14th Jul 2005 07:00
Epic Group PLC14 July 2005 FOR RELEASE 07.00AM 14 July 2005 Epic Group plc ("Epic") (The UK's leading online learning company) RESULTS FOR THE YEAR ENDED 31 MAY 2005 (Extracted from the audited financial statements) Epic, leaders in online learning, announce preliminary results for the yearended 31 May 2005. 2005 2004 ChangeTurnover £8.1m £7.3m +11%Operating profit £1.6m £0.9m +77%Profit before tax £2.1m £1.4m +53%Basic earnings per share 6.3p 4.0p +57%Total dividend for year 4.8p 1.8p +166%Cash balances £10.3m £12.5m • Record profitability • £3m returned to shareholders in the year • Dividend increased to 4.8p • Business broadening in all sectors • Potential offer talks in progress For further information: Epic John Gordon (Chairman) 01273 728686Donald Clark (Chief Executive Officer) 01273 728686Stephen Oliver (Chief Financial Officer) 01273 728686 Beattie Financial 020 7053 6400Brian Coleman-Smith / Jo Clewlow / Tim PilgrimAltium Capital 020 7484 4040Garry Levin, Tim Richardson BACKGROUND NOTE: ABOUT EPIC Epic Group plc is the UK market leader in e-learning, blended learning andknowledge solutions. Using the best of new technologies alongside traditionalmethods, Epic helps people to know more, learn faster, perform better - bringingbenefits to both organisations and individuals. Epic has an unrivalled client list in both the private and public sectors.Private sector clients include the major banks, retailers and consultancies. Inthe public sector, Epic has clients in government departments, education, healthand defence. Website www.epic.co.uk Epic Group plc ("Epic") (The UK's leading online learning company) RESULTS FOR THE YEAR ENDED 31 MAY 2005 (Extracted from the audited financial statements) Chairman's statement Overview Epic has maintained its position as market leader in e-learning and it ispleasing for Epic to release financial results showing its best everprofitability. Results For the year ended 31 May 2005, turnover increased by 11% to £8.1m (2004:£7.3m). Effective cost control this year has meant that operating profit, beforeinterest receivable and taxation, increased by 77% to £1.6m (2004: £0.9m) andprofits before tax were up by 52% to £2.1m (2004: £1.4m). After providing forcorporation tax, earnings per share for the year were 6.3p (2004: 4.0p) anincrease of 57%. Cash generated from operating activities was £0.7m (2004: £0.8m) as our debtorbalances increased pending payments by our customers. Returns to shareholdersduring the year (in the form of dividends and share buy-backs) totalled £3.0m(2004: £0.5m) and consequently cash balances decreased during the year by £2.2m(2004: increase £0.8m). At 31 May 2005 cash balances were £10.3m (2004: £12.5m). Potential offer for Epic As shareholders will know from our formal announcement to the London StockExchange on 28 June 2005 and my letter alerting them to this, Epic is inpreliminary discussions with a third party that may or may not result in anoffer being made for the Company. Whilst this approach was not actively sought,the talks are continuing at present and we will keep shareholders informed ofdevelopments as appropriate. Dividends During the year the directors doubled the interim dividend to 1.6p per share(2004: 0.8p). The Board have recommended a final dividend of 3.2p (2004: 1.0p)giving a total ordinary dividend of 4.8p (2004: 1.8p) more than double theprevious year. Shareholders should only expect to receive the final dividend ifthe potential offer does not proceed. The dividend is, as is usual, subject toshareholders voting for its approval at the annual general meeting to be held indue course. It is the directors' intention to follow a policy of distributing the major partof earnings each year, having due regard to the working capital and cashposition of Epic. Return of capital During the course of the year, the directors determined that Epic, from itssuccessful trading, had generated cash balances in excess of its requirements.Following shareholder approval at an extraordinary general meeting on 13 April2005 and the consent of the High Court, a capital re-construction was undertakencreating further distributable reserves. Accordingly the sum of £4.1m has beentransferred to the profit and loss account. It is the intention of the directorsthat, if the potential offer does not proceed, not less than £5m of these cashbalances should be returned to shareholders. Trading The balance of work between the private and public sector remains approximatelyeven. Margins have been healthy in both sectors and we continue to be active inboth. Successful integration of Epic technology in the client base with Arena(learning management software) and Context (content management software) hasresulted in stronger long term relationships with clients. In the private sector, Epic has increased both the number of clients and thoseclients where it has 'approved supplier' status. We have therefore broadened ourclient base across finance, retail, manufacturing, pharmaceutical, oil,telecommunications and consultancies. In the public sector, after the May 2005 election and a considerablereorganisation in the National Health Service and the central governmentdepartments, we are beginning to see a more settled landscape. We have beenparticularly successful in the defence and education markets. People Steve Rayson has today announced his resignation from the Board to pursue acareer outside of e-learning. I thank Steve for his past hard work. Epic is verymuch a people business and the thanks of the directors and shareholders go toall our staff for their contribution to these outstanding results. Prospects The current year has started satisfactorily in both public and private sectorsand we maintain our position as the leading e-learning company in the UK. John Gordon Chairman14 July 2005 Summary Consolidated Profit and Loss Account Year ended Year ended 31 May 2005 31 May 2004 Note £'000 £'000 Turnover 8,104 7,296 Cost of sales (3,810) (3,524) ----------- ----------- Gross profit 4,294 3,772 Administrative expenses (2,725) (2,887) ----------- ----------- Operating profit 1,569 885 Net interest receivable 516 479 ----------- -----------Profit on ordinary activities before taxation 2,085 1,364 Taxation 2 (550) (330) ----------- ----------- Profit for the financial year 1,535 1,034 Dividends 3 (1,117) (471) ----------- -----------Retained profit for the financial year 418 563 ----------- ----------- Earnings per share (pence) 4 Earnings per share 6.3p 4.0p Diluted earnings per share 6.2p 3.9p There is no material difference between the historical cost profits and thoseshown above; therefore no separate note of historical cost profits and losseshas been presented. The Group has no recognised gains or losses during the current or previousperiods other than the above results. All of the results derive from continuingoperations. Consolidated Balance Sheet 31 May 2005 31 May 2004 Note £'000 £'000 Fixed assetsTangible assets 149 148Investments 100 100 ------------ ----------- 249 248 ------------ ----------- Current assetsDebtors 2,561 1,908Cash at bank and in hand 10,281 12,470 ------------ ----------- 12,842 14,378 Creditors: amounts falling due within one (4,037) (3,630)year ------------ ----------- Net current assets 8,805 10,748 ------------ ----------- Net assets 9,054 10,996 ------------ ----------- Capital and reservesCalled up share capital 238 262Share premium account 5 26 4,114Capital redemption reserve 5 28 -Other capital reserve 5 - 1,090Profit and loss account 5 8,762 5,530 ------------ -----------Equity shareholders' funds 6 9,054 10,996 ------------ ----------- Consolidated Cash Flow Statement Year ended Year ended 31 May 2005 31 May 2004 Note £'000 £'000 Net cash inflow from operating activities 7 684 818 Returns on investments and servicing of 525 440finance Taxation (314) (46) Capital expenditure (111) (96) Equity dividends paid (613) (465) ------------ -----------Cash inflow before financing 171 651 FinancingIssue of ordinary share capital 84 99Share capital repurchased (2,444) - ------------ -----------(Decrease) / increase in cash in the year (2,189) 750 ------------ ----------- Reconciliation of net cash flow to movement in net funds Year ended Year ended 31 May 2005 31 May 2004 £'000 £'000 (Decrease) / increase in cash for the year (2,189) 750 Net funds at beginning of year 12,470 11,720 ------------ ----------- Net funds at end of year 10,281 12,470 ------------ ----------- 1 Basis of preparation The preliminary announcement does not constitute the company's statutoryaccounts within the meaning of section 240 of the Companies Act 1985. The sameaccounting policies have been used as stated in the accounts for the year ended31 May 2004. Statutory accounts for the year ended 31 May 2004 have been filedwith the Registrar of Companies on which the auditors have reported and theirreport was unqualified and does not contain a statement under Section 237 (2) or(3) of the Companies Act 1985. The contents of the preliminary announcement have been extracted from theaudited financial statements of the company for the year ended 31 May 2005 thatwill be filed with the Registrar of Companies following the Annual GeneralMeeting. Copies of the annual report and financial statements for 2005 will be posted toshareholders and will be available from the Company's registered office, 52 OldSteine, Brighton, BN1 1NH in due course. They will also be available from thecompany website www.epic.co.uk 2 Taxation Corporation tax is calculated on the profit for the year using the standard rateof corporation tax 30%. The taxation charge for 2005 is reduced by the deductionof amounts relating to share option exercises, which do not otherwise appear inthe profit and loss account. 3 Dividends The final dividend of 3.2p per share will be paid on 25 November 2005 toshareholders on the register at 28 October 2005. The payment of the dividend issubject to approval by the AGM to be held on 10 October 2005. 4 Earnings per share Earnings per share have been calculated on the profit after tax of £1,535,000 (2004:£1,034,000) divided by the weighted average number of shares in issueduring the period. The weighted average number of shares in issue during theyear was 24,511,055 (2004: 26,061,643). The calculation of the diluted earnings per share is calculated on 24,603,576shares (2004: 26,650,815) being the weighted average number of shares in issueadjusted for the effects of dilutive potential shares arising from share optiongrants. 5 Reserves Share premium Capital Other account redemption capital Profit and £000 reserve reserve loss account Total £000 £000 £000 £000 At 31 May 2004 4,114 - 1,090 5,530 10,734Share capitalsubscribed 80 - - - 80Capitalreconstruction (4,168) - - 4,168 -Share capitalrepurchased - 28 - (2,444) (2,416)Transfer (1,090) 1,090 -Retained profitfor - - - 418 418the year -------- -------- -------- ------- -------- At 31 May 2005 26 28 - 8,762 8,816 -------- -------- -------- ------- -------- Following a review of the group structure, the directors decided that somedormant subsidiary companies within the group were no longer required and havecommenced the process to have these dissolved. As a result, the other capitalreserve of £1,090,000 has been transferred to the profit and loss account.Under a court approved capital reconstruction in May 2005 the balance thenoutstanding on the share premium account was transferred to the profit and lossaccount. 6 Summary of movements in shareholders' funds Year ended Year ended 31 May 2005 31 May 2004 £'000 £'000 Profit for the financial year 1,535 1,034Dividends (1,117) (471)Share capital subscribed 84 99Share capital repurchased (2,444) - ------------ ----------- Net movements on shareholders' funds (1,942) 662Opening shareholders' funds 10,996 10,334 ------------ ----------- Closing shareholders' funds 9,054 10,996 ------------ ----------- During the year the company repurchased 2,828,473 ordinary shares of 1p each ata cost of £2,444,000. It also issued 396,500 ordinary shares of 1p each as aresult of exercises under share option agreements, the proceeds to the companywere £84,000. 7 Reconciliation of operating profit to net cash inflow from operatingactivities Year ended Year ended 31 May 2005 31 May 2004 £'000 £'000 Operating profit 1,569 885Depreciation 110 120Profit on the disposal of fixed assets - (9)(Increase)/decrease in debtors (674) (64)(Decrease)/increase in creditors (321) (114) ------------ ----------- Net cash inflow from operating activities 684 818 ------------ ----------- This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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