Challenger consolidates stock

Challenger Financial Services Group (CFSG) shareholders voted at the group’s annual general meeting (AGM) yesterday to a resolution to consolidate the firm’s shares as part of a one for five share plan.

The group said the move was to facilitate better capital management and to reduce the 2.8 billion shares Challenger has available in the market at present.

Trading in the amalgamated securities began today, however this was done on a deferred basis as the trades were conducted on a T+3 (trade plus three days) basis.

“The directors believe consolidation will allow for improved capital management of the company and increase the nominal value of Challenger shares to levels which more commonly reflect Challenger’s size,” Challenger chairman Peter Polson said at yesterday’s AGM.

Polson said the board also anticipated that consolidation would reduce the long-term volatility on Challenger’s share register and improve the quality of trading in the group’s shares.

Also speaking at the firm’s first AGM, after listing late in 2003 on the Australian Stock Exchange, Challenger chief executive Mike Tilley outlined a number of key initiatives the group would be pursuing in 2005.

The head of the group said he would look to further develop the strategic direction of the funds management business, and specifically would look to cut costs by reducing the number of registry systems used from seven to one and the closing a number of products that lacked scale and are unprofitable.

Tilley said the group has also set clear financial objectives and budgets for its three business units Challenger Life, Challenger Wholesale Finance and Challenger Wealth Management and will continue to focus on growing each division.

“We operate within strict financial criteria and to this extent all businesses and projects are required to achieve 18 per cent return on net assets within three years,” Tilley said.