Annual Report for the year ended 31 December 2008

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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
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Yesterday Today Tomorrow... ANNUAL
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FINANCIAL ANd OPERATIONAL HIGHLIGHT
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Balance Sheet strength and cash bal
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evolution securities Evolution secu
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Corporate Finance Evolution securit
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Wdb capital The Group’s investmen
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EARNINGS PER SHARE ON TOTAL OPERATI
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evolution securities’ income anal
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other activities The Group’s othe
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Lord macLaurin of Knebworth, dL (72
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principal risks and uncertainties T
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share capital Details of the change
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The Directors consider that in prep
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The Chief Executive, Alex snow, is
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The Committee observed that during
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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)
Page 69 and 70: 24. tRadinG PoRtFolio assets notes
Page 71 and 72: 31. Consolidated moVement in sHaReH
Page 73 and 74: 33. CasH FloW FRom oPeRatinG aCtiVi
Page 75 and 76: 38. emPloYee sHaRe sCHemes Movement
Page 77 and 78: 38. emPloYee sHaRe sCHemes (CONTINu
Page 79 and 80: THE EVOLuTION GROuP PLC PARENT COMP
Page 81 and 82: ASSETS ComPanY BalanCe sHeet AS AT
Page 83: statement oF ReCoGnised inCome and
Page 87 and 88: 2. FinanCial instRUments and RisK m
Page 89 and 90: 2. FinanCial instRUments and RisK m
Page 91 and 92: 5. inVestment in sUBsidiaRies notes
Page 93 and 94: 10. CasH and CasH eQUiValents 2008
Page 95 and 96: 17. Post BalanCe sHeet eVents There
Page 101 and 102: FoR YoUR notes 99
Page 103 and 104: DesiGneD AnD proDuceD BY BesT&co. l
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Annual Report for the year ended 31 December 2008

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