Annual Report for the year ended 31 December 2008

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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
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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
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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 and 84: statement oF ReCoGnised inCome and
Page 85: 1. aCCoUntinG PoliCies (CONTINuED)
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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