Investor's Chronicle: Epic won't be rushed
...These results were broadly in line
with the trading update at October's general meeting, when the company
warned of a poor order intake. Revenues have become increasingly lumpy
as Epic continues to switch its focus to the public sector, following
the decline in private sector business after the tech bubble burst.
The good news is that Epic's markets have not got any worse since
then. In the period, the company won its first MoD contract, and an
uptake in blended learning - a combination of online and offline training
- is helping its consultancy business.
Though cash-generation was less impressive than in previous years
- net cash inflow of £0.5m was half that in the same period in 2002
- Epic remains a cash-rich business. Net funds of £12m, or about
54p a share, equates to nearly half the £27m market capitalisation.
Strip that out, and the shares are trading on around 14 times cash
profits.
That said, investors can be justified in wondering whether this
cash can be better deployed. Returns on investment and servicing
of finance added £190,000 to free-cash-flow. A decent acquisition
would surely make more sense than hoarding cash. But the company
has been looking for an acquisition for some time and won't be rushed.
|
