Growth Company Investor: Epic - BUY

E-learning venture Epic has high levels of repeat business, rising profits, no debts, a strong balance sheet and is paying a maiden dividend after a record year to May.

Pre-tax profits rocketed ahead by 125% to £1.8m on a 21% sales hike to £8.7m and strong cash generation of £2.3m (£2.8m) during the year left Epic with year-end cash balances of £11.7m (£9.4m).

Chief executive Donald Clark says Epic's revenues were 51% weighted to the public sector, where spending continues on 'the twin pillars' of education and health. In education, Epic plays a part in most of the Government's e-learning initiatives in schools, further education, higher education and lifelong learning.

Health is a new market for the Brighton-based company, where contracts have been won with the NHSU and NPSA, in a business that should grow rapidly in the coming year. Public sector work is attractive because the company gets paid more promptly. Private sector work, 44% of sales, is centred on the finance, retail and telecommunications sectors.

This is the first year Epic has paid a dividend - the 1.4p total for the year is covered 3.5 times by earnings.