Trading update and amendment of ongoing supply and logistics arrangements between Howden Kitchens and MFI Retail

18 May 2007

Following the disposal of the MFI retail business last autumn, the development of Galiform is continuing on track and in line with management expectations.

Trading update

Howden Joinery continues to trade well. In the first four periods of 2007 (to 21 April), sales increased by 9.8% compared with the comparative period last year, 5.9% up on a same depot basis (see note below), partly reflecting the maturing of depots opened in recent years. Gross margin was similar to that seen in 2006.

So far this year, 9 Howden Joinery depots have been opened and the business is on course to open 60 depots this year, as planned.

As previously indicated, the performance of our Supply business has benefited from the move to greater outsourcing instigated in 2006. The transitional arrangements with MFI, including product demand, continue to be satisfactory.

Supply of products and logistics services to MFI Retail

Galiform is pleased to announce that it has reachedagreement with MEP Mayflower Limited ("MEP") on the terms of amendments to the ongoing supply and logistics arrangements between Galiform's subsidiary,Howden Kitchens Limited (Supply), and MEP's subsidiary, MFI Retail Limited (MFI).

Thesesupply and logistics arrangementswere agreed at the time of MEP's acquisition of MFI in October 2006 and were due to terminateon 31March 2008 (with Galiformbeing required to fulfil orders placed prior to 31 March 2008 up until 30 June 2008).

Under the agreed amendments, Supply will cease all supply and logistics services provided to MFIon21 December 2007 (with finaldeliveries and payments beingmade on that date). All other aspects of the original arrangements with MEP remain unchanged.

Supply currently both manufactures and sources products externally for Howden Joinery and third parties, primarily MFI. Since May 2006, the majority of products have been sourced externally. Manufacturing is now mainly focused on the production of rigid and flat pack kitchen carcasses.

The amended terms enable us to bring forward a full review of the manufacturing, warehousing and logistics requirements of Supply after the new termination date. Details of the outcome of this review will be announced as decisions are taken.

The amended terms also brings forward the time at which the Group will be able to give greater attention to focusing on the business opportunities available to Howden Joinery and Supply.

Note: The inclusion of a 53rd week in the 2006 financial year (2006) means that sales in the first four periods of the 2007 financial year (2007) are not comparable with sales in the first four periods of 2006. This is because the first week in 2007 (new year week) included 4 trading days, whereas the first week in 2006 (Christmas week) had no trading days. Thus, the figures quoted are based on a comparison of sales in the first 16 weeks of 2007 with sales in weeks 2 to 17 in 2006.




Gary Rawlinson
Head of Investor Relations
+44 (0)207 535 1127
+44 (0)7989 397527

Susan Gilchrist/ Fiona Laffan/ Anna Jones +44 (0)207 404 5959


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