Lead Manager

BABCOCK & BROWN PROSPECTUS
Net corporate interest income
Net corporate interest income comprises interest income on cash and cash equivalent balances held by the Group
and interest expense on corporate debt facilities.The Forecasts assume that the Group will have excess cash of
approximately $185 million as at 31 December 2005 reflecting, among other things, the capital raising, repayment
of debt drawn down at 31 December 2003 amounting to approximately $120 million, repayment of debt drawn
down since that date and capital allocations to investment projects. Interest income on unutilised cash and cash
equivalent balances has been assumed using a rate of 6% per annum.This assumes that cash has been invested at a
variety of different deposit rates.
Operating expenses
Forecast operating expenditure for the years ending 31 December 2004 and 2005 has been based on historical
operating expenditure, adjusted for major expected changes such as assumed increases in headcount. Certain
expenses have then been increased by factors of up to 5% per annum in the years ending 31 December 2004 and
2005. Additional costs associated with operating as a publicly listed company have also been included in the
Forecasts.
Bonus expense
The forecast bonus expense in the Forecast Period is based on a forecast annual bonus pool calculated in
accordance with the remuneration policy set out in Section 4.7.2. In respect of the year ending 31 December
2004, the full amount of the bonus pool, forecast to be $127.5 million, will be paid in cash or cash equivalents.
In respect of the year ending 31 December 2005, the bonus pool is forecast to be $178.4 million. However,
approximately $24.5 million of that amount will be paid in the form of Bonus Deferral Rights as set out in
Section 4.7.5. As the Bonus Deferral Rights relate to equity transactions there is no requirement under AGAAP
to recognise an expense for this amount.The forecast AGAAP bonus expense for the year ending 31 December
2005 is therefore $153.9 million.Were Babcock & Brown to elect to recognise an expense, the value attributed to
the rights would be recognised as an expense over the period to the vesting date of the rights consistent with
Australian IFRS (see footnote 5, Section 5.4.2).
Income tax
Pro-forma income tax expense is forecast to be $63.2 million in 2005.This reflects an effective tax rate of 29%.
The effective tax rate for the year ending 31 December 2005 represents a blended tax rate arising from the tax
rate applicable to the various jurisdictions in which the Group operates, and taking into account all applicable
permanent differences.
No income tax expense has been included in the pro-forma statement of financial performance for the year
ending 31 December 2004 on the basis that the group structure in existence to the date of transaction reflects a
private partnership.
Babcock & Brown International Pty Ltd (BBIPL) will be the head company of an Australian consolidated tax
group, which is formed as part of the Restructuring. It is not anticipated that the resetting of tax bases of the
assets held by the consolidated group will have a material impact on the forecast income tax expense.
Exchange rates
The following Australian dollar exchange rates have been used in the preparation of the Forecasts:
Years ending
31 December
2004 2005
US Dollar 0.7220 0.7000
Euro 0.5935 0.5792
British Pound 0.3955 0.3894
Japanese Yen 79.0193 76.5522
Malaysian Ringgit 2.7429 2.6683
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