BABCOCK & BROWN SUBORDINATED NOTES PRESENTATION. Please find enclosed a Babcock & Brown (ASX: BNB) Subordinated Notes Investor Presentation.

Transcription

1 ASX Release 27 September 2006 BABCOCK & BROWN SUBORDINATED NOTES PRESENTATION Please find enclosed a Babcock & Brown (ASX: BNB) Subordinated Notes Investor Presentation. For further information please contact: Kelly Hibbins Babcock & Brown About Babcock & Brown Babcock & Brown is a global investment and advisory firm with longstanding capabilities in structured finance and the creation, syndication and management of asset and cash flow-based investments. Babcock & Brown was founded in 1977 and is listed on the Australian Stock Exchange. Babcock & Brown operates from 22 offices across Australia, the United States, Europe, Asia, United Arab Emirates and Africa and has in excess of 810 employees worldwide. Babcock & Brown has five operating divisions including real estate, infrastructure and project finance, operating leasing, structured finance and corporate finance. The company has established a funds management platform across the operating divisions that has resulted in the creation of a number of focused investment vehicles in areas including real estate, renewable energy and infrastructure. For further information about Babcock & Brown please see our website:

2 Babcock & Brown Subordinated Notes Investor presentation September 2006

3 IMPORTANT NOTICE NOT FOR RELEASE OR DISTRIBUTION IN THE UNITED STATES No offer or invitation to apply for Babcock & Brown Subordinated Notes (BBSN) is being made in this presentation. To the maximum extent permitted by law, the BNB Group (including Babcock & Brown Asset Holdings Pty Limited) and the Joint Lead Managers, and their respective officers, employees and agents, and any other person involved in the preparation of the offer documents, disclaims all liability and responsibility, including any liability arising from fault or negligence, for any direct or indirect loss or damage which may be suffered through use or reliance on anything contained in, or omitted from, this presentation. The offer of BBSN in Australia will be made in, or accompanied by, a copy of the prospectus dated 27 September Anyone in Australia wishing to acquire BBSN will need to complete the application form that will be in the prospectus after the offer opens. No applications for BBSN from a New Zealand resident investor will be accepted or money received unless the subscriber has received a copy of the prospectus dated 27 September 2006 and investment statement to be dated on or about 3 October Any New Zealand investor wishing to subscribe for BBSN must obtain a copy of the investment statement and prospectus and complete the accompanying application form. The prospectus and investment statement are important documents, and prospective investors should read carefully the offer document relevant to them before making an investment decision. This presentation is being made to participating organisations of Australian Stock Exchange Limited and primary market participants of New Zealand Exchange Limited (Retail Brokers and Institutions). The purpose of this presentation is to enable Retail Brokers and Institutions to: make a decision about a firm allocation for which they may wish to apply; and, plan for the selling program in respect of the offer of BBSN. In the case of primary market participants of New Zealand Exchange Limited, this presentation is provided for their internal use on the basis that they are a New Zealand resident entity or persons whose principal business is the investment of money or that they are New Zealand resident persons who, in the course of and for the purposes of their business, habitually invest money. The information in this announcement is general information only, is not investment advice, and does not take into account the individual investment objectives, financial situation or particular needs of an investor. Consequently, prospective investors should consider whether an investment in BBSN is appropriate for them in light of their investment objectives, financial situation and particular needs (including financial and tax issues), and seek professional advice from their financial advisor or other professional advisor before deciding whether to apply for BBSN. The prospectus and investment statement do not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. In particular, BBSN have not been and will not be registered under the US Securities Act of 1933, and may not be offered or sold in the United States or to or for the account or benefit of a US Person as defined in Regulation S under that Act. 2

4 AGENDA 1. Summary of BBSN offer 2. Information about Babcock & Brown 3. Use of proceeds 4. Key terms of BBSN 5. Bookbuild and timing Appendix: Financial information 3

5 1. SUMMARY OF BBSN OFFER Security Issuer Guarantee Offer size Interest Interest rate Initial interest period First reset date Maturity date Applications Firm offer A$ denominated, unsecured, subordinated, cumulative, resettable notes Babcock & Brown Limited (BNB or Babcock & Brown) Guaranteed on a subordinated basis by Babcock & Brown International Pty Limited (BBIPL) Up to A$135 million with the ability to accept up to A$15 million in oversubscriptions Floating rate paid semi-annually until the first reset date Six month BBSW plus margin of 220 basis points The initial interest period will be from settlement date to the next interest payment date, 15 May November November 2015 Fixed issue price of A$100 each; Minimum A$5,000 and thereafter in multiples of A$1, % of the issue may be reserved for clients of the Joint Lead Managers, Co-Managers and other participants in any bookbuild determined by the Joint Lead Managers 4

6 BBSN IN THE BNB GROUP STRUCTURE BBSN Holders Offer proceeds BBSN BNB 100% ownership Ordinary shareholders Offer proceeds (BBIPL Loan) 77.7% ownership Unsecured and subordinated guarantee BBIPL 22.3% ownership US Executive Stakeholders Operating companies 5

7 AGENDA 1. Summary of BBSN offer 2. Information about Babcock & Brown 3. Use of proceeds 4. Key terms of BBSN 5. Bookbuild and timing Appendix: Financial information 6

8 BACKGROUND OF BABCOCK & BROWN Babcock & Brown formed in San Francisco 1977 Formed a joint First UK PFI venture company with project Nomura (NBB) to 1996 carry out Japanese cross border leasing 1986 AIDC acquisition 1997 Japanese Real Estate business established 1998 HVB injects capital and takes 20% stake 2000 Asian Infrastructure business established 2002 European Real Estate business established 2003 BBSN Issue raising A$265.8m Dec 2005 BNB raise A$300m through equity placement Sydney office opens First cross border lease executed Aircraft operating leasing business established (BBAM) (JV with Nomura) 1989 First Real Estate principal investments in Australia Early 90s Commencement of non-leasing structured finance business outside Australia Rail leasing business established (BBRM) 1999 First major Corporate Principal Investment (AUSDOC) 2001 Prime Infrastructure floated on ASX 2002 Electronics leasing business established (BBEM) 2002 BNB IPO Oct 2004 BBSN2 Issue Raising NZ$225m June

9 BUSINESS MODEL Three principal business activities Financial advisory Principal investment Funds management Focus on maximising revenue and ROE through integrated model Origination through advisory and/or development including greenfield development Securing/profiting from opportunity through principal investment Recycling capital through Specialised Asset and Funds Management platform Generating passive and recurring management fee income through Specialised Asset and Funds Management platform Recurring transaction and investment banking fees from managed funds Funds and assets under management provide a platform for further origination activity Principal Investment Funds Management Financial Advisory 8

10 OPERATING DIVISIONS BNB operates through five business groups Real Estate, Corporate Finance and Infrastructure groups are focused on advisory, investment management and principal investment Operating Leasing group, operates in aircraft, rail and electrical equipment. Includes investment management and principal investment Structured Finance group, traditionally advisory in nature. Increasingly focused on the underwriting, structuring and distribution of investment transactions Specialised Asset and Funds Management platform sits across the business groups Real Estate Corporate Finance Operating Leasing Structured Finance Infrastructure Specialised Asset and Funds Management platform B&B Japan Property Trust (BJT) B&B Capital Limited (BCM) Aircraft Warehouse Syndicate One Structured Finance CDO s B&B Infrastructure (BBI) B&B Residential Land Partners (BLP) B&B Global Partners (BBGP) BBRX Rail Syndicate One B&B Wind Partners (BBW) BGP Investment Sarl (GPT JV) B&B Direct Investment Fund (DIF) CBRail B&B Environmental Investments (BEI) 9 Everest B&B Alternative Investments (EBB) UK PFI Assets Under Management

11 GROWTH IN TOTAL AUM & FUM $Billions Dec Jun Dec Jun 06 Total AUM and FUM grew by 41% over the six month period. Compound annualised growth rate of 68% in AUM and FUM since listing. 10

12 SPECIALISED FUNDS AND ASSET MANAGEMENT PLATFORM $Billions Dec Jun Dec Jun Listed Funds Unlisted Funds Private Equity Specialised AUM AUM: Assets under management FUM: Funds under management Growth in AUM and FUM has been spread across a variety of listed and unlisted capital sources. Future growth in AUM and FUM is expected to be in both the unlisted and listed space. There will be a focus on diversifying BNB s capital sources away from the Australian market. 11

13 FUNDS & ASSET MANAGEMENT PLATFORM A$31.2 billion of total Specialised Funds and Assets Under Management as at 30 June 2006 As at 30 June 2006 Specialised Funds Under Management Listed Ownership % Mkt Cap Jun 2006 (A$m) B&B Infrastructure Limited (BBI) 8.0 2,340 Babcock & Brown Environmental Investments (BEI) Babcock & Brown Japan Property Trust (BJT) Everest Babcock & Brown Alternative Investments (EBB) B&B Wind Partners (BBW) B&B Capital Limited 2 (BCM) B&B Residential Land Partners (BLP) Total Listed Funds 5,510 Unlisted BGP Investment Sarl (GPT JV) Everest Capital Limited 3 UK retail property syndicates Total Unlisted Funds Private Equity B&B Global Partners 4 B&B Direct Investment Fund Total Private Equity Funds Total for Specialised Funds Under Management n/a Assets Under Management as at Jun 2006 (A$m) 6, , ,300 1, ,073 5,245 1, , ,571 12

14 FUNDS & ASSET MANAGEMENT PLATFORM (continued) Assets Under Management as at As at 30 June 2006 Ownership % June 06 (A$m) Assets Under Management Aircraft Warehouse Syndicate BBRX Rail Syndicate CBRail Other Operating Leasing AUMs - - -Rail - 1,034 -Air - 5,891 PFI/PPP - 2,111 Structured Finance CDO - 2,017 Total Specialised AUM 12,588 Total Specialised Funds and Assets Under Management 31,159 Specialised Funds & Assets Under Management as at As at 30 June 2006 Ownership % June 06 (A$m) Segment Analysis Real Estate 6,744 Infrastructure 10,178 Operating Leasing 8,460 Structured Finance - 2,017 Corporate Finance 3,760 Total Specialised Funds and Assets Under Management 31,159 Notes: 1. Environmental Infrastructure Limited completed a restructure on 5 July 2005 and at that time changed its name to Babcock & Brown Environmental Investments Ltd. 2. Includes capital committed of A$500 million in Babcock & Brown Capital Limited. 3. Assets under management (AUM) figures incorporate Everest Capital managed funds excluding EBB. 4. Represents capital committed. 13

15 EARNINGS COMPOSITION Net profit after tax attributable to the Babcock & Brown Group for the six month period was A$163m an increase of 48% on pcp. This growth generated: Basic EPS growth of 48% Fully diluted EPS growth of 44% DPS of 15 The result exceeds the guidance released at the Company s AGM in May 2006 of 35% EPS growth for the six month period ended 30 June 2006 Specialised Funds and Assets Under Management grew 41% from A$22bn at 31 December 2005 to A$31bn at 30 June The business is well positioned to grow this number significantly in the second half of 2006 and into 2007 Upgraded Basic EPS growth guidance for 2006 from at least 35%, given in late May, to 45%. Achieving this guidance will be dependent on market conditions over the period. The successful execution of all current fund initiatives targeted for 2006 will result in BNB exceeding the upgraded guidance 14

16 EARNINGS COMPOSITION (continued) Net revenue by division for the 6 months ended 30 June 2006 Net revenue by type for the 6 months ended 30 June 2006 Net revenue by region for the 6 months ended 30 June

17 STRONG NET REVENUE GROWTH A$ m Jun-05 Jun * AUM: Assets under management FUM: Funds under management 50 0 Base fees from AUM and FUM Co-Investment Income Advisory fees from AUM and FUM Performance fees from AUM and FUM Other Operating Income Development Activity Principal Investment Third Party Advisory fees A feature of the six month period was the growing contribution from our Specialised Funds and Asset Management platform, representing 40.3% of net revenue compared to 22% in the pcp¹ The increase in Development Activity reflects financial close and sale of a number of wind farms in Europe, US and Australia and real estate development projects in Australia and Italy Principal Investment activity was maintained over the period with activity spread across all business divisions Again in 2006 we do not anticipate any single transaction representing more than 5% of net revenue 1. This % may reduce in the 2H as the majority of performance fees are paid in the 1H of the year. 16

18 BALANCE SHEET ASSETS UNDER DEVELOPMENT Wind farm projects Gas power plant Real estate projects Aircraft Other Total 30 June 2006 $ m , Dec 2005 $ m The increase in assets under development reflects the importance BNB places on the competitive advantage delivered by green field development in our core asset classes. 17

19 GENERAL BUSINESS OUTLOOK Basic EPS growth guidance upgraded from at least 35% given at the Company s AGM in late May to 45% for 2006 Transactions required to achieve this result are all identified and well progressed Execution on all new fund initiatives is not required to meet 2006 forecast If we successfully execute on all new fund activity targeted for 2006 we will exceed this guidance Achieving this guidance is dependent on market conditions over the period Expect significant geographic expansion of our specialised funds and asset management platform as we accelerate the move to tap capital sources outside Australia Expect ongoing growth in Real Estate, Infrastructure, Corporate Finance Divisions, Operating Leasing, with the Structured Finance result expected to be in line with or slightly below 2005 Intend to utilise capital resources efficiently - incremental capital may be required in light of current growth rates The employee base will continue to expand as we fill out the geographic presence of the various business divisions. Despite growth there is a continued focus on costs efficiencies 18

20 AGENDA 1. Summary of BBSN offer 2. Information about Babcock & Brown 3. Use of proceeds 4. Key terms of BBSN 5. Bookbuild and timing Appendix: Financial information 19

21 USE OF PROCEEDS Significant transaction activity since 30 June 2005 Capital deployment 23 -Sep -05 Acquisition of 10.6% of East Surrey Holdings A$102m 29 - Sep 05 Acquisition of Multiplex's interest in JV, between Primelife Multiplex and BNB A$5m Nov-05 Aircraft Syndicate investment US $55.7m Dec-05 BJT rights issue$10.9m 22-Mar-06 Equity interest In US$900mn US property portfolio Sept-06 Contracted to Acquire 1 bn of European retail property 18 -Jun BBI capital raising A$26m 24- Oct-05 Investment in Pace A$9m 26 -Oct -05 BBW 15% Investment A$39.3m 17-Dec m invested in Enersis Feb-06 $25.6m invested in BBI rights issue Jun-06 10% in BLP A$17mn 05- -Jul -05 BEI restructure and capital raising - A$13.5m BNB debt converted to equity 12 -Jul-05 B&B Global Partners - Unlisted A$550m investment fund 26 -Sep-05 BNB vendor of certain BBW assets 10-Oct-06 Eircom- Investment By BCM A$55m Nov-05 BBSN1 Issue raising A$265.8m Capital recycling/raising Jan-06 Net proceeds from sale of property to BJT 3.4 bn Feb-06 ARG acquisition A$853.5mn Aug-06 A$317mn of NRG Flinders 20

22 USE OF PROCEEDS Rate of transactions has exceeded expectations, resulting in: Significantly higher profits than was envisaged at time of IPO Employment of funds raised at IPO Significant pipeline of further opportunities over the short to medium term Additional capital being sought to improve balance sheet efficiency and reinforce capacity to capitalise on pipeline A$265.8m from BBSN offer NZ$225m from BBSN2 offer A$300m from equity placement Up to A$150m from follow-on BBSN offer Proceeds of BBSN offers applied to generally invest in the various business and investment opportunities available to BNB Number of specifically identified projects exist Investment in aircraft and rail assets Real estate opportunities in the US and Europe Investment in wind farm developments in the US, Australia, and Europe Investment in other power generation and infrastructure assets both through development and by acquisition of completed assets 21

23 SELECT INTEREST COVERAGE RATIOS The interest coverage ratio of BNB and the effect on interest coverage under the following three scenarios for the six months ended 30 June 2006 is as follows: Actual Corporate Facility drawn to A$854.9m as at 30 June 2006 A$265.8m of BBSN on issue from 1 January 2006 NZ$225m of BBSN2 on issue from 12 June 2006 Scenario 1 Corporate Facility drawn to A$854.9m as at 30 June 2006 A$265.8m of BBSN on issue from 1 January 2006 NZ$225m of BBSN2 on issue from 1 January 2006 Scenario 3 Corporate Facility drawn to A$854.9m as at 30 June 2006 A$265.8m of BBSN on issue from 1 January 2006 NZ$225m of BBSN2 on issue from 1 January 2006 A$300m of additional Ordinary Shares on issue from 1 January 2006 A$135m of additional BBSN on issue from 1 January 2006 Scenario 5 Corporate Facility on the assumption it was fully drawn to A$1.32bn for the 6 months ended 30 June 2006 A$265.8m of BBSN on issue from 1 January 2006 NZ$225m of BBSN2 on issue from 1 January 2006 A$300m of additional Ordinary Shares on issue from 1 January 2006 A$150m of additional BBSN (assuming oversubscriptions of A$15m) on issue from 1 January times 5.8 times 5.3 times 4.1 times 22

24 AGENDA 1. Summary of BBSN offer 2. Information about Babcock & Brown 3. Use of proceeds 4. Key terms of BBSN 5. Bookbuild and timing Appendix: Financial information 23

25 KEY TERMS GENERAL Issuer Security Offer Babcock & Brown Limited, a company incorporated in Australia and listed on ASX Babcock & Brown Subordinated Notes (BBSN) are Australian dollar denominated, floating rate unsecured, subordinated, cumulative, resettable notes 1.35 million BBSN at an issue price of A$100 per BBSN to raise up to A$135 million, with the ability to accept oversubscriptions for up to A$15 million Reset Date The first Reset Date is 15 November 2010 Maturity Date 15 November 2015 On the Maturity Date, all outstanding BBSN must be either Repaid, or Exchanged (if a Holder requests an Exchange and BNB agrees) ASX quotation No NZX quotation Application will be made to ASX for quotation of the additional BBSN within seven days after the lodgement of the Prospectus Application will not be made to NZX for quotation of BBSN and it is not intended that BBSN will be quoted on the NZDX 24

26 KEY TERMS INTEREST Interest Rate First Interest Payment Deferral conditions Deferred Interest Restrictions on BNB Until the first Reset Date = Market Rate + Margin where the Market Rate is the six month Bank Bill Swap Rate on the first Business Day of the Interest Period the Margin is 2.20% Interest will generally be payable semi-annually in arrears The first interest payment to which the additional BBSN relate will be on 15 May 2007 BNB is insolvent or such payment would cause it to become insolvent Such payment would cause BNB to breach any legal obligation or Directors determine that BNB has insufficient cash to make the Interest Payment Interest will accrue on any Outstanding Interest on a daily basis at the Interest Rate plus 2.00% per annum. Deferred Interest remaining unpaid must be paid on the next Interest Payment Date where no Interest Payment deferral condition applies Until Outstanding Interest is paid in full, BNB will be prevented from: declaring and paying any dividend or making any return of capital or other payment to its shareholders setting aside any cash or assets for that purpose undertaking any arrangement, reconstruction or reorganisation, which would have a material adverse effect on the value of the BBSN 25

27 KEY TERMS RESET & BNB EXIT RIGHTS Reset Date The first Reset Date is 15 November 2010 Reset of terms BNB initiated Repayment, Exchange and Resale On each Reset Date, BNB may change certain terms of BBSN including: the next Reset Date, provided that each Reset Date will be no less than 12 months after the immediately preceding Reset Date and will also be an Interest Payment Date the Exchange Discount the Market Rate the Margin the Interest Payment Dates BNB may Repay all or some of the BBSN on a Reset Date BNB may Repay all BBSN: on occurrence of a Change in Law Event on occurrence of a Change in Control Event on occurrence of a Delisting Event or if the aggregate Face Value of BBSN on issue is less than A$50 million 26

28 KEY TERMS INVESTOR EXIT RIGHTS Investor initiated Repayment and Exchange BNB action upon receipt of an Exit Notice Exchange into Ordinary Shares Resale Holders may provide an Exit Notice requesting Exchange in relation to: a Reset Date a Trigger Event (Holders may also request Repayment) a Change in Control Event or the Maturity Date Where a Holder requests Exchange, BNB may generally Exchange, Repay or Resell BBSN (or a combination of Exchange, Repay and Resell) Where a Holder requests Repayment pursuant to a Trigger Event, BNB may Repay or Resell BBSN (or a combination of Repay and Resell) Upon Exchange the number of Ordinary Shares delivered to a Holder for each BBSN will be calculated as: Repayment Amount / (VWAP x (1 - ED)) Where: ED is the Exchange Discount of 2.5% (subject to change on a Reset Date) Repayment Amount is the Face Value plus any Outstanding Interest as at the Realisation Date that will not be separately paid in cash as interest on the Realisation Date VWAP means, subject to any adjustments under clause 6.3 of the Terms or Issue, the average of the daily volume weighted average sale prices (rounded to the nearest full cent) of Ordinary Shares sold on ASX for each Business Day during the relevant Period but does not include any transaction defined in the ASX Market Rules as special, crossings prior to the commencement of normal trading, crossings during the closing phase and the after hours adjust phase nor any overseas trades or trades pursuant to the exercise of options over Ordinary Shares or any overnight crossings Upon Resale, BNB must ensure that the Holder is paid an amount at least equal to the Repayment Amount on the Realisation Date. 27

29 KEY TERMS SUBORDINATION, GUARANTEE Subordination on payments Winding Up Guarantor Guarantee BBSN rank equally with BBSN2. BBSN rank behind all other debt of BNB BNB may issue debt ranking ahead of BBSN in right of any payment including payment of Interest and on a Winding Up On a Winding Up, the rights of Holders are subordinated in right of payment to the claims of any creditors of BNB from time to time other than those whose claims are stated to rank equally with, or behind, the claims of Holders Babcock & Brown International Pty Limited (BBIPL) BBIPL guarantees any amounts which become due and payable by BNB on BBSN Claims under the Guarantee are subordinated to the claims of all creditors of BBIPL (other than creditors whose claims are expressed to rank behind or equally with the claims of Holders under the Guarantee), but in priority to the claims of BBIPL shareholders BBIPL may enter into any transaction without restriction including issuing other indebtedness ranking ahead of claims of Holders under the BBIPL Guarantee As the payment of Interest is subject to deferral conditions, the Guarantee does not ensure that interest will be paid in all circumstances 28

30 AGENDA 1. Summary of BBSN offer 2. Information about Babcock & Brown 3. Use of proceeds 4. Key terms of BBSN 5. Bookbuild and timing Appendix: Financial information 29

31 BOOKBUILD Volume only bookbuild issue price fixed at A$100 per BBSN Close for brokers and institutions: 29 September 2006 Firm allocations can only be received from the Joint Lead Managers & Joint Bookrunners Syndicate naming rights: Front cover of Investment Statement and Prospectus Joint Lead Managers & Joint Bookrunners Co-Managers Bell Potter Securities Limited Grange Securities Limited UBS Wealth Management Australia Limited ASB Securities Limited First NZ Capital Limited Forsyth Barr Limited 30

32 KEY DATES Key dates for the Offer (indicative) Announcement of Offer and Prospectus lodged with ASIC Bookbuild Opening Date Closing Date Settlement Date Issue Date Holding Statements despatched by Additional BBSN begin trading on ASX (normal settlement basis) Date 27 September September October am 13 November November November November November 2006 Key dates for BBSN First Interest Payment Date for the BBSN issued under the Offer First Reset Date Maturity Date Date 15 May November November

33 AGENDA 1. Summary of BBSN offer 2. Information about Babcock & Brown 3. Use of proceeds 4. Key terms of BBSN 5. Bookbuild and timing Appendix: Financial information 32

34 INCOME STATEMENT A$ 000 Revenues from continuing operations Expenses from continuing operations, excluding finance costs and bonus expense Finance costs Share of net profits of associates and joint ventures Bonus expense (including amortisation of share options and bonus deferral rights) Profit from continuing operations before income tax Income tax (expense)/benefit Net profit after tax before minority interest Minority interest excluding BBIPL Net profit attributable to the Babcock & Brown Group, including BBIPL BBIPL minority interest Net profit AIFRS Six months ended 30 June ,567 (347,695) (112,189) 76,558 (167,461) 199,780 (32,904) 166,876 (3,863) 163,013 (42,043) 120,970 AIFRS Six months ended 31 Dec ,058,584 (423,547) (117,044) 81,765 (266,796) 332,962 (59,897) 273,065 (21,428) 251,637 (71,649) 179,988 33

35 PRO-FORMA BALANCE SHEET A$ 000 AIFRS 30 Jun 06 Pro-forma adjustments AIFRS Pro-forma 30 Jun 06 A$ 000 AIFRS 30 Jun 06 Pro-forma adjustments AIFRS Pro-forma 30 Jun 06 Assets Liabilities Cash and cash equivalents Fees receivable from financing transactions 691, , , ,126, ,515 Accounts payable and accrued liabilities Deposits held 351, , , ,099 Other receivables 205, ,541 Deferred income 124, ,446 Notes receivable 520, ,701 Interest bearing liabilities 2 5,813, , ,948,835 Investments in financial assets 437, ,121 Liabilities payable to pre-ipo owners 17,278 17,278 Finance lease receivable 163, ,643 Current tax liabilities 111, ,744 Transportation assets Semiconductor equipment Power generation assets Assets under development Real estate held for sale Real estate held as investment property Investments in associates Investments in joint venture entities Property and equipment Other assets Deferred tax assets Intangible assets Total Assets 1,406,423 20,993 1,345,446 1,305, , , , ,155 38, , , ,557 8,360, ,000 1,406,423 20,993 1,345,446 1,305, , , , ,155 38, , , ,557 8,795,514 Deferred tax liabilities Other liabilities Total Liabilities Net Assets Equity Contributed equity Reserves Retained earnings Parent entity interest in equity Minority interest Total equity Gearing ratio 4 366,924 22,985 6,963,043 1,397, ,527 (96,596) 249, , ,777 1,397, % 135, , , ,924 22,985 7,098,043 1,697, ,527 (96,596) 249, , ,777 1,697, % 34 Notes: 1. Assumes A$135 million of additional BBSN and A$300 million of Ordinary Shares are issued on 30 June 2006 and that the gross proceeds of the Offer and Ordinary Shares issued are held as cash. 2. Interest bearing liabiliti3es, with the exception of the Corporation Facility (A$854.9 million drawn as at balance date) and BBSN and BBSN2, are recourse only to the assets of certain special purpose vehicles in the Babcock & Brown Group and are described as non-recourse. 3. Additional BBSN liability recorded as interest bearing liabilities. 4. Drawn Corporate Facility plus BBSN and BBSN2 (and additional BBSN, in pro-forma) divided by net assets plus drawn Corporate Facility plus BBSN and BBSN2 (and additional BBSN, in pro-forma) less intangible assets.

36 BBSN OFFER CONTACTS Babcock & Brown Michael Larkin, CFO, Kelly Hibbins, Investor Relations, UBS (Australia) Simon Maidment, Tricia Ho, Barry Sharkey, UBS (New Zealand) Andy Coupe, Jonathan Oram, CommSec Chris Dickman, Tony Kench, Truong Le,