Business SummaryMacquarie Telecom Group Limited (MAQ) is an Australian company engagedin the provision of telecommunication and hosting services to corporate andgovernment customers within Australia. MAQ currently operates in twoprimary business divisions; Hosting (business and government) and Telcomobiles.

Hosting Division: The Hosting Business Division focuses on providingsecure, scalable, high-availability, co-location, fully managed hosting andcloud services for our customers mission critical application whereas theGovernment Division protects Australian government departments from cyberthreats with specialised Gateway, Hosting infrastructure and a range ofsecure cloud services.

Telco Division: The Division provides a full range of telecommunicationservices to corporate and government customers including fixed line voice,data networks and mobility services through a range of carriers offeringchoice, control and cost reduction with an outstanding customer servicemodel.

Latest ResearchA generational growth story

MAQ is a provider of traditional telecommunications services (i.e. voice,mobile and data services), managed cloud, and colocation services forcorporate customers. MAQ also has a dedicated Government division,which focuses on providing secure cloud,

colocation, and cyber security services for the Federal, NSW and VICgovernments. MAQ currently provides services to 42% of FederalGovernment departments.

For more information see research 6 Jul 2020.

GICS - Telco Services

Macquarie Telecom Group Limited

ASX Code: MAQ Price: $45.91 12 Mth Target Price: $51.25 Rating: Buy

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Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

28 July 2020$980m21.3m$47.75$19.20

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Buy$51.2510.4%NA%10.4%

Investment FundamentalsFYE 30 Jun 2019A 2020F 2021F 2022F

Profit $m 16.5 14.2 9.2 11.2Profit (norm)* $m 16.5 14.2 9.2 11.2

EPS* ¢ 78.1 66.4 43.3 52.7EPS Growth % -3.7 -15.0 -34.8 21.6P/E* x 59.4 69.9 107.1 88.1P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 50.0 0.0 0.0 0.0Yield % 1.1 0.0 0.0 0.0Franking % 0.0 0.0 0.0 0.0* Adjusted for goodwill and unusual itemsSource: Based on Bell Potter estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2015A 2016A 2017A 2018A 2019A

Sales Revenue 192 203 220 233 244Total Revenue ex. Int. 192 203 220 234 247EBITDA 26 32 40 48 52Depreciation & Amort. -31 -25 -21 -24 -29Goodwill Amortisation -- -- -- -- --EBIT -5 7 19 24 23Net Interest -1 0 1 0 -0Profit Before Tax -6 7 20 25 23Income Tax 2 -2 -5 -8 -7Outside Equity Int. -- -- -- -- --Profit after Tax -4 5 14 17 16Significant Items after Tax -- -- -- -- --Reported Profit after Tax -4 5 14 17 16Preferred Dividends -- -- -- -- --

Cash Flow ($M)2015A 2016A 2017A 2018A 2019A

Receipts from Customers 213 222 238 254 271Funds from Operations 24 39 42 52 50Net Operating Cashflow 24 39 41 43 39Capex -20 -18 -39 -34 -46Acquisitions & Investments -- -- -- -- --Sale of Invest. & Subsid. -- -- -- -- --Net Investing Cashflow -20 22 -36 -34 -46Proceeds from Issues -- -- -- -- --Dividends Paid -- -10 -10 -11 -5Net Financing Cashflow -2 -31 -10 -11 -6Net Increase Cash 1 30 -5 -1 -13Cash at Beginning 5 6 36 32 30Exchange Rate Adjust. 0 0 -0 -0 0Cash at End 6 36 32 30 17

Ratios and Substantial Shareholders2015A 2016A 2017A 2018A 2019A

Profitability RatiosEBITDA Margin % 13.53 15.90 18.36 20.53 21.34EBIT Margin % -2.59 3.40 8.67 10.43 9.62Net Profit Margin % -2.23 2.59 6.47 7.30 6.75Return on Equity % -4.89 6.37 16.45 18.22 15.44Return on Assets % -2.34 4.43 10.68 11.85 10.41

Debt/Safety RatiosNet Debt/Equity % 18.39 -41.37 -36.75 -32.45 -15.99Interest Cover x -3.40 -14.30 -36.78 -55.75 189.35

Top 5 Substantial ShareholdersClaiward Pty Ltd 54.8%National Nominees Limited 11.6%Viburnum Funds Pty Ltd 9.8%J P Morgan Nominees Australia 9.5%National Nominees <Australian Ethical Smaller Companies Trust> 7.2%

Balance Sheet ($M)2015A 2016A 2017A 2018A 2019A

Cash & Equivalent 6 36 32 30 17Receivables 8 8 7 7 12Inventories -- -- -- -- --Other Current Assets 9 11 13 14 18Current Assets 67 57 52 52 47Prop. Plant & Equipment 52 47 60 66 81Intangibles 10 7 13 17 19Other Non-Current Assets 9 11 13 14 18Non-Current Assets 69 63 81 92 115Total Assets 136 120 133 144 161Interest Bearing Debt 23 2 -- -- --Other Liabilities 26 35 47 50 55Total Liabilities 48 37 47 50 55Net Assets 88 82 86 93 107Share Capital 43 43 43 43 44Reserves 0 0 1 1 3Retained Earnings 44 39 43 49 61Outside Equity Int. -- -- -- -- --Total Shareholders Equity 88 82 86 93 107

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Mr Michael Gold

Directors

Mr Peter Richard James(Non-Executive Director,Non-ExecutiveChairman)Mr David Tudehope(Chief Executive Officer,Executive Director)Mr Aidan Tudehope(Managing Director- Hosting Group,ExecutiveDirector)Mrs Anouk Darling(Non-Executive Director)Mr Bart Vogel(Non-Executive Director)Dr Adelle Maree Howse(Non-Executive Director)

To access further Research or for information regarding our recommendations and ratings please seewww.bellpotter.com.au

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Macquarie Telecom Group Limited

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