XPS Pensions Group

Website: XPS Pensions Group
Index: FTSE 250
EPIC: XPS
Supersector: Financial Services
Sector: Financial Services
Subsector: Investment Services
Market Cap: £718.83M
Payout Frequency: Semi-Annual

XPS Pensions Group Dividend Analysis and Summary

Key Dividend Details

Context from Results

H1 FY26 adjusted revenue up 13% to £128.5m; adjusted EBITDA up 8% to £33.4m (margin 26.0%)
Adjusted fully diluted EPS rose 9% to 9.7p; statutory diluted EPS fell to 4.0p due to exceptional/post-acquisition remuneration and amortisation
Net debt increased to £62.2m primarily due to Polaris acquisition and EBT share purchases; leverage 0.88x (undrawn RCF headroom £47m; facility to March 2029)

Analysis: Sustainability and Growth

Coverage: Interim DPS of 4.1p is covered ~2.4x by adjusted diluted EPS (9.7p) for H1, consistent with dividends being based on adjusted, not statutory, earnings. On a statutory basis coverage is thin, but the company explicitly frames dividends against adjusted metrics.
Cash generation and balance sheet: H1 operating cash flow of £15.5m versus a planned interim cash outflow of ~£8.4m looks manageable. Despite higher net debt, leverage below 1.0x and ample facility headroom support ongoing distributions.
Earnings trajectory: Mid-teens revenue growth (8% organic; 12% organic ex-McCloud) and 9% growth in adjusted EPS underpin the 11% DPS increase. Margin dipped due to investment and NI headwinds, but the pipeline (public sector wins, insurance consulting) supports medium-term growth.
Capital allocation: The group is balancing a progressive dividend with M&A (Polaris), growth investment, and EBT share purchases. Lower share count aided adjusted EPS, indirectly supporting DPS growth.

Structural Changes and Other Considerations

M&A: Acquisition of Polaris (Feb 2025) accelerated entry into Insurance Consulting; integration progressing and opening cross-sell opportunities. While it lifted net debt and interest expense, it broadens recurring revenue streams, supportive for future dividends if execution continues to plan.
Contract wins: Long-term administration mandate for the Metropolitan Police (~80,000 members) and continued migration to proprietary Aurora platform enhance revenue visibility and potential operational efficiencies over time.
Share capital actions: Ongoing EBT share purchases reduce free float cash but support per-share metrics; no share consolidation announced.

Risks and Flags

Statutory vs adjusted earnings: Material exceptional/post-acquisition remuneration and acquired intangibles amortisation depress statutory EPS; reliance on adjusted metrics for dividends may be scrutinized if exceptions persist.
Debt and interest costs: Net debt up 178% YoY; higher finance costs (+62%) modestly pressure coverage if growth slows. Current leverage is comfortable but bears monitoring with further M&A or rate moves.
Project-related volatility: Prior McCloud project was a one-off; management highlights strong underlying demand ex-McCloud, but any slowdown in project work could affect margins and cash conversion.
Board commentary: Going-concern scenarios explicitly note dividend reduction as a potential lever in a severe downturn—low probability per management, but a reminder that payouts are discretionary.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
09/01/2025	07/02/2025	Interim	3.70p	GBX
21/08/2025	22/09/2025	Final	8.20p	GBX

Total (Annual Dividends Per Share): 11.90p

Dividend Yield = Annual Dividends Per Share (11.90p) ÷ Share Price (346p) = 3.44%

Ex Dividend Date	Payment Date	Type	Amount	Currency
08/01/2026	06/02/2026	Interim	4.1000p	GBX
21/08/2025	22/09/2025	Final	8.20p	GBX
09/01/2025	07/02/2025	Interim	3.70p	GBX
22/08/2024	23/09/2024	Final	7.00p	GBX
11/01/2024	05/02/2024	Interim	3.00p	GBX
24/08/2023	21/09/2023	Final	5.70p	GBX
05/01/2023	02/02/2023	Interim	2.70p	GBX
25/08/2022	22/09/2022	Final	4.80p	GBX
06/01/2022	03/02/2022	Interim	2.40p	GBX
26/08/2021	23/09/2021	Final	4.40p	GBX
07/01/2021	04/02/2021	Interim	2.30p	GBX
27/08/2020	24/09/2020	Final	4.30p	GBX
09/01/2020	06/02/2020	Interim	2.30p	GBX
29/08/2019	26/09/2019	Final	4.30p	GBX
10/01/2019	07/02/2019	Interim	2.30p	GBX
30/08/2018	27/09/2018	Final	4.20p	GBX
28/12/2017	08/02/2018	Interim	2.10p	GBX
31/08/2017	28/09/2017	Final	0.73p	GBX

Year	Interim	Final	Currency	Total	Change
2024	3.000	7.000	GBX	10.000	19.040
2023	2.700	5.700	GBX	8.400	16.660
2022	2.400	4.800	GBX	7.200	7.460
2021	2.300	4.400	GBX	6.700	1.510
2020	2.300	4.300	GBX	6.600	0.000
2019	2.300	4.300	GBX	6.600	57.140
2018		4.200	GBX	4.200	48.400
2017	2.100	0.730	GBX	2.830

Number of Shares:

Payment	Paid	Amount
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