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Shareholder Review
Annual Report
Notice of Meeting
FROM THE CHAIRMAN
I am very pleased to report that 2008 was
another year of strong progress for TOWER
Australia Group Limited (TOWER Australia)
despite the challenging economic
environment locally and globally.
Reported net profit after tax for the 12 months
to 30 September 2008 increased 69% to
$68.7 million compared with the 2007 year.
Underlying net profit, which excludes noncash
items and normalises investment
income, increased 14% over the year to
$67.9 million. These are very solid results.
In these times of turmoil in the financial
markets, TOWER Australia's strong capital
position, solvency cover of 2.5 times
regulatory requirements, conservatively
managed capital investments and low
levels of debt have stood it in good stead.
The company is well placed to weather the
current difficult markets and will continue to
focus on the basics of sustainable growth and
sound business operations. The Company
has a strong position in the life risk market
which is an attractive, growing market. We
have a good platform from which to build
and we will continue to explore value adding
opportunities for growth as they arise in
the life insurance market.
The Board of Directors has declared a
dividend for the year of 4.5 cents a share,
fully franked, and this will be paid on
19 January 2009. The dividend payout
ratio has been maintained at 25% of
underlying profit after tax reflecting TOWER
Australia's financial strength and the positive
trend in earnings.
The membership of the TOWER Australia
Board changed during the year with
Elana Rubin and Don Findlater joining
the Board and bringing with them their
extensive financial services expertise
particularly in the areas of life insurance,
superannuation and the investment sectors.
Gary Weiss and Michael Jefferies resigned
from the Board in August 2008 following
the decision by the Guinness Peat Group
(GPG) to accept an offer for its shareholding
in TOWER Australia from The Dai-ichi Mutual
Life Insurance Company (Dai-ichi Life).
I would like to extend our appreciation
to both Gary Weiss and Michael Jefferies
for the enormous contribution they made
to TOWER Australia during their time on
the Board. These two Directors and GPG
actively supported TOWER Australia's
growth for over five years and played
a very supportive role in the Company's
strategic direction.
Two significant events have occurred
subsequent to the financial year end which
will help underpin TOWER Australia's future
successes. In October 2008, TOWER
Australia announced it was acquiring the
85% interest in InsuranceLine that
it did not already own. This transaction
was completed in early November 2008
and represents a strategic move by
TOWER Australia to strengthen and
enhance its position in the overall life
insurance market of Australia.
The acquisition of InsuranceLine
complements TOWER Australia's existing
Advice and Workplace distribution channels
and gives us end-to-end distribution
capability in the direct to customer segment
of the market which is not served by advice.
This will strategically enhance
TOWER Australia's distribution model
and reduce operational risk.
Also in October, we were delighted to see
shareholders approve Dai-ichi Life acquiring
the remaining 9.8% shareholding in
TOWER Australia held by GPG to secure a
total shareholding just under 30%. Dai-ichi
Life which some months earlier secured
19.9% of TOWER Australia shares is Japan's
oldest mutual life insurance company and
one of the world's top ten life insurers based
on premium income.
Given the recent global events in the
financial and insurance sectors we are
fortunate to have Dai-ichi Life as our
cornerstone shareholder, with its scale,
extensive insurance experience in the life
insurance industry and desire to support
TOWER Australia's strategy, Board and
management team. We look forward to
working productively with Dai-ichi Life over
the coming years.
I would like to welcome two new Directors,
Mr Takayuki Kotani and Mr Tetsuya Kikuta
from Dai-ichi Life, who joined the Board
on 8 December 2008. Both Mr Kotani and
Mr Kikuta have worked for over 20 years
with Dai-ichi Life and have specific
responsibilities for Dai-ichi Life's
international businesses.
TOWER Australia's ambition is to make
life solutions a well understood and valued
part of peoples' lives. Our values reflect
the importance of delivering service,
being uncomplicated and straightforward,
encouraging new ideas and above all being
relevant to people and their needs. Our
strategy is one of leadership in the Australian
life insurance market with the interests of
customers and partners at the forefront.
I would like to take this opportunity to
thank our Managing Director, Jim Minto,
his senior executive team and all our staff at
TOWER Australia for their hard work, effort
and diligence over the past 12 months in
continuing to deliver for all stakeholders in
often difficult and challenging times.
I would also like to thank my fellow Directors
for their hard work, support and guidance
over the past year and into the future.
It will take time for the instability of the
recent global economic situation to work
through, but TOWER Australia is very well
placed and will continue to focus on
delivering value to shareholders, business
partners and customers. Good momentum
is evident in all our businesses.
Robert Thomas
Chairman
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