Company registration number 06719651 (England and Wales)
Twig Education Limited
Annual report and financial statements
for the year ended 31 December 2023
Twig Education Limited
Company information
Directors
J Grayer
A Klaber
Company number
06719651
Registered office
71-75 Shelton Street
Covent Garden
London
WC2H 9JQ
Auditor
Henderson Loggie LLP
The Vision Building
20 Greenmarket
Dundee
DD1 4QB
Twig Education Limited
Contents
Page
Strategic report
1 - 2
Directors' report
3
Directors' responsibilities statement
4
Independent auditor's report
5 - 7
Statement of comprehensive income
8
Balance sheet
9
Statement of changes in equity
10
Notes to the financial statements
11 - 25
Twig Education Limited
Strategic Report
for the year ended 31 December 2023
- 1 -
The directors present the strategic report for the year ended 31 December 2023.
Review of the business
Twig Education Limited is a multi-media development studio specialising in creating global Education programs that primarily explore real world phenomena through student driven investigation and discovery, with a major focus on the US instructional market.
Our mission has been to improve global science literacy by giving all students the skills and knowledge they need to understand how their world works.
Twig Education currently provides high quality digital and print resources to more than 60 countries and in 20 different languages and comprises a collaboration of teachers, filmmakers, writers, researchers, designers, academics, and students, all working together to create exciting and effective student learning experiences.
Twig Science is the flagship product developed by the company and is a full science curriculum product for grades K-8, that is constructed around the new Next Generation Science Standards (NGSS) teaching framework that is sold globally, with particular success in the USA.
Following the acquisition of the company by Imagine Learning LLC in 2021, the company has increased its development capabilities into other core subject areas to enhance its reputation as a best-in-class development studio.
The company is strategically well placed to develop further innovative market leading products as part of an enlarged Imagine Learning LLC group that offers other K-12 Core products alongside a growing portfolio of additional innovative educational brands.
Principal risks and uncertainties
The principal risks and uncertainties affecting the company include the following:
Competitive risk - the company operates in a highly competitive market against well-established large publishers. Product innovations, technical advances by competitors or higher financial sales & marketing spend could adversely affect the company.
Availability of free digital resources - although the company's educational resources are considered best-in-class by many educators and students - there is a plethora of free resources that provide alternatives to purchasing the company's products.
Human Resources - The company's staff resources are vital to its continued creative and operational success and are based in several distinct locations. Attracting and retaining key creative, technical, operational, and commercial talent is critical and a relevant and attractive reward package form a fundamental strand of the company's HR strategy.
Group support - the company is reliant on the resources of its parent company, Imagine Learning LLC to fund future product development.
Twig Education Limited
Strategic Report (continued)
for the year ended 31 December 2023
- 2 -
Development and performance
Key areas of strategic development and performance of the business include:
Key performance indicators
Key financial performance indicators include the monitoring of (i) product trials and pilots, and new sales pipelines, (ii) operational execution and optimising margins, and (iii) strategic product development investment.
A Klaber
Director
27 August 2024
Twig Education Limited
Directors' report
for the year ended 31 December 2023
- 3 -
The directors present their annual report and financial statements for the year ended 31 December 2023.
Principal activities
The principal activity of the company is that of developing and delivering award winning multi media education resources.
Directors
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
J Grayer
A Klaber
Results and dividends
The results for the year are set out on page 8.
No ordinary dividends were paid. The directors do not recommend payment of a final dividend.
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.
Strategic report
Included within the strategic report is an indication of the principal risks and uncertainties including the risks associated with new products, projects and technology, competition, availability of free digital resources and human resources. Also included are the methods adopted to manage these risks where applicable.
On behalf of the board
A Klaber
Director
27 August 2024
Twig Education Limited
Directors' responsibilities statement
for the year ended 31 December 2023
- 4 -
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.
Twig Education Limited
Independent auditor's report
to the members of Twig Education Limited
- 5 -
Opinion
We have audited the financial statements of Twig Education Limited (the 'company') for the year ended 31 December 2023 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 2023 and of its loss 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.
Twig Education Limited
Independent auditor's report (continued)
to the members of Twig Education Limited
- 6 -
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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 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:
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.
Responsibilities of directors
As explained more fully in the directors' responsibilities statement, 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.
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. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below:
Twig Education Limited
Independent auditor's report (continued)
to the members of Twig Education Limited
- 7 -
As part of our planning process:
We enquired of management the systems and controls the company has in place, the areas of the financial statements that are mostly susceptible to the risk of irregularities and fraud, and whether there was any known, suspected or alleged fraud. Management informed us that there were no instances of known, suspected or alleged fraud;
We obtained an understanding of the legal and regulatory frameworks applicable to the company. We determined that the following were most relevant: FRS 102; Copyright regulations; Anti Bribery and Corruption regulations; Health and Safety; employment law (including the Working Time Directive); and compliance with the UK Companies Act;
We considered the incentives and opportunities that exist in the company, including the extent of management bias, which present a potential for irregularities and fraud to be perpetrated, and tailored our risk assessment accordingly; and
Using our knowledge of the company, together with the discussions held with management at the planning stage, we formed a conclusion on the risk of misstatement due to irregularities including fraud and tailored our procedures according to this risk assessment.
The key procedures we undertook to detect irregularities including fraud during the course of the audit included:
Enquiries with management about any known or suspected instances of non-compliance with laws and regulations and fraud;
Reviewing Board minutes;
Challenging assumptions and judgements made by management in their significant accounting estimates, in particular in relation to the revenue recognition basis of multi year contracts and the carrying value of intangible assets;
Auditing the risk of management override of controls, including through testing journal entries and other adjustments for appropriateness; and
Reviewing the financial statement disclosures and determining whether accounting policies have been appropriately applied.
Owing to the inherent limitations of an audit, there is an unavoidable risk that some material misstatements in the financial statements may not be detected, even though the audit is properly planned and performed in accordance with the ISAs (UK). For instance, the further removed non-compliance is from the events and transactions reflected in the financial statements, the less likely the auditor is to become aware of it or to recognise the non-compliance. The risk is also greater regarding irregularities occurring due to fraud rather than error, as fraud involves intentional concealment, forgery, collusion, omission or misrepresentation. The primary responsibility for the prevention and detection of irregularities and fraud rests with the directors.
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 members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the company's members those matters we are required to state to them in an auditor's report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company and the company's members as a body, for our audit work, for this report, or for the opinions we have formed.
Gavin Black
Senior Statutory Auditor
For and on behalf of Henderson Loggie LLP
27 August 2024
Chartered Accountants
Statutory Auditor
The Vision Building
20 Greenmarket
Dundee
DD1 4QB
Twig Education Limited
Statement of comprehensive income
for the year ended 31 December 2023
- 8 -
2023
2022
Notes
£
£
Turnover
3
9,824,336
4,118,243
Cost of sales
(5,599,798)
(4,986,434)
Gross profit/(loss)
4,224,538
(868,191)
Administrative expenses
(4,242,904)
(2,320,963)
Provision against intercompany balances
(147,338)
Disposal of subsidiary
18,480,067
Operating (loss)/profit
4
(18,366)
15,143,575
Interest receivable and similar income
7
258,585
268,560
Interest payable and similar expenses
8
(901,935)
(353,549)
(Loss)/profit before taxation
(661,716)
15,058,586
Tax on (loss)/profit
9
87,296
(Loss)/profit for the financial year
(574,420)
15,058,586
The Statement of Comprehensive Income has been prepared on the basis that all operations are continuing operations.
Twig Education Limited
Balance sheet
as at 31 December 2023
- 9 -
2023
2022
Notes
£
£
£
£
Fixed assets
Intangible assets
10
21,843,710
23,398,307
Tangible assets
11
121,352
204,032
21,965,062
23,602,339
Current assets
Stocks
14
80,432
206,526
Debtors
15
42,508,680
44,880,959
Cash at bank and in hand
477,127
657,195
43,066,239
45,744,680
Creditors: amounts falling due within one year
16
(65,467,878)
(69,163,938)
Net current liabilities
(22,401,639)
(23,419,258)
Total assets less current liabilities
(436,577)
183,081
Creditors: amounts falling due after more than one year
17
(70,353)
(115,591)
Net (liabilities)/assets
(506,930)
67,490
Capital and reserves
Called up share capital
21
92
92
Profit and loss reserves
22
(507,022)
67,398
Total equity
(506,930)
67,490
The financial statements were approved by the board of directors and authorised for issue on 27 August 2024 and are signed on its behalf by:
A Klaber
Director
Company Registration No. 06719651
Twig Education Limited
Statement of changes in equity
for the year ended 31 December 2023
- 10 -
Share capital
Profit and loss reserves
Total
£
£
£
Balance at 1 January 2022
92
(14,991,188)
(14,991,096)
Year ended 31 December 2022:
Profit and total comprehensive income for the year
-
15,058,586
15,058,586
Balance at 31 December 2022
92
67,398
67,490
Year ended 31 December 2023:
Loss and total comprehensive income for the year
-
(574,420)
(574,420)
Balance at 31 December 2023
92
(507,022)
(506,930)
Twig Education Limited
Notes to the financial statements
for the year ended 31 December 2023
- 11 -
1
Accounting policies
Company information
Twig Education Limited is a private company limited by shares incorporated in England and Wales. The registered office is 71-75 Shelton Street, Covent Garden, London, WC2H 9JQ.
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 amounts 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.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’ – Presentation of a statement of cash flow and related notes and disclosures;
Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’ – Carrying amounts, interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’ – Compensation for key management personnel.
The company has taken advantage of the exemption under section 400 of the Companies Act 2006 not to prepare consolidated financial statements. The financial statements present information about the company as an individual entity and not about its group.
Twig Education Limited is a wholly owned subsidiary of Twig UK Holdco Limited and the results of Twig Education Limited are included in the consolidated financial statements of Twig UK Holdco Limited which are available from its registered office.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 12 -
1.2
Going concern
The financial statements have been prepared on a going concern basis. The directors have considered relevant information, including the annual budget, forecast future cash flows and the impact of subsequent events in making their assessment. The directors have performed an analysis of forecast future cash flows taking into account the potential impact on the business of the current economic climate, particularly in the US and the UK. This analysis also considers the effectiveness of available measures to assist in mitigating the impact.true
Following the restructuring of the Twig UK Holdco Limited group (which includes Twig Education Limited), the group is heavily reliant on Imagine Learning LLC providing working capital funding as it can no longer rely on the positive cash generation from the trading activities of Twig Education Inc. The directors have received confirmation of continued financial support from Imagine Learning LLC covering a period of at least 12 months from the date of approval of these financial statements. The directors have also taken appropriate steps to ensure that the parent company has the financial resources to provide this support.
Based on the trading assessment and having regard to the financial resources available to the group, including the ongoing financial support of its parent company and ultimate shareholders, the directors have concluded that there is no material uncertainty and that they can continue to adopt the going concern basis in preparing the annual report and financial statements.
1.3
Turnover
Income recognised from films represents the invoiced value of licence fees including withholding tax but excluding value added tax. The company's policy is to recognise the income when all of the following criteria are met:
(a) a licence agreement has been executed by both parties;
(b) the programme has substantially met all necessary technical quality requirements;
(c) delivery to the broadcaster has occurred;
(d) the licence term has commenced;
(e) the arrangement is fixed or determinable; and
(f) collection of the arrangement fee is reasonably assured.
Any licence fees received in advance, which do not meet all of the above criteria, are included in deferred income until the above criteria are met.
Where the revenue recognition criteria are met and the customer is given the right to access content as it stands at the point in time at which the licence is granted, income is recognised at the licence grant date.
Where the revenue recognition criteria are met and the customer is given the right to access content as it exists throughout the licence period, income is recognised over the term of the licence agreement.
The company also recognises transfer pricing adjustments each year within turnover which are in relation to other group entities.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 13 -
1.4
Research and development expenditure
Research expenditure is written off to the profit and loss account in the year in which it is incurred.
Development expenditure is written off in the same way unless the directors are satisfied as to the technical, commercial and financial viability of individual projects. In this situation, the expenditure is capitalised as an intangible asset and amortised over its expected useful life. Development expenditure includes third party costs and employee costs.
Where payments are made to third parties for access to film content these are included in prepayments and released to intangibles when utilised.
1.5
Intangible fixed assets other than goodwill
Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.
Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity.
Amortisation 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:
Development costs
5 - 7 years
1.6
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:
Leasehold improvements
over the shorter of the lease term or useful life
Fixtures, fittings & equipment
over 4 years
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.
1.7
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.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 14 -
1.8
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.
1.9
Stocks
Stocks are stated at the lower of cost and estimated selling price less costs to complete and sell. Cost comprises direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the stocks to their present location and condition.
At each reporting date, an assessment is made for impairment. Any excess of the carrying amount of stocks over its estimated selling price less costs to complete and sell is recognised as an impairment loss in profit or loss. Reversals of impairment losses are also recognised in profit or loss.
1.10
Cash at bank and in hand
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.
1.11
Financial instruments
The company has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.
Financial instruments are recognised in the company's balance sheet when the company becomes party to the contractual provisions of the instrument.
Financial assets and liabilities are offset, with the net amounts presented in the financial statements, when there is a legally 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.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 15 -
Basic financial assets
Basic financial assets, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method unless the arrangement constitutes a financing transaction, where the transaction is measured at the present value of the future receipts discounted at a market rate of interest. Financial assets classified as receivable within one year are not amortised.
Trade debtors, loans and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as 'loans and receivables'. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.
Interest is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial. The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating the interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument to the net carrying amount on initial recognition.
Impairment of financial assets
Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.
Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.
If there is a decrease in the impairment loss arising from an event occurring after the impairment was recognised, the impairment is reversed. The reversal is such that the current carrying amount does not exceed what the carrying amount would have been, had the impairment not previously been recognised. The impairment reversal is recognised in profit or loss.
Derecognition of financial assets
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Classification of financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 16 -
Basic financial liabilities
Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Trade creditors are obligations to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.
Derecognition of financial liabilities
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
1.12
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.
Changes in the fair value of derivatives that are designated and qualify as fair value hedges are recognised in profit or loss immediately, together with any changes in the fair value of the hedged asset or liability that are attributable to the hedged risk.
1.13
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.
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.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
1
Accounting policies (continued)
- 17 -
1.14
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.
1.15
Retirement benefits
The company makes contributions to the personal pension schemes of individual employees as well as a company pension scheme. Contributions payable are charged to the profit and loss account in the year they are payable.
1.16
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 leases asset are consumed.
1.17
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.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 18 -
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.
Critical judgements
The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.
Development costs
Development costs are capitalised as intangible assets on the basis that the individual projects are technically feasible as well as being commercially and financially viable. Once capitalised, development costs are amortised over an expected useful life of 5 to 7 years but, in reality, may generate income over a longer period of time.
Deferred income
Any licence fees received in advance, which do not meet all of the revenue recognition criteria per the accounting policy, are included in deferred income until the criteria are met.
Where the revenue recognition criteria are met and the customer is given the right to access content as it stands at the point in time at which the licence is granted, income is recognised at the licence grant date.
Where the revenue recognition criteria are met and the customer is given the right to access content as it exists throughout the licence period, income is recognised over the term of the licence agreement.
Therefore, income can be recognised over a period of time and certain assumptions are used, based on the agreement terms.
3
Turnover and other revenue
An analysis of the company's turnover is as follows:
2023
2022
£
£
Turnover analysed by class of business
Principal activity
1,504,403
1,482,986
Group transfer pricing adjustment
8,319,933
2,635,257
9,824,336
4,118,243
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
3
Turnover and other revenue (continued)
- 19 -
2023
2022
£
£
Other revenue
Interest income
258,585
268,560
4
Operating (loss)/profit
2023
2022
Operating (loss)/profit for the year is stated after charging/(crediting):
£
£
Exchange losses/(gains)
26,028
(2,797,137)
Research and development costs
919
-
Fees payable to the company's auditor for the audit of the company's financial statements
25,000
20,160
Depreciation of owned tangible fixed assets
92,416
97,188
Amortisation of intangible assets
5,584,657
4,516,340
Operating lease charges
84,847
96,491
5
Employees
The average monthly number of persons (including directors) employed by the company during the year was:
2023
2022
Number
Number
Average
140
166
Their aggregate remuneration comprised:
2023
2022
£
£
Wages and salaries
6,147,690
7,765,818
Social security costs
636,613
740,241
Pension costs
304,226
234,783
7,088,529
8,740,842
Employment costs include internal staff costs incurred in developing multi media curriculum content and products amounting to £2,591,811 (2022 - £3,797,171) which have been capitalised as part of intangible fixed asset additions.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 20 -
6
Directors' remuneration
Directors were not remunerated through this company in either financial year.
7
Interest receivable and similar income
2023
2022
£
£
Interest income
Interest receivable from group companies
258,585
268,560
8
Interest payable and similar expenses
2023
2022
£
£
Interest payable to group undertakings
901,935
353,549
9
Taxation
2023
2022
£
£
Current tax
UK income tax
(87,296)
The actual (credit)/charge for the year can be reconciled to the expected (credit)/charge for the year based on the profit or loss and the standard rate of tax as follows:
2023
2022
£
£
(Loss)/profit before taxation
(661,716)
15,058,586
Expected tax (credit)/charge based on the standard rate of corporation tax in the UK of 25% (2022: 19%)
(165,429)
2,861,131
Tax effect of expenses that are not deductible in determining taxable profit
9,991
Unutilised tax losses carried forward
644,474
Change in unrecognised deferred tax assets
155,268
(22,386)
Research and development tax credit
(87,296)
Provision against intercompany balances
27,994
Disposal of subsidiary
(3,511,213)
Margin
170
Taxation credit for the year
(87,296)
-
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
9
Taxation (continued)
- 21 -
On 3 March 2021, the UK Budget 2021 announcements included measures to support economic recovery as a result of the COVID-19 pandemic. These included an increase to the UK’s main corporation tax rate to 25%, which became effective from 1 April 2023. The 25% rate was granted Royal Assent on 10 June 2021 and so was enacted at the balance sheet date. As a result, the corporation tax rate for the year has been taken as 25%.
10
Intangible fixed assets
Development costs
£
Cost
At 1 January 2023
41,409,897
Additions - internally developed
4,030,060
Disposals
(1,019,061)
At 31 December 2023
44,420,896
Amortisation and impairment
At 1 January 2023
18,011,590
Amortisation charged for the year
5,584,657
Disposals
(1,019,061)
At 31 December 2023
22,577,186
Carrying amount
At 31 December 2023
21,843,710
At 31 December 2022
23,398,307
This asset reflects development costs incurred in developing multi media curriculum content and products. Internal staff costs of £2,591,811 (2022 - £3,797,171) have been capitalised as part of additions.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 22 -
11
Tangible fixed assets
Leasehold improvements
Fixtures, fittings & equipment
Total
£
£
£
Cost
At 1 January 2023
631,803
631,803
Additions
10,590
10,590
Disposals
(18,303)
(18,303)
At 31 December 2023
10,590
613,500
624,090
Depreciation and impairment
At 1 January 2023
427,771
427,771
Depreciation charged in the year
92,416
92,416
Eliminated in respect of disposals
(17,449)
(17,449)
At 31 December 2023
502,738
502,738
Carrying amount
At 31 December 2023
10,590
110,762
121,352
At 31 December 2022
204,032
204,032
12
Fixed asset investments
2023
2022
£
£
Investments in subsidiaries
13
13
Subsidiaries
These financial statements are separate company financial statements for Twig Education Limited
Subsidiaries, Twig Education Technology Beijing Ltd and Twig Asia HK Ltd, ceased trading during the year ended 31 December 2021. The dissolution process for both entities has been completed in the current year.
14
Stocks
2023
2022
£
£
Finished goods and goods for resale
80,432
206,526
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 23 -
15
Debtors
2023
2022
Amounts falling due within one year:
£
£
Trade debtors
615,430
697,554
Amounts owed by group undertakings
40,820,383
41,585,432
Other debtors
642,060
827,807
Prepayments
175,751
1,595,426
42,253,624
44,706,219
2023
2022
Amounts falling due after more than one year:
£
£
Other debtors
255,056
174,740
Total debtors
42,508,680
44,880,959
16
Creditors: amounts falling due within one year
2023
2022
Notes
£
£
Trade creditors
573,540
1,315,640
Amounts owed to group undertakings
63,227,526
65,254,148
Taxation and social security
167,954
188,049
Deferred income
19
724,417
842,777
Other creditors
21,418
31,791
Accruals
753,023
1,531,533
65,467,878
69,163,938
There are no fixed repayment terms for amounts owed to group undertakings and interest applies at 1.52%.
17
Creditors: amounts falling due after more than one year
2023
2022
Notes
£
£
Deferred income
19
70,353
115,591
18
Deferred taxation
There were no deferred tax movements in the year.
Deferred tax is not recognised in respect of tax losses of £23,339,000 (2022 - £23,173,000) as it is not probable that they will be recovered against future taxable profits.
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 24 -
19
Deferred income
2023
2022
£
£
Other deferred income
794,770
958,368
Included in the financial statements as follows:
Current liabilities
724,417
842,777
Non-current liabilities
70,353
115,591
794,770
958,368
20
Retirement benefit schemes
2023
2022
Defined contribution schemes
£
£
Charge to profit or loss in respect of defined contribution schemes
304,226
234,783
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.
21
Share capital
2023
2022
£
£
Ordinary share capital
Issued and fully paid
9,250 Ordinary shares of 1p each
92
92
Ordinary shares carry full ownership, voting and equity rights.
22
Profit and loss reserves
Profit and loss reserves include all current and prior period retained profits and losses.
23
Operating lease commitments
Lessee
At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:
2023
2022
£
£
Within one year
82,392
85,192
Between two and five years
441,283
122,675
523,675
207,867
Twig Education Limited
Notes to the financial statements (continued)
for the year ended 31 December 2023
- 25 -
24
Related party transactions
The company has taken advantage of the disclosure exemption under FRS 102.33.1A not to disclose transactions entered into between two or more wholly owned members of its group.
25
Ultimate controlling party
The company's parent undertaking is Twig UK Holdco Limited, a company incorporated in the Great Britain and registered in England.
The ultimate controlling party is Imagine Learning LLC, incorporated in the United States of America.
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