Interim Results

Evolution Group PLC
07 September 2004


7 September 2004

                            The Evolution Group Plc
                       ("Evolution Group" or the "Group")

             Interim results for the six months ended 30 June 2004

Evolution Group, a leading mid-market integrated investment bank, today
announces its results for the six months ended 30 June 2004.

Financial highlights

   • Group operating income increased by 126% to £31.4m (2003: £13.9m)
   • Gross profit increased by 126% to £29.6m (2003: £13.1m)
   • Profit before tax of £37.1m (2003: Loss £1.6m)
   • Basic earnings per share increased to 13.6p (2003: Loss of 0.6p)
   • Interim dividend declared of 0.17p per share (2003: Nil)


Operational highlights


   • First half demonstrates considerable growth in revenues
   • Investment banking division has made a strong start to 2004 with revenue
     growth in all areas
   • Christows' FUM have increased by £232m, or 65%, since 30 June 2003 to
     £588m
   • Cash realisation of £40.5m on partial sale of holding in IP2IPO resulting
     in net profit of £22.3m

Richard Griffiths, Evolution Group's Chairman, commented:

"Following an excellent start to the year, the Board remains confident of the
future prospects for the Group."

                                     -Ends-

For further information please contact:

The Evolution Group Plc                                          020 7071 4300
Alex Snow, Chief Executive Officer
Graeme Dell, Finance Director

Hogarth Partnership Limited                                      020 7357 9477
Andrew Jaques / Georgina Briscoe

Notes to Editors:

The Evolution Group Plc

The Evolution Group is the holding company of Evolution Beeson Gregory Limited
and Christows Limited. The Evolution Group is fully listed and is a constituent
of the FTSE 250 with a current market capitalisation of approximately £370
million.

Evolution Beeson Gregory Limited aims to be the "leading investment bank to
small and mid cap companies". This is based upon the belief that it has the
strategy and capabilities to achieve this goal, coupled with the fact that the
market opportunity exists for this strategy to be a successful and profitable
one.

The company's capabilities are strong across the primary and secondary equity
market and central to this is the presence of a leading, retained corporate
client base in the small and mid cap sector. We service these clients by
providing the full range of corporate finance, equity research, market making
and sales activities and delivering all of these with a strong client service
culture.

Christows Limited is a leading independent firm of stockbrokers and portfolio
managers which, from its foundation in 1991 in Exeter, has always set out to
provide a traditional stockbroking service whilst developing an innovative
product offering. Christows now also operates from London, Bournemouth and Bath
and has 68 staff across account executive, research, sales and administration
functions.

As at 30 June 2004, Christows had a total of £588m (2003: £356m) client funds
under management, on over three quarters of which it receives a recurring fee
based commission. Christows' strategy for 2004 is one of controlled growth of
the funds under management by organic means through the sales and account
executive teams and by the recruitment of likeminded account executives who can
attract new clients to the company.

IP2IPO is held as an investment by the Group following the partial disposal of
shares in May 2004.

IP2IPO's business is the formation of long-term university partnerships in which
it receives a significant interest in the intellectual property created by its
university partners. IP2IPO successfully listed on AIM in October 2003.


CHAIRMAN'S STATEMENT

Review of the half year ended 30 June 2004

During the first half of 2004, The Evolution Group Plc ("Evolution"or the
"Group") has traded strongly and I am pleased to report operating income has
increased 126% to £31.4m (2003: £13.9m) and profit before tax has increased by
£38.7m to £37.1m giving the Group a basic earnings per share figure of 13.6p
(2003: Loss 0.6p).

Investment Banking

Within Evolution Beeson Gregory, the Group's investment banking business, there
has been continued growth from the corporate broking, equity research and
distribution and trading divisions.

Corporate broking

Our corporate broking track record for the first half of 2004 has continued to
progress strongly. During the period we advised on 19 fundraising transactions
raising £239m for our clients. In July and August 2004 we have raised a further
£131m from 10 transactions. The total of £370m raised in the eight months to
August already significantly exceeds the total funds raised in the 12 months to
31 December 2003 of £271m.

Equity research and distribution

The primary fundraisings outlined above from our corporate activities have been
successfully placed with institutional investors demonstrating the strength of
our team and their placing power in a difficult and highly competitive market.
In addition, our secondary sales commission growth has continued in 2004.

Equity research has made further progress, increasing coverage from 191 stocks
at 31 December 2003 to 208 stocks by 30 June 2004. The breadth and quality of
the coverage in this area has been recognised through improved institutional
rankings for our research analysts.

Trading

Market making and trading activities have had a very profitable first half as we
have continued to build this business. Our voice and electronic trading volumes
have increased as we cover more stocks and gain connectivity to a greater range
of intermediaries.

Private Client Stockbroking & Fund Management

Christows, the Group's private client fund management business, has seen results
that build on the progress reported at the year end with a further increase in
funds under management and resulting revenue growth.

Total income has increased in line with our growth plans and the operating
profit of this business in the first half of 2004 is in excess of the full year
in 2003. Our sales team continues to attract more funds under management and
this has been a record half year. At 30 June 2004, total funds under management
were £588m, up from £356m at the same time last year, an increase of 65%.
Strategic funds under management, on which we receive recurring fees have
continued to grow and now represent 84% or £493m of this total (2003: 81% or
£288m). This is further evidence of the trend in continued growth in sales from
our sales team over the last three years.

IP2IPO

During the period, the Group announced the disposal of 9,000,000 shares in
IP2IPO Group Plc for gross proceeds of £40.5m in cash, which realised a profit
for the Group, after taking into account related expenses of sale, of £22.3m.

This transaction realised significant value for Evolution's shareholders. In
reducing the Group's interest in IP2IPO from 40.61% to 18.46%, this transaction
has resulted in IP2IPO becoming treated as an investment by Evolution rather
than as an associated undertaking in the Group's consolidated balance sheet.

Other items

As previously reported the Group has continued to exit from its legacy
investment portfolio. The Group has realised £5.1m in profits from the sale of
some of these legacy investments in the 6 months to 30 June 2004.

Board and advisory changes

On 13 July 2004 the Board announced the appointment of Lord MacLaurin of
Knebworth, DL as Non-executive director of the Group. We look forward to working
closely with him as the business grows in the future. At the same time Sir
Malcolm Field and George Loudon announced their resignations from the Board. We
are very grateful for their contributions in the two years since the acquisition
of the Beeson Gregory Group.

Following these Board changes: Nicholas Irens has been appointed Chairman of the
Audit Committee; Oliver Vaughan has been appointed Chairman of the Remuneration
Committee; and Lord MacLaurin the Senior Non-executive director. All
Non-executive directors will serve on all committees and are considered
independent of management for the purposes of the Revised Combined Code on
Corporate Governance.

On 21 June 2004 the Board appointed Credit Suisse First Boston as sole financial
advisor and broker to the Group.

Dividend

The Board declares an interim dividend of 0.17p per share (2003: Nil). This
reflects the Board's continued commitment to a progressive dividend policy as
set out in the 2003 Annual Report. This is payable on 3 November 2004 to
shareholders on the register at 24 September 2004.

Employees

All of our businesses are people businesses, where our most important assets are
our people. I should like to reiterate my thanks to everyone for all of their
efforts as we move towards the achievement of our strategic goals.

Outlook

Following an excellent start to the year, the Board remains confident of the
future prospects for the Group.

Richard Griffiths
Chairman
6 September 2004



CONSOLIDATED PROFIT AND LOSS ACCOUNT

                                        Unaudited     Unaudited Audited twelve
                                       six months    six months      months to
                                       to 30 June    to 30 June    31 December               
                                             2004          2003           2003                                   
                                                      (Restated)
                                            £'000         £'000          £'000                                        
                                                                         
Operating income                           31,374        13,875         40,751

Commissions payable                        (1,727)         (754)        (2,656)
                                         --------      --------     ----------
Gross profit                               29,647        13,121         38,095

Administrative expenses                   (21,576)      (10,352)       (32,720)
Profit on sale of fixed asset
investments                                   452         1,301          2,379
Profit on sale of current asset
investments                                 4,681             -             99
Provision against fixed asset
investments                                     -        (6,163)        (6,114)
                                         --------      --------     ----------
Group operating profit/ (loss)             13,204        (2,093)         1,739

Share of associated undertaking's
operating profit/(loss)                       184             -           (186)
                                         --------      --------     ----------
Total operating profit/(loss)              13,388        (2,093)         1,553

Profit on part sale of subsidiaries            54             -         15,085
Profit on disposal of associate            22,292             -              -
Interest receivable and similar income      1,148           542          1,156
Share of associated undertaking's
interest receivable                           252             -            126
Interest payable and similar charges          (13)           (2)           (21)
                                         --------      --------     ----------
Profit/(loss) on ordinary
activities before taxation                 37,121        (1,553)        17,899

Tax on profit/(loss) on
ordinary activities                        (3,273)           (2)        (1,851)
                                         --------      --------     ----------
Profit/(loss) on ordinary
activities after taxation                  33,848        (1,555)        16,048

Minority interest - Equity                     65            41            146
                                         --------      --------     ----------
Profit/(loss) for the financial
period                                     33,913        (1,514)        16,194

Dividends paid and declared: Interim -
0.17p per share (2003: Interim- Nil; 
Final - 0.25p per share)                     (422)            -           (616)
                                         --------      --------     ----------
Retained profit/(loss) for the
financial period                           33,491        (1,514)        15,578
                                         --------      --------     ----------
                                         --------      --------     ----------
Basic earnings/(loss) per ordinary 
share (pence)                                13.6          (0.6)           6.7
Diluted earnings per share (pence)           12.5             -            6.3


CONSOLIDATED BALANCE SHEET

                             Unaudited           Unaudited             Audited
                               30 June             30 June         31 December
                                  2004                2003                2003 
                                                 (Restated)          (Restated)
                                 £'000               £'000               £'000
Fixed assets
Intangible assets                8,748              11,140               8,990
Investment in associated
undertakings                         -                   -              25,525
Tangible assets                  1,375                 719               1,509
Investments                     12,640              22,594                 851
                              --------            --------           ---------
                                22,763              34,453              36,875
Current assets
Debtors                         36,695              44,119              28,171
Long trading positions          17,420               7,575               7,207
Investments                        136                  77                 444
Cash at bank and in hand        89,576              31,259              53,705
                              --------            --------           ---------
                               143,827              83,030              89,527

Creditors: Amounts falling
due within one year            (39,283)            (38,723)            (34,734)
                              --------            --------           ---------
Net current assets             104,544              44,307              54,793
                              --------            --------           ---------
Total assets less current
liabilities                    127,307              78,760              91,668

Provisions for liabilities
and charges                       (529)               (196)               (227)
                              --------            --------           ---------
Net assets                     126,778              78,564              91,441
                              --------            --------           ---------
                              --------            --------           ---------

Capital and Reserves
Called up share capital          2,485               2,454               2,478
Shares to be issued                  -                 254                   -
Share premium account           26,002              24,831              25,739
Merger reserve                  51,230              57,261              57,261
Profit and loss account         47,145             (13,957)              5,996
                              --------            --------           ---------
Total shareholders' funds      126,862              70,843              91,474
                              --------            --------           ---------

Shareholders' funds - Equity   126,862              70,843              91,474

Minority interests - Equity        (84)              7,721                 (33)
                              --------            --------           ---------
Minority interests &
shareholders' funds            126,778              78,564              91,441
                              --------            --------           ---------
                              --------            --------           ---------


Graeme Dell                       Alex Snow
Finance Director                  Chief Executive Officer



CONSOLIDATED CASH FLOW STATEMENT

                                 £'000 Unaudited six    £'000 Unaudited six
                                        months to 30           months to 30
                                           June 2004              June 2003
                                               £'000                  £'000
Net cash outflow from
operating activities                          (9,023)                (5,658)

Returns on investments and
servicing of finance
Interest received                1,148                    712
Interest paid                      (13)                    (2)
Income from fixed asset
investments                         20                      -
                              --------                -------

Net cash inflow from
returns on investments
and servicing of finance                       1,155                    710

Taxation                                        
Corporation tax (paid) /                        
received                                        (870)                   276

Capital expenditure and
financial investments
Purchase of tangible 
fixed assets                      (253)                  (126)
Purchase of investments              -                 (1,483)
Sale of investments              5,445                    199
                              --------                -------

Net cash inflow/(outflow) 
from capital expenditure
and financial investments                      5,192                 (1,410)

Acquisitions and disposals
Disposal of associate                         39,690                      -

Equity dividends paid                           (618)                     -
                                          ----------             ----------
Cash inflow/(outflow)
before financing                              35,526                 (6,082)

Financing
Issues of ordinary share
capital                            270                  5,578
Issue of shares to
minorities                          75                      -
Expenses of share issue              -                   (225)
                              --------                -------
Net cash inflow from
financing                                        345                  5,353
                                          ----------             ----------
Increase/(decrease) in
cash in the period                            35,871                   (729)
                                          ----------             ----------
                                          ----------             ----------

Adjusted operating profit

The statutory operating profit for the overall Group is as shown below. In line
with our previous reports, the Board believes a truer reflection of the
performance of the Group's on-going operating businesses is afforded by the
measure "adjusted operating profit". This is calculated so as to exclude items
from operating profit that are one-off or non-recurring, are not part of the
on-going business profitability or, in the case of the cost of options and
amortisation, represent non-cash items.

                                                 6 months to       6 months to
                                                     30 June           30 June
                                                        2004              2003
                                              £'000    £'000    £'000    £'000

Operating profit / (loss)                             13,388            (2,093)

Items not included within adjusted operating
profit / (loss)

Profit on sale of fixed asset investments      (452)           (1,301)
Profit on sale of current asset investments  (4,681)                -
Provision against fixed asset investments         -             6,163
                                            -------  -------  -------  -------
Adjustment for provisions and profits on
investments                                           (5,133)            4,862

Non-recurring costs                               -               323
                                            -------  -------  -------  -------
Non-recurring items                                        -               323

Amortisation                                    262               301
Share of associated undertaking's profit       (184)                -
Cost of options                               1,725               102
                                            -------  -------  -------  -------
Non-cash items                                         1,803               403
                                            -------  -------  -------  -------
Adjusted Group operating profit                       10,058             3,495
                                            =======  =======  =======  =======

Notes to the Financial Statements

 1. The interim accounts, which are unaudited, have been prepared on the basis of
    the accounting policies set out in the Annual Report and Accounts for the
    year ended 31 December 2003, except with regard to accounting for The
    Evolution Group Plc equity shares held by the Share Incentive Trust.

 2. A change in accounting policy arose from the adoption in 2004 of the Urgent
    Issues Task Force Abstract 38, 'Accounting for ESOP Trusts' ("UITF 38").
    UITF 38 requires The Evolution Group Plc equity shares held in the Share
    Incentive Trust to be accounted for as a deduction in arriving at
    shareholders' funds, rather than as assets. The balance sheets for 30 June
    2003 and 31 December 2003 have both been restated accordingly, and own
    shares and shareholders' funds have both been reduced by £492,000. The
    impact of UITF 38 on the 30 June 2003 and 31 December 2003 profit and loss
    account was immaterial , and the comparatives have not been restated.

    The profit and loss account for the period ended 30 June 2003 has been restated
    to conform with the 31 December 2003 year end presentation.

 3. The interim report was approved by the directors on 6 September 2004.

 4. The financial information contained in this interim report does not
    constitute the Group's statutory accounts within the meaning of Section 240
    of the Companies Act 1985 ("the Act"). The figures shown for the full year
    ended 31 December 2003 represent an abridged version of the audited
    financial statements of The Evolution Group Plc for that year, which
    contained an unqualified report under Section 235 of the Act and did not
    make any statements under Section 237 of the Act, have been delivered to the
    Registrar of Companies in accordance with Section 242 of the Act.

 5. The interim report for the six months to 30 June 2004, including the
    independent review report by the auditors, will be mailed to the
    shareholders of the Group. Copies of this interim report will be available
    for a period of one month from today's date at the registered office
    address: 9th Floor, 100 Wood Street, London, EC2V 7AN.




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