AGM and Interim Management Statement

The Group's strategy to focus on its Rail, Plant and Freight businesses, dispose of unprofitable activities and reduce overhead costs remains on track and its overall trading results during the year to date have been broadly in line with management expectations.

This has been achieved against a backdrop of an increasingly uncertain economy which has inevitably affected the business. Revenues in Plant were impacted by lower demand for transport vehicle hires and in Freight by a reduction in freight container imports. Both Plant and Freight margins were also reduced as a consequence of significantly higher fuel costs.

On a more positive note we have been pleased at the increasing levels of visibility in the Rail business, where volumes have continued at the strong levels experienced in the second half of the previous financial year, and the business has now secured sufficient order level to fully underpin our expectations for the current financial year.

We were pleased to announce in June that Jarvis Rail had secured an extension of the Rugby Station Remodelling contract. The extension is worth in the region of £40m and will run until the completion of the project, which is expected in December 2008. The summer works schedule in Rail is expected to be exceptionally busy, especially on the West Coast where major enhancement works will be undertaken.

In Scotland, the Rail business commenced work on the Airdrie to Bathgate line enhancement scheme and secured the second phase of the Glasgow Airport Rail Link project, having successfully completed phase one in the previous financial year. In the South East, infrastructure strengthening works to support the Thameslink project commenced, and the Electrical Projects Group secured further signalling and telecoms projects.

In Plant, the On Track Machines (OTM) business supported the continuing high level of rail enhancement project expenditure and work commenced on the contract to operate Network Rail's fleet of Multi Purpose Vehicles, undertaking weed spraying across much of the UK rail network. The business also agreed the sale of a further two pieces of its older and largely unused heavy plant to customers in Europe and North Africa.

In April, as part of the ongoing restructuring of its support infrastructure for the national OTM contract, the Plant business negotiated the termination of a lease of one of its operating depots. The proceeds received as compensation for this termination will be used to restructure the support costs in respect of the national OTM contract.

Small Plant has performed well and continues to benefit from the upturn in workload within the Rail business and, externally, for clients including Metronet. Due to this increase in demand, the business has begun to invest in expanding and refreshing its product range.

In Freight, the E.ON coal haulage service commenced as expected in May. The business is, in stages, taking possession of the new locomotives and wagons required to support this contract and is on target to achieve full run rate in the second half of the current financial year. The mobilisation of this five-year contract is a significant step forward for the Freight business and is expected to give it the economies of scale necessary to achieve operational profitability.

Jarvis Accommodation Services performed in line with expectations during the first quarter. Following the successful exit from three loss making contracts in the previous financial year, the business is now on a sounder financial footing and is focusing on driving further operational efficiencies to improve performance.

The Group's project to implement new integrated management information systems achieved a significant milestone in the first quarter with the first phase of the programme going live. The remaining key phases will be introduced over the rest of the financial year.

Unaudited net debt at the end of June 2008 stood at £40.8m and we continue to operate within our banking covenants. It was pleasing to be able to report in May that we were able to refinance £10m of our subordinated debt facilities on much improved terms and extend the term of the overall facility.

Jarvis Executive Chairman, Steven Norris said: 'The implementation of our strategy to focus on our Rail, Plant and Freight operations and reduce our cost base remains on track. There is still some work to do to rationalise and restructure the Plant business to ensure its performance continues to improve, and we are fully focused on the safe delivery of our increased workload.

Clearly Jarvis cannot be immune from the macro-economy which, whilst impacting on performance during the year to date, has not detracted from a solid overall performance, nor does it undermine our outlook on the rest of the year which continues to be one of cautious optimism. The continued strong demand for our Rail services is encouraging. However, the challenge will be to minimise the impact of the weaker demand experienced in the container freight and transport businesses and the significant increase in fuel costs, all of which we now expect to continue for the remainder of the financial year. In the longer term we believe we remain ideally placed to maximise the significant opportunities that the growing UK rail and rail freight markets present.'

Ends

For further information please contact:
Toni Jackson – Head of Communications
T: 01904 712 667 M: 07921 939 031

James Strong, Tim Anderson – Buchanan Communications
T: 020 7466 5000

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