XPS Pensions Group (XPS) H2 2025 earnings summary

Executive summary

• Revenue grew 18% year-over-year to £231.8m, with EBITDA up 27% and adjusted EPS up 36%, marking the third consecutive year of strong growth.

• Growth was driven by investments in risk transfer, GMP and data work, regulatory tailwinds, and the McCloud public sector rectification project.

• Margin improvement resulted from a higher mix of project work, operational efficiencies, and technology adoption.

• Employee and client satisfaction remained high, with strong survey results and industry awards, including Actuarial Firm of the Year and diversity recognition.

• Expansion into insurance consulting was accelerated by senior hires and the acquisition of Polaris, broadening the addressable market.

Financial highlights

• Adjusted EBITDA margin improved to 30.1% from 27.9% last year, with adjusted diluted EPS up 36% to GBP 0.206 (20.6p), and group revenue reaching £231.8m.

• Leverage ended the year at 0.57x, with net debt at £40.3m, including Polaris acquisition consideration.

• Final dividend proposed at GBP 0.082, with full-year dividend up 19% to 11.9p per share.

• Operating cash flow conversion remained strong at 96%, ahead of 90%-95% guidance.

• Exceptional costs included Polaris and Penfida acquisition fees, with Polaris expected to add GBP 10m per annum in charges.

Outlook and guidance

• Organic revenue growth expected to normalize to mid-to-high single digits as McCloud impact washes out in FY2026.

• FY2026 margins will be lower due to McCloud washout and higher national insurance costs, but consensus reflects this.

• Beyond FY2026, margin improvements of 0.5% per year are targeted.

• Focus remains on technology, cost discipline, and pursuing new business mandates.

• Interest costs will rise in FY2026 due to Polaris, then decline as debt is paid down.