Shares of embattled taxi payment company, Cabcharge Australia Limited (ASX: CAB), traded mostly flat today despite the announcement of its half-year results this morning.
In the six months to 31 December 2014, Cabcharge's revenue fell 2.1% to $100.4 million, whilst a net profit after tax, or NPAT, of $31.19 million was reported, down 13.4% over the prior corresponding period.
The company said its top line (revenue) decrease reflects the effect of a price cap on service fees in both Victoria and New South Wales, and a lower contribution from Associates. The loss of bus contracts in Sydney, and implementation costs associated for a new contract saw Cabcharge's share of profits from Bus & Coach services fall $3.26 million, or 30%.
An interim dividend of 10 cents per share fully franked was declared, down from 15 cents in the prior corresponding period. It is payable on 29 April 2015.
Cabcharge CEO, Andrew Skelton said, "We are re-energising our approach to taxi services and are building a platform from which to improve customer interactions across each of our taxi networks. There are pleasing early signs of fleet growth and a broadening of network offerings which should flow through to revenue improvements in future periods."
Looking ahead he said, "The remainder of this financial year will see the full impact of Government changes introduced in Victoria, NSW and Western Australia. We will actively continue to review our cost base in light of the revenue challenges we face. The enduring solution to our challenges will come from new revenue streams and we are determined to leverage our payments expertise outside the taxi industry."
Cabcharge operates in a highly political – therefore regulated – industry which is currently in a state of transformation. It's facing threats from innovative personal transportation services like Uber and at risk of technological disruption. This has been reflected in the group's volatile share price over the past five years.
Cabcharge (ASX: CAB) share price over five years. Click to Enlarge. Source: Google Finance.
Could it be a bargain?
Cabcharge will look to consolidate its taxi network operations into a single set of technologies this year, to reduce costs and improve services. It said it'll also look to grow its presence in other areas – something which can be good and bad. Although it is currently trading on just 10x earnings per share, its dividend is quickly drying up and it doesn't look to be a good long-term investment.
