Mergers, Acquisitions and Financial Results

Technology company Compu-Clearing is handing out its entire annual profit to shareholders as it is generating more cash than it needs.

Shareholders will receive a dividend of 11c and a capital distribution of 9c, with the total sum of 20c a share soaking up its R7m profit for the year to June 30.

"Very few businesses pay 100% of their earnings out, but we are extremely cash-flush," said CEO Arnold Garber. "We just have too much cash."

Compu-Clearing specialises in software for the freight-forwarding and customs industries.

Since it makes its money from selling services rather than from selling new products, its income is steady, with very little fluctuation from month to month.

Its revenue of R39,7m for the year was up from R37,5m, while headline earnings a share rose 31% from 15,3c to 19,9c. Cash resources rose from R12,5m to R19,6m.

Garber said the growth in profits had been achieved through a combination of stronger revenues, improved cost controls and a reduction in secondary tax.

Some of the savings came by closing its branch operations and appointing business partners to represent it instead.

The same model will be used to try to expand abroad -- avoiding the need to establish a direct presence in other countries.

Some cash reserves will be used to redevelop its systems to serve international markets, and the offshore operations are not expected to contribute to the company for up to a year while the redevelopment takes place.

Two other projects that have been in the pipeline for months are yet to provide any revenue or profit growth.

One is a scheme for Compu-Clearing to arrange foreign exchange financing for its customers by electronically forwarding all their import documents to a bank, which will supply the forex.

That will save customers from having to submit their own documents, although it will force them to take forex from the niche bank Compu-Clearing is working with.

A second new service is an order-planning system for importers, which are not paid for the goods they bring in for several weeks.

To tide them over, they usually take out trade-financing loans.

Compu-Clearing will arrange that funding at a lower rate with a niche bank for a little commission.

Those operations were now being launched but would probably not make any contribution in the next few months, said Garber.

Business Day