Kewill

Kewill, the provider of software that simplifies trade and logistics for a broad global client base, put in a robust performance during a challenging year to March, whilst building recurring sales.

Bossed by astute CEO Paul Nichols, Kewill, whose solutions provide highly measurable investment returns to clients, reported 6% sales growth to £56.3m against a backdrop of lengthening sales cycles. Operating profits advanced for the sixth year in succession, by 11% to £8.8m, as cost-cutting came into play – the operating margin moved up from 3.7% to 4.7%. And from earnings increased to 4.1p (2009: 1.9p), the full year dividend was lifted 10% to 1.10p.

During the year, Kewill clinched significant contract wins with global clients including Nokia, Lockheed Martin, Steinweg and Heinz, whilst continuing to cross-sell products into new regions, as the benefits of its ‘One Kewill’ product integration initiative flowed through. High-visibility recurring revenues, derived from Software-as-a-Service (SaaS) hosting and maintenance, grew 11% to £34.8m to represent 62% of total turnover.

Earlier this month, Kewill, which recently raised £7.2m specifically for bolt-on acquisitions, made its first such strategic takeover. Benelux-based Minihouse, a specialist in helping businesses automate customs compliance across Europe which adds to the group repeat revenue base, was acquired for up to £10m.

First backed by Growth Company Investor at 57p in 2003, we remain positive about the long-term positioning of Kewill, set to profit from any upswing in global trade and well placed to capitalise on its ever-increasing red tape. With Kewill having recently received a bid tilt at 130p, the investment case for the shares has never been so compelling. Strong buy.