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Australian Broadband Services Pty Ltd. The Telco / ISP market will be redefined by the rollout of the NBN Opportunities for smaller players to take substantial.

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Presentation on theme: "Australian Broadband Services Pty Ltd. The Telco / ISP market will be redefined by the rollout of the NBN Opportunities for smaller players to take substantial."— Presentation transcript:

1 Australian Broadband Services Pty Ltd

2 The Telco / ISP market will be redefined by the rollout of the NBN Opportunities for smaller players to take substantial share in a shifting market Technology has evolved allowing a high level of outsourcing by well managed RSPs Partnered with the worlds largest direct sales company, Cobra Group to implement a proven subscriber growth strategy Management bring over a 100 years in Telco, ISP and online media success to ensure the best in execution Targeting 300K+ subscribers, AUD250M in revenues and top 10 ISP position within 5 years Raising AUD2M in the lead up to an ASX listing in 2012 Overview

3 R2 – Sophisticated Investors New Funds$2M Equity Share30% Share Price$0.25 Cobra$500K Post Cash Value$6.7M R3 – ASX Listing (6 -12 mths) New Funds$6M Equity Share / Dilution31% Share Price$0.50 Value Post Listing$19M IRR over 5 years30% ROI year 5180% Deal Structure

4 Optical fibre to the home will shape the future of content delivery and consumer behaviour Opportunity to target millions of subscribers shifting to optical fibre or engaging for the first time Change of Government may lead to changes in implementation but too expensive to scrap the NBN For the first time smaller Telcos and Aggregators will have access to non discriminatory wholesale pricing The NBN

5 The ability to access wholesale supply through Aggregators and out sourced ISP solution providers creates a low variable cost model suited to ABS ABS will target areas due for connection to the NBN within 5 years and ensure a low cost NBN transition without costs associated with incumbent legacy systems Telstra and Optus wholesale DSL will continue to service the majority of fixed line broadband customers for some years Other Networks

6 Preferred solution provider Utilibill is proven in Telco sector. ABS platform to manage product access, payment processing, billing and CRM. Platform

7 *Market size forecast chart for internet subscribers in Australia (excluding internet connections through mobile handsets) based on Australian Bureau of statistics growth trends and premises connection forecasts provided by NBNCo. Telco market has seen 20 years of strong growth no signs of slowing down Market Size and Trends

8 Key wholesale rates negotiated and ready for integration PlatformWholesale DataPhoneVAS UtilibillNextgenEngin (VoIP)Aus Power and Gas HarbourMSPVocusTelcoinabox (Mobile)Get Covered / AVIVA MCRNBN, Telstra, OptusOptusFetchTV Key Suppliers

9 Partnered with Cobra - the Worlds largest direct sales company Extensive telecommunications sales experience 2M+ Telco accounts signed in Australia 7M+ Telco accounts signed in Europe Success only fee structure ensuring cost base tied to sales Proven partnership with Australian Power and Gas (ASX: APG) Seed round investor The Cobra Group

10 KPIsYear 1Year 2Year 3Year 4Year 5 New Subs per mth3.5k5.5k7.5k10.0k12.5k Churn per year0k(3k)(20k)(44k)(70k) NBN Subs4k21k47k87k139k DSL Subs21k68k111k147k174k Total Closing Subscribers26k89k158k234k313k NBN Market Share1.22%1.85%2.09%2.63%3.18% Total Market Share0.22%0.72%1.22%1.72%2.20% SIO Forecast

11 Variable cost model directly linked to sales; Success only fees for new accounts to Cobra Transaction based fees for billing, provisioning and customer service platform Wholesale supply deals linked directly to consumption Competitive pricing with an unprecedented level of flexibility; pay as you go data plans increasing customer control over the billing simple tiered data plans with unlimited switching bundled VoIP, mobile, wireless broadband and energy Partnerships with entertainment and media providers to cross promote and bundle media products as the optical fibre subscriber base expands Business Strategy

12 At launch the ABS product offering; Optical Fibre Cap and Pay As You Go Plans ADSL2+ Cap and Pay As you Go Plans VoIP phone plans (over the Internet or by dedicated fibre for NBN connected households) Mobile Broadband Cap Plans Mobile Phone Cap Plans In home technology and data insurance Year 2 product offering for expanded NBN market; IPTV and VOD Online Backup Virtual Desktop Power and Gas Product Offering

13 100+ years of combined experience in senior roles with Telco and online media companies Chairman - Ian McGregor B. BS, CA, FICS. (Chairman: APG, CFO: OzEmail, Unwired) CEO - Rob Appel B. A., LLB. (CEO: Chaos Group, Microview, Production Manager: OzEmail) CTO Services - Andrew Kent B. Sc, Elec Engineering (CTO: OzEmail, Webcentral, MD: Uunet A Pac Operations) CFO - Andrew Cowling CA., B. Econ, Accounting (CFO: OzEmail Interline, iSOFT, Group Manager: Bigpond) Dir Marketing & Sales - Geoff Isaac B. A. (Dir of Marketing: OzEmail, Unwired, Engin) Management

14 KPIsYear 1Year 2Year 3Year 4Year 5 New Subs per mth3.5k5.5k7.5k10.0k12.5k Churn per year0k(3k)(20k)(44k)(70k) NBN Subs4k21k47k87k139k DSL Subs21k68k111k147k174k Total Closing Subscribers26k89k158k234k313k NBN Market Share1.22%1.85%2.09%2.63%3.18% Total Market Share0.22%0.72%1.22%1.72%2.20% NBN Market Size (premises connected/covered)358k1,129k2,229k3,306k4,369k Total Market Size11,731k12,318k12,934k13,580k14,259k ARPU (Service Revenue) $ 76.52 $ 81.00 $ 83.28 $ 86.44 $ 89.77 ARPU Incr6%3%4% EPS-$ 0.12-$ 0.03 $ 0.19 $ 0.30 $ 0.44 Shares on Issue$38,667k$40,987k$44,467k$49,107k$52,973k Share Capital$7,541k Net Cash (excl Share Capital)($5,876k)($287k)$12,544k$15,112k$4,089k IRR30% ROI-68%-71%39%153%180% Headcount1318232833 KPIs

15 CY2012CY2013CY2014CY2015CY2016 Revenues $13.1M$70.8M$121.9M$185.1M$256.6M EBITDA -$4.8M-$1.1M$9.8M$21.5M$34.0M NPAT -$4.8M-$1.2M$8.6M$15.0M$23.7M EBITDA + NPAT

16 CY2012CY2013CY2014CY2015CY2016 Underlying EPS $ -0.12 $ -0.03 $ 0.19 $ 0.30 $ 0.44 Underlying EPS

17 CY2012CY2013CY2014CY2015CY2016 Return On Investment -68%-71%39%153%180% ROI

18 P&LYear 1Year 2Year 3Year 4Year 5 Total Services Revenue$7,566k$57,293k$125,677k$205,996k$297,933k Hardware Revenue$3,357k$8,383k$9,280k$10,311k$11,207k Setup Fees$2,209k$5,161k$5,328k$5,292k$5,165k Total Revenue$13,132k$70,837k$140,286k$221,599k$314,304k Revenue incr %$0k Network & Carrier Costs($11,228k)($55,882k) ($107,963k ) ($170,328k ) ($243,089k ) Gross Margin$1,904k$14,955k$32,323k$51,272k$71,215k Other Income$33k$13k$96k$379k$823k Customer Acquisition & Service($4,592k)($11,473k)($15,643k)($20,498k)($25,500k) Network, Billing & Hosting($151k)($106k)($121k)($136k)($151k) Employee expenses($1,285k)($2,334k)($3,349k)($4,413k)($5,642k) Marketing expenses($184k)($600k)($738k)($926k)($987k) Office costs($131k)($195k)($235k)($315k)($372k) Administrative expenses($214k)($325k)($371k)($423k)($480k) Finance costs($166k)($1,052k)($2,153k)($3,439k)($4,910k) Total Expenses($6,690k)($16,072k)($22,514k)($29,771k)($37,219k) EBITDA($4,786k)($1,117k)$9,809k$21,501k$33,996k Depreciation and amortisation expense($20k)($40k)($57k)($73k)($89k) Profit before income tax($4,806k)($1,157k)$9,752k$21,428k$33,906k Income tax expense$0k ($1,137k)($6,428k)($10,172k) Net Profit/Loss after Tax($4,806k)($1,157k)$8,615k$15,000k$23,734k P&L

19 Balance SheetYear 1Year 2Year 3Year 4Year 5 ASSETS Cash$1,665k$1,378k$13,922k$36,574k$48,204k Inventory$1,312k$1,522k$1,671k$1,790k$1,833k Accounts Receivable, net$2,785k$6,085k$8,137k$8,835k$29,496k Total Current Assets$5,762k$8,986k$23,730k$47,200k$79,533k Plant & Equipment, net$133k$173k$197k$204k$195k Total assets$5,894k$9,158k$23,927k$47,404k$79,729k LIABLITIES AND SHAREHOLDERS EQUITY Accounts Payable$3,261k$7,682k$12,698k$18,642k$25,331k Income Taxes payable$0k $1,137k$3,672k$5,572k Total Current Liabilities$3,261k$7,682k$13,835k$22,313k$30,904k Total Liabilities$3,261k$7,682k$13,835k$22,313k$30,904k COMMITMENTS AND CONTINGENCIES Shareholders Equity Additional paid up capital$7,541k Accumulated profit/(deficit)($4,907k)($6,065k)$2,551k$17,550k$41,285k Total Shareholders equity$2,634k$1,476k$10,091k$25,091k$48,825k Total Liabilities & Shareholders Equity$5,894k$9,158k$23,927k$47,404k$79,729k Balance Sheet

20 Cash FlowYear 1Year 2Year 3Year 4Year 5 Cash flows from Operating Activities($4,839k)($1,170k)$9,656k$21,049k$33,083k Adjustments to reconcile net profit/(loss) to net cash used in operating activities Depreciation$20k$41k$57k$73k$89k Hardware COS$3,498k$8,595k$9,471k$10,301k$10,847k Allowance for Bad & Doubtful Debts$153k$981k$2,013k$3,217k$4,596k Loss/(Gain) on disposal of Plant & Equipment$0k Changes in assets and liabilities Inventory($4,810k)($8,805k)($9,620k)($10,421k)($10,890k) Accounts Receivable($2,938k)($4,281k)($4,065k)($3,915k)($25,256k) Accounts Payable$3,261k$4,422k$5,016k$5,943k$6,690k Accrued Expense$0k incr/(decr) in income taxes payable/receivable, net$0k ($3,894k)($8,271k) increase in deferred income taxes$0k Net cash used in operating activities($5,655k)($219k)$12,528k$22,354k$10,888k Cash flows from Investing Activities Miscellaneous Income$0k Sale of Plant & Equipment$0k Purchase of Plant & Equipment($153k)($81k) Interest Income$33k$13k$96k$379k$823k Net cash used in investing activities($120k)($67k)$16k$299k$742k Cash flows from financing Activities Payments under finance lease obligations$0k Payments of dividends$0k Interest Expense$0k Proceeds from Bank Overdraft$0k Fund Raising Expense($560k)$0k Proceeds from Common Stock issued$8,000k$0k Net cash provided by/(used in) financing activities$7,440k$0k Incr/(decrease) in cash$1,665k($287k)$12,544k$22,652k$11,630k opening cash$0k$1,665k$1,378k$13,922k$36,574k Closing Cash$1,665k$1,378k$13,922k$36,574k$48,204k Cash Flow

21 IRRYR 0YR 1YR 2YR 3YR 4YR 5 30%($7,541k)($5,876k)($287k)$12,544k$15,112k$4,089k NPV of cashflows$13,595k Cost of capital15%YR 1YR 2YR 3YR 4YR 5 Discounted Cashflow$7,541k($5,110k)($217k)$8,248k$8,640k$2,033k ROI-68%-71%39%153%180% EPSYR 0YR 1YR 2YR 3YR 4YR 5 Net Profit after tax($4,806k)($1,157k)$8,615k$15,000k$23,734k Shares On Issue$39,827k$42,147k$45,627k$50,267k$54,133k EPS $ -0.12 $ -0.03 $ 0.19 $ 0.30 $ 0.44 Valuation Guide Per SIOYR 0YR 1YR 2YR 3YR 4YR 5 Ausbbs Market Cap$41,793k$144,482k$257,640k$380,718k$510,318k Value Per Share $ 1.05 $ 3.43 $ 5.65 $ 7.57 $ 9.43 Market Guide Per SIOSubs at Dec 2010Market CapValue per Sub Iinet$650k$425,000k$654 TPG$516k$1,344,000k$2,605 Average$1,629 * As at Sep 2011 Valuation Models

22 Application of Funds - Cash Flow to Listing 6 months to 30 June 12 R2 Funding$2,000k Cash flows from Operating Activities($1,084k) Inventory($918k) Accounts Receivable($864k) Accounts Payable$1,290k incr/(decr) in income taxes payable/receivable, net$0k increase in deferred income taxes$0k Net cash used in operating activities($1,575k) Cash flows from Investing Activities Purchase of Plant & Equipment($136k) Interest Income$9k Net cash used in investing activities($127k) Cash flows from financing Activities Interest Expense$0k Net cash provided by/(used in) financing activities$0k Incr/(decrease) in cash($1,702k) Closing Cash$298k Application of Funds

23 R2 – Sophisticated Investors New Funds$2M Equity Share30% Share Price$0.25 Cobra$500K Post Cash Value$6.7M R3 – ASX Listing (6 -12 mths) New Funds$6M Equity Share / Dilution31% Share Price$0.50 Value Post Listing$19M IRR over 5 years30% ROI year 5180% Deal Structure

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