Structural guarantees update

MFI Furniture Group PLC
03 April 2003

3 April 2003

                            MFI Furniture Group Plc

                         Update on structural guarantees

Since August 2001 MFI Furniture Group Plc ('MFI') has been selling an optional
insurance-backed structural guarantee on certain items of furniture in its UK
retail stores. This is comparable to products sold by a number of other major UK
furniture retailers. Insurance Premium Tax (IPT) is paid on the sale of these
guarantees, and Value Added Tax (VAT) on the furniture element of the
transaction.

At the preliminary results announcement on 27 February 2003, MFI disclosed the
following amounts that had been recorded on the sale of these products:

                                 Cumulative to      Jan to Dec        Aug to Dec 2001
                                   Dec 2002            2002
                                                                            £m
                                      £m                £m
Reduction in VAT paid                29.3              22.0                 7.3
IPT paid                             (7.7)             (5.6)               (2.1)
  External insurance / expenses      (4.0)             (2.8)               (1.2)
  Reinsurance to group company       (6.2)             (4.5)               (1.7)
Net benefit to profit and loss       11.4               9.1                 2.3

Yesterday HM Customs and Excise raised an assessment on MFI's VAT treatment of
these insurance-backed structural guarantees.  This amounted to £28.5 million
for the period from inception to December 2002.

MFI has taken extensive legal and taxation advice and believes that HM Customs &
Excise does not have a valid claim. Should it become necessary to pay the
assessment, it will be paid in full from existing cash resources within the
appropriate time limits. The Company has appealed against the assessment and
intends to contest it vigorously.  Accordingly no provision has been made in the
accounts in respect of these claims at this time.

The Company will continue to disclose the financial effect of this product at
future results announcements, and will keep the market updated of any material
developments relating to this case.

                                    - ends -



Enquiries


Martin Clifford-King           MFI Furniture Group Plc             020 8913 5350
Finance Director

Charlotte Elston /             Brunswick                           020 7404 5959
Katya Reynier


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