Maxima pursued by mystery suitor

VAR gives update of strategic review as it posts £9m pre-tax loss

VAR Maxima revealed it has struck up talks with a mystery suitor as it posted annual pre-tax losses of £9m on sales that fell 10 per cent to £45.7m.

The Microsoft, SAP, Citrix and IBM partner launched a strategic review of the business in mid-April, which it said could result in the sale of all or part of the business.

In its financial results for the year ended 31 May, Maxima said that a number of opportunities are being considered, including one which could result in a potential acquisition of the company.

Kelvin Harisson, chairman of the Alternative Investment Market-listed firm, stressed the discussions were at a "very preliminary stage".

"The Board continues to believe that considerable business value can be released through Maxima's expertise and high growth potential in the key technology components of cloud-based service delivery," Harisson said. "The combination of this powerful asset and the access to a large installed base of customers represents an excellent opportunity but the board believes that it requires further investment to achieve full potential."

He added: "The strategic review continues and a further announcement will be made in due course."

Maxima posted annual pre-tax losses of £9m after swallowing an £8.3m goodwill impairment charge and £1.2m in exceptional costs (stemming from redundancies and reorganisation, bank refinancing and the strategic review). Total headcount fell from 409 to 373 despite India-based staff rising from 44 to 69.

Turnover trailed initial expectations as Maxima suffered delays or cancellations of a small number of key sales opportunities and tumbling business intelligence sales.

As a result of the "difficult market conditions", chief executive Graham Kingsmill said Maxima would intensify its efforts to focus on its high-growth technologies.

Sales of these "Growth Engines" – which comprise Microsoft Dynamics AX/CRM, Citrix virtualisation, connectivity/UC and cloud hosting/enablement – rose 36 per cent to £14m during the financial year. Maxima said it will continue to invest in the IBM-based virtualised server and storage infrastructure it implemented last year.

However, the progress of its Growth Engines were more than offset by its other activities, which fell by 23 per cent to £31.7m.

Some 59 per cent of Maxima's revenues were recurring.

Kingsmill said: "In the current year this organic growth potential will continue to be tempered by some further attrition from areas where we have chosen to scale back our presence.

"However, we are encouraged by pipeline improvement, particularly in the early part of the new financial year, although it is too early to be certain that this positive trend will continue or return to previous levels."