JSE-listed Compu-Clearing Outsourcing says a period of exceptional cash flow generation positions it well for growth in the international arena.
Chairman and CE Arnold Garber says the company will not be setting up offices, but rather marketing its services in different countries, starting with the US. Customers will be able to connect via the Internet.
<B>Salient figures</B>
Compu-Clearing Outsourcing results for the six months to 31 December 2002.
Year-earlier figures in parentheses:
Total revenue: R16.26m (R14.41m)
Operating profit: R3.98m (R3.49m)
Profit before tax: R4.83m (R3.69m)
Attributable earnings: R3.23m (R2.46m)
HEPS: 8c (5c)
Dividend per share: 3c (2.5c)
Cash generated by operations: R6.66m (R5.55m)
Cash flows from operating activities: R5.19m (R2.7m)
Current assets: R21.1m (R16.27m)
Liquid current assets: R15.38m (R9.84m)
Current liabilities: R3.26m (R2.3m)
NAV per share: 75.1c (66.2c)
He says the company decided on this route because although having R15 million cash sounds good in local terms, it is "peanuts" when taken abroad. At the same time, the company is not a large one, and the approach it is taking means there is less chance of being burned.
The company also has a conservative acquisition policy which involves buying other companies only when they are of the same quality as Compu-Clearing and which add value to the existing business.
Garber says the nature of the business is continuing to change and Compu-Clearing is becoming more focused on its core business - software for the customs clearing and freight forwarding industry - and less dependent on hardware and networking.
For the six months to end-December the company achieved revenue of R16.26 million, 13% up from the same period in 2001, while the operating margin was maintained at 24%.
Attributable earnings saw a healthy 32% increase to R3.2 million and headline earnings per share surged by 60% to 8c. The number of shares in issue declined from 41.63 million to R39.74 million.
Garber says a more than 90% increase in cash generated by operating activities is due mainly to Compu-Clearing having fulfilled its hardware renewal programme which it began in 1999.
The company always followed the philosophy of replacing equipment only when it collapsed, but "we stocked ourselves up when we listed. We really went overboard the other way and we invested in assets in a big way."
He says the company is now not investing in assets, only renewing them. "So we still have depreciation but not cash outflow. In a few years the depreciation will decline and headline earnings will rise, but not cash generation," he says.
The group is to continue with its campaign of opportunistic share buy-backs as well as an ever-increasing dividend payout. The company has declared an interim dividend of 3c a share, up from the 2.5c declared a year before.
Garber says the performance is likely to be sustained in the second half, which is also when the group plans to launch its international operation.
"Compu-Clearing continues its ethos which it has since it was founded in 1983, to build a steady and solid company based on annuity income," he says.
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