MNF Group Annual Report 2016

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FY2016 Annual Report · MNF Group

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MNF Group Limited
Annual Report 2016

Contents

Board of Directors

Letter from our Chairman

Letter from our CEO

About the MNF Group

MNF Group Timeline

Smart Network

Group of Brands

Company Structure

Business Unit Profiles

Innovation Spotlight

Future Roadmap

Directors’ Report

Consolidated Statement of Profit or Loss and Other Comprehensive Income

Consolidated Statement of Financial Position

Consolidated Statement of Cash Flows

Consolidated Statement of Changes in Equity

Notes to the Consolidated Financial Statements

Directors’ Declaration

Auditor’s Independence Declaration

Independent Auditor’s Report

ASX Additional Information

Board of Directors

Mr Terry Cuthbertson
B. Bus., CA
Chairman

Mr Michael Boorne
Electronics Eng. Dip.
Non-Executive Director

A Chartered Accountant, previously partner at
KPMG with extensive corporate finance expertise
and knowledge. Also a Director and Chairman of
Australian Whisky Holdings Ltd, Austpac Resources
N.L., Mint Wireless Ltd, South American Iron & Steel
Ltd, Malachite Resources Ltd and Isentric Ltd.

A successful entrepreneur with extensive track
record
in combining technical expertise with
commercial and corporate experience. Founder of
Sprit Modems and Mitron Pty Ltd and previously a
Non Executive Director of Netcomm Ltd.

MNF Director since December 2006

Ms Catherine Ly
B.Bus., CPA
Company Secretary since July 2006

MNF Director since March 2006

Mr Andy Fung
B.E. MCom
Non-Executive Director

experience

Extensive
telecommunications.
in
Formerly Director of Business Development of
Lucent Technologies. Co-Founder of MyNetFone,
Symbio Networks Pty Ltd, and Symbio Wholesale
Pty Ltd.

MNF Director since March 2006

Mr Rene Sugo
B.Eng. (Hon)
Chief Executive Officer and Director

experience

Extensive
telecommunications.
in
Formerly Technical Director of Lucent Technologies.
Co-Founder of MyNetFone, Symbio Networks Pty
Ltd, and Symbio Wholesale Pty Ltd.

MNF Director since March 2006

Left to right: Mr Andy Fung, Mr Michael Boorne, Mr Rene Sugo, Mr Terry Cuthbertson

Letter from our Chairman

Fellow Shareholders,

It is with great satisfaction that I present to you the 2016 full year results
for the MNF Group Limited. It has been another very successful year for
the MNF Group. The company achieved another record financial result for
the sixth consecutive year.

Our consolidated group revenue increased to $161 million, up 88% from
the previous year. Our EBITDA rose by 46% to $17.8 million, and our NPAT
rose 25% to $9.0 million. The company ended the year with no net debt,
and the ability to redraw $13 million from our revolving acquisition facility.

This year’s success is attributed to solid contribution from all three
segments of the business – Domestic Retail, Domestic Wholesale, and
our newest segment Global Wholesale. Particularly pleasing was the
organic growth in the Domestic Wholesale segment which saw gross
margin increase by 49% on prior year. The Global Wholesale segment also
performed very strongly in its maiden full year result demonstrating a
relative full year growth of 21% on prior year margin contribution.

This year’s solid performance has allowed the board to declare an annual dividend of 7.0 cents per share fully franked –
an increase of 22% over the previous year. The dividend is consistent with our track record of providing consistent returns
to shareholders in the order of 50% of NPAT.

Achievements

During the year MNF Group grew thanks to some incredible achievements and the dedication and effort of our invaluable
team. The highlights of our year are:

•

Completing the acquisition of TNZI – This large strategic acquisition has kick started the company’s global growth
strategy. This year was one for completing the complex transaction and integrating staff and systems into the MNF
Group. Other major milestones achieved as part of the transaction are the granting of a US carrier licence by the FCC,
as well as upgrading infrastructure in London, Los Angeles and Hong Kong. There are still many more challenges
to come in executing this global growth strategy, but the team is primed and ready to execute as effectively as
possible. We look forward to more great things to come in the years ahead from this strategic acquisition.

• Organic growth – As mentioned earlier, the company’s Domestic Wholesale segment grew organically 49% on the
previous year at the margin level. This is due to the incredible momentum built up by the domestic wholesale sales
and operations teams. The ability to deliver high value services in a fast and reliable fashion has meant that our
existing wholesale customers can focus on growing their businesses, and many more wholesale customers are now
choosing Symbio as their preferred platform for hosting their voice capabilities.

•

Innovation recognition – The MNF Group prides itself on developing its own proprietary software systems and
building its own network. This is a key part of our market differentiator compared to other Australian communications
providers. Our R&D team is growing steadily, as are their achievements. This year we have been recognised by
several key industry bodies for our product innovation. We have been awarded the national Australian Internet
Industry Association ‘iAward’, and the Australian Communications Alliance & CommsDay ‘ACOMMS’ award for
our TollShield fraud mitigation platform. These awards are only a brief indication of the strength of our underlying
intellectual property and skills base available inside the Group.

The Future

The company has established three very solid independently performing business segments, each with a well-defined
strategy for growth. The Domestic Retail segment is performing steadily with some good potential in addressing small
business and government customers. The Domestic Wholesale segment has excellent momentum coming out of last
year, and is poised to capitalise on the company’s position in the domestic market. And finally the Global Wholesale

segment is on the cusp of a big push into the Asia-Pacific market to capitalise on our locally developed technology.

In addition to developing our own organic growth strategy, the company continues to seek sensible acquisitions that
will deliver incremental value to shareholders. Our goal is to find opportunities that allow us to leverage our strong
intellectual property assets, incredibly skilled team, and massive synergy potential of our nationally interconnected
voice network.

Additionally, we continue to develop new technology, software and processes that will deliver new products and
services into a market ripe with opportunity driven by change. Our strategy remains centered on voice communications
technology and applications. We are constantly looking at how to push the boundaries of change in the global market
and capture new emerging revenue streams in an Internet enabled world. The MNF Group is truly in a unique position to
seize this new market opportunity as it emerges.

On behalf of the board, I would like to thank all of the staff and management team in achieving another great result
for our company. The board continues to provide its full support to the team to ensure the company maintains its
momentum and growth into the future.

I would also like to thank my fellow members of the Board for their hard work and dedication over the last 12 months.
Their insight and vision has truly shaped an innovative and successful organisation that stands out as a rapidly emerging
player in the Australian telecommunications market.

I thank all shareholders for your continued and loyal support. The company is looking forward to a successful and
rewarding year ahead.

Terry Cuthbertson
Chairman

Letter from our CEO

Dear Shareholders,

I am very pleased to report another record full year result for MNF Group,
making it our 5th consecutive year of double-digit EBITDA growth.

In this past year, our focus has been on integrating the prior year
acquisition of the global TNZI voice business to create a springboard for
new market opportunities; as well as developing organic growth in the
strongly performing domestic business.

MNF Group’s performance has been excellent delivering 46% EBITDA
growth to $17.8 million (2015: $12.2 million) – slightly ahead of forecast
thanks to solid margin growth & overhead costs control. Our NPAT grew
to $9 million (2015: $7.2 million), an increase of 25% over the previous
year and 23.5% CAGR over the last 5 years demonstrating solid consistent
growth. The separation between NPAT from EBITDA is due to interest,
depreciation and amortisation introduced through prior acquisitions,
however this is a once-off occurrence and the separation is expected to
stabilise going forward. Revenue grew 88% to $161 million (2015: $85.7
million) driven by full 12 month contribution from the TNZI acquisition
(except TNZI USA revenue which only contributed one month), and very
strong organic growth in the Domestic Wholesale segment.

As always, we at MNF Group recognise the importance of delivering consistent shareholder returns. Both our Earnings
Per Share (EPS) and Dividends Per Share (DPS) are at a record high this financial year at 13.45cps and 7.00cps respectively,
with dividends representing 52% of EPS consistent with prior years.

Segment Performance

Shareholders will notice that segment reporting is a new element in this year’s report. By breaking out our three core
market segments, we have endeavoured to deliver more insight into the Group structure & performance for our investors.

All three segments performed strongly, reflecting our balanced and diverse portfolio of services. In particular the
Domestic Wholesale segment delivered the standout performance with margin organically growing 49% on the
previous year. The Domestic Retail segment was steady due to slight decline in the Residential sub-segment, which was
largely offset by strong growth in Business, Enterprise and Government sub-segments. The Global Wholesale segment,
incorporating newly acquired TNZI and the global customers of the Symbio business, also performed above expectation
with full year relative margin growth of 21% and capable of big future potential long term organic growth.

Our commitment to innovation & market disruption remains unwavering with all three segments focused on our area
of specialisation – the delivery of new-generation voice communications driven by innovation, software development
and network deployment.

Network Expansion

The key to leveraging the TNZI acquisition to create further growth has been the global network upgrade project. This
included capacity and capability expansion in London and LA Points of Presence (PoPs), and the deployment of a new
Hong Kong PoP. This was the final link in our global network ring, positioning TNZI as regional specialist and the voice
‘carrier of choice’ for European and US telcos seeking capabilities in the high potential Asia-Pacific region.

This increased global presence is combined with deployment of Symbio’s new-generation capabilities and services
into the TNZI network, enabling us to soon start selling value-added services into TNZI’s established customer base.
Further service cross-pollination is planned for the year ahead to position TNZI as the ‘go to’ provider for new-generation
communications in the Asia-Pacific region.

The next phase of Domestic Wholesale expansion will be the deployment of the Symbio model into New Zealand. While
Symbio has offered certain capabilities in that market for many years, full deployment will allow us to shake up the
wholesale market with a complete new-generation service suite.

Future Roadmap

As the world transitions to internet-based communications, we are seeing exciting opportunities at every market level.
With the prevalence of ‘always connected’ devices, ‘any to any connectivity’ will be the main challenge. And where there
is challenge – there is opportunity. Today, MNF Group’s smart network already delivers core building blocks for the voice
communication needs of the future. We will continue to innovate and build our broad portfolio of capabilities to be the
leading provider enabling this exciting voice communications revolution in our region.

This commitment to creating value-added services and leveraging our own voice technology gives us confidence that
organic growth will remain strong. We are also, of course, still looking for and evaluating potential further acquisitions.
My thanks goes to all MNF Group staff globally, as well as the executive team, for their outstanding contribution and
achievements accomplished this year.

The future presents many opportunities, and we hope you are excited to be part of the journey with us.

Kind regards,

Rene Sugo
CEO

About the MNF Group

MNF Group is an integrated voice services business that provides IP communication technologies to Australia, New
Zealand and the world.

The Group was founded in Sydney in 2004, and listed on the Australian Stock Exchange in 2006 (ASX: MNF). Now a
global business, the Group has grown from strength to strength in just over a decade and received many industry and
retail awards.

Our people

Our capabilities

Brands & customers

Powering the dynamic product &
brand mix is a specialist team of
almost 250 staff across offices in
Australia, New Zealand, UK and
USA.

team’s

The
record of
track
innovation positions the Group as
a disruptor in the communications
market.

MNF Group specialises
in the
delivery of voice communications
capabilities around the globe.

The Group’s smart
IP voice
network delivers a diversified
portfolio of voice products to over
250 global providers and 100,000
retail customers across multiple
brands.

Each brand in the MNF Group
portfolio services a defined target
market with products designed to
meet evolving user needs.

Customer profiles span next-
service providers,
generation
carriers,
and
business
government, right through to
mums & dads.

software

products

smart IP
network

global

innovation

people

Global
Voice
Specialist

brands

wholesale

retail

value-added

domestic

international

SaaS

diversified voice
portfolio

offices in
AUS NZ UK US

customers

next-gen
providers

carriers &
service providers

business, enterprise
& government

mums & dads

MNF Group Timeline

A
D
T
I
B
E

$20M

$18M

$16M

$14M

$12M

$10M

$8M

$6M

$4M

$2M

• Tasmanian
Government $20M
Project win

• Acquisition of
CallStream
Connexus
GoTalk Wholesale

• Exclusive Panasonic
deal for SME phone
system

• Acquisition of
Symbio Networks

• Maiden Profit
• ADSL2+ service
launch

2009

2010

2011

2012

• TNZI integration

• US completion

• Acquisition of
TNZI global voice
network & OpenCA
Softswitch

• Integration of prior-
year acquisitions

• Acquisition of
Pennytel & iBoss

• Strong organic
growth

• CeBIT Outstanding
Project Award for
Tasmanian Governemnt
Voice Carriage Project

2009

2010

2011

2012

2013

2014

2015

2016

Smart Network

As the world moves to IP communications, MNF Group is building the network and technology to lead the way.

Global Scale

MNF Group’s Tier 1 carrier network spans the globe with Points of presence in Los Angeles, New York, Hong Kong,
Singapore, London, Frankfurt, Sydney and Auckland and over 200 partner interconnects.

Having developed market-leading managed voice services for its Australian network, the Group is now progressively
rolling out these smart network capabilities to the rest of its global network.

Unlike traditional carriers, the Group’s focus is on making it easy for service providers to do business – The Group’s
smart network enables easy integration and has the flexibility to meet evolving customer needs.

These innovative capabilities combined with first-mover advantage puts the MNF Group in prime position to be the
carrier of choice for providers looking to reach the fast-growing Asia Pacific region.

San Jose

London

New York

London

AAG

Los Angeles

San Jose

London

Frankfurt

SWM-4

S. Korea
SWM-3

Saudi Arabia

UAE

Hong Kong

SWM-3

Oman
SWM-3

Vietnam

Thailand
SWM-3

SWM-3

SJC

Taiwan
AAG

Sri Lanka

Malaysia

EASSy

SWM-4

Singapore

Indonesia

Japan

AJC

Guam

AJC

Mozambique

SWM-3

A-PNG-2

SCCN

Perth

Sydney

SCCN

TAS-2

Tonga

Norfolk Is.

Auckland

Nauru

PNG

Vanuatu

Fiji

SCCN

Tokelau
W. Samoa

Cook Is.

Niue

Domestic Expertise

In Australia, the Group owns and operates the country’s largest IP voice network and has established a robust network
presence in New Zealand.

High speed fibre connectivity between major cities and modern VoIP nodes in all 65 regional call collection areas make
this network the ‘go to’ for new-generation OTT providers and global carriers looking to establish or expand their
presence in Australia and New Zealand.

Group of Brands

As the global voice specialist, MNF Group delivers comprehensive communications solutions through a diversified
product portfolio offered across 3 key market segments.

The multi-brand approach empowers the Group to tailor solutions to different customer needs while eliminating the
risk of relying on any one product in today’s fast-paced technology environment. From call termination for global Tier 1
carriers, API-powered smarts for new-generation app players, innovative fraud prevention, to voice and data for home
and business, MNF Group powers all levels of the IP voice revolution.

The Group gathers consumer insights across all these segments to continue developing innovative software solutions
and address customer needs in the changing communications landscape.

Domestic Retail

Domestic Wholesale

Stable performance, with several strategic wins in
enterprise and government sectors. Growth focus
on SME with Virtual PBX refresh
and strong pipeline of
enterprise prospects.

Fastest organically growing segment, with gross margin
increasing 49% on previous year. Continued strong
Australian performance and full
deployment of New Zealand
network underway.

SIP Trunking

Virtual PBX

Pre-select

Business Internet

Call termination

13, 1300,1800
numbers

Inbound &
Virtual Numbers
& Porting

Number
Porting

Conferencing

Home
internet

VoIP home
phone

Aus
Domestic
Retail

Aus&NZ
Domestic
Wholesale

Global
Wholesale

Co-location

Call Data
Feeds

Wholesale
aggregation

Data
enablement

MVNO

Voice carriage

Billing

ITFS

Inbound &
Virtual Numbers

Class 4
Softswitch

Toll Fraud
prevention

Global Wholesale

Strong track record in global voice termination, leveraging global tier 1
reputation. Addition of new-generation services such as freephone and
local numbers, and TollShield® is set to drive further growth.

Company Structure

London, 4

Los Angeles

Global voice services business,
headquartered in Sydney

Darwin

Sydney, 140

Auckland, 2

Melbourne, 59

Wellington, 45

Hobart, 3

While operating across Australia, New Zealand, UK and USA, MNF Group’s structure is defined by function rather than
geography, with several Business Units headed by highly skilled and experienced Chief Executives.

Each unit focuses on a particular functional area and works across multiple brands, products and even office locations.
This structure allows the Group to develop & leverage subject matter expertise of various teams to support a multi-
brand strategy while ensuring operational efficiency.

Rene Sugo
CEO

Indika
Nanayakkara
CTO

Tim Dunning
President - Global
Commercial

Jon Cleaver
CCO

Ritsa Hime
COO

Matthew Gepp
CFO

Helen Fraser
General Counsel

Platform &
Networks
Business unit

Global
Commercial
Business Unit

Domestic
Commercial
Business Unit

Operations
Business Unit

Finance
Business Unit

Legal

Commitment to Innovation

Business Unit Headcount

While expanding internationally, the MNF Group remain
committed to in-house Research & Development and
bringing disruptive new products to market.

Approximately 25% of the Group headcount, residing
in the Platform & Networks Business Unit, works in
the R&D field. This includes new product development,
new features, user experience improvement and core
network stability and expansion.

Global
Commercial
6%

Domestic
Commercial
20%

Legal
1%

Finance
8%

Platform &
Networks
24%

Operations
41%

Business Unit Profiles

Domestic Commercial Business Unit - Jon Cleaver, CCO

The Domestic Commercial Business Unit is responsible for
executing the company’s multi-brand strategy in Australia
through sales & marketing, combined with the vision and
innovation from the product management and solutions
teams ensuring we service what customers need today and
anticipate their needs for the future.

“I believe we have the structure just right,” said Jon Cleaver,
COO. “Following a few key additions to our established team
of specialists and industry veterans, I am confident we will stay
well ahead of the curve. Our focus remains on providing further
automation and efficiency in our current channels, whilst
expanding into new segments through product innovation.
This gives us a clear funnel for continued organic growth”

The figures speak for themselves, but especially pleasing is
the continued growth in the wholesale space and further
gains in government and enterprise. In FY2017, NBN ramp up
and further expansion in mobility will round out the Group’s
full UC offerings. In-house development has also maximised
automation on Symbio’s smart network, allowing us to easily
deploy the wholesale model into other countries with New
Zealand just around the corner. It is certainly an exciting
outlook ahead.

Global Commercial Business Unit - Tim Dunning, President

The Global Commercial Business Unit continues to go from
strength to strength as the benefits of integrating into the
MNF Group accrue.

Upgraded network assets in the United Kingdom, Los
Angeles, and Hong Kong position TNZI to offer new-
generation services to the global market. This investment
further enhances network capacity and capability,
supporting a growing presence and strength in the Asia-
pacific and other regions.

“Leveraging global relationships and intellectual property
built from a long-tenure staffing base, we will continue to
roll out MNF Group managed service solutions through
building presence and infrastructure in new markets,” said
Tim Dunning.

Continued investment in network and software systems
as well as recent front-line staff placements enhance the
Global Commercial Business Unit’s ability to meet the
challenges of a dynamic global environment.

Operation Business Unit - Ritsa Hime, COO

Customer experience continues to be the focal point of the
Operations Business Unit - this goes well beyond a friendly
representative answering calls. It must include every touch
point a customer experiences from online and self-serve portal
capability through to the technical acumen of the team.

For these reasons and coupled with customer feedback, the
Operations Business Unit embarked on an operational efficiency
drive focused on developing innovative online capabilities that
deliver a superior customer experience. This will enable MNF
Group customers to use the full suite of products and services
with ease and flexibility, leveraging the high performance
network and infrastructure that MNF is recognised for.

“Over the past 12 months, we focused our energies on platform
integrations and process improvements,” said Ritsa Hime. “We
set plans and delivered effective training programs for our
Operations staff to enable first call resolution support for our
customers.”

Operations continue to work closely with the Commercial
Business Unit and other stakeholders across the MNF Group to
ensure the company roadmap is strategically aligned.

Finance Business Unit - Matthew Gepp, CFO

FY2016 was another successful year for MNF Group, not just in terms
of the outstanding result that we reported but also the successful
integration of the TNZI business which we had only just acquired at
the start of the year, and which now forms the foundation of the
global wholesale segment.

The year saw significant investment in both the domestic and global
voice infrastructure, which has created a more robust network with
the available capacity and reach to enable further growth and see
our key products, namely our intellectual property in the form voice
enablement software, reach global markets. We are particularly
pleased with the organic growth that was delivered through both
the domestic and global wholesale segments in 2016.

MNF finished the year with a strong balance sheet, which will allow
us to move decisively to take advantage of growth opportunities as
they are presented.

“The Finance BU continues to focus on preserving the value that
has been created for the benefit of our shareholders and creating
the platform that will promote sustainable organic and acquisitive
growth into the future,” said Matthew Gepp. “This is achieved by
delivering internal stakeholders the support they require to achieve
the ambitious goals we have set for ourselves in the coming years.”

Platform & Networks - Indika Nanayakkara, CTO

The Platforms & Networks Business Unit builds and operates the infrastructure
and software systems which underpin the suite of products and services
delivered by the MNF Group.

“FY2016 was a busy year with the expansion of TNZI POPs and the Australian
network, as well as the work on integrating the TNZI systems into the MNF
Group network,” said Indika Nanayakkara, CTO. “A number of major customer
migrations and system consolidations were also carried out to meet data
retention obligations.”

The in-house software development and systems integration skills continue
to be a key differentiator for the MNF Group, with the team’s capabilities being
reflected in the awards for innovation received from ACOMMS and iAwards.

FY2017 is expected to be another busy year for the BU with many development
activities planned to leverage the infrastructure, intellectual property and
software systems that the MNF Group has developed over the years. Some of
the highlights include:
•

Expanding the New Zealand network which will allow the MNF Group to
offer its full suite of products and services to NZ customers.
Enhancements to the product suite for Small Business, Enterprise and
Government customers
Enhancements to B2B APIs to make it simpler for customers and partners
to integrate their systems with the MNF Group infrastructure

•

Legal Services Unit - Helen Fraser, General Counsel

The Legal Services unit provides advice and support to
the Board and the business as a whole at both strategic
and operational levels.

Transactions, regulatory, corporate governance and
intellectual property rights are all key areas of focus.

“Working closely with stakeholder groups across
the company, we look for pragmatic, business savvy
solutions to facilitate their business objectives and meet
the strategic needs of the group,” said Helen Fraser.
“With this in mind, FY2016 has seen the development
of a new contract framework and standard terms for
our TNZI brand, which will provide a platform for global
sales of a wider product range.”

The goal is to establish frameworks and solutions
which are flexible and scalable to support the company
as it grows while still meeting the business’ legal
requirements.

Innovation Spotlight

In a few short years, TollShield® has grown from an in-
house innovation to become an industry-recognised tool,
essential in the fight against new-generation threats.

Anatomy of a toll fraud attack

Toll fraud begins when criminals
hack into phone systems or VoIP
devices, allowing them to make
thousands of unauthorised calls.

Without TollShield

With TollShield

Fraudsters call overseas premium-
rate numbers - which they own. The
calls are billed to the victim, and the
fraudster collects easy money.

With TollShield® toll fraud can be
rapidly detected and stopped. Without
TollShield® the attack may continue for
hours, even days.

How TollShield® fights toll fraud

The challenge of toll fraud

Toll fraud relies upon unsecured devices, like VoIP modems or PBXs, which provide a ‘backdoor’ for hackers to make
unauthorised voice calls.

For telcos, toll fraud is impossible to prevent. Every customer and every device is a potential weak point. Worse, the costs
of toll fraud are often passed on to the service provider – because victims are understandably reluctant to pay.

An innovative, real time solution

TollShield® is the MNF Group’s proprietary toll fraud mitigation software. It uses advanced machine-learning technology
to attune to a network and ‘understand’ the difference between toll fraud and legitimate call traffic.

TollShield® enables telcos to pinpoint toll fraud in near real-time. By catching fraud early, service providers can mitigate
its impact on brand and revenue.

2014

Today

The basic idea of TollShield® was conceived in
September 2014, during an internal innovation
session to better protect business and enterprise
customers from toll fraud.

Since global launch at ITW (2015) TollShield® has
been deployed by networks in the UK, Asia, NZ
and Australia. TollShield® is standard on the TNZI
and Symbio Networks.

Days later

Estimated global losses from toll fraud1
US$ 38,000,000,000

If toll fraud is undetected, the ‘per
minute’ costs quickly compound.
In 2015, fraud-related losses were
estimated at $38 billion (US).1

TollShield® enables service providers
to detect, investigate and block toll
fraud in near real time - mitigating
loss and brand damage.

Awards & recognition

1. CFCA, 2015.

TollShield® will be our first line of defence
against toll fraud by providing a new level of
visibility and blocking capacity.

Dee Telecom Thailand.
Vice President, Mr John Clark.

Multi award-winning

TollShield® has been listed among Australia’s
Smart 100
innovations (Anthill 2015), and
has recently won industry honours from the
ACOMMS (Emerging Vendor Innovation 2016)
and the iAwards (NSW Industry & Platforms
Innovation of the Year 2016; NSW Business
Service of the Year 2016).

Caption: iAwards and ACOMMs trophies - 2016

Future Roadmap

The next step in the new-generation voice communications evolution is “any to any” connectivity, with applications
working across all devices. This requires smart networks and applications that act as the glue between the ever growing
ecosystems of devices.

MNF Group is a credible small player in this very big and still growing market, with plenty of opportunity for growth. An
expert in new-generation voice, MNF has the first-mover advantage in delivering these communication solutions of the
future.

Powering innovation

While other telcos ‘traditional’ networks are being dug out of the ground, MNF Group’s smart network is already
delivering the building blocks of the future.

beyond

Applications

imagination

Virtual
numbers

APIs

Legacy
products

Mobile
MVNO

iBoss
enablement

NBN

Portals

MNF
Voice
Network

The Group combines the scale and credibility of a global Tier 1 network with the flexibility of a new-generation software-
defined network that continuously evolves to anticipate customer needs.

Looking to the future, MNF Group will continue to focus on creating value-added innovations right here in Australia, and
exporting them to the world by leveraging existing Tier 1 relationships of its Symbio & TNZI global brands.

Domestic Opportunity

Global Expansion

Industry consolidation creates gap in middle
of the market – MNF steps in

New Mobile MVNO capabilities will drive
growth

New portals and API capabilities to embed
and lock in customer loyalty

MNF Group has the most extensive
wholesale eco-system in Australia/NZ

Global players buy access to regional
infrastructure to create a global capability

MNF’s smart, API-driven network is the
building block for new-generation cloud
communication solutions

TNZI provides access to global players and
pathway into the Asia-Pacific region

MNF Group Limited

ABN 37 118 699 853

30 June 2016
Annual Financial Report

Directors’
Report

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report

For the year ended 30 June 2016

Your directors present this report, together with the financial statements of the Group, being the company and its
controlled entities, for the financial year ended 30 June 2016.

Information on directors

The directors of the Company at any time during or since the end of the financial year are:

Name and qualifications

Experience, special responsibilities and other directorships

Mr Terry Cuthbertson
B. Bus., CA
Chairman

Mr Michael Boorne
Electronics Eng. Dip.
Non-Executive Director

Mr Cuthbertson is the Chairman and an independent non-executive director; he
was previously a partner at KPMG and has extensive corporate finance expertise
and knowledge. Mr Cuthbertson is also a director and Chairman of Australian
Whisky Holdings Ltd, Austpac Resources N.L., Malachite Resources Ltd, South
American Iron & Steel Ltd and Mint Wireless Ltd. He is also a non-executive
director of Isentric Ltd.

Mr Cuthbertson has been a director since March 2006.

Mr Boorne is an independent non-executive director; he is a successful entrepreneur
with extensive experience in combining technical expertise with commercial and
corporate experience. He has founded start-up businesses such as Sprit Modems
and Mitron, and is a director and committee member of numerous private
companies and charitable foundations. He was previously a non-executive director
of Netcomm Ltd.

Mr Boorne is the Chairman of the Audit and Remuneration committees, and has
been a director since December 2006.

Mr Andy Fung
B.E. MCom
Non-Executive Director

Mr Fung is a non-executive director; he is a co-founder and was formerly Managing
Director of My Net Fone since its inception in 2006 until February 2012. He has been
a director of Symbio Networks Pty Ltd since 2002 and Symbio Wholesale Pty Ltd
since 2009.

Mr Fung has been a director since March 2006.

Mr Rene Sugo
B.Eng. (Hon)
CEO and Director

Mr Sugo is the CEO and a director; he is a co-founder and was formerly Technical
Director of My Net Fone since its inception in 2006 until February 2012 when he
was made Chief Executive Officer. He is a director of all MNF Group operating
companies globally.

Mr Sugo is a strong industry advocate, representing the interests of MNF Group and
competition in general. He has been a director of the Australian Communications
Alliance and the INMS (Industry Number Management Services) since 2015.

Mr Sugo sits on various industry committees locally and overseas including the
Numbering Steering Group (NSG) and the ITW Global Leaders Forum (GLF).
Mr Sugo also regularly contributes articles and opinions on issues affecting the
industry, such as the NBN, regulatory policy and innovation.

Mr Sugo has been a director since March 2006.

Company Secretary

Ms. Catherine Ly B.Bus., CPA. Ms Ly was appointed Company Secretary in July 2006.

www.mnfgroup.limited

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

Board and Committee Meetings

From 1 July 2015 to 30 June 2016, the directors held 11 board meetings and 2 audit committee meetings. Each director’s
attendance at those meetings is set out in the following table:

Directors

Mr. Terry Cuthbertson

Mr. Michael Boorne

Mr. Andy Fung

Mr. Rene Sugo

Board

Audit

Eligible to attend

Attended

Eligible to attend

Attended

Principal activities and significant changes in nature of activities

The principal activity of the MNF Group is providing voice communications, broadband Internet, and cloud based
communications services to residential, business, government and wholesale customers in Australia and internationally.

In the financial year the MNF Group derived revenue from the sale of the above mentioned communications services.
These fees consist of recurring charges for access to facilities and capabilities, as well as consumption charges for variable
usage of those facilities. There was also revenue derived from the sale of hardware, equipment and consulting services to
support the primary products of the business.

The company acquired the global wholesale voice business of Telecom New Zealand International (TNZI) in April 2015.
The company is now operating three main segments:

• Domestic Retail – based on the original MyNetFone brand and other retail acquisitions, focussing on selling directly

to residential, small business, enterprise and government customers;

• Domestic Wholesale – based on the original Symbio Networks brand, focussing on selling to Australian & New

Zealand domestic carriers, carriage service providers (CSP), cloud providers and application providers; and

• Global Wholesale – based on the TNZI acquisition and some pre-existing global customers, focussing on selling to

global carriers, carriage service providers (CSP), cloud providers and application providers.

The overall nature of the business has not changed during the financial year.

Operating Result

Earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 46% to $17.8 million, with net profit
after tax (NPAT) increasing by 25% to $9.0 million, compared to the prior year. The result is slightly ahead of forecast,
with EBITDA finishing 2.9% above forecast and NPAT finishing 7.0% above forecast. Revenue for the year increased 88%
to $161.2 million.

The total dividend for the full year has increased by 22% to 7.0 cents per share fully franked, with the company now
declaring a final dividend of 3.5 cents per share for the second half. The full year dividend represents 52% of the FY16 EPS.

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

MNF performance at a glance:

160

140

120

100

FY12 FY13 FY14 FY15 FY16

REVENUE
$161 Million

MARGIN
$49 Million

FY16 Revenue increased 88% on
the prior corresponding period
(PCP) to $161m. With 12 months
of the TNZI acquisition (versus 3
months in FY15) plus 1 month from
the US part of the TNZI acquisition,
combined with strong organic
growth in the Domestic Wholesale
segment.

FY16 Margin increased 53% on the
PCP to $49m. All segments made
strong contributions to the result.
Year on year the Global Wholesale
segment benefited from 12
months contribution from TNZI,
with Domestic Wholesale showing
the biggest organic growth, and
Domestic Retail steady.

EBITDA
$17.8 Million

FY16 EBITDA increased 46% on
the PCP to $17.8m. The result is
slightly ahead of expectation due
to strong margin growth and good
cost control on overheads.

50
45
40
35
30
25
20
15
10
5
0

FY12 FY13 FY14 FY15 FY16

EPS
13.45¢

EPS at 13.45c represents an
increase of 17% on the PCP. This
result represents a 5 year CAGR
of 19.2% demonstrating the
consistent long term shareholder
return from the business.

NPAT
$9.0 Million

FY16 NPAT increased 25% on
the PCP to $9.0m, a pleasing
result which was 7% above initial
forecasts. This NPAT CAGR is a
solid 23.8% over the last 5 years.

10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0

8.0

7.0

6.0

5.0

4.0

3.0

2.0

1.0

0.0

FY12 FY13 FY14 FY15 FY16

DIVIDEND
7.00¢

A final declared dividend of 3.50c
brings the full year dividend to
7.00c, a 22% increase on the PCP.
This represents 52% of EPS, which
is consistent with prior years.

FY12 FY13 FY14 FY15 FY16

14.0

12.0

10.0

8.0

6.0

4.0

2.0

0.0

www.mnfgroup.limited

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

Review of operations

Year ended
30 June 2016

Year ended
30 June 2015

% change

$161.2m

$48.6m

$17.8m

$9.0m

$85.7m

$31.8m

$12.2m

$7.2m

13.45 cents

11.49 cents

+88%

+53%

+46%

+25%

+17%

Revenue

Gross profit

EBITDA

NPAT

EPS

Net cash flow

The closing cash balance as at 30 June 2016 was $52.9m (2015: $6.3m).

At year end debt in the form of a $27.0m revolving acquisition facility was $13.7m (2015: $25.3m). The company had no
net debt as at year end (2015: $19.0m).

Acquisitions

MNF Group acquired the voice business of Telecom New Zealand International (TNZI) in April 2015. Subsequently, and
after completing US regulatory approvals, on 31 May 2016 MNF Group completed the acquisition of the US assets of
TNZI. That completed the acquisition of TNZI in its entirety.
There have been no further acquisitions in the current period.

Business outlook

The MNF Group is now operating three very solid independent segments – Domestic Retail, Domestic Wholesale
and Global Wholesale. Inside each segment are multiple product lines with excellent diversity of customers and
profit contribution. All segments operate in our core area of specialisation, being enabling new and disruptive voice
communications through software development and network deployment. Each segment has a well-defined strategy
for investment and growth. The business is confident of sustainable organic gross margin and profit growth across all
three segments.

Additionally, the business has shown an ability to find value accretive acquisitions and integrate them quickly and
effectively to improve the overall performance of the business. With a discerning and conservative approach, the Board
of MNF Group will continue to actively search for further acquisition opportunities; whilst the business remains totally
committed to driving organic growth and overall financial performance within the business.

Domestic Retail Segment

This segment is based on the original MyNetFone brand and other retail acquisitions, focussing on selling directly to
residential, small business, enterprise & government customers. The segment overall is performing steadily with Gross
Margin contribution stable at $15.1M for the full year – the stability is a result of the diversification within the segment,
with residential in gradual decline, and small business and enterprise & government growing strongly albeit from a
smaller base.

a. Residential

The Residential sub-segment consists of selling residential VoIP, DSL broadband and NBN broadband to consumers in
Australia. The sub-segment operates under the brands of MyNetFone, PennyTel and theBuzz. Each brand has its own
value proposition, web site, and product range; however, all brands are operated across the same network and same
operations team, providing a high level of synergy. Despite the decline in the residential sub-segment it is still viewed as
providing critical mass and volume and an opportunity for future growth.

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

The residential voice market is declining due to the market shift towards mobile communications and mobilecap plans.
The company however has been implementing a defensive strategy of cross selling DSL broadband services, and most
recently NBN broadband services into this customer base. This action has stemmed the decline in revenue and margin,
and provided a useful retention tool.

The residential DSL subscriber base declined slightly to 13,504 services in operation, and the VoIP base fell slightly overall
to 91,369 services in operation. The decline in DSL services is due to migration towards the NBN and MNF being sub-scale
in terms of NBN reach and market voice. The business is looking at improving NBN reach by being certified across all
access types, and putting in place backhaul agreements to be able to reach all 121 Points-of-Interconnect (POI). Total
residential subscriptions across all brands totals 109,000.

In terms of new customer acquisition the business is now signing on more new NBN customers than it is new DSL
customers. This is consistent with the NBN deployment breaking through the 50% population coverage milestone. The
NBN still presents big challenges to smaller broadband companies like MNF – being the ability to reach 121 POI nationally,
the usage based cost of the Capacity Virtual Circuit (CVC), and the explosion in data usage demands of consumers due to
the adoption of over-the-top (OTT) video and content services.

The company is still committed to servicing the residential customer base as it still provides a large user base generating
solid margins on the VoIP and DSL products. The base also provides an opportunity for further innovation and potential
growth in an NBN era. The business is looking at innovative ways to grow scale on the NBN, including acquisitions of
additional subscriber bases and new marketing techniques.

b. Small Business

The Small Business sub-segment consists of selling business grade MyNetFone Virtual PBX and SIP trunks, as well as
business grade DSL, NBN and Ethernet broadband services within Australia. The sub-segment operates under the brands
MyNetFone, Connexus and CallStream. Each brand has its own value proposition, web site, and product range; however,
all brands are operated across the same network and same operations team, providing a high level of synergy. The small
business market sub-segment is strategic to MNF with strong prospects for future growth.

The company has some leading products in the market and continues to innovate. The NBN roll out will provide additional
growth impetus to this segment when the NBN reaches more centralised business areas, as it will force customers to
move off legacy copper PSTN services and find new alternatives for telephony.

The Virtual PBX and SIP trunk products in service grew by 11% to 3,245 services in operation, and overall business voice
services fell slightly to 8,466 services in operation. The decline in business voice services is all under the CallStream
brand and due to a reclassification of active services in operation – the revenue and margin from this business has
not been affected and remains steady. Business data services fell slightly to 2,017 services in operation, mainly due to
reclassification of some older Connexus services to residential.

In terms of new customer acquisition the business continues to push the Virtual PBX as the leading service. The business
has recently re-launched the business customer web site - https://business.mynetfone.com.au/ - as well as released
higher value included plans which are very popular. The product is undergoing a cosmetic and feature refresh which
should be completed by the end of the year. Based on our competitive analysis, the product is still very strong in terms
of price and functionality when compared to all competitors selling a hosted PBX product. The business is constantly
looking at new ways to market effectively whilst keeping costs under control.

c. Enterprise & Government

The Enterprise & Government sub-segment consists of selling enterprise grade MyNetFone SIP trunks and other value
added services to enterprise and government organisations within Australia. The sub-segment operates under the
MyNetFone brand. This sub-segment is strategic to the group with strong organic growth in the last 12 months, and an
excellent pipeline of prospects looking forward to next year.

The company has adopted a long-term strategy to pursue domestic government business as VoIP technology increases
its foothold in all levels of government. The Enterprise & Government sector is generally more conservative than small
business, and the migration to next generation telephony has been lagging that of small business. However recently

www.mnfgroup.limited

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

the sector has been more focussed on cost reduction and efficiency, resulting in the increased rate of migration into
centralised private cloud telephony services, and the need for data centre based high capacity centralised SIP trunks. This
is the same model adopted by the Tasmanian Government in 2012 which was a pioneer in this space.

MyNetFone had initial success with the Tasmanian Government in 2012, where it was awarded a long term contract to
provide telephony services to government. Recently the Tasmanian Government has elected to exercise all extensions to
the initial contract, securing MyNetFone as an exclusive supplier of voice carriage until 2022. MyNetFone is also actively
engaged with the Tasmanian Government in providing additional value added services and product innovation to assist
the Government in delivering services to its constituents.

Recently the company has also secured several large contracts with government enterprises in NSW. These contracts are
for inbound and outbound voice carriage, as well as value added services and product innovation. These are multi-year
contracts with initial terms of 3 years, and potential extensions of up to 7 years.

Based on recent success with both Tasmanian and NSW government enterprises, the company is increasing its resourcing
to support and drive growth in the Enterprise & Government sector. These additional resources are in the area of business
development, account management, bid management and customer life cycle management.

The company currently holds the following government certifications: Municipal Association of Victoria (MAV), Western
Australian Local Government Association (WALGA), NSW Procurement ICT Services Scheme, Queensland Government
IT&T Procurement Panel and Tasmanian Government. As a result of these efforts the company is winning successful
business with many local governments, universities and several state government departments around Australia. The
company continues to pursue additional Government certifications and tenders in other areas.

The company also maintains several key certifications with leading enterprise grade equipment vendors such as:
Microsoft, Cisco, Avaya, Samsung, Panasonic and many others. The company is still the only carriage service provider in
Australia certified by Microsoft for the Lync unified communications platform.

Domestic Wholesale Segment

This segment is based on the original Symbio Networks brand, and now includes the iBoss software platform. The
segment is focussed on selling to Australian & New Zealand domestic carriers, carriage service providers (CSP), cloud
providers and application providers. This segment is strategic to the group and is currently the fastest organically
growing segment with gross margin contribution growing 49% on the PCP to $12.5M.

It should be noted that certain Symbio customers are now included in the Global Wholesale segment as result of the
new segmentation following the acquisition of the TNZI voice business. Revenue, margin and relative growth have been
adjusted for this fact to make comparisons meaningful.

The key products sold into this market are:

1. Wholesale voice – termination of high volume wholesale voice minutes;
2. Wholesale managed services – providing unbranded capabilities and services such as Local Number Portability,

voice end-points, phone numbers, and numerous other in-house developed cloud based value added services;

3. Wholesale aggregation services on the iBoss software platform – providing customer branded services such as:
DSL broadband, NBN broadband, Legacy ISDN/PSTN voice resale, mobile telephony resale and also providing
access to the complete suite of Symbio wholesale managed services;

4. Software-as-a-Service (SaaS) – leveraging the company’s extensive software intellectual property assets and
monetising them by means of selling cloud based capabilities on a monthly recurring basis. The main product
is the iBoss enablement platform.

These products leverage the extensive fully interconnected national voice network that is also used to carry the group’s
retail and globally originated traffic, in addition to an extensive amount of proprietary intellectural property that has
been developed by the company over the last 14 years.

The domestic wholesale business is currently hosting over 238 unique service provider customers, an increase of 13% on
the previous year. Each customer generally purchases one or more products from the above suite of products. In addition

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

to the increase in service provider customers, the customers themselves are generally growing organically, providing a
compounding growth effect – hence the strong margin growth for this segment.

Services provided in this segment continue to experience strong growth, with Local Number Portability (LNP) growing
16% to 502,000 inbound ported numbers, and the total volume of hosted Direct-In-Dial (DID) numbers growing 10% to
2.7 million numbers. Wholesale aggregation subscriptions (iBoss) increased to 3,000, up 50% on the prior year.

Global Wholesale Segment

This segment is based on the TNZI brand, and the customer base acquired together with some pre-existing Symbio
customers that are global operators. The segment is focussed on selling to global carriers, carriage service providers
(CSP), cloud providers and application providers. This segment is strategic to the group and has the biggest potential for
long term organic growth through leveraging its global market reach to sell the company’s high margin products. Initial
focus for global growth is the Asia-Pacific region where the opportunity and the company is strongest.

The main product sold by TNZI has historically been global voice termination. The TNZI brand operates high quality voice
termination to all countries around the globe through direct and indirect partnerships. TNZI is globally recognised as a
“Tier 1” quality brand, having being an innovator and pioneer of global minutes trading for the past 25 years. The TNZI
organisation is a member of many exclusive global infrastructure organisations and committees, including the ITW
Global Leaders Forum (GLF), Pacific Islands Telecommunications Association (PITA), the i3 Forum standards organisation
and the Pacific Telecommunications Council (PTC).

This has been the first full year of ownership of the TNZI business. The integration of the TNZI business has been going
well with all major milestones for the first 12 months being completed. These include – staff integration, staff resource
expansion, Wellington office relocation, IT systems separation, customer novations, and US licensing & transaction
completion. The acquisition of TNZI was a large and complex transaction, and completing the integration has been an
onerous task for management over the last 12 months.

The global network expansion and upgrade program is also well underway. The expansion of the UK (London) Point of
Presence (PoP) was finalised earlier this year, and the US (Los Angeles) PoP upgrade has been completed recently in July
2016. After some logistics delays the Hong Kong PoP is due to be fully operational by September 2016. Additionally, the
NZ (Auckland) and Singapore PoPs are due to be upgraded and expanded in FY17.

In addition to the traditional TNZI product suite, the Symbio products are being productised and made available to the
TNZI global customer base. This is expected to provide additional high margin recurring revenue streams to the TNZI
business, similar to what Symbio is achieving in the Australian and New Zealand domestic markets.

The international wholesale network is currently hosting over 209 service provider customers, most of which are major
global Tier 1 service providers. Due to the cost and complexity of managing a global customer base, the focus for TNZI is
large service providers with significant positive margin contribution, so smaller nonperforming customers are regularly
disconnected to save network and operational resources. The Group is investing in additional global marketing of the
TNZI brand, and is deploying additional Business Development resources in the UK, USA and New Zealand in order to
capture an increase in market share for both traditional and next generation products.

Significant changes in the state of affairs

There were no significant changes in the state of affairs of the company during the financial year.

After balance date events

Dividends proposed
The dividend as recommended by the Board will be paid subsequent to the balance date.

Options Exercised
60,000 options with an exercise price at $3.00 were exercised subsequent to year end.

www.mnfgroup.limited

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

Future developments

The Board is committed to growing the company organically as well as by way of targeted acquisitions.

The Company has a strict policy around the evaluation of acquisition targets and will continue to look to build through
leveraging synergies, adding products and services through the acquisition of intellectual property and avoiding
companies that are pure re-sellers of other networks.

Environmental issues

The Group’s operations are not regulated by any significant environmental regulation under a law of the Commonwealth
or of a State or Territory.

Dividends paid or recommended

Fully franked dividends paid or declared for payment during the financial year are as follows:

$000

Franking

Dividends paid during the year:

2015 Final dividend of 3.25 cents per share paid on 29 September 2015

2016 Interim dividend of 3.50 cents per share paid on 30 March 2016

2,170

2,342

Dividends recommended (subsequent to year end):

2016 Final dividend of 3.50 cents per share recommended on 16 August 2016

2,363

100%

The 2016 final dividend is to be paid on 29 September 2016 to shareholders registered as at 5 September 2016.

Options

Shares under option or issued on exercise of options

No options have been granted since the end of the 2015 financial year.

Below are the details of shares issued to directors throughout the 2016 financial year as a result of the exercise of options.

Director

Date of expiry

Exercise price

Number of options

Terry Cuthbertson

Michael Boorne

Andy Fung

Rene Sugo

31 August 2016

$3.00

100,000

150,000

450,000

Below are the details of shares issued to executives and staff throughout the 2016 financial year as a result of the exercise
of options.

Date of expiry

Exercise price

Number of options

Executives and Staff

31 December 2015

Executives and Staff

31 August 2016

$1.70

$3.00

10,000

85,000

95,000

At the date of this report, the unissued ordinary shares of MNF Group Limited under options which were granted in
previous financial years is as follows:

Grant date

1 July 2014

Date of expiry

Exercise price

Number of options

31 August 2016

$3.00

355,000

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

Remuneration Report Audited

This Remuneration Report for the year ended 30 June 2016 outlines the remuneration arrangements of the Company
and the Group in accordance with the requirements of the Corporations Act 2001 (the Act) and its regulations. This
information has been audited as required by section 308 (3C) of the Act.

Introduction

The Remuneration Report details the remuneration arrangements for key management personnel (KMP) who are defined
as those persons having authority and responsibility for planning, directing and controlling the major activities of the
Company and the Group, directly or indirectly, including any director (whether executive or otherwise) of the Parent.

For the purposes of this report, the term “executive” includes the Chief Executive Officer (CEO), executive directors and
other senior executives of the Company or the Group.

Non-executive directors

Terry Cuthbertson

Chairman

Michael Boorne

Andy Fung

Executive director

Rene Sugo

Other KMPs

Director

Chief Executive Officer

Matthew Gepp

Chief Financial Officer

Catherine Ly

Company Secretary & Treasurer

There were no changes to KMP between the reporting date and date the finanical report was authorised for issue.

Remuneration governance

Remuneration Committee

Due to the size of the Company the functions of the Remuneration Committee are undertaken by a full Board. Mr
Boorne chairs the Remuneration Committee.

The Board approves the remuneration arrangements of the CEO and other executives and all awards made under short
and long term incentive plans.

The Board also sets the aggregate remuneration of non-executive directors, which is then subject to shareholder
approval.

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MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

Remuneration Report (continued)

Use of remuneration consultants

The Company does not currently engage remuneration consultants. The Board may consider the use of remuneration
consultants in the future as the company grows.

Remuneration report approval at the 2015 AGM

The 2015 remuneration report received positive shareholder support at the 2015 AGM with a vote of 97.97% in favour.
(2014: 94.8%)

Executive remuneration arrangements

Remuneration principles and strategy

The Board has established salary arrangements for the directors that are comparable with other companies in the
sector of similar revenue, market capital and earnings levels. The Board has established salary arrangements for the
key executives that are commensurate with their level of experience. The Board will continually review its approach to
setting remuneration levels by balancing short and long term benefits and linking remuneration to performance.

Details of short term incentive (STI) plans

As part of their respective employment agreements the CEO, CFO and other senior managers are eligible for a cash
bonus subject to the attainment of clearly defined objectives.

Non-executive directors are not eligible for an STI.

STIs for the previous and current financial years are based on meeting agreed net profit after tax targets as set by the
Board and are subject to Board approval.

STI amounts paid in FY16 are in relation to the FY15 company performance and targets.

Details of long term incentives (LTI) plans

The Board may issue options to executive and other employees under the company Employee Option Plan in order to
align remuneration with the creation of shareholder value over the long term. As such, LTI awards are only made to
executives and other key employees who have an impact on the Group’s performance.

Shareholders returns

The following table sets out MNF Group’s earnings and movements in shareholder wealth over the past five years:

Revenue (‘000)

NPAT (‘000)

Basic EPS (cents)

Dividends paid (‘000)

Dividends per share (cents)

Share price (as at 30 June)

Change in share price

2016

2015

2014

2013

2012

$161,217

$85,675

$59,306

$46,209

$38,292

$8,990

13.45

$4,512

7.00

$4.00

$0.18

$7,184

11.49

$3,128

5.75

$3.82

$1.40

$5,778

9.26

$2,498

4.50

$2.42

$1.22

$4,141

6.98

$1,770

3.50

$1.20

$0.64

$74M

$3,069

5.55

$862

2.30

$0.56

$0.38

$31M

Market capitalisation

$270M

$240M

$151M

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

Remuneration Report (continued)

Remuneration details of key management personnel for the year ended 30 June 2016

Details of the nature and amount of benefits and payments for each director and KMP of the Company for the 2015 and
2016 financial years are as follows:

Short term benefits

Post employment
benefits

Share based
payments

Total

Cash salary & fees

STI/Bonus

Superannuation

Options

Non-executive directors:

Mr T Cuthbertson

Mr M Boorne

Mr A Fung

Executive director:

Mr R Sugo

Other KMPs:

Mr M Gepp

Ms C Ly

Total

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

109,000

94,784

83,000

72,312

71,000

61,812

410,779

298,550

246,667

225,000

154,250

146,742

43,900

66,350

57,500

40,000

1,074,696

101,400

899,200

106,350

Key terms of employment agreements

10,355

9,004

7,885

6,870

6,745

5,872

43,195

34,666

28,896

25,175

14,654

13,940

111,730

95,527

22,000

33,000

11,000

4,400

119,355

125,788

90,885

101,182

77,745

89,684

497,874

432,566

333,063

301,175

168,904

165,082

1,287,826

114,400

1,215,477

The Company has entered into an Executive Employment Agreement with Rene Sugo. The remuneration and terms of
employment for other Key Executives are also set out in written agreements. Each of these employment agreements
are unlimited in term but may be terminated by written notice by either party and by the Company making payment in
lieu of notice.

Each of these agreements sets out the arrangements for total fixed remuneration, performance-related cash bonus
opportunities, superannuation, termination rights and obligations and eligibility to participate in the employee equity-
based incentive scheme. Executive salaries are reviewed annually. The executive employment agreements do not require
the Company to increase base salary, incentive bonuses or to continue the participants’ participation in equity-based
incentive programs.

www.mnfgroup.limited

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

Remuneration Report (continued)

The Company may terminate the employment of the Key Executives without notice and without payment in lieu of
notice in some circumstances. This includes if the executive:

commits an act of serious misconduct;
commits a material breach of the executive employment agreement;

1.
2.
3. denigrates or engages in any behaviour that may materially damage the reputation of, or otherwise bring the
Company into disrepute; or is convicted of any criminal offence which would in the reasonable opinion of the Board
of Directors adversely affect the carrying out of the executive’s duties.

The Company may terminate the employment of the Key Executive at any time by giving the executive notice of
termination or payment in lieu of such notice. The amount of notice required from the Company in these circumstances
is set out in the following table:

Name of key executive

Company notice period

Employee notice period

Termination provision

Rene Sugo

Matthew Gepp

Catherine Ly

6 months

3 months

6 months

1 month

3 months

1 month

6 months base salary

3 months base salary

6 months base salary

Directors’ interests in shares and options of the company or related bodies corporate

At the date of this Report, the particulars of shares and options held by the directors of the company in the company or
in related bodies corporate which are required to be declared in the register of directors’ share holdings are as follows:

Name of Director

Mr Andy Fung

Mr Rene Sugo

Mr Terry Cuthbertson

Mr Michael Boorne

Total

Share holding

13,969,216

13,160,576

920,000

705,067

28,754,859

This concludes the remuneration report, which has been audited.

Options

MNF Group Limited | ABN 37 118 699 853 and controlled entities

Directors’ Report for the year ended 30 June 2016 (continued)

Directors benefits

No director has received or has become entitled to receive, during or since the financial year, a benefit because of a
contract made by the company, controlled entity or related body corporate with a director, a firm which a director is a
member or an entity in which a director has a substantial financial interest.

Indemnifying officers or auditor

During the year, the Group confirmed a contract insuring the directors, the company secretary and all executive officers
of the Group and any related body corporate, against a liability incurred by a director, company secretary or executive
officers to the extent permitted by the Corporations Act 2001.

The Group has indemnified the directors, the company secretary and all executive officers of the Group for costs incurred,
in their capacity as officers of the Group, for which they may be held personally liable, except where there is a lack of
good faith.

Details of the amount of the premium paid in respect of the insurance policies are not disclosed as such disclosure is
prohibited under the terms of the contract.

No indemnities have been given or agreed to be given or insurance premiums paid or agreed to be paid, during or since the
end of the financial year, to the auditors of the Group or any related entities against a liability incurred by the auditors.

Proceedings on behalf of the Group

No person has applied for leave of a court to bring proceedings on behalf of the Group or intervene in any proceedings
to which the Group is a party for the purpose of taking responsibility on behalf of the Group for all or any part of those
proceedings. The Group was not a party to any such proceedings during the year.

Non-audit services

During the current and prior year MNSA Pty Ltd Chartered Accountants, the Group’s auditor did not provide any non-
audit services.

The total amount received by MNSA Pty Ltd Chartered Accountants for non-audit services was $Nil (2015: $Nil).

Auditor’s independence declaration

A copy of the auditor’s independence declaration as required under section 307C of the Corporations Act 2001 has been
received and can be found on page 69 of the financial report.

Rounding off

The Group is of a kind referred to in ASIC Class order 98/100 report 10 July 1988 and in accordance with that Class Order,
amounts in the consolidated financial statements and Director’s have been rounded off to the nearest thousand dollars,
unless otherwise stated.

This directors’ report, incorporating the remuneration report, is signed in accordance with a resolution of the Board of
Directors.

Terry Cuthbertson
Chairman

Sydney, 16 August 2016

Rene Sugo
Director

www.mnfgroup.limited

Financial
Statements
2016

MNF Group Limited

Consolidated statement of profit or loss and other comprehensive income

For the year ended 30 June

Continuing operations
Revenue

Cost of sales
Gross profit

Finance revenue

Employee benefits expense

Depreciation and amortisation

Other expenses

Costs related to acquisition

Financing costs
Profit before income tax

Income tax expense

Profit from continuing operations

Net profit for the year

Other comprehensive income:

Items that may be reclassified to profit or loss:

Exchange differences on translation of foreign operations

Changes in fair value of cash flow hedges

Total comprehensive income for the year

Consolidated group

2016

$000

2015

$000

161,217

(112,576)
48,641

85,675

(53,891)

31,784

249

(21,223)

(4,709)

(9,872)

(200)

(1,061)
11,825

(13,840)

(1,983)

(5,846)

(332)

(225)

9,646

(2,835)

(2,462)

Notes

8,990

(484)

(582)
(1,066)

7,924

7,184

155

(23)

132

7,316

11.49

11.32

Earnings per share from continuing operations

Basic earnings per share (cents)

- Diluted earnings per share (cents)

13.45

13.38

The accompanying notes form part of these consolidated financial statements

www.mnfgroup.limited

MNF Group Limited

Consolidated statement of financial position

As at:

Assets

Current assets

Cash and cash equivalents

Trade and other receivables

Income tax receivable

Inventories

Other financial assets
Total current assets

Non-current assets

Property, plant and equipment

Deferred income tax asset

Goodwill and other intangibles

Consideration paid in advance
Total non-current assets

Total assets

Liabilities

Current liabilities

Trade and other payables

Loans and borrowings

Deferred revenue

Income tax payable

Finance lease liability

Financial Instruments

Provisions
Total current liabilities

Non-current liabilities

Loans and borrowings

Financial instruments
Provisions
Total non-current liabilities

Total liabilities

Net assets

Equity

Issued capital

Reserves

Retained earnings
Total equity

Consolidated group

30 June 2016

30 June 2015

Notes

$000

16a

52,889

29,067

195

305

-
82,456

12,011

735

30,802

-
43,548

126,004

66,550

2,500

1,668

2,812

1,300
74,830

11,190

282

734
12,206

87,036

38,968

26,440

419

12,109
38,968

6,287

29,706

185

323
36,501

7,797

527

29,308

4,420
42,052

78,553

29,304

2,500

1,843

1,201

1,169
36,033

22,790

659
23,472

59,505

19,048

9,932

1,485

7,631
19,048

The accompanying notes form part of these consolidated financial statements

MNF Group Limited

Consolidated statement of cash flows

Consolidated group

For the year ended 30 June

2016

Notes

$000

Cash flows from operating activities

Receipts from customers

Payments to suppliers and employees

Receipt on supplier novations

Interest received

Interest paid

Income tax paid
Net cash from operating activities

Cash flows from investing activities

Purchase of property, plant and equipment

Decrease/(increase) in other financial assets

Receipt/(payment) for business acquisitions

Payment in advance for business acquisition

Software development costs
Net cash (used in) investing activities

Cash flows from financing activities

Proceeds from share placement and options exercised

Dividends paid

Proceeds from borrowings

Repayment of borrowings

Repayment of finance lease liability

Net Cash from financing activities

Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at 1 July
Cash and cash equivalents at 30 June

173,115

(157,611)

41,464

144

(873)

(4,415)
51,824

(5,958)

323

182

(150)
(5,603)

16,508

(4,511)

(11,600)

(16)

381

46,602

6,287
52,889

2015

$000

81,694

(69,010)

(225)

(3,001)
9,546

(3,811)

(25)

(24,128)

(4,420)

(817)
(33,201)

425

(3,129)

26,790

(1,588)

22,498

(1,157)

7,444
6,287

The accompanying notes form part of these consolidated financial statements

www.mnfgroup.limited

MNF Group Limited

Consolidated statement of changes in equity

Attributable to owners of the company

For the year ended
30 June 2016

Ordinary
share
capital

Share-
based
payment
reserve

Trans-
lation
reserve

Hedging
reserve

Retained
earnings

Total

$000

Balance at 30 June 2014

9,507

1,157

Profit for the period

Other comprehensive income

Dividends paid

Share options exercised

Share-based payment transactions

425

196

155

(23)

3,576

14,240

7,184

132

(3,129)

425

196

Balance at 30 June 2015

9,932

1,353

155

(23)

7,631

19,048

Profit for the period

Other comprehensive income

Dividends paid

Share options exercised

Share placement

Shares issued - DRP

1,607

14,449

452

(484)

(582)

8,990

(4,512)

8,990

(1,066)

(4,512)

1,607

14,449

452

Balance at 30 June 2016

26,440

1,353

(329)

(605)

12,109

38,968

The accompanying notes form part of these consolidated financial statements

Notes to the
Consolidated
Financial
Statements

MNF Group Limited

Notes to the consolidated financial statements

Table of Contents

1. Corporate Information ........................................................................................................................ 41

2. Significant accounting policies ........................................................................................................... 41

3. Segment note ....................................................................................................................................... 50

4. Revenue and expenses ....................................................................................................................... 51

Income tax ........................................................................................................................................... 52

6. Statement of cash flows reconciliation ............................................................................................ 53

7. Trade and other receivables .............................................................................................................. 53

8. Other financial assets ......................................................................................................................... 53

9. Property, plant and equipment ......................................................................................................... 54

10. Trade and other payables ................................................................................................................... 55

11. Loans and borrowings ......................................................................................................................... 55

12. Financial liabilities ............................................................................................................................... 55

13. Deferred revenue .................................................................................................................................. 56

14. Provisions .............................................................................................................................................. 56

15. Finance lease liability ......................................................................................................................... 57

16. Issued capital ...................................................................................................................................... 57

17. Share based payments ....................................................................................................................... 58

18. Commitments and contingencies ..................................................................................................... 59

19. Events after reporting date ................................................................................................................ 59

20. Auditors remuneration ...................................................................................................................... 59

21. Director and executive disclosures ...................................................................................................... 60

22. Controlled entities .............................................................................................................................. 61

23. Goodwill and other intangible assets ............................................................................................... 62

24. Impairment testing ............................................................................................................................ 63

25. Business combinations ...................................................................................................................... 64

26. Earnings per share .............................................................................................................................. 65

27. Dividends paid and proposed ............................................................................................................ 65

28. Parent entity ........................................................................................................................................ 66

29. Financial risk management objectives and policies ......................................................................... 66

30. Company details ................................................................................................................................. 67

MNF Group Limited

Notes to the consolidated financial statements

1. Corporate Information
These consolidated financial statements and notes represent those of MNF Group Limited and controlled entities (the
“Company” or the “Group”) for the year ended 30 June 2016.

At the 2015 AGM, shareholders approved a resolution to change the company name from My Net Fone Limited to MNF
Group Limited. This name change is representative of the fact that the company is now a large and sophisticated group,
trading under multiple brand names, in a global market.

MNF Group Limited is a for profit entity limited by shares and incorporated and domiciled in Australia whose shares are
publicly traded on the Australian Securities Exchange (ASX) and is the ultimate parent entity in the Group.

The separate financial statements of the parent entity, MNF Group Limited, have not been presented within this financial
report as permitted by the Corporations Act 2001.

The financial statements were authorised for issue on 16 August 2016 by the directors of the Company.

The nature of the operations and principal activities of the Group are described in the Directors’ Report.

2. Significant accounting policies
a. Basis of preparation

The financial statements are general purpose financial statements that have been prepared in accordance with Australian
Accounting Standards, Australian Accounting Interpretations, other authoritative pronouncements of the Australian
Accounting Standards Board (AASB) and the Corporations Act 2001.

Australian Accounting Standards set out accounting policies that the AASB has concluded would result in the financial
statements containing relevant and reliable information about transactions, events and conditions. Compliance with
Australian Accounting Standards ensures that the financial statements and notes also comply with International
Financial Reporting Standards as issued by the IASB. Material accounting policies adopted in the preparation of these
financial statements are presented below and have been consistently applied unless otherwise stated.

The financial statements have been prepared on an accruals basis and are based on historical costs, modified, where
applicable, by the measurement at fair value of selected non-current assets, financial assets and financial liabilities. Fair
Value which is level 3 “unobservable inputs” is determined primarily from inputs reflective of management expectations.

b. New and amended accounting policies adopted by the Group and New Accounting Standards for application in

future periods

Accounting Standards and Interpretations issued by the AASB that are not yet mandatorily applicable to the Group,
together with an assessment of the potential impact of such pronouncements on the Group when adopted in future
periods, are discussed below:

AASB 9: Financial Instruments and associated Amending Standards (applicable to annual reporting periods beginning
on or after 1 January 2018).

The Standard will be applicable retrospectively (subject to the provisions on hedge accounting outlined below) and
includes revised requirements for the classification and measurement of financial instruments, revised recognition and
derecognition requirements for financial instruments and simplified requirements for hedge accounting.

The key changes that may affect the Group on initial application include certain simplifications to the classification
of financial assets, simplifications to the accounting of embedded derivatives, upfront accounting for expected credit
loss and the irrevocable election to recognise gains and losses on investments in equity instruments that are not held
for trading in other comprehensive income. AASB 9 also introduces a new model for hedge accounting that will allow
greater flexibility in the ability to hedge risk, particularly with respect to hedges of non-financial items. Should the entity
elect to change its hedge policies in line with the new hedge accounting requirements of the Standard, the application of
such accounting would be largely prospective.

Although the directors anticipate that the adoption of AASB 9 may have an impact on the Group’s financial instruments,
including hedging activity, it is impracticable at this stage to provide a reasonable estimate of such impact.

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

AASB 15: Revenue from Contracts with Customers (applicable to annual reporting periods commencing on or after 1
January 2017).

When effective, this Standard will replace the current accounting requirements applicable to revenue with a single,
principles-based model. Except for a limited number of exceptions, including leases, the new revenue model in AASB
15 will apply to all contracts with customers as well as non-monetary exchanges between entities in the same line of
business to facilitate sales to customers and potential customers.
The core principle of the Standard is that an entity will recognise revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange
for the goods or services. To achieve this objective, AASB 15 provides the following five-step process:

•
•
•
•
•

identify the contract(s) with a customer;
identify the performance obligations in the contract(s);
determine the transaction price;
allocate the transaction price to the performance obligations in the contract(s); and
recognise revenue when (or as) the performance obligations are satisfied.

This Standard will require retrospective restatement, as well as enhanced disclosures regarding revenue. Although
the directors anticipate that the adoption of AASB 15 may have an impact on the Group’s financial statements, it is
impracticable at this stage to provide a reasonable estimate of such impact.

AASB 16: Leases (applicable to annual reporting periods commencing on or after 1 January 2019). When effective, this
Standard will:

•
•

•

replace AASB 117 Leases and some lease-related Interpretations;
require all leases to be accounted for ‘on-balance sheet’ by lessees, other than short-term and low value asset
leases; and
require new and difference disclosures about leases.

This Standard will require retrospective restatement, as well as new and difference disclosures. Although the directors
anticipate the adoption of AASB 16 may have an impact on the Group’s financial statements, it is impracticable at this
stage to provide a reasonable estimate of such impact.

c. Principles of consolidation

The consolidated financial statements incorporate the assets, liabilities and results of entities controlled by MNF Group
Limited at the end of the reporting period. A controlled entity is any entity over which MNF Group Limited has the ability
and right to govern the financial and operating policies so as to obtain benefits from the entity’s activities. Control will
generally exist when the parent owns, directly or indirectly through subsidiaries, more than half of the voting power of
an entity. In assessing the power to govern, the existence and effect of holdings of actual and potential voting rights are
also considered.

In preparing the consolidated financial statements, all inter-group balances and transactions between entities in the
consolidated group have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where
necessary to ensure consistency with those adopted by the parent entity.

Where controlled entities have entered or left the Group during the year, the financial performance of those entities are
included only for the period of the year that they were controlled. A list of controlled entities is contained in Note 22 to
the financial statements.

d. Business combinations

Business combinations occur where an acquirer obtains control over one or more businesses and results in the
consolidation of its assets and liabilities. All business combinations, including those involving entities under common
control, are accounted for by applying the acquisition method.

Consideration transferred for the acquisition comprises the fair value of the assets transferred, liability incurred and the
equity interests issued by the acquirer. Identifiable assets acquired and liabilities and contingent liabilities assumed in
a business combination are, with limited exceptions, measured initially at their fair values at the acquisition date. Any
deferred consideration payable is discounted to present value using the entity’s incremental borrowing rate. Acquisition
related costs are expensed as incurred.

Goodwill is stated after separate recognition of identifiable intangible assets. It is calculated as the excess of the sum of
fair value of consideration transferred, over the acquisition-date fair values of identifiable net assets.

MNF Group Limited

Notes to the consolidated financial statements (continued)

e. Going concern

The financial report has been prepared on a going concern basis. This presumes that funds will be available to finance
future operations and the realisation of assets and settlement of liabilities will occur in the normal course of business.

For the year ended 30 June 2016 the Group generated profit after tax of $9.0m (2015: $7.2m), as at the balance date the
Group’s total assets exceeded total liabilities by $39.0m (2015: $19.0m).
The Directors believe that the going concern basis of accounting is appropriate due to the expected cash flows to be
generated by the Group over the next twelve months. The Directors closely monitor cash flows as the Group grows and
if revenues do not increase as expected, the directors will look to contain costs. The Directors believe that these actions,
if required, will be sufficient to ensure that the company will be able to pay its debts as and when they fall due for the
next twelve months.

Notwithstanding the above, the directors acknowledge that there are a number of risk factors that could materially
affect the Group’s future profitability and cash flows, which include, but are not limited to:

(i) Competition
There can be no assurance given in respect of the Group’s ability to continue to compete profitably in the competitive
markets in which the Group operates. The potential exists for change in the competitive environment in which the Group
operates.

(ii) Management of growth
The Group achieved a profit during the year, however, there is always an inherent risk the Group may have insufficient
working capital to meet its business requirements and the expansion of the Group will depend upon the ability of
management to implement and successfully manage the Group’s growth strategy.

(iii) Reliance on key management
The responsibility of overseeing the day-to-day operations and strategic management of the Group is substantially
dependent upon its senior management and its key personnel. There can be no assurance given that there will be no
detrimental impact on the Group if one, or a number of, these employees cease their employment.

(iv) New products and technological developments
The Group’s current core business of broadband telecommunications is highly competitive and is subject to the
introduction of new and improved products and services into the market on a regular basis.

(v) Broadband access arrangements
The Group currently has certain access to the Internet backbone network. Terms of the supply of broadband are
negotiated regularly. There is no guarantee that future access arrangements will be able to be negotiated on commercially
acceptable terms.

(vi) Distribution channels and device suppliers
The Group benefits from its good working relationship with its distribution channels to promote its products and
services and with its device suppliers to provide its VoIP adaptors. There is no guarantee that these relationships will
continue in the future.

(vii) Legislation, regulation and policies
Any material adverse changes in government or other regulatory organisation policies or legislation which impacts on
the telecommunications industry, may affect the viability and profitability of the Group.

(viii) Internet access
The use of VoIP technology is dependent on quality and speed of access to the Internet. The market growth of VoIP may
be limited by the take up rate of broadband and other fast Internet access or by the quality of such access.

f. Critical accounting estimates and judgments

The directors evaluate estimates and judgments incorporated into the financial statements based on historical
knowledge and best available current information. Estimates assure a reasonable expectation of future events and are

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

based on current trends and economic data, obtained both externally and within the Group. Key estimates that have a
significant risk of causing adjustments to the carrying amounts of certain assets and liabilities within the next annual
reporting period are:

(i) Share based payment transactions
The Group measures the cost of equity-settled transactions with employees by reference to the fair value of the equity
instruments at the date at which they are granted. The fair value is determined by an independent valuer using a Black-
Scholes model. The accounting estimates and assumptions relating to equity-based payments would have no impact on
the carrying amounts of assets and liabilities within the next annual reporting period but may have impact on profit or
loss and equity.

(ii) Useful lives of property, plant and equipment
The Group reviews the estimated useful lives of property, plant and equipment at the end of each financial year. The
Group adjusts the remaining effective useful life of its assets to better reflect their actual usage and future economic
benefit.

(iii) Utilisation of tax losses
The Company and its wholly-owned Australian subsidiaries elected to join as members of a tax consolidated group
under Australian taxation law as of 1 July 2011. Each entity in the tax consolidated group contributed tax losses to the
Group. The Group has no tax losses to currently utilize.

(iv) Research & Development (R&D) tax concession
When calculating the income tax provision for the year, there is an operating assumption that the Research &
Development tax concession for 2016 will be materially the same as for 2015. The directors believe the estimate is
reasonable and conservative. This may be subject to change following the approval of the R&D tax concession application
from AusIndustry in due course.

g. Revenue recognition

Revenue is measured at the fair value of the consideration received or receivable after taking into account any trade
discounts and volume rebates allowed. The following specific recognition criteria must also be met before revenue is
recognised:

(i) Rendering of services
Revenue from telecommunication services is recognised when the services are provided to the customer. Deferred
revenue represents the unused proportion of cash received in advance for call credits determined on a specific account
basis at balance date.

(ii) Interest income / Finance revenue
Interest revenue is recognised using the effective interest rate method, which, for floating rate financial assets, is the
rate inherent in the instrument.

h. Leases

Lease payments for operating leases, where substantially all the risks and benefits remain with the lessor, are charged
as expenses in the period in which they are incurred. Lease incentives under operating leases are recognised as a liability
and amortised on a straight-line basis over the life of the lease term.

i. Cash and cash equivalents

Cash and cash equivalents in the statement of financial position comprise cash at bank and in hand and short-term
deposits with an original maturity of three months or less that are readily convertible to known amounts of cash and
which are subject to an insignificant risk of changes in value.

For the purposes of the Statement of Cash Flows, cash and cash equivalents consist of cash and cash equivalents as
defined above, net of outstanding bank overdrafts.

MNF Group Limited

Notes to the consolidated financial statements (continued)

j. Trade and other receivables

Trade receivables and other receivables, which generally have 30-90 day terms, are recognised and carried at original
invoice amount less an allowance for any amounts determined to be un-collectable or amounts subject to dispute.

An allowance for doubtful debts is made when there is objective evidence that the Group will not be able to collect the
debts. Bad debts are written off when it is determined there is no chance of recovering the debt.

An allowance for credit notes is made when invoiced amounts are subject to dispute and there is objective evidence that
the dispute will be successful.

k. Foreign currency transactions and balances

(i) Functional and presentation currency
The functional currency of each group entity is measured using the currency of the primary consolidated environment in
which the entity operates. The consolidated financial statements are presented in Australian dollars which is the parent
entity’s functional and presentation currency.

(ii) Transactions and balances
Transactions in foreign currencies are initially recorded in the functional currency by applying the exchange rates ruling
at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are retranslated at the
rate of exchange ruling at the balance sheet date.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the
exchange rate as at the date of the initial transaction. Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair value was determined.

(iii) Group Companies
The financial results and position of foreign operations whose functional currency is different from the group’s
presentation currency are translated as follows:
- Assets and liabilities are translated at year end exchange rates prevailing at the reporting date.
- Income and expenses are translated at average exchange rates for the period.
- Retained earnings are translated at the exchange rates prevailing at the date of the transaction.
On consolidation, assets and liabilities have been translated into Australian dollars at the closing rate at the reporting
date. Income and expenses have been translated into the Group’s presentation currency at the average rate over the
reporting period. The exchange differences are taken to other comprehensive income (OCI) in the consolidated financial
report.

l. Income tax

The income tax expense (income) for the year comprises current income tax expense (income) and deferred tax expense
(income).

Current income tax expense charged to the profit or loss is the tax payable on taxable income. Current tax liabilities
(assets) are measured at the amounts expected to be paid to (recovered from) the relevant taxation authority.

Deferred income tax expense reflects movements in deferred tax asset and deferred tax liability balances during the year
as well as unused tax losses if any.

Current and deferred income tax expense (credit) is charged or credited outside profit or loss when the tax relates to
items that are recognised outside profit or loss.

Except for business combinations, no deferred income tax is recognised from the initial recognition of an asset or liability
where there is no effect on accounting or taxable profit or loss.

Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to the period when the asset
is realised or the liability is settled and their measurement also reflects the manner in which management expects to
recover or settle the carrying amount of the related asset or liability.

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MNF Group Limited

Notes to the consolidated financial statements (continued)

Deferred tax assets relating to temporary differences and unused tax losses are recognised only to the extent that it is
probable that future taxable profit will be available against which the benefits of the deferred tax asset can be utilised.

Where temporary differences exist in relation to investments in subsidiaries, branches, associates, and joint ventures,
deferred tax assets and liabilities are not recognised where the timing of the reversal of the temporary difference can be
controlled and it is not probable that the reversal will occur in the foreseeable future.

Current tax assets and liabilities are offset where a legally enforceable right of set-off exists and it is intended that
net settlement or simultaneous realisation and settlement of the respective asset and liability will occur. Deferred tax
assets and liabilities are offset where: (a) a legally enforceable right of set-off exists; and (b) the deferred tax assets and
liabilities relate to income taxes levied by the same taxation authority on either the same taxable entity or different
taxable entities where it is intended that net settlement or simultaneous realisation and settlement of the respective
asset and liability will occur in future periods in which significant amounts of deferred tax assets or liabilities are expected
to be recovered or settled.

Tax consolidation:
MNF Group Limited and its wholly-owned Australian subsidiaries are part of a tax consolidation group under Australian
taxation law. MNF Group Limited is the head entity in the tax consolidation group. Tax expense, deferred tax liabilities
and deferred tax assets arise from temporary differences of the members of the tax-consolidation group using the
‘separate taxpayer within group’ approach by reference to the carrying amounts in the separate financial statements of
each entity and the tax values applying under tax consolidation.

MNF Group Limited, as the head entity in the tax consolidated group, recognises the current tax liabilities and assets and
deferred tax assets arising from unused tax losses and tax credits of all entities in the Australia group.

m. Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is
not recoverable from the Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of
the asset or as part of an item of the expense. Receivables and payables in the statement of financial position are shown
inclusive of GST.

Cash flows are presented in the statement of cash flows on a gross basis, except for the GST component of investing and
financing activities, which are disclosed as operating cash flows.

n. Inventories

Inventories are measured and recorded at cost and are valued at the lower of cost and net realisable value.

o. Property, plant and equipment

Plant and equipment are measured on the cost basis.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the
recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows
that will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been
discounted to their present values in determining recoverable amounts.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as apporpriate, only when
it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item can
be measured reliably. All other repairs and maintenance are charged to the statement of comprehensive income during
the financial period in which they are incurred.

MNF Group Limited

Notes to the consolidated financial statements (continued)

Depreciation
The depreciable amount of all fixed assets is depreciated on a straight-line basis over the asset’s useful life to the
consolidated group commencing from the time the asset is held ready for use.
The depreciation rates used for each class of depreciable assets are:

Funiture & Fittings
Office Equipment
Leasehold improvements
Network Infrastructure and IT Systems

Group
6 to 10 years
3 to 5 years
3 to 5 years
2 to 10 years

The asset’s residual values and useful lives are reviewed, and adjusted if appropriate, at the end of each reporting period.

An assets’ carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is
greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses
are included in the statement of comprehensive income. When re-valued assets are sold, amounts included in the
revaluation surplus relating to that asset are transferred to retained earnings.

p. Financial instruments

Non-derivative financial assets and financial liabilities are recognised when the entity becomes a party to the contractual
provisions to the instrument. For financial assets, this is equivalent to the date that the company commits itself to
either the purchase or sale of the asset (i.e. trade date accounting is adopted).

Financial instruments are initially measured at fair value plus transaction costs, except where the instrument is classified
‘at fair value through profit or loss’, in which case transaction costs are expensed to profit or loss immediately.

(i) Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an
active market and are subsequently measured at amortised cost.
Loans and receivables are included in current assets, except for those which are not expected to mature within 12 months
after the end of the reporting period. (All other loans and receivables are classified as non-current assets.)

(ii) Investments in subsidiaries held by the parent
Investments in subsidiaries held by the parent entity are recognised and subsequently measured at cost in the separate
financial statements of the Company, less any impairment.

(iii) Derivative financial instruments and hedge accounting
The group holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures. Embedded
derivatives are separated from the host contract and accounted for separately if certain criteria are met.

If the hedging instrument no longer meets the criteria for hedge accounting, expires or is sold, terminated or exercised,
or the designation is revoked, then the hedge accounting is discontinued prospectively. If the forecast transaction is no
longer expected to occur, then the amount accumulated in reserves is reclassified to profit or loss.

Derivatives are initially recognised at fair value; any directly attributable transaction costs are recognised in profit or loss
as incurred.

Cash flow hedges
When a derivative is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the
derivative is recognised in other comprehensive income (OCI) and accumulated in the hedging reserve. Any ineffective
portion of changes in the fair value of the derivative is recognised immediately in profit or loss.

The amount accumulated in equity is retained in OCI and reclassified to profit or loss in the same period or periods during
which the hedged item affects profit or loss.

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

Fair value hedges
When a derivative is designated as a fair value hedging instrument, the hedged item is re-measured to take into account
the gain or loss attributable to the hedged risk, with the gains or losses arising recognised in profit or loss. This offsets
the gain or loss arising on the hedging instrument which is measured at fair value through profit or loss. Changes in fair
value of the derivative instrument are recognised in profit or loss.

q. Intangible assets and goodwill (impairment testing)

At the end of each reporting period, the Group assesses whether there is any indication that an asset may be impaired.
The assessment will include the consideration of external and internal sources of information including dividends
received from subsidiaries, associates or jointly controlled entities deemed to be out of pre-acquisition profits. If such an
indication exists, an impairment test is carried out on the asset by comparing the recoverable amount of the asset, being
the higher of the asset’s fair value less costs to sell and value in use, to the asset’s carrying value. Any excess of the asset’s
carrying value over its recoverable amount is expensed to the statement of comprehensive income.

Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the
recoverable amount of the cash-generating unit to which the asset belongs.

Recognition and measurement:

Goodwill

Brands

Research and
development

Other intangible
assets

Goodwill arising on the acquisition of subsidiaries is measured at cost less accumulated
impairment losses. Goodwill Assets are not subject to amortisation and are tested for
impairment on an annual basis, or whenever an indication of impairment exists.
Brands identified on acquisitions are measured and recorded at valuation less accumulated
impairment losses. Brands are not subject to amortisation and are tested for impairment on
an annual basis, or whenever an indication of impairment exists.
Expenditure on research is recognised in profit or loss as incurred. Development expenditure
is capitalised only if the expenditure can be measured reliably, the product or process is
technically and commercially feasible, future economic benefits are probable and the Group
intends to and has sufficient resources to complete development and to use or sell the asset.
Otherwise, it is recognised in profit or loss as incurred. Subsequent to initial recognition,
development expenditure is measured at cost less accumulated amortisation and any
accumulated impairment losses.
Other intangible assets, including customer contracts, patents and trademarks and software
acquired by the Group that have finite lives are measured at cost less accumulated amortisation
and any accumulated impairment losses.

Amortisation
Amortisation is calculated to write off the cost of intangible assets less their residual values using the straightline
method over their estimated useful life, and is generally recognised in profit or loss. Goodwill is not amortised.

The estimate useful life of intangibles is as follows:

•
•
•

Patents and trademarks
Software and Software development costs
Customer relationships

5-20 years
5-10 years
3-5 years

Amortisation methods, useful lives and residual values are reviewed at each reporting date and adjusted if appropriate.

r. Trade and other payables

Trade and other payables represent the liability outstanding at the end of the reporting period for goods and services
received by the Group during the reporting period which remains unpaid. The balance is recognised as a current liability
with the amount being normally paid within 30 days of recognition of the liability.

s. Provisions

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, for
which it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the obligation.

When the group expects some or all of a provision to be reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense
relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement.

MNF Group Limited

Notes to the consolidated financial statements (continued)

Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the
present obligation at the Statement of Financial Position date. If the effect of the time value of money is material,
provisions are discounted using a current pre-tax rate that reflects the time value of money and the risks specific to the
liability.

t. Employee leave benefits

Provision is made for the Group’s liability for employee benefits arising from services rendered by employees to balance
date. Employee benefits that are expected to be settled within one year have been measured at the amounts expected
to be paid when the liability is settled. Employee benefits payable later than one year have been measured at the present
value of the estimated future cash outflows to be made for those benefits. In determining the liability, consideration
is given to employee wages increases and the probability that the employee may satisfy vesting requirements. Those
cash outflows are discounted using market yields on national government bonds with terms to maturity that match the
expected timing of cash flows.

u. Contributed capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are
shown in equity as a deduction, net of tax, from the proceeds.

v. Earnings per share

Basic earnings per share is determined as net profit/(loss) attributable to members of the group, adjusted to exclude any
costs of servicing equity (other than dividends), divided by the weighted average number of ordinary shares.

Diluted earnings per share include options outstanding that will have the potential to convert to ordinary shares and
dilute the basic earnings per share.

w. De-recognition of financial assets and financial liabilities

Financial assets are de-recognised where the contractual rights to receipt of cash flows expires or the asset is transferred
to another party whereby the entity no longer has any significant continuing involvement in the risks and benefits
associated with the asset. Financial liabilities are de-recognised where the related obligations are either discharged,
cancelled or expired. The difference between the carrying value of the financial liability extinguished or transferred to
another party and the fair value of consideration paid, including the transfer of non-cash assets or liabilities assumed,
is recognised in profit or loss.

x. Share-based payment transactions

The Group provides benefits to its employees and Directors (including key management personnel) in the form of
share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled
transactions).

The cost of these equity-settled transactions with employees and Directors is measured by reference to the fair value of
the equity instruments at the date at which they are granted. The fair value is determined by an external valuer using a
Black-Scholes model.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, over the period
in which the performance and/or service conditions are fulfilled (the vesting period), ending on the date on which the
relevant employees and Directors become fully entitled to the award (the vesting date).

At each subsequent reporting date until vesting, the cumulative charge to the consolidated statement of profit or loss
and other comprehensive income is the product of:

(i) the grant date fair value of the award;
(ii) the current best estimate of the number of awards that will vest, taking into account such factors as the likelihood
of employee turnover during the vesting period and the likelihood of non-market performance conditions being
met; and

(iii) the expired portion of the vesting period.

The charge to the consolidated statement of profit or loss and other comprehensive income for the period is the
cumulative amount as calculated above less the amounts already charged in previous periods. There is a corresponding
credit to equity.

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

3. Segment note
Operating Segments
The Group operates in one business segment being telecommunications. Prior to the acquisition of the TNZI voice
business in April 2015 the Group operated primarily out of one geographic segment, Australia, and in one business
segment, Telecommunications.

During the 2016 year the Group has re-structured its business and the segmentation reporting and now identifies three
core segments.

Segment comparatives reflect the organisational changes that have occurred since the 2015 reporting period in order to
present a like-for-like comparison.

Australian Domestic Retail
•

The core MyNetFone brand, services residential, SMB (small to medium business), Enterprise and Government
customers in Australia.

• Other brands in this segment include, Connexus, callstream, PennyTel and theBuzz.
•

Key products in this segment include:
o VoIP, Internet, Virtual PBX and SIP trunking
o Conferencing, toll free numbers and number porting.

Australia/New Zealand Domestic Wholesale
•
•

The core Symbio and iBoss brands service wholesale customers based in Australia & New Zealand.
Key products in this segment include
o Call termination, pre-select, SIP trunking, inbound numbers, virtual numbers and porting.
o Wholesale aggregation, SaaS, data enablement and MVNO.

Global Wholesale
•
• During the year international customers supplied under the Symbio brand have transitioned over to being serviced

The TNZI Brand services the global wholesale market

•
•

by the TNZI Global team.
TollShield and OCA (Open CA) also operate under the Global Wholesale segment
Key products include:
o Voice carriage and International toll free services (ITFS)
o
o Class 4 Softswitch and billing

Toll Fraud prevention

The Group has identified its operating segments based on internal management reporting that is used by the executive
management team (chief operating decision makers) in assessing the performance and allocating resources.

The accounting policies used by the Group in reporting segment information internally, is the same as those contained
in note 2 to the financial statements.

Australia
Domestic Retail

Australia/New
Zealand Domestic
Wholesale

Global Wholesale

Total

$000

28,917

-
28,917

15,078

29,253

-
29,253

15,150

23,445

6,582
30,027

12,479

20,991

810
21,801

8,363

108,855

1,420
110,275

21,084

35,431

-
35,431

8,271

161,217

8,002
169,219

48,641

85,675

810
86,485

31,784

2016

External revenue

Inter-segment revenue
Segment revenue

Segment margin

2015

External revenue

Inter-segment revenue
Segment revenue

Segment margin

MNF Group Limited

Notes to the consolidated financial statements (continued)

For the year ended 30 June

4. Revenue and expenses

a. Revenue

Rendering of services

Finance revenue consists of:

Interest on bank deposits

b. Employee benefits expense

Wages and salaries

Superannuation

Shared based payments expense

Other employee benefits expense

c. Depreciation and amortisation

Depreciation of fixed assets

Amortisation of intangibles

d. Other expenses

Marketing

Property

Technology & support

Distribution

Accounting and audit

Legal and consulting

Bank and transaction costs

Other administrative expenses

e. Financing costs

Finance charges payable under finance lease

Finance charges related to hedge instrument

Finance charges payable on bank loan

2016

$000

2015

$000

161,217

85,675

249

18,527

1,295

1,401
21,223

3,244

1,465
4,709

1,401

1,068

2,248

307

358

544

379

3,567
9,872

107

954
1,061

11,940

1,068

196

636
13,840

1,474

509
1,983

1,145

793

969

218

196

362

2,075
5,846

217
225

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

For the year ended 30 June

2016

$000

2015

$000

5. Income tax
a.

Income tax expense

The major components of income tax expense are as follows:

Current tax

Adjustment in respect of prior year tax

Origination and reversal of temporary differences
Total

b. Reconciliation between tax expense and the accounting profit

Profit before income tax

At the Group’s statutory rate of 30% (2015: 30%)

Tax incentives

Effect of tax rates in foreign jurisdictions

Non-temporary differences

Change in recognised deductible temporary differences

Adjustment in respect of prior year
Total

c. Deferred tax asset

Recognised in the accounts:

Relating to temporary differences

2,951

(150)
2,835

11,825

3,548

(250)

(64)

(433)

34
2,835

2,475

(26)

13
2,462

9,646

2,894

(222)

(50)

156

(290)

(26)
2,462

735
735

527
527

The total value of temporary differences not brought to account in the current year is $118k (2015: Nil).

d. The Company and its wholly-owned Australian entities are members of a tax consolidated group. Transactions within
the Group have been eliminated in full on consolidation. The tax consolidated group is treated as a single entity for

income tax purposes.

MNF Group Limited

Notes to the consolidated financial statements (continued)

For the year ended 30 June

6. Statement of cash flows reconciliation
a. Cash and cash equivalents

2016

$000

2015

$000

Cash and cash equivalents balance comprises:

Cash at bank

52,889

6,287

b. Reconciliation of net profit after tax to net cash flows from operating activities:

Profit for the year

Adjustments for:

Depreciation and amortisation

Share based payments expense

Tax expense

Changes in assets and liabilities, net of the effects of acquisitions:

Change in trade and other receivables

Change in inventories

Change in trade and other payables

Change in deferred revenue

Change in provisions and employee benefits
Cash generated from operating activities

8,990

4,709

2,835

639

(120)

39,155

(175)

206
56,239

7,184

1,983

196

2,462

(8,770)

9,075

117

235
12,547

Tax paid

(4,415)

(3,001)

Net cash flow from operating activities

51,824

9,546

7. Trade and other receivables

Trade receivables

Doubtful debts provision

Provision for credit notes

Other receivables

8. Other financial assets

Term deposits

28,307

(1,001)

(300)

2,061
29,067

29,224

(768)

(250)

1,500
29,706

323

Term deposits relate to cash on deposit securing bank guarantees and are not available for immediate use. Short
term deposits are made for fixed terms and earn interest at the prevailing short term rates.

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

9. Property, plant and equipment
a. Reconciliation of carrying amount

Office furniture
& equipment

Leasehold
improvements

Network
infrastructure &
equipment

Total

$000

Consolidated

Cost:

At 1 July 2014

Acquisitions

Additions

Disposals

Reclassify asset category

Effect of movement in exchange rates
At 30 June 2015

At 1 July 2015

Acquisitions

Additions

Disposals (c)

Reclassify asset category

Effect of movement in exchange rates
At 30 June 2016

Accumulated depreciation:

At 1 July 2014

Acquisitions

Depreciation expense

Disposals

Reclassify asset category

Effect of movement in exchange rates
At 30 June 2015

At 1 July 2015

Acquisitions

Depreciation expense

Disposals (c)

Reclassify asset category

Effect of movement in exchange rate
At 30 June 2016

Net book value:

At 30 June 2015
At 30 June 2016

886

441

297

26
1,650

1,650

1,171

(389)

(9)
2,423

(580)

(421)

(158)

(24)
(1,183)

(1,183)

(316)

389

8
(1,102)

467

1,321

237

-
287

287

502

-
789

(54)

(35)

-
(89)

(89)

(465)

-
(554)

198

235

4,038

12,749

3,277

(44)

(50)

487
20,457

20,457

974

4,719

(3,327)

(617)
22,206

(2,627)

(9,037)

(1,262)

(478)
(13,325)

(13,325)

(2,463)

3,327

710
(11,751)

4,924

13,190

3,811

(44)

513
22,394

22,394

974

6,392

(3,716)

(626)
25,418

(3,207)

(9,458)

(1,474)

(502)
(14,597)

(14,597)

(3,244)

3,716

718
(13,407)

7,132

10,455

7,797

12,011

b. Property, plant and equipment work in progress
Included in leasehold improvements is $86k of WIP (work in progress) that is expected to complete in August 2016.

c. Disposals
Asset disposals relate to equipment that is fully written down to net book value $Nil and is no longer in use. There was
no impact to the profit or loss account in relation to these disposals.

MNF Group Limited

Notes to the consolidated financial statements (continued)

For the year ended 30 June

10. Trade and other payables

Trade payables

Other creditors and accruals

Security deposits held

11. Loans and borrowings

Current liabilities:

Secured bank loan

Non-current liabilities:

Secured bank loan

2016

$000

52,608

13,895

47
66,550

2015

$000

8,787

20,477

40
29,304

2,500

11,190

22,790

13,690

25,290

The Group’s bank facility (the “Facility”) consists of a $27,000,000 revolving acquisition facility and an $850,000 (2015:
$500,000) revolving multi-option credit facility. The Facility has a maturity date of 20 April 2020.

The Facility is secured by a fixed and floating charge over the assets of the Group.

During the year there were no defaults or breaches on the Facility.

12. Financial liabilities

Current liabilities

Forward foreign exhange contract - fair value hedge

Non-current liabilities

Interest rate swap contract - cash flow hedge

2,812

282

3,094

The Group’s bank facility is a variable interest rate facility. It is the Groups policy to protect a portion of the bank facility
from exposure to fluctuations in interest rates. Accordingly on 23 April 2015 the Group entered into an interest rate swap
agreement to protect the loan facility from exposure to increasing interest rates. A hedge relationship was designated
on this date. Under this interest rate swap, the Group is obliged to receive interest at a variable rate and pay interest
at a fixed rate of 2.64% per annum. The swap covers 89% (2015: 52%) of the floating rate exposure under the Facility.

The contract requires settlement of the net interest receivable or payable each 90 days which coincides with the dates
on which interest is payable on the underlying facility making it highly effective.

The gain or loss from remeasuring the hedging instrument at fair value is recognised in other comprehensive income and
deferred in equity in the hedge reserve. It is reclassified into profit or loss when the hedged interest expense is recognised.

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

Forward foreign exchange contract - fair value hedge

There are significant creditor balances derived in foreign currencies, including Euro, Japanese Yen, Pound Sterling, and
U.S. Dollar. These exposures on creditor balances are largely offset by debtor balances in corresponding currencies.
Where this is not the case it is the Groups policy to protect these liabilities from exposure to fluctuations in foreign
exchange rates. Accordingly, on 31 May 2016 the Group entered into a forward foreign exchange contract to protect
the exposed creditor balances from increasing foreign exchange rates. A hedge relationship was designated on this
date. During the year ended 30 June 2016 the Group recognised a $2,368k foreign exchange loss on the fair value hedge
excluding transaction costs and a $2,102k gain on the hedged items. There has been no material ineffectiveness on the
fair value hedge relationship during the year.

For the year ended 30 June

Foreign exchange hedge effectiveness

Foreign exchange movement

Foreign currency term deposits

Foreign currency liabilities
Gain in foreign currency valuations

Fair value of hedging contract

Less transaction costs of hedging contract
Loss in valuation of hedge

Hedge effectiveness

13. Deferred revenue

2016

$000

2015

$000

1,969

133
2,102

2,812

(444)
2,368

89%

-
-

Pre-paid calling credits

1,668

1,843

Deferred revenue relates to cash received in advance from customers with respect to pre-paid calling credits, The
balance represents the unused call credits as at balance date.

14. Provisions

As at 1 July 2015

Arising during the year

Acquired during the year

Utilised during the year
As at 30 June 2016

Current

Non-current

Annual leave

Long service leave

$000

1,169

1,096

(1,028)
1,300

1,300

659

103

(28)
734

734

Total

$000

1,828

1,199

(1,056)
2,034

1,300

734

A provision has been recognised for employee entitlements relating to long service leave. In calculating the present
value of future cash flows in respect of long service leave, the probability of long service leave being taken is based
on historical data. The measurement and recognition criteria relating to employee benefits have been included in
Note 2.

MNF Group Limited

Notes to the consolidated financial statements (continued)

For the year ended 30 June

15. Finance lease liability

Finance lease liability: Current

Finance lease liability: Non-current

2016

$000

2015

$000

Refer to note 18 (b) for the terms and conditions relating to the finance lease obligations.

16. Issued capital
a. Ordinary shares

Issued capital

26,440

9,932

Movements in ordinary shares on

2016

2015

issue:

At 1 July

Exercise of share options (i)

Exercise of share options (ii)

Issued for cash (iii)

Issued from DRP participation (iv)

Number of shares $000

62,710,215

10,000

535,000

4,054,054

145,068

9,932

1,592

14,449

452

62,460,215

250,000

9,507

425

At 30 June

67,454,337

26,440

62,710,215

9,932

10,000 options were exercised with an exercise price of $1.70.

(i)
(ii) 535,000 options were exercised with an exercise price of $3.00.
(iii) 4,054,054 shares were issued at a price of $3.70.
(iv) 145,068 shares were issued as a result of participation in the MNF Group dividend reinvestment plan (at an

issue price of $3.17 and $3.11).

Share capital movements above are presented net of transaction costs.

Ordinary shares have the right to receive dividends as declared and in the event of winding up the company, to
participate in the proceeds from the sale of all surplus assets in proportion to the number of and amounts paid up
on shares held. Ordinary shares entitle their holder to one vote, either in person or by proxy, at a meeting of the
company.

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

b. Share options

2016

2015

Movements in share options on issue:

Number WAEP $ Number WAEP $

Outstanding at 1 July

Granted during the year

Exercised during the year

Expired during the year
Outstanding at 30 June

Exercisable

910,000

(10,000)

(535,000)

(10,000)
355,000

355,000

2.97

1.70

3.00

1.70
3.00

3.00

270,000

890,000

(250,000)

-
910,000

910,000

1.70

3.00

1.70

-
2.97

2.97

The outstanding options balance as at 30 June 2016, issued under the share based payment option scheme to

directors, executives and employees is represented by 355,000 options with an exercise price of $3.00 and an expiry

date of 31 August 2016.

17. Share based payments

Outstanding options as at year end:

Employee option plan

Option granted to directors
Total

2016

2015

Number

355,000

-
355,000

460,000

450,000
910,000

a. Employee option plan (EOP)
The Board may issue options under the EOP to any employee of the Group, including executive directors and non-
executive directors. Options will be issued free of charge, unless the Board determines otherwise. Each option is to
subscribe for one share and when issued, the shares will rank equally with other shares. Unless the terms on which an
option was offered specify otherwise, an option may be exercised at any time after one year from the date it is granted,
provided the employee is still employed by the Company.

An option may also be exercised in special circumstances, that is, at any time within 6 months after the employee’s
death, total and permanent disablement, or retrenchment. An option lapses upon the termination of the employee’s
employment by the Company and, unless the terms of the offer of the option specify otherwise, lapses three years after
the date upon which it was granted. The exercise price per share for an option will be the average closing market price of
the Company’s share over the five trading days before their issue.

The maximum number of options on issue under the EOP must not at any time exceed 5% of the total number of shares
on issue at that time.

b. Share options granted to the directors
No options were granted to Directors during the year. The following table illustrates the number and weighted average
exercise prices (WAEP) of and movements of share options held by directors during the year:

2016

2015

Number WAEP $ Number WAEP $

Outstanding at 1 July

Granted during the year

Exercised during the year
Outstanding as at 30 June

450,000

3.00

450,000

3.00

MNF Group Limited

Notes to the consolidated financial statements (continued)

18. Commitments and contingencies

a. Operating lease commitments

Operating leases relate to premises with lease terms remaining between 3 and 6 years. The consolidated entity does
not have an option to purchase the leased assets at the expiry of the lease terms.

Future minimum rentals payable under non-cancellable operating leases as at 30 June 2016 are as follows:

Within one year

After one year, not more than five years

More than five years

b. Finance lease commitments

2016

$000

1,105

4,195

230
5,530

2015

$000

771

526

-
1,297

The Group has used finance leases to acquire Network infrastructure and equipment. Future minimum lease
payments under purchase contracts together with the present value of the net minimum lease payments are as
follows:

2016

2015

Within one year

After one year, not more than five years

More than five years
Total minimum lease payments

Less amounts representing finance charges

Present value of minimum lease payments

Included in the financial statements as:

Finance lease liability: Current

Finance lease liability: Non-current
Total

$000

-
-

-
16

The finance lease obligations consisted of one finance lease with a maturity date of August 2015. The finance lease
liabilities were secured against the assets to which they relate.

19. Events after reporting date

a. Dividends
The dividend as recommended by the Board will be paid subsequent to the balance date.

b. Share Options
Subsequent to year end 60,000 options with an exercise price of $3.00 were exercised by employees.

Since the reporting date, there have been no other significant events, other than those mentioned above, which
would impact on the financial position of the Company as disclosed in the Statement of Financial Position as at 30
June 2016, and on the cash flow of the Company for the year ended on that date.

20. Auditors remuneration

The Auditor of the Group is MNSA Pty Ltd Chartered Accountants.

Auditors of the company:
Amounts received or due and receivable by MNSA Pty Ltd Chartered
Accountants for:

Audit and review of the annual report of the entity

Non-audit services

Other Auditors:

Audit and review of financial statements

www.mnfgroup.limited

2016

$000

2015

$000

255

57
312

112

36
148

MNF Group Limited

Notes to the consolidated financial statements (continued)

21. Director and executive disclosures
a. Details of Key Management Personnel (KMP)

Mr Terry Cuthbertson

Mr Michael Boorne

Mr Andy Fung

Mr Rene Sugo

Mr Matthew Gepp

Ms Catherine Ly

Chairman and Non-executive Director

Non-executive Director

Director & Chief Executive Officer

Chief Financial Officer

Company Secretary

b. Compensation of Key Management Personnel

The Group has applied the exemption under Corporations Amendments Regulation 2006 No 4 which exempts listed
companies from providing remuneration disclosures in relation to their key management personnel in their annual
financial reports by Accounting Standard AASB 124 Related Party Disclosures. These disclosures are provided in the
Directors’ Report designated as audited.

c. Shareholdings of Key Management Personnel

Directors:
Mr Terry Cuthbertson

Mr Michael Boorne

Mr Andy Fung

Mr Rene Sugo

Executives:

Mr Matthew Gepp

Ms Catherine Ly

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

Balance at
the beginning
of period

Traded during
the year

Options
exercised

1,000,000

1,125,000

682,500

1,019,749

14,448,955

14,488,955

13,488,955

50,000

260,000

210,000

(180,000)

(125,000)

(77,433)

(337,249)

(579,739)

(40,000)

(478,379)

(50,000)

2,665

100,000

150,000

50,000

20,000

50,000

The above shareholdings are held directly and indirectly through controlled entities.

d. Share options of Key Management Personnel

Year

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

2016

2015

Balance at
the beginning
of period

Granted

Options
exercised

100,000

150,000

50,000

20,000

50,000

100,000

150,000

50,000

20,000

(100,000)

(150,000)

(50,000)

(20,000)

(50,000)

Directors:

Mr Terry Cuthbertson

Mr Michael Boorne

Mr Andy Fung

Mr Rene Sugo

Executives:

Mr Matthew Gepp

Ms Catherine Ly

Balance at
end of
period

920,000

1,000,000

705,067

682,500

13,969,216

14,448,955

13,160,576

13,488,955

50,000

282,665

260,000

Balance at
end of
period

100,000

150,000

50,000

20,000

MNF Group Limited

Notes to the consolidated financial statements (continued)

22. Controlled entities

The consolidated financial statements include the financial statements of MNF Group Limited and the subsidiaries
listed in the following table:

Name

Country of
Incorporation

Ownership interest

2016

2015

My Net Fone Australia Pty Limited

Symbio Networks Pty Limited

Symbio Wholesale Pty Limited

Internex Australia Pty Limited

Pennytel Australia Pty Limited

Numbering Services Australia Pty Limited

Symbio Wholesale (Singapore) Pte Limited

Symbio Wholesale International Pty Limited (i)

TNZI USA LLC

TNZI New Zealand Limited

TNZI Australia Pty Limited

TNZI UK Limited

TNZI Singapore Pte Limited

Symbio Wholesale NZ Pty Limited (ii)

Australia

Singapore

Australia

USA

New Zealand

Australia

United Kingdom

Singapore

New Zealand

100%

(i) On 28 June 2016 the board resolved to change the name of Symbio Wholesale International Pty Limited to TNZI

International Pty Limited

(ii) Symbio Wholesale NZ Pty Limited was registered on 19 January 2016

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

23. Goodwill and other intangible assets

Consolidated

Goodwill

Brands

Customer
contracts

Software
develop-
ment
costs

Software
and other
assets#

Total

$000

Adjustment to fair value from

2,710

provisional accounts (TNZI)

Additions

Balance at 30 June 2016

17,327

1,823

1,433

Cost

Balance at 1 July 2014

Acquisition of iBoss

Acquistion of OpenCA

Acquisition of TNZI

Additions
Balance at 1 July 2015

Accumulated Amortisation

Balance at 1 July 2014

Amortisation
Balance at 1 July 2015

Amortisation

Balance at 30 June 2016

Net Book Value

At 30 June 2015
At 30 June 2016

11,951

2,666

-
14,617

1,811

-
1,811

1,377

-
1,377

-
-

(69)
(69)

(290)

(359)

817
817

150

967

-
-

11,951

1,580

500

9,115

-
11,195

1,580

500

14,969

817
29,817

2,809

150

11,226

32,776

(440)
(440)

(509)
(509)

(1,175)

(1,465)

(1,615)

(1,974)

14,617

17,327

1,811

1,823

1,308

1,074

817

967

10,755

9,611

29,308

30,802

# Acquired externally or purchased as part of a business combination.

MNF Group Limited

Notes to the consolidated financial statements (continued)

24. Impairment testing

For the purpose of undertaking impairment testing, MNF Group Limited identifies cash generating units (CGUs).
CGUs are determined according to the smallest group of assets that generates cash flows that are separately
identifiable.

The carrying amount of goodwill broken out into CGUs is detailed below:

Goodwill

CGUs

Wholesale

Data

Retail

International

30 June 2016

30 June 2015

$000

6,086

4,533

1,332

5,376
17,327

$000

6,086

4,533

1,332

2,666
14,617

Goodwill assets are not subject to amortisation and are tested for impairment on an annual basis, or whenever an
indication of impairment exists.

The recoverable amount of the cash generating units has been determined based on value-in-use calculations using
cash flow projections based on five year financial forecasts and assumptions that represent management’s best
estimate of the range of business and economic conditions at the time. Calculations are reviewed and approved by
the Board of Directors.

Value-in-use represents the present value of the future net cash flow arising from the assets continued use and
subsequent disposal. Any reduction in the carrying value is recognised as an expense in the consolidated statement
of profit or loss and other comprehensive income in the reporting period in which the impairment loss occurs.

In determining value in use, management applies its best judgement in establishing forecasts of future operating
performance, as well as a selection of growth rates, terminal rates and discount rates. These judgements are applied
based on management’s understanding of historical information and expectation of future performance.

Management considers that, as the wholesale, retail and data CGUs operate in the Telecommunications Industry in
Australia servicing the same markets, the risks specific to each unit are comparable and therefore a discount rate
of 9.6% (2015: 10.0%) is applicable to all domestic CGUs. The long-term growth rate used to extrapolate the cash
flows beyond five years (the Terminal Value) for each CGU is 2.5% (2015: 2.5%). The International CGU has been
assessed using a discount rate of 14.0% (2015: 14.6%) and a Terminal Value of 2.0% (2015: 2.0%)

Based on the results of the tests undertaken no impairment losses were recognised in relation to goodwill.

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

25. Business combinations

On 1 April 2015 MNF Group Limited purchased the global wholesale voice business of Telecom New Zealand International

(TNZI) from Spark New Zealand Limited for NZD 22.4m (A$22.0m).

Completion of the US component of the acquisition took place on 31 May 2016. From that date the US assets and

liabilities have been included in the consolidated balance sheet of the Group.

Following completion of the US component and after further assessment of the fair value of the identifiable assets and

liabilities of the whole TNZI acquisition, including subsequent adjustments to the purchase price through the working

capital adjustment, the final consolidated acquisition accounting is illustrated in the table below:

Purchase consideration paid

Plus working capital adjustment

Less US TNZI voice business component
Net cash paid for TNZI voice business

Less fair value of identifiable net assets
Goodwill

Identifiable net asset acquired:

Trade receivables

Doubtful debts provision

Other Debtors

Deferred tax asset

Fixed assets

Accumulated depreciation

Customer contracts

Brand names

Software

Trade and other payables

Income tax payable

Provisions
Provisional fair value of identifiable net assets

2016
Consolidated
final

2015
Consolidated
provisional

$000

22,010

4,502

-
26,512

(21,136)
5,376

20,216

(938)

1,446

14,188

(9,459)

1,433

1,823

9,146

(16,190)

(292)

(315)
21,136

22,010

4,684

(4,420)
22,274

(19,608)
2,666

14,985

(686)

1,342

13,190

(9,459)

1,377

1,811

9,115

(11,601)

(292)

(252)
19,608

The fair value of TNZI’s intangible assets (brand name, customer bases and software assets) has been measured based
on an independent valuation.

Consideration paid in advance:

For US TNZI voice business

Consolidated
final

Consolidated
provisional

4,420

With the acquisition of the US TNZI voice business complete, the consideration paid in advance for the US component
has been accounted for in the acquisition accounting above.

MNF Group Limited

Notes to the consolidated financial statements (continued)

26. Earnings per share

Earnings and weighted average number of ordinary shares used in calculating basic and diluted earnings per share

are:

Net profit attributable to ordinary equity holders of the Company

2016

$000

8,990

2015

$000

7,184

Weighted average number of shares:

Number

Weighted average number of ordinary shares for basic earnings per share

Add effect of dilution:

- Share options

Weighted average number of ordinary shares for diluted earnings per share

$000

66,851

355

67,206

$000

62,538

910

63,448

27. Dividends paid and proposed

Cents per
share

$000

Date of
payment

Recognised amounts:

2015 fully franked final dividend declared and paid

2016 fully franked interim dividend declared and paid

3.25

3.50

2,170

2,342

29 September 2015

30 March 2016

Unrecognised amounts:

2016 fully franked final dividend declared (i)

3.50

2,363

(i) The final dividend was declared on 16 August 2016. The amount has not been recognised as a liability in the 2016

financial year and will be brought to account in the 2017 financial year.

The proposed payment date of the 2016 final dividend is 29 September 2016.

The amount of franking credits available for future reporting periods is $4,207,757 (2015: $2,764,834).

The tax rate at which paid dividends have been franked is 30% (2015: 30%).
Dividends proposed will be franked at the rate of 30%.

www.mnfgroup.limited

MNF Group Limited

Notes to the consolidated financial statements (continued)

28. Parent entity

Key financial information relating to the parent entity is summarised below:

Statement of profit or loss and other comprehensive income

Profit/(loss) attributable to the owners of the company

Other comprehensive income

Total comprehensive income/(loss) attributable to the owners of the company

Statement of financial position

Total current assets

Total non-current assets

Total current liabilities

Total non-current liabilities
Net assets

Issued Capital

Reserves

Retained earnings
Total equity

2016

$000

23,120

259
23,379

6,582

44,485

(374)

(13,951)
36,742

31,255

1,071

4,416
36,742

2015

$000

(3,661)

(23)
(3,684)

3,781

43,968

(2,698)

(43,167)
1,884

14,747

1,329

(14,192)
1,884

In 2014 MNF Group Limited issued a guarantee to Telstra Corporation Limited. This guarantee covers the primary
obligations including any debts of its wholly owned subsidiary Symbio Wholesale Pty Limited. It does not impose any
greater liability on MNF Group Limited than is already in place for Symbio Wholesale Pty Limited.

During the year MNF Group Limited has not entered into any material contractual commitments for the acquisition of
property, plant and equipment.

29. Financial risk management objectives and policies

The Group’s principal financial instruments as at year end comprise cash at bank, short term deposits and loan facility.

The main risks arising from the Group’s financial instruments are interest rate risk, foreign currency risk, liquidity risk
and credit risk. The Board reviews and agrees policies for managing each of these risks and they are summarised below:

Interest rate risk
The Group’s interest rate exposure relates to short term cash and long-term loans, both are subject to the floating
interest rate. The Group policy is to maintain at least 50% of its long term loan at fixed rates using interest rate swaps
whereby the Group agree to exchange at defined periods the net difference between fixed and floating interest rates
based on an agreed notional principal amount. This interest rate swap is designated into a hedge relationship and
satisfies the requirements for hedge accounting.

Foreign currency risk
The Group is exposed to foreign exchange risks arising from various currency exposures, primarily with respect to the
United States Dollar (USD) and the New Zealand Dollar (NZD). Much of the USD exposure is subject to a natural hedge,
as the buy and sell side of most transactions is in USD. The Groups policy to manage its foreign exchange risk against its
functional currency is to hedge firm commitments and highly probable and material forecast transactions over varying
time horizons using forward exchange contracts.

MNF Group Limited

Notes to the consolidated financial statements (continued)

Liquidity risk
The Group’s objective is to maintain a balance between continuity of funding and interest revenue through the use
of current accounts and short term deposits.

Credit risk
The company has no significant exposure to credit risk. For credit sales the company only trades with recognised
creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to
credit verification procedures. Moreover, the company considers it is appropriate to provide a provision for doubtful
debts for the year ended 30 June 2016.

Set out below is a comparison by category of carrying amounts and fair values of all of the Group’s financial
instruments recognised in the financial statements.

Financial assets

Cash
Weighted average effective interest rate 0.1% (2015: 1.4%)

Cash at call
Weighted average effective interest rate 3.2% (2015: 3.1%)

Trade and other receivables

Other financial assets
Weighted average effective interest rate Nil% (2015: 3.1%)

Financial liabilities

On statement of financial position

Trade payables

Loans and borrowings

2016

2015

Carrying
amount

Fair
value

Carrying
amount

Fair
value

11,259

5,870

41,630

417

29,067

29,706

323

66,550

13,690

66,550

13,690

29,304

25,290

29,304

25,290

Weighted average effective interest rate 4.87% (2015: 4.57 %)

Forward foreign exchange contract - fair value hedge

Interest rate swap contract - cash flow hedge

2,812

282

2,812

282

30. Company details

The registered office and principal place of business of MNF Group Limited is:
Level 3, 580 George Street, Sydney, NSW, 2000, Australia (effective 8 August 2016)

www.mnfgroup.limited

MNF Group Limited

Directors’ Declaration

In accordance with a resolution of the directors of MNF Group Limited, the directors of the Company declare that:

The financial statements and notes, as set out on pages 34 to 67, are in accordance with the Corporations Act 2001
and:

comply with Australian Accounting Standards, which, as stated in accounting policy Note 2 to the financial
statements, constitutes compliance with International Financial Reporting Standards (IFRS); and

b. give a true and fair view of the financial position as at 30 June 2016 and of the performance for the year ended

on that date of the consolidated group;

in the directors’ opinion there are reasonable grounds to believe that the company will be able to pay its debts as
and when they become due and payable; and

the directors have been given the declarations required by s295A of the Corporations Act 2001 from the Chief
Executive Officer and Chief Financial Officer.

On behalf of the Board

Terry Cuthbertson
Chairman

Rene Sugo
Director

Sydney, 16 August 2016

ASX Additional
Information

MNF Group Limited

ASX Additional Information

Additional information required by the ASX Ltd and not shown elsewhere in this report is as follows.

The information is current as at 01 August 2016.

(a) Distribution of equity securities

(i) Ordinary share capital

67,504,337 fully paid ordinary shares are held by 2,693 individual shareholders.
All issued ordinary shares carry one vote per share and carry the rights to dividends.

(ii) Options

305,000 unlisted options are held by 15 individual option holders.
Options do not carry a right to vote.

The numbers of shareholders, by size of holding, in each class are:

Fully Paid Ordinary Shares

1 – 1,000

1,001 – 5,000

5,001 – 10,000

10,001 – 100,000

100,001 and over

The number of security investors holding less than a marketable parcel of ordinary shares is 80.

(b) Substantial shareholders

Ordinary shareholders

Mr Andy Fung & Ms Monique Ly

Avondale Innovations Pty Ltd

Citicorp Nominees Pty Ltd

National Nominees Limited

Fully Paid

Number

13,969,216

12,138,955

6,299,538

6,072,765

716

1,095

414

439

29
2,693

Percentage

20.69

17.98

9.33

9.00

www.mnfgroup.limited

MNF Group Limited

ASX Additional Information

Mr Andy Fung & Ms Monique Ly

Avondale Innovations Pty Ltd

Citicorp Nominees Pty Ltd

National Nominees Limited

BNP Paribas Noms Pty Ltd

L & C Pty Ltd

RACS SMSF Pty Ltd

Kore Management Services Pty Ltd

Boorne Gregg Investments Pty Ltd

Boorne Superannuation Fund Pty Ltd

Lee Superfund Management Pty Ltd

JP Morgan Nominees Australia Limited

G & E Properties Pty Ltd

Mr Michael John Boorne

Earglow Pty Ltd

ABN AMRO Clearing Sydney Nominees Pty Ltd

Mr Christopher John Ayres

Endan Pty Ltd

Ms Catherine Ly

Mr Michael Karl Korber

(d) On-market buy back

There is currently no on-market buy back.

Number

13,969,216

12,138,955

6,299,538

6,072,765

2,024,343

1,997,315

1,021,621

920,000

860,000

805,000

550,000

549,954

521,522

357,567

335,000

321,087

300,000

288,294

282,665

246,500
49,861,342

Fully Paid

Percentage

20.69

17.98

9.33

9.00

3.00

2.96

1.51

1.36

1.27

1.19

0.81

0.77

0.53

0.50

0.48

0.44

0.43

0.42

0.37
73.85

Corporate Information

Directors

Terry Cuthbertson (Chairman)

Michael Boorne

Andy Fung

Rene Sugo (CEO)

Company Secretary

Catherine Ly

Chief Financial Officer

Matthew Gepp

Registered Office

Level 3, 580 George Street

Sydney NSW 2000

Australia

Principal Place of Business

Level 3, 580 George Street

Sydney NSW 2000

Australia

Phone: 61 2 8008 8000

Share Register

Link Market Services Limited

Level 12, 680 George Street

Sydney NSW 2000

Australia

Phone: 61 2 8280 7100

This annual report covers both MNF Group Limited

as an individual entity and the consolidated group

comprising MNF Group Limited and its subsidiaries.

The Group’s functional and presentation currency is

AUD (s).

The company is listed on the Australian Securities

Exchange under the code MNF.

The Annual General Meeting of MNF Group Limited

will be held at Level 3, 580 George Street, Sydney at

11:00 on 25 October 2016.

Bankers

Westpac Banking Corporation

Westpac Place

Sydney NSW 2000

Australia

Auditors

MNSA Pty Ltd

Chartered Accountants

Level 2, 333 George Street

Sydney NSW 2000

Australia

Annual Report

Copies of the 2016 Annual Report with the Financial

Statements can be downloaded from:

www.mnfgroup.limited/investors/annual-reports

www.mnfgroup.limited

MNF Group Limited Annual Report 2016