Lead Manager

BABCOCK & BROWN PROSPECTUS
7.1.25 Accounting standards and reported income
Babcock & Brown operates in a variety of jurisdictions, many with different accounting standards.The difference
in accounts produced under US GAAP, Australian GAAP and Australian IFRS may be considerable. Please refer
to Section 5.4.4 for a discussion of the impact of reporting under Australian IFRS.
Babcock & Brown’s accounting policies and methods are fundamental to how it records and reports its financial
position and results of operations. Babcock & Brown’s management must exercise judgement in selecting and
applying many of these accounting policies and methods so that not only do they comply with generally
accepted accounting principles but that they also reflect the most appropriate manner in which to record and
report Babcock & Brown’s financial position and results of operations.
In some cases, management must select an accounting policy or method from two or more alternatives, any of
which might be reasonable under the circumstances yet might result in Babcock & Brown reporting materially
different outcomes than would have been reported under a different alternative.
For reporting periods beginning on or after 1 January 2005, Babcock & Brown must comply with International
Financial Reporting Standards as issued by the Australian Accounting Standards Board (Australian IFRS). Pending
standards have been released, with further standards to come; and as such, Babcock & Brown is continuing to
evaluate the impact that these new standards will have on its results. Consequently, reported results beyond 2005
could materially vary to those reported under current Australian Accounting Standards and IFRS contained
herein.
7.1.26 Documentation risk
Babcock & Brown enters into a number of highly structured transactions that require detailed documentation.
As a result, the risk of dispute over interpretation or enforceability of the documentation, or errors in preparation
of the documentation may be higher than for other investments.
7.2 GENERAL RISKS
7.2.1 Stock market fluctuations
The price of the Shares on ASX may rise or fall due to numerous factors which may affect the market
performance of Babcock & Brown, including:
• General economic conditions, including inflation rates and interest rates
• Variations in the local and global market for listed stocks
• Changes to government policy, legislation or regulation
• Inclusion or removal from major market indices
• The nature of competition in the markets in which Babcock & Brown operates
• General operational and business risks
In particular, the Share prices for many companies have in recent times been subject to wide fluctuations, which
in many cases may reflect a diverse range of non-company specific influences such as global hostilities and
tensions, acts of terrorism and the general state of the economy. Such market fluctuations may materially
adversely affect the market price of the Shares.
No assurances can be made that Babcock & Brown’s market performance will not be adversely affected by any
such market fluctuations or factors. None of Babcock & Brown, or its Directors or any other person guarantees
Babcock & Brown’s market performance.
145