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Registered number:
FOR THE YEAR ENDED 31 DECEMBER 2024
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CANTAB RESEARCH LIMITED
COMPANY INFORMATION
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CANTAB RESEARCH LIMITED
CONTENTS
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CANTAB RESEARCH LIMITED
DIRECTORS' REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their report and the financial statements for the year ended 31 December 2024.
The loss for the year, after taxation, amounted to £5,647,721 (2023 - loss £9,395,208).
The loss for the year, before restructuring and share based payment charge, after taxation totalled £4,818,052 (2023 - £6,385,359).
No dividends were paid during the year (2023 - £NIL). The directors do not recommend the payment of a final dividend (2023 - £NIL).
The directors who served during the year were:
The directors routinely monitor all known risks and uncertainties, and appropriate actions are taken to mitigate the risks and their potential outcomes.
The Group operates in the fast-moving artificial intelligence (AI) space where there is much media and general public attention. The Group is well placed with both human resource and investment to be competitive in the industry. The Group has exposures to two main areas of risk - foreign exchange currency exposure and customer credit exposure. Foreign exchange transactional currency exposure The Group’s parent Company is exposed to currency exchange rate risk in relation to the US Dollar, Euro and Sterling exchange rates. Whilst most of the Group’s sales and operating expenses are denominated in Sterling, a proportion of the parent Company’s sales and costs are denominated in other currencies. These are not considered to result in material foreign exchange rate exposure to the Group. Customer credit exposure The Group may offer credit terms to its customers which allow payment of the debt after delivery of the services. The Group is at risk to the extent that a customer may be unable to pay the debt on the specific due date. This risk is mitigated by strong ongoing customer relationships.
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CANTAB RESEARCH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
PRINCIPAL RISKS AND UNCERTAINTIES (CONTINUED)
Interest rate risk The Group currently has no borrowings and is receiving interest on its cash deposits. The Group therefore considers the interest rate risk to be immaterial.
The directors have adopted the going concern basis in preparing the financial statements. In assessing whether the going concern assumption is appropriate, the directors have taken into account all relevant information about the current status of the business operations and its liquidity.
Based on their review the directors have a reasonable expectation that the Group and Company will continue to have sufficient funds to meet its liabilities as they fall due for at least 12 months from the date of approval of these financial statements. This expectation is arrived at following consideration of the future development, performance, cash flows and financial position along with the current and forecast liquidity. The directors monitor the cash position of the Group regularly, taking account of the current trading, they consider that the assumptions made are appropriate and are satisfied that the Group and Company is a going concern.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the consolidated financial statements in accordance with applicable law and regulations.
In preparing these financial statements, the directors are required to:
∙select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙make judgements and accounting estimates that are reasonable and prudent;
∙prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
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CANTAB RESEARCH LIMITED
DIRECTORS' REPORT (CONTINUED)
FOR THE YEAR ENDED 31 DECEMBER 2024
On 5 February 2025, the Group entered into an agreement with its landlord to surrender its lease effective 1 August 2025. Further details of this non-adjusting post balance sheet event can be found in note 26.
The auditor, Peters Elworthy & Moore, will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf by:
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CANTAB RESEARCH LIMITED
GROUP STRATEGIC REPORT
FOR THE YEAR ENDED 31 DECEMBER 2024
The directors present their strategic report for the Group for the year ended 31 December 2024.
Group turnover increased by 8% to £12.6 million in 2024, up from £11.7 million in 2023. The key driver of growth was our Real-Time Speech-to-Text product, where we saw a near doubling in contracted revenue at the 2024 year-end. This positions Speechmatics strongly to materially outperform revenue expectations in 2025. The Company losses for the year (excluding share-based payment charge) totalled £5.2 million, a reduction of £2.2million compared to £7.4 million in 2023. This improvement was primarily driven by higher revenue, a well-managed cost base, and a significant reduction in restructuring expenses. The Company continues to invest deeply in its technology and machine learning, with 2024 seeing an investment totalling of £8.4 million (2023 - £8.2 million) as we develop new products for customers and extend our position as the leading provider of speech recognition tools with the highest accuracy across all languages. The Company elects to expense nearly all of its technology investment as opposed to capitalising. Balance Sheet and Investment The Group closed the year with net assets of £16.6 million and closing cash (including short term deposits) of £13.5 million in 2024 compared to £19.7 million in 2023. The company remains in a strong capital position following its fundraising in June 2022, notwithstanding the significant investment in R&D which we anticipate to continue into 2025, with the expectation that this will drive future revenue growth and cash flows.
To support the Group’s strategy and to monitor performance, the directors use a number of financial and nonfinancial key performance indicators (KPIs). These KPIs are selected as being important to the success of the Group in delivering its strategic objectives and include revenue, operating costs, EBITDA, cash and headcount amongst others. Progress is assessed by comparison with the Group’s strategy, goals and objectives, its budget for the year and against historical performance. Executive management use a range of further benchmarks and other KPIs as part of their planning and performance review processes.
The list of KPIs is reviewed and updated to ensure it remains important and relevant to the success of the Group.
The Group derives its revenue from the sale of speech-to-text solutions, through a variety of different deployment mechanisms, including SaaS, on-premise, and on-device. The directors expect revenue to continue to grow, driven by the Group’s leading position in accuracy, real-time offering, non-English languages, new speech applications and the product release of Flow. The Group intends to continue to investment in GPU infrastructure and product development including further advancement in accuracy and other feature sets within Speech Artificial Intelligence.
As of 31 December 2024, the Group is in a strong cash position, with minimal financial borrowing (finance leases), and is therefore confident that its growth can be funded from existing resources. This will allow the Group to remain a leading innovator in the Speech AI ecosystem.
This report was approved by the board and signed on its behalf by:
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CANTAB RESEARCH LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CANTAB RESEARCH LIMITED
We have audited the financial statements of Cantab Research Limited (the 'parent Company') and its subsidiaries (the 'Group') for the year ended 31 December 2024, which comprise the Consolidated Income Statement, the Consolidated Statement of Comprehensive Income, the Consolidated Statement of Financial Position, the Company Statement of Financial Position, the Consolidated Statement of Cash Flows, the Consolidated Statement of Changes in Equity, the Company Statement of Changes in Equity and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
In auditing the financial statements, we have concluded that the directors' use of the going concern basis of accounting in the preparation of the financial statements is appropriate.
Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually or collectively, may cast significant doubt on the Group's or the 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.
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CANTAB RESEARCH LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CANTAB RESEARCH LIMITED (CONTINUED)
The other information comprises the information included in the Annual Report other than the financial statements and our Auditor's Report thereon. The directors are responsible for the other information contained within the Annual Report. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon. Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the course of the audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
∙the information given in the Group 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 Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
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CANTAB RESEARCH LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CANTAB RESEARCH LIMITED (CONTINUED)
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditor's Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Group financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of irregularities, including fraud. The extent to which our procedures are capable of detecting irregularities, including fraud is detailed below:
Our approach to identifying and assessing the risks of material misstatement in respect of irregularities, including fraud and non-compliance with laws and regulations, was as follows:
∙the engagement partner ensured that the engagement team collectively had the appropriate competence, capabilities and skills to identify or recognise non-compliance with applicable laws and regulations;
∙we identified the laws and regulations applicable to the Group through discussions with directors and other management, and from our commercial knowledge and experience of the technology sector;
∙we focused on specific laws and regulations which we considered may have a direct material effect on the financial statements or the operations of the Group, including Financial Reporting Standard 102 (United Kingdom Generally Accepted Accounting Practice), the Companies Act 2006 and taxation legislation;
∙in addition, we considered provisions of other laws and regulations which do not have a direct effect on the financial statements but compliance with which might be fundamental to the Group's ability to operate or to avoid material penalties; and
∙we obtained an understanding of the entity’s policies and procedures on compliance with laws and regulations, including documentation of any instances of non-compliance.
We assessed the susceptibility of the Group’s financial statements to material misstatement, including obtaining an understanding of how fraud might occur, by:
∙making enquiries of management as to where they considered there was susceptibility to fraud, their knowledge of actual, suspected and alleged fraud; and
∙considering the internal controls in place to mitigate risks of fraud and non-compliance with laws and regulations.
To address the risk of fraud through management bias and override of controls, we;
∙performed analytical procedures to identify any unusual or unexpected relationships;
∙tested journal entries to identify unusual transactions;
∙assessed whether judgements and assumptions made in determining the accounting estimates set out in Note 3 were indicative of potential bias;
∙designed procedures to identify unexpected and unusual journal entries and performed testing to confirm the validity of such postings;
∙used Audit Data Analytics to review the client data for unusual trends and anomalies; and
∙performed audit work over the risk of management override of controls, including testing of journal entries and other adjustments for appropriateness, evaluating the business rationale of significant transactions outside the normal course of business and reviewing accounting estimates for bias.
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CANTAB RESEARCH LIMITED
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF CANTAB RESEARCH LIMITED (CONTINUED)
AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE FINANCIAL STATEMENTS (CONTINUED)
In response to the risk of irregularities and non-compliance with laws and regulations, we designed procedures which included, but were not limited to:
∙agreeing financial statement disclosures to underlying supporting documentation;
∙reading the minutes of meetings of those charged with governance; and
∙enquiring of management as to actual and potential litigation and claims.
There are inherent limitations in our audit procedures described above. The more removed that laws and regulations are from financial transactions, the less likely it is that we would become aware of non-compliance. Auditing standards also limit the audit procedures required to identify non-compliance with laws and regulations to enquiry of the directors and other management and the inspection of regulatory and legal correspondence, if any. Material misstatements that arise due to fraud can be harder to detect than those that arise from error as they may involve deliberate concealment or collusion.
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.
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an Auditor's Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditors
Salisbury House
Station Road
CB1 2LA
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CANTAB RESEARCH LIMITED
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2024
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CANTAB RESEARCH LIMITED
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2024
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CANTAB RESEARCH LIMITED
REGISTERED NUMBER: 05697423
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 38 form part of these financial statements.
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CANTAB RESEARCH LIMITED
REGISTERED NUMBER: 05697423
COMPANY STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2024
The financial statements were approved and authorised for issue by the board and were signed on its behalf by:
The notes on pages 17 to 38 form part of these financial statements.
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