HALFYR: TWR: Preliminary announcement for half year ended 31 March 2010

28 May 2010 9:05 am

TWR 28/05/2010 HALFYR

REL: 0905 HRS Tower Limited

HALFYR: TWR: Preliminary announcement for half year ended 31 March 2010

MEDIA RELEASE

For immediate release

28 May 2010

INTERIM DIVIDEND CONFIRMS TOWER ON TRACK

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.

"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.

RESULTS FOR ANNOUNCEMENT TO THE MARKET

TOWER LIMITED Reporting Period 6 months to 31 March 2010 Previous Reporting Period 6 months to 31 March 2009

Revenue from ordinary activities Amounts (000s) NZ$ 288,934 Percentage change 30.4% increase

Net profit from ordinary activities after tax attributable to shareholders Amounts (000s) NZ$ 27,859 Percentage change 5.9% increase

Net profit attributable to shareholders Amounts (00s) $NZD 27,859 Percentage change 5.9% increase

Interim Dividend Amount per security Imputed amount per security NZ 4 cents 0.0171429 Record Date Friday 18 June Dividend Payment Date Friday 2 July

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.

ENDS

For further information please contact: Rob Flannagan Group Managing Director TOWER Limited Tel: +64 9 369 2057 End CA:00195469 For:TWR Type:HALFYR Time:2010-05-28:09:05:59

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