Johannesburg — EMPOWERMENT firm Sekunjalo yesterday posted an operating loss of R28m in the year to August, but CEO Khalid Abdulla said it now had a strong balance sheet to "cherry-pick" assets being sold by cash- strapped owners.

Abdulla said the group had incurred costs of about R10m to restructure its portfolio of businesses involved in such diverse sectors as IT, tourism, health and fishing. He estimated the restructuring would yield bottom-line savings of up to R40m in the next two financial years.

"When the global recession started, it was quite clear that the consequences would be dire and we were very pro-active in taking positive steps to restructure the business during the past 12 months," he said.

"Our balance sheet is now stronger, we are now much leaner and we will consider acquisitions as long as they make business sense.

"It is interesting that we used to get offers from sellers which were too high, but now we are being approached by the same people with discounted prices. So it allows us to cherry-pick the businesses we want."

He said the group would consider acquisitions in such growth areas as IT, but would use strict investment criteria, which included strong cash-flow generation and the ability to run on a lean cost structure.

Reviewing the year, Abdulla said that despite the operating loss, the group was on a sound footing to take advantage of new opportunities. Revenue fell to R405,9m from R601,53m, while the operating loss of R28,01m compared with an operating profit of R29,29m last year .

Its businesses took the strain of the recession, but Sekunjalo Technology Solutions made an operating profit of R12,8m, slightly lower than the R15,2m made the year before.

"This drop is primarily associated with the disposal of Synergy at the half-year mark and with the impact of the general downturn in spending given the economic conditions of the last 12 months," Abdulla said.

Among post-balance sheet events was the decision to abandon a R1bn technology contract with the Gauteng government over non-payment of services.