Interim Results

Lupus Capital PLC
5 September 2000



Lupus Capital plc

Interim results for the six months ended 30 June 2000

Lupus Capital plc ('Lupus') today announced its interim results.

Highlights are as follows:

Lupus is making good progress with its investment strategy

Turnover of £775,000, operating profit of £190,000 and profit before taxation
of £98,000

Interim dividend of 0.1p per share

Gall Thomson, the wholly-owned subsidiary acquired as an investment in
December 1999, is performing well, significantly exceeding its budget and
strengthened during the period by the acquisition of two add-on businesses

13.3% holding in Armitage Brothers plc, a fully listed manufacturer and  
supplier of pet accessories and pet foods
       
Commenting on the results, Charles Ryder, Chief Executive of Lupus Capital,
said:

'Lupus is making good progress with its investment strategy.  Our first
acquisition, Gall Thomson, is performing well and tactical acquisitions have
enhanced the value of that business.  We have also announced investments in
Armitage Brothers plc and, very recently, in European Colour plc.  Our
strategy is to hold major investments in approximately five companies at any
one time and we expect to reach this optimum level during the early part of
next year.  Some companies will be fully-owned while in others we will hold a
strategic interest of up to 20% of the issued share capital.'


For further information, please contact:

Lupus Capital plc                 Tel: [phone]

Charles Ryder, Chief Executive
James Orr, Finance Director

Merlin Financial                  Tel: [phone]
Paul Downes
Karen Simmonds
 


Statement of the Chairman and the Chief Executive

Strategy

The strategy of Lupus Capital plc ('Lupus' or 'the Group') is to invest in, or
acquire, small and medium sized public companies which are facing strategic
barriers to development whether of a corporate or commercial nature.  Lupus
intends to generate significant returns by providing and, where necessary,
implementing strategic plans for these companies, including appropriate exit
routes.  Lupus will therefore create value by providing a service to
shareholders and company boards, as well as to acquisitive well-run
international companies looking to expand and to diversify their businesses.

In accordance with applicable accounting practice, subsidiaries held
exclusively with a view to subsequent resale are recorded as current asset
investments.  The Group's wholly-owned subsidiary, Gall Thomson Environmental
Limited ('Gall Thomson'), is thus recorded as a current investment both at 30
June 2000 and 31 December 1999 and the related trading results are not
consolidated.

A brief review of the activities of each of Lupus's investments will be made
in its interim and full year statements, particularly in relation to companies
that are fully-owned.


Financial Review

In the six months to 30 June 2000, Lupus made an operating profit of £190,000
(1999: loss of £478,000 on continuing operations) on turnover of £775,000 
(1999: nil on continuing operations).  Lupus made a profit before taxation in
the period of £98,000.
  
For the reasons stated above, turnover in the period relates exclusively to
management charges receivable from Gall Thomson.

The net assets of Lupus at 30 June 2000 were £15.74 million (£4.34 million at 
30 June 1999) representing 9.3p per share (5.8p per share in 1999).  Net debt
amounted to £1.23 million, net of cash of £0.25 million held by Gall Thomson
(1999: net debt of £3.01 million).


Dividends

In line with Lupus's statement on its dividend policy made at the time of
announcement of the 1999 results, the Board has decided to declare an interim
dividend of 0.1p per share (1999: 0.1p).  The dividend will be paid on 30
October 2000 to shareholders on the register at the close of business on 6
October 2000.  The ex-dividend date will be 2 October 2000.


Review of Investments

In December 1999, Lupus acquired Gall Thomson, a listed company, and also
Octroi Group PLC, a de-listed investment company whose principal assets were
cash and a 46% interest in Gall Thomson.  Gall Thomson's major business is the
supply of marine breakaway couplings for oil and gas applications.

Gall Thomson's continuing businesses have performed well in the six months to
30 June 2000, significantly exceeding budget.  In the period, the continuing
operations recorded sales of £2.2 million and operating profits of £1.0
million before Lupus management charges.  Gall Thomson's main business has
been particularly strong and it is believed that the full benefit of the
sustained period of higher oil prices is only just beginning to impact on the
level of exploration and production activity in the oil and gas industry.

In February 2000, Lupus strengthened Gall Thomson by acquiring its dedicated
manufacturing facility in Great Yarmouth for an initial cash consideration of
£450,000 to which was added £51,000 for stock and work-in-progress.  The
acquisition is having a beneficial impact on Gall Thomson's margins and Lupus
believes that it will enhance its strategic value.

An acquisition has also been made to strengthen Gall Thomson's industrial
couplings business, at a cost of some £100,000.  The industrial couplings
business, principally operating through Gall Thomson's subsidiary, KLAW, is
now making good progress after a slow start to the year.

On 4 May 2000, Lupus announced that Gall Thomson had disposed of its
subsidiary, Survey Equipment Services, Inc. ('SES'), based in Houston, Texas. 
SES, which represented a small part of Gall Thomson, is involved in the
supply, sale and rental of specialist marine navigation and survey equipment
to the oil and gas industry.  SES was sold for a cash consideration of $1.4
million.  In the nine months to 31 December 1999 SES recorded a break-even
result on a turnover of $1.6 million.  Net assets at 31 December 1999 were
$2.0 million.  The market in which SES operates became progressively weaker in
1999 and this trend continued into 2000: SES made a trading loss of $65,000 in
the first four months of the year.  

On 4 May 2000, Lupus disclosed that it held 538,000 shares in Armitage
Brothers plc ('Armitage') representing 13.3% of the issued share capital of
Armitage.  Armitage develops, manufactures and supplies pet accessories and
pet foods.  Lupus believes that there is continuing growth in consumer demand
in both of these sectors but that there needs to be consolidation amongst the
suppliers for a number of reasons, including major change relating to the
distribution and retailing of the products. 

Lupus announced on 30 August 2000 that it held 1,626,236 shares in European
Colour plc ('European Colour') representing 3.5% of the issued share capital
of that company.  European Colour is a speciality chemicals company which
manufactures specialist pigments and performance coatings.

The various acquisitions and investments are part of Lupus's strategy to hold,
at any one time, major investments in approximately five companies.  Such
investments may be fully-owned or represented by a strategic interest of up to
some 20% in the issued share capital of a particular company.

Current Trading

Gall Thomson's good start to the year has continued into the second half and,
with oil prices reaching record levels for recent years, the Board expects
this strong performance to be maintained.

Lupus intends to continue to build up its portfolio of assets and expects that
it will reach its optimum level, in terms of the number of companies in which
it has a major interest, during the early part of next year.  The key element
of Lupus's strategy, the sale of these investments to companies with the
relevant commercial or financial size and skill to make best use of them in
today's very competitive environment, will then be underway.

The Board looks to the future with confidence. 



Group profit and loss account

 
                               Six month          Six month             Year
                            period ended       period ended            ended
                                 30 June            30 June      31 December
                                    2000               1999             1999
                              (Unaudited)        (Unaudited)        (Audited)
                                    £000               £000             £000

Turnover
Continuing operations                775                  -                -
Discontinued operations                -             14,606           16,964
                                 _______            _______          _______
                                     775             14,606           16,964
                                   =====              =====            =====
Operating profit / (loss)
Continuing operations                190               (478)          (1,154)
Discontinued operations                -                855              396
                                 _______            _______          _______
                                     190                377             (758)
Exceptional items:
 - loss on disposal of tangible 
   fixed assets                        -                  -              (40)
 - (loss) / profit on sale of 
   operations                        (26)                 -              125
Interest and similar items           (66)              (148)             (14)
                                  ______             ______           ______
Profit / (loss) on ordinary 
activities before taxation            98                229             (687)

Taxation                             (37)              (107)              16
                                  ______             ______           ______
Profit / (loss) on ordinary 
activities after taxation             61                122             (671)

Ordinary dividend                   (169)               (79)            (419)
                                  ______             ______           ______
Retained (loss) / profit            (108)                43           (1,090)
                                   =====              =====            =====

Earnings / (loss) per share         0.04p              0.16p           (0.86)p
Diluted earnings / (loss) 
per share                           0.04p              0.16p           (0.86)p

Dividend per share                  0.10p              0.10p             0.30p

There were no recognised gains or losses in each period other than the profit
on ordinary activities after taxation.


Group balance sheet
                                 30 June            30 June      31 December
                                    2000               1999             1999
                              (Unaudited)        (Unaudited)        (Audited)
                                    £000               £000             £000

Fixed assets
Intangible fixed assets             (840)             3,639             (882)
Tangible fixed assets                  4              1,138                3
Investments                            -                778                -
                                  ______             ______           ______
                                    (836)             5,555             (879)
                                  ______             ______           ______

Current assets
Stocks and work-in-progress            -              3,380                -
Debtors                              456              5,457              653
Investments                       20,645                  -           19,637
Cash at bank and in hand               -                 68            3,262
                                  ______             ______           ______
                                  21,101              8,905           23,552

Creditors: Amounts falling
due within one year               (4,523)            (7,383)          (6,821)
                                  ______             ______           ______

Net current assets                16,578              1,522           16,731
                                  ______             ______           ______

Total assets less current 
liabilities                       15,742              7,077           15,852

Creditors: Amounts falling
due after more than one year           -             (2,734)               -
                                  ______             ______           ______
Net assets                        15,742              4,343           15,852
                                   =====              =====            =====

Capital and reserves
Called up share capital              848                378              725
Share premium account              4,541              4,410            4,543
Shares to be issued                    -                  -            2,961
Merger reserve                    10,390                  -            7,552
Profit and loss account              (37)              (445)              71
                                  ______             ______           ______
Equity shareholders' funds        15,742              4,343           15,852
                                   =====              =====            =====


Group statement of cash flows
                               Six month          Six month             Year
                            period ended       period ended            ended  
                                 30 June            30 June      31 December  
                                    2000               1999             1999  
                              (Unaudited)        (Unaudited)        (Audited) 
                                    £000               £000             £000

Net cash outflow from 
operating activities              (1,640)              (809)           (1,441)
                                  ______             ______            ______

Returns on investments and
servicing of finance
Interest received                     86                 31              185
Interest paid                       (171)              (175)            (155)
Interest element of finance 
lease rental payments                  -                  -              (55)
Dividends received                    19                  -                8
                                  ______             ______           ______
                                     (66)              (144)             (17)
                                  ______             ______           ______
Taxation
UK Corporation tax paid                -               (143)             (143)
                                  ______             ______            ______
Capital expenditure and
financial investment
Sale of tangible fixed assets          -                 49               174
Purchase of tangible fixed assets     (3)               (64)              (66)
Sale of investments                  898                  -               491
Purchase of investments           (2,031)              (294)           (1,276)
                                  ______             ______            ______
                                  (1,136)              (309)             (677)
                                  ______             ______            ______
Acquisitions and disposals
Purchase of subsidiary 
undertakings                         (63)                (7)           (6,528)
Disposal of subsidiary 
undertakings                           -                  -             7,180
Net cash acquired with subsidiary 
undertakings                           -                  -             3,064
Net overdrafts in disposed 
operations                             -                  -             2,191
Payments to acquire intangible 
fixed assets                           -                  -                 -
                                  ______             ______            ______
                                     (63)                (7)            5,907
                                  ______             ______            ______

Equity dividends paid               (339)              (227)             (306)
                                  ______             ______            ______
Net cash (outflow) / inflow 
before financing                  (3,244)            (1,639)            3,323

Financing
Issue of shares net of costs           -                  -               281
New long term loans                3,250                  -             1,500
Repayment of long term loans      (4,750)              (201)           (1,678)
Repayment of capital element
of finance leases                      -               (162)             (161)
Acquisition of dividend rights 
of former preference shareholders 
of Octroi Group Limited                -                  -              (867)
                                  ______             ______            ______
(Decrease) / increase in cash     (4,744)            (2,002)            2,398
                                   =====              =====             =====
 
Group statement of cash flows (continued)


                               Six month          Six month             Year  
                            period ended       period ended            ended  
                                 30 June            30 June      31 December  
                                    2000               1999             1999  
                              (Unaudited)        (Unaudited)        (Audited) 
                                    £000               £000             £000

Reconciliation of net cash flow to movement in net debt

(Decrease) / increase in cash      (4,744)           (2,002)           2,398
Cash inflow from increase in 
loans                              (3,250)                -           (1,500)
Cash outflow from repayment of 
loans                               4,750               201            1,678
Repayment of capital element of 
finance leases                          -               162              161
                                   ______            ______           ______
Change in net debt from cash 
flows                              (3,244)           (1,639)          (2,737)
Acquisitions and disposals              -                 -              395
New finance leases                      -              (156)            (155)
                                   ______            ______           ______
Movement in net (debt) / funds     (3,244)           (1,795)           2,977
Opening net funds / (debt )         1,762            (1,215)          (1,215)
                                   ______            ______           ______
Closing net (debt) / funds         (1,482)           (3,010)           1,762
                                    =====             =====            =====


Reconciliation of operating profit to net cash flows from operating activities

Operating profit / (loss)            190                377              (758)
Depreciation                           1                104               104
Amortisation of goodwill               -                 94               116
Movement in stock                      -               (917)             (742)
Movement in debtors                  198              1,011               639
Movement in creditors             (2,147)            (1,478)             (882)
Profit on disposal of investments    (67)                 -                (7)
Exceptional costs incurred on 
past disposals                       (26)                 -                 -
Revaluation of investments           211                  -                89
                                  ______             ______            ______
                                  (1,640)              (809)           (1,441)
                                   =====              =====             =====

Notes to the Interim Statement



1. The interim financial information has been prepared on the basis of the
accounting policies set out in the Report and Accounts for the Group for the
year ended 31 December 1999.  The interim figures have not been audited.

The Interim Financial Statement does not constitute statutory accounts within
the meaning of section 240 of the Companies Act 1985 (the 'Act').  Comparative
financial information for the year ended 31 December 1999 has been extracted
from the statutory accounts for the year which have been delivered to the
Registrar of Companies and upon which the auditors gave an unqualified report,
with no statement under section 237(2) or (3) of the Act.

2. The calculation of earnings per share is based on the profit on ordinary
activities after taxation and 166,271,654 ordinary shares (1999: 75,523,785)
being the weighted average number of shares in issue during the half year. 
The weighted average number of shares in issue during the year ended 31
December 1999 was 77,707,599.  The calculation of fully diluted earnings per
share is based on the profit on ordinary activities after taxation and
166,271,654 ordinary shares being the weighted average number of shares in
issue during the period, after allowing for share options (June 1999:
77,160,340 and December 1999: 77,707,599).

3. The Directors have declared an interim dividend of 0.1 pence per share
(1999: 0.1 pence) to shareholders on the register at the close of business on
6 October 2000, which will be paid on 30 October 2000. The ex-dividend date
will be 2 October 2000.

4. The board of Directors approved the Interim Financial Statement on 4
September 2000.