Melbourne IT : 2016 HY Financial Report (Appendix 4D)

2.1 Total revenues

Up

22.8%

to

84,950

2.2 Profit after tax

Up

127.0%

to

3,196

2.3 Net profit attributable to members of the parent

Up

88.8%

to

2,241

2.4 Dividends (distributions)

Amount per security

Franked amount per security

Current period

4.0 cents

80%

Final dividend

Interim dividend

2.0 cents

100%

6.0 cents

Previous corresponding period

4.0 cents

80%

Final dividend

Interim dividend

1.0 cent

80%

5.0 cents

2.5 Record date for determining entitlements to the dividend.

9 September 2016

2.6 Brief explanation of any of the figures reported above necessary to enable the figures to be understood.

Review and Results of Operations

Melbourne IT Ltd - Consolidated Group (unaudited results)

• Total consolidated revenue for the half year ended 30 June 2016 was $84.950 million (2015: $69.176 million), an increase of 22.8%.

• Profit after tax for the half year ended 30 June 2016 was $3.196 million (2015: $1.408 million), an increase of 127.0%.

• Profit after tax attributable to members of the parent for the half year ended 30 June 2016 was $2.241 million (2015: $1.187 million), an increase of 88.8%. Profit after tax attributable to non-controlling interests was $0.955 million (2015: $0.221 million), of which Outware Systems Pty Ltd (Outware) comprised $0.939 million (2015: $0.122 million). The following table shows a reconciliation of EBITDA* to the reported profit after tax attibutable to members of the parent.

30-Jun-16 30-Jun-15

$'000 $'000

Earnings before interest, tax, depreciation and amortisation (EBITDA)* 11,190 5,154

Depreciation and amortisation (3,513) (2,446)

Earnings before interest and tax* 7,677

Net interest (expense)/revenue (645)

Tax expense (3,836)

Profit after tax 3,196

Less: Profit after tax attributable to non-controlling interests: 955

Profit after tax attributable to members of the parent 2,241

2,708

8

(1,308)

1,408

221

1,187

• Underlying net profit after tax (Underlying NPAT)* for the half year ended 30 June 2016 was $4.589 million (2015: $4.666 million), a decrease of 1.7%. Underlying figures have excluded transaction costs, synergy costs, 2015 warranty provision writeback, unwinding of discount on other financial liabilities, gain on sale of IDNR business, contribution of IDNR business prior to sale, gain on reassessment of non-controlling interests dividend liability and included the full year impact of acquisitions made during the respective years and profit after tax attributable to non-controlling interests of Outware Systems Pty Ltd. The following table shows a reconciliation of statutory NPAT to underlying NPAT*.

30-Jun-16 30-Jun-15

$'000 $'000

Profit after tax attributable to members of the parent (Statutory NPAT) 2,241 1,187

Adjustments to calculate underlying NPAT*:

Profit after tax attributable to non-controlling interests of Outware 939 122

Transaction costs (tax effected) 501 1,500

Synergy costs (tax effected) 812 560

Unwinding of discount on other financial liabilities 252 - Provision writeback - (800)

Gain on reassessment of non-controlling interests dividend liability (586) -

Gain on sale of IDNR business, net of transaction costs (2,350) -

Tax on sale of IDNR business 2,424 -

Fair value movement in embedded derivatives 53 -

Imputed interest income on convertible note receivables (55) -

Contribution from IDNR business prior to sale (tax effected) (101) -

Contribution from acquisitions (assuming acquisitions 100% owned since 1 January) (tax

effected) 416 2,097

Other non-operating expenses (tax effected) 43 -

Underlying NPAT* 4,589

4,666

• Statutory EBITDA* for the half year ended 30 June 2016 was $11.190 million (2015: $5.154 million), an increase of 117.1%

2.6 Brief explanation of any of the figures reported above necessary to enable the figures to be understood (Continued)

Review and Results of Operations (Continued)

• Underlying EBITDA* for the half year ended 30 June 2016 was $10.579 million (2015: $9.954 million), an increase of 5.9%

30-Jun-16 30-Jun-15

$'000 $'000

Statutory EBITDA* 11,190 5,154

Adjustments to calculate underlying EBITDA*:

Transaction costs 595 1,700

Synergy costs 1,160 800

Provision writeback - (800)

Gain on reassessment of non-controlling interests dividend liability (586) -

Gain on sale of IDNR business, net of transaction costs (2,350) - Fair value movement in embedded derivatives 53 -

Contribution from IDNR business prior to sale (144) - Contribution from acquisitions (assuming acquisitions 100% owned since 1 January) 599 3,100 Other non-operating expenses 62 -

Underlying EBITDA* 10,579

9,954

• Following the acquisition completed on 31 March 2016, InfoReady Pty Ltd (InfoReady) has contributed revenue of $7.269 million, net profit after tax of $0.705 million and EBITDA* of $1.012 million during the period.

• Statutory earnings per share for the half year ended 30 June 2016 was 2.31 cents (2015: 1.28 cents), an increase of 80.5%.

• Operating cashflow for the half year year ended 30 June 2016 was $7.946 million (2015: $9.881 million), a decrease of 19.6%. Included in the operating cash flows are net income tax paid of $3.149 million (2015: $0.017 million), a difference of $3.132 million.

• Included in cash flows from investing activities are outflows from acquisitions including transaction costs of $15.977 million (2015: $37.020 million).

• Cash and cash equivalents were $16.506 million at 30 June 2016 (31 December 2015: $12.370 million).

• Deferred gross margin (i.e. income received in advance net of prepaid costs) was $26.101 million at 30 June 2016 (31 December 2015: $27.108 million), a decrease of 3.7%.

* The company believes this unaudited non-IFRS information is relevant to the user's understanding of the Group's underlying performance.

Change in Accounting Policies and Treatments

The Group has changed its accounting for its investment in convertible note receivables. Details of the change are set out in Note 8 to the financial report noting the impact of the change is immaterial to the financial report. Other than this change, the accounting policies and treatments are consistent with the 31 December 2015 financial report.

3.0 NTA Backing

Current period

30 June 2016

Previous Period

31 December 2015

Net tangible asset backing per ordinary security

-83.28 cents

-93.33 cents

Dividends (distributions)

Amount per security

Franked amount per security

Amount per security of foreign sourced dividend

Current Year

4.0 cents

80%

N/A

Final

Interim

2.0 cents

100%

N/A

6.0 cents

Previous Year

4.0 cents

1.0 cent

Final

80%

N/A

Interim

80%

N/A

5.0 cents

Total Dividends (distributions) per security (interim + final)

Current Year

Previous Year

Final Interim

4.0 cents

2.0 cents

4.0 cents

1.0 cent

Total

6.0 cents

5.0 cents