The directors present their Strategic Report on thebigword Group Holdings Limited ("the company") and its subsidiaries (together "the group") for the year ended 31 December 2024.
thebigword's WordSynk technology seeks to break down language barriers for its clients connecting them with the world, fostering growth and universal understanding.
Business review and future developments
Turnover in the year was £69.2m (2023: £61.4m) resulting in an EBITDA profit of £7.7m (2023: £4.9m) and an operating loss of £2.3m (2023: loss £4.2m).
EBITDA is defined as Earnings before Interest, Tax, Depreciation, and Amortisation.
| 2024 | 2023 |
| £'000 | £'000 |
Operating Loss | -2,304 | -4,215 |
Depreciation | 110 | 242 |
Intangible fixed assets - amortisation | 9,889 | 8,888 |
EBITDA | 7,695 | 4,915 |
The group has had another successful year of growth and the directors remain confident that the group is well positioned to continue as one of the leading full-service providers of cost-effective language solutions to meet the global requirements of its clients.
The group’s WordSynk technology is focused upon enhancing the client experience, accessibility and security while driving efficiency. The group’s continued investment in the development of WordSynk is expected to deliver strong ongoing returns and means that the group is well placed for future expansion.
In March 2024, the group acquired Clarion Interpreting Limited, a specialist British Sign Language interpreting business for cash consideration of £3.6m. See note 25 for further details. The business is highly complementary to thebigword’s and in 2024 it contributed £3.3m to group revenue and £0.2m to group EBITDA. The acquisition was financed by a £2m drawdown in January 2024 on the group’s £5m revolver facility.
During 2024 the group continued to invest in WordSynk, the group's all in one language technology platform and during the year it continued its rollout of this new technology platform to its largest clients. The group continues to host various back office and support operations in Pune, India, where operations were expanded during the year, helping to deliver the group's service offering in a cost efficient manner.
Corporate and social responsibility successes
In 2024, thebigword group undertook a series of impactful Corporate Social Responsibility (CSR) initiatives, reinforcing our dedication to supporting our communities, promoting equality, diversity, and inclusion (ED&I), and advancing environmental sustainability.
Supporting Local Communities
As part of our ongoing partnership with Leeds-based charity Zarach, thebigword is proud to support initiatives that provide beds and essential clothing to children living in poverty. Our contributions include financial donations, pro bono access to critical language services, and hands-on support from our team, who helped deliver much-needed care bundles through our volunteer days program.
Every employee at thebigword is given two paid volunteer days each year, empowering them to dedicate time to causes they’re passionate about and make a positive impact in their communities.
In July 2024, team members also visited HMP Wealstun Prison in Wetherby to explore a potential collaboration with The New Futures Network. This partnership took shape in 2025, with our staff providing CV writing support to individuals preparing for release - helping them build confidence and take meaningful steps toward future employment.
Environmental Sustainability Efforts
Demonstrating our commitment to environmental sustainability, thebigword planted 60 trees at a local primary school. This initiative is expected to capture an estimated 35 tonnes of carbon and contributed to cooling the atmosphere. Additionally, it raised environmental awareness among the 60 pupils who participated in the tree-planting activities.
Promoting Equality, Diversity, and Inclusion
To mark Pride Month in June, thebigword partnered with Sparkle, The National Transgender Charity, to host an informative session for employees aimed at raising awareness of LGBTQ+ issues. Following this, the organisation launched its global ‘Transitioning at Work Policy,’ reaffirming our commitment to inclusivity and support for all employees.
In addition, we collaborated with Leeds Autism Services to offer two internal training sessions on Autism Awareness. These sessions introduced the concept of neurodiversity and provided practical guidance on supporting individuals on the autism spectrum.
In honour of International Women's Day, we organised a sanitary product drive, collecting donations for a local community centre. This initiative is part of our broader commitment to supporting hygiene access for underprivileged individuals, with ongoing donations planned throughout the year.
Employee Well-being Initiatives
Recognising the importance of employee well-being, thebigword celebrated key events such as International Yoga Day and World Environment Day. These celebrations included inviting prominent speakers to support employees' physical strength, flexibility, and mental clarity. Additionally, environmental awareness was highlighted through speakers from sustainable initiatives, including representatives from the Serum Institute of India.
Through these initiatives, thebigword Group has demonstrated a strong commitment to corporate social responsibility, making a positive impact on our employees, local communities, and the environment.
The group monitors risks formally through a risk committee, whose membership is drawn from all areas of the business. The key business risks affecting the group, beyond the challenging macro economic and political climate, are retaining our talented pool of linguists and employees and the group’s exposure to foreign exchange risk and credit risk. The group's approach to mitigation of all these risks is explained within the Strategic report under financial risk management.
Financial key performance indicators
The directors consider that the group’s Key Performance Indicators (“KPI”) are revenue growth and EBITDA. Revenue has grown by 12.7% in 2024 to £69.2m compared with £61.4m in 2023, whilst EBITDA has grown by 57.1% to £7.7m from £4.9m in 2023. The directors believe that the group remains in a strong position to continue to improve these KPIs.
The group's main financial risk management objectives are to ensure it has sufficient working capital and to protect the group against bad debts and adverse movements in interest, inflation and foreign exchange rates.
The group's borrowings consist of a £24.5m term loan repayable in August 2026. The interest on the loan is partially exposed to market rate movements as it is linked to the Sterling Overnight Interbank Average (“SONIA”). This exposure has been partially mitigated by hedging using an Interest Rate Swap which expired in August 2024. In addition, the group has a £5m Revolving Credit Facility (RCF) of which £2m was drawn down in January 2024. The interest rate on this facility is similarly linked to SONIA.
Management regularly monitor the company and group exposure to movements in inflation and forecast revenue and cost targets accordingly.
The group both buys and sells in foreign currencies, giving exposure to movements in exchange rates where there are inflows and outflows in individual currencies. For significant net exposures, particularly in respect of the US Dollar and the Euro, the directors monitor the potential use of hedging strategies where necessary to minimise exchange gains and losses.
The group transacts with its clients on credit terms and so has exposure to the risk of defaulted debts. However, a large proportion of the client base comprises of blue-chip private sector and public sector clients, which significantly reduces this exposure. The group also follows proactive and robust credit management policies, designed to minimise overdue accounts and the corresponding risk of bad debts.
This section describes how the directors have had regard to the matters set out in section 172(1) (a) to (f) of the Companies Act 2006 in exercising their duty to promote the success of the group for the benefits of its stakeholders as a whole.
Our stakeholders
The directors consider that the following groups are the group’s key stakeholders:
• Employees
• Clients
• Shareholders & Third Party Debt Holders
• Suppliers
The directors seek to understand the respective interest of such stakeholder groups so that they can be properly considered in their decisions.
Employees
thebigword aims to be an innovative and rewarding business where colleagues can reach their full potential building meaningful careers in an innovative and growing industry.
The continued development of the business is dependent on the contribution of all employees and the business recognises the benefits of having a committed and well trained workforce. This is achieved through regular meetings at all levels within the workforce and feedback via management to the Director Group.
Clients
The group utilises its WordSynk technology to breakdown language barriers for clients, connecting them with the world, fostering growth and universal understanding.
Clients are key to the continued existence and growth of the business, and the directors recognise that acting promptly upon customer feedback is essential. The directors are continually aware of our customer opinions of our services either through direct contact with the customer or via feedback from our sales and operations teams. The directors are very proud that the business continues to have very high client retention rates.
Shareholders and third party debt holders
The directors manage the group to be a sound investment with a clear strategy for growth from the perspective of both these stakeholders whilst ensuring they deliver value to the shareholders. The directors are in regular contact with the shareholders and third party debt holders and keep them appraised on the ongoing development of the Group both operationally and financially.
Suppliers
The group relies on linguists, freelancers and partners to deliver its services. The directors are actively involved in discussions with key suppliers, not only to ensure value for money for shareholders, but also to ensure high quality services are delivered to all clients.
The group aims to become the language technology platform of choice by providing a home for linguists, where they can use their skills to connect the world, supporting trade, diplomacy and justice for the group’s customers.
On behalf of the board
The directors present their annual report and financial statements for the year ended 31 December 2024.
The results for the year are set out on page 12.
No ordinary dividends were paid. The directors do not recommend payment of a further dividend.
The directors who held office during the year and up to the date of signature of the financial statements were as follows:
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.
There is no employee UK share scheme at present, but the directors are considering the introduction of such a scheme as a means of further encouraging the involvement of employees in the company's performance.
The group maintains a policy of keeping employees fully informed of matters affecting them as employees and to make them aware of the financial and economic factors influencing group performance.
This involves regularly providing employees with relevant information; regular consultation with employees or their representatives so that the employees’ views may be taken into account in making decisions that are likely to affect their interests and the encouragement of employees’ participation in the group’s performance by providing performance related remuneration where considered appropriate.
As an Equal Opportunities employer, the group wishes to ensure that no employee or applicant for employment with the group suffers unjustifiable discrimination because of their disability. The group will therefore follow procedures designed to provide that all employees are treated on the basis of their relative merits and abilities.
In particular the group will not discriminate in the recruitment of employees, terms and conditions afforded to employees, promotion, training or any other benefit afforded to employees or disciplining of employees in a way that does or may discriminate against disabled employees.
A discussion of future developments can be found in the Strategic Report under the 'business review and future developments' heading.
Branches outside the United Kingdom
During the period the group continued to have overseas branches in Afghanistan and Iraq, although both are in the process of being closed.
The auditor, Saffery LLP, is deemed to be reappointed under section 487(2) of the Companies Act 2006.
Since the group remains a partly home-based working model, significant reductions have been seen in CO2 emissions over recent years.
Our data covers measurements collected for our Head Office in Leeds, UK.
We have used utility bills for energy, gas and water; supplier reports for waste, A4 paper and travel data; and our Accounts’ Department for remaining transport data.
Our data covers relevant aspects of scopes described in the 2019 UK Government Environmental Reporting Guidelines.
We have used the 2023 and 2024 UK Government GHG Conversion Factors and suggested template to calculate our emissions. We’ve used the financial control approach with our previous year as our base year.
We have measured our data against scopes 1, 2 and 3 emissions. We have explained any relevant aspects of our data within the table below.
Monitoring of our environmental impacts
Targets are set and reviewed once a year. The Group monitors and where possible tries to reduce the amount of CO2 emissions via gas, energy, waste and water consumption, travel emissions and A4 paper consumed. Staff are encouraged to use digital documents for internal and external meetings. Where printing is essential the standard is double sided black and white printing.
As anticipated, emissions did go up in 2024 as compared to 2023 as more staff members returned to the office and there was a more regular use of the office. Another contributing factor to the rise in emissions—particularly from travel—is the expansion of our operations to the US toward the end of 2024. As a result, we anticipate a further increase in emissions in 2025 as we adjust to our new normal.
We continue to invest on ways to look after the environment and are considering offsetting 2024 emissions, details will be included in the next year report.
Carbon Offsets
Regarding emissions offsets, in May 2024 employee volunteers planted 60 trees at East Ardsley Primary Academy, a local primary school. A post with more details is available on our website: thebigword donates trees to local primary school – thebigword.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the group’s and 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. They are also responsible for safeguarding the assets of the group and company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
We have audited the financial statements of thebigword Group Holdings Limited (the 'parent company') and its subsidiaries (the 'group') for the year ended 31 December 2024 which comprise the group income statement, the group statement of comprehensive income, the group statement of financial position, the company statement of financial position, 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).
Basis for opinion
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the Directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's and parent Company’s ability to continue as a going concern for a period of at least twelve months from when the financial statements are authorised for issue.
Our responsibilities and the responsibilities of the Directors with respect to going concern are described in the relevant sections of this report.
Other information
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, based on the work undertaken in the course of the audit:
the information given in the strategic report and the directors' report for the financial year for which the financial statements are prepared is consistent with the financial statements; and
the strategic report and the directors' report have been prepared in accordance with applicable legal requirements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The specific procedures for this engagement and the extent to which these are capable of detecting irregularities, including fraud are detailed below.
Identifying and assessing risks related to irregularities:
We assessed the susceptibility of the group and parent company’s financial statements to material misstatement and how fraud might occur, including through discussions with the directors, discussions within our audit team planning meeting, updating our record of internal controls and ensuring these controls operated as intended. We evaluated possible incentives and opportunities for fraudulent manipulation of the financial statements. We identified laws and regulations that are of significance in the context of the group and parent company by discussions with directors and by updating our understanding of the sector in which the group and parent company operates.
Laws and regulations of direct significance in the context of the group and parent company include The Companies Act 2006 and UK Tax legislation.
Audit response to risks identified
We considered the extent of compliance with these laws and regulations as part of our audit procedures on the related financial statement items including a review of Group and parent Company financial statement disclosures. We reviewed the parent Company's records of breaches of laws and regulations, minutes of meetings and correspondence with relevant authorities to identify potential material misstatements arising. We discussed the parent Company's policies and procedures for compliance with laws and regulations with members of management responsible for compliance.
During the planning meeting with the audit team, the engagement partner drew attention to the key areas which might involve non-compliance with laws and regulations or fraud. We enquired of management whether they were aware of any instances of non-compliance with laws and regulations or knowledge of any actual, suspected or alleged fraud. We addressed the risk of fraud through management override of controls by testing the appropriateness of journal entries and identifying any significant transactions that were unusual or outside the normal course of business. We assessed whether judgements made in making accounting estimates gave rise to a possible indication of management bias. At the completion stage of the audit, the engagement partner’s review included ensuring that the team had approached their work with appropriate professional scepticism and thus the capacity to identify non-compliance with laws and regulations and fraud.
As group auditors, our assessment of matters relating to non-compliance with laws or regulations and fraud differed at group and component level according to their particular circumstances. Our communications included a request to identify instances of non-compliance with laws and regulations and fraud that could give rise to a material misstatement of the group financial statements in addition to our risk assessment.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would become aware of it. Also, the risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
A further description of our responsibilities is available on the Financial Reporting Council’s website at: https://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 parent 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 parent company's members those matters we are required to state to them in an auditors 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 parent company and the parent company's members as a body, for our audit work, for this report, or for the opinions we have formed.
As permitted by s408 Companies Act 2006, the company has not presented its own profit and loss account and related notes. The company’s loss for the year was £nil (2023: £nil).
thebigword Group Holdings Limited (“the company”) is a private company limited by shares incorporated in England and Wales. The registered office is .
The group consists of thebigword Group Holdings 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 sterling, which is the functional currency of the Company. Monetary amounts in these financial statements are rounded to the nearest £'000.
The financial statements 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 company has therefore taken advantage of exemptions from the following disclosure requirements for parent company information presented within the 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: Interest income/expense and net gains/losses for financial instruments not measured at fair value; basis of determining fair values; details of collateral, loan defaults or breaches, details of hedges, hedging fair value changes recognised in profit or loss and in other comprehensive income;
Section 33 ‘Related Party Disclosures’: Compensation for key management personnel.
The consolidated group financial statements consist of the financial statements of the parent company thebigword Group Holdings 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 2024. 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.
Subsidiaries are consolidated in the Group’s financial statements from the date that control commences until the date that control ceases.
The going concern basis of preparation is considered applicable in the financial statements despite the group reporting a loss result for 2024. It is forecast to be profitable during the upcoming year ending December 2025 and beyond. The group is also in a strong net asset position and holds a significant positive cash balance.
The directors have considered the forecasted cash flows up to December 2026 and are comfortable with the current performance and the forecast which shows that there will continue to be a positive generation of cash to cover all liabilities which fall due over this period.
The debt within the group is currently made up of a £24.5m term loan which is not due for payment until August 2026. There is also a £5m RCF agreement of which £2m was drawn down in January 2024. These are part of the same agreement and require the same covenant compliance including cashflow cover, adjusted leverage, and guarantor coverage. The continued and forecasted improvements in both EBITDA and cash generation enables the directors to be comfortable that the group will continue to be in compliance with all covenants and that the group will be able to either roll over or replace its debt facilities before their expiry date in August 2026.
Based on the above, the directors have a reasonable expectation that the group will continue to trade as a going concern for the foreseeable future with the necessary resources to do this.
Turnover is recognised at the fair value of the consideration received or receivable for services provided in the normal course of business, and is shown net of VAT and other sales related taxes. The fair value of consideration takes into account trade discounts, settlement discounts and volume rebates.
The group recognises turnover when the service has been provided to the customer, the amount of turnover can be measured reliably and it is probable that future economic benefits will flow to the entity from the services provided.
The group provides language translation and interpreting services to customers. Turnover is recognised in the accounting period in which the services are rendered.
Where the group enters into a rebate agreement with customers, the rebate value is accrued against turnover once the turnover relating to the specific customer reaches the agreed threshold. Where the rebate period is not coterminous to the year end, the group estimates whether or not the threshold will be met and accrues for the rebate value accordingly
Interest income is recognised in the profit or loss using the effective interest method.
Research expenditure is written off against profits in the year in which it is incurred. Identifiable development expenditure is capitalised to the extent that the technical, commercial and financial feasibility can be demonstrated. The capitalised development costs are subsequently amortised on a straight line basis over their useful economic lives, which range from 3 to 6 years.
If it is not possible to distinguish between the research phase and the development phase of an internal project, the expenditure is treated as if it were all incurred in the research phase only.
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 income statement.
In the parent company financial statements, investments in subsidiaries are initially measured at cost and subsequently measured at cost less any accumulated impairment losses.
A subsidiary is an entity controlled by the group. Control is the power to govern the financial and operating policies of the entity so as to obtain benefits from its activities.
At each reporting period end date, the 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.
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 statement of financial position 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, 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.
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 and loans from fellow group companies are initially
recognised at transaction price unless the arrangement constitutes a financing transaction, where the debt instrument is measured at the present value of the future payments discounted at a market rate of interest. 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 obligations 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.
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 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 income statement 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. Where items recognised in other comprehensive income or equity are chargeable to or deductible for tax purposes, the resulting current or deferred tax expense or income is presented in the same component of comprehensive income or equity as the transaction or other event that resulted in the tax expense or income. Deferred tax assets and liabilities are offset when the Company has a legally enforceable right to offset current tax assets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authority.
The costs of short-term employee benefits are recognised as a liability and an expense, unless those costs are required to be recognised as part of the cost of stock or fixed assets.
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.
Where share options are awarded to employees, the fair value of the options at the date of grant is charged to profit or loss over the vesting period. Non-market vesting conditions are taken into account by adjusting the number of equity instruments expected to vest at each balance sheet date so that, ultimately, the cumulative amount recognised over the vesting period is based on the number of options that eventually vest. Market vesting conditions are factored into the fair value of the options granted. The cumulative expense is not adjusted for failure to achieve a market vesting condition.
The fair value of the award also takes into account non-vesting conditions. These are either factors beyond the control of one of either party (such as a target based on an index) or factors which are within the control of one or other of the parties (such as the group keeping the scheme open or the employee maintaining any contributions required by the scheme).
Where the terms and conditions of options are modified before they vest, the increase in the fair value of the options, measured immediately before and after the modification, is also charged to profit or loss over the remaining vesting period.
Where equity instruments are granted to persons other than employees, profit or loss is charged with fair value of goods and services received.
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.
Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the Company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Foreign currency transactions are translated into the functional currency using the spot exchange rate at the dates of the transactions.
At each period end, foreign currency monetary items are translated using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transactions and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.
Foreign exchange gains and losses that relate to borrowings and cash and cash equivalents are presented in the consolidated profit and loss account within 'finance income or costs' within 'other operating income'.
On consolidation, the results of overseas operations are translated into Sterling at rates approximating to those ruling when the transactions took place. All assets and liabilities of overseas operations are translated at the rate ruling at the reporting date. Exchange differences arising on translating the opening net assets at opening rate and the results of overseas operations at actual rate are reocgnised in other comprehensive income.
Hedge accounting
The group uses variable to fixed interest rate swaps to manage its exposure to fair value risk on loans. These derivatives are measured at fair value at each balance sheet date.
To the extent the cash flow hedge is effective, movements in fair value are recognised in other comprehensive income and presented in a separate cash flow hedge reserve. Any ineffective portions of those movements are recognised in profit or loss for the year.
Gains and losses on the hedging instruments and the hedged items are recognised in profit or loss for the year. When a hedged item is an unrecognised firm commitment, the cumulative hedging gain or loss on the hedged item is recognised as an asset or liability with a corresponding gain or loss recognised in profit or loss.
In the application of the Group’s accounting policies, the Directors are required to make judgements, estimates and assumptions about the carrying amount of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised where the revision affects only that period, or in the period of the revision and future periods where the revision affects both current and future periods.
The following judgements have had the most significant effect on amounts recognised in the financial statements.
The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below.
In the year the identification and valuation of intangibles acquired, as well as their respective useful economic lives, was a key estimate. In respect of the acquisition of the subsidiary and the intangible assets acquired thereon, experts were engaged during the process to assist the directors in ensuring the underlying assumptions and approach in the valuation was appropriate. The group considers whether intangible assets are impaired. Where an indication of impairment is identified the estimation of recoverable value requires estimation of the recoverable value of the cash generating units (CGUs). This requires estimation of the future cash flows from the CGUs. See note 11 for the carrying amount of intangible fixed assets.
The annual depreciation charge for tangible fixed assets is sensitive to changes in the estimated useful economic lives and residual values of the assets. The useful economic lives and residual values are reassessed annually. They are amended when necessary to reflect current estimates, based on technological advancement, future investments, economic utilisation and the physical condition of the assets. See note 12 for the carrying amount of tangible fixed assets.
The Group makes an estimate of the recoverable value of trade and other debtors. When assessing impairment of trade and other debtors, management considers factors including the ageing profile of debtors and historical experience. See note 16 for the net carrying amount of the debtors and associated impairment provision.
A share based payments charge was made in the year under an equity settled scheme by issuance of profit interest units. The units are split 50% time based which vest at a rate of 10% per annum over a 5 year vesting period and 50% performance based which vest in full over 5 years. The Group makes estimates on the fair value of these units over the vesting period by considering the non-market and market based conditions attached to them. It makes assumptions that the shares will vest over the full 5 year period and requires an estimate of the equity value of the Group across the vesting period. See note 22 for the weighted average share price of the units.
Determining income tax provisions involves judgements on the tax treatment of certain transactions. Deferred tax is recognised on tax losses not yet used on temporary differences where it is probable that there will be taxable income against which these can be offset. See note 20 below for details of deferred tax recognised.
The group operates an equity-settled share based remuneration scheme for a number of key employees. See note 22 for further details.
The shares issued are in the ultimate parent company.
The average monthly number of persons (including Directors) employed by the Group and Company during the year was:
Their aggregate remuneration comprised:
During the year, retirement benefits were accruing to 1 Director (2023: 2) in respect of defined contribution pension schemes.
Those who were a director of the company during the year were remunerated for their services through other subsidiaries of the group.
During the year the group paid £115,509 (2023: £108,000) to a director as compensation for loss of office. This payment was made in accordance with the terms of the director's service contract and approved by the board of directors.
Bank loan interest payable is on a loan of £24.5m and includes transaction costs of £850k, which will be charged to profit or loss as part of the interest charge using the effective interest rate method. Amortisation of these transaction costs included within bank loan interest payable was £170k (2023: £170k) in the year.
The actual charge/(credit) for the year can be reconciled to the expected credit for the year based on the profit or loss and the standard rate of tax as follows:
The directors have assessed there were no indicators of impairment existing at the year end. They foresee no significant reduction to the recoverable value of the investments by a change in either the Companies' legal or economic circumstances. They consider the Group's future cash flows as being higher than the carrying value of its investments in those Companies. They therefore deem no impairment is required.
Details of the Company's subsidiaries at 31 December 2024 are as follows:
Registered office addresses:
Financial assets measured at amortised cost comprise cash at bank and in hand, trade debtors, amounts owed by Group companies, other debtors and accrued income. Financial assets include financial instruments in relation to an interest rate swap and are measured at fair value.
Financial liabilities measured at amortised cost comprise bank loans, trade creditors, amounts owed to Group companies, other taxation and social security liabilities, other creditors and accruals.
Amounts owed by Group undertakings are unsecured, interest free and repayable on demand. Trade debtors are presented net of a provision of £69k (2023: £88k).
Amounts owed to Group undertakings are unsecured, interest free and repayable on demand.
On the 4th of August 2021 a bank loan of £24,500,000 was taken. Interest is charged on this loan based on a number of measures at a rate between 6.25% and 7.00% plus SONIA per annum. Transaction costs of £850,000, were incurred, which have been deducted from the initial carrying value and will be charged to profit or loss as part of the interest charge calculated using the effective interest rate method. This loan is due to expire on 3rd August 2026. The loan is secured by a fixed and floating charge over the assets of the group.
A £2m RCF loan drawdown facility was taken out in the year. This was a revolving facility with an establishment date of 30th January 2024. The interest rate was also 6.25%-7% plus SONIA.
The following are the major deferred tax liabilities and assets recognised by the Group and Company, and movements thereon:
The deferred tax liability set out above is expected to reverse within 12 months and relates to accelerated capital allowances and short term differences that are expected to mature within the same period.
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.
Contributions amounting to £54k (2023: £72k) were payable to the scheme at the year end.
The company operates an equity-settled share based remuneration scheme for a number of key employees. Shares consist of profit interest units split 50% time based units which vest at a rate of 10% per annum over a 5 year vesting period and 50% performance based shares which vest in full over 5 years. The shares issued are in the ultimate parent company.
In the year a charge in profit and loss of £81k (2023: £167k) , was incurred in respect of a share based charge, from 473,535 units (2023: 696,374 units) in respect of the above scheme.
All restricted stock are issued with a £nil exercisable price.
Each of the shares carry a voting right and equal rights to participate in any discretional dividends.
The share premium account includes the premium on issue of equity shares, net of any issue costs.
This reserve represents the value of share based payments granted by the parent company to the employees of its subsidiary over the vesting period of the share options.
Profit and loss account
The profit and loss account represents cumulative profits or losses, net of dividends paid and other adjustments.
Foreign exchange reserve
The foreign exchange reserve includes net exchange differences recognised in other comprehensive income that are accumulated as a separate equity reserve.
On 13 March 2024 the group acquired the entire issued capital of Clarion Interpreting Limited.
As at the balance sheet date, the company is party to a fixed and floating charge over all of its assets in favour of Kartesia. thebigword Group Holdings Limited and fellow subsidiaries have a total facility with Kartesia for £27,031k (2023: £25,172k).
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:
All directors and certain senior employees who have authority and responsibility for planning, directing and controlling the activities of the group are considered to be key management personnel. The remuneration of key management personnel is as follows:
The above figures include share based payments as detailed in note 4.