EPIC
(The UK's leading e-learning company)

INTERIM RESULTS FOR THE SIX MONTHS TO

30 NOVEMBER 2001

• Interim Results for the Six Months to 30 November 2001
• Chairman’s Statement
• Summary Consolidated Profit and Loss Account
• Consolidated Balance Sheet
• Consolidated Cash Flow Statement

Epic, leaders in e-learning, announce interim results for the six months ended
30 November 2001.

· E-learning widely accepted as a mainstream method for training

· Balance sheet continues to strengthen

· Cash balances of £7.4 million

· Stable Order Book

· Confident about future financial performance

For further information:

BACKGROUND NOTE:

MARKET DATA ON THE E-LEARNING MARKET:

IDC estimate that the e-learning market will grow to $18 billion by the year 2005 compared to an estimated $2.3 billion for 2000. 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. IDC also estimate that a shift in the e-learning market will occur from IT skills training to the non-IT or business skills segment. In 2000 the business skills segment accounted for 24 percent of the market, but is expected to capture 53.8 percent by 2005.

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 Department of Work and Pensions, LearnDirect, Scottish Enterprise, the DETR, Inland Revenue and Customs & Excise. British Airways, BOC, PriceWaterhouseCoopers, Video Arts, Linguaphone and the Industrial Society are also clients.

EPIC
(The UK's leading e-learning company)

INTERIM RESULTS FOR THE SIX MONTHS TO 30 NOVEMBER 2001

Chairman's Statement

Trading results for the six months ended 30 November 2001
Turnover was £3,308,000 (2000: £3,712,000) with profits after tax of £205,000 (2000:£567,000). Due to the operational gearing of the business, the operating profit was £26,000 (2000: £498,000) with Interest receipts of £179,000 (2000: £69,000). Epic remains cash generative with a positive cashflow from operating activities of £600,000 in the period (2000: £100,000) leading to a cash balance of £7,400,000. Basic earnings per share were 0.8p (2000: 2.33p).

The principal market sectors for content development remain financial services (20% of turnover) and the public sector (34% of turnover). Other sectors (31% of revenues) include manufacturing, retail, media and IT. Growth in our consultancy and services (15% of revenues) has occurred.

Against a flat economic backdrop, we have controlled costs, and continue to be the UK market leader in e-learning, with a strong balance sheet, and cash generation.

Core business

Our core business is the delivery of e-learning solutions to major private and public organisations. E-learning uses internet technology to deliver training, learning and performance improvement and cost savings. We offer a full outsource solution that includes consultancy, content development, services and products.

Consultancy

To engage with organisations at a higher and more strategic level we have built a consultancy service that delivers to corporate, government and education clients. This includes e-learning strategies for Scottish Enterprise (for the whole of Scotland); global companies in telecommunications, pharmaceuticals, electronics; major government departments and higher education. From a standing start we have obtained 3% of revenues from this activity this year.
Content development
In the finance sector, we are approved suppliers to The Royal Bank of Scotland and Lloyds TSB, with on-going revenues from Barclays, American Express and other financial clients. Consolidation and the need to reduce costs and increase productivity in this sector will continue to drive revenue in 2002.

The public sector represents our largest market. We are approved suppliers for an enlarged Department of Work and Pensions and the Inland Revenue. On-going revenues also come from the Cabinet Office, Houses of Parliament, Department of Transport, London and the Regions, DTI, Scottish Enterprise and the Welsh Development Agency. In local government work continues with several large local authorities.

Within the public sector we have also established ourselves in the further and higher education sectors. Major contracts have been won with the e-university, along with a project on a Virtual Medical School involving 30 of the world's leading Universities. Work continues in Further Education with the government sponsored National Learning Network.

In other sectors, new clients have been won in media, manufacturing, retail and IT. A major contract is underway at Channel 4. Other contracts secured have been from a major manufacturer, several large UK retailers, a major accountancy firm and one of the world's major suppliers of enterprise-wide software.

Services

Testing and localisation work on e-learning products from the University for Industry, a major US publisher and many others continue. Maintenance contracts for the updating and renewal of previous e-learning projects have also continued with a major retail bank.

Products

2002 sees the extension of our activities by the launch of some innovative second-generation e-learning products. These are targeted at specific audiences with strategic partners. Our leadership software 'Prime', produced in partnership with the Cabinet Office, will be launched this month with potential revenue from a range of major government organisations. Our Peer to Peer learning software is being tested in a major trial with Local Authorities later this year, and a collaborative learning tool 'Platinum' has been developed and implemented across a number of government departments. We have continued our previous prudent policy of writing off all costs associated with these products direct to the profit and loss account.
Investments
We have two investments, Digital Bridges and Cityspace. Digital Bridges successfully raised £12 million in October 2001, while Cityspace completed a £2.2m fund raising exercise in December 2001.

Prospects

The e-learning proposition is becoming widely accepted as a mainstream method of training delivery. The initial trials have given way to annual budgets, a focus on Return on Investment and a consolidated supplier base.

We continue to be the UK market leader as evidenced by a prestigious Brandon-Hall award for e-learning and the Outstanding Achievement in E-learning Award in October at the World Open Learning Conference. These awards are a tribute to the largest and most experienced e-learning production capacity in the UK.

As we stated at the time of our AGM in November, our order book is stable and this gives us confidence about our future financial performance.

Epic remains focused, fast and flexible. Our focus on e-learning, and the more robust financial and public sectors, will continue to deliver core revenue. We were fast in responding to this period of economic pressure, controlling costs as necessary, and are ideally placed to resume growth as demand improves. Our flexibility is shown in the range of consultancy, content development, services and innovative products that we deliver in response to changing demands from customers in this rapidly developing market. Profitable market leadership continues to be our business strategy.

Michael Inwards

Chairman

5 February 2002

Summary Consolidated Profit and Loss Account

Consolidated Balance Sheet

Consolidated Cash Flow Statement

Notes:

1. Earnings per share have been calculated using the weighted average number of shares in issue during the period of 25,468,072 (2000:24,366,994). Diluted earnings per share have been calculated using the average number of shares in issue of 26,629,540 (2000: 26,164,998). Fully taxed earnings per share have been calculated on the basis of the full rate of corporation tax (30%) applying to the profit in the period.

2. The comparative figures for the financial year ended 31 May 2001 are not the company's statutory accounts for that financial year. Those accounts have been reported on by the company's auditors and delivered to the registrar of companies. The report of the auditors was unqualified and did not contain a statement under section 237(2) or (3) of the Companies Act 1985.

3. Copies of this announcement will be posted to shareholders and are available from the company's registered office, 52 Old Steine, Brighton, East Sussex, BN1 1NH