MACQUARIE TECHNOLOGY GROUP LIMITED — Earnings Release 2007

Aug 28, 2007

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29 August 2007

Macquarie Telecom Reports 2007 Full-Year Results

Key Points

• Macquarie Telecom achieved a full-year EBITDA profit of $11.3 million for the twelve months ended 30 June 2007, a 150% improvement on the twelve months ended 30 June 2006 (“corresponding period”).

• The result exceeded expectations with all lines of business achieving EBITDA

• profitability.

• Total service revenue was up 2.3% to $254.6 million.

• Data & Hosting service revenue was up 8.0% to $72.2 million, with the hosting business performing strongly.

• Mobiles service revenue was up 25.5% to $26.4 million.

• Voice revenue was down 2.8% to $145.1 million, withstanding an aggressive pricing environment. The voice result also reflected Macquarie Telecom’s changing focus towards higher-margin businesses.

• Macquarie Telecom maintains a healthy balance sheet, with strong operating cash flows of $14.3 million, and cash and cash equivalents of $20 million as at June 30.

Australian carrier Macquarie Telecom (ASX: MAQ) today announced that earnings before interest, tax, depreciation and amortisation (EBITDA) rose to $11.3 million in the year ended June 30, from $4.5 million in the corresponding period.

The EBITDA result exceeded expectations and all lines of Macquarie Telecom’s businesses were profitable on an EBITDA basis. The result reflects benefits derived from Macquarie Telecom’s significant investment program that has positioned the company for future profitable growth. The investment program has been vital in enhancing Macquarie Telecom’s ability to meet its customers’ increasingly sophisticated IP-based needs.

Total service revenue of $254.6 million was 2.3% higher than the corresponding period with improved revenue mix and bigger contributions from both Data & Hosting and Mobiles. Macquarie Telecom now provides services to approximately 3,000 corporate and government customers in Australia and Asia .

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Macquarie Telecom Chairman Robert Kaye said: “Macquarie Telecom is performing well. The Data & Hosting and Mobile business units performed strongly, while voice services held up in a competitive market dominated by lower prices. The EBITDA result exceeded expectations, and I am especially pleased that our highly accredited Hosting business has maintained momentum.”

Data and Hosting EBITDA profit grew to $6 million in 2007 from $0.8 million in the corresponding period, and contributed 28.3% of total revenue.

Voice EBITDA profit increased 32.2% from the previous corresponding period to $10.7 million in a highly competitive environment characterized by aggressive pricing. Chief Executive David Tudehope said: “Macquarie Telecom is continuing to defend its Voice revenue and boost Voice profitability whilst increasing our focus on Data and Hosting services”.

The following tables summarise the revenue and EBITDA performance of Macquarie Telecom’s major lines of business for the past three comparable reporting periods.

REVENUE (A$ million)	Full Year 2005	Full Year 2006	Full Year 2007
Voice	148.2	149.3	145.1
Data & Hosting	59.3	66.8	72.2
Asia	10.9	11.9	11.0
Mobiles	12.2	21.0	26.4
TOTAL	230.5	249.0	254.6

EBITDA (A$ million)	Full Year 2005	Full Year 2006	Full Year 2007
Voice	8.4	8.1	10.7
Data & Hosting	(0.3)	0.8	6.0
Asia	(0.8)	0.3	0.2
Mobiles	(1.1)	0.5	0.7
Corporate Office	(5.5)*	(5.2)	(6.3)
TOTAL	0.6*	4.5	11.3

*(Full Year 2005 EBITDA has been revised from $0.7m to $0.6m reflecting adjustments required by the first time adoption of Australian Equivalents to International Financial Reporting Standards (AIFRS)).

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Operational Review

In the 12 months to June 30 2007, Macquarie Telecom delivered revenue improvements across its Data & Hosting and Mobiles businesses. Total service revenue was $254.6 million, an increase of 2.3% compared to the corresponding period.

Macquarie Telecom’s Data & Hosting business, which provides data networking services to Australian corporate and government customers, generated revenue of $72.2 million, up 8.0% on the corresponding period. Data & Hosting now represents 28.3% of total revenue.

Data & Hosting recorded an EBITDA profit of $6 million in fiscal 2007, up from $0.8 million in the corresponding period, benefiting from investments that increase speed and scalability of voice, data and internet applications.

The Hosting business won a number of new hosting clients during the period, including contracts with Fairfax Business Media's afr.com and PBL Media’s Trader Classifieds.

Macquarie Telecom’s established Voice business generated revenue of $145.1 million, down 2.8% from the corresponding period, but delivered an impressive EBITDA profit increase of 32.2% to $10.7 million. The voice services market again came under intense price pressure, reinforcing Macquarie Telecom’s ongoing strategy to reduce reliance on voice service revenue and focus on higher margin businesses, such as data and hosting. The company’s investment program has been an important element in this strategy.

Mobiles service revenue rose 25.5% to $26.4 million. Mobiles is an important element in Macquarie Telecom’s full service offering and part of the company’s strategy of offering bundled solutions to customers across all areas of telecommunications.

The data offering of the Asian business, including the design and management of IP data network solutions, is gaining traction and complimenting the already established voice business. The Asian business adds a regional dimension to Macquarie’s business model.

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Capex and Guidance

Capital expenditure for the full year was $12.1 million, down from $14.8 million in 2006.

“Profitability in fiscal 2008 is expected to continue on a solid growth path as Macquarie Telecom’s investments increasingly deliver profit benefits. Capital expenditure for the year is expected to be 5% of revenue,” said Macquarie Telecom Chairman Mr Kaye.

An update on Macquarie Telecom’s first half performance in fiscal 2008 will be given at the company’s Annual General Meeting in late November, said Mr Kaye.

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For more information, please contact:

Chris Savage , Savage & Partners: (02) 8281 3231 or 0404 012 266

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