Xps Pensions Regulatory News (XPS)

21 September 2022

XPS Pensions Group plc

("XPS" or the "Group")

Acquisition of Penfida Limited and Trading Update

Acquisition of Penfida Limited

XPS Pensions Group plc, is pleased to announce that it has acquired the entire issued share capital of Penfida Limited ("Penfida") the leading independent corporate finance and covenant advisor to UK pension funds (the "Acquisition") for a total cash consideration of £11.6 million, comprising £7.9 million on completion and contingent deferred consideration of up to £3.7 million, subject to business performance and the continued employment of key employees. The Acquisition includes all staff and contracts within the business and constitutes a Class 2 transaction for the purposes of the FCA's Listing Rules.

Penfida was established in 2005, with the mission of providing corporate finance advice mainly to pension fund trustees, both in respect of complex corporate transactions as well as regular covenant advisory work in connection with pensions 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 more than £300 billion of assets.

Under the pensions regulatory framework, all pension scheme trustees require actuarial advice, investment advice, administration services and advice about the strength of the sponsoring employer (referred to as the 'employer covenant strength'). XPS has a strong offering in the first three of these areas, and a successful and growing employer covenant practice. 

Penfida's business will be combined with the existing XPS covenant team, significantly boosting capability and giving critical mass in this important area. The acquisition will enable 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 capabilities of XPS. The business unit will be led by the current Penfida management team, including Senior Partner Paul Jameson, integrating within the wider XPS Group over time.

Penfida Limited generated profit before tax of £0.9 million in the year ended 31 March 2022. This is a statutory figure which is unadjusted for company-specific policies regarding profit distribution. The Acquisition is expected to contribute to the Group approximately £5 million of revenue per annum at a 25% adjusted EBITDA margin. Gross assets were £3.6 million at 31 March 2022.

Paul Jameson, Penfida Limited Senior Partner, said: "We are delighted to be joining the XPS family, where the culture and values of the firm align with our own. As part of XPS we will be able to continue to provide independent advice to our clients and we will benefit from ongoing investment to enable the combined business to grow and thrive into the future."

XPS Trading Update

With the high levels of demand for XPS's services and increased client activity, the Group has generated strong organic growth in the first five months of our financial year, with revenue up 12% against the equivalent period in 2021.

Whilst relatively early in the financial year, the continued resilience and predictability of the XPS business model (including inflation-linked revenues) alongside the strong pipeline of activity for both longstanding and new clients is very encouraging. Combined with the Acquisition, the Board are confident of achieving full year results slightly ahead of their previous expectations of the year.

Paul Cuff, XPS Pensions Group Co-CEO, said: "Penfida is a business that we have known and admired for a long time. We have seen first hand the high quality service they provide when we have worked on clients we have in common. We are excited to welcome their fantastic team. Their expertise complements our existing strong and growing covenant business and means we can offer a market leading service to current and future clients across the entire spectrum of services that they need.

I am also very encouraged by the revenue growth we are experiencing at XPS across all our divisions, as we deliver for our clients who have needed our support against a backdrop of significant levels of regulatory change and market turmoil. I am excited for the prospects of the Group and look forward to updating shareholders as the year progresses."

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For further information, contact:

The person responsible for making this announcement is Zoe Adlam (Company Secretary).

 Notes to Editors

About XPS Pensions Group

XPS Pensions Group is a leading pension consulting and administration business focussed on UK pension schemes. XPS combines expertise, insight and technology to address the needs of over 1,500 pension schemes and their sponsoring employers on an ongoing and project basis. We undertake pensions administration for over 968,000 members and provide advisory services to schemes and corporate sponsors in respect of schemes of all sizes, including 51 with assets over £1bn.

In 2022 XPS Pensions Group was awarded Actuarial/Pensions Consultancy of the Year, Investment Consultancy of the Year and Third-Party Administrator of the Year at the UK Pension Awards. This is the first time any business has won all three categories outright in a single year. 

XPS Pensions Group has also been awarded Actuarial/Pensions Consultancy and Third-Party Administrator of the Year in three of the last four years and the Investment Consultancy of the Year for the last two years at UK Pension Awards. XPS was also highly commended for Technology Innovation of the Year in 2022 and Third-Party Administrator of the Year and Education and Thought Leadership Initiative of the Year in 2021.

XPS Pensions Group has also been ranked Gold in the Employee Engagement category and Silver in the Employee-Centric Company category at the 2020 UK Employee Experience Awards. XPS Pensions Group also won two awards at the 2020 Business Culture Awards winning Best Business Culture Transformation Initiative and the overall Gold Award winner for Business Culture.

www.xpsgroup.com