Cab Payments Holdings Plc · LSE:CABA
Cab Payments — H1 2024 Earnings Presentation
39 slides from Cab Payments's earnings presentation, Sep 4, 2024
Slide 1: Strategic Update & H1 2024 Results
CAB Payments Holdings plc Strategic Update & H1 2024 Results moving money 4 September 2024 where it’s needed Classification: PUBLIC
Slide 2: Introduction
Introduction Neeraj Kapur, CEO 2
Slide 3: Highlights
Highlights • Solid performance against backdrop of exceptional prior year period and lower global market volumes £56m H1 2024 Gross Income • Serving our purpose – we continue to deliver aid flows and liquidity, allowing communities to thrive in hard-to-reach areas +14% • 35 new clients onboarded and
Slide 4: Strategic Update
Strategic Update Building on CAB’s solid foundations Neeraj Kapur, CEO 4
Slide 5: Introduction – initial thoughts after 6 months
Introduction – initial thoughts after 6 months CAB today Differentiators Where next? • Leading B2B cross-border FX • B2B focus - Strong client base of transactions provider Central Banks, Developmental Focus on: Organisations, Banks and non-bank • Strong network of liquidity institutions Strategic N
Slide 6: Strategic pillars to drive long-term sustainable growth
Strategic pillars to drive long-term sustainable growth 1 Network Strengthen breadth and depth of network Deepen existing relationships, expand 2 Clients ✓ Improved the client base diversification ✓ Sustainable Leverage the banking license to accelerate growth 3 Platform FX and payments volume growt
Slide 7: Strengthen breadth and depth of network
1 Strengthen breadth and depth of network Network size has grown consistently YoY… Assessment: • Network a key differentiator and 121 driver of the business 113 Liquidity providers 101 237 82 218 • Strong network but only in select 186 Payment partners markets – concentrated on sub- 159 Saharan Afri
Slide 8: Strengthen breadth and depth of network – moving ahead
1 Strengthen breadth and depth of network – moving ahead Focus Areas: Quality of network in Africa especially NGN, XAF, XOF Execution already underway: Grow overall number of liquidity ✓ New and experienced head of network now in place – team providers building occurring in local jurisdictions Partn
Slide 9: Deepen existing relationships, expand the client base
2 Deepen existing relationships, expand the client base Assessment: • Good quality book of clients across central banks, developmental organisations, Revenue per active client banks and non-bank institutions • Major market banks still present a good opportunity but suffer from long sales <£100k cycl
Slide 10: New client model to enhance coverage
2 New client model to enhance coverage Focus Areas: Decentralised sales model allows for more bespoke “in country” Grow the sales force, funded through increased relationships with oversight from HQ revenue trajectory and operating leverage UK sales and RoW Deeper relationships and culture alignment
Slide 11: Leverage the banking licence to accelerate FX and payments volume growth
3 Leverage the banking licence to accelerate FX and payments volume growth Assessment: Strong growing deposit franchise, • Strong banking balance sheet conservatively invested generated below market net-interest margin • Above market RoE given capital light configuration £1.5bn +13% • Conservative a
Slide 12: Credit initiatives already in progress
3 Credit initiatives already in progress Focus Areas: Limits on trade £200m Better use of the trade finance and finance and liquidity £100m liquidity credit products to service facilities expanded £75m customers’ cross-border needs £40m Liquidity as a Service 0.2% Trade Finance Strong credit risk pa
Slide 13: Disciplined capital allocation to drive growth
4 Disciplined capital allocation to drive growth Assessment: • Capital allocation prioritised for growth Significant amount of capital used to satisfy concentrated on technology, balance sheet regulatory requirement deployment to accelerate transactional volume as at 30 June 2024 • Banking structure
Slide 14: Organic growth capital focused on building and enhancing the technology stack
4 Organic growth capital focused on building and enhancing the technology stack Product Processing Protection Platform • FX Derivatives • Enhanced straight- • New AI Transaction • Expand and upgrade through-processing Monitoring platform FX & Payment • FX settlement through platforms PVP(1) • Roboti
Slide 15: Strategy delivers sustainable growth and a more diversified business
Strategy delivers sustainable growth and a more diversified business Focus on execution results in KPIs to measure strategic progress a stronger, more resilient CAB: Available Growth in • Sustainable and attractive YoY capital for 7 1 LPs / Nostros growth growth and Capital Network size base technol
Slide 16: Leading talent to drive change
Leading talent to drive change Global Head of Sales Head of Payments CEO – CAB Europe European Head Kirsty Garrett Claire Gates Kostas Konstantis Thomas Friesleben To drive a new global sales Improve payments Drive new sales and Lead the sales effort in organisation. Build new infrastructure, grow t
Slide 17: Financial Performance
HY 2024 Financial Performance Richard Hallett, CFO 17
Slide 18: H1 2024 performance snapshot
H1 2024 performance snapshot Resilient performance versus exceptional prior year, double digit income growth excluding NGN, XAF, XOF (all figures in £m) • 22% fall in total income reflects exceptional £71.8m Adj. EBITDA margin Cash conversion NGN performance in prior year • Adjusting for NGN, XOF XA
Slide 19: Gross Income
Gross Income Y-o-Y decline reflects reset profile without benefits of dislocations (22%) £72m +11% £8m £56m £0.3m £2m £48m £1m £2m £43m (£29m) H1 2023 Gross exclude NGN, H1 2023 Gross Underlying Growth in NII Growth Other Growth H1 2024 Gross H1 2024 NGN, H1 2024 Gross Income XAF, XOF Income (ex gro
Slide 20: Client segments
Client segments Revenue by Segment (£M) (1) £72m Good quality YoY growth in EMFI (inc CBs) and NBFI 3 Major Market Banks clients when excluding NGN, XAF, XOF IDO £56m 18 NBFI and fintech 1 Emerging Market Non-bank Financial 8 Financial Institutions Institutions EMFI £37m 22 17 +18% +10% 1 9 £19m Int
Slide 21: Corridor performance
Corridor performance Volumes improved in a declining market, margins grew sustainably; diversification improved Volume and take rate by corridor Volume Take Rate Category H1 23 H1 24 H1 23 H1 24 Emerging markets(1) Total 16.9 17.6 0.28% 0.17% • Resilient take rates in emerging Major markets 10.0 10.
Slide 22: Adj. EBITDA margin of 34%, expect improvement in H2
Adj. EBITDA margin of 34%, expect improvement in H2 Continued investment for growth despite falling revenue results in margin compression Adjusted EBITDA (£m) and Adjusted EBITDA Margin (1) (%) • Continued to invest in business to prepare for next phase of growth • Costs up by £5.5m due to: 13% 39%
Slide 23: Cash generation lower however still healthy
Cash generation lower however still healthy Lower adj. EBITDA and higher capex drives lower cash generation and conversion Cash 94% conversion(4) • H1 2024 capex spend of £9.0m (H1 2023: £2.2m) £37.6m • Core Capex(1) of £6.8m (H1 2023: £2.0m) • Additional fixed-asset Capex of £2.2m (H1 2023: £0.2m)
Slide 24: Capital
Capital Strong capital base however utilisation driven by increased trade finance balances vs FY23 (all figures in £m) 30 June 2024 Available growth Operational Risk capital £28.7m, 25% • Trade finance balances increased £24.9m, 22% significantly as a result of increased limits - associated addition
Slide 25: Outlook for 2024
Outlook for 2024 Expect 2024 Gross income to be marginally below 2023(1) 1 BAU Growth • No tailwinds in H1 and good momentum into H2 • Significant cultural holidays in Q4 • IDO seasonal spend / “use it or lose” it approach to budgeting Marginal Adjusted EBITDA and… increase in costs margin in the in
Slide 26: Closing remarks
Closing remarks Neeraj Kapur, CEO 26
Slide 27: Summary: an exciting future for CAB
Summary: an exciting future for CAB ✓ Solid foundations already in place, a market leader in emerging markets FX & Payments Network 1 Strengthen breadth and depth ✓ Fundamental business model unchanged, of network now moving to focused operational execution Clients 2 Deepen existing relationships, ✓
Slide 28: Appendix
Appendix 28
Slide 29: Our Purpose
Our Purpose Through our network, sustainably unlocking the prosperity of the global communities we serve moving money when and where it’s needed LTM Flows(1) Driving financial inclusion Providing backbone to make financial services accessible and affordable Development aid flows £2.9bn Formalising f
Slide 30: P&L – management basis
P&L – management basis Six months ended 30 June £m H1 2024 H1 2023 YoY YoY(1) 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% Total transactional income 37.0 54.6 (32%) 12% Net interest income from cash managemen
Slide 31: Other Key KPIs
Other Key KPIs 2024 2023 YoY 2024 2023 YoY Capital & Investment Income by client type Core Capex (£m) 6.8 2.0 238% EMFI (£m) 29.4 29.4 (0)% Capital intensity (% of Total Income) 12% 3% IDO (£m) 8.3 17.7 (53)% Operating Free Cash Flow (£m) 9.4 37.6 (75)% Major Market Banks (£m) 1.0 3.1 (66)% Cash Con
Slide 32: Gross income progression
Gross income progression £m H1 2022 H2 2022 H1 2023 H2 2023 H1 2024 Wholesale FX 20.2 42.8 37.8 30.6 22.9 Payments 13.2 20.8 16.8 16.8 14.2 of which Payments FX 6.5 13.2 10.4 9.7 7.0 Other Payments 6.7 7.6 6.4 7.1 7.2 Total transactional income 33.4 63.6 54.6 47.4 37.0 Net interest income from cash
Slide 33: Operating expenses
Operating expenses Higher run-rate costs reflect expanding business, headcount and geographic footprint – driving future growth and operating leverage +£5.5m £1.2m £37.6m £0.9m £1.0m £2.4m Largely Additional £32.2m Investment in the professional fees operating costs of technology estate London HQ an
Slide 34: Capital
Capital The group’s overall and available capital has significantly increased over the past 3 years whilst seeing increased capital allocation to operational risk and credit exposures Operational risk Standardised calculation for risk as per Basel 3, based on prior 3 years revenue Local bank account
Slide 35: Alternative performance measures (1/2)
Alternative performance measures (1/2) Alternative How the metric is used Calculation Definition Performance Measure Gross Income or As noted in previous years, as a growing organisation, the Group’s focus is on driving Total income, net of interest expense. Income income growth through controlled i
Slide 36: Alternative performance measures (2/2)
Alternative performance measures (2/2) Alternative How the metric is used Calculation Definition Performance Measure Adjusted Earnings The Group consider the Adjusted EPS to better reflect the base line of shareholder Adjusted Profit After Tax for the period divided by the total Per Share (‘’AEPS’’)
Slide 37: Attractive market opportunity
Attractive market opportunity Short-term dynamics Long-term trends Global GDP and cross-border trade $ growth, continued increase in migration, Strong dollar EM Volume growth new regional free-trade agreements and increasing development flows Central bank interventions Shift to specialist players Ma
Slide 38: Blue chip clients
Blue chip clients CAB Payment segments include many of the most important players in emerging market payments • Includes UN organisations, development banks and western governments along with charities IDOs • Tend to be FX clients send aid flows and budgets into market where they work • Banks headqu
Slide 39: This material is for your information and should not be distributed further
This material is for your information and should not be distributed further The views expressed are the views of Crown Agents Bank Ltd and are subject to change based on market and other conditions and should not be taken as statements of policy or intent. There is no representation or warranty of a
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