REG - CAB Payments Hldgs - 2024 Pre-Close Trading Update

Cab Payments HoldingsAnnouncement

16/01/2025 07:00

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RNS Number : 5082T  CAB Payments Holdings PLC  16 January 2025

16 January 2025

 

CAB Payments Holdings plc and its subsidiaries

("CAB", "CAB Payments", the "Group" or the "Company")

 

2024 Pre-close Trading Update

 

Good strategic progress despite a challenging macro environment

 

Note all figures are approximate, rounded to the nearest million, unaudited
and therefore should not be treated as final

 

CAB Payments today announces an update on its strategic progress and trading
performance for the year-ended 31 December 2024. The Group will issue its
full-year results on 13 March 2025.

 

Strategic progress

During 2024, the Company made good progress on its strategic goals to deliver
a more predictable, diversified business with a longer maturity profile. In
particular:

·    Network size increased by 18% to 390 bank counterparties (2023: 331),
with more than 40 new counterparties outside of the Group's core Africa region

·    60 new active clients added in 2024 with focus expanded to central
banks and large corporates in 2025

·    Trade Finance and Working Capital facilities draw-downs increased
significantly to £180 million (2023: £59 million) and £32 million (2023:
£8 million) respectively. Trade Finance revenues almost doubled between H1
and H2 2024

·    VISA integration progressing well with 9 currencies integrated with
CAB and approximately 50 further currencies planned for 2025

·    FX Derivatives capability ready and due to launch in Q1

 

2024 Trading

Since the trading update in October 2024, the Company continued to be
negatively impacted by a stronger dollar, reduction in aid flows and political
uncertainty affecting the demand for cross-border payments, impacting both
client volume and margin. This trend continued throughout Q4 and as indicated
previously, the Company did not benefit from a usual seasonal uplift in
revenue in the second half of 2024.

Total Group volumes for 2024 grew approximately 7% to £37.2 billion, in the
context of market-wide SWIFT payment flows around the world dropping 4%
year-on-year and flows into its core Sub-Saharan Africa market dropping 2% as
the Company continues to take market share and deliver for its clients.

The largest driver of softening performance was take-rates in emerging markets
which compressed in 2024 in comparison with the previous year. This was due to
dislocations and market volatility subsiding in 2024 across emerging
currencies together with a lower demand for USD in certain markets. The
Company prudently forecasts these levels to continue into 2025, however CAB
continues to drive strong win-rates among its clients.

Gross Income for the financial year-ended 31 December 2024 is expected to be
approximately £105 million (2023: £137 million) with performance in the
second half of 2024 marginally declining versus the first half. CAB continued
to diversify its business with improving corridor concentration risk -
approximately 29% of its 2024 revenue coming from top 5 currency corridors (H1
2024: 32%, 2023: 45%).

Operating costs have been rigorously reviewed and immediate action is being
taken to right-size the cost base for 2025. H2 2024 operating costs were well
controlled with Adjusted EBITDA for 2024 likely to be within the range of
analyst consensus estimates.

 

Strategic cost improvement exercise

In line with the Group's strategic objective to improve operational leverage
as it drives higher levels of growth, the business has planned to streamline
its operations during 2025. This will deliver growth from a cost base that is
more appropriately aligned to its stated strategic and operational priorities.
It is therefore commencing a programme to reduce its head count by
approximately 20% including a redundancy program subject to consultation,
while also driving higher performance within the organisation.

This restructuring is expected to take place during the first quarter of 2025.
It is expected that the impact of headcount reduction savings will counteract
the annualisation of strategic hires made throughout 2024, inflation and
national insurance rises, resulting in broadly flat growth of staff costs in
2025. The Group will continue to focus on its investments in AI and automation
to drive an increasing amount of automation throughout the business. More
details will be provided at the time of the publication of the full-year
results.

 

US Licence Update

The Group awaits the grant of its licence to operate a representative office
in the US from the New York Federal Reserve and the New York Department of
Financial Services and looks forward to initiating its US expansion plans.

 

Neeraj Kapur, CEO of CAB Payments, commented:

"2024 has been an important year of strategic review despite the challenging
market environment. We have made strong progress towards our journey of
becoming a more sustainable and predictable growth business with a longer
maturity profile. There is more work to do during 2025, but most importantly,
we are confident that we have the right leadership in place to deliver our
strategic goals.

"As part of the increased focus on performance we are taking significant steps
to re-align the cost base to our strategic growth plans; meaning we can do
more with less. As a result, we will see a number of colleagues who have been
part of our journey departing from our Group - I want to thank each of them
for their contribution and wish them well for the future.

"CAB's fundamental business model remains robust, based on strong emerging
markets connectivity; our market share is increasing and we are seen as
experts in what we do. We are now focused on driving growth in volumes, but
more importantly, take-rates and operational leverage, which is where our
banking business becomes a key driver. We look forward to providing more
information at the next update."

 

 

 

Volumes and take-rate information:

 

 Volumes & Take Rates - Wholesale FX and Payment FX
                                                           Volume (£bn)                  Take Rate (%)
                                                           FY 2024              FY 2023  FY 2024  FY 2023
 Emerging Markets                                          13.5                 13.6     0.29%    0.55%
 Developed Markets                                         23.7                 21.0     0.06%    0.06%
 Total                                                     37.2                 34.6     0.14%    0.26%

 Memo:
 Emerging Markets (ex NGN, XAF, XOF)                       8.9                  8.4      0.30%    0.38%

Note: Volume and Take Rates information is a driver of Wholesale FX &
Payments FX Income

 

About CAB Payments:

CAB Payments Holdings plc is the holding company for Crown Agents Bank.
Regulated in the UK, Crown Agents Bank, specialises in FX and cross-border
payments for hard-to-reach markets. Its strength of network and deep expertise
means it can move money into and out of the world's most complex financial
markets. Trusted by a global ecosystem of leading institutions across the
public, private and development sectors, Crown Agents Bank's strength lies in
its network which connects its clients to underserved geographies, giving them
access to 100+ currencies across 700+ currency pairs.

The delivery of fast, transparent and efficient transactions moves money where
it's needed. Crown Agents Bank's network offers multiple transaction
solutions, delivered via a single API, digital trading platforms, or through
bespoke approaches developed by its specialist teams.

Crown Agents Bank is one of the first banks to achieve B Corporation™
status. The bank was awarded the Gold Sustainability Rating by EcoVadis in
2022, 2023 and 2024, ranked within the top 5% of 100,000 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 (http://www.cabpayments.com)

 FTI Consulting

 (Public Relations Adviser to CAB Payments)

 Edward Bridges                                     +44 (0) 7768 216 607

 Katie Bell                                         +44 (0) 7976 870 961

 cabpayments@fticonsulting.com

 

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