Lead Manager

BABCOCK & BROWN PROSPECTUS
As at 31 December 2003 ($000) Assets Liabilities Net
Cash and cash equivalents 486,771
Working capital (excluding cash) (115,761)
Deferred tax assets 66,549
Deferred tax liability (3,109)
Property, plant and equipment 19,539
Other 21,197
Total net tangible assets 772,861
Goodwill 725,733
Total net assets per AGAAP Financial Information 1 1,498,594
NOTE
1. Represents net assets in the AGAAP pro-forma statement of financial position in Section 5.3.1.3 ($1,536 million) less outside equity interests other than BBIPL
($37 million). Certain assets and liabilities are reflected at different amounts in the table above than in the AGAAP pro-forma statement of financial position in
Section 5.3.1.3 due to different classification of items in the above analysis.
5.2.5 Management discussion and analysis
A detailed discussion of the historical results and forecast performance of each of the Business Groups, based on
the Restated Financial Information, is included in the Business Overview in Section 3.The discussion below
provides a high level overview for the business as a whole.
5.2.5.1 Historical Financial Information
Revenue
The Group increased its Net Revenue by 6.6% and 12.6% in 2002 and 2003 respectively.This was achieved
despite challenging operating conditions in several of its key business segments including:
• The global aircraft industry experienced one of its most severe downturns during this period due to the
impacts of a slowing global economy, the events of September 11 2001, the SARS outbreak in 2002 and the
2003 Iraq War.This negatively impacted the Group’s aircraft operating and finance leasing businesses
• Low interest rates worldwide have favoured the debt-financed acquisition of assets over leasing to the
detriment of the Group’s traditional lease advisory and operating leasing businesses
• Changes in US tax laws resulted in the effective shut-down of the US cross-border leasing market which
had historically been one of the Group’s most profitable activities
The diversity of the Group’s operations allowed it to continue to grow revenue despite these challenges. Many of
the Group’s investment focused areas were able to take advantage of the difficult economic environment to
acquire assets at attractive valuations, financed with low interest debt.The demand for high-yielding income assets
in a low interest rate environment also favoured several of the Group’s investment management activities which
focus on the acquisition or development of assets with long term cash flow streams to package for private
syndication or investment funds.
In general terms, 2001-2003 was characterised by the following trends:
• Strong growth in the investment focused Real Estate, Infrastructure and Project Finance and Corporate
Principal Investment and Funds Management Groups
• Modest decline in the Operating Leasing Group, driven principally by difficult conditions in aircraft
operating leasing
• Significant decline in the Group’s advisory focused Structured Finance Business Group
For the Group overall, declining revenues in certain Business Units were more than compensated for by revenue
increases in others, thereby contributing to the Group’s growing revenues.
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