Preliminary Announcement Annual report & ac...

For immediate release
Wednesday 5 March 2008

                         Evolutec Group plc
                    ("Evolutec" or "the Company")

       Preliminary Results for the year ended 31 December 2007

          Actively seeking a single investment opportunity

Evolutec Group plc (AIM: EVC), announces Preliminary Results for  the
year ended 31 December 2007.

HIGHLIGHTS


  * The loss for the year was £1.76 million (2006, loss £11.83
    million)



  * The Company made a small pre-tax profit of £0.17 million in the
    second half of 2007 reflecting the fact that interest payments on
    its cash deposits were sufficient to cover its cost base



  * Net cash and cash equivalents on 31 December were £5.8 million
    (2006, £8.7 million)



  * Based on 25.9 million issued ordinary shares, Evolutec had a cash
    value of 23.0p per share (2006, 33.6p per share) at the year end



  * The Company has out-licensed its intellectual property in the
    biopharmaceutical area to third parties



  * The Company is now classified as an investment company under the
    AIM rules.



  * The Company is actively looking for a single investment
    opportunity


David Bloxham, Chairman of Evolutec, said:

"The Company is actively seeking a single investment opportunity that
has the potential  to deliver value  to all its  shareholders in  the
next twelve months.   During this period all  steps will be taken  to
conserve cash and cash equivalents in the Company."

Enquiries:

Dr David P Bloxham, Chairman                       07771 525 875
Mr Michael Meade, Numis Securities              0207 260 1000
Mr Oliver Cardigan, Numis Securities              0207 260 1000

Notes for Editors:
About Evolutec

Evolutec is listed on the AIM market of the London Stock Exchange and
developed therapeutics originally isolated from the saliva of  ticks.
Following the unsuccessful outcome of Phase II clinical trials on its
lead clinical trail candidate, the Company licensed its  intellectual
property to third parties and is now focussing all its activities  on
the identification of  a single  investment opportunity.   This  will
take advantage  of  Evolutec's AIM  listing  and its  cash  and  cash
equivalent reserve,



Safe Harbour statement: this news release may contain forward-looking
statements that  reflect  the  current expectations  of  the  Company
regarding future events. Forward-looking statements involve risks and
uncertainties. Actual  events  could  differ  materially  from  those
projected herein  and depend  on a  number of  factors including  the
success of  the Company's  strategy,  the successful  integration  of
completed  mergers  and  acquisitions  and  achievement  of  expected
synergies from such transactions, and  the ability of the Company  to
identify and consummate suitable  strategic and business  combination
transactions.


CHAIRMAN'S REVIEW

Following the disappointing clinical results  with rEV131 at the  end
of 2006 and the subsequent collapse of the Company's share price, the
Company undertook  a review  of its  strategic options  in the  first
quarter of 2007.  It was clear that there was no shareholder appetite
for the risk  involved in  continuing the Company  as an  independent
entity engaged in biopharmaceutical  research and development and  it
was decided to look for alternative solutions.

Numis Securities was appointed to assist the Company with the  review
of its strategic options, merging with another company being the most
obvious.   After an  exhaustive search  and the  identification of  a
potential  merger  partner,  these   discussions  did  not  yield   a
recommendable offer.  The Company was then left with a very difficult
decision  to   make.     After   further  consultation   with   major
institutional shareholders it was felt that the majority opinion  was
in favour  of  a  return of  cash  by  way of  a  Member's  Voluntary
Liquidation (MVL).  The Board felt that the proposed distribution  of
net cash by way of  liquidation provided shareholders with  certainty
as to quantum and timing.

Appropriate steps were  taken to begin  this process and  on the  6th
June the  Company  sent out  a  Circular convening  an  Extraordinary
General Meeting (EGM) to approve the  MVL for 6th July 2007.   During
this period the Company took all  steps to reduce its expenditure  to
the minimum and to settle all  its outstanding debts.  This  involved
ending the contracts of  all employees and  terminating the lease  on
the Company's premises in Reading.  Effectively the Company became  a
cash shell with a listing on the Alternative Investment Market (AIM).

After sending the Circular,  the Board received written  confirmation
from Gartmore Investment Limited  (Gartmore) that they had  increased
their holding in Evolutec through  market purchases and that at  that
time they held 23.9 per cent of the issued share capital of Evolutec.
Furthermore, Gartmore advised the Board  that they would not vote  in
favour  of  the  Resolutions  proposed  in  the  Circular.    As  the
Resolutions  were  special,  AIM  rules  required  the  approval   of
three-quarters of those shareholders voting  in person or by proxy.
As another institutional shareholder indicated that it too would vote
against  the  Resolutions,  the  Board  was  of  the  view  that  the
Resolutions would not be passed.  This proved to be the case when the
EGM was held and the resolutions were not passed.  Following the EGM,
Nicholas Badman,  Dr  Mark Carnegie  Brown,  John Burke  and  Malcolm
Darvell resigned as Directors of the Company.

Following these structural changes, the cost base of the Company  was
considerably reduced.   It took  all necessary steps  to reduce  cash
outflow to the minimum consistent with maintaining its AIM listing.
Assuming that interest rates remain broadly similar to current values
then the Company anticipates  that it should be  able to continue  to
preserve its  cash  reserve. The  loss  for the  financial  year  was
reduced to £1.76 million (2006, loss £11.83 million) and the  Company
had cash and cash equivalents of £5.80 million at the end of the year
(2006, £8.68 million).  The Company made a small operating profit  of
£0.17 million  for the  second half  of 2007  reflecting the  changes
described above.  Most of the loss in the first half of the year  was
explained by the costs of closing  the activities of the Company  and
terminating service contracts.

Graeme Hart  and  I  have  continued as  Directors  and  in  addition
Gartmore proposed that Gordon  Hall and Mark  Hawtin should join  the
Board to assist the Company with its future.  These appointments were
subsequently confirmed and  it is  a pleasure to  welcome Gordon  and
Mark  to  the  Board.  They  have  considerable  experience  in   the
healthcare and fund management fields respectively, and have been  of
considerable benefit  to  the  Company already  in  reviewing  future
opportunities.

The regulatory  team at  AIM  have confirmed  that Evolutec  will  be
classed as  an investment  company under  the AIM  Rules pending  any
further transaction.  The Board intend that the investment policy  of
Evolutec will be to seek a  single investment, most probably in a  UK
or European  business,  in  the  technology,  healthcare  or  service
related sectors. It is expected that the investee company will be  an
actively trading and profitable entity.   The Board believes that  it
will  have  the  necessary  experience  to  evaluate  any   potential
acquisitions. Any proposed acquisition by  the Board will be  subject
to shareholder approval.

During the second half  of the financial  year, all the  intellectual
properties of  the  Company were  licensed  to third  parties.    The
intellectual property related to the potential vaccine technology was
assigned to Merial Limited for a single payment covering the  license
fee and  costs.   The  remaining  assets were  licensed  to  Varleigh
Limited, a collaborator of Evolutec in the development of rEV131.  In
this case the Company received a single payment covering license fees
and costs as well  as a future  royalty in the  event that there  are
commercial revenues. The Company judged that the licensees would have
a better opportunity to evaluate  whether the technology worked in  a
clinical setting.  The Company has retained a commercial interest  in
its intellectual property in the event that it proves successful  via
its royalty position.   The Company  does not intend  to research  or
develop new products in the biopharmaceutical area.

During the  last six  months the  Company has  reviewed a  number  of
investment opportunities  which  have  met  the  investment  criteria
without being able to agree  valuations.  During this period,  market
conditions have  worsened  considerably  and it  is  not  clear  when
conditions will  either  stabilise or  improve.   The  valuations  of
smaller companies with market capitalisations below £50 million  have
been particularly  impacted  and  this is  the  area  where  Evolutec
expects to identify  a suitable  investment.  This  has made  valuing
companies  very  difficult,  particularly  in  terms  of   satisfying
expectations of  shareholders  on both  sides  of the  transaction.
Nevertheless, the Board believes that it remains in the interests  of
Evolutec shareholders  for the  Company to  continue to  pursue  this
investment route and  therefore the Board  has proposed a  resolution
that the Company should continue  as an investment company until  the
next Annual General Meeting to be convened in 2009.

In the  past  year  the  Company  has  endeavoured  to  simplify  its
operations in order to facilitate  any investment process that  might
occur.  It would be normal at the time of the Annual General  Meeting
to seek the  authority to allocate  shares to cover  the ordinary  or
special activities of the Company.  Given the expressed intention  of
the  Company  to  seek  a  single  investment  and  to  put  this  to
shareholders for approval, the Directors  felt that on this  occasion
it was inappropriate to seek any authorisation to allocate additional
shares.

The major shareholder  in Evolutec  at 31 December  2007 is  Gartmore
with 25.8% of the issued equity.  More than 50% of the issued  equity
is held by five investors.  They have continued to acquire shares  in
the market during  the past six  months and the  Board has  solicited
their opinion  on a  number of  occasions in  determining its  future
strategy.   It  remains a  key  objective of  the  Board to  find  an
investment opportunity that  delivers value to  all its  shareholders
over the next twelve months.

David P Bloxham
Chairman
4 March 2008

Consolidated income statement
For the year ended 31 December 2007


+-------------------------------------------------------------------+
|                               |   | Year ended 31 | Year ended    |
|                               |   | December 2007 |   31 December |
|                               |   |               |          2006 |
|                               |   |               |               |
|-------------------------------+---+---------------+---------------|
| Continuing operations         |   |          £000 |          £000 |
|-------------------------------+---+---------------+---------------|
| Revenue                       |   |            82 |            14 |
|-------------------------------+---+---------------+---------------|
| Cost of sales                 |   |           (1) |           (1) |
|-------------------------------+---+---------------+---------------|
| Gross Profit                  |   |            81 |            13 |
|-------------------------------+---+---------------+---------------|
|                               |   |               |               |
| Selling and marketing costs   |   |         (160) |         (189) |
|-------------------------------+---+---------------+---------------|
| Research and development      |   |       (1,050) |      (10,509) |
| expenditure                   |   |               |               |
|-------------------------------+---+---------------+---------------|
| Administrative expenses       |   |       (1,159) |       (2,172) |
|-------------------------------+---+---------------+---------------|
| Operating loss                |   |       (2,288) |      (12,857) |
|-------------------------------+---+---------------+---------------|
|                               |   |               |               |
| Finance income                |   |           375 |           749 |
|-------------------------------+---+---------------+---------------|
| Finance costs                 |   |          (12) |         (364) |
|-------------------------------+---+---------------+---------------|
| Loss before tax               |   |       (1,925) |      (12,472) |
|-------------------------------+---+---------------+---------------|
|                               |   |               |               |
| Taxation                      |   |           162 |           645 |
|-------------------------------+---+---------------+---------------|
| Loss for the period           |   |       (1,763) |      (11,827) |
|-----------------------------------+---------------+---------------|
|                              |    |               |               |
|------------------------------+----+---------------+---------------|
| Basic and diluted loss per   |    |               |               |
| ordinary share from          |    |        (6.8)p |       (49.3)p |
| continuing activities        |    |               |               |
+-------------------------------------------------------------------+


Balance sheets
As at 31 December 2007


                                     Group    Group  Company  Company
                                        31       31       31       31
                                  December December December December
                                      2007     2006     2007     2006


ASSETS                       Note     £000     £000     £000     £000
Non-current assets
Property, plant and                      -      140
equipment
Equity accounted Investments             -        -    5,791    3,853
                                         -      140    5,791    3,853
Current assets
Research and development tax                               -        -
credits                                162      645
Trade and other receivables             28      203        -        -
Held-to-maturity investments             -        -        -        -
Cash and cash equivalents            5,797    8,682        -    3,147
                                     5,987    9,530        -    3,147
Total assets                         5,987    9,670    5,791    7,000

EQUITY
Share capital                 2     27,037   27,037   27,037   27,037
Other reserves                3      8,518    9,083    4,784    5,349
Retained deficit                  (29,602) (27,839) (26,030) (25,386)
Equity shareholders' funds           5,953    8,281    5,791    7,000

LIABILITIES
Non current liabilities                  -       34        -        -
                                         -       34        -        -
Current liabilities
Trade and other payables                34    1,355        -        -
Total liabilities                       34    1,389        -        -
Total equity and liabilities         5,987    9,670    5,791    7,000


Consolidated statements of changes in shareholders' equity


                             Share   Share    Other Retained
                           capital Premium reserves  deficit    Total
Group                         £000    £000     £000     £000     £000
Balance at 1 January 2006    2,359  22,043    8,793 (16,012)   17,183

Net income recognised
directly in equity
Loss for the year                -       -        - (11,827) (11,827)
Total recognised income          -       -        - (11,827) (11,827)
and expense for the period

Share-based payments             -       -      290        -      290
charge
Issue of ordinary shares       236   2,399        -        -    2,635
Balance at 31 December       2,595  24,442    9,083 (27,839)    8,281
2006

Net income recognised
directly in equity
Loss for the year                -       -        -  (1,763)  (1,763)
Total recognised income          -       -        -  (1,763)  (1,763)
and expense for the period

Share-based payments             -       -    (565)        -    (565)
charge / (credit)
Balance at 31 December       2,595  24,442    8,518 (29,602)    5,953
2007


Company
Balance at 1 January 2006    2,359  22,043    4,784        -   29,186

Net income recognised
directly in equity
Impairment charge                -       -        - (25,386) (25,386)
Total recognised income          -       -        - (25,386) (25,386)
and expense for the period

Share-based payments             -       -      565        -      565
charge
Issue of ordinary shares       236   2,399        -        -    2,635
Balance at 31 December       2,595  24,442    5,349 (25,386)    7,000
2006

Net income recognised
directly in equity
Impairment charge                -       -        -    (644)    (644)

Total recognised income          -       -        -    (644)    (644)
and expense for the period

Share-based payments             -       -    (565)        -    (565)
charge/(credit)
Balance at 31 December              24,442    4,784 (26,030)    5,791
2007                         2,595




Cash flow statements           Group  Group Year    Company   Company
for the year ended 31      Year ended   ended 31  Year ended     Year
December 2006                      31   December 31 December ended 31
                             December       2006        2007 December
                                 2007                            2006


                                 £000       £000        £000     £000

Cash flows from
operating activities
Loss for the period           (1,763)   (11,827)       (644) (25,386)
Taxation                        (162)      (645)           -        -
Depreciation                      140         87           -        -
Interest received               (375)      (595)           -        -
Fair value adjustment on            -          -         644   25,386
investment in subsidiary
Unrealised foreign                  -         81           -        -
exchange losses
Share options - value of        (565)        290           -        -
employee services
Decrease in trade and             174        616           -        -
other receivables
Decrease in trade and         (1,354)      (526)           -        -
other payables
Cash used by operations       (3,905)   (12,519)           -        -
Taxation received                 645        502           -        -
Net cash outflow from         (3,260)   (12,017)           -        -
operating activities

Cash flows from
investing activities
Purchase of property,               -       (66)           -        -
plant and equipment
(Increase)/decrease in              -          -     (3,147)      512
investment in subsidiary
Interest received                 375        595           -        -
Decrease/(increase) in              -     15,877           -        -
held-to-maturity
investments
Net cash generated from
(applied to) investing            375     16,406     (3,147)      512
activities

Cash flows from
financing activities
Proceeds from issuance              -      2,635           -    2,635
of shares
Net cash generated from             -      2,635           -    2,635
financing activities

Net (decrease)/increase
in cash and  cash
equivalents                   (2,885)      7,024     (3,147)    3,147
Cash and cash                   8,682      1,739       3,147        -
equivalents at the start
of the period
Exchange gains/(losses)             -       (81)           -        -
on cash and bank
overdrafts
Cash and cash                   5,797      8,682           -    3,147
equivalents at the end
of the period



Preliminary results for the year ended 31 December 2007

1.  Accounting policies and basis of preparation

Following  the  cessation  of  its  research  and   development-based
pharmaceutical  business,  Evolutec   has  been   classified  as   an
investment company  in the  terms  of the  rules of  the  Alternative
Investment Market of the London  Stock Exchange (AIM). The  Directors
believe that the Group has sufficient funds available to continue for
the foreseeable future; therefore the financial statements have  been
prepared on the going concern basis.

Basis of preparation These financial statements have been prepared in
accordance with International Financial Reporting Standards and IFRIC
interpretations endorsed  by  the EU  and  with those  parts  of  the
Companies Act, 1985 applicable to companies reporting under IFRS. The
financial statements  have been  prepared under  the historical  cost
convention.

IFRS7 Financial Instruments:  Disclosures A new  standard has  become
mandatory for reporting periods beginning  1 January 2007 or later.
This standard  which  replaces rules  previously  set out  in  IAS32,
Financial Instruments: Presentation and Disclosures, has been applied
by the  group in  its 2007  consolidated financial  statements.   All
disclosures  relating   to   financial  instruments   including   all
comparative  information  have  been  updated  to  reflect  the   new
requirement.  The first time application of IFRS7 has not resulted in
any prior period  adjustments of  cash flows, net  income or  balance
sheet line items.

Company income statement In accordance with the provisions of Section
230 of the Companies Act 1985, no separate income statement has  been
presented for the Evolutec  Group plc.  The  results for the  Company
are also presented under IFRS.

Accounting policies The principal accounting policies adopted in  the
preparation of these financial statements  are set out below.   These
policies have  been consistently  applied to  all periods  presented,
unless otherwise stated.

Basis of consolidation The  consolidated financial statements of  the
Group include  the  accounts  of  Evolutec  Group  plc  and  all  its
subsidiary undertakings  (together,  the  "Group"),  made  up  to  31
December  2007.   Inter-company   transactions  are   eliminated   on
consolidation.

The identifiable assets  and liabilities  of subsidiary  undertakings
accounted for under acquisition accounting principles are included in
the consolidated balance sheet  at their fair values  at the date  of
acquisition. The  results and  cash flows  of such  subsidiaries  are
brought into the Group accounts only from the date of acquisition.

The combination of Evolutec  Group plc and  Evolutec Limited in  2004
was accounted for under merger accounting principles.

Revenue The Group generates revenue  by licensing its technologies.
The recognition of  such revenue,  including up  front and  milestone
payments, is  dependent  on the  terms  of the  related  arrangement,
having regard to the  ongoing risks and  rewards of the  arrangement,
and the existence  of any performance  or repayment obligations  with
any third party.

Non-refundable access  fees,  options  fees  and  milestone  payments
receivable for  participation by  a third  party in  development  and
commercialisation of a product  development candidate are  recognised
when they become contractually binding, provided there are no related
commitments of  the  Group.   Where  there are  related  commitments,
revenue is  recognised on  a percentage-of-completion  basis in  line
with the actual  levels of expenditure  incurred in fulfilling  these
commitments.  All other licence income and contract research fees are
recognised over the accounting period to which the relevant  services
relate.  Revenues derived from grants received are recognised in line
with the  related  expenditure.   Royalty  income  is  recognised  in
relation to sales to which the royalty relates.

Operating leases Costs in respect of operating leases are charged  to
the income statement on a straight-line  basis over the terms of  the
leases.

Share-based  payments  The  Group  makes  equity-settled  share-based
payments to its employees and Directors.  Equity-settled  share-based
payments are measured at fair value at the date of grant and expensed
on a straight-line basis  over the vesting period  of the award.   At
each balance sheet date, Evolutec revises its estimate of the  number
of options that are expected to become exercisable.

The value of any shares or  options granted is charged to the  income
statement over  the  period the  shares  vest, with  a  corresponding
credit to reserves.  When  share options are exercised, the  proceeds
received, net of any transaction costs, are credited to share capital
(nominal value) and share premium.

The principal  assumptions used  to calculate  the value  of  options
issued are:
Share price volatility                            45%
Risk free rate of return                         4.5%
Date of exercise                    Normally assumed to be the  first
possible exercise date

Employee benefits All employee benefit costs, notably holiday pay and
contributions to  personal defined  contribution pension  plans,  are
charged to the income statement on an accruals basis.  The Group does
not offer any other post-retirement benefits.

Taxation Current tax, including UK  corporation tax and research  and
development tax credits, is provided  (or shown) at amounts  expected
to be paid (or recovered) using the tax rates or laws that have  been
enacted, or substantially enacted, by the balance sheet date.

Credit is taken in the accounting period for research and development
tax credits, which  will be claimed  from HM Revenue  and Customs  in
respect of qualifying research and development costs incurred in  the
same accounting period.

Deferred tax is  recognised in respect  of all temporary  differences
identified at  the  balance  sheet date.  Temporary  differences  are
differences between the  carrying amount  of the  Group's assets  and
liabilities and their tax base.

A deferred tax asset is recognised only when, on the basis of all the
available evidence, it can be regarded as probable that there will be
suitable taxable  profits,  within  the  same  jurisdiction,  in  the
foreseeable future against which the deductible temporary  difference
can be utilised.

Deferred  tax  is  provided  on  temporary  differences  arising   in
subsidiaries, except where  the timing of  reversal of the  temporary
difference can be controlled  and it is  probable that the  temporary
difference will not reverse in the foreseeable future.

Deferred tax is measured at the  average tax rates that are  expected
to apply in the periods in  which the asset is realised or  liability
settled, based  on tax  rates  and laws  that  have been  enacted  or
substantially enacted  by the  balance sheet  date.   Measurement  of
deferred tax  liabilities and  assets  reflects the  tax  consequence
expected to follow from the manner in which the asset or liability is
recovered or settled.

Property, plant  and  equipment  Property, plant  and  equipment  are
stated at  historic  cost less  depreciation  and any  provision  for
impairment. Historic cost comprises the purchase price together  with
any incidental costs  of acquisition. Depreciation  is calculated  to
write off the cost, less residual value, of tangible fixed assets  in
equal  annual  instalments  over  their  estimated  useful  lives  as
follows:

Plant and machinery 3-5 years
Fixtures and fittings 3 years

The  carrying  values  of  plant  and  equipment  are  reviewed   for
impairment when  events or  changes  in circumstances  indicate  that
carrying value may not be recoverable. The assets residual values and
useful lives  are  reviewed and  adjusted,  if appropriate,  at  each
financial year end.

Internally-generated  intangible  assets   -  product  research   and
development Development expenditure on new or substantially  improved
products is capitalised as an intangible asset and amortised  through
cost  of  sales  over  the  expected  useful  life  of  the   product
concerned.   Capitalisation commences  from the  point at  which  the
technical feasibility and commercial viability of the product can  be
demonstrated and  the Group  is satisfied  that it  is probable  that
future economic benefit will result from the product once completed.
This is usually at the point  of regulatory filing in a major  market
and approval  is highly  probable.   Capitalisation ceases  when  the
product  is  ready  for  launch.    Where  assets  are  acquired   or
constructed  in  order  to   provide  facilities  for  research   and
development  over  a  number  of  years,  they  are  capitalised  and
depreciated  over  their  useful  lives.    Expenditure  relating  to
clinical trials is accrued  on a percentage-of-completion basis  with
reference to fee estimates with third parties.

Expenditure on research and development activities which do not  meet
the above criteria is charged to the income statement as incurred.

Financial instruments The Group's financial instruments comprise cash
and cash equivalents, held-to-maturity  financial assets and  various
receivables and payables,  such as  trade receivables  and trade  and
other payables, which arise directly  from its operations. The  Group
does not enter into derivative transactions or other forms of hedging
arrangements.

Held-to-maturity   investments   Held-to-maturity   investments   are
non-derivative financial assets with  fixed or determinable  payments
and fixed maturities  that the  Group's management  has the  positive
intention and ability to hold to  maturity.  Assets in this  category
are held  at  amortised cost.  Held-to-maturity  investments  include
short-term investments  with  original  maturities  of  more  than  3
months.

Cash and cash equivalents Cash  and cash equivalents include cash  in
hand, bank deposits repayable on  demand and other short-term  highly
liquid investments with original maturities of 3 months or less.

Foreign  currencies       Transactions  in  foreign  currencies   are
translated into  sterling  at the  rate  of exchange  ruling  at  the
transaction  date.  Monetary  assets   and  liabilities  in   foreign
currencies are retranslated  into sterling at  the rates of  exchange
ruling at  the  balance  sheet  date.   Differences  arising  due  to
exchange rate fluctuations are taken  to the income statement in  the
period in which they arise.


2.  Share Capital


                           Number of ordinary   Share    Share  Total
                                       shares capital  premium   £000
                                                 £000     £000


At 1 January 2006                  23,590,906   2,359   22,043 24,402
Proceeds from shares                2,359,090     236    2,399  2,635
issued
At 31 December 2006                25,949,996   2,595   24,442 27,037


At 31 December 2007                25,949,996   2,595   24,442 27,037


The authorised share capital of the  Company at 31 December 2007  was
£7,700,000 divided into 77,000,000 ordinary shares of 10p each (2006:
77,000,000).

All issued shares are fully paid.

The rights and restrictions attaching to the ordinary shares are  set
out in the Articles of Association.

Capital management objectives and policies

Evolutec Group Plc's capital management objectives are:
                to ensure the Group's ability to continue as a  going
concern
                to provide an adequate return to shareholders
by  seeking  a  single  investment  opportunity  in  the  technology,
healthcare or service related sectors.
The Group monitors capital on the basis of the carrying value of  the
amount of equity.

3.   Other reserves


                        Share-based    Capital  Merger      Own Total
                           payments redemption reserve   shares
                            reserve    reserve             held
                                                             by
                               £000       £000    £000 Employee  £000
                                                        Benefit
                                                          Trust
                                                           £000
Group
Balance at 1 January            275      4,804   3,734     (20) 8,793
2006
Share-based payments            290          -       -        -   290
charge
Balance at 31 December          565      4,804   3,734     (20) 9,083
2006
Share-based payments
charge/(credit)               (565)          -       -        - (565)
Balance at 31 December            -      4,804   3,734     (20) 8,518
2007


Company
Balance at 1 January              -      4,804       -     (20) 4,784
2006
Share-based payments            565          -       -        -   565
charge
Balance at 31 December          565      4,804       -     (20) 5,349
2006
Share-based payments
charge/(credit)               (565)          -       -        - (565)
Balance at 31 December            -      4,804       -     (20) 4,784
2007





























The share-based payments reserve arose from the value of  share-based
payments to employees which were recognised over the vesting period.

The merger  reserve  arose as  a  difference on  consolidation  under
merger accounting principles and is  solely in respect of the  merger
of Evolutec Group plc  and Evolutec Limited in  a prior period.   The
reserve represents the difference between the nominal value of shares
issued by Evolutec  Group plc in  consideration for Evolutec  Limited
shares and  the nominal  value and  share premium  and other  capital
reserves of Evolutec Limited shares at the date of the merger.

The  capital  redemption  reserve  arises  from  the  the  off-market
purchase of  deferred  shares on  4  May 2005  and  their  subsequent
cancellation.

4. Publication of non-statutory accounts

The financial information set out in this preliminary announcement
does not constitute statutory
accounts as defined in section 240 of the Companies Act 1985.

The balance sheets at  31 December 2007  and the consolidated  income
statement, statements of
changes in shareholders' equity, cash flow statements and  associated
notes for the year then
ended have been extracted from  the Group's 2007 statutory  financial
statements upon which the
auditor's opinion is unqualified and  does not include any  statement
under section 237 of the
Companies Act 1985.

These financial  statements  have  not  yet  been  delivered  to  the
Registrar of Companies.

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