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Business Description: Challenger Limited (CGF, formerly Challenger Financial Services Group Limited) is an investment management firm focusing on providing Australians with financial security in retirement. Challenger operates two core investment businesses, an APRA regulated Life division and a fiduciary Funds Management division. As at September 2012 funds under management was $35.2bn.
Strategy Analysis: Annuities are in demand by retail investors moving into retirement and CGF is well placed to take advantage of this trend. Changing demographics clearly complement the business model. The two business divisions are aligned to changes in the industry and are well positioned to take advantage of their small positions in a large market that continues to grow. We expect strong long-term demand for lower-risk, lower-cost income stream products, with the industry focus on new products and expanded distribution. CGF‚Äôs simplified business model is based on annuity sales from its Life business and Funds Management, with around $35bn of funds and assets under management after selling most of its mortgage management business in late 2009. Management expects further growth in fund flows due to growth of existing boutique managers and investing in new managers over coming years.
Challenger reported NPAT of $222.0m for the half-year ended 31 December 2012. The increase in statutory profit reflects a significant improvement in investment experience due to improved global sentiment leading to a contraction in credit spreads. Revenues from ordinary activities were $810.9m, up 21.7% from the same period last year. Diluted EPS was 41.5 cents compared to 3.8 cents last year. Net operating cash flow was $261.0m compared to $400.6m last year. The interim dividend declared was 9.5 cents compared with 7.5 cents last year.
The Age 18/05/2013 |
As Australia's major retailers increase their online sales channels, pouring millions into their websites, they could face new competition from China's booming e-commerce industry.
The Age 18/05/2013 |
Most of those who take a political approach to the budget assume that if it's in deficit, the way you get it back to surplus is to cut government spending or, if you're a really bad person, increase taxes. They forget it's the budget itself that's supposed to do the heavy lifting.
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