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TOWER LIMITED — Interim / Quarterly Report 2010
May 27, 2010
65971_rns_2010-05-27_b8942166-43d3-4e36-bb64-ee6de4cc9b63.pdf
Interim / Quarterly Report
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28 May 2010
Market Information Company Announcements Office NZX Limited ASX Limited Level 2, NZX Centre Exchange Centre 11 Cable Street Level 6, 20 Bridge Street PO Box 2959 Sydney NSW 2000 Wellington AUSTRALIA New Zealand
TOWER Limited preliminary announcement for half year ended 31 March 2010
Please find attached the following documents in relation to the half year ended 31 March 2010:
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- Media release
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- NZX Appendix 1
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- ASX Appendix 4D
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- Interim Financial Statements and auditor’s review opinion
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- Details of interim dividend and NZX Appendix 7
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- Results Presentation
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Bronwyn Walsh Company Secretary TOWER Limited ARBN 088 481 234 Incorporated in New Zealand
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MEDIA RELEASE
For immediate release
28 May 2010
INTERIM DIVIDEND CONFIRMS TOWER ON TRACK
(Auckland – NZ)
TOWER Limited today reported an increased profit result for the half year to 31 March 2010. Underlying profit was $NZ27.7 million, a 28.8 % increase over the comparable period last year.
Profit after tax, which includes the non-cash effect of movements in the discount rate used to value life insurance liabilities, was $NZ28.1 million, 5.6% higher than for the same period last year.
Recognising this performance, the Board has decided to pay an interim dividend which will be the first interim dividend since July 2002. The dividend, NZ4.0 cents per share fully imputed, will be paid on 2 July.
While the markets in which TOWER operates have not been conducive to revenue growth in recent periods, the Group has continued to put a strong focus on both claims costs and expense management. The strong result in the latest half year period reflects good performances by all three of TOWER’s businesses: Health & Life, General Insurance and Investments.
Health & Life delivered an underlying profit after tax of $NZ16.9 million, 22.5% ahead of the March 2009 half year.
General Insurance reported a profit after tax of $NZ11.9 million for the half year, up 26.6% on the comparable period.
And in a difficult environment for the funds management industry, TOWER Investments reported a $NZ2.0 million profit after tax, compared with $NZ2.3 million in the March 2009 half year.
Group Managing Director Rob Flannagan said “the bottom line result is very robust and reflects TOWER’s ongoing steady progress against the backdrop of a difficult economy.
“Throughout the past year, we have aggressively focused on achieving cost efficiencies and improving customer services in the Health & Life and General Insurance businesses, and on proactively managing assets in the Investment business,” Mr Flannagan said.
“This emphasis on getting the basics right enables TOWER to reinforce its position as a market leader providing products and services in insurance, superannuation, savings and asset management,” he said.
“TOWER is a long established brand in New Zealand with the company’s origins going back to 1869 and I am delighted that we are once again in a position to demonstrate our commitment to our 56,000 shareholders by paying an interim dividend,” he said.
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“The company’s liquidity position is very strong with around $NZ150 million of cash balances at 31 March and a conservative gearing ratio of 16.2%. This places TOWER in a great position to act quickly on expansion opportunities which arise. We have investigated several opportunities in the past few months and continue to do so.”
TOWER Chairman, Tony Gibbs, said “TOWER’s strong performance was a credit to the management team and staff who have worked tirelessly to navigate the company through difficult economic conditions.”
“In uncertain times, this result is encouraging. TOWER’s solid financial position provides a ready platform for growth. The company delivered an annualised 13.7% return on shareholders’ funds and will continue its focus on cost reduction, profitability and delivery of good returns to its shareholders,” Mr Gibbs said.
ENDS
For further information please contact:
Rob Flannagan Group Managing Director TOWER Limited Tel: +64 9 369 2057
APPENDIX 1
HALF YEAR PRELIMINARY ANNOUNCEMENTS AND HALF YEAR RESULTS
RESULTS FOR ANNOUNCEMENT TO THE MARKET
TOWER LIMITED
| ReportingPeriod | 6months to 31 March 2010 |
|---|---|
| PreviousReportingPeriod | 6months to 31 March 2009 |
| Amounts (000s) | Percentage change | |
|---|---|---|
| Revenue from ordinary activities | NZ$ 288,934 | 30.4% increase |
| Net profit from ordinary activities aftertaxattributable to shareholders |
NZ$ 27,859 | 5.9% increase |
| Net profit attributable to shareholders | NZ$ 27,859 | 5.9% increase |
| Interim Dividend | Amount per security | Imputed amount per security |
| NZ 4cents | 0.0171429 | |
| RecordDate | Friday18 June | |
| DividendPaymentDate | Friday2July | |
| Comments | Net profit from ordinary activities in the 6 months to 31 March 2010 includes a gain of NZ$0.4 million (2009: NZ$5.1 million) which has arisen as a result of changes in the global investment market, which in turn affect the discount rate applied under the relevant accounting standards in valuing individual life risk policy liabilities. If this gain is eliminated in order to show the underlying net profit after tax that amount becomes NZ$27.7 million which is an increase of 28.8% over the NZ$21.5 million comparable result for the same period last year. |
|
| Additional Information | 1. Net tangible assets per share as at 31 March 2010 was NZ$1.47(2009: NZ$1.37) |
|---|---|
| 2. Earnings per share for the six months to 31 March 2010 were NZ 10.88 cents (2009: NZ12.98 cents). This reflects the impact of additional capital raised on 28 September 2009. |
|
Refer attached 31 March 2010 unaudited Financial Statements for TOWER Limited and its subsidiaries and Presentation for more detailed analysis and explanation.
TOWER Limited
APPENDIX 4D PRELIMINARY INTERIM REPORT 28 May 2010 ASX LISTING RULES 4.2A.3
TOWER LIMITED PRELIMINARY INTERIM REPORT
Current Reporting Period 6 months ended 31 March 2010 Previous Reporting Period 6 months ended 31 March 2009
RESULTS FOR ANNOUNCEMENT TO THE MARKET
Half year Movement 31 March 2010 000’s Total revenue from ordinary activities NZ$ 288,934 + 30.4% Net profit after tax from ordinary activities attributed to shareholders NZ$ 27,859 + 5.9% Net profit for the period attributed to shareholders NZ$ 27,859 + 5.9%
Net tangible assets per share as at 31 March 2010 was NZ$1.47 (2009: NZ$1.37)
Earnings per share for the six months to 31 March 2010 were NZ 10.88 cents (2009: NZ 12.98 cents). This reflects the impact of additional capital raised on 28 September 2009.
INTERIM DIVIDEND
An interim dividend of NZ 4 cents per share has been declared. The Record Date is Friday 18 June. The dividend will be paid on 2 July 2010. No franking credits apply.
ADDITIONAL COMMENTS
Net profit from ordinary activities in the 6 months to 31 March 2010 includes a gain of NZ$0.4 million (2009: NZ$5.1 million) which has arisen as a result of changes in the global investment market, which in turn affect the discount rate applied under the relevant accounting standards in valuing individual life risk policy liabilities. If this gain is eliminated in order to show the underlying net profit after tax that amount becomes NZ$27.7 million which is an increase of 28.8% over the NZ$21.5 million comparable result for the same period last year.
Refer attached 31 March 2010 unaudited Financial Statements for TOWER Limited and its subsidiaries and Presentation for more detailed analysis and explanation.
TOWER Limited Level 11 22 Fanshawe Street, Auckland PO Box 90347 Auckland New Zealand Tel (+64) 9 369 2000 Fax (+64) 9 369 2160
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TOWER LIMITED
INTERIM FINANCIAL STATEMENTS
FOR THE HALF YEAR ENDED
31 MARCH 2010
TOWER LIMITED FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2010
Table of Contents
CONSOLIDATED INCOME STATEMENT ........................................................................................................................... 2 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME ......................................................................................... 3 CONSOLIDATED BALANCE SHEET ................................................................................................................................... 4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY ................................................................................................... 5 CONSOLIDATED STATEMENT OF CASH FLOWS .............................................................................................................. 6 NOTES TO THE FINANCIAL STATEMENTS ....................................................................................................................... 7 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES .................................................................................................................... 7 2. UNDERLYING PROFIT AFTER TAX ............................................................................................................................................ 7 3. PREMIUM REVENUE ............................................................................................................................................................ 8 4. INVESTMENT REVENUE ........................................................................................................................................................ 8 5. FEE AND OTHER REVENUE .................................................................................................................................................... 8 6. MOVEMENT IN POLICY LIABILITIES .......................................................................................................................................... 9 7. LIFE INSURANCE AND INVESTMENT CONTRACT LIABILITIES ........................................................................................................... 9 8. SEGMENTAL REPORTING ...................................................................................................................................................... 9 9. INTEREST BEARING LIABILITIES ............................................................................................................................................. 10 10. NOTE TO CONSOLIDATED STATEMENT OF CASH FLOWS ........................................................................................................... 11 11. DISTRIBUTIONS TO SHAREHOLDERS .................................................................................................................................... 11 12. SUBSEQUENT EVENTS ...................................................................................................................................................... 11
1
TOWER LIMITED CONSOLIDATED INCOME STATEMENT FOR THE HALF YEAR ENDED 31 MARCH 2010
| Note Revenue Premium revenue from insurance contracts 3 Less : Outwards reinsurance expense 3 Net premium revenue Investment revenue/(loss) 4 Fee and other revenue 5 Net operating revenue Expenses Claims expense Less : Reinsurance recoveries revenue Net claims expense Increase/(decrease) in policy liabilities 6 Management and sales expenses Net claims and operating expenses Financing costs Total expenses Profit before taxation Tax (expense)/credit attributed to policyholders' returns Profit attributed to shareholders before taxation Tax expense attributed to shareholders' profits Profit for the half year 2 Profit attributed to: Shareholders Minority Interests Basic and diluted earnings per share for profit attributed to shareholders |
Half year ended 31 March 31 March 2010 2009 Unaudited Unaudited $000 $000 |
|---|---|
| 209,808 213,319 (19,622) (17,796) |
|
| 190,186 195,523 62,820 (9,087) 16,306 17,353 |
|
| 269,312 203,789 |
|
| 127,612 131,989 (5,979) (7,252) |
|
| 121,633 124,737 8,133 (49,083) 89,920 95,945 |
|
| 219,686 171,599 3,758 3,515 |
|
| 223,444 175,114 |
|
| 45,868 28,675 (9,498) 1,952 |
|
| 36,370 30,627 (8,268) (4,003) |
|
| 28,102 26,624 |
|
| 27,859 26,310 243 314 |
|
| 28,102 26,624 | |
| 10.88 12.98 |
The consolidated income statement should be read in conjunction with the accompanying notes.
2
TOWER LIMITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 MARCH 2010
| Note Profit for the half year 2 Other comprehensive income: Currency translation differences Other comprehensive income net of taxation Total comprehensive income for the half year Total comprehensive income attributed to: Shareholders Minority Interests |
Half year ended 31 March 31 March 2010 2009 Unaudited Unaudited $000 $000 |
|---|---|
| 28,102 26,624 1,097 2,195 |
|
| 1,097 2,195 |
|
| 29,199 28,819 |
|
| 29,164 28,981 35 (162) |
|
| 29,199 28,819 |
The consolidated statement of comprehensive income should be read in conjunction with the accompanying notes.
3
TOWER LIMITED CONSOLIDATED BALANCE SHEET AS AT 31 MARCH 2010
| Note Assets Cash and cash equivalents Receivables Financial assets at fair value through profit or loss Derivative financial assets Liabilities ceded under reinsurance 7 Property, plant and equipment Prepaid tax assets Current tax assets Deferred acquisition costs Deferred tax assets Intangible assets Total Assets Liabilities Payables Current tax liabilities Other liabilities Provisions Derivative financial liabilities Interest bearing liabilities 9 Insurance liabilities Deferred tax liabilities Life insurance and investment contract liabilities 7 Total Liabilities Net Assets Equity Contributed equity Accumulated losses Reserves Total equity attributed to shareholders Minority interests Total Equity |
31 March 30 September 31 March 2010 2009 2009 Unaudited Audited Unaudited $000 $000 $000 |
|---|---|
| 150,562 146,381 152,697 137,167 141,253 129,641 1,075,129 1,076,595 1,024,257 50,557 53,410 65,850 16,631 14,450 13,562 6,222 6,030 7,839 36,230 34,732 42,737 - 1,164 - 43,851 45,096 47,885 25,443 32,650 34,669 46,894 39,178 36,081 |
|
| 1,588,686 1,590,939 1,555,218 57,539 62,123 58,242 13,796 - 12,769 22,745 22,745 21,874 5,822 7,594 6,328 15,090 21,305 19,256 80,284 80,002 165,243 259,638 279,700 267,877 35,772 38,619 29,680 681,644 674,403 666,526 |
|
| 1,172,330 1,186,491 1,247,795 |
|
| 416,356 404,448 307,423 |
|
| 555,282 547,680 468,633 (32,112) (35,128) (59,610) (109,540) (110,795) (104,458) |
|
| 413,630 401,757 304,565 2,726 2,691 2,858 |
|
| 416,356 404,448 307,423 |
The financial statements were approved for issue by the Board on 27 May 2010.
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AI (Tony) Gibbs Chairman
John Spencer Director
The consolidated balance sheet should be read in conjunction with the accompanying notes.
4
TOWER LIMITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 MARCH 2010
| Half year ended 31 March 2010 At the beginning of the half year Comprehensive income for the period Profit for the half year Currency translation differences Total comprehensive income for the period Transactions with shareholders Shares issued under dividend reinvestment plan Shares issued under employee share options scheme Movement in share based payment reserve Dividends paid Other Total transactions with shareholders At the end of the half year Half year ended 31 March 2009 At the beginning of the half year Comprehensive income for the period Profit for the half year Currency translation differences Total comprehensive income for the period Transactions with shareholders Shares issued under dividend reinvestment plan Movement in share based payment reserve Dividends paid Total transactions with shareholders At the end of the half year |
Share capital Accumulated losses Reserves Total Minority interest Total equity Unaudited Unaudited Unaudited Unaudited Unaudited Unaudited $000 $000 $000 $000 $000 $000 Attributed to shareholders |
|---|---|
| 547,680 (35,128) (110,795) 401,757 2,691 404,448 - 27,859 - 27,859 243 28,102 - - 1,305 1,305 (208) 1,097 |
|
| - 27,859 1,305 29,164 35 29,199 7,046 - - 7,046 - 7,046 556 - - 556 - 556 - 228 (50) 178 - 178 - (25,043) - (25,043) - (25,043) - (28) - (28) - (28) |
|
| 7,602 (24,843) (50) (17,291) - (17,291) |
|
| 555,282 (32,112) (109,540) 413,630 2,726 416,356 |
|
| 465,323 (66,453) (107,670) 291,200 3,020 294,220 - 26,310 - 26,310 314 26,624 - - 2,671 2,671 (476) 2,195 |
|
| - 26,310 2,671 28,981 (162) 28,819 3,310 - - 3,310 - 3,310 - - 541 541 - 541 - (19,467) - (19,467) - (19,467) |
|
| 3,310 (19,467) 541 (15,616) - (15,616) |
|
| 468,633 (59,610) (104,458) 304,565 2,858 307,423 |
The consolidated statement of changes in equity should be read in conjunction with the accompanying notes.
5
TOWER LIMITED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 MARCH 2010
| Note Cash flows from operating activities Premiums received Interest received Dividends received Investment income Non-life company fee income Reinsurance received Reinsurance paid Claims expenses Payments to suppliers and employees Interest paid Income tax paid Net cash inflow from operating activities 10 Cash flows from investing activities Net receipts for financial assets Net payments for purchase of property, plant and equipment and intangible assets Net cash inflow from investing activities Cash flows from financing activities Proceeds from issue of share capital Proceeds from issue of fixed rate senior unsecured bonds Payment for issue costs of senior unsecured bonds Repayment of short term borrowings Dividend paid Net cash (outflow)/inflow from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at beginning of half year Cash and cash equivalents at end of half year |
31 March 31 March 2010 2009 Unaudited Unaudited $000 $000 Half year ended |
|---|---|
| 208,433 212,712 18,418 25,480 1,195 1,544 17,239 2,456 15,972 18,222 14,912 6,170 (28,125) (20,765) (148,804) (138,952) (88,147) (95,756) (3,476) (3,857) (539) (2,633) |
|
| 7,078 4,621 25,020 26,377 (10,505) (912) |
|
| 14,515 25,465 585 - - 81,759 - (979) - (304) (17,997) (16,157) |
|
| (17,412) 64,319 |
|
| 4,181 94,405 146,381 58,292 |
|
| 150,562 152,697 |
|
Note:
The consolidated statement of cash flows presents the net changes in cash flow for financial assets, property, plant and equipment and intangible assets. TOWER considers that knowledge of gross receipts and payments is not essential to understanding certain activities of TOWER and it is considered acceptable to report only the net changes in cash flow for these items. This is based on the fact that either the turnover of these items is quick, the amounts are large, and the maturities are short or the value of the sales are immaterial.
The consolidated statement of cash flows should be read in conjunction with the accompanying notes.
6
TOWER LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2010
1. Summary of significant accounting policies
Entities reporting
The interim financial statements presented are those of TOWER Limited (the Company) and its subsidiaries (the Group).
Statutory base
TOWER Limited is a company domiciled in New Zealand, registered under the Companies Act 1993 and listed on the New Zealand and Australian Stock Exchanges. The Company is an issuer under the Financial Reporting Act 1993.
Basis of preparation
These interim financial statements have been prepared in accordance with New Zealand Generally Accepted Accounting Practice (NZ GAAP), as appropriate for profit oriented entities, International Accounting Standard 34, and New Zealand equivalent to International Accounting Standard 34, Interim Financial Reporting.
The interim financial statements should be read in conjunction with the annual financial statements for the year ended 30 September 2009, which have been prepared in accordance with International Financial Reporting Standards, and New Zealand equivalents to International Financial Reporting Standards.
The interim financial statements were approved by the Board of Directors on 27 May 2010.
The interim financial statements for the six months ended 31 March 2010 are unaudited.
Accounting policies
The principal accounting policies adopted in the preparation of the interim financial statements are consistent with those of the audited annual financial statements as at 30 September 2009.
Comparatives
Where necessary, comparative information has been reclassified to achieve consistency of disclosure with the current period.
2. Underlying profit after tax
Underlying profit after tax is presented to provide a more meaningful comparison of the Group’s profit for the reported financial periods. The movement in the discount rate during the March 2010 and 2009 half years impacted the individual life risk policy liabilities and increased Group profit after tax.
The discount rate applied to value individual life risk policy liabilities (included within life insurance contract liabilities in Note 7) is based on the current risk-free interest rates. The decline in the risk-free interest rates lead to a change in the value of individual life risk policy liabilities, generating a net gain of $376,000 in the period (2009: $5,078,000).
| Underlying profit after tax Add: Discount rate effect before tax Income tax on discount rate effect Discount rate effect after tax Profit for the half year |
31 March 31 March 2010 2009 Unaudited Unaudited $000 $000 Half year ended |
|---|---|
| 27,726 21,546 402 5,057 (26) 21 |
|
| 376 5,078 |
|
| 28,102 26,624 |
|
7
TOWER LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2010
3. Premium revenue
| Life insurance premiums Life investment premiums Total life premiums Less: Deposits recognised as an increase in policy liabilities Life insurance contract premiums recognised as revenue General insurance premiums Health insurance premiums Less: Reinsurance ceded |
31 March 31 March 2010 2009 Unaudited Unaudited $000 $000 Half year ended |
|---|---|
| 42,422 45,510 250295 |
|
| 42,672 45,805 (2,114) (8,256) |
|
| 40,558 37,549 101,541 110,350 67,709 65,420 |
|
| 209,808 213,319 (19,622) (17,796) |
|
| Total net premium revenue | 190,186 195,523 |
4. Investment revenue
| Fixed interest securities (1) Interest income Net realised gain/(loss) Net unrealised loss Equity securities (1) Dividend income Net realised loss Net unrealised gain/(loss) Property securities (1) Property income Net realised gain Net unrealised gain/(loss) Other (2) Other investment revenue Net realised gain Net unrealised gain Total investment revenue/(loss) Total investment revenue Total realised gain Total unrealised gain/(loss) |
18,836 25,480 2,282 (118) (534) (120) |
|---|---|
| 20,584 25,242 | |
| 1,195 1,544 (418) (3,609) 20,755 (38,590) |
|
| 21,532 (40,655) |
|
| 1,124 647 - 518 2,050 (9,662) |
|
| 3,174 (8,497) |
|
| 78 512 13,568 5,019 3,884 9,292 |
|
| 17,530 14,823 |
|
| 21,233 28,183 15,432 1,810 26,155 (39,080) |
|
| 62,820 (9,087) |
(1) The income and loss in these categories has been generated by financial assets designated on initial recognition at fair value through profit or loss.
(2) Other investment income has been generated by financial assets and financial liabilities classified as held for trading at fair value through profit or loss.
5. Fee and other revenue
| Investment and management fees | 16,268 17,353 |
|---|---|
| Other revenue Total fee and other revenue |
38 - |
| 16,306 17,353 |
|
8
TOWER LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2010
6. Movement in policy liabilities
| 6. Movement in policy liabilities | |
|---|---|
| Increase/(decrease) in policy liabilities (Decrease)/increase in non-current health insurance contract Increase/(decrease) in life insurance contract liabilities Increase/(decrease) in life investment contract liabilities |
31 March 31 March 2010 2009 Unaudited Unaudited $000 $000 Half year ended |
| 6,800 (48,362) 2,268 (4,631) (935) 3,910 |
|
| 8,133 (49,083) |
|
7. Life insurance and investment contract liabilities
| 7. Life insurance and investment contract liabilities | |
|---|---|
| Life insurance contract liabilities Life investment contract liabilities Total life insurance and investment contract liabilities Less: Liabilities ceded under reinsurance Net life insurance and investment contract liabilities |
31 March 30 September 31 March 2010 2009 2009 Unaudited Audited Unaudited $000 $000 $000 |
| 647,787 641,753 637,410 33,857 32,650 29,116 |
|
| 681,644 674,403 666,526 (16,631) (14,450) (13,562) |
|
| 665,013 659,953 652,964 |
|
The movement in life insurance and investment contract liabilities include movements recognised in the income statement (refer to Note 6), changes in liabilities ceded under reinsurance, deposits and withdrawals and other adjustments, which do not affect the income statement.
8. Segmental reporting
| 8. Segmental reporting | |
|---|---|
| Business Segments Half year ended 31 March 2010 Underlying profit/(loss) after tax Add discount rate effect(1) |
Health & Life General Insurance Investments Other Total Unaudited Unaudited Unaudited Unaudited Unaudited $000 $000 $000 $000 $000 |
| 16,943 11,877 2,046 (3,140) 27,726 376 - - - 376 |
|
| Profit/(loss) for the half year | 17,319 11,877 2,046 (3,140) 28,102 |
| Revenue Operating revenue and realised investment gain/(loss) Unrealised investment gain/(loss)(2) Net operating revenue Half year ended 31 March 2009 Underlying profit/(loss) after tax Add discount rate effect(1) Profit/(loss) for the half year Revenue Operating revenue and realised investment gain Unrealised investment loss(2) Net operating revenue |
128,932 96,135 18,239 (149) 243,157 24,820 1,364 - (29) 26,155 |
| 153,752 97,499 18,239 (178) 269,312 |
|
| 13,800 9,442 2,306 (4,002) 21,546 5,078 - - - 5,078 |
|
| 18,878 9,442 2,306 (4,002) 26,624 |
|
| 116,095 106,293 19,099 1,382 242,869 (36,285) (2,284) - (511) (39,080) |
|
| 79,810 104,009 19,099 871 203,789 |
|
Note:
[(1)] The discount rate effect, as discussed in Note 2, has been adjusted for tax and shown separately to provide a more meaningful comparison between the reported periods.
(2) Unrealised investment gains and losses have been separately disclosed to show their impact on total revenue of the business segments.
9
TOWER LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2010
8. Segmental reporting (continued)
| 8. Segmental reporting (continued) | |
|---|---|
| Segment assets 31 March 2010 (Unaudited) 30 September 2009 (Audited) 31 March 2009 (Unaudited) |
Health & Life General Insurance Investments Other Total $000 $000 $000 $000 $000 |
| 1,078,280 367,562 42,225 100,619 1,588,686 1,065,970 388,185 56,933 79,851 1,590,939 1,032,333 372,236 61,989 88,660 1,555,218 |
Description of segments
Health & Life includes all health, life and disability insurance services in New Zealand. General Insurance includes all general insurance services in New Zealand and the Pacific Islands. Investments includes all wealth management services in New Zealand. Other includes head office expenses, financing costs and eliminations.
9. Interest bearing liabilities
| Bank loan Fixed rate senior unsecured bonds Unamortised capitalised costs |
31 March 30 September 31 March 2010 2009 2009 Unaudited Audited Unaudited $000 $000 $000 |
|---|---|
| - - 86,296 83,210 83,220 82,185 (2,926) (3,218) (3,238) |
|
| 80,284 80,002 165,243 |
|
Bank loan
The bank loan was fully repaid in June 2009.
Fixed rate senior unsecured bonds
On 24 March 2009, the Group issued $81,759,000 of fixed rate senior unsecured bonds, bearing a fixed interest rate of 8.5% per annum. The bonds mature on 15 April 2014.
The above total of $80,284,000 includes $1,451,000 of accrued interest (30 September 2009: $1,461,000 and 31 March 2009: $426,000). The Group capitalised $3,499,000 of costs associated with the issuance of the bonds. These costs are amortised over the five year term of the bonds using the effective interest rate method.
10
TOWER LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE HALF YEAR ENDED 31 MARCH 2010
10. Note to consolidated statement of cash flows
| 10. Note to consolidated statement of cash flows | |||
|---|---|---|---|
| Half year | ended | ||
| 31 March | 31 | March | |
| 2010 | 2009 | ||
| Unaudited | Unaudited | ||
| $000 | $000 | ||
| Reconciliation of profit for the period to net cash flows from operating activities | |||
| Net profit after tax for the half year | 28,102 | 26,624 | |
| Add/(less) non-cash items: | |||
| Depreciation of property, plant and equipment | 1,677 | 1,463 | |
| Amortisation of intangible assets | 921 | 1,217 | |
| Change in insurance and life investment contract liabilities | (16,185) | (54,865) | |
| Unrealised (gain)/loss on financial assets | (26,155) | 39,080 | |
| Share based payments expense and movement in fair value of employee | 163 | 541 | |
| share option derivative | |||
| Decrease/(increase) in deferred tax | 4,360 | (7,566) | |
| (35,219) | (20,130) | ||
| Add/(less) movements in working capital (excluding the effects of exchange differences | on consolidation) | ||
| Decrease/(increase) in receivables | 6,905 | (3,056) | |
| Decrease in payables | (6,392) | (5,331) | |
| Decrease in taxation | 13,400 | 7,047 | |
| 13,913 | (1,340) | ||
| Add/(less) other items classified as investing or financing activities | |||
| Increase/(decrease) in interest accrued | 282 | (533) | |
| Net cash inflows from operating activities | 7,078 | 4,621 | |
11. Distributions to shareholders
On 25 November 2009 the Board of Directors declared a dividend for the 2009 financial year of 9 cents per share net of tax. The total amount payable was $25,043,000 of which $7,046,000 was paid in TOWER shares under the dividend reinvestment plan and $17,997,000 paid in cash.
The dividend was paid on 2 February 2010.
12. Subsequent events
On 27 May 2010 the Board of Directors declared a dividend of 4 cents per share net of tax. The dividend will be paid on 2 July 2010.
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PricewaterhouseCoopers 188 Quay Street Private Bag 92162 Auckland, New Zealand DX CP24073 www.pwc.com/nz Telephone +64 9 355 8000 Facsimile +64 9 355 8001
Accountants’ Report
To the shareholders of TOWER Limited
We have reviewed the interim consolidated financial statements (“financial statements”) on pages 2 to 11. The financial statements provide information about the past financial performance and cash flows of the Company and its subsidiaries (the Group), for the period ended 31 March 2010 and its financial position as at that date. This information is stated in accordance with the accounting policies set out on page 7.
This report is made solely to the Company’s shareholders, as a body, Our review work has been undertaken so that we might state to the Company’s shareholders those matters which we are required to state to them in an auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company’s shareholders as a body, for our review procedures, for this report, or for the opinions we have formed.
Directors’ responsibilities
The Company’s Directors are responsible for the preparation and presentation of the financial statements that present fairly the financial position of the Group as at 31 March 2010 and its financial performance and cash flows for the period ended on that date.
Accountants’ responsibilities
We are responsible for reviewing the financial statements presented by the Directors in order to report whether, in our opinion and on the basis of the procedures performed by us, anything has come to our attention that would indicate that the financial statements do not present fairly the matters to which they relate.
Basis of opinion
A review is limited primarily to enquiries of company personnel and analytical review procedures applied to financial data and thus provides less assurance than an audit. We have not performed an audit on the financial statements and, accordingly, we do not express an audit opinion.
We have reviewed the financial statements of the Group for the period ended 31 March 2010 in accordance with the Review Engagement Standards issued by the New Zealand Institute of Chartered Accountants.
We have no relationship with or interests in the Company or any of its subsidiaries other than in our capacities as accountants conducting this review and providers of other assurance and tax services.
Accountants’ Report
To the shareholders of TOWER Limited
Review opinion
Based on our review, nothing has come to our attention that causes us to believe that the financial statements which have been prepared in accordance with International Accounting Standard 34 and New Zealand Equivalent to International Accounting Standard 34: Interim Financial Reporting do not present fairly the financial position of the Group as at 31 March 2010 and its financial performance and cash flows for the period ended on that date.
Our review was completed on 27 May 2010 and our review opinion is expressed as at that date.
Chartered Accountants
Auckland
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28 May 2010
Market Information Company Announcements Office NZX Limited ASX Limited Level 2, NZX Centre Exchange Centre 11 Cable Street Level 6, 20 Bridge Street PO Box 2959 Sydney NSW 2000 Wellington AUSTRALIA New Zealand
TOWER Limited interim dividend
TOWER Limited ( Company ) advises that an interim dividend of 4 cents per share, net of tax, will be paid on 2 July 2010 ( Payment Date ) to all shareholders on the register as at 5pm on Friday, 18 June 2010 ( Record Date ).
A copy of NZX Appendix 7 is attached.
Shareholders with a New Zealand or Australian address on the Company’s register will be able to elect to participate in the Company’s Dividend Reinvestment Plan (DRP) up to the Record Date. Ordinary shares will be issued on the Payment Date to all shareholders who elect to participate in the DRP at a strike price equal to 97.5% of the volume weighted average price of the Company's ordinary shares on NZX on the five trading days following the Record Date. The cash dividend that would otherwise be payable to these shareholders will be applied to pay up the issue price on the shares issued under the DRP. The shares issued under the DRP will rank equally with all existing ordinary shares of the Company.
If the shareholder is tax resident in New Zealand, the interim dividend will be fully credited with imputation credits at the ratio of 30/70 or 42.85%, being $0.0171429 per share. TOWER will withhold resident withholding tax where applicable.
If the shareholder is not tax resident in New Zealand and holds a shareholding interest of less than 10% in TOWER, the interim dividend will be credited with imputation credits of $0.010084 per share and a supplementary dividend of $0.0070589 per share will be paid. The total ratio of the imputation credits and supplementary dividend is 30/70 or 42.85%. TOWER will withhold non-resident withholding tax where applicable.
If the shareholder is not tax resident in New Zealand and holds a shareholding interest of more than 10% in TOWER, the interim dividend will be fully credited with imputation credits at the ratio of 30/70 or 42.85%, being $0.0171429 per share. TOWER will withhold non-resident withholding tax where applicable.
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Bronwyn Walsh Company Secretary TOWER Limited ARBN 088 481 234 Incorporated in New Zealand
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Appendix 7 of Listing Rules.
==> picture [355 x 16] intentionally omitted <==
EMAIL: [email protected]
| NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
NZX Listing Rule 7.12.2. For rights, Listing Rules 7.10.9 and 7.10.10. For change to allotment, Listing Rule 7.12.1, a separate advice is required. Notice of event affecting securities |
N ( d |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
umber of pages including this one Please provide any other relevant etails on additional pages) 1 |
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| F of N m C n |
ull name Issuer ame of offic ake this noti ontact phon umber |
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| TOWER Limited | ||||||||||||||||||||||||
| er ce e |
authorised to | Authority fo e.g. Directo |
r event, rs' resolution D |
at |
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| Bronwyn Walsh | Directors' Resolution | |||||||||||||||||||||||
| Contact fax number |
e | |||||||||||||||||||||||
| 09 369 2201 | 09 | 369 2160 | 28 05 10 |
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| Rights Issue terest Renouncable Full x Year Special |
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| N Ti |
ature of e ck as appro |
ve pri |
nt ate |
Bonus If ticked, Issue state wh Rights Issue C non-renouncable c |
ether: apita hang |
Taxable l e Call |
/ | Non Taxab Divi |
le Con If dend x w |
version ticked, state hether: In |
te | rim | In |
|||||||||||
| E D cl |
XISTING s escription of ass of securi |
ec th tie |
u e s |
rities affected by this | If more than one security i | s aff | ected by th | e event, use a | separate for ISI |
m. N |
||||||||||||||
| Ordinary Shares | NZTWRE0001S3 | |||||||||||||||||||||||
| If unknown, contact NZX eparate form for each class. |
||||||||||||||||||||||||
| D | etails of s | ec | ur | ities issued pursuant to t | his | event If mor |
e tha | n one clas | s of security is t | o be issued, ISI |
us N |
e | a s | |||||||||||
D cl N b C P S S |
escription of ass of securi umber of Se e issued follo onversion, M ayable or Ex trike price pe trike Price av |
th tie cu wi at erc r s ail |
e s riti ng uri is ec ab |
|||||||||||||||||||||
| Ordinary shares | NZTWRE0001S3 | |||||||||||||||||||||||
| es to event ty, Call e Date urity for le. |
If | unknown, contact NZX | ||||||||||||||||||||||
| D | etermined under Div | iden | d Reinvestment Plan | Minimum Entitlement |
n/a | R |
atio, e.g 1 for 2 |
for | ||||||||||||||||
| a | Tick pari |
if passu |
Treatment of F p OR e of ra |
ractions rovide an xplanation the nking |
||||||||||||||||||||
| n/a | R | o | un | ded | to nearest whole number | |||||||||||||||||||
| ny issue in lieu or da Enter N/A if not applicable |
||||||||||||||||||||||||
| t 97.5 Rec |
% of VWAP over 5 days p ord Date |
ost | ||||||||||||||||||||||
| on money. | ||||||||||||||||||||||||
| M | onies Ass | oc | ia | ted wi | th | Event Divide lars and cents |
nd pa | yable, Call payable, Exerci | se pr S P |
ice, Conve ource of ayment Supple di d Listing |
rsion price, Re | demption pri | ce | , A | pp | licati | ||||||||
| In | dol | |||||||||||||||||||||||
| Retained | profits | |||||||||||||||||||||||
| Amount Currency Total mo |
per nie |
se s |
curity | |||||||||||||||||||||
| $0.04 | ||||||||||||||||||||||||
| mentary vidend etails - Rule 7.12.7 |
Amount p in dollars Date P |
er a ay |
se nd abl |
cu ce e |
rity nts |
|||||||||||||||||||
| NZ$* | 0.007059 | |||||||||||||||||||||||
| $10.76 million** | July 2, 2010 | |||||||||||||||||||||||
| six decimalplaces | ||||||||||||||||||||||||
| T In is |
axation the case of sue state stri |
a t ke |
ax pr |
able bo ice |
nus | $ | Amo | untper Securit | yin Dollars a | nd | c | en | ts to | |||||||||||
| Resident Withholding Tax |
C ( |
re Giv |
dit e |
s det |
ails) | |||||||||||||||||||
| $0.001714 | $0.017143 | |||||||||||||||||||||||
| Timing Record Date For calculatio Notice Date Entitlement let conversion no |
5p n o te tic |
( m f e rs, es |
Refer A ntitleme call not mailed |
ppen nts ices, |
dix 8 in the Listing Rule | s) | Application Date Also, Call Payable, Interest Payable, E Conversion Date. In of applications this last business day o Allotment Date For the issue of ne Must be within 5 bu of record date. |
Dividend / xercise Date, the case must be the f the week. w securities. siness days |
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| Jun 18, 2010 | Jul 2, 2010 |
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| Jul 2, 2010 | ||||||||||||||||||||||||
| ate Page 1 of 1 |
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| OFFICE USE Ex Date: Commence Q Cease Quotin Commence Q Cease Quotin |
ON uot g R uot g O |
LY ing igh ing ld |
Rights: ts 5pm: New Sec Security 5 |
urities pm: |
: | Security Code: Security Code: |
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| * Shareh ** Estimat |
old e |
er ba |
s on th sed on |
e Company's Australian curent % of non-residen |
register will be paid in t shareholders |
AU$ | calculated at the exchange rate o | n the Record D |
1
TOWER Group Analysts Briefing - Half Year Results – 31 March 2010
Rob Flannagan Group Managing Director
Eric O’Sullivan Group Chief Financial Officer
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TOWER Group
Half Year Results – 31 March 2010
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Agenda
Results Overview
Business Performance
- Looking Forward
2
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Results Overview
3
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TOWER Group Financial Highlights
Half Year 31 March 2010
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Net profit
Underlying profit
$28.1m 5.6% ↑ $27.7m 28.8% ↑
Interim dividend (Fully imputed)
- Total equity
4.0cps ↑ $416.4m 35.5% ↑
Changes are compared to half year 31 March 2009
4
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TOWER Group Results
Summary
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| mary | ||
|---|---|---|
| Half year ended | ||
| $ millions | Mar-10 Mar-09 16.9 13.8 11.9 9.4 2.0 2.3 30.8 25.5 (3.1) (4.0) 27.7 21.5 0.4 5.1 28.1 26.6 |
Sep-09 |
| Health and Life General Insurance Investments |
17.8 7.9 3.5 |
|
| Business unit net profit after tax Finance and corporate expenses |
29.2 (3.8) |
|
| Underlying profit after tax Discount rate effect |
25.4 (1.9) |
|
| Net profit after tax | 23.5 | |
| % change | ||
| Underlying profit after tax Net profit after tax |
29% 6% |
|
5
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TOWER Group Results
Key Points
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-
Overall profit of $28.1m, up 5.6% on last year
-
Underlying profit at $27.7m, up 28.8%
-
Health & Life is maintaining its market position and management expense reductions are leading to increased profitability
-
General Insurance continues to improve its underwriting profit and the direct business net premium revenue continues to experience strong growth replacing to a large extent lapses of the ANZ/National book
-
The Investments business continues to adjust to the current economic conditions with good control in costs to offset its lower revenue levels
6
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Business Performance
7
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TOWER Business Performance
Statistics
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| Half year ended | |
|---|---|
| Mar-10 Mar-09 Underlying profit after tax $27.7m $21.5m Earnings per share 10.88cps 12.98cps Return on equity (annualised) 13.7% 17.7% Gearing (debt to debt plus equity) 16.2% 35.0% Net asset backing $1.57 $1.59 |
Sep-09 |
| $25.4m 11.33cps 14.3% 16.5% $1.59 |
|
8
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TOWER Share Price
2010 Financial Year
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TOWER Shares v NZX Index
1 Oct 2009 to 25 May 2010
Dividend Reinvested
0.50
0.40
NZX All
0.30 Index
0.20
0.10
0.00
-0.10
-0.20
-0.30
-0.40
-0.50
Price Difference (cents) v Index
1.10.09 8.10.09 15.10.09 22.10.09 30.10.09 6.11.09 13.11.09 20.11.09 27.11.09 4.12.09 11.12.09 18.12.09 29.12.09 7.01.10 14.01.10 21.01.10 28.01.10 4.02.10 11.02.10 18.02.10 25.02.10 4.03.10 11.03.10 18.03.10 25.03.10 1.04.10 12.04.10 19.04.10 26.04.10 3.05.10 10.05.10 17.05.10 24.05.10
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9
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TOWER – Health & Life
Analysis of Profit - Total
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| ysis of Profit - Total | ||
|---|---|---|
| Half year ended | ||
| $ millions | Mar-10 Mar-09 99.4 95.9 (75.6) (71.0) (37.2) (40.7) (9.4) 43.0 47.8 (18.3) 25.0 8.9 4.6 2.2 29.6 11.1 (12.7) 2.7 16.9 13.8 0.4 5.1 17.3 18.9 |
Sep-09 |
| Net premiums Incurred claims Management and sales expenses Movement in policy liabilities Investment income/(loss) on assets backing policy liabilities |
97.2 (77.1) (41.4) (10.9) 50.5 |
|
| Insurance profit Investment income on shareholders' funds |
18.3 5.0 |
|
| Profit before tax Income tax (expense)/credit |
23.3 (5.5) |
|
| Underlying profit after tax Discount rate effect |
17.8 (1.9) |
|
| Profit after tax | 15.9 | |
| % change | ||
| Underlying profit after tax Profit after tax |
22% (8%) |
|
-
Continuing growth in net premiums
-
Strong reduction in management and sales expenses
-
Increase in underlying profit after tax
10
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TOWER – Health & Life
Analysis of Profit - Health
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| WER – Health & Life ysis of Profit - Health |
WER – Health & Life ysis of Profit - Health |
|
|---|---|---|
| Half year ended | ||
| $ millions Mar-10 Mar-09 Net premiums 67.7 65.3 Incurred claims (43.3) (39.6) Management and sales expenses (17.5) (18.7) Movement in policy liabilities (0.1) (4.7) Investment income on assets backing policy liabilities 1.6 5.9 Insurance profit 8.4 8.2 Investment income on shareholders' funds 1.2 1.0 Profit before tax 9.6 9.2 Income tax expense (2.9) (2.8) Profit after tax 6.7 6.4 |
Sep-09 | |
| 66.3 (43.5) (18.3) 0.4 0.4 |
||
| 5.3 1.1 |
||
| 6.4 (1.9) |
||
| 4.5 | ||
| % change | ||
| ~~~~ ~~Net premiums have continued to grow and a~~re up by 4% Profit after tax 5% |
||
| % change | |||
|---|---|---|---|
| ~~~~ Profit after tax |
~~Net premiums have continued to grow and a~~re up by 4% 5% |
-
Management and sales expenses tracking down
-
Profit after tax up by 5% on the same period last year
11
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TOWER – Health & Life
Analysis of Profit - Life
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| sis of Profit - Life | ||
|---|---|---|
| Half year ended | ||
| $ millions | Mar-10 Mar-09 31.7 30.6 (32.3) (31.4) (19.7) (22.0) (9.3) 47.7 46.2 (24.2) 16.6 0.7 3.4 1.2 20.0 1.9 (9.8) 5.5 10.2 7.4 0.4 5.1 10.6 12.5 |
Sep-09 |
| Net premiums Incurred claims Management and sales expenses Movement in policy liabilities Investment income/(loss) on assets backing policy liabilities |
30.9 (33.6) (23.1) (11.3) 50.1 |
|
| Insurance profit Investment income on shareholders' funds |
13.0 3.9 |
|
| Profit before tax Income tax (expense)/credit |
16.9 (3.6) |
|
| Underlying profit after tax Discount rate effect |
13.3 (1.9) |
|
| Profit after tax | 11.4 | |
| % change | ||
| ~~~~ ~~Continued premium growth~~ Underlying profit after tax 38% Profit after tax (15%) |
||
| Profit after tax | 10.6 | 12.5 11.4 |
|
|---|---|---|---|
| % change | |||
| Underlying profit after | tax | 38% | |
| ~~~~ Profit after tax |
~~Continued premium growth~~ | (15%) |
-
Material reduction in management expenses
-
Investment income up strongly on previous period
-
Underlying profit increased
12
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TOWER – Health & Life
In-force Premiums and Lapses
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220 16%
200
14%
180
12%
160
140 10%
120
8%
100
80 6%
60
4%
40
2%
20
0 0%
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Individual & Group Health Individual Life
Group Life Total Premiums
Individual & Group Health Lapse Individual Life Lapse
$ millions
Lapse Rates
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-
Overall premium growth across all business lines
-
Reduction in lapse rates in all business lines
13
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TOWER – Health & Life
Premiums from New Business
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12
10
8
6
4
2
0
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Individual & Group Health Individual Life Group Life Total New Business
$ millions
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14
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TOWER – Health & Life
Health Claims Ratio
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70%
60%
50%
40%
30%
20%
10%
0%
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Individual & Group Health
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- Health claims in line with performance in the same half last year
15
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TOWER – Health & Life
Life Claims Ratio
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80%
70%
60%
50%
40%
30%
20%
10%
0%
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Individual Life Group Life Total Life
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-
Individual Life claims ratio increased slightly
-
Strong reduction in Group Life
16
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TOWER – Health & Life
Management & Sales Expenses
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45
40
35
30
25
20
15
10
5
0
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Management expenses Commissions Total expenses
$ millions
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Management expenses continue to reduce
17
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TOWER – General Insurance
Analysis of Profit
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| WER – General Insurance lysis of Profit |
|
|---|---|
| Half year ended | |
| $ millions Mar-10 Mar-09 Net premiums 90.8 99.7 Incurred claims (46.0) (52.8) Management and sales expenses (33.6) (36.2) Underwriting result 11.2 10.7 Investment income on assets backing technical reserves 3.9 2.6 Insurance profit 15.1 13.3 Investment income on shareholders' funds 2.4 1.4 Profit before tax 17.5 14.7 Income tax expense (5.6) (5.3) Profit after tax 11.9 9.4 |
Sep-09 |
| 95.3 (56.7) (35.2) |
|
| 3.4 4.6 |
|
| 8.0 2.6 |
|
| 10.6 (2.7) |
|
| 7.9 |
% change
Profit after tax 27%
-
Reduction in premiums
-
Claims expenses are down
-
Underwriting and insurance profit increase
18
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TOWER – General Insurance
Gross Written Premiums & Lapses
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25%
220
200
20%
180
160
140 15%
120
100
10%
80
60
5%
40
20
0 0%
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
New Zealand Pacific Island Total GWP Lapse rate
Lapse Rate
Rolling 12 month GWP ($m)
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-
New Zealand direct business continues to experience strong premium growth
-
Pacific premiums stable in local currencies
-
Retention rates in direct business and Pacific remain strong
19
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TOWER – General Insurance
Net Premiums & Claims
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120 80%
100 70%
80 60%
60 50%
40 40%
20 30%
0 20%
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Net premiums Claims Claims ratio
$ millions
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Benign weather events and cost management reflect a reduced claim ratio
20
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TOWER – General Insurance
Management & Sales Expenses
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35
30
25
20
15
10
5
0
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Management expenses Commissions Total management expenses and commissions
$ millions
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-
We continue to invest strongly in our direct brands
-
Commission costs remain steady
21
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TOWER – Investments
Analysis of Profit
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| Half year ended | ||
| $ millions | Mar-10 Mar-09 18.2 18.8 (15.3) (15.5) 2.9 3.3 (0.9) (1.0) 2.0 2.3 |
Sep-09 |
| Total income Management and sales expenses |
21.0 (16.1) |
|
| Profit before tax Income tax expense |
4.9 (1.4) |
|
| Profit after tax | 3.5 | |
| % change | ||
| Profit after tax | (13%) | |
-
Revenue and costs down
-
Pricing continues to be reviewed
22
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TOWER – Investments
Funds Under Management
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6,000 30
5,000 25
4,000 20
3,000 15
2,000 10
1,000 5
0 0
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
FUM Total Income
$ millions
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Funds under management grew by 10% from March 2009
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Total fee income down by 3% to $18.2m
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TOWER – Investments
Expenses
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22
20
18
16
14
12
10
8
6
4
2
0
Sep-07 Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Management expenses Sales expenses
Other expenses Kiwisaver/PIE establishment
Total expenses
$ millions
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- Expenses controlled to ensure business is resourced and sized appropriately
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TOWER – Investments
KiwiSaver
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500 90,000
80,000
400
70,000
60,000
300
50,000
40,000
200 402.4
326.5 30,000
100 198.0 20,000
139.2
10,000
57.1
0 0
Mar-08 Sep-08 Mar-09 Sep-09 Mar-10
Funds under management Number of members
$ millions Members
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TOWER KiwiSaver as at 31 March 2010 had:
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82,143 Members
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$402.4m of Funds under management
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TOWER Group Balance Sheet
Summary
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| $ millions Mar-10 Mar-09 Cash & call deposits 150.6 152.7 Total investment assets 1,125.7 1,090.2 Other operational assets 312.4 312.3 Total assets 1,588.7 1,555.2 Policy liabilities & insurance provisions (941.3) (934.4) External debt - bonds (80.3) (78.9) External debt - bank (86.3) Other operational liabilities (150.7) (148.2) Total liabilities (1,172.3) (1,247.8) Total equity 416.4 307.4 |
Sep-09 |
|---|---|
| 146.4 1,130.0 314.5 |
|
| 1,590.9 (954.1) (80.0) (152.4) |
|
| (1,186.5) | |
| 404.4 | |
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Looking Forward
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TOWER – Looking forward
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TOWER has announced another solid result for the first half of its financial year amid the continuing market volatility
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Market conditions will present further challenges over the next six to twelve months
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We continue to rationalise our products across the business, widen our distribution channels and develop direct sales
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We are well positioned for continuing the growth of the business
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Looking Forward
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The new life taxation legislation comes into effect on 1[st] July 2010
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Prudential regulation of insurers which are coming into effect
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New legislation advisor regulations
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The implementation of the new computer system is progressing well and will be fully operational within the next 13 months
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Pursuing sustainable and profitable growth in our chosen markets remains the primary focus of TOWER management
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TOWER Group
Half Year Results – 31 March 2010
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End
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