Restructure Proposals

THIS ANNOUNCEMENT IS AN ADVERTISEMENT AND NOT A PROSPECTUS AND INVESTORS SHOULD NOT PURCHASE ANY SHARES REFERRED TO IN THIS ANNOUNCEMENT EXCEPT ON THE BASIS OF INFORMATION IN THE PROSPECTUS RELATING TO BIFFA PLC WHICH IS PROPOSED TO BE PUBLISHED BY BIFFA PLC IN DUE COURSE IN CONNECTION WITH THE PROPOSED DEMERGER OF BIFFA PLC FROM THE SEVERN TRENT GROUP. Severn Trent Plc - Biffa Demerger The Board of Severn Trent Plc announces today that it intends to demerge its UK integrated waste management business, Biffa. The Board believes that the creation of two separately listed companies, Severn Trent Plc and Biffa Plc, each with dedicated Boards and experienced management teams focused on continued strategic and operational development with access to their own capital will deliver greater benefits to shareholders, customers and employees. Following the demerger Severn Trent is expected to remain the UK's second largest listed water company and a constituent of the FTSE 100, continuing to focus on delivering investment programmes, improving efficiencies and customer service levels. Biffa is one of the UK's leading integrated waste management companies. It was acquired by Severn Trent in 1991 and since then it has grown both organically and through the acquisitions of UK Waste and Hales. Following the demerger it is expected to be a constituent of the FTSE 250. The decision to demerge Biffa remains subject to shareholder and other approvals and to further detailed due diligence. The Board expects the demerger to be completed by the end of 2006. The Board is also currently considering options for Biffa Belgium, including possible disposal. Colin Matthews, Chief Executive of Severn Trent Plc, said: "When I took over as Group Chief Executive in February 2005, I said that the new management team would concentrate for 12 to 18 months on improving all our businesses, particularly water and waste. "Our review demonstrated that the growth and regulation drivers of the two businesses are very different and that few operational synergies would be lost through separate ownership. "The Board has therefore concluded that shareholders, customers and employees would be best served by the creation of two independently quoted businesses. "Severn Trent and Biffa are both leading companies in their separate industries and will continue to benefit from scale and development opportunities. Shareholders will have greater choice and the opportunity to invest in two businesses with different investment characteristics. "Following the conclusion of our review, I shall provide more details of the demerger and our overall Group strategy at our Results Presentation on Tuesday 6 June." For further information contact: Peter Gavan Director of Corporate Affairs Severn Trent Plc 0121 722 4310 07901 517447 Andrew Grant / David Trenchard Tulchan Communications Group Ltd 020 7353 4200 Footnotes: 1. Biffa is a leading UK integrated waste management business, providing collection, recycling, treatment and landfill and special waste services to industrial / commercial clients and to local authorities. 2. Severn Trent Plc today announced its trading update prior to full year results announcements on Tuesday 6 June. It is available at www.severntrent.com . In that statement Severn Trent Plc stated that Biffa UK has achieved a good performance in the year in a flat market. The first half 2005/06 PBIT improvement of 8% is expected to progress further with full year PBIT for Biffa UK growing over the prior year (£78.9m) by some 10%-15%. This year Biffa UK has benefited from a 53 week trading year, favourably impacting full year PBIT growth by around 2%. The collection division, the landfill division and the special waste division are all expected to contribute to the improved profitability year on year. Profit Before Interest and Tax excludes exceptional items. 3. This document contains certain "forward-looking statements". Forward- looking statements are sometimes, but not always, identified by their use of a date in the future or such words as "anticipates", "aims", "due", "could", "may", "should", "expects", "believes", "intends", "plans", "targets", "goal" or "estimates". By their very nature forward-looking statements are inherently unpredictable, speculative and involve risk and uncertainty because they relate to events and depend on circumstances that will occur in the future. There are a number of factors that could cause actual results and developments to differ materially from those expressed or implied by these forward-looking statements. These factors include, but are not limited to, changes in the economies and markets in which Severn Trent and Biffa operate; changes in the regulatory and competition frameworks in which Severn Trent and Biffa operate; the impact of legal or other proceedings against or which affect Severn Trent and Biffa; and changes in interest and exchange rates. All written or verbal forward-looking statements made in this document or made subsequently, which are attributable to Severn Trent or Biffa or any other member of the Severn Trent Group or persons acting on their behalf are expressly qualified in their entirety by the factors referred to above. Neither Severn Trent nor Biffa intends to update these forward-looking statements. This announcement does not constitute an offer of, or the solicitation of an offer to buy or subscribe for, or to sell, exchange or transfer any securities in any jurisdiction. Securities may not be offered, sold or transferred in the United States absent registration or an applicable exemption from the registration requirements of the US Securities Act of 1933 (as amended) (the "Securities Act"). The shares in Biffa proposed to be distributed in connection with the demerger have not been, and will not be, registered under the Securities Act nor have they been approved or disapproved by the U.S. Securities and Exchange Commission (the "SEC") or any U.S. state securities commission and neither the SEC nor any U.S. state securities commission passed upon the accuracy or adequacy of this announcement. Any representation to the contrary is a criminal offence in the U.S.

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Severn Trent (SVT)
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