CERTARA_UK_LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2022.

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 addition, 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 2022 was £46,044,700 compared to the 2021 figures of £38,549,351, an increase of 19.4%. Profit after tax for 2022 was £18,391,090 compared to £13,523,626 in 2021, representing an increase of 36.0%. The profit from 2022 was transferred to reserves and made available for the payment of dividends. At the year end the company had net assets of £97,216,860 compared to 2021 figures of £74,874,016 representing an increase of 29.8%. The increase in net assets was mainly due to the profit made by the company in 2022.

The Company's primary function is to support its clients in the pharmaceutical and biotechnology industry and their efforts for the successful development of 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:

This section satisfies the Section 172 requirements of the Companies Act 2006, which requires the directors to take into consideration the interest of stakeholders in their decision making. The board considers its stakeholders to be shareholders, employees, customers, suppliers and the environment.

(a) The likely consequences of any decision in the long term

The directors’ role is to promote the long term success of the Company through setting a clear sustainable strategy, vision and mission. All decision making is aligned to the mission of the Certara group which is to accelerate medicines to patients by transforming drug development with unparalleled science, software, and services, in partnership with our customers.

(b) Interest of the company's workforce

The engagement, wellbeing and success of the Company's employees is of key importance to the directors. The Company operates a hybrid working environment whereby the benefits of collaboration and mental wellbeing as a result of being in an office are balanced with the flexibility of working from home to suit individual circumstances. There are monthly meetings with the employees to ensure ongoing engagement and communication.

(c) The need to foster the company's business relationships with suppliers, customers and others

The directors consider the customers to be central to the business. The Company aims to deliver software in an efficient and continuously improving way to meet the customer's needs. The Company's customers include leading pharmaceutical and biotechnology companies from all over the world. The Company's Simcyp division has a consortium of members that includes a number of these biopharmaceutical companies. Each year the consortium member companies meet to discuss the latest scientific developments in the area of modeling and simulation and guide the future development of the Simcyp Simulator.

On the other hand, building good relationships with suppliers enables the Company to obtain value, high quality, and good service. We engage suppliers who understand our business and adhere to our ways of working. Although there is no formalised supplier review process in place, adequate checks are performed before onboarding a supplier.

(d) The desirability of the company maintaining a reputation for high standards of business conduct

The Company has a code of conduct in place which all employees are expected to adhere to. It sets out the high standards and behaviours expected of those that work for us or with us.

(e) The impact of the Company's operations on the community and the environment

The Company values its place in the community and actively encourages its employees to undertake charitable activities.

(f) The need to act fairly as between members of the Company

The Company’s directors aim to balance the needs of various stakeholders when setting and delivering the company’s strategy, having regard to long term value creation, including maximising long term shareholder value.

Methodology

Electricity consumption data has been obtained from utility invoices and transport fuel mileage data has been obtained from the companys expense recording system. The data has been converted into kWH and KgCO2e using 2022 Government emission conversion factors for greenhouse gas company reporting.

Energy efficiency actions

The premises occupied by the company is deemed to be energy efficient. Therefore, no new energy reduction initiatives have been put in place this year.

On behalf of the board

The directors present their annual report and financial statements for the year ended 31 December 2022.

The profit for the year, after taxation amounted to £18,391,090 (2021 - £13,523,626).

Total dividend distributions during the period were £Nil (2021 - £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 that describe disease progression and its modulation with drug treatment

The company will continue to invest in and develop in 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 in silico modelling tools across the drug development industry.

RSM UK Audit LLP were appointed as auditor to the company and in accordance with section 485 of the Companies Act 2006, a resolution proposing that they be re-appointed will be put at a General Meeting.

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.

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.

We have audited the financial statements of Certara UK Limited (the 'company') for the year ended 31 December 2022 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 2022 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, 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 are instances of non-compliance with laws and regulations. The objectives of our audit are to obtain sufficient appropriate audit evidence regarding compliance with laws and regulations that have a direct effect on the determination of material amounts and disclosures in the financial statements, to perform audit procedures to help identify instances of non-compliance with other laws and regulations that may have a material effect on the financial statements, and to respond appropriately to identified or suspected non-compliance with laws and regulations identified during the audit.

In relation to fraud, the objectives of our audit are to identify and assess the risk of material misstatement of the financial statements due to fraud, to obtain sufficient appropriate audit evidence regarding the assessed risks of material misstatement due to fraud through designing and implementing appropriate responses and to respond appropriately to fraud or suspected fraud identified during the audit.

However, it is the primary responsibility of management, with the oversight of those charged with governance, to ensure that the entity's operations are conducted in accordance with the provisions of laws and regulations and for the prevention and detection of fraud.

In identifying and assessing risks of material misstatement in respect of irregularities, including fraud, the audit engagement team:

• obtained an understanding of the nature of the industry and sector, including the legal and regulatory framework that the company operates in and how the company is complying with the legal and regulatory framework;

• inquired of management, and those charged with governance, about their own identification and assessment of the risks of irregularities, including any known actual, suspected or alleged instances of fraud;

• discussed matters about non-compliance with laws and regulations and how fraud might occur including assessment of how and where the financial statements may be susceptible to fraud.

As a result of these procedures we consider the most significant laws and regulations that have a direct impact on the financial statements are FRS 102, the Companies Act 2006 and tax compliance regulations. We performed audit procedures to detect non-compliances which may have a material impact on the financial statements which included reviewing financial statement disclosures, inspecting correspondence with local tax authorities and evaluating advice received from tax advisors.

The audit engagement team identified the risk of management override of controls and the cut-off and occurrence assertions in revenue recognition and deferred revenue as the areas where the financial statements were most susceptible to material misstatement due to fraud. Audit procedures performed in relation to management override of controls included but were not limited to testing manual journal entries and other adjustments and evaluating the business rationale in relation to significant, unusual transactions and transactions entered into outside the normal course of business and challenging judgments and estimates. Audit procedures performed in relation to revenue recognition and deferred revenue in respect of cut off and occurrence included but were not limited to ensuring that the revenue accounting policy was correctly applied to a sample of transactions and contracts and corroborating and recalculating deferred revenue from contracts with customers to supporting documentation.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: http://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 2022 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 entitled to exemption from the obligation to prepare and deliver group accounts under section 401 of the Companies Act 2006 since it is included in the non-UK group accounts of a larger group.

The name of the ultimate parent undertaking and its registered office from where consolidated accounts can be obtained is included in the notes to these financial statements.

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 ongoing services, turnover is apportioned between license, workshop, and consultancy.

Licenses - income is recognised evenly over the relevant contract period

Workshops - income is recognised evenly over the relevant contract period

Consultancy - income is recognised based on milestone completed

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.

Other financial assets, including investments in equity instruments which are not subsidiaries, associates or joint ventures, are initially measured at fair value, which is normally the transaction price. Such assets are subsequently carried at fair value and the changes in fair value are recognised in profit or loss, except that investments in equity instruments that are not publicly traded and whose fair values cannot be measured reliably are measured at cost less impairment.

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.

Financial assets, other than those held at fair value through profit and loss, are assessed for indicators of impairment at each reporting end date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows have been affected. If an asset is impaired, the impairment loss is the difference between the carrying amount and the present value of the estimated cash flows discounted at the asset’s original effective interest rate. The impairment loss is recognised in profit or loss.

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.

Financial assets are derecognised only when the contractual rights to the cash flows from the asset expire or are settled, or when the company transfers the financial asset and substantially all the risks and rewards of ownership to another entity, or if some significant risks and rewards of ownership are retained but control of the asset has transferred to another party that is able to sell the asset in its entirety to an unrelated third party.

Derivatives, including interest rate swaps and forward foreign exchange contracts, are not basic financial instruments. Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured at their fair value. Changes in the fair value of derivatives are recognised in profit or loss in finance costs or finance income as appropriate, unless hedge accounting is applied and the hedge is a cash flow hedge.

Debt instruments that do not meet the conditions in FRS 102 paragraph 11.9 are subsequently measured at fair value through profit or loss. Debt instruments may be designated as being measured at fair value through profit or loss to eliminate or reduce an accounting mismatch or if the instruments are measured and their performance evaluated on a fair value basis in accordance with a documented risk management or investment strategy.

Financial liabilities are derecognised when the company’s contractual obligations expire or are discharged or cancelled.

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. 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.

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 (2021 - 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:

Details of the company's subsidiaries at 31 December 2022 are as follows:

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 £979,678 (2021: £825,080). Contributions totalling £140,227 (2021: £113,832) were payable to the fund at the reporting date.

Liabilities and expenses

During the year, the company recognised total share-based payment expenses of £3,951,754 (2021 -

£2,542,712) 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. Of this expense, £3,688,502 (2021 - £2,070,727) relates to the 2020 Employee Stock Purchase Plan RSUs and PSUs, and £263,252 (2021 - £471,985) relates to the modified 2017 Class B Plan award.

Pre Certara Inc IPO share based payment transaction

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.

2017 Class B Plan award

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.

Modification

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 timebased vesting restricted common stock, given the vesting conditions were changed.

Post Certara Inc IPO share based payment transactions

The Company, through its affiliation with ultimate parent Certara Inc, participated in the 2020 Employee Stock Purchase Plan, an employee compensation program for Certara Inc and its subsidiaries. During the year ended 31 December 2022, restricted stock units (RSUs) and performance stock units (PSUs) for shares in Certara Inc. were granted to Certara UK Limited employees and Directors under this Plan. RSUs represent the right to receive shares of the common stock of Certara Inc. at a specified date in the future. The fair value of the RSUs is based on the fair value of the underlying shares on the date of grant. Performance stock units (PSUs) represent the right to receive shares of the common stock of Certara Inc. at a specified date in the

future based on the satisfaction of various service conditions and the achievement of certain non-market related performance thresholds including year over year revenue growth and unlevered free cashflow growth in Certara Inc. Share based payment expenses for the PSUs are only recognised to the extent a threshold is probable of being achieved. The Company will continue to assess the probability of each condition being achieved at each reporting period to determine whether and when to recognise an expense.

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:

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 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.