Interim Results

RNS Number : 1560Y

Evolution Group PLC

28 August 2009

 



The Evolution Group Plc

(the "Evolution Group", the "Group", the "Company")

Half Year results for the six months ended 30 June 2009

INTERIM MANAGEMENT REPORT - 2009 

Evolution Group, the listed investment bank and private client investment management group, today announces its half yearly financial report for the six months ended 30 June 2009.

Performance Highlights (unaudited)

		Half Year Ended  30.06.09		Half Year Ended  31.12.08		Half Year Ended1  30.06.08
		£m		£m		£m
Total income		52.6		29.0		34.9
Adjusted operating profit / (loss) 2		9.1		(7.2)		4.5
Adjusted earnings / (loss) 2		8.2		(2.7)		5.6
Adjusted diluted earnings / (loss) per share 2		3.54p		(1.10p)		2.24p
Statutory profit / (loss) before tax from continuing operations		3.6		(13.1)		0.4
Diluted earnings / (loss) per share from continuing operations		1.21p		(3.95p)		(0.50p)
Dividend per Share		0.80p		1.27p		0.75p

• Record Group income of £52.6m for the half year ended 30 June 2009, up 51% compared with 30 June 2008: £34.9m.

• Adjusted operating profit1 of £9.1m for the half year ended 30 June 2009, up 102% compared with 30 June 2008: £4.5m.

• Investment Banking income of £33.9m for the half year ended 30 June 2009, up 93% compared with 30 June 2008: £17.6m, mainly from more sustainable secondary equities and fixed income commissions.  

• Williams de Broë client assets have increased to record levels of £4.2bn, a 50% increase from £2.8bn at 30 June 2008, despite a 24% decline in FTSE All Share Index over the same period, and an increase on the balance of £3.8bn at 31 December 2008.

• Record Private Client income of £18.8m for the half year ended 30 June 2009, up 9% compared with 30 June 2008: £17.2m. 

• Balance sheet strength maintained, with net assets at £147.1m (31 December 2008: £147.2m).

• Adjusted diluted earnings per share of 3.54p for the first year half, up 58% compared with 30 June 2008: 2.24p.

• Continued growth in interim dividend of 7% to 0.80p (2008: 0.75p).

• Voted Number 1 AIM advisor of 2009 by Growth Company Investor Magazine.

• Voted Number 1 European Fixed Income Agency Broker of 2009 by Credit Magazine.

1 30 June 2008 figures have been restated due to Evolution Securities China Limited becoming a discontinued operation in December 2008. Further information can be found in the notes to the interim financial information.

2Adjusted operating profit, adjusted earnings and adjusted diluted earnings per share are defined in the Financial Business Review section.

Commenting on the results and outlook, Martin Gray, Chairman of Evolution Group said:

We are hopefully beginning to exit from the most challenging market and economic conditions experienced in generations. However, even during these difficult conditions we have significantly built our equities and fixed income businesses within Evolution Securities, and integrated the Singer and Friedlander Investment Management business acquired last year within Williams de Broë. We have achieved this whilst delivering record levels of income, growing profits and maintaining a strong and liquid balance sheet. 

The Group's strategy remains one of growth and financial strength. We are very pleased with the Group's progress in the first half of 2009 and believe the Group continues to be well positioned for the future.

The Evolution Group Plc

The Evolution Group Plc is the holding company of Evolution Securities Limited and Williams de Broë Limited. Founded in April 2001 and originally listed on AIM, the Evolution Group joined the LSE Official List in 2003 and re-entered the FTSE 250 in 2009, the Group now has a market capitalisation of over £300 million.

Evolution Securities Limited is a leading investment bank focused on serving our international institutional and UK corporate client base. It provides a range of investment banking services including equity research, institutional sales and trading, fixed income, market making and corporate finance advice. Evolution Securities Limited is authorised and regulated by the Financial Services Authority.

Williams de Broë Limited is a leading private client investment manager, with offices in Bath, Birmingham, Bournemouth, Edinburgh, Exeter, Guildford and London. Williams de Broë is authorised and regulated by the Financial Services Authority.

For further information, please contact:

The Evolution Group Plc Alex Snow, Chief Executive Officer Andrew Westenberger, Finance Director	020 7071 4300
Bell Pottinger Corporate and Financial Charles Cook Emma Kent Victoria Geoghegan	020 7861 3232

FORWARD-LOOKING STATEMENTS

This Half Yearly Financial Report contains forward-looking statements with respect to the financial condition, results, operations and businesses of the Evolution Group plc. Although the Group believes that the expectations reflected in these forward-looking statements are reasonable, we can give no assurance that these expectations will prove to have been correct. Such statements and forecasts involve risk and uncertainty because they relate to future events and depend upon circumstances that will occur in the future. There are a number of factors that could cause actual results or developments to differ materially from those expressed or implied by forward-looking statements and forecasts. Forward-looking statements and forecasts are based on the Directors' current view and information known to them at the date of this statement. The Directors do not make any undertaking to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 

CHAIRMAN'S STATEMENT

Review of the half year ended 30 June 2009

Evolution Group ("Evolution" or the "Group") has performed strongly given the challenging economic climate of 2009 and results reported in 2008. The Group traded profitably in each of the six months of 2009, generating an adjusted operating profit of £9.1m for the first six months of 2009, compared with £4.5m in the first half of 2008, and a loss of £7.2m in the second half of 2008. I am pleased to report the Group has achieved record income of £52.6m for the half year, up 51% from £34.9m in the first half of 2008, with adjusted earnings of £8.2m (30 June 2008: £5.6m). 

Our Business Model

Our aim as a group is to generate a growing return for our Shareholders on the financial capital they have invested. That growth will come from both our operating businesses, which we believe are well placed in their respective areas through our differentiated business model.

At the heart of our model are two core values 

• A performance culture in which there is an appropriate alignment and sharing of reward between our employees (the human capital) and our Shareholders (the financial capital). 

• A disciplined, conservative investment approach. We treat our stewardship of investors' capital with the utmost care and accordingly carefully evaluate all risks (including liquidity) when investing that capital. Moreover, we have a conservative accounting philosophy whereby, for example, comparatively few investment costs are capitalised, save for larger acquisitions. This approach reflects our internal discipline and is also reflected in our reported results.  

Our Businesses

Investment Banking (Evolution Securities)

Underpinning our investment banking division's current success are firstly our clean balance sheet, free of any legacy of write downs or risks not yet reflected in results and, secondly our efficient fixed cost platform with low central overheads.

This differentiates us from our competitors. The transparency of our performance pay model, without cross subsidies between individual businesses and benefiting from lower fixed costs, combined with our agency led focus, results in superior rewards for Shareholders and employees alike.

Private Client (Williams de Broë)

Our success in having built the division to the scale which we now have (£4.2bn funds under management and administration) in a short period should not be underestimated. We have done this through the toughest market conditions (from 2007 to date). During this period the private client division has made an excellent contribution to the Group's overall results and has played no small part in preserving the financial and balance sheet strength we retain today. We believe we have laid the foundations for a top class private client wealth management business at the heart of which are superior client service, a pre-eminent brand name, and good investment advice. This is coupled, as in investment banking, with a performance culture which seeks to align, the rewards to employees with the returns to our Shareholders.

2009 Performance 

Investment Banking

2009 saw significant expansion of the Group's investment banking business. Firstly we continued to recruit in our fixed income business resulting in record levels of income from this activity. Our equities business in May 2009 announced the recruitment of 45 equities staff from the former Dresdner Kleinwort securities business. Over the last few months we have made further significant hires into our equities business. These investments have increased the headcount of our client facing equity staff by 52 (an increase of 100%), and provides us with a significant opportunity to grow our pan European equities business. I am pleased to report that we have made significant progress with both this integration and development of each of these business units; but we would not expect to see the full potential of these investments until 2010. The growth in our fixed income and equities businesses has resulted in the Group's investment banking division reporting income of £33.9m, up 93% on the first half of 2008, and up 180% on the second half of 2008.

Private Client

The Group's private client activities have performed robustly given the decline of UK indices in the period, coupled with the sharp decline in Bank of England interest rates (affecting interest margins on client cash holdings). Net income for the period of £18.8m is up 9% on the first and second halves of 2008. The acquisition of the investment management team of Singer and Friedlander Investment Management Limited ("SFIM") as reported on 21 October 2008 contributed significantly to the growth in client assets, enabling the business to absorb the consequences of the current economic conditions. With the benefit of this acquisition, client assets continued to grow when compared with the first half (up 50%) and second half (up 11%) of 2008. This acquisition is proving very successful and over £1bn of client assets were transferred to the existing Williams de Broë platform in January 2009. 

Dividend 

In light of these results the Board declares an interim dividend of 0.80p per share, up 7% from the prior year dividend of 0.75p. This reflects the Board's continuing commitment to a progressive dividend policy as set out in the 2008 Annual Report and Accounts. The dividend is payable on 9 October 2009 to shareholders on the register at 11 September 2009. 

Balance sheet, cash and other items

The Group's balance sheet strength is being maintained, with net assets of £147.1m at the period end (31 December 2008: £147.2m) including cash and cash equivalents of £68.8m (31 December 2008: £103.6m). Cash has reduced in the period due to the Group's natural cash cycle where June is historically a low point of the year. In addition, cash has been employed as working capital, which overall has increased by £35.9m in the six months to 30 June 2009; this has been to support the growth of our equities and fixed income businesses.

Outlook

We continue to believe challenging economic conditions may continue for some time. However, even during the difficult conditions of the past year we have made significant progress in both the investment banking and private client businesses. 

We will continue to invest organically in all our businesses where we see opportunities which fit with our core values set out above. We are seeking to build the foundations for future growth for 2010 and beyond when much of our current investments will begin to reach their full potential. In particular, we will invest to expand our fixed income and equities securities businesses, by adding international reach to our client distribution network and further developing our product capabilities. In private clients, not only will we continually examine opportunities to invest in our business model, to improve efficiency and margins, but we will also ensure that sufficient investment in our control environment continues to be made in order that it keeps pace with the increasing regulatory demands being put upon UK private wealth managers. 

Despite the continuing UK recession and the current uncertainty over the financial sector, we are confident the Group is sufficiently capitalised with a strong and liquid balance sheet to deliver future growth. The Group's continued strategy is growth and financial strength. We believe the Group continues to be well positioned for the future.

Martin Gray

Chairman

28 August 2009

FINANCIAL BUSINESS REVIEW

Adjusted operating profit

The Group's principal performance measure, 'Adjusted Operating Profit' (excluding costs not considered part of the ongoing business profitability and the cost of share options) is followed by the analyst community. While such costs continue to be material, the Board considers it appropriate to disclose their impact through the reconciliation below:

	Note	Half year ended  30.06.09	Half year ended  31.12.08	Half year ended  30.06.08
		£m	£m		£m
Total income		52.6	29.0		34.9
Operating expenses		(48.9)	(44.3)		(36.9)
Operating profit / (loss) from continuing operations		3.7	(15.3)		(2.0)
Items not included within adjusted operating profit / (loss):
Amortisation of intangibles		0.8	0.4		0.2
Income statement charge for share options granted to employees1		3.3	5.4		6.3
Non-recurring operating expenses		1.3	2.3		-
Adjusted operating profit / (loss)		9.1	(7.2)		4.5
Net finance income		0.3	2.2		2.4
Adjusted profit / (loss) before tax		9.4	(5.0)		6.9
Tax (expense) / credit2		(1.2)	2.3		(1.3)
Adjusted earnings / (loss)		8.2	(2.7)		5.6
Adjusted diluted earnings / (loss) per share	4	3.54p	(1.10p)		2.24p

1 Represents the Income Statement charge for the fair value of options granted to employees. The Group continues to purchase shares through the Trust to satisfy obligations in respect of share options and call rights granted to employees (refer to note 10).

2 Excludes the tax effect of non-recurring operating expenses.

FINANCIAL BUSINESS REVIEW 

Investment Banking

Evolution Securities provides equity and fixed income research, institutional sales and trading, equity market making, corporate finance and corporate broking advice. Within Evolution Securities, the core strategic objective is to maintain a balanced business, between equities and fixed income, servicing the needs of Institutional and Corporate customers in both of these product areas. 

		Half Year  Ended  30.06.09		Half Year Ended  31.12.08		Half Year Ended  30.06.08
			£m		£m		£m
Corporate finance income			3.5		3.6		5.6
Equity commission and trading income			14.4		4.5		8.9
Fixed income commission			16.0		4.0		3.1
Total income			33.9		12.1		17.6
Operating expenses			(25.6)		(19.1)		(16.1)
Adjusted operating profit / (loss)			8.3		(7.0)		1.5
Key metrics
Headcount - Total			189		125		131
Corporate clients - Total			76		70		74
Transactional volumes (000's)			1,264		773		781

Backdrop

The last two years have seen significant changes to the shape of revenues within the Investment Banking sector. Over this period, primary income from IPO's has fallen to virtually zero, equity market levels are lower with volumes down by 30 to 40%, and capital market activity has proven more difficult. During the last two years Evolution Securities reduced its cost base down by 30%, and subsequently re-aligned its business toward recurring revenue streams. Over the last six to nine months we have re-invested this cost saving; in people, services and products in Equities and Fixed Income. Not only have we enhanced our core market position within the UK but we are creating a leading independent position in Pan European Equities and Fixed Income, increasing our value to clients and developing a culture to create an environment for success through co-operation and teamwork. Our business model aligns costs with reward structures, assesses risks at every level whilst putting our client first. 

Results 

Results in the first half of 2009 only partly reflect some of the changes we have made to Fixed Income and Equities. In the period, equities sales commissions and market making income accounted for £14.4m or 42% of total income in the business (30 June 2008: £8.9m, 51% total income). Sales and trading volume reached record levels of 1.3million for the period, up 62% from the same period last year (30 June 2008: 0.8million). Fixed Income, in the first half, recorded record levels of income of £16m, up 416% period on period (30 June 2008: £3.1m). Including Corporate Finance, total income was £33.9m, up 93% period on period (30 June 2008: £17.6m). 

FINANCIAL BUSINESS REVIEW 

Investment Banking 

Strategy for Growth

Equities 

In Equities, on 11th May 2009, our business offering was transformed by the decision of over 45 former Dresdner Kleinwort Securities equities staff across Research, Trading, Sales Trading and Sales to join our platform. Over the last few months we have made further significant hires into our Equities business. These investments have increased our headcount of client facing staff by 52 (an increase of 100%). We now have significant growth opportunities across UK and European Equities. 

By the end of 2009, we estimate that we will have research coverage for approximately 80% of the UK and European equity market by market capitalisation. Our research is independent, non conflicted, client led, and ranges from Economics and Strategy through to Pan European Large Cap to UK Small Cap. Our sector coverage includes; Banks, General Financials, Industrials, Engineering, Aerospace, Oil and Gas, Mining, Real Estate, Beverages, Food Producers, Tobacco, Household Products, Luxury Goods, Support Services, Utilities, Pharmaceutical, Healthcare, Medtech, Biotech, Technology, Media, Telecoms, Travel and Leisure, Food and General Retail. In addition, we have a dedicated team who cover 'growth companies' in the UK as well as a full income service in equities and bonds. Our analyst teams are both experienced and well regarded.

Market Making has historically been focused in UK Small and Mid Cap stocks and in serving the retail stock broker. In response to client demand and because we had invested in our platform in this area over the last few years, we were able to significantly expand our capabilities in the first half of 2009. We now have dedicated trading teams in the Eurostoxx 300 and in European Mid and Small Cap stocks. We are committed to best execution and excellent risk management. In Distribution (sales and sales trading), recognising that good relationships are at the core of a broker/client partnership, we have also significantly expanded and improved our capabilities to service clients in the UK, Europe and US. The sales teams we have hired to achieve this are experienced and well regarded, and will leverage our substantial independent research platform and significant trading capability.

Fixed Income 

During 2009, the Fixed Income business has also seen some significant changes to both its strategic direction and headcount. Over the first half of 2009, we have increased our headcount by 18 (an increase of 140%), recruiting high calibre individuals with specialist skills. Strategically, we have set out to develop fixed income as the "best in league" to offer genuinely independent research, no client-principal conflicts, with a pure focus on the buyer and seller, solving their liquidity needs. Pricing over 4,000 bonds daily, without principal position taking, we offer our clients an un-conflicted service. The Fixed Income business now encompasses 6 product areas across  the UK and Europe; Investment Grade Bonds, Asset Backed Securities, Government Bonds, Emerging Markets, High Yield and Distressed Bonds, and Illiquid Bonds (Prefs and Pibs). During the first half of 2009 we have seen significant market share gains in Sterling based markets, and a rapidly growing position in Euro, ABS, High Yield and Inflation linked bonds. Fixed Income now has a global client base. Importantly, Evolution Fixed Income has been rated for 2009 as the No 1 UK and European Fixed Income Agency House by Credit Magazine, polling over 52% of the vote.

Corporate Finance

Corporate Finance successfully executed 5 placings in the first Half of 2009; (1 IPO and 4 secondary placings) which together with other advisory fees and retainers generated income of £3.5m in the period to 30th June 2009 (30 June 2008 £5.6m). This level of primary fee income has been impacted by prevailing market conditions. Momentum in Corporate Finance and Corporate Broking is very good as demonstrated by successfully winning 16 new clients during this period. In 2009 our efforts were recognised by Growth Company Investor Magazine (as voted by Directors of publicly quoted companies) who voted us as the Number 1 AIM advisor for 2009. Looking after UK companies in both the Small and Mid cap sectors is our core franchise within Corporate Finance and Corporate Broking, and whether this is on the Main list or on AIM market, we believe we are well equipped to give the right service to any size of company. Looking at our secondary market strengths in Equities (research and distribution), and firmly believing that many corporates would desire access to both advice and placement capability in Fixed Income we have recruited Debt Capital Markets expertise. This unit will co-exist with Corporate Finance from September 2009. We firmly believe that Evolution Corporate Finance and Corporate Broking can retain, service and attract a very good corporate client base.

Outlook

Evolution Securities has the ambition to become a leading UK Investment Bank in Equity and Debt markets. Some of these foundation stones, enabling us to attract the talent to attain our goals, are now in place. We believe that the changes we have made over the first half of 2009 enable us to capitalise on opportunities for further growth.

FINANCIAL BUSINESS REVIEW 

Private Client Investment Management

Private Client Investment Management results are defined as those arising from the results of Williams de Broë Limited, which is a leading private client investment manager, with offices in Bath, Birmingham, Bournemouth, Edinburgh, Exeter, Guildford and London, and WDB Capital Limited which is the investment manager of WDB Capital Fund Limited. Both Williams de Broë Limited and WDB Capital Limited ("WdB") are authorised and regulated by the Financial Services Authority.

		Half Year  Ended  30.06.09		Half Year Ended  31.12.08		Half Year Ended  30.06.08
			£m		£m		£m
Management fees			10.8		9.9		7.5
Transactional income			7.3		5.8		8.3
Segregated interest income			0.7		1.6		1.4
Total income			18.8		17.3		17.2
Operating expenses			(17.6)		(16.5)		(14.4)
Adjusted operating profit			1.2		0.8		2.8
Key metrics
Headcount - Total			261		252		213
Total client assets			£4.2bn		£3.8bn		£2.8bn
Fund Sales			£0.2bn		£0.2bn		£0.3bn

WdB has again delivered a robust performance despite a 1.65% fall in the FTSE all share and a fall of 4.1% in the FSTE APCIMS balanced index since 31 December 2008, coupled with the sharp decline in Bank of England interest rates affecting interest margins. Despite this, total client assets were £4.2bn, up by 50% from £2.8bn at 30 June 2008 and have increased 11% on the balance of £3.8bn at 31 December 2008, demonstrating our continuing success in growing client assets. The acquisition of SFIM has proved successful with over £1bn of client assets transferred onto the existing WdB platform in January 2009. 

Management fee income of £10.8m has grown in line with client assets; up 44% from £7.5m in the first half of 2008. Further growth is expected in the second half as clients continue to be integrated following the acquisition of SFIM. We are also pleased to see transactional incomes and volumes recovering from the lows seen in the second half of 2008, with the second quarter of 2009 being a record quarter for volumes and income. However, segregated interest income has been exposed to sharp declines in interest rates and yields. As a result segregated interest income of £0.7m is down 50% on the first half of 2008.

In addition, WdB's dedicated intermediary sales team continued to deliver strong new asset sales in the first six months of 2009 of £0.2bn (30 June 2008: £0.3bn). The below table shows WdB movement in client assets during the period:

Movement in funds under management and administration		£Billions		%
Funds under management and administration - December 2008		3.8
Non managed funds - December		(0.4)
Managed assets under management - December 2008		3.4
Performance		0.1		2.9%
Fund Sales		0.2		5.9%
Redemptions		(0.1)		(2.9%)
Managed assets under management - June 2009		3.6
Non managed funds - June		0.6
Funds under management and administration - June 2009		4.2

OTHER INTERIM INFORMATION

Group activities

A summary of Group Activities can be found on Page 18 of the 2008 Annual Report and Accounts.

Key events and transactions

A summary of the operational highlights and their impact on the performance and financial position of the Group is given in the Chairman's Statement above.

Principal risks and uncertainties

Information on the principal risks and uncertainties are included within the 2008 Annual Report and Accounts where the Group's key risks and its risk management framework can be found in the Directors' Report on page 19 and in Note 2 respectively. The Board believes the Group's principal risks and uncertainties which could have a material impact over the remaining six months of the financial year remain consistent with those disclosed within the 2008 Annual Report and Accounts. Each of the Group's divisions considers strategic, operational and financial risks and identifies actions to mitigate those risks. These risk profiles are updated at least annually. 

Related parties

Related party transactions are described in Note 37 of our 2008 Annual Report and Accounts. Additional related party disclosures are given in Note 12 to the condensed consolidated interim financial information.

STATEMENT OF DIRECTORS' RESPONSIBILITIES 

The Board confirm, to the best of their knowledge, that this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and that the Interim Management Report includes a fair review of the information required by: 

• DTR 4.2.7: an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

• DTR 4.2.8: material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report and Accounts.

The Directors of the Group are listed in the 2008 Annual Report and Accounts; in addition Andrew Westenberger was appointed a director on 8 April 2009. Other than this appointment there have been no changes in the period to 30 June 2009. A list of the current Directors is maintained on the Group's website: www.evgplc.com.

The Directors are responsible for the maintenance and integrity of the Group web site, www.evgplc.com. Legislation in the UK governing the preparation and dissemination of Financial Statements may differ from legislation in other jurisdictions.

By order of the Board

Alex Snow

Chief Executive Officer

28 August 2009

INDEPENDENT REVIEW REPORT TO THE EVOLUTION GROUP PLC

Introduction

We have been engaged by the Company to review the condensed consolidated interim financial information in the Half Yearly Financial Report for the six months ended 30 June 2009, which comprises the Consolidated Income Statement, Consolidated Statement of Comprehensive Income, Consolidated Balance Sheet, Consolidated Statement of Changes in Equity, Consolidated Cash Flow Statement and related notes. We have read the other information contained in the Half Yearly Financial Report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial information.

Directors' responsibilities

The Half Yearly Financial Report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Half Yearly Financial Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

As disclosed in note 1, the annual financial statements of the Group are prepared in accordance with IFRSs as adopted by the European Union. The condensed consolidated interim financial information included in this Half Yearly Financial Report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed consolidated interim financial information in the Half Yearly Financial Report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion

Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial information in the Half Yearly Financial Report for the six months ended 30 June 2009 is not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.

PricewaterhouseCoopers LLP

Chartered Accountants 

London

28 August 2009

INTERIM FINANCIAL INFORMATION

CONDENSED CONSOLIDATED INCOME STATEMENT (Unaudited)

		Half Year Ended  30.06.09		Half Year Ended  31.12.08		Half Year Ended 1 30.06.08
	Note	£m		£m		£m
Total income		52.6		29.0		34.9
Operating expenses		(48.9)		(44.3)		(36.9)
Operating profit / (loss) from continuing operations		3.7		(15.3)		(2.0)
Finance income		0.5		2.9		2.7
Finance expense		(0.2)		(0.7)		(0.3)
Share of post tax results of associates		(0.4)		-		-
Profit / (loss) before tax from continuing operations		3.6		(13.1)		0.4
Tax (expense) / credit	6	(0.7)		3.0		(1.3)
Profit / (loss) after tax from continuing operations		2.9		(10.1)		(0.9)
(Loss) from discontinued operations	11	(2.3)		(2.1)		(0.4)
Profit / (loss) after tax from total operations		0.6		(12.2)		(1.3)
Profit / (loss) attributable to:
Minority interests		(0.4)		(0.9)		0.2
Equity holders of The Evolution Group Plc		1.0		(11.3)		(1.5)
		0.6		(12.2)		(1.3)
Earnings / (loss) per share attributable to the equity holders of The Evolution Group Plc during the period:
Basic earnings / (loss) per share from continuing operations	4	1.28p		(4.59p)		(0.59p)
Basic (loss) per share from discontinued operations	4	(0.86p)		(0.70p)		(0.14p)
		0.42p		(5.29p)		(0.73p)
Diluted earnings / (loss) per share from continuing operations	4	1.21p		(3.95p)		(0.50p)
Diluted (loss) per share from discontinued operations	4	(0.81p)		(0.61p)		(0.12p)
		0.40p		(4.56p)		(0.62p)
Dividend proposed / paid per share - Interim	5	0.80p		-		0.75p
- Final	5	-		1.27p		-

1 H1 2008 figures have been restated due to Evolution Securities China Limited becoming a discontinued operation in December 2008. Further information can be found in the notes to the interim financial information.

The notes below form an integral part of this condensed consolidated interim financial information.  CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)

	Half Year Ended 30.06.09		Half Year Ended 31.12.08		Half Year Ended 30.06.08
	£m		£m		£m
Profit / (loss) for the financial period	0.6		(12.2)		(1.3)
Revaluation of available-for-sale financial assets, net of tax	-		(0.5)		(0.1)
Foreign exchange translation	(0.2)		0.4		-
Deferred income tax credit / (debit) on share options taken to equity	1.2		(0.3)		(0.7)
Other comprehensive income / (expense) for the period, net of tax	1.0		(0.4)		(0.8)
Total comprehensive income / (expense) for the period	1.6		(12.6)		(2.1)
Attributable to:
Minority interests	(0.4)		(0.9)		0.2
Equity holders of The Evolution Group Plc	2.0		(11.7)		(2.3)
	1.6		(12.6)		(2.1)

The notes below form an integral part of this condensed consolidated interim financial information.

CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)

	Note	30.06.09 £m		31.12.08 £m
ASSETS
Non-current assets
Goodwill		10.4		10.4
Other intangible assets		7.2		7.6
Investment in associates	7	13.3		-
Property, plant and equipment		3.1		3.4
Deferred tax assets		9.8		9.4
Total non-current assets		43.8		30.8
Current assets
Trade and other receivables		432.6		58.7
Available-for-sale investments		1.1		1.1
Trading portfolio assets	8	32.2		5.0
Cash and cash equivalents		68.8		103.6
Assets of disposal groups classified as held-for-sale	11	-		28.1
Total current assets		534.7		196.5
Total assets		578.5		227.3
LIABILITIES
Current liabilities
Trade and other payables		415.1		60.2
Trading portfolio liabilities	9	13.9		4.3
Current income tax liabilities		-		0.1
Liabilities of disposal groups classified as held-for-sale	11	-		12.9
Total current liabilities		429.0		77.5
Non-current liabilities
Deferred tax liabilities		1.6		1.8
Provisions for liabilities		0.8		0.8
Total non-current liabilities		2.4		2.6
Total liabilities		431.4		80.1
EQUITY
Capital and reserves attributable to equity shareholders
Share capital		2.3		2.2
Share premium		30.0		29.8
Other reserves		27.6		27.8
Retained earnings		87.2		86.5
Shareholders' equity excluding minority interests		147.1		146.3
Minority interests in equity		-		0.9
Total equity		147.1		147.2
Total equity and liabilities		578.5		227.3

The notes below form an integral part of this condensed consolidated interim financial information.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)

	Share capital	Share premium	Other Reserves	Retained earnings	Total	Minority  Interest	Total equity
	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2009	2.2	29.8	27.8	86.5	146.3	0.9	147.2
Profit / (loss) for the period	-	-	-	1.0	1.0	(0.4)	0.6
Revaluation of available-for-sale financial assets	-	-	-	-	-	-	-
Deferred income tax credit on share options taken to equity	-	-	-	1.2	1.2	-	1.2
Foreign exchange revaluations	-	-	(0.2)	-	(0.2)	-	(0.2)
Total comprehensive income for the period	-	-	(0.2)	2.2	2.0	(0.4)	1.6
Issuance of ordinary shares	0.1	0.2	-	-	0.3	-	0.3
Purchase of Trust shares	-	-	-	(2.4)	(2.4)	-	(2.4)
Dividends paid	-	-	-	(2.8)	(2.8)	-	(2.8)
Share options: value of services provided	-	-	-	3.4	3.4	-	3.4
Disposal of subsidiaries deferred tax and share options	-	-	-	0.2	0.2	-	0.2
Schedule 23 deduction on options exercised	-	-	-	0.1	0.1	-	0.1
Reversal of minority interest on disposal	-	-	-	-	-	(0.5)	(0.5)
Balance at 30 June 2009	2.3	30.0	27.6	87.2	147.1	-	147.1

	Share capital	Share premium	Other Reserves	Retained earnings	Total	Minority Interest	Total equity
	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2008	2.2	28.8	49.9	72.4	153.3	1.9	155.2
(Loss) / profit for the period	-	-	-	(1.5)	(1.5)	0.2	(1.3)
Revaluation of available-for-sale financial assets	-	-	(0.1)	-	(0.1)	-	(0.1)
Deferred income tax (debit) on share options taken to equity	-	-	-	(0.7)	(0.7)	-	(0.7)
Total comprehensive expense for the period	-	-	(0.1)	(2.2)	(2.3)	0.2	(2.1)
Issuance of ordinary shares	-	0.8	-	-	0.8	-	0.8
Purchase of Trust shares	-	-	-	(1.6)	(1.6)	-	(1.6)
Dividends paid	-	-	-	(2.7)	(2.7)	-	(2.7)
Share options: value of services provided	-	-	-	6.4	6.4	-	6.4
Schedule 23 deduction on options exercised	-	-	-	0.1	0.1	-	0.1
Investment by third parties into WDB Capital Fund	-	-	-	-	-	4.7	4.7
Balance at 30 June 2008	2.2	29.6	49.8	72.4	154.0	6.8	160.8

The notes below form an integral part of this condensed consolidated interim financial information. 

 CONDENSED CONSOLIDATED CASH FLOW STATEMENT (Unaudited)

		Half Year Ended 30.06.09 £m		Half Year Ended 31.12.08 £m		Half Year Ended  30.06.08 £m
Profit / (loss) before tax from continuing operations		3.6		(13.1)		0.4
Adjustments for:
Non cash items		4.7		6.7		8.6
Movement in working capital		(35.9)		21.1		(5.7)
Tax paid		(0.6)		(0.6)		(0.1)
Cash flows generated from / (absorbed by) discontinued operations		0.1		(1.6)		(0.1)
Net cash (absorbed by) / generated from operating activities - total		(28.1)		12.5		3.1
Cash flows from investing activities from continuing operations:
Acquisition of business		-		(4.4)		-
Purchase of available-for-sale investments		-		-		(1.0)
Purchase of property, plant and equipment and intangible assets		(1.3)		(0.9)		(1.4)
Cash flows (absorbed by) investing activities of discontinued operation		-		(0.4)		-
Net cash (absorbed by) investing activities - total		(1.3)		(5.7)		(2.4)
Cash flows from financing activities from continuing operations:
Issues of ordinary share capital		-		-		0.2
Dividends paid to the Company's shareholders		(2.8)		(1.6)		(2.7)
Purchase of shares held by the Trust		(2.4)		-		(1.6)
Cash flows from financing activities of discontinued operation		-		-		-
Net cash (absorbed by) from financing activities - total		(5.2)		(1.6)		(4.1)
Net (decrease) / increase in cash and cash equivalents		(34.6)		5.2		(3.4)
Cash and cash equivalents at beginning of period		103.6		100.2		122.7
Exchange gains		-		0.6		0.2
Less: cash and cash equivalents classified as held-for-sale		-		(2.4)		(19.3)
Less: cash deconsolidated during the period from discontinued operations		(0.2)		-		-
Cash and cash equivalents at end of period		68.8		103.6		100.2

The notes below form an integral part of this condensed consolidated interim financial information.

NOTES TO THE INTERIM FINANCIAL INFORMATION

1. BASIS OF PREPARATION

This condensed consolidated interim financial information for the six months ended 30 June 2009 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority, IAS 34, 'Interim financial reporting' as adopted by the European Union, with the 'Accounting Policies' set out in the 2008 Annual Report and Accounts and Note 2 below. The condensed consolidated interim financial information should be read in conjunction with the Annual Report and Accounts for the year ended 31 December 2008, which have been prepared in accordance with IFRSs as adopted by the European Union.

The condensed consolidated interim financial information in this Half Yearly Financial Report does not constitute the Statutory Accounts within the meaning of Section 434 of the Companies Act 2006. The Annual Report and Accounts for the year ended 31 December 2008 were approved by the Board of directors on 8 April 2009 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statement under Section 237 of the Companies Act 1985.

This condensed consolidated interim financial information has been reviewed, not audited.

The Evolution Group Plc is a UK listed holding company for financial services companies. The Company is a public limited company incorporated in the United Kingdom. The address of its registered office is: 100 Wood Street, London, EC2V 7AN.

2. ACCOUNTING POLICIES

The accounting policies adopted are consistent with those of the Annual Report and Accounts for the year ended 31 December 2008, except as set out below.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2009.

• IAS 1 (revised), 'Presentation of financial statements' is required to be adopted for the Group for the financial year beginning 1 January 2009. The revised standard prohibits the presentation of items of income and expenses in the statement of changes in equity, requiring 'non-owner changes in equity' to be presented separately from owner changes in equity. All 'non-owner changes in equity' are required to be shown in a performance statement. 

  The Group has elected to present two statements: an income statement and a statement of comprehensive income. The interim financial statements have been prepared under the revised disclosure requirements;

• IFRS 7 (amended), 'Financial instruments; disclosure' is required to be adopted for the Group for the financial year beginning 1 January 2009. The amended standard requires the fair value measurements of financial instruments to be classified using a three tier fair value hierarchy, which reflects the significance of the inputs used in making the measurements. The Group will adopt this disclosure in the 2009 annual financial statements, but has not been included these disclosures within the half yearly report; and

• IFRS 8, 'Operating segments' is required to be adopted for the Group for the financial year beginning 1 January 2009. The standard requires a 'management approach' under which segmental information is presented using the same method as that adopted for internal reporting purposes. The presentation of the segmental information in note 3 has been prepared using this method.

The following new interpretations are mandatory for the first time for the financial year beginning 1 January 2009, but are not currently relevant for the Group:

• IFRIC 13, 'Customer loyalty programmes';

• IFRIC 15, 'Amendments for the construction of real estate'; and

• IFRIC 16, 'Hedges of a net investment in a foreign operation'.

Discontinued operations and disposal groups held-for-sale

Evolution Securities China Limited

The Group disclosed within its Annual Report and Accounts for 31 December 2008 Evolution Securities China Limited ("ESCL") as a discontinued operation following the Board's decision to dispose of a controlling interest in the business on 18 December 2008. 

On 1 April 2009 the Company announced the completion of an investment in ESCL by First Eastern. As a result of this transaction the Group's interest in ESCL has fallen to 48.5%. Prior to the completion of this transaction in 2009 the Group consolidated ESCL and presented it as a discontinued operation. From 1 April 2009 ESCL and its subsidiary have been deconsolidated and are accounted for by the equity method of accounting in accordance with IAS 28.

WDB Capital Fund

The Group classified its subsidiary WDB Capital Fund as held-for-sale as at 31 December 2008. This was based on the Group Board's intention to reduce its holding below 50% during 2009. On 1 April 2009 the Group's holding fell below 50%. From 1 April 2009 WDB Capital Fund is accounted for by the equity method of accounting in accordance with IAS 28. At 30 June 2009 the Group's interest in WDB Capital Fund is 48.1%.

Investment in associated undertaking

Associates are those entities in which the Group has significant influence, but not control, over the financial and operating policies and in which the Group generally has between 20% and 50% voting power. The Group accounts for associates using the equity method. Under this method, the consolidated financial statements show the Group's share of the total recognised gains and losses of associates and their net assets, from the date that significant influence or joint control commences until the date they cease. Any premium over net asset value paid to acquire an interest in an associate is recognised as goodwill, within the same line as the underlying investment. 

3. SEGMENTAL INFORMATION

By business segment 

Investment banking refers to the business carried out in Evolution Securities Limited and Evolution Securities (US) Inc. Private client refers to Private Client Investment Management under the Williams de Broë brand. Other includes central administrative costs which are not recharged to the operating businesses.

	Half Year Ended 30.06.09
Income statement	Investment banking	Private client	Other	Total
	£m	£m	£m	£m
Total income	33.9	18.8	(0.1)	52.6
Adjusted operating profit / (loss)	8.3	1.2	(0.4)	9.1
Charge for share options granted to employees				(3.3)
Amortisation of intangibles				(0.8)
Non-recurring operating expenses				(1.3)
Operating profit from continuing operations				3.7
Finance income				0.5
Finance expense				(0.2)
Share of post tax results of associates				(0.4)
Profit before tax from continuing operations				3.6
Discontinued operations				(1.0)
Profit before tax from total operations				2.6

	Half Year Ended 31.12.08
Income Statement	Investment banking	Private client	Other	Total
	£m	£m	£m	£m
Total income	12.1	17.3	(0.4)	29.0
Adjusted operating (loss) / profit	(7.0)	0.8	(1.0)	(7.2)
Charge for share options granted to employees				(5.4)
Amortisation of intangibles				(0.4)
Non-recurring operating expenses				(2.3)
Operating (loss) from continuing operations				(15.3)
Finance income				2.9
Finance expense				(0.7)
(Loss) before tax from continuing operations				(13.1)
Discontinued operations				(2.6)
(Loss) before tax from total operations				(15.7)

	Half Year Ended 30.06.08
Income Statement	Investment banking	Private client	Other	Total
	£m	£m	£m	£m
Total income	17.6	17.2	0.1	34.9
Adjusted operating profit	1.5	2.8	0.2	4.5
Charge for share options granted to employees				(6.3)
Amortisation of intangibles				(0.2)
Operating (loss) from continuing operations				(2.0)
Finance income				2.7
Finance expense				(0.3)
Profit before tax from continuing operations				0.4
Discontinued operations				(0.7)
(Loss) before tax from total operations				(0.3)

3. SEGMENT INFORMATION 

By business segment 

The Group's total assets are disclosed by segment below:

Total Assets	30.06.09
	Investment banking	Private client	Other	Total
	£m	£m	£m	£m
Assets	462.4	35.2	80.9	578.5
Assets of disposal group held-for-sale	-	-	-	-
Total assets	462.4	35.2	80.9	578.5

Total Assets	31.12.08
	Investment banking	Private client	Other	Total
	£m	£m	£m	£m
Assets	79.5	34.8	84.9	199.2
Assets of disposal group held-for-sale	4.8	23.3	-	28.1
Total assets	84.3	58.1	84.9	227.3

Total Assets	30.06.08
	Investment banking	Private client	Other	Total
	£m	£m	£m	£m
Assets	298.6	26.6	89.9	415.1
Assets of disposal group held-for-sale	7.7	17.3	-	25.0
Total assets	306.3	43.9	89.9	440.1

4. EARNINGS PER ORDINARY SHARE

The calculation of the basic earnings per ordinary share is based on the attributable profit for the period and the weighted average number of ordinary shares in issue during the period. The calculation of the diluted earnings per share is based on the basic earnings per share adjusted to allow for the issue of shares on the assumed conversion of all dilutive options.

	Half Year Ended 30.06.09		Half Year Ended 31.12.08		Half Year Ended 30.06.08
	Total	Weighted	Total	Weighted	Total	Weighted
	shares	average	shares	average	shares	average
	(Millions)	(Millions)	(Millions)	(Millions)	(Millions)	(Millions)
Basic shares	223.5	221.8	215.8	213.2	213.8	211.4
Diluted Shares	234.5	234.9	257.2	247.9	252.1	250.7

	Earnings (£m)	EPS (Pence)	Earnings (£m)	EPS (Pence)	Earnings (£m)	EPS  (Pence)
Basic EPS from continuing operations	2.9	1.28p	(9.8)	(4.59p)	(1.2)	(0.59p)
Basic EPS from discontinued operations	(1.9)	(0.86p)	(1.5)	(0.70p)	(0.3)	(0.14p)
Basic EPS from total operations	1.0	0.42p	(11.3)	(5.29p)	(1.5)	(0.73p)
Diluted EPS from continuing operations	2.9	1.21p	(9.8)	(3.95p)	(1.2)	(0.50p)
Diluted EPS from discontinued operations	(1.9)	(0.81p)	(1.5)	(0.61p)	(0.3)	(0.12p)
Diluted EPS from total operations	1.0	0.40p	(11.3)	(4.56p)	(1.5)	(0.62p)
Diluted EPS from continuing operations	2.9	1.21p	(9.8)	(3.95p)	(1.2)	(0.50p)
Total adjustments to operating expenses 1	5.4	2.31p	8.1	3.26p	6.5	2.59p
Tax effect of adjustments above	(0.5)	(0.17p)	(0.7)	(0.26p)	-	-
Adjustment for share of associates losses	0.4	0.19p	-	-	-	-
Minority interest on subsidiaries	-	-	(0.3)	(0.15p)	0.3	0.15p
Adjusted diluted EPS	8.2	3.54p	(2.7)	(1.10p)	5.6	2.24p

1The non recurring operating expenses are defined in the Financial Business Review section and are consistent with those disclosed within Note 3.

5. DIVIDENDS

	30.06.09	31.12.08	30.06.08
	£m	£m	£m
Final paid	2.8	-	2.7
Interim paid	-	1.6	-
	2.8	1.6	2.7

In addition, the Directors are proposing an interim dividend in respect of the financial year ending on 31 December 2009 of 0.80p per share, which will absorb an estimated £1.8m of shareholders' funds. It will be paid on 9 October 2009 to shareholders on the register of members on 11 September 2009.

6. TAX EXPENSE

Income tax expense is recognised based on management's best estimate of the weighted average annual income tax rate expected for the full financial year. The tax charge for continuing operations for the first half of 2009 was £0.7m (2008: credit of £1.7m) representing an effective tax rate of 19% (2008: 13%). The tax charge for both periods is lower than the UK tax rate of 28% (2008: 28.5%) primarily due to deferred tax on options arising from the movement in the Group's share price more than partially offsetting the impact of disallowable expenses.

7. INVESTMENT IN ASSOCIATES

		30.06.09	31.12.08
		£m	£m
Beginning of period		-	-
Transfer from subsidiary undertakings of ESCL1		2.1	-
Transfer from subsidiary undertakings of WDB Capital Fund2		11.7	-
Share of ESCL's loss for the period		(0.2)	-
Share of WDB Capital Fund's loss for the period		(0.2)	-
Exchange differences		(0.1)	-
End of period		13.3	-

Investments in associates at the end of the period includes goodwill of £0.3m.  

1 On the 31 March 2009 ESCL issued new equity to First Eastern Financial Holdings Limited. The issue of this new equity caused the Group's shareholding in ESCL to fall from 71% to 48.5%. As a result of this transaction the Group has reclassified its holding in ESCL from an investment in subsidiary undertakings to an investment in associated undertakings.  

2 On the 31 March 2009 WDB Capital Fund issued new equity to third party investors. The issue of this new equity caused the Group's shareholding to fall below 50%. As a result of this transaction the Group has reclassified its holding in WDB Capital Fund from an investment in subsidiary undertakings to an investment in associated undertakings.

8. TRADING PORTFOLIO ASSETS

		30.06.09	31.12.08
		£m	£m
Long positions in market making and dealing operations		31.7	4.8
Other derivatives		0.5	0.2
		32.2	5.0

The long trading portfolio assets include shares listed on LSE Official List, AIM markets and other leading European exchanges.

The long positions balances have been inflated to include an amount of £16.1m for trading assets (31 December 2008: £0.4m) which were sold with a trade date prior to the 30 June 2009 but had a settlement period which was longer than the standard market convention and straddled the period end. All of these trades have now settled. The other derivatives balance relates to the positive or negative market value movement of these trades between the trade date and the period end.

9. TRADING PORTFOLIO LIABILITIES

		30.06.09	31.12.08
		£m	£m
Short positions in market-making and dealing operations		11.3	4.0
Other derivatives		2.6	0.3
		13.9	4.3

The short trading portfolio liabilities represent shares listed on LSE Official List, AIM markets and other leading European exchanges.

The short positions balance have been inflated to include an amount of £4.3m for trading liabilities (31 December 2008: £3.3m) which were bought with a trade date prior to the 30 June 2009 but had a settlement period which was longer than the standard market convention and straddled the period end. All of these trades have now settled. The other derivatives balance relates to the positive or negative market value movement of these trades between the trade date and the period end.

10. SHARE CAPITAL

The Evolution Group Plc Employees' Share Trust (the "Trust") administers The Evolution Group Plc share schemes and the Share Incentive Trust and is managed by the Sanne Trust. 

In the six months to 30 June 2009 the Group purchased an additional 2,321,920 shares (30 June 2008: 1,500,000) for total consideration of £2.4m (30 June 2008: £1.6m). These shares were purchased by the Trust and are held to satisfy share awards made to staff in the Group. The Trust held 3,315,739 shares (30 June 2008: 10,543,460) which had a market value of £4.8m (30 June 2008: £9.8m). All of these shares were acquired in the open market. The shares held represent 1.46% (30 June 2008: 4.70%) of the issued share capital of the Company as at 30 June 2009. The Trust used funds provided by the Company to meet the Group's obligations under the share option and incentive schemes in place. Share options are granted to employees at the discretion of the Company and shares are awarded to employees by the Trust in accordance with the recommendations of the Company. 

11. ASSETS AND LIABILITIES OF DISPOSAL GROUPS CLASSIFIED AS HELD-FOR-SALE AND DISCONTINUED OPERATIONS

As at 31 December 2008 the assets and liabilities relating to ESCL and its subsidiary and WDB Capital Fund were presented as held-for-sale.

	30.06.09	31.12.08
	£m	£m
(a) Assets of disposal groups classified as held-for-sale
Goodwill	-	1.2
Property, plant and equipment	-	0.5
Intangible assets	-	0.3
Deferred tax assets	-	0.8
Other non current assets	-	0.1
Trade and other receivables	-	2.9
Other current assets	-	0.6
Cash and cash equivalents	-	21.7
Total	-	28.1
(b) Liabilities of disposal groups classified as held-for-sale
Trade and other payables	-	12.8
Other non current liabilities	-	0.1
Total	-	12.9

WDB Capital Fund

The Group Board's intention has been to reduce its interest in WDB Capital Fund by way of a deemed disposal, to be effected by bringing in new investors into WDB Capital Fund. The Group's interest in WDB Capital Fund at 30 June 2009 is 48.1%. As a result of the Group's interest in WDB Capital Fund falling below 50%, the Group now recognises its share of WDB Capital Fund as an associate undertaking, and accounts for it by using the equity method of accounting in accordance with IAS 28.

11. ASSETS AND LIABILITIES OF DISPOSAL GROUPS CLASSIFIED AS HELD-FOR-SALE AND DISCONTINUED OPERATIONS (continued)

ESCL

On 18 December 2008, the Board gave approval for the Group to enter into an investment agreement with First Eastern Financial Holdings Limited, which resulted in a partial disposal of the Group's interest in ESCL. The investment agreement was formally signed on 31 March 2009, and was disclosed in detail in Note 36 of the 2008 Annual Report and Accounts. As a result of this transaction the Group's interest in ESCL has fallen to 48.5%. Prior to the completion of this transaction on 31 March 2009 the Group continued to consolidate and present ESCL as a discontinued operation. From 1 April 2009 to 30 June 2009 ESCL and its subsidiary are accounted for by the equity method of accounting in accordance with IAS 28.

The results of ESCL and its subsidiary are shown as discontinued per the table below:

	Period  Ended	Half Year  Ended	Half Year Ended
	31.03.09	31.12.08	30.06.08
	£m	£m	£m
Total income	0.1	0.5	1.8
Impairment	(0.4)	-	-
Other operating expenses	(0.7)	(3.1)	(2.5)
Operating (loss) from discontinued operations	(1.0)	(2.6)	(0.7)
(Loss) before tax from discontinued operations	(1.0)	(2.6)	(0.7)
Tax (expense) / credit	(0.3)	0.5	0.3
(Loss) arising on disposal	(1.0)	-	-
(Loss) after tax from discontinued operations	(2.3)	(2.1)	(0.4)
Minority interest	0.4	0.6	0.1
(Loss) attributable to equity holders of The Evolution Group Plc	(1.9)	(1.5)	(0.3)

12. RELATED PARTY TRANSACTIONS

Related party transactions are described in the 2008 Annual Report and Accounts.  

There have been no significant changes in related party transactions described in the 2008 Annual Report and Accounts, other than Evolution Securities China Limited and WDB Capital Fund becoming associates as described in Note 11. The Group's share of their post tax results are shown on the Consolidated Income Statement.

 

END

 

 

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