EW Fact thrives on competition; The Investment Column

The onset of competition in the central London market for accountancy tuition has had a galvanising effect on EW Fact, the market leader. The arrival in 1994 of Professional Accountancy Training, a minnow in the world of accountancy education, sent prices plunging by two-thirds and cut class sizes by over a third. Fact's profits went through the mangle, but last summer it merged its two competing colleges to form AT Emile Woolf Colleges, slashing staff costs by pounds 1m and slicing around pounds 200,000 from the marketing budget by cutting out duplication.

The results are clear from yesterday's half-year results to June. Profits have soared from pounds 272,000 to pounds 932,000, out of which a restored interim dividend of 0.9p is being paid.

Fact's move to match its rival's prices has added 7 per cent to volumes in the first half, while it was able to lift its prices by up to 50 per cent in January. But that is only half the story. The group's efforts to diversify over the past few years are starting to bear fruit. While professional courses remain the core of the business, raising profits from pounds 660,000 to pounds 827,000 in the half year, three other business areas now represent a quarter of group profits.

Business degrees are the group's second most important activity. Meanwhile, a contract to supply study materials to the Chartered Association of Certified Accountants should underpin the fledgling publishing operation.

Suresh Tanna, who is taking over as chairman from the group's eponymous founder Emile Woolf, reckons accountancy training profits will fall to around 40 per cent of the total in a couple of years. That should put the group on a firmer footing and full-year profits of close to pounds 1.9m would put the shares, up 6p at 81p, on a forward p/e of 12. Standing only a few pence above their 1988 flotation price, they are not to be chased too far, despite the lowly rating.