NZSE queries Tower disclosure

In a letter to the company, the NZSE asked Tower when it had become aware of its adverse financial results, which included seven different one-off items, which would result in a net loss for the year to September 30 of at least $NZ30 million ($26.3 million).

Tower claimed it had only become aware of the problems on October 30 when a six-month actuarial review was nearing completion; at the same time the group was completing a review of the carrying value of some capitalised items.

These figures were put to the board meeting on November 1, a day after the company put its shares in a trading halt.

A large number of Tower's problems relate to its Australian life operations but acting chief executive Keith Taylor said last week the group did not have solvency issues and would return to normal profits in 2002-2003. Tower closed 7c lower at $1.50.

When the NZSE asked why the adverse items were not known before the trading halt, Tower said the actuarial review was complex and took some weeks to complete.

``The review of carrying values of capitalised items is an end-of- year process carried out in line with a normal timetable," it said.

However, at least two of the items were not actuarial in nature: $NZ9 million in redundancy and termination payments including a $NZ2 million payment to former managing director James Boonzaier; and $NZ4 million in due diligence costs relating an uncompleted takeover of Royal & Sun's financial services operations.

The NZSE also asked why Tower had conducted analyst briefings which made no mention of possible write-offs during the actuarial review, to which the company replied that it did not discuss future results during those briefings.

A revaluation of Bridges, the financial planners bought for $168 million in September 2000 and since revalued up to $198 million, is possible after an independent review is completed this month.