BABCOCK & BROWN

Consolidated balance sheet (continued)
AIFRS
AIFRS Pro-forma Pro-forma
$’000 30 Jun 05 adjustments 30 Jun 05
Equity
Contributed equity 482,628 482,628
Reserves (7,302) (7,302)
Retained earnings 78,457 78,457
Parent entity interest in equity 553,783 553,783
Minority interest 304,121 304,121
Total equity 857,904 857,904
Gearing ratio 5 7.2% 7.2%
Notes: 1. Assumes $250 million BBSN issued on 30 June 2005, and that the gross proceeds of the Offer are held as cash.
2. Interest bearing liabilities, with the exception of the Existing Corporate Facility ($66 million drawn as at balance date),
are recourse only to the assets of certain special purpose vehicles in the Babcock & Brown Group and are described in this
Section 5 as ‘non-recourse’.
3. Other notes payable includes the Existing Corporate Facility.
4. BBSN liability recorded as other notes payable.
5. Existing Corporate Facility divided by net assets plus Existing Corporate Facility less intangibles.
5.4 Interest coverage analysis
The interest coverage ratio of Babcock & Brown and the effect on interest coverage under the following three scenarios for the
six months ended 30 June 2005 is as follows:
Interest Coverage Ratio 1 Interest Coverage Ratio 2,3
Actual: Existing Corporate Facility as at 30 June 2005 32.6 times
Scenario 1: Existing Corporate Facility on the assumption it is fully drawn
for the six months ended 30 June 2005
8.9 times
Scenario 2: Existing Corporate Facility on the assumption it is fully drawn
for the six months ended 30 June 2005 and $250 million BBSN issue on 1 January 2005
6.1 times
Scenario 3: Existing Corporate Facility on the assumption it is fully drawn
for the six months ended 30 June 2005 and $300 million BBSN issue
(assuming over-subscription of $50 million) on 1 January 2005
5.8 times
Notes: 1. The interest coverage ratios have been calculated as profit from continuing operations before income tax expense divided by interest
expense excluding interest on non-recourse debt. In the calculation of the interest coverage ratios an assumed Margin of 215 bps has
been adopted.
2. Assumes that interest is earned at the rate of 5.70% on the $250 million proceeds of the BBSN issue and on the proceeds of the
additional draw down of the Existing Corporate Facility. Finance costs attributable to the Existing Corporate Facility during the
period ended 30 June 2005 were $4.6 million.
3. In calculating the interest coverage ratio it is assumed the senior debt is drawn in Australian dollars and is drawn on a fully funded
basis rather than drawn for letters of credit.
The interest coverage ratios have been calculated assuming that interest income of only 5.70% is earned on the funds drawn and
that all facilities are fully drawn in AUD for the whole of the period. Between 1 January 2000 and 30 September 2005 Babcock &
Brown has achieved average pre-tax IRRs in excess of 30% on its principal investments. Past performance is not necessarily a guide
to future performance.
BABCOCK & BROWN SUBORDINATED NOTES 45