NZSE joins queue to question Tower

By NZPA

Tuesday 12th November 2002

The New Zealand Stock Exchange has joined the queue to question fund manager Tower about the timing of its profit warning at the start of the month.

Tower warned the market on November 1 that it expected to post an annual loss in the region of $30 million-40 million, rather than the $50 million-70 million profit expected by analysts.

Further writedowns of its Australian unit, Bridges, could push that significantly higher.

The NZSE asked Tower on Thursday when it became aware of the company's adverse financial results, and why the writedowns were not known prior to the trading halt at the start of November.

"Tower only became aware of the likelihood and extent of the adverse result on the evening of Wednesday, October 30, when the six month actuarial review of Tower Australia was nearing completion," Tower said in the reply released by the NZSE today.

"The actuarial review was sufficiently advanced by late Thursday evening to enable management to provide the estimated figures to the board at its meeting on Friday, November 1."

Tower's share price was hammered last week -- falling from $3.55 before a trading halt on October 31 to $1.70 today -- in part because the company had given no indication at a recent briefing for analysts about the writedowns.

"These briefings focused principally on updating the progress of Tower's strategy," Tower told the NZSE.

"At both briefings Tower specifically stated that it could not discuss its results as it was in a `black out' period."

Tower told the NZSE an independent valuation to determine Bridges writedown should be completed by the end of next week.

"The current carrying value including current year profits is $A198 million ($NZ227.4 million). We do not currently have any accurate information as to the likely new value, however, as previously advised we consider a write down is possible.

"Bridges has operated well during the year and its profit was ahead of expectations. However, there are indications that future margin squeezes in the industry may be having negative impacts on the valuation of such businesses."

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