4 September 2024
CAB
Payments Holdings plc and its subsidiaries
("CAB
Payments", the "Group" or the "Company")
Interim results for the six
months ended 30 June 2024
Resilient business model,
focus now on strategic execution
CAB Payments, a specialist in
business-to-business cross-border payments and foreign exchange in
hard-to-reach markets, announces its interim results for the six
months ended 30 June 2024 and updated strategy.
Neeraj Kapur, Group CEO of CAB Payments
commented:
"Our H1 results were resilient
despite the exceptional prior year as set out in our trading update
in July. Our outlook remains unchanged from our previous update and
there was encouraging trading at the beginning of H2. We expect our
Gross Income to be marginally below last year whilst we exhibit
good growth across a broader range of currency corridors. I am
particularly pleased with our recently announced strategic
partnership with Visa which will significantly increase our payment
reach and give us a more scalable solution to deliver a higher
volume of payments.
"Importantly, we continued to
deliver on our purpose, unlocking the prosperity of the global
communities we serve by moving money when and where it's needed.
Over the last twelve months we delivered approximately £3 billion
of development aid and £8.5 billion of liquidity into low and
middle-income countries.
"Today I am delighted to announce an
updated, more execution focused strategy for the Group which builds
upon its existing solid foundations and business model. We have
already attracted some new world class talent from within the
industry to help drive the business forward and who share our
vision for the next phase of growth. We will be focusing on four
areas: our network, our clients, our platform while continuing to
invest and innovate. We will deliver a more diversified,
sustainably growing business with strong operating
leverage.
"I look forward to updating you on
our strategic progress as we continue to execute our strategy over
the medium term."
A
renewed focus on strategic execution:
· Delivering a diversified business with sustainable growth,
through four key pillars:
1. Network -
Strengthen the breadth and depth of our network
2. Clients - Deepen
existing relationships, expand client base
3. Platform - Leverage
the banking licence to accelerate FX and payment volume
growth
4. Invest &
innovate - Disciplined capital allocation to drive growth via
technology and balance sheet management
· Updated strategy driven by new senior leadership hires
including Global Head of Sales, Head of Network, Head of Payments,
Head of European Business Development and Chief Operating Officer,
all with significant experience and track-record within the
industry
H1
2024 financial highlights:
· Resilient performance given elevated prior year performance,
a lack of equivalent tailwinds in the current year and lower flows
from International Developmental Organisations
· Total Volume levels up 4% to £17.6 billion (H1 2023: £17.0
billion) - market-wide payment flows are down approximately 5%
year-on-year in the Group's core Sub-Saharan Africa market and
approximately 10% globally, based on the Company's analysis of
market data
· Gross Income down 22% to £55.7 million (H1 2023: £71.8
million)
o Normalised performance - excluding the impact of previously
identified dislocations in Nigerian Naira (NGN) and Central Bank
interventions in Central African Franc (XAF) and West African Franc
(XOF) - shows 11% growth in Gross Income and 12% growth in
Transactional Income
· Adjusted EBITDA of £18.7 million (H1 2023: £40.0 million) and
Adjusted EBITDA margin of 34% (H1 2023: 56%) resulting from lower
revenue and higher operating expenses (excluding D&A and
strategic restructuring costs) which increased by approximately
£5.5 million
· Adjusted PAT of £11.0 million (H1 2023: £28.8 million) and
Adjusted EPS of 4.3 pence (H1 2023: 11.3 pence)
· Core
Capital Expenditure as a proportion of Total Gross Income increased
to 12% (H1 2022: 3%) as the business continued to invest for
growth
· Operating free cash flow of £9.4 million (H1 2023: £37.6
million) due to lower EBITDA performance compounded by higher
Capital Expenditure in the period
· Outlook:
o Outlook unchanged from previous update in July: full-year
Gross Income expected to be marginally below prior year with
increased operating leverage in the second half, encouraging
performance in July and August
o Expect to incur approximately £15 million of Core Capital
Expenditure for 2024
Operating and commercial highlights:
· New
collaboration with Visa to integrate CAB's offering with Visa
Direct giving the capability to deliver lower-value, higher volume
payments in a cost-effective manner, providing reach to more than
8.5bn end-points across more than 190 countries
· Authorisation from the relevant authorities to open a
representative office in the USA remains on-track to occur in the
second half
· Successfully secured a payment service provider licence with
De Nederlandsche Bank N.V. (DNB) allowing CAB to provide services
across the European Economic Area
· 35
new clients onboarded and 526 active clients in total
Board change:
· Mario Shiliashki, independent non-executive director of the
Group, has resigned from the board to focus on his new role as
Chief Executive Officer of myPOS, a London-based payment technology
business. A recruitment process is underway to find a suitable
replacement with the valuable experience and capabilities that
Mario brought to the Group
Analyst and Institutional Investor Webcast:
A presentation webcast and live
Q&A conference call for analysts and institutional investors
will take place on 4th September 2024 at 9.30 am UK
time, a copy of the presentation will be made available on the
Company's website at https://www.cabpayments.com/investors.
The presentation will be hosted by
Neeraj Kapur, Group CEO and Richard Hallett, Group CFO
To register for the webcast, please
go to:
https://secure.emincote.com/client/cab/2024interims
To register for the conference call,
please go to:
https://secure.emincote.com/client/cab/2024interims/vip_connect
Retail Investor Webcast:
CAB Payments will also host a
presentation for retail shareholders and prospective shareholders.
This will be hosted via Investor Meet Company on 4th
September 2024 at 2.00pm UK Time.
Questions can be submitted via the
platform any time during the live presentation.
Investors can sign up to Investor
Meet Company for free and add to meet CAB Payments Holdings plc
via:
https://www.investormeetcompany.com/cab-payments-holdings-plc/register-investor
Investors who already follow CAB
Payments Holdings plc on the Investor Meet Company platform will
automatically be invited.
Selected Financial information and KPIs for Continued
Operations:
|
|
|
|
|
|
|
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Total income by product Type (£m)
|
|
Six months ended 30
June
|
YoY
|
YoY
Normalised(1)
|
|
|
|
|
2024
|
2023
|
%
|
%
|
|
Wholesale FX
|
|
22.9
|
37.8
|
(39)
|
24
|
|
Payments
|
|
14.1
|
16.8
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(16)
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0
|
|
of which
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|
|
|
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Payments FX
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|
7.0
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10.4
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(33)
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(14)
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Other Payments
|
|
7.1
|
6.4
|
11
|
12
|
|
Total transactional income
|
|
37.0
|
54.6
|
(32)
|
12
|
|
NII from Cash Management
|
|
16.2
|
15.8
|
2
|
2
|
|
Other banking services
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|
2.5
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1.4
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87
|
87
|
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Total Gross Income
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|
55.7
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71.8
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(22)
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11
|
|
|
|
|
|
|
|
|
Memo:
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|
|
|
|
|
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Wholesale FX & Payments FX
Income
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29.8
|
48.2
|
(38)
|
14
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|
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|
|
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Note:
(1) Excludes the Gross Income effect of the NGN, XAF and XOF
Corridors
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Selected Financial Information (£m) -
Reported
|
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Six months ended 30
June
|
YoY
|
|
|
|
|
|
|
2024
|
2023
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%
|
|
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Profit before tax
|
|
13.7
|
23.8
|
(43)
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|
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Profit after tax
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|
10.2
|
14.8
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(31)
|
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Earnings per share
(pence)
|
|
4.0
|
6.1
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(34)
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|
|
|
|
|
|
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|
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Selected Financial Information (£m) -
Adjusted
|
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Six months ended 30
June
|
YoY
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|
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|
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2024
|
2023
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%
|
|
Adjusted EBITDA
|
|
18.7
|
40.0
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(53)
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Adjusted EBITDA Margin
(%)
|
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33.5%
|
55.7%
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|
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|
|
|
|
|
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Depreciation &
Amortisation
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|
3.8
|
3.0
|
25
|
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Adjusted Profit Before Tax
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14.7
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36.9
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(60)
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Adjusted Profit After Tax
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11.0
|
28.8
|
(62)
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Adjusted Earnings per Share
(pence)
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4.3
|
11.3
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(62)
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Volumes & Take Rates - Wholesale FX and Payment
FX
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Volume
(£bn)
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Take Rate
(%)
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|
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H1
2024
|
H1
2023
|
H1 2024
|
H1 2023
|
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Emerging Markets
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6.8
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7.0
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0.33%
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0.61%
|
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Developed Markets
|
|
10.8
|
10.0
|
0.07%
|
0.06%
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Total
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17.6
|
17.0
|
0.17%
|
0.28%
|
|
|
|
|
|
|
|
|
Memo:
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|
|
|
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|
Emerging Markets (ex NGN, XAF,
XOF)
|
4.4
|
4.0
|
0.33%
|
0.34%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other key KPIs
|
|
|
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|
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|
|
Six months ended 30
June
|
YoY
|
|
|
|
2024
|
2023
|
%
|
|
|
|
|
|
|
|
Capital & Investment
|
|
|
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|
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Core Capex (£m)
|
|
6.8
|
2.0
|
238
|
|
Capital intensity (% of Total Gross
Income)
|
12%
|
3%
|
|
|
Operating Free Cash Flow
(£m)
|
|
9.4
|
37.6
|
(75)
|
|
Operating FCF Conversion
(%)
|
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50%
|
94%
|
|
|
Total Capital (£m)
|
|
113.4
|
93.0
|
22
|
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Available Capital for growth
(£m)
|
|
24.9
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38.7
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(36)
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CET1 Ratio (%)
|
|
22.5%
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29.9%
|
|
|
|
|
|
|
|
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Income
|
|
|
|
|
|
Wholesale FX & Payments
FX
|
|
29.8
|
48.2
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(38)
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|
Wholesale FX & Payments
FX
|
|
22.0
|
19.4
|
14
|
(ex NGN, XAF, XOF) (£m)
|
|
|
|
|
|
|
|
|
|
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Income by client type
|
|
|
|
|
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EMFI (£m)
|
|
29.4
|
29.4
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(0)
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|
IDO (£m)
|
|
8.3
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17.7
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(53)
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Major Market Banks (£m)
|
|
1.0
|
3.1
|
(66)
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NBFI and Fintech (£m)
|
|
17.0
|
21.6
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(21)
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About CAB Payments:
CAB Payments Holdings PLC is the
holding company for Crown Agents Bank (CAB), a UK-regulated FX and
payments service provider, specialising in global FX and
cross-border payments for hard-to-reach markets.
Unlike traditional banks, CAB's
unrivalled network, technology, and expertise means it can move
money in the most complex situations, to the most challenging
markets, for organisations that expect the most.
Trusted by Blue Chip organisations
across the globe, CAB connects its clients to underserved
geographies rapidly, consistently, and equitably so money can move
efficiently to where it is needed. Offering a single API for all FX
and cross-border payments, covering 140+ markets and currencies
across 700+ currency pairs. Its extensive global network of
partners allows CAB to offer competitive prices and fast, reliable
settlement.
CAB is one of the first banks to
achieve B Corporation™ status. The bank was awarded the Gold
Sustainability Rating by EcoVadis in 2022 & 2023 - ranked
within the top 94% of 94,000 companies assessed across 160
countries and over 200+ industries.
For
further information, please contact:
CAB Payments Holdings plc
Gaurav Patel, Head of Investor
Relations
ir@cabpayments.com
www.cabpayments.com
|
|
|
|
FTI
Consulting
(Public Relations Adviser to CAB Payments)
Ed Bridges -
Edward.Bridges@fticonsulting.com
Katie Bell -
Katherine.Bell@fticonsulting.com
|
+44 (0) 7768 216 607
+44 (0) 7976 870
961
|
Chief Executive Officer's Review
This is my first set of results
since being confirmed as Group CEO of Crown Agents Bank ("CAB") and
its listed holding company, CAB Payments Holdings plc (''CAB
Payments'' or ''the Group''). Since joining the business, I have
spent time meeting our people, getting to know our increasingly
diversified client base, and forming my first impressions of the
operations and business model. I've found that CAB Payments is an
exciting group with a differentiated business model and a
highly-rated and valued purpose and proposition: through our
network, sustainably unlocking the prosperity of the global
communities we serve by moving money when and where it's
needed.
The Group has a structural part to
play in ensuring liquidity is consistently and reliably being
delivered to emerging markets, improving financial infrastructure
and stimulating economic development. The statistics tell this
story: Over the last twelve months, our network moved approximately
£3.0 billion of development aid flows (H1 2024: £1.4 billion) and
£8.5 billion of flows into low and lower-middle income countries
(H1 2024: £4.3 billion), all of which are critical to promoting
social stability and economic growth in the core geographies in
which we operate. We are proud that CAB is one of the few
UK-regulated banks to achieve Certified B Corporation status. This
certification recognises our commitment to advancing sustainability
across all aspects of our operations, with a particular focus on
environmental impact, climate change, and responsible business
practices. It reflects our ongoing efforts to improve and align
with the highest standards of ethical conduct.
My aim is to make sure the Group
takes advantage of the significant growth opportunities available
to it through careful and judicious investment in our business,
delivering on our purpose and driving value for all of our
stakeholders.
Below, I outline four strategic
pillars that will drive the Group's future growth, at the heart of
which is creating an increasingly diversified - and therefore
sustainable - revenue mix. We have already begun work on some of
these, having identified levers we can pull to improve operational
performance in the second half of this financial year.
H1 2024 performance
summary
Whilst my position as Group CEO
was only confirmed in June 2024, the Group has delivered a solid
set of results for this half year. This performance should be
viewed against the backdrop of a particularly strong first half of
the prior year, which included material elevated income from
trading in the Nigerian Naira (NGN), as previously
disclosed.
In October 2023, the Group also
disclosed that the business had experienced a compression in
revenues in the second half due to central bank interventions in
some of our core markets in particular the Central African Franc
(XAF) and West African Franc (XOF). Therefore, we believe that 2024
is the first year since 2020 where the Group does not expect to
benefit from any significant corridor-related tailwinds and this is
evident in the first half performance.
It is also important to note that
we believe there to have been an approximate 10% year-on-year drop
in global cross-border flows and an approximate 5% drop in flows
into Africa when comparing H1 2024 to H1 2023. We see this market
contraction as short-term owing to a variety of factors, not least
a strong dollar and global political volatility. However, we
believe the underlying structural demand for FX flows and payments
will continue to grow over the long-term in the markets in which we
operate while also continuing to grow our market share as we did in
the period.
There were a couple of
industry-wide incidents in July, namely the global payments issue
that affected the Bank of England's CHAPS service and the
CrowdStrike update that caused widespread problems with Microsoft
Windows. Both events had minimal impact on the Group, our
ability to continue trading and most importantly our clients. We
detected the CrowdStrike incident early via our observability
technology and managed it through our established incident
management process working closely with internal teams and affected
vendors. Whilst the impacts were minimal in line with our
established practises, we are assessing our response procedures to
incorporate any internal and external lessons learned from the
global outage.
Wholesale FX and Payments FX - good underlying growth and
improving corridor diversity
Excluding the effects of NGN, XAF
and XOF, our Wholesale FX and Payments FX revenue grew 14%, which
is pleasing as the business leverages its well-established network
to facilitate best execution for our clients to become a provider
of choice. Our top 5 currency corridors accounted for just 32% of
Gross Income in H1 2024 versus 49% in H1 2023. A key priority is to
reduce the Group's level of currency concentration going forward,
as we build and grow a more diversified business fit to deliver
growth through the market cycle and navigate changes across the
markets in which we operate.
On a reported basis, Gross Income
from the core Wholesale FX and Payments FX business declined year
on year by 38% from £48.2 million in H1 2023 to £29.8 million in H1
2024. Total volumes were up 4% versus the same period last year
despite decreased activity from the three identified corridors
which have persisted into 2024 and the broader decline in the
payments market. Take rates declined from a blended 28 bps in H1
2023 to 17 bps in H1 2024 as a result of the unusually high
Nigerian Naira take rates in the prior year period. This was as
expected, as flagged in the Group's IPO materials.
Further, International Development
Organisations (''IDOs''), who traditionally tend to transact more
in the second half of the financial year, also demonstrated below
trend volumes in the first half owing to changes in the political
landscape among major donor governments (principally the US and
Europe), that have seen aid budgets cut and those funds diverted to
support domestic policies.
In the period, we continued to
expand our client base through onboarding 35 new clients (H1 2023:
41) while strengthening our network, increasing the number of
partners to 237 (H1 2023: 205) and liquidity providers to 121 (H1
2023: 112). This speaks to the strength of the Group's proposition
and its ability to deliver for diverse client needs. In the first
half we have improved the client onboarding process, resulting in a
shorter time frame between signing a client and a ramp up in their
revenue-generating activity. Looking ahead, there is more to do to
optimise the way our sales and network teams operate.
Banking income remains robust
During 2023, the Group earned
strong net interest income on its balance sheet due to higher swap
curves and an increased spread, as a result of the lower rates paid
on deposit liabilities. At the beginning of the year, the Group
guided that it expected this to decline for 2024. However, changes
in expectations regarding the number of rate cuts in both the US
and UK, along with balance sheet expansion, have resulted in net
interest income from cash management increasing by 2% to £16.2m (H1
2023: £15.8m).
The Group expects further growth
from its trade finance and liquidity services business as we take
steps to expand credit limits to a small, highly selective group of
clients, including central banks whose risk profiles we understand
well. These credit lines will be used by clients specifically to
facilitate their FX and Payments needs, primarily driving
incremental transactional income as well as Net Interest Income.
Given our understanding on how frequently these facilities cycle on
an annual basis, in the Group's experience, for each £1 we increase
trade finance balances, we create approximately £4 in additional FX
volume in a given year which presents an exciting incremental
growth opportunity for the Group.
Adjusted EBITDA margin compressed reflecting lower revenue
and continued expansion
My initial assessment indicates
that the Group's lean operating structure and relatively fixed
operational cost base allows for a greater level of flexibility.
The business prudently continued to invest in its long-term growth
plans through the volatility experienced in the second half of the
last financial year and the first half of the current one.
Inevitably, this has compressed adjusted EBITDA margins from 56% in
H1 2023 to 33% in H1 2024. It is also important to emphasise that
run-rate costs have increased as a result of strategic investments
such as expanding the EU office, set up costs for the US office,
significant front-loaded costs associated with our new consolidated
headquarters in London and expansion of our workforce. We have also
made some efficiency gains as I have reduced the size of the
executive team and delayered the organisation in various places, we
continue to monitor costs carefully and to make sure we are adding
in the right areas. We are expecting widening operating margins in
the second half as we deliver increased revenue, and with costs
remaining broadly flat to H1 resulting in an overall blended
Adjusted EBITDA margin in the high 30s for the full-year.
Continuing on our path to invest for growth
Our investment plans remain
unchanged as the business invests in people, technology and the
network. In the first half the Group spent £6.8m (H1 2023: £2.0m)
of "core" or intangible capex, which equated to 12% (H1 2023:3%) of
Gross Income. This was higher than our usual run-rate given a
renewed focus on product development, such as expanding our global
payments reach, enhanced straight through processing and adopting a
new flexible FX settlement system. We also spent another £2.2m (H1
2023: £0.2m) on fixed asset capex which was largely due to the
fit-out of our new London Bridge Headquarters, which has a higher
capacity than our previous offices and will attract a wider pool of
talent. We also saw our underlying costs excluding depreciation and
amortisation increase by 16% largely due to targeted expansion in
our workforce to better serve our growing customer base and
widening of our geographic footprint.
We are working on a broad pipeline
of exciting projects which will deliver tangible benefits over the
medium to long-term, which will further diversify the Group's
revenue mix and for which we are incurring cost today. Highlights
include:
· the
development of new products, such as FX forwards and
swaps;
· investing in data and analytics platforms to understand
client trends to better develop future products;
· developing innovative ways to improve connectivity to new
payment channels; and
· providing clients with 24-hour, round-the-world
trading.
These are complemented with
investments in our people. We are expanding the salesforce and
network team to facilitate the onboarding of new clients,
increasing our share of the wallet with existing clients and
increasing the number of correspondent banks with whom we have
relationships. We are attracting a high calibre of senior staff
from across the industry, due to their belief in CAB Payment's
purpose and our potential.
Secondly, there is a burgeoning
need to be closer to our key customers on the ground, in their
local markets. The Group will be investing more in local
capabilities in order to better service customers, broaden the
network and build on our relationships with local central banks and
regulators.
Finally, our sharp focus on growth
will require us to refresh and optimise the skillsets of our
people. We are creating a corporate ethos that is even more
customer centric by leveraging data and analytics, creating
multi-product sales disciplines and encouraging a collaborative,
execution and performance driven culture. We have made significant
leadership changes in the business which has involved the
recruitment of external talent with the expertise to drive our
business and culture forward, and deliver our full potential.
We will continue to keep the
market updated as we progress on these exciting and tangible
initiatives.
Strategic assessment - the fundamentals are strong, the
growth platform is there: diversification and improved execution
are key
Prior to being confirmed as Group
CEO, I had the benefit of time to thoroughly assess the
organisation and its strategic positioning. That review has
re-confirmed that CAB Payments has a differentiated position in the
specialist FX and payments market. It has unparalleled access to
markets across Africa, deep rooted relationships with global IDO's
and Emerging Market Financial Institutions (''EMFI'') clients (as
well as governments and central banks), underpinned by strong
trading execution capabilities. When combined with being a
regulated banking institution, the Group is a standout FX and
payments service provider versus its peers in the B2B
space.
In short, the foundations of a
large-scale, high-quality business with the capacity for strong
growth in revenues and margins are all there. However, there is
work to do to evolve the Group into a less volatile,
highly-diversified business which can demonstrate sustainable
growth. This will come through improved execution of our strategy.
Over the medium term, the management team will focus on the
execution of four strategic pillars that deliver a diversified
business that is sustainable and growing profitably,
namely:
1. Network -
strengthen the breadth and depth of our network;
2. Clients - deepen
existing relationships, expand client base;
3. Platform - leverage
the banking licence to accelerate FX and payment volume growth;
and
4. Invest and innovate
- disciplined capital management to drive value for all
stakeholders.
1. Network - Strengthen the breadth and depth of our
network
The Group's network is core to its
business and allows advanced execution and competitive pricing for
our clients. Thanks to our UK banking licence, the Group has
exceptionally strong relationships with local liquidity providers,
banks and central banks. As at H1 2024, the Group had 237 payment
partners (H1 2023: 205) and 121 liquidity providers (H1 2023: 112)
which was growth of 16% and 8% respectively on the prior period. It
is essential that this growth and quality in our network
accelerates.
Our existing network reflects our
focus to date on our transacting business in certain corridors. In
turn, this has left the Group overly-concentrated and therefore
subject to higher risk of certain dislocations which were out of
our control. This also meant that the Group has historically been
reliant on fewer providers for its liquidity.
Now, our focus is to expand the
network with additional on-the-ground presence in new and existing
geographies. We will continue to develop the network across African
markets, to maintain our leadership position, but will also drive
senior relationships in new regions such as LATAM and the Middle
East. A process to hire senior personnel in strategic areas is
underway to begin this expansion effort. We are confident that this
will provide an increasingly diverse client base with the
liquidity, execution and pricing they need. We will take a more
"de-centralised" approach to sales which allows us to be more
culturally aligned to our customers and form deeper relationships
with physical presence on the ground. Central banks are key to this
process in terms of opening up liquidity and channels in specified
regions.
2. Clients - Drive growth in new relationships and
deepen our current relationships across our global footprint,
better understanding and servicing our clients'
needs
Today, we have a high-quality
client base across major market banks, central banks, EMFIs, IDOs
and Non-Bank Financial Institutions (NBFI). However, revenue from
these clients is concentrated towards the top 25%, leaving a
significant tail of low-transacting clients with significant
untapped potential. We are therefore focused on better
understanding their needs and expanding the monetisation of those
relationships. To complement this growth area, we are developing
new client relationships in our target geographies, using our
newly-acquired EU licence and our upcoming US licence as a
springboard.
There are three material actions
we are taking to achieve this:
a. building our senior
sales leadership in the UK, EU and US;
b. investing in the
expansion of the overall sales force, covering multiple client
types and geographies; and
c. a new sales
incentivisation scheme which aligns individual performance against
monetary targets and our overall strategic aims.
Our intention is to at least
double the size of the salesforce over the next three years. Our
focus will be on senior sales personnel with a track record in our
segment for driving relationships at the decision-maker level
amongst a diversified target client base. A recruitment drive is
already in place and we will expand this with the organic cadence
of the business. A revised sales incentivisation scheme will drive
better individual performance and alignment to the overall Group
plans. This is a meaningful change and will drive the right
behaviours and support sustainable top line growth for the
future.
3. Platform - Leverage the banking licence to
accelerate FX and payments volume growth
The Group's main subsidiary, CAB,
is a PRA regulated UK banking institution which allows it to
operate in ways that many other payment companies cannot. For
example, its rigorous operational and compliance-based operating
model has been a strong enabler of our network and its ability to
open Nostro and Vostro accounts with local institutions. It is also
able to effectively pool capital to generate effective returns.
This is underpinned by the strong PRA regulatory framework in which
we operate, giving our clients confidence that they can trust and
partner with us safely.
Our banking model allows us to
offer short-term liquidity facilities and trade finance to clients.
To date, this has operated under a limited risk appetite framework.
By offering multiple services to clients where we can assess their
immediate product needs, we are able to foster even better client
loyalty and increase our share of wallet, especially to clients for
whom price is a significant factor.
In May 2024 we raised the total
internal risk appetite of our trade finance lines from £100 million
to £200 million and our liquidity as a service lines from £35
million to £70 million. We have started to offer these increased
lines to our existing clients that exhibit a strong credit profile
and will grow this as our operations grow. Each of these actions
will drive a multiplier effect on transaction (Wholesale FX and
Payments) volumes which is key driver of growth in our
business.
4. Invest and innovate - Disciplined capital
allocation
We have ambitious plans to grow
the business. However, due to our banking structure, we need to set
aside significant capital to underpin our regulatory capital
requirements which increase with growth in revenue and balance
sheet activities. This leaves a small proportion available for
capital investment. Our highly cash-generative business model will
finance these plans in the short and medium term. Looking to
the medium-term, capital deployment will be essential to maximise
the growth opportunity ahead of us. We see this as largely organic,
but could also include pursuing select inorganic opportunities that
fit our strategic priorities. If we believe we cannot derive market
leading investment returns or there is significant surplus capital
to our anticipated regulatory capital requirements then we will
consider returning capital to shareholders, however we do not see
there being sufficient spare capital in the immediate future to
pursue this strategy without sacrificing growth.
Our investment focus will be
largely centred on our already strong technology estate both on the
client-facing front-end as well as operational resilience and
automation. On the front-end we are supporting the launch of new
products such as FX derivatives, next generation payment rails and
improving workflow through straight through processing. We have
already hired a new Head of Payments to drive our payments products
forward and provide innovative solutions to our clients. On
the operational side, we are making better use of AI to improve
efficiencies in AML / KYC screening, transaction processing
resiliency and updating our core payments APIs. This will allow us
to process significantly more volume and lower transactions
costs.
Outcome: Diversify, reduce concentration and drive
sustainable growth
We believe that effectively
executing against the above four strategic pillars will deliver
strong fundamentals that will grow attractively year-on-year. Prior
to my arrival, business growth was predicated on strong margins in
select markets, notably those where positive dislocations were
present. We are now shifting to operational execution where driving
sales, expanding clients, expanding the network and geographic
presence will ultimately drive increased volumes through our
platform and truly offer 500+ currency pairs across 140+
countries.
These steps will lower
concentration risk and will set a path for less volatile revenue
generation. Driven by growth in revenue from other payments and
currency corridors, as well as the reduced contribution from the
three identified West African currencies, this concentration
dropped significantly in the first half of 2024, a trend we want to
continue to develop a more predictable and sustainable
business.
We will be assessing the quality
of delivery of our strategy against a number of strategic KPIs,
these include: 1) growing the size of our network of partners and
liquidity providers, 2) growing the number of clients, 3) growing
the revenue generated per client, 4) reducing the proportion of
Gross Income driven by the Top 5 currency corridors, 5) increasing
in the proportion of revenue driven by LATAM / Middle East and APAC
regions and 6) increasing the amount of capital available for
use.
Outlook
I am a strong believer in the
purpose driven growth prospects for the Group based on the global
market opportunity before us. The emerging markets retain strong
economic growth dynamics that are compelling for well-entrenched
infrastructure players such as CAB Payments.
I am confident that the focused
execution of our strategic pillars above will allow the Group to
deliver sustainable and attractive growth year-on-year, while
improving operational leverage to drive higher adjusted EBITDA
margins over time. Gross Income growth will continue to be driven
by our core transactions business (Wholesale FX & Payments) and
supplemented by banking income. We will provide more details on our
medium-term outlook at the time of the full-year results in March
2025.
As for 2024, the business is now
on a more sustainable trajectory with 2023 proving to have been an
exceptional year. The Group also believes that in 2024, there are
no significant tailwinds in its major corridors. As a result, we
expect Total Gross Income for 2024 to be marginally down compared
to last year, while continuing to demonstrate double-digit growth
in its underlying transactions business (beyond NGN, XAF and XOF).
I look forward to continuing to
engage with all our stakeholders as we deliver on our purpose and
execute on our strategic and operational plans.
Key Interim Financial Measures:
£m
|
Six months ended 30
June
|
|
YoY
|
|
2024
|
2023
|
|
%
|
Gross Income
|
55.7
|
71.8
|
|
(22)
|
Profit After Tax
|
10.2
|
14.6
|
|
(30)
|
Adjusted EBITDA
1
|
18.7
|
40.0
|
|
(53)
|
Adjusted EBITDA margin
(%)1
|
33.5%
|
55.7%
|
|
(40)
|
Operating Free Cashflow
1
|
9.4
|
37.6
|
|
(75)
|
Operating Free Cashflow Conversion
(%)1
|
50%
|
94%
|
|
(47)
|
Earnings Per Share
(pence)
|
4.0p
|
6.1p
|
|
(33)
|
Adjusted Earnings Per Share
(pence) 1
|
4.3p
|
11.3p
|
|
(64)
|
Overall
Gross income for the six months
ended 30 June 2024 was £55.7 million, this compares to £71.8m in
2023 with the reduction period-on-period primarily due to lower NGN
income, as the currency experienced a take rate dislocation through
the majority of the first half of 2023 which benefitted
income.
Profit After Tax of £10.2 million
has reduced from £14.6 million in H1 2023, because of the reduced
NGN income partially offset by lower non-recurring expenses, which
in 2023 represented the costs associated with the initial public
offering (''IPO'').
The business is strategically
committed to ongoing investment, as demonstrated in the operational
and capital expenditures for the first half of 2024. This
investment supported the expansion of the company's international
presence, with new hires in the Netherlands following the EU
licence approval, and in North America to facilitate the US licence
application process. Additionally, the company established a new
headquarters in London. The UK headcount increased, particularly in
sales and control functions. As a result of these investments and
lower income, the adjusted EBITDA decreased from £40.0 million to
£18.7 million, and operating free cash flow fell from £37.6 million
to £9.4 million, period-on-period.
Income
Further Analysis of Gross Income
£m
|
Six months ended 30
June
|
YoY
|
YoY (Exc. NGN, XAF
XOF)
|
|
2024
|
2023
|
%
|
%
|
Wholesale FX
|
22.9
|
37.8
|
(39)
|
24
|
Payments
|
14.1
|
16.8
|
(16)
|
0
|
of which
|
|
|
|
|
Payments FX
|
7.0
|
10.4
|
(33)
|
(14)
|
Other Payments
|
7.1
|
6.4
|
11
|
12
|
Banking Services:
|
18.7
|
17.2
|
9
|
9
|
of which
|
|
|
|
|
NII
|
16.2
|
15.8
|
2
|
2
|
Other banking services
|
2.5
|
1.4
|
87
|
87
|
Total Gross Income
|
55.7
|
71.8
|
(22)
|
11
|
Wholesale FX and Payments
FX
The combined income from Wholesale
FX and Payments FX decreased by 38% between the first half of 2023
and the first half of 2024. This decline was due to challenges in
the three largest corridors: NGN experienced margin dislocation in
the first half of 2023, while XOF and XAF faced structural market
changes along with competitive pressures in the second half of 2023
which continued into the first half of 2024. This led to reduced
take rates and volumes. However, excluding the impacts from XOF,
XAF, and NGN, the underlying combined revenue from Wholesale FX and
Payments FX increased by 14%, highlighting the robustness of our
business model.
Historically, our income has been
heavily concentrated in the top currency corridors, with over c.
40% generated from NGN, XOF, and XAF alone in the first half of
2023. In 2024, we have diversified our income sources. The business
is striving to reduce volatility by expanding our client base,
increasing the number of payment partners, and broadening the range
of currencies we offer.
Total volumes increased by 4%
compared to the previous period, driven primarily by growth in
Developed Market currencies due to our enhanced collaboration with
Emerging Markets Financial Institutions (EMFIs). Despite
challenging trading conditions in the first half of 2024, including
structural changes and central bank interventions that affected our
ability to source competitively priced currency, Emerging Markets
volumes remained broadly flat and excluding NGN, XOF and XAF
increased by 10%. Market analysis indicates that IDOs underutilized
their budgets by as much as 18% in the first half of
2024.
Take rates decreased from 28 basis
points (bps) to 17 bps, driven by a significant reduction in
Emerging Markets take rates from 61 bps to 33 bps, primarily due to
the NGN take rate dislocation in the first half of 2023. Excluding
NGN, XOF and XAF, Emerging Market take rates resiliently remained
broadly flat period on period at 33bps.
Wholesale FX and Payment FX Performance by
Market
Six months ended 30 June:
|
Income
(£m)
|
Volume
(£bn)
|
Take Rate
(%)
|
2024
|
2023
|
2024
|
2023
|
2024
|
2023
|
Developed Markets
|
7.5
|
5.8
|
10.8
|
10.0
|
0.07
|
0.06
|
Emerging Markets
|
22.3
|
42.4
|
6.8
|
7.0
|
0.33
|
0.61
|
Total Markets
|
29.8
|
48.2
|
17.6
|
17
|
0.17
|
0.28
|
Historically, income has been
higher in the second half of each year, with the exception of 2023,
primarily attributable to the headwinds experienced across the key
currencies of NGN, XOF and XAF. In 2024, we expect revenues to
return to the historic 40%/60% H1/H2 seasonality trend, with
second-half uplifts driven by seasonality of payment flows from the
existing client base and strategic initiatives put in place during
Q2.
Other Payments
Other Payments represents income
from our correspondent banking, Pension payments and final mile
mobile payments. In 2024, income from these products has increased
by £0.7m or 11% to £7.1 million from £6.4 million, largely
reflecting an increased number of EMFI clients utilising our
correspondent banking capabilities.
Banking Services
Other Banking Services income,
which primarily reflects Net Interest Income from cash management
activities and Trade Finance income, for the six months ended 30
June 2024 was £18.7 million, up from £17.2 million for the prior
period whilst absorbing an increase of £0.2m in interest expense as
a result of recognising the IFRS16 lease liability for the new
London headquarters.
Entering 2024, there was an
expectation that the Banking Services income would decline as a
result of expected rate cuts particularly by the Bank of England
and FED. These rate cuts have not come through and income was
higher than planned. This increase was driven by higher trade
finance activity resulting from the strategic decision to increase
the overall credit exposure limits to continue to support our EMFI
customers and utilising our available surplus capital to drive
transactional payment volumes. This income line is expected to
continue to reflect movements in our limit increases for the
remainder of the year.
Client Performance
Client Sector Analysis:
£m
|
Six months ended 30
June
|
|
YoY
|
|
2024
|
2023
|
|
%
|
Emerging Market Financial
Institutions (EMFI)
|
29.4
|
29.4
|
|
0
|
International Development
Organisations (IDO)
|
8.3
|
17.7
|
|
(53)
|
Major Market Banks
(MMBs)
|
1.0
|
3.1
|
|
(68)
|
NBFI and Fintechs
|
17.0
|
21.6
|
|
(21)
|
Total Gross Income
|
55.7
|
71.8
|
|
(22)
|
The IDO and NBFI & Fintech
client segments both utilise our NGN currency corridor, and
therefore both have experienced a reduction in income as a result
of the non-repeat of the NGN take rate dislocation experienced
during H1 2023, further IDO income is lower a result of reduced
flow from their underutilised budgets. Our EMFI business continues
to grow strongly, with additional central banks using our
correspondent banking and deposits capabilities.
Operating Expenses
£m
|
Six months ended 30
June
|
|
YoY
|
|
2024
|
2023
|
|
%
|
Staff Expenses
|
23.0
|
20.5
|
|
12
|
Administrative Operating
Expenses
|
15.2
|
11.7
|
|
30
|
Depreciation and
Amortisation
|
3.8
|
3.0
|
|
27
|
Non-recurring Operating
Expenses
|
0.4
|
13.1
|
|
(97)
|
Staff expenses have increased to
£23.0 million in the first half of 2024 compared to £20.5 million
in H1 2023, a growth of 12%, as a result of higher average number
of employees (H1 2024: 384 FTE, H1 2023: 304 FTE), as the business
continues to invest for sustainable income growth, and the impact
of annual performance and inflationary staff increases.
Administrative operating expenses
have grown by 30%, which is primarily driven by an increase in
building related expenses due to the Company's new London
headquarters, and higher software costs driven by licences of new
systems implemented.
Non-recurring items have
significantly reduced, with 2023 costs primarily reflecting the
professional fees incurred during the IPO process undertaken in the
first half of the year, as well as non-performance staff bonuses
relating to recruitment commitments on listing.
Taxation
The tax charge arising during the
period of £3.4 million (H1 2023: £9.0 million) is based on an
effective tax rate of 25.1% (being the expected rate for the entire
year). This is at a more normalised level compared to the H1 2023
effective tax rate of 38% which was high as a result of adjustments
for disallowable costs associated with the IPO. The tax rate
takes into account the standard corporation tax rate (H1 2024: 25%,
H1 2023: 19%) and with respect of Q1 2023, the impact of the legacy
banking surcharge (8% for profits greater than £25m).
Investments
Capital expenditure for the six
months ended 30 June 2024 was £9.0 million (H1 2023: £2.2 million),
of which £2.9 million related to establishing the new London head
office after an enforced move from Quadrant House. The
remaining costs primarily relate to investment in software and we
continue to anticipate that capitalised expenditure will be within
a range of £13 to £15 million by the end of the year, excluding the
property set up costs.
Balance Sheet and Capital
The balance sheet largely
comprises interest-bearing current and term customer deposits to
support payment flows, which the Group holds in high quality liquid
assets in order to meet liquidity requirements. The reported
consolidated statement of cash flows therefore largely reflects the
movement in customer deposits, and movements in to and out of asset
classes not classified as cash and cash equivalents.
Customer account balances as at 30
June 2024 were £1,446 million, compared to £1,543 million at 31
December 2023. The customer accounts represent demand deposit
accounts of corporate and other institutional customers held with
CAB. A substantial proportion of customer accounts are US
dollar accounts. On the last working day of 2023, there was a
single large, short-term placement on the balance sheet of £193m,
which was paid away subsequently in 2024, which is the main driver
behind the reduction between December 2023 and June
2024.
Dividends
No dividends have been declared in
2024. In 2023 and prior to the IPO, the Company declared dividends
to its shareholders of £5.6 million on 26 April 2023 and £5.7
million on 1 June 2023.
CAB Tech Holdco Limited, a
subsidiary of the Company, declared a total dividend of £17.1
million on 19 April 2023 (30 June 2022: nil), of which £1.5 million
was payable externally to CAB Tech Holdco Limited's minority
shareholders.
Related Parties
Please refer to Note 26 to the
interim condensed consolidated financial statements where detailed
disclosures on related parties are made.
Principal Risks and Uncertainties
Effective risk management is
critical to realising the Group strategy. The Group has an
established risk management framework to manage and mitigate the
various risks that we face. As at 30 June 2024 and for the period
up until the year end, the principal risks consisted of:
Risk Type and Current Context
|
Mitigants and other considerations
|
Business Risk
The Group's business model and
operations rely on the continued relationships with a diversified
network of counterparties and partners including liquidity
providers, nostros and clearing agents across currency
markets.
The Group is highly reliant on
established relationships with a small number of key banks for
clearing USD, GBP and EUR.
The Group provides access to
emerging markets, with a level of concentration to sub-Saharan
Africa. Significant changes to our partner network or key market
structures (e.g. the narrowing or removal of market dislocations,
general access, regulatory, economic, or geopolitical conditions)
would have a corresponding impact on the Group's business,
operations, financial performance and reputation.
Potential events may
include:
· Adjustments in the nature of our partner networks impacting
access to local liquidity or clearing services
· Structural changes to markets that result in the removal or
narrowing of dislocations and/or access to preferential local
market currency rates
· Changes to local economies including market structure (e.g.
regulatory/central bank monetary actions)
· Economic or political events (e.g. changes in
government)
· Translation risk associated with significant strengthening in
GBP relative to USD.
|
• The Board and Management periodically review and update the
strategic plan, budgets, targets, emerging opportunities and
threats.
• The Board and Management track and manage, through
governance, a range of metrics and early warning indicators to
highlight emerging risks to performance including take rates and identify and undertake any
appropriate management actions.
• The Group has a dedicated network team, who develop and
manage our key local relationships. Actions continue to be taken to
ensure these are adequately diversified including for key
currencies such as USD and GBP. This function also tracks and
reports regulatory changes and geo-political issues in these
markets.
• The Group has a strategic risk register which tracks the top
risks and the corresponding actions planned and underway to
mitigate these. This is reported periodically to the Risk Committee
and Executive Risk Committee.
• The Group has a medium-term strategy in place to continue
diversifying revenues across geographies, clients
and products.
• The Group only deals with regulated institutions in respect
of these transactions.
|
Financial Crime Risk
One of the Group's core offerings
is correspondent banking and payments services. It facilitates
inclusion and allows corporates, individuals and our clients to
conduct millions of transactions across the world on a daily basis.
However, this type of product can be more vulnerable to money
launderers, fraudsters, tax-evaders and sanctions
breachers.
|
• To mitigate risks effectively,
the Group has implemented strict onboarding and correspondent
banking due diligence processes and procedures, as well as strong
governance and client approval committees.
• A robust country risk framework
mitigates the Group's exposure to high- risk countries. This
framework includes complete prohibitions of some countries and
detailed restrictions on others.
• Screening and monitoring
controls enforce the framework, and the Group's employees have a
strong awareness and understanding of the legal and regulatory
environment in which they operate, including the relevant financial
crime prevention provisions.
|
Operational Risk
The Group is exposed to
operational risk in executing its core business activities and
seeks to manage this exposure in a cost-effective
manner.
The Group is alert to the fact
that operational risk has a broad remit, covering processes,
people, systems and external events. It therefore has a risk
appetite set at Level 2 risk types. The top level 2 risks at this
level are:
Data management risk, execution,
transaction processing and delivery risk, technology, information
security and cyber risk, outsourcing, vendor management and
third-party risk, social risk, people risk, operational resilience
and client, products and business practices.
|
• The Group has an established
Group Operational Risk Management Policy that details various tools
supporting the identification, assessment, management and reporting
of operational risk, linked to the Group ERMF.
• RCSA's are performed at business
unit level. All risks and controls are stored centrally in the
Groups GRC system. The system has links to risks, controls, issues,
assurance actions, board metrics and other similar information thus
providing a holistic operational risk profile.
• Processes are being documented,
and automation considered, to ensure consistency and reduction of
manual / bespoke processes.
• The Group is working on
obtaining ISO27001 and Cyber Essential accreditation.
• Annual business continuity plan
and disaster recovery tests are completed with lessons learnt
driving improvements and enhancements.
|
Credit Risk
Credit risk is generated through
the Group's banking and financing activities, i.e. through trade
finance products, working capital overdrafts, Nostro balances
etc.
Counterparty credit risk arises
due to FX/Payment related trading and derivatives activities where
counterparties fail to meet their financial obligations, including
collateral obligations, as they fall due.
Treasury related activities also
generate an element of credit risk through its day-to-day placement
of funds i.e. money market funds, HQLA portfolio etc.
|
• Credit Risk remains a key
focus for the Group given the current macroeconomic
environment.
• Risk appetite thresholds
are constructed with regard to regulatory requirements and internal
assessments included within the ICAAP.
• An established credit
policy is in place with portfolio levels exposure limits and a
maximum individual counterparty exposure limit framework. The
Credit Risk Committee provides individual counterparty approvals
and portfolio level oversight.
• Counterparty FX and
derivatives transaction risk is mitigated via an ISDA master
agreements and credit support annexes, where suitable.
|
Market Risk
The Group's market risk exposure
occurs primarily through FX volatility and IRRBB.
The economic and financial market
uncertainties remain elevated, disruptive adjustment to interest
rate levels, deteriorating trade or geopolitical tensions could
have implications for: FX rates, net interest margin, or the value
of the Group's Nostro balances.
|
• An assessment of market
risk drivers is conducted as part of the ICAAP, and to assess BAU
and stressed market risk.
• Market Risk exposure
limits are staggered, to constrain typical market risk exposure.
The Group primarily trades in the FX spot market and risk appetite
limits are set and monitored at both an aggregate and currency
level.
• Defensive positions are
typically taken to the extent that markets exhibit increased market
risk events, such as during national elections.
• Interest rate risk in the
banking book is driven by client deposit-taking, investments in the
liquid asset portfolio and funding activities. The Group executes
hedging strategies to ensure a predominantly matched profile and
thereby mitigate the majority of the IRRBB risks that result from
these activities.
|
Regulatory and Compliance Risk
As the Group continues to grow in
terms of increasing size and complexity it brings with it a complex
legislative and regulatory landscape thus increasing the risks of
legal or regulatory sanctions, material financial loss and/or
reputational damage in the markets in which we operate.
|
• Horizon-scanning is
conducted to monitor upcoming UK regulatory changes.
Responding to any regulatory request promptly.
• Ensuring that we have
adequate permissions to operate in certain markets. CAB Payments
partners with local providers that are typically regulated entities
or locally licensed.
• The Group consults
third-party legal counsel for new territorial expansions to ensure
compliance with local regulations.
|
Capital Adequacy Risk
The Group's capital ratios can be
affected by various business activities and the failure to meet
prudential capital requirements, internal targets and/or to support
the Group's strategic plans.
|
• The Group has robustly
defined capital adequacy thresholds, constructed in reference to
regulatory requirements and maintain capital ratios in excess of
these.
• Day-to-day capital risk
exposure is managed by the Treasury function with oversight from
Asset & Liability Committee and the Group Treasury Committee,
who monitor and manage capital risk in line with the Group's
capital management objectives, capital plan and risk
frameworks.
• If the Group were to
encounter a significant stress on capital resources, a Recovery
Plan is maintained which includes options to ensure it can remain
sufficiently capitalised to remain viable.
|
Liquidity and Funding Risk
The Group's liquidity ratios (i.e.
LCR and Net Stable Funding Ratio (''NSFR'')) can be affected by
various business activities, either idiosyncratic or market wide,
that could impact prudential liquidity requirements and
corresponding business activities, and investor or depositor
confidence.
The key liquidity risk drivers are
depositor outflows, and intraday liquidity requirements
|
• Funding and liquidity
risks are managed within a comprehensive risk framework in
reference to regulatory requirements and internal thresholds to
ensure there is no significant risk that liabilities cannot be met
as they fall due.
• CAB produces an ILAAP at
least once per calendar year. Challenge and oversight of the ILAAP
occurs at the Asset & Liability Committee and the Risk
Committee before approval by the Board.
• Day-to-day liquidity risk
exposure is managed by the Treasury function with oversight from
the Asset & Liability Committee and the Group Treasury
Committee.
• Treasury conducts regular
and comprehensive liquidity stress testing, including reverse
stress testing, to ensure that the liquidity position remains
within the Board's appetite.
|
Conduct Risk
Conduct risk can arise through: -
the design of products that do not meet client needs; -
mishandling complaints where the Group has behaved inappropriately
towards its clients; - inappropriate sales processes; and -
behaviour that does not meet market or
regulatory standards
|
• Conduct risk is
incorporated into the product approval process.
• Complaints are formally
registered, investigated and responses provided.
• All staff receive annual
online training on conduct, ethics and culture.
|
Audit tender
The Group has commenced a tender
process for the role of external auditor for the financial year
ending 31 December 2025. The audit tender process will be overseen
by the Group Audit Committee and is expected to conclude by the end
of the current financial year. A resolution proposing the
appointment of the selected firm will be put forward at the next
Annual General Meeting. The Group's current external auditor is
Forvis Mazars LLP who were originally appointed for the financial
year ended 31 December 2021.
Directors' Responsibility
Statement
The Directors confirm that these
Interim condensed consolidated Financial Statements have been
prepared in accordance with International Accounting Standard 34
'Interim Financial Reporting', as adopted by the United Kingdom and
that the interim management report includes a fair review of the
information required by DTR 4.2.7R and DTR 4.2.8R,
namely:
· an indication of important events that have occurred during
the first six months and their impact on the condensed set of
financial statements, and a description of the principal risks and
uncertainties for the remaining six months of the financial year;
and
· related party transactions that have taken place in the first
six months of the financial year and that have materially affected
the financial position or performance of the Group during that
period; and any changes in the related party transactions described
in the last annual report and Accounts that could do so. These have
been disclosed in Note 26.
Neeraj Kapur was appointed as the
Group CEO of CAB and CAB Payments on 20 June 2024. A list of
Directors is maintained on the Company's website, www.cabpayments.com.
The Directors are responsible for
the maintenance and integrity of the Company's website.
By order of the Board,
Neeraj Kapur
Chief Executive Officer
Richard Hallett
Chief Financial Officer
3 September 2024
Alternative Performance Measures
CAB Payments uses alternative
performance measures ("APMs") when presenting its financial
results. Management believe these provide stakeholders with
additional useful information to interpret the underlying
performance of the business. They are used by the Directors and
management to monitor performance.
APMs used within this management
report are supplemental to, but not a substitute for IFRS measures
presented within the interim condensed consolidated financial
statements. They may not be comparable with the APMs of other
companies.
Alternative Performance Measure
|
How the metric is used
|
Calculation Definition
|
Calculation
|
Gross Income or Income
|
As noted in previous years, as a
growing organisation, the Group's focus is on driving income growth
through controlled investment, whether as capital expenditure or
through operating costs.
|
Total income, net of interest
expense.
|
Interim condensed consolidated
statement of profit or loss
|
EBITDA
|
The key measure of profitability
used internally at Executive Committees and Board and with
externally with investors.
|
Calculated as Profit before Tax
and IFRS16 lease liability interest, depreciation and
amortisation.
Although it is typical to
calculate EBITDA before interest, our net interest income is
generated from operational client deposits and subsequent
re-investment to generate returns for the shareholder and therefore
remains included within EBITDA.
|
Note 3: segmental reporting
note
|
Adjusted EBITDA
|
The Group believes that Adjusted
EBITDA is a useful measure for investors because it is closely
tracked by management to evaluate Group's performance for making
financial, strategic and operating decisions, as well as aiding
investors to understand and evaluate the underlying trends in the
Group's performance period on period, in a comparable
manner.
|
EBITDA before non-recurring
operating expenses or exceptional items which have been identified
by management.
|
See Table 1
|
Adjusted EBITDA Margin
|
A measure of profitability, by
understanding how much of the income is converted to
profit.
|
Adjusted EBITDA as a percentage of
Gross Income
|
See Table 2
|
Adjusted Profit After Tax
(''PAT'')
|
A measure of profitability based
on adjusting the statutory profit after tax by removing identified
exceptional items. Although these items may not be classified as
non-recurring expenses under IFRS, management believes their
inclusion distorts the future expected run rate of
costs.
|
Profit before Tax before
non-recurring operating expenses or exceptional items identified by
management, after deducting tax figure based on applicable standard
HMRC tax rates for the period.
|
See Table 3
|
Adjusted Earnings Per Share
(''AEPS'')
|
The Group consider the Adjusted
EPS to better reflect the base line of shareholder value on a go
forward basis, when adjusting for one off or exceptional costs and
discontinued items.
|
Adjusted Profit After Tax for the
period divided by the total number of called up shares at the
period end. Measured in pence.
|
See Table 3
|
Operating Free Cash
Flow
|
Measure of cash flow generated by
the business. It is a non-statutory measure used by the Board and
the senior management team to measure the ability of the Group to
support future business expansion, distributions or
financing.
|
Adjusted EBITDA before the cost
of purchasing property, plant and equipment, the cost of intangible
asset additions and the cost of lease payments.
|
See Table 4
|
Operating Free Cash Flow
Conversion
|
A measure used by the Group to
understand how much of the Group's profitability (measured as
adjusted EBITDA), is converted to available capital for future
business growth.
|
Free cash flow as a percentage of
Adjusted EBITDA
|
See Table 4
|
Wholesale FX and Payment FX
income
|
Wholesale FX and Payment FX Income
is measured collectively by Group as the underlying economic
drivers are the same. The income, volume and margins are all
measured and monitored, along with the underlying currencies, to
help the Group understand broader income performance.
The reported figures represents
the accumulative income from all trades undertaken during the year,
where the income of a single transaction has been generated from
the bid / ask spread and any associated payment fees if the Foreign
Exchange is then forward to a 3rd party beneficiary.
|
Net foreign exchange
gain
|
Interim condensed consolidated
statement of profit or loss
|
Alternative Interest
Income
|
Group measures and monitors net
interest income by its underlying commercial driver, which enables
evaluation of performance in consideration of return on capital
deployed and product profitability.
|
This is done by capturing interest
income by source and spreading the interest expense through an
internal transfer pricing mechanism
|
See table 5
|
Table 1:
Adjusted EBITDA
|
reference
|
|
Six months ended 30
June:
|
|
|
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
EBITDA
|
Note
3
|
|
17,669
|
26,836
|
Non-recurring expenses
|
Interim
condensed consolidated statement of profit or loss
|
|
412
|
13,140
|
Strategic Restructuring
Costs
|
Glossary
|
|
590
|
-
|
Adjusted EBITDA
|
|
|
18,671
|
39,976
|
Table 2:
Adjusted EBITDA margin
|
reference
|
|
Six months ended 30
June:
|
|
|
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
Adjusted EBITDA
|
Table
1
|
A
|
18,671
|
39,976
|
Gross Income (defined as Total
Income, net of interest expense)
|
Interim
condensed consolidated statement of profit or loss
|
B
|
55,739
|
71,812
|
Adjusted EBITDA margin
|
|
A /
B
|
33.5%
|
55.7%
|
Table 3:
Adjusted PAT and Adjusted EPS
|
reference
|
|
Six months ended 30
June:
|
|
|
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
Profit Before Tax
|
Interim
condensed consolidated statement of profit or loss
|
A
|
13,673
|
23,794
|
Non-recurring expenses
|
Interim
condensed consolidated statement of profit or loss
|
B
|
412
|
13,140
|
Strategic Restructuring
Costs
|
Glossary
|
C
|
590
|
-
|
Adjusted Profit Before Tax
|
|
D=A+B+C
|
14,675
|
36,934
|
Adjusted Tax (2024 H1: 25%, 2023
H1: 22%)*
|
|
E
|
(3,669)
|
(8,126)
|
Adjusted Profit After Tax
|
|
F=D-E
|
11,006
|
28,808
|
Number of Shares
|
|
G
|
254,143,218
|
254,143,218
|
Adjusted Earnings Per Share
|
|
F / G
|
0.04
|
0.11
|
*Refer to APMs definition of Tax
under Adjusted PAT.
Table 4:
Operating Free Cash Flow:
|
reference
|
|
Six months ended 30
June:
|
|
|
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
Adjusted EBITDA
|
Table
1
|
A
|
18,671
|
39,976
|
Less: additions of tangible fixed
assets
|
Note
15
|
|
(2,213)
|
(160)
|
Less: additions of intangible
fixed assets
|
Note
17
|
|
(6,813)
|
(2,017)
|
Less: cash payments made on
property leases
|
Note 16
B
|
|
(264)
|
(168)
|
Operating Free Cash
Flow
|
|
B
|
9,381
|
37,631
|
Operating Free Cash Flow
Conversion
|
|
B /
A
|
50%
|
94%
|
Table 5:
Alternative Interest Income:
|
reference
|
|
Six months ended 30
June:
|
|
|
|
2024
|
2023
|
|
|
|
£'000
|
£'000
|
Net Interest Income
|
Interim
condensed consolidated statement of profit or loss
|
|
9,076
|
11,039
|
Gains on money market
funds
|
Interim
condensed consolidated statement of profit or loss
|
|
8,546
|
4,551
|
Net gain on financial assets and
financial liabilities mandatorily held at fair value through profit
or loss
|
Interim
condensed consolidated statement of profit or loss
|
|
179
|
1,089
|
Total
|
|
|
17,801
|
16,679
|
|
|
|
|
|
NII from Cash
Management
|
|
|
16,153
|
15,812
|
Trade Finance NII
|
|
|
1,304
|
617
|
Liquidity as a Service
NII
|
|
|
344
|
250
|
Total
|
|
|
17,801
|
16,679
|
INDEPENDENT REVIEW REPORT TO CAB
PAYMENTS HOLDINGS PLC
Conclusion
We have been engaged by the CAB
Payments Holdings plc (the "Company") and its subsidiaries
(collectively referred to as "the Group") to review the condensed
set of financial statements in the half- yearly financial report
for the six months ended 30 June 2024 which comprises the interim
condensed consolidated statement of profit or loss, the interim
condensed consolidated statement of other comprehensive income, the
interim condensed consolidated statement of financial position, the
interim condensed consolidated statement of changes in equity, the
interim condensed consolidated statement of cash flows and the
related notes 1 to 32.
Based on our review, nothing has
come to our attention that causes us to believe that the set of
interim condensed consolidated financial statements in the
half-yearly financial report for the six months ended 30 June 2024
is not prepared, in all material respects, in accordance with UK
adopted International Accounting Standard 34 and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
Basis for Conclusion
We conducted our review in
accordance with International Standard on Review Engagements (UK)
2410 (Revised), "Review of Interim Financial Information Performed
by the Independent Auditor of the Entity" issued for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
As disclosed in note 1, the annual
financial statements of the Group are prepared in accordance with
UK adopted International Accounting Standards. The set of interim
condensed consolidated financial statements included in this
half-yearly financial report has been prepared in accordance with
UK adopted International Accounting Standard 34, "Interim Financial
Reporting.
Conclusions Relating to Going
Concern
Based on our review procedures,
which are less extensive than those performed in an audit as
described in the Basis of Conclusion section of this report,
nothing has come to our attention to suggest that management have
inappropriately adopted the going concern basis of accounting or
that management have identified material uncertainties relating to
going concern that are not appropriately disclosed.
This conclusion is based on the
review procedures performed in accordance with ISRE (UK) 2410
(Revised), however future events or conditions may cause the entity
to cease to continue as a going concern.
Responsibilities of directors
The directors are responsible for
preparing the half-yearly financial report in accordance with UK
adopted International Accounting Standard 34 and the Disclosure
Guidance and Transparency Rules of the United Kingdom's Financial
Conduct Authority.
In preparing the half-yearly
financial report, 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 to cease operations, or have no realistic
alternative but to do so.
Auditor's Responsibilities for
the review of the financial information
In reviewing the half-yearly
report, we are responsible for expressing to the Group a conclusion
on the set of interim condensed consolidated financial statement in
the half-yearly financial report. Our conclusion, including our
Conclusions Relating to Going Concern, are based on procedures that
are less extensive than audit procedures, as described in the Basis
for Conclusion paragraph of this report.
Use of the review report
This report is made solely to the
Group in accordance with International Standard on Review
Engagements (UK) 2410 issued by the Financial Reporting Council and
our Engagement Letter dated 26 July 2024. Our work has been
undertaken so that we might state to the Group those matters we are
required to state to it in an independent review 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 Group, for
our review work, for this report, or for the conclusions we have
formed.
Signed:
Forvis Mazars LLP
Chartered Accountants 30 Old Bailey
London EC4M 7AU
3 September 2024
Notes:
(a) The maintenance and integrity of the CAB Payments Holdings
plc website is the responsibility of the directors; the work
carried out by us does not involve consideration of these matters
and, accordingly, we accept no responsibility for any changes that
may have occurred to the interim report since it was initially
presented on the web site.
(b) Legislation in the United Kingdom governing the preparation
and dissemination of financial information may differ from
legislation in other jurisdictions.
Interim
condensed consolidated statement of profit or loss for the six
months ended 30 June 2024
|
Six months ended 30
June
|
|
Note
|
2024
|
|
2023
|
|
|
£'000
|
|
£'000
|
Continuing operations
|
|
|
|
|
Interest income
|
4
|
28,697
|
|
23,763
|
Interest expense
|
4
|
(19,621)
|
|
(12,724)
|
Net Interest Income
|
|
9,076
|
|
11,039
|
Gains on money market
funds
|
|
8,546
|
|
4,551
|
Net gain on financial assets
mandatorily held at fair value through profit or loss
|
|
179
|
|
1,089
|
Fees and commission
income
|
5
|
8,090
|
|
6,981
|
Net foreign exchange
gain
|
6
|
29,848
|
|
48,152
|
Total income, net of interest expense
|
|
55,739
|
|
71,812
|
|
|
|
|
|
- Recurring
|
7
|
(42,010)
|
|
(35,199)
|
- Non-recurring
|
7
|
(412)
|
|
(13,140)
|
Operating expenses
|
|
(42,422)
|
|
(48,339)
|
Reversal of impairment loss on
financial assets at amortised cost
|
|
356
|
|
321
|
Profit before taxation
|
|
13,673
|
|
23,794
|
-Tax expense
|
8
|
(3,432)
|
|
(9,039)
|
Profit after tax for the period from continuing
operations
|
|
10,241
|
|
14,755
|
|
|
|
|
|
Discontinued
operations
|
|
|
|
|
Loss after tax for the period from
discontinued operations
|
|
-
|
|
(153)
|
Profit for the period
|
|
10,241
|
|
14,602
|
|
|
|
|
|
Profit for the period attributable to:
|
|
|
|
|
Owners of the parent
|
|
10,241
|
|
13,578
|
Non-controlling
interests
|
|
-
|
|
1,024
|
|
|
10,241
|
|
14,602
|
|
|
|
|
|
Basic and diluted earnings per share
|
25
|
2024
pence
|
|
2023
pence
|
Continuing operations
|
|
4.0
|
|
6.2
|
Discontinued operations
|
|
-
|
|
(0.1)
|
Total basic and diluted earnings per share
|
|
4.0
|
|
6.1
|
The notes on pages 31 to 66 form
part of these interim condensed consolidated financial
statement.
Interim condensed consolidated
statement of other comprehensive income for the six months ended 30
June 2024
|
Six months ended 30
June
|
|
|
2024
£'000
|
|
2023
£'000
|
|
Note
|
|
|
|
Profit for the period
|
|
10,241
|
|
14,602
|
Other comprehensive income for the period:
|
|
|
|
|
Items that may be reclassified subsequently to profit or
loss:
|
|
|
|
|
Foreign exchange losses on
translation of foreign operations
|
|
(36)
|
|
(138)
|
Items that will not be reclassified subsequently to profit or
loss:
|
|
|
|
|
Movement in investment revaluation
reserve for equity instruments at fair value through other
comprehensive income
|
|
20
|
|
-
|
Income tax relating to these
items
|
|
-
|
|
-
|
Other comprehensive loss for the period net of
tax
|
|
(16)
|
|
(138)
|
Total comprehensive income
|
|
10,225
|
|
14,464
|
Total comprehensive income attributable to:
|
|
|
|
|
-
Owners of the parent
|
|
10,225
|
|
13,450
|
-
Non-controlling interests
|
|
-
|
|
1,014
|
|
|
10,225
|
|
14,464
|
|
|
|
|
|
The notes on pages 31 to 66 form
part of these interim condensed consolidated financial
statements.
Interim condensed consolidated
statement of financial position as at 30 June 2024
|
|
|
As at
30 June
2024
|
|
As
at
31
December
2023
|
|
Note
|
|
£'000
|
|
£'000
|
Assets
|
|
|
|
|
|
Cash and balances at central
banks
|
9
|
|
499,725
|
|
528,396
|
Money market funds
|
10
|
|
390,084
|
|
518,764
|
Loans and advances on demand to
banks
|
11
|
|
130,715
|
|
135,178
|
Investments in debt
securities
|
13
|
|
317,011
|
|
353,028
|
Other loans and advances to
banks
|
11
|
|
198,287
|
|
137,570
|
Other loans and advances to
non-banks
|
11
|
|
8,268
|
|
8,216
|
Unsettled transactions
|
14
|
|
29,068
|
|
8,417
|
Derivative financial
assets
|
12
|
|
4,083
|
|
3,829
|
Investments in equity
securities
|
|
|
569
|
|
495
|
Other assets
|
14
|
|
19,148
|
|
11,200
|
Accrued income
|
|
|
1,848
|
|
1,215
|
Property, plant and
equipment
|
15
|
|
2,981
|
|
1,191
|
Right of use assets
|
16
|
|
17,706
|
|
689
|
Intangible assets
|
17
|
|
28,281
|
|
24,294
|
Total
assets
|
|
|
1,647,774
|
|
1,732,482
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
Customer accounts
|
18
|
|
1,446,035
|
|
1,542,889
|
Derivative financial
liabilities
|
12
|
|
1,254
|
|
9,679
|
Unsettled transactions
|
19
|
|
16,013
|
|
20,081
|
Other liabilities
|
19
|
|
9,287
|
|
8,121
|
Accruals
|
19
|
|
11,894
|
|
18,367
|
Lease liabilities
|
16
|
|
17,063
|
|
884
|
Deferred tax liability
|
|
|
2,807
|
|
695
|
Provisions
|
20
|
|
1,350
|
|
236
|
|
|
|
1,505,703
|
|
1,600,952
|
|
|
|
|
|
|
Equity
|
|
|
|
|
|
Called up share capital
|
21
|
|
85
|
|
85
|
Treasury shares
|
22
|
|
(242)
|
|
-
|
Retained earnings
|
23
|
|
142,277
|
|
131,478
|
Foreign currency translation
reserve
|
|
|
(180)
|
|
(144)
|
Investment revaluation
reserve
|
|
|
131
|
|
111
|
Equity attributable to owners of the parent
|
|
|
142,071
|
|
131,530
|
Total liabilities and equity
|
|
|
1,647,774
|
|
1,732,482
|
Company registration number -
09659405
The Board of Directors approved
the interim condensed consolidated financial statements on 03
September 2024.
N
Kapur
R Hallett
Group Chief Executive
Officer
Group Chief Financial Officer
The notes on pages 31 to 66 form
part of these interim condensed consolidated financial
statements
Interim condensed consolidated
statement of changes in equity for the six months ended 30 June
2024
|
Attributable To Owners Of The Parent
|
|
|
|
|
Share
Capital
|
Treasury
shares
|
Retained
earnings
|
|
Investment revaluation reserve
|
|
Foreign
currency translation reserve
|
|
Total
|
Non-Controlling Interest (NCI)
|
|
Total
Shareholders' Funds
|
|
£'000
|
£'000
|
£'000
|
|
£'000
|
|
£'000
|
|
£'000
|
£'000
|
|
£'000
|
Balance at 1 January
2024
|
85
|
-
|
131,478
|
|
111
|
|
(144)
|
|
131,530
|
-
|
|
131,530
|
Profit for the period (Note
22)
|
-
|
-
|
10,241
|
|
-
|
|
-
|
|
10,241
|
-
|
|
10,241
|
Other comprehensive income:
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange losses on
translation of foreign operations
|
-
|
-
|
-
|
|
-
|
|
(36)
|
|
(36)
|
-
|
|
(36)
|
Movement in investment revaluation
reserve for equity instruments at fair value through other
comprehensive income
|
-
|
-
|
-
|
|
20
|
|
-
|
|
20
|
-
|
|
20
|
Income tax relating to these
items
|
-
|
-
|
-
|
|
-
|
|
-
|
|
-
|
-
|
|
-
|
Other comprehensive loss net of
tax
|
-
|
-
|
-
|
|
20
|
|
(36)
|
|
(16)
|
-
|
|
(16)
|
Total comprehensive income/
(loss)
|
-
|
-
|
10,241
|
|
20
|
|
(36)
|
|
10,225
|
-
|
|
10,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Transactions with owners in their
capacity as owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based payment
expense
|
-
|
-
|
520
|
|
-
|
|
-
|
|
520
|
-
|
|
520
|
Stamp duty refund
|
-
|
-
|
38
|
|
-
|
|
-
|
|
38
|
-
|
|
38
|
Acquisition of treasury shares by
EBT (Note 21)
|
-
|
(242)
|
-
|
|
-
|
|
-
|
|
(242)
|
-
|
|
(242)
|
Total
|
-
|
(242)
|
558
|
|
-
|
|
-
|
|
316
|
-
|
|
316
|
Balance at 30 June 2024
|
85
|
(242)
|
142,277
|
|
131
|
|
(180)
|
|
142,071
|
-
|
|
142,071
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at 1 January
2023
|
68,010
|
-
|
40,179
|
|
96
|
|
(31)
|
|
108,254
|
7,704
|
|
115,958
|
Profit for the period (Note
22)
|
-
|
-
|
13,578
|
|
-
|
|
-
|
|
13,578
|
1,024
|
|
14,602
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange gains on
translation of foreign operations
|
-
|
-
|
-
|
|
-
|
|
(128)
|
|
(128)
|
(10)
|
|
(138)
|
Other comprehensive loss
|
-
|
-
|
-
|
|
-
|
|
(128)
|
|
(128)
|
(10)
|
|
(138)
|
Total comprehensive income/
(loss)
|
-
|
-
|
13,578
|
|
-
|
|
(128)
|
|
13,450
|
1,014
|
|
14,464
|
Transactions with owners in their
capacity as owners:
|
|
|
|
|
|
|
|
|
|
|
|
|
Share based payment
expense
|
-
|
-
|
978
|
|
-
|
|
-
|
|
978
|
46
|
|
1,024
|
Capital injection
|
-
|
-
|
3,330
|
|
-
|
|
-
|
|
3,330
|
296
|
|
3,626
|
Share capital reduction
|
(67,936)
|
-
|
67,936
|
|
-
|
|
-
|
|
-
|
-
|
|
-
|
Dividends declared
|
-
|
-
|
(11,300)
|
|
-
|
|
-
|
|
(11,300)
|
(1,540)
|
|
(12,840)
|
Total
|
(67,936)
|
-
|
60,944
|
|
-
|
|
-
|
|
(6,992)
|
(1,198)
|
|
(8,190)
|
Balance at 30 June 2023
|
74
|
-
|
114,701
|
|
96
|
|
(159)
|
|
114,712
|
7,520
|
|
122,232
|
The notes on pages 31 to 66 form
part of these interim condensed consolidated financial
statements.
Interim condensed consolidated
statement of cash flows for the six months ended 30 June
2024
|
Six months ended 30
June
|
|
Note
|
2024
|
|
Restated1
2023
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
Cash outflow from operating
activities1
|
24
|
(138,344)
|
|
(19,389)
|
Tax paid
|
|
(11,347)
|
|
(9,780)
|
Payments for interest on lease
liabilities
|
|
(212)
|
|
(34)
|
Net cash generated used in operating
activities1
|
|
(149,903)
|
|
(29,203)
|
|
|
|
|
|
Cash flow used in investing activities
|
|
|
|
|
Purchase of property, plant and
equipment
|
15
|
(2,213)
|
|
(160)
|
Purchase of intangible
assets
|
17
|
(6,813)
|
|
(2,017)
|
Proceeds from sale of investment
in CAIM
|
|
-
|
|
1,846
|
Net cash used in investing activities
|
|
(9,026)
|
|
(331)
|
|
|
|
|
|
Cash flow used in financing activities
|
|
|
|
|
Repayment of principal portion of
the lease liability
|
16
|
(264)
|
|
(168)
|
Proceeds from shares issued to
non-controlling interests1
|
|
-
|
|
975
|
Purchase of treasury
shares
|
21
|
(242)
|
|
-
|
Dividends paid
|
|
-
|
|
(12,840)
|
Increase in overdraft
accounts
|
|
174
|
|
77
|
Net cash used in financing
activities1
|
|
(332)
|
|
(11,956)
|
|
|
|
|
|
|
|
|
|
|
Net decrease in cash and cash
equivalents1
|
|
(159,261)
|
|
(41,490)
|
Cash and cash equivalents at the
beginning of the period
|
|
1,182,339
|
|
907,053
|
Effect of exchange rate changes on
cash and cash equivalents
|
|
(2,554)
|
|
(15,092)
|
Cash and cash equivalents at the end of the
period
|
|
1,020,524
|
|
850,471
|
Analysed as follows:
|
|
|
|
|
Cash and balances at central
banks
|
9
|
499,725
|
|
577,572
|
Money market funds
|
10
|
390,084
|
|
164,982
|
Loans and advances on demand to
banks
|
11
|
130,715
|
|
107,917
|
|
|
|
|
|
1 Prior year
restatement note is disclosed in Note 24.
The notes on pages 31 to 66 form
part of these interim condensed consolidated financial
statements.
Notes to the interim condensed consolidated financial
statements for the six months ended 30 June 2024
1.
STATEMENT OF
ACCOUNTING POLICIES
The following accounting policies
relate to the financial statements of CAB Payments Holdings plc
("the Company") and its subsidiaries (collectively referred to as
"the Group").
(a) General
Information
The Company is incorporated and
domiciled in England. On 4 July 2023 the Company was re-registered
as a public limited company, CAB Payments Holdings plc, in order to
align with its strategic objectives. The address of its registered office as at 30
June 2024 is 3 London Bridge St, London SE1 9SG,
England.
CAB Payments is a market leader in
business-to-business cross-border payments and foreign exchange,
specialising in hard-to-reach markets.
(b) Basis of
Preparation
The interim condensed consolidated
financial statements comprise (i) the interim condensed
consolidated statements of profit or loss, (ii) the interim
condensed consolidated statement of other comprehensive income,
(iii) the interim condensed consolidated statement of financial
position, (iv) the interim condensed consolidated statement of
changes in equity, (v) the interim condensed consolidated statement
of cash flows and (vi) the related notes of the Group, for the six
months ended 30 June 2024.
The interim condensed consolidated
financial statements have been prepared in accordance with the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority and with UK adopted International Accounting Standard 34
"Interim Financial Reporting''.
The interim condensed consolidated
financial statements have not been audited and do not constitute
statutory accounts within the meaning of Section 434 of the
Companies Act 2006 but has been reviewed by the auditor in
accordance with International Standard on Review Engagements (UK)
2410 issued by the Financial Reporting Council. The Group's
statutory accounts for the year ended 31 December 2023, prepared in
accordance with UK adopted international accounting standards, have
been delivered to the Registrar of Companies. The report of the
auditor on these financial statements was unqualified, did not draw
attention to any matters by way of emphasis and did not contain any
statement under section 498(2) or (3) of the Companies Act
2006.
The interim condensed consolidated
financial statements should be read in conjunction with the Annual
Report and Accounts for the year ended 31 December 2023 from which
the comparative information as at 31 December 2023 has been
derived. The interim condensed consolidated financial statements
dated 30 June 2024 and 30 June 2023 have been reviewed, but not
audited. The comparative financial statements dated 31 December
2023 have been audited as part of the 2023 financial statements
unless noted otherwise.
Comparatives, only in relation to
the cash flow, have been restated in line with current period
disclosures and corrections from prior period disclosures. Details
of these changes are set out in Note 24. These restatements did not
result in a change of accounting policies and there is no impact to
profit or loss and equity.
The interim condensed consolidated
financial statements are presented in British Pound Sterling ("£").
All values are rounded to the nearest thousand ("£'000"), except
where otherwise indicated.
1.
STATEMENT OF
ACCOUNTING POLICIES (continued)
(c) Accounting
policy
The accounting policies and
presentation applied by the Group in these interim condensed
consolidated financial statements are consistent with those applied
in the Annual Report and Accounts for the year ended 31 December
2023 and those expected to be applied in the year to 31 December
2024.
The annual financial statements of
the Group will be prepared in accordance with UK adopted
International Accounting Standards (UK adopted International
Financial Reporting Standards ("IFRSs")).
The Group has adopted the
following new or amended IFRSs and interpretations that are
effective from 1 January 2024, none of which had any material
impact on the Group's interim condensed consolidated financial
statements.
Accounting standard
|
Details of amendment
|
Amendments to IAS 1
|
Classification of Liabilities as
Current or Non-current: clarify that the classification of
liabilities as current or noncurrent is based solely on a company's
right to defer settlement for at least 12 months at the reporting
date. The right needs to exist at the reporting date and must have
substance.
|
Amendments to IFRS 16,
Leases
|
Lease Liability in a
Sale-and-Leaseback requires a seller-lessee to account for variable
lease payments that arise in a sale-and-leaseback transaction as
follows.
·
On initial recognition, include variable lease
payments when measuring a lease liability arising from a
sale-and-leaseback transaction.
·
After initial recognition, apply the general
requirements for subsequent accounting of the lease liability such
that no gain or loss relating to the retained right of use is
recognized.
|
IAS 7, Statement of Cash Flows and
IFRS 7, Financial Instruments: Disclosures
(Amendment)
|
Supplier Finance Arrangements:
requires an entity to disclose qualitative and quantitative
information about its supplier finance programs, such as terms and
conditions - including, for example, extended payment terms and
security or guarantees provided.
|
1.
STATEMENT OF
ACCOUNTING POLICIES (continued)
(d) New and revised IFRS
accounting standards in issue but not yet
effective
At the
date of authorisation of these interim condensed consolidated
financial statements, the Group has not applied the following new
and revised IFRS that have been issued but are not yet
effective.
Amendments to IAS 21 The Effects
of Changes in Foreign Exchange Rates:
|
Lack of Exchangeability (Issued
August 2023). The standard is effective 1 January 2025.
|
Amendments to the Classification
and Measurement of Financial Instruments - Amendments to IFRS
9 Financial Instruments and IFRS 7 Financial
Instruments: Disclosures effective 1 January 2026
|
The amendments provide guidance
related to:
· Financial assets with ESG-linked features;
· Settlement of financial liabilities by electronic
payments
|
New sustainability standards
issued by the International Sustainability Standards Board (ISSB)
effective 1 January 2026 in the UK
|
The ISSB issued its first two
sustainability reporting standards on 26 June 2023. This
included:
·
General Requirements for Disclosure of
Sustainability-related Financial Information (IFRS S1), the core
framework for the disclosure of material information about
sustainability-related risks and opportunities across an entity's
value chain.
·
Climate-related Disclosures (IFRS S2), the first
thematic standard issued that sets out requirements for entities to
disclose information about climate-related risks and
opportunities.
|
IFRS 18 Presentation and
Disclosure in Financial Statements effective 1 January
2027
|
IFRS 18 affects all companies,
bringing significant changes to how you present your income
statement and what information you need to disclose, and making
certain 'non-GAAP' measures part of your audited financial
statements for the first time. There will be three new categories
of income and expenses, two defined income statement subtotals and
one single note on management-defined performance
measures.
|
With the exception of IFRS 18 which
has not yet been endorsed for use in the UK and impact has yet to
be determined, the directors do not expect that the revision or
introduction of the Standards listed above will have a material
impact on the interim condensed consolidated financial statements
in future periods.
(e) Employee benefit trust and
Treasury Shares
The Group has established employee
benefit trusts (''EBTs'') to hold shares to meet the Group's
obligation to provide shares awarded to employees under the share
incentive plan Shares held by the EBTs are deducted from equity and
presented as Treasury Shares until such time that the shares
settle.
1.
STATEMENT OF
ACCOUNTING POLICIES (continued)
(f) Going
concern
The Directors have assessed the
ability of the Company and the Group to continue as going concerns
based on the net current asset position, regulatory capital
requirements and estimated future cash flows. The Directors have
formed the view that the Company and the Group have adequate
resources to meet financial obligations as they fall due and to
continue in operational existence for a period of at least 12
months from when these interim condensed consolidated financial
statements are authorised for issuance. Accordingly, the interim
condensed consolidated financial statements of the Company/ Group
have been prepared on a going concern basis.
In reaching their conclusions, the
Directors also considered the outputs of the 2023 ILAAP, the 2023
ICAAP and the 2023 Recovery Plan which Directors believe are still
applicable as at 30 June 2024. Critical to reaching this view
were:
i.
The output of internal stress assessments which
were conducted at Group level and modelled the impact of severe yet
plausible stresses which underpinned the 2023 ICAAP
assessment.
ii.
The output of the Reverse Stress Testing
assessment undertaken within the 2023 ICAAP which modelled the
scenarios that would have to occur in order for the Group to fall
below its Total Capital Requirement (being the aggregate of Pillar
1 and Pillar 2A capital requirements).
Internal Stress Assessments
In total, three stresses were
considered:
i. Market & Climate Change
Stress which modelled the impacts of a severe global recession
which leads to increased credit defaults and widespread credit
rating downgrades, a low interest rate environment detrimentally
impacting Net Interest Income and £ sharply depreciating against
USD which led to material increases in USD denominated Credit Risk
Weighted Assets ("RWA").
ii.
Idiosyncratic Stress which modelled the impact of a material
reduction in revenue driven by idiosyncratic events.
iii. A Combined
Stress which modelled the impact of the Market & Climate Stress
occurring concurrently with the Idiosyncratic Stress.
In all the stresses noted above
the Group maintained sizeable surpluses to Total Capital
Requirement.
Reverse Stress Tests
The Reverse Stress tests are used
to assess vulnerabilities of the Company/Group and determine what
extreme adverse events would cause the business to fail.
Where any of these events are deemed to be plausible, the Company/
Group will adopt measures to mitigate the impact of such events
where plausible.
The Company/ Group did not
identify reasonably possible scenarios which could result in
failure to continue in operational existence for a period of 12
months from when these financial statements are authorised for
issuance.
Conclusion
The Directors are of the view
that:
i.
There are no material uncertainties relating to
events or conditions that cast significant doubt on the Group's
ability to continue as a going concern.
ii. There are no material uncertainties to disclose in respect of
going concern.
Accordingly, the interim
consolidated financial statements have been prepared on a going
concern basis.
1.
STATEMENT OF
ACCOUNTING POLICIES (continued)
(g)
Earnings per
share
Basic earnings per
share
Basic earnings per share is
calculated on the Group's profit or loss after taxation
attributable to the parent entity and based on weighted average of
ordinary shares at the end of the period.
Diluted earnings per
share
Diluted earnings per share is
calculated on the Group's profit or loss after taxation
attributable to owners of the parent and based on weighted average
of ordinary shares at the end of the period and the weighted
average number of ordinary shares that would be issued on
conversion of all the dilutive potential ordinary shares into
ordinary shares. Performance‑based employee share options are
treated as contingently issuable shares because their issue is
contingent upon satisfying specified conditions in addition to the
passage of time.
2.
CRITICAL
ACCOUNTING JUDGEMENTS AND ESTIMATES
In preparing the interim condensed
consolidated financial statements, management has made judgements
and estimates that affect the application of accounting policies
and the reported figures. Other than the judgement on Incremental
Borrowing Rate (''IBR'') and commencement date disclosed below,
management assessed that there were no other material changes in
the current period to the critical accounting estimates and
judgements, as disclosed in Note 2 in the 2023 Annual Report and
Financial Statements.
2.1 Judgement on IBR
The London Bridge Office Building
lease agreement was completed on 25 January 2024 and the office
space became available for use in April 2024 resulting in
recognition of a right of use ("ROU") of asset of and a lease
liability. There was no interest rate implicit in this lease
agreement, therefore, management carefully considered the guidance
within IFRS 16, and calculated an Incremental Borrowing Rate
("IBR") of 7.06% by determining:
· an
appropriate corporate bond yield (5.89%) being the average of five
specific corporate bonds which (i) had a tenor similar to the
weighted tenor of the London Bridge lease (two bonds) and
(ii) had a credit rating similar to CAB (BB) 's credit rating
and with a maturity date close to that of the weighted tenor of the
London bridge lease agreement (three bonds).
and adding
· an
asset specific adjustment (1.17%) which relates particularly to the
asset being leased and is based on prime vs secondary office
properties margins data published by the CASS Business School UK
Commercial Property Lending Report.
2.2 Judgement on Commencement Date
IFRS 16 Appendix A states that the
commencement date is the date on which a lessor makes an
underlying asset available for use by a
lessee. Although the lease agreement was
completed on 25 January 2024, management have taken the judgement
that the commencement date of the London Bridge office building
lease agreement is 25 April 2024 as this is the date the office
space became available for use to the Group.
3.
SEGMENT
REPORTING
Operating segments are determined
by the Group's internal reporting to the Chief Operating Decision
Maker ("CODM"). The CODM has been determined to be the Group's
Executive Committee. The information regularly reported to the
Executive Committee for the purposes of resource allocation and the
assessment of performance, is based wholly on the overall
activities of the Group. Based on the Group's business model, the
Group has determined that it has only one reportable segment of
continuing operations.
The CODM assess the profitability
of the segment based on a measure of EBITDA defined as
follows:
- EBITDA -
Calculated as Profit before Tax and IFRS 16 lease liability
interest, depreciation and amortisation. Although it is
typical to calculate EBITDA before interest, our net interest
income is generated from operational client deposits and subsequent
re-investment to generate returns for the shareholder and therefore
remains included within EBITDA.
All revenue from external
customers is generated through its operations located in the UK and
on that basis is wholly attributable to the UK. All non-current
assets, other than certain financial instruments, loans to banks
and deferred tax assets, are located in the UK.
Income
The Group derives its income from
continuing and discontinued operations as follows:
Six
months ended 30 June 2024
Income by Business Line
|
Continuing
operations
£'000
|
|
Discontinued
operations
£'000
|
|
Total
£'000
|
FX
|
22,850
|
|
-
|
|
22,850
|
Payments
|
14,861
|
|
-
|
|
14,861
|
Banking services and other
income
|
18,028
|
|
-
|
|
18,028
|
Total income, net of interest expense
|
55,739
|
|
-
|
|
55,739
|
Six months ended 30 June 2023
Income by Business Line
|
Continuing
operations
£'000
|
|
Discontinued
operations
£'000
|
|
Total
£'000
|
FX
|
37,944
|
|
4
|
|
37,948
|
Payments
|
17,113
|
|
855
|
|
17,968
|
Banking services and other
income
|
16,755
|
|
68
|
|
16,823
|
Total income, net of interest expense
|
71,812
|
|
927
|
|
72,739
|
FX: The Group's FX revenue is
derived from the difference between the exchange rate the Group
makes available to its customers and the rate that it receives from
one or more liquidity providers from whom it sources the relevant
currency. Revenue categorised as FX is from customers with a need
to exchange a bulk amount from one currency for another without
onward payment to another party. The Group's FX revenue also
comprise:
-
Fair value gains or losses on foreign exchange
derivative financial instruments mandatorily held at fair value
through profit or loss.
-
FX adjustments from remeasurement of non-sterling
balances at period end.
Payments: The Group's
payments revenue includes cross currency payments, same currency
payments (corresponding activity income and account management
fees), pension payments and platform revenue. Cross currency
payments comprise margin derived from bid-ask spreads on foreign
currency conversion and fees paid by customers to transfer money
from one country to another to third parties.
3. SEGMENT REPORTING
(continued)
Payments (continued): Same
currency payments relates to services provided for payments
transacted without an exchange of foreign currency largely relating
to major market currency clearing and includes fees for account
management activities and payments execution. Pension payments fees
relate to amounts earned on processing of pension scheme foreign
currency payments. Platform revenue relates to recurring fixed fees
rather than fees earned on transaction volumes.
Banking Services: The Group
also generates income from trade finance, liquidity services
(including trade finance and letters of credit), and risk
management consulting fees. The Group takes customer funds
earmarked for other needs as customer deposits and makes short-term
investment in the money market to generate net interest
income.
Seasonality
Historically, income has been
higher in the second half of each year, with the exception of 2023,
primarily due to the headwinds experienced across the key
currencies. In 2024, we expect revenues to return to the historic
40%/60% H1/H2 seasonality trend, with second-half uplifts driven by
seasonality of payment flows from the existing client base and
strategic initiatives put in place during Q2.
Profitability
The Group
measures profitability for the reporting segment on an EBITDA
basis. EBITDA is useful as a measure of comparative operating
performance between both previous periods, and other companies as
it removes the effect of taxation, depreciation and amortisation as
well as items relating to capital structure.
Reconciliation of Profit before tax to
EBITDA
Six months ended 30 June 2024
|
|
Continuing operations
£'000
|
|
Discontinued
Operations
£'000
|
|
Total
£'000
|
|
|
|
|
|
|
|
Profit before tax
|
|
13,673
|
|
-
|
|
13,673
|
Adjusted for:
|
|
|
|
-
|
|
|
Interest expenses on lease
liabilities (Note 4)
|
|
227
|
|
-
|
|
227
|
Amortisation (Note 7)
|
|
2,826
|
|
-
|
|
2,826
|
Depreciation1 (Note
7)
|
|
943
|
|
-
|
|
943
|
EBITDA
|
|
17,669
|
|
-
|
|
17,669
|
Reconciliation of Profit before tax to
EBITDA
Six months ended 30 June 2023
|
|
Continuing operations
£'000
|
|
Discontinued
Operations
£'000
|
|
Total
£'000
|
|
|
|
|
|
|
|
Profit / (loss) before tax
|
|
23,794
|
|
(219)
|
|
23,575
|
Adjusted for:
|
|
|
|
|
|
|
Interest expenses on lease
liabilities (Note 4)
|
|
34
|
|
-
|
|
34
|
Amortisation (Note 7)
|
|
2,372
|
|
13
|
|
2,385
|
Depreciation1
(Note 7)
|
|
636
|
|
-
|
|
636
|
EBITDA
|
|
26,836
|
|
(206)
|
|
26,630
|
¹ Balance includes depreciation on
property plant and equipment and depreciation on right of use of
asset.
4.
NET INTEREST
INCOME
|
Six months ended 30
June
|
Interest income
|
2024
£'000
|
|
2023
£'000
|
|
|
|
|
Interest on cash and balances at
central banks
|
14,505
|
|
13,424
|
Interest on loans and
advances
|
6,058
|
|
2,632
|
Interest on letters of
credit
|
476
|
|
-
|
Interest on investment in debt
securities
|
7,586
|
|
7,625
|
Other interest income and similar
income1
|
72
|
|
82
|
Interest income
|
28,697
|
|
23,763
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
|
Interest on financial liabilities
at amortised cost
|
(19,283)
|
|
(12,646)
|
Interest expense on lease
liabilities
|
(227)
|
|
(34)
|
Other interest
expense1
|
(111)
|
|
(44)
|
Interest expense
|
(19,621)
|
|
(12,724)
|
|
|
|
|
Total net interest income
|
9,076
|
|
11,039
|
1Other interest income and similar income and other interest
expense are interest received, interest accrued or interest paid on
the collateral balances paid to or received from our FX Swap
counterparties.
5. FEES AND COMMISSION
INCOME
|
Six months ended 30
June
|
|
|
2024
£'000
|
|
2023
£'000
|
Fees and commissions income:
|
|
|
|
Account management and
payments
|
6,575
|
|
5,764
|
Pension payment fees
|
784
|
|
527
|
Trade finance
|
571
|
|
327
|
Electronic platform fees
|
160
|
|
363
|
Total fees and commission income
|
8,090
|
|
6,981
|
|
|
|
| |
At 30 June 2024, the Group held on
its consolidated statement of financial position £946k (at 31
December 2023: £531k) of accrued income in respect of services
provided to customers and £29k (at 30 June 2023: £42k) of deferred
income (entirely recognised within 6 months) in respect of amounts
received from customers for services to be provided after the
period end.
6. NET FOREIGN EXCHANGE
GAIN
|
Six months ended 30
June
|
|
2024
£'000
|
|
2023
£'000
|
Profit on settlement of foreign
exchange contracts, fair value gains on derivatives1 and remeasurement of
non-sterling balances
|
22,850
|
|
37,944
|
Foreign exchange gains on payment
transaction revenue
|
6,998
|
|
10,208
|
Total
|
29,848
|
|
48,152
|
1 Foreign exchange derivative financial instruments are
mandatorily held at fair value through profit or loss and this
balance relates to unrealised gain/(loss) during the period. As
noted in Note 12 the derivatives have been transacted to
economically hedge assets and liabilities in foreign currencies.
The Group does not trade in derivates.
7. OPERATING
EXPENSES
|
|
|
Six months ended 30
June
|
Operating Expenses:
|
|
|
2024
£'000
|
|
2023
£'000
|
Staff costs and directors' emoluments:
|
|
|
|
|
|
Salaries and bonuses
|
|
|
18,740
|
|
16,615
|
Share based payments
|
|
|
520
|
|
1,024
|
Social security costs
|
|
|
2,401
|
|
1,880
|
Pension costs
|
|
|
1,345
|
|
994
|
|
|
|
|
|
|
Depreciation and amortisation:
|
|
|
|
|
|
Amortisation of intangible assets
(Note 17)
|
|
|
2,826
|
|
2,372
|
Depreciation of property, plant
and equipment (Note 15)
|
|
|
423
|
|
414
|
Depreciation charge for
right-of-use assets (Note 16)
|
|
|
520
|
|
222
|
|
|
|
|
|
|
Other expenses
|
|
|
|
|
|
Low-value lease
expenses
|
|
|
30
|
|
19
|
Clearing costs
|
|
|
1,154
|
|
928
|
Other bank charges
|
|
|
1,555
|
|
1,319
|
Software support/
licenses
|
|
|
3,698
|
|
2,634
|
Process automation
costs
|
|
|
1,053
|
|
1,000
|
Professional fees
|
|
|
1,155
|
|
1,084
|
Irrecoverable VAT
|
|
|
319
|
|
545
|
Other operating
expenses
|
|
|
6,271
|
|
4,149
|
Total recurring operating expenses
|
|
|
42,010
|
|
35,199
|
Non-recurring operating
expenses
|
|
|
412
|
|
13,140
|
Total operating expenses
|
|
|
42,422
|
|
48,339
|
7.
OPERATING EXPENSES (continued)
A.
Number of employees
The monthly average number of
full-time equivalent staff employed within the Group, including
executive directors for the six months ended 30 June 2024
was 415 (six months ended 30 June
2023: 313).
Average number of persons employed by legal
entity
Six months ended 30
June
|
|
2024
|
|
2023
|
Crown Agents Bank Limited
|
400
|
|
304
|
CAB US Inc (previously Segovia Technology
Company)
|
6
|
|
6
|
CAB Europe BV
|
9
|
|
3
|
|
415
|
|
313
|
8. TAX
EXPENSE
Analysis of tax charge for the period
|
Six months ended 30
June
|
|
2024
£'000
|
|
2023
£'000
|
Current tax
|
|
|
|
Corporation tax based on the
taxable profit for the period
|
1,319
|
|
8,913
|
Total current income tax for the
period
|
1,319
|
|
8,913
|
|
|
|
|
Deferred tax
|
|
|
|
Deferred tax credit in profit or
loss
|
2,113
|
|
126
|
Total deferred tax expense for the period
|
2,113
|
|
126
|
Total tax expense for the period
|
3,432
|
|
9,039
|
The income tax expense for the
period is based on an estimate of the annual effective tax rate
expected for the full year which is then applied to the pre-tax
income of the six-month period.
The effective tax rate for the six
months ended 30 June 2024 is 25.1% (six months ended 30 June 2023:
38%).
9.
CASH AND
BALANCES AT CENTRAL BANKS
|
|
As at
30 June
2024
|
|
As at 31
December 2023
|
|
|
£'000
|
|
£'000
|
Cash and balances at central
banks
|
|
499,725
|
|
528,396
|
Less: Impairment loss
allowance
|
|
-
|
|
-
|
Cash and balances at central banks
|
|
499,725
|
|
528,396
|
|
|
|
|
|
|
|
|
|
|
Component of cash and balances included in Interim condensed
statement of cashflow under:
|
|
As at 30 June
2024
£'000
|
|
As at 30
June 2023
£'000
|
|
|
|
|
|
Cash balances at central banks
|
|
499,725
|
|
577,572
|
Cash and balances at central banks
include no encumbered assets (at 31 December 2023 - £nil).
There are no restricted amounts within cash and
balances at central banks. The cash and bank balance at central
banks is measured at amortised cost as the exposure meets the
Solely Payment of Principal and Interest ('SPPI') criterion and is
held to collect the contractual cashflows.
The carrying amount of these
assets is approximately equal to their fair value.
10. MONEY MARKET
FUNDS
|
|
As at
30 June
2024
|
|
As
at
31
December 2023
|
|
|
£'000
|
|
£'000
|
Open ended investment companies
|
|
|
|
|
Goldman Sachs USD Treasury Liquid
Reserves Fund
|
|
274,684
|
|
380,805
|
Black Rock ICS USD Liquidity
Fund
|
|
79,490
|
|
98,566
|
JP Morgan USD Liquidity LVNAV
Fund
|
|
15,893
|
|
39,393
|
BlackRock ICS US Treasury Fund
Class Premier Distributing USD
|
|
20,017
|
|
-
|
|
|
390,084
|
|
518,764
|
|
|
|
|
|
Component of money market funds included in Interim condensed
consolidated statement of cashflows under:
|
|
As at
30 June
2024
£'000
|
|
As
at
30
June
2023
£'000
|
|
|
|
|
|
Cash and cash equivalent
balances
|
|
390,084
|
|
164,982
|
|
|
|
|
|
Money market funds are mandatorily
held at fair value through profit or loss as they do not satisfy
the SPPI criterion set out in IFRS 9. The funds are all rated AAA
(as at 30 June 2023 and 30 June 2024) based on a basket of credit
ratings agencies, all approved by the Financial Conduct
Authority.
Refer to Note 28 on fair value
measurements for further details.
11. LOANS AND
ADVANCES
Loans and advances are measured at
amortised cost as they meet the SPPI criterion and are held to
collect the contractual cashflows:
|
|
|
As at
30 June
2024
|
|
As
at
31
December
2023
|
|
|
|
£'000
|
|
£'000
|
Loans and advances
|
|
|
|
|
|
Loans and advances on demand to
banks
|
|
|
130,729
|
|
135,203
|
Other loans and advances to
banks
|
|
|
198,311
|
|
137,597
|
Other loans and advances to
non-banks
|
|
|
8,528
|
|
8,712
|
Total
|
|
|
337,568
|
|
281,512
|
|
|
|
|
|
|
Less: Impairment loss allowance
|
|
|
|
|
|
Loans and advances on demand to
banks
|
|
|
(14)
|
|
(25)
|
Other loans and advances to
banks
|
|
|
(24)
|
|
(27)
|
Other loans and advances to
non-banks
|
|
|
(260)
|
|
(496)
|
Total
|
|
|
(298)
|
|
(548)
|
|
|
|
|
|
|
Net Loans and advances on demand
to banks
|
|
|
130,715
|
|
135,178
|
Net Other loans and advances to
banks
|
|
|
198,287
|
|
137,570
|
Net Other loans and advances to
non-banks
|
|
|
8,268
|
|
8,216
|
Net loans and advances
|
|
|
337,270
|
|
280,964
|
|
|
|
|
|
|
Component of loans and advances included in the interim
condensed consolidated statement of cashflows
under:
|
|
|
As at 30
June 2024
£'000
|
|
As at
30
June
2023
£'000
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
130,715
|
|
107,917
|
Total
|
|
|
130,715
|
|
107,917
|
|
|
|
|
|
|
The Group's loans and advances on
demand to banks include £2k of encumbered assets (at 31 December
2023: £8,264k) in relation to derivative contracts with other
financial institutions and the balance is not overdue.
12. DERIVATIVE FINANCIAL
INSTRUMENTS
At 30 June 2024 the derivative
assets and liabilities are set out below, these are held to manage
foreign currency exposure and are not designated in hedge
accounting relationships for risk management purposes:
Foreign Exchange Forwards:
|
Notional
Principal
|
|
Assets
|
|
Liabilities
|
|
£'000
|
|
£'000
|
|
£'000
|
As at 30 June 2024
|
840,173
|
|
4,083
|
|
1,254
|
As at 31 December 2023
|
711,098
|
|
3,829
|
|
9,679
|
The forward foreign exchange
contracts have been transacted to economically hedge assets and
liabilities in foreign currencies. The fair value gain at the
statement of financial position date is £2,829k (at 31 December
2023: fair value loss £5,850k). These derivative financial
instruments and the underlying transactions they hedge will mature
during 2025 (at 31 December 2023: mature during 2024).
The following table presents the
recognised financial instruments that are offset, or subject to
enforceable master netting arrangements and other similar
agreements but were not offset in the statement of financial
position, as at 30 June 2024 and as at 31 December 2023. The column
'net amount' shows the impact on the Group's balance sheet if all
set-off rights were exercised.
As
at 30 June 2024
£'000
|
Gross
amounts
|
Gross amounts set off in the
balance sheet
|
Net amounts presented in the
balance sheet
|
Amounts subjected on master
netting arrangements1
|
Net amount
|
Financial assets
|
|
|
|
|
|
Derivative assets
|
4,083
|
-
|
4,083
|
3,656
|
427
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
Derivative liabilities
|
1,254
|
-
|
1,254
|
114
|
1,140
|
As
at 31 December 2023
£'000
|
Gross
amounts
|
Gross amounts set off in the
balance sheet
|
Net amounts presented in the
balance sheet
|
Amounts subjected on master
netting arrangements1
|
Net amount
|
Financial assets
|
|
|
|
|
|
Derivative assets
|
3,829
|
-
|
3,829
|
736
|
3,093
|
|
|
|
|
|
|
Financial liabilities
|
|
|
|
|
|
Derivative liabilities
|
9,679
|
-
|
9,679
|
8,387
|
1,292
|
1
Agreements with derivative counterparties are
based on an ISDA Master Agreement and other similar master netting
arrangement with other counterparties. Under the terms of these
arrangements, only where certain credit events occur (such as
termination of the contract or default of the other party), will
the net position owing / receivable to a single counterparty in the
same currency be taken as owing and all the relevant arrangements
terminated. As the Group does not presently have a legally
enforceable right of set-off, these amounts have not been offset in
the balance sheet but have been presented separately in the table
above.
The fair value of a derivative
contract represents the price that would be received to sell an
asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date (an exit
price).
13. INVESTMENT IN DEBT
SECURITIES
The Group's investment in debt
securities consists of fixed rate bonds issued (or guaranteed) by
central and private banks and floating rate notes. Investments in
debt securities are measured at amortised costs as they meet the
SPPI criterion and are held to collect the contractual
cashflows.
|
|
|
As at
30 June
2024
|
|
As
at
31
December
2023
|
|
|
|
£'000
|
|
£'000
|
|
|
|
|
|
|
Investment in debt securities at amortised
costs
|
|
|
|
|
|
Balance at the
beginning of the period
|
|
|
353,028
|
|
414,061
|
Purchases
|
|
|
132,690
|
|
484,208
|
Redemptions
|
|
|
(170,660)
|
|
(521,161)
|
Exchange gains/(losses)
|
|
|
1,112
|
|
(19,776)
|
Movement in discount/premium and
accrued interest receivable
|
|
|
849
|
|
(4,290)
|
|
|
|
317,019
|
|
353,042
|
Less: Impairment loss
allowance
|
|
|
(8)
|
|
(14)
|
Balance at the end of the period
|
|
|
317,011
|
|
353,028
|
|
|
|
|
|
|
Refer to Note 28 on fair value
measurements for further details.
14. OTHER ASSETS AND UNSETTLED
TRANSACTIONS
A. Other assets
|
|
As at
30 June
2024
£'000
|
|
As
at
31
December
2023
£'000
|
Financial assets:
|
|
|
|
|
Balances with mobile network
operators1
|
|
1,285
|
|
3,164
|
Staff loans
|
|
349
|
|
335
|
Transactions debited by third
party nostro provider2
|
|
1,544
|
|
1,996
|
Other assets
|
|
1,080
|
|
262
|
Less: impairment loss
|
|
(44)
|
|
(36)
|
Total
|
|
4,214
|
|
5,721
|
Non-financial assets:
|
|
|
|
|
|
|
|
|
|
VAT refund
|
|
1,853
|
|
1,994
|
Corporation tax
receivable
|
|
10,012
|
|
-
|
Prepayments
|
|
2,909
|
|
3,429
|
Deferred tax
|
|
160
|
|
56
|
|
|
14,934
|
|
5,479
|
Total other assets
|
|
19,148
|
|
11,200
|
Financial assets are measured at
amortised cost as they meet the SPPI criterion and are held to
collect the contractual cashflows.
¹ Balances with mobile network operators ("MNOs") are due to
the Group in respect of mobile money transfers. The Group charges
fees for services it provides to aid transfer of funds by its
clients to beneficiaries via mobile money using MNOs. These
balances are funds with the MNOs which have yet to be transferred
to beneficiaries.
2
These balances represent amounts that are debited
in advance by third party nostro providers at period end and funds
paid/deducted in error.
B. Unsettled
transactions:
|
|
As at
30 June
2024
£'000
|
|
As at 31
December
2023
£'000
|
|
|
|
|
|
Unsettled transactions³
|
|
29,068
|
|
8,417
|
|
|
|
|
|
³ Unsettled
foreign currency transactions that are delayed
due to time differences, public holidays in other countries (where
the counterparties are located) or similar operational reasons. The
arising balances are short-term in nature (typically less than four
days) and were settled early in the following period.
15. PROPERTY, PLANT AND
EQUIPMENT
|
|
Leasehold
improvements
£'000
|
|
Computer
Equipment¹
£'000
|
|
Fixtures &
Fittings²
£'000
|
|
Total
£'000
|
Cost
|
|
|
|
|
|
|
|
At 1 January 2024
|
122
|
|
2,789
|
|
2,275
|
|
5,186
|
Additions
|
-
|
|
1,270
|
|
943
|
|
2,213
|
|
|
|
|
|
|
|
|
At 30 June 2024
|
122
|
|
4,059
|
|
3,218
|
|
7,399
|
|
|
|
|
|
|
|
|
Accumulated depreciation
|
|
|
|
|
|
|
|
At 1 January 2024
|
111
|
|
1,907
|
|
1,977
|
|
3,995
|
Charge to profit or
loss
|
11
|
|
223
|
|
189
|
|
423
|
|
|
|
|
|
|
|
|
At 30 June 2024
|
122
|
|
2,130
|
|
2,166
|
|
4,418
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
At 1 January 2024
|
11
|
|
882
|
|
298
|
|
1,191
|
At 30 June 2024
|
-
|
|
1,929
|
|
1,052
|
|
2,981
|
|
|
|
|
|
|
|
|
1 Includes mobile phones.
2 Includes artwork.
The Directors assess property and
plant for indicators of impairment at least annually, or when there
is an indicator of impairment. The recoverable amount of the
business is significantly higher than the carrying amount of the
net assets and there were no indicators of impairment identified
during the period. Therefore, no impairment charge was taken in the
period.
16. LEASES (Group as a
lessee)
The Group has recognised
right-of-use ("ROU") assets and lease liabilities for its property
leases which have been accounted for as individual assets and
liabilities. The discounts used are the incremental borrowing rates
in the range of 2.14% - 8.99%.
The Group makes monthly/quarterly
fixed payments in advance, to the lessors for the use of the
properties, and there are no variable payments. The property leases
have lease incentives, with the lease incentive receivable being
deducted from the future lease payments.
The services provided by the
lessors, such as cleaning, security, maintenance, and utilities, as
part of the contract, are components which are not included in the
ROU calculation and have been expensed in 'Other operating
expenses' line item in Note 7. These expenses amount to £500k (six
months ended 30 June 2023: £201k).
Dilapidation costs (restoration
cost) of £1,273k (six months ended June 2023: nil) were added to
the ROU at initial recognition and the Dilapidation provision as at
30 June 2024 amounts to £1,287k (as at 30 June 2023:
nil).
The Group's leases of low value
fixtures and equipment are expensed in 'Other operating expenses'
line item in Note 7 on a straight-line basis (see accounting policy
in Note 1 for leases). These amounted to £30k (six months ended 30
June 2023: £19k).
16. LEASES (Group as a lessee) (continued)
There were no short-term leases
during the period (six months ended 30 June 2023: nil).
The lease terms cover only the
non-cancellable lease term. There are no purchase, extension, or
termination options and residual guarantees in the
leases.
There are also no restrictions or
covenants imposed by the leases.
The lease interest payments
charged as an expense for the period totalled £227k (six months
ended 30 June 2023: £34k).
The Group had no lease payments
under non-cancellable lease during the six months ended 30 June
2024 (six months ended 30 June 2023: nil).
A. Right of use assets
All the Group's right-of-use
assets are non-current assets. The Group's right-of-use assets as
at 30 June 2024 and 31 December 2023 is shown below:
|
Leasehold
property¹
£'000
|
Cost
|
|
At 1 January 2024
|
1,760
|
Additions²
|
17,537
|
At 30 June 2024
|
19,297
|
|
|
Accumulated depreciation
|
|
At 1 January 2024
|
1,071
|
Charge to profit or
loss
|
520
|
At 30 June 2024
|
1,591
|
|
|
Net book value
|
|
At 30 June 2024
|
17,706
|
At 31 December 2023
|
689
|
1 There is only one class of right-of-use assets which are the
property leases.
2 This relates to the lease of office space at 3 London Bridge,
SE1 9SG, London commenced during the period.
16. LEASES (Group as a lessee) (continued)
B. Lease liabilities
A reconciliation of the Group's
remaining lease liabilities as at 30 June 2024 and 31 December 2023
are shown below:
|
Leasehold
property
£'000
|
Lease liabilities as at 1 January 2024/31 December
2023
|
884
|
Additions during the
period
|
16,318
|
Disposal during the
period
|
(87)
|
Payments during the
period
|
(264)
|
Add: Interest on lease
liabilities
|
212
|
At
30 June 2024
|
17,063
|
There were no variable lease
payments expenses in the reporting period (six months ended 30 June
2023: nil).
The analysis of the Group's lease
liabilities as at 30 June 2024 and as at 31 December 2023 between
current and non-current liabilities is as follows:
|
As at
30 June
2024
£'000
|
|
As at
31 December
2023
£'000
|
Current
|
1,326
|
|
372
|
Non-current
|
15,737
|
|
512
|
Lease liabilities
|
17,063
|
|
884
|
C. Impact on the profit and
loss
The following are the amounts
recognised in profit or loss:
|
Six months ended 30
June
|
|
2024
£'000
|
|
2023
£'000
|
Depreciation expense of right-of-use
assets (Note 7)
|
520
|
|
222
|
Interest expense on lease
liabilities (Note 4)
|
227
|
|
34
|
Expense relating to leases of
low-value assets (Note 7)
|
30
|
|
19
|
Total amount recognised in profit or loss
|
777
|
|
275
|
The Group had total cash outflows
for the period for all leases of £264k (six months ended 30 June
2023: £202k).
17. INTANGIBLE
ASSETS
|
Goodwill
£'000
|
|
Core
Accounting Software
£'000
|
|
Other
Software
£'000
|
|
Brand/
Other
£'000
|
|
Total
£'000
|
Cost
|
|
|
|
|
|
|
|
|
|
At 1 January 2024
|
5,919
|
|
5,872
|
|
31,653
|
|
1,483
|
|
44,927
|
Additions
|
-
|
|
74
|
|
6,739
|
|
-
|
|
6,813
|
Reclassification of software from
core to non-core
|
-
|
|
(805)
|
|
805
|
|
-
|
|
-
|
Exchange rate loss
|
-
|
|
-
|
|
23
|
|
-
|
|
23
|
At 30 June 2024
|
5,919
|
|
5,141
|
|
39,220
|
|
1,483
|
|
51,763
|
|
|
|
|
|
|
|
|
|
|
Accumulated amortisation and impairment
|
|
|
|
|
|
|
|
|
At 1 January 2024
|
-
|
|
4,428
|
|
16,038
|
|
167
|
|
20,633
|
Charged in the period
|
-
|
|
168
|
|
2,632
|
|
26
|
|
2,826
|
Reclassification of software
amortisation from core to non-core
|
-
|
|
(308)
|
|
308
|
|
|
|
-
|
Exchange rate loss
|
-
|
|
-
|
|
23
|
|
-
|
|
23
|
At 30 June 2024
|
-
|
|
4,288
|
|
19,001
|
|
193
|
|
23,482
|
|
|
|
|
|
|
|
|
|
|
Net book value
|
|
|
|
|
|
|
|
|
|
At 1 January 2024/31 December
2023
|
5,919
|
|
1,444
|
|
15,615
|
|
1,316
|
|
24,294
|
At 30 June 2024
|
5,919
|
|
853
|
|
20,219
|
|
1,290
|
|
28,281
|
The Directors treat the business
as a single cash-generating unit for the purposes of testing
goodwill for impairment. The recoverable amount of goodwill was
calculated by reference to the business estimated value-in-use. The
inputs and assumptions used in the calculation of the value in use
at year-end (and the sensitivity analysis) were assessed as
reasonable and appropriate for the purposes of interim financial
reporting, because since the year-end there have been no
significant changes resulting in the need for an impairment.
Therefore, no impairment charge was taken during the
period.
18. CUSTOMER
ACCOUNTS
|
|
As at
30 June
2024
£'000
|
|
|
As
at
31
December
2023
£'000
|
Repayable on demand
|
|
629,581
|
|
|
785,316
|
Other customers' accounts with
agreed maturity dates or periods of notice by residual maturity
repayable:
|
|
|
|
|
|
3 months or less
|
|
722,404
|
|
|
670,901
|
1 year or less but over 3
months
|
|
94,050
|
|
|
81,020
|
2 years or less but over 1
year
|
|
-
|
|
|
5,652
|
|
|
1,446,035
|
|
|
1,542,889
|
|
|
|
|
|
|
| |
Customer accounts are accounts
that customers hold with the Group. The Group is transaction led
and does not borrow to finance lending. A substantial proportion of
customer accounts are current accounts which, although repayable on
demand, have historically formed a stable deposit base.
19. UNSETTLED
TRANSACTIONS, ACCRUALS AND OTHER
LIABILITIES
A. Other liabilities
|
|
As
at
30 June
2024
£'000
|
|
As
at
31
December 2023
£'000
|
Financial liabilities
|
|
|
|
|
Trade creditors
|
|
1,194
|
|
2,041
|
Funds received in
advance
|
|
4,384
|
|
3,327
|
Transactions credited by third
party nostro providers¹
|
|
1,491
|
|
159
|
Other creditors
|
|
1,464
|
|
696
|
Overdrawn bank accounts
|
|
174
|
|
-
|
|
|
8,707
|
|
6,223
|
|
|
|
|
|
Non -financial
liabilities
|
|
|
|
|
Tax liabilities
|
|
543
|
|
1,816
|
Deferred income²
|
|
37
|
|
82
|
|
|
580
|
|
1,898
|
|
|
|
|
|
Total other liabilities
|
|
9,287
|
|
8,121
|
1 These balances represent amounts that were incorrectly
credited by third party nostro providers.
2 Deferred income relates to payments that are received from
customers before the services are provided to customers.
B. Unsettled transactions
|
|
As
at
30
June
2024
£'000
|
|
As
at
31
December
2023
£'000
|
Unsettled
transactions3
|
|
16,013
|
|
20,081
|
3
Unsettled transactions result from foreign
exchange transactions that are delayed due to time differences,
public holidays in other countries (where the counterparties are
located) or similar operational reasons. The arising balances are
short-term in nature (typically less than four days) and were
settled shortly after the balance sheet date.
C. Accruals
|
|
As
at
30
June
2024
£'000
|
|
As
at
31
December
2023
£'000
|
Accruals4
|
|
11,894
|
|
18,367
|
4Accruals comprise various balances which have not yet been
invoiced for goods received or services provided e.g. audit fees,
bank charges, professional fees and payroll
accruals.
20. PROVISIONS
|
|
As
at
30
June
2024
£'000
|
|
As
at
31
December
2023
£'000
|
Expected credit loss:
|
|
|
|
|
Financial guarantee
liability
|
|
7
|
|
2
|
Liability for letter of credit
confirmations / bill acceptances
|
|
4
|
|
6
|
Liquidity as a service (LaaS) -
undrawn commitments
|
|
52
|
|
228
|
ECL provision for off balance
sheet balances
|
|
63
|
|
236
|
Dilapidation provision for the
London Bridge Lease
|
|
1,287
|
|
-
|
Total provision
|
|
1,350
|
|
236
|
i. Financial guarantee
contracts
A financial guarantee contract is
a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified
debtor fails to make payments when due in accordance with the terms
of a debt instrument. The Group provides financial guarantees to
multiple counterparties The Group received
premiums of £17k (six months ended 30 June 2023: £58k).
ii. Letter of credit
confirmations / bill acceptances
Letter of credit confirmation /
acceptance is a letter from an issuing bank guaranteeing that a
buyer's payment to a seller will be received on time and for the
correct amount. The Group confirmed the letters of credit issued by
an issuing bank and charged fixed fees, which are received either
in advance or at a later date. The Group provides these acceptances
to multiple counterparties. The Group received premiums of £334k
(six months ended 30 June 2023: £572k).
The uncertainties relating to the
amount or timing of any outflow are those inherent within the
products concerned, notably that the relevant counterparty will not
carry out its obligations. At 30 June 2024, cash collateral of
£39,155 (at 31 December 2023: £44,588k) was held by the Group in
respect of the assets underlying financial guarantees and letter of
credits noted above. These are not restricted cash and are
available for use by the Group.
iii. Liquidity as a service
("LaaS") - undrawn commitments
LaaS is a credit facility offered
by the Group to its customers that allows customers to draw down on
the facility on satisfaction of the terms of this facility. The
Group charges facility fees for consideration of providing this
facility. The Group provides this facility to multiple
counterparties. The Group received facility fees of £nil (six
months ended 30 June 2023: £ 52k).
21. TREASURY
SHARES
In January 2024, via the EBTs, the
Group acquired a total of 280,090 shares (at 31 December 2023: nil)
from the market at an average cost of £0.864 per share as part of
its employee share incentive scheme. As at 30 June 2024 a total of
£242k has been recognised against equity. The market value of these
shares as at 30 June 2024 is £286k. Directly attributable costs of
£nil (at 31 December 2023: nil) have been expensed to
equity.
22. RETAINED
EARNINGS
|
|
|
|
|
£'000
|
|
|
|
|
Balance at 1 January 2023
|
|
|
40,179
|
Profit for the year
|
|
|
22,713
|
Share capital reduction
|
|
|
67,936
|
Dividends declared
|
|
|
(11,300)
|
Share based payment expense
|
|
|
1,313
|
Acquisition of NCI
|
|
|
7,530
|
Capital injection
|
|
|
3,661
|
Issuance of new shares
|
|
|
(11)
|
Change in ownership interest in subsidiary
|
|
|
(543)
|
Balance at 31 December 2023/ 1 January 2024
|
|
|
131,478
|
Profit for the period
|
|
|
10,241
|
Share based payment expense
|
|
|
520
|
Stamp duty refund
|
|
|
38
|
Balance at 30 June 2024
|
|
|
142,277
|
23. CALLED UP SHARE
CAPITAL
|
As at 30
June
2024
'000
|
|
As at 31
December 2023
'000
|
Number of ordinary shares
|
|
|
Authorised, allotted, issued, and
fully paid (Ordinary Shares)
|
254,143
|
|
254,143
|
|
|
|
|
Ordinary share balances
|
As at 30
June
2024
£'000
|
|
As at 31
December 2023
£'000
|
Authorised, allotted, issued, and
fully paid (Ordinary Shares)
|
85
|
|
85
|
24. NOTES TO THE STATEMENT OF
CASH FLOWS
A. Reconciliation of profit before taxation to net cash
outflow from operating activities
|
|
Six months ended 30
June
|
|
Notes
|
2024
£'000
|
|
Restated
2023
£'000
|
|
|
|
|
|
Profit / (loss) before taxation
|
|
13,673
|
|
23,575
|
Continuing operations
|
|
13,673
|
|
23,794
|
Discontinued operations
|
|
-
|
|
(219)
|
Adjusted for non-cash
items
|
|
|
|
|
Effect of currency exchange rate
change1
|
|
(7,944)
|
|
(13,447)
|
Effect of other mark to market
revaluations
|
|
20
|
|
|
Amortisation
|
17
|
2,826
|
|
2,402
|
Depreciation
|
|
943
|
|
636
|
-
Right-of-use of assets
|
16
|
520
|
|
222
|
-
Property, plant and equipment
|
15
|
423
|
|
414
|
Share based payment
charge
|
7
|
520
|
|
1,024
|
Loss on write-off of intangible
assets
|
|
-
|
|
299
|
Profit on disposal of discontinued
operations
|
|
-
|
|
(68)
|
Interest accrued on lease
liabilities
|
16
|
212
|
|
34
|
Other non-cash expenses
|
|
-
|
|
1,045
|
|
|
10,250
|
|
15,500
|
Changes in working
capital
|
|
|
|
|
Net (increase)/decrease in loans
and advances to banks other than on demand1
|
|
(61,136)
|
|
12,342
|
Net decrease in customer
accounts1
|
|
(95,156)
|
|
(7,841)
|
Net decrease/(increase) in
investment in debt securities1
|
|
36,285
|
|
(34,393)
|
Net decrease in other loans and
advances to non-banks1
|
|
146
|
|
7,058
|
Net increase in unsettled
transactions
|
|
(24,719)
|
|
(15,232)
|
Net increase in other
assets
|
|
(7,949)
|
|
(1,003)
|
Net increase in other
liabilities
|
|
8,909
|
|
8,849
|
Net decrease in lease
liabilities
|
|
(1,095)
|
|
(168)
|
Net (increase)/ decrease in
accrued income
|
|
(633)
|
|
872
|
Net decrease in accruals,
provisions, and deferred tax
|
|
(3,246)
|
|
(5,373)
|
Net cash generated/(outflow) from operating
activities1,2
|
|
(138,344)
|
|
(19,389)
|
1 See
restatements in Note D below.
2 Cash flows
from operating activities include interest received of £30,757k
(six months ended 2023: £24,185k) and interest paid of £15,474k
(six months ended 2023: £10,187k).
24. NOTES TO THE STATEMENT OF CASH FLOWS
(continued)
B. Non-cash transactions - lease liability/
right-of-use asset
Non-cash transactions from
investing activities for the Group during the period include
acquisition of right-of-use assets amounting to £17,537k (six
months ended 30 June 2023: £nil). Refer to Note 16.
C. Changes in liabilities arising from financing
activities
The Group's changes in lease
liabilities are in Note 16. There are no other changes in
liabilities from financing activities.
D. Restatement of prior period
balances
A number of 2023 cash flow
balances have been restated as follows:
Notes to the statement of cash flows
|
Previously reported £'000
|
|
Prior Period Adjustments
£'000
|
|
Restated £'000
|
Non-cash items
|
|
|
Adjustment
1
|
|
Adjustment
2
|
|
Adjustment
3
|
Adjustment
4
|
Adjustment
5
|
|
|
Effect of currency exchange rate
changes
|
(15,812)
|
|
2,365
|
|
-
|
|
-
|
-
|
|
|
(13,447)
|
Other non-cash expenses
|
-
|
|
-
|
|
1,045
|
|
-
|
-
|
|
|
1,045
|
Changes in working capital
|
|
|
|
|
|
|
|
|
|
|
|
Net (increase)/decrease in loans
and advances to banks other than on demand
|
11,125
|
|
1,217
|
|
-
|
|
-
|
-
|
|
|
12,342
|
Net decrease in customer
accounts
|
(1,736)
|
|
(6,105)
|
|
-
|
|
-
|
-
|
|
|
(7,841)
|
Net increase in investment in debt
securities
|
(36,370)
|
|
1,977
|
|
-
|
|
-
|
-
|
|
|
(34,393)
|
Net (increase) / decrease in
unsettled transactions
|
(12,426)
|
|
-
|
|
-
|
|
-
|
(2,806)
|
-
|
|
(15,232)
|
Net increase in other
assets
|
(3,809)
|
|
-
|
|
-
|
|
-
|
2,806
|
-
|
|
(1,003)
|
Net (decrease)/increase in other
liabilities
|
7,075
|
|
-
|
|
-
|
|
1,606
|
-
|
168
|
|
8,849
|
Net decrease in lease
liabilities
|
-
|
|
-
|
|
-
|
|
-
|
-
|
(168)
|
|
(168)
|
Net cash outflow from operating
activities
|
(21,494)
|
|
(546)
|
|
1,045
|
|
1,606
|
-
|
|
|
(19,389)
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated statement of cash flows for the six months ended
30 June 2023
|
|
|
|
|
|
|
|
|
|
|
Net cash outflow from operating
activities
|
(21,494)
|
|
(546)
|
|
1,045
|
|
1,606
|
-
|
|
|
(19,389)
|
Net cash used in operating
activities
|
(31,308)
|
|
(546)
|
|
1,045
|
|
1,606
|
-
|
|
|
(29,203)
|
Proceeds from shares issued to
non-controlling interests/
|
3,626
|
|
-
|
|
(1,045)
|
|
(1,606)
|
-
|
|
|
975
|
Net cash flow from financing
activities
|
(9,305)
|
|
-
|
|
(1,045)
|
|
(1,606)
|
-
|
|
|
(11,956)
|
Net decrease in cash and cash
equivalents
|
(40,944)
|
|
(546)
|
|
-
|
|
-
|
-
|
|
|
(41,490)
|
Effect of exchange rate changes on
cash and cash equivalents
|
(15,638)
|
|
546
|
|
-
|
|
-
|
-
|
|
|
(15,092)
|
Adjustments included previously in 31 December 2023
accounts
Adjustment 1:
In H2 2023, the Group has implemented an improved
approach to capturing unrealised FX gains and losses which under
IAS 7 are not deemed to be cash flows. As a result, the prior
period balances relating to the consolidated statement of cash
flows for the period ended 30 June 2023, and related notes have
been restated accordingly.
Adjustment 2: Bonuses were
transferred internally in relation to the purchase of shares of a
subsidiary. As a result, there was no cash movement.
Adjustment 3: Prior year
bonuses were transferred internally in relation to the purchase of
shares of a subsidiary. As a result, there was no cash
movement.
Adjustment 4: Late receipts
were previously categorised within Other Assets and have now been
included within Unsettled Transactions.
Other/new adjustments
Adjustment 5:
The movement in the Lease Liability has now been
analysed out separately. Previously, it was included in the cash
flow statement under movements in Other Liabilities.
25. EARNINGS PER
SHARE
The calculation of the basic and
diluted earnings per share at reporting date is based on the
following data:
|
Six months ended 30
June
|
|
2024
£'000
|
|
2023
£'000
|
Earnings /(losses) attributable to owners of the
Group:
|
|
|
|
Continuing operations
|
10,241
|
|
13,731
|
Discontinued operations
|
-
|
|
(153)
|
|
10,241
|
|
13,578
|
|
|
|
|
Weighted average number of ordinary shares
|
Six months ended 30
June
|
|
2024
'000
|
|
2023
'000
|
|
|
|
|
Weighted average number of ordinary shares for basic earnings
per share
|
254,143
|
|
221,739
|
Potential dilutive ordinary shares
from the 2023 LTIP Scheme1
|
1,142
|
|
-
|
Weighted average number of ordinary shares for diluted
earnings per share
|
255,285
|
|
221,739
|
1 Current forecasts indicate that there will be no dilution
effective from the 2024 LTIP scheme and therefore, these have not
been included in the calculation of the number of ordinary shares
for the diluted earnings per share.
The number of potential dilutive
ordinary shares arising from the 2023 LTIP Scheme is small relative
to the total number of ordinary shares in issue at the end of the
period, therefore, the basic and diluted earnings per share numbers
are similar. The basic and diluted earnings per share are as
follows:
|
Six months ended 30
June
|
|
2024
pence
|
|
2023
pence
|
Basic and diluted earnings per share
|
|
|
|
Continuing operations
|
4.0
|
|
6.2
|
Discontinued operations
|
-
|
|
(0.1)
|
Total basic and diluted EPS attributable to owners of the
Company
|
4.0
|
|
6.1
|
|
|
|
|
26. RELATED PARTY
TRANSACTIONS
The related party transactions
(which were all at arm's length and were transacted at market
prices) are as follows:
A. As
at 30 June 2024, the Group had one related party balance with a
company outside the Group (at 31 December 2023: two) as
follows:
(i) £162k (at 31 December 2023:
£129k), payable to Helios Investors Genpar III LP. The amount
relates to the outstanding balance of a director's fees payable by
CAB. No interest accrues on the outstanding amount. Helios
Investors Genpar III LP continues to have indirect significant
influence over the Company as at 30 June 2024.
B. There were no banking services provided to related parties
during the period. A Group company provided banking services to
connected parties with income earned in 2023 as follows:
Six
months ended 30 June 2023
|
Net foreign exchange
gain
£'000
|
|
Net interest
income
£'000
|
|
Total
£'000
|
Helios Investors Genpar III LP
|
1
|
|
-
|
|
1
|
|
1
|
|
-
|
|
1
|
C. Directors and key management
loans
Across the Group there were loans
outstanding to directors and key management at the period-end as
follows:
|
|
As at 30
June 2024
|
|
As at 31
December
2023
|
|
|
No
|
|
£'000
|
|
No.
|
|
£'000
|
Directors
|
|
|
|
|
|
|
|
As at 1 Jan
|
|
1
|
|
335
|
|
3
|
|
159
|
Repaid
|
|
-
|
|
-
|
|
(3)
|
|
(159)
|
Director's resignation
|
|
(1)
|
|
(335)
|
|
-
|
|
-
|
Advanced
|
|
-
|
|
-
|
|
1
|
|
335
|
As at period end
|
|
-
|
|
-
|
|
1
|
|
335
|
|
|
|
|
|
|
|
|
Key Management
|
|
|
|
|
|
|
|
As at 1 Jan
|
|
-
|
|
-
|
|
8
|
|
252
|
Repaid
|
|
-
|
|
-
|
|
(8)
|
|
(252)
|
As at period end
|
|
-
|
|
-
|
|
-
|
|
-
|
|
|
|
|
|
|
|
|
|
The loans repaid in 2023 accrued
interest at the HMRC stipulated interest rate but only on balances
in excess of £10,000.
The Director's loan advanced in
2023 was to the CEO of the Group at that time, Bhairav Trivedi, and
is repayable on the occurrence of the earliest of a number of
events. The loan accrues interest monthly at the HMRC stipulated
rate on the entire balance and the interest is due for repayment
when the loan is repaid. Since Bhairav ceased to be a director in
H1 2024, the outstanding amount is no longer classified as a
Director's loan. The period end balance excludes accrued interest
totalling £nil (as at 31 December 2023 - £5k).
There was no impairment of the
loans owed by these related parties (2023: nil). The ECL for all
such loans was assessed as immaterial as at 30 June 2024 and 31
December 2023.
26. RELATED PARTY TRANSACTIONS (continued)
D. Remuneration
of key
management personnel (including directors)
The remuneration of the key
management personnel of the Group is set out below in aggregate for
each of the categories specified in IAS 24 Related Party
Disclosures.
|
Six months ended 30
June
|
|
2024
£'000
|
|
2023
£'000
|
Short-term employee benefits
(including bonuses and NICs Ers)
|
2,426
|
|
2,863
|
Post-employment
benefits
|
114
|
|
55
|
Share based payments
|
238
|
|
393
|
Total remuneration
|
2,778
|
|
3,311
|
Included in the aggregate
emoluments above, the Group has made contributions of £48k (six
months ended 30 June 2023: £36k) on behalf of two directors (six
months ended 30 June 2023: two) to a defined contribution pension
scheme. No retirement benefits accrued for any director (six months
ended 30 June 2023: none) under a defined benefit pension
scheme.
The aggregate emoluments
(including share-based payment charge) and accrued pension
contributions of the highest paid director in the Group were £425k
(six months ended 30 June 2023: £310k) and £32k (six months ended
30 June 2023: £25k) respectively.
The aggregate emoluments
(Including pension contributions and exit compensation) of the
Group's key management personnel (excluding Directors) were £1,773k
(six months ended 30 June 2023: £1,578k).
27. CLASSIFICATION OF FINANCIAL
INSTRUMENTS
The carrying values of the
financial assets and financial liabilities are summarised by
category below:
|
As at
30 June
2024
£'000
|
|
As
at
31
December
2023
£'000
|
Financial assets
Measured at fair value through profit or
loss
|
|
|
|
Money market funds
|
390,084
|
|
518,764
|
Derivative financial instruments -
foreign exchange related contracts
|
4,083
|
|
3,829
|
|
394,167
|
|
522,593
|
Measured at amortised cost
|
|
|
|
Cash and balances at central
banks
|
499,725
|
|
528,396
|
Loans and advances on demand to
banks
|
130,715
|
|
135,178
|
Other loans and advances to
banks
|
198,287
|
|
137,570
|
Other loans and advances to
non-banks
|
8,268
|
|
8,216
|
Investment in debt
securities
|
317,011
|
|
353,028
|
Unsettled
transactions2
|
29,068
|
|
8,417
|
Other assets (excluding
non-financial assets)
|
4,214
|
|
5,721
|
Accrued income
|
1,187
|
|
544
|
|
1,188,475
|
|
1,177,070
|
Measured at fair value through other comprehensive
income
|
|
|
|
Investment in equity
securities
|
569
|
|
495
|
|
|
|
|
27. CLASSIFICATION OF FINANCIAL INSTRUMENTS
(continued)
|
As at
30 June
2024
£'000
|
|
As
at
31
December
2023
£'000
|
Financial
liabilities
Measured at fair value through profit or
loss
|
|
|
|
Derivative financial instruments -
foreign exchange related contracts
|
1,254
|
|
9,679
|
|
1,254
|
|
9,679
|
Measured at amortised cost
|
|
|
|
Customer accounts
|
1,446,035
|
|
1,542,889
|
Unsettled transactions
|
16,013
|
|
20,081
|
Other liabilities (excluding
non-financial liabilities)
|
8,707
|
|
6,223
|
Lease liabilities
|
17,063
|
|
884
|
Accruals
|
11,894
|
|
18,367
|
|
1,499,712
|
|
1,588,444
|
28. FAIR VALUE
MEASUREMENTS
A. Fair value
methodology:
Fair value is the price that would
be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement
date. Where available, fair values are determined at prices quoted
in active markets. In some instances, such price information is not
available for all instruments and the Group applies valuation
techniques to measure such instruments. These valuation techniques
make maximum use of market observable data, but in some cases,
management estimate unobservable market inputs within the valuation
model. There is no standard model and different assumptions would
generate different results. To provide an indication about the
reliability of the inputs used in determining fair value, the Group
has classified its financial instruments that are measured at fair
value into the three levels of fair value hierarchy explained
further below, based on the lowest level input that is significant
to the entire measurement of the instrument.
B. Fair value
hierarchy:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets or liabilities
Inputs to Level 1 fair value are
quoted prices (unadjusted) in active markets for identical assets.
An active market is defined as one where transactions for the asset
occur with sufficient frequency and volume to provide pricing
information on an on-going basis.
Level 2 - Inputs other than quoted prices included within
Level 1 that are observable for the asset or liability, either
directly or indirectly
The fair value of financial
instruments not traded in an active market (for example,
over-the-counter derivative financial instruments) is determined
using valuation techniques that maximise the use of observable
market data and rely as little as possible on entity-specific
estimates. If all significant inputs required to determine the fair
value of an instrument are observable, the instrument is included
in Level 2.
Fair values of derivative
financial instruments (foreign exchange contracts), money market
funds, investment in equity securities and investment in debt
securities are included in Level 2.
28. FAIR VALUE MEASUREMENTS
(continued)
B. Fair value hierarchy
(continued)
Money market funds are valued at
fair value based on the price a willing buyer would pay for the
asset. Any gain or loss is taken through the profit and loss
account. The money market funds include contractual terms such that
they are traded at par until the total market value of the
underlying instruments deviates from that par value by a certain
amount (typically 20bps). The funds have each traded at par at all
times since the initial investment by the Group.
The fair value of the Group's
investment in debt securities is determined by using discounted
cash flow models that use market interest rates as at the end of
the period.
Level 3 - Unobservable inputs for the asset or
liability
Inputs to Level 3 fair values are
based on unobservable inputs for the assets as of the last
measurement date. If all significant inputs required to determine
the fair value of an instrument are observable, then the instrument
is included in Level 2, otherwise, it is included in Level 3. The
Group did not have any such instruments.
There were no transfers between
fair value hierarchy level during the period. There were no changes
in valuation techniques used during the period.
C. Financial assets and
liabilities through FVTPL and FVTOCI are categorised at Level 2
Fair value hierarchy
Financial assets and financial liabilities at fair value
through profit or loss
|
Valuation techniques
|
Inputs (including any significant unobservable
inputs)
|
Derivative financial assets
|
The Mark-to-Market (''MTM'')
calculation for foreign currency forwards is performed within Core
Banking System (''CBS'') based on market inputs pulled from Reuters
at the end of each trading day.
CBS applies a straight-line
interpolation calculation to derive the requisite forward points
for each currency based on the maturity date of the transaction -
these points are added to the spot rate to derive a revaluation
rate.
|
Reuters quoted spot rates and
forward points.
|
Money market funds
|
Net asset value based on the
valuation of the underlying Level 1 investments.
|
Quoted market prices but not for
identical assets.
|
Investment in equity securities
|
Equity investment held in illiquid
security. In order to undertake its business, the Group utilises
the Swift payment system, the conditions of which oblige
participants to invest in the shares of Swift, in proportion to
participants' financial contributions to Swift.
|
The fair value is based on a share
price provided by Swift annually.
|
Derivative financial liabilities
|
The MTM calculation for FX
Forwards is performed within CBS based on market inputs pulled from
Reuters at the end of each trading day.
CBS applies a straight-line
interpolation calculation to derive the requisite forward points
for each currency based on the maturity date of the transaction -
these points are added to the spot rate to derive a revaluation
rate.
|
Reuters quoted spot rates and
forward points.
|
D. Financial assets and
financial liabilities at fair value through profit or
loss
Forward foreign exchange contracts
have been used to economically hedge assets and liabilities in
foreign currencies, with movements recognised at fair value through
profit or loss. Any gain or loss is reflected in the interim
condensed consolidated statement of profit or loss and other
comprehensive income.
28. FAIR VALUE MEASUREMENTS
(continued)
E. Fair values of financial
assets that are measured at amortised cost
Apart from the fixed rate bonds,
the carrying amounts of financial assets and liabilities measured
at amortised cost are approximately the same as their fair values
due to their short-term nature. The fair value of the fixed rate
bonds is provided below.
F. Financial liabilities
measured at amortised cost
The carrying amounts of financial
liabilities at amortised cost are approximately the same as their
fair values due to their short-term nature.
G. Financial instruments
measured at fair value
The valuation levels of the
financial assets and financial liabilities accounted for at fair
value are as follows:
As
at 30 June 2024
|
|
Level 2
£'000
|
|
Stress
|
|
Sensitivity
£'000
|
Financial assets at fair value
|
|
|
|
|
|
|
- Money market funds
|
|
390,084
|
|
1%
increase in interest rates
|
|
(540)
|
- Derivative financial assets
|
|
4,083
|
|
£
exchange-rate rise of 1%
|
|
(4,241)
|
- Investment in equity securities
-
|
|
569
|
|
Equity
price +5%
|
|
28
|
Financial liabilities at fair value
|
|
|
|
|
|
|
- Derivative financial liabilities
|
|
(1,254)
|
|
£
exchange-rate rise of 1%
|
|
(149)
|
|
|
393,482
|
|
|
|
(4,902)
|
As
at 31 December 2023
|
|
Level 1
£'000
|
|
Stress
|
|
Sensitivity
£'000
|
Financial assets at fair value
|
|
|
|
|
|
|
- Money market funds
|
|
518,764
|
|
1%
increase in interest rates
|
|
(895)
|
- Derivative financial assets
|
|
3,829
|
|
£
exchange-rate rise of 1%
|
|
(299)
|
- Investment in equity securities
|
|
495
|
|
Equity
price +5%
|
|
24
|
Financial liabilities at fair value
|
|
|
|
|
|
|
- Derivative financial liabilities
|
|
(9,679)
|
|
£
exchange-rate rise of 1%
|
|
(3,390)
|
|
|
513,409
|
|
|
|
(4,560)
|
These are all recurring fair value
measurements. There were no financial assets classified as Level 1
and Level 3, and there were no movements between fair value
levels.
28. FAIR VALUE MEASUREMENTS
(continued)
H. Fair value and carrying
amount of investment in debt securities
|
As at 30
June
2024
£'000
|
|
As at
31
December
2023
£'000
|
Fixed rate bonds
|
Carrying
Value
|
Fair
Value
|
|
Carrying
Value
|
Fair
Value
|
-
US Treasury Bills (excluding accrued
interest)
|
-
|
-
|
|
7,845
|
7,775
|
- Other
fixed rate bonds (excluding accrued interest)
|
314,901
|
306,500
|
|
343,070
|
342,907
|
Accrued interest
|
2,110
|
2,110
|
|
2,113
|
2,113
|
|
317,011
|
308,610
|
|
353,028
|
352,795
|
Note: The fair values of the fixed
rate bond are based on market quoted prices. They are classified as
Level 1 fair values in the fair value hierarchy due to the liquid
nature of the bond holdings, having observable and transparent
secondary market pricing.
29. CONTINGENT LIABILITIES AND
COMMITMENTS
A. CONTINGENT
LIABILITIES
The Group does not have any other
contingent liabilities at the balance sheet date other than those
disclosed in Note 20.
B. COMMITMENTS
i. Capital Commitments
The Group does not have any
capital commitments at the balance sheet date (at 31 December 2023:
nil) nor any which have been approved but not contracted (at 31
December 2023: nil).
ii. Other Commitments
a) In 2020, the
Group entered into a five-year contract to assist with the ongoing
automation of manual processes. The following payments are due
under the contract:
Payment
Due
|
As at 30
June
2024
£'000
|
|
As at 31
December
2023
£'000
|
Not later than one
year
|
2,260
|
|
2,260
|
Later than one year and not
later than five years
|
753
|
|
1,883
|
|
3,013
|
|
4,143
|
The total amounts due under the
contract are expensed in the interim condensed consolidated
statement of profit or loss and other comprehensive income over the
life of the contract, in line with the benefits
received.
30. SHARE BASED PAYMENT
TRANSACTIONS
a. 2023 Long Term Incentive Plan
The Group implemented a long-term
incentive plan (''LTIP'') in July 2023 to incentivise staff and
this was accounted for in accordance with the requirements of IFRS
2.
On 4 June 2024, the Remuneration
Committee resolved to amend the performance conditions by (i)
withdrawing the Total Shareholder Return (''TSR'') condition and
(ii) reducing the EPS metrics, which also became applicable to all
outstanding awards. The changes were for the outstanding awards
held by all participants other than Executive Directors.
In line with requirements of IFRS
2:26-27, this change has been accounted for as a modification of
the scheme. The incremental fair value granted, as a result of the
modification, had no material impact on the interim consolidated
financial statements.
b. 2024 Long Term Incentive Plan
Long Term Incentive Plan ("LTIP")
awards were granted to incentivise members of the Executive
Committee ("EXCO") and
other senior management on 19 June 2024 excluding Executive
Directors. The vesting conditions are subject to performance
measures over the period from 1 January 2024 to 31 December 2026
relating to relative total shareholder return (33%) and earnings
per share (67%). Each measure is assessed independently over
the vesting periods. The awards are also subject to a service
condition requiring continued employment until the final vesting
date of 1 April 2027. The LTIP awards granted are as
follows:
LTIP awards granted
|
|
Ordinary Shares subject to
LTIP awards
Number -
'000
|
Awards to members of the Executive
Committee1
|
|
1,564
|
Awards to other senior
management
|
|
1,448
|
|
|
3,012
|
1
This excludes
the LTIP awards which will be granted to Executive Directors later
in 2024. Full details of the level of grants and performance
conditions applying to Executive Directors will be provided when
the grants are made and reported in the full year
accounts.
All of the awards granted were
outstanding at the end of the period.
LTIP awards are subject to a
clawback period of three years from the date of grant.
Additionally, LTIP awards granted to members of EXCO are subject to
a two-year post-vesting holding period.
The fair valuation of these awards
had no significant or material impact on the interim consolidated
financial statements.
c. Free Shares Award
On 26 March 2024, an award of 1,000
free shares per employee was made under the Share Incentive Plan to
eligible employees (defined as those in continuous service since 6
July 2023). Awards were given to 259 employees with a fair
value of 95.2p per share, being the closing market price of
ordinary shares on the trading date prior to the award date. The
awards are subject to a service condition of 12 months from the
date of grant.
31. EVENTS AFTER THE REPORTING
PERIOD
A. Assignment of Tower 42
office space
The Group assigned the lease
agreement for the office space in Tower 42 after 30 June 2024.The
related right-of-use asset balance and lease liability balances
were consequently derecognised post 30 June 2024.
B. New office lease space (US)
The Group entered into a lease
agreement for office space at One Rockefeller Plaza, New York,
10020, during the period. A right-of-use asset balance and a lease
liability balance will be recognised in the consolidated statement
of financial position for the full year 2024. Interest expense and
depreciation will be recognised in the consolidated statement of
profit or loss and other comprehensive income over the life of the
lease contract, starting from the commencement date which is post
reporting period.
The expected cash outflows over
the duration of the lease contract amount to £1.3m.
32. BOARD
APPROVAL
The interim condensed consolidated
financial statements for the period ended 30 June 2024 were
approved by the Board of Directors and authorised for issue on 03
September 2024.
Glossary
Adjusted EBITDA
|
EBITDA before non-recurring
operating expenses or exceptional items which have been identified
by management
|
Adjusted EBITDA margin
|
Adjusted EBITDA as a percentage of
Gross Income
|
Adjusted Profit After Tax
|
Profit After Tax before
non-recurring operating expenses or exceptional items identified by
management
|
Admission
|
The ordinary shares of the Company
were admitted to the premium listing segment of the Official List
of the FCA and to trading on the Main Market of the London Stock
Exchange on 11 July 2023
|
Alternative Interest Income
|
Calculated by capturing interest
income by source and spreading the interest expense through an
internal transfer pricing mechanism
|
APM
|
Alternative performance measures,
as defined
|
BAU
|
Business as usual
|
B2B
|
Business to
Business
|
Banking Services
|
One of the Group's three business
lines
|
BN
|
A billion, ie 1,000
million
|
CAB
|
Crown Agents Bank Limited, a
regulated subsidiary of the Group
|
CAB Payments or the Company
|
CAB Payments Holdings PLC, the
Group's listed holding company
|
CAIM
|
Crown Agents Investment Management
Limited a wholly owned subsidiary of the Company until it was sold
on 31 March 2023
|
CAPEX
|
Expenditures made for goods or
services that are recorded on a company's balance
sheet
|
CBS
|
Core Banking System, the Group's
banking software
|
CEO
|
Chief Executive
Officer
|
CFO
|
Chief Financial Officer
|
CODM
|
Chief Operating Decision
Maker
|
Currency corridor
|
Specific combinations of sending
currency and receiving currency pairs, or, in some cases, country
combinations
|
Directors
|
Directors of CAB
Payments
|
EBITDA
|
Profit before tax, IFRS 16 lease
liability interest depreciation and amortisation. Although it is
typical to calculate EBITDA before interest, our net interest
income is generated from operational client deposits and subsequent
re-investment to generate returns for the shareholder and therefore
remains included within EBITDA
|
EBT
|
Employee benefit
trust
|
ECL
|
Expected credit
loss
|
Emerging Markets
|
Markets other than G10 or Denmark.
When we refer to Emerging Markets income, volume or take rate, they
are Wholesale FX or Payment FX where the selling currency is an
Emerging Market currency
|
EMFI
|
Emerging market financial
institutions
|
EPS
|
Earnings per share
|
ERMF
|
Enterprise Risk Management
Framework
|
EU
|
European Union
|
EUR
|
Euro
|
EVP
|
Corporate title: Executive Vice
President
|
FCA
|
Financial Conduct
Authority
|
FinTech
|
Financial
Technology
|
FTEs
|
Full Time Employees, including
temporary contractors and consultants filling in for permanent
roles
|
Glossary (continued)
|
|
|
FVTOCI
|
Fair value through other
comprehensive income
|
FVTPL
|
Fair value through profit or
loss
|
FX
|
Foreign Exchange. When referring
to the Group's services, it refers to one of the Group's business
lines, including the Group's spot foreign exchange trading
services
|
G10
|
Belgium, Canada, France, Italy,
Japan, the Netherlands, the United Kingdom, and the United States,
Switzerland and the central banks of Germany and
Sweden
|
GBP
|
£ sterling
|
GDP
|
Gross domestic
product
|
Gross Income
|
Total income, net of interest
expense
|
Group
|
CAB Payments Holdings PLC and
subsidiaries
|
HMRC
|
HM Revenue &
Customs
|
HQLA
|
High Quality Liquid
Assets
|
IAS
|
International Accounting
Standards
|
IBR
|
Incremental Borrowing
Rate
|
ICAAP
|
Internal Capital Adequacy
Assessment Process
|
IDO
|
International development
organisations
|
IFRS
|
UK-adopted international
accounting standards
|
ILAAP
|
Internal Liquidity Adequacy
Assessment Process
|
IPO
|
Initial public
offering
|
IRRBB
|
Interest rate risk in the banking
book
|
ISDA
|
International Swaps and
Derivatives Association
|
ISSB
|
International Sustainability
Standards Board
|
KPI
|
Key performance
indicator
|
LAAS
|
Liquidity as a service - a credit
facility offered by the Group to its customers which allows
customers to draw down on the facility on satisfaction of the terms
of the facility
|
LATAM
|
Latin America
region
|
LCR
|
Liquidity Coverage
Ratio
|
LTIP
|
Long term incentive
plan
|
LSE
|
London Stock
Exchange
|
MN
|
A million
|
MNO
|
Mobile network operator
|
MTM
|
Mark to market
|
NBFI
|
Non-Bank financial
institution
|
NCI
|
Non-controlling
interest
|
Netting
|
The practice of using funds
received from one customer to fulfil an order in that same currency
from another customer in order to capture both bid and ask spreads
on the transaction
|
NGO
|
Non-governmental
organisation
|
NGN
|
Nigerian naira
|
NIC
|
National insurance
contributions
|
Nostro
|
A bank account held by CAB in
another country, denominated in a foreign
currency
|
NSFR
|
Net stable funding
ratio
|
Glossary (continued)
|
OCI
|
Other comprehensive
income
|
OECD countries
|
The 38 member countries of the
Organisation for Economic Co-operation and
Development
|
Operating Free Cash Flow
|
Adjusted EBITDA before the cost
of purchasing property, plant and equipment, the cost of intangible
asset additions and the cost of lease payments
|
Operating Free Cash Flow Conversion
|
Free cash flow as a percentage of
Adjusted EBITDA
|
Payment FX
|
The margin derived from bid-ask
spreads on foreign currency conversion and fees paid by customers
to transfer money from one country to another and to third
parties
|
Payments
|
One of the Group's three business
lines
|
PLC
|
Public limited
company
|
PPE
|
Property plant and
equipment
|
PRA
|
Prudential Regulation
Authority
|
RCSA
|
Risk control and
self-assessment
|
Revenue
|
When referring to the Group's
financial results means "total income, net of interest
expense"
|
ROU
|
Right-of-use
|
RWA
|
Credit risk weighted
assets
|
SPPI
|
Solely Payment of Principal and
Interest principle under IFRS 9
|
Strategic Restructuring Costs
|
Expenses incurred by a company in
relation to changes to its strategy. These costs include expenses
for contractors supporting the new CEO during a strategic review,
as well as dual running costs associated with the CEO
transition
|
Take rate
|
A combination of the dealing
profit (i.e. the spread between any buy / sell of two FX trades
undertaken), the margin added to the transaction (i.e. the fee
element agreed with the customer for the transaction), and any
additional fees charged; and the take rate is calculated as FX and
cross-currency payments income divided by FX and cross currency
payments volumes
|
TSR
|
Total shareholder
return
|
US
|
United states Of
America
|
USD
|
US dollar
|
Wholesale FX
|
The difference between the
exchange rate the Group makes available to its customers and the
rate that it receives from one or more liquidity providers from
whom it sources the relevant currency. Revenue categorised as
wholesale FX is from customers with a need to exchange a bulk
amount from one currency for another without onward payment to
another party
|
WTT
|
Well to tank factors reported
under scope 3 emissions representing those that are produced
indirectly by the Group
|
XAF
|
Central African Franc
|
XOF
|
West African Franc
|