Sofcom in urgent strategic review

The board of ASX-listed Sofcom has launched a strategic review of finances, assets and operations to evaluate its performance, profitability and future prospects.

The move comes in the wake of shareholders issuing requisition notices last month following the continued losses the company suffered for the financial year ending in June, which totalled just over $5 million.

A director's report from Sofcom (Software Communication Group) said "strategies to make the current businesses more profitable and whether this will ever be possible under the current cost structure" were being looked at. Other considerations include disposal of one or more of the businesses to stem losses and "various alternative ways" to use remaining cash reserves, which were $9.25 million at the end of the financial year. It is not clear whether disposal would mean closing or selling.

Sofcom, established in 1981 by Professor Les Goldschlager, now the executive chairman, has been listed on the ASX for more than two years and acquired two businesses during December 2000 in an attempt to build company capacity.

The first of these was Web design company Zivo, which it bought from administrators for less than $50,000 following the dotcom collapse in April 2000. The other was Stanley & Milford, a marketing and communications consultancy for the online, government and services sectors.

The other two divisions of Sofcom operations are Web development and maintenance, and advertising sales. An advertisement has been placed in a national newspaper inviting expressions of interest for all divisions of the company.

"There has been a weakening in the whole IT sector and many companies have had some difficulties," Goldschlager said. He refused to go into any further detail.