1st Feb 2005 07:00
Epic Group PLC01 February 2005 FOR RELEASE 07.00AM 1 February 2005 EPIC GROUP PLC ("Epic") (The UK's leading online learning company) INTERIM RESULTS for the SIX MONTHS TO 30 NOVEMBER 2004 Epic Group, leaders in online learning, announce interim results for the sixmonths ended 30 November 2004 2004 2003 ChangeTurnover £3.87m £3.73m +3.9%Profit before tax £0.89m £0.82m +8.7%Basic earnings per share 2.5p 2.3p +8.7%Dividend per share 1.6p 0.8p +100% * Cash balances of £10.14 (2003: £12.47m) after share buy-back of £2.4 million* Dividend doubled to 1.6p (2003. 0.8p)* Actively considering methods of returning surplus cash to shareholders* New clients wins in both private and public sectors* Reorganisation in some areas of the public sector affecting sales levels* Overall revenue growth not as strong as anticipated, results for full year likely to be below market expectations* Current orders ahead of last year For further information: Epic Group plcJohn Gordon (Chairman) 01273 728686Donald Clark (Chief Executive Officer) 01273 728686Stephen Oliver (Chief Financial Officer) 01273 728686 Beattie FinancialBrian Coleman-Smith / James Chandler / Grace Marriner 020 7398 3300 EPIC GROUP PLC ("Epic") (The UK's leading online learning company) INTERIM RESULTS for the SIX MONTHS TO 30 NOVEMBER 2004 Chairman's Statement Introduction Epic, the leading online learning company in the UK, reports increases in bothrevenue and profits for the six months ended 30th November 2004 compared to thecorresponding period last year. Cash generation remained strong and this isreflected in a doubling of the interim dividend. In addition, we undertook ashare buy-back in October 2004, enhancing earnings per share. Trading results for the six months ended 30th November 2004 Turnover for the period was £3.87 million (2003: £3.73 million), an increase of3.9 per cent. Gross margin for the period was 52 per cent (2003: 53 per cent).Profit before taxation for the period amounted to £0.89 million (2003: £0.82million), an increase of 8.7 per cent. Basic earnings per share were 2.5p (2003:2.3p), an increase of 8.7 per cent and diluted earnings per share were 2.4p(2003: 2.2p). The net cash generated during the period was £0.3 million (2003: £0.5 million),excluding the outflows on share buy-backs and dividends paid to shareholders.Cash balances at 30th November 2004 were £10.14 million (31st May 2004: £12.47million). Dividend The Board has decided that the interim dividend should be doubled to 1.6p pershare (2003: 0.8p per share). This will be paid on 25th April 2005 toshareholders on the register on 23rd March 2005. The Board believes that theCompany has more than adequate cash reserves for its foreseeable requirementsand that the major part of available earnings should be distributed toshareholders. Share Buy-back In accordance with authorities given to the Board by shareholders in GeneralMeetings, the Company repurchased 2,828,473 ordinary shares for cancellationduring October 2004 at prices between 85p and 87.5p per share. The total cost ofthese purchases was £2.4 million. This represented approximately 10.8% per centof the issued share capital of the Company prior to the buy backs and shouldresult in an enhancement of earnings per share in subsequent financial periods. Return of Capital The Board currently has the authority to repurchase a further 1,997,508 ordinaryshares and is committed to utilising this authority if there would bedemonstrable benefit to the Company in doing so. In addition the Board, in association with the Company's advisers, is activelyconsidering the most appropriate method of returning surplus cash toshareholders. To this end the Board intends to make application to the Court toeffect a capital reduction to create additional distributable reserves. Board Changes Michael Inwards stepped down as Chairman of the Company on 12th October 2004. Hewill continue as a non-executive Director until the end of the current financialyear on 31st May 2005. I was elected to the Board on 12th October 2004 and was appointed Chairman onthe same date. By training a Chartered Accountant, my career was mostly spent incorporate finance in the City of London. I am also a director of several otherpublic companies. Trading During the period under review, the Company increased the number of its approvedsupplier status contracts and clients in both the private and public sector. Thebalance between private and public sectors remained 50:50. We gained 10 newclients in the private sector, in finance, retail and manufacturing. In thepublic sector we achieved better than expected revenue in defence and some otherareas of government. Although we are opening up new clients in key sectors, reorganisation in thepublic sector, specifically in health and education, has resulted in some delaysand uncertainty which is affecting sales levels. We expect that visibility inthese sectors will become clearer after the forthcoming election. People Epic is very much a people business and the thanks of shareholders and directorsgo to all our staff for their contribution to these results. Prospects Some current contracts will deliver margin in excess of expectations but overallrevenue growth will not be as strong as previously anticipated, so results forthe current year are likely to be below current market expectations. However,orders are ahead of last year, and present indications are that results for thesecond half should be satisfactory. Epic maintains its position as the leadinge-learning company in the UK and the Board continues to explore thepossibilities of expanding the Group's activities. John Gordon1st February 2005 Consolidated Profit and Loss Account Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) Note £'000 £'000 £'000 Turnover 3,873 3,726 7,296 Cost of sales (1,853) (1,744) (3,524) ----------- ----------- --------- Gross Profit 2,020 1,982 3,772 Administrative expenses (1,382) (1,370) (2,887) ----------- ----------- --------- Operating profit 638 612 885 Net interest receivable 255 209 479 ----------- ----------- ---------Profit on ordinaryactivities beforetaxation 893 821 1,364 Taxation 2 (260) (220) (330) ----------- ----------- --------- Profit for thefinancial period 633 601 1,034 Dividends 3 (374) (209) (471) ----------- ----------- --------- Retained profit for thefinancial period 259 392 563 ----------- ----------- --------- Earnings per share(pence) 4 Earnings per share 2.5p 2.3p 4.0p Diluted earnings pershare 2.4p 2.2p 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 above derive fromcontinuing operations. Consolidated Balance Sheet Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) Note £'000 £'000 £'000Fixed assetsTangible assets 123 141 148Investments 100 100 100 ----------- ----------- --------- 223 241 248 ----------- ----------- --------- Current assetsDebtors 5 1,679 1,726 1,908Cash at bank and inhand 10,149 11,996 12,470 ----------- ----------- --------- 11,828 13,722 14,378 Creditors: amountsfalling due within oneyear 6 (3,226) (3,154) (3,630) ----------- ----------- --------- Net current assets 8,602 10,568 10,748 ----------- ----------- --------- Net assets 8,825 10,809 10,996 ----------- ----------- --------- Capital and reservesCalled up share capital 234 261 262Share premium account 4,128 4,099 4,114Capital redemptionreserve 28 - -Other capital reserves 1,090 1,090 1,090Profit and loss account 3,345 5,359 5,530 ----------- ----------- ---------Equity shareholders'funds 7 8,825 10,809 10,996 ----------- ----------- --------- Consolidated Cash Flow Statement Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) Note £'000 £'000 £'000 Net cash inflow fromoperating activities 8 83 306 818 Returns on investmentsand servicing offinance 281 190 440 Taxation - - (46) Capital expenditure (26) (43) (96) Equity dividends paid (229) (260) (465) ----------- ----------- --------- Cash inflow beforefinancing 109 193 651 FinancingShares repurchased (2,444) - -Shares issued 14 83 99 ----------- ----------- ---------(Decrease) / increasein cash in the period (2,321) 276 750 ----------- ----------- --------- Reconciliation of net cash flow to movement in net funds Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 (Decrease)/increase incash for the period (2,321) 276 750 Net funds at beginning ofperiod 12,470 11,720 11,720 ----------- ----------- --------- Net funds at end of period 10,149 11,996 12,470 ----------- ----------- --------- NOTES 1 Basis of preparation This interim report has been prepared using the accounting policies as set outin the annual report and accounts for the year ended 31 May 2004. This report isunaudited, but has been reviewed by the auditors and their independent reviewreport is set out on page 9. The comparative figures for the financial year ended 31 May 2004 have beenextracted from the statutory accounts that have been delivered to the Registrarof Companies and carried an unqualified audit report and did not contain astatement under section 237(2) or (3) of the Companies Act 1985. The interimreport and accounts are not full accounts within the meaning of section 240 ofthe Companies Act 1985. 2 Tax charge on profit on ordinary activities The tax charge for the period has been calculated at the estimated effectiverate for the full year. 3 Dividends The interim dividend of 1.6p per share (2003 0.8p per share) will be paid on 25April 2005 to shareholders on the register at 28 March 2005. 4 Earnings per share Earnings per share have been calculated on the profit after tax for thefinancial period divided by the weighted average number of shares in issueduring the period. Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) Weighted average number of shares For basic earnings pershare 25,456,406 26,003,616 26,061,643Dilutive share options 471,111 642,008 589,172 ------------ ------------ ----------For diluted earnings pershare 25,927,517 26,645,624 26,650,815 ------------ ------------ ---------- 5 Debtors Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Trade debtors 640 775 1,017Amounts recoverable oncontracts 904 891 703Prepayments and otherdebtors 135 60 188 ------------ ------------ ---------- 1,679 1,726 1,908 ------------ ------------ ---------- Included within other debtors is £70,000 (30 November 2003: £nil, 31 May 2004:£70,000) in respect of deferred tax that is recoverable in more than one year.6 Creditors Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Payments received onaccount 1,274 1,800 1,792Trade creditors 85 67 212Corporation tax 669 - 409Taxes and social security 315 519 361Dividends payable 412 210 267Accruals, deferred incomeand other creditors 471 558 589 ------------ ------------ ---------- 3,226 3,154 3,630 ------------ ------------ ---------- 7 Reconciliation of movements in shareholders' funds Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Profit for the financialperiod 633 601 1,034Dividends (374) (209) (471)Share capital purchased (2,444) - -Share capital subscribed 14 83 99 ------------ ------------ ----------Net (deduction from) /addition to shareholders'funds (2,171) 475 662Opening shareholders'funds 10,996 10,334 10,334 ------------ ------------ ----------Closing shareholders'funds 8,825 10,809 10,996 ------------ ------------ ---------- During the period, the Company repurchased 2,828,473 ordinary shares at a totalcost of £2,444,000 out of distributable reserves. A capital redemption reserveof £28,000 is established to account for the nominal value of the sharescancelled. 8 Reconciliation of operating profit to net cash inflow from operating activities Half year to Half year to Year to 30 November 30 November 31 May 2004 2003 2004 (unaudited) (unaudited) (audited) £'000 £'000 £'000 Operating profit 638 612 885Depreciation 51 67 120Profit on the disposal offixed assets - (2) (9)Decrease/(increase) indebtors 203 28 (64)(Decrease)/increase increditors (809) (399) (114) ------------ ------------ ----------Net cash inflow fromoperating activities 83 306 818 ------------ ------------ ---------- Copies of this announcement will be posted to shareholders and are availablefrom the registered office, 52 Old Steine, Brighton, Sussex, BN1 1NH or from thecompany website at www.epic.co.uk Independent review report by Baker Tilly to Epic Group Plc Introduction We have been instructed by the company to review the financial information setout on pages 4 to 8 and we have read the other information in the interimstatement and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report, including the conclusion, has been prepared for and only for thecompany for the purpose of their interim statement and for no other purpose. Wedo not, therefore in producing this report, accept or assume responsibility forany other purpose or to any other person to whom this report is shown or intowhose hands it may come save where expressly agreed by our prior consent inwriting. Directors' responsibilities The interim statement, including the financial information contained therein, isthe responsibility of, and has been approved by the directors. The directors areresponsible for preparing the Interim Statement in accordance with theAlternative Investment Market Rules which require that the accounting policiesand presentation applied to the interim figures must be consistent with thosethat will be adopted in the company's annual accounts. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board as if that Bulletin applied. A reviewconsists principally of making enquiries of group management and applyinganalytical procedures to the financial information and underlying financial dataand based thereon assessing whether the accounting policies and presentationhave been consistently applied unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditperformed in accordance with Auditing Standards and therefore provides a lowerlevel of assurance than an audit. Accordingly we do not express an audit opinionon the financial information. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 November 2004. BAKER TILLYChartered AccountantsBrighton1 February 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Wt India Earn