Tower posts $75 million full year loss

12.00pm

Financial services group Tower 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 per cent to $580.6 million, reflecting negative investment income in the second half of the year and the Bridges writedown.


Assets under management declined 2 per cent 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."


Mr Beyer said the company expected to appoint a new chief executive by the end of the calendar year.

The company has been without one since James Boonzaier stood down in July after 12 years at the helm.

Acting chief executive Keith Taylor said the loss overshadowed a number of positive aspects of the 2001/2002 year including: growth of the company's risk business in New Zealand; Tower Asset Management NZ's strong investment performance and new business growth; Bridge's increased profits and funds under management; and extensive reorganisation of the New Zealand and Australian operations, aimed at greater efficiency and cost reduction.

"The recent and significant changes to Tower's management, structure and finances are aimed at providing a strong base going forward.

"The financial plan for Tower for 2002/2003 provides for a return to more normal profitability levels. The groundwork has been laid for this and, to date, performance expectations are being met for the current financial year," Mr Taylor said.

Tower remains New Zealand's biggest retail funds manager.

- NZPA