Registered number:
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
COMPANY INFORMATION
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DUCK CREEK TECHNOLOGIES LIMITED
CONTENTS
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DUCK CREEK TECHNOLOGIES LIMITED
STRATEGIC REPORT
FOR THE YEAR ENDED 31 AUGUST 2022
The directors present their report and the audited financial statements of the company for the year ended 31 August 2022.
Duck Creek Technologies Limited (‘the Company’) was incorporated on 14 April 2016. The Company is a wholly owned subsidiary of Disco Topco Holdings (Cayman), L.P. which is wholly owned by Duck Creek Technologies Inc. (the ultimate parent company). Duck Creek Technologies, Inc. completed its initial public offering on 14 August 2020 and is currently traded on the Nasdaq stock exchange under the DCT ticker symbol. Duck Creek Technologies Pty Ltd (“DC Australia”) and Duck Creek Technologies Spain, SL (“DC Spain”) are wholly owned by the Company, and Duck Creek Technologies India LLP (“DC India”) is majority owned by DC Australia.
The results for the period ended 31 August 2022 are set out in the Profit and Loss Account. The reporting period for the Company includes the trading activities for the Company for the period from 1 September 2021 to 31 August 2022.
While the Company provides various services to local market customers, it also derives turnover from services provided to DC Australia. The Company is a provider of Software as a Service (SaaS) systems to the property and casualty (P&C) insurance industry. The loss for the current period to 31 August 2022 is $10,779,090 compared to a loss of $4,184,827 in the prior period. The directors are confident that the business is moving forward and has a promising future. Investments are being made to expand the Company’s local market customer base and to sell additional software products and services to its current customers. The Company has been successful in securing key personnel to manage this expansion. The Company's total revenue increased 20% to $16,712,718 in the current period compared to $13,951,939 in the prior period. The Company’s maintenance and support revenue increased slightly to $2,157,714 in the current period compared to $2,147,995 in the prior period, SaaS revenue increased 8% to $5,256,278 in the current period compared to $4,861,467 in the prior year, professional services revenue decreased 13% to $2,264,844 in the current period compared to $2,600,734 in the prior period, and intercompany revenue increased 47% to $5,547,719 in the current period compared to $3,773,689 in the prior period. License revenues increased by 161% to $1,486,163 in the current period compared to $568,054 in the prior period. The Company is increasingly focused on selling its SaaS solutions to P&C insurance carriers around the globe. The Company has a good cash position at the year end due to the timely collection of trade debts from its customers and the timely collection of intercompany debts from the U.S. based subsidiaries. In a Company this size, the directors consider various non financial performance indicators but none individually are key. The Company continues to enjoy a high rate of customer retention that should continue to provide recurring revenues to the business over the coming years. Due to the Company’s cash position, high customer retention rate, and availability of a variety of funding sources, the directors believe that it remains appropriate to prepare the financial statements on a going concern basis, as explained in note 2.4 to the financial statements.
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DUCK CREEK TECHNOLOGIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2022
Competitive pressure is a constant risk that could impact the operating performance of the Company. This risk is managed by working closely with customers to provide competitive products and services and ensuring that excellent service levels are maintained.
The cash flow and liquidity needs of the Company are moderately dependent on interest income related to the intercompany loan with a U.S. based subsidiary. The Company maintains its short term flexibility through intercompany borrowings, if required. The global economic environment can affect the operating performance of the Company and the market it competes in. Both sales and profitability are exposed to these risks. The Company works to mitigate the impact of these external variables by competing in diverse geographies and with management planning and oversight processes.
The Company has no hedging arrangements as of 31 August 2022. The foreign exchange currency risk is managed centrally at a group level.
Liquidity and cash flow risks are governed by the ultimate parent undertaking’s requirements. The Company maintains its short term flexibility through intercompany borrowing, if required. The Company governs its own price risk and credit risk based on directors’ requirements to meet its ultimate parent undertaking expectations.
The Directors have acted in a way they considered, in good faith, to be the most likely to promote the success of the Company for the benefit of its stakeholders. Section 172 requires the Directors to have regard, amongst other matters to the:
a) Likely consequences of any decisions in the long term b) Interests of the Company’s employees c) Need to foster the Company’s business relationships with suppliers, customers, and others d) Impact of the Company’s operations on the community and the environment e) Desirability of the Company maintaining a reputation for high standards of business conduct, and f) Need to act fairly as between members of the Company Similar to many large organisations, much of the group strategy is set at a corporate level. The Company delegates authority for the day to day management to the parent company executives. Management are responsible for overseeing the execution of the group strategy and adhering to polices set by the group. Senior executives hold meetings with the regional management team regularly to ensure feedback from employees, customers and supplier base.
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DUCK CREEK TECHNOLOGIES LIMITED
STRATEGIC REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2022
This report was approved by the board and signed on its behalf.
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DUCK CREEK TECHNOLOGIES LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 AUGUST 2022
The directors present their report and the financial statements for the year ended 31 August 2022.
The directors are responsible for preparing the Strategic Report, the Directors' Report 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 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 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 of the profit or loss of the Company for that period.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Company's financial statements and then apply them consistently;
∙make judgments 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 directors are 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 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 hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The loss for the year, after taxation, amounted to $10,779,090 (2021 - loss $4,184,827).
No dividends were paid or proposed during the current or prior year.
The directors who served during the year were:
There were no significant future developments expected to impact the Company.
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DUCK CREEK TECHNOLOGIES LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 AUGUST 2022
The directors are required to foster the Company’s business relationships with suppliers, customers and others. The Company has a number of direct contracts with external customers and a portion of its revenue is derived from services provided to customers of Duck Creek Australia. Due to the recurring nature of revenues, our account managers are responsible for maintaining those relationships. The majority of business operations are conducted by our own employees and a significant proportion of services are supplied on a cost share basis with the wider group. As such the key relationships with suppliers are maintained by our parent company.
The Company has chosen in accordance with Companies Act 2006, s. 414C(11) to set out in the strategic report information required by The Large and Medium sized Companies and Groups (Accounts and Reports) Regulations 2008, Sch. 7 to be contained in the directors' report. It has done so in respect of risk and uncertainties and financial risk management objectives and policies
On 05 January 2023 the company acquired Imburse AG a payments infrastructure and orchestration business based in Switzerland.
On 30 March 2023 the companies ultimate parent company Duck Creek Technolgies Inc was acquired by Vista Equity Partners and at that point the shares ceased to be listed on the Nasdaq.
The auditor, Nortons Assurance Limited, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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DUCK CREEK TECHNOLOGIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DUCK CREEK TECHNOLOGIES LIMITED
We have audited the financial statements of Duck Creek Technologies Limited (the 'Company') for the year ended 31 August 2022, which comprise the Profit and Loss Account, the Balance Sheet, the Statement of Changes in Equity and the related notes, 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).
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 directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.
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DUCK CREEK TECHNOLOGIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DUCK CREEK TECHNOLOGIES LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are 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.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Strategic Report and the Directors' Report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
∙the Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
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 Directors' Report.
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DUCK CREEK TECHNOLOGIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DUCK CREEK TECHNOLOGIES LIMITED (CONTINUED)
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:
We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the most significant frameworks which are directly relevant to specific assertions in the financial statements are those that relate to the reporting framework including the Companies Act 2006 and the relevant tax compliance regulations in the UK. We understood how the Company is complying with those frameworks by making enquiries of management and those responsible for legal and compliance procedures. We assessed the susceptibility of the Company’s financial statements to material misstatement, including how fraud might occur by meeting with management to understand where it considered there was a susceptibility to fraud. We considered the controls that the Company has established to address risks identified, or that otherwise prevent, deter and detect fraud; and how senior management monitors those programmes and controls. Where the risk was considered to be higher, we performed audit procedures toaddress each identified fraud risk. These procedures included testing manual journals and were designed to provide reasonable assurance that the financial statements were free from fraud and error. Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations identified in the paragraphs above. Our procedures involved journal entry testing, with a focus on journals indicating large or unusual transactions based on our understanding of the business, enquiries of Company management and focused testing. In addition, we completed procedures to conclude on the compliance of the disclosures in the Annual Report and Accounts with the requirements of the relevant accounting standards and UK legislation.
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.
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DUCK CREEK TECHNOLOGIES LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF DUCK CREEK TECHNOLOGIES LIMITED (CONTINUED)
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 and Statutory Auditor
Second Floor
NOW Building
Thames Valley Park
Berkshire
RG6 1NT
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DUCK CREEK TECHNOLOGIES LIMITED
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
REGISTERED NUMBER: 10124977
BALANCE SHEET
AS AT 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
REGISTERED NUMBER: 10124977
BALANCE SHEET (CONTINUED)
AS AT 31 AUGUST 2022
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 14 to 37 form part of these financial statements.
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DUCK CREEK TECHNOLOGIES LIMITED
STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
Duck Creek Technologies Limited ('the Company') is a company incorporated in the United Kingdom under the Companies Act. The Company is a private company limited by shares and is registered in England and Wales. The address of the Company's registered office is shown on the Company information page.
The principal activities of the Company are set out in the strategic report. These financial statements present the results for the year ended 31 August 2021.
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 Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and the Republic of Ireland and 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 judgment in applying the Company's accounting policies (see note 3).
The following principal accounting policies have been applied:
The Company has taken advantage of the following disclosure exemptions in preparing these financial statements, as permitted by the FRS 102 "The Financial Reporting Standard applicable in the UK and Republic of Ireland":
∙the requirements of Section 7 Statement of Cash Flows;
∙the requirements of Section 3 Financial Statement Presentation paragraph 3.17(d);
∙the requirements of Section 11 Financial Instruments paragraphs 11.42, 11.44 to 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b) and 11.48(c);
∙the requirements of Section 12 Other Financial Instruments paragraphs 12.26 to 12.27, 12.29(a), 12.29(b) and 12.29A;
∙the requirements of Section 26 Share-based Payment paragraphs 26.18(b), 26.19 to 26.21 and 26.23;
∙the requirements of Section 33 Related Party Disclosures paragraph 33.7.
This information is included in the consolidated financial statements of Duck Creek Technologies, Inc. as at 31 August 2021 and these financial statements may be obtained from 22 Boston Wharf Road, Boston, MA 02210, USA or www.duckcreek.com.
The Company is a parent company that is also a subsidiary included in the consolidated financial statements of its immediate parent undertaking established under the law of a non-EEA state and is therefore exempt from the requirement to prepare consolidated financial statements under section 401 of the Companies Act 2006.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
The accounts have been prepared on a going concern basis. The directors are therefore satisfied that adequate resources are available to the Company and they have no reason to believe that any material uncertainty exists that may cast significant doubt about the ability of the Company to continue as a going concern.
Functional and presentation currency
Transactions and balances
Sales of hosted software services under SaaS arrangements. Sales of software licenses - Software license revenue is derived from the sale of term-based and perpetual licenses to customers. Sales of maintenance and support services - Maintenance and support services include telephone and web-based support, software updates, and rights to unspecified software upgrades on a when-and-if-available basis. Sales of professional services and other - Professional services include training, implementation, and consulting services. Other revenues primarily consist of reimbursable employee out-of-pocket expenses. SaaS Arrangements The transaction price allocated to SaaS arrangements is recognized as revenue over time throughout the term of the contract as the services are provided on a continuous basis, beginning after the SaaS environment is provisioned and made available to customers. The Company’s SaaS arrangements generally have terms of three to seven years, and are generally payable on a monthly basis over the term of the SaaS arrangement, which is typically noncancellable. Revenue is recognized ratably using contractual DWP (the gross dollar value of total premiums paid to carriers by policyholders) as the measure of progress. Software Licenses The Company has concluded that its software licenses provide the customer with the right to functional intellectual property (IP), and are distinct performance obligations as the customer can benefit from the software licenses on their own. The transaction price allocated to perpetual and term
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
Maintenance and Support Services Maintenance and support contracts associated with the Company’s software licenses entitle customers to receive technical support and software updates, on a when and if available basis, during the term of the maintenance and support contract. Technical support and software updates are considered distinct from the related software licenses but accounted for as a single performance obligation as they each constitute a series of distinct services that are substantially the same and have the same pattern of transfer to the customer. The transaction price allocated to software maintenance and support is recognized as revenue over time on a straight-line basis over the term of the maintenance and support contract. Maintenance and support fees are generally payable in advance on a monthly, quarterly, or annual basis over the term of the maintenance and support contract. Maintenance and support contracts are priced as a percentage of the associated software license. Professional Services The Company’s professional services revenue is primarily comprised of implementation services provided to customers. The majority of professional services engagements are billed to customers on a time and materials basis. The Company has determined that professional services provided to customers represent distinct performance obligations. These services may be provided on a stand-alone basis or bundled with other performance obligations, including SaaS arrangements, software licenses, and maintenance and support services. The transaction price allocated to these performance obligations is recognized as revenue over time as the services are performed. In those limited instances where professional services arrangements are sold on a fixed price basis, revenue is recognized over time using an input measure of time incurred to date relative to total estimated time to be incurred at project completion. Invoices for all professional services arrangements are generally invoiced monthly in arrears. Costs to obtain a contract The Company allocates the incremental costs to obtain a contract among the identified performance obligations that are included in the contract, on a relative basis to the allocated transaction price. Incremental costs primarily comprise of commissions paid to the Company's sales representatives. Any such costs that are allocated to performance obligations that are recognised at a point in time are expensed at that time. Any such costs that are allocated to performance obligations that are recognised over time are capitalised in the period in which they are incurred and amortised on a straight-line basis over the expected benefit of the associated contract. As a practical expedient, the Company recognises the incremental costs of obtaining a contract as an expense when incurred if the amortisation period of the asset that it would otherwise have recognised is one year or less. The Company has estimated that the typical period of benefit for its contracts is 8 years, based on both qualitative and quantitative factors, including product lifecycle attributes and historical customer retention data. The Company assesses deferred contract costs for impairment on an annual basis. Expenses associated with deferred contract costs are included within administrative expenses. Deferred contract costs are included on the balance sheet within other debtors.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
The Company also recognises revenue for services provided to other group companies under a global cost sharing arrangement. Revenue is measured as the fair value of the consideration received or receivable, excluding discounts, rebates, value added tax and other sales taxes.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
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.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
Goodwill
Other intangible assets
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:
Amortisation is included in administrative expenses in the profit and loss account.
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in profit or loss.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
Provisions are charged as an expense to profit or loss in the year that the Company becomes aware of the obligation, and are measured at the best estimate at the balance sheet date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Balance Sheet.
The Company has elected to apply the provisions of Section 11 “Basic Financial Instruments” of FRS 102 to all of its financial instruments.
The Company has elected to apply the recognition and measurement provisions of IFRS 9 Financial Instruments (as adopted by the UK Endorsement Board) with the disclosure requirements of Sections 11 and 12 and the other presentation requirements of FRS 102.
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.
Basic financial assets
Basic financial assets, which include trade and other receivables, cash and bank balances, are initially measured at their transaction price including transaction costs and are subsequently carried at their amortised cost using the effective interest method, less any provision for impairment, 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.
Discounting is omitted where the effect of discounting is immaterial. The Company's cash and cash equivalents, trade and most other receivables due with the operating cycle fall into this category of financial instruments.
Other financial assets
Other financial assets, which includes investments in equity instruments which are not classified as subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the recognised transaction price. Such assets are subsequently measured at fair value with the changes in fair value being recognised in the profit or loss. Where other financial assets are not publicly traded, hence their fair value cannot be measured reliably, they are measured at cost less impairment.
Impairment of financial assets
Financial assets are assessed for indicators of impairment at each reporting date.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
Financial assets are impaired when events, subsequent to their initial recognition, indicate the estimated future cash flows derived from the financial asset(s) have been adversely impacted. The impairment loss will be the difference between the current carrying amount and the present value of the future cash flows at the asset(s) original effective interest rate.
If there is a favourable change in relation to the events surrounding the impairment loss then the impairment can be reviewed for possible reversal. The reversal will not cause the current carrying amount to exceed the original carrying amount had the impairment not been recognised. The impairment reversal is recognised in the profit or loss.
Financial liabilities
Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instruments any contract that evidences a residual interest in the assets of the Company after the deduction of all its liabilities.
Basic financial liabilities, which include trade and other payables, bank loans and other loans are initially measured at their transaction price after transaction costs. When this constitutes a financing transaction, whereby the debt instrument is measured at the present value of the future receipts discounted at a market rate of interest. Discounting is omitted where the effect of discounting is immaterial.
Debt instruments are subsequently carried at their amortised cost using the effective interest rate method.
Trade payables are obligations to pay for goods and services that have been acquired in the ordinary course of business from suppliers. Trade payables are classified as current liabilities if the payment is due within one year. If not, they represent non-current liabilities. Trade payables are initially recognised at their transaction price and subsequently are measured at amortised cost using the effective interest method. Discounting is omitted where the effect of discounting is immaterial.
Other financial instruments
Derivatives, including forward exchange contracts, futures contracts and interest rate swaps, are not classified as basic financial instruments. These are initially recognised at fair value on the date the derivative contract is entered into, with costs being charged to the profit or loss. They are subsequently measured at fair value with changes in the profit or loss.
Debt instruments that do not meet the conditions as set out in FRS 102 paragraph 11.9 are subsequently measured at fair value through the profit or loss. This recognition and measurement would also apply to financial instruments where the performance is evaluated on a fair value basis as with a documented risk management or investment strategy.
Derecognition of financial instruments
Derecognition of financial assets
Financial assets are derecognised when their contractual right to future cash flow expire, or are settled, or when the Company transfers the asset and substantially all the risks and rewards of ownership to another party. If significant risks and rewards of ownership are retained after the transfer to another party, then the Company will continue to recognise the value of the portion of the
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
2.Accounting policies (continued)
risks and rewards retained.
Derecognition of financial liabilities
Financial liabilities are derecognised when the Company's contractual obligations expire or are discharged or cancelled.
Financial assets and liabilities are offset and the net amount reported in the Balance Sheet when there is an enforceable right to offset the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.
Although the Company regularly assesses these estimates, actual results could differ materially from these estimates. Changes in the estimates are recorded in the period in which they become known. The Company bases its estimates on historical experiences and various other assumptions that it believe to be reasonable under the circumstances. Actual results could differ from managements estimates if past experience or other assumptions are not substantially accurate.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
Analysis of turnover by country of destination:
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
The Finance Act 2021 was substantially enacted in May 2021 and has increased the corporation tax rate to from 19% to 25% with effect from 1 April 2023.
No deferred asset has been recognised in respect of losses which are not expected to reverse in the foreseeable future. The unrecognised deferred tax asset in respect of these losses is approximately $6,200,000 (2021: $3,440,000).
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
Share premium account
Other reserves
Profit and loss account
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
The Class D Phantom Stock Awards retain the vesting attributes (including original service period vesting start date) of the Phantom Units. These awards will be settled in cash equal to the fair market value of a share of the Company’s common stock, determined on the day that such award becomes fully vested.
In substitution for part of the economic benefit of the Phantom Units that was not reflected in the conversion to Class D Phantom Stock Awards, stock appreciation rights (“Leverage Restoration SARs”) were granted to holders of Phantom Units. The fair value of the Leverage Restoration SARs is being recorded as share-based compensation expense over the requisite period of the awards. The Company has concluded that the Leverage Restoration SARs should be treated as liability classified share-based compensation awards because they will be settled in cash. Accordingly, the accrued liability balance associated with Leverage Restoration SARs is adjusted to fair value at each reporting period through earnings. Leverage Restoration Stock Appreciation Rights (“SARs”) were granted on August 14, 2020 with an exercise price of $27.00, a ten-year contractual term and retained vesting attributes (including original service period vesting start dates) of the Phantom Units. SARs will be settled in cash equal to the excess of the fair market value of a share of the Company’s common stock, determined on the date of exercise, over the exercise price share of common stock underlying such SAR. New Restricted Stock Awards and Restricted Stock Units On the date of the IPO, the parent company granted Restricted Stock Units (“RSUs”) to select international employees. The RSUs represent the right to receive shares of the Company’s common stock as they vest; however, the holder of an RSU has no rights as a stockholder. These awards vest annually over a 4-year requisite service period and are settled in shares of the Company’s common stock. The Company has concluded that the RSUs should be treated as equity classified share-based compensation awards.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
Purchase Price Allocation The base purchase price was EUR 110,000,000 funded by cash reserves. The allocation of the purchase price to identifiable assets, liabilities, and contingent liabilities acquired is outlined in the table below: Goodwill Goodwill, representing the excess of the purchase price over fair values, is attributed to expected synergies and future business opportunities. It will be subject to annual impairment testing in line with FRS 102. Transaction Costs Directly attributable transaction costs are expensed as incurred. Post-Acquisition Performance Effisoft SA and Prima Solutions Belgium SA results have been included in the consolidated financial statements from the acquisition date. Related Party Transactions Refer to related party transactions note.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
On 30 December 2022, the Company entered into an agreement to assign the property lease to a third party however, the Company remains guarantor for all obligations under the terms on the lease in the event of any default by the assignee.
The Company operates a defined contribution pension scheme. The assets of the scheme are held separately from those of the Company in an independently administered fund. The pension cost charge represents contributions payable by the Company to the fund and amounted to $174,891 (2021: $178,477). Contributions totalling $30,169 (2021: $20,806) were payable to the fund at the balance sheet date and are included in creditors.
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DUCK CREEK TECHNOLOGIES LIMITED
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 AUGUST 2022
On 30th March 2023 the companies ultimate parent company Duck Creek Technolgies Inc was acquired by Vista Equity Partners and at that point the shares ceased to be listed on Nasdaq.
The immediate parent company is Disco Topco Holdings (Cayman), L.P., registered at Maples Corporate Services Limited, PO BOX 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.
The ultimate parent company is Duck Creek Technologies, Inc. is the smallest and largest group to consolidate these financial statements.
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