Strathmore’s Half Year Result In Line
FOR IMMEDIATE RELEASE
Strathmore’s Half Year Result In Line With Expectations
[Operating surplus of $4.8 million]
AUCKLAND, 12 April 2001 – Strathmore Group Ltd (NZSE: SMR) has announced an operating surplus of $4.8 million for the half year ended 31 January 2001, which includes a gain on the realization of an investment. The reported result represents a profit of 2.5 cents per share compared with a profit of 2.3 cents per share in the previous corresponding half year. The operating surplus is after charging costs for portfolio management and the equity accounting of the result of some of the early stage companies in the portfolio.
Strathmore’s Executive Chairman, Phil Norman, indicated that the result was in accordance with expectations for the Company. “Reporting these earnings is a direct result of the decision to partially realise the investment in CommSoft through the sell down at IPO and buy back”.
Strathmore’s unlisted portfolio companies, including Genie Systems, Soft Tech and Global Online Promotions, are all continuing successfully to develop their businesses into international markets. Genie Systems has established a beach head in Asia with a major Singaporean partner and is now closing sales in the US. Soft Tech has recently won the first contract for its new 3D configuration software in the competitive US market and is actively executing a joint product offering with Computer Associates in the US. Global Online has performed well with its Kachingo product in New Zealand and has strong retail and investor interest in the US.
While CommSoft’s increase in its provision for doubtful debts led to a disappointing interim result, Strathmore is actively assisting the company to make appropriate changes to recover its market momentum and to fully achieve the potential represented by its intellectual property, personnel and channel relationships. The planned introduction of additional senior management will be an essential part of achieving that positive outcome and a recovery in its share price and the value that represents for Strathmore.
“Strathmore will continue to invest resources to effect significant value creation in its portfolio companies in the medium term. The Company’s ownership of this portfolio of growing businesses and their potential is the real value,” said Norman. “As we advised shareholders at the 2000 AGM and in the Annual Report, individual reporting periods may be changeable. Venture capital is patient capital.”
“Strathmore and its portfolio are not insulated from the difficult market conditions for technology stocks, which are particularly severe in the US at the moment. Each portfolio company continues to carefully manage its scarce financial resources and a number have raised further funds to ensure sufficient cash is available to continue their expansion. Strathmore has provided some of this funding and, where appropriate, has assisted its investee companies to seek support from third parties.
It seems likely that there will be continuing market volatility in the technology sector for the remainder of the year, which will affect Strathmore’s share price. Strathmore has put in place suitable arrangements to ensure it has adequate financial resources for the year to allow the time required to work with and support its investee companies. Despite general market sentiment, continuing progress in the portfolio companies in accordance with the strategies planned will deliver value increases to Strathmore shareholders. “In addition, the Board will continue to review the Strathmore business model and look at the widest possible range of activities and relationships to achieve shareholder value”, said Norman.
Other details announced in the Strathmore result included total assets with a recorded value of $23.4 million and liabilities of $0.9 million.
About Strathmore Group Limited
Strathmore Group Limited is a technology investment company with approximately $22.5 million of shareholders’ equity. It targets information technology companies with potential to deliver accelerated growth in shareholder value by competing in global markets. It provides strategic advice, capital support, operational assistance, industry expertise and a network of relationships to assist technology companies to migrate internationally.