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MTG Media Technology Group Limited

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Media Technology Group Limited MTG 28 Sep, 2007, 15:54 MEETING CHAIRMANS ADDRESS TO AGM

Executive Chairman's Address
2007 Annual Meeting of Shareholders - 28 September 2007
Annual General Meeting of Shareholders of Media Technology Group Limited held at the company office, 17 - 21 Maidstone St, Ponsonby, Auckland, New Zealand.

I have been Executive Chairman since the 2006 Annual Meeting. It was not a responsibility I was keen to take as I've always been more market and development orientated. However it was a task I found necessary if the company founded was to restore the values and spirit of the past and thereby have a future.

Over the past 12 months we have enjoyed the support of two worthy directors in Bridget Daldy and Ron Ackroyd who had seen the Software Images business of past years. They understood that a fundamental radical restructure was what the business needed. It needed to drastically reduce its cost base, empower its front line people to reengage its customers.

The board was confronted with a difficult situation. The alternatives to what we took on were dire so all our efforts have been directed at the restructure and I'm proud to say that overall it is coming together.

We felt that Media Technology control was far too centralized in the pursuit of efficiency and was failing in its responsiveness customer intimacy. Since October 06, the overhead structure that evolved over the last 3 years has been dismantled with marketing, administration and IT services decentralized.

One of the key objectives of the restructure was to identify and associate costs against the two operating companies and the corporate (public company) overhead. With this information we were then able to separately address the needs of each and be accountable.

With the benefit of personal undertakings from the major shareholders and continued constructive support from Lock Finance the Group refinanced during the year and was able to lower its financing costs.

The restructure has made the business, particularly NZ, more efficient. I sense that improvement is now available with introduction of smarter work practices and an empowered local management. So despite the loss of two major clients there are good signs that returns are now available in the medium term.

The Australian business is larger, more complex and lacks the manufacturing capability to differentiate itself from competition. It lags behind NZ in its restoration. A separate finance team is now in place, marketing obligations are being fulfilled and the huge IT rebuild project is underway. Prospects remain good although generating shareholder returns in this market will be challenging.

Concurrent with the restructure and about the time of the audit, this Board received a proposal from Cadre' Investments to segregate the Australian businesses from MTG. The essence of the proposal has been outlined in the attachment letter to the notice of this meeting.



We had anticipated that this proposal would have been tabled at this meeting, but the prerequisites and receipt of the independent report have taken longer than anticipated. We will be calling a Special Meeting shortly.

For the 12 months ended 31 March 2007 the company achieved revenue of $17.1million, which was 4% down on the previous year ($17.8million). This resulted in a net deficit for the year of $532,000 compared to the previous year deficit of $659,000.

The deficit for the period was after depreciation charge of $191,000, finance costs of $48,000 and non-recurring restructuring costs of $750,000. EBITDA for the full year was negative $285,000 which was affected by lower than expected revenue in the 4th quarter, and the costs of restructuring the business.

The company has accumulated tax losses in NZ and Australia but the directors have elected not to recognise as the short term likelihood of utilizing those losses is uncertain. The prospects of shareholder returns in the short to medium term remain unknown and challenging in the current form.

Allan Morton
Executive Chairman

The company wishes to advise it has entered into a heads of agreement with its two major shareholders which involves:
- The sale of its Australian subsidiaries in consideration for the cancellation of all the shares held in Media Technology Group Ltd by SAM Holdings (Aust) Pty Ltd and the assumption of certain intercompany indebtedness of the Group by SAM Holdings (Aust) Pty Ltd.
- The write off of interest accrued on loans made by Cadre Investments Ltd & SAM Holdings (Aust) Pty Ltd to the company.
- The issue of shares to Cadre Investments Ltd in settlement of the loan which Cadre has made to Media Technology Group.
- The introduction of a further $250,000 in new capital.

This is conditional on final legally binding agreements being entered into by the respective parties and gaining the approval of shareholders in accordance with all regulatory requirements. This is to be sought at the AGM which will be held in late August/early September. Full details will be provided in the notice of meeting which will be distributed shortly.

The directors believe the result of this agreement being concluded will be to improve the prospects of the Group and significantly improve its financial position. As a consequence of concluding this arrangement there are consequential changes which have to be made to the results and financial position for the year to 31 March 2007 previously disclosed in the preliminary announcement on 14 June 2007. They are as follows:-

$000's
As revised
Net deficit for the period $585
Earnings per share(0.67)cents
Total equity ($1,495)
Total assets $4,383
Total liabilities $5,878


Full financial details will be in the annual report which will be mailed to shareholders by 31 July 2007.

Director's Report