XPS Pensions Group Reports Fourth Consecutive Year of Double-Digit Revenue Growth

XPS Pensions Group FY 2026 Results – strong growth, but the headline numbers need a bit of unpacking

XPS Pensions Group has delivered another solid year, with revenue up 13% to £262.7 million and adjusted EBITDA up 9% to £75.7 million. This is the fourth consecutive year of double-digit revenue growth, which is exactly the sort of consistency investors like to see.

The interesting part is that the headline probably understates the momentum a bit. Last year included a chunky one-off project called McCloud, so when management strips that out of the comparison, revenue growth looks stronger at 18%.

Key FY 2026 numbers	FY 2026	FY 2025	Change
Total revenue	£262.7 million	£231.8 million	13%
Revenue excluding prior-year McCloud effect	£259.2 million	£219.1 million	18%
Adjusted EBITDA	£75.7 million	£69.7 million	9%
Statutory profit before tax	£38.7 million	£40.8 million	(5%)
Adjusted diluted EPS	22.3p	20.6p	8%
Basic EPS	13.0p	14.7p	(12%)
Net debt	£46.2 million	£40.3 million	15%
Total dividend per share	13.2p	11.9p	11%

XPS revenue growth by division – Advisory is flying, Administration is better than it first looks

The standout performer was Advisory, where revenue jumped 20% to £150.1 million. That was helped by the Polaris acquisition, but even on an organic basis – meaning excluding acquisition help – growth was still 8%.

Why is Advisory doing so well? XPS says pension schemes are dealing with major regulatory change, stronger funding positions, more demand for risk transfer work, and ongoing GMP projects. GMP stands for Guaranteed Minimum Pension, a long-running equalisation and correction exercise that continues to generate fee income across the industry.

Administration grew 5% to £98.7 million, which looks modest until you remember that last year benefited from McCloud work. McCloud was a time-sensitive public sector pension remedy project, largely completed by 31 March 2025. Excluding that distortion, underlying Administration revenue growth was 18%.

That matters. It suggests the core admin business is still growing nicely through new client wins, project work and inflation-linked fees, rather than simply living off one-off clean-up projects.

SIP revenue rose 10% to £13.9 million. SIP here refers to self-invested pensions, and while it is the smallest division at 5% of group revenue, another year of double-digit growth shows it is contributing steadily.

XPS profit margins and earnings – good operating performance, messy statutory optics

This is where retail investors need to keep their wits about them. Adjusted EBITDA rose 9% to £75.7 million, but statutory profit before tax fell 5% to £38.7 million and basic earnings per share dropped 12% to 13.0p.

That looks contradictory until you dig into the accounting. The main issue is the Polaris acquisition and how IFRS 3 treats contingent payments linked to continued employment. In plain English, some of the deferred deal consideration has to be booked as an employment cost rather than part of the acquisition price.

That led to £7.9 million of acquisition-related remuneration in the year, which XPS treats as exceptional in its adjusted figures. It is real enough as an accounting cost, but it does not tell you the trading engine has stalled. On the adjusted numbers, profit before tax rose 8% to £64.2 million and adjusted diluted EPS increased 8% to 22.3p.

My take: the quality of the trading performance looks better than the statutory earnings line suggests. That said, investors should not ignore the fact these acquisition-related charges will continue for the next two years. Even if management calls them one-off, they are not disappearing tomorrow.

XPS cash generation, net debt and dividend growth – a reassuring balance sheet story

One of the better parts of this update is the cash profile. Operating cash conversion was 91%, down from 96% but still comfortably above 90%, which is a healthy number for a services business.

Net debt rose to £46.2 million from £40.3 million, and leverage moved to 0.64x adjusted EBITDA. That is still well below XPS’s target range of 1.0x to 1.5x, so there is no sign of balance sheet stress here.

In fact, management is almost signalling the opposite. With leverage that low, the group has room for further acquisitions if it finds the right targets.

The dividend also tells a positive story. Total dividends per share increased 11% to 13.2p, including a proposed final dividend of 9.1p. Boards do not usually raise dividends at that pace unless they feel pretty comfortable about the outlook.

Why XPS believes pension regulation and insurance consulting can drive future growth

XPS is making a fairly clear strategic bet: the UK pensions landscape is changing fast, and it wants to be paid at every stage of that change. That includes advising schemes that want to run on and extract surplus, helping others move to buy-out through insurers, and then supporting insurers once those members transfer across.

This is what the company calls its “follow the member” strategy. The logic is sensible. However pension liabilities move around the system, someone still needs actuarial, administration, reporting and implementation support.

There are a few concrete signs this strategy is gaining traction. Revenues from insurers across all business units have tripled and now represent 10% of group revenue. XPS also says its total addressable market has expanded to £4.5 billion per annum, made up of £3.0 billion in traditional pensions fees and £1.5 billion in insurance fees.

The Polaris acquisition looks important here. It contributed £16.1 million of Advisory revenue in FY 2026, and management says it is opening doors to broader work with insurance clients. That is encouraging because the best acquisitions do not just add revenue – they create cross-selling opportunities across the whole platform.

Operationally, the appointment to the Metropolitan Police Pension Scheme is another useful proof point. It covers 80,000 members and will go live in the latter part of FY 2027, becoming XPS’s largest public sector client.

XPS risks and watchpoints – what could investors reasonably worry about?

This was a good update, but not a flawless one. Adjusted EBITDA margin slipped to 28.8% from 30.1%, partly because last year’s McCloud work was high margin, and partly because of higher employer National Insurance costs and investment in Insurance Consulting.

Costs are clearly moving up. Operating costs increased 15% to £194.0 million, driven by headcount growth, pay inflation, bonuses, National Insurance and the full-year impact of Polaris.

None of that looks alarming, but it does mean XPS needs to keep delivering strong revenue growth to protect margins. So far it is doing that, but this is something to monitor.

What the XPS full-year results mean for retail investors

Overall, this reads as a positive set of results. Revenue growth is strong, underlying demand looks healthy, cash generation is robust, the balance sheet is comfortable, and the dividend is still moving higher.

The only real wrinkle is that the statutory profit and EPS lines look worse than the underlying business trend because of acquisition accounting. That can put off casual readers, but in this case the trading picture looks stronger than the headline statutory decline suggests.

In short, XPS appears to be benefiting from a structural shift in UK pensions rather than a temporary boom. If management is right about demand from run-on, buy-out, risk transfer and insurance consulting, there is a decent runway ahead. For investors, this looks more like a steady compounder than a dramatic turnaround story – and there is nothing wrong with that.