Tower primes market for loss announcement
TowerLimitedhas announced it will post an operating profit for the first half of this year of between $2.7 and $5.3 million and embark on a capital raising of $177 million, despite facing a loss for the same period of $160 million.
Tower says the reason for the loss was the writedown of the value of assets in the group by $169 million, including a $120 million amortisation of excess market value, which it says came about due to a change in accounting standards.
The company will formally announce the half-year results this week, but says in the lead up that the capital raising will be mainly used to retire debt within the group.
Tower’s current market capitalisation is around $211 million based on a share price of $1.20 at 1pm on Wednesday of last week and 176 million shares on the market. As such, a $200 million capitalisation would nearly double share numbers.
The announcement played havoc with Tower’s shares, which have spent the last month hovering around the $1.95 to $2 range but plummeted to around $1.20 at the time of going to press.
The writedown is the latest in a series of negative announcements by Tower, which stated in March it had made an unaudited net profit of $5.4 million in the December quarter, down 78 per cent on a year earlier.
This figure came after the company made sweeping changes in terms of board membership, staffing numbers and business operations after a $78 million September year loss in 2002.
At the time of the changes it shut down its in-house salaried financial planning division, Tower Financial Consultants, sold its online annuity business, AdviserBlue, and merged the Tower Managed Funds stand-alone business back into the wider Tower Australia group.
AUTHOR
Jason Spits
Recommended for you
In this week’s episode of Relative Return Insider, AMP chief economist Shane Oliver joins the show to dissect the ongoing government economic reform roundtable and reflect on the wish lists of industry stakeholders – and whether there is hope for meaningful reform.
In this week’s episode of Relative Return Insider, hosts Maja Garaca Djurdjevic and Keith Ford take a look at the Reserve Bank’s latest rate cut call, the factors influencing the unanimous decision, and what economists expect from the rest of the year.
In this episode of Relative Return Insider, host Keith Ford is joined by Accountants Daily journalist Imogen Wilson to take a look at why there has been such broad support for a more comprehensive tax reform discussion at the Treasurer’s economic roundtable.
In this week’s episode of Relative Return Insider, AMP chief economist Shane Oliver joins the show to discuss Australia’s stagnating productivity ahead of the government’s economic reform roundtable, and how picking all the “low-hanging fruit” for reform in the ’90s helped kick off a surge that has since stalled out.
