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Registered number: 07542144












D2L EUROPE LTD
ANNUAL REPORT AND FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

 

D2L EUROPE LTD

CONTENTS



Page
Company information
 
1
Strategic report
 
2 - 3
Director's report
 
4
Director's responsibilities statement
 
5
Independent auditors' report
 
6 - 9
Profit and loss account
 
10
Balance sheet
 
11
Statement of changes in equity
 
12
Notes to the financial statements
 
13 - 25


 

D2L EUROPE LTD
 
COMPANY INFORMATION


Director
J Baker 




Company secretary
W Trick



Registered number
07542144



Registered office
5 New Street Square

London

EC4A 3TW




Independent auditor
Blick Rothenberg Audit LLP
Chartered Accountants & Statutory Auditor

16 Great Queen Street

Covent Garden

London

WC2B 5AH




Page 1

 

D2L EUROPE LTD
 
STRATEGIC REPORT
FOR THE YEAR ENDED 31 JANUARY 2024

Introduction
 
The director present his strategic report for D2L Europe Ltd (“D2L Europe” or the “company”) for the fiscal year ended 31 January 2024. 

Business review
 
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.

Page 2

 

D2L EUROPE LTD

STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024

Principal risks and uncertainties
 
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.

Financial key performance indicators
 
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.





J Baker
Director

Date: 30 January 2025

Page 3

 

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.

Results and dividends

The profit for the year, after taxation, amounted to £268,506 (2023 - £212,275).

The director does not recommend a dividend.

Director

The director who served during the year was:

J Baker 

Matters covered in the Strategic report

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.

Disclosure of information to auditor

The director at the time when this director's report is approved has confirmed that:
 
so far as he is aware, there is no relevant audit information of which the company's auditor is unaware, and

he has taken all the steps that ought to have been taken as a director in order to be aware of any relevant audit information and to establish that the company's auditor is aware of that information.

Post balance sheet events

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.
 





J Baker
Director

Date: 30 January 2025

Page 4

 

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 2006He 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.

Page 5

 

D2L EUROPE LTD

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF D2L EUROPE LTD
 FOR THE YEAR ENDED 31 JANUARY 2024

Opinion


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 policiesThe financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).


In our opinion the financial statements:


give a true and fair view of the state of the company's affairs as at 31 January 2024 and of its profit 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 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.


Conclusions relating to going concern


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.


Other information


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 reportOur 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.


Page 6

 

D2L EUROPE LTD

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF D2L EUROPE LTD (CONTINUED)
FOR THE YEAR ENDED 31 JANUARY 2024

Opinion 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 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.


Matters on which we are required to report by exception
 

In the light of the knowledge and understanding of the company and its environment obtained in the course of the audit, we have not identified material misstatements in the strategic report or the director's report.


We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:


adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not visited by us; or
the financial statements are not in agreement with the accounting records and returns; or
certain disclosures of director's 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 director's responsibilities statement set out on page 5, the director is 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 director determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.


In preparing the financial statements, the director is responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the director either intends to liquidate the company or to cease operations, or have no realistic alternative but to do so.


Page 7

 

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
 

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

Page 8

 

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.


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 2006Our 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.





Nicholas Anderson (senior statutory auditor)
  
for and on behalf of
Blick Rothenberg Audit LLP
 
Chartered Accountants
Statutory Auditor
  
16 Great Queen Street
Covent Garden
London
WC2B 5AH
 

31 January 2025
Page 9

 

D2L EUROPE LTD
 
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 JANUARY 2024

2024
2023
Note
£
£

  

Turnover
 3 
14,416,581
10,861,281

Administrative expenses
  
(7,943,819)
(5,862,644)

Other operating charges
  
(6,046,000)
(4,669,046)

Operating profit
 4 
426,762
329,591

Interest payable and similar expenses
 6 
5,735
(4,230)

Profit before taxation
  
432,497
325,361

Tax on profit
 7 
(163,991)
(113,086)

Profit for the financial year
  
268,506
212,275

There are no items of other comprehensive income for either the year or the prior year other than the profit for the year. Accordingly, no statement of other comprehensive income has been presented.

Page 10


 
REGISTERED NUMBER:07542144
D2L EUROPE LTD

BALANCE SHEET
AS AT 31 JANUARY 2024

2024
2023
Note
£
£

Fixed assets
  

Intangible assets
 8 
3,511,967
-

Investments
 9 
300,737
1

  
3,812,704
1

Current assets
  

Debtors: amounts falling due after more than one year
 10 
1,140,100
1,095,802

Debtors: amounts falling due within one year
 10 
5,719,035
4,369,630

Cash at bank and in hand
  
8,605,812
8,606,577

  
15,464,947
14,072,009

  

  

Amounts owed to group companies
  
(7,888,442)
(4,704,426)

All other creditors
  
(9,556,196)
(7,939,059)

Creditors: amounts falling due within one year
 11 
(17,444,638)
(12,643,485)

Net current (liabilities)/assets
  
 
 
(1,979,691)
 
 
1,428,524

Total assets less current liabilities
  
1,833,013
1,428,525

  

Net assets
  
1,833,013
1,428,525


Capital and reserves
  

Called up share capital 
 13 
100
100

Other reserves
 14 
315,520
290,526

Profit and loss account
 14 
1,517,393
1,137,899

Total equity
  
1,833,013
1,428,525


The financial statements were approved, authorised for issue and signed by the sole director. 




J Baker
Director

Date: 30 January 2025

The notes on pages 13 to 25 form part of these financial statements.

Page 11

 

D2L EUROPE LTD

STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 JANUARY 2024


Called up share capital
Other reserves
Profit and loss account
Total equity

£
£
£
£


At 1 February 2022
100
129,724
833,283
963,107


Comprehensive income for the year

Profit for the year
-
-
212,275
212,275

Share based payment expense
-
253,143
-
253,143

Transfer to/from profit and loss account
-
(92,341)
92,341
-



At 1 February 2023
100
290,526
1,137,899
1,428,525


Comprehensive income for the year

Profit for the year
-
-
268,506
268,506

Share based payment expense
-
135,982
-
135,982

Transfer to/from profit and loss account
-
(110,988)
110,988
-


At 31 January 2024
100
315,520
1,517,393
1,833,013


The notes on pages 13 to 25 form part of these financial statements.

Page 12

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

1.


General information

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

 
2.1

Basis of preparation of financial statements

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:

 
2.2

Going concern

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.

Page 13

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)

 
2.3

Turnover

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes. The following criteria must also be met before revenue is recognised:

Revenue associated with multiple element contracts is allocated based on the fair value of the services included within the contract.
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.

 
2.4

Share-based payments

Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
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.

The company has taken advantage of the exemption available in FRS102 from accounting for share based payments arrangements which were granted prior to 1 January 2016.

  
2.5

Other operating charges

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.

Page 14

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)

 
2.6

Pensions

Defined contribution pension plan

The company operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the company pays fixed contributions into a separate entity. Once the contributions have been paid the company has no further payment obligations.

The contributions are recognised as an expense in profit or loss when they fall due. Amounts not paid are shown in accruals as a liability in the balance sheet. The assets of the plan are held separately from the company in independently administered funds.

 
2.7

Operating leases

Rentals paid under operating leases are charged to profit or loss on a straight-line basis over the lease term.

  
2.8

Current and deferred taxation

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.

Page 15

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)

 
2.9

Foreign currency translation

Functional and presentation currency

The company's functional and presentational currency is Sterling (£).

Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

Foreign exchange gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profit or loss, within 'Administrative expenses'.

 
2.10

Intangible assets

Goodwill

Goodwill represents the difference between amounts paid on the cost of a business combination and the acquirer’s interest in the fair value of its identifiable assets and liabilities of the acquiree at the date of acquisition. Subsequent to initial recognition, goodwill is measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is amortised on a straight-line basis to the profit and loss account over its useful economic life.

Other intangible assets

Intangible assets are initially recognised at cost. After recognition, under the cost model, intangible assets are measured at cost less any accumulated amortisation and any accumulated impairment losses.

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:

Goodwill
-
10
years
Customer relationships
-
8
years
Proprietary software
-
5
years

 
2.11

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Page 16

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)


2.12

Financial instruments

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.


Page 17

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)




Financial instruments (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.

 
2.13

Cash

Cash is represented by cash in hand and deposits with financial institutions repayable without penalty on notice of not more than 24 hours.

  
2.14

Deferred commissions

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.

  
2.15

Deferred income

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.

  
2.16

Share capital

Ordinary shares are classified as equity.

Page 18

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

2.Accounting policies (continued)

 
2.17

Impairment of fixed assets and goodwill

Assets that are subject to depreciation or amortisation are assessed at each balance sheet date to determine whether there is any indication that the assets are impaired. Where there is any indication that an asset may be impaired, the carrying value of the asset (or cash-generating unit to which the asset has been allocated) is tested for impairment. An impairment loss is recognised for the amount by which the asset's carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset's (or CGU's) fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (CGUs). Non-financial assets that have been previously impaired are reviewed at each balance sheet date to assess whether there is any indication that the impairment losses recognised in prior periods may no longer exist or may have decreased.


3.


Turnover

An analysis of turnover by class of business is as follows:


2024
2023
£
£

Product revenue
12,609,006
9,315,689

Service revenue
1,807,575
1,545,592

14,416,581
10,861,281


Analysis of turnover by country of destination:

2024
2023
£
£

United Kingdom
7,498,014
5,439,434

Rest of Europe
5,518,377
4,645,815

Rest of the world
1,400,190
776,032

14,416,581
10,861,281



4.


Operating profit

The operating profit is stated after charging/(crediting):

2024
2023
£
£

Audit fees payable to the company's auditor
27,175
24,675

Non-audit fees payable to the company's auditor
6,000
4,400

Exchange differences
280,049
(274,638)

Other operating lease rentals
282,714
212,910

Share-based payment expense
135,982
253,143

Page 19

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

5.


Employees

Staff costs were as follows:


2024
2023
£
£

Wages and salaries
5,085,071
4,218,250

Social security costs
623,094
512,635

Cost of defined contribution scheme
170,913
95,635

5,879,078
4,826,520


The average monthly number of employees, excluding the director, during the year was as follows:


        2024
        2023
            No.
            No.







Sales and Marketing
30
33



Research and Development
6
-



Administrative support
3
3



Services
21
10

60
46


6.


Interest payable and similar expenses

2024
2023
£
£


Other interest payable
(5,735)
4,230

Page 20

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

7.


Taxation


2024
2023
£
£

Corporation tax


Current tax on profits for the year
193,767
110,428


Total current tax
193,767
110,428

Deferred tax


Origination and reversal of timing differences
(29,776)
2,658

Total deferred tax
(29,776)
2,658


Tax on profit
163,991
113,086

Factors affecting tax charge for the year

The tax assessed for the year is higher than (2023 - higher than) the standard rate of corporation tax in the UK of 24.03% (2023 - 19.00%). The differences are explained below:

2024
2023
£
£


Profit before taxation
432,497
325,361


Profit multiplied by standard rate of corporation tax in the UK of 24.03% (2023 - 19.00%)
103,929
61,819

Effects of:


Expenses not deductible for tax purposes, other than amortisation
9,169
9,009

Non-tax deductible amortisation of goodwill
65,392
-

Other timing differences leading to an (decrease)/increase in the tax charge
2,265
638

Deferred tax (not previously recognised)/not recognised
(16,764)
41,620

Total tax charge for the year
163,991
113,086


Factors that may affect future tax charges

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.

Page 21

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

8.


Intangible assets




Customer relationships
Proprietary software
Goodwill
Total

£
£
£
£



Cost


Additions
203,298
246,979
3,333,818
3,784,095



At 31 January 2024

203,298
246,979
3,333,818
3,784,095



Amortisation


Charge for the year
16,942
32,931
222,255
272,128



At 31 January 2024

16,942
32,931
222,255
272,128



Net book value



At 31 January 2024
186,356
214,048
3,111,563
3,511,967



At 31 January 2023
-
-
-
-

The goodwill arose on the acquisition of the trade and assets of Connected Shopping Ltd on 9 May 2023. The asset is carried at £3,111,563 and has a remaining amortisation period of 9 years.




9.


Fixed asset investments





Investments in subsidiary companies

£



Cost


At 1 February 2023
1


Additions
3,634,554


Conversion to goodwill upon hive up
(3,333,818)



At 31 January 2024
300,737




Page 22

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

Subsidiary undertakings


The following were subsidiary undertakings of the company:

Name

Registered office

Class of shares

Holding

D2L EU B.V.
Schiphol Boulevard 359 WTC Schiphol 1118BJ Netherlands
Ordinary
  100%
Connected Shopping Ltd
C/O Taylor Wessing LLP, 5 New Street Square, London, England, EC4A 3TW
Ordinary
100%

The trade of Connected Shopping Ltd has been hived up to the parent company, D2L Europe Ltd. Under the hive up accounting provisions £3,333,818 of the investment in the subsidiary of £3,634,554 has been converted to goodwill. The residual figure of £300,737 in fixed asset investments represents the remaining positive net assets of the subsidiary to be transferred at a later date.


10.


Debtors

2024
2023
£
£

Due after more than one year

Other debtors
1,140,100
1,095,802


2024
2023
£
£

Due within one year

Trade debtors
3,089,771
2,348,206

Amounts owed by group undertakings
1,416,146
1,186,020

Other debtors
697,000
640,766

Prepayments and accrued income
470,616
178,912

Deferred taxation
45,502
15,726

5,719,035
4,369,630


Amounts owed by group undertakings are interest free, have no fixed repayment date and are repayable on demand.

Page 23

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

11.


Creditors: Amounts falling due within one year

2024
2023
£
£

Trade creditors
67,981
57,744

Amounts owed to group undertakings
7,888,442
4,704,426

Corporation tax
168,476
110,466

Other taxation and social security
421,683
414,153

Other creditors
1,021,578
7,879

Accruals and deferred income
7,876,478
7,348,817

17,444,638
12,643,485


Amounts owed to group undertakings are interest free, have no fixed repayment date and are repayable on demand.


12.


Deferred taxation




2024


£






At beginning of year
15,726


Charged to profit or loss
29,776



At end of year
45,502

The deferred tax asset is made up as follows:

2024
2023
£
£


Fixed asset timing differences
11,280
13,757

Short term timing differences
3,050
1,969

Share option timing differences
31,172
-

45,502
15,726


13.


Share capital

2024
2023
£
£
Allotted, called up and fully paid



100 (2023 - 100) Ordinary shares of £1.00 each
100
100


Page 24

 

D2L EUROPE LTD

NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 JANUARY 2024

14.


Reserves

Other reserves

Other reserves have arisen from the share-based payment charge. The shares over which the options were issued are that of the ultimate parent company.

Profit and loss account

The profit and loss account includes all current and prior period retained profits and losses.


15.


Commitments under operating leases

At 31 January 2024 the company had future minimum lease payments due under non-cancellable operating leases for each of the following periods:

2024
2023
£
£


Not later than 1 year
138,828
99,900

Later than 1 year and not later than 5 years
196,642
-

335,470
99,900


16.


Related party transactions

The company has taken advantage of the exemption contained in FRS102 section 33 "Related Party Disclosures" from disclosing transactions with entities which are a wholly owned part of the group.


17.


Controlling party

The immediate parent undertaking is D2L Corporation.
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.


18.


Post balance sheet events

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.

 
Page 25