Directorate Change

Lupus Capital PLC
16 January 2004


16 January 2004                                           For immediate release


                               Lupus Capital PLC

The Board of Lupus announces that it has successfully concluded negotiations
with Greg Hutchings whereby:

- Greg Hutchings will join the Board as executive chairman;

- Greg Hutchings will make a total investment of £2,137,500 in existing and new
  shares of the Company which will represent approximately 12.5 per cent. of the
  enlarged share capital;

- The Company's strategy will be to build shareholder value through the
  acquisition of undervalued businesses and the application of proven management
  skills and systems;

- The Company will establish incentive arrangements for executive directors and
  employees of the Group for successful achievement of the strategy.

Commenting, Konrad Legg, non executive chairman, said:

'We are pleased to have agreed terms with Greg Hutchings for him to join Lupus
and invest in the Company. We believe he will be able to lead the Company to
significant growth and expect the proposals to be well received and provide
value and liquidity for shareholders.'

Commenting, Greg Hutchings said:

'Lupus provides a sound base from which to develop a substantial and exciting
business and I very much look forward to building the Company.'

For further information please contact:

Robert Legget, Progressive Value Management                      016 2081 0070
                                                       or mobile [phone]

Robert Luetchford, Marshall Securities Limited                   020 7490 3788

Greg Hutchings via                                               020 7405 7777
                                                      or mobile [phone]

Note:

The Company also announces that it has terminated discussions concerning the
potential sale of Gall Thomson, its operating subsidiary, or the Company. The
Company is accordingly no longer in an offer period under the City Code.

Marshall Securities Limited, which is regulated in the United Kingdom by the
Financial Services Authority, is acting for Lupus Capital PLC and for no-one
else in connection with the Proposals and will not be responsible to anyone
other than Lupus Capital PLC for providing the protections afforded to clients
of Marshall Securities Limited or for providing advice in relation to the
Proposals.



Lupus Capital PLC

('Lupus' or 'the Company')

Proposed share subscription by Greg Hutchings, appointment of Greg Hutchings as
executive chairman and establishment of employee incentive arrangements

Introduction

Lupus is pleased to announce that it has successfully concluded arrangements for
Greg Hutchings to join the Company and to be appointed as executive chairman and
that it is putting forward proposals (the 'Proposals') whereby:

- Greg Hutchings will invest £2,137,500 in shares of the Company by means of
  subscription for 17,283,944 new Ordinary Shares at 9p per share (the
  'Subscription') and the purchase of existing Ordinary Shares;

- the Company will establish arrangements to provide incentives for executive
  directors and employees of the Group to achieve value for shareholders.

The Proposals are conditional on the approval of shareholders and a circular
convening an extraordinary general meeting of the Company for that purpose will
be sent to shareholders shortly.

If the Proposals are approved and the Subscription is completed Greg Hutchings
appointment as executive chairman of the Company will become effective. His
total investment will represent approximately 12.5 per cent. of the enlarged
issued share capital.

The Company's strategy will be to build shareholder value through the
acquisition of undervalued businesses and the application of proven management
skills and systems. Lupus will compete in many cases with private equity groups
but will offer investors in acquired businesses an opportunity to maintain an
investment and to benefit from the value added through a holding in a publicly
traded, dividend paying group with an experienced management team.

Background to the Proposals
Board changes in November 2002

In October 2002 three of the Company's institutional shareholders served notice
requiring an extraordinary general meeting to be convened to consider the
removal of the majority of the then directors. The requisition set out a
proposed strategy to realise the Company's investments, minimise central costs
and return cash to all shareholders. All the resolutions were passed at the
meeting on 28 November 2002, all the former directors were replaced by the
current directors and Progressive Value Management Limited ('PVML') was
appointed as manager.

Negotiations for the sale of Lupus or Gall Thomson

The Company announced on 26 September 2003 that having sold its listed
investments it was examining ways to return value to shareholders by the sale of
Gall Thomson, its remaining operation, or the sale of the Company. The
indicative proposals received to date have involved significant levels of debt
financing and no definitive offer at an acceptable level has been received.

Alternative approach

In the light of Gall Thomson's continuing sound performance, the Board
instructed PVML, in conjunction with Marshall, the Company's broker, to
investigate the possibility of a transaction offering shareholders the
opportunity to continue with their investment in the Company as an alternative
to crystallising the value of their Ordinary Shares.

Given the market position and the performance of Gall Thomson and the Group's
much reduced cost base and simplified operations, the potential for an
independent route was clear to the Board. However, it was also evident that for
successful implementation of a strategy of growth on the scale which would
justify a continuing listed entity it would be necessary to introduce new
corporate leadership with relevant expertise and experience. In this context
Marshall approached Greg Hutchings.

Potential tender

The Board expects the Proposals to be well received and that interest generated
by the Proposals should create greater liquidity and value in the Ordinary
Shares, providing shareholders with opportunities to dispose of all or some of
their Ordinary Shares if they so desire. If such opportunities do not arise in
the period between the announcement of the Proposals and the preliminary
announcement of the results for the year ended 31 December 2003 the Board
intends, following such preliminary announcement, to seek to arrange a tender at
9p per Ordinary Share (or, if lower, the maximum price at which the Company is
permitted to buy back Ordinary Shares under the Listing Rules). If such a tender
takes place the opportunity to participate will be personal to those
shareholders on the register on 15 January 2004 and will be for at least 40 per
cent. in aggregate of the relevant shareholdings at the time of the tender.
Arrangements will be made for shareholders who purchased Ordinary Shares before
the announcement but were not on the register at 15 January 2004 to participate
in the tender. Any such tender may be satisfied by the Company purchasing
Ordinary Shares itself (up to the limit of its authority to make such purchases)
or by Marshall procuring purchasers or by a combination of Company and investor
purchases. In any case, the Board will not seek to arrange such a tender if the
average closing market bid price of an Ordinary Share on the five business days
following the preliminary announcement of the results for the year ended 31
December 2003 is 9p or more based on reasonable levels of liquidity.

Offer Period

The Board has terminated discussions with all other third parties and,
accordingly, the Company is no longer in an offer period for the purposes of the
City Code on Take-overs and Mergers.

Proposed appointment of Greg Hutchings

Greg Hutchings has entered into a service agreement with the Company under which
if the Proposals are approved by shareholders, and the Subscription is
completed, his appointment as executive chairman of the Company will become
effective. Konrad Legg, Fred Hoad and Roland Tate will continue as non-executive
directors. It is intended that further directors will be appointed in due
course.

If the Proposals are approved by shareholders, the investment management
agreement between the Company and PVML will be terminated and PVML will be paid
the sums due to it under the terms of the investment management agreement.

Greg Hutchings joined Tomkins plc in 1983 and held the post of Chief Executive
or Chairman from January 1984 until he stepped down in October 2000. Over the
sixteen year period to 30 April 2000 Tomkins plc annual profit before tax and
exceptional items rose from £1.6 million to £473.6 million with uninterrupted
growth, year on year, in earnings per share. Compound growth in earnings per
share over this period was around 26 per cent. per annum and compound growth of
dividends per share was over 24 per cent. per annum. In the year to 30 April
2000 Tomkins plc earnings per share and dividends increased by 15 per cent.. The
Board is aware of, and has satisfied itself as to, the circumstances of the
resignation of Greg Hutchings from Tomkins plc, which received extensive
publicity.

Proposed incentive arrangements

The incentive arrangements included in the Proposals are intended to incentivise
the executive team, including Greg Hutchings, to achieve value for shareholders
in terms of share price, earnings per share and growth in the scale of the
Group's operations.

If certain criteria are met and certain conditions are satisfied the Company
intends to issue new Ordinary Shares to an employee benefit trust for the
purpose of making share awards some of which would be made under an Enterprise
Management Incentive Scheme, with the purchase price of such shares being funded
by contributions made by the Company. If the criteria are met and the conditions
satisfied the new Ordinary Shares may be issued in three tranches which are
expected to occur by July 2004, by July 2005 and by August 2008.

The incentive arrangements provide the opportunity for the executive team,
including Greg Hutchings, to achieve a substantial benefit over a short period
reflecting the importance to the Group of their recruitment.

The incentive arrangements provide for three periods, each with demanding
criteria for achievement relevant to stages of the Company's development:

The First Period

The objective of the first period is to reward share price performance
associated with the implementation of the Proposals and the new direction of the
Company. The first period runs until 31 July 2004 and provides for an award of
up to 47,539,257 new Ordinary Shares based on share price achievement over the
range 9p to 15p.

The Second Period

The second period aims to reward share price consolidation and the first phase
of equity growth. The second period runs until 31 July 2005 and provides for an
award of up to 95,000,000 new Ordinary Shares, less the number of Ordinary
Shares allotted in respect of the first period. Share price achievement will be
determined in the same way as in the first period but will be assessed against a
range starting with the relevant share price at the end of the first period
(subject to a minimum of 9p) and rising to 18p.

The Third Period

The criteria for the third period are designed to reward sustained exceptional
business performance and substantial growth of shareholder value. The criteria
require further share price performance, further growth in the equity base and
substantial growth in adjusted earnings per share. The third period covers the
three financial years ending 31 December 2007 and awards are exercisable until
31 August 2008. The number of new Ordinary Shares to be issued in the third
period will be a maximum of 95,000,000 multiplied by a factor relating to share
price performance and by a factor relating to compound growth in adjusted
earnings per share. The share price factor is based on share price achievement
against the range 18p to 30p, which may be adjusted to take account of
substantial issues of new equity. The earnings per share factor is based on
achievement of compound annual increase in adjusted earnings per share against
the range 10 per cent. to 25 per cent. in the three years ending 31 December
2007. The award of new Ordinary Shares in the third period will be scaled back
if the number of new Ordinary Shares issued under the incentive arrangements and
any other employee share schemes in aggregate since the announcement of the
Proposals would otherwise exceed 10 per cent. of the number of Ordinary Shares
in issue immediately prior to the issue.

The Directors believe that to achieve the criteria in full will be challenging.
The maximum number of new Ordinary Shares to be issued under the incentive
arrangements is 190,000,000 Ordinary Shares but for this to occur it will be
necessary, by the time of the issue of the shares under the third tranche, for
the share price to be at least 30p and for adjusted earnings per share to have
grown by at least 25 per cent. per annum compound in the three years ending 31
December 2007. In addition, because of the 10 per cent. limit referred to above,
it will be necessary for the market capitalisation of the Company to increase
very substantially. The Board expects that, before the end of the third period,
the Company will make a number of acquisitions for which all or part of the
consideration may be new Ordinary Shares.

Current trading and prospects

As envisaged at the time of the interim results the trading environment for Gall
Thomson has now recovered fully following the effects of the Iraq war. The
Directors remain confident that Gall Thomson will report a solid performance for
2003, which was a complicated year.

Gall Thomson has entered 2004 with a healthy order book. External consultants
have indicated that they expect that there will be good prospects for the
offshore market over the coming years. This is being driven by the continuing
expansion in the use of sub-sea production technologies, the move into deep
water areas and the exploitation of marginal fields.

Klaw has continued to extend its product range and has increased its marketing
efforts to penetrate the industrial couplings market.

Dividends

The Company intends to continue to pay dividends. The implementation of the
Proposals may have a significant effect on distributable reserves which may
require the Board to take action to enable dividends to be paid. The final
dividend for the year ended 31 December 2003 will be declared as soon as is
practicable.

Reasons for recommending the Proposals

The Proposals are based on a price of 9p per Ordinary Share. As stated above, in
the light of the recent approaches received from third parties and the funding
structures being contemplated by them the Board believes that if a cash offer
for Lupus had been made on conclusion of negotiations, which is not certain, it
is unlikely that the offer would have been at a price higher than 9p per
Ordinary Share. The Directors intend that shareholders should have the choice of
retaining their Ordinary Shares in order to participate in the next phase of the
Company's development under the leadership of Greg Hutchings or disposing of all
or some of such shares by taking advantage of liquidity and value expected to be
created by the Proposals or the potential tender.

The Board is aware that the scale of the potential share issues under the first
two periods of the incentive arrangements is significantly greater, in
percentage terms, than would be customary in a large and established listed
company. However, the Company is currently very small and despite the excellence
of the Gall Thomson business, has failed to attract and maintain significant
institutional support. The third tranche of the awards is designed with normal
corporate governance criteria in mind in particular the 10 per cent. limit
referred to above.

The Board believes that the proven track record of Greg Hutchings in building a
major industrial group offers a real prospect of transforming the Company into a
major enterprise focussed on creation of shareholder value. In this context the
Board has sought to ensure that the interests of the executive team and the
interests of other shareholders are fully aligned by establishing significant
reward potential for exceptional achievements.

Dealings and settlement

The new Ordinary Shares to be issued under the Subscription will, when issued
and fully paid, rank pari passu with the Ordinary Shares then in issue and will
rank for all dividends and other distributions declared, made or paid after the
date of issue other than any dividend declared, made or paid in respect of the
year ended 31 December 2003.




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