Strathmore warns of tech volatility

By Phil Boeyen, ShareChat Business News Editor

Friday 13th April 2001

Technology investment company Strathmore Group (NZSE: SMR) is warning of continuing volatility in the tech sector which will affect the company's share price.

Strathmore has reported a $4.82 million profit for the half-year ended January, mainly as a result of realising some of its investment in software company CommSoft (NZSE: CSG), which was floated last year.

Since then Commsoft's share price has fallen dramatically due to problems with bad debts however SMR executive chairman Phil Norman is promising his company's help to get CSG back on track.

"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."

Although selling some of its CommSoft investment helped Strathmore to increase half-year profit from 2.3 cents per share previously to 2.5 cents per share, sales revenue fell from $1.86 million to just $129,000.

Mr Norman says the result was in accordance with expectations and he is advising shareholders that "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 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."

Mr Norman says the company's unlisted investments, including Genie Systems, Soft Tech and Global Online Promotions, are continuing successfully to develop their businesses into international markets.

Strathmore's assets are currently recorded at $23.4 million with liabilities of $900,000. No interim dividend has been declared.

Comments from our readers

No comments yet