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M2 Net Profit To Record High With 16% Rise

M2 Net Profit To Record High With 16% Rise

Melbourne, August 22, 2006:- Fast growing telecommunications services company, M2 Telecommunications Group Limited (ASX: MTU) has announced a record Net Profit After Tax (NPAT) of $2.18 million for the year to 30 June 2006, a 16 % increase on the previous year. Revenue also hit a new high of $33.5 million representing 41 % growth.

M2 offers a suite of unique bundled telecommunications services and value added offerings that are distributed through an exclusive national network of sales dealerships and agencies. The company’s marketing and sales expertise is reflected in the record full year result, and its fifth consecutive year of double digit increases in net profit.

M2’s Managing Director & CEO, Vaughan Bowen said “This is a very satisfying result, particularly given that the last year involved substantial new development in our product offerings and internal processes, yet we still managed to grow our top and bottom lines substantially. It demonstrates the agile nature of our business and our focus on delivering growth for shareholders whilst ensuring we remained well positioned for the future.”

Key financial highlights include:

16% year-on-year increase in profit to $2.18 million. 41% year-on-year increase in revenue to $33.5 million, driven by a significant increase in customer numbers, particularly within the fast-growing M2 Mobile business unit. Strong cash reserves of $4.2 million. Declaration of fourth consecutive dividend, with a final fully franked dividend of 2c per share declared by the Board. Combined dividend (interim + final) for 2005/6 financial year of 2.59c, representing a fully franked yield of 8.6% and a 14% dividend increase year-on-year.

“This solid result provides a great platform for M2’s next phase of growth. Our challenge now is to continue our strong organic growth in our core telecommunication business while developing new market opportunities that will underpin our future success” said Bowen.

During the year M2 entered into several significant agreements and alliances:

Agreement with Optus providing M2 with access to wholesale mobile telecommunications services on the Optus network in Australia. Agreement with Optus whereby M2 becomes Optus’ appointed aggregator / wholesale supplier of Optus mobile services, through M2 subsidiary, Wholesale Telecommunications Services Pty Ltd (“WTS”). M2 entered the rapidly growing VoIP market via a wholesale supply agreement with Engin Limited, to bundle Engin VoIP services with M2’s expanding M2 Mobile product suite. Entered the New Zealand market via a Wholesale Services Agreement with Telecom New Zealand (ASX: TEL). Executed license agreement with international mobile telecommunications marketing organisation, E-Direct Pty Ltd.

Outlook for the year ahead:

Expansion of newly established “WTS” subsidiary, building upon mobile wholesaling / aggregation agreement entered into with Optus in May ‘06 Continued growth in M2’s core SME market segment, through expanded sales channels Australia wide Further expansion of services offered in the NZ market, including mobile services, via Mobile Virtual Network Operator (“MVNO”) agreement with Vodafone NZ, executed earlier this month. Establishment of a dedicated strategic development arm, to research potential entry into complementary “essential services” markets, to leverage M2’s established marketing channels and back-of-house resources. Another year of double-digit earnings growth of between 10% and 20%.

Based upon yesterday’s closing share price of 30c, M2 trades on an earnings multiple of approximately 8.1 times NPAT, with a dividend yield, based on 2006 earnings of around 8.6%, fully franked.

ENDS -

About M2: M2 Telecommunications Group Limited (ASX : MTU) is a network independent provider of fixed line, mobile and data telecommunications services Australia wide. M2 offers a suite of unique bundled telecommunications services and value added offerings that are distributed through an exclusive national network of sales dealerships and agencies.

The company has demonstrated strong growth in both revenue and profit year-on-year for each of the last 5 years and was named by BRW as one of Australia’s fastest growing companies in 2003, 2004 and 2005 and on the Deloitte Technology Fast 50 in 2004 and 2005. M2’s balance sheet is debt free and boasts sizable cash reserves. M2 has an established dividend policy, with high yield franked dividends being paid over the last 2 years. For further information please visit: www.m2.com.au.

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