Tuesday, 10 November 2009

Kewill holds firm, issues shares to fund future growth

(By Philip Carnelley 10 Nov 09, 09:15) Kewill Systems, the logistics software provider has reported ‘holding pattern’ results for its half year to 30 Sept. Revenue was up 11% to £27.2m while adjusted operating profit increased 25% to £3.5m. At constant currency (ccy) however, revenues were flat at £24.4m and adjusted profits rose 6%. ‘True’ operating profit – ie including amortisation – was up £0.1m to £0.6m. Revenue in Asia jumped 51% (though still tiny at just £1.4m), while at ccy Europe was up 1%: the company is doing rather well in Germany at present on the back of certain new customs legislations, as well as the Nokia deal we commented on previously (Nokia deal underlines Kewill’s SaaS future). However the US was down 8% (ccy).

Paul Nichols, CEO, said the current ‘challenging’ market conditions were not expected to change until 2010 (something we here at TechMarketView have been saying for some considerable time). Good news for Kewill is that its SaaS offering continues to gain ground; aggregate recurring revenue from SaaS, hosting and maintenance rose 19% and now represent 63% of total revenues. However new licence revenue fell 20%. Despite Kewill’s relatively low profitability for a software company (13% adjusted margin) it increased net cash to £2.1m, up from £0.5m.

Looking to future growth, the company also announced today a share placing designed to raise £7m “to help fund future acquisition opportunities.” We await further details on what those opportunities might be.

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