Re Contract

    INTERSERVE NAMED PREFERRED BIDDER FOR £90m CORNWALL SCHOOLS PFI

Interserve, the support services group, has been named preferred bidder by
Cornwall County Council for its schools PFI scheme, worth £90 million to the
group in design, construction and operational fees. HBOS is Interserve's
consortium partner for the contract.

The scheme involves the creation of two new schools, one secondary and one
junior, and the alteration and refurbishment of a further 16 junior schools.
Work on the design and construction will begin immediately after the contract
is signed, which is expected by March 2004, with completion dates for the
schools spread over the following three years. Interserve will then provide
facilities management services over a 25-year period including

  * caretaking and porterage
   
  * estates management
   
  * catering, cleaning and security
   
  * helpdesk
   
  * grounds maintenance
   
The flagship school is Richard Lander Secondary School which will be built on a
greenfield site north-west of Truro. It will have capacity for 1,350 pupils
when it opens in 2007. The remaining schools in the project are situated around
Truro and Penryn and will serve a further 3,270 pupils.

The county council's Executive Member for Lifelong Learning, Doris Ansari,
said, "This is an exciting moment for Cornish education. After decades of
suffering the constraints of inadequate building stock, this second phase of
PFI will see many schools enjoying new and refurbished facilities, enabling us
to continue offering one of the best education services in Britain."

Interserve Investments Plc is leading Interserve's contract team and will
manage the group's equity investment in the PFI special purpose company. Bruce
Melizan, Managing Director of Interserve Investments, commented,

"This announcement is excellent news. It continues our strategic relationship
with Cornwall in delivering new facilities and services, and takes our PFI
education portfolio to 33 schools and colleges across seven projects - with a
total population of just over 21,000 pupils."

Interserve is now involved in 22 PFI/PPP projects of which two are at preferred
bidder stage.



END