Software and IT services group Maxima, which has bought and integrated ten acquisitions since floating in November 2004, continues to grow strongly and has published half-year figures well ahead of last year.

A recent trading statement warning that a top-ten managed services customer had terminated a number of contracts early was a ‘terrible blow’, admits chief executive Kelvin Harrison, who reckons that it cost the company £1m of operating profit. This was an atypical event, however, since client attrition is generally nonexistent. And otherwise the business is 'diverse and robust', with customers numbering well over 1,000 across a variety of sectors, all businesses profitable and recurring revenues running steady at 56%.

Harrison also counters recent speculation that Maxima’s buy-and-build model is broken – ‘that couldn’t be further from the truth! This setback was nothing to do with our strategy.’ He stresses that even though clients ‘are being a little bit cautious…we don’t see it as a major impediment, just a slightly tougher market’.

For the six months to November pre-tax profits jumped 43% higher to £2m on revenues up 62% at £21.1m, helped by 35 new client wins and a £1.7m sales contribution from ninth acquisition Centric. From earnings up 16% to 10.4p, the dividend was increased by 11% to 2p per share.

The first is traditionally the weaker half and Harrison maintains that, despite the recent hit and market uncertainty causing a slowdown in new business, ‘We’ll still have a stronger second half’. On forecasts of £8.9m of pre-tax profit and 25.6p of earnings from house broker Cenkos, the shares trade on a bargain 5.6 times forward earnings. Maxima has proved a well-run business, although it might take time before faith is restored. Hold.

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