Tower rebounds to $55m year profit and may pay 2004/5 div

11.30am

Financial services firm Tower Ltd today signalled its financial recovery with a September year net profit of $54.6 million, rebounding from last year's $149m loss.

The company said it would not pay a dividend but would considering resuming suspended payments during the 2004/05 year.

Second half net profit was $34.1m compared with $5.5m in the second half last year and $20.5m in the first half of 2004.

Earnings per share were 13.4c against last year's loss of 74.5c.

Chairman Olaf O'Duill expressed delight at the recovery.

"They (the results) confirm that Tower is well progressed through its two-year recovery phase.

"We are confident there is still further improvement to come, particularly once the proposed spin off of the Australian Wealth Management businesses is complete and Tower moves to be a more specialised entity."

He said highlights included:

* improved business profitability following prior period restructures;

* a major turnaround in Tower Australia, which made a profit of NZ$23.2m against a $13.1m loss, as a result of improved sales, retention, and cost management;

* continued growth in life and health insurance sales in Tower New Zealand;

* improved profitability of the life and health insurance operations in New Zealand offset by reduced general insurance profit reflecting weather related events;

* growth of $1.6 billion in assets under management in Bridges and Tower Trust to $13.1 billion;

* a strong increase in investment returns, due to the improved performance of the equity and property markets; and

* a reduction in financing costs from $20.7m to NZ$9.9m;

Operating earnings of $27.9m compared with a loss of $9.7m a year ago.

Investment return on shareholders' funds came to $23.2m against $10.7m.

The Australian Wealth Management made a profit of $16.7m against $11.4m.

Tower shares, which started this year at $1.25, were down 2c to $2.28 today.

- NZPA