The bankruptcy of Microway GmbH, an independent German distributor for Kewill Systems Plc, overshadowed Kewill Systems Plc’s healthy interim results, forcing down its share price by 24 pence to 251.5 pence. The official German receiver is proving particularly difficult and has slapped injuctions on both Kewill and IBM Deutschland GmbH, which markets Kewill’s HAN Dataport CAD 400 product for architectural building services and building management applications. The injunctions restrain both companies from approaching Microway’s customers. Kewill hopes that the matter will soon be resolved and says the receivership may ultimately prove a benefit to the company. The substantial user base cannot go anywhere else and many support contracts will lapse at the end of this year. Kewill was receiving only around a 15% royalty on each sale and the receivership should give the company a larger cut. Elsewhere, in the six months to September 30, the Walton-on-Thames, Surrey-based company saw pre-tax profits up a healthy 23.3% to a record UKP2.2m on turnover up 2.5% at UKP16.4m, and Kewill will pay a first time interim dividend of 2.5 pence. Pre-tax profits included an exceptional item of UKP254,000 relating to the selling off of the last vestiges of Weigang GmbH, another German thorn in Kewill’s side since its acquisition in 1991.
Intellectual property
Kewill had decided to keep hold of intellectual property rights and a development team in former East Germany and integrate them into the HAN Dataport project. However this has proved unsuccessful and Kewill has sold what is left to a management buy-out. Before group admistration costs of UKP210,000, UK operating profits were up 25%. In Manufacturing Systems, which represents 43% of Kewill’s business, operating profits from Micross and Trifid rose 17%, on turnover that was up 4% and down 4% respectively. The Pick-based Trifid software has now been redeveloped for Unix and Kewill-Xetal’s specialist manufacturing systems for the garment industry did well, with turnover up 21%. In the US, the Micro-MAX manufacturing system saw operating profit up 60% to UKP720,000 on record turnover. In its accounting division, the company is hoping for great things from Dynamics, the Windows accounting package from Great Plains Software Inc, for which Kewill is the sole distributor in the UK. Some 40 sales have been made so far, and Kewill expects around 100 next year as more software modules are made available, with the real impact coming in 1996. In Electronic Data Interchange, Kewill’s customer base increased 35% to 1,400 and this will generate strong recurring revenue as companies sign up for more demanding and lucrative maintenance agreements and additional software modules. Turnover in Austria and Germay in the mechanical engineering sector slipped, and profit fell 18.5% at HAN Dataport Computer Aided Design, as employees focused on the CAD 400 product. Net cash levels stood at UKP600,000 and will be enhanced by the gain of UKP1.3m that it made on the sale of offices in the North of England since the end of the period on which the company was reporting yesterday. This money will be used by the still acquisitive Kewill to buy small companies over the next 18 months with product ranges adjacent to our own, promises Richard Broad, financial director.
