(By Anthony Miller – Tuesday 14th July 2009 8:30am). Since the April profit warning (see Maxima warns again), trading at software and IT services consolidation play, Maxima, appears to have settled on a steadier course. However, while signalling “in line” numbers for the year to 31st May, Maxima chairman Kelvin Harrison presaged a FY loss after restructuring and impairment charges, the likely outcome from a strategic review being undertaken by the new top team (see New brace of management at Maxima).This doesn’t really come as a huge surprise. We have commented many times before how difficult it is to make a consolidation play work, especially when it’s small-scale and more so during a downturn. Maxima is now more than four times the size since its Nov. ’04 IPO, and has swallowed a dozen companies since. Even Harrison concedes that Maxima has a broader portfolio than most companies its size, and so will use the strategic review to put greater focus on those areas where market conditions are most favourable. But despite the losses, cash and net debt is ahead of plan, and Harrison made the point that Maxima is still within its bank facilities and covenants. As he eloquently puts it, ”cash is what keeps you alive” – how could we possibly disagree?
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