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.