Challenger Limited · ASX:CGF
Challenger — Challenger Infrastructure Fund — H1 2006 Earnings Presentation
31 slides from Challenger's earnings presentation, Feb 24, 2006
Slide 1: Challenger Infrastructure Fund (CIFCA) Half-year results to 31 December 2005
Challenger Infrastructure Fund (CIFCA) Half-year results to 31 December 2005 Steve Bickerton, Chief Executive Paul Rogan, Chief Financial Officer 24 February 2006
Slide 2: Key messages
Key messages On track to deliver on Full Year Forecasts Asset performance in line with our expectations Highly predictable distributions with growth potential Capacity to execute - flexible approach - experienced Infrastructure team - robust investment criteria - alignment to Challenger Grou
Slide 3: Financial Highlights
Financial Highlights Period* ended 31 December 2005 PDS Forecast Actual * Full Year $m $m EBITDA 26.9 46.6 Operating cash flow 20.8 28.6 Distribution (cents per unit) 6.05 14.2 * For the period from 19 August to 31 December 2005 3
Slide 4: Contents
Contents Fund Overview 5 Asset Overview & Update 9 Financial Results 16 Strategy and Outlook 22 4
Slide 5: Fund Overview
€2 challenger \ Fund Overview
Slide 6: Responsible Entity Strengthened
Responsible Entity Strengthened • Key appointments - Majority of independent directors - Appointment of Ian Moore and Geoff McWilliam Class A Securities Class B Securities 62.5% post 37.5% post capital capital raising raising Responsible Entity CIF1 CIF2 Manager (CLIL) (CMSL) 80% 6.3% 5.8% 8.6% 13%
Slide 7: Challenger Infrastructure Fund to Date
Challenger Infrastructure Fund to Date August ‘05 September ‘05 October ‘05 November ‘05 December ‘05 Rights Bid for PD Interim Acquisition IPO Issue Of Ports Distribution Inexus $630m raised UK’s leading $210m raised $130m bid 6.05c independent gas Acquisition of 3 transporter Partial Controlling s
Slide 8: Fund Profile
Fund Profile CIF was established to provide investors with access to a global portfolio of infrastructure and to deliver long term predictable yields with growth Attribute Yield √ 9.5% for the year ending 30 June 2005 Interim distribution of 6.05c with final of 8.15c in line with PDS Growth √ Inexus
Slide 9: Portfolio
Portfolio Asset Equity Equity Consortium Description of ownership Investment Business Inexus 80.1% $A363m Arranged by Challenger, Leading independent gas with CIF the lead transporter and investor. Colonial independent utility (13.2%) and Inexus infrastructure provider in management (6.7%) the Unite
Slide 10: Asset overview and Update
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Slide 11: Inexus Summary
Inexus Summary Inexus is the leading independent gas transporter in the UK • Revenue is derived primarily from the ownership of the Last Mile of gas pipes and electricity cables (fully linked to inflation) • Focuses primarily on providing services to new build domestic housing estates • Inexus’ cust
Slide 12: Inexus - Update
Inexus - Update • Integration now complete • Record connections and sales in year ending December 2005 - 76,000 sales (66,000 gas,10,000 electricity) - 49,000 connections • Electricity growth potential demonstrated • Double digit growth in EBITDA 12
Slide 13: Arqiva - Overview
Arqiva - Overview Arqiva – the leading owner and operator of broadcast infrastructure in the UK • Services for TV and radio broadcasters, including distribution transmission, digital multiplexing and a range of satellite services • Provides all analogue commercial TV transmission (BBC networks are s
Slide 14: Arqiva - Update
Arqiva - Update •Overall the business continues to perform well against forecasts •Business continues to pursue growth opportunities in Analogue and Digital radio •Increase in revenues has been driven by acquisition of Inmedia •DSO continues to progress well – next stage negotiation/ contracts •Head
Slide 15: UK Gas Distribution Networks
UK Gas Distribution Networks Distribution The Distribution Networks are Networks responsible for owning, maintaining and extending the network of pipes and associated infrastructure required to distribute gas within designated geographic areas. Business The networks act as regional monopolies Model
Slide 16: Gas Distribution Networks
Gas Distribution Networks Wales & West Utilities Northern Gas Networks Geographic Includes the whole of Wales and a large Extends south from the Scottish border to Region part of the south-West of England. The South Yorkshire and has coastlines on both network comprises approximately the east and we
Slide 17: Financials
€2 challenger Financials
Slide 18: Result
Result Period ended 31 December 2005 PDS Forecast Actual Full Year $m $m Investment revenue 15.5 14.9 Gross profit 19.1 49.5 Net revenue 34.6 64.4 Operating expenses (7.7) (17.8) EBITDA 26.9 46.6 Depreciation & amortisation (5.9) (13.3) Unrealised losses on hedging** (14.7) (3.7)* EBIT 6.3 29.6 Inte
Slide 19: Seed Assets
Seed Assets Result for the period from 19 August to 31 December 2005 PDS Forecast Actual Full Year $m $m Investment revenue - Arqiva 8.6 5.4 - North DN 3.4 1.7 - Wales & West DN 2.5 7.8 - Other 1.0 - Total revenue 15.5 14.9 Operating expenses (1.5) (3.3) EBITDA 14.0 11.6 Unrealised gains on hedging
Slide 20: Inexus
Inexus Result for the period from 1 September to 31 December 2005 PDS Forecast Actual Full Year $m $m Transportation income 21.1 56.7 Other income 0.3 - Cost of sales (2.3) (7.2) Gross profit 19.1 49.5 Operating expenses (6.2) (14.5) EBITDA 12.9 35.0 Depreciation and amortisation (5.9) (13.3) Unreal
Slide 21: Cash Flow
Cash Flow Period ended 31 December 2005 PDS Forecast Actual Full Year $m $m NPAT (15.4) (28.4) - Non cash items * 20.6 20.6 - Working capital 15.6 36.4 Cash flow from operations 20.8 28.6 Inexus debt drawdowns and prefs 1,169.5 1,198.6^ Acquisition of Inexus (1,160.8) (1,160.8)^ Entitlement offer pr
Slide 22: Balance Sheet
Balance Sheet As at 31 December 2005 Consol. Flexible growth funding options $m 2nd instalment due 21 August 2006 - $420m Cash 67 Receivables 440 Co-investment agreement with Challenger Life Fixed assets 243 Seed Assets 291 Inexus Goodwill 968 Total Assets 2,009 Reconciliation $/sec Hedging (net)
Slide 23: Strategy and Outlook
€2 challenger j Strategy and Outlook
Slide 24: CIF – Investment Management Approach
CIF – Investment Management Approach Experienced Robust Focus Infrastructure Investment Team Criteria Capacity Quality Assets 10 professionals Regulated / To contracted revenues Attractive Value Relevant diverse Execute background Long term Global / Sector predictable cashflow diversification Global
Slide 25: Infrastructure Team
Infrastructure Team CEO Asset Ops Investor Origination M&A Management CFO Manager Relations Global Multi Active Asset Finance Operations Investor & Strategy Disciplinary Media Relations Team Management Legal Registry Research - Advising Presentations - Structuring Board Compliance Distributions Busi
Slide 26: Global investment opportunities
Global investment opportunities Challenger has identified significant potential investment opportunities North America UK Europe Australia Target •Transport •PPP/PFI •Transport •Transport sectors •Energy •Regulated •Utilities •Utilities utilities •PPP/PFI •PPP/PFI Specific •Power •Regulated gas•Regi
Slide 27: Outlook for 2006
Outlook for 2006 • On track to meet full year distribution forecasts • Assets performing well • Strong pipeline of investment opportunities • Financial capacity and flexibility to meet growth targets 27
Slide 28: Key messages
Key messages On track to deliver on Full Year Forecasts Asset performance in line with our expectations Highly predictable distributions with growth potential Capacity to Execute - flexible approach - experienced Infrastructure team - robust investment criteria - alignment to Challenger Grou
Slide 29: Thank you
Thank you Contact Details: Steve Bickerton Tanya Atkins Chief Executive Head of Shareholder & Media Relations Tel: 61–2–9994 7327 Tel: 61-2-9994 7125 29
Slide 30: Disclaimer
Disclaimer — Information contained in this publication is current as at 31 December2005 unless otherwise specified and is provided by Challenger Listed Investments Limited (ABN 94 055 293 644) (AFSL 236887) (“Challenger”), as Responsible Entity of the Challenger Infrastructure Fund. This document ha
Slide 31: Appendix: Inexus swap hedging
Appendix: Inexus swap hedging • CIF has entered into three interest rate swaps to hedge Inexus long term exposure to interest rates • Swaps are 25 years in duration reflecting the fact that Inexus will remain geared well beyond the expiry of the current debt facilities (which run for 5 years) • Swap
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