Interim Results

Graphite Enterprise Trust PLC
10 August 2001



UNAUDITED RESULTS FOR THE HALF YEAR
TO 30 JUNE 2001

SUMMARY
                                  30 Jun       31 Dec       % change to
                                    2001         2000       30 Jun 2001
                     
Shareholders' Funds              £271.3m       £310.0m       -12.5%
Net Assets per Share              288.5p        329.6p       -12.5%
Share Price                       247.5p        316.0p       -21.7%


KEY POINTS

Shareholders' funds decreased by 12.5% to £271.3 million

Additions to the investment portfolio totalled £37.1 million 

Realisations from the investment portfolio totalled £31.8 million 



Commenting on the results, John Sclater, Chairman, said:

'In the six months to 30 June 2001, the net assets attributable to
shareholders of Graphite Enterprise Trust PLC (the 'Enterprise Trust' or the
'Company') fell by 12.5% to £271.3 million (288.5p per share).  The share
price fell by 21.7% to 247.5p.  These movements compare with a fall in the
FTSE All-Share Index of 8.6% in the period.  The greater fall in the share
price reflected a widening, from 4.2% to 14.2%, in the discount of the share
price to the underlying net asset value.

The investment portfolio

The portfolio of the Enterprise Trust had a disappointing first half in
difficult quoted markets.  While the unquoted portfolio performed relatively
well, rising in value by 4.1%, the quoted portfolio fell sharply in value by
32.0%.  Overall, the net fall was of 11.6%, or £32.6 million.  More than half
of this amount was attributable to a single holding, Independent Insurance.

At the beginning of the year, the Enterprise Trust held 4.25 million shares in
Independent Insurance valued at 398p per share, giving a value of £16.9
million.  On 11 June the shares were suspended at a price of 81p and one week
later the company announced that it had appointed provisional liquidators.  It
became clear that the shares almost certainly had no value and we have
therefore made a full provision against the investment.

It hardly needs to be said that we are extremely disappointed with the events
at Independent Insurance.  No clear account of what went wrong has yet been
issued and when this becomes available we will review whether we should take
any action.  Our initial advice suggests that we are unlikely to make any
recovery.

While the failure of Independent Insurance has dealt the Enterprise Trust a
serious blow in the current year, as a long term investment it was successful.
 We first invested in the company in 1987 when it was the subject of a
management buy-out.  The company subsequently achieved its listing and we
retained a substantial holding during a period when the shares performed very
well.  Overall, we invested a total of £2.4 million in the company and
generated cash proceeds from sales of stock and from income of £18.5 million. 
This represents a multiple of 7.6 times cost and an annual internal rate of
return of 28.1% over the life of the investment.  A total of £11.3 million was
realised in 1999 and 2000.

Investment activity

In the six months to 30 June there was substantial net investment into the
unquoted portfolio and there were substantial net realisations from the quoted
portfolio.  There was a total of £37.1 million of new investment, of which
£35.3 million was in the unquoted portfolio and £1.8 million was in the quoted
portfolio.  The largest new investments were of £7.8 million in Standard
Brands, a consumer products company and the owner of Zip firelighters and of
£5.2 million in Maplin a retailer of electronic products and components.

A total of £31.8 million was generated from disposals of which £18.1 million
was from the unquoted portfolio and £13.7 million was from the quoted
portfolio.  The largest unquoted disposals were from the Barclays UK
Infrastructure Fund (£6.7 million), from the Hicks, Muse, Tate & Furst Europe
Fund (£6.2 million), and from the sale of Alliance Medical (£3.1 million). 
From the quoted portfolio, £5.0 million was raised from the sale of 1.6
million shares in Computacenter, £4.9 million from the sale of the holding in
Jarvis and £3.1 million from the sale of the holding in Electronics Boutique.

Liquidity

We have continued to make progress with the reinvestment of the liquid assets
of the Enterprise Trust. Net liquid assets were £70.4 million at the beginning
of the period and £59.4 million at the end.  Undrawn commitments to the
existing portfolio were £38.4 million at 30 June, representing 64.6% of net
liquid assets.  During the period we sold the Enterprise Trust's holdings of
zero coupon preference shares for £12.8 million and we realised a net amount
of £10.0 million from the index tracking portfolio which had a value of £44.2
million at the period end.  Overall, liquid assets less undrawn commitments
represented 7.8% of net assets at 30 June.

The Board

In May we were delighted to welcome Sean O'Connor to the Board.  He is the
founder of Trillium Venture Developments, which specialises in the packaging
of corporate development projects, and is a non-executive director of
Sportingbet.com plc, Cape PLC and a number of private companies.  He brings
considerable experience across a wide range of businesses and is familiar with
the private equity industry having been the chairman of a management buy-in
and a shareholder in a number of companies with private equity backing. 

As signalled in my last statement, Peter Curry retired from the Board at the
AGM in May.  Once again we should like to thank him for his invaluable
contribution to the Company over many years.

Outlook

The Enterprise Trust has had a disappointing first half year as a result of
the poor performance of the quoted portfolio and in particular the failure of
Independent Insurance.  The quoted portfolio is itself the legacy of past
success, with almost all the holdings having once been unquoted and having
achieved listings.   Our task is to continue steadily to reposition the
Company's assets, redeploying the quoted and liquid holdings into the unquoted
portfolio.  Considerable progress has been made in the last eighteen months,
with unquoted holdings increasing from 32% to 68% of the investment portfolio.
 At the same time, liquid assets, net of outstanding commitments, have fallen
considerably.

After a long period in which we felt that valuations were relatively high and
we realised more from the portfolio than we added to it, market conditions
have changed.  There is arguably greater stockmarket and economic uncertainty
than at any time in the last five years and this has been reflected in the
private equity market.  The environment for new investments has improved and
we are seeing a considerably stronger flow of attractive investment
opportunities.  This should enable us to continue to increase the Enterprise
Trust's weighting in unquoted investments.

In the last two years the performance of the Enterprise Trust has been
determined largely by a concentrated portfolio of quoted holdings.  As our
programme of reinvestment continues, performance will be increasingly
determined by the unquoted portfolio.  In the meantime there may continue to
be some short term volatility reflecting the uncertainty in the quoted
markets.'


For further information, please contact:

James Nelson / Stephen Cavell
Graphite Capital Management Limited       Tel:  [phone]
       



UNAUDITED RESULTS FOR THE HALF YEAR TO 30 JUNE 

Consolidated Assets                           30 Jun              31 Dec
                                        2001          2000          2000
                                       £'000s        £'000s        £'000s
                     
Listed investments                     69,504       104,124       114,882 
Unlisted investments at 
directors' valuation                  146,648       112,482       128,616 
Portfolio investments                 216,152       216,606       243,498 
Zero coupon preference shares               -        12,228        12,913
FTSE 350 Index fund                    44,212        58,695        58,616 
Total investments                     260,364       287,529       315,027
Net current assets                     15,187        21,422        (1,080)
Total assets less current liabilities 275,551       308,951       313,947
Minority interest                      (4,221)       (4,619)       (3,982)
Net assets attributable to 
ordinary shareholders                 271,330       304,332       309,965
                     
Net asset value per share               288.5p       323.6p        329.6p


Geographical distribution of investments     Continental     North    
at 30 June 2001                         UK        Europe   America    Total
                                         %            %         %        %
                         
Listed                                  32            -         -       32
Unlisted                                53           13         2       68
                                        85           13         2      100


Consolidated Statement of Total Return            30 Jun            31 Dec
(incorporating the Revenue Account)           2001        2000        2000
                                             £'000s      £'000s      £'000s
                     
Revenue Return                     
Income                                       2,829       3,707       7,227
Investment management fee                     (615)       (676)     (1,403)
Other expenses                                (408)       (430)       (874)
Net return before finance costs and taxation 1,806       2,601       4,950
Interest payable and similar charges            (5)        (16)        (16)
Return on ordinary activities before tax     1,801       2,585       4,934
Tax on ordinary activities                       -        (263)       (486)
Return attributable to equity shareholders   1,801       2,322       4,448
Dividends in respect of 
ordinary shares (equity)                         -           -      (4,044)
Transfer to reserves                         1,801       2,322         404
                     
Capital Return                     
(Losses)/gains on investments              (37,891)      4,220      14,315
Investment management fee                   (1,846)     (2,029)     (4,208)
Other expenses                                (127)       (212)        356
Tax on ordinary activities                       -         614         486
                                           (39,864)      2,593      10,949
Minority interests                            (572)        222        (582)
Net capital return                         (40,436)      2,815      10,367
Total Return                               (38,635)      5,137      10,771
                     
Revenue return per ordinary share             1.92p       2.47p       4.73p
Capital return per ordinary share           (43.00p)      2.99p      11.02p
Total return per ordinary share             (41.08p)      5.46p      15.75p

Consolidated Cash Flow Statement                   30 Jun           31 Dec
                                              2001       2000         2000
                                             £'000s     £'000s       £'000s
                     
Net cash (outflow)/inflow from 
operating activities                          (121)       129       (1,086)
Returns on investments and servicing of finance (5)       (30)         (30)
Taxation                                         -          -          167
Acquisitions and disposals                  10,042    (60,363)     (76,547) 
Equity dividends paid                       (4,044)    (4,044)      (4,044)
Management of liquid resources                   -     48,512       42,512 
Net cash inflow/(outflow) before financing   5,872    (15,796)     (39,028)
Financing                                     (223)        13       (1,416)
Increase/(decrease) in cash                  5,649    (15,783)     (40,444)
                     
Reconciliation of net cash flow to movement in net debt                     
                     
Increase/(decrease) in cash                  5,649    (15,783)     (40,444)
Cash inflow from change in liquid resources      -    (48,512)     (42,512)
Change in net liquid funds resulting 
from cash flows                              5,649    (64,295)     (82,956)
Exchange difference                           (127)       524          356
Movement of net liquid funds                 5,522    (63,771)     (82,600)
Net liquid funds at 1 January                2,160     84,760       84,760
Net liquid funds 30 June/31 December         7,682     20,989        2,160
                     
Reconciliation of operating profit to net cash flow from operating activities 
                   
                     
Net revenue on ordinary activities 
before taxation                             1,801      2,585        4,934
Add back interest payable                       5         16           16
Income before interest payable and taxation 1,806      2,601        4,950
Decrease in debtors                           820        288          219
Increase/(decrease) in creditors              218       (226)        (659)
Income capitalised                           (744)      (304)        (990)
Tax on investment income within income       (375)      (201)        (398)
Management fee charged to capital          (1,846)    (2,029)      (4,208)
Net cash inflow from operating activities    (121)       129       (1,086)  


The abridged financial statements at 31 December 2000 have been compiled from
the latest published accounts.  Those accounts have delivered to the Registrar
of Companies: the report of the auditors thereon was unqualified.

Copies of the Interim Report will be posted to all shareholders on or around
29 August 2001 and copies may be obtained during normal business hours from
the Company's registered office, Berkeley Square House, Berkeley Square,
London W1X 5PA thereafter.

By order of the Board                                        Registered Office
Graphite Capital Management Limited                      Berkeley Square House
Secretary                                                      Berkeley Square
                                                                London W1X 5PA
                                                            Tel: [phone]