Annual Report for the year ended 31 December 2008

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).