Recommended Offers for Octroi Group Plc - Part 1

Lupus Capital PLC
29 November 1999

PART 1

RECOMMENDED OFFERS FOR OCTROI GROUP PLC

Not for release, publication or distribution in or into the United States of
America, Canada, Australia or Japan.


1. Introduction

The boards of Lupus and Octroi are pleased to announce that they have reached
agreement on the terms of recommended offers, to be made by Sutherlands on
behalf of Lupus, to acquire the whole of the issued and to be issued Octroi
Ordinary Shares and Octroi Preference Shares. The Offers value the entire
issued ordinary and preference share capital of Octroi at approximately £8.15
million, based (in the case of the Ordinary Offer) on the Closing Price of a
Lupus Share of 11.25p on 26 November 1999, the last business day prior to this
announcement.  Lupus is also proposing to make a cash offer, involving an
aggregate amount of £0.87 million, for the rights of a class of Octroi
preference shares which were redeemed by Octroi in 1993.

In addition, it has separately been announced that Lupus has reached agreement
with the board of Gall Thomson on the terms of a recommended offer to acquire
the whole of the issued and to be issued share capital of Gall Thomson other
than the shares in Gall Thomson owned by Octroi Investments (which represent
approximately 46 per cent. of Gall Thomson's issued share capital).  Lupus has
entered into a share purchase agreement with Octroi Investments, which is
conditional on the Offers and the Gall Thomson Offer becoming unconditional in
all respects, under which Lupus will acquire the Excluded Shares in Gall
Thomson held by Octroi Investments in return for the issue to Octroi
Investments of a loan note described in more detail below. The Gall Thomson
Offer and the Ordinary Offer are each conditional on the other becoming
unconditional in all respects. The Preference Offer is conditional on the
Ordinary Offer becoming unconditional in all respects.

The directors of Octroi, who have been so advised by Cavendish, consider that
the terms of the Offers are fair and reasonable and unanimously recommend all
Octroi Shareholders to accept the Offers.

The directors of Octroi have irrevocably undertaken to accept the Offers in
respect of 172,354 Octroi Ordinary Shares, representing approximately 0.39 per
cent. of Octroi's issued ordinary share capital. In addition, certain other
Octroi Shareholders have irrevocably undertaken to accept the Offers in
respect of 7,722,531 Octroi Ordinary Shares, representing approximately 17.5
per cent. of Octroi's issued ordinary share capital,  and 2,080,818 Octroi
Preference Shares, representing approximately 45.0 per cent. of  Octroi's
issued preference share capital, all of which undertakings will cease to be
binding in the event of a competing offer for the share capital of Octroi
which is at least 15 per cent. higher in overall value (including the value
attributed to the Dividend Rights).  Further, Lupus has received an indication
of intent from one other shareholder to accept the Offers in respect of
5,829,692 Octroi Ordinary Shares, representing approximately 13.2 per cent. of
Octroi's issued ordinary share capital, and 940,720 Octroi Preference Shares,
representing approximately 20.3 per cent. of Octroi's issued preference share
capital.

Lupus has received irrevocable undertakings to accept the Cash Cancellation
Offer from certain Dividend Holders in respect of their entire entitlements to
Dividend Rights amounting, in aggregate, to approximately 48.9 per cent. of 
the outstanding Dividend Rights.  These undertakings will cease to be binding
in the event of a competing offer for the shares in Octroi which is at least
15 per cent. higher in overall value (including the value attributed to the
Dividend Rights).  In addition, Lupus has received an indication of intent
from one other Dividend Holder to accept the Cash Cancellation Offer in
respect of that holder's entire entitlement to Dividend Rights amounting to
approximately 7.1  per cent. of the outstanding Dividend Rights. 

2. The Offers

A. The Ordinary Offer

On behalf of Lupus, Sutherlands will offer to acquire, on the terms and
subject to the conditions set out or referred to in this announcement and the
relevant Form of Acceptance, all of the Octroi Ordinary Shares on the
following basis:

for every 45 Octroi Ordinary Shares                  16 New Lupus Shares

and so in proportion for any other number of Octroi Ordinary Shares held.

Based on the Closing Price of a Lupus Share of 11.25p on 26 November 1999,
being the business day prior to this announcement of the Offers, the Ordinary
Offer values each Octroi Ordinary Share at 4p and the whole of the issued
ordinary share capital of Octroi at approximately £1.76 million.

The Ordinary Offer extends to all Octroi Ordinary Shares unconditionally
allotted or issued on the date of this document and any further Octroi
Ordinary Shares unconditionally allotted or issued while the Ordinary Offer
remains open for acceptance, or such earlier date or dates as Lupus may,
subject to the Code, decide.

B. The Preference Offer

On behalf of Lupus, Sutherlands will offer to acquire on the terms and subject
to the conditions set out or referred to in this document and the relevant
blue Form of Acceptance, all of the Octroi Preference Shares on the following
basis:

                            for each Octroi Preference Share                
138p in cash

The Preference Offer is in respect of all rights of the Octroi Preference
Shareholders in respect of the Octroi Preference Shares (including all
dividends accrued or to be accrued on the Octroi Preference Shares up to 31
December 1999).

On the basis of the Ordinary Offer described above, were Octroi Preference
Shareholders to convert their Octroi Preference Shares and accept the Ordinary
Offer, this would equate to a value of approximately 2.8p per Octroi
Preference Share.

The Preference Offer extends to all Octroi Preference Shares unconditionally
allotted or issued on the date of this document and any further Octroi
Preference Shares unconditionally allotted or issued while the Preference
Offer remains open for acceptance, or such earlier date or dates as Lupus may,
subject to the Code, decide.

C. Further Terms of the Offers

Full acceptance of the Offers and the Gall Thomson Offer, assuming no exercise
of options over Octroi Ordinary Shares or options over Gall Thomson Shares and
no conversion of Octroi Preference Shares while the Offers remain open for
acceptance, would require the issue of approximately 90.34 million New Lupus
Shares, representing approximately 53.3 per cent. of the enlarged issued
ordinary share capital of Lupus, assuming no exercise of options over Lupus
Shares. The cash payable under the Preference Offer will be provided primarily
out of Lupus's own resources and partly by a new committed bank facility of £4
million provided by Bank of Scotland. Assuming full acceptance, the total cash
payable under the Preference Offer would be approximately £6.39 million.

The Offer is conditional, inter alia, on the approval of the Offers by Lupus
Shareholders at an Extraordinary General Meeting of Lupus and on the Gall
Thomson Offer becoming unconditional in all respects.

As Octroi's Shares are not listed on any stock exchange and a deficit on
Octroi's distributable reserves has prevented the payment of any dividends
since January 1994, it is not possible to provide any meaningful statement
indicating the effect of acceptance of the Offers on the capital and income
position of Octroi Shareholders.

The New Lupus Shares will be issued, in the case of acceptances relating to
Octroi Ordinary Shares held through CREST, in uncertificated form, and in the
case of acceptances relating to Octroi Ordinary Shares not held through CREST,
in certificated form, credited as fully paid, and will rank pari passu in all
respects with the existing Lupus Shares, including the right to receive and
retain all dividends and other distributions declared, made or paid hereafter.
The first dividend in which the holders of such shares will be eligible to
participate will be the Lupus final dividend for the year ending 31 December
1999.

Fractions of New Lupus Shares will not be allotted or issued to persons
accepting the Ordinary Offer. Fractional entitlements to New Lupus Shares will
be aggregated and sold in the market and the net proceeds of sale distributed,
pro rata, to persons entitled thereto. However, individual entitlements to
amounts of less than £3, in respect of such fractions will not be paid to
persons accepting the Ordinary Offer but will be retained for the benefit of
the Enlarged Group.

The Octroi Shares are to be acquired by Lupus fully paid and free from all
liens, equitable interests, charges and encumbrances, rights of pre-emption
and any other third party rights of any nature whatsoever and together with
all rights attaching thereto, including the right to all dividends or other
distributions declared, paid or made after the date the Offer Document is
posted to Octroi Shareholders.

The conditions and further terms of the Offers are set out in the Appendix to
this announcement and will be set out in the Offer Document and in the Forms
of Acceptance. The Preference Offer is conditional on the Ordinary Offer
becoming unconditional in all respects but the Ordinary Offer is not
conditional on the Preference Offer becoming unconditional in all respects.


3. The Cash Cancellation Offer

In addition to the Offers Lupus will make a separate cash offer to those
persons entitled to Dividend Rights on the Redeemable 9-1/4% Preference
Shares, which were redeemed by Octroi on 31 August 1993. The Ordinary Offer
is, inter alia, conditional on valid acceptances of the Cash Cancellation
Offer being received in respect of 50 per cent. of the outstanding Dividend
Rights. The details of the Cash Cancellation Offer will be set out in the
letter from Sutherlands on behalf of Lupus to the Dividend Holders.


4. Acquisition of Gall Thomson Shares from Octroi Investments

Following the Offers becoming unconditional in all respects, Octroi
Investments would be a subsidiary of Lupus. As such, Octroi Investments is not
permitted under the Companies Act to acquire shares in Lupus. Accordingly,
instead of offering to acquire the Excluded Shares which would have involved
the issue of new Lupus Shares, Lupus has agreed to acquire the Excluded Shares
from Octroi Investments under a share purchase agreement between Octroi
Investments and Lupus dated 26 November 1999. The share purchase agreement is
conditional upon the Offers and the Gall Thomson Offer becoming unconditional
in all respects.

Under the share purchase agreement, the consideration for the sale of the
Excluded Shares is the issue by Lupus to Octroi Investments of an unsecured
loan note for a principal amount of £7,876,000 (the 'Octroi Loan Note'). This
principal amount equates to the value of the Gall Thomson Offer for each Gall
Thomson Share (of 55p) which is based on the Closing Price of a Lupus Share on
26 November 1999 (the last business day immediately preceding the announcement
of the Offers) and is therefore calculated by multiplying the number of
Excluded Shares by 55p.

Interest will be payable on the principal amount of the Octroi Loan Note at
the rate of two per cent. per annum from the date of issue until redemption.
The Octroi Loan Note is redeemable at any time after 31 December 2005 but may
be prepaid at any time by Lupus. The Octroi Loan Note will be transferable
only with the consent of Lupus.

5. Background to and Reasons for the Offers and the Cash Cancellation Offer

The strategy of Lupus is to invest in, or acquire, small and medium sized
public companies which it believes are facing strategic barriers to
development whether of a corporate or commercial nature. It plans to provide,
and where necessary, implement, strategic plans for those companies, including
appropriate exit routes. In so doing, Lupus expects to 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.

The current environment for small and medium sized public companies remains
challenging with continuing, substantial change taking place in the financial
and commercial markets. This has caused shareholders, particularly
institutions, to concentrate their investment policy on large, international
companies with liquid markets in their equity capital. The Lupus board
believes that changes in the commercial environment - for example, the
revolution in information and telecommunication technologies, the advent of
low inflation generally, deflation in certain goods and the
internationalisation of consumer products - have been driving forces in this
development. The Lupus board believes that these forces are of a structural,
long-term nature.

In such an environment, those companies which lack strategic direction need to
find solutions before the company's inherent values - such as brands - erode
at great speed. This is essential so that all shareholders (not least
institutional shareholders with larger, and hence particularly illiquid,
stakes) can derive value and also to ensure that the particular company's
products and employees can develop in the increasingly competitive global
market. However for a variety of reasons, boards alone often find it difficult
to set a strategy for dealing with these challenges, not least because a
company's development cannot necessarily be achieved by remaining as an
independent company. Given its strategy, Lupus believes it will be able to
provide the plans, means and methodology to meet such challenges.

Lupus believes that the Offers are fully in line with its strategy. In recent
years Octroi has had to concentrate its resources - both management and
financial - in dealing with a number of issues relating to its troubled past.
Moreover, in 1997 shares in Octroi were de-listed and since then there has
been no market in the shares.  Since flotation of Gall Thomson on the
Alternative Investment Market in August 1996 the board of Gall Thomson has
sought to develop the business of the Gall Thomson Group organically and by
acquisition.  The business has been enhanced by the acquisitions of KLAW and
of the camlock coupling business of Welin Lambie Limited.  However, the board
of Gall Thomson has been unable to implement any major strategic transactions
of a kind which would transform the prospects of Gall Thomson for the benefit
of shareholders.  The uncertainty concerning Octroi's intentions with regard
to its 46 per cent. shareholding in Gall Thomson has not proved helpful in
this regard.  The board of Gall Thomson expected that the move to the Official
List in August 1998 would create a more favourable background for the
strategic development of the Gall Thomson Group but, despite considerable
efforts by the board of Gall Thomson, this has not proved to be the case.

The current board of Octroi has almost completed the task of dealing with the
legacy of Octroi's past. However, Lupus believes that it would have taken some
time before Octroi Preference Shares could have been redeemed and their
arrears paid or before any payment could be made on a winding up of Octroi.
Moreover, Lupus believes that the continuing presence of Octroi as a
shareholder in Gall Thomson has not only restricted Gall Thomson's strategic
development but also made the market in Gall Thomson Shares particularly
illiquid. The Offers and the Gall Thomson Offer provide liquidity for both
sets of shareholders.

Given the above, Lupus believes that the Offers, the Gall Thomson Offer and
the Cash Cancellation Offer deal with a number of structural and corporate
issues for the boards and shareholders of Octroi and Gall Thomson. Lupus also
will use its skills to assist Gall Thomson's businesses in developing a
long-term strategy to meet the challenges and opportunities in the global oil
and gas industries.

The Offers illustrate Lupus's strategy to provide a service to boards,
management and shareholders wishing to solve strategic issues whether of a
corporate or commercial nature. Furthermore, the board of Lupus believes that
the Offers and the Gall Thomson Offer represent a major step in the
development of Lupus and that there are many further opportunities for Lupus
to pursue.

6. Further Information on Lupus

Lupus has undergone very significant change in 1999. In February, an investor
group led by Charles Ryder and James Orr acquired a 29.6 per cent. stake in
Lupus, then known as Environmental Property Services plc and a number of board
and management changes ensued. In April, when the results for the year ended
31 December 1998 were released, Lupus announced its new strategy, the proposal
to change its name to Lupus Capital plc, and the potential sale of its
underlying businesses which were all involved in property services.

Shareholders confirmed the change of name at the Annual General Meeting held
on 4 June 1999.

On 26 July 1999, Lupus announced that it had agreed to sell all of its
property services operations to Environmental Property Services Holdings
Limited ('EPS Holdings') an MBO vehicle led by David Anderson, Managing
Director of these operations. EPS Holdings was backed by certain funds advised
by Alchemy Partners and by the Bank of Scotland. The sale of the property
services operations realised a cash consideration of £7.81 million. In
addition, EPS Holdings undertook to discharge deferred consideration
liabilities amounting to £1.53 million. On the same day, Lupus announced the
sale of its 29.5 per cent. holding in Superframe Group Plc for a net cash
consideration of £491,476.

The sale of the property services operations was completed on 13 August 1999
following approval of the sale by shareholders and left Lupus principally with
cash, certain quoted investments, freehold properties and some sundry debtors
and creditors.  Since that date, Lupus has made certain incidental investments
in the shares of other listed companies aggregating approximately £950,000.

Further information on Lupus, including financial information, will be
contained in the Listing Particulars which will accompany the Offer Document.


7. Current Trading of Lupus

The Sale of Lupus's property services operations was completed on 13 August
1999; it left Lupus principally with cash, certain quoted investments,
freehold properties and some sundry debtors and creditors.  Most importantly,
the sale left Lupus in a position to pursue its new strategy which is
illustrated by the announcement of the Offers and the Gall Thomson Offer.  The
board of Lupus looks forward to the future with confidence.


8. Further Information on Octroi

The main activity of Octroi is that of investment management. The principal
assets of Octroi are cash (which as at 31 March 1999 stood at £3.2 million)
and its interest in Gall Thomson (held by Octroi Investments) which as at 26
November 1999 represented approximately 46 per cent. of the issued share
capital of Gall Thomson. Octroi also has a number of subsidiaries all of which
are either dormant or not trading.

9. Current Trading of Octroi

At 31 March 1999 Octroi had net assets of £9.9 million and in the year then
ended incurred a loss on ordinary activities after taxation of £0.8 million.
More detailed financial information on Octroi will be contained in the Listing
Particulars.

In the event that the Offers are not successful, it is the intention of the
Board of Octroi to consider alternative means of realising value for Octroi's
shareholders, which may include a members voluntary winding up of Octroi.

10. Management and Employees

The board of Lupus confirms that the existing employment rights, including
pension rights, of all Octroi employees will be fully safeguarded.

Upon the Offers becoming unconditional in all respects, each of the directors
of Octroi will resign from the board of Octroi in each case without
compensation.

11. Octroi Share Option Schemes

The Ordinary Offer will extend to any Octroi Ordinary Shares currently in
issue or unconditionally allotted or issued prior to the date on which the
Ordinary Offer closes or such earlier date as Lupus may, subject to the Code,
decide pursuant to the exercise of options under the Octroi Share Option
Schemes. Holders of options under the Octroi Share Option Schemes however,
should be aware that the exercise price of their options exceeds the Ordinary
Offer price and hence it is not intended that any separate proposals will be
made to participants in the Octroi Share Option Schemes.

12. Shareholdings and Dealings in Octroi Shares

Save as disclosed in this announcement, neither Lupus nor, so far as Lupus is
aware, any person acting in concert with Lupus, owns or controls any Octroi
Shares or holds any options or other rights to purchase or otherwise receive
Octroi Shares or has entered into any derivative referenced to Octroi Shares.

13. General

The Offer Document, together with the Listing Particulars, will be posted to
Octroi Shareholders as soon as practicable.

The availability of the Offers to persons outside the United Kingdom may be
affected by the laws of other jurisdictions. Shareholders who are not resident
in the United Kingdom should inform themselves about and observe any
applicable requirements of those jurisdictions.

The Offers will not be made, directly or indirectly, in or into, or by the use
of the mails or any means or instrumentality (including, without limitation,
telephonically or electronically) of interstate or foreign commerce of, or any
facilities of a national, state or other securities exchange of, the United
States, Canada, Australia or Japan. Accordingly, copies of this announcement
are not being, and must not be, mailed, or otherwise forwarded, distributed or
sent in, into or from the United States, Canada, Australia or Japan and
persons receiving this announcement (including custodians, nominees and
trustees) must not distribute or send it in, into or from the United States,
Canada, Australia or Japan. Doing so may invalidate any related purported
acceptance of the Offers.

The Offers will be conditional on, inter alia, their approval by Lupus
Shareholders. A circular summarising the background to and reasons for the
Offers, including a notice convening an Extraordinary General Meeting of
Lupus, together with the Listing Particulars and, for information only, the
Offer Documents, will be sent to Lupus Shareholders as soon as possible.

This announcement does not constitute an offer or an invitation to purchase
any securities.

Sutherlands, which is regulated in the United Kingdom by The Securities and
Futures Authority Limited, is acting exclusively for Lupus Capital plc and no
one else in connection with the Offers and the other matters referred to
herein and will not be responsible to anyone other than Lupus Capital plc for
providing the protections afforded to its customers or for providing advice in
relation to the Offers and the other matters referred to herein.

Cavendish, which is regulated in the United Kingdom by The Securities and
Futures Authority Limited, is acting exclusively for Octroi and no one else in
connection with the Offers and other matters referred to herein and will not
be responsible to anyone other than Octroi for providing the protections
afforded to its customers or for providing advice in relation to the Offers
and the other matters referred to herein.

For further information, please contact:

Lupus Capital plc                      Octroi Group PLC
Tel: [phone] 821 7206       Tel: [phone]
Charles Ryder   Chief Executive        Sam Wauchope, Chairman
James Orr   Finance Director       

Sutherlands Limited                    Cavendish Corporate Finance Limited
Tel: [phone]                     Tel: [phone]
Paul Newman   Director                 Peter Gray

Merlin Financial
Tel: [phone]
Paul Downes/Karen Simmonds


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