MACQUARIE TECHNOLOGY GROUP LIMITED — AGM Information 2004

Nov 28, 2004

MACQUARIE CORPORATE TELECOMMUNICATIONS HOLDINGS LIMITED ANNUAL GENERAL MEETING MONDAY, 29 NOVEMBER 2004 CHAIRMAN'S ADDRESS

Ladies and gentlemen, good morning. I'm Robert Kaye. This is my first opportunity to talk to you as Chairman of Macquarie Corporate Telecommunications Holdings Limited, and I would like to extend a warm welcome to shareholders to the Annual General Meeting for 2004.

You might notice we have a new name! We will tell you more about that today as well.

INTRODUCTION OF BOARD

I would like to introduce you to the board members seated here with me this morning:

David Tudehope - David is co-founder and Chief Executive of Macquarie Telecom. In addition to supervising the general management and strategic direction of the company, David is also actively involved in Macquarie Telecom's participation in regulatory issues.

Aidan Tudehope - Aidan is co-founder and Chief Operating Officer of Macquarie Telecom. He has played a key role in establishing and growing Macquarie Telecom's Singaporean, data networking and Intellicentre strategies. Aidan is also responsible for the design and delivery of operational excellence within Macquarie Telecom.

Also joining us this morning are our two new Non-Executive Directors, John Palfreyman and Stephen Butler. I will have a few more words to say about John and Stephen later in the meeting.

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

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 Telecom'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 four items of ordinary business today:

1. The receipt of the financial statements and reports

2. 1. The election of John Palfreyman and Stephen Butler as Directors; and
3. 1. The re-election of Aidan Tudehope as a Director.

SPECIAL BUSINESS

We will need to consider three items of special business:

• 1. A change in the company's name; and
• 1. The issue of options to John Palfreyman and Stephen Butler

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 26 November 2003, have been approved by the Board and signed by the Chair. The original minutes are tabled and are available for inspection by any member wishing to see them.

ADDRESS

At last year's AGM we said that Macquarie Telecom was beginning to realise significant benefits from the strategy of repositioning the company as an integrated information technology and telecommunications carrier.

I'm pleased to report to shareholders that 2004 certainly saw further improvements in Macquarie Telecom's operational and financial performance. Our business fundamentals continued to improve during the 2004 financial year.

And 2004 has indeed also seen the company realise further benefits through executing our strategy to position Macquarie Telecom as an integrated information technology and telecommunications carrier

During the year, we continued to evolve into not just a supplier to our customers, but an important strategic partner critical to the success of our customer's businesses. Our strong, loyal and growing customer base is evidence of the success of this strategy.

I'd now like to spend a few moments reviewing the more detailed financial results.

The 2004 financial year contained a number of highlights.

• $\blacksquare$ Macquarie Telecom achieved an EBITDA profit of \$7.9 million. This was a commendable result and represented a \$5.1 million improvement over the previous year
• The net loss after tax was \$787,000, representing a significant improvement when compared to the previous vear's net loss after tax of \$4.7 million
• Macquarie Telecom generated service revenue of \$226.9 million, across all our businesses $\bullet$
• As we have anticipated, voice revenues continued to decline and in 2004 were at \$161.6 $\blacksquare$ million, from \$182.2 million in 2003. Macquarie Telecom's traditional voice business was again characterised by intense competition and industry-wide price pressure on both new and renewable business. We continued to pursue reductions in carrier costs to protect our margins in voice, and to seek out opportunities to reduce our overall cost base, improve our margins and boost profitability
• $\blacksquare$ The decline in our voice revenues has been partially offset by an increase in our data service business.
• Data service revenue was \$51.1 million in 2004, a 25.3% increase over last year.....this $\bullet$ was a strong growth result
• Our data services business achieved an EBITDA profit of \$4.2 million, an improvement of \$7.5 million over 2003. We are encouraged by the Company's continually improving revenue mix, with less reliance on voice services. We are confident this momentum in data revenue will be maintained

• Our early investment in the Intellicentre and pursuit of high levels of accreditation for this facility are now delivering positive growth. This has been fuelled by the convergence in telecommunications and emerging complex electronic security requirements. In fact, and its certainly fair to say, we are experiencing increasing recognition by our customers of the benefits of our dedicated world-class hosting facility

• Mobile revenues grew in 2004 to \$4.1 million in a highly competitive mobile market. The mobile business makes an important strategic contribution to the competitiveness of the overall Macquarie Telecom business model and our ability to provide a complete range of services, and we are confident our mobile offering will continue to grow

• Our Singapore business continues to fight fierce competition, an adverse pricing environment, and entry barriers to some telecommunications services. These challenges will continue in 2005
• Macquarie Telecom continues to maintain a solid balance sheet, with a strong liquidity $\blacksquare$ position of \$31.8 million in cash and no debt at 30 June 2004. This will enable Macquarie Telecom to execute important new investments and to pursue further growth opportunities in the coming year

I wanted here to highlight for shareholders the solid growth path Macquarie Telecom has had during the past 3 years. The strategies management and the Board have adopted have delivered this improvement. I will come back to the EBITDA outlook shortly.

I'd like now to spend a few moments discussing the company's future. During the year, the senior management team, and the Board, dedicated an enormous amount of time defining our road-map for future growth and profitability, and detailing strategies to drive the company down this path.

The road-map is now defined and the strategies detailed. We now enter the phase where we lay the foundations to deliver on this strategy. It is now critical that we invest in the future.

In the coming year, Macquarie Telecom will continue to invest significant resources, both operating and capital, to position the company for further growth. This investment is crucial to the ongoing enhancement of Macquarie Telecom's capability to meet its customer's increasingly sophisticated IP based needs.

I'd like to touch on the key areas for capital and operational investment.

Firstly, Macquarie Telecom has commenced a capital investment program to establish a Metro Access Network. This network will position Macquarie Telecom as a full service carrier and provide both a reduced cost base and a high degree of self-reliance. And it will enable the Company to leverage the increasing convergence of voice and data communications. Chief Executive David Tudehope will give you more details on the Metro Access Network shortly.

Secondly, Macquarie Telecom will further invest in security, a key opportunity for differentiation for us.

Thirdly, we will be investing in building the Macquarie Telecom brand. David will give you more details on these initiatives in a few moments.

And fourth. Macquarie Telecom has also decided to commence a capital investment program to build a new generation voice and data network to service the Asian region in response to demand from its multi-national clients.

The new regional network will compliment existing network capabilities in Australia and Singapore, will leverage the considerable customer base in each country and will build upon the Australia Metro Access Network Project. This initiative to expand Macquarie Telecom's regional capabilities will require a capital investment of approximately \$4 million, of which approximately one quarter will be spent in this current financial year.

These areas of capital investment and our decision to increase our investment in security and data expertise are important to position the company as an integrated information technology and telecommunications carrier into the future.

Capital expenditure for the current financial year is expected to be approximately \$20 million.

OUTLOOK

These exciting projects will lay a solid foundation for Macquarie Telecom's future growth and enhanced profitability in the medium term. As demonstrated earlier when I showed the slide of EBITDA growth in recent years, Macquarie Telecom has delivered a track record of profit growth. However, at this point in time, we need to accelerate the investment for the future, and I am confident we will build on growth momentum once we have done so.

As announced in August this year, these investments will impact Macquarie Telecom's EBITDA profitability in the short term. EBITDA in the first half of the current financial year is expected to be around breakeven and not exceeding a \$1 million loss. Second half profitability is expected to position earnings back on a growth path, but because these investments extend into the second half of the year, EBITDA for the second half will be less than that achieved in the second half of the last financial year.

BOARD CHANGES

I'd like now to touch on a number of changes to the Board which took place during the year.

In July, John Priest retired from the position of Chairman of the Board, a role he had held since 2001, and Dr Jane Craig, a Non-Executive Director since 2003, also retired from the Board. John Priest's chairmanship saw Macquarie Telecom develop into a professional company, and Dr Jane Craig's technical expertise in management and planning was invaluable. We wish them well.

I have taken on the role of Chairman, having been a Board member since 2001.

We are pleased to welcome Stephen Butler and John Palfreyman who have joined the Board as Non-Executive Directors. Each brings a wealth of experience in emerging technologies, telecommunications and Australian industry and corporate practice. These will be essential as Macquarie Telecom faces new challenges in its next phase of development.

Some brief background on each.... Stephen Butler is currently executive vice president for S3 Matching Technologies, a telco billing systems specialist based in Texas, He was formerly CEO of PowerTel Limited, a position he held for more than three years until 2003. Welcome Stephen.

John Palfreyman brings more than 20 years of IT experience to the Macquarie Telecom board. His past experience includes a role as executive chairman of 90East Inc, an Australian supplier of managed security services to Federal Government agencies. Very relevant experience for Macquarie Telecom. Welcome John.

I'll ask both John and Stephen to say a few words to you a little later.

Ladies and Gentlemen, in summary, our focus remains on the execution of our newly defined strategies. We are committed to building our customer base and becoming an integral part of our customer's businesses. We are dedicated to improving our efficiency, competitiveness and performance, and enhancing our depth and breadth of expertise. And we enter the new financial year confident we have a strong customer base upon which to build. We believe we have the strategies and the momentum in place to position Macquarie strongly in the evolving and converging telecommunications market.

In closing, I would like to thank management, staff and shareholders of Macquarie Telecom for their support during the year.

Ladies and gentlemen, that concludes my address today. It now gives me great pleasure to hand over to David Tudehope for the Chief Executive's report. David.