Statement re Pension Plans

MFI Furniture Group PLC
06 May 2004

May 6 2004
                            MFI Furniture Group Plc

                           Statement re Pension Plans

MFI Furniture Group Plc has received actuarial and legal advice following a
thorough review of an issue arising within its UK pension plans. This issue is
liable to result in the Group recognising higher pension obligations than
previously identified. The issue has its origins in a failure, back in 1994,
effectively to properly equalise the pension age for men and women at age 65 for
an employee's service from 17 November 1994. Although announcements to this
effect were made at the time to plan members, the relevant trust documentation
was not properly amended. This is liable to result in the part of the benefits
earned by employee members over a period from 1994 to 2004 having to be
calculated using a normal retirement date of age 60 rather than at age 65. Plan
rules have now been amended to cap liability in relation to future service.

The Board has sought legal advice on the scope for correction and an independent
actuarial assessment of the additional liabilities which might arise and of the
contributions required to fund them. It now appears far from certain that the
situation can be corrected, in which case some £40 million of additional
liabilities (before tax) will arise. This figure is assessed on the same
actuarial assumptions as currently used for funding the UK pension plans and
accounting for them under SSAP24 (see note 23 to the Group's 2003 financial
statements). Under FRS 17, which the Group has not yet adopted, this figure
would be approximately £50 million (before tax).

In the past any deficits in the pension plans have been met by additional
contributions over periods of 14 years. If the same approach were to be
followed, additional liabilities of £40 million would require additional annual
contributions of approximately £3.5 million (before tax). The Board is reviewing
the position in the light of the advice received and will be discussing with the
trustees how best to proceed. The trustees will need to be satisfied both as to
the period over which contributions are paid and the date from which
contributions commence.

Under the pensions accounting standard SSAP24, the impact on future profits of
the Group will depend on the period over which additional liabilities are
recognised. This will not be finalised until discussions have taken place with
the trustees.

The Board continues to take advice from leading counsel as to the actions
required to obtain recovery from the third parties on whose advice the Group and
the trustees of the plan relied in relation to this issue.

Enquiries

John Hancock                Chief Executive              020 8913 5319
Martin Clifford-King        Finance Director             020 8913 5319

Susan Gilchrist             Brunswick                    020 7404 5959
Fiona Laffan
Katya Reynier



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