STRATHMORE GROUP LIMITED
Interim Report
31 January 1998

Directors’ Report

  1. The Directors advise that Strathmore has recorded an unaudited profit, before accounting for its associate company investments, of $430,628 for the six month period to 31 January 1998.
  2. After accounting for Strathmore’s investments in its two associated companies Strathmore Group made a loss of $437,963. The loss stems from (i) amortising the goodwill relating to the purchase of these investments totalling $299,021, and (ii) Strathmore’s share of losses from these two associates totalling $569,570.
  3. Both associate companies Wellington Drive Technologies Limited (Wellington Drive…30% owned by Strathmore) and CES Communications Limited (CES…43% owned by Strathmore) are experiencing losses as both move into the production/marketing phase of their respective technologies. In both cases actions are currently underway to minimise losses.
  4. The Wellington Drive Interim Result for the six months to 31 December 1997, including the comments of the Directors, is attached.
  5. CES has continued to progress the development of its technology over the last period. The success of CES Safe, the division of CES involved in marketing secure telecommunication equipment, will depend to quite a degree on the acceptance of governmental organisations adopting the CES technology. A number of large governments are currently reviewing the technology with a view to implementation in the near future.
  6. The NASA testing of the CES Spread Time Communication methodology was completed in November. Analysis of the results has not yet been completed. However there is a lot of international interest in the tests as they may have implications for future wireless communications particularly for satellite telecommunication operators.
  7. Strathmore intends proceeding with the buyback offers on the NZ Stock Exchange as approved at the Annual General Meeting. This may see up to 28,500,000 shares repurchased and up to $10m distributed to shareholders. This offer will commence 48 hours after the interim report is despatched to shareholders and will close on 9 April 1998 if not filled earlier. The maximum buyback price will be determined with regard to the formula put before shareholders but in any event will not be greater than 36 cents. As previously advised to shareholders the Directors may sell shares under this buyback.
  8. The Directors of Strathmore have taken a cautious approach with regard to investing in the financial markets. The prime objective in the short term will be to remain focused on maximising our opportunity from our existing investments.

 

Dr R.J. Thomson
Chairman of Directors
12 March 1998

 

Consolidated Statement of
Financial Performance

 

Six months ended
31 January

Year ended
31 July
 

1998
 $000

1997
 $000

1997
 $000

Operating Revenue

      

Interest income

525

706

1,158

Other revenue

-

1,764

2,401

Total operating revenue

$525

$2,470

$3,559

Surplus before taxation

132

715

1,056

Less taxation expense

-

-

-

Surplus after taxation

132

715

1,056

Share of deficits of associate
entities after tax

(570)

(240)

(527)

Group profit/(loss) attributable to the shareholders of the parent company

 

($438)

 

$475

 

$529

Consolidated Statement of
Movements in Equity

Equity at 1 August

16,302

19,272

19,272

Net Surplus for period

(438)

475

529

Shares re-purchased

-

(3,330)

(3,454)

Share of movements in associate company reserves

(14)

(51)

(45)

Equity at 31 January 1998

$15,850

16,366

$16,302

These half year accounts have not been audited.

Consolidated Statement of
Financial Position

 

As at
31 January

As at
31 July
 

1998
 $000

1997
 $000

1997
 $000

Non Current Assets

      

Fixed Assets

4

11

7

Investments in:

- unlisted companies

 

-

 

407

 

-

- associate entities

75

26

290

Goodwill on consolidation

2,753

3,054

2,860
 

2,832

3,498

3,157

Current Assets

      

Cash, call & term deposits,
& commercial bills


13,006


12,865


13,142

Receivables & tax

5

9

2

Investments

21

24

22
 

13,032

12,898

13,166

Total assets

$15,864

$16,396

$16,323

Shareholders’ Equity

      

50,652,684 (1/97 - 51,002,384,
7/97 – 50,652,684) fully paid
ordinary shares


39,650


39,774


39,650

Accumulated deficit

(23,786)

(23,402)

(23,348)

Share of associate entity reserves

(14)

(6)

-
 

15,850

16,366

16,302

Current Liabilities

14

30

21

Total funds employed

$15,864

$16,396

$16,323

There have been no change in accounting policies, which have been applied on the bases consistent with the previous year.

Consolidated Statement of
Cash Flows

 

Six months ended
31 January

Year ended
31 July
 

1998
 $000

1997
 $000

1997
 $000

Operating cash flows:

      

Gross cash from interest, sales
of trading shares & dividends

 

525

 

2,470

 

3,547

Payments to suppliers, employees,
trading share purchases & tax

 

(103)

 

(139)

 

(220)
 

422

2,331

3,327

Investing cash flows:

      

Sale/(purchase) of fixed assets

2

(10)

(10)

Purchase of share investments

(560)

(1,208)

(1,803)
 

(558)

(1,218)

(1,813)

Financing cash flows:

      

Repurchase of shares

-

(3,360)

(3,484)

Net increase/(decrease) in cash held

(136)

(2,247)

(1,970)

Cash at beginning of period

13,142

15,112

15,112

Cash at end of period

$13,006

$12,865

$13,142

Reconciliation of Net Surplus to
Operating Cash Flows

Net suplus after tax

132

715

1,056

Add non cash items:

      

Depreciation

1

4

8

Amortisation of goodwill

299

173

416

Add/(Less) working capital movements:

    

Receivables & tax

(3)

3

10

Creditors

(7)

(41)

(49)

Current investments

-

1,447

1,449

Items re-classified:

      

Sale of non current investments

-

-

407

Share re-purchase creditors

-

30

30

Net operating cash flows

$422

$2,331

$3,327

 

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