Epic
(The UK’s leading e-learning company)

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 MAY 2001

• Preliminary results for the year ended 31 May 2001
• Chairman’s Statement
• Summary Consolidated Profit and Loss Account
• Consolidated Balance Sheet
• Consolidated Cash Flow Statement

Epic, leaders in e-learning and developers of internet related services, announces preliminary results for the year ended 31 May 2001.

• A year of market leadership and significant growth
  
  
• Financial services revenue increased by 75%
  
  
• Public sector revenue rose by 83%
  
  
• Other sectors revenue up by 86 %
  
  
• Repeat business accounted for 63% of revenue
  
  
• Services sector grown by 300% through EpiCentre division
  
  
• EpiCentre now primary e-learning test centre in Europe
  
  
• Management team strengthened
  
  
• Looking forward to another year of continued success

For further information:

Background note:

Market data on the e-learning market

IDC estimate that the e-learning market will grow to $28.4 billion by the year 2004. The estimate for 2000 is a market of $2.0 billion. In Europe, IDC estimate that the market will grow to $4.0 billion in 2004. The market will be dominated by the UK, Sweden and Netherlands.

EPIC’S CLIENTS:

Epic has worked with The Royal Bank of Scotland, Lloyds TSB, Barclays, Credit Suisse and the Chartered Institute of Bankers. In the government sector, it has undertaken work for the DSS, LearnDirect, Scottish Enterprise, the DETR, Inland Revenue and Customs & Excise. British Airways, BOC, PriceWaterhouseCoopers, Video Arts, Linguaphone and the Industrial Society are also clients.

Results for the year ended 31 May 2001

I am very pleased to report another year of significant growth in both turnover and profits. For the year ended 31 May 2001, turnover has increased by 83% to £8,041,000 (2000: £4,398,000), operating profits by 84% to £1,356,000 (2000: £738,000) and profit before taxation by 105% to £1,569,000 (2000: £765,000). Earnings per share increased by 94% to 6.35p (2000: 3.28p) reflecting the impact of the share placing during the year. Furthermore, in spite of a near doubling in activity, we have managed to reduce our working capital and increased cash generated from operations by £1,847,000 (2000: £114,000).

The significant increase in revenue has been achieved by widening our sector coverage and providing more e-learning services. Our revenue split by market sector is; Financial services (27%), Public sector (21%), Consultancies & Training (21%), Others (21%), Services (10%), demonstrating the breadth of acceptance of e-learning.

e-learning

We have been successful in increasing revenues in our two primary sectors, financial services and the public sector, as well as in other sectors. It is particularly pleasing to see that repeat business from existing clients was 63% of revenues.

Financial services sector revenue has increased by 75%, as financial institutions use e-learning to reduce costs. Successes during the year include further projects for The Royal Bank of Scotland, a major project for Lloyds TSB and on-going contracts with Barclays Bank.

Public sector revenue has increased by 83%. We have successfully secured work from an additional number of government departments, significantly extending our market presence. Public spending policy has led to a sustained increase in spending on e-learning and Epic is working with many central government departments and local government bodies. Projects with the Cabinet Office, the Institute of Public Finance and the Improvement and Development Agency have strengthened our position. Our move this year into the education sector has also resulted in the award of several contracts.

Revenues from other sectors have increased by 86%. Work with major consultancies and training companies continues and we are now seeing increased interest in e-learning from the retail and leisure sectors.

We have grown the services side of the business by 300%. Testing (of e-learning materials to ensure that products work as intended) and localisation (the re-versioning of material for foreign language users) through our EpiCentre division have seen substantial increases in revenue, driven by public sector growth in education and e-learning spend. During the year we have invested in new premises, equipment and strengthened management to cope with demand. EpiCentre is now the primary e-learning test centre in Europe.

Our consultancy service has led to a number of major content contracts and we have continued to build a position based on thought leadership through published work and conference activity. Epic held its first e-learning conference this year in London.

People

We have recently strengthened our management team by appointing a new Sales and Marketing Director, Sales Manager, Marketing Manager and Production Director. David Bull, our former sales director, has become a non-executive Director. During the year we have won a number of industry and market awards, which we believe, are testimony to the skill and expertise of our staff. This external validation demonstrates our market leading position.

Prospects

Despite the difficult economic climate, e-learning represents the most cost effective method of training and educating staff; accordingly we believe that the e-learning market will continue to grow.

Our focus on the more robust financial and public sectors, as opposed to the troubled TMT (Technology, Media and Telecoms) sector, should protect us from economic turbulence. In addition the uncertain international outlook is balanced by the fact that our clients are primarily UK based, not US, and we are now seeing evidence of a post-election spend on public services.

We aim to consolidate and build on our leading position in the growing e-learning market through continued investment in sales and marketing. The current year will, we believe, be another excellent one for the group and we will continue to operate with a tight control on costs. We look forward to another year of market leadership and continued success.

Michael Inwards - Chairman

Epic
Consolidated profit and loss account for the year ended 31 May 2001

There is no material difference between historical cost profits and those shown above, therefore no separate note of historical cost profits and losses has been presented. The Group has no recognised gains or losses other than the above results.

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Epic
Consolidated Balance Sheet

at 31 May 2001

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Epic
Consolidated Cash Flow Statement

at 31 May 2001

Epic
Reconciliation of net cash flow to movement in net debt

for the year ended 31 May 2001

Notes:

1. The calculation of the undiluted earnings per share is based on the profit after tax of £1,569,000 (2000: £765,000) and on 24,725,400 ordinary shares (2000: 23,343,423), being the weighted average number of shares in issue during the year ended 31 May 2001. The calculation of the diluted earnings per share is calculated on 25,928,625 ordinary shares (2000: £24,483,411) being the estimated dilutive effect of the share options on the shares in issue during the year ended 31 May 2001.

2. The preliminary announcement does not amount to full accounts within the meaning of section 240 of the Companies Act 1985. The contents of the preliminary announcement have been extracted from the audited financial statements of the company for the year ended 31 May 2001 which will be filed with the Registrar of Companies. The audit report on these financial statements is unqualified and does not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.

3. Copies of the annual report and financial statements for 2001 will be posted to shareholders and will be available from the Company's registered office, 52 Old Steine, Brighton, BN1 1NH.