Challenger Limited · ASX:CGF
Challenger — Challenger Infrastructure Fund — Investor Presentation (October 2005)
31 slides from Challenger's investor presentation, Oct 19, 2005
Slide 1: Challenger Infrastructure Fund 1:3 Non-renounceable Entitlement Offer
lle challenger Financial Services Group Challenger Infrastructure Fund 1:3 Non-renounceable Entitlement Offer 19 October 2005
Slide 2: Important notice
€2 challenger Financial Services Group he information in this document is provided for informational purposes only in relation to the marketing to certain wholesale nvestors of an Entitlement Offer for Challenger Infrastructure Fund (“CIF”) and is subject to change without notice. Nothing contained
Slide 3: Agenda
Agend oo . Executive Summary . Structure of the Entitlement Offer . Acquisition of Inexus Detailed financial forecasts for CIF Pipeline update Au BwWN bs . Timetable and contacts
Slide 4: Executive Summary
pe ee ee 4 WES ol _ . ee LU Gees challenger Financial Services Group oo ie Oe oe LOL LL LL <a CE Executive Summary ee LE
Slide 5: Introduction
€2 challenger Financial Services Group ntroduction.« On 4 eptember 2005, CIF announced it had successfully led a consortium in the acquisition of Inexus Group (Holdings) Limited CInexus’) for an enterprise “ value of £464 million. CIF was the largest investor in the consortium with an interest of 80
Slide 6: Investment highlights of Inexus
challenger Financial Services Group Regulated industry or near monopoly market position » Certainty for 98% of revenue from connections existing at 31 May 2005 until 2018 » Revenues for new connections benefit from a high degree of regulatory certainty until 2014 under the RPC regime « Market leader
Slide 7: Diversification of CIF's investment portfolio
| €2 challenger Financial Services Group Diversification of CIF’s investment portfolio Increased forecast cash Distributions and targeted return Increased tax deferred proportion of Distributions CIF’s portfolio to deliver reliable cashflow Continued flexibility to pursue robust pipeline of investme
Slide 8: Improved portfolio diversification
€2 challenger Financial Services Group ved por fo diversificat } ds gro assets _ Majority-owned Minority stake assets 27% ease wee Classic utility The ntl Broadcast North DN UK Broadcast Essential 19% 13% Infrastructure infrastructure 19% with growth 73% Reliable cashflow Regulated Revenue 98% Regul
Slide 9: Returns being generated by CIF are attractive
€2 challenger Financial Services Group Returns being g nerated by CIF are attractive Indicative annualised cash return : »~--- On New Class A Securities from Final Allotment Date to 30 June 2006: 13.6% p.a. . — On Class A Securities from IPO and Entitlement Offer to 30 June 2006: 10.5% p.a. “~~ — Fo
Slide 10: Offer
ona j wy A ia ay i ay LD @ oe 2 challenger YY) y yO Financial Services Group os 7 Offer oe nt eae Gk oP
Slide 11: Offer size and structure
Offer size and eligibility Structure Oversubscriptions Challenger Life intention ii €2 challeng er Financial Services ns sue of approximately 60 million New Class A Securities Approximately $210 million, fully paid Offer open to Eligible Holders (at Record Date) in Australia and New Zealand 1:3 pro
Slide 12: Acquisition of Inexus
ESS SI ue A ENO ee LE Ly y ae fH to : ae Lo age = #2 challenger Financial Services Group 2 nl Vn 3. Acquisition of Inexus
Slide 13: Inexus investment highlights
&2 challenger Financial Services Group « Almost twice the cannections of nearest competitor «47% IGT market share and complete national coverage « CIF has retained and incentivised « Strong order book visibility with existing management team via 142,000 gas connections contracted Management Equity I
Slide 14: Market leader
€2 challeng er Financial Services ns! rket leader 47% estimated market share of existing IGT connections at 31 May 2005, nearly twofold its nearest “eTnexus GTC tm BCGL @Other competitor e 464,000 gas connections built and contracted as at 31 August 2005 ~ 322,000 existing ~ 142,000 contracted e Nat
Slide 15: 17% CAGR in connections in the three years to December 2004
€2 challenger Financial Services Group 17% CAGR in connections in the three years to 31 December 2004 _.,*. Stable forward order book, with 75% expected to be built in next three years Gas built Electricity built @Gas Contracted w Electricity Contracted 400 150 350 120 300 250 30 200 150 50 a4 110 a
Slide 16: Prospects are strong: UK new build housing
pects are 200,000 150,000 100,000 50,000 1997/98 1998/99 Source: Office of the Deputy Prime Minister website, Statistics, Table 203 16 5 year average 4 1999/00 2000/01 Housing 2001/02 2002/03 2003/04 €2 challenger Financial Services Group UK new build housing forecast to grow beyond 169,000 p.a. (la
Slide 17: Prospects are strong: electricity and dual fuel
€2 challenger Financial Services Group ‘ospects are . New business opportunity in electricity connections — Electricity sales twice that of gas business at same stage of development Inexus is first to market with dual fuel offering — [nexus is the only active IGT in the UK licensed to provide a one-
Slide 18: Regulated revenue certainty
€2 challenger Financial Services Group * 98% of gas revenues and 90% of contracted gas revenues from connections as at 31 May 2005 are fixed in real terms until 31 December 2018 (contracts signed prior to 1 January 2004) — Thereafter, the revenues migrate to Relative Price Control (“RPC”) and benefi
Slide 19: Once built, connections are highly profitable
Once built, co net One are highly 19 _ Excellent customer profile consisting @2 challenger of large UK gas shippers Historically, strong EBITDA margins “eLondon energy @ Powergen Majority of the cost base is m Scottish power w British Gas trading . . “ Other comprised of overheads which are either f
Slide 20: Capex only committed when revenue is secured
after 20 @ challenger . . with capex only committed ; is secured _ Capex is discretionary and revenue driven Capex is only committed on an order once a contract is executed with the developer The developer is typically responsible for excavation Completion rate has been historically very high at 99.
Slide 21: Inexus financial summary
an r Inexus 0 Year end Year end 31 December 2602 2603 2604 2065F 3i December 2602 2063 2004 2065F ~ Asset ownership 14,163 17,631 21,445 24,906 Connections built transportation income Opening balance 152 188 242 290 Other trading income 1,419 1,539 1,467 1,426 Order book build-out 26 54 48 49 Total
Slide 22: Detailed financial forecasts for CIF
EEUU SSSA s éh KDI S SISSON i" Sg L220 i aE | . + challenger Co) SSE | y Wg). Financial Services Group VW ee 7 LM Le WE Le We ee 7 . Detailed financial forecasts - for CIF oe nt eae Gk a
Slide 23: Sources and applications of funds
€2 challeng er Financial Services ns Applications Amount (A$m) First Instalment 105.0 Payment of interest on bridging 1.0 loans Second Instalment 105.0 Repayment of Challenger bridging 69.2 loan Part repayment of CBA and Calyon 28.2 bridging loans Estimated Entitlement Offer costs 6.6 Application of
Slide 24: Expected returns from Seed Assets and Inexus
Ex pected retur _.. _ €2 challenger rom Seed s and Inexus pe . 410 months to 42 months to All amounts in $ million, unless otherwise stated 30 June 2006 30 June 2007 Distributions from Seed Assets Araiva 16.8 9.3 |S onorth on 18 6.0 - ... Wales & the West DN 7.8 10.3 26.4 25.6 Distribution from Inex
Slide 25: Pro forma balance sheet as at September 2005
€2 challenger Financial Services Group As at 1 September 2005 All amounts in $ million Seed Assets Inexus Consolidated Assets Cash 8.1 17.9 26.0 Receivables 316.3 119.3 435.6 Work in progress - 3.7 a7 Fixed Assets - 232.1 232.1 Available for sale financial assets 293.5 - 293.5 Goodwill > 992.5 992.5
Slide 26: Income statement: directors' forecast
1e statement challenger Financial Services Group Directors’ forecast for the 10 months ending 306 June 2006 All amounts in $ million Seed Assets Inexus Consolidated Revenue Investment revenue - Argiva 5.4 - 5.4 - North DN 1.7 - 17 - Wajes & the West DN 7.8 - 78 Total Investment revenue 14.9 - 14.9 T
Slide 27: Pipeline update
ie ON om NOH: LL Lo oie) mil es mm nn a, ye La Li LL Los LOLs is 0 . Pipeline update €2 challenger Financial Services Group ee LE
Slide 28: Target sectors by region
€2 challenger Financial Services Group North America Europe ‘BNE i Ea +. Toll roads «> + PPP/PFE «. Toll roads «.. Transport Target + Power +. Regulated +. Airports «Utilities 7 ) F sectors utilities utilities + PPP/PFI + PPP/PFI w Broadcast + Broadcast + Broadcast Power Regulated gas. +: Regional +
Slide 29: Timetable & key contacts
Li Lae Ls La Le 2 challenger Financial Services Group on . Bee 2 ae Ei Ae 7 Lo we 5. Timetable & key contacts 7 ee A iy OE oe e ag iL
Slide 30: Indicative timetable
| €2 challenger Financial Services Group PDS lodged 19 October 2005 » Institutional Entitlement Offer opens 19 October 2005 Institutional Entitlement Offer closes 20 October 2005 Record date for Entitlement Offer 7.00pm on 24 October 2005 Retail Entitlement Offer opens 25 October 2005 Early Retail A
Slide 31: Contact information
Contact information JPMorgan Australia Limited — Paul Ryan Tel: 612 9220 3158
Challenger Infrastructure Fund — Investor Presentation (October 2005) on 6ix