Maxima

Under new boss Graham Kingsmill, IT services provider Maxima still aspires to almost double revenues to £100m by the time of the London Olympics in 2012.

The formerly acquisitive group, whose share price plummeted from a £3-plus high in 2007 to a 42.5p low in April, reflecting the effects of the credit crunch on its customer base, saw previous profits of £5.2m turn to paper losses of £9.6m before tax in a ‘tough’ year to May. Boosted by June 2008 acquisition DXI, revenues vaulted 21% to £56.6m and, before the exceptional accounting charges that produced its headline losses, the group produced a £7.1m profit and will pay a final dividend of 2.5p.

Kingsmill, who stepped into the shoes of founder Kelvin Harrison as he withdrew from front-line operations and took the chair, sees ‘a business with potential’ and has tried to simplify things. ‘There was some customer confusion about our identity and the breadth of our offering,’ he says, adding that the company was perhaps ‘trying to do too much’.

Thus Kingsmill’s short-term plan is ‘to sweat the assets’ – although he plans to ‘remain ever vigilant’ for opportunities to return Maxima to the formerly frantic acquisitive approach from which it has now taken a hiatus of more than a year. He believes that Maxima, whose year-end net debt of £15.5m was down from £17.3m at the half-year stage, has an opportunity to ‘leverage’ its largely untapped client base – where 1,300 clients currently spend £16,000 each on average.

At current levels, the shares look fairly valued – with house broker Cenkos forecasting just 1% sales growth to £57m and earnings to fall 15% to 17p per share in the current year – and are worth holding for their ample yield.