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.
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Jason Spits
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