22/09/11 8:38 AM

Cabcharge Annual Report 2011 H50778 Cover.indd 1 Highlights 2

About 6

Executive Chairman’s Report 8

Corporate Social Responsibility 12

Directors’ Report 16

Corporate Governance 26

Financial Statements 31

Corporate Directory 68

Cabcharge Annual Report 2011 1 Highlights

Financial Operational

• Strong Profit result despite difficult economic conditions. NPAT • National rollout of new EFTPOS terminals completed. (before non-recurring items) up 6.1% to $61.1m.

• Successful launch of contactless Cabcharge FASTCARD™ • Reported Net Profit after tax of $46.1m. provides fast, safe and secure payment system.

• Total Revenue up 5.8% to $184.5m. • FASt eTICKET (contactless eTICKET) pilot is in progress.

• Successful rollout of MTData taxi dispatch system which has • Total FY11 dividend of 30¢ per share fully franked. been accepted by operators and drivers in Black Cabs group (VIC) and CCN group (NSW).

• Strong growth in fleet numbers in and • Taxi Services revenue up 8.4% to $83.6m. Victoria.

• Effective diversification strategy – Associates now contribute • Won more software contracts through EFT Solutions – 24.4% of Group Profit. Australia Post, 2 major retailers, 3 major banks.

• Successful rollout of new Askari Security Cameras, developed in-house that meet new regulatory framework in NSW.

2 Cabcharge Annual Report 2011 Revenue ($m) E BITDA ($m) 98.3 94.8 92.2 91.6 184.5 174.5 173.6 172.9 80.1 150.9 130.7 62.3 113.5 48.1 100.3 89.8 39.5 32.9 63.9 25.7 49.3 20.2 ^ 2011 2011 2010 2010 2001 2001 2007 2007 2005 2005 2002 2002 2008 2008 2003 2003 2006 2006 2004 2004 2009 2009

Profit after Tax ($m) Earnings per share (cents) 51.0 50.7 50.3 47.8 61.1 61.4 44.9 59.0 57.6 51.8 33.9 38.0 24.8 27.8 20.6 18.0 23.1 20.3 14.7 16.1 11.5 12.5 ^ ^ 2011 2011 2010 2010 2001 2001 2007 2005 2007 2005 2002 2002 2008 2008 2003 2006 2006 2003 2004 2004 2009 2009

^ Before non-recurring items - ACCC settlement (see note 39)

Cabcharge Annual Report 2011 3 Highlights cont.

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 CAGR# Financial Performance ($m)

Turnover 545.4 588.1 645.7 693.5 779.3 883.3 1,024.9 1,149.7 1,130.9 1,096.5 1,131.6 8% Revenue* 49.3 63.9 89.8 100.3 113.5 130.7 150.9 172.9 173.6 174.5 184.5 14% EBITDA** 20.2 25.7 32.9 39.5 48.1 62.3 80.1 92.2 94.8 91.6 98.3^ 17% EBIT** 17.1 21.2 26.4 30.6 36.8 53.0 72.0 83.9 86.4 81.1 85.8^ 18% Profit after Tax 12.5 16.1 20.3 23.1 27.8 38.0 51.8 59.0 61.4 57.6 61.1^ 17%

Financial Position ($m) Total assets employed 110.4 137.8 145.8 158.4 168.9 229.1 310.2 380.8 418.9 447.9 479.0 16% Capital and reserves 96.0 103.5 120.6 126.7 140.0 156.7 217.6 263.4 279.7 294.9 306.8 12%

Per share (cents) Earnings per share - basic 11.50 14.70 18.00 20.60 24.80 33.90 44.90 50.30 51.00 47.80 50.70^ 16% Earnings per share - diluted 11.50 14.60 18.00 20.60 24.80 33.90 44.90 50.30 51.00 47.80 50.70^ 16% Ordinary dividends per share 8.00 10.00 12.00 13.75 17.00 23.00 30.00 34.00 34.00 34.00 30.00 14% Net assets per share 85.8 90.4 104.6 106.2 114.7 139.1 185.0 213.1 221.3 233.9 243.8 11% (ex goodwill)

Key ratios (%) Earnings per share growth 30 32 23 14 20 37 32 12 1 -6 6^ Return on contributed equity 18 22 27 32 38 53 46 43 44 42 44^

4 Cabcharge Annual Report 2011 Ten year share price performance versus all ordinaries index

180%180% 160%160% 140%140% Cabcharge % Change 120%120% 100%100% 80%80% 60%60% 40%40% All Ordinaries Index % Change 20%20% 0%0% -20%-20% -40%-40%

Figures presented in tables and graphs for years 2005 onward are expressed on the basis of AIFRS Standards while earlier years are per previous AGAAP # CAGR is Compound Annual Growth Rate over the 10 year period * Revenue in 2009, 2010 and 2011 excludes interest income ** EBIT (Earnings Before Interest and Tax) and EBITDA (EBIT before Depreciation and Amortisation) are shown inclusive of equity accounted share of profit of associates ^ Before non-recurring items - ACCC settlement (See note 39) ^ Before non-recurring items - ACCC settlement (see note 39)

Cabcharge Annual Report 2011 5 About Cabcharge

Cabcharge is an Australian Company devoted to innovation in particular focus on customer protection and ease of payment the Taxi Industry. It was established by the Taxi Industry in 1976 for drivers. as a financial services provider for the Industry. Its first priority was to improve convenience and security for passengers and In Australia, Cabcharge’s customer base spans accounts drivers through providing a national alternative payment system ranging from large corporations and government bodies to to cash. It was listed on the Australian Stock Exchange in small businesses and individuals. Cabcharge holds merchant December 1999. Today it is a diversified Australian technology, agreements with a range of Taxi Companies. financial services, taxi payments and passenger land transport Company. It also develops and manufactures in-taxi equipment. When the Company listed on the ASX, a wide range of Taxi Throughout its history, Cabcharge has had a strong community Industry participants including Taxi Networks, operators, focus, especially in relation to assisting the Taxi Industry to drivers and staff took the opportunity to become shareholders improve services to those with mobility constraints. in Cabcharge at a share offer price of $1.05 and many of them remain shareholders today. The Cabcharge payment system is still core to what we do and today the Cabcharge electronic payment system is found in In 2008, Cabcharge established EFT Solutions which develops approximately 97% of Australian taxis as well as limousines payment system software for other clients, including major and water taxis. In addition to Cabcharge products, it processes banks and retailers, as well as for the Cabcharge system. all credit and debit chip and contactless cards, as well as those This has placed us at the forefront of this area of technology with magnetic stripe. This includes bank issued cards such as development. MasterCard and Visa and third party cards such as AMEX. While some vehicles choose to have additional hand held terminals Growth and diversification into from other suppliers, these do not provide the same range related markets have long been of features which includes taxi integration, GPS, trip details capture and contactless processing capability. We source and priorities for Cabcharge and build the in-vehicle equipment which is world class with a remain so.

6 Cabcharge Annual Report 2011 Combined Communications Network in became a wholly Cabcharge has a longstanding relationship with ComfortDelGro, owned subsidiary of Cabcharge in January 2002. It provides one of the largest land transport companies in the world. booking and dispatch services for Taxis Combined Services, Together we own CityFleet UK, on the same basis as CDC. Yellow Cabs, ABC Taxis, South Western Cabs and Silver It provides account, booking and dispatch services for taxis Service. It also provides a wide range of additional services to and private hire vehicles in , , Aberdeen, taxi operators in these fleets including vehicle leasing, loans, Birmingham and Liverpool. insurance, smash repairs and driver training. In addition, it operates Zero 200 on behalf of the Taxi Industry which provides The success of Cabcharge has stemmed from its commitment booking and dispatch services for all Wheelchair Accessible to look ahead, seek new opportunities to grow, invest in Taxi Service (WATS) vehicles in metropolitan Sydney. Black leading technology and set consistently high standards. This Cabs, Melbourne’s second largest taxi company, was acquired commitment continues to ensure Cabcharge’s position as an in March 2003. This was followed by Newcastle Taxis and industry leader. We share this vision and commitment with our Melbourne’s Arrow Taxis. joint venture partner.

In 2005 Cabcharge, together with ComfortDelGro Corporation Our initiatives in relation to contactless payments technology Limited (Singapore), formed a joint venture company, demonstrate that we are still at the forefront of a very ComfortDelGro Cabcharge Pty Ltd (CDC) – with ComfortDelGro competitive market in the Taxi Industry. New opportunities owning 51 percent and Cabcharge 49 percent of the business. are continually emerging for us in different areas, for example, It purchased the Group and later the Baxter private innovative technology in taxi meter and camera products, bus business and Toronto Bus Services. CDC is the largest further development in other modes of transport such as buses, private bus operator in Australia and operates under brands that and expanding into new geographic centres. We examine each include Westbus, and . In 2009, CDC opportunity on the basis of its value to our shareholders. purchased the Kefford Group in Victoria. The total CDC fleet was 1548 buses as at 30 June 2011.

Cabcharge Annual Report 2011 7 Executive Chairman’s Report

On behalf of the Board, I am pleased to report for the 2011 financial year that we have again delivered a solid performance for shareholders. Profit before non-recurring items (NRI) is up 6.1% to $61.1m from $57.6m in 2010. Earnings per share (before NRI) has also rebounded to 50.7 cents from 47.8 cents in 2010 – an increase of 6.1%. Reported net profit after tax was $46.1m.

These results are driven by a combination of revenue growth On the Taxi Services side of our business, we are also pleased and careful attention to controlling our operating costs. with the strong revenue growth of 8.4% from $77.1m to $83.6m. Group revenue grew from $174.5m to $184.5m, an increase of Our Sydney, Newcastle and Melbourne taxi fleets, where the 5.8%. EBITDA and EBIT (before NRI) are up by 7.3% and 5.8% Group provides taxi network services, are popular fleets and respectively. The results are particularly encouraging given the we continue to see good growth in fleet numbers. In FY2011, ongoing difficult economic environment, with overall corporate we have made a major investment in new dispatch and in-car activity sluggish and business and consumer confidence at an equipment for our fleets. The new MTData dispatch technology extremely low level. Our Group’s overall performance in tough replaced ageing equipment which was beginning to become times demonstrates the ongoing resilience of our business expensive to maintain. We did have very good value out of the model including our diversification strategy. old system, but it was time to move on and the MTData system has been well received by taxi operators and drivers. Your Board has declared a final dividend of 20 cents per share, a full year total of 30 cents per share fully franked. For the final Equity accounted income from our associates increased by dividend, we have set a record date of 30 September 2011 and 16.6% from $12.8m to $14.9m. This is an excellent contribution payment date of 28 October 2011. to our result, and once again demonstrates the foresight of our diversification strategy to expand into the broader In the tough market conditions, we were pleased to see good passenger land transport sector. In total, the contribution quality revenue growth from the Cabcharge Payment System from our associates represents 24.4% of our Group’s profit in business while maintaining the gross service fee margin at FY2011 (22.2% previous year and 18.2% in the 2009 year). This 9.2%. Total Payment System turnover increased to $1.033 contribution as a proportion of our Group’s total profit has been billion, up 2.8% on 2010. A most pleasing trend from the 2010 increasing as we continue to reinvest the strong profits of our year, which we have further improved in 2011, is the relative associates to support the growth of those businesses. The bus strength of the Cabcharge branded cards and related products. business of our associate, ComfortDelGro Cabcharge Pty Ltd Cabcharge branded card turnover increased by 5.8% to $423m. (CDC) has demonstrated excellent growth in profit contribution, Turnover from bank issued cards increased to $473m, up 3.7%. up 20.9% from $10.9m to $13.2m. We have reinvested in the Turnover from third party cards declined to $137m. We are business of CDC as the opportunities for growth have been, and working constructively with AMEX to strengthen our long term continue to be, excellent. We are particularly pleased with the relationship. progress of CDC with its growth in services and improvements in operational management. We see the turnover growth in Cabcharge branded cards as a clear endorsement of our latest technological advances in card Our UK associate business, CityFleet UK, has had another payment technology. As I foreshadowed in the 2010 Annual challenging year with the weak UK economy and of course the Report, we have now completed installation of the latest continued strength of the Australian Dollar versus the British technology EFTPOS terminals in taxis throughout Australia as Pound. The equity accounted NPAT contribution from the UK well as rolling out contactless FASTCARDs to all our Cabcharge was $1.7m compared to $1.8m in 2010. account customers. The feedback has been good – but the proof is in the dollars processed through the terminals. We consider Costs of the Cabcharge Group have been carefully controlled, that, in a market characterised by low levels of confidence and with limited areas of cost increase. In operating costs, we consumers being cautious with their discretionary spending, 5.8% have higher depreciation charges as a result of our capital growth in Cabcharge card turnover is a very positive outcome for expenditure on the new terminals and 2011. It has been our goal to achieve a rebound for our Cabcharge the MTData dispatch system. As a non-recurring cost item, brand, and we are very encouraged by this early success. we made a $15m settlement payment to the ACCC in a matter

8 Cabcharge Annual Report 2011 that was dealt with at length in my 2010 Chairman’s Report. We are pleased to have the matter settled as it now allows management to focus its efforts entirely on the business and constructive compliance rather than protracted legal disputes. We are acutely aware of our compliance obligations that were set out in the Federal Court Order and we have now established all the steps necessary to meet the compliance program.

Operations Review

Great progress has been made with our introduction of contactless technology to the Taxi Industry across Australia, putting Cabcharge at the forefront of such development nationally. Contactless technology is convenient, safe and easy to use for both consumers and taxi drivers.

The contactless FASTCARD was successfully launched and by 30 May this year, ahead of schedule, all existing Cabcharge account holders received their new card, replacing the Cabcharge silver card.

The rollout of the new Cabcharge terminals was completed and provides the platform for processing all bank issued contactless cards. The next stage involves activation of EMV capability which will process fare payments from all cards displaying the MasterCard PayPass logo or Visa payWave logo simply by tapping the card against the contactless symbol on the terminal. Activation commenced in June 2011. We are very pleased with the growth in the number of contactless transactions to date. We are currently working with AMEX to meet their scheduled deadlines in implementing contactless functionality for their cards.

As well as the core booking and dispatch services, other products and services provided by our Networks to taxi operators proved very popular including vehicle funding and our expanded range of taxi related in-vehicle equipment. Stratacom of course is kept extremely busy with fit outs of new and replacement taxis in addition to “decabbing”. Stratacom also fits Verifeye and Askari cameras and a range of meters including Novax, Schmidt, Cabcharge and Digitax.

The Askari in-vehicle camera, designed by our in-house Europa team, was introduced during the year and, to the best of our knowledge, is currently the only camera in NSW which has been independently certified as complying with Transport for NSW’s specifications. We are seeking similar accreditation in Victoria which has recently upgraded their camera specification and are in close contact with other States and Territories currently reviewing their camera specifications.

We also continued to expand our services to consumers. Following the popularity of our innovative and Award-winning iPhone taxi booking application which was developed in-house, we were the first to market with Android and Windows smart phone applications. It is these types of products that make our subsidiary Networks popular with both consumers and our Operators and Drivers.

Cabcharge Annual Report 2011 9 Executive Chairman’s Report cont.

Our venture into the Private Bus Industry has not only been a With the major card issuers and banks focused on encouraging great success but has shown us that diversification combined the use of cards over cash with contactless technology for with the necessary level of investment in infrastructure and transactions under $100, we expect to see increasing consumer technology will result in significant growth. The CDC fleet in acceptance of this form of rapid payment for taxi fares over NSW and Victoria grew by 110 buses to 1,548 buses at 30 June time in preference to cash. Both MasterCard and Visa have 2011. In NSW, the service kilometres under the Government been vigorously marketing the use of contactless cards, with bus contracts continued to increase with the introduction of the latest television ads featuring their use in taxis. We expect the Hunter Valley Buses Integrated Bus Networks in November AMEX to follow. This complements our own marketing efforts 2010 and the services in Sydney – the M61 service and will assist in educating consumers, account holders and taxi between Castle Hill and the City in December 2010 and the drivers on the benefits and security of contactless technology. In M60 service between and Hornsby in March 2011. relation to Cabcharge account holders we are adopting a much In Victoria, the urban contracts for Ballarat and Geelong were more proactive approach given our success to date and continue successfully renegotiated with 7+3 year terms which started on to reinvigorate our sales and service model. 1 July 2011. In both States we have a strong focus on charter work which has and will continue to result in significant growth Our product innovation has continued with our contactless for this part of the business. FASteTICKET which has been developed to complement the FASTCARD – the FASteTICKET being a single-use product. CDC also recently received the 2011 Australian Business Award Field piloting is in progress and we will be gradually increasing for Project Management in the Road Passenger Transport issuance with 10 million tickets on order along with customised Industry. This Award for the St Marys and Foundry Road chip packaging together with a special printing process to depot developments recognised the outstanding achievement enhance security. It will be another world first in the Taxi of CDC in improving operational capacity which facilitated Industry and we anticipate considerable interest from other improvement of bus services for the whole community. New countries, particularly because of the security features. depots and improvements at other depots also provide a much improved working environment f