Buy Epic

Investors' Chronicle

"Epic has emerged in great shape, with a fat cash pile, an impressive client list and a strong record of cash-generation. Epic's main activity is the provision of e-learning solutions to government departments and blue-chip companies, primarily in the financial services sector.

Analysts estimate that Epic currently has a 15-20 per cent share of this market. Government commitment to spending on both IT and training shows no signs of diminishing, and, for the first time, in interim results for the six months to November 2002 more than 50 per cent of Epic's revenue came from the public sector. During that period, Epic secured its first work for the NHS and, following the government's announcement this week of increased budgets for NHS staff, the outlook in this area remains very favourable.

E-learning and online training remain growth markets. Granted, many private sector companies are still cautious about new projects, but Epic remains well-placed to ride out the downturn thanks to its blue-chip client base. With 10.4m cash in the bank, Epic enjoys a rock-solid balance sheet.

The announcement of a maiden dividend earlier this month represents one more step in Epic's journey to becoming a mature business. Strip out the cash pile, and Epic's current-year PE falls from 17 to just 8.5, making the investment case even more compelling. Buy."