30 July 2003

                                    AWG Plc                                    

                                 AGM STATEMENT                                 

Speaking at the Annual General Meeting of AWG Plc today, chairman Peter Hickson
said:

"In addition to a good set of trading results, we completed the ring-fencing
and refinancing of our water company; we delivered significant returns of
capital for our shareholders and clarified our forward objectives; we continued
to progress our disposal strategy in the UK and overseas; we substantially
reorganised the Board; and finally, we dealt with a lengthy and very public
attack from WestLB.

The Board took the proposal from WestLB seriously, even though it is now clear
the approach was not financed on a committed basis, and WestLB did not have a
solution to the regulatory problem caused by the bank's ownership of another
water company. The AWG Board rejected the approach because it was substantially
below the value we saw in the company.

The affair became a very public one. A second approach from WestLB indicating a
slightly higher price was also rejected on the same grounds of not reflecting
the true value of the company.

This time-consuming impasse continued for nearly four months, until WestLB
announced its withdrawal early in June. This change followed a letter I had
written to the chairman of WestLB at the end of May requesting that he clarify
the bank's intentions. I received no reply to this letter. The day after my
letter had been sent, a formal deadline of June 18 was imposed for potential
bidders to make a bid or withdraw for the next six months.

Shortly before the expiry of the June 18 deadline, the two former executives
involved in the original approach found new venture capital support to try
again. Their advisers indicated directly to us, and some of our shareholders,
that there might be a bid if we would extend the deadline. It was clear,
however, that the finance required to support any bid would only be available,
if at all, after a due diligence exercise of unpredictable length. There could
be no certainty that the outcome of this exercise would lead to a firm bid.
Such a period of uncertainty for employees and customers, following four and a
half months' publicity already, seemed to the Board to present little
attraction to the business and to the shareholders.

In the six months since the first WestLB approach, nobody has tabled a bid for
AWG. Where there have been indications of price - what I term a virtual bid -
there has been no committed financing.

Furthermore, any apparent financing has always been subject to extensive
investigation by banks - what they call confirmatory due diligence - in order
to meet their undisclosed requirements.

Obviously, as a company with publicly traded shares, we should expect that we
may receive a bid. The Board understands that. However, we must be cautious
about allowing virtual bids to be seen as real bids, and for financing to be
seen to be in place when, in reality, it is subject to delay and doubt.

My objective is not to deny our shareholders the opportunity to receive value
for their shares. We believe there is substantial value in AWG, which the
management is determined to deliver to shareholders. If anybody wishes to
provide that value immediately, then they should be prepared to make the
commitment up front.

Since last year we will have returned �678 million to shareholders over and
above the normal payments to shareholders of �81 million. I have already
mentioned our ordinary payments to shareholders which we increased this year by
just over three per cent. Last year, we confirmed our intention to continue to
increase annual payments by RPI until 2005, the end of the current regulatory
period. Following our two capital returns, the Board has confirmed this policy
and has also stated its objective to continue it beyond 2005, subject to the
outcome of the next regulatory review, currently in progress. We shall continue
to pursue positive cash flows, and the Board remains committed to the principle
of returning surplus capital to shareholders.

Looking forward, there continue to be challenges for all parts of our business.

  * We must continue to deliver our cash flows and profits
   
  * We must deliver the best result from the regulatory review
   
  * We must continue to improve the quality of our infrastructure business
   
  * The disposals programme must be vigorously pursued
   
  * And we must prove the real value of the company.
   
As a result of the refinancing last year, we do not see any requirement to
raise new equity capital to fund future capital expenditure.

The year has started satisfactorily. We have recently announced �450 million of
contract awards and after three months our results are in line with our
expectations."

                                      END                                      

For further information please contact:

AWG Plc                                                                    
                                                                           
Mike Keohane, Group HR and Communications Director             07702 151044
                                                                           
CardewChancery                                                             
                                                                           
Anthony Cardew / Rupert Pittman                               020 7930 0777
                                                                           
Weber Shandwick Square Mile                                                
                                                                           
Terry Garrett                                                 020 7067 07172


END