REGISTERED NUMBER: |
Rosetta Stone (UK) Limited |
Financial Statements |
for the Year Ended 31 December 2023 |
REGISTERED NUMBER: |
Rosetta Stone (UK) Limited |
Financial Statements |
for the Year Ended 31 December 2023 |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Contents of the Financial Statements |
for the Year Ended 31 December 2023 |
Page |
Company Information | 1 |
Balance Sheet | 2 |
Notes to the Financial Statements | 3 |
Rosetta Stone (UK) Limited |
Company Information |
for the Year Ended 31 December 2023 |
DIRECTOR: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants and Statutory Auditors |
Sterling House |
97 Lichfield Street |
Tamworth |
Staffordshire |
B79 7QF |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Balance Sheet |
31 December 2023 |
2023 | 2022 |
Notes | £ | £ |
CURRENT ASSETS |
Debtors | 5 |
Cash at bank |
CREDITORS |
Amounts falling due within one year | 6 |
NET CURRENT ASSETS |
TOTAL ASSETS LESS CURRENT LIABILITIES |
CREDITORS |
Amounts falling due after more than one year | 7 |
NET ASSETS |
CAPITAL AND RESERVES |
Called up share capital | 8 |
Other reserves |
Retained earnings |
SHAREHOLDERS' FUNDS |
In accordance with Section 444 of the Companies Act 2006, the Income Statement has not been delivered. |
The financial statements were approved by the director and authorised for issue on |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Notes to the Financial Statements |
for the Year Ended 31 December 2023 |
1. | STATUTORY INFORMATION |
Rosetta Stone (UK) Limited is a |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
Related party exemption |
The company has taken advantage of exemption, under the terms of Financial Reporting Standard 102 'The Financial Reporting Standard applicable in the UK and Republic of Ireland', not to disclose related party transactions with wholly owned subsidiaries within the group. |
Significant judgements and estimates |
The company makes estimates and assumptions concerning the future. Management are also required to exercise judgement in the process of applying the company's accounting policies. Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below: |
In preparing these financial statements, the directors have made the following judgements: |
- Determine whether leases entered into by the company either as a lessor or a lessee are operating or finance leases. These decisions depend on an assessment of whether the risks and rewards of ownership have been transferred from the lessor to the lessee on a lease by lease basis based on an evaluation of the terms and conditions of the arrangements, and accordingly whether the lease requires an asset and liability to be recognised in the statement of financial position. |
- A provision is recognised when the company has a present legal or constructive obligation as a result of a past event for which it is probable that an outflow of resources will be required to settle the obligation and the amount can be reliably estimated. If the effect is material, provisions are determined by discounting the expected future cash flow at a rate that reflects the time value of money and the risks specific to the liability. |
- Whether a present obligation is probable or not requires judgement. The nature and type of risks for these provisions differ and management's judgement is applied regarding the nature and extent of obligations in deciding if an outflow of resources is probable or not. |
- Sales ledger debt provisions. Management review debts on a case by case basis to highlight deviation from terms and therefore possible provision requirement. |
- Depreciation and residual values. Management have reviewed the asset lives and associated residual values of all fixed asset classes and concluded that they are appropriate. |
The actual lives of the assets and residual values are assessed annually and may vary depending on a number of factors. In re-assessing asset lives, factors such as technological innovation, product life cycles and maintenance programmes are taken into account. Residual value assessments consider issues such as future market conditions, the remaining life of the asset and projects disposal values. |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2023 |
2. | ACCOUNTING POLICIES - continued |
Turnover |
Turnover is measured at the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. |
The Company derives its revenue from the sale of subscriptions of language learning programmes. Customers do not have the contractual right to take possession of the software and the software is delivered from the Company’s hosting facility. The Company recognises the subscription fees equally over the term of the subscription agreement, which typically ranges between three and twenty-four months in the case of Consumer sales and 12 months or longer in the case of Enterprise sales. |
Revenues from professional services are recognised as the respective services are performed. |
Deferred income represents turnover for subscriptions invoiced in advance and recognised at a later date. |
Tangible fixed assets |
Office furniture and equipment | - | 5 to 7 years |
IT equipment | - | 3 years |
Leasehold improvements | - | Lesser of Lease Term/Economic Life |
Residual value represents the estimated amount which would currently be obtained from disposal of an asset, after deducting estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life. |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2023 |
2. | ACCOUNTING POLICIES - continued |
Financial instruments |
Financial assets and financial liabilities are recognised when the Company becomes a party to the contractual provisions of the instrument. |
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. |
i. Financial assets and liabilities |
All financial assets and liabilities are initially measured at transaction price (including transaction costs), except for those financial assets classified as at fair value through profit or loss, which are initially measured at fair value (which is normally the transaction price excluding transaction costs), unless the arrangement constitutes a financing transaction. If an arrangement constitutes a financing transaction, the financial asset or financial liability is measured at the present value of the future payments discounted at a market rate of interest for a similar debt instrument. |
Financial assets and liabilities are only offset in the balance sheet when, and only when there exists a legally enforceable right to set off the recognised amounts and the Company intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. |
Debt instruments which meet the conditions of being ‘basic’ financial instruments as defined in paragraph 11.9 of FRS 102 are subsequently measured at amortised cost using the effective interest method. |
Debt instruments that have no stated interest rate (and do not constitute a financing transaction) and are classified as payable or receivable within one year are initially measured at an undiscounted amount of the cash or other consideration expected to be paid or received, net of impairment. |
Other debt instruments not meeting conditions of being ‘basic’ financial instruments are measured at fair value through profit or loss. |
Commitments to make and receive loans which meet the conditions mentioned above are measured at cost (which may be nil) less impairment. |
Financial assets are derecognised when and only when a) the contractual rights to the cash flows from the financial asset expire or are settled, b) the Company transfers to another party substantially all of the risks and rewards of ownership of the financial asset, or c) the Company, despite having retained some, but not all, significant risks and rewards of ownership, has transferred control of the asset to another party. |
Financial liabilities are derecognised only when the obligation specified in the contract is discharged, cancelled or expires. |
ii. Equity instruments |
Equity instruments issued by the Company are recorded at the fair value of cash or other resources received or receivable, net of direct issue costs. |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2023 |
2. | ACCOUNTING POLICIES - continued |
Taxation |
Taxation for the year comprises current and deferred tax. Tax is recognised in the Income Statement, except to the extent that it relates to items recognised in other comprehensive income or directly in equity. |
Current or deferred taxation assets and liabilities are not discounted. |
Current tax is recognised at the amount of tax payable using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date. |
A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable. The assessment is based on the judgement of tax professionals within the Company supported by previous experience in respect of such activities and in certain cases based on specialist independent tax |
advice. |
Deferred tax |
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date. |
Timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in financial statements. Deferred tax is measured using tax rates and laws that have been enacted or substantively enacted by the year end and that are expected to apply to the reversal of the timing difference. |
Unrelieved tax losses and other deferred tax assets are recognised only to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. |
Deferred tax is measured using the tax rates and laws that have been enacted or substantively enacted by the balance sheet date that are expected to apply to the reversal of the timing difference. Deferred tax relating to non-depreciable property, plant and equipment measured using the revaluation model and investment property is measured using the tax rates and |
allowances that apply to sale of the asset. In other cases, the measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities. |
Current tax assets and liabilities are offset only when there is a legally enforceable right to set off the amounts and the Company intends either to settle on a net basis or to realise the asset and settle the liability simultaneously. |
Deferred tax assets and liabilities are offset only if: a) the Company has a legally enforceable right to set off current tax assets against current tax liabilities; and b) the deferred tax assets and deferred tax liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different taxable entities which intend either to settle current tax liabilities and assets on a net basis, or to realise the assets and settle the liabilities simultaneously, in each future period in which significant amounts of deferred tax liabilities or assets are expected to be settled or recovered. |
Foreign currencies |
Transactions in foreign currencies are recorded at the rate of exchange at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are reported at the rates of exchange prevailing at that date. |
Exchange differences are recognised in profit or loss in the period in which they arise except for exchange differences arising on gains or losses on non-monetary items which are recognised in other comprehensive income. |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2023 |
2. | ACCOUNTING POLICIES - continued |
Pension costs and other post-retirement benefits |
The Company provides benefits through a defined contribution pension scheme, the assets of which are held separately from those of the Company in independently administered funds. The pension cost charge represents contributions payable by the Company to the funds. Employers’ contributions are charged to the profit and loss account in the year to which they relate and are disclosed in note 6 under “Other pension costs”. Differences between contributions payable in the year and contributions actually paid are shown as either accruals or prepayments in the balance sheet. |
Going concern |
As a market leader in distance language education, the Company is strategically positioned to provide learning solutions to enterprises restarting operations under social distancing restrictions, as well as for educational institutions gearing up for the new academic year. |
After making enquiries, the directors can confirm that despite the on-going economic uncertainty the Company has access to group financial resources and support to continue in operational existence for at least 12 months from the signature date on the audit report. The Company has written confirmation of the continued support from the ultimate parent company, IXL Learning, Inc. as at the reporting date. The directors consider that the parent company has sufficient financial resources to support the Company for a period of at least 12 months from the date of signing these accounts. Thus, the directors continue to adopt the going concern basis in preparing the annual report and financial statements. |
Impairment of assets |
Assets, other than those measured at fair value, are assessed for indicators of impairment at each balance sheet date. If there is objective evidence of impairment, an impairment loss is recognised in profit or loss as described below. |
Non-financial assets |
An asset is impaired where there is objective evidence that, as a result of one or more events that occurred after initial recognition, the estimated recoverable value of the asset has been reduced. The recoverable amount of an asset is the higher of its fair value less costs to sell and its value in use. |
Where indicators exist for a decrease in impairment loss, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. |
Financial assets |
For financial assets carried at amortised cost, the amount of impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the financial asset’s original effective interest rate. |
For financial assets carried at cost less impairment, the impairment loss is the difference between the asset’s carrying amount and the best estimate of the amount that would be received for the asset if it were to be sold at the reporting date. |
Where indicators exist for a decrease in impairment loss, and the decrease can be related objectively to an event occurring after the impairment was recognised, the prior impairment loss is tested to determine reversal. An impairment loss is reversed on an individual impaired financial asset to the extent that the revised recoverable value does not lead to a revised carrying amount higher than the carrying value had no impairment been recognised. |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2023 |
2. | ACCOUNTING POLICIES - continued |
Share-based payment |
During the prior year, the previous ultimate parent company, Rosetta Stone Inc., operated an equity-settled, share-based compensation plan for the employees of all its subsidiaries, including Rosetta Stone (UK) Limited. |
The fair value of the employee services received by the Company in exchange for the grant of the options is recognised as an expense in the Company’s accounts and a credit entry is made in equity. The parent company granting the options or restricted stock awards recognises a corresponding credit in reserves and an increase in its investment in the subsidiaries. |
The total amount to be expensed over the vesting period is determined by reference to the fair value of the options or restricted stock awards granted, excluding the impact of any non-market vesting conditions (for example, profitability and sales growth targets). Non-market vesting conditions are included in assumptions about the number of options or restricted stock awards that are expected to vest. At each balance sheet date, the entity revises its estimates of the number of options or restricted stock awards that are expected to vest. It recognises the impact of the revision to original estimates, if any, in the profit and loss account, with a corresponding adjustment to equity. |
Fair value is measured by use of the Black-Scholes pricing model which is considered by management to be the most appropriate method of valuation. |
Later in 2020, after the Company was acquired by Cambium Learning Group on 15 October 2020, all of the Rosetta Stone stocks ceased to exist and all vested and unvested share-based compensation awards and options throughout the company were purchased by Cambium. |
No further equity settled, share based compensation plan were entered into, when during the current year the Company was acquired by IXL Learning, Inc. |
3. | EMPLOYEES AND DIRECTORS |
The average number of employees during the year was |
4. | TANGIBLE FIXED ASSETS |
Plant and |
machinery |
etc |
£ |
COST |
At 1 January 2023 |
and 31 December 2023 |
DEPRECIATION |
At 1 January 2023 |
and 31 December 2023 |
NET BOOK VALUE |
At 31 December 2023 |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2023 |
5. | DEBTORS |
2023 | 2022 |
£ | £ |
Amounts falling due within one year: |
Trade debtors |
Other debtors |
Amounts falling due after more than one year: |
Amounts owed by group undertakings |
Aggregate amounts |
Management is not requesting repayment of the intercompany loan receivable in the following 12 months. |
Amounts owed by fellow subsidiary are unsecured and bear interest at 3%. |
6. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
2023 | 2022 |
£ | £ |
Trade creditors |
Amounts owed to group undertakings |
Taxation and social security |
Other creditors |
Amounts owed to fellow subsidiary are due upon demand, unsecured and do not bear interest. |
7. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
2023 | 2022 |
£ | £ |
Other creditors |
8. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2023 | 2022 |
value: | £ | £ |
Ordinary | £1 | 10,000 | 10,000 |
The Company has one class of ordinary shares which carry no right to fixed income. |
The Company's other reserves are as follows: |
The capital contribution is the cumulative amount contributed to Rosetta Stone (UK) Limited by its immediate parent company, Rosetta Stone LLC. |
The profit and loss reserve represents cumulative profits or losses, net of dividends paid and other adjustments. |
Rosetta Stone (UK) Limited (Registered number: 05344234) |
Notes to the Financial Statements - continued |
for the Year Ended 31 December 2023 |
9. | DISCLOSURE UNDER SECTION 444(5B) OF THE COMPANIES ACT 2006 |
The Report of the Auditors was unqualified. |
for and on behalf of |
10. | ULTIMATE PARENT COMPANY |
The Company is a wholly-owned subsidiary of Rosetta Stone LLC, a company registered in the Commonwealth of Virginia, USA. Its financial statements can be obtained from the office of Rosetta Stone at 135 West Market Street, Harrisonburg, VA, 22801, USA. |
On 12 March 2021, following a further acquisition, the ultimate parent company and controlling party, and smallest and largest group of which the Company is a member for which group financial statements is prepared is IXL Learning Inc, developer of innovative educational technologies for K-12 and higher educations, a company incorporated in the state of Delaware and whose headquarter is located in San Mateo, California. The financial statements of IXL Learning Inc can be obtained from 777 Mariners Island Blvd., Suite 600 San Mateo, California, 94404, USA. |