CAB Payments Holdings plc Annual Report and Accounts 2023
CAB Payments Holdings plc Annual Report and Accounts 2023
CAB Payments Holdings plc
Annual Report and Accounts
2023
CAB Payments Holdings plc | Annual Report and Accounts 2023
Strong record of
financial growth…
Integrity Collaboration Impact Client focus
VISION
Empower communities and partners by moving
money everywhere it’s needed
VALUES
MISSION
Connecting emerging markets to the global economy
through our unparalleled network, cutting-edge
technology, and deep expertise in Foreign Exchange (FX)
and payments.
For more examples / Page 13
TARGET
5%
of financial flows into
Emerging Markets by
2027
…uniquely placed to
capture share of a large
addressable market.
1
2
1
3
4
5
Overview Strategic Report Governance AppendixFinancial Statements
01
What’s Inside
OUR 2023 HIGHLIGHTS
02
Governance Report
70 Chair’s Introduction
72 Board of Directors
74 Board Statements
76 Corporate Governance Statement
86 Nomination Committee Report
90 Audit Committee Report
96 Risk Committee Report
98 Directors’ Remuneration Report
120 Directors’ Report
125 Directors’ Responsibilities Statement
Overview
02 Our 2023 Highlights
04 At a Glance
06 Investment Case
08 Chair’s Statement
CHAIR’S INTRODUCTION
TO GOVERNANCE
70
For the latest investor relations /
www.cabpayments.com/#investors
12
18
OUR
STRATEGY
Strategic Report
12 Chief Executive Officer’s Review
16 Our Business Model
18 Our Strategy
24 Strategic Progress
26 KPIs
28 ESG Report
48 Stakeholder Engagement and s172 Statement
50 Financial Review
55 Risk Management
60 Principal Risks and Uncertainties
65 Going Concern and Viability Statements
67 Non-financial and Sustainability Information
55
CHIEF EXECUTIVE
OFFICER’S REVIEW
RISK
MANAGEMENT
OUR BUSINESS
MODEL
16
See our sustainability report /
www.cabpayments.com/#sustainability
28
ESG
REPORT
Financial Statements
128 Auditor’s Report to the members of
CAB Payments Holdings plc
137 Consolidated Statement of Profit or Loss
138 Consolidated Statement of Other
Comprehensive Income
139 Consolidated Statement of Financial Position
141 Consolidated Statement of Changes
in Equity
142 Consolidated Statement of Cash Flows
143 Company Statement of Financial Position
144 Company Statement of Changes in Equity
145 Company Statement of Cash Flows
146 Notes to the Financial Statements
Appendix
240 Shareholder Information
241 Alternative Performance Measures
243 Glossary
247 Contact Details
2022 £109.4m
2023 £137.1m
2022 £49.2m 2022 £55.0m
2023 £58.7m 2023 £64.6m
CAB Payments Holdings plc | Annual Report and Accounts 202302
Our 2023 Highlights
CAB
Payments
Strong financial performance
underpinned by a focus on serving clients
FINANCIAL HIGHLIGHTS
Gross Income1
£137.1m
Adjusted PBT2
£58.7m
Adjusted EBITDA1
£64.6m
1. See alternative performance measures for definition / Page 241.
2. Adjusted PBT is defined as profit from continuing operations before tax and before non recurring operating expenses.
2022 91% 2022 456 2022 99
2023 88% 2023 509 2023 110
Financial StatementsOverview Strategic Report Governance Appendix
03
moving money
where it’s needed…
Operating Free Cash Flow
88%
Unique Active Clients
509
Number of Currencies Offered
110
See our key performance indicators / Page 26
CAB Payments Holdings plc | Annual Report and Accounts 202304
At a Glance
CAB Payments uses its strength of
network, technology, and expertise to
seamlessly move money to, from, and
across hard-to-reach markets
OUR BUSINESS LINES
CAB Payments Holdings plc and its subsidiaries (CAB Payments or the Group) operate three principal business lines,
addressing various combinations of client groups, distribution networks and services:
FX
A real-time trading platform,
customised for emerging markets,
offered through Empower FX, via the
Group’s Application Programming
Interface (API) or Graphical User
Interface (GUI), multi-dealer platforms
and the Group’s own traders.
FX accounts for around 50% of the
Group’s business.
Payments
An end-to-end, cross-border
payments gateway, where the
Group routes the funds to a
beneficiary’s account and converts
to a local currency as required.
Three distinct platforms are used:
Empower Payments (API or GUI),
Empower Pensions and Empower
Connect (making hard currency
payments in the most efficient way).
Around 25% of incomes are derived
from payment services.
FX accounts for around
50%
of the Group’s business
Around
25%
income is derived from
payment services
Banking contributes around
25%
of our income
OUR MARKET
We specialise in the world’s
emerging markets and
hard-to-reach places.
FINANCIALS
From debt repayments and development funds to emergency relief,
we are the world’s payment partner.
1%-2%
market share
150+
countries
110
currencies
Average payment transaction
£104k
Wholesale FX and
Payment FX volumes 2023
£34.7bn
1 See alternative performance measures for definition / Page 241.
Gross Income
£137.1m
Annual Income
Growth
25%
Banking Services
With a heritage that dates back
to 1833, the Group contains a
UK-regulated provider of FX and
cross-border payments that holds
a UK banking licence. We offer
transaction and deposit accounts,
and earn a net interest margin
between the rate we pay deposit
holders and what we receive in the
money markets. Banking contributes
around 25% of our incomes.
Financial StatementsOverview Strategic Report Governance Appendix
05
WHO WE SERVE
We provide our services to four key client segments:
Non-Bank
Financial
Institutions
(NBFIs)
Fintechs and other
licensed financial services
companies, including
high street and online
remittance companies,
payroll providers and
pension administrators.
International
development
organisations
(IDOs)
Multilateral, Government
and Non-Governmental
Organisations (NGOs)
who send aid and run
development programmes
in the world’s most
challenging environments.
Emerging
Market
Financial
Institutions
(EMFIs)
Banks headquartered in
non-G20 markets who
provide cross border
payments to corporations
and people in these
markets.
Major Market
Banks (MMBs)
Banks headquartered in
G20 markets who provide
cross border payments to
corporations and people in
these markets.
Our income is well diversified, with
no one client representing more than
7%
ON THE GROUND, GLOBALLY
25
central banks
331
FX, pricing and liquidity partners
121
local accounts
c.200
years of integrity and trust
CAB Payments Holdings plc | Annual Report and Accounts 202306
Investment Case
How we are delivering
long-term success
The Group is a significant and
growing operator in a large
and expanding market and has
excelled to this point due to
the strength of its financial and
technology network, along with
strong global relationships, with
both partners and clients.
See our sustainability section /
Page 28
£3.1bn
of aid flows in FY23
Underpinned by
Environmental, Social and
Governance (ESG) leadership
and social impact
Large, fast-
growing market
High-quality
clientbase
Global payments
and licensing
infrastructure
Market-leading
proposition/
platform
Compelling
economics
The payments and FX markets are
undergoing a favourable structural
shift from local banks to global
specialists.
Our highly diversified international
client base includes leading banks,
development organisations and
fintechs.
We collaborate with an extensive
partner network with global coverage
to give market-leading emerging
market footprint.
Our solutions are delivered through
a well-invested scalable technology
platform purpose-built for clients
paying money into emerging markets.
Our financial performance is driving
market-leading growth, profitability
and cash generation.
1%-2%
Market share
509
Active clients
(53 new in FY23)
331
Local and regional bank accounts,
FX settlement partners and
liquidity providers
80%
Digital channels for FX
£137.1m
Gross income1
£64.6m
Adjusted EBITDA1 in FY23
For more information /
Page 23
For more information /
Page 20
For more information /
Page 19
For more information /
Page 22
For more information /
Page 51
Financial StatementsOverview Strategic Report Governance Appendix
07
1. See alternative performance measures for
definition / Page 241.
Large, fast-
growing market
High-quality
clientbase
Global payments
and licensing
infrastructure
Market-leading
proposition/
platform
Compelling
economics
The payments and FX markets are
undergoing a favourable structural
shift from local banks to global
specialists.
Our highly diversified international
client base includes leading banks,
development organisations and
fintechs.
We collaborate with an extensive
partner network with global coverage
to give market-leading emerging
market footprint.
Our solutions are delivered through
a well-invested scalable technology
platform purpose-built for clients
paying money into emerging markets.
Our financial performance is driving
market-leading growth, profitability
and cash generation.
1%-2%
Market share
509
Active clients
(53 new in FY23)
331
Local and regional bank accounts,
FX settlement partners and
liquidity providers
80%
Digital channels for FX
£137.1m
Gross income1
£64.6m
Adjusted EBITDA1 in FY23
For more information /
Page 23
For more information /
Page 20
For more information /
Page 19
For more information /
Page 22
For more information /
Page 51
CAB Payments Holdings plc | Annual Report and Accounts 202308
Chair’s Statement
A year of resilience,
strength and purpose
Ann Cairns
Chair
Biography / Page 72
Our clients include some of the world’s most
important aid organisations and many key
central banks from developing nations.
Feedback consistently shows that these high-
quality clients fully understand the financial
strength of CAB Payments, greatly value the
service we offer and continue to be comfortable
placing their trust in us to move their money
safely and securely. We never take these
relationships for granted and continue to work
hard to make them even stronger.
We remain focused on delivering the potential
of CAB Payments and are very confident about
the value this business is uniquely positioned to
create.
Board and Governance
The Board structure has remained stable since
the Initial Public Offering (IPO) in July 2023, and
meetings have been both regular and ad-hoc.
Your Board is fully engaged in the performance
of CAB Payments and the Non-executive
members of the Board seek to maintain direct
contact with all the members of the Executive
team, to ensure they get a broad and accurate
view of the current challenges and opportunities
and to hear any concerns or suggestions each
individual has to offer.
I am pleased that the Board is diverse, with a
60% female representation and an impressive
range of skills, experience and backgrounds. I do
believe we can continue to improve as we move
forward to ensure we have an even broader
range of cultural and geographic backgrounds,
with a specific focus on the markets we serve.
In February 2024, we announced that Neeraj
Kapur will succeed Bhairav Trivedi as Chief
Executive Officer (CEO), subject to regulatory
approval. The Board would like to express
their sincere gratitude to Bhairav, and we are
delighted he will continue to represent the
Group as a senior adviser to the Board.
I am delighted to present the first annual
results for CAB Payments Holdings plc (CPH
or the Company) as a listed business. CAB
Payments, through its client-facing brand of
Crown Agents Bank, has a rich history and
a recent track record of strong growth. The
business specialises in moving crucial funds into
developing countries, whose growth and future
welfare depend on it.
The Group can trace its history back at least
200 years and has become a vital part of
a financial support eco-system. In 2023
alone, CAB Payments moved c.£9.3 billion to
developing economies to support humanitarian
aid, financial inclusion and remittance flows to
local populations.
2023 was a very eventful year for the Group.
The tremendous effort that went into generating
the strong growth this year was somewhat
overshadowed by events late in the year in two
of our larger markets. These events caused us to
downgrade our short-term guidance on Group
financial performance. This was personally
extremely disappointing. However, the Group
grew its income by 25% this year, an excellent
result under any other circumstances, and a
great springboard for future success.
Financial StatementsOverview Strategic Report Governance Appendix
09
We welcome Neeraj to CAB Payments. He is a very
experienced finance professional and will bring a new
perspective to the Group. Once approvals are complete,
Neeraj will replace Bhairav as an Executive member of
the Board.
Capital Allocation
CAB Payments has significant potential for superior
growth into the medium-to-long-term, and this will
be achieved through the successful execution of
our plans. This will require continued investment in
our operations, our capabilities, our network and
our product development – we will do nothing to
endanger this. The Group generates healthy profits
and cashflow and we are confident this will continue.
By taking advantage of the growth opportunities
ahead and pursuing active cost management and
a capital light business model, the Group expects to
continue to generate significant free cash flow. We
currently anticipate that the majority of the growth
will come through a consistent capturing of market
share in current and new geographies, with a focused
organic approach. The Board will actively manage
capital allocation with an emphasis on growth, but
will also consider distributions to shareholders at
the appropriate time, always seeking to make the
right choice to maximise long-term and sustainable
shareholder value.
Looking Forward
CAB Payments is a leader in a very sizeable niche.
Being able to safely, rapidly and cost-effectively
move funds around the world within the confines
of a complex regulatory environment can be a
daunting task, and it is one best left to the experts.
CAB Payments are experts. Compliance is central to
the business model, and we are exceptionally proud
of our UK banking licence; this sets us apart from the
competition and gives clients and prospective clients
an indication of the attention to detail and level of
service they can expect from us.
Our people are key to our success, and we have great
people. Their hard work and total dedication during
a period of continued growth is a testament to their
abilities, their experience and their talents. I wish to
thank them on behalf of the Board.
Your Board and I remain very positive about the future.
We will focus on building trust and confidence in all
our stakeholders, and on delivering on the promises we
have made.
I want to finish by thanking you, our shareholders,
for your continued support.
Ann Cairns
Chair
25 March 2024
Board engagement
The Non-executive members of the Board seek
to maintain direct contact with all the members
of the Executive team, to ensure they get a broad
and accurate view of the current challenges
and opportunities and to hear any concerns or
suggestions each individual has to offer.
More on Governance / Page 70
Strategic
Report
12 Chief Executive Officer Review
16 Our Business Model
18 Our Strategy
24 Strategic Progress
26 KPIs
28 ESG Report
48 Stakeholder Engagement
and s172 Statement
50 Financial Review
55 Risk Management
60 Principal Risks and
Uncertainties
65 Going Concern and Viability
Statements
67 Non-financial and
Sustainability Information
single platform…
Moving money from a
CAB Payments Holdings plc | Annual Report and Accounts 202310
…to 100+ currencies
in 600+ currency pairs
11
Overview Governance Financial Statements AppendixStrategic Report
Chief Executive Officer Review
An emerging success story
Bhairav Trivedi
Chief Executive Officer
Biography / Page 72
CAB Payments has a number of significant
growth drivers underpinning its long-term
development:
• Large addressable market undergoing a shift
to specialist providers;
• High-quality, diverse client base;
• Global network and infrastructure; and
• Multi-channel emerging market platform.
All of this allows us to move money where it is
needed, resulting in a positive global impact.
Research supports the Group’s view that the
market for cross border payments is shifting
from traditional global banks to specialist
providers like CAB Payments. This provides a
tailwind and an opportunity. CAB Payments
expects to grow from here by exploiting this
transition, increasing its client base rapidly
through new sales channels, gaining market
share and strengthening its presence in
additional geographic currency destinations to
diversify its income streams.
Business Performance
2023 was another year of strong growth for the
Group. While we recognise the business did not
deliver as we had anticipated in the second half
of the year, it was still in absolute and relative
terms a good performance, with healthy growth
in income and profit, and sets the Group up well
for further growth in 2024 and beyond.
Strategic Context
CAB Payments is a market leader in business-
to-business cross-border payments and FX.
The Group has a high-quality and growing client
base, made up of G10 government entities,
some of the world’s best known international
development organisations, global remittance
companies, emerging markets financial
institutions and, increasingly, major market
banks with a global presence. The Group is
a significant and growing operator in a large
and expanding market and has excelled to
this point due to the strength of its financial and
technology network, along with strong global
relationships, with both partners and clients.
While the Group is very capable in developed
markets and more than half its volume
is transacted in these currencies, its core
advantages are most pronounced in hard-
to-reach emerging markets, with a particular
current emphasis on Africa. Continued success
is dependent on a clear focus on what we
do best, providing an unrivalled and cost-
efficient service, and expanding our product
set and geographic reach, in response to
client demands.
CAB Payments Holdings plc | Annual Report and Accounts 202312
Income growth overall and in
Payments and FX
In the year, Group gross income was ahead
of the previous year by 25% at £137.1 million
(2022: £109.4 million). Within this, we did
experience some weakness in the
second half of the year, particularly in
the fourth quarter, with interventions
in two of our key currency corridors.
Income in the first half of the year
came in at £71.8 million (H1 2022:
£37.0 million) and declined in
the second half of the year to
£65.3 million (H2 2022: £72.4 million)
with, as mentioned, the fourth quarter not
delivering as expected, and the Nigeria Naira
(NGN or Naira) corridor significantly down
year-on-year, as was forecast at the time of
the IPO in July 2023. Naira income was down
in 2023 to £18 million (2022: £27.5 million),
with £15.2 million of this coming in the first half.
This was more than offset by the increase in net
interest income from cash management, which
delivered £31.7 million in the year, up from
£10.1 million in 2022.
Importantly, the transactional Wholesale FX and
Payments FX income grew by 7% year-on-year
to £88.4 million (2022: £82.8 million); excluding
the Naira, which experienced well-documented
elevated conditions in 2022, the growth rate
would have been 28%.
Robust profitability and cash flow generation
EBITDA1 was down in 2023 by 12% to
£43.5 million (2022: £49.7 million), due to
non-recurring items of £21.1 million, primarily
costs directly associated with the IPO in July
(2022: £5.3 million). Excluding non-recurring
items, adjusted EBITDA was £64.6 million, up
17% (2022: £55.0 million). Reported profit after
tax from continuing operations in the year was
down 29% at £23.9 million (2022: £33.4 million),
again impacted by non-recurring costs.
We continued to invest in the business
throughout the period, reflecting our confidence
in the growth potential of the Group over the
medium term.
Supporting vital aid
An explosion occurred on 7 December
2023 at an explosives depot on the
island of Mahé in the Seychelles, south of
the capital Victoria. The blast damaged
numerous structures. The explosion took
place during heavy flooding in Seychelles
that killed three people; a state of
emergency was declared following both
events. The Central Bank of the Seychelles
needed to channel emergency aid, and
they put out a flyer to aid organisations
to help them route aid. CAB Payments
provided the infrastructure to send GBP,
EUR and USD, ensuring the timely and
inexpensive arrival of aid.
1 See alternative performance measures for definition / Page 241
Importantly, the
transactional
Wholesale FX and
Payments FX income
excluding the Naira,
grew by 28%.
13
Overview Governance Financial Statements AppendixStrategic Report
CAB Payments continued to
extend its client and network
reach during the year. This
extension will, over time, provide
a greater level of diversification
and growth potential.
Chief Executive Officer Review continued
Operating costs, excluding non-recurring costs,
were up by 30% at £77.9 million, primarily
due to increased headcount and licensing and
support costs associated with the investments
in our IT infrastructure. Capital expenditure in the
year was £7.4 million (2022: £4.9 million). We
continue to estimate that capital investments in
2024 will be around 8% of gross income, based
on projects in progress and in the pipeline, and
that approximately 8-10% going forward would
be the appropriate level to fully support growth.
Stable Business Model Focused on
Areas of Commercial Advantage
CAB Payments continued to extend its client
and network reach during the year. This
extension will, over time, provide a greater level
of diversification and growth potential and
reduce the risk of a single event significantly
impacting financial performance, as we improve
our offering in other geographic regions. In the
year the Group added 83 new clients, of which
around half were active in the year, bringing
the total number of active clients to 509 (2022:
456). Even allowing for the fact that a number
of clients onboarded late in the year wouldn’t
be expected to be active until 2024, the income
contribution from new clients was below historic
averages. We are restructuring the onboarding
and activation process to address this and
remove any friction from the early stages of the
client journey.
In 2023, we added some significant clients.
Specific client relationships and identities are
often considered commercially confidential,
but it is also important to be able to help our
stakeholders understand the general prestige of
those who choose to trust CAB Payments with
their business. In 2023, we onboarded many
high-quality clients, including Barclays, Inpay,
Plan International and SNV Global, joining such
institutions as Save the Children International,
the Norwegian Refugee Council and PagoNxt/
Santander. We are confident they will go on to be
important and valuable long-term relationships.
We are in negotiations with several major
financial institutions and expect some of these
to begin operating with CAB Payments in the
very near future. Successful progress in this client
segment will be an important driver of growth in
the coming years.
We continued to extend our network reach
during 2023 – this is a clear differentiator for
CAB Payments in being able to deliver a cost
effective and reliable service to our clients,
who place an incredible degree of trust in us. In
the year we increased the number of banking
partners, including Nostro accounts, liquidity
providers and payment partners, by 44 to 331.
These partnerships allow us to move client
funds quickly and reliably, whilst retaining
full control of the end-to-end journey. We are
seeking to further deepen our network of Nostros
in geographic regions where complexity and
market size provide an opportunity for the Group
or where our clients require our solutions. CAB
Payments’ credibility and trust is underpinned by
our UK banking licence, and this provides us with
an advantage in developing relationships in other
geographic regions.
The nature of maximising the impact of our
competitive advantages, built up over many
years, means there is
regional concentration in
the income delivery.
CAB Payments
specialises in regions
where regulations are
constantly developing
and where there is a
level of uncertainty. This
is part of the reason
why there is an ongoing
market share shift
from global banking
institutions to specialist
providers like CAB Payments and provides
the opportunity for higher margins and future
volume growth.
In recent years, the Naira has delivered a
disproportionate degree of FX and payments
income, due to CAB Payments’ inherently strong
position in this market. Although this continued
into the first half of 2023, the Naira represented
less than 7% of transactional income in the
second half of the year, returning to a level more
in line with medium-term expectations.
CAB Payments Holdings plc | Annual Report and Accounts 202314
There were negative surprises in the fourth
quarter of the year for two important currencies
for the business, the Central African Franc (XAF)
and the West African Franc (XOF). The central
banks in these regions intervened, in different
ways, in an effort to support the currencies and
shore up the foreign currency reserves. These
interventions had the effect of significantly
reducing the income towards the end of the
year from XAF and XOF, during a period when
we were forecasting significant strength in both
currencies, causing the Group to publicly reduce
its income estimates for 2023. We understand
this reforecast had a significant impact on
shareholder confidence and we are focused
on delivering on the great potential for CAB
Payments and re-establishing shareholder and
broader investor trust.
Looking Forward
We look forward to 2024 with confidence and
expect another year of income growth. This
will be underpinned by further investment in
our sales capabilities, increased share from
the current client base, a concentration on the
activation of new clients onboarded in 2023,
and the development of additional currency
corridors and partnerships.
We are in the final stages of obtaining our EU
licence and continue to expect our US licence to
be granted in the second half of this year. These
licences will open up significant additional sales
channels for CAB Payments among high-quality
development organisations and remittance
providers who move considerable sums into our
key markets. Building out offices in these regions
will have the added advantage of placing
salespeople in closer proximity to major market
banks in both geographies, where cultural or
language similarities can be important in the
sales process. As well as new potential clients,
we have some sizeable clients we have already
signed up who are yet to carry out their first
transaction; we will seek to guide them rapidly
and smoothly through the activation process.
And our concentration on continually improving
our service to current clients remains a focus,
where our net revenue retention remains well in
excess of 100%.
We did finish 2023 on a disappointing note,
with negative surprises in two of our important
markets. While we are not dependent on a
short-term recovery here, we expect these to
be important markets for us over the medium
term. These changes highlighted a requirement
for the Group to be increasingly proactive and
influential at the highest level across the world,
not only predicting change, but helping to shape
effective regulation in the markets we serve.
It is also evident to us that CAB Payments’
capabilities are ahead of its profile, and we
consistently receive feedback from new clients
that we outperform their expectations. Going
forward, I will dedicate my time to raising the
understanding of CAB Payments globally, once I
hand over the reins of CEO to Neeraj Kapur over
the next couple of months. I will do my utmost
to ensure global central banks, regulators, large
money movers and senior industry participants
better understand and recognise just how much
of a force for good CAB Payments is. Success
here will underpin the profitable growth and
value we expect to continue to deliver for all our
stakeholders.
Bhairav Trivedi
Group Chief Executive Officer
25 March 2024
15
Governance AppendixFinancial StatementsStrategic ReportOverview
Our Business Model
Moving money where it’s needed
We enable critical payment flows into emerging economies…
OVERVIEW
CAB Payments streamlines emerging market flows
resulting in quicker and better performance than the
incumbent SWIFT network.
Our key resources and relationships
– We have a wide range of clients who send money to
emerging markets – banks, supranationals, fintechs
and governments.
– We have an extensive network allowing us to send
money quickly, cheaply, and reliably.
– We have a best-in-class platform that allows us to
seamlessly connect our clients and our network.
Traditional SWIFT
Traditional - multiple hops
based on regional bilateral
arrangements
We use a single hop using dedicated
emerging market infrastructure
…through our leading FX and Payments platform
WHAT
MAKES
CAB PAYMENTS
UNIQUE:
Holds a Banking Licence
Focused on emerging markets
B2B only – no retail clients
Focused on larger
transactions
What we do and how we do it
1
1
2
2
3
1
1
3
4
4
5
5
CAB Payments Holdings plc | Annual Report and Accounts 202316
DELIVERING FOR OUR CLIENTS
Cost : competitively priced
Speed : faster payments
Reliability : professional and extensive emerging
markets network
Trust : UK-regulated bank with strong heritage
Ease : can instruct through API, file transfer or
SWIFT
Transparency : ability to track payments
throughout journey
Creating value for our stakeholders and delivering positive social impact
DELIVERING FOR OUR EMPLOYEES
50%
Ethnically diverse
employees
40%
Female employees
DELIVERING FOR OUR INVESTORS
25%
Income growth
£64.6m
Adjusted EBITDA1
WE CONTINUE TO SCALE THE
BUSINESS TO DRIVE FUTURE
LONG-TERM GROWTH
For more details, see our strategy /
Page 18 and our KPIs / Page 26
PROVIDING CLEARING
BACKBONE
to make financial services accessible and
formalise financial markets.
£9.3bn
Flows into and out of Low and
Lower-middle income countries2
For more details, see our ESG section /
Page 28
STRENGTHENING LOCAL
ECONOMIES AND DRIVING
FINANCIAL INCLUSION
by allowing remittance and aid flows to be
more reliable and cost-effective.
£3.1bn
Development aid flows
£1.8bn
Remittance flows
1 See alternative performance measures for definition / Page 241.
2 As defined by the World Bank.
17
Overview Governance Financial Statements AppendixStrategic Report
Our Strategy
We have a proven track record
of performance…
OUR FOUR STRATEGIC AIMS
… and are positioned
to deliver at scale
going forward.
CLIENTS
Target large, new client
segments
Highly diversified international base of clients
who move money into emerging markets.
We have four segments, including developed
and emerging market banks, fintechs and
development organisations, including
multilateral organisations and NGOs.
PLATFORM
Introduce new products
and capabilities
Our tech enabled, multi-channel platform was
built with the challenges of emerging markets
in mind. Its goal is to deliver our network to our
clients while minimising time, risk and cost.
NETWORK
Deepen our
networkglobally
Deep global payments and FX infrastructure
targeting emerging markets. We have a
dedicated team focused on establishing and
maintaining payment and FX relationships.
MARKET
Large and underserved
We focus on a large market of financial flows
into and out of emerging markets. This market is
underserved and growing at a faster rate than
global GDP. Margins are sustainably high due to
the difficulty and perceived risk of the markets.
CAB Payments Holdings plc | Annual Report and Accounts 202318
NETWORK
Deepen our networkglobally
Payment partners
We deliver money into 150+ different
countries using 110 different currencies.
We do this in one of three ways. We
either establish a local bank account with
a local bank (Direct Nostro) which allows
us to make local payments out and
have our liquidity partners pay into the
account. In markets with Direct Nostros
we have full flexibility to source our FX as
we wish and typically have good relative
performance of delivery of payments. We
also have bank accounts with regional or
global providers who are able to provide
access to geographies where we do not
have a local partner (Indirect Nostros).
In theory, an Indirect Nostro can be as
effective as a Direct Nostro, but in general
we prefer to work with local partners
who are able to navigate local nuances
more effectively. Finally, in some markets,
we have FX settlement partners – players
who give us access to make local
payments, but do not allow us to freely
source our local FX.
As of 31 December 2023, we had 171
Nostros (127 Direct), which reflects
growth of 23% on 2022,and 47 FX
Settlement Partner relationships.
Together, this gives us access to 150+
countries and 110 currencies.
Liquidity providers
Within our Emerging market portfolio we have
a robust portfolio of counterparties who have
appetite for inward bound hard currency flows
and have local currency for sale which makes us
highly competitive when servicing our client base.
These are in addition to our Nostro relationships
and consequently supplement the already strong
pricing we receive from them. The vast majority
of our liquidity partners are commercial banks,
but we do also get liquidity from select NBFIs and
central banks. In our target markets, we ideally
have three or more liquidity partners to ensure
the ability to source competitive FX rates.
As of 31 December 2023, we had 113 liquidity
providers, up from 101 in 2022.
We have a strong
roster of banking
partnerships across
the globe which allows
us to make payments
in 110 currencies. The
partnerships consist
of payment partners
and liquidity providers.
Payment partners
help the Group deliver
payments into our chosen
corridors. Our Liquidity
providers ensure we can
competitively price for
our clients. Our Banking
Partnerships network
team onboards, recruits
and maintains these
partnerships.
2021 2022
159
2023
186
218
Payment Partners End of Year
Local Bank Accounts – Direct Nostros
Local Bank Accounts – Indirect Nostros
FX Settlement Partners
98
114
127
17
25
44
44
47
47
19
Governance AppendixFinancial StatementsStrategic ReportOverview
Our Strategy continued
Target large, new client segments
CLIENTS
IDOs
IDOs include multilaterals, NGOs
and development arms of central
governments. Most of the flows we
facilitate are aid flows, either directly
for deployment in the market or for
salaries and operational expenses.
Typically, they will be to support
international development and to finance
humanitarian aid. This means that IDOs
send large scale periodic payments to
some of the world’s most challenging
environments. Because IDOs tend to
make large payments which are aid
flows, they want to make sure that
there is minimal friction. We help them
by ensuring their money arrives as
inexpensively as possible.
One client example is an IDO that is a
set of intergovernmental organisations
with over 37,000 employees across 193
countries. They need to be able to access
funds for peacekeeping, humanitarian
assistance, and development
programmes in all their locations. CAB
Payments’ proprietary technology is
purpose-designed for these markets to
reduce both cost and friction, maximising
the value of urgently needed funds.
This sharp focus on payment and
cost efficiency has made us this IDO’s
largest FX provider for emerging market
currencies, with a tender win-rate well in
excess of the next best provider.
Across all our IDOs in 2023, our average
volume per unique client was 72 million,
and this segment accounted for 26% of
our income.
NBFIs
NBFIs are typically financial services
technology businesses (fintechs) notably
remittance companies, payments
business and FX brokerages. As financial
players, NBFIs have a frequent and
consistent need for FX and payments
services. Some of our NBFI clients make
large wholesale FX transactions to
manage their balance sheet, and others
use us for back-to-back client payments.
As both a bank and an aggregator,
the Group brings immediate scale and
regulatory support.
We have 509 clients
spread across four major
client segments. All four
segments have at least
one client in the top ten,
every one of our top 50
clients from 2022 still
trades with us. Our clients
are some of the most
influential parties sending
money into emerging
markets including
governments, multilateral
organisations, fintechs
and banks.
CAB Payments Holdings plc | Annual Report and Accounts 202320
One of our NBFI clients serves corporate
clients across 140 currencies in 200+
countries. We are able, drawing on our
network and liquidity, to deliver services
more competitively than their historical
banking partners in 22 of those markets
between 2022 and 2023. This has led the
client to increase volumes with the Group
by314%. Clients include several of the
largest remittances players in the world.
Overall, the NBFI segment contributes
around 31% of the Group’s income.
EMFIs
EMFIs are banks headquartered in
emerging markets. Clients include both
regional and local commercial banks,
and correspondent banks. We have a
significant presence in the Caribbean, the
Pacific Islands, sub-Saharan Africa and
in other regions. The Group’s relationships
with financial institutions in emerging
markets dates back to day one of our
business. EMFI clients use the Group
to access global clearing systems and
to make payments on behalf of their
clients in USD, GBP and EUR. Flows from
these clients go the opposite direction
of our other clients – from emerging to
developed markets.
One such client is the central bank of one
of Africa’s ten most populous nations
which is responsible for facilitating
repayment of its foreign debt. Working
with the Group has enabled it to make
payments against the sale of local
currency, while protecting its foreign
reserves at a time when import bills are
at historic highs. In turn, the Group has
captured flows in this corridor from the
development sector that were previously
lost to competitors.
During 2023, the client placed payment
volumes totalling $916 million and overall
the EMFI segment contributed 39% to our
income.
MMBs
MMBs – banks who are headquartered
in G20 markets – is our newest segment.
Banks see us as a cure for the headaches
that are associated with sending money
via traditional bilateral arrangements into
emerging markets. Clients already include
some of the largest banks in the world.
This results in high cost, high
perceived risk and a lack of certainty
and transparency. MMBs use the
Group because we are a trusted
professional counterparty in these
challengingmarkets.
Given the demonstrable cost and
logistical advantages we offer, one such
global bank that was onboarded in late
2021 steadily increased its use of the
Group’s products and services and more
than doubled volumes between 2022
and 2023 to £117million.
During 2023, the MMB segment
contributed 4% to our income.
509
clients spread across four
major client segments
21
Governance AppendixFinancial StatementsStrategic ReportOverview