Tower delivers "first rate result" in tough year

Thursday 26th November 2009

Tower Ltd, the life, health and general insurance group, has delivered a 23.8% increase in profit for the year to September 30 of $50.08 million, and raised its effective dividend rate by 49% to reflect what chairman Tony Gibbs said was "a first rate result".

At $517.22 million, revenue from ordinary activities was up 6.7%, in part reflecting the fact that Tower took most of the hit to equity investments from the global downturn in the previous financial year.

The company declared a dividend of 9 cents a share (8 cents the previous year), payable on Feb. 2 next year. "When the new shares issued following the September 2009 rights issue are taken into account, it is an effective increase of 49%," said group managing director Rob Flanagan.

Basic earnings per share at 24.31 cents were up 21.2%, from 20.06 cents in the previous year.

Tower chairman Tony Gibbs expressed delight with the result.

"The outlook for Tower is positive," he said. "We have withstood the economic downturn and have delivered a first rate profit, and a sustainable one at that, in the board's view.

"Our liquidity has been further improved as a result of the recent share issues and at the September financial year end our cash balanced exceeded $146 million.

"There will be opportunities which Tower is now in a position to take advantage of. We are very much looking forward to the next 12 months," said Gibbs, who offered no forecast for the next financial year.

Notes to the accounts show that Tower took a $10.02 million hit to the value of listed equities in its portfolio in the latest year, compared with losses of $57.53 million reported on the portfolio in the previous year, indicating that Tower took most of the pain from the collapse in global sharemarket prices in 2007/08.

Net gains from changes in the fair value of financial assets for the year were $18.45 million, compared with net losses in the prior year of $28.28 million.

Losses of $10.48 million were reported for the year, following property portfolio revaluations, compared with revaluation gains of $2.24 million in the prior year.

The company also recalibrated its earnings to take account of a $3.15 million gain arising from changes in the discount rate applied to valuation of individual life risk policy liabilities, caused b y "changes in the global investment market".

"If this gain is eliminated to show the underlying net profit, that amount becomes $46.94 million, an increase of 22.3% over the comparable result the previous year."

Businesswire.co.nz

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