Trading Statement

SEVERN TRENT PLC

PRE-CLOSE PERIOD TRADING STATEMENT

3 October 2006

Severn Trent is issuing the following trading update ahead of the close period
prior to the announcement of results on 7 December 2006 for the six months
ended 30 September 2006.

The Board considers that overall the Group has delivered first half-year
performance that is broadly consistent with its expectations for the full year.

Water and Sewerage

Sales prices have increased by 6.58% (including inflation) from 1 April 2006,
being the 7.23% increase allowed by Ofwat less the 0.65% voluntary abatement of
K, as previously announced. In addition, the cost of completing the agreement
made with Ofwat arising from their report dated 7 March 2006 will reduce first
half turnover and PBIT by around £3.2m (full year around £6.3m). This amount
will be credited to customer accounts during 2006/07 and represents the full
cost of the £1m per annum difference (plus inflation) between the voluntary
abatement of K and Ofwat's position over the remainder of AMP4.

Severn Trent Water continues to focus on the operating cost challenge of the
AMP4 contract. As previously announced, rising energy prices, net of efficiency
savings, will have a significant impact on 2006/07 operating costs, with full
year costs expected to be around £15m to £20m higher than last year.

Investment in leakage management to address the conditions towards the end of
2005/06 and the continued drive to improve customer service levels will further
impact on the level of operating costs in 2006/07. As a result, we expect
higher operating costs in the first half of around £4m, with the full year
impact anticipated to be around £6m.

Severn Trent Water's infrastructure maintenance programme and rate of
expenditure are progressively increasing through the year. As a result the
first half expenditure for 2006/07 of around £40m to £42m for such maintenance
is expected to represent around 40% of the total expenditure for the year.

Gross capital expenditures under UK GAAP, (including infrastructure maintenance
expenditure) are expected to be around £500m for the full year 2006/07, with
expenditures in the first half of around £195m.

Waste Management

On 13 September, Severn Trent announced the terms of the Biffa demerger,
together with details of a special dividend and share consolidation of Severn
Trent Ordinary Shares. Subject to, among other things, a resolution to approve
the Demerger being passed at an extraordinary general meeting on Friday 6
October, dealings in Biffa shares are expected to commence on Monday 9 October.

As the demerger of Biffa is therefore expected to occur during the second half,
Biffa will be included in the results of the Group's continuing operations for
the first half year.

Biffa's prospectus contains a statement that based on Biffa's financial
performance since 1 April 2006, Biffa continues to trade in line with Biffa's
Directors' expectations and that the directors of Biffa have confidence in
Biffa's prospects for the current financial year.

UK Laboratories

UK Laboratories' PBIT for the first half of 2006/07 is expected to be around
the result achieved for the second half of 2005/06 (£2.6m).

Water Purification and Operating Services

Water Purification and Operating Services continue to make good progress. Total
Services' PBIT for the first half of 2006/07 is expected to be around the
result achieved for the second half 2005/06 (£6.5m).

Other Businesses

Other Businesses, which include Property and Insurance, are expected to record
a PBIT loss of approximately £1m to £1.5m in the first half of 2006/07,
compared to a full year loss in 2005/06 of £3.5m.

Corporate

Corporate overheads in the first half are expected to be around the same level
as that incurred in the second half of 2005/06, before taking into account some
£9m to £11m (second half 2005/06 £7.8m) of additional costs relating to the
demerger of Biffa.

The disposals of Biffa Belgium and Aquafin have been completed in the first
half year, with exceptional profits on disposal of around £25m expected to be
recorded in the first half of 2006/07. In addition, the sale of US Laboratories
was announced on 25 September, with this transaction expected to complete by
the end of December 2006. It is anticipated that US Laboratories will therefore
be treated as a discontinued business in the first half year. The anticipated
book loss on disposal of this business is expected to be around £31m.

The sale process for the Property business is continuing.

Net debt at the half year (excluding IAS 39 fair value adjustments) is expected
to be around £3.0 billion.

ENQUIRIES TUESDAY 3 OCTOBER 2006:

Mike McKeon                    Severn Trent      0207 353 4200     
Group Finance Director                                             
                                                                   
Jonathan Davies                Severn Trent      0207 353 4200     
Head of Investor Relations                                         
                                                                   
Peter Gavan                    Severn Trent      07901 517 447     
Director of Corporate Affairs                                      
                                                                   
David Trenchard                Tulchan           0207 353 4200     
Peter Hewer                                                        

AFTER 3 OCTOBER 2006:

Mike McKeon                    Severn Trent      024 7665 6169     
Group Finance Director                                             
                                                                   
Jonathan Davies                Severn Trent      0121 722 4295     
Head of Investor Relations                                         
                                                                   
Peter Gavan                    Severn Trent      024 7665 6114     
Director of Corporate Affairs                                      
                                                                   
David Trenchard                Tulchan           0207 353 4200     
Peter Hewer                                                        

Footnotes:

1    The financial statements presented have been prepared in accordance with  
     IFRS, as endorsed by the EU, and interpretations issued by the            
     International Financial Reporting Interpretations Committee (IFRIC) or its
     predecessor body. The group's IFRS accounting policies are set out on     
     pages 57 to 63 of its 2006 Annual Report.                                 
                                                                               
2    PBIT is profit before interest and tax and excluding exceptional items.   
                                                                               
3    This document contains certain "forward-looking statements" with respect  
     to Severn Trent's financial condition, results of operations and business 
     and certain of Severn Trent's plans and objectives with respect to these  
     items.                                                                    
                                                                               
     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 the Group operates; changes 
     in the regulatory and competition frameworks in which the Group operates; 
     the impact of legal or other proceedings against or which affect the      
     Group; 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 any other    
     member of the Group or persons acting on their behalf are expressly       
     qualified in their entirety by the factors referred to above. Severn Trent
     does not intend to update these forward-looking statements.