A net profit of $7 million by its financial planning arm, including Genesys Wealth Advisers, has helped Challenger lift its group net profit by 12.3 per cent to $134.3 million in the year ended June 30, up from $119.6 million for the previous year.
The division’s earnings before interest and tax for 2005-06 was realised on a net income of $43 million, up 10.3 per cent, while expenses, were contained to 5.9 per cent, growing to $36 million, despite an extensive brand campaign launch for Genesys.
Challenger chief executive officer Mike Tilley said “improvements in operating efficiency had been achieved during the year, following the merger and integration of Genesys, with further gains expected in 2007 and 2007-08”.
Overall group revenue rose 12.7 per cent for 2005-06 to $2.33 billion from $2.07 billion, while operating profit was up 10 per cent to $181 million from $164.5 million.
It declared a final dividend of 5 cents, fully franked, taking the total payout for the year to 7.5 cents, a 50 per cent increase on the previous year.
Tilley said the Challenger group result was achieved through strong growth in net income, while expenses before significant items grew at a slower rate
“The growth in revenues achieved this year was driven by our commitment to quality products and customer-focused service; we believe these scale benefits are sustainable.”
Challenger’s funds management division realised a net profit of $24 million in 2005-06, turning around a loss of $10 million in 2004-05, while funds under management increased by 21.6 per cent to $12.9 billion for the 2005-06.
The division’s performance for the year was attributed partly to an expansion of its boutique strategy, with the launch of Five Oceans Asset Management and GreenCape Capital.
The launch of listed and unlisted infrastructure and property funds, and a strong growth in fee income, helped to push the asset management division’s net income up by 29.2 per cent for 2005-06 to $177 million.
Fee income as a proportion of income was up 240 per cent during the year to $51 million, while expenses increased from $37 million to $54 million, reflecting the investments in the infrastructure and property funds.
Meanwhile, Challenger has commenced investor briefings for a proposed initial public offering of units in an ASX-listed externally managed property vehicle.
The proposed vehicle would initially acquire an interest in a portfolio of Australian property assets from Challenger, with an expected value of more than $500 million.
Challenger will consider subscribing for a stake of no more than 40 per cent of units in the vehicle, a media release said.
