Final Results

 25th July 2012

Theo Fennell PLC

("Theo Fennell" or "the Company")

Final results for the year ended 31 March 2012

Theo Fennell plc, the luxury jewellery brand, announces results in line with expectations for the year ended 31 March 2012.

HIGHLIGHTS

Financial & Operational

·; Turnover of £12.38 million

·; Loss on ordinary activities before taxation and exceptional items £1.21 million

·; Sales were up 9% in the first half of financial year - second half sales were down 11% affected by a difficult Christmas

·; Completed a full upgrade of the website

·; Launched new collections including Scallop keys, Evil eye keys, Zodiac charms, Totem, coloured Spangle keys, rings and crosses

·; Alias, the new silver jewellery range, performed well

o Launched into 30 new outlets during the year

o Alias will be launched into further new outlets this current year

·; Invested in unique one off pieces including a series of brooches of historic characters which have sold well

Outlook & Strategy

·; A solid start to the year with like for like retail sales 3% ahead in the first 12 weeks of the current financial year versus a strong same period last year

·; Improvement achieved by reducing cost base by £1million - Company on track to significantly reduce its losses at the half year

·; Launch of new standalone store in Burlington Arcade earlier this month

·; Focus on international growth with plans to open with wholesale partners in Harvey Nichols in Kuwait and the Emporium department store in Baku, Azerbaijan in the first half of this year

·; Positive discussions with partners in South East Asia and China

·; Focus this year on Limited Editions including Enchanted Pool and Safari 'Arts

·; Other new collections include the Tryst and Tropical ranges

·; Plans to target the male market with recent launch of gold and enamelled cufflinks

·; Continue to target wholesale and online as primary channels to grow sales further

Rupert Hambro, Chairman of Theo Fennell, commented:

"Although it has been a challenging year for the Company, we have made some solid progress having expanded our product ranges, upgraded our website and launched a new standalone store in Burlington Arcade. We have significantly reduced our costs and restructured our wholesale division and are confident that these changes will help enhance the Company's performance.

Sales for the first eight months of last year were strong but unfortunately sales for the latter part of the year were disappointing. Whilst we remain cautious about the outlook given the on-going economic challenges which are affecting consumer spending, we believe firmly in the long term potential of the brand."

Theo Fennell, Interim MD & Founder of Theo Fennell commented:

"Our focus in the coming year is to return the company to profit. We plan to develop our wholesale and online business and further extend our international network.

We are very excited by our new store in the Burlington Arcade which we believe is the perfect showcase to promote the company to the West End's international customers.

I am also delighted to say that we have introduced a bonus scheme which will mean that every employee can share in the future success of the business"

Enquiries:

CHAIRMAN'S STATEMENT

Chairman's Statement

The Company's results for this year were in line with expectations. After an encouraging first 6 months of the year, during which sales were up by 9%, trading during the second half was more difficult with sales 11% below the prior year, mainly due to the depressed UK consumer market.

In view of the challenges faced over the past year and in response to the on-going uncertainties regarding the economic environment, the Company has completed an in-depth restructuring of its cost base. We have reduced our costs across the business by some £1 million and closed a small loss making concession outside of London.

In the coming year we will focus the business on growing sales through both our directly operated retail stores in London, which benefit from a broad range of International clients, and also Internationally through our wholesale network. We have also restructured our wholesale department, early signs have been encouraging and we expect to see a marked improvement in our wholesale revenues in the coming year.

Our long term strategy remains the same; to build on the unique strengths of the business and its design-led ethos. We intend to grow the core jewellery business while developing our product offer and growing our International distribution and client base.

FinancialFor the year ended 31 March 2012 the Company achieved sales of £12.4m, in line with the prior year, and made a loss on ordinary activities before taxation and exceptional items of £1.2m.

The restructuring and refocus of the business has already seen an improvement in the performance of the business. Current trading is encouraging with retail sales up 3% in the first three months of the financial year to 31 March 2013 versus the same period last year against challenging comparatives.

The improved performance from the business, together with the reduction in our cost base, should see a significantly reduced loss at the half year.

Design, Product and Operations

In the year we have continued to invest in unique one-off pieces which we believe clearly differentiate our product from our competitors in the jewellery market. These pieces are at the forefront of British design and craftsmanship and utilise the very best skills from our work shop. Most recent examples of this are the Castle ring, Chinese Secret Garden ring and a series of unique brooches based on historic characters including Marie Antoinette, Chief Sitting Bull, Cleopatra, Elizabeth I and Chief Shaka Zulu. These have not only been showcased in our Fulham Road store, but also by key wholesale partners and were exhibited at Masterpiece in London in July 2012.

In the current year we will launch, Enchanted Pool, the second in our series of Limited Edition keys, crosses and Phis following the success of our Secret Garden Limited Edition. Our 'Arts collection will be expanded with the introduction of a series of Safari 'Arts the first being Giraffe, Buffalo and Lion followed later in the year by Elephant, Leopard and Rhinoceros. We have recognised the limited offer in the fine jewellery market for men's cufflinks and have launched a unique and individual range of gold and enamelled cufflinks.

The Alias range continues to be refined. Exclusively with Harrods we have launched Meadow coloured keys and crosses and have expanded the collection with our Dragon Fly bracelets, necklaces and earrings. We will continue to launch new collections throughout the year.

Website

The website was re-launched in November 2011 and although sales for this financial year were lower than the prior year we have been encouraged by the performance in the first quarter of the current year with sales significantly above the prior year. We will continue to refine and develop the website and support it with a tailored marketing campaign. We expect this to be a growing part of our business and an important communication channel to our clients.

Retail Stores

We continue to focus our directly operated retail stores on the London market which benefits from an affluent International client base.

We are very pleased to report that we opened a new boutique in the Burlington Arcade Mayfair, funded from existing resources, in July 2012. The opening of this boutique ensures that we are now represented in the Mayfair area, an important destination for luxury customers.

International and Wholesale

This year the wholesale channel did not perform as well as anticipated. We have taken action to address the poor performance and restructured our wholesale division.

I am pleased to report a significant improvement in the first quarter of the current year. We have seen a very strong performance from our partners in Dubai and are beginning to reinvigorate our relationships with existing accounts, particularly our partners in Eastern Europe. We have secured two new wholesale openings in Kuwait in the new Harvey Nichols department store which will be opening in September 2012 and in the Emporium department store in Baku, Azerbaijan which will be opening in August 2012.

We continue to explore opportunities in key international markets including the Middle East, Far East and USA. We expect to secure at least one new significant wholesale opening in the current year but remain focused on appointing the right partners to represent the Theo Fennell brand, particularly in the Chinese market.

The Board

On 3 June 2011, we announced that Barbara Snoad, CEO of Theo Fennell, had left the Company. Mr Theo Fennell continues in the role of Managing Director in the interim period.

On 3 November 2011 we announced that Roger Pedder, non executive director, resigned from the board. We are currently in discussion with an individual to join the board.

Banking

I am pleased to report that we have renewed our banking facilities with the Clydesdale Bank until July 2013 and continue to have a supportive relationship with our bank.

Outlook

The focus for the coming year will be on increasing sales both in the UK and Internationally as well as developing Alias and our website. We believe that the brand has hardly been exploited thus far and has great potential to expand into new International markets given our unique design-led product and the number of significant markets the brand has yet to penetrate.

We remain cautious about the outlook given the challenging economic environment, however we believe strongly in the long term potential of the brand. We remain focused on returning the Company to profit.

Rupert Hambro

Chairman

25 July 2012

Summarised Profit and Loss AccountFor the year ended 31 March 2012

Summarised Balance Sheetas at 31 March 2012Company Number 1955534

Summarised Cash Flow StatementFor the year ended 31 March 2012

1. Basis of preparation

The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom accounting standards. The principal accounting policies which are set out below have remained unchanged from the previous year. These policies have been applied consistently in dealing with items in relation to the Company's financial statements and have been reviewed in accordance with Financial Reporting Standard 18 "Accounting Policies".

Going concern

The current economic conditions continue to create uncertainty over the level of demand for the Company's products and the Board have therefore undertaken detailed forecasting of the Company's activities, including sensitivity analysis, through to March 2014.  Cash flow projections are based on conservative assumptions and the continued availability of an overdraft facility totalling £3m to 31 January 2013, reducing to £2.5m thereafter to 31 July 2013. We have renewed our bank overdraft with Clydesdale Bank plc for a further year until 31 July 2013. Based on the continued availability of this facility the board do not envisage a shortfall in working capital during the coming twelve months.  Accordingly, based on the Company's plans for 2012/13 and after making enquiries, the Directors have a reasonable expectation that the Company has adequate resources available from funds generated from trading and from banking facilities to continue operations for at least 12 months from the date of signing of these financial statements.  The directors are therefore satisfied that the Company has adequate resources to continue in business for the foreseeable future. Accordingly, the financial statements of the Company have been prepared on a going concern basis. 

2. Exceptional administrative expenses

3. Tax on loss on ordinary activities

The taxation charge is based on the loss for the year and represents:

4. Loss per share

Loss per share is calculated by dividing the loss attributable to ordinary shareholders by the weighted average number of ordinary shares during the year. Share options are generally dilutive if the exercise price was below the average market price for the year end 31 March 2012 of 11.25p.

5. Fixed assets investments

For the year ended 31 March 2012 the Original Design Partnership made a profit before tax of £14,773 (2011: loss of £108,613) and the total capital and reserves was £119,002 (2011: £104,228).

This is treated as a fixed asset investment as the Company does not exert significant influence over The Original Design Partnership. The Company is not involved in the strategic, operational and financial decision making of The Original Design Partnership and we do not have independent Board representation.

The Company held £2,422,286 of stock on consignment as at 31 March 2012 (2011: £2,383,242) which is not recorded on the balance sheet. The principal terms of the consignment agreements, which can generally be terminated by either side, are such that the Company can return any or all of the stock to the relevant suppliers without financial and commercial penalties and the supplier can vary stock prices.7. Debtors

The bank loans are secured by a debenture over the assets and undertakings of the Company.

9. Share capital

During the year 400,000 shares were issued as a result of the exercise of share options. The nominal value of these shares was £20,000 and the consideration was £68,000.

10. Reserves

11. Publication of Non-Statutory Accounts

The financial information set out in this preliminary announcement does not constitute the company's statutory accounts as defined in Section 435 of the Companies Act 2006 in respect of 2012 accounts and 2011 accounts.

The summarised balance sheet at 31 March 2012 and the summarised profit and loss account, summarised cash flow statement and associated notes for the year then ended have been extracted from the Company's 2012 statutory financial statements which have been finalised and will continue to include a modification within the auditors' opinion with an emphasis of matter opinion in relation to going concern. The comparative figures relating to the year to 31 March 2011 are taken from the audited statutory accounts for that year.

The Annual Report and Accounts for the year ended 31 March 2012 is being posted to shareholders and will be made available on the Company's website www.theofennell.com.