Capital Reorganisation

Lupus Capital PLC
27 April 2004


                       Lupus Capital plc or 'the Company'
                 Proposed cancellation of share premium account

The Company is today despatching a circular to Shareholders convening an
extraordinary general meeting at which a special resolution to approve the
cancellation of the share premium account will be proposed.

Background

The Company announced on 30 March 2004 that it intended to make an application
to the Court to cancel the share premium account of the Company which has built
up over a number of years as the result of the Company issuing shares (including
the Ordinary Shares issued to the trustees of the Lupus Employee Share Ownership
Trust ('the LESOT')) at a premium to their nominal value and which at 31 March
2004 stood at £13,816,307.

On 26 March 2004 the Company allotted 47,539,257 Ordinary Shares to the trustees
of the LESOT under the employee incentive arrangements described in the circular
to Shareholders dated 21 January 2004 and approved by Shareholders at the
extraordinary general meeting of the Company held on 16 February 2004. The
trustees of the LESOT subscribed for the Ordinary Shares in cash at a price of
17.25p per Ordinary Share using funds lent to the trustees of the LESOT by the
Company.

The issue of the Ordinary Shares to the trustees of the LESOT gave rise to an
additional £237,696 of paid up share capital and £7,962,826 of share premium,
offset by a charge to the reserves of £8,200,522. There was no change to the net
assets of the Company as a result of this share issue. However, the profit and
loss account is affected with the result that, at 31 March 2004, the Company has
a negative balance of £7,173,339 on the profit and loss account. This fact
impedes the Company's ability to pay dividends.

The Board is now seeking to restore the Company's capability to pay dividends by
effecting a capital reduction through the cancellation of the amount standing to
the credit of the share premium account of the Company.

Cancellation of the Company's share premium account

The amount standing to the credit of the share premium account of the Company is
£13,816,307. A share premium account is an undistributable reserve and
accordingly the purposes for which the Company can use its share premium account
are extremely restricted. In particular, it cannot be used for the purpose of
paying dividends.

However, with the consent of the Court, the Company may reduce or cancel a share
premium account. The sum which results upon such a reduction or cancellation
taking effect may then be applied to eliminate the accumulated deficit on the
Company's profit and loss account. The Company therefore proposes to cancel its
share premium account and to carry the sum of £7,173,339 to its profit and loss
account in order to eliminate the current deficit. The balance, of £6,642,968,
will be carried to a special reserve which, subject to suitable protection being
put in place for the benefit of the Company's creditors, may be treated as a
distributable reserve.

Extraordinary General Meeting

The cancellation of the share premium account of the Company requires
shareholder approval by way of special resolution. An extraordinary general
meeting of the Company has been convened to be held at 10.00 a.m. on 24 May 2004
at which the special resolution referred to above will be proposed.


Court approval

The cancellation of the share premium account will only take effect if confirmed
by the Court and upon the appropriate documents being lodged with the Registrar
of Companies. The Court may require the Company to put in place protection for
the benefit of the Company's existing creditors. The Board anticipates that the
Company will provide such protection as so required.

The application to the Court will be made soon after the EGM. A hearing of the
petition has provisionally been arranged for 16 June 2004 and the procedure is
expected to be finalised by 23 June 2004.

Subject to the passing of the special resolution to be proposed at the EGM and
the confirmation by the Court of the proposed cancellation of the share premium
account (and the registration by the Registrar of Companies of the Court order
for the cancellation), the Company will have sufficient distributable reserves
to pay the proposed final dividend for the year ended 31 December 2003 subject
to the final dividend being approved by Shareholders at the Company's annual
general meeting.

Recommendation

The Directors unanimously recommend that Shareholders vote in favour of the
resolution to be considered at the EGM, as they intend to do in respect of their
own beneficial holdings of Ordinary Shares amounting, in aggregate, to
27,911,196 Ordinary Shares representing approximately 11.74% of the issued share
capital of the Company. In addition, the trustees of the LESOT have indicated
that they intend to vote in favour of the resolution in respect of the holding
of 47,539,257 Ordinary Shares representing approximately 20.00% of the issued
share capital of the Company.

Expected timetable of principal events
                                                                           2004

Latest time and date for receipt of forms of proxy         10.00 a.m. on 22 May

Extraordinary General Meeting                              10.00 a.m. on 24 May

Court hearing of Company's application for directions                    28 May

Court hearing of Company's petition for cancellation of share           16 June
premium account

Anticipated effective date of cancellation of share premium             23 June
account

Proposed record date for 2003 final dividend                             2 July

Proposed payment date for payment of 2003 final dividend                23 July

Contacts for enquiries:

Alan Frame, Equity Developments                                   020 7405 7777

27 April 2004

Defined terms in this announcement have the same meaning as in the circular.



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