaction price and allocating amounts to performance obligations
For the contracts where an adjustment is required, the Group has identified the element of the fixed fee that
is attributable to the triennial valuation and/or the strategic review. This has been calculated based on the
expected time required to perform these obligations for each specific customer. To ensure that the revenue is
allocated to the relevant period, the Group has determined the timespan for the triennial valuation work, and
the separate stages of this work. A percentage has been applied to each stage, based on the proportion of total
effort. For strategic reviews, which are a smaller piece of work, the Group makes an assessment at the end of
each relevant period of the percentage complete for each review.
Judgement is required for these contracts in determining the value attributable to the triennial valuation work
and the strategic reviews, and also to the stage of completion at each reporting period. The judgements made
are based on experience, and have been validated by comparison to timesheet data.
The remainder of revenue from fixed fee contracts is recognised on a monthly basis, as the services provided
tend to be evenly spread over the life of the contract.
Services provided under contracts which do not include a fixed fee are recognised at a price quoted within
the contract which typically varies depending on the level of seniority of the employee providing the service.
Commission income is recognised on renewal of scheme membership, as the performance obligations are met
at the time the contract is won or renewed with the insurer.
Expenses
Exceptional and non-trading items
To assist in understanding its underlying performance, the Group has defined the following items of pre-tax
income and expense as exceptional or non-trading as they either reflect items which are exceptional in nature
or size or are associated with the amortisation of acquired intangibles. Items treated as non-trading or
exceptional include:
• profits or losses on disposal of assets or businesses;
• corporate transaction and restructuring costs;
• amortisation of acquired intangibles;
• changes in the fair value of contingent consideration;
• share-based payments; and
• the related tax effect of these items.
Any other non-recurring items are considered individually for classification as non-trading or exceptional by
virtue of their nature or size.
The separate disclosure of these items allows a clearer understanding of the trading performance on a
consistent and comparable basis, together with an understanding of the effect of non-recurring or large
individual transactions upon the overall profitability of the Group.
The non-trading items have been included within the appropriate classifications in the consolidated income
statement. Further details are given in note 6.
Leases and payments
Identifying leases
The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use
an asset for a period of time in exchange for consideration. Leases are those contracts that satisfy the
following criteria:
(a) there is an identified asset;
(b) the Group obtains substantially all the economic benefits from use of the asset; and
(c) the Group has the right to direct use of the asset.
113XPS Pensions Group Annual Report 2022
Financial Statements
1 Accounting policies continued
Leases and payments continued
Identifying leases continued
The Group considers whether the supplier has substantive substitution rights. If the supplier does have those
rights, the contract is not identified as giving rise to a lease.
In determining whether the Group obtains substantially all the economic benefits from use of the asset, the
Group considers only the economic benefits that arise from use of the asset, not those incidental to legal
ownership or other potential benefits.
In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs
how and for what purpose the asset is used throughout the period of use. If there are no significant decisions
to be made because they are predetermined due to the nature of the asset, the Group considers whether it was
involved in the design of the asset in a way that predetermines how and for what purpose the asset will be used
throughout the period of use. If the contract or portion of a contract does not satisfy these criteria, the Group
applies other applicable IFRSs rather than IFRS 16.
All leases are accounted for by recognising a right-of-use asset and a lease liability except for:
• leases of low value assets; and
• leases with a duration of 12 months or less.
Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease
term, with the discount rate determined by reference to the rate inherent in the lease unless (as is typically
the case) this is not readily determinable, in which case the lessee company’s incremental borrowing rate
on commencement of the lease is used. Other variable lease payments are expensed in the period to which
they relate.
Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives
received, and increased for the amount of any provision recognised where the Group is contractually required to
dismantle, remove or restore the leased asset (typically leasehold dilapidations – see note 26).
Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate
on the balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a
straight-line basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely,
this is judged to be shorter than the lease term. When the Group revises its estimate of the term of any lease
(because, for example, it reassesses the probability of a lessee extension or termination option being exercised),
it adjusts the carrying amount of the lease liability to reflect the payments to make over the revised term, which
are discounted at the same discount rate that applied on lease commencement. The carrying value of lease
liabilities is also revised when the variable element of future lease payments dependent on a rate or index is
revised; however, this will use the original discount rate. In both cases an equivalent adjustment is made to the
carrying value of the right-of-use asset, with the revised carrying amount being amortised over the remaining
(revised) lease term.
When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the
nature of the modification:
• if the renegotiation results in one or more additional assets being leased for an amount commensurate with
the standalone price for the additional rights of use obtained, the modification is accounted for as a separate
lease in accordance with the above policy;
• in all other cases where the renegotiated lease increases the scope of the lease (whether that is an extension
to the lease term, or one or more additional assets being leased), the lease liability is remeasured using the
discount rate applicable on the modification date, with the right-of-use asset being adjusted by the same
amount; and
• if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease
liability and right-of-use asset are reduced by the same proportion to reflect the partial or full termination of
the lease with any difference recognised in profit or loss. The lease liability is then further adjusted to ensure
its carrying amount reflects the amount of the renegotiated payments over the renegotiated term, with the
modified lease payments discounted at the rate applicable on the modification date. The right-of-use asset is
adjusted by the same amount.
For contracts that both convey a right to the Group to use an identified asset and require services to be
provided to the Group by the lessor, the Group has elected to account for the entire contract as a lease, i.e. it
does not allocate any amount of the contractual payments to, and account separately for, any services provided
by the supplier as part of the contract.
XPS Pensions Group Annual Report 2022114
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
1 Accounting policies continued
Leases and payments continued
Identifying leases continued
When the Group revises its estimate of the term of any lease (because, for example, it reassesses the probability of
a lessee extension or termination option being exercised), it adjusts the carrying amount of the lease liability to
reflect the payments to make over the revised term, which are discounted at the same discount rate that applied
on lease commencement.
Where the lease liability changes due to change in lease term (for example, due to utilisation of an extension
option) a new discount rate is used. This rate is determined as the interest rate implicit in the lease for the
remainder of the lease term, if that rate can be readily determined, or the Group’s incremental borrowing rate at
the date of reassessment if the interest rate implicit in the lease cannot be readily determined. The same rate is
used for changes in index rates or a rate used to determine future lease payments.
Foreign exchange policy
Transactions entered into by Group entities in a currency other than the functional currency (GBP) are recorded
at the rates ruling when the transactions occur.
Any exchange rate differences are recognised immediately through the statement of comprehensive income.
Finance income and expense
Finance costs comprise interest payable, foreign exchange losses and costs directly related to the raising of loans.
Finance income comprises interest receivable on own funds, and foreign exchange gains.
Interest income and interest payable are recognised in profit or loss as it accrues, using the effective interest method.
Share-based payment costs - Performance Share Plan and Deferred Share Plan
The Group operates an equity-settled, share-based compensation plan, under which the entity receives services
from the Executive Directors and key management personnel in consideration for equity instruments of the
Group. The fair value of the services received in exchange for the grant of the awards is recognised as an expense.
The total amount to be expensed is determined by reference to the fair value of the awards granted:
• including any market performance conditions (for example, an entity’s share price); and
• excluding the impact of any service and non-market performance vesting conditions (for example, profitability
and remaining a Director for a specified period of time).
The Deferred Share Plans (DSPs) do not have any market performance conditions or non-market performance
vesting conditions, they only have service vesting conditions. The fair value for DSPs is the share price on the
date of grant.
The total amount expensed to the Group is recognised over the vesting period of the award. Where a share
award is cancelled, the share-based payment charge is accelerated at that point in time and all remaining
unvested charge is immediately expensed to the Group.
See the Employee Benefit Trust (EBT) policy above for information on the Employee Benefit Trust element
ofshare-based payment costs.
Taxation
Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in profit and loss
in the statement of comprehensive income except to the extent that it relates to items recognised in equity,
inwhich case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.
Deferred tax is provided on temporary differences between the carrying amounts of assets and liabilities
for financial reporting purposes and the amounts used for taxation purposes. The following temporary
differences are not provided for: the initial recognition of goodwill, the initial recognition of assets or liabilities
that affect neither accounting nor taxable profit other than in a business combination and differences relating
to investments in subsidiaries to the extent that they will probably not reverse in the foreseeable future. The
amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying
amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.
A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be
available against which the asset can be utilised.
115XPS Pensions Group Annual Report 2022
Financial Statements
1 Accounting policies continued
Changes in accounting policies - new standards, interpretations and amendments effective from 1 April 2021
New and amended standards and interpretations issued by the IASB that apply for the first time in these annual
financial statements do not impact the Group as they are either not relevant to the Group’s activities or require
accounting which is consistent with the Group’s current accounting policies.
New standards and interpretations not yet adopted
A number of new standards, amendments to standards and interpretations are not effective for 2022, and
therefore have not been applied in preparing XPS Pensions Group’s financial statements. They are not expected
to have a material impact on the Group’s consolidated financial statements. These include the following
amendments effective for the year beginning 1 April 2022:
• Onerous Contracts – Cost of Fulfilling a Contract (Amendments to IAS 37);
• Property, Plant and Equipment: Proceeds before Intended Use (Amendments to IAS 16);
• Annual Improvements to IFRS Standards 2018-2020 (Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and
• References to Conceptual Framework (Amendments to IFRS 3).
The following amendments are effective for the year beginning 1 April 2023:
• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);
• Definition of Accounting Estimates (Amendments to IAS 8); and
• Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12).
In January 2020, the IASB issued amendments to IAS 1, which clarify the criteria used to determine whether
liabilities are classified as current or non-current. These amendments clarify that current or non-current
classification is based on whether an entity has a right at the end of the reporting period to defer settlement
of the liability for at least 12 months after the reporting period. The amendments also clarify that “settlement”
includes the transfer of cash, goods, services, or equity instruments unless the obligation to transfer equity
instruments arises from a conversion feature classified as an equity instrument separately from the liability
component of a compound financial instrument. The amendments were originally effective for annual reporting
periods beginning on or after 1 January 2022. However, in May 2020, the effective date was deferred to annual
reporting periods beginning on or after 1 January 2023.
In response to feedback and enquiries from stakeholders, in December 2020, the IFRS Interpretations Committee
(IFRIC) issued a Tentative Agenda Decision, analysing the applicability of the amendments to three scenarios.
However, given the comments received and concerns raised on some aspects of the amendments, in April 2021,
IFRIC decided not to finalise the agenda decision and referred the matter to the IASB. In its June 2021 meeting,
the IASB tentatively decided to amend the requirements of IAS 1 with respect to the classification of liabilities
subject to conditions and disclosure of information about such conditions and to defer the effective date of the
2020 amendment by at least one year.
The Group is currently assessing the impact of these new accounting standards and amendments. The Group
will assess the impact of the final amendments to IAS 1 on classification of its liabilities once the those are issued
by the IASB.
The other standards, interpretations and amendments issued by the IASB (of which some are still subject to
endorsement by the UK), but not yet effective, are not expected to have a material impact on the Group’s
consolidated financial statements.
Critical accounting estimates and judgements
The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are
continually evaluated based on historical experience and other factors, including expectations of future events
that are believed to be reasonable under the circumstances. The estimates and underlying assumptions are
reviewed on an ongoing basis, with revisions to accounting estimates applied prospectively. In the future, actual
experience may differ from these estimates and assumptions. The estimates and assumptions that have a
significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next
financial year are discussed below.
XPS Pensions Group Annual Report 2022116
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
1 Accounting policies continued
Critical accounting estimates and judgements continued
Fair values of intangible assets
Goodwill and intangibles are tested for impairment on an annual basis at the year end and between annual
testsif an event occurs or circumstances change that would more likely than not reduce the fair value of the
cash-generating unit below its carrying value. These events or circumstances could include a significant change
in the business climate, legal factors, operating performance indicators, competition, or sale or disposition of a
significant portion of a reporting unit.
Application of the goodwill impairment test requires judgement, including the identification of cash-generating
units, assignment of assets and liabilities to such units, assignment of goodwill to such units and determination
of the fair value of a unit. The fair value of each cash-generating unit or asset is estimated using the income
approach, on a discounted cash flow methodology. This analysis requires significant estimates, including
estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of
growth for the business, estimation of the useful life over which cash flows will occur and determination of our
weighted average cost of capital. See note 17 for more detail.
Revenue recognition
Revenue is recognised once the performance obligations of the contract with the customer have been met, in
line with IFRS 15. This may be at a point in time or over time according to when control passes to the customer.
Dependent upon the income stream and nature of the engagement, revenue is recognised on either a time costs
incurred, fixed fee or rateably over the period of providing the service basis. Revenue is billed on a monthly,
quarterly or, in the case of certain SSAS and SIPP services, annual basis. Services may be billed in arrears, as
in the case of pensions advisory work, or in advance as is the case with SSAS and SIPP revenues. As a result of
such arrangements, critical accounting judgements are made in determining the timing of revenue recognition.
These relate to identifying individual performance obligations and then allocating an appropriate amount of
revenue to those obligations which largely depends on the time incurred in providing the services. Management
applies judgement in assessing timesheet data to ensure that revenue is allocated proportionally to effort.
There are significant judgements involved in determining the level of performance obligations met as part of
the triennial valuation work. These have been recognised on the basis of work completed through the 15-month
valuation process.
Deferred tax
Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit
will be available against which the losses can be utilised. Significant management estimates are required to
determine the amount of deferred tax assets that can be recognised based upon the likely timing and the level
of future taxable profits together with future tax planning strategies. Throughout the current and prior periods
the Directors consider that the IAS 12 recognition criteria have been satisfied. The recognised deferred tax
assets for the Group relate to share-based payments, whereby a corporation tax asset will arise in the future on
the exercise of share options issued to Executive Directors and senior staff under performance share plans and
deferred share plans. See note 18 for details of the carrying amount of the deferred tax assets.
Provisions
Dilapidations provisions have been made for properties which the Group currently leases based upon the cost
to make good the property in accordance with lease terms where applicable. Provisions are made for claims
in respect of complaints against the Group. The amount provided is based on management’s best estimate
of the likely liability. The cost to the business is capped to the excess on the Group’s professional indemnity
insurance in respect of each individual claim. The expected liability to the Group is disclosed as a gross figure
in the provision, with the amount covered by the Group’s insurance disclosed as a receivable. See note 26 for
more detail.
Useful lives of intangible assets
Intangible assets are amortised over their estimated useful lives with the charge recorded in administrative
expenses. Useful lives are based on management’s estimates of the period that the assets will generate revenue,
which are periodically reviewed for continued appropriateness. Changes to estimates can result in significant
variations in the carrying value and amounts charged to the consolidated income statement in specific periods.
Exceptional costs
Exceptional costs are recognised to the extent that they meet the definition outlined in the accounting policy
above. This requires a certain amount of judgement that is applied consistently by management.
117XPS Pensions Group Annual Report 2022
Financial Statements
1 Accounting policies continued
Critical accounting estimates and judgements continued
Contingent consideration
Contingent consideration is recognised in cost at its acquisition date fair value, and is classified as a financial
liability. At each reporting period the liability is remeasured at fair value through profit or loss. This remeasurement
is based on management’s expectation of future performance. Therefore, judgement is necessary in assessing
the amount of consideration that will be payable in the future. Because of the inherent uncertainty in this
evaluation process, actual gains or losses may be different from the originally estimated consideration.
Asset acquisition
In the year ended 31 March 2022, the Group undertook two significant software transactions. One of these
transactions included the purchase of a legal entity, which was necessary in order to gain control of the
software asset. Judgement was exercised to conclude that this acquisition was an asset acquisition and not a
business combination, after applying the optional concentration test.
2 Financial risk management
The XPS Pensions Group’s operations expose it to a variety of financial risks including credit risk, liquidity risk,
market risk and the effects of changes in interest rates on debt. The Group has in place a risk management
programme that seeks to limit the adverse effects on the financial performance of the Group by monitoring
levels of debt finance and the related finance costs.
The Group’s principal financial instruments comprise sterling cash, lease liabilities, bank deposits and bank loans
together with trade receivables and trade payables that arise directly from its operations.
Risk management policies are established for the XPS Pensions Group of companies and the Group Audit & Risk
Committee oversees how management monitors compliance with these policies and procedures and reviews
the adequacy of the risk management framework in relation to the risks faced by the Group. Further details
relating to the current year position are provided in note 30.
Credit risk
Credit risk is the risk of financial loss to the Group if a customer or counterparty, including brokers, to a financial
instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.
Due to the nature of the business, the majority of the trade receivables are with trustees of pension schemes
and large institutions and losses have occurred infrequently over previous years.
Liquidity risk
Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The
Group’s approach to managing liquidity is to ensure, as far as possible, that the Group will have sufficient
liquidity to meet its liabilities when due, under both normal and stressed conditions.
Market risk
Market risk is the risk that changes in market prices such as foreign exchange rates and equity prices will affect
the Group’s income or the value of its financial instruments. Interest rate risks are discussed in the cash flow
interest rate risk below.
The Group’s financial instruments are currently in sterling; hence foreign exchange movements do not have a
material effect on the Group’s performance.
The Group is exposed to movements in interest rate in its net finance costs and also in a small element of its
operating revenue. Senior loans are linked to SONIA. The Group earns income in relation to client as well as
interest income on its own deposits.
The Group does not hold its own position in trading securities, being involved only in arranging transactions on
behalf of its clients.
The Group does not engage in holding speculative financial instruments or derivatives. Further quantitative
disclosures are included throughout these Consolidated Financial Statements.
Cash flow interest rate risk
The XPS Pensions Group is exposed to cash flow interest rate risk in two main respects: firstly, corporate and
client bank deposits, which earn interest at a variable rate, although not at a material level; and secondly, interest
expense arising on bank facilities at a margin over SONIA.
XPS Pensions Group Annual Report 2022118
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
3 Capital risk management
The Group is focused on delivering value for its shareholders whilst ensuring the Group is able to continue
effectively as a going concern. Value adding opportunities to grow the business are continually assessed,
although strict and careful criteria are applied.
The policy for managing capital is to increase shareholder value by maximising profits and cash. The policy is to
set budgets and forecasts in the short and medium term that the Group feels are achievable. The processes for
managing capital are regular reviews of financial data to ensure that the Group is tracking the targets set and to
reforecast as necessary based on the most up-to-date information. This then contributes to the XPS Pensions
Group’s forecast which ensures future covenant test points are met. The Group continues to meet these test
points and they have been achieved over the last year.
Due to the nature of some of the services provided, two subsidiaries within the Group were regulated by the
Financial Conduct Authority (FCA) during the year. They are required to hold a minimum level of capital and this
is monitored on a monthly basis. Formal compliance returns are submitted to the FCA in line with its reporting
requirements. The Group was compliant with its capital requirements throughout the year.
4 Other operating income
Other operating income arose from the revaluation of the contingent consideration for the Trigon acquisition in
October 2019. The balance of the contingent consideration was paid by the Group in January 2021. Since this
is not considered to be part of the main revenue-generating activities of the Group, the Group presents this
income separately from revenue.
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Fair value adjustment of contingent consideration (note 27) — 421
5 Auditor’s remuneration
During the period the following services were obtained from the Group’s auditor at a cost detailed below:
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Audit services
Fees payable in respect of the Parent Company and consolidated accounts 197 187
Fees payable in respect of the subsidiary accounts 151 140
348 327
Audit-related services 45 43
Total 393 370
119XPS Pensions Group Annual Report 2022
Financial Statements
6 Non-trading and exceptional items
Note
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Corporate transaction costs
1
(320) (226)
Restructuring costs — (367)
Other exceptional costs
2
966 (2,028)
Exceptional items 646 (2,621)
Contingent consideration write back 27 — 421
Share-based payment costs
3
13 (3,875) (4 ,924)
Amortisation of acquired intangibles
4
17 (6,579) (6,547)
Exceptional finance costs — (188)
Non-trading items (10,454) (11,238)
Total before tax (9,808) (13,859)
Tax on adjusting items
5
(2,530) 2,334
Adjusting items after taxation (12,338) (11,525)
1 Costs associated with acquisitions and potential acquisitions of £320,000 (2021: £226,000).
2 Other exceptional credit of £966,000 relates to the reversal of the prior year increase in exceptional holiday pay accrual. The one-off
non-cash holiday pay accrual in the year ended 31 March 2021 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 December 2020. Prior to the pandemic the holiday pay accrual
had been stable. In the year ended 31 March 2022 the Group changed its holiday year to align with its accounting year, and as a result there
was no cash outflow as a result of the charge in the year ended 31 March 2021. Due to its one-off nature and the size of the holiday pay
accrual in the prior year, as well as the corresponding reversal in the year ended 31 March 2022, it was deemed appropriate to disclose the
amount separately from the underlying business performance. The year ended 31 March 2021 also included one-off costs to enable staff to
work from home, dual running costs for a delayed office move, and exceptional finance costs relating to renegotiations on the Revolving
Credit Facility - all as a direct result of the Covid-19 pandemic.
3 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 related
credits go directly to equity and so have a limited impact on the reserves of the Group. They are therefore shown as a non-trading item to give
clarity to users of the accounts on the profit figures that dividends and PSP performance are based on.
4 During the year the Group incurred £6,579,000 of amortisation charges in relation to acquired intangible assets (customer relationships and
brand) (2021: £6,547,000).
5 The tax charge on non-trading items of £2,530,000 (2021: credit of £2,334,000) represents 26% (2021: 17%) of the non-trading items
incurred of £9,808,000 (2021: £13,859,000). This is different to the expected tax credit of 19% (2021: 19%), as various adjustments are
made to tax including for deferred tax, and the exclusion of amounts not allowable for tax. The tax on non-trading and exceptional items
is a tax charge in the year ended 31 March 2022 instead of a tax credit, because of the tax rate increase from 19% to 25% from 1 April 2023.
As a result the Group re-valued the deferred tax position, and the large deferred tax charge in the year (£4.3 million) is mainly due to the
revaluation of deferred tax on acquired intangible assets.
7 Business combinations during the period
On 1 February 2022, the Group acquired the business of the Michael J Field Group, and 100% of the share
capital of MJF Pension Trustees Limited and MJF SSAS Trustees Limited from Michael Jeffrey Field, for total
consideration of £1.5 million in cash upon completion, and £0.8 million contingent cash consideration. The
business acquired undertakes the provision of administration, operator and actuarial consulting services to SIPP
and SSAS pensions, their trustees, operators and customers.
Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are as follows:
Book value
£’000
Adjustment
£’000
Fair value
£’000
Trade and other receivables 69 — 69
Trade and other payables (797) — (797)
Customer relationships — 1,964 1,964
Deferred tax — (477) (477)
Total net assets (728) 1,487 759
XPS Pensions Group Annual Report 2022120
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
7 Business combinations during the period continued
Fair value of consideration paid
£’000
Cash 1,469
Contingent cash 765
Total consideration 2,234
Goodwill (note 17) 1,475
Contingent consideration
The value of the contingent cash consideration for the Michael J Field acquisition in the contract is up to a
maximum of £1.5 million, based of revenue and cost targets being met in the 12 months following the acquisition.
The value attributed to the contingent consideration included in consideration has been determined using
Group forecasts. The contingent consideration is payable in February 2023.
In this acquisition, the main factors leading to the recognition of goodwill are the presence of certain intangible
assets, such as the assembled workforce of the acquired entities and the expected growth in the business
generated by new customers, which do not qualify for separate recognition.
The goodwill arising from the above acquisition is not deductible for tax purposes.
Since the acquisition date, the Michael J Field business has contributed £313,000 to Group revenues and
£77,000 to Group profit before tax.
If this acquisition had occurred on 1 April 2021, Group revenue would have been £140,605,000 and Group profit
before tax for the year would have been £17,063,000.
Acquisition expenses
Costs relating to the above acquisition totalled £294,000 and are included within exceptional costs.
8 Operating segments
In accordance with IFRS 8 Operating Segments, an operating segment is defined as a business activity whose
operating results are reviewed by the chief operating decision maker (CODM) and for which discrete information
is available. The Group’s CODM is the Board of Directors.
The Group has one operating segment, and one reporting segment due to the nature of services provided
across the whole business being the same: pension and employee benefit solutions. The Group’s revenues,
costs, assets, liabilities and cash flows are therefore totally attributable to this reporting segment. The table
below shows the disaggregation of the Group’s revenue, by product line.
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Pensions Actuarial & Consulting 63,724 60,687
Pensions Administration 50,786 46,813
Pensions Investment Consulting 13,678 11,585
National Pension Trust (NPT) 4,353 3,239
SIP
1
6,081 5,607
Total 138,622 127,931
1 Self Invested Pensions (SIPP) business, incorporating both SIPP and SSAS products
121XPS Pensions Group Annual Report 2022
Financial Statements
9 Administrative expenses
Included in the operating profit for the year are the following:
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Expenses by nature
Staff costs (note 10) 83,060 77,999
Depreciation and amortisation 11,922 11,475
Short-term and low value lease costs 31 —
Premises costs (excluding rent accounted for under IFRS 16 Leases) 2,651 2,674
Exceptional items (note 6) (646) 2,621
Other general business costs 22,616 20,171
Total 119,634 114,940
10 Staff numbers and costs
The average number of people employed by the Group (including Directors) during the year, analysed by
category, was as follows:
Year ended
31 March
2022
Number of
employees
Year ended
31 March
2021
Number of
employees
Operational 1,309 1,202
Administration 106 93
Sales and marketing 20 20
1,435 1,315
The aggregate payroll costs of these persons were as follows:
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Wages and salaries 66,719 62,086
Social security contributions and similar taxes 7,454 6,529
Defined contribution pension cost 3,509 3,131
Other long-term employee benefits 1,503 1,329
Share-based payment costs (note 13) 3,875 4,924
83,060 77,999
11 Employee benefits
Defined contribution plan
The Company operates a defined contribution pension plan. Outstanding contributions at the year end were £nil
(2021: £nil).
XPS Pensions Group Annual Report 2022122
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
12 Directors’ emoluments
The Directors were remunerated for their services by the Group and their emoluments are disclosed below.
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Aggregate emoluments 2,256 1,967
Company contributions to money purchase pension plans 30 30
2,286 1,997
Share-based payment expense for Directors was £433,000 (2021: £509,000).
Year ended
31 March
2022
Number of
Directors
Year ended
31 March
2021
Number of
Directors
At 31 March 2022, retirement benefits are accruing to the following number of Directors under:
Money purchase schemes 3 3
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
The emoluments of the highest paid Director, including benefits and share-based payments 870 835
13 Share-based payment costs
The Group operates a number of equity-settled share-based remuneration schemes for employees: Performance
Share Plans (PSP) for Executive Directors and other key senior personnel, and Deferred Share Plans (DSP)
for key senior personnel from July 2020. All employees are also eligible to participate in the Save as You Earn
(SAYE) scheme, the only vesting condition being that the individual remains an employee of the Group over the
savings period.
The Executive PSP award expense relates to annual awards over shares that vest subject to certain, stretching
performance conditions, measured over a three-year period. Maximum “normal” grant level is 150% of salary,
capped at a maximum of 200% in exceptional circumstances. Malus and clawback provisions apply. The fair
value of awards granted during the year was determined using certain assumptions around vesting. More
information about the Executive PSP can be found in the Remuneration Report section of this Annual Report.
The Staff PSP (issued to key senior staff) relates to annual awards over shares that vest subject to certain
performance conditions, measured over a three-year period. This scheme was replaced in July 2020 with a
DSP; the only vesting criterion for the DSP is a service criterion. The fair value of awards under this scheme was
determined using the share price on the date of grant.
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Performance Share Plan awards, Deferred Share Plan awards and SAYE scheme 3,343 4,082
Social security cost on Performance Share Plan awards and Deferred Share Plan awards 532 684
Share-based payments 3,875 4,766
Bonus settled from EBT — 139
Social security cost on bonus settled from EBT — 19
Total 3,875 4,924
123XPS Pensions Group Annual Report 2022
Financial Statements
13 Share-based payment costs continued
The fair value of Executive PSP options granted during the period was calculated using different methods for
different elements - the Black-Scholes method for the EPS element, the Stochastic method for the TSR element,
and the Finnerty method for the holding period (2021: Monte Carlo valuation method). The inputs to the model
were as follows:
Year ended 31 March 2022
75%
earnings
per share
(EPS)
25%
relative
total
shareholder
return
(TSR)
Two -year
holding
period
Year ended
31 March
2021
Weighted average exercise price of options issued during the period (pence) 0.05 0.05 0.05 0.05
Expected volatility (%) n/a 49.00% 40.70% 44%
Expected life beyond vesting date (years) 3.01 3.01 2.00 3
Risk-free rate (%) n/a 0.16% 0.34% (0.02)%
Dividend yield (%) — — — —
The Staff DSP options granted during the year had no performance criteria, other than a service condition.
Therefore, the fair value of this award was the market value of shares on the date of the award.
The fair value of SAYE options granted during the period was calculated using the Black-Scholes valuation
method. The inputs to the model were as follows:
Year ended
31 March
2022
Weighted average exercise price of options issued during the period (pence) 111.0
Expected volatility (%) 47.63%
Expected life beyond vesting date (years) 3.35
Risk-free rate (%) 0.28%
Dividend yield (%) 5.00%
No SAYE options were granted in the prior year.
The volatility assumption, measured at the standard deviation of expected share price returns, is based on a
statistical analysis of daily share prices over the last three years.
As at 31 March 2022, in respect of the Group’s ordinary shares of 0.05p each, 2,984,550 Executive PSP options
had been granted and remained outstanding, at an exercise price of 0.05p per share, 3,222,875 Staff PSP
options had been granted and remained outstanding, at an exercise price of 0.05p per share, 3,825,682 Staff
DSP options had been granted and remained outstanding, at an exercise price of 0.05p per share, 4,156 SAYE
options had been granted and remained outstanding, at an exercise price of 147.2p per share, 3,506,955 SAYE
options had been granted and remained outstanding, at an exercise price of 78p per share, and 919,855 SAYE
options had been granted and remained outstanding at an exercise price of 111p per share. The table below
includes dividend equivalent shares on the PSP and DSP option figures where applicable.
XPS Pensions Group Annual Report 2022124
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
13 Share-based payment costs continued
2022
Weighted
average
exercise
price
(pence)
2022
Number
2021
Weighted
average
exercise
price
(pence)
2021
Number
Executive PSP Outstanding at 1 April 0.05 2,918,849 0.05 2,750,750
Granted during the year 0.05 964,133 0.05 969,999
Forfeited during the year 0.05 (235,198) 0.05 (201,680)
Exercised during the year 0.05 (146,101) 0.05 (312,235)
Cancelled during the year 0.05 (403,447) 0.05 (287,985)
Outstanding at 31 March 0.05 3,098,236 0.05 2,918,849
Staff PSP Outstanding at 1 April 0.05 5,045,911 0.05 7,99 6,727
Forfeited during the year 0.05 (474,375) 0.05 (1,104,040)
Exercised during the year 0.05 (1,194,069) 0.05 (1,784,325)
Cancelled during the year 0.05 (41,792) 0.05 (62,451)
Outstanding at 31 March 0.05 3,335,675 0.05 5,045,911
Staff DSP Outstanding at 1 April 0.05 2,331,278 — —
Granted during the year 0.05 1,795,090 0.05 2, 337,458
Forfeited during the year 0.05 (149,906) 0.05 (6,180)
Outstanding at 31 March 0.05 3,976,462 0.05 2,331,278
SAYE Outstanding at 1 April 80.22 3,883,505 82.73 4,367,675
Granted during the year 111.00 975,889 — —
Forfeited during the year 82 .74 (171,814) 85.06 (154,043)
Exercised during the year 87.64 (37,421) — —
Lapsed during the year 144.75 (113,015) 130.20 (178,579)
Cancelled during the year 91.74 (106,178) 88.83 (151,548)
Outstanding at 31 March 88.61 4,430,966 80.22 3,883,505
The exercise price of options outstanding at 31 March 2022 ranged between £0.0005 (i.e. the nominal value of
an ordinary share) in the case of the PSPs and £1.472 in the case of the SAYE scheme (2021: £0.0005 to £1.472).
Their weighted average contractual life was 3 years (2021: 3 years), and the weighted average exercise price for
exercisable options was £0.01 (2021: £0.04).
Of the total number of options outstanding at 31 March 2022, 447,454 (2021: 506,580) had vested and
wereexercisable.
The weighted average fair value of each option granted during the year was £1.31 (2021: £1.10).
125XPS Pensions Group Annual Report 2022
Financial Statements
14 Finance income and expense
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Interest income on bank deposits — 3
Finance income — 3
Interest expense on bank loans 1,108 1,171
Other costs of borrowing 602 317
Interest on leases 291 340
Other finance expense 46 29
Finance expenses – trading 2,047 1,857
Exceptional finance costs (note 6) — 188
Finance expenses 2,047 2,045
Other costs of borrowing largely represent the amortisation expense of capitalised loan arrangement fees on
the Group’s bank debt.
15 Income tax expense
Recognised in the statement of comprehensive income
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Current tax expense
Current year 4,864 3,785
Adjustment in respect of prior year (205) (112)
Total current tax expense 4,659 3,673
Deferred tax (credit)/expense
Origination and reversal of temporary differences (1,399) (1,266)
Effect of tax rate changes 4,258 —
Total income tax expense 7,51 8 2,407
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Profit for the year 9,423 8,963
Total tax expense 7,51 8 2,407
Profit before income tax 16,941 11,370
Tax using the UK corporation tax rate of 19% (2021: 19%) 3,219 2,160
Non-deductible expenses 648 1,002
Other operating income not taxable — (80)
Fixed asset differences (55) (85)
Adjustment in respect of prior periods (205) (112)
Amounts credited directly to equity or otherwise transferred (7) 3
Excess relief on exercise of share options (340) (481)
Effect of tax rate change 4,258 —
Total tax expense 7,51 8 2,407
XPS Pensions Group Annual Report 2022126
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
15 Income tax expense continued
Recognised in the statement of comprehensive income continued
The standard rate of corporation tax in the UK was 19% (2021: 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 2022, which
is not lower than 19% (2021: 19%). Deferred tax not recognised relates to £6 million of finance expense losses in
a prior year and their future recoverability is uncertain. At 31 March 2022 the total unrecognised deferred tax
asset in respect of these losses was approximately £1.1 million (2021: £1.2 million).
An increase in corporation tax from 19% to 25%, taking effect from 1 April 2023, has been substantively enacted.
As a result, the deferred tax values in these financial statements have been updated to reflect this.
16 Property, plant and equipment
Leasehold
improvements
£’000
Office
equipment
£’000
Fixtures
and fittings
£’000
Total
£’000
Cost
Balance at 1 April 2021 3,128 1,723 832 5,683
Acquired through business combinations — 2 — 2
Additions 174 591 66 831
Disposals (85) (844) (7) (936)
Balance at 31 March 2022 3,217 1,472 891 5,580
Accumulated depreciation
Balance at 1 April 2021 1,254 1,000 232 2,486
Acquired through business combinations — 1 — 1
Depreciation charge for the year 271 482 89 842
Disposals (85) (844) (7) (936)
Balance at 31 March 2022 1,440 639 314 2,393
Net book value
Balance at 1 April 2021 1,874 723 600 3,197
Balance at 31 March 2022 1,777 833 577 3,187
Leasehold
improvements
£’000
Office
equipment
£’000
Fixtures
and fittings
£’000
Total
£’000
Cost
Balance at 1 April 2020 2,738 1,598 715 5,051
Additions 513 448 193 1,154
Disposals (123) (323) (76) (522)
Balance at 31 March 2021 3,128 1,723 832 5,683
Accumulated depreciation
Balance at 1 April 2020 1,115 725 194 2,034
Depreciation charge for the year 262 598 114 974
Disposals (123) (323) (76) (522)
Balance at 31 March 2021 1,254 1,000 232 2,486
Net book value
Balance at 1 April 2020 1,623 873 521 3,017
Balance at 31 March 2021 1, 874 723 600 3,197
127XPS Pensions Group Annual Report 2022
Financial Statements
17 Intangible assets
Group
Goodwill
£’000
Customer
relationships
£’000
Brands
£’000
Software
£’000
Total
£’000
Cost
Balance at 1 April 2021 120,343 123,305 6,036 5,076 254,760
Acquired through business combinations 1,475 1,964 — — 3,439
Additions — — — 6,611 6,611
Disposals — — — (880) (880)
Balance at 31 March 2022 121,818 125,269 6,036 10,807 263,930
Accumulated amortisation
Balance at 1 April 2021 — 42,011 5,917 2,048 49,976
Amortisation for the year — 6,516 63 1,455 8,034
Disposals — — — (880) (880)
Balance at 31 March 2022 — 48,527 5,980 2,623 57,130
Net book value
Balance at 1 April 2021 120,343 81,294 119 3,028 204,784
Balance at 31 March 2022 121,818 76,742 56 8,184 206,800
Goodwill
£’000
Customer
relationships
£’000
Brands
£’000
Software
£’000
Total
£’000
Cost
Balance at 1 April 2020 120,294 123,305 6,036 3,647 253,282
Additions — — — 1,743 1,743
Disposals — — — (314) (314)
Reassessment of fair value of net assets 49 — — — 49
Balance at 31 March 2021 120,343 123,305 6,036 5,076 254,760
Accumulated amortisation
Balance at 1 April 2020 — 35,527 5,854 1,300 42,681
Amortisation for the year — 6,484 63 1,062 7,609
Disposals — — — (314) (314)
Balance at 31 March 2021 — 42,011 5,917 2,048 49,976
Net book value
Balance at 1 April 2020 120,294 87,778 182 2,347 210,601
Balance at 31 March 2021 120,343 81,294 119 3,028 204,784
The Group made two significant software purchases in the year, totalling £5,071,000. This software will be used
within the Administration business and will drive efficiencies and cost savings in the longer term.
Material customer relationship assets are broken down as follows:
Remaining
UEL
(years)
31 March
2022
Net book
value
(£’000)
31 March
2022
Remaining
UEL
(years)
31 March
2021
Net book
value
(£’000)
31 March
2021
Acquisitions prior to January 2018 (CGU 1) 11 19,623 12 21,421
Punter Southall Actuarial (CGU 2) 16 43,634 17 46,399
Punter Southall Administrative (CGU 3) 6 5,655 7 6,633
Kier (CGU 3) 7 2,044 8 2,355
XPS Pensions RL Limited (CGU 1) 8 2,184 9 2,489
XPS Pensions Trigon Limited (CGU 1) 8 1,632 9 1,847
Michael J Field (CGU 1) 10 1,931 — —
XPS Pensions Group Annual Report 2022128
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
17 Intangible assets continued
Impairment test
Goodwill represents the excess of the consideration over the fair value of the net assets acquired on the
purchase of the subsidiary companies listed in note 35, as well as goodwill which has arisen on the purchase of
trade and assets by the Group. In accordance with IFRS, this balance is not amortised and is subject to annual
impairment reviews.
The carrying value of goodwill was assessed based on the three cash-generating units that were identified in
prior years.
The three CGUs to which goodwill has been allocated are:
CGU 1 - Former Xafinity businesses, Royal London, Trigon and Michael J Field acquisitions
CGU 2 - PS Actuarial
CGU 3 - PS Admin
The cash-generating unit at each year end was assessed on the basis of value in use using the following
assumptions, which reflect past experience of the Group:
2022 2021
CGU 1 CGU 2 CGU 3 CGU 1 CGU 2 CGU 3
Discount rate pre-tax 9.3% 9.3% 9.3% 9.9% 9.9% 9.9%
Terminal rate after period 8 2.0% 2.0% 2.0% 2.0% 2.0% 2.0%
Period on which detailed forecasts are based 3 years 3 years 3 years 3 years 3 years 3 years
Growth rate during detailed forecast period (average) 10.4% 7.4% 27.3% 6.4% 8.1% 1.9%
Growth rate applied beyond approved forecast period
toyear 8 5% 5% 5% 5% 5% 5%
The discount rate comprises two elements, the cost of debt and the cost of equity, to derive a blended cost of
capital demanded by all providers of capital. The cost of equity is based on the following components:
• Beta: calculated to estimate how volatile the Group’s equity is compared to the FTSE SmallCap index
• Risk-free rate: using a 20-year UK government bond yield as a proxy for the risk-free rate
• Equity risk premium: the implied rate as at 31 March 2022 is used to assess the price of risk in equity markets
• Small company premium: an additional size premium is applied to the Group’s cost of equity to account for
extra risk
The cost of debt represents the cost of capital for the Group’s drawn Revolving Credit Facility and is based on
average borrowings during the year.
The growth rate beyond the forecast period is based on a blend of average growth rates experienced by the
Group and management’s assessment of industry and macroeconomic outlooks. Such forecast rates have been
accurate in the past, so the Directors believe they will be sufficiently representative of actual results.
The growth rate is applied up to 8 years; this is due to the longevity of the customer relationships held by
the Group.
The impairment exercise demonstrated that there was significant headroom in all CGUs on this basis, so the
Directors are satisfied that no impairment has arisen during the financial period.
2022
£’000
2021
£’000
Goodwill allocated to cash-generating units:
Goodwill - XPS Pensions Consulting Limited, Xafinity SIPP Services Limited, Xafinity Pensions
Consulting Limited and subsidiaries, XPS Pensions (RL) Limited, XPS Pensions (Trigon) Limited (CGU 1) 30,007 28,532
Goodwill - XPS Investment Limited, XPS Pensions Limited (CGU 2) 79,314 79,314
Goodwill - XPS Holdings Limited, XPS Administration Holdings Limited, XPS Administration Limited (CGU 3) 12,497 12,497
121,818 120,343
129XPS Pensions Group Annual Report 2022
Financial Statements
17 Intangible assets continued
Sensitivity analysis of assumptions
The Group performed further sensitivity analysis by recalculating the fair value of the net assets of the Group
on a “worst case” basis. For the Group, the worst case would be breaching the banking covenants on leverage,
as that could lead to the Group’s Revolving Credit Facility being withdrawn. The size of the impact on revenue
to reach this point was considered, alongside mitigating factors that the Group would take if necessary. This
analysis showed that this potential worst case scenario is considered unlikely to materialise, and so there was
norequirement for impairment.
18 Deferred income tax
Analysis of the breakdown and movement of deferred tax during the year is as follows:
Balance at
1 April 2021
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
Acquired
in period
£’000
31 March
2022
£’000
31 March
2022
Assets
£’000
31 March
2022
Liabilities
£’000
Property, plant and equipment 51 39 — — 90 — 90
Capital gains 717 — — — 717 — 717
Short-term temporary differences (767) (339) 7 — (1,099) 1,099 —
Business combinations 15,622 3,159 — 477 19,258 — 19,258
15,623 2,859 7 477 18,966 1,099 20,065
Balance at
1 April 2020
£’000
Recognised
in income
£’000
Recognised
in equity
£’000
31 March
2021
£’000
31 March
2021
Assets
£’000
31 March
2021
Liabilities
£’000
Property, plant and equipment (2) 53 — 51 — 51
Capital gains 717 — — 717 — 717
Short-term temporary differences (667) (97) (3) (767) 767 —
Business combinations 16,844 (1,222) — 15,622 — 15,622
16,892 (1,266) (3) 15,623 767 16,390
Deferred income tax assets are recognised to the extent that the realisation of the related tax benefit through
future taxable profits is probable. Deferred tax assets and liabilities have been measured at the rate they are
expected to unwind at. The increase in the main rate of corporation tax to 25% was substantively enacted in May
2021. This new rate has been applied to deferred tax balances which are expected to reverse after 1 April 2023,
the date on which that new rate becomes effective. For balances expected to reverse before 1 April 2023, 19%
(2021: 19%) has been used.
19 Other financial assets
The non-current financial asset relates to restricted cash held by the Group as security for the National Pension
Trust (NPT). For the NPT to gain approval to operate by the Pensions Regulator, the Group is required to demonstrate
it can support the NPT in any eventuality. The Group has therefore placed £1,814,000 (2021: £1,780,000) into a
restricted bank account, which the trustees of the NPT are able to access in certain circumstances.
There are no lifetime expected credit losses associated with this cash balance.
XPS Pensions Group Annual Report 2022130
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
20 Trade and other receivables
31 March
2022
£’000
31 March
2021
£’000
Trade receivables 17,925 17, 382
Less: provision for impairment of trade receivables (330) (350)
Net trade receivables 17,595 17,032
Accrued income 13,240 12,147
Contract assets 1,322 1,149
Total financial assets other than cash and cash equivalents carried at amortised cost 32,157 30,328
Prepayments 6,292 4,068
Other receivables includes £276,000 (2021: £186,000) of capitalised loan arrangement fees 327 239
Total trade and other receivables 38,776 34,635
The carrying value of trade and other receivables carried at amortised cost approximates to fair value.
31 March 2022 Current
Past due
0-30 days
Past due
31-90 days
Past due
more than
90 days
Total
£’000
Expected loss rate 0% 0% 2% 24%
Gross carrying amount 13,018 3,089 876 942 17,925
Loss provision 13 9 15 226 263
Amendment for specific bad debt provision (13) (9) (15) 104 67
Total — — — 330 330
31 March 2021 Current
Past due
0-30 days
Past due
31-90 days
Past due
more than
90 days
Total
£’000
Expected loss rate 0% 0% 0% 11%
Gross carrying amount 12,146 2,814 1,225 1,197 17,382
Loss provision 2 1 1 131 135
Amendment for specific bad debt provision (2) (1) (1) 219 215
Total — — — 350 350
The Group applies the IFRS 9 simplified approach to measuring expected credit losses using a lifetime expected
credit loss provision for trade receivables and contract assets. The expected loss rates are based on the Group’s
historical credit losses experienced over the three-year period prior to the period end. The historical loss rates
are then adjusted for current and forward-looking information affecting the Group’s customers.
Once the IFRS 9 approach has been calculated, the Group then calculates a specific debt provision based on
age of debt and specific client knowledge. The provision is then adjusted to take this detail into account.
Of the March 2021 contract asset balance of £1,149,000, £982,000 was billed in the year. Of the March 2020
contract asset balance of £1,528,000, £1,100,000 was billed in the year ended 31 March 2021. The March 2022
contract asset balance is expected to be billed in the year ending 31 March 2023 (£1,014,000), and the year
ending 31 March 2024 (£308,000). The March 2021 contract asset balance was to be billed in the years ending
31 March 2022 (£982,000) and 31 March 2023 (£167,000).
21 Cash and cash equivalents
31 March
2022
£’000
31 March
2021
£’000
Cash and cash equivalents per statement of financial position 10,150 8,623
Cash and cash equivalents per statement of cash flows 10,150 8,623
The balance is comprised solely of cash at bank and on hand.
131XPS Pensions Group Annual Report 2022
Financial Statements
22 Loans and borrowings
31 March 2022
Due within
1 year
(current)
£’000
Due
between
1 and 2
years
£’000
Due after
2 years
£’000
Sub-total
(non-
current)
£’000
Total
£’000
Drawn Revolving Credit Facility — — 64,000 64,000 64,000
Capitalised debt arrangement fees — (276) (415) (691) (691)
Sub-total — (276) 63,585 63,309 63,309
Capitalised debt arrangement fees shown as current assets
onbalancesheet (276) — — — (276)
Total (276) (276) 63,585 63,309 63,033
31 March 2021
Due
within
1 year
(current)
£’000
Due
between
1 and 2
years
£’000
Due after
2 years
£’000
Sub-total
(non-
current)
£’000
Total
£’000
Drawn Revolving Credit Facility — 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
The book value and fair value of loans and borrowings are not materially different.
Terms and debt repayment schedule
31 March 2022
Amount
£’000 Currency Nominal interest rate
Year of
maturity
Revolving Credit Facility 64,000 GBP 1.65% above SONIA 2025
31 March 2021
Amount
£’000 Currency
Nominal interest
rate
Year of
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
At 31 March 2022 the Group had drawn down £64,000,000 (2021: £59,000,000) of its £100,000,000 (2021:
£80,000,000) Revolving Credit Facility. On 12 October 2021, the Group entered into a new Revolving Facility
Agreement for £100 million with an accordion of £50 million. This facility has a 4 year term which started in
October 2021. Interest is calculated at a margin above SONIA, subject to a net leverage test. This refinancing
completes the Group’s transition to alternative benchmark rates from LIBOR, and the Group has no residual
LIBOR exposures.
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), XPS 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.
XPS Pensions Group Annual Report 2022132
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
23 Reconciliation of liabilities arising from financing activities
31 March
2021
£’000
Cash
flows
£’000
Non-cash
change:
liability
to asset
£’000
Non-cash
change:
new leases/
interest
this year
£’000
31 March
2022
£’000
Long-term borrowings 59,000 5,000 — — 64,000
Capitalised debt arrangement fees (310) (1,105) 276 172 (967)
Interest payable on long-term borrowings 10 (1,222) — 1,269 57
Lease liabilities 12,706 (3,042) — 2,016 11,680
Total liabilities from financing activities 71,406 (369) 276 3,457 74,770
31 March
2020
£’000
Cash
flows
£’000
Non-cash
change:
liability
to asset
£’000
Non-cash
change:
new leases/
interest
this year
£’000
31 March
2021
£’000
Long-term borrowings 70,500 (11,500) — — 59,000
Capitalised debt arrangement fees (500) — 186 4 (310)
Interest payable on long-term borrowings 270 (1,562) — 1,302 10
Lease liabilities 12,965 (2,444) 50 2,135 12,706
Total liabilities from financing activities 83,235 (15,506) 236 3,441 71,406
The prior year table has been restated to reflect the changes made in the classification of lease liabilities not
paid at the period end (see the cash flow statement for more detail), and also to include interest payable on
long-term borrowings.
24 Trade and other payables
31 March
2022
£’000
31 March
2021
£’000
Trade payables 8,635 4,746
Accrued expenses 8,867 10,603
Interest payable 57 10
Other payables 390 624
Total financial liabilities excluding leases, loans and borrowings, classified
asfinancialliabilitiesatamortised cost 17,949 15,983
Other payables – tax and social security payments 1,846 1,934
Other payables – VAT 4,233 3,802
Contract liabilities 3,247 2,785
Total trade and other payables 27,275 24,504
The carrying value of trade and other payables classified as financial liabilities measured at amortised cost
approximates to fair value.
Of the March 2021 contract liability balance of £2,785,000, £2,230,000 was recognised in revenue in the year.
Of the March 2020 contract liability balance of £2,472,000, £1,876,000 was recognised in revenue in the year
ended 31 March 2021.
The March 2021 trade payables balance has been restated to exclude £636,000 unpaid relating to finance lease
liabilities. The lease liability note has also been updated to reflect this adjustment.
25 Current income tax liabilities
31 March
2022
£’000
31 March
2021
£’000
Tax payable 2,207 1,410
2,207 1,410
133XPS Pensions Group Annual Report 2022
Financial Statements
26 Provisions for other liabilities and charges
31 March 2022
Social
security
costs on
Performance
Share Plan
£’000
Dilapidations
£’000
Professional
indemnity
£’000
Total
£’000
Balance at 1 April 2021 746 1,712 604 3,062
Provisions made during the year 532 20 332 884
Provisions used during the year (283) — (350) (633)
Provisions released unused during the year — (101) (195) (296)
Balance at 31 March 2022 995 1,631 391 3,017
Due within one year or less 594 251 391 1,236
Due after more than one year:
Between one and three years 401 442 — 843
Over three years — 938 — 938
995 1,631 391 3,017
31 March 2021
Social
security
costs on
Performance
Share Plan
£’000
Dilapidations
£’000
Professional
indemnity
£’000
Total
£’000
Balance at 1 April 2020 472 1,454 1,167 3,093
Provisions made during the year 624 342 573 1,539
Provisions used during the year (350) (84) (1,065) (1,499)
Provisions released unused during the year — — (71) (71)
Balance at 31 March 2021 746 1,712 604 3,062
Due within one year or less 420 360 604 1,384
Due after more than one year:
Between one and three years 326 218 — 544
Over three years — 1,134 — 1,134
746 1,712 604 3,062
Social security costs (National Insurance) are payable on gains made by employees on exercise of share options
granted to them. The eventual liability to National Insurance is dependent on:
• the market price of the Group’s shares at the date of exercise;
• the number of options that will be exercised; and
• the prevailing rate of National Insurance at the date of exercise.
Dilapidations relate to the estimated cost of returning a leasehold property to its original state at the end of the
lease in accordance with the lease terms. The cost is recognised within the depreciation of the right-of-use asset
over the remaining term of the lease. The main uncertainty relates to estimating the cost that will be incurred at
the end of the lease.
The dilapidations provision will be utilised at the end of the lease of the asset to which it relates.
The Group is involved in a small number of potential professional indemnity claims. The amount provided
represents the Directors’ best estimate of the Group’s liability, after having taken legal advice. Uncertainties
relate to whether claims will be settled out of court or if not whether the Group is successful in defending any
action. Because of the nature of the disputes, the Directors have not disclosed future information on the basis
that they believe that this would be seriously prejudicial to the Group’s position in defending the cases brought
against it. The provision relating to potential professional indemnity claims is updated depending on the status
of each individual claim.
XPS Pensions Group Annual Report 2022134
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
27 Deferred consideration
Balance at
1 April
2021
£’000
Acquisition
£’000
Fair value
adjustment
£’000
Settled
in year
£’000
31 March
2022
£’000
Contingent cash consideration — 765 — — 765
— 765 — — 765
Balance at
1 April
2020
£’000
Acquisition
£’000
Fair value
adjustment
£’000
Settled
in year
£’000
31 March
2021
£’000
Contingent cash consideration 757 — (421) (336) —
757 — (421) (336) —
The contingent cash consideration liability recognised at 31 March 2022 relates to the Michael J Field
acquisition in February 2022. The liability has been calculated based on terms agreed in the business purchase
agreement, which are dependent on certain revenue and cost targets being met in the 12 months following the
acquisition date.
28 Share capital
Ordinary
shares
’000
31 March
2022
Ordinary
shares
£’000
31 March
2022
Ordinary
shares
’000
31 March
2021
Ordinary
shares
£’000
31 March
2021
In issue at the beginning of the year 205,117 103 203,905 102
Issued during the year 34 — 1,212 1
In issue at the end of the year 205,151 103 205,117 103
31 March
2022
’000
31 March
2022
£’000
31 March
2021
’000
31 March
2021
£’000
Allotted, called up and fully paid
Ordinary shares of 0.05p (2021: 0.05p) each 201,982 101 203,105 102
Shares held by the Group’s Employee Benefit Trust
Ordinary shares of 0.05p (2021: 0.05p) each 3,169 2 2,012 1
Shares classified in shareholders’ funds 205,151 103 205,117 103
The Group has invested in the shares for its Employee Benefit Trust (EBT). These shares are held on behalf of
employees and legal ownership will transfer to those employees on the exercise of an award. This investment in
own shares held in trust is deducted from equity in the consolidated statement of changes in equity.
29 Reserves
The following describes the nature and purpose of each reserve within equity:
Reserve Description and purpose
Accumulated deficit All net gains and losses recognised through the consolidated statement
ofcomprehensiveincome.
Share premium Amounts subscribed for share capital in excess of nominal value.
Merger relief reserve The merger relief reserve represents the difference between the fair value
andnominalvalueof shares issued on the acquisition of subsidiary companies.
Investment in own shares Cost of own shares held by the EBT.
135XPS Pensions Group Annual Report 2022
Financial Statements
30 Financial instruments
The fair values and the carrying values of financial assets and liabilities are the same.
Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped
into three levels of a fair value hierarchy. The three levels are defined based on the observability of significant
inputs to the measurement, as follows:
• Level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;
• Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability,
either directly or indirectly; and
• Level 3: unobservable inputs for the asset or liability.
The Group’s finance team performs valuations of financial items for financial reporting purposes, including level
3 fair values, in consultation with third-party valuation specialists for complex valuations. Valuation techniques
are selected based on the characteristics of each instrument, with the overall objective of maximising the use of
market-based information. The finance team reports directly to the Chief Financial Officer.
The Group currently holds level 2 and level 3 financial assets and liabilities.
Contingent consideration is a level 2 financial liability, and is measured based on budgeted performance compared
to targets agreed in the business transfer agreement. The amount is not discounted as this would be immaterial.
Credit risk
The maximum exposure to credit risk at the reporting date was:
Carrying
amount
31 March
2022
£’000
Carrying
amount
31 March
2021
£’000
Trade receivables 17,925 17, 382
Provision for impairment of trade receivables (330) (350)
Net trade receivables due 17,595 17,032
Accrued income 13,240 12,147
Contract assets 1,322 1,149
Cash and cash equivalents 10,150 8,623
Non-current financial asset 1,814 1,780
44,121 40,731
Credit risk mitigation
The ageing of trade receivables at the reporting date was:
31 March
2022
£’000
31 March
2021
£’000
Not past due 13,018 12,146
Past due 0-30 days 3,089 2,814
Past due 31-90 days 876 1,225
Past due more than 90 days 942 1,197
17,925 17, 382
Movement in impairment allowance for trade receivables
Balance at start of the year 350 674
Increase during the year 121 172
Receivable written off during the year as uncollectable (57) (3)
Reversal of allowances (84) (493)
Balance at end of the year 330 350
XPS Pensions Group Annual Report 2022136
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
30 Financial instruments continued
Credit risk mitigation continued
The Group prepared a forward-looking impairment model using a provision matrix based on historical data.
Using this, the Group believes that an impairment allowance of £330,000 (2021: £350,000) is adequate in
respect of trade receivables. Those debts which have not been provided against are considered recoverable
by the Group. In accordance with IFRS 9, the expected credit loss (ECL) model was used to calculate the
impairment loss.
The Group has considered whether any provision needs to be made for credit losses on contract assets and
accrued income, and concluded that there are none.
Cash flow risk
The Group is exposed to cash flow interest rate risk in two main respects. Firstly, corporate and client bank
deposits, which earn interest at a variable rate, although not at a material level. Secondly, interest expense
arising on bank facilities at a margin over SONIA.
Interest rate risk
The interest rate on long-term borrowings is a margin over SONIA and as such the Company is at risk from
SONIA increases. The sensitivity of the interest rate risk has been assessed and it is not material.
Liquidity risk
Liquidity risk arises from the Group’s working capital and the finance charges and principal repayments on
its debt instruments. It is the risk the Group will encounter difficulty in meeting its financial obligations as
they fall due.
The following table sets out the contractual maturities (representing undiscounted cash flows) of financial liabilities:
Up to 3
months
£’000
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
31 March
2022
£’000
Trade and other payables 17,949 — — — — 17,949
Leases 1,115 1,911 2,537 4,479 2,606 12,648
Loans and borrowings — — — 64,000 — 64,000
Bank interest 375 1,061 1,236 2,367 — 5,039
Deferred consideration — 765 — — — 765
19,439 3,737 3,773 70,846 2,606 100,401
Up to 3
months
£’000
Between
3 and 12
months
£’000
Between
1 and 2
years
£’000
Between
2 and 5
years
£’000
Over
5 years
£’000
31 March
2021
£’000
Trade and other payables 15,983 — — — — 15,983
Leases 1,446 1,949 2,203 4,615 3,706 13,919
Loans and borrowings — — 59,000 — — 59,000
Bank interest 246 727 739 — — 1,712
17,675 2,676 61,942 4,615 3,706 90,614
The Group does not have any concerns over meeting its liabilities as they fall due, as the forecasts prepared
indicate sufficient cash receipts in each period to cover liabilities.
Capital risk
The Group’s objectives when managing capital is to maximise shareholder value whilst safeguarding the Group’s
ability to continue as a going concern. Total capital is calculated as total equity in the statement of financial position.
137XPS Pensions Group Annual Report 2022
Financial Statements
30 Financial instruments continued
Management of capital
31 March
2022
£’000
31 March
2021
£’000
Total equity 144,435 149,066
31 Leases
Nature of leasing activities (in the capacity as lessee)
The Group leases a number of properties in the UK. In some instances the rent is reviewed and may be reset
periodically to market rental rates. In other cases the periodic rent is fixed over the lease term. The Group also leases
certain items of equipment (photocopiers). Leases of photocopiers comprise only fixed payments over the lease
terms. The percentages in the table below reflect the current proportions of lease payments that are either fixed
or variable. The sensitivity reflects the impact on the carrying amount of lease liabilities and right-of-use assets if
there was an uplift of 5% on the balance sheet date to lease payments that are variable.
31 March 2022
Lease
contracts
Number
Fixed
payments
%
Variable
payments
%
Sensitivity
£’000
Property leases with periodic uplifts to market rentals 9 — 82 ± 334
Property leases with fixed payments 8 17 — —
Leases of plant and equipment 2 1 — —
19 18 82 ± 334
31 March 2021
Lease
contracts
Number
Fixed
payments
%
Variable
payments
%
Sensitivity
£’000
Property leases with periodic uplifts to market rentals 8 — 74 ± 307
Property leases with fixed payments 9 25 — —
Leases of plant and equipment 2 1 — —
19 26 74 ± 307
The Group sometimes negotiates break clauses in its property leases. On a case-by-case basis, the Group will
consider whether the absence of a break clause would expose the Group to excessive risk. Typically factors
considered in deciding to negotiate a break clause include:
• the length of the lease term;
• whether the location represents a new area of operations for the Group.
At 31 March 2022, the carrying amounts of lease liabilities are not reduced by the amount of payments that
would be avoided from exercising break clauses because on both dates it was considered reasonably certain
that the Group would not exercise its right to break the lease. Total undiscounted lease payments of £6,689,469
(2021: £6,138,038) are potentially avoidable were the Group to exercise break clauses at the earliest opportunity.
Right-of-use assets
Land and
buildings
£’000
Office
equipment
£’000
Total
£’000
At 1 April 2021 12,063 165 12,228
Additions 1,745 — 1,745
Depreciation (2,984) (62) (3,046)
At 31 March 2022 10,824 103 10,927
Right-of-use assets
Land and
buildings
£’000
Office
equipment
£’000
Total
£’000
At 1 April 2020 12,738 227 12,965
Additions 1,906 — 1,906
Depreciation (2,830) (62) (2,892)
Effect of modification to lease terms 249 — 249
At 31 March 2021 12,063 165 12,228
XPS Pensions Group Annual Report 2022138
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
31 Leases continued
Nature of leasing activities (in the capacity as lessee) continued
Lease liabilities
Land and
buildings
£’000
Office
equipment
£’000
Total
£’000
At 1 April 2021 12,528 178 12,706
Additions 1,725 — 1,725
Interest expense 286 5 291
Lease payments (2,974) (68) (3,042)
At 31 March 2022 11,565 115 11,680
Lease liabilities
Land and
buildings
£’000
Office
equipment
£’000
Total
£’000
At 1 April 2020 12,748 238 12,986
Additions 1,774 — 1,774
Interest expense 332 8 340
Effect of modification to lease terms 50 — 50
Lease payments (2,376) (68) (2,444)
At 31 March 2021 12,528 178 12,706
The lease liability as at 1 April 2020 and 31 March 2021 has been restated. Previously, this was reported net of
rental invoices received but not paid at the year end (included in trade payables). Trade payables and the lease
liability have now been adjusted by £636,000 to include balances not settled at the year end.
31 March
2022
£’000
31 March
2021
£’000
Short-term lease expense 30 —
Low value lease expense 8 —
Aggregate expense for short-term leases 38 —
The maturity of the lease liabilities are as follows:
Year ended
31 March
2022
£’000
Year ended
31 March
2021
£’000
Up to 3 months 1,039 1,360
Between 3 and 12 months 1,706 1,734
Between 1 and 2 years 2,321 1,947
Between 2 and 5 years 4,192 4,137
More than 5 years 2,422 3,528
11,680 12,706
The lease liability as at 1 April 2020 and 31 March 2021 has been restated. Previously, this was reported net of
rental invoices received but not paid at the year end (included in trade payables). Trade payables and the lease
liability have now been adjusted by £636,000 to include balances not settled at the year end. These amounts
are all current liabilities due within 3 months of the year end.
32 Notes supporting statement of cash flows
Cash and cash equivalents for the purposes of the statement of cash flows comprise:
Year
ended
31 March
2022
£’000
Year
ended
31 March
2021
£’000
Cash at bank available on demand 10,150 8,623
139XPS Pensions Group Annual Report 2022
Financial Statements
33 Related party transactions
Key management emoluments during the year
Year
ended
31 March
2022
£’000
Year
ended
31 March
2021
£’000
Emoluments excluding gain on the exercise of share options 1,926 1,642
Gain on exercise of share options 451 128
Share-based payment 433 509
Company contributions to money purchase pension plans 30 30
Social security costs 255 200
3,095 2,509
Non-executive emoluments during the year
Year
ended
31 March
2022
£’000
Year
ended
31 March
2021
£’000
Emoluments 330 326
Social security costs 41 40
371 366
34 Earnings per share
31 March
2022
£’000
31 March
2021
£’000
Profit for the year 9,423 8,963
’000 ’000
Weighted average number of ordinary shares in issue 203,742 204,392
Diluted weighted average number of ordinary shares 212,519 209,850
Basic earnings per share (pence) 4.6 4.4
Diluted earnings per share (pence) 4.4 4.3
The calculation of basic earnings per share is based on the earnings attributable to ordinary shareholders
divided by the weighted average number of shares in issue during the period.
Reconciliation of weighted average ordinary shares in issue to diluted weighted average ordinary shares:
Year
ended
31 March
2022
’000
Year
ended
31 March
2021
’000
Weighted average number of ordinary shares in issue 203,742 204,392
Dilutive impact of share options vested up to exercise date 329 271
Dilutive impact of PSP and DSP options not yet vested 5,954 3,420
Dilutive impact of dividend yield shares for PSP and DSP options 803 358
Dilutive impact of SAYE options not yet vested 1,691 1,409
Diluted weighted average number of ordinary shares 212,519 209,850
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 vests 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 2019,
2020 and 2022; these will vest in the years ending 31 March 2022, 2023 and 2025 respectively. These shares are
reflected in the diluted number of shares and diluted earnings per share calculations.
XPS Pensions Group Annual Report 2022140
Notes to the Consolidated Financial Statements continued
for the year ended 31 March 2022
34 Earnings per share continued
Adjusted earnings per share
Total
31 March
2022
£’000
Total
31 March
2021
£’000
Adjusted profit after tax 21,761 20,488
Adjusted earnings per share (pence) 10.7 10.0
Diluted adjusted earnings per share (pence) 10.2 9.8
35 Subsidiaries
The following is the list of wholly owned companies consolidated within the financial statements of XPS
Pensions Group plc.
Company name
Company
number Principal activity Registered address
XPS Pensions Group plc 08279139 Holding company Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Financing Limited 08279274 Holding company Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Reading Limited 08279362 Holding company Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Consulting (Reading) Limited 08287502 Holding company Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Pensions Consulting Limited 02459442 Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS SIPP Services Limited SC069096 Employee benefit
consultancy
Scotia House, Castle Business Park, Stirling,
Stirlingshire, FK9 4TZ
Xafinity Pensions Consulting Limited 04436642 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Xafinity PT Limited 00232565 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Entegria Limited 05777554 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Xafinity Pensions Trustees Limited 01450089 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Hazell Carr (AT) Services Limited SC420031 Employee benefit
consultancy
Scotia House, Castle Business Park, Stirling,
Stirlingshire, FK9 4TZ
Hazell Carr (SG) Services Limited 01867603 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Hazell Carr (ES) Services Limited 02372343 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Hazell Carr (PN) Services Limited 00236752 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Hazell Carr (SA) Services Limited SC086807 Dormant Scotia House, Castle Business Park, Stirling,
Stirlingshire, FK9 4TZ
Xafinity Trustees Limited 04305500 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Xafinity Employee Benefit Trust 2013 N/A Trust JTC Trustees Limited, Elizabeth House, 9
Castle Street, St Helier, Jersey, JE4 2QP
XPS Holdings Limited 04807951 Holding company Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Administration Holdings Limited 09655671 Holding company Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Administration Limited 09428346 Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Investment Limited 06242672 Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
141XPS Pensions Group Annual Report 2022
Financial Statements
Company name
Company
number Principal activity Registered address
XPS Pensions Limited 03842603 Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Pensions (RL) Limited 05817049 Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
XPS Pensions (Trigon) Limited 12085392 Employee benefit
consultancy
Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
MJF Pension Trustees Limited 03394648 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
MJF SSAS Trustees Limited 04089958 Dormant Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
Pensions Software Solutions Limited 11482474 Software development Phoenix House, 1 Station Hill, Reading,
Berkshire, RG1 1NB
36 Dividends
Amounts recognised as distributions to equity holders of the Parent in the year
31 March
2022
£’000
31 March
2021
£’000
Final dividend for the year ended 31 March 2021: 4.4p per share (2020: 4.3p per share) 8,948 8,795
Interim dividend for the year ended 31 March 2022: 2.4p (2021: 2.3p) per ordinary share was paid
duringthe year 4,883 4,685
13,831 13,480
The recommended final dividend payable in respect of the year ended 31 March 2022 is £9,696,000 or 4.8p per
share (2021: £9,025,000).
The proposed dividend has not been accrued as a liability as at 31 March 2022 as it is subject to approval at the
Annual General Meeting.
31 March
2022
£’000
31 March
2021
£’000
Proposed final dividend for year ended 31 March 2022 9,696 9,025
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 £28,073,000.
Therefore there are sufficient distributable reserves in XPS Pensions Group plc in order to pay the proposed
final dividend.
37 Ultimate controlling party
The Directors do not consider that there is an ultimate controlling party.
35 Subsidiaries continued
XPS Pensions Group Annual Report 2022142
Note
31 March
2022
£’000
31 March
2021
£’000
Assets
Non-current assets
Investments 5 29,681 26,345
Trade and other receivables 6 233,857 217,123
263,538 243,468
Total assets 263,538 243,468
Liabilities
Non-current liabilities
Trade and other payables 7 40,309 38,312
40,309 38,312
Current liabilities
Current tax liabilities 8 744 1,531
744 1,531
Total liabilities 41,053 39,843
Net assets 222,485 203,625
Equity and liabilities
Share capital 9 103 103
Share premium 10 116,804 116,797
Merger relief reserve 10 48,687 48,687
Other reserve 10 28,818 25,483
Retained profit 10 28,073 12,555
Total equity 222,485 203,625
The notes on pages 145 to 148 form part of these financial statements.
Under Section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its
own statement of comprehensive income. The profit for the financial year, of the holding company, as approved
by the Board, was £29,349,000 (2021: £23,519,000).
These financial statements were approved by the Board of Directors on 22 June 2022 and were signed on its
behalf by:
Snehal Shah
Chief Financial Officer
22 June 2022
Registered number: 08279139
Statement of Financial Position - Company
as at 31 March 2022
143XPS Pensions Group Annual Report 2022
Financial Statements
Statement of Changes in Equity - Company
for the year ended 31 March 2022
Share
capital
£’000
Share
premium
£’000
Merger
relief
reserve
£’000
Other
reserve
£’000
Retained
profit
£’000
Total
£’000
Balance at 1 April 2020 102 116,797 48,687 21,235 2,516 189,337
Comprehensive income and total comprehensive income
for the year — — — — 23,519 23,519
Contributions by and distributions to owners:
Share capital issued 1 — — — — 1
Share-based payment expense - equity settled from
Employee Benefit Trust — — — 163 — 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
Dividends paid — — — — (13,480) (13,480)
Total contributions by and distributions to owners 1 — — 4,248 (13,480) (9,231)
Balance at 31 March 2021 103 116,797 48,687 25,483 12,555 203,625
Balance at 1 April 2021 103 116,797 48,687 25,483 12,555 203,625
Comprehensive income and total comprehensive income
for the year — — — — 29,349 29,349
Contributions by and distributions to owners:
Share capital issued — 7 — — — 7
Share-based payment expense - equity settled from
Employee Benefit Trust — — — 26 — 26
Share-based payment expense - IFRS 2 charge in respect
of long-term incentives — — — 3,316 — 3,316
Deferred tax movement in respect of long-term incentives — — — (7) — (7)
Dividends paid — — — — (13,831) (13,831)
Total contributions by and distributions to owners — 7 — 3,335 (13,831) (10,489)
Balance at 31 March 2022 103 116,804 48,687 28,818 28,073 222,485
The appropriate filing of interim accounts showing sufficient reserves to pay the £13,831,000 dividend
wasundertaken.
The notes on pages 145 to 148 form part of these financial statements.
XPS Pensions Group Annual Report 2022144
The Company does not operate a bank account and therefore there were no cash flows during the year. All
movements of funds have been dealt with through subsidiary companies.
The notes on pages 145 to 148 form part of these financial statements.
Statement of Cash Flows - Company
for the year ended 31 March 2022
145XPS Pensions Group Annual Report 2022
Financial Statements
Notes to the Financial Statements - Company
for the year ended 31 March 2022
1 Accounting policies
XPS Pensions Group plc (the “Company”) is a public company incorporated in the UK. The principal
activity of the Company is that of a holding company. The registered office is Phoenix House, 1 Station Hill,
Reading, RG1 1NB.
Basis of preparation
These financial statements have been prepared in accordance with UK adopted International Financial
Reporting Standards in conformity with the requirements of the Companies Act 2006. There were no changes
to accounting policies on adoption of UK IFRSs. The consolidated financial statements have been prepared
under the going concern basis.
The preparation of financial statements in conformity with IFRSs requires the use of certain critical accounting
estimates. It also requires management to exercise its judgement in the process of applying the Company’s
accounting policies. The Company makes certain estimates and assumptions regarding the future. Estimates
and judgements are continually evaluated based on historical experience and other factors, including
expectations of future events that are believed to be reasonable under the circumstances. There are no critical
judgements or estimates to disclose.
Measurement convention
The financial statements are prepared on the historical cost basis.
Investments in subsidiaries
Investments in subsidiaries are carried at cost, plus capital contributions to the Group’s subsidiary companies in
respect of share-based payment charges, less any provisions for impairment.
Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or
options are shown in equity as a deduction, net of tax, from the proceeds.
Dividends
Dividends are recognised when they become legally payable. In the case of interim dividends to equity
shareholders, this is when paid, and in the case of final dividends, this is when approved by the shareholders at
the Annual General Meeting.
Taxation
Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in profit and loss
in the statement of comprehensive income except to the extent that it relates to items recognised directly in
equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or
substantively enacted at the statement of financial position date, and any adjustment to tax payable in respect
of previous years.
Changes in accounting policies - new standards, interpretations and amendments effective from 1 April 2021
New and amended standards and interpretations issued by the IASB that apply for the first time in these annual
financial statements do not impact the Group as they are either not relevant to the Group’s activities or require
accounting which is consistent with the Group’s current accounting policies.
New standards and interpretations adopted and not yet adopted
A number of new standards, amendments to standards, and interpretations are not effective for 2022, and
therefore have not been applied in preparing XPS Pensions Group plc’s financial statements. These standards,
interpretations and amendments issued by the IASB (of which some are still subject to endorsement by the UK)
but not yet effective are not expected to have a material impact on the Company’s financial statements.
XPS Pensions Group Annual Report 2022146
2 Financial risk management
The Company is a holding company and has limited exposure to financial risks. Details of the financial risks
management are contained in the Group accounts (note 2) and details of their application to the Company is
included in Company note 11.
3 Capital risk management
The Company is a holding company and will apply the risk management policies of the Group contained in the
Group’s financial statements.
4 Staff numbers and costs
The Company had no employees other than Directors in the year to 31 March 2022 (2021: nil).
No Directors received remuneration for their services to the Company during the year. Directors were
remunerated for their services to the Group by a subsidiary company.
Pension contributions of £nil (2021: £nil) were paid on behalf of the Directors.
5 Investments in subsidiaries
31 March
2022
£’000
31 March
2021
£’000
At the beginning of the year 26,345 22,097
In relation to XPS Pensions Consulting Limited 1,894 2,584
In relation to XPS SIPP Services Limited 89 91
In relation to XPS Pensions Limited 818 1,075
In relation to XPS Administration Limited 454 446
In relation to XPS Investment Limited 65 38
In relation to XPS Pensions (RL) Limited 11 12
In relation to XPS Pensions (Trigon) Limited 5 2
At the end of the year 29,681 26,345
Subsidiary Ownership
Country of
incorporation
Class of
shares
held
Principal
activities Registered address
XPS Financing Limited 100% England and Wales Ordinary Holding
company
Phoenix House, 1 Station Hill,
Reading, Berkshire, RG1 1NB
The additions to investments during the year represent amounts in respect of Performance Share Plan awards
and SAYE schemes, and an equity-settled award made by the Employee Benefit Trust to subsidiary companies
as instructed by the Company.
All other subsidiaries disclosed in note 35 of the Group accounts are indirectly owned by other Group companies.
6 Trade and other receivables
31 March
2022
£’000
31 March
2021
£’000
Receivables due from related parties 233,857 217,123
Non-current receivable 233,857 217,123
Current receivable — —
233,857 217,123
Notes to the Financial Statements - Company continued
for the year ended 31 March 2022
147XPS Pensions Group Annual Report 2022
Financial Statements
7 Trade and other payables
31 March
2022
£’000
31 March
2021
£’000
Payables due to related parties 40,309 38,312
Total trade and other payables 40,309 38,312
Non-current payable 40,309 38,312
Current payable — —
40,309 38,312
Corporation tax payable was included within this note in the prior year; this has now been disclosed in a
separate note (note 8).
8 Current tax liabilities
31 March
2022
£’000
31 March
2021
£’000
Corporation tax payable 744 1,531
744 1,531
9 Share capital
Details on the share capital of the Company are contained in the Group financial statements.
10 Reserves
Reserve Description and purpose
Share premium Amount subscribed for share capital in excess of nominal value.
Other reserve The other reserve represents the amount in respect of the equity-settled awards made by the Employee
Benefit Trust to subsidiary companies as instructed by the Company, and share-based payment reserves.
Merger relief
reserve
The merger relief reserve represents the difference between the fair value and nominal value of shares
issued on the acquisition of subsidiary companies.
Retained profit All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.
11 Financial instruments
The fair values and the carrying values of financial assets are the same.
Credit risk
The maximum exposure to credit risk at the reporting date was:
Carrying
amount
31 March
2022
£’000
Carrying
amount
31 March
2021
£’000
Receivables due from related parties 233,857 217,123
Loans from related parties are repayable on demand. Credit risk for receivables due from related parties has not
increased significantly since their initial recognition.
Liquidity risk
The Company does not have any significant liquidity risk, as its receivables and payables are all with
related parties.
Interest rate risk
The Company does not have any significant interest rate risk, as its receivables and payables are all with
related parties.
XPS Pensions Group Annual Report 2022148
11 Financial instruments continued
Capital risk management
As part of the XPS Pensions Group, the Company is focused on delivering value for its shareholders whilst
ensuring the Group is able to continue effectively as a going concern. Total capital for the Company comprises
total equity.
The policies for managing capital are to increase shareholder value by maximising profits and cash. The policy
is to set budgets and forecasts in the short and medium term that the Company ensures are achievable. The
process for managing capital is regular reviews of financial data to ensure that the Company is tracking the
targets set and to reforecast as necessary based on the most up-to-date information. This then contributes to
the XPS Pensions Group’s forecast which ensures future covenant test points are met. The XPS Pensions Group
continues to meet these test points and they have been achieved over the last 12 months. Further information
can be found within the consolidated financial statements of XPS Pensions Group plc.
Management of capital
31 March
2022
£’000
31 March
2021
£’000
Total equity 222,485 203,625
12 Related party transactions
Amounts receivable from/(payable to) related parties at the balance sheet date
31 March
2022
£’000
31 March
2021
£’000
Loans to related parties 233,857 217,123
Loans from related parties (40,309) (38,312)
193,548 178,811
Transactions with related parties during the year
31 March
2022
£’000
31 March
2021
£’000
Interest income 3,565 4,178
Interest expense (690) (729)
Increase in loans to related parties (15,145) (18,292)
Increase in loans from related parties 7 4,010
Intercompany dividend 27,000 20,900
14,737 10,067
All transactions with related parties are made in the ordinary course of business and balances outstanding at
the reporting date are unsecured. Loans are repayable on demand and accrue interest at a rate in line with the
Group’s bank borrowing rate. 1.68% was applied in the year (2021: 1.88%). All related parties are part of the XPS
Pensions Group.
13 Contingencies
The Company has provided a guarantee in relation to the repayment of syndicated banking facilities available
to its subsidiaries. The facilities guaranteed comprise a drawn revolving credit facility of £64,000,000 (2021:
£59,000,000) and a further undrawn rolling facility loan in the amount of £36,000,000 (2021: £21,000,000).
This facility has a 4 year term which started in October 2021. Interest is calculated at a margin above SONIA,
subject to a net leverage test.
14 Ultimate controlling party
The Directors do not consider that there is an ultimate controlling party.
Notes to the Financial Statements - Company continued
for the year ended 31 March 2022
149XPS Pensions Group Annual Report 2022
Financial Statements
Registered office and Directors’ address
Phoenix House
1 Station Hill
Reading
Berkshire
RG1 1NB
Company Secretary
Zoe Adlam
Financial adviser and broker
Canaccord Genuity Limited
88 Wood Street
London
EC2V 7QR
Financial adviser and broker
RBC Capital Markets
100 Bishopsgate
London
EC2N 4AA
Legal advisers to the Company
Macfarlanes LLP
20 Cursitor Street
London
EC4A 1 LT
Auditor
BDO LLP
55 Baker Street
London
W1U 7EU
Registrar
Equiniti Limited
Aspect House
Spencer Road
Lancing
West Sussex
BN99 6DA
Bankers
HSBC Bank plc
Level 7, Thames Tower
Station Road
Reading
RG1 1LX
Citibank N.A.
Citigroup Centre
33 Canada Square
Canary Wharf
London
E13 5LB
National Westminster Bank plc
250 Bishopsgate
London
EC2M 4AA
The Governor and Company of the Bank of Ireland
40 Mespil Road
Dublin
Ireland
D04 C2N4
Notes
www.xpsgroup.com
Company Information
CBP013373
XPS Pensions Group’s commitment to environmental issues
isreflected in this Annual Report, which has been printed on
ArcticSnow, an FSC
certified material. This document was printed
by Park Communications using its environmental print technology,
which minimises the impact of printing on the environment, with 99%
of dry waste diverted from landfill. Both the printer and the paper mill
are registered to ISO 14001.
XPS Pensions Group Annual Report and Accounts 2022
Registered office
Phoenix House
1 Station Hill
Reading
Berkshire
RG1 1NB
T: 0118 918 5000
www.xpsgroup.com
XPS Pensions Group Annual Report and Accounts 2022