Company Registration Number
03223959
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MONTANE LTD
COMPANY INFORMATION
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Armstrong Watson Audit Limited
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Chartered Accountants
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Statutory Auditor
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MONTANE LTD
CONTENTS
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Independent auditors' report
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Statement of comprehensive income
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Statement of financial position
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Statement of changes in equity
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Notes to the financial statements
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MONTANE LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2022
Montane Ltd develops and sells premium clothing and equipment for outdoor sports such as trail running, hiking, climbing and mountaineering all under the “Montane” brand name.
The company focuses upon functional, lightweight clothing and equipment, and is regarded to have a particularly active and sport-focused consumer base – as epitomised by the brand slogan “Further. Faster.” The products are designed mainly using industry leading materials (including Gore-Tex®, Pertex®, Polartec® and Primaloft®) and are manufactured at world class 3rd party factories in Asia.
The brand is supported by a wide range of different marketing activities including headline sponsorship of the Montane Spine Race, Montane Lakeland 100 and Montane Dragon’s Back races in the UK and Montane Grand Traverse in the USA, online and press advertising, athlete sponsorship and a brand partnership with the British Mountaineering Council, amongst other activities. Marketing investment has consistently been applied to support the brand through both consumer and trade channels.
Montane’s sales are weighted towards the UK with the remainder of sales to countries including Czech Republic, Denmark, Germany, Spain, Slovenia, USA and New Zealand.
For the year ended 31 January 2022 turnover was £21,168,000. This represents a 21% increase from the 16 month period to 31 January 2021, and a 53% increase on a like-for-like basis on a 12 month period to 31 January 2021.
This growth is reflective of a rebound from the global COVID-19 pandemic which adversely impacted prior year revenue, alongside continued growth and distribution in our UK and international wholesale channels, together with our own direct-to-consumer offering.
Gross profit margin for the period increased from 38% to 39% largely through sourcing efficiencies and a higher margin sales channel split.
Net profit before exceptional items was £906,000, an increase of £242,000 from prior year.
This was achieved despite significant headwinds including substantial increases in global shipping rates alongside instability in the international supply chain as a result of the COVID-19 pandemic.
With continued investment to grow brand awareness, logistical and operational capabilities, the Company has budgeted for further revenue growth in the new financial year, supported by an increased order book for both the spring/summer and autumn/winter seasons.
Operational highlights for the period include:
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Continued growth of revenue and profit through ecommerce. This represents an increasing proportion of company turnover, and underpins the overall gross margin improvement;
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Completion of an office redevelopment project to expand and improve the operational headquarters in Northumberland;
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Completing the renovation and expansion of the sales showroom facility in the Lake District, Cumbria;
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Investment into a new website and customer service platform;
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Enhanced seasonal trade sales launch concept implemented;
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European supply route post Brexit established with introduction of third party logistics partner;
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Significant increase in quantifiable brand awareness as a result of enhanced media and marketing output;
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Onboarding of new international partners to facilitate further growth;
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Employed a full time Corporate Social Responsibility manager to enhance our ongoing commitment to our environmental and social sustainability;
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Successfully completed Fair Wear Foundation Brand Performance Check, outlining our commitment to social compliance work in our supply chain including publishing our first Social Report;
∙
Further accreditation achieved and commitments made:
Page 1
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MONTANE LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2022
- All polybags purchased are made using 100% recycled low density polyethylene;
- All down traced using the Track My Down tool;
- Cycle Scheme for registered employees;
- Electric vehicle charging points installed;
- Support given to several charities doing vital conservation work, both nationally and internationally,
including Fix the Fells, The Climate Project and EOCA (European Outdoor Conservation Association).
Principal risks and uncertainties
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The major risks the company contends with are:
Financial risk
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Ongoing volatility in the currency markets. This is mitigated through securing forward contracts at key stage gates of the seasonal product development;
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Cost price inflation. This is managed through strict cost control, pursuing sourcing efficiencies and where necessary passing on costs through price increases;
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Mild weather, which we address by focusing upon lightweight and sun-protective products and other summer focused products;
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Fierce branded competition, which we resist through innovative products, a clear and well-communicated brand image, and a significant marketing spend;
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Sourcing challenges posed by any political uncertainty or unrest, alongside any resurgence of the COVID-19 pandemic in the countries of origin of our suppliers. This is mitigated by having a portfolio of suppliers with a geographical spread;
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Continued variability in global freight costs is addressed through maximising the efficiency of our logistics operation whilst recognising the higher rates in future financial planning;
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A decline in Consumer Confidence and discretionary spending of consumers in 2022, with many forecasts pointing towards a recession. Continued investment in the brand coupled with product development is used to create desirability for products which together with an expanded distribution network mitigate the macroeconomic headwinds.
Credit risk
The company has implemented policies that require appropriate credit checks and, where appropriate, credit insurance on corporate customers before sales are made.
Liquidity risk
The directors believe that the company has sufficient funds available to support its activities in the future.
Financial key performance indicators
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The directors consider the key financial performance indicator to be turnover growth, stock and EBITDA.
During the year turnover has increased by £3,727,000 (21%) from the prior 16 month accounting period.
The directors have successfully facilitated sales growth in areas that are key to the long term success of the business, predominantly being with key customers, and investment in the ecommerce channel.
The stock value has increased by 11% from 31 January 2021. This higher stock holding is reflective of the increased revenue and order book heading into the next financial year. The directors continue to monitor stock levels against revenue.
Overall, EBITDA (excluding exceptionals) has increased to £1,022,000 from £757,000 for the year ending 31 January 2022. This is a result of a growth in revenue and gross margin, whilst continuing to invest in the foundations for long term sustainable growth.
After taxation and dividends, shareholders’ funds have increased at the year end which demonstrates the strong growth and strength of the company as a whole.
Page 2
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MONTANE LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2022
The directors have considered a wide number of macroeconomic factors, including, but not limited to foreign exchange rates, inflation rates, consumer confidence and the fallout from the COVID-19 pandemic, and their potential impact on the financial sustainability of the Company. In doing so management have applied sensitivities and adverse assumptions upon their budgets, cash flow forecasts in making their assessment. The directors have considered a period of at least twelve months from the date of sign off when making their assessment with regards to going concern. After consideration of all factors, the directors have continued to adopt the going concern basis in preparing the financial statements.
This report was approved by the board
and signed on its behalf.
Page 3
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MONTANE LTD
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 JANUARY 2022
The directors present their report and the financial statements for the year ended 31 January 2022.
Directors' responsibilities statement
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The directors are responsible for preparing the Strategic report, the Directors' 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 applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. 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:
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select suitable accounting policies for the Company's financial statements and then apply them consistently;
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make judgements and accounting estimates that are reasonable and prudent;
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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 to 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.
The profit for the year, after taxation, amounted to £
656,205
(2021 -
£
240,708
)
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The directors have not recommended a final dividend.
The directors who served during the year were:
The directors are not expecting to make any significant changes in the nature of the business in the near future.
Matters covered in the Strategic report
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Information is not shown in the Directors’ report because it is shown in the strategic report instead under S414C (11). The strategic report includes a business review, principal risks and uncertainties and financial key performance indicators.
Page 4
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MONTANE LTD
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2022
Disclosure of information to auditors
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Each of the persons who are
directors at the time when this Directors' report is approved has confirmed that:
∙
so far as the director is aware, there is no relevant audit information of which the Company's auditors are unaware, and
∙
the director has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the Company's auditors are aware of that information.
Post balance sheet events
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There have been no significant events affecting the Company since the year end.
The auditors, Armstrong Watson Audit Limited, will be proposed for reappointment in accordance with
section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
Page 5
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MONTANE LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MONTANE LTD
We have audited the financial statements of Montane Ltd (the 'Company') for the year ended 31 January 2022, which comprise the Statement of comprehensive income, the Statement of financial position, the Statement of cash flows, the Statement of changes in equity
and the related notes, 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 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:
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give a true and fair view of the state of the Company's affairs as at 31 January 2022 and of its profit for the year then ended;
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have been properly prepared in accordance with United Kingdom Generally Accepted Accounting Practice; and
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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 Auditors' 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 United Kingdom, including the Financial Reporting Council'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
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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 Auditors' 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.
Page 6
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MONTANE LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MONTANE LTD (CONTINUED)
Opinion on other matters prescribed by the Companies Act 2006
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In our opinion, based on the work undertaken in the course of the audit:
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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
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the Strategic report and the Directors' report have been prepared in accordance with applicable legal requirements.
Matters on which we are required to report by exception
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In the light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Strategic report or the Directors' report.
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:
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adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
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the financial statements are not in agreement with the accounting records and returns; or
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certain disclosures of directors
' remuneration specified by law are not made; or
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we have not received all the information and explanations we require for our audit.
Responsibilities of directors
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As explained more fully in the Directors' responsibilities statement on page 5, 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.
Page 7
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MONTANE LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MONTANE LTD (CONTINUED)
Auditors' responsibilities for the audit of the financial statements
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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 Auditors' 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.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
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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;
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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 sector;
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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 data protection, anti-bribery and employment.
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we assessed the extent of compliance with the laws and regulations identified above through making
enquiries of management and inspecting legal correspondence; and
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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:
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making enquiries of management as to where they considered there was susceptibility to fraud, their
knowledge of actual, suspected and alleged fraud; and
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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:
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performed analytical procedures to identify any unusual or unexpected relationships;
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tested journal entries to identify unusual transactions;
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assessed whether judgements and assumptions made in determining the accounting estimates were
indicative of potential bias; and
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investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
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agreeing financial statement disclosures to underlying supporting documentation;
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reading the minutes of meetings of those charged with governance;
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enquiring of management as to actual and potential litigation and claims; and
reviewing correspondence with HMRC.
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.
Page 8
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MONTANE LTD
INDEPENDENT AUDITORS' REPORT TO THE MEMBERS OF MONTANE LTD (CONTINUED)
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditors' 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 Auditors' 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.
Joanna Gray
(Senior statutory auditor)
for and on behalf of
Armstrong Watson Audit Limited
Chartered Accountants
Statutory Auditor
Suite 15/17
11 Waterloo Street
Newcastle
NE1 4DP
31 October 2022
Page 9
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MONTANE LTD
STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 JANUARY 2022
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16 months ended
31 January
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Exceptional administrative expenses
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Interest payable and similar expenses
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Other comprehensive income for the period
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Cash flow hedges gain/(loss) arising in the period
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Cash flow hedges gain/(loss) reclassified to profit or loss
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Deferred tax arising on the adjustment to the hedging reserve
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Other comprehensive income for the period
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Total comprehensive income for the period
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The notes on pages 17 to 34 form part of these financial statements.
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Page 10
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MONTANE LTD
REGISTERED NUMBER:
03223959
STATEMENT OF FINANCIAL POSITION
AS AT
31 JANUARY 2022
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Debtors: amounts falling due within one year
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Creditors: amounts falling due within one year
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Total assets less current liabilities
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Creditors: amounts falling due after more than one year
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Provisions for liabilities
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Capital redemption reserve
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The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 17 to 34 form part of these financial statements.
Page 11
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STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED
31 JANUARY 2022
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Capital redemption reserve
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Comprehensive income for the period
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Deferred tax on derivative financial instruments
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Shares cancelled during the year
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Share premium repaid on cancelled shares
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The notes on pages 17 to 34 form part of these financial statements.
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Page 12
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STATEMENT OF CHANGES IN EQUITY
FOR THE 16 MONTHS ENDED
31 JANUARY 2021
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Capital redemption reserve
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Comprehensive income for the period
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Profit on share based payment
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Cash flow hedges gains reclassified to profit or loss
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Deferred tax on derivative financial instruments
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Shares issued during the period
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The notes on pages 17 to 34 form part of these financial statements.
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Page 13
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MONTANE LTD
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 JANUARY 2022
Cash flows from operating activities
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Profit for the financial year
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Amortisation of intangible assets
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Depreciation of tangible assets
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(Increase)/decrease in debtors
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(Decrease)/increase in creditors
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Inclusion of share based payment
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Net cash generated from operating activities
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Cash flows from investing activities
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Purchase of intangible fixed assets
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Purchase of tangible fixed assets
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Net cash from investing activities
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Cash flows from financing activities
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Movement in the derivative contracts
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Movement on invoice discounting
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Net cash used in financing activities
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Net (decrease)/increase in cash and cash equivalents
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Page 14
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MONTANE LTD
STATEMENT OF CASH FLOWS (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2022
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Cash and cash equivalents at beginning of the period
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Cash and cash equivalents at the end of the period
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Cash and cash equivalents at the end of the period to comprise:
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The notes on pages 17 to 34 form part of these financial statements.
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Page 15
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MONTANE LTD
ANALYSIS OF NET DEBT
FOR THE YEAR ENDED 31 JANUARY 2022
The notes on pages 17 to 34 form part of these financial statements.
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Page 16
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MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
The company is a limited liability company incorporated and domiciled in the United Kingdom. It trades from its registered office at 3 Freeman Court, North Seaton Industrial Estate, Ashington, Northumberland, NE63 0YF.
The principal activity of the company is the manufacture of specialist outdoor clothing and equipment.
These financial statements have been presented in Pound Sterling as this is the currency of the primary economic environment in which the company operates.
2.
Accounting policies
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Basis of preparation of financial statements
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The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
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The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The directors have considered a wide number of macroeconomic factors, including, but not limited to foreign exchange rates, inflation rates, consumer confidence and the fallout from the COVID-19 pandemic, and their potential impact on the financial sustainability of the Company. In doing so management have applied sensitivities and adverse assumptions upon their budgets, cash flow forecasts in making their assessment. The directors have considered a period of at least twelve months from the date of sign off when making their assessment with regards to going concern. After consideration of all factors, the directors have continued to adopt the going concern basis in preparing the financial statements.
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:
Sale of goods
Revenue from the sale of goods is recognised when all of the following conditions are satisfied:
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the Company has transferred the significant risks and rewards of ownership to the buyer;
∙
the Company retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold;
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the amount of revenue can be measured reliably;
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it is probable that the Company will receive the consideration due under the transaction; and
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the costs incurred or to be incurred in respect of the transaction can be measured reliably.
Page 17
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MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
2.
Accounting policies (continued)
Tangible fixed assets under the cost model are stated at historical cost less accumulated depreciation and any accumulated impairment losses. Historical cost includes expenditure that is directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, on the following basis.
Depreciation is provided on the following basis:
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S/Term Leasehold Property
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The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first out basis.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss
Short-term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.
|
|
Cash and cash equivalents
|
Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours. Cash equivalents are highly liquid investments that mature in no more than three months from the date of acquisition and that are readily convertible to known amounts of cash with insignificant risk of change in value.
In the Statement of cash flows, cash and cash equivalents are shown net of bank overdrafts that are repayable on demand and form an integral part of the Company's cash management.
Short-term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.
Page 18
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MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
2.
Accounting policies (continued)
Debt instruments (other than those wholly repayable or receivable within one year), including loans and other accounts receivable and payable, are initially measured at present value of the future cash flows and subsequently at amortised cost using the effective interest method. Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or in case of an out-right short-term loan that is not at market rate, the financial asset or liability is measured, initially at the present value of future cash flows discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost, unless it qualifies as a loan from a director in the case of a small company, or a public benefit entity concessionary loan.
Financial assets that are measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the Statement of comprehensive income.
Financial assets and liabilities are offset and the net amount reported in the Statement of financial position when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs of finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.
Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.
The Company uses foreign currency forward contracts to manage its exposure to cash flow risk on its foreign currency transactions. These derivatives are measured at fair value at each reporting date.
To the extent the cash flow hedge is effective, movements in fair value are recognised in other comprehensive income and presented in a separate cash flow hedge reserve. Any ineffective portions of those movements are recognised in profit or loss for the period.
Gains and losses on the hedging instruments and the hedged items are recognised in profit or loss for the period. When a hedged item is an unrecognised firm commitment, the cumulative hedging gain or loss on the hedged item is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss.
Page 19
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
2.
Accounting policies (continued)
|
|
Provisions for liabilities
|
Provisions are made where an event has taken place that gives the Company a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the reporting date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties.
When payments are eventually made, they are charged to the provision carried in the Statement of financial position.
Defined contribution pension plan
The Company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Company pays fixed contributions into a separate entity. Once the contributions have been paid the Company has no further obligations.
The contributions are recognised as an expense in the Statement of comprehensive income when they fall due. Amounts not paid are shown in accruals as a liability in the statement of financial position. The assets of the plan are held separately from the Company in an independently administered fund.
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the Company keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
Page 20
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
2.
Accounting policies (continued)
|
|
Foreign currency translation
|
Functional and presentation currency
The Company's functional and presentational currency is GBP.
Transactions and balances
Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.
At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss except when deferred in other comprehensive income as qualifying cash flow hedges.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the Statement of comprehensive income within 'finance income or costs'. All other foreign exchange gains and losses are presented in profit or loss within 'other operating income'.
|
|
Operating leases: the Company as lessee
|
Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.
In the research phase of an internal project it is not possible to demonstrate that the project will generate future economic benefits and hence all expenditure on research shall be recognised as an expense when it is incurred. Intangible assets are recognised from the development phase of a project if and only if certain specific criteria are met in order to demonstrate the asset will generate probable future economic benefits and that its cost can be reliably measured. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to expenditure on tangible fixed assets are credited to profit or loss at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.
Grants of a revenue nature are recognised in the Statement of comprehensive income in the same period as the related expenditure.
Page 21
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
2.
Accounting policies (continued)
Finance costs are charged to profit or loss over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in profit or loss in the year in which they are incurred.
|
|
Current and deferred taxation
|
The tax expense for the year to comprises current and deferred tax. Tax is recognised in profit or loss except that a charge attributable to an item of income and expense recognised as other comprehensive income or to an item recognised directly in equity is also recognised in other comprehensive income or directly in equity respectively.
The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the reporting date in the countries where the Company operates and generates income.
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the reporting date, except that:
∙
The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙
Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
Exceptional items are transactions that fall within the ordinary activities of the Company but are presented separately due to their size or incidence.
Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible
assets are measured at cost less any accumulated amortisation and any accumulated impairment
losses.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life
cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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Website Development Expenditure
|
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Page 22
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
Judgements in applying accounting policies and key sources of estimation uncertainty
|
The preparation of these financial statements requires management to make judgements, estimates and assumptions that effect the application of policies and reported amounts of assets and liabilities, income and expenses.
Judgements and estimates are continually evaluated and are based on historical experiences and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The company makes estimates and assumptions concerning the future. The resulting accounting estimates will be, by definition, seldom equal to the related actual results.
There is a key source of estimation uncertainty in relation to the obsolescence of stock.
The whole of the turnover is attributable to the principal activity of the company.
Analysis of turnover by country of destination:
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|
16 months ended
31 January
|
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|
The operating profit is stated after charging:
|
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|
|
16 months ended
31 January
|
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|
Other operating lease rentals
|
|
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Page 23
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
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|
|
16 months ended
31 January
|
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|
Fees payable to the Company's auditor and its associates for the audit of the Company's annual financial statements
|
|
|
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|
Staff costs, including directors' remuneration, were as follows:
|
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|
|
|
|
16 months ended
31 January
|
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Cost of defined contribution scheme
|
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|
The average monthly number of employees, including the directors, during the year was as follows:
|
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|
16 months ended
31 January
|
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16 months ended
31 January
|
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The highest paid director received remuneration of £
237,897
(2021 - £
242,230
)
.
|
Page 24
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
Interest payable and similar expenses
|
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|
16 months ended
31 January
|
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Other loan interest payable
|
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|
16 months ended
31 January
|
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Current tax on profits for the year
|
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|
|
Adjustments in respect of previous periods
|
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Origination and reversal of timing differences
|
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|
Taxation on profit on ordinary activities
|
|
|
Page 25
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
10.
Taxation (continued)
|
Factors affecting tax charge for the year/period
|
|
The tax assessed for the year/period is higher than
(2021 - lower than)
the standard rate of corporation tax in the UK of
19
% (2021-
19
%)
. The differences are explained below:
|
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|
16 months ended
31 January
|
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|
Profit on ordinary activities before tax
|
|
|
|
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2021 - 19%)
|
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|
|
Expenses not deductible for tax purposes
|
|
|
|
Adjustments to tax charge in respect of prior periods
|
|
|
|
Short-term timing difference leading to an increase (decrease) in taxation
|
|
|
|
Adjustment in research and development tax credit leading to an increase in the tax charge
|
|
|
|
Total tax charge for the year/period
|
|
|
|
Factors that may affect future tax charges
|
An increase in the UK corporate tax from 19% to 25% was announced in the 2021 budget, this is scheduled to take effect from April 2023. The rate for small profits under £50,000 will remain at 19%, and there will be taper relief for businesses with profits between £50,000 and £250,000. Since the proposal to increase the rate to 25% had not been substantively enacted at the balance sheet date effects are not included in these financial statements.
|
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|
16 months ended
31 January
|
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|
|
Fees in respect of change of ownership
|
|
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|
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Page 26
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
|
Websites & development costs
|
|
|
|
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|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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Page 27
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
|
S/Term Leasehold Property
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
|
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|
|
Charge for the year on owned assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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|
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|
|
The net book value of land and buildings may be further analysed as follows:
|
|
|
|
|
|
|
|
|
|
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Page 28
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
Raw materials and consumables
|
|
|
|
Finished goods and goods for resale
|
|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
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|
|
Prepayments and accrued income
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
|
|
|
|
|
|
|
|
|
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|
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Page 29
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
Creditors: Amounts falling due within one year
|
|
|
|
|
|
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|
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|
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|
Other taxation and social security
|
|
|
|
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|
|
Accruals and deferred income
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
|
|
|
|
Secured creditors
Bank loans of £1,800,565 (2021 - £113,130) are secured by the company as detailed below.
Debenture comprising fixed and floating charges over all assets and undertakings of Montane Ltd including all present and future freehold and leasehold property, book and other debts, chattels, goodwill and uncalled capital, both present and future.
Supplemental fixed charge over goodwill, uncalled capital and intellectual property rights of Montane Limited.
Charge over contract monies given by Montane Limited.
General pledge over documents and goods given by Montane Limited.
|
|
Creditors: Amounts falling due after more than one year
|
|
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|
|
|
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Page 30
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
|
|
Analysis of the maturity of loans is given below:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amounts falling due within one year
|
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|
|
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|
|
Amounts falling due 2-5 years
|
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|
|
|
|
|
|
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|
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|
|
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|
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|
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|
|
A £1.7m Coronavirus Business Interruption Loan (CBIL) was received in October 2020. Having utilised the government Business Interruption Payment initiative for 12 months interest was then payable from October 2021 and was charged at 3.99%. The loan was repaid in full in December 2021.
|
Page 31
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
|
|
|
|
Financial assets measured at fair value through profit or loss
|
|
|
|
Financial assets that are debt instruments measured at amortised cost
|
|
|
|
|
|
|
|
|
|
|
|
Financial liabilities measured at amortised cost
|
|
|
|
The company enters into forward foreign currency contracts to hedge currency exposure on firm future commitments. The fair values of the assets and liabilities held at fair value through profit and loss at the balance sheet date are determined using quoted prices.
|
Page 32
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to profit or loss
|
|
|
Deferred tax on derivative financial instruments
|
|
|
|
|
|
The provision for deferred taxation is made up as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accelerated capital allowances
|
|
|
|
Derivative financial instruments
|
|
|
|
|
|
|
|
|
Allotted, called up and fully paid
|
|
|
|
|
|
|
|
|
|
15,773
(2021 -
15,832
)
Ordinary
shares of £
1.00
each
|
|
|
Share premium account
This reserve includes and premiums received on issue of share capital. Any transactions costs associated with the issuing of shares are deducted from share premium.
Capital redemption reserve
This reserve arises on the repurchase of share capital of the company from the shareholders and records the nominal value of shares repurchased.
Hedging reserve
This reserve arises due to changes in the fair value of the Company's cash flow hedges, net of any deferred taxation.
Page 33
|
MONTANE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2022
The Company operates a defined contributions pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to £54,657 (2021 - £45,153). Contributions totalling £
11,920
(2021 - £
8,959
) were payable to the fund at the reporting date and are included in creditors.
|
Commitments under operating leases
|
|
At 31 January 2022 the Company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Later than 1 year and not later than 5 years
|
|
|
|
|
|
|
|
Related party transactions
|
|
Administration expenses include £50,000 (2021- £43,208) paid to Inverleith LLP in relation to management fees.
|
The ultimate parent company of Montane Ltd is
Inverleith (MT) Limited
. It is the view of the directors that there is no ultimate controlling party.
Inverleith (MT) Limited is a company incorporated in Scotland, the accounts of which are available from 43 Melville Street, Edinburgh, Midlothian, Scotland, EH3 7JF.
Page 34
|