CHAIRMAN'S AND CHIEF EXECUTIVE'S STATEMENT

Results

2006 has been a very challenging year for the Group. The first half of the
year began poorly and trading conditions only began to improve towards the end
of the year, a trend which has continued into the current financial year.

Sales at �62.7 million were �25.5 million, or 29%, down from last year,
largely caused by supply chain decisions taken by certain of the Group's
trading partners.

Gross profit, excluding goodwill impairment, fell by �12.4 million to �14.0
million from �26.4 million, reflecting lower sales and lower margins - 22% in
2006 compared with 30% in 2005, as a result of efforts to reduce excess
inventory particularly in the homeware business, and significant margin
pressure from our major customers in a weak and deflationary retail
environment.

The Group suffered an operating loss during the year of �16.4 million compared
with a profit of �2.2 million in 2005, as a result of the lower sales and
reduced margins. The figures were also affected significantly by a number of
one-off and exceptional items; including -

- goodwill impairment �6.2 million (2005: �6.1 million);

- restructuring costs �3.1 million (2005: �0.1 million);

- other expenses �0.1 million (2005: �3.3 million income).

The goodwill impairment relates to the homeware operations in the UK and
Spain. The impairment, which eliminates all carrying value for goodwill, for
the homeware business has been made in recognition of the challenges faced in
this market.

The restructuring costs relate principally to the refinancing for the business
that was undertaken last year with Barclays and ABN Amro, and subsequently
Landsbanki, and redundancy costs. We are pleased to be working with Landsbanki
who are proving a very supportive partner to the business.

Other expenses and income in 2006 includes �1.2 million of expense, being the
effect of cashflow hedges which in 2005 gave rise to a gain of �1.8 million,
largely as a result of the adoption of IFRS and profits on the sale of surplus
property of �1.1 million in 2006 and �1.4 million in 2005.

A lower cost base has been established for the business covering
administration expenses and selling and distribution costs. A reduction in the
headcount, of 88 over the year, has been achieved and savings secured.
However, in 2006 a number of one off costs have been incurred in the
consolidation of our warehousing, in interim management resource to assist in
a more rapid change process and recruitment fees for the building of the new
team.

Operations

The second half of 2006 was an important period of transition for the Group.
As reported in the Interim Report, Mrs Pamela Harper was appointed Chief
Executive Officer on 2 June 2006, with a mandate to conduct a thorough review
of the Group's business and strategy, which involved not only adapting the
Group's responses to an ever- changing market environment, but also improving
significantly the Group's systems and business processes. Important steps have
been taken and significant progress has been made in these matters.

The Group's organisational and strategic restructuring, announced in September
2006 is well underway, as a result of which a number of significant senior
executive and operational changes have been announced.

Operational changes, which management believes will help to reposition the
business, whilst reducing costs through increased efficiencies, include the
following:

A decision was taken by the Board to outsource its warehousing and logistics
and to ensure the best service provision would always be available to its
partners going forward. As part of the move in outsourcing our warehouse and
distribution, the premises in Burnley were sold, realising �1.1 million before
costs of disposal. The successful migration of our warehousing facilities took
place between November 2006 and January 2007, for our footwear and accessories
business.

Integral to the programme of cost reductions, and most importantly to
strengthen further the Group's Far Eastern sourcing operations, certain
activities are being transferred out of Hong Kong to a new office in Shanghai
closer to the sourcing operations and the supply base.

Strategic Options Review and Fundraising

The Homeware Division, comprising businesses in the UK and Spain, was loss
making in 2005 and 2006. Despite efforts to refocus and revitalise its
activities, the trading in this financial year has not demonstrated that the
division can be turned into profit within a reasonable timeframe, to a large
extent caused by the logistics and warehousing problems of our external
warehouse supplier.

As a result, the Group is actively reviewing the structure of the division. It
is likely that this review will involve major changes which may result in
certain exceptional restructuring charges being incurred this financial year.

The Board believes that this restructuring of the division will allow
management's time and the Group's capital to be better deployed in the
profitable development of the Group's footwear, accessories and lifestyle
products business.

As a result of the business performance during 2006 and its planned
restructuring the Group requires additional funding. The Group is in
discussions with shareholders and potential new investors regarding this
fundraising and is confident that terms for such a fundraising will be agreed
shortly, although there can be no guarantee of such an outcome. The Group
retains the support of its lending bank pending such a fundraising. On this
basis the preliminary results have been prepared on a going concern basis.
However, in the absence of such a fundraising, the Group may not be able to
operate within its existing bank facilities. Further details of the possible
implications of this can be seen in note 1. If the fundraising is not
forthcoming for whatever reason, the Board would pursue alternative options.

Business Strategy

We have stated that our strategy is to capitalise on the Group's excellent
skills and experience in the design, development, sourcing and distribution of
footwear and accessories globally. We will continue to focus on these areas
with both our existing and new customers, whilst pursuing new business
opportunities.

The Group is aware of the need to reduce its dependence on the UK market, and
thus growth in international markets is a key strategic goal towards which the
business is taking active steps.

The Group believes that it is well placed to develop a larger and successful
business in the branded arena and early implementation of the strategy is
delivering success. We have obtained licences with Radley, for the supply of
ladies' footwear and Pringle, for the supply of both men's and ladies' leather
accessories. The Group is delighted to be associated with two such strong and
successful brands, which represent a significant opportunity for the Group as
it develops its brands business. The business is engaged in the development
work for the launch of collections for each of these major brands, with a view
to the launch of the Radley footwear in Autumn 2007, and the launch of the
Pringle collections in Spring 2008.

In the area of international development, we have secured an important
contract for the supply of ladies' footwear to Tesco's Eastern European
stores, and also won a contract with Wehmeyer, the German retailer, for the
supply of handbags and soft accessories.

Board and Employees

In the development of the Board and senior management team, we are pleased to
announce a number of new appointments.

John Suirdale joins the Board as the Director responsible for the Group Supply
Chain. John brings with him considerable experience in supplier management,
licensing and the Far East, having held senior positions at Burberry and
Alfred Dunhill.

Paul Owens joins the Board to take up the position of Group Finance Director,
following John Gibson's retirement. Paul has held a number of finance and
business roles and joins on 1 May 2007 from Blue Hackle Group.

John Gibson leaves the Board at the beginning of May after 10 years with the
Group. We thank him for his contribution to the Group over this time.

Christian Dieng has joined the Group with responsibility for international
sales development and marketing. He will spearhead the development of the
Group's business on to an international platform, this being an integral part
of our strategy. He joins the Group from Falke, where he led a very successful
period of growth.

The business has seen significant change over the last year as the strategic
review has been undertaken and implemented. It has represented an especially
challenging time for our people who have responded well with much dedication
and spirit and we thank them on behalf of the Board.

Outlook

The slow recovery experienced in the second half of 2006 has continued in the
first two months of 2007, which are normally quieter trading months for the
business. Sales of our core footwear and accessories in March and April have,
however, met management's expectations. The order book is healthy, and the
Board is confident that this can be converted into profitable sales over
coming months.

Although there is still much to do to achieve the recovery plan, the Board is
cautiously optimistic that the turn around is well underway.

For further information:
 
Lambert Howarth Group p.l.c. 020 7258 9988
 
Alfred Vinton, Chairman
 
Pamela Harper, Chief Executive Officer
Lambert Howarth Group plc
 
Consolidated income statement
for the year ended 31 December 2006
                                                                               Unaudited  Audited
 
                                                                                    2006     2005
                                                                          Note     �'000    �'000
Continuing operations
Revenue                                                                    2      62,686   88,193
 
Cost of sales before goodwill impairment                                        (48,697) (61,821)
 
Goodwill impairment                                                        5     (6,161)  (6,115)
 
Gross profit                                                                       7,828   20,257
 
Selling and distribution expenses                                               (13,604) (14,463)
Administration expenses before restructuring costs                               (7,528)  (6,750)
Restructuring costs                                                        3     (3,076)    (104)
Total administration expenses                                                   (10,604)  (6,854)
Other (expense) / income                                                            (66)    3,267
 
Operating (loss ) / profit                                                      (16,446)    2,207
 
Finance expense                                                                    (460)    (151)
 
Finance income                                                                        89      327
 
(Loss) / profit before taxation                                                 (16,817)    2,383
Taxation                                                                             239  (2,208)
(Loss) / profit for the year from continuing operations                         (16,578)      175
 
Discontined operations
Profit for the year from discontinued operations                                     147      164
(Loss) / profit for the year                                                    (16,431)      339
 
Earnings per share                                                         4
- Basic                                                                          (80.7)p     1.4p
- Diluted                                                                        (80.7)p     1.4p
 
Earnings per share from continuing operations
- Basic                                                                          (81.4)p     0.7p
- Diluted                                                                        (81.4)p     0.7p
 
Lambert Howarth Group plc
 


Consolidated statement of recognised income and expense
for the year ended 31 December 2006
                                                                           Unaudited Audited
                                                                                2006    2005
                                                                               �'000   �'000
(Loss) / profit for the financial year                                      (16,431)     339
 
Net exchange adjustments offset in reserves net of tax                          (50)    (93)
Pension scheme
- actuarial gain / (loss) recognised in pension scheme                         1,047 (1,920)
- deferred tax on actuarial gain / (loss)                                      (314)     576
 
Net gains / (losses) not recognised in income statement                          683 (1,437)
 
Total recognised loss for the year                                          (15,748) (1,098)
 


Lambert Howarth Group plc
 
Consolidated balance sheet
at 31 December 2006
                                                                           Unaudited Audited
                                                                                2006    2005
                                                                    Note       �'000   �'000
ASSETS
Non-current assets
Intangible assets - goodwill                                          5        8,663  14,824
Property, plant and equipment                                                  5,235   5,574
Investments accounted for using equity method                                      -       -
Deferred income tax assets                                                     1,676   2,515
                                                                              15,574  22,913
 
Current assets
Inventories                                                                   10,993  14,877
Trade and other receivables                                                   10,853   9,633
Financial assets
- Derivative financial instruments                                                 -     740
Cash and cash equivalents                                                      4,099   2,808
                                                                              25,945  28,058
Assets classified as held for sale and included in disposal groups               304   1,433
                                                                              26,249  29,491
 
LIABILITIES
Current liabilities
Financial liabilities
- Borrowings                                                                   4,846     244
Trade and other payables                                                       9,916   7,682
                                                                              14,762   7,926
Net current assets                                                            11,487  21,565
 
Non-current liabilities
Retirement benefit obligations                                                 6,837   9,691
Financial liabilities
- Borrowings                                                                   2,565       -
                                                                               9,402   9,691
Net assets                                                                    17,659  34,787
 
SHAREHOLDERS' EQUITY
Capital and reserves
Share capital                                                                  2,039   2,029
Share premium account                                                          1,307   1,175
Merger and other reserves                                                     23,346  23,430
(Losses) / retained earnings                                                 (9,033)   8,153
Total shareholders' equity                                                    17,659  34,787
 
Lambert Howarth Group plc
 
Consolidated cash flow statement
for the year ended 31 December 2006
 
                                                                          Unaudited  Audited
                                                                               2006     2005
                                                                     Note     �'000    �'000
Cash flows from operating activities
Cash flows (used in) / from operations                                6     (4,389)    3,640
Interest received                                                                89      327
Interest paid                                                                 (390)    (151)
Net tax received / (paid)                                                     1,315  (3,089)
Net cash (used in) / from operating activities                              (3,375)      727
 
Cash flows from investing activities
Proceeds from sale of property, plant and equipment                           2,529    4,576
Purchase of property, plant and equipment                                     (511)    (184)
(Repayment)/receipt of grants                                                     -    (229)
Net cash from investing activities                                            2,018    4,163
 
Cash flows from / (used in) financing activities
Net proceeds from issue of ordinary share capital                               142      551
Consideration for the purchase of ordinary share capital including costs          - (10,191)
Issue of new borrowings                                                       4,391        -
Dividends paid to shareholders                                              (1,529)  (2,752)
Net cash from / (used in) financing activities                                3,004 (12,392)
 
Net increase / (decrease) in cash and cash equivalents                        1,647  (7,502)
Cash and cash equivalents at 1 January                                        2,564    9,878
Effects of exchange rate changes                                              (450)      188
Cash and cash equivalents at 31 December                                      3,761    2,564
 
Cash                                                                          4,099    2,808
Overdraft                                                                     (338)    (244)
Net cash at 31 December                                                       3,761    2,564
 
Lambert Howarth Group plc
 
Notes to the financial statements
for the year ended 31 December 2006
 
1. Accounting convention, basis of preparation and going concern
 
The financial information set out herein (which was approved by the Board on 30 April 2007)
does not constitute the Company's statutory accounts for the years ended 31 December 2006
and 2005 but is derived from the 2006 statutory accounts.
 
The statutory accounts for the year ended 31 December 2005, which were prepared under
International Financial Reporting Standards adopted for use in the EU, have been delivered
to the Registrar of Companies. The auditors have reported on those accounts; their reports
were unqualified, did not include references to any matters to which the auditors drew
attention by way of emphasis without qualifying their reports and did not contain statements
under section 237(2) or (3) of the Companies Act 1985.
 
The statutory accounts for the year ended 31 December 2006, prepared under International
Financial Reporting Standards adopted for use in the EU, will be finalised on the basis of the
unaudited financial information presented in this preliminary announcement.
 
As a result of the trading during 2006 and planned restructuring the Group requires additional
funding. The Group is in discussions with shareholders and potential new investors regarding
this fundraising and is confident that terms for such a fundraising will be agreed shortly, although
there can be no guarantee of such an outcome. The Group retains the support of its lending
bank pending such a fundraising. On this basis the preliminary results have been prepared on
a going concern basis. However, in the absence of such a fundraising, the Group may not be
able to operate within its existing bank facilities. If the funding is not forthcoming, adjustments
may have to be made to the balance sheets of the Company and the Group to reduce the balance
sheet values of assets to their recoverable amounts, to provide for future liabilities that might
arise and to reclassify fixed assets and long term liabilities as current assets and liabilities.
 
The auditors have indicated that, depending on the outcome of the uncertainties described
above, they may need to modify their audit opinion with regard to going concern.
 
 2 Segmental reporting
 
 Primary reporting format
 - business segments                                              Unaudited                                   Audited
                                    Footwear                                   Footwear
                                         And    Homeware               2006         And    Homeware              2005
                                                          Unalloc-                                   Unalloc-
                                 Accessories Accessories     ated     Group Accessories Accessories     ated    Group
                                       �'000       �'000    �'000     �'000       �'000       �'000    �'000    �'000
 Continuing operations
 Revenue                              45,563      17,123        -    62,686      65,455      22,738        -   88,193
 
 Segment result                        (874)    (10,393)  (5,179)  (16,446)      10,259     (8,105)       53    2,207
 Interest expense                          -        (47)    (413)     (460)           -           -    (151)    (151)
 Interest income                           -           -       89        89           -           -      327      327
 (Loss) / profit before tax            (874)    (10,440)  (5,503)  (16,817)      10,259     (8,105)      229    2,383
 Income taxes                           (95)        (70)      404       239     (2,984)         928    (152)  (2,208)
 (Loss) / profit for the year
 from continuing operations            (969)    (10,510)  (5,099)  (16,578)       7,275     (7,177)       77      175
 
 Discontinued operations
 Revenue                                   -           -        -         -       3,529         130        -    3,659
 
 Segment result                         (51)           -        -      (51)         538       (360)        -      178
 Profit before tax                      (51)           -        -      (51)         538       (360)        -      178
 Income taxes                            198           -                198       (126)         112        -     (14)
 Profit for the year
 from discontinued operations            147           -        -       147         412       (248)        -      164
 
 Net (loss) / profit attributable
 to equity shareholders                (822)    (10,510)  (5,099)  (16,431)       7,687     (7,425)       77      339
 
 Segment assets                       28,252       9,609    2,081    39,942      32,004      17,180      143   49,327
 Unallocated assets
 - Income tax                              -           -    1,881     1,881           -           -    3,077    3,077
 Total assets                         28,252       9,609    3,962    41,823      32,004      17,180    3,220   52,404
 
 Segment liabilities                (16,431)     (4,514)  (3,219)  (24,164)     (8,302)     (2,420)  (6,895) (17,617)
 Unallocated liabilities
 - Income tax                              -           -        -         -           -           -        -        -
 Total liabilities                  (16,431)     (4,514)  (3,219)  (24,164)     (8,302)     (2,420)  (6,895) (17,617)
 Other segment items
 Capital expenditure                     170         245       96       511          98          86        -      184
 Depreciation                            272         121        -       393         296         162        -      458
 Impairment of goodwill
 (note 5)                                  -     (6,161)        -   (6,161)           -     (6,115)        -  (6,115)
 Impairment of trade receivables         169          12        -       181          56        (74)        -     (18)
 Assets held for sale                    304           -        -       304           -       1,433        -    1,433
 
 Overdrafts of �nil (2005: �4,886,000) under a right of set off have been included in segment assets
 
3 Restructuring costs
                             Unaudited          Audited
 
                                  2006             2005
                                 �'000            �'000
 
  Restructuring costs            3,076              104
 
  Restructuring costs comprise the cost of restructuring the business and include the
  refinancing
 
  of the UK Group (�1,843,000) and redundancies (�712,000).


4 Earnings per share

Basic earnings per share is calculated by dividing the earnings attributable
to ordinary shareholders by the weighted average number of ordinary shares
during the year.

The company has share options which are potentially ordinary shares. However,
the impact on the net loss of these potential ordinary shares is
anti-dilutive.

Reconciliations of the earnings and weighted average number of shares used in
the calculations are set out below.

                                                           Unaudited                      Audited
                                                                2006                         2005
                                                            Weighted                     Weighted
                                                             average                      average
                                                           number of Per share          number of Per share
                                                  Earnings    shares    amount Earnings    shares    amount
                                                     �'000  Thousand     pence    �'000  Thousand     pence
  Basic EPS
  Earnings attributable to ordinary shareholders  (16,431)    20,355    (80.7)      339    24,526       1.4
  Effect of dilutive share options                       -         -         -        -       258         -
  Diluted eps                                     (16,431)    20,355    (80.7)      339    24,784       1.4
 
  Earnings per share from continuing operations
  Basic EPS                                       (16,431)    20,355    (80.7)      339    24,526       1.4
  Pre tax profits from discontinued operations          51         -       0.3    (178)         -     (0.7)
  Tax relating to discontinued operations            (198)         -     (1.0)       14         -         -
  Basic EPS from continuing operations            (16,578)    20,355    (81.4)      175    24,526       0.7
  Diluted EPS                                     (16,431)    20,355    (80.7)      339    24,784       1.4
  Pre tax profits from discontinued operations          51         -       0.3    (178)         -     (0.7)
  Tax relating to discontinued operations            (198)         -     (1.0)       14         -         -
  Diluted EPS from continuing operations          (16,578)    20,355    (81.4)      175    24,784       0.7
 
  Earnings per share from discontinued operations
  Basic EPS
  Pre tax profits from discontinued operations        (51)    20,355     (0.3)      178    24,526       0.7
  Tax relating to discontinued operations              198         -       1.0     (14)         -         -
  Basic EPS from discontinued operations               147    20,355       0.7      164    24,526       0.7
  Diluted EPS
  Pre tax profits from discontinued operations        (51)    20,355     (0.3)      178    24,784       0.7
  Tax relating to discontinued operations              198         -       1.0     (14)         -         -
  Diluted EPS from discontinued operations             147    20,355       0.7      164    24,784       0.7
 


5 Intangible assets - goodwill                                  Unaudited Audited
                                                                     2006    2005
                                                                    �'000   �'000
  Cost at 1 January and 31 December                                34,282  34,282
 
  Aggregate impairment
  At 1 January                                                     19,458  13,343
  Impairment for the year                                           6,161   6,115
  At 31 December                                                   25,619  19,458
 
  Net book amount at 31 December                                    8,663  14,824
 
The carrying amount of goodwill has been reduced to its recoverable amount
through the recognition of impairment losses against goodwill.

These losses have been included in cost of sales in the income statement.

The goodwill impairment arose from the difficult trading conditions which have
faced the Homeware Accessories marketplace.

The recoverable amount for the cash-generating unit has been measured based on
a value in use calculation.

A pre-tax discount rate of 14% was used in the value in use calculation.

  The carrying amounts of goodwill by segment are as follows:                 2006                            2005
                                                   Footwear and    Homeware        Footwear and    Homeware
                                                    Accessories Accessories  Group  Accessories Accessories  Group
                                                          �'000       �'000  �'000        �'000       �'000  �'000
  UK                                                      8,663           -  8,663        8,663       5,932 14,595
  Spain                                                       -           -      -            -         229    229
                                                          8,663           -  8,663        8,663       6,161 14,824
 
The key assumptions in the value in use calculations for all business segments
were:

* *� Budgeted profit growth -- an average of 2.25% each year for the next five
years.

* *� The relative risk adjustment (or `beta') applied discount rates to reflect
the risk inherent in the companies.

In determining the risk adjusted discount rate, management have applied an
adjustment for risk of such companies relative to all other sectors on average
determined using an average of the beta's of comparable companies listed in
the UK. The Beta used is 0.7 (which implies a risk adjusted pre-tax discount
rate of 14%).

Footwear and Accessories

As there has been no impairment in the goodwill relating to the companies the
carrying value of goodwill represents the value of goodwill calculated at the
time of acquisition less amortisation charged under UK GAAP up to 31 December
2003.

                                                                     Unaudited Audited
                                                                          2006    2005
 6 Reconciliation of net (loss) / profit to cash flow                    �'000   �'000
   from operations
 
   Continuing operations
 
   Net (loss) / profit                                                (16,578)     175
   Tax                                                                   (239)   2,208
   Depreciation                                                            393     409
   Profit on disposal of property, plant and equipment                   (947) (1,442)
   Impairment of goodwill                                                6,161   6,115
   Share compensation expense                                               11    (82)
   Non cash movement on fair value hedges                                  740 (2,230)
   Interest income                                                        (89)   (327)
   Interest expense                                                        460     151
   Effect of exchange rate changes                                         450   (188)
   Decrease in Pension obligations                                     (1,853)   (997)
 
   Changes in working capital
   (excluding effects of acquisitions and disposal of subsidiaries):
   Decrease in Inventories                                               3,884   4,786
   Decrease in Trade and other receivables                               1,104   2,098
   Increase / (decrease) in Trade and other payables                     2,118 (6,173)
   Cash flows from continuing operations                               (4,385)   4,503
 
   Discontinued operations
 
   Net profit                                                              147     164
   Tax                                                                   (198)      14
   Depreciation                                                              -      49
   Profit on disposal of property, plant and equipment                       - (1,859)
   Impairment of assets                                                      -      31
   Deferred income - grants                                                  -      48
 
   Changes in working capital
   Decrease in Inventories                                                   -   1,612
   Decrease in Trade and other receivables                                   -     170
   Decrease in Trade and other payables                                      -   (639)
   Increase / (decrease) in Pension obligations                             47   (453)
   Cash flows from discontinued operations                                 (4)   (863)
 
   Cash flows from operating activities                                (4,389)   3,640
 
7 Companies Act Requirements

As the net assets of the Company are half or less of its called up share
capital, an Extraordinary General Meeting will be held in due course pursuant
to the provisions of Section 142(1) of the Companies Act 1985, to consider
whether any, and if so what, steps should be taken to deal with the situation
arising by virtue of the fact that the net assets of the Company are half or
less of its called up share capital.

END


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