Offer by Aqualnvest

RNS Number:5148E
South Staffordshire Plc
27 October 2004



                                                                 27 October 2004



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN



                             Recommended Cash Offer



                                       by



 Dresdner Kleinwort Wasserstein on behalf of AquaInvest Acquisitions Limited 
                              (" AquaInvest") for



                South Staffordshire Plc ("South Staffordshire")



Summary of the Offer



The boards of AquaInvest and South Staffordshire today announce that they have
reached agreement on the terms of a recommended cash offer to be made by
Dresdner Kleinwort Wasserstein, on behalf of AquaInvest, to acquire the whole of
the issued and to be issued share capital of South Staffordshire.



AquaInvest, which has been incorporated for the purpose of making the Offer, is
ultimately beneficially owned and principally funded by the First Islamic
Investment Bank E.C. ("First Islamic"), a Bahrain-based company. First Islamic
arranges and invests in corporate, real estate and asset-based investments.
Crescent Capital, a subsidiary of First Islamic, is responsible for identifying
and structuring such investment opportunities.



*    The Offer is unanimously recommended by the South Staffordshire Directors.



*    The Offer is 1120 pence for each South Staffordshire Share, valuing the
existing issued share capital of South Staffordshire at approximately #142.6
million and representing an enterprise value of approximately #236.7 million
based on net debt of #94.1 million at 31 March 2004.



*       The Offer represents a premium of 27 per cent. over the Closing Price of
a South Staffordshire Share of 880 pence on 18 October 2004, being the day prior
to the day on which South Staffordshire announced that it was in talks that
might lead to an offer.



*       In aggregate, irrevocable undertakings and statements of intention to
accept the Offer have been received in respect of 4,661,447 South Staffordshire
Shares, representing approximately 36.6 per cent. of South Staffordshire's
existing issued share capital.



Commenting on the Offer, Asim Zafar of AquaInvest, said:



"We are delighted to be making this investment. We look forward to working with
South Staffordshire's strong management team in further developing the South
Staffordshire water business as well as in growing South Staffordshire's other
activities to allow them to realise their true potential."



Commenting on the Offer, David Sankey, Chairman of South Staffordshire, said:



"I believe this offer reflects both the value of our regulated water business
and the growth prospects of our non-regulated businesses and is thus a fair
result for our institutional and private shareholders. It also reflects very
favourably on our employees, on whom AquaInvest will be depending to continue
the record of financial success and service to our customers for which South
Staffordshire is known.



"The management of South Staffordshire looks forward to working with AquaInvest
to continue to develop the regulated and non-regulated businesses."




Enquiries:


AquaInvest                                                  South Staffordshire
Asim Zafar, Director                                        David Sankey, Chairman
Henry Thompson, Director                                    Adrian Page, Group Finance Director

Tel:  [phone]                                         Tel: [phone]

Dresdner Kleinwort Wasserstein                              Rothschild
(Financial adviser to First Islamic and AquaInvest)         (Joint financial adviser to South Staffordshire)
Anand Jagannathan, Managing Director                        Tim Hancock, Managing Director
Christian Littlewood, Director                              Richard Guest, Director

Tel:  [phone]                                         Tel: [phone]

Financial Dynamics                                          Cazenove
(Financial PR advisers)                                     (Joint financial adviser and broker to South
                                                            Staffordshire)
Andrew Dowler , Managing Director                           Edmund Byers, Managing Director
Andrew  Waterworth, Partner                                 Robert Constant, Director
                                                            Shona Graham, Director

Tel:  [phone]                                         Tel: [phone]
                                                            



Terms used in this summary shall have the same meaning given to them in the full
Announcement.



The Offer Document and Form of Acceptance are expected to be posted to existing
South Staffordshire Shareholders today, other than to South Staffordshire
Shareholders in a Restricted Jurisdiction.



This Announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities. The Offer will be made solely by the Offer
Document and the Form of Acceptance, which will contain the full terms and
conditions of the Offer, including details of how the Offer may be accepted.



Unless otherwise determined by AquaInvest and permitted by applicable law and
regulation, the Offer will not be made, directly or indirectly, in or into, or
by the use of the mails of, or by any means or instrumentality (including,
without limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce of, or of any facility of a national, state or
other securities exchange of, a Restricted Jurisdiction (including the United
States, Canada, Australia and Japan) and the Offer will not be capable of
acceptance by any such use, means, instrumentality or facility or from within a
Restricted Jurisdiction.



Dresdner Kleinwort Wasserstein Limited, which is authorised and regulated in the
United Kingdom by the FSA, is acting exclusively as financial adviser to First
Islamic and AquaInvest in connection with the Offer and Announcement and no-one
else and will not be responsible to anyone other than First Islamic and
AquaInvest for providing the protections afforded to customers of Dresdner
Kleinwort Wasserstein Limited, or for affording advice in relation to the Offer
or in relation to the contents of this Announcement or any transaction or
arrangement referred to herein.



Rothschild, which is authorised and regulated in the United Kingdom by the FSA,
is acting exclusively as joint financial adviser to South Staffordshire, and
no-one else, in connection with the Offer and Announcement and will not be
responsible to anyone other than South Staffordshire for providing the
protections afforded to customers of Rothschild, or for providing advice in
relation to the Offer or in relation to the contents of this Announcement or any
transaction or arrangement referred to herein.



Cazenove, which is authorised and regulated in the United Kingdom by the FSA, is
acting exclusively as broker and joint financial adviser to South Staffordshire,
and no-one else, in connection with the Offer and Announcement and will not be
responsible to anyone other than South Staffordshire for providing the
protections afforded to customers of Cazenove, or for providing advice in
relation to the Offer or in relation to the contents of this Announcement or any
transaction or arrangement referred to herein.



If you are in any doubt about the action you should take, you are recommended to
seek your own personal financial advice immediately from your stockbroker, bank
manager, solicitor, accountant or other independent financial adviser duly
authorised under the Financial Services and Markets Act 2000 if you are resident
in the United Kingdom or, if not, from another appropriately authorised
independent financial adviser.






                                                                 27 October 2004



NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, IN OR INTO
THE UNITED STATES, CANADA, AUSTRALIA OR JAPAN



                             Recommended Cash Offer



                                       by



 Dresdner Kleinwort Wasserstein on behalf of AquaInvest Acquisitions Limited 
                             (" AquaInvest") for



             South Staffordshire Plc ("South Staffordshire")



1.   Introduction



The boards of AquaInvest and South Staffordshire are today pleased to announce
that they have reached agreement on the terms of a recommended cash offer to be
made by Dresdner Kleinwort Wasserstein, on behalf of AquaInvest, to acquire the
whole of the issued and to be issued share capital of South Staffordshire.



AquaInvest, which has been incorporated for the purpose of making the Offer, is
ultimately beneficially owned and principally funded by First Islamic, a
Bahrain-based company. First Islamic arranges and invests in corporate, real
estate and asset-based investments. Crescent Capital, a subsidiary of First
Islamic, is responsible for identifying and structuring such investment
opportunities.



2.       The Offer



The Offer, which will be subject, inter alia, to the terms and conditions set
out in the Offer Document and the Form of Acceptance, will be made by Dresdner
Kleinwort Wasserstein, on behalf of AquaInvest, on the following basis:



for each South Staffordshire Share               1120 pence in cash



The Offer values the existing issued share capital of South Staffordshire at
approximately #142.6 million and represents an enterprise value of approximately
#236.7 million based on net debt of #94.1 million at 31 March 2004. The Offer
represents a premium of 27 per cent. over the Closing Price of a South
Staffordshire Share of 880 pence on 18 October 2004, being the day prior to the
day on which South Staffordshire announced that it was in talks that might lead
to an offer and a premium of 16 per cent. over the Closing Price of a South
Staffordshire Share of 965 pence on 26 October 2004, being the last Dealing Day
prior to this Announcement.



The South Staffordshire Shares will be acquired by AquaInvest with the benefit
of all future dividends and accordingly South Staffordshire Shareholders will
not be entitled to receive an interim dividend for the period to 30 September
2004 as this has been reflected in the Offer price.



AquaInvest has received irrevocable undertakings or statements of intention to
accept the Offer in respect of an aggregate of 4,661,447 South Staffordshire
Shares, representing approximately 36.6 per cent. of South Staffordshire's
existing issued share capital.  Further details are set out below.



Details of further terms and conditions of the Offer are set out below and in
Appendix I of this Announcement.  The full terms of the Offer will be set out in
the Offer Document and Form of Acceptance.



3.   Recommendation



The South Staffordshire Directors, who have been so advised by Rothschild and
Cazenove, consider the terms of the Offer to be fair and reasonable. In
providing their advice, Rothschild and Cazenove each have taken into account the
commercial assessments of the South Staffordshire Directors.



The South Staffordshire Directors unanimously recommend South Staffordshire
Shareholders to accept the Offer, and they have irrevocably undertaken to accept
the Offer in respect of their entire beneficial holdings of South Staffordshire
Shares amounting, in aggregate, to approximately 0.1 per cent. of the existing
issued share capital of South Staffordshire.







4.   Background to and reasons for the Offer



AquaInvest management believes that the acquisition of South Staffordshire
represents an opportunity to achieve stable returns from its regulated water
business, as well as capital growth from the development of the non-regulated
side of its business.  AquaInvest believes that South Staffordshire's strong and
capable management has consistently delivered good value to its shareholders.
The regulated business provides a stable and predictable cashflow in a
transparent and stable regulatory environment.  In addition, the non-regulated
businesses offer good growth opportunities.



It is AquaInvest's intention to support South Staffordshire's management in
further developing the regulated business and growing the non-regulated
businesses.



5.   Irrevocable undertakings to accept the Offer



AquaInvest has received irrevocable undertakings from all of the South
Staffordshire Directors who beneficially own existing South Staffordshire Shares
to accept, or procure the acceptance of, the Offer in respect of an aggregate of
11,462 South Staffordshire Shares, representing approximately 0.1 per cent. of
South Staffordshire's existing issued share capital.  All of these irrevocable
undertakings to accept the Offer are binding, even if a higher competing offer
is announced by a third party, unless the Offer lapses or is withdrawn.



AquaInvest has also received irrevocable undertakings from certain institutional
shareholders of South Staffordshire to accept, or procure the acceptance of, the
Offer in respect of an aggregate of 2,851,896 South Staffordshire Shares,
representing approximately 22.4 per cent. of South Staffordshire's existing
issued share capital.  Of these, undertakings in respect of 485,000 shares will
cease to be binding in the event of an offer for the issued share capital of
South Staffordshire by another party which has a value, upon announcement, which
exceeds the value of the Offer by at least 10 per cent. and where AquaInvest
does not make a higher revised offer. The balance will cease to be binding in
the event of an offer for the issued share capital of South Staffordshire by
another party which has a value, upon announcement, which exceeds the value of
the Offer.



AquaInvest has also received letters of intent from certain institutional
shareholders of South Staffordshire to accept, or procure the acceptance of, the
Offer in respect of 1,798,089 South Staffordshire Shares, representing
approximately 14.1 per cent. of South Staffordshire's existing issued share
capital.



Therefore, in aggregate, irrevocable undertakings to accept, or procure the
acceptance of, the Offer, or statements of intention to accept the Offer, have
been received in respect of 4,661,447 South Staffordshire Shares, representing
approximately 36.6 per cent. of South Staffordshire's existing issued share
capital.



6.   Information on AquaInvest, the financing of the Offer, Crescent Capital and
First Islamic



Information on AquaInvest and the financing of the Offer



AquaInvest is a private company, incorporated in England and Wales on 18 August
2004, for the purpose of making the Offer. AquaInvest has not traded since
incorporation and its sole current activity relates to the making of the Offer.



AquaInvest is ultimately beneficially wholly owned by First Islamic. The
directors of AquaInvest are Asim Zafar, Henry Thompson and Charles Ogburn, who
are executive directors of the First Islamic group.



The maximum cash consideration payable by AquaInvest under the terms of the
Offer (including South Staffordshire Shares capable of being issued pursuant to
the exercise of options under the South Staffordshire Share Schemes) will be
approximately #144.3 million.



Funding for the acquisition will be primarily provided by First Islamic.  In
addition, AquaInvest has entered into debt facilities of #31.2 million which
have been arranged and underwritten by Dresdner Kleinwort Wasserstein.



Further information in relation to the financing of the Offer will be set out in
the Offer Document.



Information on Crescent Capital and First Islamic



Crescent Capital, wholly owned by First Islamic, identifies opportunities for
First Islamic and its co-investors to acquire interests in operating companies.
Crescent Capital structures and advises First Islamic and its co-investors with
respect to investments in corporate, real estate and asset-based investments and
provides management and strategic advice to such operating companies and joint
venture vehicles.



Founded in 1996, First Islamic is headquartered in Bahrain with US and UK
subsidiary offices in Atlanta and London, respectively, and has completed
transactions with a total value in excess of US$6.0 billion, including more than
US$1.5 billion in Europe. Its main lines of business are corporate investment,
real estate investment and asset-based investment. In conducting its investment
activities, First Islamic acts as principal, utilising its own funds (or funds
under its management) to underwrite investment transactions. First Islamic then
seeks to place a majority of the equity with its investor base which comprises
high net worth individuals and institutions across the Middle East. First
Islamic typically retains between 5 per cent. and 20 per cent. of the beneficial
ownership of its investments.



First Islamic's corporate investment objective is to build a diversified
portfolio of significant equity interests across a range of sectors. First
Islamic invests in companies with strong management teams in businesses with a
sustainable value proposition.



First Islamic's current corporate investment portfolio includes, amongst others:



*         Vogica, a leading retailer and wholesaler of kitchens and bathrooms in
France, acquired in October 2004. The total transaction value has not been
disclosed;

*         Loehmann's, a leading discount specialty retailer of designer men's
and women's fashion apparel and accessories in the United States, acquired for
US$186 million in October 2004; and

*         Cirrus Industries Inc., a fast-growing manufacturer of single engine
aircraft, acquired in August 2001 for US$142 million.



First Islamic's real estate and asset-based investment strategy is predominantly
based on creating joint ventures or strategic partnerships with leading
operators across a range of asset classes.  Current investments include:



*         a joint venture with RWE Innogy Plc and an international investor to
acquire and develop 430 megawatts of wind farms in the UK for #410 million.  The
transaction was completed in early 2004;

*         a joint venture with Shurgard Europe to develop up to 38 self-storage
centres for up to Euro232 million; and

*         three joint ventures with ProLogis to acquire, in aggregate, 78
industrial distribution facilities throughout the United States for US$604
million.



As at 31 December 2003, First Islamic had assets under management of US$3.6
billion, total assets of US$818.0 million and had generated net income of
US$44.8 million in the year then ended.



7.   Information on South Staffordshire



South Staffordshire owns regulated operations in the water sector together with
complementary non-regulated businesses.



South Staffordshire Water is the principal subsidiary of South Staffordshire.
Its main activity is the regulated supply of water, but not sewerage services.
South Staffordshire Water supplies water in the Midlands to a population of 1.2
million in both urban and rural areas covering 1,500 sq. km and to commercial
customers. Of the 22 water companies in England and Wales, South Staffordshire
Water has the second lowest average annual household bill (some 21 per cent.
below the industry average), and the third highest levels of service for the
year to 31 March 2004 with a score of 285 out of a possible maximum of 288, as
measured by Ofwat in its overall performance assessment. Its operating cost base
is one of the most efficient, ranked second in the industry in 2002/03 by Ofwat.



South Staffordshire's principal non-regulated businesses are Echo, Rapid,
Underground Pipeline Services and Aqua Direct. Echo provides outsourced customer
contact management and billing activities for South Staffordshire and a number
of other external water utility and non-water industry customers. Rapid provides
development and implementation of customer contact and billing software for the
UK water industry. Underground Pipeline Services repairs and replaces water
mains, principally for South Staffordshire Water. Aqua Direct is a spring and
mineral water business.



In the year ended 31 March 2004, South Staffordshire reported turnover of #72.8
million and a profit before tax of #14.5 million.  As at 31 March 2004, South
Staffordshire had net assets of #28.4 million.



8.   Directors, management and employees



The AquaInvest Directors have confirmed that the existing senior management team
of South Staffordshire will remain in place and that they have no current
intention to change the day to day operations of the business. They have also
confirmed that AquaInvest will safeguard employee rights, including pension
rights, and that it is committed to supporting South Staffordshire's management
in delivering performance in the regulated business and to growing the
non-regulated activities.



Save for Roger Gabb, the existing board members will remain in place. Roger Gabb
has indicated his intention to retire from the board of South Staffordshire upon
the Offer becoming or being declared unconditional in all respects, but will
continue to act as a consultant to the board of South Staffordshire in relation
to Aqua Direct.



9.       South Staffordshire Share Schemes



Upon the Offer being declared unconditional in all respects, AquaInvest has
agreed to make the following proposals to holders of options and awards under
the South Staffordshire Share Schemes:

*         option holders under the South Staffordshire Sharesave Scheme, may
exercise their options to the extent of their savings for a limited period when
the Offer becomes unconditional and will be able to accept the Offer in respect
of the resulting shares. As an alternative to exercise, option holders who
continue to save under their savings contract will be entitled to a compensation
payment at the relevant maturity date of that savings contract subject to
remaining employed by the South Staffordshire Group at the payment date. The
payment will be equal to the gain option holders would have realised had they
been able to exercise their options in full and accept the Offer.

*         awards and options granted under the South Staffordshire 2004 Long
Term Incentive Plan and the South Staffordshire 2004 Discretionary Share Option
Plan will become exercisable in full for a limited period when the Offer becomes
unconditional and holders of awards and options will be able to accept the Offer
in respect of the resulting shares.

Upon the Offer being declared unconditional in all respects, AquaInvest will
write to all participants in the South Staffordshire Share Schemes to provide
them with further details of these arrangements.



10.   Inducement fee



As it was a pre-condition of the Offer, South Staffordshire has agreed to pay
AquaInvest, in certain limited circumstances, an inducement fee of #1.4 million
(equivalent to one per cent. of the Offer value). This is only payable if the
Offer lapses or is withdrawn and prior to that either any person who is not
connected with First Islamic publicly announces an intention to acquire South
Staffordshire, in accordance with the provisions of the City Code (or makes
proposals which would result in a change of control of South Staffordshire) and
that transaction (or any other transaction announced within 60 days of the
Announcement) becomes or is declared wholly unconditional or is completed, or,
other than following the announcement of such a transaction, the South
Staffordshire Directors withdraw their recommendation to shareholders to accept
the Offer.



11.   Disclosure of interests in South Staffordshire



Neither AquaInvest, nor its directors nor, so far as AquaInvest is aware, any
person deemed to be acting in concert with AquaInvest owns or controls any South
Staffordshire Shares or has any options to acquire South Staffordshire Shares.
Neither AquaInvest nor, so far as AquaInvest is aware, any person acting in
concert with AquaInvest for the purposes of the Offer has any arrangement in
relation to South Staffordshire Shares or any securities convertible into or
exchangeable into South Staffordshire Shares or options (including traded
options) in respect of, or derivatives referenced to, any such shares.  For
these purposes, "arrangement" includes any indemnity or option arrangement, any
agreement or understanding, formal or informal, of whatever nature, relating to
South Staffordshire Shares which may be an inducement to deal or refrain from
dealing in such shares. In the interests of confidentiality prior to this
Announcement, AquaInvest has not made any enquiries in this respect of certain
parties who may be presumed by the Panel to be acting in concert with AquaInvest
for the purposes of the Offer.



12.     Further details of the Offer



The Offer will extend to all existing issued South Staffordshire Shares and to
any South Staffordshire Shares which are unconditionally allotted and fully paid
(or credited as fully paid) while the Offer remains open for acceptance (or such
earlier date, not being earlier than the date on which the Offer becomes
unconditional as to acceptances or, if later, the First Closing Date, as
AquaInvest may, subject to the City Code, decide), including such shares which
are unconditionally allotted or issued or subscribed for upon the exercise of
any options or awards granted under the South Staffordshire Share Schemes.



The South Staffordshire Shares will be acquired by AquaInvest fully paid and
free from all liens, charges, equitable interests, encumbrances and any other
third party rights of any nature whatsoever and together with all rights now or
hereafter attaching to them, including the right to receive in full and retain
all dividends and other distributions (if any) subsequently declared, made or
paid.



The Offer will be subject to the conditions of the Offer set out in Appendix I,
and the conditions and further terms that will be set out in the Offer Document
and in the Form of Acceptance.



13.   Compulsory Acquisition and cancellation of listing



If AquaInvest receives acceptances under the Offer in respect of, and/or
otherwise acquires, 90 per cent. or more of the South Staffordshire Shares to
which the Offer relates and the Offer becomes unconditional in all respects,
AquaInvest intends to exercise its rights pursuant to the provisions of sections
428 to 430F (inclusive) of the Act to acquire compulsorily South Staffordshire
Shares in respect of which acceptances have not then been received.



It is intended that, following the Offer becoming or being declared
unconditional in all respects and subject to any applicable requirements of the
UK Listing Authority, AquaInvest will procure that South Staffordshire applies
to the UK Listing Authority for the listing of the South Staffordshire Shares on
the Official List to be cancelled and to the London Stock Exchange for the
admission to trading of the South Staffordshire Shares to be cancelled. Such
cancellations will take effect no earlier than 20 business days after the Offer
becomes or is declared unconditional in all respects. Delisting would
significantly reduce the liquidity and marketability of any South Staffordshire
Shares in respect of which acceptances of the Offer have not been submitted.



14.     Overseas Shareholders



Unless otherwise determined by AquaInvest and permitted by applicable law and
regulation, the Offer will not be made, directly or indirectly, in or into, or
by the use of the mails of, or by any means or instrumentality (including,
without limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce of, or of any facility of a national, state or
other securities exchange of, a Restricted Jurisdiction (including the United
States, Canada, Australia and Japan) and the Offer will not be capable of
acceptance by any such use, means, instrumentality or facility or from within a
Restricted Jurisdiction. Accordingly, copies of this Announcement and formal
documentation relating to the Offer are not being and must not be, directly or
indirectly, mailed or otherwise forwarded, distributed or sent in or into or
from a Restricted Jurisdiction, including to South Staffordshire Shareholders
with addresses in a Restricted Jurisdiction or to persons whom AquaInvest knows
to be custodians, nominees or trustees holding South Staffordshire Shares for
persons in a Restricted Jurisdiction. Doing so may render invalid any related
purported acceptance of the Offer. Persons receiving this Announcement and
formal documentation relating to the Offer (including, without limitation,
custodians, nominees and trustees) must not mail or otherwise forward,
distribute or send them in or into or from a Restricted Jurisdiction. The
availability of the Offer to persons who are not resident in the United Kingdom
may be affected by the laws of the relevant jurisdictions. Persons who are not
resident in the United Kingdom should inform themselves about and observe any
applicable requirements. Further details in relation to Overseas Shareholders
will be contained in the Offer Document.



15.     General



The Offer Document and Form of Acceptance are expected to be posted to South
Staffordshire Shareholders today, other than to South Staffordshire Shareholders
in a Restricted Jurisdiction.



The Offer will be subject to the applicable requirements of the City Code and
the Panel, the London Stock Exchange and the UK Listing Authority.



16.            Appendices



(a)               Appendix I to this Announcement contains the conditions and a
summary of certain further terms of the Offer.

(b)               Appendix II to this Announcement contains definitions of
certain expressions used in this Announcement.



Enquiries:


AquaInvest                                                  South Staffordshire
Asim Zafar, Director                                        David Sankey, Chairman
Henry Thompson, Director                                    Adrian Page, Group Finance Director

Tel:  [phone]                                         Tel: [phone]

Dresdner Kleinwort Wasserstein                              Rothschild
(Financial adviser to First Islamic and AquaInvest)         (Joint financial adviser to South Staffordshire)
Anand Jagannathan, Managing Director                        Tim Hancock, Managing Director
Christian Littlewood, Director                              Richard Guest, Director

Tel:  [phone]                                         Tel: [phone]

Financial Dynamics                                          Cazenove
(Financial PR advisers)                                     (Joint financial adviser and broker to South
                                                            Staffordshire)
Andrew Dowler , Managing Director                           Edmund Byers, Managing Director
Andrew Waterworth, Partner                                  Robert Constant, Director
                                                            Shona Graham, Director

Tel:  [phone]                                         Tel: [phone]
                                                            



This Announcement does not constitute an offer or an invitation to purchase or
subscribe for any securities. The Offer will be made solely by the Offer
Document and the Form of Acceptance, which will contain the full terms and
conditions of the Offer, including details of how the Offer may be accepted.



Unless otherwise determined by AquaInvest and permitted by applicable law and
regulation, the Offer will not be made, directly or indirectly, in or into, or
by the use of the mails of or by any means or instrumentality (including,
without limitation, facsimile transmission, telephone and the internet) of
interstate or foreign commerce of, or of any facility of a national, state or
other securities exchange of, a Restricted Jurisdiction (including the United
States, Canada, Australia and Japan) and the Offer will not be capable of
acceptance by any such use, means, instrumentality or facility or from within a
Restricted Jurisdiction.



Dresdner Kleinwort Wasserstein Limited, which is authorised and regulated in the
United Kingdom by the FSA, is acting exclusively as financial adviser to First
Islamic and AquaInvest in connection with the Offer and Announcement and no one
else and will not be responsible to anyone other than First Islamic and
AquaInvest for providing the protections afforded to customers of Dresdner
Kleinwort Wasserstein Limited or for affording advice in relation to the Offer
nor in relation to the contents of this Announcement or any transaction or
arrangement referred to herein.



Rothschild, which is authorised and regulated in the United Kingdom by the FSA,
is acting exclusively as joint financial adviser to South Staffordshire, and no
one else, in connection with the Offer and Announcement and will not be
responsible to anyone other than South Staffordshire for providing the
protections afforded to customers of Rothschild, or for providing advice in
relation to the Offer or in relation to the contents of this Announcement or any
transaction or arrangement referred to herein.



Cazenove, which is authorised and regulated in the United Kingdom by the FSA, is
acting exclusively as broker and joint financial adviser to South Staffordshire,
and no one else, in connection with the Offer and Announcement and will not be
responsible to anyone other than South Staffordshire for providing the
protections afforded to customers of Cazenove, or for providing advice in
relation to the Offer or in relation to the contents of this Announcement or any
transaction or arrangement referred to herein.



If you are in any doubt about the action you should take, you are recommended to
seek your own personal financial advice immediately from your stockbroker, bank
manager, solicitor, accountant or other independent financial adviser authorised
under the Financial Services and Market Act 2000 if you are resident in the
United Kingdom or, if not, from another appropriately authorised independent
financial adviser.



                                   APPENDIX I

               Conditions and certain further terms of the Offer



Part A: Conditions of the Offer

The Offer, which will be made by Dresdner Kleinwort Wasserstein on behalf of
AquaInvest, will be subject to the applicable rules and regulations of the
Financial Services Authority and the City Code.

The Offer will be subject to the following conditions:

(a)               valid acceptances of the Offer being received (and not, where
permitted, withdrawn) by no later than 3.00 p.m. on the First Closing Date or
such later time(s) and/or date(s) as AquaInvest may, subject to the rules of the
City Code, decide in respect of not less than 90 per cent. (or such lesser
percentage as AquaInvest may decide) in nominal value of the South Staffordshire
Shares to which the Offer relates, provided that this condition will not be
satisfied unless AquaInvest and/or any of its wholly-owned subsidiaries shall
have acquired, or agreed to acquire (whether pursuant to the Offer or
otherwise), South Staffordshire Shares carrying, in aggregate, more than 50 per
cent. of the voting rights normally exercisable at a general meeting of South
Staffordshire, including for this purpose (to the extent, if any, required by
the Panel) any such voting rights attaching to any South Staffordshire Shares
that are unconditionally allotted or issued before the Offer becomes or is
declared unconditional as to acceptances whether pursuant to the exercise of any
outstanding subscription or conversion rights or otherwise, and for the purposes
of this condition:

(i)                  South Staffordshire Shares which have been unconditionally
allotted but not issued shall be deemed to carry the voting rights which they
will carry upon issue;

(ii)                the expression 'South Staffordshire Shares to which the
Offer relates' shall be construed in accordance with sections 428 to 430F of the
Companies Act; and

(iii)               valid acceptances also shall be treated as having been
received in respect of any South Staffordshire Shares which AquaInvest shall,
pursuant to section 429(8) of the Companies Act, be treated as having acquired
or contracted to acquire other than by virtue of acceptance of the Offer;

(b)

(i)                  the Office of Fair Trading ("OFT") indicating in terms
reasonably satisfactory to AquaInvest that it does not believe that the
Acquisition creates a relevant merger situation within the meaning of section 23
of the Enterprise Act 2002 ("EA"); or

(ii)                the OFT indicating in terms reasonably satisfactory to
AquaInvest that it has decided not to refer the Acquisition or any part of it to
the Competition Commission ("CC"); or

(iii)               the period for considering any merger notice given to the
OFT under section 96 of the EA by AquaInvest having expired without any such
reference to the CC being made, provided that sections 100(1)(a), (d) and (f) of
the EA do not apply in relation to that merger notice;

(c)               receipt by AquaInvest, in terms reasonably satisfactory to
AquaInvest and to South Staffordshire, of clearance from the Inland Revenue
under Section 215(2) of the Income and Corporation Taxes Act 1988 in relation to
the Offer;

(d)               other than by, in relation to, or in respect of the Office of
Water Services ("Ofwat") or the Director General of Water Services ("DGWS"), all
necessary notifications and filings having been made, all or any applicable
waiting or other time periods (including any extensions of them) under any
applicable legislation of any jurisdiction having expired, lapsed or terminated
(as appropriate) and all authorisations, orders, grants, consents, clearances,
confirmations, licences, permissions and approvals ("Authorisations") necessary
or appropriate for or in respect of the Offer or the Acquisition having been
obtained in terms reasonably satisfactory to AquaInvest and all such
Authorisations remaining in full force and effect and there being no intimation
of an intention to revoke, or appeal the grant of, the same at the time at which
the Offer becomes otherwise unconditional;

(e)               other than by, in respect of, or in relation to Ofwat or the
DGWS, no central bank, government or governmental, quasi-governmental,
supranational, statutory, regulatory, environmental or investigative body,
institution, trade agency, court, professional association, or any other body or
person in any jurisdiction (each a "Third Party") having decided to take,
institute or threaten any action, proceeding, suit, investigation, enquiry or
reference, or having required any action to be taken or otherwise having done
anything or having enacted, made or proposed any statute, regulation, decision
or order and there not continuing to be outstanding any statute, regulation,
decision or order which would or might reasonably be expected to:

(i)                  make the Offer, its implementation or the Acquisition void,
unenforceable or illegal;

(ii)                restrict, materially delay or otherwise interfere with the
implementation of, impose additional conditions or obligations with respect to,
or otherwise impede, challenge or interfere with or require amendment to the
terms of, the Offer or the Acquisition;

(iii)               require, prevent or delay the divestiture or alter the terms
of any proposed divestiture by AquaInvest or any member of the AquaInvest Group
or by any member of the Wider South Staffordshire Group of all or any part of
their respective businesses, assets or properties, or impose any limitation on
their ability to conduct their respective businesses (or any part of them) or to
own their respective assets or properties or any part of them, in each such case
in a manner which is material in the context of the Wider South Staffordshire
Group taken as a whole or material to AquaInvest in the context of the Offer;

(iv)               impose any limitation on, or result in any material delay in,
the ability of any member of the AquaInvest Group or any member of the South
Staffordshire Group to acquire or hold South Staffordshire Shares or other
securities in any member of the Wider South Staffordshire Group or to exercise
effectively, directly or indirectly, all or any rights of ownership in respect
of shares or other securities in, or to exercise management control over, any
member of the Wider South Staffordshire Group which, in any such case, is
material in the context of the Wider South Staffordshire Group taken as a whole
or material to AquaInvest in the context of the Offer;

(v)                 result in any member of the Wider South Staffordshire Group
ceasing to be able to carry on business under any name under which it presently
does so which is material in the context of the Wider South Staffordshire Group
taken as a whole or material to AquaInvest in the context of the Offer; or

(vi)               otherwise materially and adversely affect the business,
financial or trading position, profits or prospects of any member of the
AquaInvest Group or of the Wider South Staffordshire Group,

and all applicable waiting and other time periods during which any such Third
Party could decide to take, institute, implement or threaten any such action,
proceeding, suit, investigation, enquiry or reference or otherwise intervene as
described in this paragraph (e) having expired, lapsed or been terminated;

(f)                 save as Disclosed, there being no provision of any
arrangement, agreement, lease, licence (other than the Instrument of Appointment
of South Staffordshire Water as a water undertaker under the Water Industry Act
1991 (the "Licence")), permit or other instrument to which any member of the
Wider South Staffordshire Group is a party or by or to which any such member or
any of its assets is or may be bound or be subject and which, as a consequence
of the making or implementation of the Offer or the Acquisition or because of a
change in the control of any member of the South Staffordshire Group or
otherwise, could result in, to an extent which is material in the context of the
Wider South Staffordshire Group taken as a whole or material to AquaInvest in
the context of the Offer:

(i)                  any monies borrowed by, or any other indebtedness (actual
or contingent) of, or any grant available to, any member of the Wider South
Staffordshire Group being or becoming repayable, or being capable of being
declared repayable immediately or prior to their or its stated maturity, or the
ability of any such member to borrow monies or incur any indebtedness being
withdrawn or inhibited or becoming capable of being withdrawn;

(ii)                the creation or enforcement of any mortgage, charge or other
security interest, over the whole or any part of the business, property, assets
or interests of any member of the Wider South Staffordshire Group or any such
mortgage, charge or other security interest (whenever arising or having arisen)
becoming enforceable;

(iii)               the rights, liabilities, obligations, interests or business
of any member of the Wider South Staffordshire Group under any such arrangement,
agreement, licence, permit, lease or instrument or the interests or business of
any member of the Wider South Staffordshire Group in or with any other firm,
company, body or person (or any agreement or arrangement relating to any such
interests or business) being terminated or adversely modified or affected or any
onerous obligation or liability arising or any adverse action being taken
thereunder;

(iv)               any assets or interests of, or any asset the use of which is
enjoyed by, any member of the Wider South Staffordshire Group being or falling
to be disposed of or charged, or ceasing to be available to any such member or
any right arising under which any such asset or interest could be required to be
disposed of or charged or could cease to be available to any such member;

(v)                 any member of the Wider South Staffordshire Group ceasing to
be able to carry on business under any name under which it presently does so;

(vi)               the business, financial or trading position, profits or
prospects of any member of the Wider South Staffordshire Group being prejudiced
or adversely affected; or

(vii)              the creation of any liability (actual or contingent) by any
member of the Wider South Staffordshire Group,

and no event having occurred which, under any provision of any arrangement,
agreement, lease, licence, permit or other instrument to which any member of the
Wider South Staffordshire Group is a party or by which any such member or any of
its assets may be bound or be subject, could result in any events or
circumstances as are referred to in sub-paragraphs (i) to (vii) of this
paragraph (f) to an extent which is material in the context of the Wider South
Staffordshire Group taken as a whole or material to AquaInvest in the context of
the Offer;

(g)               no member of the South Staffordshire Group having since 31
March 2004, being the date to which the Annual Accounts were made up, save as
Disclosed:

(i)                  issued or agreed to issue or authorised or proposed or
announced its intention to authorise or propose the issue of additional shares
of any class, or securities convertible into, or exchangeable for, or rights,
warrants or options to subscribe for or acquire, any such shares or convertible
securities (save as between South Staffordshire and wholly-owned subsidiaries of
South Staffordshire);

(ii)                recommended, declared, paid or made or proposed to
recommend, declare, pay or make any bonus issue, dividend or other distribution
whether payable in cash or otherwise other than dividends (or other
distributions whether payable in cash or otherwise) lawfully paid by a
wholly-owned subsidiary of South Staffordshire;

(iii)               (save for transactions between two or more wholly-owned
subsidiaries of South Staffordshire) authorised, proposed or announced its
intention to authorise or propose or carried out any merger, demerger,
reconstruction, amalgamation, acquisition or disposal of assets or shares in any
undertaking or any change in its share or loan capital;

(iv)               (save for transactions between two or more wholly-owned
subsidiaries of South Staffordshire and other than in the ordinary course of
business) disposed of, transferred, mortgaged or created any security interest
over any asset or any right, title or interest in any asset or authorised,
proposed or announced any intention to do so;

(v)                 (save for transactions between two or more wholly-owned
subsidiaries of South Staffordshire) incurred any indebtedness or contingent
liability which is material in the context of the Wider South Staffordshire
Group taken as a whole;

(vi)               entered into, varied or authorised, or announced its
intention to enter into or vary, or made any offer (which remains open for
acceptance) to enter into or vary, any arrangement, agreement, transaction or
commitment which is of a long term, unusual or onerous nature or magnitude or
which involves or could involve an obligation of such a nature or magnitude
other than in the ordinary course of business, or which is or is likely to be
restrictive on the business of any member of the Wider South Staffordshire
Group, and which is, in any such case, material in the context of the Wider
South Staffordshire Group taken as a whole;

(vii)              entered into, varied or authorised, or announced its
intention to enter into or vary, or made any offer (which remains open for
acceptance) to enter into or vary, any service agreement (or similar or related
arrangement) with any senior executive of any member of the South Staffordshire
Group earning more than #75,000 (or who would earn more than that amount upon so
entering into or varying that service agreement) or with any director of South
Staffordshire;

(viii)            waived, compromised or settled any claim which is material in
the context of the Wider South Staffordshire Group as a whole, or authorised,
proposed or announced any intention to do so;

(ix)              terminated or varied the terms of any agreement or arrangement
the effect of which termination or variation is material in the context of the
Wider South Staffordshire Group taken as a whole, or authorised, proposed or
announced any intention to do so;

(x)                other than in the case of a wholly-owned subsidiary of South
Staffordshire, made any alteration to its memorandum or articles of association
which is material to AquaInvest in the context of the Offer;

(xi)              made, agreed to or proposed any change to the terms of the
trust deeds constituting the pension schemes established for its directors and/
or employees and/or their dependants, or to the benefits which accrue or to the
pensions which are payable thereunder, or to the basis on which qualification
for or accrual or entitlement to such benefits or pensions are calculated or
determined, or to the basis upon which the liabilities (including pensions) of
such pension schemes are funded, or made, agreed to or proposed any change to
the trustees involving the appointment of a trust corporation, in any such case
to an extent which is, or could be, material in the context of the Wider South
Staffordshire Group taken as a whole or material to AquaInvest in the context of
the Offer;

(xii)             been unable, or having admitted in writing that it is unable,
to pay its debts or having stopped or suspended (or threatened to stop or
suspend) payment of its debts generally or ceased or threatened to cease
carrying on all or a substantial part of its business; or

(xiii)           (other than in respect of a member which is dormant and was
solvent at the relevant time) taken or proposed any corporate action, or had any
action or proceedings or other steps instituted or threatened against it, for
its winding-up (voluntary or otherwise), dissolution or reorganisation or for
the appointment of a receiver, administrator, administrative receiver, trustee
or similar officer of all or any of its assets or revenues;

(h)               since 31 March 2004, save as Disclosed:

(i)                  other than in respect of, in relation to, or as a result of
any decision, ruling, resolution or review by DGWS or Ofwat, or in respect of
the Licence, there having been no material adverse change or deterioration in
the business, assets, financial or trading position or profits or prospects of
the Wider South Staffordshire Group taken as a whole;

(ii)                no litigation, arbitration proceedings, prosecution or other
legal proceedings having been threatened, announced or instituted by or against
or remaining outstanding against any member of the Wider South Staffordshire
Group or to which any member of the Wider South Staffordshire Group is a party
(whether as claimant, defendant or otherwise) and, other than in respect of, in
relation to, or as a result of any decision, ruling, resolution or review by
DGWS or Ofwat, or in respect of the Licence, no enquiry or investigation by or
complaint or reference to any Third Party against or in respect of any member of
the Wider South Staffordshire Group having been threatened, announced or
instituted or remaining outstanding against or in respect of any member of the
Wider South Staffordshire Group, which in any such case might be likely
adversely to affect any member of the Wider South Staffordshire Group in a
manner which is material in the context of the Wider South Staffordshire Group
taken as a whole; and

(iii)               no contingent or other liability having arisen or been
incurred which might be likely adversely to affect any member of the Wider South
Staffordshire Group and which is material in the context of the Wider South
Staffordshire Group taken as a whole; and

(i)                 save as Disclosed, AquaInvest not having discovered:

(i)                  that the financial, business or other information
concerning the Wider South Staffordshire Group publicly announced or publicly
disclosed since 31 March 2004 by or on behalf of any member of the Wider South
Staffordshire Group is misleading (whether or not by omission) in a manner which
is material in the context of the Wider South Staffordshire Group taken as a
whole or material to AquaInvest in the context of the Offer;

(ii)                in relation to any release, emission, discharge or disposal
which causes or might cause pollution of the environment or harm to human
health, no member of the Wider South Staffordshire Group having, to an extent
which is material in the context of the Wider South Staffordshire Group taken as
a whole, (i) committed any violation of any laws, statutes, ordinances,
regulations or other requirements of any Third Party and/or (ii) incurred any
liability (whether actual or contingent) with respect thereto; or

(iii)               that there is or is likely to be any obligation or liability
(whether actual or contingent) on the part of any member of the Wider South
Staffordshire Group to make good, repair, re-instate or clean up any property
now or previously owned, occupied, operated or made use of or controlled by any
past or present member of the Wider South Staffordshire Group under any
environmental legislation, regulation, notice, circular or order of any Third
Party (in any such case, to an extent which is material in the context of the
Wider South Staffordshire Group taken as a whole).



Part B: Waiver of Conditions and further Terms of the Offer



Subject to the requirements of the Panel, AquaInvest reserves the right to waive
all or any of the above conditions in whole or in part, except condition (a).
AquaInvest may waive condition (c) only with the prior written consent of South
Staffordshire. AquaInvest also reserves the right, subject to consent of the
Panel, to extend the time allowed under the Code for the satisfaction of
condition (a) until such time as conditions (b) to (i) have been satisfied,
fulfilled or, to the extent permitted, waived.

If AquaInvest is required by the Panel to make an offer for South Staffordshire
Shares under the provisions of Rule 9 of the City Code, AquaInvest may make such
alterations to any of the above conditions, including condition (a) above, as
are necessary to comply with the provisions of that Rule.

The Offer will lapse unless all of the conditions set out above have been
fulfilled or, to the extent permitted, waived or, where appropriate, have been
determined by AquaInvest in its reasonable opinion to be or remain satisfied or
(if capable of waiver) waived, by midnight on the 21st day after the later of
(i) the First Closing Date and (ii) the date on which condition (a) is fulfilled
(or such later date as AquaInvest, with the consent of the Panel, may decide).
AquaInvest shall be under no obligation to waive (if capable of waiver) or treat
as satisfied any of conditions (b) to (i) by a date earlier than the latest date
specified above for the fulfilment of that condition, notwithstanding that the
other conditions of the Offer may at such earlier date have been waived or
fulfilled and that there are at such earlier date no circumstances indicating
that the condition may not be capable of fulfilment.

The Offer will lapse if, before 3.00 p.m. on the First Closing Date or the date
on which the Offer becomes or is declared unconditional as to acceptances
(whichever is later), the Offer or any part of it is referred to the Competition
Commission.


                                  APPENDIX II



Definitions





The following definitions apply throughout this Announcement, unless the context
requires otherwise:

"Acquisition"                           the acquisition of all or part of the issued or to be issued ordinary
                                        share capital of South Staffordshire by AquaInvest by means of the
                                        Offer;

"Act" or "Companies Act"                the Companies Act 1985;

"Announcement"                          this announcement;

"Annual Report"                         the audited consolidated accounts of South Staffordshire for the year
                                        ended 31 March 2004;

"Aqua Direct"                           Aqua Direct Limited ;

"AquaInvest"                            AquaInvest Acquisitions Limited;

"AquaInvest Directors"                  the directors of AquaInvest;

"Authorisations"                        has the meaning given to it in paragraph (d) of Part A of Appendix I
                                        of this Announcement;

"Cazenove"                              Cazenove & Co. Ltd;

"City Code"                             the City Code on Takeovers and Mergers;

"Closing Price"                         the closing middle market quotation of a South Staffordshire Share for
                                        the day to which such price relates, as derived from the Daily
                                        Official List of the London Stock Exchange for that day, save for the
                                        quotation for 26 October 2004 which has been derived from the website
                                        of the London Stock Exchange;

"Crescent Capital"                      Crescent Capital Investments (Europe) Limited or Crescent Capital
                                        Investments Inc., as appropriate, each a wholly-owned subsidiary of
                                        First Islamic;

"Dealing Day"                           a day on which the London Stock Exchange is open for business in the
                                        trading of securities admitted to the Official List;

"Disclosed"                             without limitation, (i) as disclosed in the Listing Particulars (ii)
                                        as disclosed in the Annual Report (iii) as publicly announced by South
                                        Staffordshire (through a Regulatory Information Service) prior to the
                                        date of this Announcement (iv) as disclosed in this Announcement (v)
                                        as disclosed in the Offer Document or (vi) as otherwise fairly
                                        disclosed to AquaInvest or its advisers by or on behalf of South
                                        Staffordshire prior to the date of this Announcement;

"Dresdner Kleinwort Wasserstein"        Dresdner Kleinwort Wasserstein Limited;

"Echo"                                  Echo Managed Services Limited;

"First Closing Date"                    the first closing date for the Offer, expected to fall 21 days after
                                        the date on which the Offer Document is posted;

"First Islamic"                         First Islamic Investment Bank E.C.;

"Form of Acceptance"                    the form of acceptance for use in connection with the Offer that will
                                        accompany the Offer Document;

"FSA"                                   the UK Financial Services Authority;

"FSMA"                                  the Financial Services and Markets Act 2000;

"London Stock Exchange"                 London Stock Exchange plc;

"Offer"                                 the recommended cash offer to be made by Dresdner Kleinwort
                                        Wasserstein on behalf of AquaInvest to acquire the entire issued and
                                        to be issued share capital of South Staffordshire, on the terms and
                                        subject to the conditions set out in this Announcement and the terms
                                        to be set out in the Offer Document and the Form of Acceptance and
                                        (where the context permits) any subsequent revision, variation,
                                        extension or renewal thereof;

"Offer Document"                        the document to contain the Offer to be sent to South Staffordshire
                                        Shareholders by Dresdner Kleinwort Wasserstein on behalf of
                                        AquaInvest;

"Offer Period"                          shall have the meaning given to that term in the City Code, and in any
                                        event commencing on 19 October 2004 (the date on which it was
                                        announced that South Staffordshire was in talks which may lead to an
                                        offer for South Staffordshire);

"Official List"                         the Official List of the UK Listing Authority;

"Overseas Shareholders"                 South Staffordshire Shareholders resident in, or nationals or citizens
                                        of, jurisdictions outside the UK or who are custodians, nominees or
                                        trustees for, citizens or nationals of such other jurisdictions;

"Panel"                                 the Panel on Takeovers and Mergers;

"Rapid"                                 Rapid Systems Limited;

"Regulatory Information Service"        any of the services from time to time set out in Schedule 12 to the
                                        Listing Rules;

"Restricted Jurisdiction"               the United States, Canada, Australia or Japan or any other
                                        jurisdiction where extension or acceptance of the Offer would violate
                                        the law of that jurisdiction;

"Rothschild"                            N. M. Rothschild & Sons Limited;

"South Staffordshire"                   South Staffordshire Plc;

"South Staffordshire Directors"         the directors of South Staffordshire;

"South Staffordshire Group"             South Staffordshire, its subsidiaries and its subsidiary undertakings;

"South Staffordshire Shareholder(s)"    holder(s) of South Staffordshire Shares;

"South Staffordshire Share Schemes"     the South Staffordshire Plc 2004 Long Term Incentive Plan, the South
                                        Staffordshire Plc 2004 Discretionary Share Option Plan and the South
                                        Staffordshire Savings Related Share Option Scheme;

"South Staffordshire Shares"            the existing unconditionally allotted or issued and fully paid (or
                                        credited as fully paid) ordinary shares of 42.5 pence each in the
                                        capital of South Staffordshire;

"South Staffordshire Water"             South Staffordshire Water PLC;

"subsidiary", "subsidiary undertaking", have the meanings given to them by the Companies Act (but for these
"associated undertaking" or "           purposes ignoring paragraph 20(1)(b) of Schedule 4A to the Companies
undertaking"                            Act);

"substantial interest"                  means a direct or indirect interest in 20 per cent. or more of the
                                        voting capital of an undertaking;

"Third Party"                           has the meaning given to it in condition (e) of Part A of Appendix I;

"UK" or "United Kingdom"                the United Kingdom of Great Britain and Northern Ireland;

"UK Listing Authority" or "UKLA"        the FSA acting in its capacity as competent authority for the purpose
                                        of Part VI of FSMA and in the exercise of its function in respect of
                                        the admission to the Official List otherwise than in accordance with
                                        Part VI of FSMA;

"Underground Pipeline Services"         Underground Pipeline Services Limited (formerly known as Onsite North
                                        Midlands Limited);

"United States" or "US"                 the United States of America, its territories and possessions, any
                                        state of the United States and the District of Columbia and other
                                        areas subject to its jurisdiction; and

"Wider South Staffordshire Group"       South Staffordshire and its subsidiary undertakings, associated
                                        undertakings and any other undertaking in which South Staffordshire
                                        and/or such undertakings (aggregating their interest) have a
                                        significant interest.



All references to legislation in this document are to English legislation unless
the contrary is indicated. All references to time in this document are to London
time unless the contrary is indicated.



Any reference to any provision of any legislation shall include any amendment,
modification, re-enactment or extension thereof.



Words importing the singular shall include the plural and vice versa, and words
importing the masculine gender shall include the feminine or neuter gender.


                      This information is provided by RNS
            The company news service from the London Stock Exchange
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