Financial Reporting and Compliance - The financial information is presented in United States dollars and prepared in accordance with IFRS, with all figures being unaudited unless otherwise indicated[14]. - The company is exempt from certain U.S. securities regulations as a foreign private issuer, resulting in potentially less publicly available information compared to U.S. domestic registrants[36][37]. - Effective internal controls are crucial, as failures could lead to material weaknesses in financial reporting and affect investor confidence[44][45]. - The accuracy of management's assumptions and estimates is critical, as significant deviations could materially affect financial results[165]. Forward-Looking Statements and Risks - The company emphasizes that historical performance and market data may not be indicative of future results[13]. - Forward-looking statements include expectations regarding operations, financial condition, and anticipated benefits from acquisitions, with terms like "expects" and "anticipates" used to describe these projections[15]. - Risks include general economic conditions, competition, operational risks, and changes in government regulation, which may impact future performance[16]. - The company acknowledges the potential impact of international conflicts, such as Russia's invasion of Ukraine, on its operations[17]. - The ongoing conflict in Ukraine has created significant uncertainty in the global financial system, impacting costs and operations, although direct exposure remains limited[169]. Operational Risks and Market Conditions - The company faces risks related to its healthcare services operations, including reliance on private health insurance funds and relationships with medical practitioners[26]. - The healthcare services operations are facing rising labor costs, particularly in nursing, which is the most significant cost in hospital operations[77]. - The construction operations are highly dependent on the award of new contracts, which are unpredictable and can fluctuate quarterly and annually[83]. - The profitability of construction operations is closely tied to macroeconomic factors, including the impacts of the COVID-19 pandemic and rising inflation[91]. - Climate change may disrupt construction operations due to extreme weather events, impacting the availability and cost of raw materials[92]. - The company is vulnerable to business disruptions from various sources, which could materially affect financial condition and operational results[189]. Financial Structure and Shareholder Relations - The company is dependent on Brookfield for acquisition opportunities and management, which may create conflicts of interest[28]. - Brookfield holds approximately 64.8% of the exchangeable shares, providing it with significant control over the company[125]. - The company may redeem exchangeable shares at any time without the consent of holders, which could occur under specific circumstances[46]. - The company has guaranteed Brookfield Business Partners' obligations under a 1 billion revolving acquisition credit facility, exposing it to credit risk[140]. - The arrangements with Brookfield may contain terms less favorable than those that could have been negotiated with unrelated parties[130]. Market and Economic Factors - Rising inflation rates in 2022 have exceeded target ranges, driven by increased costs in labor, energy, and supply chain disruptions, potentially affecting operational performance[181]. - Economic conditions, including interest rate fluctuations, could adversely impact the company's ability to obtain financing and affect overall financial health[175][179]. - Foreign currency risks are present due to operations in countries with currencies other than the U.S. dollar, which may impact cash flows and service costs[191]. - Political instability in key markets could create economic uncertainty, negatively impacting financial performance and operational relationships[184]. Environmental and Regulatory Challenges - The company is subject to increasingly stringent environmental legislation, which may result in higher operational costs and affect growth prospects[207]. - Climate change-related regulations may increase the company's regulatory compliance burden and impact its financial performance[210]. - Environmental damage risks and compliance costs with environmental laws could materially impact the company's financial performance[205]. Acquisition Strategy and Competition - The group operates in a highly competitive market for acquisition opportunities, facing competition from larger investment funds and companies[162]. - The group's acquisition strategy may involve acquiring distressed companies, which carries substantial financial and business risks[160]. - The company may face challenges in sourcing suitable investment opportunities due to inflationary pressures and economic conditions[181]. Insurance and Liability Risks - The company maintains insurance coverage for healthcare services operations, but future availability and adequacy of coverage are uncertain[78]. - The company faces challenges in obtaining necessary insurance, which could increase overall risk exposure and operational expenses[194]. - Labor disruptions and unfavorable collective bargaining agreements could significantly disrupt operations and increase labor costs[195].
Brookfield Business (BBUC) - 2022 Q4 - Annual Report