27th Jun 2007 07:01
Galiform PLC27 June 2007 GALIFORM Plc RESTRUCTURING OF SUPPLY BUSINESS Galiform is today announcing proposals to restructure its Supply business.Supply currently both manufactures and externally sources products for HowdenJoinery and third parties, primarily MFI Retail Limited (MFI), and providesrelated logistical services. In February 2006, Galiform announced the initial phase of the restructuring ofSupply. This involved the outsourcing of the supply of kitchen fascias andappliances, thereby increasing the flexibility and efficiency of the business.As a result, the remaining in-house manufacturing of products was focussed on'flat pack' and 'rigid' kitchen cabinets and worktops. As part of the disposal of MFI to MEP Mayflower Limited in October 2006,transitional supply and logistics arrangements were agreed between Supply andMFI. The end date for these arrangements was recently brought forward to 21December 2007, after which the volume and range of products to be manufacturedand sourced by Supply will be significantly reduced. The ending of these arrangements enables Galiform to undertake the next stage ofrestructuring the business, decreasing the scale and complexity of Supply'smanufacturing, warehousing and transport operations. This will speed the plannedalignment of the business with Howden Joinery and is a further step in thetransformation of Galiform. Under the proposals being announced today, Supply's manufacturing operationswill focus on the production of 'rigid' kitchen cabinets and worktops at itsfactories in Runcorn and Howden. It is proposed that the manufacturingoperations in Hull, which currently produce kitchen components, will berelocated to Howden and that warehousing facilities will be located at thefactory sites and at Supply's national distribution centre in Northampton. Theseproposals, along with the streamlining of other activities, are expected toresult in job reductions of around 560. The restructuring of Supply was anticipated at the time of the disposal of MFIand the detailed proposals announced today do not alter management'sexpectations for the Supply business in 2008 and 2009. It is estimated that thecosts of the restructuring will total around £35m. Of this, around £25mprimarily relates to redundancy costs and associated support, and property'clean up' and disposal costs, with the remainder relating to asset write-offs.With the ending of the arrangements for product supply and delivery to MFI beingbrought forward, around £20m of the cash cost of £25m is now expected to beincurred in 2007, with the balance in 2008 to 2010. Howden Joinery continues to trade well and remains on course to open 60 depotsin 2007. A further update on current trading will be given as part of Galiform's2007 interim results, to be announced on 6 September 2007. Notes to Editors At the end of 2006, Galiform had 6,362 employees, of whom over 1,900 wereemployed by Supply. With 60 new depots planned to be opened in 2007, togetherwith the anticipated growth of existing depots, it is expected that HowdenJoinery's employee numbers will increase by over 550 this year. Total employmentby the Group is therefore expected to be broadly similar in 2007. Enquiries: Investors/analysts Gary Rawlinson, Head of Investor Relations +44 (0) 207 535 1127 Media Brunswick Fiona Laffan / Anna Jones +44 (0) 207 404 5959 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
Howden Joinery