Thu, 19 May 2005
TOWER Limited today announced its results for the six months ended 31 March 2005, reporting a 66% increase in operating earnings from continuing operations (excluding investment returns) from NZ$12.1m to NZ$20.1m. The reported net profit after tax of NZ$55.3 million (NZ$20.5 million for the previous corresponding period in 2004) includes a NZ$23.0 million gain on the sale of the Australian Wealth Management business.
Earnings per share, excluding discontinued businesses and the profit on sale of Australian Wealth Management (AWM), increased by 35% from NZ5.0 cents to NZ6.7 cents.
TOWER Limited Chairman, Olaf O’Duill said, “This result is further confirmation of the strength of TOWER’s recovery and is particularly satisfying given that it was achieved during a period of intense management activity associated with the spin off of AWM. TOWER has a stronger capital base and is now well positioned to move to its next phase of growth. The Board and management remain committed to targeting levels of performance that provide a stronger return on capital than that currently being generated. However, in recognition of the progress being made, the Board intends to consider the dividend policy at the end of this financial year.”
Highlights of the period under review include:
Financial Results
6 months
March 2005
March 2004
20.1
12.1
19.7
14.6
11.4
10.3
(4.8)
(4.7)
6.0
0.3
Gain on sale of AWM
23.0
-
55.3
20.5
2.04
1.94
Earnings per share (NZ cents per share) (3)
6.7
5.0
(1) Includes operating earnings from AWM for four months and TOWER’s corporate head office costs(2) Includes investment return on shareholders’ funds from AWM for four months(3) EPS from continuing activities and excluding the NZ$23.0 million gain on sale of AWM
TOWER Australia
Net profit after tax increased 70%, compared with the same period last year, from NZ$10.5 million to NZ$17.9 million, comprising NZ$9.6 million in operating earnings and NZ$8.3 million in investment returns on shareholders’ funds. This reflected strong growth in sales and continued reduction in lapse rates, a 10% increase in in-force premiums to NZ$262 million and improvements in productivity as sales volumes increased.
TOWER New Zealand - Insurance
The TOWER NZ Insurance businesses reported a 25% increase in net profit to NZ$12.4 million, comprising operating earnings of NZ$9.9 million and the investment return on shareholders’ funds of NZ$2.5 million. The in-force business grew from NZ$120.0 million to NZ$142.2 million.
New business sales for TOWER Health & Life declined to NZ$9.3 million, NZ$2.2 million lower than the previous corresponding period. Management has moved quickly to address this trend.
TOWER New Zealand – Investments
TOWER is one of New Zealand’s leading wholesale fund managers with a 17% share of that market. It was named FundSource 2004 Fund Manager of the Year.
Net profit after tax for the TOWER NZ Investment business was NZ$0.7 million compared with NZ$1.2 million in the six months to March 2004.
TOWER Limited, Group Chief Executive Officer, Jim Minto said, “Over the next year, we will be looking to improve the performance of the New Zealand Investment businesses by focusing only on core, profitable business areas and products. We will also look for opportunities to leverage our successful wholesale asset management capabilities into the New Zealand retail market.”
Current focus
In respect of the half year results, Olaf O’Duill said, “During the past six months TOWER has undergone a number of significant changes. We have successfully completed the demerger of Australian Wealth Management, and put in place a new management structure that will drive our future returns to shareholders.”
Jim Minto continued, “All positions in the new leadership team have been filled. The management structure is now closely aligned with each of TOWER’s business operations and each CEO of the five core businesses is accountable for delivering improved operating performance. We will seek to grow our businesses by focusing only on areas where we can compete effectively and profitably.
“In each of our businesses, we will target sales growth by improving relationships with our customers and strengthening our distribution channels. New sales and business retention remain key areas of focus right across TOWER. Additionally, our drive to improve both competitiveness and efficiency in NZ businesses is well under way.
“TOWER will continue to build its earnings and operations in order to improve its return on capital and maximise value to shareholders.”
Back to Archived Announcements 2005