Offer for ITNET plc

Serco Group PLC
16 December 2004



Not for release, publication or distribution in, into or from the United States,
Canada, Australia or Japan.



                     RECOMMENDED OFFER TO ACQUIRE ITNET PLC

                      TO BE MADE BY LAZARD & CO., LIMITED

                          ON BEHALF OF SERCO GROUP PLC





Serco Group plc ('Serco' or the 'Company') announces today that the Board of
Serco and the Board of ITNET plc ('ITNET') have agreed the terms of a
recommended cash offer with a partial share alternative (the 'Offer') for ITNET
to be made by Lazard & Co., Limited ('Lazard') on behalf of Serco, to acquire
the entire issued and to be issued ordinary share capital of ITNET.



TRANSACTION SUMMARY



The Offer values each ITNET Share at 320 pence and the whole of the issued share
capital of ITNET at GBP235 million.



The cash Offer will be 320 pence in cash with a partial share alternative of
1.36 Serco Shares for each ITNET Share.  The partial share alternative will be
available for up to a maximum of 25.6 million ITNET Shares (corresponding to 33
per cent. of ITNET's issued and to be issued share capital).



The offer represents:


-        a premium of 10.9 per cent. to the closing price of 288.5 pence per 
         ITNET Share on 15 December 2004, the last dealing day prior to this 
         announcement;

-        a premium of 36.2 per cent. to the closing price of 235 pence per ITNET 
         Share on 12 November 2004, the last dealing day before the announcement 
         made by ITNET on 15 November 2004 that it was in preliminary 
         discussions which may or may not lead to an offer for the whole of the 
         issued share capital of ITNET; and

-        a premium of 36.5 per cent. to the average closing price of 
         approximately 234 pence per ITNET Share over the last three months.



REASONS FOR THE OFFER



Serco is one of the world's leading service companies in its chosen markets.  By
successfully managing organisational design and change, it helps national and
local governments and private sector clients around the world to improve both
the delivery and value for money of their services.



Serco's range of activities includes business transformation, specialised IT
services and general business process management and IT capabilities.  Serco is
seeking to build on this and expand its presence in these growing markets.
ITNET is one of the UK's leading IT service providers to local authorities and
supplies business process outsourcing along with IT services to both the public
and the private sector.



The combination of ITNET's skills, capabilities and customer relationships and
those of Serco will provide the Enlarged Group with the opportunity to enhance
its market presence and its potential growth opportunities.  In particular:


-        the business transformation and local government outsourcing markets 
         are expanding and this provides significant opportunities for Serco to 
         compete for larger and higher value contracts; and

-        Serco's and ITNET's services and skills can be expanded into the 
         broader customer base, particularly those sectors which ITNET does not 
         serve but where Serco is well established, such
         as defence, health, justice and transport, as well as overseas markets.



Serco and ITNET have complementary business models with similar cultures that
focus on building long term customer relationships.  The Enlarged Group will
have the capability to undertake larger, higher value contracts in the UK and
abroad.  Additionally, the combination of the two groups is expected to give
rise to cost synergies rising to approximately GBP5 million in 2007*.



The directors expect that the transaction will have a positive financial impact
on Serco, enhancing earnings, pre-goodwill and exceptional items, in 2005**.



Commenting on the Offer, Kevin Beeston, Executive Chairman of Serco said:



'The acquisition of ITNET has significant operational and strategic advantages
for Serco which will bring strong benefits to employees, customers and
shareholders.  ITNET is a strong fit with Serco, both in terms of complementary
skills and customer bases.  The transaction gives Serco a leading presence in
the very attractive business transformation market and I am confident the
Enlarged Group will create value through a well-balanced portfolio, cost savings
and a strong commercial offering.'



Commenting on the Offer, Oliver Whitehead, Chairman of ITNET said:



'ITNET fits well with Serco and the Enlarged Group will have a strong presence
in the business transformation market.  The combination of Serco's experience of
successfully handling complex contracts together with ITNET's experience in IT
consulting and business process outsourcing, will provide a market leading
offering.  The directors of ITNET consider the terms of the Offer to be fair and
reasonable and accordingly have unanimously recommended that ITNET Shareholders
accept the Offer.'



Serco has received irrevocable undertakings from the directors of ITNET in
respect of 3,447,708 ITNET Shares, in aggregate representing 4.5 per cent. of
ITNET's existing entire issued and to be issued ordinary share capital.  These
irrevocable undertakings will only cease to be binding in the event that the
Offer lapses or is withdrawn.  In addition, expressions of intent to accept the
Offer have been received from other ITNET Shareholders in respect of 15,366,374
ITNET Shares in aggregate representing 20.9 per cent. of ITNET's existing issued
ordinary share capital.



This summary should be read in conjunction with the full text of the following
announcement.  Appendix IV to the following announcement contains definitions of
certain expressions used in this summary and the following announcement.



A presentation to analysts and investors will be held today, 16 December 2004,
at The Brewery, Chiswell Street, London, EC1Y 4SD, at 9.00am.



ENQUIRIES


Serco Group plc                                     [phone]
Kevin Beeston, Executive Chairman
Christopher Hyman, Chief Executive
Andrew Jenner, Finance Director
Dominic Cheetham, Director of Corporate Communications
Richard Hollins, Head of Investor Relations

Lazard & Co., Limited (Financial Adviser to Serco)  [phone]
Paul Jameson
Samuel Bertrand

Merrill Lynch International (Corporate Broker to    [phone]
Serco)
Simon Fraser
Andrew Osborne

Weber Shandwick Square Mile                         [phone]
Louise Robson

ITNET plc                                           [phone]
Bridget Blow, Chief Executive


Cazenove & Co. Ltd (Financial Adviser and Broker to [phone]
ITNET)
David Anderson
Andrew Hodgkin

PricewaterhouseCoopers LLP (Rule 3 Adviser to       [phone]
ITNET)
David Armfield

Cubitt Consulting                                   [phone]
Michael Henman

*  The expected operational cost savings have been calculated on the basis of
   the existing cost and operating structures of the companies and by reference
   to current prices and the current regulatory environment. These statements of
   estimated cost savings and one-off costs for achieving them relate to future
   actions and circumstances which, by their nature, involve risks,
   uncertainties and other factors. Because of this, the cost savings referred
   to may not be achieved, or those achieved could be materially different from
   those estimated. This statement should not be interpreted to mean that the
   earnings per share in 2005, or in any subsequent period, would necessarily
   match or be greater than those for the relevant preceding financial period.

** The statement that the proposed Offer will be earnings enhancing,
   pre-goodwill and exceptional items, in 2005 when compared to the earnings per
   share that Serco would have achieved without the acquisition, does not
   constitute a profit forecast and should not be interpreted to mean that the
   earnings per share in 2005, or in any subsequent period, would necessarily
   match or be greater than those for the relevant preceding financial period.

Lazard & Co., Limited which is regulated in the UK by the Financial Services
Authority, is acting for Serco and no one else in connection with the Offer and
will not be responsible to anyone other than Serco for providing the protections
afforded to customers of Lazard & Co., Limited.

Merrill Lynch International, which is regulated in the UK by the Financial
Services Authority, is acting as sole corporate broker to Serco and no one else
in connection with the Offer and will not be responsible to anyone other than
Serco for providing the protections afforded to customers of Merrill Lynch
International.

Cazenove & Co. Ltd, which is regulated in the UK by the Financial Services
Authority, is acting for ITNET and no one else in connection with the Offer and
will not be responsible to anyone other than ITNET for providing the protections
afforded to customers of Cazenove & Co. Ltd.

PricewaterhouseCoopers LLP, which is regulated in the UK by the Financial
Services Authority for designated investment business, is acting for ITNET and
no one else in connection with the Offer and will not be responsible to anyone
other than ITNET for providing the protections afforded to clients of
PricewaterhouseCoopers LLP.

This announcement does not constitute, or form any part of, any offer for, or
solicitation of any offer for securities. Any acceptance or other response to
the Offer should be made only on the basis of the information contained in the
Offer Document and the Form of Acceptance.

The Offer will not be made, directly or indirectly, in or into, or by use of the
mails or any means of instrumentality (including without limitation facsimile
transmission, telex and telephone) of interstate or foreign commerce of, or any
facilities of a national securities exchange of the United States, nor will it
be made in or into Canada, Australia or Japan. Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed or
sent in or into or from the United States, Canada, Australia or Japan and
persons receiving this announcement (including custodians, nominees and
trustees) must not distribute or send it in, into or from the United States,
Canada, Australia or Japan.

The New Serco Shares have not been, and will not be, registered under the United
States Securities Act of 1933, as amended, or under the securities laws of any
jurisdiction of the United States; the relevant clearances have not been
obtained and will not be obtained from the securities commission of any province
or territory of Canada; no prospectus in relation to the New Serco Shares has
been, or will be, lodged with or registered by the Australian Securities &
Investments Commission; nor have any steps been taken to enable the New Serco
Shares to be offered in Japan in compliance with applicable securities laws of
Japan. Accordingly, the New Serco Shares may not be offered, sold, resold or
delivered directly or indirectly in or into the United States, Canada, Australia
or Japan or any other country outside the UK where to do so would lead to a
breach of any legal or regulatory requirement.

This announcement contains a number of forward-looking statements relating to
Serco, ITNET and the Enlarged Group with respect to, among others, the
following: financial condition; results of operations; the business of the
Enlarged Group; future benefits of the acquisition; and management plans and
objectives. Serco and ITNET consider any statements that are not historical
facts as 'forward-looking statements'. They involve a number of risks and
uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. Important factors that could cause
actual results to differ materially from estimates or forecasts contained in the
forward-looking statements include, among others, the following possibilities:
future revenues are lower than expected; costs or difficulties relating to the
integration of the businesses of Serco and ITNET, or of other future
acquisitions, are greater than expected; expected cost savings from the
acquisition or from other future acquisitions are not fully realised or realised
within the expected time frame; competitive pressures in the industry increase;
general economic conditions or conditions affecting the relevant industries,
whether internationally or in the places Serco and ITNET do business, are less
favourable than expected, and/or conditions in the securities market are less
favourable than expected.

The directors of Serco accept responsibility for the information contained in
this announcement other than paragraphs 5, 6 and 9 (and the next unnumbered
paragraph immediately below). To the best of the knowledge and belief of the
directors of Serco (who have taken all reasonable care to ensure that such is
the case), the information contained in this announcement for which they accept
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of such information.

The directors of ITNET accept responsibility for the information contained in
this announcement in paragraphs 5, 6 and 9 (and this paragraph). To the best of
the knowledge and belief of the directors of ITNET (who have taken all
reasonable care to ensure that such is the case), the information contained in
this announcement for which they accept responsibility is in accordance with the
facts and does not omit anything likely to affect the import of such
information.

Not for release, publication or distribution in, into or from the United States,
Canada, Australia or Japan.

                               RECOMMENDED OFFER

                                    BY SERCO

                                   FOR ITNET

           1.  Introduction

The Boards of Serco and ITNET announce today the terms of a recommended cash
offer with a partial share alternative to be made by Lazard, on behalf of Serco,
for the entire issued and to be issued share capital of ITNET.

The Offer will be conditional, inter alia, on the approval of Serco
shareholders. The Chairman of Serco will be writing to Serco shareholders
shortly to provide them with details of the Offer and to convene the necessary
Extraordinary General Meeting to seek such approval.

       2.  Terms of the Offer

The Offer will be made on the following basis:

For each ITNET Share 320 pence in cash.

ITNET Shareholders (other than certain overseas shareholders) who validly accept
the Offer may, alternatively, elect to receive New Serco Shares under the Share
Alternative instead of 33 per cent. of the cash consideration to which they
would otherwise be entitled under the Offer. There is also a Mix and Match
Facility available for ITNET Shareholders wishing to elect for more or less than
that proportion of the cash consideration in New Serco Shares. (Both the Share
Alternative and the Mix and Match Facility are described in further detail
below).

The Offer values the entire issued ordinary share capital of ITNET at GBP235
million and each ITNET Share at 320 pence, representing:

-   a premium of 10.9 per cent. to the closing price of 288.5 pence per ITNET
    Share on 15 December 2004, the dealing day prior to this announcement;

-   a premium of 36.2 per cent. to the closing price of 235 pence per ITNET
    Share on 12 November 2004, the last dealing day before the announcement made
    by ITNET on 15 November 2004 that it was in preliminary discussions which
    may or may not lead to an offer for the whole of the issued share capital of
    ITNET; and

-   a premium of 36.5 per cent. to the average closing price of approximately
    234 pence per ITNET Share over the last three months.

The Offer will initially remain open for acceptance until 3.00 pm (London time)
on the date which is 21 days following the date on which the Offer Document is
posted, but may be extended in accordance with the Code.

The conditions to and certain further terms of the Offer are set out in Appendix
I to this Announcement. Further details of the terms of the Offer will be
contained in the Offer Document and the Form of Acceptance.

    3.  Terms of the Share Alternative

Each ITNET Shareholder (other than certain overseas shareholders) may elect to
receive New Serco Shares in lieu of part of the cash consideration to which they
would otherwise be entitled under the Offer.

Under the Share Alternative an ITNET Shareholder may elect to receive 1.36 New
Serco Shares for each ITNET Share, in exchange for 33 per cent. of the ITNET
Shares in respect of which he has accepted the Offer. Fractions of New Serco
Shares will not be allotted or issued to Accepting ITNET Shareholders.
Fractional entitlements to New Serco Shares will be rounded down and paid in
cash*.

Therefore, for example, an ITNET Shareholder who elects for the Share
Alternative will receive, for each 100 ITNET Shares, the following
consideration:

For each 100 ITNET Shares:                    GBP216.49 in cash and
                                              44 New Serco Shares

The Share Alternative is conditional upon the Offer becoming or being declared
unconditional in all respects.

Full acceptance of the Offer assuming the maximum take-up of the share
alternative, and assuming exercise of all the options under the ITNET Share
Option Schemes where the exercise price is less than 320 pence, would result in
the issue of approximately 34.8 million New Serco Shares (representing
approximately 7.4 per cent. of the enlarged issued share capital of Serco).

   4.  Terms of the Mix and Match Facility

ITNET Shareholders (other than certain overseas shareholders) who participate in
the Share Alternative may elect under the terms of the Offer to vary the
proportion of New Serco Shares they receive in lieu of cash consideration above
or below the 33 per cent. receivable under the Share Alternative.

The total number of New Serco Shares to be issued to ITNET Shareholders pursuant
to the Offer, will not exceed 34,762,885. Accordingly, satisfaction of elections
made for additional New Serco Shares pursuant to the Mix and Match Facility will
depend on the extent to which other ITNET Shareholders have elected to receive
New Serco Shares under either the Share Alternative or the Mix and Match
Facility.

To the extent that elections to receive more than 33 per cent. of the
consideration in the form of New Serco Shares cannot be satisfied in full, the
excess above 33 per cent. will be scaled down pro rata. Fractions of New Serco
Shares will be rounded down and paid in cash.

As a result, ITNET Shareholders who make an election to receive more than 33 per
cent. of the consideration in the form of New Serco Shares will not necessarily
know the exact number of New Serco Shares or the amount of cash they will
receive until settlement of the consideration under the Offer.

Elections under the Mix and Match Facility will not affect the entitlements of
those ITNET Shareholders who have elected for the Share Alternative but who have
not made elections under the Mix and Match Facility.

The Mix and Match Facility will remain open until the first closing date of the
Offer. If the Offer is not then unconditional as to acceptances, Serco may
extend the Mix and Match Facility to a later date. If the Mix and Match Facility
has been closed, Serco reserves the right to reintroduce a mix and match
facility, subject to the rules of the City Code. The Mix and Match Facility is
conditional on the Offer becoming or being declared unconditional in all
respects.

Further details of the terms of the Mix and Match Facility will be contained in
the Offer Document and the Form of Acceptance.

         5.  Recommendation

The directors of ITNET, who have been so advised by Cazenove, consider the terms
of the offer to be fair and reasonable. Cazenove has an advisory relationship
with Serco and the directors of ITNET have therefore engaged
PricewaterhouseCoopers as an adviser for the purposes of Rule 3 of the City
Code. PricewaterhouseCoopers have also advised the directors that they consider
the terms of the Offer to be fair and reasonable. In providing their advice,
Cazenove and PricewaterhouseCoopers have taken into account the directors'
commercial assessments.

Accordingly, the ITNET directors unanimously recommend that ITNET Shareholders
accept the Offer as they will do in respect of their own respective beneficial
holdings comprising, in aggregate, 3,447,708 ITNET Shares, representing
approximately 4.5 per cent. of the existing issued and to be issued share
capital of ITNET.

 6.  Background to and reasons for recommending the Offer

ITNET is one of the UK's leading IT service providers to local authorities and
has supplied business process outsourcing services since 1993 and IT services
since 1989.

In the first half of 2004, ITNET achieved significant revenue growth with
turnover for the first six months up 15 per cent. Current trading remains in
line with the ITNET Board's expectations. ITNET continues to see increased
business in the public sector and growth opportunities in chosen areas in the
commercial sector.

However, ITNET's customers increasingly look for a wide range of services from
their suppliers and outsource an increasing range of their requirements. In
recognition of the changing market in which ITNET operates, the Board of ITNET
have reviewed a variety of potential partners in recent years with the intention
of seeing if any particular transaction could enhance the value and range of
services which ITNET offers its customers.

The combination with Serco, one of the world's leading service companies in its
chosen markets, has significant operational and strategic advantages for both
companies. Serco and ITNET have complementary skill sets and customers. The
Enlarged Group will have the opportunity to bid for larger and higher value
contracts than are currently accessible to either company bidding on its own.

On 29 June 2004 ITNET announced that a large contract with the Cabinet Office
had been terminated. ITNET's Board, on the basis of legal advice, remains of the
view that substantial sums are recoverable from the Cabinet Office and it is
actively pursuing this recovery. The ITNET Board has been mindful of this
potential receivable in its negotiations with Serco, taking into account
uncertainties as to timing and quantum, and has considered it in the context of
the Offer as a whole.

The Offer represents a 1.2x sales multiple and a 18.6x price earnings ratio
(based on 2003 sales of GBP188.5 million and EPS of 17.18 pence per share
respectively).

In the context of these factors, the ITNET Board is therefore unanimously
recommending the Offer as it believes it reflects a fair value for the business
taken as a whole.

The cash consideration provides certainty of proceeds to ITNET Shareholders,
while the Share Alternative provides ITNET Shareholders with an opportunity to
transfer their investment, in part, into Serco Shares should they so wish.
(Certain overseas shareholders will not be entitled to participate in the Share
Alternative).

  7.  Background to and reasons for the Offer

Serco is one of the world's leading service companies in its chosen markets. By
successfully managing organisational design and change, it helps national and
local governments and private sector clients around the world to improve both
the delivery and value for money of their services.

Serco has a strong track record of delivering growth through organic development
- the extension of scale and scope of existing contracts and the winning of new
contracts. This will remain the key driver of growth. However, where
opportunities exist to make value enhancing acquisitions which provide a
significant platform for the future growth and development of the business,
these will be considered.

Serco's strategic priorities are:

-   emphasising service delivery around managing change as a key factor in
    generating value for its customers, thereby enhancing Serco's business
    development;

-   securing and retaining long-term contracts that give a high level of
    visibility to future earnings and cash flows;

-   anticipating and reacting to the increased sophistication of opportunities
    as markets have matured;

-   creating and maintaining a culture based around a strong identity and a
    devolved management style; and

-   operating within a common governance and management framework.

Key to the achievement of its strategic priorities are Serco's:

-   business offering, which is based on innovation, organisational change and
    assured delivery of services to help its clients achieve their ambitions;
    and

-   business model, which focuses on building long-term relationships, robust
    processes, continuous improvement, organic growth and value creation.

The acquisition of ITNET provides a significant opportunity for Serco to
accelerate the delivery of its strategic ambitions, in that it would:

-   expand Serco's position in the attractive business transformation market:
    ITNET has supplied outsourcing services since 1993 and IT services since
    1989. The directors of Serco believe that the underlying fundamentals of the
    broader business transformation market will drive further outsourcing in the
    public sector, encouraged by the e-government, efficiency and choice agendas
    and continued growth in the private sector, encouraged by the ongoing drive
    for efficiency and service improvement;

-   broaden the customer base: although Serco and ITNET operate in similar UK
    markets, customer overlap is minimal and the transaction increases Serco's
    presence in the expanding local authority market. The Enlarged Group will be
    able to offer Serco's services to ITNET's customer base and promote ITNET's
    services into Serco's customer base, in particular in the defence, health,
    justice and transport sectors in the UK and overseas;

-   enhance the skill sets of the Enlarged Group: ITNET's business process
    management and IT skills are highly complementary to Serco. As well as
    specialist technology capabilities, such as the provision of secure IT
    facilities, Serco provides general business process management and IT
    services within many of its contracts. The acquisition of ITNET will enable
    Serco to realise efficiencies and enhance its service offerings in these
    areas. In addition, the Enlarged Group will be able to develop solutions
    integrating ITNET's skills with Serco's capabilities in managing
    organisational design and change;

-   enable the Enlarged Group to pursue new opportunities: the Enlarged Group
    will be able to offer a broader suite of services and compete for larger and
    higher value contracts which are not accessible to ITNET or Serco on a
    stand-alone basis;

-   combine highly complementary business models: the directors of Serco believe
    that the companies have complementary business models, with cultures that
    focus on building long term customer relationships; and

-   enhance earnings: the Serco directors expect the transaction to have a
    positive financial impact on Serco, enhancing earnings, pre-goodwill and
    exceptional items in 2005**.

Additionally, the combination of the two groups is expected to give rise to cost
synergies rising to approximately GBP5 million in 2007***.

Given the benefits of the acquisition outlined above, including the synergy
opportunities, the Board of Serco is confident about the financial and trading
prospects of the Enlarged Group.

      8.  Information on Serco

Serco is one of the world's leading service companies in its chosen markets. By
successfully managing organisational design and change, it helps national and
local governments and private sector clients around the world to improve both
the delivery and value for money of their services.

Serco operates across the world in a diverse range of sectors, including: public
transport and traffic management, defence and aerospace, justice, science,
health, education and local government, providing, inter alia, the day to day
operation of public services, including transport systems, traffic information
services, scientific establishments, defence facilities and justice services.

Serco is listed on the London Stock Exchange. On 15 December 2004, the last
dealing day before this announcement, Serco's market capitalisation was
approximately GBP1,024 million and its closing price was 235.25 pence. In the
year ended 31 December 2003 Serco had revenues of GBP1,556 million (including
its share of joint venture revenues), profit on ordinary activities before tax
(before goodwill amortisation and exceptional items) of GBP63 million (including
its share of joint venture profits), and net assets of GBP281 million. In the
six months to 30 June 2004 (reported on an unaudited basis) Serco had revenues
of GBP804 million (including its share of joint venture revenues), profit on
ordinary activities before tax (before goodwill, amortisation and exceptional
items) of GBP36 million (including its share of joint venture profits), and net
assets of GBP293 million.

      9.  Information on ITNET

ITNET is one of the UK's leading IT service providers to local authorities and
has supplied business process outsourcing services since 1993 and IT services
since 1989.

ITNET derives all its revenue in the UK, with around 57 per cent. coming from
the public sector and the remaining 43 per cent from the commercial sector (in
the year ended 31 December 2003). Its public sector division is a market leader
in local government.

As well as proven experience in a variety of outsourcing services, ITNET also
delivers application solutions in areas such as SAP, CRM and web hosting.

ITNET is headquartered in Birmingham and employs more than 2,200 people
throughout the UK. It has a large number of major customers, including public
sector organisations and medium to large blue chip commercial enterprises.
ITNET's shares have been listed on the London Stock Exchange since 1998.

On 15 December 2004, the last dealing day prior to this announcement ITNET's
market capitalisation was approximately GBP212 million and its closing price was
288.5 pence. In the year ended 31 December 2003 ITNET had revenues of GBP188.5
million, profit on ordinary activities before tax (before goodwill amortisation
and exceptional items) of GBP18.6 million and net assets of GBP29.5 million. In
the six months to 30 June 2004 (reported on an unaudited basis) ITNET had
revenues of GBP104.6 million, profit on ordinary activities before tax (before
goodwill amortisation and exceptional items) of GBP8.2 million and net assets of
GBP15.6 million. In the six months to 30 June 2004, ITNET also reported an
exceptional provision of GBP24.4 million for impairment of data centre assets
and related exit costs contracted by the Cabinet Office and no longer required
following the cessation of the Cabinet Office Contract.

  10.  Financial effects of acceptance of the Offer

Details of the financial effects of acceptance of the Offer are set out in
Appendix II to this announcement.

    11.  Undertakings to accept the Offer

The directors of ITNET have given irrevocable undertakings in respect of
3,447,708 ITNET Shares, representing in aggregate approximately 4.5 per cent. of
the existing issued and to be issued share capital of ITNET. These undertakings
are binding save where the Offer lapses or is withdrawn.

In addition, certain institutions have confirmed their intention to accept the
offer in respect of 15,366,374 ITNET Shares, which represents, in aggregate,
approximately 20.9 per cent. of the existing issued share capital of ITNET.

    12.  Financing of the Offer

The cash consideration payable under the Offer will be financed from a GBP450
million debt facility which has been arranged by Barclays Capital, HSBC Bank plc
and The Royal Bank of Scotland plc as mandated lead arrangers and underwriters.
The Facility Agreement, insofar as it relates to the Offer, is conditional on,
among other things, the Offer becoming or being declared unconditional in all
respects.

Pro forma net debt on completion of the acquisition is expected to be
approximately GBP611 million - assuming no take-up of the Share Alternative - of
which GBP264 million is recourse debt and GBP346 million is non-recourse debt.
The directors of Serco are comfortable with the balance sheet position
irrespective of the level of take up of the Share Alternative.

Lazard is satisfied that the necessary financial resources are available to
Serco to enable it to satisfy full acceptance of the Offer in cash.

Further details of the financing arrangements will be set out in the Offer
Document.

    13.  Inducement fee arrangements

Serco and ITNET have entered into an inducement fee agreement. Under this
agreement, ITNET has agreed to pay to Serco a fee of 1 per cent. of the value of
the Offer in the event that the Offer is withdrawn or lapses without becoming or
being declared unconditional in all respects and, prior to such withdrawal or
lapse, either:

-   a third party publicly announces an intention to make a Competing Offer
    which subsequently becomes or is declared unconditional; or

-   the ITNET Board of directors, or any independent committee of the Board,
    withdraws or modifies (in a manner materially adverse to Serco) its
    recommendation to ITNET's shareholders in respect of the Offer.

For these purposes, a 'Competing Offer' means an offer or proposal (however
effected, including by means of a scheme of arrangement) to acquire 30 per cent.
or more of the voting rights attributable to the issued ordinary share capital
of ITNET which is made by a person or entity other than Serco or any person
acting in concert with Serco.

  14.  Directors, management and employees of ITNET

On completion of the acquisition, Ian Downie, Strategic Development Director of
Serco, will become Chief Executive of ITNET. He is a member of Serco's Executive
and a board member of AWE Management Limited. He has considerable experience and
knowledge of the Company's processes and operations, having joined Serco in
1992. From 1993 to 1999 he was Managing Director of Serco Defence. He will
oversee the integration of ITNET, bringing it within Serco's governance and
management framework.

Bridget Blow, currently Chief Executive of ITNET, will join Serco's Executive as
Director, Technology. In this role, she will be responsible for leveraging the
Enlarged Group's technology capabilities, as well as realising efficiencies by
enhancing Serco's technology-related processes.

The Board of Serco has given assurances to the directors of ITNET that,
following the Offer becoming or being declared unconditional in all respects,
the existing employment rights (including pension rights) of all employees of
ITNET will be fully safeguarded.

  15.  ITNET Share Option Schemes and ITNET Share Schemes

The Offer extends to all ITNET Shares unconditionally allotted or issued
(including any which are so allotted or issued pursuant to the exercise of
options granted, or the vesting of awards, under the ITNET Share Option Schemes
or ITNET Share Schemes) on or prior to the date and time on which the Offer
ceases to be open for acceptance (or such earlier date not being earlier than
the date on which the Offer becomes or is declared unconditional as to
acceptances or, such later date as Serco may, subject to the City Code and with
the consent of the Panel, determine).

Serco will make appropriate proposals to participants in the ITNET Share Option
Schemes in due course which would take effect after the Offer has become or has
been declared unconditional in all respects.

      16.  Listing of New Serco Shares

Application will be made to the UK Listing Authority for the New Serco Shares to
be admitted to the Official List and to the London Stock Exchange for the New
Serco Shares to be admitted to trading on the London Stock Exchange's market for
listed securities. It is expected that admission of the New Serco Shares to the
Official List will become effective, and that dealings for normal settlement in
the New Serco Shares will commence on the London Stock Exchange, as soon as
reasonably practicable after the date on which the Offer becomes or is declared
unconditional in all respects (subject only to the condition relating to
admission contained in paragraph (b) of Part 1 of Appendix I to this
Announcement).

      17.  Compulsory acquisition, de-listing and cancellation of trading

If the Offer becomes or is declared unconditional in all respects and sufficient
acceptances are received, it is Serco's intention:

-   to apply the provisions of sections 428 to 430F (inclusive) of the Companies
    Act 1985 to acquire compulsorily any remaining ITNET Shares to which the
    Offer relates on the same terms of the Offer; and

-   to procure that ITNET applies to the UK Listing Authority for cancellation
    of the listing of the ITNET Shares on the Official List and to the London
    Stock Exchange for the cancellation of trading of ITNET Shares on the London
    Stock Exchange's market for listed securities.

It is anticipated that the cancellation of ITNET's listing and admission to
trading will take effect no earlier than the expiry of 20 business days after
the date on which the Offer becomes or is declared unconditional in all
respects. Such cancellation would significantly reduce the liquidity and
marketability of any ITNET Shares not assented to the Offer.

      18.  Serco shareholder approval

The takeover constitutes a 'Class 1' transaction (as defined in The Listing
Rules of the UK Listing Authority) for Serco. Accordingly, Serco will be
required to seek the approval of its shareholders for the transaction at an
extraordinary general meeting. Serco will prepare and send to shareholders, an
explanatory circular summarising the background to and reasons for the Offer
(which will include a notice convening the extraordinary general meeting). The
Offer will be conditional on, among other things, the requisite resolution being
passed by the Serco Shareholders at the extraordinary general meeting which is
expected to be held on 12 January 2005.

      19.  Other information

The Offer will be subject to the conditions and further terms set out in
Appendix I to this announcement and to be set out in the Offer Document and the
accompanying Form of Acceptance and such other terms as may be required to
comply with the City Code. The Offer Document containing the full terms and
conditions of the Offer and the Form of Acceptance will be despatched to ITNET
Shareholders and, for information only, to participants in the ITNET Share
Option Schemes shortly.

The availability of the Offer to persons not resident in the UK may be affected
by the laws of the relevant jurisdiction. Persons who are not resident in the UK
should inform themselves about and observe any applicable legal or regulatory
requirements. Further details in relation to overseas shareholders will be
contained in the Offer Document.

Neither Serco, nor any of its directors, nor, so far as Serco is aware, any
person deemed to be acting in concert with it, owns or controls any ITNET Shares
or has any option to acquire any ITNET Shares, or has entered into any
derivative referenced to securities of ITNET which remains outstanding.

Save as summarised in this announcement and as provided for in the undertakings
to accept the Offer, Serco and its directors do not own any ITNET Shares, and
neither Serco nor, so far as the directors of Serco are aware, any person acting
in concert with Serco for the purposes of the Offer, has any arrangements in
relation to Serco Shares or any securities convertible or exchangeable into
Serco Shares or ITNET Shares or options (including traded options) in respect
of, or derivatives referenced to, any such shares. For these purposes,
'arrangement' includes any indemnity or option arrangement, any agreement or
understanding, formal or informal, of whatever nature relating to Serco Shares
or ITNET which may be an inducement to deal or refrain from dealing in such
shares.

Appendix III contains the sources and bases for certain information set out in
this Announcement.

Appendix IV contains a list of definitions of the terms used in the
announcement.

Lazard & Co., Limited which is regulated in the UK by the Financial Services
Authority, is acting for Serco and no one else in connection with the Offer and
will not be responsible to anyone other than Serco for providing the protections
afforded to customers of Lazard & Co., Limited.

Merrill Lynch International, which is regulated in the UK by the Financial
Services Authority, is acting as sole corporate broker to Serco and no one else
in connection with the Offer and will not be responsible to anyone other than
Serco for providing the protections afforded to customers of Merrill Lynch
International.

Cazenove & Co. Ltd, which is regulated in the UK by the Financial Services
Authority, is acting for ITNET and no one else in connection with the Offer and
will not be responsible to anyone other than ITNET for providing the protections
afforded to customers of Cazenove & Co. Ltd.

PricewaterhouseCoopers LLP, which is regulated in the UK by the Financial
Services Authority for designated investment business, is acting for ITNET and
no one else in connection with the Offer and will not be responsible to anyone
other than ITNET for providing the protections afforded to clients of
PricewaterhouseCoopers LLP.

This announcement does not constitute, or form any part of, any offer for, or
solicitation of any offer for securities. Any acceptance or other response to
the Offer should be made only on the basis of the information contained in the
Offer Document and the Form of Acceptance.

The Offer will not be made, directly or indirectly, in or into, or by use of the
mails or any means of instrumentality (including without limitation facsimile
transmission, telex and telephone) of interstate or foreign commerce of, or any
facilities of a national securities exchange of the United States, nor will it
be made in or into Canada, Australia or Japan. Accordingly, copies of this
announcement are not being, and must not be, mailed or otherwise distributed or
sent in or into or from the United States, Canada, Australia or Japan and
persons receiving this announcement (including custodians, nominees and
trustees) must not distribute or send it in, into or from the United States,
Canada, Australia or Japan.

The New Serco Shares have not been, and will not be, registered under the United
States Securities Act of 1933, as amended, or under the securities laws of any
jurisdiction of the United States; the relevant clearances have not been
obtained and will not be obtained from the securities commission of any province
or territory of Canada; no prospectus in relation to the New Serco Shares has
been, or will be, lodged with or registered by the Australian Securities &
Investments Commission; nor have any steps been taken to enable the New Serco
Shares to be offered in Japan in compliance with applicable securities laws of
Japan. Accordingly, the New Serco Shares may not be offered, sold, resold or
delivered directly or indirectly in or into the United States, Canada, Australia
or Japan or any other country outside the UK where to do so would lead to a
breach of any legal or regulatory requirement.

This announcement contains a number of forward-looking statements relating to
Serco, ITNET and the Enlarged Group with respect to, among others, the
following: financial condition; results of operations; the business of the
Enlarged Group; future benefits of the acquisition; and management plans and
objectives. Serco and ITNET consider any statements that are not historical
facts as 'forward-looking statements'. They involve a number of risks and
uncertainties that could cause actual results to differ materially from those
suggested by the forward-looking statements. Important factors that could cause
actual results to differ materially from estimates or forecasts contained in the
forward-looking statements include, among others, the following possibilities:
future revenues are lower than expected; costs or difficulties relating to the
integration of the businesses of Serco and ITNET, or of other future
acquisitions, are greater than expected; expected cost savings from the
acquisition or from other future acquisitions are not fully realised or realised
within the expected time frame; competitive pressures in the industry increase;
general economic conditions or conditions affecting the relevant industries,
whether internationally or in the places Serco and ITNET do business, are less
favourable than expected, and/or conditions in the securities market are less
favourable than expected.

The directors of Serco accept responsibility for the information contained in
this announcement other than paragraphs 5, 6 and 9 (and the next unnumbered
paragraph immediately below). To the best of the knowledge and belief of the
directors of Serco (who have taken all reasonable care to ensure that such is
the case), the information contained in this announcement for which they accept
responsibility is in accordance with the facts and does not omit anything likely
to affect the import of such information.

The directors of ITNET accept responsibility for the information contained in
this announcement in paragraphs 5, 6 and 9 (and this paragraph). To the best of
the knowledge and belief of the directors of ITNET (who have taken all
reasonable care to ensure that such is the case), the information contained in
this announcement for which they accept responsibility is in accordance with the
facts and does not omit anything likely to affect the import of such
information.


                                   APPENDIX I

              CONDITIONS TO AND CERTAIN FURTHER TERMS OF THE OFFER

                                     PART 1

                            CONDITIONS OF THE OFFER

The Offer will be subject to the following conditions:

(a) valid acceptances being received (and not, where permitted, withdrawn) by
    3.00 p.m. on the first closing date of the Offer (the First Closing Date) or
    such later time(s) and/or date(s) as Serco may, subject to the Code, decide
    in respect of not less than 90 per cent. in nominal value (or such lesser
    percentage as Serco may decide) of the ITNET Shares to which the Offer
    relates, provided that this condition will not be satisfied unless Serco and
    its wholly-owned subsidiaries shall have acquired, or agreed to acquire,
    pursuant to the Offer or otherwise, ITNET Shares carrying more than 50 per
    cent. of the voting rights normally exercisable at a general meeting of
    ITNET, including for this purpose (to the extent, if any, required by the
    Panel) any such voting rights attaching to any ITNET Shares that are
    unconditionally allotted or issued before the Offer becomes or is declared
    unconditional as to acceptances whether pursuant to the exercise of any
    outstanding subscription or conversion rights or otherwise and for the
    purposes of this condition: (i) shares which have been unconditionally
    allotted but not issued shall be deemed to carry the voting rights they will
    carry on issue; and (ii) the expression ITNET Shares to which the Offer
    relates shall be construed in accordance with sections 428 to 430F of the
    Companies Act 1985;

(b) (i)      the admission to the Official List of the New Serco Shares becoming
             effective in accordance with the Listing Rules or (if Serco so
             determines and subject to the consent of the Panel) the UK Listing
             Authority agreeing to admit such shares to the Official List; and

    (ii)     the admission to trading of the New Serco Shares becoming effective
             in accordance with the rules of the London Stock Exchange or (if
             Serco so determines and subject to the consent of the Panel) the
             London Stock Exchange agreeing to admit such shares to trading;

(c) the passing at an extraordinary general meeting of Serco (or any adjournment
    thereof) of such resolution(s) as may be necessary or incidental to approve,
    implement and effect the Offer, the acquisition of any ITNET Shares pursuant
    to the Offer or otherwise and the allotment of New Serco Shares pursuant to
    the Offer;

(d) (i)      it being established in terms reasonably satisfactory to Serco that
             neither the Offer nor any matter arising from or relating to the
             Offer will be referred to the Competition Commission (a
             Non-referral Decision);

    (ii)     the relevant four week period within which an application for
             review of such Non-referral Decision may be made to the Competition
             Appeal Tribunal (the CAT) having expired without such an
             application having been made or, where any application(s) has/have
             been made, such application(s) having been dismissed by the CAT and
             it being established in terms reasonably satisfactory to Serco that
             no further appeal will be made against the decision of the CAT, all
             no later than the 60th day after the day the Offer Document was
             posted (or such later date, not later than the 81st day after the
             day the Offer Document was posted, as Serco may decide); and

    (iii)    no request having been made to the European Commission pursuant to
             Article 22(1) of Council Regulation (EC) No.139/2004 (the Merger
             Regulation) for the European Commission to examine the Offer, or in
             the event of such a request having been made and the European
             Commission having decided (or being deemed to have decided) to
             examine the Offer, the European Commission issuing a decision under
             Article 6(1)(b) of the Merger Regulation, or being deemed to have
             done so under Article 10(6) of the Merger Regulation, declaring the
             Offer compatible with the common market, on terms satisfactory to
             Serco;

(e) no government or governmental, quasi-governmental, supranational, statutory
    or regulatory body or association, institution or agency (including any
    trade agency) or any court or other body (including any professional or
    environmental body) or person in any jurisdiction (each a Relevant
    Authority) having decided to take, instituted or threatened any action,
    proceeding, suit, investigation, enquiry or reference or enacted, made or
    proposed and there not continuing to be outstanding any statute, regulation,
    order or decision that would or might be reasonably expected to:

    (i)      make the Offer or the acquisition or the proposed acquisition of
             any shares in, or control of, ITNET by any member of the Wider
             Serco Group void, unenforceable or illegal or directly or
             indirectly prohibit or otherwise materially restrict, delay or
             interfere with the implementation of, or impose material additional
             conditions or obligations with respect to, or otherwise challenge,
             the Offer or the acquisition of any shares in, or control of, ITNET
             by any member of the Wider Serco Group;

    (ii)     require, prevent or materially delay the divestiture (or alter the
             terms of any proposed divestiture) by the Wider Serco Group or the
             Wider ITNET Group of all or any part of their respective
             businesses, assets or properties or impose any material limitation
             on their ability to conduct all or any part of their respective
             businesses and to own any of their respective assets or properties
             in each case to an extent which is or might reasonably be expected
             to be material in the context of the Wider Serco Group taken as a
             whole or, as the case may be, the Wider ITNET Group taken as a
             whole;

    (iii)    impose any material limitation on, or result in any material delay
             in, the ability of any member of the Wider Serco Group to acquire
             or hold or to exercise effectively, directly or indirectly, all or
             any rights of ownership of shares or other securities (or the
             equivalent) in, or to exercise management control over, any member
             of the Wider ITNET Group or on the ability of any member of the
             Wider ITNET Group to hold or exercise effectively, directly or
             indirectly, all or any rights of ownership of shares or other
             securities (or the equivalent) in, or to exercise management
             control over, any other member of the Wider ITNET Group in each
             case to an extent which is or might reasonably be expected to be
             material in the context of the Wider Serco Group taken as a whole
             or, as the case may be, the Wider ITNET Group taken as a whole;

    (iv)     require any member of the Wider Serco Group or of the Wider ITNET
             Group to acquire or offer to acquire any shares or other securities
             (or the equivalent) in any member of the Wider ITNET Group or any
             member of the Wider Serco Group where such acquisition would be or
             might reasonably be expected to be material in the context of the
             Wider Serco Group taken as a whole or, as the case may be, the
             Wider ITNET Group taken as a whole;

    (v)      impose any material limitation on the ability of any member of the
             Wider Serco Group or the Wider ITNET Group to integrate or
             co-ordinate its business, or any part of it, with the businesses or
             any part of the businesses of any other member of the Wider Serco
             Group and/or the Wider ITNET Group in each case in a manner which
             would be or which might reasonably be expected to be material in
             the context of the Wider Serco Group taken as a whole or, as the
             case may be, the Wider ITNET Group taken as a whole; or

    (vi)     otherwise materially and adversely affect the business, assets,
             financial or trading position or profits or prospects of any member
             of the Wider Serco Group or of the Wider ITNET Group to an extent
             which is or which might reasonably be expected to be material in
             the context of the Wider Serco Group taken as a whole or, as the
             case may be, the Wider ITNET Group taken as a whole,

    and all applicable waiting and other time periods during which any such
    Relevant Authority could decide to take, institute, implement or threaten
    any such action, proceeding, suit, investigation, enquiry or reference
    having expired, lapsed or been terminated;

(f) all necessary filings having been made and all appropriate waiting periods
    (including any extensions thereof) under any applicable legislation or
    regulation of any jurisdiction having expired, lapsed or been terminated in
    each case in respect of the Offer and the acquisition of any shares in, or
    control of, ITNET by Serco and all authorisations, orders, grants,
    recognitions, confirmations, licences, consents, clearances, permissions and
    approvals (authorisations) reasonably necessary or appropriate in any
    jurisdiction for or in respect of the Offer and the proposed acquisition of
    any shares in, or control of, ITNET by Serco being obtained in terms and in
    a form reasonably satisfactory to Serco from appropriate Relevant
    Authorities or from any persons or bodies with whom any member of the Wider
    Serco Group or the Wider ITNET Group has entered into contractual
    arrangements and such authorisations together with all authorisations
    reasonably necessary or appropriate for any member of the Wider ITNET Group
    to carry on its business remaining in full force and effect and no
    intimation of any intention to revoke, suspend, restrict or modify or not to
    renew any of the same having been made and all necessary statutory or
    regulatory obligations in any jurisdiction having been complied with;

(g) except as fully and fairly disclosed to Serco in writing by or on behalf of
    ITNET before 16 December 2004 there being no provision of any agreement,
    arrangement, licence or other instrument to which any member of the Wider
    ITNET Group is a party or by or to which any such member or any of its
    assets is or may be bound, entitled or subject which, as a result of the
    making or implementation of the Offer or the acquisition or proposed
    acquisition by any member of the Wider Serco Group of any shares in, or
    change in the control or management of, ITNET or otherwise, would or might
    (to an extent which is or might reasonably be expected to be materially
    adverse in the context of the Wider ITNET Group taken as a whole) result in:

    (i)      any moneys borrowed by or any other indebtedness (actual or
             contingent) of any such member of the Wider ITNET Group becoming
             repayable or capable of being declared repayable immediately or
             earlier than the stated repayment date or the ability of such
             member to borrow monies or incur any indebtedness being withdrawn
             or inhibited;

    (ii)     the creation or enforcement of any mortgage, charge or other
             security interest over the whole or any part of the business,
             property or assets of any such member of the Wider ITNET Group or
             any such security interest (whenever arising or having arisen)
             becoming enforceable;

    (iii)    any assets or interest of any such member of the Wider ITNET Group
             being or falling to be disposed of or charged or any right arising
             under which any such asset or interest could be required to be
             disposed of or charged;

    (iv)     the interest or business of any such member of the Wider ITNET
             Group in or with any other person, firm or company (or any
             agreements or arrangements relating to such interest or business)
             being terminated or adversely affected;

    (v)      any such member of the Wider ITNET Group ceasing to be able to
             carry on business under any name under which it presently does so;

    (vi)     the value of any such member of the Wider ITNET Group or its
             financial or trading position or prospects being prejudiced or
             adversely affected;

    (vii)    any such agreement, arrangement, licence or other instrument being
             terminated or adversely modified or any onerous obligation arising
             or any adverse action being taken or arising thereunder; or

    (viii)   the creation of any liabilities (actual or contingent) by any such
             member;

    and no event having occurred which, under any provision of any agreement,
    arrangement, licence or other instrument to which any member of the Wider
    ITNET Group is a party or by or to which any such member or any of its
    assets may be bound or be subject, could result in any events or
    circumstances as are referred to in subparagraphs (i) to (viii) of this
    paragraph (g) in any case where such result would be or might reasonably be
    expected to be material in the context of the Wider ITNET Group taken as a
    whole;

(h) except as disclosed in the Annual Report and Accounts of ITNET for the year
    ended 31 December 2003 or the Interim Financial Statements of ITNET for the
    six months ended 30 June 2004 or as publicly announced to a Regulatory
    Information Service by or on behalf of ITNET, before 16 December 2004, or as
    otherwise fully and fairly disclosed to Serco in writing by or on behalf of
    ITNET before 16 December 2004, no member of the Wider ITNET Group having
    since 31 December 2003:

    (i)                issued or agreed to issue or authorised the issue of
                       additional shares of any class, or securities convertible
                       into, or rights, warrants or options to subscribe for or
                       acquire, any such shares or convertible securities, other
                       than shares which are issued upon the exercise of rights
                       to subscribe for shares pursuant to options granted under
                       the ITNET Share Option Schemes before 16 December 2004;

    (ii)               recommended, declared, paid or made any bonus issue,
                       dividend or other distribution, whether payable in cash
                       or otherwise, other than a distribution by any
                       wholly-owned subsidiary of ITNET and save for the interim
                       dividend of 1.46p per ITNET Share paid on 6 October 2004;

    (iii)              implemented or authorised any merger or demerger or
                       (other than in the ordinary course of business and
                       provided not material) acquired or disposed of or
                       transferred, mortgaged or charged, or created any other
                       security interest over, any asset or any right, title or
                       interest in any asset;

    (iv)               implemented or authorised any reconstruction,
                       amalgamation, scheme or other transaction or arrangement
                       (other than in the ordinary course of business and
                       provided not material);

    (v)                purchased, redeemed or repaid any of its own shares or
                       other securities or reduced or made or authorised any
                       other change in its share capital;

    (vi)               made or authorised any change in its loan capital or
                       issued or authorised the issue of any debentures or
                       (other than in the ordinary course of business and
                       provided not material) incurred or increased any
                       indebtedness or contingent liability;

    (vii)              entered into, varied or terminated, or authorised the
                       entry into, variation or termination of, any contract,
                       commitment or arrangement (whether in respect of capital
                       expenditure or otherwise) which is outside the ordinary
                       course of business or which is of a long term, onerous or
                       unusual nature or magnitude or which involves or could
                       involve an obligation of a nature or magnitude, which in
                       any case is material in the context of the Wider ITNET
                       Group taken as a whole;

    (viii)             entered into any contract, commitment or arrangement
                       which would be restrictive on the business of any member
                       of the Wider ITNET Group or the Wider Serco Group;

    (ix)               been unable, or admitted in writing that it is unable, to
                       pay its debts or having stopped or suspended (or
                       threatened to stop or suspend) payment of its debts
                       generally or ceased or threatened to cease carrying on
                       all or a substantial part of its business, in any case
                       which has a material adverse effect on the Wider ITNET
                       Group taken as a whole;

    (x)                taken any corporate action or had any legal proceedings
                       started or threatened against it for its winding-up
                       (voluntary or otherwise), dissolution or reorganisation
                       (or for any analogous proceedings or steps in any
                       jurisdiction) or for the appointment of a receiver,
                       administrator, administrative receiver, trustee or
                       similar officer (or for the appointment of any analogous
                       person in any jurisdiction) of all or any of its assets
                       and revenues, which in any case has a material adverse
                       effect on the Wider ITNET Group taken as a whole;

    (xi)               waived, compromised or settled any claim which is
                       material;

    (xii)              entered into or varied the terms of any service agreement
                       or arrangement with any director or senior executive of
                       ITNET;

    (xiii)             made or consented to any change to the terms of the trust
                       deeds constituting the pension schemes established for
                       its directors and/or employees and/or their dependants or
                       to the benefits which accrue, or to the pensions which
                       are payable thereunder, or to the basis on which
                       qualification for or accrual or entitlement to such
                       benefits or pensions are calculated or determined, or to
                       the basis upon which the liabilities (including pensions)
                       of such pension schemes are funded or made, or agreed or
                       consented to, any change to the trustees;

    (xiv)              entered into any contract, commitment or arrangement or
                       passed any resolution or made any offer (which remains
                       open for acceptance) with respect to, or proposed or
                       announced any intention to effect or propose, any of the
                       transactions, matters or events referred to in this
                       condition; or

    (xv)               increased, or agreed or resolved to increase, any
                       contributions payable by it under any pension arrangement
                       in respect of any employee;

(i) since 31 December 2003 (except as disclosed in the Annual Report and
    Accounts of ITNET for the year then ended or the Interim Financial
    Statements of ITNET for the six months ended 30 June 2004 or as publicly
    announced to a Regulatory Information Service by or on behalf of ITNET
    before 16 December 2004):

    (i)                no adverse change having occurred in the business,
                       assets, financial or trading position or profits or
                       prospects of any member of the Wider ITNET Group which is
                       or which might reasonably be expected to be material in
                       the context of the Wider ITNET Group taken as a whole;

    (ii)               no litigation, arbitration proceedings, prosecution or
                       other legal proceedings having been threatened,
                       announced, instituted or remaining outstanding by,
                       against or in respect of any member of the Wider ITNET
                       Group or to which any member of the Wider ITNET Group is
                       a party (whether as plaintiff or defendant or otherwise)
                       and no investigation by any Relevant Authority or other
                       investigative body against or in respect of any member of
                       the Wider ITNET Group having been threatened, announced,
                       instituted or remaining outstanding by, against or in
                       respect of any member of the Wider ITNET Group which
                       would or might reasonably be expected to materially and
                       adversely affect the Wider ITNET Group taken as a whole;
                       and

    (iii)              no contingent or other liability having arisen which
                       would or might reasonably be expected to materially and
                       adversely affect any member of the Wider ITNET Group
                       taken as a whole;

(j) Serco not having discovered that:

    (i)                any financial, business or other information publicly
                       disclosed at any time by any member of the Wider ITNET
                       Group is misleading, contains a misrepresentation of fact
                       or omits to state a fact necessary to make the
                       information contained therein not misleading which in any
                       case is or might reasonably be expected to be material in
                       the context of the Wider ITNET Group taken as a whole;

    (ii)               any member of the Wider ITNET Group is subject to any
                       liability, contingent or otherwise, which is not
                       disclosed in the Annual Report and Accounts of ITNET for
                       the year ended 31 December 2003 or the Interim Financial
                       Statements of ITNET for the six months ended 30 June 2004
                       and which is or might reasonably be expected to be
                       material in the context of the Wider ITNET Group taken as
                       a whole;

    (iii)              any past or present member of the Wider ITNET Group has
                       failed to comply with any applicable legislation or
                       regulations of any jurisdiction or any notice or
                       requirement of any Relevant Authority with regard to the
                       storage, disposal, discharge, spillage, release, leak or
                       emission of any waste or hazardous or harmful substance
                       or any substance likely to impair the environment or harm
                       human or animal health or otherwise relating to
                       environmental matters or that there has otherwise been
                       any such storage, disposal, discharge, spillage, release,
                       leak or emission (whether or not the same constituted
                       non-compliance by any person with any such legislation or
                       regulation, and whenever the same may have taken place),
                       any of which non-compliance would be likely to give rise
                       to any liability (whether actual or contingent) or cost
                       on the part of any member of the Wider ITNET Group and
                       which is or might reasonably be expected to be material
                       in the context of the Wider ITNET Group taken as a whole;
                       or

    (iv)               there is or is likely to be any obligation or liability
                       (whether actual or contingent) to make good, repair,
                       re-instate or clean up any property now or previously
                       owned, occupied, operated or made use of or controlled by
                       any past or present member of the Wider ITNET Group under
                       any environmental legislation, regulation, notice,
                       circular or order of any Relevant Authority in any
                       jurisdiction and which is or might reasonably be expected
                       to be material in the context of the Wider ITNET Group
                       taken as a whole.


Serco reserves the right to waive all or any of conditions (d) to (j) inclusive,
in whole or in part. The Offer will lapse unless all the above conditions are
fulfilled or (if capable of waiver) waived or, where appropriate, determined by
Serco to have been or remain satisfied by midnight on the day which is 21 days
after the later of the First Closing Date and the date on which the Offer
becomes or is declared unconditional as to acceptances (or such later date as
Serco may, with the consent of the Panel, decide). Serco shall be under no
obligation to waive or treat as fulfilled any of conditions (b) to (j) inclusive
by a date earlier than the date specified above for the fulfilment thereof
notwithstanding that the other conditions of the Offer may at such earlier date
have been waived or fulfilled and that there are at such earlier date no
circumstances indicating that any of such conditions may not be capable of
fulfilment.

If Serco is required by the Panel to make an offer or offers for any ITNET
Shares under Rule 9 of the Code, the Serco may make such alterations to the
above conditions as are necessary to comply with that Rule.

The Offer will lapse (unless the Panel otherwise consents) if, before the First
Closing Date or the date when the Offer becomes unconditional as to acceptances
(whichever is the later), the acquisition of ITNET is referred to the
Competition Commission.

As used in this Part 1, subsidiary undertaking, associated undertaking and
undertaking have the meanings given by the Companies Act 1985 (but for these
purposes ignoring paragraph 20(1)(b) of Schedule 4A to the Companies Act 1985)
and substantial interest means a direct or indirect interest in 10 per cent. or
more of the equity capital of an undertaking.

                                     PART 2

                       CERTAIN FURTHER TERMS OF THE OFFER

The ITNET Shares will be acquired by Serco free from all liens, equities,
charges, encumbrances, rights of pre-emption and any other third party rights or
interests of any nature whatsoever and together with all rights attaching
thereto including the right to receive in full all dividends and other
distributions declared, paid or made after 16 December 2004.

Fractions of New Serco Shares will not be allotted or issued to persons who
elect to participate in the Share Alternative or the Mix and Match Facility.
Entitlements to New Serco Shares will be rounded down to the nearest whole
number with the fractional entitlement being settled in cash.

Any New Serco Shares will be issued credited as fully paid and will rank pari
passu in all respects with existing Serco Shares and will be entitled to all
dividends and other distributions declared, made or paid after the date of the
Offer (including any final Serco dividend for the year ended 31 December 2004,
assuming the Accepting ITNET Shareholder concerned has been allotted such New
Serco Shares before the record date for any such final dividend, which is
expected to be on or about 18 March 2005).

The Offer is not being made, directly or indirectly, in or into, or by use of
the mails of, or by any means or instrumentality of interstate or foreign
commerce of, or any facilities of a national securities exchange of, the United
States nor is the Offer being made in or into Canada, Australia or Japan.
Accordingly, copies of this announcement are not being, and must not be, mailed
or otherwise distributed or sent in or into the United States, Canada, Australia
or Japan.

Furthermore, the New Serco Shares have not been, and will not be, registered
under the United States Securities Act of 1933, as amended, or under the
securities laws of any jurisdiction of the United States; the relevant
clearances have not been obtained and will not be obtained from the securities
commission of any province of Canada; no prospectus in relation to the New Serco
Shares has been, or will be, lodged with or registered by the Australian
Securities Commission; nor have any steps been taken to enable the New Serco
Shares to be offered in Japan in compliance with applicable securities laws of
Japan. Accordingly, the New Serco Shares may not be offered, sold, resold or
delivered directly or indirectly in or in to the United States, Canada,
Australia or Japan.

The provisions referred to in the previous two paragraphs may be waived or
varied by Serco in its sole discretion as regards specific ITNET shareholders or
generally.

                                  APPENDIX II

                  FINANCIAL EFFECTS OF ACCEPTANCE OF THE OFFER

 1.  FINANCIAL EFFECTS OF ACCEPTANCE OF THE FULL CASH OFFER

The following tables set out, for illustrative purposes only, and on the bases
and assumptions set out in the notes below, the financial effects of acceptance
of the full cash offer on capital value and gross income for an accepting holder
of 100 ITNET Shares if the Offer becomes or is declared unconditional in all
respects:

A.         Increase in Capital Value

                                                        Notes              GBP

Market value of 100 ITNET Shares                          (1)           235.00

Cash consideration for 100 ITNET Shares                                 320.00
                                                                    ----------
Total value of consideration                                            320.00
                                                                    ----------
Increase in capital value                                                85.00

This represents an increase of approximately 36.2 per cent.

B.    Increase in gross income under the terms of the Offer

                                                           Notes           GBP

Gross dividend income from 100 ITNET Shares                  (2)          4.39

Gross income from re-investment of cash consideration        (3)         14.18
                                                                    ----------
Total gross income from consideration                                    14.18
                                                                    ----------
Increase in gross income                                                  9.79

This represents an increase of approximately 222.9 per cent.

Notes

1.  Based on the closing price of 235 pence per ITNET Share on 12 November 2004,
    being the last business day prior to the announcement by ITNET that it was
    in preliminary discussions which may or may not lead to an offer for the
    whole of the issued share capital of ITNET.

2.  The gross dividend income on ITNET Shares is based on the interim dividend
    for the half year 2004 of 1.46 pence per ITNET share and the final dividend
    for the financial year ended 31 December 2003 of 2.93 pence per ITNET
    share.

3.  The gross income on the cash consideration has been calculated on the
    assumption that the cash is re-invested for a period of 12 months to yield
    approximately 4.43 per cent. per annum, being the yield for UK Gilts with a
    maturity of up to five years as defined by the FTSE UK Gilts as published by
    the Financial Times on 15 December 2004, the last business day prior to the
    publication of this announcement.

4.  No account has been taken of any potential liability for taxation.

 2.  FINANCIAL EFFECTS OF ACCEPTANCE OF THE SHARE ALTERNATIVE

The following tables set out, for illustrative purposes only, and on the bases
and assumptions set out in the notes below, the financial effects of acceptance
of the Offer assuming a 33 per cent. Share Alternative take up on capital value
and gross income for an accepting holder of 100 ITNET Shares if the Offer
becomes or is declared unconditional in all respects:

A.         Increase in capital value

                                                     Notes                 GBP

Market value of 100 ITNET Shares                       (5)              235.00

Market value of 44 Serco Shares                        (6)              103.51

Cash consideration                                                      216.49
                                                                    ----------
Total value of consideration                                            320.00
                                                                    ----------
Increase in capital value                                                85.00

This represents an increase of approximately 36.2 per cent.

B.    Increase in gross income under the terms of the Offer

                                                          Notes            GBP

Gross dividend income from 100 ITNET Shares                  (7)          4.39

Gross dividend income from 44 Serco Shares                   (8)          1.07

Gross income from re-investment of cash consideration        (9)          9.59
                                                                    ----------
Total gross income from consideration                                    10.66
                                                                    ----------
Increase in gross income                                                  6.27

This represents an increase of approximately 142.8 per cent.

Notes

 5.  Based on the closing price of 235 pence per ITNET Share on 12 November
     2004, being the last business day prior to the announcement by ITNET that
     it was in preliminary discussions which may or may not lead to an offer for
     the whole of the issued share capital of ITNET.

 6.  Based on the closing price of 235.25 pence per Serco Share on 15 December
     2004, the last business day prior to the announcement of the Offer.

 7.  The gross dividend income on ITNET Shares is based on the interim dividend
     for the half year 2004 of 1.46 pence per ITNET share and the final dividend
     for the financial year ended 31 December 2003 of 2.93 pence per ITNET
     share.

 8.  The gross dividend income on Serco Shares is based on the interim dividend
     for the half year 2004 of 0.81 pence per Serco share and the final dividend
     for the financial year ended 31 December 2003 of 1.62 pence per Serco
     share.

 9.  The gross income on the cash consideration has been calculated on the
     assumption that the cash is re-invested for a period of 12 months to yield
     approximately 4.43 per cent. per annum, being the yield for UK Gilts with a
     maturity of up to five years as defined by the FTSE UK Gilts as published
     by the Financial Times on 15 December 2004, the last business day prior to
     the publication of this announcement.

10.  No account has been taken of any potential liability for taxation.


                                  APPENDIX III

                               SOURCES AND BASES

In this announcement:

1.  unless otherwise stated, financial information relating to Serco has been
    extracted from the audited financial statements of Serco for the relevant
    financial year or from Serco's interim results;

2.  unless otherwise stated, financial information relating to ITNET has been
    extracted from the audited financial statements of ITNET for the relevant
    financial year or from ITNET's preliminary results;

3.  the value of the Offer is GBP235 million which is based on 73.5 million
    ITNET Shares in issue on 15 December 2004 and an offer price of 320 pence
    per ITNET Share;

4.  the number of New Serco Shares to be issued pursuant to the Offer, being up
    to 34,762,885 (assuming full acceptance of the Offer and full exercise of
    options under the ITNET Share Option Schemes where the exercise price is
    less than the Offer) is based on 73,459,227 ITNET Shares in issue and
    4,029,663 ITNET Options outstanding on 15 December 2004;

5.  the pro forma net debt of approximately GBP611 million assuming no take-up
    of the Share Alternative (of which GBP264 million is recourse debt and
    GBP346 million is non-recourse debt) has been derived based on Serco net
    debt of GBP364 million (of which GBP18 million is recourse and GBP346
    million non-recourse) as of 30 June 2004 (reported on an unaudited basis),
    ITNET cash of nil as at 30 June 2004 (reported on an unaudited basis) plus
    net debt arising from the transaction of GBP247 million assuming no take-up
    of the Share Alternative; and

6.  all financial information relating to Serco has been quoted on the basis of
    current UK Generally Accepted Accounting Principles as at the date of this
    announcement.


                                  APPENDIX IV

                                  DEFINITIONS

The following definitions apply throughout this announcement unless the context
otherwise requires:

'Accepting ITNET             The ITNET Shareholders who have accepted and who
Shareholders'                accept the Offer and, in both cases, who have not
                             withdrawn their acceptance of the Offer, and also
                             any ITNET Shareholder whose ITNET Shares are
                             compulsorily acquired pursuant to the regime in
                             Part XIIIA of the Companies Act 1985

'Board or Boards'            The boards of Serco and/or ITNET as the context
                             requires

'Cazenove'                   Cazenove & Co. Ltd, 20 Moorgate, London EC2R 6DA

'City Code or Code'          The City Code on Takeovers and Mergers

'Enlarged Group'             The combined Serco and ITNET groups

'Extraordinary General       The extraordinary general meeting of Serco to be
Meeting'                     convened to approve the Offer

'Form of Acceptance'         The form of acceptance and election relating to the
                             Offer accompanying the Offer Document

'ITNET'                      ITNET plc

'ITNET Shares'               The ordinary shares of nominal value 10 pence each
                             in the capital of ITNET which are unconditionally
                             allotted or issued or otherwise arise prior to the
                             date on which the Offer closes (or such earlier
                             date, not being earlier than the First Closing
                             Date, as Serco may, subject to the provisions of
                             the City Code, decide) as a result of exercise of
                             the options under the ITNET Share Option Schemes or
                             the vesting of awards under the ITNET Share
                             Schemes

'ITNET Share Option          The existing share option schemes of ITNET,
Schemes'                     comprising the ITNET Executive Share Option Scheme
                             1998 and the ITNET Savings Related Share Option
                             scheme

'ITNET Share Schemes'        The existing share schemes of ITNET, comprising the
                             ITNET Long Term Incentive Plan and the ITNET Share
                             Incentive Plan

'ITNET Shareholder'          A holder of ITNET Shares

'Mix and Match Facility'     The right of ITNET Shareholders (other than certain
                             overseas shareholders) to elect, subject to
                             availability, to vary the proportions in which they
                             receive New Serco Shares and cash under the Offer

'New Serco Shares'           The new Serco Shares to be issued, credited as
                             fully paid, pursuant to the Offer

'Offer'                      The recommended cash offer to be made by Serco to
                             acquire all of the issued and to be issued share
                             capital of ITNET as described in this announcement,
                             including, where the context so requires, any
                             subsequent revision, variation, extension or
                             renewal of such offer, and subject to the
                             conditions set out herein

'Offer Document'             The document to be dispatched to ITNET Shareholders
                             containing the full terms and conditions of the
                             Offer

'Official List'              The Official List of the UK Listing Authority

'Panel'                      The UK Panel on Takeovers and Mergers

'PricewaterhouseCoopers'     PricewaterhouseCoopers LLP, a limited liability
                             partnership registered in England with registration
                             number OC303525

'Share Alternative'          The share alternative under the Offer pursuant to
                             which ITNET Shareholders (other than certain
                             overseas shareholders) may elect to receive New
                             Serco Shares on the basis set out in this
                             announcement in lieu of part of the cash
                             consideration which they would otherwise have
                             received under the Offer

'Serco'                      Serco Group plc

'UK Listing Authority'       The Financial Services Authority in its capacity as
                             competent authority under Part VI of the Financial
                             Services and Markets Act 2000

'Wider ITNET Group'          ITNET and its subsidiary undertakings, associated
                             undertakings and any other undertakings in which
                             ITNET and such undertakings (aggregating their
                             interests) have a substantial interest

'Wider Serco Group'          Serco and its subsidiary undertakings, associated
                             undertakings and any other undertakings in which
                             Serco and such undertakings (aggregating their
                             interests) have a substantial interest


*  The cash amount for a fraction of New Serco Share will be calculated on the
   basis of 235.25 pence in cash for each New Serco Share (using the price of a
   Serco Share on 15 December 2004, being the last dealing day before the date
   on which the Offer was announced).

** The statement that the proposed Offer will be earnings enhancing,
   pre-goodwill and exceptional items, in 2005 when compared to the earnings per
   share that Serco would have achieved without the acquisition, does not
   constitute a profit forecast and should not be interpreted to mean that the
   earnings per share in 2005, or in any subsequent period, would necessarily
   match or be greater than those for the relevant preceding financial period.

***The expected operational cost savings have been calculated on the basis of
   the existing cost and operating structures of the companies and by reference
   to current prices and the current regulatory environment. These statements of
   estimated cost savings and one-off costs for achieving them relate to future
   actions and circumstances which, by their nature, involve risks,
   uncertainties and other factors. Because of this, the cost savings referred
   to may not be achieved, or those achieved could be materially different from
   those estimated. This statement should not be interpreted to mean that the
   earnings per share in 2005, or in any subsequent period, would necessarily
   match or be greater than those for the relevant preceding financial period.







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