SATURN_PARENT_LIMITED - Accounts

The directors present the strategic report for the year ended 31 December 2021. The comparative period is for the three months to 31 December 2020, following the acquisition of the Sectigo business on 30 September 2020. The group did not trade during the period from incorporation to 30 September 2020.

Saturn Parent Limited (the 'Company') was incorporated on 18 August 2020 as part of a group of companies with the purpose of acquiring Sectigo Limited and subsidiaries ("Sectigo") from Condor Top Holdco Limited on 30 September 2020. The group is ultimately owned and operated by investment funds managed by GI Partners. GI Partners is a private equity firm specializing in healthcare, IT infrastructure, consumer goods and software businesses.

During the year, the Company acquired 100% of the issued and outstanding shares of Sitelock Intermediate Holdings, LLC (“Sitelock”), for total consideration of $115.3 million (the “Sitelock Acquisition”). The Sitelock Acquisition was completed on February 22, 2021, and was funded with a $30.0 million issuance of share capital including share premium, $90.0 million in borrowings under the group’s credit facilities, and cash in bank.

The Company’s consolidated financial statements include the financial results of Sitelock from the acquisition date of February 22, 2021.

In addition to the issuance of shares in connection with the Sitelock Acquisition, the shareholders contributed $1.1 million to the Company, which is not repayable and has been accounted for as a capital contribution.

Revenue for the year ended 31 December 2021 was $85.9 million compared with $4.6 million in the three months ended 31 December 2020.

The loss before tax for the for the year was $417.0 million (2020: $39.1 million). The loss for the year includes a charge of $83.5 million (2020: $18.7 million) relating to amortization of intangible assets, a goodwill impairment charge of $279.7 million (2020: $nil) and $31.9 million (2020: $6.6 million) relating to the loan interest expense.

Goodwill recorded on the acquisition of SiteLock was $71 million. The goodwill is being amortised over 15 years. The fair value of intangible assets arising on acquisition were $76 million. These are being amortised over a period of 3-10 years. The carrying value of total intangible fixed assets at 31 December 2021 was $738.5 million (2020: $951.9 million). The decrease compared to the prior year is as a result of the impairment of goodwill and the current year amortisation charge being partially offset by the new intangible assets recognised from the SiteLock acquisition.

The Directors are seeking to build an increasingly profitable business by utilising its resources and relationships and at the same time carefully managing operational risks. Such risks include competitor, customer concentration, business execution and technology risks (such as new encryption protocols and methods). Management intends to address these risks by making strategic investments, including developing Sectigo’s core product base, expanding into rising international markets, identifying new customer cross selling opportunities, and keeping ahead of the latest technology trends.

Financial risk management

The group is exposed to several business risks in the normal course of business including foreign currency risk and credit risk. Risk management is carried out by the treasury team under policies approved by the group. Details of the liquidity risk are set out in the going concern section of the Directors report.

Foreign currency risk

The Company's reporting currency is the United States Dollar. The Company and its subsidiaries conduct various operations outside the United States, primarily in Europe, Asia Pacific and Canada. Our foreign currency risk is primarily associated with revenue and operating expenses. The principal foreign currencies involved include the Euro, the British Pound Sterling, the Indian Rupee, and the Canadian Dollar.

In recent years, exchange rates between foreign currencies and the U.S. dollar have fluctuated significantly and may continue to do so in the future. During times of volatile currency movements, this risk can impact our earnings. This is monitored by management in order to ensure any necessary actions are taken. The Company does not make use of forward foreign currency contracts.

Credit risk

The Company’s objective is to reduce the risk of financial loss due to a counter party’s failure to honour its obligations. Some of the Company’s customers pay in advance for purchases. Where sales are made without advance payment, a credit review of the customer is undertaken and exposures are monitored with customers to ensure that the Company’s exposure to bad debts is not significant. The Company’s maximum exposure to credit risk is the carrying value as at the balance sheet date.

Legislative risk

The potential impact of legislative changes to both UK and overseas operations are constantly monitored by management.

The Company's Directors utilize key performance indicators to monitor Company developments, performance and the position of the business. Management assesses both quantitative and qualitative key performance indicators. Quantitative indicators are focused on returns from the investment and levels of interest paid.

Qualitative indicators are focused on global business climates and market trends including liquidity and credit risk, interest rates and inflation rates. The Company utilises these indicators to make strategic and operational decisions. A key risk that is managed is the potential for impairment of the investment and to monitor any events or changes in circumstances which could indicate that the carrying value of the investment may not be recoverable.

$000             $000

Year         3 month period

ended 31         ended 31

December         December

2021          2020

Sales (turnover)                     85,853             4,633

Gross profit                 73,158             3,386

Gross profit percentage             85.21%             73.08%

Cash                         11,125             13,227

Liquidity                         21,125             38,227

Net debt                     415,676             312,580

Net leverage ratio                     8.65             6.41

DSO                        66 days             49 days

Interest expense settled in cash             31,878             6,573

Average interest rate                 7.50%             7.50%

No single customer accounted for more than 10% of our total revenue during any period or represented more than 10% of accounts receivable as of December 31, 2021 or December 31, 2020.

Future developments

The Company will continue to operate as a holding company moving forward. Management will continue to focus on growing the business through organic and acquisition growth. Organic growth will be focused on making strategic investments in sales and marketing including sales systems, human capital, international markets, and customer cross selling opportunities. Acquisition growth will focus on investments that can efficiently be integrated into the vertical business model and diversify Sectigo’s product base.

Under s172 of the Companies Act 2006 Directors of UK companies have a duty to promote the success of their company for the benefit of the members as a whole and in doing so, have regard to:

• The likely consequences of any decision in the long term

• The interests of the company’s employees;

• The need to foster the company’s business relationships with suppliers, customer and others;

• The impact of the company’s operations on the community and the environment;

• The desirability of the company maintaining a reputation for high standards of business conduct ; and

• The need to act fairly between members of the company.

The Directors of the Company consider the following areas to be of key importance in the fulfilment of this duty:

• Carrying out detailed review of budgets, financial cash flow forecasting to ensure the ongoing financial safety of the business.

• Maintaining the highest standards of integrity and honesty in the company’s dealings with employees, suppliers and others.

• Focusing on growth through organic and acquisition methods by making strategic investments in sales and marketing.

• Developing the core product base, expanding into rising international markets, identifying new customers cross selling opportunities and keeping ahead of the latest technology trends.

The Directors present their report and the financial statements for the year ended 31 December 2021.

The principal activity of the Company continued to be that of a holding structure to facilitate the acquisition of Sectigo Limited and its subsidiaries. The principal activity of the group is that of a Certificate Authority (“CA”) and internet security organization that provides internet security solutions for businesses and consumers worldwide. Since its inception in 2000, Sectigo has created or acquired a total of 16 publicly trusted roots that are used to issue secure sockets layer (“SSL”) certificates. Sectigo is headquartered in New Jersey, U.S., and has global offices in the U.S., the United Kingdom, France, Netherlands, Canada, India, and Japan.

Sectigo has four core product offerings: (1) direct sale of SSL certificates; (2) white-label capable webhost management software for SSL partner sales; (3) enterprise-level SSL certificate management software; and (4) website backup, monitoring, and restore services. Sectigo enables security, trust, and compliance for its customers through a comprehensive suite of digital certificate solutions for a variety of applications and use cases. Sectigo’s tools help customers establish trust with end users who face critical online challenges such as establishing, maintaining, and verifying secure connections; identifying and avoiding spoofed websites; avoiding phishing attacks; and combating data exfiltration.

Sectigo offers web, email, code signing, and Internet of Things certificates. Additionally, Sectigo delivers security, trust, and compliance solutions for customers. It also helps companies encrypt data in transit between users’ browsers and businesses’ servers, establish trust with end users by verifying the site’s legitimacy and providing assurance that sensitive information will be treated appropriately, and maintain compliance to conduct e-commerce.

During the year, the Company acquired 100% of the issued and outstanding shares of Sitelock Intermediate Holdings, LLC (“Sitelock”), for total consideration of $115.3 million (the “Sitelock Acquisition”). The Sitelock Acquisition was completed on February 22, 2021, and was funded with a $30.0 million issuance of share capital including share premium, $90.0 million in borrowings under the group’s credit facilities, and cash in bank.

Sitelock is headquartered in Scottsdale, Arizona, and provides website security protection and monitoring solutions. The Sitelock Acquisition was targeted at expanding the Group’s product capabilities, partner network, and customer base.

The Company’s consolidated financial statements include the financial results of Sitelock from the acquisition date of February 22, 2021.

In addition to the issuance of shares in connection with the Sitelock Acquisition, the shareholders contributed $1.1 million to the Company, which is not repayable and has been accounted for as a capital contribution.

The results for the year are set out on page 15. The Directors have not declared in dividends in the year (2020 - nil)

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

Applications for employment by disabled persons are always fully considered, bearing in mind the aptitudes of the applicant concerned. In the event of members of staff becoming disabled, every effort is made to ensure that their employment within the group continues and that the appropriate training is arranged. It is the policy of the group that the training, career development and promotion of disabled persons should, as far as possible, be identical to that of other employees.

The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests. Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance.

We will invest in our employees, not only by compensating them fairly and providing important benefits but supporting them through training and education that help develop new skills. We foster diversity and inclusion, dignity, and respect.

Stakeholder engagement

By delivering value to our customers we will continue to meet or exceed our customers expectations. We will invest in our employees, not only by compensating them fairly and providing important benefits but supporting them through training and education that help develop new skills. We foster diversity and inclusion, dignity, and respect. We will deal fairly and ethically with our suppliers. We are dedicated to serving as good partners to the other companies, large and small, that help us meet our missions and we support the communities in which we work. We will generate long-term value for shareholders, who provide the capital that allows our company to invest, grow and innovate. We are committed to transparency and effective engagement with shareholders.

Management has evaluated subsequent events and transactions for recognition and/or disclosure in these consolidated financial statements through the date these consolidated financial statements were issued. Details of the subsequent events are set out in the notes to the financial statements within the events after the reporting date footnote.

The Company will continue to operate as a holding company moving forward. Management will continue to focus on growing the business through organic and acquisition growth. Organic growth will be focused on making strategic investments in sales and marketing including sales systems, human capital, international markets, and customer cross selling opportunities. Acquisition growth will focus on investments that can efficiently be integrated into the vertical business model and diversify Sectigo’s product base.

The Company’s consolidated and parent company financial statements have been prepared on a going concern basis. As further described in note 1.4 in the financial statements the Group has sustained recurring net losses and negative operating cash flows, and its cash flow needs have been funded through a combination of borrowings on its revolving line of credit and capital contributions from the shareholders. The Group’s cash flow projections indicate that that the company will have sufficient funds to meet its liabilities as they fall due without further shareholder support, however, there is uncertainty in relation to achieving budgeted revenue and budgeted cost reductions and therefore whether further funding may be necessary. While no additional support is forecasted in the budget, the directors also have no reason at this point to believe that additional shareholder support would not be available to the Group if warranted. The directors have identified that these conditions indicate the existence of a material uncertainty, which may cast significant doubt about the Group’s ability to continue as a going concern, and therefore that it may be unable to realize its assets and discharge its liabilities in the normal course of business.

While there is an inherent risk that the budgeted revenues and cost savings do not materialise, and therefore the cash generation achieved is lower than what is forecasted in the budget, the directors (i) have prepared sensitivity analysis of the budget, such that they believe this risk is sufficiently mitigated and (ii) believe that, to the best of their knowledge and belief through the date of the issuance of these financial statements, the budgeted revenues and costs assumed in the budget are reasonable and will be achieved.

Notwithstanding the material uncertainty, based on the above factors and actions taken, the directors have a reasonable expectation that the Company and Group will continue as a going concern for at least twelve months from the date of the issuance of these financial statements.

Grant Thornton UK LLP are the company's auditor 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 group sets out below its energy consumption and emissions for the year ended 31 December 2021 and 2020.

The group has followed the 2019 HM Government Environmental Reporting Guidelines. The group has also used the GHG Reporting Protocol – Corporate Standard and have used the 2020 UK Government’s Conversion Factors for Company Reporting

The chosen intensity measurement ratio is total gross emissions in metric tonnes CO2e per employee, the recommended ratio for the sector.

Electrical energy used in our Bradford office is low carbon as we buy electricity that is from a predominantly nuclear fuel mix. Due to COVID-19 restrictions our offices have been closed since March 2020 and we have adopted a work from home policy.

Financial control approach, whereby the organisation accounts for 100% of the GHG emission over which it has control.

All Scope 1 and 2 emissions, and scope 3 emissions related to employee use of their own vehicles.

The Directors confirm that:

•     so far as each Director is aware, there is no relevant audit information of which the company's auditor is unaware; and

•     the Directors have taken all the steps that they ought to have taken as Directors in order to make themselves aware of any relevant audit information and to establish that the company's auditor is aware of the information.

There have been no political or charitable donations to date.

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 including FRS 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 and profit or loss of the company and group 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 ;

•     prepare the on the going concern basis unless it is inappropriate to presume that the group and 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 group and Company and enable them to ensure that the financial statements comply with the Companies Act 2006. He 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 Saturn Parent Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2021 which comprise the group statement of comprehensive income, the group balance sheet, the company balance sheet, the group statement of changes in equity, the company statement of changes in equity, the group statement of cash flows 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 group's and the parent company's affairs as at 31 December 2021 and of the group's loss 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 group and the parent 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.

Material uncertainty related to going concern

We draw attention to note 1.4 in the financial statements which indicates that the Group has sustained recurring net losses and negative operating cash flows, and its cash flow needs have been funded through a combination of borrowings on its revolving line of credit and capital contributions from the shareholders. The company's cash flow projections indicate that that the company will have sufficient funds to meet its liabilities as they fall due without further shareholder support, however, there is uncertainty in relation to achieving budgeted revenue and budgeted cost reductions. Whilst the directors do not believe that additional shareholder support would not be available to the Group, no formal commitment is in place.

As stated in note 1.4, these events or conditions, along with the other matters as set forth in note 1.4, indicate that a material uncertainty exists that may cast significant doubt on the company’s ability to continue as a going concern. Our opinion is not modified in respect of this matter.

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

Other information

The other information comprises the information included in the annual report, other than the financial statements and our auditor’s report thereon. The 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 audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is 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 our 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.

Matter on which we are required to report under the Companies Act 2006

In the light of the knowledge and understanding of the group and the parent 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 where the Companies Act 2006 requires us to report to you if, in our opinion:

• adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from branches not visited by us; or

• the parent company 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 10, 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 group'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 group or the parent 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. The extent to which our procedures are capable of detecting irregularities, including fraud, is detailed below:

The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:

• We identified areas of laws and regulations, where the consequence of non-compliance could reasonably be expected to have a material effect on the financial statements, from our general commercial and sector experience and through discussions with the company’s management. We corroborated the results of our enquiries with those charged with governance and to supporting documentation such as our legal and professional expenses review.

• We determined that the laws and regulations most directly relevant to specific assertions in the financial statements are those related to the reporting frameworks (FRS 102 ‘The Financial Reporting Standard applicable in the UK and Ireland’, the Companies Act 2006) and relevant tax legislation in the UK.

• In addition, we concluded that there are certain significant laws and regulations where the consequences of non-compliance could have a material effect on amounts or disclosures in the financial statements. We identified the following laws and regulations as the most likely to have a material impact if non-compliance were to occur; health and safety regulations and employment law.

• We communicated relevant laws and regulations and potential fraud risks to all engagement team members and remained alert to any indications of fraud or non-compliance with laws and regulations throughout the audit.

• We assessed the susceptibility of the financial statements to material misstatement, including how fraud might occur, by making enquiries of management and those charged with governance, and updating our understanding of the company’s operations, financial reporting obligations and control environment, including around compliance with laws and regulations. We considered the risk of fraud to be higher through the potential for management override of controls.

• Audit procedures performed by the engagement team included:

- Identifying and assessing the design effectiveness of controls management has in place to prevent and detect fraud, particularly around journal processing;

- Journal entry testing, with a focus on journals meeting our defined risk criteria based on our understanding of the business;

- Challenging assumptions and judgements made by management relating to its areas of significant estimation and judgement;

- Reviewing legal and professional expenditure in the year to assess for any indicators of non-compliance with relevant laws and regulations;

- Completion of audit procedures to conclude on the compliance of disclosures in the annual report and accounts with applicable financial reporting requirements.

- Identifying and testing related party transactions.

• These audit procedures were designed to provide reasonable assurance that the financial statements were free from fraud or error. The risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error and detecting irregularities that result from fraud is inherently more difficult than detecting those that result from error, as fraud may involve collusion, deliberate concealment, forgery or intentional misrepresentations. Also, the further removed non-compliance with laws and regulations is from events and transactions reflected in the financial statements, the less likely we would become aware of it;

• Assessment of the appropriateness of the collective competence and capabilities of the engagement team included consideration of the engagement team’s:

- knowledge of the industry in which the company operates and understanding of, and practical experience with, audit engagements of a similar nature and complexity through appropriate training and participation;

- understanding of the legal and regulatory requirements specific to the company.

All team members are qualified accountants or working towards that qualification and are considered to have sufficient knowledge and experience of companies of a similar size and complexity, appropriate to their role within the team.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website at: www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditor’s report.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 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.

Saturn Parent Limited (the "Company”) is a private limited company domiciled and incorporated in England and Wales. The registered office is Unit 7 Listerhills Science Park, Campus Road, Bradford, West Yorkshire, England, BD7 1HR.

The group consists of Saturn Parent Limited and all of its subsidiaries.

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 US dollars and have been prepared under the historical cost convention.

The principal accounting policies adopted are set out below.

The 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 'parent company consolidated financial statements'). The Company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the parent company consolidated financial statements:

• 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: The disclosure requirements of paragraphs 11.42, 11.44, 11.45, 11.47, 11.48(a)(iii), 11.48(a)(iv), 11.48(b), 11.48(c), 12.26, 12.27, 12.29(a), 12.29(b), and 12.29A;

• Section 26 ‘Share based Payment’: Share based payment arrangements required under FRS 102 paragraphs 26.18(b), 26.19 to 26.21 and 26.23;

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

In the parent company consolidated financial statements, the cost of a business combination is the fair value at the acquisition date of the assets given, equity instruments issued and liabilities incurred or assumed, plus costs directly attributable to the business combination. The excess of the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired is recognised as goodwill. The cost of the combination includes the estimated amount of contingent consideration that is probable and can be measured reliably, and is adjusted for changes in contingent consideration after the acquisition date. Provisional fair values recognised for business combinations in previous periods are adjusted retrospectively for final fair values determined in the 12 months following the acquisition date. Investments in subsidiaries, joint ventures and associates are accounted for at cost less impairment.

Deferred tax is recognised on differences between the value of assets (other than goodwill) and liabilities recognised in a business combination accounted for using the purchase method and the amounts that can be deducted or assessed for tax, considering the manner in which the carrying amount of the asset or liability is expected to be recovered or settled. The deferred tax recognised is adjusted against goodwill or negative goodwill.

The consolidated group financial statements consist of the financial statements of the parent company Saturn Parent Limited together with all entities controlled by the parent company (its subsidiaries) and the group’s share of its interests in joint ventures and associates.

All financial statements are made up to 31 December 2021. Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the group.

All intra-group transactions, balances and unrealised gains on transactions between group companies are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred.

The entity has taken exemption from presenting its unconsolidated profit and loss account under section 408 of the Companies Act 2006.

Subsidiaries are consolidated in the group’s financial statements from the date that control commences until the date that control ceases.

Entities in which the group holds an interest and which are jointly controlled by the group and one or more other venturers under a contractual arrangement are treated as joint ventures.

Investments in joint ventures are carried in the group balance sheet at cost plus post-acquisition changes in the group’s share of the net assets of the entity, less any impairment in value. The carrying values of investments in joint ventures and associates include acquired goodwill.

If the group’s share of losses in a joint venture equals or exceeds its investment in the joint venture or associate, the group does not recognise further losses unless it has incurred obligations to do so or has made payments on behalf of the joint venture or associate.

Unrealised gains arising from transactions with joint ventures and associates are eliminated to the extent of the group’s interest in the entity.

The Company’s consolidated and parent company financial statements have been prepared on a going concern basis. As of December 31, 2021, the Company had cash at bank of $11.1 million, net current liabilities of $49.0 million and retained losses of $449.8 million. The Group has sustained recurring net losses and negative operating cash flows, and its cash flow needs have been funded through a combination of borrowings on its revolving line of credit and capital contributions from the shareholders.

The directors have approved the budget through to June 2024, which considers reasonable possible changes in activity, the finances available to the Group and compliance with the covenants attached to the credit facilities. In approving the budget, the directors have identified the following:

• The budget includes exploring and securing new business and expanding the Group’s presence in the certificate management industry in order to increase revenues. The directors believe that the assumptions included in the budget in relation to securing new business are appropriate based on the investments made to develop and continue to develop our solutions as well as our global sales teams.

• The budget includes assumptions and reflects actions taken to reduce discretionary spend not required for servicing and generating revenues. The Company implemented a cost savings plan, which began in May of 2022, to identify and reduce recurring operating costs. In December of 2022, the Company completed a restructuring of the organization and eliminated discretionary personnel, vendor and facilities spend within the Group. The Company will continue to identify and explore future operational efficiencies and cost savings synergies as needed.

Since the year end, the Group has also received $15.0 million in additional funding from its primary shareholder to assist the Group with meeting its working capital and principal and interest obligations. While the budget does not forecast the Group requiring additional funding, the directors will evaluate if additional funding may be necessary to meet the Group’s future obligations.

The directors recognise that there remain risks in achieving the budgeted revenue and achieving the budgeted cost reductions, which in turn determine whether the Group is able to pay its debts as they fall due and therefore whether further funding may be necessary. While no additional support is forecasted in the budget and there is no formal commitment in place, the directors also have no reason at this point to believe that additional shareholder support would not be available to the Group if warranted. The directors have identified that these conditions indicate the existence of a material uncertainty, which may cast significant doubt about the Group’s ability to continue as a going concern, and therefore that it may be unable to realize its assets and discharge its liabilities in the normal course of business.

While there is an inherent risk that the budgeted revenues and cost savings do not materialise, and therefore the cash generation achieved is lower than what is forecasted in the budget, the directors (i) have prepared sensitivity analysis of the budget, such that they believe this risk is sufficiently mitigated and (ii) believe that, to the best of their knowledge and belief through the date of the issuance of these financial statements, the budgeted revenues and costs assumed in the budget are reasonable and will be achieved.

Notwithstanding the material uncertainty, based on the above factors and actions taken, the directors have a reasonable expectation that the Company and Group will continue as a going concern for at least twelve months from the date of the issuance of these financial statements.

Turnover represents sales of goods exclusive of VAT.

The Group’s revenues primarily relate to the sale of digital certificates, which are valid from between one and five years. The Group’s authentication services are provided over time and the associated revenue from these services is generally recognized on a straight line basis over the digital certificate lifetime. Revenue is recognized at the time the customer receives the digital certificates, for either direct sale of SSL certificates or enterprise level SSL certificates. The Group has three major classes of business, partner, enterprise, and retail. Revenue is recognized on a straight line basis over the digital certificate lifetime for each of these classes of business.

Revenue recognition does not commence until (1) the Group has evidence of an arrangement with a customer, (2) delivery of the certificates to the end users has occurred, (3) agreement terms are fixed or determinable and free of contingencies or uncertainties that may alter the agreement such that it may not be complete and final, and (4) collection is probable. Revenue from sales to the Group’s wholesale partners (i.e., resellers) is recognized on a gross basis ratably as described above, when these resellers issue the certificates to their customers, which is commonly referred to as the "sell through" method. In most instances, the Group acts as the principal in a transaction and records revenue on a gross basis. However, in some instances, the Group acts as the agent when the Group is the reseller of certain third-party goods or services and records revenue on a net basis equal to the amount the Group retains as agency revenue. Sitelock revenues are included in partner revenues.

The difference between the amounts invoiced for the digital certificate sold to the customer and the amounts recognized as revenue is recorded as deferred revenue on the consolidated balance sheet. Certain of the Group’s customers will make deposits with the Group for the sale of certificates and such amounts are classified on the balance sheet as customer deposits, which is included within other current liabilities on the consolidated balance sheet.

The cost of obtaining contracts is capitalized if they relate directly to a contract that the Group can specifically identify, the costs generate resources of the Group that will be used in satisfying performance obligations in the future and the costs are expected to be recovered. The Group amortizes the capitalized contract costs over a period of one to five years, which management has determined is a systematic basis consistent with the pattern of transferring the goods related to those costs.

Cost of Sales
Cost of sales consist of the direct costs involved in the production and delivery of digital goods and services to customers. Cost of sales includes server and data centre fees, validation costs, root key costs, and hosting fees. The Company also incurs web trust audit fees related to annual audits to ensure that the Company is enabled to operate, issue, and validate certificates within a certificate authority browser forum, and such fees are recorded within cost of sales.

Goodwill represents the excess of the cost of acquisition of a business 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 amortised over its estimated useful economic life of 15 years.

For the purposes of impairment testing, goodwill is allocated to the cash-generating units expected to benefit from the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment at least annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated first to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets of the unit pro-rata on the basis of the carrying amount of each asset in the unit.

The Company had an impairment loss of $279.8 million for the year ended 31 December 2021. Refer to note 10 for more information.

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

Intangible assets acquired on business combinations are recognised separately from goodwill at the acquisition date where it is probable that the expected future economic benefits that are attributable to the asset will flow to the entity and the fair value of the asset can be measured reliably; the intangible asset arises from contractual or other legal rights; and the intangible asset is separable from the entity. Development costs that are direct and clearly incremental to the project and will generate future revenue are capitalizable.

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:

Tangible fixed assets are initially measured at cost and subsequently measured at cost or valuation, net of depreciation and any impairment losses.

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

The gain or loss arising on the disposal of an asset is determined as the difference between the sale proceeds and the carrying value of the asset, and is recognised in the profit and loss account.

Equity investments are measured at fair value through profit or loss, except for those equity investments that are not publicly traded and whose fair value cannot otherwise be measured reliably, which are recognised at cost less impairment until a reliable measure of fair value becomes available.

In the parent company financial statements, investments in subsidiaries and jointly controlled entities are initially measured at cost and subsequently measured at cost less than any accumulated impairment losses.

At each reporting period end date, the group 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.

The carrying amount of the investments accounted for using the equity method is tested for impairment as a single asset. Any goodwill included in the carrying amount of the investment is not tested separately for impairment.

Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted.

If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (or cash-generating unit) is reduced to its recoverable amount. An impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease.

Recognised impairment losses are reversed if, and only if, the reasons for the impairment loss have ceased to apply. Where an impairment loss subsequently reverses, the carrying amount of the asset (or cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or cash-generating unit) in prior years. A reversal of an impairment loss is recognised immediately in profit or loss, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

Cash and cash equivalents are basic financial assets and include cash and deposits held at call with banks.

The group has elected to apply the provisions of Section 11 ‘Basic Financial Instruments’ and Section 12 ‘Other Financial Instruments Issues’ of FRS 102 to all of its financial instruments.

Financial instruments are recognised in the group's balance sheet when the group becomes party to the contractual provisions of the instrument.

Financial assets and liabilities are offset and 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, which include debtors and cash and bank balances, are initially measured at transaction price including transaction costs and are subsequently carried at amortised cost using the effective interest method 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. Financial assets classified as receivable within one year are not amortised.

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.

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 group 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.

Financial liabilities and equity instruments are classified according to the substance of the contractual arrangements entered into. An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of its liabilities.

Basic financial liabilities, including creditors, bank loans, loans from fellow group companies and preference shares that are classified as debt, are initially recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. Financial liabilities classified as payable within one year are not amortised.

Debt instruments are subsequently carried at amortised cost, using the effective interest rate method.

Trade creditors are obligated to pay for goods or services that have been acquired in the ordinary course of business from suppliers. Amounts payable are classified as current liabilities if payment is due within one year or less. If not, they are presented as non-current liabilities. Trade creditors are recognised initially at transaction price and subsequently measured at amortised cost using the effective interest method.

Financial liabilities are derecognised when the group's contractual obligations expire or are discharged or cancelled.

Equity instruments issued by the group are recorded at the proceeds received, net of transaction costs. Dividends payable on equity instruments are recognised as liabilities once they are no longer at the discretion of the group.

The Company’s principal financial instruments that are subject to potential concentration of credit risk are cash and accounts receivable. Cash deposits on account at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250 thousand. As of December 31, 2021 the Company had $4.3 million in excess of the FDIC insured limits. Accounts receivable balances are unsecured and the Company provides an allowance for doubtful accounts equal to estimated losses expected to be incurred in the collection of accounts receivable. The Company has adopted credit policies and standards intended to accommodate industry growth and inherent risk, and it believes that credit risks are moderated by the financial stability of its major customers, conservative payment terms, and the Company’s strict credit policies.

For the periods presented within these accounts, no individual customer represented more than 10% of revenues or more than 10% of accounts receivable.

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 profit and loss account 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 group’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 profit and loss account, 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 if, and only if, there is 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.

The costs of short-term employee benefits are recognised as a liability and an expense.

The cost of any unused holiday entitlement is recognised in the period in which the employee’s services are received.

Termination benefits are recognised immediately as an expense when the Company is demonstrably committed to terminate the employment of an employee or to provide termination benefits.

Payments to defined contribution retirement benefit schemes are charged as an expense as they fall due.

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 leased asset are consumed.

Transactions in currencies other than US Dollars 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 remeasured at the rates prevailing on the reporting end date. Gains and losses arising on translation in the period are included in profit or loss.

Advertising Costs

Advertising costs are generally expensed as incurred. These costs may include the development costs for branded content and advertising campaigns.

Debt Financing Costs

The Company has incurred debt origination costs in connection with the issuance of the long-term debt. These costs are recorded as a reduction of long-term debt and amortized over the term of the related debt using the effective interest method.

Equity-Based Compensation

The Company has equity settled in equity-based payment arrangements. The Company accounts for share-based compensation by measuring and recognizing compensation expense for all equity-based awards made to employees and Directors based on estimated fair values on the grant date. The Company is required to estimate the fair value of equity-based awards on the grant date and recognize expense of the award that is ultimately expected to vest, over the requisite service period. Equity-based compensation expense is recognized as expense ratably over the vesting period of the award. Forfeitures are recognized upon the occurrence of a forfeiture.

In the application of the group’s accounting policies, there is a requirement 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.

Impairment of investments and fixed assets

The Group reviews, on an annual basis, whether investments and fixed assets have suffered any indicators of impairment. Where there are indicators of impairment an impairment test is performed for the cash generating unit to which the asset belongs. The directors have concluded that there are two cash generating units which is a significant judgement. The recoverable amount is determined based from two calculations.

• estimating future cash flows by choosing a discount rate to calculate the present value of the cash flows.

• obtaining fair value at the date of measurement.

The higher of the two outputs is used for the assessment. The recoverable amount includes estimates based on forecasted sales and earnings. The fair value includes valuation multiples. To the extent that sales and EBITDA or valuation multiples are lower than used in the analysis, there could be future impairment. Actual outcomes may vary.

The Directors have performed a review of the performance of their investments and fixed assets for indicators of impairment and concluded that goodwill was impaired. Refer to footnote 10 for further discussion.

Revenue

Revenue is recognized over the life of the certificate issued. Enterprise deals where the customer signs a contract, revenue is recognized over the life of the contract, plus 12 months. This is to account for certificates that are issued towards the end of the contract and are still valid after the contract ends. For enterprise arrangements that are not for a fixed number of certificates, 65% of revenue is recognised over a 14 month period, 15% is recognized over 26 month period, 10% over a 38 month period and 10% is recognized over 62 month period based on historical experience. In Partner deals customers pay upfront for certificates, in such cases the Company has used it’s judgement based on historical data to adopt a portfolio approach for recognizing such revenue. The revenue is recognized 65% over a 14 month period, 15% over a 26 month period, 10% over a 38 month period and 10% over a 62 month period. A portfolio approach has also been taken on Retail revenue with 40% of revenue being recognized over a 14 month period, 10% over a 26 month period, 30% over a 38 month period and 20% over a 62 month period. It is the Company’s view that performing the calculation at the individual certificate level will essentially yield the same result as the approach currently applied.

Basis of preparation of the financial statements

The directors have prepared the financial statements on the going concern basis, which includes significant judgements, as set out earlier in the accounting policy section.

Business combinations

The calculation of the fair value of intangible assets arising on acquisition includes estimation as a result of the valuation technique used. The trademarks and developed technology assets were valued using the relief from royalty method, which assumes the fair value of the asset is the discounted cash flows of the amount that the Company would have to pay had the Company not owned the asset and instead licensed the asset from another company. As such, this method discounts the projected hypothetical royalties for the use of the trademarked products and developed technology.

The customer relationship intangible assets were valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with the existing base of customers as of the acquisition date, factoring in expected attrition of the existing base.

The Company valued deferred revenue acquired associated with the prepayment of certificate and subscription contracts using the cost-plus markup methodology. Key assumptions used in the valuation included:

• Timing: Deferred revenue calculations were based on the deferred revenue waterfall.

• Costs: most costs are incurred at or near the beginning of the contract. Remaining costs to be incurred are based on historical service and support cost metrics.

• Markup: The markup is calculated as 1/(1-reasonable profit)-1. The reasonable profit is the estimated EBIT margin a market participant would be required to assume the deferred revenue liability.

• Discount rate: The discount rate was selected based on the pre-tax cost of debt. The risk associated with the deferred revenue is minimal and relates primarily to timing.

Turnover relates to provision of services as of the year ended 31 December 2021 and for the 3 month period ended 31 December 2020 as set out below.

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

Their aggregate remuneration comprised of the following for the period:

The total remuneration of key management personnel for the year was $2.6 million and $1.54 million for the three months ended 31 December 2020.

The directors, who were in office during the year and the prior year, are not remunerated by the group as they are paid by GI Partners. The group receives a management charge from GI Partners (see note 28) however it is not practicable to identify the element of their remuneration that relates to their services as directors of the Company. The directors did not receive any contributions into a pension scheme, receive any shares in respect of qualifying services or exercise any share options in the year.

The actual charge/(credit) for the period can be reconciled to the expected credit for the period based on the profit or loss and the standard rate of tax as follows:

Impairment tests have been carried out where appropriate and the following impairment losses have been recognised in profit or loss within administrative expenses for the period:

The Company performed its annual impairment assessment and identified that there were indicators of impairment, which included net losses and negative operating cash flows. For each cash generating unit, the recoverable amount was determined based on the higher of the value in use and the fair value of the asset.

The significant assumptions used in the value in use approach included the estimated future cash flows of cash generating unit. A discount rate was applied to the future cash flows, considering the risks

associated with such future cash flows.

Significant assumptions used in the fair value approach included identifying companies of a comparable nature, size, growth and profitability profile, and identifying and selecting appropriate revenue and earnings multiples in estimating the fair value of our cash generating unit.

Based on our assessment, we determined the carrying value of our reporting unit exceeded its recoverable value, and an impairment charge of $279.7 million was recorded to goodwill.

More information on impairment movements in the year is given in note 10.

Amortisation is charged to other administrative expenses.

In February 2021, the Company increased its investment in its Subsidiary by $30.0 million to fund the acquisition of Sitelock Intermediate Holdings, LLC ("Sitelock") which was completed on February 22, 2021.This investment was funded by a $30.0 million issuance of share capital. Additionally, there was $1.1 million cash contribution.

Details of the Company's subsidiaries at 31 December 2021 are as follows:

For the period ended 31 December 2021, the following subsidiaries: Saturn Intermediate Limited, Condor Intermediate Holdco Limited, Condor Buyer Limited, SSL247 Limited and Sectigo Limited were exempt from audit under section 479A-479C of the Companies Act.

Financial assets measured at amortised cost comprise cash at bank and in hand, trade debtors and amounts owed by related parties.

Financial liabilities measured at amortised cost comprise bank loans, trade creditors, other creditors and accruals and other taxation and social security.

Trade debtors are stated after provision for impairment of $1.0 million (2020 : $1.2million).

On September 30, 2020, in connection with the Sectigo Acquisition, Saturn Borrower Inc. (“Borrower”), a wholly owned subsidiary of the Company, entered into the following senior secured credit facilities (collectively the “First Lien Credit Facilities”):

• A $340.0 million term loan maturing on September 30, 2026 (the “First Lien Term Loan Facility”); and

• A $25.0 million first lien revolving credit facility maturing on September 30, 2026 (the “Revolving Credit Facility”).

In connection with the Sitelock Acquisition (see Note 24), on February 22, 2021, Borrower amended its First Lien Credit Facilities and entered into a $90.0 million term loan maturing on September 30, 2026 (the “Second Lien Term Loan Facility” and collectively with the First Lien Credit Facilities, the “Credit Facilities”). The terms of the Second Lien Term Loan Facility are synonymous with the First Lien Term Loan Facilities, as further described below.

Borrowings under the Credit Facilities bear interest at rates per annum equal to, at our option, either (a) a Eurodollar rate, subject to a 1.00% floor, or (b) a base rate, subject to a 0.50% floor, in each case plus an applicable margin. The initial applicable margin for borrowings under the Credit Facilities was 5.50% for base rate borrowings and 6.50% for Eurodollar borrowings, with the First Lien Term Loan Facility and Second Lien Term Loan Facility borrowings being subject to a 25 basis point step down if our total net leverage ratio is under 6.00 times. We are required to pay a commitment fee equal to 0.50% per annum to the lenders under the Revolving Credit Facility in respect of the unutilized commitments, which is not subject to step downs. For the year ended December 31, 2021, the weighted average interest rate under the Credit Facilities was 7.50%.

All obligations under the Credit Facilities are secured by a pledge of the Company’s and its subsidiaries capital stock and substantially all of its assets.

Beginning on December 31, 2020, the First Lien Term Loan Facility required scheduled quarterly principal payments equal to $850 thousand with the balance of the First Lien Term Loan Facility due at maturity. Beginning on March 31, 2021, the Second Lien Term Loan Facility required an additional scheduled quarterly principal payments of $225 thousand with the balance of the Second Lien Term Loan Facility due at maturity.

The Credit Agreement contains affirmative and negative covenants, including restrictions on indebtedness, liens, lines of business, dividends, distributions, acquisitions, investments, sale or transfer of assets, transactions with affiliates, change in control, and other matters customarily restricted in such agreements.

As of December 31, 2021, the Credit Agreement contained a maximum total net leverage ratio as follows:

• as of the last day of any test period commencing on March 31, 2021 and ending on or prior to the last day of the fiscal quarter ending on September 30, 2022, not to exceed 9.75 to 1.00;

• as of the last day of any test period ending on or after the last day of the fiscal quarter ending on December 31, 2022 and on or prior to the last day of the fiscal quarter ending on September 30, 2023, not to exceed 9.00 to 1.00; and

• as of the last day of any test period ending on or after the last day of the fiscal quarter ending on December 31, 2023, not to exceed 8.50 to 1.00.

The Company was in compliance with all required financial covenants as of December 31, 2021. There were no breaches of financial covenants since the year end and the directors are not forecasting a breach of covenants in their going concern assessment period.

In connection with entering into the First Lien Term Loan Facilities, the Company incurred an original debt discount of 300 basis points of par or $10.2 million and $0.8 million of debt issuance costs. In connection with entering into the Second Lien Term Loan Facility, the Company incurred $2.7 million of an original issuance discount. The original issue discounts and debt issuance costs are presented within current and long-term debt in the consolidated balance sheets and are being amortized, over the life of the facility using the effective interest rate method, as interest expense within the consolidated statements of comprehensive loss.

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

The majority of the deferred tax liabilities set out above are not expected to reverse within 12 months.

Deferred income is included in the financial statements as follows:

The timing of the Company's performance under its various contracts often differ from the timing of the customer's invoicing and payment, which results in the recognition of a contract liability. A contract is recognized when consideration is received from the customer prior to the transfer of goods or services. Contract liabilities are reported in deferred income and represent the unearned portion of fixed fee contractual arrangements and fee per certificate contracts that expire after the balance sheet date. Deferred income is recognized as revenue based upon proportional performance over the life of the contract as goods and services are delivered. Further details of the judgment in relation to revenue recognition are set out in note 2 to the financial statements.

A defined contribution pension scheme is operated for all qualifying employees. The assets of the scheme are held separately from those of the group in an independently administered fund.

As of December 31 2021, all contributions had been paid to the schemes (2020: contributions of $47 thousand had not been paid over to the schemes).

On 22 February 2021, one Ordinary Share of $0.01 was issued at a premium of $30.0 million, the proceeds of which were used to fund the Sitelock Acquisition.

Ordinary Shares have full rights in the company with respect to voting, dividends and capital distributions.

Share premium account
This reserve records the amount above the nominal value received for shares sold, less transaction costs.

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

Capital contribution reserve

The reserve records cash contributions from the shareholder. There is no contractual right to return the contributions.

On February 22, 2021, the Company acquired 100% of the issued and outstanding shares of Sitelock Intermediate Holdings, LLC (“Sitelock”), for total consideration of $115.3 million net of cash acquired (the “Sitelock Acquisition”).

The purchase price was allocated to the net assets acquired, as summarized in the table below:

Sitelock is headquartered in Scottsdale, Arizona, and provides website security protection and monitoring solutions. The acquisition was targeted at expanding the Company’s product capabilities, partner network, and customer base.

The Sitelock Acquisition was funded with $23.0 million in cash, funded from additional capital contributions from our majority investor, and $90.0 million in borrowings under the Credit Facilities. The parent company consolidated financial statements include the financial results of Sitelock from the acquisition date of February 22, 2021.

Accordingly, the cost was allocated to the underlying net assets, based on their respective fair values. The excess of the purchase price over the estimated fair value of the net assets acquired was recorded as goodwill. The purchase price allocation for the assets acquired and liabilities assumed is substantially complete; however, it may be subject to change as additional information is obtained during the acquisition measurement period. The transaction was a stock purchase and intangible assets acquired and goodwill are not deductible for tax purposes.

The trademarks and developed technology were valued using the relief from royalty method, which assumes the fair value of the asset is the discounted cash flows of the amount that the Company would have to pay had the Company not owned the asset and instead licensed the asset from another company. As such, this method discounts the projected hypothetical royalties for the use of the trademarked products and developed technology.

The customer relationship intangible asset was valued using the excess earnings method, which discounts the estimated after-tax cash flows associated with the existing base of customers as of the acquisition date, factoring in expected attrition of the existing base.

The deferred revenue liability was valued using a cost-plus market methodology utilizing key assumptions including timing and discount rate. Deferred tax liabilities were increased by $21.0 million due to the impact of deferred tax on the fair value adjustments disclosed above.

We incurred $2.3 million of legal, accounting, and other third-party costs associated with the Sitelock Acquisition, which were capitalized and included in the total consideration paid. The Revenue of $42.9 million and profit generated from Sitelock of $16.6 million contributed to the overall year-end results of the group.

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

The group leases office space in each of the cities in which its offices are located and holds certain office equipment under operating leases. Rental payments include minimum rental plus common area maintenance charges.

Management has evaluated subsequent events and transactions for recognition and/or disclosure in these

consolidated financial statements through the date these consolidated financial statements were issued. We identified the following items for disclosure:

In June 2022, an associate of the Company was unable to generate sufficient cash to meet its principal and interest obligations. As a result, the Company received additional support from its primary shareholder, in the form of a borrowing under the shareholder’s revolving credit agreement contributed $5.0 million to Saturn Intermediate Limited in exchange for two newly issued shares with share capital of $0.02 and the balance as share premium. Saturn Intermediate Limited then contributed the $5.0 million to Saturn Acquisition Limited in exchange for two newly issued shares with share capital of $0.02 and the balance as share premium. Lastly, Saturn Acquisition Limited issued $5.0 million cash to Sectigo Limited in exchange for a note of equal value, the proceeds of which were used to fund debt obligations.

In October 2022 and March 2023, the Company borrowed an additional $5.0 million each and purchased two additional shares with the same terms and structure as the June 2022 transactions described above.

In addition, we amended our Credit Facilities Agreement to provide relief on our total net leverage ratio requirements. Our maximum net leverage ratio requirements as follows:

a) as of the last day of any test period commencing on March 31, 2021 and ending on or prior to the last day of the fiscal quarter ending on June 30, 2023, not to exceed 9.75 to 1.00;

b) as of the last day of any test period ending on or after the last day of the fiscal quarter ending on September 30, 2023 and on or prior to the last day of the fiscal quarter ending on December 31, 2023, to exceed 9.00 to 1.00; and

c) as of the last day of any test period ending on or after the last day of the fiscal quarter ending on March 31,2024, not to exceed 8.50 to 1.00.

In addition, the amendments to our Credit Facilities Agreement included additional reporting and minimum liquidity covenants and added a payment-in-kind of 75 bps, for all periods in which our Total Net Leverage Ratio exceeds 7.50.

On December 15, 2020, the Company issued a loan to an officer of the Company in the form of a $2.0 million promissory note, which is presented within other debtors on the consolidated balance sheets (note 16 to the financial statements). The promissory note accrues interest at 0.48% and matures on the earlier of (1) the ninth anniversary, (2) the sale or transfer of shares by the officer without consent, (3) 60 days following termination of employment, (4) lenders under the First Lien Loan or Second Lien Loan requesting to call the loan at their discretion, (5) change in control of the Company, or (6) in the event of a default. The promissory note is secured by a pledge of the officer’s shares in Parent Topco. For the year ended December 31, 2021 and the period ended December 31, 2020, the Company incurred $10 thousand and $0 thousand in interest income, respectively, which is included within interest expense on the consolidated statements of comprehensive loss.

On September 30, 2020, the Company entered into a management services agreement with GI Manager L.P., an affiliate of GI Partners (“GI MSA”) for a period of five years, renewable on a year-to-year basis thereafter. GI Partners and its principals will dedicate time to the Company’s business affairs as is reasonably necessary to accomplish the purposes of the GI MSA, with no minimum required hours necessary. Under the agreement, GI Partners may directly or indirectly incur costs on behalf of the Company, including, costs incurred by GI Partners or other third-party service providers. For the year ended December 31, 2021 and for the period ended December 31, 2020, the Company incurred $0.1 million and $7.0 thousand in expenses under the GI MSA.

During FY2021 the Company engaged two outside board members to provide governance and consulting services to the Company. The Company paid fees and issued OMB Incentive Units (see Note 30) to the two board members for their services. As of December 31, 2021, the Company incurred $0.2 million of fees to our two board members.

On September 10, 2020, the Company entered into a management services agreement with Tack Asset Management SARL (“T.A.M.”), the former owners of SSL247. T.A.M. provided transitional services and assistance with integration of the Group within Sectigo for the period ended October 1, 2020 through December 31, 2020. The agreement is no longer in effect and there are no amounts outstanding under the Consulting Agreement as of December 31, 2021. The consulting expense recorded for the years ended December 31, 2021 and December 31, 2020 was $0 and $54 thousand.

On September 10, 2020, the Company entered into a management services agreement with Olka International Ltd (“Olka”), a former owner of SSL247. Olka provided transitional services and assistance with integration of the Group within Sectigo for the period ended October 1, 2020 through December 31, 2020.. The agreement is no longer in effect and there are no amounts outstanding under the Consulting Agreement as of December 31, 2021. The consulting expense recorded for the years ended December 31, 2021 and December 31, 2020 was $0 and $47 thousand.

On June 23, 2020, the Company entered into a management services agreement with Maarten Bremer Beheer, the former owner of Xolphin B.V. Bremer provided transitional services and assistance with integration within Sectigo for the period ended October 1, 2020 through December 31, 2020.. The agreement is no longer in effect and there are no amounts outstanding under the Consulting Agreement as of December 31, 2021. There were no amounts outstanding under the Consulting Agreement as of December 31, 2021 The consulting expense recorded for the years ended December 31, 2021 and December 31, 2020 was $0 and $73 thousand.

In the opinion of the directors the ultimate controlling party is Saturn Topco LP, which is controlled by funds owned by GI Partners.

Saturn Topco LP, (“Topco”), a Delaware limited partnership that wholly owns Saturn Parent, grants to certain employees and advisors of the group equity-based incentive units (“Profit Interest Units”), which are governed by the Profit Interest Award Plan (the “2020 Plan”), the Outside Board Member Incentive Unit Award Plan (the “OBM Plan”), and the Phantom Equity Plan (the “Phantom Plan”). These Profit Interest Units included units with service-based vesting conditions (“Time-Based Units”) and units with performance- and market-based vesting conditions (“Performance Units”). Expense attributable to Time-Based Units is recognized, at the fair value of the unit at the time of grant, on a straight-line basis over the requisite employee service period of 5 years. Forfeitures are recognized as incurred in the period in which the employee’s or directors employment or service with the Company terminates. Performance Units vest upon the achievement of certain returns on the initial capital contributions of the Investors in Topco upon a liquidity event. Expense attributable to Performance Units is recognized when vesting becomes probable.

The Company estimated the fair value of Profit Interest Units based on an option pricing model, using a Monte Carlo simulation approach. The expected volatility is based on the historical volatility of similar companies’ stock prices over a preceding period commensurate with the expected term of the Profit Interest Units. The estimated term of the Profit Interest Units considers the timing and probability of a liquidity event. The risk-free interest rate is based on the Constant Maturity Treasury Rate as of the grant date, with the maturity commensurate with the time to liquidity. A marketability discount is then applied to the fair value of the Profit Interest Units to account for their lack of marketability.

There were no grants made during the year ended December 31, 2021.

The following table summarizes the assumptions used for estimating the fair value of Profit Interest Units granted during the year ended 2020:

Time-Based         Performance

Units            Units

Grant-date fair value                 $0.25         $0.16

Expected term (estimated time to liquidity event)     4 years          4 years

Volatility                         90%         90%

Risk-free interest rate                 0.22%         0.22%

Marketability discount                 30%         30%

Profit Interest Award Plan

Effective November 18, 2020, the Company adopted the 2020 Plan, under which certain members of management of the Company’s and its subsidiaries are eligible to receive Profit Interest Units of Topco. There are 62,208,000 units authorized to be issued under the 2020 Plan. The Profit Interest Units have a Grant Date Value Threshold equal to the fair market value of the equity of the Company as of the grant date of each unit and do not have a contractual life. As of December 31, 2021, there were 5,584,673 remaining units available for grant under the 2020 Plan. There were two types of awards granted under the 2020 Plan, time-based awards and performance-based awards.

Time-Based Units

The Time-Based Units vest 20% at the first anniversary of the awards and the remaining 80% vest in 48 monthly instalments equally over a four-year period subject to the employee’s continued service through the vesting date (cliff vesting). The Time-Based Units vest in full upon the consummation of a liquidity event, including a sale of the Company where either (x) the Investors do not collectively own at least 30% of the voting power of the equity ownership interests of the Company, the successor entity in the case of a merger or consolidation or the acquiring entity in the case of a purchase of Company securities or all or substantially all of the Company’s assets, or (y) a third-party acquiror acquires equity ownership interests possessing more than 50% of the voting power of the equity ownership interests of the Company, the successor entity in the case of a merger or consolidation or the acquiring entity in the case of a purchase of Company securities or all or substantially all of the Company’s assets (the “Time-Based Unit Vesting Criteria”). In the event of an employee’s separation, any vested Profit Interest Unit held by such employee will be subject to a one-year repurchase option (the “Repurchase Option”), whereby the Company (subject to approval of the majority of the Board of Managers) can elect to repurchase the vested Profit Interest Unit, provided that, if such separation results from a termination for cause, then the Profit Interest Unit will be forfeited. The purchase price for each vested Profit Interest Unit will be based on the fair market value of such unit at the time of the employee’s separation. Compensation expense for the time-based award under the Profit Interest Award plan was $3.2 million and $0.7 million, respectively, for the years ended December 31, 2021 and 2020.

Performance Units

The Performance Units vest as a function of achieving a multiple on invested capital (“MOIC”) between 2.0 and 3.5 multiples on a linear interpolation, subject to the employee’s continued service through the vesting date. Therefore, upon achieving less than 2.0 multiples of MOIC, no portion of the award will vest; at 2.75 multiples, 50% will vest; and at 3.0 multiples, 100% will vest. In addition, MOIC multiples for the Performance Units shall be tested to determine eligibility for vesting upon (1) each distribution of investor proceeds (proceeds received by the Investors) and (2) a change in control (the “Performance Unit Vesting Criteria”). Distribution of investor proceeds includes (1) the amount of cash received as a result of the sale of relevant equity owned by the Investors after the acquisition date, excluding funds received by other Investors; (2) funds received by the Investors in connection with the redemption of equity by the Company; (3) a cash dividend paid to the Investors; and (4) the fair value of noncash assets received by the Investors.

The weighted average grant date value Threshold of outstanding Profit Interest Units was $558.9 million. The aggregate intrinsic value of outstanding Profit Interest Units was $0. Compensation expense for the performance-based award under the Profit Interest Award plan was $0.0 million and $0.2 million, respectively, for the years ended December 31, 2021 and 2020.

The following table summarizes the Profit Interest Units granted during the year ended 2021:

Time-Based         Performance

Units            Units

Outstanding at January 1, 2021             28,216,345 28,216,345

Granted                              -         -

Forfeited                         (451,511)     (451,511)

Outstanding at December 31, 2021             27,764,834     27,764,834

Outside Board Member Incentive Unit Award Plan

Effective December 31, 2020, the Company adopted the OBM Plan, under which the Company’s outside board members were granted awards to receive OBM Profit Interest Units (the “Time-Based OBM Units”) of Topco. There are 1,000 OBM Units authorized to be issued under the OBM Plan. The OBM Units have a Grant Date Value Threshold equal to the fair market value of the equity of the Company as of the grant date of each unit and do not have a contractual life. As of December 31, 2021, there were no remaining OBM Units available for grant under the OBM Plan.

Time-Based OBM Units

These awards vest based on the Time-Based Unit Vesting Criteria outlined above. In the event of a director’s termination of service, any vested Time-Based OBM Units held by such director will be subject to a one-year repurchase option, whereby the Company (subject to approval of the majority of the Board of Managers) can elect to repurchase the vested Time-Based OBM Unit. The purchase price for each vested Time-Based OBM Unit will be based on the fair market value of such unit at the time of the director’s separation.

The following table summarizes Time-Based OBM Units during the year ended 2021:

Time-Based

OBM Units

Outstanding at January 1, 2021                      1,000,000

Granted                                       -

Forfeited                              -

Outstanding at December 31, 2021                      1,000,000

The weighted average Grant Date Value Threshold of outstanding Time-Based OBM Units was $558.9 million. The aggregate intrinsic value of outstanding Time-Based OBM Units was $0. Compensation expense for the time-based award under the OBM Plan was $0.1 million and $0.0 million, respectively, for the years ended December 31, 2021 and 2020.

Phantom Plan

Effective November 18, 2020, the Company adopted the Phantom Plan, under which certain members of management and other persons are eligible to receive Phantom Units of Topco, which include phantom units with service-based vesting conditions (“Time-Based Phantom Units”) and units with performance- and market-based vesting conditions (“Performance Phantom Units”). The maximum aggregate number of Phantom Units which may be granted hereunder is 62,208,000 Phantom Units minus the number of outstanding Profits Interests Units outstanding. The Phantom Units have a Grant Date Value Threshold equal to the fair market value of the equity of the Company as of the grant date of each unit and do not have a contractual life. As of December 31, 2021, there were 5,584,673 Total Available Phantom Units available for grant under the Phantom Plan.

Time-Based Phantom Units

Time-Based Phantom Units vest in accordance with the Time-Based Vesting Criteria outlined above. In the event of an employee’s or person’s separation, any vested Phantom Unit held by such employee or person will be subject to a Repurchase Option, as outlined above. Compensation expense for the time-based award under the Phantom Plan was $0.1 million and $0.0 million, respectively, for the years ended December 31, 2021 and 2020.

Performance Phantom Units

Performance Phantom Units vest upon achieving the Performance Unit Vesting Criteria outlined above. Compensation expense for the performance- based awards under the Phantom Plan was $0.0 million and $0.0 million, respectively, for the years ended December 31, 2021 and 2020.

The following table summarizes activity of Phantom Units issued under the Phantom Plan for the year ended 2021:

Time-Based         Performance

Units         Phantom Units

Outstanding at January 1, 2021             570,000 570,000

Granted                              -         -

Forfeited                              -     -

Outstanding at December 31, 2021             546,828     546,828

The weighted average grant date value Threshold of outstanding Phantom Units was $558.9 million. The aggregate intrinsic value of outstanding Phantom Units was $0.

The Board of Managers in its sole discretion in good faith can adjust the number and type of Profit Interest Units issued under the 2020 Plan, the OBM Plan and the Phantom Plan related to extraordinary events, such as recapitalization, share split, reverse share split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, exchange of shares for other securities of the Company, issuance of warrants or other rights to purchase shares or other securities of the Company, or other similar corporate transaction or events affecting any dilution or enlargement of the Profit Interest Units.