the report

For those who dont have it

By the way use a file pdf2txt to convert - look it up...



Findlay & Co Stockbrokers Limited

CORPORATE RESEARCH August 2003
By William Bannister Tel: +61 2 9251 9644 Email: [email protected]

MULTIEMEDIA LIMITED

(MUL)

AUSTRALIA.S FASTEST SATELLITE BROADBAND INTERNET PROVIDER
st
Launching 1 October,2003

EARNINGS FUNDAMENTALS

YearEnded June 30 2003E 2004E 2005E 2006E
NPAT A$m 1.3 34.0 82.0 139.0
EPS cents 0.1 3.7 9.0 15.3

PER times 48.3 1.9 0.8 0.5
DPS cents 0.0 0.9 2.3 3.8
Yield 0.0% 13.3% 32.2% 54.5%

Issued Capital
Ordinary Shares 763.370 Price A$ $0.07

Options 77.125 M/Cap A$m 63.735
Convertible Notes @ 5¢ 70.000
TOTAL millions 910.495

KEY POINTS

!!!!""""Data & Internet Solutions in Australia including ISDN have an estimated market of
A$6 billion. Our revenue forecasts during 2004-2006 for Multiemedia reflect market shares

of 2% - 8% with 1 satellite transponder in 2004 rising to 3 transponders in 2006.

!!!!""""The satellite hub & terminal equipment infrastructure will be provided by USA-based ViaSat
to Multiemedia. ViaSat are up to be 5x faster with bandwidth downlink speed compared
with the competitors (Hughes & Gilat). In Australia Optus the satellite fleet operator
provides hub & terminal equipment using a maximum one spot beamcompared with 6 by

Multiemedia.s satellite NSS6.
!!!!""""In FY2004 the rapid deal flow from Multiemedia.s superiority is expected to generate

operating revenues of A$100m including 70% from space & end user equipment.
Multiemediacommence commercial satellite operations on October 1, 2003 with a 5-year
contract to increase from 1 to 3 transponders. Each transponder generates A$100m of
revenues atcurrent prices.

!!!!""""We value Multiemedia @ 10-15x FY2004 earnings forecast at A$34m implying a valuation of

A$340-510m representing 37-56c per share using current issued capital of 910m securities.
We have assumed a dividend payout ratio of 25% if the business planis realized.

!!!!""""Investors will receive clear signals of Multiemedia.s emerging broadband superiority
through Australian Government Agencies. preference for Multiemedia.s services for new
business contracts. Head-to-head bidding against Optus is currently raging for broadband
contracts.

Findlay &Co StockbrokersLimited A.C.N. 065 943 982 Member Organisation of The AustralianStockExchange Ltd
Level 1, 27 Macquarie Place, Sydney, NSW 2000

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

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Findlay & Co Stockbrokers Limited

CORPORATE RESEARCH
August 2003

EXECUTIVE SUMMARY

Generally broadband is regarded as Internet speeds over 200 kbps, however for large users at the premium
end broadband is speeds over 1,000 kbps.

In the table below satellite broadband has moved ahead of the competing alternatives. However for most
large corporates taking services like video conferencing with multiple venues ISDN is the current
preference. We believe large users will be lured to satellite broadband by significant cost advantages as
downside risk to broadband prices occurs in 2004 for the 3 major access means of ADSL, Cable & ISDN.
Satellite are now the lowest cost provider.

BROADBAND INTERNET SPEEDS & COVERAGE

ACCESS AUSTRALIAN COVERAGE UPLINK kbps Downlink kbps Distributor
Satellites
*NSS6 100% 1,150 60,000 Multiemedia
*C1 100% 1,000 36,000 Optus
*iPStar 1 70% 2,000 8,000 Telstra
ADSL 70% 1,500 256 Various
Cable 30% 128 256 - 2000 Various
ISDN 96% 1,920 1,920 Telstra
Video conferencing requires up to 784 kbps.
ADSL only within3.5kms of telephone exchange.

The bandwidth capacity in Australia provided by cable and satellite combined is estimated to have
increased by +655% to 2,100 Gbits/s during 2000-2003 before the capacity of ISDN & ADSL. We
therefore believe further price deflation for broadband services is inevitable with the market price likely to
bottom-out in calendar 2004 when iPStar 1 is launched in 1Q2004. This is the world.s largest commercial
satellite @ 6,775 kgs (Both C1 & NSS6 around 4,725 kgs).

More importantly Telstra.s 50%-owned Reach Global Services Limited operating from Hong Kong
announced an MOU in May 2003 to deploy iPStar 1.s broadband satellite program in Australia and New
Zealand. With Singtel-Optus.s C1 satellite 85% pre-sold from June 2003 and Telstra.s satellite capacity
available from 1Q2004, Multiemedia have a 9 months.window-of-opportunity. tosell capacity on 1-to-3
transponders.

IPStar 1.s configurations may be a superior satellite to NSS6 owing to there being 100 spot beams vs 6 spot
beams but operational delivery will be the key. Multiemedia claim a superior VSAT terminalinfrastructure
for 2-way communication using PCMA (paired carrier multiple access) reducing bandwidth by 50% on the
downlink space segment costs.

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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Findlay & Co Stockbrokers Limited

CORPORATE RESEARCH
August 2003

Australia and New Zealand now have leading edge satellite technology whereas prior to the launchof C1
Optus. Satellite Fleet wasold technology (analogue, small, usually one frequency band).

In mid 2003 broadband internet using ADSL has emerged as Telstra.s fastest growing business with
broadband subscribers up +101%yoy and revenues up +37% for the 3Q in FY2003. As of July 2003 Telstra
have 361,000 broadband internet subscribers (250,000 ADSL, 100,000 Cable, 11,000 Satellite) with a
target of 1 million in FY2005.

Coinciding with Telstra.s broadband rollout is the development of Multiemedia Ltd (ASX : MUL) providing
broadband internet services with satellite delivery fromNew Skies. Inc.s NSS6 satellite. The characteristics
of NSS6 provide Multiemedia with a competitive advantage over all other satellite broadband service
providers because :

1) Optus,Telstra,TelecomNZ all use Optus. satellites with access to only one spot beam for 2-way
uplink/downlink bandwidthspeed.

2) Competing hub & VSAT terminal equipment providers are Hughes & Gilat but ViaSat is 5x faster @
1,650 kbpscompared withHughes @ 250 kbps and Gilat @ 300 kbps.
3) For Optus, Telstra, Telecom NZ to compete with Multiemedia.s satellite broadband hub and
infrastructure equipment will need to be upgraded at the service providers. cost.
4) Vindication for Multiemedia.s superiority is expected to come from Australian Government
Agencies seeking faster broadband and, after head-to-head with Optus, preferring Multiemedia.

We believe large users of broadband in 2003 onwards will switch from the major telecoms in preference for
the lowest cost provider forbulk bandwidth capacity.

Already encouraging signs are emerging with Newcastle-based SP Telecom establishing a hub & VSAT
terminal agreement with Multiemedia to service customers seeking high speed broadband internet in
regional NSW.

SP Telecom have the broadband contract for the NSW Department of Education for schools & TAFEs with
an estimated 2,800 outlets. We believe a significant percentage up to 30%+ have no ADSL orcable
broadband connectivity. Many regional users have very slow broadband speeds and customer churn is
expected to accelerate.

In Australia ADSL and cable are generally not available in regional areas leading toMultiemedia.s satellite
broadband service solution. Multiemedia have contracted to use Europe-based New Skies. hybrid satellite
of 50 Ku-band transponders and 12 Ka-band transponders covering Middle East, Indian Sub-Continent, S-E
Asia, Oceania, N-E Asia. The satellite has a 15-year life to 2016 (see table p7).

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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Findlay & Co Stockbrokers Limited

CORPORATE RESEARCH
August 2003

MULTIEMEDIA.S NETWORK OPERATIONS ARE EXPECTED TO COMMENCE COMMERCIAL
OPERATIONS FROM ITS MELBOURNE HO ONOCTOBER 1, 2003. THIS IS THE EFFECTIVE DATE FOR
THE COMMENCEMENT OF THE 5-YEAR SATELLITE CONTRACT WITHNEW SKIES INC WITHOPTIONS
FOR A FURTHER 2x5-YEAR TERMS.

Multiemedia have identified a potential market in Australia including :

!!!!""""9,596 schools
!!!!""""748 hospitals including 509 private hospitals
!!!!""""684 local governments
!!!!""""101 TAFE / Government Education Institutions
!!!!""""45 Universities
!!!!""""567 small & medium sized ISPs
!!!!""""150,000 SMEs
!!!!""""3.5 million people
!!!!""""1.4 million households

Multiemedia are participating in Microsoft.s SPLA Licence Program for worldwide distribution of all
Microsoft.s products in Multiemedia.s satellite footprint coverage area ie 60 countries and 66% of world.s
population. We view the Microsoft Software licence asunique for a listed company in Australia especially
with Office 2003 due for release in the USA on October 21, 2003 comprising strengthened software
security for viruses, spam, and anti-terrorism features.

Superior terminal speed using ViaSat.s LINKSTAR product underpins the satellite broadband service of
Multiemedia and its future delivery of Microsoft Software to educational institutions.

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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CORPORATE RESEARCH
August 2003

LinkStaris Faster than the Competition

Max ReturnlinkSpeed
1800
Why is this so
1600 important?
1400
1200 To support
1000 5 Times Faster! multiple users
kb8p0s0 per VSAT

600
400
200
0
HNS Directway Gilat Skyblaster ViaSat LinkStar
2000 360E

Hub and terminal provider ViaSat have increased its order backlog by +54% toUS$214m in the 2Q2003
with products sold to :
!!!!""""High Capabilities Technologies Co. Ltd in Saudi Arabia
!!!!""""Beijing Application Institute of Information Technology (BAIIT) in China
!!!!""""Multiemedia Ltd in Australia

The ViaSat satellite broadband network has realized sales prices of:
!!!!""""300 outlets for BAIIT @ A$29,000/outlet in China
!!!!""""800 outlets for Shoppers Drug Mart & Pharmaprix @ A$9,615/outlet in Canada
!!!!""""1,000 outlets for Transcom@ A$15,000/outlet in UK

This sales program highlights the customization of ViaSat.s broadband network as a successful solution.
Multiemedia have sub-licenced the product in Australia to 3 customers, SPTelecom, Australian Private
Networks, Transcom ISP with 6-10 sub-licences expected to be sold in FY2004.

Multiemedia have achieved pre-launch letters of intent revenues of A$22m after 45 days in FY2004
implying an annual revenue achievement in FY2004 of A$183m. We forecast a transponder will take 1
year to sell such that by FY2006 Multiemedia will have fully sold its 3 transponders of capacity.

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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Findlay & Co Stockbrokers Limited

CORPORATE RESEARCH
August 2003

Leveraging the Microsoft software program with an annual R & D effort ofUS$4.6bn including a new
Microsoft Office 2003 program will impact in calendar 2004. Software fees will be key revenue drivers as
the space segment sales mature.

RECOMMENDATION: MULTIEMEDIA REPRESENTS A UNIQUE BROADBAND / SOFTWARE
INVESTMENT OPPORTUNITY WITH WORLD CLASS SATELLITE CAPACITY AND THE LEADING EDGE
SOFTWARE OF MICROSOFT. SINCE MULTIEMEDIA HAVE ONLY REALIZED THE NSS6 AND
MICROSOFT CONTRACTS IN 2HFY2003 THE HISTORICAL FINANCIAL PERFORMANCE IS LESS
RELEVANT AND WE BELIEVE INVESTORS SHOULD FOCUS ON FORWARD FINANCIAL EXPECTATIONS
OF AN NPAT IN FY2004 OF A$34M OR EPS OF 3.7C FOR A PER OF 2x.

STOP PRESS :
On July 18 2003 Telstra .flagged. its broadband credentials as the current provider of broadband services
to 90-95% of Australia.s 600 Internet Service Providers (ISPs).
Telstra.s profit experience with ADSL Broadband :
!!!!""""Year 1 : Positive gross contributionover fixedcosts
!!!!""""Year 2 :Gross margin doubles in year 2

On August 20, 2003 Multiemedia have announced a A$3.5m convertible note issuance which @ 5c per
convertible note will require the issue of 70 million notes and increase the capital base to 910 million
securities.

Pre-launch network uplink speeds are operating up to 22% higher or at 1,400kbps compared with the
expected speed of 1,150 kbps (see table p2).

SATELLITE FOOTPRINT & CHARACTERISTICS
Principal concept of NSS6 is broadband content throughout Asia with connectivity to Europe & USA. 15
transponders have been allocated to each market : Middle East, Indian sub-continent, S-E Asia, Australia,
China, N-E Asia.

6 spot uplink beams are targeting metropolitan cities in coverage areas :

!!!!""""China : Beijing, Tianjin, Hong Kong, Shanghai,Wuhan
!!!!""""Japan :Tokyo, Osaka
!!!!""""Korea :Korean Peninsula
!!!!""""Taiwan : Taiwan
!!!!""""Australia : Sydney, Melbourne, Adelaide
!!!!""""India : Delhi, Mumbai, Chennai, Bangalore

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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CORPORATE RESEARCH

August 2003

Each spotcovers 650 Kms for small VSAT terminals. C and Ku band frequencies are relatively congested

providing Ka band with an advantage of bandwidth and speed. Ka band offers smaller terminals than Ku

band.

Importantly for Optus.s newest satellite C1 launched in 2003 Loral have entered Chapter 11 in the USA for

financial restructuring, and for AsiaSat.s satellites 3 & 4 launched in 1999 and 2003 Boeing have decided to

withdraw from the manufacture ofcommercial satellites to focus onmilitary applications.

This implies New Skies have the youngest fleet with the best technology & configurations for the future with

the satellite industry analogous to the airline industry from a fleet perspective.

AUSTRALASIAN SATELLITE COMPARISONS

Satellite Number NSS6 C1 B3 B1 2 3 4 iPStar 1
Operator NewSkies Optus Optus Optus AsiaSat AsiaSat AsiaSat ShinSat

Launch Dec-02 Jun-03 na na Nov-95 Mar-99 Apr-03 1Q2004

Manufacturer Lockheed Loral na na Lockheed Boeing Boeing Loral

End of useful life 2016 2018 2009 2006 2008 2014 2018 2016

No. of Transponders

*Ku-band 60 24 15 15 9 16 20 84

*Ka-band 12 4 nil nil nil nil nil 16

*C-band nil nil nil nil 24 28 28 nil

*X-band nil 4 nil nil nil nil nil nil

*UHF nil 6 nil nil nil nil nil nil

Spot Beams 6 1 nil nil nil nil nil 100

Footprint Middle East Oceania Oceania OceaniaAsia Asia Asia Asia

India S-E Asia Oceania Oceania Oceania Oceania

S-E Asia Hawaii Middle East Middle East
Soviet Union
Oceania Soviet Union

N-E Asia

S Africa

Source:Arianespace, Loral, Lockheed, AsiaSat, Optus, Thaicom

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever

on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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CORPORATE RESEARCH
August 2003

CHARACTERISTICS OF2-WAY BROADBANDACCESS

!!!!""""Very high-speed internet access
!!!!""""Attractive alternative to ADSL orcable modem
!!!!""""High-power Ku or Ka band transmission
!!!!""""Small VSAT, 75cm
!!!!""""Low cost
!!!!""""Rapid deployment
!!!!""""Secure transmission w/SMS&CA
!!!!""""Multicasting enabled
!!!!""""Personalised content
!!!!""""Support for multi channel television
!!!!""""Value-added services : PUSH, cache, streaming media, pay-per-view

VSAT TERMINALS USING KA-BAND CAN UPLINK DATA AS FAST AS 1.5MBPS AND DOWNLINK AS
FAST AS 45 MBPS. UPSTREAM SPEEDS USING MULTIEMEDIA.S KU-BAND ARE 1,024 KBPS AND
DOWNSTREAM ARE 54,000 KBPS. NETWORK SPEEDS USING MUL.S KU-BAND ARE 15-20X DSL, CABLE
OR ISDN VS 50X FOR KA-BAND.

High costs of equipment migration will be a deterrent from switching from Ku to Ka band frequency. NSS6
with its superiorKa-band payload for today.s satellite is the first major hybrid covering Australia.

Satellite is an open broadband system while cable is a closed system. Satellite payTV services in USA have
taken market share from cable payTV services to 2Q2003. Industry trend is strong demand for high speed
internet service at low costs.

SALES CONTRACTS ANNOUNCED BY MULTIEMEDIA
(SATELLITE SERVICES LIVE FROM OCTOBER 1, 2003).

!!!!""""Transcom ISP in UK for A$15m over 3 years for 1,000 sites
!!!!""""SP Telecom in Australia (not disclosed)
!!!!""""Australian Private Networks for A$1m
!!!!""""Microsoft SPLA Licence worldwide with sales potential of A$150-200m on a 2-3 year time
horizon
!!!!""""people telecom in Australia (not disclosed) with 16,000 customers.

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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CORPORATE RESEARCH
August 2003

INTERNET SUBSCRIBERGROWTH IN AUSTRALASIA

In the table below are the operating data for the 3 major Telecoms. We estimate current household
penetration rates of the internet in Australia at 43%.

The Broadband Revolution has dawned with household penetration of 70% in South Korea and forecast at
48% in Japan by 2007.

We expect Broadband to win subscribers from all other categories of internet providers and dominate by
2005. Generally large users will have a preference for Satellite Broadband and the householder using ADSL
or cable modem.

INTERNET SUBSCRIBER GROWTH

Year Ended June 301999 2000 2001 2002 2003E 2004E 2005E 2006E
Provider
Broadband .000
Telstra 0 29 78 168 350 625 1,100 1,500
Singtel Australia 0 0 0 65 109 185 300 400
Singtel 0 0 38 92 192 250 300 325
Telecom NZ 0 0 0 0 0 25 80 120
TOTAL 0 29 116 325 651 1,085 1,780 2,345
% growth 300.0% 180.2% 100.3% 66.7% 64.1% 31.7%
Narrowband .000
Telstra 415 702 890 1,108 1,100 800 700 750
Singtel Australia 0 0 300 402 511 400 300 300
Singtel 0 0 289 252 191 150 115 120
Telecom NZ 206 291 302 380 430 400 325 280
TOTAL 621 993 1,781 2,142 2,232 1,750 1,440 1,450
% growth 59.9% 79.4% 20.3% 4.2% -21.6% -17.7% 0.7%
ISDN .000
Telsta 722 1,049 1,235 1,268 1,150 1,100 1,000 900
Singtel Australia 0 0 0 0 0 0 0 0
Singtel 0 0 0 0 0 0 0 0
Telecom NZ 53 72 75 75 79 70 65 60
TOTAL 775 1,121 1,310 1,343 1,229 1,170 1,065 960
% growth 44.6% 16.9% 2.5% -8.5% -4.8% -9.0% -9.9%
INTERNET .000
Telstra 1,137 1,780 2,203 2,544 2,600 2,525 2,800 3,150
Singtel Australia 0 0 300 467 620 585 600 700
Singtel 0 0 327 344 383 400 415 445
Telecom NZ 259 363 377 455 509 495 470 460
TOTAL 1,396 2,143 3,207 3,810 4,112 4,005 4,285 4,755
% growth 53.5% 49.7% 18.8% 7.9% -2.6% 7.0% 11.0%
MARKET SHARES
Broadband 0.0% 1.4% 3.6% 8.5% 15.8% 27.1% 41.5% 49.3%
Narrowband 44.5% 46.3% 55.5% 56.2% 54.3% 43.7% 33.6% 30.5%
ISDN 55.5% 52.3% 40.8% 35.2% 29.9% 29.2% 24.9% 20.2%
TOTAL 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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Findlay & Co Stockbrokers Limited

CORPORATE RESEARCH

August 2003

MICROSOFT SPLA (SERVICES PROVIDER LICENCE AGREEMENT) LICENCE

Effective from July 1 2003 Multiemedia will leverage off a Microsoft licence to distribute software

worldwide across Multiemedia.s satellite footprint. Microsoft advise there are 640of these SPLA licences
worldwide including 30 in Australia. A prerequisite is broadband distributioncapability.

The SPLA program of Microsoft is a new application software licencing agreement allowing the
licenceholder to license Microsoft.s productson a monthly subscription basis to end users.

The end customer may choose to allow the SPLA licenceholder (Multiemedia) to become the licencee of

the Microsoft software by acquiring licences through the SPLA Program including for Schools using VPN
Networks. Microsoft software users will be able to access its software using Multiemedia.s very high-speed

broadband internet which is arguably the fastest in Australia.

st
A typical 1 tier Microsoft distributor in Australia records sales of A$150-200m in annual revenues and can

be sub-licenced to resellers. A point of difference withMultiemedia.s SPLA licenceis that it is a worldwide

licence with opportunities in Middle East, Indian sub-continent, S-E Asia, Oceania, N-E Asia.

BACKGROUND TO OFFICE 2003

Microsoft have an annual R&D effort of US$4.6bn driving the software business. Office software revenues
in FY2003 were US$9bn or28% of total revenues. In calendar 2003 Microsoft will be releasing :

Office 2003

Office Project 2003 (Enterprise Project Management software package)

These new softwareproducts are very positive for Multiemedia as the emphasis shifts to tighter system

security against viruses, spam & junk emails and terrorists.

Microsoft have recently won a 6-year US$471m software supply contract for the US Army.s 494,000 PCs

involving software reseller Softmart, a key endorsement for its efforts to improve the security of its software.

The US Government are upgrading IT systems throughout the security services as part of its war against
terrorism and the focus on national security.

Microsoft Office 2003 will be released in the USA & Canada onOctober 21, 2003 with 4 versions :

Microsoft Office 2003

Package Price US$

Standard 399

Professional 499

Small Business 449

Student & Teacher 149

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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CORPORATE RESEARCH
August 2003

These Office upgrades also require new server software used tomanage the computer networks.

Microsoft, the world.s largest software maker have completed work on Project 2003 with its Microsoft
Office Enterprise Project Management (EPM) Solution is an important platform for markets in 2004. The
software is for managing large enterprises from a project management approach by aligning business
resources with strategic objectives.

Microsoft Office 2003 has commenced manufacturing in North America from August 18, 2003, but
Microsoft OfficeProject 2003 will be released later in 2003.

MICROSOFT IN USA

Microsoft.s MSN unit (joint venture with PBL in Australia) is pursuing further expansion in online advertising.
MSN are expanding online advertising at double the growth rate for the overall online business unit.

MSN.s 2Q2003 revenues from subscription and advertising increased by +25%yoy to US$559m whilst
online advertising increased by +48%yoy to US$80m while subscription revenue increased by +11%yoy to
US$479m. The price-per-click (around US40c) is going up as advertisers use online surveys to reach
consumers resulting in lower marketing costs. MSN.s 350 million clicks per month are therefore worth
US$1,680m pa if advertisers pay.

Microsoft are reported as having online subscribers of 8.6 million using its dial-up, broadband and other
premium services. MSN have high-speed internet alliances with :

!!!!""""Satellite internet : Hughes Electronics
!!!!""""Telecom services : Qwest, BellSouth, Sprint, Verizon
!!!!""""Cable internet : Charter, Comcast, Mediacom

Microsoft alsohave cable box TV software trials with cable TVoperators AOLTimeWarner and Comcast
with a view to a focused strategy of broadband scenarios in video. MSN doesn.t plan to be in the content
business but in developing great software topartner with content developers.

Australia have joined the Microsoft Government Security Program joining 12 other participantsincluding
Russia, NATO, China, UK and Taiwan. This program was launched globally in January 2003 and offers
controlled access to Microsoft Windows source code and other technical data. This allows National
Governments to perform audits of Microsoft Windowsproducts & applications.

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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August 2003

USA BROADBAND EXPERIENCE

Major corporations in the telecom-media-technology industries are embarking on a mission to develop
broadband internet. Verizon, the USA.s largest telecom considers broadband internet will transform broad
sections of the US economy including essential services of education, health care, financial services and
Government services. Cable broadband focuses on entertainment and games.
The USA broadband internet market share in March 2003 is :

USA INTERNET MARKET SHARES

ACCESS OVERALL BROADBAND
Dial-up 74% 0%
Cable Modem 17% 67%
DSL 9% 28%
Satellite 0% 5%
TOTAL 100% 100%
Source: Pew Internet & American Life Project

Broadband internet connectivity is up +50%yoy to 30 million users as of March 2003according to a survey
by Pew Internet & American Life Project. The report on future trends indicated 13% of dial-up internet
users are planning to switchto broadband.

Telecoms providing DSL broadband internet services have a footprint issue lacking household coverage and
the cable companies have spent US$75bn upgrading todigital during 1996-2003.

Satellite broadband services have historically been slower than cable until 2003 following the advent of :

1) Spot beam technology in Satellites to accelerate bandwidth speeds using 2-way uplink/downlink
services.
2) ViaSat-type hub & VSAT terminal equipment enables a manipulation of the satellite frequency to
achieve lower cost for satellite provided bandwidth.

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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August 2003

EARNINGS PROJECTIONS

Multiemedia.s network operations from Melbourne commence commercial operations on October 1,
2003. Hence FY2004 will be effectively for 9 months only in the space and end user equipment segments.

Included in operating costs are transpondercharges ofup to A$25m eachper annum,ViaSat systems and
Kavera management charges. All revenues are managed and billed by Multiemedia.

Multiemedia have current headcount numbers of 12 rising to 18 by end of 2003 performing sales and head
office executive functions.

Multiemedia are in transistion from the legacy technology distribution business earmarked for divestment to
satellite broadband network operator and distributor of Microsoft.s leading edge software. Accordingly
clearing the balance sheet will be a priority in FY2003 results and writeoffs of A$5m are expected in
significant items.

EARNINGS PROJECTIONS

Base Case
YearEnded June 30 1HY2003 2HY2003 2003E 2004E 2005E 2006E
A$m A$m A$m A$m A$m A$m
Space Segment 0.0 4.5 4.5 50.0 125.0 250.0
End User Equipment 0.0 2.0 2.0 25.0 40.0 95.0
Franchise Fees 0.0 0.0 0.0 10.0 35.0 60.0
Application Fees 0.0 0.0 0.0 10.0 20.0 30.0
Technology Distribution 11.7 13.0 24.7 32.0 0.0 0.0
Other 2.8 3.0 5.8 5.0 10.0 15.0
OPERATING REVENUES 14.5 22.5 37.0 132.0 230.0 450.0
Cost of Sales 9.6 16.0 25.6 67.0 85.0 175.0
Overheads 3.7 5.0 8.7 15.0 25.0 75.0
EBITDA 1.2 1.5 2.7 50.0 120.0 200.0
Depreciation & Amortisation 0.5 0.5 1.0 2.0 4.0 6.0
EBIT 0.7 1.0 1.7 48.0 116.0 194.0
Net Interest Costs 0.2 0.2 0.4 0.0 0.0 0.0
Pre-Tax Profit 0.5 0.8 1.3 48.0 116.0 194.0
Income Tax Expense 0.0 0.0 0.0 14.0 34.0 55.0
NPAT 0.5 0.8 1.3 34.0 82.0 139.0
EBITDA/Operating Revenue Margin 8.0% 6.7% 7.2% 37.9% 52.2% 44.4%
OPERATING DATA
Number ofEmployees 12 12 25 40 60
Number of Transponders 1 1 1 2 3
Number ofCustomers 100 100 1,000 4,000 9,000
Estimated Size of Target Market A$m 6,000 6,420 6,869 7,350
Internet Subscribers .000 3,729 3,605 3,870 4,310
Broadband Subscribers .000 459 835 1,480 2,020

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
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Findlay & Co Stockbrokers Limited

CORPORATE RESEARCH
August 2003

Disclaimer :Thisresearch report has beenprepared exclusively for our clients and is not to be relied upon
by anyone else. In compiling this research report, we are of necessity unable to take account of the
particular investment objectives, financial situation and needs of any of our individual clients. Accordingly,
each client should evaluate the recommendations obtained in this research report in the light of their own
particular investment objectives, financial situation and needs. If you wish to obtain further advice
regarding any recommendation made in this research report to take account of your particular investment
objectives, financial situation and needs, you should contact your Findlays. investment advisor. We believe
that the advice and information herein are accurate and reliable, but no warranty ofaccuracy, reliability or
completeness is given and (except insofar as liability under any statute cannot be excluded) no
responsibility arising in any other way for errors or omissions or in negligence is accepted by FINDLAY &
CO. STOCKBROKERS LIMITED or any employee or agent. For private circulationonly. Thisdocument is
not intended to be anoffer, or a solicitation of an offer, to buy or sell relevant securities (ie securities
mentioned herein or of the same issuer and options, warrants, or rights with respect to or interests in any
such securities). Wedo not guarantee the accuracyor completeness of the information herein,orupon
which opinions herein are based. At any time we or any ofour connected or affiliated companies (or our
or their employees) may have a position, subject to change, and we or any such companies may make a
market or act asprincipal in transactions, in any relevant securitiesor provide advisory or other services to
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herein (including estimates or forecasts) are solely those of the author and subject to change without notice.
This document may not be reproduced orcopies circulated without authority.

Disclosures : Findlay & Co. Stockbrokers Limited and orits associates have raised A$3.5 million in capital
in the form of a convertible note.

The author is currently a holder of shares in Multiemedia Limited.

All information and adviceis fortheprivateinformation of theperson to whomit is providedand isprovided without any responsibility or liability on any account whatsoever
on the part of Findlay & CoStockbrokers Limited or any member or employee thereof. Refer to full disclaimer atthe end of this document.

FINDLAY CORPORATE RESEARCH MULTIEMEDIA LIMITED AUGUST 2003
Page 14 of 14