Interim Management Statement

Jarvis plc ("the Company") today announces its Interim Management Statement covering the period from 11 October 2008 to date.

Rail

The Company has enjoyed a strong third quarter in Rail enhancement works. Following the successful completion of the Rugby remodelling project in December, those volumes have now fallen as previously anticipated. The Lugton Loop renewal and Glasgow Airport Rail Link projects in Scotland continue to perform well, and the Electrical Projects team continues to experience strong demand. The London North East (LNE) Integrated Management Team (IMT) track renewals contract has performed well throughout the year and has successfully achieved the key performance indicators set by Network Rail.

Following the announcement on 22 January 2009 regarding Network Rail's intention to significantly reduce, from current levels, its IMT track renewals volumes and expenditure in the year to 31 March 2010, the Company has now been able to agree a revised cost structure with Network Rail in order to deliver these lower volumes in the LNE territory.

As a result of this agreement, the Company will reduce its operating costs to reflect these lower levels of activity. It is expected that the associated restructuring will, overall, result in a neutral cash flow position to the Company. The Company is still in the process of reviewing the financial impact of the projected lower volumes, however it is anticipated that operating margins in 2009/10 will be adversely impacted.

Plant

The On Track Machines (OTM) and Small Plant businesses mirrored the strong performance in Rail in the third quarter. As a result of Network Rail's decision to reduce its track renewals volumes in 2009/10, the Company has now cancelled its plans to order new vehicles for its Transport division in the final quarter of this financial year.

The knock-on consequences of reduced track renewals volumes in 2009/10 on demand for OTM are not yet clear. However, it is likely that they will result in significantly lower utilisation levels. Network Rail has initiated a bid process for a one year OTM contract to reflect the lower volumes, and the Company is in the early stages of responding to that process.

The E.ON coal haulage contract has continued to perform well however, the freight container business continues to be affected by low import levels.

Facilities Management

Jarvis Accommodation Services has continued to see an improvement in its performance. Margins on several contracts have improved by virtue of benchmarking services to market standards.

Outlook

In the third quarter of the current financial year, the Company performed in line with management expectations. In the final quarter, rail project volumes are declining significantly, as expected, and performance will be affected by unrecovered costs as a result of a shortfall in replacement contracts in the early part of the next financial year. As a consequence of this, and the reduction in related Transport orders, operating results for the full year are now expected to be slightly below previous management expectations.

It has now also become apparent that these lower rail activity levels will continue for at least the first half of 2009/10 and are likely to result in lower utilisation of the Company's heavy and small plant. This is despite the commencement of the new five year regulatory control period in April 2009, in which Network Rail's enhancement expenditure is budgeted to increase significantly.

Given the short term reduction in rail project enhancement volumes, coupled with the impact of the previously announced reduction in track renewals volumes on both our Rail and Plant businesses, the Company's operating results in the 2009/10 financial year are now expected to be significantly below previous management expectations.

Steven Norris, Executive Chairman Jarvis plc said:

"The Company has performed strongly this year as the various strategic initiatives taken over the past three years to reshape the business have taken effect.

"The Board is therefore naturally disappointed that Network Rail has decided to adjust the phasing of its five year track renewals programme. This will clearly result in significantly less work in the next financial year for our Rail and Plant businesses. However, with almost £4bn being invested in track renewals over the next five years and as one of Network Rail's chosen track renewals contractors, we will be working closely with them to ensure that our business is restructured to help them achieve their targets and to ensure that we are well placed to maximise the longer term opportunities which continue to exist."

ends

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