A secure

ﬁnancial

future

for all

XPS Pensions Group plc

Annual Report and Accounts 2023

XPS Pensions Group plc Annual Report and Accounts 2023

Strategic report

Strategic roadmap 2

Highlights 3

At a glance 4

Investment case 5

Business model 8

Market overview 10

Our strategy 14

Co-Chief Executives’ review 18

Culture 22

Stakeholder engagement 24

Sustainability 26

Chief Financial Ocer’s review 42

Principal risks and uncertainties 46

TCFD 52

Governance

Chairman’s introduction 56

Board of Directors 58

Board and Committee composition

and operation 60

Board eectiveness 64

Nomination Committee 66

Audit & Risk Committee 70

Sustainability Committee 74

Directors’ remuneration report 76

Annual report on remuneration 89

Directors’ report 100

Directors’ responsibility statement 104

Financial statements

Independent auditor’s report 105

Consolidated statement

of comprehensive income

112

Consolidated statement

of ﬁnancial position

113

Consolidated statement

of changes in equity

114

Consolidated statement of cash ﬂows 115

Notes to the consolidated

ﬁnancial statements

116

Statement of ﬁnancial position

– Company

150

Statement of changes in equity

– Company 151

Statement of cash ﬂows – Company 152

Notes to the ﬁnancial statements

– Company 153

Company information 157

Delivering for customers through our strategy and people

Mergers and acquisitions page 6

Contents

LDI crisis page 12

Awards page 16 Our culture page 22

Strategic report

1XPS Pensions Group Annual Report 2023

We exist to shape

and support

safe, robust and

well-understood

pension schemes for

the beneﬁt ofpeople

and society.

Our strategy is 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.

XPS Pensions Group Annual Report 20232

What we want

to achieve

We are a forward-looking, ambitious business. We are a

leading independent pensions consulting and administration

services ﬁrm and want to be the best provider of services

to the UK pensions market.

Strategic roadmap

Regulatory

change

Expand

services

Grow

market share

Mergers and

acquisitions

Read more page 26

Strategic report

3XPS Pensions Group Annual Report 2023

Operational highlights

• Sixth successive year of growth in revenue and

adjusted EBITDA

• Development of our proprietary Administration

platform Aurora – launched in June 2023 and

expected to drive significant operational efficiencies

• Our agile response to the Liability Driven Investment

(LDI) Crisis arising from the government’s

mini-budget of 23September 2022

• Acquisition of Penfida, a leading independent

covenant adviser

• Multiple award wins, including at Professional

Pensions UK Pensions Awards; Third Party

Administrator of the Year, Actuarial and Pensions

Consultancy of the Year and Investment

Consultancy ofthe Year

• Carbon neutral for the second year in a row and

retained signatory to the FRC’s Stewardship Code

Financial highlights

+20%

FY 2023 £166.6m

FY 2023 £42.4m

FY 2023 12.6p

FY 2023 1,570

FY 2022 £138.6m

FY 2022 £34.1m

FY 2022 10.2p

FY 2022 1,442

Revenue

+24%

Adjusted EBITDA

+24%

Adjusted diluted earnings per share

+9%

FTE Employees

FY 2023 8.4p

FY 2023 £55.3m

FY 2023 £19.1m

FY 2023 7.7p

FY 2022 7.2p

FY 2022 £54.6m

FY 2022 £16.9m

FY 2022 4.6p

+17%

Proposed full year dividend

+1%

Net debt

+13%

Proﬁt before tax

+67%

Basic EPS

Highlights

+33eNPS

achieved

(FY 2022 +5)

1 Adjusted EBITDA excludes the impact of share-based payment

costs, fair value adjustments of contingent consideration, and

exceptional costs.

2 Adjusted diluted earnings per share from continuing operations.

It is based on adjusted profit after tax, which excludes the impact of

amortisation of intangible assets, share-based payment costs, fair

value adjustment of contingent consideration, exceptional costs, and

the tax impact of these items. See Note 6 in the financial statements.

3 As at year end.

4 Excluding lease liabilities.

Named as one of the Best Places to Work

2023 by The Sunday Times

4 XPS Pensions Group Annual Report 2023

At a glance

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/

National Pension Trust

The National Pension Trust (NPT) is a

multi-employer defined contribution master

trust providing a high-quality service that

offers choice and flexibility to members.

www.nationalpensiontrust.com

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

What we do

XPS Pensions 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.

1,600+

employees

>1,500

pension scheme clients

Our locations

UK locations

Our 16 locations

give us access to

staff, expertise

and clients

across the UK.

Our services

Scale, agility and expertise

5XPS Pensions Group Annual Report 2023

Strategic report

Investment case

Diversiﬁed and stable client base

We have long-standing relationships with a large and diverse client base, consisting

of over 1,500 clients. We have a strong brand and have won multiple industry awards

for our client service.

Read more page 42

99%

adjusted operating

cash conversion

Why invest in XPS?

Mergers and acquisitions

XPS Pensions Group Annual Report 20236

Penﬁda joins

theXPS family

£12m

price of acquisition

£300bn+

of client assets

FTE employees at year end

With Penﬁda as part of XPS Group, we can now oer the full range

of services to trustees and employers, strengthening our position

in the market and creating greater value for our stakeholders.

Our strategy is to be the best

provider of all the services that

pension scheme trustees and

employers need. We aim to achieve

this through developing our own

services and growing organically, and

also by making strategic acquisitions

to accelerate progress in important

areas when opportunities arise.

Under the pensions regulatory

framework, all pension scheme

trustees require actuarial advice,

investment advice and administration

services and the fourth pillar of

support they need is ‘employer

covenant’ advice, about the strength

of the sponsoring employer. XPS has

for many years had a strong offering

in the first three of these areas. In

the area of employer covenant, we

had a small capable team, achieving

good organic growth, but we lacked

critical mass.

Penfida was established in 2005 as

a provider of employer covenant

advice, both in respect of complex

corporate transactions as well as

regular advisory work in connection

with pension schemes’ triennial

valuations and monitoring. Penfida

has built up a substantial presence

in the market as the leading

independent specialist adviser, with

clients representing in aggregate in

excess of £300 billion of assets.

In September 2022 XPS acquired

Penfida, dramatically increasing

our capacity and capability in the

employer covenant space. The

acquisition enables XPS to offer

covenant advisory services to a wider

range of XPS clients while Penfida

clients and staff will benefit from

access to the wider capability of XPS.

We have enjoyed getting to

know our XPS colleagues,

and have had a very positive

response from our clients and

people about the combination,

which is good for everyone.

Paul Jameson

Penfida Managing Partner

With award-winning businesses

in the three other critical areas of

support (actuarial, investment and

administration), the acquisition

of Penﬁda gives us strength and

depth across all of the key areas

ofsupport our clients need.

Patrick McCoy

Head of Advisory

Mergers and acquisitions

7XPS Pensions Group Annual Report 2023

Strategic report

Paul Jameson

Head of Covenant

Arabella Slinger

Partner

XPS Pensions Group Annual Report 20238

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

Full service,

independent oering

Large, highly visible

andgrowingworkplace

pensions market

Non-cyclical and recurring

revenues + better outcomes for

pension scheme members

XPS Pensions Group is a leading independent pensions

consulting and administration business focused on UK

pension schemes.

Delivering strong and

stable growth

Inputs

Supported by our sustainability strategy

9XPS Pensions Group Annual Report 2023

Strategic report

Our mission

To be a sustainable business that allows us to build

long-term relationships with our clients, oers a great

place to work for our people and delivers value to all

ourstakeholders.

Clients

• Specialist insight and expertise leading to

better outcomes for all stakeholders

• High-quality service and tailored solutions

• Value for money

Read more about ESG page 26

Blue-chip client base

High levels of service

Innovative solutions

Thought leadership

Strong award-winning brand

XPS Pensions Group Annual Report 202310

We are a non-cyclical business, with predictable core revenues for the

non-discretionary and recurring compliance work we do for workplace

pension schemes. At the same time regulatory change and market

volatility increase the demand for additional expert advice and services.

Across the industry, it is standard practice for client contracts to contain

annual price increases in line with inﬂation – a defensive feature in

today’s high inﬂation environment.

All-weather markets

Defensive, non-cyclical, all-weather

– our end markets can be described

as all of these. They can also be

described as large and growing.

In terms of size, we estimate the

fee market in which we operate at

around £2.5 billion p.a. The overall

private sector pensions market is

estimated to comprise £1.7 trillion

of assets. Of this, £1.5 trillion relates

to defined benefit (DB) schemes,

where members are promised a

specified pension on retirement

by employers, with the remaining

£0.2 trillion accounted for by

defined contribution (DC) schemes,

where employee and employer

contributions are invested with the

proceeds used to purchase a pension

and/or other benefits at retirement.

In terms of growth, the market

has historically grown at a rate of

between 3% and 4% per annum in

line with the rate of inflation. The

market is currently growing at a

faster rate partly due to today’s

higher-inflationary environment, but

also due to elevated activity levels.

Growth drivers

Today’s elevated levels of activity

are primarily being driven by

regulatory change and evolving

markets. Whenever change occurs,

whether it is regulatory or market

driven, pension scheme trustees and

corporate sponsors are required to

act to ensure all members receive

their pensions in full. Change can

have a positive or negative effect on

a pension scheme’s financial position.

A strong business model

inaspecialist market

The key is change has occurred, so

action will be required. As well as

providing assistance and support to

trustees and employers with the day-

to-day running of pension schemes,

we advise trustees, corporate

sponsors and members on how

change affects them, what action

ought to be taken and how best to

implement this across all four key

areas of pension services.

The four areas of pension services

• Administration: doing all the

things required to ensure members

receive their correct pensions

at the right time, including all

the record keeping, calculations,

communications and payroll

services to achieve this.

• Actuarial: to work out if pension

schemes have sufficient assets to

cover their liabilities, namely the

promises made to members, and

overseeing strategies to deliver on

this over the decades-long life of a

pension scheme.

• Investment: to provide advice on

how a scheme’s funds should be

invested to enable liabilities to be

met over the long term, balancing

risk and reward.

• Employer covenant: to assess the

financial strength of the employer

in relation to its ability to meet its

pension obligations and the level of

investment risk that can be taken.

Regulations require schemes to

seek support across all four areas.

Regulatory changes and market

volatility increase the complexity of

delivering these services and thus

drive fee market growth.

Regulatory change

Regulations surrounding pension

schemes are constantly evolving.

Below are key regulations that

have recently, or are due to, come

into force:

• The Pension Schemes Act 2021:

relates to how corporates finance

their pension arrangements and

the treatment of schemes following

M&A activity.

• New Funding Code: focuses on

how pension schemes are funded,

heavily trialled ahead of likely

implementation in 2024.

• GMP equalisation: requires

companies to correct the unequal

treatment of men and women in

relation to a small part of pension

schemes dating back to the

1980s/90s.

• Single Code of Practice: is

expected to increase governance

requirements for trustees when it

comes into force later this year.

Market overview

Non-cyclical

In-built

inﬂation

protection

Non-

discretionary,

recurring

revenues

11XPS Pensions Group Annual Report 2023

Strategic report

• Task Force on Climate-related

Financial Disclosures (TCFD):

requires trustees to improve

the quality of governance and

reporting in respect of climate-

related risks and opportunities.

• CMA Review: recommends

trustees seek independent advice.

Market-driven change

A number of market drivers are at

play today:

• Outsourcing: to ensure members’

benefits are protected, the

regulatory backdrop governing

pensions is ever changing and ever

more complex. Because of this,

internally administered schemes are

increasingly looking to outsource

administration. Outsourcing

can involve the transfer of the

administration of schemes to third

parties such as XPS. The market in

this area comprises large schemes

as historically only employers

with big workforces have done

administration in house. There

are many of these large legacy

schemes that we expect to come

to the administration market in the

coming years.

• Paradigm shift in interest rates:

the era of interest rates at or close

to zero generally saw pension

scheme deficits widen. Today’s

higher interest rates, by contrast,

have been good for pension

schemes as they have largely

reduced deficits. Regime change,

such as the one experienced in

2022, does mean pension schemes

need to know how their financial

position has been affected. In

some cases, deficits will have

turned into surpluses. Trustees

of a pension scheme in surplus

may look to de-risk to lock in the

improved financial profile and

protect members’ benefits, there

may be reopened discussions with

employers about contribution

levels and use of surplus, and there

will be a need for strategic advice

on what to do against a backdrop

that has fundamentally changed.

• Bulk annuities: one way to de-risk

is via bulk annuities, a market that

is already huge. Private sector

pension liabilities alone stand at

£1.5 trillion, and where the pace of

growth has picked up volumes have

increased from £30 billion a year to

a projected £50–60 billion by 2025.

Bulk annuities can take the form of

either a buy-in or a buyout.

Buy-ins involve a pension scheme

buying an insurance policy to secure

part or all of the promises made

to members. Under a buy-in, the

pension scheme makes an upfront

payment to an insurance company

and in exchange the insurer takes

on the responsibility of ensuring

members’ benefits are met as well

as associated risks such as inflation,

longevity and demographics. A

buyout involves insuring 100% of the

liabilities in this way and ultimately

winding up the pension scheme.

There is a material amount of work

associated with such activity for a

firm like XPS. This work is the broking

of the transaction itself, work on

data cleansing and advice on the

wider strategic consequences such

as re-engineering the long-term

investment strategy of a scheme

where part of the assets are invested

in an insurance contract.

• Insurance companies: as some

pension schemes turn to the

bulk annuities markets, insurance

companies increasingly require

support in writing business, meeting

regulatory requirements and

administering growing books

of business, thereby potentially

growing the size of the fee market.

• Fragmented marketplace:

workplace pensions is a

fragmented market. Fragmented

markets offer 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.

Today’s elevated levels of regulatory

and market-driven change will likely

drive high activity levels for years

to come. Against a backdrop of

a high-inflationary environment,

the workplace pensions market is

therefore expected to continue to

build on its track record of delivering

all-weather growth.

Investment

Actuarial

Employer

covenant

Administration

Change

XPS Pensions Group Annual Report 202312

The LDI crisis

Our agile

response

In 2022 our clients had

to navigate the biggest

pension investment

crisis in living memory.

We are proud of how

quickly we were able

to help our clients

(as evidenced by

many testimonials)

and how we led the

industry thinking in

theaftermath by being

the ﬁrst to publish

our fundamental

review of the LDI

manager universe,

which has gone on

to be an unocial

industry benchmark

used by many.

During the LDI crisis, as the price of

gilts fell rapidly, many schemes had

to scramble to post collateral to keep

their liability hedges in place and,

across the industry, lots of schemes

had their hedges reduced just as gilt

prices started rising again causing

funding position losses.

In contrast to this, almost two-thirds

of XPS clients did not experience any

reduction in their liability hedge; the

average reduction was a modest 3%

across all our clients. This is testament

to our advice in the months and years

leading up to the crisis and prompt

action during the crisis.

We were on the front foot.

Although no one could anticipate

the magnitude of the LDI crisis,

as inflation increased in the first

half of 2022, we were already

recommending clients review

their LDI strategy to ensure it

remained appropriate for the new

economicenvironment.

When the crisis hit we acted quickly

and decisively, including rapid

communications with clients and

out-of-the-box thinking to help

I’m incredibly proud of how our team was

so agile, working so hard in very challenging

circumstances to help our clients navigate

the crisis, and the feedback from clients

shows that they really appreciated this too.

Ben Gold

Head of Investment

them meet urgent collateral calls.

Within six days of the crisis breaking

we rana webinar to help over 700

trustees and sponsors navigate the

extreme circumstances.

After the crisis, we were the first

(andpossibly only) consultancy to

publicly publish our market review

of LDI providers covering the

actions the managers took and the

implications for pension schemes.

This research has since gone to be an

unofficial benchmark used by many

within theindustry.

We were also the only fiduciary

manager evaluator to publish

research on how each FM fiduciary

manager reacted to the gilts crisis,

providing a deep understanding and

insight into a part of the market that

many previously thought would be

immune from such issues.

We continue to help clients with the

ramifications and have developed

a second opinion LDI health check

for schemes we didn’t previously

advise, but which were asking for our

valued input.

Strategic report

13XPS Pensions Group Annual Report 2023

Ben Gold

Head of Investment

Simeon Willis

Chief Investment Officer

The LDI crisis

“We are delighted with the

excellent advice and attentive

service we have received from

XPS… (the) lead consultant has

been a constant source of wise

counsel at all stages and…

ensured that the trustees were

fully aware of the issues when

yields rose suddenly.”

Independent Trustee

Belron UK Pension Plan

“Thank you for your prompt

and comprehensive response

which is reassuring… I have

tosay I have been very

impressed with both the

timeliness and quality of

information that has been

forthcoming from XPS given

the testing circumstances.”

Chair of Trustees

“You guys have been amazing

with the amount of proactivity

and great emails this week! You

have been exemplary at

keeping us up to date.”

Bruce Gibson

Chair of Caravan Club Retirement

Benefits Scheme

“Your appointment

coincidedwith the LDI liquidity

crisis and your insightand

recommendations

regarding the activity and

actions proved… invaluable.”

Chair of Trustees

Go-Ahead Group

LDI press coverage

6 days

into the crisis we ran a

webinar to help trustees and

sponsors navigate the extreme

circumstances (with over

700registrations)

average of only 3% loss of hedging

across our entire client base, with

around two-thirds of our clients

not suering any loss of hedging

during the LDI crisis

99%

of our clients’ LDI funds remain

positively rated post LDI crisis

14 XPS Pensions Group Annual Report 2023

Our strategy

Our strategic priorities

We are a forward-looking and ambitious business.

Whenever there is regulatory change,

our clients need bespoke advice

and support. Periods of significant

regulatory upheaval are therefore

drivers of market growth. Today, more

regulatory change is taking place, or is

in the pipeline, than at any time inthe

past 20 years.

We provide a full range of services

that pension trustees and corporate

sponsors need. But for many clients,

we only provide one service and could

deliver more. Expanding our current

service offerings to existing clients

represents a significant opportunity,

asdoes developing new services

that help deliver better outcomes

for members.

Progress

We helped our clients to

adapt to the Pension Schemes

Act 2021 and we continued

to develop solutions in line

with the evolving funding

regulations. We helped our

clients navigate the LDI

crisis in autumn 2022. Our

market-leading approach on

GMPwon us wide-ranging

mandates including on some

large schemes outside of our

existing client portfolio.

Priorities for FY 2024

• Ensure clients are prepared for

the upcoming Single Code of

Practice, focused on trustees’

governance requirements.

• Continue roll-out of GMP

equalisation solution.

• Offer enhanced LDI

reporting and oversight

service to schemes that are

not clients.

Key risks

• Third party supplier/

outsourcing

• Strategy

• Errors

• Theft and fraud

Progress

We materially strengthened

our offering in the area of

employer covenant advice,

a key service required by all

pension trustees, through the

acquisition of Penfida. We

grew our risk transfer team

significantly, with the new

head of this team who arrived

at the start of the financial

year overseeing further senior

hires which combined with

training of existing XPS staff

more than doubled our team

in this area. We continued to

invest in data analytics, and

established a dedicated team

in this area. We also invested

in the provision of services to

insurers, establishing a multi-

disciplinary team to pursue

opportunities in a

co-ordinated way.

Priorities for FY 2024

• Continued growth of

our de-risking practice

including delivering large

insurancetransactions.

• Continued growth in Trustee

Governance Services.

• Expansion of services into

support required by insurers

and expansion of our data

analytics capability.

Key risks

• Strategic planning

andexecution

• Financial performance

• Information/cyber security

• Staff/human resources

• Client engagement

• Business conduct

andreputation

phase 1 GMP

equalisation

reportsissued

£7.4m

revenue from GMP

equalisation work

Our objective is 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. One that offers a clearly differentiated

alternative to the Big 3 – able to operate at scale and yet agile enough to provide clients with

superior service at better value than our larger rivals.

Our strategy is to deliver our objective, while remaining focused on achieving profitable growth,

and is centred around four key pillars.

number of risk transfer

engagements during

the year

£6.4m

revenue from risk

transfer engagements

(76% growth year

onyear)

Regulatory change Expand services

Strategic report

15XPS Pensions Group Annual Report 2023

We seek to grow our business by

winning ‘new logo’ clients – those

pension schemes and sponsors

with whom we have no existing

relationship.

Progress

Our Market Force Initiative

generated multiple new

business leads from the

large pension schemes

targeted. Several of these

were converted during the

year in both advisory and

pension administration

including Mencap, GoAhead,

Fiat, Jacobs.

Priorities for FY 2024

• Continue roll-out of

MarketForce Initiative

togrow and convert new

business pipeline.

• Maximise opportunity

to win new investment

consulting clients in wake of

LDI fallout.

• Focus on first time

outsourcing and public

sector opportunities

withinAdministration.

Key risks

• Strategy

• Errors

• Third party supplier/

outsourcing

• Strategic planning

andexecution

We operate in a fragmented market.

Being one of the largest mid-tier

independent companies in the sector,

there is an opportunity to grow our

market share through the acquisition

of businesses that can boost our

scale and capability in certain

specialist areas.

Progress

Acquisition of Penfida

Limited, a long established

covenant advisory business

with a strong market position.

Theacquisition complements

our existing capabilities

and expands the reach of

our offering to a wider base

of clients.

Priorities for FY 2024

• Fully integrate Penfida

Limited and expand

provision of covenant

advisory services for more

XPS clients.

• Continue to evaluate

potential acquisitions

that meet investment

andstrategic criteria.

Key risks

• Financial performance

• Business conduct

andreputation

17%

Organic revenue

growth

81+

Client schemes with

over £1 billion assets

Bolt-on transactions in

the last 5 years

£26m

Earnings enhancing

capital deployed

Grow market share Mergers and acquisitions

XPS Pensions Group Annual Report 202316

Award wins

Getting it right

forour clients

In 2022 we won a number of

awards and are proud tobe

recognised for the hard work of

our colleagues toprovide excellent

service to our clients.

XPS Pensions Group wins four awards

atUK Pensions Awards 2022

XPS Pensions Group won four awards at Professional

Pensions’ UK Pensions Awards on 13 September 2022,

taking home Third Party Administrator of the Year, as well

as Actuarial and Pensions Consultancy of the Year and

Investment Consultancy of the Year for the second year

ina row. This was the first time that these three awards

have been won outright by one company in a single

year. The Company was also highly commended in the

Technology Innovation of the Year category.

Strategic report

17XPS Pensions Group Annual Report 2023

Award wins

XPS Pensions Group wins

Best SIPP Provider

XPS won the Best SIPP Provider award at the Investment

Life & Pensions Moneyfacts 2022 Awards. We were also

highly commended in the Best SSAS and Best Pension

Service categories. This win reinforces our commitment

to quality, which has already been recognised by

Moneyfacts in the form of its prestigious five-star

ratingfor our SIPP and SSAS.

We are absolutely delighted to win

these awards, which recognises

the value we are adding for our

clients, helping them to meet the

challenges that a volatile world is

throwing at them.

Paul Cuff

Co-Chief Executive Officer

XPS Pensions Group Annual Report 202318

The resilience and predictability of our business model

have driven a strong performance for the year and we

are continuing to focus on our strategy to be the best

provider of all services to the UK pensions market.

Sixth consecutive year

ofgrowth

Co-Chief Executives’ review

Sixth consecutive year of growth

A year of record revenues, record

dividends, a strategic bolt-on

acquisition, multiple award wins,

a strong culture with excellent

employee feedback sustainably

delivered including carbon neutrality

– shareholders would be forgiven

for thinking they are reading last

year’s Co-CEO Statement. There’s

even another five-year anniversary

to mention. It is true all the above

were milestones achieved during

the year ended 31 March 2022 but

12months on and many of those same

achievements have been repeated,

and in many cases bettered. This

is testament to the successful

execution of the strategy we have

pursued since we listed to deliver our

societal purpose.

Record revenues: the year ended

31 March 2023 saw a record 20%

increase in year on year revenues

to £166.6 million, of which 17% was

organic growth.

Record dividends: the Board is

proposing a 17% increase in the

ful-year payout to 8.4p per share.

Strategic acquisition: this year we

acquired Penfida, a leading covenant

adviser to UK pension funds. Just

as the previous year’s acquisition

of Michael J Field brought scale to

our SIP division, Penfida has done

the same for our existing employer

covenant practice. Together with

our award-winning Administration,

Actuarial and Investment Advisory

divisions, XPS is now a one-stop

shop of scale for all services needed

by pension trustees and sponsoring

employers.

Multiple awards: we won arguably

the three most important awards

at the 2022 Professional Pensions’

UK Pensions Awards – Third Party

Administrator of the Year; Actuarial

and Pensions Consultancy of the

Year (second consecutive year);

and Investment Consultancy of the

Year (second consecutive year). This

represents the first time all three

of these categories have been won

outright by one company in the same

year – third-party validation of our

continued excellence in client service

and innovation. Our SIP business

also won Best SIP Provider at the

Moneyfacts awards.

Carbon neutral: for the second

year in a row, our activities have

been carbon neutral, just one

example of how we strive to do

business sustainably. This has been

achieved through a combination of a

reduction in our direct footprint and

the purchase of high-quality carbon

offsets. Fostering a strong and caring

culture is another, and with this in

mind it is encouraging to note that

98% of our people rate XPS a good

place to work.

Fifth anniversary: 2023 marks the

fifth anniversary of the launch of XPS

as a new brand in the market with

clear objectives to be the best for

people and for clients.

By developing content, investing in

people and innovating consistently,

our brand has grown stronger each

year ever since, so that five years

on we are reporting revenues of

£166.6 million. Furthermore, this

60% revenue growth has been

Paul Cuff

Co-Chief Executive Officer

Ben Bramhall

Co-Chief Executive Officer

19XPS Pensions Group Annual Report 2023

Strategic report

achieved during a period which

included the pandemic, heightened

macroeconomic uncertainty and

decades-high inflation, evidence

of our non-cyclical, all-weather

end markets – our defined benefit

(DB) and defined contribution (DC)

pension scheme clients require our

advice and services regardless of the

prevailing economic environment.

The progress made is also down to our

people. Without their commitment

and expertise, becoming the first

company to win all three key awards

at the 2022 Professional Pensions’

UK Pensions Awards while reporting

a sixth consecutive year of growth

would have been impossible.

Record financial performance

Total Group revenues for the year

ended 31 March 2023 came in at a

record £166.6 million, a 20% increase

on FY 2022’s £138.6 million. Of this,

17% of the growth was organic.

The record revenues represent a

step-change compared to the mid-

to-high single-digit revenue growth

we have reported for each of the

years since our listing. This is partly

down to higher inflation being passed

through to clients and onboarding

of new client wins but is also due to

a considerable amount of regulatory

and market change – the two chief

drivers of activity in our client base.

The record revenue performance

can also be attributed to the scaling

up of our platform into high-growth

areas – the product of investment

in staff, technology and acquisitions

to respond to these market and

regulatory changes. Because of this,

we are now able to service larger

pensions schemes and offer a wider

range of value-add services. The

increased scale of our capabilities

is being reflected in our financial

performance, a trend we expect to

continue going forward.

In the past, the investments we have

made in our business have meant

growth in earnings has not outpaced

revenues. Last year, we reported a

significant narrowing in this historical

revenue and earnings gap. We also

stated that we expected this metric

to improve further in the years

ahead as our efficiency drive and

investment into higher-growth areas

increasingly translated into higher

margins. This has proven to be the

case with FY 2023 adjusted EBITDA

increasing 24% to £42.4 million

(FY 2022: £34.1 million); statutory

profit before tax rising 13% to

£19.1million (FY 2022: £16.9million);

and adjusted diluted EPS up 24%

to 12.6p (FY 2022: 10.2p). The

improved profitability and continued

confidence in future prospects

has enabled us to propose a 17%

increase in the full-year dividend,

another record.

Divisionally, Advisory (comprising

Pensions Actuarial & Consulting and

Pension Investment Consultancy)

was the top performer with full-year

revenues growing 26% to £95.4 million

(FY 2022: £75.9 million), while

Administration increased revenues

10% to £57.5 million (FY 2022:

£52.3 million).

Pension Actuarial & Consulting

revenues grew 24% to £77.4 million

(FY 2022: £62.2 million) thanks to

inflationary fee increases, new client

wins such as BT Group plc contributing

for a full year and elevated levels of

activity centred around regulatory/

market-driven dynamics. Risk transfer

work was a stand-out performer with

revenues rising sharply to £6.4 million

compared to £1.5 million the previous

year thanks to big new mandate wins.

This follows the appointment of a

Head of Risk Settlement and further

team hires in 2022.

Pension Investment Consulting

has also been a beneficiary of new

business wins. Increased demand

from clients for support in navigating

regulatory and financial market

upheaval (including the gilts crisis

in autumn 2022) has also been a

tailwind, as has inflation-aligned fee

increases. In all, YoY revenues grew

31% YoY to £18.0 million (FY 2022:

£13.7 million).

Pension Administration revenues

rose 10% to £57.5 million (FY 2022:

£52.3 million) helped by new client

wins including Peugeot and BAA

and a full year of our outsourced

contract with IBM. The wins saw

the number of members we have

under administration surpass the one

million mark for the first time. We see

further growth opportunities within

Administration and continue to invest

in our capability here. For example,

this year we successfully developed

our own proprietary Administration

platform which, as well as giving us

greater control, will drive efficiencies

and differentiate us as we look to win

further mandates.

SIP revenues benefited from a

full-year contribution from the

acquisition of the Michael J Field

SIPP and SSAS books, as well as

strong organic growth and the higher

bank base rate. Overall, SIP revenues

rose 54% to £9.4 million (FY 2022:

£6.1million). We continue to expand

the distribution channels for our SIPP

offering and we were recently added

to the panel of recommended SIPP

providers for St James’ Place, one of

the UK’s leading financial advisers.

We view our inclusion on the panel

as a major endorsement of our

SIPPoffering.

We have delivered strong growth

ahead of expectations, showing the

highest operating result since our

listing in 2017.

Ben Bramhall

Co-Chief Executive Officer

It was a year of extraordinary

change in ﬁnancial markets, with

rising interest rates and inﬂation

posing signiﬁcant challenges for

our clients. I am very proud of

how well we served our clients

throughout.

Paul Cuff

Co-Chief Executive Officer

XPS Pensions Group Annual Report 202320

Co-Chief Executives’ review continued

Record financial performance

continued

National Pensions Trust (NPT), our

defined contribution (DC) master

trust, posted another year of growth

in assets under management (AUM)

which grew 8% to £1.4 billion (FY

2022: £1.3 billion), while revenues

came in flat at £4.3 million (FY 2022:

£4.3 million) driven by lower asset

prices early in the financial year as

well as competitive price pressures.

Growth in AUM was driven by an

increase in client numbers to 152

during the year but was suppressed a

little by reductions in asset prices.

Four core strategic pillars to capture

growth in our all-weather markets

Our markets are driven by regulatory

and market change rather than by

economic cycles – pension schemes

require support to navigate the

ever-changing regulatory/market

landscape, which leads to increased

demand for services and in turn

market growth. Our markets are

therefore all-weather and to capture

the regulatory and market-driven

growth, we have in place four core

strategic pillars:

1. Regulatory change as a driver

of activity

2. Growth through

expanding services

3. Growing market share

4. Growth through M&A

Every time a regulatory change is

made, pension schemes require

bespoke advice and guidance on how

the change affects them. Examples of

this in action include the November

2020 GMP equalisation ruling which

stipulated that companies rectify

the unequal treatment of men and

women who were members of

pension schemes in the 1980s and

1990s. The ruling triggered a work

stream that did not exist prior to

November 2020 and will take years

to complete. Further regulatory

change is on the horizon. The Single

Code of Practice, which is focused on

trustees’ governance requirements, is

expected to come into force later this

year or in early 2024.

Compared to regulations, market-

driven change has been relatively

muted in recent years thanks to

the prevalence of low interest

rates. Low interest rates have had a

largely negative impact on schemes’

financial positions, but the stable

environment meant strategy/advice

did not require frequent resets. All

this changed in 2022 with aggressive

rate hikes to tackle inflation causing a

paradigm shift in interest rates.

By reducing pension scheme

liabilities, higher interest rates

are generally positive for pension

schemes – we estimate in aggregate

schemes moved from a deficit of

around £300 billion at the start of

2022 to a surplus of around £60

billion by the end of the year. This

was a positive move for many of our

clients, but one that has generated

much work for pension schemes.

Clients have needed wide-ranging

advice on the consequences for

them specifically, with many seeking

support to lock in improvements

through changes in their investment

strategy. In some cases employers

have sought to reduce their cash

commitments towards deficits. This

has caused a major uptick in work,

as all of our clients have needed to

reassess the ‘journey plans’ they have

in place. We expected to remain busy

supporting clients for the foreseeable

future, particularly against the

backdrop of evolving regulations.

Another consequence of the increase in

long-term interest rates is that bulk

annuities, insurance policies purchased

by defined benefit schemes to secure

members’ benefits, have become more

affordable for many schemes. The bulk

annuities market has grown in recent

years as pension schemes have

sought to de-risk and transaction

volumes are expected to rise further,

from around £30–40 billion a year to

£50–60 billion a year in 2024 and

beyond. High interest rates are

expected to spur this further growth,

as financially healthier pension schemes

re-evaluate de-risking options. This

will generate more work for our Risk

Transfer team, which provides all the

support required including broking

insurance transactions and all of the

‘behind the scenes’ additional work

that is required, which typically

includes complex data cleansing

projects. We expect tangential

growth opportunities to open up too;

one such opportunity is working

more closely with insurance companies

that take on the liabilities of pension

schemes in these transactions.

Insurers are resource constrained and

frequently outsource to meet some

of their needs and we therefore see

considerable scope to expand our

footprint here.

Aside from higher interest rates,

theLiability Driven Investment (LDI)

crisis was the standout market

development of 2022. LDI allows

pension schemes to hedge against

volatility and financial risk caused

by moves in interest rates. If these

risks are not hedged the risks can be

I look forward to the year ahead, knowing that

the talent and commitment of our people, and

the operational and ﬁnancial strength of our

business, put us in a good place to meet the

expectations of our stakeholders.

Paul Cuff

Co-Chief Executive Officer

21XPS Pensions Group Annual Report 2023

Strategic report

material – for a typical scheme a 1%

fall in interest rates could increase the

mark to market value of the scheme’s

liabilities by 25%, all else being equal,

which can put huge pressure on cash

funding requirements and company

balance sheets. LDI funds have

protected schemes from sharply

widening deficits as interest rates

fell during the last 20 years. What

triggered the 2022 crisis was the

speed of interest rate moves – bond

yields rose 1% in the space of three

days causing bond prices to fall 25%.

Whilst in terms of funding levels this

resulted in an improvement of the

financial position of many schemes

it put LDI funds under stress, with

many facing significant liquidity

challenges. Clients needed advice to

navigate the crisis. This gave us a real

chance to differentiate ourselves and

we are very proud of how well we

looked after our clients.

Despite the crisis, LDI continues

to have an important role to play,

particularly in helping to protect the

improved financial position many

pension schemes find themselves in

today. There are learnings to be had

though. Schemes need to ensure

they invest in sound LDI funds with

strong controls and more oversight is

required. Post-crisis, we are offering

an enhanced LDI reporting and

oversight service that is open to

schemes, including those that are

not clients – a further example of

market changes giving rise to growth

opportunities and our response to it.

M&A is a route to growing market

share, and/or addressing any gaps in

our capability. This year we acquired

Penfida, a firm that specialises in

‘employer covenant’ advice – this is

advice that pension trustees need

about the strength of the sponsoring

employer that stands behind the

scheme. We had a team in this

area of work, but it was small – the

addition of Penfida brings scale

to our existing offering, in the one

remaining area in the pensions

business where our presence had

been sub-scale. We will continue

to look at M&A and partnership

opportunities which we believe make

strategic sense as well as those that

allow us to expand into tangential

markets, for example, around support

for insurers.

We value our people

Our revenues are not the only area

seeing growth. So too is the number

of our people. The year under

our direct carbon footprint which

we aim to accomplish as part of our

science-based net zero objective,

which we committed to in 2023. Our

pledge includes ambitious targets to

halve our operational Scope 1 and 2

emissions by 2030, sourcing 100%

renewable energy in all our offices,

while promoting a low-carbon culture

amongst our staff and suppliers.

Ultimately this can support our ambition

of reducing all emissions to net

zero by 2050.

Outlook

The FY 2023 results demonstrate the

non-cyclical, resilient and predictable

nature of our business and the

opportunities for growth. Our brand

has strengthened further in the year

with multiple awards, we have won

further new mandates and have

achieved high levels of client and

staff satisfaction. The investments we

have made into high-growth, high-

margin areas are increasingly being

reflected in our earnings.

We expect the demand for our

services to remain high as we help

our clients navigate the complex and

evolving regulatory backdrop as well

as economic and financial market

developments. We have continued

to grow market share, but with this

still under 10% there are continued

opportunities to grow, supported by

both market and regulatory tailwinds.

We expect the operational gearing

that has come through this year to be

a continued feature of our results in

the future.

The Group has made a strong start to

the new financial year with continued

high levels of demand for our services

particularly within Advisory and

further success in winning new

business. We remain confident in

delivering against our expectations

for the current year.

Paul Cuff

Co-Chief Executive Officer

21 June 2023

Ben Bramhall

Co-Chief Executive Officer

21 June 2023

review saw our numbers increase

by a further 200 so that today our

employee count stands at over 1,600.

Regardless of how many we are,

we take our responsibility to every

one of our people seriously. Our

people work hard for the Group and

the Group must work hard for our

people. This is why we have a growing

number of employee committees and

networks as part of our inclusion and

diversity (‘I&D’) drive so that all our

people feel they are a part of XPS

regardless of background, gender or

ethnicity. It is why we introduced our

flexible working model, My XPS My

Choice, last year and why, during the

year under review, we awarded an

additional mid-year pay rise to all staff

(apart from those in senior positions) in

response to the cost-of-living crisis.

We are proud of our eNPS of +33%,

a very high score for a professional

services firm, and that 89% of our

people think we are truly committed

to I&D. We will continue to work

hard for our people, caring for their

wellbeing, supporting their many

volunteering efforts and providing

opportunities for career progression.

Not only is this the right thing to do

but it also helps attract and retain

talented people.

Everyone at XPS plays a part in the

continued success of the Group. One

individual who has played an invaluable

role in XPS’s success to date is Tom

Cross Brown, who was our Chairman

until September 2022. Tom had

held the Chair since our listing and

has therefore overseen tremendous

change at the Company. We thank

him wholeheartedly for the substantial

contribution he has made over the

years and we and the rest of the Board

wish him all the best with his retirement.

We value our environment

Environmental and climate

considerations shape our strategy

and culture. We are proud of the

growth we have achieved to date but

we are equally proud of our efforts

to ensure we grow in a sustainable

way. The year under review was

the second in which XPS has been

a carbon-neutral business. We

have reduced our emissions and

additionally as with last year, we

achieved this by purchasing UN

Approved Carbon Credits that cover

our own Scope 1 and 2 emissions, as

well as Scope 3 emissions produced

by our suppliers.

Carbon neutrality is not the sum of

our ambitions. Our ultimate aim is

to achieve a significant reduction in

XPS Pensions Group Annual Report 202322

Culture

We are committed to developing an

inclusive, collaborative culture where

everyone is respected and where

people at every level of the Company

can develop their talents, make an

impact and have successful careers.

Our success in attracting, retaining

and motivating employees is of

vital importance to our future and

therefore we need to ensure XPS

Group remains a highly attractive

place to work. We understand that

importance of engagement and that

it is a two-way process, so in 2022,

we refreshed how we listen to our

colleagues to provide a more regular

and complete picture of sentiment.

This included redesigning our annual

survey, using an independent survey

provider platform, and launching

a 24/7 tool “Employee Voice” for

colleagues to give us feedback

anonymously. The feedback is shared

with the leadership team to take

swift action.

The results from the annual employee

engagement survey last autumn

weretremendous!

Actively listening to our colleagues and

acting on insights helps us make real,

positive changes. It helps us build a

culture of trust, strengthens relationships,

encourages collaboration and ultimately

helps us to attract and retain exceptional

employees, who are central to our purpose

and critical in delivering our strategy.

Rachel Gillion

HR Director

74%

response rate in our Annual

Employee Survey

98%

think XPS is a forward thinking

and innovative

99%

enjoy working with their team

Actively listening

to colleagues

95% of colleagues felt they

“belonged” at XPS and this is down

to the robust I&D strategy put in

place 18 months ago. Colleagues also

told us that they felt that anyone

from any background could thrive

here. We were delighted that 98%

of colleagues said “XPS was a good

company to work for” and 99% said

“working here makes me want to do

the best work I can”. These results

demonstrate our commitment to

building a community at XPS where

everyone can flourish.

We are most proud of the employee

Net Promoter Score (eNPS): we

asked colleagues how likely they

would be to “recommend working

here to their friends and family”; the

benchmark was +5 and we achieved

a massive +33. This result epitomises

how our people feel about working

at XPS and endorses the culture we

have developed at XPS.

This year, our annual Values in

Practice Awards attracted over

130 nominations, a record! We ask

colleagues to nominate anyone in

the firm who has demonstrated one

of our values; it could be they have

developed an innovative process or

gone above and beyond their job

role. We were overwhelmed with the

enthusiasm and passion our people

showed in their everyday role making

XPS a truly great place to work.

As a testament to XPS creating a

culture and working environment that

nurtures employees, we were named

as one of the Best Places to Work

2023 by The Sunday Times. This truly

demonstrates our commitment to

putting our people first.

Our culture

Strategic report

23XPS Pensions Group Annual Report 2023

Rachel Gillion

HR Director

Our culture

XPS Pensions Group Annual Report 202324

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 46 to 51.

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 also 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 meetings with investors and results roadshows hosted by the

Executive Directors and regular calls 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. Sarah Ing is appointed as the designated Shareholder

Engagement Non-Executive Director. Sarah, along with the Chairman, attends

the Company’s results presentations for analysts and shareholders. Sarah meets

and speaks to shareholders and prospective investors as well as sell side analysts.

Margaret Snowdon OBE, as the Remuneration Committee Chair, engages

through consultation and meetings with major shareholders in relation to

executive remuneration. This year, Margaret has engaged with shareholders

in relation to the updated Directors’ Remuneration Policy, being tabled for

approval at the 2023 AGM.

Following Tom Cross Brown informing the Nomination Committee of

his intention to retire earlier in the year, Margaret Snowdon OBE led the

Nomination Committee through a recruitment process to identify the new

Chairman. The Nomination Committee engaged with six of the Group’s

largest shareholders regularly throughout this process, through both

consultation letters and meetings. You can read more about the process

on page 67.

Following Alan Bannatyne’s appointment as Chairman, Alan has held

introductory meetings with the Group’s largest shareholders and continuously

engages with shareholders in relation to issues pertinent to them.

The Group’s first Capital Markets Day was held on 24 May 2023, and was

attended by shareholders and prospective shareholders, who heard from the

senior management team and had opportunity to engage and ask questions.

Engaging with our

stakeholders

25XPS Pensions Group Annual Report 2023

Strategic report

Key interests Engagement strategy

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.

This year, the introduction of the FCA Consumer Duty has been a pertinent

issue for the Board, and Margaret Snowdon OBE was appointed as the

Group’s Consumer Duty Champion.

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 30 to 33.

The Board has re-introduced Board and employee networking sessions,

previously halted due to COVID.

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, Sarah Ing, updates

the Board following each meeting. You can read the Committee report

on pages 74 and 75. 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 36 and 37. You can read the

Group’s TCFD report on pages 52 to 55, and our commitment to net zero on

pages 38 to 41. You can also read about our community support onpages

34 and 35.

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

Penfida acquisition:

Shareholders – Our shareholders’ key interests are

thegrowth of the Group and value creation. It is with

thisin mind that part of the XPS strategy is growth

through acquisition.

Employees – Through the acquisition, we welcomed

new employees to the Group. It is important to us

that these employees feel welcomed and integrated

as quickly and effectively as possible, with as minimal

disruption as possible.

Clients – The clients we welcomed as a result of the

acquisition are important to us and the success of

the acquisition. We aim to ensure minimal impact

anddisruption to our new clients, whilst developing

therelationships and access to XPS’s experience,

offerings and skills.

Regulators – We ensure that we meet all regulatory

requirements when completing an acquisition.

Chairman succession:

Shareholders - Following Tom Cross Brown

informing us of his intention to retire, the Nomination

Committee led by Margaret Snowdon OBE consulted

the Group’s largest shareholders in relation to both

the process and the key candidate criteria for the

Chairman role succession.

Employees - It is important to us that during periods

of change to leadership, our employees experience

minimal impact and disruption. The appointment of

a Chairman who was very familiar with the business

helped to ensure this was the case.

Regulators - We pride ourselves on our high

governance standards, and throughout the process

and appointment of Alan Bannatyne we upheld

these standards, and continue to comply with the UK

Corporate Governance Code.

XPS Pensions Group Annual Report 202326

Sustainability

Embedding sustainability

across our business

Our sustainability strategy is fully aligned to our purpose:

to shape and support safe, robust and well-understood

pension schemes for the beneﬁt of people and society.

But we know sustainability must go beyond our purpose.

It mustalso be embedded in our business.

Our approach to sustainability

forms a major part of our corporate

strategy. It is integrated into our

business model so that by delivering

on our mission to be leaders in

pensions, investment consulting

and administration, we are able to

challenge our brilliant people and the

wider pensions industry to improve

and achieve better outcomes

for members.

Celebrating our

FY 2023 milestones

As part of further embedding

sustainability across our business,

we made good progress last year

towards our targets, with a particular

focus on understanding the impact

of our business operations on

the environment; and supporting

and developing our people. Our

highlights from last year include:

As we grow, our responsible business

ambition is to ensure that we do so in a

responsible and sustainable way. As well as

advancing sustainability across our business,

we are working with our clients, communities,

suppliers and colleagues to dothe right

thing, focusing on areas that arematerial

toour business andstakeholders.

Snehal Shah

Chief Financial Officer

Focus on

governance

Focus on

people

Focus on

communities

Focus on

ourclients

Focus on our

environment

• Completed an

externally facilitated

Board evaluation

• Achieved 43% female

representation on

theBoard

• Embedded

sustainability

considerations in

Executiveobjectives

• Achieved 98%

agreement that

‘XPS is a good place

towork’

• Provided cost-of-

living support to

everyone under

Partner level in form

of mid-year pay rise

• Achieved 31% female

representation in

seniormanagement

• Over £58,000

donated tocharity

• Piloted a volunteering

programme near

ouroffices

• Updated our supplier

Code of Conduct

• 60 apprentice

opportunities provided

• Re-confirmed as a

signatory to new UK

Stewardship Code

• After independent

research, we

have increased

our designated

sustainable funds

to 34

• We now have 23

clients in sustainable

funds representing

£1.9 billion AUM

• Increased ISO 14001

certification with 2

additional offices

• Increased from 2 to

8 offices with 100%

renewable energy

• Maintained carbon

neutrality for a second

year in a row

• Launched employee

electric car scheme

27XPS Pensions Group Annual Report 2023

Strategic report

Strengthening our sustainabilityframework

We launched our sustainability framework in 2020, and

over the course of 2021 and 2022, we further developed

ambitions and targets for each of the five pillars. From

stakeholder feedback and desk research, we believe

that our sustainability framework continues to address

our main material issues. Our intention is to update our

Materiality Assessment at least every three years, and we

will be undertaking this exercise in the next financial year.

Below you can find a high-level overview of our

sustainability framework, where we have aligned

our sustainability ambitions with the UN Sustainable

Development Goals. We have focused on the goals which

are most relevant to our business, and where we think

we can have the greatest impact; they are included in the

sustainability framework below.

Goal

Operate to a high standard of corporate governance

Material topics

Business ethics and value, corporate governance,

cyber security and data privacy, human rights and

modern slavery

SDG alignment

Goal

Create a supportive environment where employees

can thrive

Material topics

Employee engagement, inclusion, equality

and diversity, learning and development,

employee wellbeing

SDG alignment

Goal

Create a positive impact

wherever we operate

Material topics

Community engagement,

charitable giving, supply

chainengagement

SDG alignment

Goal

Help clients and scheme

members achieve positive long-

term outcomes

Material topics

Sustainable products and

services, responsible investment

SDG alignment

Goal

Reduce our impact on the

environment and help others

do the same

Material topics

Energy usage and climate

change, environmentally

friendly culture

SDG alignment

Focusing on governance

Focusing on our communities Focusing on our clients Focusing on our environment

Focusing on our people

Our sustainability approach is overseen by the

Sustainability Committee, a Board Committee established

in 2021 and chaired by Non-Executive Director Sarah Ing

(details of the Committee’s composition can be found

on pages 74 and 75). Here you can also read about the

activities of the Committee, which included overseeing

the implementation of the I&D and environmental

strategies, reviewing our responsible investment solutions

and our approach to sustainability reporting.

The executive sponsor of sustainability is Snehal Shah,

Chief Financial Officer, and the entire management team

drives the implementation of our sustainability framework

approach across the divisions and functions of XPS

Pensions Group.

It is supported by champions from every part of the

business as well as dedicated professionals such as Alex

Quant, Head of ESG for the investment business (details

of the entire team can be found on page 75).

XPS Pensions Group Annual Report 202328

Sustainability continued

Promoting integrity and

ethical behaviour

Focus on governance

Good governance underpins our purpose, allows us to meet the needs

of our stakeholders and is the foundation for all our sustainability

eorts. In FY 2023, we worked with the Board to meet evolving

corporate governance expectations.

43%

of Board members

are female

Completed

an externally facilitated

Boardevaluation

Integrated

sustainability consideration in

Executive objectives

At the heart of our approach to good

governance sits our goal to operate

to a high standard of corporate

governance. This means complying

with the UK Corporate Governance

Code as well as new and evolving

regulations such as the new FCA

Listing Rules. Compliance with our

internal processes and procedures

can only be achieved through ethical

behaviour in line with our values

and culture.

Ensuring the Board is diverse

andexperienced

Good governance starts with the

right tone being set from the top.

That’s why we’re pleased that in

FY 2023 43% of our Board was

female. With the appointment of

Margaret Snowdon OBE as Senior

Independent Director we also meet

the requirement of at least one senior

Board position being occupied by a

woman. You can read more about the

composition of the Board on pages

60 and 61.

As three years have passed since the

last one, the year under review saw

us complete an externally facilitated

Board evaluation. The focus was on

ensuring that the Board has the right

knowledge, expertise and experience

to provide robust oversight. From

a sustainability point of view, we

have strong capability at Board level

spread across several Directors. You

can read more about the results

of the Board evaluation on pages

64 and 65.

Sustainability is not just the purview

of the Sustainability Committee.

Other Board Committees also

provide oversight over matters

relating to sustainability, the Audit

& Risk Committee oversee the

identification and mitigation of

sustainability-related risks. You can

read more about the Audit & Risk

Committee on pages 70 to 73.

During the year, the Investment

Committee (which comprises of

the most senior members of the

investment business and led by Ben

Gold, Head of Investment at XPS

and a Director of XPS Investment

Limited) oversaw the overall XPS

investment approach and as such

took a keen interest in how ESG and

stewardship are embedded in our

advice to clients.

We continue to comply with the

UK Corporate Governance Code

2018. Please refer to page 57 for our

Statement of Corporate Governance.

Aligning performance

withsustainability

Key to the success of our sustainability

framework is incentivising the

delivery of our ambitions. That’s why

in 2022 we embedded sustainability

considerations in the Executive

performance evaluation process.

Linked to our sustainability framework,

we introduced sustainability as

part of the executive objectives.

You can read more about how

Executive performance is managed

and rewarded in the Remuneration

Committee report on pages 76 to 99.

Sustainability is further embedded

across our business by using our

values and culture to promote the

right behaviour.

In 2020, we introduced the Values

in Practice (VIP) Programme,

accompanied by our VIP Awards.

Last year, the nominees and

winners of our VIP Awards stood

out for their commitment to

sustainability. This is how we

recognise the contribution that

everyone can make to delivering

our sustainability ambitions.

29XPS Pensions Group Annual Report 2023

Strategic report

Focus on governance

Our values

Our values and our culture drive

everything we do in the business.

Firstly, our culture defines our

interactions with all our stakeholders

– clients, shareholders, regulators,

employees, contractors, suppliers,

communities, charities and the

environment. The interests of all our

stakeholders shape our decision

making and business model and are

vital to our ongoing ability to achieve

our goals. Read more about how we

engage with our stakeholders on

pages 24 and 25.

We are ambitious XPS is an ambitious business. We’re aiming high to achieve our purpose of

benefiting people and society. We have ambitious goals for our clients, our industry and ourselves.

This means leading our industry in thought, action and opinion. It means we are progressive and

think differently about pensions. We invite bold thinking and actions within our business, and we give

each person the support they need to become their very best.

We are agile We’re forward thinking, innovative and quick moving. When we see a better and

more sustainable way to do something, we make change happen. We don’t just stick to the way

things have always been done in our industry. We take a fresh look and find new ways of achieving

the best outcomes for our clients while benefiting people and society.

We are helpful We build and sustain great relationships with our clients and with each other.

This means we’re always ready and willing to help out. Clients and colleagues know they can trust us.

We listen and we are helpful. Ultimately, we aim to make people’s lives better and we play an active

role across our industry and wider society to help achieve this. We work hard together, we support

each other, and we have fun together.

We are experts We know our stuff and we each bring something special to our collective

knowledge. We make a point of cultivating our individual expertise and diversity of thought – and we

use it, share it and support each other for the benefit of our clients and colleagues every single day.

We understand the responsibilities that come with our skills and abilities, so we each put them to

good use and build on them with constant learning.

We do the right thing We’re inclusive, approachable, honest and fair, both with our clients

and each other. We value everyone’s unique contribution, recognising and rewarding hard work. We

act with integrity and honesty, speaking up if something doesn’t meet our standards.

By following these values we’ll grow responsibly and sustainably, for everyone’s benefit.

Secondly, our values and culture

underpin our compliance with

our core corporate policies and

procedures. These include:

• Business Code of Ethics: this

outlines the principles and values

that we expect all our people

to adhere to in relation to areas

such as harassment and bullying,

treating customers fairly, inclusion

and diversity, financial crime and

dealing with vulnerable customers.

In FY 2023, 100% of our employees

completed an annual programme

of mandatory training. Topics

include financial crime, bribery and

corruption, insider trading, modern

slavery, data protection, and cyber

security. This training is managed

and monitored by the Compliance

and Information Security teams.

• Anti-bribery and Corruption

Policy: this outlines our zero

tolerance for any activities or

behaviours that are not in line

with our values and specifically

spells out our expectations around

financial dealings. This policy is

supported by a whistleblowing

process. In FY 2023 there were no

reports of suspected misbehaviour.

• Modern Slavery Policy: this

outlines our expectations of our

business and our suppliers to

value and behave in a way that is

respectful of human rights. 100% of

our people completed awareness

training on modern slavery and

how to spot it last year.

• Supplier Code of Conduct:

this contains our commitments

and expectations around human

rights and social responsibilities,

discrimination, freedom of association,

environmental protection and health

and safety in our supply chain.

• Cyber security and data privacy:

our Information Security

Management System (ISMS) was

certified to ISO 27001 in 2022 and

the effective deployment of our

ISMS is independently verified

through our Cyber Essentials

Plus certification. Last year,

all our colleagues undertook

mandatory training on protecting

client, employee and corporate

information, including regular

phishing awareness exercises. We

continuously review and develop

our controls to meet new and

emerging threats.

All our policy-related training

is supported by regular

communications with staff to raise

awareness of how we can safeguard

customer information.

XPS Pensions Group Annual Report 202330

Sustainability continued

Empowering people

tothrive

Focus on our people

Our people are our greatest asset. We want to provide them with

a positive and collaborative working environment where they

are members of diverse and inclusive teams. During the year, we

achieved very positive employee engagement scores and set

ambitious targets for gender diversity.

98%

think XPS is a good place to work

+33

eNPS

99%

are committed to helping

XPSsucceed

Our goal is to create a supportive

environment where people can

thrive. This means that we engage

with our people on issues such as

diversity, inclusion, and learning and

development to ensure they have a

chance to reach their potential, which

in turn means we are well placed to

deliver for our stakeholders.

Engaging our people

We want to provide a positive,

open and collaborative working

environment, with rewarding work

and development opportunities to

ensure our people have the chance

to fulfil their potential. This is crucial

to our continued business success

and in meeting the expectations of

our clients, because an engaged

team helps us operate effectively and

provide excellent client service.

Management regularly engages with

our employees via an Employee

Engagement Group and through a

range of formal and informal channels.

These include weekly all-staff messages

from our Co-CEOs, senior leader

webcasts, town halls, team meetings,

and online publications via our intranet.

We expanded our communication

further in 2022, both to allow

colleagues’ input into decisions that

may affect their interests and to share

key information regularly.

Our Employee Engagement Group

(EEG), chaired by Non-Executive

Director Margaret Snowdon OBE,

continued to meet on a regular

basis in FY 2023, facilitating direct

communication between employees

and the Board. Our EEG duties

include reviewing the Directors’

Remuneration Report and Executive

Remuneration Policy (reviewed every

three years), providing feedback on

policies and employee surveys and

any other issues the Chair wishes

to discuss with XPS colleagues. The

group provides a channel to ensure

senior management focuses on

things that matter to our employees.

In summer 2022, we partnered with

The Happiness Index (THI) and rolled

out an employee voice tool. This is a

24/7 listening tool which provides a

safe and anonymous platform that

empowers our employees to give

feedback on their terms. It is not

designed to replace other aspects

of our listening strategy but is a

platform which allows the sharing

of ideas and feedback. It drives

engagement and allows us to be

agile. It also helps us find ways to

improve their experience at work

and invest in our people’s skills and

development.

We also used THI to help us launch

a new programme of group-wide

employee engagement surveys.

The platform was used for our

annual Employee Engagement

Survey last October and the results

demonstrated that our employees

are engaged with their roles,

that they understand our values,

and that they believe we have an

inclusive culture where anyone can

thrive no matter their background.

For instance, 98% said that ‘XPS

is a good place to work’ and 99%

felt ‘committed to helping XPS

succeed’. We also asked colleagues

an Employee Net Promoter Score

question, which asked ‘How likely

are you to recommend working here

to a friend or relative?’ This scored

+33 which is a good indicator of our

progress in creating a good place to

work (2021 survey: +5).

Following the results, action plans

were put in place to address some

of the issues raised, namely around

resourcing, career progression,

recognition and wellbeing.

Each office has the ability to

recognise colleagues’ efforts. We use

Actus, our performance management

tool, to give more formal recognition

for good work. We also have our

Values in Practice (VIPs) Awards,

31XPS Pensions Group Annual Report 2023

Strategic report

Focus on our people

which provide opportunities to

acknowledge our people’s valued

contribution to performance. Our

people nominate colleagues for

going above and beyond in making

XPS a good place to work. The

judging committee is comprised of

colleagues making the whole process

inclusive and employee driven.

We continue to drive business

performance by incentivising

colleagues through our bonus

schemes and employee share plans,

alongside our market-conforming

remuneration and benefits package.

All XPS colleagues work to an annual

performance management cycle,

and all have access to a performance-

related bonus scheme that is based

on clear objectives stemming from

Group business objectives.

Promoting learning

anddevelopment

Empowering our colleagues

to identify career paths and

access training and development

opportunities helps us retain

and develop our people. We

continued to offer a wide range

of technical training at all levels as

well as management development

programmes for our more senior

employees. All employees can

request additional training alongside

anything that’s been agreed upon

within their performance reviews,

while coaching and mentoring are

also encouraged. During FY 2023,

werecorded 28,956 hours of training.

Support is provided for employees

studying for professional qualifications

via bespoke technical programmes

across all areas of our business. We

continued to support early career

talent through our graduate Actuarial

and Administration programmes

and Advisory apprenticeships. We

have also continued to develop our

induction programme based on

feedback from colleagues.

Over

28,000

hours of training delivered across

a wide range of professional and

technical courses

Advancing inclusion and diversity

We are committed to fostering an

inclusive culture of diversity across

XPS Pensions Group. This is led by

our Inclusion & Diversity Committee

which includes our Co-CEOs and

Non-Executive Director Margaret

Snowdon OBE is the Board member

responsible for inclusion and

diversity. Membership also includes

business line representatives, to

ensure we engage colleagues across

the business. They are responsible

for ensuring decisions made by

the business units take account of

inclusion, diversity and equality,

and the Network Chairs, who are

accountable for the delivery of

the objectives of their networks,

ensure we have representation from

different groups in the business.

31%

of our senior management were

female in 2023

In 2022, we built on our inclusion

and diversity (I&D) framework, which

we launched in 2021. Clear priorities

have been set in each area and we

have undertaken a number of key

measures, including:

• publishing both our gender and

ethnicity pay gap for XPS Pensions

Group, providing mandatory

training to managers on diversity

issues and unconscious bias

and participation in ‘respectful

behaviours’ training. Last year, we

introduced a gender equality plan

to enable us to focus on gender

inequalities and set gender-specific

measures as part of our wider I&D

work. Our Co-CEOs endorsed this

plan to help us on our continuing

journey to gender equality;

• providing internal and external

mentoring programmes to

encourage diversity and reviewing

our family-friendly policies. We

have a range of family-friendly

policies to enable our colleagues

to strike a good balance between

work and family. We identified

four key areas to improve gender

equality: Institutional Governance,

Sharing Knowledge to Bring

Change, Work-life Balance and

Professional Development. We had

29% senior management female

representation last year, and this

has increased to 31% this year.

Wehave set a target of increasing

the proportion of women in

senior management roles to 37%

by 2028; and

• evolving and reviewing our

workplace policies regularly to

ensure they meet the needs of our

people. Our current policies include

enhanced maternity, adoption

and shared parental leave for

employees, agile working, parental

bereavement, menopause and a

reasonable adjustments policy.

XPS Pensions Group Annual Report 202332

Sustainability continued

Advancing inclusion and diversity

continued

All our activities and messages are

aligned so that staff know they

have the responsibility for actively

promoting equality of opportunity

and diversity, speaking up and

actively listening to others and that

everyone should respect each other

and take the time to understand

different perspectives. We have

asked and trained our managers

to set clear expectations, lead by

example, uphold the highest of

standards and ensure decisions

are fair and free from bias. Each

manager is encouraged to be

an Ambassador for IED in wider

society (as are all staff). Also, all

staff have been trained on inclusion

and respectful behaviours with

colleagues, and this is also part of our

onboarding process.

During the year, we had five thriving

employee resource groups across

our business including Women’s,

Disability, LGBTQ+, Menopause and

Multicultural. They are a key feature

of our culture as an inclusive place to

work. We are committed to providing

equal employment opportunities

and combating discrimination.

Where possible, we monitor the

ethnicity and gender composition

ofour workforce and those applying

for jobs.

XPS continued to support I&D

awareness days throughout the

year with an inclusive programme

of events and campaigns led by

our five Employee Networks. We

ran a full calendar of 21 internal

firm-wide webinars hosted by

multiple networks working together.

Highlights this year included

celebrating International Women’s

and Men’s Days, Black History Month,

Trans Awareness Week and our

‘Be Yourself at Work’ campaign. In

our 2022 engagement survey, 95%

of colleagues said they felt they

“belong” at XPS (2021: 85%).

Focus on our people continued

95%

feel like they belong

98%

feel that people of all

backgrounds can join and

thrive at XPS

93%

feel valued as an

individual

Gender split data

Male Female

Group 811 49% 832 51%

Partners & Managing Consultants 81 69% 37 31%

Board 4 57% 3 43%

Other employees 727 48% 795 52%

Note:

Senior management is Partners and Managing Consultants

Age distribution

Sexual orientation

Ethnicity

Disability









<21 2.0%

21–30 30.0%

31–40 25.0%

41–50 24.0%

51–60 16.0%

60+ 3.0%

Heterosexual 56.4%

LGBTQ+ 2.9%

Prefer not to say/

declined to specify 3.8%

Based on 63.2% of staff disclosure

Did not participate

White 70.4%

Ethnic minority 9.2%

Prefer not to say/

not stated 2.3%

Based on 81.8% of staff disclosure

Did not participate

Yes 6.0%

No 47.4%

Based on 53.4% of staff disclosure

Did not participate

33XPS Pensions Group Annual Report 2023

Strategic report

Focus on our people continued

Since 2017, XPS has been part of

the Actuarial Mentoring Programme

(AMP), a cross-company mentoring

programme designed to improve

diversity within the actuarial

profession. In 2022, our XPS Women’s

Network launched a mentoring

programme. This is in addition to

the external mentoring schemes we

participate in from AMP and Mission

Gender Equity, previously the 30%

Club Cross-Company Mentoring

Programme which focuses on

accelerating women’sleadership.

Facilitating flexible working

During the year we confirmed to

colleagues that ‘My XPS My Choice’

was a permanent policy change

and would be embedded as one

element of our approach to flexible

working. This meant that colleagues

agreed with their line manager on

the location where they felt they

could work at their best for XPS.

Most colleagues chose a “flexible”

option which means they attend an

office at least one day per week and

for the rest of the week, they would

work from home. Colleagues were

delighted to be given the opportunity

to select their location and we know

via engagement surveys that they

value this flexibility. My XPS My

Choice also makes us attractive when

hiring as many competitors do not

offer such flexibility.

In addition to My XPS My Choice,

we also updated our Agile Working

Policy: this means that colleagues can

ask for a variation to their contractual

hours due to an unforeseen event, for

example, caring for an elderly parent

or if they are struggling with ahealth

issue such as the menopause. This

approach reinforces one of our values,

“doing the right thing”, because

it means that as an employer we

can adapt to change quickly and

support colleagues when they need

itthe most.

Enhancing employee wellbeing

We have a multi-generational

workforce, and it is vital that our

people are provided with the

support and opportunities they

need to optimise their health and

wellbeing. All our colleagues benefit

from a wide range of wellbeing

and mental health supports. These

include options for private medical

insurance, permanent health

insurance, critical illness and life

cover, occupational health, access

to counselling and other support via

an Employee Assistance Programme

(EAP). This programme includes

a confidential 24-hour helpline for

colleagues to share problems and

receive actionable advice, and legal

information services including debt

and financial information. We also

provide a comprehensive calendar

of monthly wellbeing events for

our people across four key areas:

emotional, physical, financial and

spiritual. There is also extensive

resilience and mental health training

embedded within our learning and

development programmes.

We have been actively working with

Mental Health at Work (MHaW)

since 2020 and have developed a

robust and well-thought-through

approach to supporting mental

health at every level within XPS.

Leadership visibility has been key,

and there is an overarching cultural

driver for managers and employees

to do all that they can to support

one another. We have trained over

70 MHaW Allies

, all of whom have

become integral to our wellbeing

offering at XPS.

Employees have felt the impact

of the cost-of-living crisis, and we

have provided support in the form

of a mid-year pay rise to everyone

below Partner grade (£3.2 million

annualised). We have also supported

colleagues with financial wellbeing

webinars covering topics such as

financial resilience, budgeting, credit

borrowing and debt savings.

Our memberships

• Business Disability Forum

• Business in the Community

• Diversity Project

• Menopause in the Workplace

• Stonewall

• Valuable 500

XPS Pensions Group Annual Report 202334

Sustainability continued

Expanding our

community investment

Focus on community

Our continued success depends on the talent present in our

local communities; without a thriving society we are unable

to build a successful team. At the same time, our teams can

contribute meaningfully to the health of local communities.

This year we launched our volunteering programme to expand

our commitment in the communities in which we operate.

Our goal is to create a positive

impact wherever we operate. It

also means enabling our people to

donate their time, their skills and their

enthusiasm to achieve things that a

financial donation cannot. We extend

this partnership approach into our

supply chain too.

Enabling our people to give back

Last year, we continued to support

school students and individuals

in their early careers. We provide

work placements to 75 students to

undertake work experience at XPS

Pensions Group. As well as offering

work experience to secondary school

students within our Administration

business, we also offered the

opportunity for university students

to join our Investment team for a

week to gain valuable insights into

the workplace. This was undertaken,

as part of the UpReach Investment

Springboard Project, which supports

high-potential students from

less-advantaged backgrounds,

who may not otherwise be able to

access high-quality work experience

within professional environments.

In addition, 60 apprentices joined

XPS Pensions Group during the year.

Apprenticeships provide a valuable

route for those with different

educational qualifications to start

their career at the Group.

XPS Pensions Group wants to

encourage employee involvement

in fundraising and hands-on

activities which benefit our local

communities. That’s why we trialled

a new volunteering approach in

2022. Wepartnered with The

Conservation Volunteers and The

Wildlife Trust community groups to

organise conservation work in nature

near our offices. Our Environmental

Network worked with these charities

to organise conservation days.

In addition, we are working with

Business in the Community to find

other volunteering opportunities

such as job coaching.

35XPS Pensions Group Annual Report 2023

Strategic report

Focus on community

Financially supporting

ourcommunities

We are proud to support the

communities in which we operate and

actively encourage our employees to

do the same. The Group offered both

financial support and paid leave to

any employee whose family has taken

Ukrainian refugees into their homes.

In FY 2023, several colleagues

extended heart-warming hospitality

to people fleeing this war.

Over the past year, XPS Pensions

Group continued to support some of

our key charity partners – Tax Help

for Older People, Crisis for Christmas

and TeamPolice.

We also have a Charity Matched

Fundraising Policy. All our people

can apply to get matched funding

from the Company when they raise

money for an eligible registered

charity. Staff have participated in

many events supporting charities

such as Alzheimer’s Society,

Macmillan Cancer Support and the

Mental Health Foundation. We have

also supported several food banks

this year across the UK. In total, the

group contributed over £58,000

incharitable donations in the year.

Partnering with our supplychain

We have extended our sustainable

ambitions in our supply chain. In

the year, we updated our Supplier

Code of Conduct, which sets out

the high standards and behaviours

that we expect from them, including

safe working conditions, fair and

respectful treatment of employees

(including modern slavery and

human rights expectations),

consideration for the environment

and ethical practices.

XPS Pensions Group Annual Report 202336

Sustainability continued

Targeting responsible

outcomes

Focus on clients

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. Increasingly, ESG integration

and stewardship play an important role in these partnerships.

During the year, we made signiﬁcant steps to further integrate

ESG and sustainability into our serviceoering.

Our goal is to help clients and

scheme members achieve positive

long-term outcomes. We do this

through our culture and values to

help us promote sustainable services

for our clients. We incorporate

sustainability into our investment

strategy solutions as well as making

ESG considerations part of all our

investment research and advice. We

also focus on keeping all our clients’

money safe from scams and fraud.

Strengthening our responsible

investmentstrategy

Our Responsible Investment Policy

makes it clear that consideration

of ESG is a critical aspect of good

investment management both from

a risk as well as an opportunity

perspective. We believe that

proactively considering sustainable

themes, such as climate change

or positive social outcomes, will

lead to better long-term positive

outcomes, and we encourage our

clients to adopt this approach. This

supports how we integrate ESG

and stewardship throughout our

processes and in our interactions with

our clients, investment managers and

at firm level. We now have 23 clients

in sustainable funds representing

£1.9 billion in assets under

management (AUM).

We recognise that one size does

not fit all when it comes to ESG

and stewardship. We have a clear

framework to help our clients to

understand their specific priorities in

relation to ESG to ensure our advice

We now have 23 clients

in sustainable funds

with £1.9billion assets

under management

Our Scam Protection

Service has helped

protect over 8,500

members’ transfers,

totalling over

£1.85 billion

and solutions are tailored to their

unique needs and wider objectives.

XPS Pensions Group developed

its own ESG fund rating system to

ensure full consideration of ESG

factors is embedded into investment

management. This entails using a

detailed questionnaire and face-to-face

meetings to assess a manager’s overall

philosophy, how ESG is integrated into

investment decisions within the given

fund, climate change risk management

and stewardship. ESG and sustainability

considerations are embedded into all

our investment recommendations and

client advice, covering £96 billion of

assets under management.

During the year, we achieved

thefollowing:

• following the Russian invasion of

Ukraine we conducted a review of

our sustainable funds (see below)

to understand what exposure they

had to Russian entities. We found

that where there was any exposure

this was very low and the majority

of managers looked to remove

this exposure;

• the LDI gilts crisis was a challenging

time for pension schemes

everywhere. We were able to

quickly help our clients during the

gilts crisis in September/October

and this is evidenced by our many

client testimonies. Ultimately,

although this was a difficult time

for them, the vast majority of our

clients’ liability hedges were not

materially affected by the LDI crisis,

which is mainly a testament to their

preparedness and the advice they

received in the months and years

leading up to the crisis;

• in 2022, we undertook our biggest

ever annual ESG ratings exercise,

involving 255 funds across 63

managers. In the interests of

transparency and raising the bar

for the industry, we provided

feedback to all of those managers

who submitted. We also held

follow-up face-to-face meetings

with all those managers who

received a red rating, as well as

many others, to discuss areas

forimprovement;

37XPS Pensions Group Annual Report 2023

Strategic report

Focus on clients

• we carry out independent research

of available funds and have

designated a number of these to

be sustainable funds that target

environmental and social outcomes

alongside their financial objectives,

including for example, a net zero

target. We have now designated 34

sustainable funds available across

all asset classes to help our clients

meet their financial objectives whilst

targeting long-term social and

environmental outcomes; and

• we provide detailed ESG reporting

to all clients. In addition to feedback

on the ESG ratings, we include

detail on wider sustainability

factors (such as exposure to

sin industries, climate transition

alignment, and engagement on

ESG across the portfolio) as well

as carbon emissions reporting

(which we introduced in 2021). This

year we have also partnered with a

market-leading climate change data

provider which will further enhance

our reporting and analysis of climate

change risks.

By continuously improving the

practices of investment managers

to support effective ESG risk

management and directing finance

towards positive environmental and

social sustainability outcomes, XPS

Pensions Group is well positioned

to make a positive impact on

wider society.

Keeping clients 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 it to identify any

suspicious activity, including the red

and amber scam warning flags set

out in the Occupational and Personal

Pension Schemes (Conditions for

Transfers) Regulations 2021. Our

service goes beyond what is in the

regulations and we continually look

out for new potential scam warning

signs and how scammers may be

changing their behaviour.

In order to protect our clients’ funds

further, 2022 saw us participate

in the Department for Work and

Pensions’ 18-month review of

transfer regulations. Last year, we

also actively contributed to industry

forums including the Pension Scams

Industry Group and the Pension

Scams Industry Forum to improve

outcomes across the industry as a

whole in relation to scams.

Protecting vulnerable customers

We recognise that many pension

members we deal with may

be experiencing one or more

vulnerabilities, and that we must take

care to listen to our customers’ needs

and identify when we should apply

an extra duty of care. 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.

In FY 2023, all customer-facing

employees completed annual online

training to embed their knowledge

and skills in this area further. The

new FCA Consumer Duty Rules,

introduced last year, shine a further

spotlight on how retail clients with

characteristics of vulnerability should

be considered at every stage of

their interaction with FCA regulated

firms and we are implementing the

requirements in the relevant XPS

business areas from 2023 onwards.

XPS Pensions Group Annual Report 202338

Sustainability continued

Our commitment

tonet zero

As a large employer, we recognise that we have a responsibility to

addressthe environmental impacts of our operations and our investments.

Reﬂecting the importance our stakeholders and the Group itself attach to

this responsibility, we strengthened our environment strategy, targets and

programme in the year.

Our goal is to reduce our impact on

the environment and help others to

do the same – even making a positive

contribution where we can. This

means identifying our climate (such

as emissions) and environmental

impacts (such as our use of water,

paper and production of waste) and

taking steps to reduce, reuse and

recycle where possible.

Putting the environment on

theagenda

XPS Pensions Group considers

climate change a long-term risk to

our industry, the economy and the

world. But we believe that, in the

short term, we currently have a low

risk in relation to environmental

matters. The Audit & Risk Committee

oversees risk identification and

management across the Group

and reports to the Board on risk

prioritisation and mitigation. You

canread more on pages 46 to 51.

We also see the transition to a

low-carbon world as presenting

opportunities for XPS Pensions

Group. We have identified growing

demand from our clients for

ESG-related services ranging

from ESG research to advisory

and this presents climate-related

opportunities for XPS to grow.

At management level, climate risk is

overseen by the Information Security

& Environmental Management

Steering Committee. The Committee

met quarterly in FY 2023 to review

aspects, impacts, legislation updates

and provided management with

a regular opportunity for review.

Outputs are then fed into both

the Sustainability and Audit & Risk

Committees for review and approval

of any actions, objectives or policy,

which then feed back to our Board.

This is how environmental risks

and opportunities are kept on the

agenda at XPS.

Developing a

comprehensivestrategy

In order to develop a comprehensive

climate and environmental strategy,

XPS Pensions Group completed an

exercise to assess and identify the

most significant risks in the short,

medium and long term. The most

significant transition risks for our

Group are:

• Energy prices: as with all

professional services, we have a

reliance on electricity to supply

services to our clients. The energy

transition, exacerbated by the

pandemic and the war in Ukraine,

has driven up energy prices and

posed a risk of energy shortages.

• Supply chain: many of our key

climate and environmental impacts

are in our supply chain. Rising

costs, lack of supply and other

supply chain issues around waste,

water, paper and business travel

pose a risk to the Group.

Focus on environment

Rapid

Timely

Delayed

Failed

2020

2030

2040

2050

2060

2070

2080

Perceived Risk materiality

Results of our scenario analysis

Net-Zero Scenarios

39XPS Pensions Group Annual Report 2023

Strategic report

years of XPS being

carbon neutral

In response to these climate risks and

opportunities, XPS Pensions Group

developed, alongside its 2020

comprehensive sustainability

framework, the detailed climate and

environment strategy, outlined below,

and identified where sustainability

feeds into business planning and

investment decisions. A good

example is the Group’s strategy

anddecision making in the

selectionof suppliers, facilities and

acquisitions now incorporate

sustainability considerations.

Focus on environment

50%

carbon emission reduction

aimed for by2030

additional oces that have

ISO 14001 certiﬁcation

oces with certiﬁed

renewableenergy

Building our net zeropathway

In line with the Paris Agreement,

this reporting period XPS Pensions

Group formally committed to a science-

based net zero strategy that limits

our operational emissions to a level

consistent with or below a 1.5°C

global temperature rise. On the way

to net zero by 2050, we identified the

following interim targets:

• we will reduce operational

emissions by 50% by 2030;

• we aspire to reduce residual Scope 1

emissions to zero in the 2030s; and

• we will reduce our supply chain

emissions by 40% by 2035.

Last year, we developed an initial

transition plan to achieve our net

zero and interim milestone targets.

At its heart sits the effective

implementation of our Environmental

Management System (EMS). The

EMS allows us to measure our climate

and environmental impacts, manage

and, where possible, reduce them.

Covering our entire Group, the EMS is

supported by an Environment Policy

that outlines the steps to take to

achieve net zero:

• to enhance our environmental

management, we will pursue

the certification of the EMS with

ISO 14001 for environmental

management for all our locations.

This will help us implement our

Environment Policy consistently.

In FY 2023, we added ISO

14001 certification for another

two offices;

In last year’s Annual Report, we

disclosed our perception of our risk

and preparedness in relation to a

number of possible climate scenarios.

These included four potential net zero

trajectories including a rapid, timely,

delayed and failed transition. In all

four scenarios, we are confident that

XPS Pensions remains a resilient and

sustainable business. We develop our

climate and environmental strategy

based on our analysis which suggested

a timely transition to be preferential,

allowing for a smooth transition to a

low-carbon economy while limiting

global warming to below 2°C.

XPS Pensions Group Annual Report 202340

Sustainability continued

Building our net zeropathway

continued

• to reduce our biggest source of

emissions (heating, cooling and

powering our offices), we will

source 100% renewable electricity

by the turn of the decade for all

our locations or, if not possible,

seek alternative locations where

this can be sourced. In FY 2023,

the number of offices with 100%

renewable energy increased by six

to eight;

• to increase our energy efficiency,

we will implement energy-efficient

hardware and software where

possible. In 2022, we made

headway on the retirement

of inefficient light bulbs and

equipment. New starters are

now issued with greener

technology hardware; and

• to tackle the indirect impacts in our

supply chain, we deployed a range

of projects. In FY 2023:

• we rolled out campaigns to

drive down internal printing. For

instance, we’ve initiated a project

to centralise and digitiseour postal

services which offers cost-saving

and environmental benefits;

• we raised awareness of the

impact of business travel and

introduced an electric car scheme

for our colleagues; and

• we completed the sustainability-

focused refit of our Newcastle

office using sustainable materials

and repurposed furniture.

We recognise that it will take time

to achieve net zero and that urgent

action is required on climate change

right now. That’s why XPS Pensions

Group again renewed its carbon-

neutral status in FY 2023.

We offset the previous financial

year’s emissions for our entire

value chain, including supply chain

emissions. Carbon credits were

sourced and retired from trusted

carbon marketplaces Gold Standard

and the UNFCCC’s Climate Now

platforms. XPS Pensions Group

invested in two projects during this

reporting period, notably investing

in a biodiversity and reforestation

scheme in Panama. The projects

ensure vital existing habitats are

protected whilst facilitating the

growth and development of new

ones. In addition, the projects

provided work opportunities for the

local community and sustainable

cocoa production, promoting self-

sufficiency within the community.

Embedding sustainability in

ourculture

We believe our people sharing

our ambition is fundamental to

the success of our environmental

strategy. Engaging with our teams

not only helps the business achieve

its environmental objectives but

promotes greener habits in and out

of the workplace for the benefit of

us all. To accelerate this behaviour

change, we are exploring the benefits

of deploying an internal carbon price

in the accounting for our business

decisions in 2023.

Local volunteers act as

environmental champions across

the Group representing a visible

focal point for our environmental

strategy. The champion’s role

includes engaging with their local

team on environmental matters and

identifying local opportunities to

improve. As part of this initiative,

environmental champions were

involved in organising the first of

the Group’s corporate volunteering

events to benefit our local

communities in FY 2023. Volunteers

local to the Reading and Birmingham

offices enjoyed getting stuck in with

forest maintenance, tree coppicing

and biodiversity tasks.

Focus on environment continued

41XPS Pensions Group Annual Report 2023

Strategic report

Focus on environment continued

Sharing our performance transparently

In order to monitor the progress on our net zero journey, we measure relevant key performance indicators in the

EMS. This allows the Group to quantify its carbon footprint, effectively monitor risks and continually reduce its

environmental impact. In FY 2023, we completed an ISO 14064 gap analysis with an external provider to enhance the

accuracy, reliability and completeness of our carbon inventory. We will implement the recommendations in 2023 in

order to share our performance better with all our stakeholders and to meetour duties under the Streamlined Energy

and Carbon Reporting Regulations.

We were successful in decoupling our emissions from our growth. Against an increase in business in the FY 2023 we

reduced our direct (Scope 1) emissions. This is the result of our work on rationalising our office estate and requiring less

heating as a result. In addition, we reduced our Scope 2 absolute emissions despite our teams returning to the office

after the pandemic. Our increase in renewable energy has ensured we continued the downward trend of our emissions.

Our Scope 3 travel emissions have increased as office working and in-person client meetings resumed. The associated

volume and emissions relating to business travel remain below that of the pre-pandemic level, despite growth in revenue

and personnel in the time frame. Consequently, the return to office working decreased our remote work-related

emissions, which outweighed those produced by the additional commuting. This resulted in an absolute reduction in

Scope 3 emissions in the period.

Annual greenhouse gas emissions and energy use data for the period 1 April 2022 to 31 March 2023

FY 2023 FY 2022 FY 2021

Scope 1 emissions (tCO

e) 157 215 212

Scope 2 emissions – DEFRA location based (tCO

e) 215 244 350

Scope 2 emissions adjusted for renewable energy

185 230 350

Energy consumption used to calculate above emissions (kWh) 1,976,286 2,334,261 2,655,443

Scope 3 emissions (tCO

1,189 1,522 1,928

Total emissions 1,531 1,967 2,490

FY 2023 FY 2022 FY 2021

Revenue intensity Scope 1 & 2 (tCO

e/£m) 2.1 3.2 4.4

Revenue intensity Scope 1, 2 & 3 (tCO

e/£m) 9.2 14.2 19.5

FTE intensity Scope 1 & 2 (tCO

e/FTE) 0.2 0.3 0.4

FTE intensity Scope 1, 2 & 3 (tCO

e/FTE) 1.0 1.4 1.9

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 2023.

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. It has been determined the Company’s transition to

renewable energy avoided 30 tonnes of CO

e in the period based upon DEFRA kWh location-based accounting.

2 Scope 3 emission figures for FY 2023 include business travel, employee commuting and domestic energy usage to support staff working

fromhome.

XPS Pensions Group Annual Report 202342

Chief Financial Ocer’s review

The business has performed strongly

with revenues growing 20% year on

year; 17% organically. The revenue

growth has been delivered efficiently,

with total staff cost growth now

below revenue growth. We have

continued to invest in areas such as

risk transfer and member analytics

and made capital investment in

developing our own administration

platform which will further enhance

our operational gearing in the future.

Significant accounting matters

Adjusted numbers

We continue to show adjusted numbers

in our results to better reflect the

underlying business performance.

The adjusted numbers exclude

exceptional and non-trading items

such as the amortisation of acquired

intangible assets as well as share-based

payment costs. The exceptional and

non-trading items are disclosed in the

notes to the financial statements.

These alternative performance

measures may differ from those

defined by other entities but help

toexplain the progress within the

underlying business.

Highest annual revenue growth since listing - delivered

with improved margin and proﬁtability. Earnings growth

exceeded revenue growth for the ﬁrst time since 2017.

Record revenue growth and

improved operationalgearing

A year of strong operational

achievements matched with record

breaking ﬁnancial performance.

Snehal Shah

Chief Financial Officer

Snehal Shah

Chief Financial Officer

43XPS Pensions Group Annual Report 2023

Strategic report

Group income statement

FY 2023

£m

FY 2022

£m

Change

Revenue

Pensions Actuarial & Consulting 77.4 62.2 24%

Pensions Investment Consulting 18.0 13.7 31%

Total Advisory 95.4 75.9 26%

Pensions Administration 57. 5 52.3 10%

SIP 9.4 6.1 54%

NPT 4.3 4.3 —

Total revenue 166.6 138.6 20%

Adj. EBITDA

42.4 34.1 24%

Depreciation & amortisation (5.5) (5.3) (4%)

Adj. EBIT

36.9 28.8 28%

Exceptional & non-trading items (14.2) (9.8) (45%)

Net finance expense (3.6) (2.1) (71%)

Profit before tax 19.1 16.9 13%

Income tax expense (3.3) (7. 5) 56%

Profit after tax 15.8 9.4 68%

1 Management responsibilities and operations for a small part of the business moved during the year from the Pensions division to

Administration. Related revenue was £1.5 million, and the prior year (which has been restated) was also £1.5 million.

2 Adjusted measures exclude the impact of exceptional and non-trading items: acquisition-related amortisation, share-based payments,

corporate transaction costs, restructuring costs and other items considered exceptional by virtue of nature, size and incidence. See note 6

for details of exceptional and non-trading items.

Revenue

Total Group revenues grew 20% year

on year; 17% organically.

Pensions Actuarial and Consulting

is the Group’s largest business.

The division achieved 24% year

on year growth in revenues, due

to high client activity levels driven

by continued regulatory changes

as well as inflationary increases in

fees. The Penfida acquisition in the

year has contributed £2.3 million of

the growth.

Pensions Investment Consulting had

another strong year with a number

of new client mandates, continued

demand driven by regulatory

changes and financial market

volatility as well as inflationary fee

increases. The LDI crisis following

the September mini-budget led to a

significant increase in client activity.

Revenues in this division grew 31%

year on year.

Pensions Administration revenues

grew 10% year on year with a number

of new client wins coming on stream

during the year and increased levels

of project work. As with the advisory

business, inflationary increases

in fees also drove the growth in

the year. Pensions Administration

accounted for 35% of the Group

revenues (FY 2022: 38%).

SIP revenues were up 54% on prior

year, due to strong underlying sales,

and increases in commission due to

the base rate increases in the year.

The acquisition of the trade and

assets of Michael J Field Consulting

Actuaries (“Michael J Field”)

completed in February 2022, and

this accounted for £2.0 million of the

revenue in FY 2023.

The National Pension Trust (NPT)

revenues were flat year on year;

driven by competitive price

pressures, asset price volatility

partially offset by increased

contributions paid into the trust

in the year. Total assets under

management are now over

£1.5 billion.

Operating costs

Total operating costs (excluding

exceptional and non-trading items)

for the Group grew by 19% or

£19.7million year on year. The main

drivers for the cost increases are

an increase in headcount as the

business grew (1,574 FTE v 1,442

last year), inflationary pay increases

including a mid-year salary increase

for all our people below Partner

level amounting to c. £1.5 million

additional cost for the year, higher

bonus cost commensurate with

the strong financial performance

and inflationary increases in other

operating costs.

Despite the high inflation impacting

our costs, the Group has delivered

further operational gearing with

adjusted EBITDA growing by 24%

year on year – ahead of the Group

revenue growth of 20%. Adjusted

EBITDA margin was 25.5% (FY 2022:

24.6%). Statutory profit before tax

grew by 13% year on year.

XPS Pensions Group Annual Report 202344

Chief Financial Ocer’s review continued

Exceptional and non-trading items

in the year totalled £14.2 million (FY

2022: £9.8 million). Amortisation

of acquired intangible assets

amounted to £6.9 million (FY 2022:

£6.6 million). Share-based payment

charges were £4.7 million (FY 2022:

£3.9 million) with higher levels of

vesting expected due to the strong

financial performance of the Group.

The Group also incurred corporate

transaction costs of £2.9million

(FY 2022: £0.3 million) in the year.

Included within that is £0.8 million of

contingent consideration inrespect

of the acquisition of Penfida

Limited. 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. The remainder £2.1 million

of corporate transaction costs

relate to the acquisition of Penfida

Limited and other potential M&A

opportunities explored by the

Group in the year. These costs have

been partially offset by a credit of

£0.2million relating to the write back

of contingent consideration for the

acquisition of the business of Michael

J Field completed in February 2022.

Tax on the exceptional and non-trading

items was a credit of £2.9 million (FY

2022: charge of £2.5 million). The

charge in the prior year was due to

the revaluation of deferred tax liabilities

as a consequence of the increase in

corporation tax from 1 April 2023 to

25%. The credit in the current year is

driven by the unwinding of deferred

tax liabilities linked to intangible

assets acquired in previous periods.

Net finance costs

Net finance costs for the year were

£3.6 million (FY 2022: £2.1 million).

The increase is due to the increases

in the bank base rate during the year,

along with a modest increase in the

loan balance.

Taxation

A tax charge of £6.2 million (FY 2022:

£5.0 million) was recognised on

adjusted profits (before exceptional

and non-trading items) which represents

an effective tax rate of 19% (FY 2022:

19%). The Group also recognised a

tax credit of £2.9 million (FY 2022:

charge of £2.5 million) on exceptional

and non-trading items, which

resulted in an overall tax charge for

the year of £3.3 million (FY 2022:

£7.5 million). As previously disclosed,

the increase in corporation tax in FY

2024 to 25% drove an increase in

tax charges in the prior year as the

deferred tax liabilities were revalued

at the higher rate.

Our businesses generate considerable

tax revenue for the government in the

UK. For the year ended 31 March 2023,

we paid corporation tax of £4.9million

(FY 2022: £3.9 million); we collected

employment taxes of £27.0 million

(FY 2022: £22.5 million) and VAT of

£24.7 million (FY 2022: £21.3 million).

Additionally, we have paid £1.2 million

(FY 2022: £1.2million) in business

rates. The total tax contribution of the

Group was therefore £57.8 million (FY

2022: £48.9 million), which equates

to 35% of revenue (FY 2022: 35%).

EPS

Basic EPS for FY 2023 grew 67% year

on year to 7.7p (FY 2022: 4.6p) owing

to the strong financial performance

of the Group. Adjusted fully diluted

EPS grew 24% year on year to 12.6p

in FY 2023 (FY 2022: 10.2p) enabled

by the strong revenue growth as well

as delivery of further operational

gearing in the business.

Dividend

A final dividend of 5.7p is being

proposed by the Board (FY 2022:

4.8p). The final dividend, if approved,

which amounts to £11.8 million

(FY2022: £9.7 million), will be paid

on 21 September 2023 to those

shareholders on the register on

25August 2023.

45XPS Pensions Group Annual Report 2023

Strategic report

Cash flow, capital expenditure and financing

Non-GAAP cash flow

31 March 2023

£m

31 March 2022

£m

Operating

Adjusted EBITDA 42.4 34.1

Change in net working capital (0.3) (1.3)

Adjusted operating cash flow 42.1 32.8

OCF conversion 99% 96%

Financing & tax

Net finance expense (3.3) (1.5)

Taxes paid (4.9) (3.9)

Proceeds from/(repayment of) new loans 4.0 3.9

Repayment of lease liabilities (3.0) (2.7)

Share-related movements (1.0) (3.3)

Net cash flow after financing 33.9 25.3

Investing

Acquisition (8.3) (1.5)

Capex (5.4) (7. 9)

Restricted cash (NPT) — —

Net cash flow after investing 20.2 15.9

Dividends paid (15.3) (14.1)

Exceptional items (1.8) (0.3)

Movement in cash 3.1 1.5

Net debt 55.3 54.6

Leverage 1.38x 1.74x

FY 2023 has been another year of

strong cash performance for the

Group. Adjusted operating cash flow

increased by £9.3 million driven by

a £8.3 million increase in EBITDA

and a £1.0 million increase in net

working capital. Overall, this resulted

in adjusted operating cash flow

conversion of 99% compared to 96%

in the prior year.

Taxes paid in the year were £1.6million

higher than the income statement

charge due to the current year tax

credit in relation to exceptional items

in the year which is largely a

deferred tax.

During the year, the Group drew

down £4.0 million of the RCF. Capital

expenditure in the year amounted to

£5.4 million (FY 2022: £7.9 million)

with £0.6 million spent on leasehold

improvements and office fitouts

and the remaining £4.8million on

software development, enhancements

to our platforms, cyber security, and

other IT equipment.

In September 2022, the Group

acquired Penfida Limited for an initial

cash consideration of £8.3 million net

of cash acquired.

After paying £15.3 million in dividends

and £1.8 million of exceptional costs,

the Group cash balance increased by

£3.1 million year on year to close at

£13.3 million. The Group had drawn

down £68million of its £100 million

RCF at 31 March 2023, resulting in a

net debt of £55.3million, an increase

of £0.7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.

Share premium reduction

The Group undertook an exercise in

the year to reduce the balance in XPS

Pensions Group plc’s share premium

account. This was completed in

October 2022, and as a result

£116.8 million was transferred to

retained earnings.

Snehal Shah

Chief Financial Officer

21 June 2023

XPS Pensions Group Annual Report 202346

Principal risks and uncertainties

The Risk Management Frameworks embedded within the Group continue

to support the growth of the business. Eective risk management

provides the Group with the information required to understand our key

risks, and identify and embrace opportunity. The frameworks also allow

us to proactively develop our controls, protecting the Group and its

customers from new and developing threats such as Cyber Crime.

Over the last year our risk

management frameworks have

been fundamental to enabling us

to react effectively to the changing

risk environment that the business

faces during its day-to-day

operations. The risk profile of the

Group is regularly reviewed by senior

management along with the controls

framework in place, to ensure they

are enhanced to address changes

in the external threat environment.

These reviews are supported by

comprehensive internal and external

assurance activities, which validate

controls design and effectiveness,

highlighting opportunities for further

improvements. The increasing threat

of cyber-crime continues to be a key

area of focus for management, with

particular focus on protecting the

Group from phishing, business email

compromise and ransomware attacks.

To allow the Group to address the

evolving threat environment it

faces we have continued to develop

our overall risk management

capabilities, improving our ability

to detect, understand and manage

our risks. Since the last report there

have been a number of significant

enhancements, including:

• the successful achievement of

thePASA Pensions administration

standard. This standard is recognised

by The Pensions Regulator as a

way of demonstrating high-quality

pensions administration as provided

by XPS to its clients;

• the development of the existing

Risk team, through the recruitment

of additional SMEs and supporting

existing staff members to achieve

this status. This has been done

through supporting training to

achieve and then maintain relevant

professional qualifications, e.g.

CISA/CRISC/CISM;

• the expansion of the existing

ISO 27001 information security

certification to cover all activities

provided by the Group. This external

assurance provides assurance that

the Group has the right frameworks

in place to identify and effectively

manage its information security and

cyber risks;

• the development of the existing

acquisitions framework, to support

the effective integration of new

businesses. This supports the

alignment of risk and controls

frameworks, including the application

of relevant assurance frameworks;

• 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 ongoing development of the

executive level Risk Management

Committee to support the

identification of new risks and

monitoring of existing risks, and agree

prioritisation of mitigation activities;

• the further expansion of the

dedicated Information Security

team, along with developing and

enhancing the suite of technical

controls in place; and

• the development of the Environmental

Management System to ensure we

identify and manage our impact

on the environment. This includes

supporting TCFD reporting and

consideration of the risks associated

with climate change.

The Group continues to operate a

three lines of defence model which

supports the promotion of effective risk

management and seeks to prevent risk

taking that exceeds the Group’s 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, liquidity.

• Competition – risks of change

ondemand side of 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,

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,

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

Managing risk

eectively

47XPS Pensions Group Annual Report 2023

Strategic report

Board of Directors/Audit & Risk Committee

Operational Management

First line

Control of risks

Conﬁrmation of

control eectiveness

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

Links to strategy:

Regulatory change

Expand services

Grow market share

Mergers and acquisitions

Senior management/Risk Management Committee

Risk Management

Second line

Internal Audit

Third line

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

we operate are detailed below. They are not set out in any priority order, nor do they include all those associated with

the Group.

Specific risks that are material to XPS Group are:

Strategy

Description

Risks linked to the

assumptions of future

development and size

ofpensions market

usedto develop the

strategy or business

model or business

portfolio, e.g. poor data,

group think or lack of

diversity of opinions.

Key mitigations

The Board approves and regularly reviews the

Group’s strategy in conjunction with budgets,

targeting long term increases in shareholder value

and ensuring robust independent challenge.

Key decisions are assessed against risk appetites for

key Group risks with a risk management framework

in place to identify and escalate where strategic

decisions may have unintended impacts.

Rationale for change

Stable

Change during the year:

Increased risk

Stable

Improving

XPS Pensions Group Annual Report 202348

Principal risks and uncertainties continued

Strategic planning and execution

Description

Risks linked to

assessing, evaluating,

planning and executing

the strategy, e.g. poor

budgeting and planning,

inadequate or misleading

communications or poor

management of change

or projects.

Key mitigations

The Board regularly reviews the Group’s strategy,

supported by the Executive with responsibilities

assigned for the delivery of initiatives and provision

of regular progress updates.

Specific project management resources are used to

deliver large scale change initiatives, allowing risks

to delivery of initiatives to be clearly identified at

planning stage along with mitigations.

Rationale for change

XPS has built on previous years

initiatives to develop frameworks

to co-ordinate and deliver market

leading technology change. This

is evidenced by the successful

rollout of the new Aurora

administration system.

Financial performance

Description

Risks relating to the

failure to monitor and

appropriately manage the

financial performance of

the Group on an ongoing

basis which could lead

to poor management

decisions, higher costs

and/or inaccurate external

financial reporting.

Key mitigations

The Group has a highly qualified and experienced

financial reporting team. There is an extensive

financial controls framework in place and key

controls are regularly tested by internal and external

audits. The Group undertakes detailed bottom-up

budgeting and reforecasting exercises with the final

budget and reforecast approved by the Board.

Management information is published on a regular

basis and the Executive Committee reviews the

financial performance of the Group at least monthly.

The Board receives and scrutinises the financial

performance of the Group at each Board meeting.

Rationale for change

The Group has continued to

improveits budgeting and

forecasting frameworks. These

ongoing improvements are

evidenced through consistent

delivery of financial results in line

with or ahead of market consensus.

Errors

Description

Risks relating to material

mistakes made by

staff, including the

non-compliance with

established procedures,

e.g. failure to calculate

benefits correctly or not

following peer review

processes.

Key mitigations

The Group recruitment process ensures only high calibre

staff are recruited, who are then supported by training

programmes. Staff use standardised documented

processes and checklists for 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, with root cause analysis used

to identify where controls can be improved.

Rationale for change

Stable.

Change during the year:

Increased risk

Stable

Improving

Links to strategy:

Regulatory change

Expand services

Grow market share

Mergers and acquisitions

49XPS Pensions Group Annual Report 2023

Strategic report

Theft and fraud (ﬁnancial and physical assets)

Description

Risks relating to the

safeguarding of Group

and client financial

and physical assets

from malicious actors,

e.g. stealing physical

assets, deliberate

misrepresentation

leading to fraud or

theftfrom Group or

clientbank accounts.

Key mitigations

The Group deploys robust physical and systems

access controls, along with enforcing segregation

of duties to preventing individuals from making

fraudulent payments or transfers.

These controls are supported with staff vetting,

training and awareness and are regularly

independently audited.

Insurance arrangements are in place to protect

against larger claims.

Rationale for change

Controls frameworks continue

to be developed to manage this

risk, including addressing areas

identifiedin previous audits and

internal self assessments.

We continue to see small number

of attempts to impersonate pension

scheme members, with controls

identifying and preventing these.

Information/cyber security

Description

Risks relating to the

confidentiality, integrity

and availability of

information assets

including IT systems, e.g.

unauthorised access to

or disclosure of staff or

client information, denial

of access to systems or

data required or business

continuity incidents

caused by equipment

breakdown/fire/flood.

Key mitigations

The Group has an Information Security Management

System (ISMS) in place to ensure that risks are

identified and managed effectively. This includes a

range of technical controls, a dedicated Information

Security team, and a 24/7 Security Operations Centre.

These are supported by regular independent audits

and penetration tests.

All staff are provided with comprehensive policies and

guidance, with awareness of key topics reinforced with

regular training initiatives, e.g. phishing awareness.

The Group has a range of business continuity

capabilities in place to minimise impact of incidents

impacting the Group’s data, facilities or systems. These

include documented plans which are tested regularly.

Rationale for change

The Group has continued to

develop its capabilities to meet

theincreasing cyber risk. Regular

threat assessments ensure that

controls frameworks in place

address new and emerging

threats. This includes the

implementation of new technical

controls as well as maintaining

exiting assurance frameworks

including ISO27001 and Cyber

Essential Pluscertifications.

Sta/human resources

Description

Risks relating to

our people, e.g.

compensation, retention,

succession planning, skills

and competence and

management capability.

Key mitigations

The Group’s recruitment strategy is to seek

professional, experienced and qualified staff

utilisingrobust staff recruitment and selection

processes. This is supported by comprehensive

training, development and performance

management processes, with longer-term

incentivesin place 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.

Rationale for change

Stable.

Links to strategy:

Regulatory change

Expand services

Grow market share

Mergers and acquisitions

XPS Pensions Group Annual Report 202350

Principal risks and uncertainties continued

Third party supplier/outsourcing

Description

Risks relating to the

use of third parties to

support our operations,

e.g. poor due diligence

and selection processes,

failure of a supplier to

follow agreed upon

procedures or financial

failure of supplier

resulting in inability to

deliver service.

Key mitigations

The Group has a formal selection process that

ensures due diligence is carried out, which is

proportionate to the risk of the potential failure

ofthethird party.

The approvals and signing framework also ensure

contracts include key risks relating to services

provided and risks identified are managed and

accepted prior to agreements being signed. This

is supported by ongoing monitoring of key third

parties, including SLAs and financial status.

Where there is a reliance on a single supplier,

contingency plans are in place to protect

against failure.

Rationale for change

Stable.

Client engagement

Description

Risks relating to the

provision of poor service

or advice to clients,

e.g. advice that is not

clear, not understood

by the client or poorly

presented or uses out of

date technologies, but

not errors.

Key mitigations

The Group client engagement process ensures that

expectations are matched to Group capabilities.

Regular ongoing dialogue with clients ensures that

the services provided meet their requirements and

continue to be appropriate to their specific needs.

Client surveys are used to gather feedback and

identify trends and insights.

Rationale for change

Stable.

Business conduct and reputation

Description

Risks that could lead to

a breach of acceptable

conduct or ethics,

impacting the Group’s

brand, image or reputation.

Failure to ensure services

are appropriate for client’s

needs, any discrimination, or

a poor response to a cyber

incidentor client complaint.

Key mitigations

The Group’s mission, vision and values clearly set

out the tone from the top, highlighting to all staff the

conduct and ethics that are expected from them at

all times. This is supported by a recruitment strategy

that seeks professional, experienced and qualified

staff who fit with the Group’s values.

Due diligence of third parties considers supply chain

risks, ensuring that only suppliers that comply with

their legal obligations are selected.

The Group has incident management processes in

place to ensure that it is able to effectively respond

to significant events that could impact its brand or

reputation, which is regularly tested.

Rationale for change

Stable.

Change during the year:

Increased risk

Stable

Improving

51XPS Pensions Group Annual Report 2023

Strategic report

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

on page 104 that they consider that

the Annual Report, taken as a whole,

is fair, balanced and understandable

and provides the information

necessary for shareholders to assess

the Group’s position, performance,

business model and strategy.

This Strategic Report has been

approved by the Board and signed

by order of the Board:

Paul Cuff

Co-Chief Executive Officer

21 June 2023

Ben Bramhall

Co-Chief Executive Officer

21 June 2023

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 100 of the

Directors’ Report.

The Directors have assessed the

long-term prospects of the Group

based upon business plans and upon

cash flow projections for the three-

year period ending 31 March 2026.

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 2024. 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 2024.

These forecasts have been

comprehensively stress-tested

by using simulation techniques

involving sensitivity analysis. The

stress-testing involved removing

revenue relating to a large part of

customers, discretionary spend from

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 46 to 51. In addition, note 2 on

page 125 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 47 to 50.

The Group had £13 million of cash

at 31March 2023 and a £100 million

committed financing facility with

an accordion of £50 million until

October 2025. In April 2023 this

facility was extended until October

2026. At 31 March 2023, £68 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.

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 three-year

assessment period. For this reason,

the Directors continue to adopt the

going concern basis in preparing the

financial statements. At the same

time, the Directors also considered

the appropriateness of adopting the

going concern basis of accounting

in preparing the financial statements

and the Directors’ identification of

any material uncertainties to the

Group’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.

XPS Pensions Group Annual Report 202352

TCFD

Task Force on Climate-related

Financial Disclosures Report

The TCFD reporting framework seeks integration of climate

risk with risk and operational controls.

Consistent disclosures are required

for all listed companies in the

UK. As part of the environmental

management system, XPS has

integrated climate risk into its risk

management and governance

structures to ensure appropriate

consideration at Board level.

In the period XPS continued to

mature its climate and environmental

risk framework with significant

progress made. This report includes

disclosures consistent with the

TCFD framework and all 11 TCFD

recommendations (pursuant to LR

9.8.6R(8)). XPS acknowledges its

maturity and will continue to develop

its climate and environmental

capability especially within scenario

analysis which the Group firmly

believes will be invaluable to

informing key business decisions.

The elements of XPS TCFD

conformant disclosures can be

found in the relevant sections of this

report, as outlined below for ease

of reference. Additional clarity has

been provided where necessary. This

section, together with the statements

throughout this report, meet the

requirements of TCFD and the FCA,

and should be read in conjunction

with all elements within the below

table as well the Risk, Sustainability

and business strategy sections.

Governance

Describe the Board’s

oversight of climate-

related risks and

opportunities.

Please refer to the Environment section of Sustainability on page 38.

XPS recognise Climate change as a long-term risk to our industry

and economy.

XPS have successfully integrated climate and environmental risk into its

pre-existing Risk Management framework via the group’s ISO14001 certified

Environmental Management System (EMS). This allows seamless reporting

and assessment of environmental and climate risks along-side other risks via

the executive Risk Management Committee (pages 46 and 47). Responsibility

of the group’s ESG and Climate performance is attributed to the Executive

Sustainability Committee (pages 74 to 75) which is chaired by non-executive

director Sarah Ing. The committee supports the board’s oversight of the

group’s sustainable performance and meets at least twice annually. The

Committee utilises data such as carbon emissions, investment advice positioning

and market conditions to inform the group’s sustainable policies. These policies

shape the group’s risk management frameworks, business budgeting, planning

and overall business strategy. The Group has and will continue to allocate

appropriate financial provisions to meet immediate climate and environmental

obligations. The impact of any climate change initiatives and the net zero

strategy on budgeting for the financial year are currently immaterial.

Describe management’s

role in assessing

and managing

climate-related risks

and opportunities.

Fully compliant recommendations are denoted by

53XPS Pensions Group Annual Report 2023

Strategic report

Strategy

Describe the climate-

related risks and

opportunities the

organisation has

identified over the

short, medium, and

long term.

To promote consistency within our EMS, we have aligned our definition of

short, medium and long term with those defined by our net zero trajectory

& informed by the Science Based Targets initiative (SBTi) boundaries.

Short term being 0–5 years, medium term being 5–10 and long term being

anything 10 years and over.

XPS utilises its EMS and internal scenario analysis to identify and assess

current and future transitional and physical risk to the business and their

materiality on an ongoing basis. Short to medium term – The Ukrainian

conflict has highlighted known risks and vulnerabilities to commodity

pricing and the ability of our supply chain to deliver services to XPS,

especially relating to energy pricing. We consider these to have the

potential to be a significant risk, however XPS is a robust and well-prepared

organisation with mitigations in place to enable sustainable operations.

Longer term, studies and our scenario analysis currently indicate a downturn

in GDP as a consequence of the global transition to a low carbon economy

and the effects of climate change. The Group has also identified opportunities

within the transition to net zero. Leading in this field could have a beneficial

impact on brand, reputation, and access to new client prospects.

See the Risk Management section (pages 46 to 51) and refer to the

Environment section of the Sustainability section on page 38.

Describe the impact of

climate-related risks

and opportunities

on the organisation’s

businesses, strategy,

and financial planning.

Our transition to a more sustainable and climate resilient business has

already formed some of our product offering and we anticipate the demand

for green services to only increase with time. Please refer to Clients Section

(pages 36 to 37) which details our current and future investment approach.

Sharing our ambition and values with our supply chain is intrinsic to our

long-term net zero strategy. XPS are taking actions to achieve this by

actively working with our suppliers to encourage elevated levels of climate

action this decade, acknowledging XPS will select its partners based on

their credentials moving forwards.

XPS possesses robust business continuity capabilities, as heavily deployed

during the Covid-19 pandemic. This demonstrates the group’s resilience

to geographic climate incidents and our ability to provide services to our

clients remotely. XPS generally does not own physical properties and

operate solely in the UK which reduces the physical and geographical risk

posed by climate change events. We assess physical asset risks to the

business to be low.

XPS currently achieves Carbon Neutrality through the retirement of high-

quality carbon credits. The Group expects offsetting pricing to increase in

the future which will result in large expenditure unless the group acts swiftly

to reduce its emission in line with its net zero strategy.

The timeline for further development and deployment of sustainable

initiatives, products and strategy is informed by our science-based net zero

trajectory. Please refer to Business Strategy (pages 14 to 15), Sustainability

Strategy (pages 26 to 27) and the Environment section (pages 38 to 41).

Describe the resilience

of the organisation’s

strategy, taking

into consideration

different climate-

related scenarios,

including a 2°C or

lower scenario.

For our clients, providing a pension to employees is non-negotiable and,

therefore, a demand for XPS’s services will remain in the most financially

turbulent conditions, such as a failed transition. We believe, with continued

responsible financial stewardship to FCA and industry standards, XPS will

remain robust to these potential market downturns as a consequence of

climate and other risks.

Internal scenario analysis suggests an orderly transition limiting warming to

2°C offers the most favourable long-term market conditions. XPS cannot

achieve this alone, and, despite our resilience, we must work with our peers

and suppliers to encourage progress in our industry.

Our strategy already focuses heavily on sustainable business practices

(please see the Clients section of the report for more details on our product

offering and strategy on pages 36 to 37) and as such we do not anticipate

the effects of climate change to significantly change our strategic approach

further. We do anticipate the business becoming ever more sustainable on

our journey, however.

Please see the Environment section on scenario analysis on pages 38 to 41.

XPS Pensions Group Annual Report 202354

TCFD continued

Risk

management

Describe the

organisation’s

processes for

identifying and

assessing climate-

related risks.

XPS currently considers climate to be a low risk to the business due to the

Group’s mitigating controls, business continuity capability, financial stability

and product demand; however, the Group does acknowledge climate

change will impact its operations.

Climate-related risks are fully integrated and managed within the business

through the Risk Management frameworks. The EMS constantly acts to

identify new potential risks and ensure they are reported and monitored

as per the internal procedures. Please see the Environmental Section for

more details on our EMS on pages 38 to 41. The size and scope of Risks

is determined based upon the potential to impact and exceed appetites

established by senior management. XPS have determined materiality and

priority for each identified risk in the short medium and long term using

the Group’s Risk Management Framework which assesses qualitative and

quantitative impacts of a risk on a number of operational aspects including

resilience, reputation, shareholder value and P&L impact. We acknowledge

the risk and additional cost to business current and emerging regulatory

requirements may have on the group, currently considered to be low. Please

see Risk Management (pages 46 to 51). All risks, climate and otherwise of the

same priority grading are treated and managed proportionately.

XPS Investment provides investment advice only and therefore does not

directly hold the investment risk. However, the business does strive for

sustainable excellence, weighting investments by their climate impact and

promoting sustainable funds. Please see the Clients section on pages 36 to

37 for more information.

Where opportunities are identified they are considered as part of the EMS

continual improvement program which assesses an opportunities viability.

Viable opportunities are considered by the EMS governance structure and

presented to the board and sustainability committee where appropriate.

As a minimum, the Group’s environmental and climate risk register includes the

risks published within the TCFD Recommendations Table 1 and 2.

Refer to the Environment section of the Sustainability section on

pages 38 to 41.

Describe the

organisation’s

processes for managing

climate-related risks.

Describe how

processes for

identifying, assessing,

and managing

climate-related risks

are integrated into the

organisation’s overall

risk management.

Metrics and

targets

Disclose the

metrics used by the

organisation to assess

climate-related risks

and opportunities

in line with its

strategy and risk

management process.

The EMS maintains and assesses a number of environmental and climate

KPIs to monitor potential risks, understand business emissions and maintain

compliance & conformance. The frequency that each KPIs is reviewed is

based upon the aspect’s risk potential, or at least annually.

The business considers that a science-based net zero trajectory is key to

mitigating a number of climate related risks and is fundamental to the group

delivering its sustainable strategy. The Group’s carbon footprint, waste

volumes, business travel habits and energy consumption is closely monitored

as the group’s most significant and impactable environmental aspects

and are the Group’s key climate KPIs. The Group’s overall environmental

performance is managed as a risk to the business.

Climate related performance is tied with executive objectives and therefore,

shapes our executive’s remuneration potential. XPS are considering the

implementation of internal carbon pricing.

See the Environment section of the Sustainability section on pages 38 to 41.

Fully compliant recommendations are denoted by

55XPS Pensions Group Annual Report 2023

Strategic report

Disclose Scope 1, Scope

2 and, if appropriate,

Scope 3 greenhouse

gas (GHG) emissions

and the related risks.

See the Environment section of Sustainability section on pages 38 to 41 for our

Streamlined Energy and Carbon Reporting disclosure and associated narrative.

XPS have aligned the measurement, reporting and disclosure of its carbon

inventory with ISO 14064, the international standard for carbon inventories.

SECR metrics are regularly monitored and reported as appropriate.

Describe the

targets used by

the organisation to

manage climate-

related risks and

opportunities

and performance

against targets.

The EMS manages day to day KPI and objectives monitoring. As already

discussed, the business considers that a science-based net zero trajectory

is key to mitigating a number of climate related risks. The business uses it’s

predetermined science-based net zero trajectory to assess its performance

and it’s standing amongst its peers and to inform top management. Key

current interim climate and performance objectives include 2030 targets

of 100% renewable energy supply and a 50% absolute reduction in Scope

1 and 2 emissions (based on a 2019 base year). XPS targets zero emissions

by 2050 or sooner and the Group is currently developing its long-term

net zero objectives. In addition, the Group’s EMS also defines a number of

operational objectives to aid with its net zero ambitions which are set by top

management. These include a zero waste to landfill initiative, business travel

ambition and staff awareness goals. KPIs and objectives are continually

monitored by the EMS, reviewed at least every 6 months through external

certification and formally assessed by top management at least annually.

EMS reporting mechanisms are in place should an objective be at risk of non-

performance or pose a significant risk to the business, strategy, or net-zero

commitment, providing appropriate boardconsideration.

XPS is currently targeting an annual year on year reduction of emissions as

it delivers its sustainable strategies.

See the Environment section of the Sustainability section on pages 38 to 41.

Non-Financial Information Statement

The Companies Act 2006 requires us to disclose certain non-financial information in the Annual Report and Accounts.

This information can be found on the following pages:

Reporting matters Information to understand our policies and impacts

Environmental matters Focusing on our environment, see pages 38 to 41

Employees Focusing on our employees, see pages 30 to 33

Respect for human rights Focusing on governance, see pages 27 to 29

Focusing on our communities, see page 35

Social matter Focusing on our clients, see pages 36 to 37

Focusing on our communities, see pages 34 to 35

Anti-bribery and corruption Focusing on governance, see page 29

Description of principal risks and impact of business activity Our principal risks and uncertainties, see pages 46 to 51

Description of our business model Our business model, see pages 8 to 9

Non-financial key performance indicators Our sustainability framework, see pages 26 to 27

XPS Pensions Group Annual Report 202356

Chairman’s introduction

The Board is committed to maintaining high

standards of corporate governance, with an

increasing focus on sustainability.

Robust corporate

governance provides

asustainable platform

forsuccess and growth

I am delighted to have been

appointed as Chairman of XPS

during the year. I am extremely

proud of the success of the XPS

Group, with yet another year of

record ﬁnancial performance, and

look forward to capitalising on the

strong positioning of the business.

Alan Bannatyne

Chairman

Alan Bannatyne

Chairman

57XPS Pensions Group Annual Report 2023

Governance

The Board is delighted with yet

another record financial performance

from the Group. The efforts of all at

XPS should be highly commended.

We are equally delighted by the

way growth is being achieved:

alongside high corporate governance

standards. Our aim is to grow

sustainably. In line with this, high

corporate governance standards run

right through the Group, starting with

the Board itself.

Independence and diversity

The year under review saw

changesto the Board’s composition,

including my own appointment

as Chairman. This was prompted

by the retirement of Tom Cross

Brown in September 2022 and

followed an extensive recruitment

and shareholder consultation

exercise that was overseen by

Russell Reynolds Associates.

Having been Chairman since the

IPO, Tom’s departure leaves big

shoes to fill. Iknow this first hand,

having served on the Board for

six years as Senior Independent

Director. Margaret Snowdon OBE

has now been appointed as Senior

Independent Director.

In February 2023, we also appointed

Aisling Kennedy, an experienced

Actuary and previous Head of Life

& Health Pricing UK at Swiss Re, as

Independent Non-Executive Director.

As well as further strengthening

the Board’s independence,

Aisling’s appointment increases the

proportion of female Directors to

43%. While further work is needed

in terms of increasing the Board’s

diversity, we are nevertheless

encouraged by the progress

being made.

Continual assessment

Evaluation of Board members does

not end at the appointment stage.

Directors’ performance and suitability

are regularly assessed – for example,

an external Board evaluation has

been conducted this year. Involving

one-to-one interviews with Directors

and the senior management team,

this is a comprehensive exercise. It

has to be. For if we want to live up

to the high corporate governance

standards we have set ourselves and

ensure we grow in a sustainable way,

the Board must set the example.

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

21 June 2023

In FY 2023, the Company has

applied the principles and

complied with the provisions of

the UK Corporate Governance

Code 2018 as they apply to it as

a “smaller company” (defined in

the Code as being a company

below the FTSE 350). The

Code is publicly available

atwww.frc.org.uk.

Further information on how the

Company has applied the five

overarching categories of the

principles can be found on the

following pages:

(i) Board leadership and

Company purpose:

pages 58 to 63;

(ii) division of responsibilities:

pages 62 to 63;

(iii) composition, succession and

evaluation: pages60, 66 to

68 and 64 to 65;

(iv) audit, risk and internal control:

pages 70 to 73; and

(v) remuneration:

pages 76 to 99.

Statement of compliance with

the UKCorporate Governance

Code

XPS Pensions Group Annual Report 202358

Board of Directors

Paul Cu

Co-Chief

ExecutiveOcer

Appointed: October 2016

Ben Bramhall

Co-Chief

ExecutiveOcer

Appointed: April 2014

Snehal Shah

Chief Financial Ocer

Appointed: July 2019

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

• Mergers and acquisitions,

strategy, pensions industry

andinvestor relations are

notedas Paul’s key skills

Key experience

• Partner at KPMG 2008–2016

• Head of KPMG London pensions

team prior to joiningXPS

Current external listed

company directorships/

keyappointments

• None

Meetings attended

7/7

Committee membership

N/A

Key strengths

• Qualiﬁed actuary with 20+

years of experience in the

pensions industry

• Responsible for day-to-day

operation of the business,

including provision of services

to existing clients, revenue

generation and the Group’s

people strategy

• Mergers and acquisitions,

strategy, pensions industry,

riskmanagement, workforce

engagement, investor relations,

business development and

operational management are

noted as Ben’s key skills

Key experience

• Eight years at KPMG

Current external listed

company directorships/

keyappointments

• None

Meetings attended

6/7

Committee membership

Key strengths

• Chartered accountant with

20+years of experience

• Mergers and acquisitions,

post-deal integration, strategy,

risk management, ﬁnancial

reporting, listed company

experience, investor relations,

corporate governance and

operational management are

noted as Snehal’s key skills

Key experience

• Ten years with PwC

• Senior ﬁnance roles including

Group Financial Controller,

Head of Investor Relations and

Finance Director for Integration

at Ladbrokes plc 2009–2017

• Interim Director (Finance &

Corporate Governance) at

Parkdean Resorts Ltd and

Interim Director of Finance

& Investor Relations at

Countrywide plc 2017–2019

Current external listed

company directorships/

keyappointments

• None

Meetings attended

7/7

Alan Bannatyne

Independent

Non-Executive Chairman

Appointed: November 2022

Appointed to Board:

January2017

Committee membership

Key strengths

• Chartered accountant

• Recent and relevant

ﬁnancialexperience

• Strategy, risk management,

ﬁnancial reporting, listed

company experience, investor

relations and corporate

governance are noted

asAlan’skey skills

Key experience

• Qualiﬁed with Deloitte & Touche

• 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 Ocer

since 2007

Current external listed

company directorships/

keyappointments

• Chief Financial Ocer of

Robert Walters plc since

March2007

Meetings attended

7/7

The Board is composed of seven members, consisting of the

Chairman, three Executive Directors and three Independent

Non-Executive Directors.

59XPS Pensions Group Annual Report 2023

Governance

Margaret Snowdon OBE

Senior Independent

Non-Executive Director

Appointed: November 2022

Appointed to Board:

January 2017

Sarah Ing

Independent

Non-Executive Director

Appointed: May 2019

Aisling Kennedy

Independent

Non-Executive Director

Appointed: February 2023

Committee membership

Key strengths

• 40+ years of experience inthe

pensions industry

• Mergers and acquisitions,

strategy, risk management,

workforce engagement,

pensions industry, corporate

governance, business

development, investment

strategy, technology, customer

service, trusteeship and

operational management are

noted as Margaret’s key skills

Key experience

• Partner and Director level

positions with leading

employee beneﬁt consultancies

• Previous Non-Executive Director

of The Pensions Regulator

• Appointed an OBE in 2010 and

received many awards for her

contribution to pensions

Current external listed

company directorships/

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

Meetings attended

7/7

Committee membership

Key strengths

• Chartered accountant

• 30+ years of experience in

ﬁnancial services including

audit, corporate ﬁnance,

investment banking and

assetmanagement

• Mergers and acquisitions,

ﬁnancial reporting, investor

relations and risk management

are noted as Sarah’s key skills

Key experience

• Previously a top-rated equity

research analyst covering the

UK general ﬁnancial services

sector and also founded and

ran a hedge fund investment

management business

Current external listed

company directorships/

keyappointments

• Non-Executive Director of CMC

Markets plc since September

2017, where she chairs the

Remuneration Committee

• Non-Executive Director of

Marex Group since July 2021

where she chairs the Audit

&Compliance Committee

• Non-Executive Director of

Gresham House plc since

September 2021, where she

chairs the Audit Committee

Meetings attended

7/7

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 at

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 Audit 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

1/1

Key to Committee

membership

Chair

Member

Audit & Risk

Remuneration

Nomination

Sustainability

Tom Cross Brown

Previous Independent

Non-Executive Chairman

Appointed: January 2017–

September 2022

Committee membership

Key strengths

• Mergers and acquisitions,

strategy, ﬁnancial reporting,

listed company experience,

investor relations and corporate

governance are noted as Tom’s

key skills

Key experience

• CEO of ABN AMRO Asset

Manager until 2003

• 21 years at Lazard Brothers &

Co. until 1997, CEO 1994–1997

• Non-Executive Chairman of

Pearl Assurance plc 2005–2009

• Non-Executive Chairman

of Just Retirement Group

2006–2016

• Non-Executive Director

of Artemis Alpha Trust plc

2006–2018

• Non-Executive member of the

Management Committee

of Artemis Investment

Management LLP 2011–2018

Meetings attended

3/3

XPS Pensions Group Annual Report 202360

Board and Committee composition and operation

Board composition

andindependence

The Board is composed of seven

members, consisting of the Chairman,

three Executive Directors and

three Independent Non-Executive

Directors. The Company complies

with the provisions of the Code for

smaller companies below the FTSE

350 which requires the composition

of the board of directors of a UK

listed company to include at least two

independent non-executive directors

(excluding the chairman). Tom Cross

Brown retired as the Group’s

Chairman following the September

2022 AGM; Alan Bannatyne was

appointed as Interim Chairman

until the recruitment process,

supported by Russell Reynolds, was

complete, when Alan Bannatyne

was appointed as Chairman on a

permanent basis as of 30 November

2022. You can read more about the

recruitment process on page 67 of

the Nomination Committee report.

The Board concluded that Alan

Bannatyne met the independence

criteria set out in the Code on his

appointment as Chairman. Aisling

Kennedy was appointed as an

Independent Non-Executive Director

as of 22 February 2023, following

a recruitment process supported

by Russell Reynolds. Other than

supporting the recruitment of the

Group’s Chairman and Non-Executive

Directors, Russell Reynolds has no

other connection tothe Group.

The Board considers that Senior

Independent Director Margaret

Snowdon OBE and Non-Executive

Directors Sarah Ing and Aisling

Kennedy 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

58 and 59.

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;

Group governance at a glance

Board composition

Independence

Gender

Non-Executive tenure

Age

Ethnicity



 



Non-Executives 57%

Executives 43%

Male 57%

Female 43%

3–6 years 25%

Less than

3 years 25%

6+ years 50%

41–50 43%

51–60 43%

61+ 14%

White 86%

Minority

ethnic group 14%

Mergers and acquisitions

Risk management

Financial reporting

Workforce engagement

Prior FTSE experience

Pensions industry

Cyber security

Investor relations

Marketing

Corporate governance

Environmental and social sustainability

Business development

Operational management

Board members’ key skills:

All as at 31 March 2023

61XPS Pensions Group Annual Report 2023

Governance

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 70 to 73.

The role of the Remuneration

Committee is to assist the Board to

fulfil its responsibility to shareholders

to ensure that 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 September 2020, determines

and agrees with the Board the levels

of remuneration for each of the

Executive Directors, the Company

Chairman and designated senior

management below Board level. The

Remuneration Committee has tabled

an updated Directors’ Remuneration

Policy for approval at the 2023 AGM.

Further details are given in

the Remuneration Report on

pages 76 to 99.

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 66 to 69.

The role of the Sustainability

Committee is to support the

Board’s oversight responsibilities

of the Company’s environmental,

social and governance impact and

initiatives. The Committee intends

to improve practices, reporting

and communication in relation to

factors that have a material impact

on business strategy, business

performance and the long-term

sustainability of the Group.

Further details are given in the

Sustainability Committee Report

onpages 74 and 75.

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 Audit & Risk, Remuneration

and Nomination 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 & Company

Secretary and HR Director.

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 one meeting due to

personal circumstances.

The Board reviews the business

strategy for the year ahead at the

beginning of each financial year

and receives strategy updates at

each Board meeting. At least once

a year the Board will hold a strategy

session to discuss and review

business strategy. The Directors

are expected to attend all meetings

of the Board and any Committees

of which they are members, and

to devote sufficient time to the

Company’s affairs to fulfil their

duties as Directors. Non-Executive

Directors each need to commit to a

minimum of 28 days of service per

year to the Company. The Board is

satisfied that each Non-Executive

Director commits sufficient time to

the Company.

Non-Executive Directors remain in

regular contact with the Chairman,

whether in face-to-face meetings

or by telephone, to discuss matters

relating to the Company and on

occasion meet without the Executive

Directors present.

XPS Pensions Group Annual Report 202362

Division of responsibilities

Board responsibilities

The Board is focused on providing

entrepreneurial andsustainable

leadership to the Group. It is

responsible for directing and

controlling the Group and has overall

authority for the effective and

prudent management and conduct

of the Group’s business and the

Group’s strategy and development.

The Board monitors performance

and is responsible for ensuring that

appropriate financial and human

resources are in place for the Group to

meet its objectives, and takes the lead

in setting and embedding the Group’s

culture, values and standards. The

Board is also responsible for ensuring

the maintenance of a sound system of

internal control and risk management

(including financial, operational and

compliance controls, and for reviewing

the overall effectiveness of systems

in place), and for the approval of any

changes to the capital, corporate or

management structure of the Group.

All Directors devote sufficient time to

their roles. There is a formal schedule

of matters reserved for Board approval

which is subject to 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.

Embedding culture

The Board recognises the importance of its role in setting the tone of

the Group’s culture, championing thebehaviours we expect to see and

embedding these throughout the Group. In addition to the Board, the

Executive Committee upholds our values and ensures that the importance

of compliance and integrity is recognised at all levels throughout the

Group. At XPS, our values are embedded in everything we do; you can

read more about our values onpage 29.

Board and Committee composition and operation continued

Board operation and meetings

continued

If a Director is unable to attend

a meeting, they will still receive

Board papers before the meeting

and they are encouraged to submit

any comments to the Chairman to

ensure that their views are recorded

and taken into account during the

meeting. The Director will also

receive the minutes and matters

arising in the usual way in order to

ensure that they are fully informed.

The Board is ultimately responsible for

the effectiveness and monitoring of

the Group’s system of internal controls.

The Audit & Risk Committee’s role is

to assist the Board with its oversight

responsibility by reviewing and

monitoring the Company’s system of

internal controls. It met four times in the

financial year and at its meeting in June

2023 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.

63XPS Pensions Group Annual Report 2023

Governance

Board division of responsibilities

There is a clear division of key

responsibilities between the

Chairman and the Co-CEOs.

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

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 recommend

budgets and forecasts for Board

approval, leadthe investor

relations programme and maintain

a dialogue with the Chairman on

significant business developments

and strategy issues

• Both Co-CEOs have leadership

roles on large clients

Paul Cuff

Co-Chief Executive Officer

• Primarily responsible 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

Paul Cu

Ben Bramhall Margaret Snowdon OBEAlan Bannatyne

XPS Pensions Group Annual Report 202364

Board eectiveness

Annual General Meeting

The Company’s Annual General

Meeting (AGM) will take place at

12pm on Thursday 7 September

2023 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 Board evaluation process

Briefing meeting

with the Chairman,

to understand the

context and priorities

of the evaluation

and to agree on an

aide-mémoire for the

individual Board and

management meetings

Detailed document

review, including the

Company’s Board

agendas, papers,

minutes, analyst notes

and previous internal

evaluation outcomes

One-to-one meetings

with each Board

member, and

members of the senior

management team,

concentrating on

questions contained

in the pre-circulated

aide-mémoire

Observation of a

Board meeting to

further understand

Board dynamics

Feedback meeting with

the Chairman

Meeting with the Senior

Independent Director

to discuss feedback

on the Chairman from

other Board members

Board Evaluation

Report circulated to all

Board members

Presentation

of findings/

recommendations by

Ceradas at the May

Board meeting

Action plan agreed

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 has no other connections tothe Company or the Directors.

65XPS Pensions Group Annual Report 2023

Governance

The evaluation concluded positively, and the following

outcomes were agreed as areas for potential

development:

• the Board agenda to be developed to optimise the focus

of discussions;

• Nomination Committee to consider planning for

Non-Executive Director succession in the next 3

years; and

• more formal feedback from the Employee Engagement

Group to be shared with the Board.

Review of Chairman’s performance

The Non-Executive Directors, in addition to their

role of constructively challenging and facilitating the

development of the Group’s strategy, meet annually to

evaluate the performance of the Chairman, led by the

Senior Independent Director. The Senior Independent

Director also engages with the Executive Directors

separately for their feedback. As part of the wider

Board evaluation process, individual Directors discussed

the Chairman’s performance with Ceradas, which then

discussed the Chairman’s performance with the Senior

Independent Director.

2022 Board evaluation outcomes and progress

The 2022 internally facilitated evaluation identified the following areas for improvement; progress is reported

as follows:

Actions from the 2022 evaluation Improvements

The handover and succession of the Chair role following

Tom Cross Brown’s retirement in September 2022 was a key

focus for the Board during the year.

Alan Bannatyne, previously Senior Independent Director,

succeeded Tom Cross Brown as Chairman on a permanent

basis in November 2022. Alan’s understanding of the

business and working relationship with Tom over the

previous 5+ years helped to facilitate an orderly handover.

Relations and communications with shareholders continued

to develop, including the potential for new introductions

when the Group’s new Chairman was appointed.

Alan Bannatyne has attended various induction meetings

with the Group’s largest shareholders since his appointment

as Chairman. You can read more about the Board’s engagement

with shareholders, including the introduction of a Capital

Markets Day, within the Section 172 Statement onpages 24

and 25.

The Board continued to develop engagement with Group

employees, including reintroducing Non-Executive Director

and employee networking sessions (previously halted due

toCovid-19).

Margaret Snowdon OBE has continued her position as the

Group’s Employee Engagement Non-Executive Director, and

continues to chair the Group’s meetings. Sarah Ing chaired

the Values In Practice Awards again in 2023. Non-Executive

Director and employee networking sessions have been

reintroduced and further sessions are planned forFY 2024.

XPS Pensions Group Annual Report 202366

Nomination Committee

The Committee has played an important

role throughout the year by supporting the

Board with Chairman succession and the

appointment of a new Non-Executive Director,

whilst continuing to improve Board diversity.

Committee membership Attendance

Chair

Alan Bannatyne 3/4

Members

Margaret Snowdon OBE 4/4

Sarah Ing 4/4

Tom Cross Brown (resigned September 2022) 1/1

Aisling Kennedy (appointed February 2023) 0/0

Dear Shareholder,

I am pleased to present the report

of the Nomination Committee for

the year ended 31 March 2023.

The Committee has met four times

during FY 2023 and all meetings

were attended by all members of the

Committee, with the exception of one

meeting which I did not attend due to

this relating to Chairman succession

and my appointment. The Committee

intends to continue to meet at

least twice annually with additional

meetings as required.

The Nomination Committee

assists the Board in determining

the composition and make-up

of the Board, including its skills,

knowledge, experience and diversity.

It is responsible for developing

and maintaining a formal, rigorous

and transparent procedure for

identifying appropriate candidates

for Board appointments and making

recommendations to the Board.

The Committee is also responsible for

keeping under review the leadership

needs of the Group, both Executive

and Non-Executive, and for ensuring

that succession planning focuses on

the continued ability of the Group

to deliver its strategic goals and

compete effectively. The terms of

reference of the Committee are

reviewed annually and available

on the Company’s website,

www.xpsgroup.com.

Succession planning

forasustainable future

Alan Bannatyne

Chair of the Nomination Committee

67XPS Pensions Group Annual Report 2023

Governance

Chairman succession

andNon-Executive

Directorappointment

In September, Tom Cross Brown

retired as Chairman of the Group.

Onbehalf of the Board, I would like to

thank Tom for his contribution to XPS

throughout a transformational period,

and wish him well for his retirement.

The Nomination Committee was led

by Margaret Snowdon OBE in the

search for a successor, following a

review of the skill set and experience

of all Directors to identify any skills

gaps following Tom’s retirement.

The Committee engaged external

search firm Russell Reynolds, with

which the Group and the Directors

have no other connections. In

September, I was appointed as

Interim Chairman following Tom’s

retirement and my appointment was

made permanent on 30 November

2022. At the same time, Margaret

Snowdon was appointed Senior

Independent Director and Sarah Ing

was appointed as Chair of the Audit

& Risk Committee.

Following my appointment as

Chairman, the Committee reviewed

the size of the Board, the balance

between Executive and Non-

Executive Directors and the diversity

of the Board and agreed to recruit

an additional Non-Executive Director

to maintain the balance of skills,

experience, independence and

knowledge required of the Board and

each Committee. The Committee then

commenced the search for a Non-

Executive Director, with the support

of Russell Reynolds, and appointed

Aisling Kennedy in February 2023.

Aisling is an experienced Irish qualified

actuary, with a wealth of experience

across consulting, insurance

companies and professional bodies.

We were delighted to welcome Aisling

to our Board and Aisling’s extensive

experience in XPS’s key markets

complements the experience of the

other members of the Board.

The members of the Committee are

Margaret Snowdon OBE, Sarah Ing,

Aisling Kennedy and me. Members

of the management team, including

the Executive Directors, are invited

toCommittee meetings as the

agenda dictates.

Chairman recruitment process

April 2022

• XPS announced Tom Cross Brown’s intention to retire following

the September 2022 AGM.

• Margaret Snowdon OBE was identified as leading the Nomination

Committee through the recruitment process to appoint a successor.

• Russell Reynolds was engaged to support the recruitment

process, the Committee identified key competencies and Russell

Reynolds drew up a long-list of 50candidates.

• The long-list was then reduced by Russell Reynolds to ten

candidates, including Alan Bannatyne, who were invited to

interview by Russell Reynolds and Margaret Snowdon OBE.

August – October 2022

• The Group’s top ten shareholders were invited to consultation,

in addition to shareholders who had previously expressed an

interest in the process.

• Margaret Snowdon OBE held meetings with six shareholders

during August to October.

• Following Tom Cross Brown’s retirement in September,

Alan Bannatyne, as Senior Independent Director, was

appointed as Interim Chairman whilst the recruitment process

remained ongoing.

November 2022

• The Committee reviewed shareholder feedback and interview

outcomes and concluded that Alan Bannatyne was the right

candidate for the role.

• Alan was appointed as Chairman on 30 November 2022 and

has since held a number of meetings with the Group’s largest

shareholders following hisappointment.

XPS Pensions Group Annual Report 202368

Nomination Committee continued

Board effectiveness evaluation

During the year, an externally

facilitated Board effectiveness

evaluation was completed by Ceradas

Limited; further details of the process

and the outcomes can be found on

pages 64 and 65. The Group intends

to conduct an externally facilitated

effectiveness review every three

years going forward.

Succession planning

During the year, the Nomination

Committee reviewed detailed

succession plans covering the roles

considered key to the business,

including those of the Executive

Directors and the Executive

Committee. The Committee is

satisfied that the contingency and

talent management plans in place for

key positions are appropriate and has

agreed that the Group’s succession

planning should be kept under review,

at least bi-annually. Weconduct

Leadership Development Centres to

develop our future senior leaders.

In May 2023, the Board developed

and agreed a succession plan for

Non-Executive Directors and the

Chairman, and will continue to review

and maintain this plan annually

going forward.

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. Since

Aisling Kennedy’s appointment,

she has been completing a detailed

induction to the Group, including

meeting with the Group’s Executive

Committee, business heads and other

members of senior management.

Diversity, equality and inclusion

During the year, the XPS Board

reached the gender diversity target

we committed to within our FY 2022

reporting, and our female Board

representation increased from 29%

to 43%. This year, we have reported

for the first time in relation to the

FCA’s newly introduced diversity

listing rules, and I am proud to

confirm that XPS complies with

the three requirements. 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

be making progress and reporting

compliance with the listing rules.

Table 1. Reporting table on sex/gender representation as at31March 2023

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 4 57% 4 7 78%

Women 3 43% 1 2 22%

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

Table 2. Reporting table on ethnicity representation as at31March 2023

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) 6 86% 4 8 89%

Mixed/multiple ethnic groups — — — — —

Asian/Asian British 1 14% 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.

69XPS Pensions Group Annual Report 2023

Governance

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 group 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 pages 31 to 33 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

21 June 2023

XPS Pensions Group Annual Report 202370

Delivering

independentoversight

Dear Shareholder,

I am pleased to present the report

of the Audit & Risk Committee for

the year ended 31 March 2023. The

Committee met four times during

FY 2023 and intends to continue to

meet at least three times annually.

All meetings were attended by all

members of the Committee.

Membership of the Committee

During the year, Alan Bannatyne

stepped down as Chairman of

the Committee, following his

appointment as Interim Chairman of

the Group in September 2022; at this

time, I was appointed as Interim Chair

of the Committee. The appointments

were made permanent in November

2022. Aisling Kennedy was appointed

to join the Board and the Committee

in February 2023, and the Committee

members are now Margaret Snowdon

OBE, Aisling Kennedy 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 58

and59 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.

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.

Committee membership Attendance

Chair

Sarah Ing 4/4

Members

Margaret Snowdon OBE 4/4

Alan Bannatyne (resigned 8 September 2022) 2/2

Aisling Kennedy (appointed 22 February 2023) 1/1

Sarah Ing

Chair of the Audit & Risk Committee

71XPS Pensions Group Annual Report 2023

Governance

Significant accounting matters considered during the year

Matters considered

Depending on the income stream and the nature of

the engagement, the Group recognises revenue on

either time cost incurred, fixed fee or rateably over

the period of providing the relevant services. Billing

ismainly in arrears and occurs monthly or quarterly.

Action

The Committee reviewed the approach to revenue

recognition including the process for accrued and

deferred revenue. The Committee receives regular

updates on ageing of accrued revenue and trade

receivables. The Committee has also considered

the conclusions reached by BDO as part of its

auditofthis area and is satisfied that management

has adopted appropriate processes and controls

over revenue recognition, accrued revenue and

tradereceivables.

Revenue recognition, accrued income and trade receivables

Matters considered

The Group has significant intangible assets on the

balance sheet in the form of goodwill, customer

relationships, brands and software. The intangible

assets have to be reviewed for impairment at least

annually or if there are any indicators of impairment.

Action

The carrying value of all indefinite 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’s findings have

alsobeen considered by the Committee in reaching

its conclusions over the appropriateness of the

treatment within the financial statements.

Carrying value of goodwill and intangible assets

Matters considered

During the year, the Group acquired Penfida Limited

for cash consideration of £8.6 million anda further

cash payment of up to £3.4million in September 2024,

subject to the achievement of a client retention

target, and the sellers remaining in employment with

the Group. All acquisitions are assessed under IFRS

3 where applicable, and a purchase price allocation

(PPA) exercise is undertaken.

Action

The Committee has reviewed management’s

assessment of the fair value of the assets and

liabilities acquired and resulting goodwill from

the acquisition. The Committee has reviewed

the disclosures in respect of the acquisition

andconsiders the accounting and disclosures

tobeappropriate.

Business combinations

Matters considered

The Group classifies certain items in the income

statement as exceptional/non-trading to allow a

clearer understanding of the underlying trading

performance of the business.

Exceptional and non-trading items in the year

totalled £14.2 million (FY 2022: £9.8 million). For

more details, see note 6 to the financial statements

on page 127.

Action

As part of its assessment that the treatment of

exceptional/non-trading items in the financial

statements is appropriate, and consistent with the

Group’s accounting policies and with the guidance

issued by the FRC, the Committee has considered

each of the items treated as exceptional/non-trading

and challenged, where necessary, the treatment

adopted by management. The Committee has also

considered the conclusions reached by BDO as part

of its audit in this area and is satisfied.

Presentation and disclosure of exceptional and non-trading items

XPS Pensions Group Annual Report 202372

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.

During FY 2021, the Committee

undertook an audit tender exercise

and BDO LPP were retained as the

Company’s auditor.

The Committee is responsible for

making recommendations on the

independence of the Company’s

auditor, BDO LLP. In addition, the

auditor has internal processes, which

include peer reviews, to ensure that

independence is maintained. The

Committee will review the level of

audit fees and non-audit fees on an

ongoing basis. See note 5 to the

financial statements on page 127.

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 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 advisory services and

no significant control weaknesses

were identified. The Internal Audit

programme is supported by a number

of regular assurance activities which

are carried out by the Risk and

Compliance teams, which look at

thedesign and effectiveness of

internal controls for key processes.

Annual Report review

A final draft of the Annual Report

is reviewed by the Committee prior

to consideration by the Board and

the Committee considered whether

the 2023 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.

Audit & Risk Committee continued

73XPS Pensions Group Annual Report 2023

Governance

The Committee was satisfied that,

taken as a whole, the Annual Report

is fair, balanced and understandable

and provides the necessary

information.

Risk

The existing risk management

framework within the Group has been

further developed throughout the

year, ensuring it continues to address

existing and emerging risks to the

XPS Group. These enhancements are

supported by a strong culture, active

engagement from staff and a clear

direction from Executive Management.

The standardised risk management

framework supports a common

approach across all businesses,

supporting all functions in the Group

and enabling consistent reporting.

This includes a clear articulation of

the key risks and the appetite the

Group has for each of these, along

with the key controls in place to

effectively manage these risks within

their stated appetites.

The framework embraces the whole

spectrum of the Group’s activities

and supports the achievement of

the organisation’s objectives. The

underlying processes and control

procedures are regularly reviewed

and amended as required to reflect

the findings of these reviews. These

improvements typically include

key risk areas including operational

administration, regulatory compliance,

legislative changes, and changes in

the external threat environment.

The risk reporting framework deployed

provides Executive Management

with regular updates on our overall

risk profile, with detailed reports

on risks that may require action to

keep within appetite. These updates

include information on key risk

indicators, as well as summarising

root-cause analysis reviews for

incidents and errors.

The Risk Management Committee

continues to meet on a regular basis

to discuss risks and issues as well

as ensuring that the framework

is meeting the needs of Group

stakeholders. This Committee also

acts as the mechanism by which

risks reported at business level can

be considered in the context of

the Group and whether escalation

is required.

The central Risk team supports

all businesses within the Group

and ensures best practices are

applied consistently. This team is

also responsible for co-ordinating

the existing external assurance

programme across the Group,

to ensure all risks and controls

are considered and assessed

appropriately. These assurance

activities include certifications to ISO

14001 and ISO 27001, AAF 01/20,

IIP and the IoA Quality Assurance

Scheme (QAS). In addition to

these the Group has also achieved

accreditation against the PASA

pensions administration standard

this year.

The Audit & Risk Committee regularly

reviews the wider internal control

processes, enlisting external support

to support these reviews when

deemed necessary. Recognising the

importance of business resilience

and the protection of data assets

from cyber risks, the Committee

considers these specific risks at

each of its meetings. 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 available meeting or sooner if

appropriate. The Group’s Audit &

Risk Committee reviews the policy

and process annually to ensure they

remain fit for purpose.

Sarah Ing

Chair of the Audit & Risk Committee

21 June 2023

The standardised risk management

framework enables consistent reporting

and a clear articulation of risk appetite,

and the key controls in place to

eectively manage these risks.

Sarah Ing

Chair of the Audit & Risk Committee

XPS Pensions Group Annual Report 202374

Sustainability Committee

Embedding sustainability

across the business

All our sustainability activities are designed 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 have continued to focus on our

sustainability ambitions and the integration

into the Groups operations for the beneﬁt

of our people, clients, communities and

theenvironment.

Committee membership Attendance

Chair

Sarah Ing 4/4

Members

Margaret Snowdon OBE 4/4

Aisling Kennedy (appointed February 2023) 1/1

Snehal Shah 4/4

Charlotte West 3/4

Adrian Davison 4/4

Alex Quant 4/4

This year, the role of the Sustainability

Committee continues to be to drive

improvements in practices, reporting

and communication in relation to

environmental, social and governance

(ESG) factors that have a positive

impact on business strategy and

performance and the long-term

sustainability of the Group. The

Committee has oversight of the views

and interests of all key stakeholders

of the Group, internal and external.

Membership of the Committee

The members of the Committee

includes: 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 me. Aisling

Kennedy joined the Committee

following her appointment to the

Board in February 2023. Other

Board members and members of

the management team are invited to

meetings as the agenda dictates.

The Committee met four times

during the the year and all meetings

were attended by all members, with

the exception of one meeting due to

a prior engagement. The Committee

intends to continue to meet at least

twice yearly with additional meetings

as required.

The focus of the Committee

During the year the Committee

provided oversight and challenge

on a number of sustainability issues

within the Group’s key areas of

focus– governance, our employees,

our clients, our communities and

ourenvironment.

1. Launch of I&D strategy

The Committee continued to oversee

the I&D strategy, as referred to on

pages 31 to 33 and the practices to

create an ‘inclusive culture’ to ensure

we are able to nurture, retain and

attract diverse talent.

Sarah Ing

Chair of the Sustainability Committee

75XPS Pensions Group Annual Report 2023

Governance

2. Development of

environmentalstrategy

The Committee provided oversight

on the net zero and carbon offsetting

project, having reviewed the

implementation of the Environmental

Management System and associated

Environment Policy as referred to

on page 39.

3. Further development of our

responsible investment solutions

A strong focus for the Committee

this year was to provide oversight

of the Group’s further development

of its responsible investment

offering and implementation of the

Responsible Investment Policy.

Input was given on a range of issues

including training and development

within the Investment team, strategy,

our position in the market to

influence and educate.

4. Shaping sustainability reporting

This year the Committee discussed

a number of external sustainability

frameworks and standards. The

Committee also reviewed sustainability

reporting best practice and considered

feedback from proxy advisers on

XPS’s ESG performance, incorporating

this into our sustainability framework

where appropriate.

We have aligned our sustainability

ambitions with the UN Sustainable

Development Goals, where we

believe we can make a positive

contribution.

We also remain committed to

aligning our strategy with the 2015

Paris Agreement.

At a high level, the focus for the year

ahead includes:

• providing oversight for further

development and integration

of our sustainability strategy,

including a review of our

materiality matrix and further

development of our sustainability

framework and reporting to

include clear commitments, KPIs

and measurement thereof. See

pages 26 to 41 of the Strategic

Report for our current reporting

onsustainability matters;

• continuing to review and provide

challenge on activities carried out

by the business, underpinned by

our sustainability strategy;

• keeping best practice under review;

• referring to thought leadership;

• monitoring the Group’s position

regarding relevant emerging

sustainability issues; and

• providing oversight and

challenge on the continued

integration of climate risk into

our risk management processes,

and the development of our

carbon reduction plan and

associated targets.

The terms of reference of the

Committee are reviewed annually

and are available on the Company’s

website, www.xpsgroup.com.

Sarah Ing

Chair of the Sustainability Committee

21 June 2023

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

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 Annual Report 202376

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.

77XPS Pensions Group Annual Report 2023

Governance

Our Executive Directors’ remuneration at a glance

Key features of the Policy How we implemented the Policy

Fixed pay

Salary

and benefits

Annual increases will not exceed

7.5% + RPI (March 2023: 13.5%) or

the average increase of employees

across the Group in any given year,

whichever is higher.

Increases of 7% applied

effective 1 April 2023

recognising strong corporate

andindividualperformance.

Executive Director level of increase

significantly below the average

workforce rate.

Short-term variable pay

Financial/functional

and personal objectives

set with reference to

business plans approved

by the Board.

Cash bonus The maximum opportunity for

FY 2023 is 150% of salary and

potentially payable in cash and

deferred shares.

Bonus is payable subject to the

achievement of performance

conditions (financial and personal

objectives) which will be set by the

Remuneration Committee. Malus

andclawback provisions apply.

The Co-CEOs were awarded 150%

of salary and the CFO was awarded

112.5% of salary, as determined

by the Remuneration Committee.

These payments amounted to 100%

of maximum.

Bonuses were paid on financial

performance as well as personal

objectives (detailed on pages

90 and 91).

Long-term variable pay

Stretching performance

conditions measured

over a three-year period

with a further two-year

post-performance

holding period.

Performance conditions

based upon adjusted

earnings pershare/TSR to

comparatorgroup.

XPS

Performance

Plan (PSP)

Maximum “normal” grant level is

150% of salary.

Malus and clawback

provisions apply.

Aligned with long-term business

strategy to become the best

provider of services to the UK

pensions market, as a one stop shop

for everything Trustees and

Employer need in this market, and

delivery of shareholder value due to

strong cash generation and non-

cyclical demand for services.

The November 2020 PSP award

is subject to underlying EPS

performance and relative TSR

performance. The overall estimated

payout for the award is equal to

66.2% of maximum, but will be

dependent upon TSR performance

to the end of the three-year

performance period ending in

November 2023.

Share ownership

guidelines

ownership

guidelines

Minimum shareholding of 200%

of base salary for any Executive

Director with requirements

applying for a two-year period post

termination of employment.

Remuneration at a glance: payoutcomes for the year

FY 2023 fixed remuneration

Base salary Pension

Co-CEOs CFO Co-CEOs CFO

£332,755 £281,069 6% of salary 6% of salary

These pension contributions are in line with that offered to the majority of the workforce and below the average

contribution levels across the Group.

Annual bonus

The financial element of these bonuses is based on Group profit before tax (PBT). The reported Group adjusted PBT

for FY 2023 resulted in a bonus payment of 100% of the maximum for this element of the bonus. When combined with

the performance against strategic objectives, this led to a formulaic bonus outturn of 100% of the maximum. Further

details of financial and personal objectives can be found on pages 90 and 91.

£m

Threshold

£’000

Target

£’000

Maximum

£’000

Actual

£’000

Payout

(% of this

element)

Group adj. PBT (75% of potential) 28,617 30,123 31,629 33,358 100%

XPS Pensions Group Annual Report 202378

Aligning remuneration

withsustainable success

The Remuneration Committee continues to

ensure a robust link between the execution

of strategy, reward and performance and is

committed to fairness and transparency.

Committee membership Attendance

Chair

Margaret Snowdon OBE 5/5

Members

Alan Bannatyne 5/5

Sarah Ing 5/5

Tom Cross Brown (resigned 8 September 2022) 3/3

Aisling Kennedy (appointed 22 February 2023) 1/1

Directors’ remuneration report continued

Dear Shareholder,

The Directors’ Remuneration Report

for the year ended 31 March

2023 contains:

• my annual statement;

• the Directors’ Remuneration Policy,

which will apply for a maximum of

three years from the 2023 AGM

and will replace the Directors’

Remuneration Policy previously

approved at the 2020 AGM; and

• the annual report on remuneration

which describes how the Directors’

Remuneration Policy has been

applied in FY 2023 and how it will

be implemented in FY 2024.

Operational highlights

During the year ended 31 March 2023,

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 24% year on

year. This was delivered in a year

where employee engagement and

client satisfaction scores were at

record highs.

Engaging with our stakeholders

Shareholders

At last year’s Annual General

Meeting held on 8 September 2022,

the Remuneration Committee was

pleased that shareholders approved

the Remuneration Report with 96%

of votes for.

As Chair, I am always keen to

maintain a collaborative and

productive relationship regarding

remuneration decisions. Ahead

of the publication of this report,

I held meetings with many of our

top shareholders to gather views

and feedback.

Margaret Snowdon OBE

Chair of the Remuneration Committee

79XPS Pensions Group Annual Report 2023

Governance

I am extremely grateful for the

feedback I received and the level

of engagement from shareholders.

These meetings have been helpful in

shaping the Committee’s decision-

making set out in this report, as

well as maintaining our productive

relationship. I am pleased to report

that there was strong support for the

planned approach for the Directors’

Remuneration Policy 2023 and the

2023 PSP award, including the one-

off enhancement as outlined within

the report.

We are grateful for the ongoing

shareholder engagement and

constructive feedback allowing

us to ensure we are able to reflect

the views of shareholders in the

decisions that the Remuneration

Committee makes.

Employees

The Employee Engagement Group,

which I chair as XPS Group’s

Designated Employee Engagement

Non-Executive Director, considers

Executive Directors’ remuneration,

taking account of employee views.

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

Committee reviewed the approach

taken in light of the acknowledged cost-

of-living challenges. XPS awarded mid-

year salary increases in October 2022,

in addition to the increases effective

1April 2023, to all staff below Partner

and Managing Consultant grades; You

can read further details about this

on page 33.

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.

The Directors’ Remuneration Policy

The current Directors’ Remuneration Policy was approved by shareholders

at the 2020 AGM when it received 96% approval from shareholders and

therefore will be due for renewal at the 2023 AGM.

The objectives of the Policy remain to attract, motivate and retain Executive

Directors while maximising long-term shareholder value and reinforcing

the Company culture. Having reviewed the current Policy the Committee

concluded that making significant changes to the Remuneration Policy was

not required this year.

We are therefore proposing that the Policy be resubmitted broadly unchanged,

save for a revision relating to a clarification on how PSP awards in good leaver

situations will normally be retained and vest at the normal vesting date, in line

with standard market practice.

Annual bonus payments for FY 2023

The financial element of these bonuses is based on Group profit before tax

(PBT). The reported Group adjusted PBT for FY 2023 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 the first maximum bonus

payment since IPO (in 2017) and that in three of the previous four 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 112.5% 100%

Vesting outcomes for the 2020 PSP awards

The November 2020 PSP award is subject to underlying EPS performance

and relative TSR performance. The estimated overall payout for the award is

equal to 66.2% of maximum.

The Committee considers that the Policy operated as intended during

FY 2023 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.

XPS Pensions Group Annual Report 202380

Directors’ remuneration report continued

Operation of the Directors’

Remuneration Policy for FY 2024

Looking forward into FY 2024, we

have given consideration to actions

on pay matters which we regard as

appropriate and designed to support

shareholders’ interests over the

long term.

The Board considers that the Co-

CEO structure works well with clear

accountability of roles between the

Executive Directors. Both Co-CEOs

have responsibility for building and

sustaining relationships with some

of our key clients. Somewhat unique

to our industry, clients expect deep

professional and technical expertise

in senior executives, and both Co-

CEOs are practitioners who lead

projects on some of the Group’s

biggest clients.

In addition to these direct and

valuable client accountabilities,

Paul Cuff is 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. Ben Bramhall is

responsible for the day-to-day

operations of the business, which

covers the provision of services to

existing clients, revenue generation

and the Group’s people strategy.

Both are responsible for employee

culture and the dual role increases

the bandwidth for employee

engagement.

In addition to his finance

responsibilities Snehal Shah maintains

the Company’s relationships with

its brokers and is responsible

for shareholder communication.

Snehal is also responsible for Group

Risk and leads on the Group’s

sustainability agenda.

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 it was fair and reasonable to award salary increases

of 7% for all Executive Directors which take effect from 1 April 2023. This

percentage is significantly less than the comparable annual average increase

for employees across the Group which is 12% for the year, reflecting the highly

competitive landscape for professionals in our niche market. The resultant

salaries for the Executive Directors remain low against the FTSE Small Cap

market and other similarly sized companies, and annual target earnings are

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 opportunity of the CFO is being set at 125% of salary

from 2023/24 in acknowledgement of his performance and growing

experience in role. The maximum opportunity for the Co-CEOs will remain

unchanged at 150% of salary.

The PSP award due to vest in July 2024 incorporates inflation-linked EPS

targets. The current volatile and unpredictable inflation levels in the economy

have detrimentally impacted the incentive effect of awards with an inflation

linkage. The Committee does not feel that it is appropriate to amend in-flight

performance conditions, despite some compelling arguments, but it wishes to

recognise management’s performance whilst maintaining a strong alignment

with the experience of our shareholders.

In recognition of the performance of the Executive Directors and also the

need to continue to retain them and incentivise the delivery of our key

strategic objectives, it is the intention that the 2023 PSP award levels will be

enhanced on a one-off basis by 25% of salary compared to the 2022 levels.

The award levels will remain below the 200% exceptional circumstances limit

as permitted under the continuing Policy.

It should be noted that despite this increase in award levels, due to the

increase in the Company’s share price over the last year, it is anticipated that

the individual total 2023 PSP awards will be over a lesser number of shares

than the 2022 PSP awards.

For the main award, there will be three performance criteria, based on EPS,

relative TSR performance and a newly incorporated ESG measure.

The vesting of the enhanced one-off element will be based on EPS targets

incorporating a further level of stretch, with vesting requiring a performance

level well above budget and guidance. Further details of the targets are

provided on page 98.

81XPS Pensions Group Annual Report 2023

Governance

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 Executive Directors have been increased by 7% for FY

2024, which is 5% lower than the average annal increase over the year awarded to all staff:

Ben Bramhall – £356,048

Paul Cuff – £356,048

Snehal Shah – £300,744

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 Annualised

Co-CEOs 0% 0% 9.0% 6.0% 7.0% 4.3%

Average staff 3.0% 3.2% 3.2% 5.9% 12%

5.4%

1 Includes the mid-year cost-of-living salary increases granted toemployees.

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

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 2024:

Ben Bramhall – 175% of salary

Paul Cuff – 175% of salary

Snehal Shah – 150% 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.

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

21 June 2023

XPS Pensions Group Annual Report 202382

Directors’ remuneration report continued

Directors’ Remuneration Policy2023

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 will take effect for

all payments made to Directors with effect from the conclusion of the forthcoming AGM (in place of the current Policy

approved at the 2020 AGM). The new Policy is very similar to the current one, save for a change clarifying how PSP

awards in good leaver situations will normally be retained and vest at the normal vesting date.

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

83XPS Pensions Group Annual Report 2023

Governance

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 or other

majortransactions) where the Committee

considers it to be necessaryin its opinion to

make appropriate adjustments.

The Remuneration Committee retains the

flexibility to pay annual bonus outcomes in

cash and/or deferred shares (which may

allow for dividendroll-up).

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 2024, 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 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 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.

XPS Pensions Group Annual Report 202384

Directors’ remuneration report continued

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.

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.

Directors’ Remuneration Policy2023 continued

85XPS Pensions Group Annual Report 2023

Governance

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, 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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 for the Committee to

authorise such activities.

3. Past obligations: in addition

to the above elements of

remuneration, any commitment

made prior to, but due to be

fulfilled after, the approval

and implementation of this

Remuneration Policy will

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;

• 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:

XPS Pensions Group Annual Report 202386

Directors’ remuneration report continued

Notes to the Policy table

continued

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/payouts;

• 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.

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 buyouts 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 buyouts 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

buyout awards on terms that are

more bespoke than the existing

annual bonus plan and PSP.

All buyouts, 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

buyouts 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.

87XPS Pensions Group Annual Report 2023

Governance

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 and the appointment of Aisling

Kennedy is subject to the terms

of a letter of appointment dated

22February 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.

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.

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.

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.

XPS Pensions Group Annual Report 202388

100%

19% 19%

40%

Directors’ remuneration report continued

Statement of consideration

ofemployment conditions

elsewhere in the Company

continued

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.

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 2024 based on three

performance scenarios and using the

assumptions below.

100%

£331

£390 £390

£632

£813 £813

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

Share performance growth Performance Share Plan Annual bonus Total fixed pay

Maximum with share

price growth

Maximum with share

price growth

Maximum with

share price growth

£1,548

£1,384

£1,158

£1,859 £1,859

100%48%

48%

33%

35%

29% 29%

29%

40%

34% 34%

34%

17% 17%

17%

19%

25%

21%

Ben Bramhall —

Co-Chief Executive

£’000s

Snehal Shah —

Chief Financial Officer

£’000s

Paul Cuff —

Co-Chief Executive

£’000s

Minimum

Consists of base salary, benefits and pension:

• base salary is the salary to be paid in FY 2024;

• benefits measured as benefits paid in the year ended 31 March 2023; 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 (175% of base salary for Co-CEOs and 150% of

base salary for the CFO) under the PSP.

Maximum with 50% share

price growth

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

the PSP award.

89XPS Pensions Group Annual Report 2023

Governance

Remuneration Committee membership

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

Director. Alan Bannatyne, Sarah Ing and Aisling Kennedy are also members of the Committee. Tom Cross Brown

served on the Committee until he stepped down from the Board in September 2022. Aisling Kennedy was appointed

to the Committee in February 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 Policy on

remuneration in accordance with the Code and to set the remuneration of the Chairman and selected individuals with

due account taken of all relevant factors such as individual and Group performance as well as remuneration payable

by companies of a comparable size and complexity.

The Committee has formal terms 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 2023 were £54,282 (FY

2022: £63,902). 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 2023.

Director

Salary/fees

Taxable

benefits

Bonus

Long-term

incentives

Pension

Total

remuneration

Total

fixed pay

Total

variable pay

Executive Directors

Ben Bramhall 2023 332,755 12,993 499,133 367,030 18,701 1,230,612 364,449 866,163

2022 313,920 11,017 371,995 178,403 17,860 893,195 342,797 550,398

Paul Cuff 2023 332,755 12,793 499,133 367,030 18,701 1,230,412 364,249 866,163

2022 313,920 10,817 371,995 178,403 17,860 892,995 342,597 550,398

Snehal Shah 2023 281,070 12,523 316,203 253,288 15,994 879,078 309,587 569,491

2022 265,160 10,736 235,661 147,739 15,467 674,763 291,363 383,400

Non-Executive Directors

Alan Bannatyne –

Chairman of Board and

Chair of Nomination

Committee

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

2022 75,000 — — — — 75,000 75,000 —

Margaret Snowdon

OBE – Chair of

Remuneration

Committee, Senior

Independent NED and

Designated Employee

Engagement NED

2023 72,822 — — — — 72,822 72,822 —

2022 70,000 — — — — 70,000 70,000 —

Sarah Ing –

Chair of Audit & Risk

and Sustainability

Committees

2023 70,644 — — — — 70,644 70,644 —

2022 65,000 — — — — 65,000 65,000 —

Aisling Kennedy 2023 6,250 — — — — 6,250 6,250 —

Tom Cross Brown

– former Chairman

ofBoard

2023 52,727 — — — — 52,727 52,727 —

2022 120,000 — — — — 120,000 120,000 —

Total 2023 1,249,421 38,309 1,314,469 987,348 53,396 3,642,943 1,341,126 2,301,817

2022 1,223,000 32,570 979,651 504,545 51,187 2,790,953 1,306,757 1,484,196

Annual report on remuneration

XPS Pensions Group Annual Report 202390

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. Their current beneficial shareholdings are shown on page 91.

3 The outturn for the November 2020 PSP which vests in November 2023 is expected to be 66.2% and the vesting share price has been

estimated at 159.14p, based on the three-month average share price ended 31 March 2023. The grant share price for the award was 124p and

accordingly the relevant figures are reflective of an increase of 28% in the Company’s share price comparing the award price to the vesting

price. Details of the performance measures and targets applicable to the 2020 PSP are set out on page 93. The outturn for the September

2019 PSP which vested on 18 September 2022 was 50% and the value has been updated reflecting the actual vesting share price of 123p

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 Stepped down from the Board on 8 September 2022.

FY 2023 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) 28,617 30,123 31,629 33,358 100%

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

Staff approval rating at

least 90%

Staff satisfaction at an all time high with

98% reporting that XPS is a great place to

work and with an exceptional Net Promoter

Score of +33

100%

Progress Inclusion &

Diversityagenda

Reduce gender pay gap

Plan for 30% female

senior managers by 2027

Gender pay gap and gender bonus gap

have reduced and ethnicity pay gap

reported earlier than legally required

Plan and early actions agreed

100%

Develop market-leading pensions

administration platform

Platform on track for

deployment for new and

selected clients

On track against an accelerated plan 100%

Maintain high level of client

satisfaction

Client satisfaction level

at least 80%

Achieved and feedback highlighted that

clients trust XPS and appreciate our

friendlyapproach

100%

Pursue and execute accretive

acquisitions as approved by

theBoard

Successful

implementation of bolt-on

acquisitions in line with

agreed business case

The acquisition of Penfida has extended our

services to clients to include independent

sponsor covenant advice

In addition, the Michael J Field 2022

acquisition integrated successfully

100%

As executive sponsor of

Sustainability Committee, ensure

sustainability is embedded in XPS

services and infrastructure

Senior commitment to

ambitious sustainability

targets and progress

each sustainability pillar

to agreed levels

Excellent progress evidenced by being

re-confirmed as a signatory to the new UK

Stewardship Code

100%

91XPS Pensions Group Annual Report 2023

Governance

Snehal Shah – CFO

Measure Target Performance Assessment

Improve OCF conversion Above 90% Achieved 100%

Successful AAF 01/20 audit No medium or

higherexceptions in

theassessment

No exceptions. PASA accreditation

alsoachieved

100%

Fully develop sustainability

narrative in ARA and website

Sustainability KPIs defined,

measured and reported

Clear and comprehensive

with ambitious and

meaningful targets

Committed to a science-based net zero

strategy that aligns with the Paris Agreement

100%

Increase interaction with non-

shareholders and analysts and

improve shareholder

communication

Secure at least one new

institutional investor

Successfully plan and

execute a Capital Markets

Event for analysts and

institutional investors

Ten new institutional investors added in the

year, with three of these in the top 20 holders

Completed and excellent feedback received

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% 112.5%

Total actual performance outcome (£) £499,133 £499,133 £316,203

Statement of Directors’ shareholding and share interests (audited)

For each Director, the total number of Directors’ interests in shares at 31 March 2023 or at the date of stepping down

from the Board if earlier was as follows:

Director

Ben

Bramhall

Paul

Cuff

Snehal

Shah

Tom Cross

Brown

Alan

Bannatyne

Margaret

Snowdon

OBE

Sarah

Ing

Aisling

Kennedy

Number of ordinary shares held

asat 31 March 2023 1,699,549 967,191 66,830 38,861 36,594 30,303 15,000 —

Share ownership requirement

(% of salary) 200% 200% 200% 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

Holding as % of March 2023 salary 817% 465% 38%

1

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

Number of ordinary shares held

asat 31 March 2022 1,618,848 886,490 — 38,861 36,594 30,303 15,000 —

1 In line with the Directors’ Remuneration Policy, Snehal Shah will retain 50% of vested shares until he reaches the 200% ownership requirement.

XPS Pensions Group Annual Report 202392

Annual report on remuneration continued

Statement of Directors’ shareholding and share interests (audited) continued

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 2023 and 21 June 2023.

Under the share ownership guidelines, the Executive Directors are required to build and maintain a shareholding

equivalent to at least 200% of salary and are required to maintain a shareholding for a period after leaving the Board.

Awards granted in the year under the PSP (audited)

The following nominal cost option PSP awards were granted in July 2022.

These awards vest in 2025 subject to performance relating to: (i) adjusted EPS targets as to 75% of the award; and (ii)

relative TSR targets as to the remaining 25% of the award. The details of these targets are shown in the “Outstanding

share plan awards” section 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 1 July 2022 150% £499,132 383,948 July 2025

Paul Cuff 1 July 2022 150% £499,132 383,948 July 2025

Snehal Shah 1 July 2022 125% £351,336 270,260 July 2025

1 Based on the share price of £1.30 on 30 June 2022.

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

2022

Interests

awarded

during the

year

Interests

vested during

the year

Interests

lapsed during

the year

Interests held

at 31 March

2023

Vesting

period

Ben

Bramhall

18 September 2019 0.05p 313,043 — 156,521

156,522 — September

2022

30 November 2020 0.05p 348,387 — — — 348,387 November

2023

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

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

Paul Cuff 18 September 2019 0.05p 313,043 — 156,521

156,522 — September

2022

30 November 2020 0.05p 348,387 — — — 348,387 November

2023

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

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

Snehal

Shah

18 September 2019 0.05p 259,239 — 129,619

129,620 — September

2022

30 November 2020 0.05p 240,423 — — — 240,423 November

2023

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

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

1 On 12 October 2022, Ben Bramhall exercised awards over 156,521 shares granted on 18 September 2019 and sold 75,820 shares to settle

resultant tax and social security obligations. The closing share price on the day of exercise was £1.2925.

2 On 12 October 2022, Paul Cuff exercised awards over 156,521 shares granted on 18 September 2019 and sold 75,820 shares to settle

resultant tax and social security obligations. The closing share price on the day of exercise was £1.2925.

3 On 12 October 2022, Snehal Shah exercised awards over 129,619 shares granted on 18 September 2019 and sold 62,789 shares to settle

resultant tax and social security obligations. The closing share price on the day of exercise was £1.2925.

4 The highest mid-market price of the Company’s ordinary shares during the year ended 31 March 2023 was £1.68 and the lowest was £1.145.

The year-end price was £1.60.

93XPS Pensions Group Annual Report 2023

Governance

Vesting outcomes for the FY 2021 PSP awards (granted in November 2020)

These awards comprise nominal cost options with an exercise price of 0.05p per option and vest in November 2023

subject to performance relating to: (i) adjusted earnings per share (EPS) targets as to 50% of the award; and (ii)

relative total shareholder return (TSR) targets as to the remaining 50% of the award.

The 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 2023 Portion of award vesting

Compound annual growth in EPS (CAG) of less than 3% above CPI 0%

CAG of 3% above CPI 25%

CAG of between 3% and 7% above CPI Between 25% and 100% on a straight-line basis

CAG of 7% or more above CPI 100%

Actual performance

CAG of 3.3% above CPI 33%

1 Measured by normalising to allow for the use of shares held by the EBT to settle bonus payments and the impact of IFRS 16, to ensure the

outturn is an accurate reflection of operational performance.

XPS Pensions Group’s TSR ranking vs a comparator group 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 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 30 November 2023.

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 66.2% of maximum. Details of the shares

under award and their estimated value (based on the three-month average share price at 31 March 2023 of 159.14p per

share) are as follows:

Executive

Maximum

number of

Number

of shares

to vest

Number

of shares

to lapse

Estimated

value

vesting

£

Ben Bramhall 348,387 230,632 117,755 367,030

Paul Cuff 348,387 230,632 117,755 367,030

Snehal Shah 240,423 159,160 81,263 253,288

1 Based on the three-month average share price to 31 March 2023.

The awards also receive the value of dividend equivalents.

XPS Pensions Group Annual Report 202394

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 2024 subject to

performance relating to: (i) adjusted earnings per share (EPS) targets as to 75% of the award; and (ii) relative total

shareholder return (TSR) targets as to the remaining 25% of the award. The EPS target range was set considering both

the internal and external expectations for EPS performance over the next three years. The details of the EPS and TSR

target ranges are shown in the table below.

Diluted adjusted EPS

for the three-year period to the end of FY 2024 Portion of award vesting

Compound annual growth in EPS (CAG) of less than 3% above CPI 0%

CAG of 3% above CPI 25%

CAG between 3% and 7% above CPI Between 25% and 100% on a straight-line basis

CAG of 7% or more above CPI 100%

1 Measured by normalising for the impact of IFRS 16, to ensure the outturn is an accurate reflection of operational performance.

XPS Pensions Group’s TSR ranking vs a comparator group

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 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 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.

XPS Pensions Group’s TSR ranking vs a comparator group

of companies Portion of award vesting

Below median 0%

Median 25%

Between median and upper quartile Between 25% and 100% on a straight-line basis

Upper quartile 100%

2 The TSR Comparator Group consists of the constituents of the FTSE Small Cap Index (excluding investment trusts) at the start of the

performance period.

External Board appointments

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

Policy makes provision for them to retain any fees for one appointment.

Payments to past Directors (audited)

There were no payments to past Directors in the financial year FY 2023 (FY 2022: £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 2023 (FY 2022: £nil).

Annual report on remuneration continued

95XPS Pensions Group Annual Report 2023

Governance

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 2023. This is considered an appropriate comparator for XPS Pensions Group, which

is a constituent of the FTSE Small Cap Index.

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

2023 Ben Bramhall £1,230,611 100% 66.2%

Paul Cuff £1,230,411 100% 66.2%

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 November 2020 award that is due to vest in November 2023 and is, in part, based on estimated vesting levels

at 31 March 2023.

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%.

31 Mar

2017

31 Mar

2018

31 Mar

2019

31 Mar

2020

31 Mar

2021

31 Mar

2022

31 Mar

2023

15 Feb

2017

100

110

120

130

140

160

150

XPS Pensions Group plc FTSE Small Cap excl. investment trusts

Total Shareholder Return (rebased to 100p)

Total shareholder return

Source: Refinitiv Datastream

XPS Pensions Group Annual Report 202396

Percentage change in remuneration of Directors and employees (unaudited)

The table below presents the year on year % change in remuneration received by each Director, compared with the

change in remuneration received by all XPS Pensions Group staff.

Percentage change in remuneration

from 31/03/2020 to 31/03/2021

Percentage change in remuneration

from 31/03/2021 to 31/03/2022

Percentage change in remuneration

from 31/03/2022 to 31/03/2023

Percentage

change in

base

salary

Percentage

change in

benefits

Percentage

change in

bonus

Percentage

change in

base

salary

Percentage

change in

benefits

Percentage

change in

bonus

Percentage

change in

base

salary

Percentage

change in

benefits

Percentage

change in

bonus

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

Paul Cuff 0% -2% 127% 9% 2% 27% 6% 18% 29%

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

Tom Cross Brown

0% — — 0% — — (56%) — —

Alan Bannatyne 0% — — 0% — — 34% — —

Margaret Snowdon

OBE 4% — — 0% — — 4% — —

Sarah Ing 14% — — 0% — — 9% — —

Aisling Kennedy — — — — — — — — —

All UK employees 3.2% 1% 68% 5.9% (2)% 14% 10% 4% 46%

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 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).

4 Aisling Kennedy was appointed as Non-Executive Director on 22 February 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

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

1 The Company determined the remuneration figures at each quartile with reference to a date of 31 March 2023.

2 The Group used calculation option A as this is widely regarded as the method resulting in the most robust analysis.

3 The calculation is based on full-time equivalent salary calculated on the same basis as the single figure table.

4 This year the ratios have increased compared to the previous year. This increase reflects the increase in the Co-CEOs’ single figure of

remuneration for 2023, which can be found on page 95.

5 The Committee has reviewed the employee data and believes the median pay ratio to be consistent with the pay, reward and progression

policies for the Company’s UK employees over the period.

The total pay and benefits and the salary component of total pay and benefits for the employee at each of the 25th

percentile, median and 75th percentile are shown below:

£ 25th percentile Median 75th percentile

Salary £28,000 £37,6 42 £52,400

Total pay and benefits £30,765 £41,880 £59,822

Annual report on remuneration continued

97XPS Pensions Group Annual Report 2023

Governance

Relative importance of spend on pay (unaudited)

The table below details the change in total staff pay between FY 2022 and FY 2023 as detailed in note 10 of

thefinancial statements, compared with distributions to shareholders by way of dividends, share buybacks or any

othersignificant distributions or payments. These figures have been calculated in line with those in the audited

financial statements.

£’000 FY 2023 FY 2022

change

Total gross staff pay 83,009 68,222 22

Distributions to shareholders 15,331 13,831 11

Statement of shareholder voting (unaudited)

The table below shows the outcome of the binding vote on the Directors’ Remuneration Policy at the Annual General

Meeting held on 8 September 2020 and the advisory vote on the FY 2022 Directors’ Remuneration Report held on

8September 2022.

AGM resolution Votes for % Votes against Votes withheld

Directors’ Remuneration Policy 160,263,927 96.06 6,575,827 3,625

Directors’ Remuneration Report 156,173,209 95.78 6,875,925 3,612,228

Implementation of Policy for FY 2024 (unaudited information)

This section provides an overview of how the Committee is proposing to implement the Remuneration Policy in the

year ending 31 March 2024.

Base salary

Base salaries are as follows with effect from 1 April 2023:

• Ben Bramhall – £356,048;

• Paul Cuff – £356,048; and

• Snehal Shah – £300,744.

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 95. There is no intention to introduce additional benefits

in 2023/24.

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.

The weightings are as follows: 75% of the bonus will be payable by reference to performance based on adjusted PBT,

with performance against personal/strategic targets determining the extent to which the remaining 25% of the overall

bonus opportunity is payable.

In addition:

• no bonus will be payable unless the Committee is satisfied that the Company’s underlying performance

warrants it; and

• as set out in the Policy table, bonus payments will also be subject to the Committee considering that the proposed

bonus amounts, calculated by reference to performance against the targets, appropriately reflect the Company’s

overall performance and shareholders’ experience. If the Committee does not believe this to be the case, it may

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 2023/24

bonus in next year’s report. The targets will be set to ensure both consistency and fairness to all stakeholders.

XPS Pensions Group Annual Report 202398

Implementation of Policy for FY 2024 (unaudited information) continued

PSP awards

As outlined in the Committee Chair’s Statement, it is intended that the Co-CEOs and the CFO will receive awards

under the PSP comprising a main award of 150% and 125% of salary 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, based on EPS, relative TSR performance and on a newly

incorporated ESG measure. The vesting of 70% of the shares under this award will be subject to EPS performance,

20% will be subject to relative total shareholder return and the remaining 10% is based on an ESG metric.

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 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 Pensions Group’s TSR ranking vs a comparator group of companies Portion of award vesting

Below median 0%

Median 25%

Between median and upper quartile Between 25% and 100% on a straight-line basis

Upper quartile 100%

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

the start of the performance period.

As at the date of this report the ESG-related targets are still being finalised. These will be fully disclosed in next

year’s report.

For the additional award, vesting will be 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 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 has been set to ensure vesting will occur only once the EPS

element of the main award has vested in full.

Annual report on remuneration continued

99XPS Pensions Group Annual Report 2023

Governance

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

Alan Bannatyne receives an annual fee of £120,000 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 £10,000 p.a. for the Chair

of the Audit & Risk Committee and £5,000 p.a. for each of the Senior Independent Director, Chair of the Remuneration

Committee, Chair of the Sustainability Committee and Designated Employee Engagement Non-Executive Director.

This report was reviewed and approved by the Board of Directors on 21 June 2023 and was signed on its behalf by:

Margaret Snowdon OBE

Chair of the Remuneration Committee

21 June 2023

XPS Pensions Group Annual Report 2023100

The Governance section on pages 56

to 104 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 XAF.

The table on page 101 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 45 and the Viability

Statement on page 51 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 2023 are set out on

pages112 to 149 and the Company’s

audited financial statements are

set out on pages 150 to 156. The

Group’s profit after taxation for

the year ended 31 March 2023 was

£15.8million (FY 2022: £9.4 million).

An interim dividend of 2.7p per

ordinary share (FY 2022: 2.4p)

was paid on 2 February 2023. The

Directors recommend a final dividend

for the year of 5.7p per ordinary

share (FY 2022: 4.8p) to be paid on

21 September 2023 to shareholders

onthe register on 25 August 2023.

Further information regarding

dividend policy and payments can

be found in theFinancial Review

on page 45 and in note 36 to the

financial statements on page 149.

Post balance sheet events

There have been no significant post

balance sheet events to report since

31 March 2023.

Directors

The current Directors of the

Company, with summaries of their

key skills andexperience, are set out

in the Governance section on pages

58 and59. 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

(appointed 22 February 2023)

Tom Cross Brown

(resigned 8 September 2022)

Details of the Directors’ service

contracts are shown in the report

ofthe Remuneration Committee on

pages 86 to 87.

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

91 to 94.

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.

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 2023.

101XPS Pensions Group Annual Report 2023

Governance

Information Location within Annual Report

Likely future developments in the business of the Company Strategic Report (pages 14 to 15)

Inclusion and diversity Sustainability (pages 31 to 33), Nomination Committee

(pages68 to 69)

Employee involvement Sustainability (pages 30 to 33), Co-Chief Executive Officers’

Review (page 21), S172 Statement (pages 24 to 25) and

Statement of Corporate Governance (page 57)

Directors’ share interests Directors’ Remuneration Report (page 91)

Emissions and energy consumption Strategic Report (page 41)

Financial risk management objectives and policies Note 2 to the financial statements (pages 125 to 126)

Directors’ regard to foster business relationships Strategic Report (page 24)

Capital structure

The Company’s issued ordinary

share capital and total voting rights

at 31 March 2023 and the date

of this report were 207,443,140

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 2023

1,016,215 ordinary shares were held

in the Employee Benefit Trust, and as

at the date of this report, 1,881,677

shares were held in the Employee

Benefit Trust. Further details of the

Company’s issued share capital

are given in note 28 of the financial

statements onpage 142.

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 1,881,677 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 102 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

2023 and 31 May 2023 (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

2023 Annual General Meeting.

XPS Pensions Group Annual Report 2023102

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

2022 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 2023 Annual

General Meeting.

Political donations

No political contributions were made,

or political expenditure incurred, by

the Company and its subsidiaries

during the year (FY 2022: £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 64.

At 31 March 2023 At 31 May 2023

Shareholder

Number of

ordinary

Percentage of

total voting

rights

Number of

ordinary

Percentage of

total voting

rights

Gresham House Asset Management 32,916,624 15.87 34,611,219 16.68

Punter Southall Financial Management 22,543,887 10.87 22,543,887 10.87

Fidelity International 19,175,200 9.24 15,903,547 7.67

Schroder Investment Management 14,070,641 6.78 14,070,641 6.78

Premier Miton Investors 13,799,259 6.65 11,769,259 5.67

Aberforth Partners 11,385,147 5.49 10,492,647 5.06

Directors’ report continued

103XPS Pensions Group Annual Report 2023

Governance

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 81

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 101 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

21 June 2023

XPS Pensions Group Annual Report 2023104

The Directors are responsible for

preparing the Annual Report and

the Group financial statements in

accordance with applicable laws

andregulations.

Company law requires the Directors

to prepare financial statements for

each financial year. Under that law

the Directors are required to prepare

the Group financial statements and

have elected to prepare the Company

financial statements in accordance

with UK adopted International

Financial Reporting Standards. Under

company law the Directors must not

approve the financial statements

unless they are satisfied that they

give a true and fair view of the state

of affairs of the Group and Company

and of the profit or loss for the Group

and Company for that period. In

preparing these financial statements,

the Directors are required to:

• select suitable accounting policies

and then apply 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

As required by the UK Corporate

Governance Code, the Directors

confirm that they consider that the

Annual Report, taken as a whole, is

fair, balanced and understandable

and provides the information necessary

for shareholders to assess the

Group’s position and performance,

business model and strategy. When

arriving at this position the Board was

assisted by a number of processes,

including the following:

• the Annual Report is drafted by

appropriate senior management

with overall co-ordination by

Internal Communications and

Company Secretarial teams to

ensure consistency across sections;

• an extensive verification process

is undertaken to ensure

factual accuracy;

• comprehensive reviews of

drafts of the Annual Report

are undertaken by members of

the Executive Board and senior

management team; and

• the final draft is reviewed by the

Audit & Risk Committee prior to

consideration by the Board.

Responsibility statement

The Directors confirm that to the

best of their knowledge:

• the Group financial statements,

prepared in accordance with UK

adopted international accounting

standards, give a true and fair view

of the assets, liabilities, financial

position and profit or loss of the

Group; and

• the Annual Report includes a fair

review of the development and

performance of the business and

the financial position of the Group

and the Parent Company as a

whole, together with a description

of the principal risks and

uncertainties that they face.

Snehal Shah

Chief Financial Officer

21 June 2023

Directors’ responsibility statement

105XPS Pensions Group Annual Report 2023

Financial statements

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 2023 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 2023 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 and notes to the financial statements, including a summary of significant

accounting policies. The financial reporting framework that has been applied in their preparation is applicable law

andUK adopted international accounting standards and as regards the Parent Company financial statements,

asapplied in accordance with the provisions of the Companies Act 2006.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable

law. Our responsibilities under those standards are further described in the Auditor’s responsibilities for the audit of

the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and

appropriate to provide a basis for our opinion. Our audit opinion is consistent with the additional report to the Audit

&Risk Committee.

Independence

Following the recommendation of the Audit & Risk Committee, we were appointed by the directors on 28 October

2016 to audit the financial statements for the year ended 31 March 2017 and subsequent financial periods. Prior to

thelisting of the Parent Company, we were the auditors for the three years ended 31 March 2014 to 31 March 2016.

Theperiod of total uninterrupted engagement including retenders and reappointments is ten years, covering the years

ended 31 March 2014 to 31 March 2023. We remain independent of the Group and the Parent Company in accordance

with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC’s

Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical responsibilities in

accordance with these requirements. The non-audit services prohibited by that standard were not provided to the

Group or the Parent Company.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the Directors’ use of the going concern basis of

accounting in the preparation of the financial statements is appropriate. Our evaluation of the Directors’ assessment

ofthe Group and the Parent Company’s ability to continue to adopt the going concern basis of accounting included:

• Assessing the Directors’ going concern assessment and forecasts including the reasonableness of their assumptions

applied and reverse stress case sensitivities using our knowledge of the business;

• Assessing the reasonableness of assumptions, by review and challenge, through enquiry and consideration of

historical performance, applied by the Directors’ in preparation of cash flow forecasts, including growth assumptions

and movements in headcount and base costs, and the Group’s ability to meet working capital requirements over the

going concern period. We also assessed the period to May 2023 actuals against forecast;

• Reviewing the terms and period of the Group’s bank facility agreement and consideration of the sufficiency of the

facility available;

• Considering the Group’s compliance with banking covenants and related headroom in light of the Directors’ reverse

stress test assessment;

• Considering the options available to the Directors’ to mitigate the impact of reverse stress test scenarios 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 forecasts and reverse stress test assessment prepared by

theDirectors.

Independent auditor’s report

to the members of XPS Pensions Group plc

XPS Pensions Group Annual Report 2023106

Independent auditor’s report continued

to the members of XPS Pensions Group plc

Conclusions relating to going concern continued

Based on the work we have performed, we have not identified any material uncertainties relating to events or

conditions that, individually or collectively, may cast significant doubt on the Group and the Parent Company’s

ability to continue as a going concern for a period of at least twelve months from when the financial statements

areauthorised for issue.

In relation to the Parent Company’s reporting on how it has applied the UK Corporate Governance Code, we have

nothing material to add or draw attention to in relation to the Directors’ statement in the financial statements about

whether the Directors considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the

relevant sections of this report.

Overview

Coverage 96% (FY 2022: 100%) of Group profit before tax

96% (FY 2022: 100%) of Group revenue

100% (FY 2022: 100%) of Group total assets

81% (FY 2022: 100%) of Group EBITDA

(EBITDA – calculated as profit before tax, less depreciation, amortisation and finance costs)

Key audit matters

2023 2022

Year-end revenue recognition (accrued income) for core pension services  

Materiality

Group financial statements as a whole

2023: £1,000,000 based on 3% of EBITDA.

2022: £900,000 based on 3% of EBITDA.

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 Consulting Limited Full scope audit

XPS Pensions Limited Full scope audit

XPS Investment Limited Full scope audit

XPS Administration Limited Full scope audit

Non-significant components:

Other than the four significant components noted above, there were 12 other components within the Group which

formed part of our Group audit.

The following three non-significant components were subjected 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

Xafinity SIPP Services Limited Full scope audit

XPS Pensions Group plc Full scope audit

XPS Consulting (Reading) Limited Full scope audit

All 9 of the remaining non-significant components were subjected to desktop review procedures. All audit work on all

entities (significant and non-significant) was undertaken by the Group audit team.

107XPS Pensions Group Annual Report 2023

Financial statements

An overview of the scope of our audit continued

Climate change

Our work on the assessment of potential impacts on climate-related risks on the XPS Pensions Group plc 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;

• Reviewing management’s SECR report and supporting workings to check that the climate change disclosure ties

into the disclosures presented in the financial statements as required;

• 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 and Audit & Risk 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 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 assessment;

• We also assessed the consistency of management’s disclosures included as Statutory Other Information’ on page 52

with 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.

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

Year-end

revenue

recognition

(accrued

income) for core

pension services

The accounting

policy for

revenue is

disclosed in

note 1 of the

consolidated

financial

statements.

The segmental

information

relating to

Group revenue

is disclosed in

note 8 to the

consolidated

financial

statements.

The risk of fraudulent revenue

recognition arises from core

pension services (excluding

triennial and investment strategic

review services). Management

applies judgements and estimates

concerning the completeness,

existence and valuation of revenue

around year end, specifically

accrued income, therefore a risk

of material misstatement exists

in order to meet current or future

financial targets or performance

related bonuses.

This results in core pensions

services year end accrued income,

excluding triennial and investment

strategic review services being

assessed as a significant risk of

material misstatement and a key

audit matter.

Year-end recognition was assessed by selecting a sample of accrued

income balances from the accrued income listing and agreeing

back to contract with the clients, underlying timesheet data, invoice,

and where possible, subsequent receipt of payment. The above

procedures supported the individual accrued income valuation

judgements applied as well as existence of the balances.

Post year end revenue recognised was sampled and agreed back to

underlying documentation to check that revenue was recognised in

the correct period, and to check that accrued income was at the year

end, complete.

We identified outliers in the journals population that were posted to

revenue and accrued income based on our knowledge of the Group,

corroborating them back to supporting documentation to determine

the validity thereof.

Key observations:

Based on the procedures undertaken, we did not identify any

evidence that core pensions services revenue recognised associated

with accrued income (excluding triennial and investment strategic

review services) had not been recognised in the correct period or at

the correct value via the accrued income entries.

The judgements and estimates applied were consistent with

ourexpectations.

XPS Pensions Group Annual Report 2023108

Independent auditor’s report continued

to the members of XPS Pensions Group plc

Our application of materiality

We apply the concept of materiality both in planning and performing our audit, and in evaluating the effect of

misstatements. We consider materiality to be the magnitude by which misstatements, including omissions, could

influence the economic decisions of reasonable users that are taken on the basis of the financial statements.

In order to reduce to an appropriately low level the probability that any misstatements exceed materiality, we use a

lower materiality level, performance materiality, to determine the extent of testing needed. Importantly, misstatements

below these levels will not necessarily be evaluated as immaterial as we also take account of the nature of identified

misstatements, and the particular circumstances of their occurrence, when evaluating their effect on the financial

statements as a whole.

Based on our professional judgement, we determined materiality for the financial statements as a whole and

performance materiality as follows:

Group financial statements Parent company financial statements

2023 2022 2023 2022

Materiality £1,000,000 £900,000 £750,000 £360,000

Basis for

determining

materiality

3% of EBITDA 3% of EBITDA 75% of Group

materiality

40% of Group

materiality

Rationale for the

benchmark

applied

EBITDA is

considered to be the

benchmark that is of

the most interest of

the majority of users

of the financial

statements based

oninvestor and

stakeholder

expectations.

EBITDA is considered

to be the benchmark

that is of the most

interest of the majority

of the users of the

financial statements

based on investor

andstakeholder

expectations.

75% of Group materiality

given the assessment of

the component’s

aggregation risk.

40% of Group

materiality given the

assessment of the

component’s

aggregation risk.

Performance

materiality

£700,000 £650,000 £525,000 £252,000

Basis for

determining

performance

materiality

70% 70% 70% 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

We set materiality for each significant component of the Group based on a percentage of between 36% and 62%

(FY 2022: 22% and 75%) of Group materiality dependent on the size and our assessment of the risk of material

misstatement of that component. Component materiality ranged from £360,000 to £620,000 (FY 2022: £200,000

to £675,000), with aggregation risk considered. In the audit of each component, we further applied performance

materiality levels of 70% of the component materiality to our testing to ensure that the risk of errors exceeding

component materiality was appropriately mitigated.

Reporting threshold

We agreed with the Audit & Risk Committee that we would report to them all individual audit differences in excess of

£40,000 (FY2022:£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.

109XPS Pensions Group Annual Report 2023

Financial statements

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 as set out on page 45 and

• The Directors’ explanation as to their assessment of the Group’s prospects, the period this

assessment covers and why the period is appropriate as set out on page 51.

Other Code

provisions

• The Directors’ statement on fair, balanced and understandable asset out on page 104;

• The Board’s confirmation that it has carried out a robust assessment of the emerging and

principal risks as set out on page 51;

• The section of the annual report that describes the review of effectiveness of risk management

and internal control systems as set out on pages 46 to 51; and

• The section describing the work of the Audit & Risk Committee asset out on pages 70-73

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 and 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 Annual Report 2023110

Independent auditor’s report continued

to the members of XPS Pensions Group plc

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 and 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, labour regulations and tax laws in key territories which the Group operates.

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

rights Act and other consumer 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 those charged with governance 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 meeting of those charged with governance 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

• Considering how remuneration schemes and performance targets may create incentives for fraud and considering

the related financial statement areas susceptible to manipulation as a result of these.

111XPS Pensions Group Annual Report 2023

Financial statements

Auditor’s responsibilities for the audit of the financial statements continued

Fraud continued

Based on our risk assessment, we considered the areas most susceptible to fraud to be management override of

controls revenue recognition (specifically accrued income and both the existence and valuation of this balance

(overstatement) but also the completeness and valuation (understatement), for the core pensions business, excluding

triennial and investment strategic reviews).

Our procedures in respect of the above included:

• Testing a sample of journal entries throughout the year, which met a defined risk criteria, by agreeing to

supportingdocumentation;

• In response to the risk of fraud in revenue recognition we have performed the procedures set out in the key audit

matters section of our report;

• Assessing significant estimates made by management for bias including key areas of estimation uncertainty

orjudgement, for example; deferred revenue and revenue recognition, impairment of goodwill and intangibles,

provisions, recoverability of trade receivables including intracompany balances and the existence, completeness

andvaluation of accrued income at the year-end.

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

21 June 2023

BDO LLP is a limited liability partnership registered in England and Wales (with registered number OC305127).

XPS Pensions Group Annual Report 2023112

Consolidated statement of comprehensive income

for the year ended 31 March 2023

Year ended 31 March 2023 Year ended 31 March 2022

Note

Trading

items

£’000

Non-trading

and

exceptional

items

£’000

Total

£’000

Trading

items

£’000

Non-trading

and

exceptional

items

£’000

Total

£’000

Revenue 8 166,596 — 16 6,596 1 38 , 62 2 — 13 8 , 62 2

Other operating income 4 — 1 97 197 — — —

Operating expenses 9 (129 ,652) (14 , 41 3) (14 4,0 65) (1 0 9, 8 26) (9, 8 0 8) (119,634)

Profit/(loss) from operating activities 36,944 (14 , 21 6) 22 ,728 2 8 ,79 6 (9, 8 0 8) 18,988

Finance income 14 10 — 10 — — —

Finance costs 14 (3, 59 6) — (3, 59 6) (2 , 0 47) — (2 , 0 47)

Profit/(loss) before tax 33 ,35 8 (14 , 21 6) 1 9,1 42 2 6 , 74 9 (9, 8 0 8) 1 6 , 9 41

Income tax (expense)/credit 15 (6 , 21 5) 2 , 910 (3 , 305) (4 , 9 8 8) (2 , 53 0) (7, 5 1 8)

Profit/(loss) after tax and total

comprehensive income/(loss) for the year 2 7,1 4 3 (1 1,306) 15 , 837 2 1 ,76 1 (12 , 3 3 8) 9 , 423

Memo

EBITDA 42 ,4 48 (7,334) 35 ,1 14 3 4,139 (3,229) 30,910

Depreciation & amortisation (5 , 5 0 4) (6 , 8 8 2) (12 , 3 86) (5, 3 4 3) (6 , 5 7 9) (1 1 , 9 2 2)

Profit/(loss) from operating activities 36,944 (14 , 21 6) 22 ,728 2 8 ,79 6 (9 , 8 0 8) 18,988

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 13. 2 — 7. 7 10 .7 — 4.6

Diluted earnings per share 34 12 . 6 — 7. 3 10. 2 — 4.4

The notes on pages 116 to 149 form part of these financial statements.

113XPS Pensions Group Annual Report 2023

Financial statements

Consolidated statement of ﬁnancial position

as at 31 March 2023

Note

31 March

2023

£’000

31 March

2022

£’000

Assets

Non-current assets

Property, plant and equipment 16 3 ,07 9 3 ,1 87

Right-of-use assets 31 9,6 84 1 0 ,9 27

Intangible assets 17 212,103 206,800

Other financial assets 19 1, 8 47 1 , 814

226 ,7 13 222,7 28

Current assets

Trade and other receivables 20 4 3 ,76 5 3 8 ,7 76

Cash and cash equivalents 21 13 , 28 5 10, 150

57, 0 5 0 4 8, 926

Total assets 2 83 , 76 3 2 71,654

Liabilities

Non-current liabilities

Loans and borrowings 22 6 7, 3 1 0 63 ,30 9

Lease liabilities 31 7, 2 3 4 8 , 935

Provisions 26 1,8 69 1 ,78 1

Trade and other payables 24 8 45 —

Deferred income tax liabilities 18 18 , 4 45 18 ,966

95 , 703 92,991

Current liabilities

Lease liabilities 31 2 , 701 2 , 74 5

Provisions 26 2 ,00 9 1 , 236

Trade and other payables 24 31 , 218 27,275

Current income tax liabilities 25 2 ,2 80 2, 2 07

Deferred consideration 27 568 76 5

38 ,7 76 34, 228

Total liabilities 134,4 79 1 2 7, 2 1 9

Net assets 149, 2 8 4 144,43 5

Equity and liabilities

Equity attributable to owners of the Parent

Share capital 28 104 1 03

Share premium 29 1, 786 116,804

Merger relief reserve 29 4 8 ,6 87 4 8 , 6 87

Investment in own shares held in trust 29 (1,350) (4 , 1 57 )

Retained earnings/(accumulated deficit) 29 10 0,057 ( 17, 0 02)

Total equity 149, 28 4 144,43 5

Deferred tax in the prior year has been restated - see note 18 for details.

The notes on pages 116 to 149 form part of these financial statements.

The financial statements were approved by the Board of Directors on 21 June 2023 and were signed on its behalf by:

Snehal Shah

Chief Financial Officer

21 June 2023

Registered number: 08279139

XPS Pensions Group Annual Report 2023114

Consolidated statement of changes in equity

for the year ended 31 March 2023

capital

£’000

premium

£’000

Merger

relief

reserve

£’000

Investment

in own

£’000

(Accumulated

deficit)/

retained

earnings

Total

equity

£’000

Balance at 1 April 2021 103 1 1 6 ,7 97 4 8 , 6 87 (2 , 5 6 3) (13,958) 149,066

Comprehensive income and total comprehensive income

for the year — — — — 9,42 3 9, 42 3

Contributions by and distributions to owners:

Share capital issued — 7 — — — 7

Dividends paid (note 36) — — — — (13,831) (13,831)

Dividend equivalents paid on exercised share options — — — — (26 8) (2 6 8)

Shares purchased by Employee Benefit Trust for cash — — — (3 , 324) — (3 , 3 24)

Share-based payment expense – equity settled from

Employee Benefit Trust — — — 1 ,73 0 (1 , 70 4) 26

Share-based payment expense – IFRS 2 charge (note 13) — — — — 3 , 343 3 , 343

Deferred tax movement in respect of share-based payment

expense (note 18) — — — — (7) (7)

Total contributions by and distributions to owners — 7 — (1 , 59 4) (12 ,4 67) (1 4 , 0 5 4)

Balance at 31 March 2022 103 116,804 48 ,6 87 (4 ,1 5 7) (1 7, 0 02) 14 4, 435

Balance at 1 April 2022 103 116,804 4 8 ,6 87 (4 , 1 5 7) (1 7, 0 02) 14 4, 435

Comprehensive income 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) — — 116,804 —

Dividends paid (note 36) — — — — (15 , 33 1) (1 5 , 33 1)

Dividend equivalents paid on exercised share options — — — — (5 4 9) (5 4 9)

Shares purchased by Employee Benefit Trust for cash — — — (2 , 20 0) — (2 , 20 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 18) — — — — 25 8 258

Current tax movement in respect of share-based payment

expense — — — — 28 5 285

Total contributions by and distributions to owners 1 (1 1 5 ,0 1 8) — 2, 8 07 101,222 (1 0 , 9 8 8)

Balance at 31 March 2023 104 1 ,78 6 4 8 , 687 (1,350) 100,057 149, 2 8 4

The notes on pages 116 to 149 form part of these financial statements.

115XPS Pensions Group Annual Report 2023

Financial statements

Consolidated statement of cash ﬂows

for the year ended 31 March 2023

Note

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Cash flows from operating activities

Profit for the year 15 , 837 9 , 423

Adjustments for:

Depreciation 16 8 97 8 42

Depreciation of right-of-use assets 31 2, 854 3 ,04 6

Amortisation 17 8 ,635 8 ,03 4

Finance income 14 (10) —

Finance costs 14 3, 596 2 ,0 47

Share-based payment expense 13 3, 8 92 3 ,3 43

Other operating income 4 (197) —

Income tax expense 15 3, 305 7, 5 1 8

38,80 9 3 4, 253

Increase in trade and other receivables (3, 432) (3,982)

Increase in trade and other payables 3, 603 2, 315

Increase/(decrease) in provisions 442 (6 5)

39,422 32, 52 1

Income tax paid (4 , 8 66) (3 , 8 62)

Net cash inflow from operating activities 34, 55 6 28, 659

Cash flows from investing activities

Finance income received 14 10 —

Acquisition of other intangible assets — (1 , 4 6 9)

Acquisition of subsidiary, net of cash acquired 7 (8 , 268) —

Purchases of property, plant and equipment 16 (64 0) (1 , 0 5 0)

Purchases of software 17 (4 , 8 14) (6 , 8 2 0)

Increase in restricted cash balances – other financial assets 19 (33) (3 4)

Net cash outflow from investing activities (1 3 , 74 5) (9, 37 3)

Cash flows from financing activities

Proceeds from the issue of share capital 28 1 , 787 7

Proceeds from loans net of capitalised costs 11,000 5,895

Repayment of loans (7 ,000) (2, 000)

Sale of own shares 870 26

Purchase of ordinary shares by EBT (2 , 2 0 0) (3 , 3 24)

Interest paid (2 , 98 5) (1,222)

Lease interest paid (31 1) (2 9 9)

Payment of lease liabilities (2 ,9 57) (2 , 74 3)

Dividends paid to the holders of the Parent (1 5 , 33 1) (13,831)

Dividend equivalents paid on exercise of share options (54 9) (2 6 8)

Net cash outflow from financing activities (1 7, 6 7 6) (17 ,759)

Net increase in cash and cash equivalents 3 ,13 5 1 , 527

Cash and cash equivalents at start of year 10 ,1 50 8 , 623

Cash and cash equivalents at end of year 21 13 , 28 5 10, 150

The notes on pages 116 to 149 form part of these financial statements.

XPS Pensions Group Annual Report 2023116

Notes to the consolidated ﬁnancial statements

for the year ended 31 March 2023

1 Accounting policies

XPS Pensions Group plc (the “Company”) is a public limited company incorporated in the UK. The principal activity

ofthe Gof 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 the use of certain critical accounting estimates. It also requires management to exercise

its judgement in the process of applying the Group’s accounting policies. The areas involving a higher degree of

judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are

disclosed at the end of this section.

The principal accounting policies adopted in the preparation of the financial statements are set out below. The policies

have been consistently applied to all the periods presented, unless otherwise stated.

Functional and presentation currency

The financial statements are presented in British pounds which is the Company’s functional currency. Figures are

rounded to the nearest thousand.

Measurement convention

The financial information is prepared on the historical cost basis except for the measurement of contingent consideration.

Basis of consolidation

Where the Company has control over an investee, it is classified as a subsidiary. The Company controls an investee if

all three of the following elements are present: power over the investee; exposure to variable returns from the investee;

and the ability of the investor to use its power to affect those variable returns. Control is reassessed whenever facts

and circumstances indicate that there may be a change in any elements of control.

Defacto control exists in situations where the Company has the practical ability to direct the relevant activities of the

investee without holding the majority of the voting rights. In determining whether defacto control exists the Company

considers all relevant facts and circumstances, including:

• the size of the Company’s voting rights relative to both the size and dispersion of other parties who hold

voting rights;

• substantive potential voting rights held by the Company and by other parties;

• other contractual arrangements; and

• historical patterns in voting attendance.

The consolidated financial information presents the results of the Company and its subsidiaries (the “Group”) as

if they formed a single entity. Intercompany transactions and balances between Group companies are therefore

eliminated in full.

The consolidated financial information incorporates the results of business combinations using the acquisition method.

In the statement of financial position, the acquiree’s identifiable assets, liabilities and contingent liabilities are initially

recognised at their fair values at the acquisition date, with the exception of right-of-use assets and lease liabilities,

which are measured at the present value of the lease liability discounted at acquisition date incremental borrowing

rate (a rate that represents the amount that would be charged to acquire an asset of similar value for a similar period),

with an adjustment to right-of-use assets to reflect favourable/non-favourable lease terms. The results of the acquired

operations are included in the consolidated statement of comprehensive income from the date on which control is

obtained. They are deconsolidated from the date on which control ceases.

Property, plant and equipment

Property, plant and equipment are stated at historic al cost less accumulated depreci ation. For items acquired as part

of a business combination, cost comprises the deemed fair value of those items at the date of acquisition. Depreciation

on those items is charged over their estimated remaining useful lives from that date.

Depreciation is charged to profit and loss in the statement of comprehensive income on a straight-line basis over the

estimated useful lives of each part of an item of property, plant and equipment. Estimated useful lives are as follows:

• Office equipment 3 to 10 years

• Leasehold improvements Over remaining life of the lease

• Fixtures and fittings 3 to 10 years

117XPS Pensions Group Annual Report 2023

Financial statements

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.

The Directors have prepared cash flow forecasts up to 31 October 2024, which includes the 12-month period from the

date of approval of these financial statements. These forecasts show that during that period the Group is expected

to generate sufficient cash from its operations to settle its liabilities as they fall due without the requirement for

additional borrowings. Additionally, the Directors have modelled a scenario at which the banking covenants could

potentially be breached, which is the point where going concern could be threatened. 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. In this 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.

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 forecast. The Group does not have

any non-financial covenants.

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 3% of the forecast figure, and adjusted profit after tax was within

8% 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 Group does not have any clients in Russia, and so has

not had any direct impact from the sanctions or restrictions imposed on Russian owned firms. The main impact on the

Group of the current global situation therefore is the high level of inflation currently being experienced in the UK, and

also the related increases in interest rates. The Group is largely protected from a high inflation environment because

of its contractual ability to increase revenue from the majority of customers by an amount linked to inflation. 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.

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impd 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.

Brand valuation is based on the net present value of estimated royalty returns.

XPS Pensions Group Annual Report 2023118

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

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 3 to 5 years, straight-line method

1 Except for pensions and investment customer relationships acquired as part of the Punter Southall acquisition, customer relationships

recognised in 2013, and the Penfida customer relationships recognised on acquisition in FY 2023, all of which have an estimated useful life

of 20 years, on a straight-line basis.

2 Except for the Penfida brand acquired in September 2022, which has an estimated useful life of 2 years, on a straight-line basis .

Contingent consideration

Contingent consideration is included in cost at its acquisition date fair value and is classified as a financial liability,

remeasured at fair value subsequently through profit or loss. Contingent consideration classified as equity is

notrenot remeasured.

Contingent consideration is assessed against the criteria detailed in IFRS 3 Business Combinations, and subject to the

outcome of this the consideration may be classed as post-acquisition remuneration, in which case it will be expensed

through the income statement over the appropriate timeframe .

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aese 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 and call deposits

Restricted cash is cash which the Group is not entitled to receive, withdraw, transfer or otherwise deal with the

deposit, save as expressly permitted by the blocked account agreement during the security period. The blocked

account agreement is required due to regulatory rules on Master Trusts. The security period is the period beginning

on the date of the deed and ending on the date on which the beneficiary is satisfied that the secured liabilities have

been irrevocably and unconditionally paid and discharged in full and all agreements which might give rise to secured

liabilities have terminated. The restricted cash has been included in non-current assets as it is expected that the

cash will remain in the blocked account for more than 12 months after the end of the reporting period. As such, it is

not included in cash and cash equivalents in the consolidated statement of financial position and the consolidated

statement of cash flows .

119XPS Pensions Group Annual Report 2023

Financial statements

1 Accounting policies continued

Financial liabilities

The Group classifies its financial liabilities into one of two categories, depending on the purpose for which the liability

was acquired. The Group’s accounting policy for each category is as follows:

Fair value through profit or loss

This category comprises contingent consideration. The contingent consideration is carried in the consolidated

statement of financial position at fair value with changes in fair value recognised in the consolidated statement

ofcomof comprehensive income.

Other financial liabilities

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to

initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and

redemption value being recognised in the statement of comprehensive income over the period of the borrowings

onaon an effective interest basis. When borrowings are extinguished, any difference between the cash paid and the

carrying value is recognised in the statement of comprehensive income.

Trade payables and other short-term monetary liabilities represent liabilities for goods and services received by the Group

prior to the end of the financial year which are unpaid. The amounts within trade payables are unsecured. They are

initially recognised at fair value and subsequently carried at amortised cost using the effective interest method.

Provisions

A provision is recognised in the statement of financial position when the Group has a present legal or constructive

obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle

the obligation. If the effect is material, provisions are determined by discounting the expected, risk adjusted, future

cash flows at a pre-tax risk-free rate.

Dilapidations provisions relate to the estimated cost to put leased premises back to the required condition expected

under the terms of the lease. These include provisions for required dilapidations along with provisions where leasehold

improvements have been made that would require reinstatement back to the original status on exit. These are

uncertain in timing as leases may be terminated early or extended. To the extent that exits of premises are expected

within 12 months of the end of the year they are shown as current.

Professional indemnity provisions relate to complaints against the Group. The amount provided is based on

management’s best estimate of the likely liability. These are recognised as a gross amount, with any amounts covered

by insurance recognised as an asset within current assets, in line with IAS 37.

Social security cost provisions represent estimates of the Group’s National Insurance contributions liability on the cost

of the Group’s Performance and Deferred Share Plans.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares are shown in

equity as a deduction, net of tax, from the proceeds.

Retirement benefits: defined contribution schemes

Contributions to defined contribution pension schemes are charged to the consolidated statement of comprehensive

income in the year to which they relate.

Employee Benefit Trust (‘EBT’)

As the Group is deemed to have control of its EBT, it is treated as a subsidiary and consolidated for the purposes

of the consolidated financial statements. The EBT’s investment in the Group’s shares is deducted from equity in the

consolidated statement of financial position as if it were treasury shares. Consideration paid (or received) for the

purchase (or sale) of these shares is recognised directly in equity. The cost of shares held is presented as a separate

reserve (the “investment in own shares”). Any excess of the consideration received on the sale of these shares over the

weighted average cost of the shares sold is credited to retained earnings.

The equity-settled share-based payment expense represents the amount of share awards made by the EBT on behalf

of the Company as instructed by the Company.

EBT equity-settled awards, which vest immediately on issue, are measured at the fair value of the shares issued on

the date of the award, representing the bid price of the shares. The share-based payment expense is charged to the

consolidated statement of comprehensive income.

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.

XPS Pensions Group Annual Report 2023120

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

1 Accounting policies continued

Revenue

Revenue, which excludes value added tax, represents the value of employee benefit consultancy and related business

services supplied. Revenue is derived mainly from sales made in the United Kingdom. Revenue derived from outside

the United Kingdom is immaterial.

Amounts recognised as revenue but not yet billed are reflected in the statement of financial position as accrued

income (contract assets for adjustments relating to fixed fees as described below). All performance obligations have

been satisfied. Amounts billed in advance of work performed are deferred in the statement of financial position as

contract liabilities.

Performance obligations and timing of revenue recognition

Performance obligations in contracts with customers are typically satisfied as services are rendered. In most cases,

revenue is recognised on an over time basis. This is because effort has been expended by the business on fulfilling the

performance obligations in the contract and the contracts would require payment for time and effort spent by the

Group on progressing the contracts in the event of the customer cancelling the contract for any reason other than

the Group’s failure to perform its obligations under the contract. Invoices are in most cases raised monthly, based

on timesheet data for pensions actuarial and consulting work and pensions investment consulting. For pensions

administration services, invoices are typically raised monthly based on services provided. Payment is typically

due 30 days from date of invoice. The services by the Group range from actuarial and investment consultancy to

administration of pension schemes. Additionally, the Group has a SSAS and SIPP business which provides services to

small self administered pension schemes and self invested pension plans. The Group 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 provides a defined contribution master pension trust for employers offering “full freedom and choice”,

called the National Pension Trust. Income from this is linked to the value of assets undermer management.

The Group has a number of customers who are on a fixed price contract. These contracts covers a number of services

(pensions actuarial, administration and investment), most of which are ongoing and therefore require no revenue

recognition adjustment to the regular invoice issued to the customer. These are recognised monthly at the time of

billing, as the benefit the customer receives as the work is done is largely in line with the amount billed each month.

For some fixed price customers, an element of the fixed fee includes the triennial valuation of their defined benefit

pension schemes, which is a distinct performance obligation. Under IFRS 15, the Group has assessed these contracts

and has determined that an adjustment is needed to recognise the revenue for the performance obligation relating to

the triennial valuations in the specific periods that the work is undertaken.

Additionally, some of the fixed fee contracts include an element for investment strategic reviews. This is a distinct

performance obligation, which has been assessed under IFRS 15 and it was determined that an adjustment is required

to recognise the revenue for this performance obligation in the specific periods that the work is undertaken.

For the fixed fee customers where an adjustment is required, payment is made monthly over a three-year period.

Therevenue ree revenue recognition for triennial valuations takes place over the 15-month period after the valuation date, so

there can be up to 35 months’ variance between the date of billing and revenue recognition. For strategic reviews,

the variance can also be up to 35 months, depending on the timing of the review within the three-year contract

window. Any variance between the timing of payment and the timing of revenue recognition will be recognised as

either a contract asset (where the performance obligations met to date exceed the value billed from the contract to

date), or as a contract liability (where the value billed to date from the contract exceeds 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 and/or the strategic review. This has been calculated based on the expected

time required to perform these obligations for each specific customer. To ensure that the revenue is allocated to the

relevant period, the Group has determined the timespan for the triennial valuation work, and the separate stages

of this work. A percentage has been applied to each stage, based on the proportion of total effort. For strategic

reviews, which are a smaller piece of work, the Group makes an assessment at the end of each relevant period of the

percentage complete for each review.

Judgement is required for these contracts in determining the value attributable to the triennial valuation work and the

strategic reviews, and also to the stage of completion at each reporting period. The judgements made are based on

experience, and have been validated by comparison to timesheet data.

The remainder of revenue from fixed fee contracts is recognised on a monthly basis, as the services provided tend to

be evenly spread over the life of the contract.

Services provided under contracts which do not include a fixed fee are recognised at a price quoted within the

contract which typically varies depending on the level of seniority of the employee providing the service. Commission

income is recognised on renewal of scheme membership, as the performance obligations are met at the time the

contract is won or renewed with the insurer .

121XPS Pensions Group Annual Report 2023

Financial statements

1 Accounting policies continued

Expenses

Exceptional and non-trading items

To assist in understanding its underlying performance, the Group has defined the following items of pre-tax income

and expense as exceptional or non-trading as they either reflect items which are exceptional in nature or size or are

associated with the amortisation of acquired intangibles. Items treated as non-trading or exceptional include:

• profits or losses on disposal of assets or businesses;

• corporate transaction and restructuring costs;

• amortisation of acquired intangibles;

• changes in the fair value of contingent consideration;

• expenses relating to deferred consideration deemed as post-acquisition remuneration under IFRS 3;

• share-based payments; and

• the related tax effect of these items.

Any other non-recurring items are considered individually for classification as non-trading or exceptional by virtue of

their nature or size.

The separate disclosure of these items allows a clearer understanding of the trading performance on a consistent and

comparable basis, together with an understanding of the effect of non-recurring or large individual transactions upon

the overall profitability of the Group.

The non-trading items have been included within the appropriate classifications in the consolidated income statement.

Further details are given in note 6.

Leases and payments

Identifying leases

The Group accounts for a contract, or a portion of a contract, as a lease when it conveys the right to use an asset for a

period of time in exchange for consideration. Leases are those contracts that satisfy the following criteria:

(a) there is an identified asset;

(b) the Group obtains substantially all the economic benefits from use of the asset; and

The Group considers whether the supplier has substantive substitution rights. If the supplier does have those rights,

the contract is not identified as giving rise to a lease.

In determining whether the Group obtains substantially all the economic benefits from use of the asset, the Group

considers only the economic benefits that arise from use of the asset, not those incidental to legal ownership or other

potential benefits.

In determining whether the Group has the right to direct use of the asset, the Group considers whether it directs

how and for what purpose the asset is used throughout the period of use. If there are no significant decisions to be

made because they are predetermined due to the nature of the asset, the Group considers whether it was involved in

the design of the asset in a way that predetermines how and for what purpose the asset will be used throughout the

period of use. If the contract or portion of a contract does not satisfy these criteria, the Group applies other applicable

IFRSs rather than IFRS 16.

All leases are accounted for by recognising a right-of-use asset and a lease liability except for:

• leases of low value assets; and

• leases with a duration of 12 months or less.

Lease liabilities are measured at the present value of the contractual payments due to the lessor over the lease term,

with the discount rate determined by reference to the rate inherent in the lease unless (as is typically the case) this is

not readily determinable, in which case the lessee company’s incremental borrowing rate on commencement of the

lease is used. Other variable lease payments are expensed in the period to which they relate.

Right-of-use assets are initially measured at the amount of the lease liability, reduced for any lease incentives received,

and increased for the amount of any provision recognised where the Group is contractually required to dismantle,

remove or restore the leased asset (typically leasehold dilapidations – see note 26) .

XPS Pensions Group Annual Report 2023122

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

1 Accounting policies continued

Leases and payments continued

Identifying leases continued

Subsequent to initial measurement lease liabilities increase as a result of interest charged at a constant rate on the

balance outstanding and are reduced for lease payments made. Right-of-use assets are amortised on a straight-line

basis over the remaining term of the lease or over the remaining economic life of the asset if, rarely, this is judged to

be shorter than the lease term. When the Group revises its estimate of the term of any lease (because, for example, it

reassesses the probability of a lessee extension or termination option being exercised), it adjusts the carrying amount

of the lease liability to reflect the payments to make over the revised term, which are discounted at the same discount

rate that applied on lease commencement. The carrying value of lease liabilities is also revised when the variable

element of future lease payments dependent on a rate or index is revised; however this will use the original discount

rate. In both cases an equivalent adjustment is made to the carrying value of the right-of-use asset, with the revised

carrying amount being amortised over the remaining (revised) lease term.

When the Group renegotiates the contractual terms of a lease with the lessor, the accounting depends on the nature

of the modification:

• if the renegotiation results in one or more additional assets being leased for an amount commensurate with the

standalone price for the additional rights of use obtained, the modification is accounted for as a separate lease in

accordance with the above policy;

• in all other cases where the renegotiated lease increases the scope of the lease (whether that is an extension to the

lease term, or one or more additional assets being leased), the lease liability is remeasured using the discount rate

applicable on the modification date, with the right-of-use asset being adjusted by the same amount; and

• if the renegotiation results in a decrease in the scope of the lease, both the carrying amount of the lease liability

and right-of-use asset are reduced by the same proportion to reflect the partial or full termination of the lease with

any difference recognised in profit or loss. The lease liability is then further adjusted to ensure its carrying amount

reflects the amount of the renegotiated payments over the renegotiated term, with the modified lease payments

discounted at the rate applicable on the modification date. The right-of-use asset is adjusted by the same amount.

For contracts that both convey a right to the Group to use an identified asset and require services to be provided to

the Group by the lessor, the Group has elected to account for the entire contract as a lease, i.e. it does not allocate any

amount of the contractual payments to and account separately for any services provided by the supplier as part of

the contract.

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.

Foreign exchange policy

Transactions entered into by Group entities in a currency other than the functional currency (GBP) are recorded at the

rates ruling when the transactions occur.

Any exchange rate differences are recognised immediately through the statement of comprehensive income.

Finance income and expense

Finance costs comprise interest payable, foreign exchange losses and costs directly related to the raising of loans.

Finance income comprises interest receivable on own funds, and foreign exchange gains.

Interest income and interest payable are recognised in profit or loss as they accrue, using the effective

interest method.

Share-based payment costs – Performance Share Plan and Deferred Share Plan

The Group operates an equity-settled, share-based compensation plan, under which the entity receives services from

the Executive Directors and key management personnel in consideration for equity instruments of the Group. The fair

value of the services received in exchange for the grant of the awards is recognised as an expense. The total amount

to be expensed is determined by reference to the fair value of the awards granted:

• including any market performance conditions (for example, an entity’s share price); and

• excluding the impact of any service and non-market performance vesting conditions (for example, profitability

andremd remaining a Director for a specified period of time).

123XPS Pensions Group Annual Report 2023

Financial statements

1 Accounting policies continued

Share-based payment costs – Performance Share Plan and Deferred Share Plan continued

The Deferred Share Plans (DSPs) do not have any market performance conditions or non-market performance vesting

conditions; they only have service vesting conditions. The fair value for DSPs is the share price on the date of grant.

The total amount expensed to the Group is recognised over the vesting period of the award. Where a share award is

cancelled, the share-based payment charge is accelerated at that point in time and all remaining unvested charge is

immediately expensed to the Group.

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 Employee Benefit Trust element of share-

based payment costs.

Taxation

Tax on the profit or loss for the year comprises current and deferred tax. Tax is recognised in profit and loss in the

statement of comprehensive income except to the extent that it relates to items recognised in equity, 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 2022

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:

• onerous contracts – cost of fulfilling a contract (amendments to IAS 37);

• property, plant and equipment: proceeds before intended use (amendments to IAS 16);

• annual improvements to IFRS standards 2018–2020 (amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41); and

• references to conceptual framework (amendments to IFRS 3).

New standards and interpretations not yet adopted

A number of new standards, amendments to standards, and interpretations are not effective for 2023, 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 2023:

• Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2);

• Definition of Accounting Estimates (Amendments to IAS 8); and

• Deferred Tax Related to Assets and Liabilities arising from a Single Transaction (Amendments to IAS 12).

The following amendments are effective for the year beginning 1 April 2024:

• IFRS 16 Leases (amendment – liability in a sale and leaseback);

• IAS 1 Presentation of financial statements (amendment – classification of liabilities as current or non current); and

• IAS 1 Presentation of financial statements (amendment – non-current liabilities with covenants).

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 .

XPS Pensions Group Annual Report 2023124

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

1 Accounting policies continued

Critical accounting estimates and judgements

The Group makes certain estimates and assumptions regarding the future. Estimates and judgements are continually

evaluated based on historical experience and other factors, including expectations of future events that are believed

to be reasonable under the circumstances. The estimates and underlying assumptions are reviewed on an ongoing

basis, with revisions to accounting estimates applied prospectively. In the future, actual experience may differ from

these estimates and assumptions. Significant judgements are separately identified where applicable. The estimates

and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and

liabilities within the next financial year are discussed below.

Fair values of intangible assets (note 17)

Goodwill is tested for impairment on an annual basis at the year end and between annual tests if an event occurs or

circumstances change that would more likely than not reduce the fair value of the cash-generating unit below its

carrying value. These events or circumstances could include a significant change in the business climate, legal factors,

operating performance indicators, competition, or sale or disposition of a significant portion of a reporting unit.

Application of the goodwill impairment test requires judgement, including the identification of cash-generating units,

assignment of assets and liabilities to such units, assignment of goodwill to such units and determination of the fair

value of a unit. The fair value of each cash-generating unit or asset is estimated using the income approach, on a

discounted cash flow methodology. This analysis requires significant estimates, including estimation of future cash

flows, which is dependent on internal forecasts, estimation of the long-term rate of growth for the business, estimation

of the useful life over which cash flows will occur and determination of our weighted average cost of capital. See note

17 for more detail.

Intangible assets are tested for impairment if an indicator of impairment exists. Similar to goodwill, the indicator could

be a significant change to the business climate, legal factors, operating performance indicators, competition, changes

to the technological environment, or another external or internal factor observed by management. As with goodwill,

application of an impairment test here will require judgement and the use of estimates.

Revenue recognition

Revenue is recognised once the performance obligations of the contract with the customer have been met, in

line with IFRS 15. This may be at a point in time or over time according to when control passes to the customer.

Dependent upon the income stream and nature of the engagement, revenue is recognised on either a time cost

incurred, fixed fee or rateably over the period of providing the service basis. Revenue is billed on a monthly, quarterly

or, in the case of certain SSAS and SIPP services, on an annual basis. Services may be billed in arrears, as in the

case of pensions advisory work, or in advance, as is the case with SSAS and SIPP revenues. As a result of such

arrangements, judgements are made in determining the timing of revenue recognition. The significant judgements

relate to identifying individual performance obligations and then allocating an appropriate amount of revenue to those

obligations which largely depends on the time incurred in providing the services. Management applies judgement

in assessing timesheet data to ensure that revenue is allocated proportionally to effort. There are also judgements

involved in determining the level of performance obligations met as part of the triennial valuation work. These have

been recognised on the basis of work completed through the 15-month valuation process.

Deferred tax (note 18)

Deferred tax assets are recognised for unused tax losses to the extent that it is probable that taxable profit will be

available against which the losses can be utilised. Significant management estimates are required to determine the

amount of deferred tax assets that can be recognised based upon the likely timing and the level of future taxable

profits together with future tax planning strategies. Throughout the current and prior periods the Directors consider

that the IAS 12 recognition criteria have been satisfied. The recognised deferred tax assets for the Group relate to

share-based payments, whereby a corporation tax asset will arise in the future on the exercise of share options issued

to Executive Directors and senior staff under performance share plans and deferred share plans. See note 18 for

details of the carrying amount of the deferred tax assets.

Provisions (note 26)

Dilapidations provisions have been made for properties which the Group currently leases based upon the cost to

make good the property in accordance with lease terms where applicable. Provisions are made for claims in respect

of complaints against the Group. The amount provided is based on management’s best estimate of the likely liability.

The cost to the business is capped to the excess on the Group’s professional indemnity insurance in respect of each

individual claim.

125XPS Pensions Group Annual Report 2023

Financial statements

1 Accounting policies continued

Critical accounting estimates and judgements continued

Useful lives of intangible assets (note 17)

Intangible assets are amortised over their estimated useful lives with the charge recorded in administrative expenses.

Useful lives are based on management’s estimates of the period that the assets will generate revenue, which are

periodically reviewed for continued appropriateness. Changes to estimates can result in significant variations in the

carrying value and amounts charged to the consolidated income statement in specific periods.

Exceptional costs (note 6)

Exceptional costs are recognised to the extent that they meet the definition outlined in the accounting policy above.

The judgement of whether an expense is exceptional or not requires consistent application by management.

Contingent consideration (note 27)

Contingent consideration is recognised in cost at its acquisition date fair value, and is classified as a financial liability.

At each reporting period the liability is remeasured at fair value through profit or loss. This remeasurement is based

on management’s expectation of future performance. Therefore, judgement is necessary in assessing the amount of

consideration that will be payable in the future. Because of the inherent uncertainty in this evaluation process, actual

gains or losses may be different from the originally estimated consideration.

When a business is acquired, contingent consideration clauses in the share purchase agreement are assessed against

the criteria in IFRS 3 Business Combinations. Judgement is necessary to determine whether to account for contingent

consideration as deferred consideration, forming a part of the goodwill calculation, or whether under IFRS 3 the

consideration should be treated as post-acquisition remuneration.

Business combinations (note 7)

The Directors determine and allocate the purchase price of an acquired business to the assets acquired and liabilities

assumed as of the business combination date. The purchase price allocation process requires the use of significant

estimates and assumptions, including the estimated fair value of the acquired intangible assets.

While the Directors use their best estimates and assumptions as part of the purchase price allocation process to

accurately value assets acquired and liabilities assumed at the date of acquisition, the estimates and assumptions are

inherently uncertain and subject to refinement. Examples of critical estimates in valuing certain of the intangible assets

acquired or which may potentially be acquired in the future include but are not limited to:

• future expected cash flows from customer relationships and brands; and

• discount rates.

The accounting for the business combination discussed in note 7 was preliminary in the interim accounts to

30S30 September 2022, and adjustments have been made to this following the conclusion of the full purchase price

allocation process. IFRS 3 allows for any factors present at the date of the business combination but not previously

included in the calculation of the value of intangible assets to be adjusted for within twelve months of the acquisition

date. It is therefore possible that the intangible assets acquired could be adjusted by a material amount, with the

offsetting impact in goodwill .

2 Financial risk management

The XPS Pensions Group’s operations expose it to a variety of financial risks including credit risk, liquidity risk, market

risk and the effects of changes in interest rates on debt. The Group has in place a risk management programme that

seeks to limit the adverse effects on the financial performance of the Group by monitoring levels of debt finance and

the related finance costs.

The Group’s principal financial instruments comprise sterling cash, lease liabilities, bank deposits and bank loans

together with trade receivables and trade payables that arise directly from its operations.

Risk management policies are established for the XPS Pensions Group of companies and the Group Audit Committee

oversees how management monitors compliance with these policies and procedures and reviews the adequacy of

the risk management framework in relation to the risks faced by the Group. Further details relating to the current year

position are provided in note 30.

Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty, including brokers, to a financial

instrument fails to meet its contractual obligations, and arises principally from the Group’s receivables from customers.

Due to the nature of the business, the majority of the trade receivables are with trustees of pension schemes and large

institutions and losses have occurred infrequently over previous years .

XPS Pensions Group Annual Report 2023126

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

2 Financial risk management continued

Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its financial obligations as they fall due. The Group’s

approach to managing liquidity is to ensure, as far as possible, that the Group will have sufficient liquidity to meet its

liabilities when due, under both normal and stressed conditions .

Market risk

Market risk is the risk that changes in market prices 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. Senior loans are linked to

SONIA. The Group earns income in relation to client as well as interest income on its own deposits.

The Group’s financial instruments are currently in sterling; hence foreign exchange movements do not have a material

effect on the Group’s performance.

The Group does not hold its own position in trading securities, being involved only in arranging transactions on behalf

of its clients.

The Group does not engage in holding speculative financial instruments or derivatives. Further quantitative disclosures

are included throughout these consolidated financial statements.

Cash flow interest rate risk

The XPS Pensions Group is exposed to cash flow interest rate risk in two main respects: firstly, corporate and client

bank deposits, which earn interest at a variable rate, although not at a material level; and secondly, interest expense

arising on bank facilities at a margin over SONIA.

3 Capital risk management

The Group is focused on delivering value for its shareholders whilst ensuring the Group is able to continue effectively

as a going concern. Value adding opportunities to grow the business are continually assessed, although strict and

careful criteria are applied.

The policy for managing capital is to increase shareholder value by maximising profits and cash. The policy is to set

budgets and forecasts in the short and medium term that the Group feels are achievable. The processes for managing

capital are regular reviews of financial data to ensure that the Group is tracking the targets set and to reforecast as

necessary based on the most up-to-date information. This then contributes to the XPS Pensions Group’s forecast

which ensures future covenant test points are met. The Group continues to meet these test points and they have been

achieved over the last year.

Due to the nature of some of the services provided, two subsidiaries within the Group were regulated by the Financial

Conduct Authority (FCA) during the year. They are required to hold a minimum level of capital and this is monitored

on a monthly basis. Formal compliance returns are submitted to the FCA in line with their reporting requirements.

TheGroe Group was compliant with its capital requirements throughout the year.

4 Other operating income

Other operating income arose from the revaluation of the contingent consideration for the MJF acquisition in

February2y 2022. The balance of the contingent consideration is expected to be paid by the Group in July 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

31 March

2023

£’000

Year ended

31 March

2022

£’000

Contingent consideration write back (note 27) 197 —

127XPS Pensions Group Annual Report 2023

Financial statements

5 Auditor’s remuneration

During the period the following services were obtained from the Group’s auditor at a cost detailed below:

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Audit services

Fees payable in respect of the Parent Company and consolidated accounts 328 197

Fees payable in respect of the subsidiary accounts 252 151

580 348

Audit-related services 78 45

Total 658 393

6 Non-trading and exceptional items

Note

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Corporate transaction costs

(2,871) (320)

Other exceptional costs

— 966

Exceptional items (2,871) 646

Contingent consideration write back

27 197 —

Share-based payment costs

13 (4,660) (3,875)

Amortisation of acquired intangibles

17 (6,882) (6,579)

Non-trading items (11,345) (10,454)

Total before tax (14,216) (9,808)

Tax on adjusting items

2,910 (2,530)

Adjusting items after taxation (11,306) (12,338)

1 The Group incurred corporate transaction costs of £2,871,000 in the year (2022: £320,000, relating to acquisitions by the Group). Included

within that is £845,000 of contingent consideration in respect of the acquisition of Penfida Limited. The maximum contingent consideration

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 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. The remaining £2,026,000 of corporate transaction costs

relate to the acquisition of Penfida Limited and other potential M&A opportunities explored by the Group in the year.

2 The prior year credit of £966,000 relates to the reversal of the exceptional holiday pay accrual in the previous year. The one-off non-cash

holiday pay accrual in the year ended 31 March 2021 arose as the holiday cycle was disrupted by the pandemic and a higher than normal

level of holiday was carried forward at the end of the holiday year in December 2020. Prior to the pandemic the holiday pay accrual had

been stable. In the year ended 31 March 2022 the Group changed its holiday year to align with its accounting year, and as a result there was

no cash outflow as a result of the charge in the year ended 31 March 2021. Due to its one-off nature and the size of the holiday pay accrual

in the prior year, as well as the corresponding reversal in the year ending 31 March 2022, it was deemed appropriate to disclose the amount

separately from the underlying business performance.

3 The contingent consideration write back relates to the revaluation of the contingent consideration for the MJF acquisition (note 27).

4 Share-based payment expenses are included in non-trading and exceptional costs as they are a significant non-cash cost which are

excluded from the results for the purposes of measuring performance for PSP awards and dividend amounts. Additionally, the largely

non-cash-related credits go directly to equity and so have a limited impact on the reserves of the Group. They are therefore shown as a

non-trading item to give clarity to users of the accounts on the profit figures that dividends and PSP performance are based on.

5 During the year the Group incurred £6,882,000 of amortisation charges in relation to acquired intangible assets (customer relationships

and brand) (2022: £6,579,000).

6 The tax credit on non-trading items of £2,910,000 (2022: charge of £2,530,000) represents 20% (2022: 26%) of the non-trading items

incurred of £14,216,000 (2022: £9,808,000). This is different to the expected tax credit of 19% (2022: 19%), as various adjustments are

made to tax including for deferred tax, and the exclusion of amounts not allowable for tax. The tax on non-trading and exceptional items

was a large tax charge in the year ended 31 March 2022 instead of a tax credit, because of the tax rate increase from 19% to 25% from

1Ap1 April20l 2023, which was enacted in the year to 31 March 2022. As a result the Group incurred a large deferred tax charge in the prior year

(£4.4 million).

XPS Pensions Group Annual Report 2023128

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

7 Business combinations during the period

On 21 September 2022, the Group acquired 100% of the share capital of Penfida Limited from the shareholders of

Penfida Limited for £8.64 million in cash upon completion, and a further payment of £3.38 million in September

2024, subject to the achievement of a client retention target, and the sellers still being in employment with the Group.

Because this element is only payable to the sellers who remain in employment at the end of the two-year period,

under IFRS 3 the £3.38 million is treated as post-acquisition remuneration and will be an expense to the business over

the two-year period to September 2024. This expense will be treated as an exceptional cost, as it meets the Group’s

definition of an exceptional item (see note 6).

Penfida Limited provides employer covenant advisory services. The transaction will strengthen the covenant advice

offering of XPS and gives the Group the resource to expand this offering to both existing clients and new prospects.

Details of the fair value of identifiable assets and liabilities acquired, purchase consideration and goodwill are

asfollas follows:

Book value

£’000

Adjustment

£’000

Fair value

£’000

Right-of-use asset — 686 686

Non-current asset 55 — 55

Trade and other receivables 1,899 (67) 1,832

Cash 373 — 373

Lease liability — (534) (534)

Provisions (162) (31) (193)

Trade and other payables (1,031) 50 (981)

Corporation tax payable (272) (20) (292)

Customer relationships — 5,215 5,215

Brand — 295 295

Deferred tax — (1,364) (1,364)

Total net assets 862 4,230 5,092

The fair value and the gross value of acquired receivables are the same. The receivables have been reviewed and it is

expected that all contractual cash flows will be collected.

Fair value of consideration paid

£’000

Cash 8,641

Total consideration 8,641

Goodwill (note 17) 3,549

The main factors leading to the recognition of goodwill are the presence of certain intangible assets, such as the

assembled workforce of the acquired entities, synergies and potential future cost savings, and the expected growth

inthin the business generated by new customers, which do not qualify for separate recognition.

The goodwill arising from the above acquisition is not deductible for tax purposes.

Since the acquisition date, Penfida Limited has contributed £2.3 million to Group revenues and £0.4 million to Group

profit before tax, before taking into account the post-acquisition remuneration referred to above. Including this figure,

Penfida has contributed a loss of £0.3 million since the acquisition date.

If the acquisition had occurred on 1 April 2022, Group revenue would have been £168.8 million and Group profit

before tax would have been £20.7 million, excluding the impact of the post-acquisition remuneration disclosed above.

Including this, and assuming the transaction had taken place on 1 April, Group profit before tax would have been

£19.0 million.

Acquisition expenses

Costs relating to the above acquisition (excluding the post-acquisition remuneration) totalled £474,000 and are

included within exceptional costs as corporate transaction costs .

129XPS Pensions Group Annual Report 2023

Financial statements

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availais 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: pensions and employee benefit solutions. The Group’s revenues, costs, assets,

liabilities and cash flows are therefore totally attributable to this reporting segment. The table below shows the

disaggregation of the Group’s revenue, by product line.

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Pensions Actuarial & Consulting 77, 388 62,171

Pensions Administration 57,444 52,339

Pensions Investment Consulting 18,009 13,678

National Pension Trust (NPT) 4,332 4,353

SIP

9,423 6,081

Total 166,596 138,622

1 Self Invested Pensions (SIP) business, incorporating both SIPP and SSAS products.

In the year, there was a change in the way that divisional revenues are reported to the CODM which is more reflective

of the responsibilities and operations of the business. As a result related revenue of £1.5 million has been reallocated

from the Pensions Actuarial & Consulting division to the Pensions Administration division.

The prior year comparative have been restated to enable fair comparability against the current year results

amounting to a reallocation of £1.5 million revenue from the Pensions Actuarial & Consulting division to the Pensions

Administration division.

9 Administrative expenses

Included in the operating profit for the year are the following:

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Expenses by nature

Staff costs (note 10) 101,436 83,060

Depreciation and amortisation 12,386 11,922

Short-term and low value lease costs 224 31

Premises costs (excluding rent accounted for under IFRS 16 Leases) 2,868 2,651

Exceptional items (note 6) 2,871 (646)

Other general business costs 24,280 22,616

Total 144,065 119,634

10 Staff numbers and costs

The average number of people employed by the Group (including Directors) during the year, analysed by category,

was as follows:

Year ended

31 March

2023

Number of

employees

Year ended

31 March

2022

Number of

employees

Operational 1,435 1,309

Administration 125 106

Sales and marketing 24 20

1,584 1,435

XPS Pensions Group Annual Report 2023130

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

10 Staff numbers and costs continued

The aggregate payroll costs of these persons were as follows:

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Wages and salaries 81,142 66,719

Social security contributions and similar taxes 8,913 7,454

Defined contribution pension cost 4,009 3,509

Other long-term employee benefits 1,867 1,503

Post-acquisition remuneration (note 7) 845 —

Share-based payment costs (note 13) 4,660 3,875

101,436 83,060

11 Employee benefits

Defined contribution plan

The Company operates a defined contribution pension plan. Outstanding contributions at the year end were £nil

(2022: £nil).

12 Directors’ emoluments

The Directors were remunerated for their services by the Group and their emoluments are disclosed below.

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Aggregate emoluments excluding gain on exercise of share options 2,626 2,256

Gain on exercise of share options 987 451

Company contributions to money purchase pension plans 30 30

3,643 2,737

The share-based payment expense for Directors was £894,000 (2022: £433,000).

Year ended

31 March

2023

Number of

Directors

Year ended

31 March

2022

Number of

Directors

At 31 March 2023, retirement benefits are accruing to the following number of Directors under:

Money purchase schemes 3 3

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

The emoluments of the highest paid Director, including benefits and share-based payments 1,194 870

13 Share-based payment costs

The Group operates a number of equity-settled share-based remuneration schemes for employees: Performance Share

Plans (PSPs) for Executive Directors and other key senior personnel, and Deferred Share Plans (DSPs) for key senior

personnel from July 2020. All employees are also eligible to participate in the Save as You Earn (SAYE) scheme, the only

vesting condition being that the individual remains an employee of the Group over the savings period.

The Executive PSP award expense relates to annual awards over shares that vest subject to certain stretching

performance conditions, measured over a three-year period. Maximum “normal” grant level is 150% of salary, capped at a

maximum of 200% in exceptional circumstances. Malus and clawback provisions apply. The fair value of awards granted

during the year was determined using certain assumptions around vesting. More information about the Executive PSP

can be found in the Remuneration Report section of this Annual Report.

The only vesting criteria for the DSP is a service criteria. The fair value of awards under this scheme was determined

using the share price on the date of grant.

131XPS Pensions Group Annual Report 2023

Financial statements

13 Share-based payment costs continued

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Performance Share Plan awards, Deferred Share Plan awards and SAYE scheme 3,892 3,343

Social security cost on Performance Share Plan awards and Deferred Share Plan awards 768 532

Total share-based payments 4,660 3,875

The fair value of Executive PSP options granted during the period was calculated using different methods for different

elements – the Black-Scholes method for the EPS element, the Stochastic method for the TSR element, and the Chaffe

method for the holding period (2022: Black-Scholes method for the EPS element, the Stochastic method for the TSR

element, and the Finnerty method for the holding period). The inputs to the model were as follows:

Year ended 31 March 2023 Year ended 31 March 2022

75%

earnings

per share

(EPS)

25%

relative

total

shareholder

return

(TSR)

Two -year

holding

period

75%

earnings

per share

(EPS)

25%

relative

total

shareholder

return

(TSR)

Two-year

holding

period

Weighted average exercise price of options issued

duringthg the period (pence) 0.05 0.05 0.05 0.05 0.05 0.05

Expected volatility (%) n/a 38.80% 37.03% n/a 49.00% 40.70%

Expected life beyond vesting date (years) 3.00 3.00 2.00 3.01 3.01 2.00

Risk-free rate (%) n/a 1.81% 1.77% n/a 0.16% 0.34%

Dividend yield (%) — — — — — —

The Staff DSP options granted during the year had no performance criteria, other than a service condition. Therefore,

the fair value of this award was the market value of shares on the date of the award.

The fair value of SAYE options granted during the period, and the prior period, was calculated using the Black-Scholes

valuation method. The inputs to the model were as follows:

Year ended

31 March

2023

Year ended

31 March

2022

Weighted average exercise price of options issued during the period (pence) 104.0 111.0

Expected volatility (%) 47.95% 47.63%

Expected life beyond vesting date (years) 3.34 3.35

Risk-free rate (%) 1.61% 0.28%

Dividend yield (%) 4.90% 5.00%

The volatility assumption has been calculated over the period of time commensurate with the expected award term

immediately prior to the date of grant. Due to the very high level of volatility in 2020 due to the Covid-19 pandemic,

which we do not believe is reflective of the long-term average future volatility, we have excluded the period from

1Ma1 March to 31 March 2020, being the most volatile.

As at 31 March 2023, in respect of the Group’s ordinary shares of 0.05p each, 2,915,816 Executive PSP options had

been granted and remained outstanding, at an exercise price of 0.05p per share, 318,109 Staff PSP options had

been granted and remained outstanding, at an exercise price of 0.05p per share, 6,054,667 Staff DSP options had

been granted and remained outstanding, at an exercise price of 0.05p per share, 20,306 SAYE options had been

granted and remained outstanding, at an exercise price of 78p per share, 817,870 SAYE options had been granted

and remained outstanding, at an exercise price of 111p per share, and 2,335,793 SAYE options had been granted and

remained outstanding, at an exercise price of 104p per share. The table below includes dividend equivalent shares

onthon the PSP and DSP option figures where applicable.

XPS Pensions Group Annual Report 2023132

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

13 Share-based payment costs continued

2023

Weighted

average

exercise

price

pence

2023

Number

2022

Weighted

average

exercise

price

pence

2022

Number

Executive PSP Outstanding at 1 April 0.05 3,098,236 0.05 2,918,849

Granted during the year 0.05 1,084,873 0.05 964,133

Forfeited during the year 0.05 (572,818) 0.05 (235,198)

Exercised during the year 0.05 (553,445) 0.05 (146,101)

Cancelled during the year 0.05 (19,371) 0.05 (403 ,447)

Outstanding at 31 March 0.05 3,037,475 0.05 3,098,236

Staff PSP Outstanding at 1 April 0.05 3,335,675 0.05 5,045,911

Forfeited during the year 0.05 (752,892) 0.05 (474,375)

Exercised during the year 0.05 (2,177,334) 0.05 (1,194,069)

Cancelled during the year 0.05 (76,207) 0.05 (41,792)

Outstanding at 31 March 0.05 329,242 0.05 3,335,675

Staff DSP Outstanding at 1 April 0.05 3,976,462 0.05 2,331,278

Granted during the year 0.05 2,392,868 0.05 1,795,090

Forfeited during the year 0.05 (63,316) 0.05 (149,906)

Outstanding at 31 March 0.05 6,306,014 0.05 3,976,462

SAYE Outstanding at 1 April 88.61 4,430,966 80.22 3,883,505

Granted during the year 104.00 2,381,306 111.00 975,889

Forfeited during the year 94.91 (70,384) 82.74 (171,814)

Exercised during the year 78.01 (3,405,601) 87.64 (37,421)

Lapsed during the year 82.51 (39,784) 144.75 (113,015)

Cancelled during the year 106.14 (122,534) 91.74 (106,178)

Outstanding at 31 March 110.79 3,173,969 88.61 4,430,966

The exercise price of options outstanding at 31 March 2023 ranged between £0.0005 (i.e. the nominal value of

anoan ordinary share) in the case of the PSPs and £1.11 in the case of the SAYE scheme (2022: £0.0005 to £1.472).

Theirweeir weighted average contractual life was three years (2022: three years), and their weighted average exercise price

was£0.was £0.04 (2022: £0.01).

Of the total number of options outstanding at 31 March 2023, 356,263 (2022: 447,454) had vested and were exercisable.

The weighted average fair value of each option granted during the year was £1.24 (2022: £1.31). The weighted average

exercise price for exercisable options was 0.26p per share (2022: 5.14p per share).

133XPS Pensions Group Annual Report 2023

Financial statements

14 Finance income and expense

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Interest income on bank deposits 10 —

Finance income 10 —

Interest expense on bank loans 2,758 1,108

Other costs of borrowing 498 602

Interest on leases 290 291

Other finance expense 50 46

Finance expenses 3,596 2,047

Other costs of borrowing largely represent the amortisation expense of capitalised loan arrangement fees on the

Group’s bank debt.

15 Income tax expense

Recognised in the statement of comprehensive income

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Current tax expense

Current year 5,153 4,864

Adjustment in respect of prior year (223) (205)

Total current tax expense 4,930 4,659

Deferred tax (credit)/expense

Origination and reversal of temporary differences (1,403) (1,399)

Effect of tax rate changes (222) 4,258

Total income tax expense 3,305 7,518

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Profit for the year 15,837 9,423

Total tax expense 3,305 7,518

Profit before income tax 19,142 16,941

Tax using the UK corporation tax rate of 19% (2022: 19%) 3,637 3,219

Non-deductible expenses 74 648

Fixed asset differences 39 (55)

Adjustment in respect of prior periods (223) (205)

Amounts charged/(credited) directly to equity or otherwise transferred — (7)

Excess relief on exercise of share options — (340)

Effect of tax rate change (222) 4,258

Total tax expense 3,305 7,518

The standard rate of corporation tax in the UK was 19% (2022: 19%). Deferred tax assets and liabilities have been

measured at the rate they are expected to unwind at, using a rate substantively enacted at 31 March 2023, which is

not lower than 25% (2022: 19%). Deferred tax not recognised relates to £6.7 million of finance expense losses in a prior

year and their future recoverability is uncertain. At 31 March 2023 the total unrecognised deferred tax asset in respect

of these losses was approximately £1.7 million (2022: £1.1 million).

XPS Pensions Group Annual Report 2023134

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

16 Property, plant and equipment

Leasehold

improvements

£’000

Office

equipment

£’000

Fixtures

and fittings

£’000

Total

£’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 — (447 ) — (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 — (447 ) — (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

Leasehold

improvements

£’000

Office

equipment

£’000

Fixtures

and fittings

£’000

Total

£’000

Cost

Balance at 1 April 2021 3,128 1,723 832 5,683

Acquired through business combinations — 2 — 2

Additions 174 591 66 831

Disposals (85) (844) (7) (936)

Balance at 31 March 2022 3,217 1,472 891 5,580

Accumulated depreciation

Balance at 1 April 2021 1,254 1,000 232 2,486

Acquired through business combinations — 1 — 1

Depreciation charge for the year 271 482 89 842

Disposals (85) (844) (7) (936)

Balance at 31 March 2022 1,440 639 314 2,393

Net book value

Balance at 1 April 2021 1,874 723 600 3,197

Balance at 31 March 2022 1,777 833 577 3,187

135XPS Pensions Group Annual Report 2023

Financial statements

17 Intangible assets

Group

Goodwill

£’000

Customer

relationships

£’000

Brands

£’000

Software

£’000

Total

£’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

Goodwill

£’000

Customer

relationships

£’000

Brands

£’000

Software

£’000

Total

£’000

Cost

Balance at 1 April 2021 120,343 123,305 6,036 5,076 254,760

Acquired through business combinations 1,475 1,964 — — 3,439

Additions — — — 6,611 6,611

Disposals — — — (880) (880)

Balance at 31 March 2022 121,818 125,269 6,036 10,807 263,930

Accumulated amortisation

Balance at 1 April 2021 — 42,011 5,917 2,048 49,976

Amortisation for the year — 6,516 63 1,455 8,034

Disposals — — — (880) (880)

Balance at 31 March 2022 — 48,527 5,980 2,623 57,130

Net book value

Balance at 1 April 2021 120,343 81,294 119 3,028 204,784

Balance at 31 March 2022 121,818 76,742 56 8,184 206,800

Material customer relationship assets are broken down as follows:

Remaining

UEL

years

31 March

2023

Net book

value

£’000

31 March

2023

Remaining

UEL

years

31 March

2022

Net book

value

£’000

31 March

2022

Acquisitions prior to January 2018 (CGU 1) 10 17,820 11 19,623

Punter Southall actuarial (CGU 2) 15 40,869 16 43,634

Punter Southall administrative (CGU 3) 5 4,677 6 5,655

Kier (CGU 3) 6 1,734 7 2,044

XPS Pensions (RL) Limited (CGU 1) 7 1,879 8 2,184

XPS Pensions (Trigon) Limited (CGU 1) 7 1,417 8 1,632

Michael J Field (CGU 1) 9 1,743 10 1,931

Penfida Limited (CGU 4) 20 5,085 — —

XPS Pensions Group Annual Report 2023136

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

17 Intangible assets continued

The brands disposed of in the year included the rights to use the Punter Southall brands for two years as part of

the Punter Southall acquisition in 2018 – these were fully amortised in the year ended 31 March 2019, following the

successful integration of the businesses. As the period the rights were held for has since expired, the brand was

disposed of in the year to 31 March 2023. The brand had a cost of £5,408,000 and a NBV of £nil at 31 March 2023 and

1 April 2022. The remaining £628,000 relates to brands acquired on 21 February 2013 by the Group. These brands had

a useful life of ten years, and are no longer in use by the Group. They had a NBV of £nil at 31 March 2023 and a NBV of

£57,000 at 1 April 2022.

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 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 three cash-generating units that were identified in prior

years, and a new cash-generating unit comprising the Penfida acquisition in the year.

The four CGUs to which goodwill has been allocated are:

CGU 1 – former Xafinity businesses, Royal London, Trigon, and Michael J Field acquisitions;

CGU 2 – PS Actuarial;

CGU 3 – PS Admin; and

CGU 4 – Penfida Ltd.

The cash-generating unit at each year end was assessed on the basis of value in use using the following assumptions,

which reflect the past experience of the Group:

2023 2022

CGU 1 CGU 2 CGU 3 CGU 4 CGU 1 CGU 2 CGU 3

Discount rate pre-tax 13.1% 13.1% 13.1% 13.1% 9.3% 9.3% 9.3%

Terminal rate after period 8 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

Growth rate during detailed forecast period

(average) 7.7% 8.8% 31.2% 9.4% 10.4% 7.4% 27.3%

Growth rate applied beyond

approvedfoproved forecastpst period to year 8 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 2023 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 in to account for

extra risk.

The cost of debt represents the cost of capital for the Group’s drawn Revolving Credit Facility and is based on average

borrowings during the year.

The 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 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thn in the medium term .

137XPS Pensions Group Annual Report 2023

Financial statements

17 Intangible assets continued

Impairment test continued

The impairment exercise demonstrated that there was significant headroom in all CGUs on this basis, so the Directors

are satisfied that no impairment has arisen during the financial period.

2023

£’000

2022

£’000

Goodwill allocated to cash-generating units:

Goodwill – XPS Pensions Consulting Limited, XPS 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) 3,549 —

125,367 121,818

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.

18 Deferred income tax

Analysis of the breakdown and movement of deferred tax during the year is as follows:

Balance at

1 April 2022

£’000

Recognised

in income

£’000

Recognised

in equity

£’000

Acquired

in period

£’000

31 March

2023

£’000

Property, plant and equipment 90 136 — — 226

Capital gains 943 — — — 943

Short-term temporary differences (1,099) (459) (258) — (1,816)

Business combinations 19,032 (1,304) — 1,364 19,092

18,966 (1,627) (258) 1,364 18,445

Balance at

1 April 2021

£’000

Recognised

in income

£’000

Recognised

in equity

£’000

Acquired

in period

£’000

31 March

2022

£’000

Property, plant and equipment 51 39 — — 90

Capital gains 717 226 — — 943

Short-term temporary differences (767) (339) 7 — (1,099)

Business combinations 15,622 2,933 — 477 19,032

15,623 2,859 7 477 18,966

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 2023, which is not lower than 25% (2022: 19%).

In prior years, deferred tax assets and liabilities were disaggregated and presented gross in the statement of financial

position; per IAS 12 these are now netted off and presented as a deferred tax liability. The prior year has been restated.

There is no impact on the income statement as a result of this; it purely impacts the presentation on the statement of

financial position of deferred tax, decreasing deferred tax assets and deferred tax liabilities by £1,099,000 (£767,000

as at 1 April 2021).

19 Other financial assets

The non-current financial asset relates to restricted cash held by the Group as security for the National Pension Trust

(NPT). For the NPT to gain approval to operate by the Pensions Regulator, the Group is required to demonstrate it can

support the NPT in any eventuality. The Group has therefore placed £1,847,000 (2022: £1,814,000) into a restricted

bank account, which the trustees of the NPT are able to access in certain circumstances.

There are no lifetime expected credit losses associated with this cash balance.

XPS Pensions Group Annual Report 2023138

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

20 Trade and other receivables

31 March

2023

£’000

31 March

2022

£’000

Trade receivables 21,642 17,925

Less: provision for impairment of trade receivables (363) (330)

Net trade receivables 21,279 17,595

Accrued income 16,407 13,240

Contract assets 1,475 1,322

Total financial assets other than cash and cash equivalents carried at amortised cost 39,161 32,157

Prepayments 4,498 6,292

Other receivables 106 327

Total trade and other receivables 43,765 38,776

The carrying value of trade and other receivables carried at amortised cost approximates to fair value.

31 March 2023 Current

Past due

0–30 days

Past due

31–90 days

Past due

more than

90 days

Total

£’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

31 March 2022 Current

Past due

0–30 days

Past due

31–90 days

Past due

more than

90 days

Total

£’000

Expected loss rate 0% 0% 2% 24%

Gross carrying amount 13,018 3,089 876 942 17,925

Loss provision 13 9 15 226 263

Amendment for specific bad debt provision (13) (9) (15) 104 67

Total — — — 330 330

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deof debt and specific client knowledge. The provision is then adjusted to take this detail into account.

Of the March 2022 contract asset balance of £1,322,000, £1,014,000 was billed in the year, reducing the brought

forward amount. A further £1,167,000 of revenue was recognised in the year. There are no other significant movements

in the contract assets balance in the year. The March 2023 contract asset balance is expected to be billed in the year

ending 31 March 2024 (£1,230,000), the year ending 31 March 2025 (£242,000), and the year ending 31 March 2026

(£3,000).

21 Cash and cash equivalents

31 March

2023

£’000

31 March

2022

£’000

Cash and cash equivalents per statement of financial position 13,285 10,150

Cash and cash equivalents per statement of cash flows 13,285 10,150

The balance is comprised solely of cash at bank and on hand.

139XPS Pensions Group Annual Report 2023

Financial statements

22 Loans and borrowings

31 March 2023

Due within

1 year

(current)

£’000

Due

between

1 and 2

years

£’000

Due after

2 years

£’000

Sub-total

(non-

current)

£’000

Total

£’000

Drawn Revolving Credit Facility — — 68,000 68,000 68,000

Capitalised debt arrangement fees — — (690) (690) (690)

Total — — 67,310 67, 310 67,310

31 March 2022

Due

within

1 year

(current)

£’000

Due

between

1 and 2

years

£’000

Due after

2 years

£’000

Sub-total

(non-

current)

£’000

Total

£’000

Drawn Revolving Credit Facility — — 64,000 64,000 64,000

Capitalised debt arrangement fees — (276) (415) (691) (691)

Sub-total — (276) 63,585 63,309 63,309

Capitalised debt arrangement fees shown as current assets on balance

sheet (276) — — — (276)

Total (276) (276) 63,585 63,309 63,033

The book value and fair value of loans and borrowings are not materially different.

Terms and debt repayment schedule

31 March 2023

Amount

£’000 Currency Nominal interest rate

Year of

maturity

Revolving Credit Facility 68,000 GBP 1.85% above SONIA 2025

31 March 2022

Amount

£’000 Currency

Nominal interest

rate

Year of

maturity

Revolving Credit Facility 64,000 GBP 1.65% above SONIA 2025

At 31 March 2023 the Group had drawn down £68,000,000 (2022: £64,000,000) 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 has 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

Reading Limited, XPS Consulting (Reading) Limited, XPS Pensions Consulting Limited (and its subsidiaries), Xafinity

Pensions Consulting Limited (and its subsidiaries), XPS SIPP Services Limited, and XPS Holdings Limited (and its

subsidiaries). The security is over all the assets of the companies which are obligors to the loans.

XPS Pensions Group Annual Report 2023140

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

23 Reconciliation of liabilities arising from financing activities

31 March

2022

£’000

Cash

flows

£’000

Non-cash

change:

amortisation

£’000

Non-cash

change:

new leases/

interest

this year

£’000

31 March

2023

£’000

Long-term borrowings 64,000 4,000 — — 68,000

Capitalised debt arrangement fees (967) — 277 — (690)

Interest payable on long-term borrowings 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

31 March

2021

£’000

Cash

flows

£’000

Non-cash

change:

liability

to asset

£’000

Non-cash

change:

new leases/

interest

this year

£’000

31 March

2022

£’000

Long-term borrowings 59,000 5,000 — — 64,000

Capitalised debt arrangement fees (310) (1,105) 276 172 (967)

Interest payable on long-term borrowings 10 (1,222) — 1,269 57

Lease liabilities 12,706 (3,042) — 2,016 11,680

Total liabilities from financing activities 71,406 (369) 276 3,457 74,770

24 Trade and other payables

31 March

2023

£’000

31 March

2022

£’000

Trade payables 4,752 8,635

Accrued expenses 15,406 8,867

Interest payable 49 57

Other payables 471 390

Total financial liabilities excluding leases, loans and borrowings, classified as financial liabilities

ataat amortised cost 20,678 17, 949

Other payables – tax and social security payments 2,178 1,846

Other payables – VAT 5,892 4,233

Contract liabilities 3,315 3,247

Total trade and other payables 32,063 27,275

Due within one year or less 31,218 27,275

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.

The March 2023 contract liability balance is expected to be recognised in the year ended 31 March 2024 (£3,011,000),

31 March 2025 (£251,000), and 31 March 2026 (£53,000). Of the March 2022 contract liability balance of £3,247,000,

£3,041,000 was recognised in revenue in the year to 31 March 2023, £150,000 will be recognised in the year to

31Ma1 March 2024, and £56,000 in the year to 31 March 2025.

The non-current trade and other payables relate to post-acquisition remuneration for the Penfida acquisition,

whichispayabh is payable in September 2024.

25 Current income tax liabilities

31 March

2023

£’000

31 March

2022

£’000

Tax payable 2,280 2,207

141XPS Pensions Group Annual Report 2023

Financial statements

26 Provisions for other liabilities and charges

31 March 2023

Social

security

costs on

Performance

Share Plan

£’000

Dilapidations

£’000

Professional

indemnity

£’000

Total

£’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) (44) (93) (742)

Provisions released unused during the year — (116) (44) (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

31 March 2022

Social

security

costs on

Performance

Share Plan

£’000

Dilapidations

£’000

Professional

indemnity

£’000

Total

£’000

Balance at 1 April 2021 746 1,712 604 3,062

Provisions made during the year 532 20 332 884

Provisions used during the year (283) — (350) (633)

Provisions released unused during the year — (101) (195) (296)

Balance at 31 March 2022 995 1,631 391 3,017

Due within one year or less 594 251 391 1,236

Due after more than one year:

Between one and three years 401 442 — 843

Over three years — 938 — 938

995 1,631 391 3,017

Social security costs (National Insurance) are payable on gains made by employees on the 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 Annual Report 2023142

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

27 Deferred consideration

Balance at

1 April

2022

£’000

Fair value

adjustment

£’000

31 March

2023

£’000

Contingent cash consideration 765 (197) 568

Balance at

1 April

2021

£’000

Acquisition

£’000

31 March

2022

£’000

Contingent cash consideration — 765 765

The contingent cash consideration liability recognised at 31 March 2023 relates to the Michael J Field acquisition in

February 2022. The liabilities have been calculated based on terms agreed in the business purchase agreement for

Michael J Field, which are dependent on certain revenue and cost targets being met in the 12 months following the

acquisition date. The fair value adjustment in the year related to the assessment of performance of the acquisition

incomin comparison to targets set out in the business purchase agreement. The contingent cash consideration is expected

to be paid inJd in July 2023.

28 Share capital

Ordinary

’000

31 March

2023

Ordinary

£’000

31 March

2023

Ordinary

’000

31 March

2022

Ordinary

£’000

31 March

2022

In issue at the beginning of the year 205,151 103 205,117 103

Issued during the year 2,292 1 34 —

In issue at the end of the year 207,443 104 205,151 103

31 March

2023

’000

31 March

2023

£’000

31 March

2022

’000

31 March

2022

£’000

Allotted, called up and fully paid

Ordinary shares of 0.05p (2022: 0.05p) each 206,427 103 201,982 101

Shares held by the Group’s Employee Benefit Trust

Ordinary shares of 0.05p (2022: 0.05p) each 1,016 1 3,169 2

Shares classified in shareholders’ funds 207,443 104 205,151 103

The Group has invested in the shares for its Employee Benefit Trust (EBT). These shares are held on behalf of

employees and legal ownership will transfer to those employees on the exercise of an award. This investment in

ownshaown shares held in trust is deducted from equity in the consolidated statement of changes in equity.

29 Reserves

The following describes the nature and purpose of each reserve within equity:

Reserve Description and purpose

Retained earnings/

accumulated deficit:

All net gains and losses recognised through the consolidated statement of comprehensive

income. In the year a share premium reduction exercise was undertaken, and as a result

£116,804,000 was moved from share premium to retained earnings.

Share premium: Amounts subscribed for share capital in excess of nominal value. In the year a share premium

reduction exercise was undertaken, and as a result £116,804,000 was moved from share

premium to retained earnings.

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 .

143XPS Pensions Group Annual Report 2023

Financial statements

30 Financial instruments

The fair values and the carrying values of financial assets and liabilities are the same.

Financial assets and financial liabilities measured at fair value in the statement of financial position are grouped into

three levels of a fair value hierarchy. The three levels are defined based on the observability of significant inputs to the

measurement, as follows:

• level 1: quoted prices (unadjusted) in active markets for identical assets or liabilities;

• level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability, either

directly or indirectly; and

• level 3: unobservable inputs for the asset or liability.

The Group’s finance team performs valuations of financial items for financial reporting purposes, including level 3 fair

values, in consultation with third-party valuation specialists for complex valuations. Valuation techniques are selected

based on the characteristics of each instrument, with the overall objective of maximising the use of market-based

information. The finance team reports directly to the Chief Financial Officer.

The Group currently holds level 3 financial assets and liabilities.

Contingent consideration is a level 3 financial liability and is measured based on performance compared to targets

agreed in the relevant business transfer agreement. The amount is not discounted as this would be immaterial.

The contingent consideration balance is made up of £568,000 relating to the Michael J Field acquisition in

February2022, whiy 2022, which is payable in July 2023. This amount has been calculated based on achievement of both

arevenue aa revenue and cost target.

Credit risk

The maximum exposure to credit risk at the reporting date was:

Carrying

amount

31 March

2023

£’000

Carrying

amount

31 March

2022

£’000

Trade receivables 21,642 17,925

Provision for impairment of trade receivables (363) (330)

Net trade receivables due 21,279 17,595

Accrued income 16,407 13,240

Contract assets 1,475 1,322

Cash and cash equivalents 13,285 10,150

Non-current financial asset 1,847 1,814

54,293 44,121

Credit risk mitigation

The ageing of trade receivables at the reporting date was:

31 March

2023

£’000

31 March

2022

£’000

Not past due 16,402 13,018

Past due 0–30 days 3,395 3,089

Past due 31–90 days 1,177 876

Past due more than 90 days 668 942

21,642 17,925

Movement in impairment allowance for trade receivables:

Balance at start of the year 330 350

Increase during the year 359 121

Receivable written off during the year as uncollectable (105) (57)

Reversal of allowances (221) (84)

Balance at end of the year 363 330

XPS Pensions Group Annual Report 2023144

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

30 Financial instruments continued

Credit risk mitigation continued

The Group prepared a forward-looking impairment model using a provision matrix based on historical data. Using

this, the Group believes that an impairment allowance of £363,000 (2022: £330,000) is adequate in respect of

trade receivables. Those debts which have not been provided against are considered recoverable by the Group.

InaIn accordance with IFRS 9, the expected credit loss (ECL) model was used to calculate the impairment loss.

The Group has considered whether any provision needs to be made for credit losses on contract assets and accrued

income, and concluded that there are none.

Cash flow risk

The Group is exposed to cash flow interest rate risk in two main respects: firstly, corporate and client bank deposits,

which earn interest at a variable rate, although not at a material level; and secondly, interest expense arising on bank

facilities at a margin over SONIA.

Interest rate risk

The interest rate on long-term borrowings is a margin over SONIA and as such the Company is at risk from SONIA

increases. The sensitivity of the interest rate risk has been assessed and it is not material .

Liquidity risk

Liquidity risk arises from the Group’s working capital and the finance charges and principal repayments on its debt

instruments. It is the risk the Group will encounter difficulty in meeting its financial obligations as they fall due.

The following table sets out the contractual maturities (representing undiscounted cash flows) of financial liabilities:

Up to 3

months

£’000

Between

3 and 12

months

£’000

Between

1 and 2

years

£’000

Between

2 and 5

years

£’000

Over

5 years

£’000

31 March

2023

£’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

Up to 3

months

£’000

Between

3 and 12

months

£’000

Between

1 and 2

years

£’000

Between

2 and 5

years

£’000

Over

5 years

£’000

31 March

2022

£’000

Trade and other payables 17,949 — — — — 17,949

Leases 1,115 1,911 2,537 4,479 2,606 12,648

Loans and borrowings — — — 64,000 — 64,000

Bank interest 375 1,061 1,236 2,367 — 5,039

Deferred consideration — 765 — — — 765

19,439 3,737 3,773 70,846 2,606 100,401

The Group does not have any concerns over meeting its liabilities as they fall due, as the forecasts prepared indicate

sufficient cash receipts in each period to cover liabilities .

Capital risk

The Group’s objectives when managing capital are 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

2023

£’000

31 March

2022

£’000

Total equity 149,284 144,435

145XPS Pensions Group Annual Report 2023

Financial statements

31 Leases

Nature of leasing activities (in the capacity as lessee)

The Group leases a number of properties in the UK. In some instances the rent is reviewed and may be reset

periodically to market rental rates. In other cases the periodic rent is fixed over the lease term. The Group also leases

certain items of equipment (photocopiers). Leases of photocopiers comprise only fixed payments over the lease

terms. The percentages in the table below reflect the current proportions of lease payments that are either fixed or

variable. The sensitivity reflects the impact on the carrying amount of lease liabilities and right-of-use assets if there

was an uplift of 5% on the balance sheet date to lease payments that are variable.

31 March 2023

Lease

contracts

Number

Fixed

payments

Variable

payments

Sensitivity

£’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

31 March 2022

Lease

contracts

Number

Fixed

payments

Variable

payments

Sensitivity

£’000

Property leases with periodic uplifts to market rentals 9 — 82 ± 334

Property leases with fixed payments 8 17 — —

Leases of plant and equipment 2 1 — —

19 18 82 ± 334

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 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 £6,170,938 (2022: £6,689,469)

are potentially avoidable were the Group to exercise break clauses at the earliest opportunity.

Right-of-use assets

Land and

buildings

£’000

Office

equipment

£’000

Total

£’000

At 1 April 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

Right-of-use assets

Land and

buildings

£’000

Office

equipment

£’000

Total

£’000

At 1 April 2021 12,063 165 12,228

Additions 1,745 — 1,745

Depreciation (2,984) (62) (3,046)

At 31 March 2022 10,824 103 10,927

XPS Pensions Group Annual Report 2023146

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

31 Leases continued

Nature of leasing activities (in the capacity as lessee) continued

Lease liabilities

Land and

buildings

£’000

Office

equipment

£’000

Total

£’000

At 1 April 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

Lease liabilities

Land and

buildings

£’000

Office

equipment

£’000

Total

£’000

At 1 April 2021 12,528 178 12,706

Additions 1,725 — 1,725

Interest expense 286 5 291

Lease payments (2,974) (68) (3,042)

At 31 March 2022 11,565 115 11,680

31 March

2023

£’000

31 March

2022

£’000

Short-term lease expense 211 30

Low value lease expense 11 8

Aggregate expense for short-term and low value leases 222 38

The maturity of the lease liabilities are as follows:

Year ended

31 March

2023

£’000

Year ended

31 March

2022

£’000

Up to 3 months 817 1,039

Between 3 and 12 months 1,884 1,706

Between 1 and 2 years 1,742 2,321

Between 2 and 5 years 4,135 4,192

More than 5 years 1,357 2,422

9,935 11,680

32 Notes supporting statement of cash flows

Cash and cash equivalents for the purposes of the statement of cash flows comprise:

Year

ended

31 March

2023

£’000

Year

ended

31 March

2022

£’000

Cash at bank available on demand 13,285 10,150

147XPS Pensions Group Annual Report 2023

Financial statements

33 Related party transactions

Key management emoluments during the year

Year

ended

31 March

2023

£’000

Year

ended

31 March

2022

£’000

Emoluments 3,310 2,377

Share-based payment 894 433

Company contributions to money purchase pension plans 30 30

Social security costs 376 255

4,610 3,095

Non-executive emoluments during the year

Year

ended

31 March

2023

£’000

Year

ended

31 March

2022

£’000

Emoluments 303 330

Social security costs 39 41

342 371

34 Earnings per share

31 March

2023

£’000

31 March

2022

£’000

Profit for the year 15,837 9,423

’000 ’000

Weighted average number of ordinary shares in issue 205,448 203,742

Diluted weighted average number of ordinary shares 216,071 212,519

Basic earnings per share (pence) 7.7 4.6

Diluted earnings per share (pence) 7.3 4.4

The calculation of basic earnings per share is based on the earnings attributable to ordinary shareholders

divided by the weighted average number of shares in issue during the period.

Reconciliation of weighted average ordinary shares in issue to diluted weighted average ordinary shares:

Year

ended

31 March

2023

’000

Year

ended

31 March

2022

’000

Weighted average number of ordinary shares in issue 205,448 203,742

Dilutive impact of share options vested up to exercise date 802 329

Dilutive impact of PSP and DSP options not yet vested 7,920 5,954

Dilutive impact of dividend yield shares for PSP and DSP options 1,069 803

Dilutive impact of SAYE options not yet vested 832 1,691

Diluted weighted average number of ordinary shares 216,071 212,519

Share awards were made to the Executive Board members and key management personnel in each year since the

year ended 31 March 2017; these are subject to certain conditions, and each tranche of awards vests 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 ended 31 March 2020, 2022 and 2023; these

will vest in the years ending 31 March 2023, 2025 and 2026 respectively. These shares are reflected in the diluted

number of shares and diluted earnings per share calculations.

XPS Pensions Group Annual Report 2023148

Notes to the consolidated ﬁnancial statements continued

for the year ended 31 March 2023

34 Earnings per share continued

Adjusted earnings per share

Total

31 March

2023

£’000

Total

31 March

2022

£’000

Adjusted profit after tax 27,143 21,761

Adjusted earnings per share (pence) 13.2 10.7

Diluted adjusted earnings per share (pence) 12.6 10.2

35 Subsidiaries

The following is the list of wholly owned companies consolidated within the financial statements of XPS Pensions

Group plc.

Company name

Company

number Principal activity Registered address

XPS Pensions Group plc 08279139 Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Financing Limited 08279274 Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Reading Limited 08279362 Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Consulting (Reading) Limited 08287502 Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Pensions Consulting Limited 02459442 Employee benefit

consultancy

Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS SIPP Services Limited SC069096 Employee benefit

consultancy

Scotia House, Castle Business Park, Stirling, Stirlingshire

FK9 4TZ

Xafinity Pensions Consulting

Limited

04436642 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Xafinity PT Limited 00232565 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Entegria Limited 05777554 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Xafinity Pension Trustees Limited 01450089 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Hazell Carr (AT) Services Limited SC420031 Employee benefit

consultancy

Scotia House, Castle Business Park, Stirling, Stirlingshire

FK9 4TZ

Hazell Carr (SG) Services Limited 01867603 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Hazell Carr (ES) Services Limited 02372343 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Hazell Carr (PN) Services Limited 00236752 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Hazell Carr (SA) Services Limited SC086807 Dormant Scotia House, Castle Business Park, Stirling, Stirlingshire

FK9 4TZ

Xafinity Trustees Limited 04305500 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Xafinity Employee Benefit Trust

2013

N/A Trust JTC Trustees Limited, Elizabeth House, 9 Castle Street,

StHeSt Helier, Jersey JE4 2QP

XPS Holdings Limited 04807951 Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Administration Holdings Limited

09655671 Holding company Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Administration Limited 09428346 Employee benefit

consultancy

Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Investment Limited 06242672 Employee benefit

consultancy

Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1N B

XPS Pensions Limited 03842603 Employee benefit

consultancy

Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Pensions (RL) Limited 05817049 Employee benefit

consultancy

Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

XPS Pensions (Trigon) Limited 12085392 Employee benefit

consultancy

Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

MJF Pension Trustees Limited 03394648 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

MJF SSAS Trustees Limited 04089958 Dormant Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Pensions Software Solutions Ltd 11482474 Software

development

Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

Penfida Limited 08020393 Employee benefit

consultancy

Phoenix House, 1 Station Hill, Reading, Berkshire RG1 1NB

149XPS Pensions Group Annual Report 2023

Financial statements

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 at the financial year ended

31 March 2023 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

2023

£’000

31 March

2022

£’000

Final dividend for the year ended 31 March 2022: 4.8p per share (2021: 4.4p per share) 9,763 8,948

Interim dividend for the year ended 31 March 2023: 2.7p (2022: 2.4p) per ordinary share was paid

during the year 5,568 4,883

15,331 13,831

The recommended final dividend payable in respect of the year ended 31 March 2023 is £11.8 million or 5.7p per share

(2022: £9,696,000).

The proposed dividend has not been accrued as a liability as at 31 March 2023 as it is subject to approval at the Annual

General Meeting.

31 March

2023

£’000

31 March

2022

£’000

Proposed final dividend for year ended 31 March 2023 11,766 9,696

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 £161,040,000.

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 Annual Report 2023150

Statement of ﬁnancial position – Company

as at 31 March 2023

Note

31 March

2023

£’000

31 March

2022

£’000

Assets

Non-current assets

Investments 5 33,831 29,681

Trade and other receivables 6 251,335 233,857

285,166 263,538

Total assets 285,166 263,538

Liabilities

Non-current liabilities

Trade and other payables 7 39,307 40,309

39,307 40,309

Current liabilities

Current tax liabilities 8 1,273 744

1,273 744

Total liabilities 40,580 41,053

Net assets 244,586 222,485

Equity and liabilities

Share capital 9 104 103

Share premium 10 1,786 116,804

Merger relief reserve 10 48,687 48,687

Other reserve 10 32,969 28,818

Retained profit 10 161,040 28,073

Total equity 244,586 222,485

The notes on pages 153 to 156 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 £31,494,000 (2022: £29,349,000).

These financial statements were approved by the Board of Directors on 21 June 2023 and were signed on its behalf by:

Snehal Shah

Chief Financial Officer

21 June 2023

Registered number: 08279139

151XPS Pensions Group Annual Report 2023

Financial statements

Statement of changes in equity – Company

for the year ended 31 March 2023

capital

£’000

premium

£’000

Merger

relief

reserve

£’000

Other

reserve

£’000

Retained

profit

£’000

Total

£’000

Balance at 1 April 2021 103 116,797 48,687 25,483 12,555 203,625

Comprehensive income and total comprehensive income

for the year — — — — 29,349 29,349

Contributions by and distributions to owners

Share capital issued — 7 — — — 7

Share-based payment expense – equity settled from

Employee Benefit Trust — — — 26 — 26

Share-based payment expense – IFRS 2 charge — — — 3,316 — 3,316

Deferred tax movement in respect of share-based payment

expense — — — (7) — (7)

Dividends paid — — — — (13,831) (13,831)

Total contributions by and distributions to owners — 7 — 3,335 (13,831) (10,489)

Balance at 31 March 2022 103 116,804 48,687 28,818 28,073 222,485

Balance at 1 April 2022 103 116,804 48,687 28,818 28,073 222,485

Comprehensive income and total comprehensive income

for the year — — — — 31,494 31,494

Contributions by and distributions to owners

Share capital issued 1 1,786 — — — 1,787

Share premium reduction — (116,804) — — 116,804 —

Share-based payment expense – IFRS 2 charge — — — 3,893 — 3,893

Deferred tax movement in respect of share-based payment

expense — — — 258 — 258

Dividends paid — — — — (15,331) (15,331)

Total contributions by and distributions to owners 1 (115,018) — 4,151 101,473 (9,393)

Balance at 31 March 2023 104 1,786 48,687 32,969 161,040 244,586

The appropriate filing of interim accounts showing sufficient reserves to pay the £13,831,000 dividend was undertaken.

The notes on pages 153 to 156 form part of these financial statements.

XPS Pensions Group Annual Report 2023152

The Company does not operate a bank account and therefore there were no cash flows during the year.

Allmovements of funds have been dealt with through subsidiary companies.

The notes on pages 153 to 156 form part of these financial statements.

Statement of cash ﬂows – Company

for the year ended 31 March 2023

153XPS Pensions Group Annual Report 2023

Financial statements

Notes to the ﬁnancial statements – Company

for the year ended 31 March 2023

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.

Measurement convention

The financial statements are prepared on the historical cost basis.

Investments in subsidiaries

Investments in subsidiaries are carried at cost, plus capital contributions to the Group’s subsidiary companies in

respect of share-based payment charges, less any provisions for impairment.

Share capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options

are shown in equity as a deduction, net of tax, from the proceeds.

Dividends

Dividends are recognised when they become legally payable. In the case of interim dividends to equity shareholders,

this is when paid and, in the case of final dividends, this is when approved by the shareholders at the Annual

General Meeting.

Taxation

Tax on the profit or loss for the period comprises current and deferred tax. Tax is recognised in profit and loss in the

statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which

case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the period, using tax rates enacted or substantively

enacted at the statement of financial position date, and any adjustment to tax payable in respect of previous years.

Changes in accounting policies – new standards, interpretations and amendments effective from 1 April 2022

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.

New standards and interpretations adopted and not yet adopted

A number of new standards, amendments to standards and interpretations are not effective for 2023, 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 11.

3 Capital risk management

The Company is a holding company and will apply the risk management policies of the Group contained in the Group’s

financial statements.

XPS Pensions Group Annual Report 2023154

4 Staff numbers and costs

The Company had no employees other than Directors in the year to 31 March 2023 (2022: nil).

No Directors received remuneration for their services to the Company during the year. Directors were remunerated

fortheir services to the Group by a subsidiary company.

Pension contributions of £nil (2022: £nil) were paid on behalf of the Directors.

5 Investments in subsidiaries

31 March

2023

£’000

31 March

2022

£’000

At the beginning of the year 29,681 26,345

In relation to XPS Pensions Consulting Limited 2,403 1,894

In relation to XPS SIPP Services Limited 100 89

In relation to XPS Pensions Limited 983 818

In relation to XPS Administration Limited 560 454

In relation to XPS Investment Limited 80 65

In relation to XPS Pensions (RL) Limited 14 11

In relation to XPS Pensions (Trigon) Limited 10 5

At the end of the year 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 represents amounts in respect of Performance Share Plan awards

and SAYE schemes, and an equity-settled award made by the Employee Benefit Trust to subsidiary companies as

instructed by the Company.

All other subsidiaries disclosed in note 35 of the Group accounts are indirectly owned by other Group companies.

6 Trade and other receivables

31 March

2023

£’000

31 March

2022

£’000

Receivables due from related parties 251,335 233,857

Non-current receivable 251,335 233,857

Current receivable — —

251,335 233,857

7 Trade and other payables

31 March

2023

£’000

31 March

2022

£’000

Payables due to related parties 39,307 40,309

Total trade and other payables 39,307 40,309

Non-current payable 39,307 40,309

Current payable — —

39,307 40,309

Notes to the ﬁnancial statements – Company continued

for the year ended 31 March 2023

155XPS Pensions Group Annual Report 2023

Financial statements

8 Current tax liabilities

31 March

2023

£’000

31 March

2022

£’000

Corporation tax payable 1,273 744

9 Share capital

Details on the share capital of the Company are contained in the Group financial statements.

10 Reserves

Reserve Description and purpose

Share premium: Amount subscribed for share capital in excess of nominal value. In the year a share premium reduction

exercise was undertaken, and as a result £116,804,000 was moved from share premium to retained profit.

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.

Retained profit: All other net gains and losses and transactions with owners (e.g. dividends) not recognised elsewhere. In

the year a share premium reduction exercise was undertaken, and as a result £116,804,000 was moved

from share premium to retained profit.

11 Financial instruments

The fair values and the carrying values of financial assets are the same.

Credit risk

The maximum exposure to credit risk at the reporting date was:

Carrying

amount

31 March

2023

£’000

Carrying

amount

31 March

2022

£’000

Receivables due from related parties 251,335 233,857

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.

Capital risk management

As part of the XPS Pensions Group, the Company is focused on delivering value for its shareholders whilst ensuring

the Group is able to continue effectively as a going concern. Total capital for the Company comprises total equity.

The policies for managing capital are to increase shareholder value by maximising profits and cash. The policy is to

set budgets and forecasts in the short and medium term that the Company ensures are achievable. The 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 the XPS Pensions Group’s

forecast which ensures future covenant test points are met. The XPS Pensions Group continues to meet these test

points and they have been achieved over the last 12 months. Further information can be found within the consolidated

financial statements of XPS Pensions Group plc.

Management of capital

31 March

2023

£’000

31 March

2022

£’000

Total equity 244,586 222,485

XPS Pensions Group Annual Report 2023156

12 Related party transactions

Amounts receivable from/(payable to) related parties at the balance sheet date

31 March

2023

£’000

31 March

2022

£’000

Loans to related parties 251,335 233,857

Loans from related parties (39,307) (40, 309)

212,028 193,548

Transactions with related parties during the year

31 March

2023

£’000

31 March

2022

£’000

Interest income 7,090 3,565

Interest expense (1,295) (690)

Increase in loans to related parties (15,905) (15,145)

Decrease in loans from related parties 1,788 7

Intercompany dividend 26,800 27,000

18,478 14,737

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. 3.96% was applied in the year (2022: 1.68%). All related parties are part of the

XPSPensions Group.

13 Ultimate controlling party

The Directors do not consider that there is an ultimate controlling party.

Notes to the ﬁnancial statements – Company continued

for the year ended 31 March 2023

157

Financial statements

Registered office and Directors’ address

Phoenix House

1 Station Hill

Reading

Berkshire

RG1 1NB

Company Secretary

Zoe Adlam

Financial adviser and broker

Canaccord Genuity Limited

88 Wood Street

London

EC2V 7QR

Financial adviser and broker

RBC Capital Markets

100 Bishopsgate

London

EC2N 4AA

Legal advisers to the Company

Macfarlanes LLP

20 Cursitor Street

London

EC4A 1LT

Auditor

BDO LLP

55 Baker Street

London

W1U 7EU

Registrar

Equiniti Limited

Aspect House

Spencer Road

Lancing

West Sussex

BN99 6DA

Bankers

HSBC Bank plc

Level 7, Thames Tower

Station Road

Reading

RG1 1LX

Citibank N.A.

Citigroup Centre

33 Canada Square

Canary Wharf

London

E13 5LB

National Westminster Bank plc

250 Bishopsgate

London

EC2M 4AA

The Governor and Company of the Bank of Ireland

40 Mespil Road

Dublin

Ireland

D04 C2N4

Notes

www.xpsgroup.com