News blog

In-Deed Online / Learning Technologies Group

• BY: Andrew Hore |
• POSTED: 22/10/2013 |

Eight years after it was acquired by Huveaux, now Dods Group, e-learning provider Epic Group is reversing into cash shell In-Deed Online.

Epic is being acquired for 255m shares at a notional price of 5.88p a share and £1.3m in cash, which is predominantly coming from Epic’s cash pile. Epic is valued at £16.3m.

Proposed chairman Andrew Brode and chief executive Jonathan Satchell, who has already built up and sold one e-learning business, have each agreed to sell 14.285m shares at 7p each. They will each be left with 113.2m shares or 41.05% of the enlarged group, so the shares will still be tightly held. Plans for acquisitions are likely to improve liquidity.

Brode and proposed non-executive director Peter Mountford successfully reversed patent translations business RWS into an Aim shell a decade ago. The new board has a spread of experience in the e-learning sector and of making acquisitions.

Huveaux paid £22.7m in cash and shares for Epic in 2005. The cash element of the offer was more than covered by £9.5m of cash in the balance sheet. Huveaux was heavily indebted and in 2008 it sold Epic for £4.75m. The business had declined in the intervening period and it was a good time to buy.

Epic made an operating profit of £1.58m on revenues of £8.1m in its last full year as an independent Aim-quoted company. This was an unusually good performance and was double the previous year’s profit. Revenues subsequently declined with 2010 marking the low point.

The company is less dependent on the public sector than it used to be and it currently accounts for less than one-third of revenues. Epic has invested £400,000 in developing its SaaS platform GoMo, which will provide recurring revenues and make the group less reliant on contract revenues which can be lumpy.

In the three years to 2012, revenues have grown at a compound annual rate of 16.5%. In 2012, the operating profit was £800,000 on revenues of £6.9m.

The UK is still the main market but a joint venture has been started in Brazil and a New York office recently opened. There is scope for more international growth.

Despite being the market leader in the UK, there are a number of potential acquisitions which could broaden the range of services offered and also help to build up the business. Management is already talking with potential targets. The aim is to create a business through acquisitions which will have £50m of annual revenues.

Shares in In-Deed, which is being renamed Learning Technologies Group, fell 0.5p to 8p each.

The reverse takeover will be completed on 8 November if shareholders approve.

Download the latest AIM Journal from http://www.hubinvest.com/AIMPDFOctober2013_49.pdf