Preliminary Results - Part 1

Severn Trent PLC
6 June 2001


PART 1

6 June 2001

Preliminary Results for the year to 31 March 2001

GROWTH BUSINESSES AHEAD BY 58%, WHILE SEVERN TRENT WATER OUTPERFORMS


Financial and operating highlights:

Group:
*   Turnover up 7.3% to £1682 million
*   PBITA before exceptional costs £400.2m (£465.8m)
*   Strong performance from growth businesses - 58.1% increase in PBITA
    (before exceptional costs) to £83.8m
*   Successful integration of UK Waste
*   Full year dividend maintained at 45.0p

Severn Trent Water:
*   Turnover down 9.7% to £887m reflecting reduced income as a result of
    OFWAT price determination
*   PBITA £330.5m
*   OPEX and CAPEX out-performance
*   High standard of customer service and product quality maintained

Growth businesses:

Biffa:
*   Turnover up 36.0% to £396m
*   PBITA up 44.6% to £45.7m (before exceptional costs)
*   Synergies ahead of schedule - £11m annualised cost savings already
    achieved
*   Strong organic growth in the UK- increased environmental regulation
    provides catalyst for further growth

Severn Trent Services:
*   Turnover up 44.3% to £350m
*   PBITA up 78.0% to £38.1m
*   Consolidation and integration of acquisitions complete
    *   Market leader in US and UK Environmental Laboratories
    *   Strong base secured in Operating Services and Purification
*   Well placed for organic growth

David Arculus, Chairman, Severn Trent Plc, said:

'The transformation of Severn Trent into an environmental services company
has accelerated.  Almost all our businesses are ahead of the targets we set
a year ago and our non-regulated businesses are well positioned for strong
organic growth.  We are particularly pleased by the 58% profit growth from
Biffa and Severn Trent Services.'

'Severn Trent Water performed very well in the face of a tough regulatory
determination, which reduced charges to our customers by almost 12%.  We are
already achieving or exceeding the demanding targets set in the regulatory
review.  Although we are only in the second year of the new regulatory
period, we believe that we need to start planning now for the next review,
working with the new regulator to ensure that longer term investment
objectives are met.  All water companies will have a continuing need for
capital investment to meet increasing EU water and waste water quality
standards and maintain the existing infrastructure.'

Robert Walker, Group Chief Executive, Severn Trent Plc, said:

'Our growth businesses have delivered an impressive performance over the
past year. These businesses are leading the changes underway in the Group
and are laying the foundations for strong growth going forward.  This year
turnover from our growth businesses is likely, for the first time, to
overtake that from our regulated water business.  With more synergies to
come from the UK Waste acquisition together with further improvements from
Severn Trent Services and the continued out-performance of Severn Trent
Water, we are well positioned in our target markets to be a leading provider
of environmental services and to deliver strong organic growth.'


Enquiries:
Robert Walker            Severn Trent Plc       020 7404 5959 (on the day)
Group Chief Executive                           0121 722 4000 (thereafter)
                                                
Alan Costin              Severn Trent Plc       020 7404 5959 (on the day)
Group Finance Director                          0121 722 4000 (thereafter)
                                                
Simon Holberton          Brunswick Group        020 7404 5959
Helen Shepard                                   

Chairman's Statement

Over the past year the transformation of Severn Trent into an environmental
services company has accelerated.  In almost all of our businesses we are
ahead of the targets we set a year ago and our non-regulated businesses
particularly are now positioned for strong organic growth.

Our growth businesses

Our growth businesses have delivered an impressive performance over the past
year.  Biffa and Severn Trent Services are leading the changes underway at
the Group and are laying the foundations for strong growth going forward.
In a full year Biffa and Severn Trent Services between them will contribute
almost half the Group's turnover.  With only a half year contribution from
UK Waste, and before the impact of substantial synergies, their combined
profit before interest, goodwill amortisation and exceptional costs
increased by 58% compared with the previous year.  Our objective is to grow
these businesses and improve their margins.

The biggest single event this year has been the acquisition of UK Waste.  UK
Waste, combined with our strong Biffa business gives us a UK market share of
around 10%.  It brings with it strengths in logistics, recycling and in the
generation of green energy.  The Biffa team is energetically proceeding with
the integration of the two businesses and is already ahead of schedule.
Most importantly, the enlarged Biffa is now well placed to offer a complete
environmental solutions package to customers across the UK.

Our other growth business, Severn Trent Services, is an international
business based in the US.  The business has a strong base in environmental
laboratories where we are the UK and US market leader.  We also have a good
base in operating contracts and purification.  Behind the improved
performance of Severn Trent Services has been a year of consolidation and
integration - we have now largely completed our acquisition phase.  With the
new management team bedded down, and a more clearly focused strategy, we are
well positioned to deliver organic growth.

A challenging year for Water

In the face of a tough regulatory determination which reduced charges to our
customers by almost 12%, Severn Trent Water performed very well.  Severn
Trent Water has built a reputation for delivery based on effective team
work.  We are already achieving or exceeding the demanding targets set in
the regulatory review.  On operating costs our two year manpower reduction
programme has largely been completed in year one.  On capital expenditure we
are looking for additional out-performance, and on the cost of borrowing new
financing programmes are securing lower cost finance.

Although we are only in the second year of the new regulatory period, we
believe that we need to start planning now for the next review, working with
the new regulator to ensure that longer term investment objectives are met.
All water companies will have a continuing need for capital investment to
meet increasing EU water and waste water quality standards and maintain the
existing infrastructure.  These companies will only be able to secure the
necessary finance if they can ensure a reasonable return for investors and
providers of debt capital.  Severn Trent remains committed to the equity
model and we believe that these issues can be resolved with the appropriate
engagement of all parties.

Environmental leadership

Our commitment to environmental leadership binds all our businesses
together.  This starts by having exemplary internal environmental policies
and practices, which we are continually striving to develop.  We already
generate some 35% of our electricity needs from landfill and sewage gases.
Our capabilities are there to help our customers, and particularly our
business customers, solve their environmental problems.  As the Government
imposes new environmental regulation on business, Severn Trent, with its
broad spectrum of environmental businesses, is better positioned than any
other company in the UK to provide a comprehensive range of products and
services to industry.

Group results

During the year, turnover rose 7.3% to £1,681.6 million (£1,566.6 million).
Turnover from our regulated water and sewerage business fell by 9.7%
reflecting the impact of lower charges to customers.  However, turnover from
our non-regulated businesses increased by 30.2% and accounted for 50.6% of
our revenues as against 41.6% the previous year.

Group profit before interest, goodwill amortisation and exceptional costs
fell by 14.1% to £400.2 million (£465.8 million).  The contribution from the
regulated water business actually fell by 22.0%, whilst that from our non-
regulated arm increased by 41.8% to £82.8 million.

After exceptional costs of £15.5 million (£64.7 million) and interest costs
of £161.1 million (£120.7 million) profit before tax was £206.2 million
(£274.0 million).

The tax charge for the year was £12.4 million (£22.1 million) an effective
rate of 6.0%.  We anticipate that the effective current tax rate for the
year ending 31 March 2002 will be at a similar level.

Accounting Standard FRS19, requiring full provision for deferred taxation,
will be adopted by the Group in the year ending 31 March 2002.  If FRS19 had
been adopted for the year ended 31 March 2001, deferred tax of £52.6 million
would have been charged in the year, and a provision of £324.1 million would
have been included in the balance sheet.  The deferred tax is not expected
to crystalise in the foreseeable future.

Basic earnings per share before exceptional costs was 61.0p (92.8p).

On these results the Board is recommending a final dividend of 28.0p per
ordinary share, bringing the total for the year to 45.0p (45.0p).

It remains the intention of the Board that for the period up to 31 March
2005, barring unforeseen circumstances, dividends per share will as a
minimum be maintained at this level.

Operational review

Severn Trent Water

Turnover in Severn Trent Water declined by 9.7% to £887.2 million with
profit before interest and tax down 22.0% (before last year's exceptional
costs of £61.1 million) to £330.5 million.  The decline in turnover and
profit was the result of the reduction in charges to customers following the
regulatory determination of prices for the five year period beginning 1
April 2000.

Direct operating costs of £356.0 million (excluding depreciation and
infrastructure renewals) were held at last year's level, despite underlying
inflation of 2%, increased costs associated with capital schemes and
increases in bad debts and business rates.  The ability to hold costs was
achieved through cost reductions amounting to £26.0 million, equivalent to
7.3% efficiency.  The cost savings have involved the loss of 1070 jobs since
November 1999.

In the drive to reduce costs and increase service, the company has made
increased use of new technologies.  Nine control centres have been
consolidated into two high-tech network management centres in Leicester and
Wolverhampton.  A similar rationalisation of customer call centres is also
under way.  State of the art geographical information systems (GIS) are all
part of creating an efficient, e-enabled 21st Century business.

Capital investment for this first year of the new regulatory period was £320
million, somewhat below the anticipated average over the period of around
£400 million p.a.  This arose from the need to await the outcome of the
OFWAT determination before finalising investment priorities.

Against a background of operational problems presented by the fuel crisis in
the autumn, floods followed by severe frosts in the winter and restrictions
imposed as a result of the foot-and-mouth crisis in the spring,  Severn
Trent Water maintained its high level of customer service and high level of
compliance with quality standards for drinking water and sewage treatment.

Outperforming against the regulatory determination on operating and capital
expenditure is only one aspect of the company's strategy.  Severn Trent
Water is also seeking new business from commercial and industrial customers
outside its region, as well as developing a range of additional products and
services for its existing customer base.  In May 2001 the company, in
association with Marks & Spencer, launched Water Guardian our quality
control process for food suppliers.

Biffa Waste Services

Turnover in Biffa Waste Services increased by 36.0% to £396.0 million, with
profit before interest, tax, goodwill amortisation and exceptional costs
(PBITA) up 44.6% to £45.7 million.  This result included a profit
contribution from 22 September 2000 from the UK Waste acquisition amounting
to an estimated £13.4 million.  After goodwill amortisation totalling £8.7
million (including £7.9 million relating to UK Waste) profit before interest
and exceptional costs amounted to £37.0 million.  Exceptional costs of £15.5
million have been incurred or provided for the restructuring of the acquired
business.

In the UK, Biffa collection division had another very good year with
turnover rising 40.3% to £212.7 million and PBITA up 40.5% to £28.1 million.
Landfill turnover was up 51.5% to £113.2 million generating PBITA of £20.1
million, up 101%.  Turnover from the special waste division was up 26.4% to
£27.8 million, with PBITA doubled at £3.6 million.

In Belgium, Biffa's turnover of £42.3 million was marginally lower than in
the previous year and PBITA was down 45.1% to £3.9 million.  After three
very strong years the landfill operation in Belgium has now stabilised at
the lower level we indicated with our interim results.  The collection
business performed well and the special waste business continued to improve.
Although the changes in the landfill market will preclude a recovery in
profits in Belgium to the level enjoyed in the recent past, the business
continues to make good returns.

The integration of UK Waste into Biffa is proceeding well.  Head Office
functions have been combined, fourteen depots merged, the vehicle fleets
rationalised and all sites and treatment plants transferred to common
systems.  Synergies already delivered will be worth £11 million in a full
year and Biffa remains confident of achieving synergies of at least £15
million p.a. when the integration is completed by March 2002.  However the
compelling reason for Biffa acquiring UK Waste is the growth potential of
the combined businesses and their strategic fit together in the most
attractive waste market in Europe.

Biffa is now the UK's largest single supplier of integrated waste management
services.  In a business where transport logistics management is a key
skill, the acquisition of UK Waste has added further economies of scale to
Biffa's already highly successful industrial and commercial collection
business.  It has also enhanced the efficiency of the landfill operation by
adding eight large scale sites, increasing Biffa's landfill void bank and
its power generation capacity.  As the EU Landfill Directive seeks over time
to divert waste away from landfill, UK Waste further strengthens Biffa's
capabilities in recycling and waste treatment.

Severn Trent Services

Severn Trent Services maintained its strong growth momentum with turnover up
44.3% to £350.4 million and PBITA up 78.0% (before last year's exceptional
costs) to £38.1 million.  After goodwill amortisation of £8.5 million,
profit before interest was 88.5% higher at £29.6 million.

This year has seen the new management team make good progress in cutting
costs, integrating products and services, aligning the organisation more
closely to the needs of customers and promoting the Severn Trent brand.

Analytical Services division had turnover of £155.2 million, up 94.0% on the
previous year.  The increase reflected the full year effect of acquisitions
made during the course of 1999/2000 as well as four US laboratories acquired
during the year.  The business now has an estimated 20% share of the US
market, and with coast-to-coast coverage Severn Trent Laboratories is now
able to serve 80 of the Fortune 200 companies.  Building on the quality of
its laboratory testing, the business is expanding its service to include the
collection and preparation of samples.  It is also developing data delivery
systems that give customers faster and easier access to test results via the
Internet.

In the UK, following the acquisition of Hyder Laboratories in April 2000,
the business is now the market leader in analytical services.

Operating Services division increased its turnover by 37.7% on the previous
year, to £116.5 million.  As a leading contracted operator of water and
waste water systems for smaller municipalities in the USA and supplier of
pipeline services, the business expanded its geographic coverage through two
small acquisitions during the year.  Tight control of costs and negotiation
of better contract rates produced an improvement in margins.  In Europe, the
Severn Trent Water International investments in Italy and Belgium continued
to make a valuable contribution.

Turnover in Water Purification division was £78.7 million, virtually the
same as in the previous year.  The business was impacted by the slow start
amongst UK water companies to their new five year capital programmes.  In
the US, the business has been restructured along two product lines,
disinfection and filtration.  With a widening spectrum of products, services
and technologies the division is now better equipped to provide appropriate
solutions to its customers' needs for water and waste water treatment.

Severn Trent Systems

Turnover at Severn Trent Systems was down 19.3% on the previous year, to
£70.0 million.  The business made a loss before interest of £5.6 million.

The IT Services division continued its successful development of systems for
other Group companies, notably in the areas of asset management, e-commerce,
mobile fieldworking and Intranet.

Within the software products division, we have continued to experience
problems with CIS Open Vision, our billing and customer information system.
The product continues to require significant investment to resolve issues
arising from delivery of existing contracts.

In line with the strategic review carried out last year, on 17 May 2001 we
announced the sale of Stoner Associates to the Lattice Group.

The Work Management product achieved five new sales in the year and
investment in the system has continued in order to enhance its innovative
capabilities.

Property, Engineering Consultancy and Insurance

Our Property, Engineering Consultancy and Insurance businesses produced a
profit before interest of £4.4 million.  The decline over the previous year
was largely the result of flood-related insurance claims and the reduced
volume of engineering work for Severn Trent Water.

The Future

Our strategy for creating shareholder value continues to be based upon the
profitable growth of our waste and services businesses and out-performance
by our regulated water business against the targets built into the OFWAT
price determination.

We are in a strong position to achieve these objectives and we believe there
is an emerging opportunity to add further value by being a leader in the
provision of environmental services to the UK market.


David Arculus
Chairman, Severn Trent Plc

Group profit and loss account
Year ended 31 March 2001
                                                                     Total
                        Continuing                      Total   Continuing
                        Operations   Acquisitions        2001         2000
               Notes            £m             £m          £m           £m
Turnover:                                                                 
group and                                                                 
share of joint                                                            
venture                    1,568.1          117.8     1,685.9      1,580.2
Less: share of                                                            
joint                                                                     
ventures'                                                                 
turnover                     (4.3)              -       (4.3)       (13.6)
  ________________________________________________________________________
                                                                          
Turnover                   1,563.8          117.8     1,681.6      1,566.6
                                                                          
Operating                                                                 
costs before                                                              
goodwill                                                                  
amortisation                                                              
and                                                                       
exceptional                                                               
costs                    (1,188.7)        (101.5)   (1,290.2)    (1,109.4)
Goodwill                                                                  
amortisation                 (8.8)          (8.6)      (17.4)        (6.4)
Exceptional                                                               
restructuring                                                            
costs          1 (b)             -         (15.5)      (15.5)       (56.1)
Exceptional                                                               
Year 2000                                                                 
costs          1 (b)             -              -           -        (8.6)
  ________________________________________________________________________
Total                                                                     
operating                                                                 
costs                    (1,197.5)        (125.6)   (1,323.1)    (1,180.5)
                                                                          
Group                                                                     
operating                                                                 
profit /(loss)               366.3          (7.8)       358.5        386.1
Share of                                                                  
operating                                                                 
profit of                                                                 
joint ventures                                                            
and associates                 8.8              -         8.8          8.6
  ________________________________________________________________________
                                                                          
Profit before                                                             
interest,                                                                 
goodwill and                                                              
exceptional                                                               
costs                        383.9           16.3       400.2        465.8
Goodwill                                                                  
amortisation                 (8.8)          (8.6)      (17.4)        (6.4)
                        __________________________________________________
Profit before                                                             
interest and                                                              
exceptional                                                               
costs                        375.1            7.7       382.8        459.4
Exceptional                                                               
costs                            -         (15.5)      (15.5)       (64.7)
                        __________________________________________________
                                                                          
Profit/                                                                   
(loss) before                                                             
interest                     375.1          (7.8)       367.3        394.7
                                                                          
Net interest                                                              
payable                                               (161.1)      (120.7)
  ________________________________________________________________________
                                                                          
Profit after                                                              
interest                                                                  
before                                                                    
exceptional                                                               
costs                                                   221.7        338.7
Exceptional                                                               
costs                                                  (15.5)       (64.7)
                                                    ______________________
                                                                          
Profit on                                                                 
ordinary                                                                  
activities                                                                
before                                                                    
taxation                                                206.2        274.0
                                                                          
Taxation on    1 (c)                                                      
profit on                                                                 
ordinary                                                                  
activities                                             (12.4)       (22.1)
  ________________________________________________________________________
                                                                          
Profit on                                                                 
ordinary                                                                  
activities                                                                
after taxation                                          193.8        251.9
                                                                          
Equity                                                                    
minority                                                                  
interests                                               (0.4)            -
  ________________________________________________________________________
                                                                          
Profit for the                                                            
financial year                                          193.4        251.9
                                                                          
Dividends      1 (d)                                                      
(including non-                                                           
equity                                                                    
dividends)                                            (154.5)      (154.0)
  ________________________________________________________________________
                                                                          
Retained                                                                  
profit for the                                                            
financial year                                           38.9         97.9
  ________________________________________________________________________
                                                                          
Earnings per                                                              
share (pence)
Basic          1 (e)                                     56.5         73.8
Diluted        1 (e)                                     56.2         73.5
Basic before   1 (e)                                                      
exceptional                                                               
costs                                                    61.0         92.8
Diluted before 1 (e)                                                      
exceptional                                                               
costs                                                    60.7         92.3

There is no difference between the profit on ordinary activities before
taxation and the retained profit for the financial years stated above and
their historical cost equivalents.

Balance Sheet
At 31 March 2001

                                           Group                  Company
                               2001          2000        2001          2000
                                 £m            £m          £m            £m
                                                                           
Fixed assets                                                               
Intangible assets -                                                        
goodwill                      461.3         138.0           -             -
Tangible assets             4,815.6       4,630.9         7.5           7.1
  _______________________________________________________________________
  Investments in joint                                                     
  ventures
    Share of gross                                                         
    assets                      6.6           7.3           -             -
    Share of gross                                                         
    liabilities               (5.4)         (6.9)           -             -
    Loans to joint                                                         
    ventures                    3.8           4.5           -           0.1
   ______________________________________________________________________
                                5.0           4.9           -           0.1
  Investments in                                                           
  associates                   17.2          16.3           -             -
  Investments in                                                           
  subsidiaries                    -             -     3,039.6       1,785.6
  Other investments             5.4           4.5         3.6           3.3
  _______________________________________________________________________
                                                                           
Total investments              27.6          25.7     3,043.2       1,789.0
  _________________________________________________________________________
                                                                           
                            5,304.5       4,794.6     3,050.7       1,796.1
                                                                           
Current Assets                                                             
Stocks                         82.6          77.3           -             -
Debtors                       414.7         353.8        17.5         151.2
Short-term deposits            81.0          35.8        59.2             -
Cash at bank and in hand       35.0           8.4       511.1         291.4
  _________________________________________________________________________
                              613.3         475.3       587.8         442.6
                                                                           
Creditors: amounts                                                         
falling due within one                                                     
year                      (1,444.0)     (1,089.2)     (922.6)       (599.6)
  _________________________________________________________________________
                                                                           
Net current liabilities     (830.7)       (613.9)     (334.8)       (157.0)
  _________________________________________________________________________
                                                                           
Total assets less                                                          
current liabilities         4,473.8       4,180.7     2,715.9       1,639.1
                                                                           
Creditors: amounts                                                         
falling due after more                                                     
than one year             (1,770.0)     (1,537.7)      (75.5)             -
                                                                           
Provisions for                                                             
liabilities and charges      (93.7)        (96.0)           -             -
  _________________________________________________________________________
                                                                           
Net assets                  2,610.1       2,547.0     2,640.4       1,639.1
  _________________________________________________________________________
                                                                           
Capital and reserves                                                       
Called up share capital       223.6         231.7       223.6         231.7
                                                                           
Share premium account          20.2          12.2        20.2          12.2
                                                                           
Capital redemption                                                         
reserve                       156.1         147.0       156.1         147.0
                                                                           
Profit and loss account     2,209.0       2,155.8     2,240.5       1,248.2
  _________________________________________________________________________
                                                                           
Total shareholders'                                                        
funds                       2,608.9       2,546.7     2,640.4       1,639.1
                                                                           
  Equity shareholders'                                                     
  funds                     2,608.9       2,537.6     2,640.4       1,630.0
  Non-equity                                                               
  shareholders' funds             -           9.1           -           9.1
  _________________________________________________________________________
                                                                           
Minority shareholders'                                                     
interest (equity)               1.2           0.3           -             -
  _________________________________________________________________________
                            2,610.1       2,547.0     2,640.4       1,639.1
  _________________________________________________________________________
                                                                           

Group cash flow statement
Year ended 31 March 2001

                                                2001                   2000
                       Notes           £m         £m        £m           £m
Net cash inflow from                                                       
operating activities   1 (f)                   617.8                  671.5
Dividends received                                                         
from associates and                                                        
joint ventures                                   1.0                    1.5
Returns on                                                                 
investments and                                                            
servicing of finance                         (126.8)                 (94.5)
Taxation                                       (6.4)                 (49.3)
Capital expenditure                                                        
and financial                                                              
investment                                   (365.7)                (575.5)
Acquisitions                                 (427.9)                (145.1)
Equity dividends paid                        (153.7)                (247.1)
                                             _______                _______
                                                                           
Net cash outflow                                                           
before use of liquid                                                       
resources and                                                              
financing                                    (461.7)                (438.5)
                                                                           
Management of liquid                                                       
resources                                     (44.9)                 (13.8)
                                                                           
Financing                                                                  
  Increase in debt                  515.7                428.0             
  Redemption of                                                            
  shares                            (9.1)                    -
  Issue of shares                     6.7                  3.6             
                                              ______                 ______
                                               513.3                  431.6
                                              ______                 ______
Increase/ (decrease)                                                       
in cash                                          6.7                 (20.7)
                                              ______                 ______
                                                                           

Reconciliation of net cash flow to movement in net debt

                                               2001                    2000
                                    £m           £m         £m           £m
Increase/ (decrease) in                                                    
cash (as above)                    6.7                  (20.7)
Cash flow from movement in                                                 
net debt and financing         (515.7)                 (428.0)
Cash flow from movement in                                                 
liquid resources                  44.9                    13.8
                              ________                ________             
                                                                           
Change in net debt                                                         
resulting from cash flows                   (464.1)                 (434.9)
Net cash/ (debt) assumed                                                   
with acquisitions                              13.7                  (14.9)
Rolled up interest on                                                      
finance leases                               (14.4)                  (11.3)
Rolled up interest on debt                    (0.3)                   (0.2)
Currency translation                                                       
differences                                   (6.0)                     0.4
                                           ________                ________
Increase in net debt                        (471.1)                 (460.9)
                                                                           
Opening net debt                          (1,939.4)               (1,478.5)
                                           ________                ________
Closing net debt                          (2,410.5)               (1,939.4)
                                             ______                  ______

Statement of total recognised gains and losses
Year ended 31 March 2001

                                                                      Group
                                                       2001            2000
                                                         £m              £m
Profit for the financial                                                   
year                       - group                    191.8           250.0
                           - joint ventures             0.6             0.8
                           - associates                 1.0             1.1
                                                   ________        ________
Total profit for the financial year                   193.4           251.9
Currency translation differences                       25.7           (0.7)
                                                   ________        ________
Total recognised gains and losses for the                                  
year                                                  219.1           251.2
                                                     ______          ______

The company had no recognised gains or losses other than the profit for the
year.

Reconciliation of movements in shareholders' funds

                                               Group              Company
                                     2001       2000        2001     2000
                                       £m         £m          £m       £m
Profit for the financial year       193.4       251.9    1,158.2      274.0
Dividends (including non-                                                  
equity dividends)                 (154.5)     (154.0)    (154.5)    (154.0)
                                   ______      ______     ______     ______
                                     38.9        97.9    1,003.7      120.0
                                                                           
Other recognised gains and                                                 
losses relating to the year          25.7       (0.7)          -          -
                                                                           
Shares issued                         6.7         3.6        6.7        3.6
                                                                           
Redemption of shares                (9.1)           -      (9.1)          -
                                   ______      ______     ______     ______
Net addition to shareholders'                                              
funds                                62.2       100.8    1,001.3      123.6
                                                                           
Opening shareholders' funds       2,546.7     2,445.9    1,639.1    1,515.5
                                   ______      ______     ______     ______
Closing shareholders' funds       2,608.9     2,546.7    2,640.4    1,639.1
                                   ______      ______     ______     ______
                                                                           

Segmental analysis

Analysis of turnover and profit before interest by geographical origin and
type of business

                                                 Other-                    
                                            principally                    
                      United Kingdom     USA and Europe               Group
                      2001       2000     2001     2000      2001      2000
                        £m         £m       £m       £m        £m        £m
Group turnover                                                             
Water and                                                                  
sewerage             887.2      982.1        -        -     887.2     982.1
Waste management     353.7      248.3     42.3     42.8     396.0     291.1
Services              49.1       52.9    301.3    189.9     350.4     242.8
Systems               45.4       71.2     24.6     15.5      70.0      86.7
Property,                                                                  
Engineering                                                                
consultancy and                                                            
Insurance             92.6       77.1        -      0.6      92.6      77.7
Inter segment                                                              
trading            (114.0)    (113.5)    (0.6)    (0.3)   (114.6)   (113.8)
                    ______     ______   ______   ______    ______    ______
                   1,314.0    1,318.1    367.6    248.5   1,681.6   1,566.6
                    ______     ______   ______   ______    ______    ______
Group profit                                                               
before interest,
goodwill and
exceptional costs
Water and                                                                  
sewerage             330.5      423.5        -        -     330.5     423.5
Waste management      41.8       24.5      3.9      7.1      45.7      31.6
Services               4.5        0.1     33.6     21.3      38.1      21.4
Systems              (2.9)      (2.6)    (2.5)      0.1     (5.4)     (2.5)
Property,                                                                  
Engineering                                                                
consultancy and                                                            
Insurance              4.4        7.9        -        -       4.4       7.9
Unrealised profit                                                          
on inter segment                                                           
trading              (1.0)      (2.5)        -        -     (1.0)     (2.5)
Corporate                                                                  
overheads           (12.1)     (13.6)        -        -    (12.1)    (13.6)
                                                                           
                    ______     ______   ______   ______    ______    ______
                     365.2      437.3     35.0     28.5     400.2     465.8
                    ______     ______   ______   ______    ______    ______
                                                                           
Goodwill                                                                   
amortisation         (9.7)      (1.0)    (7.7)    (5.4)    (17.4)     (6.4)
                                                                           
Group profit                                                               
before interest
and exceptional
costs
Water and                                                                  
sewerage             330.5      423.5        -        -     330.5     423.5
Waste management      33.2       23.9      3.8      7.1      37.0      31.0
Services               3.4      (0.3)     26.2     16.0      29.6      15.7
Systems              (2.9)      (2.6)    (2.7)        -     (5.6)     (2.6)
Property,                                                                  
Engineering                                                                
consultancy and                                                            
Insurance              4.4        7.9        -        -       4.4       7.9
Unrealised profit                                                          
on inter segment                                                           
trading              (1.0)      (2.5)        -        -     (1.0)     (2.5)
Corporate                                                                  
overheads           (12.1)     (13.6)        -        -    (12.1)    (13.6)
                    ______     ______   ______   ______    ______    ______
                     355.5      436.3     27.3     23.1     382.8     459.4
                    ______     ______   ______   ______    ______    ______
Exceptional costs   (15.5)     (62.1)        -    (2.6)    (15.5)    (64.7)
                                                                           
Group profit                                                               
before interest
Water and                                                                  
sewerage             330.5      362.4        -        -     330.5     362.4
Waste management      17.7       23.9      3.8      7.1      21.5      31.0
Services               3.4      (1.2)     26.2     13.4      29.6      12.2
Systems              (2.9)      (2.6)    (2.7)        _     (5.6)     (2.6)
Property,                                                                  
Engineering                                                                
consultancy and                                                            
Insurance              4.4        7.8        -        -       4.4       7.8
Unrealised profit                                                          
on inter segment                                                           
trading              (1.0)      (2.5)        -        -     (1.0)     (2.5)
Corporate                                                                  
overheads           (12.1)     (13.6)        -        -    (12.1)    (13.6)
                    ______     ______   ______   ______    ______    ______
                     340.0      374.2     27.3     20.5     367.3     394.7
                    ______     ______   ______   ______    ______    ______

Turnover by origin and destination do not differ materially.
Water and sewerage turnover in the year ended 31 March 2000 was net of
customer rebates of £18.0 million.  There were no customer rebates in the
year ended 31 March 2001.

The segmental analysis includes the following amounts in respect of
businesses acquired during the year:

                                             Other-principally             
                                                USA and Europe             
                           United Kingdom                   £m        Total
                                       £m                                £m
Turnover                                                                   
  Waste management                   87.3                  1.5         88.8
  Services                            9.5                 17.6         27.1
  Property                            1.9                    -          1.9
                           ______________     ________________   __________
                                     98.7                 19.1        117.8
                           ______________     ________________   __________
                                                                           

                                             Other-principally             
                                                USA and Europe             
                           United Kingdom                   £m        Total
                                       £m                                £m
Operating Profit/ (loss)                                                   
  Waste management                 (10.0)                  0.2        (9.8)
  Services                            0.2                  1.7          1.9
  Property                            0.1                    -          0.1
                           ______________     ________________   __________
                                    (9.7)                  1.9        (7.8)
                           ______________     ________________   __________
                                                                           

Waste management operating profit in the table above is after charging £15.5
million restructuring costs and goodwill amortisation of £8.0 million.
Services' and Property's operating profit in the table above is after
charging goodwill amortisation of £0.6 million and £nil respectively.

MORE TO FOLLOW