Registered number:
FOR THE YEAR ENDED 31 JANUARY 2024
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D2L EUROPE LTD
CONTENTS
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D2L EUROPE LTD
COMPANY INFORMATION
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D2L EUROPE LTD
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
The director present his strategic report for D2L Europe Ltd (“D2L Europe” or the “company”) for the fiscal year ended 31 January 2024.
The principal business activity of D2L Europe is to deliver personalized, flexible and modern learning experiences for people of all ages through our cloud-based learning platform, D2L Brightspace. D2L Brightspace serves three distinct markets: K-12, Higher Ed, and Corporate, which use our platform to provide online learning, support learning in the classroom, and deploy professional development and upskilling for working professionals. D2L Europe primarily serves customers located in Europe.
As part of our broader global operations, D2L Corporation, the direct parent company of D2L Europe and based in Canada, has entered into a distribution arrangement with D2L Europe whereby the Company markets and distributes D2L Corporation’s software and sells professional services to customers in the European market. D2L Corporation also provides management services to D2L Europe which include administrative, pricing, marketing and sales strategies, research and development, and professional services. Both licensing and management services fees charged by D2L Corporation are recorded within Other Operating Charges in the Company’s profit and loss account. D2L Europe had profit for the year, after taxation, in the amount of £268,506 (2023: £212,275), which was mainly driven by an increase from revenue from new customers, coupled with strong revenue retention and expansion from existing customers. During the year, D2L Europe primarily invested in personnel-related wages and benefits expenses, as well as expenses related to travel and events spend, and advertising and promotions spend. D2L Europe maintained a strong cash at bank and in hand balance of £8,605,812 (2023: £8,606,577), with net assets of £1,833,013 (2023: £1,428,525) at 31 January 2024. D2L Europe separately presented creditor amounts owed to the D2L group of companies on the balance sheet from all other creditors, to help depict its contribution to the net current liabilities presented of (£1,979,691) at 31 January 2024 (2023: net current assets of £1,428,524). Excluding the impact of these creditor amounts owed to the D2L group of companies, D2L Europe had positive working capital of £5,908,751 at 31 January 2024 (2023: £6,132,950). On May 9, 2023, D2L Europe acquired the entire share capital of Connected Shopping Ltd (“Connected Shopping”), a SaaS e-commerce and course catalogue company, and maker of Course Merchant, in the amount of £3,634,554. This acquisition allows the Company to deliver Course Merchant as part of its own suite of products to address the growing needs of higher education and training organizations worldwide. Subsequently, on May 9, 2023, D2L Europe acquired the trade and assets, customer contracts, and intellectual property (“IP”) of Connected Shopping. Employees of Connected Shopping were also transferred over to D2L Europe. The IP transferred included goodwill, proprietary software and customer relationships, initially recognised at £3,333,818, £246,979 and £203,298 respectively. This transfer allowed for the full integration of Connected Shopping into the business and has been progressing well as planned.
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D2L EUROPE LTD
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
The management of D2L Europe has overall responsibility for identifying, evaluating and managing major business risks. They regularly assess the business risks exposure and controls, including compliance assessments and determine any appropriate action required. Principal business risks reviewed include, but are not limited to:
∙Market adoption of cloud-based learning solutions may not grow as we expect, which may harm our business and results of operations and even if market demand increases, the demand for our platform may not increase.
∙Continued economic uncertainty, an economic slowdown or a recession could affect our results, and other adverse economic and market conditions and reductions in spending may adversely impact our business and results of operations.
∙Privacy, data protection, and information security concerns, and data collection and transfer restrictions and related domestic or foreign regulations, may limit the use and adoption of our platform and adversely affect our business.
∙We rely upon Amazon Web Services (“AWS”) to operate certain aspects of our service and any disruption of or interference with our use of AWS could impair our ability to deliver our platform and applications to our customers, resulting in customer dissatisfaction, damage to our reputation, loss of customers and harm to our business.
The summary of key performance indicators for D2L Europe for the year ended 31 January 2024 are as follows:
FY2024 FY2023 % Change Turnover £ 14,416,581 £ 10,861,281 32.7% Profit before taxation £ 432,497 £ 325,361 32.9% Cash at bank and in hand £ 8,605,812 £ 8,606,577 0.0% Net assets £ 1,833,013 £ 1,428,525 28.3% The company’s director measures the performance of the company using these performance indicators. Based on the results of the company for fiscal year ended 31 January 2024, the company's director is satisfied with the performance of the business against these indicators and look forward to continued growth, both organically and inorganically through acquisitions, in the next fiscal year and beyond.
This report was approved and signed by the sole director.
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D2L EUROPE LTD
DIRECTOR'S REPORT
FOR THE YEAR ENDED 31 JANUARY 2024
The director presents his report and the financial statements for the year ended 31 January 2024.
The profit for the year, after taxation, amounted to £268,506 (2023 - £212,275).
The director does not recommend a dividend.
The director who served during the year was:
As permitted by s414c(11) of the Companies Act 2006, the directors have elected to disclose information, required to be in the directors' report by Schedule 7 of the 'Large and Medium-sized Companies and Groups (Accounts and Reports) Regulations 2008', in the strategic report.
Subsequent to the year end, on 8 July 2024, the company issued 20,854,400 ordinary shares of £1 each, at par, in order to provide working capital to fund the acquisition of H5P Group AS on 9 July 2024. On this date 100% of the ordinary share capital was acquired.
This report was approved and signed by the sole director.
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D2L EUROPE LTD
DIRECTOR'S RESPONSIBILITIES STATEMENT
FOR THE YEAR ENDED 31 JANUARY 2024
The director is responsible for preparing the strategic report, the director's report and the financial statements in accordance with applicable law and regulations.
Company law requires the director to prepare financial statements for each financial year. Under that law the director has elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the director must not approve the financial statements unless he is 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 director is required to:
∙select suitable accounting policies for the company's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the company will continue in business.
The director is responsible for keeping adequate accounting records that are sufficient to show and explain the company's transactions and disclose with reasonable accuracy at any time the financial position of the company and to enable him to ensure that the financial statements comply with the Companies Act 2006. He is 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.
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D2L EUROPE LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF D2L EUROPE LTD
FOR THE YEAR ENDED 31 JANUARY 2024
We have audited the financial statements of D2L Europe Ltd (the 'company') for the year ended 31 January 2024, which comprise the profit and loss account, the balance sheet, the statement of changes in equity and the 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).
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 United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the director's 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 director 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 director is 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.
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D2L EUROPE LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF D2L EUROPE LTD (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the strategic report and the director's report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the strategic report and the director's report have been prepared in accordance with applicable legal requirements.
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 director's report.
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D2L EUROPE LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF D2L EUROPE LTD (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
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 extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the company through discussions with the director and other management, and from our commercial knowledge and experience of the education software industry;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the company, including the Companies Act 2006 and employment legislation;
∙we assessed the extent of compliance with the laws and regulations identified above through making enquiries of management and inspecting legal correspondence; and
∙identified laws and regulations were communicated within the audit team regularly and the team remained alert to instances of non-compliance throughout the audit.
We assessed the susceptibility of the company’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we:
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested a sample of journal entries to identify unusual transactions;
∙assessed whether judgements and assumptions made in determining the accounting estimates were indicative of potential bias; and
∙investigated the rationale behind significant or unusual transactions.
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation; and
∙enquiring of management as to actual and potential litigation and claims
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D2L EUROPE LTD
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF D2L EUROPE LTD (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024
Auditor's responsibilities for the audit of the financial statements (continued)
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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 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.
for and on behalf of
Chartered Accountants
Statutory Auditor
16 Great Queen Street
Covent Garden
WC2B 5AH
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D2L EUROPE LTD
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JANUARY 2024
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D2L EUROPE LTD
BALANCE SHEET
AS AT 31 JANUARY 2024
The financial statements were approved, authorised for issue and signed by the sole director.
The notes on pages 13 to 25 form part of these financial statements.
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D2L EUROPE LTD
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
D2L Europe Ltd delivers personalized, flexible and modern learning experiences for people of all ages.
D2L Europe Ltd is a private company limited by shares incorporated in England and Wales. The address of its registered office is 5 New Street Square, London, EC4A 3TW. The financial statements are presented in Sterling (£).
2.Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with FRS 102 'The Financial Reporting Standard applicable in the UK and the Republic of Ireland' and the requirements of the Companies Act 2006.
The preparation of financial statements in compliance with FRS 102 requires the use of certain critical accounting estimates. It also requires management to exercise judgement in applying the company's accounting policies.
The company was, at the end of the year, a wholly-owned subsidiary of D2L Inc., whose registered address is 137 Glasgow Street, Suite 560, Kitchener, ON, Canada, N2G 4X8. D2L Inc prepares consolidated financial statements, in which the company is included, that are equivalent to UK requirements. In accordance with the exemption given in Section 401 of the Companies Act 2006, the company is not required to produce, and has not published, consolidated accounts.
The company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by FRS 102:
∙Section 3 Financial Statement Presentation paragraph 3.17(d) (inclusion of statement of cash flows);
∙Section 7 Statement of Cash Flows (inclusion of statement of cash flows);
∙Section 11 Financial Instruments paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c) (disclosures relating to financial instruments);
∙Section 26 Share based payments (disclosure of share based payments);
∙Section 33 Related Party Disclosures paragraph 33.7 (disclosures of key management personnel compensation).
The following principal accounting policies have been applied:
After making enquiries, the director has a reasonable expectation that the company has adequate resources to continue in operational existence and meet its liabilities as they fall due for the foreseeable future, being a period of at least twelve months from the date these financial statements were approved. Accordingly, he continues to adopt the going concern basis in preparing the financial statements.
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
2.Accounting policies (continued)
Revenue for license fees are recognised on a straight line basis over the term of the contract. Unearned revenue is reported as deferred income on the balance sheet. Revenue for the implementation stage and other services being provided, that is spread over two accounting periods, is recognised on a stage of completion basis. The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the company keeping the scheme open or the employee maintaining any contributions required by the scheme). Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period. Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
D2L Corporation provides management services to D2L Europe which include administrative, pricing, marketing and sales strategies, research and development, and professional services which are recorded within 'Other operating charges' in the company’s profit and loss account.
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
2.Accounting policies (continued)
The tax expense for the year comprises current and deferred tax. Tax is recognised in the profit and loss account.
Current tax is the amount of income tax payable in respect of taxable profit for the year or prior years. The current income tax charge is calculated on the basis of tax rates and laws that have been enacted or substantively enacted by the balance sheet date in the countries where the company operates and generates income. Deferred tax arises from timing differences that are differences between taxable profits and total comprehensive income as stated in the financial statements. These timing differences arise from the inclusion of income and expenses in tax assessments in periods different from those in which they are recognised in the financial statements. Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the balance sheet date, except that:
∙The recognition of deferred tax assets is limited to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits; and
∙Any deferred tax balances are reversed if and when all conditions for retaining associated tax allowances have been met.
Deferred tax balances are not recognised in respect of permanent differences. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the balance sheet date.
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
2.Accounting policies (continued)
Functional and presentation currency
Transactions and balances
Goodwill
Other intangible assets
At each reporting date the company assesses whether there is any indication of impairment. If such indication exists, the recoverable amount of the asset is determined which is the higher of its fair value less costs to sell and its value in use. An impairment loss is recognised where the carrying amount exceeds the recoverable amount.
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The estimated useful lives range as follows:
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
2.Accounting policies (continued)
The company has elected to apply Sections 11 and 12 of FRS 102 in respect of financial instruments.
Financial assets and financial liabilities are recognised when the company becomes 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.
The company’s policies for its major classes of financial assets and financial liabilities are set out below.
Financial assets
Basic financial assets, including trade and other debtors, cash and bank balances, intercompany working capital balances, and intercompany financing 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Such assets are subsequently carried at amortised cost using the effective interest method, less any impairment.
Financial liabilities
Basic financial liabilities, including trade and other creditors and loans from fellow group companies 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 for a similar debt instrument. Financing transactions are those in which payment is deferred beyond normal business terms or is financed at a rate of interest that is not a market rate.
Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.
Impairment of financial assets Financial assets measured at cost and amortised cost are assessed at the end of each reporting period for objective evidence of impairment. If objective evidence of impairment is found, an impairment loss is recognised in the profit and loss account. For financial assets measured at cost less impairment, the impairment loss is measured as the difference between the asset's carrying amount and the best estimate of the amount the company would receive for the asset if it were to be sold at the reporting date.
For financial assets measured at amortised cost, the impairment loss is measured as the difference between the asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If the financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
2.Accounting policies (continued)
Impairment of financial assets (continued)
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 and financial liabilities
Financial assets are derecognised when (a) the contractual rights to the cash flows from the asset expire or are settled, or (b) substantially all the risks and rewards of the ownership of the asset are transferred to another party or (c) despite having retained some significant risks and rewards of ownership, control of the asset has been transferred to another party who has the practical ability to unilaterally sell the asset to an unrelated third party without imposing additional restrictions.
Financial liabilities are derecognised when the liability is extinguished, that is when the contractual obligation is discharged, cancelled or expires.
Offsetting of financial assets and financial liabilities
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is an enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
The company capitalises commission costs that are incremental and directly related to the acquisition of customer contracts. Commission costs are accrued and capitalised upon execution of the sales contract by the customer. Deferred commissions are amortised over the expected life of the customer.
Deferred income consists of billings or payments received in advance of revenue recognition and is recognised as the revenue recognition criteria are met. The company generally invoices its customers annually. Accordingly, the deferred income balance does not represent the total contract value of multi-year, non-cancellable subscription agreements.
Ordinary shares are classified as equity.
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
2.Accounting policies (continued)
Analysis of turnover by country of destination:
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
In the Spring Budget 2021 the UK Government announced that from 1 April 2023, the corporation tax rate would increase to 25% for companies with profits over £250,000.
This law has been substantively enacted. For the financial year ended 31 January 2024, the current weighted average tax rate was 24.03%. Deferred taxes at the balance sheet date have been measured using these enacted tax rates and reflected in these financial statements.
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
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D2L EUROPE LTD
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024
Other reserves
Profit and loss account
The immediate parent undertaking is
The smallest and largest group for which consolidated financial statements are drawn up is that headed by D2L Inc., a company incorporated in Canada whose registered office is 137 Glasgow Street, Suite 560, Kitchener, ON, Canada, N2G 4X8. Copies of the D2L Inc., consolidated financial statements can be obtained from https://ir.d2l.com/financials /quarterly -results/default.aspx The ultimate controlling party is John Baker.
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