Tower shares crash to all time low after $75 million loss

Update - 3.00pm

Shares in financial services group Tower touched a fresh all time low today after the company posted a $75 million after-tax annual loss -- its first as a listed company.

The headline figure initially sent investors into a spin, with the shares plunging 13c to $1.56. They rebounded shortly after to trade down 4c at $1.65, but are still less than one-third of their $5.34 January peak.

The loss was driven by a $36 million writedown of Tower's Australian unit Bridges, and compared with a $77 million profit in the year to September 2001.

Excluding that writedown, the loss was $39 million -- in line with a profit warning issued by the company last month of a $30-40 million loss.

"There were no big surprises really," Macquarie Equities head Arthur Lim said.

"It is consistent with what they've indicated to the market.

"The big unknown along the way was really "how big?" the writeoff in respect of Bridges was going to be and $35.8 million - in terms of a $180 million investment by them in Bridges - and given the state of the financial markets as a whole, $35.8 million sounds probably about right."

No dividend was declared in today's result, which saw the group's total income plunge 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.

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 also announced that the company expects 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.

"The market was really looking for indication of when a new managing director will be appointed and I think there's some disappointment that that wasn't announced," Mr Lim said.

Mr Lim said investors were also seeking a firmer indication of what profitability levels were likely to be in the current financial year, rather than the vague statements offered by acting chief executive Keith Taylor, who said:

"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.

"They've given an indication that they'll return to profitability, but they haven't said what level of profitability," Mr Lim said.

Soft global markets and restructuring were a major factor in today's result.

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.

Tower is New Zealand's biggest retail funds manager.

- NZPA