ANNUAL REPORT 2003 Cabcharge Australia Limited ABN 99 001 958 390
Contents
2 Results in Brief 4 Chairman’s Report 5 Highlights 16 Board of Directors 17 Annual Financial Report
Annual General Meeting The 2003 Annual General Meeting of Shareholders of Cabcharge Australia Limited will be held at The Westin Sydney, Heritage Ballroom, No. 1 Martin Place, Sydney NSW 2000 on Monday, 24 November 2003 at 10am. The 2003 results have been significantly improved by a full year’s revenues and profits from our acquisition of Combined Communications Network in January 2002.
Importantly, the payment processing business of Cabcharge has kept growing too, both in revenue and profits.
So this year’s results attest to the success of our long-term strategy to grow both the financial and communications arms of Cabcharge as a foundation for a strong and sustainable future, whatever the vagaries of the market.
We believe that this solid growth in difficult times for the travel market augurs well for the future of Cabcharge, based on the strategy of careful expansion in our core businesses - helping the Taxi Industry to effectively carry out its valuable role of providing public transport services to the Australian community.
Cabcharge technology: supporting the industry and community
11 RESULTS IN BRIEF
2003 2002 2001 2000
Total revenue ($m) 645.7 588.1 545.4 481.1 Cabcharge operations 606.8 572.0 545.4 481.1 Communications (CCN) 38.9 16.1 - -
Profit after tax ($m) 20.2 16.1 12.5 11.0 Cabcharge operations 14.8 14.0 12.5 11.0 Communications (CCN) 5.3 2.1 - -
Earnings before interest, tax, depreciation and amortisation (EBITDA - $m) 32.9 25.7 20.2 16.9 Cabcharge operations 22.8 22.5 20.2 16.9 Communications (CCN) 10.1 3.2 - -
Earnings per share (cents) 18.0 14.7 11.5 12.1 Dividend per share (cents) 12.0 10.0 8.0 7.5 Net tangible assets per share (cents) 104.5 90.4 85.8 80.4
Cabcharge accepts all major credit and debit cards - 65% 23% Strong growth this year in bank issued card revenue (mainly VISA and Mastercard). VISA returned as an 2002 accepted card within the Cabcharge electronic payment 12% system in March 2002.
Cabcharge cards and dockets 60% 21% Third party charge cards Bank issued cards
2003 19%
Electronic processing proportion of total turnover - 03 During 2004, a new e-Ticket will phase-in to replace blue 02 paper dockets (the Cabcharge docket book). 01 In future, significantly higher volumes of taxi transactions will be electronic. Electronic transactions save manual 00 processing for Cabcharge and are also more efficient, 10 20 30 40 50 convenient and secure for taxi operators and customers. % Electronic processing
2 RESULTS IN BRIEF
Total revenue ($m) Profit after tax ($m) EBITDA ($m)
650 20 35
30 600 14 25
550 20 10 500 15 10 5 450 5
400 0 0 00 01 02 03 00 01 02 03 00 01 02 03
Earnings Dividend Net tangible assets per share (cents) per share (cents) per share (cents)
20 12 110
10 100 15 8 90 10 6 80 4 5 70 2
0 0 0 00 01 02 03 00 01 02 03 00 01 02 03
3 CHAIRMAN’S REPORT
RL Kermode Executive Chairman
It is again my pleasure to present this year’s Annual Report, which once more demonstrates the strength and resilience of your company in delivering good results to shareholders in difficult times.
The year to June 2003 can be tagged as one Before looking to the future, I would like to of the most turbulent in the history of the Taxi mention some of the contributions to this year’s Industry, after a very difficult year in 2001/2002. successful results. With economic uncertainty, a world slow down in growth and investment, and the health crisis Business Operations - Cabcharge of the SARS epidemic, the industry was again The total revenue increased by 5.9% to $603.7m under significant pressure this year. from $569.8m last year, and the Net Profit rose However, we weathered the challenges and 6.3% to $14.8m. Cabcharge made substantial progress on a number This growth was driven by a strong increase in of fronts - including achieving record results for bank issued card revenue (Visa and MasterCard). another year as shown in the Highlights opposite. It was offset to some extent by Cabcharge As we forecast, in last year’s Annual Report, the account cards and third party cards such as benefit from a full year’s operations of Combined American Express and Diners Club, which were Communications Network Limited (CCN) acquired affected by another sluggish year in the corporate in January 2002 has been significant. At the same sector. time the traditional business also expanded both Following the recent Federal Court rejection of the in revenues and profits by over 5%. Visa and MasterCard action against the Reserve These positive results demonstrate the Bank, we believe the growth in bank issued card effectiveness of Cabcharge’s strategy to usage will continue to provide opportunities consolidate its Australian forces to be a major for Cabcharge. We plan to develop these provider of vital services to the Taxi Industry. opportunities with partners whose expertise They also suggest that Cabcharge is well will complement our existing strong position in established for a sustainable future based on its payment technology and systems. leadership in these areas of business. >>
4 HIGHLIGHTS
03
• A record net profit after tax of $20.3m - an increase of 26% on the previous year.
• Total Revenue increased from $588m to $645.7m (10%).
• Earnings before Interest and Tax (EBIT) was $26.4m, up from $21.2m - an increase of 25%.
• Earnings per share was 18.0 cents, up from 14.7 cents - an increase of 22%.
• Earnings before interest, tax depreciation and amortisation (EBITDA) of $32.9m an increase of 28%.
• A final dividend of 7 cents per share (year total 12 cents per share) is up from 10 cents per share - an increase of 20%.
5 CHAIRMAN’S REPORT CONTINUED
Communications - CCN The way ahead for the Group CCN was acquired by Cabcharge in January 2002, This has been a year of consolidation as well as so these results include its first full year’s growth, as we have worked to make CCN a fully contribution to the Group. integrated part of the Cabcharge operation. So it Total revenue increased by 6.5% on a full year might be useful to take a brief look at where comparative basis to $39.8m, and Net Profit rose Cabcharge is today, in order to better see our 52% to $5.3m. future direction. As planned, we restructured the organisation to Cabcharge is a major player in the Taxi Industry integrate it with our Cabcharge operations, and the in Australia. Taxis may be just a convenience for operation is now very trim and efficient. We most of us, but they are a vital public transport confidently expect it will continue to be even more service to others. Without an efficient taxi service, profitable for the group over the coming years. the enjoyment of life for many people would be diminished. In our busy cities they also provide The Electronic Speech Recognition system is an essential aid to productivity and use of time. working extremely well, in line with our expectations. Despite its critics, who were Cabcharge has been for some years the leading concerned that it was not a fully tried technology, financial service provider to the Taxi Industry. From the evidence is that it is becoming more and more its beginnings in 1976 as a provider of efficient accepted by the Australian public as being a quick, non-cash payment services to taxi operators, your efficient and reliable means of booking a taxi. company has now broadened its operations considerably within the industry. However, the communications centre is still quite labour intensive, and maintenance costs for the Last year we acquired CCN, the largest taxi high technology in-vehicle equipment is company in Australia, which has a fleet of around relatively high. We have long term plans for 2,500 cabs. replacement with a fully integrated system which In August 2003, Cabcharge expanded its business will be at the leading edge of such systems with the acquisition of Black Cabs Combined, which worldwide. At the same time, such a system has a fleet of around 1,350 cabs. Black Cabs has must be affordable and offer major efficiencies the Yellow Cabs franchise in Melbourne, and most and cost benefits to the Group. of its taxis now use the Yellow Cabs branding. >>
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>><< Cabcharge: using leading edge technology to support the industry and community CHAIRMAN’S REPORT CONTINUED ...... Our founding mission was to be a leader in International ...... ‘common payments’ technology systems for the Cabcharge has always been conscious...... of the Taxi Industry. That continues to be core to our international application of the...... payment mission, although this has now been expanded technology we developed in Australia...... We have to providing a wide range of payment, over the years begun to look for . opportunities communications and related services for the to export these technologies and our...... developed benefit and convenience of taxi customers expertise in the Taxi and allied industries...... Our and operators. major partner in these activities ...... is Singapore Cabcharge will also continue to search for based DelGro, which merged in March...... 2003 with improvements through innovation and the use another major Singapore company. to become of technology. Our research and development ComfortDelGro. As is normal in these. situations, in totally integrated communications and payment ComfortDelGro were pre-occupied...... with the system technology look very promising. restructuring that accompanies such...... a large Specifically, we are excited about our ongoing merger to form a giant land transport...... company. research and pilot programs using GSM and GPRS This slowed down our activity...... in the UK solutions. Whilst we currently successfully use particularly, although our Edinburgh ...... trial of EFTPOS the GSM technology in regional Victoria, we also equipment has been very successful...... in promoting have pilot programs operating nationwide using our concept and keeping our presence...... alive. GSM and GPRS systems with different carriers – However, the weak corporate climate in the Telstra, Optus and Vodafone. With this technology, international arena encouraged us to attend to we aim to ensure maximum network coverage other priorities in Australia, and leave overseas with its obvious efficiencies and benefits. activities on hold for the moment. We will look again at the international opportunities when Black Cabs Combined economic upturn is evident. As mentioned earlier, we concluded a successful bid in August 2003 for Black Cabs Combined Cabcharge is still a leader in technology Limited, the second largest taxi company in Our electronic payments system continues to Melbourne. This has no impact on our 2003 grow in use and acceptance. The benefits of the figures, but we are looking for a solid contribution efficiency, convenience and security of the to profit in the 2004 financial year. system are becoming more evident to operators Opportunities for Cabcharge from this acquisition and customers alike. In the next few months it arise from the growth in the Group’s taxi fleet will become even more frequently used, when and applying new Cabcharge technologies we roll out the new ‘e Ticket’, replacing the across a wider taxi user base. current blue paper dockets. >>
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The new system will be linked to the GPRS Other mergers and acquisitions network replacing the troublesome DataTAC We plan to continue our path of expanding system which Telstra has announced is being Cabcharge by acquiring other taxi operations in phased out by late 2004. Regional Australia will Australia within the guidelines of ACCC. We also again be catered for as system coverage grows, plan to broaden the base of Cabcharge by as the result of our ability to utilise the most seeking opportunities outside the Taxi Industry. reliable and available carrier in any region. These will be companies which fit our vision and We can see opportunities for substantial organic with which we can find synergies, such as in the growth linked to this ability to extend our service use of our technology to enter new markets, or to coverage area. make significant cuts in costs. Needless to say, Of course, changes such as these do not occur the Board will continue its conservative approach overnight – the planning and technical expertise to such acquisitions to ensure we maintain that has gone into the research, pilot programs growth in shareholder value. and testing of the electronic payments system are a great credit to our team. Cabcharge and service to the community The company has always been at the forefront in As pioneers in taxi transport technologies, recognising the needs of sections of the Cabcharge’s research and development team community who are transport disadvantaged. has been investigating new ways to create Over the years we have invested considerably in a state of the art taxi booking and dispatch system programs and vehicles to provide a responsible - one that combines Customer Management, level of service to people with disabilities, often Service Provider Management, and Billing and in association with State-subsidised programs. Settlement Systems. Such an advanced system Cabcharge has also worked with the Victorian and will be needed in the future to meet the changing New South Wales Governments to assist in the needs of customers, drivers and fleet owners. provision of efficiency and accountability in the We believe our committed team has the programs they subsidise. We plan to continue > experience, skill and creativity to research and this policy of making our advanced technology develop such a system cost effectively. We also available to assist in such a vital area of providing believe that such a system would in time open efficient and responsible taxi service to people other opportunities both in Australia and overseas. who depend on it for essential mobility. >>
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...... >> ...... << ...... << ...... >> ...... CHAIRMAN’S REPORT CONTINUED
Conclusion Cabcharge’s performance this year demonstrates an efficient operation on a sound financial foundation. We have a strong base from which to apply our technical solutions to provide improved efficiencies into the future, in Australia and, when the time is right, overseas as well. We plan to remain at the forefront of development strategies in the Taxi Industry. This is necessary to enhance the value of your shares over the long term and maintain or improve your dividend. The Y2003 results are the latest outcome of our long- term strategy to meet this objective.
Appreciation It is always nice to report to you on our continuing success and our optimistic future. 1 We believe greater things are to come. The Board, Management and Staff have served with dedication, integrity and indisputable expertise. I am convinced that we have a team 1 Left to right: of people who have the skills and enthusiasm Reg Kermode, Sionna McDowell, to make the most of the opportunities that lie Sharon Doyle, Colin McGregor, ahead. Ewaz Barukh, Fred Lukabyo. I thank all of them for their support. I would particularly like to express my thanks to 2 Left to right: taxi drivers and to the communication call centre Margaret Donn, Jace Lai, Sue people who support them throughout Australia. Wu, Kan Kancharla, Garry They provide an essential transport service to our Lehmann, Thanh Mai. community with professionalism and courtesy, 3 &4 Cabcharge sponsors the sometimes under difficult conditions. Dick Johnson Racing Team.
RL Kermode Executive Chairman ......
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>> BOARD OF DIRECTORS
Top: from left to right Reg Kermode AM MBE (77) Executive Chairman and CEO Ewaz Barukh (55) Executive CFO
Ian Armstrong (61) Non Executive Director
Middle: from left to right Neill Ford (53) Non Executive Director Phil Franet (58) Non Executive Director ...... Peter Hyer (67) Non Executive Director
...... Bottom: from left to right ...... Donn McMichael (51) Non Executive Director ...... Neville Wran AC QC (77) Non Executive Director ......
16 Cabcharge Australia Limited ABN 99 001 958 390 03 Annual Financial Report for the year ended 30 June 2003
DIRECTORS’ REPORT 18
CORPORATE GOVERNANCE STATEMENT 23
STATEMENT OF FINANCIAL PERFORMANCE 25
STATEMENT OF FINANCIAL POSITION 26
STATEMENT OF CASH FLOWS 27
NOTES TO THE FINANCIAL STATEMENTS 28
DIRECTORS’ DECLARATION 45
INDEPENDENT AUDITORS’ REPORT 46
AUSTRALIAN STOCK EXCHANGE INFORMATION 47
ADDITIONAL INFORMATION 48
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 17 DIRECTORS’ REPORT
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
The Directors of Cabcharge Australia Limited present their Annual Report on the Company and its controlled entities for the year ended 30 June 2003.
Directors The Directors of Cabcharge Australia Limited in office at any time during or since the end of the year are as follows: Mr RL Kermode (Executive Chairman and CEO) Mr GF Bradd (resigned) Mr PJ Hyer Mr E Barukh (Executive CFO) Mr ND Ford Mr DS McMichael Mr IA Armstrong Mr PJ Franet The Hon NK Wran AC QC All Directors have held office for the full year and to the date of this report, with exception of Mr GF Bradd who resigned on 4 September 2003.
Principal Activities The economic entity’s principal activities are the provision of a taxi charge account service business and communications network facilities to the Taxi Industry.
Operating Results The economic entity’s net profit after income tax attributable to members of Cabcharge Australia Limited amounted to $20,265,099.
Dividends Paid and Recommended Dividends paid or declared for payment since the end of the previous financial year are as follows:
Date paid or scheduled Type Cents per share Paid or declared $000 As recommended and provided for in last year’s report 14 October 2002 Final 6.0 6,761 In respect of the current year 28 March 2003 Interim 5.0 5,642 14 October 2003 Final 7.0 7,899 All dividends paid or declared by the Company were fully franked at a tax rate of 30%.
Review of Operations A summary of key financial indicators is set out in the table below. Cabcharge’s financial performance for the year continued to show strong growth in a difficult travel market. The 2003 year is the first full year of contribution by the communications network business (acquired in January 2002) with profit contribution of $5.3m in 2003 compared with $2.1m for 5 months in 2002. Cabcharge’s core taxi charge system contribution was also strong with 6.3% growth for the year.
Growth 2003 2002 % Total revenue ($m) 645.7 588.1 10% Profit after tax ($m) 20.3 16.1 26% Earnings before interest and tax (EBIT – $m) 26.4 21.2 25% Earnings before interest, tax, depreciation and amortisation (EBITDA – $m) 32.9 25.7 28% Earnings per share – basic (cents) 18.0 14.7 22% Contributed equity ($m) 74.4 71.6 4% Capital and reserves ($m) 120.6 103.3 17% Total assets employed ($m) 145.8 137.8 6% Net tangible asset per share (cents) 104.0 90.4 15% Return on contributed equity (%) 27.2 22.5 21% Dividend per share (cents) 12.0 10.0 20% Dividends paid and recommended ($m) 13.5 11.1 22% Dividend payout ratio (%) 66.8 68.9 Franking account balance at 30% tax (new basis) ($m) 24.6 22.2
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 18 DIRECTORS’ REPORT
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
Significant Changes in the State of Affairs There were no significant changes in the state of affairs of the economic entity during the year under review.
Post Balance Date Events No matters or circumstances have arisen since the end of the financial year which significantly affected or may significantly affect the operations of the economic entity, the results of those operations, or the state of affairs of the economic entity in subsequent financial years, other than: Cabcharge’s offer to acquire all of the ordinary shares in Melbourne based taxi company Black Cabs Combined Ltd (BCC) closed successfully on 22 August 2003, the 90% minimum acceptance condition having been met. The acquisition of BCC expands Cabcharge’s business as a communication network facility to the Taxi Industry with around 1,350 Black Cabs as well as approximately 190 cabs in bureau fleets in the Melbourne taxi market. Further details are disclosed in note 36 to the accounts.
Future Developments The Directors are of the opinion that the new financial year will be a period of continued growth. Other than the information disclosed in the review of operations or notes to the financial statements, further information as to the likely developments in the operations of the economic entity and the expected results of those operations in subsequent years has not been included in this report because the Directors believe, on reasonable grounds, that to include such information would be likely to result in unreasonable prejudice to the economic entity.
Environmental Issues The economic entity’s operations are not regulated by any particular and significant environmental regulations under a law of the Commonwealth or of a State or Territory.
Information on Directors
Mr Reginald Lionel Kermode AM MBE (77 years) Executive Chairman and CEO Founder of Cabcharge in 1976, Chairman, Managing Director and Chief Executive Officer since 27 July 1980 and member of the Investment Committee. Mr Kermode is a Director of Cabcharge Asia Pte Limited, Director of Computer Cab plc, London and Director of CityFleet (UK) Pte Ltd. Mr Kermode is past President of the New South Wales Taxi Council and retired Director of the NSW Taxi Industry Association. He is a Fellow of The Australian Institute of Company Directors.
Mr Ewaz Barukh (55 years) Executive CFO Director since 19 November 1998 and member of the Investment Committee. Mr Barukh is a Director of other Cabcharge Group entities. He has been Chief Financial Officer of the Company since 1985, and has significant experience in the fields of funds management, technology and the Australian taxi industry. Mr Barukh is a Bachelor of Economics and is an Associate of the Australian Institute of Company Directors.
Mr Ian Alexander Armstrong (61 years) Non Executive Director Director since 17 July 2000 and Chairman of the Audit Committee. Mr Armstrong is a Fellow of the Institute of Chartered Accountants in Australia. He was a partner with PricewaterhouseCoopers for 23 years of which 15 years were in the field of corporate finance.
Mr Neill Douglas Ford (53 years) Non Executive Director Director since 21 March 1996 and member of the Remuneration, Investment and Marketing Committees. Mr Ford is Managing Director of Yellow Cabs (Qld) Pty Limited and Chairman of Taxis Australia Pty Limited. He has in excess of 23 years experience of taxi company management. Mr Ford is a Fellow of the Australian Institute of Company Directors and Fellow of the Australian Institute of Management.
Mr Phillip James Franet (58 years) Non Executive Director Director since 28 June 1985. Mr Franet is Managing Director of Silver Top Taxi Service Ltd and President of Victorian Taxi Association (inc). Mr Franet has over 30 years experience in the taxi industry and has consulted to the Emirate of Dubai on the establishment of a large taxi operation including the establishment of charge account services in Dubai.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 19 DIRECTORS’ REPORT
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
Mr Peter John Hyer (67 years) Non Executive Director Director since 25 June 1996 and member of the Remuneration and Audit Committees. Mr Hyer is Chairman and Managing Director of Adelhill Limited – parent entity of Premier Cabs Pty Limited, Director of Cumberland Cabs Company Pty Limited, Director of Western Districts Cabs (NSW) Pty Limited, and Director of Northern Districts Taxis (Sydney) Pty Limited. Mr Hyer is a Fellow of the Australian Institute of Company Directors.
Mr Donnald Stuart McMichael (51 years) Non Executive Director Director since 25 June 1996 and member of the Marketing Committee. Mr McMichael is a member of Australian Institute of Management and Australian Society of Association Executives. He is a Director of Yellow Cabs (Canberra) Pty Ltd, Taxis Australia and Taxi Proprietors Association (ACT). He is a Member of the Transport Reform Advisory Group (ACT), ACT Tourism Strategic Review Committee and an Associate of the Australian Institute of Company Directors. He was formerly a Director of Aerial Taxi Co-Op Society Limited.
The Hon Neville Wran AC QC (Hon) LLD FRSA (77 years) Non Executive Director Director since 28 November 2000 and member of the Audit Committee. Mr Wran is Executive Chairman of Wran Partners Pty Ltd. Mr Wran is also a Director of a number of other companies including New Skies Networks Pty Ltd. He was Premier of New South Wales from 1976 to 1986 and National President of the Australian Labor Party from 1980 to 1986. Mr Wran was Chairman of CSIRO from 1986–1991. He is a Fellow of the Powerhouse Museum, a Life Governor of the Art Gallery of New South Wales and Chairman of the Victor Chang Cardiac Research Institute.
Relevant Interests
Direct Interest Indirect Interest Shares Shares Note
Executive Directors RL Kermode (CEO) 1,500,000 – E Barukh (CFO) 696,630 24,477 1 Non-Executive Directors IA Armstrong 250,000 – GF Bradd – 4,213,277 2 ND Ford 217,647 1,745,089 3 PJ Franet 255,330 8,065,253 4 PJ Hyer – 1,671,260 5 DS McMichael 830 – NK Wran 250,000 –
1 24,477 Fully Paid Ordinary Shares held jointly by Mr Ewaz Barukh and Mrs Katherine Barukh. 2180,000 Fully Paid Ordinary Shares held by Bradd Superannuation Fund; 196,000 Fully Paid Ordinary Shares held by Eastmoor Investments Pty Limited as trustee for Eastmoor Investments Unit Trust – 50% of units held by Bradd Nominees. Mr Bradd is Director of Eastmoor Investments Pty Limited and Director and Shareholder of Bradd Nominees Pty Ltd.; 7,059 Fully Paid Ordinary Shares held by Bradd Nominees Pty Ltd in which Mr Bradd is Director and Shareholder; 3,830,218 Fully Paid Ordinary Shares held by Black Cabs Combined Limited in which Mr Bradd is now Chief Operating Officer. 31,560,288 Fully Paid Ordinary Shares held by Queensland Taxi Investments Pty Limited in which Mr Ford is a Director and Shareholder; 184,801 Fully Paid Ordinary Shares held by NL Ford Nominees Pty Ltd Super Fund. 47,107 Fully Paid Ordinary Shares held by Faraday Investments Pty Ltd in which Mr Franet is Shareholder; 8,058,146 Fully Paid Ordinary Shares held by Silver Top Taxi Service Ltd in which Mr Franet is Managing Director and Shareholder. 5166,667 fully paid Ordinary Shares held by Windcode Pty Ltd; 1,504,593 shares held by Adelhill Limited in which Mr Hyer is Chairman, Managing Director and Shareholder. Share Options Fully Paid Ordinary shares issued by virtue of the exercise of options during the year and to the date of this report are as set out in the following table. The terms and conditions of share options issued by the Company to Directors and Officers are disclosed in note 20 (c) to the accounts.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 20 DIRECTORS’ REPORT
Options at Exercised Options at beginning of financial end of financial year year 2003 financial year
Executive Directors RL Kermode (CEO) 666,668 666,668 – E Barukh (CFO) 333,334 333,334 –
Non-Executive Directors IA Armstrong 83,334 83,334 – GF Bradd 166,667 166,667 – ND Ford 83,334 83,334 – PJ Franet 166,667 166,667 – PJ Hyer 83,334 83,334 – DS McMichael 83,334 83,334 – NK Wran 83,334 83,334 – 1,750,006 1,750,006 –
Contracts with Directors There are no contracts – (i) to which a Director is a party or under which a Director is entitled to a benefit, and (ii) that confers a right to call for or deliver shares in, or debentures of or interests in a registered scheme made available by the Company or a related body corporate.
Other Interests No Director has relevant interests in, or rights or options over debentures, or interests in a registered scheme made available by the Company or a related body corporate.
Meetings of Directors The number of Directors’ Meetings which Directors were eligible to attend (including Committee Meetings) and the number attended by each Director during the year ended 30 June 2003 were:
Directors Meetings Committee Meetings Audit Remuneration Investment Marketing Committee Committee Committee Committee Number Number Number Number Number Eligible Number Eligible Number Eligible Number Eligible Number Eligible Number to Attend Attended to Attend Attended to Attend Attended to Attend Attended to Attend Attended
RL Kermode (CEO) 11 11 – –––44–– E Barukh (CFO) 11 11 – –––44–– IA Armstrong 11 11 44–––––– GF Bradd111144–––––– ND Ford 11 11 ––114433 PJ Franet 11 11 – ––––––– PJ Hyer 11 11 4 411–––– DS McMichael 11 11 – –––––33 NK Wran 11 10 44––––––
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 21 DIRECTORS’ REPORT
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
Directors’ and Executive Officers’ Emoluments The nature and amount of each major element of emoluments for the Directors, Chief Executive Officer and Senior Executives is described below and it is the role of the Remuneration Committee to advise the Board on these as part of the Company’s remuneration policies and practices.
Superannuation Non-Cash Salary Directors’ fees contributions benefits Total Parent & Economic Entity $$$$$
RL Kermode (CEO) 1,150,000–––1,150,000 E Barukh (CFO) 257,228 – 10,519 381,474 649,221 GF Bradd – – 53,667 – 53,667 ND Ford – 60,389 6,611 – 67,000 PJ Franet – 43,119 3,881 – 47,000 PJ Hyer – 54,632 5,701 – 60,333 DS McMichael – 48,876 4,791 – 53,667 IA Armstrong – 6,900 45,100 – 52,000 NK Wran – 52,000 – – 52,000 1,407,228 265,916 130,270 381,474 2,184,888
Officers receiving the highest emoluments:
Termination Superannuation Non-Cash Salary payments contributions benefits Total Parent & Economic Entity $$$$
Executive Officers RL Kermode (CEO) 1,150,000–––1,150,000 E Barukh (CFO) 257,228 – 10,519 381,474 649,221 F Lukabyo 250,155 – 9,306 – 259,461 S Doyle 184,409 – 10,527 9,143 204,079 1,841,792 – 30,352 390,617 2,262,761
Indemnities and Insurance Premiums for Directors/Officers and Auditors The Company has not during or since the reporting period – (a) given any indemnity to a current or former officer or auditor against a liability that is covered by Sub Section 199A (*2) or (3), or any relevant agreement under which an officer or auditor may be given an indemnity of that kind; or (b) paid or agreed to pay a premium for insurance against current or former officers or auditors liability for legal costs except indemnities as provided in the Constitution, and having paid premiums for contracts for its Directors and Officers (being those Directors and Officers listed under the heading Directors’ and Executive Officers’ Emoluments) which contracts do not insure against a liability (other than for legal costs) arising out of: (i) conduct involving a wilful breach of duty in relation to the Company; or (ii) a contravention of Section 182 and 183 Corporations Act. Signed in accordance with a resolution of the Board of Directors
Neville Wran Peter Hyer Director Director
Dated at Sydney this 29th day of September 2003.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 22 CORPORATE GOVERNANCE STATEMENT for the year ended 30 June 2003
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
Following the release by the ASX of its Corporate non-executive Directors. Members are appointed for two Governance Council’s “Principles of Good Corporate year terms. The role of the Committee is to review the Governance and Best Practice Recommendations”, the financial reporting process, the system of internal control Board has initiated a review of the Company’s and management of financial risks, the audit process, and governance policies and procedures. The ASX guidelines the Company's process for monitoring compliance with provide a framework for good governance and include 10 laws and regulations and its own code of business core principles and 32 specific recommendations. From conduct. The Committee is to make recommendations to next year, companies are obliged to explain if and why the Board regarding the reappointment of the external they do not comply with any of the recommendations. auditors and review their remuneration. The Committee The Company’s review of its governance policies and under its Charter reviews the performance of the external procedures is currently underway, and shall be disclosed auditors. in the 2004 year accounts and published on the It also gives the Board of Directors additional assurance Company’s website. regarding the quality and reliability of financial This statement outlines the main Corporate Governance information, prepared for use by the board in determining practices that were in place throughout the financial year. policies for inclusion in financial statements. The current members of the Committee are I Armstrong, P Hyer and The Board of Directors and Board Committees N Wran. Mr Bradd was a member of the Committee until The Role of the Board his resignation from the Board on 4 September 2003. The Board of Directors has the overall responsibility Investment Committee for the Corporate Governance of the Company. It is The Investment Committee reports to the Board on matters responsible for setting strategic direction, confirming of capital expenditure and investment. The members of the financial objectives and assuring the management Committee are R Kermode, E Barukh and N Ford. function by establishing goals for management and monitoring performance against those goals. Above Marketing Committee all, it is wholly accountable to, and focused on the The Marketing Committee reports to the Board on matters needs of, all shareholders and other stakeholders. relating to marketing. The members of the Committee are To give further effect the Board has established Board N Ford and D McMichael. Compliance and Audit, Investment, Remuneration and Remuneration Committee Marketing Committees to assist in the execution of its The Remuneration Committee reports to the Board responsibilities. on matters relating to establishing and reviewing Composition of the Board remuneration arrangements for the Chief Executive Officer The Directors of the Company in office at the date of this and other senior executives and non-executive Directors. statement are shown in the Director's Report; six are non- The members of the Committee are N Ford and P Hyer. executive Directors and two are executive Directors. The Internal Control Framework Company's Constitution requires Directors retire from office by rotation. Retiring Directors may offer themselves The Board acknowledges that it has responsibility for for re-election. the overall control framework, but recognises that no cost effective control system will preclude all errors and In the event that a potential conflict of interest may arise, irregularities. To assist in discharging this responsibility Directors affected withdraw from the Board meeting for the Board has, in addition to establishing the Board the period the matter is being considered and take no part Compliance and Audit Committee, implemented an in discussions, and exercise no influence over other Board internal control framework that can be described under members, as is required by the Directors' Code of Conduct. three headings. Board Committees • Financial reporting: There is a comprehensive The Directors seek to achieve best practice in Corporate budgeting system with an annual budget approved by Governance and accountability through the following the Directors. Monthly actual results are reported Board Committees, which assist the Board in the against budget. Revised forecasts for the year are execution of its responsibilities. prepared as needed, together with monthly chart and Board Compliance and Audit Committee graph analysis of trends and trading. The role of the Board Compliance and Audit Committee, • Quality, integrity and performance of personnel: The which is an advisory committee, is documented in its Company's requirements are detailed in the Standard Charter approved by the Board of Directors. In accordance Operating Procedures, Employment Contracts and Job with its Charter, all Members of the Committee must be Specifications.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 23 CORPORATE GOVERNANCE STATEMENT for the year ended 30 June 2003
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
• Investment appraisal: The Company has clearly defined • to ensure Directors recognise and avoid situations of guidelines for capital expenditure. These include annual conflict of interest and other improper conduct; budgets, detailed appraisal and review procedures and • to provide assurance to shareholders that appropriate due diligence enquiry, where business opportunities are procedures of governance regulation and accountability being acquired or reassessed for viability. are in place such that shareholders will not be required to intervene or adjudicate in the role of Directors, save Ethical Standards for the statutory obligation of nominating, electing and The Directors acknowledge the need for continued rewarding Directors. maintenance of the highest standard of corporate • To ensure that Directors and officers conduct governance practice and ethical conduct by all Directors transactions in the Company’s shares in an appropriate and employees of the Company. manner it is required that – Code of Ethics 1. Directors' discuss any proposed trade in the The Company aims to maintain the highest standard of Company's shares with the Chairman prior to any ethical behaviour in ethical business dealings. trade, Objectives 2. Senior Executives discuss any proposed trade in the In maintaining its ethical standards, the Company will: Company's shares with the Chief Executive Officer prior to any trade, • behave with integrity in all its dealings with shareholders, employees, Government, suppliers, 3. Always subject to compliance with Listing Rules business partners and the taxi industry: and Corporations Act unless there are unusual circumstances trades in the Company's shares by • ensure that its actions comply with applicable laws Directors and Senior Executives are limited to the and regulations; following periods: • foster good relationships with Governments while (a) One month after the release of the Company's remaining apolitical; Half Year and Annual results to the Australian • maintain and implement policies that will enable Stock Exchange (ASX), and employees to avoid situations where conflicts of (b) The period commencing from lodgement of the interest could arise; Company's Annual Report with ASX, until one • not engage in any activity that could be construed to month after the Annual General Meeting of the involve an improper inducement; Company. • achieve a working environment where; 4. Directors and Senior Executives are prohibited from – equal opportunity is rigorously practiced; trading in the Company's shares if the Director or – harassment and other offensive behaviour is not officer is in possession of price sensitive information tolerated; or would be trading for a short term gain. – the confidentiality of commercially sensitive 5. Directors and Senior Executives are also aware information is protected; of their obligations to ensure that they do not – employees are encouraged to discuss concerns communicate price sensitive information to any about ethical behaviours with their supervisors. other person who is likely to buy or sell the Company’s shares or communicate that information The Chief Executive Officer is responsible to the Board for to another party. implementing, promoting and reviewing the effectiveness of the Code of Ethics. Business Risks and Emergency Planning Directors’ Code of Conduct The Board and the Board Compliance and Audit Committee The Directors' Code of Conduct demonstrates the overview principal Business Assurance/Risk Management commitment of Directors to achieve unambiguous strategies affecting the core business operations. accountability. The objectives are – Major business risks arise from such matters as action by • to ensure Directors are seen to be 'transparent' in their competitors; Government policy changes; the impact of conduct of the role of Director; changes in consumer credit legislation and privacy • to ensure that the interests of shareholders is regulation; the purchase, development and obsolescence understood, respected and recognised ahead of all of information systems technology and other events else; not otherwise anticipated.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 24 STATEMENT OF FINANCIAL PERFORMANCE for the year ended 30 June 2003
Notes Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
Revenue from ordinary activities 2 645,674,635 588,100,645 606,813,574 572,878,675 Taxi hire charges and payments to service providers (564,511,047) (533,638,248) (566,812,722) (534,574,471) Communication network costs (13,465,784) (5,183,145) – – Employee benefits expense (19,286,105) (10,999,348) (4,992,078) (4,212,960) Depreciation and amortisation expense 3 (6,457,265) (4,479,169) (3,452,253) (3,467,143) Borrowing expenses 3 (567,771) (295,012) – – Other expenses from ordinary activities (13,459,329) (10,455,538) (8,718,242) (9,258,737)
Profit from ordinary activities before income tax expense 27,927,334 23,050,185 22,838,279 21,365,364 Income tax expense relating to ordinary activities 4 (7,760,635) (6,953,738) (5,947,442) (6,035,567)
Profit from ordinary activities after related income tax expense 20,166,699 16,096,447 16,890,837 15,329,797 Net loss attributable to outside equity interest 98,400 35,850 – –
Net profit attributable to members of parent entity 20,265,099 16,132,297 16,890,837 15,329,797 Increase (decrease) in asset revaluation reserve 21 (b) 24,077 (1,150,844) 10,058 (1,150,844)
Total changes in equity other than those resulting from transactions with owners as owners 20,289,176 14,981,453 16,900,895 14,178,953
Basic earnings per share 24 18.0 cents 14.7 cents Diluted earnings per share 24 18.0 cents 14.6 cents
The accompanying notes form part of these financial statements.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 25 STATEMENT OF FINANCIAL POSITION as at 30 June 2003
Notes Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
Current Assets Cash assets 5 47,455,136 39,219,746 21,524,826 19,344,385 Receivables 6 47,171,220 47,243,085 43,866,735 41,830,930 Inventories 7 1,013,496 1,414,632 – – Total Current Assets 95,639,852 87,877,463 65,391,561 61,175,315 Non-Current Assets Other financial assets 8 16,205,931 13,723,541 143,198,446 144,766,002 Property, plant and equipment 9 28,824,700 30,741,681 15,535,720 16,066,360 Intangible assets 10 2,751,367 3,070,182 1,929,001 2,178,776 Deferred tax assets 11 1,347,310 968,595 550,376 320,257 Other 12 999,672 1,415,328 – – Total Non-Current Assets 50,128,980 49,919,327 161,213,543 163,331,395 Total Assets 145,768,832 137, 7 96,790 226,605,104 224,506,710 Current Liabilities Payables 13 7, 31 5,550 8,515,108 4,299,742 3,765,205 Interest-bearing liabilities 14 10,036,304 12,379,637 – – Current tax liabilities 15 4,093,219 3,757,556 2,212,426 2,379,884 Provisions 16 1,900,333 8,168,306 707,946 9,225,728 Total Current Liabilities 23,345,406 32,820,607 7,220,114 15,370,817 Non-Current Liabilities Non interest-bearing liability within the Group 17 – - 105,450,228 - Deferred tax liabilities 18 221,451 278,596 126,815 130,378 Provisions 19 1,582,684 1,194,449 621,141 207,053 Total Non-Current Liabilities 1,804,135 1,473,045 106,198,184 337,431 Total Liabilities 25,149,541 34,293,652 113,418,298 15,708,248 Net Assets 120,619,291 103,503,138 113,186,806 208,798,462 Equity Contributed equity 20 74,388,916 71,605,575 74,388,916 181,164,253 Reserves 21 56,002 31,925 41,983 31,925 Retained Profits 22 46,174,373 31,646,488 38,755,907 27,602,284 Parent entity interest 120,619,291 103,283,988 113,186,806 208,798,462 Outside equity interest – 219,150 – – Total Equity 120,619,291 103,503,138 113,186,806 208,798,462
The accompanying notes form part of these financial statements.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 26 STATEMENT OF CASH FLOWS for the year ended 30 June 2003
Notes Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
Cash Flows from Operating Activities Receipts from customers and others 645,447,940 604,372,753 605,129,061 577,652,103 Payments to suppliers, licensees and employees (612,581,518) (578,337,350) (582,568,720) (556,929,938) Dividends received 68,996 149,441 2,123,082 1,518,924 Interest received 2,227,529 2,156,097 1,104,798 1,705,221 Borrowing costs (90,876) (295,012) – – Income tax paid (8,280,359) (8,430,667) (6,712,460) (8,384,378) Net Cash provided by Operating Activities 32 (a) 26,791,712 19,615,262 19,075,761 15,561,932
Cash Flows from Investing Activities Proceeds from sale of property, plant and equipment 1,635,741 158,273 – – Purchase of property, plant and equipment (5,293,996) (796,179) (2,671,838) (336,581) Purchase of investments Net cash payment for investment in subsidiary, Combined Communications Network Limited (“CCN”) – (10,626,216) – (25,798,246) Other (2,458,313) (1,010,437) (2,530,836) (1,010,437) Payments for related parties – – (18,895) (13,685) Net Cash provided by (used in) Investing Activities (6,116,568) (12,274,559) (5,221,569) (27,158,949)
Cash Flows from Financing Activities Proceeds from issue of shares 2,783,341 2,599,995 2,783,341 2,599,995 Repayment of borrowings (2,820,228) (437,460) – – Dividends paid (12,402,867) (8,830,363) (14,457,092) (10,199,846) Net Cash provided by (used in) Financing Activities (12,439,754) (6,667,828) (11,673,751) (7,599,851) Net increase (decrease) in Cash held 8,235,390 672,875 2,180,441 (19,196,868) Cash at the beginning of the financial year 39,219,746 38,546,871 19,344,385 38,541,253 Cash at the end of the financial year 5 47,455,136 39,219,746 21,524,826 19,344,385
The accompanying notes form part of these financial statements.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 27 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
1 Statement of Significant Accounting expense are included in the determination of accounting Policies profit and taxable income are brought to account as either deferred tax asset or deferred tax liability at the rate of The financial report is a general purpose financial report income tax applicable to the period in which the benefit that has been prepared in accordance with Accounting will be received or the liability will become payable. Standards, Urgent Issues Group Consensus Views and other authoritative pronouncements of the Australian Accounting Deferred tax assets are not brought to account unless Standards Board and the Corporations Act 2001. realisation of the asset is assured beyond reasonable doubt. Deferred tax assets in relation to tax losses are not The financial report covers the economic entity of brought to account unless there is virtual certainty of Cabcharge Australia Limited (“Cabcharge”) and controlled realisation of the benefit. entities, and Cabcharge Australia Limited as an individual parent entity. Cabcharge Australia Limited is a listed public The amount of benefits brought to account or which may company, incorporated and domiciled in Australia. be realised in the future is based on the assumption that no adverse change will occur in income taxation The financial report has been prepared on an accruals legislation and the anticipation that the economic entity basis and is based on historical costs and does not take will derive sufficient future assessable income to enable into account changing money values or, except where the benefit to be realised and comply with the conditions stated, current valuations of non-current assets. Cost is of deductibility imposed by the law. based on the fair values of the consideration given in exchange for assets. Legislation to allow groups, comprising a parent entity and its Australian resident wholly-owned entities, to elect The following is a summary of the material accounting to consolidate and be treated as a single entity for policies adopted by the economic entity in the preparation income tax purposes was substantively enacted on 21 of the financial report. The accounting policies have been October 2002. This legislation, which includes both consistently applied, unless otherwise stated. mandatory and elective elements of the tax consolidation (a) Principles of Consolidation system, is applicable to the group. The impact of the The consolidated accounts comprise the accounts of mandatory elements of the tax consolidation system on Cabcharge Australia Limited and all of its controlled existing deferred tax balances of the economic entity and entities. A controlled entity is any entity controlled by parent entity has been estimated on a reasonable basis. Cabcharge Australia Limited. Control exists where At the date of this report the Directors have not made a Cabcharge Australia Limited has the capacity to dominate decision whether or not to elect to be taxed as a single the decision-making in relation to the financial and entity. The financial effect of the implementation of the operating policies of another entity so that the other tax consolidation system on the consolidated entity has entity operates with Cabcharge Australia Limited to not been recognised in the financial statements achieve the objectives of Cabcharge Australia Limited. (c) Foreign Currency Transactions and Balances A list of controlled entities is contained in Note 28 to the Foreign currency transactions during the year are converted financial statements. to Australian currency at the rates of exchange applicable All inter-company balances and transactions between at the dates of the transactions. Amounts receivable and entities in the economic entity, including any unrealised payable in foreign currencies at balance date are converted profits or losses, have been eliminated on consolidation. at the rates of exchange ruling at that date. Where controlled entities have entered or left the The gains and losses from conversion of short-term economic entity during the year, their operating results assets and liabilities, whether realised or unrealised, are are included from the date control was obtained or until included in profit from ordinary activities as they arise. the date control ceased. The assets and liabilities of the overseas controlled Outside interests in the equity and results of the entities entities, which are self-sustaining, are translated at year- that are controlled are shown as a separate item in the end rates and operating results are translated at the rates consolidated financial report. ruling at the end of each month. Gains and losses arising on translation are taken directly to the foreign currency (b) Income Tax translation reserve. The economic entity adopts the liability method of tax- effect accounting whereby the income tax expense is d) Acquisitions of Assets based on the profit from ordinary activities adjusted for The cost method of accounting is used for all acquisitions any permanent differences. of assets regardless of whether shares or other assets are Timing differences which arise due to the different acquired. Cost is determined as the fair value of the accounting periods in which items of revenue and assets given up at the date of acquisition plus costs
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 28 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $ incidental to the acquisition. Where goodwill arises it is The recoverable amount is assessed from the shares’ brought to account on the basis described in note 1(l). current market value or the underlying net assets in the Where the fair values of the identifiable net assets particular entities. The expected net cash flows from acquired by the entity exceed the cost of acquisition investments have not been discounted to their present incurred by the entity, the difference represents a discount value in determining the recoverable amounts. on acquisition and is accounted for by reducing Investments in Associates are recognised in the financial proportionately the fair values of the non-monetary statements by applying the equity method of accounting. assets acquired until the discount is eliminated. (h) Taxi Licence Plates (e) Revaluation of Non-Current Assets Taxi licence plates are valued at cost (calculated after Land and Buildings are revalued at regular intervals. crediting discount on acquisition). Independent assessments are obtained of the fair market value of land and buildings and such assessments (i) Fixed term Taxi Licences are used as a guide when revaluations are made. Fixed term taxi licences are valued at cost (calculated Revaluation increments are credited directly to the asset after crediting discount on acquisition) less a proportional revaluation reserve. charge to expense based on the term of the licences. Revaluations do not result in the carrying value of land or (j) Leases buildings exceeding the net amount expected to be Leases of fixed assets where substantially all the risks recovered through the net cash inflows arising from their and benefits incidental to the ownership of the asset, continued use and subsequent disposal (“recoverable but not the legal ownership, are transferred to entities amount”). The expected net cashflows have not been in the economic entity are classified as finance leases. discounted to present values in determining recoverable Finance leases are capitalised, recording an asset and amounts. a liability equal to the present value of the minimum Where the carrying amount of an individual non-current lease payments, including any guaranteed residual asset is greater than its recoverable amount the asset is values. revalued to its recoverable amount. To the extent that the Leased assets are depreciated on a straight line basis revaluation decrement reverses a revaluation increment over the estimated useful lives where it is likely that previously credited to and still included in the balance of, the economic entity will obtain ownership of the asset or the asset revaluation reserve, the decrement is debited over the term of the lease. directly to that reserve. Lease payments are allocated between the reduction of Otherwise the decrement is recognised as an expense in the lease liability and the lease interest expense for the profit and loss account. Revaluations have not taken the period. into account potential capital gains tax. Lease payments for operating leases, where substantially (f) Inventories all the risks and benefits remain with the lessor, are Inventories are measured at the lower of cost and net charged as expenses in the periods in which they are realisable value. Cost are assigned on a first-in first-out incurred. basis and include direct materials, direct labour and an Lease incentives under operating leases are recognised appropriate proportion of variable and fixed overhead as a liability. Lease payments received reduce the liability. expenses. (k) Depreciation (g) Investments Depreciation is calculated on straight line and diminishing Shares value basis to write off the net cost or revalued amount Shares in listed companies held as current assets are of each item of property, plant and equipment over its valued by Directors at those shares’ market value at each expected useful life. Estimates of remaining useful lives balance date. Unrealised gains are credited to asset are made on a regular basis for all assets, with annual revaluation reserve. Unrealised losses are debited to reassessments for major items. asset revaluation reserve to the extent that the The depreciation rates used for each major class of revaluation decrement reverses a previous revaluation asset are: increment credited to the reserve. Buildings 1% Non-current investments are carried at cost or at Furniture, fittings, plant and equipment 5% to 33% Directors’ valuation. The carrying amount of investments EFTPOS Equipment 12.5% is reviewed annually by directors to ensure it is not in excess of the recoverable amount of these investments.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 29 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
(l) Intangible Assets Dividend revenue is recognised when the right to dividend Goodwill has been established. On acquisition of some, or all, of the assets of another (p) Employee Benefits entity or, in the case of an investment in a controlled Provision is made for the economic entity's liability for entity, on acquisition of some, or all, of the equity of that employee benefits arising from services rendered by controlled entity, the identifiable net assets acquired are employees to balance date. Employee benefits expected measured at their fair value. The excess of the fair value to be settled within one year together with entitlements of the purchase consideration plus incidental expenses arising from wages and salaries, annual leave and long over the fair value of identifiable net assets acquired service leave which will be settled after one year, have (ie goodwill) is amortised on a straight line basis over been measured at the amounts expected to be paid twenty years, being the period during which the benefits when the liability is settled, plus related on-costs. Other are expected to arise. employee benefits payable later than one year have Patents and Trademarks been measured at the present value of the estimated future cash outflows to be made for those benefits. Significant costs associated with patents and trademarks having a benefit or relationship to more than one The Company operates an ownership-based remuneration accounting period are deferred and amortised over the scheme through the executive option plan, details of periods of their expected benefit. which are provided in Note 20 to the accounts. The value of options granted is included in the disclosure of directors (m) Cash and executive remuneration in accordance with ASIC For purposes of the statement of cash flows, cash media release 03-202. includes deposits at call which are readily convertible to (q) Comparative Figures cash on hand and which are used in the cash Where required by Accounting Standards comparative management function on a day-to-day basis, net of figures have been adjusted to conform with changes in outstanding bank overdrafts. presentation for the current financial year. (n) Research and Development Expenditure (r) Change in Accounting Policy - Dividends Research and Development costs are charged to profit The economic entity changed its accounting policy in the from ordinary activities before income tax as incurred or financial year ended 30 June 2003 relating to dividends deferred where it is expected beyond any reasonable in order to comply with Accounting Standard AASB 1044 doubt that sufficient future benefits will be derived so as “Provisions, Contingent Liabilities and Contingent Assets” to recover those deferred costs. for the first time from 1 July 2002. Dividends are now Deferred research and development expenditure is recognised at the time they were declared, determined or amortised on a straight line basis over the period during publicly recommended. Previously, dividends were which the related benefits are expected to be realised, recognised in the financial period to which they related, once commercial production has commenced. even though the dividends were announced after the end The economic entity also receives research and of the financial year. development tax concessions in accordance with income If the policy were applied in the previous period, then tax legislation and these are brought to account in the provisions would have been reduced by $6,665,655 in calculation of income tax. the Statement of Financial Position.
(o) Revenue (s) Change in Accounting Policy - Employee Benefits Taxi hire charges and account service fee revenue is The economic entity changed its accounting policy in the recognised upon billing. Account service fee revenue financial year ended 30 June 2003 relating to employee is disclosed net of Goods and Services Tax (“GST”), where benefits in order to comply with Accounting Standard applicable. Taxi hire charges are GST inclusive since the AASB 1028 “Employee Benefits” for the first time from 1 GST is embedded in taxis’ metered fares and liability for July 2002. the GST rests with the taxi driver. The liability for annual leave is now calculated using the Communications and leasing fees are billed every 28 remuneration rates the company expects to pay, not days in advance. Operating revenue receipts relating to wage and salary rates current at reporting date. There years beyond the current financial year are shown in the was no financial effect of this change. No adjustment statement of financial position as unearned revenue has been made to the prior year comparatives for the under the heading of Current Liabilities – Payables. change in accounting policy.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 30 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
2 Revenue Operating activities Taxi hire charges and fee revenue 599,079,676 565,855,089 599,079,676 565,855,089 Communication fees 18,117,872 8,304,730 – – Taxi leasing revenue 9,696,710 3,993,201 – – Revenue from sales of goods and services 6,750,902 2,605,840 – – Dividends received Wholly owned subsidiaries – – 2,054,225 1,369,483 Other related corporations – 147,043 – 147,043 Other corporations 68,996 2,398 68,857 2,398 Interest received Other persons 2,227,529 2,156,097 1,104,798 1,705,221 Rental revenue 59,946 48,081 48,258 48,081 Other revenue 8,037,263 4,829,893 4,457,760 3,751,360 644,038,894 587,942,372 606,813,574 572,878,675 Non-operating activities Proceeds on sale of property, plant and equipment 1,635,741 158,273 – – Total Revenue 645,674,635 588,100,645 606,813,574 572,878,675
3 Profit from Ordinary Activities Profit from ordinary activities before income tax has been determined after: Expenses Borrowing costs Other persons 567,771 295,012 – – Total borrowing costs 567,771 295,012 – – Depreciation of non-current assets Building 168,722 89,318 22,349 22,348 Plant and equipment 5,554,072 4,139,459 3,180,129 3,195,020 Total depreciation 5,722,794 4,228,777 3,202,478 3,217,368 Amortisation of non-current assets Goodwill 249,775 249,775 249,775 249,775 Others 484,696 617 – – Total amortisation 734,471 250,392 249,775 249,775 Total depreciation and amortisation 6,457,265 4,479,169 3,452,253 3,467,143 (Gain)/Loss on disposal of property, plant and equipment (147,559) 282,243 – – Bad and doubtful debts – trade debtors 690,759 1,490,584 583,883 1,468,910
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 31 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
4 Income Tax The prima facie tax on profit from ordinary activities before income tax is reconciled to the income tax as follows: Prima facie tax payable on profit from ordinary activities before income tax at 30% (2002:30%) 8,378,200 6,915,055 6,851,484 6,409,607 Add tax effect of: Non-deductible depreciation and amortisation 103,850 82,447 81,637 81,637 Timing differences and tax losses not brought to account 22,467 1,068 – – 8,504,517 6,998,570 6,933,121 6,491,244 Less tax effect of: Rebateable fully franked dividends (5,847) (44,832) (621,802) (455,677) Additional tax deduction for research and development expenditure and other permanent credit differences (738,035) – (363,877) – Income tax expense attributable to profit from ordinary activities before income tax 7, 760,635 6,953,738 5,947,442 6,035,567
5 Current Assets – Cash Cash at bank 2,996,808 11,835,430 1,500 1,500 Deposits at call 44,458,328 27,384,316 21,523,326 19,342,885 Balance per statement of cash flows 47,455,136 39,219,746 21,524,826 19,344,385
6 Current Assets – Receivables Trade debtors 40,588,387 41,665,568 40,081,664 40,391,794 Provision for doubtful debts (523,991) (423,991) (454,624) (354,624) 40,064,396 41,241,577 39,627,040 40,037,170 Amounts receivable from: Wholly owned subsidiaries – – 2,067,743 291,661 Other debtors 7, 1 06,824 6,001,508 2,171,952 1,502,099 47,171,220 47,243,085 43,866,735 41,830,930
7 Current Assets – Inventories At lower of cost and net realisable value Parts, safety cameras and sundries 1,013,496 1,414,632 – –
8 Non-Current Assets – Other Financial Assets Market value of listed investments Shares in other listed corporations 2,488,302 157,805 2,452,923 136,446 Unlisted investments at cost Shares in controlled entities – – 137,619,611 141,655,537 Shares in other corporations 3,142,915 2,991,022 3,125,912 2,974,019 Investment in taxi plates – at cost 10,574,714 10,574,714 – – 16,205,931 13,723,541 143,198,446 144,766,002
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 32 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
9 Non-Current Assets – Property, Plant and Equipment (a) Composition Land – at Directors’ valuation – 2002 – 2,100,000 – 2,100,000 Land – at Directors’ valuation – 2003 6,804,619 – 2,100,000 – Land acquired during the year – at cost – 4,704,619 – – 6,804,619 6,804,619 2,100,000 2,100,000 Building – at Directors’ valuation – 2002 – 2,214,128 – 2,214,128 Building – at Directors’ valuation – 2003 7,089,844 – 2,214,128 – Buildings acquired during the year – at cost – 4,875,716 – – Accumulated depreciation (492,703) (323,981) (279,360) (257,011) 6,597,141 6,765,863 1,934,768 1,957,117 Total land and buildings 13,401,760 13,570,482 4,034,768 4,057,117
Furniture, fittings, plant and equipment – at cost 11,068,262 9,617,168 3,243,800 2,278,011 Accumulated depreciation (6,071,740) (4,125,517) (2,169,266) (1,948,314) 4,996,522 5,491,651 1,074,534 329,697 Eftpos equipment – at cost 24,751,730 23,045,683 24,751,730 23,045,681 Accumulated depreciation (14,325,312) (11,366,135) (14,325,312) (11,366,135) 10,426,418 11,679,548 10,426,418 11,679,546 28,824,700 30,741,681 15,535,720 16,066,360
Furniture, Land & fittings, plant Eftpos Buildings and equipment equipment Total $$$$
(b) Movement in carrying amounts Economic Entity Balance at the beginning of the year 13,570,482 5,491,651 11,679,548 30,741,681 Other additions –3,587,949 1,706,047 5,293,996 Disposals –(1,488,183) – (1,488,183) Depreciation expense (168,722) (2,594,895) (2,959,177) (5,722,794) Carrying amount at the end of the year 13,401,760 4,996,522 10,426,418 28,824,700 Parent Entity Balance at the beginning of the year 4,057,117 329,697 11,679,546 16,066,360 Additions – 965,789 1,706,049 2,671,838 Depreciation expense (22,349) (220,952) (2,959,177) (3,202,478) Carrying amount at the end of the year 4,034,768 1,074,534 10,426,418 15,535,720
(c) Note on valuation of property The carrying amount of land and buildings are reviewed annually by the Directors. If the carrying amount of an item of the Land and Buildings exceeds its recoverable amount, the asset is written down to the lesser amount. An independent valuation was performed by Lachlan Graham, A.A.P.I. Registered valuer, of Landmark White on 2 September 2002. The independent valuation for Land and Building was based upon “market value, subject to vacant possession”.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 33 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
10 Non-Current Assets – Intangibles Goodwill at cost 4,995,500 4,995,500 4,995,500 4,995,500 Accumulated amortisation (3,066,499) (2,816,724) (3,066,499) (2,816,724) 1,929,001 2,178,776 1,929,001 2,178,776 Intellectual Property at cost 892,023 892,023 – – Accumulated amortisation (69,657) (617) – – 822,366 891,406 – – Patent and Copyright at cost 225,000 225,000 225,000 225,000 Accumulated amortisation (225,000) (225,000) (225,000) (225,000) – – – – 2,751,367 3,070,182 1,929,001 2,178,776
11 Deferred Tax Assets Future income tax benefit comprising timing differences 1,347,310 968,595 550,376 320,257
12 Non-Current Other Assets Prepaid fixed term taxi licenses at cost 1,623,156 1,623,156 – – Accumulated amortisation (623,484) (207,828) – – 999,672 1,415,328 – –
13 Current Liabilities – Payables Trade creditors 2,940,852 2,959,660 2,941,050 2,106,200 Other creditors and accruals 3,594,950 4,649,411 1,358,692 1,659,005 Unearned revenue 779,748 906,037 – – 7, 31 5,550 8,515,108 4,299,742 3,765,205
14 Current Liabilities – Interest bearing Unsecured loans 10,036,304 12,379,637 – –
15 Current Liabilities – Tax Liabilities Income tax 4,093,219 3,757,556 2,212,426 2,379,884
16 Current Liabilities – Provisions Dividend – 6,665,655 – 8,719,880 Employee entitlements 1,900,333 1,502,651 707,946 505,848 1,900,333 8,168,306 707,946 9,225,728
Dividends are not provided for in the 2003 year in conformity with Accounting Standard AASB 1044
17 Non-Current Liabilities – Non Interest Bearing Amount owing to subsidiary company – – 105,450,228 –
The balance in the parent entity’s books arises from the share buy-back transaction referred to in note 20 (b)
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 34 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
18 Non-Current Liabilities-Deferred Tax Liabilities Provision for deferred income tax 221,451 278,596 126,815 130,378
19 Non-Current Liabilities - Provisions Employee entitlements 1,582,684 1,194,449 621,141 207,053 Aggregate Employee Liability entitlements Balance at end of year 3,483,017 2,697,100 1,329,087 712,901
No. No. No. No.
Number of employees at year end 268 310 63 66
Economic Entity Parent Entity 2003 2002 2003 2002 (number) (number) (number) (number)
20 Contributed Equity (a) Composition and movement in issued capital (number of shares) Composition of Issued Capital Fully Paid Ordinary Shares 112,844,254 111,094,248 112,844,254 145,331,335 Movements in Ordinary Shares Number at the beginning of the reporting period 111,094,248 109,081,476 145,331,335 109,081,476 Options exercised 1,749,996 1,749,996 19 August 2002 166,667 – 166,667 – 06 September 2002 83,334 – 83,334 – 10 September 2002 83,334 – 83,334 – 12 September 2002 83,334 – 83,334 – 16 September 2002 166,667 – 166,667 – 17 September 2002 333,334 – 333,334 – 18 September 2002 666,668 – 666,668 – 31 January 2003 83,334 – 83,334 – 19 February 2003 83,334 – 83,334 – 1,750,006 1,749,996 1,750,006 1,749,996
Shares issued in consideration for the takeover of CCN – 34,499,863 – 34,499,863 – 34,499,863 – 34,499,863
Elimination of cross-holding shares in Cabcharge (note 20d) – (34,237,087) – – Reversal of last year’s elimination (note 20d) 34,237,087 – – – Buy-back of cross-holding shares (note 20d) 12 November 2002 (34,237,087) – (34,237,087) – – (34,237,087) (34,237,087) –
Number at end of reporting period 112,844,254 111,094,248 112,844,254 145,331,335
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 35 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
20 Contributed Equity – continued (b) Composition and movement in issued capital (dollars) Composition of Issued Capital Fully Paid Ordinary Shares 74,388,916 71,605,575 74,388,916 181,164,253 Movements in Ordinary Shares Paid up amount at the beginning of the reporting period 71,605,575 68,164,696 181,164,253 68,164,696 Options exercised 2,599,995 2,599,995 19 August 2002 258,334 – 258,334 – 06 September 2002 133,334 – 133,334 – 10 September 2002 133,334 – 133,334 – 12 September 2002 133,334 – 133,334 – 16 September 2002 258,334 – 258,334 – 17 September 2002 533,334 – 533,334 – 18 September 2002 1,066,669 – 1,066,669 – 31 January 2003 133,334 – 133,334 – 19 February 2003 133,334 – 133,334 – 2,783,341 2,599,995 2,783,341 2,599,995
Shares issued in consideration for the takeover of CCN – 110,399,562 – 110,399,562 – 110,399,562 – 110,399,562 Elimination of cross-holding shares in Cabcharge (note 20d) – (109,558,678) – – Reversal of last year’s elimination (note 20d) 109,558,678 – – – Buy-back of cross-holding shares (note 20d) 12 November 2002 (105,450,228) – (105,450,228) – Transfer from share repurchase reserve (note 21b) (4,108,450) – (4,108,450) – – (109,558,678) (109,558,678) – Paid up amount at end of reporting period 74,388,916 71,605,575 74,388,916 181,164,253
(c) Options No options were granted during the year. Options granted in previous years vested in the year in which they were granted. There were no options granted but not yet exercised at 30 June 2003 (2002: 1,750,006). All options were exercisable in the period after 30 June 2002 (one-third having been exercisable in the period to 30 June 2001 and two- thirds of the total number of options having been exercisable in the period to 30 June 2002). The exercise price for the second third of options exercised was $1.50, and the exercise price for the final third of options was $1.60. During the current year, 166,666 options were exercised at $1.50 and 1,583,340 options were exercised at $1.60. (d) Share Buy-Back Pursuant to a Special Resolution passed at the 2002 Annual General Meeting, Cabcharge made a selective buy-back of 34,237,087 ordinary shares held in Cabcharge by its subsidiary companies (“the cross-holding shares”). The shares bought back were then cancelled immediately. In the prior year accounts, the cross-holding shares were eliminated on the basis of the principle that a company cannot own shares in itself. That elimination has been reversed in the current year and replaced by the actual share buy-back transactions. A consolidation adjustment arises in respect of the cross-holding shares. Cabcharge's share price at the time of its issue of shares in consideration for the takeover of CCN was $3.20 while the market based cost price applicable to the cross-holding shares at the time of buy-back was $3.08. This difference in the consolidated accounts of 12 cents per share for the buy-back shares has been charged to share repurchase reserve. The resulting debit balance in the share repurchase reserve has been transferred to issued capital (note 21b)
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 36 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
21 Reserves (a) Composition Asset revaluation reserve 56,002 31,925 41,983 31,925 (b) Movement During The Year Asset revaluation reserve – Balance at beginning of the financial year 31,925 1,182,769 31,925 1,182,769 Revaluation decrement on investments – Adjustment to Cabcharge's investment in CCN from market value in the books as at 30 June 2001 to cost base – (1,113,113) – (1,113,113) Other listed securities – (37,731) – (37,731) Revaluation increment on investments 24,077 – 10,058 – Balance at the end of the financial year 56,002 31,925 41,983 31,925 The asset revaluation reserve records revaluations of non-current assets Share repurchase reserve – Balance at beginning of the financial year – – – – Difference arising from share buy-back transaction referred to in note 20d (4,108,450) – (4,108,450) – Balance of reserve transferred to issued capital 4,108,450 – 4,108,450 – Balance at the end of the financial year – – – –
22 Retained Profits Retained profits at the beginning of the financial year 31,646,488 26,647,375 27,602,284 26,828,953 Reversal of provision for final dividend at 30 June 2002 (on adoption of Accounting Standard AASB 1044) 6,665,655 – 8,719,880 – Net profit attributable to the members of the parent entity 20,265,099 16,132,297 16,890,837 15,329,797 Final dividend proposed – (6,665,655) – – Payment of final dividend (6,760,656) – (8,814,881) (8,719,880) Payment of interim dividend (5,642,213) (4,467,529) (5,642,213) (5,836,586) Retained profits at the end of the financial year 46,174,373 31,646,488 38,755,907 27,602,284
23 Dividends Interim fully franked ordinary dividend of 5 cents per share franked at the tax rate of 30% (2002: 4 cents franked at 30%) 5,642,213 4,444,196 5,642,213 5,813,253 Final fully franked ordinary dividend of 6 cents per share franked at the tax rate of 30% – 6,665,655 – 8,719,880 Dividends on options exercised (post balance date) franked at the tax rate of 30% 95,001 23,333 95,001 23,333 Total dividends paid (and provided for in 2002) 5,737,214 11,133,184 5,737,214 14,556,466
Dividends cents per share Interim paid 5.0 4.0 5.0 4.0 Final proposed 7.0 6.0 7.0 6.0 Total 12.0 10.0 12.0 10.0
The final 7 cents per share dividend is scheduled for payment on 14 October 2003.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 37 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
24 Earnings per Share Weighted average number of fully paid ordinary shares outstanding during the year used in calculation of basic EPS 112,430,096 110,039,829 Weighted average number of options not exercised for the purpose of diluted EPS calculation 414,158 766,171
Weighted average number of ordinary shares outstanding during the year used in calculation of diluted EPS 112,844,254 110,806,000
25 Dividend Franking Balances Balance at the beginning of the financial year 51,750,867 42,436,464 43,329,358 42,436,464 Adjustment to convert to new franking basis (29,571,924) (24,759,633) Converted opening balance 22,178,943 18,569,725
Franking credit balance acquired from takeover of CCN group – 1,785,293 – – Franking credit arising from income tax paid or payable in respect of the financial year 8,216,970 17,142,738 6,200,460 13,930,436 Franked dividends received 8,353 1,519,556 8,353 1,518,924 Franked dividends paid and proposed (5,834,761) (11,133,184) (5,949,668) (14,556,466) Balance at the end of the financial year 24,569,505 51,750,867 18,828,870 43,329,358
26 Remuneration and Retirement Benefits (a) Directors' Remuneration: Income paid or payable to all Directors of each entity in the economic entity by entities of which they are directors and any related parties 2,184,888 1,392,063 Income paid or payable to all Directors of the parent entity by the parent entity and any related parties 2,184,888 1,392,063
Number of Parent entity Directors whose income from the parent entity and any related parties was within the following bands: Number Number $40,000 – $49,999 1 5 $50,000 – $59,999 4 2 $60,000 – $69,999 2 – $340,000 – $349,999 – 1 $640,000 – $649,999 1 – $710,000 – $719,999 – 1 $1,150,000 –$1,159,999 1 –
The names of parent entity Directors who held office during the financial year are – RL Kermode, E Barukh, IA Armstrong, GF Bradd, ND Ford, PJ Franet, PJ Hyer, DS McMichael and NK Wran. No amount is included within directors' or executive remuneration in respect of share options since all options exercised during the current year were granted and vested in earlier years.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 38 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
26 Remuneration and Retirement Benefits - continued (b) Executive Remuneration Remuneration received or due and receivable by executive officers of the economic entity from entities in the economic entity, and any related entities for management of the affairs of the economic entity, whose remuneration is $100,000 or more 2,262,761 1,362,689 Remuneration received or due and receivable by executive officers of the parent entity, from parent entity and any related entities for management of the affairs of the parent entity and its subsidiaries, whose remuneration is $100,000 or more 2,262,761 1,362,689 Number of economic entity executives whose income was within the following bands: Number of executives Number of executives $110,000 – $119,999 – 1 – 1 $190,000 – $199,999 – 1 – 1 $200,000 – $209,999 1 – 1 – $250,000 – $259,999 1 – 1 – $340,000 – $349,999 – 1 – 1 $640,000 – $649,999 1 – 1 – $710,000 – $719,999 – 1 – 1 $1,150,000 –$1,159,999 1 – 1 –
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
27 Remuneration of Auditors Remuneration of the auditor of the parent entity for – Auditing or reviewing the financial report 188,880 150,317 119,560 110,060 Other services 25,000 – 10,000 –
Remuneration of other auditors of subsidiary for – Auditing or reviewing the financial reports of subsidiaries 5,165 5,965 – – Other services 5,044 6,778 – –
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 39 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
28 Particulars Relating to Controlled Entities Details of controlled entities including contribution to group results are reflected below: Group Interest % Country of Incorporation 2003 2002 Combined Communications Network Limited Australia 100 100 Taxi Combined Services Pty Ltd Australia 100 100 Silver Service Taxis Pty Ltd Australia 100 100 Yellow Cabs of Sydney Pty Ltd Australia 100 100 Cabcharge International Limited Hong Kong 100 100 Cabcharge New Zealand Limited New Zealand 100 100 Cabcharge Investments Pty Ltd Australia 100 100 Transcharge Australia Pty Ltd Australia 100 100 Helpline Australia Pty Ltd Australia 100 100 Taxi Combined Services (Vic) Pty Ltd Australia 100 100 Drycol Property Trust Australia 100 100 Drycol Properties Pty Ltd Australia 100 100 TCS Communications (Vic) Pty Ltd Australia 100 100 Carbodies Australia Pty Ltd Australia 100 100 Combined Network Couriers Pty Ltd Australia 100 100 Enterprise Speech Recognition Pty Ltd Australia 100 62 The Company has guaranteed financial support to these subsidiaries, if necessary, to enable them to meet their financial commitments where due. The minority interest shares in Enterprise Speech Recognition Pty Ltd were acquired during the year for cash consideration to the Group of $44,563.
29 Superannuation Commitments All employees of the economic entity are entitled to benefits on retirement, disability, death, resignation or retrenchment from The De Luxe Cab Company Limited - AXA Tailored Superannuation Plan, NM Superannuation Pty Ltd (ABN 31 008 428 322) acting as trustee. The trustee is an “approved trustee” under the Superannuation Industry (Supervision) Act 1993 (SIS). The administrator and insurer of the fund is AXA Australia (ABN 72 004 020 437). This fund is an accumulation type fund based on employers’ contribution of 9% of the employee’s ordinary time earnings, which is in accordance with the relevant Standards outline in the Occupational Superannuation Standards Act, Superannuation Guarantee (Administration) Act and Superannuation Industry Supervision Act (SIS).
30 Related Party Information Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to other parties unless otherwise stated. Transactions with related parties are as follows
Nature of transaction Name Relationship 2003 2002
(a) Fees paid or Black Cabs Combined Director related entity 931,721 889,939 payable in capacity (Mr G Bradd) as taxi company Cumberland Cabs Company Pty Ltd, Director related entity 784,711 702,955 Northern Districts Taxis & Western District (Mr P Hyer) Taxis (Trading as Premier Cabs) Silver Top Taxi Services Limited Director related entity 1,415,002 1,366,927 (Mr P Franet) Queensland Taxi Investment Pty Ltd Director related entity 903,385 835,572 (Trading as Yellow Cabs) (Mr N Ford) Combined Communications Related party 2,226,027 2,218,440 Network Limited (CCN) As at 30 June 2003, CCN owed Cabcharge on current trading account an amount of $1,921,689.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 40 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Economic Entity Parent Entity 2003 2002 2003 2002 $ $ $ $
30 Related Party Information - continued
(b) Directors share transactions Directors and Director-related entities hold directly, indirectly or beneficially as at the reporting date the following equity interests in the ordinary shares of Cabcharge Australia Limited. 18,889,793 18,228,220 18,889,793 18,228,220 Movement during the year: Number at the beginning of the year 18,228,220 4,487,268 18,228,220 4,487,268 Adjustment to include additional Director-related entities – 11,835,441 – 11,835,441 Options exercised 1,750,006 1,666,663 1,750,006 1,666,663 Purchases 35,000 72,608 35,000 72,608 Shares issued as a result of takeover of CCN – 718,440 – 718,440 Share sales (1,123,433) (552,200) (1,123,433) (552,200) Number at the end of the year 18,889,793 18,228,220 18,889,793 18,228,220
(c) Other director-related transactions - Motor vehicles to the value of $4,447,382 were purchased from N Ford during the year (2002: Nil)
31 Capital Commitments At 30 June 2003, Cabcharge Australia Limited had no capital commitments.
32 Notes to the Cashflow (a) Reconciliation of net cash provided by operating activities with profit from ordinary activities after income tax Profit from ordinary activities after income tax 20,166,699 16,096,447 16,890,837 15,329,796 Non-cash flows in profit from ordinary activities Depreciation and amortisation expense 6,457,265 4,479,169 3,452,253 3,467,143 Net (profit) or loss on disposal of property, plant and equipment (147,559) 282,243 – – Borrowing expenses 476,895 – – – Changes in assets and liabilities, net of the effects of purchase of subsidiaries – (Increase)/Decrease in trade and other debtors 71,865 6,550,180 (2,016,912) (208,446) (Increase)/Decrease in inventories 401,136 (967,310) – – Increase/(Decrease) in creditors and accruals (1,320,309) (5,898,501) 534,537 (620,178) Increase/(Decrease) in provisions 785,917 994,954 616,186 (57,571) Movement in income taxes payable 335,663 (1,872,508) (167,458) (2,285,275) Movement in deferred tax assets (378,715) (54,565) (230,119) 32,966 Movement in deferred taxes payable (57,145) 5,153 (3,563) (96,503) Net cash provided by operating activities 26,791,712 19,615,262 19,075,761 15,561,932
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 41 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
32 Notes to the Cashflow - continued (b) Financial facilities Bank overdraft and loan limits Overdraft facility 3,500,000 7,000,000 3,500,000 6,250,000 Fixed rate loan facility – 9,000,000 – – Standby facility 15,000,000 3,250,000 15,000,000 3,250,000 Total facility 18,500,000 19,250,000 18,500,000 9,500,000 Amount unused 18,500,000 19,250,000 18,500,000 9,500,000
(c) Restricted cash There was no restricted cash on 30 June 2003. (d) Lease commitments There were no lease agreements existing on 30 June 2003.
33 Financial Instruments (a) Interest rate risk Exposure to interest rate risk and the effective interest rates of financial assets and financial liabilities, both recognised and unrecognised at balance date, is as follows:
Floating Non-interest Carrying Effective interest rate sensitive value interest rate
2003 year Financial Assets Cash at bank/on hand –2,996,808 2,996,808 Money market / deposit 44,458,328 – 44,458,328 4.20% – 4.88% Receivables –47, 171,220 47,171,220 Investments –16,205,931 16,205,931 44,458,328 66,373,959 110,832,287 Financial Liabilities Accounts payable –7,315,550 7,315,550 Unsecured loans 10,036,304 – 10,036,304 4.54% 10,036,304 7,315,550 17,351,854 2002 year Financial Assets Cash at bank/on hand – 11,835,430 11,835,430 Money market / deposit 27,384,316 – 27,384,316 4.25% – 6.00% Receivables – 47,243,085 47,243,085 Investments – 13,723,541 13,723,541 27,384,316 72,802,056 100,186,372 Financial Liabilities Accounts payable – 8,498,235 8,498,235 Unsecured loans 12,379,637 – 12,379,637 5.0% 12,379,637 8,498,235 20,877,872
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 42 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
33 Financial Instruments - continued (b) Credit Risk Exposures The economic entity’s maximum exposures to credit risk, excluding the value of any collateral or other security, at balance date to recognised financial assets is the carrying amount, net of any provisions for doubtful debts of those assets as disclosed in the statement of financial position and notes to the financial statements. The company minimised concentration of credit risk in relation to trade accounts receivable by undertaking transactions with a large number of customers. However, all the customers are concentrated in Australia. Credit risk in trade receivables is managed in the following ways: – Payment terms are 28 days – A risk assessment process is used for customers over 90 days; and – Cash or Bank guarantee is obtained where appropriate.
(c) Net fair values Valuation approach Marketable shares included in “Other financial assets” are traded in an organised financial market. The net fair value of marketable shares is determined by valuing them at the current quoted market sell price. The carrying amount of cash, deposits, accounts receivable and accounts payable approximate net fair value. Investments in unlisted securities are reflected at valuation - directors appraisals are undertaken as necessary to reflect substantial changes affecting the net fair value of investments. The aggregate net fair values and carrying amounts of financial assets and financial liabilities at balance date:
2003 year 2002 year Carrying amount Net fair value Carrying amount Net fair value
Financial Assets Cash on hand/bank 2,996,808 2,996,808 11,835,430 11,835,430 Money market / deposits 44,458,328 44,458,328 27,384,316 27,384,316 Receivables 47,171,220 47,171,220 47,243,085 47,243,085 Investments 16,205,931 16,205,931 13,723,541 13,723,541 110,832,287 110,832,287 100,186,372 100,186,372 Financial Liabilities Accounts payable 7, 31 5,550 7, 315,550 8,498,235 8,498,235 Unsecured loans 10,036,304 10,036,304 12,379,637 12,379,637 17,351,854 17,351,854 20,877,872 20,877,872
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 43 NOTES TO THE FINANCIAL STATEMENTS for the year ended 30 June 2003
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
34 Segment Reporting Primary Segments – Business Segments
Cabcharge Taxi Communication Taxi Charge System Network Provider Elimination TOTAL 2003 2002 2003 2002 2003 2002 2003 2002
REVENUE Revenue – external 603,654,551 569,812,371 39,792,555 16,132,177 – 643,447,106 585,944,548 Revenue – inter group – – 2,226,027 936,223 (2,226,027) (936,223) – – Interest – – – – 2,227,529 2,156,097 Total Segment Revenue 603,654,551 569,812,371 42,018,582 17,068,400 (2,226,027) (936,223) 645,674,635 588,100,645 RESULTS Profit Before Tax 20,784,054 19,995,880 7, 1 43,280 3,054,305 27,927,334 23,050,185 Income Tax (5,947,442) (6,035,567) (1,813,193) (918,171) (7,760,635) (6,953,738) Net Profit 14,836,612 13,960,313 5,330,087 2,136,134 20,166,699 16,096,447 ASSETS Segment Assets 83,406,659 79,740,708 62,362,173 58,056,082 145,768,832 137, 7 96,790 LIABILITIES Segment Liabilities 7,968,070 15,708,248 17,181,471 18,585,404 25,149,541 34,293,652 OTHERS Acquisition of Property, Plant & Equipment 2,671,838 336,581 2,622,158 459,598 5,293,996 796,179 Depreciation 3,202,478 3,217,369 2,520,316 1,011,408 5,722,794 4,228,777 Amortisation of goodwill 249,775 249,775 – – 249,775 249,775 Amortisation other – – 484,696 617 484,696 617
Secondary reporting – Geographical Segments The consolidated entity operates only in Australia.
35 Contingent liabilities The Company has no contingent liabilities.
36 Post balance-date event Cabcharge’s offer to acquire all of the ordinary shares in Melbourne based taxi company Black Cabs Combined Ltd (BCC) closed successfully on 22 August 2003, the 90% minimum acceptance condition having been met. The acquisition of BCC expands Cabcharge’s business as a communication network facility to the Taxi Industry with around 1,350 Black Cabs as well as approximately 190 cabs in bureau fleets in the Melbourne taxi market. The cost of acquisition of BCC is estimated to be $24.1 million comprising cash consideration of $13.0 million, shares consideration of $10.6 million based on an issue of 3,517,800 ordinary shares by Cabcharge at $3.02 and estimated costs of the acquisition of $0.5 million. Subject to shareholder approval at the Cabcharge Annual General Meeting, the shares currently held by BCC in Cabcharge totalling 3,830,218 shall be bought back by Cabcharge and cancelled.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 44 DIRECTORS’ DECLARATION
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
In the opinion of the Directors of Cabcharge Australia Limited:
(a) the financial statements and notes, as set out on pages 25 to 44, are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the financial position of the Company and consolidated entity as at 30 June 2003 and of their performance, as represented by the results of their operations and their cash flows, for the year ended on that date; and (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and
(b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable.
Dated at Sydney this 29th day of September 2003.
Signed in accordance with a resolution of the Directors.
Neville Wran Peter Hyer Director Director
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 45 INDEPENDENT AUDITORS’ REPORT to the Members of Cabcharge Australia Limited and its Controlled Entities
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
Scope We have audited the financial report of Cabcharge Australia Limited for the financial year ended 30 June 2003, consisting of the statement of financial performance, statement of financial position, statement of cash flows, accompanying notes and the Directors’ declaration set out on pages 25 to 45. The financial report includes the consolidated financial statements of the consolidated entity, comprising the Company and the entities it controlled at the year’s end or from time to time during the financial year. The Company’s Directors are responsible for the financial report. We have conducted an independent audit of this financial report in order to express an opinion on it to the members of the Company. Our audit has been conducted in accordance with Australian Auditing Standards to provide reasonable assurance whether the financial report is free of material misstatement. Our procedures included examination, on a test basis, of evidence supporting the amounts and other disclosures in the financial report, and the evaluation of accounting policies and significant accounting estimates. These procedures have been undertaken to form an opinion whether, in all material respects, the financial report is presented fairly in accordance with Accounting Standards and other mandatory professional reporting requirements and statutory requirements in Australia so as to present a view which is consistent with our understanding of the Company’s and the consolidated entity’s financial position and performance, as represented by the results of their operations and their cash flows.
Audit Opinion In our opinion, the financial report of Cabcharge Australia Limited is in accordance with: (a) the Corporations Act 2001, including: (i) giving a true and fair view of the Company’s and consolidated entity’s financial position as at 30 June 2003 and of their performance for the year ended on that date; and (ii) complying with Accounting Standards in Australia and the Corporations Regulations 2001; and (b) other mandatory professional reporting requirements in Australia.
Dated at Sydney this 29th day of September 2003.
Bryan Bird BLACKETT & LEWIS Partner Chartered Accountants
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 46 AUSTRALIAN STOCK EXCHANGE INFORMATION
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
Shareholdings as at 29 August 2003 a) Distribution of Shareholders numbers
Range of Shareholdings No of Shareholdings Shares (%) of Total
1 – 1000 901 684,600 0.61 1001 – 5000 2,053 5,285,746 4.68 5001 – 10000 762 4,829,065 4.28 10001 – 100000 613 15,963,076 14.15 100001 and over 91 86,081,767 76.28
4,420 112,844,254 100.00 b) The number of Shareholdings held in less than marketable parcels is 48 c) The names of the substantial shareholders listed in the Company’s register Number of FPO Name shares held
RBC Global Services Australia Nominees Pty Ltd 17,971,472 Silver Top Taxi Service Limited 8,058,146 J P Morgan Nominees Australia Limited 5,814,933 Citicorp Nominees Pty Limited 5,811,208 Westpac Custodian Nominees Ltd 5,725,951 d) Voting rights – all shares hold the same voting rights e) 20 Largest Shareholders – Ordinary Shares Number of FPO Rank Name shares held % held
1 RBC Global Services Australia Nominees Pty Ltd 17,971,472 15.93 2Silver Top Taxi Service Limited 8,058,146 7.14 3J P Morgan Nominees Australia Limited 5,814,933 5.15 4 Citicorp Nominees Pty Limited 5,811,208 5.15 5Westpac Custodian Nominees Ltd 5,725,951 5.07 6 National Nominees Limited 4,124,190 3.65 7 Black Cabs Combined Limited 3,830,218 3.39 8Legion Cabs (Trading) Co-operative Society Limited 3,007,614 2.67 9Swan Taxis Co-operative Limited 2,631,004 2.33 10 Arrow Taxi Services Limited 1,801,824 1.60 11 Queensland Taxi Investments Pty Ltd 1,560,288 1.38 12 Reginald Lionel Kermode 1,500,000 1.33 13 Commonwealth Custodial Services Limited 1,433,881 1.27 14 ABC Radio Taxi Co-op Limited 1,416,641 1.26 15 Cumberland Cabs Company Pty Limited 1,320,197 1.17 16 EPHS Limited 1,050,482 0.93 17 AMP Life Limited 945,678 0.84 18 ANZ Nominees Limited 931,640 0.83 19 Sandhurst Trustees Limited 912,000 0.81 20 Invia Custodian Pty Limited 907,247 0.80
70,754,614 62.70
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 47 ADDITIONAL INFORMATION
Notes Economic Entity Parent Entity 2000 1999 2000 1999 $ $ $ $
Final Dividends 2003 • Record date 19 September 2003 • Dividend payment date 14 October 2003
Voting Rights Subject to Cabcharge’s constitution – (a) at a general meeting – (i) on a show of hands, every member present has one vote; and (ii) on a poll, every member present has one vote for each fully paid share held by the member and in respect of which the member is entitled to vote. (b) at a general meeting each member entitled to vote at a meeting of members may vote – (i) in person or, where a member is a body corporate, by its representative; (ii) by not more than two proxies; or (iii) by not more than two attorneys.
Australian Stock Exchange Listing Cabcharge’s Ordinary Shares are quoted on the Australian Stock Exchange (“ASX”) with Sydney being Cabcharge’s home exchange. The stock code under which the shares trade is CAB. Trading results are published in most large Australian daily newspapers.
Internet Interim and final results are available on Cabcharge’s Internet home page: (www.cabcharge.com.au).
Annual Report not required Shareholders not wishing to receive the Annual report, or who are receiving more than one copy, should advise the share registry in writing, quoting their Shareholder Reference Number or Holder Identification Number. Shareholders will still receive all other mailings. An “Annual Report Not Required” notice can be obtained from the share registry.
Tax File Numbers The share registry is obliged to record Tax File Numbers (“TFN”) or exemption details provided by Australian resident shareholders. While it is not compulsory to provide TFN’s or exemption details, Cabcharge will be obliged to deduct withholding tax at the highest marginal rate, plus Medicare levy, for any unfranked or partially franked dividends, paid to shareholders resident in Australia who have not supplied TFN's. Further information can be obtained from the share registry.
CABCHARGE AUSTRALIA LIMITED AND CONTROLLED ENTITIES ABN 99 001 958 390 48 CORPORATE DIRECTORY
Directors Registered Office Share Registry Mr Reg Kermode - Executive Chairman AM MBE 152-162 Riley Street Postal Address Mr Ewaz Barukh - Finance Director EAST SYDNEY NSW 2010 ASX Perpetual Registrars Limited Mr Ian Armstrong Locked Bag A14 Mr Neill Ford SYDNEY SOUTH NSW 1235 Mr Phillip Franet Internet Address Mr Peter Hyer www.cabcharge.com.au Mr Donnald McMichael Delivery Address The Hon Neville Wran AC QC Auditor ASX Perpetual Registrars Limited Blackett & Lewis Level 8, HSBC Tower Company Secretary 7 Help Street 580 George Street Ms Sharon Doyle CHATSWOOD NSW 2067 SYDNEY NSW 2000
Designed and Produced by Chrystello Design Pty Ltd Cabcharge Australia Limited Telephone: +61 2 9332 9222 152-162 Riley Street, East Sydney Facsimile: +61 2 9361 4248 NSW 2010 AUSTRALIA Web: www.cabcharge.com.au