Macquarie Bank Limited European focus operational briefing and - - PowerPoint PPT Presentation

Macquarie Bank Limited

European focus operational briefing and general update

Presentation to investors and analysts 14 September 2007

2

Disclaimer This material has been prepared for professional investors. The firm preparing this report has not taken into account any customer’s particular investment objectives, financial resources or other relevant circumstances and the opinions and recommendations herein are not intended to represent recommendations of particular investments to particular

• customers. All securities transactions involve risks, which include (among
• thers) the risk of adverse or unanticipated market, financial or political

developments and, in international transactions, currency risk. Due care and attention has been used in the preparation of forecast information. However, actual results may vary from forecasts and any variation may be materially positive or negative. Forecasts, by their very nature, are subject to uncertainty and contingencies many of which are outside the control of Macquarie Bank Limited (Macquarie).

Deputy Managing Director

Presentation to investors and analysts

Richard Sheppard

Deputy Managing Director

Introduction and NOHC update

European focus operational briefing and general update

14 September 2007

4

• 1. Introduction and NOHC update

Richard Sheppard 2. General update Allan Moss

• 3. Overview of European operations

Greg Ward

• 5. Real Estate

Mark Baillie

• 4. Investment Banking Funds

Corporate Finance & Advisory Jim Craig

• 6. Glossary

Agenda

5

Proposed establishment of Macquarie Group Limited (NOHC) on track

• We are on track

— Formal APRA approval received — Court orders convening the meetings of shareholders and optionholders received — All necessary private tax rulings and draft class rulings received — Provisional ratings received. Definitive ratings will be applied by the Rating Agencies upon establishment of Macquarie Group Limited — MBL short term ratings remain unchanged at A-1 / P-1 / F-1 — Commitments obtained for a term bank facility of $A8b from a syndicate of major international and Australian banks — The proposal remains subject to the approval of the Federal Treasurer. Relevant applications have been lodged. — EGM on 25 October to seek shareholder and optionholder approvals S&P Moody’s Fitch Macquarie Group Limited (NOHC) A- A2 A Macquarie Bank Limited A A1* *Positive ratings outlook post restructure A+

6

Proposed establishment of Macquarie Group Limited (NOHC) on track

• Macquarie’s strong emphasis on risk management to continue to apply throughout the Group
• Macquarie Group Limited will be regulated by APRA as a NOHC
• As previously advised:

— No major change to senior management or business strategy — No significant release of capital anticipated

• Further details to be contained in Explanatory Memorandum to be sent to shareholders in late

September

14 September 2007 Presentation to investors and analysts

Allan Moss

Chief Executive Officer

General update

European focus operational briefing and general update

8

Comment on global market conditions

Credit markets

— Significant deterioration in global debt capital markets’ ability to transact and fund structured debt — Funds managers and other intermediaries are preserving liquidity – sharply reduced appetite for financial intermediary term investments — Banks are now funding much of what used to be placed in the non-bank sector — Transaction levels are lower — Credit spreads have widened and cost of funds has increased — Credit markets are distinguishing much more between regulated and non-regulated financial intermediaries — Quality funding transactions are still taking place on satisfactory terms

Equity markets

— High volatility in equity markets globally — Very high trading volumes in Asia and Australia (retail and institutional) — Future impact of credit market disruption is uncertain

9

• Industry transaction flow

— M&A cautious — ECM subdued — Reduced private equity activity

• Global real estate

— US residential prices have suffered and volumes have fallen — Rising spreads affecting mortgage rates generally — Investor interest remains strong across all non-residential sectors — Upturn in Australian east coast residential ‘inner ring’ — Significant funds available for appropriate investment

• Volatility positive for most global financial markets activities except in debt capital markets where

transaction volumes, liquidity and debt book positions have been impacted by broader market turmoil

• Australia and Asia much less affected than US or Europe
• Continuing competitive environment for staff

Comment on global market conditions

10

Conservatively capitalised and operating very profitably

Conservatively capitalised — Tier 1 capital ratio at 31 August in excess of 15% Well funded All Groups are operating profitably No unusual provisions or write downs Businesses are diversified by product and geography Continuing to grow staff – currently approximately 11,000* Held For Sale assets on balance sheet: $A628m at 31 August 2007 ($A1,370m at 30 September 2006)

— Expect to realise for greater than book value

Risk-weighted asset growth slower Expect strategic opportunities in the current environment

* At 31 August 2007

11

No unusual trading exposures

Main business focus is making returns by providing services to clients rather than by principal trading No material exposures not already known to investors No problem trading exposures No material problem credit exposures No exposure to Structured Investment Vehicles (SIVs) Only modest holdings of AAA and AA rated CLOs and CDOs ($US300m approx) No problems with debt underwritings No underwriting of leveraged loans Very little underwriting of corporate loans Only modest credit exposures to the hedge fund industry

12

Minimal standby facilities to conduits : — $A255m at 31 August 2007 (zero drawn, $A255m undrawn) — $A275m at 31 March 2007 (zero drawn, $A275m undrawn) Liquidity policy is to very substantially pre-fund any standby facilities and hold in liquid assets Warehouse commitments are client related and high quality Warehouse facilities also very substantially pre-funded

Warehouse commitments 31 August 2007 31 March 2007 Total ($Am) Drawn ($Am) Undrawn ($Am) Total ($Am) Drawn ($Am) Undrawn ($Am) Insured prime residential mortgages 1,450 925 525 1,450 708 742 Motor vehicle leasing 828 620 208 835 644 191 Other* 395 186 209 395 306 89 Total 2,673 1,731 942 2,680 1,658 1,022

MBL has a long standing policy of granting very few standbys or warehouses

All warehouse assets are either Australian or New Zealand assets. * Other: Warehouse collateral includes non-conforming auto & RMBS loans, commercial property loans and commercial lease & hire purchase receivables (including some vehicles within mixed pools).

13

All Groups operating profitably

Investment Banking Group

— M&A and ECM pipelines reasonable — Very strong M&A completion in first quarter (to June) — Australian ECM activity lower than first quarter - partly seasonal — Solid pipeline in Asia — Cash equities – excellent volumes in Australia and Asia — Profitable asset sales in progress — Continued growth in Investment Banking Funds and assets performing well (See slides 17-18)

Equity Markets Group

— Benefiting from current volatility — Generally high trading volumes in Australia and Asia

14

All Groups operating profitably

Treasury and Commodities

— Benefiting from current volatility — Increased volumes across most businesses except Debt Markets

Real Estate Group

— All major businesses continue to perform well — Some profitable disposals completed — Continued growth in Real Estate Funds and assets performing well (See slides 17-18) — Well positioned to capitalise on counter-cyclical opportunities associated with stress in some market sectors

15

All Groups operating profitably

• Financial Services Group

— Record retail broking volumes — Large June quarter inflows into Wrap and Cash Management Trust due to superannuation reforms ($A17b) — Seasonal outflows post June 30 as expected — CMT up 26% from $A14.1b (31 Mar 2007) to $A17.7b (31 Aug 2007); Wrap up 13% from 23.2b (31 Mar 2007) to $A26.2b (31 Aug 2007)

• Funds Management Group

— Good fund performance relative to benchmarks — Credit funds performed especially well relative to market

• Banking and Securitisation

— Record volumes in margin lending but expecting more subdued growth for remainder of the year — Launch of credit card business in April 2007 — Deposit volumes well up — Challenging funding markets for mortgages - see slide 16

16

Mortgage business – challenging funding markets but high quality assets

The mortgage business contributed approximately 1% of MBL profit^ for year to 31 March 2007 Credit quality is high across all mortgage books No lending on subprime mortgages Default rates low by industry standards 95% insured Cost of funds has increased relative to prior periods Term issuance market is challenging

^ Percentage contribution based on management accounts before unallocated corporate costs, profit share and income tax.

17

Continued growth of specialist funds

Asset Performance

— Assets continue to perform well

Refinancings

— Still being achieved on reasonable terms — Investment Banking Funds: approximately 2% of total asset debt due for refinancing over next 12 months — Real Estate Funds: approximately 3% of total asset debt due for refinancing over next 12 months

Acquisition Pipeline

— Track record and experience position funds well to pursue opportunities — Deep expertise in debt markets — Strong investment discipline — Significant capital available for investment

18

Continued growth of specialist funds

Capital raised from investors

— $A12.4b total funds raised April to August 2007 (77% international, 77% unlisted) — $A4.0b for Investment Banking Funds* (72% international, 35% unlisted) — $A2.8b for Real Estate Funds^ (88% international, 91% unlisted) — $A5.6b of other specialist funds (including Financial Products) — Other fund raisings in progress

Significant capital available for investment

— Investment Banking Funds $A9.6b** — Real Estate Funds approx $A3.7b^

New funds being developed across existing and new markets Refer Appendix (slides 22 and 23) for further details

As at 31 August 2007. * Capital raised by Macquarie and joint venture fund manager partners, including approx. A$1b of Exchangeable Convertible Bonds (ECBs) issued by MCG. **Listed funds - cash available for investment; unlisted funds- investor commitments less capital invested or committed to investments. For jointly managed funds the amount is representative of Macquarie's share in the JV manager. ^Macquarie and associates

19

50 100 150 200 2002 2003 2004 2005 2006 2007 Aug-07 Securities Wholesale Securities Retail Other Specialist Real Estate Infrastructure $Ab

$A140b $A97b $A63b $A52b $A41b $A197b $A225b

Assets under management over $A225b

14% increase since March 2007

20

Outlook – expect record half year result for the six months ending 30 September 2007

Expect record first half, up strongly on pcp Expect second quarter to be up on pcp; as in most years, down on very strong first quarter Planning for strategic initiatives: — Group level management and central strategy unit tasked to identify opportunities — Slower risk-weighted asset growth — Continuing to hire quality staff especially in areas where we see special

• pportunities

— Possible boutique acquisitions

Appendix

22

Putting the Investment Banking and Real Estate funds into perspective

These are important businesses but:

• 7%* – operating income derived from Investment Banking (IBF) and Real Estate (REF) fund base fees

and performance fees

• Approx. 3.5%* – operating income derived from IBF and REF advisory and underwriting fees

(including joint venture managed funds)

• Less than 1%* – operating income derived from sale of assets from MBL to IBF and REF
• Investment discipline

— IBF has delivered a compound annual return of 20.2% since inception 13 years ago1 — REF listed property trusts have delivered compound annual return of 17.9% over the past 10 years,

• utperforming most major global REIT indices2

— Many more assets reviewed and rejected than acquired and request to lift offer price frequently declined — Assets purchased by funds — IBF – less than 1% by value of assets purchased during FY07 were purchased from MBL — REF – less than 8% by value of assets purchased during FY07 were purchased from MBL

December 2006). Calculated in AUD. Cashflows converted at historic rates. 2Accumulated return on the Macquarie LPTs is calculated assuming that an investor acquired an initial portfolio on 31 March 1997 (weighted by market capitalisation at that date) and then participated (pro rata) in every capital raising undertaken by each Macquarie LPT over the period shown. Macquarie LPTs currently included in the index are MOF, MCW, MLE, MDT, MPR. Source Macquarie Real Estate as at 31 March 2007.

23

Putting the Investment Banking and Real Estate funds into perspective

• Sale of assets

— Funds’ general policy to be long-term owners of assets — Asset prices on material sales to third parties have in all cases exceeded directors’ valuations — IBF realising 2.3 x equity invested, 27% IRR — Sale between funds nominal — IBF: 33 acquisitions completed FY 2007, only two from one fund to another (or only 5% by value) — REF: no property transactions between funds in FY 2007 — Subject to rigorous independent valuation and review process

• Valuations

— Conservative compared to average analyst valuations and equity partner valuations

• Average gearing of assets managed by specialist funds

— IBF – 58% (debt / debt + equity) — REF – 48% (debt / debt + equity)

14 September 2007 Presentation to investors and analysts

Allan Moss

Chief Executive Officer

Q&A

European focus operational briefing and general update

14 September 2007 Presentation to investors and analysts

Greg Ward

Chief Financial Officer

Overview of European operations

European focus operational briefing and general update

26

A brief history of Macquarie in Europe

1989: First European presence in London and Munich

Institutional Stockbroking teams hired

1996: London

Project Finance

1999: London

Investment Banking Funds Futures

2000: London

Advisory Equity derivatives

2002: London

Macquarie Capital

2001: Frankfurt

• ffice opens

Corporate Advisory

2003: Dublin

• ffice
• pens

Macquarie Capital

Vienna

• ffice opens

Financial Products

Paris

Corporate Advisory

2006: Zurich

• ffice
• pens

Financial Products

1989 1998 2007

London

Corona Energy acquisition

Vienna

Macquarie Capital

1994: London

London branch established Foreign Exchange Macquarie Research

1991: London

Structured Finance

2005: Rome and Milan

• ffices open

Obtained Italian banking licence Mortgages

London

Energy trading

2004: Geneva and Paris

Institutional Stockbroking (ING) London Real Estate – MGPA JV

Munich

Equity derivatives

Amsterdam

• ffice opens

Corporate Advisory

2007: Moscow

Macquarie Renaissance JV

London

Real Estate

Manchester

• ffice
• pens

Real Estate

Paris

Investment Banking Funds

27

Macquarie European locations and staff*

• 12 office locations in 8 countries
• Over 1,000 staff, 25% of international

staff

• Regional base in London
• Representation from all of Macquarie’s
• perating Groups

dÉêã~åó 31 staff jìåáÅÜ cê~åâÑìêí cê~åÅÉ 13 staff m~êáë ^ìëíêá~ 13 staff sáÉåå~ pïáíòÉêä~åÇ 8 staff dÉåÉî~ wìêáÅÜ rh 883 staff içåÇçå j~åÅÜÉëíÉê fêÉä~åÇ 11 staff aìÄäáå fí~äó= 98 staff jáä~å

• çãÉ

kÉíÜÉêä~åÇë 2 staff ^ãëíÉêÇ~ã

* At 31 Aug 07. **Joint venture staff in Moscow not included in headcount. No Macquarie office in Moscow

• ìëëá~GG=

jçëÅçï=EgsF

28

Focused businesses in Europe

• Infrastructure and specialist funds management
• Corporate finance & advisory services
• Financial products
• UK investment funds (Open Ended Investment Company)
• Lending and asset financing
• Institutional cash equities & research
• Treasury and commodities activities
• Equity structured finance and derivatives
• Real estate structured finance
• Real estate advisory and funds management
• Residential mortgages
• Business banking services
• Funds management

29

European income* growth

200 400 600 800 1,000 1,200 1,400 1,600 '03 '04 '05 '06 '07

($Am)

European staff growth by Group

200 400 600 800 1000 1200 '03 '04 '05 '06 '07 Aug- 07

Headcount

Service areas FMG FSG REG EMG BSG T&C IBG

Growth in income and staff

Years ended 31 March * Excludes earnings on capital and is after directly attributable costs, including fee and commissions expenses.

30

Treasury and Commodities Group

• Metals and Energy Capital

— 24hr precious and base metals trading desks operated from Sydney and London, offering spot, forward and option based risk management products. — Member of the London Metals Exchange offering clients trading and clearing services over LME contracts. — Provider of finance to upstream energy companies via equity, mezzanine and senior debt. — Recent initiatives include provision of a substantial loan facility to a Central Asian petroleum explorer.

• Agricultural Commodities and Investor Products

— Risk management solutions for sophisticated producers, consumers and merchants of agricultural commodities. — Commodity pre-export and inventory financing programs. — Structured derivatives over various commodity indices for the institutional investment community and financial intermediaries. — Dry freight derivatives (Forward Freight Agreements (FFA's) and options over FFA's).

31

Treasury and Commodities Group

• Energy Markets

— Risk management and financing solutions in energy products (oil, refined products, natural gas & coal). — Physical gas and coal trading. — Corona Energy, natural gas supply to industrial and commercial customers in the UK. — Recent initiatives include the expansion of the UK physical gas supply business into Europe.

• Futures

— Full service futures global execution, clearing, Direct Market Access and margin financing services to the UK and Europe — Specialist in Freight Clearing with full coverage to the Norwegian Clearing House, London Clearing House, and Singapore exchanges. — Daily management of UK/European Exchanges and clients, including Euronext LIFFE, Euronext LTOM and CME & CBOT clearing.

32

Equity Markets Group

Equity Markets Group operates three businesses in Europe:

• Equity linked products

— Provides equity-linked investment products for high net worth individuals and wholesale clients — Services clients in all major European markets from offices in London and Munich — Bespoke transactions, which may include convertible instruments, warrants and options

• Equity finance

— Principally, the stock lend & borrow business

• Trading

— Manages market risk for EMG’s businesses and trades arbitrage opportunities — Growth across the business - staff numbers have more than doubled over the past 12 months

33

Banking and Securitisation, Financial Services and Funds Management Groups

• Banking and Securitisation

— Residential mortgages — Entered Italy in 2005 — Branches in Milan and Rome with 10 other regional sales points across Italy — Portfolio of €718m* with approximately 100 staff — Mortgages distributed through both third party and direct channels — Recent initiatives — Business banking — Start-up business established in 2007 — Provide business lending services to UK insurance broking industry — Plans to expand product offering, including insurance premium funding

• Funds Management Group - building management capabilities in London for global fixed income,

European listed property and European private equity funds

• Financial Services Group - exploring opportunities to replicate niche product expertise in the region

* At 31 August 2007

34

Specialist fund capital raisings

$Ab 2 4 6 8 10 12 14 16 18 20 22

FY07 Apr - Aug 07

Region FY07 Raising ($Ab) Africa & Middle East 0.49 3.33 4.49 5.20 8.13

$A21.6b

• 1 Apr – 31 Aug

Raising ($Ab) Asia Pacific 5.80 Australia 2.81

TOTAL $A12.4b

Americas 1.80 Europe 2.06

Funds raised by Macquarie and joint venture fund manager partners, including equity raised via DRP. Including committed, uncalled capital. Capital raised includes approx. A$1b of Exchangeable Convertible Bonds (ECBs) issued by MCG

• $A21.6b raised over the 12 months to 31 March 07;

— 79% from international investors — 87% for unlisted funds or syndicates

• $A12.4b raised over the 5 months to 31 August 07;

— 77% from international investors — 77% for unlisted funds or syndicates

35

UK licenced banking entity

• In conjunction with establishment of Macquarie Group Limited (NOHC), FSA regulated entities

have been split between Banking and Non-Banking groups.

• The Non-Banking group will use the existing FSA regulated entities - Macquarie Europe Limited & Macquarie

Investment Management (UK) Limited

• Therefore seeking to establish UK licensed banking entity as the platform for future growth for regulated

European ‘Banking’ businesses

• As previously advised, application lodged with FSA in July 2007
• FSA has approximately 6 months to approve
• Expect to be operational by April 2008
• All major ‘Banking Group’ businesses will be represented
• Approximately 100 staff initially
• Subsidiary of Macquarie Bank Limited
• Will be appropriately capitalised
• Will seek independent ratings in due course
• Will have its own Board and Executive Committee

36

International head count growth

500 1000 1500 2000 2500 3000 Mar-02 Mar-03 Mar-04 Mar-05 Mar-06 Mar-07

Business Head Count

0% 5% 10% 15% 20% 25% 30%

Support Head Count as a % of total Business Head Count

Business headcount Risk and operational staff as % of business head count

International growth is complemented by the roll-out of prudential framework Control of Compliance, Financial Operations and Risk Management functions retained by Head Office, complimented with strong regional management

Managing our international growth

37

Managing our international growth

• Same rules apply as in domestic market
• Timely and comprehensive reporting on compliance and risk matters
• Internal Audit devotes more resources to international businesses
• Frequent senior management visits to international offices
• Controls over trading payments largely centralised in Sydney
• Lending and trading activities concentrated in certain offices
• Increasing awareness of Macquarie brand internationally is improving our ability to

attract high quality staff

14 September 2007 Presentation to investors and analysts

Greg Ward

Chief Financial Officer

Q&A

European focus operational briefing and general update

14 September 2007 Presentation to investors and analysts

Jim Craig

Head of Macquarie Group (Europe) Head of Investment Banking Group (Europe)

Investment Banking Group

European focus operational briefing and general update

40

IBG European locations and staff*

dÉêã~åó jìåáÅÜ cê~åâÑìêí cê~åÅÉ m~êáë ^ìëíêá~ sáÉåå~ pïáíòÉêä~åÇ wìêáÅÜ rh içåÇçå fêÉä~åÇ aìÄäáå

Approx 600 IBG staff in Europe

100 200 300 400 500 600 '02 '03 '04 '05 '06 '07 Aug- 07

Corp Finance IBF Fin Prod Securities Mac Cap

IBG staff growth in Europe

*At August 2007

41

IBG European Snapshot

• Corporate Advisory

— Full breadth of infrastructure, TMET and PFI advisory teams — Growing resources, industrials and property teams — Well developed execution experience, including significant transactions

• Financial Products

— Significant customer base of over 14,000 - building market awareness — Expanded investor base has opened up new pools of equity — Continuing to successfully market other unlisted Macquarie Funds

• Investment Banking Funds

— Reputation for long-term, responsible management of sensitive assets — Industry specialists, senior recruits with extensive industry experience — 61%* of IBF managed assets are located in Europe

• Macquarie Capital

— Well established in Aviation, Capital, Technology and Metering — Entering new markets - first major technology deal in Poland

• Macquarie Securities

— Established, leading broker of Australian, pan-Asian and Japanese equities to institutional clients — Greenwich rated #2 in Europe for Asian Equities, #1 in Europe for Australian Equities

* As at 30 June 2007. Calculated as proportionate Enterprise Value. Proportionate net debt and equity value as at 31 December 2006 or cost if acquired subsequent to 31 December 2006.

42

Advisory and IB Funds in Europe

Advisory

200 European Execs Sourcing infrastructure and adjacent investments Part of a global team of 1,250 specialists worldwide

IB Funds

135 European Execs 61%* of IBF assets under management Investment evaluation Active asset management Part of a global team of 590+ staff Global equity under management ~$A58b (€36b)

Governance Separation

Principal Fund & Asset Manager Underwriter Financial Adviser Broker

One Global team

* As at 30 June 2007. Calculated as proportionate Enterprise Value. Proportionate net debt and equity value as at 31 December 2006 or cost if acquired subsequent to 31 December 2006.

43

1999 2000 2001 2002 2003 2004 2005 2006

Oct 1999 M1-A1 Link M6 Toll Tagus Crossings Dec 2000 Bristol Airport Dec 2001 Birmingham Airport May 2002 Rome Airport Jan 2004 Arlanda Express June 2005 Wales & West Utilities Dec 2004 Brussels Airport Mar 2005 Energy Power Resources Jun 2005 NRE* Sept 2005 Deep Sea Container Terminal Dec 2005 Isle of Man Steam Packet Dec 2005 Copenhagen Airport Feb 2006 APRR G=mÉåÇáåÖ=ÅçãéäÉíáçå Jun 2006 Moto July 2006 Petraoplus (tank farm) Jul 2005 Wightlink European Directories Red Bee Media Aug 2006 Itevelesa

Sustained European deal flow

Dec 2006 Thames Water

2007

Mar 2007 NCP April 2007 Airwave National Grid Wireless* Mar 2000 Warnow Tunnel Jan 2005 Arqiva Nov 2005 Tanquid (tank storage business) Jul 2006 BAA Nov 2006 Stagecoach London (East London Bus Group) May 2005 NM Renewable Energy Oct 2003 South East Water kçíÉW=a~íÉë=~ÄçîÉ=êÉéêÉëÉåí==Ñáå~åÅá~ä=ÅäçëÉ=Ñçê=~ää=íê~åë~Åíáçåë=ÉñÅÉéí=íÜÉ=kob=~Åèìáëáíáçå=~åÇ=íÜÉ=_áêãáåÖÜ~ã=^áêéçêí==ë~äÉ=Ñçê=ïÜáÅÜ=íÜÉ=~ååçìåÅÉãÉåí=Ç~íÉ=áë=ëÜçïK Oct 2004 Cintra IPO July2007 Obragas Net H Rome Airport sale May 2007 Birmingham Airport Sale* Sep 2006 South East Water sale Jan 2007 Talarius

44

Applying advisory expertise across wider source of deal flow

Proven capacity to execute major deals

Thames Water $A20 billion Airwave $A4.8 billion National Grid Wireless BAA Copenhagen Airports $A6.2 billion $A39 billion APRR $A1.8 billion $A11.3 billion UK Established EU countries New EU countries Estimated % of deal flow Macquarie currently sights 95% 40 – 50% 5%

Source of deal flow

Opportunities beyond those we currently see

45

Moving along the business and industry continuum

Principal Underwriting Funds Idea Brokerage Advisory Principal Funds Idea

0% 0%

Real Estate TMET Infrastructure Resources Industrials

Opportunity ? Opportunity

• Real Estate Group
• Historic

equity returns

Pure infrastructure Essential service assets Turnaround Private Equity Venture Capital 8-12% 25-30% 30% +

46

IB Funds - managing a substantial portfolio

Belgium Brussels- Airport Portugal Tagus Crossings UK Airwave Arqiva/NGW Bristol Airport CLP Envirogas East London Bus Group Energy Power Resources (UK) M6 Toll Moto National Car Parks Red Bee Media Steam Packet Talarius Thames Water Wales & West Utilities Wightlink France Energy Power Resources (Europe) Autoroutes Paris-Rhin-Rhone Trois Sources & Lomonot Windfarms Germany Warnow Tunnel TanQuid (tank storage business) Denmark Copenhagen Airport Sweden Arlanda Express Poland Deep Sea- Container Terminal The Netherlands European Directories** NRE* Obregas Net* Netbeheer Haarlemmermeer* Spain Itevelesa

As at 30 June 2007 - the assets listed are managed on behalf of investors with various direct % stakes held in each * Subject to financing and customary closing arrangements ** European Directories also located in Austria, Czech Republic, Denmark, Finland, France, Slovakia and Sweden

47

IB Funds - Managing a substantial portfolio

61% of IBF assets by value located in Europe*

*As at 30 June 2007. Calculated as proportionate Enterprise Value. Proportionate net debt and equity value as at 31 December 2006 or cost if acquired subsequent to 31 December 2006.

Europe 19% Asia 4% Middle East/Africa 1% Australia/NZ 17% North America 17% UK 42%

48

Active asset management

Senior industry specialists in asset management across all sectors eg airport CEO, utility directors, gas strategists, industry consultants Executive:asset = 5:1 Specialist skills from central team deployed at acquisition to manage transition: finance, HR, legal, tax, communication Risk management focus at all assets Efficient capital management

IBF European executives

Airports Central Finance Legal Tax Other Roads TMET MEIFs Central PE MEIFs Asset Mgt

49

Active asset management delivering results

• Thames Water

Extensive bid process involving a team of over 40 Macquarie staff in addition to advisors Management team replaced: new Chairman, CEO, CFO, COO and others Macquarie transition team worked with management to develop business and operational plans Asset management team combines leading industry experience with financial expertise

• Focus on core operations and strong governance delivering results

— Regulatory leakage target achieved for the first time in seven years — Significant improvement in environmental performance of wastewater treatment plant — Financial governance and control - operating costs down approximately 17% — Divestment of the non-regulated businesses — Sale and lease back of office property portfolio, disposal of redundant sites — Completion of the securitisation programme raising £900m of debt in current markets — Approval of Tideway Tunnel

• Turnaround acknowledged by regulators and other key stakeholders

50

MEIF & MEIF II €6.1 billion raised, €4 billion invested

Assets acquired* Equity raised

* Includes acquisitions subject to completion – NRE

1,000 2,000 3,000 4,000 5,000 6,000 7,000 Sep 04 Mar 05 Sep 05 Mar 06 Sep 06 Mar 07 Aug 07 € millions

MEIF II 52% committed in 6 months MEIF 100% committed in less than 3 years MEIF III

51

Developing European investor base

Germany 10% Italy 0% Netherlands 13% Norway 10% Switzerland 4% UK 2% Australia 19% Brunei 1% Canada 30% USA 3% France 1% Belgium 1% Singapore 6%

MEIF €1.5 billion, 42% from UK and Europe MEIF II €4.6 billion, 83% from UK and Europe

Germany 16% Netherlands 29% Norway 6% Sweden 1% Switzerland 5% UK 16% Canada 7% Other 6% Australia 2% USA 2% Finland 5% Denmark 5%

52

Actively managing risk

Major risks Managing the risks

A major reputational issue in

• ne of our assets

Strong health, safety and customer focus at all assets Industry expertise within the assets and asset management Clear rules and training, focus on regulatory compliance Focus on customer and community relations Ongoing investment a core objective Managing growth Rate of growth remains consistent Fundamentally organic and bolt-on growth Mixed teams of new people and longer-term Macquarie Benign markets changing Cycles will turn, have managed through market cycles before Infrastructure user demand unaffected by market cycles Limit market / credit exposure Test extreme scenarios and downsides of all transactions

53

Actively pursuing opportunities

European business has been built on organic growth Well placed to make the most of further opportunities — UK opportunities continue to be attractive — Continental Europe: stepping stones in place with assets, investors, local teams and presence — Extending scope along the risk/return spectrum to essential services Opportunities for step change can emerge in challenging markets

14 September 2007 Presentation to investors and analysts

Jim Craig

Head of Macquarie Group (Europe) Head of Investment Banking Group (Europe)

Q&A

European focus operational briefing and general update

14 September 2007 Presentation to investors and analysts

Mark Baillie

Head of Real Estate (Europe and North America)

Real Estate Group

European focus operational briefing and general update

56

Real Estate Group

European snapshot

In Europe, Macquarie Real Estate Group consists of two key operating divisions and a major joint venture:

• Real Estate Capital (REC)

— Business started July 2006 with 4 staff — London based with 15 staff plus 2 consultants (UK, Italy) — Two pronged business strategy:

• Continue investment in Europe for existing products such as Macquarie Office Trust (MOF), Macquarie

CountryWide Trust (MCW) and Macquarie Leisure Trust Group (MLE) - in the near future

• Take advantage of the deregulation of real estate capital markets to create new products that supply long

term, secure, income streams and have potential to form seed assets for REITs

• Real Estate Structured Finance (RESF)

— Business started January 2005 with 2 staff — A successful, focused strategy — 14 staff across 2 offices (London and Manchester) — 18 transactions approved since inception — Approximately £150 million commitments — Profitable from second year of operation

• Joint Venture: Macquarie Global Property Advisors (MGPA)

— Formed a JV with Macquarie Global Property Advisors July 2004 — Bermuda headquartered with European offices in London, Luxembourg, Paris and Frankfurt and additional associates in Munich with 58 staff — MGPA currently has our mandate to undertake real estate private equity funds management in Europe — REC works with MGPA, thereby leveraging a large global network

57

Real Estate Group

European locations and staff*

7 Macquarie Real Estate & associates European locations

Germany Frankfurt Munich France Paris Luxembourg Luxembourg UK London Manchester

89 Macquarie Real Estate & associates staff

Italy Rome

10 20 30 40 50 60 70 80 90 100 '04 '05 '06 '07 Aug-07

MGPA Real Estate Structured Finance Real Estate Capital

* At August 2007. MGPA joint venture staff are not included in MBL headcount

58

Real Estate Group

€1.8b current European investments (including associates)

France (€322.5m assets) BalthazarCapitale – (Offices) Captial Sud (Office) Paris (MGPA) Logiffine – Logistics in Valance, Lille & Mer (MGPA) Germany (€430m assets) Light Industrial Portfolio – Industrial/Office, Stuttgart & Kiel (MGPA) Munich Tower – Office, Munich (MGPA) 2 shopping centres (MCW) Atrium Charlottenburg, Berlin-Charlottenburg (MOF) Darmstadter Landstrasse, Frankfurt (MOF) ¹ Poland (€747m assets) Rondo 1 (Office) & Wilanów One (Residential development), Warsaw (MGPA) Angel Wings, (Residential development) Wrocław (MGPA) 5 shopping centres (MCW) Italy (€152m assets) Macchi Building, Milan (MOF) ² Pan European (€127m assets) Sony Portfolio – Office/Warehouse (MGPA)

¹ Frankfurt exchanged Jul 07, expected to settle Jan 08, ² Milan exchanged Mar 07, expected to settle end Sep 07

59

Real Estate Capital

Real estate market snapshot

European real estate market still split by geography and culture: REIT legislation proposed REIT legislation in place

• Second largest market by size but 27 different

countries

• In short term, requires country by country

approach and sector by sector approach

• Major markets only introduced REIT structures

within last 12 months

• REITs not yet acting as REITs
• Immature dedicated REIT investor base both

institutional and retail

• Valuation methodologies still evolving
• Growth of European REIT market not developing

as quickly as other regions (due to low yields and higher interest rates)

• Currently a hiatus in transactions as CMBS

markets recalibrate

• As a consequence, Macquarie is seeing more

deal flow as certain types of investors exit the market

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Real Estate Capital

Real estate market snapshot

Total Investment Grade ($b)

EU $4,659 US/CN $5,691 UK $963 AU/NZ $329

% of Institutional Holdings Listed

US/CN 17% EU 8% UK 17% AU/NZ 56% ce: UBS Research – “The Case for Global Real Es Sour tate” Source: Macquarie Real Estate Research, EPRA Indices via Bloomberg, UBS

• Public to private opportunities exist provided you can understand the

true underlying value, which may be changing in the current financial environment

• Europe is the second largest real estate market globally but has the

lowest level of real estate securitisation

• Combination of transition to securitised real estate and current market

volatility will lead to: — Public to private opportunities in short term — Re-listing opportunities in medium to long term

• 10%

0% 10% 20% 30% 40% 50% 60% Jan 06 Apr 06 Jul 06 Oct 06 Jan 07 Apr 07 Jul 07 UK public (listed) real estate performance (% ch p.a)

61

Real Estate Capital

Expertise and experience – platform for growth

• Our global REIT funds management expertise and experience provide a competitive advantage in deregulating

European real estate capital markets

• We are leveraging this by:

— Continuing to expand our Australian LPT’s (MOF, MCW, MLE) investments into Europe — Building on the ground resourcing to support this growth with country and sector expertise

• Identifying and funding development of real estate operating platforms in markets of interest with view to create value

from creation or on sale of a REIT

Storage King self-storage facility, Dudley

• Taking advantage of current market volatility to acquire assets, platforms

and human capital on a ‘value’ basis

• Focus on the real estate component of alternate asset classes such as

self-storage: — Long term management agreement with Storage King (largest self storage operator in Australia, and already 5th largest in the UK) — Substantial MBL equity committed to grow the platform

• Continue to work with MGPA to identify large scale co-investment
• pportunities across Europe

62

Real Estate Structured Finance

UK residential market snapshot

Overall strong fundamental residential demand - recent Government statistics show that there remains a material undersupply of dwellings across the UK Reasonably stable economic outlook, with a scarcity of good product in many prime areas UK overall price growth circa 10%, London 15% and London prime 28% over the past 12 months General UK residential market expected to slow materially in line with the higher interest rates (five consecutive interest rate rises in the last year - base rate now 5.75% pa, which is the highest in 6 years) Recent stress in financial markets may have an impact on the high-end residential markets Scarcity of high-end stock, volume of established local wealth, plus further continued international wealth (Middle East, Russia etc) entering the UK, provides a broad base

63

Real Estate Structured Finance

Deal snapshots

5-6 Queens Gate Place, South Kensington, London: refurbishment of 6 residential apartments with end value

• f £28m

Clapham Road, Stockwell, London: a redundant commercial office building, planning approval achieved for 240 residential apartments with end value £120m Atrium Apartments, Mainz, Germany: 604 apartment, university housing complex acquired for €12m with target sale price of €17m King Edward Hospital – Midhurst, West Sussex redundant hospital building, planning approval received for 260 residential dwellings with end value of £130m

64

Real Estate Structured Finance

Actively pursuing opportunities

Continue to increase key products — eg include further planning approval funding, slice/syndication funding, take out funding, loan securitisation, selective acquisition of complimentary businesses Geographic expansion, second office opened in Manchester on 20 August 2007 New European office to be assessed in line with establishment of UK licenced banking entity in 2008 Leverage existing relationships to expand into continental Europe Participate in European CMBS market as recalibration and restructuring occurs Focus on good prime, urban and provincial based projects where other lenders may be pulling back Capitalise on relationships with existing customers to seek out ‘value’ opportunities

65

Real Estate Group

Asset snapshots

Atrium Charlottenburg, Berlin-Charlottenburg: Macquarie Office Trust’s first acquisition in Germany Sourced by MGPA

66

Macchi Building, Milan - Artist Impression: Macquarie Office Trust’s first acquisition in Italy Sourced by MGPA

Real Estate Group

Asset snapshots

67

Dabrowka shopping centre, Katowice: One of Macquarie CountryWide’s 5 shopping centers in Poland Sourced by MGPA

Real Estate Group

Asset snapshots

68

Darmstadter Landstrasse, 108, Sachsenhausen Frankfurt: Macquarie Office Trust’s latest acquisition in Germany

Real Estate Group

Asset snapshots

14 September 2007 Presentation to investors and analysts

Mark Baillie

Head of Real Estate (Europe and North America)

Q&A

European focus operational briefing and general update

Glossary

71

Glossary

APRA Australian Prudential Regulatory Authority BSG Banking and Securitisation Group CBOT Chicago Board of Trade CDO Collateral Debt Obligations CLO Collateral Loan Obligations CMBS Commercial Mortgage Backed Securities CME Chicago Mercantile Exchange ECM Equity Capital Markets EGM Extraordinary General Meeting EMG Equity markets Group FSA Financial Services Authority FFA Forward Freight Agreement FMG Funds Management Group FSG Financial Services Group

72

Glossary

IB Funds Investment Banking Funds IBF Investment Banking Funds IRR Internal Rate of Return LIFFE London International Financial Futures and Options Exchange LPT Listed Property Trust LTOM London Traded Options Market M&A Mergers and Acquisitions MBL Macquarie Bank Limited MCW Macquarie Countrywide Trust MEIF Macquarie European Infrastructure Funds MOF Macquarie Office Trust MEIF II Macquarie European Infrastructure Funds 2 MGPA Macquarie Group Property Advisors NOHC Non Operating Holding Company

73

Glossary

PE Private Equity PFI Private Finance Initiative Q&A Question and Answer REC Real Estate Capital REF Real Estate Funds REG Real Estate Group REIT Real Estate Investment Trust RESF Real Estate Structured Funds T&C Treasury and Commodities Group TMET Technology Media and Entertainment