Tower slumps on back of Bridges writedown
NEW Zealand-based financial services groupTowerhas recorded its first ever loss as a listed company on the back of a $32 million write-down of its Australian financial planning business,Bridges Financial Services.
The loss, a total of $68.9 million for the year to September 30, 2002, compares to a $68.7 million profit for the year to September 2001.
The write-down of the Bridges business, the result of a recent valuation of the company by Deutsche Bank, comes just two years after Tower paid $168 million for the financial planning group.
The write-down also coincides with plans by Bridges to implement more generous income sharing arrangements with financial planners.
The changes, to come into effect from next April, will see financial planners get a better share of income from the group’s master trust, as well as a better cut of commissions for recommending the group’s other investment products.
It is expected the changes will result in a 20 per cent drop in the profitability of Bridges for at least the next two years.
However, Bridges managing director David Bleakley says the group would eventually recoup the profits by boosting funds under management through its previously stated goal of increasing the number of its financial planners.
Bleakley has also denied the instability of the Tower group was causing concern among Bridges planners, particularly in Western Australia where there was speculation the Perth-based office was looking to pull away from the group.
“I was in Perth [last week] and I am confident they will stay with Bridges,” Bleakley says.
The announcement of the poor Tower result last week caps off a difficult year for the group, which saw the departure of both its long standing group managing director James Boonzaier and group chief operating executive Ken Boag.
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