People

You cannot move rapidly in this changing internet world without flexible, dynamic and passionate people. Our competitive advantage is our people. The ‘Engin army’ have taken this business to a new level. Their dedication to the business and unfailing belief in the product, the service, the vision and the sector, has been a cornerstone of our success. With an 81% increase in full time employees in the 12 months to 30 June 2006, this is something which we continue to build and develop. Engin’s management team has a long and proven track record of managing growth and change in the telecommunications industry. The appointment in May 2006 of Barry Evans as Chief Operating Officer, was a key addition to our team. Barry has over 20 years’ industry experience, most recently as Chief Operating Officer at Virgin Mobile. He brings with him a proven track record combining business, technical, financial and people management skills which will help position Engin strongly for the future.

Industry

Whilst there is much to celebrate over the last 12 months, we are not taking our foot off the pedal, but planning to accelerate at an ever increasing pace. As the Chairman mentioned, indicators point to the mainstream adoption of Voice over Internet Protocol. Forecasters predict a growth in VoIP usage from 100,000 in 2005 to 6 million in 2011, making the internet telephony sector an exciting opportunity, in which Engin, with a market share of 40%, is the clear industry leader. We are well placed to capture this market, dramatically accelerate subscriber growth and build on our market leadership position.

With this excitement comes increased competition. In 2006 more than 160 new competitors entered the market. At Engin we are working now to build market share and grow our product and service offering and ensure that Engin has built sufficient scale and diversity to meet the competition.

Participation in industry initiatives

We at Engin understand that with market leadership comes both opportunity and responsibility to the industry. We are engaged in setting industry standards through our involvement in the Communications Alliance, the telecommunications industry standard setting body. Over the last three years we have also been deeply engaged with the industry regulator, the Australian Communications and Media Authority, in developing policy for the sector.

Outlook

The future is bright. We have worked hard to build value for shareholders from a market capitalisation of $9 million in June 2005 to over $65 million today. We have set ourselves ambitious milestones in the past...and delivered.

In financial year 2007 Engin embarks upon a period of accelerated growth. Exciting things are happening, not only in terms of our core service, but also applications and additional services which will well and truly revolutionise the way consumers and business view and use internet telephony services in the future. The 2007 financial year will see Engin continue to lead the way by taking internet telephony into mobility and bundling internet telephony with content services to consumers.

These present wonderful opportunities for our business and staff and the potential for great outcomes for subscribers and shareholders.

We thank you all for your support on the journey so far and look forward to sharing with you the opportunities of this exciting next phase of our story.