Cabcharge posted 45% fall in full year profit to $25.61 million as it writes down the value of its taxi licence portfolio and gets hit by new regulations for lower service fees.
A short time ago, Cabcharge shares were down 3% to $3.55.
The disruption to the industry, by the likes of ride sharing service Uber, saw Cabcharge book a non-cash impairment charge of $27.7 million on its taxi plates.
Revenue, from taxi networks and from Cabcharge’s payment system, was down 10.2% to $168.80 million.
State governments across Australia have been legalising riding sharing services and offering compensation to drivers who may lose out from the falling value of taxi plates.
Victoria is the last Australian state to announce the legalisation of ride-sharing. NSW and the ACT introduced it last year, followed by SA and WA. Ride-sharing starts in Queensland next month and legislation is currently going through Tasmania’s parliament. The Northern Territory does not have Uber.
The states have also been capping the fees for Cabcharge services. The introduction of a 5% cap on non-cash taxi fare service fees in Western Australia and New South Wales hit income for a full year for the first time. Queensland is now following with its own 5% cap.
Here’s how government regulations have shrunk service fee income for Cabcharge:
“Despite the regulatory focus on the industry and aggressive competition, Cabcharge has increased the value of taxi fares it processes at a compound annual growth rate of 2.9% over the past five years,” says CEO Andrew Skelton.
“Our payment model will now evolve to focus on growth and winning market share.”
Cabcharge now has its own smartphone app. ihail allows passengers to hail the nearest registered taxi with an option to pay through the app.
“We’re now focused on the quality of service for passengers and have made large strides to improve the certainty of service for taxi passengers with faster pick up times and launching Passenger Connect which enables drivers to call passengers on approach,” says Skelton.
The company declared a fully franked final dividend of 10 cents, bringing the full year payout to 20 cents a share, in line with 2015.
The 2016 results in detail: