Evolution under renewed fire as BetonSports crashes 52%

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The Independent Online

The credibility of the stockbroking group Evolution was under further scrutiny by the City yesterday, as another of its recent flotations issued a profits warning only months after listing on the market.

The credibility of the stockbroking group Evolution was under further scrutiny by the City yesterday, as another of its recent flotations issued a profits warning only months after listing on the market.

BetonSports, a US-focused online bookmaker that floated in July, said its margins had collapsed by 46 per cent after a bad run of American football results, and so its profits would be "significantly lower" than expected. Radio advertisers have also shunned the group in the face of unclear laws on online gambling in the US. This has led to a drop in BetonSports' anticipated growth in customer numbers and revenues.

Shares in BetonSports crashed 52 per cent to close at 77.5p, wiping £68m off its value. It has left investors questioning Evolution again. BetonSports was one of its largest floats this year, raising £54m. The fiasco follows Plant Health Care, an organic fertiliser business, which Evolution listed in June with a £7m fund raising. By November, Plant Health Care had issued a profits warning and its shares have collapsed by nearly one-fifth since floating. Another difficulty has been Medical Solutions, which makes tissue testing equipment. Evolution sponsored a £3m share placing for Medical Solutions in July. Two profits warnings followed and the shares have dived by more than 80 per cent.

Some fund managers, such as Patrick Evershed at New Star Asset Management, are losing confidence in Evolution. "When companies float, you have to rely very heavily on the broker, as they should have done thorough due diligence on the company. You don't expect profits warnings," Mr Evershed said yesterday.

As well as its flotation flops, Evolution's market-making arm was also recently landed with a £500,000 fine for market abuse. Its head of market-making left Evolution this week after receiving a £75,000 fine. Commerzbank, which has an 8 per cent stake in Evolution, is also reported to have carried out an internal investigation into shareholdings taken by its trading desk that were organised by Evolution.

A statement from Evolution yesterday said: "BetonSports was subject to rigorous legal, commercial and accounting due diligence and analysis as part of the flotation process. The events that gave rise to today's announcement are regrettable."

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