Update re Possible Offer and Q3 Trading Update

NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM ANY JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION

THIS IS AN ANNOUNCEMENT FALLING UNDER RULE 2.4 OF THE CITY CODE ON TAKEOVERS AND MERGERS (THE 'CODE') AND DOES NOT CONSTITUTE AN ANNOUNCEMENT OF A FIRM INTENTION TO MAKE AN OFFER UNDER RULE 2.7 OF THE CODE. THERE CAN BE NO CERTAINTY THAT ANY OFFER WILL BE MADE, NOR AS TO THE TERMS ON WHICH ANY OFFER MAY BE MADE

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION

FOR IMMEDIATE RELEASE

30 October 2024

CAB Payments Holdings plc and its subsidiaries

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

UPDATE RE POSSIBLE OFFER FOR CAB PAYMENTS AND Q3 TRADING UPDATE

As announced on 10 October 2024, the Company received an unsolicited non-binding proposal from StoneX Group Inc. ('StoneX') relating to a possible cash offer for CAB Payments with a full share alternative in listed StoneX shares (the 'Possible Offer').

Discussions with StoneX are continuing and StoneX and its advisers are undertaking due diligence.

There can be no certainty that an offer will be made, nor as to the terms on which any offer may be made.

In accordance with Rule 2.6(a) of the Code, StoneX is required, by not later than 5.00 p.m. (London time) on 7 November 2024, to either announce a firm intention to make an offer for CAB Payments in accordance with Rule 2.7 of the Code or announce that it does not intend to make an offer for CAB Payments, in which case the announcement will be treated as a statement to which Rule 2.8 of the Code applies. This deadline may be extended with the consent of the Panel on Takeovers and Mergers (the 'Takeover Panel') in accordance with Rule 2.6(c) of the Code.

Update on Q3 trading performance

Revenue performance was in line with management expectations for July and August, but marginally below those expectations by the end of September. Whilst the Group continues to exhibit growth in volumes it has also experienced a dilution in overall take-rates. This has been a result of the mix of flows shifting towards lower-margin G10 currencies together with slower than usual economic trading activity in our core markets.

The Company has also had extensive discussions with its International Developmental Organisation ('IDO') clients during October. As previously highlighted, IDO budgets have reduced this year but it was still expected that volumes would increase in Q4 due to usual seasonality. There is now reason to believe that this pick-up in volumes in Q4 is unlikely to materialise owing to changing global macro-economic and political factors. The Group believes this will reduce expected IDO volumes significantly in 2024 with an element of this likely to be deferred into 2025. 

In the nine months to 30 September 2024, the Group's FX & Payments volumes showed 9% growth on a combined basis consisting of flat growth in emerging markets (+10% when excluding NGN, XAF and XOF) and 15% growth in developed markets. In comparison market-wide global payment volumes fell 6%.

Notwithstanding the above, the Group is making good progress in executing on the four strategic pillars laid out at its half-year results in September which will make a meaningful impact in 2025.

·      Network - strong hiring progress in local jurisdictions. MENA licence process underway in Abu Dhabi and US licence process in final stages

·      Clients - commenced Central Bank outreach program with strong relationships being built at the governor level

·      Platform - strong trade finance utilisation levels. Asset returns performing well despite a reducing rate environment

·      Capital allocation - VISA integration progressing well. Expect to launch FX derivatives in early 2025

The Group continues to invest for growth with operating costs (excluding D&A) expected to track in-line with the expectations set out at H1. Given the lower revenues, the positive operating leverage that was expected in H2 is now not expected to materialise.

Neeraj Kapur, Group CEO of CAB Payments commented:

"I am pleased with the progress that has been made since setting out our strategic framework in early September. We are continuing to diversify the business and enhance relationships with our clients at a senior level, including with key Central Banks. Our business model remains robust and we are still winning market share despite short-term market headwinds.

"In terms of performance, the encouraging trading we saw early in H2, has subsequently been impacted by slower than expected flows from International Development Organizations and macro headwinds which are largely out of our control. We are expecting some of this volume to be deferred into 2025.

"I previously flagged that 2024 will be a reset year. As a team we are working hard to ensure that our strategic initiatives are put in place to deliver maximum impact in 2025."

About CAB Payments:

CAB Payments Holdings PLC is the holding company for Crown Agents Bank Limited ('CAB'), a UK-regulated Bank providing FX and payments services, 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 Central Banks and 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.

The individual responsible for arranging the release of this announcement on behalf of CAB Payments is Lesley Martin.

For further information, please contact:

Allen Overy Shearman Sterling LLP is acting as legal adviser to CAB Payments in relation to the Possible Offer.

Important notices

This announcement is not intended to, and does not, constitute or form part of any offer, invitation or solicitation of any offer to purchase, otherwise acquire, subscribe for, sell or otherwise dispose of, any securities, or the solicitation of any vote or approval in any jurisdiction, whether pursuant to this announcement or otherwise. Any offer, if made, will be made solely by certain offer documentation which will contain the full terms and conditions of any offer, including details of how it may be accepted.

The release, distribution or publication of this announcement in jurisdictions outside the United Kingdom may be restricted by laws or regulations of the relevant jurisdictions and therefore persons into whose possession this announcement comes should inform themselves about, and observe, any such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws or regulations of any such jurisdiction.

Disclaimer

Barclays Bank PLC, acting through its Investment Bank ('Barclays'), which is authorised by the Prudential Regulation Authority and regulated in the United Kingdom by the Financial Conduct Authority and the Prudential Regulation Authority, is acting exclusively for CAB Payments and no one else in connection with the matters set out in this announcement and will not be responsible to anyone other than CAB Payments for providing the protections afforded to clients of Barclays nor for providing advice in relation to any matter referred to in this announcement.

Canaccord Genuity Limited ("Canaccord Genuity"), which is authorised and regulated in the United Kingdom by the Financial Conduct Authority, is acting exclusively for CAB Payments and for no-one else in connection with the matters referred to in this Announcement and will not be responsible to any person other than CAB Payments for providing the protections afforded to clients of Canaccord Genuity, nor for providing advice in relation to the matters referred to herein. Neither Canaccord Genuity nor any of its affiliates (nor any of its or their respective directors, officers, employees, representatives or agents) owes or accepts any duty, liability or responsibility whatsoever (whether direct or indirect, whether in contract, in tort, under statute or otherwise) to any person who is not a client of Canaccord Genuity in connection with the matters referred to in this Announcement, or otherwise.

In accordance with the Code, normal United Kingdom market practice and Rule 14e-5(b) of the Exchange Act, Barclays and its affiliates will continue to act as exempt principal trader in CAB Payments securities on the London Stock Exchange. These purchases and activities by exempt principal traders which are required to be made public in the United Kingdom pursuant to the Code will be reported to a Regulatory Information Service and will be available on the London Stock Exchange website at www.londonstockexchange.com. This information will also be publicly disclosed in the United States to the extent that such information is made public in the United Kingdom.

Publication on a website

In accordance with Rule 26.1 of the Code, a copy of this announcement will be available (subject to certain restrictions relating to persons resident in restricted jurisdictions) at www.cabpayments.com, by no later than 12 noon (London time) on the business day following the date of this announcement. The content of the website referred to in this announcement is not incorporated into and does not form part of this announcement.