- First half revenue up 23%
- Full year ahead of prior expectations
- Positive regulatory backdrop
Pension consulting and administration firm XPS Pensions (XPS) jumped 9% to a new all-time high of 334.4p after reporting strong first half revenue growth of 23% and raising full year guidance.
The shares are up 99p or 42% so far in 2024 and 66% over the last 12 months after notching up another year of 20% revenue growth in the year to March 2024.
XPS floated on the stock market in 2017 at 139p per share, which means the shares are up around 140% since the company’s IPO (initial public offering). The FTSE 250 firm has also paid out 52.5p in dividends over those seven years.
WHAT DID THE COMPANY SAY?
Co-CEO Paul Cuff commented: ‘We grew strongly in the two prior years, so to achieve further like-for-like growth of over 20% in addition to that is very pleasing.’
Notwithstanding tough second half comparisons the board said it is confident of achieving full-year results ahead of previous expectations.
For the six months to the end of September 2024, revenue from continuing operations increased 23%, driven by client demand, expansion of services and the lagged effect of annual price increases.
Pensions administration was particularly strong, registering growth of 40% compared with the first half of 2023, driven by ‘significant’ project work for public sector clients, the onboarding of new clients and inflationary price increases.
The actuarial business grew 17% year-on-year while the pensions consulting division experienced a 2% drop in revenue as demand normalised following 40% growth in the prior two years. The SIP (self-invested personal pension) business saw continued double-digit revenue growth.
The company noted that regulatory change continues to act as a tailwind for the overall business which it expects to support demand for the group’s advisory services.
BUDGET UNCERTAINTIES
Analysts at Canaccord Genuity said first half growth implies full year revenue of £113 million, representing 51% of their forecast.
They said: ‘Given the upcoming UK budget (30 October), we believe it sensible to err on the side of caution and wait for clarity on this event before refining forecasts. However, all things being equal, we see circa 2% to 3% upside risks to our financial year 2025 revenue and EPS (earnings per share) forecasts.’
