Annual Report for the year ended 31 December 2008

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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
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: Wdb capital The Group’s investmen
Page 15 and 16: evolution securities’ income anal
Page 17 and 18: other activities The Group’s othe
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
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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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