Thursday 18th of November 2004

Tower's annual result yesterday was an interesting affair as on the surface it looked like a good set of numbers. Digging into them though presented a different picture. As a result there has been some strong broker comment with one report criticising management for not sufficiently explaining the result.
"Unless management is more forthcoming at the briefing about (1) any other one-off reasons for the FY04 weakness and/or (2) the near-to-medium term earnings outlook, we see little in the result to alter our Underperform/ Sell call."
The issue is that the operating earnings aren't as strong as they appear, and the result is boosted by some revaulations and the like.
The performance of the New Zealand business is interesting. Risk has been going extremely well, and is likely to get another boost with the recent launch of its new 360 product. Investments are still struggling though.
Tower isn't alone in this area - most fund managers it would seem are having a hard time of it. This is one of those topics which I'd like to explore in more detail later, and one I'd like to hear your views on. Why have funds flows been poor andlumpy this year?
The other point from the Tower media briefing was my question about what is happening with the appointment of a new boss for the recently combined NZ business?
Neither the head of the insurance business Paul Hunt nor the boss of the investment side, Paul Bevin, want the job.
Speculation has it Hunt is moving one, hence his appointment to the Adviser taskforce.
Tower boss Keith Taylor was a little cagey on this one saying no appointment would be made until next year and they are working on some issues - sounds like watch this space.