Challenger Limited · ASX:CGF
Challenger — Shareholder Meeting (November 2011)
24 slides from Challenger's shareholder meeting presentation, Nov 22, 2011
Slide 1: Annual General Meeting - Chairman's and CEO's Addresses
CHALLENGER LIMITED ANNUAL GENERAL MEETING - CHAIRMAN’S AND CEO’S ADDRESSES 22 NOVEMBER 2011 10:30AM DOCKSIDE, COCKLE BAY ROOMS 1 & 2 THE BALCONY LEVEL, COCKLE BAY WHARF, DARLING PARK SYDNEY Chairman’s Address This morning I will provide a brief overview of the company‟s financial performance, strong
Slide 2: Financial Result
Financial Result During the year, Challenger again saw a continued rise in its normalised net profit after tax to $248m, up 7% on 2010 and backed by an underlying operating cash flow of $276m. Normalised earnings of 51.7 cents per share represented a 14% increase on 2010, reflecting stronger earning
Slide 3: Risk management and board changes
It is a testament to our talented management team, and their strong risk management skills and experience, that our business has weathered some of the most testing financial environments in decades. For example we have maintained a strong balance sheet within our Life Company. Our portfolio is diver
Slide 4: CEO succession
I have worked with Dominic for over 8 years and in that time he has distinguished himself; making a truly substantial contribution to Challenger. His deep understanding of capital markets and foresight in recognising the retirement income opportunity, has underpinned Challenger‟s ongoing success. At
Slide 5: Remuneration
Remuneration The topic of executive remuneration remains a very important one for the shareholders of public companies in Australia and globally. At last year‟s annual general meeting in November 2010, Challenger received a substantial negative vote in relation to our remuneration report. I can assu
Slide 6: Remuneration and shareholder returns
publishing the total remuneration actually awarded to each KMP in the current year; and disclosing the basis on which executives are assessed and rewarded with short term incentives and the manner in which the total short term incentive pool is calculated. You will see that overall awarded remunerat
Slide 7: Five Year Scorecard (CEO address)
2011 saw our business experience significant growth which in turn has driven record financial results. Normalised net profit after tax rose 7% to $248m but more importantly our normalised earnings per share, rose 14% to 51.7 cents per share. This reflects ongoing accretion achieved via our on-market
Slide 8: Distribution, Product & Marketing
[Slide 3 – Distribution Product & Marketing] We aggregated the Distribution, Product and Marketing functions into a separate division, led by Paul Rogan, reporting directly to me. Previously these functions had been spread across different business units. With the investment we were making in growin
Slide 9: Longevity dilemma and DLAs
Currently the „average person‟ lives to circa 85 years, so the average financial plan is often designed to last that long. Therefore, by definition 50% of individual retirees live longer than the average. So how do they assure that they will have something more than the age pension post life expecta
Slide 10: Australian Superannuation – phases of growth
The global financial crisis took us abruptly into phase two of industry development. [Slide 7 – Australian Superannuation – phases of growth] Here we see a confluence of a number of themes that are changing the course of the industry. [Slide 8 – Market volatility / changing risk preferences] For the
Slide 11: Outlook
end of the spectrum. That is, on large core strategies with low fees and smaller boutique offerings looking to add significant alpha for a higher fee With these structural changes we see a bright future for Challenger and believe the Company is strategically well placed into the future. Outlook [Sli
Slide 12: Handback to Chairman
For those of you here that do not know Brian, he has a long history with Challenger dating back to 2003 and has also held senior roles at Bankers Trust, Macquarie Bank, Zurich Capital Markets and JP Morgan. I have worked closely with Brian for more than 17 years and I am confident he will excel and
Slide 13: Challenger – retirement income strategy
Challenger – retirement income strategy
Slide 14: Record financial metrics
Record financial metrics • Performance – as at 30 June 2011 – Normalised NPAT of $248m up 7%; Normalised EPS of 51.7 cps up strongly, increase of 14% – Statutory NPAT of $261m down 7% – Normalised cost to income ratio down to 37% (from 41%) – Final dividend declared of 9.5 cps unfranked up 12%, full
Slide 15: Five year scorecard
Five year scorecard Annual Sales of Guaranteed Products Earnings / Normalised EPS (bars represent sum of the four previous quarters) 350 60 2,500 300 50 2,000 250 40 cps 200 1,500 30 $m 150 $m 1,000 20 100 10 500 50 0 0 0 2006 2007 2008 2009 2010 2011 Jun 07 Dec 07 Jun 08 Dec 08 Jun 09 Dec 09 Jun 10
Slide 16: Distribution Product & Marketing
Distribution Product & Marketing • Distribution Product & Marketing division Annuity created in January 2011 Distribution to: – align activities focused CRM and Boutique Analytics Distribution on increasing sales for Life and Funds Distribution, Management Product & Marketing – drive greater product
Slide 17: The "average" retirement dilemma
The “average” retirement dilemma • Circa 1 in 7 will live close to their “average life 20 year balanced fund returns CPI + 8% expectancy” ^ • Circa 1 in 3 will see 20 year returns close to long Average life CPI + 4% expectancy + average returns term averages ^^ CPI (2)% 65 years 85 years 100+ years
Slide 18: Australian superannuation – phases of growth
Australian superannuation – phases of growth 3 2 2012 onwards 1 2007 – 2012 • 20 years of baby- boomer retirement still to come • Equity bull market • Realisation – ends superannuation is 1992 – 2007 • Change in about creating an • Establishment / demographics and adequate retirement initial growth
Slide 19: Accumulation focused on growth assets
1. Accumulation focused on growth assets All Ordinaries Index – 1992 - 2011 8000 7000 6000 5000 4000 3000 2000 1000 Stage 2 Phase 1 0 7
Slide 20: Australian superannuation – phases of growth
Australian superannuation – phases of growth 3 2 2012 onwards 1 2007 – 2012 • 20 years of baby- boomer retirement still to come • Equity bull market • Realisation – ends superannuation is 1992 – 2007 • Change in about creating an • Establishment / demographics and adequate retirement initial growth
Slide 21: Market volatility / changing risk preferences
2. Market volatility / changing risk preferences All Ordinaries Index – 1992 - 2011 8000 7000 • Unprecedented 6000 multi-year volatility • Henry Review 5000 • Cooper Review 4000 • Ripoll Review 3000 • Baby boomers begin to retire 2000 1000 Phase 1 Phase 2 0 9
Slide 22: Australian superannuation – phases of growth
Australian superannuation – phases of growth 3 2 2012 onwards 1 2007 – 2012 • 20 years of baby- boomer retirement still to come • Equity bull market • Realisation – ends superannuation is 1992 – 2007 • Change in about creating an • Establishment / demographics and adequate retirement initial growth
Slide 23: Baby boomers control over 60% of pension assets
3. Baby boomers control over 60% of pension assets All Ordinaries Index – 1992 - 2011 8000 Total Superannuation Pool (2010^) ~A$1.4 trn 7000 6000 5000 4000 Pre-baby boomers Baby boomers (20 - 44 yrs) (45 - 65 yrs) 3000 Post-baby boomers (> 65 yrs) 2000 1000 Phase 1 Phase 2 Phase 3 0 11 Source: APRA,
Slide 24: Outlook
Outlook