Wednesday, November 09, 2011

UK e-learning companies in rude health? A rude review!

The UK e-learning business remains, I think, in rude health, with predicted growth this year for Kineo, Epic, Brightwave, Line and Learningpool. It's not all been plain sailing, but here’s a gander at the top UK e-learning businesses over the last three years.
Kineo  has grown every single year since the guys set up after Epic was sold to Huveaux in 2005 and have never had any debt. Well that’s not quite true, as they converted their company from a partnership to a limited company, thereby lending money to themselves, a common tax wheeze, but it’s not really debt in the sense of a liability. It's a good team, led by the force of nature that is Steve Rayson, and they’re going strong on the back of bespoke work, franchising and Totara. What’s really interesting is their rapid expansion abroad where revenues across their shared businesses are probably nearer 15m, making them a salable entity. (3.7 m 2008, 5.2m 2009, 7.1m 2010).
Line have never really been interested in recapitalising and going for rapid growth, which has kept them clear of debt. However, they have over recent years, strengthened their focus on defence. Although dropping by a million in revenues last year, again I think they’ll bounce back this year on the back of defence work. Piers (ex-Epic many years ago) has a good team who do good work. (6.95 m 2009, 6.15m 2010)
Epic declined badly under the weight of a bad loan from the Bank of Scotland to Huveaux, and has declined in revenues every single year since it was sold it in 2005, when they eliminated the huge cash reserve and started to drop on revenues. Although bought out from Huveaux, they also suffered badly from a talent drain to Kineo, whose management team are all ex-Epic. However, it looks as though they may be bouncing back, with a possible increase in revenues in 2011. They’ve won a couple of large contracts and are dabbling in mobile and Moodle, which is a sign that they’re thinking afresh. (6.1m 2008, 5.15m 2009, 5.1m 2010).
Brightwave have also taken senior people from Epic and have a good reputation for well-designed content but seem stuck at revenues more akin to a lifestyle business. However, Charles Gould, who also worked at Epic many moons ago, is a smart cookie, and has recently shown more signs of ambition for growth. I suspect we’ll see good growth this year on the back of this ambition. Brightwave don’t put out accounts which shows they’re below the £5 million threshold, probably in the £3.5-4.5 million range. (estimates: 3.8m 2008, 3.0m 2009)
Redtray seem to be mired in debt and have been laying of staff. What distinguishes the successful from the non-successful is that all too familiar word ‘debt’. To grow by acquisition means taking on debt that has to be financed at the same time as you try to get efficiencies and revenues from your acquisitions. Not easy. (3.75m 2008, 3.66m 2009)
Learningpool have grown steadily since 2007, with a focus on a licensed service to the public sector and they will grow again this year, showing there’s space for sector specialists. Their successful, hosted content delivered via Totara will drive sales this year. (1.23m 2008, 2.07m 2009)
Saffron Interactive seem steady at below £2 million and we all hope they’ll remain. a player after the tragic death of Hanif Sazon. (1.8 2008, 1.8 2009)
The irrepressible Steve Dineen’s a trooper and has, presumably, timed out on his non-compete clause and resurrected Fuel as Fusion, with the same shocking pink corporate palette, and check out the shot of the company management team on their website– it looks like a cheap version of the Bullington Club! 
Other news includes the sale of Edvantage (ex-Futuremedia). It looks as though Lumesse have bought them for their LMS and tools, so it will be interesting to speak to that other Brighton force of nature Andrea Miles (ex-Epic) to see what the future holds. 
Specialists in oil & gas, these folks from Aberdeen have shown that sector specialisation has its rewards. However, I don't know them, so will not comment.
Brighton rocks
Brighton remains the epicentre for UK e-learning, with Kineo, Epic, Brightwave, Edvantage (now Lumesse) Vivid and many other small companies forming the backbone of the UK industry. Sheffield like to say they have the edge but it’s the Kineo and Line satellite production groups there that keep it strong, showing a degree of dependence on the south-east.
The new league table should show Kineo and Line (neck and neck finish I reckon) then Epic, Brightwave, Redtray (if they survive), Learningpool and Saffron. I wish all of the above companies well in 2012. Times are tough but they’re all seasoned campaigners and should do well.


Dick Moore said...

For the sake of completeness you might want to add Atlas interactive in there being from Scotland and all - nice people!

John Curran said...

Not sure that I would class revenues around 3m as a 'lifestyle' business... ;-)

Donald Clark said...

Hi John
'Lifestyle business' is a term used by investors and largely applies to businesses which have a single owner, eschew investment and have no independent board. The terms usually applies to businesses that are run as cash cows for the owner. In my book it is not a derogatory term, merely a sensible category for low growth businesses used by the market. They are typically under £5m in turnover but can be very much larger.

Stuart Kruse said...

I am genuinely saddened you have not included BYG Systems.

You must know they've been around for over 25 years, you know their A grade customer base, you know they are on all of the major Government and corporate frameworks and they have a great, friendly reputation. Innovative company too.

I think it is short sighted to say all of the action is in Brighton - just because that's your stomping ground doesn't make it so. Visibility/marketing doesn't necessarily mean success, expertise or longevity.

Let's hear it for the guys who maybe don't shout as loud, but quietly go about the business of delivering where it counts - with customers and with profit that fuels long term, sustainable success.

Donald Clark said...

Calm down Stuart - I didn't include them as I couldn't find their accounts. Send me the numbers and I'll add them. PS you need to update the website - went to look and your history stops in 2007! Latest news a year and a half old. Not saying all of the action's in Brighton - LINE and Atlas are in Aberdeen and London.

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