27 October 2011

Kewill plc

Trading Update for the six months ended 30 September 2011

Kewill plc (Ticker: KWL) ("Kewill" or the "Group"), the provider of software solutions that accelerate global trade and logistics, provides an update on trading for the six months ended 30 September 2011.

Overall, the Board expects the results for the full year to be in line with expectations, albeit that a much greater proportion than expected of revenue and adjusted* operating profit will, as a consequence of the factors listed below, be weighted to the second half of the financial year.

Economic uncertainty across all regions has led prospective new customers to adopt a more cautious approach to procurement, which has in turn resulted in extended sales cycles, as outlined in the Interim Management Statement in July. In addition, and as announced at the time of the full year results in June of this year, the loss of a contract with Nokia and the reduction in the value of the contract with HP following its merger with Palm, both of which were existing customers in the reverse logistics business, has adversely impacted adjusted* operating profit in the half by £0.9m compared to the comparable period last year.

In consequence, the Company will report revenue at £27.2m (1H 2010 £28.9m) and adjusted* operating profit at £2.3m (1H 2010: £4.2m) in its interim results statement for the six months ended 30 September 2011.

In response to these reductions, management has taken decisive action to reduce costs in the reverse logistics business and the Group will show a reorganisation cost (below adjusted* operating profit) of £0.6m in the results for the six months ended 30 September 2011.  This reorganisation cost represents the cash cost of redundancy payments and is expected to generate annualised cost savings of £1.3m.

Looking ahead to the second half, the Board expects to recover the first half shortfall in adjusted* operating profit and deliver full year results in-line with current expectations. Forecast full year revenues include 82% that is alreadyrecognised or contracted and there are several signed pilot orders that we fully expect to convert to license sales in the second half. In addition, we are seeing a strong sales pipeline across all regions.

In the first half of the year, Kewill has been awarded preferred status on four major new projects, which under normal procurement cycles would likely have led to significant software license fees and services revenues in the six months ended 30 September 2011. As a result of their more cautious approach, two of these major prospects have commenced their use of our products with an initial paid for end user pilot phase and we are confident that these pilots will result in significant licence orders in the second half.  For another two existing customers, Kewill is currently carrying out paid evaluation work to significantly enhance and upgrade existing systems prior to an expected larger order. All of these contracts are in the Logistics & Transportation sector in Europe and Asia, where our market share is growing rapidly.

Kewill will report its results for the six months ended 30 September 2011 on Tuesday 8^th November 2011.

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*Adjusted operating profit is before reorganisation costs, amortisation of intangibles and share based payment charges

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About Kewill plc

Kewill delivers solutions that accelerate global trade and logistics.

Our software solutions and deep domain knowledge enable our customers to drive revenue growth and measurable cost savings. 

A global company, Kewill provides software that accelerates customs and forwarding, transportation & logistics, and eCommerce & B2B integration. All of our solutions and people are focused on increasing the speed of global trade for our customers.

Since 1972, Kewill has delivered global trade and logistics solutions to some of the most sophisticated companies in the world.  Over 7,000 companies use Kewill solutions including Bayer, Ingersoll Rand, DHL, UPS, TNT, Toll, Hankyu Hanshin, Scott's & Co., Hitachi, WaverleyTBS, Mothercare, Black & Decker and Damco.

www.kewill.com.