TIDMEVG
RNS Number : 7324R
Evolution Group PLC
27 August 2010
The Evolution Group Plc
(the "Evolution Group", the "Group", the "Company")
Half Year results for the six months ended 30 June 2010
INTERIM MANAGEMENT REPORT - 2010
Evolution Group, the listed Investment Bank and Private Client group, today
announces its half yearly financial report for the six months ended 30 June
2010.
Highlights
· Total Group income of GBP56.1m, up 7% on 2009.
· Statutory operating profit of GBP4.5m, up 22% on 2009.
· Interim dividend increased 25% to 1.00p.
· Continued strong growth in Private Client income, up 35% to GBP25.4m.
· Investment banking division remained profitable despite very difficult
market conditions.
· Voted Top European Fixed Income Agency Broker of 2010 by Credit Magazine.
· Balance sheet strength and liquidity maintained.
+-----------+----------+--------+----------+
| | Half | | Half |
| | Year | | Year |
| | Ended | | Ended |
| | 30.06.10 | | 30.06.09 |
| | | | |
+-----------+----------+--------+----------+
| | GBPm | | GBPm |
+-----------+----------+--------+----------+
| | | | |
+-----------+----------+--------+----------+
| Total | 56.1 | | 52.6 |
| income | | | |
+-----------+----------+--------+----------+
| | | | |
+-----------+----------+--------+----------+
| Operating | 4.5 | | 3.7 |
| profit | | | |
+-----------+----------+--------+----------+
| | | | |
+-----------+----------+--------+----------+
| Profit | 3.0 | | 3.6 |
| before | | | |
| tax | | | |
+-----------+----------+--------+----------+
| | | | |
+-----------+----------+--------+----------+
| Diluted | 1.24p | | 1.23p |
| earnings | | | |
| per | | | |
| share | | | |
+-----------+----------+--------+----------+
| | | | |
+-----------+----------+--------+----------+
| Dividend | 1.00p | | 0.80p |
| per | | | |
| Share | | | |
+-----------+----------+--------+----------+
Commenting on the results and outlook, Alex Snow, Chief Executive of Evolution
Group said:
"These interim results reflect a creditable performance for the Group as a
whole. Growing income and operating profit in the period, in what have been very
tough trading conditions, is a good achievement. We remain focused on our long
term strategy to create shareholder value through growing a quality recurring
earning stream. This value will be created despite, not as a result of, short
term volatility in markets and performance. The Group remains in a significant
investment build out phase, both developing recent investments and new
opportunities for future growth.
Despite the evident short term challenges due to market conditions, we see real
opportunities to generate future growth from the base of our diversified
businesses, financial strength and commitment to excellence. The significant
increase in dividend underscores the Group's confidence in the success of its
strategy."
Key Performance Indicators
+---------------+--------+-----------+--------+----------+
| | | Half | | Half |
| | | Year | | Year |
| | | Ended | | Ended |
| | | 30.06.10 | | 30.06.09 |
+---------------+--------+-----------+--------+----------+
| Private | | | | |
| Clients1 | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| Net | | 128 | | 123 |
| fund | | | | |
| inflows | | | | |
| (GBPm) | | | | |
+---------------+--------+-----------+--------+----------+
| No. of | | 16,000 | | 13,000 |
| clients | | | | |
+---------------+--------+-----------+--------+----------+
| Income | | 182 | | 147 |
| per | | | | |
| average | | | | |
| head5 | | | | |
| (GBP000) | | | | |
+---------------+--------+-----------+--------+----------+
| Income | | 387 | | 301 |
| per | | | | |
| average | | | | |
| front | | | | |
| office | | | | |
| head3 & | | | | |
| 5 | | | | |
| (GBP000) | | | | |
+---------------+--------+-----------+--------+----------+
| Core | | 239 | | 215 |
| operating | | | | |
| costs per | | | | |
| average | | | | |
| front | | | | |
| office | | | | |
| head5 | | | | |
| (GBP000) | | | | |
+---------------+--------+-----------+--------+----------+
| Operating | | 3.6 | | (1.7) |
| profit / | | | | |
| (loss) | | | | |
| (GBPm) | | | | |
+---------------+--------+-----------+--------+----------+
| Operating | | 14% | | - |
| margin | | | | |
| (%) | | | | |
+---------------+--------+-----------+--------+----------+
| AUM | | 5.1 | | 4.2 |
| (GBPbn) | | | | |
+---------------+--------+-----------+--------+----------+
| Net | | 16 | | 1 |
| increase | | | | |
| in | | | | |
| headcount | | | | |
| since | | | | |
| year end | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| Investment | | | | |
| Banking2 | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| Market | | | | |
| share | | | | |
| by | | | | |
| value | | | | |
| traded | | | | |
+---------------+--------+-----------+--------+----------+
| LSE | | 1.3% | | 1.1% |
| Market | | | | |
| - FTSE | | | | |
| 100 | | | | |
| (%) | | | | |
+---------------+--------+-----------+--------+----------+
| LSE | | 1.4% | | 1.2% |
| Market | | | | |
| - | | | | |
| Total | | | | |
| FTSE | | | | |
| (%) | | | | |
+---------------+--------+-----------+--------+----------+
| LSE | | 5.4% | | 5.6% |
| Market | | | | |
| - AIM | | | | |
| (%) | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| Corporate | | 80 | | 76 |
| clients | | | | |
+---------------+--------+-----------+--------+----------+
| Transactional | | 1.4 | | 1.3 |
| volumes | | | | |
| (millions) | | | | |
+---------------+--------+-----------+--------+----------+
| Institutional | | 1,134 | | 796 |
| clients | | | | |
+---------------+--------+-----------+--------+----------+
| Funds | | 195 | | 104 |
| raised | | | | |
| (GBPm) | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| Income | | 272 | | 454 |
| per | | | | |
| average | | | | |
| head5 | | | | |
| (GBP000) | | | | |
+---------------+--------+-----------+--------+----------+
| Income | | 348 | | 610 |
| per | | | | |
| average | | | | |
| front | | | | |
| office | | | | |
| head4 & | | | | |
| 5 | | | | |
| (GBP000) | | | | |
+---------------+--------+-----------+--------+----------+
| Core | | 273 | | 279 |
| operating | | | | |
| costs per | | | | |
| average | | | | |
| front | | | | |
| office | | | | |
| head5 | | | | |
| (GBP000) | | | | |
+---------------+--------+-----------+--------+----------+
| Operating | | 1.3 | | 6.4 |
| profit (GBPm) | | | | |
+---------------+--------+-----------+--------+----------+
| Operating | | 4% | | 19% |
| margin | | | | |
| (%) | | | | |
+---------------+--------+-----------+--------+----------+
| | | 9 | | 64 |
| Net | | | | |
| increase | | | | |
| in | | | | |
| headcount | | | | |
| since | | | | |
| year end | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| | | | | |
+---------------+--------+-----------+--------+----------+
| 1The results of Private Clients are |
| defined as those arising from Williams de |
| Broë ("WDB") Limited, WDB Assetmaster |
| Management Company Limited, WDB Asset |
| Management Limited and WDB Capital |
| Limited. |
| |
| 2The results of Investment Banking are |
| defined as those arising from Evolution |
| Securities Limited ("ESL") and its |
| subsidiary Evolution Securities (US) Inc. |
| ("ESUS"), and from Darwin Strategic |
| Limited. |
| |
| 3 Front office head count for Private |
| Clients is defined as including investment |
| managers, dealers, financial planners and |
| investment assistants. |
| |
| 4 Front office head count for Investment |
| Banking is defined as including all client |
| facing staff, including corporate finance |
| executives, market makers, sales and sales |
| traders, and research analysts. |
| |
| 5 Income per average head, income per |
| average front office head and Core |
| operating costs per average front office |
| head are based on annualised first half |
| incomes and costs, divided by average |
| first half headcount. |
| |
+---------------+--------+-----------+--------+----------+
The Evolution Group Plc
The Evolution Group Plc is the ultimate holding Company of companies including:
Evolution Securities Limited, Williams de Broë Limited, Evolution Securities
(US) Inc, WDB Asset Management Limited, WDB Capital Limited and WDB Assetmaster
Management Company Limited. The Company also owns 52% of the issued share
capital of Darwin Strategic Limited.
Evolution Securities Limited is a leading investment bank focused on UK and pan
European mid cap public companies. It provides a full range of investment
banking services including equity research, institutional sales and trading,
market making and corporate finance advice. It is authorised and regulated by
the Financial Services Authority.
Williams de Broë Limited is one of the UK's leading retail investment managers,
with offices in Bath, Birmingham, Bournemouth, Edinburgh, Exeter, Guildford and
London. Williams de Broë Limited is authorised and regulated by the Financial
Services Authority.
For further information, please contact:
+---------------------------------------------+----------------------+
| The Evolution Group Plc | 020 7071 4300 |
| Alex Snow, Chief Executive Officer | |
| Andrew Westenberger, Finance Director | |
+---------------------------------------------+----------------------+
| | |
+---------------------------------------------+----------------------+
| Merlin | 020 7726 8400 |
| Charles Cook | |
| Toby Bates | |
+---------------------------------------------+----------------------+
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.
BUSINESS REVIEW
RESULTS SUMMARY
+--------------+--------+----------+--------+----------+
| | | Half | | Half |
| | | year | | year |
| | | ended | | ended |
| | | 30.06.10 | | |
| | | | | 30.06.09 |
+--------------+--------+----------+--------+----------+
| | | GBPm | | GBPm |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Total | | | | |
| income | | | | |
+--------------+--------+----------+--------+----------+
| - | | 25.4 | | 18.8 |
| Private | | | | |
| Client | | | | |
+--------------+--------+----------+--------+----------+
| - | | 30.7 | | 33.9 |
| Investment | | | | |
| Banking | | | | |
+--------------+--------+----------+--------+----------+
| - | | - | | (0.1) |
| Other | | | | |
+--------------+--------+----------+--------+----------+
| | | 56.1 | | 52.6 |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Operating | | | | |
| profit | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+--------------+--------+----------+--------+----------+
| - | | 3.6 | | (1.7) |
| Private | | | | |
| Client | | | | |
+--------------+--------+----------+--------+----------+
| - | | 1.3 | | 6.4 |
| Investment | | | | |
| Banking | | | | |
+--------------+--------+----------+--------+----------+
| - | | (0.4) | | (1.0) |
| Other | | | | |
+--------------+--------+----------+--------+----------+
| | | 4.5 | | 3.7 |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Net | | - | | 0.3 |
| finance | | | | |
| income | | | | |
+--------------+--------+----------+--------+----------+
| Share | | (1.5) | | (0.4) |
| of | | | | |
| post | | | | |
| tax | | | | |
| results | | | | |
| of | | | | |
| associates | | | | |
+--------------+--------+----------+--------+----------+
| Profit | | 3.0 | | 3.6 |
| before | | | | |
| tax | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Tax | | (0.2) | | (0.7) |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Profit | | 2.8 | | 2.9 |
| after | | | | |
| tax | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Discontinued | | - | | (2.3) |
| operations | | | | |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Profit | | 2.8 | | 0.6 |
| for | | | | |
| the | | | | |
| period | | | | |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Diluted | | 1.24p | | 1.23p |
| Earnings | | | | |
| per | | | | |
| Share from | | | | |
| continuing | | | | |
| operations | | | | |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
| Dividend | | 1.00p | | 0.80p |
| proposed | | | | |
| / paid | | | | |
| per | | | | |
| share - | | | | |
| Interim | | | | |
+--------------+--------+----------+--------+----------+
| | | | | |
+--------------+--------+----------+--------+----------+
OVERVIEW
Evolution Group performed well in the first half of 2010, delivering robust
results in an extremely difficult environment. Prompted by the European
sovereign debt crisis, financial markets (both equities and fixed income) have
suffered a series of aggressive sell-offs, followed by subsequent rallies
without a clear pattern. This seriously undermined investor confidence and risk
appetite. Furthermore, beneath the big moves in equity market indices, this lack
of investor conviction, evidenced by little sizeable flow or liquidity, has
created a challenging environment for corporate capital raising.
Against this background, a 7% increase in Group income, and 22% increase in
Group operating profit, is a result of the strategy to diversify the range of
businesses by developing new and recurring income streams. The Group now has a
level of recurring income, in particular from the private client business,
which should allow it to remain profitable during difficult market conditions.
PRIVATE CLIENTS
+----------------------------------------------+-+-+----------+----------+---------+
| | | Half year | Half year |
| | | ended | ended |
| | | 30.06.10 | 30.06.09 |
+----------------------------------------------+-+------------+--------------------+
| | | | GBPm | | GBPm |
+----------------------------------------------+-+-+----------+----------+---------+
| | | | | | |
+----------------------------------------------+-+-+----------+----------+---------+
| Management fees | | | 14.6 | | 10.8 |
+----------------------------------------------+-+-+----------+----------+---------+
| Transactional income | | | 10.6 | | 7.3 |
+----------------------------------------------+-+-+----------+----------+---------+
| Segregated interest income | | | 0.2 | | 0.7 |
+----------------------------------------------+-+-+----------+----------+---------+
| Total income | | | 25.4 | | 18.8 |
+----------------------------------------------+-+-+----------+----------+---------+
| | | | | | |
+----------------------------------------------+-+-+----------+----------+---------+
| Expenses | | | (20.3) | | (17.6) |
+----------------------------------------------+-+-+----------+----------+---------+
| | | | | | |
+----------------------------------------------+-+-+----------+----------+---------+
| Adjusted operating profit | | | 5.1 | | 1.2 |
+----------------------------------------------+-+-+----------+----------+---------+
| | | | | | |
+----------------------------------------------+-+-+----------+----------+---------+
| Charge for share options granted to | | | (0.4) | | (0.9) |
| employees | | | | | |
+----------------------------------------------+-+-+----------+----------+---------+
| Amortisation of intangibles | | | (0.7) | | (0.7) |
+----------------------------------------------+-+-+----------+----------+---------+
| Non-recurring operating expenses | | | (0.4) | | (1.3) |
+----------------------------------------------+-+-+----------+----------+---------+
| | | | | | |
+----------------------------------------------+-+-+----------+----------+---------+
| Operating profit / (loss) | | | 3.6 | | (1.7) |
+----------------------------------------------+-+-+----------+----------+---------+
| | | | | | |
+----------------------------------------------+-+-+----------+----------+---------+
| Headcount | | | 284 | | 261 |
+----------------------------------------------+-+-+----------+----------+---------+
| Assets Under Management (GBPbn) | | | 5.1 | | 4.2 |
+----------------------------------------------+-+-+----------+----------+---------+
| Net fund inflows (GBPm) | | | 128 | | 123 |
+----------------------------------------------+-+-+----------+----------+---------+
The combination of a differentiated service, high calibreteam of investment
professionals, respected brand and increasingly sophisticated technology
infrastructure, positions Williams de Broë limited as one of the leading
investment managers in the UK.
The Private Client business has reached the scale to make a material profit
contribution of GBP3.6m (2009: GBP1.7m loss) to the Group. This excellent result
reflects:
· The reduction in integration costs relating to the successful acquisition
of the Edinburgh team and Singer & Friedlander investment managers which were
taken in 2009, resulting in both teams now contributing strongly to the
performance of the business;
· Ongoing initiatives to improve operating margin;
· Organic growth momentum with both the sales team and investment managers
continuing to win significant levels of new client assets.
Total income grew to a record level of GBP25.4m in the period, an increase of
GBP6.6m (or 35%), primarily as a result of assets under management and
administration increasing to GBP5.1bn compared with GBP4.2bn in the comparative
period for 2009 (an increase of 21%).
Recurring management fee income of GBP14.6m (2009: GBP10.8m) increased by 35% in
the period. The exceptional growth has been driven by the continued focus on
growing managed assets resulting in management fee income now accounting for 57%
of total income.
Transactional volumes increased by 30% to 99,000 (2009: 76,000), as early signs
of market recovery witnessed during Q1 2010 increased retail investor
confidence, delivering a record first quarter for volumes and income. Momentum
was maintained during Q2 2010 generating GBP10.6m in the first half, an increase
of 45% on the comparative period (2009: GBP7.3m).
As a result of the sharp decline in interest rates over the past 18 months
segregated interest income declined to GBP0.2m (2009: GBP0.7m).
Growth in expenses was limited, resulting in a total charge of GBP20.3m in the
period (2009: GBP17.6m). A number of cost efficiency measures initiated in the
fourth quarter of 2009, combined with a reduction in integration costs, curbed
cost growth and improved the operating margin.
This performance was achieved despite severe market volatility which has seen
the FTSE All Share index fall 8%, and the FTSE APCIMS balanced index fall 3%
since 31 December 2009. In these challenging markets, assets under management
and administration ("AUM") declined by only 2% to GBP5.1bn, down from GBP5.2bn
at 31 December 2009. This AUM outperformance was achieved by the business
continuing to gain new clients through its discretionary sales team and
investment managers along with sound investment decision processes on behalf of
clients.
+-------------------------------------------+-+-------+-+---------+
| | | GBPbn | | % |
+-------------------------------------------+-+-------+-+---------+
| | | | | |
+-------------------------------------------+-+-------+-+---------+
| Assets under management and | | 5.2 | | |
| administration - 31 December 2009 | | | | |
+-------------------------------------------+-+-------+-+---------+
| | | | | |
+-------------------------------------------+-+-------+-+---------+
| Assets under administration - 31 December | | (1.0) | | |
| 2009 | | | | |
+-------------------------------------------+-+-------+-+---------+
| | | | | |
+-------------------------------------------+-+-------+-+---------+
| Managed assets under management - 31 | | 4.2 | | |
| December 2009 | | | | |
+-------------------------------------------+-+-------+-+---------+
| | | | | |
+-------------------------------------------+-+-------+-+---------+
| AUM Performance | | (0.2) | | (4.8%) |
+-------------------------------------------+-+-------+-+---------+
| Fund Sales | | 0.2 | | 4.8% |
+-------------------------------------------+-+-------+-+---------+
| Redemptions | | (0.1) | | (2.4%) |
+-------------------------------------------+-+-------+-+---------+
| | | | | |
+-------------------------------------------+-+-------+-+---------+
| Managed assets under management - 30 June | | 4.1 | | |
| 2010 | | | | |
+-------------------------------------------+-+-------+-+---------+
| | | | | |
+-------------------------------------------+-+-------+-+---------+
| Assets under administration - 30 June | | 1.0 | | |
| 2010 | | | | |
+-------------------------------------------+-+-------+-+---------+
| | | | | |
+-------------------------------------------+-+-------+-+---------+
| Assets under management and | | 5.1 | | |
| administration - 30 June 2010 | | | | |
+-------------------------------------------+-+-------+-+---------+
Williams de Broë Limited continues to differentiate itself from many of its
peers by offering a "personal and bespoke" service to clients on an individual
basis. This service is delivered via a disciplined investment strategy process
which is informed by an in-house research capability. This core proposition
continues to create value for clients and in turn for the business. It is also
the key driver to winning new clients, receiving referrals from existing clients
and retaining the trust of 16,000 clients through exceptionally volatile and
uncertain market conditions.
The business continues to make significant investment within its infrastructure,
back office and compliance departments. By the end of the year the business will
have relocated, and substantially upgraded, its Birmingham, London, Bournemouth
and Guildford offices. In addition, the business continues to invest in
developing operational processes and technology that will further enhance client
service.
Private Clients -Outlook
The growth opportunity for the Private Client division is significant. Williams
de Broë has a strategic target to achieve GBP10 billion of AUM by the end of
2012. This growth will be achieved through continued strong organic fund inflows
together with recruitment and acquisitions.
Continued focus will be on offering value for money to our clients, consistent
investment performance and ongoing improvements to operational efficiency. This
should fulfill a clear objective of market share gains, which, together with
further margin improvements, will support ongoing investment for growth in the
business and deliver meaningful value creation to shareholders.
INVESTMENT BANKING
+----------------------------------------------+--+----------+----------+----------+---------+
| | | Half year | Half year |
| | | ended | ended |
| | | 30.06.10 | 30.06.09 |
+----------------------------------------------+--+---------------------+--------------------+
| | | | GBPm | | GBPm |
+----------------------------------------------+--+----------+----------+----------+---------+
| | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| Corporate finance income | | | 5.9 | | 3.5 |
+----------------------------------------------+--+----------+----------+----------+---------+
| Markets | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| - Equity sales commission | | | 18.6 | | 6.6 |
+----------------------------------------------+--+----------+----------+----------+---------+
| - Equity market making | | | (3.2) | | 7.8 |
+----------------------------------------------+--+----------+----------+----------+---------+
| Total equities | | | 15.4 | | 14.4 |
+----------------------------------------------+--+----------+----------+----------+---------+
| Fixed income commission | | | 9.4 | | 16.0 |
+----------------------------------------------+--+----------+----------+----------+---------+
| Total income | | | 30.7 | | 33.9 |
+----------------------------------------------+--+----------+----------+----------+---------+
| | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| Expenses | | | (28.9) | | (25.6) |
+----------------------------------------------+--+----------+----------+----------+---------+
| | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| Adjusted operating profit | | | 1.8 | | 8.3 |
+----------------------------------------------+--+----------+----------+----------+---------+
| | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| Charge for share options granted to | | | (0.4) | | (1.8) |
| employees | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| Amortisation of intangibles | | | (0.1) | | (0.1) |
+----------------------------------------------+--+----------+----------+----------+---------+
| | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| Operating profit | | | 1.3 | | 6.4 |
+----------------------------------------------+--+----------+----------+----------+---------+
| | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| | | | | | |
+----------------------------------------------+--+----------+----------+----------+---------+
| Headcount | | | 229 | | 189 |
+----------------------------------------------+--+----------+----------+----------+---------+
| Corporate clients | | | 80 | | 76 |
+----------------------------------------------+--+----------+----------+----------+---------+
| Transactional volumes (millions) | | | 1.4 | | 1.3 |
+----------------------------------------------+--+----------+----------+----------+---------+
The volatile and illiquid financial market conditions of the first half of 2010
have presented extremely challenging trading conditions. Although the consequent
impact of turbulent market conditions inevitably led to a decline in total
income for the period to GBP30.7m (2009: GBP33.9m), the division remained
profitable, albeit at a significantly reduced level of GBP1.3m (2009: GBP6.4m).
This was achieved through continued vigilance and discipline over expenses
evidenced by the further fall in core operating costs per front office head to
GBP273,000 per annum (2009: GBP279,000). After the significant investment in
Large-cap equity and agency fixed income businesses during 2009, net headcount
growth slowed to a modest increase of 9 in the period. This stemmed primarily
from initiatives to build out our primary corporate business, including debt
advisory, DCM and equity corporate finance, offset by some decline in Fixed
Income.
Corporate Finance & Corporate Broking
Despite the Corporate fundraising market being subdued in the period, with
fundraisings being deferred and valuations reduced in the face of deteriorating
market sentiment and investor risk appetite, we acted on 17 transactions on
behalf of our clients, raising in excess of GBP195m (H1 2009 GBP104m), including
fundraisings for EMIS (being the second largest AIM IPO in 2010), Central Rand
Gold, Lombard Medical, African Aura and Coal of Africa. Corporate Finance
revenue of GBP5.9m, although ahead of the first half of 2009 declined from the
levels seen in the second half of 2009 reflecting the delay in transactional
pipelines.
Since the period end we have already acted on a further 9 transactions,
including fundraisings for Vallar (being the second largest full listing in
2010), Argos (IPO), Circle Oil, Monitise and Nautical Petroleum with a
significant pipeline of further transactions in place for the remainder of the
year.
The development of our corporate business continued with several notable new
corporate broking relationships added: Safestore, Bodycote, European Goldfields
and SpeedyHire. Overall corporate clients grew from 76 to 80 in the period. We
expect to announce a number of additional appointments during the remainder of
2010.
The success of the corporate finance and corporate broking business in servicing
our corporate clients through advice and capital raising ability has always been
the core of the division. Our long track record of fundraising has ensured that
in the current difficult market conditions clients have confidence in our
ability to raise substantial funds. Our future growth strategy is founded on
expanding our corporate coverage beyond our historical focus into the mid market
sector to align with, and capitalise on the vastly improved quality of our
institutional distribution ability in both equity and debt. Ongoing investment
through additional hiring into both our debt capital markets and equity capital
corporate finance and broking has therefore occurred through the period to
develop our ability to service and advise our expanding corporate client list.
Equities
The large-cap agency broking business continued to make good progress during the
period with sales commissions continuing to grow to GBP18.6m (2009: GBP6.6m),
despite the market wide decline in trading volumes. This underlines the
qualitative transformation achieved in this business in 2009 and reflects the
quality of our research, sales and trading. Further investment in our equity
business was focused on filling out distribution capability within our overseas
offices opening in 2009 in North America and Madrid, both of which are now
making good contributions.
Overall, equity revenue growth in the period was limited by market making losses
incurred during the periods of extreme market volatility and illiquidity.
Fixed Income
Steep declines in fixed income market volumes and spreads were experienced in
May following the resurfacing fear of European Sovereign defaults. Investor
appetite, which had been progressively increasing in fixed income, almost fell
away completely from May onwards, resulting in the almost total loss of
liquidity in all but the most highly rated Government debt. The broader product
coverage developed in 2009 away from investment grade has provided some cushion
to this market wide decline, resulting in fixed income revenues of GBP9.4m, a
decline of GBP6.6m when compared with a very strong comparative period (2009:
GBP16.0m).
Fixed income remains a key long term growth opportunity for the division.
Through the early expansion of the agency model from late 2008 onwards the
business has succeeded in establishing itself as one of the top independent
agency fixed income brokers, evidenced once again by being voted the top
"European Fixed Income Agency Broker" by Credit Magazine in 2010. The
combination of quality research and execution has ensured that the agency
broking model is still highly rated as a source of liquidity and price
transparency by our institutional clients.
A tougher trading environment, due to market conditions and renewed competitive
pressures from larger balance sheet led banking businesses undoubtedly makes for
a tougher comparison with 2009, which witnessed unprecedented benign conditions.
However, from a position of comparative strength and with the continued backing
and financial resources of the Group, the business has significant potential to
expand, both through further recruitment and other consolidation opportunities.
Investment Banking - Outlook
The transformation of the investment banking business, begun in 2009 with the
expansion of the agency fixed income and large-cap equities, continues. The
quality of both Corporate and Institutional clients and the people in the
division continues to improve, which will ultimately form the basis of long term
shareholder value creation. The growth strategy remains, and is fundamentally
framed in a disciplined investment approach. Investment to grow the business has
continued, but necessarily with caution given the short term uncertainties that
exist in markets in which the division operates. Looking through the short term
uncertainty, but ever mindful of risks, opportunities are continually being
examined to grow the business further.
BALANCE SHEET AND CASH
The Group's Balance Sheet strength is being maintained, with net assets of
GBP131.2m at the period end (31 December 2009: GBP137.2m) including cash and
cash equivalents of GBP62.5m (31 December 2009: GBP109.5m). Cash has reduced in
the period due to the Group's natural cash cycle where June is historically a
low point of the year, primarily due to the payment of year end bonuses. In
addition the Group has purchased 6.3million of own shares at an aggregate
consideration of GBP8.1m. These shares were purchased in order to satisfy the
final outstanding share option awards under the Group's 2002 and 2001 executive
share options schemes in addition to the joint share ownership plans.
ASSOCIATES
The Group's share of associates in the period amounted to a loss of GBP1.5m
compared with a loss of GBP0.4m in the comparative period. The loss in the
period is split between Evolution Securities China Limited ("ESCL") GBP0.5m and
WDB Capital UK Equity Fund GBP1.0m. ESCL's financial performance is expected to
improve in the second half of 2010 as its corporate pipeline improves. The
Group's share of results from WDB Capital UK Equity Fund stems from the
performance of the fund, being down 8% over the period.
DIVIDEND
In light of these results the Board declares an interim dividend of 1.00p per
share, up 25% from the prior year dividend of 0.80p. This reflects the Board's
continuing commitment to a progressive dividend policy as set out in the 2009
Annual Report and Accounts. The dividend is payable on 8 October 2010 to
shareholders on the register at 10 September 2010.
OUTLOOK
The possibility of further bouts of financial market volatility, triggered by
the unresolved economic outlook, with knock on effects to client confidence is
likely to remain for the foreseeable future. While the transaction pipeline and
ongoing improving client flows across our businesses give us grounds for
confidence that second half financial performance will improve on the first
half, it clearly remains at risk to such events.
The significant quality improvements across the Group in terms of clients and
earnings are enhancing its existing core strengths, namely diversified
businesses, financial strength and a proven track record of accretive
investments. From this strong base, the opportunity to create long term
shareholder value is greater than ever, and indeed continued difficult trading
conditions could present opportunities for the Group to accelerate its strategy
to that end.
OTHER INTERIM INFORMATION
Group activities
A summary of Group activities can be found on Page 22 of the 2009 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 and
Financial business review sections above.
Principal risks and uncertainties
Information on the principal risks and uncertainties are included within the
2009 Annual Report and Accounts where the Group's key risks and its risk
management framework can be found in the Directors' Report on page 22 to 23 and
in Note 3 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 2009
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 35 of our 2009 Annual Report
and Accounts. Additional related party disclosures are given in Note 14 to the
Condensed Consolidated Interim Financial Information.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Board of Directors 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.
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
27 August 2010
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 2010, which comprises the Condensed Consolidated Income Statement,
Condensed Consolidated Statement of Comprehensive Income, Condensed Consolidated
Balance Sheet, Condensed Consolidated Statement of Changes in Equity, Condensed
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 2010 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
27 August 2010
INTERIM FINANCIAL INFORMATION
CONDENSED CONSOLIDATED INCOME STATEMENT (Unaudited)
+-----------------+--------+----------+--------+----------+
| | | | | Half |
| | | Half | | year |
| | | year | | ended |
| | | ended | | |
| | | 30.06.10 | | 30.06.09 |
| | | | | |
+-----------------+--------+----------+--------+----------+
| | Note | GBPm | | GBPm |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Total | | 56.1 | | 52.6 |
| income | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Operating | | (51.6) | | (48.9) |
| expenses | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Operating | | 4.5 | | 3.7 |
| profit | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Finance | | 0.1 | | 0.5 |
| income | | | | |
+-----------------+--------+----------+--------+----------+
| Finance | | (0.1) | | (0.2) |
| expense | | | | |
+-----------------+--------+----------+--------+----------+
| Net | | - | | 0.3 |
| finance | | | | |
| income | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Share | | (1.5) | | (0.4) |
| of | | | | |
| post | | | | |
| tax | | | | |
| results | | | | |
| of | | | | |
| associates | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Profit | | 3.0 | | 3.6 |
| before | | | | |
| tax | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Tax | 6 | (0.2) | | (0.7) |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Profit | | 2.8 | | 2.9 |
| after | | | | |
| tax | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Discontinued | 13 | - | | (2.3) |
| operations | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Profit | | 2.8 | | 0.6 |
| for | | | | |
| the | | | | |
| period | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Attributable | | | | |
| to: | | | | |
+-----------------+--------+----------+--------+----------+
| Non-controlling | | - | | (0.4) |
| interests | | | | |
+-----------------+--------+----------+--------+----------+
| Equity | | 2.8 | | 1.0 |
| holders | | | | |
| of The | | | | |
| Evolution | | | | |
| Group Plc | | | | |
+-----------------+--------+----------+--------+----------+
| | | 2.8 | | 0.6 |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Earnings / (loss) per share attributable |
| to the equity holders of The Evolution |
| Group Plc during the period: |
+---------------------------------------------------------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Basic | | | | |
+-----------------+--------+----------+--------+----------+
| From | 4 | 1.30p | | 1.28p |
| continuing | | | | |
| operations | | | | |
+-----------------+--------+----------+--------+----------+
| From | 4 | - | | (0.86p) |
| discontinued | | | | |
| operations | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Diluted | | | | |
+-----------------+--------+----------+--------+----------+
| From | 4 | 1.24p | | 1.23p |
| continuing | | | | |
| operations | | | | |
+-----------------+--------+----------+--------+----------+
| From | 4 | - | | (0.86p) |
| discontinued | | | | |
| operations | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
| Dividend | 5 | 1.00p | | 0.80p |
| proposed | | | | |
| / paid | | | | |
| per | | | | |
| share - | | | | |
| Interim | | | | |
+-----------------+--------+----------+--------+----------+
| | | | | |
+-----------------+--------+----------+--------+----------+
The above Condensed Consolidated Income Statement should be read in conjunction
with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (Unaudited)
+--------------------+----------+--------+----------+
| | Half | | |
| | year | | Half |
| | ended | | year |
| | 30.06.10 | | ended |
| | | | 30.06.09 |
+--------------------+----------+--------+----------+
| | GBPm | | GBPm |
+--------------------+----------+--------+----------+
| | | | |
+--------------------+----------+--------+----------+
| Profit | 2.8 | | 0.6 |
| for | | | |
| the | | | |
| period | | | |
+--------------------+----------+--------+----------+
| | | | |
+--------------------+----------+--------+----------+
| Deferred | (0.4) | | 1.2 |
| tax | | | |
| (debit) | | | |
| / credit | | | |
| on share | | | |
| options | | | |
| taken to | | | |
| equity | | | |
+--------------------+----------+--------+----------+
| Available-for-sale | (0.1) | | - |
| financial assets, | | | |
| net of tax | | | |
+--------------------+----------+--------+----------+
| Share | 0.1 | | (0.2) |
| of | | | |
| other | | | |
| comprehensive | | | |
| income of | | | |
| associates | | | |
+--------------------+----------+--------+----------+
| | | | |
+--------------------+----------+--------+----------+
| Other | (0.4) | | 1.0 |
| comprehensive | | | |
| (expense) / | | | |
| income for | | | |
| the period, | | | |
| net of tax | | | |
+--------------------+----------+--------+----------+
| | | | |
+--------------------+----------+--------+----------+
| Total | 2.4 | | 1.6 |
| comprehensive | | | |
| income for | | | |
| the period | | | |
+--------------------+----------+--------+----------+
| | | | |
+--------------------+----------+--------+----------+
| Attributable | | | |
| to: | | | |
+--------------------+----------+--------+----------+
| Non-controlling | - | | (0.4) |
| interests | | | |
+--------------------+----------+--------+----------+
| Equity | 2.4 | | 2.0 |
| holders | | | |
| of The | | | |
| Evolution | | | |
| Group Plc | | | |
+--------------------+----------+--------+----------+
| | 2.4 | | 1.6 |
+--------------------+----------+--------+----------+
| | | | |
+--------------------+----------+--------+----------+
The above Condensed Consolidated Statement of Comprehensive Income should be
read in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED BALANCE SHEET (Unaudited)
+--------------------+--------+----------+--------+----------+
| | | | | |
| | | 30.06.10 | | 31.12.09 |
| | | GBPm | | GBPm |
| | Note | | | |
+--------------------+--------+----------+--------+----------+
| ASSETS | | | | |
+--------------------+--------+----------+--------+----------+
| Non-current | | | | |
| assets | | | | |
+--------------------+--------+----------+--------+----------+
| Goodwill | | 10.7 | | 10.7 |
+--------------------+--------+----------+--------+----------+
| Intangible | | 5.5 | | 6.2 |
| assets | | | | |
+--------------------+--------+----------+--------+----------+
| Property, | | 4.9 | | 3.3 |
| plant and | | | | |
| equipment | | | | |
+--------------------+--------+----------+--------+----------+
| Deferred | | 7.2 | | 8.5 |
| tax | | | | |
| assets | | | | |
+--------------------+--------+----------+--------+----------+
| Investment | 7 | 12.0 | | 13.4 |
| in | | | | |
| associates | | | | |
+--------------------+--------+----------+--------+----------+
| Subordinated | | 0.2 | | - |
| loan | | | | |
+--------------------+--------+----------+--------+----------+
| | | 40.5 | | 42.1 |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Current | | | | |
| assets | | | | |
+--------------------+--------+----------+--------+----------+
| Trade | 8 | 450.0 | | 78.8 |
| and | | | | |
| other | | | | |
| receivables | | | | |
+--------------------+--------+----------+--------+----------+
| Available-for-sale | | 1.5 | | 1.7 |
| financial assets | | | | |
+--------------------+--------+----------+--------+----------+
| Trading | 9 | 37.9 | | 13.3 |
| portfolio | | | | |
| assets | | | | |
+--------------------+--------+----------+--------+----------+
| Cash | | 62.5 | | 109.5 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
+--------------------+--------+----------+--------+----------+
| | | 551.9 | | 203.3 |
+--------------------+--------+----------+--------+----------+
| Total | | 592.4 | | 245.4 |
| assets | | | | |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| LIABILITIES | | | | |
+--------------------+--------+----------+--------+----------+
| Current | | | | |
| liabilities | | | | |
+--------------------+--------+----------+--------+----------+
| Trade | 10 | 443.2 | | 102.4 |
| and | | | | |
| other | | | | |
| payables | | | | |
+--------------------+--------+----------+--------+----------+
| Trading | 11 | 15.8 | | 2.9 |
| portfolio | | | | |
| liabilities | | | | |
+--------------------+--------+----------+--------+----------+
| Current | | 1.2 | | 0.8 |
| income | | | | |
| tax | | | | |
| liabilities | | | | |
+--------------------+--------+----------+--------+----------+
| | | 460.2 | | 106.1 |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Non-current | | | | |
| liabilities | | | | |
+--------------------+--------+----------+--------+----------+
| Deferred | | 0.1 | | 1.4 |
| tax | | | | |
| liabilities | | | | |
+--------------------+--------+----------+--------+----------+
| Provisions | | 0.9 | | 0.7 |
| for other | | | | |
| liabilities | | | | |
| and charges | | | | |
+--------------------+--------+----------+--------+----------+
| | | 1.0 | | 2.1 |
+--------------------+--------+----------+--------+----------+
| Total | | 461.2 | | 108.2 |
| liabilities | | | | |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Net | | 131.2 | | 137.2 |
| assets | | | | |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| EQUITY | | | | |
+--------------------+--------+----------+--------+----------+
| Capital | | | | |
| and | | | | |
| reserves | | | | |
| attributable | | | | |
| to equity | | | | |
| shareholders | | | | |
+--------------------+--------+----------+--------+----------+
| Share | | 2.3 | | 2.3 |
| capital | | | | |
+--------------------+--------+----------+--------+----------+
| Share | | 33.4 | | 33.2 |
| premium | | | | |
+--------------------+--------+----------+--------+----------+
| Other | | 30.0 | | 30.0 |
| reserves | | | | |
+--------------------+--------+----------+--------+----------+
| Retained | | 65.5 | | 71.7 |
| earnings | | | | |
+--------------------+--------+----------+--------+----------+
| Shareholders' | | 131.2 | | 137.2 |
| equity | | | | |
+--------------------+--------+----------+--------+----------+
The above Condensed Consolidated Balance Sheet should be read in conjunction
with the accompanying notes.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Unaudited)
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| | Share | Share | Other | Retained | Total | Non-controlling | Total |
| | capital | premium | reserves | earnings | | | equity |
| | | | | | | interest | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Balance | 2.3 | 33.2 | 30.0 | 71.7 | 137.2 | - | 137.2 |
| at 1 | | | | | | | |
| January | | | | | | | |
| 2010 | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Profit | - | - | - | 2.8 | 2.8 | - | 2.8 |
| for | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Deferred | - | - | - | (0.4) | (0.4) | - | (0.4) |
| tax | | | | | | | |
| debit on | | | | | | | |
| share | | | | | | | |
| options | | | | | | | |
| taken to | | | | | | | |
| equity | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Available-for-sale | - | - | (0.1) | - | (0.1) | - | (0.1) |
| financial assets, | | | | | | | |
| net of tax | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Share | - | - | 0.1 | - | 0.1 | - | 0.1 |
| of | | | | | | | |
| other | | | | | | | |
| comprehensive | | | | | | | |
| income of | | | | | | | |
| associates | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Total | - | - | - | 2.4 | 2.4 | - | 2.4 |
| comprehensive | | | | | | | |
| income for | | | | | | | |
| the period | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Issuance | - | 0.2 | - | - | 0.2 | - | 0.2 |
| of | | | | | | | |
| ordinary | | | | | | | |
| shares | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Purchase | - | - | - | (8.1) | (8.1) | - | (8.1) |
| of Trust | | | | | | | |
| shares1 | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Dividends | - | - | - | (3.7) | (3.7) | - | (3.7) |
| paid | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Share | - | - | - | 1.5 | 1.5 | - | 1.5 |
| options: | | | | | | | |
| value of | | | | | | | |
| employee | | | | | | | |
| services | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Tax | - | - | - | 0.1 | 0.1 | - | 0.1 |
| deductions | | | | | | | |
| on options | | | | | | | |
| exercised | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Contribution | - | - | - | 1.6 | 1.6 | - | 1.6 |
| received on | | | | | | | |
| issuance of | | | | | | | |
| employee | | | | | | | |
| share | | | | | | | |
| options | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Transactions | - | 0.2 | - | (8.6) | (8.4) | - | (8.4) |
| with | | | | | | | |
| shareholders | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
| Balance | 2.3 | 33.4 | 30.0 | 65.5 | 131.2 | - | 131.2 |
| at 30 | | | | | | | |
| June | | | | | | | |
| 2010 | | | | | | | |
+--------------------+---------+---------+----------+----------+--------+-----------------+--------+
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| | Share | Share | Other | Retained | Total | Non-controlling | Total |
| | capital | premium | reserves | earnings | | | equity |
| | | | | | | interest | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm | GBPm |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Balance | 2.2 | 29.8 | 27.8 | 86.5 | 146.3 | 0.9 | 147.2 |
| at 1 | | | | | | | |
| January | | | | | | | |
| 2009 | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Profit | - | - | - | 1.0 | 1.0 | (0.4) | 0.6 |
| for | | | | | | | |
| the | | | | | | | |
| period | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Deferred | - | - | - | 1.2 | 1.2 | - | 1.2 |
| tax | | | | | | | |
| credit | | | | | | | |
| on share | | | | | | | |
| options | | | | | | | |
| taken to | | | | | | | |
| equity | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Share | - | - | (0.2) | - | (0.2) | - | (0.2) |
| of | | | | | | | |
| other | | | | | | | |
| comprehensive | | | | | | | |
| income of | | | | | | | |
| associates | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Total | - | - | (0.2) | 2.2 | 2.0 | (0.4) | 1.6 |
| comprehensive | | | | | | | |
| income for | | | | | | | |
| the period | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Issuance | 0.1 | 0.2 | - | - | 0.3 | - | 0.3 |
| of | | | | | | | |
| ordinary | | | | | | | |
| shares | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Purchase | - | - | - | (2.4) | (2.4) | - | (2.4) |
| of Trust | | | | | | | |
| shares1 | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Dividends | - | - | - | (2.8) | (2.8) | - | (2.8) |
| paid | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Share | - | - | - | 3.4 | 3.4 | - | 3.4 |
| options: | | | | | | | |
| value of | | | | | | | |
| employee | | | | | | | |
| services | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Disposal | - | - | - | 0.2 | 0.2 | - | 0.2 |
| of | | | | | | | |
| subsidiaries' | | | | | | | |
| deferred tax | | | | | | | |
| and share | | | | | | | |
| options | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Tax | - | - | - | 0.1 | 0.1 | - | 0.1 |
| deductions | | | | | | | |
| on options | | | | | | | |
| exercised | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Non-controlling | - | - | - | - | - | (0.5) | (0.5) |
| interest | | | | | | | |
| disposed with | | | | | | | |
| subsidiary | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Transactions | 0.1 | 0.2 | - | (1.5) | (1.2) | (0.5) | (1.7) |
| with | | | | | | | |
| shareholders | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
| Balance | 2.3 | 30.0 | 27.6 | 87.2 | 147.1 | - | 147.1 |
| at 30 | | | | | | | |
| June | | | | | | | |
| 2009 | | | | | | | |
+-----------------+---------+---------+----------+----------+--------+-----------------+--------+
1 The Evolution Group Plc Employees' Share Trust (the "Trust") administers The
Evolution Group Plc share schemes. The debit shown in retained earnings of
GBP8.1m (2009: GBP2.4m) relates to the value of purchases made by the Trust to
satisfy these outstanding option awards to employees of the Group.
The above Condensed Consolidated Statement of Changes in Equity should be read
in conjunction with the accompanying notes.
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (Unaudited)
+--------------------+--------+----------+--------+----------+
| | | Half | | Half |
| | | year | | year |
| | | ended | | ended |
| | | 30.06.10 | | 30.06.09 |
| | | GBPm | | GBPm |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Operating | | 4.5 | | 3.7 |
| profit | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Adjustments | | | | |
| for: | | | | |
+--------------------+--------+----------+--------+----------+
| Non | | 3.4 | | 4.6 |
| cash | | | | |
| items | | | | |
+--------------------+--------+----------+--------+----------+
| Finance | | 0.1 | | 0.5 |
| income | | | | |
| received | | | | |
+--------------------+--------+----------+--------+----------+
| Finance | | (0.1) | | (0.2) |
| expense | | | | |
| paid | | | | |
+--------------------+--------+----------+--------+----------+
| Movement | | (42.2) | | (36.2) |
| in | | | | |
| working | | | | |
| capital | | | | |
+--------------------+--------+----------+--------+----------+
| Tax | | - | | (0.6) |
| paid | | | | |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Cash | | - | | 0.1 |
| flows | | | | |
| generated | | | | |
| from | | | | |
| discontinued | | | | |
| operations | | | | |
+--------------------+--------+----------+--------+----------+
| Net | | (34.3) | | (28.1) |
| cash | | | | |
| flows | | | | |
| from | | | | |
| operating | | | | |
| activities | | | | |
| - total | | | | |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| investing | | | | |
| activities | | | | |
| from | | | | |
| continuing | | | | |
| operations: | | | | |
+--------------------+--------+----------+--------+----------+
| Net | | 0.1 | | - |
| proceeds | | | | |
| from | | | | |
| sale of | | | | |
| available-for-sale | | | | |
| financial assets | | | | |
+--------------------+--------+----------+--------+----------+
| Purchase | | (2.8) | | (1.3) |
| of | | | | |
| property, | | | | |
| plant and | | | | |
| equipment | | | | |
| and | | | | |
| intangible | | | | |
| assets | | | | |
+--------------------+--------+----------+--------+----------+
| Net | | (2.7) | | (1.3) |
| cash | | | | |
| flows | | | | |
| from | | | | |
| investing | | | | |
| activities | | | | |
| - total | | | | |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Cash | | | | |
| flows | | | | |
| from | | | | |
| financing | | | | |
| activities | | | | |
| from | | | | |
| continuing | | | | |
| operations: | | | | |
+--------------------+--------+----------+--------+----------+
| Dividends | | (3.7) | | (2.8) |
| paid | | | | |
+--------------------+--------+----------+--------+----------+
| Purchase | | (8.1) | | (2.4) |
| of trust | | | | |
| shares | | | | |
+--------------------+--------+----------+--------+----------+
| Contribution | | 1.6 | | - |
| received on | | | | |
| issuance of | | | | |
| employee | | | | |
| share | | | | |
| options | | | | |
+--------------------+--------+----------+--------+----------+
| Net | | (10.2) | | (5.2) |
| cash | | | | |
| flows | | | | |
| from | | | | |
| financing | | | | |
| activities | | | | |
| - total | | | | |
+--------------------+--------+----------+--------+----------+
| | | | | |
+--------------------+--------+----------+--------+----------+
| Net | | (47.2) | | (34.6) |
| decrease | | | | |
| in cash | | | | |
| and cash | | | | |
| equivalents | | | | |
+--------------------+--------+----------+--------+----------+
| Cash | | 109.5 | | 103.6 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
| at | | | | |
| beginning | | | | |
| of period | | | | |
+--------------------+--------+----------+--------+----------+
| Exchange | | 0.2 | | - |
| gain on | | | | |
| cash | | | | |
+--------------------+--------+----------+--------+----------+
| Less: | | - | | (0.2) |
| cash | | | | |
| deconsolidated | | | | |
| during the | | | | |
| period from | | | | |
| discontinued | | | | |
| operations | | | | |
+--------------------+--------+----------+--------+----------+
| Cash | | 62.5 | | 68.8 |
| and | | | | |
| cash | | | | |
| equivalents | | | | |
| at end of | | | | |
| period | | | | |
+--------------------+--------+----------+--------+----------+
The above Condensed Consolidated Cash Flow Statement should be read in
conjunction with the accompanying notes.
NOTES TO THE INTERIM FINANCIAL INFORMATION
1. BASIS OF PREPARATION
This condensed consolidated interim financial information for the six months
ended 30 June 2010 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 2009 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
2009, 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 2009 were approved by the Board of Directors on 25 March
2010 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 498 of the Companies Act 2006.
This condensed consolidated interim financial information has been reviewed, not
audited.
These Financial Statements are prepared on a going concern basis as the
Directors have satisfied themselves that, at the time of approving the Financial
Statements and having taken into consideration the strong cash holdings, absence
of long term third party debt and ongoing profitability, the Group has adequate
resources to continue in operational existence for at least the next 12 months.
The Evolution Group Plc is a UK listed holding company for financial services
companies. The Company is a public limited company incorporated and domiciled in
the United Kingdom. The address of its registered office is: 9th floor, 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 2009, 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 2010:
· IAS 27 (revised), 'Consolidated and separate financial statements'. The
revised standard requires the effects of all transactions with non-controlling
interests to be recorded in equity if there is no change in control, and these
transactions will no longer result in goodwill or gains and losses. There have
been no transactions in the period whereby an interest in an entity is retained
after the loss of control of that entity; there have been no transactions with
non-controlling interests;
· IFRS 3 (revised), 'Business combinations' The Group will apply IFRS 3
(revised) to all Business Combinations from 1 January 2010. During the period
there have been no Business Combinations made by the Group;
· IAS 38 (amendment), 'Intangible assets'. The amendment defines a
prepayment as being recognised only if payment has been made in advance of
receiving the right to goods or receipt of services. The Group's historical
accounting policy for intangible assets was in-line with these amendments,
therefore there has been no impact on the Group's Interim Financial Statements;
and
· IFRS 2 (amendments), 'Group cash-settled share-based payment
transaction'. In addition to incorporating IFRIC 8, 'Scope of IFRS 2 and IFRIC
11', 'IFRS 2 - Group and treasury share transactions' the amendments expand on
the guidance in IFRIC 11 to address the classification of group arrangements
that were not covered by that interpretation. The Group's subsidiary Financial
Statements have been prepared on this basis. On a consolidated basis there is no
impact to the Group's Interim Financial Statements.
The following new interpretations are mandatory for the first time for the
financial year beginning 1 January 2010, but are not currently relevant for the
Group:
· IFRIC 17, 'Distributions of non cash assets to owners', effective for
annual periods beginning on or after 1 July 2009. This is not currently
applicable to the Group, as it has not made any non-cash distributions;
· IFRIC 18, 'Transfers of assets from customers', effective for transfer of
assets received on or after 1 July 2009. This is not relevant to the Group, as
it has not received assets from customers;
· IFRS 5 (amendment), 'Non-current assets held-for-sale and discontinued
operations'. This is not currently applicable to the Group, as it does not have
any non-current assets held-for-sale or discontinued operations; and
· IAS 1 (amendment), 'Presentation of financial statements'. The amendment
provides clarification that the potential settlement of a liability by the issue
of equity is not relevant to its classification as current or non current. This
is not currently applicable to the Group as there has been no settlement of
liability by an issue of equity.
3. SEGMENTAL INFORMATION
By business segment
During the period the Group's Board of Directors acted as the Chief Operating
Decision Maker ("CODM"). Presented in the table below are the operating segments
the CODM regularly reviewed in order to allocate resources and assess the
performance of the Group's operating segments. Adjusted operating profit is the
measure that the Group has historically used for employee performance
measurement purposes.
The Board monitors and reviews the operating performance of the Group by
operating segments per the tables below:
Investment banking in the current year refers to the business carried out in
Evolution Securities Limited, Evolution Securities (US) Inc and Darwin Strategic
Limited. Private Client refers to the business carried out under the Williams de
Broë brand. Other activities principally refer to the central administrative,
shared services, holding company functions.
+---------------+------------+---------+--------+--------+
| | Half Year Ended 30.06.10 |
+---------------+----------------------------------------+
| Income | Investment | Private | Other | Total |
| statement | banking | clients | | |
+---------------+------------+---------+--------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Total | 30.7 | 25.4 | - | 56.1 |
| income | | | | |
+---------------+------------+---------+--------+--------+
| Adjusted | 1.8 | 5.1 | 0.1 | 7.0 |
| operating | | | | |
| profit | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Charge | (0.4) | (0.4) | (0.5) | (1.3) |
| for | | | | |
| share | | | | |
| options | | | | |
| granted | | | | |
| to | | | | |
| employees | | | | |
+---------------+------------+---------+--------+--------+
| Amortisation | (0.1) | (0.7) | - | (0.8) |
| of | | | | |
| intangibles | | | | |
+---------------+------------+---------+--------+--------+
| Non-recurring | - | (0.4) | - | (0.4) |
| operating | | | | |
| expenses | | | | |
+---------------+------------+---------+--------+--------+
| Operating | 1.3 | 3.6 | (0.4) | 4.5 |
| profit / | | | | |
| (loss) | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Finance | | | | 0.1 |
| income | | | | |
+---------------+------------+---------+--------+--------+
| Finance | | | | (0.1) |
| expense | | | | |
+---------------+------------+---------+--------+--------+
| Share | | | | (1.5) |
| of | | | | |
| post | | | | |
| tax | | | | |
| results | | | | |
| of | | | | |
| associates | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Profit | | | | 3.0 |
| before | | | | |
| tax | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Tax | | | | (0.2) |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Profit | | | | 2.8 |
| after | | | | |
| tax | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+---------------+------------+---------+--------+--------+
+---------------+------------+---------+--------+--------+
| | Half Year Ended 30.06.09 |
+---------------+----------------------------------------+
| Income | Investment | Private | Other | Total |
| statement | banking | clients | | |
+---------------+------------+---------+--------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Total | 33.9 | 18.8 | (0.1) | 52.6 |
| income | | | | |
+---------------+------------+---------+--------+--------+
| Adjusted | 8.3 | 1.2 | (0.4) | 9.1 |
| operating | | | | |
| profit / | | | | |
| (loss) | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Charge | (1.8) | (0.9) | (0.6) | (3.3) |
| for | | | | |
| share | | | | |
| options | | | | |
| granted | | | | |
| to | | | | |
| employees | | | | |
+---------------+------------+---------+--------+--------+
| Amortisation | (0.1) | (0.7) | - | (0.8) |
| of | | | | |
| intangibles | | | | |
+---------------+------------+---------+--------+--------+
| Non-recurring | - | (1.3) | - | (1.3) |
| operating | | | | |
| expenses | | | | |
+---------------+------------+---------+--------+--------+
| Operating | 6.4 | (1.7) | (1.0) | 3.7 |
| profit / | | | | |
| (loss) | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Finance | | | | 0.5 |
| income | | | | |
+---------------+------------+---------+--------+--------+
| Finance | | | | (0.2) |
| expense | | | | |
+---------------+------------+---------+--------+--------+
| Share | | | | (0.4) |
| of | | | | |
| post | | | | |
| tax | | | | |
| results | | | | |
| of | | | | |
| associates | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Profit | | | | 3.6 |
| before | | | | |
| tax | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Tax | | | | (0.7) |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Profit | | | | 2.9 |
| after | | | | |
| tax | | | | |
| from | | | | |
| continuing | | | | |
| operations | | | | |
+---------------+------------+---------+--------+--------+
| | | | | |
+---------------+------------+---------+--------+--------+
| Loss | | | | (2.3) |
| after | | | | |
| tax | | | | |
| from | | | | |
| discontinued | | | | |
| operations | | | | |
+---------------+------------+---------+--------+--------+
3. SEGMENTAL INFORMATION
The Group's total assets are disclosed by segment below:
+------------+------------+---------+--------+--------+
| Total | 30.06.10 |
| Assets | |
+------------+----------------------------------------+
| | Investment | Private | Other | Total |
| | banking | client | | |
+------------+------------+---------+--------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+------------+------------+---------+--------+--------+
| | | | | |
+------------+------------+---------+--------+--------+
| Assets | 506.8 | 36.7 | 36.9 | 580.4 |
| | | | | |
+------------+------------+---------+--------+--------+
| Investment | | | | 12.0 |
| in | | | | |
| associates | | | | |
+------------+------------+---------+--------+--------+
| Total | | | | 592.4 |
| assets | | | | |
+------------+------------+---------+--------+--------+
| | | | | |
+------------+------------+---------+--------+--------+
+------------+------------+---------+--------+--------+
| Total | 31.12.09 |
| Assets | |
+------------+----------------------------------------+
| | Investment | Private | Other | Total |
| | banking | client | | |
+------------+------------+---------+--------+--------+
| | GBPm | GBPm | GBPm | GBPm |
+------------+------------+---------+--------+--------+
| | | | | |
+------------+------------+---------+--------+--------+
| Assets | 122.1 | 34.4 | 75.5 | 232.0 |
| | | | | |
+------------+------------+---------+--------+--------+
| Investment | | | | 13.4 |
| in | | | | |
| associates | | | | |
+------------+------------+---------+--------+--------+
| Total | | | | 245.4 |
| assets | | | | |
+------------+------------+---------+--------+--------+
| | | | | |
+------------+------------+---------+--------+--------+
4. EARNINGS PER SHARE
The calculation of the basic earnings per share is based on the profit for the
period from continuing operations (excluding non-controlling interests) divided
by the weighted average number of ordinary shares in issue (being 232.1million)
less the weighted average number of shares held by The Evolution Group Plc
Employees' Share Trust (the "Trust") during the period (being 16.1million).
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.
Continuing operations
+-----------+--------+-------------+----------+--------+--------+-------------+----------+
| Statutory | Half Year Ended 30.06.10 | | Half Year Ended 30.06.09 |
+-----------+---------------------------------+--------+---------------------------------+
| | Profit | Weighted | Earnings | | Profit | Weighted | Earnings |
| | GBPm | average | per | | GBPm | average | |
| | | no. | share(p) | | | no. | per |
| | | | | | | | share(p) |
+-----------+--------+-------------+----------+--------+--------+-------------+----------+
| | | | | | | | |
+-----------+--------+-------------+----------+--------+--------+-------------+----------+
| Basic | 2.8 | 215,979,040 | 1.30 | | 2.9 | 221,838,249 | 1.28 |
+-----------+--------+-------------+----------+--------+--------+-------------+----------+
| | | | | | | | |
+-----------+--------+-------------+----------+--------+--------+-------------+----------+
| Dilutive | - | 9,055,114 | - | | - | 13,080,818 | - |
| effect | | | | | | | |
| of share | | | | | | | |
| awards | | | | | | | |
+-----------+--------+-------------+----------+--------+--------+-------------+----------+
| | | | | | | | |
+-----------+--------+-------------+----------+--------+--------+-------------+----------+
| Diluted | 2.8 | 225,034,154 | 1.24 | | 2.9 | 234,919,067 | 1.23 |
| | | | | | | | |
+-----------+--------+-------------+----------+--------+--------+-------------+----------+
5. DIVIDENDS
+--------+----------+--------+----------+
| | 30.06.10 | | 30.06.09 |
+--------+----------+--------+----------+
| | GBPm | | GBPm |
+--------+----------+--------+----------+
| | | | |
+--------+----------+--------+----------+
| Final | 3.7 | | 2.8 |
| paid | | | |
+--------+----------+--------+----------+
| | 3.7 | | 2.8 |
+--------+----------+--------+----------+
| | | | |
+--------+----------+--------+----------+
In addition, the Directors are proposing an interim dividend in respect of the
financial year ended 31 December 2010 of 1.00p (2009: 0.80p) per share, which
will absorb an estimated GBP2.2m (2009: GBP1.9m) of shareholders' funds. It will
be paid on 8 October 2010 to shareholders on the register of members on 10
September 2010.
6. TAX EXPENSE
Income tax expense is recognised based on management's determination of the
weighted average annual income tax rate expected for the full financial year.
The tax charge for the first half of 2010 was GBP0.2m (2009: GBP0.7m)
representing an effective tax rate of 7% (2009: 19%).
The first half tax charge includes a one-off prior year adjustment of GBP1.3m
(disclosed below). Without this non-recurring adjustment and excluding the
impact of losses in the period arising from associates (GBP1.5m), the Group's
effective tax rate would have been 33%.
The tax charge in 2010 is lower than the UK tax rate of 28%, primarily due to a
credit of GBP1.3m arising from a prior year adjustment on deferred tax of
intangible assets, partially offset by a GBP0.5m debit for disallowable
expenses, and a GBP0.3m debit arising from negative movements in the Group's
share price on deferred tax on employee options.
The tax charge in 2009 is lower than the UK tax rate of 28% primarily due to a
GBP0.9m credit arising from positive movements in the Group's share price on
deferred tax on employee options, more than partially offsetting the impact of
disallowable expenses of GBP0.6m in the period.
The UK tax rate change from 28% to 27% is not expected to have a material impact
on the full year tax charge.
7. INVESTMENT IN ASSOCIATES
+-------------+----------+--------+--------+
| | 30.06.10 | | |
+-------------+----------+--------+--------+
| | GBPm | | |
+-------------+----------+--------+--------+
| | | | |
+-------------+----------+--------+--------+
| At 1 | 13.4 | | |
| January | | | |
| 2010 | | | |
+-------------+----------+--------+--------+
| Share | (0.5) | | |
| of | | | |
| ESCL's | | | |
| loss | | | |
| for | | | |
| the | | | |
| period | | | |
+-------------+----------+--------+--------+
| Share | (1.0) | | |
| of WDB | | | |
| Capital | | | |
| Fund's | | | |
| loss | | | |
| for the | | | |
| period | | | |
+-------------+----------+--------+--------+
| Exchange | 0.1 | | |
| differences | | | |
| taken to | | | |
| equity | | | |
+-------------+----------+--------+--------+
| At 30 | 12.0 | | |
| June | | | |
| 2010 | | | |
+-------------+----------+--------+--------+
8. TRADE AND OTHER RECEIVABLES
+--------------+----------+--------+----------+
| | 30.06.10 | | 31.12.09 |
| | GBPm | | |
| | | | GBPm |
+--------------+----------+--------+----------+
| Current | | | |
+--------------+----------+--------+----------+
| Trade | 6.8 | | 10.4 |
| receivables | | | |
+--------------+----------+--------+----------+
| Less: | - | | (0.2) |
| provision | | | |
| for | | | |
| impairment | | | |
| of trade | | | |
| receivables | | | |
+--------------+----------+--------+----------+
| Trade | 6.8 | | 10.2 |
| receivables | | | |
| - net | | | |
+--------------+----------+--------+----------+
| | | | |
+--------------+----------+--------+----------+
| Counterparty | 425.3 | | 57.8 |
| receivables | | | |
+--------------+----------+--------+----------+
| Counterparty | 425.3 | | 57.8 |
| receivables | | | |
| - net | | | |
+--------------+----------+--------+----------+
| | | | |
+--------------+----------+--------+----------+
| Other | 7.4 | | 6.4 |
| receivables | | | |
+--------------+----------+--------+----------+
| Prepayments | 10.5 | | 4.4 |
| and accrued | | | |
| income | | | |
+--------------+----------+--------+----------+
| | 17.9 | | 10.8 |
+--------------+----------+--------+----------+
| | | | |
+--------------+----------+--------+----------+
| | 450.0 | | 78.8 |
+--------------+----------+--------+----------+
The increase in counterparty receivables at 30.06.10 reflects a higher level of
trading activity than that experienced over the Group's year end, with
counterparty receivables reduced at the year end due to lower market wide
volumes. The increase in counterparty receivables is largely offset by a
corresponding increase in counterparty creditors.
9. TRADING PORTFOLIO ASSETS
+-------------+----------+--------+----------+
| | 30.06.10 | | 31.12.09 |
+-------------+----------+--------+----------+
| | GBPm | | GBPm |
+-------------+----------+--------+----------+
| | | | |
+-------------+----------+--------+----------+
| Long | 37.2 | | 13.2 |
| positions | | | |
| in market | | | |
| making | | | |
| and | | | |
| dealing | | | |
| operations | | | |
+-------------+----------+--------+----------+
| Options | 0.5 | | - |
| and | | | |
| warrants | | | |
| received | | | |
| in lieu | | | |
| of | | | |
| corporate | | | |
| finance | | | |
| income | | | |
+-------------+----------+--------+----------+
| Other | 0.2 | | 0.1 |
| derivatives | | | |
+-------------+----------+--------+----------+
| | 37.9 | | 13.3 |
+-------------+----------+--------+----------+
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 impacted by an amount of GBP10.6m for
trading assets (31 December 2009: GBP0.7m) which were sold with a trade date
prior to the 30 June 2010, 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 30
June 2010.
10. TRADE AND OTHER PAYABLES
+--------------+----------+--------+----------+
| | 30.06.10 | | 31.12.09 |
| | GBPm | | |
| | | | GBPm |
+--------------+----------+--------+----------+
| | | | |
+--------------+----------+--------+----------+
| Trade | 5.0 | | 3.3 |
| payables | | | |
+--------------+----------+--------+----------+
| Counterparty | 423.1 | | 58.0 |
| creditors | | | |
+--------------+----------+--------+----------+
| Other | 1.4 | | 2.6 |
| taxation | | | |
| and | | | |
| social | | | |
| security | | | |
+--------------+----------+--------+----------+
| Other | 0.9 | | 0.8 |
| payables | | | |
+--------------+----------+--------+----------+
| Accruals | 12.8 | | 37.7 |
| and | | | |
| deferred | | | |
| income | | | |
+--------------+----------+--------+----------+
| | 443.2 | | 102.4 |
+--------------+----------+--------+----------+
The increase in counterparty creditors at 30.06.10 reflects a higher level of
trading activity than that experienced over the Group's year end, with
counterparty creditors reduced at the year end due to lower market wide volumes.
The increase in counterparty creditors is largely offset by a corresponding
increase in counterparty receivables.
11. TRADING PORTFOLIO LIABILITIES
+---------------+----------+--------+----------+
| | 30.06.10 | | 31.12.09 |
+---------------+----------+--------+----------+
| | GBPm | | GBPm |
+---------------+----------+--------+----------+
| | | | |
+---------------+----------+--------+----------+
| Short | 13.5 | | 2.7 |
| positions | | | |
| in | | | |
| market-making | | | |
| and dealing | | | |
| operations | | | |
+---------------+----------+--------+----------+
| Other | 2.3 | | 0.2 |
| derivatives | | | |
+---------------+----------+--------+----------+
| | 15.8 | | 2.9 |
+---------------+----------+--------+----------+
The short trading portfolio liabilities represent shares listed on LSE Official
List, AIM markets and other leading European exchanges.
The short positions balances have been impacted by an amount of GBP5.9m for
trading liabilities (31 December 2009: GBP0.3m) which were sold with a trade
date prior to the 30 June 2010, 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.
12. 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 Capita Trustee Limited.
In the six months to 30 June 2010 the Group purchased an additional 6,279,723
shares (30 June 2009: 2,321,920) for total consideration of GBP8.1m (30 June
2009: GBP2.4m). These shares were purchased by the Trust and are held to satisfy
share awards made to employees of the Group. The Trust held 17,032,367 shares
(30 June 2009: 3,315,739) which had a market value of GBP14.9m (30 June 2009:
GBP4.8m). Included within the total shares held by the Trust are 6,600,000
shares to satisfy awards made in 2010 under the Group's Joint Share Ownership
plan. All of these shares were acquired in the open market. The shares held
represent 7.34% (30 June 2009: 1.46%) of the issued share capital of the Company
as at 30 June 2010. 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.
13. DISCONTINUED OPERATIONS
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 onwards 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 |
+--------------+--------+--------+----------+
| | | | 31.03.09 |
+--------------+--------+--------+----------+
| | | | GBPm |
+--------------+--------+--------+----------+
| | | | |
+--------------+--------+--------+----------+
| Total | | | 0.1 |
| income | | | |
+--------------+--------+--------+----------+
| | | | |
+--------------+--------+--------+----------+
| Impairment | | | (0.4) |
+--------------+--------+--------+----------+
| Other | | | (0.7) |
| operating | | | |
| expenses | | | |
+--------------+--------+--------+----------+
| | | | |
+--------------+--------+--------+----------+
| (Loss) | | | (1.0) |
| before | | | |
| tax | | | |
| from | | | |
| discontinued | | | |
| operations | | | |
+--------------+--------+--------+----------+
| | | | |
+--------------+--------+--------+----------+
| Tax | | | (0.3) |
| (expense) | | | |
+--------------+--------+--------+----------+
| (Loss) | | | (1.0) |
| arising | | | |
| on | | | |
| disposal | | | |
+--------------+--------+--------+----------+
| | | | |
+--------------+--------+--------+----------+
| (Loss) | | | (2.3) |
| after | | | |
| tax | | | |
| from | | | |
| discontinued | | | |
| operations | | | |
+--------------+--------+--------+----------+
| | | | |
+--------------+--------+--------+----------+
| Attributable | | | |
| to: | | | |
+--------------+--------+--------+----------+
| Minority | | | 0.4 |
| interest | | | |
+--------------+--------+--------+----------+
| Equity | | | (1.9) |
| holders | | | |
| of The | | | |
| Evolution | | | |
| Group Plc | | | |
+--------------+--------+--------+----------+
14. RELATED PARTY TRANSACTIONS
Related party transactions are described in the 2009 Annual Report and Accounts.
There have been no significant changes in related party transactions described
in the 2009 Annual Report and Accounts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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