Cabcharge announces $28.6m in CityFleet, taxi plate write-offs

By business reporter Thuy Ong

Cabcharge has announced write-offs totalling $28.6 million in a statement released to the ASX.

Of the write-offs, $20.7 million is on its 49 per cent stake in CityFleet Network UK, which has seen a deterioration in trading profit since August 2016.

CityFleet operates taxi, car and coach services throughout the UK.

A further $7.9 million in impairment is related to its taxi licence plate portfolio. Cabcharge noted that taxi plate licence income is continuing to adjust after regulatory reforms, and the company has increased the risk weighted discount rate for its portfolio of plate licences to reflect uncertainty.

Taxi owners paid about $300,000 to buy taxi plates in 2015 in order to work as drivers, but the monthly median transfer prices for a metropolitan taxi licence has dropped to around $150,000 in December 2016 according to the Taxi Services Commission.

“We are maintaining our focus on changing the shape of our business as we trade through a period of regulatory reform which will continue to rebase service fee income and plate values,” Cabcharge chief executive Andrew Skelton said in a statement.

“The fundamentals of the personal transport market remain strong and management is focused on transforming the company’s core business in payments technology and passenger service.

“In the context of an underserved market, we are actively looking at ways to improve service, cut waiting times and grow our quality fleet of affiliated vehicles.”

Cabcharge also said it is selling its 49 per cent stake in its joint venture CDC, and expects to receive net proceeds of $184 million after tax and other costs.

The taxi industry has seen a key part of its market taken over by ride-sharing app Uber and other ride-booking services which connect passengers to drivers via smartphone.

Uber’s services are on average just under 20 per cent cheaper than the equivalent taxi fare, according to Deloitte.

That has seen the taxi industry protest against Uber with drivers calling for more compensation to taxi operators.

Cabcharge is due to report its first half results on February 24.

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