Interim Results
LUPUS CAPITAL PLC
14 October 1999
Lupus Capital plc
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1999
Lupus Capital plc today announced its interim results.
Highlights are as follows:
* The results relate to the property services operations, the disposal of
which was completed on 13 August 1999. Turnover was £14.6m and pre-tax
profit was £229,000.
* Following the sale, Lupus Capital plc is now in a position to pursue its new
strategy to invest in or acquire small and medium sized public companies
which it believes are lacking strategic direction.
* The planned transformation of the Board has now been completed with the
appointment of Oliver Stocken as Non-Executive Chairman, with effect from
Monday 18 October 1999. Charles Ryder will then become Chief Executive.
The full text of the Chairman's statement and the interim figures are
below.
For further information, please contact:
Lupus Capital plc Tel: 0171 821 0233
or Tel: 0171 821 7206
Charles Ryder, Chairman
James Orr, Finance Director
Merlin Financial Tel: 0171 606 1244
Paul Downes
Chairman's statement
Introduction
The strategy of Lupus Capital plc ('Lupus') or ('the Company') is to invest
in, or acquire, small and medium sized public companies which it believes are
lacking strategic direction. Lupus intends to generate significant returns by
providing and, where necessary, implementing, strategic plans for these
companies, including appropriate exit routes. The Company 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.
Period of transformation
Lupus has undergone very significant change in 1999 including the period
covered by the interim results to 30 June 1999.
In February, an investor group led by Charles Ryder and James Orr acquired a
29.6% stake in the Company, then known as Environmental Property Services plc
('EPS') and a number of Board and management changes ensued. In April, when
the results for the year ended 31 December 1998 were released, the Company
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.
On 26 July, the Company 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 is 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% 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
following approval of the sale by shareholders and left the Company
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.
Results
Given the subsequent sale of the property services operations, the Lupus
Group's results for the six months to 30 June 1999 almost entirely relate to
businesses which are no longer part of it. Nevertheless, for the purposes of
the interim statement these property services operations are referred to as
the continuing operations of the Group while those referred to as discontinued
relate to the housebuilding and pub refurbishment subsidiaries demerged from
the Group in December 1998 into Artisan (UK) plc which is quoted on AIM.
During the period, total sales were £14,606,000 (1998: £19,056,000) and profit
before taxation was £229,000 (1998: £953,000). The property services
operations performed satisfactorily; sales of the continuing operations rose
to £14,606,000 (1998: £8,145,000) and operating profits of the continuing
operations were £377,000 (1998: £327,000).
Dividends
The Board has decided that dividends in future should relate to the success of
the various investments made by the Group although, certainly in the short to
medium term, the emphasis will be on using cash generated from successful
investments for investment in new opportunities.
Given the fundamental transformation in the Group, and more particularly, the
adoption of its new strategy, the Board has therefore declared an interim
dividend of 0.1 pence per share. This compares to 0.35p paid at the interim
stage in 1998 before the demerger in December of the most profitable part of
the Group and the change of strategy during the course of this year. The
dividend will be paid on 19 November 1999 to shareholders on the register at
the close of business on 29 October 1999.
Composition of the Board
As I stated at the time of the management buy-in, I intended to step down as
Chairman to become Chief Executive upon the appointment of a Non-Executive
Chairman. The Board is therefore pleased to announce that Oliver Stocken will
be joining the Board with effect from Monday, 18 October 1999 as Non-Executive
Chairman. Oliver Stocken was, until recently, Group Finance Director of
Barclays PLC and is a Non-Executive Director of a number of companies
including 3i Group, Bunzl, MEPC, Pilkington, The Rank Group and Rutland Trust.
Future Prospects
The sale of the property services operations has left the Group in a position
to pursue its strategy with vigour. The funds arising from the sale will be
used to invest in or to acquire other quoted companies with the intention of
enhancing shareholder value. The Board believes there are many such
investment opportunities and a number are currently under consideration.
The Board looks to the future with confidence.
Charles Ryder
Group profit and loss account
Six month Six month Year
period ended period ended ended
30 June 30 June 31 December
1999 1998 1998
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Turnover
Continuing operations 14,606 8,145 18,034
Discontinued operations - 10,911 20,463
_______ _______ _______
14,606 19,056 38,497
Operating profit
Continuing operations 377 327 422
Discontinued operations - 670 866
_______ _______ _______
377 997 1,288
Exceptional item -
restructuring cost - - (158)
Interest (148) (44) (89)
______ ______ ______
Profit on ordinary activities
before taxation 229 953 1,041
Taxation (107) (262) (388)
______ ______ ______
Profit on ordinary activities
after taxation 122 691 653
Ordinary dividend (79) (243) (470)
Dividend in specie - - (1,755)
______ ______ ______
Retained profit / (loss) 43 448 (1,572)
===== ===== =====
Earnings per share 0.16p 1.00p 0.94p
Diluted earnings per share 0.16p 0.98p 0.93p
Dividend per share 0.10p 0.35p 0.65p
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
1999 1998 1998
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Fixed assets
Intangible fixed assets 3,639 285 3,719
Tangible fixed assets 1,138 696 1,070
Investments 778 599 484
______ ______ ______
5,555 1,580 5,273
______ ______ ______
Current assets
Stocks and work-in-progress 3,380 4,193 2,464
Debtors 5,457 9,136 6,544
Cash at bank and in hand 68 1,650 864
______ ______ ______
8,905 14,979 9,872
Creditors: Amounts falling
due within one year (7,383) (8,888) (7,864)
______ ______ ______
Net current assets 1,522 6,091 2,008
______ ______ ______
Total assets less
current liabilities 7,077 7,671 7,281
Creditors: Amounts falling
due after more than one year (2,734) (1,751) (2,981)
Provisions for liabilities
and charges - (2) -
______ ______ ______
Net assets 4,343 5,918 4,300
===== ===== =====
Capital and reserves
Called up share capital 378 347 378
Share premium account 4,410 3,871 4,410
Special reserve - 12 -
Profit and loss account (445) 1,520 (488)
______ ______ ______
Equity shareholders' funds 4,343 5,750 4,300
Minority interests (non-equity) - 168 -
______ ______ ______
4,343 5,918 4,300
===== ===== =====
Group statement of cash flows
Six month Six month Year
period ended period ended ended
30 June 30 June 31 December
1999 1998 1998
(Unaudited) (Unaudited) (Audited)
£000 £000 £000
Net cash (outflow) / inflow
from operating activities (809) 147 1,379
______ ______ ______
Returns on investments and
servicing of finance
Interest received 31 191 62
Interest paid (175) (235) (164)
______ ______ ______
(144) (44) (102)
______ ______ ______
Taxation
UK Corporation tax paid (143) (125) (273)
______ ______ ______
Capital expenditure and
financial investment
Sale of tangible fixed assets 49 59 135
Purchase of tangible fixed assets (64) (241) (130)
Sale of investments - - 297
Purchase of investments (294) (226) (437)
______ ______ ______
(309) (408) (135)
______ ______ ______
Acquisitions and disposals
Purchase of subsidiary undertakings (7) (246) (2,769)
Net overdrafts in demerged
subsidiaries - - 1,063
Payments to acquire intangible
fixed assets - - (122)
______ ______ ______
(7) (246) (1,828)
______ ______ ______
Equity dividends paid (227) (276) (519)
______ ______ ______
Net cash outflow before financing (1,639) (952) (1,478)
Financing
Issue of shares net of costs - 50 95
New long term loans - 1,000 1,000
Repayment of long term loans (201) (152) (425)
Repayment of capital element
of finance leases (162) (2) (34)
______ ______ ______
Decrease in cash (2,002) (56) (842)
===== ===== =====
Reconciliation of net cash flow to movement in net debt
Decrease in cash (2,002) (56) (842)
Cash inflow from increase in loan - (1,000) (1,000)
Cash outflow from repayment
of loans 201 152 425
Repayment of capital element of
finance leases 162 2 34
______ ______ ______
Change in net debt from
cash flows (1,639) (902) (1,383)
Acquisitions and disposals - - (199)
New finance leases (156) - (35)
______ ______ ______
Movement in net debt (1,795) (902) (1,617)
Opening net (debt )funds (1,214) 403 403
______ ______ ______
Closing net debt (3,009) (499) (1,214)
===== ===== =====
Reconciliation of operating profit to net cash flows from operating activities
Operating profit 377 997 1,288
Depreciation 104 58 123
Amortisation of goodwill 94 1 32
Movement in stock (917) (1,930) (1,063)
Movement in debtors 1,011 (1,558) (2,994)
Movement in creditors (1,478) 2,579 4,218
Loss on disposal of fixed assets - - 4
Profit on disposal of investments - - (71)
Fundamental reorganisation costs - - (158)
______ ______ ______
(809) 147 1,379
===== ===== =====
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 1998. 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 1998 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. Post balance sheet event: on 13 August 1999 the Group completed the sale of
the property services operations for a cash consideration of £7.81 million.
In addition, the purchaser undertook to discharge deferred consideration
liabilities amounting to £1.53 million. This disposal left the Group
principally with cash, certain quoted investments, freehold properties and
some sundry debtors and creditors.
3. The calculation of earnings per share is based on the profit on ordinary
activities after taxation and 75,523,785 ordinary shares (1998: 69,953,387)
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 1998 was 69,578,565. The calculation of fully diluted earnings
per share is based on the profit on ordinary activities after taxation and
77,160,340 ordinary shares being the weighted average number of shares in
issue during the period, after allowing for share options (June 1998:
70,410,921 and December 1998: 70,289,832).
4. The Directors have declared an interim dividend of 0.1 pence per share
(1998: 0.35 pence) to shareholders on the register at the close of business
on 29 October 1999, which will be paid on 19 November 1999.
5. The board of Directors approved the Interim Financial Statement on 13
October 1999.