MACQUARIE TECHNOLOGY GROUP LIMITED — AGM Information 2003

Nov 25, 2003

MACQUARIE CORPORATE TELECOMMUNICATIONS HOLDINGS LIMITED

ANNUAL GENERAL MEETING

26 NOVEMBER 2003

SLIDE 1

Macquarie Corporate Telecommunications Annual General Meeting 26 November 2003

Ladies and gentlemen, welcome to the Annual General Meeting of members of Macquarie Corporate Telecommunications Holdings Limited. There clearly being a quorum present, I declare the meeting open.

SLIDE 2

Board of Directors

• Dr Jane Craig
• Aidan Tudehope
• Robert Kaye
• David Tudehope

Good morning. Thank you all for being here today. My name is John Priest, Chairman of Macquarie Corporate Telecommunications Holdings Limited. I would like to introduce you to the board members seated here with me this morning:

Dr Jane Craig – I'm delighted to introduce Dr Jane Craig to you, who today attends her first Macquarie AGM. Jane joined the Board in January this year. Jane is currently the Director of the Executive MBA Program at the Australian Graduate School of Management. She has extensive working experience with senior management teams at major companies and organizations in the banking, telecommunications, public utilities, insurance and government sectors. Jane holds a PhD in international strategic

management, a MBA and a Bachelor of Arts degrees. She is a member of the Audit and Risk Management Committee, and the Corporate Governance and Remuneration Committee.

Aidan Tudehope – Aidan is co-founder and Chief Operating Officer of Macquarie. He has played a key role in establishing and growing Macquarie's Singapore business and in developing our data hosting strategy. He is also responsible for the direction of the company's information technology strategy.

Robert Kaye – Robert is the former managing director of British Telecom's Australian operations and has more than 40 years experience in the telecommunications and information technology industries.

David Tudehope - David is co-founder and Chief Executive Officer of Macquarie. In addition to supervising the general management and strategic direction of the company, David is responsible for our sales and account management functions.

I'd also like to introduce Albert Koolmees, the Company Secretary.

SLIDE 3

Today's Agenda

• Chairman's Address
• Chief Executive's Address
• Ordinary & Special Business

BUSINESS OF MEETING

I'll take a moment now to outline this morning's agenda. First you will hear addresses from me and then from David. We'll give you a brief overview of Macquarie's recent performance and overall business strategy. Then we'll proceed to the ordinary and special business of the meeting.

ORDINARY BUSINESS

We will consider three items or ordinary business today:

• 1) The receipt of the financial statements statements and reports;
• 2) The election of Dr Jane Craig as a Director
• 3) The re-election of Robert Kaye as a Director

SPECIAL BUSINESS

And we will need to consider two items of special business:

• 1) An increase in the aggregate amount of remuneration that may be paid to Directors; and
• 2) The issue of options to Dr Jane Craig

OTHER BUSINESS

There has been no notice of other business validly given by any member under the Corporations Act 2001.

NOTICE OF MEETING

The notice of meeting was sent to all members. Can I take it that the notice of meeting convening this meeting is to be taken as read? Thank you.

MINUTES OF THE PREVIOUS GENERAL MEETING

The minutes of the previous general meeting of members of the company, which was the Annual General Meeting held on 27 November 2002, were approved by the Board and signed by the Chair of that general meeting in accordance with the provisions of section 251A of the Corporations Act 2001. The original minutes are tabled and there are copies of those minutes available for inspection by any member wishing to see them.

CHAIRMAN'S ADDRESS

SLIDE 4

Chairman's Address John Priest

Now we'll move on to a brief review of Macquarie's performance in 2003 and our business strategy moving forward. Most of this information is already covered in our annual report.

Macquarie delivered an encouraging operational and financial performance during the 2003 financial year

SLIDE 5

2003 Financial Highlights

• EBITDA profit of \$2.8 million, up \$18.4 million
• Total service revenue of \$234.5 million, up 2.7%
• Strong cash position of \$29.9 million
• Operating cash flow of \$10.1 million
• Historically low capex to increase in 2004

During the year Macquarie returned to EBITDA profitability, achieving an EBITDA profit of \$2.8 million. This result represents an \$18.4 million improvement over 2002. Even though our net loss after tax was \$4.7 million in 2003, that figure represents a $$13$ million improvement over last year.

These improvements were achieved against a backdrop of subdued business conditions in the IT&T industry and intense competition in all of our major markets.

We were able to identify, target and win significant new customers in every market in which we compete. Across all of our businesses, we generated total service revenue of \$234.5 million, an increase of $2.7\%$ over 2002.

We completed the 2003 financial year with a strong balance sheet. Our cash position increased to \$29.9 million. This is important as it gives us the capacity to seize opportunities as they arise. This cash position was supported by a strong operating cash flow of \$10.1 million generated by our increased profitability and the major improvements we have made in working capital management.

Our capital expenditures for the year were \$5.8 million – a bit less than $3\%$ of service revenue.

SLIDE 6

An evolving revenue base - from voice to data

• Voice revenue erodes, but earnings grow
• Data revenue jumps 50% to \$40.8 million
• New mobile business still in development stage
• Singapore revenue up substantially

While we've been able to maintain our overall top-line revenue – and even increase it a bit $(2.7%)$ – we also continue to be successful in reducing our overall cost base. That's particularly important in our traditional voice services business, which is most susceptible to price competition. We have improved our voice margins by reducing carrier costs through our successful alliance with PowerTel and by actively seeking more costeffective arrangements with other carriers and suppliers.

These initiatives resulted in a 2003 EBITDA improvement of \$7.5 million in voice services. That's a jump of 136% over last year. Our earnings rose even though our voice revenue fell 6% to just over \$182 million. The decline in revenue was largely due to the effects of price competition. We expect intense competition to continue to adversely affect voice revenues in the year ahead.

The decline in our voice revenue is now being offset by an increase in our highermargin, higher-value data services business. This business includes Macquarie's suite of data networking products and our data hosting facility in Sydney. Data service revenue in 2003 was almost \$41 million, a 50% increase over last year. Our data business has doubled its revenues over the past two years.

It is clear that data networking, data hosting and online services are becoming more and more critical for corporate and government customers seeking solutions to increasingly complex information and communications challenges. We offer a broad range of data products, and they are integrated with all of our other service offerings. That helps put us in a strong position to continue winning substantial and profitable business in the data services market.

The final piece of our full-service offering is Macquarie Corporate Mobile – our new mobile business, which was launched in January of this year. The key differentiator of our mobile service is its real-time reporting and management capability, which enables our customers to manage large fleets of mobile phones more easily and cost effectively. We're still in the early stages of establishing this business in a highly competitive mobile market. As a consequence, we expect that start-up losses for the mobiles business will continue to be incurred throughout the 2004 financial year.

Another relatively new business is Singapore, which was launched two years ago and continues to perform well. The business contributed annual revenues of just over \$11 million $-$ a 67% increase over last year. This good result was achieved despite the increasingly competitive nature of the Singapore market, which – like Australia in the mid 1990s – is deregulating at a fast pace.

SLIDE 7

Financial Highlights with graphs from left to right: EBITDA, cashflow, Data Services, Singapore]

Overall we see some very encouraging trends in our business and intend to build on them in 2004. As you can see, we made good progress in substantially increasing our earnings and cash flow in 2003. On the revenue side, Singapore continued to show promising growth prospects. Perhaps most striking of all, our data services business began to gain critical mass and establish itself as a significant contributor to our business – a trend that will become even more pronounced in coming years.

But even though our 2003 performance was encouraging, the Board recognises that further operational and financial improvements are still possible and we intend to pursue them aggressively.

As we look ahead, we are committed to building our substantial base of loyal customers, and pursuing even greater productivity and cost efficiencies across the entire organisation. We will maintain a disciplined approach to working smarter, increasing efficiency and boosting profitability.

Our strategy will remain focused on our strictly defined target market – corporate and government customers. This single-minded focus on the unique challenges facing corporate and government customers enables us to develop and deliver superior, integrated solutions. This is the heart of our value proposition. To truly succeed, we must become not just a supplier to our customers but an important strategic partner that is integral to the on-going success of their business.

Our return to EBITDA profitability is moving in the right direction. We maintain strong relationships with a large number of valued customers and with a broad range of important business partners and suppliers. And we have an enthusiastic and committed staff who are dedicated to delivering innovative IT&T solutions and extraordinary customer service.

On behalf of the Board, I wish to thank you – our shareholders – for your ongoing support over the past year. We look forward to serving you in the year ahead.

Now I'd like to turn it over to David, who will cover some additional points on operations and strategy.

$# # #$

CHIEF EXECUTIVE'S ADDRESS

SLIDE 8

Chief Executive's Address David Tudehope

Thank you John – and thank you all for being here this morning. We appreciate your interest and support.

Like John, I too am encouraged by our improved performance in 2003. There's a real determination among our management team and our staff to make even further progress in 2004 and beyond.

SLIDE₉ Macquarie's Strategy Today

The 2003 financial year was truly a milestone in Macquarie's evolution as a company. It marked the final stage of our development into an integrated IT&T carrier. For the first time we can now offer the full kit bag of communications services – voice, data, online and mobile – to our corporate and government customers in Australia and Singapore.

Our transformation is the result of the deliberate strategy we have followed over the past three years to diversify our business beyond voice and focus more on delivering the complex data, online and e-business solutions that our customers now value most.

As you all know, we have invested a substantial amount of time, effort and resources in building these capabilities. They are now a key differentiator for Macquarie when we compete for business against other carriers and service providers. They also allow us to take advantage of the wider margins and higher barriers to entry associated with advanced IT&T services.

Our 2003 results are evidence that our investments are now beginning to pay off. But we still have much work ahead if we are to seize the new market opportunities now open to us and realise the full potential of our new capabilities.

Adapting to rapid changes in the needs of our customers and the dynamics of our industry has been one of Macquarie's strengths throughout the 11 years we have been in business. During that time, no trend has been more pronounced than the emergence of data as the critical communications priority for businesses and organisations of all types and sizes.

Those of you who have followed Macquarie over the past several years know that our own development has mirrored this fundamental shift from voice to data.

We started out in 1992 as a provider of fixed-line voice services and innovative voice billing solutions to Australian corporations. By the mid-1990s – with email and the Internet beginning to take off – we began developing data communications products and in 1999 began building our own data network infrastructure. In the late 1990s, as businesses began expanding their online presence and e-business capabilities, and in late 2000/early 2001 we established the Intellicentre to enable our customers to outsource their data hosting and online services to Macquarie.

SLIDE 10 Australian Data Business

Today revenue from data services represents more than 17 per cent of Macquarie's total service revenue. As you can see, that percentage has been rising sharply in recent reporting periods. Our data services business delivered strong growth in 2003, increasing annual revenue to nearly \$41 million. This business will no doubt continue to represent an increasingly important element of our revenue mix in coming years.

We have built a talented team of data communications professionals and offer our customers superior technology. That combination has enabled Macquarie to build a strong reputation as a strategic business partner that offers advanced data infrastructure and multi-vendor flexibility, along with stringent data security protocols.

We have also been successful in establishing a range of channels with Logica CMG and other important industry partners. These partnerships enhance our marketing efforts and will provide more efficient sales channels for our data services business in the future.

SLIDE 11 Data Hosting - Intellicentre

It is particularly encouraging that the substantial investments we have made in the Intellicentre are now beginning to generate returns. The Intellicentre doubled its revenue and customer numbers in 2003 -admittedly from a small base.

The reputation of the facility was further strengthened this year with the highly regarded Gateway security certification from the Defence Signal Directorate. The Gateway certification recognises that the Intellicentre has the processes, systems and redundancy necessary to ensure the highest level of security and integrity for our customers' data. Many Government departments now require Gateway certification for suppliers seeking to provide Internet and hosting services. At this point, Macquarie is the only Australian telecommunications carrier to receive this prestigious security classification.

The Intellicentre also has important certifications and endorsements from the British Standards Institute, Sun Microsystems, and Microsoft. This type of recognition of the facility's technical and service excellence is extremely valuable when we are marketing the Intellicentre to corporate and government customers – almost all of whom are more

concerned now than ever before about hackers, computer viruses and other threats to the security of their data.

SLIDE 12 Australian Voice

Despite the emerging importance of data, our traditional voice services business still accounts for about 80 per cent of our total service revenue. We continue to be successful in differentiating our service through our billing and reporting capabilities. Our customers still place value on Macquarie's billing reports, which enable them to analyse their voice spending and identify underlying cost and usage trends.

It's likely that greater competition and ongoing pricing pressure will continue to reduce our voice revenue in coming years. We have been successful in offsetting this revenue decline by reducing carrier costs through the PowerTel alliance and by negotiating more favorable agreements with other carriers. But overall the trends in voice just serve to underscore the importance of our strategy to pursue higher-margin data and online businesses.

SLIDE 13

Macquarie Corporate Mobile

Another potential growth opportunity we are pursuing is our new Macquarie Corporate Mobile service, which we see as the last major component of what is now a truly integrated, full-service communications offering. We launched the service at the beginning of the year and began billing customers in March.

The early response has been very positive. Customers appreciate our simple, competitive pricing plans and transparent, easy-to-understand billing. They also recognise the power of FleetView, which is a real-time, web-based management and reporting tool that

enables them to manage each individual handset in their mobile fleet and monitor and control mobile costs across their entire business.

We will continue in 2004 to invest in our mobile services. As we build our business in this competitive market segment, it is likely that the start-up losses of \$1.6 million incurred in 2003, mainly in the second half, will continue into the current financial year, with a full year's impact.

We are marketing our mobile services to our existing base of fixed voice customers. Unfortunately, we were unsuccessful recently in tendering for a combined voice and mobile telephony contract with the New South Wales Police Service. As a new mobile operator, we have yet to be placed on the NSW Government's Mobile Panel. You may recall that we won the voice contract with the NSW Police Service in October of 2001. We built a strong relationship with them and they told us on a number of occasions over the past two years that we were doing an excellent job.

SLIDE 14 Singapore Business

In Singapore, revenues grew to more than \$11 million during the 2003 financial year, despite significant pricing pressures brought on by the rapid deregulation of this market. Our offering in Singapore is differentiated by our flexible billing and management reporting – just as it was here in Australia during the early days of deregulation.

As at 30 June, we were serving more than 450 customers in Singapore. The business adds an important dimension to our service offering. It helps us attract and retain Australian companies expanding into Asia - as well as multinationals that require integrated communications service for their regional operations.

SLIDE 15

Macquarie Corporate Telecommunications Annual General Meeting 26 November 2003

As I said at the outset, I am encouraged by our improved performance in 2003. There's a real determination among our management team and staff to make further progress in 2004 and beyond.

I would like to thank the management team and Macquarie's entire staff for their hard work during the past year.

Thank you for being here today.

Now I will turn it back over to John to conduct the business of this meeting.