Maxima Holdings Share Discussion Threads

[stegrego] 29/6/2011 19:51

I bought a few (and I mean few) the other week at 21.5.
Hoping that trading has not declined further.

[glasshalfull] 29/6/2011 18:42

Not much interest from PIs but I see they've recovered another couple of pence today with a few chunky trades going through.

Ignis Asset Management have sold a few over recent sessions and it's interesting to note that Metroplis Capital have been picking them up.

Worth a gander at the Metroplis Capital web site



Note their approach to investment

Our investment style:  focused value investment

For each investment decision, we apply a disciplined and rigorous methodology which is firmly rooted in the teachings of Benjamin Graham and Warren Buffett.

We look for solid businesses, with a strong franchise, in which we can invest with a significant margin of safety.  We are "investors" not "speculators", seeking a return from long-term appreciation of value and dividends.  We like companies led by smart managers, who have demonstrated high integrity and a disciplined approach to investing shareholder capital.

Regards
GHF

[glasshalfull] 26/6/2011 17:36

Correct Paddyfool.

I believe that preliminary enquiries were made to the Maxima Board in the early months of 2011 which didn't amount to anything or the Market would have been notified. The April update from the company confirms that there are a few avenues open to the company. Like yourself it looks like the "For Sale" sign to me but where I'd disagree is that the current shareprice doesn't come close to the valuation of the company. Maxima delivered £7.1m adj PTP in 2009 and currently sit on a Market cap of £5m-£6m. Yep, the debt of £11m-£12m provides an EV of £16m-£18m but the EV/Sales ratio of approx 0.3 is simply far too low IMHO.

Regards
GHF

[paddyfool] 26/6/2011 13:11

Strategic review is the standard term which means 'for sale' this company is for sale. Its value is not a million miles from the current share price. Its potential with the right management and capital backing is a multiple from here. Hence the need to sell.

[glasshalfull] 22/6/2011 13:13

Interested to see tentative signs of shareprice recovery.

Having spoken at length with a member of the management team I believe that the market have blown the April update out of all proportion. A softening of revenues (10%) surely didn't warrant a fall from 81.5p to 23p unless banking covenants were in danager of being breached.

I understand that given the commencement of an offer period following the strategic review has hamstrung the company in providing a suitable response to the market via normal channels as broker coverage is effectively suspended.

Also, net debt was forecast to have fallen to £11m at year end per one of the broker notes in circulation prior to April update. As I understand, MXM would have informed the market if there was a material difference or if banking covenants were threatened.


Please DYOR.

Regards,
GHF

[masurenguy] 21/6/2011 14:37

Very illiquid - maximum number of shares that can be bought online is 1,000.

[6kenny] 21/6/2011 14:17

takeover time?

[masurenguy] 21/6/2011 07:51

There was a post Y/E trading update (May 31) on June 17th last year so perhaps there might be a current update soon. Meanwhile, the shareprice seems to have stabilized at around 22p over the past 2 weeks.

[stegrego] 06/6/2011 11:17

Looks like until company updates market, the share price is open to further falls....

[rallycry] 02/6/2011 18:05

It currently looks like they dont have any real focus and the usage of cloud computing to generate interest in the company seems a little desperate. We currently use a number of maximas services and none, yes none work well. They seem to have real issues with support and billing acrosss the board. Again, this is only my opinion and is not meant in any way to put the boot into Maxima.

Interesting price drop again today, not really surprised as I feel a lot of people within Maxima even think there are major problems now from the conversations I have had with them recently.

Maximas purchases/acquisitions have definately damaged the company as they do not seem at all organised or coped well with the changes...

[glasshalfull] 02/6/2011 14:54

6kenny - I certainly don't want to appear cheeky, and I hope you dont take it in his context, but Maxima have fully documented their change of focus for neigh on year. There are are a number of RNS announcements from mid 2010 which focused on their strategy and the 2010 Annual Report plus company web site certainly spell out where they are going.

They are focusing on 4 growth areas, 3 of which are performing exceptionally well.

Regards
GHF

[6kenny] 02/6/2011 13:48

I wouldn't say serious trouble as they have a pretty large rolling credit facility and were cash generative last year.

Having acquired 11 companies I can imagine they are having trouble integrating them all into the overall Maxima brand, whatever that mught be.

No doubt every company they acquired had middle management staff who are too expensive to make redundant or too valuable to release.

Does Maxima actually have a core focus or underlying business strategy or is it just a case of acquiring companies and hoping for the best?

[glasshalfull] 01/6/2011 17:31

Interesting post RallyCry. It would be good if you could be slightly more specific regarding which particular area of the Maxima business you are relating to.

They are of course scaling back on some areas of their legacy businesses to focus on the more lucrative/ profitable "growth engines" as they have been documenting for the last year. They also have a number of businesses (11 acquisitions in the last 5/6 years)spread over the UK & Ireland.

So while you may be "avoiding this share like the plague" I'm definitely interested at the current price and would welcome any further comment from you on or off board given that there doesn't appear to be much discussion other than one liners from knowledgeable investors predicting imminent doom (How they know this, I'm not quite sure ;-)

As I say, I'd appreciate further contact with you on/off board

[e-mail]

Kind regards,
GHF

[rallycry] 31/5/2011 15:27

An interesting company and funnily enough one of my suppliers. They seem to have made major cuts over the past 6 months and still have major provisioning and billing issues. As a company they seem to have a lot of potential but I am avoiding this share like the plague. This is only my opinion but I feel they are in serious trouble judging from the people I know and what they have siad once they were "let go"

[glasshalfull] 27/5/2011 17:39

My last comment on this tonight, but it's worth noting that Maxima's spending spree on 11 acquisitions (I think???) resulted in net debt peaking at £17.3m per 2009 interims.



Since this time they have generated positive cashflow reducing net debt down to current level of £11.6m.

So, I don't share the assumption that the company are a "basket case". It's quite clear however that they are treading water at the moment with legacy drop off outweighing the benefits of cloud, virtualisation and Microsoft Dynamics growth.

They have also spent the last few years lowering their cost base by developing an Indian hub to offer offshore support and development.

Looks to me that these developments and investment in the "growth drivers", as they put it, will command considerable interest. Especially against the distressed price the market now attributes to the company.


I'd appreciate any other comments. Good to hear a reasoned and balanced viewpoint rather than a one-liner simply knocking the company.

Regards,
GHF

[glasshalfull] 27/5/2011 16:51

6Kenny - I've asked myself the same question but don't believe the company will go to the wall.

As my previous post indicated, the cloud and virtualisation services are growing well and in 2010 cashflow was strong:

Cash flow and net debt

This year the Group generated £6.1m of cash from operations, against £5.2m last year. This reflects lower profitability, but is offset by a reduction in trade debtors, reflecting better cash collection, and a repayment of overpaid taxation in the prior year. Net debt was £11.8m, down £3.7m from £15.5m last year, ahead of market expectations."

and

"The Group had committed borrowing facilities of £15.0m at 31 May 2010, comprising a £3.0m term loan facility, repayable in six instalments until 31 May 2013, an £11.0m revolving credit facility repayable by 31 May 2013 (with reductions of £0.25m at 31 May 2011 and 30 November 2011 and quarterly thereafter until final repayment of the balance on 31 May 2013) and a £1.0m overdraft facility. £12.5m was drawn under these facilities at the year end.
Cash balances at the year-end were £0.7m, which together with the overdraft facility allows £3.2m of headroom."


Since 2010 results we have the interim statement that confirms a similar picture. Positive cashflow and net debt reduced by a further £190k over 2010 full year. Committed facilities were £14.5m but the £11m revolving credit facility still has 2-years to run.

In the 6 months, the Group generated £1.6m of cash from operations, against £3.4m last year. Last year, we enjoyed the one-off benefits of stronger cash collection, as debtor days were reduced considerably. This is not of course repeatable, and the cash generated from operations reverted this year to a level commensurate with the year before last. As a result, net debt reduced to £11.6m (30 November 2009: £13.5m).

The Group finances its operations through a mixture of cash generation and related retained profit, and a mix of medium and long term bank facilities with Barclays Bank plc, to ensure that sufficient liquidity is available to meet its foreseeable funding requirements. The Group's facilities are floating rate and it uses interest rate instruments to hedge its interest rate risk on borrowing where appropriate.

The Group has committed borrowing facilities of £14.5m at 30 November 2010, comprising a £2.5m term loan facility, repayable in five instalments until 31 May 2013, an £11.0m revolving credit facility repayable by 31 May 2013 and a £1.0m overdraft facility. £12.4m was drawn under these facilities at the half year end, against which cash balances were £0.8m, which allows £2.9m of headroom."


Regards,
GHF

[glasshalfull] 27/5/2011 16:34

£21m Market Cap on 13th April 2011 that has fallen to £6.7m Market Cap today.

Hmmm !

Regards,
GHF

[6kenny] 27/5/2011 16:33

GHF,

Would it not be easier to just standby and watch it go to the wall and pick up the assets/contracts for a song?

[glasshalfull] 27/5/2011 16:30

Techmarkets View on 14/04/11 sums up the situation perfectly IMHO.

The diversity of performance in the UK mid-market software and IT services sector is drawn into sharp relief by today's announcement from industry stalwart, Maxima, that it is once again in trouble. After a 'swings and roundabouts' first half (see here), Maxima has not been able to close some key sales and has had 'execution' problems in delivery. Net-net, it'll be a 'miss' for the FY (ending 31st May), with revenues expected to be light by as much as 12% (£45m). As Maxima had yet to return to net profit in H1, you can work out the rest for yourselves. Management has put up the 'for sale – whole or part' sign, appointing investment bank Houlihan Lokey to assist with a 'strategic review'.

This is such a shame. We had hoped that the 'new' (ex-Netstore) top team of Graham Kingsmill (CEO) and David Memory (CFO), appointed pretty much two years ago, would be able to sort out the many diverse bits that Maxima had become. The strategy looked fine, but six months later they were dealt a savage and unexpected blow when key software partner QAD withdrew Maxima's distribution rights (see here). QAD represented over 15% of Maxima's profits, so it was never going to be plain sailing from there on in. Kingsmill had been trying to rev up Maxima's 'growth engines' (Microsoft Dynamics, Citrix, Connectivity, Cloud), which account for some 25% of the business, but the pressures on the 'legacy' businesses seem to be pulling rather harder in the opposite direction.

We have mischievously suggested that Maxima would be an 'interesting' target for highly acquisitive (and profitable) mid-market peer K3 (e.g. see K3 and its business of six halves). The revenues of the two groups are very close, but as of yesterday, Maxima was capitalised at some £21m (down 10% ytd), compared to £55m for K3 (up 12% ytd). Maxima's shares are down a further 20% as I write. Can't believe K3 CEO Andy Makeham isn't running his sliderule over this 'opportunity'!

Regards,
GHF

[6kenny] 12/5/2011 12:36

some call insolvent...

[paddyfool] 09/5/2011 21:50

they have run out of cash thats the problem. Ebit wihtout cash is an accounting trick.

[dnfa1975] 08/5/2011 14:50

lol, year the banks will take this one over probs