The year to March was “a very busy and enjoyable one” for pensions consultancy XPS Pensions (XPS), according to co-chief executive Ben Bramhall. His opposite Paul Cuff points to a “favourable” market backdrop and says the group can “look forward to the future with optimism”.
These aren’t the sort of comments which typically precede a 40 per cent share price crash. But that’s exactly what greeted XPS’ first set of full-year results since its acquisition of Punter Southall’s pensions business. Speaking shortly after the sell-off, Mr Cuff wondered if weak liquidity and low trading volumes might explain why the shares had dropped to almost a third below the 2017 IPO price.
In the event, it appears investors were spooked by an outlook which promised only “mid-single digit percentage” revenue growth this year, and a mention of a £2m increase in the annual cost base. The effect of the latter will “temporarily impact” profit growth.
Otherwise, trading looks resilient. Strip out the impact of the acquisition, and organic revenue still rose five per cent. Leave it in, and the operating profit margin climbed from 7.5 to 11.8 per cent. So did the margin on XPS’ £80m loan facility, though absent further M&A directors expect leverage to unwind this year.
Prior to these numbers, N+1 Singer was forecasting adjusted earnings of 10.9p per share for the year to March 2020, rising to 12.2p in FY2021.
| XPS PENSIONS (XPS) | ||||
| ORD PRICE: | 99p | MARKET VALUE: | £ 202m | |
| TOUCH: | 99-100p | 12-MONTH HIGH: | 192p | LOW: 99p |
| DIVIDEND YIELD: | 6.7% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 78p* | NET DEBT: | 33% | |
| Year to 31 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 49.5 | -14.1 | -13.2 | 0.7 |
| 2018 (restated) | 62.7 | 3.3 | 7.7 | 6.3 |
| 2019 | 110 | 11.4 | 5.7 | 6.6 |
| % change | +75 | +248 | -26 | +5 |
| Ex-div: | 29 Aug | |||
| Payment: | 26 Sep | |||
| *Includes intangible assets of £208m, or 102p per share. | ||||
