SEVERN TRENT WATER ANNOUNCE 600 WORKERS WILL LOSE THEIR JOBS OVER THE NEXT 5 YEARS

The losses will apply to both permanent and agency staff. Job losses had been expected following the company’s decision last year to slim down its operation and focus solely on its water business.

The GMB is extremely saddened by the announcement today of the loss of 600 jobs in Severn Trent water.  We are in contact with the company and will ensure that full consultation takes place.  It is early days and there is very little that can be expanded upon from the statement made by the company.

The GMB lead officer, Kevin Clark, said ‘I am disappointed that it has come to this, however, our members can be assured that I will do all I can to ensure that the company consults and explore every opportunity to reduce the number full time employees that are exposed to this risk’.  The 600 are expected to be from across the board.  ‘We will of course expect the company to justify the number involved’ Kevin added.

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For further information please contact Kevin Clarke, GMB Officer or Samantha Jones, Press Officer on Tel: 0121 550 4888.

Notes to Editors:

Statement made by Severn Trent:

Severn Trent Plc is issuing the following trading update prior to announcing its full year results on Wednesday 6 June 2007.

The Board considers that the Group has delivered a trading performance in the year which is consistent with its expectations.

The integration of the Plc head office and Severn Trent Water teams is progressing.  As part of this, and as previously announced, the Severn Trent Plc and Severn Trent Water Boards of Directors, whilst separately constituted, now have the same membership.

Management is developing plans to identify improvement opportunities across all areas to achieve higher standards.  These process improvements are expected to result in staffing levels (permanent and agency) in Severn Trent Water being reduced by around 600 posts over the next five years.  Further details of our improvement plans will be outlined at the full year results announcement in June.

Water and Sewerage

Profit before Interest and Tax (PBIT) for Severn Trent Water for the year is expected to be some 1% - 3% higher than the prior year (£400.4m), consistent with prior guidance.

Infrastructure renewals expenditure at Severn Trent Water is expected to be in the region of £95m - £100m for the year.

Gross capital expenditure under UK GAAP, (including infrastructure maintenance expenditure) is expected to be around £500m for the full year 2006/07.

Following the restructuring of the Group last year, management is now focusing on improving performance in the Water business.  While performance has been good with respect to water quality and health and safety, Severn Trent Water has needed to improve in respect of leakage, customer service and controls.

Following a challenging summer focused on maintaining water supplies, increased investment in leakage control has delivered a downward leakage trend.  It will be some months before the annual average for 2006/07 can be determined against the Ofwat target but in March Severn Trent Water achieved a weekly level of leakage commensurate with the Ofwat target for 2006/07.

Severn Trent Water’s raw water storage position is normal for this time of year.