XPS Pensions Group (LSE:XPS) — Interim Results 2021

0:01 Good afternoon, ladies and gentlemen. Welcome to the XPS PENSIONS GROUP PLC Interim Results twenty twenty one Investor Presentation. Throughout this presentation, investors will be in listen only mode. Questions are encouraged to be submitted anytime via the Q and A tab situated on the right hand corner of your screen. To click q and a, scroll to the bottom, type your question, and press send. Company may not be in a position to answer every question received during the meeting itself. However, the company review all questions submitted today and publish responses where it's appropriate to do so. These will be available via your investment company dashboard, and you'll be notified once they're ready for your review.

0:32 I'd also like to remind you this presentation is being recorded. Before we begin, we'd like to submit the following poll. I'd now like to hand you over to Snehal Shah, CFO, Paul Guff, co chief executive. Good afternoon. Good afternoon, everyone. Pleasure to be here. So we're gonna start with an introduction of who we are. So XPS PENSIONS GROUP PLC, we're a pensions, investments, advisory, and administration business. We are listed in The UK on the main market, and we have existed in in different guises and different sort of names over the last forty years. We employ more than 1,400 people across 16 locations in The UK.

1:18 We have grown revenues each year since we have since we have existed. And as you could see at the bottom of that slide, we have won numerous industry awards. And I'll just hand over to Paul to just talk a bit more detail about exactly what we do. Thanks, Nel. So here on the page is the core services that we provide. And as Nel said, we do all things workplace pensions. So we're not a a pensions provider directly ourselves, but we provide all the services to employers and pension scheme trustees to run workplace pensions, in The UK. Now, in terms of our clients and the services we provide, predominantly, our clients are pension scheme trustees.

2:04 And, many of our clients, a lot of our revenues come from providing support to trustees, particularly defined benefit schemes. We do do other workplace pension arrangements too, but that's a large proportion of our revenue. So I'll start by concentrating, a little bit on that. On the page in front of you, you can see the services we provide. And in plain English, on the right hand side, we employ actuaries who answer the question of, is there enough money in the defined benefit pension scheme to provide everybody with all of their benefits into the future? And our investment consultants who work very closely with the actuaries help clients decide where to invest the money that they do have to pay people's pension promises out over the decades indeed that there are, the payments are going to then be made into the future. Now that's a lot of very sophisticated financial modeling.

2:53 The people that do that type of work are very highly qualified, pass lots of exams and so on, and are often drawn from mathematical engineering science type backgrounds from universities and then have a long career with us as a as actuaries and investment advisers. On the other side of the page, it's the very human side of this that we also do the administration of pension schemes. So, literally, we track the members. We do we run all the databases. We do the calculations of what members are due when, and we make sure that we actually physically put it into payment. And we literally have teams of people that will answer phone to people who know very little about pensions, but have an entitlement and will want to ring us up and ask for quotes or questions about what they've got and so on. And, again, it's very highly skilled administration. It's done using a lot of technology, and our people are highly qualified, pass exams to become specialist administrators in this area too.

3:44 And what we're fundamentally all about is making sure that these benefits all get paid. Whenever you see new stories in the press about things like Philip Green Carillion type scandals where there have been corporate challenges and pension scheme members have not necessarily got everything that they were they were due. We are in the business of trying very hard to make sure that they do get what they are due. And world class administration is very important, but all of the deep financial analysis and support we then provide to the pension scheme trustees to try to make sure their schemes are protected in a good position. That's that's fundamentally what we are about. So having said that, what do we actually do on a day by day basis, and how do we how do we get paid for the activities? Well, here's a very simple schematic of what we might do for a typical client.

4:31 And you'll see it's a three year cycle for reasons that will become quite clear. But the first thing to say is a huge amount of what we do is very, very visible into the future is repeat and recurring in nature. So the delivery mechanism for us seeing our clients is typically trustee meetings, which might be once a quarter. And think of these as, like, very big board meetings at which all of the business of the pension scheme is discussed, which could be from one individual member's request to take early retirement for ill health through to where to invest £500,000,000 of assets, in a post pandemic world and everything in between. So big meetings that are in the diary a long way in advance, highly visible. We will know today of a November 21 meeting. We'll already have November twenty two's meeting in the diary. We run to that type of corporate calendar with a huge amount of visibility.

5:19 Now in between those meetings, we do lots of work and turn up and talk to our clients about all the research and analysis that we've done to make sure that they are staying on top of things. But then there's also a whole heap of tasks that just year in, year out, every pension scheme must do. So every pension scheme needs to repair an annual report and accounts. There's what's called an annual funding update done by the actuary. It's health check every year that's done. Members get a communication every year about the benefits they have. The company that's the ultimate sponsor of the pension scheme needs to put something in its accounts and so on and so forth. So we know that we're going to do all these activities every year, and there's a sense of turning the handle. It's high high quality technical work to do all of this stuff, but it's very visible, very repeat, very recurring at its core. Then once every three years, you do a very deep dive into the financial position of the pension scheme, and that involves typically when you might reset the contributions, the cash that's going in, other matters, and negotiate between the trustee and the company about that. Again, you'll see high profile big employers publishing their announcements about the outcome of those reviews. Typically, say, happen once every three years.

6:25 And we also might do a review of the investment strategy at that time, albeit fairness, we are continually monitoring investment markets on behalf of our clients all year round. Now at the bottom, it's a very important line in orange that says, look. Regulatory change in our market is very good for us, for our business. So our clients are constantly confronted by huge amounts of regulatory change, and we'll say a bit more about that in a minute. But every time that happens, our clients need to work out how to respond, what to do to change, to adapt, and move forward. And there's a huge amount of regulatory change working its way through our industry at the moment in response to all sorts of things that are going on in the world around us. But that keeps us extremely busy, and we are providing very valuable support to our clients in helping them navigate their way through.

7:13 Now how do we get paid? We are, first of all, for the very repeat recurring work, we often do that to a schedule of work that we get paid a fixed fee for. The very predictable stuff, we know how much we should charge for that year in and year out, so we charge the same amount typically with inflation linkage and an open ended contract. So a lot of what's in the middle of this slide, we will just do again and again and again for clients. And if they're very happy with our service, which they typically are, we will get paid a very predictable sum to keep doing it. And that sort of bulletproof core of the business is very important. Now for consulting projects or more discretionary projects to try to improve the position of pension schemes, we're a little bit like accountants, tax advisers, lawyers that we then have a rate card. And the amount of time that we spend, will communicate to clients at the end of a period and say, this is the time on the clocks.

8:02 Our most senior partners who are very experienced,

8:05 very qualified people will have charge out rates of £5,600 an hour or more in order to provide that input and insight. And clients will pay us on a per hour basis just like they would, you know, a law firm or a financial adviser and so on more widely. So we're a very typical professional services business like that, albeit in the niche area of pensions. Now we work on open ended engagement letters. There is no a lot of what we do is analogous, if you like, to sort of auditors in that we can see how much we're going to be doing each year into the future, but there's no equivalent of of of mandatory rotation. If we have happy clients, we keep our clients for a very long period of time. And as I've explained, we tend to put inflationary increases through. They're often written into our contracts, and that makes us, you know, very, predictable business, in terms of the revenues that we will then get. It is, I think, worth bringing at home that we are a pretty good stock, therefore, in volatile markets. We our our progression in the world is quite independent generally of the wider economic cycle. And you will have seen, we'll talk about the moment, strong growth in our revenues even through the pandemic.

9:12 And indeed, we paid our dividend throughout and and have announced recently, of course, that we're even increasing it. So we're a pretty good stock for the volatile times that you, you know, you see in the wider world at the moment. Now you might be asking yourself, well, this is great, but how do you grow? And we will get to that in a moment. This core bulletproof part of our business is great. How do we add more clients into the mix if in general you keep them for a long time? I will get to that in just a moment. But before I do, let let me hand the reins to Snail.

9:41 So this is a bit about the market that we operate in. So as Paul said, majority of the work that we do is is advising on defined benefit pension schemes. And there are, within just the private sector, about 5,300 defined benefit pension schemes. This is not including public sector, which has its own significant number of defined benefit pension schemes. And what the the market that we operate in is dominated by three players here. And and I appreciate some of you won't be able to see the graphs, but we will circulate the slides. It's Mercer, Aon, and WTW. And and the the graph shows the revenues of all of the firms that that earn revenues from what we do.

10:36 And it is worth £2,000,000,000 of revenue a year. So at 130,000,000, we are circa six six and a half percent, off that market, and we're taking market share as as we'll come to that in a second. Then the the other part of, the pensions market is, defined contribution. Now this is the most prevalent pension scheme arrangements that you will see. Quite a few of you might be in a defined contribution scheme. Paul and I are in a defined contribution pension scheme. And the market is is also going through a significant amount of growth for this. There is a lot of regulatory change that Paul would talk about even in the DC space.

11:26 And a lot of the companies look to invest in a cost efficient manner for the pensions, and that's when they go to something called master trusts. So we have our own master trust, and it is only one of 37 approved master trusts in The UK market. And the master trust market is set to grow at about 28% CAGR into the future. So another significant opportunity, for us to grow, our our services. Alright. So here's our strategy on a page, and it's quite simple, intentionally so. We benefit from regulatory change first and foremost. So we grow whenever there is a lot going on around us in the market. And at the moment, there's more regulatory change than probably we've had for fifteen to twenty years.

12:20 When you've seen the news stories of things like the infamous Philip Green, I pantomime villain, I make no comment on the specifics. But when that's on the front page of not just the business pay papers, but but but the tabloids too that, you know, BHS collapses with a big hole in the pension scheme, and somebody seems to have taken a lot of dividends out of the company along the way. A very parallel story, by the way, Carillion and many more besides. The government is currently regulating to say we cannot have outcomes like that. We have a very powerful pensions regulator in our industry who is only just literally in the last sort of couple of months following a pensions act going through parliament got significantly stronger powers to prevent outcomes like that in the future, and we're about to go through a significant overhaul of the funding regulations for pension schemes, I e, how much money they should have in them on an ongoing basis.

13:10 All of our clients are affected by that, and all of them will need tailored advice for that. And that's actually coming next year. That's not even really hit us in terms of the level of busyness that we have at the moment. Another simple example, something very technical, and I shan't trouble you with what it is, but it's called GMP equalization. And this essentially is a court case from a few years ago that looked at the way a very small part of a pension benefit is calculated and not calculated equally between men and women and hasn't been for the last twenty, thirty years in the defined benefit world. And the court case found that it might be very small. It might seem be seemingly immaterial, but it's not okay, and it's against the law. So every pension scheme needs to rectify this and go back and correct the way it's treated men and women unequally over the last few decades. And that is a vast amount of work, and we are just beginning to get our teeth into doing all of that to rectify things for our clients. So these are simple examples of where change regulatory change is quite challenging for our clients, but we are here to help them.

14:14 And they have no choice but to take that help, in order to navigate their way through. Now the second part of this is about expanding what we do. So, this can be a simple thing where we might be the

14:26 administrator, and we provide a fantastic service, and it might open the door to us becoming the actuary. I should say in my introduction, we don't necessarily provide all of these services in a bundled way. Often, we will provide individual services, and our competitors will also be doing that, and clients will see more than one of us. Now we just give us an opportunity to take more, on an individual client. But, actually, this is more about us developing innovative, interesting solutions and not just sitting on our hands and watching the defined benefit scheme unfold for the next twenty or thirty years, but actually trying to improve things to take risk off the table, to provide members with better options and better outcomes. And, again, expanding what we do in those areas can again lead to additional revenues where we're really adding value for our clients. Now the third one is growing market share, and this is getting brand new clients in.

15:15 If those first two are both on clients that we already have, this is about winning what we would call new logo clients. Winning So clients where other people service them at the moment, and we have no relationship but taking them onto the books of XPS. And we've had an increasing amount of success in that area. And most recently, just a couple of weeks ago, we announced we've just been appointed in a very high profile way by BT PLC to be the lead adviser to them. They have the largest private sector pension scheme in The UK. So that is a terrific appointment for us, and I'll be happy to talk a little bit about how we win such things. But fundamentally, it is about independence. It's about energy and agility, and it's also about bringing very good technology to bear. And the last part of the strategy then is m and a, and that has been a core part of our strategy for a number of years.

16:05 Indeed, the business that listed a few years ago was Affinity PLC. We did an acquisition in order to create XPS and be the scale player that we now are. That sort of top of the mid tier as the clear alternative to the big three phones in our market. And we've also done a number of smaller bolt on track transactions along the way as well, which have really augmented what we're able to do. And I suspect we will probably do further m and a into the future where the transactions are are right for us. Should I stress we don't feel that we need necessarily to do m and a, but it could be a core part of our story into the future. We we really do have all of the capability and strength that we need in our business already, but but but we shall see if other opportunities arise in what is quite a fragmented market.

16:54 Now the all of this is underpinned by being a brilliant place to work, and that's absolutely mission critical for us. And we do win awards for this. So we won the gold award at the UK Business Culture Awards last year, which was an astonishing thing. We were actually one of 90 firms that were finalists at a very big black tie event. We won our category, which was around our culture and the way that we'd handled the pandemic. And then we actually won the gold award in the entire event of all the 90 finalists that they were in all the categories across the whole event. And we were up against people like Lloyd's Banking Group, Volkswagen UK, and all sorts of SMEs and more medium sized companies like us. But we were exceptionally proud of that, and it and it goes it's really, really important.

17:39 And it it puts us as a people business, you know, in the right place to both recruit and retain the people we've got in a competitive market. And the final aspect, of course, is technology, and we do use technology in very smart ways. We have particularly, we have market leading

17:55 software in the way that we deliver our actuarial investment advice that is proprietary to us and has been a real differentiator in our ability to go out and bring insight in new business opportunities and help us to win new clients. And we will always continue to invest in technology to be right at the cutting edge and and leaders in our market.

18:17 So in terms of why invest in in XPS as a company, a lot of the the investment criteria we've covered so far, but let me reiterate a few of them. So there is this very strong demand for our services, and and we have, as Paul said, repeat recurring revenues, and we have visibility over that. So greater than 90% of our revenues are repeat recurring each year. We're highly cash generative. We have OCF conversions or operating cash flow conversion of more than 90%. So more than 90% of our the EBITDA gen that we generate converts into cash, which allows us to be, a a regular, and a high dividend paying company. So our dividend policy at the moment is to distribute two thirds of our profits after tax.

19:14 And as Paul said, we were we were probably a handful of companies last year during the pandemic that continued to pay its dividend and not only pay the dividend, but actually increase it slightly. We have significant regulatory tailwinds, which help us be busy and and growing for the medium to the longer term. And as Paul said earlier, that we are a very resilient business. We grew revenues by 9% during the pandemic. And in the half year that that we just reported on, which we'll come to, we've grown revenues 10%, and all of that is organic. We have a strong financial track record as the as the graphs they they show that we have a CAGR of about 27% revenue growth and a 10% CAGR on EPS growth.

20:03 And then in in terms of the five equity analysts that cover us, they all have us on a very strong rating and a and a strong sort of buy recommendation. And then moving on to sustainability, or ESG, which is very, very important and, a hot hot topic for a lot of the stocks. Now we have very strong ESG credentials, and I'm I'm

20:34 apologies that you can't read all of this. But we have five key pillars for our sustainability strategy, and that is that is around the five key stakeholders that we we have. So it is our employees, our clients, the communities that we operate in, our environment, and also our governance standards. So from a governance standards, being a listed company, obviously, we have we have to abide and and comply with high levels of governance standards. We are an employee centric business, and our employees vote on various things every year. And one of the key questions that we ask is, would they recommend XPS as a good place to work? We have high engagement in that, in that survey.

21:22 Last year, that, that question, had a 94%, support rate. This year, it's gone up to 95%. So 95% of our employees think that we are a good place to work for. In terms of our clients, we advise on investments of pension assets in exceed in in excess of a 140,000,000,000. So we have a important societal role to play in terms of allocation of the those capital flows into ESG responsible investments. We, in terms of the environment, we we recently announced that we have become a a net carbon neutral business, and that is that is across our entire value chain. So you will hear of companies claiming operational net carbon neutrality, which means that they have been able to offset their own emissions in terms of gas or electricity consumption and travel.

22:23 What we've done is we've also gone a bit further and and offset our scope three emissions. So scope three means the emissions within our supply chain. And what we the we've measured our emissions in a pre pandemic year, I. E, when people weren't working from home and our office were at full capacity. So in effect, you we could potentially claim that we are a net carbon negative organization right now as we stand.

22:52 That's not the end of it for us. We are continuously, putting in place various protocols and policies to reduce our carbon footprint on a permanent basis. In terms of our communities and and and people that we serve more generally, we we do have a very important societal purpose because we we exist to shape the the financial well-being of millions of people by ensuring that they get the right pensions outcome. I hand over to Paul to go through some of the highlights for this half year. Thank you, Snail. Sorry. I had a trigger finger there. Took us on one one quick. I apologize, by the way, that have not invested in a blind, and there's a certain moment in the day where the sun shines on me. So I appreciate I look a little odd, but I shall I shall battle on. In terms of, highlights for the year, we we've just announced results for a half year that was really, really terrific, and we're very, very pleased with it.

23:50 We we grew our revenues by 10% entirely organically in the period, and that's actually against a pretty strong comparator from the prior year. It's not from a depressed number at the start of the pandemic. As now said, we've kind of grown uniformly throughout. 10% is the highest organic growth we've reported since listing, and we're very, very pleased with it. It is driven probably, there's two things that that have happened in the half year to to highlight. Firstly, we've grown that revenue, almost entirely by being very, very busy delivering valued services to our clients rather than through winning new clients and taking market share in this particular half. And that's because during the pandemic, the ability to take market share and win other people's clients was a little bit restricted because people were reluctant to change their advisers, particularly at the beginning of the pandemic when nobody quite knew what would happen. So we haven't got lots of new clients coming on stream fueling that growth. It's really the products and services and offerings that we've developed and business around things like GMP equalization that I referenced earlier.

24:54 However, really happily, what did happen during the half is our new business pipeline bounced right back and is now at the level it was before the pandemic. And in the second half, particularly of the of the period, we really started to have a lot of success of winning new clients. Again, BT being probably the highest profile one, but we won another a a number of other very good mandates really across the board, across our administration business and across our advisory business as well. And and that's really heartening because that will continue to fuel some growth then going forward. We we weren't about, to give you an indication of the numbers, about £3,000,000 worth of annuity income that we will now deliver from the clients that we won during that half. So on an annualized base basis, you know, that's not a not a bad growth rate from that given we grow our revenues from other sources on existing clients and through passing on inflation as well. So that was very heartening. We also just had a very good period really for our brand. We won industry awards that really are quite important in terms of market positioning. We won actuarial consulting firm of the year and investment consulting firm of the year at The UK professional pensions awards very recently.

26:07 And those announcements that hit the market in September time, you know, with BT being announced in the market shortly after, us being entirely carbon neutral and that announcement going out very recently, there there's quite a bit of a buzz we think in our industry about how we're getting on, and people are quite interested to talk to us, about what XPS is up to. So that's just generally really quite exciting times for us, I would say. In terms of other other things that have happened, of course, snail touched on it, but we are very proud of being ESG, strong on ESG, and being carbon neutral, is a big thing and a very important thing, not just because it we sleep at night better knowing we are doing our bit, but it's also commercially very important. I think it's something that people will demand of us.

26:52 And, you know, a business that is very valued, so that like us, it's a very easy decision to do it. But I suspect there is wider commercial benefit, and that is an important factor when we come to talk to the outside world and go and pursue new opportunities. So just in in terms of other financial highlights, as Paul said, we've grown our revenues 10% in the in in this in this half year, and all of that was organic growth. And that's the highest level that that we've achieved in a in a half year period since listing as as a PLC. That 10% revenue growth has translated into an EBITDA growth of 5%.

27:39 Now, normally, we would expect to grow our revenues slightly faster than our costs. That hasn't been the case in this half year because we have recruited to to service the demand from our clients and also be ready for, you know, winning clients like BT, etcetera, which will fuel, the revenue growth in the future. In terms of, what that means to the bottom line, the earnings per share, the adjusted diluted earnings per share is one of the key metrics that the market assesses on, and that's grown 5% to 4.5p. And that allows us to pay a dividend interim dividend of 2.4, up 4% year on year. So the dividend policy of two thirds of our adjusted profit after tax, We pay a third of that in the interim and then two thirds of that as as a final. And the final thing to note here is our our leverage. So our net debt over EBITDA, that is at 1.87 times. And our policy is to be between one and a half to two times. So we're not a company that has a a high amount of debt, and but we have recently negotiated a new four year revolving credit facility for a 100,000,000 with four different banks. So it gives us the financial flexibility to to to grow operationally and as well as invest in m and a as well.

29:11 I'll pause there, and I'll hand back to the IMC host to, just run through, the mechanics of asking questions, and then we'll take the questions. Sneha, thank you, Paul. Again, thank you very much indeed for your presentation. Ladies and gentlemen, do please continue to submit your questions using the q and a tab situated in the right hand corner of your screen. Click q and a, scroll to the bottom, type your question, and press send. But just while the team take a few moments to review those questions submitted already, I'd

29:35 like to remind you that recording the presentation along with a copy of the slide and the published q and a can be accessed via the investor dashboard on the Investor Meet company platform. I'd also like to remind you that your feedback is important to the company. And immediately after the presentation has ended, you'll be redirected for the opportunity to provide your feedback in order that the company can better understand your views and expectations. Paul Snail, thank you very much indeed for the presentation. We have got a couple of questions that have come through from investors. So if I may just hand back to you just to click on that q and a tab and where appropriate to do so just read out the question and give you a response, please. Sure. Thanks. So this question says, what's the typical criteria for M and A that we look for? Paul, do you wanna take that one? Yeah. Sure. So we we we look we we characterize, as I said, m and a to in two different two different categories, really. Bolt on acquisitions first.

30:24 So bolt on acquisitions would typically be deals that we can finance easily directly from our own cash flow that are typically going to be quite small businesses. They may be owner managed businesses, or they may be noncore divisions elsewhere. And they need to be things that we can integrate easily that we can typically pay a a good price for, perhaps a lower multiple significantly than we trade at unless we get a nice little bit of accretion from doing that. But importantly, they also need to do something strategic for us. A really good example would be we acquired a a unit called the Kia Pensions Unit, which is from Kia, the the construction, motorway firm, etcetera, that you it might surprise you to know they did a bit of public sector pension administration. It was clearly noncore to them, a bit of an accident of history.

31:10 And we acquired that small business unit turnover of around 4,000,000 a year, something like that, for, first of all, you know, a good price, but but mostly because we were the right home for the business and a good transaction for us. Now what was strategic was that unit does a lot of work in the public sector administration space, and there's a bit catch 22 there that if you haven't got some in the public sector, you you struggle to get more. You need to be on certain frameworks and so on in order to get it. And that introduced that to our group. And we have integrated Keyur very successfully, and over the last couple of years then been able to win all public sector administration work off the back of having done that little transaction. So good deal in its own right financially, but then importantly, adding something a little bit strategically too. We've done a couple of other deals as well that, you know, I shan't go into all the details on, but similar kind of fact patterns to what I've just described.

32:01 Bigger bigger deals, transformational deals, we did one before to create XPS. I think we're reaping the benefits of that. You can see we're now at the very top end of the mid tier of firms up against the big three. And I'll come on to the question that we've had in a moment about how we how we we compete against firms like that. But we've already done that, and that's made us what we are today. I don't think it's impossible that we will take part in wider consolidation of some of the bigger firms beyond what you might characterize as a bolt on, but it would absolutely have to be the right transaction for us, for our shareholders, for our clients, for our staff. And and we would need to look very closely, at whether that could generate a better return, than simply carrying on with what we're doing. And when we're achieving what we are at the moment winning in the market as as well as we are, you know, we'd have quite a high hurdle to get over and say that that was the right thing for us to do. But we will absolutely take part in the discussions and dialogue in our industry as that consolidation potentially gathers a little bit more momentum.

33:01 I think that leads me straight into question two, actually, Snail. Shall I shall I just carry on? Yeah. I was just gonna say, may maybe maybe if I put the slide on which shows the competitive landscape. There we go. That's very helpful. So if if you can just about see, there are three big firms in our market that are Mercer, which, of course, is part of Marsh McLennan, Willis Towers Watson, and Aon. Now all three of them are more famous as global insurance brokers fundamentally, and they're all big global multinationals. We, of course, are very different to that. We are an independent UK only business with a very, very strong focus on what we do. And the bars are like for like, so they are dominant players in our market with a lot of market share doing the things that we've been describing.

33:50 And us and other mid tier firms that you can see there compete with them. And if you ignore Capita a little bit, who are the next bar as they do an awful lot of administration work and so on, the better comparisons are other firms like LCP and Barnett Boddingham and Hyman's Robertson. And we collectively are the mid tier that compete with the big three. Now there's a general market dynamic that that I think is well recognized in our industry, and that's that clients are drifting a little bit out of the big three providers into the mid tier. And the growth rates for the mid tier firms are generally quite healthy while the bigger firms are are probably not growing at quite the same rate. And it, of course, only needs to be a relatively gradual gentle flow for us to make nice growth and nice returns just by virtue of the size of their bars in the first place, their market share in the first place. So why why would that happen?

34:40 I think it's happening for a number of reasons. But one one critical reason to highlight is who are the key buyers. So pension scheme trustees have historically typically been what you might describe as well intentioned amateurs. It might be a retired finance director who stays on to be the chair of the trustees and so on. And they're very adviser reliant because they're not typically finance professionals or pension professionals, certainly not pension professionals. And they do they do a great job. They have a big responsibility on their shoulders. But but, yes, it's it's not their core sort of skill set, if you like. What you've then seen, though, is over the years, we've seen increasing professionalization of trustees. And there are now many people in firms that do it for a living. They are paid to be a brilliant professional trustee, and it it now is a professional qualification in its own right.

35:26 So more than half the schemes in The UK now have a professional on the board. Quite many of them will be the chair of the board of the pension scheme. Now that changes the dynamic because a professional trustee may sit on the board of 10 different pension schemes, and they can come and see Aon on a Monday and go and have a trustee meeting there and go to Willis Towers Watson on Tuesday and come and see XPS on a Wednesday. And now there is a real comparison. So if you are differentiated on the quality of what you do, if you are differentiated on your technology, your agility, your client commitments, and so on, you'll get a fair crack of the whip that becomes much more likely that you might get opportunities to work elsewhere where you've built a strong relationship with that key buyer, and you've proven that you can do it. There's just more churn in the industry in general as a consequence of the professionalization of the trustee market. And that's just been a good thing for us. And I think in fairness, it's a good thing for our mid tier competitors too. And any sort of worry about firing big blue, if you like, to hire a smaller firm has really sort of evaporated in our market in recent years.

36:34 We have a number of multibillion pound pension schemes that we look after, and the validation of something like BT choosing us very publicly and just confirms really that there isn't any concern about not dealing with one of the very, very biggest firms and and using a firm like us. And, you know, long may that continue, and and that is what is fueling the opportunity really for us to take a bit of market share. Fantastic. Thank you very much indeed. Thank you very much for actually covering off those questions. And, of course, any further questions that do come through, you will have the ability to review those, and we can publish responses out to those questions to the attendees via the investor me company platform. On that basis, Paul, perhaps I could just ask you for a closing snapshot to conclude before we redirect the investors to give you some feedback. I be really cheeky? And if people indulge me, just wanna say one thing about the longevity of the market because it is a common a common question. It hasn't popped up, but it it often does.

37:25 Defined benefit schemes are here for a very, very long time. So it is fair that there aren't that many defined benefit schemes being set up for people, and not many people have the luxury of still building up benefits in those schemes, at least not in the private sector. But that chart that's now just popped up there now is the cash flows of these DB schemes into the future, I e, the money going out the door to pay people. And you probably can't quite see that axis, but the peak in those cash flows is in the mid twenty thirties and even beyond. Basically, these defined benefit schemes are built up over a very long period of time and will run off over a very, very long period of time. And we will do lots along the way, but for as long as they exist, all the services we were describing are required And lots of derisking type activities, packaging these schemes up, and passing the easier, generally older bits to insurers and things like that are all actually really good things for our business model. The busier we are in the decommissioning of these schemes, the the higher our revenues are as we're adding value as we go. But for the avoidance of doubt, they're here for a very, very long time, and we have a very, very visible market in that space whilst we have other things going on like the rise of defined contribution and all sorts of other areas as well. But I do think it's important just to stress that as something that does sometimes come up for us a little bit. But we we have masses of work to do for long enough to see Snow and I through. I'm quite certain of that.

38:49 So, yes, if I move to a little sort of closing remarks, thanks very much for attending today. Thank you very much for your interest in in XPS, which is much appreciated. I hope you've got a sense that we are a business that has an incredibly strong core of repeat recurring work that is independent of the wider economic cycle. It's very profitable work. It generates good cash that we pay a significant dividend from, and we have a very long dated, highly visible market. We're able to take market share because of the nature of our focus and the quality of what we do. We are quite differentiated versus the biggest global players that do other things for whom this is sort of almost non core type activity increasingly, and we have a cracking market opportunity to go out and exploit.

39:37 But against the backdrop of, you know, volatile financial markets and ongoing pandemic challenges and and worries, etcetera, that we've only seen again in the news this morning, we are very, very resilient against that kind of backdrop, expect to deliver a solid good organic growth through it and a solidly increasing earnings per share and profit and dividend into the future in what's at the moment quite a visible in quite a visible way that we're genuinely really, really excited about. It is it is a great time to be us in our market. Fantastic. Thank you so much for the summary, and, yeah, what a great business to be Paul, so now thank you again for updating investors today. Could I please ask investors not to close the session as you now automatically be redirected for the opportunity to provide your feedback in order that the management team can better understand your views and expectations? This will only take a few moments to complete, and it'll be greatly valued by the company. On behalf of the management team of XPS PENSIONS GROUP PLC, we'd like to thank you for attending today's session. That concludes today's presentation.

40:36 Thank you.