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Tower upgrades profit forecast

Tuesday 1st November 2005

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Tower is signalling that its turnaround is well on the way by announcing that its earnings for the year to September 30 will be up more than 60%.

It says, in a statement to the NZX, that net profit after tax (before revaluations and goodwill amortisation and excluding Australian Wealth Management) for the year is expected to be in the range of $40-43mill, up 63-75% on the prior year.

Operating earnings from continuing businesses, which exclude AWM, investment income, head office and financing costs, are expected to be in the range of $30.5-32.5mill, up 40-50% on the prior year.

Investment income picked up strongly in the second half, reflecting the continued strength in equity markets. The company expects total investment income from shareholders funds to be in the order of $28m for the full year, an increase of approximately 29% on the prior year.

In May 2005 the company reported that the NZ risk businesses were encountering a number of problems primarily related to a decline in service levels. While these have been substantially remedied, the 2005 operating result in NZ has been adversely impacted. Second half operating earnings in the NZ risk businesses are down approximately $8m from the first half.

Operating earnings for the second half in Australia are expected to be marginally below the strong first half result.

The full year-end accounting process and year-end audit have not yet been completed. It is anticipated that the final result will be announced, as scheduled, on 24th November 2005. The final result will include any subsidiary revaluations, amortisations and AWM operating earnings plus gain on sale.

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