Tower posts $75 mln full year loss

By NZPA

Thursday 5th December 2002

Financial services group Tower Ltd today reported a $75 million loss for the full year to September 30 -- more than double estimates flagged to the market last month.

Last month the company gave the first hint of trouble, saying it expected an after-tax loss of $30-40 million when analysts had been expecting a $70 million profit.

The profit warning sent its shares into a spin -- losing two thirds of their value.

Today's result compares with a $77 million profit for the same period a year earlier.

Tower shares dived 13c to $1.56 immediately after this morning's announcement -- a fresh all time low. That price is less than a third of their January peak of $5.34.

No dividend was declared.

Today's result included a $35.8 million writedown of the trans-Tasman fund manager and insurer's Bridges Financial Services unit.

Excluding the write-down, the loss was $39.1 million -- in line with last month's forecasts.

Total income for the group plunged 17 percent to $580.6 million, reflecting negative investment income in the second half of the year and the Bridges writedown.

Assets under management declined 2 percent to $20.7 billion.

Soft global markets and restructuring also plagued the company.

Tower estimated that poor investment markets wiped about $26 million off the annual result, while write-offs of capitalised IT and other expenses saw earnings slide $36 million.

Operating and experience losses in Tower Australia had a $44 million toll on the result, and restructuring costs amounted to about $10 million.

Chairman Colin Beyer was in damage control mode, saying that Tower "continues to be in a sound financial position to meet its financial obligations", despite the huge loss.

"The group's loss is a responsibility which must be carried by the board. Following a rigorous operational review, steps have been taken to address underlying issues to ensure the business will move forward profitably."

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