AIM: Epic increases profits by 400%
"Epic, the e-learning courses developer, announced its first dividend
when it released its interim results.
Despite the cost of the dividend, Epic is continuing to increase
its cash pile as it wins more business from the public sector. Such
work now accounts for just over 50% of revenues. In the six months
to November 2002, Epic increased its profits by just under 400%
to £1m on turnover of £4.6m... The maiden dividend is 0.4p...there
is scope for rapid growth at least in line with earnings.
New customers include Orange, BT and the NHS. The health and education
sectors are increasing spending. Two-thirds of turnover is repeat
business. The consultancy side of the business is being built up
and a new boss has been appointed for this division.
Chief executive
Donald Clark plans to use the strengths of the company's balance sheet
to win more business and make acquisitions. Epic is expected to make
a profit of £1.8m in the year to May 2003 compared with £840,000 last
year. Next year profits are forecast to rise to £2.1m.
Profits will be helped by sales of software developed to train senior
civil servants. That generated 7% of turnover in the first half and
the initial £200,000 of funding from the Cabinet Office has been repaid.
That means that a greater proportion of the income will fall through
to profit.
If the cash balance of £10.4m is subtracted from the market capitalisation
then, at 92.5p, Epic is valued at less than 10 times forecast operating
profits.
Epic pays only a small tax charge at the moment - 4% at the interim
stage - because of past losses, but even on a full tax charge the
rating would be less than 14. The shares remain undervalued."
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