thebigword, Capita TI, translate plus File 2019 Financials, Give Covid Update

British Translation Agencies Report 2019 Financial Results and Provide Update on Covid Impact

With nine months of what is proving to be a very uncertain 2020 now crossed off the calendars, many in the language industry are already looking forward to 2021 — and to putting the economic turbulence of the coronavirus pandemic behind them. 

A few, however, have only recently ticked a final 2019 item off their to-do list. In September and October 2020, three UK-based language service providers (LSPs) — thebigword, translate plus, and Capita TI — filed their financials for 2019, with mixed results.

thebigword

On October 7, 2020, thebigword published its financial results for the period from June 1, 2019 to December 31, 2019.

In late 2019, the translation and interpreting provider decided to switch from a May-to-April fiscal year to calendar-year reporting. As a result, their latest filing covers just seven months of business activity, from June 1, 2019 to December 31, 2019.

thebigword generated revenues of GBP 51m (USD 66.2m) in the seven months to the end of December 2019. EBITDA for the period stood at GBP 2m and operating profit was GBP 0.7m.

For reference, thebigword reported revenues of GBP 84.9m (USD 107.m) in the 12 months to May 31, 2019, as well as EBITDA of GBP 3.1m and operating profit of GBP 1.3m.

Compared to the year ended May 2019, thebigword said there was average monthly revenue growth of around 3%.

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Chairman Larry Gould also noted in the results that the company had observed “a temporary dip in profits [during the period] due to the investment associated with onboarding major new clients and also a significant and increased investment in technology.”

As thebigword seeks to ramp up the use of machine translation in its operations, Gould highlighted the likely impact on the business: “Over the next 12 months, we expect our machine translation solutions to cannibalise some of our revenue and this will lead to an overall reduction in revenue. However, due to a higher margin nature of machine translation, we expect to deliver a significant increase in profit,” he said.

Hence, while revenues are expected to decline in 2020, Gould said that thebigword was “setting itself up for revenue and EBITDA growth to resume in 2021.”

Another 2021 goal Gould referenced related to thebigword’s “all-in-one” platform WordSynk, which was launched in 2020. Gould said that 100% of services will be procured via WordSynk by 2021.

Finally, on the impact of the coronavirus pandemic, which broke out following the end of the company’s reporting period, Gould said that the Group has “continued to operate profitably.”

translate plus

On September 15, 2020, translate plus filed full-year 2019 results for the 12 months ended December 31, 2019.

In 2017, translate plus was acquired by cross-media production platform Prodigious, which is part of the Publicis Groupe, the third-largest advertising agency conglomerate.

As a standalone entity, translate plus generated GBP 11.1m (USD 14.4m) in 2019, a 9% drop from the previous year. Operating profit fell 14% to GBP 2.2m during the same period.

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In the strategic report accompanying the results, translate plus Managing Director Per Severinsen said the company attributes the decline in revenues to “revenue reduction of some of the larger key accounts who have had less language budget” and “the loss of smaller clients, as the focus has more and more been on servicing large and profit making key accounts.”

He added that “this has not been compensated by new business revenue during the year.”

On a geographical basis, Europe accounted for the majority of translate plus’ revenues (62%) in 2019, while the UK contributed a little more than one-fourth. Europe was the only location to have experienced revenue declines from 2018; all other geographies grew, with Asia seeing a more-than-fourfold increase.

Severinsen also noted that, during the year, the average total number of translate plus’ UK employees dropped by nearly a third, as most of the positions were relocated to Bulgaria “for cost reduction reasons.”

On the topic of Covid-19, Severinsen said the company is “confident that the impact on our trading activities is manageable.” He also observed that, while the pandemic had not impacted 2019 financial statements, “it is difficult to reasonably estimate the evolution of advertising and marketing spend in 2020 at the time of this report.” Be that as it may, translate plus is still managing to secure new client contracts, “despite the circumstances.”

With GBP 11.1m in revenues in 2019, translate plus is the only fully-dedicated language services arm within the Group. However, former translate plus CEO Robert Timms told Slator in 2019 that adaptation, translation, and transcreation services account for as much as 80% of Prodigious revenues. If this still holds true, Prodigious’ language-related revenues could be as high as ca. USD 250m.

Capita TI

On September 23, 2020, Capita Translation and Interpreting (Capita TI) filed financial results for the 12 months to December 31, 2019.

The company generated revenues of GBP 15.9m (USD 20.6m) in 2019, down from GBP 16.8 the year prior. Operating profit also decreased in 2019 to GBP 0.8m.

Capita TI’s revenues have remained roughly flat since 2017, after the LSP exited a large Ministry of Justice (MoJ) contract that was later awarded to local rival thebigword.

Capita TI is the translation and interpreting division of Capita plc, a large UK-based outsourcing company with total revenues of around USD 5bn. Its translation and interpreting business is housed within Capita plc’s Specialist Services division along with eight others.

Capita TI’s financial results stated that both Capita plc (the Group) and Capita TI (the Company) “have faced challenges and uncertainties due to the Covid-19 pandemic.” Nonetheless, the company expects “revenue over the rest of the year [2020] to remain resilient, given the diverse client base.”

In February 2020, UK media outlets broke the news that Capita plc was set to undertake a transformational reorganization involving the planned sale of Specialist Services, including Capita TI (see Slator’s coverage here).

As reported at the time, Capita plc’s preference is to sell all nine Specialist Services businesses to the same bidder for at least GBP 200m (USD 257.5m), but will also consider a breakup.

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Capita plc’s 2019 financial report described Specialist Services as regrouping “those businesses which are not within Capita’s growth markets and/or have little in common with our other divisions.” Specialist Services contributed 21% to the Group’s top line in 2019.

The planned sale is designed to help Capita plc refocus its core business on higher-margin digital services and move away from the UK’s blue-collar outsourcing sector, which has faced mounting financial pressure in recent years.