The best news from beleaguered Maxima was that its designated growth engines contributed 30% to the business, up from 19% a year ago, but that was pretty much the only good news that could be taken from its full year results (to 31 May 2011). The “for sale” sign is still up - there are a number of opportunities and Maxima is in preliminary talks with one prospect.
Total revenue was down to £45.7m from £51.0m. Loss before tax was £9.0m (compared to £0.8m), which included £1.2m of exceptional items and an £8.3m goodwill impairment charge (IFRS rules required a reassessment of the value of goodwill). Adjusted operating profit dropped from £5.6m to £4.4m.
The company is still reeling from ERP vendor QAD’s action to withdraw Maxima’s UK distribution rights to its products (see Maxima loses QAD distribution rights). Revenue from the business division that handled QAD slumped 28% year on year, with 70% of the decline due to the QAD loss. But the overall decline is not just because of QAD, other business area were also down due to a combination of reasons, from service level reductions from three large customers, reduced consulting work, lower sales in specific areas and increased support and maintenance attrition in some industry verticals. Revenue from the older/legacy products areas was down by 23% to £31.7m.
Revenue from Maxima’s business intelligence (BI) activities fell by 39%, which is particularly disappointing given that for other vendors BI and analytics is a growing area (see IBM software benefits from analytics and middleware) and at TechMarketView we predict that this area will out perform other software categories – another illustration of our diversity of performance theme.
The highlights of the year were the growth engines: Microsoft Dynamics AX/CRM Business Solutions, Citrix Virtualisation, Connectivity and Unified Communications, and Cloud Hosting/Enablement Services. Within these areas, Microsoft Dynamics revenue was up 37% to £3.6m. This is a good development as it shows Maxima has the potential to replace the lost QAD ERP business with a Microsoft alternative. The challenge is continuing to grow in this highly competitive market – Microsoft is seen as a mid market business applications performer so is attracting plenty of partner attention.
Virtualisation shot up 50% year on year to generate revenues of £4.8m. Connectivity and Communications performance was up 44% to deliver £5.7m. The number of Cloud Services customers in 2H doubled to 30.
There was a particularly telling comment in the financial report which was that the drop in performance reflected “the trend that in areas where we lack sufficient scale or a specialist concentration, it has become much more difficult to remain competitive in an ever-commoditising space.” The business applications space certainly has elements of commoditisation, and providers are under pressure to be specialists rather then generalists. Maxima has a long way to go.