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March 1, 2000

The Davis Service Group Plc 1999 Results

COMPANY PRESS RELEASE: Turnover and profit before tax, excluding exceptional items, at gbp 431.3 million (1998: gbp 408.0 million) and gbp 60.6 million (1998: gbp55.2 million) respectively, increased in 1999 by 6.0% and 10% over the previous year.

By CBR Staff Writer

Earnings per share increased from 27.40 pence to 31.72 pence, a rise of 16%, whilst adjusted earnings per share rose 15% to 31.77 pence.

By the nature of the service and customer base, our workwear activities have a commitment to the manufacturing sector. Whilst trading conditions in this area were far from ideal over the last year, it is pleasing to report that the division achieved an increase in profits in the period. This result was driven by both productivity and service improvements, together with an excellent performance from our sales team, which achieved a record level of new business.

Similarly, volumes within our linen rental division are influenced by the general levels of commercial and leisure activity in the UK, and by the strength of sterling. Both factors had some impact in 1999, but through the strength and breadth of the division’s operating base we were able to achieve growth in both sales and operating profits. We continue to invest in order to improve all aspects of our business, not only in our own facilities but also in the development and provision of systems which assist customers in improving productivity in their premises.

Our healthcare division continued its strong growth, once again winning substantial contracts through its reputation for service and value. The construction of a new specialised processing plant at Shrewsbury is nearing completion and is due to open in April this year. The plant encompasses some of the latest technology for processing surgical procedure packs and will more than double our capacity to service this growing market, positioning Sunlight extremely well to comply with new European standards for surgical drapes and gowns.

Midland Laundry Group Holdings (MLG) was acquired in November 1999. The company has five processing plants at Swindon, Birmingham, Coventry, Leicester and Chesterfield. MLG specialises in processing hospital bed linen and theatre products for both the NHS and private healthcare market. The acquisition will increase Sunlight’s geographic coverage in this sector of the market.

Our overseas companies, in Germany, France and Ireland, contributed gbp 31.5 million to turnover (an increase of 4.4%) and gbp 4.0 million to operating profit (an increase of 7.2%), with Ireland making a significant contribution to this improvement. Conditional contracts were exchanged in November 1999 for the sale of the Dublin plant and its relocation to a new purpose-built facility at Bray. Completion is conditional on satisfaction of certain planning issues. It is anticipated that the business will be relocated in 2001.

The benefits of our healthcare expansion and development, taken with an underlying improvement in our other market sectors will ensure another good year for the division.

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Our record trading performance in 1999 was achieved against a background of variable market conditions. With a more positive trading climate and the benefit of the various initiatives outlined above, the directors expect they will be able to report on another year of good progress for the group.

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