Annual Report for the year ended 31 December 2008

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ANNUAL REPORT & ACCOUNTS
THE EVOLUTION GROUP PLC
FOR THE YEAR ENDED 31 DECEMBER 2008

Evolution Securities aims to be
the leading investment bank, advising
small and mid cap uK public companies
with over 75 retained corporate clients
to whom it provides corporate finance
advice and corporate broking services. its
increasing secondary markets business is
focused on servicing institutional investors
through its teams in equity research, sales
and sales trading, market making and
fixed income. Evolution securities limited
is authorised and regulated by the
Financial services Authority.
SUmmARY OF KEY INFORmATION
SECTION 1
CONSOLIdATEd FINANCIAL STATEmENTS
02 CHAiRMAN’s sTATEMENT
04 CHiEF ExECuTivE’s REpORT
10 FiNANCiAl REviEW
16 THE BOARD
18 DiRECTORs’ REpORT
Williams de Broë is one of the uK’s
leading firms of investment managers
with a business built on the core values
of personal service, bespoke portfolio
services, a sound investment process,
true independence and professional
partnerships. Williams de Broë limited
is authorised and regulated by the
Financial services Authority.
24 CORpORATE GOvERNANCE
30 REpORT FROM THE CHAiRMAN
OF THE AuDiT COMMiTTEE
31 DiRECTORs’ REMuNERATiON REpORT
39 iNDEpENDENT AuDiTORs’ REpORT
40 FiNANCiAl sTATEMENTs
44 NOTEs TO THE FiNANCiAl sTATEMENTs
B THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
Evolution Securities China is a
specialist Chinese investment banking
business with offices in london, Hong
Kong and shanghai. it offers institutional
clients research and trading in listed
Chinese stocks and provides Chinese
corporates with access to the capital
markets of london and Hong Kong.
Restated 6
31 December 2008 31 December 2007
£’000 £’000
ToTal income1 (before fee and commission expenses) 65,161 87,475
adjusTed profiT before Tax from conTinuing operaTions2 1,894 22,131
sTaTuTory (loss)/profiT before income Tax from conTinuing operaTions (12,698) 3,182
adjusTed earnings from conTinuing operaTions2 2,902 17,791
(loss)/profiT for The year from ToTal operaTions (13,496) 3,202
adjusTed basic earnings per share from conTinuing operaTions2 1.36p 8.48p
basic/(loss) earnings per share from ToTal operaTions (6.02p) 1.42p
SECTION 2
PARENT COmPANY FINANCIAL STATEmENTS
77 THE EvOluTiON GROup plC
pARENT COMpANY ACCOuNTs
98 DiRECTORs AND ADvisORs

FINANCIAL ANd OPERATIONAL HIGHLIGHTS
strong progress in developing the Group and rebalancing income
streams to produce recurring revenues.
Robust performance against peer group in exceptionally
challenging markets.
Total Group income (before fee and commission expenses) 1
of £65.2m, down 25% from £87.5m in 2007.
Adjusted profit before tax from continuing operations 2 of £1.9m
down 91% from £22.1m 6 in 2007. statutory loss before income
tax from continuing operations £12.7m (2007: statutory profit
before tax £3.2m 6 ).
Continued Balance sheet strength with net assets at £147.2m
(2007: £155.3m) of which cash is £125.3m (2007: £122.7m),
and of this £125.3m, £10.4m relates to third party investors
within the WDB Capital uK Equity Fund limited.
in March 2009 the Group re-entered the FTsE 250.
increase in final dividend of 2% to 1.27p (2007: 1.25p) following an
interim dividend paid on 24 October 2008 of 0.75p (2007: 0.67p),
giving a total dividend for the year of 2.02p, which has increased
by 5% from prior year (2007: 1.92p).
We believe the Group is capable of riding out the continuing
difficult conditions and is well positioned for the future.
WILLIAmS dE BROë 3
Assets under management up 21% to a record level of £3.4bn
(2007:£2.8bn) and income 1 up 10% to £35.7m (2007:£32.6m).
Completed the acquisition of singer & Friedlander investment
management business on 21 October 2008 acquiring over £1bn
of clients under management.
The new Edinburgh office was opened in April 2008, this
has seen strong growth in assets under management; that is
expected to continue into 2009.
Adjusted profit before tax 2 of £4.8m decreased by 28% from
£6.7m in 2007. The decline in profitability during the year was
primarily due to higher initial costs relating to the new Edinburgh
and singer & Friedlander teams.
Despite the exceptionally challenging environment, the WDB
Capital uK Equity Fund limited 3 fund achieved a net positive
return of 14.26% since inception in september 2007, and a net
positive return of 9.53% in 2008. Based on this performance the
fund was nominated in the “New Fund of the Year” Category for
2008 at the EuroHedge awards.
1 Represents total income before fee and commission expenses.
2 Adjusted operating profit from continuing operations, adjusted profit before tax from
continuing operations, adjusted earnings from continuing operations and adjusted basic
earnings per share are defined in the Financial Review section on pages 10 and 11.
3 The results of Williams de Broë are defined as those arising from Williams de Broë limited
(“WdB”), Williams de Broë Management Company limited and from WDB Capital
limited, including the consolidated results of the WDB Capital uK Equity Fund limited.
FINANCIAL ANd OPERATIONAL HIGHLIGHTS
THE EVOLUTION GROUP PLC
01 THE EvOluTiON GROup plC
EVOLUTION SECURITIES 4
Continued successful rebalancing of primary and secondary
market activities – realigning profile towards mid-cap brokerage with
increased market share in both FTsE 100 and FTsE 250 stocks.
With a back drop of the third worst year in stock market history
seeing the FTsE All-share fall by 32.78% Evolution securities’
achieved income 1 of £29.8m down 46% from £54.7m in 2007.
Expansion of the fixed income franchise saw income 1 increase by
97% to £7.1m from £3.6m. During the first few months of 2009
the expansion of this desk has continued with further key hires.
The business reduced its annualised cost base by £7.2m or 14%
during the year as part of an ongoing programme to
drive efficiency through to the bottom line and streamline
the business. The fully annualised benefit of these savings will
not been seen until 2009.
EVOLUTION SECURITIES CHINA 5
The results of Evolution securities China (loss after tax £2.5m)
(2007: profit £0.4m 6 ) are shown as discontinued in the
Consolidated Financial statements.
On 31 March 2009 the Group completed an agreement with
First Eastern Financial Holdings limited (“First Eastern”) whereby
First Eastern holds no less than 51% of the ordinary share capital
of Evolution securities China. The Group retains approximately
48.5% of the ordinary share capital. The agreement combines
the strengths of the Company’s well financed and independent
position in london with First Eastern’s considerable experience
and proprietary deal flow in the Chinese market.
We look forward to capitalising on this unique combination
of proven expertise, in both the uK & Far East, that this joint
relationship has to offer and which is expected to yield
significant opportunities between China and Europe in
2009 and beyond.
CURRENT TRAdING UPdATE
very encouraging trading in the first quarter, which has
been achieved almost completely from our recurring based
revenue streams.
We continue to recruit and retain quality people to grow
the business, while managing Group costs effectively.
4 The results of Evolution securities are defined as those arising from Evolution
securities limited (“Esl”) and its subsidiary Evolution securities (us) inc. (“Esus”).
5 The results of Evolution securities China are defined as those arising from Evolution securities
China limited (“EsCl”) and its subsidiary Evolution Watterson securities limited (“EWsl”).
6 2007 results have been restated due to EsCl results being treated as a discontinued
operation in 2008 following the Board's decision to partly dispose of a controlling
interest in the business (see Note 1 accounting policies for details of restatements).

The market conditions for most of 2008 were the most demanding for
generations. The Group’s businesses have not been immune from the
effect of those challenges. The Group has operated against the backdrop
of significant volatility in the uK Equity market and weak ipO markets
across all sectors, especially AiM.
Total income (before fee and commission expenses) for the Evolution
Group plc fell from £87.5m to £65.2m, a decrease of 25%.
in spite of very challenging market conditions the Group has made significant
progress and has continued to restructure its businesses. This restructuring
will ensure we can withstand the economic downturn and also capitalise
on opportunities that arise both now and as economic conditions improve
and markets recover.
Our long established policy of maintaining a very strong and liquid Balance
sheet has been validated, and during the year has enabled us to make a
significant acquisition and to continue the recruitment of quality people to
position our businesses for future growth. As we have done that, we have
taken a conscious decision to reward (both to retain and motivate) those
people we need for the future. Equally, we have continued to significantly
reduce our cost base where appropriate.
CHAIRmAN’S STATEmENT
THE EVOLUTION GROUP PLC
2 02 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
Evolution securities continued to make a significant contribution to the
Group, achieving total income (before fee and commission expenses) of
£29.8m (2007: £54.7m). Achieving a better balance between primary
and secondary market activities has been a priority for this business.
This was achieved in 2008 despite the disruptions caused to the
primary issuance sector.
Williams de Broë, the private client investment management business,
has continued to invest and has grown assets under management
both organically and through acquisition.
Assets under management have increased by 21% from £2.8bn to
£3.4bn at the end of 2008. income (before fee and commission
expenses) increased to £35.7m in 2008 from £32.6m in 2007.
The Group acquired the singer & Friedlander investment Management
business on 21st October 2008. That acquisition, for a consideration
of £4.4m, is proving very successful, and over £1bn of assets under
management have been transferred. We expect the acquisition to be
accretive in 2009.
Evolution securities China is shown as a discontinued business.
As announced on the 9 March 2009, the Group entered into an agreement
with First Eastern to acquire a controlling interest in EsCl. On 1 April
2009, the Company announced the completion of the investment
which included subscription for shares whereby First Eastern now holds
51% of the ordinary share capital of EsCl, with The Group retaining
48.5%. We believe this partnership will combine Evolution Group’s well
financed and independent position in london with First Eastern’s
considerable experience and proprietary deal flow in the Chinese
market. We believe the partnership will provide the opportunity for
EsCl to be First Eastern’s principal partner in the uK and Hong Kong
for a wide range of capital market opportunities.

Balance Sheet strength and cash balances
Current market conditions support our long standing strategy of
maintaining a strong and liquid Balance sheet. At the year end, the
Group had net assets of £147.2m (2007: £155.3m) and of this,
the Group’s cash balances were £125.3m (2007: £122.7m), £10.4m
of this cash balance relates to third party investors within the WDB
Capital uK Equity Fund limited. This strategy provides strength in times
of market uncertainty and supports our ability to grasp opportunities
should they present themselves. Cash balances are maintained through
the effective management of working capital in trading portfolio assets
and net trade receivables.
Adjusted Profit
Results have been impacted by the continued presence of non-recurring
costs of £2.3m (2007: £7.6m) relating to the acquisition, restructuring
and integration of singer & Friedlander and the new Edinburgh teams,
as well as redundancy costs in existing operations. The Board believes
a truer reflection of profitability for the year is afforded by the measure
of adjusted operating profit, including the exclusion of share options
costs. This is defined on pages 10 and 11.
dividend
The Board recommends the payment of a final dividend of 1.27p per
share (2007: £1.25p). This follows the interim dividend payment of
0.75p per share paid on the 24 October 2008 to shareholders on the
register at 26 september 2008 (2007: 0.67p). The overall dividend
increased by 5% and is consistent with our progressive dividend policy.
This confirms our continued confidence in the Group’s businesses, but
at the same time recognises the existing business environment.
Share buyback
The Board wishes to maintain the capability to continue this programme
during the remainder of 2009 and will be seeking approval from
shareholders at this year’s Annual General Meeting.
The Group employees
We can only prosper if we have people of the highest quality employed
in our businesses. During the year we have continued to recruit very
high calibre people and will continue to do so. We have also taken a
conscious decision to reward (both to retain and motivate) those people
we need for the future. Our staff have managed our business in a very
impressive way through unprecedented market conditions. i thank them
all for their professionalism.
Outlook
We believe the challenging market and economic conditions will
continue for some time, certainly over the course of this year and
probably into 2010. However, the Group has made significant strategic
and operational progress and has maintained a strong and liquid
Balance sheet and a more stable income base. This will enable us
to take advantage of opportunities as they arise, continue to recruit
quality people and invest in new income streams.
We will continue to follow this strategic policy and believe the Group is
capable of riding out the challenging economic environment and is well
positioned for the future.
martin Gray
Chairman
8 April 2009
03

I Am PLEASEd TO REPORT THAT THE GROUP HAS PERFORmEd WELL dURING
THE YEAR ANd WE HAVE ACHIEVEd A NUmBER OF OUR STRATEGIC OBjECTIVES.
THE GROUP HAS dELIVEREd INCOmE (BEFORE FEE ANd COmmISSION
ExPENSES) IN 2008 OF £65.2m, dOWN 25% FROm THE LEVEL ACHIEVEd
IN 2007 OF £87.5m. THERE IS A BETTER BALANCE OF THESE REVENUES
BETWEEN INSTITUTIONAL INVESTmENT BANKING AT 46% (2007: 62%) ANd
PRIVATE CLIENT INVESTmENT mANAGEmENT AT 54% (2007: 38%).
EVOLUTION GROUP INCOmE (before fee and commision expenses) £m
The historic growth in income is demonstrated below:
7.6
2001
15.8
2002
40.8
2003
64.1
2004
73.5
2005
uKGAAp iFRs
84.8
2006
CHIEF ExECUTIVE’S REPORT
THE EVOLUTION GROUP PLC
04 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
87.5
2007
Restated
65.2
2008
INCOmE BREAKdOWN
The detailed income analysis by segment and by operating company is
shown below:
2008
Restated
2007
£’000 % £’000 %
insTiTuTional invesTmenT banking
Evolution securities 1 privaTe clienT invesTmenT managemenT
29,774 46 54,650 62
Williams de Broë 2 oTher
35,727 54 32,606 38
Other income (340) – 219 –
65,161 100 87,475 100
Commissions paid away (1,257) (2,007)
Total income 63,904 85,468
notes
1 The results of Evolution securities are defined as those arising from Evolution securities
limited (“Esl”) and its subsidiary Evolution securities (us) inc. (“Esus”).
2 The results of Williams de Broë are defined as those arising from Williams de Broë limited
(“WdB”), Williams de Broë Management Company limited and from WDB Capital limited,
including the consolidated results of the WDB Capital uK Equity Fund limited.
alex snoW
Chief Executive Officer

evolution securities
Evolution securities provide equity and fixed income research, institutional
sales and trading, equity market making, corporate finance and corporate
broking advice. Within Evolution securities, the core strategic objective
is to maintain a balanced business, between equities and fixed income,
servicing the needs of institutional and Corporate customers in both of
these product areas.
2008 presented an extraordinary business environment. Capital markets
all but ceased to exist with well-publicised significant falls in all FTsE
indices, especially in AiM and the small cap indices as well as in Official
list initial public Offerings (“ipO”). in addition, secondary volumes on all
indices fell between 30-65% with a corresponding impact on share prices.
Despite this backdrop, Evolution securities continued to maintain significant
market shares in both agency business and total transactional shares
across all uK indices.
Faced with these conditions, Evolution securities reduced its headcount
and costs in its equities division and strategically took the decision to
further invest in people within fixed income, and align this business to
the opportunities that prevail in its market place. This latter point, in
particular, refers to the servicing of the customer at both the institutional
and corporate level.
Results for the year have been affected by the prevailing market conditions
in equities, especially in the second half of the year, which significantly
impacted equity market making. For the year to 31 December 2008
Evolution securities traded at a loss, recording an adjusted operating
loss (as defined in the Financial Review) of £5.4m (2007: profit £13.0m).
Total income before fee and commission expenses was £29.8m (2007:
£54.7m), with secondary sales and trading for equity and fixed income
holding up, despite market factors, at £19.8m (2007: £19.7m). The business
reduced its annualised cost base by £7.2m (14%) during the year as
part of an ongoing programme to drive efficiency through to the bottom
line and streamline the business. The fully annualised benefit of these
savings will not been seen until 2009.
Our objective for 2008 has been the reduction of costs, streamlining the
business and positioning our fixed income and equities businesses for
2009. We are very confident about our prospects in both.
CHIEF ExECUTIVE’S REPORT CONTiNuED
INSTITUTIONAL INVESTmENT BANKING
Secondary market activities
Research
strength in equity research lies at the heart of a strong equities franchise,
it helps brand the business. Our research teams are highly experienced,
with in-depth knowledge and a strong reputation across a broad range of
uK sectors and industries. Our research offering covers small, mid and
large sized capitalised companies. in total, we research approximately
200 stocks. A notable award in 2008 was from starmine (sponsored by
The sunday Times) where we achieved the No 1 ranking in FTsE 100
research recommendations across our industry.
Fixed Income
Changing working capital practises within the major investment Banks, a
changing regulatory environment as well as a redirection of risk appetite
have all produced a changing picture for fixed income markets. We believe
that these changes are permanent and here to stay.
During 2008 Evolution securities has adapted to these changes by
investing in the talent pools in the market place as well as in execution
technology. Our business in this area has changed considerably in 2008,
with further expansion in the first quarter of 2009, which is expected to
continue throughout the year. We now service a global client base and
in terms of an offering, we price over 4,000 bonds, have a first class
and independent research team, and offer services in fixed income
products across Government Bonds, investment Grade, High Yield,
Distressed and Asset Backed securities areas.
in conclusion, we believe that we offer a service that is independent and
is broadly unique to many of our competitors. Whilst these new initiatives
were not fully operational or complete in 2008, we are delighted to report
a robustness in our performance where income grew by 97% to £7.1m
(2007: £3.6m).
05

Institutional Sales & Sales Trading
Evolution securities’ uK Equities sales team has a strong franchise
across the uK listed markets from AiM to FTsE 100 and is a significant
participant in the mid cap and small cap markets, in both primary and
secondary issues. Our fundraising record is well respected throughout
the industry, and our depth of expertise and wide range of international
contacts enables the department to provide services to a broad range
of uK, European and us based investors. Equally important is that our
sales teams are conduits for passing on the message of our research
analysts and the corporates that we advise on to our various institutional
relationships.
As a result of the prevailing economic conditions the performance from
these teams in 2008 has suffered with total secondary commission
income decreasing by 23% to £12.7m (2007: £16.4m). This was in face
of the FTsE 100 index falling by 36%, AiM index falling by 65% and the
small cap index falling by 54%.
Equity Market Making
With 14 market makers covering a total of 772 stocks, Evolution securities
has one of the largest market making operations in the City of london.
The team makes markets in stocks from a variety of sectors ranging
from AiM and small cap right through to the FTsE 100, providing real
facilitation and execution services to both institutional and retail clients.
CHIEF ExECUTIVE’S REPORT CONTiNuED
INSTITUTIONAL INVESTmENT BANKING
06 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
in 2008, Evolution securities reduced the number of stocks in which we
made markets to a total of 772 stocks (2007: 916 stocks), whilst still covering
the entire FTsE 250 and FTsE 100. 2008 also saw a greater focus on
the efficient use of capital away from some of the smaller capitalised
and less liquid stocks to larger capitalised companies. This matched the
greater research and sales coverage in these stocks. performance of
our market making operations, has been impacted by significant falls in
all uK equity indices and also the significant deterioration in the underlying
liquidity of quoted companies which made 2008 the most difficult year
that this operation has ever seen. its performance, against this backdrop,
has been good when compared to FTsE falls.
Primary market activities
As previously mentioned, 2008 was an exceptionally tough year for corporate
finance activity. Evolution securities participated in transactions raising
in excess of £470m during 2008 (2007: £2.9bn). Fundraising activities
included 20 transactions from existing listed clients (2007: 41 transactions)
and one of the largest ipOs of the year (2007: five ipOs), raising in total
£157m (2007: £437m).

Corporate Finance
Evolution securities has 21 highly experienced corporate finance
executives, based in london and leeds, working in teams with a
predominantly sector based focus, in line with the research structure.
This business has an extensive track record in ipO’s, secondary fundraisings
and public and private merger and acquisition activity. We act for corporate
clients across both the Full list and AiM in a number of sectors.
Throughout 2008 we continued to improve our internal controls via
committees dealing with new business, commitment, underwriting and
pricing. We believe our procedures remain at the leading edge of those
within our peer group.
Corporate Broking
We offer advice on market facing issues through our corporate broking
team. This can either be a separate service or can be included as part
of our overall corporate finance service. The department draws on the
significant resources of Evolution securities within the regulatory framework
to ensure that we act as our client’s best advocate in the market.
We advise our corporate clients at all stages of their development, becoming
involved in the flotation process and developing our relationship with
them post-ipO on both a day-to-day and transactional basis. providing a
market facing service for our corporate clients is very important to us.
Knowing what the market thinks of a stock helps us position our clients’
story in the market.
evolution securities china
Evolution securities China is a specialist Chinese investment banking and
securities operation based in the uK, Hong Kong and shanghai. it holds
regulated status in both regions. This business completed its fifth year
of operation during the summer of 2008. income (before fee and
commission expense) fell to £2.7m (2007: £5.8m), a decrease of 53%.
On 9 March 2009, the Company entered into an investment Agreement
with First Eastern. under the terms of the investment Agreement First
Eastern and Evolution Group will between them invest an aggregate
£900,000 by way of a subscription for new Ordinary shares in EsCl.
On the 1 April 2009 the Company announced the completion of the
investment which included subscription for shares whereby First Eastern
now holds 51% of the Ordinary shares upon completion and the Company
holding will reduce from 70.94% to 48.5%. The balance will be held by
those existing minority shareholders who elect to retain their interests,
although an opportunity is being provided for those minority shareholders
to realise their investment on completion of the investment Agreement,
should they so wish. Although First Eastern will have a majority shareholding,
Evolution Group will continue to be represented on the Board of EsCl.
We believe this is an extremely exciting joint venture with China’s largest
direct investment group and their decision to enter into a partnership with
Evolution Group is a significant endorsement of our capabilities. First
Eastern has an unrivalled track record and experience, and this combined
with our expertise and strength in the uK and the Far East region will
deliver real opportunities between China and Europe.
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
077

Williams de broë
Notwithstanding arguably the most difficult trading conditions in our
sectors for a generation, 2008 witnessed significant growth for our
private client investment management business, Williams de Broë.
Despite the stock market performance we were very active in this
division last year where we:
• Announced on 21 October 2008 the acquisition of the investment
management team of singer & Friedlander investment Management
limited ("sFiM"). The acquisition is proving very successful, and over
£1bn of assets under management have been transferred onto the
existing Williams de Broë regulatory platform.
• We opened a further office in Edinburgh which during the year has
seen a strong inflow of new clients; that is expected to continue into
2009. Williams de Broë now operates across seven offices in Bath,
Birmingham, Bournemouth, Edinburgh, Exeter, Guildford and london.
• Despite the difficult market conditions of 2008, Williams de Broë’s
total income (before fee and commission expenses) increased by 10%
to £35.7m in 2008 (2007: £32.6m) demonstrating the impact of
our organic growth despite weaker transaction volumes in our sector.
Adjusted profit before tax of £4.8m decreased by 28% from £6.7m
in 2007. The decline in profitability during the year was primarily due
to higher initial costs relating to the new Edinburgh and singer &
Friedlander teams.
• Growth in assets under management (“AuM”), as with 2007, remains
a core focus within Williams de Broë. At 31 December 2008, total assets
under management reached a record level of £3.4bn, an increase of
21% from the £2.8bn at end of 2007. The acquisition of the sFiM
team and the new office in Edinburgh were instrumental in achieving
this growth.
• The successful migration of the sFiM business was supplemented by
another record performance from our discretionary sales team – further
vindicating our philosophy of discretionary intermediary distribution by
geographic location, which together with our investment managers,
won and introduced new assets under management totalling £493m
(2007: £471m) an increase of 5%.
CHIEF ExECUTIVE’S REPORT CONTiNuED
PRIVATE CLIENT INVESTmENT mANAGEmENT
08 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
Products
With a heritage dating back to 1869, Williams de Broë is one of the uK’s
leading firms of investment managers and has successfully established
a business that has been built on the following core values:
• personal service – we have a personal service driven culture and our
ethos is to maintain investment managers dedicated to our individual
client’s needs;
• Bespoke by nature – we tailor our services to fulfil our individual
client’s specific investment objectives and risk criteria;
• sound investment process – we maintain a significant resource in our
investment process and have a strong focus to achieve investment
excellence;
• True independence – we select best of breed investments, which are
appropriate for our clients, without conflicts of interest. We also develop
close relationships with our professional intermediary partners; and
• Continues to improve the businesses infrastructure, back office and
compliance departments.
We were also delighted to receive the Five star service award in November
2008 at the Financial Advisor Magazine Awards. The service award is
recognised as a benchmark for service standards.
However, at the start of 2009 the difficult market conditions still prevail,
and whilst we remain differentiated from many of our competitors, there
is no room for complacency. Accordingly we are reviewing every aspect
of the Williams de Broë’s business in order to improve our performance
for the remainder of 2009 and beyond.

Wdb capital
The Group’s investment in the WDB Capital uK Equity Fund limited
reduced from 94.79% to 50.20% during 2008. The fund is expected
to be deconsolidated in 2009 as the Group’s investment falls below
50%, as a result the assets and liabilities of the fund are presented
as held-for-sale.
WDB Capital’s principal activity is that of investment fund manager to
WDB Capital uK Equity Fund limited. From the initial seeding of £10m
by the Group made on the 24 september 2007 to the 31 December
2008 the fund returned a net positive net return of 14.26% and in
the calendar year 2008 a positive net return of 9.53%. in light of the
exceptionally challenging environment for equity markets the Group is
pleased with the funds performance. Reflecting the funds success,
WDB Capital uK Equity Fund limited was nominated in the “New Fund
of the Year” Category at the 2008 EuroHedge awards. The fund has
seen significant inflows throughout 2008 and continues to in 2009.
Infrastructure, culture and employees
2008 continued to create significant challenges for our infrastructure as
we responded to the increased market volatility, whilst managing organic
and acquisitive growth and the re-balancing across our business model.
it is due in no small part to the continued professionalism of our employees
that the Group has weathered such conditions whilst delivering a robust
performance. i would like to express my continuing thanks to all our
employees who continue to work hard through the current difficult
market conditions.
CHIEF ExECUTIVE’S REPORT CONTiNuED
OUTLOOK
Outlook
The Board has stressed the need for a strong and liquid Balance sheet
for some considerable time, the Group retains this asset and has protected
stakeholders interests by doing so. in the environment which we all face,
i believe this liquidity provides your group with substantial opportunity.
it is very firmly my belief that the Group will have opportunities to exercise
this leverage, whether through acquisition as demonstrated at the end of
2008 with the demise of Kaupthing and the unique opportunity this provided
to acquire singer & Friedlander investment management, or indeed through
even more dynamic opportunities that will inevitably occur as our industry
changes further in the coming months.
i firmly believe the Group can and will extend itself to capitalise on these
opportunities, whilst continuing to pay an increasing dividend year on year
to shareholders.
i am pleased to report very encouraging trading in the first quarter, which
has been achieved almost completely from our recurring based revenue
streams. Williams de Broë is now one of the fastest-growing private client
fund management businesses in the uK, and Evolution securities is also
expanding its business, most recently with the creation of a strong Fixed
income trading capability.
i would like to thank my Non-executive Board colleagues who have
remained supportive of this strategy over the past two years.
Alex Snow
Chief Executive Officer
8 April 2009
099

Adjusted operating profit
statutory operating profit from continuing operations declined in 2008
to a loss of £17.3m (2007: £0.4m profit). This was primarily due to the
decline in primary & trading revenues from the prior year and in part due
to the singer & Friedlander acquisition and Edinburgh office expansion.
The Board continues to believe a truer reflection of the performance of
the Group's operating businesses is afforded by the measure of ‘Adjusted
operating profit from continuing operations’ that excludes items that
are one-off or non-recurring (including items that fall to be treated as
exceptional), and are not part of the on-going business profitability (including
discontinued operations), the cost of share options granted to employees
or in the case of amortisation of intangible assets represent non-cash
items. This measure is therefore used as the principal performance criteria
against which the vesting of stock awards is determined. in addition, the
Board reviews performance against the measure ‘Adjusted profit before
OPERATING PROFIT
10 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
tax from continuing operations’, which represents adjusted operating
profit from continuing operations plus net interest; the measure ‘Adjusted
earnings from continuing operations’, which represents adjusted profit before
tax from continuing operations less tax expense (excluding exceptional tax
expense) and the measure ‘Adjusted basic earnings per share’. The analyst
community also follows these measures as benchmarks for the Group’s
on-going performance.
The following table reconciles these measures and demonstrates a reduction
in adjusted operating profit in 2007 of £19.3m to an adjusted operating
loss from continuing operations of £2.7m in 2008. This reduction is
principally due to continued pressure on corporate finance fee income,
particularly within the final quarter when market conditions deteriorated.
The adjusted profit before tax from continuing operations for 2008 is
£1.9m (2007: £22.1m) and adjusted earnings from continuing operations
are £2.9m (2007: £17.8m).
Restated4 2008 2007
£’000 £’000
group operaTing (loss)/profiT from conTinuing operaTions (17,277) 398
iTems noT included WiThin adjusTed operaTing profiT:
profit on disposal of available-for-sale financial assets (20) (299)
Amortisation of intangibles excluding computer software 551 396
share of post tax results of associates – (29)
income statement charge for share options granted to employees 1 11,729 11,253
Non-recurring and 2007 exceptional operating expenses 2 2,332 7,628
adjusTed group operaTing (loss)/profiT from conTinuing operaTions (2,685) 19,347
Net finance income 4,579 2,784
adjusTed profiT before Tax from conTinuing operaTions 1,894 22,131
Tax credit/(expense) 3 1,008 (4,340)
adjusTed earnings from conTinuing operaTions 2,902 17,791
adjusTed basic earnings per share 1.36p 8.48p
adjusTed diluTed earnings per share 1.17p 7.14p
1 Represents the income statement charge for the fair value of options granted to employees. The Group continues to purchase shares through the Trust to satisfy obligations in respect
of share options and call rights granted to employees.
2 Non-recurring and exceptional operating expenses are detailed on page 12.
3 Excludes the tax effect of non-recurring and 2007 exceptional operating expenses.
4 2007 results have been restated due to EsCl results being treated as discontinuing operations following the Board's decision to partially dispose of the business (see Note 1 accounting
policies for details of restatements).
FINANCIAL REVIEW
THE EVOLUTION GROUP PLC

EARNINGS PER SHARE ON TOTAL OPERATIONS
Statutory
Year ended 31 December 2008 Year ended 31 December 2007
Loss Weighted Earnings Profit Weighted Earnings
£’000 average no. per share (p) £’000 average no. per share (p)
basic earnings per share (12,844) 213,195,385 (6.02) 2,969 209,745,385 1.42
Dilutive effect of share awards – 34,680,832 – – 39,446,913 –
diluTed (12,844) 247,876,217 (5.18) 2,969 249,192,298 1.19
Adjusted
Year ended 31 December 2008 Year ended 31 December 2007
(Loss)/profit Weighted Earnings Profit Weighted Earnings
£’000 average no. per share (p) £’000 average no. per share (p)
basic (12,844) 213,195,385 (6.02) 2,969 209,745,385 1.42
profit on investments (20) – (0.01) (299) – (0.14)
Non-recurring and 2007 exceptional operating expenses 2,332 – 1.09 7,628 – 3.64
Related tax (credit) (653) – (0.31) (3,912) – (1.87)
Amortisation of intangibles 551 – 0.26 396 – 0.19
share of post tax result of associates – – – (29) – (0.01)
income statement charge for share options granted 11,729 – 5.50 11,253 – 5.36
loss/(profit) of discontinued operations 2,459 – 1.15 (448) – (0.21)
Minority interest on discontinued operations (652) – (0.30) 233 – 0.10
adjusTed basic 2,902 213,195,385 1.36 17,791 209,745,385 8.48
Dilutive effect of share awards – 34,680,832 – – 39,446,913 –
adjusTed diluTed 2,902 247,876,217 1.17 17,791 249,192,298 7.14
11

non-recurring and 2007 exceptional items
A summary of all non-recurring items for 2008, together with exceptional and non-recurring items for 2007 is provided below:
FINANCIAL REVIEW CONTiNuED
12 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
2008 2007
£’000 £’000
non-recurring iTems
Acquisition of singer & Friedlander (790) –
investment in Edinburgh teams (509) –
Redundancy costs on continuing operations (1,033) –
(2,332) –
sTaTuTory excepTional operaTing expenses
Retention and loyalty bonuses on acquisition of W Deb Mvl plc – (2,824)
Costs to close down business – (1,923)
Other operating expenses – (2,881)
– (7,628)
ToTal excepTional and non-recurring iTems (2,332) (7,628)
segmental reporting
Our primary business segments are institutional investment banking, private client investment management and other activities.
investment banking
Within the investment banking business of Evolution securities the overall level of income has declined between 2007 and 2008.
As a result, and as disclosed below, adjusted operating profit has fallen from £13.0m in 2007 to a loss of £5.4m in 2008.
Investment Banking
Restated1 2008 2007
£’000 £’000
income (before fee and commission expenses) 29,774 54,650
Fee and commission expenses (37) (1,151)
ToTal income 29,737 53,499
Operating expenses (45,475) (51,355)
profit on disposal of available-for-sale financial assets – 68
operaTing (loss)/profiT (15,738) 2,212
profit on disposal of available-for-sale financial assets – (68)
Amortisation of intangibles 196 196
Non-recurring and 2007 exceptional operating expenses 578 814
income statement charge for share options granted to employees 9,605 9,855
adjusTed operaTing (loss)/profiT (5,359) 13,009
Net finance expense (495) (1,332)
(loss)/profiT before income Tax from conTinuing acTiviTies (5,854) 11,677
1 2007 results have been restated due to EsCl results being treated as a discontinued operation in 2008 following the Board's decision to partially dispose of the business (see Note 1
accounting policies for details of restatements).

evolution securities’ income analysis
Evolution securities’ total income (before fee and commission expenses)
has clearly been impacted in 2008 from a weaker primary performance
with total primary income (before fee and commission expenses) in 2008
lower at £9.2m (2007: £18.6m). Equity commissions of £12.7m (2007:
£16.4m) and trading revenues of £0.1m (2007: £15.8m) have also fallen
significantly following the decline in market conditions, however this was
partially offset by a 97% increase in fixed income revenues at £7.1m
(2007: £3.6m). secondary income therefore fell in total to £19.9m
(2007: £35.8m).
evolution securities’ cost analysis
in view of deteriorating revenue opportunities during the year, Evolution
securities underwent a thorough cost reduction exercise. Costs 1 have
therefore decreased in 2008 by over 11% or £5.9m. This was achieved
through two redundancy rounds, supplier re-negotiations and suspension
of phased development programmes. staff costs this year continue to
make up a similar proportion of the total cost base as in 2007. The other
costs have remained stable and relate principally to premises, direct
transactions, systems and market data.
1 Excludes the impact of the cost of options and non-recurring and 2007 exceptional items.
evolution securities china
Following the announcement of the proposed transaction entered into
with First Eastern, Evolution securities China (which was previously shown
as separate geographical segment) has been treated as discontinued
in both 2008 and 2007. As a result the Consolidated income statement
shows a loss for the year from discontinued operations of £2.5m
(2007: £0.4m profit).
At 31 December 2008, £4.8m of assets (including cash of £0.8m)
and £0.6m of liabilities to third party’s outside the Group have been
reclassified as assets and liabilities of disposal group held-for-sale.
EVO SECURITIES INCOME
4
1
1
2
EVO SECURITIES INCOME 4
PCIM
08 07
EVO SECURITIES INCOME 4 PCIM INCOME
EVOLUTION SECURITIES’ INCOmE ANALYSIS EVOLUTION SECURITIES’ COST ANALYSIS
EVO SECURITIES COST
URITIES INCOME 4
08 07
PCIM INCOME 08 08 07 07
EVO SECURITIES COST PCIM
3
3
2
EVO SECURITIES COST 3
PCIM COST
1
4
07 08 08 07
2
NOTES 07
08
GRAPH 1A NOTES GRAPH 2
3
3
4
2 2
5
2
3
1
3
4
2
2007 3 %
2
08
07 08 07
CURITIES COST 4
PCIM COST 2
1
5 3 4
4
1
1
1
3
4
5
1
2008 4
1. CORpORATE FiNANCE 1
3
2. sAlEs COMMissiONs
3. TRADiNG
2
%
31
43
–
3
2
3 4
1
2008 3
3
1. 1sTAFF
COsTs
2
2. OTHER COsTs 1 1
2
3. iNCOME sTATEMENT CHARGE FOR
%
42
36
2
4. FixED iNCOME
2
5. OTHER
08 24
2
2
2
07
4
sHARE OpTiONs GRANTED TO EMplOYEEs 08
2
AND NON-RECuRRiNG AND 2007
3
3
4
2 2
4
2
1
1
1
2007 3 4 %
1. CORpORATE FiNANCE
2. sAlEs COMMissiONs
1
341
30
3. TRADiNG 3
29
4. FixED iNCOME
5. OTHER
1
2
2
7
–
2
1
2
07 08 07
NOTES GRAPH 1A NOTES GRAPH 2 NOTES GRAPH 1B
2
3
3
2
4
3
1
NOTES GRAPH 1A
1
3
2
4
2
2
1
3
3
1
1
ExCEpTiONAl ExpENsEs 22
1. sTAFF COsTs 41
2. OTHER COsTs 1
3
3. iNCOME sTATEMENT CHARGE FOR 2
38
sHARE OpTiONs GRANTED TO EMplOYEEs
1
1
AND NON-RECuRRiNG AND 1 2007
2
ExCEpTiONAl ExpENsEs 21
1
NOTES GRAPH 2
3
2
4
1
NOTES GRAPH 1
13
1
3

EVO SECURITIES INCOME PCIM INCOME
4
1
1
INCOME 4
08 07
PCIM INCOME
08 07
3
2
3
4
2 2
4
3 4
3
PRIVATE CLIENT INVESTmENT mANAGEmENT INCOmE ANALYSIS PRIVATE CLIENT INVESTmENT mANAGEmENT COST ANALYSIS
1
1
2
1
4
07 4. OTHER iNCOME 08 2 07
NCOME 08 08 07 07
08 07
COST PCIM COST
1A
private client investment management
looking next at Williams de Broë (including the results of the WDB
Capital uK Equity Fund limited), the Group’s private client investment
management business, 2008 has seen an expansion of this business
both in terms of an increase in the number of the investment managers
and growth in the assets under management. At the same time the
decline in market conditions has had a detrimental impact on the core
revenues of the business. in addition the upfront costs of acquiring the
team of investment managers from singer & Friedlander and establishing
the new office in Edinburgh has resulted in a decrease of 43% in adjusted
operating profit from £6.3m in 2007 to £3.6m in 2008.
2008 2007
£’000 £’000
income (before fee and commission expenses) 35,727 32,606
Fee and commission expenses (1,220) (856)
ToTal income 34,507 31,750
Operating expenses (34,343) (27,804)
operaTing profiT 164 3,946
Amortisation of intangibles 355 158
Non-recurring and 2007 exceptional operating expenses
income statement charge for share options
1,747 1,572
granted to employees 1,362 653
adjusTed operaTing profiT 3,628 6,329
Net finance income
profiT before income Tax
1,139 325
from conTinuing operaTions 4,767 6,654
2
5 4
3 4
2007 3
%
2
2. MANAGEMENT FEEs 1 3 51
3
07 08 07
NOTES
07
GRAPH 1A NOTES GRAPH 2 NOTES GRAPH 1B
2
1
3
chief FINANCIAL 3 execuTive’s REVIEW reporT
CONTiNuED
4
evoluTion group
1
1
NOTES GRAPH 2
3
2
2
PCIM INCOME
EVO SECURITIES COST PCIM COST
2
2
2
COST
2
3 4
1
3
3
1
1
1
2008
3
3
%
PCIM COST
08 07
07
NOTES GRAPH 1B
1
1
1. sAlEs COMMissiONs
2. MANAGEMENT 1 FEEs 1
2
36
57
2 3. TRADiNG iNCOME 5
1. sAlEs COMMissiONs 47
3. TRADiNG iNCOME 2
2
4. OTHER iNCOME –
2
1
14 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
2
1
4
NOTES GRAPH 1B
2
4
private client investment management income analysis
Williams de Broë’s mix of income has showed a continued shift towards
more reliable management fee income and away from sales commissions.
income has benefited from the additional revenues of the business acquired
from singer & Friedlander since its acquisition on the 21 October 2008.
As the overall level of assets under management increases, recurring
management fees are becoming a more significant source of stable income
for the Group. sales commissions suffered in absolute terms as a result of
the current market conditions. Commissions have fallen from £15.3m in
2007 to £12.9m in 2008, a fall of 16%. However, management fees have
increased from £16.6m in 2007 to £20.3m in 2008, an increase of 22%
despite the market conditions.
private client investment management cost analysis
The overall cost/income 1 ratio for Williams de Broë has increased significantly
to 88% (2007: 78%). This has been in large part due to the significant costs
incurred in acquiring the private client business from singer & Friedlander
and establishing the new office in Edinburgh.
1 Excludes the impact of the cost of options and non-recurring and 2007 exceptional items.
2
2
2
2
1
3
3
1
1
1
1
2
3
1
2008 3
%
1. sTAFF COsTs 48
2. OTHER COsTs 1
43
3. iNCOME 2 sTATEMENT CHARGE FOR
sHARE OpTiONs GRANTED TO EMplOYEEs
AND NON-RECuRRiNG AND 2007
ExCEpTiONAl ExpENsEs 9
2007 %
1. sTAFF COsTs 50
2. OTHER COsTs 41
3. iNCOME sTATEMENT CHARGE FOR
sHARE OpTiONs GRANTED TO EMplOYEEs
AND NON-RECuRRiNG AND 2007
ExCEpTiONAl ExpENsEs 9

other activities
The Group’s other activities consist of the central support costs not
recovered from the operating businesses.
2008 2007
£’000 £’000
ToTal (income)/expense (340) 219
Operating expenses (1,383) (6,239)
profit on available-for-sale financial assets 20 231
share of post tax results of associates – 29
operaTing loss (1,703) (5,760)
profit on available-for-sale financial assets (20) (231)
share of post tax results of associates – (29)
Amortisation of intangibles – 42
Non-recurring and 2007 exceptional operating expenses 7 5,242
income statement charge for share options
granted to employees 762 745
adjusTed operaTing (loss)/profiT (954) 9
Net finance income 3,935 3,791
profiT before income Tax
from conTinuing operaTions 2,981 3,800
investment portfolio
The Group has continued to exit from its legacy investment portfolio.
The Group seeks to extract value from this portfolio, and recorded a
profit on sale of available-for-sale financial assets of £20,000 in 2008
(2007 profit: £231,000). The fair value of the Group’s remaining portfolio
of available-for-sale financial assets is £1,056,000 (2007: £680,000).
shares purchased by the employee Trust
The Trust purchased 1,500,000 shares during the year (2007:
6,998,506) for total consideration of £1.6m (2007: £9.7m) through
the Group’s share incentive trust to meet awards made to staff. The
Company has and will continue this process in 2009.
balance sheet strength and cashflow
The Group remains focused on maintaining a strong Balance sheet.
At the year end the Group had net assets of £147.2m (2007: £155.3m)
including cash of £125.3m (£10.4m of this cash balance relates to
third party investors within the WDB Capital uK Equity Fund limited)
compared with £122.7m in 2007. During 2008 there were decreased
working capital requirements compared with the previous year, with net
trade receivables and net trading portfolio assets in Evolution securities
limited being lower on average than 2007. Working capital has been
monitored carefully during the year and was actively managed at the end
of the year in line with Group policy and in response to the more volatile
markets. largely, as a result of the management of working capital,
there is an overall net inflow of cash from operating activities of £15.6m
(2007: £47.2m). When taken together with the £5.9m (2007: £13.1m)
outflow from own share purchases and dividends paid, as well as the
£4.4m paid on the acquisition of singer & Friedlander, there is a
resultant overall increase in cash for 2008 of £1.8m (2007: £34.3m).
dividend
The Board is proposing a final dividend per share for 2008 of 1.27p per
share (2007: 1.25p). This dividend is payable on the 22 May 2009 to
shareholders on the register at 24 April 2009. This follows the interim
dividend paid on the 24 October 2008 of 0.75p per share (2007:
0.67p).
alex snow
8 April 2009
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
15

The Evolution Group plc is the ultimate holding company of companies
including: Evolution securities limited, Williams de Broë limited,
Evolution securities China limited, Evolution securities (us) inc and
WDB Capital limited.
The Groups’ Executive Directors, supported by strong and experienced
management teams, have continued to develop the Group’s operating
structure, processes and strategy. The Board is in the final stages of its
search to appoint a Finance Director having conducted an extensive
search.
Alex Snow (39), Group Chief Executive Officer, joined the Group in May
2000. Alex is responsible for the strategic management and development
of the Group, is Chief Executive and Chairman of Williams de Broë
limited and works closely with Andrew umbers in helping guide the
strategic development of Evolution securities limited. Alex is also
Chairman of WDB Capital limited and as part of the reorganisation of
the business of Evolution securities China limited (where First Eastern
Financial Holdings limited has taken a majority stake) will remain on
that Board as a Non-executive director. Alex’s previous career included
spells with CsFB and BZW in the equity sales, trading and capital
markets areas. He is a graduate of st Andrew’s university.
1 Alex snow
2 Andrew umbers
3 Martin Gray
4 lord Maclaurin
5 Nicholas irens
6 Mark Nicholls
7 peter Gibbs
The board
THE EVOLUTION GROUP PLC
16 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
1
Andrew Umbers (44), Executive Director and Chief Executive Officer
of Evolution securities limited, joined the Group on 12 April 2006 and
was appointed an Executive Director of the Group on 7 June 2006.
prior to joining the Group, Andrew had spent 20 years working in uK
equity markets, principally with Credit suisse following its acquisition of
BZW, which he joined in 1990. He was appointed a Managing Director
of Credit suisse Equities in 2000, and in 2005, he joined Credit suisse's
global hedge fund, Modal Capital.
The Group’s Non-executive Board members, all of whom are considered
independent under the Combined Code, combined with the Executive
Directors provide a cohesive balance of experience in strategic and
operational management in the financial services sector.
martin Gray (62) is the Non-executive Chairman and Chairman of the
Nominations Committee. He joined the Group on 26 May 2005. Martin
spent over 36 years with the Nat West Bank Group. From 1993 to 1999
he was a Group Board member of Nat West Group plc. From 1992 to 1998
he was Chief Executive of Nat West uK and Executive Director of the
Retail and Commercial Businesses until October 1999. in his operational
role in charge of the Group’s uK businesses he was responsible for
assets of over £100bn, annual revenues of nearly £5bn, annual profits
of approximately £1bn and over 55,000 staff. Martin was also a member
of the Global Board of MasterCard inc from 1993 to 1996 and was a
Director of visa Europe from 1996 to 1999. He is currently a Non-executive
Director of National savings and investments and Chairman of its
Audit Committee.
2
3

Lord macLaurin of Knebworth, dL (72), is the senior independent
Non-executive Director and was Chairman of the Remuneration
Committee until the Annual General Meeting on 29 May 2008.
He joined the Group on 13 July 2004. lord Maclaurin is currently a
member of the supervisory Board of Heineken N.v and Chairman of the
vodafone Group Foundation. He was Chairman of vodafone Group plc
and of its Nomination and Governance Committees until his retirement
from the Board in July 2006. He was formerly Chairman of Tesco plc
from 1985 to 1997, and has been a Director of Enterprise Oil plc,
Guinness plc, National Westminster Bank plc and Whitbread plc.
Nicholas Irens (62) is Chairman of the Audit Committee. He joined the
Group on 1 January 2004. He is a Chartered Accountant with recent and
relevant financial experience. He qualified as a Chartered Accountant in
1970 and went on to become the Finance Director of First leisure Corporation
plc from 1988 to 1992. Most recently he founded vardon plc, renamed
Cannons Group plc, in 1992. He was Chairman of that Group between
1998 and 2001 when he stepped down following its sale. Nick was also
a Non-executive Director of leisure and Media vCT plc until his retirement
from its Board on 30 May 2008. Nick is a Non-executive Director of
sporting index limited.
4
5
mark Nicholls (59) joined the Group on 29 september 2006. He is
currently Chairman of Ecosecurities Group plc, Deputy Chairman of
venture production plc and a Non-executive Director of Nationwide
Building society and Northern investors Company plc. After qualifying as
a solicitor with linklaters, Mark joined sG Warburg, the investment bank.
During a Warburgs career spanning two decades he rose to head Warburgs'
corporate finance division and became a main Board Director of sG Warburg
Group plc. He left Warburgs in 1996 in the wake of its sale to swiss Bank
Corporation, which in turn was subsequently acquired by uBs. He then
spent seven years as a Director of the private equity division of Royal
Bank of scotland, and was Managing Director from 2000 to 2003.
Peter Gibbs (51) joined the Group on 1 October 2007 and was appointed
Chairman of the Remuneration Committee on 29 May 2008. peter has
a wealth of financial services experience in the asset management sector.
Having begun his career at Brown shipley, he joined Bankers Trust in
1985 as a senior portfolio Manager. in 1989 he joined Mercury Asset
Management (MAM) where he rose to become Head of the international
Equities Division. Following the acquisition of MAM by Merrill lynch,
he was appointed co-Head of Equity Assets Worldwide. in 2003 he
became Chief investment Officer and Head of Region for Merrill lynch’s
investment Management activities outside the us. He retired from
Merrill lynch in November 2005. peter is a Non-executive Director of
impax Group plc having been appointed to its Board on 11 January 2008
and is a Director of Merrill lynch (uK) pension plan Trustees limited.
peter was also appointed as Non-executive Chairman of Turquoise,
the pan-European share trading platform on 1 April 2008 and on 12
January 2009 he was appointed as a Non-executive director of uK
Financial investments limited, the company set up to manage the
Government’s investments in financial institutions.
6
7
17

introduction
The Directors present their report together with the audited Financial
statements for The Evolution Group plc ("the Company") and its
subsidiaries ("Group") for the year ended 31 December 2008.
parent company
Attached as section 2 to these Financial statements, the parent
Company Financial statements on a standalone basis are provided.
These Annual Financial statements have been prepared in accordance
with iFRs as adopted by the Eu. These accounts will form the basis of
any future distribution.
principal activities and business review
The Company is a FTsE 250 uK listed holding company for uK based
financial services companies. it is incorporated in England and Wales.
The address of its registered office is 100 Wood street, london,
EC2v 7AN.
The Group undertakes institutional investment banking through its
subsidiary undertakings Evolution securities limited (“Esl”), and
Evolution securities (us) inc. (“Esus”), which undertakes secondary
sales for us institutional clients.
The Group also provides private client investment management through
its subsidiary undertaking Williams de Broë limited (“WdB”). in April
2008 WdB opened a further office in Edinburgh. On 21 October 2008
WdB reached agreement with the administrators of Kaupthing singer &
Friedlander limited (in administration) (“KsF”) and certain subsidiaries of
KsF, to acquire the investment management team of singer &
Friedlander investment Management limited (“singer & Friedlander”).
The singer & Friedlander team was successfully integrated into the
existing WdB london Office in January 2009. The total value of client
assets transferred was greater than £1bn.
WDB Capital limited (“WDB Capital”) is the investment manager of
the WDB Capital uK Equity Fund limited which was launched in
september 2007 as a uK Equity Hedge Fund with an absolute return
strategy. At 31 December 2008 the Company held 50.2% of the fund.
Evolution securities limited, Williams de Broë limited and WDB Capital
limited are authorised and regulated by the Financial services Authority
(“FsA”). Evolution securities limited has offices in leeds and london
where it is based in the Group’s office at 100 Wood street. Williams de
Broë limited has branch offices in Bath, Birmingham, Bournemouth,
Edinburgh, Exeter, Guildford and london.
The Group’s us broker-dealer, Esus, is registered with the Financial
industry Regulatory Authority (“FiNRA”) and regulated by the securities
and Exchange Commission. This entity is based in the london offices
of the Group with a branch office in New York.
On 9 March 2009, the Company announced that an agreement, conditional
on certain regulatory approvals, had been reached with First Eastern for
an investment by First Eastern and the Company in the specialist Chinese
investment banking business, Evolution securities China limited (“EsCl”).
On 1 April 2009, the Company announced the completion of the investment
which included subscription for shares whereby First Eastern now holds
51% of the ordinary share capital of EsCl with the Company holding
approximately 48.5%. The new shares represent 90% of the enlarged
issued share capital.
direcTors' reporT
for The year ended 31 december
18 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
in addition to the initial share subscription, each of First Eastern and the
Company have entered into a financial commitment to EsCl pursuant to
which they may each be called upon to provide an aggregate of up to
£500,000 by way of additional funding in each of the three years
following completion of the transaction. Regulatory approvals were
received in March 2009.
The agreement combines the strengths of the Company’s well financed
and independent position in london along with First Eastern’s considerable
experience and proprietary deal flow in the Chinese market. Evolution
securities China is based in london, Hong Kong and shanghai. pursuant
to the investment agreement dated 6 March 2009 between the Company
and First Eastern, the Company granted to First Eastern a right to acquire
from the Company such number of the Company's residual holding of
ordinary shares in EsCl which would increase First Eastern's holding in
EsCl to 75% of the issued ordinary share capital. This right arises in the
event (i) any person or group of persons acting in concert (as defined in
the City Code on Takeovers and Mergers) acquires the right to cast more
than 30% of the votes which may be exercised at an Annual General
Meeting of the Company, or (ii) both Alex snow and Clive Whiley (but for
the avoidance of doubt, not only one of them) cease to be Directors or
employees of EsCl or the Company, or (iii) an order is made by a court
of competent jurisdiction, or a resolution is passed, for the liquidation or
administration of the Company or a notice of appointment of an administrator
of the Company is filed with a court of competent jurisdiction, or (iv) any
step is taken to appoint a manager, receiver, administrative receiver,
administrator, trustee or other similar officer in respect of the Company
or any of its assets. The price at which the ordinary shares in EsCl
would be acquired by First Eastern depends on the date on which this
right arises and is exercised, but is calculated by reference to either the
net tangible asset value of EsCl and its subsidiaries or a multiple of the
consolidated profit after tax of EsCl and its subsidiaries at the time.
A detailed review of the principal activities of the Group and its principal
subsidiaries, the review and main trends and factors likely to affect the
future development, performance and position of its business including
the current market conditions and regulatory environment in which the
business operates, key performance indicators and strategy and its future
prospects are set out in the Chairman’s statement, Chief Executive’s
Report and Financial Review on pages 2 to 15 and in the notes to these
Financial statements on pages 44 to 76. A description of the principal
risks and uncertainties facing the Group are detailed below and additional
information on financial risk management framework can be found in
note 2 to the Financial statements and below. in addition the environmental
matters and social and community issues are discussed in the Corporate
Governance Report on pages 24 to 30. information about the Company’s
employees can be found within this Directors’ Report, Chairman’s statement,
Chief Executive’s Report and in the Corporate Governance Report.
The Group has an outsourcing arrangement in place for operational and
settlement activities with pershing securities limited. This agreement
has a six month rolling notice period.
All information relating to the principal activities business review and principal
risks can be found below and elsewhere in the Financial statements and
shall be treated as forming part of this Directors’ Report by reference.

principal risks and uncertainties
The Audit Committee reviewed the key risks facing the Group and the
controls that have been put in place to mitigate them. Changes to the
risk environment were highlighted, as were improvements to the control
structure: most notably in the restructuring of the Compliance Function,
the introduction of an Annual Compliance plan, approved by the Board
and the introduction of enhanced governance structures below Board
level at WdB.
Reputational risk
Reputational risk is the risk of damage to the Group’s image as a result
of the inability to retain and generate business due to adverse public
opinion. The Board has established policies and procedures that provide
direction on managing reputational risk focusing on reducing loss of
confidence amongst existing and potential customers, investors,
suppliers, and supervisors.
Retention of staff
The retention of highly skilled staff, as well as the ability to attract new
staff with the right capabilities and experience is central to the efficiency
and sustainability of the Groups’ operations. The Group mitigates the
risk of loss of key staff through its employment policies, remuneration
and benefits packages which are designed to be competitive with other
companies, as well as providing staff with motivating and fulfilling career
opportunities. The Group supports the principles set out in the FsA’s
code of best practice on remuneration policies issued in February 2009.
Major infrastructure incident
There is a risk that any incident the Group is involved in, directly or
indirectly could cause possible damage to the Group’s or key vendors
infrastructure which in turn would also affect the Group’s reputation or
cause financial loss. The Group has in place controls to maintain the
integrity and efficiency of its systems, while ensuring the sustainability
of operations despite a significant disruption. The Group continuously
reviews its business continuity planning, and has disaster recovery
facilities in order to mitigate any substantial disruption to its operations
caused by events such as acts of terrorism and natural disasters.
Financial crime
This is the risk that the Group suffers a loss from fraud. This could be
through the deliberate over-riding of internal controls or through an
external party successfully overcoming the Group’s controls (eg through
identity theft). The FsA in its annual financial risk outlook highlighted
that firms may be at greater risk of financial crime due to the current
economic stresses at the individual and corporate level. The Group
believes that it has sufficient controls in place to mitigate the risk of
financial crime. Nevertheless, the compliance department is undertaking
a review of the current controls in place throughout the Group to ensure
controls are robust and to determine where improvements can be made.
Regulatory risk
The Group’s principal business subsidiaries are all regulated entities.
Recent statements by the FsA, the results of the Turner report and the
likely outcome of the forthcoming Walker report all point to a financial
services regulatory environment that is becoming increasingly challenging.
The Group’s philosophy is to ensure compliance at all times. There is,
however, always a risk of regulatory action given the markets in which
the Group operates including its private client business which is expanding
its client base and where the FsA is demonstrating an increasing focus
on the fair treatment of customers and the governance arrangements
surrounding this. Furthermore, there are regulatory risks relating to the
FsA increasing focus on regulatory reporting within our securities business.
The Audit Committee considered whether there had been any material
failings or weaknesses in the internal controls of the Group and in doing
so considered the results of the FsA ARROW visit in september 2008.
The visit focused upon certain matters already under review by the Group
and with our internal auditors including the governance and committee
structures below Board level. in line with the FsA’s continuing treating
customers fairly (TCF) initiative, the ARROW visit also focused on treating
customers fairly and portfolio suitability within WdB.
Detailed discussions with the FsA on the results of the ARROW visit are
continuing. However, the Group has increased the resources employed
in and accelerated its review and remediation work on customer files
with third party help. in line with the continuing project to enhance
systems and reporting in WdB it has also committed to considerable
investment in a bespoke management information system.
Market risk
The Group, through Esl, holds positions in equities which are subject to
price fluctuation. There is therefore a risk that Esl will suffer a loss in
the event of a significant market correction. positions are subject to
limits that are independently monitored by the risk department. Further
details on financial risk management can be found in note 2 – financial
instruments and risk management to the accounts.
results and dividends
During the year the Group made a loss after tax from continuing
operations of £13,496,000 (2007: profit £3,202,000).
The profit for the year ended 31 December 2008 of the Company amounted
to £2,167,000 (2007: profit £762,000). The Directors recommend the
payment of a final dividend for the year of 1.27p per ordinary share (2007:
1.25p). if approved, the final dividend will make the total dividends for
the year 2.02p (2007: 1.92p) following the payment of the interim dividend
of 0.75p per ordinary share on 24 October 2008. The dividend is payable
on 22 May 2009 to shareholders on the register on 24 April 2009.
post balance sheet events
Details of significant post Balance sheet events are set out in note 36
to the accounts and in the principal activities and business review
section of this Directors’ Report.
Directors
The Directors of the Company, who held office since 1 January 2008
(there were no appointments or resignations of Directors during the
year up to the date of this report), unless otherwise stated, are as
shown below:
Martin Gray (Non-executive Chairman)
Alex snow (Chief Executive Officer)
Andrew umbers (Executive Director)
lord Maclaurin of Knebworth, Dl (senior Non-executive)
Nicholas irens (Non-executive)
Mark Nicholls (Non-executive)
peter Gibbs (Non-executive)
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
19

Details of those Directors retiring by rotation at the Annual General
Meeting and details of Directors’ service agreements can be found in
the Corporate Governance Report on pages 24 to 30. Biographical
information on each Director can be found on pages 16 to 17. The
interests of Directors in shares and options are disclosed in the
Directors’ Remuneration Report on pages 31 to 38.
There are no transactions or arrangements in which the Directors
have a direct or indirect material interest other than in respect of the
transaction detailed above relating to the investment agreement entered
into between the Group and First Eastern for the disposal of EsCl.
Following the acquisition of a majority ownership by First Eastern, Alex
snow will continue on the Board of EsCl in a non-executive capacity.
charitable donations
During the year, the Group made charitable donations of £10,121
(2007: £23,115). The Group’s general policy with respect to charitable
donations is to donate to causes that are suggested by the Group’s
employees, particularly where such staff are taking part in fundraising
events. The Group does not set a pre-determined level of charitable
donations, retaining the flexibility to respond accordingly to staff
participation in charitable events. The amount donated included the
following payments: £5,000 to Camfed international; £1,000 to
National Autistic society; £605 to Birmingham st Mary’s Hospice;
£1,000 to Rainbows Children’s Hospice; £1,000 to The British Heart
Foundation; £1,000 to The smile Train; and £466 to Cancer Research
uK. The remaining balance was made up of de minimis amounts
donated to various other charities.
political donations
it is Group's policy not to make political donations.
creditors’ payment policy
it is the Group’s policy to agree appropriate terms and conditions for its
transactions with suppliers by means ranging from standard terms and
conditions to individually negotiated contracts. suppliers are paid
according to agreed terms and conditions, provided that the supplier
meets those terms and conditions. The accounts payable function for
the Group and Company is carried out by a Group company, Evolution
Group services limited. Average trade creditor days for the Group as at
the year end was 27 days (2007: 38 days).
employees
The average and actual number of employees, including Directors,
employed by the Group and their remuneration is disclosed in note 12
to the Financial statements, with key management compensation
disclosed in note 37 to the Financial statements.
employment policies
The Group encourages employees to participate in its success through
performance based bonus arrangements and through its use of share
based incentive arrangements amongst its key performers within each
of the business units. To further this overall equity participation, the
Company continued with its Employees’ share Ownership plan (“EsOp”)
which allows every employee to purchase up to £1,500 worth of the
Company’s shares per annum on a tax efficient basis. These are
purchased on a monthly basis and held in trust and are matched by
shares issued by the Company. The Group operates a salary sacrifice
pension scheme where the Company contributes the National insurance
costs it would otherwise have saved. The Group supports the principles
set out in the FsA’s code of best practice on remuneration policies
issued in February 2009.
direcTors' reporT CONTiNuED
for The year ended 31 december
20 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
We have maintained our commitment to employee involvement
throughout the business. Employees are provided with information on
matters of concern to them through the Group’s intranet site, through
regular e-mail updates provided by Group Human Resources and locally
through business units and individual office communications. The
Group’s published results are communicated to all employees and
through face to face meetings with senior management.
Full and fair consideration is given to applications for employment that
are made to the Group by disabled persons, it endeavours to continue
the employment of and arrange appropriate training for, any of our
employees who have become disabled during their period of employment
with us or otherwise will provide the training and career development
and promotion of disabled persons we employ as needs require.
it is Group policy that no employee or applicant for employment receives
less favourable treatment (including training and development,
recruitment and promotion) by the Group or any other employee, on the
grounds of sex, marital status, race, colour, nationality, ethnic origin,
sexual orientation, political opinion, religion, age or disability. it is policy
that persons in or applying for employment are not disadvantaged by
conditions, management attitudes, behaviour or requirements that
cannot be justified. There are established whistle blowing procedures for
individuals to report suspected breaches of law or regulations or other
improprieties.
The Group’s parental and family policies for employees address the
importance of family values and the Group endeavours to respond
positively to all requests for flexible working practices to uphold
these values.
Details of the Group’s approach to Health and safety in the workplace
can be found in the Corporate Governance Report on pages 24 to 30.
risk management policies – financial risk management
The risk management framework that exists within the Group is detailed
in the Corporate Governance Report on pages 24 to 30 and in note 2 to
the Financial statements.
substantial shareholdings
As at 25 March 2009 (being a date not more than one month prior to
the date of the notice of the Annual General Meeting) other than the
interests of the Directors, the notified share and voting rights in excess
of three percent of the issued ordinary share capital of the Company
including under the Disclosure and Transparency Rules were as follows:
Number of shares
or voting rights Holding
Shareholder name over shares held %
Banco Espirito santo de investimento, sA 22,459,079 10.01%
BlackRock, inc. 21,742,834 9.68%
Aberforth partners llp 17,109,242 7.62%
schroders 11,190,358 4.98%
Artemis investment Management limited 10,026,533 4.46%
lansdowne partners limited 9,055,306 4.03%

share capital
Details of the changes in authorised and issued share capital during the
year of the Company are set out in note 32 to the Financial statements.
in 2008 the Group made market purchases of its own shares only for
the purpose of acquiring shares for The Evolution Group plc Employees’
share Trust (the “Trust”) to fund outstanding awards under its share
based incentive plans. The Group did not purchase any of its own shares
for cancellation in 2008 and up to the date of this report reflecting the
focus of the Board on preserving Balance sheet strength at a time of
considerable market uncertainty. The details for these transactions are
provided below.
authority for company to purchase its own shares
subject to authorisation by shareholder resolution, the Company may
purchase its own shares, in accordance with the relevant legislation.
The minimum price which must be paid for such share is £0.50 and
the maximum price payable is 105% of the average middle market
quotations for the five business days preceding the purchase. At the
Annual General Meeting held on 29 May 2008, members approved
the Company's authority under section 166 of the Companies Act 1985
to make market purchases on the london stock Exchange of up to
22,300,000 ordinary shares of 1p each (“shares”) of the Company
(2007: 33,000,000), representing less than 10%, (2007: less than
15%) of the issued share capital of the Company at 2 April 2009.
The Group did not purchase any of its own shares for cancellation in
2008 and up to the date of this report.
The authority given by members at the last Annual General Meeting for
the Company to purchase its own shares expires on 31 August 2009
or, if earlier, at the next Annual General Meeting at which a similar
resolution will be proposed. The Directors believe that it is in the
best interests of the Company for the authority to be renewed at the
forthcoming Annual General Meeting for a period which shall expire at
the end of 15 months from the date of the meeting or, if earlier, at the
next Annual General Meeting. Accordingly, it is intended to propose, as
special Business, at the forthcoming Annual General Meeting, a special
Resolution to renew the Directors' existing authority to purchase shares
of the Company, which shall be limited to 9.97% (2007: 9.96%) of the
issued share capital of 224,709,109 at 2 April 2009 or 22,400,000
(2007: 22,300,000) shares.
purchase of shares by The evolution group plc employees’ share
Trust (the “Trust”)
The Trust purchased, in the financial year ended 31 December 2008,
an aggregate of 1,500,000 (2007: 6,998,506) shares having a nominal
value of £15,000 (2007: £69,985). The shares were purchased to satisfy
outstanding awards under the Group’s share based incentive schemes.
The total amount purchased (representing 0.67% of the Company's
issued share capital as at 31 December 2008 (2007: 3.13%)), was for
an aggregate consideration of £1,607,000 (2007: £9,696,728), at an
average cost of 110.24p per share (2007: 138.55p). The shares were
purchased to satisfy outstanding awards under the Group’s share based
incentive schemes.
Further, the Company has in the financial year ending 31 December
2009, up to the date of this report, purchased an aggregate of 830,000
shares having a nominal value of £8,300 for an aggregate consideration
of £747,166 at an average cost of 90.02p. These shares were also
purchased to satisfy outstanding awards under the Group’s share based
incentive schemes.
The Company considers that these purchases were beneficial to
members as they have contributed to an increase in earnings per share.
annual general meeting
All resolutions to be proposed at the Annual General Meeting held
on 19 May 2009 appear in the separate notice of meeting sent to
all shareholders with a Form of proxy. such resolutions will include
business to renew the authority of the Directors to allot shares and to
dis-apply pre-emption rights. The Company supports the principals
detailed in the guidance note issued by the institute of Chartered
secretaries and Administrators regarding proxies and Corporate
representatives at General Meetings.
employee share Trusts
The Evolution Group plc Employees’ share Trust (the “Trust”) administers
The Evolution Group plc share schemes and the share incentive Trust and
is managed by Capita Trustees limited (2007: sanne Trust uK limited).
At 31 December 2008, the Trust held 9,547,183 (2007: 14,000,058)
shares with a cost of £12,995,000 (2007: £19,086,000) and a market
value of £8,211,000 (2007: £17,220,000). All of these shares were acquired
in the open market. The shares held represent 4.25% (2007: 6.27%)
of the issued share capital of the Company as at 31 December 2008.
The Trust used funds provided by the Company to meet the Group’s
obligations under the share option and incentive schemes in place.
share options are granted to employees at the discretion of the Company
and shares are awarded to employees by the Trust in accordance with
the recommendations of the Company.
The total number of shares, both allocated and unallocated, are
disclosed in note 32. All shares in the Trust are held to satisfy the
Company’s obligations in respect of share options and call rights
granted.
committees
The Group currently operates a Nomination Committee, a Remuneration
Committee and an Audit Committee. Details of members, terms of
reference and frequency of meetings are referred to in the Corporate
Governance Report on pages 24 to 30.
additional information for shareholders
The following description, based on the Company’s current Articles of
Association, provides information that is now required to be disclosed
following the implementation of the Eu Takeover Directive into uK law
and now in part vii of schedule 7 to the Companies Act 1985. The
information provided is a summary only and the relevant provisions of
Companies legislation or the current Articles of Association should be
consulted if further information is required. The Company has a single
class of share capital which is divided into ordinary shares of 1p each.
Details of the authority of the Company to purchase its own shares can
be found in this Directors’ Report.
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
21

ights and obligations attaching to shares
general – subject to relevant statutory provisions and shareholders’
rights, shares may be issued with such rights or restrictions, whether in
regard to dividend, return on capital, voting or otherwise as the
Company may decide by ordinary resolution of its shareholders.
voting – subject to relevant statutory provisions and the provisions of
the Articles of Association and to any special rights or restrictions as to
voting attached to any class of shares in the Company (of which there
are none) on a show of hands, every member present in person shall
have one vote and on a poll every member who is present in person or
by proxy shall have one vote for every share of which he or she is the
holder. proxies may vote on a show of hands.
No member shall be entitled to vote at any general meeting in respect of
any shares held by him or her if any call or other sum then payable by
him or her in respect of that share remains unpaid. Currently all issued
shares are fully paid.
deadlines for voting rights – Full details of the deadlines for exercising
voting rights in respect of the resolutions to be considered at the Annual
General Meeting to be held on 19 May 2009 are set out in the Notice of
Meeting and accompanying Form of proxy.
dividends and distributions – subject to the provisions of the relevant
legislation, the Company may, by ordinary resolution, declare a dividend
to be paid to the members, but no dividend shall exceed the amount
recommended by the Board. The Board may pay interim dividends and
any fixed rate dividend, as appear to them to be justified by the profits of
the Company. All dividends shall be apportioned and paid pro rata
according to the amounts paid up on the shares.
liquidation – under the Articles of Association, if the Company is in
liquidation, the liquidator may, with the authority of an extraordinary
resolution of the Company and any other authority required by the
relevant legislation divide among the members in specie the whole or
any part of the assets of the Company, or vest any part of the assets in
trustees upon such trusts for the benefit of members as the liquidator,
with this authority, sees fit.
Transfer of shares – subject to the Articles of Association any member
may transfer all or any of his or her certificated shares by an instrument
of transfer in any usual form or in any other form which the Board may
approve. The Board may, in its absolute discretion and without giving
any reason, decline to register any instrument of transfer of a
certificated share which is not a fully paid share or on which the
Company has a lien. The Board may also decline to register a transfer of
a certificated share unless the instrument of transfer is left at the office,
or such other place as the Board may decide, for registration; and
accompanied by the certificate for the shares to be transferred and such
other evidence (if any) as the Board may reasonably require to prove the
title of the intending transferor or his or her right to transfer the shares.
Any class of shares in the Company may be held in uncertificated form
and, subject to the Articles of Association, title to uncertificated shares
may be transferred by means of a relevant system. Registration of a
transfer of an uncertificated share may be refused where permitted by
the relevant legislation.
direcTors' reporT CONTiNuED
for The year ended 31 december
22 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
appointment and replacement of directors – Directors shall be no less
than 2 and no more than 15 in number. Directors may be appointed by
the Company by ordinary resolution or by the Board. A Director appointed
by the Board holds office until the next Annual General Meeting and is
then eligible for election by the shareholders. The Board may from time
to time appoint one or more Directors to hold employment or executive
office for such period subject to the relevant legislation and on such terms
as they may determine and may revoke or terminate any such appointment.
At every Annual General Meeting of the Company, any Director in office
who has been appointed by the Board since the previous Annual General
Meeting shall retire from office and shall be eligible for re-election by the
shareholders. in addition not less than one-third of the remaining Directors
shall retire from office and be eligible for re-election. The Directors that
must retire shall be those that have been longest in office since their last
retirement at the date of the Notice of Annual General Meeting. The Company
may by extraordinary resolution (or by ordinary resolution of which
special notice has been given) remove, and the Board may by unanimous
decision, remove any Director before the expiration of his term of office.
The office of Director shall be vacated if (not being an Executive Director
whose contract precludes resignation) he resigns his office by notice in
writing left at the registered office of the Company; he becomes bankrupt
or has a receiving order made against him or compounds with his
creditors; he becomes of unsound mind or a patient for any purpose of
any statute relating to mental health and the Directors resolve that his
office should be vacated; if he is absent from meetings of the Directors
for 6 months without leave, and his alternate Director (if any) does not
during that period attend in his stead, and the Directors resolve that his
office should be vacated; if he is removed or becomes prohibited from
being a Director under any provision of the relevant legislation or if he is
requested in writing by all the other Directors to resign his office.
powers of the directors – The business of the Company will be managed
by the Board who may exercise the powers of the Company, subject to the
provisions of the Company’s Memorandum of Association, the Articles
of Association, relevant legislation and any extraordinary resolution of
the Company.
shares held by The evolution group plc employees’ share Trust
(the “Trust”) – in accordance with the rules of the Trust Deed relating
to the Trust, the trustees shall be obliged to waive all voting rights in
connection with shares held in the Trust save where they are held by
the trustees as bare trustees on behalf of beneficiaries.
statement of directors’ responsibilities
The following statement, which should be read in conjunction with
the independent Auditors Report set out on page 39, is made with
a view to distinguishing for shareholders the respective responsibilities
of the Directors and of the independent auditors in relation to the
Financial statements.
The Directors are responsible for preparing the Annual Report, the
Directors’ Remuneration Report and the Financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare Financial statements
for each financial year. under that law the Directors have prepared the
Group and parent Company Financial statements in accordance with
international Financial Reporting standards (iFRss) as adopted by the
European union. The Financial statements are required by law to give a
true and fair view of the state of affairs of the Company and the Group
and of the profit or loss of the Company and Group for that period.

The Directors consider that in preparing the Financial statements on
pages 44 to 76 that they have:
• selected suitable accounting policies and then apply them
consistently;
• made judgements and estimates that are reasonable and prudent;
• stated that the Financial statements comply with iFRss as adopted
by the European union; and
• prepared the Financial statements on the going concern basis, unless
it is inappropriate to presume that the Group will continue in business,
in which case there should be supporting assumptions or
qualifications as necessary.
The Directors are responsible for keeping proper accounting records that
disclose with reasonable accuracy at any time the financial position of
the Company and the Group and to enable them to ensure that the
Financial statements and the Directors’ Remuneration Report comply with
the Companies Act 1985 and, as regards the Group Financial statements,
Article 4 of the iAs Regulation. They are also responsible for safeguarding
the assets of the Company and the Group and hence for taking reasonable
steps for the prevention and detection of fraud and other irregularities.
Each of the Directors, whose names and functions are listed in the
Biography section of this report, are set out on pages 16 to 17 confirm
that to the best of their knowledge:
• the Group Financial statements, which have been prepared in
accordance with iFRss as adopted by the Eu, give a true and fair view
of the assets, liabilities, financial position and loss of the Group; and
• the Directors’ Report, on pages 18 to 23 includes a fair review of
the development and performance of the business and the position
of the Group, together with a description of the principal risks and
uncertainties that it faces.
The Directors are responsible for the maintenance and integrity of the
Group web site, www.evgplc.com. legislation in the uK governing the
preparation and dissemination of Financial statements may differ from
legislation in other jurisdictions.
directors’ disclosures to the auditors
united Kingdom company law (section 234ZA of the Companies Act
2005) requires each Director to make an individual statement regarding
the disclosure of information to the auditors. The statement must
confirm that as at the date of this report and as far as the Director is
aware there is no relevant audit information of which the Company’s
auditors are unaware; and that the Director has taken all the steps he
ought to have taken in order to make himself aware of any relevant audit
information and to establish that the Company’s auditors are aware of
that information. A Director is deemed to have taken all the steps
necessary that he ought to have taken if he has made such enquiries of
his fellow Directors and of the Company’s auditors for that purpose, and
taken such other steps, if any, for that purpose as are required by his duty
as a Director of the Company to exercise due care, skill and diligence.
All of the Directors of the Company as at the date of this report have
provided such a statement to the Company.
The Company’s auditors have been advised that confirmation has been given
and should be interpreted in accordance with the provisions of section
234ZA of the Companies Act 1985.
auditors
The Group has appointed pricewaterhouseCoopers llp (“pwC”) as
auditors of the parent Company and all subsidiaries since 2001.
During the year the Audit Committee reviewed the cost effectiveness,
objectivity and independence of the auditors in the light of assurances
received relating to their internal quality and control procedures, the
promptness and accuracy of their work and other services obtained from
their firm. The Audit Committee as a matter of principal will not award
non-audit work to the auditors unless it is satisfied, following enquiry,
that the provision of such services would not prejudice the independence
and objectivity of the audit. The auditors disclosed the level of fees
received in respect of the various services provided by their firm in
addition to audit during 2008. They confirmed to the Audit Committee
that they did not believe that the level of non-audit fees had affected their
independence. The Audit Committee is responsible for implementing a
policy for the engagement of the external auditors to supply non-audit
services. The most appropriate advisers are used for non-audit work
taking account of the need to maintain independence. The Group does
not maintain a policy of regular fixed-term rotation of auditors.
in addition to their statutory audit responsibilities, the Group will typically
use the auditors for other work that they are well placed to undertake in
that role. This includes areas such as: regulatory reviews and other ancillary
audit work; work in respect of acquisitions and disposals; and tax compliance.
several firms are considered for other work, including the auditors in
some instances. in such cases due consideration is given to the impact
of the assignment on the independence of the auditors and to their
qualifications to carry out the role.
The Board were satisfied that pwC had sufficient controls in place to
guard against any possible conflicts of interest and to ensure the
objectivity and independence of the audit. pwC were chosen in the
interests of cost effectiveness, efficiency and timeliness.
Having given consideration to the extra work undertaken by the auditors,
and after careful discussion with the responsible partner in pwC and the
Executive Directors, the Audit Committee is satisfied as to the
independence of the statutory auditors.
Because of this review, the Audit Committee recommended to the Board
that the auditors be re-elected and a resolution to re-appoint them as
the Company’s auditors will be proposed at the forthcoming Annual
General Meeting.
pwC have indicated their willingness to continue in office, and pursuant
to section 384 (1) of the Companies Act 1985, an ordinary resolution
re-appointing them as auditors and authorising the Directors to determine
their remuneration will be proposed at the 2009 Annual General Meeting.
ON BEHAlF OF THE BOARD
Tony lee
secretary
8 April 2009
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
23

compliance
The Board of Directors (“the Board”) are collectively responsible for
the success and corporate governance of the Group. They support
the principles of good corporate governance and code of best practice
laid down by the Combined Code issued in June 2006. The Directors
consider that the Group has been in compliance with the provisions set
out in section 1 of the Combined Code on corporate governance, issued
in July 2003 and as endorsed by the Financial services Authority and
updated in June 2006, as published by the Financial Reporting Council,
save for compliance with schedule A due to the absence of a performance
bonus ceiling in the operation of the Group’s remuneration policy. This
exception is explained in more detail in the Directors’ Remuneration
Report on pages 31 to 38.
The Group does not appoint Non-executive Directors for a specified
term as required by provision A7.2 of the Combined Code. Following
successful completion of one year’s service, however, the Group may
terminate their contracts by two months notice in writing. Additionally
the current policy of the Board is that Non-executive Directors should
not serve more than nine years if it is determined that this would
prejudice their independence.
The manner in which the Company has applied the principles of good
governance set out in the Combined Code is outlined below and in the
Directors' Remuneration Report on pages 31 to 38.
directors
At the year end, the Board comprised two Executive and five Nonexecutive
Directors. Biographies of all Directors as at the date of this
report are set out on pages 16 to 17. The Non-executive Directors are
Martin Gray (the Non-executive Chairman), lord Maclaurin, (the senior
independent Director), peter Gibbs, Nicholas irens and Mark Nicholls.
All are independent as set out in the Combined Code as they have no
relationships and there are no circumstances which are likely to affect,
or could appear to affect, each Director’s judgement.
Whilst the Board has intensified its search for a new Finance Director,
the reorganised senior management team below Board level continues
to provide an appropriate balance of skills and experience within the
Group. The Group Financial Controller and the Group Head of Compliance
attend each Board meeting to present the monthly finance, risk
and compliance papers and are in constant dialogue with Executive
and Non-executive Directors as well as with the external auditors
pricewaterhouseCoopers llp and internal auditors Ernst and Young.
There is a formal schedule of matters reserved for decision by the
Board, which is reviewed annually and otherwise as required. such
matters reserved to the Board reflect the size, scale and nature of the
Group’s businesses and its risk profile. The Board is responsible for the
overall strategy of the Group, acquisitions and divestments, major
capital projects, financial, budgetary and risk matters and the
employment of senior employees.
The Board has a schedule of 12 meetings per annum to discuss matters
arising in the Company's ordinary course of business. Additional
meetings are arranged as required.
corporaTe governance
24 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
The following table identifies the scheduled number of Board meetings and
actual Committee meetings held during the year to 31 December 2008 and
the attendance record of their members:
Scheduled Remuneration Nomination
Audit Board Meetings Committee Committee* Committee
number of meetings in the year 12 5 6 2
Martin Gray 12 N/A 6 2
Alex snow 12 N/A N/A N/A
Andrew umbers 12 N/A N/A N/A
lord Maclaurin (1) 9 5 5 1
Nicholas irens (2) 10 5 6 2
Mark Nicholls (3) 11 5 4 2
peter Gibbs 12 N/A 6 N/A
*Although the Remuneration Committee held 12 meetings during the year, 6
of these were procedural meetings and a further 2 were held at relatively
short notice to approve ad-hoc items in accordance with the Committee’s
terms of reference.
Notes
1. lord Maclaurin was unable to attend three Board meetings due to prior commitments.
He attended all but one substantive Remuneration Committee meeting held at short
notice.
2. Nicholas irens was unable to attend two Board meetings due to prior commitments.
He attended all substantive Remuneration Committee meetings.
3. Mark Nicholls was unable to attend one Board and two substantive Remuneration
Committee meetings held at short notice due to prior commitments.
directors’ service agreements
The terms of the Directors' service agreements and letters of
appointment are summarised in the Directors' Remuneration Report on
pages 31 to 38. in accordance with the Combined Code, all Directors
are subject to election by shareholders at the first Annual General
Meeting of shareholders after their appointment. Thereafter, all
Directors are subject to retirement by rotation and re-election at least
every three years. At least one third of the Board seek re-election at
each Annual General Meeting.
retirement by rotation
At the forthcoming Annual General Meeting on the 19 May 2009
(given it is three years since his last retirement), Alex snow will retire by
rotation and, being eligible, seek re-election, as will Nick irens, who last
retired by rotation at the 2007 Annual General Meeting. Whilst only one
of Mark Nicholls and Andrew umbers are required to retire by rotation
following their appointments in 2006, it has been agreed that both will
retire and seek re-election at this Annual General Meeting. Resolutions
proposing their re-election are set out in the Notice of Annual General
Meeting. The Chairman confirms, and in respect of the Chairman, the
senior Non-executive Director confirms, that all the Directors whether
seeking election, re-election or otherwise and following appropriate
performance evaluation continue to perform effectively and demonstrate
commitment to their positions.
division of responsibilities and insurance
in accordance with the Combined Code, there is a clear division of
responsibilities set out in writing and agreed by the Board between the
running of the Board by the Chairman and the responsibility for running
the Group by the Chief Executive. The Chairman is responsible for the
leadership and conduct of the Board. He is also responsible for the Board’s
oversight of the Group’s affairs and strategy, which includes ensuring the
Directors receive accurate, timely and clear information, ensuring the
effective contribution of Non-executive Directors, facilitating constructive
relations between the Non-executive Directors and Executive Directors,
and implementing effective communication with shareholders.

The Chief Executive, Alex snow, is responsible for the day-to-day and
strategic management of the Group’s activities. He works closely with
Andrew umbers in continuing to develop the strategic direction of
Evolution securities limited and acts as Chief Executive Officer and
Chairman of Williams de Broë limited and is Chairman of WDB Capital
limited. He is ultimately responsible for the operating plans and budgets
for the businesses, monitoring business performance and ensuring
these are reported upon to the Board. The Board believes that these
arrangements facilitate the effective management of the business and
provide a strong control environment.
lord Maclaurin, the senior independent Director, is available to
shareholders if they have concerns where contact through the normal
channels is deemed inappropriate.
The biographies on pages 16 to 17 demonstrate a range of experience
and calibre to bring independent judgement on issues of strategy,
performance, resources and standards of conduct which are vital to the
success of the Group. The Non-executive Directors bring a wealth of
experience to the Board. in particular their complementary skills include
legal and accounting, asset management and corporate finance,
demonstrable leadership and experience at the highest level and
practical experience of the current regulatory and market environment.
The Executive Directors have and continue to build an impressive track
record of value and accretive acquisitions and organic growth whilst
protecting the capital position of the business through strong balance
sheet management. The Board is responsible to shareholders for the
proper management of the Company. All Directors of the Company take
decisions objectively in the interest of the Company. A statement of the
Directors' responsibilities in respect of the accounts is set out in the
Directors’ Report on pages 18 to 23. A statement on going concern is
set out on page 29.
should Directors have concerns about the running of the Company or
a proposed action that could not be resolved, their concerns would
be recorded in the Board minutes or otherwise discussed with the
Chairman. During the year, the Chairman held meetings with the Nonexecutive
Directors without the Executive Directors present. Resigning
Non-executive Directors are encouraged to provide written statements
to the Chairman to be circulated to the Board in order that the Board
may resolve any concerns that are raised. No such concerns or issues
have been raised during the year.
The Group has taken out appropriate insurance cover in respect of legal
action against its Directors and officers. in addition to insurance cover
for Directors and officers’ liability, the Group has arranged insurance
cover in respect of professional indemnity and corporate crime,
employers’ liability, and public and products liability.
information and professional development
As stated above the Chairman is responsible for ensuring that Directors
receive accurate, timely and clear information. There is a clear
understanding by management that they have the obligation to provide
such information in a way that facilitates informed and timely decision
making by the Board. The Company secretary is responsible for advising
the Board, through the Chairman, on all corporate governance matters
and is responsible to the Board for ensuring that Board procedures are
complied with. During the year the Board initiated a review of corporate
governance processes and procedures across the Group in order to
benchmark and refresh existing arrangements. This review will be
completed during the first half of 2009. such review encompasses both
a top down and a bottom up review of governance below Board level
and between principal subsidiaries and the Group Board and is being
co-ordinated by the Company secretary. As part of this review interim
measures have been identified and implemented to strengthen the
subsidiary Board Committee structure below Group Board level.
The principal subsidiary companies have adopted matters specifically
reserved to them for decision.
The Board as a whole considers the appointment and removal of the
Company secretary. All Directors have access to the advice and services
of the Company secretary and there are procedures in place for taking
independent professional advice to ensure that individual Directors and
the Board Committees are provided with sufficient resources to undertake
their duties, at the Group's expense if required.
The Company secretary is responsible for ensuring good information
flows within the Board and its committees and between senior
management and Non-executive Directors. To this end the annual Board
and subsidiary company Board timetables provide for matters that are
brought to the Board for decision or information to be first considered
by the relevant subsidiary Board where appropriate.
New Directors are provided with the opportunity to undertake a thorough
induction on joining the Board commensurate with their existing
knowledge and understanding of the business of the Group. Training
needs are monitored and addressed as part of the annual performance
evaluation process detailed below.
performance
The Board conducts a formal and rigorous annual evaluation of individual
Directors, its own performance and that of its Committees. The evaluation
process is constructively used as a mechanism to improve Board
effectiveness, maximise strengths and address any weaknesses.
The format of evaluation is reviewed annually. The Board feel that a
consistent approach year to year is vital to allow comparison and
benchmarking of progress against previous years and targets. The Board
annually considers whether it might be appropriate to engage a third
party to conduct its performance evaluations and has concluded that
the current structure provides sufficient scrutiny to meet the needs of
the Group. in the opinion of the Board, the most important aspect of
evaluation is to constantly strive to improve performance, act on any
areas in need of improvement and to be able to act quickly and
effectively in the face of the changing structure of the Group and the
environment in which it operates. The Board is committed to this
process. As previously disclosed the Board have accelerated its search
for a Finance Director. We constantly strive to continue to meet
corporate governance best practice and efforts continue to be made
to ensure the correct balance of information flow up to the Group Board,
a process which has the full support and engagement of senior
management and the Board. in its 2008 evaluation of performance,
the Board recognised the need to continue to enhance governance
standards at and below Board level and in this aim is being advised
by the Company secretary and its internal auditors. The Board are
committed to continue to evolve and improve its own performance to
meet the expectations of regulators and to meet best practice.
Individual Performance
The Chairman, having consulted with the Non-executive Directors
without the Chief Executive present, appraises the Chief Executive.
He is subject to annual qualitative and quantitative objectives linked to
rewards. The Chief Executive appraises the performance of the other
Executive Directors, having consulted the Non-executive Directors and
having regard to their annual qualitative and quantitative objectives.
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
25

The senior independent Non-executive Director appraises the
performance of the Chairman, having consulted the Non-executive
Directors without the Chairman present and considered the views of the
Executive Directors. The Chairman, having consulted with the Executive
Directors, appraises the performance of the Non-executive Directors.
Appraisals were conducted for all the Directors during January to
March 2009 in respect of their performance in 2008.
in addition to the individual performance appraisals, the Board
considers its overall performance as a body and the performance of
its Committees.
The Chairman confirms that all the Directors whether seeking election
and re-election or otherwise continue to perform effectively and
demonstrate commitment to their positions.
Board Performance
The Company believes that most benefit is to be gained from an indepth
annual review of all areas of Board activity and adopts a formal
methodology to facilitate this review. Each member of the Board
completes a detailed ‘Board Effectiveness’ questionnaire following the
year end. The results for the 2008 annual review were collated by the
Company secretary and reviewed by the Board at the subsequent Board
meeting. Recognising the need for governance standards to continue to
evolve and improve to meet the expectations of regulators and the
Board, the Board was considered to be performing effectively through
this process and no significant issues were raised.
review of internal controls
The Board of Directors is responsible for identifying, evaluating and
managing the significant risks faced by the Group to safeguard shareholders'
investment and the Group’s assets. The Board acknowledges that it is
responsible for the Group’s system of internal controls and for setting
the control framework including financial, operational and compliance
controls and risk management systems, and for reviewing the
effectiveness of these systems. The principal risks and uncertainties
on page 19 and the Financial instruments and Risk Management
Framework detailed in note 2 to the Financial statements describes
the key risks facing the Group and how they are mitigated.
The system of internal control, which includes the Group’s public
reporting processes, is designed to manage rather than eliminate the
risk of failure to achieve business objectives. Therefore, this can only
provide reasonable and not absolute assurance against material
misstatement or loss.
The Board, through the Audit Committee, reviews the effectiveness of
the system of internal control. in March 2009, the Audit Committee
considered the progress made during the year and assessed the status
of the Group’s system of internal controls. in evaluating the
effectiveness of the internal control framework, the Audit Committee
considered how risks are identified, monitored, mitigated and reported
throughout the Group.
The Audit Committee noted that the Boards of each operating subsidiary
company meet regularly to review financial and operational performance
against budget and against prior year, to assess key performance
indicators, risk mitigation and to consider major operational issues,
trading developments and additional projects in their respective
businesses.
corporaTe governance CONTiNuED
26 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
Recognising that Esl, WdB, EsCl and WDB Capital are authorised and
regulated by the FsA and that Esus is registered with the FiNRA and
regulated by the sEC, the Committee also noted that the Compliance
department undertakes risk based monitoring that ensures all entities
are complying with the relevant rules and regulations and that
procedures and policies are being implemented in compliance with
these rules. Compliance officers are in regular contact with the
Executive Directors and our regulatory supervisors and the Group Head
of Compliance reports formally to the Board each month, and to the
Audit Committee.
The Audit Committee reviewed the key risks facing the Group and the
controls that have been put in place to mitigate them. Changes to the
risk environment were highlighted, as were improvements to the control
structure: most notably in the restructuring of the compliance function
where the team had been strengthened in number and by the
appointment of an experienced and well regarded head of Williams de
Broë compliance, the introduction of an Annual Compliance plan,
approved by the Board and the introduction of enhanced governance
structures below Board level at Williams de Broë limited.
The Audit Committee considered whether there had been any material
failings or weaknesses in the internal controls of the Group and in doing
so considered the results of the FsA ARROW visit in september 2008.
The visit focused upon certain matters already under review by the
Group and with our internal auditors including the governance and
committee structures below board level. in line with the FsA’s continuing
treating customers fairly (TCF) initiative, the ARROW visit also focused
on treating customers fairly and portfolio suitability within WdB.
Detailed discussions with the FsA on the results of the ARROW visit are
continuing. However, the Group has increased the resources employed
in and accelerated its review and remuneration work on customer files
with third party help. in line with the continuing project to enhance
systems and reporting in WdB it has also committed to considerable
investment in a bespoke management information system.
in accordance with the Combined Code, during the year the Audit Committee
has considered the need for an internal audit function. Following an
internal review the Audit Committee met with Ernst & Young in May 2008
to consider their appointment as an outsourced internal audit function.
Whilst the Audit Committee recognised the valuable work undertaken by
the Controls Review Committee, in recognition of growth in the business,
prevailing market practice and the regulatory environment it agreed to
recommend the appointment of an internal audit function to the Board,
which was duly approved at the May 2008 Board.
The internal audit function initiated three reviews towards the end of
2008 of Evolution securities limited Operations and Treasury and also
Williams de Broë limited Operations.
The Controls Review Committee met twice in 2008 prior to it being replaced
by the internal audit function and considered six control reviews. The areas
covered included Group Human Resources, Evolution securities limited
Operations and Market Making, Williams de Broë limited Assetmaster
team, Evolution Watterson securities limited sales, Operations and
Finance and Evolution securities limited Corporate Finance. The CRC
also reviewed Key Reporting indicators and Operational losses and
matters arising out of the auditors’ controls report. The terms of reference
of the CRC required all areas of the Group to be reviewed at least once
in a two year period.

The Committee observed that during the year the internal control
framework continued to provide reasonable assurances that appropriate
internal controls are in place or are further strengthened where it was
identified that potential risks or weaker controls existed. A formal review
of all risk incidents takes place to ensure that additional mitigating
actions that have been identified are implemented. These, along with
Key Risk indicators, are reviewed by the Risk Committee and included
within the monthly risk report to the Board.
The Committee reported that, save for the matters identified above
relating to Williams de Broë limited, risks are adequately managed and
mitigated through the system of internal controls and that there were
no further material failings or weaknesses in the Group’s internal control
system during the period under review. Therefore, the Board confirms
that throughout the year ended 31 December 2008 and up to the
approval date of the Financial statements, there has been an on-going
process of identifying, evaluating and managing the significant risks
faced by the Group and that the Group has complied with the Turnbull
Committee’s guidance for Directors.
Committee Performance
Committee performance is reviewed as follows:
• The Audit and Remuneration Committees are subject to a rigorous
review by their own members. Each member completes a questionnaire
to assess the effectiveness of the relevant Committee. The results for
the 2008 annual review are collated by the Company secretary and
reviewed by the relevant Committee at the subsequent Audit Committee
meeting. The Chairman of the relevant Committee is responsible for
leading a discussion on the results at the subsequent Board meeting.
Both Committees are considered to be working effectively.
• The Nomination Committee is subject to a rigorous review by its own
members and is considered to be working effectively.
The following committees deal with the specific aspects of the Group's affairs:
Audit Committee
The Audit Committee is comprised of three independent Non-executive
Directors. Nicholas irens acts as Chairman of the Audit Committee, with
lord Maclaurin and Mark Nicholls as members. Attendance at Committee
meetings is set out on page 24. The biographies on pages 16 to 17 set
out the qualifications of all the members of the Committee during the
year. Nicholas irens, as a Chartered Accountant with recent and relevant
financial experience, was considered by the Nomination Committee to
be appropriate for the role of Chairman of the Audit Committee.
The Audit Committee met on five occasions during the course of 2008.
The Group's auditors and the Executive Directors may attend Committee
meetings by invitation. The Committee has a discussion with the
external auditors at each Audit Committee meeting. The discussions
take place without Executive Directors being present, to ensure that
there are no unresolved issues of concern.
The Terms of Reference for the Committee comply with the Combined
Code and are available for inspection at the Company's registered office
and at the Annual General Meeting. A summary of these Terms is on the
Group’s website: www.evgplc.com. in accordance with the Combined
Code, the Audit Committee's remit, which is set out in its Terms of
Reference, includes responsibility for:
• monitoring the integrity of the Financial statements and formal
announcements of financial performance and reviewing significant
financial reporting judgements contained therein;
• reviewing related information presented within the Financial
statements, including the Financial Review, and Corporate
Governance Reports relating to risk management and audit, and
reviewing other statements containing financial information prior to
Board approval;
• reviewing the scope and findings of the external audit at the interim
and final stages;
• reporting to the Board any identified matters requiring action or
improvement and recommendations of steps to be taken;
• reviewing the effectiveness of the Group's internal financial control
procedures, and internal control and risk management systems,
reviewing any reports on the effectiveness of systems and conclusions
of any testing carried out by external auditors;
• reviewing arrangements by which staff of the Group may, in
confidence, raise concerns about possible improprieties in matters of
financial reporting or other matters and ensure arrangements are in
place for the proportionate and independent investigation of such
matters and for appropriate follow-up action;
• making recommendations to the Board for shareholder approval
of the appointment, re-appointment and removal of the external
auditors, external auditors’ remuneration and terms of engagement.
The Audit Committee has primary responsibility for these
recommendations; and
• reviewing and approving the annual internal audit plan, considering
reports and recommendations presented by the internal audit function
on processes, systems and controls and monitoring the implementation
of internal audit recommendations by management.
The Audit Committee has primary responsibility for:
• reviewing on an annual basis external auditor’s independence,
objectivity and the effectiveness of the audit process taking into
consideration relevant uK professional and regulatory requirements;
• developing and implementing policy on the engagement of the
external auditors to supply non-audit services and reporting to the
Board and, identifying any matters which require action or
improvement;
• considering the major findings of any internal investigations and
management’s response; and
• monitoring and reviewing the effectiveness of the internal audit function.
Remuneration Committee
The Remuneration Committee comprises all the independent Nonexecutive
Directors. lord Maclaurin acted as Chairman until 29 May
2008 when peter Gibbs was appointed Chairman in his place. lord
Maclaurin continues to make a valuable contribution to the work of the
Committee. Martin Gray, Nicholas irens and Mark Nicholls were also
members of the Committee. Attendance at Committee meetings is set
out on page 24.
The Remuneration Committee met twelve times during 2008 as part of
the continuing review of the Group’s remuneration and reward structure,
which had been prolonged due to the need to fully consider various
guidelines and codes of practice issued by the Financial services Authority
which at the date of this report were under review and in order to comply
with the requirements of the various share incentive plans. The Executive
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
27

Directors attend certain parts of meetings of the Remuneration Committee
by invitation but do not attend discussions on their own remuneration.
The Terms of Reference for the Committee comply with the Combined
Code and are available for inspection at the Company's registered office
and at the Annual General Meeting. A summary of these Terms is also
on the Group’s website: www.evgplc.com. The duties of the Committee,
as set out in its Terms of Reference, include:
• delegated responsibility to agree and recommend remuneration policy;
• responsibility for setting the remuneration of the Executive Directors,
Chairman and senior management;
• formulating suitable performance related criteria for any element of
Executive Director remuneration, Chairman and senior management
and making recommendations to the Chairman regarding bonuses or
performance related remuneration;
• advising and determining all performance related formulae relevant to
Directors remuneration and to consider the eligibility of Directors for
annual bonuses and benefits under long-term incentive schemes;
• administering and granting share options under the Company’s share
option schemes;
• ensuring that regulatory disclosure requirements regarding
remuneration are met;
• reviewing the policy or authorising claims for expenses from the CEO
and Chairman; and
• responsibility for selecting and appointing remuneration consultants
who advise the Committee.
The Chairman of the Remuneration Committee reports the Committee’s
findings to the Board at the following Board meeting. Further details of
how these responsibilities are executed and the Group's policies on
remuneration, service contracts and share options are given in the
Directors' Remuneration Report on pages 31 to 38.
Details of professional advice received on remuneration issues can be
found in the Directors’ Remuneration Report on pages 31 to 38.
Nomination Committee
The Chairman of the Group who is joined by the other Non-executive
Directors, other than peter Gibbs, chairs the Nomination Committee.
The Nomination Committee met twice during 2008. Attendance at the
Committee meetings is set out on page 24.
The Terms of Reference for the Committee comply with the Combined
Code and are available for inspection at the Company's registered office
and at the Annual General Meeting. A summary of these Terms are on
the Group’s website: www.evgplc.com. The Nomination Committee is
responsible for all elements of the nomination process for the Executive
and Non-executive Directors of the Company. The duties of the
Committee, as set out in its Terms of Reference, include:
• reviewing regularly the Board structure, size and composition to
ensure orderly succession planning and making recommendations to
the Board with regard to any adjustments that are deemed necessary;
• identifying and nominating candidates for the approval of the Board
and putting in place plans for succession;
corporaTe governance CONTiNuED
28 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
• evaluating the balance of skills, knowledge and experience on the
Board prior to making an appointment and determining the role and
capabilities required for a particular appointment;
• making recommendations to the Board for the continuation in service
of an Executive Director, for the re-election of Directors who are
retiring by rotation and on the appointment of Directors to the relevant
committees; and
• reviewing annually the time required from a Non-executive Director
and whether time commitments are being satisfactorily fulfilled.
The Chairman of the Nomination Committee reports the Committee’s
determinations to the Board at the following Board meeting and is
available to report to shareholders at each Annual General Meeting.
During the year, the Nomination Committee discussed succession
planning for the Board. The Nomination Committee follows a process
for nominating candidates for Board appointments which involves
considering the structure, size and composition of the existing Board,
determining a description of the role and capabilities required, drawing
up a shortlist of candidates, holding a series of one-to-one meetings
between the candidates and Non-executive Directors, and then
candidates meeting with all members of the Board. in 2008 the
Committee used external consultants to assist with the search for both
Executive and Non-executive Directors. Future appointments will follow a
similar process, with consideration given to whether external advertising
or external advice is required.
The terms of appointment of Non-executive Directors are detailed in
the Directors’ Remuneration Report on pages 31 to 38. The terms of
appointment and time commitments of Non-executive Directors are
available for inspection at the Company’s registered office.
environmental, social and governance (“esg”)
The Director with responsibility for the EsG policy is the Finance Director
and in his absence the Chief Executive Officer. EsG issues will be
regularly considered by the Board to identify, assess and manage the
significant risks and opportunities affecting the Group’s long and shortterm
value arising from its handling of EsG matters, as well as
opportunities to enhance value that may arise from an appropriate
response. The Group’s approach to EsG issues reflect our businesses as
a service provider and investment bank. The Board takes account of the
significance of environmental, social and governance matters on the
business of the Company. it has processes in place to identify and
mitigate all material risks to the short and long-term value of the Group,
and is always seeking to enhance value by wholly reasonable means.
The Board is to introduce a programme of internal review by the Chief
Operating Officers of its businesses that consider EsG issues. The Board
has identified no EsG related risks that may significantly affect the
Group’s short or long-term value although is currently embarking on a
cost reduction programme which has already identified costs savings,
a product of which will have a positive effect on the environment by
consolidating our procurement practices.
The Environment
The Board considers the Group makes the appropriate provision for
environmental issues appropriate to the size of the Group and the
financial services sector in which it operates. The Group has a formal
environmental policy, which is available to all employees through the
Group intranet site. Our policy includes the implementation of
reasonable measures to comply with relevant environmental legislation,
that appropriate steps are taken to minimise negative environmental
impacts and to conserve natural resources, the development of

appropriate and comprehensive procedures and guidelines to achieve
our objectives and that appropriate forms of instruction, information,
training and supervision are made available to enable employees to
assist us in meeting our objectives. We continue to work towards being
able to more carefully monitor the positive impact our polices have on
the management of our environmental footprint.
All new buildings are managed with energy efficiency as a goal. We
conduct our activities, including contracting with other business entities,
in a resource-efficient manner and are selective in our choice of
products, processes and services. Our resource-efficient behaviour
includes implementation of pollution-prevention techniques to reduce
our generation of wastes, particularly hazardous and regulated
substances. The Finance Director, and in his absence the Chief
Executive, and other members of senior management are responsible
for environmental issues across the Group.
The Group conforms to the Waste Electrical and Electronic Equipment
Directive 2002/96/EC by recycling electrical and electronic equipment.
This covers items such as white goods, brown goods, iT and
telecommunication equipment, electrical lighting and electrical tools.
paper, confidential waste, newspapers and magazines, packaging,
aluminium cans and containers are actively recycled. Quantification of
environmental initiatives across all the offices within the Group is not
available at present although the Group’s principal offices are located
within managed buildings, which follow best practice guidelines for
environmental issues including programmed lighting, air conditioning
sensors, monitoring water usage and recycling.
social responsibility and governance framework
The Group is committed to upholding its social responsibility and has
measures in place to address this responsibility. The Group endeavours
in all its office locations to be an active member of the local business
community. Employees in the Group’s regional offices attend local
meetings of the Chamber of Commerce, of the securities institute, and
of the various organisations in the Midlands, to promote the professional,
financial and business services in the region.
The Group has made £10,121 (2007: £23,115) in charitable donations
during the year as detailed on page 20 and continues to support its staff
participation in charitable events. in addition to monetary contributions
to charities, staff also contributed their time and talents.
The Head of Human Resources is responsible for human resources
issues in the Group. Details of employment practices can be found in
the Directors’ Report on page 20.
The Group adheres to the FsA principles of business and follows their
rules and guidance on appropriate behaviour as well as guidance
provided by the uK listing Authority and other regulatory bodies under
which the Group acts. Furthermore, the Group is committed to
extending its ethical obligations beyond regulatory compliance as
regards to conduct in its relations with its stakeholders, including clients,
suppliers, advisors, and shareholders. For example, Williams de Broë
limited manages the portfolios of a number of charity clients. Further
details of the governance framework can be found elsewhere in this
Corporate Governance Report.
health and safety
The Group takes its responsibilities to ensure the Health and safety of
its staff and any visitors to its offices seriously. it is the policy of the
Group and its associated companies to comply with the terms of the
Health and safety at Work Act 1974 and any subsequent legislation and
also to provide and maintain a healthy and safe working environment.
The Group endeavours to minimise the number of instances of
occupational accidents and illnesses and to ultimately achieve an
accident-free workplace. As part of this commitment all employees are
provided with such equipment, information, training and supervision
as is necessary to implement and achieve the above stated aim. in
addition, the Group recognises and accepts the duty to protect the
health and safety of all visitors to its premises, including contractors and
temporary workers, as well as any members of the public who might be
affected by our operations. it also conducts due diligence on contractors
to ensure that they adhere to suitable Heath and safety standards.
An efficient and effective Health and safety programme requires
effective communication between the Group and its employees on
Health and safety matters. Accordingly, the Group communicates health
and safety matters to staff through: (1) a number of key documents
outlining policy and procedures which are made available via the Group's
intranet sites; (2) various rules laid out in the Employee Handbook; (3)
the appointment and training of Health and safety representatives who
are responsible for the implementation and monitoring of Health and
safety policies and procedures in each office; and (4) the establishment
and rehearsal of effective evacuation procedures. Another key aspect
of ensuring that the Group's policies and procedures are appropriate
and in line with current laws, rules and regulations is the establishment
of a Health and safety testing and monitoring programme. To this end,
the Group have appointed a specialist Health and safety consultant.
Health and safety is considered by the Board at least on an annual
basis.
going concern
These Financial statements are prepared on a going concern basis as
the Directors have satisfied themselves that, at the time of approving
the Financial statements, the Group and Company have adequate
resources to continue in operational existence for the near future.
relations with shareholders
The Board is responsible for ensuring that a satisfactory dialogue with
shareholders takes place and welcomes shareholder participation.
The Chairman's statement, Chief Executive’s Report and Financial
Review in these Financial statements include a detailed review of the
business and future developments as a way of informing shareholders
of the Group’s performance and progress. The Board is also in regular
dialogue with institutional investors, and analysts, principally around the
time of the Group's announcement of results. After the announcement
of results, the Executive Board members present to existing and
prospective shareholders. in addition, the appropriate briefing meetings
are arranged with analysts and the press to ensure dissemination and
interpretation of the Group’s results.
The Board recognises the importance of investor relations and
communications with shareholders throughout the year as well as at
the time of results. Throughout the year, the Group Chairman, CEO and
where relevant the Chairman of the Remuneration Committee maintain
a dialogue with the principal shareholders, in order to understand their
issues and concerns discussing matters of governance, strategy and
remuneration, and are responsible for ensuring that shareholders' views
are communicated to the Board as a whole. The senior independent
Non-executive Director is available to meet with shareholders should
other channels of contact be unsuitable but was not called upon for this
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
29

purpose during the year. Non-executive Directors are offered the
opportunity to attend meetings with major shareholders.
The Group participates in a share Deal service offered by Capita
Registrars whereby small existing shareholders have the opportunity,
through an online and telephone share dealing service, to buy or sell
shares in many leading uK Companies. An online and telephone facility
is available allowing instant trading at prices provided at the time you
give your instruction. There is no need to pre-register. This is a quick and
easy share dealing service and is available to either sell or buy Evolution
Group plc shares. This benefits both the Group and shareholders in
extending the market for the Group’s shares and facilitating dealing for
private shareholders.
To deal online or by telephone you will need your surname, investor Code
reference number (which may be found on a recent share certificate,
statement or tax voucher), full postcode and your date of birth.
For further information on this service, or to buy and sell shares please
contact:
• www.capitadeal.com (online dealing)
• 0871 664 0454 (telephone dealing – calls cost 10p per minute plus
network extras)
Full terms, conditions and risks apply and are available on request or by
visiting www.capitadeal.com. This is not a recommendation to buy or sell
shares. The price of shares can go down as well as up, and you are not
guaranteed to get back the amount that you originally invested.
shareholders who may wish to donate their shares to charity may do so
free of charge through share Gift. Further details are available at www.
sharegift.org.uk or by telephoning 020 7930 3737.
The Group's website at www.evgplc.com contains information on the
Group, its Board and Committees, its operating subsidiaries and the
products and services that it offers as well as share price performance
and recent announcements.
corporaTe governance CONTiNuED
30 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
report from the chairman of the audit committee
for the year ended 31 december 2008
The composition and Terms of Reference of the Audit Committee are
detailed on page 27.
The principal activities of the Audit Committee in the year to 31
December 2008 are summarised below:
financial statements
The Audit Committee reviewed the 2008 Annual Report, the interim
results and reports from the external auditors, pricewaterhouseCoopers
llp, on the outcome of their audits during 2008.
external audit
The Committee liaised with the external auditors during 2008 to review
the scope and findings of the external audit at the interim and final stages.
The Committee recommended to the Board for shareholder approval the
re-appointment, remuneration and terms of engagement of the auditors
during 2008.
Through their review of the balance of audit and non-audit work
performed and fees paid to pricewaterhouseCoopers llp, the
Committee concluded that auditors’ independence has been maintained
throughout 2008 and the audit process was effective.
Meetings were held between the auditors and the Committee after each
meeting at which the auditors were present, without the presence of
Executive Directors, to ensure there were no restrictions on the scope of
their audit and that there were no unresolved issues of concern.
internal audit
in March 2008 the Committee asked the Board to consider the
introduction of an internal audit function. in May 2008, Ernst & Young
were appointed as the Group’s internal auditors. The internal Audit plan
was considered and approved in May 2008 for the year ahead and
again in March 2009. The internal audit reports were reviewed and
discussed with the internal auditors and management.
internal controls
The Committee reviewed and evaluated the process by which the Group
implemented its system of internal controls and risk management.
audit committee effectiveness
The members reviewed the Committee’s effectiveness and concluded
the Committee to be working effectively.
nick irens
Chairman of the Audit Committee
8 April 2009
REPORT FROm THE CHAIRmAN
OF THE AUdIT COmmITTEE

The Board has delegated to the Remuneration Committee the
determination of Executive Directors’ remuneration. The constitution and
operation of the Committee comply with the Best practice provisions on
Directors’ remuneration in the Combined Code.
This report has been prepared in accordance with the Companies Act
1985 as amended by the Directors’ Remuneration Report Regulations
2002, the listing Rules of the uK listing Authority and the Combined
Code. it describes how the Board has applied the principles of good
governance relating to Directors’ remuneration and where it does not
comply and why this is the case. The Directors’ Remuneration Report
will be submitted at the forthcoming Annual General Meeting for
approval.
members of the remuneration committee
The Remuneration Committee consists only of independent Nonexecutive
Directors. peter Gibbs took over the role as Chairman of
the Committee from lord Maclaurin of Knebworth Dl immediately
following the Annual General Meeting of the Company on 29 May
2008, and served as Chairman throughout the remainder of the year.
lord Maclaurin of Knebworth Dl remains on the Committee, whose
other members are Martin Gray, Nicholas irens and Mark Nicholls.
The Board considers that all members of the Committee are
independent within the meaning of the Combined Code as explained
in the Corporate Governance Report on pages 24 to 30. Details of the
number of meetings and each member’s attendance are set out in the
table on page 24.
The Terms of Reference for the Committee comply with the Combined
Code and are available for inspection at the Company’s registered office
and at the Annual General Meeting. A summary of these Terms is also
available on the Group’s website: www.evgplc.com.
advice
During the year, the Committee has received advice on executive
remuneration from its external remuneration advisors Deloitte llp
who were appointed by the Committee in september 2008. in addition,
it received advice from its lawyers, Jones Day, and internally from its
Human Resources Department. The remuneration consultants do not
have any other connection with the Group. No individual is involved in
the determination of his or her own remuneration.
remuneration policy
The Committee is responsible for ensuring that the Company’s Executive
Directors and senior executives are fairly, but responsibly rewarded for their
individual contributions to the Company’s overall performance. it exercises
this responsibility through consideration, of all bonus, salary and incentive
awards including reviews of the structure of remuneration within operating
subsidiaries. The Committee considers Executive Director recommendations
for senior executives whose bonus and incentive awards are wholly
discretionary. This typically will include non revenue earning areas of the
business including risk and compliance. The Committee also considers
ad hoc remuneration requests in line with its Terms of Reference
throughout the year. The Executive Directors are responsible for bringing
remuneration matters to the attention of the Remuneration Committee.
For all employees throughout the Group the overriding aim is to develop
and implement a remuneration policy which attracts, retains and
motivates individuals of the highest calibre to grow the value of the
Group and maximise returns to shareholders. The Committee takes the
view that the same philosophy that is applied to employees of the Group
generally should also apply to Executive Directors who are essential to
the effective and successful leadership and management of the Group.
The Group operates in the highly competitive market place of investment
banking and asset management, which places a heavy emphasis on
exceptional rewards for exceptional performance. An overriding objective
is to ensure that the approach to remuneration is simple and clear.
The Board does not support reward for executives when this is not
justified by performance.
All reward structures in place across the Group reflect our culture and
values of encouraging high individual effort to achieve individual and
corporate performance targets. We endeavour to ensure that our
businesses are conducted in a manner that achieves the highest
standards of compliance and we adopt a zero tolerance policy for
non compliance. This policy is reflected in our reward structure.
Consistent with this philosophy, the Group’s reward structure aims to
achieve the following:
• motivate executives in the short to medium-term while also linking
remuneration to the long-term performance of the Group;
• deliver fully market competitive levels of total compensation to
recognise personal performance as well as the individual’s
contribution to Group performance, judged on the basis of profit levels
and profit growth;
• support sustained growth in shareholder value over the medium and
long-term by aligning the interests of Executive Directors with those
of shareholders through performance related awards reflecting the
performance of the Group;
• provide long-term incentive opportunity that acts as a retention
mechanism;
• to ensure that remuneration does not encourage excessive risk taking
by aligning rewards to the delivery of sound risk management systems
and controls; and
• deliver proportionate rewards to Executive Directors having regard to
remuneration arrangements of senior Group employees.
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
direcTors' remuneraTion reporT
for The year ended 31 december
31

in determining Directors’ remuneration, the Committee considers
returns to shareholders as measured by profit and earnings performance
both in absolute terms and against budget. The quality of profit
performance is also considered in the context of market conditions and
whether it is broadly based across all divisions or derived more narrowly.
Other considerations are comparable market remuneration data, the
experience and performance of individual Directors, their areas of
responsibility and remuneration levels throughout the Group.
A high proportion of potential total remuneration is related to
performance designed to motivate Executive Directors to enhance the
value of the Group. As indicated in last year’s report these arrangements
have been reviewed during 2008 and in light of the FsA’s recent
guidance on remuneration published in October 2008. it is the view of
the Committee that appropriate and sufficient risk and control measures
are currently in place and are supported by our approach to reward.
Medium and long-term incentives are delivered in the form of Evolution
Group options and share awards.
The Committee intends that the broad tenets of remuneration policy will
continue to support the objectives of the Group but will keep it under
review and will strive to balance the views of major shareholders and the
needs of the Group. in particular, the Committee recognises the need to
ensure that the most senior executives who lead the success of the
Group must be incentivised and retained in challenging market
conditions.
The components of remuneration
Overview
The remuneration packages of Executive Directors currently comprise
three elements: basic salary and benefits in kind, annual discretionary
performance related bonus, and medium to long-term incentive plans.
As indicated above, the Board has conducted a review of the remuneration
and reward structure across the Group including that of Executive
Directors to ensure the FsA guidance on remuneration published in
October 2008 is carefully considered in setting remuneration strategy
for the Group. The current structure is geared towards meeting the
needs of the Group in the medium-term, in order to continue to be able
to recruit, reward and motivate staff at all levels to maximise the
earnings potential of the Group and to further align the interests of
Directors and senior staff with those of our shareholders.
1. Fixed remuneration - basic salary and benefits
The fixed component of Executive Directors’ remuneration comprises
basic salary and benefits in kind. A salary cap was implemented in 2002
for all employees throughout the Group of £100,000, which remained
in place throughout 2008. We will keep the salary cap under review,
mindful of the FsA’s commentary around the risk profile that this may
encourage. At this time, the Group continue to believe that this cap
provides invaluable support to its subsidiaries to enable them to
effectively manage their fixed cost base. This supports a performance
culture based on medium term equity participation that is aligned with
shareholders’ interests. We are confident that this approach does not
undermine our compliance and risk priorities.
direcTors' remuneraTion reporT CONTiNuED
for The year ended 31 december
32 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
At the year end 21% (2007: 18%) of employees were paid the salary
cap of £100,000. The average salary for all employees was £55,674
(2007: £55,808). The following benefits in kind are provided to
Executive Directors: medical cover; life assurance; critical illness and
permanent health insurance; and a car allowance. No pension provision
is provided by the Group save for a salary sacrifice pension scheme
where the Company contributes the National insurance costs it would
otherwise have saved. No Director has joined this scheme.
Based on information provided by our retained remuneration consultants
the basic salary of £100,000, together with the benefits in kind,
continues to represent one of the lowest levels of fixed remuneration
in comparable companies, particularly given the absence of a pension
provision. This accords with the Group’s overall philosophy of
remuneration having as low an element of fixed or non-performance
related pay as possible.
2. Performance-related remuneration
As part of the remuneration and reward review, changes have recently
been and will continue to be developed in respect of the remuneration
and reward structure for Executive Directors. in particular the remuneration
and reward package for the Chief Executive Officer will no longer directly
reflect the scheme for employees of Esl.
The calculation of Executive Director bonuses will, subject to the discretion
of the Committee, reflect performance measured against each Director’s
quantitative performance criteria including profit performance and return
on capital employed as well as other quantitative and qualitative performance
measures including, where relevant, assets under management, income
diversification, integration of new assets and where appropriate, the
share price performance of the Group. in respect of 2008, the Executive
Directors received performance related bonuses in recognition of their
achievement of various strategic and qualitative objectives throughout
the year. The awards also reflect the relative strength of the share price
performance of the Group and the continued loyalty to the Group shown
by Executive Directors during a period where they enjoyed limited or no
medium to long-term retention benefits.
in recognition of the need to further align the interests of Directors
with those of shareholders and recognising guidelines issued by the
FsA, a three year deferral element of 25% has been introduced on
Executive Director bonuses for 2008, to ensure a material element is
linked to future performance. The deferral will be by way of the grant
of conditional share awards under the Evolution Group plC Executive
share incentive plan 2002, subject to the achievement of qualitative
performance conditions set at the start of each year and continuing
to operate within the risk and compliance framework of the Group.
These changes to the remuneration strategy reflect the strategic
direction of the Group and are a response to regulatory concerns that
the strategy does not encourage excessive risk taking.

The concept of a bonus ceiling does not naturally align with the Group’s
remuneration philosophy. To set a ceiling on the level of bonuses within
the current profit levels would seriously prejudice the ability of the Group
to attract, retain and motivate many of its senior employees whose
contribution to profits within an organisation such as this is vital and
may be much greater than in other businesses. This would therefore be
counter productive to the objective to retain senior management in order
to improve profit performance.
The Committee acknowledges that the consequence of this is that
the scheme does not comply with schedule A of the Combined Code.
The current and prospective bonus schemes are designed to generate
and reward behaviours which drive the creation of long-term shareholder
value and support our risk and compliance framework. The emphasis on
annual bonus payments, which are not capped on an individual basis
but only by reference to the profit pool made available, allows the Group
to keep fixed cost remuneration low while at the same time remaining
competitive.
Exceptional Performance Awards
As part of the 2008 changes to Executive Director remuneration and
reward all Executive Directors of the Company and principal operating
subsidiaries may receive additional rewards for exceptional performance.
in 2009 a pool will be created for the Executive Board and will be
accrued once adjusted NiBBiT (net income before bonus, interest and
tax) has exceeded budget by more than 10% on the relevant business
units. For all profits above this level 10% will be added to a pool for
distribution subject to the return on capital employed being above the
cost of capital of the Group or relevant subsidiary. The Remuneration
Committee will have discretion to determine any awards from this pool
to Executive Directors of the Group. The Group CEO will provide
recommendations to the Remuneration Committee for the allocation
of the pool for each subsidiary Director. Awards from this pool will be
subject to a 25% deferral on the same terms as the bonus awards
detailed above. All performance related cash awards will be subject to
a 25% deferral in future years for Executive Directors and all employees
across the Group who receive a cash bonus in excess of £100,000.
3. Medium to long-term incentive plans
The third element of reward for the Executive Directors is the medium to
long-term incentive plans which are forward looking in nature. in years
of relatively poor profit performance when bonuses might be reduced,
share based awards encourage continuity of service, help to drive
improved profit performance and of course closer align the interests
of Directors with shareholders. The level of share-based awards is not
subject to a maximum multiple of salary due to the low salary cap for
Executive Directors relative to other similar sized companies. There are
currently two plans which have been used to offer medium and longterm
incentives to Executive Directors (both of which are unapproved)
as follows:
Performance Share Plan
shareholders at the Annual General Meeting held on 25 May 2006
approved the 2006 performance share plan (“psp”). it had been
designed to reward significant value creation by Executive Directors
and management and was intended to further align the interests of
shareholders, executives and staff. The awards were therefore designed
to reflect the future performance of the Group. The psp made available
a pool of the Company’s ordinary shares (“shares”) split between
Executive Directors and other staff. Entitlements to the shares that are
the subject of the awards were subject to the achievement of specified
share price growth, conditions from a base share price of £1.42 per
share, within a three year period from 1 April 2006 and to continued
employment. The performance condition would be satisfied in respect of
one third of the shares if the average share price over any period of 60
continuous days within the three year period (“Measurement period”)
equals or exceeded £2.13 (50% above the base price) and in respect of
the remaining two thirds if the share price doubled to £2.84 within the
Measurement period. At the time of the approval of the psp the Board
believed these targets to be sufficiently stretching in the context both
of the prevailing economic environment and the prospects of the Group
based on past performance and reported strategy. The Board determined
not to reduce the performance targets as far as they relate to Executive
Directors.
As at the date of this report performance conditions for awards under
this plan can no longer be met and therefore awards under this plan to
Executive Directors will not vest.
The 2002 Executive Share Incentive Scheme (“2002 ESIS”)
shares may be awarded to Executive Directors under the 2002 Executive
share incentive scheme, approved by shareholders on 10 October 2002.
During 2008 awards of 500,000 shares were made to Andrew umbers
on 28 March 2008 and 30 December 2008 in satisfaction of commitments
made to Andrew umbers on joining the Group in 2006. The awards will
vest on 31 January 2010 and 31 January 2011 respectively.
The Remuneration Committee is aware that the Executive share incentive
scheme operates unusually in two main respects: there are no annual
limits on award levels and the vesting of awards are phased over two,
three or four years. The Committee believes this flexibility allows
remuneration to be structured in a simple and yet highly effective way,
and which also aligns the interests of Executive Directors with those of
shareholders.
As part of its continuing remuneration review and in order to create the
right combination of meaningful incentive and shareholder alignment
within a business in which short-term decisions and performance
are critical to medium-term and long-term growth, the Committee is
developing detailed plans to provide equity awards to the Executive
Directors which will be subject to achievement of performance
conditions that may reasonably include profitability, total shareholder
return, earnings per share and return on capital employed.
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
33

Award levels have been determined in the light of the impact on
shareholders’ dilution. At the year end the dilution (as defined by the
guidelines of the Association of British insurers) arising from the Group’s
discretionary schemes was 9.7% (2007: 9.7%) taking into account own
shares purchased by the Group’s employee trust to satisfy outstanding
awards. This level of dilution reflects our undertaking to keep dilution
capped at 12% as detailed at the time of the adoption of the performance
share plan at the 2006 Annual General Meeting. This excludes the
impact of the psp which is a separate scheme approved by shareholders
in addition to the existing discretionary schemes and is subject to the
performance conditions detailed above. The Remuneration Committee
keeps the levels of dilution under regular review.
awards to the esl chief executive officer
in the 2006 Remuneration Report it was reported that two further
awards under the 2002 Esis of 500,000 shares would be made to
Andrew umbers in 2007 and 2008 which would be subject to three
years vesting. Following discussions between the Group Chief Executive
Officer and members of the Committee the allocation of the 2007
award was deferred until following the announcement of the Group’s
preliminary results. Following completion of his 2007 appraisal and
the approval of the Remuneration Committee on 27 March 2008 and
recognising certain undertakings made to Andrew umbers at the time
of his joining the Group, Andrew umbers was awarded 500,000 shares
under the 2002 Esis on the 28 March 2008. Call rights will be granted
and the shares will vest on 31 January 2010 subject to Andrew umbers
remaining with the Group up to that date. The final 500,000 tranche of
this award was made on the 30 December 2008 vesting on 31 January
2011.
The evolution group share incentive plan (“sip”)
Executive Directors are eligible to participate in the Evolution Group
share incentive plan (“sip”). The sip is an HMRC approved plan open to
all uK permanent employees. Eligible employees may contribute up to
£125 each month and the trustee of the plan uses the money to buy
partnership shares on their behalf. The Company issues an equivalent
number of matching shares, with the equivalent cost met by the
employing company. partnership and matching shares are eligible for
dividends and dividend shares are acquired on receipt of the relevant
paid amounts. On 15 January 2008 the Committee agreed to the award
of free shares under the sip for up to a maximum of £3,000 per
employee. in order to qualify for £1,000 of shares employees must have
been employed for a period of 12 continuous months. £2,000 worth of
shares were awarded for 3 years service and £3,000 worth of shares
for five or more years services. On 18 January 2008 Alex snow was
awarded 2,658 free shares an Andrew umbers was awarded 868
free shares.
direcTors' remuneraTion reporT CONTiNuED
for The year ended 31 december
34 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
Details of the Executive Directors’ share interests under this plan are
given in the table below:
1 January Partnership Matching Free Dividend 31 December
2008 shares shares shares shares 2008
Alex snow 10,222 1,543 1,543 2,658 315 16,281
Andrew umbers 2,148 1,543 1,543 886 98 6,218
Between 1 January 2009 and 2 April 2009 Alex snow and Andrew
umbers were both awarded 409 partnership and 409 Matching shares.
pensions
None of the Directors receives any employer pension contributions from
the Group either under defined contribution or under final salary
schemes.
proportion of fixed and variable remuneration
in line with the reward structure outlined above, the relative proportions
of fixed annual remuneration and performance related pay made for
2008 for the Executive Directors are as follows:
Non-performance Performance
related (%) related (%)
Alex snow 12.2 87.8
Andrew umbers 15.7 84.3
directors’ service contracts
The Combined Code recommends that a one-year notice period or
contract terms be set as an objective for Executive Directors. The
Remuneration Committee’s policy is that service contracts should not
have a notice period exceeding 12 months and should not contain a
liquidated damages clause in the event of termination. payment of the
notice period for Andrew umbers may be made at monthly intervals and
is mitigated by any salary earned from new employment in the period of
notice in accordance with recommended best practice.
All Executive Directors have service contracts without fixed terms and
with notice periods of 12 months or less. The principal terms extant in
these contracts are as set out below. The Directors’ service contracts
and letters of engagement for Non-executive Directors will be available
for inspection at the Company’s Annual General Meeting.
Contract Notice
Contractual
termination
date period payment
Alex snow 13.11.03 12 months None
Andrew umbers 16.10.06 12 months None

non-executive directors
Non-executive Directors do not hold service contracts but letters of
engagement. The Non-executive Directors’ letters of engagement are each
for an initial term of one year with two months’ notice. Non-executive
Directors are subject to the process of re-appointment on a rolling
basis at the time of the Annual General Meeting. Non-executive
Directors receive a fee for their services to the Board. The Chairman
and Executive Directors set fee levels for Non-executive Directors,
excluding the Chairman. The other Non-executive Directors set the fee
for the Chairman. The Non-executive Directors are not involved in the
discussions to determine their own remuneration. Additionally the
current policy of the Board is that Non-executive Directors should not
serve more than nine years if it is determined that this would prejudice
their independence. The current expected time commitment of Nonexecutive
Directors other than the Chairman is 20 days per annum.
The Chairman commits on average two days per week to the Company.
Non-executive Directors do not participate in the Group’s annual bonus
arrangements or long-term incentive arrangements. Fees cease to be
payable immediately upon termination of any appointments for any
reason and no compensation is payable in respect of such termination.
The overall fee for Non-executive Directors is a £60,000 basic fee plus
£15,000 for chairing a Committee and in respect of the senior Nonexecutive
Director. The fee for Martin Gray, during the year was
£125,000. The Board believe these fee levels are appropriate and
reflect the experience brought by the Non-executive Directors, the time
commitment they give, and the contribution they make.
FIVE YEAR HISTORICAL TSR PERFORmANCE
Growth in the value of a hypothetical £100
£250
£200
£150
£100
£50
£0 Dec 03 Dec 04 Dec 05 Dec 06 Dec 07 Dec 08
The Evolution Group plc
FTsE small Cap
FTsE 250
The above graph shows the TsR against that of the FTsE small cap
index (excluding investment Trusts) and the FTsE 250. TsR is calculated
assuming dividends are reinvested on receipt.
in the opinion of the Directors, the FTsE small cap index (excluding
investment Trusts) is the most appropriate index against which the total
shareholder return of the Group should be measured as at 31 December
2008, because it was an index of similar-sized companies to the Group
as at that date. The Group’s growth strategy and commitment to
improving shareholder value seek to ensure that the Group becomes
part of the FTsE 250 and it is this index that the Group entered during
March 2009. For context only, in the period shown in the graph above,
the Group was listed on the AiM market from December 1999 up until
its move to the Full list of the london stock Exchange in June 2003,
when it became a constituent of the FTsE small cap index. Thereafter,
the Group’s shares then joined the FTsE 250 index in March 2004 and
left the FTsE 250 index in June 2005 when they returned to the FTsE
small cap index. The Group joined the FTsE 250 index in March 2009.
environmental social and governance (esg)
The Committee does not consider corporate performance on EsG issues
when setting the remuneration of Executive Directors as given the profile
and operations of the Group it does not believe that consideration of
these matters is likely to have a material impact on such remuneration.
However, the Board does consider the major risks to the Group when
setting quantitative and qualitative performance objectives of the
Executive Directors and performance against those objectives does have
a direct bearing on the level of remuneration, including bonuses and
share awards provided to those Directors.
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
35

audited information
The report on remuneration from page 31 up to this statement has not been audited. The Company’s auditors pricewaterhouseCoopers llp have
audited the following information as required by section 235 (4) of the Companies Act 1985.
A summary of the total remuneration paid to Executive and Non-executive Directors appears in the table below:
36 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
Benefits Total Total
Salary/fees Bonus award in kind 2008 2007
£'000 £'000 £'000 £'000 £'000 Note
execuTive direcTors
Alex snow 100 806 14 920 547 (1)
Andrew umbers 100 600 12 712 111 (1)
Graeme Dell – – – – 477
non-execuTive direcTors
Martin Gray 125 – – 125 125
lord Maclaurin 75 – – 75 75
Nicholas irens 75 – – 75 75
Mark Nicholls 60 – – 60 60
peter Gibbs 69 – – 69 15 (2)
ToTal 604 1,406 26 2,036 1,485
notes to remuneration in table above
1. Alex snow and Andrew umbers each received bonuses of £300k in April 2008. in March 2009 Alex snow received an additional bonus of £675k
and Andrew umbers received an additional bonus of £400k in relation to performance in 2008 of which 25% was deferred into shares under the
Evolution Group plC Executive share incentive plan 2002. Brief details of the deferred share award mechanism are provided on page 33 of this
Report and further details of the awards themselves can be found below on page 37 of this report.
2. Fees to peter Gibbs in 2007 reflect his appointment to the Board on 1 October 2007 and his appointment as Chairman of the Remuneration
Committee in May 2008.
Benefits in kind represent contributions for private medical insurance and the provision of a company car allowance (and congestion charge
payments).
Total aggregate emoluments of Directors appear in note 12.
directors’ pensions
None of the Directors receives any pension contributions from the Group under either defined contribution or final salary schemes.
directors’ shares under option
At 1 January Granted Exercised Earliest Expiry Exercise Market price At 31 December
Note 2008 during the year during the year exercise date date price (p) at exercise date 2008
Alex snow
11.05.01 (2) 1,065,632 – – 12.05.04 11.05.11 58.67 – 1,065,632
11.05.01 (3) 2,025,933 – – 12.05.03 11.05.11 58.67 – 2,025,933
29.06.01 (1) 1,500,000 – – 30.06.04 29.06.11 52.30 – 1,500,000
13.11.03 (4) 2,000,000 – – 22.03.06 12.11.13 1.00 – 2,000,000
Andrew umbers
05.06.06 (5) 500,000 – – 03.05.09 03.05.16 1.00 – 500,000
19.09.06 (6) 100,000 – – 18.09.09 18.09.16 1.00 – 100,000
28.03.08 (7) – 500,000 – 31.01.10 28.03.18 1.00 – 500,000
30.12.08 (8) – 500,000 – 31.01.11 30.12.18 1.00 – 500,000
No options lapsed during the year to 31 December 2008. No options were cancelled during the year. On 28 March 2008 and 30 December 2008,
Andrew umbers was awarded 500,000 shares under the 2002 Esis. Call rights will be granted and the shares will vest on 31 January 2010 and
31 January 2011 subject to Andrew umbers remaining with the Group up to those dates. There was no consideration on grant and the exercise
price is 1p per share.
direcTors' remuneraTion reporT CONTiNuED
for The year ended 31 december

On 8 April 2009, Alex snow was awarded 175,179 shares under the
2002 Esis as the 25% deferral element of his £675,000 bonus and
Andrew umbers was awarded 103,810 shares under the 2002 Esis
as the 25% deferral element of his £400,000 bonus. The shares were
awarded based upon the average of the mid market price of the shares
of The Evolution Group plc. This was as derived from the Daily Official
list published by The london stock Exchange plc on the three days
immediately prior to the granting of the award in principal by the Board.
The awards, which have an exercise price of 1p per share will vest three
years from the date of grant by the award of call rights. This is subject
to achievement of certain performance conditions and subject to claw
back provisions based on the profitability of the Group during the
performance period.
save as set out above, no Directors or any members of the immediate
family of Directors, have any options over shares in the Company or any
Group Company or, during the year to 31 December 2008, was granted
or exercised an option over shares in the Company.
The market price for an ordinary share in the Company at 31 December
2008 was £0.86 (2007: £1.23). The highest price throughout the year
was £1.28 (2007: £1.59) and the lowest was £0.65 (2007: £0.99).
summary of schemes for directors’ options in the above tables
1. These options were granted under the 2001 Executive share Option
scheme. under the terms of this scheme the performance criteria
require that the closing bid of The Evolution Group plc share price,
as derived from the Daily Official list published by The london stock
Exchange plc, must be not less on average than a specified amount
for a period of 60 consecutive days before options can be exercised.
if the share price is £0.90 then 25% of the options may be exercised;
if £1.10, a further 25% may be exercised; if £1.30 then a further 25%
may be exercised and if £1.50, the remaining 25% may be exercised.
The vesting conditions for these options have been met in full.
2. These options were granted under the 2000 Executive share Option
scheme (unapproved ordinary). A performance criterion has been set
making the exercise of the option conditional on the middle market
quotation of The Evolution Group plc share price increasing by an average
of 50% above the relevant exercise price over a period of 30 dealing
days since the date of the grant. The vesting conditions for these
options have been met in full.
3. These options were granted under the 2000 Executive share Option
scheme (unapproved ordinary). No performance criteria are attached
to the exercise of these options. The vesting conditions for these
options have been met in full.
4. These options were granted under the 2002 Executive share incentive
plan. The options were granted subject to performance criteria in respect
of the Group’s adjusted earnings per share (based upon the adjusted
operating profit figure divided by the weighted average number of
shares) for the full years in 2004 and 2005. The vesting conditions
for these options have been met in full.
5. These options were granted under the 2002 Executive share incentive
plan, as part of the arrangements to complete the recruitment of Andrew
umbers to the Group. The award will vest on 3 May 2009 subject only to
Andrew umbers remaining in employment with the Group up to the
date of vesting.
6. Andrew umbers was granted these options under the 2002 Executive
share incentive plan following and subject to the acquisition of 100,000
shares for his own account, which he purchased on 18 september 2006.
The award will vest on 18 september 2009 subject only to Andrew
umbers remaining in employment and retaining the shares purchased
on his own account up to the date of vesting. No consideration was
payable for the grant of the award.
7. These options were granted under the 2002 Executive share incentive
plan, as part of the arrangements to complete the recruitment of Andrew
umbers to the Group. The award will vest on 31 January 2010 subject
only to Andrew umbers remaining in employment with the Group up to
the date of vesting.
8. These options were granted under the 2002 Executive share incentive
plan, as part of the arrangements to complete the recruitment of
Andrew umbers to the Group. The award will vest on 31 January 2011
subject only to Andrew umbers remaining in employment with the Group
up to the date of vesting.
We have made very good progress
WiTh The inTegraTion and developmenT
of each of our businesses.
37

performance share plan
At 1 January Vesting At 31 December
Date of award 2008 Granted period Forfeited 2008
Alex snow
22.12.06 2,000,000 – 30.06.09 to 22.12.16 – 2,000,000
Andrew umbers
22.12.06 4,000,000 – 30.06.09 to 22.12.16 – 4,000,000
notes to the performance share plan
Refer to page 33 for the performance share plan awards. The Remuneration
Committee may use their discretion to reduce the number of shares over
which an award vests depending on the overall performance of the Group.
Awards over 8,000,000 shares, from a maximum pool of 10,000,000
shares were made to Executive Directors on 22 December 2006
reflecting the relatively challenging year experienced by the Group in
2007. The remaining 2,000,000 shares and the 2,000,000 shares
forfeited by Graeme Dell on his resignation as a Director were
transferred into the staff pool, and would only be made available to staff
and Executive Directors who were appointed after 31 December 2006.
For further details of share schemes across the Group, see note 38 to
the Financial statements. The performance targets attached to these
awards have not been met and therefore all existing awards lapsed on
the 1 April 2009.
direcTors' remuneraTion reporT CONTiNuED
for The year ended 31 december
38 THE EvOluTiON GROup plC ANNuAl REpORT & ACCOuNTs 2008
directors’ interests in ordinary shares of The evolution group plc
The Directors in office at the year end had interests in the ordinary share
capital of the Company (all of which were beneficial) as shown below:
1 January 2008 31 December 2008
Alex snow 3,023,392 3,029,451
Andrew umbers 102,148 106,218
Martin Gray 18,000 18,000
lord Maclaurin 51,500 51,500
Nicholas irens 25,000 25,000
Mark Nicholls 20,000 20,000
peter Gibbs - -
The above shareholdings include shares acquired and issued under the
“The Evolution Group sip”. subsequent to the year end and up to the
2 April 2009, Alex snow and Andrew umbers have each purchased 409
additional partnership shares under The Evolution Group sip, which have
been matched by the issue of 409 shares by the Company.
chairman of the remuneration committee
peter Gibbs
8 April 2009

We have audited the Consolidated Financial statements of The Evolution
Group plc for the year ended 31 December 2008 which comprises the
Consolidated income statement, the Consolidated Balance sheet, the
Consolidated Cash Flow statement, the Consolidated statement of
Recognised income and Expense and the related notes on page 40 to
76. The Group Financial statements have been prepared under the
accounting policies set out on pages 44 to 76.
We have reported separately on the parent Company Financial statements
of The Evolution Group plc for the year ended 31 December 2008
and on the information in the Directors’ Remuneration Report that is
described as having been audited.
respective responsibilities of directors and auditors
The Directors’ responsibilities for preparing the Annual Report and
the Group Consolidated Financial statements in accordance with
applicable law and international Financial Reporting standards (iFRs)
as adopted by the European union are set out in the statement of
Directors’ Responsibilities on pages 22 to 23.
Our responsibility is to audit the Group Consolidated Financial statements
in accordance with relevant legal and regulatory requirements and
international standards on Auditing (uK and ireland). This report,
including the opinion, has been prepared for and only for the Company’s
members as a body in accordance with section 235 of the Companies
Act 1985 and for no other purpose. We do not, in giving this opinion,
accept or assume responsibility for any other purpose or to any other
person to whom this report is shown or into whose hands it may come
save where expressly agreed by our prior consent in writing.
We report to you our opinion as to whether the Group Consolidated
Financial statements give a true and fair view and whether the Group
Consolidated Financial statements have been properly prepared in
accordance with the Companies Act 1985 and Article 4 of the iAs
Regulation. We also report to you whether in our opinion the information
given in the Directors' Report is consistent with the Group Consolidated
Financial statements.
in addition we report to you if, in our opinion, we have not received
all the information and explanations we require for our audit, or if
information specified by law regarding Director’s remuneration and
other transactions is not disclosed.
We review whether the Corporate Governance statement reflects the
Group's compliance with the nine provisions of the Combined Code
(2006) specified for our review by the listing Rules of the Financial
services Authority, and we report if it does not. We are not required to
consider whether the Board’s statements on internal control cover all
risks and controls, or form an opinion on the effectiveness of the
Group’s corporate governance procedures or its risk and control
procedures.
We read other information contained in the Annual Report and consider
whether it is consistent with the audited Group Financial statements.
The other information comprises only the Financial and Operational
highlights, Chairman’s Report, the Chief Executive’s Report, the Financial
Review, the Directors’ Report, the Corporate Governance Report from
the Chairman of the Audit Committee and the unaudited part of the
Directors’ Remuneration Report. We consider the implications for our
report if we become aware of any apparent misstatements or material
inconsistencies with the Group Consolidated Financial statements.
Our responsibilities do not extend to any other information.
The maintenance and integrity of The Evolution Group plc website is
the responsibility of the Directors; the work carried out by us does not
involve consideration of these matters and, accordingly, we accept no
responsibility for any changes that may have occurred to the financial
statements since they were initially presented on the website. legislation
in the united Kingdom governing the preparation and dissemination of
financial statements may differ from legislation in other jurisdictions.
basis of audit opinion
We conducted our audit in accordance with international standards
on Auditing (uK and ireland) issued by the Auditing practices Board.
An audit includes examination, on a test basis, of evidence relevant
to the amounts and disclosures in the Group Financial statements.
it also includes an assessment of the significant estimates and
judgements made by the Directors in the preparation of the Group
Consolidated Financial statements, and of whether the accounting
policies are appropriate to the Group’s circumstances, consistently
applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide us
with sufficient evidence to give reasonable assurance that the Group
Consolidated Financial statements are free from material misstatement,
whether caused by fraud or other irregularity or error. in forming our
opinion we also evaluated the overall adequacy of the presentation of
information in the Group Consolidated Financial statements.
opinion
in our opinion:
independenT audiTors' reporT To The
members of The evoluTion group plc
for The year ended 31 december
• the Group Consolidated Financial statements give a true and fair view,
in accordance with iFRs as adopted by the European union, of the
state of the Group’s affairs as at 31 December 2008 and of its loss
and cash flows for the year then ended;
• the Group Consolidated Financial statements have been properly
prepared in accordance with the Companies Act 1985 and Article 4
of the iAs Regulation; and
• the information given in the Directors' Report is consistent with the
Group Consolidated Financial statements.
pricewaterhousecoopers llp
Chartered Accountants and Registered Auditors
london, united Kingdom
8 April 2009
39

40 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Restated
2008 2007
Note £’000 £’000
Fee and commission income 4 62,066 70,650
Fee and commission expenses 4 (1,257) (2,007)
net fee and commission income 4 60,809 68,643
Trading income 5 1,978 16,595
other income 6 1,117 230
TOTAL INCOME 3 63,904 85,468
profit on disposal of available-for-sale investments - financial assets 7 20 299
share of post tax results of associate 21 – 29
operating expenses 9 (81,201) (77,770)
exceptional operating expenses 9/10 – (7,628)
Total operating expenses 9 (81,201) (85,398)
OPERATING (LOSS)/PROFIT FROM CONTINuING OPERATIONS (17,277) 398
Finance income 13 5,576 3,094
Finance expense 13 (997) (310)
(LOSS)/PROFIT BEFORE INCOME TAX FROM CONTINuING OPERATIONS (12,698) 3,182
income tax credit/(expense) 1,661 (4,340)
exceptional income tax credit – 3,912
TOTAL INCOME TAX CREDIT/(EXPENSE) 14 1,661 (428)
(LOSS)/PROFIT AFTER TAX FROM CONTINuING OPERATIONS (11,037) 2,754
(loss)/profit from discontinued operations 8 (2,459) 448
(LOSS)/PROFIT FOR THE YEAR FROM TOTAL OPERATIONS (13,496) 3,202
ATTRIBuTABLE TO:
MINORITY INTEREST (652) 233
EQuITY HOLDERS OF THE EVOLuTION GROuP PLC (12,844) 2,969
(13,496) 3,202
(LOSS)/EARNINGS PER SHARE ATTRIBuTABLE TO THE EQuITY HOLDERS OF THE
EVOLuTION GROuP PLC DuRING THE YEAR:
Basic (loss)/earnings per share from continuing operations 15 (4.87p) 1.21p
Basic (loss)/earnings per share from discontinuing operations 15 (1.15p) 0.21p
(6.02p) 1.42p
Diluted (loss)/earnings per share from continuing operations 15 (4.19p) 1.01p
Diluted (loss)/earnings per share from discontinuing operations 15 (0.99p) 0.18p
(5.18p) 1.19p
DIVIDEND PROPOSED/PAID PER SHARE – INTERIM (PAID) 16 0.75p 0.67p
– FINAL (PROPOSED) 16 1.27p 1.25p
DIVIDEND PROPOSED/PAID (£’000) – INTERIM (PAID) 16 1,607 1,402
– FINAL (PROPOSED) 16 2,985 2,655
The notes on pages 44 to 76 form an integral part of these Financial statements.
Consolidated inCome statement
FOR THE YEAR ENDED 31 DECEMBER 2008

ASSETS
2008 2007
Note £’000 £’000
NON-CuRRENT ASSETS
Goodwill 17 10,447 9,932
intangible assets 18 7,586 2,706
property, plant and equipment 19 3,383 3,616
Deferred income tax assets 20 9,380 9,300
Trade and other receivables 22 – 35
TOTAL NON-CuRRENT ASSETS 30,796 25,589
CuRRENT ASSETS
Trade and other receivables 22 58,713 92,299
Available-for-sale financial assets 23 1,056 680
Trading portfolio assets 24 5,034 19,171
cash and cash equivalents 25 103,639 122,743
Assets of disposal groups classified as held-for-sale:
– cash and cash equivalents 8 21,692 –
– other assets 8 6,360 –
TOTAL CuRRENT ASSETS 196,494 234,893
TOTAL ASSETS 227,290 260,482
LIABILITIES
CuRRENT LIABILITIES
Trade and other payables 26 60,251 96,082
Trading portfolio liabilities 27 4,260 6,744
current income tax liabilities 133 1,519
liabilities of disposal groups classified as held-for-sale 8 12,878 –
TOTAL CuRRENT LIABILITIES 77,522 104,345
NON-CuRRENT LIABILITIES
Deferred income tax liabilities 28 1,791 340
provisions for other liabilities and charges 29 763 525
TOTAL NON-CuRRENT LIABILITIES 2,554 865
TOTAL LIABILITIES 80,076 105,210
EQuITY
CAPITAL AND RESERVES ATTRIBuTABLE TO EQuITY SHAREHOLDERS
share capital 32 2,245 2,232
share premium 31 29,762 28,795
capital redemption reserve 31 373 373
Merger reserve 31 29,332 51,230
Available-for-sale and other reserves 31 (1,891) (1,687)
retained earnings 31 86,524 72,389
SHAREHOLDERS’ EQuITY EXCLuDING MINORITY INTEREST 31 146,345 153,332
MINORITY INTERESTS IN EQuITY 869 1,940
TOTAL EQuITY 147,214 155,272
TOTAL EQuITY AND LIABILITIES 227,290 260,482
The notes on pages 44 to 76 form an integral part of these Financial statements.
The Financial statements on pages 40 to 76 were approved by the Board of Directors on 8 April 2009 and were signed on its behalf by:
Alex Snow
chief executive
Consolidated BalanCe sHeet
AS AT 31 DECEMBER 2008
41

Consolidated CasH FloW statement
FOR THE YEAR ENDED 31 DECEMBER 2008
42 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Restated
2008 2007
Note £’000 £’000
CASH FLOwS FROM OPERATING ACTIVITIES FROM CONTINuING OPERATIONS:
cash generated from operations 33 13,509 45,470
Finance income received 5,576 3,496
Finance expense paid (997) (311)
income tax paid (754) (719)
CASH FLOwS (ABSORBED BY) OPERATING ACTIVITIES FROM DISCONTINuED OPERATIONS: (1,702) (767)
NET CASH (ABSORBED BY) OPERATING ACTIVITIES – TOTAL 15,632 47,169
CASH FLOwS FROM INVESTING ACTIVITIES FROM CONTINuING OPERATIONS:
Acquisition of business 30 (4,431) –
net proceeds from sale of available-for-sale financial assets 23 – 1,385
Fees in relation to acquisition of subsidiaries – (11)
purchase of property, plant and equipment (1,554) (746)
purchase of intangible assets (704) (864)
purchase of available-for-sale financial assets (1,025) –
CASH FLOwS (ABSORBED BY) INVESTING ACTIVITIES FROM DISCONTINuED OPERATIONS: (447) (237)
NET CASH (ABSORBED BY) INVESTING ACTIVITIES – TOTAL (8,161) (473)
CASH FLOwS FROM FINANCING ACTIVITIES FROM CONTINuING OPERATIONS:
proceeds from issuance of ordinary shares 219 151
proceeds from issuance of shares to third parties in the WDB uK equity capital Fund limited – 550
Dividends paid to the company’s shareholders 16 (4,262) (3,496)
purchase of shares held by the Trust (1,607) (9,557)
CASH FLOwS FROM FINANCING ACTIVITIES FROM DISCONTINuED OPERATIONS: – –
NET CASH (ABSORBED BY) FINANCING ACTIVITIES – TOTAL (5,650) (12,352)
net increase in cash and cash equivalents 1,821 34,344
cash and cash equivalents at beginning of year 122,743 88,565
exchange (loss) on cash 767 (166)
less: cash and cash equivalents as held-for-sale 8 (21,692) –
cash and cash equivalents at end of year from continuing operations 25 103,639 122,743
The notes on pages 44 to 76 form an integral part of these Financial statements.

2008 2007
£’000 £’000
(loss)/profit for the financial year (13,496) 3,202
revaluation of available-for-sale financial assets (note 31) (651) 139
Fair value changes transferred to income statement on disposal 447 (36)
Deferred income tax (debit) on share options taken to equity (note 31) (996) (991)
NET EXPENSE RECOGNISED DIRECTLY IN EQuITY (1,200) (888)
TOTAL RECOGNISED (EXPENSE)/INCOME FOR THE YEAR (14,696) (2,314)
ATTRIBuTABLE TO:
Minority interest (652) 233
equity holders of The evolution Group plc (14,044) 2,081
(14,696) 2,314
The notes on pages 44 to 76 form an integral part of these Financial statements.
Consolidated statement oF ReCoGnised inCome and eXPense
FOR THE YEAR ENDED 31 DECEMBER 2008
43

1. aCCoUntinG PoliCies
The principal accounting policies adopted in the preparation of these
Financial statements are set out below. except as explained below,
these policies have been consistently applied to the years presented.
Basis of preparation
The Financial statements of the Group have been prepared in accordance
with international Financial reporting standards (“iFrs”) as adopted by the
european union (“eu”) and iFric interpretations and with those parts of the
companies Act 1985 applicable to companies reporting under iFrs.
The Financial statements have been prepared under the historical cost
convention, as modified by the revaluation of available-for-sale financial
assets, and financial assets and financial liabilities (including derivative
instruments) at fair value through the profit or loss.
A summary of the Group accounting policies is set out below, together with
an explanation of where changes have been made to previous policies on
the adoption of new accounting standards in the year.
Discontinued operations and disposal groups held-for-sale
When the Group is committed to dispose of a business segment that
represents a separate major line of business, and it is intended that such a
disposal will be completed within one year of the decision to sell, it classifies
such a business segment as a discontinued operation, in accordance with
iFrs 5 ‘non-current assets held-for-sale and discontinued operations’.
The assets of disposal groups are presented separately from other assets
on the Group Balance sheet and the liabilities of disposal groups are
presented separately from other liabilities on the Group Balance sheet.
The assets and liabilities of the disposal groups classified as held-for-sale
are measured at the lower of carrying amount and fair value less costs to
sell. The comparative Balance sheet is not restated. The post-tax result
of the discontinued operation is shown as a single amount on the face of
the Group income statement, with a restatement of the comparative period.
in determining the post-tax result of the discontinued operation only those
central costs that will be eliminated on disposal are allocated to the
discontinued operation.
The Group has disclosed evolution securities china limited (“escl”) as
a discontinued operation following the Board’s decision to dispose of a
controlling interest in the business on 18 December 2008. in addition the
company has classified its subsidiary WDB capital uK equity Fund limited
as held-for-sale based on the Group Board’s intention to reduce its holding
below 50% during 2009.
Critical accounting estimates and judgements
The preparation of Financial statements in conformity with iFrs requires
the use of estimates and assumptions that affect the reported amounts of
assets and liabilities at the date of the Financial statements and the reported
amounts of revenues and expenses during the reporting year. Although these
estimates are based on management’s best knowledge of the amount,
event or actions, actual results ultimately may differ from those estimates.
The areas involving a higher degree of judgement or complexity, or areas
where assumptions and estimates are significant to the Financial statements
are disclosed as follows:
notes to tHe FinanCial statements
FOR THE YEAR ENDED 31 DECEMBER 2008
44 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Intangible assets and goodwill impairment
intangible assets, such as customer relationships and distribution channels
are tested for impairment based on management’s assumptions and estimates
of future cash flows and discount rates. Goodwill is tested for impairment
based on industry income and earnings multiples less costs to sell calculations.
intangible assets that derive their value from contractual customer relationships
or that can be separated and sold and have a finite useful life are amortised
over their estimated useful life. Determining the estimated useful life of these
finite life intangible assets requires an analysis of circumstances, and judgement
by management. At each Balance sheet date, or more frequently when events
or changes in circumstances dictate, intangible assets are assessed for
indications of impairment. if indications are present, these assets are subject
to an impairment review. The impairment review comprises a comparison of
the carrying amount of the asset with its recoverable amount: the higher of
the assets’ or the cash-generating unit’s net selling price and its value in use.
value in use is calculated by discounting the expected future cash flows obtainable
as a result of the asset’s continued use, including those resulting from its
ultimate disposal, at a market-based discount rate on a pre-tax basis.
Based on the outcomes of the above prescribed analysis, the Group believes
the carrying values of its intangible assets are held at appropriate levels and
do not require impairment.
Income taxes
The Group is subject to income taxes. Judgement is required in determining
estimates in relation to the provision for income taxes. There are transactions
for which the ultimate tax determination is uncertain during the ordinary course
of business. Where the final tax outcome of these matters is different from the
amounts that were initially recorded, such differences will impact the income tax
and deferred tax provisions in the period in which such determination is made.
Deferred tax has been recognised on the belief that taxable profits will be
available against which deductible temporary differences can be utilised.
Based on forecasts the Group expects to recover its deferred tax assets
within the next three years.
Fee and commission income
initial commissions received from clients (and paid onto intermediaries) are
capitalised, when received, in the Balance sheet, as a liability. These amounts
are amortised over the average holding period of five years, the relevant
period in which the relationship between the commission earned (and paid
away) and the assets under management to which such commissions relate.
Significant Accounting Policies
Basis of Consolidation
The Group’s consolidated Financial statements comprise the Financial
statements of the company and its subsidiary undertakings.
a) Investments in subsidiary undertakings
interests in subsidiary undertakings are presented in accordance with
iAs 27, ‘consolidated and separate Financial statements’ and sic-12
‘consolidation - special purpose entities’. subsidiaries are all entities
(including special purpose entities) over which the Group has the power
to govern the financial and operating policies generally accompanying a

shareholding of more than one half of the voting rights. The existence and
effect of potential voting rights that are currently exercisable or convertible
are considered when assessing whether the Group controls another entity.
subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are deconsolidated from the date that control ceases.
All intra-Group transactions and balances are eliminated on consolidation
and consistent accounting policies are used throughout the Group for the
purposes of the consolidation.
Investments in fund entities
Where the Group is an investor and has at least significant influence over the
fund entities either through a majority investment or through its role as investment
manager, those fund entities are considered to be subsidiaries of the Group.
b) Transactions with minority interests
The Group applies a policy of treating transactions with minority interests as
transactions with parties external to the Group. Disposals to minority
interests result in gains and losses for the Group that are recorded in the
consolidated income statement. purchases from minority interests result in
goodwill, being the difference between any consideration paid and the
relevant share acquired of the carrying value of net assets of the subsidiary.
Business combinations
The purchase method of accounting is used to account for the acquisition
of subsidiaries as prescribed under iFrs 3, ‘Business combinations’.
The cost of an acquisition is measured at the fair value of the identifiable
assets given, equity instruments issued and liabilities or contingent liabilities
incurred or assumed at the date of exchange, together with any costs
directly related to the acquisition. The excess of the cost of an acquisition
over the Group’s share of the fair value of the identifiable assets, liabilities
and contingent liabilities acquired is recorded as goodwill. if the cost
of the acquisition is less than the fair value of the Group’s share of the
identifiable assets, liabilities and contingent liabilities of the subsidiary
acquired, the difference is recognised immediately in the consolidated
income statement as negative goodwill.
Income recognition
The Group follows the principles of iAs 18, ‘revenue recognition’, in
determining appropriate revenue recognition policies. in principle, therefore,
revenue is recognised to the extent that it is probable that the economic
benefits associated with the transaction will flow into the Group.
a) Fee and commission income
Fee and commission income includes transaction income, commission
income, trail commission, placing commission, retainer income, initial
commission and fees from asset management activities (including interest
income on private client assets), net of payaway to independent Financial
Advisers, introducers and self-employed half commission persons.
initial commissions received from clients are capitalised, when received, in
the Balance sheet, as deferred income. These amounts are amortised over
the average holding period of five years, the relevant period in which the
relationship between the commission earned (and paid away) and the assets
under management to which such commissions relate is believed to exist.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Fees and commissions are recognised in the income statement when the
related services are performed and all legal conditions have been satisfied,
and when considered recoverable.
b) Fee and commission expenses
Fee and commission expenses includes amounts paid to other third
parties in connection with corporate finance fee income such as introduction
fees. costs incurred in the normal course of executing commission
transactions across our exchanges and settling through recognised
networks are also included.
initial commissions paid to advisors are capitalised, when paid, in the
Balance sheet as an asset. These amounts are amortised over the average
holding period of five years, the relevant period in which the relationship
between the commission earned (and paid away) and the assets under
management to which such commissions relate is believed to exist. The
amortised amount appears within fee and commission expense.
c) Trading income
Trading income from market making and principal trading activities
comprises all gains and losses from changes in the fair value of financial
assets and liabilities held for trading, together with any related dividend
income on positions held. costs incurred in the normal course of executing
trading transactions across our exchanges and settling through recognised
networks are included within other administrative expenses.
Derivative contracts relating to equity options and warrants received in lieu
of corporate finance fees, which have been acquired at zero cost are initially
accounted and measured at fair value on the date a derivative contract is
entered into. This is included within trading income and subsequently measured
at fair value with the gain or loss on re-measurement taken to the
consolidated income statement within trading income.
d) Other income
other income includes fees for probate valuations and foreign exchange
gains and losses resulting from the re-translation and settlement of foreign
currency transactions and any dividend income on available-for-sale financial
assets. interest income on segregated client money accounts which relates
to evolution securities is included within this category.
Operating leases
rentals applicable to operating leases where substantially all the benefits
and risk of ownership remain with the lessor are charged to the income
statement on a straight line basis over the lease term.
lease incentives are credited to the consolidated income statement and
spread over the life of the lease.
Exceptional items
exceptional items are shown on the face of the consolidated income
statement of the Group. The Group presents them separately, in order to
simplify comparability between different financial periods. An exceptional
item is defined in terms of its size and/or nature. These do not arise from
normal trading operations and may not be individually significant in size
but in aggregate are worthy of separate disclosure.
45

1. aCCoUntinG PoliCies (CONTINuED)
Segment reporting
Business segments are distinguishable components of the Group that
provide products or services that are subject to risks and reward that are
different to those of other business segments. Geographical segments
provide products or services within a particular economic environment that
is subject to risks and rewards that are different to those of components
operating in other economic environments. Business segments are the
primary reporting segments. Group costs are allocated to segments on a
reasonable and consistent basis. The analysis by geographical segment
is based on the location of the customer.
Foreign currency translation
(a) Functional and presentation currency
items included in the Financial statements of each of the Group’s entities
are measured using the currency of the primary economic environment
in which the entity operates (the ‘functional currency’). The consolidated
Financial statements of the Group are presented in sterling, which is the
company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional currency using
the exchange rates prevailing at the dates of the transactions. Foreign exchange
gains and losses resulting from the settlement of such transactions and from
the translation at year end exchange rates of monetary assets and liabilities
denominated in foreign currencies are recognised in the income statement.
Translation differences on non-monetary items, such as equities held at fair
value through profit or loss, are reported as part of their fair value gain or
loss. Translation differences on non-monetary items measured at fair value
in a foreign currency, such as equities classified as available-for-sale
financial assets, are translated into the functional currency using the rate of
exchange at the date the fair value was determined. Translation differences
are included in the fair value reserve in equity.
(c) Group companies
The results and financial position of all the Group entities that have a
functional currency different from the presentation currency are translated
into the presentation currency as follows:
• assets and liabilities for each Balance sheet presented are translated
at the closing rate at the date of that Balance sheet;
• income and expenses for each income statement are translated at
average exchange rates (unless this average is not a reasonable
approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated
at the rate on the dates of the transactions); and
• all resulting exchange differences are recognised as a separate
component in equity which is fair value and other reserves.
Goodwill and fair value adjustments arising on the acquisition of a foreign
entity are treated as assets and liabilities of the foreign entity and translated
at the closing rate.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
46 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Financial Liabilities - Redeemable Investment Shares
WDB capital uK equity Fund limited, a subsidiary of the Group, issues
redeemable investment shares to subscribers of its fund. The fund’s
redeemable investment shares can be redeemed, subject to certain
restrictions in relation to the timing of redemptions at the option of holders.
Therefore the Group deems these redeemable investment shares to be a
financial liability and classifies them under trade and other payables.
The value of these redeemable shares changes depending on the performance
of the fund. As WDB capital uK equity Fund limited is a subsidiary of the
Group, and therefore consolidated within the Groups Financial statements,
any change in the value of these redeemable investment shares issued to
third party’s leads to an adjustment to trade and other payables, and a
corresponding debit or credit being taken to other income.
Finance income and expense
interest income and expense for all interest-bearing financial instruments,
except for those classified as held for trading or designated at fair value
through profit or loss, are recognised within ‘finance income’ and ‘finance
expense’ in the income statement using the effective interest method.
The effective interest rate method is a method of calculating the amortised cost
of a financial asset or a financial liability and of allocating the interest income
or interest expense over the relevant period. The effective interest rate is the
rate that exactly discounts estimated future cash payments or receipts through
the expected life of the financial instrument or, when appropriate, a shorter
period to the net carrying amount of the financial asset or financial liability.
The calculation of the effective interest rate includes all fees and points paid
or received between parties to the contract that are an integral part of the
effective interest rate, transaction costs and all other premiums or discounts.
Goodwill
Goodwill arises on business combinations, including the acquisition of
subsidiaries, associated entities, and represents the excess of the fair value
of the purchase consideration and direct costs of making the acquisition,
over the fair value of the Group’s share of the identifiable assets acquired
and the liabilities and contingent liabilities assumed on the date of the
acquisition. Goodwill is stated at cost less accumulated impairment losses,
which are charged to the income statement.
For calculating Goodwill, fair values of acquired identifiable assets, liabilities
and contingent liabilities are determined by reference to market values or by
discounting expected future cash flows to present value. This discounting is
either performed using market rates or by using risk-free rates and risk
adjusted expected future cash flows.
Intangible assets
intangible assets are stated at cost less accumulated amortisation and
accumulated impairment losses, if any. The following are the main
categories of intangible assets:
Intangible assets with a finite useful life
a) Brands: purchased brands are capitalised at cost less amortisation and
provisions for impairment over their estimated useful lives. expenditure
incurred to develop or maintain brands internally is recognised as an
expense in the period incurred.

) Distribution channels and customer relationships: purchased distribution
channels and customer relationships are capitalised at cost less
amortisation and provisions for impairment over their estimated useful lives.
c) Computer software: Acquired computer software licenses are stated at
cost, including those costs incurred to acquire and bring to use the specific
software, less amortisation and provisions for impairment, if any.
Any intangible assets with a finite life are amortised over a period of their
useful lives on a straight-line basis.
The following useful lives have been determined for intangible assets:
computer software 3 years
customer relations 5 years
Brand 5 years
Distribution channels 5 years
Intangible assets with an indefinite useful life
Financial Industry Regulatory Authority (“FINRA”) Licence
costs associated with the acquisition of the us Broker Dealer, esus, are deemed
to relate to the FinrA licence only. The licence is deemed to have an indefinite
life, based on continuing FinrA membership having no fixed life, and consequently
is not being amortised.
Financial Services Authority (“FSA”) Regulatory Status
costs associated with the acquisition of WDB capital limited (previously
Wickam capital limited on 14 August 2007), are deemed to relate to its
FsA regulatory status. The regulatory status is deemed to have an indefinite
life, based on continuing FsA membership having no fixed life, and
consequently is not being amortised.
Property, plant and equipment
All property, plant and equipment (“ppe”) is shown at cost less subsequent
depreciation and impairment. cost includes expenditure that is directly
attributable to the acquisition of the item. Depreciation on ppe is calculated
using the straight-line method to allocate the cost of each asset to its
residual value over its estimated useful life, as follows:
leasehold improvements over 5 years
computers and similar equipment over 3 to 5 years
Fixtures, fittings, and other equipment over 3 to 5 years
Major renovations are depreciated over the remaining useful life of the
related asset or to the date of the next major renovation, whichever is sooner.
Impairment of goodwill, intangible assets and PPE
Goodwill and intangible assets that have an indefinite useful life are
not subject to amortisation or depreciation and are tested annually for
impairment. other intangibles and ppe are assessed at the reporting date
or whenever events or changes in circumstance indicate that the carrying
amount may not be recoverable. The impairment review comprises a
comparison of the carrying amount of the asset with its recoverable amount
of the asset or cash generating unit (for goodwill and intangible assets with
an indefinite useful life).
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
The recoverable amount is the higher of an asset’s or cash generating units
fair value less costs to sell and its value in use. An impairment loss is
recognised in the consolidated income statement in the period in which it
occurs for the amount by which the asset’s or cash generating unit’s carrying
amount exceeds its recoverable amount.
The assets’ residual values and useful lives, are reviewed and adjusted if
necessary at each Balance sheet date.
Financial assets and liabilities
The Group classifies its financial assets and liabilities as trading portfolio
assets and liabilities, available-for-sale financial assets, derivative financial
instruments, stock borrowing and lending, trade and other receivables, cash
and cash equivalents, and trade and other payables. The classification
depends on the purpose for which the assets and liabilities were acquired.
Management determines the classification of its investments at initial
recognition and re-evaluates this designation at every reporting date.
Financial assets are initially recognised at fair value plus transaction costs
for all financial assets not carried at fair value through the profit or loss.
Financial assets carried at fair value through profit or loss are initially
recognised at fair value, and transaction costs are expensed in the income
statement. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or where the company
has transferred substantially all risks and rewards of ownership. Financial
liabilities are derecognised when they are extinguished, that is, when the
obligation is discharged, cancelled or expires.
Trading portfolio assets and liabilities
Financial assets and liabilities are classified as held for trading if acquired
principally for the purpose of selling in the short-term or if so designated by
management. purchases and sales of investments are recognised on trade date,
being the date on which the company commits to purchase or sell the asset.
Available-for-sale financial assets
Available-for-sale financial assets are either designated in this category or
are not classified in any other category. Available-for-sale financial assets
are those intended to be held for an indefinite period of time, which may be
sold in response to needs for liquidity or changes in interest rates, exchange
rates or equity prices. They are initially recognised at fair value including
direct and incremental transaction costs. They are subsequently held at fair
value. Dividends on available-for-sale equity instruments are recognised in
the income statement when the entity’s right to receive payment is established.
Gains and losses arising from changes in fair value are included as a separate
component of equity within fair value and other reserves until sale or when impaired,
when the cumulative gain or loss is transferred to the income statement.
Measurement of trading portfolio assets and liabilities and available-forsale
financial assets
For trading portfolio assets and liabilities and available-for-sale financial assets
that are quoted in active markets, fair values are determined by reference to
the current quoted bid/offer price, with trading portfolio assets marked to the
bid price and trading portfolio liabilities marked at the offer price. Where
independent prices are not available, fair values may be determined using
valuation techniques with reference to observable market data.
47

1. aCCoUntinG PoliCies (CONTINuED)
These may include comparison to similar instruments where market
observable prices exist, discounted cash flow analysis, option pricing models
such as Black-scholes and other valuation techniques commonly used by
market participants.
The Group makes an assessment at each Balance sheet date as to whether
there is any objective evidence of impairment, being any circumstance
where an adverse impact on estimated future cash flows of the financial
asset or group of assets can be reliably estimated. in the case of equity
investments classified as available-for-sale, the cumulative loss (measured
as the difference between the acquisition cost and the current fair value,
less any impairment loss on that financial asset previously recognised in
the income statement) is removed from equity and recognised in the
income statement. impairment losses recognised in the income statement
on available-for-sale equity investments are not reversed through the
income statement.
Derivative financial instruments
Derivative contracts relating to equity options and warrants held have been
acquired at zero cost in lieu of corporate finance fees. WDB capital uK equity
Fund limited holds contracts for difference (“cFD”) and these are brought
into the Group on consolidation. Derivatives are initially accounted for and
measured at fair value on the date a derivative contract is entered into and
subsequently measured at fair value. The gain or loss on re-measurement is
taken to the income statement within trading income. Fair values are obtained
from quoted prices prevailing in active markets, including recent market
transactions, and valuation techniques, including discounted cash flow models
and options pricing models as appropriate. All derivatives are included in
assets when their fair value is positive and liabilities when their fair value is
negative, unless there is the legal ability and intention to settle net.
The regular way purchase or sale of held for trading financial assets is recognised
using trade date accounting. A regular way purchase or sale is a purchase or
sale of a financial asset under a contract whose terms require delivery of the
asset within the time frames established generally by regulation or convention
in the marketplace concerned. purchases or sales that do not fall within the
regular way classification (generally beyond three days settlement) are treated
as derivatives in the period between the trade date and the settlement date,
i.e. as a forward purchase or sale of security. The contract value (i.e. the trade
date receivable or payable) of such transactions is not recorded on the
Balance sheet, but the change in fair value is recognised on the Balance
sheet and income statement within trading income in the intervening period
between the trade date and settlement date.
Stock borrowing and lending
The Group enters into stock borrowing and lending arrangements with
certain institutions on a collateralised basis with securities or cash advanced
or received as collateral. The transfer of securities to institutions is not
reflected on the Balance sheet. Where cash collateral is advanced or
received, an asset or liability is recorded at the amount of cash collateral
advanced or received. securities borrowed are recognised on the Balance
sheet and are recorded as a trading liability and measured at fair value.
Fees charged in the course of borrowing are recorded on an accruals basis
and included within other operating expenses. interest received or paid on
collateral is included within finance income or expense.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
48 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Trade and other receivables
Trade and other receivables (which include counterparty receivables) are
recognised initially at fair value and subsequently measured at amortised cost
using the effective interest method, less provision for impairment. A provision
for impairment of trade receivables is established when there is objective
evidence that the Group will not be able to collect all amounts due according to
the original terms of the receivables. evidence that an impairment of the asset
may be required includes ageing of the debt beyond 180 days, persistent
lack of communication and internal awareness of third party trading difficulties.
The amount of the provision is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at
the effective interest rate. The amount of the provision is recognised in the
income statement within operating expenses.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents
include cash in hand, deposits held at call with banks, and other short-term
highly liquid investments that are readily convertible to known amounts of cash
and which are subject to an insignificant risk of change in value. such investments
are normally those with original maturities of three months or less.
Trade and other payables
Trade and other payables (which includes counterparty payables) are
recognised initially at fair value, which is the agreed market price at the
time goods or services are provided and are subsequently recorded at
amortised cost using the effective interest rate. The Group accrues for all
goods and services consumed but as yet unbilled at amounts representing
management’s best estimate of fair value.
Provisions
provisions are recognised for present obligations arising as consequences
of past events where it is probable that a transfer of economic benefit will
be necessary to settle the obligation and it can be reliably estimated.
provisions for dilapidation on leasehold premises are recognised as a liability
in all years over the life of the lease and discounted to fair value at an
effective interest rate over the period of the property lease. The accrual is
based on expected costs to be incurred at the end of the lease period to
bring the building back into a suitable state discounted to the net present
value using an effective discount rate that reliably calculates the present
value of the future obligation.
contingent liabilities are possible obligations whose existence will be
confirmed only by uncertain future events or present obligations where the
transfer of economic benefit is uncertain or cannot be reliably measured.
contingent liabilities are not recognised in the Financial statements,
however, they are disclosed unless considered remote.
Employee benefits
(a) Pension obligations
The Group does not offer any company pension schemes. however, the
Group does make defined contributions to employees’ approved personal
pension plans, and the costs of these are charged to the income statement
when they are incurred.

(b) Share-based plans
The Group’s management awards high-performing employees bonuses in
the form of equity-settled share based payments, from time to time, on a
discretionary basis. in accordance with iFrs 2, ‘share-based payments’,
equity-settled share-based payments are measured at fair value at the date
of grant. Fair value is measured by use of the Black-scholes pricing model
or, in the case of awards of call rights, which have an exercise price of 1p
per ordinary share the fair value is based on the market value at the time of
grant discounted by the dividend yield over the expected life. The fair value
determined at the grant date of the equity-settled share-based payments
is expensed on a straight-line basis over the vesting period, based on the
Group’s estimate of the number of shares that will eventually vest. The
options are generally subject to three-year service vesting condition, and
their fair value is recognised as an employee benefits expense with a
corresponding increase in other reserve equity over the vesting period.
The proceeds received net of any directly attributable transaction costs
are credited to share capital (nominal value) and share premium when
the options are exercised.
(c) Employees’ Share Ownership Plan (“ESOP”)
The esop allows every employee to purchase up to £1,500 worth of the
Group’s shares per annum on a tax efficient basis. These are purchased on
a monthly basis and held in trust and are matched by shares issued by the
Group company on a one-for-one basis.
Current and deferred income taxes
current income taxes are computed on a basis of the tax laws enacted or
substantially enacted at the Balance sheet date in the countries where the
Group’s subsidiaries operate and generate income.
Taxes are computed using the liability method, deferred income on
temporary differences between the bases of assets and liabilities and their
carrying amounts in Financial statements. The deferred income tax is not
accounted for if it arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of the
transaction affects neither accounting nor taxable profit nor loss.
Deferred income tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which tax losses or
deductible temporary differences can be utilised. such assets and liabilities
are not recognised if the temporary difference arises from goodwill, negative
goodwill or from the acquisition of an asset, which does not affect either
taxable or accounting income.
Deferred income tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where the Group
is able to control the reversal of the temporary difference and it is probable
that the temporary difference will not reverse in the foreseeable future.
Deferred income tax is charged or credited in the income statement, except
when it relates to items charged or credited directly to equity, in which case
the deferred tax is also dealt with in equity.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
The Group is entitled to a tax deduction for amounts treated as compensation
on exercise of certain employee share options under uK tax rules. As explained
under “share-based plans” above, a compensation expense is recorded in
the Group’s income statement over the period from the grant date to the
vesting date of the relevant options. As there is a temporary difference between
the accounting and tax bases, a deferred tax asset is recorded. The deferred
tax asset arising is calculated by comparing the estimated amount of tax
deduction to be obtained in the future (based on the company’s share price
at the Balance sheet date) with the cumulative amount of the compensation
expense recorded in the income statement. if the amount of estimated
future tax deduction exceeds the cumulative amount of the remuneration
expense, at the statutory tax rate, the excess is recorded directly in equity,
against retained earnings.
in accordance with the provisions of iFrs 2, no compensation charge is
recorded in respect of options granted before 7 november 2002 or in
respect of those options which have been exercised or have lapsed before
1 January 2005. nevertheless, tax deductions have arisen and will continue
to arise on these options. The tax effects arising in relation to these options
are recorded directly in equity, against retained earnings.
Share capital
a) Share issue costs
ordinary shares are classified as equity.
incremental costs directly attributable to the issue of new shares or options
are shown in equity as a deduction from the proceeds, net of tax.
b) Treasury shares
Where the Group purchases its own equity share capital (treasury shares),
the consideration paid, including any directly attributable incremental costs
(net of taxes), is deducted from equity attributable to the company’s equity
holders until the shares are cancelled, reissued or disposed of.
c) Trust shares
The Group’s employee Benefit Trust (“the Trust”) uses funds provided by
the Group to meet the Group’s obligations under the employee share option
schemes in place. All shares acquired by the Trust are purchased on the
open market. The consideration paid, including any directly attributable
incremental costs (net of taxes), is deducted from equity attributable to
the company’s equity holders.
d) Dividend distribution
Dividend distribution to the Group’s shareholders is recognised in equity in
the Group’s Financial statements in the period in which the dividends are
paid. Final dividends are recognised at the date they are approved by
shareholders at the Annual General Meeting.
Earnings per share
Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
in issue during the period, excluding those held in the evolution Group plc
employees’ share Trust which are treated as cancelled. For diluted earnings
per share, the weighted number of ordinary shares in issue is adjusted to
assume conversion of all dilutive potential ordinary shares and option costs
not yet charged to the income statement.
49

1. aCCoUntinG PoliCies (CONTINuED)
Standards, amendments and interpretations to existing standards that are
not yet effective and have not been early adopted by the Group. The following
interpretations and amendments to existing standards have been published
and are mandatory for the Group’s accounting periods beginning on or after
1 January 2009 or later periods, but the Group has not early adopted them:
• iFrs 8, ‘operating segments’ is required to be adopted for the Group for
the financial year ending 31 December 2009. The standard requires a
‘management approach’ under which segmental information is presented
using the same method as that adopted for internal reporting purposes.
This is not expected to have a significant impact on the Group;
• iAs 23 (amendment), ‘Borrowing costs’ is required to be adopted for the
Group for the financial year ending 31 December 2009. The amendment
requires borrowing costs directly attributable to the acquisition,
construction or production of a qualifying asset to be capitalised. The
option of immediately expensing those borrowing costs will be removed.
This is not expected to have a significant impact on the Group;
• iAs 1 (revised), ‘presentation of financial statements’ is required to be
adopted for the Group for the financial year ending 31 December 2009.
The revised standard requires comparative information to be reclassified
or restated, and a restated Balance sheet as at the beginning comparative
period in addition to the current requirement to present Balance sheets
at the end of the current period and comparative period to be shown.
This is not expected to have a significant impact on the Group;
• iFrs 2 (amendment), ‘share-based payment’ is required to be adopted for
the Group for the financial year ending 31 December 2009. This amendment
clarifies that vesting conditions are service conditions and performance
conditions only. other features of share based payments are not vesting
conditions. This is not expected to have a significant impact on the Group;
• iAs 32 (amendment), ‘Financial instruments presentation’ is required to
be adopted for the Group for the financial year ending 31 December
2009. This amendment clarifies the classification of puttable financial
instruments and obligations arising on liquidation. This is not expected to
have a significant impact on the Group;
• iAs 27 (revised), ‘consolidated and separate financial statements’ is required
to be adopted for the Group for the financial year ending 31 December 2010.
The revised standard requires the effects of non-controlling interests to be
recorded in equity while no change in control will no longer result in gains
or losses in goodwill. The Group is assessing the implications of this change;
• iFrs 3 (revised), ‘Business combinations’ is required to be adopted for
the Group for the financial year ending 31 December 2010. The revised
standard results in changes to the acquisition method of business
combinations. The Group expects that this revision will impact the
accounts for business combinations in the financial year ended 2010;
• iFrs 5 (amendment), ‘non-current assets held-for-sale and discontinued
operations’ is required to be adopted for the Group for the financial year
ending 31 December 2010. The amendment clarifies that all of a subsidiary’s
assets and liabilities as held-for-sale if a partial disposal will result in loss
of control. This is not expected to have a significant impact on the Group;
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
50 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
• iAs 36 (amendment), ‘impairment of assets’ is required to be adopted for
the Group for the financial year ending 31 December 2009. The amendment
requires fair value less costs to sell is calculated on the basis of discounted
cash flows. This is not expected to have a significant impact on the Group;
• iAs 38 (amendment), ‘intangible assets’ is required to be adopted for the
Group for the financial year ending 31 December 2009. The amendment
defines a prepayment as being recognised only if payment has been
made in advance of receiving the right to goods or receipt of services.
The Group is assessing the implications of this change; and
• iAs 39 (amendment), ‘Financial instruments: recognition and measurement’
is required to be adopted for the Group for the financial year ending
31 December 2009. This amendment allows movements from fair value
through profit or loss category where a derivative commences or ceases to
qualify as a hedging instrument in cash flow or net investment hedge.
2. FinanCial instRUments and RisK manaGement
Through its normal operations, the Group is exposed to a number of risks,
the most significant of which are market, credit, and operational risks. The
Group’s Balance sheet includes large cash balances which are exposed to
interest rate risk. in 2008 the Group’s finance income was affected by the
Bank of england’s decision to cut interest rates, in 2009 the Group’s finance
income will continue to be affected by any further adjustments to the Bank
of england’s interest rate policy. The Group has minimal exposure to foreign
exchange risk. its strong cash and cash equivalents position also ensures
that it has low liquidity risk.
Risk Management Framework
The Group Board is responsible for approving all risk management policies
and for determining the overall risk appetite for the Group.
The Audit committee is responsible for reviewing the Group’s internal control
and risk management systems.
Risk Committee
The Group’s Directors have delegated to a sub-committee, the risk
committee, the responsibility for setting the risk management policies
applied by the Group and its subsidiaries.
The purpose of the risk committee is to monitor and assess all types
of risk within the Group and to ensure that internal controls are properly
established so that the Group’s risk exposure is commensurate with the
wishes of the Board. in addition, the risk committee tracks external market
events and tries to evaluate their impact on the Group. The risk committee
meets at least monthly and is chaired by the head of risk.
Risk Department
The risk Department has day-to-day responsibility for monitoring, mitigating
and reporting risks within the Group and for escalating issues to senior
management. The risk Department follows the guidelines laid down by the
credit policy, the credit limit Book, the Trading policy statement and the
operational risk policy as approved by the Group Board, the Audit committee
and the risk committee. The Treasury Department is responsible for
hedging foreign exchange risk and for managing liquidity.

Risk Reporting
The Group Board receives a monthly risk report detailing market and credit
risk exposures, operational risk incidents and losses and key risk indicators.
in addition, the risk committee discusses significant exposures and reviews
limit breaches or requests for temporary limit increases.
(a) Management of Market Risk
Market risk management seeks to identify and control the potential loss in
value of Group assets arising from changes in market prices. The principal
risk for the Group is an adverse change in equity prices. The risk
Department’s role is to independently monitor, control and report this risk.
it is important for senior management to be aware of the possible capital
implications of an adverse movement in prices. stress tests provide
an indication of the potential size of losses that could arise in extreme
conditions. The stress tests approved by the risk committee are historical
scenarios that show the profit & loss that would occur if the historic changes
were to be repeated. These stress test results are calculated in near realtime
and the end-of-day results are reviewed by the risk committee and the
Board of Directors. This stress test is used to determine whether the Group
holds enough capital under pillar 2 of the capital requirements Directive.
Equity Price Risk
The Group is exposed to equity market risk in respect of its equity holdings.
These comprise: (i) available-for-sale financial assets, (ii) trading portfolio assets
and liabilities that result from market making, and (iii) derivatives. in conjunction
with stress tests outlined above, a sensitivity analysis has been performed
on the Group’s exposure to equity risk. The analysis is based on the assumption
that underlying equity prices had an increase/decrease of 10% with all other
variables held constant at the year end. The results as outlined below, are
only representative of the impact that is observed at the year end, and not
of the impact that was observed during the year. This occurs due to a varying
portfolio throughout the year.
i) Available-for-sale financial assets
The Board continues to review the performance of existing available-for-sale
financial assets in the Group’s portfolio and realises these investments when
deemed appropriate.
The Group does not consider any of the assets to be impaired.
For available-for-sale financial assets, a 10% increase/decrease in equity
prices would result in an increase/decrease respectively in equity reserves
of £106,000 (2007: £68,000).
ii) Trading portfolio assets and liabilities that result from market making
The risk Department monitors the market risk limits as laid down in the Trading
policy statement. An automated system notifies the department whenever
a limit is breached and the risk Department then have a discussion with
the trader before notifying senior management as to how the breach will
be resolved. The whole process is logged and is fully auditable so that it is
possible, for example, to analyse limit breach patterns or limit utilisation.
A 10% increase/decrease in equity prices on trading portfolio assets would
increase/decrease profit in the income statement by £503,000 (2007:
£1,777,000). A 10% increase/decrease in equity prices on trading portfolio
liabilities would decrease/increase profit in the income statement by
£426,000 (2007: £605,000) respectively.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
iii) Derivatives
Derivatives mainly consist of options and warrants received in lieu of
corporate finance fees. Management of market risk in respect of derivatives
is through active involvement of senior management under the supervision
of the Board of Directors.
The Group will occasionally use derivatives to hedge its trading portfolio.
All such positions are discussed with senior management and independently
monitored by the risk Department.
Additionally, non-regular way trades at the period end give rise to derivative
forward contracts as a result of the change in market value from the
contract (trade) date to 31 December 2008.
WDB capital uK equity Fund limited holds cFDs and these are brought into the
Group on consolidation. These positions are held on a matched basis and are
closed out on a monthly basis, hence do not provide the Group with any material
exposure to equity risk. At the year end there were no open cFD positions.
The impact of a 10% increase in equity prices on derivatives would increase
profit in the income statement by £111,000 (2007: £257,000). A 10%
decrease in equity prices would decrease profit in the income statement
by £99,000 (2007: £232,000).
Foreign exchange risk
The following table summarises the Group’s currency exposure arising from
unmatched monetary assets or liabilities not denominated in the Group’s
functional currency of the Group entity:
2008 2007
£’000 £’000
net assets/(liabilities)
euros 110 496
us Dollar 566 1,223
hong Kong Dollar 731 642
swiss Franc 216 89
other currencies 140 (83)
1,763 2,367
The Group’s activities are primarily denominated in sterling and it therefore
has minimal foreign exchange risk. The majority of transactions denominated
in a foreign currency that would expose the Group to currency risk are economically
hedged immediately, normally in the spot market. The Group does not enter
into forward exchange contracts for hedging anticipated transactions.
Based on the Group’s year end net assets dominated in non sterling currencies
the impact of a 10% strengthening or weakening in sterling against major
currencies would result in a gain or loss of £176,000 (2007 £237,000).
During 2008 the Group was also exposed to foreign exchange movements
with the WDB capital uK equity Fund limited. however, the Group’s interest
in the fund reduced from 94.79% to 50.20% during 2008. in 2009 the
Group expects its interest in the fund to reduce below 50% and therefore
will no longer be 100% consolidating WDB capital uK equity Fund limited’s
results. The impact of the continued dilution of the Group’s interest in WDB
capital uK equity Fund limited, and converting to equity associate accounting
(in accordance with iAs 28) reduces further the Group’s exposure to foreign
exchange movements.
51

2. FinanCial instRUments and RisK manaGement (CONTINuED)
Interest rate risk
The Group has interest bearing assets in mainly cash and cash equivalents. The Group has a policy of maintaining excess funds in cash and short-term
deposits and is exposed to short-term interest rate risk. At the year end, all of the Group’s excess funds were invested in cash and short-term deposits.
The Group does not use any derivatives to hedge interest rate risk.
At 31 December 2008 if liBor market interest rates had been 100 basis points higher/lower with all other variables held constant, profit for the year would
have been £1,026,000 (2007: £504,000) higher and £1,026,000 (2007: £504,000) lower respectively.
(b) Management of Credit Risk
The Group has exposure to credit risk, which is the risk that a counterparty will cause a financial loss for the Group by failing to discharge an obligation. credit
risk exposure is generated primarily from the settlement risk on equities and fixed income. This is principally the risk that counterparty fails to settle a trade thereby
forcing the Group to close out the trade at a possible loss. it is important to note that the potential loss is not the value of the trade, but the difference between
the prices at which the trade was executed and the current price. This is termed the mark-to-market value. The Group is also exposed to credit risk on outstanding
receivables; exposure to this risk is managed by taking into account financial position, past experience and other factors for the customers. The Group does
not lend money nor does it trade in oTc derivatives and the longest dated transactions are limited to trade date plus twenty five business days.
Credit Risk Control
counterparty receivables represent monies due from institutional trading counterparts. The risk Department undertakes a credit review of all new accounts
and periodically reviews all existing counterparties. As part of the review, each counterparty is assigned a credit limit according to the guidelines in the credit
limit Book. limits are based on either the amount of assets under management or risk assessments from a third party provider. Where data is not available the
limit is based on the net assets and profitability of the counterparty. new accounts cannot begin to trade until the credit review has been completed and the
counterparty assessed as credit worthy.
The chart below summarises the credit quality of the Group's financial assets by third party credit ratings (if available):
2008 %
1. AAA-A rATeD
2. un-rATeD – privATe clienT cusToDiAn %
61
priMe BroKers
3. un-rATeD – invesTMenT BAnKinG
4
insTiTuTionAl clienTs 19
4. un-rATeD 16
The ratings noted above have been derived using source information from standard & poor and Moody's. All financial assets over an “A” rating are
consolidated under the “AAA-A” category and include as cash and cash equivalents, trade debtors and counterparties. Where an asset is un-rated, that is,
there is no recognised external rating applicable to the asset, we have created sub-divisions to further distinguish the asset classes. All un-rated assets have
undergone a thorough credit review and have been allocated internal ratings based on this review.
each day the risk Department prepares a counterparty exposure report that shows all credit risk exposures, potential future exposures and limits. credit limit
breaches are annotated and investigated. The risk committee reviews all credit limit breaches and authorises mitigating action when deemed necessary.
The Group has £101.7m of its cash balance deposited with a single AA rated uK Bank. however there are no significant concentrations of credit risk with
unrated counterparties. All items classified as neither past due nor impaired, following the credit reviews described above, are considered to be recoverable
and therefore of a credit quality that do not require impairment.
The table below of financial assets analyses amounts due by ageing:
Neither past Past due but not impaired Greater than Carrying
due nor impaired 0-3 months 3-6 months 6-9 months 1 year Impaired value
31 December 2008 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Trade receivables 4,002 685 798 42 60 (384) 5,203
counterparty receivables 32,246 6,273 99 950 892 (1,454) 39,006
other receivables 5,832 57 48 – 24 – 5,961
Available-for-sale financial assets 1,056 – – – – – 1,056
Trading portfolio assets 5,034 – – – – – 5,034
cash and cash equivalents 103,639 – – – – – 103,639
Amounts owed from Group undertakings 693 – – – – – 693
152,502 7,015 945 992 976 (1,838) 160,592
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
52 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2007 %
1. AAA-A rATeD
2. un-rATeD – privATe clienT cusToDiAn %
60
priMe BroKers
3. un-rATeD – invesTMenT BAnKinG
2
insTiTuTionAl clienTs 35
4. un-rATeD 3

Neither past Past due but not impaired Greater than Carrying
due nor impaired 0-3 months 3-6 months 6-9 months 1 year Impaired value
31 December 2007 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Trade receivables 5,512 1,021 1,086 164 155 (666) 7,272
counterparty receivables 43,244 28,815 720 2,161 – (1,394) 73,546
other receivables 3,506 823 – – – – 4,329
Available-for-sale financial assets 680 – – – – – 680
Trading portfolio assets 19,171 – – – – – 19,171
cash and cash equivalents 122,743 – – – – – 122,743
Deposits 35 – – – – – 35
194,891 30,659 1,806 2,325 155 (2,060) 227,776
(c) Management of Liquidity Risk
The Group seeks to manage liquidity risk, to ensure sufficient liquidity is available to meet foreseeable needs and to invest cash assets safely and profitably.
The Group actively maintains a mixture of cash and short-term deposits that is designed to ensure the Group has sufficient available funds for operations,
trading and corporate finance activities. As part of this process the Group has been diversifying its deposits to ensure that it is not exposed to undue risk
caused by the possible increase in redemption times in its money market funds. WDB capital limited has also undertaken a similar process to ensure that
the WDB uK equity Fund limited is not unduly exposed to its prime broker. The Group deems there is sufficient liquidity for the near future.
The Group’s exposure to liquidity arises from the equity and fixed income trading activities within the investment bank business and the settlement of trades
within this business. This risk is short-term in nature.
The tables below analyse the Group’s future cash outflows based on the remaining period to the contractual maturity date. The amounts disclosed are the
contractual undiscounted cash flows.
Less than 1 year 1-2 years Total
31 December 2008 £'000 £'000 £'000
Trade and other payables 60,251 – 60,251
Trading portfolio liabilities 4,260 – 4,260
held-for-sale liabilities 12,878 – 12,878
77,389 – 77,389
Less than 1 year 1-2 years Total
31 December 2007 £'000 £'000 £'000
Trade and other payables 96,077 5 96,082
Trading portfolio liabilities 6,744 – 6,744
102,821 5 102,826
(d) Operational Risk Control
The Group defines operational risk as the risk of loss resulting from inadequate or failed internal processes, people, and systems or from external events.
The Group recognises that operational risk can never be eliminated, but seeks to minimise the probability and impact of operational risk events.
The operational risk policy that has been implemented incorporates three key processes:
• A risk and control assessment carried out by the risk Department through discussion with department heads. The assessment scores risk events as to
probability and impact as well as evaluating the design and performance of controls that have been put in place to mitigate the risk. The results of this
assessment form the basis of the Key risks Matrix.
• Monitoring of Key risk indicators by the risk committee and Group Board.
• establishment of an operational loss database to capture and analyse risk incidents and loss events.
The Group also undertake yearly appraisals for all employees as well as completing an independent employment screening of all new employees.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
53

2. FinanCial instRUments and RisK manaGement (CONTINuED)
(e) Capital Risk Management
consistent with others in the industry the Group manages capital on the basis of regulatory capital in accordance with pillar 1 and pillar 2.
capital adequacy and the use of regulatory capital are monitored daily by the Group’s management, employing techniques based on the guidelines developed
by the Basel committee and the european community Directives, as implemented by the Financial services Authority, for supervisory purposes. compliance
with FsA regulatory requirements was maintained throughout the year.
The Group has an internal capital Adequacy Assessment process (commonly known as the icAAp), which it uses to manage regulatory capital. This
Assessment takes into account the risk profile and future plans of the business. under this process the Group is satisfied that there is either sufficient capital
to absorb potential losses or that there are mitigating controls in place to prevent the risks occurring.
The risk Department includes commentary on required and available capital in its monthly risk report to the Group and in the risk committee pack.
The commentary highlights any changes to pillar 1 or 2 numbers and also any expected impact from the anticipated business initiatives.
Where significant business initiatives are planned, the effects on the risk profile of the Group and therefore its capital requirement are considered as part
of the business plan.
Further details regarding the Group’s capital adequacy can be found in its pillar 3 disclosures at www.evgplc.com/otherinformation.aspx.
Fair value of financial instruments
The carrying values of assets and liabilities not held at fair value (cash and cash equivalents, trade receivables, counterparty receivables, other receivables,
and trade and other payables) are not significantly different from fair value.
3. seGment RePoRtinG
By business segment
The Board monitors and reviews the operating performance of the Group by subsidiary. The parent is a holding company for its subsidiaries and the Board
reviews the performance of its subsidiaries separately from the business segment categories disclosed below. The chief executive’s report and Financial
review on pages 4 to 15 highlight the detailed breakdown of these business segments by entity.
investment banking and markets in the current year refers to the business carried out in evolution securities limited, evolution securities china limited,
evolution Watterson Asia securities limited and evolution securities (us) inc. private client investment management refers to private client investment management
under the Williams de Broë brand and includes WDB capital uK equity Fund limited. other activities refer to the central administrative, shared services and
holding company functions, combined with the profits on, the legacy fixed asset investment portfolio.
2008 2008
Continuing Discontinued 2008 2007
operations operations Total Total
£'000 £'000 £'000 £'000
TOTAL ASSETS
investment banking and markets 79,448 4,771 84,219 157,684
private client and asset management 58,078 – 58,078 38,073
other 84,993 – 84,993 64,725
222,519 4,771 227,290 260,482
2008 2008
Continuing Discontinued 2008 2007
operations operations Total Total
£'000 £'000 £'000 £'000
TOTAL LIABILITIES
investment banking and markets (47,766) (595) (48,361) (86,916)
private client and asset management (27,425) – (27,425) (13,474)
other (4,290) – (4,290) (4,820)
(79,481) (595) (80,076) (105,210)
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
54 The evoluTion Group plc AnnuAl reporT & AccounTs 2008

By business segment (continued)
The acquisition of property, plant and equipment and intangible assets is disclosed below:
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2008
Continuing Discontinued 2008 2007
operations operations Total Total
£'000 £'000 £'000 £'000
investment banking and markets 1,062 447 1,509 1,377
private client and asset management 7,132 – 7,132 412
other – – – 15
8,194 447 8,641 1,804
segmental information provided to the Board of Directors for the reportable segments for the year ended 31 December 2008 is as follows:
Yearended 31 December 2008
Restated
Year ended 31 December 2007
Investment Private client Investment Private client
banking and and investment Other banking and and investment Other
markets management activities Total markets management activities Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Fee and commission income 28,994 33,072 – 62,066 38,572 32,131 (53) 70,650
Fee and commission expenses (37) (1,220) – (1,257) (1,151) (856) – (2,007)
net fee and commission income 28,957 31,852 – 60,809 37,421 31,275 (53) 68,643
Trading income 72 1,820 86 1,978 15,806 497 292 16,595
other income 708 835 (426) 1,117 272 (22) (20) 230
TOTAL INCOME
profit on disposal of available-for-sale
29,737 34,507 (340) 63,904 53,499 31,750 219 85,468
financial assets – – 20 20 68 – 231 299
share of post tax results of associate – – – – – – 29 29
Depreciation of ppe (1,097) (517) (7) (1,621) (1,182) (417) (12) (1,611)
Amortisation of intangibles (750) (460) (5) (1,215) (425) (215) (48) (688)
operating expenses (43,628) (33,366) (1,371) (78,365) (48,934) (25,600) (937) (75,471)
exceptional operating expenses
OPERATING (LOSS)/PROFIT FROM
– – – – (814) (1,572) (5,242) (7,628)
CONTINuING OPERATIONS (15,738) 164 (1,703) (17,277) 2,212 3,946 (5,760) 398
Finance income 877 1,561 3,138 5,576 961 692 1,441 3,094
Finance expense (1,372) (422) 797 (997) (2,293) (367) 2,350 (310)
(LOSS)/PROFIT BEFORE INCOME TAX FROM
CONTINuING OPERATIONS (16,233) 1,303 2,232 (12,698) 880 4,271 (1,969) 3,182
income tax credit/(expense) 1,958 18 (315) 1,661 1,036 (878) (586) (428)
(loss)/profit for the year from
discontinued operations (2,459) – – (2,459) 448 – – 448
55

3. seGment RePoRtinG (CONTINuED)
By geographical segment
The disclosure of the Group’s assets, income and costs, ppe and intangibles are below. The analysis is based on the three main geographical areas in which
the Group operates. The uK is the home country of the parent company and the principal location in which all subsidiary companies are registered and
located. Asia relates to the business of escl and eWsl carried out on behalf of chinese clients and is classified as a discontinued operation.
2008 2007
£'000 £'000
TOTAL ASSETS
uK and ireland 222,199 253,069
us 320 843
Asia 4,771 6,570
227,290 260,482
2008 2007
£'000 £'000
PuRCHASE OF PPE AND OTHER INTANGIBLE ASSETS
uK and ireland 9,557 1,567
Asia 447 237
10,004 1,804
2008 2007
£'000 £'000
TOTAL INCOME
uK and ireland 63,549 85,173
us 355 295
Asia 2,335 5,738
66,239 91,206
4. net Fee and Commission inCome
2008
Restated
2007
£'000 £'000
FEE AND COMMISSION INCOME
corporate finance fees 9,228 18,565
Fixed income commission 7,100 3,598
Management fees 20,233 16,741
sales commission 25,505 31,746
62,066 70,650
Fee and commission expenses (1,257) (2,007)
net fee and commission income 60,809 68,643
5. tRadinG inCome
2008
Restated
2007
£'000 £'000
Trading income 2,247 16,880
Fair value loss on options taken through profit or loss (269) (285)
1,978 16,595
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
56 The evoluTion Group plc AnnuAl reporT & AccounTs 2008

6. otHeR inCome Restated
2008 2007
£'000 £'000
other (losses)/income (805) 289
Foreign exchange gains/(losses) 1,922 (59)
1,117 230
7. PRoFit on disPosal oF aVailaBle-FoR-sale FinanCial assets
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2007
£'000 £'000
proceeds from disposal of available-for-sale financial assets 20 1,385
Fair value of investments at date of disposal – (1,385)
20 –
reversal of fair value reserve (note 31) – 299
profit on disposal of available-for-sale financial assets 20 299
8. assets and liaBilities oF disPosal GRoUPs ClassiFied as Held-FoR-sale and disContinUed oPeRations
(a) Assets of disposal groups classified as held-for-sale
Total
2008 2007
£'000 £'000
Goodwill 1,171 –
property, plant and equipment 501 –
intangible assets 323 –
Deferred tax assets 830 –
other non current assets 144 –
Trade and other receivables 2,927 –
other current assets 464 –
cash and cash equivalents 1 21,692 –
TOTAL 28,052 –
(b) Liabilities of disposal groups classified as held-for-sale
Total
2008 2007
£'000 £'000
Trade and other payables 12,788 –
other current liabilities 18 –
other non current liabilities 72 –
TOTAL 12,878 –
Group
The assets and liabilities related to escl and its subsidiary and WDB capital Fund uK equity limited have been presented as held-for-sale.
ESCL
on 18 December 2008, the Board gave approval for the Group to enter into an investment agreement with First eastern Financial holdings limited, which will
result in a partial dilution of the Group’s interest in escl. The investment agreement was formally signed on the 31 March 2009, and is disclosed in detail in
note 36. At 31 December 2008 the assets and liabilities of escl and its subsidiary are classified as held-for-sale and their operations as discontinued.
wDB Fund
The Group Board’s intention is to reduce the Group’s interest in WDB capital uK equity Fund limited by way of a deemed disposal, to be effected by bringing in new
investors into WDB capital uK equity Fund limited. At 31 December 2008, the assets and liabilities of WDB capital uK equity Fund limited were classified as heldfor-sale.
on the 1 January 2008 the Groups investment in WDB capital uK equity Fund limited was 94.79% during the year this was reduced to 50.20%.
1 of the £21.7m of cash and cash equivalents shown above £0.8m relates to escl, the balance of £20.9m relates to WDB capital uK equity Fund limited of which 49.8% (£10.4m)
is held by third party investors outside of the Group.
57

8. assets and liaBilities oF disPosal GRoUPs ClassiFied as Held-FoR-sale and disContinUed oPeRation (CONTINuED)
The results of escl and its subsidiary are shown as discontinuing per the table below:
2008 2007
£'000 £'000
Fee and commission income 3,093 5,160
Fee and commission expenses (365) (62)
net fee and commission income 2,728 5,098
net trading (expense)/income (405) 642
other income/(expense) 12 (2)
TOTAL INCOME 2,335 5,738
employee remuneration expense (3,017) (3,094)
Depreciation – owned assets (144) (75)
Management recharge: depreciation (132) (91)
Management recharge: amortisation (11) (4)
Management recharge: operating lease charges (432) (226)
Amortisation of intangibles (101) (102)
legal costs (66) (100)
Auditors’ remuneration (83) (94)
other operating expenses (1,656) (1,466)
TOTAL OPERATING EXPENSES (5,642) (5,252)
OPERATING (LOSS)/PROFIT FROM DISCONTINuED OPERATIONS (3,307) 486
net finance income 9 89
(LOSS)/PROFIT BEFORE INCOME TAX FROM DISCONTINuED OPERATIONS (3,298) 575
Total income tax credit/(expense) 839 (127)
(LOSS)/PROFIT AFTER TAX FROM DISCONTINuED OPERATIONS (2,459) 448
9. oPeRatinG eXPenses
The following items have been included in arriving at operating profit from contiunuing operations:
Total Restated Exceptional
Total
Restated
2008 2007 2007 2007
£'000 £'000 £'000 £'000
OPERATING EXPENSES
employee remuneration expense (note 12) 51,141 47,841 3,447 51,288
Depreciation: owned assets 1,621 1,611 – 1,611
operating lease charges: leasehold property 1,311 1,527 – 1,527
Amortisation of intangibles 1,378 839 – 839
legal costs 858 692 140 832
Direct dealing costs 3,432 3,285 – 3,285
Auditors’ remuneration (note 11) 928 1,050 – 1,050
other operating expenses 20,532 20,925 4,041 24,966
OPERATING EXPENSES – TOTAL 81,201 77,770 7,628 85,398
10. eXCePtional oPeRatinG eXPenses
exceptional costs in 2007 relate to redundancy and provisions to terminate the systems and leases following closure of W Deb Mvl plc. other operating
expenses include those expenses incurred for wages and salaries, premises and systems which as a result of the integration of Wdeb Mvl plc are not
expected to recur. in addition, they include a net amount of £1,216,000 relating to the settlement and rectification of errors and control related issues arising
prior to the final integration of the W Deb Mvl plc businesses acquired.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
58 The evoluTion Group plc AnnuAl reporT & AccounTs 2008

11. aUditoRs’ RemUneRation
During the year, the Group (including its overseas branches and subsidiaries) obtained the following services from the Group’s auditors at costs as detailed
below:
Continuing Discontinued Total Total
operations operations 2008 2007
2008 2008 2008 2007
£'000 £'000 £'000 £'000
AuDIT SERVICES:
Fees payable to the company’s auditor for the audit of the Group’s annual accounts 70 – 70 201
FEES PAYABLE TO THE GROuP’S AuDITOR AND ITS ASSOCIATES FOR OTHER SERVICES:
The audit of the Group’s subsidiaries 468 56 524 408
other services supplied pursuant to legislation 29 – 29 28
services relating to taxation 268 – 268 198
All other services 93 27 120 215
928 83 1,011 1,050
Fees paid to the Group’s auditors include all fees in their capacity as such. included within the fees payable for the audits of the Group’s annual accounts and of
its subsidiaries is an amount of £31,000 in 2008 (2007: £194,000) which was paid in the year in which it is included, but related to the prior years’ audits.
Taxation services include compliance services such as tax return preparation and advisory services such as consultation on tax matters, tax advice relating to
transactions and other tax planning and advice.
12. emPloYees and diReCtoRs Exceptional Total
Total Restated Restated Restated
2008 2007 2007 2007
£'000 £'000 £'000 £'000
EMPLOYEE REMuNERATION EXPENSE
Wages and salaries 33,889 31,823 2,978 34,801
social security costs 4,116 4,162 381 4,543
redundancy costs 1,033 240 – 240
other pension costs 229 159 – 159
cost of share options 11,729 11,253 – 11,253
other staff costs 145 204 88 292
Total employee remuneration expense 51,141 47,841 3,447 51,288
The average number of employees (including Directors) during the year was as follows: Restated
2008 2007
GROuP
investment banking and markets 137 162
private client and investment management 216 166
other activities 13 11
Total average number of employees 366 339
The actual number of full time employees was 396 at 31 December 2008 (31 December 2007: 352).
Directors
The total emoluments of the highest paid Director were £918,162 (2007: £2,340,867), which comprised aggregate emoluments and £nil (2007:
£1,863,750) of gains on exercise of share options.
no Director accrued benefits under money purchase pension schemes during the year (2007: nil).
Aggregate emoluments for all Directors is shown in the table below:
2008 2007
£'000 £'000
Aggregate emoluments 2,034 1,485
Gains made on exercise of share options – 1,864
2,034 3,349
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
59

13. net FinanCe inCome
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
60 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Restated
2008 2007
£'000 £'000
Finance income – on cash and cash equivalents 5,576 3,094
Finance expense (997) (310)
net finance income 4,579 2,784
interest is paid on overdrawn balances with clearing or settlement institutions.
14. inCome taX eXPense
Restated
2008 2007
£'000 £'000
CuRRENT TAX:
uK corporation income tax on profit 204 4,654
corporation income tax on exceptional items – (2,288)
Adjustments in respect of prior years (690) (1,225)
Adjustments in respect of prior years – exceptional tax – (1,624)
Foreign tax 155 314
current year tax credit (331) (169)
DEFERRED TAX:
current year movement (876) (248)
Adjustments in respect of prior years (454) 845
Total income tax (credit)/expense (1,661) 428
Factors affecting the current tax charge for the year are explained below:
Restated
2008 2007
£'000 £'000
(loss)/profit before income tax from continuing operations (12,698) 3,182
(loss)/profit multiplied by the standard rate of corporation tax in the uK of 28.5% (2007: 30%) (3,619) 954
TAX EFFECTS OF:
expenses not deductible for tax purposes 4,989 5,932
schedule 23 deduction on options exercised (1,854) (1,742)
utilisation of losses (49) (2,127)
Trade losses carried back 874 –
non taxable income (621) –
Adjustment in respect of prior years (690) (2,849)
(lower) tax rates on overseas earnings (125) (113)
stock options taken to equity reserves 197 196
overseas tax credit (132) –
small companies tax relief (20) –
capital allowances (590) (420)
current year tax losses not utilised 1,309 –
CuRRENT INCOME TAX CREDIT (331) (169)
Deferred income tax (876) (776)
Deferred income tax adjustment in respect of prior periods (454) 845
change of rate from 30% to 28% – 528
CuRRENT YEAR MOVEMENT (1,330) 597
TOTAL INCOME TAX (CREDIT)/EXPENSE (1,661) 428

14. inCome taX eXPense (CONTINuED)
The 2007 exceptional tax credit of £3,912,000 includes a prior period adjustment of £1,624,000 on the £5,413,000 consideration receivable from inG for the
net assets of W Deb Mvl plc and £2,288,000 which relates to the 30% tax credit estimated to arise on the £7,628,000 of exceptional operating expenses.
The 2007 adjustments in respect of prior years relates primarily to the write off of deferred tax assets on pension contributions made by the vendor of W Deb
Mvl plc prior to acquisition.
The 2008 adjustment in respect of prior years relates to the recognition of additional income tax losses claimed for the years ended 31 December 2004
to 31 December 2007.
DEFERRED TAX ON ITEMS CHARGED TO INCOME STATEMENT:
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Restated
2008 2007
£'000 £'000
Deferred income tax expense/(credit) on stock options 659 (212)
Deferred income tax (credit) on capital allowances (114) (136)
Deferred income tax (credit) on trade losses (1,289) (251)
Deferred income tax (credit)/expense on trade losses – prior year adjustment (454) 845
Deferred income tax expense/(credit) on other temporary differences 7 (99)
Deferred income tax (credit) on intangibles (139) (78)
change of rate from 30% to 28% – 528
Total deferred income tax (credited)/charged to income statement (1,330) 597
Deferred tax amounted to £996,000 (2007: £991,000) relating to share option charges taken to reserves.
15. eaRninGs PeR oRdinaRY sHaRe
The calculation of the basic (loss)/earnings per ordinary share is based on the (loss)/profit for the period for continuing and discontinuing operations (excluding
minority interest) and on the weighted average number of ordinary shares in issue during the year. The calculation of the diluted (loss)/earnings per share is
based on the basic (loss)/earnings per share adjusted to allow for the issue of shares on the assumed conversion of all dilutive options.
CONTINuING OPERATIONS
Statutory Year ended 31 December 2008
Restated
Year ended 31 December 2007
Loss Weighted Loss Profit Weighted Earnings
£'000 average no. per share (p) £'000 average no. per share (p)
BASIC (10,385) 213,195,385 (4.87) 2,521 209,745,385 1.21
Dilutive effect of share awards – 34,680,832 – – 39,446,913 –
DILuTED (10,385) 247,876,217 (4.19) 2,521 249,192,298 1.01
DISCONTINuING OPERATIONS
Statutory Year ended 31 December 2008
Restated
Year ended 31 December 2007
Loss Weighted Loss Profit Weighted Earnings
£'000 average no. per share (p) £'000 average no. per share (p)
BASIC (2,459) 213,195,385 (1.15) 448 209,745,385 0.21
Dilutive effect of share awards – 34,680,832 – – 39,446,913 –
DILuTED (2,459) 247,876,217 (0.99) 448 249,192,298 0.18
61

16. diVidends
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
62 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2008 2007
£'000 £'000
prior year final paid: 1.25p (2007: 1.00p) per share 2,655 2,094
current year interim paid: 0.75p (2007: 0.67p) per share 1,607 1,402
4,262 3,496
in addition, the Directors are proposing a final dividend in respect of the financial year ended 31 December 2008 of 1.27p (2007: 1.25p) per share, which will
reduce shareholders equity by £2,708,000. it will be paid on the 22 May 2009 to shareholders on the register of members at 24 April 2009.
Dividends amounting to £53,990 (2007: £170,615) in respect of the company’s shares held by an employee share trust have been waived and accordingly
deducted in arriving at the aggregate dividends proposed.
17. GoodWill
2008 2007
£'000 £'000
COST
At 1 January 9,932 9,956
Additions 1,363 –
exchange differences 323 (24)
Transferred to disposal groups classified as held-for-sale (1,171) –
At 31 December 10,447 9,932
NET BOOk AMOuNT
At 31 December 10,447 9,932
The goodwill acquired in the year relates to the acquisition of the private client investment management business from Kaupthing singer & Friedlander limited
(in administration) on 21 october 2008.
The goodwill transferred to disposal groups classified as held-for-sale relates to the acquisition of 100% of the share capital of eWsl by escl on 14 June 2006.
2008 2007
Investment Private Investment Private
banking client Total banking client Total
£'000 £'000 £'000 £'000 £'000 £'000
uK 8,990 1,363 10,353 8,990 – 8,990
hong Kong 94 – 94 942 – 942
9,084 1,363 10,447 9,932 – 9,932
Impairment test for goodwill
To determine whether impairment exists, the carrying value of goodwill is compared annually with the recoverable amount of the Group’s cash generating
units. The recoverable amount was calculated based on the ‘fair value less costs to sell’ basis. The fair value has been calculated by reference to comparable
financial institutions listed on the hong Kong stock exchange in the case of eWsl and on the london stock exchange in the cases of esl and Williams de
Broë limited. it is the opinion of the Directors that goodwill is fairly valued and no impairment adjustment is necessary.

18. intanGiBle assets
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Computer Licenses and Customer Distribution
software regulatory status relations Brand channels Total
2008 2008 2008 2008 2008 2008
£’000 £’000 £’000 £’000 £’000 £’000
COST
At 1 January 2,589 130 1,576 1,080 351 5,726
Additions 704 – – – – 704
Additions in relation to acquisition (refer to note 30) – – 4,481 – 1,455 5,936
exchange differences – (61) 172 6 – 117
Transferred to disposal groups classified as held-for-sale
(refer to note 8) – – (623) (21) – (644)
AT 31 DECEMBER 3,293 69 5,606 1,065 1,806 11,839
AGGREGATE AMORTISATION AND IMPAIRMENT
At 1 January 1,540 – 498 872 110 3,020
charge for the year 827 – 472 60 120 1,479
exchange differences – – 72 3 – 75
Transferred to disposal groups classified as held-for-sale
(refer to note 8) – – (311) (10) – (321)
AT 31 DECEMBER 2,367 – 731 925 230 4,253
NET BOOk AMOuNT
At 1 January 1,049 130 1,078 208 241 2,706
AT 31 DECEMBER 926 69 4,875 140 1,576 7,586
The intangible assets acquired during the year relate to the acquisition of the singer & Friedlander business on the 21 october 2008. (refer to note 30).
Computer Licenses and Customer Distribution
software regulatory status relations Brand channels Total
2007 2007 2007 2007 2007 2007
£’000 £’000 £’000 £’000 £’000 £’000
COST
At 1 January 1,750 60 1,588 1,081 351 4,830
Additions 839 – – – – 839
Additions in relation to acquisition – 70 – – – 70
exchange differences – – (12) (1) – (13)
At 31 December 2,589 130 1,576 1,080 351 5,726
AGGREGATE AMORTISATION AND IMPAIRMENT
At 1 January 1,096 – 162 792 35 2,085
charge for the year 444 – 341 81 75 941
Write offs – – (5) (1) – (6)
At 31 December 1,540 – 498 872 110 3,020
NET BOOk AMOuNT
At 1 January 654 60 1,426 289 316 2,745
at 31 deCemBeR 1,049 130 1,078 208 241 2,706
63

19. PRoPeRtY, Plant and eQUiPment
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
64 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Leasehold Fixtures Computer Leasehold Fixtures Computer
improvements and fittings equipment Total improvements and fittings equipment Total
2008 2008 2008 2008 2007 2007 2007 2007
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
COST
At 1 January 38 5,417 3,579 9,034 25 5,002 3,062 8,089
Additions – 1,249 752 2,001 13 456 496 965
Acquired with subsidiary – – – – – – 24 24
Write downs – – – – – (41) (3) (44)
exchange differences – 73 25 98 – – – –
Transferred to disposal groups classified as held-for-sale
(refer to note 8) – (692) (114) (806) – – – –
At 31 December 38 6,047 4,242 10,327 38 5,417 3,579 9,034
ACCuMuLATED DEPRECIATION
At 1 January 26 2,759 2,633 5,418 24 1,850 1,878 3,752
Acquired with subsidiary – – – – – – 24 24
charge for the year 3 1,080 682 1,765 2 950 734 1,686
Write downs – – – – – (41) (3) (44)
exchange differences – 53 13 66 – – – –
Transferred to disposal groups classified as held-for-sale
(refer to note 8) – (246) (59) (305) – – – –
At 31 December 29 3,646 3,269 6,944 26 2,759 2,633 5,418
NET BOOk VALuES
AT 31 DECEMBER 9 2,401 973 3,383 12 2,658 946 3,616
At 1 January 12 2,658 946 3,616 1 3,152 1,184 4,337
20. deFeRRed inCome taX
The movement on the deferred income tax account is detailed below:
2008 2007
£'000 £'000
AT 1 JANuARY 9,300 10,973
income statement credit - capital allowances 114 130
income statement (charge)/credit - other temporary differences (7) 99
income statement credit/(charge) - trading losses 1,743 (594)
income statement (charge)/credit - stock options (659) 228
change in income tax rate from 30% to 28% movement in income statement – (547)
equity (charge) - stock options (833) (904)
change in income tax rate from 30% to 28% movement in equity – (87)
Transfer to deferred income tax liabilities – 2
Movement in discontinuing operations throughout the year 552 –
Transferred to disposal groups classified as held-for-sale (830) –
AT 31 DECEMBER 9,380 9,300

20. deFeRRed inCome taX (CONTINuED)
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Capital Other temporary Trading Deferred income
allowances differences losses Options tax asset
2008 2008 2008 2008 2008
£'000 £'000 £'000 £'000 £'000
DEFERRED INCOME TAX ASSETS
At 1 January 198 89 3,123 5,890 9,300
Movement in the year 114 (7) 1,743 (1,492) 358
Movement in discontinuing operations throughout the year 81 – 643 (172) 552
Transferred to disposal group classified as held-for-sale (83) – (643) (104) (830)
AT 31 DECEMBER 310 82 4,866 4,122 9,380
Deferred income tax assets are expected to be recovered as follows:
2008 2007
£'000 £'000
Within twelve months 5,914 5,948
After twelve months 3,466 3,352
Total deferred income tax asset 9,380 9,300
21. inVestment in assoCiates
2008 2007
£'000 £'000
COST
At 1 January – 109
Transfer – (138)
post tax share of profits – 29
AT 31 DECEMBER – –
NET BOOk VALuES
At 1 January – 109
AT 31 DECEMBER – –
The investment in associate relates to WDB capital limited which became a wholly owned subsidiary of the Group on 2 August 2007.
65

22. tRade and otHeR ReCeiVaBles
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
66 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2008 2007
£'000 £'000
CuRRENT
Trade receivables 5,587 7,938
less: provision for impairment of trade receivables (384) (666)
Trade receivables – net 5,203 7,272
counterparty receivables 40,460 74,940
less: provision for impairment of counterparty receivables (1,454) (1,394)
counterparty receivables – net 39,006 73,546
other receivables 10,708 7,888
prepayments and accrued income 3,796 3,593
58,713 92,299
NON CuRRENT
Deposits – 35
58,713 92,334
The opening provision for impairment of trade receivables was £666,000 (2007: £631,000), with a credit to the income statement in 2008 of £282,000 for
the release of provisions (2007: £142,000). no amounts were utilised in the year (2007: £107,000). This has resulted in a closing provision for impairment of
receivables of £384,000 (2007: £666,000).
The provision for impairment of counterparty receivables is £1,454,000 (2007: £1,394,000). During the year there has been a charge to the income
statement of £60,000 (2007: nil) and no amounts utilised (2007: nil).
23. aVailaBle-FoR-sale FinanCial assets
2008 2007
£'000 £'000
At 1 January 680 1,926
Additions 1,000 –
Fair value additions of shares received in lieu of corporate finance income 27 –
1,707 1,926
Disposals of available-for-sale financial assets at fair value – (1,385)
revaluation (deficit)/surplus transfer to equity (note 31) (651) 139
At 31 December
AVAILABLE-FOR-SALE FINANCIAL ASSETS INCLuDE THE FOLLOwING:
listed securities:
1,056 680
equity securities – uK
unlisted securities:
167 606
equity securities – uK 889 74
1,056 680

24. tRadinG PoRtFolio assets
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2007
£'000 £'000
long positions in market making and dealing operations 4,821 17,752
options and warrants received in lieu of corporate finance income 8 1,404
other derivatives 205 15
5,034 19,171
The long trading portfolio assets represent shares listed on both the lse official list and AiM markets.
The nominal value (based on exercise price) of options and warrants held at 31 December 2008 was £1,171,000 (2007: £5,362,000).
25. CasH and CasH eQUiValents
cash at bank includes £769,000 (2007: £1,478,000) received in the course of settlement of client transactions which is held in trust on behalf of clients,
but may be utilised to settle outstanding transactions. it also includes cash of £248,932 (2007: £478,000) held by The evolution Group plc employees’
share Trust and the W Deb Mvl trust which cannot be used by the Group.
2008 2007
£'000 £'000
CASH AND CASH EQuIVALENTS
cash at bank and at hand 2,000 12,628
short term bank deposits 101,639 110,115
103,639 122,743
26. tRade and otHeR PaYaBles
2008 2007
£'000 £'000
Trade payables 1,984 3,061
counterparty creditors 35,167 70,642
other taxation and social security 1,390 1,242
other payables 371 906
Accruals and deferred income 21,339 20,231
60,251 96,082
27. tRadinG PoRtFolio liaBilities
2008 2007
£'000 £'000
short positions in market making and dealing operations 3,985 6,731
other derivatives 275 13
4,260 6,744
The short trading positions represent shares listed on both the lse official list and AiM markets.
67

28. deFeRRed inCome taX liaBilities
The movement on the deferred tax account is detailed below:
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
68 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2008 2007
£'000 £'000
NON-CuRRENT
At 1 January 340 459
Transferred to disposal group classified as held-for-sale (72) –
Deferred tax liability recognised on acquisition of intangibles (note 30) 1,662 –
income statement (credit) - amortisation of intangibles (139) (101)
change in tax rate from 30% to 28% movement in income statement – (17)
exchange differences – (3)
Transfer from deferred tax assets – 2
At 31 December 1,791 340
The deferred income tax liability relates to the recognition at acquisition of the intangible assets acquired. These intangible assets and the deferred income
tax liability are amortised over a total of 5 years.
29. PRoVisions FoR otHeR liaBilities and PRoVisions
2008 2007
£'000 £'000
AT 1 JANuARY 525 333
charge to income statement 238 192
AT 31 DECEMBER 763 525
The amount provided in respect of dilapidations in the current year relates to all offices of the Group’s subsidiaries.
30. BUsiness ComBinations
on 21 october 2008, the company acquired the private client investment management business from Kaupthing singer & Friedlander limited (in Administration)
(“KsF”) for a total consideration of £4,431,435.
Details of net assets acquired and goodwill are as follows:
PuRCHASE CONSIDERATION
cash paid 4,250
Acquisition expenses 181
TOTAL PuRCHASE CONSIDERATION 4,431
Fair value of net identifiable assets acquired (3,068)
GOODwILL 1,363
The assets and liabilities arising from the acquisition are as follows:
Provisional
fair value
(£'000)
intanginble assets
– Distribution channels 1,455
– customer relationships 4,481
Accruals (1,206)
Deferred tax liability on initial recognition of distribution channels and customer relationships (1,662)
net identifiable assets acquired 3,068
The revenue included in the consolidated income statement since 21 october 2008 contributed by singer & Friedlander was £1,711,561, generating a profit
of £178,037.
£'000

31. Consolidated moVement in sHaReHoldeRs’ eQUitY
Capital Available-for-sale
Share Share redemption Merger and other Retained Total
capital premium reserve reserve reserves earnings equity
2008 2008 2008 2008 2008 2008 2008
£'000 £'000 £'000 £'000 £'000 £'000 £'000
BALANCE AT 1 JANuARY 2,232 28,795 373 51,230 (1,687) 72,389 153,332
loss for the year – – – – – (12,844) (12,844)
issuance of ordinary shares 13 967 – – – – 980
Transfer of merger reserve to retained earnings – – – (21,898) – 21,898 –
purchase of Trust shares – – – – – (1,607) (1,607)
share options: value of services provided – – – – – 11,709 11,709
Minority interest element of share options:
value of services provided – – – – – 6 6
revaluation of available-for-sale financial assets – – – – (651) – (651)
Deferred income tax (debit) on share options
taken to equity – – – – – (996) (996)
Dividends paid – – – – – (4,262) (4,262)
Foreign exchange revaluations – – – – 654 (13) 641
Minority interest element of exchange differences – – – – (207) – (207)
schedule 23 deduction on options exercised – – – – – 197 197
Minority interest element of deferred tax credit on
employee options – – – – – 47 47
BALANCE AT 31 DECEMBER 2,245 29,762 373 29,332 (1,891) 86,524 146,345
The balance of £21,898,000 has been transferred from the Group’s merger reserve to retained earnings following the liquidation and disposal of entities
which were acquired under the acquisition of Beeson Gregory Group on the 11 July 2002.
The merger reserve within the Group arose on the acquisition of the Beeson Gregory Group, which was accounted for under acquisition accounting using
merger relief under section 131 of The companies Act 1985. The adoption of this method resulted in the premium arising on the acquisition being taken to
the merger reserve.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Capital Available-for-sale
Share Share redemption Merger and other Retained Total
capital premium reserve reserve reserves earnings equity
2007 2007 2007 2007 2007 2007 2007
£'000 £'000 £'000 £'000 £'000 £'000 £'000
BALANCE AT 1 JANuARY 2,214 28,445 373 51,230 (1,491) 72,061 152,832
profit for the year – – – – – 2,969 2,969
issuance of ordinary shares 18 350 – – – – 368
purchase of Trust shares – – – – – (9,620) (9,620)
share option: value of services provided – – – – – 11,289 11,289
Minority interest element of share options:
value of services provided – – – – – (10) (10)
revaluation of available-for-sale financial assets – – – – 139 – 139
Deferred income tax (debit) on share options
taken to equity – – – – – (991) (991)
Minority interest element of deferred tax credit – – – – – (9) (9)
Dividends paid – – – – – (3,496) (3,496)
Foreign exchange revaluations – – – – (51) – (51)
Minority interest element of exchange differences – – – – 15 – 15
schedule 23 deduction on options exercised – – – – – 196 196
Available-for-sale financial assets transferred to
income statement on sale – – – – (299) – (299)
BALANCE AT 31 DECEMBER 2,232 28,795 373 51,230 (1,687) 72,389 153,332
69

32. sHaRe CaPital
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
70 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2008 2007
£'000 £'000
AuTHORISED:
400,000,000 ordinary shares of 1p each 4,000 4,000
ALLOTTED, ISSuED AND FuLLY PAID:
224,477,637 (2007: 223,218,843) ordinary shares of 1p each 2,245 2,232
The following table summarises the movements of allotted, issued and fully paid share capital:
2008 2007
COMPANY £'000 £'000
ALLOTTED, ISSuED AND FuLLY PAID:
At 1 January
223,218,843 (2007: 221,381,671) ordinary shares of 1p each 2,232 2,214
ISSuES
546,550 (2007: 1,667,301) ordinary shares on exercise of options 6 16
243,550 (2007: 169,871) ordinary shares on issue of matching shares from share incentive plan 2 2
468,694 (2007: nil) ordinary shares on issue of share incentive plan bonus 5 –
AT 31 DECEMBER
224,477,637 (2007: 223,218,843) ordinary shares of 1p each 2,245 2,232
The aggregate consideration received on the issue of shares during the year was £980,000 (2007: £368,000).
Terms of share capital
The holder of each ordinary share is entitled to one vote on a poll. The holders also have the right to receive dividends and the right to participate on a return
of capital.
Potential issues of ordinary shares
As at 31 December 2008, there are 52,568,372 (2007: 53,667,197) options outstanding under all Group schemes as detailed in note 38. of these 8,147,985
(2007: 9,536,398) have already vested.
The number and market value of the Group’s holding in its own shares, held by the evolution Group plc employees’ share Trust, are disclosed below:
2008 2007
Number Number
of shares of shares
shares held in trust not yet conditionally allocated 9,547,183 14,000,058
nominal value of 1p ordinary shares £95,472 £140,000
Market value at £0.86 per share (2007: £1.23) £8,210,577 £17,220,071
The market value represents the market price for an ordinary 1p share at 31 December 2008.

33. CasH FloW FRom oPeRatinG aCtiVities
reconciliation of operating profit from continuing operations to net cash generated from operating activities:
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Restated
2008 2007
£'000 £'000
CASH GENERATED FROM OPERATING ACTIVITIES – CONTINuING OPERATIONS
operating (loss)/profit from continuing operations (17,277) 398
ADJuSTMENTS FOR:
Depreciation of property, plant and equipment 1,621 1,613
Amortisation of intangibles 1,378 835
(profit) on sale of available-for-sale financial assets – (299)
share options charge 11,722 11,289
Foreign exchange (gain)/loss (207) 166
cost of matching shares issued under share incentive plan 760 217
operating loss on associates – (29)
CHANGES IN wORkING CAPITAL:
(increase)/decrease in trade and other receivables (2,118) 12,888
Decrease/(increase) in trade and other payables 10,733 (2,322)
(increase)/decrease in net market counterparties (3,878) 19,320
Decrease in derivatives 267 285
Decrease/(increase) in provisions for liabilities and charges 244 (5)
Decrease in net trading portfolio positions 10,264 1,114
CASH GENERATED FROM OPERATING ACTIVITIES – CONTINuING OPERATIONS 13,509 45,470
34. CaPital Commitments and ContinGenCies
in the ordinary course of business the Group has given letters of indemnity to clients in respect of lost share certificates. Although the contingent liability
arising from these cannot be precisely quantified, it is not believed to be material.
35. lease Commitments
The Group has non-cancellable operating lease commitments in respect of land and buildings of £2,477,000 (2007: £1,833,000). The future aggregate
minimum lease payments to which these amounts relate expire as follows:
2008 2007
LAND AND BuILDINGS £'000 £'000
Within one year 2,447 1,833
Within two to five years 2,839 2,857
After five years – 20
5,286 4,710
71

36. Post BalanCe sHeet eVents
on 6 March 2009, The evolution Group plc, the parent company of escl, entered into an investment agreement with First eastern Financial holdings limited
(“First eastern”). under the terms of the investment Agreement First eastern and The evolution Group plc will between them invest an aggregate £900,000 by
way of a subscription for new ordinary shares in escl.
on 1st April 2009, the company announced the completion of the investment which included subscription for shares whereby First eastern now holds 51% of
the ordinary share capital of escl, with the company holding approximately 48.5%. The balance will be held by those existing minority shareholders who elect
to retain their interests, although an opportunity is being provided for those minority shareholders to realise their investment on completion of the investment
Agreement, should they so wish. Although First eastern will have a majority shareholding, The evolution Group plc will continue to be represented on the
Board of escl. The new shares represent 90% of the enlarged issued share capital.
in addition to the funds now being invested, each of First eastern and The evolution Group plc will enter into a financial commitment to escl pursuant
to which they may each be called upon (at the discretion of the escl Board) to provide an aggregate of up to £500,000 by way of additional funding in
each of the three years following completion of this transaction on the basis of 51% from First eastern and 49% from The evolution Group plc.
The financial effect this transaction will have on the future profits and losses of the Group cannot be accurately estimated.
it is expected that once the transaction is completed the Group’s remaining investment in escl will be classified as an investment in associate.
37. Related PaRtY tRansaCtions
The following transactions were carried out with related parties:
i) Intra-Group trading
The company has per iAs 24 not disclosed transactions or balances between Group entities that have been fully eliminated on consolidation.
The company has invested £225,000 in the WDB capital uK equity Fund limited, a fund managed by WDB capital limited, a company which is a wholly
owned subsidiary of the Group. in the prior year the company invested £10,000,000. The fair value of this holding at the year end is £11,651,145.
ii) key management compensation
The compensation paid to key management is detailed below. Key management has been determined as the executive management teams of the Group
operating subsidiaries who are also the Directors of those subsidiaries, and Group Directors.
2008 2007
£'000 £'000
REMuNERATION IN RESPECT OF DIRECTORS:
salaries and short-term employee benefits 5,503 4,221
social security costs 704 540
Gains made on exercise of share options 1,321 2,374
share option expense 3,394 3,247
10,922 10,382
An analysis of all Directors’ remuneration may be found in the Directors’ remuneration report on pages 31 to 38.
iii) Debenture
During 2002, a Director of the company, Alex snow, purchased a debenture at Twickenham rugby club for a term of 10 years. The debenture was paid for by
the Group to the value of £26,000. The balance outstanding at 31 December 2008 was £10,065. (2007: £12,881). An agreement is in place that requires
the remaining portion of the debenture to be repaid by the Director should he leave prior to the end of the ten year term. The debenture is used to facilitate
the entertainment of clients.
iv) Dealings with Directors
other than the dealings referred to the above there are no other dealings the Group had with companies in which any of the key management, or persons
connected to them, is a Director.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
72 The evoluTion Group plc AnnuAl reporT & AccounTs 2008

38. emPloYee sHaRe sCHemes
Movements in the number of share options and their weighted average exercise prices are as follows:
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2007
Average exercise price Outstanding Average exercise price Outstanding
(pence per share) options (pence per share) options
At 1 January 23.20 28,667,197 25.04 27,992,334
Granted 1.00 7,352,362 1.00 8,535,410
exercised 4.38 (6,501,121) 4.15 (4,316,021)
Forfeited 5.72 (1,950,066) 7.75 (3,544,526)
AT 31 DECEMBER 22.93 27,568,372 23.20 28,667,197
The weighted average market price of the shares issued during the year upon exercise was £1.01 (2007: £1.41).
The date range over which the above options may be exercised is described in the relevant scheme details below. The overall weighted average life of the
remaining options is 6.95 years (2007: 7.34 years).
All options in the above table have a life from grant of 10 years.
options under the share incentive schemes are valued using a Black-scholes model adjusted for dividends according to those declared by the company.
The company estimates the number of options likely to vest and expenses that value over the relevant period. volatility has been estimated by taking the
historical volatility in the company’s share price over a three year period.
in the case of awards of call rights, which have an exercise price of 1p per ordinary share, the fair value is based on the market value at the time of grant
discounted by the dividend yield over the expected life.
The number of options and share awards outstanding by issue date and exercise price, together with the vesting periods, the fair values, and the assumptions
used to calculate it, and the actual remaining contractual life as at 31 December 2008 are as follows:
EVG 2006 EVG 2002 EVG 2001 EVG 2000
Performance Share Executive Share Executive Share Executive Share
plan Option Scheme Option Scheme Option Scheme
Grant dates (1) 09/06/06-26/01/07 29/04/02-30/12/08 29/06/01-03/11/06 11/05/01
Weighted average market value at grant date (pence) 144.85 122.46 103.80 58.67
Weighted average exercise price (pence) n/A 1.00 93.42 58.67
number of awards outstanding 25,000,000 19,863,532 4,613,275 3,091,565
vesting period (months) 29-37 4-36 24-36 16-36
expected share price volatility (%) 24.74-38.27 n/A 0-73 n/A
Dividend yield (%) 0.84 1.14 0.48 n/A
Average life remaining (years) n/A 8.00 5.50 2.36
number of options/awards expected to vest n/A 100% 100% 100%
Average fair value per option/award granted (pence) 46.55 118.79 27.32 n/A
income statement charge (£) 436,000 11,180,000 113,000 –
note
(1) represents the period since when the performance condition (as described below) can be met at which point all awards meet the vesting criteria.
in the above table evG refers to The evolution Group plc.
73

38. emPloYee sHaRe sCHemes (CONTINuED)
The share options outstanding at the end of the year have a weighted average exercise price and expected remaining life as follows:
2008 2007
Weighted Weighted Weighted Weighted
Number average average Number average average
Range of exercise prices of share exercise price expected of share exercise price expected
(pence) options (pence) remaining life options (pence) remaining life
1 19,863,532 1.00 8.00 20,320,807 1.00 8.19
25-55 1,878,275 50.37 2.81 2,439,825 48.02 4.11
56-155 5,826,565 88.86 4.70 5,906,565 89.31 5.74
27,568,372 28,667,197
The Evolution Group Plc 2006 Performance Share Plan
This plan was approved by shareholders on the 26 May 2006 at its Annual
General Meeting.
Eligibility
Any Director of the company, or a Group company, and any employee of the
company, or a Group company, may be invited to participate in the plan.
Nature of Plan
The plan provides for participants to be awarded free shares in the parent
company subject to achievement of specific performance criteria.
Performance criteria
The performance conditions determine the number of shares with reference
to the average mid market share price as derived from the Daily official list
of the london stock exchange on all dealing days over any period of 60
consecutive days during the performance period, which is from 1 April 2006
to 31 March 2009. The prescribed performance growth is derived from a
base share price of £1.42 at 31 December 2005.
if the average share price equals or exceeds £2.13 (an increase of 50% from
base price) within the performance period then an award may be exercised
over one-third of the shares granted. however if the average share price equals
or exceeds £2.84 (an increase of 100% from base price) then the full award of
the shares granted may take place. Additionally, the satisfactory employment
by the individual within a Group company throughout the period following
grant of an award is required. The earliest exercise date is 30 June 2009.
As at 1 February 2009 the performance criteria can no longer be met and
hence awards under this scheme will lapse on 1 April 2009.
Scheme Limits
The number of shares which may be issued to satisfy awards under
this plan is limited 25,000,000 shares. The scheme additionally restricts
the maximum number of shares available to Directors of the company
to 10,000,000 shares. individuals who fall within the definition of a Director
of the company before 31 December 2007 are not eligible for awards after
31 December 2006. An amount of 2,000,000 shares not awarded to
Directors of the company before 31 December 2006 up to the 10,000,000
share limit have become available to award to employees or to future
Directors of the company.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
74 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Awards granted
At 31 December 2008, awards of 25,000,000 (2007: 25,000,000) shares
were outstanding. Following vesting the shares can be exercised between
30 June 2009 and 30 June 2016 subject to achievement of relevant
performance conditions.
The Evolution Group Plc 2002 Executive Share Option Scheme
The Board approved this plan on 13 March 2002 and it was approved by
shareholders on 10 october 2003.
Eligibility
Any Director of the company, or a Group company, and any employee of the
company, or a Group company, may be invited to participate in the plan.
Nature of Plan
The plan provides for participants to be awarded shares in the company at
their nominal cost. subject to achievement of performance criteria, awards
of shares convert into call rights over such shares. The plan is operated in
conjunction with an employee benefit trust on three levels.
it is operated as a standalone plan and it is also used as the framework for
the Key performers share incentive plan (“Kpsip”) introduced for employees
of evolution securities limited in January 2003, and the Market Making
and Trading share incentive plan (“MMTsip”) which was introduced for the
market making team of esl in January 2005, where it forms the method of
delivery of such awards made within the Kpsip framework.
The Evolution Group Plc 2002 Executive Share Option Scheme
Performance criteria
• Standalone plan
under the standalone plan the basic performance criteria used prior to
the vesting of awards was growth in earnings of 15% per annum over the
vesting period of the award. Additionally, the satisfactory employment by
the individual within a Group company throughout the period following grant
of an award is required. From January 2006, following the review by the
remuneration committee, it was concluded that the continued imposition of
performance criteria for all awards on the basis of 15% earnings growth was
too generally applied and that where awards were made to employees of the
Group’s operating subsidiaries, then the sole general criteria should be that
of continued satisfactory employment within a Group company.

38. emPloYee sHaRe sCHemes (CONTINuED)
This is because individual employees do not by themselves have particular
influence upon the achievement of the earnings growth target. Furthermore,
the remuneration committee observed that the imposition of this target
was undermining the financial and retention values of share awards.
• KPSIP
under the Kpsip, employees may be granted an initial award and two
subsequent awards at the first and second anniversary of the initial award.
up to 50% of each award, once made may be clawed back dependent upon
the individual’s performance during the twelve months following the award,
as measured within the Group company’s annual appraisal process.
The level of subsequent awards is also directly related to the individual’s
overall performance rating within the company’s annual appraisal process.
Additionally, the satisfactory employment by the individual within a Group
company throughout the period following grant of an award is required. The
performance criteria for the aggregate growth in earnings were removed for
all awards on 20 January 2006 as outlined above for the standalone plan.
• MMTSIP
under the MMTsip, employees of the market making team of evolution
securities may be granted an initial award and two subsequent awards at
the first and second anniversary of the initial award. each award is allocated
to individuals within this team in the following January based upon strict
performance criteria, dependent upon the individual’s performance during
the twelve months following the award. The award will ultimately vest after
three years subject to the basic scheme target of aggregate growth in
earnings (based upon the adjusted operating profit) of the company of
15% per annum over the vesting period of the award. Additionally, the
satisfactory employment by the individual within a Group company
throughout the period following grant of an award is required. The price to
be paid on exercise of these awards is the greater of £1.00 or the nominal
value of shares to be subscribed for. The awards may be exercised after
three years from the date of grant. The performance criteria for the
aggregate growth in earnings were removed for all awards on 20 January
2006 as outlined above for the standalone plan.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Call rights
After achievement of the performance criteria and vesting of the award,
a call right is granted to the individual exercisable, subject to continued
satisfactory employment, within ten years of the date of the original award.
Scheme Limits
The number of shares, which may be issued to satisfy awards under this
plan, is limited to 10% of the issued share capital of the company from
time to time.
Options granted
At 31 December 2008, awards and call rights over 19,863,532
shares (2007: 20,320,807) were outstanding at an exercise price
of the greater of £1.00 or the nominal value of the shares to be
subscribed for. The call rights can be exercised between 14 november
2003 and 31 December 2018.
The Evolution Group Plc 2001 Executive Share Option Scheme
shareholders approved this scheme on 21 June 2001.
Eligibility
Any Director who is required to devote the whole or substantially the whole
of his working time to the service of the company, or a Group company,
and any employee of the company, or a Group company, may be invited
to participate in either ordinary or super options.
Option price
The exercise price shall be determined by the Directors but shall not,
unless approved by ordinary resolution of the shareholders, be less than
the greater of nine-tenths of the market value of the share at the date of
the grant and the nominal value of a share.
75

38. emPloYee sHaRe sCHemes (CONTINuED)
Performance criteria
The option exercise may be conditional upon the performance of the
company and/or the participant over such period and measured against
such objective criteria as may be determined by the Directors. The initial
performance criteria established by the Directors of the company were that
the closing bid price of a share in The evolution Group plc, as derived from
the Daily official list published by The london stock exchange, must be not
less on average than a specified amount for a period of 60 consecutive
days before options can be exercised. if the average share price is £0.90,
then 25% of the options may be exercised; at £1.10 a further 25% may be
exercised; at £1.30 then a further 25% may be exercised; and at £1.50, the
remaining 25% may be exercised. At a meeting of the Board on 21
november 2002, approval was given to the waiving of these initial
performance criteria for all new options granted under the scheme by
varying the scheme rules. The remuneration committee, having made
comparisons with the practice of other Groups and taken the appropriate
legal advice, made this recommendation.
Exercise of options
An option may not be exercised later than the tenth anniversary after the
date of grant. The earliest date of exercise is generally two years after the
date of grant for ordinary options and three years after the date of grant
for super options.
Scheme Limits
The overall limit on the number of shares which may be issued to satisfy
ordinary options, is 10% of the issued share capital and for super options,
is 5% of the issued share capital of the company.
Options granted
At 31 December 2008 nil ordinary options (2007: nil) and 4,613,275 super
options (2007: 5,254,825) were outstanding with exercise prices between
27.00p and 130.50p. The options can be exercised between 29 June 2004
and 4 november 2016.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
76 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
The Evolution Group Plc 2000 Executive Share Option
Scheme (unapproved)
shareholders approved this scheme on 20 november 2000.
Eligibility
Any Director of the company, or a Group company, and any employee of
the company, or a Group company, may be invited to participate in either
ordinary or super options.
Option price
The exercise price shall be determined by the Directors but shall not be
less than the greater of the market value of the share at the date of grant
or the nominal value of a share.
Performance criteria
The option exercise on ordinary options may be conditional upon the
performance of the company and/or the participant over such period
and measured against such objective criteria as may be determined
by the Directors. There are no performance criteria for super options.
Exercise of options
An option may not be exercised later than the tenth anniversary after the
date of grant. The earliest date of exercise is generally three years after
the grant for ordinary options and five years after the date of grant for
super options.
Scheme Limits
The overall limit on the number of shares, which may be issued to satisfy
ordinary options, is 10% of the issued share capital and for super options,
is 5% of the issued share capital of the company.
Options granted
At 31 December 2008, 2,025,933 ordinary options (2007: 2,025,933)
and 1,065,632 super options (2007: 1,065,632) were outstanding with
an exercise price of 58.67p. The options can be exercised between
11 May 2004 and 11 May 2011.
The Evolution Group Plc 2000 Executive Share Option
Scheme (Approved)
The terms of this scheme are exactly the same as the unapproved 2000
scheme save the restriction that no individual shall be granted options over
shares with an aggregate market value (calculated as the strike price at
date of grant) exceeding £30,000.
Options granted
no options were granted in either period.

THE EVOLuTION GROuP PLC PARENT COMPANY ACCOuNTS
Auditors' report and Financial statements
For the year ended 31 December 2008
Registered Number: 03359425
PaRent ComPanY FinanCial statements
FOR THE YEAR ENDED 31 DECEMBER
77

INDEPENDENT AuDITORS' REPORT TO THE MEMBERS
OF THE EVOLuTION GROuP PLC
We have audited the parent company Financial statements of The evolution
Group plc (“the company”) for the year ended 31 December 2008 which
comprise the Balance sheet, the cash Flow statement, the statement of
recognised income and expense and the related notes. These parent
company Financial statements have been prepared under the accounting
policies set out therein. We have also audited the information in the Directors’
remuneration report that is described as having been audited. We have
reported separately on the Group Financial statements of The evolution
Group plc for the year ended 31 December 2008.
Respective responsibilities of Directors and auditors
The Directors’ responsibilities for preparing the Annual report, the Directors’
remuneration report and the parent company Financial statements in
accordance with applicable law and international Financial reporting
standards (“iFrs”) as adopted by the european union are set out in the
statement of Directors’ responsibilities.
our responsibility is to audit the parent company Financial statements and
the part of the Directors’ remuneration report to be audited in accordance
with relevant legal and regulatory requirements and international standards
on Auditing (uK and ireland). This report, including the opinion, has been
prepared for and only for the company’s members as a body in accordance
with section 235 of the companies Act 1985 and for no other purpose.
We do not, in giving this opinion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent
in writing.
We report to you our opinion as to whether the parent company Financial
statements give a true and fair view and whether the parent company
Financial statements and the part of the Directors’ remuneration report
to be audited have been properly prepared in accordance with the
companies Act 1985. We also report to you whether in our opinion the
information given in the Directors' report is consistent with the parent
company Financial statements.
in addition we report to you if, in our opinion, the parent company has not
kept proper accounting records, if we have not received all the information
and explanations we require for our audit, or if information specified by law
regarding directors’ remuneration and other transactions is not disclosed.
We read other information contained in the Annual report and
consider whether it is consistent with the audited parent company Financial
statements. The other information comprises only the Directors’ report,
the unaudited part of the Directors’ remuneration report and the
chairman’s statement. We consider the implications for our report if we
become aware of any apparent misstatements or material inconsistencies
with the parent company Financial statements. our responsibilities
do not extend to any other information.
PaRent ComPanY FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER
78 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Basis of audit opinion
We conducted our audit in accordance with international standards on
Auditing (uK and ireland) issued by the Auditing practices Board. An audit
includes examination, on a test basis, of evidence relevant to the amounts
and disclosures in the parent company Financial statements and the part
of the Directors’ remuneration report to be audited. it also includes an
assessment of the significant estimates and judgements made by the
Directors in the preparation of the parent company Financial statements,
and of whether the accounting policies are appropriate to the company’s
circumstances, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the information
and explanations which we considered necessary in order to provide us with
sufficient evidence to give reasonable assurance that the parent company
Financial statements and the part of the Directors’ remuneration report
to be audited are free from material misstatement, whether caused by fraud
or other irregularity or error. in forming our opinion we also evaluated the
overall adequacy of the presentation of information in the parent company
Financial statements and the part of the Directors’ remuneration report
to be audited.
Opinion
in our opinion:
• the parent company Financial statements give a true and fair view, in
accordance with iFrs as adopted by the european union as applied in
accordance with the provisions of the companies Act 1985, of the state
of the company’s affairs as at 31 December 2008 and cash flows for
the year then ended;
• the parent company Financial statements and the part of the Directors’
remuneration report to be audited have been properly prepared in
accordance with the companies Act 1985; and
• the information given in the Directors' report is consistent with the
parent company Financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants and Registered Auditors
London, United Kingdom
8 April 2009

ASSETS
ComPanY BalanCe sHeet
AS AT 31 DECEMBER 2008
2008 2007
Note £'000 £'000
NON-CuRRENT ASSETS
Deferred income tax assets 4 929 1,701
investment in subsidiaries 5 57,437 68,789
TOTAL NON-CuRRENT ASSETS 58,366 70,490
CuRRENT ASSETS
Trade and other receivables 8 3,967 2,464
Available-for-sale financial assets 9 11,652 10,432
cash and cash equivalents 10 75,542 55,476
TOTAL CuRRENT ASSETS 91,161 68,372
TOTAL ASSETS 149,527 138,862
LIABILITIES
CuRRENT LIABILITIES
Trade and other payables 11 6,280 4,779
TOTAL CuRRENT LIABILITIES 6,280 4,779
TOTAL LIABILITIES 6,280 4,779
EQuITY
CAPITAL AND RESERVES ATTRIBuTABLE TO EQuITY SHAREHOLDERS
share capital 14 2,245 2,232
share premium account 14 29,762 28,795
capital redemption reserve 14 373 373
Merger reserve 14 29,332 51,230
Available-for-sale and other reserves 14 9,615 24,974
retained earnings 14 71,920 26,479
TOTAL EQuITY 143,247 134,083
TOTAL EQuITY AND LIABILITIES 149,527 138,862
The notes on pages 82 to 97 form an integral part of these Financial statements.
The Financial statements on pages 79 to 81 were approved by the Board of Directors on 8 April 2009 and were signed on its behalf by:
Alex Snow
Director
79

CasH FloW statement
FOR THE YEAR ENDED 31 DECEMBER 2008
80 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2008 2007
Note £’000 £’000
CASH FLOwS FROM OPERATING ACTIVITIES:
cash generated from operations 13 229 29,418
Finance income 3,658 3,252
Finance expense (4) –
income tax paid – (7)
NET CASH GENERATED FROM OPERATING ACTIVITIES 3,883 32,663
CASH FLOwS FROM INVESTING ACTIVITIES:
investment in subsidiary (5,002) –
net proceeds from sale of available-for-sale financial assets – 1,200
purchase of available-for-sale financial assets (225) (10,000)
purchase of subsidiary – (6,214)
Fees in relation to acquisition of subsidiary – (10)
NET CASH ABSORBED BY INVESTING ACTIVITIES (5,227) (15,024)
CASH FLOwS FROM FINANCING ACTIVITIES:
proceeds for issuance of ordinary shares 219 151
payment of share options recharged to subsidiary 14 27,060 –
Dividends paid to the company’s shareholders 14 (4,262) (3,496)
purchase of own shares and shares held for the Trust (1,607) (9,681)
NET CASH GENERATED BY/(ABSORBED) FROM FINANCING ACTIVITIES 21,410 (13,026)
net increase in cash and cash equivalents 20,066 4,613
cash and cash equivalents at beginning of year 55,476 50,863
cash and cash equivalents at end of year 10 75,542 55,476
The notes on pages 82 to 97 form an integral part of these Financial statements.

statement oF ReCoGnised inCome and eXPense
FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2007
£'000 £'000
profit for the financial year 2,167 762
revaluation of available-for-sale financial assets (note 9) 995 492
Fair value changes transferred to income statement on disposal – (199)
Deferred income tax (debit) on share options taken to equity (673) (210)
NET INCOME RECOGNISED DIRECTLY IN EQuITY 322 83
TOTAL RECOGNISED INCOME FOR THE YEAR 2,489 845
ATTRIBuTABLE TO:
Minority interest (652) 233
equity shareholders of the company 3,141 612
2,489 845
The notes on pages 82 to 97 form an integral part of these Financial statements.
81

1. aCCoUntinG PoliCies
Basis of preparation
The Financial statements of the company have been prepared in
accordance with international Financial reporting standards (“iFrs”) as
adopted by the european union (“eu”) and iFric interpretations and with
those parts of the companies Act 1985 applicable to companies reporting
under iFrs. The Financial statements have been prepared under the
historical cost convention, as modified by the revaluation of available-forsale
financial assets.
A summary of the company accounting policies are set out below, together
with an explanation of where changes have been made to previous policies
on the adoption of new accounting standards in the year.
As permitted by section 230 of the companies Act 1985 the company has
elected not to present its own income statement for the year. The company
reported a profit for the financial year ended 31 December 2008 of
£2,167,000 (2007: £762,000).
Significant Accounting Policies
Investments in subsidiaries
interests in subsidiary undertakings are presented in accordance with iAs
27, ‘consolidated and separate Financial statements’. An undertaking is
regarded as a subsidiary undertaking if the company has the power to
exercise control over its operating and financial policies. This generally
accompanies a shareholding of greater than 50% of the voting power.
The company’s shares in subsidiary undertakings are stated in the
Balance sheet at cost less provision less any impairment incurred.
The carrying value of investments in subsidiary undertakings are assessed
at the reporting date or whenever events or changes in circumstance
indicate that the carrying amount may not be recoverable. The impairment
review comprises a comparison of the carrying amount of the investment
with its recoverable amount. The recoverable amount is the higher of an
investment’s fair value less costs to sell and its value in use. An impairment
loss is recognised in the income statement in the period in which it occurs
for the amount by which the investment’s carrying amount exceeds its
recoverable amount.
notes to tHe FinanCial statements
FOR THE YEAR ENDED 31 DECEMBER 2008
82 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Financial assets and liabilities
The company classifies its financial assets and liabilities as available-forsale
financial assets, financial receivables, trade and other receivables,
cash and cash equivalents, and trade and other payables. The classification
depends on the purpose for which the assets and liabilities were acquired.
Management determines the classification of its investments at initial
recognition and re-evaluates this designation at every reporting date.
Financial assets are initially recognised at fair value plus transaction costs
for all financial assets not carried at fair value through the profit or loss.
Financial assets carried at fair value through the profit and loss are initially
recognised at fair value, and transaction costs are expensed in the income
statement. Financial assets are derecognised when the rights to receive
cash flows from the financial assets have expired or where the company
has transferred substantially all risks and rewards of ownership. Financial
liabilities are derecognised when they are extinguished, that is, when the
obligation is discharged, cancelled or expires.
Available-for-sale financial assets
Available-for-sale financial assets are either designated in this category or
are not classified in the other category. Available-for-sale financial assets
are those intended to be held for an indefinite period of time, which may
be sold in response to needs for liquidity or changes in interest rates,
exchange rates or equity prices. They are initially recognised at fair value
including direct and incremental transaction costs. They are subsequently
held at fair value. Dividends on available-for-sale equity instruments are
recognised in the income statement when the entity’s right to receive
payment is established.
Gains and losses arising from changes in fair value are included as a
separate component of equity within fair value and other reserves until sale
or when impaired, when the cumulative gain or loss is transferred to the
income statement.

1. aCCoUntinG PoliCies (CONTINuED)
Measurement of available-for-sale financial assets
For available-for-sale financial assets that are quoted in active markets,
fair values are determined by reference to the current quoted bid/offer
price. Where independent prices are not available, fair values may be
determined using valuation techniques with reference to observable market
data. These may include comparison to similar instruments where market
observable prices exist, discounted cash flow analysis, option pricing models
such as Black-scholes and other valuation techniques commonly used by
market participants.
The management of the company makes an assessment at each Balance
sheet date as to whether there is any objective evidence of impairment,
being any circumstance where an adverse impact on estimated future cash
flows of the financial asset or group of assets can be reliably estimated.
in the case of equity investments classified as available-for-sale, the
cumulative loss (measured as the difference between the acquisition cost
and the current fair value, less any impairment loss on that financial asset
previously recognised in the income statement) is removed from equity and
recognised in the income statement. impairment losses recognised in the
income statement on available-for-sale equity investments are not reversed
through the income statement.
Trade and other receivables
Trade and other receivables (which include counterparty receivables) are
recognised initially at fair value and subsequently measured at amortised
cost using the effective interest method, less provision for impairment.
A provision for impairment of trade receivables is established when there
is objective evidence that the Group will not be able to collect all amounts
due according to the original terms of the receivables. evidence that an
impairment of the asset may be required include ageing of the debt beyond
180 days, persistent lack of communication and internal awareness of third
party trading difficulties.
The amount of the provision is the difference between the asset’s carrying
amount and the present value of estimated future cash flows, discounted at
the effective interest rate. The amount of the provision is recognised in the
income statement within operating expenses.
Cash and cash equivalents
For the purposes of the cash flow statement, cash and cash equivalents
include cash in hand, deposits held at call with banks, and other short-term
highly liquid investments that are readily convertible to known amounts of
cash and which are subject to an insignificant risk of change in value. such
investments are normally those with original maturities of three months or
less. Bank overdrafts are shown within borrowings in current liabilities on
the Balance sheet.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Trade and other payables
Trade and other payables are recognised initially at fair value, which is
the agreed market price at the time goods or services are provided. The
company accrues for all goods and services consumed but yet unbilled
at amounts representing management’s best estimate of fair value.
Evolution Group employees share trust
The Trust is a separately administered trust, which is funded by loans
from the company, and the assets of which comprise shares in the
company. The company recognises the assets and liabilities of the Trust
in its Financial statements and shares held by the Trust are recorded at cost
as a deduction in arriving at shareholders’ funds until the shares vest
unconditionally with employees.
iAs 39 has a scope for exclusion of treasury share transactions linked to
share-based payment awards. The Trust is considered to act as an agent for
the company, and accordingly aggregation of the Trust’s assets and
liabilities to reflect the substance of the relationship.
Group Recharge
The company, through the normal course of business, incurs costs on
behalf of its subsidiaries. These costs are recharged, where relevant,
to those subsidiaries.
The company recharges it subsidiaries for cash for the cost of share
options. The amount of the recharge is equivalent to the cost of shares
purchased by the company to satisfy the awards made to subsidiary
employees under the Group’s employee share scheme. This recharge
reduces the investment in subsidiary and a corresponding entry is made
to increase retained earnings.
Employee benefits
(a) Pension obligations
The company does not offer any company pension schemes. however, the
company does make defined contributions to employees’ approved personal
pension plans, and the costs of these are charged to the income statement
when they are incurred.
(b) Share-based plans
The company’s management awards high-performing employees bonuses
in the form of equity-settled share based payments, from time to time,
on a discretionary basis. in accordance with iFrs 2, ‘share-based
payments’, equity-settled share-based payments are measured at fair value
at the date of grant. Fair value is measured by use of the Black-scholes
pricing model or, in the case of awards of call rights, which have an exercise
price of 1p per ordinary share; the fair value is based on the market value at
the time of grant discounted by the dividend yield over the expected life. The
fair value determined at the grant date of the equity-settled share-based
payment is expensed on a straight-line basis over the vesting period, based
on the company’s estimate of the number of shares, which will eventually
vest. The options are generally subject to a three year service vesting
condition, and their fair value is recognised as an employee benefits
expense with a corresponding increase in equity over the vesting period.
The proceeds received net of any directly attributable transaction costs are
credited to share capital (nominal value) and share premium when the
options are exercised.
83

1. aCCoUntinG PoliCies (CONTINuED)
The issuance by the company to employees of its subsidiaries of an award
over the company’s shares is treated as a capital contribution by the
company in its subsidiaries. This additional investment in subsidiaries
results in a corresponding entry to shareholders’ equity. The additional
capital contribution is based on the fair value of the awards issued
allocated on a straight line basis over the relevant vesting period.
Current and deferred income taxes
current income taxes are computed on a basis of the tax laws enacted or
substantially enacted at the Balance sheet date in the countries where the
company’s subsidiaries operate and generate income.
Taxes are computed using the liability method, deferred income on
temporary differences between the bases of assets and liabilities and their
carrying amounts in Financial statements. The deferred income tax is not
accounted for if it arises from initial recognition of an asset or liability in a
transaction, other than a business combination, that at the time of the
transaction affects neither accounting nor taxable profit nor loss.
Deferred income tax liabilities are recognised for all taxable temporary
differences and deferred tax assets are recognised to the extent that it is
probable that taxable profits will be available against which tax losses or
deductible temporary differences can be utilised. such assets and liabilities
are not recognised if the temporary difference arises from goodwill, negative
goodwill or from the acquisition of an asset, which does not affect either
taxable or accounting income.
Deferred income tax liabilities are recognised for taxable temporary
differences arising on investments in subsidiaries, except where the
company is able to control the reversal of the temporary difference
and it is probable that the temporary difference will not reverse in the
foreseeable future.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
84 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Deferred income tax is charged or credited in the income statement, except
when it relates to items charged or credited directly to equity, in which case
the deferred tax is also dealt with in equity.
The company is entitled to a tax deduction for amounts treated as
compensation on exercise of certain employee share options under uK tax
rules. As explained under “share-based plans” above, a compensation
expense is recorded in the company’s income statement over the period
from the grant date to the vesting date of the relevant options. As there is a
temporary difference between the accounting and tax bases, a deferred tax
asset is recorded. The deferred tax asset arising is calculated by comparing
the estimated amount of tax deduction to be obtained in the future (based
on the company’s share price at the Balance sheet date) with the
cumulative amount of the compensation expense recorded in the income
statement. if the amount of estimated future tax deduction exceeds the
cumulative amount of the remuneration expense, at the statutory tax rate,
the excess is recorded directly in equity, against retained earnings.
in accordance with the provisions of iFrs 2, no compensation charge is
recorded in respect of options granted before 7 november 2002 or in
respect of those options which have been exercised or have lapsed before 1
January 2005. nevertheless, tax deductions have arisen and will continue
to arise on these options. The tax effects arising in relation to these options
are recorded directly in equity, against retained earnings.

2. FinanCial instRUments and RisK manaGement
Through its normal operations, the company is exposed to a number of
risks, the most significant of which are market, credit and liquidity risks.
its strong cash and cash equivalents position ensures that it has low
liquidity risk.
Risk Management Framework
The company Board is responsible for approving all risk management
policies and for determining the overall risk appetite for the company.
Risk Committee
The company’s Directors have delegated to a sub-committee, the risk
committee, the responsibility for setting the risk management policies
applied by the company.
The purpose of the risk committee is to monitor and assess all types of
risk within the company and to ensure that internal controls are properly
established so that the company’s risk exposure is commensurate with the
wishes of the Board. The risk committee meets at least monthly and is
chaired by the head of risk.
Risk Department
The risk Department has day-to-day responsibility for monitoring, mitigating
and reporting risks within the company and for escalating issues to senior
management. The risk Department follows the guidelines laid down by the
credit policy, the credit limit Book, the Trading policy statement for esl
and the operational risk policy as approved by the parent company Board,
the Audit committee and the risk committee.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Equity Risk
The company is exposed to equity market risk in respect of its equity
holdings, which comprise available-for-sale financial assets.
The Board continues to review the performance of existing available-for-sale
financial assets in the company’s portfolio and realises these investments
when deemed appropriate. note 9 summarises the available-for-sale
financial assets at the year end date and the disposals and fair value
movements made in the year.
A sensitivity analysis has been performed on the company’s exposure to
equity risk. The analysis is based on the assumption that underlying equity
prices had an increase/decrease of 10% with all other variables held
constant at the year end. The results as outlined below, are only representative
of the impact that is observed at the year end, and not of the impact that
was observed during the year. This occurs due to a varying investment held
throughout the year.
A 10% increase/decrease in equity prices would result in an increase/
decrease in equity reserves of £165,000 (2007: £43,000).
85

2. FinanCial instRUments and RisK manaGement (CONTINuED)
Foreign exchange risk
The following table summarises the company’s currency exposure arising
from unmatched monetary assets or liabilities not denominated in the
functional currency of the company:
2008 2007
£’000 £’000
NET ASSETS
euros – 1
us dollar – 66
– 67
The company’s activities are primarily denominated in sterling and it
therefore has minimal foreign exchange risk. The majority of transactions
denominated in a foreign currency that would expose the company to
currency risk are hedged immediately, normally in the spot market. The
company does not enter into forward exchange contracts for hedging
anticipated transactions.
Interest rate risk
The company has interest bearing assets in mainly cash and cash
equivalents. The company has a policy of maintaining excess funds in cash
and short-term deposits and is exposed to short-term interest rate risk.
At the year end, all of the company’s excess funds were invested in cash
and short-term deposits. The company does not use any derivatives to
hedge interest rate risk.
At 31 December 2008 if liBor market interest rates had been 100 basis
points higher/lower with all other variables held constant, profit for the year
(after tax) would have been £824,000 (2007: £561,000) (higher) and
£824,000 (2007: £561,000) (lower).
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
86 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
(b) Management of Credit Risk
The company has no exposure to any third party credit risk and all
receivables are with other Group companies.
Credit Quality of Financial Assets Control
The quality of our financial assets in terms of their credit rating is AAA-A
rated 95% (2007: 88%) and un-rated 5% (2007: 12%).
The ratings noted above have been derived using source information from
standard & poors and Moody’s. All financial assets over an “A” rating are
consolidated under the “AAA-A” category and represent assets such as
cash, and trade debtors. All un-rated assets have undergone a thorough
credit review and have been allocated internal ratings based on this review.
All items classified as neither past due nor impaired, following the credit
reviews described above, are considered to be recoverable and therefore
of a credit quality that do not require impairment.
The following table of financial assets analyses amounts due by ageing:
Neither past Carrying
due nor impaired value
31 December 2008 £'000 £'000
other receivables 1,193 1,193
Amounts owed by Group undertakings 2,767 2,767
cash and cash equivalents 75,542 75,542
Available-for-sale investments 11,652 11,652
91,154 91,154
Neither past Carrying
due nor impaired value
31 December 2007 £'000 £'000
other receivables 798 798
Amounts owed by Group undertakings 1,563 1,563
cash and cash equivalents 55,476 55,476
Available-for-sale investments 10,432 10,432
68,269 68,269

2. FinanCial instRUments and RisK manaGement (CONTINuED)
(c) Management of Liquidity Risk
The company seeks to manage liquidity risk, to ensure sufficient liquidity is
available to meet foreseeable needs and to invest cash assets safely and
profitably. The company actively maintains a mixture of cash and short-term
deposits that is designed to ensure the company has sufficient available
funds for operations, trading and corporate finance activities. The company
deems there is sufficient liquidity for the near future.
The tables below analyse the company’s future cash outflows based on the
remaining period to the contractual maturity date. The amounts disclosed are
the contractual undiscounted cash flows.
Less than 1 year Total
31 December 2008 £'000 £'000
Trade and other payables 2,187 2,187
2,187 2,187
Less than 1 year Total
31 December 2007 £'000 £'000
Trade and other payables 1,612 1,612
1,612 1,612
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
d) Capital risk management
consistent with others in the industry the company manages capital on the
basis of regulatory capital in accordance with pillar 1 and pillar 2.
capital adequacy and the use of regulatory capital are monitored daily by
the company’s management, employing techniques based on the
guidelines developed by the Basel committee and the european community
Directives, as implemented by the Financial services Authority, for
supervisory purposes. compliance with FsA regulatory requirements was
maintained throughout the year.
The company has an internal capital Adequacy Assessment process
(commonly known as the icAAp), which it uses to manage capital. This
Assessment covers the company and takes into account the risk profile and
future plans of the business. under this process the company is satisfied
that there is either sufficient capital to absorb potential losses or that there
are mitigating controls in place to prevent the risks occurring.
The risk Department includes commentary on required and available
capital in its monthly risk report to the company and in the risk committee
pack. The commentary highlights any changes to pillar 1 or 2 numbers and
also any expected impact from the anticipated business initiatives.
Where significant business initiatives are planned, the effects on the risk
profile of the company and therefore its capital requirement are considered
as part of the business plan.
Further details regarding the company's capital adequacy can be found in
its pillar 3 disclosures at www.evgplc.com/otherinformation.aspx.
Fair value of financial instruments
The carrying values of assets and liabilities not held at fair value (cash and
cash equivalents, trade receivables, counterparty receivables, other receivables,
and trade and other payables) are not significantly different from the fair value.
87

3. aUditoRs’ RemUneRation
During the year, the company obtained the following services from the company’s auditors at costs as detailed below:
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
88 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2008 2007
£'000 £'000
AuDIT SERVICES:
Fees payable to the company’s auditor for the audit of the company’s annual accounts 58 119
FEES PAYABLE TO THE COMPANY’S AuDITOR AND ITS ASSOCIATES FOR OTHER SERVICES:
other services supplied pursuant to legislation – 15
services relating to taxation 70 34
All other services 110 11
238 179
Fees for audit services above include all amounts payable to the company’s auditors in their capacity as such. included within the fees payable for the audit
of the company’s annual accounts is an amount of £nil in 2008 (2007: 19,000) which was paid in the year in which it is included, but related to the prior
years’ audits.
Taxation services include compliance services such as tax return preparation and advisory services such as consultation on tax matters, tax advice relating
to transactions and other tax planning and advice.
4. deFeRRed inCome taX
Deferred income tax is calculated in full on temporary differences under the liability method using a tax rate of 28% (2007: 28%)
The movement on the deferred income tax account is detailed below:
2008 2007
£'000 £'000
AT 1 JANuARY 1,701 2,348
income statement (charge)/credit - capital allowances (2) 5
income statement (charge) - stock options (97) (427)
income statement (charge) - stock options exercised (97) (15)
equity (charge) - stock options (576) (210)
AT 31 DECEMBER 929 1,701
Deferred income tax assets are expected to be recovered as follows:
2008 2007
£'000 £'000
Within twelve months 873 1,687
After twelve months 56 14
Total deferred income tax asset 929 1,701

5. inVestment in sUBsidiaRies
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
2008 2007
£'000 £'000
Cost
At 1 January 74,716 57,882
Additions 5,002 6,331
issue of equity options to employees of subsidiaries 10,706 10,503
Deduction to investment in subsidiaries for options purchased in the market (27,060) –
At 31 December 63,364 74,716
PROVISION FOR IMPAIRMENT
At 1 January 5,927 5,927
At 31 December 5,927 5,927
NET BOOk VALuES
At 1 January 68,789 51,955
At 31 December 57,437 68,789
Additions
During the year the company made a further investment into Williams de Broë limited of £5,002,000.
in addition, during the year, in recognition of grant of options over equity instruments to employees of other Group companies, the company has increased its
investments in subsidiaries by £10,706,000 in the year (2007: £10,503,000). The credit entry to this represents an increase in the company’s available-forsale
and other reserves as shown in note 14.
The deduction to investment in subsidiaries of £27,060,000 relates to the recharge by the company for market purchases and costs associated with the
employee share scheme to its underlying subsidiaries.
6. PRinCiPal sUBsidiaRY UndeRtaKinGss
Percentage Country of
Held directly by the Company Business Owned 2008 % Incorporation
evolution securities limited investment banking 100 uK
Williams de Broë limited private client investment management 100 uK
evolution Group services limited shared services 100 uK
evolution capital investment limited investment company: private equity portfolio 100 uK
evolution securities china limited investment banking 70.94 uK
WDB capital limited private client investment management 100 uK
WDB capital uK equity Fund limited hedge Fund 50.2 cayman islands
W Deb Mvl plc investment banking and private client investment management 100 uK
Held by other Group companies
evolution securities (us) inc. investment banking 100 us
Williams de Broë Management company limited Asset management 100 uK
evolution Watterson securities limited investment banking 100 hong Kong
shareholdings in the above subsidiaries are of ordinary equity shares except for the interest in WDB capital uK equity Fund limited, which is in the form of
investment shares. in accordance with s231 (5) of the companies Act 1985, the above information is solely provided in relation to principal subsidiary
undertakings. Full information is included within the Annual return to be filed at companies house.
on 17 April 2007 W Deb Mvl plc was placed into Members voluntary liquidation.
89

7. inVestment in assoCiates
90 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2008 2007
£'000 £'000
COST
At 1 January – 108
Transfer – (108)
At 31 December – –
NET BOOk VALuES
At 1 January – 108
At 31 December – –
The investment in associate opening balance relates to WDB capital limited, which became a wholly owned subsidiary of the Group on 2 August 2007.
8. tRade and otHeR ReCeiVaBles
2008 2007
£'000 £'000
CuRRENT
other receivables 1,193 820
Amounts owed by Group undertakings 2,767 1,563
prepayments and accrued income 7 81
3,967 2,464
9. aVailaBle-FoR-sale FinanCial assets
2008 2007
£'000 £'000
At 1 January 10,432 1,139
Additions at fair value 225 10,000
10,657 11,139
Disposals of available-for-sale financial assets at fair value – (1,199)
revaluation surplus transfer to equity (note 14) 995 492
At 31 December 11,652 10,432
AVAILABLE-FOR-SALE FINANCIAL ASSETS INCLuDE THE FOLLOwING:
LISTED SECuRITIES:
equity securities – uK and ireland 11,652 10,432
11,652 10,432
Available-for-sale financial assets include amounts invested in the WDB capital uK equity Fund limited, an entity managed by WDB capital limited.
The company invested £225,000 into the fund during 2008 (2007: £10,000,000) and has adjusted this value to fair value at 31 December 2008.
As a result, the investment has been increased by £995,000 (2007: £492,000) with a corresponding credit to fair value and other reserves.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER

10. CasH and CasH eQUiValents
2008 2007
£'000 £'000
CASH AND CASH EQuIVALENTS
cash at bank and in hand 249 288
short term bank deposits 75,293 55,188
75,542 55,476
11. tRade and otHeR PaYaBles
2008 2007
£'000 £'000
Amount owed to Group undertaking 4,093 3,110
other taxation and social security 168 59
other payables 6 142
Accruals and deferred income 2,013 1,468
6,280 4,779
12. emPloYees and diReCtoRs
2008 2007
£'000 £'000
EMPLOYEE REMuNERATION EXPENSE
Wages and salaries 1,955 1,173
social security costs 134 193
redundancy costs – 23
other pension costs 1 4
cost of share options 761 745
other staff costs 31 1
Total employee remuneration expense 2,882 2,139
The average number of employees (including Directors) during the year was as follows:
2008 2007
Group 13 11
The actual number of full time employees was 15 at 31 December 2008 (31 December 2007: 13).
13. CasH FloW FRom oPeRatinG aCtiVities
reconciliation of operating (loss) to net cash generated from operating activities:
2008 2007
£'000 £'000
CASH GENERATED FROM OPERATING ACTIVITIES
operating (loss) (1,291) (2,845)
ADJuSTMENTS FOR:
profit on sale of available-for-sale financial assets – (200)
share options charge 761 744
cost of matching shares issued under sip 760 217
CHANGES IN wORkING CAPITAL:
(increase)/decrease in trade and other receivables (302) 33,101
increase/(decrease) in trade and other payables 301 (1,599)
CASH GENERATED FROM OPERATING ACTIVITIES 229 29,418
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER
91

14. moVement in sHaReHoldeRs’ eQUitY
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
92 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
Capital Available-for-sale
Share Share redemption Merger and other Retained Total
capital premium reserve reserve reserves earnings equity
2008 2008 2008 2008 2008 2008 2008
£'000 £'000 £'000 £'000 £'000 £'000 £'000
BALANCE AT 1 JANuARY 2,232 28,795 373 51,230 24,974 26,479 134,083
profit for the year – – – – – 2,167 2,167
proceeds from issuance of ordinary shares 13 967 – – – – 980
Transfer of merger reserve to retained earnings – – – (21,898) – 21,898 –
purchase of Trust shares – – – – – (1,607) (1,607)
share option: value of services provided – – – – – 761 761
revaluation of available-for-sale financial assets – – – – 995 – 995
Deferred tax credit on employee options – – – – – (673) (673)
Dividends paid – – – – – (4,262) (4,262)
issue of equity instruments to employees of subsidiaries – – – – 10,706 – 10,706
schedule 23 deduction on options exercised – – – – – 97 97
recharge of option costs to subsidiaries – – – – (27,060) 27,060 –
BALANCE AT 31 DECEMBER 2,245 29,762 373 29,332 9,615 71,920 143,247
Capital Available-for-sale
Share Share redemption Merger and other Retained Total
capital premium reserve reserve reserves earnings equity
2007 2007 2007 2007 2007 2007 2007
£'000 £'000 £'000 £'000 £'000 £'000 £'000
BALANCE AT 1 JANuARY 2,214 28,445 373 51,230 14,178 38,284 134,724
profit for the year – – – – – 762 762
proceeds from issuance of ordinary shares 18 350 – – – – 368
purchase of Trust shares – – – – – (9,620) (9,620)
share option: value of services provided – – – – – 744 744
revaluation of available-for-sale financial assets – – – – 492 – 492
Deferred tax credit on employee options – – – – – (210) (210)
Dividends paid – – – – – (3,496) (3,496)
issue of equity instruments to employees of subsidiaries – – – – 10,503 – 10,503
schedule 23 deduction on options exercised – – – – – 15 15
Fair value reserve transferred to income statement
on disposal – – – – (199) – (199)
BALANCE AT 31 DECEMBER 2,232 28,795 373 51,230 24,974 26,479 134,083
15. CaPital Commitments and GUaRantees
The company had no capital commitments or guarantees at 31 December 2008 (2007: nil).
16. lease Commitments
The leases on the company’s main premises are in the name of evolution Group services limited, another Group company, details of which can be seen
in the accounts of that company. evolution Group services limited recharges the company for usage of these premises.

17. Post BalanCe sHeet eVents
There are no further post Balance sheet events other than those disclosed in the Group’s Financial statements and on note 36.
18. Related PaRtY tRansaCtions
i) Intra-Group trading
The following table shows the balances owed by/(owed to) the company to fellow Group undertakings at the year-end:
2008 2007
£'000 £'000
Williams de Broë limited (734) 1,032
W Deb Mvl plc (2,183) (1,597)
evolution securities limited 612 (1,432)
evolution Group services limited (27) 162
WDB capital limited – (19)
evolution capital investment limited 307 307
(2,025) (1,547)
ii) Fixed assets
The company pays interest to evolution Group services limited in respect of fixed assets which are used by the company and owned by evolution Group
services limited. The interest paid for fixed assets during the period was £1,000 (2007: £1,000).
iii) Commissions earned on trading with key management and other Group Directors
During the period Directors of the company paid £375 (2007: £471) in commission and fee income for trading and portfolio management to Williams de Broë
limited on private client accounts belonging to Directors of the company.
iv) Dealings with Directors
The company has had no dealings with companies in which any of the key management, or persons connected to them, is a Director.
v) Debenture
During 2002, a Director of the company, Alex snow, purchased a debenture at Twickenham rugby for a term of 10 years. The debenture was paid by the
company to the value of £26,000. The balance outstanding at 31 December 2008 was £10,065 (31 December 2007: £12,881). An agreement is in place
that requires the remaining portion of the debenture to be repaid by the Director should he leave prior to the end of the ten year term. The debenture is used
to facilitate the entertainment of clients.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
93

19. emPloYee sHaRe sCHemes
Movements in the number of share options and their weighted average exercise prices are as follows:
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
94 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
2008 2007
Average exercise price Outstanding Average exercise price Outstanding
(pence per share) options (pence per share) options
At 1 January 39.30 7,191,565 33.39 8,504,065
Granted 1.00 500,000 – –
exercised 41.40 (500,000) 1.00 (1,312,500)
employee relocated to another group company 1.00 550,000 – –
At 31 December 33.97 7,741,565 39.30 7,191,565
The weighted average market price of the shares issued during the year upon exercise was £1.02 (2007: £1.43).
The date range over which the above options may be exercised is described in the relevant scheme detailed below. The overall weighted average life of the
remaining options is 4.04 years (2007: 4.28 years).
All options in the above table have a life from grant of 10 years.
in the below tables evG refers to The evolution Group plc.
The company currently operates one share trust. The evolution Group plc employees’ share Trust (the “Trust”) administers The evolution Group plc share
schemes and is managed by the sanne Trust.
options under the share incentive schemes are valued using a Black-scholes model adjusted for dividends according to those declared by the company.
The company estimates the number of options likely to vest and expenses that value over the relevant period. volatility has been estimated by taking the
historical volatility in the company’s share price over a three year period.
in the case of awards of call rights, which have an exercise price of 1p per ordinary share, the fair value is based on the market value at the time of grant
discounted by the dividend yield over the expected life.
The number of options and share awards outstanding by issue date and exercise price, together with the vesting periods, the fair values, and the assumptions
used to calculate it, and the actual remaining contractual life as at 31 December 2008 are as follows:
EVG 2006 EVG 2002 EVG 2001 EVG 2000
Performance Share Executive Share Executive Share Executive Share
plan Option Scheme Option Scheme Option Scheme
Grant dates (1) 22/12/06 14/11/03-30/12/08 29/06/01 11/05/01
Weighted average market value at grant date (pence) 125.50 101.94 58.11 58.67
Weighted average exercise price (pence) n/A 1.00 52.30 58.67
number of awards outstanding 6,000,000 3,150,000 1,500,000 3,091,565
vesting period (months) 30 22-36 36 36
expected share price volatility (%) 24.74 - 38.27 n/A 0-73 n/A
Dividend yield (%) 0.96 0.63 0.00 n/A
Average life remaining (years) n/A 6.41 2.49 2.36
number of options/awards expected to vest – 100% 100% 100%
Average fair value per option/award granted (pence) 40.00 103.35 – n/A
income statement charge (£) 395,000 295,000 – –
note
(1) represents the period over which the performance condition (as described below) can be met at which point all awards meet the vesting criteria.

19. emPloYee sHaRe sCHemes (CONTINuED)
The share options outstanding at the end of the year have a weighted average exercise price and expected remaining life as follows:
2008 2007
Weighted Weighted Weighted Weighted
Number average average Number average average
Range of exercise prices of share exercise price expected of share exercise price expected
(pence) options (pence) remaining life options (pence) remaining life
1.00 3,150,000 1.00 6.41 2,100,000 1.00 6.01
52.3 1,500,000 52.30 2.49 2,000,000 49.58 3.89
58.67 3,091,565 58.67 2.36 3,091,565 58.67 3.36
7,741,565 7,191,565
The Evolution Group Plc 2006 Performance Share Plan (“PSP”)
This plan was approved by shareholders of the parent company on the 25 May 2006 at its Annual General Meeting.
Eligibility
Any Director of the company, or a Group company, and any employee of the company, or a Group company, may be invited to participate in the plan.
Nature of Plan
The plan provides for participants to be awarded free shares in the parent company subject to achievement of specific performance criteria.
Performance criteria
The performance conditions determine the number of shares with reference to the average mid-market share price as derived from the Daily official list
of the london stock exchange on all dealing days over any period of 60 consecutive days during the performance period, which is from 1 April 2006 to
31 March 2009. The prescribed performance growth is derived from a base share price of £1.42 at 31 December 2005.
if the average share price equals or exceeds £2.13 (an increase of 50% from base price) within the performance period then an award may be exercised
over one-third of the shares granted. however if the average share price equals or exceeds £2.84 (an increase of 100% from base price) then the full award
of the shares granted may take place. Additionally, the satisfactory employment by the individual within a Group company throughout the period following
grant of an award is required. The earliest exercise date is 30 June 2009.
Scheme Limits
The number of shares, which may be issued to satisfy awards under this plan is limited 25,000,000 shares. The scheme additionally restricts the maximum
number of shares available to Directors of the company to 10,000,000 shares. individuals who fall within the definition of a Director of the company before
31 December 2006 are not eligible for awards after 31 December 2006. An amount of 2,000,000 shares not awarded to Directors of the company before
31 December 2006 up to the 10,000,000 share limit have become available to award to employees or to future Directors of the company.
Awards granted
At 31 December 2008, awards of 6,000,000 shares were outstanding. Following vesting the shares can be exercised between 30 June 2009 and
30 June 2016 subject to achievement of relevant performance conditions.
The Evolution Group Plc 2002 Executive Share Incentive Plan
This plan was approved by the Board on 13 March 2002 and it was approved by shareholders on 10 october 2003.
Eligibility
Any Director of the company, or a Group company, and any employee of the company, or a Group company, may be invited to participate in the plan.
Nature of Plan
The plan provides for participants to be awarded shares in the company at their nominal cost. subject to achievement of performance criteria, awards of
shares convert into call rights over such shares. The plan is operated in conjunction with an employee benefit trust on three levels.
it is operated as a standalone plan and it is also used as the framework for the Key performers share incentive plan (“Kpsip”) introduced for employees
of evolution securities limited in January 2003, and the Market Making and Trading share incentive plan (“MMTsip”), which was introduced for the market
making team of esl in January 2005, where it forms the method of delivery of such awards made within the Kpsip framework.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
95

19. emPloYee sHaRe sCHemes (CONTINuED)
Performance criteria
• Standalone plan
under the standalone plan, the basic performance criteria used prior to
the vesting of awards was growth in earnings of 15% per annum over the
vesting period of the award. Additionally, the satisfactory employment by
the individual within a Group company throughout the period following grant
of an award is required. From January 2006, following the review by the
remuneration committee, it was concluded that the continued imposition of
performance criteria for all awards on the basis of 15% earnings growth was
too generally applied and that where awards were made to employees of the
company’s operating subsidiaries, then the sole general criteria should be
that of continued satisfactory employment within a Group company. This
is because individual employees do not by themselves have particular
influence upon the achievement of the earnings growth target. Furthermore,
the remuneration committee observed that the imposition of this target
was undermining the financial and retention values of share awards.
• KPSIP
under the Kpsip, employees may be granted an initial award and two
subsequent awards at the first and second anniversary of the initial award.
up to 50% of each award, once made may be clawed back dependent upon
the individual’s performance during the twelve months following the award,
as measured within the Group company’s annual appraisal process. The
level of subsequent awards is also directly related to the individual’s overall
performance rating within the company’s annual appraisal process.
Additionally, the satisfactory employment by the individual within a Group
company throughout the period following grant of an award is required. The
performance criteria for the aggregate growth in earnings were removed for
all awards on 20 January 2006 as outlined above for the standalone plan.
• MMTSIP
under the MMTsip, employees of the market making team of esl may be
granted an initial award and two subsequent awards at the first and second
anniversary of the initial award. each award is allocated to individuals within
this team in the following January based upon strict performance criteria,
dependent upon the individual’s performance during the twelve months
following the award. The award will ultimately vest after three years subject
to the basic scheme target of aggregate growth in earnings (based upon the
adjusted operating profit) of the company of 15% per annum over the
vesting period of the award. Additionally, the satisfactory employment by the
individual within a Group company throughout the period following grant of
an award is required. The price to be paid on exercise of these awards is the
greater of £1.00 or the nominal value of shares to be subscribed for. The
awards may be exercised after three years from the date of grant. The
performance criteria for the aggregate growth in earnings were removed for
all awards on 20 January 2006 as outlined above for the standalone plan.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
96 The evoluTion Group plc AnnuAl reporT & AccounTs 2008
The Evolution Group Plc 2002 Executive Share Incentive Plan
Call rights
After achievement of the performance criteria and vesting of the award,
a call right is granted to the individual exercisable, subject to continued
satisfactory employment, within ten years of the date of the original award.
Scheme Limits
The number of shares, which may be issued to satisfy awards under this
plan, is limited to 10% of the issued share capital of the company from
time to time.
Options granted
At 31 December 2008, awards and call rights over 3,150,000 shares
(2007: 2,100,000) were outstanding at an exercise price of the greater
of £1.00 or the nominal value of the shares to be subscribed for. The call
rights can be exercised between 14 november 2003 and 6 July 2014.
The Evolution Group Plc 2001 Executive Share Option Scheme
shareholders approved this scheme on 21 June 2001.
Eligibility
Any Director who is required to devote the whole or substantially the whole
of his working time to the service of the company, or a Group company,
and any employee of the company, or a Group company, may be invited
to participate in either ordinary or super options.
Option price
The exercise price shall be determined by the Directors but shall not, unless
approved by ordinary resolution of the shareholders be less than the greater
of nine-tenths of the market value of the share at the date of the grant and
the nominal value of a share.
Performance criteria
The option exercise may be conditional upon the performance of the
company and/or the participant over such period and measured against
such objective criteria as may be determined by the Directors. The initial
performance criteria established by the Directors of the company were that
the closing bid price of a share in The evolution Group plc, as derived from
the Daily official list published by The london stock exchange, must be not
less on average than a specified amount for a period of 60 consecutive
days before options can be exercised. if the average share price is £0.90,
then 25% of the options may be exercised; at £1.10 a further 25% may be
exercised; at £1.30 then a further 25% may be exercised; and at £1.50, the
remaining 25% may be exercised. At a meeting of the Board on
21 november 2002, approval was given to the waiving of these initial
performance criteria for all new options granted under the scheme by
varying the scheme rules. The remuneration committee, having made
comparisons with the practice of other Groups and taken the appropriate
legal advice, made this recommendation.

19. emPloYee sHaRe sCHemes (CONTINuED)
Exercise of options
An option may not be exercised later than the tenth anniversary after the
date of grant. The earliest date of exercise is generally two years after the
date of grant for ordinary options and three years after the date of grant
for super options.
Scheme Limits
The overall limit on the number of shares, which may be issued to satisfy
ordinary options, is 10% of the issued share capital and for super options,
is 5% of the issued share capital of the company.
Options granted
At 31 December 2008 nil ordinary options (2007: nil) and 1,500,000
super options (2007: 2,000,000) were outstanding with an exercise
price of 52.3p. The options can be exercised between 29 June 2004
and 29 June 2011.
The Evolution Group Plc 2000 Executive Share Option Scheme
(unapproved)
shareholders approved this scheme on 20 november 2000.
Eligibility
Any Director of the company, or a Group company, and any employee of
the company, or a Group company, may be invited to participate in either
ordinary or super options.
Option price
The exercise price shall be determined by the Directors but shall not be less
than the greater of the market value of the share at the date of grant or the
nominal value of a share.
Performance criteria
The option exercise on ordinary options may be conditional upon the
performance of the company and /or the participant over such period and
measured against such objective criteria as may be determined by the
Directors. There are no performance criteria for super options.
notes to tHe FinanCial statements CONTINuED
FOR THE YEAR ENDED 31 DECEMBER 2008
Exercise of options
An option may not be exercised later than the tenth anniversary after the
date of grant. The earliest date of exercise is generally three years after
the grant for ordinary options and five years after the date of grant for
super options.
Scheme Limits
The overall limit on the number of shares, which may be issued to satisfy
ordinary options, is 10% of the issued share capital and for super options,
is 5% of the issued share capital of the company.
Options granted
At 31 December 2008, 2,025,933 ordinary options (2007: 2,025,933) and
1,065,632 super options (2007: 1,065,632) were outstanding with an
exercise price of 58.67p. The options can be exercised between 11 May
2004 and 11 May 2011.
The Evolution Group Plc 2000 Executive Share Option Scheme
(Approved)
The terms of this scheme are exactly the same as the unapproved 2000
scheme save the restriction that no individual shall be granted options over
shares with an aggregate market value (calculated as the strike price at
date of grant) exceeding £30,000.
Options granted
no options were outstanding in either periods.
97

Directors Martin Gray (non-executive chairman)
Alex snow (Group chief executive)
Andrew umbers (executive Director)
lord Maclaurin of Knebworth, Dl (non-executive)
nicholas irens (non-executive)
Mark nicholls (non-executive)
peter Gibbs (non-executive
Company Secretary Tony lee
Registered Office 9th Floor
100 Wood street
london
ec2v 7An
Auditors pricewaterhousecoopers llp
hay’s Galleria
1 hays lane
london
se1 2rD
Solicitors Bird & Bird
15 Fetter lane
london
ec4A 1Jp
Fasken Martineau stringer saul llp
17 hanover square
london
W1s 1hu
Broker credit suisse
one cabot square
london
e14 4QJ
Registrars capita registrars
The registry
34 Beckenham road
Beckenham
Kent
Br3 4Br
Registered number 03359425
diReCtoRs and adVisoRs
98 The evoluTion Group plc AnnuAl reporT & AccounTs 2008

FoR YoUR notes
99

FoR YoUR notes CONTINuED
100 The evoluTion Group plc AnnuAl reporT & AccounTs 2008

DesiGneD AnD proDuceD BY BesT&co. lonDon +44 (0) 20 7440 8710

THE EVOLuTION GROuP PLC
100 wOOD STREET LONDON EC2V 7AN
T: +44 (0) 20 7071 4300
WWW.evGplc.coM