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. >> 6 >> << ................. ................ ........................................ ......... .................. ...................... .......................... .................... .................... .................... ...................... ...................... ...................... ....................... ....................... ....................... ................................. ...................... ...................... .................... < ....... ....................... ....................... ....................... ........................................ ........................................ ........................................ ........................................ ........................................ ...... ....................... .............................. ....................... ....................... .............................. ....................... ................................ ........................................ ........................................ ........................................ ........................................ ....................... ....................... ....................... ....... .................... ...................... ...................... ................................