Lead Manager

SECTION 5
FINANCIAL INFORMATION
but after the:
• Offer Proceeds net of IPO and capital raising costs of $523 million
• Transaction costs associated with the Restructure that, for AGAAP accounting purposes, are required to be
expensed rather than offset against the proceeds of the capital raising
It is important to note that the actual results for Babcock & Brown for the year ending 31 December 2004 will
be substantially different from the AGAAP pro-forma Forecast operating profit before tax but after outside equity
interest referred to above.This is because, in addition to the limitation and uncertainties relating to the AGAAP
pro-forma Forecasts noted below, the actual results of Babcock & Brown for the period ending 31 December
2004:
• Will only reflect the results of the restructured Group from the date of the Restructure to 31 December 2004
• Will reflect actual tax expense for the period from the date of the Restructure to 31 December 2004
• May be subject to adjustment given the basis on which the Directors have determined to apportion the
final pro-forma earnings of the restructured Group for 2004 between pre- and post-IPO Shareholders.This
basis of allocation is set out in Section 5.2.3.4
The Directors believe that they have prepared the AGAAP pro-forma Forecasts with due care and attention and
consider all best estimate assumptions, when taken as a whole, to be reasonable at the date of this Prospectus.
However, this information is not fact and investors are cautioned not to place undue reliance on the AGAAP
pro-forma Forecasts.
The AGAAP pro-forma Forecast has been prepared on the basis of a number of estimates and assumptions
regarding future events and actions as set out in Section 5.3.2.2. Such assumptions are subject to business,
economic and competitive uncertainties and contingencies, many of which are beyond the control of the Group
and the Directors. Babcock & Brown currently relies on transactions to generate the majority of its revenue
across a range of Business Units in five separate Business Groups. In particular, the Forecast Net Revenue has
been prepared on the basis of certain assumptions in relation to the:
• Expected scale and transaction mix of the portfolios of various Business Units
• Probability of a large number of potential future transactions occurring within the Forecast Period
Approximately 80% of the Forecast Net Revenue for 2005 relates to potential transactions that have been
specifically identified by Babcock & Brown as likely to generate this revenue. However, the nature of Babcock
&Brown’s business, coupled with the application of AGAAP in relation to certain future events and actions,
introduces additional uncertainties in relation to the AGAAP pro-forma Forecasts.The most material of these are:
• The probability, Forecast Net Revenue and timing of completion of specifically identified potential
transactions occurring is not always easy to assess as these transactions are in varying stages of development
• Transactions not specifically identified will occur in the Forecast Period and the Net Revenue generated by
those transactions may be greater or smaller than the approximate 20% of the Forecast Net Revenue not
based on specifically identified potential transactions
• Babcock & Brown’s future decisions to invest equity in transactions in which they are involved can result in
those investments being equity accounted or consolidated for accounting purposes
• The timing of Babcock & Brown’s future decisions to dispose of equity or related investments and the
forecast profit or loss on those disposals
• As a consequence of Babcock & Brown’s investment in entities that are equity accounted or consolidated,
deferred income may arise – refer Section 5.3.2.2
• The potential impact that changes in tax laws could have on certain aspects of the Group’s activities
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