CHALLENGER LIMITED — Capital/Financing Update 2003

23 December 2003

Challenger Financial Services Group Limited ACN 106 842 371

Sydney

Level 41, Aurora Place 88 Phillip Street Sydney NSW 2000 Australia www.challenger.com.au

telephone: 02 9994 7000 facsimile: 02 9994 7777

Adrian Smythe Senior Companies Advisor Australian Stock Exchange Limited Exchange Centre Level 6, 20 Bridge Street SYDNEY NSW 2000

Dear Mr Smythe

CHALLENGER FINANCIAL SERVICES GROUP LIMITED - ADMISSION TO THE OFFICIAL LIST

We refer to your letter sent to Mr Garry Besson of Gilbert + Tobin dated 15 December 2003 (Letter), in relation to the application for admission to the Official List by Challenger Financial Services Group Limited (Challenger).

As you are aware from the Announcement which was made on 22 December 2003 to ASX by CPH Management Limited (as responsible entity of Challenger Financial Services Group), the Restructure Resolutions were passed by Unitholders.

The purpose of this letter is to comply with the various conditions and undertakings set out in the Letter.

• 1. A copy of the Court Order made on 19 December 2003 approving the Scheme, referred to in clause 1.1 of the Letter, is attached.
• 1. Pursuant to paragraph 1.2 of the Letter, we advise ASX that all conditions precedent to the implementation of the restructure whereby Challenger becomes the successor entity to Challenger Financial Services Group (other than ASX agreeing to admit Challenger to the Official List and to quotation of Challenger shares) have been waived or satisfied and the restructure will proceed.
• 1. Pursuant to paragraph 1.3 of the Letter, we confirm that 2,439,035,734 ordinary shares (each fully paid) have been allotted and issued pursuant to the Restructure.
• 1. CPH Management Limited (as responsible entity of Challenger Financial Services Group) will provide ASX today a letter confirming paragraph 1.4 of the Letter.
• 1. Pursuant to paragraph 2.1 of the Letter we advise as follows:

Melbourne

Brisbane

Perth

Level 41, 101 Collins Street Melbourne VIC 3000 telephone 03 8616 1000 facsimile 03 8616 1111

Level 9, 175 Eagle Street Brisbane QLD 4000 telephone 07 3218 8000 facsimile 07 3220 3132

Level 2, 141 St Georges Terrace Perth WA 6000 telephone 08 9480 2800 facsimile 08 9322 9289

Adelaide

Level 9, T & G Building 82 King Street Adelaide SA 5000 telephone 08 8211 7777 facsimile 08 8212 1661

• (a) the date for despatch of the Challenger holding statements on the CHESS sub-register and the issuer sponsored sub-register is on or prior to 30 December 2003;
• (b) an indicative distribution of the number of holders in each class of ordinary shares to be quoted appears as annexure A to this letter;
• (c) an indicative statement setting out the names of the 20 largest holders in each class of ordinary shares to be quoted, and the number and percentage of each class of ordinary shares held by those holders appears as annexure B to this letter;
• (d) the terms and conditions of the long term incentive plan are attached as annexure C to this letter:
• (e) the Company has not adopted a dividend reinvestment plan at the date of this letter;
• (f) we confirm that Challenger is in compliance with listing rule 3.1 at the time of this letter and will remain in compliance with that listing rule at the time Challenger is admitted to the official list.

Yours faithfully Challenger Financial Services Group Limited

C E Cuffe

(Chief Executive Officer)