Share Capital Reduction

Evolution Group PLC
08 November 2002

                            The Evolution Group Plc

              Proposals for cancelling all of the Deferred Shares
                     and part of the share premium account

8 November 2002


1. Introduction

Evolution announces today it is seeking approval for the proposals regarding the
Share Capital Reduction. The Share Capital Reduction will result in a reduction
of the deficit on the Company's profit and loss account and will put the Company
in a position where, if it makes profits in the future, it is able to pay
dividends. Additionally the cancellation of the Deferred Shares will simplify
the Company's balance sheet making it more readily understandable both to
Shareholders and potential investors.

2. Background

On 26 March 2001 the Deferred Shares were created as part of a share capital
reorganisation. In the circular to shareholders dated 1 March 2001 which dealt
with, inter alia, the creation of the Deferred Shares it was stated that
application would be made in due course to the Court for the cancellation of the
Deferred Shares. Such cancellation requires the approval of Shareholders.

The Company also intends to make application to the Court to cancel £42,012,627
of the Company's share premium account (which currently stands at £65,873,851).
Such cancellation also requires the approval of Shareholders and this will be
sought at the EGM, at which the resolutions will be proposed which are necessary
to: cancel the Deferred Shares; cancel 10 "old" shares in the Company; reduce
the authorised share capital of the Company to 400,000,000 Ordinary Shares; and
reduce the Company's share premium account by £42,012,627.

3. The Company's unconsolidated balance sheet

The last audited unconsolidated balance sheet of the Company is at 31 December
2001. This discloses that, as at 31 December 2001 the total shareholders funds
were £44,429,142, of which there was £8,153,090 in respect of called up ordinary
share capital, £66,150,162 in respect of share premium account and an
accumulated deficit on the profit and loss account of £29,874,110. Since 31
December 2001 the Company has acquired the entire issued share capital of Beeson
Gregory in consideration of the issue of a total of 121,975,790 Ordinary Shares
credited as fully paid at 43p per share.

As at 30 September 2002 (being the latest practicable date prior to the posting
of this document) the share premium account had decreased by £276,311 (being the
cost of the issue of shares associated with the acquisition of Beeson Gregory)
to £65,873,851.

As at 30 September 2002 (being the latest practicable date prior to the posting
of this document) the result of this issue of shares, together with cash amounts
invested previously in the shares of Beeson Gregory and IP2IPO, gives a carrying
value on the Company's balance sheet for the overall investment in Beeson
Gregory of £56,780,537. In the light of the extreme equity market conditions
that have prevailed since the transaction was completed, the Board has concluded
that it is prudent to make an impairment of this carrying value by an amount of
£10,865,000. This reduces the carrying value to £45,915,537 and arises for two
distinct reasons. Firstly, there has been a revaluation, undertaken within the
fair value process, of the Beeson Gregory private equity portfolio from £7.9
million at 31 December 2001 to £0.3 million at 30 September 2002. This is a
significant decrease from valuations that, at the time of the offer in May, had
seemed to be prudent and includes a further provision of £0.6 million from that
reported in the interim statement. Secondly, the valuations attached to
investment banking and intellectual property company shares, which form the
remainder of the assets of Beeson Gregory, have seen very significant reductions
in the United Kingdom equity market since the transaction was completed.

In addition, the Board has reviewed the carrying values of the Group's other
subsidiary operations on the Company's balance sheet. Where it is necessary,
adjustments have been made within the Company's balance sheet to record
investments at their net asset value to reflect losses that have previously been
reported on a consolidated basis within the subsidiaries.

Including these adjustments the accumulated deficit on the Company's
unconsolidated profit and loss account at 30 September 2002 is £48,983,492.

4. Cancellation of the Deferred Shares

There are 77,454,058 Deferred Shares in issue and there are no authorised but
unissued Deferred Shares. The Deferred Shares are of negligible value as they do
not entitle the holders to receive dividends or vote at meetings of
shareholders. The only entitlement that the Deferred Shareholders give to their
holders is to receive the par value of the Deferred Shares (of 9p) on a winding
up of the Company once the holders of Ordinary Shares have received £1,000,000
for every Ordinary Share that they hold.

Under the Act, a company's ability to cancel any of its share capital is very
limited. However, with the consent of the Court it is possible to cancel the
Deferred Shares and apply the sum which results in such reduction in reducing
the accumulated deficit on the Company's profit and loss account.

The Board therefore considers that the Deferred Shares represent paid-up share
capital which is lost or unrepresented by available assets and the application
to the Court for the cancellation of the Deferred Shares will be on this basis
pursuant to section 135(2)(b) of the Act.

5. Cancellation of Old Ordinary Shares

On 26 March 2001 the Deferred Shares were created as part of a share capital
reorganisation which was described in the circular to shareholders dated 1 March
2001. The share capital reorganisation that was effected on 26 March 2001 was
designed to consolidate every 10 Old Ordinary Shares of 1p that were then in
issue into one ordinary share of 10p each in the Company and immediately to
subdivide each such ordinary share of 10p each in the Company into one Ordinary
Share (i.e. with a par value of 1p) and one Deferred Share. However, because the
number of Old Ordinary Shares that were in issue immediately prior to the share
capital reorganisation was not a multiple of 10, 8 issued Old Ordinary Shares
and a further 2 unissued Old Ordinary Shares were left over on consolidation.
Application will be made to the Court for the cancellation of the 10 Old
Ordinary Shares in order to tidy up the position.

6. Reduction of the share premium account

Under the Act, a company's ability to utilise its share premium account is very
limited. However, with the consent of the Court it is possible to reduce its
share premium account and apply the sum which results in such reduction in
further reducing the accumulated deficit on the Company's profit and loss
account.

The Company therefore proposes to reduce the share premium account by
£42,012,627 and to carry that sum to its profit and loss account in order to
reduce the deficit.

7. The Share Capital Reduction

The cancellation of the Deferred Shares and the reduction in share premium
account will both only take effect if confirmed by the Court and upon the
appropriate documents being lodged with the Registrar of Companies. The Court
may require the Company to give an undertaking for the protection of the
Company's existing creditors and your Board anticipates that the Company will
give such an undertaking, if required. The application to the Court will be made
soon after the EGM and the procedure is expected to be completed by the end of
December 2002.


Enquiries

The Evolution Group Plc                                   020 7488 4040
Alex Snow - Chief Executive Officer
Graeme Dell - Finance Director

Hogarth Partnership Limited                               020 7357 9477
Andrew Jaques - Partner
Georgina Briscoe - Associate


Appendix

Definitions


The following definitions apply throughout this document, unless the context 
requires otherwise.

"Act"                         the Companies Act 1985, as amended

"Beeson Gregory"              Beeson Gregory Group Plc

"Board" or "Directors"        the Company's board of directors

"Company" or "Evolution"      The Evolution Group Plc

"Court"                       The High Court of Justice in England & Wales

"Deferred Share"              a deferred share of 9p created on 26 March 2002

"EGM"                         the extraordinary general meeting of the Company to be held on 3 December 2002, or
                              any adjournment of that meeting

"Group"                       the Company and its subsidiaries

 "Old Ordinary Share"         the ordinary shares of 1p each in the capital of the Company prior to the share
                              capital reorganisation that was approved by the Company in general meeting on 26 March
                              2001

"Ordinary Shares"             the ordinary shares of 1p each in the capital of the Company

 "Resolutions"                the resolutions to be proposed at the EGM, as set out in the EGM Notice

"Shareholders"                holders of Ordinary Shares

"Share Capital Reduction"     the cancellation of: the Deferred Shares, 10 Old Ordinary Shares in the Company
                              that were not consolidated effectively on 26 March 2001; and part of the Company's
                              share premium accounts on the terms set out in the EGM notice.



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