Personal transport and digital payments company A2B Australia (ASX: A2B) is living out its comeback story after operations took a hit over the past two years. With the return of travelers, easing restrictions and digital payments boom, the Company is seeing its financials slowly return to pre-Covid levels.
In FY23, its revenue increased by 17.7% on FY22 to $147.3 million. Its statutory net profit after tax (NPAT) rose to $27.1 million after witnessing a $27.8 million loss. And its underlying EBITDA was up 313%, amounting to $20.1 million after seeing a $9.4 million loss in FY22.
A2B Executive Chairman, Mark Bayliss, who was appointed in March 2022, said, “The successful execution of our ‘BETTER BEFORE BIGGER’ strategy delivered a substantial turnaround in the business during the past 12 months, returning the Company to profitability and sustainable growth. Pleasingly, both fleet and fares increased, reflecting our focus on the key value levers for our drivers, operators, customers and team members. I want to thank our entire team for their dedication and commitment in delivering the change necessary to enable A2B to deliver on its potential.”
The total costs for A2B went down by $9.7 million, which is a decrease of 7.1%. This reduction in expenses compared to the previous year was mainly due to a cost decrease of $13.9 million. In FY22, after incurring massive losses, the Company let go of its loss-making segments, eliminated 99 vehicles from its fleet, and undertook a restructure.
In FY23, the Company received $2.3 million less in other income compared to the previous fiscal year, as the COVID-related financial support from the government was not repeated.
After reviewing its operations, A2B’s team managed to improve both the operational and financial aspects of the Company by concentrating on the main factors driving its revenue, which are the total number of vehicles in the fleet and the fares charged. In FY23, its total fleet size expanded by 14.2% to reach 7,803 cars by June 30, 2023. Additionally, the total fare earnings amounted to $854.4 million, which is approximately 87% of the levels seen before the pandemic (FY19).
Notably, the rise in fares and fleet size also contributed to better profitability for the drivers and operators associated with A2B. Plus, it also helped that the NSW government deregulated taxi license plates to help traditional taxi drivers address competition from services like Uber. Over the years, taxi license plates were devaluing, which also impacted the impairment losses for A2B. The subsequent compensation amounted to $1.6 million, included in its EBITDA.
In FY23, A2B capitalised on its strengths by investing in the growth of its core fleet brands, namely 13cabs and Silver Service, while moving away from the CHAMP brand and further streamlining its operations.
Bayliss added, “We did what we said we were going to do, selling the two Sydney properties to strengthen the Company’s balance sheet and ultimately return capital to shareholders. Our earnings guidance for FY23 was exceeded, with strong growth achieved in EBITDA, and we expect to continue the growth trajectory in FY24.”
As of June 30, the Company had $13.9 million net cash. It reinstated its dividends, commencing with final FY23 dividend of $0.05 per share fully franked. The Board plans on declaring a special dividend of $0.55 per share fully franked once the O’Riordan Street, Alexandria property is settled, expected in December 2023.
Heading into FY24, A2B’s fleet growth is continuing with 150 cars added since 30 June. Rising migration levels, an improvement in vehicle supply, along with the removal of restrictions on taxi license plates as a result of deregulation in NSW, signal hope for the Company. That said, it is still wary of some wider economic factors, like the recent decline in consumer spending, which may soften fares in the near term.
Alinda is a Business Reporter for The Sentiment
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