6 Jul 2006

Interserve Plc, the services, maintenance and building group, today provides an update on trading in the first half of 2006 in advance of announcing its interim results on 4th September 2006.

In the first six months of the year trading conditions have been encouraging. Overall our businesses have performed in line with the expectations set out in our AGM statement, with strong performance particularly in the Middle East and through new business wins partly offset by weaker performance in Industrial Services. During the period, we have been successful in securing a number of significant contract wins worth a total of approximately £700 million.

We can announce today that contracts have been signed and that we are now delivering services on the MoD's Cyprus Prime Contract and the facilities management contract for the London Borough of Croydon, and that our framework activities have been boosted through expansions to, and several new, agreements with both public and private sector organisations. In aggregate with Cyprus and Croydon these agreements total around £560 million and are with the following clients:

• Barclays - refurbishment of various offices and branches, building on the existing relationship Interserve has with this long-term client.
• Welsh Health Estates – "Designed for Life: Building for Wales", the programme created to deliver all major NHS construction projects in Wales. Interserve is one of three Supply Chain Partners in the agreement which will run for an initial four years with a possible two-year extension.
• BBC - a framework covering a wide range of building, mechanical and electrical projects across the Corporation's UK property portfolio. We are again one of three suppliers in a four-year agreement.
• BT – work concerning both the development of exchanges for BT's 21st Century Network and maintenance in existing properties.

In the period we were also named preferred bidder for the Plymouth Schools PFI and reached financial close on the Addiewell Prison PFI, together worth around £140 million.

Significant activity is under way in anticipation of the acquisition and subsequent integration of the MacLellan businesses on 20th July. This extension to our outsourcing activities positions the group to deliver further growth through access to a broader range of markets across the public and private sectors and through opportunities for customer development and cross-selling.
 
With encouraging recent new business wins, a positive trading environment in the UK, continued strength in the Middle East and the expected completion of the acquisition of MacLellan, the Board believes that Interserve is well-placed to continue its progress this year and thereafter.