Maxima stays on track

Kam Patel, 13/06/07 08:55

Maxima, the acquisitive IT services group, signalled in line full year results and assured its new year has started well, with its order book strong. It remains on the acquisition trail.

In an update for its year to 31 May, the group notes that 'solid' trading across its solutions and managed services businesses means it expects full year revenues, profits and earnings per share will be in line with market expectations. Net debt at the end of the period stood at £6.5m.

The group completed four more acquisitions during the year, including Cognition Solutions and SevenThree, both software experts with a focus on the construction sector. All four acquisitions have been fully integrated.

Over the year the group secured 71 one new customers, including eleven new customers for SAP Business One and two for QAD applications in the healthcare and automotive sectors, where it has a strong track record. It also won the first contract for its newly launched construction industry software solution based upon Microsoft Dynamics AX.

In managed services, significant new business has been won, particularly as a result of the group's strong skills in Citrix and Oracle technologies.


Encouragingly, within its existing customer base, levels of contract renewals have been high.


The group says its new year has started well, with a strong order book and that it remains on the acquisition trail.

Derek Brown, analyst at Seymour Pierce, says the update is in line with his expectations, although the net debt is slightly higher than he expected. He says that although the

stock should carry something of a risk discount due to the acquisitive nature of the growth, the multiple is, nevertheless, 'very modest' at just 11x 2008 earnings, falling to 10x in calendar 2008, based on Seymour forecasts. He rates the shares a 'buy'.

Maxima floated on AIM in November 2004, priced at 110p, with the aim of acquiring businesses to build a focused IT services group. On flotation it immediately acquired Azur Holdings and has since made a further eight acquisitions:

Maxima Holdings PLC shares edged up 1.5p to 295.5p in early trade, valuing the company at £55m. Based on consensus estimates, the shares trade on a forward PER of 12.8, falling to 11 in 2008. The prospective yield is 1.7%.