Annual Report for the year ended 31 December 2008

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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
Page 1 and 2: Yesterday Today Tomorrow... ANNUAL
Page 3 and 4: FINANCIAL ANd OPERATIONAL HIGHLIGHT
Page 5 and 6: Balance Sheet strength and cash bal
Page 7 and 8: evolution securities Evolution secu
Page 9 and 10: Corporate Finance Evolution securit
Page 11 and 12: Wdb capital The Group’s investmen
Page 13 and 14: EARNINGS PER SHARE ON TOTAL OPERATI
Page 15: evolution securities’ income anal
Page 19 and 20: Lord macLaurin of Knebworth, dL (72
Page 21 and 22: principal risks and uncertainties T
Page 23 and 24: share capital Details of the change
Page 25 and 26: The Directors consider that in prep
Page 27 and 28: The Chief Executive, Alex snow, is
Page 29 and 30: The Committee observed that during
Page 31 and 32: appropriate and comprehensive proce
Page 33 and 34: The Board has delegated to the Remu
Page 35 and 36: The concept of a bonus ceiling does
Page 37 and 38: non-executive directors Non-executi
Page 39 and 40: On 8 April 2009, Alex snow was awar
Page 41 and 42: We have audited the Consolidated Fi
Page 43 and 44: ASSETS 2008 2007 Note £’000 £
Page 45 and 46: 2008 2007 £’000 £’000 (loss)/
Page 47 and 48: shareholding of more than one half
Page 49 and 50: ) Distribution channels and custome
Page 51 and 52: (b) Share-based plans The Group’s
Page 53 and 54: Risk Reporting The Group Board rece
Page 55 and 56: Neither past Past due but not impai
Page 57 and 58: By business segment (continued) The
Page 59 and 60: 6. otHeR inCome Restated 2008 2007
Page 61 and 62: 11. aUditoRs’ RemUneRation During
Page 63 and 64: 14. inCome taX eXPense (CONTINuED)
Page 65 and 66: 18. intanGiBle assets notes to tHe
Page 67 and 68:
20. deFeRRed inCome taX (CONTINuED)
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24. tRadinG PoRtFolio assets notes
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31. Consolidated moVement in sHaReH
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33. CasH FloW FRom oPeRatinG aCtiVi
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38. emPloYee sHaRe sCHemes Movement
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38. emPloYee sHaRe sCHemes (CONTINu
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THE EVOLuTION GROuP PLC PARENT COMP
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ASSETS ComPanY BalanCe sHeet AS AT
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statement oF ReCoGnised inCome and
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1. aCCoUntinG PoliCies (CONTINuED)
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2. FinanCial instRUments and RisK m
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2. FinanCial instRUments and RisK m
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5. inVestment in sUBsidiaRies notes
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10. CasH and CasH eQUiValents 2008
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17. Post BalanCe sHeet eVents There
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Page 99 and 100:
Page 101 and 102:
FoR YoUR notes 99
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DesiGneD AnD proDuceD BY BesT&co. l
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Annual Report for the year ended 31 December 2008

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