Challenger Limited · ASX:CGF
Challenger — Challenger Financial Services Group — H1 2008 Earnings Presentation
27 slides from Challenger's earnings presentation, Feb 25, 2008
Slide 1: Interim results to 31 December 2007
For personal use only Challenger Financial Services Group Limited Interim results to 31 December 2007 Mike Tilley, Chief Executive Officer 25 February 2008 1 Challenger Group Six Months Ended 31 December 2007 Positioned for the long term • Resilient performance in challenging market conditions – Con
Slide 2: Resilient financial performance
Challenger Group Six Months Ended 31 December 2007 Resilient financial performance 250 • Strong revenue quality 200 – fee income 71% of total $m 150 income (up 25% on pcp) For personal use only 100 – recurring AUM fees 84% of total fee income 50 1H05 2H05 1H06 2H06 1H07 2H07 1H08 Fee incom e (perfor
Slide 3: Mortgage business - continued profitability
Challenger Group Six Months Ended 31 December 2007 Mortgage business - continued profitability • EBIT $52m up 10% excluding Choice acquisition • 3 businesses – distribution, commercial and residential For personal use only • Distribution and commercial lending – performing on or ahead of plan – brok
Slide 4: Financial highlights
For personal use only Challenger Financial Services Group Limited Interim results to 31 December 2007 Paul Rogan, Group Chief Financial Officer 25 February 2008 7 Challenger Group Six Months Ended 31 December 2007 Financial highlights % Mvt – half Financial Performance 1H08 1H07 on half Trend Assets
Slide 5: Key performance trends
Challenger Group Six Months Ended 31 December 2007 Key performance trends 350 60% 60.0 300 For personal use only 50% 50.0 250 40% 40.0 200 $ billion $ million 30% 30.0 150 20% 20.0 100 10% 10.0 50 0 0% 0.0 2H06 1H07 2H07 1H08 2H06 1H07 2H07 1H08 Net Income Expenses Assets under management NPAT Cost
Slide 6: Funds Management financial highlights
Funds Mortgage Asset Financial Mgmt Mgmt Mgmt Planning Six Months Ended 31 December 2007 Financial highlights % Mvt – half Financial Performance 1H08 1H07 on half Trend For personal use only Funds Under Management1 $19.0bn $15.5bn 23% Ï Net Income $56m $55m 2% Ï Expenses $37m $38m -3% Ð EBIT $20m $1
Slide 7: Funds Management key value drivers
Funds Mortgage Asset Financial Mgmt Mgmt Mgmt Planning Six Months Ended 31 December 2007 Key value drivers of the result FUM by asset class – December 2007 13% • Slower FUM growth in Q2 due to 19% Mortgage funds overall market decline, however 13% Fixed interest & continue to grow market share cash
Slide 8: Mortgage Management financial highlights
Funds Mortgage Asset Financial Mgmt Mgmt Mgmt Planning Six Months Ended 31 December 2007 Financial highlights % Mvt – half Financial Performance 1H08 1H07 on half Trend For personal use only Mortgages Under Management $23.3bn $21.6bn 8% Ï Mortgages Under Administration $22.8bn - large Ï Net Income $
Slide 9: Mortgage Management key value drivers
Funds Mortgage Asset Financial Mgmt Mgmt Mgmt Planning Key value drivers of the result Six Months Ended 31 December 2007 Residential loans book / annualised repayments • Profit excluding Choice up 10% in tough 22.0 30.00% market conditions 20.0 25.00% Annualised repayment% – Profit margins on back-b
Slide 10: Asset Management financial highlights
Funds Mortgage Asset Financial Mgmt Mgmt Mgmt Planning Six Months Ended 31 December 2007 Financial highlights % Mvt – half Financial Performance 1H08 1H07 on half Trend For personal use only AUM – Balance Sheet $5.5bn $3.3bn 67% Ï AUM – Specialised Funds $3.5bn $2.0bn 75% Ï Net Income $133m $141m -6
Slide 11: Asset Management key value drivers
Funds Mortgage Asset Financial Mgmt Mgmt Mgmt Planning Six Months Ended 31 December 2007 Key value drivers of the result • Fee income - a growing Net income composition 1H07 Net income composition 1H08 percentage of net income $22.3 $52.9 For personal use only – base management fees continue to grow
Slide 12: Financial Planning financial highlights
Funds Mortgage Asset Financial Mgmt Mgmt Mgmt Planning Six Months Ended 31 December 2007 Financial highlights % Mvt – half Financial Performance 1H08 1H07 on half Trend For personal use only Funds Under Administration $2.3bn $2.1bn 10% Ï Funds Under Advice $6.8bn $5.6bn 21% Ï Net Income $26m $24m 8%
Slide 13: Operating cash flow and dividends
Challenger Group Six Months Ended 31 December 2007 Operating cash flow • Strong operating $m 1H08 1H07 cash flows For personal use only underpin business Receipts from customers (excl SPV’s) 438.3 321.3 activities Dividends received 65.9 15.8 • Excludes realised Interest received 102.1 52.4 gains Ne
Slide 14: Outlook and Challenger differentiation
For personal use only Outlook Mike Tilley – Chief Executive Officer 25 February 2008 27 Challenger Group Six Months Ended 31 December 2007 Challenger differentiation • Financial assets reside in prudentially regulated environment • ‘Sticky’ annuities - long duration fixed funding cost supports long
Slide 15: Strong operating cash flow
Challenger Group Six Months Ended 31 December 2007 Strong operating cash flow • Group operating cash Mark to market of listed vehicles flow remains very strong For personal use only at $130m Listed vehicle % Holding NAV per unit 31/12/07 22/02/08 • Mark to market of listed vehicles not reflecting CI
Slide 16: Appendices index
For personal use only Appendices 31 INDEX Appendices Challenger Group 31 December 2007 1. Consolidated Profit and Loss 2. Consolidated Balance Sheet 3. Consolidated Cash flow 4. Debt and Gearing 5. Issued share capital 6. Earnings and Dividends Per Share 7. Funds Management 8. Mortgage Management 9.
Slide 17: Consolidated profit and loss
APPENDIX 1 Consolidated profit and loss Challenger Group 31 December 2007 Challenger Group $millions 1H 08 2H 07 1H 07 2H 06 1H 06 Income 1 Total investment income 199.0 180.3 182.2 154 149 Costs of funding (118.9) (70.2) (63.6) (61) (58) Net investment income 80.1 110.1 118.6 93 91 Fees received 42
Slide 18: Consolidated operating cashflow; debt and gearing
APPENDIX 3 Consolidated Operating Cashflow Challenger Group 31 December 2007 Challenger Group $millions 1H 08 1H 07 Operating Activities For personal use only Receipts from customers (excluding SPVs) 438.3 321.3 Dividends received 65.9 15.8 Interest received 102.1 52.4 Net distributions from mortgag
Slide 19: Issued share capital
APPENDIX 5 Issued share capital Challenger Group 31 December 2007 Shares Number of shares 1H 08 2H 07 1H 07 2H 06 1H 06 Ordinary Shares: Quoted (CGF) Opening 554,608,540 550,103,540 544,767,540 537,917,717 534,269,048 Additions (+) i) DRP - - 371,823 530,669 ii) LTIP vested 5,770,000 6,085,000 5,336
Slide 20: Funds Management
APPENDIX 7 Funds Management Funds Management 31 December 2007 Funds Manage ment $millions 1H 08 2H 07 1H 07 2H 06 1H 06 Income Net Investment Income - - - - - Fees received 75.4 69.3 70.1 65 52 Fees & commissions paid (19.0) (16.6) (15.0) (15) (12) Acquisition cost amortisation - - - - - Net fee inc
Slide 21: Mortgage Management - Residential Lending
APPENDIX 9 Mortgage Management Mortgage Management 31 December 2007 Residential Lending MM Residential Lending $millions 1H 08 2H 07 1H 07 2H 06 1H 06 Income Net Investment Income - - - - - Fees received 144.8 142.0 140.4 133 126 Fees & commissions paid (35.7) (35.2) (37.0) (37) (37) Acquisition cos
Slide 22: Mortgage Management - Aggregator Platforms
APPENDIX 11 Mortgage Management Mortgage Management 31 December 2007 Aggregator Platforms MM Aggregator Platforms $millions 1H 08 2H 07 1H 07 2H 06 1H 06 Income Net Investment Income - - - - - Fees received and receivable 37.1 - - - - Fees & commissions paid (29.9) - - - - Acquisition cost amortisat
Slide 23: Asset Management Balance Sheet
APPENDIX 13 Asset Management Asset Management 31 December 2007 Balance Sheet Asset Management Balance Sheet (excl SPV and CIF) $millions 1H 08 2H 07 1H 07 Debt investments and cash 3,195 1,567 1,729 Equity and other investments 247 184 100 Infrastructure investments 992 648 569 Net property investme
Slide 24: Corporate and significant items
APPENDIX 15 Corporate Corporate 31 December 2007 Corporate $millions 1H 08 2H 07 1H 07 2H 06 1H 06 Income Net income 6.5 4.8 2.0 - - For personal use only Expenses Employee expenses (17.9) (18.6) (13.3) (11) (9) Other expenses (6.3) (6.8) (4.0) (6) (3) Total expenses (24.2) (25.4) (17.3) (17) (12) E
Slide 25: Group Assets, Mortgages and Funds Under Management
APPENDIX 17 Group Assets, Mortgages and Funds Under Challenger Group 31 December 2007 Management, Administration and Advice Group Assets, Mortgages and Funds Under Management, Administration and Advice $millions 1H 08 2H 07 1H 07 Asset Management Life Company investment assets Net property investmen
Slide 26: Glossary
APPENDIX 18 Challenger Group 31 December 2007 Glossary Fees & commissions paid MM – trailing expenses paid to mortgage originators. Accounted for on an accruals basis with cash flow closely aligned to accounting treatment. FM – upfront and trailing expenses paid to financial planners and advisers FP
Slide 27: Disclaimer
For personal use only Disclaimer: The material in this presentation is general background information about Challenger Financial Services Group activities and is current at the date of the presentation. It is information given in summary form and does not purport to be complete. It is not intended t
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