ASX Release 28 September 2007 BABCOCK & BROWN CAPITAL – 2007 ANNUAL REPORT Please find attached the Babcock & Brown Capital Limited 2007 Annual Report which has been despatched to shareholders. ENDS Further Information: Erica Borgelt Investor Relations Babcock & Brown +61 2 9229 1800 For personal use only About Babcock & Brown Capital Limited Babcock & Brown Capital is an Australian-based investment company that focuses on a concentrated portfolio with a flexible investment horizon. The Company’s mandate allows it to build positions in domestic and overseas companies and both listed and private entities. Babcock & Brown Capital concentrates on growing the value of its investments over time. Investments are held while they continue to meet the Company’s investment objectives. Babcock & Brown Capital is listed on the Australian Stock Exchange. eircom BCM holds a 57.1% interest in eircom representing an investment of approximately $448 million. Associates of Babcock & Brown hold an additional 7.9% and existing and former employees hold the remaining 35% through their share ownership trust, the ESOT. eircom owns Ireland's copper and fibre backbone telecommunications network. It is the largest provider of fixed line wholesale and retail telecommunication services in Ireland and has 72% of the fast growing broadband market. eircom’s mobile business has a rapidly growing 18.2% share of the mobile market. Golden Pages BCM acquired Golden Pages in July 2007. Golden Pages is the leading Israeli directories business with portfolio of complementary directory and search businesses operating across four distribution platforms. Golden Pages was acquired for an enterprise value of A$248 million, requiring an equity investment from BCM of A$143.3 million. For further information please see our website: www.babcockbrowncapital.com For personal use only ANNUAL REPORT ANNUAL 2007 BABCOCK & BROWN CAPITAL LIMITED Annual Report 2007 www.babcockbrowncapital.com For personal use only 2007 Corporate DIRECTORY COMPANY SECRETARY Simone Lander PRINCIPAL REGISTERED OFFICE Level 23, The Chifley Tower 2 Chifley Square Sydney NSW 2000 Australia LOCATION OF SHARE REGISTER Link Market Services Level 12, 680 George Street Sydney NSW 2000 Australia Tel: 1800 704 855 (within Australia) +61 2 8280 7783 (outside Australia) Fax: +61 2 9287 0303 Email: [email protected] STOCK EXCHANGE Australian Securities Exchange MANAGEMENT COMPANY The Management Company was initially Babcock & Brown Securities Pty Ltd (“BBS”) and was replaced by Babcock & Brown Capital Management Pty Ltd (“BBCM”) once it had been issued with an appropriate Australian Financial Services Licence (“AFSL”). The Management Agreement is therefore an agreement between the Company, BBS and BBCM. AUDITORS PricewaterhouseCoopers 2 Southbank Boulevard Southbank VIC 3006 WEBSITE www.babcockbrowncapital.com BABCOCK & BROWN CAPITAL LIMITED AND CONTROLLED ENTITIES ABN 31 112 119 203 BBCM ACN 112 118 144 is the Management Company for BCM under a Management Agreement dated 20 December 2004. CONTENTS Investments in the Company are not investments in, deposits with, or other liabilities, of Babcock & Brown, or any entity in the Babcock & Brown Group and are subject to investment risk, including loss of income and capital invested. Neither BBCM nor any member of the Babcock & Brown Group, guarantees the performance of the Company, the repayment of capital or the payment of a particular rate of 2 Chairman’s & Managing Director’s Report return on the Company’s shares. 6 Review of Operating Results This report is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the 10 Board of Directors investment objectives, financial situation and particular needs of the investor. Before making an investment in the Company, the investor 12 Overview of eircom or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and 21 eircom Chairman & Executive Team financial circumstances and consult an investment advisor if necessary. 22 Overview of Golden Pages The Company’s consolidated financial report has been prepared to enable the Company to comply with its obligations under the For personal use only 27 Directors’ Report Corporations Act and to ensure compliance with the ASX Listing Rules and satisfy the requirements of the Australian accounting standards. 40 Corporate Governance Statement The responsibility for preparation of the consolidated financial report and any financial information contained in this Annual Report rests solely with the Directors of the Company. 51 Auditor’s Independence Declaration 52 Financial Statements The Financial Report was authorised for issue by the Directors on 28 August 2007. The Company has the power to amend and reissue the Financial Report. 108 Directors’ Declaration 109 Independent Auditor’s Report to the Members of Babcock & Brown Capital Limited 111 ASX Additional information 113 Corporate Directory 2007 Corporate DIRECTORY COMPANY SECRETARY Simone Lander PRINCIPAL REGISTERED OFFICE Level 23, The Chifley Tower 2 Chifley Square Sydney NSW 2000 Australia LOCATION OF SHARE REGISTER Link Market Services Level 12, 680 George Street Sydney NSW 2000 Australia Tel: 1800 704 855 (within Australia) +61 2 8280 7783 (outside Australia) Fax: +61 2 9287 0303 Email: [email protected] STOCK EXCHANGE Australian Securities Exchange MANAGEMENT COMPANY The Management Company was initially Babcock & Brown Securities Pty Ltd (“BBS”) and was replaced by Babcock & Brown Capital Management Pty Ltd (“BBCM”) once it had been issued with an appropriate Australian Financial Services Licence (“AFSL”). The Management Agreement is therefore an agreement between the Company, BBS and BBCM. AUDITORS PricewaterhouseCoopers 2 Southbank Boulevard Southbank VIC 3006 WEBSITE www.babcockbrowncapital.com BABCOCK & BROWN CAPITAL LIMITED AND CONTROLLED ENTITIES ABN 31 112 119 203 BBCM ACN 112 118 144 is the Management Company for BCM under a Management Agreement dated 20 December 2004. CONTENTS Investments in the Company are not investments in, deposits with, or other liabilities, of Babcock & Brown, or any entity in the Babcock & Brown Group and are subject to investment risk, including loss of income and capital invested. Neither BBCM nor any member of the Babcock & Brown Group, guarantees the performance of the Company, the repayment of capital or the payment of a particular rate of 2 Chairman’s & Managing Director’s Report return on the Company’s shares. 6 Review of Operating Results This report is not an offer or invitation for subscription or purchase of or a recommendation of securities. It does not take into account the 10 Board of Directors investment objectives, financial situation and particular needs of the investor. Before making an investment in the Company, the investor 12 Overview of eircom or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and 21 eircom Chairman & Executive Team financial circumstances and consult an investment advisor if necessary. 22 Overview of Golden Pages The Company’s consolidated financial report has been prepared to enable the Company to comply with its obligations under the 27 Directors’ Report For personal use only Corporations Act and to ensure compliance with the ASX Listing Rules and satisfy the requirements of the Australian accounting standards. 40 Corporate Governance Statement The responsibility for preparation of the consolidated financial report and any financial information contained in this Annual Report rests solely with the Directors of the Company. 51 Auditor’s Independence Declaration 52 Financial Statements The Financial Report was authorised for issue by the Directors on 28 August 2007. The Company has the power to amend and reissue the Financial Report. 108 Directors’ Declaration 109 Independent Auditor’s Report to the Members of Babcock & Brown Capital Limited 111 ASX Additional information 113 Corporate Directory Major Achievements • Completed A$8 billion recommended Offer for eircom in August 2006. • Successful PIK note refinancing resulting in capital return to Babcock & Brown Capital Limited (“BCM”) of A$364 million (45% of eircom investment) in November 2006. • eircom acquired the 3G mobile licence in Ireland in March 2007. • Successful eircom debt repricing in May 2007 representing an interest saving of approximately €16 million per annum. • Strong growth in eircom mobile EBITDA margins and market share. • Resilience of fixed-line EBITDA of €600million per annum. • Ongoing realisation of eircom real estate assets. • eircom increased monthly access line rental charges by 4.9% CPI in June 2007. • Acquired leading directories and search business, Israeli Golden Pages for an enterprise value of A$248 million. About Babcock & Brown Capital Limited BCM is an Australian-based investment company that focuses on a concentrated portfolio with a flexible investment horizon. The Company’s mandate allows it to build positions in domestic and overseas companies and both listed and private entities. BCM concentrates on growing the value of its investments over time. Investments are held while they continue to meet the Company’s investment objectives. BCM is listed on the Australian Securities Exchange. eircom BCM holds a 57.1% interest in eircom representing an investment of approximately A$448 million. Associates of