UPDATE 2-Kewill posts higher profit, raises dividend

* Says still in talks regarding approach

* To pursue acquisitions - CFO

* FY pretax profit 2.6 mln stg vs 1.4 mln stg yr ago

* Revenue up 6 pct at 56.3 mln stg

* Raises FY dividend by 10 pct to 1.10p (Adds comments from CEO, CFO)

By Anirban Sen

BANGALORE, June 21 (Reuters) - British software firm Kewill Plc (KWL.L) posted an 80 percent increase in full-year pretax profit, helped by cost controls and revenue growth in Europe, but said it expected tough economic conditions to continue in the short term.

Kewill, which received an approach pitched at 130 pence per share in May, said talks were continuing.

However, Chief Financial Officer Karen Bach declined to comment further on the progress of the deal.

The company, which acquired customs compliance firm Minihouse1 last week, said it would continue to actively pursue acquisitions in fiscal 2011.

"We have had multiple discussions till date," Bach told Reuters.

The company would use its net cash to fund acquisitions, Bach said.

As of March 31, Kewill's net cash stood at 17.0 million pounds, of which 5 million pounds was used to fund the acquisition of Minihouse1.

The company, whose customers include Nintendo (7974.OS), FedEx (FDX.N) and Whirlpool (WHR.N), would focus on acquiring companies with a software-as-a-service business model, Chief Executive Paul Nichols said.

Merger and acquisition activity in the technology sector has sprung back to life as the shift to mobile and cloud computing changes the IT landscape, and companies position themselves for an economic upturn. [ID:nN13250035]

PROFIT, DIVIDEND UP

Kewill, which supplies software to the global logistics sector, raised its full-year dividend by 10 percent to 1.10 pence per share.

For the year ended March 31, pretax profit was 2.6 million pounds ($3.86 million), compared with 1.4 million pounds in the year-ago period.

Revenue climbed 6 percent to 56.3 million pounds. Recurring revenue from software-as-a-service, hosting and maintenance increased 11 percent to 34.8 million pounds.

Finance costs decreased to 116,000 pounds from 606,000 pounds last year. ($1=.6744 Pound) (Reporting by Anirban Sen in Bangalore; Editing by Vinu Pilakkott)