Defence  Health  Education  Industry  Commerce  Infrastructure  Custodial  
/police  Central and local government  Defence  Health  Education  Industry  
Commerce  Many Services Infrastructure  Custodial/police  Central and Loc
government  Defence  Health  Education  Industry  Commerce  Infrastructure
Custodial/police  Central and local government  Defence  Health  Education  
Industry  Commerce  Infrastructure  One Provider Custodial/police  Central
and local government  Defence  Health  Education  Industry  Commerce  
Infrastructure  Custodial/police  Central and local government  Defence  
Interserve Plc
Annual report and
accounts 2003 Contents
1 Highlights of 2003
2 Principal activities
4 Profile of operating divisions
6 Directors and advisers
8 Chairman’s statement 
10 Chief Executive’s review
10 Overview
11 Facilities Services
12 Industrial Services
13 Project Services
14 Equipment Services
15 PFI Investments
16 Case studies
16 Defence: Army Training Estate PPP
17 Custodial/police: Metropolitan Police Service
18 Industry: BP Petrochemicals, Hull
19 Education: Southampton Schools PFI
20 Health: NHS ProCure21
21 Commerce: BT framework programme
22 Infrastructure: Boadilla Tunnel reconstruction 
23 Central and local government: Inland Revenue PFI, Newcastle
24 Corporate Social Responsibility
24 Health and safety
25 Environment
27 Social and ethical
30 Finance Director’s report
32 Directors’ report
37 Directors’ remuneration report
44 Directors’ responsibility statement
45 Independent auditors’ report to the members of Interserve Plc
46 Consolidated profit and loss account
47 Balance sheet
48 Consolidated statement of total recognised gains and losses
Consolidated cash flow statement
50 Notes on the accounts
71 Principal undertakings and trading activities
75 Five-year history
76 Shareholder information Many services, one provider
Highlights of 2003
2003 2002
Turnover £1,211m £1,123m
Headline profit from continuing operations* £30.7m £47.9m
Net exceptional (charge) credit‡ (£22.2m) £0.3m
(Loss) profit before tax (£2.9m) £37.2m
Future workload £4.3bn £3.7bn
Net debt £22.5m £42.8m
Full-year dividend 13.5p 13.0p
“Our 2003 results were broadly in line with expectations and reflect a satisfactory
performance in our core activities, achieved in conjunction with the implementation of
planned management changes and the withdrawal from non-core businesses. These actions,
taken under our new Chief Executive and Finance Director, will improve the quality of the
Group’s earnings and will do much to strengthen our platform for future growth. 
“We saw an increase in the pace at which contracts are being secured across the business.
With £1.7 billion of new work won in the period our future workload now stands at a record
level of £4.3 billion and firmly underpins our position going forward.”
Mike Bottjer 
Chairman
* Headline profit from continuing operations comprises loss on ordinary activities before taxation of £2.9m (2002: profit of £37.2m) adjusted for the impact
of exceptional items of £22.2m (2002: £0.3m credit), goodwill amortisation of £9.6m (2002: £9.7m) and the operating loss from discontinued operations of
£1.8m (2002: £1.3m).
‡ Exceptional items comprise loss on sale or termination of operations of £24.9m (2002: £1.2m), profit on sale of tangible fixed assets of £2.7m (2002: £2.5m)
and exceptional operating charges of £nil (2002: £1.0m).
Interserve creates, operates and maintains amenities and infrastructure 
in the UK and overseas. 2 Interserve Plc  Annual Report 2003
Principal activities
Facilities Services
Activities
Provision of outsourced support services
to public- and private-sector clients. 
The division concentrates on
opportunities where it can deliver
benefits through integrating the
management and delivery of several
services for one customer.
Typical services
• mechanical and electrical 
maintenance
• communications
• building fabric maintenance
• energy monitoring
• estates management
• reception
• helpdesk
• security
• cleaning
• catering
• porterage
• waste management
Key sectors
• health
• education
• commerce
• defence
• custodial/police
• central and local government
Geographical scope
United Kingdom
Industrial Services
Activities
Provision of specialised, multi-disciplined
support services.
Industrial Services is unique in the
breadth of its activities, bringing a 
range of resources to bear in a safe,
planned and efficient way.
Typical services
• electrical control and 
instrumentation
• industrial access
• mechanical installation
• industrial cleaning
• application of protective coatings 
and insulation
• power transmission
• pipework fabrication
Key sectors
• industry
• petrochemical
• pharmaceutical
• food and drink
• nuclear
• steel
• gas
• infrastructure
• power generation
• defence
• marine
Geographical scope
United Kingdom
Project Services 
Activities
Design, construction and maintenance 
of buildings and infrastructure.
Focusing on framework agreements,
private finance initiative (PFI) projects
and long-term maintenance contracts,
Project Services has a progressive
approach, working in true partnership
and forming long-term relationships with
its customers and its supply chain.
Typical services
• building design, construction and 
maintenance
• road design and construction
• bridge maintenance and repair
• design, construction and 
commissioning of water and sewage 
treatment plants
Key sectors
• health
• education
• commerce
• defence
• central and local government
• infrastructure
• custodial/police
Geographical scope
United Kingdom, Middle East
Defence
Custodial/police
Industry
Education
Health
Commerce
Infrastructure
Central and local government
14%
6%
28%
1%
25%
21%
5% 6%
62%
21%
11%
28%
19%
4%
16%
11%
11%
11%
Divisional turnover split by market sector – see below for key Equipment Services
Trading name
RMD Kwikform Ltd
Activities
Design, hire and sale of formwork,
falsework and associated access
equipment. (Formwork is the system of
parts comprising the mould into which
concrete is poured; falsework consists 
of the structural elements and bracing
required for the support of temporary
loads during construction.)
The division focuses on large projects
(both infrastructure and building) in
addition to an underlying core of
ongoing trading in its established
markets. The design and logistics
expertise within the division help its
customers maximise the value of their
projects (by reducing time and cost) 
and position Interserve as an integral
part of their supply chain.
Typical services
• hire and sale of formwork, falsework 
and associated access equipment
• consultancy in its application
• project planning
• technical support
• custom design
Key sectors
• infrastructure
• transport
• buildings
• utilities
• waterways
• commerce
• industry
Geographical scope
Europe, Middle East, Australasia, 
Far East, South America
PFI Investments
Activities
Transaction structuring and management
for Interserve’s PFI activities.
The division co-ordinates Interserve’s
identification of suitable target
projects, selection of bid partners and
bid management process. It manages 
the Group’s PFI equity investments and
provides management services to
various special purpose companies. 
At 31 December 2003 Interserve 
was involved in 22 PFI/PPP contracts
including two at preferred bidder stage.
The total investment commitment was
approximately £35 million.
Key sectors
• health
• education
• defence
• central and local government
• custodial/police
Geographical scope
United Kingdom
Interserve Plc  Annual Report 2003  3
9%
8%
9%
11%
21%
22%
14%
6%
Defence
Education
Health
Industry
Commerce
Infrastructure
Custodial/police
Central and local government
Overall turnover split by market sector
10%
16%
2%
56%
2% 10%
2%
2% 4 Interserve Plc  Annual Report 2003
Profile of operating divisions
Facilities Services
Through the Facilities Services division
Interserve is one of the leading players
in the growing UK facilities management
market. Our approach is to focus on 
key clients offering significant long-term
revenue streams, building a detailed
understanding of their operations and
adding value with an integrated suite 
of related services. These are tailored
through bespoke service-level agreements
and sustainable commercial relationships.
Our preference is for complex
outsourcing projects, where our 
change-management skills, integrated
management and direct-delivery
capabilities and our willingness to
structure risk and reward innovatively
set us apart from our competitors.
As the outsourcing market continues to
develop and grow we see a continuing
sophistication in service specification
and measurement and in transparency of
performance standards. By combining an
anticipation of these trends with our
broader-based service capabilities and
those of our supply chain partners, we
believe we are well positioned to deliver
on growing client expectation and to
maintain competitive advantage.
Industrial Services
Through the Industrial Services division
Interserve is a market leader in terms of
its breadth of service offering, its safety
record and its client relationships. The
UK market for outsourced industrial
maintenance services continues to grow
as more and more clients realise the
economic and managerial benefits
resulting from this approach to service
delivery that contributes to their own
competitive position in world markets.
Our approach is to provide an integrated
single-point relationship for our clients,
managing and controlling on their behalf
the interfaces between the various
services necessary to deliver effective
maintenance and successful project
solutions, as well as delivering those
services directly. Our clients benefit 
from this approach not only through 
a reduction in the direct cost of
maintenance services, but, critically,
from a reduction in plant downtime
achieved by improved efficiencies in 
the execution of planned and unplanned
tasks. As the range of services we 
deliver increases, Interserve becomes
increasingly integral to the infrastructure
support needs of our clients, which we
believe enhances the longevity of our
client relationships.
The division operates in markets where
safety and environmental concerns are
paramount and the ability to provide
effective safety and quality management
systems is a prerequisite. Our approach 
is to focus on continual improvement
from our already very high standards in
the knowledge that sustainable safety
and environmental performance is a 
key differentiator on which clients will
increasingly base their buying decisions.
As a reflection of our capability and of
our clients’ focus on this value added
area, we have, during 2003, established 
a safety training business unit within 
the division, which will provide services
into our existing contract base and 
also generate third party revenues.
Project Services
Through the Project Services division
Interserve specialises in delivering
building and infrastructure projects in
the UK and the Middle East through
framework agreements, PFI contracts
and negotiated relationships. In the UK
our approach is to work with our clients
in long-term relationships, delivering
our services from resources in both 
our strategic projects and regional
businesses, increasingly through open-
book arrangements providing supply
chain transparency and demonstrating
the added value of our co-ordination,
planning and management role. In 
the Middle East we work through our
associate companies almost entirely 
on negotiated and/or repeat business
contracts using our skills to deliver
business development and project
management in concert with our
partners’ market knowledge and 
access to the supply chain.
UK activities are focused mainly on public
service amenities and infrastructure,
where market conditions remain generally
favourable. Our involvement in the
private sector market in the UK is
predominantly through framework
agreements for ‘blue chip’ clients where
spend profiles are predictable and
relatively reliable. Overseas, market
conditions are driven by the macro-
economic environment in the Middle East,
which is seeing continued confidence and
was largely unaffected by the 2003 Iraq
conflict. In all instances our approach 
is characterised by partnering and
collaborative working with our clients
and our supply chain, founded on
excellent technical skills and a first 
class safety record. We believe that 
these attributes, together with our
pragmatism and consistent record in
delivering to time and budget provide
Interserve with a differentiated position
in our chosen markets. Equipment Services
Through the Equipment Services division
Interserve is a leading player in the
global system formwork and falsework
market, supplying a key service integral
to the delivery of complex infrastructure
and building projects in most parts of
the world. The use of system formwork
and falsework – the temporary support
equipment required in the creation of
substantial concrete structures – enables
construction processes to be designed
optimally and saves time and space
compared to traditional alternative
technologies. Trading globally as RMD
Kwikform, a well-respected and
established brand within its target
markets, the business operates around
two centres of excellence in the UK and
Australia from where design and
engineering support is provided to the
operating units in each country of
operation.
Equipment Services’ business model is
based on the hire and sale of its
equipment in meeting the challenges of
often demanding construction projects.
We offer engineering advice in the
application of the equipment as part of
each hire transaction and this, together
with our proprietary designs and the
ability to produce customised solutions,
differentiates us strongly in the market.
PFI Investments
Our approach is to invest only in PFI/PPP
projects where one or both of our principal
downstream activities of facilities
services and design/construction services
are involved. Therefore our investment
strategy is led by the growth needs of
our core businesses in sectors in which
we have appropriate skills and resources.
Where it is not desirable for Interserve
companies to fulfil all the downstream
delivery roles, we work with partners to
deliver the total PFI/PPP solution. We
also provide management and ‘back
office’ support services to a number of
special purpose companies. Our key
market sectors are health, education,
custodial and defence accommodation.
Interserve Plc  Annual Report 2003  5
Divisional split by turnover
2002
2003
£448m £148m £476m £75m
£396m £110m £428m £75m
Facilities Services Industrial Services
Project Services Equipment Services 6 Interserve Plc  Annual Report 2003
Directors and advisers
From left to right: Allan Hannah, Patrick Balfour, Nicholas Keegan, Trevor Bradbury, John Padovan, Mike Bottjer, 
John Vyse, Adrian Ringrose, Stewart Hagerty, David Trapnell, Tim Jones. 
With thanks to University College London Hospitals NHS Trust. Interserve Plc  Annual Report 2003  7
Chairman
Michael C Bottjer MBA CEng FICE 
1
Mike has been Chairman since 1996. Having
joined one of the Group’s companies in 1964
he became its Managing Director in 1978. A
year later he took a seat on the parent Board,
then in 1986 became the Group’s Assistant
Managing Director. He was appointed Chief
Executive in 1988 and served in that position
until June 2003. Mike is 63.
Executive directors
Adrian M Ringrose BA MCIM 
1
Chief Executive
Adrian was appointed Chief Executive on 
1 July 2003 having served as Deputy Chief
Executive since 1 January 2003. He joined
Interserve in 2000 on its acquisition of the
Building & Property Group, became Managing
Director of Interservefm a year later and
joined the parent Board in 2002. Adrian is also
a non-executive director of the Business
Services Association. He is 36.
Stewart B Hagerty FCIMA
Stewart is Managing Director of Interserve
Industrial Services. He joined the Group in
1999 on its acquisition of Bandt and was
appointed to the parent Board in 2002. Having
founded his own company in 1993, Stewart
negotiated its acquisition by Bandt in 1997
and continued to manage it thereafter.
Stewart is 45.
Allan R Hannah MRICS
Allan, Executive Chairman of the Group’s
Equipment Services division, has been on the
parent Board since 1995. Allan had previously
been on the management board of Norwest
Holst. He is 54.
Tim C Jones MA (Hons) ACA
Group Finance Director
Tim joined Interserve as Group Finance
Director on 11 August 2003. He was previously
Novar's Group Director of Financial
Operations. Prior to joining Novar in 2001 Tim
spent six years in a variety of senior financial
positions at Exel, both in the UK and overseas.
Having qualified as an accountant Tim's early
career was in corporate finance and
acquisitions. He is 40.
John H Vyse BEng CEng FICE FIHT
John was appointed to the parent Board in
2002 and is Chairman of Interserve Project
Services. He joined the Group in 1993 and in
1996 was appointed Managing Director of
Tilbury Douglas Construction. He has also held
the chairmanship of several other Interserve
subsidiaries. John had earlier been Managing
Director of Laing Civil Engineering. He is 55.
Retired executive directors
Clive J Groom
Clive became a parent Board member in 2001
and was Chairman of Interserve Investments.
He joined Interserve in December 2000 when
the Company acquired the Building & Property
group, of which he had been Chief Executive
following the management buy-out he led in
1996. He retired from Interserve’s Board at the
end of 2003. Clive is 55.
M Stuart Lee FCA
Group Financial Director
Stuart joined Interserve as Group Financial
Director in 1989. He controlled the financial
aspects of the major acquisitions in 1998, 
1999 and 2000 and oversaw the transfer of 
the Group to the support services sector of
the FTSE listing. He retired from the Board 
on 30 September 2003. Stuart is 57.
Non-executive directors
JohnMFPadovan LLB (London) BCL (Oxon) FCA
1 2 3 4
Deputy Chairman
John joined Interserve as a non-executive
director in 1996. His career in investment
banking included being Chairman and Chief
Executive of County Bank and Deputy
Chairman of Barclays de Zoete Wedd. He is
Chairman of the Williams Lea Group and of
Schroder Split Investment Fund, and a
director of several other listed and unlisted
companies. He is 65.
G Patrick Balfour MA (Cantab)
1 2 3
Patrick became a non-executive director on
Interserve’s parent Board at the beginning of
January 2003. He is a solicitor and was
formerly a partner of Slaughter and May.
Patrick is 62.
Nicholas F Keegan MA FCA
1 2 3
Nicholas joined Interserve as a non-executive
director on 11 July 2003. He has been Group
Finance Director of Evenser Group and
previously held the same position at Frederick
Cooper and prior to that at Newman Tonks
Group. Nicholas is 48.
David A Trapnell BSc (Hons)
1 2 3
David became a non-executive director of
Interserve on 11 July 2003. Previous roles
include non-executive director and Chairman
of the Audit Committee at The Royal Mint,
Group Chief Executive of Marley and Vice
President of the Construction Products
Association. David is 59.
Retired non-executive director
David C Keys BA (Hons) MA
1 2 3 4
Deputy Chairman
David joined the Board in 1991 and became
the Group’s Deputy Chairman in 1996. He was
previously an executive director of Morgan
Grenfell and Chairman of HFC Bank. He retired
from the Board at the Annual General Meeting
on 14 May 2003. David is 70.
1
Member of the Nomination Committee
2
Member of the Audit Committee
3
Member of the Remuneration Committee
4
Senior independent director
Advisers
Group Company Secretary
Trevor Bradbury LLB (Hons) FRICS MCIArb
Barrister
Registered office 
Interserve House 
Ruscombe Park
Twyford
Reading 
Berkshire RG10 9JU 
T +44 (0)118 932 0123 
F +44 (0)118 932 0206 
enquiry@interserveplc.co.uk
www.interserveplc.co.uk 
Registered number 88456 
Registrar and Share 
Transfer Office
Capita Registrars 
Northern House
Woodsome Park
Fenay Bridge
Huddersfield HD8 0LA
T +44 (0)870 162 3131 
F +44 (0)1484 600911
www.capitaregistrars.com
Auditors
Deloitte & Touche LLP
Bankers
Royal Bank of Scotland plc 
HSBC Bank plc 
Stockbrokers
Cazenove & Co Ltd
Lawyers
Wragge & Co LLP 8 Interserve Plc  Annual Report 2003
Chairman’s statement
Our 2003 results were broadly in
line with expectations and reflect a
satisfactory performance in our core
activities, achieved in conjunction
with the implementation of planned
management changes and the
withdrawal from non-core businesses.
Headline profit from continuing
operations* amounted to £30.7
million (2002: £47.9 million) which
was, in particular, impacted by
increased pension charges of £8.9
million (2002: £nil) and a provision
of £5.5 million in respect of the
Liverpool City Council contract for
the repair and maintenance of
council houses. 
Following a review of the activities
of the Group the decision was taken
to withdraw from businesses that
were unlikely to produce acceptable
future returns, thus facilitating the
concentration of resources and effort
on our core activities going forward.
Exceptional charges for the closure
of non-core, underperforming
businesses amounted to £24.9 million.
The restructuring has proceeded
largely to plan and is substantially
complete.
After exceptional items and
goodwill amortisation the Group
made a pre-tax loss of £2.9 million
(2002: £37.2 million profit).
As announced in February of this
year we transferred our contract
with Liverpool City Council to a third
party. This action was necessary 
due to reductions in the amount of
work available making the contract
unviable on a stand-alone basis.
Turnover from continuing
operations rose by 13 per cent to
£1.17 billion (2002: £1.03 billion) 
resulting from the refocusing that
has taken place over the last few
years and reflecting generally
improving market conditions. 
The public and privatised sectors
continued to provide the majority
of our workload and in the year
accounted for around two-thirds 
of the total turnover.
Improved working capital
management and cash received from
the disposal of assets in discontinued
businesses contributed to a reduced
net debt at the year end amounting
to £22.5 million (2002: £42.8 million).
Net interest payable of £3.2 million
was covered over 10 times by total
operating profit before exceptional
items and goodwill amortisation of
£32.1 million. 
Dividend
The Directors are recommending a
final dividend of 9.3p (2002: 9.0p)
bringing the total dividend for the
year to 13.5p (2002: 13.0p), an
increase of 3.8 per cent. Subject to
the approval of the shareholders at
the Annual General Meeting the final
dividend will be paid on 9 June 2004
to shareholders on the register at the
close of business on 19 March 2004.
People
I am delighted once again to thank
each and every one of our people
for their hard work, dedication 
and enthusiasm. They also deserve
particular thanks for their much-
valued support in a year in which
we have implemented significant
change in order to strengthen our
prospects for sustained growth. 
The necessary closures resulted in the
loss of approximately 500 jobs; I am
grateful for the professionalism shown
by those affected and wish them
every success in their future careers. Interserve Plc  Annual Report 2003  9
The many talented people within
the Group possess a wealth of
professional and practical skills. 
The Interserve Training Trust, under
the guidance of John Jutson, has
done much to enhance this by
encouraging self-improvement
through training and qualifications.
I would like, on behalf of the Board,
to thank John, who retires from 
his position with Industrial Services
this year, for his sterling work 
in this regard.
Board
There have been a number of
planned changes to the Board
during the course of the year, 
most of which were reported at 
the Interim stage. They included 
the appointment of Adrian Ringrose
as Chief Executive on 1 July and 
Tim Jones as Group Finance Director
on 11 August. Since then Stuart Lee
and Clive Groom have retired from
the Board on 30 September and 
31 December respectively.
Stuart joined the Group in 1989 and
until 11 August was Group Financial
Director. I would like, on behalf of
the Board, to thank him for his
most valuable contribution to the
progress of the Group during his
tenure of office. 
Clive Groom was formerly 
Chief Executive of Building &
Property, a facilities services
business, which we acquired in 
2000 and at which time he joined
the Board. Again, on behalf of the
Board, I would like to thank him 
for his help and support in the
successful integration of Building &
Property into the Group and its
subsequent development as part of
our Facilities Services division. 
Strategy and outlook
In 2003 much has been done to
strengthen the Group’s platform for
future growth. Under our new Chief
Executive and Finance Director, a
review of the Group’s activities has
led to the closure of some small
businesses and withdrawal from
contracts that were not able to
offer the potential for appropriate
returns. The anticipated improvement
in the quality of the Group’s earnings,
combined with management’s
determination to drive growth in
our continuing businesses, bodes
well for the future. 
During 2003, the Group saw an
increase in the pace at which
contracts are being won across 
the business. The Group’s future
workload, now at a record level of
£4.3 billion, underpins our growth
potential and it is encouraging 
to see that our established track
record of achieving client retention
rates in excess of 90 per cent for
term contracts is continuing.
The markets in which the Group
undertakes its core activities
continue to be attractive, with an
encouraging flow of opportunities
for the short and long term in both
the public and private sectors.
Interserve is well placed to capitalise
on the considerable potential
available across the Group’s
continuing businesses.
Mike Bottjer
Chairman
9 March 2004
* Headline profit from continuing operations
comprises loss on ordinary activities before taxation
of £2.9m (2002: profit of £37.2m) adjusted for the
impact of exceptional items of £22.2m (2002: £0.3m
credit), goodwill amortisation of £9.6m (2002: £9.7m)
and the operating loss from discontinued operations
of £1.8m (2002: £1.3m).
Exceptional items comprise loss on sale or
termination of operations of £24.9m (2002: £1.2m),
profit on sale of tangible fixed assets of £2.7m (2002:
£2.5m) and exceptional operating charges of £nil
(2002: £1.0m).
Left to right
University College London Hospitals NHS Trust Services provided by
Interservefm include domestic cleaning, which incorporates the Trust’s
Infection Control Policy
Alder High School Hattersley Completed in 2003 this 750-student
secondary school is part of the Hattersley PFI schools project, together
with 2 primary schools
Dudley Group of Hospitals NHS Trust A range of non-clinical support
services is being undertaken, with bed numbers doubling 10 Interserve Plc  Annual Report 2003
• Restructuring action taken – 
closure of non-core operations
• Free cash flow increased to 
£32.2m (2002: £15.9m) 
• Average bank debt reduced to 
£67.3m (2002: £82.1m)
• Future workload at record 
£4.3bn
1 
Tube & fittings townwork scaffolding, low voltage
power distribution and rail cabling & signalling
(announced in July) and foundation engineering
(announced in November)
Overview
During 2003 solid progress was made
in positioning the Group to deliver
increasing shareholder value from
sustained organic growth across 
its operations. Changes to the
business mix, achieved through
discontinuing four activities
1
, will
provide the Group with increased
focus and improved quality of
continuing revenue streams for 
the future.
Total operating profit from
continuing operations (excluding
exceptional items and goodwill
amortisation) was £33.9 million
(2002: £51.9 million), absorbed
within which was a pension charge
of £8.9 million (2002: nil), increased
National Insurance and general
insurance costs of over £4 million
and a provision of £5.5 million on
the contract with Liverpool City
Council, now transferred to a 
third party.
After exceptional items and
goodwill amortisation the Group
made a pre-tax loss of £2.9 million
(2002: £37.2 million profit).
Cash flow remained a priority during
the year. Year-end net debt was
reduced to £22.5 million (2002:
£42.8 million) through improved
cash management in the continuing
businesses and accelerated timing
on the disposal of assets from the
discontinued businesses. The resulting
average bank debt was £67.3 million
(2002: £82.1 million). Included within
this performance is the resumption
of cash contributions to the 
pension scheme of approximately
£10 million (2002: nil).
The Group reports operations 
under six main headings: Facilities
Services, Industrial Services, Project
Services, Equipment Services, PFI
Investments and Group Services.
Group Services’ operating costs
totalled £9.6 million (2002: £9.2
million) principally comprising the
costs associated with head office,
centrally-provided services and 
PFI bid costs.
Reviews of the Group’s five 
trading divisions follow. The term
“divisional operating profit” used
hereafter excludes exceptional
items, goodwill amortisation 
and any UK defined benefit 
pension charges.
Improving 
revenue quality
Chief Executive’s review
2003
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2040
2041
Future workload at 31 December 2002 (total £3.7 billion)
Future workload at 31 December 2003 (total £4.3 billion)
The chart shows the turnover associated with Interserve's future workload for each of the years up to 2041
(when our longest contract – the PFI with Dudley Hospitals NHS Trust – expires). The chart is structured such
that it is possible to make a direct comparison between how the workload stood at the end of 2002 and the end
of 2003. For example, the workload at the end of 2002 for 2005 (i.e. three years ahead) should be compared
with the workload at the end of 2003 for 2006 (also three years ahead). These two bars are placed adjacent to
each other in the chart.
Future workload Interserve Plc  Annual Report 2003  11
Facilities Services
The division traded in line with
expectations other than in respect of
the contract with Liverpool City
Council (LCC) where results were
affected by trading losses of £0.6
million (2002: £1.2 million profit) and
a provision of £5.5 million.
Significant volume reductions on this
contract led us to seek an exit,
which we effected shortly after the
year end. Excluding the LCC
contract, divisional operating profit*
grew by 14 per cent to £16.7 million
(2002: £14.6 million) as new
contracts came on line. Overall
turnover was £448 million (2002:
£396 million), within which MOD
works bills (which flow through our
accounts but carry no margin)
amounted to £128 million (2002:
£118 million).
During the year the division
achieved financial close on the £600
million Army Training Estate PPP
project and is now delivering full
services. The contract is for an initial
period of 10 years and includes
facilities management and firing
range operations at 130 sites in
England, Scotland and Wales
covering over 1 per cent of the UK
land mass. Other new work secured
during the period included contracts
with BT, City & Provincial, British
European Airways and the
universities of Birmingham, Aston
and Central England.
Our overall client retention rate
remained above 90 per cent. Among
contracts contributing to this was a
two-year extension, increased in
scope, to our existing five-year
contract with the Metropolitan
Police where we are now involved
in a range of managerial and
technical areas in addition to
providing services such as building
maintenance, security access
systems and special events support.
Other notable renewals and
extensions were secured from
Network Rail, Boots, Barclays Bank
and Royal & SunAlliance.
As the outsourcing market continues
to develop and grow we see an
increasing sophistication in service
specification and measurement and
in transparency of performance
standards. By combining an
anticipation of these trends with
our broader-based service capabilities
and those of our supply chain
partners, we believe we are well
positioned to deliver on growing
client expectation and to maintain
competitive advantage. As a reflection
of our performance in the market,
our future workload at the end of
2003 was £2.7 billion, an increase of
13 per cent on the position at the
end of 2002 (£2.4 billion).
* See final paragraph of Overview on 
page 10 for definition
• Army Training Estate PPP – 
£600m over 10 years
• New contracts, extensions 
& renewals
• Client retention over 90%
• 13% increase in future 
workload
Left to right
Matthew Boulton College This project involves the installation of over
18,000m of pipeline and nearly 200,000m of electrical cable to support
facilities for 15,000 sudents and 600 staff
British European Airways Facilities Services undertakes a range of
support activities at the new BEA hangar in Exeter
Institute of Bio-Medical Research, Birmingham University
Installation has commenced of services to the 6-storey, 8,500m
2
laboratory
building with roof-level plant rooms, laboratories, laboratory support
areas, write-up areas, offices and general welfare facilities 12 Interserve Plc  Annual Report 2003
• Balancing the business mix
• Work winning in existing 
sectors
• Client retention over 90%
• Exits from townwork tube & 
fittings scaffolding and low-
voltage power distribution
* See final paragraph of Overview on 
page 10 for definition
Industrial Services
Divisional operating profit* from
continuing activities was ahead of
expectations at £11.6 million (2002:
£11.6 million) on turnover of £148
million (2002: £110 million).
Following an above-trend result in
2002 the operating margin of 7.8 per
cent  (2002: 10.5 per cent) is more
closely in line with that expected
from the new profile of the business
after the restructuring that has
taken place.
In addition to benefiting from the
improving market conditions within
our traditional petrochemical sector,
we have made good progress in
developing the balance of the
business across different market
sectors and in concentrating on
maintenance-led growth.
With regard to our client mix, 
the division has continued its
expansion into the marine
engineering defence sector 
through a growing relationship 
with BAe Systems in the Royal Navy
shipbuilding and refurbishment
programmes at Govan, Barrow and
Devonport. In the nuclear sector 
our term maintenance contracts
with BNFL have been expanded at
Sellafield and Dounreay and our
relationship with this client was
extended through recent contract
awards at Dungeness and, latterly,
Springfield. These developments have
enabled us to position ourselves well
for the substantial nuclear plant
decommissioning programme that is
expected to begin in earnest in the
coming years. 
High voltage overhead power
transmission work has also grown
and new relationships have been
formed with United Utilities,
Yorkshire Electricity Distribution and
Scottish Power. We now hold in
excess of 50 substantial term
maintenance contracts, with our
client retention rate remaining in
excess of 90 per cent.
During the year we accelerated our
plan for withdrawal from townwork
tube & fittings access scaffolding,
with the closure announced in July.
This, together with the exit from 
low voltage power distribution, is
enabling increased concentration on
developing the business in areas with
better long-term potential. The exit
programme has proceeded well,
yielding accelerated positive cash
flow from asset disposals and
working capital recovery.
2003 was the third year of our
approach to the industrial market 
as an integrated supplier of a broad
range of services and we believe 
that the benefits this approach
brings to both client and service
provider are proven. As a reflection
of this, our future workload has
risen to £571 million (2002: £544
million), representing both an overall
increase and greater certainty of
work during the year ahead, with
around 75 per cent of 2004’s
expected turnover secure at the 
year end. Looking further ahead,
there are opportunities available
both to expand our share of our
traditional market sectors and to
extend our offering progressively
into new growth areas.
Working in partnership
Chief Executive’s review continued Project Services
Following the exceptionally strong
UK performance in 2002 we
produced a satisfactory result,
reporting £15.8 million divisional
operating profit* from continuing
activities (2002: £17.7 million).
Within this result our international
operations contributed £3.6 million
(2002: £3.6 million), achieved despite
an adverse foreign exchange impact
of £0.3 million. The UK operating
margin returned to trend at 2.6 per
cent (2002: 3.3 per cent).
The business is now more clearly
focused following several years of
realignment and deliberate reduction
of traditional high-risk, low-margin
construction activities. As a result,
turnover from continuing operations
rose by 11.2 per cent to £476 million
(2002: £428 million).
Our Building operations made good
progress in all market sectors. We
completed and handed over the
buildings on the Hattersley and
Southampton schools PFI contracts
and began the construction of the
Defence Sixth Form College,
scheduled to open in 2005. In the
custodial sector we completed
framework projects at Hull and
Winson Green prisons and have
commenced new projects at
Wymott, Wealstun and Ranby
prisons. The key development in the
health sector was our selection as a
Principal Supply Chain Partner for
the national roll-out of the NHS
ProCure21 framework programme.
Having won the first contract to be
let under this programme, we now
have secured projects to date worth
in excess of £60 million with a
further £20 million in the development
stage. In addition to the examples
mentioned above, we have continued
to deliver substantial volumes of
work through our framework
agreements with clients such as BT,
Barclays Bank, British Energy,
Somerfield, Vodafone, Mapeley and
the Department of Work and Pensions.
The continuing Infrastructure
operations made excellent progress,
securing three Early Contractor
Involvement schemes for the
Highways Agency (the A5, A1 and
A30/38), which provide predictable
workflow from 2004 to 2009. The
programmes to exit rail cabling 
and signalling and foundation
engineering (Westpile) are well
advanced and have proceeded to
plan since their announcements in
July and November respectively.
Although Westpile made a small
positive contribution to operating
profit, the closures enable even
greater management attention to
developing the core operations and
remove significant risks and capital
expenditure requirements from the
Group going forward.
Internationally, the division operates
in the UAE, Qatar and Oman.
Performance was good during 2003,
with strong market demand driven
by increased US military presence in
Qatar compensating for a temporary
dip in confidence in Dubai associated
with the Iraq conflict. Towards the
end of the year significant contract
wins in both Dubai and Oman (the
Mall of the Emirates and Sohar
Refinery respectively) will provide a
sound platform for these operations
in 2004/05. Increasingly, cross-border
relationships in the region are an
effective channel for business
development and differentiation.
As a result of the division’s
concentration on framework
agreements and other long-term
sources of revenue, more than 90 per
cent of our expected turnover for
2004 is already secured, and we have
contracted revenues and framework
agreements extending out to 2009.
Overall, Project Services’ future
workload at the end of 2003 was
£1,025 million (2002: £764 million),
an increase of 34 per cent, with a
significant and growing proportion
comprising work from long-term
contracts.
• Principal Supply Chain Partner 
on NHS ProCure21 framework
• 3 Early Contractor Involvement 
schemes with Highways Agency
• Strong international 
performance
• Exits from rail cabling & 
signalling and Westpile 
* See final paragraph of Overview on 
page 10 for definition
Interserve Plc  Annual Report 2003  13
Left to right
Power Transmission Industrial Services offers a comprehensive service
for high-voltage power transmission and sub-stations
Garrick Theatre, Lichfield Interserve Project Services produced an
innovative design for the theatre with external walls made of terracotta,
zinc, cedar and brickwork
HM Prison Birmingham A framework agreement project with HM Prison
Service. This project comprises the design and construction of 2 housing
blocks, each of which provides a total of 208 identical cells. Construction
uses pre-cast concrete cell modules 14 Interserve Plc  Annual Report 2003
• Business reorganised on 
functional lines
• Management Information 
System implemented in UK – 
worldwide in 2004
• Progressive improvement 
through second half of 2003
* See final paragraph of Overview on 
page 10 for definition
Equipment Services
Market conditions were mixed in 2003,
reflecting the stages of the underlying
economic cycle in each global region
and the lifecycle of key infrastructure
projects within specific countries.
We reorganised the division during
the year along functional lines. Business
and customer-base development are
now the key responsibilities of local
management in each country, with
design, fleet logistics, procurement,
marketing, systems and finance
organised and managed globally. A
new management information system
was successfully implemented in the
UK, with worldwide rollout planned
for 2004. This, combined with the new
management structure, will significantly
improve the visibility and management
of key business dynamics, supporting
margin recovery as we re-establish the
long-term profitability and growth
pattern of the division.
Overall, we achieved a divisional
operating profit* of £12.6 million
(2002: £13.6 million) on sales of £74.8
million (2002: £74.5 million). The full
year operating margin of 16.8 per
cent benefited from progressive
improvement through the second
half. Within this result profit from
hire revenue grew, compensating in
part for a sharp reduction in export
sales to the Far East during the year.
Strong performances were achieved
in Australasia, where record profits
were delivered in buoyant markets by
extending the customer base and
introducing a broader product range.
The UAE-based Middle East operation
increased operating profits over its
strong 2002 result despite a quiet first 
quarter associated with the Iraq
conflict. The operation made good
progress in developing cross-border
revenues in the region, with contribu-
tions achieved in Qatar, Bahrain,
Kuwait, Oman, Syria and the Lebanon.
Our European operations experienced
quieter market conditions. In the UK
we achieved notable successes on a
number of major infrastructure
projects. Overall, though, the scale
and duration of these projects was
not comparable with those available
in 2002, affecting volume and
profitability accordingly. Management
changes in the UK operation, effected
towards the end of the year, are
expected to lead to operational
efficiencies and a broadening of the
client base in the future. 
In the Far East there was a slower
pick-up in the pace of activity than
we had hoped. However, design
activity and tendering on major
projects in Hong Kong improved in
the second half, with orders
beginning to be secured during
December and since the year end. 
Equipment Services’ future workload
is generated on a short lead-time, with
contract duration for hire usually being
less than 12 months. Nevertheless,
the projected infrastructure and
building programmes for a particular
country or region provide a basis for
establishing our expectations for
growth. Our current analysis indicates
the opportunity of substantial growth
and margin improvement in most of
our established operational locations,
with further prospects in due course
for expansion into new territories.
Managing on 
a global basis
Chief Executive’s review continued Interserve Plc  Annual Report 2003  15
PFI Investments
The PFI Investments division, trading
as Interserve Investments, further
extended its portfolio during the
year taking our total of secured
PFI/PPP projects to 20 (2002: 15) with
two more at preferred bidder stage.
We achieved financial close on all
four projects for which we were
preferred bidder at the beginning of
the year, and one further project
progressed rapidly from preferred
bidder selection at the end of
January to financial close in May. 
At the year end our investment
commitment in the 20 secured
projects was £35 million (2002: 
£29 million).
In addition to the Army Training
Estate, three projects (Cornwall 
Fire Stations and Hattersley and
Southampton schools) became fully
operational during the year, while
the two major projects now in the
construction phase (the hospitals 
of University College London and
Dudley) are due for completion 
in 2004/05.
The five projects on which we
achieved financial close are:
• February – Peterborough Prison,
the first prison in the country
designed to house both male and
female prisoners, on which
construction is well advanced
• March – the £600 million Army
Training Estate project, which is
now fully operational
• May – the Defence Sixth Form
College, the project which
progressed from preferred bidder
selection to financial close in just
over three months
• September – the two Tyrone
colleges projects, where
construction is in progress and
interim services are due to
commence in 2004
Our investments in PFI/PPP special
purpose companies generated 
profit after interest of £0.3 million
(2002: £0.6 million). During the year
we injected £6.1 million cash in
equity and subordinated loan stock,
increasing the total already invested
to £20.4 million with a future
commitment, excluding projects 
at the preferred bidder stage, of
£14.9 million.
Our pipeline of opportunities
remains strong, with key bids in
progress in all our chosen sectors.
We continue to see PFI/PPP as an
attractive and important channel 
to market generating good quality
work for our Facilities and Project
Services divisions, and we will
continue to invest in projects as 
a means of helping to secure the
development of our core businesses.
Adrian Ringrose
Chief Executive
9 March 2004
• 5 projects reached financial 
close
• Named preferred bidder in 
3 projects
• Army Training Estate mobilised 
and became fully operational
• Cornwall Fire Stations and 
Hattersley and Southampton 
schools became fully operational
Left to right
Jose de Alvalade Stadium for the Sporting Club de Portugal Work was
carried out on this 52,800-capacity building using 800 tonnes of Megashor
and Super Slim Soldiers, devised and implemented by RMD Kwikform Ibérica
Conference Palace Hotel More than 1,300 detailed drawings were created
and over 30,000m
2
of Kwikstage propping and decking were supplied for this
structure, for the upcoming GCC heads of state conference in Abu Dhabi
Welbeck - The Defence Sixth Form College This PFI project for the MOD
is being constructed by Project Services and will be managed by Facilities
Services over its 28-year life 16 Interserve Plc  Annual Report 2003
Defence 
In February 2003 the Interserve subsidiary,
Landmarc Support Services, won one of
the largest outsourcing contracts ever
awarded by the MOD. It was also one of
the largest Public Private Partnerships to
have been signed at the time.
The Army Training Estate (ATE) comprises
some 130 training areas and ranges in
England, Scotland and Wales and covers
approximately 1 per cent of the British
land mass. It is used by the armed forces
to train soldiers and give them experience
in a wide variety of terrains under diverse
operational conditions. Having brought
the management of all this land together
for the first time, the MOD recognised
that the skills required to control a large,
complex landholding are different from
those of running modern armed forces. It
therefore undertook an extensive
competition to find a long-term strategic
partner to assist in the management and
running of the ATE.
Landmarc’s selection for the £600 million
contract was the result of a number of
factors including Interserve’s experience
in working at a strategic level with the
MOD for many years, giving it a solid
understanding of the requirements of the
modern military environment. The
company also had a proven track record
of handling TUPE transfers effectively in
many other public-sector contracts and
maintains a philosophy of obtaining the
best from its staff by investing in training
and development.
The ATE contract mobilised in April 2003
and is now fully operational. The services
Landmarc provides include almost all
support activities not directly related to
the training itself. It runs the built estate,
camps and accommodation, the rural
training areas and training ranges and a
booking and management information
system. It also provides support to
Defence Estates on environmental and
other issues. In addition to the initial 10
years of the contract Landmarc will be
eligible for a five-year extension if it
maintains the successful performance
delivered so far.
Army Training Estate PPP 
Working in a dynamic environment
Case studies Interserve Plc  Annual Report 2003  17
Custodial/police 
Interserve Facilities Services’ contract
with the Metropolitan Police Service
(MPS) began in 1999. It is large, diverse
and complex, involving the delivery of a
number of related support functions
throughout the MPS’s operational territory
within the M25. This covers 350 separate
sites and more than 1,200 buildings
including New Scotland Yard, the police
training college at Hendon, offices,
garages, premises for housing and training
dogs and nearly 300 police stations.
The main services provided across this estate
under the initial five-year contract were:
• planned and reactive mechanical and
electrical maintenance, managed
through a dedicated help-desk
• security access systems and 
security services
• messenger services
• document reprographics
• mobile handyman force
•radio masts and towers (added during
the contract term)
• uninterruptible power supply systems
• special events
‘Special events’ covers a multitude of
planned and reactive activities such as
creating and setting up notices for events
such as Wimbledon, the London Marathon
and the Boat Race, providing and
deploying barriers, spotlights and other
temporary equipment at incidents and
making signage including witness appeal
boards. It even includes supplying and
using body bags and incident tents.
Interserve personnel can travel anywhere
in the country when the MPS’s expertise
is called upon by other forces.
As the five-year contract came to a close
the MPS awarded the company a two-year
extension worth approximately £60
million. Not only did this include all the
services originally provided, it was also
increased in scope through the addition
of several mainly managerial and
technical services such as statutory
inspections and surveys, traffic census
support and an extended help-desk
facility. These were previously supplied by
a third party and are worth in the region
of £5 million each year. As David Hill,
Director of Facilities Management for the
Metropolitan Police, commented, “We’ve
developed a partnership of trust with
Interserve over the last five years. The
company has shown its commitment and
its ability to deliver a high level of service
across our estate, which is why we’re
happy to award this extended contract.”
Metropolitan Police Service
Freeing the client to deliver its services 18 Interserve Plc  Annual Report 2003
Industry
With an annual production capacity of
over 1.5 million tonnes and covering 370
acres, BP’s Hull site is a strategic part of
the company’s worldwide operations. It
manufactures seven petrochemical
products on a global scale and is Europe’s
largest producer of acetic acid (700,000
tonnes a year) and the world’s second-
largest producer of vinyl acetate
monomer (250,000 tonnes a year).
Processing such volumes of chemicals
safely and efficiently requires an
extensive ongoing maintenance and
renewal regime of considerable scale.
Traditionally the diverse services
necessary to support the site would have
been provided by individual specialist
organisations such as instrument
technicians, pipefitters, welders,
electricians, scaffolders, painters, 
insulators, joiners and many others. 
Each of these would have had its own
interface with the company’s managers
and would have worked with its own
priorities and schedule in mind. BP
wanted a different approach and, in
Interserve Industrial Services, found its
ideal partner.
Interserve’s management approach, the
breadth of its service capabilities and its
exceptional safety record were critical
factors in BP’s choice. It won a three-
year contract for the provision of several
services in the highly complex, time-
critical environment and took on the
role of project co-ordinator, giving BP a
single point of contact instead of having
to manage multiple interfaces. The
relationship has since developed to
include more services and a deeper
integration with BP’s own managers,
such that the two companies now work
together as a single team.
In 2003 Interserve won a three-year
extension to its contract with two
further one-year options. Services
include project management, design 
and procurement, plant repair and
maintenance, mechanical and pipework
fabrication and installation, electrical
and instrumentation installation, civil
engineering and construction, building
services, scaffolding, thermal insulation
and industrial coatings.
BP Petrochemicals, Hull
Delivering safety, efficiency and teamwork
Case studies continued Interserve Plc  Annual Report 2003  19
Education
Having determined that three new
secondary schools were needed to 
replace and augment existing facilities,
Southampton City Council saw PFI as the
route which would deliver the schools
most efficiently and with the greatest
value for money. Interserve Investments
managed the Group’s bid and was
successful in securing the contract, worth
£37 million to Interserve Project Services
in design and construction turnover and
£25 million to Interserve Facilities Services
over the contract’s 28-year lifetime.
Financial close was reached in October
2001. The next month our Facilities
Services division began providing interim
services at the existing schools while our
Project Services division started the
construction of the new buildings
adjacent to these sites. 
The first school to be completed, on
schedule in April 2003, was the 900-place
Redbridge Community School, which has
been awarded specialist sports status. It 
offers state-of-the-art facilities and
equipment including a new sports hall
and gymnasium and first-class ICT rooms
and learning areas. The school also has 
a dedicated Hearing-Impaired Unit for
children with hearing difficulties.
The other two schools, Woodlands
Community School (shown in the 
picture, 1,050 places) and Cantell School
(1,300 places), also opened on schedule
for the Autumn term 2003. We created
classrooms, Learning Resource Centres,
laboratories for Science, Design &
Technology, Food Technology and
Languages, offices, kitchen and dining
facilities, gymnasia and sports halls, 
as well as outdoor sports facilities
including floodlit all-weather pitches. 
All three schools have a wing serving 
the local community, including nurseries
and crèches.
Once the new schools were open we
began demolition of the old buildings and
transferred operations from these 
to the new facilities, where we have
responsibility for a broad range of
services such as caretaking, cleaning,
catering, building maintenance, 
grounds maintenance, energy services
and security.
Southampton Schools PFI
Combining skills to deliver whole-life services 20 Interserve Plc  Annual Report 2003
Health
In 2002, aiming to improve efficiency and
value for money in capital procurement,
NHS Estates inaugurated the pilot of a
sophisticated framework programme
known as ProCure21. Interserve Project
Services won its place as one of only five
Principal Supply Chain Partners (PSCPs),
demonstrating the strength of its supply
chain and its ability to deliver good
quality projects reliably on time and to
budget – the fundamental drivers behind
the programme.
ProCure21, covering all publicly-funded
construction projects with a capital cost
greater than £1 million, has been
developed following comprehensive
consultation from within the NHS and
with experts from the private sector and
in academia. The partnering programme
not only removes duplication of effort in
the tendering process but also brings 
the best of the construction industry
together to deliver better value for
money and better clinical facilities 
for patients.
Interserve Project Services won the first
two projects to be released under the
pilot programme: the creation of
Withington Community Hospital and the
strategic redevelopment of St Helen’s
Hospital (shown in the picture). On the
strength of its performance here and in 
a number of further projects, and after
an exhaustive assessment process, the
company was selected as one of 
12 PSCPs in the national ProCure21 
roll-out announced in September 2003,
estimated to be worth an aggregate 
£7 billion over five years. Interserve’s
expertise in helping the NHS deliver
better patient care is now available to
over 600 NHS trusts without the need 
to tender in the traditional way.
South Tees Hospitals NHS Trust became
the first beneficiary when, just as it had
in the pilot, Interserve won the first
contract to be awarded in the national
programme: the construction of new
facilities and the refurbishment of
existing buildings at Friarage Hospital 
in Northallerton, North Yorkshire.
NHS ProCure21
Working in close partnership
Case studies continued Interserve Plc  Annual Report 2003  21
Commerce
In October 2000 Interserve Project
Services became one of only four Tier 1
Suppliers to be named in the framework
programme set up by BT to improve the
speed, predictability and value of the
property services provided to its
businesses. The programme, with an 
initial length of six years and the option
to extend for a further two, covers 
both high value, low volume capital
projects and high volume, lower value
maintenance projects throughout the UK.
Interserve’s culture, organisation and
structure have been developed to
cultivate partnering relationships with
suppliers and sub-contractors in order to
capture their capacity for creativity and
innovation. This, combined with our well-
established national network of offices
linked to a core team acting as a centre 
of excellence, led BT to select Interserve
for the framework agreement.
We have successfully completed many
projects under the programme and are
working on several others. Among those
completed are: the new headquarters for
BT Global Services in Watford – BT’s most
advanced office yet with future-proofed
IT systems and wireless data transfer
capabilities; high specification offices for
BT Retail in Leeds (shown in the picture);
lifecycle replacement works to the roofs
and other elements of a number of
telephone exchanges across the country
(25 in 2003 alone); and the upgrading of
six BT Call Centres to New Generation
Contact Centres.
The BT framework programme is
characterised by teamwork,
transparency and shared knowledge. 
A key tenet is that experience gained 
as projects are undertaken should be
applied to future work in a process of
continuous improvement. In addition 
to the positive customer feedback
received, one measure of this is that 
the Interserve partnership has succeeded
in reducing the construction cost per
square metre by 12 per cent over the
three-year life of the programme to date.
BT framework programme
Putting continuous improvement into practice 22 Interserve Plc  Annual Report 2003
Infrastructure
When disaster struck the newly-
constructed Boadilla Tunnel outside
Madrid, Spain, the contractor, a joint
venture of the four biggest Spanish
construction companies, needed a fast,
high-quality and cost-effective way of
rebuilding it. Interserve’s Equipment
Services division provided the solution.
The M50 motorway will, when complete,
circle Madrid in much the same way as
the M25 circles London. A section of this
outer ring road passes through the
residential community of Boadilla, some
9 miles to the west of Madrid. In order 
to maintain the community’s integrity 
an artificial tunnel, 225 metres long and
designed to carry three lanes of traffic,
was constructed by excavating the
ground, creating a tunnel shell and
finally covering the shell with soil. It 
was during this last stage that things
went wrong: part of the tunnel collapsed
under the weight of the earth on top 
of it.
The contractor called in specialist
engineers from Interserve Equipment
Services to devise a method of rebuilding
the damaged section. Although
Interserve had not been involved in 
the original project, its design offered
significant savings in construction time
compared to the alternatives considered.
The design began with building a
falsework frame outside the tunnel then
placing curved formwork panels on top
on lengthways steel beams. The whole
structure was towed into the tunnel in
modules and the new section of tunnel
shell was then created by pouring
concrete around the form in three
carefully-controlled operations, the
equipment being moved along the
freshly-created tunnel between 
each pour.
This approach, using largely standard
materials and avoiding the need for 
a rail-mounted system, reduced the
amount of equipment needed and saved
the team valuable time on site – with 
the result that this section of the M50,
carrying approximately 80,000 cars a
day, will be open some two to three
months earlier than would otherwise
have been possible.
Boadilla Tunnel reconstruction – Madrid, Spain
Exceeding customer expectations
Case studies continued Interserve Plc  Annual Report 2003  23
Central and local government
In the late 1990s the Inland Revenue and
the Department of Social Security (later
to become the Department for Work and
Pensions) decided to consolidate
operations at 12 sites in the north-east of
England into just four. They selected an
Interserve joint venture with AMEC to
deliver the PFI project.
The redevelopment of the Newcastle
Estate began in February 1998 with major
refurbishment and remedial works by
Interserve at two existing sites at Durham
House, Washington, and Tyne View Park,
Newcastle. Meanwhile AMEC undertook
two new developments at Benton Park,
Newcastle, and Waterview Park, 2 miles
from Washington town centre. In tandem
with this, Interserve managed the staged
transfer of over 12,000 staff and a variety
of equipment from their old locations to
temporary and permanent offices.
After the initial phase of works
Interserve Project Services negotiated
two supplementary design and build
projects as part of the NEDFAR
(Newcastle Estate Development Further
Accommodation Requirement)
programme. The first of these was the
creation of a fast-track office building
and associated facilities housing about
600 call-centre staff at Tyne View Park
(shown in the picture). The second,
worth £45 million and awarded on the
strength of its performance on the Tyne
View project, was the construction on
the Benton Park site of a stand-alone
restaurant and four three-storey office
buildings to accommodate 2,400 staff.
The four sites, when complete, will house
approximately 16,000 people and cover
over 1.5 million square feet. Interserve
Facilities Services is responsible for a
wide range of services across the
different sites until 2029. Valued at a
total of £135 million over the life of the
contract, these services include:
• Estate management
• Engineering & technical services
• Building fabric repair & maintenance
• Grounds maintenance
• Window cleaning
• Pest control
• Fire protection systems
• 24-hour help desk
• Project management
Inland Revenue PFI, Newcastle
Managing change while the client works on 24 Interserve Plc  Annual Report 2003
• Reportable injuries reduced 
by 12%
• ISO 14001 registrations 
increased
• Waste reduction initiatives 
implemented
• Investment in training & 
development increased by
over 25%
• £57,000 donated by the Group 
and staff to SportsAid over its 
2 years as selected charity
• Macmillan Cancer Relief 
chosen as new charity for 
the next 2 years
Interserve’s business is founded on
building long-term relationships,
from clients to suppliers and
employees to communities. We aim
to ensure that our conduct is of the
highest standard, that our dealings
with stakeholders are mutually
beneficial and that our interaction
with the environment minimises any
negative impact.
We manage these issues under three
principal headings:
• health and safety
• environment
• social and ethical
Health and safety
Health and safety is covered in detail
in the Directors’ report on pages 35
and 36. Some highlights of 2003 are:
• Total number of reportable
injuries recorded reduced by 
12 per cent
• All-labour incidence rate reduced
for third consecutive year
• Over 260 managers attended
safety management courses
accredited to either the IOSH
(Institution of Occupational
Safety and Health) or the CITB
(Construction Industry Training
Board) 
• Six RoSPA (Royal Society for the
Prevention of Accidents) and BSC
(British Safety Council) national
safety awards received
• Group Health and Safety Policy
statement reviewed and reissued
• Accreditation to Occupational
Health and Safety Assessment
Series (OHSAS 18001) maintained
in Project Services
• Commitment to gain OHSAS
18001 accreditation in all major
business units
Corporate Social Responsibility Interserve Plc  Annual Report 2003  25
Environment
Interserve’s activities have an impact
on the environment both directly
and in the services we provide to
clients when building, maintaining
and managing their facilities. To help
us focus on reducing this impact we
have adopted the following policy:
Group Environmental Policy
Statement
The policy of the Group is to
conduct its operations in an
environmentally sustainable manner
in order to protect the environment
for future generations.
In implementing its policy the Group
will seek, through its operating
companies, to ensure:
• Compliance with relevant
environmental legislation and
regulation
• Prevention of pollution
• The efficient use of natural
resources
• The minimisation of waste and
emissions to air and water
• Environmental awareness of all
employees
• Effective monitoring of
environmental performance
• Continual improvement in
environmental performance
The Group will set targets and
objectives for the improvement of
environmental management and will
publish details of its environmental
performance.
All employees have a role to play 
in care of the environment. The
Group has appointed a director to
be responsible for environmental
issues, and environmental
responsibilities are allocated 
to line management throughout 
the organisation.
This policy will be subject to
periodic review to ensure it
continues to meet the Group’s
environmental requirements.
Environmental Management
Standard ISO 14001
Operating companies are responsible
for developing arrangements to
manage their environmental impact.
This is generally achieved through
adopting an Environmental
Management System (EMS) that
meets the requirements of ISO 14001.
ISO 14001 is the internationally
recognised standard for EMSs. It
specifies a process for controlling and
improving a company’s environmental
performance and consists of:
• General requirements 
• Environmental policy 
• Planning 
• Implementation and operation 
• Checking and corrective action 
• Management review
In the 2002 report and accounts 
we reported that we were working
towards ISO 14001 registration in
Interserve (Defence) Ltd, which is
part of the Facilities Services
division, and in the various area
offices of the Regional Services
section of Project Services’ Building
group. Interserve Defence achieved
accreditation in 2003 as did the
first of Building group’s regional
offices, South Wales. Our approach
with these offices is to progress 
in a sequential programme and the
remaining locations aim to receive
accreditation during 2004.
We continue to hold ISO 14001
registration in:
• our contracts with the Office 
for National Statistics and 
the Cumberland Infirmary 
(in Facilities Services)
• the Industrial Services office 
with responsibility for Safety,
Health and the Environment,
where the EMS was successfully
audited for re-registration and is
implemented company-wide
• the Infrastructure group (Civils
and Water) within Project Services
• the Strategic Projects group
within Project Services
Left to right
BP, Hull Brian Bevan, Interserve Operations Manager received the
Outstanding Health and Safety Performance award from the National
Joint Council for the Engineering Construction Industry on behalf of
Interserve Industrial Services
Boccia David Smith, a partially-sighted boccia player, recipient of a
SportsAid grant, has been selected to take part in the Paralympics in
Beijing in 2008
Ice hockey Brothers Shaun and Carl Thompson received SportsAid grants
from the Slough contract run by the Facilities Services division 26 Interserve Plc  Annual Report 2003
Environmental impact
An overall assessment of the
environmental effect of the Group’s
operations identifies the following
main impacts:
• Carbon dioxide emissions from
direct and indirect energy
consumption
• Waste generation and disposal
from offices and sites
• Natural resource usage
• Potential for pollution incidents
Carbon dioxide emissions
Carbon dioxide emissions represent
the Group’s main environmental
impact. The key elements are:
• Fuel (diesel and petrol)
consumption in company cars,
vans and commercial vehicles
• Gas, oil and electricity
consumption for office and 
site heating
• Other transport used by employees
on company business (planes,
trains etc.) and transportation of
material to and from sites
Interserve is increasing its data
collection activities to help monitor
these factors. Our estimate of carbon
dioxide emissions in 2003 is 30.9
tonnes per £million of turnover
(37,440 tonnes in total), apportioned
as shown in the diagram below. 
Waste generation and disposal
While policies and systems are
generated at Group, divisional or
business unit level, implementing
these is generally the responsibility
of individual offices or sites. The
following are examples of how we
are doing this.
• Industrial Services’ Liverpool site
introduced aluminium can and
mobile phone recycling and
recorded increases in the amount
of paper (+46 per cent), ink
cartridges (+48  per cent), laser
cartridges (+67 per cent) and
photocopier cartridges (+61 per
cent) recycled.
• Facilities Services liaised with
wildlife consultants and advised
the MOD on amendments to the
planned maintenance regime at
its RNAS Yeovilton site in order to
allow a colony of crested newts
discovered in the ditches on the
camp to thrive.
• Innovative solutions have been
applied to minimising the
environmental impact in
Industrial Services’ contract to
paint the Avonmouth Bridge:
• specially-designed dust
extraction units allow the shot-
blasting medium to be reused while
minimising the emissions of lead
paint dust into the atmosphere
• an estimated 8,250 drums
would normally have been used
to provide the paint. A paint
system has been designed that
allows paint to be delivered in
bulk, with only a neoprene liner
to be disposed of. This removes
the requirement to dispose of the
paint tins as special waste and
also minimises wastage of the
paint being used
• All Project Services’ construction
sites are required to address
waste-handling issues through
their site management plan. 
For instance:
• a mobile crusher was brought
in at Ashford, Middlesex, where
the new prison is being built, so
that waste building blocks could
be crushed and used as fill on site
• the material arising from the
demolition of the buildings on
the Peterborough Prison contract
was processed and the hard core
used for site preparation and
landscaping
• Site Services, part of the Project
Services division, provides a
waste-handling service and
operates a waste transfer station.
Waste is collected from
Interserve’s and other clients’
sites and is segregated and
consolidated. In 2003 the station
recovered a total of 4,148 tonnes
which would otherwise have
gone to landfill – an increase of
over 170 per cent. Recovered
materials include timber, metals
and hardcore.
• When Equipment Services’
products need to be repainted,
water-based rather than solvent-
based paints are used. There is
also a programme of installing
filtration in all the branches
carrying out this activity to
remove particulates from the
atmosphere. In the longer term,
products are progressively being
galvanised to avoid repainting.
Corporate Social Responsibility continued
Company vehicles 70%
Heating 27%
Other transport 3%
Estimate of apportioned carbon dioxide 
emissions in 2003 Interserve Plc  Annual Report 2003  27
Natural resource usage
There is little use of water as a process
component and most consumption is
in an office or site environment to
provide welfare facilities.
We use aggregates and timber in
construction and shop-fitting
activities. The materials used are
often specified by the client but
wherever possible we look at using
recycled aggregates and timber from
sustainable sources.
Equipment Services’ equipment is
made mainly from metals such as
steel and aluminium and is designed
to have a long life. Products which
are damaged are either repaired and
placed back in the fleet or are
recycled. Those products which are
made of wood are from sustainable
sources.
Potential pollution
One of the key objectives of 
the environmental management
arrangements implemented is 
to avoid pollution incidents. 
During 2003 there were:
• no cases of enforcement action
taken against the Group by the
Environment Agency
• no incidents of pollution
reportable to the Environment
Agency
Social and ethical
Diversity and equal opportunities
Interserve is committed to a policy
of diversity and equal opportunities
in its employment practices. Our
policy supports the fundamental
belief that all our employees,
including potential recruits, are
equal regardless of gender, race,
disability, sexual orientation, age,
religion, religious belief or any other
reason that might be assumed to
limit their contribution or potential.
As far as possible the structure of
the workforce should reflect the
diversity of Interserve’s external
stakeholders.
All employees have a personal
responsibility for the practical
application of equal opportunities,
demonstrated by respect for the
individual, in their everyday 
dealings and working relationships
with colleagues, customers, 
suppliers and other parties.
Ethics
It is important that individuals
throughout all of Interserve’s
operations retain a set of core values
and approaches to the process of
doing business. The reputation of the
Group and the trust and confidence
of those with whom it deals are
among its most vital resources, and
the protection of these is of
fundamental importance. We
demand and maintain high ethical
standards in carrying out our
business activities and tolerate no
form of corrupt practice. To support
an open and honest operating
environment, Interserve has a
whistleblowing policy and procedure
which is available to all employees.
Our ethical policy includes guidance
for managing our relationships with
customers, suppliers and competitors
and addresses the specific issues
associated with international
business. We consider harassment of
any employee for any reason to be
unacceptable.
Investors in People
Investors in People (IiP) is the
national standard which sets a level
of good practice for training and
development of people to achieve
business goals. It provides a
framework for improving business
performance and competitiveness
through a planned approach to
setting and communicating business
objectives and developing people to
meet these objectives.
Interserve has achieved accreditation
at its head office and at locations
within all of its principal operating
divisions. We shall continue to be
reviewed regularly against the
standard in order to gain the benefits
of ongoing improvement, both for
our people and for the business.
During 2003 we increased our
investment in training and
development across the Group to
£1.8 million (2002: £1.4 million).
Left to right
Harmondsworth Detention Centre Elaine Reynolds represented the
British Kidney Patient Association to receive a cheque for over £5,000
raised by Project Services staff working at the Detention Centre
Trampolining Fourteen-year-old Michael Wood, a recipient of a SportsAid
grant, has been included in the British Youth Squad
Cancer Research UK A team from the Group’s head office completed the
5km ‘Race for Life’ walk to raise over £1,300 28 Interserve Plc  Annual Report 2003
Charitable giving
Interserve believes in contributing 
to the well-being of the communities
in which it operates. We have a
programme which operates at
different levels: at Group level we
have a chosen charity and make an
annual donation (£25,000 in 2003);
we encourage business units to run
charitable events, either for the
chosen Group charity or for another
cause that is important to the area
or the people involved; and we offer
support for employees to undertake
sponsored activities.
Over the last two years we have
worked with SportsAid, a charity set
up to assist young athletes and
sportspeople between the ages of 12
and 18 by helping cover the costs of
their training and travelling. During
our association with SportsAid
Interserve staff have made a great
difference to the lives of many
young people, raising grants through
a wide variety of events. In all, some
£7,000 raised by staff has been
donated to 28 young athletes in
addition to the £50,000 donated by
the Company. We are hopeful that
some of these may one day be as
successful in their chosen sports as
SportsAid alumni such as Sir Steve
Redgrave, Matthew Pinsent, Paula
Radcliffe and Tanni Grey-Thompson.
Among the recipients of grants in
2003 were:
• David Smith, a partially-sighted
boccia player who became
national champion in 2003 and
has been selected to take part in
the Paralympics in Beijing in 2008.
The grants for David and for
Michael Wood (see below) were
made possible by combining
funds raised in a range of
activities across the Group.
• Trampolinist Michael Wood, 14,
who has consistently come in the
top 10 in the under-18 category
and has been included in the
British Youth Squad.
• Shaun Thompson, a Slough ice
hockey player who has played for
the England under-16s and is hope-
ful of places in the under-17s and
the Great Britain under-18s. His
grant came from the Facilities
Services office managing the Slough
council contract. Shaun’s younger
brother Carl is also a recipient.
• Cross-country runner India Lee
from Hampshire, who came
eighth overall in the 2003
national cross country under-15s
competition. Her grant, the final
one made in conjunction with
SportsAid, resulted from a raffle
organised by the staff and
contractors at DHE 2, Warminster
(a Facilities Services contract for
the MOD). As this raised over
£1,000 there was also enough to
enable a substantial donation to
the local rugby club.
Interserve has now chosen another
charity with which to work over the
next two years: Macmillan Cancer
Relief. Macmillan provides expert
care and practical support to
improve the quality of life for
people living with cancer. Its
activities include funding specialist
Macmillan nurses and doctors,
building cancer care centres and
providing a range of information
and support services. We are
forming committees in each of 
our divisions that will help organise
fund-raising events and assist
individuals in sponsored activities.
Corporate Social Responsibility continued Interserve Plc  Annual Report 2003  29
Group companies, business units and
employees also raised money for a
wide range of other causes during
the year – too many to be included
here. Among the activities and the
beneficiaries were:
• All Interserve divisions took part
in the Financial Times’ Crisis at
Christmas Card Challenge, where
money is donated to charity
instead of being spent on
Christmas cards. £7,800 was
raised in 2003 of which £2,000
was donated to the appeal with
the remainder being distributed
among four other charities: the
Anthony Nolan Trust, Riding for
the Disabled, Samaritans and
Barnardo’s. Each received £1,450. 
• Jo Colvill, an accounts assistant
at the Group’s head office,
undertook a sponsored bike ride
in Cuba in which she raised
£2,800 for the Camden Society, a
day-care centre for the mentally
and physically handicapped.
• Project Services staff and
contractors at Harmondsworth
Detention Centre undertook a
variety of activities to raise over
£5,000 for the British Kidney
Patient Association.
• Staff at the Group’s head office
took part in the ‘Race for Life’ for
Cancer Research UK raising over
£1,300 for the charity.
• Facilities Services gave £2,500 to
INSPIRE in sponsorship of a
charity polo match between
National Hunt Jockeys and Three
Day Eventers. It also designed and
produced the official invitations.
The INSPIRE Foundation funds
medical research into the
recovery of mobility following
spinal cord injury.
• Following a donation of £5,000
by Interserve to Project Compass
in 2003, a representative of
Facilities Services is now a
member of the steering group
alongside a number of leading
charities, businesses and the
government. Project Compass is
an initiative to address
homelessness among ex-service
men and women. It seeks to
establish a support structure to
enable these vulnerable people to
move into and sustain
employment by taking personal
responsibility for their own
future success.
• We are the principal sponsor 
in the bid by Ecclesfield School
(one of the six schools built and
operated by Interserve under 
its PFI project in Sheffield) to 
gain specialist status for the
performing arts and have also
sponsored the school hockey team.
INSPIRE Teams competed at this charity polo match, an event supported
by Facilities Services and visited by HRH The Prince of Wales
Ian Burns 30 Interserve Plc  Annual Report 2003
The Chairman’s statement and Chief Executive’s review of
operations provide an overview of the Group’s results for 2003.
This review provides further information on key aspects of the
performance and financial position of the Group.
Accounting policies
The Directors are of the opinion that a trade in property activities
is no longer being conducted by the Group. As such the profit on
sale of land and buildings has been shown as an exceptional item
in accordance with FRS 3 “Reporting Financial Performance”, with
comparative figures restated accordingly. The total profit made
from disposals in 2003 was £2.7 million (2002: £2.5 million).
The revised transitional arrangements of FRS 17 “Retirement
Benefits” continue to be adopted such that this standard has not
been implemented in full pending the introduction of International
Financial Reporting Standards in 2005. Full balance sheet and profit
and loss disclosure is, however, provided in the notes on the
accounts as if the standard were to have been implemented in 
full during 2003.
The introduction of International Financial Reporting Standards is
anticipated to first impact the Group financial statements for 2005.
Work has been undertaken during the year in preparation for this
transition to identify the main areas of change, assess the impact
that adoption will have and to determine and initiate the work
necessary to meet reporting requirements under the new standards.
Pending final clarification of requirements, the main areas of
impact on the Group financial statements are expected to be in 
the accounting treatment of defined benefit pension schemes and
of goodwill.
Exceptional items – disposals and closures
During the year the Group has announced the sale or closure of
a number of businesses on the basis that they did not offer the
prospect of sustained growth in shareholder value. Costs of
£24.9 million associated with the sale or closure of these businesses
have been treated as exceptional and trading results have been
reported as discontinued. The exceptional charge comprises
£20.5 million relating to closure costs and asset revaluations and
£4.4 million relating to the recycling of pre-1998 goodwill
previously written off to reserves. In all cases the closure
programmes have been executed on, or ahead of, plan. 
Interest
The Group interest charge of £3.2 million (2002: £4.0 million)
comprises both amounts due in relation to Group debt and the
Group’s share of the cost of non-recourse borrowings within
joint venture companies, principally in relation to PFI projects.
The charge can be analysed as follows:
£million 2003 2002
Net interest payable on Group debt (3.5) (3.7)
Interest receivable from PFI sub-debt 1.8 1.5
Share of interest in associates/JVs:
Interest receivable 8.8 7.1
Interest payable (19.5) (13.9)
Add: capitalised interest 9.2 5.0
Group interest charge (3.2) (4.0)
Interest receivable in associates/JVs reflects the increasing maturity
of the Group’s PFI portfolio and, in particular, the fact that 12
projects have now reached their operational stage (2002: eight).  
Interest payable on non-recourse debt held within construction
contracts is capitalised as a cost of construction until the project
is completed from which point it is amortised over the remaining
income-generating life of the asset. 
Taxation
Tax on profits before exceptional items and goodwill amortisation
of £9.3 million represents an effective rate of 32 per cent. This rate
reflects the mix of the Group’s businesses both within the UK and
overseas. A credit of £4.9 million relating to exceptional charges
gives a total tax charge for the year of £4.4 million.
Net debt and cash flow
Year-end net debt was £22.5 million, representing a net inflow of
£20.3 million over the year. This can be analysed as follows:
£million 2003 2002
Operating cash inflow
1
38.4 54.1
Interest paid (1.7) (2.5)
Dividends from associates 2.7 2.1
Tax paid (4.9) (15.5)
Capital expenditure (15.8) (28.3)
Sale of fixed assets 12.7 8.9
Other 0.8 (2.9)
Free cash flow 32.2 15.9
Dividends (15.1) (14.1)
Non-recurring proceeds
2
9.3 21.2
PFI investments (6.1) (3.0)
Movement in net debt 20.3 20.0
1
Operating cash inflow comprises net cash inflow from operating activities
of £40.4 million (2002: £53.1 million), less £2.0 million (2002: £nil) cash
inflow from operations sold or closed during the period and before £nil
(2002: outflow £1.0 million) relating to exceptional operating costs.
2
Non-recurring proceeds represent proceeds realised from the sale or closure of
businesses and the sale of properties.
Finance Director’s report Interserve Plc  Annual Report 2003  31
Free cash flow above is defined as cash generated before the
payment of dividends, investments in PFI equity and sub-debt and
amounts realised from sale or closure of discontinued businesses
and properties. Over the year free cash flow generation of
£32.2 million represented an increase of £16.3 million over 2002
despite lower profits and the resumption of cash contributions 
into the Group’s defined benefit pension scheme of approximately
£10 million in the year.
Average debt levels across the year can differ significantly from
the level at the balance sheet date. Through 2003 average net debt
was £67.3 million (2002: £82.1 million).
Dividend
The directors recommend a final dividend for the year of 9.3p, to
bring the total for the year to 13.5p, an increase of 3.8 per cent
over last year. This dividend is covered 1.2 times by Headline
earnings per share and 2.1 times by free cash flow during the year.
PFI/PPP investments
At the balance sheet date the Group had £35.3 million of committed
investment in 20 PFI/PPP projects which had reached financial close.
Of this £20.4 million had been invested at that date, with the
balance due to be invested over the next three years. During 2003
£1.1 million was returned to the Group in repayment of loan stock
principal and interest.
The Group’s share of gross liabilities of £304.9 million principally
represents non-recourse debt within these ventures to fund 
capital building programmes and working capital requirements.
On a further two projects the Group has been nominated as
preferred bidder but these had not reached financial close at 
the year end. Completion of these projects will entail a further
investment commitment of £5.9 million. In accordance with UITF
abstract 34 “Pre-contract costs”, third party bidding costs of
£1.0 million (2002: £2.7 million) have been carried forward at 
the balance sheet date in relation to these two contracts.
Pensions
The Group’s principal pension scheme is the Interserve Pension
Scheme (the “Scheme”). The defined benefit section of the Scheme
is now closed to all but a very few new entrants and those
employees who, under agreement, TUPE transfer to the Group 
from the public sector. A defined contribution section of the
Scheme has been established for all new eligible employees.
With effect from August 2003 changes were introduced to the
defined benefit section of the Scheme arrangements whereby
member contributions were increased for a given level of
benefit accrual.
During the year the triennial valuation of the Scheme was
finalised. As a result a number of changes have been made to the
funding arrangements in place for the Scheme. These include the
agreement to resume cash contributions by the Group of
approximately £10 million per annum. A full year’s contribution
has been made in 2003.
At 31 December 2003 the Group pension deficit under FRS 17 was
£88.8 million (2002: £79.0 million). Movement in the deficit during
the year was driven by changes in market conditions – principally
an increase in the rate of forecast inflation and a decrease in the
liability discount rate outweighing an increase in equity values.
Full FRS 17 disclosures are provided in note 7b to the financial
statements.
Treasury
Group Treasury operates to ensure that sufficient liquidity is
available to meet foreseeable needs and to control the use of
financial instruments to manage the Group’s risk.
Interest rate risk
Group borrowings are principally denominated in sterling.
Previously these borrowings were predominantly on floating
rates given the general expectations for UK and global rate
movements. During the year arrangements have been put in
place by caps to protect £40 million of the Group’s ongoing
debt requirement over the next two to four years. 
Liquidity risk
At the balance sheet date the Group had total facilities in place
of £206 million. Included within this is the main revolving credit
facility which was extended and renewed in the year to £165
million with a five-year term. These facilities are sufficient to
meet forecast borrowing requirements for at least the next 12
months.
Foreign currency risk
In preparing the accounts, profits and losses from overseas
activities are translated at the average exchange rates applying
during the year. The balance sheet is translated at the year-end
exchange rates. The impact of fluctuations in exchange rate
during the year did not have a significant effect upon the
reported results.
The Group has a number of overseas subsidiaries and associates
whose revenues, expenses and net assets are denominated
principally in local currencies. It is Group policy to protect the
sterling value of overseas net assets where practical and material.
All material foreign currency trading exposures are fully hedged. 
T C Jones
Group Finance Director
9 March 2004
Finance Director’s report continued 32 Interserve Plc  Annual Report 2003
The directors of Interserve Plc present their report and the audited
accounts for the year ended 31 December 2003.
Principal activities and business review
Interserve Plc is the holding company of a group of integrated
businesses providing facilities services, industrial services, project
services and equipment services in the United Kingdom and
overseas and with a range of PFI investments. The principal
companies of the Group, together with details of their individual
activities and their locations, may be found on pages 71 to 74
and in the Chief Executive’s review on pages 10 to 15 of this Report
and Accounts. Prospects for the future appear in the Chairman’s
statement on pages 8 and 9.
Group results and dividends
The Group loss from ordinary trading activities before taxation 
and after exceptional items and amortisation of goodwill was
£2.9 million (2002: profit of £37.2 million). The detailed results
of the Group are given in the Accounts on pages 46 to 70 and
further comments on divisional results are given in the Chief
Executive’s review. An interim dividend of 4.2p per 10p ordinary
share was paid on 3 November 2003 and the Board recommends
a final dividend of 9.3p per 10p ordinary share, making a total
distribution for the year ended 31 December 2003 of 13.5p per 
10p ordinary share (2002: 13.0p).
Subject to approval of shareholders at the Annual General Meeting
(“AGM”), the final dividend will be paid on 9 June 2004 to
shareholders appearing on the register at the close of business on
19 March 2004. The directors recommend that the retained loss of
£23.3 million be transferred from reserves, as indicated in note 26
to the Accounts on page 69.
Share capital
The authorised share capital of the Company is 150,000,000
ordinary shares of 10p each. During the year 792,344 shares were
allotted as follows:
95,000 ordinary shares of 10p to participants in the Executive
Share Option Scheme on the exercise of options at a price of 
212p per ordinary share; and
697,344 ordinary shares of 10p to participants in the Sharesave
Scheme on the exercise of their options at a price of 199.2p per
ordinary share.
As a result of the forgoing allotments, the issued share capital at
the end of the year stood at 113,756,332 ordinary shares of 10p
each (£11,375,633.20). 
The issued share capital at the date of this report stands at
113,756,332 ordinary shares of 10p each (£11,375,633.20). 
Details of outstanding options over shares in the Company as at
31 December 2003 are set out in note 25 to the Accounts on
page 68.
The Company has authority under a shareholders’ resolution
passed at the AGM held on 14 May 2003 to purchase up to
11,303,941 of the Company’s ordinary shares at prices ranging
between the nominal value for each share and 105 per cent of the
average of the middle market price of the ordinary shares for the
five business days immediately preceding the date on which the
Company agrees to buy the shares concerned. This authority
expires on the date of the forthcoming AGM or 14 August 2004,
whichever shall be the earlier. Shareholders will be asked to renew
the authority, which will include the purchase of shares for
treasury, for a further period of up to 15 months at the AGM.
The Companies Act 1985 requires that any shares issued wholly for
cash must first be offered to existing shareholders in proportion 
to their existing holdings unless authorised to the contrary by a
resolution of the shareholders. Resolutions giving such authority
were passed in 2003. Authorities to renew for one year the power
of directors to allot shares pursuant to sections 89 and 95 of the
Companies Act 1985 will be sought from shareholders at the AGM.
Directorate and directors’ interests
The following (unless otherwise noted) have been directors
throughout the year:
M C Bottjer (Group Chairman)
J M F Padovan*
†
(Deputy Chairman)
A M Ringrose✦ (Chief Executive)
G P Balfour*
C J Groom (retired from the Board on 31 December 2003)
S B Hagerty
A R Hannah
T C Jones (appointed to the Board on 11 August 2003)
N F Keegan* (appointed to the Board on 11 July 2003)
D C Keys (Deputy Chairman and Senior Independent
Director, retired from the Board on 14 May 2003)
M S Lee (retired from the Board on 30 September 2003)
D A Trapnell* (appointed to the Board on 11 July 2003)
J H Vyse
†Senior Independent Director
✦ Appointed Deputy Chief Executive on 1 January 2003 and Chief Executive 
on 1 July 2003
*Non-executive director
As required by the Company’s Articles of Association,
Messrs Hagerty, Ringrose and Vyse retire by rotation and, being
eligible, offer themselves for re-election. Messrs Jones, Keegan and
Trapnell, who were appointed as additional members of the Board,
retire in accordance with the Company’s Articles of Association
and, being eligible, offer themselves for re-election.
At the date of this report the unexpired period of Messrs Hagerty,
Jones, Ringrose and Vyse’s service contracts are one year.
Messrs Keegan and Trapnell do not have service contracts with
the Company.
The directors’ beneficial interests in, and options to acquire
ordinary shares of, the Company and Company loan stock at the
year end are set out in note 6 to the Accounts on page 55 and in
the Directors’ remuneration report on pages 41 and 42 of this
Report and Accounts.
There have been no changes in the directors’ beneficial interests in
and options to acquire ordinary shares of the Company and Company
loan stock between the year end and the date of this report.
The directors do not have any interest in any other Group company.
Directors’ report
For the year ended 31 December 2003 Interserve Plc  Annual Report 2003  33
No director has, or has had, a material interest, directly or
indirectly, at any time during the year under review in any contract
significant to the Company’s business (other than Mr Groom and
Mr Ringrose’s interest in the sale and purchase agreement and loan
notes issued in connection with the acquisition of Building &
Property (Holdings) Limited prior to their appointment as directors
and Mr Hagerty’s interest in loan notes issued in connection with
the acquisition of Fincham Industrial Services Limited by Bandt
Holdings Limited prior to the acquisition of Bandt plc by the
Company – see notes 1, 3 and 8 respectively in the Directors’
remuneration report on page 42).
Substantial shareholdings
As at 9 March 2004 the Company has been notified of the
following interests in shares:
12,618,443 (11.09%) Aviva plc
11,348,673 (9.98%) Henderson Global Investors Ltd
3,888,459 (3.42%) Legal & General Investment Management Ltd
3,691,424 (3.25%) Scottish Widows Investment Partnership Ltd
3,622,350 (3.18%) Prudential plc (M&G Investment Management Ltd)
There are no other notifiable interests, so far as the directors are
aware, comprising material interests of 3 per cent or more, or an
aggregate of material and non-material interests of 10 per cent or
more, in the issued share capital of the Company.
Corporate governance
In June 1998 the Combined Code (the “Hampel Code”) was issued
by the London Stock Exchange. This Hampel Code is based on the
Report of the Hampel Committee and sets out Principles of Good
Corporate Governance and Hampel Code Provisions which
consolidate the work of the earlier Cadbury and Greenbury
Committees and introduced certain new Principles and Provisions.
Section 1 of the Hampel Code is applicable to companies.
A narrative statement on how the Company has applied the
Principles and a statement explaining the extent to which the
provisions in the Hampel Code have been complied with
appear below.
Narrative statement
The Hampel Code establishes 14 Principles of Good Governance
which are split into the four areas described below.
Directors
The Board
The Board comprises five executive directors (seven during the
period under review, save for between 11 August and
30 September 2003 when there were eight), four independent 
non-executive directors (three from 1 January until 15 May, two
from 15 May until 11 July and four thereafter) and a Chairman
(from 1 July 2003, when the roles of Chairman and Chief Executive
were split), whose biographies are set out on page 7 of this 
Report and Accounts.
The Board normally meets monthly throughout the year, 
excepting August, and has a schedule of matters specifically
reserved for its approval. There are also Audit, Remuneration,
Nomination, PFI, Treasury and Allotment Committees with defined
terms of reference.
The Board is responsible, amongst other things, for overall Group
strategy, acquisition and divestment policy, approval of major
capital expenditure projects, approving both material contracts
and contracts otherwise than in the normal course of business of
all subsidiary companies, employee issues and key appointments,
risk management strategy including Group insurances, health and
safety, and social, environmental and ethical matters.
Below the Board is the Executive Committee, comprising the
executive directors, Mr S Maroli, Mr B Melizan and the Company
Secretary, which has its own terms of reference.
Each operating company has regular board meetings chaired by an
executive director, save for the smaller overseas subsidiaries in the
Equipment Services division, which are visited from time to time 
by the relevant executive director and on a regular basis by the
divisional and regional managing directors, divisional financial
director and regional financial controllers.
Directors may, after consultation with the Deputy Chairman, take
independent legal advice in furtherance of their duties at the
Company’s expense up to a limit of £10,000 in relation to any one
event. All directors have access to the advice and services of the
Company Secretary, whose appointment or removal is a matter
reserved for the approval of the Board or any duly delegated
committee thereof.
The individual directors have different skills, experience and
qualifications with certain of their number presently or previously
working in other sectors of the economy, and are able to bring
independent judgement to bear on matters for consideration by
the Board.
Executive directors may be permitted to take a limited number of
outside non-executive directorships in non-competing companies,
subject to the approval of the Remuneration Committee.
Every director receives appropriate training on or before
appointment to the Board and thereafter as necessary.
Group Chairman and Chief Executive
The posts of Group Chairman and Chief Executive were combined
in June 1996 and remained so until 1 July 2003 when Mr Ringrose
took up his appointment as Chief Executive, with Mr Bottjer
continuing as Group Chairman. 
All operational activities report through the executive directors
who focus on co-ordinating the Company’s businesses and
implementing Group strategy.
The Board considers its non-executive directors to be of sufficient
calibre and number that their views may be expected to be of
sufficient weight that no individual or small group can dominate
the Board’s decision-making processes.
The non-executive directors have no financial or contractual
interest in the Company other than by way of their fees and
shareholdings as disclosed in the Directors’ remuneration report.
They do not participate in the Group’s share option schemes and
their service is not pensionable.
Directors’ report continued
For the year ended 31 December 2003 34 Interserve Plc  Annual Report 2003
Supply of information
The Group Chairman and the Company Secretary prepare detailed
agenda papers for each meeting of the Board, which are normally
circulated in advance of each meeting. The agenda papers include
sufficient information from management on financial, business and
corporate issues to enable the directors to be properly briefed on
issues to be considered at Board meetings.
The Group has a comprehensive system for reporting financial
results, cash flows and projections to the Board on a monthly
basis. These are compared with budgets approved by the Board
prior to the commencement of each financial year. The financial
summaries are accompanied by a written report explaining
operating and financial performance, and the cause and effect
of variance from the agreed budgets.
Appointments to the Board
Nominations for appointments to the Board are made by the
Nomination Committee, which comprises the Group Chairman,
who is chairman of the Committee, the Deputy Chairman, the
Chief Executive and at least one other non-executive director.
The Committee has its own terms of reference.
Re-election
All directors are required by the Company’s Articles of Association
to submit themselves for re-election every three years.
Directors’ remuneration
The Remuneration Committee, under the chairmanship of 
Mr Keys (1 January until 14 May 2003), Mr Padovan (14 May until
31 December 2003) and Mr Balfour (from 1 January 2004), considers
and determines the remuneration, whether by way of salary or
otherwise, of the executive directors. The remuneration of the
non-executive directors is determined by the Board within limits
set out in the Articles of Association. The Directors’ remuneration
report is set out on pages 37 to 43 of this Report and Accounts,
and includes details of directors’ service contracts.
Relations with shareholders
The Company encourages two-way communication with both
institutional and private investors. The Group Chairman and the
Chief Executive, accompanied in the majority of cases by the
Finance Director, attended between them 93 meetings with analysts
and institutional investors in the year ended 31 December 2003.
All shareholders are given at least 20 working days’ notice of the
AGM at which all directors and committee chairmen are introduced
and are available for questions.
Accountability and audit
Financial reporting
Detailed reviews of the performance and financial position of the
Company’s operations are included in the Chief Executive’s review
and Finance Director’s report. The Board uses these, together with
the Chairman’s statement and this Directors’ report, to present a
balanced and understandable statement of the Company’s position
and prospects. The directors’ responsibility for the financial
statements is described on page 44 of this Report and Accounts.
Internal control
The Board is responsible for the Group’s system of internal control
and for reviewing its effectiveness. The system is designed to
manage rather than eliminate the risk of failure to achieve
business objectives, and can only provide reasonable and not
absolute assurance against material mis-statement or loss.
The principal features of the system of internal control are:
• An established management structure comprising the Board
with its various committees and an Executive Committee.
• A comprehensive system for reporting financial results to the
Board. Each company prepares monthly results (excepting
January) with a comparison against budget or forecast, 
together with certain key performance indicators, which are
also presented in a consolidated form on a divisional basis. 
The Board reviews these for the Group as a whole and
determines appropriate action.
• All proposals for capital expenditure below £200,000 are
submitted for approval to the Executive Committee. Larger
value proposals and company acquisitions and disposals are
controlled by the Board.
• Manuals setting out Group policy and financial and operating
procedures are in place, with which all Group companies must
comply. These manuals set out the necessary levels of
authorisation applicable for different transactions.
• The Group has certain key areas which are subject to central
management or control, which include management information
systems, safety, legal, insurance, treasury and company
secretarial. These functions report to executive directors and
operate within defined limits and levels of authority.
• During the course of each year members of the Executive
Committee or other senior operational and financial management
visit all trading companies, including those located overseas, to
discuss and monitor performance of those businesses.
• The Audit Committee receives and considers a report from the
Auditors setting out their material findings on the audit of
individual companies. These findings are also considered by the
Executive Committee and matters arising are discussed in depth
with each company.
The Board confirms that it has established the procedures
necessary to implement “Internal Control: Guidance for Directors
on the Combined [Hampel] Code”. A risk management policy
document is available to operating companies’ staff as appropriate
comprising an introduction from the Group Chairman on behalf of
the Board, the Board’s own risk management matrix, the risk
management matrix applicable to their division and their own
company internal controls in order that they understand the
significant risks which are relevant to the tasks which they
perform, apply control strategies which are relevant to those risks
and carry out the fundamentals of good risk management.
An ongoing process for identifying, evaluating and managing the
significant risks faced by all companies within the Group has been
in place for the period under review and until the date of approval
of this Report and Accounts.
Directors’ report continued
For the year ended 31 December 2003 Interserve Plc  Annual Report 2003  35
Directors’ report continued
For the year ended 31 December 2003
Internal controls are reviewed in September and March by the
Board, which accords with the Internal Control Guidance for
Directors on the Combined [Hampel] Code produced by the
Turnbull Working Party.
There is an ongoing process to embed internal control and risk
management further into the operations of the business, to deal
with areas of improvement which are identified from time to time
and to derive the maximum benefit to the business through the 
use of risk management procedures.
Audit Committee and Auditors
The Audit Committee is comprised solely of non-executive
directors: the Deputy Chairman, Mr Padovan (Mr Keys from
1 January to 14 May 2003) who is its chairman, Mr Balfour,
Mr Keegan (from 11 September 2003) and Mr Trapnell (from
11 September 2003), and has written terms of reference which deal
clearly with its authority and duties. It meets at least three times
a year with the Auditors, the Group Chairman, the Chief Executive
and the Finance Director attending by invitation. The Committee
overviews the monitoring of the adequacy of the Company’s
internal controls, accounting policies and financial reporting and
provides a forum through which the Company’s external Auditors
report to the non-executive directors. Part of the Audit Committee
meetings are held between the non-executive directors and
external Auditors in private.
During the course of the year an internal audit department was
established and an internal audit policy and plan for 2004 were
agreed with the Audit Committee.
Going concern basis
After making enquiries, the directors have formed a judgement,
at the time of approving the financial statements, that there is a
reasonable expectation that the Company has adequate resources
to continue in operational existence for the foreseeable future.
For this reason they continue to adopt the going concern basis in
preparing the financial statements.
Compliance statement
The Listing Rules require the Board to report on compliance with
45 Hampel Code provisions throughout the accounting period.
Save for the limited exceptions outlined below, the Company has
complied throughout the accounting period ended 31 December
2003 with the provisions set out in Section 1 of the Hampel Code.
All executive directors have service contracts terminable on one
year’s notice save for Mr Hannah and Mr Lee, both of whom had
service contracts with two-year notice periods. On 27 June 2003
Mr Hannah was given two years’ notice of the termination of his
service agreement, effective from 1 July 2003, with a view to his
being offered a new service agreement in July 2004, terminable
upon one year’s notice. Mr Lee retired from the Board on
30 September 2003.
During the period 1 January until 11 July the Board comprised less
than one-third non-executive directors.
For the period 15 May until 11 September 2003 the Audit Committee
comprised two non-executive directors. Notwithstanding the
appointment of Messrs Keegan and Trapnell as non-executive
directors on 11 July 2003 their appointment to the Audit Committee
did not become effective until close of business on 10 September
2003. The Board considered that it was appropriate that
Messrs Keegan and Trapnell should attend at least one Board
meeting before becoming members of the Audit Committee.
However, Messrs Keegan and Trapnell were invited and did attend
the only Audit Committee meeting during this period of
non-compliance, which took place on 10 September 2003.
In July 2003, the Financial Reporting Council published a revised Code
(the “2003 FRC Code”) based on the reports of the Higgs and Smith
Committees, which were published in January 2003. The 2003 FRC
Code is not applicable to the Company for the year under review,
but the Company has begun the process of reviewing and revising its
procedures to enable the Board to report, as required, on compliance
with the 2003 FRC Code for the year beginning 1 January 2004.
Charitable and political donations
Charitable donations made during the year amounted to £27,500
(2002: £26,670). No political donations were made in the period.
Creditor payment policy
It is the Group’s normal practice to agree payment terms with its
suppliers and abide by those terms. Payment becomes due when it
can be confirmed that goods and/or services have been provided
in accordance with the relevant contractual conditions. Trade
creditors for the Company at 31 December 2003, calculated in
accordance with the requirements of the Companies Act 1985,
were 5 days (2002: 9 days). This represents the ratio, expressed in
days, between the amounts invoiced to the Company in the year
by its suppliers and the amounts due, at the year end, to trade
creditors falling due for payment within one year. As figures for
the Company alone are not representative, trade creditors for the
Group (calculated on the above basis) at 31 December 2003 were
70 days (2002: 67 days).
Health and safety
Health and safety issues continue to occupy a prominent priority
in all business operations as the goal of continual improvement in
safety performance is pursued.
The policy of the Group is that accountability for health and safety
performance is managed within the operating divisions. During the
year the Group Health and Safety Policy Statement was reviewed
and reissued under the signature of the Chief Executive.
At Group level, an executive director is appointed with
responsibility for health and safety. All executive directors are
accountable for health and safety performance in areas under
their control and within each operating company senior managers
are also appointed with health and safety responsibilities.
Performance is monitored by the Board by using monthly safety
reports together with more detailed quarterly reviews.
The range of risks to which employees of the Group are exposed
are all assessed and managed in accordance with legislative
requirements using documented company procedures.  36 Interserve Plc  Annual Report 2003
Directors’ report continued
For the year ended 31 December 2003
OHSAS 18001 is used as the model for the development of formal
safety management systems within each operating company.
Project Services have maintained accreditation of their
management arrangements to this standard. Development and
implementation of management systems are supported by the
employment of more than 52 full or part-time qualified safety
professionals.
During the year, various initiatives have been taken to improve
health and safety performance. These included:
• Industrial Services established a training facility to meet the
requirements of both in-house and external clients. Courses
accredited by IOSH, CIEH and IPAF are offered and during
the year over 80 managers attended the IOSH Managing
Safety course;
• a programme by Project Services focusing on vehicle and plant
management arrangements which reduced the incidence of
non-conformance recorded during inspections; and
• a pilot programme run by Facilities Services using the stress
management tools provided by the HSE on their website.
Operating companies have continued to receive recognition for
their safety performance through the achievement of national
safety awards:
Interserve Industrial Services RoSPA Highly Commended
Engineering Construction
Sector
Interserve (Defence) RoSPA Gold Medal
Interserve Facilities Services (Slough) RoSPA Merit Award
Interserve Project Services RoSPA Gold Award
BSC National Safety Award
(4 years)
Interserve Engineering Services RoSPA Gold Award
Other organisations and clients also provide recognition of safety
standards achieved with awards to individual contracts or sites.
During the year this has included awards from ECIA and the
Considerate Constructors Scheme.
The Group sets targets and objects as a focus for health and safety
and, for 2003, progress can be reported in all areas.
The number of RIDDOR reportable injuries to employees and 
sub-contractors reduced by 12 per cent over the year with a
corresponding reduction in the annual incidence rate of just 
over 1 per cent, the third successive year of reduction.
Employee involvement
Within the bounds of commercial confidentiality, management
disseminates information to all levels of staff about matters that
affect the progress of the Group and are of interest and concern
to them as employees.  Information on the Group’s strategy,
performance, range of activities, training developments and
charitable activities was given within the February, June and
September editions of Focus, the Group newsletter produced 
on behalf of the Executive Committee.
Disabled employees
The Group has an established policy that disabled persons,
especially should they become disabled in the course of their
employment with the Group, be employed where circumstances
permit. The Group endeavours to ensure that disabled employees
benefit from training and career development programmes in line
with other employees.
Social, environmental and ethical policies
A Board director is appointed to be responsible for the Group
social, environmental and ethical policies. A separate report on
Corporate Social Responsibility is contained on pages 24 to 29 
of this Report and Accounts.
Auditors
On 1 August 2003, Deloitte & Touche, the Company’s Auditors,
transferred their business to Deloitte & Touche LLP, a limited
liability partnership incorporated under the Limited Liability
Partnership Act 2000. The Company’s consent has been given to
treat the appointment of Deloitte & Touche as extending to
Deloitte & Touche LLP with effect from 1 August 2003 under the
provisions of section 26(5) of the Companies Act 1989. A resolution
to re-appoint Deloitte & Touche LLP as the Company’s Auditors will
be proposed at the forthcoming AGM.
Annual General Meeting resolutions
The resolutions to be presented at the AGM to be held on 13 May
2004, together with the explanatory notes, appear in the separate
Notice of Annual General Meeting sent to all shareholders. 
Interserve House Approved by the Board of 
Ruscombe Park directors and signed on
Twyford behalf of the Board
Reading
Berkshire RG10 9JU
T Bradbury
Company Secretary
9 March 2004 Interserve Plc  Annual Report 2003  37
Directors’ remuneration report
For the year ended 31 December 2003
Introduction
This report has been prepared in accordance with the Directors’
Remuneration Report Regulations 2002 (the “Regulations”) which
introduced new statutory requirements for the disclosure of
directors’ remuneration in respect of periods ending on or after
31 December 2002. The report also meets the relevant requirements
of the Listing Rules of the Financial Services Authority and describes
how the Board has applied the Principles of Good Governance
relating to directors’ remuneration. As required by the Regulations,
a resolution to approve the report will be proposed at the Annual
General Meeting (“AGM”) of the Company.
The Regulations require the Auditors to report to the Company’s
members on the auditable section of this report and to state
whether in their opinion that part of the report has been properly
prepared in accordance with the Companies Act 1985 (as amended
by the Regulations). The report has therefore been divided into
separate sections containing unaudited and audited information.
Pages 37 to 40 of this report contain unaudited information and
pages 40 (beginning with Directors’ emoluments and compensation)
to 43 contain audited information.
Remuneration Committee
The Company has a Remuneration Committee which is constituted
in accordance with the recommendations of the Hampel Code and
which determines the remuneration of the executive directors.
The directors who have served on the Remuneration Committee
(the “Committee”) during the year are: 
D C Keys (retired as Chairman of the Committee 
on 14 May 2003)
J M F Padovan (appointed as Chairman of the Committee 
on 14 May 2003)
G P Balfour
N F Keegan (appointed 11 September 2003)
D A Trapnell (appointed 11 September 2003)
all of whom the Board regards as independent.
Mr Balfour was appointed Chairman of the Committee on
1 January 2004 in place of Mr Padovan, following a review of the
chairmanship of Board committees. It has been determined by the
Board that Mr Balfour is independent after taking into account his
retirement from Slaughter and May in 2001, that whilst a partner
in that firm he was neither instructed by the Company nor worked
on any transaction involving the Company and that no instruction
of any significance has been given by the Company to that firm
since 1999.
None of the Committee has any personal financial interest in the
Company (other than as a shareholder), any conflict of interest
arising from cross-directorships, or any day-to-day involvement 
in running the business. No director plays a part in any discussion
about his own remuneration.
In determining the executive directors’ remuneration the
Committee consulted with and received recommendations from
Mr Bottjer (Group Chairman). The Committee also received advice
relating to executive directors’ and the Group Chairman’s
remuneration from New Bridge Street Consultants LLP, who were
appointed by the Committee during 2001. New Bridge Street
Consultants LLP did not provide any other service to the Group.
Remuneration policy
Executive directors’ remuneration packages are designed to
attract, retain and motivate directors of the quality required to
improve the Company’s performance, to align the interests of the
directors with those of the shareholders and to reward them for
enhancing shareholder value. The determination of their annual
remuneration packages is undertaken by the Committee. Directors’
remuneration will be the subject of regular review, in accordance
with this policy, during this and following financial years. The
remuneration of the non-executive directors is determined by the
Board within limits set out in the Articles of Association and is
designed to attract and retain non-executive directors of sufficient
calibre to undertake the responsibilities entrusted to them.
There are four main elements of the remuneration package for
executive directors:
• basic annual salary and benefits;
• annual bonus payments with (in some cases) linked share
arrangements;
• share option incentives; and
• pensions arrangements.
The Company’s policy is that a substantial portion of the
remuneration of the executive directors should be performance-
related. As described below, executive directors may earn annual
incentive payments up to a defined percentage of their basic 
salary together with the benefits of participating in various share
option schemes.
Basic annual salary and benefits
The executive directors’ salaries are reviewed by the Committee
annually for implementation of such review from 1 July in each year.
Ad hoc reviews can also be made. In deciding upon appropriate salary
levels, the Committee takes into account current remuneration
trends, relative up-to-date information from other comparable groups
of companies and the provisions of Schedule A to the Hampel Code.
In addition to basic salary, the executive directors receive certain
benefits-in-kind, principally a fully-expensed car or car allowance,
and medical and permanent health insurance.
Annual bonus payments
In the case of Messrs Ringrose, Hagerty, Jones and Vyse the Committee
establishes performance conditions annually which govern the amount
of bonus payable in respect of each financial year, subject to a ceiling
of 100 per cent of basic salary. The performance conditions are based
on a sliding scale of growth rates for earnings per share determined 
by the Committee on such basis as it shall choose from time to time
excluding exceptional items unless otherwise determined (“EPS”) over
the financial year. Under their bonus scheme up to 50 per cent of the
net bonus receivable by them must be invested in Company shares
under the Interserve Plc Share Matching Plan (the “Share Matching
Plan”) with the balance being payable in cash.
In the case of Messrs Bottjer, Groom, Hannah and Lee the formulae for
calculating their bonus and applicable performance conditions are or
were stated within their service contracts and are or were based
primarily on the moving average of earnings per share, before goodwill
amortisation, over the past three years, with other components based
on Company wage and salary bill and return on capital employed,
subject to a ceiling of 150 per cent of basic salary. There is no obligation
to invest any of their bonuses under the Share Matching Plan. 38 Interserve Plc  Annual Report 2003
Directors’ remuneration report continued
For the year ended 31 December 2003
Share option incentives
Share Matching Plan
The Share Matching Plan was introduced following its approval at
the AGM on 9 May 2002. Under this arrangement participants are
required to invest up to 50 per cent of their net annual cash bonus
in Company shares (“Investment Shares”). The percentage of bonus
applicable for each year (not exceeding 50 per cent) is determined
annually by the Committee. To the extent that Investment Shares
are retained for a three-year period, the participant remains
employed and if certain conditions are satisfied, they will receive
free shares from the Company (“Free Shares”) that will “match” 
the number of Investment Shares deemed acquired (on a pre-tax
basis) and retained.
Awards made under the first cycle of the Share Matching Plan in
connection with the bonus earned in 2002 are set out on page 42
of this report.
For the next cycle of the Share Matching Plan participants are
required to invest 50 per cent of their net annual bonus, and
grants under the Share Matching Plan will be made to Messrs
Ringrose, Hagerty, Jones and Vyse in relation to their bonuses 
for 2004, subject to certain conditions. These conditions are based
on the Company’s EPS growth over and above the UK Retail Prices
Index (“RPI”) over a three-year period, measured from the financial
year ending just prior to the grant of the awards. The level of
match of Free Shares to Investment Shares will be calculated in
accordance with the following table:
Average annual EPS growth Level of match (i.e. number 
over three-year period of Free Shares to number of 
after grant Investment Shares deemed 
acquired or retained)
Less than RPI + 3% 0.25:1
RPI + 3% 0.5:1
RPI + 3% to 12% 0.5:1 to 1:1 (pro rated)
RPI + 12% 1:1
There will be no re-testing of performance following the end of 
the three-year period.
The performance conditions, relating increases in EPS to inflation
rates, were chosen to ensure that higher rewards would only be
achievable for superior financial performance by the Company.
Share options
The Interserve Sharesave Scheme (the “Sharesave Scheme”) was
introduced on 17 April 1997. It is an all-employee share scheme
and, as is normal with sharesave schemes, the exercise of options 
is not dependent upon performance criteria. There are currently
options granted under the Sharesave Scheme which remain
unexercised, the details of which are set out on pages 41 and 42
of this report.
The earliest executive share option plan under which options are
still outstanding (the “Plan”) was introduced on 17 April 1997 and
amended by a resolution of the members passed at an Extraordinary
General Meeting held on 7 March 2001. There are currently options
granted under the Plan which remain unexercised, the details of
which are set out on pages 41 and 42 of this report. No further
grants of options will be made under the Plan.
The Interserve Plc 2002 Executive Share Option Scheme (the “2002
Scheme”) was introduced following its approval at the AGM on
9 May 2002. The Company’s policy is to grant options under the
2002 Scheme annually, at the discretion of the Committee, to
motivate selected employees who have previously performed well
and who will, potentially, influence the future performance of the
business and enhance shareholder value.
Each option granted under the 2002 Scheme will be subject to a
performance condition, in a form determined by the Committee,
which is intended to link the exercise of the option to a sustained
improvement in the underlying financial performance of the
Group. Options will not be granted over shares with a market
value at the date of grant in excess of 200 per cent of salary unless
the Committee is satisfied that there are exceptional circumstances
which justify this.
Options granted under the 2002 Scheme during the year ended
31 December 2003, together with the performance conditions
attaching thereto, are set out on pages 41 and 42 of this report.
The performance conditions in relation to options to be granted
under the 2002 Scheme during the current financial year are that
over the period of three financial years, measuring from the
financial year ended 31 December 2003:
• in respect of the first third of an option, the Company’s EPS
growth must exceed the growth in RPI by an average of at least
10 per cent per year;
• in respect of the second third of an option, the Company’s EPS
growth must exceed the growth in RPI by an average of at least
15 per cent per year; and
• in respect of the final third of an option, the Company’s EPS
growth must exceed the growth in RPI by an average of at least
20 per cent per year.
To the extent that the performance conditions are not satisfied 
by the third anniversary of grant, the option lapses.
The performance conditions were chosen so as to strike an
appropriate balance between potential reward levels and the
targets attaching to the options so that, in relation to the market,
the targets were reasonable.
The Committee will determine whether the performance conditions
under the 2002 Scheme and the Share Matching Plan have been
met by using the EPS information contained within the Company’s
annual report and accounts and taking the advice of the Auditors,
should it be deemed necessary, as to whether any adjustments are
required to ensure consistency in accordance with the terms of the
relevant performance conditions.
The Company does not operate any other long-term incentive
schemes, and no amendments are proposed to be made to the
terms and conditions of any entitlement of a director to share
options. Non-executive directors do not participate in the Group’s
share option schemes.
At 31 December 2003 there remained 5,035,902 shares over which
options may be granted under the Company’s Share Schemes.
Pension arrangements
All executive directors are members of the Interserve Pension
Scheme (the “Scheme”). In general the Scheme provides a pension on
retirement equal to 1/60 of basic annual salary for each year and
proportionately for each month of pensionable service subject to
this not exceeding Inland Revenue limits. In the event of death in
service the executive directors in the Scheme are covered for a lump
sum benefit of four times basic salary (subject to Inland Revenue
limits) payable by the Trustee of the Scheme at its discretion to one
or more of their dependants. In addition, a pension would be
payable to their spouse or an alternative financial dependant. 
The normal retirement age for executive directors is 60 years. 
There are no unfunded or unapproved pension promises or similar
arrangements for directors. Interserve Plc  Annual Report 2003  39
Directors’ remuneration report continued
For the year ended 31 December 2003
Executive directors’ service contracts
The Company’s policy on the duration of directors’ service
contracts is that all newly appointed executive directors should
have contracts terminable at any time on one year’s notice save
where it is necessary to offer longer notice periods to any new
directors recruited from outside the Group, in which case such
periods would be reduced to one year after an initial period. 
Details of service contracts of the executive directors who held
office during the financial year ended 31 December 2003 are
summarised as follows:
Unexpired
Date of term at Notice
Name contract 9 March2004 period
M C Bottjer 2 April 1990 see note 1 below one year
1
C J Groom 16 January 2001 see note 2 below one year
2
S B Hagerty 13 December 2001 indefinite one year
A R Hannah 13 October 1995 1 year 113 days two years
3
T C Jones 1 August 2003 indefinite one year
M S Lee 2 April 1990 see note 4 below two years
4
A M Ringrose 13 December 2001 indefinite one year
J H Vyse 13 December 2001 indefinite one year
1
Mr Bottjer’s service agreement terminated by mutual consent on 31 December
2003 and was replaced by a letter of appointment which may be terminated by
either party upon six months’ prior notice in writing.
2
Mr Groom retired from the Board on 31 December 2003.
3
On 27 June 2003 Mr Hannah was given two years’ notice of the termination of 
his service agreement, effective from 1 July 2003, with a view to his being 
offered a new service agreement, terminable on one year’s notice, in July 2004.
4
Mr Lee retired from the Board on 30 September 2003.
In the event of the termination of any service contract the policy
of the Company would be not to make payments beyond its
contractual obligations.
The service contracts of Messrs Hagerty, Jones, Ringrose and Vyse
provide that if the contract is terminated summarily, for reasons
other than gross misconduct, liquidated damages equal to the
executive’s annual basic salary are payable. The executive’s
entitlement to this payment would not be affected if the executive
was in fact able to reduce his loss by obtaining alternative
employment during the normal notice period. There are no
provisions entitling the executive to terminate his employment or
receive damages in the event of a change in control of the
Company. The same provisions were applicable to Mr Groom’s
service contract.
The service contracts of Messrs Bottjer and Lee provided that if the
executive’s employment was terminated by the Company without
notice or without due notice (other than lawfully either as a result
of the executive committing an act of bankruptcy or compounding
with his creditors or not faithfully discharging his duties under his
service contract or otherwise) the executive would be entitled to
receive, in addition to annual bonus accrued in respect of
completed financial years:
(a) a bonus calculated in accordance with a formula contained
within the executive’s service contract for the financial year of
the Company in which the employment terminated, the bonus
being the calculated proportion of salary paid or payable to the
executive for his actual service during the financial year; and
(b) save in the event of termination as a result of death (or
permanent incapacity) of the executive, a payment in lieu of 
the annual bonus which, after deducting any bonus due under
(a) above for any current period, had the Company given due
notice of termination, the executive would have received in
respect of such notice period.
The service contract of Mr Hannah provides that if the executive’s
employment is terminated on less than two years’ notice (but not to
the extent that such expiry date exceeds Normal Retirement Age):
(a) no payment of bonus under the bonus scheme applicable to him
(the “Scheme”) shall be made in respect of the period starting
on the actual date of termination or on the date notice was
given, if earlier; and
(b) any calculation of damages payable to the executive for breach
of contract shall exclude as a head of claim any amount
representing that which would have been payable under the
Scheme had the contract been terminated by the Company
upon proper notice.
In the event of Mr Hannah’s employment being terminated part
way through any financial year he is entitled to payment of a
proportionate part of the bonus to which he would be entitled 
had he remained in employment throughout the relevant financial
year, such apportionment being calculated by reference to the
total number of days of his employment as a proportion of the
financial year. There are no provisions entitling Mr Hannah to
terminate his employment or receive damages in the event of a
change in control of the Company.
Chairman and non-executive directors
Mr Bottjer’s terms of appointment as Group Chairman were revised
with effect from 1 January 2004 to reflect his retirement as
Executive Chairman. He will continue as Group Chairman unless
and until his appointment is terminated at the discretion of either
party upon six months’ prior written notice.
Non-executive directors are appointed initially until the first AGM
of the Company following appointment when they are required to
stand for re-election and, subject to their re-election, thereafter
for a maximum period of three years, renewable on the agreement
of both the Company and the director. These appointments are
terminable only by the members passing an ordinary resolution as
required by section 303 of the Companies Act 1985, or if the director
were not to be re-elected, or by the director, on one month’s notice,
without compensation. The fees of the non-executive directors are
determined by the Board as a whole, taking into account amounts
paid by other similar-sized companies within the FTSE 350 index.
Details of non-executive appointments are as follows:
Name Date first appointed
G P Balfour 1 January 2003
N F Keegan 11 July 2003
D C Keys
1
12 November 1991
J M F Padovan 13 March 1996
D A Trapnell 11 July 2003
1
Retired from the Board on 14 May 2003.
Messrs Keegan and Trapnell, who were appointed as additional
members of the Board during the year, are required to retire in
accordance with the Company’s Articles of Association at the
forthcoming AGM, offer themselves for re-election. Being 
non-executive directors they do not have a service contract. Performance graph
The graph below, which has been included as required by the Regulations, shows a comparison of the total shareholder return (“TSR”) for
the Company’s shares for each of the last five financial years against the total shareholder return for the companies comprising the
support services sector of the FTSE index. This index was chosen for this comparison because it includes the most appropriate comparator
group against which the performance of the Company may be judged.
The following information has been audited:
Directors’ emoluments and compensation 
Aggregate directors’ remuneration
The total amounts for directors’ remuneration were as follows: Total Total
2003 2002
£ £
Emoluments 2,068,129 2,624,940
Compensation for loss of office Nil Nil
Gains made on the exercise of share options 3,878 Nil
Amounts receivable under long-term incentive schemes Nil Nil
Money purchase pension contributions Nil Nil
The following table sets out details of the emoluments and compensation received during the financial year ended 31 December 2003 
by each director:
Basic Benefits Annual Total Total
Fees Salary in Kind Bonuses 2003 2002
££££ £ £
Executive directors
M C Bottjer – 436,500 32,100 – 468,600 593,913
C J Groom
1
– 234,500 15,006 – 249,506 319,892
S B Hagerty – 182,500 14,941 – 197,441 256,861
A R Hannah – 234,500 25,065 – 259,565 327,946
TC Jones
2
– 90,833 6,485 – 97,318 Nil
M S Lee
3
– 179,500 50,078* – 229,578 333,775
A M Ringrose – 235,000 19,318 – 254,318 229,969
J H Vyse – 187,500 14,828 – 202,328 251,987
Non-executive directors
GP Balfour 28,000 – – – 28,000 Nil
NF Keegan
5
13,282 – – – 13,282 Nil
D C Keys
4
16,558 – – – 16,558 45,000
J M F Padovan 38,353 – – – 38,353 28,000
DA Trapnell
5
13,282 – – – 13,282 Nil
Former directors 237,597
Total 2003 109,475 1,780,833 177,821 – 2,068,129
Total 2002 101,000 1,722,000 198,928 603,012 2,624,940
1 
Retired from the Board on 31 December 2003.
2 
Appointed to the Board on 11 August 2003.
3 
Retired from the Board on 30 September 2003. 
4 
Retired from the Board on 14 May 2003.
5 
Appointed to the Board on 11 July 2003.
* This figure includes assets that were transferred to Mr Lee with a taxable value of £23,250 (2002: £nil) in respect of directors’ fees for his directorship of How Group
Trust Company Limited for the period to 30 September 2004.
40 Interserve Plc  Annual Report 2003
Directors’ remuneration report continued
For the year ended 31 December 2003 Interserve Plc  Annual Report 2003  41
Directors’ remuneration report continued
For the year ended 31 December 2003
The aggregate emoluments and compensation disclosed above do not include any amounts for the value of options to acquire ordinary
shares in the Company granted to or held by the directors.
Mr Ringrose is also a non-executive director of the Business Services Association for which he receives no director’s fee.
Directors’ shareholdings and share options
The following table sets out details of the beneficial interests in shares and share options held by or granted to each director during the year:
Name Ordinary shares of 10p each Options over ordinary shares of 10p each
Market Price
01.01.03 31.12.03 01.01.03 Granted Exercised Lapsed 31.12.03 Exercise at Exercise Exercise Period
during during during Price Date
year* year year pence pence
GP Balfour – 2,000 ––––––– –
M C Bottjer 252,278 252,278 40,000 40,000
a
212.00 07.10.01 - 06.10.05
30,000 30,000
a
346.00 14.06.03 - 13.06.07
70,000 70,000
b
542.50 26.03.04 - 25.03.08
1,640 1,640
c
439.40 01.06.04 - 30.11.04
5,295 5,295
b
566.50 19.03.05 - 18.03.12
67,105 67,105
b
566.50 19.03.05 - 18.03.09
241 241
c
441.00 01.06.05 - 30.11.05
C J Groom
1
829,226 829,226 5,529
2
5,529
b
542.50 26.03.04 - 31.12.06
39,471
2
39,471
b
542.50 26.03.04 - 31.12.06
39,200
2
39,200
b
566.50 19.03.05 - 31.12.06
S B Hagerty
3
53,000 62,980 91,330 91,330
a
346.00 14.06.03 - 13.06.07
8,670 8,670
a
346.00 14.06.03 - 13.06.10
30,000 30,000
b
542.50 26.03.04 - 25.03.08
1,322 1,322
c
439.40 01.06.04 - 30.11.04
45,000 45,000
b
566.50 19.03.05 - 18.03.09
241 241
c
441.00 01.06.05 - 30.11.05
A R Hannah 70,000 78,657 70,000 70,000
a
212.00 07.10.01 - 06.10.05
8,657 8,657
c
– 199.20 244.00 01.01.03 - 30.06.03
30,000 30,000
a
346.00 14.06.03 - 13.06.07
45,000 45,000
b
542.50 26.03.04 - 25.03.08
5,295 5,295
b
566.50 19.03.05 - 18.03.12
33,905 33,905
b
566.50 19.03.05 - 18.03.09
NF Keegan
4
– 2,000 ––––––– –
D C Keys
5
7,500 7,500 ––––––– –
M S Lee
6
118,323 118,323 97,660 97,660
a
268.40 18.06.00 - 17.06.04
70,000
7
70,000
a
212.00 07.10.01 - 30.09.05
30,000
7
30,000
a
346.00 14.06.03 - 30.09.05
45,000
7
45,000
b
542.50 26.03.04 - 30.09.05
1,640 1,640
c
439.40 01.06.04 - 30.11.04
241 241
c
441.00 01.10.04 - 31.03.05
5,295
7
5,295
b
566.50 19.03.05 - 30.09.05
33,905
7
33,905
b
566.50 19.03.05 - 30.09.05
J M F Padovan 7,500 7,500 ––––––– –
A M Ringrose
8
28,487 37,337 24,471 24,471
b
542.50 26.03.04 - 25.03.08
5,529 5,529
b
542.50 26.03.04 - 25.03.11
45,000 45,000
b
566.50 19.03.05 - 18.03.09
– 200,000 200,000
d
205.83 23.04.06 - 22.04.13
D A Trapnell
4
– 2,000 ––––––– –
J H Vyse 5,000 15,099 40,000 40,000
a
212.00 07.10.01 - 06.10.05
8,657 8,657
c
– 199.20 01.01.03 - 30.06.03
15,000 15,000
a
346.00 14.06.03 - 13.06.07
30,000 30,000
b
542.50 26.03.04 - 25.03.08
5,295 5,295
b
566.50 19.03.05 - 18.03.12
39,705 39,705
b
566.50 19.03.05 - 18.03.09 42 Interserve Plc  Annual Report 2003
Directors’ remuneration report continued
For the year ended 31 December 2003
The market price of the shares as at 31 December 2003 was 240.00p. The highest and lowest market prices of ordinary shares during the
financial year were 283.50p and 165.00p respectively.
The performance condition attaching to the options marked 
a
is that over a three-year period the Company's performance, in terms of 
EPS growth, must exceed the growth in the RPI by an average of 2 per cent per year.
The performance condition attaching to the options marked 
b
is that over a three-year period the Company's performance, in terms of 
EPS growth, must exceed the growth in the RPI by an average of 4 per cent per year.
There is no performance condition attaching to the options marked 
c
as these options were issued under the Interserve Sharesave Scheme,
an all-employee share scheme.
The performance conditions attaching to options marked 
d
are that over a three-year period in respect of the first third of an option, the
Company's EPS growth must exceed the growth in the RPI by an average of at least 3 per cent per year; in respect of the second third of an
option, the Company's EPS growth must exceed the growth in RPI by an average of at least 4 per cent per year; and in respect of the final
third of an option, the Company's EPS growth must exceed the growth in RPI by an average of at least 7 per cent per year. To the extent
that the performance conditions are not satisfied by the fifth anniversary of grant, the option lapses.
There have been no variations to the terms and conditions or performance criteria for share options during the financial year.
*Options granted to directors during the year for qualifying services.
1
Mr Groom retired from the Board on 31 December 2003. He holds £nil (2002: £2,354,700) unsecured floating rate loan notes issued 
by the Company.
2
Options lapse if not exercised by 31 December 2006.
3
At the year end Mr Hagerty held £1,450,000 unsecured loan notes (2002: £1,550,000) issued by Bandt Holdings Ltd. Since the 
year end Mr Hagerty has redeemed loan notes to a value of £150,000. His present holding is £1,300,000. A further £550,000 
(2002: £550,000) of unsecured loan notes are held by a nominee company on his behalf. 
4
Messrs Keegan and Trapnell were appointed as non-executive directors on 11 July 2003. Their holding of ordinary shares of 10p in 
the Company as at that date was nil.
5
Mr Keys retired from the Board on 14 May 2003.
6
Mr Lee retired from the Board on 30 September 2003.
7
Options lapse if not exercised by 30 September 2005.
8
Mr Ringrose holds £89,303 (2002: £118,700) unsecured floating rate loan notes issued by the Company.
Share Matching Plan
Maximum
potential Mid-Market
number of price on
matching award date Performance period
Name Date of award Free Shares* pence for matching award
S B Hagerty 07.04.03 16,750 188.50 31.12.02 - 31.12.05
A M Ringrose 02.04.03 14,854 173.50 31.12.02 - 31.12.05
J H Vyse 02.04.03 16,941 173.50 31.12.02 - 31.12.05
*The number of matching Free Shares is the maximum (a match of 1:1) that could be receivable by the executive if the performance
conditions outlined in the policy section on page 38 are fully met.
The directors' interests set out in the foregoing tables were as at 31 December 2003. There have been no changes since the year end. Interserve Plc  Annual Report 2003  43
Directors’ remuneration report continued
For the year ended 31 December 2003
Directors' pension entitlements
Seven directors of the Company earned pension benefits in the Interserve Pension Scheme (the "Scheme") which is a defined benefit
pension scheme.
Defined benefit scheme
The following table sets out the change in each executive director's accrued pension entitlements under the Scheme during the year 
and accrued benefits in the Scheme at the year end together with the cash equivalent transfer value ("Transfer Value") of each executive
director's accrued benefits under the Scheme, calculated in a manner consistent with "Retirement Benefit Scheme – Transfer Values (GN11)"
published by the Institute of Actuaries and the Faculty of Actuaries.
Transfer
Real value of real Increase
increase increase in (decrease)
(decrease) Increase accrued in transfer
Accrued Transfer in accrued (decrease) pension value less Accrued Transfer
pension value pension in accrued (less directors’ directors’ pension value
31.12.02 31.12.02 in the year pension contributions) contributions 31.12.03 31.12.03
Name ££££££££
M C Bottjer Nil Nil Nil Nil Nil Nil Nil Nil
C J Groom 111,484 1,229,000 (16,527) (14,632) 705,000 866,000 96,852
1
2,102,000
2
S B Hagerty 2,106 13,000 2,148 2,148 9,000 10,000 4,290 29,000
A R Hannah 14,038 145,000 1,673 1,912 18,000 37,000 15,950 183,000
T C Jones Nil
3
Nil
3
688 688 0 0 688 4,000
M S Lee 180,086 2,264,000 (4,909) (1,848) 1,065,000 1,375,000 178,238
1
3,639,000
4
A M Ringrose 14,332 56,000 6,075 6,318 11,000 18,000 20,650 89,000
J H Vyse 19,181 217,000 2,192 2,518 22,000 51,000 21,699 273,000
1 
This was the full pension payable following the director’s retirement in December 2003 (prior to the commutation of part of the pension for a tax-free sum in accordance 
with the rules of the Scheme) as required to be disclosed by the Listing Rules and is not therefore comparable with the accrued pension at 31 December 2002.
2 
This is the amount (prior to commutation) that would have been the transfer value required by the Regulations but for Mr Groom’s retirement on 31 December 2003 and 
is not therefore comparable with the transfer value at 31 December 2002.
3 
As at 11 August 2003, on becoming a director.
4 
This is the amount (prior to commutation) that would have been the transfer value required by the Regulations but for Mr Lee’s retirement on 30 September 2003 and is 
not therefore comparable with the transfer value at 31 December 2002.
The transfer values disclosed above do not represent a sum paid or payable to the individual director. Instead they represent a potential
liability of the Scheme.
Non-executive directors' fees are not pensionable and they have therefore not been included in the above table.
Members of the Scheme have the option to pay Additional Voluntary Contributions. Neither the contributions nor the resulting benefits
are included in the above tables.
Special benefits were awarded to Mr Bottjer and Mr Lee under the Scheme on 26 October 1990. In March 1998 Mr Bottjer transferred his
entitlements to a personal pension plan. Mr Lee switched, in accordance with the terms of the Scheme applicable to him, from a money
purchase scheme to a defined benefit scheme with effect from 14 March 2003 and, accordingly, the disclosures in relation to him have
been made on a defined benefit basis. 
Approval
This report was approved by the Board of Directors on 9 March 2004 and signed on its behalf by:
T Bradbury
Company Secretary
9 March 2004 44 Interserve Plc  Annual Report 2003
Directors’ responsibility statement
United Kingdom company law requires the directors to prepare
financial statements for each year which give a true and fair view
of the state of affairs of the Company and the Group as at the end
of the financial year and of the profit or loss of the Group for that
period. In preparing those financial statements, the directors are
required to:
• select suitable accounting policies and then apply them
consistently;
• make judgements and estimates that are reasonable and
prudent; and
• state whether applicable accounting standards have been
followed.
The directors are responsible for keeping proper accounting
records which disclose with reasonable accuracy at any time 
the financial position of the Company and enable them to ensure 
that the financial statements comply with the Companies Act 
1985. They are also responsible for the system of internal control,
for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities. Interserve Plc  Annual Report 2003  45
Independent auditors’ report to the members of Interserve Plc
We have audited the financial statements of Interserve Plc for the
year ended 31 December 2003 which comprise the consolidated
profit and loss account, the balance sheets, the consolidated
statement of total recognised gains and losses, the consolidated
cash flow statement, the notes to the consolidated cash flow
statement and the related notes 1 to 29. These financial statements
have been prepared under the accounting policies set out therein.
We have also audited the information in the part of the directors'
remuneration report that is described as having been audited.
This report is made solely to the Company's members, as a body, 
in accordance with section 235 of the Companies Act 1985. Our
audit work has been undertaken so that we might state to the
Company's members those matters we are required to state to
them in an Auditors' report and for no other purpose. To the fullest
extent permitted by law, we do not accept or assume responsibility
to anyone other than the Company and the Company's members as
a body, for our audit work, for this report, or for the opinions we
have formed.
Respective responsibilities of directors and auditors
As described in the directors' responsibility statement, the
Company's directors are responsible for the preparation of the
financial statements in accordance with applicable United
Kingdom law and accounting standards. They are also responsible
for the preparation of the other information contained in the
annual report including the directors' remuneration report. Our
responsibility is to audit the financial statements and the part of
the directors' remuneration report described as having been
audited in accordance with relevant United Kingdom legal and
regulatory requirements and auditing standards.
We report to you our opinion as to whether the financial
statements give a true and fair view and whether the financial
statements and the part of the directors' remuneration report
described as having been audited have been properly prepared in
accordance with the Companies Act 1985. We also report to you 
if, in our opinion, the directors' report is not consistent with the
financial statements, if the Company has not kept proper
accounting records, if we have not received all the information
and explanations we require for our audit, or if information
specified by law regarding directors' remuneration and transactions
with the Company and other members of the Group is not disclosed.
We review whether the corporate governance statement reflects
the Company's compliance with the seven provisions of the
Combined Code specified for our review by the Listing Rules of the
Financial Services Authority, and we report if it does not. We are
not required to consider whether the Board's statements on
internal control cover all risks and controls, or form an opinion on
the effectiveness of the Group's corporate governance procedures
or its risk and control procedures.
We read the directors' report and the other information contained
in the annual report for the above year as described in the
contents section including the unaudited part of the directors'
remuneration report and consider the implications for our report 
if we become aware of any apparent misstatements or material
inconsistencies with the financial statements.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom
auditing standards issued by the Auditing Practices Board. An
audit includes examination, on a test basis, of evidence relevant 
to the amounts and disclosures in the financial statements and 
the part of the directors' remuneration report described as having
been audited. It also includes an assessment of the significant
estimates and judgements made by the directors in the preparation
of the financial statements and of whether the accounting policies
are appropriate to the circumstances of the Company and the
Group, consistently applied and adequately disclosed.
We planned and performed our audit so as to obtain all the
information and explanations which we considered necessary in
order to provide us with sufficient evidence to give reasonable
assurance that the financial statements and the part of the
directors' remuneration report described as having been audited
are free from material misstatement, whether caused by fraud or
other irregularity or error. In forming our opinion, we also
evaluated the overall adequacy of the presentation of information
in the financial statements and the part of the directors'
remuneration report described as having been audited.
Opinion 
In our opinion:
• the financial statements give a true and fair view of the state of
affairs of the Company and the Group as at 31 December 2003 
and of the loss of the Group for the year then ended; and
• the financial statements and part of the directors' remuneration
report described as having been audited have been properly
prepared in accordance with the Companies Act 1985.
Deloitte & Touche LLP
Chartered Accountants
and Registered Auditors
London
9 March 2004 46 Interserve Plc  Annual Report 2003
Consolidated profit and loss account
For the year ended 31 December 2003
2003 2002
Before
Before exceptional Exceptional
exceptional Exceptional items and items and
items and items and goodwill goodwill
goodwilll goodwill amortisation amortisation Total
amortisation amortisation Total #Restated #Restated #Restated
Notes £million £million £million £million £million £million
Turnover 2
Continuing operations 1,170.6 – 1,170.6 1,033.0 – 1,033.0
Discontinued operations 40.5 – 40.5 89.9 – 89.9
1,211.1 – 1,211.1 1,122.9 – 1,122.9
Less: Share of joint ventures - PFI investments (23.5) – (23.5) (23.7) – (23.7)
1,187.6 – 1,187.6 1,099.2 – 1,099.2
Cost of sales 3 (1,069.9) – (1,069.9) (958.6) – (958.6)
Gross profit 117.7 – 117.7 140.6 – 140.6
Net operating expenses 3 (91.0) (9.6) (100.6) (96.1) (10.6) (106.7)
Operating profit 4
Continuing operations 28.5 (9.6) 18.9 45.8 (10.6) 35.2
Discontinued operations (1.8) – (1.8) (1.3) – (1.3)
26.7 (9.6) 17.1 44.5 (10.6) 33.9
Share of joint ventures - PFI investments
and associated undertakings 5.4 – 5.4 6.1 (0.1) 6.0
Total operating profit 2 32.1 (9.6) 22.5 50.6 (10.7) 39.9
Exceptional items 8
Net (loss) on sale or termination of 
operations (discontinued operations) – (24.9) (24.9) – (1.2) (1.2)
Profit on sale of tangible fixed assets
(continuing operations) – 2.7 2.7 – 2.5 2.5
Net interest payable 9 (3.2) – (3.2) (4.0) – (4.0)
Profit (loss) on ordinary activities before taxation 28.9 (31.8) (2.9) 46.6 (9.4) 37.2
Tax on profit (loss) on ordinary activities 10 (9.3) 4.9 (4.4) (13.0) 0.4 (12.6)
Profit (loss) on ordinary activities after taxation 19.6 (26.9) (7.3) 33.6 (9.0) 24.6
Minority interest (0.6) – (0.6) –––
Profit (loss) for the financial year attributable  
to members of Interserve Plc 19.0 (26.9) (7.9) 33.6 (9.0) 24.6
Dividends 11 (15.4) – (15.4) (14.7) – (14.7)
Profit (loss) for the year transferred to 
(from) reserves 26 3.6 (26.9) (23.3) 18.9 (9.0) 9.9
ppp ppp
Basic (loss) earnings per share 12 (7.0) 21.6
Adjust for exceptional items and 
goodwill amortisation 23.7 7.9
Headline earnings per share 16.7 29.5
Diluted earnings per share (7.0) 21.5
# Certain comparative figures have been restated as explained in note 8. Balance sheet
At 31 December 2003
Consolidated The Company
2003 2002 2003 2002
Notes £million £million £million £million
Fixed assets
Intangible fixed assets – goodwill 13 154.3 163.9 – –
Tangible fixed assets 14 90.1 100.7 7.2 9.5
Investments 15
Joint ventures - PFI investments
Share of gross assets 326.5 241.6 – –
Share of gross liabilities (304.9) (226.3) – –
Share of net assets 21.6 15.3 – –
Associated undertakings 11.2 10.9 0.1 0.1
Subsidiary undertakings – – 318.2 318.2
277.2 290.8 325.5 327.8
Current assets
Stocks and work in progress 16 12.5 14.9 – –
Debtors 17 244.6 235.6 206.9 212.9
Pension scheme prepayment 7 33.2 32.3 33.2 32.3
Investments 18 0.5 0.5 – –
Short-term cash deposits 12.1 6.4 – –
Cash at bank and in hand 23.9 7.0 18.2 21.9
326.8 296.7 258.3 267.1
Creditors falling due within one year
Bank loans – (0.4) – –
Bank overdrafts (2.3) (4.0) (94.7) (82.5)
Unsecured loan notes 19 (6.1) (16.0) (4.1) (13.9)
Trade creditors (161.4) (158.6) (0.1) (0.2)
Other creditors 20 (153.8) (137.9) (144.0) (166.2)
(323.6) (316.9) (242.9) (262.8)
Net current assets (liabilities) 3.2 (20.2) 15.4 4.3
Total assets less current liabilities 280.4 270.6 340.9 332.1
Creditors falling due after more than one year
Bank loans 21 (49.7) (35.1) (49.5) (50.1)
Other creditors 22 (1.6) (2.4) – –
Provisions for liabilities and charges 24 (40.7) (29.4) (11.2) (10.9)
Net assets 188.4 203.7 280.2 271.1
Capital and reserves
Called up share capital 25 11.4 11.3 11.4 11.3
Share premium account 26 107.9 106.4 107.9 106.4
Capital redemption reserve 26 0.1 0.1 0.1 0.1
Acquisition reserve 26 16.4 16.4 75.9 75.9
Profit and loss account 26 51.9 69.4 84.9 77.4
Shareholders’ funds – equity interest 2&27 187.7 203.6 280.2 271.1
Minority interest - equity interest 0.7 0.1 – –
188.4 203.7 280.2 271.1
These financial statements were approved by the Board of Directors on 9 March 2004
Signed on behalf of the Board of Directors
A M Ringrose T C Jones
9 March 2004 Interserve Plc  Annual Report 2003  47 48 Interserve Plc  Annual Report 2003
Consolidated statement of total recognised gains and losses
For the year ended 31 December 2003
2003 2002
Notes £million £million
Net cash inflow from operating activities (i) 40.4 53.1
Dividends received from associated undertakings 2.7 2.1
Returns on investment and servicing of finance
Interest received 5.3 7.0
Interest paid (7.0) (9.5)
(1.7) (2.5)
Taxation (4.9) (15.5)
Capital expenditure and financial investment
Purchase of tangible fixed assets (15.8) (28.3)
Sale of tangible fixed assets 19.2 18.7
3.4 (9.6)
Acquisitions and disposals
Investment in joint ventures - PFI investments (6.1) (3.0)
Sale of subsidiary undertaking net of costs – 11.4
(6.1) 8.4
Equity dividends paid (15.1) (14.1)
Cash inflow before management of liquid resources and financing 18.7 21.9
Management of liquid resources (ii) (5.3) (4.9)
Financing (iii) 5.1 (21.4)
Increase (decrease) in cash in the year 18.5 (4.4)
Reconciliation of net cash flow to movement in net debt (iv)
Increase (decrease) in cash in the year 18.5 (4.4)
Cash flow from increase in liquid resources 5.3 4.9
Cash flow from (increase) decrease in debt (13.7) 13.9
Repayment of unsecured loan notes 9.9 5.8
Cash flow from finance lease rentals 0.3 0.2
Change in net debt resulting from cash flows 20.3 20.4
Inception of new finance leases – (0.6)
Translation differences – 0.2
Movement in net debt in year 20.3 20.0
Net debt at 1 January (42.8) (62.8)
Net debt at 31 December (22.5) (42.8)
Consolidated cash flow statement
For the year ended 31 December 2003
2003 2002
£million £million
(Loss) profit for the financial year attributable to members of Interserve Plc (7.9) 24.6
Currency translation differences on foreign currency net investments 1.4 (0.9)
Total recognised gains and losses in the year (6.5) 23.7 Interserve Plc  Annual Report 2003  49
Notes on the consolidated cash flow statement
For the year ended 31 December 2003
2003 2002
#Restated
£million £million
(i) Net cash inflow from operating activities
Operating profit before exceptional items and goodwill amortisation 26.7 44.5
Exceptional items* (20.5) (2.3)
Profit on sale of fixed assets (3.7) (3.7)
Depreciation charges 14.9 14.8
Decrease (increase) in stocks and work in progress 2.4 (1.0)
(Increase) decrease in debtors (10.0) 19.9
Increase (decrease) in creditors 29.7 (20.2)
Currency adjustments 0.9 1.1
40.4 53.1
*Exceptional items includes the loss on termination of operations of £24.9 million less the goodwill write off of £4.4 million.
(ii) Management of liquid resources
Cash (invested in) short-term cash deposits (5.3) (4.9)
(iii)Financing
Net issue (repurchase) of ordinary shares 1.6 (1.5)
Increase (decrease) in bank loans
Due within one year (0.4) (1.2)
Due after more than one year 14.1 (12.7)
Repayment of unsecured loan notes (9.9) (5.8)
Capital element of finance lease rental payments (0.3) (0.2)
5.1 (21.4)
(iv)Analysis of net debt
1 January Other non-cash Exchange 31 December
2003 Cash flow movements movements 2003
£million £million £million £million £million
Cash at bank and in hand 7.0 16.6 – 0.3 23.9
Bank overdrafts (4.0) 1.9 – (0.2) (2.3)
3.0 18.5 – 0.1 21.6
Short-term cash deposits 6.4 5.3 – 0.4 12.1
Bank loans
Due within one year (0.4) 0.4 – – –
Due after more than one year (35.1) (14.1) – (0.5) (49.7)
(35.5) (13.7) – (0.5) (49.7)
Net bank balances (26.1) 10.1 – – (16.0)
Unsecured loan notes
Due within one year (16.0) 9.9 – – (6.1)
Finance leases
Due within one year (0.2) – – – (0.2)
Due after more than one year (0.5) 0.3 – – (0.2)
(0.7) 0.3 – – (0.4)
Net debt (42.8) 20.3 – – (22.5)
# Certain comparative figures have been restated as explained in note 8. Notes on the accounts 
For the year ended 31 December 2003
50 Interserve Plc  Annual Report 2003
1. Accounting policies
The financial statements have been prepared in accordance with applicable UK accounting standards and with the Companies Act 1985.
The accounting policies have been applied consistently throughout the year and the previous period. The Group continues to comply with
the transitional arrangements under FRS 17 “Retirement Benefits”. These have had no effect upon the results for the year, as set out in
note 7b.
The particular policies adopted by the directors are described below.
(a) Convention
These financial statements have been prepared in accordance with the historical cost convention.
(b) Basis of consolidation
The Group accounts consolidate the accounts of the Company and its subsidiary undertakings. Investments in joint ventures are accounted
for under the gross equity method. Investments in associated undertakings are accounted for under the equity method. For joint
arrangements that are not an entity the accounts include the Group’s share of turnover, profits, net assets and cash flows measured
according to the terms of the agreement covering the arrangement. The results of subsidiaries acquired or disposed of during the year are
included from the effective date of acquisition or until the effective date of disposal respectively. Profits arising on trading between Group
undertakings are excluded.
(c) Goodwill
Where, on acquisition of shares in a subsidiary undertaking, the purchase consideration includes a sum over and above the fair value of
the net assets acquired, the excess, being the provisional calculation of goodwill, is included in fixed assets and amortised on a straight
line basis over its useful economic life, which is normally assessed as being 20 years unless exceptional circumstances arise.
The profit or loss on disposal of a business is calculated after taking into account any applicable goodwill previously written off to
reserves.
Goodwill arising on the acquisition of shares in associated undertakings is included within investments in associated undertakings.
(d) Foreign currency
Transactions denominated in foreign currency are translated at the rates ruling at the dates of the transactions. Monetary assets and
liabilities denominated in foreign currencies at the balance sheet date are translated at the rates ruling at that date. These translation
differences are dealt with in the profit for the year. The financial results and cash flows of foreign subsidiaries, associated undertakings
and joint arrangements that are not an entity are translated into sterling at the average rate of exchange for the year, the balance sheets
are translated into sterling at the closing rate of exchange, and the difference arising from the translation of the opening net assets and
financial results for the year at closing rate is taken direct to reserves.
(e) Turnover 
Turnover, which excludes sales between Group undertakings, comprises the value of goods and services supplied to external customers and
the value of work executed in respect of contracts, excluding VAT.
(f) Tangible fixed assets and depreciation
(i) Depreciation is provided on a straight line or reducing balance basis at rates ranging between:
Straight line Reducing balance
Freehold land nil
Freehold buildings 2% to 5%
Leasehold property over the period of the lease
Plant and equipment 10% to 50% 11.5% to 38% 
(ii) Fixed assets leased under finance leases are capitalised and depreciated over their expected useful lives. The finance charges are
allocated over the primary period of the lease in proportion to the capital element outstanding.
(iii) The costs of operating leases are charged to the profit and loss account as they accrue.
(g) Investments
Investments are stated at cost less provision for any impairment in value. Notes on the accounts continued
For the year ended 31 December 2003
Interserve Plc  Annual Report 2003  51
1. Accounting policies (continued)
(h) Stocks and work in progress
(i) Stocks and property work in progress are valued at the lower of cost and net realisable value.
(ii) Contract work in progress is valued at cost plus attributable profit less foreseeable losses. Attributable profit is included when the
outcome of a contract can be assessed with reasonable certainty. The value of contract work in progress is accounted for within
turnover, and in accordance with SSAP 9 “Stocks and Long-term Contracts”, the excess of the book value over payments receivable is
included in debtors as “Amounts recoverable on contracts”. Payments receivable in excess of book value on an individual contract
basis are included in creditors.
(iii) Project-specific finance costs are capitalised until the asset becomes operational.
(i) Pre-contract costs
In compliance with UITF 34 pre-contract costs are recognised as expenses as incurred, except that directly attributable costs are recognised
as an asset when it is virtually certain that a contract will be obtained and the contract is expected to result in future net cash flows.  
(j) PFI projects
In accordance with FRS 5 “Reporting the substance of transactions” (Application note F) the Group has determined the appropriate
treatment of the principal assets of, and income streams from, PFI and similar contracts. Where the balance of risks and rewards derived
from the underlying assets are not borne by the Group, the asset provided is accounted for as a financial asset. 
Revenues received from the customer are apportioned between capital repayments, finance income and operating revenue. The finance
income element is shown within interest receivable.
(k) Pensions
The Group operates two principal pension schemes for the benefit of permanent members of staff: the Interserve Pension Scheme, which is
of the defined benefit type; and the Interserve Retirement Plan, which is of the defined contribution type. The Group also set up a new
defined contribution section of the Interserve Pension Scheme with effect from 1 November 2002. Actuarial valuations are carried out
every three years.  
The (deficit) surplus in the Group’s pension scheme after offsetting regular pension costs and allowing for accruing interest will, in
accordance with SSAP 24 “Accounting for Pension Costs”, be released to the profit and loss account over the average remaining service life
of employees. The amortisation of the experience (deficit) surplus and pension cost charged to the profit and loss account is reflected in the
balance sheet.
For defined contribution schemes, the amount recognised in the profit and loss account is equal to the contributions payable to the
schemes during the year.
(l) Taxation
Current tax, including UK corporation tax and foreign tax, is provided at amounts expected to be paid (or recovered) using the tax rates
and laws that have been enacted or substantively enacted by the balance sheet date.
Deferred tax is provided in full on timing differences which result in an obligation at the balance sheet date to pay more tax, or a right to
pay less tax, at a future date, at rates expected to apply when they crystallise based on current tax rates and law. Timing differences arise
from the inclusion of items of income and expenditure in taxation computations in periods different from those in which they are included
in the financial statements. Deferred tax is not provided on timing differences arising from the revaluation of fixed assets where there is no
commitment to sell the asset, or on unremitted earnings of subsidiaries and associates where there is no commitment to remit these
earnings. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. Deferred
tax assets and liabilities are not discounted. 
(m) Financial instruments
Transactions in derivative financial instruments are for risk management purposes only. The Group uses derivative financial instruments to
hedge its exposure to interest rate and foreign currency risk. To the extent that such instruments are matched to underlying assets or
liabilities, they are accounted for using hedge accounting.
Transactions covered by foreign exchange contracts are recorded at the contracted rate. Interest rate payments and receipts under
interest rate derivative contracts are spread and added to / netted against the corresponding interest charge or interest receivable in the
profit and loss account over the life of the instruments. For foreign exchange instruments, premiums or discounts are spread over the life
of the underlying transactions being hedged.
Where the underlying position being hedged is permanently reduced, the profit or loss on the closure of the corresponding hedge position
will be taken to the profit and loss account in the period in which the position is closed out. 52 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
2. Segmental analysis
The turnover, total operating profit (before exceptional items and goodwill amortisation) and net assets (liabilities) (less minority interest)
attributable to the different classes of the Group’s business are:
Total operating profit
(loss) (excluding
exceptional items and Net assets (liabilities)
Turnover (external) goodwill amortisation) (less minority interest)
2003 2002 2003 2002 2003 2002
#Restated
£million £million £million £million £million £million
By business segment:
Facilities Services (note i) 447.8 396.0 10.6 15.8 (42.7) (34.0)
Industrial Services 148.4 110.1 11.6 11.6 44.4 36.8
Project Services 475.7 428.0 15.8 17.7 (66.9) (60.8)
Equipment Services 74.8 74.5 12.6 13.6 68.4 68.6
1,146.7 1,008.6 50.6 58.7 3.2 10.6
Joint ventures - PFI investments 23.5 23.7 1.8 2.4 21.6 15.3
Group Services 0.4 0.7 (9.6) (9.2) (10.3) (2.7)
1,170.6 1,033.0 42.8 51.9 14.5 23.2
UK defined benefit pension scheme (note ii) – – (8.9) – 33.2 32.3
1,170.6 1,033.0 33.9 51.9 47.7 55.5
Discontinued operations (note iii) 40.5 89.9 (1.8) (1.3) 8.2 27.0
1,211.1 1,122.9 32.1 50.6 55.9 82.5
Goodwill 154.3 163.9
Net debt (22.5) (42.8)
187.7 203.6
By geographical area:
United Kingdom 1,093.4 953.7 38.4 46.4 (55.1) (50.5)
Rest of Europe 15.9 14.6 2.2 2.9 14.3 12.7
Middle East & Africa 7.1 4.8 4.3 3.9 10.7 10.6
Australasia 22.2 15.3 7.4 4.0 15.2 12.8
Far East 7.1 18.7 (1.6) 1.0 15.3 21.1
South America 1.0 1.5 (0.1) 0.5 2.8 3.9
1,146.7 1,008.6 50.6 58.7 3.2 10.6
Joint ventures - PFI investments - United Kingdom 23.5 23.7 1.8 2.4 21.6 15.3
Group Services 0.4 0.7 (9.6) (9.2) (10.3) (2.7)
1,170.6 1,033.0 42.8 51.9 14.5 23.2
UK defined benefit pension scheme (note ii) – – (8.9) – 33.2 32.3
1,170.6 1,033.0 33.9 51.9 47.7 55.5
Discontinued operations (note iii) 40.5 89.9 (1.8) (1.3) 8.2 27.0
1,211.1 1,122.9 32.1 50.6 55.9 82.5
Goodwill 154.3 163.9
Net debt (22.5) (42.8)
187.7 203.6
# Certain comparative figures have been restated as explained in note 8. Interserve Plc  Annual Report 2003  53
Notes on the accounts continued
For the year ended 31 December 2003
2. Segmental analysis (continued)
(i) Facilities Services turnover includes £128.4 million in respect of works bills (2002: £118.0 million). Works bills are costs relating to
services and materials procured on behalf of the Ministry of Defence on which no margin is allowed but for which a management 
fee is received.
(ii) UK defined benefit pension scheme refers to the net pension scheme charge on the Interserve UK defined benefit scheme including
incremental National Insurance costs arising on the new arrangements agreed by the Trustees to the Scheme in 2003.
(iii) Discontinued operations principally represent the results of tube & fittings townwork scaffolding, low voltage power distribution
and rail cabling and signalling and the results of Westpile, the proposed closures of which were announced on 14 July 2003 and
27 November 2003 respectively (2002: the results of businesses noted above and the results of West’s Engineering Design, Tilbury
Phoenix and Climate Equipment which were sold with effect from 11 January 2002, 25 March 2002 and 4 October 
2002 respectively).
(iv) Inter segment turnover is not material and has been excluded from the above figures. The segmental analyses of turnover are 
stated by source and there is no material difference from analyses by destination.
(v) The segmental total operating profit (loss) including exceptional items, goodwill amortisation and the effect of the UK defined
benefit pension scheme is Facilities Services £6.3 million (2002: £15.6 million), Industrial Services £10.7 million (2002: £10.8 million),
Project Services £12.6 million (2002: £17.5 million), Equipment Services £12.2 million (2002: £13.6 million), discontinued operations
(£1.8 million) (2002: (£1.3 million)), joint ventures - PFI investments £1.8 million (2002: £2.4 million) and Group Services (including
goodwill amortisation) (£19.3 million) (2002: (£18.7 million)).
(vi) The segmental net assets (liabilities) less minority interest including the effect of the UK defined benefit pension scheme is
Facilities Services (£37.3 million) (2002: (£29.0 million)), Industrial Services £49.4 million (2002: £41.8 million), Project Services
(£48.1 million) (2002: (£42.4 million)), Equipment Services £69.9 million (2002: £70.1 million), discontinued operations £8.2 million
(2002: £27.1 million), joint ventures - PFI investments £21.6 million (2002: £15.3 million) and Group Services (£7.8 million)
(2002: (£0.4 million)).
(vii) The segmental net assets (liabilities) less minority interest including the UK defined benefit pension scheme is United Kingdom
(£24.4 million) (2002: (£20.6 million)), Group Services (£7.8 million) (2002: (£0.4 million)). All other segmental information is 
identical to that in the table above. 54 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
3. Analyses of continuing and discontinued cost of sales and net operating expenses
Exceptional items
Continuing Discontinued and goodwill 2003
operations operations amortisation Total
£million £million £million £million
Cost of sales 1,033.1 36.8 – 1,069.9
Net operating expenses
Distribution costs 24.9 1.7 – 26.6
Administrative expenses
Total excluding exceptional items and goodwill amortisation
(including release into discontinued operations of £0.8 million provision) 60.9 3.8 – 64.7
Goodwill amortisation – – 9.6 9.6
Total 60.9 3.8 9.6 74.3
Other operating income
Net rental income (0.3) – – (0.3)
85.5 5.5 9.6 100.6
2002
Restated Restated Restated Restated
£million £million £million £million
Cost of sales 881.5 77.1 – 958.6
Net operating expenses
Distribution costs 25.2 2.2 – 27.4
Administrative expenses
Total excluding exceptional items and goodwill amortisation 57.6 11.9 – 69.5
Exceptional items – reorganisation costs predominantly relating to 
Industrial Services –– 1.0 1.0
Goodwill amortisation –– 9.6 9.6
Total 57.6 11.9 10.6 80.1
Other operating income
Net rental income (0.8) – – (0.8)
82.0 14.1 10.6 106.7 Interserve Plc  Annual Report 2003  55
Notes on the accounts continued
For the year ended 31 December 2003
4. Operating profit
2003 2002
£million £million
Operating profit is arrived at after charging:
Depreciation
On owned assets 14.7 14.7
On assets held under finance leases 0.2 0.1
Goodwill amortisation 9.6 9.6
Rentals under operating leases
Hire of plant and machinery 17.3 19.4
Other lease rentals 16.6 16.6
Remuneration payable to auditors
Audit fees – company 0.1 0.1
– subsidiary undertakings 0.5 0.5
0.6 0.6
Non-audit fees – tax advisory services 0.2 0.1
– tax compliance services 0.1 0.1
– other services 0.1 –
0.4 0.2
5. Employees
2003 2002
Number Number
The average number of persons employed, being full time equivalents, within each division during the year,
including directors, was:
Facilities Services 6,754 5,298
Industrial Services 2,720 2,375
Project Services 2,078 2,089
Equipment Services 848 799
Group Services 75 63
Discontinued operations 575 961
13,050 11,585
£million £million
The costs incurred in respect of these employees were:
Wages and salaries 298.5 265.2
Social security costs 24.2 19.8
Pension costs (note 7a) 12.8 2.8
335.5 287.8
6. Directors’ remuneration
Detailed disclosures of directors’ individual remuneration and share options are given in the directors’ remuneration report on pages 37
to 43 and should be regarded as an integral part of this note. 56 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
7a. Pension scheme – SSAP 24 disclosures
(a) The Group operates two principal pension schemes for the benefit of permanent members of staff: the Interserve Pension Scheme
(the “Scheme”), which is of the defined benefit type; and the Interserve Retirement Plan, which is of the defined contribution type. 
The Group also set up a new defined contribution section of the Interserve Pension Scheme with effect from 1 November 2002. 
From November 2002 the defined benefit section of the Scheme was closed to all but a very few new entrants and those employees
who, under agreement, TUPE transfer to the Group from the public sector. Taking account of these factors, it is expected under
normal circumstances that the age profile of the active membership of the defined benefit section will rise and consequently under
the projected unit method the current service cost will increase as the members of the Scheme approach retirement.
The assets of the schemes are held separately from those of the Group and are managed by external independent investment
managers appointed by the Trustees.
(b) The net pension costs for the year (note 5) are made up as follows:
2003 2002
£million £million
UK defined benefit scheme:
Regular cost 3.7 7.1
Amortisation of experience deficit/(surplus) and interest 4.4 (7.1)
SSAP 24 cost 8.1 –
National Insurance costs* 0.8 –
8.9 –
Other UK schemes 3.3 2.3
Overseas and other pension contributions 0.6 0.5
12.8 2.8
* National Insurance costs arise on the change in the contracted-out nature of the Scheme to a money purchase basis, with effect from 6 April 2003.
(c) The pension cost relating to the Interserve Pension Scheme is assessed in accordance with the advice of a qualified actuary using the
projected unit method. The assumptions which have the most significant effect on the results of the actuarial calculations are those
relating to the return on investments and the rate of increase in salaries and pensions. It is assumed that the investment return will
exceed salary increases by 4.7 per cent per annum, and increases to present and future pensions in payment by 6.2 per cent per
annum.  
(d) The actuarially assessed experience (deficit) surplus in the Scheme is being amortised on a straight line basis over the average
remaining service lives of employees.
(e) The pension scheme prepayment of £33.2 million (2002: £32.3 million) shown in the balance sheet represents the amortisation of the
experience surplus less pension cost credited to the profit and loss account. The latest actuarial valuation of the Interserve Pension
Scheme was at 31 December 2002. At the date of that actuarial valuation the market value of the Scheme’s assets was £212.5 million
and represented approximately 83 per cent of the benefits that had accrued to members, after allowing for expected future
increases in earnings. Since the date of the valuation, on the recommendation of the actuary, the Group has recommenced
contributions to the Scheme. Interserve Plc  Annual Report 2003  57
Notes on the accounts continued
For the year ended 31 December 2003
7b. Pension scheme – FRS 17 disclosures
The principal pension schemes within the Group have been valued for the purposes of the transitional arrangements under FRS 17. For each
of these pension schemes valuation information has been updated by Lane Clark & Peacock, qualified independent actuaries, to take
account of the requirements of FRS 17 in order to assess the liabilities of the scheme at 31 December 2003.
Scheme assets are stated at their market value at 31 December 2003.
The financial assumptions used to calculate scheme liabilities under FRS 17 are:
2003 2002 2001
Valuation Method Projected Unit Projected Unit Projected Unit
Discount Rate 5.6% 5.9% 6.0%
Inflation Rate 2.8% 2.3% 2.5%
Increases in Pensions
LPI/RPI 2.6-2.8% 2.3% 2.5%
Fixed 5% 5.0% 5.0% 5.0%
3% or RPI if higher (capped at 5%) 3.6% 3.4% 3.5%
Salary increases 3.55-4.3% 3.05-3.8% 3.25-4.5%
The assets in the scheme and the expected rate of return were:
Long-term Long-term Long-term
rate of 2003 rate of 2002 rate of 2001
expected return £million expected return £million expected return £million
Equities 8.0% 249.4 8.0% 227.5 8.0% 283.3
Bonds/cash 5.6% 21.1 5.6% 4.3 5.0% 4.5
Other 5.6% 4.2 5.6% 7.5 6.0% 3.3
Total market value of assets 274.7 239.3 291.1
Present value of scheme liabilities (401.6) (352.1) (310.5)
Deficit in the scheme (126.9) (112.8) (19.4)
Related deferred tax asset 38.1 33.8 5.8
Net pension liability (88.8) (79.0) (13.6)
If FRS 17 had been applied in full instead of SSAP 24, the Group would have benefited from a credit of £0.6 million (2002: cost of £7.7 million).
The analysis of operating profit and finance income is set out below:
Analysis of amount which would be charged (credited) to operating profit:
Incremental Incremental
impact impact
2003 2003 2002 2002
£million £million £million £million
Employer’s part of current service cost (UK defined benefit scheme) 11.0 2.9 12.8 12.8
Other schemes (note 7a) 3.9 – 2.8 –
Curtailment on discontinued operations (5.4) (5.4) (1.0) (1.0)
Total operating charge 9.5 (2.5) 14.6 11.8
Analysis of the amount which would be charged (credited) to other finance income:
Incremental Incremental
impact impact
2003 2003 2002 2002
£million £million £million £million
Expected return on pension scheme assets (19.4) (19.4) (22.9) (22.9)
Interest on pension scheme liabilities 21.3 21.3 18.8 18.8
1.9 1.9 (4.1) (4.1) 58 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
7b. Pension scheme – FRS 17 disclosures (continued)
Analysis of amounts which would be recognised in the statement of total recognised gains and losses (“STRGL”) if FRS 17 had been adopted
in full:
2003 2002
£million £million
Actual return less expected return on pension scheme assets 27.4 (93.0)
Experience (losses) gains arising on the scheme liabilities (6.1) 1.3
Changes in assumptions underlying the present value of scheme liabilities (39.8) 5.3
Actuarial loss recognised in the statement of total recognised gains and losses (18.5) (86.4)
Movement in scheme deficit during the year:
2003 2002
£million £million
(Deficit) in scheme at the beginning of the year (112.8) (19.4)
Movement in year:
Current service cost (16.9) (17.9)
Aggregate contributions 17.8 5.8
Curtailment gain on discontinued operations 5.4 1.0
Other finance income (1.9) 4.1
Actuarial (loss) recognised in STRGL (18.5) (86.4)
(Deficit) in scheme at the end of the year (126.9) (112.8)
History of experience gains and losses:
2003 2002
£million £million
Difference between expected and actual return on scheme assets
Amount – gain (loss) 27.4 (93.0)
Percentage of scheme assets 10% (39%)
Experience gains and losses on scheme liabilities
Amount – (loss) gain (6.1) 1.3
Percentage of the present value of the scheme liabilities 2% 0%
Total amount recognised in STRGL
Amount – (loss) (18.5) (86.4)
Percentage of the present value of the scheme liabilities 5% 25%
2003 2002 2001
£million £million £million
Net assets:
Net assets per balance sheet (excluding minority interest) 187.7 203.6 196.0
less: Pension scheme prepayment (33.2) (32.3) (32.0)
add: Deferred tax on pension scheme prepayment 9.9 9.6 9.6
Net assets excluding pension scheme prepayment 164.4 180.9 173.6
Pension liability net of deferred tax (88.8) (79.0) (13.6)
Net assets including pension liability 75.6 101.9 160.0
2003 2002 2001
£million £million £million
Reserves:
Profit and loss reserve 51.9 69.4 62.1
less: Pension scheme prepayment (33.2) (32.3) (32.0)
add: Deferred tax on pension scheme prepayment 9.9 9.6 9.6
Profit and loss reserve excluding pension scheme prepayment 28.6 46.7 39.7
Pension liability net of deferred tax (88.8) (79.0) (13.6)
Profit and loss (deficit) reserve including pension liability (60.2) (32.3) 26.1 Interserve Plc  Annual Report 2003  59
Notes on the accounts continued
For the year ended 31 December 2003
8. Exceptional items
2003 2002
£million £million
(a) Net (loss) on sale or termination of operations (discontinued operations)
Net (loss) on sale or termination of operations – discontinued (20.5) (1.1)
Goodwill write off in respect of discontinued operations (note 26)* (4.4) (0.1)
(24.9) (1.2)
* Goodwill written off relates to that arising on acquisitions prior to 1998. This was previously written off to reserves on acquisition. On the termination of a
business, the goodwill is charged in the profit and loss account and is written back in the profit and loss reserve (note 26). There is therefore no effect on the
net assets of the Group.
(b) Profit on sale of tangible fixed assets (continuing operations)
Profit on sale of land and buildings 2.7 2.5
The directors are of the opinion that a trade in property activities is no longer being conducted by the Group. The profit on sale of land
and buildings has therefore been shown as an exceptional item in accordance with FRS 3 “Reporting financial performance”. Comparative
figures have been restated accordingly.
9. Net interest payable
2003 2002
£million £million
(a) Interest receivable
Bank interest 3.5 5.7
Other interest 1.8 1.5
Joint ventures - PFI investments 8.8 7.1
14.1 14.3
(b) Interest payable
Bank loans and overdrafts and other loans repayable within 5 years (7.0) (9.4)
Joint ventures - PFI investments (19.5) (13.9)
less: capitalised 9.2 5.0
(17.3) (18.3)
Net interest payable (3.2) (4.0)
10. Tax on profit on ordinary activities
2003 2002
£million £million
UK Corporation tax at 30% (2002: 30%) 4.1 9.4
Overseas taxation 2.5 1.7
Adjustments in respect of prior periods 0.2 (0.4)
Total current tax 6.8 10.7
Deferred taxation – current year (2.0) 1.7
– prior period (0.4) 0.2
4.4 12.6
The impact of exceptional items of £22.2 million (2002: credit of £0.3 million) on the tax charge, included above, has been a credit of
£4.9 million (2002: credit of £0.4 million). 60 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
10. Tax on profit on ordinary activities (continued)
The standard rate of tax for the year, based on the UK standard rate of corporation tax, is 30 per cent. The actual tax charge for the
current and the previous year is more than / less than the standard rate for the reasons set out in the following reconciliation:
2003 2002
£million £million
(Loss) profit on ordinary activities before tax (2.9) 37.2
Tax on (loss) profit on ordinary activities at standard rate (0.9) 11.2
Factors affecting charge for the year:
Expenses not deductible for tax purposes (primarily goodwill amortisation) 4.6 3.3
Sales of subsidiaries – 0.2
Indexation allowance (0.2) (0.6)
Capital allowances and other timing differences 2.7 (2.6)
Adjustments in respect of prior periods (0.2) (0.4)
Foreign tax charged at rates varying from the UK standard rate (0.2) –
Overseas losses unrelieved 1.0 –
Other – (0.4)
Total actual amount of current tax 6.8 10.7
11. Dividends
2003 2002
£million £million
The interim dividend of 4.2p per share (2002: 4.0p) was paid to shareholders on 3 November 2003 4.8 4.5
The proposed final dividend is 9.3p per share (2002: 9.0p) 10.6 10.2
15.4 14.7
12. Earnings per share
The calculation of headline earnings per share, which includes both continuing and discontinued operations, is based on the weighted
average number of shares in issue throughout the year which totalled 113,380,366 (2002: 113,473,523) and a profit after taxation and
minority interest excluding exceptional items and goodwill amortisation of £19.0 million (2002: £33.6 million). This is disclosed in addition
to the basic earnings per share as the directors consider it more fairly represents the performance of the Group. Basic earnings per share
is calculated on attributable (loss)/profit after exceptional items and goodwill amortisation of (£7.9 million) (2002: £24.6 million).
Diluted earnings per share for the year is based on the weighted average number of shares, including dilutive potential shares relating to
option schemes, which totalled 113,380,366 (2002: 114,230,394) and a (loss)/profit after taxation and minority interest of (£7.9 million)
(2002: £24.6 million).
13. Intangible fixed assets – goodwill
Consolidated
2003
£million
Cost
1 January 2003 and 31 December 2003 191.1
Amortisation
1 January 2003 27.2
Amortisation in year 9.6
31 December 2003 36.8
Net book value
31 December 2003 154.3
31 December 2002 163.9 Interserve Plc  Annual Report 2003  61
Notes on the accounts continued
For the year ended 31 December 2003
14. Tangible fixed assets
Consolidated The Company
Land Plant Land Plant
and and and and
buildings equipment Total buildings equipment Total
£million £million £million £million £million £million
(a) Movement during the year
Cost
1 January 2003 16.5 136.3 152.8 10.4 1.2 11.6
Additions at cost 0.9 14.8 15.7 0.3 0.1 0.4
Disposals at cost (4.2) (20.2) (24.4) (2.8) (0.1) (2.9)
Currency adjustment 0.4 1.8 2.2 – – –
31 December 2003 13.6 132.7 146.3 7.9 1.2 9.1
Depreciation
1 January 2003 2.8 49.3 52.1 1.3 0.8 2.1
Provided in year 0.5 14.4 14.9 0.1 0.2 0.3
Disposals (1.0)(10.7)(11.7)(0.5)–(0.5)
Currency adjustment 0.1 0.8 0.9 – – –
31 December 2003 2.4 53.8 56.2 0.9 1.0 1.9
Net book value
31 December 2003
Owned assets 11.2 78.0 89.2 7.0 0.2 7.2
Assets under finance lease and hire purchase agreements – 0.9 0.9 – – –
11.2 78.9 90.1 7.0 0.2 7.2
31 December 2002
Owned assets 13.7 86.0 99.7 9.1 0.4 9.5
Assets under finance lease and hire purchase agreements – 1.0 1.0 – – –
13.7 87.0 100.7 9.1 0.4 9.5
(b) Land and buildings
Net book value of land and buildings
Consolidated The Company
2003 2002 2003 2002
£million £million £million £million
Freehold:
Land at cost 3.9 4.0 2.7 3.4
Buildings at cost less depreciation 3.1 4.9 1.9 3.5
7.0 8.9 4.6 6.9
Leaseholds over 50 years:
At cost less depreciation 2.4 2.2 2.4 2.2
Leaseholds under 50 years:
At cost less depreciation 1.8 2.6 – –
Total 11.2 13.7 7.0 9.1
Tangible fixed assets are stated at depreciated historical cost.
(c) Future capital expenditure not provided for in the accounts
Committed 0.4 1.3 – – 62 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
14. Tangible fixed assets (continued)
(d) Operating leases
At 31 December 2003 the Group had annual commitments under non-cancellable operating leases as follows:
Commitments expiring:
Land and buildings Other
2003 2002 2003 2002
£million £million £million £million
within one year 0.4 0.2 2.6 2.6
in two to five years 1.6 1.3 6.7 7.5
after five years 3.6 3.8 0.1 1.0
5.6 5.3 9.4 11.1
The majority of leases of land and buildings are subject to rent reviews at periodic intervals of between three and five years.
15. Investments in joint ventures, associated and subsidiary undertakings
Share of
Shares Loans reserves Total
£million £million £million £million
(a) Consolidated
Joint ventures - PFI investments:
Cost
1 January 2003 6.7 7.6 1.0 15.3
Acquisitions and advances 0.1 6.1 – 6.2
Repayments – (0.1) – (0.1)
Share of retained profits – – 0.2 0.2
31 December 2003 6.8 13.6 1.2 21.6
The operating profit from joint ventures - PFI investments is £1.8 million (2002: £2.4 million).
The investment is analysed as follows:
2003 2002
£million £million
Current assets (including interest capitalised of £24.0 million (2002: £14.8 million)) 326.5 241.6
Current liabilities (16.6) (12.1)
Liabilities falling due after more than one year (288.3) (214.2)
21.6 15.3
The liabilities of the joint ventures principally relate to the non-recourse debt within those businesses.
The most substantial investment is in Health Management (UCLH) Holdings Ltd. The Group’s share is gross assets of £87.8 million, current
liabilities of £0.8 million and liabilities falling due after more than one year of £79.9 million.
At 31 December 2003, the Group had a commitment for additional investment in joint ventures - PFI investments of £14.9 million
(2002: £14.8 million).
Share of
Shares Loans reserves Total
£million £million £million £million
Associated undertakings:
Cost
1 January 2003 5.0 0.4 5.5 10.9
Share of retained profits – – 0.9 0.9
Currency 0.2 (0.1) (0.7) (0.6)
31 December 2003 5.2 0.3 5.7 11.2
The operating profit from associates is £3.6 million (2002: £3.7 million).
The investment in associated undertakings includes £0.8 million in respect of goodwill (net of amortisation) arising on the investment in
Gulf Housing and Construction Company WLL. Interserve Plc  Annual Report 2003  63
Notes on the accounts continued
For the year ended 31 December 2003
15. Investments in joint ventures, associated and subsidiary undertakings (continued)
(b) The Company
Investments in associated and subsidiary undertakings:
Associated
Undertakings Subsidiary Undertakings
Shares Shares
at cost at cost Loans Total
£million £million £million £million
Cost
1 January 2003 and 31 December 2003 0.1 308.5 27.2 335.8
Provisions
1 January 2003 and 31 December 2003 17.5
Net book value
1 January 2003 and 31 December 2003 318.3
Details of principal subsidiary and associated undertakings are given on pages 71 to 74, which form part of these accounts.
16. Stocks and work in progress
Consolidated
2003 2002
£million £million
Stocks:
Goods held for resale 11.5 9.5
Materials 1.0 2.2
12.5 11.7
Commercial property – 3.2
Total stocks and work in progress 12.5 14.9
17. Debtors
Consolidated The Company
2003 2002 2003 2002
£million £million £million £million
Trade debtors 148.6 141.2 0.4 0.5
Amounts recoverable on contracts 75.6 81.2 – –
Amounts owed by subsidiary undertakings – – 185.9 199.6
Amounts owed by associated undertakings 2.0 2.1 – –
Other debtors 6.1 7.9 18.8 2.6
Prepayments and accrued income 12.3 3.2 1.8 10.2
244.6 235.6 206.9 212.9
Amounts included above recoverable after more than one year:
Amounts owed by subsidiary undertakings – – 98.3 94.5
Prepayments and accrued income 4.1 – – –
4.1 – 98.3 94.5 64 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
18. Investments
Consolidated The Company
2003 2002 2003 2002
£million £million £million £million
Quoted investments 0.5 0.5 – –
Quoted investments include 230,548 (2002: 230,548) shares in Interserve Plc held by the trustee of the How Group Employee 
Benefit Trust.
The market value of these shares at 31 December 2003 was £553,000 (2002: £384,000).
19. Unsecured loan notes
Consolidated The Company
2003 2002 2003 2002
£million £million £million £million
Floating rate loan notes 6.1 13.9 4.1 13.9
Fixed rate loan notes – 2.1 – –
6.1 16.0 4.1 13.9
The floating rate unsecured loan notes are redeemable at par by the noteholder giving not less than 30 days’ prior notice in writing to
expire on or before any interest payment date. Unless redeemed earlier, repayment will be made on 31 December 2005 (£0.9 million) or on
1 July 2008 (£3.2 million).  Interest is payable half-yearly on the loan notes at rates ranging between 0.5 per cent and 1.3 per cent below
six-month LIBOR.
The 6 per cent fixed rate unsecured loan notes were converted during the year to floating unsecured loan notes. These are redeemable by
the Company giving not less than six months’ prior notice in writing, the date for redemption being after 6 April following the date of the
notice.  Interest is payable at the rates noted above.  
20. Other creditors
Consolidated The Company
2003 2002 2003 2002
£million £million £million £million
Obligations under finance leases 0.2 0.2 – –
Advance payments 23.9 16.1 – –
Amounts owed to subsidiary undertakings – – 121.4 147.8
Amounts owed to associated undertakings 0.2 0.3 – –
Corporation tax 8.1 6.2 4.4 1.0
Other taxation and social security 7.0 28.4 – –
Other creditors 28.4 20.1 5.4 4.5
Accruals and deferred income 75.4 56.4 2.2 2.7
Dividends proposed 10.6 10.2 10.6 10.2
153.8 137.9 144.0 166.2
21. Bank loans repayable after more than one year
Consolidated The Company
2003 2002 2003 2002
£million £million £million £million
Repayable:
in one to two years – 35.1 – 50.1
in two to five years 49.7 – 49.5 –
49.7 35.1 49.5 50.1 Interserve Plc  Annual Report 2003  65
Notes on the accounts continued
For the year ended 31 December 2003
22. Other creditors – amounts falling due after more than one year
Consolidated The Company
2003 2002 2003 2002
£million £million £million £million
Trade creditors 1.0 1.4 – –
Other creditors 0.4 0.4 – –
Accruals – 0.1 – –
Obligations under finance leases 0.2 0.5 – –
1.6 2.4 – –
Amounts payable:
in one to two years 0.1 0.3 – –
in two to five years 1.2 1.8 – –
after five years 0.3 0.3 – –
1.6 2.4 – –
23. Financial instruments
(a) Interest rate risk profile of financial assets and financial liabilities
Financial assets comprise short-term cash deposits, long-term debtors and cash at bank. Financial liabilities comprise bank borrowings,
finance leases, loan notes, long-term creditors and interest rate caps. As permitted by FRS 13, the disclosures below, other than the currency
exposure disclosures, exclude all of the Group’s short-term debtors and creditors.
31 December 2003 31 December 2002
Floating Non-interest Floating Non-interest
rates Fixed rates Capped bearing Total rates Fixed rates Capped bearing Total
Financial liabilities £million £million £million £million £million £million £million £million £million £million
Currency
Sterling 6.1 0.4 35.0 1.4 42.9 35.7 2.1 – 1.9 39.7
US dollar 7.7––– 7.7 8.5 – – – 8.5
Euro 0.9––– 0.9 3.4 – – – 3.4
Australian dollar 8.2––– 8.2 6.5 – – – 6.5
Other 0.2––– 0.2 –––––
23.1 0.4 35.0 1.4 59.9 54.1 2.1 – 1.9 58.1
The Group had interest rate caps covering £40 million at 31 December 2003. At that date only £35 million had been drawn under the
Group’s £165 million Credit Facility.
31 December 2003 31 December 2002
Floating Non-interest Floating Non-interest
rates Fixed rates Capped bearing Total rates Fixed rates Capped bearing Total
Financial assets £million £million £million £million £million £million £million £million £million £million
Currency
Sterling 22.0 – – 4.1 26.1 3.7 – – – 3.7
US dollar 0.2––– 0.2 –––––
Euro 6.1––– 6.1 5.6 – – – 5.6
Australian dollar 2.2––– 2.2 0.8 – – – 0.8
Other 5.5––– 5.5 3.3 – – – 3.3
36.0 – – 4.1 40.1 13.4 – – – 13.4
Floating rate borrowings and deposits bear interest rates related to relevant national LIBOR equivalents, apart from small amounts that are
related to national base rates. 66 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
23. Financial instruments (continued)
(b) Maturity of financial liabilities
The maturity profile of the Group’s financial liabilities, other than short-term creditors and accruals was as follows:
2003 2002
£million £million
At 31 December
In one year or less or on demand 8.6 20.6
In more than one year but not more than two years 0.1 35.4
In more than two years but not more than five years 50.9 1.8
In more than five years 0.3 0.3
59.9 58.1
The Group has various undrawn committed facilities. The facilities available in respect of which all conditions precedent had been met
were as follows:
2003 2002
£million £million
In more than one year but not more than two years – 96.5
In more than two years but not more than five years 115.5 –
115.5 96.5
(c) Currency exposures
Gains and losses relating to monetary assets and liabilities of Group companies that are not denominated in their functional currency will be
recognised in the profit and loss account. Taking into account the effect of forward contracts, the Group did not have a material exposure
to foreign exchange gains or losses on monetary assets and monetary liabilities denominated in foreign currencies at 31 December 2003.
(d) Fair values of financial assets and financial liabilities
For the whole Group, financial assets and liabilities, with the exception of foreign exchange forward contracts, have fair values not
materially different to the carrying values. The fair values of the forward contracts not recorded in the balance sheet are £nil (2002: £nil).
(e) Market price risk
The Group seeks to control its exposures to changes in interest rates by limiting their impact on the interest charge in the profit and loss
account. This is achieved through the use of interest rate caps where appropriate. An instantaneous 1 per cent increase across all relevant
interest rates would increase the Group’s interest charge by less than 0.5 per cent of consolidated Group profits before exceptional items
and goodwill amortisation.
In addition the Group seeks to selectively hedge its foreign currency dividends either through forward contracts or by purchasing options.
At 31 December 2003 none of the Group’s expected dividends for the year ended 31 December 2003 has been hedged. A 10 per cent
increase in the value of sterling against all relevant currencies would reduce dividend income by 1.1 per cent of consolidated Group profits
before exceptional items and goodwill amortisation.
(f) Gains and losses on hedges
The Group enters into forward foreign exchange contracts to eliminate the currency exposure that arises on sales or purchases
denominated in foreign currencies immediately those sales or purchases are contracted. It also uses interest rate caps to manage the
interest rate profile. Changes in the fair value of instruments used as hedges are not recognised in the financial statements until the
hedged positions mature. There were no unrecognised gains or losses on hedges at 1 January 2003. There were no gains or losses on hedges
that were recognised in 2003. There were no unrecognised gains or losses on hedges at 31 December 2003. Interserve Plc  Annual Report 2003  67
Notes on the accounts continued
For the year ended 31 December 2003
24. Provisions for liabilities and charges
Consolidated The Company
2003 2002 2003 2002
£million £million £million £million
Deferred taxation 15.9 18.1 11.2 10.9
Other provisions 24.8 11.3 – –
40.7 29.4 11.2 10.9
Deferred taxation
(a) Movement in year
1 January 2003 18.1 10.9
(Release) charge for year (2.4) 0.3
Currency 0.2 –
31 December 2003 15.9 11.2
(b) The source of the balance on deferred tax account is as follows:
Accelerated capital allowances 7.3 5.9 – –
Pension prepayment 9.9 9.6 9.9 9.6
Other timing differences (1.0) 3.1 1.1 1.1
Losses (0.3) (0.5) – –
Capital gains rolled over – – 0.2 0.2
15.9 18.1 11.2 10.9
Consolidated The Company
Termination
Other provisions of operations Other Total Total
£million £million £million £million
1 January 2003 – 11.3 11.3 –
Provided during year 20.7 9.0 29.7 –
Amounts released – (0.7) (0.7) –
Amounts utilised (15.5) – (15.5) –
31 December 2003 5.2 19.6 24.8 –
Provisions on termination of operations will be utilised in the course of the next 12 months.
Other provisions include costs of site clearance, remedial costs and contractual provisions. These will be utilised on final settlement of
the contract. 68 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
25. Share capital
2003 2002
£million £million
Authorised
150,000,000 ordinary shares of 10p each (2002: 150,000,000 ordinary shares of 10p each) 15.0 15.0
Allotted and fully paid
113,756,332 ordinary shares of 10p each (2002: 112,963,988 ordinary shares of 10p each) 11.4 11.3
During the year 95,000 ordinary shares of 10p each were issued for a cash consideration of £201,400 to participants in the Executive Share
Option Scheme (2002: 77,500 ordinary shares of 10p each) and 697,344 ordinary shares of 10p each issued for a cash consideration of
£1,389,109 to participants in the Sharesave Scheme (2002: 49,113 ordinary shares of 10p each).
Options were granted during the year as indicated below. Outstanding options are normally exercisable after the third but before the
tenth anniversary of the date of the grant. Outstanding options over shares in the Company at 31 December 2003 were as follows:
Number of
Subscription employees
price per 10p including Number of
Date of grant ordinary share directors shares
(a) Sharesave scheme 25 April 2001 439.40p 1,578 954,036
17 April 2002 441.00p 1,520 305,070
1,259,106
(b) Share option plan 18 June 1997 268.40p 2 147,660
7 October 1998 212.00p 9 325,850
14 June 2000 346.00p 19 422,000
26 March 2001 542.50p 30 707,000
19 March 2002 566.50p 34 597,000
23 April 2003 205.83p 1 200,000
2,399,510 Interserve Plc  Annual Report 2003  69
Notes on the accounts continued
For the year ended 31 December 2003
26. Reserves
Capital 
(a) Consolidated Share redemption Acquisition Profit and
premium reserve reserve loss account Total
£million £million £million £million £million
1 January 2003 106.4 0.1 16.4 69.4 192.3
Retained loss for the year – – – (23.3) (23.3)
Premium on shares issued in year 1.5 – – – 1.5
Goodwill previously written off transferred to profit and loss account – – – 4.4 4.4
Currency adjustments – – – 1.4 1.4
31 December 2003 107.9 0.1 16.4 51.9 176.3
The cumulative amount of goodwill written off against profit and loss account and acquisition reserve in the period from 1 January 1986 to
31 December 1997 amounted to £70.5 million (2002: £74.9 million). Goodwill written off in respect of accounting periods prior to 1986 has
not been disclosed on grounds that it cannot be obtained without unreasonable expense and delay. In 1998 the Company adopted FRS 10
“Goodwill and Intangible Assets” and goodwill arising after 1 January 1998 is included in fixed assets and amortised over its useful
economic life.
Capital 
(b) The Company Share redemption Acquisition Profit and
premium reserve reserve loss account Total
£million £million £million £million £million
1 January 2003 106.4 0.1 75.9 77.4 259.8
Retained profit for the year – – – 6.2 6.2
Premium on shares issued in year 1.5 – – – 1.5
Currency adjustments – – – 1.3 1.3
31 December 2003 107.9 0.1 75.9 84.9 268.8
The Company has taken advantage of section 230 of the Companies Act 1985 and consequently a profit and loss account for the Company
alone is not presented. The profit after taxation was £21.6 million (2002: £26.2 million).
27. Reconciliation of movement in shareholders’ funds
Consolidated
2003 2002
£million £million
(Loss) profit for the financial year attributable to the members of Interserve Plc (7.9) 24.6
Dividends (15.4) (14.7)
(23.3) 9.9
Other recognised gains and losses for the year 1.4 (0.9)
New share capital subscribed 1.6 0.3
Repurchase of Company shares – (1.7)
Goodwill previously written off transferred to profit and loss account 4.4 –
Net (reduction in) addition to shareholders’ funds (15.9) 7.6
Opening shareholders’ funds 203.6 196.0
Closing shareholders’ funds 187.7 203.6 70 Interserve Plc  Annual Report 2003
Notes on the accounts continued
For the year ended 31 December 2003
28. Related party transactions
Details of transactions with related parties of Interserve Plc in accordance with the requirements of FRS 8 “Related Party Disclosures”,
are set out below:
2003 2002
£million £million
Sales to joint ventures - PFI investments on normal trading terms 170.1 115.0
Sales to associated undertakings on normal trading terms 1.5 0.9
Purchases from associated undertakings on normal trading terms 0.6 0.9
During the year, fees were paid by a subsidiary of the Group. An arrangement was entered into in December 2000 whereby these fees are
periodically reimbursed to Interserve Plc. Mr A M Ringrose, a director of Interserve Plc, and Mr C J Groom, a former director of Interserve
Plc, were parties to that arrangement, and had an interest amounting to approximately £29,400 and £2,354,700 respectively during the
year (2002: Mr A M Ringrose £1,400: Mr C J Groom £42,500).  
Details of the interests of certain directors in loan notes issued by the Company are set out on page 42, and the interest applicable to
those loan notes is set out in note 19.
Details of the Group’s principal joint ventures - PFI investments and associated undertakings are set out on pages 71 to 74. Investments in
and loans granted to joint ventures - PFI investments and associated undertakings and movements during the year are set out in note 15
and other amounts due from or to associated undertakings are shown in notes 17 and 20. Amounts due from joint ventures - PFI
investments amounted to £4.6 million (2002: £5.3 million). Guarantees given in respect of bank facilities made available to associated
undertakings are reported in note 29.
29. Contingent liabilities
At 31 December 2003 there were guarantees given in the ordinary course of business of the Group. The Company has given guarantees
covering bank overdrafts in its subsidiary and associated undertakings. At 31 December 2003 these amounted to £0.7 million (2002:
£2.8 million).
The Group has given guarantees in respect of bank borrowings and guarantees made available to associated undertakings for sums not
exceeding £1.0 million (2002: £1.2 million) in respect of borrowings and £19.3 million (2002: £16.9 million) in respect of guarantees. 
At 31 December 2003 £nil (2002: £nil) had been utilised in borrowings and £14.1 million (2002: £10.6 million) in guarantees. Interserve Plc  Annual Report 2003  71
Principal undertakings and trading activities
As at 31 December 2003
Listed below are the principal subsidiary and associated undertakings, joint arrangements and joint ventures of the Group as at
31 December 2003. The subsidiary undertakings are, unless otherwise stated, wholly-owned and incorporated in Great Britain, unless their
principal offices are located overseas, in which case the respective country is the country of incorporation. Shareholdings in companies
marked ‘*’ are held by subsidiaries of Interserve Plc. The accounting reference date for the following companies is 31 December unless
otherwise stated.
Facilities Services Activities Principal Offices
Industrial Services
Interserve Industrial Services Ltd* Project management, mechanical and process Dartford, Derby, Liverpool, 
pipework fabrication and erection, scaffolding and Redditch, Teesside, Leeds, 
access, thermal insulation, access hire and sale, Preston, Aberdeen, Dundee,
electrical, instrumentation and control systems, Edinburgh, Falkirk, Glasgow,
power transmission and distribution, protective Bristol, Newcastle
coatings, asbestos surveying and cleaning to the
industrial and construction sectors
Project Services
Interserve Project Services Ltd Building and infrastructure services focused Aldridge, Belvedere, 
particularly on PFI, framework, and alliancing Birmingham, Edinburgh, 
opportunities Edwinstowe, Exeter, Leeds,
Leicester, Mansfield, Stockton,
Swansea, Uxbridge,
Wellington, Wigan
Douglas OHI LLC (33%)* Civil engineering and building Sultanate of Oman
(Issued capital 251,000 Omani Rials divided into ordinary shares of 10 Omani Rials each)
Gulf Housing and Construction Company WLL (49%)* Civil engineering and building Qatar
(Issued capital 1,000,000 Qatar Rials divided into ordinary shares of 1,000 Qatar Rials each)
How United Services WLL (49%)* Engineering services Qatar
(Issued capital 1,000,000 Qatar Rials divided into shares of 1,000 Qatar Rials each)
London, Bristol
London
London
London
London
Facilities management services in central and local
government, commercial, healthcare and
educational sectors
Property and facilities management services to the
Ministry of Defence
Facilities management services in the public and
private sectors
Building, maintenance and cleaning services for
8,000 council-owned homes
Management of the Ministry of Defence Army
Training Estate
Interservefm Ltd*
Interserve (Defence) Ltd*
Interserve (Facilities Management) Ltd*
Interserve (Facilities Services-Slough) Ltd*
1
Landmarc Support Services Ltd (51%)*
1
1
accounting reference date - 31 March 72 Interserve Plc  Annual Report 2003
Principal undertakings and trading activities continued
As at 31 December 2003
Project Services (continued) Activities Principal Offices
Khansaheb Civil Engineering LLC (45%)* Civil engineering and building Emirate of Dubai
(Issued capital 1,000,000 UAE Dirhams divided into ordinary shares of 1,000 UAE Dirhams each)
Khansaheb Hussain LLC (49%)* Civil engineering and building Emirate of Abu Dhabi
(Issued capital 1,000,000 UAE Dirhams divided into ordinary shares of 1,000 UAE Dirhams each)
KMI Water Joint Venture (33%)* Water project framework for United Utilities Leigh
Equipment Services
RMD Kwikform Ltd* Equipment hire and sales Aldridge, Bristol, Belfast, 
Cardiff, Glasgow, Haydock, 
Huddersfield, Rainham, 
Wembley and three other 
branches
Rapid Metal Developments (Australia) Pty Ltd* Equipment hire and sales Adelaide, Brisbane, Melbourne, 
Perth, Sydney and 12 other 
branches
Rapid Metal Developments (NZ) Ltd* Equipment hire and sales Auckland, Christchurch, 
Wellington
RMD Kwikform Chile SA* Equipment hire and sales Santiago
RMD Kwikform Hong Kong Ltd Equipment hire and sales Hong Kong SAR
RMD Kwikform Ibérica, SA (95%)* Equipment hire and sales Madrid and Lisbon
RMD Kwikform Ireland Ltd* Equipment hire and sales Dublin and two other branches
RMD Kwikform Korea Co, Ltd* Equipment hire and sales Seoul
RMD Kwikform Middle East LLC (49%)* Equipment hire and sales Bahrain, Emirate of Sharjah,
(Issued capital 500,000 UAE Dirhams divided into ordinary shares of 1,000 UAE Dirhams each) Emirate of Abu Dhabi, Qatar
RMD Kwikform Philippines, Inc Equipment hire and sales Manila
RMD Kwikform (Taiwan) Ltd* Equipment hire and sales Taipei
RMD Sweden AB* Equipment hire and sales Malmo
RMD (Thailand) Ltd* Equipment hire and sales Bangkok
B C Barton & Son Ltd (33%)
1
Manufacture of pressed steel components Tividale, Warley
1
accounting reference date - 31 July Interserve Plc  Annual Report 2003  73
Principal undertakings and trading activities continued
As at 31 December 2003
PFI Investments Activities Principal Offices
Interserve Investments Plc Investment company Twyford
Interserve PFI Holdings Ltd* Holding company Twyford
Ashford Prison Services Holdings Ltd (33.33%)*
1
Design, build, finance and operation of Twyford
Ashford Prison, Middlesex
Baglan Moor Healthcare Holdings Ltd (25.5%)* Design, build, finance and operation of Farnham
Neath Port Talbot Hospital
Baglan Moor Healthcare Property Ltd (25.5%)* Design, build, finance and operation of Farnham
Neath Port Talbot Hospital
Belfast Educational Services (Dungannon) Design, build, finance and operation of Belfast
Holdings Ltd (50%)*
2
Dungannon College, County Tyrone,
Northern Ireland
Belfast Educational Services (Holdings) Ltd Design, build, finance and operation of Belfast
(33.33%)*
3
St Genevive’s School, Northern Ireland
Belfast Educational Services (Omagh) Design, build, finance and operation of Belfast
Holdings Ltd (50%)* Omagh College, County Tyrone,
Northern Ireland
Community Health Facilities (Holdings) Ltd Design, build, finance and operation of the Edinburgh
(33.33%)*
4
Oxford Littlemore Hospital
Harmondsworth Detention Services Ltd (49%)*
2
Design, build and operation of Harmondsworth Twyford
Detention Centre
Health Management (Carlisle) Holdings Ltd (50%)* Design, build, finance and operation of the Twyford
Cumberland Infirmary
Health Management (UCLH) Holdings Ltd (33.33%)* Design, build, finance and operation of the London
University College London Hospital
ICB Holdings Ltd (20%)* Design, build, finance and operation of London
Health and Safety Laboratories in Buxton
Minerva Education and Training (Holdings) Ltd Design, build, finance and operation of Twyford
(45%)*
1
Defence Sixth Form College
Newcastle Estate Partnership Holdings Ltd (50%)* Design, build, finance and operation of the Northwich
Newcastle Estate at Longbenton
Peterborough Prison Management Holdings Ltd Design, build, finance and operation of Twyford
(33.33%)*
1
Peterborough Prison
Pyramid Accommodation Services Design, build, finance and operation of Twyford
(Cornwall) Holdings Ltd (50%)*
1
31 fire stations for Cornwall County Council
Pyramid Schools (Southampton) Holdings Ltd Design, build, finance and operation of three Twyford
(50%)*
5
secondary schools for Southampton County Council
Pyramid Schools (Tameside) Holdings Ltd (50%)*
1
Design, build, finance and operation of three Twyford
schools for Tameside Metropolitan Council
Sheffield Schools Services Holdings Ltd (50%)* Design, build, finance and operation of six schools Twyford
for Sheffield City Council
Summit Holdings (Dudley) Ltd (33.33%)*
1
Design, build, finance and operation of Twyford
Dudley NHS Trust
Victory Support Services (Portsmouth) Design, build, finance and operation of two day Twyford
Holdings Ltd (50%)* care centres and one residential unit for
Portsmouth County Council
1
accounting reference date - 31 March
2
accounting reference date - 31 August
3
accounting reference date - 24 February
4
accounting reference date - 31 October
5
accounting reference date - 28 February 74 Interserve Plc  Annual Report 2003
Principal undertakings and trading activities continued
As at 31 December 2003
Group Services Activities Principal Offices
Bandt Ltd Holding company Twyford
Bandt Properties Ltd* Group property holdings Twyford
Building & Property (Holdings) Ltd* Holding company London
How Group Ltd Holding company Twyford
How Investments Ltd* Group property holdings Twyford
Interserve Deutschland GmbH Car leasing Pirmasens
Interserve Holdings Plc Holding company Twyford
Interserve Insurance Company Ltd* Insurance Guernsey
The Indium Division Company, S.L.* Property leasing Madrid
Tilbury Douglas Projects Ltd* Property development Twyford
Tilbury Ibérica, SA Holding company Madrid Interserve Plc  Annual Report 2003  75
Five-year history
For the years ended 31 December
2003 2002 2001 2000 1999
£million £million £million £million £million
Profit and loss accounts
Turnover 1,211.1 1,122.9 1,273.3 929.3 769.2
Total operating profit 32.1 50.6 58.9 46.3 39.1
Interest (3.2) (4.0) (6.7) (4.9) (3.8)
Profit after interest 28.9 46.6 52.2 41.4 35.3
Exceptional items and goodwill amortisation (31.8) (9.4) (12.9) (7.2) (6.1)
(Loss) profit before taxation (2.9) 37.2 39.3 34.2 29.2
Taxation (4.4) (12.6) (14.8) (11.0) (11.4)
(Loss) profit after taxation (7.3) 24.6 24.5 23.2 17.8
Minority interest (0.6) – – (0.1) (0.2)
(Loss) profit attributable to shareholders (7.9) 24.6 24.5 23.1 17.6
Dividends (15.4) (14.7) (13.9) (12.4) (10.9)
Retained (loss) profit (23.3) 9.9 10.6 10.7 6.7
Balance sheets
Tangible fixed assets 90.1 100.7 101.4 99.4 103.4
Joint ventures and associated undertakings 32.8 26.2 21.2 16.2 9.1
Other assets less liabilities including provisions (66.3) (44.3) (37.3) (42.2) (0.7)
Operating assets employed 56.6 82.6 85.3 73.4 111.8
Intangible fixed asset – goodwill 154.3 163.9 173.6 185.3 81.7
Net (debt)/funds (22.5) (42.8) (62.8) (80.1) (59.9)
Net assets 188.4 203.7 196.1 178.6 133.6
Financed by
Shareholders’ funds 187.7 203.6 196.0 178.5 125.5
Minority interest 0.7 0.1 0.1 0.1 8.1
188.4 203.7 196.1 178.6 133.6
Earnings (loss) per share p p ppp
Basic (loss) earnings per share (7.0) 21.6 21.9 22.7 18.5
Exceptional items and goodwill amortisation 23.7 7.9 10.6 7.0 5.9
Headline earnings per share 16.7 29.5 32.5 29.7 24.4
Growth in headline earnings per share % (43.4%) (9.2%) 9.4% 21.7% 24.7%
Dividends – net payable per share 13.5 13.0 12.3 11.5 10.8
Ratios:
% % %%%
Total operating profit from operations
to turnover 2.7 4.5 4.6 5.0 5.1
to average operating assets employed 46 60 74 50 40
Comparative figures for 2002 and 2001 have been restated as explained in note 8 to the annual financial statements. 76 Interserve Plc  Annual Report 2003
Shareholder information
Shareholders
Holders Shares
Category Number % Number %
Notifiable interests 5 0.14 35,169,349 30.92
Banks, institutions and nominees 787 22.54 65,786,686 57.83
Private shareholders 2,699 77.32 12,800,297 11.25
Total as at 9 March 2004 3,491 100.00 113,756,332 100.00
Share price
Price as at 31 December 2003 240.00p
Lowest for year 165.00p
Highest for year 283.50p
Financial diary
Results and Dividends for 2003/2004 Interim Final
Announcements 16 September 2003 10 March 2004
Shares quoted ex-dividend 24 September 2003 17 March 2004
Last date for transfers 26 September 2003 19 March 2004
Report and Accounts to shareholders 7 April 2004
Annual General Meeting 13 May 2004
Dividends payable 3 November 2003 9 June 2004
Shareholder enquiries
If you have any questions about your shareholding or if you require any other guidance (e.g. to notify a change of address or to 
give dividend instructions to a bank account), please contact Capita Registrars, Northern House, Woodsome Park, Fenay Bridge,
Huddersfield HD8 0LA (telephone: +44 (0)870 162 3131; facsimile: +44 (0)1484 600911). Capita Registrars also has an internet facility
whereby shareholders in Interserve Plc are able to access details of their shareholding. You can access this service on its website 
at www.capitaregistrars.com.  In the first instance, please contact Capita Registrars for more details, as you will require a 
shareholder code.
Electronic communication
As an alternative to receiving documentation through the post, the Company offers shareholders the option to receive by email or 
fax a notification that shareholder documents (including the Annual and Interim Reports, Notices of Shareholder Meetings, Proxy
Forms etc.) are available for access on the Company’s website. If you wish to make such an election, you should register online at
www.capitaregistrars.com. If you have already made such an election you need take no further action. Registration is entirely
voluntary and you may request a hard copy of the shareholder documents or change your election at any time.
Share dealing service
Details of a low-cost postal share dealing service can be obtained from: Interserve Plc Postal Share Dealing Service, Cazenove & Co Ltd, 
20 Moorgate, London EC2R 6DA (telephone: +44 (0)20 7155 5155) or alternatively via the Interserve Secretariat Department 
(telephone: +44 (0)118 932 0123).
Capital gains tax
The market value of the Company’s shares as at 31 March 1982 (adjusted to take account of all capitalisation changes to 9 March 2004,
as indicated below, other than the 1 for 3 at 140p rights issue in 1986) for the purpose of capital gains tax was 16.67p per share.
Capitalisation changes
22 June 1982 – sub-division of each £1 share into four shares of 25p; bonus issue of two new 25p shares for
each £1 share held.
10 June 1983 – bonus issue of 1 for 4.
31 October 1997 – share split of five new 10p shares for every two 25p shares held. Contacts
Registered Office
Interserve Plc
Interserve House
Ruscombe Park
Twyford
Reading 
Berkshire RG10 9JU
T +44 (0)118 932 0123
F +44 (0)118 932 0206
enquiry@interserveplc.co.uk
www.interserveplc.co.uk
Facilities Services
Interservefm Ltd
Interserve House
19-23 Blackfriars Road
London SE1 8NY
T +44 (0)20 7902 2000
F +44 (0)20 7902 2001
info@interservefm.com
www.interservefm.com
Industrial Services
Interserve Industrial Services Ltd
Riverside House
Littlebrook Complex
Littlebrook Manor
Dartford DA1 5PZ
T +44 (0)1322 226000
F +44 (0)1322 282098
info@interserveis.co.uk
www.interserveis.co.uk
Project Services
Interserve Project Services Ltd
395 George Road
Erdington
Birmingham B23 7RZ
T +44 (0)121 344 4888
F +44 (0)121 344 4801
information@interserveprojects.com
www.interserveprojects.com
Equipment Services
RMD Kwikform Ltd
Brickyard Road
Aldridge
Walsall WS9 8BW
T +44 (0)1922 743743
F +44 (0)1922 743400
info@rmdkwikform.com
www.rmdkwikform.com
PFI Investments
Interserve Investments Plc
Interserve House
Ruscombe Park
Twyford
Reading 
Berkshire RG10 9JU
T +44 (0)118 932 0123
F +44 (0)118 932 0206
info.request@interserveinvest.com
www.interserveplc.co.uk
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