The directors present the strategic report for the year ended 30 September 2024.
The business continues to provide independent ACD services. Assets under management, the key driver of revenue, increased during the year by 64% (from £10,145 million to £16,611 million). Profit before tax more than doubled to £523k (2023: £213k).
The company’s revenue, all of which is derived from ACD services and associated activities for its funds, was £93.9 million (2023: £68.6 million), an increase of 37% from the previous year. The increase was predominantly due to the successful onboarding of the Evenlode fund range.
A new contract has been signed for the launch of a number of new funds, which have received FCA approval post year-end and are anticipated to bring further inflows. The company is focused on identifying suitable unitisation partners for the coming year, with the onboarding process already underway with a number of new ones. Stretching but achievable targets have been set for the current financial year to ensure the continuation of IFSL’s growth.
Expenses have increased by 37% to £93.9m (2023: £68.5m). This increase is in line with revenue growth and is also partially due to continued investment by the company in its people and technology, which is to enable the business to continue to grow its assets under management and partner base, while maintaining high standards of governance.
During the year, the company began a new relationship with SS&C, which is providing transfer agency and fund administration services for the IFSL funds. This relationship will enable IFSL to benefit both from advances in technology and SS&C’s specialist expertise. It is expected to support IFSL’s growth by enabling the business to maintain high standards of service, whilst enabling the business to become more scalable and onboard new business more efficiently.
IFSL’s capital position remains very strong, with the company holding substantially more than its capital adequacy requirement. The business had net assets at the year-end of £10.2m, almost all of which is held in liquid assets.
The directors are pleased with the results and financial position for the year under review. The business has improved its profitability, while continuing to differentiate itself through the quality of its service, with highly experienced and collaborative senior leadership and relationship management teams. IFSL is committed to service excellence and high standards of business conduct and has continued to invest in its people and technology to enable standards to be maintained as growth continues. Relationships with new partners such as SS&C will also help to maintain and enhance the quality of IFSL’s service as the business grows.
The activities of the business are not expected to change in the foreseeable future, with the focus being on working strategically with our existing partners to deliver asset growth, while also establishing new partnerships to achieve additional growth. The directors are confident that the business has the appropriate culture and people with the necessary talent and experience to meet its objectives.
The board of directors of IFSL consider that in their decision-making they have acted in a manner most likely to promote the success of the company for the benefit of its members as a whole. In doing so, they have considered their statutory duties as follows:
a) The likely consequence of any decision in the long term;
b) The interests of the company’s employees;
c) The need to foster the company’s business relationships with suppliers, customers and others;
d) The impact of the company’s operations on the community and the environment;
e) The desirability of the company maintaining a reputation for high standards of business conduct;
f) The need to act fairly between members of the company.
The following demonstrates how the directors take these factors into consideration in their decision making.
The company’s activities are not expected to change in the foreseeable future. The focus is on working strategically with existing partners to deliver AUM growth while also forming new partnerships, to achieve growth in AUM. The directors are confident that the business employs people with the appropriate talent and experience to meet its objectives, while maintaining the culture of the business. The directors believe strong relationships with stakeholders will enable the business to overcome the economic, regulatory and other challenges it faces in the year ahead.
In addition to key financial performance indicators referred to above, the business is aware of its environmental responsibilities and endeavours to minimise its operational impact on the environment. The company forms part of a wider group, with environmental and employee relations considered at group level.
In line with the best available science, the group acknowledges there is an urgent need to accelerate the transition towards global net zero. After a recent review, the group has acknowledged that its original target of achieving net zero by 2040 was highly ambitious and has amended this to 2050. While the group’s commitment to net zero remains as strong as ever, this target is viewed as more realistic.
The group continues to implement, monitor and review its environmental, social and governance (ESG) policy and net zero strategy documents. The company remains focused, resolute and compliant with its emissions reporting responsibilities. Regular reporting is conducted through Streamlined Energy and Carbon Reporting (SECR), the Energy Saving Opportunity Scheme (ESOS), the Task Force on Climate-Related Financial Disclosures (TCFD) and Sustainability Disclosure Requirements (SDR). This reporting is completed through the work of group colleagues and with the help of external specialists.
The objective of reaching carbon neutrality through the group’s utility contracts across operations by the end of 2025 remains on course. The business has made great progress so far, replacing expiring ‘traditional’ energy contracts using the Renewable Energy Guarantees of Origin (REGO) scheme (58% of the group’s energy is now bought via REGO).
The group has recently established a sub-committee of its executive committee that is wholly focused on sustainability matters. In addition, it has established a sustainability champions group, which will drive a range of initiatives. Regular sustainability updates are communicated through various channels and colleagues can keep up with progress through the group’s new corporate social responsibility (CSR) intranet page, which is kept up to date by the recently established CSR forum. Looking ahead, the board are set to agree and schedule ESG training for all colleagues and additional training will also be provided for the sustainability champions group.
Sustainability offers environmental, economic and social benefits, and, through sustainable practices, the group can identify and implement potential cost-saving opportunities in areas such as energy efficiency and waste reduction. Socially, we can have a positive impact on colleague wellbeing and in our local communities. Environmentally, the group will contribute to helping to promote a healthier planet through managing, monitoring and reviewing its environmental impacts.
The business recognises that employee relations are a critical factor requiring careful attention. To foster a positive workplace culture, we have completed and reviewed comprehensive employee engagement surveys. Based on the insights gained, we are setting strategic objectives to address key areas of employee satisfaction and organisational growth. We are committed to maintaining robust policies that prioritise both the remuneration and welfare of our employees.
On behalf of the board
The directors present their annual report and financial statements for the year ended 30 September 2024.
The results for the year are set out on page 9.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
The auditor, Barlow Andrews LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company. The company has therefore taken advantage of exemptions from the disclosure requirements relating to energy and carbon reporting.
Company law requires the directors to prepare financial statements for each financial year. Under that law the directors have elected to prepare the financial statements in accordance with United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law, the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and of the profit or loss of the company for that period.
In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the company’s transactions and disclose with reasonable accuracy at any time the financial position of the company and enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of Investment Fund Services Limited (the 'company') for the year ended 30 September 2024 which comprise the Profit And Loss Account, the Balance Sheet, the Statement of Changes in Equity and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including FRS 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below.
the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
we identified the laws and regulations applicable to the company through discussions with directors and other management, and from our commercial knowledge and experience of the financial services sector;
we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006, taxation legislation and FCA regulations;
we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
performed analytical procedures to identify any unusual or unexpected relationships;
tested journal entries to identify unusual transactions; and
assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
agreeing financial statement disclosures to underlying supporting documentation;
reading the minutes of meetings of those charged with governance;
enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with relevant regulators.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any.
Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor's report.
Use of our report
This report is made solely to the company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Investment Fund Services Limited is a private company limited by shares incorporated in England and Wales. The registered office is Marlborough House, 59 Chorley New Road, Bolton.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors and loans from fellow group companies, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
An analysis of the company's turnover is as follows:
The average monthly number of persons (including directors) employed by the company during the year was:
All staff and directors were employed and paid on behalf of the company by the parent company, Marlborough Group Holdings Limited.
The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:
Details of the company's subsidiaries at 30 September 2024 are as follows:
Each share issued is entitled to one vote in any circumstances.
The company has managed 92 (2023: 89) authorised collective investment schemes during the year and generated income of £93,880,197 (2023: £68,559,318) directly from these funds. At 30 September 2024, there was £9,359,517 (2023: £5,719,739) due from the funds.
The company is included in the consolidated accounts of Marlborough Group Holdings Limited and UFC Fund Management Plc, both incorporated in England and Wales. The registered office of these companies is Marlborough House, 59 Chorley New Road, Bolton. Copies of the group accounts for both entities can be obtained from the registered office.