Babcock & Brown

Babcock & Brown
Interim Results 2006
24 August 2006

AGENDA
1. Result Overview
2. Divisional Overview
3. Strategic Direction/Outlook
4. Appendix
Presenters: Phil Green – Chief Executive Officer & Managing Director
David Ross – Chief Operating Officer
Michael Larkin – Chief Financial Officer
For further information please contact:
Kelly Hibbins
+61 2 9229 1800
kelly.hibbins@babcockbrown.com
Note: Abbreviations used throughout the report:
BNB – Babcock & Brown
BBI – Babcock & Brown Infrastructure
BEI – Babcock & Brown Environmental Investments
BBW – Babcock & Brown Wind Partners
BCM – Babcock & Brown Capital
BJT – Babcock & Brown Japan Property Fund
BLP – Babcock & Brown Residential Land Partners
2

Highlights
• Net Profit after tax attributable to the Babcock & Brown Group¹ for the six month period was
$163m an increase of 48% on pcp. This growth generated:
– Basic EPS² 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 40% 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 2006. 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.
1. Babcock & Brown Group comprises Babcock & Brown Limited, the company listed on the ASX and Babcock & Brown International Pty Ltd, a 75.5% owned subsidiary.
2. Basic EPS as defined on page 11 of the Financial Report
3

Highlights cont..
Key Metrics
Six months ended 30 June
2005
2006
% chg
Net Revenue ($‘m)
374.1
564.9
51
NPAT attributable to the BNB Group ($’m)
110.2
163.0
48
Basic EPS (¢)
33.9
50.1
48
Fully Diluted EPS (¢)
32.9
47.4
44
Fully Diluted EPS Growth (%)
na
44
-
ROE (%) annualised
27.4
31
13
Specialised Funds and Assets under Management ($’bn)
16.9
31.2
85
Cost/Income Ratio pre bonus (%)
27
29
(7)
Dividend (¢)
8.75
15
71
• The result for the six month period delivered on our target metrics.
• Significant net revenue growth from Infrastructure and Corporate Finance at 211% and 108%
respectively and increase in Real Estate of 10% on top of the strong growth in 2005.
• 179% increase in fee income from our specialised funds and asset management platform
over pcp has lead to further diversification of net revenue sources.
4

Net Revenue Breakdown
$m
300
June HY 2005 June HY 2006
262
250
224
200
150
112
100
• A feature of the six month period was the growing contribution from our specialised funds and asset management
platform in the form of base, performance and advisory fees, representing 40.3% of Net Revenue compared to
22% in the pcp.¹
• 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.
5
50
0
22
Base fees from AUM and
FUM*
168%
58 58
29 31 29
Performance fees from
AUM and FUM
97%
Advisory fees from AUM
and FUM
265%
56
Development activity
95%
Principal Investment
17%
40
20
Third party advisory fees
(51)%
* AUM: Assets under management
FUM: Funds under management

Diversification of Revenue Sources
19%
3%
10%
16%
33%
10%
4%
9%
47%
55%
20%
29%
35%
Real Estate
Infrastructure & Project Finance
Operating Leasing
Structured Finance
Corporate Finance
10%
Base fees from AUM and FUM
Performance fees from AUM and FUM
Advisory fees from AUM and FUM
Development activity
Principal Investment
Third party advisory fees
Asia Pacific
Europe
North America
• In line with our stated aim there was further diversification of revenue sources by both division
and net revenue type.
• Geographic revenue mix was biased to Asia Pacific in the first half; however the mix is
expected to swing back towards North America and Europe in the second half with traditional
second half bias in Operating Leasing and a number of fund initiatives in regions outside
Australia.
6

Cost Control
100%
80%
Headcount* numbers
Cost/Income pre bonus (%)
768
642
Australia
Asia
US
UK
Europe
Other
100
2
60%
40%
455
500
114
280
20%
0%
31 Dec 04 30 Jun 05 31 Dec 05 30 Jun 06
232
40
* Headcount does not include consolidated investments
• Despite the significant rate of growth in the business and the resulting growth in employee
numbers from 642 at 31 December 2005 to 768 at 30 June 2006, costs were maintained
as a percentage of net revenue.
• Employee numbers are now in excess of 810. The growth in employee numbers in 1H
2006 is anticipated to continue over 2H 2006.
7

Tax Rate
Six months ended 30 June
Corporate Tax rate
Equity accounted profits and foreign tax exempt dividends
Over provision
Difference in overseas tax rates
Miscellaneous non-deductible items
Tax losses not recognised
Effective Tax Rate
(%)
30
(7.7)
(7.6)
(2.4)
2.1
2.1
16.5
• The effective tax rate was impacted favourably by offshore income taxed at lower effective
tax rates than Australia, earnings from equity accounted investments included on an after
tax basis and the impact of the release of a provision relating to the entering into of the tax
consolidation regime in Australia.
• Excluding the impact of the release of the over-provision for the prior year and the effective
tax losses not recognised, the effective tax rate for the period was 22%. The effective rate
for the 2006 year is expected to be in line with the forecast effective rate of 20%.
8

Impact of one-off items
Six months ended 30 June
NPAT attributable to the BNB Group
Less: adjustment to reflect annual maintainable effective tax rate
Plus: loss on foreign exchange movement taken through the P&L
with foreign exchange gain taken to equity
Adjusted reported profit
($’m)
163
(7)
6
162
• The two one-off items included in the result are materially offset.
9

Annualised Return on Equity of 31%
35
33
31
31%
29
27
27.4%
%
25
23
21
19
17
15
30 June 2005 30 June 2006
• The ROE of 31% annualised (15.5% for the six months to 30 June 2006) is ahead of last year
and exceeded our target range.
• The maintenance of a high ROE will remain a key performance target for the Group.
10

Growth in Total AUM & FUM
$Billions
31
17
22
11
31 Dec 04 30 Jun 05 31 Dec 05 30 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.
• This growth is expected to continue in the 2H of 2006 with a number of listed and unlisted
funds expected to be launched. The growth will depend on market conditions over the period.
11

Specialised Funds and Asset Management Platform
$Billions 31 Dec 04 30 Jun 05 31 Dec 05 30 Jun 06
14
12
11
12
10
8
7
8
7
7
7
9
AUM: Assets under management
FUM: Funds under management
6
4
4
2
0
3
3
1 1
1
0.1 0.1
Listed Funds Unlisted Funds Private Equity Specialised AUM
12
Growth in AUM and FUM was spread across a variety of capital sources:
• The growth in listed funds was the result of the IPO of BLP in June, further acquisitions by BJT and capital
raisings by BEI and BBI.
• Unlisted funds growth was the result of the significant increase in AUM in the GPT joint venture.
• Growth in Specialised AUM was driven by the growth in our PPP portfolio, in particular in the UK, the growth
in aircraft under management and the establishment and management of a $2bn Collateralised Debt
Obligation (CDO) of Asset Backed Securities (ABS).

Funds Platform - Recent Significant Achievements
• BBI grew distributions for the 12 month period to 30 June 2006 by 23.3% to 13.25¢ underpinned by:
- strong performances from Powerco, IEG and Dalrymple Bay;
- the completion of the acquisition of PD Ports in February 2006; and
- the acquisition of 51% of Westnet Rail.
Future growth is expected to be boosted by the refinancing and expansion of the Dalrymple Bay
Coal Terminal and the completion of the acquisition of the integrated energy utilities business,
NorthWestern in the US.
• BEI completed the acquisition of ethanol producer and developer Diversified Energy Group (Denco)
in the US which has outperformed expectations at the time of acquisition.
13

Funds Platform - Recent Significant Achievements cont…
• BJT’s distribution for the 12 month period to 30 June 2006 was 12% higher than forecast at the
time of its IPO in April 2005 driven by:
- accretive acquisitions expanding its property portfolio from interests in 12 properties at
IPO to interests in 31 properties at 30 June 2006;
- a strong leasing performance; and
- upward revaluation of portfolio assets.
The recently announced acquisition of interests in 5 additional properties will take the portfolio
to interests in 36 properties and is forecast to drive further growth in distributions.
• The business plan for the GPT joint venture has been delivered, including outperformance by the
much maligned German residential portfolio, and has in our view contributed to the strong market
performance by GPT.
• The successful execution of an $8bn takeover offer for Irish telecommunications company eircom
Group plc coupled with the implementation of an attractive funding structure for BCM.
14

Funds Platform - Recent Significant Achievements cont…
• The creation of value for all security holders through the de-stapling of EBB resulting in Everest
Capital becoming a separately listed funds management company named Everest Babcock &
Brown Limited and a re-rating of the stock on the market.
• Whilst BBW recently announced a downgrade to its FY06 IPO forecast it has completed a number
of accretive wind farm acquisitions which has grown its portfolio of wind farms from 4 at IPO in
October 2005 to 19 operational wind farms as compared to the 15 forecast at the time of the IPO.
BBW’s equity interest in total installed capacity has grown from 146.9MW to 468.2MW. The BBW
management team has recently explained the changes it has made to address the issues
impacting the downgrade. BNB is confident that these issues are being quickly addressed and that
the recent acquisitions will support growth in the level of distributions over the forecast period in
line with market expectations reflected in its share price at the end of last year.
15

Growing revenue from listed funds platform
6 months ended
30 June 2006
Total Annualised
Compound Return
Since Listing (%)¹
Market Cap.
June 30 2006
($’m)
Advisory Fees
($’m)
Base Fees
($’m)
Performance
Fees
($’m)
BBW
23.2
869
10.6
8.2
-
BJT
60.2
720
3.8
1.8
30.5
BBI
19.4
2,340
44.4
11.7
7.4
EBB
13.9
315
0.1
-
BCM
(16.9)
774
7.0
8.5
-
BLP
-
175
6.6
-
-
BEI*
80.9
317
2.8
18.4
Total ($’m)
5,510
72.4
33.1
56.3
1. Source: Bloomberg
*Since reconstruction.
• The market capitalisation of our listed funds grew from $4bn at 31 December 2005 to $5.5bn
at 30 June 2006.
16

Managing Expansion of Funds Platform
• Where any new fund initiative has an investment mandate that potentially overlaps with that of an
existing fund managed by BNB, we will put in place appropriate investment allocation protocols.
• We believe clear protocols will effectively manage any potential overlap however in practice we do
not believe there will be significant overlap between the funds as:
– Any new funds are likely to be primary focused towards investing in the jurisdiction in which they
are established;
– Any new funds are likely to have investment concentration limits for any one investment;
– Existing and new funds will be well placed to benefit from co-investment opportunities particularly
as the size, scale and diversity of opportunities available to BNB grows;
– Additional capital sources managed by BNB will assist existing funds source new investments
and new funds will benefit from the existence and performance of established funds; and
– All BNB managed funds will have the access to the expertise of BNB executives around the globe.
• The ongoing success and expansion of our funds platform is dependent on our funds achieving returns
for investors over time at least in line with expectation. To this end we recognise that where the listed
market is looking to pre-empt underlying performance it can have the effect of bringing forward the
payment of performance fees. In this regard we will adjust our model to ensure we do not become
entitled to performance fees from new listed funds in the first 12 months of listing.
17

Balance Sheet
Segment Assets
Segment Liabilities
Corporate Facility
Net working capital
Other - net
Total Net Assets
30 June 2006
$’m
6,947.6
4,812.4
1,300.4
332.3
230.4
1,397.5
31 Dec 2005
$’m
5,466.7
3,858.9
723.1
107.3
122.8
1,114.8
% chg
27.1
24.7
79.4
209.7
87.7
25.4
• Growth in the balance sheet was financed by project debt combined with an increase in the
corporate facility, listed subordinated notes and retained earnings.
• There was significant growth in assets under development and transportation assets.
• The expansion of the Balance Sheet positions the Group well for growth in 2H 2006 and
beyond.
18

Balance Sheet – Assets Under Development
Wind farm projects
Gas power plant
Real estate projects
Aircraft
Biomass/wave assets
Hydro generation assets
Trans Bay Cable
Other
Total
30 June 2006
$’m
608.7
395.3
229.8
42.1
13.9
3.1
9.9
2.3
1,305.0
31 Dec 2005
$’m
448.3
276.2
169.0
58.2
8.8
3.5
8.6
1.8
974.5
• 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.
• The build up in wind assets reflects developments across the US and Europe and continues
to outpace the sale of completed projects.
• The increase in gas power plants reflects further development of Braemer and NewGen
Kwinana; these assets are earmarked for the BNB power operating business.
• New green field development initiatives include ethanol plants in the US.
19

Balance Sheet – Transportation Assets
Aircraft – cost
- accum depreciation
Total Aircraft
30 June 2006
$’m
1,258.1
(79.4)
1,178.7
31 Dec 2005
$’m
464.2
(59.1)
405.1
Rail – cost
- accum depreciation
Total Rail
195.6
(2.2)
193.4
151.7
(0.4)
151.3
Others
Total
34.3
1,406.4
-
556.4
• The BNB managed aircraft warehouse syndicate launched last year is now significantly
invested and should provide a platform for future growth in our aircraft leasing business. The
build up over the six month period reflects the growth from 143 aircraft to 190 aircraft under
management.
• The growth in rail assets reflects the growth in both the US fleet and European fleet under
management.
20

Balance Sheet – Real Estate for Sale
Japanese real estate
European real estate
US real estate
Other
Total
30 June 2006
$’m
20.8
79.9
26.6
-
127.3
31 Dec 2005
$’m
278.6
187.6
-
7.0
473.2
• The reduction in Japanese real estate reflects the sale of a portfolio of properties to BJT that
settled in January.
• The reduction in European real estate reflects the sale of real estate over the six month
period into the GPT joint venture.
21

Balance Sheet – Power Generation Completed Projects
Wind power
Hydro power
Power plant
Total
30 June 2006
$’m
1,036.4
302.1
6.9
1,345.4
31 Dec 2005
$’m
958.6
285.4
-
1,244.0
• The balances at 30 June 2006 represent operating assets available for sale.
22

Corporate Debt Facility
Revolving syndicated loan facility (drawn to A$854.9m)
Babcock & Brown Subordinated Notes ASX: BNBG
Babcock & Brown Subordinated Notes NZX: BNB010
30 June 2006
$’m
A$1,320
A$265.8
NZ$225
31 Dec 2005
$’m
A$820
A$265.8
-
• The drawn corporate facility of $854.9m and the subordinated notes comprise the
corporate debt of $1.3bn in the segment balance sheet. All liabilities allocated to business
segments are recourse only to the specific assets to which the borrowing relates.
• The Group’s gearing of corporate debt to total net assets plus corporate debt at
30 June 2006 was 48% (39% 31 Dec 2005).
23

Equity Interests versus Book Value
Book vs Market Value of Listed
Equity Accounted Investments
500
400
410
384
527
$ 'm
300
200
269
Book Value
Market Value
100
0
31-Dec-05
30-Jun-06
• There remains significant embedded value in the balance sheet.
24

Deferred Income & Fees
Unearned fees
Deferred gain on sale
Deferred Fees
Total
30 June 2006
$’m
59.4
51.9
153.0
264.3
31 Dec 2005
$’m
42.5
53.3
105.8
201.6
• The Group has substantial unrecognised income and profits deferred, as a consequence of
equity accounting for interests in unlisted associates and profits deferred from consolidated
subsidiaries. Deferred income and fees are recognised over time, as part of the sale of
investments by the associate, the sale of our interest in the associate, or the sell down of the
consolidated investment.
25

Cashflow Reconciliation
Six months ended 30 June ($’m) 2006
2005
Net profit after tax before minority interests
Non cash items forming part of operating profit after tax
Cash distributions from associates not forming part of operating profit after tax
Working capital movement
Total net cash flows from operations
166.9
(115.3)
102.0
(59.2)
94.4
117.9
(125.5)
80.7
(51.0)
22.1
• Net adjusted cash flow from operations was $94.4 million.
• Non cash items forming part of profit after tax includes fees and income receivable, equity
accounted profits from associates, non cash revenue, change in tax provisions, non cash
expenses i.e. depreciation and share based payments, net accrued interest
payable/receivable and unrealised gains on the sale of investment property.
26

Risk Management
• Risk management has always been embodied in the BNB culture due to the partnership
history of the Group and the high level of equity that senior executives have retained in the
Group post IPO.
• Cornerstones of the Group’s Risk Management framework include:
– Strategic and business planning processes;
– Accountability for the identification, assessment, monitoring and managing of risk within
business units and functions and risk reporting to management and the Board;
– Control activities including delegated authorities, financial and operational controls,
risk and portfolio monitoring, business continuity and disaster recovery planning;
– A well defined centralised investment approval process with approval delegations
commensurate with size and nature of the investment;
– Risk culture, policy and processes spanning all business units, functions and
specialist funds;
– An internal audit program;
– Oversight by the Audit and Risk Management Committee
27

Relative Share Price Performance
BNB Relative Return
ASX/S&P Index
Indexed Relative Returns (base = 100)
300
250
200
150
100
50
0
Oct-04 Mar-05 Jul-05 Dec-05 May-06
• BNB has outperformed the ASX/S&P Index by 104% since listing (as at 22 August 2006).
28

AGENDA
1. Result Overview
2. Divisional Overview
3. Strategic Direction/Outlook
4. Appendix
29

Real Estate
Six months ended 30 June $’m 2006
2005
%Change
Base fees from AUM and FUM
Performance fees from AUM and FUM
Advisory fees from AUM and FUM
Development fees, interest, and profits
5.7
30.5
37.8
20.4
2.2
11.9
2.1
16.0
153.1%
155.7%
>1,000%
27.7%
Principal Investment
Third party advisory fees
Net Revenue (before Minority interest)
Segment Minority Interest
Total Net Revenue (after Minority interest)
90.7
1.9
187.0
(3.2)
183.8
134.7
2.7
169.6
(9.2)
160.4
(32.7)%
(26.3)%
10.3%
(64.9)%
14.6%
The Result was driven by:
• Base, Performance and Advisory Fees earned from the funds platform including the GPT JV which grew
from 10% to 40% of Net Revenue and grew 355% in total.
• Base and Performance fees earned from BJT.
• Revenue from the sale of real estate to BJT and BLP.
• Revenue from Babcock & Brown’s capital investment in the GPT JV.
• Continuing revenue from core real estate business in Australia, Europe and most recently the US.
30

Real Estate - Outlook
• Following the completion of current commitments the GPT joint venture should be fully
invested. The joint venture will explore refinancing and trading opportunities across the
portfolio and the development of funds, both wholesale and listed.
• Further expansion of US real estate activities will be undertaken, focused on specific asset
classes including multi family dwellings, retail, residential development and conversions, and
self storage.
• Expansion of mezzanine debt investment globally.
• In Europe the Division will remain focused on retail, residential and industrial property
opportunities. BNB is also currently looking at a number of opportunities for portfolio
acquisitions and is participating in a number of development projects.
• The Division is considering opportunities for property investment in Asia (ex-Japan) in niche
asset classes.
31

Infrastructure
Six months 30 June $’m 2006
Base fees from AUM and FUM
26.2
Performance fees from AUM and FUM
25.5
Advisory fees from AUM and FUM
55.2
Development fees, interest, and profits
36.0
Principal Investment
51.6
Third party advisory fees
2.9
Net Revenue (before Minority interest)
197.4
Segment Minority Interest
1.9
Total Net Revenue (after Minority Interest)
199.3
The Result was driven by:
2005
7.8
14.9
8.2
12.9
11.6
8.2
63.6
0.5
64.1
%Change
235.4%
71.6%
573.4%
179.5%
344.0%
(64.3%)
210.6%
213.1%
210.6%
• Fee income earned from the specialised funds and asset management platform which grew from 48% to
54% of Net Revenue and grew 246% in total over the period.
• Base fees from BEI, BBI and BBW.
• Performance Fees from BEI and BBI.
• Fees, investment income and development profits from wind farm development in Australia, US and Europe.
• Fee and investment income from PPP projects in the UK and Australia.
• Income from advisory mandates in Australia and the UK, primarily on behalf of BNB managed funds.
• Operating income from Enersis.
32

Infrastructure - Outlook
• On 2 June 2006 BNB was selected as preferred tenderer to acquire the South Australian
power generator NRG Flinders with a total capacity of 760MW. This transaction is expected
to close by the end of the month. BNB has announced its intention to consolidate its equity
holdings in its current non wind power generation assets to establish a Babcock & Brown
branded power generation business.
• BNB has reached financial close on 29 PPP or similar projects in the UK, in which we retain
a management interest with a gross value of approximately £860 million. We expect to
establish a fund based in Europe to hold both our UK and Australian projects over which we
retain management rights and a financial interest.
• The Enersis energy portfolio performed ahead of expectations for 1H 2006. Work is continuing
to restructure and develop the portfolio readying it for future sale, in particular the wind and
hydro assets.
• To allow BNB to take advantage of the many opportunities in the US and European
infrastructure sectors the division may seek to raise additional pools of capital through the
creation of wholesale or listed funds in those regions.
33

Corporate Finance
Six months 30 June $’m 2006
Base Fees from AUM and FUM
9.3
Performance fees from AUM and FUM
-
Advisory fees from AUM and FUM
9.9
Development fees, interest, and profits
-
Principal Investment
86.3
Third party advisory fees
(0.1)
Net Revenue (excl Minority Interest)
105.4
Segment Minority Interest
(0.8)
Total Net Revenue
104.6
2005
1.2
-
0.1
-
48.6
0.7
50.6
1.4
52.0
%Change
701.4%
-
>1,000%
-
77.5%
(118.6)%
108.4%
(157.8)%
101.3%
The Result was driven by:
• Net Revenue for the sale of management fee rights in return for an additional 10% equity stake in Everest
Capital Limited.
• The recognition of a gain on derivatives associated with our investment in MFS Limited.
• The sale of interests in Commander Communications.
• Initial advisory and base fees from Babcock & Brown Capital.
34

Corporate Finance - Outlook
• Following the completion of the acquisition of eircom Group plc, BCM is 80% invested.
Corporate Finance will continue to look at ways to maximise shareholder value in BCM.
• Corporate Finance will also focus on identifying investment opportunities for Babcock & Brown
Global Partners and continuing to grow Babcock & Brown Direct Investments through the
identification of suitable investments.
• Corporate Finance’s goal over the next twelve months is to establish a managed investment
vehicle in the retirement/aged care space. The foundation for this investment vehicle is
anticipated to include all or some of the existing investments BNB has, including its interest
in Prime Living Trust.
• Corporate Finance is looking to build out its team in the US, Europe and Asia to take
advantage of an expanding range of opportunities. This may also result in the creation of
further wholesale private equity style funds in offshore markets.
35

Operating Leasing
Six months 30 June $’m 2006
Base Fees from AUM and FUM
12.9
Performance fees from AUM and FUM
1.6
Advisory fees from AUM and FUM
9.1
Development fees, interest, and profits
-
Principal Investment
28.8
Third party advisory fees
-
Net Revenue (before Minority interest)
52.4
Segment Minority Interest
(1.6)
Total Net Revenue (before Minority interest)
50.8
2005
10.3
2.5
20.3
-
16.6
-
49.7
(0.5)
49.2
%Change
25.6%
(35.5)%
(55.2)%
-
73.6%
-
5.5%
242.5%
3.2%
The Result was driven by:
• A continuation of demand in the aircraft leasing sector, and activity in the North American rail
car market.
• A key feature of activity in the six month period was the growth in aircraft under management
from 143 aircraft at 31 December 2005 to 190 aircraft, valued in excess of US$4.9 billion
at 30 June 2006 with a further 13 aircraft valued in excess of US$370 million under contract.
36

Operating Leasing - Outlook
• We anticipate the US$1.2 billion Babcock & Brown managed aircraft warehouse syndication
will be fully invested by the end of 2006 and negotiations have commenced to extend the
fund.
• US rail leasing activities are expected to report significant growth in 2H 2006; the managed
fleet is expected to report growth in the order of 22% for 2006.
• Eurorail activities continue to expand, with European demand for locomotives outstripping
supply; the ability to finance forward orders has become a significant competitive advantage.
This business is expected to continue to grow its cars under management.
• In the electronics manufacturing equipment business we have put in place non-recourse
funding lines to enable us to build our equipment leasing activity in this sector.
• The 2006 result for Operating Leasing is expected to exceed the 2005 result with a typical
bias to the second half of the year.
37

Structured Finance
Six months 30 June $’m 2006
Base fees from AUM and FUM
3.6
Performance fees from AUM and FUM
-
Advisory fees from AUM and FUM
-
Development fees, interest, and profits
-
Principal Investment
4.3
Third party advisory fees
14.8
Net Revenue (excl Minority interest)
22.7
Segment Minority Interest
-
Total Net Revenue
22.7
2005
-
-
-
-
12.1
28.6
40.7
-
40.7
%Change
100%
-
-
-
(64.5)%
(48.3)%
(44.3)%
(100.0)%
(44.3)%
The Result was driven by:
• Revenue from the acquisition, financing and syndication of interests in lease cashflows.
• Revenue from lease advisory and lease restructuring advisory mandates in the airline, rail
and shipping industries.
• Investment income and advisory fees from structured finance products.
• Revenue from arrangement and management of the Division’s first US$1.5 bn CDO.
38

Structured Finance - Outlook
• The Structured Finance Group has recently established a wholesale fund focused on financial
assets which the Group will seek to list in an offshore market in the second half of 2006.
• The Structured Finance Group plans to build on its CDO management platform by executing a
number of transactions in the pipeline which should increase assets under management by
year end.
• Despite a lower six month result compared to 2005, we are hopeful that the 2006 full year
result will be in line with the 2005 result.
• The skills of a number of the people within the Structured Finance Group have been utilised
across the BNB Group in the six month period, in particular in US Real Estate and the biofuels
sector. This activity is expected to continue.
39

AGENDA
1. Result Overview
2. Divisional Overview
3. Strategic Direction/Outlook
4. Appendix
40

Strategic Direction – Business Position at IPO
Australia/NZ
Asia including Japan
US
Europe/UK
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Real Estate
Infrastructure
Corporate Finance
Operating Leasing
Structured Finance
• BNB’s business model is based on leveraging the connection between financial advisory,
principal investment and funds management. We aim to leverage existing businesses to
create recurring earnings streams.
• At IPO our principal investment and funds management experience was primarily in the
Australian region. The focus since IPO has been to build out the business both
geographically and functionally.
41

Strategic Direction – Position at the current time
Australia/NZ
Asia including Japan
US
Europe/UK
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Real Estate
Infrastructure
Corporate Finance
Operating Leasing
Structured Finance
• The growth to-date has been centred on building out the business model in jurisdictions
where we have a history and track record in the market.
• The rollout of the funds management platform has primarily been in the Australian listed
market, although wholesale funds have successfully been raised in Australia and the UK.
42

Strategic Direction – Target by the end of 2007
Australia/NZ
Asia including Japan
US
Europe/UK
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Advisory
Principal
investment
Funds
Mgt
Real Estate
Infrastructure
Corporate Finance
Operating Leasing
Structured Finance
• The expansion of the funds management platform is expected to focus on geographic
expansion and broadening our distribution base through the creation of both wholesale
and listed funds.
• The growth will be targeted to leverage off existing skill bases in each region, supplemented
by new hires in key areas.
43

Managing our Challenges
Challenge
Reducing our reliance on the Australian public
capital markets.
Growing our employee base with the right mix
of skills and local presence in the geographies
where expansion is targeted.
Extending our competitive advantage by
expanding our origination capability.
Recycling our capital through the expansion of
our specialised funds and asset management
platform.
Manage the impact of the potential volatility
in world financial markets.
Management
Diversify our capital sources on a geographic
basis through the establishment of further
unlisted and listed funds in offshore markets.
Leveraging the contacts and presence of our
existing people and operations to attract the right
skill set to drive our growth.
Expanding our development capability pipeline
in key areas of competency and selectively
participating in acquisition activity.
Focus on delivering superior performance to
existing investors in our funds platform and
maintaining our co-investment philosophy to
ensure the interests of investors and BNB are
aligned.
Maintain sound corporate governance and risk
management controls.
Focus on capital management.
Continue revenue and investment diversification
strategy.
44

Outlook
• Basic EPS¹ 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.
45
1. Basic EPS as defined in the Financial Report on page 11

Disclaimer
The information contained in this presentation is given without any liability whatsoever to Babcock & Brown Limited or any
of its related entities (collectively “BNB”) or their respective directors or officers, and is not intended to constitute legal, tax or
accounting advice or opinion. No representation or warranty, expressed or implied, is made as to the accuracy, completeness
or thoroughness of the content of the information. The recipient should consult with its own legal, tax or accounting advisers
as to the accuracy and application of the information contained herein and should conduct its own due diligence and other
enquiries in relation to such information.
The information in this presentation has not been independently verified by BNB. BNB disclaims any responsibility for any
errors or omissions in such information, including the financial calculations, projections and forecasts set forth herein. No
representation or warranty is made by or on behalf of BNB that any projection, forecast, calculation, forward-looking statement,
assumption or estimate contained in this presentation should or will be achieved.
Please note that, in providing this presentation, BNB has not considered the objectives, financial position or needs of the
recipient. The recipient should obtain and rely on its own professional advice from its tax, legal, accounting and other
professional advisers in respect of the addressee’s objectives, financial position or needs.
This presentation does not carry any right of publication. This presentation is incomplete without reference to, and should
be viewed solely in conjunction with, the oral briefing provided by BNB. Neither this presentation nor any of its contents may
be reproduced or used for any other purpose without the prior written consent of BNB.
46

47
THANK YOU

Appendix – Specialised Funds and Assets Under Management
Assets Under Management as at
Ownership of
Mkt Cap
Mkt Cap
Management
ASX
Ownership
Dec ’05
Jun’06
Jun ’05
Dec ’05
Jun ’06
As at 30 June 2006
Company (%)
Code
(%)
($m)
($m)
($m)
($m)
($m)
Specialised Funds Under Management
Listed
B&B Infrastructure Limited 100 BBI 8.0 1,595 2,340 4,500 4,500 6,600
B&B Environmental Investments Ltd 1 100 BEI 26.8 186 317 47 98 167
B&B Japan Property Trust 100 BJT 4.8 750 720 561 903 1,205
Everest Babcock & Brown Alternative
Investments 27.9 EBB 5.0 283 315 500 522 552
B&B Wind Partners 100 BBW 16.2 871 869 - 1,070 1,300
B&B Capital Limited 2 100 BCM 7.2 365 774 993 1,039 1,015
B&B Residential Land Partners 100 BLP 10.0 - 175 - - 234
Total Listed Funds 4,050 5,510 6,601 8,132 11,073
Unlisted
Everest Capital Limited 3 27.9 n/a - 872 1,150 1,336
Global Wind Partners 100 n/a - 580 - -
BGP Investment Sarl (GPT JV) n/a n/a 50.0 1,100 3,170 5,245
UK retail property syndicates 100 n/a - 74 74 60
Total Unlisted Funds 2,626 4,394 6,641
Private Equity
B&B Global Partners 4 100 n/a 11.2 - 600 600
B&B Direct Investment Fund 100 n/a n/a 123 238 257
Total Private Equity Funds 123 838 857
Total for Specialised Funds Under
Management 9,350 13,364 18,571
48
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 $500 million in Babcock & Brown Capital Limited.
3 Assets under management (AUM) figures incorporate Everest Capital managed funds excluding EBB.
4 Represents capital committed.

Appendix – Specialised Funds and Assets Under Management
Assets Under Management as at
As at 30 June 2006
Ownership of
Management
Company (%)
Ownership (%)
June ‘05
($m)
Dec ‘05
($m)
June ‘06
($m)
Assets Under Management
Aircraft Warehouse Syndicate 1 100 42.2 - 114 802
BBRX Rail Syndicate 1 100 30 - 221 223
CBRail 50 50 288 385 510
Other Operating Leasing AUMs
- Rail 952 983 1,034
- Air 5,335 5,161 5,891
PFI/PPP 930 1,515 2,111
Structured Finance CDO - - 2,017
Total Specialised AUM 7,505 8,379 12,588
Total Specialised Funds and Assets Under
Management 16,855 21,743 31,159
Segment Analysis
June ‘05
($m)
Specialised Funds &
Assets Under
Management as at
Dec ‘05
($m)
June ‘06
($m)
Real Estate 1,735 4,147 6,744
Infrastructure 6,057 7,183 10,178
Operating Leasing 6,575 6,864 8,460
Structured Finance - - 2,017
Corporate Finance 2,488 3,549 3,760
Total Specialised Funds and Assets Under
Management 16,855 21,743 31,159
49
1 Assets are carried on the Group’s balance sheet and minority interest eliminated.