CERTARA_UK_LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2020.

The principal activity of the Company in the year under review was that of the development and advancement of algorithms to simulate the absorption and disposition of drugs in virtual populations in order to predict pharmacokinetic and pharmacodynamics behaviour, including drug-to-drug interactions. The Company conducts its activities for a customer base of global pharmaceutical and biotechnology companies.

In additions, consultancy services are offered on related topics. Workshops are held at various global locations to educate clients or potential clients on the science involved in model-informed drug development. The Company also provides licences to major academic and non-profit centres of excellence for both teaching and research purposes as well as to regulatory authorities.

Review of business

Turnover for 2020 was £34,151,635 compared to the 2019 figures of £32,111,754, an increase of 6.4%. Profit after tax for 2020 was £12,805,028 compared to £11,143,420 in 2019, representing an increase of 14.9%. The profit from 2020 was transferred to reserves and made available for the payment of dividends.

The Company's primary function is to support its clients in the pharmaceutical and biotechnology industry and their efforts for the successful development if drug therapies. The Company is at risk of rapid changes in the methods for drug research. Additionally, substantial changes in the drug approval protocols by government agencies such as FDA, EMEA and PMDA could have a negative impact on the Company's business model.

Products and services provided by the Company are the result of highly sophisticated scientific research and analysis. Users must be able to accept and understand the underlying premises of the method employed by the Certara scientists in building the algorithms and models in order to benefit from the technology.

The Company has a high penetration among the largest pharmaceutical companies for its software based technology. Future growth in members of the simulator consortium will be dependent on identifying the next tier of customers or selling additional licences to existing customers. Likewise the Company is at risk of slower acceptance of its consultancy services by smaller pharmaceutical and biotechnology companies.

Continued development of the software product and delivery of consultancy services are dependant on the Company's continued ability to find an available pool of scientist and IT professionals.

Due to the Company's growth and relationship with the global Certara group of companies, it may no longer qualify for certain grant funded projects. As a result, proceeds from grants may diminish.

As part of the Certara group of companies, the Company has access to growth capital and the global network of staff, offices and resources. There are no plans to change the group profile.

The Company conducts the majority of its transactions in Sterling with the remaining transactions in U.S Dollars, Euros and Japanese Yen. As a result, the Company is exposed to some exchange risk.

Liquidity risk

The Company seeks to manage financial risk by ensuring sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably. Primarily this is achieved through treasury account facilities.

Price risk

All commercial transactions undertaken by the Company are subject to negotiation, and as such the Company is exposed to some price risk.

Cash flow risk

The Company holds significant cash reserves and whilst the Company continues to operate profitably the cash flow risk remains relatively low.

Management review Turnover and Earnings Before Interest, Taxes, Depreciation and Amortisation ("EBITDA") as key indicators of the Company's performance.

The increase in turnover is described above and is principally related to addition of licence and consultancy clients. In addition the continued growth of the Company's standalone operations, it has benefited from membership in the global Certara organisation which helped to facilitate growth in turnover from the USA and Asia markets.

EBITDA for the years presented was:

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2020.

The profit for the year, after taxation amounted to £12,805,028 (2019 - £11,143,420).

Total dividend distributions during the period were £Nil (2019 - £Nil). The directors do not recommend the payment of a final dividend.

The directors who held office during the year and up to the date of signature of the financial statements were as follows:

The company has made qualifying third party indemnity provisions for the benefit of its directors during the year. These provisions remain in force at the reporting date.

During this year and in recent years the company has continued to work on models and algorithms that describe the disposition of drugs within virtual human and animal populations as well as the development of quantitative numerical models the describe disease progression and its modulation with drug treatment

The company will continue to invest in and develop the silico products to support model-informed drug development for its pharmaceutical and biotechnology client base, New opportunities to broaden out collaborations with both academic organisations and global regulatory authorities will be sought out in order to influence the further adoption of silico modelling tools across the drug development industry.

In accordance with the company's articles, a resolution proposing that Saffery Champness LLP be reappointed as auditor of the company will be put at a General Meeting.

So far as each person who was a director at the date of approving this report is aware, there is no relevant audit information of which the company’s auditor is unaware. Additionally, the directors individually have taken all the necessary steps that they ought to have taken as directors in order to make themselves aware of all relevant audit information and to establish that the company’s auditor is aware of that information.

The directors are responsible for preparing the annual 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 United Kingdom Generally Accepted Accounting Practice (United Kingdom Accounting Standards and applicable law). Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the company and 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 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 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 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.

We have audited the financial statements of Certara UK Limited for the year ended 31 December 2020 which comprise the statement of comprehensive income, the balance sheet, the statement of changes in equity and notes to the financial statements, including significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102, the Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).

In our opinion, the financial statements:

•     give a true and fair view of the state of the company’s affairs as at 31 December 2020 and 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 UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the financial statements is appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the company's ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this report.

Other information

The directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

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.

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, based on the work undertaken in the course of the audit:

• the information given in the 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.

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 directors’ remuneration specified by law are not made; or

•     we have not received all the information and explanations we require for our audit.

As explained more fully in the Directors’ Responsibilities Statement set out on page 5, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine 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 directors are 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 directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

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 specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.

Identifying and assessing risks related to irregularities:

We assessed the susceptibility of the company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the company by discussions with directors and updating our understanding of the sector in which the company operates.

Laws and regulations of direct significance in the context of the company include The Companies Act 2006, and UK Tax legislation.

Audit response to risks identified:

We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of financial statement disclosures. We reviewed the company’s records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the company’s policies and procedures for compliance with laws and regulations with members of management responsible for compliance.

During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.

There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.

A further description of our responsibilities is available 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 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.

The profit and loss account has been prepared on the basis that all operations are continuing operations.

Certara UK Limited is a private company limited by shares incorporated in England and Wales. The registered office is 6th Floor One, London Wall, London, EC2Y 5EB.

These financial statements have been prepared in accordance with FRS 102 “The Financial Reporting Standard applicable in the UK and Republic of Ireland” (“FRS 102”) and the requirements of the Companies Act 2006.

The financial statements are prepared in sterling, which is the functional currency of the company. Monetary amounts in these financial statements are rounded to the nearest £.

The financial statements have been prepared under the historical cost convention. The principal accounting policies adopted are set out below.

This company is a qualifying entity for the purposes of FRS 102, being a member of a group where the parent of that group prepares publicly available consolidated financial statements, including this company, which are intended to give a true and fair view of the assets, liabilities, financial position and profit or loss of the group. The company has therefore taken advantage of exemptions from the following disclosure requirements:

• Section 7 ‘Statement of Cash Flows’: Presentation of a statement of cash flow and related notes and disclosures;

• Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instrument Issues’: Interest income/expense and net gains/losses for each category of financial instrument; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;

• Section 26 ‘Share based Payment’: Share-based payment expense charged to profit or loss, reconciliation of opening and closing number and weighted average exercise price of share options, how the fair value of options granted was measured, measurement and carrying amount of liabilities for cash-settled share-based payments, explanation of modifications to arrangements;

• Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.

This information is included in the consolidated financial statements of Certara Inc. as at 31 December 2020 and these financial statements may be obtained from 100 Overlook Center, Suite 101, Princeton, NJ 08540 USA.

Exemption from preparing consolidated financial statements

The company is a parent company that is also a subsidiary included in the consolidation financial statements of its immediate parent undertaking established under the new law of an EEA state and is therefore exempt from the requirement to prepared consolidated financial statements under section 400 of the Companies Act 2006.

Atruet the time of approving the financial statements, the directors have a reasonable expectation that the company has adequate resources to continue in operational existence for the foreseeable future. Thus the directors continue to adopt the going concern basis of accounting in preparing the financial statements.

Turnover comprises revenue recognised by the company in respect of goods and services supplied, exclusive of Value Added Tax.

In respect of sales and contracts for on-going services, turnover is apportioned between license, workshop and consultancy. Income is recognised evenly over the relevant contract period with exception of workshop income which is recognised at the end of the contract period.

In respect of commissions received for sales and marketing services provided on behalf of the group companies, income is recognised at the point on invoice.

Goodwill represents the excess of the cost of acquisition of unincorporated businesses over the fair value of net assets acquired. It is initially recognised as an asset at cost and is subsequently measured at cost less accumulated amortisation and accumulated impairment losses. Goodwill is considered to have a finite useful life and is amortised on a systematic basis over its expected life, which is 10 years.

Intangible assets acquired separately from a business are recognised at cost and are subsequently measured at cost less accumulated amortisation and accumulated impairment losses.

Amortisation is recognised so as to write off the cost or valuation of assets less their residual values over their useful lives on the following bases:

Research and development

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development (or from the development phase of an internal project) is recognised if all of the criteria set out in FRS102 are met. Once the criteria are met, the development expenditure is capitalised and amortised over its useful life, included in administrative costs in Statement of Comprehensive Income.

The useful life of development costs is considered to be 3 years. No amortisation is charged until

development is complete and the asset is brought into use.

Tangible fixed assets under the cost model are stated at historical cost less accumulated

depreciation and any accumulated impairment losses. Historical cost includes expenditure that is

directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

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.

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 the Statement of Comprehensive Income.

Interests in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses. The investments are assessed for impairment at each reporting date and any impairment losses or reversals of impairment losses are recognised immediately in profit or loss.

A subsidiary is an entity controlled by the company. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.

At each reporting period end date, the company reviews the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the company estimates the recoverable amount of the cash-generating unit to which the asset belongs.

Cash and cash equivalents are basic financial assets and include cash in hand, deposits held at call with banks, other short-term liquid investments with original maturities of three months or less, and bank overdrafts. Bank overdrafts are shown within borrowings in current liabilities.

The Company only enters into basic financial instruments transactions that result in the reception of financial assets and liabilities such as trade and other debtors and creditors, loans from banks and other third parties and loans to related parties.

Debt instruments that are payable or receivable within one year, typically trade debtors and creditors, are measured, initially and subsequently, at the undiscounted amount of the cash or other consideration expected to be paid or received. However, if the arrangements of a short-term instrument constitute a financing transaction, like the payment of a trade debt deferred beyond normal business terms or financed at a rate of interest that is not a market rate or in case of an outright short-term loan not at market rate, the financial asset or liability is measured, initially, at the present value of the future cash flow discounted at a market rate of interest for a similar debt instrument and subsequently at amortised cost.

Financial assets that are 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 Statement of Comprehensive Income.

For financial assets measured at amortised cost, the impairment loss is measured as the difference between an asset's carrying amount and the present value of estimated cash flows discounted at the asset's original effective interest rate. If a 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.

For financial assets measured at cost less impairment, the impairment loss is measured as the difference between an asset's carrying amount and best estimate of the recoverable amount, which is an approximation of the amount that the Company would receive for the asset if it were to be sold at the reporting date.

Financial assets and liabilities are offset and the net reported in the Statement of Financial Position when there is an enforceable right to set off the recognised amounts and there is intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

Short term debtors are measured at transaction price, less any impairment. Loans receivable are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method, less any impairment.

Short term creditors are measured at the transaction price. Other financial liabilities, including bank loans, are measured initially at fair value, net of transaction costs, and are measured subsequently at amortised cost using the effective interest method.

The tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from net profit as reported in the Statement of Comprehensive Income because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the reporting end date.

Deferred tax liabilities are generally recognised for all timing differences and deferred tax assets are recognised to the extent that it is probable that they will be recovered against the reversal of deferred tax liabilities or other future taxable profits. Such assets and liabilities are not recognised if the timing difference arises from goodwill or from the initial recognition of other assets and liabilities in a transaction that affects neither the tax profit nor the accounting profit.

The carrying amount of deferred tax assets is reviewed at each reporting end date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset is realised. Deferred tax is charged or credited in the Statement of Comprehensive Income, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when the company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.

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 the Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Company in independently administered funds.

Equity-settled share-based payments are measured at fair value at the date of grant by reference to the fair value of the equity instruments granted using the Monte Carlo and Black-Scholes model. The fair value determined at the grant date is expensed on a straight-line basis over the vesting period, based on the estimate of shares that will eventually vest. A corresponding adjustment is made to equity.

When the terms and conditions of equity-settled share-based payments at the time they were granted are subsequently modified, the fair value of the share-based payment under the original terms and conditions and under the modified terms and conditions are both determined at the date of the modification. Any excess of the modified fair value over the original fair value is recognised over the remaining vesting period in addition to the grant date fair value of the original share-based payment. The share-based payment expense is not adjusted if the modified fair value is less than the original fair value.

Cancellations or settlements (including those resulting from employee redundancies) are treated as an acceleration of vesting and the amount that would have been recognised over the remaining vesting period is recognised immediately.

Rentals payable under operating leases, including any lease incentives received, are charged to profit or loss on a straight line basis over the term of the relevant lease except where another more systematic basis is more representative of the time pattern in which economic benefits from the leases asset are consumed.

Grants are accounted under the accruals model as permitted by FRS 102. Grants relating to

expenditure on tangible fixed assets are credited to the Statement of Comprehensive Income at the same rate as the depreciation on the assets to which the grant relates. The deferred element of grants is included in creditors as deferred income.

Grants of a revenue nature are recognised in the Statement of Comprehensive Income in the same period as the related expenditure.

Transactions in currencies other than pounds sterling are recorded at the rates of exchange prevailing at the dates of the transactions. At each reporting end date, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Interest income

Interest income is recognised in the Statement of Comprehensive Income using the effective interest method.

Valuation of investments

Investments in subsidiaries are measured at cost less accumulated impairment.

Finance costs

Finance costs are charged to the Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.

In the application of the company’s accounting policies, the directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.

The following judgements (apart from those involving estimates) have had the most significant effect on amounts recognised in the financial statements.

Determination of whether there are indicators of impairment of the Company's tangible and intangible assets, including goodwill. Factors taken into consideration in reaching such a decision include the economic viability and expected future financial performance of the asset and, where it is a component of a larger cash-generating unit, the viability and expected future performance of that unit.

Leasehold incentives are spread over the lease term, which is considered to be the non-cancellable period for which the lessee has contracted to lease the asset. With this, management have considered any further terms for which the lessee has the option to continue to lease the asset, with or without further payment, when at the inception of the lease it is reasonably certain that the lessee will exercise the option. This is considered to have been a judgement at the outset of the lease, with factors such as forecast growth of the business and capacity needs being key to this.

The estimates and assumptions which have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities are as follows.

Management consider the nature of the Company's contracts with customers and recognise revenue on an appropriate basis in accordance with UK GAAP. This process involves the use of judgements and estimates. Revenue is recognised when the service is completed or the goods delivered to the customer. Appropriate deferrals are made to revenue when services are being delivered over time.

The average monthly number of persons (including directors) employed by the company during the year was:

Their aggregate remuneration comprised:

The number of directors for whom retirement benefits are accruing under defined contribution schemes amounted to 2 (2019 - 2).

The actual charge for the year can be reconciled to the expected charge for the year based on the profit or loss and the standard rate of tax as follows:

The subsidiary undertaking of the Company is Xenologiq Limited. The Company holds 100% of the Ordinary A, B and C shares. Xenologiq Limited is a dormant company.

The registered office of Xenologiq Limited is 6th Floor, One London Wall, London EC2Y 5EB.

Included in amounts owed by group undertakings is a loan to a fellow group company which is subject to interest of 6.25% p.a for a period of five years starting on 25 June 2018.

Amounts owed to group undertakings are interest free and repayable on demand.

The following are the major deferred tax liabilities and assets recognised by the company and movements thereon:

The Company operates a defined contributions 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 £728,419 (2019: £660,073). Contributions totalling £89,177 (2019: £69,087) were payable to the fund at the reporting date.

The company's management, through the group’s affiliation with its shareholder and former parent, EQT Avatar Parent LP (hereafter referred to as EQT), participated in a 2017 Class B Profits Interest Unit Incentive Plan (the "Class B Plan") whereby EQT was authorized to issue a total of Class B Units, representing the right to share a portion of the value appreciation in EQT. The options were therefore equity-settled by EQT, and not the UK company.

The grant agreements for the Class B Units were comprised of 50% time-based vesting units ("Time-based Units") and 50% performance-based vesting units ("Performance-based Units"). The Time-based Units generally vested over a five-year period; The Performance-based Units would vest if EQT, the former parent achieved specified levels of return on investment at the time of i) a change in control, ii) a reduction in holdings of the Certara group by EQT to 10% or less following an IPO or iii) certain distributions by EQT.

Effective as of 10 December 2020 (the "Exchange Date"), all vested Class B Units were changed by EQT for shares for common stock of Certara Inc. held by EQT, and unvested Class B Units were exchanged for shares of restricted common stock of Certara Inc.. On the Exchange Date, holders of unvested Time-based and Performance-based Units elected to exchange their unvested Class B Units with shares of restricted common stock of Certara Inc. The restricted stock of Certara Inc. vested upon the same time based vesting conditions as the original time based Class B Units.

Modifications were not required for the time-based vesting Class B Units for which the vesting conditions, classification and fair value did not change for the shares of restricted common stock that replaced them.

Modifications were required for the performance-based vesting Class B Units that were exchanged for time-based vesting restricted common stock, given the vesting conditions were changed.

During the year, the company recognised total share-based payment expenses of £998,531 (2019 - £707,035) which related to equity settled share based payment transactions. As the cost of these options

is ultimately settled by group equity, the liability for future issues is accounted for as a capital contribution rather than through a share-based payment reserve, as would be the case if settled by this company.

All shares carry full voting, dividend and capital distribution rights.

The Company's reserves are as follows:

Share Capital

Share capital represents the nominal value of shares issued.

Share premium account

The share premium account represents the premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from the share premium.

Other reserves

Other reserves represents the difference in the fair value of net assets acquired of subsidiaries between the acquisition date and hive up date.

Profit and loss account

Profit and loss account represents cumulative profits and losses, net of dividends paid and other adjustments.

At the reporting end date the company had outstanding commitments for future minimum lease payments under non-cancellable operating leases, which fall due as follows:

On the 7th June 2021, Certara UK Limited acquired 100% of Insight Medical Writing Limited for £10,454,768 in consideration.

The Company is a wholly owned subsidiary of Certara UK Holdings Limited and has taken advantage of the available exemption conferred by section 33.1A of FRS 102 not to disclose transactions with fellow wholly owned group members.

The Company's immediate parent undertaking group is Certara UK Holdings Limited, whose registered address is 6th Floor, One London Wall, London, EC2Y 5EB.

The smallest group in which the results of the Company are consolidated is that of Certara UK Holdings Limited, a company registered in the UK. A copy of Certara UK Holdings group financial statements can be obtained from 6th Floor, One London Wall, London, EC2Y 5EB.

The Company's ultimate parent company and ultimate controlling party is Certara Inc. which is incorporated in the USA. A copy of Certara Inc. group financial statements can be obtained from 100 Overlook Center, Suite 101, Princeton, NJ 08540 USA.

During the year, following an IPO at parent level it came to light that share based payments in the parent granted to UK employees had not been accounted for at a UK level. A prior year adjustment has been made to reflect the vested shares to date.