FY 24 Results

13 March 2025

CAB Payments Holdings plc and its subsidiaries

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

Audited results for the twelve months ended 31 December 2024

Creating a reshaped business with strong foundations for growth

CAB Payments, a specialist in B2B FX and cross-border payments in hard-to-reach markets, announces its audited results for the twelve months ended 31 December 2024. The Group continues to execute on its four pillar strategy with early evidence of delivery coming through.

Neeraj Kapur, Group CEO of CAB Payments, commented:

"We have made solid strategic progress in our transformation journey with active client numbers growing 7%, volumes growing 7% while generating £16m in adjusted profit after tax for the year, in line with market expectations.

"2024 was a "reset" year. Since then our new and highly experienced senior leadership team is now in place and executing well against our plans driving deeper, stronger and trusted relationships with our clients, central banks and counterparties.

"Our vision is clear, we operate a leading Emerging Markets FX and Payments business with well-established foundations of operating in hard-to-reach markets. Our work throughout 2025 will look to enhance this position whilst creating a more profitable, diversified and sustainable company.

"We are executing well against our 2025 plan on both revenues and costs and the Group will continue on its transformation, generating income growth. The changes that we are making will allow us to focus on delivering on our purpose - supporting fast growing economies in challenging conditions helping to improve prosperity for their people."

The Group remains profitable and cash generative, whilst navigating macro-economic challenges. Operational KPIs indicate positive strategic momentum, with elevated levels of investment in 2024 to build a more robust and sustainable business model.

• Volumes grew 7% to £37.2 billion, with developed markets growing 13% and Emerging Markets falling 1%.

• As previously announced, Gross Income fell 23% to £105.5 million (2023: £137.1m) predominantly impacted by exceptional Nigerian Naira, Central African Franc and West African Franc (together "NXX") business in 2023.

• Wholesale FX & Payments FX Gross Income fell 39% to £53.8 million (2023: £88.4 million).

• NXX income reduced by £31.4m between 2023 and 2024.

• A stronger dollar lowered average transaction values combined with reduced aid flows suppressed volume growth and take-rates in emerging markets. In developed markets, a higher mix of G10 currency trading reduced the overall blended take-rate.

• Banking and Other Income grew 8% to £37.0 million (2023: £34.3 million) reflecting higher trade finance lending to drive enhanced FX & Payments growth and enhanced asset allocation to dampen the effects of a falling rate environment.

• Operating costs (excluding D&A) increased by 6% to £76.2 million reflecting 15% growth in other operating expenses, largely due to technology and office costs. Staff costs were broadly flat year-on-year .

◦ In-year costs were well controlled, with H2 2024 costs up 2% vs H1 2024.

◦ Previously announced cost action is underway to reshape the organisation for greater efficiency and to reflect the new strategy. The Group expects a c.20% reduction in FTE and approximately £12m cash staff cost saving in 2025 across operating expenses and capital expenditure, before upskilling and new hires. We therefore expect broadly flat staff P&L cost in 2025.

◦ Adjusted EBITDA margin remains robust at 29% albeit down on the prior year (2023: 47%) reflecting lower Gross Income performance combined with a primarily fixed cost base.

• Depreciation and amortisation increased 47% to £8.5 million (2023: £5.8 million) reflecting higher levels of capital expenditure to help deliver on our four-pillar strategy.

◦ Capex stood at £15.0 million up from £7.4 million in 2023, a result of underspend in prior year with focus being on operational resilience and platform scalability.

◦ Capex expected to reduce in 2025, with increasing allocation towards product and revenue generation related investment.

• Adjusted EPS of 6.3 pence (2023: 17.7 pence).

Operating and commercial highlights:

• Active (revenue generating) clients grew 7% to 546 (2023: 509), reflecting strong sales progress and the growing strength of customer relationships.

• Network counterparties grew 18% to 390 (2023: 331) evidencing our competitive pricing, expansive geographic reach and efficiency in execution for clients.

• New collaboration with Visa to integrate CAB's offering with Visa Direct giving the capability to deliver higher volume, lower-value payments in a cost-effective manner, providing reach to more than 8.5bn end-points across more than 190 countries.

• Trade Finance activity grew by 2.1x to £180 million of balances as at 31 December 2024 (2023: £59 million), while total gross trade lending throughout the year was £535 million (2023: £243 million).

▪ In 2024 the Group started working to create capability to distribute trade finance assets and In February 2025, the Group conducted its first trade asset sale, demonstrating the ability to rapidly scale business in a low capital usage manner

▪ Trade finance helps to drive client loyalty and is a strong support for the core FX & Payments business - trade finance clients generated £3.2 billion in FX volume.

• In 2024 the Group also started working with major global banks to enable us to offer investment grade deposits, allowing for onboarding of deposits from a wider set of blue-chip clients to further drive active client growth in 2025.

Outlook

The business is structured to optimise earnings growth through a more sustainable business model, driving lower income concentration and increased diversification, with a clear focus on enhancing the strength of our customer relationships. The strategic diversification of the income base driven by a stronger in-geography sales focus, expansion of its network and having a more integrated solutions based banking and customer proposition will go towards mitigating evolving macro headwinds.

The Group will continue its transformation journey during 2025 and it is expected to generate income growth versus 2024.

Senior leadership changes:

Strong senior leadership is now in place to execute the strategy and deliver growth. New leadership hires include:

• James Hopkinson - Group CFO. James brings significant broad based experience across Emerging Markets including FX, Payments and Banking. James built his career at Standard Chartered, where he spent almost 20 years across multiple geographies including Africa, Hong Kong, India, Singapore, Qatar and the UK. Latterly, he held senior roles including Global CFO of retail banking and Global CFO Regions and Clients. More recently James has been CFO of both privately-owned and UK Listed banks.

• Clare Davies - Group CRO. Clare has extensive risk management experience across large aspects of financial services, both regionally and globally. Prior to joining CAB, Clare was EMEA Chief Risk Officer and Global ESG Chief Risk & Compliance Officer at Bank of New York Mellon. Previous roles also include senior risk management positions at Goldman Sachs, Deutsche Bank, Deutsche Asset Management and GE Capital.

• Simon Ramage - General Counsel. Simon was previously Group Legal Director at Prudential plc. Prior to that, he held general counsel positions at GE Capital, having practised as a corporate lawyer at Freshfields.

Change in Auditor:

As previously announced, the Group conducted a competitive tender process for the role of external auditor. The Board Audit Committee has recommended the appointment of PwC as the Group's external auditor for the financial year ended 31 December 2025.

Shareholder approval for PwC's appointment will be sought at the 2025 AGM and Forvis Mazars will resign as auditor after four years in position.

Analyst and Institutional Investor Webcast:

A presentation webcast and live Q&A conference call for analysts and institutional investors will take place on 13th March 2025 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.

To register for the webcast, please go to: https://secure.emincote.com/client/cab/2024annualresults

To register for the conference call, please go to: https://secure.emincote.com/client/cab/2024annualresults/vip_connect

Retail Investor Webcast:

CAB Payments will also host a presentation for retail shareholders and prospective shareholders. This will take place at 10.00am UK Time on Friday 14th March. The presentation will be hosted by Neeraj Kapur, Group CEO and can be accessed via the link below:

https://sparklive.lseg.com/CABPAYMENTSHOLDINGS/events/e07ad3c2-4155-402f-a2e4-e47e3b661f6e/cab-payments-2024-annual-results-presentation-to-retail-holders

Questions can be submitted via the platform any time during the live presentation.

Selected Financial Information and KPIs for Continued Operations:

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

[email protected]

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

[email protected]

In accordance with the Listing Rules of the UK Listing Authority, these preliminary results have been agreed with the Company's auditors, Forvis Mazars LLP.

The financial information set out above does not constitute the Group's statutory accounts for the years ended 31 December 2024 and 2023, but is derived from those accounts. Statutory accounts for 2023 have been delivered to the Registrar of Companies and those for 2024 will be delivered following the Group's Annual General Meeting. The auditors have reported on those accounts: their reports were: (i) unqualified, (ii) did not contain a reference to a material uncertainty in respect of going concern, (iii) did not contain a statement under Sections 498 (2) and 498 (3) of the Companies Act 2006.

A mission to create long term shareholder value

In June 2024, I was delighted to be appointed as CEO of CAB Payments and Crown Agents Bank (CAB) and this is my first set of annual results since being appointed. The performance of the business in 2024 was below expectations, and did not contain any of the specific currency tailwinds that existed in the prior year. Despite this, we still have a business with fundamental strengths: a highly differentiated offering for clients with great margins and profitability, good cash generation and a strong balance sheet. This, combined with our unique relationship with central banks and local banks, supports our loyal client base and competitive moat.

I strongly believe that we have a distinct and powerful FX and cross-border payment offering for the market. Our strength of network and deep expertise means we can move money into and out of the world's most complex financial markets. We are trusted by a global ecosystem of leading institutions across the public, private and development sectors to support their desire to ensure that the global south economies are better connected and served by the international currency markets. All of this is underpinned by the fact that we are a fully regulated banking institution in the UK, which is an important unique selling point when establishing and building trust as well as client loyalty.

With that said, strategic change was needed in order to create a more diverse business that is capable of creating sustained growth in profitability, cash flow and ultimately shareholder value. I announced this at our half year results in September 2024 and it builds on our existing strengths and focuses on the quality of execution across four pillars:

• Network

• Clients

• Platform

• Invest and Innovate

We are well into our journey of preparing the business for the future

The business has moved quickly to strengthen the quality and capabilities of leadership within our business, bringing in diversified and relevant experience to deliver on the next phase of growth. Key hires have been made in significant areas such as operations, sales, payments and banking as well as a new Group CFO. This is part of our updated, more execution focused, strategy that was introduced in the latter half of 2024.

In September 2024, we hired a new Global Head of Sales, who brings significant sales experience in emerging markets and in leading large teams. The sales team has been reorganised to focus on specific segments and geographies to deliver on go-to-market strategies in each of our target markets. As part of the restructure, we are adding teams to focus specifically on Central Banks and Corporates. We have also invested in our payment products and network development teams with experienced leaders from those sectors.

We expanded our business into the EU with our office in Amsterdam now able to service clients across 28 passported jurisdictions. We still await our licence authorisation in the USA. We have also commenced our licence application in Abu Dhabi as our Middle East & North Africa hub as we seek to leverage the growth in capital flows between the Gulf and Sub-Saharan Africa. This is driving new and improved relationships with Central Banks allowing us to gain superior access to local liquidity. As an example, we recently received our licence to act as an International Money Transfer Operator (IMTO) in Nigeria, which unlocks significant potential as we are able to work with the Nigerian Central Bank on large scale Naira transactions.

Our B Corp Certification has been a cornerstone of our sustainability journey, establishing a strong foundation and driving meaningful value for our key stakeholders, including clients, investors and regulators. Sustainability remains at the heart of our strategy, and we are resolutely focused on the future especially as we play a key part in opening up emerging markets to help their economies grow and their people thrive.

Strategic vision - good early progress

We now have a business model which puts us firmly on a path to sustainable growth. This results in our business being: 1) relationship led, 2) technology driven and 3) having a wider geographic reach. This is a long-term vision, designed to drive sustainable growth and mitigate concentration risk underpinned by our four-pillar strategy.

Our moat is based on driving stronger relationships both across our clients and network. Building relationships at the right level accompanied by offering a wider product set that we can do as a bank, makes us a stand-out partner. We have a right to win in our markets.

Technology is the engine of our growth. We understand that our clients need the most seamless, secure and efficient services possible which is why our ongoing capex plans drive this agenda. Automation and AI-driven compliance solutions will enable us to scale while ensuring we meet the highest regulatory standards across multiple jurisdictions. Real-time payment solutions will enhance the speed and reliability of our transactions, particularly in emerging markets where instant settlement is becoming the norm. Data-driven insights will allow us to better understand our clients' needs and tailor solutions that add real value.

Our operations will no longer be defined as a single-branch offering, centrally controlled from London, but moving towards a global business with strategic locations in London, Amsterdam, New York and Abu Dhabi. This drives deeper relationships with our clients, partners, regulators and stakeholders. London remains our core operations and innovation hub, continuing to drive our technological edge. Amsterdam strengthens our European presence and gives us better access to EU financial institutions and regulatory frameworks. New York will connect us to the heart of global banking and expands our reach in the Americas specifically LATAM. Abu Dhabi cements our role in the Middle East and provides a strategic gateway to North Africa and South Asia.

Our strategic indicators show progress. We have increased our network counterparties by 18% to 390. Active (revenue generating) clients numbers are up 7% to 546. We have also been targeting flows in key regions outside of Africa such as LATAM, MENA and Asia-Pacific which now account for 7% of Group volumes, up 2% on 2023.

Under new leadership we continued to expand the network with 27 new Nostro providers and 32 new liquidity providers onboarded. We will continuously assess the quality of our network which is largely determined by loyalty and the quality of FX pricing we are getting

We believe that our banking activities brings us a distinct tactical advantage to our core FX and Payments business. Trade Finance, for example, is a distinct service that many of our competitors cannot offer. Not only does it drive client loyalty by offering an integrated service, it also facilitates significant FX & Payment flows. In H2 2024, we increased limits on our Trade Finance facilities, with our lending book standing at £180m at the end of 2024 (2023: £59m), a 2.1x increase. Trade finance facilities are principally used by banking and liquidity partners which helps facilitate tighter relationships and thus better FX pricing and liquidity. This business can be scaled up beyond our own balance sheet through asset sales, syndications and third-party funding driving even more FX & Payment flow onto our platform. In February 2025, we conducted our first asset sale.

To support this vision, in late 2024, the difficult decision was taken to reshape the organisation to reflect better our renewed strategy and growth ambitions. This is expected to result in a reduction in the workforce of approximately 20% of full-time equivalents. However we will continue to hire at the right levels throughout 2025 to get the right quality of talent, especially in revenue generating functions. We will continue to monitor and control costs carefully as part of our focus on improving the Group's adjusted EBITDA margin.

Business Performance

2024 was a challenging year for CAB Payments. The impact on our performance was two-fold; first, the removal of extraordinary revenue performance from certain corridors, and secondly, macro-economic headwinds such as a stronger US dollar and reduced commitments to aid from developed nations.

It is also important to contextualise our performance against some broader market trends, principally that there was a drop of 4% in global market payment volumes according to management analysis, and a 2% drop in flows into our core Sub-Saharan Africa markets. We see this market contraction as short-term and in spite of this, our overall volumes grew 7%. In Emerging Markets our volumes fell 1%.

Excluding the effects of Nigerian Naira, Central African Franc and West African Franc (NXX), our Wholesale FX and Payments FX revenue fell 7% to £41.8m (2023: £45.0m), which is not an unexpected result given the contracting market in 2024 and lack of currency-specific tailwinds. In addition, our currency concentration reduced significantly with our Top 5 corridors accounting for 29% of Gross Income versus 45% for 2023, which is the right direction as we create a more diversified business.

We had expected Wholesale FX and Payments FX revenues to demonstrate their normal increase in the second half of the year. Disappointingly, this did not transpire. This was for a number of reasons, not least that IDO volumes continued to be suppressed from the first half owing to budget constraints driven by political factors. IDO activity going into 2025 again remains uncertain given the significant spending review being undertaken in the US.

The strong dollar also impacted revenue significantly having the effect of lowering average transaction values. Moving forward, our approach of integrating banking solutions with FX and Payments will help us drive more predictable volume flow among our client base.

The Group positively managed its net interest income during the year which stood at £30.9m (2023: £31.7m) a decrease of 3% as near-term market interest rates peaked and then started to fall. In June we extended the limits of both our Trade Finance and Working Capital facilities (previously known as Liquidity as a Service ''LaaS'' facilities) to £200m and £75m respectively and we saw a commensurate increase in utilisation of these facilities.

On the investment side we are seeking higher returns by investing our assets into a wider pool of high quality securities that produce higher yield with little to no extra incremental risk.

The Group operates a relatively fixed cost base which accommodates the scalability of the business model and drives good operational leverage. However, as we operated in a declining revenue environment, this has resulted in significant compression in our Adjusted EBITDA margin to 29% from 47% in 2023. Whilst we remain significantly profitable, we consider this to be disappointing and it will need to be improved from 2025.

Cash generation was lower than last year given the lower Adjusted EBITDA margin. Our model in itself remains highly cash generative given the majority of our revenues are capital light. Due to the relatively high level of capex and lower level of profitability versus last year, cash conversion stood at 50% vs 88% in 2023.

Above all, we remain well capitalised. At the end of 2024 we had total capital of £116.0m (2023: £107.5m) of which £10m is considered excess over our regulatory and internal capital requirements (2023: £34m). We are committing this capital to return to growth as our renewed strategy demands.

Looking forward

We have taken meaningful action from H2 2024 to prepare the business for future success. The Board and executive team are wholly aligned on the vision and strategy for the business. There are exciting market opportunities available that can drive significant growth.

There is still much work to be done in 2025, a year of transition for the business where we expect to launch new revenue initiatives to clients, begin to deliver from our international offices and, later in the year, begin to reap the benefits of our strategic realignment. That said, I am confident that we will begin to see the benefits of our actions. Whilst the macro-environment in 2025 remains uncertain given the narrative coming out of developed markets with respect to trade tariffs and significant cuts to development aid, the year has started well and we are optimistic of driving growth in 2025 but with more meaningful growth in 2026.

Financial Review

2024 was a year of challenges and recalibration for CAB Payments. As we exited 2023, the Group faced headwinds that would continue to shape our financial performance in the current year. These included significant macro-economic pressures and central bank interventions, which particularly impacted income streams from key currency corridors. Despite these challenges, we continued to demonstrate the resilience of our business model by remaining profitable and cash generative, while maintaining confidence in our long-term strategy.

Macro-Economic and Market Conditions

The Central Bank interventions that defined 2023 continued to be of focus in 2024, directly affecting our key income streams in Nigeria (NGN), West Africa (XOF) and Central Africa (XAF) in particular (collectively 'NXX').

Our business was also impacted by the strengthening of the US dollar against emerging markets reducing average transaction values, and political uncertainty in a number of jurisdictions in which we operate. This had a telling effect particularly on the volume flow of our International Development Organisation clients (IDOs).

In this inflationary environment pervading the global economy, the trust in CAB as a PRA and FCA regulated bank and its ability to deploy its banking licence came to the fore with our clients increasingly placing their funds with us for both operational and investment purposes. As market interest rates were projected to fall, we invested more of our surplus capital and liquidity into higher yielding Trade Finance lending for increased net interest income. This business is frequently accompanied by FX & Payments activity, providing a healthy return on capital while further diversifying our income streams.

Our international operations offer further cause for optimism in diversifying our income streams. In Europe we have a developing pipeline of clients offering opportunities for market expansion, and we are also awaiting permissions to begin operating from offices in the US and Abu Dhabi, giving us future access to significant new markets.

Performance Highlights and Operational Resilience

The Group's continued investments in its product capabilities, infrastructure and resilience contributed to continued increased client activity and profitability:

• Financial Strength: We maintained healthy capital surpluses with CET1 ratio of 19.2% and £1.6bn client deposits.

• Client Growth: The Group successfully onboarded an additional 71 clients in 2024 (2023: 83), of which 53 monetised during 2024, taking the total number of active clients to 546 (2023: 509).

• Network Size and Strength: We continue to develop our network, which we see as a key differentiator, growing 18% year on year to 390 counterparties.

• Adjusted EBITDA and Margin: We remained profitable and cash generative with an Adjusted EBITDA of £30.8m (2023: £64.6m ), and a margin of 29.1% (2023: 47.2%). Our cost control and lower capital expenditure plans will support both profitability and free cash flow through 2025.

Strategic Focus, Investment and 2025 Outlook

2024 marked the beginning of a strategic reset for the business through its four pillar strategy to deliver shareholder value. As we enter 2025 the Group is well-positioned to return to growth, supported by:

• Expanding Market Reach (Network): Continued efforts to deepen penetration in our core markets, with increased local presence to build and develop relationships with central banks and liquidity providers.

• Disciplined Capital Allocation (Invest and Innovate): Continuation of strategic investment to ensure operational resilience and efficiency. We are now in a position to enhance our product and technological capabilities for greater innovation and enhanced revenue.

• Client-Centric Growth (Client): Onboarding of new clients in existing jurisdictions while developing a pipeline of new business in Europe alongside licensing applications in the US and UAE.

• Developing Infrastructure and offerings (Platform): By leveraging our banking licence, the Group is increasing its focus on Central and Regional Bank relationships to be a trusted banking partner, solidifying our FX and Payment income streams.

Risks and Opportunities

The Central Bank interventions that defined performance year-on-year highlighted both the challenges and opportunities inherent in our markets. While interventions reduced income from key corridors, they also underscored the need for geographic diversification. The Group remains focused on expanding its footprint in LATAM, APAC, and MENA, which will help mitigate concentration risks and create more stable revenue streams.

Our ongoing investments in technology and compliance further bolster our ability to navigate regulatory complexities, ensuring long-term operational resilience.

Gross income

Gross Income in 2024 was £105.5m (2023: £137.1m) reflecting (23)% contraction year-on-year. This reduction was principally due to Wholesale FX and Payment FX take rate declines which contributed to £34.6m lower income in 2024, particularly through the NGN, XOF and XAF currencies ('NXX'). Gross Income excluding NXX was broadly in line with 2023 at £93.5m in 2024 (2023: £93.7m).

A reallocation of liquidity resources from cash management to higher margin Trade Finance and Working Capital facilities offset the impact of Bank of England and US Federal interest rates peaking and subsequently falling towards the end of 2024, with Banking Services and Other Income increasing to £37.0m (2023: £34.3m).

Wholesale FX and Payment FX income

Income reduced year-on-year by £34.6m driven by NXX declines of £31.4m. Volumes grew by 7.2% year on year, with a mix shift between lower take rate developed markets and higher take rate emerging markets. Excluding NXX, Emerging Market volumes grew by £0.5bn, contributing a net £1.4m income versus 2023. This is despite the impact of the strengthening dollar against emerging market currencies, which resulted in lower average transaction values. Our developed markets volumes grew while take rates remained stable, contributing an additional £2.1m income year-on-year.

One of our key focus areas has been to grow our client base in order to diversify, and in 2024 we onboarded 71 new clients, of which 53 clients generated income in the year, with the remaining 18 clients expected to trade early in 2025. We also saw clients onboarded at the end of 2023 begin to monetise.

We continue to progress with our geographical expansion, with the EU licence confirmed earlier in 2024 and licences pending in the United States and through our application in Abu Dhabi, as our Middle East hub.

Other payments Income

This represents income from providing access to USD, GBP and EUR payment and clearing services, and Pension payments, and has grown 3% to £14.7m (2023: £14.3m). This is the result of adding additional EMFIs to our clearing facilities.

Banking services and Other income

Income grew to £37.0m, up from £34.3m in 2023 through the reallocation of some of the Group's capital and liquidity resources towards higher-margin Trade Finance and Working Capital facilities. These facilities are a key enabler of our transactional products.

We have also begun further diversifying our liquidity portfolio by investing some surplus liquidity in AAA-rated floating rate securities.

Client performance

• EMFIs: stable performance demonstrates the strength of our relationships with local and central banks within emerging markets. Income sustained by increasing Trade Finance facilities and deposit taking to offset reducing income mainly from NXX.

• IDOs: reduction in income driven by NXX, with underlying performance excluding NXX down 11% year on year reflecting the negative business impact of the strong dollar and political uncertainty.

• MMBs: revenue broadly in line excluding the material impact of NXX.

• NBFIs: year-on-year reduction driven by NXX. Excluding NXX, income is down 16% reflective of broader take rate compression in a highly competitive segment.

Cost base development

Total operating expenses decreased by 11% to £88.4m, with:

• Staff expenses: broadly in line year-on-year (£45.7m vs £45.6m in 2023) despite the Group's average headcount growing to 378 Full-Time Equivalent (FTE) (2023: 310 FTE), which reflected investment, particularly in IT, to support strategic initiatives reflective in higher capitalisation in 2024.

• Other operating expenses increased 15% to £30.5m vs £26.5m in 2023, due to higher recruitment fees, professional services and technology investments linked to EU, US and Abu Dhabi licensing efforts.

• Depreciation and amortisation increased 47% year on year, primarily due to the initial recognition in April and subsequent amortisation of the right of use asset associated with 3 London Bridge, along with increased depreciation of capital investment in 2024.

• Adjusting items (formerly referred to as non-recurring expenses): £3.7m (2023: £21.1m) of one-off expenses were incurred, primarily related to due diligence work associated with the third-party acquisition bid, costs of transitioning senior management, professional costs in relation to review of strategic options and bonuses paid to staff to settle loans re the 2017 LTIP scheme

The organisation had positioned itself for increased revenue, which has not materialised in the expected way. As a result, the business is currently in the process of undertaking a c. 20% FTE redundancy programme, which is anticipated to save c. £7m of operational costs during 2025 and a further c. £5m of capitalised costs. This programme is to reshape the organisational design for future strategic requirements.

Profitability and cash generation

As a result of contracting income and despite a good control over costs, Adjusted EBITDA declined by £33.9m to £30.8m (2023: £64.6m) and Profit After Tax by £9.7m to £14.2m (2023: £23.9m). The reduction year-on-year on Profit After Tax was not as severe due to lower Adjusting items. EPS fell from 10p to 6p, a decline of 40%.

Operating free cash flow was impacted by the reduced Adjusted EBITDA and higher capital investment in 2024 leading to a reduction to £15.5m in 2024 from £56.8m in 2023. Operating Free Cash Flow Conversion fell to 50% in 2024 from 88% in 2023.

Taxation

The effective tax rate for the year was 19%, reflecting adjustments for disallowable costs associated with restructuring and compliance with the UK banking surcharge. The Group incurred a total tax charge of £3.4m compared to £13.7m in 2023, reflecting the decline in profitability.

Capital allocation

The Group deploys capital into two main categories - capital investment expenditure with a view to driving long-term growth, and lending assets which generate a strong return on capital and enhance the franchise by deepening relationships with clients and liquidity providers. As the Group has been investing surplus capital generated into the business, it will not be paying a dividend.

Capital investment expenditure

Capital expenditure for the year ended 31 December 2024 was £15m (2023: £7.4m), representing a 102% increase. This investment focused on:

• Technology Development: Enhancements to the core banking and FX systems, including greater automation for scalability and risk control.

• Infrastructure Expansion: Building out offices and operational capabilities in anticipation of EU and US licences.

• Product Development: Innovative solutions such as derivatives and Trade Finance development

These investments align with our strategic objectives to expand market reach and enhance client service capabilities. In 2025, it is anticipated that capital expenditure will be lower reflecting the operational maturity of the business and the redundancy programme. The emphasis of 2025 expenditure will be on revenue-enhancing Product Development.

Balance sheet

As at 31 December 2024, customer deposits totalled c. £1.6bn of which c. £0.9bn was on fixed term deposit (including overnight) with the remainder being easy access in line with clients' operational requirements. The vast majority of depositors transact other business with the Group demonstrating the strength of the relationships that we have with clients.

As at 31 December 2024, our portfolio of High-Quality Liquid Assets (HQLA) stood at £1.3bn(2023: £1.3bn) providing deep liquidity access to the business to support our ongoing growth, comfortably exceeding our minimum prudential requirements with Liquidity Coverage Ratio (LCR) standing at 138% (2023: 152%). The reduction in our LCR has been driven by a decision the Group has taken to better utilise its balance sheet to help increase yield by deploying funds into franchise enhancing, short dated Trade Finance assets and Working Capital (£212m at 31 December 2024 vs £67m at 31 December 2023) and investing in floating rate notes as part of its HQLA buffer (£44m at 31 December 2024 vs £nil at 31 December 2023). The growth in the Trade Finance book has been achieved whilst still maintaining healthy surpluses across all prudential liquidity and capital metrics.

The Group's strong levels of liquidity will continue to allow us to deploy funds to take advantage of further opportunities to invest in yield and franchise enhancing assets, and to fully exploit the opportunities presented to us by holding a banking licence. We have continued to reinvest our profits into the long-term growth prospects of the Group whilst simultaneously growing our capital base with CET1 now standing at £116.0m (2023: £107.5 m). The Group's CET1 ratio has trended down across the course of the year (2024:19.2% , 2023:25.5%) primarily as a result of the Group deploying its surplus capital into Trade Finance assets and higher operational risk charges required, as a result of higher average 3-year revenue. As the Group has been investing surplus capital generated into the business, it will not be paying a dividend.

During the year we made a reversal of provision for credit losses of £0.5m (2023: provision for credit losses £0.4 m) with impairment provisions held on the balance sheet at 31 December 2024 of £0.4m (2023: £0.9m). The reversal of provision for credit losses in the current year is attributable to a change in our recognition of the behavioural life of Working Capital facilities.

Principal Risks and Uncertainties

Effective risk management is critical to realising our strategy. We have an established risk management framework to manage and mitigate the various risks that we face.

As at 31 December 2024 our principal risks consisted of:

Financial Statements

Consolidated statement of Profit or Loss

Consolidated Statement of Other Comprehensive Income

Consolidated Statement of Financial Position

1 - A prior period adjustment has been made to record a reclassification of £1.4m interest receivable from Cash and balances with central banks which was incorrectly recognised in Other loans and advances to banks instead of Cash and balances from central banks. There was no impact to profit or loss, equity or earnings per share.

Company registration number - 09659405. 

The notes on pages 29 to 85 form part of these financial statements. The Board of Directors approved the financial statements on 12 March 2025.

N Kapur,

Group Chief Executive Officer

Consolidated Statement of Changes in Equity

Consolidated Statement of Cash Flows

1 - A prior period adjustment has been made to record a reclassification of £1.4m interest receivable from Cash and balances with central banks which was incorrectly recognised in Other loans and advances to banks instead of Cash and balances from central banks. There was no impact to profit or loss, equity or earnings per share.

Notes to the Financial Statements

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 31 December 2024 is 3 London Bridge St, London, SE1 9SG, England.

The Company's shares trade under the ticker code of CABP.L.

The Group 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 consolidated and Company financial statements have been prepared under the historical cost convention, except as disclosed in the accounting policies set out within these financial statements, and in accordance with the UK adopted International Accounting Standards (UK-adopted International Financial Reporting Standards ('IFRSs')) in conformity with the applicable legal requirements of the Companies Act 2006.

The principal accounting policies applied in the preparation of these financial statements are set out in this Note. These accounting policies have been consistently applied to all the years presented unless otherwise stated. The balance sheet has been presented in order of liquidity.

Comparatives have been restated due to prior period errors as set out in Note 9 and Note 19. This restatement was not as a result of a change of accounting policies and there is no impact to profit or loss and equity.

'Adjusting items' presented in the consolidated statement of profit or loss and related notes has been referred to as 'non-recurring expenses' in the prior year.

The preparation of consolidated and company financial statements in conformity with IFRS as adopted by the UK requires the use of certain critical accounting estimates which have been disclosed in Note 2.

The consolidated and Company financial statements are presented in British Pound Sterling (£). All values are rounded to the nearest thousand (£'000), except when otherwise indicated.

The Group and the Company have 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 Company's or the Group's consolidated financial statements and the Company's financial statements.

c) Basis of consolidation

The consolidated financial statements include the financial statements of the Company and all of the entities controlled by the Company made up to 31 December each year. Control is achieved when the Company:

• has the power over the investee;

• is exposed, or has rights, to variable return from its involvement with the investee; and

• has the ability to use its power to affect its returns.

The Company reassesses whether or not it controls an investee if facts and circumstances indicate that there are changes to one or more of the three elements of control listed above.

A subsidiary is an entity controlled directly or indirectly by the Company. The Company controls a subsidiary when it is exposed, or has rights, to variable returns from its involvement with the subsidiary and has the ability to affect those returns through its power over the investee.

Consolidation of a subsidiary begins when the Company obtains control over the subsidiary and ceases when the Company loses control of the subsidiary. Specifically, the results of subsidiaries acquired or disposed of during the year are included in the consolidated profit or loss account from the date the Company gains control until the date when the Company ceases to control the subsidiary.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with the Group's accounting policies.

All intragroup assets and liabilities, equity, income, expenses, and cash flows relating to transactions between the members of the Group are eliminated on consolidation, with the exception of foreign currency gains and losses on intragroup monetary items denominated in a foreign currency of at least one of the parties.

The non-controlling interest (NCI) in subsidiaries is identified separately from the Group's equity therein. Interests of non-controlling shareholders represent ownership interests entitling them to a proportionate share of net assets upon liquidation initially being measured at the non-controlling interest's proportionate share of the acquiree's identifiable net assets.

Subsequent to acquisition, the carrying amount of the NCI is the amount of those interests at initial recognition plus the NCI's share of subsequent changes in equity. Total comprehensive income is attributed to NCIs even if it results in the NCI having a deficit balance. Following the capital reorganisation in July 2023, there was no NCI as at 31 December 2024 or 31 December 2023.

Changes in the Group's interests in subsidiaries that do not result in a loss of control are accounted for as equity transactions. The carrying amount of the Group's interests and the non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to the owners of the Company.

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. The EBT is controlled and recognised by the Company using the look-through approach, i.e. as if the EBT is included within the accounts of the Company.

d) Going concern

The Directors have assessed the ability of the Company and of the Group to continue as a going concern 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 continue in existence for a period of 12 months from when these financial statements are authorised for issuance. Accordingly, the financial statements of the Company and the Group have been prepared on a going concern basis.

Critical to reaching this view were:

• The output of internal stress assessments which were conducted at a Company and a Group level and modelled the impact of severe yet plausible stresses which underpinned the Going concern assessment.

• The output of the reverse stress testing assessment 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).

In reaching their conclusions, the Directors also considered the results of the 2024 ILAAP, the 2024 Going concern assessment, and the 2024 Recovery Plan.

i. Internal stress assessments

In total, three stresses were considered:

• 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 GBP sharply depreciating against USD which led to material increases in USD denominated Credit Risk Weighted Assets (CRWA);

• Idiosyncratic Stress which modelled the impact of a material reduction in revenue driven by idiosyncratic events; and

• A Combined Stress which modelled the impact of the Market & Climate Stress occurring concurrently with the Idiosyncratic Stress.

The Group's most recent ICAAP was approved by the Board in early 2024 and thus its conclusions were based on a version of the corporate plan agreed by the Board during December 2023. As part of this Going Concern assessment, severe, but plausible Idiosyncratic, Market and Climate, and Combined stresses similar to those applied in the ICAAP are applied to the Group Corporate Plan which was Board approved during December 2024.

In all the stresses noted above the Group maintained sizeable surpluses to Total Capital Requirement.

ii. Reverse stress tests

The reverse stress tests are used to assess vulnerabilities of the Group and determine what extreme adverse events would cause the business to fail. Where any of these events are deemed to be plausible, the Group will adopt measures to mitigate the impact of such events where plausible.

The 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.

iii. Conclusion

The Directors are of the view that:

• There are no material uncertainties relating to events or conditions that cast significant doubt on the Company's and the Group's ability to continue as a going concern; and

• The significant judgements and estimates made by management in determining whether or not the adoption of the going concern is appropriate are disclosed in Note 2.1. The forecasts and assumptions used for impairment assessments were the same used for the going concern assessment.

Accordingly, the financial statements have been prepared on a going concern basis.

e) Interest income and interest expense

i) Net interest income

Interest income and interest expense for all interest-bearing financial instruments, including interest accruals on related FX contracts, are recognised within Net interest income in the consolidated statement of profit or loss and other comprehensive income. The interest expense on financial liabilities and interest income on assets that are held for collection of contractual cash flows, where those cash flows represent solely payments of principal and interest, is recognised using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial asset or financial liability and of allocating the interest income or expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the life of the financial instrument or, when appropriate, a shorter period, to the net carrying amount of the financial asset or financial liability.

ii) Net (loss)/gain on financial instruments measured at fair value through profit or loss

This balance comprises the interest income or interest expense on FX derivatives. It is measured at the contractual interest rate.

f) Fees and commission income

Fees and commission receivable which are not an integral part of the effective interest rate are recognised as income as the Group fulfils its performance obligations. Fees and commission income includes the following key revenue streams:

• Account management and payment services: the Group's performance obligation in relation to account management services is to provide management or maintenance services to its current account holders. The revenue for these services is recognised over the life of the contract on a monthly basis as fees are received. Crown Agents Bank Ltd (CAB) provides the service. Payment services fees relate to services offered by the Group to its clients by executing payment transactions. Revenue from providing services is recognised at a point in time when the services are rendered i.e. when the payments are executed.

• Pension payment fees: pension payment fees are charged to pension companies for making payment to pension beneficiaries on their behalf. The Group acts as a principal in rendering these services to its clients. Revenue from providing services is recognised at a point in time when the services are rendered i.e., when the payments are executed.

• Trade finance income

◦ Financial guarantee income: includes fixed fees earned for issuing financial guarantee contracts. The performance obligation of the Group is to provide financial assurance to the recipient of the guarantee in case of payment default. Revenue is recognised over the period of the contract term. The fees for providing financial guarantee services are charged and collected upfront.

◦ Income from letters of credit: the Group also receives fees in respect of the issue of letters of credit where the performance obligations are typically fulfilled towards the end of the client contract. Where it is unlikely that the letter of credit will be drawn down, it is recognised in fee and commission income over the life of the facility, rather than as an adjustment to the effective interest rate for loans expected to be drawn as they are short-term facilities. The fees for acceptance of letters of credits include fees and are charged and collected upfront. Other charges include advising fees, confirming bank fees, and bank charges, all of which are collected on the completion of the term of the letter of credit.

• Electronic platform fees: fees for the services provided by the Group using its electronic platform to facilitate bulk payments to its clients. Revenue is recognised at a point in time when the services are rendered i.e., when the payments are executed.

• Risk assessment fees: fees for enhanced due diligence services provided by the Group under fixed price contracts. Revenue is recognised over the period the service is provided. As the contracts are time-based contracts, revenue is determined on the time elapsed relative to the total period of the contract period. Fees are invoiced on the completion of services or on a quarterly basis. No significant element of financing is deemed present as the contract allows a credit term of 30 days.

• FX Payment fees: commission earned for introducing a new client to a third party to facilitate cash payment transactions. Revenue is recognised at a point in time when the services are rendered by the third party.

g) Net foreign exchange gain

Net FX gain comprises the following:

• Profit on settlement of FX contracts: these profits arise on FX Settlements involving the instruction of client payments to specific recipients. Under the Group's FX and payment services, clients agree to terms and conditions for all transactions at the time of signing a contract with the Group. On trade date the Group measures these cash flows at fair value, with further changes in fair value being recognised in profit or loss until the settlement of the contract. This balance includes both realised and unrealised FX income at year-end.

• Remeasurement of non-sterling balances: Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions. At each period end foreign currency monetary items are translated to the functional currency using the closing rate. Non-monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined. FX gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit or loss except for FX gains and losses in relation to instruments measured at fair value through other comprehensive income (FVTOCI) which are recognised in other comprehensive income (OCI).

• Fair value gains or losses on derivatives: this comprises the profits and losses on remeasurement of forward FX derivatives carried at fair value through profit and loss (FVTPL).

• FX gain on payment transaction revenue: an FX gain or loss on payment transactions is the difference between the spot exchange rate between the functional currency and the foreign currency at the date of the payment transaction.

h) Foreign currency

(i) Functional and presentational currency

The Company's and the Group's functional and presentational currency is British Pound Sterling (£).

(ii) Transactions and balances

Foreign currency transactions are translated into the functional currency using the spot exchange rates at the dates of the transactions.

At each period end foreign currency monetary items are translated to the functional currency using the closing rate. Non‑monetary items measured at historical cost are translated using the exchange rate at the date of the transaction and non-monetary items measured at fair value are measured using the exchange rate when fair value was determined.

FX gains and losses resulting from the settlement of transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the consolidated statement of profit or loss except for FX gains and losses in relation to instruments measured at fair value through other comprehensive income (FVTOCI) which are recognised in other comprehensive income (OCI).

(iii) Group companies

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group's foreign operations are translated to the Group's presentational currency at exchange rates prevailing at the close of business on the balance sheet date. Income and expense items are translated at the exchange rates on the day of the transaction.

FX differences arising on the translation of a foreign operation are recognised in other comprehensive income and accumulated in the Foreign Currency Translation Reserve (FCTR).

(iv) Lack of exchangeability on currencies

If a currency becomes unexchangeable either for purposes of translating foreign currency transactions during the year or foreign operations and FX balance sheet balances to GBP at reporting date, management estimates the spot exchange rates for such currencies in line with IAS 21 requirements by using either:

• an observable exchange rate without adjustment (e.g. exchange rates from the market sources or independent providers like Reuters); and

• an estimation technique e.g. first subsequent available exchange rate from official independent sources.

The impact of this amendment has been assessed as not material to the Group at year-end.

i) Taxation

The tax expense for the period comprises current and deferred tax recognised in the reporting period. Current and deferred tax are recognised in profit or loss, except when they relate to items that are recognised in other comprehensive income or directly in equity, in which case, the current and deferred tax are also recognised in other comprehensive income or directly in equity respectively. If current tax or deferred tax arises from the initial accounting for a business combination, the tax effect is included in the accounting for the business combination.

Current or deferred tax assets or liabilities are not discounted.

Current tax

Current tax is the tax expected to be payable on the taxable profit for the year and on any adjustment to tax payable in respect of previous years. Taxable profit differs from net profit as reported in profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

A provision is recognised for those matters for which the tax determination is uncertain but it is considered probable that there will be a future outflow of funds to a tax authority. The provisions are measured at the best estimate of the amount expected to become payable.

If a company within the Group incurs losses within the period, that company may surrender trading losses and other amounts eligible for relief from corporation tax to another Group company (the 'claimant company') for the claimant company to set off against its own profits for corporation tax purposes as permitted by HMRC.

Deferred tax

Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and liabilities are not recognised if the temporary difference arises from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. In addition, a deferred tax liability is not recognised if the temporary difference arises from the initial recognition of goodwill.

j) Intangible assets (excluding Goodwill)

Intangible assets (except for Goodwill) are stated at cost less accumulated amortisation and accumulated impairment losses. The residual value of such intangible assets is amortised, using the straight-line method, over their estimated useful lives, as follows:

• Core accounting software - 12.5 years;

• Other software - 5 years (subject to regular management assessment of the economic benefit of the asset); and

• Brand/name - 50 years (acquired).

Costs associated with maintaining computer software are recognised as an expense as incurred. Development costs that are directly attributable to the design and testing of identifiable and unique software products controlled by the Group are recognised as intangible assets when the following criteria are met:

• it is technically feasible to complete the software so that it will be available for use;

• management intends to complete the software and use or sell it;

• there is an ability to use or sell the software;

• it can be demonstrated how the software will generate probable future economic benefits;

• adequate technical, financial and other resources to complete the development and to use or sell the software are available; and

• the expenditure attributable to the software during its development can be reliably measured.

Other development expenditure that does not meet these criteria is recognised as an expense as incurred. Development costs previously recognised as an expense are not recognised as an asset in a subsequent period. Long-term software-as-a-service (SaaS) type contracts that do not meet the definition of an asset (rental of software) are expensed to profit and loss over the period of the contract in line with the benefits received.

k) Property, plant and equipment, and depreciation

Property, plant and equipment are stated in the statement of financial position at historic cost less accumulated depreciation. Cost includes the original purchase price of the asset and the costs attributable to bring the asset to its working condition for its intended use. Depreciation commences when an asset becomes available for use and is calculated to write down assets to their residual value in equal instalments, on a straight-line basis over their estimated useful lives, as follows:

l) Impairment of non-financial assets

At each statement of financial position date, non-financial assets not carried at fair value are assessed to determine whether there is an indication that the asset may be impaired, such as a decline in operational performance, geopolitical uncertainty, economic uncertainty i.e. rising interest rates and inflation, or changes in the outlook of future profitability among other potential indicators. If there is such an indication the recoverable amount of the asset is compared to the carrying amount of the asset.

Individual assets are grouped for impairment assessment purposes at the lowest level at which there are identifiable cash inflows that are largely independent of the cash flows of other groups of assets. This should be at a level not higher than an operating segment. The recoverable amount of the asset is the higher of the fair value less costs to sell and value in use. Value in use is defined as the present value of the future cash flows before interest and tax obtainable as a result of the asset's continued use. These cash flows are discounted using a pre-tax discount rate that represents the current market risk-free rate and the risks inherent in the asset. In determining fair value less costs to sell, recent market transactions are taken into account. If no such transactions can be identified, an appropriate valuation model is used. If the recoverable amount of the asset is estimated to be lower than the carrying amount, the carrying amount is reduced to its recoverable amount. An impairment loss is recognised in the statement of profit or loss unless the asset has been revalued then the amount is recognised in other comprehensive income to the extent of any previously recognised revaluation. An impairment loss recognised on goodwill is not reversed in a subsequent period.

If an impairment loss is subsequently reversed, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the revised carrying amount does not exceed the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior periods. A reversal of an impairment loss is recognised in the statement of profit or loss and other comprehensive income.

Goodwill is allocated on acquisition to the cash-generating unit expected to benefit from the synergies of the combination. Goodwill is included in the carrying value of cash-generating units for impairment testing.

Disposal groups held for sale are measured at the lower of their carrying amount and fair value less costs to sell. At initial classification of the disposal group as held for sale, the carrying amounts of all the individual assets and liabilities in the disposal group are measured in accordance with the Group's accounting policies. If fair value less costs to sell for the disposal group is below the aggregate carrying amount of all of the assets and liabilities included in the disposal group, the disposal group is written down. The impairment loss is recognised in profit or loss for the period.

m) Cash and cash equivalents

Cash and cash equivalents include cash in hand and deposits held at call with commercial or central banks and exposures to money market funds (transacted via open-ended investment companies). Cash equivalents are short-term highly liquid investments that are readily convertible to a known amount of cash and which are subject to an insignificant risk of changes in value. Cash equivalents are held for the purpose of meeting short-term cash commitments rather than for investment or other purposes.

n) Goodwill

Goodwill arises on the acquisition of subsidiaries and represents the excess of the consideration transferred over the Group's interest in the net fair value of the net identifiable assets, liabilities and contingent liabilities of the acquiree and the fair value of any non-controlling interest in the acquiree.

Goodwill is tested for impairment at the end of each accounting period.

On disposal of a cash-generating unit, the attributable amount of goodwill is included in the determination of the profit or loss on disposal. Goodwill is accounted for at cost less accumulated impairment losses.

o) Financial instruments

Financial assets and financial liabilities are recognised in the Company and Group statements of financial position when the Company or Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

(i) Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised using trade date accounting. The trade date is the date of the commitment to buy or sell the financial asset.

All recognised financial assets are measured subsequently in their entirety at either amortised cost or fair value, depending on the classification of the financial assets.

Classification of financial assets

Financial assets that meet the following conditions are measured subsequently at amortised cost:

• the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Financial assets that meet the following conditions are measured subsequently at FVTOCI:

• the financial asset is held within a business model whose objective is achieved by both collecting contractual cash flows and selling the financial assets; and

• the contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Despite the foregoing, the Group and the Company may irrevocably elect to present subsequent changes in fair value of an equity investment in other comprehensive income if equity instruments are held as a strategic investment and not held with the intention to realise a profit.

By default, all other financial assets are measured subsequently at fair value through profit or loss.

The Group's financial assets measured at amortised cost consist of:

• Cash and balances at central banks;

• Loans and advances on demand to banks;

• Other loans and advances to banks;

• Other loans and advances to non-banks;

• Investment in debt securities;

• Other assets;

• Accrued income; and

• Unsettled transactions.

The nature of all financial items included in a given balance sheet line item is as shown in the respective note breakdown.

The Group's financial assets measured at FVTPL consist of money market funds and derivative financial instruments.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss.The Group's financial assets designated at FVTOCI comprise primarily its investment in equity securities, which are not held for trading. The equity instruments are held as a strategic investment and not held with the intention to realise a profit.

Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the Investment revaluation reserve. The cumulative gain or loss is not reclassified to profit or loss on disposal of the equity investments, instead, it is transferred to retained earnings.

Dividends on these investments in equity instruments are recognised in profit or loss in accordance with IFRS 9 unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the 'Other operating income' line item in the statement of profit or loss and other comprehensive income.

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost (Note 1 (e)) above. Interest income is recognised in the statement of profit or loss and other comprehensive income in the 'Net interest income' line item (Note 4).

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity.

On derecognition of a financial asset the difference between the asset's carrying amount and the sum of the consideration received and receivable is recognised in profit or loss.

(ii) Financial liabilities

Debt and equity instruments are classified as either financial liabilities or as equity in accordance with the contractual substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Classification of financial liabilities

All financial liabilities are measured subsequently at amortised cost using the effective interest method or at fair value through profit and loss.

Financial liabilities at fair value through profit and loss

The Group's financial liabilities at fair value through profit and loss consist of derivative liabilities (see below for policy on derivative financial instruments).

Financial liabilities at fair value through profit and loss are measured at fair value, with any gains or losses arising on changes in fair value recognised in profit or loss.

Financial liabilities at amortised cost

The Group's financial liabilities at amortised cost consist of client accounts, unsettled transactions and other liabilities such as trade creditors, funds received in advance, transactions credited by third-party nostro providers and other creditors.

Financial liabilities at amortised cost are measured subsequently at amortised cost using the effective interest method (see Note 1(e) above).

Derecognition of financial liabilities

Financial liabilities are derecognised when, and only when, the Group's obligations are discharged, cancelled or have expired. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable is recognised in profit or loss.

(iii) Derivative financial instruments

The Group's derivatives policy only permits dealing in forward FX contracts to hedge, to provide services to clients or to facilitate cash management.

Derivative financial instruments are initially recognised at fair value on the date a derivative contract is entered into and are subsequently remeasured at their fair value at the reporting date.

A derivative with a positive fair value is recognised as a financial asset whereas a derivative with a negative fair value is recognised as a financial liability.

Hedge accounting is not applied.

(iv) Offsetting

Financial assets and liabilities are offset and the net amounts presented in the financial statements only when there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or to realise the asset and settle the liability simultaneously.

(v) Equity

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

Repurchase of the Company's own equity instruments is recognised and deducted directly from equity. No gain or loss is recognised in profit or loss on the purchase, sale, issue or cancellation of the Company's own equity instruments.

(vi) Financial guarantee contracts and letter of credit confirmations/bill acceptances - provisions

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.

Letters of credit confirmations/bill acceptances

A 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 confirms/accepts the letters of credit issued by an issuing bank and charges fixed fees which are received either in advance or at a later date.

Fees relating to financial guarantee contracts and letter of credit confirmations / bill acceptances issued by the Group can be received upfront and these fees are amortised on a straight-line basis to income over the year. The receivable increases over the life of the contract as service is performed with the corresponding recognition of income in the statement of profit or loss. All financial guarantee contracts issued by the Group are subsequently measured at the higher of:

• the amount of the loss allowance determined in accordance with IFRS 9; and

• the amount initially recognised less, where appropriate, the cumulative amount of income recognised in accordance with the Group's revenue recognition policies.

Such amounts are presented as provisions on the statement of financial position and the remeasurement is included within the reversal of impairment/(impairment loss) on financial assets at amortised cost.

(vii) Impairment of financial assets

The Group recognises loss allowances for Expected Credit Loss (ECL) in accordance with IFRS 9 on financial assets.

Equity investments are not subject to impairment, consistent with IFRS 9.

ECLs are required to be measured through a loss allowance at an amount equal to:

• 12-month ECL (referred to as Stage 1); or

• full lifetime ECL (referred to as Stage 2 and Stage 3).

For Stages 1 and 2, interest revenue is calculated on the gross carrying amount. Under Stage 3, interest revenue is calculated based on the net carrying amount (gross amount less ECL).

The amount of ECL is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument. For these financial assets, the Group recognises lifetime ECL when there has been a significant increase in credit risk since initial recognition. However, if the credit risk on the financial instrument has not increased significantly since initial recognition, the Group measures the loss allowance for that financial instrument at an amount equal to 12-month ECL.

Lifetime ECL represents the expected credit losses that will result from all possible default events over the expected life of a financial instrument. In contrast, 12-month ECL represents the portion of lifetime ECL that is expected to result from default events on a financial instrument that are possible within 12 months after the reporting date.

Significant increase in credit risk

The Group monitors all financial assets, financial guarantee contracts and letter of credit confirmations/bill acceptances that are subject to the impairment requirements to assess whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk the Group will measure the loss allowance based on lifetime rather than 12-month ECL.

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, the Group compares the risk of a default occurring on the financial instrument at the reporting date with the risk of a default occurring on the financial instrument at the date of initial recognition. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort. Forward-looking information considered includes the future prospects of the industries in which the Group's debtors operate, obtained from economic expert reports, financial analysts, governmental bodies, relevant think-tanks and other similar organisations, as well as consideration of various external sources of actual and forecast economic information that relate to the Group's core operations.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

• an actual or expected significant deterioration in the financial instrument's external (if available) or internal credit rating;

• significant deterioration in external market indicators of credit risk for a particular financial instrument, e.g., a significant increase in the credit spread, the credit default swap prices for the debtor, or the length of time or the extent to which the fair value of a financial asset has been less than its amortised cost;

• existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor's ability to meet its debt obligations;

• an actual or expected significant deterioration in the operating results of the debtor;

• economic uncertainty i.e., inflation and rising interest rates;

• geopolitical uncertainty;

• significant increases in credit risk on other financial instruments of the same debtor; and

• an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor's ability to meet its debt obligations.

Irrespective of the outcome of the above assessment, the Group assumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise. Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if:

• the financial instrument has a low risk of default;

• the debtor has a strong capacity to meet its contractual cash flow obligations in the near term; and

• adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations.

The Group considers a financial asset to have low credit risk when the asset with a credit rating of 'investment grade' in accordance with the globally understood definition, and a high credit risk when the asset has a credit rating of 'sub-investment grade'. Throughout the lifetime of the account, the Group monitors the behaviour of the asset based on its financial position and assesses whether the asset has any amounts past due. The Group assigns a 'performing' status when the counterparty has a strong financial position and there is no past due amounts, and a 'non-performing' status when there is a degradation in the financial position and subsequent arrears.

For financial guarantee contracts and letter of credit confirmations/bill acceptances, the date that the Group becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing the financial instrument for impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of a financial guarantee contract, the Group considers the changes in the risk that the specified debtor will default on the contract.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

Definition of default

The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that financial assets that meet the earlier of either of the following criteria are generally not recoverable:

• when there is a breach of financial covenants by the debtor; or

• information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full.

Irrespective of the above analysis, the Group considers that default has occurred when a financial asset is more than 90 days past due unless the Group has reasonable and supportable information to demonstrate that a more lagging default criterion is more appropriate.

Write-off policy

The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the debtor has been placed under liquidation or has entered into bankruptcy proceedings. Financial assets written off may still be subject to enforcement activities under the Group's recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

Measurement and recognition of ECLs

ECLs are a probability-weighted estimate of the present value of credit losses. These are measured as the present value of the difference between the cash flows due to the Group under the contract and the cash flows that the Group expects to receive arising from the weighting of multiple future economic scenarios, discounted at the asset's Effective Interest Rate (EIR).

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information. As for the exposure at default, for financial assets, this is represented by the assets' gross carrying amount at the reporting date; for financial guarantee contracts and letter of credit confirmations/bill acceptances, the exposure includes the amount of guaranteed debt that has been drawn down as at the reporting date, together with any additional guaranteed amounts expected to be drawn down by the borrower in the future by default date determined based on historical trend, the Group's understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.

For a financial guarantee contract and letter of credit confirmations/bill acceptances, as the Group is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Group expects to receive from the holder, the debtor, or any other party.

If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date.

The Group measures ECL on an individual basis, or on a collective basis for portfolios of loans that share similar economic risk characteristics. The measurement of the loss allowance is based on the present value of the asset's expected cash flows using the asset's original EIR, regardless of whether it is measured on an individual basis or a collective basis.

Presentation of ECL

Loss allowances for ECL are presented in the statement of financial position as follows:

• for financial assets measured at amortised cost: as a deduction from the gross carrying amount of the assets;

• financial guarantee contracts: as a provision.

The Group recognises an increase or decrease in impairment in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

p) Employee benefits

The Group provides a range of benefits to employees, including annual bonus arrangements, paid holiday arrangements, medical insurance and defined contribution pension plans. The Group has implemented a one-off Free Share Scheme following the 2023 listing and a Matching/Partnership Share Scheme, both schemes for all employees. The Group also provides share incentive schemes to Executive Directors and certain other key employees or senior management as follows:

• Long-Term Incentive Plans;

• a Matching/Partnership Share Incentive Plan (all employees);

• a Free Shares Plan (all employees);

• the rights to invest in restricted shares of Group companies*; and

• the rights to restricted share units of Group companies*.

* Applicable to 2023 only.

Short-term benefits

Short-term benefits, including holiday pay and other similar non-monetary benefits, are recognised as an expense in the period in which the service is received.

Pension contributions

All pension contributions are accounted for as defined contributions and paid over on a monthly basis. No liability for pension entitlement accrues to the Group.

Share-based payment arrangements

The Group provides share-based payment arrangements to certain employees (as noted above).

The awards are equity-settled arrangements and are measured at fair value of the equity instruments at the grant date. The fair value is expensed on a straight-line basis over the vesting period. The fair value of the employee services received in exchange for the grant of the awards is recognised in employee benefit expenses together with a corresponding increase in equity (retained earnings), over the period in which the service and the performance conditions are fulfilled (the vesting period). The grant date fair value is not adjusted for subsequent changes in the fair value of the equity instruments.

Long-term incentive plan (LTIP) awards are subject to performance conditions. LTIP awards granted in 2023 and 2024 are subject to both market performance conditions (relating to Total Shareholder Returns) and non-market performance conditions (relating to Earnings Per Share).

Service conditions are not taken into account when determining the grant date and for fair value of awards, but the likelihood of the conditions being met is assessed as part of the Group's best estimate of the number of equity instruments that will ultimately vest. Any other conditions attached to an award, but without an associated service requirement, are non-vesting conditions. Non-vesting conditions are reflected in the fair value of an award. Share awards vest when service conditions are met.

Where the equity-settled arrangements are modified before the vesting date, and are of benefit to the employee, the incremental fair value is recognised over the period from the date of modification to the date of vesting. If modified after vesting, it is recognised immediately. Where a modification is not beneficial to the employee there is no change to the charge for the share-based payment. Settlement and cancellations are treated as an acceleration of vesting and the unvested amount is recognised immediately in the statements of profit or loss and other comprehensive income.

The Group has no cash-settled arrangements.

q) Investments in subsidiaries

Investments in subsidiaries are non-monetary assets measured at cost less impairment. Refer to Note 2 for the judgements and estimates involved in the impairment assessment.

r) Discontinued operations and disposal group held for sale

Discontinued operations and disposal group held for sale is a component of the Group's business, the operations and cash flows of which can be clearly distinguished from the rest of the Group and which:

• represents a separate major line of business or geographical area of operation;

• is part of a single coordinated plan to dispose of a separate major line of business or geographical area of operation; or

• is a subsidiary acquired exclusively with a view to resale.

Classification as a discontinued operation occurs upon disposal, abandonment or when the operations meet the criteria to be classified as held for sale. This condition is regarded as satisfied only when the sale is highly probable and the asset or disposal group is available for immediate sale in its present condition. Management must be committed to the sale, which should be expected to qualify for recognition as a completed sale within one year of the date of classification. Property, plant and equipment, and intangible assets, once classified as held for sale, are not depreciated or amortised.

Disposal groups classified as held for sale are measured at the lower of the carrying value and the fair value less costs to sell. Non-current assets and disposal groups are classified as held for sale if their carrying amounts will be recovered through a sale transaction rather than continued use. When an operation is classified as a discontinued operation, the comparative statement of profit or loss and other comprehensive income is re-presented as if the operation had been discontinued from the start of the comparative year.

When the Group ceases to have control of an undertaking (disposal group), it is at this point that the Group ceases to consolidate the operations and any gain or loss on disposal is recognised in the Group consolidated statement of profit or loss. In addition, any movements previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

s) Provisions and contingent liabilities

Provisions are recognised in respect of present obligations arising from past events where it is probable that outflows of resources will be required to settle the obligations and they can be reliably estimated. Provisions also comprises dilapidation provision on the leased office space and an ECL provision in relation to off balance sheet assets (i.e financial guarantees, Working Capital commitments and letters of credit confirmations / bill acceptances).

Contingent liabilities are possible obligations whose existence depends on the outcome of uncertain future events or those present obligations where the outflows of resources are uncertain or cannot be measured reliably. Contingent liabilities are not recognised in the consolidated and Company financial statements but are disclosed unless they are remote.

t) Share capital

On issue of ordinary shares, any consideration received is included in equity net of any directly attributable transaction costs.

u) Earnings per share

i. Basic earnings per share

Basic earnings per share is calculated on the Group's profit or loss after taxation attributable to the owners of the parent and based on the weighted average of ordinary shares at the end of the year.

ii. 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 the weighted average of ordinary shares at the end of the year 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.

v) Dividends

Dividends are recognised in the financial statements in the period they are paid.

w) Leases (Group as lessee)

The Group assesses whether a contract is, or contains, a lease, at inception of the contract. The Group recognises a right-of-use asset and corresponding lease liabilities with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low-value assets (such as small items of fixtures and equipment and value of less than £10,000). For these leases, the Group recognises the lease payments as an Operating Expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

The lease liabilities are initially measured at the present value of the lease payments that are not paid at the commencement date, discounted by using the rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

The incremental borrowing rate depends on the term, currency and start date of the lease and is determined based on a series of inputs including: the risk-free rate based on government bond rates; a country-specific risk adjustment; a credit risk adjustment based on bond yields; and an entity-specific adjustment when the risk profile of the entity that enters into the lease is different to that of the Group.

Lease payments included in the measurement of the Group's lease liabilities are fixed lease payments less any lease incentives receivable.

The lease liabilities are presented as a separate line in the consolidated statement of financial position.

The lease liabilities are subsequently measured by increasing the carrying amount to reflect interest on the lease liabilities (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

The right-of-use assets comprise the initial measurement of the corresponding lease liabilities, lease payments made at or before the commencement day, less any lease incentives received and any initial direct costs and estimations of any dilapidation obligations. They are subsequently measured at cost less accumulated depreciation and impairment losses.

Right-of-use assets are depreciated over the shorter period of lease term and useful life of the right-of-use asset. The depreciation starts at the commencement date of the lease. The right-of-use assets are presented as a separate line in the consolidated statement of financial position.

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss as described in the 'impairment of non-financial assets' policy.

In line with IFRS 9, a liability is derecognised when the obligation in the contract is extinguished or cancelled, which in the context of the lease liabilities, they are derecognised when the Group and its subsidiaries have been legally released from the obligations by the creditors.

The dilapidation provision is recognised in accordance with IAS 37 when a present obligation exists due to a lease agreement requiring restoration of premises. It is initially measured at the best estimate of the expected costs to settle the obligation, discounted to present value if the time value of money is material. Subsequently, the provision is reviewed at each reporting date and adjusted for changes in estimates, such as cost revisions or discount rate changes. If initially discounted, the unwinding of the discount is recognised as an interest expense in profit or loss.

x) New and revised IFRS accounting standards in issue but not yet effective

At the date of authorisation of these consolidated financial statements, the Group has not applied the following new and revised IFRS Accounting Standards that have been issued but are not yet effective.

* Anything not mentioned in the above table is not relevant.

The Group does not expect that the adoption of the Standards listed above will have a material impact on the consolidated and Company Financial Statements of the Group and the Company in future periods, with the exception of IFRS 18 where the impact has yet to be determined.

2 - Critical Accounting Judgements and Key Sources of Estimation Uncertainty

In applying the Group's accounting policies, which are described in Note 1, the Directors are required to make judgements (other than those involving estimations) that have a significant impact on the amounts recognised and to make estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

The critical judgements, apart from those involving estimation, made by management in applying the Group's accounting policies in these consolidated financial statements and the key sources of estimation uncertainty that may have a significant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next financial year, which together are considered critical to the Group's results and financial position, are as follows:

 2.1 Key judgements and estimates in impairment and going concern assessment

The assessment of goodwill and intangible assets (Note 13), investments in subsidiary undertakings (Note 14) for impairment and appropriateness of going concern reflects management's best estimate of the future cash flows of the Cash-Generating Units (CGUs) and the rates used to discount these cash flows, both of which are subject to uncertain factors as follows:

 2.2 Key judgements and estimates in impairment of financial assets and of certain off balance sheet items

The calculation of the Group's ECL under IFRS 9 requires the Group to make a number of judgements, assumptions and estimates. The most significant are set out below:

2.3 Key judgements on classification of adjusting items

Some of the expenses accounted for by the Group have been separately identified as Adjusting items in the Consolidated Statement of Profit or Loss and Other comprehensive income on the basis that such presentation enhances the transparency and understanding of the Group's financial performance. Judgement has been applied in determining whether an item of expense is Adjusting in accordance with the Group's accounting policy. Based on an assessment of the nature, timing, and frequency of the events giving rise to certain expenses, the following items have been presented as Adjusting items:

• Professional costs incurred in connection with review and implementation of strategic options;

• Staff bonuses related to listing and to take on commitments (applicable to 2023 only); and

• Senior management transitioning costs.

2.4 Key judgements on Incremental Borrowing Rate (IBR)

The Group signed two (2023: none) lease agreements and the office space became available for use during the year resulting in recognition of right of use assets (ROU) and lease liabilities. There was no interest rate implicit in the lease agreements, therefore, management considered the guidance within IFRS 16, and calculated an IBR by determining:

• an appropriate corporate bond yield being the average of specific corporate bonds which (i) had a tenor similar to the weighted tenor of the leases 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 lease agreements;

• an asset-specific adjustment (for lease term above five years) 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.

The key judgement is not considered to have a significant source of estimation uncertainty.

2.5 Key judgement on estimation of Research and Development Expenditure Costs

The Group recognises the research and development tax rebate (an HMRC tax claim) as income in the accounts as it is highly probable that the claim will result in a future economic benefit and can be reliably measured. The amount of the research and development tax rebate recognised in the financial statements is based on the management's best estimate of the probable amount that will be received.

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 assesses the profitability of the segment based on a measure of EBITDA and Adjusted EBITDA and is 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.

• Adjusted EBITDA - EBITDA before Adjusting items (Adjusting items were referred to as Non-recurring items in the prior year)

All revenue from external clients is generated through its operations located in the UK and on that basis is wholly attributable to the UK and all non-current assets, other than financial instruments and deferred tax assets, are located in the UK.

a) Income

The Group derives its income from continuing and discontinued operations as follows:

FX: Revenue categorised as FX is from clients with a need to exchange a bulk amount from one currency for another without onward payment to another party. The Group's FX revenue is derived from profit on settlement of FX contracts, remeasurement of sterling balances, fair value losses on derivatives and FX gain on payment transaction revenue. The accounting policy for the Group's Net FX gain revenue and its components is disclosed in Note 1 (g).

Payments: The Group's payments revenue include payments FX, same currency payments (corresponding activity income, and account management fees), pension payments and platform revenue. Payments FX comprises of the margin derived from bid-ask spreads on foreign currency conversion and fees paid by clients to transfer money from or to a third party, cross borders.

Same currency relates to payment 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 and other income: The Group also generates income from trade finance (including trade finance and letters of credit), working capital services and risk management consulting fees, interest earned from other placements with banks, interest earned from advances to non-banks outside the Working Capital facility, interest from staff loans, and net gains from financial assets/liabilities measured at fair value. The Group takes client funds earmarked for other needs as client deposits and makes short-term investment in the money market to generate gain on money market funds.

b) Profitability

The Group measures profitability for the reporting segment on an EBITDA and Adjusted 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, while adjusted EBITDA also removes the effect of adjusted items.

1 Balance includes depreciation on property, plant and equipment, and depreciation on right of use of asset.

4 - Net Interest Income

1 Other 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 Commissions Income

At 31 December 2024, the Group held on its consolidated statement of financial position £567k (2023: £531k) of accrued income in respect of services provided to clients and £17k (2023: £75k) of deferred income (entirely recognised within one year) in respect of amounts received from clients for services to be provided after the year end.

6 - Net Foreign Exchange Gain

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. The derivatives have been transacted to i) economically hedge assets and liabilities in foreign currencies and ii) trade on behalf of clients.

7 - Operating Expenses

1 Audit fees includes £nil (2023: £379k) of prior year audit fees. Additional services provided by the auditor are noted in (a) below.

2 Adjusting items consist of material adjusting items that are considered exceptional in nature by virtue of their size and/or incidence and as a result of arising outside of the normal trading of the Group. In determining whether a cost is adjusting, the Group considers the nature and frequency of similar events or transactions that have occurred in the past, as well as the likelihood of similar events or transactions in the future. Adjusting items were referred to as non-recurring items in the prior year.

a) Adjusting items can be analysed as follows: