Re Contract

Shanks Group PLC
23 December 2002


Shanks completes East London Waste Authority (ELWA) contract

Shanks Group plc today announces the completion of the 25-year contract to
manage waste and increase recycling within the East London Waste Authority
(ELWA), under the Private Finance Initiative (PFI).

The PFI special purpose vehicle (SPV) acquired by Shanks now has the immediate
responsibility for managing more than 535,000 tonnes of annual waste arisings
from the four London boroughs of Havering, Newham, Redbridge and Barking &
Dagenham.

As detailed when Shanks was announced as preferred bidder, the contract will
generate a revenue of £25 million in the first full year. It is anticipated that
profits will be modest in calendar 2003 before growing in subsequent years as
recycling supplements are earned. However, this higher level of profit is
expected to be somewhat reduced by the associated depreciation and interest
charges as the investment in new facilities is made, before resuming a normal
pattern of growth through the remainder of the contract. The investment required
in the SPV is more than £100 million, with the largest expenditures in years two
to five, subject to planning permissions. The SPV will be funded c.80% by new
limited resource bank finance and the remainder from Shanks existing resources,
the majority of which will be invested when the facilities are built. Work on
planning and permitting for the new facilities is already well advanced.

To meet and beat challenging local authority landfill diversion and recycling
targets, Shanks is introducing innovative technologies to the management of
ELWA's waste. This centres on the use of mechanical/biological treatment
facilities and recycling initiatives, rather than relying on landfill or new
incineration capacity.

Shanks Group Chief Executive Michael Averill said: 'We are delighted to have now
started work on the Group's largest single municipal waste contract. Whilst
operating elsewhere, mechanical/biological treatment will prove to be an
exciting new technology for the UK.'

Further background details are available within a slide presentation via the
Shanks website at www.shanks.co.uk, by selecting 'investor relations' and then
'analyst presentation'.

                                      Ends

Contact: [phone]

Michael Averill, Group Chief Executive

David Downes, Group Finance Director, or

John Shaughnessy, Head of External Relations; (mobile [phone])


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