REGISTERED NUMBER: 07264379 (England and Wales) |
GROUP STRATEGIC REPORT, |
REPORT OF THE DIRECTORS AND |
AUDITED CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 JANUARY 2024 |
FOR |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED |
REGISTERED NUMBER: 07264379 (England and Wales) |
GROUP STRATEGIC REPORT, |
REPORT OF THE DIRECTORS AND |
AUDITED CONSOLIDATED FINANCIAL STATEMENTS |
FOR THE YEAR ENDED 31 JANUARY 2024 |
FOR |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
CONTENTS OF THE CONSOLIDATED FINANCIAL STATEMENTS |
for the year ended 31 January 2024 |
Page |
Company Information | 1 |
Group Strategic Report | 2 |
Report of the Directors | 3 |
Report of the Independent Auditors | 5 |
Consolidated Statement of Comprehensive Income | 8 |
Consolidated Balance Sheet | 9 |
Company Balance Sheet | 10 |
Consolidated Statement of Changes in Equity | 11 |
Company Statement of Changes in Equity | 12 |
Consolidated Cash Flow Statement | 13 |
Notes to the Consolidated Cash Flow Statement | 14 |
Notes to the Consolidated Financial Statements | 15 |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED |
COMPANY INFORMATION |
for the year ended 31 January 2024 |
DIRECTORS: |
REGISTERED OFFICE: |
REGISTERED NUMBER: |
AUDITORS: |
Chartered Accountants |
Statutory Auditor |
Unit 2, Charnwood Edge Business Park |
Syston Road |
Leicestershire |
LE7 4UZ |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
GROUP STRATEGIC REPORT |
for the year ended 31 January 2024 |
The directors present their strategic report of the company and the group for the year ended 31 January 2024. |
REVIEW OF BUSINESS |
Our key financial indicators are Invoiced Sales, Revenue, and EBITDA. The business has a slight seasonal pattern, Our key financial indicators are Invoiced Sales, Revenue, and EBITDA. The business has a slight seasonal pattern, with Q1 and Q3 being strong, linked to the budget year for most UK schools and the start of the new academic year respectively, and the remaining quarters being of broadly similar size. Our product is sold on a subscription basis, with some multi-year subscriptions. We rely significantly on our ability to achieve renewals of subscriptions, as well as sales to new customers. |
In the year, we had a 6.1% increase in overall revenue in the business. UK revenue fell 70.8% compared to prior year, as our main focus was on multi-year deals and continuing to grow the international revenue, which increased by 46.2%. Cost of Sale increased £928k on the prior year which is primarily royalties paid to Edmentum. Administrative expenses were up significantly compared with the prior year by £2,376k due to largely to exchange fluctuations and employee costs. We continue to invest in product development, adding content to provide greater UK and US curriculum coverage for subject offerings in addition to providing international sales support to grow US offerings globally. |
Other operating income decreased 20.5% primarily due to exchange fluctuations. This income mainly comprises royalties receivable from sales in the USA by Edmentum of our own product and products to which we have contributed content. We continue to develop a significant amount of new content and new features for existing platforms. |
As a result of the movements mentioned above, operating loss showed a loss of £4,068k. |
Interest receivable and similar income has increased due to the AFR rate increase in the US on Loans and Edmentum trading balances. |
We continue to finance our business primarily through cash flow from operations and through support of Edmentum. |
Looking ahead, in addition to the opportunities for growth that exist for our product in international markets, we anticipate growth opportunities arising from the sales of other Edmentum products in international markets and have started to reconfigure go-to-market in the UK. We also anticipate continuing growth in royalties receivable on sales made in the USA by Edmentum of relevant products. |
PRINCIPAL RISKS AND UNCERTAINTIES |
Our principle risk is the exchange rate fluctuation against the US Dollar. The weakening of sterling against the dollar impacts loan balances and royalties receivable. |
INTEREST RATE RISK |
The company reviews its exposure to interest rates regularly and considers the benefit (or otherwise) of hedging against adverse interest rate movements as part of these reviews. |
FOREIGN CURRENCY RISK |
Foreign currency exposure resulting from group loans, trade with customers and suppliers abroad is mitigated by a hedging policy adopted by the company. |
CREDIT RISK |
Managing cashflow and credit risk is a priority of the company. All customers are subject to credit checks to reduce exposure to bad debts and to maintain cashflow to support the working capital required for the operations within the business. |
ON BEHALF OF THE BOARD: |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
REPORT OF THE DIRECTORS |
for the year ended 31 January 2024 |
The directors present their report with the financial statements of the company and the group for the year ended 31 January 2024. |
PRINCIPAL ACTIVITY |
The group continues to be a leading provider of educational content and provides online educational software targeted at children aged 3 - 12 years. The product covers English, Maths and Science. |
DIVIDENDS |
No dividends will be distributed for the year ended 31 January 2024. |
DIRECTORS |
The directors shown below have held office during the whole of the period from 1 February 2023 to the date of this report. |
Other changes in directors holding office are as follows: |
STATEMENT OF DIRECTORS' RESPONSIBILITIES |
The directors are responsible for preparing the Group Strategic Report, the Report of the Directors 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 the group and of the profit or loss of the group 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 and the group's transactions and disclose with reasonable accuracy at any time the financial position of the company and the group 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 the group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities. |
STATEMENT AS TO DISCLOSURE OF INFORMATION TO AUDITORS |
So far as the directors are aware, there is no relevant audit information (as defined by Section 418 of the Companies Act 2006) of which the group's auditors are unaware, and each director has taken all the steps that he or she ought to have taken as a director in order to make himself or herself aware of any relevant audit information and to establish that the group's auditors are aware of that information. |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
REPORT OF THE DIRECTORS |
for the year ended 31 January 2024 |
AUDITORS |
The auditors, Magma Audit LLP (part of the Dains Group), will be proposed for re-appointment at the forthcoming Annual General Meeting. |
ON BEHALF OF THE BOARD: |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED |
Opinion |
We have audited the financial statements of Archipelago Learning Holdings UK Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 January 2024 which comprise the Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Company Balance Sheet, Consolidated Statement of Changes in Equity, Company Statement of Changes in Equity, Consolidated Cash Flow Statement and Notes to the Consolidated Cash Flow Statement, Notes to the Financial Statements, 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: |
- | give a true and fair view of the state of the group's and of the parent company affairs as at 31 January 2024 and of the group's 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. |
Basis for opinion |
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 group 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 group's and the parent 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 |
The directors are responsible for the other information. The other information comprises the information in the Group Strategic Report and the Report of the Directors, but does not include the financial statements and our Report of the Auditors thereon. |
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. |
In connection with our audit of the financial statements, 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard. |
Opinions on other matters prescribed by the Companies Act 2006 |
In our opinion, based on the work undertaken in the course of the audit: |
- | the information given in the Group Strategic Report and the Report of the Directors for the financial year for which the financial statements are prepared is consistent with the financial statements; and |
- | the Group Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED |
Matters on which we are required to report by exception |
In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Report of the Directors. |
We have nothing to report in respect of the following matters where the Companies Act 2006 requires us to report to you if, in our opinion: |
- | adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or |
- | the parent company financial statements are not in agreement with the accounting records and returns; or |
- | certain disclosures of directors' 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 Statement of Directors' Responsibilities set out on page three, 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 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 group's and the parent 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 group or the parent company or to cease operations, or have no realistic alternative but to do so. |
Auditors' 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 a Report of the Auditors that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. |
The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below: |
Based on our understanding of the company and industry, we identified the principal risks of non-compliance with laws and regulations, and we considered the extent to which non-compliance might have a material effect on the financial statements. We also considered those laws and regulations that have a direct impact on the financial statements such as the Companies Act 2006 and tax legislation. We evaluated management's incentives and opportunities for fraudulent manipulation of the financial statements (including the risk of override of controls), and determined that the principal risks were related to posting inappropriate journal entries and management bias in accounting estimates. Audit procedures performed included: |
- Enquire with management including consideration of known or suspected instances of non-compliance with laws and regulation and fraud; |
- Challenging assumptions made by management in their significant accounting estimates, in particular in relation to recognising revenue, debtor provisions and accruals; |
- Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations, journal entries crediting cash and journal entries with specific defined descriptions. |
There are inherent limitations in the audit procedures described above. We are less likely to become aware of instances of non-compliance with laws and regulations that are not closely related to events and transactions reflected in the financial statements. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion. |
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 Report of the Auditors. |
REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED |
Use of our 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 a Report of the Auditors 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. |
for and on behalf of |
Chartered Accountants |
Statutory Auditor |
Unit 2, Charnwood Edge Business Park |
Syston Road |
Leicestershire |
LE7 4UZ |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
CONSOLIDATED |
STATEMENT OF COMPREHENSIVE |
INCOME |
for the year ended 31 January 2024 |
2024 | 2023 |
Notes | £ | £ |
TURNOVER | 4 | 2,955,405 | 2,785,299 |
Cost of sales | (1,364,226 | ) | (436,161 | ) |
GROSS PROFIT | 1,591,179 | 2,349,138 |
Administrative expenses | (6,980,302 | ) | (4,604,772 | ) |
(5,389,123 | ) | (2,255,634 | ) |
Other operating income | 5 | 1,320,954 | 1,660,999 |
OPERATING LOSS | 7 | (4,068,169 | ) | (594,635 | ) |
Interest receivable and similar income | 9 | 540,075 | 206,335 |
(3,528,094 | ) | (388,300 | ) |
Interest payable and similar expenses | 10 | (343,837 | ) | (316,636 | ) |
LOSS BEFORE TAXATION | (3,871,931 | ) | (704,936 | ) |
Tax on loss | 11 | 1,906 | (59,623 | ) |
LOSS FOR THE FINANCIAL YEAR | ( |
) | ( |
) |
OTHER COMPREHENSIVE INCOME |
Currency translation differences | 428,961 | (969,853 | ) |
Income tax relating to other comprehensive income |
- |
- |
OTHER COMPREHENSIVE INCOME FOR THE YEAR, NET OF INCOME TAX |
428,961 |
(969,853 |
) |
TOTAL COMPREHENSIVE INCOME FOR THE YEAR |
(3,441,064 |
) |
(1,734,412 |
) |
Loss attributable to: |
Owners of the parent | (3,870,025 | ) | (764,559 | ) |
Total comprehensive income attributable to: |
Owners of the parent | (3,441,064 | ) | (1,734,412 | ) |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
CONSOLIDATED BALANCE SHEET |
31 January 2024 |
2024 | 2023 |
Notes | £ | £ |
FIXED ASSETS |
Intangible assets | 14 | 4,988,149 | 5,751,391 |
Tangible assets | 15 | 48,877 | 82,309 |
Investments | 16 | - | - |
5,037,026 | 5,833,700 |
CURRENT ASSETS |
Debtors | 17 | 15,522,785 | 14,643,230 |
Cash at bank and in hand | 381,183 | 311,059 |
15,903,968 | 14,954,289 |
CREDITORS |
Amounts falling due within one year | 18 | (18,962,113 | ) | (14,926,299 | ) |
NET CURRENT (LIABILITIES)/ASSETS | (3,058,145 | ) | 27,990 |
TOTAL ASSETS LESS CURRENT LIABILITIES |
1,978,881 |
5,861,690 |
CREDITORS |
Amounts falling due after more than one year |
19 |
(1,896,299 |
) |
(2,338,044 |
) |
PROVISIONS FOR LIABILITIES | 22 | (16,700 | ) | (16,700 | ) |
NET ASSETS | 65,882 | 3,506,946 |
CAPITAL AND RESERVES |
Called up share capital | 23 | 180 | 180 |
Share premium | 46,875,911 | 46,875,911 |
Retained earnings | (46,810,209 | ) | (43,369,145 | ) |
SHAREHOLDERS' FUNDS | 65,882 | 3,506,946 |
The financial statements were approved by the Board of Directors and authorised for issue on 29 October 2024 and were signed on its behalf by: |
M E Trimarchi - Director |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
COMPANY BALANCE SHEET |
31 January 2024 |
2024 | 2023 |
Notes | £ | £ |
FIXED ASSETS |
Intangible assets | 14 |
Tangible assets | 15 |
Investments | 16 |
CREDITORS |
Amounts falling due within one year | 18 | ( |
) | ( |
) |
NET CURRENT LIABILITIES | ( |
) | ( |
) |
TOTAL ASSETS LESS CURRENT LIABILITIES |
( |
) |
( |
) |
CAPITAL AND RESERVES |
Called up share capital | 23 |
Share premium |
Retained earnings | ( |
) | ( |
) |
SHAREHOLDERS' FUNDS | ( |
) | ( |
) |
Company's loss for the financial year | (329,158 | ) | (429,739 | ) |
The financial statements were approved by the Board of Directors and authorised for issue on |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY |
for the year ended 31 January 2024 |
Called up |
share | Retained | Share | Total |
capital | earnings | premium | equity |
£ | £ | £ | £ |
Balance at 1 February 2022 | 180 | (41,634,733 | ) | 46,875,911 | 5,241,358 |
Changes in equity |
Total comprehensive income | - | (1,734,412 | ) | - | (1,734,412 | ) |
Balance at 31 January 2023 | 180 | (43,369,145 | ) | 46,875,911 | 3,506,946 |
Changes in equity |
Total comprehensive income | - | (3,441,064 | ) | - | (3,441,064 | ) |
Balance at 31 January 2024 | 180 | (46,810,209 | ) | 46,875,911 | 65,882 |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
COMPANY STATEMENT OF CHANGES IN EQUITY |
for the year ended 31 January 2024 |
Called up |
share | Retained | Share | Total |
capital | earnings | premium | equity |
£ | £ | £ | £ |
Balance at 1 February 2022 | ( |
) | ( |
) |
Changes in equity |
Total comprehensive income | - | ( |
) | - | ( |
) |
Balance at 31 January 2023 | ( |
) | ( |
) |
Changes in equity |
Total comprehensive income | - | ( |
) | - | ( |
) |
Balance at 31 January 2024 | ( |
) | ( |
) |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
CONSOLIDATED CASH FLOW STATEMENT |
for the year ended 31 January 2024 |
2024 | 2023 |
Notes | £ | £ |
Cash flows from operating activities |
Cash generated from operations | 1 | (853,734 | ) | 2,967,217 |
Interest paid | (343,837 | ) | (316,636 | ) |
Tax paid | (86,024 | ) | (291,644 | ) |
Net cash from operating activities | (1,283,595 | ) | 2,358,937 |
Cash flows from investing activities |
Purchase of tangible fixed assets | (13,955 | ) | (66,551 | ) |
Sale of tangible fixed assets | 376 | 1,150 |
Interest received | 540,075 | 206,335 |
Net cash from investing activities | 526,496 | 140,934 |
(Decrease)/increase in cash and cash equivalents | (757,099 | ) | 2,499,871 |
Cash and cash equivalents at beginning of year |
2 |
311,059 |
195,697 |
Effect of foreign exchange rate changes | 827,223 | (2,384,509 | ) |
Cash and cash equivalents at end of year | 2 | 381,183 | 311,059 |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT |
for the year ended 31 January 2024 |
1. | RECONCILIATION OF LOSS BEFORE TAXATION TO CASH GENERATED FROM OPERATIONS |
2024 | 2023 |
£ | £ |
Loss before taxation | (3,871,931 | ) | (704,936 | ) |
Depreciation charges | 46,880 | 48,190 |
Loss/(profit) on disposal of fixed assets | 131 | (1,150 | ) |
Foreign exchange gains/(losses) | (398,262 | ) | 1,414,657 |
Amortisation charges | 763,242 | 764,909 |
Finance costs | 343,837 | 316,636 |
Finance income | (540,075 | ) | (206,335 | ) |
(3,656,178 | ) | 1,631,971 |
Increase in trade and other debtors | (895,981 | ) | (735,576 | ) |
Increase in trade and other creditors | 3,698,425 | 2,070,822 |
Cash generated from operations | (853,734 | ) | 2,967,217 |
2. | CASH AND CASH EQUIVALENTS |
The amounts disclosed on the Cash Flow Statement in respect of cash and cash equivalents are in respect of these Balance Sheet amounts: |
Year ended 31 January 2024 |
31/1/24 | 1/2/23 |
£ | £ |
Cash and cash equivalents | 381,183 | 311,059 |
Year ended 31 January 2023 |
31/1/23 | 1/2/22 |
£ | £ |
Cash and cash equivalents | 311,059 | 195,697 |
3. | ANALYSIS OF CHANGES IN NET DEBT |
At 1/2/23 | Cash flow | At 31/1/24 |
£ | £ | £ |
Net cash |
Cash at bank and in hand | 311,059 | 70,124 | 381,183 |
311,059 | 70,124 | 381,183 |
Debt |
Debts falling due within 1 year | (12,223,967 | ) | (17,851 | ) | (12,241,818 | ) |
(12,223,967 | ) | (17,851 | ) | (12,241,818 | ) |
Total | (11,912,908 | ) | 52,273 | (11,860,635 | ) |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS |
for the year ended 31 January 2024 |
1. | STATUTORY INFORMATION |
Archipelago Learning Holdings UK Limited is a group, registered in England and Wales. Its registered office address and the registered number can be found on the company information page. |
2. | ACCOUNTING POLICIES |
Basis of preparing the financial statements |
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 company's functional currency is US Dollars. The financial statements are presented in pound sterling due to the company being a UK company and owning a trading UK subsidiary. Amounts are rounded to the nearest £. |
The financial statements have been prepared under the historical cost convention, modified to include certain financial instruments at fair value. The principal accounting policies adopted are set out below. |
Basis of consolidation |
In the parent company financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment. |
The consolidated financial statements incorporate those of Archipelago Learning Holdings UK Ltd and all of its subsidiaries (ie entities that the group controls through its power to govern the financial and operating policies so as to obtain economic benefits). Subsidiaries acquired during the year are consolidated using |
the purchase method. Their results are incorporated from the date that control passes. |
All financial statements are made up to 31 January 2024. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group. |
All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. |
Educationcity Limited has been included in the group financial statements using the purchase method of accounting. Accordingly, the group profit and loss account and statement of cash flows include the results and cash flows of Educationcity Limited. |
Going concern |
At the time of approving the financial statements, the directors have a reasonable expectation that the group has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements. |
The validity of this assumption relies on the continued support of the US group companies. The group owed US group companies a total of £14,987,499 at 31 January 2024. |
The UK group was owed £11,934,504 at 31 January 2024 and is deemed to be recoverable. |
The directors have prepared forecasts that reflect the current trading expectations and these show that the UK group will be able to satisfy its financial commitments with ongoing support from the US group companies. |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
2. | ACCOUNTING POLICIES - continued |
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. |
Transactions between group entities which have been eliminated on consolidation are not disclosed within the financial statements. |
Turnover |
Turnover in the financial statements is recognised on the accruals basis and represents amounts receivable for goods and services net of VAT and discounts. The company's income comprises the sales of licenses for a period of 12 months and in some cases longer, invoiced at inception of the agreement. Income relating to the future periods is deferred based on the length of the license and released into the period to which it relates, usually on a monthly basis. |
Other operating income includes royalties receivable. This relates to royalties received, or receivable, from fellow group companies selling the company's software. |
Deferred income is disclosed separately in creditors in the financial statements. |
Goodwill |
Goodwill represents the excess of the cost of acquisition of a business over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 20 years. |
Goodwill is assessed for impairment when there are indicators of impairment and any impairment is charged to the profit and loss account. No reversals of impairment are recognised. |
Intangible assets |
Intangible assets are initially measured at cost. After initial recognition, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses. |
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: |
Land and buildings leasehold | Over the term of the lease |
Fixtures, fittings & equipment | 25% & 33% straight line |
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. |
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. |
Debtors |
Basic financial assets, including trade and other debtors, are initially recognised at transaction price, 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. Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment. |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
2. | ACCOUNTING POLICIES - continued |
Cash and cash equivalents |
Cash and cash equivalents are represented by cash in hand, deposits held at call with financial institutions, and other short-term 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. |
Creditors |
Basic financial liabilities, including trade and other creditors, loans from third parties and loans from related parties, 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. Such instruments are subsequently carried at amortised cost using the effective interest method, less any impairment. |
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 group’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 taxation is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. The deferred tax balance has not been discounted. |
Research and development |
Research and development expenditure is written off to the profit and loss account in the year in which it is |
incurred. |
Foreign currencies |
Assets and liabilities in foreign currencies are translated into sterling at the rates of exchange ruling at the balance sheet date. Transactions in foreign currencies are translated into sterling at the rate of exchange ruling at the date of transaction. Exchange differences are taken into account in arriving at the operating result. |
Operating leases |
Rentals paid under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Leases that do not transfer all the risks and rewards of ownership are classified as operating leases. Payments under operating leases are charged to profit or loss on a straight line basis over the period of the lease. |
Pension costs and other post-retirement benefits |
The group operates a defined contribution pension scheme. Contributions payable to the group's pension scheme are charged to profit or loss in the period to which they relate. |
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. |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
3. | CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY |
In the application of the group’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. |
Key sources of estimation uncertainty |
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. |
Useful economic lives of tangible fixed assets |
The annual depreciation charge for tangible assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. For the carrying amount of the property plant and equipment, and the tangible assets see accounting policy for the useful economic lives for each class of assets. |
4. | TURNOVER |
The turnover and loss before taxation are attributable to the one principal activity of the group. |
An analysis of turnover by geographical market is given below: |
2024 | 2023 |
£ | £ |
United Kingdom | 278,751 | 954,891 |
Europe | 29,192 | 70,547 |
Rest of the World | 2,647,462 | 1,759,861 |
2,955,405 | 2,785,299 |
5. | OTHER OPERATING INCOME |
2024 | 2023 |
£ | £ |
Royalties receivable | 1,320,954 | 1,607,751 |
Sundry receipts | - | 53,248 |
1,320,954 | 1,660,999 |
6. | EMPLOYEES AND DIRECTORS |
2024 | 2023 |
£ | £ |
Wages and salaries | 3,991,206 | 3,393,620 |
Social security costs | 393,793 | 376,571 |
Other pension costs | 174,016 | 141,836 |
4,559,015 | 3,912,027 |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
6. | EMPLOYEES AND DIRECTORS - continued |
The average number of employees during the year was as follows: |
2024 | 2023 |
Directors | 8 | 7 |
Sales | 25 | 31 |
Content | 33 | 28 |
Other | 16 | 16 |
2024 | 2023 |
£ | £ |
Directors' remuneration | - | - |
7. | OPERATING LOSS |
The operating profit is stated after charging/(crediting): |
2024 | 2023 |
£ | £ |
Hire of plant and machinery | 9,391 | 8,761 |
Other operating leases | 107,733 | 94,511 |
Depreciation - owned assets | 46,880 | 48,190 |
(Profit)/loss on disposal of fixed assets | 131 | (1,150 | ) |
Goodwill amortisation | 758,242 | 758,242 |
Computer software amortisation | 5,000 | 6,667 |
Foreign exchange differences | 398,262 | (1,160,743 | ) |
Royalties payable | 1,364,226 | 436,161 |
8. | AUDITORS' REMUNERATION |
2024 | 2023 |
£ | £ |
Fees payable to the company's auditors for the audit of the group's | 14,775 | 13,750 |
financial statements |
9. | INTEREST RECEIVABLE AND SIMILAR INCOME |
2024 | 2023 |
£ | £ |
Bank interest received | 5,436 | 393 |
Interest received from group | 534,639 | 205,942 |
540,075 | 206,335 |
10. | INTEREST PAYABLE AND SIMILAR EXPENSES |
2024 | 2023 |
£ | £ |
Interest payable | 343,837 | 316,636 |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
11. | TAXATION |
Analysis of the tax (credit)/charge |
The tax (credit)/charge on the loss for the year was as follows: |
2024 | 2023 |
£ | £ |
Current tax: |
UK corporation tax | - | 49,823 |
Adjustment to prior years | (1,906 | ) | - |
Total current tax | (1,906 | ) | 49,823 |
Deferred tax | - | 9,800 |
Tax on loss | (1,906 | ) | 59,623 |
Reconciliation of total tax (credit)/charge included in profit and loss |
The tax assessed for the year is higher than the standard rate of corporation tax in the UK. The difference is explained below: |
2024 | 2023 |
£ | £ |
Loss before tax | (3,871,931 | ) | (704,936 | ) |
Loss multiplied by the standard rate of corporation tax in the UK of 19 % (2023 - 19 %) |
(735,667 |
) |
(133,938 |
) |
Effects of: |
Expenses not deductible for tax purposes | 189 | 527 |
Capital allowances in excess of depreciation | - | (8,461 | ) |
Depreciation in excess of capital allowances | 5,704 | - |
Deferred tax charge | - | 9,800 |
Other tax adjustments | 40,774 | 48,327 |
Provision adjustment | (9,687 | ) | (479 | ) |
Profit on disposal | 25 | (219 | ) |
Amortisation on assets not qualifying for tax allowances | 187,198 | 144,066 |
Losses carried forward | 509,558 | - |
Total tax (credit)/charge | (1,906 | ) | 59,623 |
Tax effects relating to effects of other comprehensive income |
2024 |
Gross | Tax | Net |
£ | £ | £ |
Currency translation differences | 428,961 | - | 428,961 |
2023 |
Gross | Tax | Net |
£ | £ | £ |
Currency translation differences | (969,853 | ) | - | (969,853 | ) |
The group has trading deficits of approximately £2,500,000 (2023: £NIL) and non-trade loan relationship deficits of £375,000 (2023: £48,000) to be carried forward to future years. |
12. | INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME |
As permitted by Section 408 of the Companies Act 2006, the Income Statement of the parent company is not presented as part of these financial statements. |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
13. | RETIREMENT BENEFIT SCHEMES |
Defined contribution schemes |
2024 | 2023 |
£ | £ |
Charge to profit or loss in respect of defined contribution schemes | 174,016 | 141,836 |
14. | INTANGIBLE FIXED ASSETS |
Group |
Computer |
Goodwill | software | Totals |
£ | £ | £ |
COST |
At 1 February 2023 |
and 31 January 2024 | 15,164,837 | 20,000 | 15,184,837 |
AMORTISATION |
At 1 February 2023 | 9,418,446 | 15,000 | 9,433,446 |
Amortisation for year | 758,242 | 5,000 | 763,242 |
At 31 January 2024 | 10,176,688 | 20,000 | 10,196,688 |
NET BOOK VALUE |
At 31 January 2024 | 4,988,149 | - | 4,988,149 |
At 31 January 2023 | 5,746,391 | 5,000 | 5,751,391 |
15. | TANGIBLE FIXED ASSETS |
Group |
Land & | Fixtures, |
buildings | fittings |
leasehold | & equipment | Totals |
£ | £ | £ |
COST |
At 1 February 2023 | 62,669 | 750,638 | 813,307 |
Additions | - | 13,955 | 13,955 |
Disposals | (62,669 | ) | (593,715 | ) | (656,384 | ) |
At 31 January 2024 | - | 170,878 | 170,878 |
DEPRECIATION |
At 1 February 2023 | 62,669 | 668,329 | 730,998 |
Charge for year | - | 46,880 | 46,880 |
Eliminated on disposal | (62,669 | ) | (593,208 | ) | (655,877 | ) |
At 31 January 2024 | - | 122,001 | 122,001 |
NET BOOK VALUE |
At 31 January 2024 | - | 48,877 | 48,877 |
At 31 January 2023 | - | 82,309 | 82,309 |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
16. | FIXED ASSET INVESTMENTS |
Company |
Shares in |
group |
undertakings |
£ |
COST |
At 1 February 2023 |
and 31 January 2024 |
NET BOOK VALUE |
At 31 January 2024 |
At 31 January 2023 |
The group or the company's investments at the Balance Sheet date in the share capital of companies include the following: |
Subsidiary |
Educationcity Limited |
Registered office: Pera Business Park, Nottingham Road, Melton Mowbray, LE13 0PB |
Nature of business: Provider of educational content |
% |
Class of shares: | holding |
Ordinary | 100.00 |
2024 | 2023 |
£ | £ |
Aggregate capital and reserves | 12,850,380 | 15,410,995 |
(Loss)/profit for the year | (2,560,615 | ) | 677,336 |
17. | DEBTORS |
Group |
2024 | 2023 |
£ | £ |
Amounts falling due within one year: |
Trade debtors | 3,126,580 | 1,714,119 |
Amounts owed by group undertakings | 11,934,507 | 11,716,052 |
Other debtors | 953 | 748 |
Corporation tax | 118,828 | 30,898 |
VAT | 8,299 | - |
Prepayments | 120,190 | 141,732 |
15,309,357 | 13,603,549 |
Amounts falling due after more than one | year: |
Trade debtors | 213,428 | 1,039,681 |
Aggregate amounts | 15,522,785 | 14,643,230 |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
18. | CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR |
Group | Company |
2024 | 2023 | 2024 | 2023 |
£ | £ | £ | £ |
Other loans (see note 20) | 12,241,818 | 12,223,967 |
Trade creditors | 66,009 | 100,720 |
Amounts owed to group undertakings | 2,754,683 | 41,569 |
Social security and other taxes | 112,778 | 97,934 |
VAT | - | 15,500 | - | - |
Other creditors | 4,244 | 8,831 |
Deferred income | 3,342,282 | 2,236,924 |
Accrued expenses | 440,299 | 200,854 |
18,962,113 | 14,926,299 |
19. | CREDITORS: AMOUNTS FALLING DUE AFTER MORE THAN ONE YEAR |
Group |
2024 | 2023 |
£ | £ |
Deferred income | 1,896,299 | 2,338,044 |
20. | LOANS |
An analysis of the maturity of loans is given below: |
Group | Company |
2024 | 2023 | 2024 | 2023 |
£ | £ | £ | £ |
Amounts falling due within one year or on | demand: |
Other loans | 12,241,818 | 12,223,967 |
Included in the balance above is a loan from Archipelago International Holdings Inc. This is an intercompany loan with interest charged at the short term AFR rate compounded on a semi annual basis and is repayable on demand. |
21. | LEASING AGREEMENTS |
Minimum lease payments fall due as follows: |
Operating lease payments represent values payable by the group for certain of it properties, and vehicles. Leases are negotiated for various period between 2-3 years. |
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: |
2024 | 2023 |
£ | £ |
Within one year | - | 92,000 |
Between one and five years | - | 15,333 |
- | 107,333 |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
22. | PROVISIONS FOR LIABILITIES |
Group |
2024 | 2023 |
£ | £ |
Deferred tax | 16,700 | 16,700 |
Group |
Deferred |
tax |
£ |
Balance at 1 February 2023 | 16,700 |
Balance at 31 January 2024 | 16,700 |
23. | CALLED UP SHARE CAPITAL |
Allotted, issued and fully paid: |
Number: | Class: | Nominal | 2024 | 2023 |
value: | £ | £ |
Ordinary | 1 | 180 | 180 |
The Ordinary shares have full rights in the company with respect to voting, dividends and distributions. |
24. | RELATED PARTY DISCLOSURES |
Transactions during the year |
Amounts due from/(to) at year end |
current year | prior year | current year | prior year |
Educationcity Inc. |
Amounts due from them included in group debtors |
139,493 |
143,359 |
Archipelago Learning Inc. |
Interest received | 209,584 | 77,579 |
Amounts due from them included in group debtors |
4,566,458 |
4,477,086 |
Amounts due to them included in group creditors | (2,754,682 | ) | (41,569 | ) |
Edmentum Inc. |
Royalties received | 1,320,954 | 1,607,751 |
Royalties paid | 1,344,890 | 416,934 |
Interest received | 325,055 | 120,321 |
Amounts due from them included in group debtors |
7,082,352 |
6,949,405 |
Project Porsche Holdings Corporation |
Amounts due from them included in group debtors |
146,201 |
146,201 |
Archipelago International Holdings |
Loan payable included within other loans | (12,241,817 | ) | (12,223,967 | ) |
Interest paid | 343,837 | 429,738 |
The amounts owed by group companies are charged interest at the market rate. No guarantees have been given or received. |
During the year, a total of key management personnel compensation of £ 297,894 (2023 - £ 337,954 ) was paid. |
ARCHIPELAGO LEARNING HOLDINGS UK LIMITED (REGISTERED NUMBER: 07264379) |
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - continued |
for the year ended 31 January 2024 |
25. | ULTIMATE CONTROLLING PARTY |
The immediate parent undertaking is Archipelago International Holdings, Inc. a company incorporated in the United States of America. |
The ultimate parent undertaking at 31 January 2024 was Vistria Edmentum Holdings LLC a company incorporated in the United States of America. |