Company registration number 04137475 (England and Wales)
MONTAGE PORTFOLIO MANAGEMENT LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
MONTAGE PORTFOLIO MANAGEMENT LTD
COMPANY INFORMATION
Directors
P J Montague
D J Ingram
D L Acfield
Company number
04137475
Registered office
135/137 New London Road
Chelmsford
Essex
CM2 0QT
Auditor
Newton & Garner Limited
Building 2
30 Friern Park
North Finchley
London
N12 9DA
Business address
135/137 New London Road
Chelmsford
Essex
CM2 0QT
MONTAGE PORTFOLIO MANAGEMENT LTD
CONTENTS
Page
Directors' report
1 - 2
Independent auditor's report
3 - 5
Statement of comprehensive income
6
Balance sheet
7
Statement of changes in equity
8
Notes to the financial statements
9 - 21
MONTAGE PORTFOLIO MANAGEMENT LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2021
- 1 -
The directors present their annual report and financial statements for the year ended 31 December 2021.
Principal activities
The principal activity of the company continued to be that of financial advice to personal and corporate clients and no significant changes are anticipated.
The results for the year and the financial position at the year end were considered satisfactory by the directors who expect continued growth in the foreseeable future.
Results and dividends
The results for the year are set out on page 6.
Ordinary dividends were paid amounting to £105,000. The directors do not recommend payment of a final dividend.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
P J Montague
S I Mordrick
(Resigned 12 February 2021)
D J Ingram
D L Acfield
Auditor
The auditor, Newton & Garner Limited, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Statement of directors' responsibilities
The directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.
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;
-
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.
Statement of disclosure to auditor
So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s
auditor
is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s
auditor
is aware of that information.
MONTAGE PORTFOLIO MANAGEMENT LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 2 -
Small companies exemption
This report has been prepared in accordance with the provisions applicable to companies entitled to the small companies exemption.
On behalf of the board
P J Montague
Director
30 September 2022
MONTAGE PORTFOLIO MANAGEMENT LTD
INDEPENDENT AUDITOR'S REPORT
TO THE MEMBER OF MONTAGE PORTFOLIO MANAGEMENT LTD
- 3 -
Opinion
We have audited the financial statements of MONTAGE PORTFOLIO MANAGEMENT LTD (the 'company') for the year ended 31 December 2021 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102
The Financial Reporting Standard applicable in the UK and Republic of Ireland
(United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
-
give a true and fair view of the state of the company's affairs as at 31 December 2021 and of its profit for the year then ended;
-
have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
-
have been prepared in accordance with the requirements of the Companies Act 2006.
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the
Auditor's
responsibilities for the audit of the
financial statements
section of our report. We are independent of the
company
in accordance with the ethical requirements that are relevant to our audit of the
financial statements
in the UK, including the FRC’s Ethical Standard
, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our 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.
The other information comprises the information included in the annual report other than the financial statements and our auditor's report thereon. The directors are responsible for the other information contained within the annual report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
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 directors'
r
eport for the financial year for which the financial statements are prepared is consistent with the financial statements
; and
-
the directors' report has been prepared in accordance with applicable legal requirements.
MONTAGE PORTFOLIO MANAGEMENT LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MONTAGE PORTFOLIO MANAGEMENT LTD
- 4 -
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identifie
d
material misstatements in the directors'
r
eport
. We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
-
adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
-
the financial statements are not in agreement with the accounting records and returns; or
-
certain disclosures of
remuneration specified by law are not made; or
-
we have not received all the information and explanations we require for our audit; or
-
the directors were not entitled to prepare the financial statements in accordance with the small companies regime and take advantage of the small companies' exemption in preparing the directors' report and from the requirement to prepare a strategic report.
Responsibilities of directors
As explained more fully in the directors'
r
esponsibilities
s
tatement, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of
financial statements
that are free from material misstatement, whether due to fraud or error. In preparing the
financial statements
, the
directors are
responsible for assessing the company
'
s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have
no realistic alternative but to do so.
Auditor's responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the
financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an
auditor's
report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with
ISAs (UK)
will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements
.
The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below
.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We identified and assessed the risks of material misstatement of the financial statements from irregularities, whether due to fraud or error, and discussed these between our audit team members. We then designed and performed audit procedures responsive to those risks, including audit evidence sufficient and appropriate to provide a basis for our opinion.
We obtained an understanding of the legal and regulatory frameworks within which the
company
operates, focusing on those laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements. The main law and regulation we considered in this context was
The Financial Reporting Standards applicable in the UK and Republic of Ireland
(FRS 102). We assessed the required compliance with these as part of our audit procedures on the related financial statement items.
We also considered the opportunities and incentives that may exist within the
company
for fraud. Auditing standards limit the required audit procedures to identify non-compliance.
We identified the greatest risk of impact on the financial statements from irregularities, including fraud, to be within the recording of income
, particularly year end debtors,
and the override of controls by management. Our audit procedures to respond to these risks included additional work reviewing
year end debtors
and enquiries of management and analytical review procedures.
Owing to the inherent limitations of an audit, there is an unavoidable risk that we may not have detected some material misstatements in the financial statements, even though we have properly planned and performed our audit in accordance with auditing standards. We are not responsible for preventing non-compliance and cannot be expected to detect non-compliance with all laws and regulations.
MONTAGE PORTFOLIO MANAGEMENT LTD
INDEPENDENT AUDITOR'S REPORT (CONTINUED)
TO THE MEMBER OF MONTAGE PORTFOLIO MANAGEMENT LTD
- 5 -
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.
This report is made solely to the company's member 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 member those matters we are required to state to the member 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 member, for our audit work, for this report, or for the opinions we have formed.
Robert Knight, FCCA, ATII
Senior Statutory Auditor
For and on behalf of Newton & Garner Limited
30 September 2022
Chartered Accountants
Statutory Auditor
Building 2
30 Friern Park
North Finchley
London
N12 9DA
MONTAGE PORTFOLIO MANAGEMENT LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
- 6 -
2021
2020
Notes
£
£
Turnover
3
1,902,090
1,603,509
Administrative expenses
(1,233,812)
(814,476)
Other operating income
396,089
Operating profit
4
1,064,367
789,033
Interest receivable and similar income
7
1,012
90
Interest payable and similar expenses
8
(15,684)
(11,678)
Profit before taxation
1,049,695
777,445
Tax on profit
9
(251,702)
(163,578)
Profit for the financial year
797,993
613,867
The profit and loss account has been prepared on the basis that all operations are continuing operations.
MONTAGE PORTFOLIO MANAGEMENT LTD
BALANCE SHEET
AS AT
31 DECEMBER 2021
31 December 2021
- 7 -
2021
2020
Notes
£
£
£
£
Fixed assets
Goodwill
12
398,123
391,950
Tangible assets
11
15,837
21,468
Investments
13
1
1
413,961
413,419
Current assets
Debtors
14
979,247
148,965
Cash at bank and in hand
547,346
545,182
1,526,593
694,147
Creditors: amounts falling due within one year
15
(481,447)
(290,225)
Net current assets
1,045,146
403,922
Total assets less current liabilities
1,459,107
817,341
Creditors: amounts falling due after more than one year
16
(156,326)
(206,534)
Provisions for liabilities
Deferred tax liability
18
2,790
3,809
(2,790)
(3,809)
Net assets
1,299,991
606,998
Capital and reserves
Called up share capital
20
102
102
Profit and loss reserves
1,299,889
606,896
Total equity
1,299,991
606,998
These financial statements have been prepared in accordance with the provisions applicable to companies subject to the small companies regime.
The financial statements were approved by the board of directors and authorised for issue on 30 September 2022 and are signed on its behalf by:
P J Montague
Director
Company Registration No. 04137475
MONTAGE PORTFOLIO MANAGEMENT LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2021
- 8 -
Share capital
Profit and loss reserves
Total
Notes
£
£
£
Balance at 1 January 2020
102
493,029
493,131
Year ended 31 December 2020:
Profit and total comprehensive income for the year
-
613,867
613,867
Dividends
10
-
(500,000)
(500,000)
Balance at 31 December 2020
102
606,896
606,998
Year ended 31 December 2021:
Profit and total comprehensive income for the year
-
797,993
797,993
Dividends
10
-
(105,000)
(105,000)
Balance at 31 December 2021
102
1,299,889
1,299,991
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
- 9 -
1
Accounting policies
Company information
MONTAGE PORTFOLIO MANAGEMENT LTD is a
private
company
limited by shares
incorporated in
England and Wales
.
The registered office is
135/137 New London Road, Chelmsford, Essex, CM2 0QT.
1.1
Accounting convention
These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.
The financial statements are prepared in
sterling
, which is the functional currency of the company.
Monetary a
mounts
in these financial statements are
rounded to the nearest £.
The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.
1.2
Going concern
A
true
t the time of approving the financial statements
,
t
he directors have a reasonable expectation that the
company
has adequate resources to continue in operational existence for the foreseeable future. Thus
t
he directors continue to adopt the going concern basis of accounting in preparing the financial statements.
1.3
Turnover
Turnover is recognised at the fair value of the consideration received or receivable for goods and services provided in the normal course of business
, and
is shown net of VAT and other sales related taxes
.
The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
When cash inflows are deferred and represent a financing arrangement, the fair value of the consideration is the present value of the future receipts. The difference between the fair value of the consideration and the nominal amount received is recognised as interest income.
1.4
Intangible fixed assets - goodwill
The capitalised cost of goodwill represents personal and corporate clients purchased together with future revenue streams.
Goodwill purchased during the year is being written off over a period of 5 years.
1.5
Tangible fixed assets
Tangible fixed assets
are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.
Depreciation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:
Plant and machinery
25% reducing balance basis
Fixtures, fittings & equipment
25% reducing balance basis
The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and
is credited or charged to profit or loss
.
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 10 -
1.6
Fixed asset investments
Interests in subsidiaries, associates and jointly controlled entities are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
The investments are assessed for impairment at each reporting date
and
any
impairment
losses or reversals of impairment losses are recognised immediately in
profit
or
loss
.
A subsidiary is an entity controlled by the company
. Control is
the power to govern the financial and operating policies of
the
entity so as to obtain benefits from its activities.
1.7
Impairment of fixed assets
At each reporting
period
end date, the
company
reviews the carrying amounts of its tangible
and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the
company
estimates the recoverable amount of the cash-generating unit to which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.
Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit)
in
prior years. A reversal of an impairment loss is recognised immediately in
profit
or
loss
, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.
1.8
Cash and cash equivalents
Cash and cash equivalents
are basic financial assets
and
include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.
1.9
Equity instruments
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.
1.10
Taxation
The tax expense represents the sum of the tax currently payable and deferred tax.
Current tax
The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the
profit and loss account
because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The
company’s
liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 11 -
Deferred tax
Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.
The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the
profit and loss account
, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the
company
has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
1.11
Employee benefits
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or
fixed assets
.
The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.
Termination benefits are recognised immediately as an expense when the company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.
1.12
Retirement benefits
Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.
1.13
Leases
Rentals payable under operating leases,
including
any lease incentives received, are charged to
profit or loss
on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the lease
s
asset are consumed.
1.14
Foreign exchange
Transactions in currencies other than
pounds sterling
are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation
in the period
are included in profit or loss.
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 12 -
1.15
Pillar 3 and BIPRU Remuneration Code Disclosures
Background
This is the Pillar 3 disclosure made in accordance with the UK Financial Conduct Authority (FCA) Prudential Sourcebook for Banks, Building Societies and Investment Firms (‘BIPRU’).
The European Capital Requirements Directive (CRD) created a regulatory capital framework consisting of three ‘pillars’ namely;
-
Pillar 1 – which sets out the minimum capital requirements that firms are required to meet for;
-
Pillar 2 – which requires firms to take a view on whether additional capital should be held against capital risks not covered by Pillar 1; and
-
Pillar 3 - which requires firms to publish certain details of its risks, capital and risk management process.
Disclosure Policy
The rules in BIPRU 11 provide that the firm may omit one or more of the required disclosures if it believes that the information is immaterial. Materiality is based on the criteria that the omission or misstatement of material information would be likely to change or influence the assessment or decision of a user relying on that information for the purposes of making economic decisions. Where the firm considers a disclosure to be immaterial, this will be stated in the relevant section.
The firm is also permitted to omit one or more of the required disclosures where it believes that the information is regarded as proprietary or confidential. Proprietary information is that which, if it were shared, would undermine the firm’s competitive position. Information is considered to be confidential where there are obligations binding the firm to confidentiality with its clients and counterparties.
Where the firm has omitted information for any of the above reasons, a statement explaining this will be provided in the relevant section.
Unless stated as otherwise, all figures contained in this disclosure are based on the firm’s annual reports for the year ending 31 December 2021.
Frequency
These Pillar 3 Disclosures will be reviewed on an annual basis as a minimum. The disclosures will be published as soon as is practical following the finalisation of the firm’s Internal Capital Adequacy Assessment Process (ICAAP) and the publication of its annual reports.
Verification
The information contained in this disclosure has not been audited by our firm’s external auditors and does not constitute any form of financial statement.
Publication
Our firm’s Pillar 3 Disclosure reports are published in our Annual Accounts.
Scope and Application of Directive Requirements
The disclosures in this document are made in respect of Montage Portfolio Management Ltd which provides financial advice and discretionary investment management services.
The firm is a BIPRU firm.
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 13 -
Risk Management Objectives and Policies
Our risk management policy reflects the FCA requirement that we must manage a number of different categories of risk. These include: liquidity, credit, market, interest rate, business and operational risks.
-
Liquidity Risk
The firm manages all cash and borrowing requirements to ensure the firm has sufficient liquid resources to meet the continued operating needs of the business. This is supported by a robust budgeting and forecasting process which has the full involvement of the Board.
-
Credit Risk
The main credit risk for the firm is the risk that a client does not pay fees for services provided. The firm’s revenue is made up of Wealth Management Fees and Portfolio Management Fees received from clients, which are based on a percentage of client’s assets under management and are deducted directly from clients’ portfolios, and Initial Advice Fees which are based on a percentage of amounts invested and are normally deducted directly from client’s investments. The income paid directly by clients is minimal. The credit risk relating to this income is therefore minimal.
-
Interest Rate Risk
The firm is exposed to interest rate risk through the funding it has received by way of loans. The firm has borrowing with Premium Credit which is used to spread the FCA Annual Fees and the PI Annual Insurance Premium over 10 monthly installments. The interest payable on these loans is fixed at 3.6% pa. The firm also has a CIBLS loan from Funding Circle, the interest payable is currently 8.9%.
-
Business Risk
The firm’s Pillar 2 business risk assessment principally takes the form of a fall in assets under management following a market downturn that leads to lower Wealth Management and Portfolio Management fees, although other risks such as loss of advisers and systems failures are also considered. To mitigate our business risk, we regularly analyse various different economic scenarios to model the impact of economic downturns on our financial position.
-
Operational Risk
Operational risk is defined as the potential risk of financial loss or impairment to reputation resulting from inadequate or failed internal processes and systems, from the actions of people or from external events. Major sources of operation risk include: outsourcing of operations, IT security, internal and external fraud, implementation of strategic change and regulatory non-compliance. The firm operates a robust risk management process which is regularly reviewed and updated with details being provided to all staff. The firm’s board is responsible for Compliance Oversight and the periodic reviews and recommending any changes. All senior management will bear responsibility for internal controls and the management of business risk as part of their accountability to the board. Individuals are responsible for identifying the risks surrounding their work, implementing controls over those risks and reporting areas of concern to their line manager. The Board meet quarterly to report on all significant risk issues.
-
Other Risks
The firm operates a simple business model. Accordingly, many of the specific risks identified by the FCA do not apply.
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 14 -
1.16
Capital Resources
Pillar 1 Requirement
In accordance with GENPRU 2.1.45R (calculation of variable capital requirement for a BIPRU firm), our capital requirement has been determined as being our fixed overhead requirement and not the sum of our credit risk capital requirement and our market risk capital requirement.
The Pillar 1 capital requirement for Montage Portfolio Management, based on the fixed overhead requirement, was £103,000 as at 31 December 2021.
Pillar 2
Our overall approach to assessing the adequacy of our internal capital is set out in our ICAAP. The ICAAP process involves separate consideration of risks to our capital combined with stress testing using scenario analysis. The level of capital required to cover risks is a function of impact and probability. We assess impact by modelling the changes in our income and expenses caused by various potential risks over a 1-year time horizon. Probability is assessed subjectively.
In addition, we have reviewed the outputs of our risk reviews to quantify any risks identified. This has identified a number of key business risks which we have classified against the risk categories contained in GENPRU 1.2.30R and reviewed the guidance in BIPRU 2.2.61-65.
Our Pillar 2 capital requirement, which is our own assessment of the minimum amount of capital that we believe is adequate against the risks identified, has been assessed as no greater than our Pillar 1 requirement.
To ensure that the firm's capital resources meet the requirements of the FCA we have earmarked a capital requirement of £37,000 to supplement the cover provided under our PI policy.
Regulatory Capital
The main features of Montage Portfolio Management Ltd capital resources for regulatory purposes, as at 31 December 2021 are as follows:
|
|
Tier 1 Capital (called up share capital, share premium account, profit and loss account, externally verified interim net profits)
|
|
Total of Tier 2 and Tier 3 capital (broadly long and short term subordinated loans)
|
|
Deductions from Tier 1 and Tier 2 capital (goodwill)
|
|
Total capital resources, net of deductions
|
|
The firm holds regulatory capital in accordance with the Capital Requirements Directive. All such capital is classified as Tier 1 capital and is therefore of the highest quality. There is a surplus of reserves above the capital resource requirement deemed necessary to cover the risks identified.
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
1
Accounting policies
(Continued)
- 15 -
Remuneration Code Disclosure
The firm is subject to the BIPRU Remuneration Code. This section provides further information on our remuneration policy.
BIPRU Remuneration Code Staff
We have identified, and maintain a record of, 'BIPRU Remuneration Code Staff' – i.e. staff to whom the BIPRU Remuneration Code applies. This includes senior management and members of staff whose actions may have a material impact on a firm's risk profile. All of our Code Staff fall into the "senior management" category of Code Staff (rather than the "risk taker" category) for the purposes of the BIPRU Remuneration Code.
Decision Making / Remuneration Committee
Montage Portfolio Management Ltd has a Remuneration Committee and is responsible for our remuneration policy including:
-
Determining the framework and policy for remuneration and ensuring it does not encourage undue risk taking.
-
Agreeing any major changes in remuneration structures.
-
Reviewing the terms and conditions of any new incentive schemes and in particular, considering the appropriate targets for any performance related remuneration schemes.
-
Considering and recommending the remuneration policy for the senior employees taking into account the appropriate mix of salary, discretionary bonus and share based remuneration.
-
In determining remuneration arrangements, the Directors/Partners will give due regard to best practice and any relevant legal or regulatory requirements including the BIPRU Remuneration Code.
Link Between Pay & Performance
Competitive salaries form the basis of our firm’s remuneration package. There is a small element of variable pay for all staff which is based on firm wide and individual performance. Whilst most of the variable reward components are awarded to employees across the firm, the structure, balance and amounts may differ. Variable remuneration is considerably reduced where subdued or negative financial performance of the firm occurs. When assessing individual performance, we use a robust performance review process, with reviews including qualitative criteria and, in the case of investment managers, long-term investment results are a factor in the assessment process.
Quantitative Information on Remuneration
The FCA rules require certain firms to disclose aggregate information on remuneration in respect of its BIPRU Remuneration Code Staff broken down by business area, senior management and other Code Staff, including “risk takers”. The firm has two business areas, Wealth Management and Portfolio Management. The firm has one CEO but no “risk takers”. Director remuneration is agreed formally at board meetings. The link between performance and pay is inevitable in a small firm, but the firm’s risk adverse strategy and robust risk management systems mitigate any risks.
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 16 -
2
Judgements and key sources of estimation uncertainty
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.
3
Turnover and other revenue
Other operating income of £396,089 is made up of sale of goodwill £243,174 (2020 - zero) and a VAT debtor of £152,915 (2020 - zero).
2021
2020
£
£
Turnover analysed by class of business
Turnover
1,902,090
1,603,509
2021
2020
£
£
Other revenue
Interest income
1,012
90
4
Operating profit
2021
2020
Operating profit for the year is stated after charging:
£
£
Depreciation of owned tangible fixed assets
9,393
8,324
Amortisation of intangible assets
288,418
80,765
Operating lease charges
56,612
54,165
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2021
2020
Number
Number
9
9
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
5
Employees
(Continued)
- 17 -
Their aggregate remuneration comprised:
2021
2020
£
£
Wages and salaries
445,225
345,651
Pension costs
27,665
25,138
472,890
370,789
6
Directors' remuneration
2021
2020
£
£
Remuneration for qualifying services
732
8,745
7
Interest receivable and similar income
2021
2020
£
£
Interest income
Interest on bank deposits
1,012
90
8
Interest payable and similar expenses
2021
2020
£
£
Interest on financial liabilities measured at amortised cost:
Interest on bank overdrafts and loans
15,684
11,678
9
Taxation
2021
2020
£
£
Current tax
UK corporation tax on profits for the current period
252,721
163,976
Deferred tax
Origination and reversal of timing differences
(1,019)
(398)
Total tax charge
251,702
163,578
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
9
Taxation
(Continued)
- 18 -
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:
2021
2020
£
£
Profit before taxation
1,049,695
777,445
Expected tax charge based on the standard rate of corporation tax in the UK of 19.00% (2020: 19.00%)
199,442
147,715
Tax effect of expenses that are not deductible in determining taxable profit
1,403
17,445
Gains not taxable
(3,779)
Permanent capital allowances in excess of depreciation
55,655
(1,184)
Deferred tax adjustments in respect of prior years
(1,019)
(398)
Taxation charge for the year
251,702
163,578
10
Dividends
2021
2020
£
£
Interim paid
105,000
500,000
11
Tangible fixed assets
Plant and machinery
Fixtures, fittings & equipment
Total
£
£
£
Cost
At 1 January 2021
43,196
27,990
71,186
Additions
3,762
3,762
Disposals
(14,186)
(604)
(14,790)
At 31 December 2021
32,772
27,386
60,158
Depreciation and impairment
At 1 January 2021
26,190
23,528
49,718
Depreciation charged in the year
8,281
1,112
9,393
Eliminated in respect of disposals
(14,186)
(604)
(14,790)
At 31 December 2021
20,285
24,036
44,321
Carrying amount
At 31 December 2021
12,487
3,350
15,837
At 31 December 2020
17,006
4,462
21,468
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 19 -
12
Intangible fixed assets
Goodwill
£
Cost
At 1 January 2021
511,685
Additions
305,951
Disposals
(31,251)
At 31 December 2021
786,385
Amortisation and impairment
At 1 January 2021
119,735
Amortisation charged for the year
288,418
Disposals
(19,891)
At 31 December 2021
388,262
Carrying amount
At 31 December 2021
398,123
At 31 December 2020
391,950
13
Fixed asset investments
2021
2020
Notes
£
£
Investments in associates
1
1
14
Debtors
2021
2020
Amounts falling due within one year:
£
£
Gross amounts owed by contract customers
77,065
73,286
Corporation tax recoverable
44,179
44,179
Other debtors
827,112
5,606
Prepayments and accrued income
30,891
25,894
979,247
148,965
Other debtors of £827,112 includes a director loan of £562,158 (2020 - zero), a VAT debtor of £132,081 (2020 - zero), deferred income in respect of goodwill sold of £127,267 (2020 - zero), amounts owed by a connected company £999 (2020 - £999) and a rent deposit of £4,607 (2020 - £4,607).
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 20 -
15
Creditors: amounts falling due within one year
2021
2020
Notes
£
£
Other borrowings
17
99,331
74,736
Corporation tax
252,720
163,976
Other taxation and social security
30,000
12,667
Other creditors
77,876
27,922
Accruals and deferred income
21,520
10,924
481,447
290,225
16
Creditors: amounts falling due after more than one year
2021
2020
Notes
£
£
Other borrowings
17
156,326
206,534
17
Loans and overdrafts
2021
2020
£
£
Other loans
255,657
281,270
Payable within one year
99,331
74,736
Payable after one year
156,326
206,534
18
Deferred taxation
Deferred tax assets and liabilities are offset where the company has a legally enforceable right to do so. The following is the analysis of the deferred tax balances (after offset) for financial reporting purposes:
Liabilities
Liabilities
2021
2020
Balances:
£
£
Accelerated capital allowances
2,790
3,809
2021
Movements in the year:
£
Liability at 1 January 2021
3,809
Credit to profit or loss
(1,019)
Liability at 31 December 2021
2,790
MONTAGE PORTFOLIO MANAGEMENT LTD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2021
- 21 -
19
Retirement benefit schemes
2021
2020
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
27,665
25,138
The company operates a defined contribution pension scheme for all qualifying employees.
The assets of the scheme are held separately from those of the company in an independently administered fund.
20
Share capital
2021
2020
2021
2020
Ordinary share capital
Number
Number
£
£
Issued and fully paid
Ordinary shares of £1 each
102
100
102
100
Ordinary B shares of £1 each
-
2
-
2
102
102
102
102
The two Ordinary B shares were converted to Ordinary Shares on 13th May 2021.
21
Operating lease commitments
Lessee
At the 31st December 2021 the company was committed to making the following total future minimum lease payments under non-cancellable operating leases:
2021
2020
£
£
Within one year
13,428
13,428
22
Directors' transactions
Dividends totalling £505,000 (2020 - £500,000) were paid in the year in respect of shares held by the company's directors.
Other debtors include directors loans at 31st December 2021 of £562,158 (2020 - zero).
23
Ultimate controlling party
The ultimate controlling party is P J Montague.
2021-12-31
2021-01-01
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