Macquarie Communications Infrastructure Group

Transcription

1 Macquarie Communications Infrastructure Comprising Macquarie Communications Infrastructure Trust and its controlled entities, Macquarie Communications Infrastructure Limited and its controlled entities and Macquarie International Limited and its controlled entities Interim Financial Report for the half year ended 31 December 2007 Macquarie Communications Infrastructure () comprises Macquarie Communications Infrastructure Trust (MCIT) ARSN , Macquarie Communications Infrastructure Limited () ACN and Macquarie International Limited (MIL) ARBN Macquarie Communications Infrastructure Management Limited (MCIML) ACN is the responsible entity of MCIT, manager of and advisor to MIL. MCIML is a wholly owned subsidiary of the Macquarie Limited ACN and its constituent entities are not authorised deposit-taking institutions for the purposes of the Banking Act 1959 (Commonwealth of Australia) and its obligations do not represent deposits or other liabilities of Macquarie Bank Limited ABN (MBL). MBL does not guarantee or otherwise provide assurance in respect of the obligations of or its constituent entities. This report is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of the investor. Before making an investment in, the investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary. MCIML, as responsible entity of MCIT, manager of, and advisor to MIL is entitled to fees for so acting. Macquarie Limited and its related corporations (including MCIML) together with their officers and directors and officers and directors of and MIL may hold stapled securities in from time to time.

2 Table of Contents Explanation of the Interim Financial Report...1 Directors Reports MCIML, and MIL...2 Directors...2 Review and Results of Operations...3 Distributions and Dividends...5 Significant Changes in State of Affairs...5 Events Occurring After Balance Date...5 Directors Holdings of Stapled Securities...5 MCIML s Holdings of Stapled Securities...5 Auditor s Independence Declaration...5 Rounding of Amounts in the Directors Report and the Interim Financial Report...5 Presentation of Stapled Entities Financial Statements in the Same Financial Report...5 Auditors Independence Declaration...7 Consolidated Income Statements...8 Consolidated Balance Sheets...9 Consolidated Statements of Changes in Equity...11 Consolidated Statements of Cash Flows...12 Notes to the Financial Statements Summary of Significant Accounting Policies Result for the Half Year Dividends and Distributions Paid and Proposed Contributed Equity Accumulated Losses and Retained Profits Non-Cash Operating and Financing Activities Segment Information Business Combinations Contingent Liabilities and Assets Events Occurring after Balance Date...26 Statement by the Directors of the Responsible Entity of the Trust...27 Directors Declaration...28 Directors Declaration MIL...29 Independent Auditor s Review Report...30

3 Explanation of the Interim Financial Report At 31 December 2007 Macquarie Communications Infrastructure comprised Macquarie Communications Infrastructure Trust ( MCIT or the Trust ) and its controlled entities, Macquarie Communications Infrastructure Limited () and its controlled entities and Macquarie International Limited (MIL) and its controlled entities. These three stapled entities trade as one listed security, Macquarie Communications Infrastructure, on the Australian Securities Exchange. A summary of the corporate structure illustrating legal ownership is shown below in Figure 1. Figure 1 at 31 December 2007 Stapled Security Holders Unit Share Share MCIT (Aus) (Aus) MIL (Bermuda) 90% 90% Global Tower Acquisition Trust 10% US$200 million Exchangeable Bonds due 2013 US$96.5m Sub debt 35.7% 100% 2007 Sub Trust 10% A$725 million Exchangeable Bonds due % Macquarie Communications Infrastructure Holdings Limited 37.2% 48.5% Bird 1 Limited 100% MICAL Trans Pacific Pylon LLC 64.3% MUKBHL 39.3% 100% 100% 100% 50% Global Tower Partners Broadcast Australia Arqiva NGW Airwave Under Australian Accounting Standards, MCIT has been deemed the parent entity of and MIL for accounting purposes. Therefore the MCIT consolidated financial statements include all entities forming Macquarie Communications Infrastructure ( or the ). Financial statements for the consolidated group and the MIL consolidated group for the half year ended 31 December 2007 have been presented in this report, jointly as permitted by ASIC class order 05/642. As the securities held by investors are stapled securities in Macquarie Communications Infrastructure, the financial report for the provides the most concise information regarding the performance of investors funds, with further information on the components of the investment presented in the remaining columns.. Macquarie Communications Infrastructure Page 1

4 Macquarie Communications Infrastructure Management Limited Macquarie Communications Infrastructure Limited Macquarie International Limited Directors Report for the Half Year ended 31 December 2007 Directors Reports MCIML, and MIL Macquarie Communications Infrastructure Management Limited ( MCIML or the Responsible Entity ) acts as the responsible entity for Macquarie Communications Infrastructure Trust (MCIT), the manager of Macquarie Communications Infrastructure Limited () and the advisor to Macquarie International Limited (MIL). The directors of MCIML submit the following report on the consolidated interim financial report of the Macquarie Communications Infrastructure Trust group ( or the ) for the half year ended 31 December Both UIG 1013 Consolidated Financial Reports in relation to Pre-Date-of-Transition Stapling Arrangements and AASB Interpretation 1002: Post-Date-of-Transition Stapling Arrangements require one of the stapled entities of a stapled structure to be identified as the parent entity for the purpose of preparing a consolidated financial report. In accordance with this requirement, MCIT has been identified as the parent of the consolidated group comprising MCIT and its controlled entities, and its controlled entities and MIL and its controlled entities, together acting as Macquarie Communications Infrastructure. The directors of submit the following report for the Macquarie Communications Infrastructure Limited (the ), being and its controlled entities, for the half year ended 31 December The directors of MIL submit the following report for the Macquarie International Limited (the MIL ), being MIL and its controlled entities, for the half year ended 31 December Directors The following persons held office as directors of MCIML during the half year and up to the date of this report: Gerald Edward Moriarty AM (Chairman) Malcolm William Long Rodney Harold Keller Melvyn Keith Ward AO Nicholas William Moore John Stuart Roberts (alternate to Nicholas Moore and Gerald Moriarty) The following persons held office as directors of during the half year and up to the date of this report: Gerald Edward Moriarty AM (Chairman) Malcolm William Long Rodney Harold Keller Melvyn Keith Ward AO The following persons held office as directors of MIL during the half year and up to the date of this report: Rodney Peter Donald Birrell (Chairman) Gerald Edward Moriarty AM Kim Thomas Robert Carter Thomas Haskins Davis Macquarie Communications Infrastructure Page 2

5 Macquarie Communications Infrastructure Management Limited Macquarie Communications Infrastructure Limited Macquarie International Limited Directors Report for the Half Year ended 31 December 2007 Review and Results of Operations The performances of the groups, as represented by the results of their operations, were as follows: MIL MIL Total revenue and other income from continuing activities 1,156, , , , , ,457 (Loss) / profit attributable to equity holders of MCIT and (66,196) (228,734) - 13,311 6,895 - (Loss) / profit attributable to equity holders of MIL (as parent entity) - - (254,520) - - 6,450 Basic (loss) / earnings per unit /share attributable to: - MCIT and (12.93)c (44.67)c c 1.75c - - MIL (as parent entity) - - (49.70)c c Diluted (loss) / earnings per unit /share attributable to: - MCIT and (28.03)c (44.67)c c 1.75c - - MIL (as parent entity) - - (49.70)c c On 2 July 2007, announced the acquisition of Global Tower Management LLC and its subsidiaries, collectively known as Global Tower Partners (GTP), by a consortium led by and Macquarie Infrastructure Partners (MIP) in an exclusive and negotiated transaction. The total purchase price was US$1.4 billion (A$1.7 billion) excluding transaction costs. has an indirect equity interest in GTP of 28.7% whilst MIP holds 56.2%. The remaining equity in the consortium is held by two other unlisted Macquarie managed funds and by existing GTP management. The acquisition closed on 30 July GTP is a leading owner and operator of towers and sites for wireless communications services in the United States (US). At acquisition it had a portfolio of approximately 2500 tower and 4600 rooftop sites in urban, suburban and key corridor locations across the US and Puerto Rico. contributed US$358.0 million (A$408.1 million) including the provision of US$96.5 million (A$108.0 million) of subordinated debt. The contribution was funded from cash reserves of A$138.5 million, drawdown of a US$200.0 million (A$229.5 million) bridge debt facility and A$60.0 million standby facility. The bridge facility was later repaid from a US$200.0 million (A$250.6 million) Exchangeable Bond (EB) issuance and $22.7 million was repaid on the standby from the proceeds of the issuance of securities under s distribution and dividend reinvestment plan (DRP) in August On 3 July 2007, announced that it had successfully completed the bookbuild for the placement of US$200.0 million US-dollar-denominated EBs. The net proceeds of US$195.5 million (A$245.0 million) were used to partially repay bridge facilities used to fund the acquisition of GTP. The EBs settled on 23 August The EBs carry a 2.5% coupon and are exchangeable by holders at any time prior to maturity into stapled securities at a fixed initial exchange price of A$8.13 (converted into US dollars at a fixed exchange rate of A$1: US$0.8532), representing a 30% premium to the stapled security volume weighted average price on 29 June On 12 November 2007, MCIT signed a A$300.0 million multi-currency revolving acquisition facility (the facility). The facility comprises 2 tranches with maturity of 1 and 2 years and margins of 0.8% to 0.9%. On 12 November 2007 a subsidiary of MIL, Macquarie International Communications Assets Limited (MICAL), acquired a further 3.27% of Macquarie UK Broadcast Holdings Limited (which together with its controlled entities is known as Arqiva ) from Cheyne Special Situations Fund LP ( Cheyne ) for a consideration of A$144.5 million ( 63.3million). The acquisition was facilitated via the acceleration of an option agreement with Cheyne and was partially funded from drawing on the facility. Macquarie Communications Infrastructure Page 3

6 Macquarie Communications Infrastructure Management Limited Macquarie Communications Infrastructure Limited Macquarie International Limited Directors Report for the Half Year ended 31 December 2007 Broadcast Australia During the period, the Broadcast Australia (BA) successfully continued the rollout of analogue and digital television transmission services for the ABC and SBS across Australia, in addition to the continued provision of analogue television and radio services to the national broadcasters, regional and community broadcasters, telecom operators and emergency service communications providers. On 9 August 2007 BA reached an agreement with Kordia Pty Limited to acquire Kordia Repair and Maintenance Pty Limited on 30 November the transaction was successfully completed on this date. This brought in-house all repairs and maintenance activities for the BA national broadcast network from 1 December On 2 October 2007 Broadcast Australia announced it had acquired 55% of Hong Kong-based Radio Frequency Engineering (RFE). RFE specialises in indoor and confined-space coverage for television and radio and the acquisition will permit BA and RFE to work closely together, in particular on broadcast mobile television networks across the Asia Pacific region. On 7 December 2007 BA entered into an agreement to acquire all of the shares in Hostworks Limited (Hostworks). Hostworks is recognised as Australia s leading provider of managed services for on-line media and entertainment companies as well as for management and hosting of a broad range of critical applications. Hostworks is trusted to manage the availability, performance and running costs of the critical online presence of a significant portfolio of blue-chip businesses. Its customers include ABC, SBS, News, NineMSN, Wotif and Ticketek. The acquisition will be finalised via a Scheme of Arrangement. The Scheme was approved by the Hostworks shareholders at a Scheme meeting on 13 February 2008 and will put forward for court approval on 10 March Arqiva/National Grid Wireless During the period Arqiva and National Grid Wireless (NGW) continued to deliver digital TV, analogue TV and radio broadcast transmission services, network management, tower site rental, satellite and media services and provide radio communications to public safety organisations in the United Kingdom (UK). On 30 July 2007 Arqiva announced it was awarded a contract with SDN Limited to design, build and operate a new digital terrestrial TV network until On 8 August 2007 Arqiva announced it had been awarded a contract from Digital 3 and 4 Limited for a similar project until The contracts are estimated to be worth a combined value of 1.5 billion (A$3.6 billion). On 8 August 2007 the UK Office of Fair Trading (OFT) referred the acquisition of NGW by Arqiva to the UK Competition Commission (UKCC). On 3 December 2007, the UKCC published its provisional findings. The UKCC's competition concerns relate to the supply of transmission services to television broadcasters and radio broadcasters. Arqiva and the other stakeholders, including the market regulator Ofcom and some customers, have now submitted their responses to the UKCC's provisional findings. The UKCC is expected to conclude its review and publish its findings by 18 March Under the terms of the Arqiva debt facilities there is a potential requirement to pay down debt to the extent that any decision by the UKCC has a significant impact on financial covenants implicit in the Arqiva business plan. The requirement to make any such payment will only arise following completion of the UKCC review and publication of its findings. As at 31 December 2007 and the date of this report is not required to make any such payment and the timing and amount, if any, of such a payment is unknown. On 19 September 2007 Arqiva was awarded a contract with the BBC to help bring the new Freesat Digital TV platform to air by March Arqiva s role is to support the creation of the new service, which will help bring digital satellite television to viewers across the UK without the need for a subscription. The contract is expected to earn revenue from both satellite capacity and connectivity fees over a minimum five-year term. Airwave Solutions Limited During the period Airwave Solutions Limited (Airwave) maintained its position as primary provider of secured digital radio communications to the police, fire and ambulance services and other public safety organisations in the UK. acquired a 50% interest in Airwave on 20 April On 19 July 2007, the OFT established hold separate arrangements in relation to the acquisition of Airwave by Guardian Digital Communications Luxembourg Sarl to ensure that Airwave was managed independently of Arqiva and during the OFT s review of the acquisition. On 8 August 2007 the OFT cleared the acquisition and the hold separate arrangements were removed. Macquarie Communications Infrastructure Page 4

7 Macquarie Communications Infrastructure Management Limited Macquarie Communications Infrastructure Limited Macquarie International Limited Directors Report for the Half Year ended 31 December 2007 Distributions and Dividends A distribution for the half year ended 31 December 2007 of 23.0 cents per stapled security was announced on 30 November and was paid on 14 February 2008 (half year ended 31 December 2006: 21.0 cents per stapled security). This distribution consists of 21.0 cents per unit to be paid by MCIT (half year ended 31 December 2006: 14.0 cents per unit) and an unfranked dividend of 2.0 cents per ordinary share to be paid by (half year ended 31 December 2006: 7.0 cents per ordinary share). Significant Changes in State of Affairs Other than referred to above, in the opinion of the directors, there were no other significant changes in the state of affairs of, the or the MIL that occurred during the half year under review. Events Occurring After Balance Date Other than as noted below, no matters or circumstances have arisen since the end of the half year that have significantly affected or may significantly affect the operations of the, the or the MIL, the results of these operations in future financial years or the state of affairs of the, the or the MIL in years subsequent to the half year ended 31 December The acquisition of Hostworks was approved by the Hostworks shareholders at a Scheme meeting on 13 February 2008 and will put forward for court approval on 10 March Directors Holdings of Stapled Securities The aggregate number of stapled securities held directly, indirectly or beneficially by directors of MCIML at the date of this financial report is 495,890 (31 December 2006: 458,181). The aggregate number of stapled securities held directly, indirectly or beneficially by directors of at the date of this financial report is 136,699 (31 December 2006: 131,624). The aggregate number of stapled securities held directly, indirectly or beneficially by directors of MIL at the date of this financial report is 64,852 (31 December 2006: 63,214). MCIML s Holdings of Stapled Securities MCIML holds 86,993,706 stapled securities in at the date of this financial report (2006: 47,361,236). Auditor s Independence Declaration A copy of the auditors independence declaration as required under section 307C of the Corporations Act 2001 is set out on page 7. Rounding of Amounts in the Directors Report and the Interim Financial Report, and MIL are of a kind referred to in Class Order 98/0100, as amended by class order 04/667 and class order 05/641, issued by the Australian Securities & Investments Commission relating to the rounding off of amounts in the directors report and financial report. Amounts in the directors report and the financial report have been rounded to the nearest thousand dollars in accordance with that Class Order, unless otherwise indicated. Presentation of Stapled Entities Financial Statements in the Same Financial Report As permitted by ASIC Class order 05/642, the interim financial report consists of the consolidated financial statements of the, the consolidated financial statements of the and the consolidated financial statements of the MIL jointly. Macquarie Communications Infrastructure Page 5

8 Macquarie Communications Infrastructure Management Limited Macquarie Communications Infrastructure Limited Macquarie International Limited Directors Report for the Half Year ended 31 December 2007 Signed in accordance with resolutions of the directors of Macquarie Communications Infrastructure Management Limited Gerald Moriarty AM Malcolm Long Chairman Director Macquarie Communications Infrastructure Management Limited Macquarie Communications Infrastructure Management Limited Sydney Sydney 18 February February 2008 Signed in accordance with resolutions of the directors of Macquarie Communications Infrastructure Limited Gerald Moriarty AM Malcolm Long Chairman Director Macquarie Communications Infrastructure Limited Macquarie Communications Infrastructure Limited Sydney Sydney 18 February February 2008 Signed in accordance with resolutions of the directors of Macquarie International Limited Gerald Moriarty AM Rodney Birrell Director Chairman Macquarie International Limited Macquarie International Limited Sydney Bermuda 18 February February 2008 Macquarie Communications Infrastructure Page 6

9 PricewaterhouseCoopers ABN Auditors Independence Declaration Darling Park Tower Sussex Street GPO BOX 2650 SYDNEY NSW 1171 DX 77 Sydney Australia Telephone Facsimile As lead auditor for the review of Macquarie Communications Infrastructure Trust, Macquarie Communications Infrastructure Limited and Macquarie International Limited for the half year ended 31 December 2007, I declare that to the best of my knowledge and belief, there have been: (a) no contraventions of the auditor independence requirements of the Corporations Act 2001 in relation to the review; and (b) no contraventions of any applicable code of professional conduct in relation to the review. This declaration is in respect of Macquarie Communications Infrastructure Trust, Macquarie Communications Infrastructure Limited and Macquarie International Limited and the entities they controlled during the period. Wayne Andrews Partner 18 February 2008 PricewaterhouseCoopers Sydney Liability limited by a scheme approved under Professional Standards Legislation Page 7

10 Consolidated Income Statements Notes MIL MIL Revenue from continuing activities 2 1,038, , , , , ,469 Other income 2 118,228 23,236 44,032 29,933 4,960 24,988 Total revenue and other income from continuing activities 1,156, , , , , ,457 Share of (loss)/profit of associates accounted for using the equity method (160,522) (211,295) (144,377) 2,431 18,456 2,431 Depreciation and amortisation expense (171,737) (21,303) (150,434) (58,289) (21,020) (37,270) Finance costs (926,411) (80,318) (918,906) (133,284) (55,184) (100,156) Salaries and employee benefits expense (148,325) (7,517) (140,808) (99,398) (6,697) (92,700) Cost of sales expense (370,323) (33,205) (337,118) (158,506) (32,319) (126,188) Other expenses (98,609) (18,475) (120,222) (72, 083) (13,366) (42,758) Operating expenses from continuing activities 2 (1,715,405) (160,818) (1,667,488) (521,560) (128,586) (399,072) (Loss)/profit from continuing activities before income tax expense (719,083) (220,640) (862,285) 37,841 13,064 36,816 Income tax benefit/(expense) 187,954 (7,540) 195,885 (13,584) (6,169) (7,415) (Loss)/profit from continuing activities after income tax expense (531,129) (228,180) (666,400) 24,257 6,895 29,401 (Loss)/profit attributable to: - Equity holders of MCIT and (66,196) (228,734) - 13,311 6, Equity holders of MIL (as minority interest) (254,520) - - 6, Equity holders of MCIT and (as minority interest) - - (205,283) ,454 - Equity holders of MIL (as parent entity) - - (254,520) - - 6,450 Stapled security holders (320,716) (228,734) (459,803) 19,761 6,895 24,904 - Other minority interest (210,413) 554 (206,597) 4,497-4,497 Basic (loss)/earnings per unit/share attributable to: (531,129) (228,180) (666,400) 24,258 6,895 29,401 - MCIT and (12.93)c (44.67)c c 1.75c - - MIL (as parent entity) - - (49.70)c c Diluted (loss)/earnings per unit /share attributable to: - MCIT and (28.03)c (44.67)c c 1.75c - - MIL (as parent entity) - - (49.70)c c The above Consolidated Income Statements should be read in conjunction with the accompanying notes Macquarie Communications Infrastructure Page 8

11 As at 31 December 2007 Consolidated Balance Sheets Notes As at As at MIL As at As at 30 Jun 07 As at 30 Jun 07 MIL As at 30 Jun 07 Current assets Cash and cash equivalents 489,695 31, , ,897 62, ,620 Receivables 349,146 25, , ,980 25, ,660 Other assets 142,351 4, , ,452 25, ,936 Derivative financial instruments 23,698 5,011 16,757 3,735-3,735 Loans and receivables 17, Total current assets 1,022,194 66, ,999 1,230, ,759 1,082,951 Non-current assets Investments accounted for using the equity method 823, , , ,419 1,083, ,418 Property, plant and equipment 3,472, ,478 2,756,000 3,567, ,528 2,859,480 Intangible assets 7,904, ,793 7,655,415 8,245, ,785 8,000,681 Loans and receivables 92, Derivative financial instruments 37,289 35,706-85,540 19,170 66,370 Other assets 7, ,997 7, ,346 Total non-current assets 12,337,045 1,942,853 10,847,541 12,537,108 2,055,226 11,565,295 Total assets 13,359,239 2,009,278 11,779,540 13,767,172 2,168,985 12,648,246 Current liabilities Distribution payable 118,020 10,262-84,311 22,079 - Payables 170,104 44, , ,826 14, ,017 Accrued expenses 318,755 24, , ,121 26, ,583 Derivative financial instruments Provisions 22,020 4,714 17,306 53,424 5,095 48,329 Interest bearing liabilities 130, Unearned revenue 396,309 7, , ,915 6, ,956 Other liabilities 125,968 16, , ,491 16,491 81,258 Total current liabilities 1,281, , ,258 1,193,982 93, ,143 Non-current liabilities Provisions 93,145 2,250 90,895 63,678 2,747 60,931 Interest bearing liabilities 8,917,351 1,855,154 7,890,660 9,101,061 1,709,438 8,202,360 Derivative financial instruments 536, , Deferred tax liabilities 769,561 73, ,426 1,002,255 64, ,522 Retirement benefit obligations 2,830-2, Unearned revenue 167,157 16, , ,181 19, ,761 Other liabilities 23,019 7,458 15,558 7,519 6,409 1,111 Total non-current liabilities 10,509,596 1,954,841 9,380,856 10,353,618 1,802,747 9,361,609 Total liabilities 11,790,854 2,063,700 10,323,114 11,547,600 1,895,823 10,302,752 Net assets 1,568,385 (54,422) 1,456,426 2,219, ,162 2,345,494 Macquarie Communications Infrastructure Page 9

12 As at 31 December 2007 Consolidated Balance Sheets (cont d) MIL MIL Notes As at As at As at As at 30 Jun 07 As at 30 Jun 07 As at 30 Jun 07 Equity attributable to equity holders of MCIT and (as parent entity / minority interest) Contributed equity 4 1,646, ,239 1,165,537 1,629, ,337 1,120,162 Reserves (396,987) (131,719) (90,328) (384,147) (32,053) (31,964) Accumulated losses and retained profits 5 (416,782) (496,117) (247,653) (288,982) (257,122) (6,137) MCIT and holders interest 832,578 (55,597) 827, , ,162 1,082,061 Equity attributable to equity holders of MIL (as minority interest / parent entity) Contributed equity 4 470, , , ,614 Reserves (131,576) - (131,576) (73,463) - (73,463) Accumulated losses and retained profits 5 (213,973) - (213,973) 40,545-40,545 MIL holders interest 124, , , ,696 Other minority interest 611,048 1, , , ,737 Total equity 1,568,385 (54,422) 1,456,426 2,219, ,162 2,345,494 The above Consolidated Balance Sheets should be read in conjunction with the accompanying notes Macquarie Communications Infrastructure Page 10

13 Consolidated Statements of Changes in Equity Notes MIL MIL Total equity at the beginning of the half year 2,219, ,162 2,345,494 1,289,081 67,057 1,007,688 Exchange differences on translation of foreign operations Share of movement of foreign translation reserve of associates and jointly controlled entities (100,010) (195) (113,354) (2,431) 232 (2,662) (17,951) (59,495) (17,951) - (845) - (Loss)/profit for the half year (531,129) (228,180) (666,400) 24,257 6,895 29,401 Total recognised income and expense for the half year (649,090) (287,870) (797,705) 21,826 6,282 26,739 Contributions of equity, net of transaction costs paid 4 22,773 9,902 5,694 13,436 3,416 2,922 Acquisition of minority shareholdings (467) - (93,784) (53,603) - (10,874) Minority interest on acquisition of subsidiary 111, Share capital issued to minority interests , Share of movement of other reserves of associates and jointly controlled entities - (39,975) Distributions provided for or paid to security holders 3 (118,005) (10,261) - (83,396) (27,799) - Distributions provided for or paid to minority interests (17,755) - (48,649) (29,936) - (60,346) (2,097) (39,714) (91,363) (153,499) (24,383) (68,298) Total equity at the end of the half year 1,568,385 (54,422) 1,456,426 1,157,408 48, ,129 Total recognised income and expenses for the half year is attributable to: - Equity holders of MCIT and (110,615) (288,424) - 13,311 6, Equity holders of MCIT and (as minority interest / parent entity) - - (258,675) ,613 - Equity holders of MIL (as minority interest / parent entity) (304,383) - (304,383) 4,943-5,554 Stapled security holders (414,998) (288,424) (563,058) 18,254 6,282 23,167 Other minority interest (234,092) 554 (234,647) 3,572-3,572 (649,090) (287,870) (797,705) 21,826 6,282 26,739 The above Consolidated Statements of Changes in Equity should be read in conjunction with the accompanying notes Macquarie Communications Infrastructure Page 11

14 Consolidated Statements of Cash Flows Cash flows from operating activities MIL MIL Receipts from customers (inclusive of GST and VAT) 1,138, ,033 1,005, , , ,029 Payments to suppliers and employees (inclusive of GST and VAT) (753,890) (55,353) (696,789) (337,313) (42,215) (294,716) Responsible Entity/ Manager/Advisor base fees paid (inclusive of GST) (22,220) (10,257) (5,015) (14,632) (6,434) (3,026) GST/VAT (paid) (77,993) (6,323) (72,250) (44,732) (5,563) (39,638) Interest received 15, ,507 2, ,583 Interest received from related parties 6, Tax paid (1,322) - (932) (35) (35) - Dividends received - 30, , Net cash flows from operating activities 305,047 92, , , , ,465 Cash flows from investing activities Payments for purchase of property, plant and equipment (115,912) (25,131) (90,781) (94,567) (22,500) (72,067) Proceeds from sale of property, plant and equipment 3,325 3, , ,257 Proceeds from sale of jointly controlled entities ,965-11,965 Return of capital of jointly controlled entities 51,914-51, Payments for purchase of investments (42,728) - Payments for purchase of intangible assets (649) - (649) (8,378) - (8,378) Payment for interest in associates (521,592) (198,437) Payments for purchase of controlled entities, net of cash acquired (216,098) (8,198) (207,900) (91,944) (202) (91,743) Net cash flows from investing activities (799,012) (228,504) (247,353) (180,593) (65,356) (157,966) Cash flows from financing activities Distributions paid to security holders (61,560) (16,123) - (77,001) (23,693) - Distributions paid to other minority interests (17,755) - (48,649) (29,936) - (60,345) Proceeds from capital raising from outside equity interest 110,737-45, ,728 Borrowings from external parties 1,186, , ,408 10, ,408 Borrowings from related parties - 158,308 61, ,500 Repayment of borrowings to related parties - (70,330) (63,014) (66) (31,735) (1,750) Repayment of borrowings to external parties (761,335) (486,000) (1,996) Borrowing costs (237,548) (34,534) (183,241) (110,139) (35,256) (91,603) Borrowing costs - related parties (23,865) - (23,865) Capital raising costs (926) (288) (257) Capital raising costs of subsidiary (24,532) - (24,532) Payment of preference share dividends (4) Proceeds from issue of preference shares Net cash flows from financing activities 170, ,033 (238,327) (78,734) (80,684) 30,938 Macquarie Communications Infrastructure Page 12

15 Consolidated Statements of Cash Flows (cont d) MIL MIL Net (decrease)/increase in cash assets held (323,952) (31,532) (241,666) (69,062) (44,079) (3,563) Cash assets at the beginning of the half year 835,897 62, , ,079 49, ,079 Foreign exchange differences (22,250) - (22,255) Cash assets at the end of the half year 489,695 31, , ,058 5, ,557 The above Consolidated Statements of Cash Flows should be read in conjunction with the accompanying notes Macquarie Communications Infrastructure Page 13

16 Notes to the Financial Statements 1 Summary of Significant Accounting Policies This general purpose interim financial report for the half year reporting period ended 31 December 2007 has been prepared in accordance with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Act 2001 (where applicable). This interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report of Macquarie Communications Infrastructure for the year ended 30 June 2007 and any public announcements made by Macquarie Communications Infrastructure during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act (a) Basis of preparation of interim financial report The accounting policies adopted in the preparation of the interim financial report are consistent with those of the previous financial year and corresponding interim period unless otherwise stated. The principal accounting policies adopted in the preparation of the interim financial report are set out below. These policies have been consistently applied to all the periods presented, unless otherwise stated. Compliance with International Financial Reporting Standards (IFRSs) Compliance with Australian Accounting Standard AASB 134 ensures that the interim financial report complies with IAS 34 Interim Financial Reporting as issued by the International Accounting Standards Board (IASB). Consequently, this interim financial report has also been prepared in accordance with and complies with IAS 34 Interim Financial Reporting as issued by the IASB. Historical cost convention These financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities (including derivative instruments) at fair value through profit or loss. Stapled security The units of Macquarie Communications Infrastructure Trust (MCIT), the shares of Macquarie Communications Infrastructure Limited () and Macquarie International Limited (MIL) are combined and issued as stapled securities in Macquarie Communications Infrastructure. The units of MCIT and the shares of and MIL cannot be traded separately and can only be traded as stapled securities. As permitted by ASIC Class order 05/642, this interim financial report consists of the consolidated financial statements of MCIT and its controlled entities (collectively referred to as or the ), the consolidated financial statements of and its controlled entities (collectively referred to as the ) and the consolidated financial statements of MIL and its controlled entities (collectively referred to as the MIL ). (b) Consolidated accounts UIG Interpretation 1013 Consolidated Financial Reports in relation to Pre-Date-of-Transition Stapling Arrangements requires one of the stapled entities of an existing stapled structure to be identified as the parent entity for the purpose of preparing consolidated financial reports. In accordance with this requirement MCIT has been identified as the parent of the consolidated group comprising and its controlled entities. All equity under this arrangement is attributable to the parent entity. On the 27 January 2005, MIL became the third stapled entity stapled to MCIT and. AASB Interpretation 1002 Post-Date-of-Transition Stapling Arrangements requires that MIL was deemed to be acquired by MCIT. Accordingly, the stapled entities of Macquarie Communications Infrastructure are represented as the consolidated financial statements of MCIT, however in accordance with AASB Interpretation 1002, the interest in MIL is shown as minority interest in both the income statement and balance sheet. and MIL are therefore treated differently on consolidation with the equity of being attributable to the parent whereas the equity of MIL is attributable to minority interests. Macquarie Communications Infrastructure Page 14

17 1 Summary of Significant Accounting Policies (cont d) (c) Principles of consolidation The consolidated financial statements of incorporate the assets and liabilities of the entities controlled by MCIT at 31 December 2007, including those deemed to be controlled by MCIT by identifying it as the parent of, and the results of those controlled entities for the period then ended. The effects of all transactions between entities in the consolidated entity are eliminated in full. Minority interests in the results and equity are shown separately in the income statement and the balance sheet respectively. Other minority interests are those interests in partly owned subsidiaries which are not held directly or indirectly by the. (i) Subsidiaries Subsidiaries, other than those that MCIT has been deemed to have directly acquired through stapling arrangements, are those entities over which the groups have the power to govern the financial and operating policies. Investments in subsidiaries are accounted for in the parent entity financial statements using the cost method. Subsidiaries are fully consolidated from the date on which control is transferred to the groups. The existence and effect of potential voting rights that are currently exercisable or convertible are considered when assessing whether the groups control another entity. The purchase method of accounting is used to account for the acquisition of subsidiaries by the groups. Where control of an entity is obtained during a financial period, its results are included in the income statement from the date on which control commences. Where control of an entity ceases during a financial period, its results are included for that part of the period during which control existed. Intercompany transactions, balances and unrealised gains on transactions between the companies within a group are eliminated. Unrealised losses are also eliminated unless the transaction provides evidence of the impairment of the asset transferred. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the groups. Minority interests in the results and equity of subsidiaries are shown separately in the consolidated income statement and balance sheet respectively. (ii) Associates Associates are entities over which the groups have significant influence. Investments in associates are accounted for in the consolidated financial statements using the equity method of accounting, after initially being recognised at cost. A group s investment in associates includes goodwill identified on acquisition. A groups share of its associates' post-acquisition profits or losses is recognised in the income statement, and its share of post-acquisition movements in reserves is recognised in reserves. The cumulative post-acquisition movements are adjusted against the carrying amount of the investment. Dividends receivable from associates reduce the carrying amount of the investment. When a group s share of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognise further losses, unless they have incurred obligations or made payments on behalf of the associate. Unrealised gains on transactions between a group and its associate are eliminated to the extent of the group s interest in the associate. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. Accounting policies of associates have been changed where necessary to ensure consistency with the policies adopted by the groups. (iii) Jointly controlled entities Interests in jointly controlled entities are accounted for in the consolidated financial statements using the equity method. The share of the profits or losses of the jointly controlled entity are recognised in the income statement and the share of movements in reserves is recognised in reserves in the balance sheet. (iv) Transactions with minorities Transactions with minorities are recognised in the groups financial statements using the economic entity method, whereby transactions with minorities are treated as transactions with equity participants. Macquarie Communications Infrastructure Page 15

18 Summary of Significant Accounting Policies (cont d) (d) Acquisition of assets The purchase method of accounting is used to account for all acquisitions of assets (including business combinations) regardless of whether equity instruments or assets are acquired. Cost is measured as the fair value of the assets given, shares issued or liabilities incurred or assumed at the date of exchange plus the costs directly attributable to the acquisition. Identifiable assets and liabilities acquired and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of cost of acquisition over the fair value of the groups share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired. (e) Property, plant and equipment Cost Property, plant and equipment is recorded at cost less accumulated depreciation and any impairment charges. Cost includes those costs directly attributable to bringing the assets into location and working condition necessary for the asset to be capable of operating in the manner intended by management. The estimated cost of dismantling and removing infrastructure items and restoring the site on which the assets are located is only included in the cost of the asset to the extent that the group has an obligation to restore the site and the cost of restoration is not recoverable from third parties. Additions, renewals and improvements are capitalised, while maintenance and repairs are expensed. The carrying values of property, plant and equipment are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amounts may not be recoverable. An asset s carrying amount is written down immediately to its recoverable amount if the asset s carrying amount is greater than its estimated recoverable amount. Depreciation Land is not depreciated. Depreciation on other assets is calculated on a straight-line basis to write off the cost of property, plant and equipment over its estimated useful life. Estimates of remaining useful life are made on a regular basis for all assets, with annual reassessments for major items. The expected useful life* of property, plant and equipment is as follows: Land access and improvements 50 years Buildings and building improvements years Plant and equipment: Towers and masts years Transmitters years Power equipment years Other transmission equipment years Other plant and equipment 3-20 years Leasehold improvements the lease term Motor vehicles 4 years * The expected useful life of property, plant and equipment has been determined by management at the time of acquisition of BA, Arqiva, Inmedia and National Grid and re-assessed at each subsequent reporting period. Work in progress Assets remain in work in progress until ready for use. Once ready for use, assets are transferred to property, plant and equipment and depreciated over their useful lives. Macquarie Communications Infrastructure Page 16

19 Summary of Significant Accounting Policies (cont d) (f) Revenue recognition and unearned revenue Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, subsidies, Goods and Services Tax (GST), Value Added Tax (VAT) and other sales related taxes. Cash received in advance from customers is taken to unearned revenue and is brought to account over the life of the contract to which it relates. Transmission services Work is undertaken either on the basis that time and materials are billed as incurred or according to fixed price contracts. For time and materials contracts, turnover and profit are recognised when the right to consideration has been established according to time worked and materials expended. Fixed price contract revenue and expenses are recognised in accordance with the percentage of completion method unless the outcome of the contract cannot be reliably estimated. For fixed price contracts, the stage of completion is measured by reference to the percentage of the estimated total contract value complete or the achievement of contract milestones. Where it is probable that a loss will arise from a contract, the excess of total costs over revenue is recognised as an expense immediately. Where the outcome of a contract cannot be reliably estimated, contract costs are recognised as an expense as incurred, and where it is probable that the costs will be recovered, revenue is recognised to the extent of costs incurred. Revenue from project variations is recognised when it is expected that it will be recovered from customers. Other network services Revenue under short term contracts for other network services is recognised upon contract completion. Costs and revenues associated with contracts not complete at the end of a period are deferred and recognised when the service is complete. Any anticipated losses on these contracts are recognised immediately. Site rental revenue Where determinable, site rental revenues are recognised each month on a straight line basis over the fixed, non cancellable term of the relevant lease, regardless of whether the payments from the customer are received in equal monthly amounts. Multiple service revenue The groups revenue arrangements sometimes entail the delivery of multiple services, such as the delivery, installation and implementation of assets in the network against predetermined milestones, and the future maintenance and support thereof. Service revenues consist of regular fees for ongoing services, such as network access, control room services, managed terminal services and additional coverage solutions. These revenue arrangements with multiple deliverables are divided into the separate units of accounting if the deliverables in the arrangement meet the following criteria: 1) the delivered item has value to the customer on a standalone basis 2) there is objective and reliable evidence of the fair value of each item 3) delivery of any undelivered item is considered probable and substantially in the control of the company. If these criteria are met, each of the services included in the contract are treated as separate units of accounting and arrangement consideration is allocated among the separate units of accounting based on their relative fair values. Implementation revenues are recognised on acceptance of the milestone to which it relates and service revenues are recognised from implementation over the remaining period of the arrangement. If these criteria are not met, all of the services included are accounted for as a single unit of accounting and delivery and implementation revenues are recognised from commencement of implementation over the remaining length of the useful economic life of the asset to which the revenue relates. Service revenues are recognised from the date of implementation over the remaining period of the arrangement Pre contract costs All bid costs are expensed up to the point where contract award (or full recovery of costs) is virtually certain, which is at preferred bidder stage. Bid costs incurred after this are capitalised within current assets. On contract award these bid costs are included in contract costs. Macquarie Communications Infrastructure Page 17

20 Summary of Significant Accounting Policies (cont d) Revenue recognition and unearned revenue (cont d) Interest income Interest is recognised as revenue using the effective interest rate method. (g) Foreign currency Functional and presentation currency Items included in the financial statements of each of the group s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The financial statements are presented in Australian dollars, which is MCIT s, s and MIL s functional and presentation currency. Transactions and balances Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at period-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in the income statement, except when deferred in equity from applying net investment hedge accounting. Companies The results and financial position of all of the groups entities (none of which has the currency of a hyperinflationary economy) that have functional currency different from the presentation currency are translated into the presentation currency as follows: assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; income and expenses for each income statement are translated at average exchange rates; and all resulting exchange differences are recognised as a separate component of equity. Goodwill and fair value adjustments arising on the acquisition of a foreign entity are treated as assets and liabilities of the foreign entity and translated at the closing rate. (h) Intangible assets Goodwill represents the excess of the purchase consideration over the fair value of identifiable net assets acquired at the time of acquisition of a business or securities in a controlled entity. Goodwill is not amortised but is instead, tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired and is carried at cost less accumulated impairment losses. Prior to the implementation of AIFRS, goodwill in relation to the acquisition of BA had been amortised on a straight-line basis over 15 years. In line with AASB 1: First-time Adoption of Australian Equivalents to International Financial Reporting Standards the goodwill on transition to AIFRS on 1 July 2004 includes the accumulated amortisation at that date. Identifiable intangible assets Identifiable intangible assets are recorded at cost less accumulated amortisation and impairment charges. Identifiable intangibles are amortised on a straight line basis over the period that the benefits are expected to be received. Customer contracts are amortised over the life of the contract (including expected renewals). These range across operating companies from 5 to 20 years. Customer relationships are amortised over a period of up to 25 years. (i) Comparative information Where necessary, comparative figures have been adjusted to conform with changes in presentation in the current period. A tax expense of $6,169,243 has been recognised in the consolidated income statements of and the group for the 6 months ended December This adjustment is to recognise a correction to deferred tax balances that arose on conversion to AIFRS in respect of prior periods. Macquarie Communications Infrastructure Page 18