Profit warning at Epic blamed on Whitehall software delays

The training software provider Epic issued a profits warning yesterday after seeing sales fall just as it took on more staff. Its shares fell 21.5p to 107.5p on a gloomy annual meeting statement that made a stark contrast with buoyant figures released in July.

Epic's chairman, Michael Inwards, told shareholders that extended consultation on the Government's e-learning policy had delayed decision-making by many government departments and agencies this summer. With 60 per cent of revenue coming from the public sector, Epic's orders would be hit in the second half to next May, although the first half to November was running only slightly below budget, he said.

Mr Inwards also admitted that, in the private sector, activity among financial services providers had been "weaker than expected".

Epic, spurred on by improved trading towards the end of the last financial year that saw turnover up 21 per cent and pre-tax profits doubling to £1.8m, recruited additional sales staff this summer but Mr Inwards said: "Despite increasing our sales activities we are experiencing some delays in actual orders being placed."

Epic paid its first dividend of 1.4p, for the past year to May and Mr Inwards promised that an interim 0.8p would be paid this time, double a year ago. He also said he was looking for acquisitions, although he has not found a suitable one yet.

Yesterday's share price slide brought to an end a period of steady recovery from 55p a year ago. The statement was ominously reminiscent of the bursting of the tech bubble when companies insisted that orders were delayed rather than cancelled. Mr Inwards insisted that "online learning has become and accepted practice". However, he conceded that training budgets are being capped and Epic relied on a shift in spending from traditional learning methods to e-learning.

He assured shareholders that Epic had steered successfully through the first phase of a "double-dip" market, adding: "We are now in a period of reflection just prior to the next phase of solid and consistent spend. Increased activity in our consultancy business confirms this, with strong activity in strategic and planning contracts in the private and public sectors."