The directors present the strategic report for the year ended 31 December 2023.
Twig Rights Limited and Twig Education Limited (together "the Group") are 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.
The Group 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 Group has increased its development capabilities into other core subject areas to enhance its reputation as a best-in-class development studio.
The Group 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.
The principal risks and uncertainties affecting the Group include the following:
New product, project and technology risk – the Group develops new content and platforms. All new technologies and products involve business risk which may materially impact the Group.
Competitive risk – the Group 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 Group.
Availability of free digital resources – although the Group’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 Group’s products.
Human Resources - The Group’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 Group’s HR strategy.
Group support – the Group is reliant on the resources of its parent company, Imagine Learning LLC to fund future product development.
Key areas of strategic development and performance of the business include:
Twig Science expansion – expanding the current product offering to cover all relevant states in the US at Grades K-8.
Enhancing and developing other educational products in the Core education portfolio developed by parent company Imagine Learning LLC to exploit the new potential available in this market.
Sales and marketing – supporting Imagine Learning LLC to maximise performance and aligning future product development strategies across the full Core curriculum.
Printing – leading the strategy and execution of delivering innovative printed materials as part of a distinct multi-media product offering for Imagine Learning LLC products.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2023.
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.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of our audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
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.
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.
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 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 carrying value of intercompany debtors;
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.
The profit and loss account has been prepared on the basis that all operations are continuing operations.
Twig Rights 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.
The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.
This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:
Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;
The financial statements of the company are consolidated in the financial statements of Twig Holdco UK Limited. These consolidated financial statements are available from its registered office.
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.
Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the company after deducting all of its liabilities.
Basic financial liabilities, including creditors, 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.
Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.
Equity instruments issued by the company are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the company.
In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.
Debts due from subsidiary undertakings are assessed at each reporting date for any indication of impairment. If any indication exists, the entity determines the recoverable amount of the debtor. In such cases, the recoverable amount is based on forecasted results which involves the use of significant estimates and assumptions including turnover, margin and growth rates as well as future economic and market conditions.
The average monthly number of persons (including directors) employed by the company during the year was:
The actual charge for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
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%.
Details of the company's subsidiaries at 31 December 2023 are as follows:
There are no fixed repayment terms for amounts owed by group undertakings and no interest applies. Although the intercompany debt naturally defaults to be presented as payable within one year, it is not expected that this debt will be called for payment within the next 12 months.
Each ordinary and 'A' ordinary share is entitled to one vote in any circumstance and are equally entitled to dividend or other distributions.
Each ‘A’ ordinary share has preferential rights in a return of capital where the first amount equal to the subscription price of each A ordinary share is paid to the A ordinary shares and a second amount equal to the subscription price of each ordinary share is paid is paid to the ordinary share and thereafter proceeds ae paid pari passu between the ordinary shares and the A ordinary shares after allowing for a fixed percentage allocation to E ordinary shares.
'E' ordinary shares shall not be entitled to receive dividends or distributions and shall not carry any voting rights. Holders shall not be entitled to receive information from the company or receive notice of, or attend, any general meetings of the company. Returns on capital are allocated to 'A' and ordinary shares based on subscription price prior to any allocation due to 'E' ordinary holders.
The share premium account includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium.
Profit and loss reserves include all current and prior period retained profits and losses.