Investors want share of Evolution's £100m

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The Independent Online

Evolution Group, the London-based stockbroker that was recently fined by the Financial Services Authority, is coming under pressure from shareholders to return some of the £100m cash on its balance sheet.

Evolution Group, the London-based stockbroker that was recently fined by the Financial Services Authority, is coming under pressure from shareholders to return some of the £100m cash on its balance sheet.

Graeme Dell, the group's finance director, said: "Shareholders have a view that we have excess cash."

Evolution is being advised by Credit Suisse First Boston on its options, which include share buy-backs and special dividends for investors. It expects to make an announcement alongside its results in March. The cash pile stems partly from Evolution's move to sell down its stake in the patents company IP2IPO and other asset sales as well as organic cash flow.

A trading update yesterday sought to dispel any doubts about the company's performance after it was fined £500,000 by the FSA in November for market abuse. Chris Potts, its head of market-making, received a fine of £75,000 and quit after being suspended. Moreover, several of Evolution's flotations - BetonSports, Plant HealthCare, Medical Solutions - issued profits warnings only months after listing on the market last year. This led some fund managers to say they were losing confidence in Evolution.

Richard Griffiths, Evolution's chairman, has also admitted that there is an investigation into his own share dealings in Incite, a mobile phone company.

Despite its troubles, Evolution said it would meet full-year forecasts of £23m in pre-tax profits. Its investment banking business has performed strongly, raising record funds for corporate clients, and managing to retain clients, Mr Dell said. But trading had been challenging.

Evolution admitted it had mistakes but pointed to steps taken to address them, such as a change of personnel in the trading unit and the hiring of a new head of risk. Its shares closed down 0.75p at 156p.

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