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

INTERIM RESULTS FOR THE SIX MONTHS TO

30 NOVEMBER 2002

• Interim Results for the Six Months to 30 November 2002
• Chairman’s Statement
• Summary Consolidated Profit and Loss Account
• Consolidated Balance Sheet
• Consolidated Cash Flow Statement
• Reconciliation of net cash flow to movement in net funds

Epic, leaders in e-learning, announce interim results for the six months ended
30 November 2002.

• Substantial increase in revenues and profits

• Cash generative - balance sheet strengthens further

• Public sector accounts for 50% of all revenues

• Revenues from the private sector up 20%

• Broad spread of new clients

• New services division

• Maiden dividend

• Looking forward to a year of success

For further information:

BACKGROUND NOTE:

ABOUT EPIC:

Epic is the leading online learning company in the UK. For nearly 20 years Epic has been a consistent leader and innovator, producing ground-breaking and award winning work.

Epic creates complete integrated learning solutions for clients embracing blends of online learning, workshops, performance support and collaborative communities. Services range from consultancy through content production and technology solutions (both bespoke and generic) to testing and localisation.

Epic's extensive client list includes:

• In the financial sector, Barclays, Lloyds TSB and The Royal Bank of Scotland
• In the government sector, central government departments (DWP, DfES, FCO), the Cabinet Office, regional bodies (Scottish Enterprise, the Welsh Development Agency) and Inland Revenue, Customs & Excise
• In education and health, Ufi learndirect, UKeUniversities, NHSU (National Health Service University)

Chairman's Statement

I am pleased to report substantial increases in both revenues and profits for the six month period, along with the payment of a maiden dividend. This performance reinforces our position as the UK market leader in online learning.

Turnover at £4.6m (2001: £3.3m) increased by 39% and includes £0.3m (2001: £nil) from sales of our Products. Profit before tax of £1.0m (2001: £0.2m) show a 400% increase. The gross margin for the period was consistent with last year at 49% (31 May 2001: 49%). We have expanded the scope of our services division to increase the offering to our clients. Whilst some of this work may affect our overall gross profit margins, we believe it is appropriate to offer these services so as to be the supplier of choice to our blue chip customers.

Cash generation for the period has again been strong with an increase of £1.0m (2001: £0.8m) leading to total cash balances of £10.4m at the period end (31 May 2001: £9.4m).

Basic earnings per share were 3.7p (2001: 0.8p) and on a fully taxed basis 2.7p (2001:0.6p). We expect to utilise our remaining tax losses during the current financial year.

Dividend

As previously announced, we are to commence the payment of dividends. An interim payment of 0.4p per share will be paid on 25 April 2003 to shareholders on the register at 28 March 2003.

Cash balances

We continue to be highly cash generative and have investigated a number of potential acquisitions in the last two and a half years but none of these has matched our strict criteria. Our growing cash balances not only provide us with a strong balance sheet, which has been very beneficial in winning major government related business, but it also provides us with the flexibility to move quickly if we found the right acquisition opportunity. In addition at the last AGM we obtained shareholder authority to undertake share buy backs and will use this authority when appropriate.

Business model

Our business is the design, development and delivery of e-learning solutions to major private and public organisations. Online learning uses internet technology to deliver training, learning and performance improvement. Drivers in the market include speed of delivery, regulatory pressure and cost savings. We offer outsourced solutions to large organisations in many different sectors. The public sector accounts for over 50% of all revenues. Split by activity, revenues arise from production of online learning (private sector 45%, public sector 34%), services (14%) and products (7%).

Online learning

Our private sector revenues grew by 20% in the period. Financial services remains our largest individual sector where the retail banks, now mature online customers, continue to provide regular contracts through approved supplier relationships. We have extended our client list in all other sectors with specific wins in accountancy, media, retail, travel and telecommunications. Consolidation, regulatory compliance and the need to reduce costs and increase productivity in the private sector will continue to drive revenue this year.

Our increased focus on the public sector resulted in revenue growth in the period of 30%. We have seen increased activity in education with contracts from a major sector skills council and large contracts in both further and higher education. An encouraging start has also been made in our planned push into health, winning our first major projects with the NHS. Contracts with major government departments, local authorities and development agencies have also been won.

Products and services

Products, have been primarily sold into the public sector, and include PRIME, our public sector leadership course, and Arena, our collaborative learning tool.

As previously mentioned, we have expanded our services division to increase the scope of our offering to our clients where they want more than pure online learning. Our 'blended' offer broadens into services and products, integrating online and offline methods of learning. We have recently appointed a Director of Services and revenue growth in this division was experienced in the provision of consultancy, workshops and testing to both public and private sector clients.

People

Our success would not have been possible without the skills and dedication of the people who work for us and, on behalf of the directors and shareholders, I would like to thank them for their contribution to these excellent results.

Prospects

As with email or the internet, we believe that online learning is irreversible, as the cost savings once implemented are considerable. Major corporates and public funded organisations have different but specific needs. Our business model focuses on providing our clients with tailored solutions and has resulted in us continuing to win high levels of repeat business. We have continued to respond to the rapid changes in the market by widening the range of products and services we offer.

The return to sales growth, a balance sheet with over £10.4m in cash and no debt together provide us with a strong base for future expansion. We have the largest single online learning and skills base in the UK, ISO 9001:2000 and more quantifiable experience than any other UK company. This places us in a strong position to win the larger contracts and achieve increased success in tendering for public sector work.

Our core strategy is to remain at the forefront of the UK online learning market whilst at the same time providing our clients with an increasing range of solutions and an ever improving level of service. This should maximise value to our shareholders and I look forward to a year of success for Epic.

Michael Inwards

Chairman

3 February 2003

Summary Consolidated Profit and Loss Account

There is no material difference between the historical cost profits and those shown above; therefore no separate note of historical cost profits and losses has been presented.

The Group has no recognized gains or losses during the current or previous periods other than the above results. All of the results derive from continuing operations.

Consolidated Balance Sheet

Consolidated Cash Flow Statement

Reconciliation of net cash flow to movement in net funds

Notes:

1. Basis of preparation

This interim report, which is unaudited, has been prepared using the accounting policies as set out in the annual report and accounts for the year ended 31 May 2002. The comparative figures for the financial year ended 31 May 2002 have been extracted from the statutory accounts that have been delivered to the Registrar of Companies and carried an unqualified audit report.

2. Earnings per share

Earnings per share have been calculated on the profit after tax divided by the weighted average number of shares in issue during the period.

Fully taxed earnings per share is calculated on the basis of the full rate of corporation tax (30%) applying to the profit in the period. As the Group has tax losses that are not reflected in the balance sheet, the directors consider that this figure provides a useful measure of performance.

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