Hefty dividend from cash-flush Compu-Clearing
SOFTWARE company Compu-Clearing Outsourcing is handing out a dividend of 25c to shareholders, making it one of the most generous payers for its size on the JSE, says chairman Arnold Garber.
The company was generating too much cash for its growth requirements, and with no acquisitions planned it was happy to hand back some of its R27,8m cash reserves to investors, Garber said yesterday.
The dividend was declared in its results for the year to June. Revenue of R45,4m was up 8% from R42,2m, and attributable profit of R10,9m rose 33% from R8,2m. Diluted earnings per share also rose 33% from 19,9c to 26,5c.
“We are rolling out a number of new products, and have sufficient cash for the renewal of our software,” Garber said. “Only about a quarter of our cash is being flushed out, even with this dividend.”
A note of caution was that the leap in profit came largely from savings generated by restructuring its networks rather than by growing its revenue. Those savings may not be repeatable. “We have signed some new contracts and renewed a massive contract so we are definitely going to have growth, but maybe not at 30%,” Garber said.
Compu-Clearing earns the bulk of its revenue developing software for the freight forwarding and customs clearing industries. Efforts to diversify into related niches and to win work abroad have been slow, and Garber said the company was being ultraconservative rather than burning through its money in fast but potentially fatal expansion.
A long-planned sideline to give its clients access to trade financing and foreign exchange in partnership with niche banks met some serious development delays because the software had to be adapted to run over the internet rather than be installed on customers’ computers. That would probably be launched only next year.
A new product that was growing quickly was its software for independent warehouse operators, which contributed under 3% of the turnover so far but was growing by 50% a year.
New contract wins were also expected for its software to automate international airways bills, the air tickets of the cargo industry. Only 50% were automatically generated, and smaller companies still produced the bills manually. Compu-Clearing’s internet-based system was being used by two companies in the US, but now it wanted to market it to developing countries.
“These things are all blue sky and very small contributors to the business,” Garber said. “Growth is still going to come from our main business, which is customer clearing and freight forwarding.” Even if the economy shrank, people needed to import goods, and Compu-Clearing earned its money on the number of imports being handled, not on the size of each shipment.
Imara SP Reid analyst Warwick Lucas said recently Compu-Clearing was a reliable producer of special dividends, and the market seemed to take umbrage when it had the temerity to invest in its own business. It was fine to trust the management’s judgment on that score, he said, rating the share a buy up to 240c. Its shares were priced at R2 on Monday.
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