Shaping better

financial futures

XPS Pensions Group plc

Annual Report and Accounts 2024

Strategic report

Highlights 2

At a glance 4

Investment case 5

Business model 6

Markets overview 8

Our strategy 10

Co-Chief Executives’ review 12

Stakeholder engagement 18

Sustainability 20

Task Force on Climate-related

FinancialDisclosures 35

Non-financial and sustainability

information statement 40

Chief Financial

Officer’s review 41

Principal risks

and uncertainties 47

Governance

Chairman’s introduction 54

Board of Directors 56

Board and Committee composition

and operation 58

Nomination Committee 63

Audit & Risk Committee 66

Sustainability Committee 70

Directors’ remuneration report 72

Annual report on remuneration 85

Directors’ report 96

Directors’ responsibility statement 100

Financial statements

Independent

auditor’s report 101

Consolidated statement

of comprehensive income 109

Consolidated statement

of financial position 110

Consolidated statement

of changes in equity 111

Consolidated statement

of cash flows 112

Notes to the consolidated

financial statements 113

Statement of financial

position – Company 146

Statement of changes

in equity – Company 147

Statement of cash

flows – Company 148

Notes to the financial

statements–Company 149

Company information 154

XPS Pensions Group plc Annual Report and Accounts 2024

We are a forward-looking, ambitiousbusiness

We are a leading independent pensions

consulting and administration services

firm and strive to be the best provider

ofservices to the UK pensions market.

Our purpose

Why we exist

We exist to shape and support safe,

robust and well-understood pension

schemes for the benefit of people

and society.

Our vision

What we want to achieve

We will constantly challenge the

pensions industry to improve

and achieve better outcomes

for members.

Our mission

What drives us

We strive to be leaders in pensions,

investment consulting and administration

with brilliant people and leading

technology delivering better outcomes

for pension scheme members and

rewarding careers for our people.

Contents

Our strategic framework

for growth

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Our strategic priorities

Our values

Fundamental values that drive decision making

Read more on page 20

Our sustainability framework

Being a responsible business

Strengthening

our

communities

Protecting

our

environment

Supporting

ourclients

andmembers

Empowering our people to thrive

Regulatory

change

Expand

services

Grow

market share

Mergers and

acquisitions

XPS Pensions Group plc Annual Report and Accounts 2024

Highlights

Financial

Revenue

+21%

FY 2024 £196.6m

FY 2023 £162.3m

Proposed full year dividend

FY 2024 10.0p

FY 2023 8.4p

+19%

Adjusted EBITDA

FY 2024 £54.8m

FY 2023 £41.4m

+32%

Adjusted diluted earnings per share

FY 2024 15.1p

FY 2023 12.2p

+24%

FTE employees

FY 2024 1,712

FY 2023 1,570

+9%

1 Group revenue growth excluding the NPT business disposed of

inNovember 2023. Revenue growth including the NPT business

was 20%. See note 7 in the financial statements.

2 Adjusted EBITDA excludes the impact of share-based payment

costs, fair value adjustments of contingent consideration, and

exceptional costs. This also excludes the results of the NPT

business disposed of during the year. Adjusted EBITDA including

the results of the NPT business was £55.3 million (FY 2023:

£42.4million).

3 Adjusted diluted earnings per share 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). This also

excludes

the results of the NPT business disposed of during the year. Adjusted

diluted earnings per share including the NPT business was 15.3p

(FY2023: 12.6p).

4 As at year end.

5 Excluding lease liabilities.

6 Profit before tax in FY 2024 benefits from the gain on sale of the

NPT business. Excluding this, FY 2024 profit before tax would have

been £30.0 million, a 57% increase on the prior year.

7 Basic EPS in FY 2024 benefits from the gain on sale of the NPT

business. Excluding this gain, FY 2024 basic EPS would have been

10.5p vs 7.7p, a 36% increase on the prior year.

Profit before tax

FY 2024 £62.5m

FY 2023

+227%

£19.1m

Basic EPS

FY 2024 26.2p

FY 2023

+240%

7.7p

FY 2024

Net debt

FY 2023 £55.3m

-75%

£14.0m

FY 2024

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Operational

£2.8bn

2023: £2.1bn

Value of liabilities over

whichwe provided risk

transfer advice

2023: 81

Number of schemes with

over £1bn of assets

1.1m

2023: 1.0m

Members under

administration

+31 eNPS

2023: +33

High eNPS score for

the second year in a row

Maintain carbon

neutralstatus for

thirdyear inarow

£5.5m

2023: £4.9m

Continuing investment in

softwareassets to drive

operationalefficiencies and

improvecustomer experience

SustainabilityAwards

35%

2023: 31%

Senior management positions

heldby women

2023: 23

Number of clients in sustainable

funds, representing £2.6bn AUM

60%

2023: 40%

Proportion of electricity

that is renewable

XPS Pensions Group plc Annual Report and Accounts 2024

At a glance

What we do

XPS Group is a leading independent pensions consulting

andadministration business 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 as the world around our clients shifts.

Welcome to XPS Group

Actuarial Consulting

We help make sure

there is enough

moneyin schemes

Investment Consulting

We advise on where

to invest the assets

Pensions Administration

We keep all the records,

communicate with

members and pay

thepensions

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

Our award-winning pensions

administration service puts

scheme members at the heart

of everything we do.

www.xpsgroup.com/what-we-do/

administration/

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

Our services

UK locations

Our 15 locations give us access

toemployees, expertise

andclientsacross the UK.

1,700+

Employees

Our 1,700+ employees with market

leading experience and knowledge

and pride themselves on the highest

delivery standards to solve our

clients’ needs.

>1,400

Pension scheme clients

We build strong relationships

withour clients, which lead

to repeat business and

opportunitiesto cross-sell.

The foundations of a thriving business

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Investment case

Diversified and stable

client base

• We have long-standing relationships with

alarge and diverse client base, consisting of

over 1,400 clients. We have a strong brand

and have won multiple industry awards for

our client service.

Read more on page 17

acquisitions

since listing in 2017

Why invest in XPS?

XPS Pensions Group plc Annual Report and Accounts 2024

Our resources

Business model

Our people

Experts in their fields, our people drive

the business. They’re the innovators, the

problem-solvers, the forward-thinkers,

andthat’s why we invest in them.

Our culture

Values driven, employee centric,

inclusive, friendly, meritocratic –

our culture empowers our business.

Our technology

We invest in technology to deliver our

services efficiently, and to bring clarity

and understanding to the complex

problems we help to solve.

Our financial strength

We are consistently profitable with

the financial resources to invest in the

development of services to anticipate

client needs.

XPS Group’s unique proposition is our ability to

add value across our business. Our people, culture,

technology and financial strength make this possible.

Delivering strong and stable growth

Specialist insight and expertise:

Our team of experts brings deep knowledge

and experience to the table.

Exceptional quality service and tailored solutions:

We pride ourselves on delivering a quality

service. Whether it’s administration, consulting

or investment-related services, we tailor our

solutionsto meet the unique needs of our clients.

Our culture: Our culture and values guide us

in everything we do and help us make a positive

andsustainable impact with all stakeholders.

Diverse client base: XPS serves a diverse

range of clients, including large corporate

schemes, public sector funds, smaller pension

arrangements and other financial institutions.

Strong brand: Our strong award-winning

brand setsus apart from our competitors and

communicates our values and brand promise

aswellas building client trust and loyalty.

Our competitive advantage

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Value for all stakeholdersHow we create value

Clients

•

Specialist insight and expertise leading

tobetter outcomes for all stakeholders

• High-quality service and tailored solutions

• Value for money

Read more on page 27-31

60%

renewable

electricity with

commitment for

100% by 2030

Advisory

•

Actuarial advice

• Investment strategy

• Insurance consulting

• Risk management

• Regulatory compliance

• Governance support

Administration

•

Private sector

• Public sector

• Regulatory compliance

• Self Invested Pensions

• Master trust administration

XPS Pensions Group plc Annual Report and Accounts 2024

Competitive landscape and marketopportunities

Markets overview

A highly visible defined benefit market complemented

byarapidlygrowingdefined contribution market.

All weather growth

The solutions and services we provide to pension scheme

clients continue to be in demand regardless of the

economic cycle. After all, whatever the macroeconomic

backdrop, members of pension schemes require correct

payments to be made into their accounts at the right

time. Lots of our other core services are needed against

all backdrops too. Combine this with standard industry

practice for client contracts to incorporate annual

price increases in line with a measure of inflation, and

the pensions services markets in which we operate

can be termed “all weather” or “non-cyclical”. Because

of this, ourmarkets have historically kept pace with

inflation, growing at between 3% and 4% per annum.

Today, however, market growth is outpacing inflation.

Two keylong-term structural drivers are fuelling this –

regulatory and market change.

Our markets

In terms of size, the UK pensions services industry is

worth approximately £2.5 billion per annum. Fees are

generated across four key segments of the market:

• Administration: ensures scheme members receive the

pensions they are owed when they are due. Services

include record keeping, calculations, communications

and payroll services;

• Actuarial: for defined benefit pension schemes,

actuaries calculate if a pension scheme’s promises to

members (liabilities) can be met by its assets over time.

Services include monitoring the financial position of a

pension scheme and recommending courses of action

to protect scheme members and sponsors against

financial risk;

• Investment: provides advice on which asset strategy

should be deployed to enable a pension scheme’s

liabilities to be met over the long term, balancing

seeking good returns whilst avoiding taking

undue risk; and

• Employer covenant: assesses the financial strength of

the employer in relation to its ability to meet its pension

obligations, which feeds into the level of investment risk

that can be taken.

It is the essential nature of the services provided that

gives the pensions industry its all weather growth qualities.

All weather: pension schemes constantly need all the

above services. Members must receive payments on

time. A scheme’s capacity to meet its obligations to the

members requires continual monitoring. Investment

strategies need implementing and frequent reviewing.

The financial strength of scheme sponsors has to be

assessed regularly.

Growth: growth over and above the historical, all

weather rate is generated when a fundamental shift

in the operating environment has taken place either

through regulatory and/or market change. Whenever

change takes place, pension scheme trustees and

corporate sponsors require advice on how best to

navigate the new world so that members’ pensions

are protected. Theworkflows generated can often be

spread over several years. Furthermore, with every new

regulatory change/market shift, the delivery of pensions

services becomes that much more complex. Not only

does this drive fee market growth but also outsourcing

opportunities, as internally administered schemes

looktooffload their administrative responsibilities to

third-party specialists, such as us.

How regulatory changes drive markets

Regulations require pension scheme trustees and

sponsors to seek support across all four areas outlined

above. The regulatory landscape is, however, constantly

evolving. In recent years pension schemes have had

to respond to a series of new regulations: The Pension

Schemes Act 2021 - covering how schemes should be

funded and how company sponsors treat schemes during

M&A activity; the Task Force on Climate-related Financial

Disclosures (TCFD) - requiring trustees to improve the

quality of governance and reporting of climate-related

risks and opportunities; GMP equalisation – correcting

the unequal treatment of men and women in relation

to a small part of pension schemes dating back to the

1980s/90s; and the CMA Review – recommending

trustees seek independent advice where they use certain

types of asset manager.

Each of the above continues to generate demand for

solutions and services. New guidance is expected too –

aNew Funding Code covering the Pensions Regulator’s

expectations around how to ensure members are

protected over the longer term, building on a Single

Code of Practice that came into effect in March 2024

that will increase governance requirements for trustees.

This increased regulatory oversight of pension scheme

trustees is therefore likely to be a key driver of growth

foryears to come.

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

How markets drive growth

Markets are also expected to be a source of growth

for the industry over the next few years, particularly

following the change that has taken place in recent years

from a low to high interest/inflationary rate environment.

This has largely been positive for pension schemes –

deficits caused by near-zero interest rates have either

been sharply reduced or replaced by surpluses. Aswitch

from a large to small deficit or from a deficit to a surplus

represents a material change in circumstances, one

that requires advice and potentially action to lock in

a scheme’s improved financial position via de-risking

so that members’ benefits are safeguarded. Options

with regard to corporate sponsor contributions or how

best to make use of any surplus will also likely need to

beconsidered.

The effects of the new regime are being reflected in the

de-risking market – bulk annuity volumes are forecast

to rise to £50–60 billion by 2025, a step up from the

previous £30 billion a year level, and with private sector

pension liabilities alone standing at £1.3 trillion, ample

scope remains for further growth in bulk annuity volumes

over the long term.

What does this mean for service providers such as XPS?

Whether they take the form of a buy-in (where a pension

scheme buys an insurance policy to secure part or all of

the promises made to members) or a buy-out (where the

pension scheme is eventually wound up after 100% of the

liabilities have been insured), bulk annuities generate a

wide range of work streams from the provision of advice

to transaction broking services, and, on the other side

of a buy-in/buy-out transaction, there typically sits an

insurance company. As the bulk annuity market grows,

therefore, so too does the overlap between the pensions

and insurance industries. Insurers require support

when they take on the responsibility of protecting and

administering members’ benefits. They also have to

meet regulatory requirements and manage risks such

as inflation, longevity and demographics. Insurance

companies are therefore increasingly becoming another

source of market-driven growth for the sector.

The fragmented nature of the workplace pensions market

represents another growth opportunity. Considerable

scope exists for XPS, one of the largest mid-tier

companies, to continue capturing market share, both

organically and inorganically, particularly as XPS is

strongly differentiated from its larger competitors.

A new normal

During the period of low-to-near-zero interest rates that

followed the global financial crisis, regulatory change was

the primary source of activity. Today, markets too are

driving new opportunities for pension schemes and with

them strong demand for our services. The overall number

of schemes may be reducing, but opportunities are being

created for XPS in the insurance market and, in turn, for

us to maintain our track record of all-weather growth.

Competitive landscape

Opportunity for mid-tier firms

to win clients of the Big 3

•

Technology

• Investment in services

• Value for money

• Driven by Independent Trustee

5,063

(Private sector) UK defined benefit schemes

c.£1.3tn

Total liabilities

£2.5bn+

Pensions advisory services market p.a.

Big three

Mid-tier firms

Small firms

700

600

500

400

300

200

100

Mercer

WTW

Aon

XPS

LCP

Barnett Waddingham

Capita

Isio

Hymans Robertson

Buck

Broadstone

First Actual

Redington

Revenue (£m)

1 Professional Pensions article “The UK’s biggest pension consulting

firms by revenue” issued 21 February 2024 based on figures taken

from latest available company accounts.

Source: Pensions Protection Fund Purple Book 2023 as at 31 March 2023.

3 Management estimate.

Fragmented marketplace: opportunity to grow

Workplace pensions is a fragmented market which offers a considerable potential to grow by increasing market share,

either organically or via M&A. Sitting beneath the big three players for whom workplace pensions are not 100% of their

business, XPS is one of the largest mid-tier companies and so is well placed to continue to grow market share.

XPS Pensions Group plc Annual Report and Accounts 2024

Our strategy

Our strategic priorities

Delivering our purpose and growing profitably.

Our strategy has been designed to deliver our societal purpose – to shape and support safe, robust and well-understood

pension schemes for the benefit of people and society – and at the same time achieve profitable growth. Thanks to

the hard work and dedication of our people, we have executed effectively on our strategy, which has created the scale

and the agility to deliver best-in-class solutions to pension schemes of all sizes. We have the track record of providing

thought leadership to the industry and regulators, and we have the proprietary technology and partners in place to

achieve better outcomes for members and society as a whole.

Our strategy is based around four strategic pillars:

Trustees, corporate sponsors and

members of pension schemes all need

ongoing advice and support to navigate

the evolving regulatory environment.

We see our role as not only a provider

of solutions to help deal with change,

but also as a contributor to the

regulatory debate.

Expansion of our services is not just

centred around adding new solutions to

our full-service offering but also increasing

the number of services we provide to

each of our clients as well as expanding

into new markets. The growing overlap

between the pensions and insurance

industries is a clear avenue of growth,

one that can be captured by continually

expanding our offering, leveraging

technology and forging partnerships.

Progress

We helped clients prepare

for the new Single Code of

Practice and continued to

roll out our GMP equalisation

solution. We have also been

working on a large one-off

project to develop technology

to implement the McCloud

judgement. We participated

alongside the regulator,

the UK government,

HM Treasury and the

Institute for Fiscal Studies

in discussions focused

on how pension scheme

assets can best be invested

into productive finance.

We commenced working

with several new and

existing clients to explore

how they can invest in

productive finance.

Priorities for FY 2025

•

Meet McCloud judgement

project commitments within

the statutory timeframe

• Prepare clients for the

newSingle Code of

Practice and Funding

andInvestment Code

• Further roll-out of GMP

equalisation solution

• Continue work

onproductive

financeapproach

Key risks

•

Include third-party supplier/

outsourcing issues, errors,

theft and fraud and strategy

Progress

We launched our AI Driven

Actuary (AIDA) tool, which

speeds up the process of

assessing member options.

We launched a strategic

partnership with specialist

UK insurer The Pensions

Insurance Corporation (PIC) to

enable small pension schemes

to access insurance solutions.

We established a strategic

partnership with SEI to create

a market-leading master trust

following the sale of our NPT

business to SEI. Our de-risking

activity continued to generate

advisory work with insurance

companies that have taken on

client pension schemeliabilities.

Priorities for FY 2025

•

Grow the PIC and SEI

partnerships

• Roll out new products

such as our AIDA tool

across our client base and

further expand our data

analyticscapability

• Pursue further growth

inour de-risking

practice, including to

win moreexternal and

internalmandates

• Continue to expand

ourservices to

insurancecompanies

Key risks

•

Include strategic planning

and execution, financial

performance, information/

cyber security, staff/

human resources, client

engagement and business

conduct and reputation

£100bn

the amount of surplus

that could be invested

into productive finance

via our straightforward

and safe approach

32,000

the number of public

sector pension members

covered by the

McCloudJudgement

no. of risk transfer

engagements during

theyear

£10m

revenue from risk

transferengagements

Regulatory change Expand services

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Winning mandates from pension

schemesand sponsors with which

we do not already have a relationship

(“newlogo”clients) represents a clear

route to growing our market share.

Increasingly we will also be looking

to grow our share in the insurance

consulting market.

Progress

Through our Market Force

initiative and supported by

a strong brand reputation

built from our client centric

approach to services, we

secured several new client

wins including the John Lewis

Partnership (JLP) Scheme,

Stallantis, Cadbury, Mencap

and Delta. These wins helped

increase the number of

members under administration

to 1.1 million. Winning the

JLP Scheme served as an

endorsement of our new

proprietary cloud-based

Aurora administration platform.

We have had success in winning

new mandates within Advisory

as well, with 40 risk transfer

engagements with new clients.

Priorities for FY 2025

•

Grow and convert new

business pipeline via

continued roll-out of Market

Force Initiative

• Continue focus on first-time

outsourcing and public

sector opportunities within

Administration

Key risks

•

Include strategic planning

and execution, errors

and third-party supplier/

outsourcing issues

We are one of the largest mid-tier

independent pensions services providers

in the UK, but the market in which we

operate is fragmented. By acquiring

businesses, we can increase our scale

andcapabilities in specialist areas and

inthe process grow our market share.

Progress

We integrated the FY2023

acquisition of PenfidaLimited,

an established covenant

advisorybusiness.

Priorities for FY 2025

•

Ongoing evaluation of

potential acquisitions and

other opportunities that

meet our investment and

strategic criteria

Key risks

•

Include financial

performance and business

conduct and reputation

21%

organic revenue growth

excluding the NPT

business disposed of part

way through theyear

165,000

the number of members

in the JLP Scheme

<10%

our current

marketshare

the number of

acquisitions since

listingin 2017

Grow market share Mergers and acquisitions

XPS Pensions Group plc Annual Report and Accounts 2024

Growing track record

“ We are proud of

our people. Without

their commitment

and effort, we would

not be reporting a

seventh successive

year of record

revenue growth.”

“ Growth has

beenacross all

business lines and

ourprofitability has

continued to reap the

benefits of operational

gearing with profits

growth outpacing

ourrevenues

once again.”

Co-Chief Executives’ review

Our last Annual Report, for the

yearended 31 March 2023, set out a

tremendous set of results - a record

year for the Group, delivering strong

revenue growth with operational

gearing coming through.

With this we had delivered revenue growth in every

year since we listed in 2017, in turn building on a much

longer track record of continuous growth before that.

Thisgrowth is set against a wide range of macro/

geopolitical backdrops: macro – from the low-to-near-

zero interest rates and inflation when we listed to the

high rates and prices of today; and geopolitical – Brexit,

the pandemic and conflict in Europe. To have delivered

uninterrupted revenue growth throughout was, in our

view, testament to the dependable nature of the pensions

markets in which we operate, the resilience of our

business model and the excellence and commitment

ofour people.

The question was; how to follow our best year? Theanswer

was to go one better still, and this latest 12-month period

is a stand-out in its own right. Growthat the revenue

level has been strong across the board. Allfour main

divisions (Pensions Actuarial &Consulting; Pensions

Investment Consulting; Pensions Administration; and SIP)

have recorded double-digit top-line growth. Typically, in

any given year, one division outperforms. This year, the

investment we have made in our services, together with

the significant regulatory and structurally driven end

market activity, has delivered uniform growth which has

also been boosted by the headline level of inflation flowing

through to our fees. That same combination also lies

behind a second consecutive year of improved operational

gearing for the Group, with an accelerating trend of

earnings growing faster than revenues.

Paul Cuff

Co-Chief Executive Officer

Ben Bramhall

Co-Chief Executive Officer

Not only are we growing our revenues, but our profitability

too, and we are continuing to grow sustainably. FY 2024

is the third successive year that we have been carbon

neutral. It is also the second consecutive year that we

have achieved an employee NetPromoter Score (eNPS)

of more than 30, a level viewed as exceptional for

professional services businesses. We were also named

one of the Best Places to Work 2023 by The Sunday

Times. As well as monitoring employee engagement and

wellbeing, the survey tracked the best places to work

for women, members of the LGBTQIA+ community,

disabled employees, ethnic minorities and younger and

older workers.

Growing profitability

Total Group revenues of £199.4 million for FY 2024

represent a 20% increase on FY 2023’s £166.6 million.

Excluding NPT, Group revenues were £196.6 million

(FY2023: £162.3 million), representing an increase of

21%. This is the second year in a row that total revenues

have grown by 20% – previously, annual growth had

been in the mid-to-high single digits. We view this step

change in growth as a product of the high-inflationary

environment and strong end markets. We also believe

we are reaping the benefits of the investments we have

made over the years in our technology, resources and

platform. We have built up our capabilities across all

of our key service areas so that the increased breadth

and scale of our offering allows us to deliver an ever-

expanding set of solutions to our clients. It also enables us

to win new mandates on pension schemes of significant

size, such as the JohnLewisPartnership (JLP) Scheme,

which was awarded to us during the year. The high

proportion of organic revenue growth (19%) is further

evidence thatthe investment in our internal capabilities is

bearing fruit (the remaining growth arose from last year’s

Penfidaacquisition).

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

In addition, this is the second successive year that the

Group has benefited from operational gearing, whereby

earnings growth has outpaced that of revenues – FY

2024 adjusted EBITDA excluding the NPT business sold

in November 2023 grew 32% to £54.8 million (FY2023

on a comparable basis: £41.4 million); statutory profit

before tax increased 227% to £62.5 million (FY2023:

£19.1million) on the back of strong operational

performance as well as the gain on disposal of the NPT

business; and adjusted diluted EPS grew 21% year on

year to 15.3p in FY 2024 (FY 2023: 12.6p). Excluding

the NPT business, the equivalent adjusted fully diluted

EPS grew by 24% to 15.1p in FY 2024 (FY 2023: 12.2p).

This latter measure is suppressed by the increase in

corporation tax. As with revenues, earnings are benefiting

from the investments we have made into our platform

and capabilities. We expect this to continue in the

years ahead.

In terms of balance sheet, following the sale of NPT

during the year for an initial cash consideration of

£35million, a significant portion of the Group’s existing

debt facilities has been repaid. Having low debt gives us

additional flexibility to invest further in the business, both

organically and inorganically. Under the terms of the NPT

sale, contingent consideration of up to £7.5 million may

be paid to the Group, subject to business performance

over the two years following completion.

Based on the strength of our financial performance and

our balance sheet, we are proposing a 19% increase in

the total full-year dividend for the year in line with our

progressive dividend policy.

As mentioned earlier, growth at the divisional level has

been across all areas of the business posting double-

digit increases in full-year revenues: Pensions Actuarial &

Consulting up 21% to £93.4 million (FY 2023: £77.4 million);

Pensions Investment Consulting up 13% to £20.3 million

(FY 2023: £18.0 million); Pensions Administration up 25%

to £71.9 million (FY 2023: £57.5 million); and SIP up 17%

to £11.0 million (FY 2023: £9.4 million). All of our divisions

have benefited from contractual fee increases in line with

various inflationary measures.

Awards

In another award winning year,

we have earned a number of

prestigious awards for great client

service, innovation and looking

after our people.

Recognition for highest level of

innovation, performance of third party

administration service to occupational

pension schemes.

Recognition for the excellent provision

of service to evaluate, select and

monitor fiduciary managers.

This award acknowledges the

initiatives we have undertaken

that best promote diversity and

inclusion for our colleagues, as well

as contributed to industry-wide

initiatives.

We won the Best Pensions Adviser

of the Year recognising our expertise

and innovation in corporate advice

to defined benefit and defined

contribution pension schemes.

Radar – Our actuarial software

won Software of the year at the

Actuarial Post awards for the second

year running.

XPS/Penfida won the Sponsor

Covenant Provider of the Year at the

Pensions Age Awards.

XPS has been named as one of

theBest Places to Work 2023 by

TheSunday Times.

XPS successfully retained signatory

status to the UK Stewardship Code for

the third consecutive year.

XPS Pensions Group plc Annual Report and Accounts 2024

Co-Chief Executives’ review continued

Growing profitability continued

Specific drivers of growth beyond this are:

Pensions Actuarial & Consulting: the switch from a low

to a high interest rate/inflationary environment has driven

a need for advice. Clients require guidance on how best

to navigate the new macro backdrop and reset their

strategies accordingly. In some cases, this has involved

de-risking, fuelling further strong growth in risk transfer

revenues. De-risking activity also continues to generate

work directly for insurance companies as they take on

pension scheme liabilities.

Pensions Investment Consulting: further tailwinds were

experienced from the autumn 2022 gilt market crisis,

leading to strong demand for portfolio rebalancing work

and hedging strategy reviews as well as new mandates

for independent oversight of fiduciary managers.

Pensions Administration: several new client wins late

in the previous financial year came on stream during

this year and increased the number of members under

administration to 1.1 million. During the year we won

JohnLewis Partnership (JLP) with approximately 165,000

members, a new client that will transition between now

and 2025. This win represents a major endorsement of

both our offering and our new Aurora platform which

we launched during the year on time and on budget.

Aurora is a cloud-based proprietary system that drives

efficiencies, further bolsters security and provides clients

and members with enhanced online access.

We also won work in the public sector including a one-off

project to support schemes to implement the McCloud

judgement on behalf of approximately 32,000 members.

We have assigned material resources to this project to

ensure we meet the 2025 delivery target.

SIP: strong organic growth and a full-year contribution

from our inclusion on the panel of recommended SIPP

providers for St James’ Place, one of the UK’s leading

financial advisers, have both been tailwinds. So too has

the high bank base rate as, in line with standard industry

practice, our SIP business is paid in part through interest

generated from client deposits, although we have elected

to cap this at a level that is currently well below prevailing

rates and caps our peers typically have in place.

National Pensions Trust (NPT): following the November

2023 sale of NPT to SEI, a best-of-breed service provider,

we continue to provide a wide range of services to both

NPT and SEI. The rationale behind the sale is to create

a market-leading master trust for the benefit of clients

and members. Under the strategic partnership with SEI,

we will continue to provide pensions administration and

consultancy services.

Growing markets

Our end markets are large, growing, predictable and, as

our long track record of revenue growth demonstrates,

non-cyclical. This is primarily due to the presence of two

key structural drivers.

Ongoing regulatory change: recent years have seen

much activity on the regulatory front including the

Pension Schemes Act 2021, which focuses on how

corporates finance their arrangements and how schemes

are treated following M&A; the 2018 GMP equalisation

ruling that trustees must correct the unequal treatment

of men and women in relation to elements of defined

benefit schemes that built up in the 1980s/90s; and

the CMA Review which recommended schemes seek

independent advice about fund managers engaged on

a fiduciary management basis. Further change is on

the horizon, including a new Funding Code due no later

than September 2024, which may have quite a profound

impact on how pension schemes operate.

Changes to rules and regulations governing pension

schemes have a lasting effect. Often bespoke advice is

required to understand how changes affect individual

schemes with the significant flows of business generated

tending to run for several years. Furthermore, as the

regulatory landscape gets more complex, in-house

schemes can be open to outsourcing administration

tospecialist partners such as us.

Ongoing market-driven change: similar to regulation,

when there is lasting change in financial markets,

clients require advice on how best to navigate the new

environment. The fundamental shift from low to high

interest/inflation rates has largely been positive for

pensions schemes – the aggregate funding level across all

UK defined benefit schemes has improved by c.20% over

the last 2 years. As schemes look to lock in their surpluses

and/or consider their options, demand for the services

we provide, such as de-risking, rises. The number of

schemes in the pensions eco-system is declining as they

transfer out their liabilities to insurers but it’s a gradual

headwind for the industry and it continues to create a

surge in demand for de-risking advice.

The bulk annuities market is one area that is benefiting from

the move by pension schemes to de-risk and offload liabilities

– bulk annuity transaction volumes are currently between

£50-60 billion a year, compared to £30-40 billion previously.

“ The pensions and insurance world

are increasingly overlapping, offering

us amajor avenue of growth, not just

onefor tomorrow, but also today too.”

Ben Bramhall

Co-Chief Executive Officer

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Regulatory change as a driver of activity: providing

thought leadership, XPS is often at the heart of the

regulatory debate and therefore well placed to offer

up-to-date guidance and advice. This year, we have been

involved in discussions with the Pensions Regulator,

the UK Government, HM Treasury and the Institute

for Fiscal Studies on how to drive greater investment

of pension scheme assets into productive finance.

Ourresearch proposal “How DB pension schemes can

support UK growth and protect members” sets out how

regulations and a code of practice could deliver £100

billion in surplus to benefit members and the economy.

Whilediscussions on our straightforward and safe

approach continue, we are already helping schemes

benefit now and are building relationships with sponsors

of large schemes (£1 billion plus) with which we are

exploring run-on for their DB pensions.

Growing market share: the overall fee market stands at

over £2.5 billion and has historically grown 3-4% per year,

although, recently, this rate has picked up due to inflation

and elevated levels of regulatory and market change.

Based on full-year revenues of £199.4 million, our market

share stands at 8%. Considerable scope remains for us to

increase this and, as our 21% revenue growth for the year

shows, this is what we are doing.

“ We’re excited to be at the heart of

the debate with the UK Government

regarding how pensions can safely

invest in productive finance, and to

assist our clients in benefiting from the

opportunities generated.”

Paul Cuff

Co-Chief Executive Officer

As de-risking via bulk annuities or other insurance

solutions increases, so too does the overlap between the

pensions and insurance industries. Like all pension scheme

clients, insurers need best-in-class advice and solutions.

Working with insurance companies is therefore a long-

term growth opportunity for the business.

As the above demonstrates, there is no shortage of

growth opportunities to go for within our markets. To

maximise the opportunity set before us, we have in place

four core strategic pillars.

XPS Pensions Group plc Annual Report and Accounts 2024

Growing markets continued

Growth through expanding services: the increasing

overlap between the pensions and insurance industries

as well as broader life insurance opportunities outside of

bulk annuities offer clear avenues of growth. To capture

this, we need to ensure we have a continually expanding

offering. Technology plays a key role here both in terms

of maximising the commercial value of our proprietary

solutions in new ways and in developing new platforms.

The year under review saw us pioneer the use of AI in our

industry. Our AI Driven Actuary (AIDA) tool revolutionises

the assessment of member options for pension schemes

by quickly analysing large volumes of members’ data

and providing clear information on which members are

eligible for, and likely to engage with and benefit from,

member options. The tool simplifies and accelerates

the process for clients and trustees and allows action to

be taken at speed when needed, either on buy-out or

more generally to ensure fairness to members as market

conditions change. Because it can be used by schemes

of all sizes, AIDA helps trustees give more choice to

all members.

Partnerships are another route to capturing market-

driven growth. In line with this, we have been working

with one of the leading UK bulk annuity providers to

create a solution that enables small pension schemes to

access insurance solutions efficiently.

“ We have a successful track record of

identifying, acquiring and embedding

businesses. We look at potential M&A

opportunities that meet our investment

criteria and strategic objectives as and

when they arise. As our sub 10% market

share demonstrates, however, we have

plenty of organic growth to go for.”

Ben Bramhall

Co-Chief Executive Officer

Co-Chief Executives’ review continued

This will involve us providing wide ranging support -

including pricing, transition and administration services.

The partnership serves as another demonstration of the

growing overlap between the pensions and insurance

industries and with it the expanding opportunity

set before us. To better reflect our growing overlap

between the pensions and insurance industries and the

expanding opportunity set ahead of us, we are making

a small change to our brand identity to trade as XPS

Group. There will be no change to our legal registered

company name.

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Growth through M&A: alongside the range of organic

growth opportunities, we have a successful track record

of identifying, acquiring and integrating businesses.

We look at potential M&A opportunities that meet our

investment criteria and strategic objectives as and when

they arise. As our sub 10% market share demonstrates,

however, we have plenty of organic growth to go for.

As we expand our services in tangential markets such

as insurance consulting, the M&A landscape stretches

beyond the pensions advisory and administration space.

Growing sustainably

Growing track record, growing profitability, growing

markets - all are key to the XPS investment case. So too

is growing sustainably. By growing sustainably, we can

secure the long-term future of the Group.

To grow sustainably, we need to safeguard the wellbeing

of our people and our environment.

People: the year under review saw the number of our

people grow by more than 100 to over 1,700.

We are proud of all our people for the contributions they

have made to the success of the Group over the years

and to the record set of results we are reporting today.

We are also proud of our people for what they do outside

of their everyday work - volunteering, fundraising, and

participating in or leading the many DEI networks that

are active across the Group. Regarding this last point,

we are particularly proud of the high DEI (90%+) score

we registered as part of our employee survey. DEI was

also one of the criteria assessed by The Sunday Times as

part of its evaluation process. We view our subsequent

inclusion in the publication’s list of Best Places to Work as

recognition of our ongoing commitment to ensure that all

our people feel valued and included at XPS.

Environment: FY 2024 was the third year in which XPS

has been a carbon-neutral business. As with previous

years this was achieved through continued reduction in

our own emissions as well as the purchase of UN-approved

carbon credits that cover Scope 1 and 2 emissions, as well

as Scope 3 emissions produced by suppliers.

Our ultimate aim is to achieve a significant reduction in our

direct carbon footprint. In 2023, we submitted our net zero

ambitions to the Science Based Targets initiative for review

and certification. Our approach is to source 100% of our

electricity from renewable sources by 2030 and promote

alow-carbon culture amongst staff and suppliers.

Outlook

The regulatory and market drivers behind our dependable

business model remain in place. The scale and reputation

we have built in our markets, the thought leadership

we provide on regulatory issues and the proprietary

technologies and solutions we have developed, position

us well to capitalise on the long-term opportunities in

front of us. We have seen continued strong demand of

our services since the beginning of the year and maintain

an active new business pipeline. We have continued to

grow market share, but with this still under 10% there is

considerable scope for us to grow further.

The increasing overlap between the pensions and insurance

industries through bulk annuities as well as broader life

insurance opportunities offer further meaningful avenues

of growth. To better reflect our growing overlap between

the pensions and insurance industries and the expanding

opportunity set ahead of us, we are making a small change

to our brand identity to trade as XPS Group*.

We are proud to be joining the FTSE 250 effective from

24 June which is a significant milestone for XPS and is

a testament to the hard work of our colleagues and the

backing of our clients and shareholders.

The strong momentum from FY 2024 has continued

into the new financial year and we remain confident in

delivering against our expectations for the current year.

Paul Cuff Ben Bramhall

Co-Chief Executive Officer Co-Chief Executive Officer

19 June 2024 19 June 2024

* No change to our legal registered company name.

“ Our performance is on the rise, as

evidenced by increasing revenues,

improved operational efficiency,

progress toward carbon neutrality,

and higher employee Net Promoter

Scores. This consistent growth across

our primary indicators reflects our

commitment to excellence and

sustainable development.”

Paul Cuff

Co-Chief Executive Officer

XPS Pensions Group plc Annual Report and Accounts 2024

Stakeholder engagement

Section 172 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’semployees;

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 and suppliers, on pages 47 to 52.

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 hold conferences, webinars

and training exercises for clients throughout the year, of which we see a

fantastic uptake.

Ben Bramhall (Co-CEO) is Scheme Actuary on some of our largest client

accounts, and Paul Cuff (Co-CEO) also works on corporate advisory projects

from time to time.

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 results roadshows hosted by the Executive Directors, and regulator

meetings with analysts, investors and potential investors.

The Investors section of the XPS website is updated throughout the year,

toinclude useful information for our shareholders.

The Board also attends the Annual General Meeting and is available to

answer shareholder questions. This year the Board also attended the

GeneralMeeting held in March 2024.

Margaret Snowdon OBE, as the Remuneration Committee Chair, engages

through consultation and meetings with major shareholders in relation

to executive remuneration. This year, Margaret and Alan Bannatyne, as

Chairman, engaged with the Company’s 20 largest shareholders in relation

to the updated Directors’ Remuneration Policy, approved at the March 2024

General Meeting.

The Board recognises that a small number of shareholders voted against

Director re-elections and the Directors Remuneration Policy during the year,

and the Chairman and the Senior Independent Director have engaged at

length to understand their views.

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 OBE is an adviser to The Pensions Regulator and

regularly updates the Board on industry developments.

In November 2023, we completed the sale of NPT. We engaged with the

regulator as required throughout the disposal and approval was granted

prior to completion of the sale.

The FCA Consumer Duty has continued to be a pertinent issue for the

Board this year, and during the year the role of Consumer Duty Champion

was handed over from Margaret Snowdon OBE to Aisling Kennedy

(Non-Executive Director). Aisling has engaged with the relevant teams

and subsidiary Boards to oversee the Group’s compliance with Consumer

Dutyregulation.

Engaging with our stakeholders

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Key interests Engagement strategy

Employees

• Engagement

• Reward

• Career opportunities

• Training and development

• Wellbeing

• Equality, inclusion and diversity

• Work-life balance and flexibility

Margaret Snowdon OBE 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. You can read

more about employee engagement on pages 22 to 26.

During the year, Imogen Joss (Non-Executive Director) supported the

Group’s Values in Practice awards as Chair to the panel.

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, and the Board is made aware of any issues in relation to supplier

performance or agreements. Our Supplier Code of Conduct communicates

what we expect from our suppliers. The Board annually approves the XPS

Modern Slavery Statement.

Communities,

charities and

environment

• Local and worldwide social

and environmental impact

• Health and safety

The Sustainability Committee is a Committee of the Board, and the majority

of members are Board members. The Committee Chair updates the Board

following each meeting. You can read the Committee report on pages 70

and 71. 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 32 and 33. You can read the Group’s TCFD

report on pages 35 to 39, and our commitment to net zero on pages 28 and

29. You can also read about our community support on page 27.

Example of stakeholder key interests being considered and impacting decisions during the year:

Executive Directors’ remuneration:

Shareholders – Our shareholders’ key interests are the

growth of the Group and value creation. The Group

Chairman and Remuneration Committee Chair engaged

extensively throughout the year to understand our

shareholder views and introduced an element of bonus

deferral into the approved Directors’ Remuneration Policy

as a result of shareholder feedback.

Employees – Employees are interested in the alignment

of employee and Executive remuneration. The Board

engages on this topic via the Employee Engagement

Group, chaired by the Remuneration Committee Chair.

Regulators – We pride ourselves on our high standards of

corporate governance and compliance, including linked

to Executive remuneration.

National Pension Trust sale:

Shareholders – The proceeds of the sale of NPT were

used to reduce net debt, further strengthening the

Group’s balance sheet.

Employees – As part of the transaction, a small

number of XPS employees transferred to become

employees of the acquiring firm. It was important to us

to ensure cultural alignment of the Company and their

new employer, SEI.

Clients – We continue to support NPT and SEI

with a wide range of services including pensions

administration and consultancy services, for the

benefit of clients and members of the trust.

Regulators – The transaction was subject to regulatory

approval, we engaged proactively and effectively with

the regulator to ensure a smooth transaction, in line

with all regulatory requirements.

Snehal Shah

Chief Financial Officer

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability supports the Group’s mission and strategy.

It is embedded into our business model so that by

delivering on our mission to be leaders in pensions,

investment consulting and administration, we are able

to achieve better outcomes for all our stakeholders. This

is not just for our clients and members, but also for our

colleagues, the communities in which we operate and

theenvironment.

Reviewing our material issues

Last year, XPS conducted a dynamic materiality review

to assess whether the material issues underpinning our

sustainability framework were still relevant. The process

involved engaging with internal stakeholders as well as

conducting a thorough peer and landscape review. This has

resulted in a re-confirmation of our material issues.

Driving sustainability action

Ultimate responsibility for our sustainability strategy

rests with the Board of Directors. Oversight of the

implementation, progress and performance of the

strategy has been delegated by the Board to the

Sustainability Committee. You can read a report on

the activities of this Board Committee, which met five

times last year, on pages 70 and 71. Supported by

Executive sponsor Snehal Shah, a dedicated Working

Group is responsible for implementing the sustainability

framework as well as measuring and reporting progress

and performance.

Sustainability

Shaping a better future

“ Doing the right thing lies at the heart of XPS. In line

with this, during the year we reviewed what is material

to our business and stakeholders, strengthened our

sustainability framework and continued to advance

sustainability across our business, working closely

withclients, communities and colleagues as we did so.”

Our material topics

Governance:

Business ethics and values

Corporate governance

Cyber security and data privacy

Human rights and modern slavery

Clients:

Sustainable products and services

Responsible investment

Advising clients and members

Environment:

Climate change and our environment

Environmentally friendly culture

People:

Employee engagement

Inclusion, equality and diversity

Learning and development

Employee health and wellbeing

Communities:

Community engagement

Charitable giving

Supply chain engagement

Our purpose is to shape and support safe, robust and well-understood

pension schemes for the benefit of people and society. It follows,

therefore, that sustainability is integral to delivering on our purpose.

With this in mind, we made significant progress towards further

embedding sustainability across our business last year.

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

XPS promotes a diverse and inclusive culture, enabling people to realise their fullest potential.

Material issues

Employee engagement, inclusion, equality and diversity, learning & development, employee health & wellbeing

Empowering our people to thrive

Strengthening our framework

Building on the findings of the materiality assessment, we refreshed our sustainability framework to ensure it reflects

our corporate priorities. Working with external advisers, we developed a stronger narrative around “shaping a better

future” within the framework as well as clear ambitions for each of its pillars.

Being a responsible business

XPS has a culture of strong governance that minimises risk, upholds high standards in

conduct and complies with legal standards.

Material issues

Business ethics & values, Corporate governance, Cyber security & data privacy, Human rights & modern slavery,

Supply chain management

Strengthening

ourcommunities

XPS contributes to the

local communities near our

offices, working together

for a better future.

Material issues

Community engagement,

Charitable giving

Protecting

ourenvironment

XPS works to mitigate

climate change by

minimising its impact on

the environment.

Material issues

Climate change & environment,

Environmentally friendly culture

Supporting our clients

and members

XPS supports its

clients and members to

optimise outcomes.

Material issues

Sustainable products & services,

Responsible investment, Advising

clients & members

Ambitions and targets

Empowering our people to thrive

XPS promotes a diverse and inclusive culture, enabling people to realise their full potential

Ambitions and targets:

• Reach 37% female senior managers by 2028

• Maintain employee approval rating of at least 90%

Strengthening our communities

XPS supports the people living near our business operations with the challenges they face

Ambitions and targets:

• Increase our charitable giving and employee volunteering

Protecting our environment

XPS works to mitigate climate change by minimising its impact on the environment

Ambitions and targets:

• Achieve net zero by 2050

Supporting our clients

and members

XPS supports its clients and members to optimise outcomes

Ambitions and targets:

• Maintain satisfaction level of at least 80%

• Encourage sustainable investment

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability continued

Empowering people to thrive

Our people are fundamental to our success. XPS is committed to fostering

a positive and collaborative work environment, one in which all our people

are valued members of diverse and inclusive teams. Our goal is to enable

colleagues to flourish and excel.

We empower colleagues to take control of their careers,

whilst aligning with organisational goals. An important part

of this is considering the specific needs of each individual

so that their full potential can be unlocked and positive

outcomes can be achieved. As such our strategy is to

foster a culture of autonomy and trust within a diverse and

inclusive workplace. We do this by clarifying our vision and

goals, encouraging open feedback, supporting colleagues

to set personal and professional targets and recognising

and celebrating their achievements. This way we help

our people to meet their goals and at the same time we

maintain a strong and resilient talent pool and pipeline.

Engaging our people

XPS believes creating a positive and collaborative

work environment is essential to achieving business

success and meeting client expectations. Engaging

with colleagues through various channels, such as the

Employee Engagement Group, ensures that their voices

are heard and their interests are considered in the

decision-making process, while regular communication

from leadership, including regular messages from our

Co-CEOs and town halls, promotes transparency and trust.

The use of tools such as “The Happiness Index”, a

comprehensive feedback platform, exemplifies the

Group’s commitment to constant improvement and

employee wellbeing. Tools such as these not only provide

a platform for and facilitate continuous feedback, but

also drive engagement and organisational agility. They also

ensure employees are motivated to contribute to the

overall success and sustainability of the business.

“ XPS has cultivated an environment where “doing the

right thing” and trust are not just valued, they are the

bedrock of our culture. It is an ethos that empowers

colleagues to contribute meaningfully, driving impactful

innovations that resonate across our organisation and

beyond, and helps shape a better future.”

Rachel Gillion

HR Director

The positive feedback received from XPS colleagues is

atestament to the Company’s commitment to creating

asupportive and rewarding work environment. With 98%

of employees affirming that XPS is a good place to work

(FY 2023: 98%) along with a 99% commitment rate to the

Company’s success (FY 2023: 99%), our culture fosters

astrong sense of belonging and dedication.

Our Values in Practice (VIP) Awards, which have now

been running for four years, provide us with a formal

platform with which to recognise and reward employees’

contributions, further embedding the values of excellence

and teamwork within the Company’s culture. This year we

had over 110 nominations from across the business.

In terms of incentivising employees, we have adopted

a comprehensive approach to ensure personal

achievements are aligned with the Company’s broader

business objectives. Our holistic strategy, which

includes bonus schemes, share plans and competitive

remuneration packages, motivates colleagues, and also

aligns their efforts with the Company’s goals, fostering

aunified drive towards continued success and growth.

Promoting learning and development

This year, our commitment to empowering colleagues in

their career development journey has been stronger than

ever. Through increasing the suite of third-party learning

and development opportunities, we have seen our

colleagues flourish and our organisation thrive.

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

The Group’s learning and development approach centres

around nurturing the skills our people need to execute

our organisational strategy effectively. Our goal is

twofold: firstly, to establish a strong pipeline of emerging

talent; secondly, to prepare future senior leaders. Both goals

are achieved by fostering behaviours that are aligned with

our core values.

In addition to our graduate Actuarial and Administration

programmes, we continued to support early career talent

through our fast-growing apprenticeship programme.

Apprentices are integral to every aspect of our business

and by the end of FY 2024 we had welcomed 111

apprentices across various disciplines, an 85% increase

onthe previous year.

We already have an established induction programme,

but FY 2024 saw us launch our internal XPS Mentoring

Programme to help individuals become their best

and to encourage a high-performance culture that is

underpinned by continuous learning and development.

Currently, we have 40 pairs engaged in this programme.

We support the development and career aspirations of

our people at all levels through technical training as well

as management development programmes for our more

senior colleagues. Support is also provided for colleagues

studying for professional qualifications via bespoke

technical programmes across all areas of our business.

During FY 2024, we recorded over 31,000 hours of

training, 13% higher than FY 2023.

98%

think “XPS is a good place to work”

111

apprentices at XPS in FY 2024

31,000+

hours of training in FY 2024

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability continued

Empowering people to thrive continued

XPS is committed to promoting equality, diversity and inclusion in

the workplace. We foster a culture of belonging, where everyone

within XPS is encouraged to share, with confidence, their opinions

and ideas in a way that respects the value of our differences.

Improving gender equality

Our journey towards a more diverse workplace is marked

by tangible actions and measurable progress. Last year,

for example, XPS launched its gender equality plan.

Endorsed by the Co-CEOs, the plan sets out specific

measures to drive diversity. To underline this, we became

a signatory of the Women in Finance Charter in FY 2024

and we set ourselves the target to have 37% female

representation in senior management by 2028. We are

already making progress here – by the end of FY 2024,

35% of our senior management positions were held by

women (FY 2023: 31%).

Progress is also being made in terms of closing the mean

gender pay gap across the Group – this was reduced

by a further 2.1% to 22.1% last year. We also rolled out

mandatory diversity training for managers, respectful

behaviour training for all colleagues and internal and

external mentoring programmes, and we reviewed our

people policies to ensure family-friendly commitments

such as flexible working, the buying and selling of holiday

and swapping bank holidays are firmly established across

the Group.

Disability

(63.0% staff disclosure)

Yes 8.5%

No 53.3%

Undisclosed 37.0%

Disability diversity at XPS

Age distribution

<20 2%

21-30 30%

31-40 25%

41-50 24%

51-60 16%

61+ 3%

Age diversity at XPS

Sexual orientation

(71.6% staff disclosure)

Heterosexual 63.1%

LGBT+ 4.1%

Prefer not

tosay 4.4%

Undisclosed 28.4%

Ethnicity

(85.8% staff disclosure)

White 72.9%

Ethnic

minority 10.7%

Prefer not

tosay 2.1%

Undisclosed 14.2%

Sexual diversity at XPS

Ethnic diversity at XPS

Gender diversity at XPS

Males Females

No. % No. %

Board 5 56% 4 44%

Group 890 50% 904 50%

Excludes

NEDs

Partners & Managing Consultants 85 65% 45 35%

Other employees 802 51% 859 49%

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Promoting disability inclusion

In addition to gender, we enhanced our approach to

disability inclusion. We have put in place a workplace

adjustment policy. We provide reasonable adjustments

for disabled job applicants and we guarantee interviews

for disabled candidates who meet the essential job

requirements. We were recognised for our efforts

by achieving Disability Confident Employer Level 2

in FY 2024.

Becoming a menopause-friendly employer

Last year, XPS initiated comprehensive menopause

training for managers, focusing on engagement, culture

enhancement and policy improvement. Additionally, we

launched new tools and guidance on our intranet. We also

spread awareness with the introduction of menopause

champions. As a result, XPS achieved Menopause in the

Workplace accreditation in FY 2024.

Celebrating inclusion and diversity

Alongside our diversity action, XPS promotes an inclusive

workplace so that everyone feels welcome and involved.

Actions taken include investing in our six employee

networks. Over the course of the year, our networks

organised over 23 webinars with experts covering issues

such as gender equality, menopause, mental health,

disability, neurodiversity, ethnicity and LGBTQIA+.

Our networks also ran monthly discussion groups and

podcasts where colleagues share their views on subjects

including allyship and what inclusion means to them.

Reflecting our colleagues’ efforts to foster a culture of

inclusivity, we were honoured to receive the Diversity and

Inclusion Excellence Award at the UK Pensions Awards

last year.

4.6/5 stars

XPS rating on Glassdoor for diversity and inclusion

Our partnerships

See more information about our partners on our website:

www.xpsgroup.com/sustainability/employees/

“ Being recognised with the

Diversityand Inclusion Excellence

Award at the UK Pensions Awards

underscores our commitment

to promoting diversity and

inclusion within both XPS

andthebroaderindustry.”

Charlotte West

Head of Employee Engagement

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability continued

Empowering people to thrive continued

Driving health and wellbeing

Our commitment to colleague wellbeing underpins our

efforts to foster a supportive environment for all at XPS.

Our comprehensive approach includes providing our

employees with the resources, tools and advice they

need to achieve a healthy body and mind, a fair work-life

balance, healthy relationships and sound finances. In our

FY 2024 survey, we observed a promising improvement

in work-life balance. Favourable work-life balance scores

increased by 4%, a positive result that can be attributed

to several strategic actions taken by XPS:

• The business proactively focused on allocating

resources and recruiting to bridge gaps. By strategically

addressing talent shortages, we ensured that

colleagues received the necessary support.

• Our flexible working arrangements empowered

colleagues to balance their professional and personal

commitments effectively to help achieve a healthier

work-life equilibrium. We gave colleagues the option to

use bank holidays flexibly as well as greater flexibility

around their precise working hours between 8.00am

and 6.30pm. Colleagues are also able to reduce their

working hours if it suits their personal needs. We were

early adopters of the new legislation on the rights

for employees around flexible working and paid and

unpaid leave.

• We have actively promoted an environment where

colleagues can have transparent conversations about

work-life balance with their line managers. We have

launched wellness initiatives that address physical,

mental, financial and emotional wellbeing, recognising

that a balanced life encompasses more than just work.

Looking ahead

For FY 2025, we will continue to invest in tailored

trainingand development initiatives to encourage

continuous learning, upskilling and increased use of

technology (including AI). Our focus is on health and

wellbeing centres, enhancing manager effectiveness

with an emphasis on people skills and providing robust

support for team wellbeing, prioritising employee

mental health through wellness events and cultivating

anenvironment of active listening.

Action plans developed in response to the FY 2024

employee engagement survey target key areas such

ascareer progression, learning and development and

arequest for stronger office communities. Inclusion

anddiversity efforts continue to shape our culture.

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Strengthening our communities

XPS is deeply committed to supporting its local communities,

not just because the talent we need to attract (and therefore

our continued success) depends on the communities in which

we operate, but also because it is the right thing to do.

Our proactive approach aims to create positive change.

Through active community involvement, fundraising

initiatives and responsible supplier management, we

can collaboratively tackle the challenges our local

communities face.

Encouraging volunteering

The XPS Volunteering Initiative was successfully launched

in FY 2023 and we were able to increase our support

of local communities further in FY 2024. As part of the

Initiative, 40 employees from across the country took

the opportunity to take a day’s paid leave to take part

in a volunteering activity organised by XPS (FY 2023:

15 colleagues). Activities ranged from beach cleaning

in Lough Shore, Northern Ireland, to renovating a

community centre in Leeds and handing food parcels to

the homeless in London.

Supporting communities financially

At XPS, we support charities nationally. We also

undertake fundraising activities for charities in the local

communities where we operate. Last year, we introduced

a matched fundraising commitment to encourage our

employees to support charities of their own choosing.

As part of our commitment, funds raised are matched

byXPS up to a certain value.

During the year, more than 50 employees and teams

raised funds for 30 different charities including the

Roxburghe House Day Care Centre, Portsmouth

Down Syndrome Association, Maddy’s Mark and many

more. In total, the Group contributed over £67,000

(FY2023: £58,000).

“ I am proud that we increased our employee

volunteering last year. It has a measurable impact on

engagement for our people and of course delivers

positive impacts for our charitable partners.”

Charlotte West

Head of Employee Engagement

From abseiling down buildings and running marathons

to head shaving and sleeping out, our employees have

gone above and beyond to raise money for these worthy

causes and more. Our biggest fundraising effort this year

saw employees raise over £5,000 for Macmillan Cancer

Support in September, a sum which was matched by

the Company.

Creating a sustainable supply chain

We continue to improve procurement governance to

extend our diversity and sustainability goals further into

the supply chain. In FY 2024, we updated the Supplier

Code of Conduct to include references to modern slavery

and over the coming years we will include environment,

social and governance and diversity, equity and inclusion

references too.

Looking ahead

As part of our ongoing commitment to strengthening our

local communities, we plan to expand our volunteering

opportunities further. Upcoming initiatives include local

conservation projects, job coaching with Business in

the Community and career planning sessions in schools.

Froma procurement point of view, we will continue to

include additional sustainability considerations in our

Supplier Code of Conduct.

charities supported in FY 2024

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability continued

Protecting our environment

We are focused on mitigating our environmental impact and

promoting a green and stable future for our business and

communities through effective stewardship. Through decisive

andmeaningful actions, especially regarding our climate impacts,

we are building a strong foundation for a sustainable future.

As part of our commitment to have a positive impact on

the environment, XPS deployed the XPS Planet Group,

a Group-wide Environmental Management System,

to address our environmental risk and compliance

obligations as well as drive performance. The XPS Planet

Group, which was externally certified to ISO 14001 in

seven of the Group’s offices by the end of FY 2024

(FY2023: four), utilises the integrated risk management

and internal control framework to manage risks. We are

aiming to obtain certification for all our office locations

by the end of FY 2025.

“ This year we formally submitted our climate

plan and commitments to the Science Based

Targets Initiative (SBTi), a major milestone in

our journey to net zero.”

Matt Wellbelove

Environmental System Manager

Developing our net zero pathway

Last year, XPS developed a net zero roadmap in accordance

with current scientific demands to limit warming to a level

consistent with a 1.5˚C core temperature increase by 2100.

This formed the basis for the formal submission of our

ambitions to the Science Based Targets initiative (SBTi)

for review and certification. Our submission underscores

our dedication to operating in a manner that is both

environmentally responsible and economically sustainable.

In future we anticipate that, with the support of the SBTi,

we will be in a position todisclose our net zero pathway

inmore detail.

Our net zero journey to date

July 2022

First TCFD disclosure

June 2023

XPS commits to

100% renewable

electricity by 2030 and

alignment with SDGs

December 2023

XPS officially submits

its near-term target

setting framework

to the SBTi

October 2021

Carbon neutrality achieved for

the first time across our entire

value chain for the

FY 2020–FY 2021 period

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

60%

60% of our square footage is supplied by

certified renewable energy in FY 2024

Our future goals

2030

Achieve 100%

renewableelectricity

2040

Achieve complete phase-out of

naturalgas in all properties

2035

Reduce direct emissions by 60%

and indirect emissions in supply

chain by 40%

We are currently working towards hitting the interim

milestones we have set ourselves: achieving 100%

renewable electricity by 2030; and retiring gas heating

from our direct emissions inventory by 2040. Our climate

ambition therefore relies on our continued efforts to

secure renewable electricity and heating sources for our

offices, and also the deployment of efficient property

technology. By the end of FY 2024, 60% of our electricity

consumption across our estate was generated from

renewable sources.

Additionally, we recognise we must tackle our indirect

emissions by applying greater scrutiny to our suppliers,

evolving our product offering and improving our

technological efficiency.

Our approach is to deliver net zero at the soonest

opportunity whilst avoiding adverse impacts on our

operations, quality and cash flow. In line with this

and for the third year in a row, FY 2024 saw us offset

our remaining direct and indirect greenhouse gas

emissions. retiring high quality Gold Standard carbon

credits for sustainable projects that support the

group’s commitment to global sustainability and the

UN’s Sustainable Development Goals. Our most recent

projects include investment in sustainable biofuel

solutions and clean wind energy.

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability continued

Improving our environmental performance

Reducing our emissions in FY 2024

During FY 2024, XPS achieved a fourth successive year

of combined Scope 1 and 2 carbon reductions, owing to

our focused transition to renewable electricity and more

sustainable properties. We made the strategic decision to

decommission two of our legacy properties - Wokingham

and Bristol Cote House - as the facilities no longer aligned

with our brand ethos or sustainability objectives, or met

our threshold for commercial justification.

Scope 1 emissions for FY 2024, relating to gas-fuelled

heating, increased slightly due to the changing carbon

intensity of natural gas as a result of the Ukraine war. We

expect this to decrease next year to reflect a full year

without the two legacy properties mentioned above.

Scope 2 emissions for FY 2024 decreased year on year

due to more efficient equipment and office capacity use.

Adjusted for renewable electricity, they decreased even

more as we increased our renewable consumption.

There was a slight increase in FY 2024 in Scope 3

emissions from business travel and employee commutes.

This can be attributed to the resurgence of office-based

work following the Covid-19 pandemic and the expansion

of our business. Nonetheless, emissions from travel have

maintained a significant downturn compared to the

baseline figures of FY 2020, with the intensity of travel

emissions per full-time equivalent employee continuing

todecline year over year.

Annual greenhouse gas emissions and energy use data from UK-based activities under SECR for FY 2024:

FY 2024 FY 2023 FY 2022

Scope 1 emissions (tCO

e) 161 157 212

Scope 2 emissions – Defra location based (tCO

e) 193 215 350

Scope 2 emissions adjusted for renewable energy

106

185

350

Energy consumption used to calculate emissions (kWh) 1,812,093 1,976,286 2,655,443

Scope 3 emissions (tCO

e) 1,191 1,189 1,928

Total gross emissions 1,545 1,561 2,490

Total net emissions 1,458 1,531 2,490

Intensities FY 2024 FY 2023 FY 2022

Revenue intensity – Scope 1 & 2 (tCO

e/£m) 1.7 2.1 3.2

Revenue intensity – Scope 1, 2 & 3 (tCO

e/£m) 7.7 9.2 14.2

FTE intensity – Scope 1 & 2 (tCO

e/FTE) 0.2 0.2 0.3

FTE intensity – Scope 1, 2 & 3 (tCO

e/FTE) 0.9 1.0 1.4

Notes:

All activities are UK based. tCO

e = tonnes of CO

equivalent. Unless otherwise noted all conversion to carbon is based on current Department

for Education, Food and Rural Affairs (‘Defra’) factors. Calculations are made in accordance with the SECR guidance and the GHG Protocol.

FTE = Full time employees as at 31 March 2024.

1 XPS has transitioned to certified renewable energy in a number of its locations, enabling the Group to claim zero-emissions relating to

associated energy consumption, as per the market-based accounting method. In addition to the progress made on renewable electricity,

our market-based Scope 2 emissions declined further last year, reflecting the adoption of the more accurate supplier “fuel-based”

conversion rate as supported by the GHG Protocol. This conversion rate uses data direct from suppliers (where available) to better estimate

non-renewable supply. We have applied this methodology to prior disclosures and found that a discrepancy of less than 1% occurred.

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Embedding sustainability in our culture

Integrating a sustainability philosophy and embedding

a green culture throughout the business is fundamental

to the Group achieving its environmental ambitions.

The business continues to incentivise the green cultural

transition by offering benefits as part of the Group’s

salary sacrifice options including cycle to work, electric

car and tree planting schemes.

During the past year, XPS organised its first

environmentally focused volunteering day, led and

organised by our local XPS Planet Group Champions.

Thesuccessful pilot scheme contributed to the

development and roll-out of the new Group-wide

Volunteering Policy, which encourages and facilitates

local volunteering across the UK for causes that are

meaningful to our colleagues whilst continuing to align

with the Group’s culture and values.

Looking ahead

For FY 2025, we will continue to develop our net zero

roadmap, which will be submitted for verification with

the SBTi. In addition, we will focus on gaining additional

ISO 14001 certifications across our property portfolio.

We will continue to develop and deploy our sustainable

procurement policies. We will also prepare the business

ahead of forthcoming environmental and climate

regulatory demands such as the IFRS Sustainability

disclosure standards S1 and S2 andTransition Plan

Taskforce disclosure requirements.

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability continued

Supporting our clients and members

We are trusted advisers of pension funds on which millions of people depend.

To support our clients best, we aim to develop long-term partnerships with

them. Sustainability and stewardship increasingly play an important role in

these partnerships. During the year, we made significant steps to integrate

sustainability considerations further into our service offering.

Our goal is to help clients and scheme members achieve

positive long-term outcomes. Our culture and values

help us promote sustainable services for our clients.

Weincorporate sustainability into our client services and

solutions, and we ensure sustainability considerations

are embedded in all our investment research and advice.

We also focus on keeping all our clients’ money safe from

scams and fraud.

Helping clients navigate sustainability

Sustainability considerations are embedded into all

the investment recommendations and client advice

we provide for the £104 billion assets we have

under advisement. We deliver detailed sustainability

reporting to all clients. In addition to feedback on their

sustainability ratings, we detail wider sustainability

factors (such as exposure to sin industries, climate

transition alignment and engagement on sustainability

across the portfolio) as well as carbon emissions

reporting. We have partnered with a market-leading

climate change data provider so that we can provide

enhanced reporting and analysis of climate change

risks – we have used this to support certain clients with

their regulatory climate change reporting requirements,

aligned with the Task Force on Climate-related Financial

Disclosures (TCFD) framework.

“ The investment markets play a significant role in

addressing pressing societal challenges such as climate

change, and considering these issues is key to ensuring

secure long-term outcomes for scheme members. We

provide our clients with comprehensive information and

advice on sustainability considerations to inform how they

manage their schemes.”

Alex Quant FIA

Head of ESG Research – Investment

During the year, we carried out our fourth annual

sustainability ratings exercise, which involved reviewing

227 funds run by 53 investment managers. In the interest

of transparency and raising the bar for the industry, we

provided feedback to all those managers who submitted.

We also held follow-up face-to-face meetings with those

managers who received a red rating, as well as many

others, to discuss areas for improvement.

Driving sustainable investment

For those clients who wish to go further, we have

a growing number of buy-rated funds that target

environmental and social outcomes alongside their

financial objectives. In FY 2024, we formalised our

Impact Designation, which is a label we award funds

that achieve our Sustainable Designation but go further

by having explicit non-financial targets alongside

their financial objectives. For example, funds that set

net zero targets can earn our Sustainable or Impact

Designations. Weawarded three investment funds

our Impact Designation. We have now awarded our

Sustainable Designation to 39 funds across all asset

classes (FY 2023: 34) to help our clients meet their

financial objectives whilst targeting long-term social

andenvironmental outcomes.

At the end of FY 2024, XPS had 36 clients in sustainable

funds representing £2.6 billion (FY 2023: 23 clients,

£1.9billion) in assets under advisement.

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

£104bn

assets under advisement with XPS clients

funds awarded Sustainable Designation by XPS

10,000+

members’ transfers protected by XPS

Creating a sustainable pensions industry

In FY 2024, we joined the Net Zero Investment Consultant

Initiative and we worked to action the commitment we

have made to take net zero considerations to all our

investment clients and to embed these into our research

framework. We also retained our status as a signatory of

the UK Stewardship Code, having been successful at the

first time of asking in 2021. We contributed to a number

of public consultations relating to sustainability issues,

including the DWP Taskforce for Social Factors guidance

and the FCA consultation on Finance for Positive

Sustainable Change.

Keeping members safe

We remain focused on keeping the members of the

pension funds we administer safe. Our Scam Protection

Service continues to support trustees and our clients’

members by identifying and managing suspicious activity

in relation to transfers. In particular, our Scam Protection

team uses a phone call with scheme members to obtain

robust information about their transfer and uses this

to identify any suspicious activity. In addition, XPS is

an advisory member of the Pension Scams Industry

Board. Our service goes beyond what is required in the

regulations and we continually look out for trends in

behaviour to help spot warning signs of new potential

scams. Our Scam Protection Service has helped protect

over 10,000 members’ transfers to date, totalling over

£2 billion.

To minimise social engineering threats, XPS rolled out

Abnormal Email Security, which uses AI and behaviour

analysis to detect malicious emails. In FY 2024, all our

colleagues undertook mandatory training on protecting

client, employee and corporate information, including

regular phishing awareness exercises. Our Information

Security Management System (ISMS) was certified to

ISO 27001 in FY 2022 and the effective deployment of

our ISMS is independently verified through our Cyber

Essentials Plus certification and BitSight risk scoring.

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.

Our Dealing with Vulnerable Customers Policy provides

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.

Looking ahead

For FY 2025, our focus remains on further embedding

sustainability within the advice and services we give to

our clients, whilst keeping on top of the fast-evolving

regulatory landscape.

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability continued

Being a responsible business

Good governance underpins both our approach to sustainability and the

purpose and strategy of our business. At XPS, we pride ourselves on our

strong culture and values, which are fully integrated throughout our business.

Both our culture and values promote the right behaviours, whilst delivering

our strategy and supporting our stakeholders.

Ensuring strong governance

We are proud to comply with the UK Corporate

Governance Code. Starting at the top of our business

and our Board of Directors, we uphold high standards

of governance. This year, we strengthened our Board

with the appointment of two additional Non-Executive

Directors, and are proud to have maintained the gender

diversity of our Board at 44% female. You can read more

about the governance and composition of our Board on

pages 56 to 62.

During the year, we also continued to demonstrate our

sustainability commitments by including sustainability

within our Executive Directors’ bonus objectives and

share incentive award vesting criteria. You can read about

remuneration on pages 72 to 95.

100%

compliance training rate in FY 2024

Maintaining a culture of compliance

We have core policies and procedures in place that

ensure we uphold high standards of governance and

act as a responsible business with all our stakeholders in

mind. Our Business Code of Ethics outlines the principles

and values that we expect all our people to adhere to

in relation to matters such as treating customers fairly,

inclusion and diversity, financial crime and dealing with

vulnerable customers. We also have an Anti-Bribery and

Corruption Policy in place, outlining our zero tolerance

for activities and behaviours that are not in line with our

values, especially in relation to financial dealings.

Each year, all our employees are required to

complete modern slavery training, which outlines

the expectations of our business and our suppliers

to behave in a way that is respectful of human rights.

This year our supplier onboarding process has been

strengthened and adherence to our Supplier Code

of Conduct is now acondition of doing business

with XPS. We publish our Modern Slavery Statement

annually and you can read it on our website at

https://www.xpsgroup.com/modern-slavery-statement/.

All our employees are required to complete an annual

programme of compliance training, covering topics such

as financial crime, bribery and corruption, insider trading,

modern slavery, data protection and cyber security.

During FY 2024, the 100% training completion rate across

the Group was maintained (FY 2023: 100%).

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Task Force on Climate-related Financial Disclosures

This report includes disclosures consistent with the TCFD framework and all

11TCFD recommendations (pursuant to LR 9.8.6 R (8)). The most recent TCFD

and FCA-related guidance has been considered and appropriately informs

the content of this disclosure. Some elements of disclosure refer to extracts

within this report that should be read in conjunction with this disclosure.

This report, together with the statements throughout this report, meets the

requirements of TCFD.

Governance

a) Describe the

board’soversight of

climate-related risks

and opportunities.

XPS recognises that strong risk governance is fundamental to the success of the business

including those risks relating to the environment and climate change. XPS utilises a

number of traditional management committees to ensure risks within the business are

appropriately controlled including the Sustainability Committee, Risk Management

Committee, Audit & Risk Committee and the Remuneration Committee.

The Board-level Sustainability Committee, chaired by Non-Executive Director Sarah Ing,

provides a dedicated mechanism for sustainability-related risks and opportunities, such

as climate, to be reported to the Board on at least a quarterly basis. The Committee

is also responsible for establishing the XPS sustainability framework, overseeing its

implementation and the ongoing monitoring of progress on related topics. You can find

adetailed report of Sustainability Committee on pages 70 and 71.

The Risk Management Committee and Audit & Risk Committee are integral to the

governance structure within the business. These Committees are responsible for Group

risk management and the internal control framework and have oversight of identified

risks, including those relating to climate change. You can find a detailed report on the

Risk Management Committee and Audit & Risk Committee on pages 66 to 69.

The Remuneration Committee determines executive remuneration including approval of

executive incentive schemes, which incorporate sustainability performance objectives.

You can find a detailed report on the Remuneration Committee on pages 72 to 95.

b) Describe

management’s

roleinassessing

andmanaging

climate-related risks

and opportunities.

The Group manages all risk in an integrated fashion, including those relating to climate,

via its risk management and internal control framework which is detailed on page 48.

The Group’s sustainability framework, which incorporates the Group’s climate risk,

strategyand ambitions, is integrated within all management-level decision-making ensuring

sustainability and climate considerations around risks and opportunities are an appropriately

weighted input into group-level decision making, strategy, budgeting, objectives, remuneration

and, where appropriate, major capital expenditures andacquisitions.

The Group’s certified Environmental Management System acts as the unified mechanism

to report relevant climate-related progress to management as well as the Board via its

regular auditing activities, data analytics and assessments, helping to assess the success

of mitigating climate-related risk.

Management has established a Sustainability Working Group that brings together,

on a regular basis, representatives from across the business to monitor progress and

performance on managing climate-related risks and opportunities.

Strategy

a) Describe the climate-

related risks and

opportunities the

organisation has

identified over the

short, medium, and

long term.

XPS’s definition of short, medium and long term is aligned with those defined by

the Group’s net zero trajectory and informed by the Science Based Targets initiative

boundaries: short term being 0–5 years, medium term being 5–10 and long term being

anything 10years and over.

XPS Pensions Group plc Annual Report and Accounts 2024

Strategy continued

a) Describe the climate-

related risks and

opportunities the

organisation has

identified over the

short, medium, and

long term. continued

In the short term up to 2030, the climate-related risk profile for XPS remains consistently

low across different climate change scenarios, with the swiftest transition to a 1.5-degree

pathway posing the greatest risk. This is due to the expected demands for enforced

technological upgrades affecting equipment, early retirement of properties and

additional compliance needs requiring additional investment and resource posing a

capital and reputational risk whilst navigating an anticipated negative reaction within the

marketplace due to the capital required globally to transition at pace. The sustainability

framework and net zero commitment of XPS are strategically designed to transition at

pace and enable the Group to act proactively and to operate effectively in adverse swift

transition environments. There is an opportunity within slower moving transitions for

XPS to bolster its reputation and client appeal and retention by acting in advance of the

marketplace as well as opportunities to make efficiency related savings. Earlyadoption

of new technology, yet to be determined, is likely to be accompanied by a risk to

capital and effectiveness. XPS will ensure new technology is appropriately assessed

before any deployment so that the Group’s investment and operations are protected

andappropriate.

In the mid-term, spanning from 2030 to 2035, the Group’s comprehensive plan for

achieving net zero will most likely pre-emptively mitigate major climate-risks from the

global shift in the timeframe. There is some expectation that markets will recede in

this period due to legislation and transitional activities posing both a cash flow and

compliance risk as well behavioural changes potentially influencing consumer selection.

The cost of business in general is expected to increase posing a potential risk to

profitability but the Group currently expects this incremental cost to be immaterial to

its operations and the cost of the XPS transition to sustainable energy and facilities to

present a low impact on XPS cash flow and operations.

Looking further ahead, from 2035 to 2050, XPS anticipate to be working on the

addressing and eradicating the Group’s residual emissions, with a heavy reliance on

technological advancements for carbon capture, removal, and sequestration. The

efficiency and affordability of such technologies are currently uncertain, presenting

a potential risk of capital demands. A successful XPS transition will be reliant upon

local infrastructure achieving its own ambitions. This presents a risk of XPS failing to

achieve its net zero objectives and generating excessive residual emissions. A risk of

significant carbon taxation is viable in this period and may pose a significant potential

risk should XPS fail to meet its net zero objectives due to internal or external influencing

factors. Potential market downturn during this period is likely to impact global cash flow

potentially affecting profitability. XPS plans to significantly reduce emissions ahead of

this scenario, forecast to require modest treatment for residual emissions, reducing the

potential forconsiderable outlay.

Task Force on Climate-related Financial Disclosures continued

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

a) Describe the climate-

related risks and

opportunities the

organisation has

identified over the

short, medium, and

long term. continued

In all scenarios beyond 2050, there will be a significant increase in adverse climate

events impacting many industries and societies including agriculture, accommodation,

infrastructure, logistics and manufacture. It is likely that some of these impacts

are already unavoidable. XPS does not expect its direct operations to be critically

impacted by these events. However, XPS does expect the cost of business to increase,

significantly for the Group’s supply chain operating or investing in vulnerable industries

or geographies. There is a risk that these suppliers, or those with connections to these

suppliers, experience service interruptions or significantly increased cost of service which

may impact the Group’s ability to provide services itself. XPS plans to manage this risk

and its supply chain carefully in the interim to reduce its third-party risk in this area. The

Group’s supply chain risk is currently considered low due to the type of services procured

and the geographic suppliers selected however XPS will continue to deploy its approach

to further minimise this risk by seeking suppliers that reflect the long term XPS morals

and have sufficiently resilient operations ensuring XPS continue to have a robust supply

chain. The most optimistic outlooks foresee a considerable reduction in GDP and market

conditions. XPS currently consider its operations to be financially equipped and robust

to operate effectively in these conditions; however, the financial landscape is yet to be

foreseen and trading conditions are anticipated to be universally impacted posing a

potential risk to the XPS operations and its capital.

Opportunities have been identified within the Group’s analysis which suggest XPS’s

proactive approach will bolster the Group’s reputation and facilitate client retention

and appeal within the marketplace as well as offering cost saving opportunities by

deploying more efficient technology. Opportunities are most beneficial in slower

movingmarketplaces.

For more information, see the Risk Management section on pages 47 to 52 and refer to

the Environment section of the Sustainability section on pages 28 to 31.

XPS Pensions Group plc Annual Report and Accounts 2024

Task Force on Climate-related Financial Disclosures continued

Strategy continued

b) Describe the impact

of climate-related

risks and

opportunities on the

organisation’s

businesses, strategy,

and financial planning.

The Group’s sustainability framework ensures that climate-related risks and

opportunitiesare considered within Group-level decision making, strategy, budgeting,

objectives, remuneration and, where appropriate, major capital expenditures and

acquisitions. Whilstsome mitigating steps will require proactive action by XPS, the Group

anticipates a considerable volume of the XPS transition to net zero will be delivered with

the adaptation of the market and infrastructure.

Recognising the Group’s risks, opportunities and commitments as an input, the Group

acknowledges the adaptations required, specifically within the Group’s key climate

risks such as the XPS supply chain - ensuring XPS suppliers complement XPS’s net zero

trajectory, use of technology in XPS offices and applications - allowing XPS to reduce

energy consumption to a level consistent with a 1.5 degree scenario, selection of property

- ensuring XPS facilities are suitably efficient and environmentally friendly to the Group’s

surroundings, and the Group’s approach to investments - ensuring investments meet the

Group’s moral commitments and their actions align with the XPS 1.5 degree ambitions.

The Group’s sustainability framework ensures that these mitigation steps are taken

without a material financial impact on revenues and assets and act at an appropriate

pace. Whilst the transitional steps present the anticipated need for modest additional

investment and resource at the outset posing a low risk, the business anticipates energy

efficiencies and long-term cost savings to be delivered post transition.

XPS expect an increased risk of environmental and climate compliance demands and

associated disclosure expectations in the short to medium term which will require

additional resource and investment, however, the Group currently believe its strategy

is prepared, well equipped and financially able to make such a transition resulting in

amanaged low risk to the business.

The opportunities that exist up to 2050 present XPS with a potential to bolster its

reputation resulting in improved client appeal and retention whilst its transition to green

technology and buildings is likely to offer long term cost savings relating to a more

efficient operation.

c) Describe the resilience

of the organisation’s

strategy, taking into

consideration

different climate

related scenarios,

including a 2°C or

lower scenario.

XPS considers that its business model and operations are resilient in the most common

climate change scenarios.

In order to assess the resilience of the Group, three different commonly used climate

scenarios were used: a rapid change aimed to curtail warming at 1.5 degrees; an orderly shift

to a 2-degree limit and a scenario where the transition is only partially successfully, leading to

temperature rises beyond 2 degrees. XPS scenario analysis model assessed conceivable risks

and opportunities, including those listed in Table A1.1 of the TCFD Implementation Guidance,

in each decade to 2100 in differing paces of transition to understand the conceptual

materiality and impact to the business considering transitional and physical risks and

opportunities. Using data and projections from, but not limited to, scientific papers published

by IPCC, Institute and Faculty of Actuaries and BNEF as an input, the Group has been able to

determine key opportunities and risks likely to be faced in the future.

The Group has committed to an ambitious pathway informed by scientific data, aiming

to achieve emissions associated with a maximum temperature rise of 1.5 degrees

Celsius. This approach is expected to be proactive, outpacing the broader market and

statutory obligations, thereby establishing the Group as strong and adaptable to swift

climate-related demands, as well as changes in legislation and consumer behaviour. By

prioritising the transition of the business’s highest risks, such as the Group’s engagement

with renewable energy sources, preparing to meet forthcoming compliance obligations

and ensuring financial resilience to market downturns, XPS is strategically positioning

itself favourably across conceivable climate outcomes.

Pensions are an inherently stable product that can withstand economic downturns and

market volatility, maintaining a consistent demand due to their essential nature. Guided

by scenario analysis, the Group is assured that the XPS business structure, financial

resources, and strategic approach are currently resilient and sufficiently robust.

XPS scenario analysis suggest that a smooth transition, likely to result in a 2˚C

temperature rise, is the most favourable pathway for XPS and global markets. A rapid or

delayed reaction is likely to result in unfavourable market conditions potentially impacting

XPS’s capital and profitability.

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Risk management

a) Describe the

organisation’s

processes for

identifying and

assessing climate

related risks.

The Group’s integrated approach identifies, manages and addresses all risks, climate and

otherwise, in a consistent manner as specified with in the Risk Management and Internal

Control Framework section of this report on pages 47 to 52.

The Group deploys a plan, do, check, act procedure which the ISO 14001 certified

Environmental Management System utilises within its identification and assessment of

climate risk in accordance with the established risk framework. The Environmental Risk

Implementation Guidance as a minimum as well as other risks identified as part of the

risk management process. The assessment considers the short-, medium- and long-term

effect a risk may constitute to capital, revenue, reputation, environmental performance,

business continuity and information security. Climate risks often present a risk in multiple

facets which are assessed individually in a consistent and integrated manner with

traditional risks to ensure appropriate and consistent weighting, treatment and priority

isapplied based upon a risk’s materiality. Utilising the existing risk matrix and framework,

climate assessments are repeatable and consistent with risk management processes

facilitating a unified approach to treatment, management, acceptance or rejection of

a risk. The approach is aligned for climate and other risks and enables the group to

effectively identify any material risks to its operation and capital. A similar approach is

deployed to establish opportunities, assessing the risk to benefit ratio and enabling the

business to ascertain the most beneficial pathways and actions available to it.

Specifically relating to climate, existing and emerging regulatory requirements are

managed as an emerging risk as well as the possible change in market appetite.

b) Describe the

organisation’s

processes for

managing climate

related risks.

c) Describe how

processes for

identifying, assessing

and managing climate

related risks are

integrated into the

organisation’s overall

risk management.

Metrics and targets

a) Disclose the metrics

used by the

organisation to assess

climate related risks

and opportunities in

line with its strategy

and risk management

process.

XPS actively manages and monitors its sustainability performance to ensure the business

is acting upon its framework and ambitions. XPS’s most recent SECR disclosure can be

found on page 30.

The success of the XPS climate ambition requires top-down management and

implementation. To support this approach 10% of executive remuneration is tied to the

Group’s annual emissions and the performance against the Group’s carbon objectives.

XPS has not established internal carbon pricing but it is continuing to assess the benefits

of carbon pricing within the landscape.

The most prevalent KPI within the climate space for XPS’s is the Group’s carbon inventory.

The XPScarbon footprint is measured and reported using the Greenhouse Gas Protocol

methodology and aligned with ISO 14064, measuring comprehensive emissions sources such

as travel emissions, energy consumption, energy sources, waste generation, waste treatment,

water treatment, water consumption and downstream emissions within the Group’s

supply chain.

XPS has committed to the SBTi target framework, which provides the business with

aclear and unambiguous pathway to a science-based net zero status. Utilising the

1.5˚C emissions corridor, XPS has set emissions performance objectives for all identified

emissions sources. Any non-conformance with the approved transition corridor is treated

as a risk and managed and addressed within the above-mentioned risk process.

Prior to verification of the Group’s transition plan, it would not be suitable for XPS to disclose

draft targets in full detail; however, the high-level journey and anticipated milestones are

disclosed on pages 28 to 29. Key objectives include the transition to renewable electricity

seeking zero electricity emissions by 2030, the transition to green heating methods resulting

in zero heating emissions by 2040 and the reduction of supply chain emissions by 40% by

2035 initially and 90% by 2050 subject to approval. Noted objectives are measured via KPI

performance of tCO

e generated and represent absolute reductions as required by the IPCC

and SBTi frameworks. Performance targets/KPIs have been established annually between

2024 and 2030 and 5 yearly thereafter, in an accelerating fashion that aligns with the SBTi

emissions corridor. Carbon emissions are quantified using industry standard methods aligned

with the Greenhouse Gas Protocol, ISO 14064 and the SBTi. The information disclosed in this

report and being developed internally all refers to a base year of FY 2020.

Internally, the Group is developing its transition plan approach to ensure compliance with

forthcoming regulation such as the anticipated Transition Plan Taskforce and ISSB.

b) Disclose Scope 1,

Scope 2 and, if

appropriate, Scope 3

greenhouse gas

(GHG) emissions, and

the related risks.

c) Describe the targets

used by the

organisation to

manage climate related

risks and opportunities

and performance

against targets.

XPS Pensions Group plc Annual Report and Accounts 2024

Non-financial and sustainability information statement

This section of the Annual Report and Accounts constitutes

the XPS Group Non-Financial and Sustainability Information

Statement, produced to comply with Sections 414CA and

414CB of the Companies Act 2006.

The following table sets out where, within our Annual Report and Accounts, we provide further detail on matters

required to be disclosed under the sections above. In particular, it covers the impact we have on the environment, our

employees, social matters, human rights, anti-corruption and anti-bribery matters, policies pursued and the outcome

of those policies, and principal risks that may arise from the Company’s operations and how we manage these, to the

extent necessary for an understanding of the Company’s development, performance and position and the impact of

its activity.

Reporting requirement

Relevant policies, documents,

or reports that set out our approach Section(s) and page(s)

Anti-bribery and corruption

•

Bribery and gifts policy

• Whistleblowing policy

• Financial crime policy

See our “Being Responsible

Business” section on page 34

Business Model

Business Model, see page 6

Employees

•

Recruitment and selection policy

• Inclusion and diversity

• Flexible working policy

• Harassment and bullying

prevention policy

• Grievance policy

• Health and safety policy

• Agile working policy

• Family friendly policy

• Sabbatical policy

See our “Empowering our people to

thrive” section on page 22-26

Environmental matters

•

Environmental policy See our “Protecting the

environment” section on page 28-31

Description of principal risks

andimpact on business activity

Helping the transition to a

sustainable low-carbon economy:

Risk management – see page 47

Principal risks - see pages 49-52

Respect for human rights

•

Data privacy policy

• Modern slavery policy

• Information & cyber security policy

See our “Being a Responsible

Business” section on

page 34 and our website

www.xpsgroup.com/modern-

slavery-statement

Social matters

•

Matched fundraising

• Corporate volunteering policy

See our “Strengthening our

Communities” section on page 27

Non-financial key

performanceindicators

Operating responsibly for all our

stakeholders, see page 20-34

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Chief Financial Officer’s review

The business has continued to perform strongly with like-for-like revenues growing 21% year on year (20% including

revenues from the National Pension Trust (NPT) business, which was disposed of in November 2023). All divisions

have posted strong year on year growth driven by high client demand for our services. Operational gearing has also

continued to come through with adjusted diluted EPS and adjusted EBITDA growth exceeding revenue growth for

the second consecutive year. We disposed of the NPT business for a consideration of £35.0 million and used the

proceeds to reduce net debt – further strengthening the balance sheet and providing greater flexibility for continuing

our growth trajectory. We have continued to develop our own administration platform which will further enhance our

operational gearing in the future.

Group income statement

Adjusted

(1)

As reported

FY 2024

£m

FY 2023

£m

Change

FY 2024

£m

FY 2023

£m

Change

Revenue

Pensions Actuarial & Consulting 93.4 77.4 21% 93.4 77.4 21%

Pensions Investment Consulting 20.3 18.0 13% 20.3 18.0 13%

Total Advisory 113.7 95.4 19% 113.7 95.4 19%

Pensions Administration 71.9 57.5 25% 71.9 57.5 25%

SIP 11.0 9.4 17% 11.0 9.4 17%

NPT — — — 2.8 4.3 (35%)

Total revenue 196.6 162.3 21% 199.4 166.6 20%

EBITDA 54.8 41.4 32% 79.8 35.1 127%

Depreciation & amortisation (5.8) (5.5) (5%) (12.8) (12.4) (3%)

EBIT

49.0 35.9 36% 67.0 22.7 195%

Net finance expense (4.5) (3.6) (25%) (4.5) (3.6) (25%)

Profit before tax 44.5 32.3 38% 62.5 19.1 227%

Income tax expense (11.4) (6.0) (90%) (8.3) (3.3) (152%)

Profit after tax 33.1 26.3 26% 54.2 15.8 243%

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. They also

exclude the Group’s NPT business, which was sold in November 2023. See note 6 for details of exceptional and non-trading items.

Strong financial performance delivering

onourgrowth strategy

Snehal Shah

Chief Financial Officer

XPS Pensions Group plc Annual Report and Accounts 2024

Revenue

Total Group revenues grew 20% year on year, 19%

organically. Excluding NPT, total Group revenues grew

21% year on year.

Pensions Actuarial & Consulting is the Group’s largest

business, accounting for 47% of Group revenues in

FY2024. The division achieved 21% year on year growth

in revenues, due to high client activity levels driven by

continued regulatory changes, expansion of our service

offering, in particular; Risk Transfer, and inflationary

increases in fees.

Pensions Investment Consulting had another strong year

with continued demand driven by regulatory changes as

well as inflationary fee increases. Revenues in this division

grew 13% year on year.

Pensions Administration revenues grew 25% year on

year with a number of new client wins coming on stream

during the year and increased levels of project work

such as GMP equalisation and the McCloud judgement

rectification. As with the Advisory business, inflationary

increases in fees also helped to drive the growth in the

year. Pensions Administration accounted for 36% of the

Group revenues (FY 2023: 35%).

SIP revenues were up 17% on prior year, due to strong

underlying sales, and increases in commission due to the

base rate increases in the year.

The NPT business was sold in November 2023.

Operating costs

Total operating costs (excluding exceptional and non-trading

items) of £150.0 million (FY 2023: £129.7 million) grew by

16% year on year. The main drivers for the cost increases

are an increase in headcount as the business grew (1,712

FTE v. 1,574 last year), inflationary/market driven pay

increases, higher bonus cost commensurate with the

strong financial performance, and inflationary increases

inother operating costs.

Adjusted EBITDA

Despite the continuing inflationary pressures on our

costs, the Group has delivered further operational

gearing with adjusted EBITDA growing by 32% year

on year - ahead of the Group adjusted revenue

growth of 21%. Adjusted EBITDA margin was 27.9%

(FY2023: 25.5%).

Adjusted profit before tax grew by 38% year on year

benefiting from the strong trading and continued

operational gearing.

Exceptional and non-trading items

Exceptional and non-trading items excluding the gain on

sale of NPT in the year totalled £15.0 million (FY 2023:

£14.2 million). Amortisation of acquired intangible assets

amounted to £7.0 million (FY 2023: £6.9 million).

Share-based payment charges were £6.3 million

(FY2023: £4.7 million) with higher levels of vesting

expected due to the strong financial performance of the

Group and a higher National Insurance charge resulting

from the Group’s strong share price.

The Group also incurred corporate transaction costs

of £1.7 million in the year, which related to contingent

consideration in respect of the acquisition of Penfida

Limited (FY 2023: corporate transaction costs of

£2.9million, of which £2.1 million was in relation to the

acquisition of Penfida Limited and £0.8 million related

to contingent consideration). The maximum contingent

consideration of £3.4 million would be payable on the

second anniversary of the acquisition subject to business

performance which includes retention of clients as well as

continued employment of key employees. As continued

employment is one part of the contingent consideration

test, according to IFRS 3, the entire contingent

consideration must be treated as a post-transaction

employment cost accruing over the deferment period of

two years. The contingent consideration is material in size

and it is one-off in nature. As such, in line with the Group’s

accounting policies, it has been classified as an exceptional

item. If the entire contingent consideration is not payable

at the end of the two-year period, any resulting credit will

also flow through the exceptional category.

Tax on the exceptional and non-trading items was a credit

of £3.2 million (FY 2023: £2.9 million). This is driven by the

unwinding of deferred tax liabilities linked to intangible

assets acquired in previous periods, deferred tax relating

to share-based payments, and corporation tax on

corporate transaction costs.

In November 2023 the Group disposed of its NPT

business. The exceptional gain on the disposal totalled

£34.6 million and was offset by related corporate

transaction fees of £2.1 million. More information on

the transaction can be found in notes 6 and 7 of the

consolidated financial statements as well as in the

Co-Chief Executives’ Review.

Net finance costs

Net finance costs for the year were £4.5 million

(FY2023:£3.6 million). The increase is due to the higher

bank base rate during the year compared to the prior

year. The loan balance was significantly reduced in the

year following the sale of the NPT business; this led to

lower interest costs in the second half of the year.

Taxation

A tax charge of £11.5 million (FY 2023: £6.2 million)

was recognised on adjusted profits. This represents an

effective tax rate of 26% (FY 2023: 19%). The Group

also recognised a tax credit of £3.2 million (FY 2023:

£2.9 million) on exceptional and non-trading items,

which resulted in an overall tax charge for the year of

£8.3 million (FY 2023: £3.3million). The increase in the

corporation tax rate in FY 2024 to 25% drove an increase

in tax charges in the year compared to the prior year.

Chief Financial Officer’s review continued

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Our businesses generate considerable tax revenue for the

UK government. For the year ended 31March2024, we

paid corporation tax of £11.3 million (FY2023: £4.9million);

we collected employment taxes of £32.1million (FY

2023: £27.0 million) and VAT of £31.9million (FY 2023:

£24.7million). Additionally, we have paid £1.3 million

(FY 2023: £1.2 million) in business rates. The total tax

contribution of the Group was therefore £76.6 million

(FY2023: £57.8 million), which equates to 38% of revenue

(FY 2023: 35%). Corporation tax paid in the year was

higher due to the fact that the Group is now considered to

be very large for tax payment on account purposes, and so

an element of prior year tax was paid as well as the current

years full year estimated liability. In FY 2025 corporation

tax payments will normalise and will be in linewith the

related income statement charge.

EPS

Basic EPS for FY 2024 grew 240% year on year to 26.2p

(FY 2023: 7.7p) owing to the strong financial performance

of the Group and the gain on disposal of NPT. Basic EPS

for the year excluding the gain on disposal of the NPT

business is 10.5p. which gives growth in the year of 36%.

Adjusted fully diluted EPS grew 21% year on year to

15.3p in FY 2024 (FY 2023: 12.6p), enabled by the strong

revenue growth as well as delivery of further operational

gearing in the business. Excluding the NPT business sold

in November 2023, the equivalent adjusted fully diluted

EPS would be 15.1p in FY 2024 (FY 2023: 12.2p), showing

growth of 24%.

Dividend

A final dividend of 7.0p is being proposed by the Board

(FY 2023: 5.7p). The final dividend, which amounts to

£14.6 million (FY 2023: £11.8 million), will be paid on

23September 2024 to those shareholders on the register

on 23 August 2024.

Cash flow, capital expenditure and financing

Non-GAAP cash flow

31 March 2024

£m

31 March 2023

£m

Operating

Adjusted EBITDA 55.3 42.4

Change in net working capital

2.4 (0.3)

Adjusted operating cash flow (OCF)² 57.7 42.1

OCF conversion 104% 99%

Financing & tax

Net finance expense (4.3) (3.3)

Taxes paid (11.3) (4.9)

Repayment of/proceeds from new loans (44.0) 4.0

Repayment of lease liabilities (2.7) (3.0)

Share-related movements (7.7) (1.0)

Net cash flow after financing (12.3) 33.9

Investing

Disposal/(acquisition) 34.5 (8.3)

Capex (7.5) (5.4)

Net cash flow after investing 14.7 20.2

Dividends paid (18.0) (15.3)

Exceptional items — (1.8)

Movement in cash (3.3) 3.1

Net debt

14.0 55.3

Leverage 0.27x 1.38x

1 Change in net working capital exclusive of corporate transaction costs detailed in note 6 to the consolidated financial statements.

2 Appendix 2 provides a reconciliation of this figure to the operating cash flow presented in the consolidated financial statements.

3 Net debt constitutes long-term borrowings and contingent consideration, less cash. See note 24 to the consolidated financial statements

for a reconciliation ofthisfigure.

XPS Pensions Group plc Annual Report and Accounts 2024

Cash flow, capital expenditure and financing continued

FY 2024 has been another year of strong cash performance

for the Group. Adjusted operating cash flow increased by

£15.6 million driven by a £12.9 million increase in adjusted

EBITDA and a £2.7 million decrease in net working capital

year on year. Overall, this resulted in adjusted operating

cash flow conversion of 104% compared to 99% in the

prior year.

Taxes paid in the year of £11.3 million (FY 2023: £4.9 million)

were significantly higher than the prior year. During the year

the Group became a “very large company” as defined by

HMRC for corporation tax purposes, meaning tax is due in

the year to which it relates rather than six months in arrears

as has previously been the case. Therefore, this re-base, as

well as the increase in headline rate from 19% to 25%, has led

to the increase.

During the year, the Group repaid £44.0 million of the

RCF. £0.2 million was spent on extending the current loan

facility for a further year (to October 2026). Interest paid

on the loan balance amounted to £3.9 million (FY 2023:

£3.0 million), and £0.3 million was paid on interest relating

to leases in the year (FY 2023: £0.3 million), offset with

£0.1million of interest income received. Capital expenditure

in the year amounted to £7.5 million (FY 2023: £5.4 million)

with £1.9 million spent on leasehold improvements and

office fit-outs and the remaining £5.6 million on software

development, enhancements to our platforms, cyber

security, and other IT equipment. £2.7 million relating to

leases was paid in the year (FY 2023: £3.0 million).

In November 2023, the Group sold its NPT business for

cash consideration of £35.0 million, and an additional

£2.0 million in respect of the completion balance sheet;

£2.1 million was paid out in transaction-related fees, and

a further £0.4million was paid out relating to contingent

consideration for prior year acquisitions.

The Group spent £5.6 million (FY 2023: £2.2 million) on

acquiring its own shares via its EBT, to be used to settle

employee share options as they vest. £0.6 million (FY

2023: £0.5 million) was paid to employees as dividend

equivalents on the vesting of share options as well as

incurring £1.5million of employer’s National Insurance.

After paying £18.0 million in dividends, the Group cash

balance decreased by £3.3 million year on year to close at

£10.0million. TheGroup had drawn down £24 million of its

£100 million RCF at 31 March 2024, resulting in net debt of

£14.0 million, adecrease of £41.3 million 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

19 June 2024

Chief Financial Officer’s review continued

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Appendix: Reconciliation of reported/statutory results

toalternativeperformancemeasures (APMs)

In order to assist the reader’s understanding of the financial performance of the Group, it continues to present a range

of results metrics to demonstrate its performance. These include those presented in accordance with International

Accounting Standards (IFRS) and APMs. APMs exclude specific exceptional and non-trading items as set out in note 6

of the consolidated financial statements.

An explanation of the Group’s key APMs has been detailed below:

APM

Closest equivalent

statutorymeasure APM definition and purpose

Adjusted EBITDA

Profit/loss from

operating activities

Definition: Earnings before interest, tax, depreciation and

amortisation excluding exceptional and non-trading items and

excluding the NPT business disposed of in November 2023 as

if adiscontinued operation – see note 7 to the consolidated

financialstatements.

Purpose: A recognised APM which has been central to the business

over many years and through different ownership structures.

Itallows the Group to monitor the underlying trading performance

of the business without the impact of external and exceptional and

non-trading factors distorting the figures.

OCF conversion

Net cash from

operating activities

Definition: The conversion of adjusted EBITDA into cash.

Purpose: Measures how well the Group is managing its operating

cash flows. Unlike net cash from operating activities, it excludes the

impact of tax and exceptional and non-trading items and therefore

allows for a direct and like for like comparison to the Group’s key

profit related APM, adjusted EBITDA.

Adjusted

dilutedEPS

excluding the NPT

business

Diluted earnings

per share

Definition: Reflects the profit after tax, adjusted to remove the impact

of exceptional and non-trading items and the NPT business disposed

of in November 2023. Details of this can be found in note 6 of the

consolidated financial statements as well as in the reconciliations on

the following page of this Chief Financial Officer’s review.

Purpose: Presents an EPS measure used more widely by

investorsand analysts and more in line with how the Group’s

dividends are calculated.

Leverage

Cash and cash

equivalents

Definition: Leverage ratio showing the amount of third-party debt

excluding leases (net of cash held) relative to last twelve months

adjusted pro-forma EBITDA.

Purpose: Management can measure exposure to reliance on third-

party debt. Leverage is the key measure in reporting to the Group’s

banks and driving the interest rate margin which is added to SONIA

to determine the all-in rate payable.

A reconciliation of the Group’s APMs to their closest statutory measures has been provided below:

1. Adjusted EBITDA excluding NPT

31 March 2024

£m

31 March 2023

£m

Profit from operating activities 67.0 22.7

Depreciation and amortisation 12.8 12.4

Gain on disposal of NPT business

(32.5) —

Trading EBITDA in respect of NPT business

(0.5) (1.0)

Other exceptional and non-trading items 8.0 7.3

Adjusted EBITDA excluding NPT 54.8 41.4

XPS Pensions Group plc Annual Report and Accounts 2024

Appendix: Reconciliation of reported/statutory results to alternative performance

measures (APMs) continued

A reconciliation of the Group’s APMs to their closest statutory measures has been provided below continued:

2. OCF conversion

31 March 2024

£m

31 March 2023

£m

Profit from operating activities 67.0 22.7

Depreciation and amortisation 12.8 12.4

Other exceptional and non-trading cash items

8.0 7.3

Gain on disposal of NPT business (32.5) —

Trading EBITDA 55.3 42.4

Net cash from operating activities 42.9 34.5

Income tax paid 11.3 4.9

Cash exceptional and non-trading items

3.5 2.7

Adjusted operating cash flow 57.7 42.1

OCF conversion 104% 99%

3. Adjusted diluted EPS excluding NPT

31 March 2024

£m

31 March 2023

£m

Profit after tax and total comprehensive income for the year 54.2 15.8

Adjustment for exceptional and non trading items (net of tax)

(20.7) 11.3

Profit after tax from operating activities for NPT business

(0.4) (0.8)

Adjusted profit after tax 33.1 26.3

Dilutive weighted average number of shares ('000) 219,621 216,071

Adjusted diluted EPS excluding NPT (pence) 15.1 12.2

4. Leverage

31 March 2024

£m

31 March 2023

£m

Cash and cash equivalents 10.0 13.3

Bank debt (24.0) (68.0)

Contingent consideration — (0.6)

Net debt (14.0) (55.3)

Trading EBITDA 55.3 42.4

Impact of IFRS 16 ignored for bank covenants purposes

(3.0) (2.9)

Pro-forma impact of M&A transactions in year

(0.5) 0.6

Adjusted EBITDA for covenant 51.8 40.1

Leverage 0.27x 1.38x

1 See note 7 of the consolidated financial statements.

2 See note 6 of the consolidated financial statements.

3 This is the cash element of exceptional and non-trading items: National Insurance on share-based payments (note 13 of the consolidated

financial statements) and transaction costs relating to the NPT disposal in note 7 of the consolidated financial statements (FY 2023:

National Insurance on share-based payments and other corporate transaction costs).

4 See note 24 of the consolidated financial statements.

5 The Group’s banking facilities agreement ignores IFRS 16 for covenant test purposes. Debt excludes lease-related liabilities and to be on

aconsistent basis adjusted pro-forma EBITDA includes rent-related costs as an operating expense unlike in the statutory income statement

where they are treated as depreciation of right-of-use assets with a related financing cost.

6 Pro-forma-related adjustments reflect the impact of M&A-related transactions as if they had been included for the whole financial

year. The FY 2024 adjustment is to reflect the NPT sale taking place on 1 April 2023 (i.e. it removes the EBITDA that the NPT business

contributed between 1 April 2023 and the point it was sold on 20 November 2023. The FY 2023 adjustment is to present the contribution

that the Penfida acquisition would have made had the business been acquired on 1 April 2022 rather than the actual acquisition date of

20September 2022.

Chief Financial Officer’s review continued

Principal risks and uncertainties

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

The risk management controls frameworks deployed across the Group

continues to be developed and enhanced, ensuring it supports the growth

of the business. Effective risk management provides the Group with

fully articulated risks, enabling us to identify and embrace opportunity.

Theyalsoensure that internal controls are reviewed and developed to

protect the Group and its customers from new and developing threats

suchas cyber crime.

Over the last year our risk management and internal

controls frameworks have continued to operate effectively,

enabling us to respond to the evolving risks inherent

in day-to-day operations, alongside new opportunities

and initiatives. The Group’s risk environment is regularly

reviewed by senior management alongside the internal

controls frameworks in place. This ensures that they

continue to be effective, and enhancements to address

changes in the external threat environment are considered.

Internal and external assurance frameworks support

this, ensuring regular, planned reviews to validate

control design and effectiveness, as well as highlighting

opportunities for further improvements. Cyber crime

continues to be a key focus for senior management,

recognising the threats to the Group from phishing,

ransomware and supply chain attacks.

We continuously develop our risk management capabilities

to support the Group and address the evolving threats in

our market. Since the last report there have been anumber

of significant enhancements, including:

• the rollout of a new Risk Management Policy which

provides clear articulation to all staff of how the

key components of the Group’s risk management

framework support its objectives. The introduction

of new risk reporting templates will further support

the business to articulate its risk profile, alongside

highlighting and reporting on the effectiveness of

key internal controls. This has been supported by

an externally facilitated risk review project with

senior management, resulting in a refreshed Group

risk register;

• the enhancement of the existing external assurance

frameworks to ensure that they continue to meet the

developing needs of the business. This supported the

recertification to the PASA pensions administration

standard and the successful triennial ISO 27001

information security audit;

• the development of the existing Risk team, through

the recruitment of an additional subject matter expert,

alongside supporting existing team members to

achieve and maintain this status. This ensures that the

Group can effectively maintain its risk and controls

frameworks and provide effective expert support and

challenge to business areas as required;

• the development of the existing ISO 27001 information

security frameworks to recognise new and emerging

threats. This included those inherent with the in-house

development of the Aurora platform and the controls

frameworks required to support ongoing secure design,

development and implementation;

• the development of the Group’s ability to effectively

respond to a major cyber incident. This was done

through the introduction of Board-down testing,

supported by an ongoing programme of activities to

ensure operational resilience capabilities are in place,

maintained and tested on a regular basis;

• the development of the internal controls frameworks

in place to manage key risks such as fraud through

theintroduction of updated policies and guidance.

Thisincludes the identification and documentation of

key controls as well as mandated controls, escalation

and reporting processes;

• the development of the existing third-party assurance

framework, recognising the importance of supply chain

risk in relation to cyber and business resilience risks;

• the development of the Environmental Management

System to both identify and manage our impact on the

environment. This includes supporting TCFD reporting,

assessment of the risks associated with climate change,

and the Group’s net zero strategy; and

• the ongoing development of the executive-level Risk

Management Committee to support the identification

of new and emerging risks as part of its quarterly

meeting cycle. This includes inviting external experts

to facilitate horizon scanning and deep dives on

specific topics.

Managing risk effectively

XPS Pensions Group plc Annual Report and Accounts 2024

Board of Directors/Audit & Risk Committee

Operational Management

Firstline

Control of risks

Confirmation of

control effectiveness

Strategic overview

of controls

Key activitiesOutcomes

• Implement governance, risk

and control frameworks

• Measure and manage

projectperformance

• Manage risk (within agreed

riskappetite)

• Design governance, risk

andcontrol framework

• Monitor adherence

toframework

• Provide timely,

balancedinformation

• Review framework application

objectively

• Offer independent oversight

of first and second lines

Senior management/Risk Management Committee

Risk Management

Second line

Internal Audit

Third line

The Group continues to operate a three lines of defence

model which supports the promotion of effective risk

management taking into account the Group’s risk

appetite. The Board, with the support of the Audit &

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, interest rates,

orliquidity.

• Competition – risks of change to the demand side of

the business due to changes in customer demands

or competitors, likely to influence the entire industry,

e.g. aggressive competitor pricing, consolidation

trends, major technological innovation, or substitute

technologies. These changes may not directly affect

the Group but could influence the entire industry.

• Legal and regulatory – risks associated with the

criminal and civil judicial processes and contract

law, e.g. not identifying changes required by new

legislation,increased litigation in a particular field,

orindustrial accidents.

• Environmental – risks associated with climate-related

change, how these changes can impact business

models and how businesses in turn can manage the

impact of their operations on the environment.

Principal risks and uncertainties continued

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

The material risks and uncertainties which are either unique to the Group or apply to the pensions industry in which it

operates 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 Key mitigations Rationale for change

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.

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.

Stable

Strategic planning and execution

Description Key mitigations Rationale for change

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.

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.

XPS has continued to

build out its frameworks

to design and successfully

deliver market-leading

innovation and technology

change. This continues to be

evidenced by the ongoing

rollout of the new Aurora

administration system.

Financial performance

Description Key mitigations Rationale for change

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.

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.

The Group has continued to

improve its budgeting and

forecasting frameworks,

supporting growth. This is

evidenced by consistent

delivery of financial results

in line with or ahead of

market consensus.

Change during the year:

Increased risk

Stable

Improving

Links to strategy:

Regulatory change

Expand services

Grow market share

Mergers and acquisitions

XPS Pensions Group plc Annual Report and Accounts 2024

Errors

Description Key mitigations Rationale for change

Risks relating to material

mistakes made by staff,

including non-compliance with

established procedures, e.g.

failure to calculate benefits

correctly or not following peer

review processes. These may

not crystallise immediately

and only become apparent

a number of years after

completion of work.

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 key processes.

Higher risk work is identified with peer review and

additional sign-off required, with regular quality audits

to confirm processes are being followed correctly.

Insurance arrangements are in place to limit the loss

should an error occur. Root cause analysis is used to

identify where controls improvements are required,

which are monitored through to implementation.

Stable

Theft and fraud (financial and physical assets)

Description Key mitigations Rationale for change

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.

The Group deploys robust physical and systems access

controls, along with enforcing segregation of duties to

prevent individuals from making fraudulent payments

ortransfers.

These controls are supported with staff vetting, training

and awareness and control frameworks are regularly

independently audited.

Insurance arrangements are in place to protect against

larger claims.

Controls frameworks

continue to be developed

to manage this risk,

addressing controls

enhancements identified

through audits and internal

risk assessments. We

continue to see attempts

to impersonate pension

scheme members,

albeit in small numbers.

Theseattempts are

identified and prevented

through the existing

controls frameworks.

Links to strategy:

Regulatory change

Expand services

Grow market share

Mergers and acquisitions

Principal risks and uncertainties continued

Change during the year:

Increased risk

Stable

Improving

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

Information/cyber security

Description Key mitigations Rationale for change

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.

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 policies and procedures, supported by

a dedicated Cyber 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 a programme of training and testing initiatives,

e.g. phishing awareness. The Group has dedicated

business continuity frameworks and capabilities to

minimise the impact of incidents affecting the Group’s

data, facilities or systems. These frameworks include

incident management capabilities to allow the Group

to effectively coordinate and communicate with

stakeholders in the case of a significant incident.

The Group has continued

to develop its capabilities,

recognising the continued

evolution of this risk.

These activities are

supported by regular

threat assessments to

ensure controls continue to

address new and emerging

threats. Theannual cyber

programme plans the

implementation of new

technical controls to meet

these threats. It also takes

into account the findings

of regular penetration

and purple team testing.

Additional assurance is

provided through the

existing certification

frameworks including ISO

27001 and Cyber Essential

Plus certifications and

by having appropriate

insurance policies in place.

Staff/human resources

Description Key mitigations Rationale for change

Risks relating to our people,

e.g. compensation, retention,

succession planning, skills

andcompetence and

management capability.

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

to aid retention. Regular key staff reviews ensure succession

planning is kept up to date and remains appropriate. Staffing

requirements are considered as part of the strategy and

budgeting process to ensure alignment with business plans.

Stable

Third party supplier/outsourcing

Description Key mitigations Rationale for change

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.

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

impactsof outages or failure.

Stable

XPS Pensions Group plc Annual Report and Accounts 2024

Client engagement

Description Key mitigations Rationale for change

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.

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.

Stable

Business conduct and reputation

Description Key mitigations Rationale for change

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client complaint.

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.

Stable

The Directors confirm that they have carried out a

robustassessment of the principal risks facing the Group,

including those that would threaten its business model,

future performance, solvency or liquidity. Theprincipal

risks are those listed above. The Directors do not

believe there to be any additional emerging risks that

are not already addressed within the principal risks and

uncertainties section.

The Directors confirm in the Directors’ Responsibility

Statement 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.

Principal risks and uncertainties continued

Links to strategy:

Regulatory change

Expand services

Grow market share

Mergers and acquisitions

Change during the year:

Increased risk

Stable

Improving

Strategic report

XPS Pensions Group plc Annual Report and Accounts 2024

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 96 of the Directors’ Report.

The Directors have assessed the long-term prospects of the

Group based upon business plans and cash flow projections for

the three-year period ending 31 March 2027.

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 October 2025. A 16-month

period from the sign-off of the accounts is used for the going

concern review as the Group produces more detailed

budgets

and forecasts for this time frame which have proved to be

very reliable in the past. October is typically the lowest point

in the Group’s working capital and cash cycle, which is why

the going concern review extends to October 2025.

The Group’s current revolving credit facility extends to

October 2026, which is within the viability period. Based

on the previous refinancing experience and the financial

strength of the Group, the Directors are confident that

a new facility will be in place before the current facility

comes to an end.

The forecasts prepared 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 the Group’s revenue forecasts. A high percentage

of the Group’s revenue relates 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 47 to 52. In addition,

note 2 on page 121 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 49 to 52.

The Group had £10 million of cash at 31 March 2024 and a

£100 million committed financing facility with an accordion

of £50 million until October 2026. At 31 March 2024,

£24million of this facility was drawn. The facility is subject

to two 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.

Having reviewed the identified risks, the Directors are

confident that the business is robust and resilient enough

to tackle any challenges that may arise over the three-

year viability period in relation to the Group’s exposure to

credit risk, liquidity risk and market risk.

With regards to market risk, the Directors have assessed

the current market conditions and the potential impact of

regulatory changes, as discussed in the market overview

section on pages 8 to 9. The Directors assessment of the

market is that there is considerable opportunity, and any

risks identified are managed by the Group’s risk strategy

and are not considered to be a material risk to the

Group’s viability over the next three years.

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 the

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

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’s 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.

This Strategic Report has been approved by the Board

and signed by order of the Board:

Paul Cuff

Co-Chief Executive Officer

19 June 2024

Ben Bramhall

Co-Chief Executive Officer

19 June 2024

XPS Pensions Group plc Annual Report and Accounts 2024

“ The Board’s primary focus is leading the XPS Group to

deliver sustainable and profitable growth, and long-term

value for our shareholders, whilst upholding high standards

of corporate governance.”

Seven consecutive years of revenue growth may steal

the headlines at the front end of this Annual Report,

but it is not the only track record that we are proud of.

We are also building a record of growing sustainably,

particularly in terms of shaping and supporting safe

pension outcomes as well as being rated highly by our

people. Underpinning these is our adherence to high

corporate governance standards. Overseeing a culture of

strong governance is the Board’s responsibility; leading

by example is key.

Appointments

Leading by example starts with the make-up of the

Boarditself. In December 2023, we welcomed

ImogenJoss and Martin Sutherland as Independent

Non-Executive Directors after a comprehensive

appointment process. Both have high-level leadership

and oversight experience and skill sets that complement

thoseof the existing Directors, thereby ensuring the

Board continues to havethe resources it needs to

discharge its responsibilities effectively.

Directors’ remuneration

Leading by example also concerns how Directors are

remunerated. During the year, we undertook an extensive

consultation exercise, which saw myself and Margaret

Snowdon OBE, Chair of the Remuneration Committee,

engage with our 20 largest shareholders accounting for

c.85% of the Group’s issued share capital. The resultant

new Directors’ Remuneration Policy, which takes on

board shareholder views and introduces an element of

bonus deferral, was approved by shareholders at the

March 2024 General Meeting.

Continual improvement

As a Board, we recognise high governance standards are

there to be continually improved upon. In line with this,

we have commenced the process of incorporating the

changes included in the new UK Corporate Governance

Code, which was published in January 2024, ready for

this to apply to XPS in FY 2026. For now, the following

report 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.

Alan Bannatyne

Chairman

19 June 2024

Alan Bannatyne

Chairman

Chairman’s introduction

Robust corporate governance is vital

forsustainable growth and success

The Board is committed to maintaining high standards of corporate

governance, with an increasing focus on sustainability.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Statement of compliance with the UKCorporate Governance Code 2018

In FY 2024, the Company has applied the principles and complied with the provisions of the UK Corporate

Governance Code 2018 as they applied to it as a “smaller company” (defined in the Code as being a company

below the FTSE 350), during the year. 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 56 to 60;

(ii) division of responsibilities: pages 60 to 61;

(iii) composition, succession and evaluation: pages 56 to 62;

(iv) audit, risk and internal control: pages 66 to 69; and

(v) remuneration: pages 72 to 95.

XPS Pensions Group plc Annual Report and Accounts 2024

Board of Directors

The Board is composed of nine members, consisting

of the Chairman, three Executive Directors and five

Independent Non-Executive Directors.

Appointed: April 2014

Committee membership

n/a

Key strengths

• Qualified actuary with

25 years of experience

in the pensions

industry and Scheme

Actuary to a number of

large pension schemes

• Responsible for the

day-to-day operation of

the business, including

provision of services

to existing clients,

revenue generation

and the Group’s

peoplestrategy

Key experience

• Eight years at KPMG

• 18 months leading

pricing and deal team

at Lucida, a former

bulk annuity provider

Current external listed

company directorships/

keyappointments

• None

Meetings attended

13/14

Appointed: October 2016

Committee membership

n/a

Key strengths

• Qualified actuary

with 20+ years of

experience in the

pensions 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

Key experience

• Partner at KPMG

2008–2016

• Head of KPMG London

pensions team prior to

joining XPS

Current external listed

company directorships/

keyappointments

• None

Meetings attended

14/14

Appointed:

November2022

Appointed to Board:

January2017

Committee membership

Key strengths

• Chartered accountant

• Recent and relevant

financialexperience

Key experience

• Qualified with Deloitte

& Touch e

• Previous Commercial

Manager of Primecom

and Financial Director

of Foresight – both

subsidiaries of Primedia

• 20+ years at Robert

Walters plc, Group

Financial Controller

2002–2007, Chief

Financial Officer

2007–2023

Current external listed

company directorships/

keyappointments

• None

Meetings attended

12/12

Ben Bramhall

Co-Chief

ExecutiveOfficer

Appointed: November

2022

Appointed to Board:

January 2017

Committee membership

Key strengths

• 40+ years of

experience inthe

pensions industry

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/

keyappointments

• Non-Executive

member of Phoenix

Group With Profits

Committee

• Advisory Board

member of Moneyhub

Financial Technology

Limited

• Chair of Pension

Scams Industry Group

• President of

the Pensions

Administration

Standards Association

Meetings attended

13/13

Appointed: July 2019

Committee membership

Key strengths

• Chartered accountant

with 25+years of

experience

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/

keyappointments

• None

Meetings attended

14/14

Paul Cuff

Co-Chief

ExecutiveOfficer

Snehal Shah

Chief Financial Officer

Alan Bannatyne

Independent

Non-Executive

Chairman

Margaret

Snowdon OBE

Senior Independent

Non-Executive

Director

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Key to Committee membership

Chair

Member

Audit & Risk

Remuneration

Nomination

Sustainability

Appointed: May 2019

Committee membership

Key strengths

• Chartered accountant

• 30+ years of

experience in financial

services including

audit, corporate

finance, investment

banking and asset

management

• 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

• Non-Executive

Director of Gresham

House plc until

December 2023, where

she chaired the Audit

Committee

Current external listed

company directorships/

keyappointments

• Senior Independent

Non-Executive

Director of Marex

Group since July 2021

where she chairs the

Audit & Compliance

Committee

• Non-Executive

Director of CMC

Markets plc since

September 2017,

where she chairs

the Remuneration

Committee

• Non-Executive

Director of City of

London Investment

Group plc

Meetings attended

14/14

Sarah Ing

Independent

Non-Executive

Director

Appointed:

December2023

Committee membership

Key strengths

• Experience working for

a range of technology

and information

services companies

Key experience

• Senior Independent

Director of Gresham

Technologies plc

until2020

Current external listed

company directorships/

keyappointments

• Chair of Grant

Thornton UK LLP

since 2021, where

she was previously

Non-Executive

Director from 2017

to2021

• Senior Independent

Non-Executive

Director of Fintel plc

since 5January 2021,

where she chairs

theNomination,

Remuneration and

ESGand Wellbeing

Committees

• Non-Executive

Directorof Envetec

Sustainable

Technologies

since2022

• Non-Executive

Director of SThree plc

since 2022

• Non-Executive

Director of IPSX since

2017, where she chairs

the Remuneration

Committee

Meetings attended

2/4

Appointed:

December2023

Committee membership

Key strengths

• Delivering growth in

services and consulting

businesses through

product innovation,

market diversification

and geographical

expansion

• Extensive international

experience at senior

management and

director level

Key experience

• Chief Executive Officer

of Reliance Cyber Ltd

2020–2023

• Chief Executive Officer

of De La Rue plc

2014–2019

• Managing Director of

Detica Ltd 2008–2014

Current external listed

company directorships/

keyappointments

• Chair of Logiq

Consulting Ltd

since2023

• Non-Executive

Director of Forterra plc

since2017

• Non-Executive

Director of Alliance

Pharmaceuticals

Ltd since 2023,

where he chairs

the Remuneration

Committee

Meetings attended

3/4

Appointed: February

2023

Committee membership

Key strengths

• Experienced Irish

qualified actuary

• A wealth of experience

across consulting,

insurance companies

and professional

bodies

Key experience

• Head of Life & Health

Pricing UK at Swiss Re

until 2020, where she

spent eight years

Current external listed

company directorships/

key appointments

• Non-Executive

Director of State Street

Fund Services (Ireland)

since 2021, where

she chairs the Audit

Committee

• Non-Executive

Director of Athora

Ireland plc since 2020,

where she chairs the

Risk Committee

• Chair of ECCU

Assurance Company

since 2023, where she

has served as Director

since 2018

• Non-Executive

Director of White

Horse Insurance

Ireland since 2021

• Non-Executive

Director of the

Irish Auditing

and Accounting

Supervisory Authority

since 2020

• Chair of Irish charity

MABS Support CLG

Meetings attended

14/14

Aisling Kennedy

Independent

Non-Executive

Director

Imogen Joss

Independent

Non-Executive

Director

Martin Sutherland

Independent

Non-Executive

Director

XPS Pensions Group plc Annual Report and Accounts 2024

Board and Committee composition and operation

The Board is composed of nine

members, consisting ofthe Chairman,

three executive Directors and five

Independent Non-Executive Directors.

The Company complied 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).

Weacknowledge that the Group will become a

constituent of the FTSE 250 effective from 24 June 2024.

We will report on our compliance with the Code, as this

now applies, within our next annual report and accounts.

Imogen Joss and Martin Sutherland were appointed as

Independent Non-Executive Directors as of 7 December

2023, following a recruitment process supported by

Russell Reynolds Associates. Other than supporting the

recruitment of the Group’s Chairman and Non-Executive

Directors, Russell Reynolds Associates has no other

connection to the Group.

The Board considers that the Chairman, Alan Bannatyne,

Senior Independent Director, Margaret SnowdonOBE,

and Non-Executive Directors, Sarah Ing, AislingKennedy,

Imogen Joss and Martin Sutherland, are eachindependent

of management in character, judgement and opinion and

are free from relationships or circumstances that could

affect their judgement. The Board benefits from the wide

experience of its Non-Executive Directors. Biographical

details of all Board members are given on pages 56 to 57.

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 on

pages 66 to 69

The role of the Remuneration Committee is to assist

the Board to fulfil its responsibility to shareholders to

ensure that the Remuneration Policy and practices of the

Company reward fairly and responsibly, with a clear link

to corporate and individual performance, having regard to

sustainability and statutory and regulatory requirements.

The Committee recommends the policy the Board should

adopt on executive remuneration and, within the terms

of the Directors’ Remuneration Policy approved by

shareholders at the AGM in March 2024, determines and

agrees with the Board the levels of remuneration for each

of the Executive Directors, the Company Chairman and

the Group’s Executive Committee.

Further details are given in the Remuneration Report on pages 72

to 95

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 of skills, 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 63 to 65

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 oversees 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 70 and 71

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 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

smaller (defined as below FTSE 350) UK listed company’s

remuneration and audit committees should comprise at

least two 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 of their

duties, including the development and implementation

of strategy 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

andHR Director.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Group governance at a glance

Board composition

Independence

Gender

Non-Executive tenure

Age

Ethnicity

Non-Executives 67%

Executives 33%

Male 56%

Female 44%

Less than

3 years 50%

3–6 years 17%

6+ years 33%

41–50 33%

51–60 45%

61+ 22%

White 89%

Minority

ethnic group 11%

Board members’

keyskills:

Mergers and acquisitions

Risk management

Financial reporting

Workforce engagement

Prior FTSE experience

Pensions industry

Cyber security

Technology

Investor relations

Marketing

Corporate governance

Environmental and social

sustainability

Business development

Operational management

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 when necessary. During the year, all

Board meetings were attended by all Directors, with the

exception of meetings where conflicts of interest were

present, or prior commitments prevented attendance.

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 in depth.

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.

XPS Pensions Group plc Annual Report and Accounts 2024

Board and Committee composition and operation continued

Board operation and meetings continued

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

or Company Secretary 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 2024 considered the internal controls assurance

framework used during the financial year, concluding that

it was sound and appropriate for the business.

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

At XPS, our values are embedded in everything we

do. The Board recognises the importance of its role in

setting the tone and monitoring 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.

Division of 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.

There is a formal schedule of matters reserved for Board approval

which is subject to annual review 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 and standards;

• 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 risk management;

• contracts which are material strategically or by reason

of size or duration;

• calling of shareholder meetings and related documentation;

• changes to the membership of the Board and

itsCommittees;

• Remuneration Policy for the Directors and

seniormanagement;

• introduction of new share incentive plans or major

changes to existing plans; and

• the Company’s overall corporate governance arrangements.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Board division of responsibilities

Paul Cuff

Ben Bramhall

Margaret Snowdon OBE

Alan Bannatyne

Chairman

•

Leads the Board and manages the effective

leadership and governance of the Board

• Provides direction and focus on business

strategy, performance, value creation

andaccountability

• 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

key stakeholders

Paul Cuff

Co-Chief Executive Officer

•

Primarily responsible for raising the profile

of XPS in the market and generating new

business, both in traditional service areas and

in the development of new services as the

market evolves

• Develops the Group’s strategy with regard to

M&A opportunities and technology investment

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 and the Group’s people strategy

• Develops the Group’s internal strategy to

pursue large opportunities within themarket

• The Board considers that the Co-CEO

structure works well with clear accountability

of roles between the Executive Directors

Margaret Snowdon OBE

Senior Independent

Non-Executive Director

•

Acts as a sounding board for the Chairman and

other Directors

• Leads the annual review of the Chairman’s

performance

• 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 such contact

isinappropriate

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 and regulations

• The Co-CEOs, with the support of the CFO,

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

XPS Pensions Group plc Annual Report and Accounts 2024

Board and Committee composition and operation continued

Annual General Meeting

The Company’s Annual General Meeting (AGM) will take

place at 1.00pm on Thursday 5 September 2024 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 to answer any

questions put to them by shareholders.

2023 AGM and 2024 GM

At the Company’s 2023 Annual General Meeting all

resolutions were passed and there was strong support

for the Directors’ Remuneration Report reflecting the

application of the 2020 Directors’ Remuneration Policy.

Ahead of the 2023 AGM, the Company withdrew the

resolution to seek shareholder approval of the Directors’

Remuneration Policy 2023 in favour of continuing to

engage with shareholders.

The Remuneration Committee then continued to

undertake an extensive shareholder consultation, ahead

of the policy being approved at the March 2024 General

Meeting (GM). During the consultation, the Group’s 20

largest shareholders, covering c.85% of the Company’s

issued share capital and key proxy advisory firms, were

invited to meet with the Chairman and the Remuneration

Committee Chair. The policy approved at the GM is

effectively a continuation of the previously approved

policy, introducing an element of bonus deferral in

line with evolving market practice, reflecting that the

overwhelming majority of shareholders consulted felt

that the existing policy was appropriate. The Board

acknowledges that the policy received less than 80%

support at the GM, and recognises that a small number

ofshareholders have differing views.

Following the 2023 AGM, during which the resolutions

to re-elect Alan Bannatyne (Chairman) and Margaret

Snowdon OBE (Senior Independent Non-Executive

Director and Remuneration Committee Chair) received

below 80% support, the Company has appointed two

additional Independent Non-Executive Directors, Imogen

Joss and Martin Sutherland to further strengthen the

Board, and continued to engage with shareholders

regarding Board composition.

Board evaluation

The Board acknowledges that the Code requires regular external Board evaluations (as a company below the FTSE

350) and conducted an external Board evaluation in 2023, facilitated by Ceradas Limited. All Board members engaged

with the process, in addition to a number of the senior management team. Ceradas Limited has no other connections

to the Company or the Directors.

In 2024, the Board completed an internally facilitated evaluation, using questionnaires agreed by the Chairman and

Company Secretary. The Senior Independent Director also met with each Board member to appraise the performance

of the Chairman. The Board discussed the outcome of the evaluation at the May 2024 Board meeting, and agreed

actions as follows:

• the Remuneration Committee to receive increased internal support from the HR function;

• the Nomination Committee to agree the best way to ensure smooth transition when the Chairman and Senior

Independent Director reach nine years’ tenure in January 2026; and

• the Sustainability Committee to report formally to the Board annually.

2023 Board evaluation outcomes and progress

The 2023 externally facilitated evaluation, supported by Ceradas Limited, identified the following areas for

improvement; progress is reported as follows:

Actions from the 2023 evaluation Improvements

The Board agenda to be developed to optimise the focus

ofdiscussions.

The Board’s agenda has been re-ordered and a clearer

focus on strategic items established.

Nomination Committee to consider planning for

Non-Executive Director succession in the next three years.

In recognition of the Group’s Chairman, Alan Bannatyne,

and Senior Independent Director, Margaret Snowdon OBE,

reaching nine years’ tenure in January 2026, the Nomination

Committee appointed two additional Independent

Non-Executive Directors to the Board in December 2023.

The Nomination Committee reviews the Board, including

Non-Executive Director, succession plan bi-annually.

More formal feedback from the Employee Engagement

Group to be shared with the Board.

The Designated Employee Engagement Non-Executive

Director, Margaret Snowdon OBE, feeds back to the Board

after each Employee Engagement Group meeting.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Alan Bannatyne

Chair of the Nomination Committee

Nomination Committee

This year, we strengthened our Board further with the

recruitment of two additional Non-Executive Directors who

bringexcellent skill sets to complement the Board.

Dear Shareholder,

I am pleased to present the report of the Nomination

Committee for the year ended 31 March 2024.

The Committee has met four times during FY 2024

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 members of the Committee are

Margaret Snowdon OBE, Sarah Ing, Aisling Kennedy and

myself as Chair.

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.

Succession planning forasustainable future

Committee membership Attendance

Chair

Alan Bannatyne 4/4

Members

Margaret Snowdon OBE 4/4

Sarah Ing 4/4

Aisling Kennedy 4/4

XPS Pensions Group plc Annual Report and Accounts 2024

Non-Executive Director appointments

During the year, the Nomination Committee reviewed

the composition of the Board and Committees and the

Non-Executive Director succession plan and agreed to

commence a search for two additional Non-Executive

Directors. The recruitment process was led by the

Nomination Committee and external search firm Russell

Reynolds Associates, with which the Group and the

Directors have no other connections. Following the

completion of a successful recruitment process, we were

delighted to welcome Imogen Joss and Martin Sutherland

to the Board on 7 December 2023. Imogen and Martin also

joined the Remuneration and Audit & Risk Committees

at the same time. The Committee is satisfied that the

Board and its Committees have the right balance of skills,

experience, independence and knowledge required.

Recruitment process

•

The Nomination Committee identified key skills required.

• Russell Reynolds Associates commenced a search

forcandidates.

• A shortlist of candidates was drawn up by Russell

Reynolds Associates.

• Alan Bannatyne, Group Chairman and Nomination

Committee Chair, interviewed a number of candidates.

• The Nomination Committee interviewed Imogen Joss

and Martin Sutherland.

• The Executive Directors met with Imogen Joss and

Martin Sutherland.

• All Directors fed back at a Nomination Committee

meeting, and agreed to appoint both Imogen Joss

and Martin Sutherland as Independent Non-Executive

Directors and members of the Remuneration and Audit

& Risk Committees.

Board evaluation

During the year, an internally facilitated Board evaluation

was completed; further details of the process and

the outcomes can be found on page 62. The Group

conducted an externally facilitated Board evaluation

supported by Ceradas Limited in 2023, and will continue

to conduct an externally facilitated evaluation every

three years going forward as required by the Corporate

Governance Code.

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, the Non-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 will be kept under review,

atleast bi-annually.

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.

Nomination Committee continued

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Diversity, equality and inclusion

I am proud to confirm that XPS complies with the

requirements of the FCA’s diversity listing rules, with

over 40% female representation on our Board (44%),

onesenior board position held by a female and one Board

member from an ethnic minority background. Whilst

we recognise that XPS has further progress to make

in relation to the diversity of our Board and executive

management, we are pleased to have made progress

inrecent years and continue reporting compliance with

the listing rules. We have also committed to 37% of our

senior management team being female by 2028 and are

pleased to report good progress this year, with female

representation increasing to 35% (FY 2023: 31%).

The Company has an established Inclusion and Diversity

Committee, championed by Non-Executive Director

Margaret Snowdon OBE and chaired by a senior female

within the Group. The Committee has made great

progress, has a significant impact across the business and

is a key channel of communication and engagement for

employees and management. You can read more about

the Group’s I&D strategy and commitment to further

progress on page 25 of our Sustainability Report.

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 continued to

recruit into the 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.

Alan Bannatyne

Chair of the Nomination Committee

19 June 2024

Table 1. Reporting table on sex/gender representation as at31March 2024

Number

of Board

members

Percentage

of the

Board

Number

of senior

positions

on the Board

(CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage

of executive

management

Men 5 56% 4 7 78%

Women 4 44% 1 2 22%

Not specified/prefer not to say — — — — —

Table 2. Reporting table on ethnicity representation as at31March 2024

Number

of Board

members

Percentage

of the

Board

Number

of senior

positions

on the Board

(CEO, CFO,

SID and Chair)

Number in

executive

management

Percentage

of executive

management

White British or other White (including minority White groups) 8 89% 4 8 89%

Mixed/multiple ethnic groups — — — — —

Asian/Asian British 1 11% 1 1 11%

Black/African/Caribbean/Black British — — — — —

Other ethnic group, including Arab — — — — —

Not specified/prefer not to say — — — — —

Executive management is defined as the XPS Executive Committee.

This data was obtained from HR data held by the Group.

XPS Pensions Group plc Annual Report and Accounts 2024

Audit & Risk Committee

Sarah Ing

Chair of the Audit & Risk Committee

The Audit & Risk Committee continues to provide independent

oversight of the Group’s financial reporting procedures,

riskmanagement and internal control framework.

Membership of the Committee

Imogen Joss and Martin Sutherland were appointed to

join the Board and the Committee in December 2023,

and the Committee members are now Margaret Snowdon

OBE, Aisling Kennedy, Imogen Joss, Martin Sutherland

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 I have

recent relevant financial experience as can be seen in

our biographies included on pages 56 and 57 of the

Annual Report.

The Executive Directors are invited to each meeting

as well as the Company’s Non-Executive Chairman,

Chief Information Officer, Head of Risk, General

Counsel, Financial Controller, and other members of

themanagement team as the agenda dictates.

The Committee’s performance evaluation was conducted

as part of the wider Board evaluation, you can read about

this on page 62.

Delivering independentoversight

Committee membership Attendance

Chair

Sarah Ing 4/4

Members

Margaret Snowdon OBE 4/4

Aisling Kennedy 4/4

Imogen Joss 1/1

Martin Sutherland 1/1

Dear Shareholder,

I am pleased to present the report of the Audit &

Risk Committee for the year ended 31 March 2024.

The Committee met four times during FY 2024

andintends to continue to meet at least three times

annually. All meetings were attended by all members

oftheCommittee.

Significant accounting matters considered during the year

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 life 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 LLP’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

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

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 LLP 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

tradereceivables.

Revenue recognition, accrued income and trade receivables

Matters considered

During the year, the Group disposed of its defined

contribution master trust, National Pension Trust (NPT).

The transaction completed on 20 November 2023

for an initial consideration of £35 million with an

additional £7.5 million payable contingently based on

the future performance of NPT.

The trade and transaction-related income and costs

are not presented as a discontinued operation on

the face of the consolidated income statement, as

the NPT business does not meet the criteria set

out in IFRS 5 (it does not constitute a separate

cash-generating unit).

Further information can be found in note 7 to the

financial statements on page 123.

Action

The Committee has reviewed management’s

assessment of the fair value of the assets and

liabilities disposed of and the resulting profit

on disposal. The Committee has reviewed the

disclosures in respect of the disposal and considers

the accounting and disclosures to be appropriate.

Business disposals

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

£15.0 million (FY 2023: £14.2 million). For more details,

see note 6 to the financial statements on page 123.

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 LLP as

part of its audit in this area and is satisfied.

Presentation and disclosure of exceptional and non-trading items

Matters considered

The Group received a letter from the FRC

disclosing the results of a review undertaken of the

Annual Report and Accounts for the year ended

31March 2023. Whilst the FRC suggested some

improvements could be made to aid a reader’s

understanding of the accounts, it was also clear

that it did not have any specific questions or

queries to raise.

Action

The Group has considered all points raised by

the FRC and has implemented changes in the

31March 2024 Annual Report and Accounts where

appropriate. The Committee, in consideration with the

Group’s auditors, has reviewed the changes made by

the Group and has sent an acknowledgement to the

FRC in response to their letter.

Letter from the Financial Reporting Council (FRC)

XPS Pensions Group plc Annual Report and Accounts 2024

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, and BDO LLP have begun the process

to identify a successor, to ensure appropriate handover

of the audit partner. During FY 2021, the Committee

undertook an audit tender exercise and BDO LLP were

retained as the Company’s auditor.

The Committee is responsible for making ran assessment 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 122.

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, and a closed session between the

Audit & Risk Committee and the audit partner is held at

the beginning of each Committee meeting, without the

Executive Directors and management team present.

The audit partner is also invited to attend the Committee

meetings for the duration of the meeting. 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 anti-money laundering (AML) controls and

the integration of the recent Michael J Field acquisition,

with no significant control weaknesses identified.

The Internal Audit program is integrated with the existing

framework of internal and external assurance activities,

e.g. CE+, AAF, IoA QAS, which are carried out by the

Risk and Compliance teams. These activities focus on

the design and effectiveness of internal controls for

keyprocesses.

Audit & Risk Committee continued

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

“ The robust risk management and

internal control framework deployed

across the XPS Group ensures visibility

of existing and emerging risks.”

Sarah Ing

Chair of the Audit & Risk Committee

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 2024 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.

Effective 24 June 2024, the Group will become a

constituent of the FTSE 250. The FRC’s minimum

standard for Audit Committees and the External Audit

will now apply to the Group on a comply or explain basis.

We will report on this as required within our next annual

report and accounts.

Risk management and internal control

The existing risk management and internal control

framework deployed across the Group continues to

be developed and enhanced to ensure it manages

existing and emerging risks to the XPS Group. Effective

communication of risk appetites and key controls

are supported by clear direction from executive

management, which drives a strong risk culture and

active engagement from staff.

The framework supports a standardised risk management

approach across all businesses and support functions in

the Group, enabling clear and consistent reporting. This

includes a clear articulation of the key controls required

to ensure risks are managed within their stated appetites.

The use of a common approach for all risk types

covers the full spectrum of the Group’s activities,

and supports the achievement of the organisation’s

objectives. Theframework also highlights key processes

and controls, supporting their regular review, with

amendments made as required to reflect the findings of

these reviews. All review findings are recorded centrally

to ensure identified improvements are implemented

consistently across the Group. Executive management

is provided with regular updates on the Group’s overall

risk profile and actions required to keep within appetite.

This is supported by a rolling programme of deep dives

on specific risks at the Risk Management Committee.

These meetings are held on a regular basis and support

the Audit & Risk Committee to ensure that the risk

management and internal control framework meets the

needs of the Group’s stakeholders.

The Risk function supports all businesses within the

Group, ensuring that best practice is applied consistently.

The team is also responsible for co-ordinating the

existing assurance frameworks 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 01/20, IIP

and the IoA Quality Assurance Scheme (QAS). In addition

to these, the Group has also maintained accreditation

against the PASA pensions administration standard.

The Audit & Risk Committee regularly reviews the wider

internal control processes as part of its meeting cycle.

The Committee enlists external support from specialist

advisers to support these reviews when appropriate.

Torecognise the importance of operational resilience and

protection of Group and client assets from cyber risks,

the Committee considers this as a standing item at each

meeting. This includes the performance of key controls

and the independent assurance frameworks in place.

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 scheduled

meeting, or sooner if required. The Group’s Audit & Risk

Committee reviews the policy and process annually to

ensure they remain fit for purpose.

Sarah Ing

Chair of the Audit & Risk Committee

19 June 2024

XPS Pensions Group plc Annual Report and Accounts 2024

Sustainability Committee

Sarah Ing

Chair of the Sustainability Committee

We are embedding sustainability across the business to support our purpose:

to shape and support safe, robust and well-understood pension schemes

for the benefit of people and society. This year we focused on reviewing

our strategic approach to sustainability as well as further developing our

environmental, community and clients and members programmes.

The membership of the Committee

The membership of the Committee during the year

was Margaret Snowdon OBE (Senior Independent

NonExecutive Director), Aisling Kennedy (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 myself as Chair. Martin

Sutherland (Independent Non-Executive Director

appointed to Board on 7 December 2023) attended the

Committee meeting in January 2024 and Imogen Joss

(Independent Non-Executive Director appointed to the

Board on 7 December 2023) attended the Committee

meeting in March 2024 as part of their Board induction

process. Imogen has joined the Committee as a member

since 1 April 2024.

The focus of the Committee

During the year, the Committee tracked the performance

on the Group’s key sustainability issues: our employees,

our environment, our communities, our members and

clients and our governance. Its work plan included the

following focus areas:

1. Refreshed materiality assessment

In an effort to ensure the Group’s sustainability

framework continues to be relevant, the Committee

provided oversight on the completion of a dynamic

materiality assessment. As part of the process, key

stakeholder groups were asked to review which

sustainability issues they thought were priorities and

howthey felt the Group was performing on them.

The Committee discussed the findings of the materiality

assessment twice and approved a refreshed set of

material issues, which are included on page 20.

Strengthening our approach to sustainability

Committee membership Attendance

Chair

Sarah Ing 5/5

Members

Margaret Snowdon OBE 5/5

Aisling Kennedy 5/5

Snehal Shah 5/5

Charlotte West 5/5

Adrian Davison 5/5

Alex Quant 4/5

“ This year we refreshed our materiality and

strengthened our sustainability framework by

taking into account the views and interests of

key stakeholders.”

Dear shareholder,

I am pleased to present the report of the Sustainability

Committee for the year ended 31 March 2024.

TheCommittee met five times during the year and

all meetings were attended by all members, with the

exception of one meeting due to planned annual leave.

The Committee intends to continue to meet at least

twiceyearly with additional meetings as required.

The Sustainability Committee takes into account the views

and interests of all key internal and external stakeholders

of the Group. Its role is to set the sustainability framework,

oversee its implementation and drive improvements in

reporting and communication in relation to environmental,

social and governance (ESG) factors that have a positive

impact on the business strategy and performance of

the Group.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

2. Strengthened sustainability framework

The Committee continued to oversee the development

of the Group’s sustainability framework during the year.

We took note of the key insights from the materiality

assessment, which identified, inter alia, that stakeholders

perceived the Group’s impact on people and the

environment to be strong, and that its impact on the

community leaves room for improvement. In addition,

stakeholders recognised that internal and external

communication of the Group’s strategic framework

couldbe improved to drive engagement.

Over the year, we guided the update of the sustainability

framework. As shown on page 21, the framework was

reshaped to display our priorities clearly, building on

the foundation of good governance. We also supported

the adoption of a stronger communications framework

around the narrative of “shaping a better future” and of

ambition statements that outline our direction of travel.

3. Oversaw sustainability initiatives

A strong focus for the Committee this year was to

provide oversight of the Group’s activities on key

priorities such as the environment, community and clients

and members. We reviewed:

• progress on our net zero commitment and approved

adetailed roadmap;

• performance on embedding sustainability

considerations in our support to clients and

members including compliance with the UK

Stewardship Code; and

• charitable giving in the Group and, after reviewing

alternatives, agreed to maintain the current approach.

Looking ahead

At a high level, the focus for the year ahead includes:

• overseeing the further integration of our sustainability

framework across the Group, including stronger

and more frequent communication to internal and

externalstakeholders;

• continuing to play a critical friend role in reviewing

progress and performance, including the development

of a regular sustainability dashboard for the Board;

• monitoring the Group’s existing and emerging

sustainability risks and opportunities and updating our

approach where necessary;

• introducing a refreshed charitable giving policy to

provide a more strategic approach to our current

charitable giving practice; and

• continuing to engage with our key internal and

external stakeholders to receive feedback on our

sustainabilityperformance.

At the end of this report, all that remains is for me

to thank the members and the attendees of the

Sustainability Committee for their hard work and

contributions. I have handed the chair over to Aisling

Kennedy, who took over the reins from 1 April 2024.

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

19 June 2024

Board of Directors

Sustainability Committee

Sarah Ing

Chair of the

Sustainability Committee

Non-Executive Director

Margaret

Snowdon OBE

Senior

Independent

Non-Executive

Director, Chair of

EEG and

member of

I&D Committee

Adrian Davison

Head of Risk

Responsible for

environmental

strategy

Alex Quant

Head of ESG for

the Investment

business

Responsible for

representing client

interests

Supported by resources from across XPS and external consultants

Aisling Kennedy

Independent

Non-Executive

Director

Snehal Shah

Chief

Financial Officer

Executive sponsor

for sustainability,

responsible for

representing

investorviews

Charlotte West

Head of

Employee

Engagement

Responsible for

employee

engagement

and I&D strategies

XPS Pensions Group plc Annual Report and Accounts 2024

Directors’ remuneration report

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:

Remuneration at a glance

Aligned with shareholders – in order 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 – by striving for as consistent

aspossible an approach between the Executive Directors

and senior management.

Aligned with clients – the continued strategy to be

thebest provider of services to the UK pensions market,

as aone stop shop for everything trustees and employers

need in this market, 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.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

FY 2024 FY 2025

Fixed pay

Base salary

Co-CEOs CFO

£356,048 £300,745

Pension

Co-CEOs CFO Average employee

6% 6% 6%

Benefits

Benefits currently include permanent health

insurance, life insurance, private medical insurance

and car allowance.

Shareholding

Actual level % of base salary at 31 March 2023

Ben Bramhall Paul Cuff Snehal Shah

817% 465% 35%

Annual bonus

2024 annual bonus

Co-CEOs CFO

£534,072 £375,931

100% of maximum 100% of maximum

150% of salary 125% of salary

Long-term incentive plan

2021 PSP estimated outcome*

Co-CEOs CFO

100% 100%

Performance conditions:

EPS – 75% TSR – 25%

Subject to two-year holding period.

Malus and clawback provisions apply.

* Vesting 1 July 2024.

Fixed pay

Base salary

Co-CEOs CFO Average employee

£372,070 £321,797

4.5% 7% 5.8%

Pension

No change for FY 2025.

Benefits

No change for FY 2025.

Shareholding

Actual level % of base salary at 31 March 2024

Ben Bramhall Paul Cuff Snehal Shah

533% 317% 116%

Annual bonus

2025 annual bonus

Co-CEOs

Maximum

150% of salary

CFO

Maximum

125% of salary

Bonus delivery

Beyond 100%

of salary

delivered in shares

Long-term incentiveplan

Anticipated award grants

as % of base salary

Co-CEOs CFO

150% 125%

Group adj. PBT 75%

Personal objectives 25%

Bonus

elements

EPS 70%

TSR 20%

ESG 10%

Performance

conditions

Shareholding requirement

489,016 shares

B. Bramhall

P. Cuff

S. Shah

0% 100% 200% 300% 400% 500% 600% 700% 800% 900%

821,374 shares

150,902 shares

967,191 shares

B. Bramhall

P. Cuff

S. Shah

0% 100% 200% 300% 400% 500% 600% 700% 800% 900%

1,699,549 shares

66,830 shares

Shareholding requirement

XPS Pensions Group plc Annual Report and Accounts 2024

Directors’ remuneration report continued

Margaret Snowdon OBE

Chair of the Remuneration Committee

The Remuneration Committee continues to ensure a robust link

between the execution of strategy, reward and performance and

is committed to fairness and transparency.

Dear Shareholder,

The Directors’ Remuneration Report for the year ended

31March 2024 contains:

• my annual statement;

• the Directors’ Remuneration Policy, which was

approved at the March 2024 General Meeting; and

• the annual report on remuneration which describes how

the Directors’ Remuneration Policy has been applied in

FY 2024 and how it will be implemented in FY 2025.

At the 2024 AGM, in addition to the voting resolution on

the advisory vote on the Directors’ Remuneration Report,

there will be a resolution asking shareholders to approve

the new deferred bonus plan rules.

Operational highlights

During the year ended 31 March 2024, we produced an

excellent year of robust financial performance. Ata Group

level, revenues increased 20% year on year and adjusted

fully diluted EPS rose 21% year on year. Thiswas delivered

in a year where employee engagementandclient

satisfaction remained high.

The Company’s strong operational and financial progress

was reflected in the share price and value delivered to

our shareholders. XPS ended the year as one of the

top performers in the FTSE All-Share, delivering a total

shareholder return of over 50% across the year.

Engaging with our stakeholders

Shareholders

At last year’s Annual General Meeting held on

7September 2023, the Remuneration Committee was

pleased that shareholders approved the Remuneration

Report with 85% of votes for.

Aligning remuneration withsustainable success

Committee membership Attendance

Chair

Margaret Snowdon OBE 5/5

Members

Alan Bannatyne 5/5

Sarah Ing 5/5

Aisling Kennedy 5/5

Imogen Joss (appointed 7 December 2023) 2/2

Martin Sutherland (appointed 7 December 2023) 2/2

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

The resolution to approve the Directors’ Remuneration

Policy was withdrawn from the AGM in favour of continuing

to engage with shareholders, as outlined on page 62.

Weundertook an extensive consultation with our 20

largest shareholders in the lead up to the General Meeting

held on 7 March 2024 where the Directors’ Remuneration

Policy 2024 was approved with 76% of votes in favour.

This 2024 Policy is effectively a continuation of the

previously approved policy, introducing an element of

bonus deferral in line with evolving market practice,

reflecting that the overwhelming majority of shareholders

consulted felt that the existing policy was appropriate.

The Board acknowledges that 19.5% of the Group’s total

issued share capital was voted against the resolution

and recognises that a small number of shareholders have

differing views. I would like to thank those shareholders

that participated in the consultation and will continue to

engage as appropriate in the future.

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.

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.

Wider workforce remuneration

We continue to review the remuneration arrangements

for the wider workforce and take these into account when

considering remuneration arrangements for the Executive

Directors and other members of senior management.

The Remuneration Committee also 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 Inclusion & Diversity Committee, in addition

to chairing the Employee Engagement Group.

Annual bonus payments for FY 2024

The financial element of these bonuses is based on Group

profit before tax (PBT). The reported Group adjusted PBT

for FY 2024 has resulted in a bonus payment of 100% of

the maximum for this element of the bonus.

The Committee determined that the strategic objectives

had been fully met which therefore led to a bonus outturn

of 100% of the maximum for the Co-CEOs and CFO.

When considering the appropriateness of the bonus

outturn, the Committee was mindful that this was only

the second maximum bonus payment since IPO (in 2017)

and that in three of the previous six years the bonus had

been reduced, with the agreement of the Co-CEOs, from

the formulaic outcome.

% of salary

% of

maximum

Ben Bramhall 150% 100%

Paul Cuff 150% 100%

Snehal Shah 125% 100%

Vesting outcomes for the 2021 PSP awards

The July 2021 PSP award is subject to underlying

EPS performance and relative TSR performance.

Theestimated overall vesting of the award is expected

tobe 100% of maximum.

The Committee considers that the policy operated

as intended during FY 2024 and that remuneration

outcomes are consistent with the Group performance

and appropriately reflect performance delivered for our

shareholders over the respective periods. The Committee

felt that no discretion needed to be applied for these

remuneration outcomes. With regard to the PSPs, the

Committee considers that the increase in share price

from the date of grant is aligned to the underlying

performance of the business.

Operation of the Directors’ Remuneration Policy

forFY 2025

Looking forward into FY 2025, we have given consideration

to actions on pay matters which we regard as appropriate

and designed to support shareholders’ interests over the

long term.

When reviewing the Executive Directors’ salaries, the

Committee considered the matter holistically, taking

into consideration the roles outlined above, the impact

of salary increases on total remuneration and increases

applicable to the wider workforce along with the strong

absolute and relative performance of the Group.

The Committee agreed to award salary increases for

the Co-CEOs of 4.5% and the CFO’s salary has been

increased by 7%, reflecting performance and the

expansion of the role across risk and sustainability.

This compares with an average increase over the year

awarded to all staff of 5.8%.

The resultant salaries for the Executive Directors remain

low against similarly sized companies, and annual target

remuneration is low in comparison to senior leadership

and senior client facing roles at some of the Group’s

competitors, which include Big 4 accounting firms and

other equity partnerships.

The maximum bonus opportunities for the Co-CEOs

andCFO will remain unchanged at 150% and 125% of

salary respectively.

The PSP awards due to be made in July 2024 will revert

to the normal award levels of 150% and 125% of salary for

the Co-CEOs and CFO respectively.

XPS Pensions Group plc Annual Report and Accounts 2024

Directors’ remuneration report continued

Operation of the Directors’ Remuneration Policy for FY 2025 continued

Component of

remuneration Summary of approach

Base salary

and benefits

Base salary and benefits are reviewed annually on 1 April in light of a number of factors,

including the approach to salary reviews more generally across the Group and the performance

of the individuals and the Company. The base salaries of the Co-CEOs have been increased by

4.5% for FY 2025 and the CFO’s salary has been increased by 7%, reflecting performance and

the expansion of the role across risk and sustainability. This compares with an average increase

over the year awarded to all staff of 5.8%.

Ben Bramhall – £372,070

Paul Cuff – £372,070

Snehal Shah – £321,797

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

1 April

2023

1 April

2024 Annualised

Co-CEOs 0% 0% 9.0% 6.0% 7.0% 4.5% 4.4%

Average staff 3.0% 3.2% 3.2% 5.9% 12% 5.8% 5.5%

Pension

Defined contribution/cash supplements of 6% are paid and are aligned with the levels available

for new employees. 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 – 125% of salary

Bonus above 100% of salary will be paid in shares, deferred over two years.

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 FY 2025:

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 of employment at 200% for one year

and 100% for a second year.

The Chairman’s and the Non-Executive Directors’ fees

Following a review, the Committee recognised that the fee

paid for the Chairman of the Board was considerably lower

than typically paid at companies of a similar size to XPS

Group. Therefore, effective 1 April 2024, the Chair’s fee was

increased to £150,000. This fee is still below the typical

Chair fee for comparable sized UK listed businesses.

The Board reviewed the fees paid to the Non-Executive

Directors. The base fee for Non-Executive Directors

remains unchanged at £60,000 p.a. The Board approved

an increase to the additional responsibility fee levels

resulting in a fee of £15,000 p.a. for the Chair of the

Audit & Risk Committee and £10,000 p.a. for each of the

Senior Independent Director, Chair of the Remuneration

Committee and Chair of the Sustainability Committee.

These represent the first increases to Non-Executive fee

levels since IPO.

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

19 June 2024

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Directors’ Remuneration Policy

This Remuneration Policy, which has been approved by the Board, contains the material required to be set out in the

Directors’ Remuneration Report for the purposes of 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

March 2024 and took effect for all payments made to Directors with effect from the conclusion of the General Meeting

at which it was approved. The Policy as approved can be found at xpsgroup.com/investors/shareholder-information/

agms-and-general-meetings. We have reproduced it below for the convenience of our shareholders.

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 as

the shares are “re-rated”

by investorssuch that

thecomparator

groupchanges.

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 a year.

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 £35,000

foreach Executive

Director (indexed

toinflation).

n/a

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% of salary.

Executive Directors’

employer’s contribution

levels are aligned to the

contribution levels for the

majority of the workforce.

n/a

XPS Pensions Group plc Annual Report and Accounts 2024

Directors’ remuneration report continued

Element and purpose Policy and operation Maximum Performance measures

Annual bonus

To motivate

Executive Directors

and support the

delivery of the

Group’s financial

andstrategic

business target

overa 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 to reflect events (e.g. corporate

acquisitions, other major transactions)

where the Committee considers it to be

necessary in its opinion to make

appropriate adjustments.

For financial years commencing following

the approval of this Policy, bonus payments

of up to 100% of salary are to be paid as

cash with amounts in excess of this

deferred into shares for two years.

The value of the deferred 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 apply as

explained in more detail in the notes to this

Policy table.

The maximum annual

bonus opportunity is

150% of base salary. For

FY 2025, the maximum

opportunity will be 150%

of base salary for the

Co-CEOs and 125% for

the CFO.

Bonuses will be payable subject

to the achievement of

performance 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

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 bonus

outturn accordingly.

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

it considers appropriate which

must be satisfied before any

award will 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.

No more than 25% of awards

vest for attaining the

threshold level of

performance.

The 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

outturn accordingly.

Directors’ Remuneration Policy continued

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Element and purpose Policy and operation Maximum Performance measures

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) a shareholding in the Company.

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 the guideline is met.

Any performance vested shares subject to

a holding period and any shares awarded

in connection with annual bonus deferral

will be credited for the purpose of the

guidelines (discounted for anticipated

taxliabilities).

Executive Directors will be required to

maintain 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 the

Executive Directors’ actual relevant

shareholding at leaving and reducing to

50% of this requirement in the second year.

For the purpose of this requirement,

theExecutive Directors’ actual 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 the 2020 AGM but excludes

shares acquired and the release of shares

under share incentive plans where the grant

occurred prior to the adoption of the Policy.

The Committee will retain the discretion to

remove the holding requirement if it is

deemed to be inappropriate.

No maximum level but

not less than 200% of

base salary for any

Executive Director.

n/a

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, on the same terms

asotheremployees.

These all-employee share plans are

established 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, such awards

wouldnot be subject to

performance conditions.

XPS Pensions Group plc Annual Report and Accounts 2024

Directors’ remuneration report continued

Element and purpose Policy and operation Maximum Performance measures

Chairman and

Non-Executive

Directors’ fees

To enable the

Company to recruit

and retain Company

Chairs and Non-

Executive Directors

of the highest

calibre, at the

appropriate 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,

Chair of the Audit & Risk, Remuneration or

other Board Committees or Designated

Employee Engagement NED to reflect the

additional time commitment. They will be

entitled to an additional fee if they are

required to perform any specific and

additional services.

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. in

aggregate.

Any increases in fee

levels made will be

appropriately disclosed.

n/a

Notes to the Policy table

1. Stating maxima for each element of the

Remuneration Policy:The DRR 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 hospitality:While 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 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 be honoured.

4. Malus/clawback: The 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

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;

Directors’ Remuneration Policy continued

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

• 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 been made;

• 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 sufficiently 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 conditions: The 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 discretions: The 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/pay-outs;

• discretion required when dealing with a change of

control or restructuring of the Company;

• 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 issue, 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 plc Annual Report and Accounts 2024

Directors’ remuneration report continued

Directors’ Remuneration Policy continued

Remuneration policy onrecruitment

The Company’s recruitment remuneration policy aims

to give the Committee sufficient flexibility to secure the

appointment and promotion of high-calibre executives

to strengthen the management team and secure the skill

sets to deliver our strategic aims.

In terms of the principles for setting a package for a new

Executive Director, the starting point for the Committee

will be to apply the Remuneration Policy for Executive

Directors as set out above and structure a package in

accordance with that policy. Consistent with the DRR

Regulations, any caps contained within the Policy for

fixed pay do not apply to new recruits, although the

Committee would not envisage exceeding these caps

inpractice unless absolutely necessary.

The annual bonus plan and PSP, including the maximum

award levels, will operate as detailed in the general

Remuneration Policy in relation to any newly appointed

Executive Director. For an internal appointment, any

variable pay element awarded in respect of the prior

rolemay either continue on its original terms or be

adjusted to reflect the new appointment as appropriate.

For both external and internal appointments, the

Committee may agree that the Company will meet

certain relocation expenses as it considers appropriate.

For external candidates, it may be necessary to make

additional awards in connection with the recruitment to

buy-out awards forfeited by the individual on leaving

a previous employer. Any recruitment-related awards

which are not buy-outs will be subject to the limits of

the annual bonus plan and PSP as stated in the general

policy. Details of any recruitment-related awards will be

appropriately disclosed.

For any buy-outs the Company will not pay more than

is necessary in the view of the Committee and will be

limited in value to what the Committee considers to

be a fair estimate of the value of the awards foregone.

TheCommittee will in all cases seek, in the first instance,

to deliver any such awards under the terms of the existing

annual bonus plan and PSP. It may, however, be necessary

in some cases to make buy-out awards on terms that

are more bespoke than the existing annual bonus

plan and PSP.

All buy-outs, whether under the annual bonus plan,

PSP or otherwise, will take due account of the service

obligations and performance requirements for any

remuneration relinquished by the individual when leaving

a previous employer.

The Committee will seek, where it is practicable to do

so, to make buy-outs subject to what are, in its opinion,

comparable requirements in respect of service and

performance. However, the Committee may choose to

relax this requirement in certain cases, such as where the

service and/or performance requirements are materially

completed, or where such factors are, in the view of

the Committee, reflected in some other way, such as

a significant discount to the face value of the awards

forfeited, and where the Committee considers it to be

inthe interests of shareholders.

Service contracts

Executive Directors

Ben Bramhall and Paul Cuff entered into a service

agreement with the Company that was effective upon

Admission and dated 16 February 2017. Snehal Shah

entered into a service agreement with the Company that

was effective 28 May 2019, the date of his employment

beginning, although Snehal was not appointed as Chief

Financial Officer until FCA approval was received on

9July 2019. The policy is that each Executive Director’s

service agreement should be of indefinite duration,

subject to termination by the Company or the individual

on no more than 12 months’ notice.

The service agreements of all Executive Directors, which

are available for inspection at the Company’s registered

office, comply with this policy:

• the Executive Directors’ service agreements are

terminable by either party on not less than nine months’

written notice for the Co-CEO, six months for the CFO

or immediately upon payment in lieu of notice, and

contain a garden leave clause; and

• in each case any payment in lieu of notice will

be calculated by reference to base salary and

contractual benefits only, and will not include any

entitlement to bonus.

Chairman and Non-Executive Directors

The appointments of Alan Bannatyne and Margaret

Snowdon OBE are subject to the terms of letters of

appointment agreed between each of them and the

Company dated 24 January 2017, the appointment

of Sarah Ing is subject to the terms of a letter of

appointment dated 19 March 2019, the appointment

of Aisling Kennedy is subject to the terms of a letter

of appointment dated 22 February 2023 and the

appointments of Imogen Joss and Martin Sutherland

are subject to the terms of letters of appointment dated

7 December 2023. They are not entitled to receive any

compensation on termination of their appointment

(other than payment in respect of a notice period where

notice is served) and are not entitled to participate in

the Company’s share plans, bonus arrangements or

pension schemes.

They are entitled to be reimbursed all reasonable

out-of-pocket expenses incurred in the proper

performance of their duties.

Their appointment may be terminated at any time

upon three months’ written notice by either party

and with immediate effect in certain circumstances.

Theappointment may also be terminated pursuant to

the Articles or as otherwise required by law. They are

subject to retirement by rotation every three years under

the Articles but intend to retire and submit themselves

for re-election by shareholders each year at the Annual

General Meeting.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Remuneration policy on termination

The Committee will consider treatments on a termination

having regard to all of the relevant facts and circumstances

available at that time. This policy applies both to any

negotiations linked to notice periods on a termination and

any treatments that the Committee may choose to apply

under the discretions available to it under the terms of

the annual bonus plan and PSP. The potential treatments

on termination under these plans are as follows:

Annual bonus plan

If an Executive Director resigns or is dismissed for cause

before the bonus payment date, the right to receive any

bonus normally lapses (unless the Committee determines

otherwise). If an Executive Director ceases employment

before the bonus date because of death, injury, ill

health, disability or any other reason determined by the

Committee, such bonus will be payable as the Committee

in its absolute discretion determines taking into account

the circumstances for leaving, time in employment and

performance. Similar treatment will apply in the event of

achange in control of the Company.

Deferred bonus awards are normally preserved in all leaver

cases (unless an Executive Director ceases employment due

to gross misconduct or gross negligence) but release will

not typically be accelerated, except in the case of death in

service. The Committee has the ability to release a leaver’s

awards early in exceptional circumstances.

Performance Share Plan (PSP)

The Committee’s Policy is in accordance with the rules

of the Performance Share Plan 2017. If, during the

performance or vesting period, a participant:

• resigns or is dismissed for cause, awards will normally

lapse in full; and

• ceases to be employed due to death, ill health, injury

or disability, retirement with the agreement of the

participant’s employer, redundancy, the sale or transfer

of the participant’s employing company or business

out of the Group (other than on change of control),

or for other reasons specifically approved by the

Committee, the award shall be retained and will vest

at the normal vesting date (unless the Committee

exercises its discretion to allow awards to vest early on

cessation in exceptional circumstances) to the extent

that the Committee determines. The Committee will

determine the extent to which an award will vest taking

into account the extent to which the performance

conditions have been met and, where appropriate,

theperiod that has expired to the date of cessation.

If a participant ceases employment during the holding

period, performance-vested awards will normally be

retained and vest as normal at the end of the holding

period (unless the Committee exercises its discretion to

allow awards to vest early on cessation in suitable cases).

The all-staff Share Save scheme provides treatments for

leavers in line with HMRC rules for such plans.

The Company has the power to enter into settlement

agreements with Directors and to pay compensation

tosettle potential legal claims.

In addition, and consistent with market practice, in

the event of the termination of an Executive Director,

the Company may make a contribution towards that

individual’s legal fees and fees for outplacement

servicesas part of a negotiated settlement.

Anysuchfeeswill be disclosed as part of the detail

oftermination arrangements.

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 enable 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 above.

Annual salary reviews across the Company take into

account Company performance, relevant pay and

market conditions and salary levels for similar roles

incomparable companies.

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 scheme 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.

XPS Pensions Group plc Annual Report and Accounts 2024

Directors’ remuneration report continued

100%

19%

40%

100%

£354

£408 £408

£676

£849 £849

Minimum

£2,000

£1,800

£1,600

£1,400

£1,200

£1,000

£800

£600

£400

£200

£0

£1,600

£1,400

£1,200

£1,000

£800

£600

£400

£200

£0

In line with

expectations

In line with

expectations

In line with

expectations

Maximum

Total fixed pay Annual bonus Performance Share Plan Share performance growth

Maximum with share

price growth

Maximum with share

price growth

Maximum with

share price growth

£1,617 £1,617

£1,480

£1,239

£1,942 £1,942

100%

48%

33%

35%

29% 29%

29%

40%

33% 33%

33%

17% 17%

17%

19%

25%

21%

Ben Bramhall —

Co-Chief Executive Officer

£’000s

Snehal Shah —

Chief Financial Officer

£’000s

Paul Cuff —

Co-Chief Executive Officer

£’000s

Directors’ Remuneration Policy continued

Illustrations of application of the Directors’ Remuneration Policy

The charts below show how the Remuneration Policy set out above will be applied for Executive Directors in FY 2025

based on three performance scenarios and using the assumptions below.

Minimum

Consists of base salary, benefits and pension:

• base salary is the salary to be paid in FY 2025;

• benefits measured as benefits paid in FY 2024; and

• pension measured as the defined contribution or cash allowance in lieu of Company

contributions of 6%.

Target

Based on what the Executive Director would receive if performance were in line with

expectations or on target (excluding share price appreciation and dividends):

• annual bonus: consists of the on-target bonus (50% of maximum opportunity used

forillustrative purposes); and

• PSP: consists of the threshold level of vesting (25% vesting) under the PSP.

Maximum

Based on the maximum remuneration receivable (excluding share price appreciation

anddividends):

• annual bonus: consists of maximum bonus of 150% of salary for the Co-CEOs and 125%

of salary for the CFO; and

• PSP: consists of the face value of awards (150% of base salary for Co-CEOs and 125%

ofbase salary for the CFO) under the PSP.

Maximum with 50% share

price growth

As the Maximum scenario plus the value resulting from a share price growth of 50% in

relation to the PSP award.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Annual report on remuneration

Remuneration Committee membership

The Remuneration Committee is chaired by Margaret Snowdon OBE, who is Senior Independent Non-Executive

Director. Alan Bannatyne, Sarah Ing, Aisling Kennedy, Imogen Joss and Martin Sutherland are also members of the

Committee. Imogen Joss and Martin Sutherland were appointed to the Committee in December 2023. 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 five times during the year. All members attended every Committee meeting they were

eligible to attend throughout the year.

Other individuals, such as the Co-Chief Executive Officers, the Chief Financial 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 Remuneration

Policy 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 of reference which are reviewed annually and can be viewed on the Company’s

website: www.xpsgroup.com.

Advisers

FIT Remuneration Consultants LLP (FIT), signatory to the Remuneration Consultants Group’s Code of Conduct,

was appointed 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 FY 2024 were £73,958

(FY 2023: £54,282). FIT’s fees are charged on the basis of the firm’s standard terms of business for advice provided.

The following (audited) section provides details of how the Directors were paid during the financial year to 31 March 2024.

Director

Salary/fees

Taxable

benefits

Bonus

Long-term

incentives

Pension

Total

remuneration

Total

fixed pay

Total

variable pay

Executive Directors

Ben Bramhall 2024 356,048 13,320 534,072 748,403 19,985 1,671,828 389,353 1,282,475

2023 332,755 12,993 499,133 598,029 18,701 1,461,611 364,449 1,097,162

Paul Cuff 2024 356,048 13,120 534,072 748,403 19,985 1,671,628 389,153 1,282,475

2023 332,755 12,793 499,133 598,029 18,701 1,461,411 364,249 1,097,162

Snehal Shah 2024 300,745 12,872 375,931 526,797 17,069 1,233,414 330,686 902,728

2023 281,070 12,523 316,203 412,702 15,994 1,038,492 309,587 728,905

Non-Executive Directors

Alan Bannatyne –

Chairman of Board and

Chair of Nomination

Committee

2024 120,000 — — — — 120,000 120,000 —

2023 100,398 — — — — 100,398 100,398 —

Margaret Snowdon

OBE – Chair of

Remuneration

Committee, Senior

Independent NED and

Designated Employee

Engagement NED

2024 75,000 — — — — 75,000 75,000 —

2023 72,822 — — — — 72,822 72,822 —

Sarah Ing –

Chair of Audit & Risk

and Sustainability

Committees

2024 75,000 — — — — 75,000 75,000 —

2023 70,644 — — — — 70,644 70,644 —

Aisling Kennedy 2024 60,000 — — — — 60,000 60,000 —

2023 6,250 — — — — 6,250 6,250 —

Imogen Joss

2024 19,048 — — — — 19,048 19,048 —

Martin Sutherland

2024 19,048 — — — — 19,048 19,048 —

Tom Cross Brown

– former Chairman

ofBoard

2023 52,727 — — — — 52,727 52,727 —

Total 2024 1,380,937 39,312 1,444,075 2,023,603 57,039 4,944,966 1,477,288 3,467,678

2023 1,249,421 38,309 1,314,469 1,608,760 53,396 4,264,355 1,341,126 2,923,229

XPS Pensions Group plc Annual Report and Accounts 2024

Annual report on remuneration continued

Advisers continued

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.

3 The outturn for the July 2021 PSP which vests in July 2024 is expected to be 100% and the vesting share price has been estimated at

219.33p, based on the three-month average share price ended 31 March 2024. The grant share price for the award was 138p and accordingly

the relevant figures are reflective of an increase of 59% in the Company’s share price comparing the award price to the vesting price. Details

of the performance measures and targets applicable to the 2021 PSP are set out on page 87. The outturn for the November 2020 PSP which

vested on 30 November 2023 was 66% and the value has been updated reflecting the actual vesting share price of 237p and the dividend equivalents.

4 Pension values shown all relate either to pension contributions or to cash allowances in lieu of pension.

5 Appointed Non-Executive Chairman on 30 November 2022.

6 Appointed to the Board on 22 February 2023.

7 Appointed to the Board on 7 December 2023.

8 Stepped down from the Board on 8 September 2022.

FY 2024 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) 36,066 37,384 38,672 44,975 100%

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 staff

satisfaction and morale

Maintain high employee

satisfaction score in

employee survey

Exceptional employee Net Promoter Score

of +31 achieved

100%

Progress inclusion and

diversityagenda

Reduce gender pay gap

Increase females in

senior management roles

Median and mean gender pay gaps fell by

0.6% and 2.1% respectively between April

2023 and 2024

Significant increase in the percentage of

females in the senior management team

achieved

100%

Maintain high level of

clientsatisfaction

Continued effectiveness of

clientcare program

High level of client

retention to be maintained

Client retention remained very high with no

material client losses due to service quality

Client care programme continues to be

embedded across the client base

100%

Pursue and execute accretive

M&A opportunities

Execute smoothly any

opportunities approved

by the Board

Successful sale of National Pension Trust

achieved with a smooth transition for staff

and clients, and positive feedback from

shareholders. Strategic partnership with

acquirer has been maintained

100%

Technology Smooth client transition

onto new administration

platform to commence

Transition commenced and remains largely

on track against the plan

100%

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Snehal Shah – CFO

Measure Target Performance Assessment

Support improved KPIs and

financial analysis of performance

in certain business areas

Improved financial

reporting to the Board

and Executive Committee

Significant improvement made with granular

management information leading to better

business decisions

100%

Maintain OCF conversion Above 90% Achieved 100%

Debt reduction Continue de-leveraging Debt reduced during the year and NPT sale

resulted in de-leveraging to below 0.5x at

the end of the year

100%

Continue to drive strong

shareholder interest and

engagement in XPS

Meet with non-holders

and secure at least two

new institutional investors

Met with over 50 non-holders and in

excessof 15 new institutional investors

added in the year

100%

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.

In light of the high standards of attainment of each of the Executive Directors, the Remuneration Committee assessed

that performance against the targets had been met in full and would result in 100% of maximum for this element of

bonus to be payable to the Co-CEOs and CFO.

This results in an outcome in aggregate of 100% of maximum for the Co-CEOs and CFO.

Outcomes

Weightings

Ben

Bramhall

Paul

Cuff

Snehal

Shah

Financial performance (% of this element) 75% 100% 100% 100%

Strategic performance (% of this element) 25% 100% 100% 100%

Total actual performance outcome (% of maximum) 100% 100% 100%

Total actual performance outcome (% of salary) 150% 150% 125%

Total actual performance outcome (£) £534,072 £534,072 £375,931

Statement of Directors’ shareholding and share interests (audited)

For each Director, the total number of Directors’ interests in shares at 31 March 2024 was as follows:

Director

Ben

Bramhall

Paul

Cuff

Snehal

Shah

Alan

Bannatyne

Margaret

Snowdon

OBE

Sarah

Ing

Aisling

Kennedy

Imogen

Joss

Martin

Sutherland

Number of ordinary

shares held asat

31March 2024

821,374 489,016 150,902 36,594 30,303 15,000 — — —

Share ownership

requirement

(%ofsalary)

200% 200% 200% n/a n/a n/a n/a n/a n/a

Share ownership

requirement met?

Y Y N n/a n/a n/a n/a n/a n/a

Holding as % of

March2023 salary

533% 317% 116%

n/a n/a n/a n/a n/a n/a

Number of ordinary

shares held asat

31March 2023

1,699,549 967,191 66,830 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.

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 2024 and 19 June 2024.

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.

XPS Pensions Group plc Annual Report and Accounts 2024

Annual report on remuneration continued

Awards granted in the year under the PSP (audited)

The following nominal cost option PSP awards were granted in July 2023.

These awards vest in 2026 subject to performance relating to a mix of adjusted EPS, relative TSR and ESG-related

targets. The details of these targets are shown in the “Outstanding share plan awards” section below.

Director Date of grant

Basis of award

(% of salary)

Face value of

awards at grant

Number of

shares under

award

Date of

vesting

Ben Bramhall 17 July 2023 175% £623,084 333,200 July 2026

Paul Cuff 17 July 2023 175% £623,084 333,200 July 2026

Snehal Shah 17 July 2023 150% £451,117 241,239 July 2026

1 Based on the share price of £1.87 on 14 July 2023.

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

2023

Interests

awarded

during the

year

Interests

vested during

the year

Interests

lapsed during

the year

Interests held

at 31 March

2024

Vesting

period

Ben

Bramhall

30 November 2020 0.05p 348,387 — 230,632

117,755 — November

2023

1 July 2021 0.05p 341,217 — — — 341,217 July 2024

1 July 2022 0.05p 383,948 — — — 383,948 July 2025

17 July 2023 0.05p — 333,200 — — 333,200 July 2026

Paul Cuff 30 November 2020 0.05p 348,387 — 230,632

117,755 — November

2023

1 July 2021 0.05p 341,217 — — — 341,217 July 2024

1 July 2022 0.05p 383,948 — — — 383,948 July 2025

17 July 2023 0.05p — 333,200 — — 333,200 July 2026

Snehal

Shah

30 November 2020 0.05p 240,423 — 159,160

81,263 — November

2023

1 July 2021 0.05p 240,181 — — — 240,181 July 2024

1 July 2022 0.05p 270,260 — — — 270,260 July 2025

17 July 2023 0.05p — 241,239 — — 241,239 July 2026

1 On 12 December 2023, Ben Bramhall exercised awards over 230,632 shares granted on 30 November 2020 and sold 108,807 shares to

settle resultant tax and social security obligations. The closing share price on the day of exercise was £2.20.

2 On 11 December 2023, Paul Cuff exercised awards over 230,632 shares granted on 30 November 2020 and sold 108,807 shares to settle

resultant tax and social security obligations. The closing share price on the day of exercise was £2.20.

3 On 11 December 2023, Snehal Shah exercised awards over 159,160 shares granted on 30 November 2020 and sold 84,072 shares to settle

resultant tax and social security obligations. The closing share price on the day of exercise was £2.20.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Vesting outcomes for the FY 2022 PSP awards (granted in July 2021)

These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in July 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 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 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 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

CAG of 12.6% above CPI

100%

1 Measured by normalising for the impact of IFRS 16 and on a constant tax rate basis, to ensure the outturn is an accurate reflection of

operational performance.

XPS 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

Above upper quartile threshold

100%

2 Based on performance to the end of May. This is an estimate as TSR performance will be measured to the third anniversary of the date of

grant which is 1 July 2024.

The TSR comparator group consists of the constituents of the FTSE Small Cap Index (excluding investment trusts) at

the start of the performance period.

Based on the above the expected percentage of the total award vesting is 100% of maximum. Details of the shares

under award and their estimated value (based on the three-month average share price at 31 March 2024 of 219.33p

per share) are as follows:

Executive

Maximum

number of

Number

of shares

to vest

Number

of shares

to lapse

Estimated

value

vesting

£

Ben Bramhall 341,217 341,217 — 748,403

Paul Cuff 341,217 341,217 — 748,403

Snehal Shah 240,181 240,181 — 526,797

1 Based on the three-month average share price to 31 March 2024.

The awards also receive the value of dividend equivalents.

XPS Pensions Group plc Annual Report and Accounts 2024

Annual report on remuneration continued

FY 2023 PSP awards (granted in July 2022)

These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in 2025 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

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 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.

XPS 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%

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.

FY 2024 PSP awards (granted in July 2023)

These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in 2026. These

awards comprised a main award of 150% and 125% of salary for the Co-CEOs and the CFO respectively and a one-off

additional award of 25% of salary.

Vesting of both awards will be based on the measures as summarised in the tables below, with performance measured

over a three-year period.

For the main award, there are three performance criteria, with the vesting of 70% of the shares under this award

subject to EPS performance, 20% subject to relative total shareholder return and the remaining 10% is based on

areduction of the Company’s CO

emissions.

The details of the target ranges are shown in the table below.

Diluted adjusted EPS

for the three-year period to the end of FY 2026 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 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%

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.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

XPS Group’s CO

emissions

for the three-year period to the end of the FY 2026 Portion of award vesting

Below 20% reduction 0%

20% reduction 25%

Between 20% and 30% reduction Between 25% and 100% on a straight-line basis

30% or more reduction 100%

3 The CO

emissions are based on Scope 1 and 2 emissions and will be calculated on an emissions per number of employees basis.

For the additional award, vesting is fully based on EPS performance. The details of the EPS target range is shown in

the table below.

Diluted adjusted EPS

for the three-year period to the end of the FY 2026 Portion of award vesting

CAG of 10% 0%

CAG of between 10% and 15% Between 25% and 100% on a straight-line basis

CAG of 15% or more 100%

1 Measured on a constant tax rate basis, to ensure the outturn is an accurate reflection of operational performance.

The EPS performance range of the additional award was set to ensure vesting will occur only once the EPS element

ofthe main award has vested in full.

External Board appointments

The Executive Directors did not hold any external directorships during the year. The approved Directors’ Remuneration

Policy makes provisions 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 2024 (FY 2023: £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 2024 (FY 2023: £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 2024. This is considered an appropriate comparator for XPS Group, which was

a constituent of the FTSE Small Cap Index during the year.

31 Mar

2017

31 Mar

2018

31 Mar

2019

31 Mar

2020

31 Mar

2021

31 Mar

2022

31 Mar

2024

31 Mar

2023

15 Feb

2017

110

130

150

170

190

210

230

XPS Pensions Group plc FTSE Small Cap excl. investment trusts

Total Shareholder Return (rebased to 100p)

Total shareholder return

Source: Refinitiv Eikon (an LSEG product)

XPS Pensions Group plc Annual Report and Accounts 2024

Annual report on remuneration continued

Total shareholder return continued

The table below shows the Co-CEOs’ single total figure of 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

2024 Ben Bramhall £1,671,828 100% 100%¹

Paul Cuff £1,671,628 100% 100%¹

2023 Ben Bramhall £1,461,611 100% 66%

Paul Cuff £1,461,411 100% 66%

2022 Ben Bramhall £893,195 79%

38%

Paul Cuff £892,995 79%

38%

2021 Ben Bramhall £692,741 68% 21%

Paul Cuff £692,541 68% 21%

2020 Ben Bramhall £569,272 30%

40%

Paul Cuff £569,272 30%

40%

2019 Ben Bramhall £362,803 12%

n/a

Paul Cuff £362,803 12%

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 vesting rate relates to the July 2021 award that is due to vest in July 2024 and is, in part, based on estimated vesting levels at 31 March 2024.

2 The bonus was reduced with the agreement of the Co-CEOs from the formulaic outcome of 86%.

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 on page 93 presents the year on year percentage change in remuneration received by each Director,

compared with the change in remuneration received by all XPS Group staff.

The percentage changes are impacted where a Director has been in role for part of a year and for Non-Executive

Directors are reflective of changes to individual committee and other responsibilities, as well as adjustments to

fee levels.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

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

remuneration from

31/03/2022 to 31/03/2023

Percentage change in

remuneration from

31/03/2023 to 31/03/2024

Base

salary

Benefits

Bonus

Base

salary

Benefits

Bonus

Base

salary

Benefits

Bonus

Base

salary

Benefits

Bonus

Ben Bramhall 0% — 127% 9% 2% 27% 6% 18% 29% 7% 3% 7%

Paul Cuff 0% (2)% 127% 9% 2% 27% 6% 18% 29% 7% 3% 7%

Snehal Shah 20% 23% 177% 9% 2% 27% 6% 17% 29% 7% 3% 19%

Tom Cross Brown 0% — — 0% — — (56%)

— — — — —

Alan Bannatyne 0% — — 0% — — 34% — — 20%

— —

Margaret Snowdon OBE 4% — — 0% — — 4% — — 3% — —

Sarah Ing 14% — — 0% — — 9% — — 6% — —

Aisling Kennedy — — — — — — — — — 860%

— —

Imogen Joss — — — — — — — — — — — —

Martin Sutherland — — — — — — — — — — — —

All UK employees 3.2% (8)% 68% 5.9% (12)% 14% 10% 6% 46% 8.4% 15% 11%

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 Tom Cross Brown stepped down as a Director on 8 September 2022; accordingly, the percentage difference shown represents

acomparison between a full year (FY 2022) and a part year (FY 2023).

3 Alan Bannatyne was appointed as Chairman on 30 November 2022, previously Non-Executive Director; accordingly, the percentage

difference shown represents a partial year of the increased fee (FY 2023) and a full year (FY 2024).

4 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).

5 Aisling Kennedy was appointed as Non-Executive Director on 22 February 2023; accordingly, the percentage difference shown represents

acomparison between full year (FY 2024) and a part year (FY 2023).

6 Imogen Joss and Martin Sutherland were appointed to the Board on 7 December 2023.

CEO pay (unaudited)

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

2024 Option A Total pay ratio 53:1 39:1 25:1

2023 Option A Total pay ratio 40:1 29:1 21:1

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

The Company determined the remuneration figures at each quartile with reference to a date of 31 March 2024.

The Group used calculation option A as this is widely regarded as the method resulting in the most robust analysis.

The calculation is based on full-time equivalent salary calculated on the same basis as the single figure table.

This year the ratios have increased compared to the previous year. This increase reflects the increase in the Co-CEOs’ single figure of

remuneration for 2024, which can be found on page 90.

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 £28,740 £48,617 £57,000

Total pay and benefits £31,845 £60,109 £65,757

XPS Pensions Group plc Annual Report and Accounts 2024

Annual report on remuneration continued

Relative importance of spend on pay (unaudited)

The table below details the change in total staff pay between FY 2023 and FY 2024 as detailed in note 10 of the

financial statements, compared with distributions to shareholders by way of dividends, share buy-backs or any

other significant distributions or payments. These figures have been calculated in line with those in the audited

financialstatements.

£’000 FY 2024 FY 2023

change

Total gross staff pay 97,467 83,009 17

Distributions to shareholders 18,025 15,331 18

Statement of shareholder voting (unaudited)

The table below shows the outcome of the binding vote on the Directors’ Remuneration Policy at the General

Meeting held on 7 March 2024 and the advisory vote on the FY 2023 Directors’ Remuneration Report held on

7September 2023.

AGM resolution Votes for % Votes against Votes withheld

Directors’ Remuneration Policy 131,060,632 76.44 40,386,688 4,362,067

Directors’ Remuneration Report 162,820,119 84.71 29,399,220

35,033

Implementation of Policy for FY 2025 (unaudited information)

This section provides an overview of how the Committee is proposing to implement the Remuneration Policy in the

year ending 31 March 2025.

Base salary

Base salaries are as follows with effect from 1 April 2024:

• Ben Bramhall – £372,070;

• Paul Cuff – £372,070; and

• Snehal Shah – £321,796.

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 90. There is no intention to introduce additional benefits

in 2024/25.

Pension

Contribution rates are currently 6% of base salary. Contributions may be made as cash supplements in full or in part.

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 125% for the Chief Financial

Officer. Bonus payments up to 100% of salary will be paid as cash with amounts in excess of this deferred into shares

for two years.

The performance 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

adjust the 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 FY 2025

bonus in next year’s report. The targets will be set to ensure both consistency and fairness to all stakeholders.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

PSP awards

It is intended that the PSP awards will be made in FY 2025. The award levels will be no more than 150% of salary for

the Co-CEOs and 125% for the CFO.

Vesting of the awards will be based on three performance criteria, with the vesting of 70% of the shares subject to

EPS performance, 20% subject to relative total shareholder return and the remaining 10% based on a reduction of the

Company’s CO

emissions.

The details of the target ranges are shown in the table below.

Diluted adjusted EPS

for the three-year period to the end of FY 2027 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 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%

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 Group’s CO

emissions

for the three-year period to the end of FY 2027 Portion of award vesting

Below 20% reduction 0%

20% reduction 25%

Between 20% and 30% reduction Between 25% and 100% on a straight-line basis

30% or more reduction 100%

3 The CO

emissions are based on Scope 1 and 2 emissions and will be calculated on an emissions per number of employees basis.

Minimum shareholding requirement

To align the interests of Executive Directors with those of shareholders, they are required to build and maintain

significant holdings of shares in the Group over time. The minimum 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

The following fee levels become effective from 1 April 2024.

Alan Bannatyne receives an annual fee of £150,000 for his role as Board Chairman.

The Non-Executive Directors are entitled to a fee of £60,000 p.a., with an additional fee of £15,000 p.a. for the

Chair of the Audit & Risk Committee and £10,000 p.a. for each of the Senior Independent Director, Chair of the

Remuneration Committee and Chair of the Sustainability Committee. The Designated Employee Engagement

Non-Executive Director receives an additional £5,000 p.a.

This report was reviewed and approved by the Board of Directors on 19 June 2024 and was signed on its behalf by:

Margaret Snowdon OBE

Chair of the Remuneration Committee

19 June 2024

XPS Pensions Group plc Annual Report and Accounts 2024

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 2024.

The Governance section on pages 54 to 100 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 and employee

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 the ticker symbol XPS.

The table on page 99 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 44 and the Viability Statement

on page 53 for details on the assessment carried out by

the Directors with regard to going concern.

Results and dividend

The Group’s audited financial statements for the year

ended 31 March 2024 are set out on pages 109 to 145

and the Company’s audited financial statements are set

out on pages 146 to 153. The Group’s profit after taxation

for the year ended 31 March 2024 was £54.2 million (FY

2023: £15.8 million). An interim dividend of 3.0p per

ordinary share (FY 2023: 2.7p) was paid on 5 February

2024. The Directors recommend a final dividend for the

year of 7.0p per ordinary share (FY 2023: 5.7p) to be paid

on 23 September 2024 to shareholders on the register on

23 August 2024.

Further information regarding dividend policy and

payments can be found in the Financial Review on page

43 and in note 36 to the financial statements on page 145.

Post balance sheet events

There have been no significant post balance sheet events

to report since 31 March 2024.

Directors

The current Directors of the Company, with summaries

of their key strengths and experience, are set out in the

Governance section on pages 56 and 57. Directors on the

Board during the year and up to the date of this report

are as follows:

Alan Bannatyne

Ben Bramhall

Paul Cuff

Snehal Shah

Margaret Snowdon OBE

Sarah Ing

Aisling Kennedy

Imogen Joss (appointed 7 December 2023)

Martin Sutherland (appointed 7 December 2023)

Details of the Directors’ service contracts are shown in

the report of the Remuneration Committee on page 82.

Details of share options granted to Directors and the

interests of the Directors in the ordinary shares of the

Company are set out in the Remuneration Report on

pages 87 to 91.

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.

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

Information Location within Annual Report

Likely future developments in the business of the Company Strategic Report (pages 8 to 17)

Inclusion and diversity Sustainability (pages 24 and 25), Nomination Committee

(page 65)

Employee involvement Sustainability (pages 22 to 26), Co-Chief Executive Officers’

Review (page 17) and S172 Statement (pages 18 and 19)

Directors’ share interests Directors’ Remuneration Report (pages 87 and 88)

Emissions and energy consumption Strategic Report (page 30)

Financial risk management objectives and policies Note 2 to the financial statements (page 122)

Directors’ regard to foster business relationships Strategic Report (page 18)

Capital structure

The Company’s issued ordinary share capital and total

voting rights at 31 March 2024 and the date of this report

were 207,544,975 ordinary shares (each with a par value

of 0.05p and all fully paid). There were no ordinary shares

held in treasury. As at 31 March 2024 1,512,760 ordinary

shares were held in the Employee Benefit Trust, and as at

the date of this report, 1,388,956 shares were held in the

Employee Benefit Trust. Further details of the Company’s

issued share capital are given in note 29 of the financial

statements on page 140.

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 1,388,956 ordinary shares in

the Company but has waived its entitlement to dividends

and does not seek to exercise the voting rights on

those shares.

Major interests in shares

The table on page 98 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 2024

and 31 May 2024 (being the latest practicable date prior

to publication of this Annual Report).

Appointment and retirement ofDirectors

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. All Directors will

offer themselves for re-election at the 2024 Annual

General Meeting.

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 2023 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 2024 Annual General Meeting.

XPS Pensions Group plc Annual Report and Accounts 2024

Political donations

No political contributions were made, or political

expenditure incurred, by the Company and its

subsidiaries during the year (FY 2023: £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 62.

Directors’ report continued

At 31 March 2024 At 31 May 2024

Shareholder

Number of

ordinary

Percentage of

total voting

rights

Number of

ordinary

Percentage of

total voting

rights

Gresham House Asset Management 33,471,239 16.13 33,471,239 16.13

Abrdn 19,325,366 9.31 21,458,916 10.34

Schroder Investment Management 15,534,549 7.48 15,560,013 7.50

J.P. Morgan Asset Management 13,913,853 6.70 15,595,917 7.51

BlackRock 12,292,158 5.92 12,332,856 5.94

Premier Miton Investors 11,816,361 5.69 10,263,839 4.95

Governance

XPS Pensions Group plc Annual Report and Accounts 2024

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

followinglocations:

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 76

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 97 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

19 June 2024

100

XPS Pensions Group plc Annual Report and Accounts 2024

Directors’ responsibility statement

The Directors are responsible for preparing the Annual

Report and accounts 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

themconsistently;

• 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 financial statements;

• prepare the financial statements on the going concern

basis unless it is inappropriate to presume that the

Company will continue in business; and

• prepare a Directors’ Report, a Strategic Report and a

Directors’ Remuneration Report which comply with the

requirements of the 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 and accounts

As required by the UK Corporate Governance Code, the

Directors confirm that they consider that the Annual

Report and accounts, 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

19 June 2024

XPS Pensions Group plc Annual Report and Accounts 2024

Financial statements

101

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 2024 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 2024 which comprise the 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, Statement

of Cash Flows – Company, Notes to the Consolidated Financial Statements and Notes to the Financial Statements

– Company, including a summary of material 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 &Risk Committee.

Independence

Following the recommendation of the Audit & Risk Committee, we were appointed by the Directors on 27 February 2013

to audit the financial statements for the year ended 31 March 2014 and subsequent financial periods, noting the listing

of the Parent Company in the year ended 31 March 2016. The period of total uninterrupted engagement including

retenders and reappointments is 11 years, covering the years ended 31 March 2014 to 31 March 2024. 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.

Independent auditor’s report

to the members of XPS Pensions Group plc

XPS Pensions Group plc Annual Report and Accounts 2024

102

Independent auditor’s report continued

to the members of XPS Pensions Group plc

Conclusions relating to going concern

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

the following procedures:

• Assessing the reasonableness of assumptions in preparation of cash flow forecasts, with consideration of historical

performance, review and challenge of revenue growth rate assumptions and the Group’s ability to meet working

capital requirements over the going concern period;

• Assessing the current period actuals against the prior period forecasts and also assessing the period to May 2024

actuals against current period forecast to determine forecasting ability;

• Assessing the Directors’ going concern assessment and mathematical accuracy of cash flow forecasts and

sensitivities used in respect of the worst case and reasonable downturn scenario models using our knowledge of

the business;

• Reviewing the terms and period of the Group’s bank facility agreement and consideration of the sufficiency of the

facility available throughout the going concern period;

• Considering the Group’s compliance with banking covenants and related headroom in light of the Directors’ worst

case scenario modelled;

• Considering the options available to the Directors’ to mitigate the impact of the worst case scenario and whether

such actions are within their control; and

• Considering the adequacy of the disclosures in the financial statements against the requirements of the accounting

standards and consistency of the disclosure with the forecast and worst case scenario.

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.

Other matters

The corresponding figures in the Statement of Cash Flows – Company are unaudited.

Overview

Coverage 89% (FY 2023: 81%) of Total EBITDA less gain on disposal

89% (FY 2023: 96%) of Group revenue

(EBITDA – calculated as profit before tax, less depreciation, amortisation and finance costs)

Key audit matters

2024 2023

Valuation of contract assets - accrued income  

Materiality

Group financial statements as a whole

2024: £1,410,000 based on 3% of Total EBITDA less gain on disposal

2023: £1,000,000 based on 3% of Total EBITDA

XPS Pensions Group plc Annual Report and Accounts 2024

Financial statements

103

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.

Significant components:

Component Type of work performed

XPS Pensions Group plc Full scope audit

XPS Pensions Consulting Limited Full scope audit

XPS Pensions Limited Full scope audit

XPS Investment Limited Full scope audit

XPS Administration Limited Full scope audit

All components are located in the UK and are centrally managed and controlled.

Non-significant components:

Other than the five significant components noted above, there were 12 other components within the Group which

formed part of our Group audit.

The following two non-significant components were subject to a full scope audit on account of them being part

ofanon-small group and being entities that do not avail themselves of a parental guarantee from audit under s479A

ofthe Companies Act 2006:

Component Type of work performed

XPS SIPP Services Limited Full scope audit

XPS Consulting (Reading) Limited Full scope audit

All 10 of the remaining non-significant components were subjected to group procedures on revenue balances,

procedures on financial statement area balances greater than the materiality thresholds, and desktop review

procedures. All audit work on all entities (significant or non-significant) was undertaken by the Group audit

engagement team.

Climate change

Our work on the assessment of potential impacts on climate-related risks on XPS Pensions Group plc’s operations and

financial statements included:

• Enquiries and challenge of management to understand the actions they have taken to identify climate-related risks

and their potential impacts on the financial statements and adequately disclose climate-related risks within the

Annual Report;

• Our own qualitative risk assessment taking into consideration the sector in which the Group operates and how

climate change affects this particular sector; and

• Review of the minutes of Board, Audit & Risk Committee and Sustainability Committee meetings and other papers

related to climate change, and performed a risk assessment as to how the impact of the Group’s commitment as set

out in the Strategic Report may affect the financial statements and our audit.

We challenged the extent to which climate-related considerations, including the expected cash flows from the initiatives

and commitments have been reflected, where appropriate, in the Directors’ going concern assessment and viability.

We also assessed the consistency of management’s disclosures included as ‘Statutory Other Information’ including

Task force Climate-Related Financial Disclosures (TCFD) and the Streamlined Energy and Carbon Reporting (SECR)

within the financial statements and with our knowledge obtained from the audit.

Based on our risk assessment procedures, we did not identify there to be any Key Audit Matters materially impacted

by climate-related risks and related commitments.

XPS Pensions Group plc Annual Report and Accounts 2024

104

Independent auditor’s report continued

to the members of XPS Pensions Group plc

An overview of the scope of our audit continued

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

Valuation of

contract assets –

accrued income

Refer to Note 1, Note

8 and Note 21 of the

Financial Statements.

The Group has a total contract assets – accrued

income of £16.7 million (FY 2023: £16.4

million) as disclosed in note 21 of the financial

statements.

Valuation of contract assets – accrued

income was considered a fraud risk due to

the recognition being highly subjective and

involving management’s judgements around

the amount of revenue to be billed in the future

and the subsequent recovery of the revenue

beinguncertain.

Management’s judgement relates to the time

recorded against each client project versus the

amount billed, as well as other factors including

expected recoverability levels based on past

experience, the nature of the work undertaken,

and to what extent the performance obligations

have been met.

The risk around the valuation of contract

assets – accrued income has been determined

to be both over and understatement through

judgements made by management in its

valuation at year end, or in recording time that

relates to work performed in the financial year

that is not included in contract assets - accrued

income at year end.

This results in the valuation of contract assets

– accrued income being assessed as an area of

significant risk of material misstatement and

therefore a key audit matter.

Year-end valuation was assessed by selecting

a sample of contract assets - accrued income

balances from the accrued income listing and

agreeing the inputs in the calculation back

to contracts with the customers, underlying

timesheet data from the time recording system

and where possible, subsequent invoices raised

post year end with related statement of activity,

to assess the reasonableness of the judgement

applied by management in the valuation.

In addition, where possible, we agreed our

sample to subsequent cash receipt in the bank

statements to assess the reasonableness of the

judgement applied by management in assessing

the recoverability of the balances.

We also compared the time recorded in the

March 2024 monthly timesheet report as

extracted from the timesheet recording system,

to the time recorded in the accrued income

listing to assess if the valuation of accrued

income was understated based on omitted

time worked.

We tested the operating effectiveness of the

relevant control over the time recording system.

Key observations:

Based on the procedures undertaken, we

did not identify any evidence that suggests

that the judgement applied by management

isinappropriate.

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.

XPS Pensions Group plc Annual Report and Accounts 2024

Financial statements

105

Our application of materiality continued

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

2024 2023 2024 2023

Materiality £1,410,000 £1,000,000 £1,057,000 £750,000

Basis for

determining

materiality

3% of Total EBITDA

less gain on disposal

3% of Total EBITDA 4% of Company Net

Assets capped at 75%

of Group materiality.

4% of Company Net

Assets capped at 75%

of Group materiality.

Rationale for the

benchmark applied

EBITDA less gain on disposal is considered to

bethe benchmark that is of the most interest to

the majority of users of the financial statements

based on investor and stakeholder expectations.

75% of Group materiality given the assessment of

the component’s aggregation risk.

Performance

materiality

£1,057,000 £700,000 £790,000 £525,000

Basis for

determining

performance

materiality

75% 70% 75% 70%

Rationale for the

percentage applied

for performance

materiality

These thresholds are based on our knowledge of the Group and Parent Company, control environment

over financial reporting, history of misstatements in previous periods and management’s attitude to

proposed adjustments.

Component materiality

For the purposes of our Group audit opinion, we set materiality for each significant component of the Group, apart

from the Parent Company whose materiality is set out above, based on a percentage of between 32% and 60%

(FY 2023: 36% and 62%) of Group materiality dependent on the size and our assessment of the risk of material

misstatement of that component. Component materiality, apart from the Parent Company, ranged from £450,000

to £850,000 (FY 2023: £360,000 to £620,000). In the audit of each component, we further applied performance

materiality levels of 75% (FY 2023: 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 & Risk Committee that we would report to them all individual audit differences in excess of

£56,000 (FY 2023: £40,000). 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 plc Annual Report and Accounts 2024

106

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

andlonger-term

viability

• The Directors’ statement with regards to the appropriateness of adopting the going concern

basis of accounting and any material uncertainties identified set out on page 44 and

• The Directors’ explanation as to their assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate set out on page 53.

Other Code

provisions

• The Directors’ statement is fair, balanced and understandable as set out on page 100;

• The Board’s confirmation that it has carried out a robust assessment of the emerging and

principal risks set out on page 52;

• The section of the annual report that describes the review of effectiveness of risk management

and internal control systems set out on pages 47 to 52 ; and

• The section describing the work of the Audit & Risk Committee set out on pages 66 to 69.

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 legal requirements.

In 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.

XPS Pensions Group plc Annual Report and Accounts 2024

Financial statements

107

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:

Non-compliance with laws and regulations

Based on:

• Our understanding of the Group and the industry in which it operates;

• Discussion with management and those charged with governance; and

• Obtaining an understanding of the Group’s policies and procedures regarding compliance with laws and regulations.

We considered the significant laws and regulations to be the applicable accounting framework, UK tax legislation,

Listing Rules, Companies Act 2006, and labour regulations and tax laws in key territories which the Group operates in.

The Group is also subject to laws and regulations where the consequence of non-compliance could have a material

effect on the amount or disclosures in the financial statements, for example through the imposition of fines or

litigations. We identified such laws and regulations to be the health and safety legislation, employment law, consumer

protection laws and regulations, and the Financial Conduct Authority regulations, including client money rules.

Our procedures in respect of the above included:

• Review of minutes of meeting of the Board of Directors for any instances of non-compliance with laws

andregulations;

• Review of correspondence with regulatory and tax authorities for any instances of non-compliance with laws

andregulations;

• Review of financial statement disclosures and agreeing to supporting documentation;

• Involvement of tax specialists in the audit; and

• Review of legal expenditure accounts to understand the nature of expenditure incurred.

Fraud

We assessed the susceptibility of the financial statements to material misstatement, including fraud. Our risk

assessment procedures included:

• Enquiry with management and the Audit & Risk Committee regarding any known or suspected instances of fraud;

• Obtaining an understanding of the Group’s policies and procedures relating to:

• Detecting and responding to the risks of fraud; and

• Internal controls established to mitigate risks related to fraud.

• Review of minutes of meetings of the Board of Directors for any known or suspected instances of fraud;

• Discussion amongst the engagement team as to how and where fraud might occur in the financial statements;

• Performing analytical procedures to identify any unusual or unexpected relationships that may indicate risks of

material misstatement due to fraud; and

• Performing an assessment of the Group’s IT environment and as part of this work, we tested the operating

effectiveness of financial systems including the general ledger system and the time recording system. We also

tested IT application level controls in relation to the time recording system in revenue.

XPS Pensions Group plc Annual Report and Accounts 2024

108

Auditor’s responsibilities for the audit of the financial statements continued

Extent to which the audit was capable of detecting irregularities, including fraud continued

Fraud continued

Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of

controls, specifically the risk of management overriding the control environment to either overstate or understate the

EBITDA reported, and to overstate or understate the valuation of contract assets - accrued income.

Our procedures in respect of the above included:

• Selecting a sample of journal entries throughout the year which met a defined risk criteria, and testing these by

agreeing to supporting documentation;

• In response to the risk of fraud in contract asset – accrued income, performing the procedures set out in the ‘Key

Audit Matters’ section of this report; and

• Assessing in aggregate, material estimates and judgements made by management that affect EBITDA for bias.

We also communicated relevant identified laws and regulations and potential fraud risks to all engagement team

members who were all deemed to have appropriate competence and capabilities 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.

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

19 June 2024

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

Independent auditor’s report continued

to the members of XPS Pensions Group plc

XPS Pensions Group plc Annual Report and Accounts 2024

Financial statements

109

Consolidated statement of comprehensive income

for the year ended 31 March 2024

				Year ended 31 March 2024	Year ended 31 March 2023
			Non-trading		Non-trading
			and			and
		Trading	exceptional		Trading	exceptional
		items	items 1	Total	items	items 1	Total
	Note	£’000	£’000	£’000	£’000	£’000	£’000
Revenue	8	199, 432	—	1 99,432	1 66 , 59 6	—	1 66 , 59 6
Other operating income	4	—	92	92	—	1 97	197
Operating expenses	9	(1 49 , 9 60)	(15,1 28)	(1 65,0 8 8)	(1 2 9, 6 52)	(1 4 , 413)	(14 4,0 65)
Gain on disposal	7	—	32 , 53 8	32 ,538	—	—	—
Profit/(loss) from operating activities		49 , 47 2	1 7, 5 0 2	6 6 , 9 74	36, 944	(14 , 2 1 6)	22 ,7 28
Finance income	14	50	—	50	10	—	10
Finance costs	14	(4 , 54 3)	—	(4 , 5 43)	(3 , 59 6)	—	(3 , 59 6)
Profit/(loss) before tax		44,9 79	1 7, 5 0 2	62 ,4 81	33 ,35 8	(1 4 , 2 1 6)	19 ,1 42
Income tax (expense)/credit	15	(11,483)	3 ,1 6 9	(8 , 3 1 4)	(6 , 2 1 5)	2 ,910	(3 , 305)
Profit/(loss) after tax and total
comprehensive income/(loss) for the year		33 ,49 6	20 ,67 1	5 4 ,1 67	2 7, 1 4 3	(1 1 , 3 0 6)	15, 8 37
Memo
EBITDA		55, 295	24, 53 6	79, 83 1	42, 4 48	(7, 3 3 4)	35 ,1 14
Depreciation and amortisation		(5 , 8 2 3)	(7, 0 3 4)	(12 , 857)	(5 , 5 0 4)	(6 , 8 8 2)	(1 2, 3 8 6)
Profit/(loss) from operating activities		49 , 47 2	1 7, 5 0 2	6 6 , 9 74	36, 944	(14 , 2 1 6)	22 ,7 28
		Pence		Pence	Pence		Pence
Earnings per share attributable to the ordinary equity holders of the Company:		Adjusted			Adjusted
Profit or loss:
Basic earnings per share	34	16. 2	—	26 . 2	13 . 2	—	7. 7
Diluted earnings per share	34	15. 3	—	24. 7	12.6	—	7. 3

1 See note 6 for additional information regarding non-trading and exceptional items.

The notes on pages 113 to 145 form part of these financial statements.

XPS Pensions Group plc Annual Report and Accounts 2024

110

Consolidated statement of financial position

as at 31 March 2024

		31 March	31 March
		2024	2023
	Note	£’000	£’000
Assets
Non-current assets
Property, plant and equipment	16	3 , 976	3 , 07 9
Right-of-use assets	17	8,89 2	9,6 8 4
Intangible assets	18	20 8 , 070	212 ,1 03
Other financial assets	20	—	1 , 8 47
		220, 93 8	22 6 ,7 1 3
Current assets
Trade and other receivables	21	50,92 2	4 3 ,76 5
Cash and cash equivalents	22	10,0 05	13, 285
		60, 927	5 7, 0 5 0
Total assets		281 , 865	2 8 3 ,76 3
Liabilities
Non-current liabilities
Loans and borrowings	23	23,38 6	6 7, 3 1 0
Lease liabilities	17	7, 2 9 5	7, 2 3 4
Provisions	27	1 , 8 02	1 , 8 69
Trade and other payables	25	—	845
Deferred income tax liabilities	19	1 5, 5 93	1 8 ,4 45
		4 8 , 076	9 5 ,70 3
Current liabilities
Lease liabilities	17	1 , 872	2 ,70 1
Provisions	27	1, 914	2,00 9
Trade and other payables	25	43,7 22	31,218
Current income tax liabilities	26	427	2, 280
Contingent consideration	28	—	568
		47, 9 3 5	3 8 ,7 76
Total liabilities		9 6 ,011	1 3 4 , 47 9
Net assets		185, 854	149 , 28 4
Equity
Equity attributable to owners of the Parent
Share capital	29	104	104
Share premium	30	1, 786	1 ,78 6
Merger relief reserve	30	4 8 , 6 87	4 8, 6 87
Investment in own shares held in trust	30	(2 , 92 5)	(1 , 3 5 0)
Retained earnings	30	138 , 202	10 0,057
Total equity		185, 854	149 , 28 4

The notes on pages 113 to 145 form part of these financial statements.

The financial statements were approved by the Board of Directors on 19 June 2024 and were signed on its behalf by:

Snehal Shah

Chief Financial Officer

19 June 2024

Registered number: 08279139

XPS Pensions Group plc Annual Report and Accounts 2024

Financial statements

111

Consolidated statement of changes in equity

for the year ended 31 March 2024

					Accumulated
			Merger	Investment	(deficit)/
	Share	Share	relief	in own	retained	Total
	capital	premium	reserve	shares	earnings	equity
	£’000	£’000	£’000	£’000	£’000	£’000
Balance at 1 April 2022	103	116,804	4 8 , 6 87	(4 , 1 5 7)	(1 7, 0 0 2)	14 4,43 5
Profit after tax and total comprehensive income for the year	—	—	—	—	15, 8 37	15 , 837
Contributions by and distributions to owners:
Share capital issued	1	1 ,7 8 6	—	—	—	1 ,787
Share premium reduction	—	(116,804)	—	—	1 16,804	—
Dividends paid (note 36)	—	—	—	—	(1 5 , 33 1)	(1 5, 3 3 1)
Dividend equivalents paid on exercised share options	—	—	—	—	(5 49)	(5 4 9)
Shares purchased by Employee Benefit Trust for cash	—	—	—	(2 , 2 0 0)	—	(2 , 2 0 0)
Share-based payment expense – equity settled from Employee Benefit Trust	—	—	—	5 ,0 07	(4 , 1 3 7)	870
Share-based payment expense – IFRS 2 charge (note 13)	—	—	—	—	3 , 892	3 , 892
Deferred tax movement in respect of share-based payment
expense (note 19)	—	—	—	—	258	25 8
Current tax movement in respect of share-based
paymentexpense	—	—	—	—	285	285
Total contributions by and distributions to owners	1	(115 ,01 8)	—	2 , 8 07	101,222	(1 0 , 9 8 8)
Balance at 31 March 2023	104	1 ,78 6	4 8 ,6 87	(1 , 3 5 0)	10 0,057	149, 2 8 4
Balance at 1 April 2023	104	1 ,78 6	4 8 ,6 87	(1 , 3 5 0)	10 0,057	149, 2 8 4
Profit after tax and total comprehensive income for the year	—	—	—	—	5 4 ,1 67	5 4 ,1 67
Contributions by and distributions to owners:
Dividends paid (note 36)	—	—	—	—	(1 8 ,025)	(18 ,025)
Dividend equivalents paid on exercised share options	—	—	—	—	(5 76)	(5 76)
Shares purchased by Employee Benefit Trust for cash	—	—	—	(5, 62 1)	—	(5 , 62 1)
Share-based payment expense – equity settled from Employee Benefit Trust	—	—	—	4,046	(4 , 0 1 9)	27
Share-based payment expense – IFRS 2 charge (note 13)	—	—	—	—	4 ,91 0	4 ,91 0
Deferred tax movement in respect of share-based payment
expense (note 19)	—	—	—	—	1 ,1 67	1 ,1 6 7
Current tax movement in respect of share-based
paymentexpense	—	—	—	—	521	52 1
Total contributions by and distributions to owners	—	—	—	(1 , 575)	(1 6, 02 2)	( 1 7, 5 97)
Balance at 31 March 2024	104	1 ,78 6	48 , 687	(2 , 925)	138 , 202	185 ,854

The notes on pages 113 to 145 form part of these financial statements.

XPS Pensions Group plc Annual Report and Accounts 2024

112

Consolidated statement of cash flows

for the year ended 31 March 2024

		Year ended	Year ended
		31 March	31 March
		2024	2023
	Note	£’000	£’000
Cash flows from operating activities
Profit for the year		54 ,167	15 , 837
Adjustments for:
Depreciation	16	8 92	8 97
Depreciation of right-of-use assets	17	2 , 8 87	2, 854
Amortisation	18	9,061	8 ,635
Finance income	14	(5 0)	(1 0)
Finance costs	14	4 , 543	3, 59 6
Gain on sale of business	7	(3 4 , 639)	—
Loss on disposal of right-of-use assets	17	117	—
Share-based payment expense	13	4 ,91 0	3, 8 92
Other operating income	4	(92)	(1 97)
Income tax expense	15	8 , 3 14	3 , 305
		50 ,11 0	38 ,809
Increase in trade and other receivables		(7, 4 6 2)	(3 ,43 2)
Increase in trade and other payables		11 ,9 93	3 ,6 03
(Decrease)/increase in provisions		(379)	4 42
		54 , 262	39,422
Income tax paid		(11,33 1)	(4 , 8 6 6)
Net cash inflow from operating activities		42 ,931	34, 556
Cash flows from investing activities
Finance income received	14	50	10
Acquisition of subsidiary, net of cash acquired	28	(4 0 5)	(8 , 2 6 8)
Purchases of property, plant and equipment	16	(1,851)	(6 4 0)
Purchases of software	18	(5 , 65 5)	(4 , 8 1 4)
Increase in restricted cash balances – other financial assets	20	—	(33)
Disposal of business	7	37 ,035	—
Net cash inflow/(outflow) from investing activities		2 9 , 1 74	(1 3 ,74 5)
Cash flows from financing activities
Proceeds from the issue of share capital		—	1 ,787
Proceeds from loans net of capitalised costs		8,000	11,000
Repayment of loans		(52,000)	(7 ,000)
Payment relating to extension of loan facility		(2 0 0)	—
Sale of own shares		27	8 70
Purchase of ordinary shares by EBT		(5, 6 21)	(2 , 2 0 0)
Interest paid		(3, 9 05)	(2 , 98 5)
Lease interest paid		(33 1)	(31 1)
Payment of lease liabilities		(2 , 7 5 4)	(2 , 9 5 7)
Dividends paid to the holders of the Parent	36	(18 ,02 5)	(15 , 3 31)
Dividend equivalents paid on exercise of share options		(576)	(5 49)
Net cash outflow from financing activities		(75 , 3 8 5)	(1 7, 6 76)
Net (decrease)/increase in cash and cash equivalents		(3 , 2 8 0)	3 ,13 5
Cash and cash equivalents at start of year		13, 2 85	10,150
Cash and cash equivalents at end of year	22	10,005	13 , 285

The notes on pages 113 to 145 form part of these financial statements.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

113

Notes to the consolidated financial statements

for the year ended 31 March 2024

1 Accounting policies

XPS Pensions Group plc (the “Company”) is a public limited company incorporated in the UK. The principal 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 consolidated financial statements have been prepared in accordance with UK-adopted International Accounting

Standards. The consolidated financial statements have been prepared under the going concern basis.

The preparation of financial statements in accordance with the requirements of International Financial Reporting

Standards (IFRS) requires management to exercise its judgement in the process of applying the Group’s accounting

policies. There are no critical accounting estimates within these financial statements. 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 significant 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.

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.

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.

Property, plant and equipment

Property, plant and equipment are stated at historical 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 the remaining life of the lease

• Fixtures and fittings 3 to 10 years

XPS Pensions Group plc Annual Report and Accounts 2024

114

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

1 Accounting policies continued

Going concern

IFRS 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.

Management has prepared cash flow forecasts up to 31 October 2025, which the Directors have approved.

These include 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. This period has been chosen as October is the

lowest point in the Group’s working capital and cash cycle. Inflationary increases have been modelled using the

OBR inflation forecasts for that period, and interest rate increase has been included in the forecasts based on latest

market projections.

The Group’s banking facility is in place until October 2026 and 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 expected in the cash flow forecast.

The Group does not have any non-financial covenants.

Management has also performed some scenario modelling to further assess the liquidity of the Group. Firstly,

management has modelled a scenario at which the banking covenants could potentially be breached, which is

the point where going concern could be threatened. In this worst case scenario, revenue is modelled to decrease

significantly, partially offset with a reduction in staff bonuses. 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.

In addition, the Group has several additional cost reduction and cash preservation levers it could utilise, which

include managing staff costs through a hiring freeze or reduction in workforce, a reduction in capital expenditure,

and a reduction of dividends if this worst case scenario was to happen. Another scenario modelled was a reasonable

downside scenario, where no growth is experienced in revenues not related to compliance. The result of this

reasonable downside scenario was that even with no actions to reduce costs in line with the revenue decrease, the

Group remained profitable and complied comfortably with its banking covenants. This reasonable downside scenario

is considered to be very unlikely, as historically the Group has always performed discretionary work for its customers.

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 1% of the forecast figure, and adjusted EBITDA was within 4% of the

forecast figure. Actual results were ahead of forecast in both cases. 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.

In terms of the wider macroeconomic and financial situation, the increase in the rate of inflation has fallen significantly

since the prior year although management is monitoring the situation with Russia and Ukraine as well as Israel,

Palestine and Iran as any further escalations could trigger further price increases with potential for related interest rate

increases. The Group does have protection for any increases in the inflation rate built into customer contracts, which

stipulate that the price charged can be increased by an inflationary amount. Pricing on indexation-linked contracts

continues to be reviewed and was uplifted accordingly as the contracts were renewed throughout the current year

and into the following year. The Group demonstrated its ability to perform strongly in a high-inflation environment

in both the prior and current years. Whilst higher interest rates have led to higher finance expenses, this has been

modelled in the Group’s forecasts and is not considered a significant risk, especially since the Group has paid down

a significant portion of its debt in the year.

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.

Customer relationships are valued based on the net present value of the excess earnings generated by the revenue

streams over their estimated useful lives.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

115

1 Accounting policies continued

Intangible assets and goodwill continued

Amortisation is included in operating expenses 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 5 to 10 years, straight-line method

1 Except for pensions and investment customer relationships acquired as part of the Punter Southall acquisition and customer relationships

recognised in 2013, and the Penfida customer relationships recognised on acquisition in 2023, all of which have an estimated useful life of

20 years, on a straight-line basis.

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.

Cash and cash equivalents comprise cash balances

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 had 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 of financial position and the consolidated

statement of cash flows. This balance was disposed of in the year as part of the NPT sale, and so the Group does not

hold any restricted cash balances at 31 March 2024.

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

The Group does not currently have any liabilities which fall into this category.

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.

XPS Pensions Group plc Annual Report and Accounts 2024

116

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

1 Accounting policies continued

Financial liabilities continued

Other financial liabilities continued

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

The Group has provisions for the following items:

• 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; and

• social security costs provisions represent estimates of the Group’s National Insurance contributions liability on the

cost of the Group’s Performance Share Plans and Senior Equity Plans.

Employee Benefit Trust (EBT)

As the Group is deemed to have control of its EBT, it has been aggregated within the accounts of XPS Pensions Group

plc, and therefore 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”). As the shares are typically used to

satisfy vested share options, the difference between the option cost and the weighted average cost of the shares is

charged to retained earnings.

The equity-settled share-based payment expense represents the amount of share awards made by the EBT on behalf

of the sponsoring entity (XPS Pensions Group plc).

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.

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 consolidated statement of financial position as

contract assets. This is work where there is no unconditional right to receive the cash, but work has been performed

in line with performance obligations. Amounts billed in advance of work performed are recognised as deferred income

and presented in the statement of financial position as contract liabilities.

Performance obligations and timing of revenue recognition

Performance obligations in contracts with customers are typically satisfied as services are rendered. Where work

performed in a period has not yet been billed, the value of this will be included in contract assets - accrued income at

the period end. 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 and Pensions investment consulting.

For Pensions Administration services, invoices are typically raised monthly based on services provided. Work relating

to the McCloud judgement in Pensions Administration services has been billed in advance. Payment is typically due

30 days from date of invoice. 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 receives income on corporate

and customer bank deposits within the SSAS and SIPP business based on a rate linked to the Bank of England base

rate. The Group also provided a defined contribution master pension trust for employers offering “full freedom and

choice”, called the National Pension Trust (NPT). Income from this NPT business is linked to the value of assets under

management. The NPT business was disposed of in the year (see note 7).

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.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

117

1 Accounting policies continued

Revenue continued

Performance obligations and timing of revenue recognition continued

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.

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. 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 the performance obligations met to date).

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. 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 time span 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.

Judgement is required for these contracts in determining the value attributable to the triennial valuation work, 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 to measure work performed over the three year contract window.

For the McCloud work being performed by the Administration business, judgement is required to assess the cost

to complete and therefore the revenue to be recognised at a point in time.

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.

There are no significant judgements relating to revenue recognition for the SIP business.

Alternative performance measures (APMs)

The Group presents APMs within its annual report and accounts, these APMs are not defined under the requirements

of IFRS. These include those that are visible from the consolidated statement of comprehensive income and the

following key APMs: adjusted EBITDA, adjusted EBITDA margin, adjusted diluted earnings per share, and cash

conversion. Management believes that the presentation of these APMs provides stakeholders with additional

information on the underlying performance of the business, as well as aiding comparability between reporting periods

by adjusting for factors which affect IFRS performance measures. These APMs are not a substitute for or superior to

IFRS measures. The Group’s APMs are defined, explained and reconciled to the nearest statutory measure within the

Chief Financial Officer’s review.

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, which are considered to be non-trading in nature as these do

not reflect the underlying performance of the Group. These transactions tend to be material in value, and the timing

can be uncertain. The impact on the financial statements can be significant and can distort certain key performance

indicators, such as basic EPS;

• corporate transaction and restructuring costs are considered to be exceptional in nature as these can be material

and are not a reflection of the underlying performance of the Group. The timing of these costs can vary and amounts

can differ significantly year on year, which can have a distortive impact on the statutory measures of performance;

• amortisation of acquired intangibles is considered to be non-trading as this is a material number and does not

reflect the underlying performance of the Group, and users of the accounts expect to be able to assess the

profitability and growth of the Group excluding this figure. Additionally this is a significant non-cash cost ;

XPS Pensions Group plc Annual Report and Accounts 2024

118

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

1 Accounting policies continued

Exceptional and non-trading items continued

•

changes in the fair value of contingent consideration – these movements do not reflect underlying trade and the

timing of these items can be significantly different from the date of the original transaction to which they relate.

They do not reflect the underlying performance of the Group as a whole;

• expenses relating to deferred consideration deemed as post-acquisition remuneration under IFRS 3 are considered

to be exceptional in nature. Without the link to continuing employment, these costs would have been treated as

consideration and are material;

• share-based payments, which are considered a non-trading cost as they are a significant non-cash cost which are

excluded from the results for the purposes of measuring performance for PSP awards and also dividend amounts.

Additionally, the large non-cash-related credits go directly to equity and so have a limited impact on the reserves

of the Group; 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

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 27).

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.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

119

1 Accounting policies continued

Leases and payments continued

Identifying leases continued

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.

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.

Share-based payment costs – Performance Share Plan and Senior Equity Plan

Share-based payment costs as referred to throughout these financial statements are a long-term employee benefit.

The Group operates equity-settled, share-based compensation plans, under which the entity receives services from

the Executive Directors and certain senior employees 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 Senior Equity Plans (SEPs) do not have any market performance conditions or non-market performance vesting

conditions, they only have service vesting conditions. The fair value for SEPs 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.

Where a share award includes dividend equivalents, these are included within the IFRS 2 charge described above.

The Group may settle these via cash or shares.

See the Employee Benefit Trust (EBT) policy above for information on the EBT element of share-based payment costs.

XPS Pensions Group plc Annual Report and Accounts 2024

120

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

1 Accounting policies continued

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, in which 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.

Changes in accounting policies – new standards, interpretations, and amendments effective from 1 April 2023

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. These include:

• IFRS 17 Insurance Contracts;

• Definition of Accounting Estimates (Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates

and Errors);

• Deferred Tax Related to Assets and Liabilities Arising from a Single Transaction (Amendments to IAS 12 Income

Taxes); and

• International Tax Reform – Pillar Two Model Rules (Amendment to IAS 12 Income taxes) (effective immediately upon

the issue of the amendments and retrospectively).

The Group has reflected changes within its accounting policies as a result of implementing “Disclosure of Accounting

Policies (Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2 Making Materiality

Judgements)”. No material changes resulted from this.

New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations are not effective for 2024, 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 2024:

• Liability in a Sale and Leaseback (Amendments to IFRS 16 Leases);

• Classification of Liabilities as Current or Non-Current (Amendments to IAS 1 Presentation of Financial Statements);

• Non-Current Liabilities with Covenants (Amendments to IAS 1 Presentation of Financial Statements); and

• Supplier Finance Arrangements (Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial

Instruments: Disclosures).

The following amendments are effective for the period beginning 1 April 2025:

• Lack of Exchangeability (Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates).

The Group is currently assessing the impact of these new accounting standards and amendments, but currently

does not anticipate that these will drive any material changes to the Group’s consolidated financial statements.

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.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

121

1 Accounting policies continued

Critical accounting estimates and judgements

The Group makes certain estimates and assumptions within the course of business. 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. In the future, actual experience may differ from these estimates and assumptions. Significant

judgements are separately identified where applicable. The Directors have reviewed the accounting estimates and

judgements made, and have determined that there are two critical judgements. The first relates to the valuation of

contract assets – accrued income within the unbilled element of pensions, investment and administration services.

The second critical judgement relates to the disposal of the NPT business. There are no critical estimates.

Management will make a judgement as to whether a project is in an accrued or deferred position at the end of each

month/reporting period. This judgement is based on the time recorded against each client project versus the amount

billed, as well as other factors including expected recoverability levels based on past experience, the nature of the

work undertaken, and to what extent the performance obligations have been met, all in line with IFRS 15.

The NPT business disposal was a significant transaction for the Group and resulted in a material gain. However, it has

not been presented as a disposal of a discontinued operation. A discontinued operation must be a component of an

entity that has been disposed of. A component is defined within IFRS 5 as a cash-generating unit (CGU), and cannot

be smaller than a CGU. The NPT business did not form a single CGU; it was incorporated within CGU 1. Therefore, the

Group cannot present the sale of the NPT business as a disposal of a discontinued operation.

2 Financial risk management

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 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 31.

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, within the going concern period, under both the normal and worst case scenario modelled. Cash

flow forecasts are updated daily and reviewed regularly by management. Trade debtor balances are managed to

ensure debtors are kept to terms as much as is possible, and management ensure sufficient cash is available to meet

expected cash outflows. The Group has significant headroom within its current revolving credit facility .

Market risk

Market risk is the risk that changes in market prices will affect the Group’s income or the value of its financial

instruments. Market risk comprises three elements – interest rate risks, foreign exchange risks and pricing risks.

Interest rate risks are discussed in the cash flow interest rate risk below. The Group is exposed to movements in

interest rate in its net finance costs and also in a small element of its operating revenue. Loans and borrowings are

based on a rate linked to SONIA. The Group earns income in relation to client deposits as well as interest income on

its own deposits.

The Group’s financial instruments are currently in sterling; hence, foreign exchange movements do not have a material

effect on the Group’s performance.

Pricing risks are considered to be low – an element of resetting fees regularly includes an inflation measure, but as this

is contractual it does not present a significant risk to the Group.

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 in note 31.

XPS Pensions Group plc Annual Report and Accounts 2024

122

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

2 Financial risk management continued

Cash flow interest rate risk

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 the revolving credit facility at a margin over SONIA.

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 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 their 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 in the year for the MJF acquisition

in February 2022. The balance of the contingent consideration was paid by the Group in August 2023. 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	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Contingent consideration fair value adjustment (note 28)	92	197

5 Auditor’s remuneration

During the period the following services were obtained from the Group’s auditor at a cost detailed below:

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Audit services
Fees payable in respect of the Parent Company and consolidated accounts	394	328
Fees payable in respect of the subsidiary accounts	166	252
	560	580
Audit-related services	42	36
Other assurance services	12	12
Other non-audit services	10	30
Total	624	658

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

123

6 Non-trading and exceptional items

		Year ended 31 March 2024			Year ended 31 March 2023
		Total	Tax on	Adjusting	Total	Tax on	Adjusting
		before	adjusting	items after	before	adjusting	items after
		tax	items 6	taxation	tax	items 6	taxation
	Note	£’000	£’000	£’000	£’000	£’000	£’000
Corporate transaction costs 1		(1,718)	(212)	(1,930)	(2,871)	216	(2,655)
Exceptional items		(1,718)	(212)	(1,930)	(2,871)	216	(2,655)
Contingent consideration write back 2	4	92	—	92	197	—	197
Share-based payment costs 3	13	(6,376)	1,623	(4,753)	(4,6 60)	1,370	(3,290)
Amortisation of acquired intangibles 4	18	(7,034)	1,758	(5,276)	(6,882)	1,324	(5,558)
Gain on disposal 5	7	32,538	—	32,538	—	—	—
Non-trading items		19,220	3,381	22,601	(11,345)	2,694	(8,651)
Total		17,502	3,169	20,671	(14,216)	2,910	(11,306)

1 The Group incurred total corporate transaction costs of £1,718,000 (2023: £2,871,000) in the year, of which £1,689,000 (2023: £845,000)

related to amounts owed to the vendor as earn out in respect of the acquisition of Penfida Limited. The maximum payout of £3,379,000

would be payable on the second anniversary of the acquisition subject to business performance which includes retention of clients as well

as continued employment of key employees. As continued employment is one condition of the share purchase agreement, then according

to IFRS 3, the entire additional amount must be treated as a post-transaction employment cost accruing over the deferment period of two

years to September 2024. This additional amount is material in size and it is one-off in nature. As such, in line with the Group’s accounting

policies, it has been classified as an exceptional item. If the entire amount is not payable at the end of the two year period, any resulting

credit will also flow through the exceptional category. Additionally, the Group incurred £29,000 (2023: £2,026,000) of costs relating to

other potential M&A activities explored by the Group during the year. The prior year included costs relating to the acquisition of Penfida

Limited and other potential M&A opportunities explored by the Group in the year. The overall transaction costs are material and do not

reflect the underlying performance of the Group. Users of the accounts expect these costs to be disclosed separately, to aid visibility of

underlying performance. The timing of these costs can also vary and is normally not aligned with the related benefits of the transaction.

2 The contingent consideration write back relates to the revaluation of the contingent consideration for the Michael J Field (MJF) acquisition

(note 4). This income is deemed to be exceptional in nature as it is linked to a payment set out in the business transfer agreement for the

MJF acquisition in February 2022. This income is not related to underlying business performance and so is disclosed as non-trading income.

Management does not include this figure in income when reviewing overall business performance. There are no further payments to be

made in respect of this acquisition.

3 Share-based payment expenses and related National Insurance are included in non-trading and exceptional costs as they are significant

non-cash costs which are excluded from the results for the purposes of measuring performance for PSP/SEP 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 £7,034,000 of amortisation charges in relation to acquired intangible assets (customer relationships and

brand) (2023: £6,882,000). As this figure is material, and is linked to non-trading activity, management excludes this cost when reviewing

and reporting on the underlying performance of the Group. Similarly, users of the accounts expect to be able to assess the profitability and

growth of the Group excluding this figure.

5 The gain on disposal relates to the NPT business disposal disclosed in note 7. This is a material figure which does not reflect the underlying

performance of the Group and is non-recurring. This gain has a significant impact on basic EPS (26.2p including this gain, 10.5p excluding it).

6 The tax credit on exceptional and non-trading items of £3,169,000 (2023: £2,910,000) represents 18% (2023: 20%) of the exceptional and

non-trading items incurred of £17,502,000 (2023: £14,216,000). This is different to the expected tax charge of 25% (2023: credit of 19%),

as various adjustments are made to tax including for deferred tax and the exclusion of amounts not allowable for tax – in particular the gain

relating to the sale of the NPT business in the year.

7 Gain on disposal

On 20 November 2023, the Group sold the NPT business to SEI. The sale is intended to create a market-leading

defined contribution proposition for employers and pension scheme members. The sale creates a strategic partnership

between XPS Pensions Group and SEI, under which the Group will provide wide ranging services to continue to

support NPT and SEI.

The total cash consideration payable to the Group is up to £42.5 million, comprising £35.0 million initial consideration

and contingent consideration of up to £7.5 million based on business performance over two years. This £7.5 million has

not been recognised as the threshold for recognition has not been met at 31 March 2024.

The transaction positions the SEI Master Trust to continue delivering best-of-breed service at increased scale in

partnership with NPT. The Group will continue to provide high-quality pensions administration and consultancy

services to NPT and SEI which will ensure continuity of service to the members and clients. SEI will benefit from

enhanced opportunities in the growing master trust space and XPS will benefit as a strategic partner of SEI .

XPS Pensions Group plc Annual Report and Accounts 2024

124

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

7 Gain on disposal continued

The post-tax gain on disposal was determined as follows:

	Year ended
	31 March
	2024
	£’000
Cash consideration received	37,035
Total consideration received and net cash inflow on disposal	37,035
Net assets disposed
Intangible assets	(353)
Other financial assets – restricted cash	(1,847)
Trade and other receivables	(305)
Trade and other payables	109
	(2,396)
Corporate costs in relation to disposal	(2,101)
Pre-tax gain on disposal	32,538
Related tax expense	—
Gain on disposal	32,538
The amount reflected as the gain in the consolidated statement of cash flows is the £37,035,000 proceeds, less the £2,396,000

Note 1 references the critical judgement applied to this transaction. Had this been treated as a discontinued operation,

then the disposal of this business would have been presented as a profit on discontinued operation within the

statement of comprehensive income, along with the trading results for the NPT business. The results of the NPT

business are shown below.

Year ended 31 March 2024 Year ended 31 March 2023

Trading

items

£’000

Non-trading

and

exceptional

items

£’000

Total

£’000

Trading

items

£’000

Non-trading

and

exceptional

items

£’000

Total

£’000

Revenue 2,759 — 2,759 4,332 — 4,332

Operating expenses (2,374) — (2,374) (3,451) — (3,451)

Gain on disposal — 32,538 32,538 — — —

Profit from operating activities 385 32,538 32,923 881 — 881

Finance costs (9) — (9) — — —

Profit before tax 376 32,538 32,914 881 — 881

Income tax expense (94) — (94) (175) — (175)

Profit after tax 282 32,538 32,820 706 — 706

Memo

EBITDA 454 32,538 32,992 1,013 — 1,013

Depreciation and amortisation (69) — (69) (132) — (132)

Profit from operating activities 385 32,538 32,923 881 — 881

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

125

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		Year ended
	31 March		31 March
	2024		2023
	£’000		£’000
Pensions Actuarial & Consulting	93,411	77,38	8
Pensions Administration	71,929		57,444
Pensions Investment Consulting	20,316		18,009
SIP 1	11,017		9,423
NPT 2	2,759		4,332
Total	199,432		166,596

1 Self Invested Pensions (SIP) business, incorporating both SIPP and SSAS products.

2 The NPT business was sold on 20 November 2023 (note 7) and so revenue in the year is up to that date.

9 Operating expenses

Included in the operating profit for the year are the following:

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Expenses by nature
Staff costs (note 10)	120,357	101,436
Depreciation and amortisation	12,840	12,386
Short-term and low-value lease costs	308	222
Premises costs (excluding rent accounted for under IFRS 16 Leases)	3,233	2,870
Professional fees	7,652	6,993
IT costs	13,167	10,731
Exceptional items	29	2,026
Other general business costs	7,502	7,401
Total	165,088	144,065

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	Year ended
	31 March	31 March
	2024	2023
	Number of	Number of
	employees	employees
Operational	1,557	1,435
Administration	137	125
Sales and marketing	27	24
Total	1,721	1,584

XPS Pensions Group plc Annual Report and Accounts 2024

126

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

10 Staff numbers and costs continued

The aggregate payroll costs of these persons were as follows:

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Wages and salaries	95,425	81,142
Social security contributions	10,175	8,913
Defined contribution pension cost	4,650	4,009
Other long-term employee benefits	2,042	1,867
Post-acquisition remuneration (note 6)	1,689	845
Share-based payment costs (note 13)	6,376	4,660
Total	120,357	101,436

11 Employee benefits

Defined contribution plan

The Company operates a defined contribution pension plan. Outstanding contributions at the year end were £nil

(2023: £nil).

12 Directors’ emoluments

The Directors were remunerated for their services by the Group and their emoluments are disclosed below.

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Aggregate emoluments excluding gain on exercise of share options	2,854	2,626
Gain on exercise of share options	2,024	987
Company contributions to defined contribution pension scheme	30	30
Total	4,908	3,643

Share-based payment expense for Directors was £1,233,000 (2023: £894,000).

	Year ended	Year ended
	31 March	31 March
	2024	2023
	Number of	Number of
	Directors	Directors
At 31 March 2024, retirement benefits are accruing to the following number of Directors under:
Defined contribution pension schemes	3	3

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
The emoluments of the highest paid Director, including benefits and share-based payment charge	1,379	1,194

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. In July 2023, the name of the DSP was changed to Senior Equity Plan (SEP). All references to

SEP throughout these notes relate to both DSP and SEP awards as they are identical in all but name. 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. PSP schemes are no longer issued to employees other than

Executive Directors; any staff PSP figures in this note relate to outstanding vested options not yet exercised.

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.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

127

13 Share-based payment costs continued

The only vesting criterion for the SEP 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	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
PSP awards, SEP awards and SAYE scheme	4,910	3,892
Social security cost on PSP awards and SEP awards (note 27)	1,466	768
Total share-based payments	6,376	4,660
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 and ESG elements, the Stochastic method for the TSR element, and

the Chaffe method for the holding period. There is no change in the valuation methodology since the prior year. In the

year there was also an additional award which is solely based on an EPS target. The fair value for this additional award

was calculated using the Black-Scholes method. The inputs to the model were as follows:

			Year ended 31 March 2024				Year ended 31 March 2023
			20%		Additional		25%
		10%	relative		award:		relative
	70%	environmental,	total		100%	75%	total
	earnings	social and	shareholder	Two -year	earnings	earnings	shareholder	Two-year
	per share	governance	return	holding	per share	per share	return	holding
	(EPS)	(ESG)	(TSR)	period	(EPS)	(EPS)	(TSR)	period
Weighted average exercise price
of options issued during the period (pence)	0.05	0.05	0.05	0.05	0.05	0.05	0.05	0.05
Expected volatility (%)	n/a	n/a	36.44%	37.02%	n/a	n/a	38.80%	37.03%
Expected life beyond vesting
date (years)	3	3	3	2	3	3	3	2
Risk-free rate (%)	n/a	n/a	4.88%	4.64%	n/a	n/a	1.81%	1.77%
Dividend yield (%)	—	—	—	—	—	—	—	—

For the TSR element, the volatility is calculated over the period of time commensurate with the remainder of the

performance period immediately prior to the date of grant. For the holding period, this is calculated over the period

commensurate with the holding period immediately prior to the date of grant.

The risk-free rate is calculated using the rate of interest obtainable from government securities (i.e. gilts in the UK)

over a period commensurate with the expected term. For the holding period the risk-free rate is the rate obtained

over a term equal to the vesting period plus the holding period.

No SAYE options were granted during the period. The fair value of SAYE options granted during the prior year

was calculated using the Black-Scholes valuation method. The inputs to the model were as follows:

	Year ended
	31 March
	2023
Weighted average exercise price of options issued during the period (pence)	104.0
Expected volatility (%)	47.95%
Expected life beyond vesting date (years)	3.34
Risk-free rate (%)	1.61%
Dividend yield (%)	4.90%

The volatility assumption has been calculated over the period of time commensurate with the expected award term

immediately prior to the date of grant.

XPS Pensions Group plc Annual Report and Accounts 2024

128

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

13 Share-based payment costs continued

As at 31 March 2024, in respect of the Group’s ordinary shares of 0.05p each, 2,886,258 Executive PSP options had

been granted and remained outstanding, at an exercise price of 0.05p per share, 178,655 staff PSP options had been

granted and remained outstanding, at an exercise price of 0.05p per share, 6,565,064 staff SEP options had been

granted and remained outstanding, at an exercise price of 0.05p per share, 786,870 SAYE options had been granted

and remained outstanding, at an exercise price of 111p per share, and 2,263,496 SAYE options had been granted and

remained outstanding, at an exercise price of 104p per share. The table below includes dividend equivalent shares on

the PSP and SEP option figures where applicable.

		2024		2023
		Weighted		Weighted
		average		average
		exercise		exercise
		price	2024	price	2023
		(pence)	Number	(pence)	Number
Executive PSP	Outstanding at 1 April	0.05	3,037,475	0.05	3,098,236
	Granted during the year	0.05	948,483	0.05	1,084,873
	Forfeited during the year	0.05	(327,860)	0.05	(572,818)
	Exercised during the year	0.05	(620,424)	0.05	(553,445)
	Cancelled during the year	0.05	(21,715)	0.05	(19,371)
	Outstanding at 31 March	0.05	3,015,959	0.05	3,037,475
Staff PSP	Outstanding at 1 April	0.05	329,242	0.05	3,335,675
	Forfeited during the year	0.05	(3,869)	0.05	(752,892)
	Exercised during the year	0.05	(135,716)	0.05	(2,177,334)
	Cancelled during the year	0.05	(4,750)	0.05	(76,207)
	Outstanding at 31 March	0.05	184,907	0.05	329,242
Staff SEP	Outstanding at 1 April	0.05	6,306,014	0.05	3,976,462
	Granted during the year	0.05	2,590,302	0.05	2,392,868
	Forfeited during the year	0.05	(84,425)	0.05	(63,316)
	Exercised during the year	0.05	(1,887,415)	—	—
	Cancelled during the year	0.05	(66,059)	—	—
	Outstanding at 31 March	0.05	6,858,417	0.05	6,306,014
SAYE	Outstanding at 1 April	110.79	3,173,969	88.61	4,430,966
	Granted during the year	—	—	104.00	2,381,306
	Forfeited during the year	105.61	(50,382)	94.91	(70,384)
	Exercised during the year	87.47	(29,081)	78.01	(3,405,601)
	Lapsed during the year	—	—	82.51	(39,784)
	Cancelled during the year	106.01	(44,140)	106.14	(122,534)
	Outstanding at 31 March	111.17	3,050,366	110.79	3,173,969

The exercise price of options outstanding at 31 March 2024 ranged between £0.0005 (i.e. the nominal value of an

ordinary share) in the case of the PSP and SEP and £1.110 in the case of the SAYE scheme (2023: £0.0005 to £1.110).

Their weighted average contractual life was three years (2023: three years), and their weighted average exercise price

was £0.25 (2023: £0.32).

Across all schemes, of the total number of options outstanding at 31 March 2024, 403,985 (2023: 356,263) had vested

and were exercisable.

The weighted average fair value of each option granted during the year was £1.74 (2023: £1.24). The weighted average

exercise price for exercisable options was 0.05p per share (2023: 0.26p per share). The weighted average share price

at the date of exercise for share options exercised during the year was £1.88 (2023: £1.33).

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

129

14 Finance income and expense

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Interest income on bank deposits	50	10
Finance income	50	10
Interest expense on bank loans	3,629	2,758
Other costs of borrowing	542	498
Interest on leases	323	290
Other finance expense	49	50
Finance expense	4,543	3,596

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	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Current tax expense
Current year	10,133	5,153
Adjustment in respect of prior year	(131)	(223)
Total current tax expense	10,002	4,930
Deferred tax credit
Origination and reversal of temporary differences	(2,231)	(1,403)
Adjustment in respect of prior year	543	—
Effect of tax rate changes	—	(222)
Total income tax expense	8,314	3,305

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Profit for the year	54,167	15,837
Total tax expense	8,314	3,305
Profit before income tax	62,481	19,142
Tax using the UK corporation tax rate of 25% (2023: 19%)	15,620	3,637
Non-deductible expenses	510	74
Other operating income not taxable	(23)	—
Gain on disposal not taxable	(8,135)	—
Fixed asset differences	(70)	39
Adjustment in respect of prior periods	412	(223)
Effect of tax rate change	—	(222)
Total tax expense	8,314	3,305

The standard rate of corporation tax in the UK was 25% (2023: 19%). The average effective tax rate was 13% (2023: 17%).

The average effective rate in the year is impacted by the non-taxable gain on sale of the NPT business. Excluding

this, the effective tax rate was 28%. This is higher than the standard rate due to the impact of costs not allowable for

tax. 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 2024, which is 25% (2023: 25%). Deferred tax not recognised relates to £6.7 million

(2023: £6.7 million) of finance expense losses in a prior year and their future recoverability is uncertain. At 31 March 2024

the total unrecognised deferred tax asset in respect of these losses was approximately £1.7 million (2023: £1.7 million).

£521,000 (2023: £285,000) of current year tax, and £1,167,000 (2023: £258,000) of deferred tax was recognised

directly in equity; this relates to employee share options accounted for under IFRS 2.

XPS Pensions Group plc Annual Report and Accounts 2024

130

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

16 Property, plant and equipment

	Leasehold	Office	Fixtures
	improvements	equipment	and fittings	Total
	£’000	£’000	£’000	£’000
Cost
Balance at 1 April 2023	3,502	1,595	901	5,998
Additions	992	733	64	1,789
Disposals	(38)	(248)	(59)	(345)
Balance at 31 March 2024	4,456	2,080	906	7,442
Accumulated depreciation
Balance at 1 April 2023	1,755	739	425	2,919
Depreciation charge for the year	424	355	113	892
Disposals	(38)	(248)	(59)	(345)
Balance at 31 March 2024	2,141	846	479	3,466
Net book value
Balance at 1 April 2023	1,747	856	476	3,079
Balance at 31 March 2024	2,315	1,234	427	3,976

	Leasehold	Office	Fixtures
	improvements	equipment	and fittings	Total
	£’000	£’000	£’000	£’000
Cost
Balance at 1 April 2022	3,217	1,472	891	5,580
Acquired through business combinations	—	59	17	76
Additions	285	511	(7)	789
Disposals	—	(4 47)	—	(4 47 )
Balance at 31 March 2023	3,502	1,595	901	5,998
Accumulated depreciation
Balance at 1 April 2022	1,440	639	314	2,393
Acquired through business combinations	—	59	17	76
Depreciation charge for the year	315	488	94	897
Disposals	—	(4 47)	—	(4 47 )
Balance at 31 March 2023	1,755	739	425	2,919
Net book value
Balance at 1 April 2022	1,777	833	577	3,187
Balance at 31 March 2023	1,747	856	476	3,079

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

131

17 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.

	Lease	Fixed	Variable
	contracts	payments	payments	Sensitivity
31 March 2024	Number	%	%	£’000
Property leases with periodic uplifts to market rentals	8	—	85	± 337
Property leases with fixed payments	7	11	—	—
Leases of plant and equipment	19	4	—	—
	34	15	85	± 337

	Lease	Fixed	Variable
	contracts	payments	payments	Sensitivity
31 March 2023	Number	%	%	£’000
Property leases with periodic uplifts to market rentals	7	—	83	± 309
Property leases with fixed payments	11	16	—	—
Leases of plant and equipment	1	1	—	—
	19	17	83	± 309

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; and

• whether the location represents a new area of operations for the Group.

At 31 March 2024 and 31 March 2023, 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 £6,747,875

(2023: £6,170,938) are potentially avoidable were the Group to exercise break clauses at the earliest opportunity.

XPS Pensions Group plc Annual Report and Accounts 2024

132

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

17 Leases continued

Nature of leasing activities (in the capacity as lessee) continued

	Land and		Office
	buildings	Cars	equipment	Total
Right-of-use assets	£’000	£’000	£’000	£’000
At 1 April 2023	9,640	—	44	9,684
Additions	2,576	476	—	3,052
Depreciation	(2,740)	(103)	(4 4)	(2,887)
Effect of modification to lease terms	(311)	—	—	(311)
Disposal of lease	(627)	(19)	—	(646)
At 31 March 2024	8,538	354	—	8,892

	Land and	Office
	buildings	equipment	Total
Right-of-use assets	£’000	£’000	£’000
At 1 April 2022	10,824	103	10,927
Additions	616	—	616
Depreciation	(2,795)	(59)	(2,854)
Effect of modification to lease terms	309	—	309
On acquisition	686	—	686
At 31 March 2023	9,640	44	9,684

	Land and		Office
	buildings	Cars	equipment	Total
Lease liabilities	£’000	£’000	£’000	£’000
At 1 April 2023	9,880	—	55	9,935
Additions	2,359	476	—	2,835
Interest expense	304	18	1	323
Effect of modification to lease term	(311)	—	—	(311)
Disposal	(511)	(19)	—	(530)
Lease payments	(2,915)	(114)	(56)	(3,085)
At 31 March 2024	8,806	361	—	9,167

	Land and	Office
	buildings	equipment	Total
Lease liabilities	£’000	£’000	£’000
At 1 April 2022	11,565	115	11,680
Additions	616	—	616
Interest expense	287	3	290
Effect of modification to lease term	82	—	82
On acquisition	534	—	534
Lease payments	(3,204)	(63)	(3,267)
At 31 March 2023	9,880	55	9,935

	31 March	31 March
	2024	2023
	£’000	£’000
Short-term lease expense	285	211
Low-value lease expense	23	11
Aggregate expense for short-term leases	308	222

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

133

17 Leases continued

Nature of leasing activities (in the capacity as lessee) continued

The maturity of the lease liabilities is as follows:

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Up to 3 months	471	817
Between 3 and 12 months	1,401	1,884
Between 1 and 2 years	1,640	1,742
Between 2 and 5 years	3,869	4,135
More than 5 years	1,786	1,357
	9,167	9,935

The cash flows above are discounted and reconcile back to the lease liability. For the undiscounted cash flows, please

see note 31.

18 Intangible assets

		Customer
	Goodwill	relationships	Brands	Software	Total
Group	£’000	£’000	£’000	£’000	£’000
Cost
Balance at 1 April 2023	125,367	130,484	295	14,589	270,735
Adjustment to prior year business combination	(71)	—	—	—	(71)
Additions	—	—	—	5,450	5,450
Disposals	—	—	—	(1,420)	(1,420)
Balance at 31 March 2024	125,296	130,484	295	18,619	274,694
Accumulated amortisation
Balance at 1 April 2023	—	55,254	99	3,279	58,632
Amortisation for the year	—	6,838	196	2,027	9,061
Disposals	—	—	—	(1,069)	(1,069)
Balance at 31 March 2024	—	62,092	295	4,237	66,624
Net book value
Balance at 1 April 2023	125,367	75,230	196	11,310	212,103
Balance at 31 March 2024	125,296	68,392	—	14,382	208,070

		Customer
	Goodwill	relationships	Brands	Software	Total
Group	£’000	£’000	£’000	£’000	£’000
Cost
Balance at 1 April 2022	121,818	125,269	6,036	10,807	263,930
Acquired through business combinations	3,549	5,215	295	—	9,059
Additions	—	—	—	4,879	4,879
Disposals	—	—	(6,036)	(1,097)	(7,133)
Balance at 31 March 2023	125,367	130,484	295	14,589	270,735
Accumulated amortisation
Balance at 1 April 2022	—	48,527	5,980	2,623	57,130
Amortisation for the year	—	6,727	155	1,753	8,635
Disposals	—	—	(6,036)	(1,097)	(7,133)
Balance at 31 March 2023	—	55,254	99	3,279	58,632
Net book value
Balance at 1 April 2022	121,818	76,742	56	8,184	206,800
Balance at 31 March 2023	125,367	75,230	196	11,310	212,103

XPS Pensions Group plc Annual Report and Accounts 2024

134

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

18 Intangible assets continued

Material customer relationship assets are broken down as follows:

		31 March 2024		31 March 2023
	Remaining	Net book	Remaining	Net book
	UEL	value	UEL	value
	years	£’000	years	£’000
Acquisitions prior to January 2018 (CGU 1)	9	16,028	10	17,820
Punter Southall actuarial (CGU 2)	14	38,104	15	40,869
Punter Southall administrative (CGU 3)	4	3,699	5	4,677
Kier (CGU 3)	5	1,423	6	1,734
XPS Pensions RL Limited (CGU 1)	6	1,574	7	1,879
XPS Pensions Trigon Limited (CGU 1)	6	1,202	7	1,417
Michael J Field (CGU 1)	8	1,538	9	1,743
Penfida Limited (CGU 4)	19	4,824	20	5,085

Software assets held by the Group comprise internally generated or enhanced software for use in providing

services to customers. The largest group of software assets relates to the Administration business, specifically the

development of an in-house administration system. Software disposals in the year related to software disposed of

as part of the NPT disposal (see note 7), and software which has reached the end of its useful economic life and is

no longer in use.

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 four cash-generating units that were identified in

prior years.

The four CGUs to which goodwill has been allocated are:

CGU 1 – former Xafinity businesses, and Royal London, Trigon and Michael J Field acquisitions;

CGU 2 – PS Actuarial;

CGU 3 – PS Admin; and

CGU 4 – Penfida.

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:

			2024				2023
	CGU 1	CGU 2	CGU 3	CGU 4	CGU 1	CGU 2	CGU 3	CGU 4
Discount rate pre-tax	12.6%	12.6%	12.6%	12.6%	13.1%	13.1%	13.1%	13.1%
Terminal rate after period 8	2.0%	2.0%	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	3 years	3 years
Growth rate during detailed forecast
period (average)	10.4%	8.5%	30.2%	20.8%	7.7%	8.8%	31.2%	9.4%
Growth rate applied beyond
approved forecast period to year 8	5%	5%	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 ten-year UK government bond yield as a proxy for the risk-free rate;

• equity risk premium: the implied rate as at 31 March 2024 is used to assess the price of risk in equity markets; and

• 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.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

135

18 Intangible assets continued

Impairment test continued

The cash flows used for the value in use calculations incorporate the impact of inflation, and future assumptions

regarding inflation which are based on the latest outlook from the UK government.

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 for up to eight years; this is due to the longevity of the customer relationships held by the

Group. The growth rate of 5% is higher than the terminal rate due to expectations of market conditions and higher

inflation in the medium term.

The impairment exercise demonstrated that there was significant headroom in all CGUs on this basis, particularly in

CGUs 1, 2 and 3, and so the Directors are satisfied that no impairment has arisen during the financial period.

	2024	2023
Goodwill allocated to cash-generating units:	£’000	£’000
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	30,007
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
Goodwill – Penfida Limited (CGU 4)	3,478	3,549
Total	125,296	125,367

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 no requirement for impairment.

The Group has also assessed the sensitivity of the discount rate and growth rates used in the impairment testing and

determined that these were not sensitive.

19 Deferred income tax

Analysis of the breakdown and movement of deferred tax during the year is as follows:

	Balance at	Recognised	Recognised		31 March
	1 April 2023	in income	in equity 2024
	£’000	£’000	£’000	£’000
Property, plant and equipment	226	93	—	319
Capital gains	943	—	—	943
Other temporary and deductible differences – share-based payments	(1,806)	(526)	(1,167)	(3,499)
Other temporary and deductible differences – other	(10)	506	—	496
Customer relationships	19,092	(1,758)	—	17,334
	18,445	(1,685)	(1,167)	15,593

	Balance at	Recognised	Recognised	Acquired	31 March
	1 April 2022	in income	in equity	in period	2023
	£’000	£’000	£’000	£’000	£’000
Property, plant and equipment	90	136	—	—	226
Capital gains	943	—	—	—	943
Other temporary and deductible differences – share-based payments	(1,087)	(461)	(258)	—	(1,806)
Other temporary and deductible differences – other	(12)	2	—	—	(10)
Customer relationships	19,032	(1,304)	—	1,364	19,092
	18,966	(1,627)	(258)	1,364	18,445

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, using a rate substantively enacted at 31 March 2024, which is not lower than 25% (2023: 25%).

XPS Pensions Group plc Annual Report and Accounts 2024

136

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

20 Other financial assets

Following the sale of the NPT business, the restricted cash held of £1,847,000 was transferred to the new owners of

the NPT. In the prior year, this restricted cash was presented as a non-current financial asset. This restricted cash was

held by the Group as security for the NPT. For the NPT to gain approval to operate by the Pensions Regulator, the

Group was required to demonstrate it could support the NPT in any eventuality. The Group therefore placed cash into

a restricted bank account, which the trustees of the NPT are able to access in certain circumstances. There were no

lifetime expected credit losses associated with this cash balance.

21 Trade and other receivables

	31 March	31 March
	2024	2023
	£’000	£’000
Trade receivables	27,650	21,642
Less: provision for impairment of trade receivables	(602)	(363)
Net trade receivables	27,048	21,279
Contract assets – accrued income	16,706	16,407
Contract assets – amounts recognised for triennial reviews	1,355	1,475
Total contract assets	18,061	17,882
Total financial assets other than cash and cash equivalents carried at amortised cost	45,109	39,161
Prepayments	5,530	4,498
Other receivables	283	106
Total trade and other receivables	50,922	43,765

The carrying value of trade and other receivables carried at amortised cost approximates to fair value.

				Past due
		Past due	Past due	more than
	Current	0–30 days	31–90 days	90 day	Total
31 March 2024	£’000	£’000	£’000	£’000	£’000
Expected loss rate	0%	1%	7%	41%
Gross carrying amount	20,046	4,788	1,867	949	27,650
Loss provision	72	50	129	389	640
Amendment for specific bad debt provision	(72)	(50)	(129)	213	(38)
Total	—	—	—	602	602

				Past due
		Past due	Past due	more than
	Current	0–30 days	31–90 days	90 days	Total
31 March 2023	£’000	£’000	£’000	£’000	£’000
Expected loss rate	0%	1%	4%	18%
Gross carrying amount	16,402	3,395	1,177	668	21,642
Loss provision	32	21	51	123	227
Amendment for specific bad debt provision	(32)	(21)	(51)	240	136
Total	—	—	—	363	363

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 2023 contract asset balance relating to triennial reviews of £1,475,000, £1,246,000 was billed in the year,

reducing the brought forward amount. A further £1,126,000 of revenue was recognised in the year. There are no other

significant movements in the contract assets balance in the year. The March 2024 contract asset balance is expected

to be billed in the year ending 31 March 2025 (£1,119,000), the year ending 31 March 2026 (£223,000) and the year

ending 31 March 2027 (£13,000).

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

137

22 Cash and cash equivalents

	31 March	31 March
	2024	2023
	£’000	£’000
Cash and cash equivalents per statement of financial position	10,005	13,285
Cash and cash equivalents per statement of cash flows	10,005	13,285

The balance is comprised solely of cash at bank and on hand.

23 Loans and borrowings

		Due
	Due within	between		Sub-total
	1 year	1 and 2	Due after	(non-
	(current)	years	2 years	current)	Total
31 March 2024	£’000	£’000	£’000	£’000	£’000
Drawn revolving credit facility	—	—	24,000	24,000	24,000
Capitalised debt arrangement fees	—	—	(614)	(614)	(614)
Total	—	—	23,386	23,386	23,386

	Due	Due
	within	between		Sub-total
	1 year	1 and 2	Due after	(non-
	(current)	years	2 years	current)	Total
31 March 2023	£’000	£’000	£’000	£’000	£’000
Drawn revolving credit facility	—	—	68,000	68,000	68,000
Capitalised debt arrangement fees	—	—	(690)	(690)	(690)
Total	—	—	67,3 10	67,310	67,3 10

The book value and fair value of loans and borrowings are not materially different.

Terms and debt repayment schedule

	Amount			Year of
31 March 2024	£’000	Currency	Nominal interest rate	maturity
Revolving credit facility	24,000	GBP	1.25% above SONIA	2026

	Amount		Nominal interest	Year of
31 March 2023	£’000	Currency	rate	maturity
Revolving credit facility	68,000	GBP	1.85% above SONIA	2025

At 31 March 2024 the Group had drawn down £24,000,000 (2023: £68,000,000) of its £100,000,000 revolving

credit facility. The Group’s revolving facility agreement is for £100 million with an accordion of £50 million.

This facility had a four-year term which started in October 2021. In April 2023, a one-year extension to the term was

agreed, extending it to October 2026. Interest is calculated at a margin above SONIA, subject to a net leverage test.

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

Pensions Group plc, XPS Consulting (Reading) Limited, XPS Financing Limited, XPS Reading Limited, XPS Pensions

Consulting Limited, XPS SIPP Services Limited, XPS Holdings Limited, XPS Pensions Limited, XPS Investment Limited,

XPS Administration Holdings Limited and XPS Administration Limited. The security is over all the assets of the

companies which are obligors to the loans.

24 Reconciliation of liabilities arising from financing activities

				Non-cash
				change:
			Other	new leases/
	31 March	Cash	non-cash	interest		31 March
	2023	flows	changes	this year 2024
	£’000	£’000	£’000	£’000	£’000
Drawn revolving credit facility	68,000	(44,000)	—	—	24,000
Capitalised debt arrangement fees	(690)	(200)	276	—	(614)
Interest payable on long-term borrowings	49	(3,905)	—	3,901	45
Lease liabilities	9,935	(3,085)	—	2,317	9,167
Total liabilities from financing activities	77,294	(51,190)	276	6,218	32,598

XPS Pensions Group plc Annual Report and Accounts 2024

138

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

24 Reconciliation of liabilities arising from financing activities continued

				Non-cash
				change:
			Other	new leases/
	31 March	Cash	non-cash	interest		31 March
	2022	flows	changes	this year 2023
	£’000	£’000	£’000	£’000	£’000
Drawn revolving credit facility	64,000	4,000	—	—	68,000
Capitalised debt arrangement fees	(967)	—	277	—	(690)
Interest payable on revolving credit facility	57	(2,985)	—	2,977	49
Lease liabilities	11,680	(3,267)	—	1,522	9,935
Total liabilities from financing activities	74,770	(2,252)	277	4,499	77, 294

Net debt for bank reporting purposes:

	31 March	31 March
	2024	2023
	£’000	£’000
Drawn revolving credit facility	24,000	68,000
Contingent consideration	—	568
Less: cash	(10,005)	(13,285)
Net debt	13,995	55,283

For banking covenant purposes, net debt includes any amounts owed as contingent consideration but excludes

lease liabilities .

25 Trade and other payables

	31 March	31 March
	2024	2023
	£’000	£’000
Trade payables	2,839	4,752
Accrued expenses	17, 215	14,561
Accrued earn out consideration relating to Penfida	2,534	845
Interest payable	89	49
Other payables	495	471
Total financial liabilities excluding leases, loans and borrowings
classified as financial liabilities at amortised cost	23,172	20,678
Other payables – tax and social security payments	2,411	2,178
Other payables – VAT	7,358	5,892
Contract liabilities	10,781	3,315
Total trade and other payables	43,722	32,063
Due within one year or less	43,722	31,218
Due between one and three years	—	845

The carrying value of trade and other payables classified as financial liabilities measured at amortised cost

approximates to fair value.

In the prior year, the Penfida accrued earn out consideration was disclosed as a non-current liability; however, in the

current year this is a current liability as payment is due within 12 months of the year end.

The March 2024 contract liability balance is expected to be recognised in the year ended 31 March 2025

(£10,435,000), 31 March 2026 (£250,000) and 31 March 2027 (£96,000). Of the March 2023 contract liability balance

of £3,315,000, £3,011,000 was recognised in revenue in the year to 31 March 2024, £251,000 will be recognised in the

year to 31 March 2025, and £53,000 will be recognised in the year to 31 March 2026.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

139

26 Current income tax liabilities

	31 March	31 March
	2024	2023
	£’000	£’000
Tax payable	427	2,280
	427	2,280

27 Provisions for other liabilities and charges

	Social
	security
	costs on		Professional
	PSP/SEP	Dilapidations	indemnity	Total
31 March 2024	£’000	£’000	£’000	£’000
Balance at 1 April 2023	1,155	1,911	812	3,878
Provisions made during the year	1,466	317	923	2,706
Provisions used during the year	(764)	(675)	(986)	(2,425)
Provisions released unused during the year	—	(200)	(243)	(443)
Balance at 31 March 2024	1,857	1,353	506	3,716
Due within one year or less	954	454	506	1,914
Due after more than one year:
Between one and three years	903	73	—	976
Over three years	—	826	—	826
	1,857	1,353	506	3,716

	Social
	security
	costs on		Professional
	PSP/SEP	Dilapidations	indemnity	Total
31 March 2023	£’000	£’000	£’000	£’000
Balance at 1 April 2022	995	1,631	391	3,017
Provisions made during the year	765	247	558	1,570
Provisions used during the year	(605)	(4 4)	(93)	(742)
Provisions released unused during the year	—	(116)	(4 4)	(160)
On acquisition	—	193	—	193
Balance at 31 March 2023	1,155	1,911	812	3,878
Due within one year or less	658	539	812	2,009
Due after more than one year:
Between one and three years	497	288	—	785
Over three years	—	1,084	—	1,084
	1,155	1,911	812	3,878

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 after 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 plc Annual Report and Accounts 2024

140

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

28 Contingent consideration

	Balance at
	1 April	Fair value	Settled in	31 March
	2023	adjustment		year 2024
	£’000	£’000	£’000	£’000
Contingent cash consideration	568	(92)	(476)	—
	568	(92)	(476)	—

	Balance at
	1 April	Fair value	Settled in	31 March
	2022	adjustment		year 2023
	£’000	£’000	£’000	£’000
Contingent cash consideration	765	(197)	—	568
	765	(197)	—	568

The contingent cash consideration liability recognised at 31 March 2023 relates to the Michael J Field acquisition

in February 2022. The liabilities were calculated based on terms agreed in the business purchase agreement for

Michael J Field, which were dependent on certain revenue and cost targets being met in the 12 months following the

acquisition date. A final settlement of £476,461 was paid in the year, with the remaining balance being recognised as

other operating income in the statement of comprehensive income.

The amount disclosed in the cash flow is the £476,461 noted above, net of £71,000 received from the sellers of Penfida

Limited, due to a purchase price adjustment received in 2024.

29 Share capital

		31 March 2024		31 March 2023
	Ordinary	Ordinary	Ordinary	Ordinary
	shares	shares	shares	shares
	’000	£’000	’000	£’000
In issue at the beginning of the year	207,443	104	205,151	103
Issued during the year	102	—	2,292	1
In issue at the end of the year	207, 545	104	207,443	104

	31 March 2024		31 March 2023
	’000	£’000	’000	£’000
Allotted, called up and fully paid
Ordinary shares of 0.05p (2023: 0.05p) each Shares held by the Group’s Employee Benefit Trust	206,032	103	206,427	103
Ordinary shares of 0.05p (2023: 0.05p) each	1,513	1	1,016	1
Shares classified in shareholders’ funds	207,545	104	207,443	104

The number of shares allotted in the year is 101,835 (2023: 2,291,669).

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.

30 Reserves

The following describes the nature and purpose of each reserve within equity:

Reserve	Description and purpose
Retained earnings/	All net gains and losses recognised through the consolidated statement of comprehensive
accumulated deficit:	income.
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 and nominal value
	of shares issued on the acquisition of subsidiary companies.
Investment in own shares:	Cost of own shares held by the EBT.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

141

31 Financial instruments

The fair values and the carrying values of financial assets and liabilities are the same.

Credit risk

The maximum exposure to credit risk at the reporting date was:

	Carrying	Carrying
	amount	amount
	31 March	31 March
	2024	2023
	£’000	£’000
Trade receivables	27,650	21,642
Provision for impairment of trade receivables	(602)	(363)
Net trade receivables due	27,048	21,279
Contract assets – accrued income	16,706	16,407
Contract assets – amounts recognised for triennial reviews	1,355	1,475
Cash and cash equivalents	10,005	13,285
Non-current financial asset	—	1,847
Total	55,114	54,293

Credit risk mitigation

The ageing of trade receivables at the reporting date was:

	31 March	31 March
	2024	2023
	£’000	£’000
Not past due	20,046	16,402
Past due 0–30 days	4,788	3,395
Past due 31–90 days	1,867	1,177
Past due more than 90 days	949	668
Total	27,650	21,642
Movement in impairment allowance for trade receivables
Balance at start of the year	363	330
Increase during the year	510	359
Receivable written off during the year as uncollectable	(107)	(105)
Reversal of allowances	(164)	(221)
Balance at end of the year	602	363

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 £602,000 (2023: £363,000) 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

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 the Group’s

revolving credit facility at a margin over SONIA.

Interest rate risk

The interest rate on the Group’s revolving credit facility 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.

XPS Pensions Group plc Annual Report and Accounts 2024

142

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

31 Financial instruments continued

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:

		Between	Between	Between
	Up to 3	3 and 12	1 and 2	2 and 5	Over	31 March
	months	months	years	years	5 years	2024
	£’000	£’000	£’000	£’000	£’000	£’000
Trade and other payables	23,172	—	—	—	—	23,172
Leases	555	1,604	1,888	4,321	1,952	10,320
Loans and borrowings	—	—	—	24,000	—	24,000
Bank interest	396	1,127	1,522	973	—	4,018
	24,123	2,731	3,410	29,294	1,952	61,510

		Between	Between	Between
	Up to 3	3 and 12	1 and 2	2 and 5	Over	31 March
	months	months	years	years	5 years	2023
	£’000	£’000	£’000	£’000	£’000	£’000
Trade and other payables	20,678	—	—	—	—	20,678
Leases	1,009	2,067	1,926	4,337	1,500	10,839
Loans and borrowings	—	—	—	68,000	—	68,000
Bank interest	1,000	3,425	3,936	2,364	—	10,725
Deferred consideration	568	—	—	—	—	568
	23,255	5,492	5,862	74,701	1,500	110,810

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 objective 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.

Management of capital

	31 March	31 March
	2024	2023
	£’000	£’000
Total equity	185,854	149,284

32 Notes supporting statement of cash flows

Cash and cash equivalents for the purposes of the statement of cash flows comprise:

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Cash at bank available on demand	10,005	13,285

33 Related party transactions

Key management emoluments during the year

Key management personnel are those persons having authority and responsibility for planning, directing and

controlling the activities of the Group, being the Board of Directors.

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Emoluments	4,509	3,310
Share-based payment	1,233	894
Company contributions to defined contribution pension plans	30	30
Social security costs	530	376
	6,302	4,610

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

143

33 Related party transactions continued

Non-executive emoluments during the year

	Year ended	Year ended
	31 March	31 March
	2024	2023
	£’000	£’000
Emoluments	368	303
Social security costs	45	39
	413	342

34 Earnings per share

	31 March	31 March
	2024	2023
	£’000	£’000
Profit for the year	54,167	15,837

	31 March	31 March
	2024	2023
	’000	’000
Weighted average number of ordinary shares in issue	206,760	205,448
Diluted weighted average number of ordinary shares	219,621	216,071
Basic earnings per share (pence)	26.2	7.7
Diluted earnings per share (pence)	24.7	7.3

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	Year
	ended	ended
	31 March	31 March
	2024	2023
	’000	’000
Weighted average number of ordinary shares in issue	206,760	205,448
Dilutive impact of share options vested up to exercise date	940	802
Dilutive impact of PSP and SEP options not yet vested	9,226	7,920
Dilutive impact of dividend yield shares for PSP and SEP options	1,246	1,069
Dilutive impact of SAYE options not yet vested	1,449	832
Diluted weighted average number of ordinary shares	219,621	216,071

Share awards were made to the Executive Board members and key management personnel in each year since the

year ending 31 March 2017; these are subject to certain conditions and each tranche of awards vest three 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 2022 and 2023, these will

vest in the years ending 31 March 2025 and 2026 respectively. These shares are reflected in the diluted number of

shares and diluted earnings per share calculations.

Adjusted earnings per share

	31 March	31 March
	2024	2023
	£’000	£’000
Adjusted profit after tax	33,496	27,143
Adjusted earnings per share (pence)	16.2	13.2
Diluted adjusted earnings per share (pence)	15.3	12.6

The adjusted profit after tax is taken from the trading column of the income statement, and excludes the impact of the

exceptional and non-trading items disclosed in note 6.

XPS Pensions Group plc Annual Report and Accounts 2024

144

Notes to the consolidated financial statements continued

for the year ended 31 March 2024

35 Subsidiaries

The following are the wholly owned companies consolidated within the financial statements of XPS Pensions

Group plc:

	Company
Company name	number	Principal activity	Registered address
XPS Financing Limited	08279274	Holding company	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

The subsidiaries below are indirectly owned by other Group companies:

	Company
Company name	number	Principal activity	Registered address
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	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
		consultancy
XPS SIPP Services Limited	SC069096	Employee benefit	Scotia House, Castle Business Park, Stirling, Stirlingshire
		consultancy	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	Scotia House, Castle Business Park, Stirling, Stirlingshire
		consultancy	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	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
		consultancy
XPS Investment Limited	06242672	Employee benefit	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
		consultancy
XPS Pensions Limited	03842603	Employee benefit	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
		consultancy
XPS Pensions (RL) Limited	05817049	Employee benefit	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
		consultancy
XPS Pensions (Trigon) Limited	12085392	Employee benefit	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
		consultancy
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	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
		development
Penfida Limited	08020393	Employee benefit	Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB
		consultancy

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

145

35 Subsidiaries continued

Subsidiary audit exemptions

The following UK subsidiary undertakings are exempt from the requirements of the Companies Act 2006 (the “Act”)

relating to the audit of individual accounts by virtue of Section 479A of the Act.

Company name	Company number
XPS Financing Limited	08279274
XPS Reading Limited	08279362
Hazell Carr (AT) Services Limited	SC420031
XPS Holdings Limited	04807951
XPS Administration Holdings Limited	09655671
XPS Pensions (RL) Limited	05817049
XPS Pensions (Trigon) Limited	12085392
Pensions Software Solutions Limited	11482474
Penfida Limited	08020393

The Company will guarantee all outstanding liabilities that these subsidiaries are subject to as the financial year ended

31 March 2024 in accordance with Section 479C of the Act, as amended by the Companies and Limited Liability

Partnerships (Accounts and Audit Exemptions and Change of Accounting Framework) Regulations 2012. In addition,

the Company will guarantee any contingent and prospective liabilities that these subsidiaries are subject to.

36 Dividends

Amounts recognised as distributions to equity holders of the Parent in the year

	31 March	31 March
	2024	2023
	£’000	£’000
Final dividend for the year ended 31 March 2023: 5 .7p per share (2022: 4 . 8p per share)	11,825	9,763
Interim dividend for the year ended 31 March 2024: 3.0p (2023: 2.7p) per ordinary share was paid
during the year	6,200	5,568
	18,025	15,331

The recommended final dividend payable in respect of the year ended 31 March 2024 is £14.6 million or 7 .0p per share

(2023: £11.8 million or 5.7p per share).

The proposed dividend has not been accrued as a liability as at 31 March 2024 as it is subject to approval at the Annual

General Meeting.

	31 March	31 March
	2024	2023
	£’000	£’000
Proposed final dividend for year ended 31 March 2024	14,630	11,825

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 £166,081,000.

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.

XPS Pensions Group plc Annual Report and Accounts 2024

146

Statement of financial position – Company

as at 31 March 2024

Note

31 March

2024

£’000

31 March

2023

Restated

£’000

31 March

2022

Restated

£’000

Assets

Non-current assets

Investments 5 38,478 33,831 29,681

Trade and other receivables 6 259,006 243,660 229,163

297,484 277,491 258,844

Current assets

Trade and other receivables 6 — 5 5

Cash and cash equivalents 7 1,623 1,704 —

1,623 1,709 5

Total assets 299,107 279,200 258,849

Liabilities

Non-current liabilities

Trade and other payables 8 44,464 41,257 42,366

44,464 41,257 42,366

Current liabilities

Trade and other payables 8 — 204 —

Current tax liabilities 9 3,294 1,273 744

3,294 1,477 744

Total liabilities 47,758 42,734 43,110

Net assets 251,349 236,466 215,739

Equity and liabilities

Share capital 10 104 104 103

Share premium 11 1,786 1,786 116,804

Merger relief reserve 11 48,687 48,687 48,687

Investment in own shares 11 (2,925) (1,350) (4,157)

Other reserve 11 37,616 32,969 28,818

Retained profit 11 166,081 154,270 25,484

Total equity 251,349 236,466 215,739

The notes on pages 149 to 153 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 £33,855,000 (2023: £31,450,000).

These financial statements were approved by the Board of Directors on 19 June 2024 and were signed on its behalf by:

Snehal Shah

Chief Financial Officer

19 June 2024

Registered number: 08279139

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

147

Statement of changes in equity – Company

for the year ended 31 March 2024

capital

£’000

premium

£’000

Merger

relief

reserve

£’000

Investment

in own

£’000

Other

reserve

£’000

Retained

profit

£’000

Total

£’000

Balance at 1 April 2022 (as previously stated) 103 116,804 48,687 — 28,818 28,073 222,485

Adjustment for aggregation of Employee

BenefitTrust — — — (4,1 57) — (2,589) (6,746)

Balance at 1 April 2022 (as restated) 103 116,804 48,687 (4,157) 28,818 25,484 215,739

Comprehensive income and total comprehensive

income for the year (as restated) — — — — — 31,450 31,450

Contributions by and distributions to owners

Share capital issued 1 1,786 — — — — 1,787

Share premium reduction — (116,804) — — — 116,804 —

Shares purchased by Employee Benefit Trust

forcash — — — (2,200) — — (2,200)

Share-based payment expense – equity settled

from Employee Benefit Trust — — — 5,007 — (4 ,137) 870

Share-based payment expense – IFRS 2 charge

in respect of long-term incentives — — — — 3,893 — 3,893

Deferred tax movement in respect of long-term

incentives — — — — 258 — 258

Dividends paid — — — — — (15,331) (15,331)

Total contributions by and distributions to owners 1 (115,018) — 2,807 4,151 97, 336 (10,723)

Balance at 31 March 2023 as restated 104 1,786 48,687 (1,350) 32,969 154,270 236,466

Balance at 1 April 2023 104 1,786 48,687 (1,350) 32,969 154,270 236,466

Comprehensive income and total comprehensive

income for the year — — — — — 33,855 33,855

Contributions by and distributions to owners

Shares purchased by Employee Benefit Trust

forcash — — — (5,621) — — (5,621)

Share-based payment expense – equity settled

from Employee Benefit Trust — — — 4,046 — (4,019) 27

Share-based payment expense – IFRS 2 charge

in respect of long-term incentives — — — — 4,910 — 4,910

Deferred tax movement in respect of

long-term incentives — — — — (263) — (263)

Dividends paid — — — — — (18,025) (18,025)

Total contributions by and distributions to owners — — — (1,575) 4,647 (22,044) (18,972)

Balance at 31 March 2024 104 1,786 48,687 (2,925) 37,616 166,081 251,349

The balance at 1 April 2022 has been restated following an accounting policy change in the year to aggregate the

Employee Benefit Trust (EBT) within the Company. Further information on this change can be found in note 1. The impact

on opening retained earnings of £2,589,000 is due to the loss on disposal of shares incurred by the EBT when

shares acquired at market value were used to satisfy share options at nominal value in prior periods. The change in

policy lead to a £44,000 reduction in comprehensive income for the year ended 31 March 2023 (£31,494,000 before

therestatement).

The appropriate filing of interim accounts showing sufficient reserves to pay the £15,331,000 dividend was undertaken.

The notes on pages 149 to 153 form part of these financial statements.

XPS Pensions Group plc Annual Report and Accounts 2024

148

Year ended

31 March

2024

£’000

Year ended

31 March

2023

Unaudited

Restated

£’000

Cash flows from operating activities

Profit for the year 33,855 31,450

Adjustments for:

Finance income (15,876) (7,090)

Finance costs 2,727 1,339

Income tax expense 3,294 1,101

Dividend income (24,000) (26,800)

Net cash inflow from operating activities — —

Cash flows from investing activities

Finance income received 17 —

Net cash inflow from investing activities 17 —

Cash flows from financing activities

Purchase of ordinary shares by the EBT (5,621) (2,200)

Loans with related parties 5,523 3,904

Net cash (outflow)/inflow from financing activities (98) 1,700

Net (decrease)/increase in cash and cash equivalents (81) 1,704

Cash and cash equivalents at start of year 1,704 —

Cash and cash equivalents at end of year 1,623 1,704

The prior year has been restated due to the accounting policy change to aggregate the Employee Benefit Trust within

the XPS Pensions Group plc Company financial statements. Previously, no cash flow statement was presented as XPS

Pensions Group plc does not hold a bank account. However, as the EBT holds a bank account for the purposes of

acquiring shares in the Group on behalf of XPS Pensions Group plc, a cash flow statement has been presented, along

with the comparative year.

The dividends are paid from a subsidiary company, as the Company itself does not hold a bank account.

The notes on pages 149 to 153 form part of these financial statements.

Statement of cash flows – Company

for the year ended 31 March 2024

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

149

Notes to the financial statements – Company

for the year ended 31 March 2024

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 Accounting Standards.

The financial statements have been prepared under the going concern basis.

The preparation of financial statements in accordance with the requirements of International Financial Reporting

Standards (IFRS) 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.

The prior year cash flow statement is unaudited. This is because in the prior year, the Employee Benefit Trust (EBT)

was unaggregated, and the Company itself does not hold a bank account. Due to the aggregation of the EBT in the

year (see below for more detail), a cash flow statement has been presented in these financial statements, along with a

comparative year.

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 and related deferred tax, 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.

Change in accounting policy: aggregation of Employee Benefit Trust

In the year, management has reviewed the accounting treatment of its Employee Benefit Trust (EBT). Accounting

standards in this area provide no clear guidance and so it is down to management to determine the most appropriate

way to present the EBT. Under the previous permitted accounting policy, the EBT was excluded from the financial

statements of XPS Pensions Group plc. Management have decided that it is appropriate to aggregate the assets and

the liabilities of the EBT within XPS Pensions Group plc. This decision has been made to provide users of the accounts

with more transparency over the EBT and its transactions. XPS Pensions Group plc currently gifts the EBT with cash

(via another Group entity) and instructs the EBT to use this cash to purchase XPS Pensions Group plc shares from

the market. These shares are then used to settle vested employee share options. As the EBT can only operate on the

explicit instruction of XPS Pensions Group plc, the EBT is acting as an agent of XPS Pensions Group plc and therefore

meets the criteria for aggregation. As the EBT holds cash balances where it has not yet fulfilled the wishes ofXPS

Pensions Group plc, aggregation allows management to disclose this cash balance in the Company-only financial

statements, providing more information to users of these accounts.

This change has had no impact on the Group’s consolidated financial statements, as the EBT was previously

consolidated within the Group accounts. The change impacts XPS Pensions Group plc’s Company-only financial

statements, and therefore as a result of this change, the prior year statement of financial position and statement of

changes in equity have been restated. Additionally, a cash flow statement is now disclosed for the Company, as the

EBT holds a bank account.

Changes in accounting policies – new standards, interpretations, and amendments effective from 1 April 2023

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 Company as they are either not relevant to the Company’s activities or require

accounting which is consistent with the Company’s current accounting policies.

XPS Pensions Group plc Annual Report and Accounts 2024

150

Notes to the financial statements – Company continued

for the year ended 31 March 2024

1 Accounting policies continued

New standards and interpretations adopted and not yet adopted

A number of new standards, amendments to standards and interpretations are not effective for 2024, 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.

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 are

included in Company note 13.

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 2024 (2023: 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. See Group accounts note 12 for more information.

Pension contributions of £nil (2023: £nil) were paid on behalf of the Directors in the Company.

5 Investments in subsidiaries

31 March

2024

£’000

31 March

2023

£’000

31 March

2022

£’000

At the beginning of the year 33,831 29,681 26,345

In relation to XPS Pensions Consulting Limited 2,765 2,403 1,894

In relation to XPS SIPP Services Limited 94 100 89

In relation to XPS Pensions Limited 1,040 983 818

In relation to XPS Administration Limited 618 560 454

In relation to XPS Investment Limited 114 80 65

In relation to XPS Pensions (RL) Limited 11 14 11

In relation to XPS Pensions (Trigon) Limited 5 10 5

At the end of the year 38,478 33,831 29,681

Subsidiary Ownership

Country of

incorporation

Class of

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 and Senior

Equity Plan awards.

All other subsidiaries disclosed in note 35 of the Group accounts are indirectly owned by other Group companies.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

151

6 Trade and other receivables

31 March

2024

£’000

31 March

2023

Restated

£’000

31 March

2022

Restated

£’000

Receivables due from related parties 259,006 243,660 229,163

Other receivables — 5 5

Total 259,006 243,665 229,168

Non-current receivable 259,006 243,660 229,163

Current receivable — 5 5

Total 259,006 243,665 229,168

The prior year has been restated as a result of the aggregation of the Employee Benefit Trust (EBT). Had the EBT

not been aggregated, then the current year receivable would have increased by £27,860,000 to £275,493,000 as at

31March 2024, the 31 March 2023 receivable would have increased by £13,776,000 to £247,633,000, and the balance

at 31 March 2022 was £233,857,000, an increase of £16,734,000 in the year. The receivable at 31 March 2023 would

have been restated from £251,335,000 to £247,635,000 to reflect an error in the way the EBT received funds after

September 2022.

7 Cash and cash equivalents

31 March

2024

£’000

31 March

2023

Restated

£’000

31 March

2022

£’000

Cash and cash equivalents per statement of financial position 1,623 1,704 —

Cash and cash equivalents per statement of cash flows 1,623 1,704 —

The prior year has been restated as a result of the aggregation of the Employee Benefit Trust (EBT). The EBT holds a

bank account, and the amounts above represent the cash held within this account.

8 Trade and other payables

31 March

2024

£’000

31 March

2023

Restated

£’000

31 March

2022

Restated

£’000

Payables due to related parties 44,464 41,257 42,366

Other payables — 204 —

Total trade and other payables 44,464 41,461 42,366

Non-current payable 44,464 41,257 42,366

Current payable — 204 —

Total 44,464 41,461 42,366

The prior year has been restated as a result of the aggregation of the Employee Benefit Trust (EBT). Had the EBT not

been aggregated, then the current year payable would have increased by £6,282,000 to £45,588,000 as at 31 March

2024, the 31 March 2023 payable would have decreased by £1,003,000 to £39,306,000, and the balance at 31 March

2022 would have been £40,309,000, an increase of £1,997,000 from the balance at 31 March 2021.

9 Current tax liabilities

31 March

2024

£’000

31 March

2023

£’000

31 March

2022

£’000

Corporation tax payable 3,294 1,273 744

10 Share capital

Details on the share capital of the Company are contained in the Group financial statements.

XPS Pensions Group plc Annual Report and Accounts 2024

152

Notes to the financial statements – Company continued

for the year ended 31 March 2024

11 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.

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.

Investment in

own shares:

Cost of own shares held by the EBT. See note 12 for more information.

Retained profit: All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere.

12 Investment in own shares

31 March

2024

£’000

31 March

2023

Restated

£’000

31 March

2022

Restated

£’000

Balance at 1 April 1,350 4,157 2,563

Acquired during the year 5,621 2,200 3,325

Utilised during the year (4,046) (5,007) (1,731)

Balance at 31 March 2,925 1,350 4,157

Investment in own shares represents the cost of shares in the Company purchased in the market and held by the

Employee Benefit Trust (EBT) to satisfy awards under the Group’s employee share option plans (see note 13 to the

Group’s consolidated financial statements).

During the year, 3,067,346 (2023: 1,691,703) shares with a total value of £5,621,000. (2023: £2,200,000) have been

purchased by the EBT. 2,570,801 (2023: 3,844,709) shares were used in the year to satisfy vested employee share

options. The number of ordinary shares held by the EBT at 31 March 2024 was 1,512,760 (2023: 1,016,215).

13 Financial instruments

The fair values and the carrying values of financial assets are the same. All restated amounts in the note below relate

to the aggregation of the EBT (see note 1).

Credit risk

The maximum exposure to credit risk at the reporting date was:

Carrying

amount

31 March

2024

£’000

Carrying

amount

31 March

2023

Restated

£’000

Carrying

amount

31 March

2022

Restated

£’000

Receivables due from related parties 259,006 243,660 229,163

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.

Financial statements

XPS Pensions Group plc Annual Report and Accounts 2024

153

13 Financial instruments continued

Capital risk management

As part of 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 processes

for managing capital are 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 XPS Pensions Group’s

forecast which ensures future covenant test points are met. 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

2024

£’000

31 March

2023

Restated

£’000

31 March

2022

Restated

£’000

Total equity 252,779 236,466 215,739

14 Related party transactions

Amounts receivable from/(payable to) related parties at the balance sheet date

31 March

2024

£’000

31 March

2023

Restated

£’000

31 March

2022

Restated

£’000

Loans to related parties 259,006 243,660 229,163

Loans from related parties (44,464) (41, 257) (42,36 6)

214,541 202,403 186,797

Movement in loans to related parties in the year are as follows:

31 March

2024

£’000

31 March

2023

£’000

31 March

2022

£’000

Interest income 15,860 7,090 3,565

Increase in loans to related parties (24,515) (19,393) (16,241)

Intercompany dividends received 24,000 26,800 27,000

15,345 14,497 14,324

Of the increase in loans to related parties, £5,525,000 (2023: £3,900,000) was cash funded to XPS Pensions Group

plc. The rest of the movements were non-cash.

Movement in loans from related parties in the year are as follows:

31 March

2024

£’000

31 March

2023

£’000

31 March

2022

£’000

Interest expense (2,684) (1,295) (690)

(Increase)/decrease in loans from related parties (523) 2,404 (2,232)

(3,207) 1,109 (2,922)

All of the increase in loans from related parties in the current and the prior year were non-cash movements.

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. 6.50% was applied in the year (2023: 3.96%). All related parties are part of XPS Pensions Group.

15 Ultimate controlling party

The Directors do not consider that there is an ultimate controlling party.

XPS Pensions Group plc Annual Report and Accounts 2024

154