C C CABCHARGE ANNUAL REPORT 2016 REPORT CABCHARGE ANNUAL ANNUAL REPORT CONNECTING YOU WITH 2016 PEOPLE AND PLACES CABCHARGECABCHARGE 2016 ANNUAL 2016 ANNUALREPORT REPORT AnnualAnnual General General Meeting Meeting The 2016The Cabcharge 2016 Cabcharge Australia Australia Limited Limited Annual Annual GeneralGeneral Meeting Meeting will be heldwill be on held Thursday, on Thursday, 24 November24 November 2016 at 2016 11am at (AEST) 11am (AEDST)in the in the HeritageHeritage Ballroom Ballroom at The Westinat The WestinSydney, Sydney, 1 Martin1 Place,Martin Sydney,Place, Sydney, NSW 2000. NSW 2000. ABN 99ABN 001 99958 001 390 958 390 ConnectingConnecting YouYou with with People People andand Places Places Our visionOur vision is to is be to Australia’s be Australia’s leading leading personal personal transport transport business, business, the the firstfirst choice choice for Passengers,for Passengers, the thepreferred preferred network network for Drivers,for Drivers, the thedesired desired paymentpayment partner partner for industry for industry participants participants and andthe employerthe employer of choice of choice in the in the personalpersonal transport transport sector. sector. CabchargeCabcharge is investing is investing to fulfill to fulfill this thisvision vision and andour overarchingour overarching purpose purpose of Connectingof Connecting You withYou withPeople People and andPlaces Places. We. areWe determinedare determined to capture to capture opportunitiesopportunities in the in personalthe personal transport transport market market and andprovide provide leading leading service service and andcustomer customer experience. experience. In ourIn changingour changing industry industry there there is considerable is considerable scope scope for growth. for growth. We startWe start fromfrom a position a position of strength of strength and andexperience experience and andare focusedare focused on leveraging on leveraging our uniqueour unique capabilities capabilities to build to build on our on sustainableour sustainable competitive competitive advantage. advantage. 16060 Cabcharge_AR16_PPV1.indd 4 5/10/2016 3:43 PM PRE-PRESS PROOF Version: PPV1 Approved: Client: Cabcharge Job Name: Annual Report Date: 10/10/16 1 02 About Us 04 What we have achieved in FY16 06 Chairman’s Report 03 Key Financial Numbers 08 Chief Executive Officer’s Report 10 Opportunities for Growth 12 12 – Operating Financial Review 24 – Board of Directors 26 – Executive Team 27 – Corporate Governance Statement 39 – Directors’ Report 44 – Remuneration Report 59 – Auditor’s Independence Declaration 60 61 – Consolidated Financial Statements 97 – Directors’ Declaration 98 – Independent Auditor’s Report 100 – Additional ASX Information 101 – Corporate Directory 2 CABCHARGE 2016 ANNUAL REPORT About Us PAYMENTS Cabcharge facilitates non-cash payments in taxis via our electronic terminals. Our payments business has been operating successfully for 40 years, and remains at the forefront of cashless payment technology through continuous improvement and innovation. Cabcharge offers Passengers a convenient, fast and secure method for fare payments via a range of payment options. TAXI NETWORKS Cabcharge is the largest taxi booking and dispatch service provider in Australia. With an emphasis on delivering quality services and technological innovation, Cabcharge provides INVESTMENTS leading Taxi Network services Cabcharge holds a 49% to Taxi Operators and Drivers, investment in ComfortDelGro including taxi booking services, Cabcharge Pty Ltd (CDC), full taxi fit-outs and repairs, Australia’s largest private vehicle financing and insurance, bus operator. CDC provides and Driver training and route, school and charter bus education. There are almost services in Sydney, the Hunter 7,500 taxis in the Cabcharge Valley, Blue Mountains and network that operate in Sydney, Queanbeyan in New South Melbourne, Adelaide, Newcastle, Wales, and in Melbourne, regional Victoria and the Geelong and Ballarat in Victoria. Northern Territory. Cabcharge also holds a 49% interest in CityFleet UK, a provider of account, booking and dispatch services for taxis and private hire vehicles in London, Liverpool, Edinburgh and Aberdeen, and coach services in London. 3 Revenue $169m 10.2% on PCP Underlying EBITDA $58.6m Excluding normalisations: $42.7m Underlying NPAT 22.8% on PCP $43.6m Excluding normalisations: $25.6m 23.4% on PCP Revenue ($m) 2012 192 2013 197 2014 197 2015 188 Net Debt $96.6m 2016 169 Reduced by $7.7m on pcp Underlying EBITDA ($m) Cash Conversion Ratio Net Debt / Equity 24.8% 2012 89 2013 86 85% 2014 84 High cash flow generation to facilitate debt reduction and 2015 76 paying sustainable dividends 2016 59 Net cash from operating activities ($m) 2012 70 2013 70 2014 58 2015 50 Final Dividend 2016 47 10c Dividends per share (cents) Per share fully franked 2012 35 Full year dividend of 20 cents per share, consistent with FY15 2013 30 2014 25 2015 20 2016 20 4 CABCHARGE 2016 ANNUAL REPORT What we have achieved in FY16 We have made INTEGRATING NETWORKS COMMITTING TO A KEY BRAND Restructured workforce, Rebranding of Newcastle Taxis significant consolidated contact centres to 13CABS, with operations and standardised dispatch in Adelaide, Melbourne and progress on our and phone systems Newcastle now aligned under strategic priorities common branding Marketing campaigns undertaken to increase brand recognition Personal Transport Just as the Cabcharge of today is a different Company from 10 years ago, the market in which we operate has transformed. New business models, changing regulatory frameworks and renewed Passenger expectations have resulted in blending discrete segments into one much larger market – the personal transport market – with Passengers choosing from a range of transport solutions for each trip. This market includes both public and private transport as well as taxis and ridesharing (“private paid transport”). In this market in which Cabcharge now operates, there is considerable opportunity for growth given that private paid transport currently represents less than 1% of the entire personal transport market. Looking ahead to FY21, population growth is expected to contribute to an increase in the personal transport market to 27.6 billion trips per annum. Private paid trips are expected to comprise approximately 255 million of those trips. Given the changes to personal transport and its regulation and operation, as well as underlying demand growth, there is a significant opportunity for Cabcharge to gain market share in the personal transport market. Australian Transport For Cabcharge this opportunity presents in terms of both the volume of trips and the types Market Size1 and volumes of payments that we process. As shown in the chart below private paid transport Number of trips currently has a small share of the overall market and any increase in this share will provide taken per annum substantial opportunities for Cabcharge. in Australia 30 1 Excluding non-motorised transport 0.3 0.2 25 0.2 4.4 3.7 3.0 20 15 22.9 PRIVATE PAID TRANSPORT 21.6 10 19.7 PUBLIC TRANSPORT TRIPS 5 PRIVATE VEHICLE TRIPS Billions 0 FY02 FY12 FY21 Source: extrapolation of NSW bureau of transport statistics (release 11 Jul13) and ABS population growth assumptions of 1.4% per annum. 5 LINKING BOOKINGS LOOKING AFTER OUR CUSTOMERS + PAYMENTS Drivers can now call Passengers on Bookings linked to approach, enhancing certainty of payments through our service for Passengers apps as well as through Improvement in passenger pick-up payment services for some times by 26 seconds in NSW of our Merchant Partners SUPPORTING OUR MERCHANT PARTNERS Installed FAREWAYplus and updated pinpad in over 18,000 taxis in Australia, supporting a better payment experience for Drivers and Passengers CAPITAL MANAGEMENT Following a capital management review we identified non-core assets to dispose of including our Riley Street premises and shares held in ComfortDelGro 6 CABCHARGE 2016 ANNUAL REPORT During the year we also managed Chairman’s Report to reduce borrowings by a further $18.5m (14.5%) to $109.7m. The industries in which Cabcharge operates Notwithstanding the positive aspects have always been competitive. We welcome of our performance in FY16, we are embracing regulatory change competition because it broadens the scope and so as to ensure our business model evolves at pace within the size of the personal transport services sector. environments of digital expansion and disruption. The Company continues to innovate and leverage its technology expertise and transform into a more customer focused organisation. We have RUSSELL BALDING AO rolled out our new payment system Chairman FAREWAYPlus to taxis throughout Australia, unified our technology platforms, consolidated our key brands and developed and acquired The 2016 Financial Year continued However, our underlying complementary businesses like to see the Australian taxi industry performance in FY16 demonstrates Dandenong Taxis to extend the impacted by further regulatory that in the face of aggressive scope of our service offering. We change that, in the main, reduced regulatory change and competition, have achieved all this while returning both our payment processing fee for Cabcharge continues to be a highly consistent solid dividends for non-cash taxi transactions as well as cash-generative business able shareholders and strengthening our the holding value of our taxi licences. to invest in its future growth and balance sheet. In recent times, the Queensland,