Interim Management Statement

 2 November 2010

THE DAVIS SERVICE GROUP PLC

Interim Management Statement

The Board of The Davis Service Group Plc ("the Group'') today issues its interim management statement for the period from 1 January 2010.

Trading Summary

Revenue in the three months from 30 June 2010 to 30 September 2010 ("the third quarter") was up 1% on the same period last year and in line with the first half. However the Group delivered a slightly higher improvement in operating margin than reported in the first half. Profit before tax also increased modestly over the same period last year, despite higher interest costs resulting from the debt private placement in 2009. The Group is continuing to benefit from its strong cash flow. Foreign exchange translation had a smaller than expected negative impact on results compared to last year with the Continental European currencies strengthening against Sterling towards the end of the period.

In the Nordic region we are encouraged that the growth in underlying profits, before currency and acquisition impacts, increased in the third quarter compared with the first half, and we have seen further improvements in Norway and Sweden due to a stronger economic background; Denmark, while improving, is yet to show growth.

In the Continent region, the Workwear and Facility markets remain stable with underlying profits in the third quarter broadly similar to the same period last year. As reported previously the German Healthcare business has been operating in difficult markets but has steadily been improving its margin over the last 18 months and the Group has decided to further restructure this business primarily by closing its loss making plant at Glϋckstadt, near Hamburg. Volumes from Glϋckstadt will be served from other plants in the North of Germany and we expect this restructuring to result in an increase in profits in 2011, moving us closer to our margin target for this business. The cash cost of the restructuring is estimated at around £6 million together with an expected tangible asset write off of £4 million.

In the UK and Ireland, the Group's textile maintenance business performed very well, with positive momentum in UK Hotels and Healthcare linen continuing to drive a much improved margin over last year. We have yet to turn the corner in moving our decontamination contracts towards profitability.

The Group's free cash flow was again strong and we converted over 100% of our profit to free cash flow for the nine month period to 30 September 2010. Net debt was lower than we reported at the half year, maintaining our solid financing position, with the majority of our current funding needs available beyond 2016 and secured at interest rates fixed at below 5%.

Strategy Review

Group senior management will present the conclusions of its strategy review, and proposals for implementation, to the investment community at 2.00 pm this afternoon.

As previously stated the strategy builds on the Group's well invested base and strong market position. The Board believes that through a greater focus on our core, higher margin and higher growth businesses, and by improvements in sales processes, it can grow revenue at 1-2% above GDP and grow underlying earnings in high single digits over the medium term, based on its current view of the outlook for its markets.

Greater focus will also be applied to improvements in return on invested capital and the Group aims to deliver a post tax return in double digits over the same medium term period. Capital efficiency across the Group will be the subject of an improvement project starting immediately.

The Group sees growth opportunities in expanding its customer base more aggressively to businesses which have yet to adopt the full service rental model.

The Group will also adopt a new business line structure, with Executive Board members taking responsibility for core business lines rather than geographical divisions. Within this new structure, the key growth areas the Group has identified are Workwear, Mats, Washroom & Cleanroom across all regions and, in the UK, the Hotel and Healthcare linen businesses also offer attractive growth opportunities. In other areas the Group's existing well invested businesses will be managed with lower expectations of growth and consequently these areas will attract lower investment and generate higher free cash flow. We have a carefully prepared programme to manage the implementation of these changes through 2011 and expect to be reporting fully under the new business line structure from the beginning of 2012.

The Group believes this structure will be more transparent to all stakeholders, will enable us to identify and concentrate on growth opportunities more easily and will allow us to drive best practice in the key areas of sales, operations, logistics and pricing. At plant level the business remains essentially local and we will continue to drive accountability down to this level.

As well as capturing improved organic growth, there is scope for continued growth through bolt-on acquisitions and to play an active role in the consolidation of the industry.

To promote a one company vision both internally and externally, more closely align the Group with its main operating brand and to capitalise on the benefits of shared knowledge and experience, we will be changing the Group name to Berendsen plc towards the end of 2010. However, the local brands will be retained, such as Sunlight in the UK, as they continue to have strong market recognition.

The Board believes that the Group has a great opportunity to build on the strength of its existing foundations. Radical change is not appropriate but an increased focus on key growth markets reflects the specialist nature of our different businesses and will allow the Group to drive stronger growth and increased returns for shareholders.

Outlook for the Group

Trading conditions so far in 2010 have remained largely unchanged yet, despite this, the Group has delivered against its priorities of further improving its operational efficiency, delivering a strong free cash flow, which is benefiting interest, and maintaining a robust balance sheet. With nine months trading now behind us, the Board is confident of delivering on its expectations for 2010.

For further information contact:

Note:

1. Davis Service Group is a focused European textile maintenance business with leading positions in most of the countries in which it operates. As a focused business we are able to mobilise our resources to drive our strategies in our core area of expertise.

2. All financial information sourced from management accounts; operating profit and earnings per share stated before exceptional items and amortisation of customer contracts and intellectual property rights.

3. Statements made in this announcement that look forward in time or that express management's beliefs, expectations or estimates regarding future occurrences are "forward-looking statements" within the meaning of the United States federal securities laws. These forward-looking statements reflect the Group's current expectations concerning future events and actual results may differ materially from current expectations or historical results.