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Maxima Holdings

  • BY: Andrew Hore |
  • POSTED: 07/08/2009 |

New management is refocusing the business of IT services provider Maxima Holdings.

Former Netstore chief executive Graham Kingsmill and ex-Netstore finance director David Memory took over those roles at Maxima in April 2009. They intend to focus Maxima on Microsoft, SAP/Oracle and QAD software and make the product offering simpler to understand.

The plan is double digit growth in the core areas of the business and migrate existing customers from older software to newer products. More than half of the company’s revenues are recurring which provides a strong base.

Revenues rose 21% to £56.6m in the year to May 2009 but the reported loss was £9.64m. That was down to intangible asset write-offs. Adjusted profits fell from £8.9m to £7.1m.

On the face of it Maxima’s figures look poor but, importantly, the business is still a strong cash generator. Operating activities generated £5.18m in cash. Net debt increased from £8.6m to £15.5m at the end of May 2009 but that rise is due to acquisitions. Without acquisitions there would have been a decrease in debt. Total debt facilities of £18.75m are mostly committed to 2013. Net debt is forecast to fall to £12.6m by May 2010.

Although the final dividend has been cut from 3.6p to 2.5p a share, the total dividend is 4.5p a share. That is covered more than four times by adjusted earnings per share of 21.2p.

At 92.5p a share, Maxima is valued at £23.4m.

A fall in adjusted profits to £6.2m is forecast this year. That puts the shares on six times prospective 2009-10 earnings. The dividend may be reduced in line with the fall in operating profit. A dividend of 4p a share would mean that the prospective yield would be 4.3%.

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