Lead Manager

SECTION 1
SUMMARY OF KEY INFORMATION
1.5 KEY FINANCIAL INFORMATION
The table below summarises the Restated Financial Information outlined in Section 5.2 and should be read in
conjunction with, and qualified by, the more detailed financial disclosures in Section 5.3.The Restated Financial
Information reflects certain adjustments from the AGAAP Financial Information, which has been reviewed by
the Independent Accountants.The Restated Financial Information has not been reviewed by the Independent
Accountants.These adjustments were made to more meaningfully reflect the underlying economic performance
of Babcock & Brown over the historic and Forecast Period. Further details of the adjustments are provided in the
footnotes to the table and in Section 5.2.1.
Year to 31 December 1, 8 ($000) 2001A 2002A 2003A 2004F 2005F
Net Revenue 2 326,347 347,835 391,482 424,109 523,365
Other revenue (1,263) 600 1,073
Total business revenue 325,083 348,435 392,555 424,109 523,365
Net corporate interest income/(expense) 3 (2,780) (1,564) (1,200) 5,759 20,977
Operating costs 4 (118,894) (148,361) (162,543) (159,845) (178,730)
Operating profit before bonuses,
restructuring costs, goodwill
amortisation 5 and tax 203,410 198,510 228,812 270,023 365,612
Bonus expense (pro-forma) 6 (101,705) (99,255) (114,406) (127,509) (150,700)
Restructuring expenses (9,800)
Operating profit before goodwill
amortisation and tax 101,705 99,255 114,406 132,714 214,912
Tax 7 (62,324)
Net Profit After Tax
(before goodwill amortisation) 152,588
NOTES
1.The Historical Financial Information for 2001-2003 was initially prepared in US dollars.This information and Forecast Financial Information for 2004 and 2005
are translated at constant exchange rates based on the rates assumed for the 2004 Forecasts.The assumed rates are set out in detail in Section 5.3.2.2. In particular
the $:US$ rate used in the conversion process is $0.722. Prior to the Offer, the Group managed its activities with US dollars as its benchmark currency. Historical
Financial Information has been prepared from statements prepared in US dollars.The use of constant exchange rates, whilst not consistent with Australian GAAP,
has been adopted in the table above and in the Business Overviews in Section 3 of this Prospectus, as Babcock & Brown believes that this basis provides a more
meaningful insight into the activities and financial performance of Babcock & Brown given the prior practice of managing its activities using the US dollar as its
benchmark currency.
2. Net Revenue comprises gross revenues calculated in accordance with AGAAP less cost of sales, expenses directly related to transactions plus net contribution
from equity accounted and consolidated non-strategic investments.
3. Net corporate interest income includes interest income on cash and cash-equivalent balances held by the Group and interest expense on corporate debt
facilities.This includes approximately three months in 2004 and 12 months in 2005 of net interest earned on unused capital raised via the Offer.
4. Operating costs comprise total expenses calculated in accordance with AGAAP but exclude cost of sales, expenses directly related to transactions, expenses of
consolidated but non-strategic investments, bonuses and restructure costs.
5. Details of the treatment of goodwill under AGAAP in the forecast period are set out in Section 5.3.2.1, footnote 3.
6.The pro-forma bonus expense for 2001-2003 has been calculated as 50% of operating profit before bonuses, restructuring costs, goodwill amortisation and tax.
Consistent with Babcock & Brown’s intentions, the forecast bonus for 2004 assumes that the full amount of the bonus pool, calculated in accordance with the
remuneration policy outlined in Section 4.7.2 (including the adjustments to the bonus pool in these years in relation to interest income on uninvested Offer
Proceeds) will be paid in cash or cash equivalents.Therefore the full amount of the forecast bonus pool is expensed during 2004.In 2005 based on constant
exchange rates, the total bonus pool is forecast to be $174.5 million consistent with the stated remuneration policy. However, of this amount $23.8 million
based on constant exchange rates is expected to be treated as Bonus Deferral Rights (see 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 2005 bonus expense based on constant
exchange rates is therefore $150.7 million. In addition, consistent with current AGAAP, no amount has been forecast as an expense in the pro-forma Forecasts
in respect of Shares and options allocated to the Employee Trusts (see Section 4.7.7) in either 2004 or 2005.
7. Due to significant changes in the Group’s corporate and tax structure during 2004, no taxation charge has been forecast for 2004.
8.The Restated Financial Information is presented on a consolidated basis for the entire Group. It should be noted that the pre-IPO US Executive Stakeholders
hold their interest at the BBIPL level and those interests will be treated as outside equity interests in Babcock & Brown’s consolidated financial statements
(see Section 2.5).
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