Interim Results

Lupus Capital PLC 18 September 2001 Tuesday 18 September 2001 PRESS RELEASE Lupus Capital plc Interim Results for the six months ended 30 June 2001 Lupus Capital plc ('Lupus') today announced its financial results for the six months ended 30 June 2001. Highlights are as follows: * Profit before tax increased to £352,000 (2000: £185,000) on turnover of £2.46m (2000 continuing operations: £2.15m) * Interim dividend up 10% at 0.11 p per share (2000: 0.1 p) * Oil services subsidiary, Gall Thomson, performing at record levels * Subsequent to the period end, first investment exit completed with Time Products Commenting on the results, Charles Ryder, Chief Executive, said: 'We are pleased to report results showing growth in turnover, profits and dividends. Our wholly-owned business, Gall Thomson, continues to perform at record levels. Current market conditions are presenting further opportunities to develop our portfolio. We view the future with confidence.' - ENDS - Lupus Capital plc Tel: 020 7976 8000 Charles Ryder www.lupuscapital.com Chief Executive James Orr Finance Director Merlin Financial Tel: 020 7606 1244 Paul Downes Karen Simmonds Interim Results for the six months ended 30 June 2001 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 seeks to generate significant returns by providing and, where necessary, implementing strategic plans for these companies, including appropriate exit routes. Lupus creates value by providing a service to shareholders and company boards, as well as to acquisitive well-run international companies looking to expand and diversify their businesses. A brief review of the activities of each of Lupus's investments is made in its interim and full year statements, particularly in relation to companies that are wholly-owned. Additionally, each Annual Report and Accounts will include a more detailed description of wholly-owned businesses. Financial Review In the six months to 30 June 2001, Lupus made an operating profit before goodwill amortisation and interest of £666,000 (2000: £600,000) on turnover of £2.46 million (2000 continuing operations: £2.15 million). After a charge of £370,000 for goodwill amortisation (2000: £375,000) Lupus made an operating profit before taxation and exceptional items in the period of £296,000 (2000 continuing operations: £225,000). Profit before taxation, including net interest and dividend income of £56,000, was £352,000 (2000: £ 185,000). The net assets of Lupus at 30 June 2001 were £15.42 million (2000: £15.57 million) representing 9.08p per share (9.18p per share at 30 June 2000), a small increase on the figure at 31 December 2000. Net debt amounted to £6.37 million (2000: £1.23 million). Following receipt of the proceeds of the Company's investment in Time Products plc, net debt at 31 August was approximately £2.7 million. Dividends The board is declaring an interim cash dividend of 0.11p per share (2000: 0.1p), a 10 per cent increase over last year's figure. The dividend will be paid on 30 October 2001 to shareholders on the register at the close of business on 5 October 2001. The ex-dividend date will be 3 October 2001. Review of Investments Lupus has one wholly-owned investment, Gall Thomson Environmental Limited (' Gall Thomson'), the major business of which is the supply of marine breakaway couplings for oil and gas applications. In the six months to 30 June 2001, Gall Thomson continued to perform at record levels, exceeding both budget and last year's comparative figures. Sales in the period were £2.46 million (2000: £2.15 million), an increase of 14.4%. Operating profits in the period were £1.37 million (2000: £1.17 million) an increase of 17.1%. In response to the sustained higher level of oil prices, major oil companies are undertaking significantly enhanced programmes of exploration and production in key development areas across all five continents. In many instances, the relevant techniques of production and shipment specify the use of marine breakaway couplings, thus benefiting Gall Thomson's main business. Sales of marine breakaway couplings have not only continued to be strong in areas with pre-existing installations, but orders have also been received for the first time from Bangladesh, Brunei, Iran and Tunisia. Lupus believes that this strong performance also reflects the increasing general demand for environmental safeguards. After a slow start to the year, Gall Thomson's industrial couplings business, KLAW, has also experienced strong growth in recent months. In March, Lupus announced that it had acquired a stake in Time Products plc (' Time Products'), a distributor of watches and associated products. Time Products' portfolio includes ownership of one of the largest middle market watch brands in the UK, Sekonda, as well as the distribution rights to a number of luxury watch names such as Audemars Piguet and Piaget. By 6 April 2001, Lupus had built up a stake of 1,700,000 shares in Time Products, representing 4.1% of the Company. Lupus's intention had been to accumulate a significantly larger position in Time Products but, before this was possible, an announcement was made that an offer in excess of 180p per share was being contemplated by the management. On 19 June 2001, a management buy-out team, operating as Almar PLC, confirmed an offer of 190p per share with shareholders retaining the right to the final dividend. The offer valued the issued share capital of Time Products at approximately £79.7 million. The offer became effective in August and Lupus has successfully realised a net profit of approximately £625,000, which will be recorded in the second half of the year. In addition, Lupus retains a pro rata entitlement to any proceeds of a disposal within the next five years of Time Products' 8.5% holding in the leading Swiss watch company, Audemars Piguet, in excess of a threshold of £ 4.25 million. There can be no certainty that any such sale will take place and accordingly no value is attributed to this entitlement. Time Products, with its interesting watch brand portfolio and strong cash position, is representative of the type of investment which Lupus seeks. Lupus continues to own a 13.6% stake in the issued share capital of Armitage Brothers plc ('Armitage'). Armitage develops, manufactures and supplies pet accessories and pet products; it operates in a rapidly changing marketplace. Lupus is involved in detailed discussions with the board of Armitage, relating to that company's corporate and commercial strategy. Lupus has continued to hold its 10.1% stake in the issued share capital of European Colour plc ('European Colour'). European Colour is a specialty chemicals company comprising a holding company with two divisions providing specialist pigments and performance coatings. European Colour operates in a sector which, in recent years, has been, and will continue to be, subject to worldwide consolidation. Lupus is continuing its discussions with the board and management of European Colour. Lupus has also built up non-disclosable stakes in certain other companies. Lupus may significantly increase its shareholding in certain of these companies in the coming months. Such involvement reflects Lupus's views on the benefits of consolidation, particularly as the global economy continues to revert to its long-term historic norm of sustained low inflation or, indeed, deflation. These benefits are apparent in almost all the sectors in which Lupus has invested or will be investing. These benefits include buying power, in terms of raw materials and services, access to better and more extensive marketing and distribution, access to capital and easier access to recruiting new management, better trained to make use of developments in information technology. Current Trading The outlook for Gall Thomson continues to be very good and Lupus believes that it will achieve significant growth in sales and profits in the second half of the year. Lupus also expects to continue to build up its portfolio and to realise certain investments during the coming months. It believes that opportunities are continuing to grow as both commercial and financial market pressures continue to beset most small and medium sized public companies. The Board continues to view the future with confidence. Oliver Stocken Chairman Charles Ryder Chief Executive Group profit and loss account As restated Six month Six month Year period period ended ended ended 30 June 30 June 31 December 2001 2000 2000 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Turnover Continuing operations 2,463 2,152 4,772 Discontinued operations - 291 291 2,463 2,443 5,063 Operating profit / (loss) Continuing operations - excluding 666 600 1,306 goodwill amortisation Goodwill amortisation (370) (375) (750) Continuing operations 296 225 556 Discontinued operations - (18) (18) 296 207 538 Exceptional items: - loss on sale of operations - (26) (47) Dividend income 216 19 112 Interest and similar items (160) (15) (76) Profit on ordinary activities before 352 185 527 taxation Taxation (116) (148) (324) Profit on ordinary activities after 236 37 203 taxation Ordinary dividend (187) (169) (551) Retained profit / (loss) 49 (132) (348) Earnings per share 0.14p 0.02p 0.12p Diluted earnings per share 0.14p 0.02p 0.12p Earnings before goodwill amortisation per 0.36p 0.23p 0.57p share Dividend per share 0.110p 0.100p 0.325p There were no recognised gains or losses in each period other than the profit on ordinary activities after taxation. Group balance sheet As restated 30 June 30 June 31 December 2001 2000 2000 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Fixed assets Intangible fixed assets 13,273 14,110 13,643 Tangible fixed assets 601 515 606 Investments 7,051 2,245 3,933 20,925 16,870 18,182 Current assets Stocks and work-in-progress 165 191 177 Debtors 1,848 1,368 1,349 Investments 299 83 204 2,312 1,642 1,730 Creditors: Amounts falling due within (7,820) (2,940) (4,556) one year Net current liabilities (5,508) (1,298) (2,826) Net assets 15,417 15,572 15,356 Capital and reserves Called up share capital 849 848 848 Share premium account 4,407 4,396 4,396 Merger reserve 10,389 10,389 10,389 Profit and loss account (228) (61) (277) Equity shareholders' funds 15,417 15,572 15,356 Group statement of cash flows As restated Six month Six month Year period period ended ended ended 30 June 30 June 31 December 2001 2000 2000 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Net cash inflow / (outflow) from 288 (3,240) (2,450) operating activities Returns on investments and servicing of finance Interest received 87 156 327 Interest paid (247) (171) (403) Dividends received 35 19 112 (125) 4 36 Taxation UK Corporation tax paid (89) (162) (458) Capital expenditure and financial investment Sale of tangible fixed assets 2 202 202 Purchase of tangible fixed assets (38) (30) (151) Sale of investments 90 898 898 Purchase of investments (3,284) (1,945) (3,766) (3,230) (875) (2,817) Acquisitions and disposals Purchase of subsidiary undertakings - (738) (738) Disposal of subsidiary undertakings - 576 551 Net cash in disposed operations - (171) (171) - (333) (358) Equity dividends paid (382) (339) (509) Net cash outflow before financing (3,538) (4,945) (6,556) Financing Issue of shares net of costs 12 - - New long-term loans - 3,250 3,250 Repayment of long-term loans - (4,750) (4,750) Decrease in cash (3,526) (6,445) (8,056) Reconciliations As restated Six month Six month Year period period ended ended ended 30 June 30 June 31 December 2001 2000 2000 (Unaudited) (Unaudited) (Audited) £000 £000 £000 Reconciliation of net cash flow to movement in net debt Decrease in cash (3,526) (6,445) (8,056) Cash inflow from increase in loans - (3,250) (3,250) Cash outflow from repayment of loans - 4,750 4,750 Change in net debt from cash flows (3,526) (4,945) (6,556) Opening net (debt) / funds (2,844) 3,712 3,712 Closing net debt (6,370) (1,233) (2,844) Reconciliation of operating profit to net cash flows from operating activities Operating profit 296 207 538 Depreciation 41 97 128 Amortisation of goodwill 370 365 750 Movement in stock 12 (94) (81) Movement in debtors (319) 1,068 1,086 Movement in creditors (95) (4,766) (4,765) Profit on disposal of investments (17) (67) (67) Foreign exchange - (24) (24) Revaluation of investments - (26) (15) Net cash flow from operating 288 (3,240) (2,450) activities 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 2000. 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 2000 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 audit report, with no statement under section 237(2) or (3) of the Act. The comparative financial information for the six month period ended 30 June 2000 has been restated to reflect the consolidation of Gall Thomson with effect from the date of acquisition, details of which were provided in the statutory accounts for the year ended 31 December 2000. 2. The calculation of earnings per share is based on the profit on ordinary activities after taxation and 169,726,551 ordinary shares (2000: 166,271,654) 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 2000 was 167,953,570. The calculation of fully diluted earnings per share is based on the profit on ordinary activities after taxation and 169,726,551 ordinary shares being the weighted average number of shares in issue during the period, after allowing for share options (June 2000: 166,271,654 and December 2000: 169,953,570). 3. The Directors have declared an interim dividend of 0.11 pence per share (2000: 0.1 pence) to shareholders on the register on the close of business on 5 October 2001, which will be paid on 30 October 2001. The ex-dividend date will be 3 October 2001. 4. The board of Directors approved the Interim Financial Statement on 17 September 2001.

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