RNS Number:8465S
AWG PLC
04 December 2003


                      AWG Plc interim results announcement
                   for the half-year ended 30 September 2003


Financial summary
                                                  Six months   Six months
                                                    ended 30     ended 30
                                                   September    September
                                                        (H1)         (H1)
                                                        2003         2002
                                                          #m           #m   

Turnover (including share of joint ventures)           924.7        945.8
Turnover (excluding share of joint ventures)           862.1        889.9
Operating profit* including share of joint ventures    179.7        154.0
Total operating profit**                               166.4        115.1
Profit before tax*                                      46.4         54.8
Loss before tax**                                      (46.5)       (55.3)
Earnings per share*                                     21.8p         5.3p
Loss per share**                                       (37.2p)      (26.3p)
Proposed payment per share to shareholders              14.0p        13.6p

Overview

  * Total operating profit* including share of joint ventures up 16.7 per cent
    to #179.7m (2002: #154.0m)
  * Interim payment per share to shareholders up 2.8 per cent to 14.0p
  * Good performance from Anglian Water Services (AWS)
  * #1.7bn forward order book in infrastructure management business (IMB)
  * #106m raised from international business sales since end September
  * Jonson Cox appointed group chief executive

* Before goodwill amortisation and exceptional items
** After goodwill amortisation and exceptional items

Commenting on the results, AWG's chairman Peter Hickson said:

"This has been an important period for AWG, both in terms of our core activities
and our strategy of focusing on the UK.

"AWS continues to deliver good performance and to improve its services to
customers. In August 2003, AWS submitted to Ofwat its draft business plan for
the next regulatory period and is now in a period of consultation with the
Regulator. Final plans will be submitted in Spring 2004.

"The half-year results from the IMB were mixed. Government Services showed
improved profitability, with a significant contribution from the facilities
services activities. The harvesting strategy for Developments and Commercial
Services contributed #72 million of cash in the half-year. On the other hand,
the Utility Services business suffered margin pressures with a major customer
although other margins remained stable.

"In Construction Services, the operating margins showed improvement, but this was
tempered by a #2.5 million unexpected cost on one contract. However, the IMB
order book stands at #1.7 billion, compared with #1.6 billion at the end of the
last financial year and the margins within the order book are showing an
improving trend. As in previous years, the IMB performance will be weighted to
the second half.

"Overseas, the disposal of activities in Chile, the Czech Republic and Vietnam,
and closure of our business in Germany, have continued the process of focusing
on the UK. The disposals process continues and should complete during the second
half of the year.

"Looking forward, our management will be greatly strengthened in January when
Jonson Cox joins the group as chief executive. His leadership and his
considerable experience of the water industry will prove valuable as the
regulatory review proceeds."


Contact details:

AWG Plc
Elliott Mannis      group finance director                        01480 323246
Mike Keohane        group director of HR and communications       07702 151044

Weber Shandwick Square Mile
Susan Ellis                                                      020 7067 0717

Cardew Chancery
Anthony Cardew                                                   020 7930 0777

Notes:

7:00am  Video interviews with Peter Hickson and Elliott Mannis available at 
        www.cantos.com
        
8.00am  Interim results announcement available at www.awg.com
        Analysts presentation available at www.awg.com




                      AWG Plc interim results announcement
                   for the half-year ended 30 September 2003

Group financial results - summary

Turnover, excluding the group's share of turnover of joint ventures, decreased
by 3.1 per cent compared with the same period last year. This decrease was
primarily due to a #56.0 million reduction from Developments and Commercial
Services as a result of the harvesting strategy. This was offset by increased
turnover from Anglian Water Services (AWS), which was up 6.5 per cent as a result
of the allowed increase in prices, combined with the additional demand caused by 
the dry summer.

Total operating profit, including the share of operating profits in joint
ventures, but before exceptional items and goodwill amortisation, was up by 16.7
per cent to #179.7 million, principally because of a #23.0 million increase in
the AWS contribution to #166.3 million.

Total operating profits, after exceptional items and goodwill amortisation, were
up from #115.1 million to #166.4 million.

Interest charges increased by #34.1 million to #133.3 million (2002: #99.2
million before exceptional items), primarily due to the increase in debt
following the refinancing in July 2002. The interest charges in 2002 reflected
two months of the post-refinancing charge, whereas the 2003 figure reflected the
full six months of the higher post-refinancing level of debt.

Profit on ordinary activities before tax, goodwill and exceptional items was
#8.4 million lower at #46.4 million (2002: #54.8 million), mainly as a result of
the increased interest charges offsetting the improved operating profit. The
loss before tax was #46.5 million (2002: #55.3 million), after exceptional
provisions for losses on business disposals and closure costs of #79.6 million.

The tax charge after exceptional items was #8.4 million, compared with #16.3
million in the same period last year. The reduction was a result of the effects
of changes in deferred tax discount rates, and lower prior year charges.

Total exceptional items amounted to #85.7 million, compared with #102.8 million
in the same period last year when the exceptional items mainly related to the
refinancing project. The current period charge comprised #79.6 million of
provisions for losses on disposals and closure costs, (principally
international), #3.6 million for restructuring and other costs and #2.5 million
of contract rectification costs relating to the Rockingham project.

The #79.6 million of provisions for losses on disposals and closures included
the impairment loss on the disposal of the Chilean and Czech Republic businesses
of #67.1 million. In addition, there were disposal costs of #1.2 million and
business closure costs of #11.3 million, which principally related to the
closure of Purac GmbH.

The full-year loss on disposal to be reported in the annual accounts will
include the impact of foreign currency rate movements between the period end and
the disposal dates, the additional disposal costs incurred on completion, the
impact of the further trading results on the net assets disposed of and further
disposals.

Earnings per share, before exceptional items and goodwill amortisation, were
21.8 pence (2002: 5.3 pence). After exceptional items and goodwill amortisation,
the loss per share was 37.2 pence (2002: 26.3 pence).

The interim payment to shareholders for the six months ended 30 September 2003
will be 14.0 pence per share, an increase of 2.8 per cent over last year, in
line with AWG's payment policy. The payment will be made on 13 February 2004 to
shareholders on the register at 5pm on 12 December 2003.

Cash flow

Group net cash inflow from operating activities was #217.8 million, 5.9 per cent
below the figure for the same period last year (2002: #231.4 million)
principally as a result of increased investment in working capital. Group net
debt increased by #214.4 million to #3,435.5 million, from #3,221.1 million at
last year-end. This included net capital expenditure of #117.4 million and a
return of capital to shareholders in the form of a special payment in the period
of #177.4 million.


Group operational results

Anglian Water Services

                                                       H1 2003       H1 2002
                                                            #m            #m
    Turnover                                             387.7         364.0
                                                     ------------------------

    Operating profit before exceptional items            166.3         143.3
    Exceptional items                                        -         (13.2)
                                                     ------------------------
    Operating profit                                     166.3         130.1
                                                     ------------------------

AWS performed well during the first half of the year, with turnover up by 6.5
per cent and operating profit before exceptional items up by 16.1 per cent.

Over half of AWS's customers are metered. Although metering has a rationing
effect on customer demand, revenues benefited from the substantial additional
demand for water during this year's dry summer, described by the Environment
Agency to be one of the driest periods on record. In spite of the increase in
demand for water and the dry autumn, AWS's water resources currently remain
satisfactory, but above average rainfall in the next few months will be
important for recharging water resources.

Operating expenditure in the first half was #144.2 million (2002: #143.2
million). Net capital expenditure for the first half-year was #107.6 million
(2002: #101.2 million).

Service quality

AWS continued to perform well against service and water quality standards. In
Ofwat's overall performance assessment, published in July 2003, AWS moved up to
fourth amongst companies in England and Wales for the period 2002/3, from sixth
the previous year.

Ofwat's report shows that AWS has the lowest water leakage rate in the country.
Its leakage of 5.2 cubic metres per kilometre of water pipe per day is almost
half the industry average. Combined with the proportion of our customers on
metered supplies (53 per cent), the low leakage rate has been a significant
factor in preserving water resources while the very high level of demand was
experienced.

The standard of AWS's drinking water remained high, with 99.63 per cent of all
water quality tests performed in 2002 complying with the regulatory standards.
For the period to 31 August 2003, overall compliance was 99.73 per cent, with
overall microbiological compliance for the period at its highest-ever level.

For the fifth time in seven years all 46 designated bathing waters in the AWS
region passed the mandatory standard of the Bathing Water Directive, maintaining
AWS's position as the best in the sector. In addition, 35 of the region's
bathing waters (76 per cent) also passed the guideline standard of the
Directive, a requirement for the coveted Blue Flag award (2002: 84 per cent).

Regulation

In August 2003, AWS submitted its draft business plans to Ofwat, as part of the
regulatory price review for 2005-2010. This was the first stage in the review
process, which the regulator will consider in determining AWS's obligations.
Discussions with Ofwat will continue and the final business plans, which will
reflect the results of stakeholder consultation, will be submitted in April
2004. Ofwat will then announce final price limits in November 2004 and they will
take effect from April 2005.

In September, AWS applied to Ofwat for an interim determination of K (IDoK) to
recover costs that were not anticipated in the last price review in 1999.
Following discussions with Ofwat, AWS accepted that it would not meet the
materiality tests that form part of the IDoK process and decided not to pursue
its application. Ofwat announced on Monday 1 December its intention to withdraw
its counter-notices. K factors for charge increases for 2004/5 therefore remain
unchanged at 2.5 per cent.

Infrastructure management business (IMB)

                                                                 H1 2003   H1 2002
                                                                      #m        #m

    Turnover (including share of joint venture turnover)           468.2     494.6
                                                                --------------------
    Operating profit excluding bid costs, exceptional items and
    goodwill amortisation
    Utility Services                                                 3.8       5.2
    Government Services                                              5.2       4.9
    Construction Services                                            1.7       1.5
    (formerly known as Project Management Services)
    Developments and Commercial Services                             1.8       1.0
                                                                --------------------
    Operating profit excluding bid costs, exceptional
    items and goodwill amortisation                                 12.5      12.6
    Bid costs                                                       (5.6)     (3.0)
                                                                --------------------
    Operating profit including bid costs, before
    exceptional items and goodwill amortisation                      6.9       9.6
    Exceptional items                                               (2.6)     (0.9)
    Goodwill amortisation                                           (6.1)     (5.7)
                                                                --------------------
    Operating (loss)/profit                                         (1.8)      3.0
    Loss on disposal of business                                       -      (1.8)
                                                                --------------------
    (Loss)/profit before interest and tax                           (1.8)      1.2
                                                                --------------------

IMB now excludes International Services, which is in the process of being sold.

Turnover at #468.2 million, reflected a decreased contribution of #56.0 million
from Developments and Commercial Services, partly offset by increases in
Government Services following its acquisition of facilities management contracts
in Birmingham and London.

Operating profit excluding bid costs, exceptional items and goodwill
amortisation was largely unchanged and reflected increased contributions from
Developments and Commercial Services, but reduced profit from Utility Services.
The #1.4 million reduction in Utility Services' operating profit was primarily
as a result of margin pressure on a number of contracts with a single client.

Bid costs significantly increased in the period to #5.6 million (2002: #3.0
million). This was primarily as a result of bidding for water contracts in
advance of the next regulatory review, and an increase in PFI activity.

The IMB order book currently stands at #1.7 billion. Significant new wins during
the period included three major transportation projects (the M77, A80 and A78)
and contracts with BT, Yorkshire Electricity Distribution and Northern
Electric Distribution. In addition, Construction Services won a number of
utility framework contracts.

Margins implicit in the order book are at better levels than those achieved
historically. In Construction Services, this is as a consequence of winning
higher margin framework and PFI projects. In Utility Services and Government
Services, margin improvement is achieved as further asset management work is
acquired.

The order book breaks down as follows:

                                30 September           31 March
                                        2003               2003
                                          #m                 #m
    Utility Services                     362                450
    Government Services                  921                800
    Construction Services                455                424
                                       -----              -----
                                       1,738              1,674
                                       -----              -----
Utility Services

During the period Utility Services won business worth #61.0 million from new and
existing clients. The electricity and telecoms sectors have been the focus of
business development as Utility Services is already a significant supplier to
the water and gas sectors. Utility Services has won a contract with Yorkshire
Water for repair and maintenance work valued at #8.5 million per year for three
years and a contract with Yorkshire Electricity Distribution Ltd worth #6
million per annum for three years, also with a possible two-year extension. In
addition, a contract worth #0.6 million has been won with BT in Wales.

Government Services

Government Services' turnover increased by 86.5 per cent in the period as a
result of extensions to existing projects and the acquisition of facilities
management contracts in Birmingham and four London boroughs in March 2003.

Operating profit before bid costs, exceptional items and goodwill amortisation,
increased to #5.2 million (2002: #4.9 million). Last year's results benefited
from one-off PFI development revenues of approximately #5 million. On a
like-for-like basis, the underlying operating margin has improved significantly.

Project Investments, Government Services' PFI operation, is now bidding for a
variety of projects, following a recent improvement in the quality and quantity
of work available. Project Investments is the preferred bidder for a further
housing project for the Defence Housing Executive in Portsmouth and student
accommodation for the University of Hertfordshire.

Construction Services

The emphasis for the division has been the winning of higher margin business on
partnering, framework and PFI-type projects. This has resulted in the bid costs
doubling year-on-year, which has shown through in the order book margin mix,
which again has increased year-on-year.

AWG is increasingly involved in long-term partnering contracts and some 25 per
cent of its order book is for construction services to the UK water sector.

In November 2003 the company received an adverse adjudication of a claim
relating to work that was carried out at the Rockingham speedway track. As a
result rectification work will need to be completed on the track at a cost of
#2.5 million. This has been accounted for in these results as an exceptional
item.

Developments and Commercial Services

Developments and Commercial Services' turnover represents the value realised
from its property portfolio during the period.

During the period, the Great Northern Warehouse was sold to a joint venture with
Capital and Regional, releasing #54.1 million in cash. In addition, several
other developments were sold, including a shopping centre in Stockport and an
office development in Cardiff, both of which were joint ventures. Gross cash
generated by Developments and Commercial Services was #72.0 million during the
period.


Other activities

International Services
                                                                H1 2003    H1 2002
                                                                     #m         #m
    Turnover (including share of joint venture turnover)           76.1       99.4
                                                             ----------------------
    Operating profit before bid costs, exceptional items
    and goodwill amortisation                                      12.4        8.5
    Bid costs                                                      (0.6)      (2.6)
                                                             ----------------------
    Operating profit after bid costs, before exceptional
    items and goodwill amortisation                                11.8        5.9
    Exceptional items                                              (2.1)      (2.0)
    Goodwill amortisation                                          (1.1)      (1.6)
                                                             ----------------------
    Operating profit                                                8.6        2.3
    Provision for (losses)/profits on business disposals
    and closures                                                  (78.4)       1.1
                                                             ----------------------
    (Loss)/profit before interest and tax                         (69.8)       3.4
                                                             ----------------------

Since the end of the accounting period, AWG announced the sale of its
shareholdings in Chile and the Czech Republic for #55 million and #51 million
respectively. The Chilean disposal received regulatory approval and the
transaction was completed in November 2003. The transactions in the Czech
Republic are subject to local competition commission approval, and are expected
to complete in the first quarter of 2004. Provision for losses on the disposals
has been taken in the accounts for the six months under review.

Elsewhere overseas, the business in Vietnam was sold and the decision was taken
to close the German business. The Irish operations will be transferred to the
IMB at the end of the financial year.

The remaining international operations and contracts are scheduled for disposal
during the second half of the year. These include activities in the Philippines,
Australia, New Zealand and Scandinavia. It is not anticipated that there will be
any further significant proceeds from these disposals.

Following the completion of the main phase of disposals, AWG will still retain
an interest in a small number of residual operations and contracts, including
those in China, Thailand, Brazil and Argentina.

Outlook

The major objective for AWS is the satisfactory completion of the regulatory
review, which will be the focus of significant management attention. The IMB will
continue to focus on winning further new business of better quality and margins.
On the international side, the disposal programme is scheduled to complete in
the second half, whilst the harvesting of the UK development portfolio will
continue. Finally, the appointment of a new group chief executive will bring
enhanced focus and leadership to the management of the group.



Group profit and loss account
for the six months ended 30 September 2003


                                  Six months ended                       Six months ended
                                    30 September                           30 September
                                       2003                                    2002
                                    (unaudited)                            (unaudited)
                        ----------------------------------------------------------------------------
                              Before                                 Before
                         exceptional    Exceptional             exceptional    Exceptional
                               items          items                   items          items
                        and goodwill   and goodwill            and goodwill   and goodwill
                        amortisation   amortisation    Total   amortisation   amortisation    Total
                                  #m             #m       #m             #m             #m       #m
                        ----------------------------------------------------------------------------
 Notes
        Turnover: total 
        group and share
        of joint
        ventures (1)           924.7              -    924.7          945.8              -    945.8
        Less: share of 
        turnover of    
        joint
        ventures               (62.6)             -    (62.6)         (55.9)             -    (55.9)
                        ----------------------------------------------------------------------------
    2   Group turnover (1)     862.1              -    862.1          889.9              -    889.9
                        ----------------------------------------------------------------------------        

        Operating costs 
        before
        depreciation
        and
        amortisation of
        intangibles           (593.8)          (6.1)  (599.9)        (643.1)         (31.6)  (674.7)
        Depreciation  
        net of
        amortisation of
        grants and
        contributions          (92.7)             -    (92.7)         (95.4)             -    (95.4)
        Amortisation of 
        intangibles             (0.4)          (7.2)    (7.6)             -           (7.3)    (7.3)
        Goodwill    
        impairment                 -              -        -              -              -        -
                        ----------------------------------------------------------------------------        
        Group operating 
        costs                 (686.9)         (13.3)  (700.2)        (738.5)         (38.9)  (777.4)
                        ----------------------------------------------------------------------------        
                        ---------------------------------------------------------------------------- 
        Group operating 
        profit (2)             175.2          (13.3)   161.9          151.4          (38.9)   112.5
                        ----------------------------------------------------------------------------        
        Share of    
        operating           
        profit in joint
        ventures                 4.5              -      4.5            2.6              -      2.6
                        ----------------------------------------------------------------------------        
        Total operating 
        profit: group
        and share of
        joint ventures (2)     179.7          (13.3)   166.4          154.0          (38.9)   115.1
    4   Provision for 
        loss on              
        business
        disposals and
        closures                   -          (79.6)   (79.6)             -           (1.2)    (1.2)
                        ----------------------------------------------------------------------------        
    2   Profit on   
        ordinary
        activities
        before
        interest               179.7          (92.9)    86.8          154.0          (40.1)   113.9
        Interest        
        payable (net)         (133.3)             -   (133.3)         (99.2)         (70.0)  (169.2)
                        ----------------------------------------------------------------------------        
        Profit/(loss)    
        on ordinary
        activities
        before
        taxation                46.4          (92.9)   (46.5)          54.8         (110.1)   (55.3)
        Tax on profit/   
        (loss) on       
        ordinary
        activities              (8.8)           0.4     (8.4)         (37.0)          20.7    (16.3)
                        ----------------------------------------------------------------------------        
        Profit/(loss) 
        on ordinary
        activities
        after
        taxation                37.6          (92.5)   (54.9)          17.8          (89.4)   (71.6)
        Equity minority  
        interest                (3.3)             -     (3.3)          (2.7)             -     (2.7)
                        ----------------------------------------------------------------------------        
        Profit/(loss)   
        attributable to
        group
        shareholders            34.3          (92.5)   (58.2)          15.1          (89.4)   (74.3)
    6   Dividends -       
        non-equity              (0.1)             -     (0.1)          (0.1)             -     (0.1)
                        ----------------------------------------------------------------------------        
        Retained profit 
        /(loss)                 34.2          (92.5)   (58.3)          15.0          (89.4)   (74.4)  
                        ----------------------------------------------------------------------------        

    7   Earnings/(loss)   
        per share -
        basic                   21.8p         (59.0p)  (37.2p)          5.3p         (31.6p)  (26.3p)
        Earnings/(loss)  
        per share -
        diluted                    -              -    (37.2p)            -              -    (26.3p)





                                                      Year ended
                                                       31 March
                                                         2003
                                                       (audited)
                                     -------------------------------------------
                                              Before
                                         exceptional    Exceptional
                                               items          items
                                        and goodwill   and goodwill
                                        amortisation   amortisation      Total
                                                  #m             #m         #m
                                     -------------------------------------------
Notes
        Turnover: total group and share 
        of joint ventures (1)                1,882.8              -    1,882.8
        Less: share of turnover of  
        joint ventures                        (142.8)             -     (142.8)
                                     -------------------------------------------
    2   Group turnover (1)                   1,740.0              -    1,740.0
                                     -------------------------------------------

        Operating costs before   
        depreciation and amortisation
        of intangibles                      (1,230.6)         (55.4)  (1,286.0)
        Depreciation net of   
        amortisation of grants and
        contributions                         (190.5)             -     (190.5)
        Amortisation of intangibles             (0.5)         (13.8)     (14.3)
        Goodwill impairment                        -           (4.4)      (4.4)
                                     -------------------------------------------
        Group operating costs               (1,421.6)         (73.6)  (1,495.2)
                                     -------------------------------------------
                                     -------------------------------------------
        Group operating profit (2)             318.4          (73.6)     244.8
                                     -------------------------------------------
        Share of operating profit in
        joint ventures                           7.5           (3.6)       3.9
                                     -------------------------------------------
        Total operating profit: group 
        and share of joint ventures (2)        325.9          (77.2)     248.7
    4   Provision for loss on business  
        disposals and closures                     -           (1.2)      (1.2)
                                     -------------------------------------------
    2   Profit on ordinary activities
        before interest                        325.9          (78.4)     247.5
        Interest payable (net)                (219.9)         (70.0)    (289.9)
                                     -------------------------------------------
        Profit/(loss) on ordinary   
        activities before taxation             106.0         (148.4)     (42.4)
        Tax on profit/(loss) on    
        ordinary activities                    (37.5)          27.8       (9.7)           
                                     -------------------------------------------
        Profit/(loss) on ordinary               
        activities after taxation               68.5         (120.6)     (52.1)
        Equity minority interest                (9.5)             -       (9.5)
                                     -------------------------------------------
        Profit/(loss) attributable to 
        group shareholders                      59.0         (120.6)     (61.6)
    6   Dividends - non-equity                  (0.3)             -       (0.3)
                                     -------------------------------------------
        Retained profit/(loss)                  58.7         (120.6)     (61.9)
                                     -------------------------------------------

    7   Earnings/(loss) per share - 
        basic                                   25.0p         (51.4p)    (26.4p)
        Earnings/(loss) per share -  
        diluted                                    -              -      (26.4p)

(1) turnover includes #55.0 million (30 September 2002: #49.9 million; 31 March
2003: #106.7 million) relating to activities which are in the process of being
discontinued (see note 3).

(2) operating profit includes #11.5 million (30 September 2002: #10.9 million;
31 March 2003: #28.2 million) relating to activities which are in the process of
being discontinued (see note 3).

The impact of acquisitions was not material. Exceptional items are analysed in
note 4.

The notes on pages 17 to 22 form part of these financial statements.




Statement of group total recognised gains and losses
for the six months ended 30 September 2003

                                          Six months    Six months        Year
                                               ended         ended       ended
                                        30 September  30 September    31 March   
                                                2003          2002        2003
                                         (unaudited)   (unaudited)   (audited)
                                                  #m            #m          #m
                                      -----------------------------------------

  Loss attributable to group    
  shareholders                                 (58.2)        (74.3)      (61.6)
  Currency translation differences on  
  foreign currency net investments               2.2          (6.2)       (4.2)
                                      -----------------------------------------
  Total recognised gains and losses            
  since last annual report and financial     
  statements                                   (56.0)        (80.5)      (65.8)
                                      =========================================


Statement of movement in group shareholders' funds
for the six months ended 30 September 2003

                                          Six months    Six months        Year
                                               ended         ended       ended
                                        30 September  30 September    31 March  
                                                2003          2002        2003
                                         (unaudited)   (unaudited)   (audited)
Notes                                            #m             #m          #m
                                      -----------------------------------------
                                                                       
    Total recognised gains and losses
    relating to the period                     (56.0)        (80.5)      (65.8)
    Dividends paid and proposed on  
    non-equity shares                           (0.1)         (0.1)       (0.3)
8   Goodwill previously eliminated        
    against reserves, now reinstated and
    written off against profit for the
    period                                       6.1           3.5         3.5
8   Issue of shares                              0.8           0.4         2.6
    Return of capital - cancellation of 
    'C' Shares                                     -             -      (500.9)
    Return of capital - redemption of  
    redeemable shares                         (169.4)            -           -
    Redemption of redeemable shares            (58.4)            -      (110.6)
    Share issue costs                           (0.3)            -        (0.2)
                                      -----------------------------------------
    Decrease in shareholders' funds           (277.3)        (76.7)     (671.7)
                                      -----------------------------------------

    Opening shareholders' funds                917.4       1,589.1     1,589.1
                                      -----------------------------------------
    Closing shareholders' funds                640.1       1,512.4       917.4
                                      -----------------------------------------

The notes on pages 17 to 22 form part of these financial statements.



Group balance sheet
at 30 September 2003

                                        30 September  30 September    31 March
                                                2003          2002        2003
                                         (unaudited)   (unaudited)   (audited)      
Notes                                            #m            #m           #m
                                       ----------------------------------------

    Fixed assets
    Intangible assets                          214.2         257.1       258.7
    Tangible assets                          4,109.7       4,027.5     4,116.3
    Investments
    Joint ventures:
    - Share of gross assets                    396.6         384.5       376.0
    - Share of gross liabilities              (389.0)       (369.0)     (366.1)
    - Amounts included in provisions            14.4             -         9.4
                                       ----------------------------------------
                                                22.0          15.5        19.3
    Associates                                   0.4           0.5         0.2
    Other investments                            3.4          25.4         3.7
                                       ----------------------------------------
    Total investments                           25.8          41.4        23.2
                                       ----------------------------------------
                                             4,349.7       4,326.0     4,398.2
                                       ----------------------------------------
    Current assets
    Stock                                      155.2         177.5       203.3
    Debtors                                    667.5         678.4       562.6
    Investments                                 11.6         127.5        18.8
    Cash at bank and in hand                   641.9       1,080.8       395.4
                                       ----------------------------------------
                                             1,476.2       2,064.2     1,180.1
                                       ----------------------------------------
    Creditors: amounts falling due
    within one year
    Short-term borrowings                      (56.2)       (233.7)      (60.5)
    Other creditors                           (707.8)       (723.7)     (650.0)
                                       ----------------------------------------
                                              (764.0)       (957.4)     (710.5)
                                       ----------------------------------------
    Net current assets                         712.2       1,106.8       469.6
                                       ----------------------------------------
    Total assets less current    
    liabilities                              5,061.9       5,432.8     4,867.8
    Creditors: amounts falling due after
    more than one year
    Loans and other borrowings              (4,032.8)     (3,572.9)   (3,574.8)
    Other creditors                            (99.0)       (100.8)      (97.5)
                                       ----------------------------------------
                                            (4,131.8)     (3,673.7)   (3,672.3)
                                       ----------------------------------------

    Provisions for liabilities and     
    charges                                   (176.7)       (144.1)     (165.9) 
                                       ----------------------------------------
                                               753.4       1,615.0     1,029.6
                                       ----------------------------------------
    Capital and reserves
8   Called up share capital                     45.4         124.6        38.2
8   Share premium account                        6.4           4.1         6.0
8   Capital redemption reserve                 580.1         241.7       352.3
    Other reserves                                 -          96.6           -
8   Profit and loss account                      8.2       1,045.4       520.9
                                       ----------------------------------------
    Total shareholders' funds                  640.1       1,512.4       917.4

    Equity minority interest                   113.3         102.6       112.2
                                       ----------------------------------------
    Capital employed                           753.4       1,615.0     1,029.6
                                       ----------------------------------------
    Shareholders' funds are analysed as:
    Equity                                     623.2       1,416.1       907.6
    Non-equity                                  16.9          96.3         9.8
                                       ----------------------------------------
                                               640.1       1,512.4       917.4
                                       ----------------------------------------

    The notes on pages 17 to 22 form part of these financial statements.



Group cash flow statement
for the six months ended 30 September 2003

                                          Six months    Six months        Year
                                               ended         ended       ended
                                        30 September  30 September    31 March 
                                                2003          2002        2003
                                         (unaudited)   (unaudited)    (audited)
Notes                                             #m            #m          #m
                                       ----------------------------------------

(a) Net cash inflow from operating 
    activities                                 217.8         231.4       465.1
                                       ----------------------------------------
    Dividends received from joint  
    ventures                                     1.3             -         4.0          
                                       ----------------------------------------
    Returns on investments and servicing
    of finance
    Interest received                            9.0           9.7        26.9
    Interest paid                             (129.8)       (141.1)     (210.8)
    Interest element of finance lease 
    rental payments                             (2.6)         (3.7)      (11.4)
    Cash flow treated as finance costs  
    under FRS 4                                 (0.8)        (23.8)      (24.0)
    Dividends received from trade   
    investments                                    -           0.1         0.2
    Dividends paid to minority     
    interests                                   (4.0)         (4.0)       (4.1)
    Non-equity dividends paid                   (0.1)         (0.1)       (0.3)
                                       ----------------------------------------
    Net cash outflow for returns on         
    investments and servicing of finance      (128.3)       (162.9)     (223.5)       
                                       ----------------------------------------
    Taxation
    Taxation received/(paid)                     7.6          (4.2)        9.2
                                       ----------------------------------------

    Capital expenditure and financial
    investment
    Purchase of intangible fixed assets            -         (14.2)      (14.1)
    Purchase of tangible fixed assets         (137.6)       (134.9)     (314.6)
    Grants and contributions received            7.9           9.2        16.8
    Sale of tangible fixed assets               12.3          22.4        33.1
                                       ----------------------------------------
    Net cash outflow for capital   
    expenditure and financial                
    investment                                (117.4)       (117.5)     (278.8)
                                       ----------------------------------------
    Acquisitions and disposals
    Payments to acquire trade     
    investments and joint ventures              (1.1)         (2.0)       (5.6)
(b) Payments to acquire subsidiary     
    undertakings (net of cash and
    overdrafts acquired)                           -          (5.7)      (15.2)
(c) Receipts from sales of businesses       
    (net of cash and overdrafts disposed of)    54.1           3.3         3.3
    Receipts from sales of fixed asset           
    investments                                  0.8             -        21.0
                                       ----------------------------------------
    Net cash inflow/(outflow) for      
    acquisitions and disposals                  53.8          (4.4)        3.5      
                                       ----------------------------------------

    Net cash inflow/(outflow) before      
    management of liquid resources and          34.8         (57.6)      (20.5)
    financing
                                       ----------------------------------------
    Management of liquid resources
(e) Increase in short-term deposits and       
    investments                               (100.6)       (352.8)      (97.6) 
                                       ----------------------------------------
    Financing
    Issue of ordinary share capital              0.8           0.4         2.6
    Cancellation of 'C' shares                     -             -      (500.9)
    Redemption of redeemable shares           (227.8)            -      (110.6)
(e) Increase in loans                          459.7       2,276.1     2,302.2
(e) Repayments of amounts borrowed              (9.2)     (1,263.7)   (1,473.9)
(e) Capital element of finance lease       
    rental payments                            (18.0)        (16.9)      (34.4)  
                                       ----------------------------------------
    Net cash inflow from financing             205.5         995.9       185.0
                                       ----------------------------------------
(e) Increase in cash                           139.7         585.5        66.9
                                       ----------------------------------------


Notes to the group cash flow statement

(a) Reconciliation of operating profit    Six months    Six months        Year
    to net cash inflow from operating          ended         ended       ended
    activities                          30 September  30 September    31 March
                                                2003          2002        2003
                                         (unaudited)   (unaudited)   (audited) 
                                                 #m            #m           #m
                                       ----------------------------------------

    Operating profit                           161.9         112.5       244.8
    Dividends received from trade  
    investments                                    -          (0.1)       (0.2)
    Depreciation (net of amortisation of 
    deferred grants and contributions)          92.7          95.4       190.5
    Amortisation and impairment of 
    intangible assets                            7.6           7.3        18.7
    Loss/(profit) on disposal of fixed  
    assets                                       1.0             -        (0.5)
    Impairment of trade investment                 -           2.5         3.3
    Net movements on provisions                 (1.6)          1.2        (1.9)
                                       ----------------------------------------
                                               261.6         218.8       454.7
                                       ----------------------------------------
    (Increase)/decrease in working capital:
    Stock                                      (24.4)         22.2        (3.0)
    Debtors                                    (86.7)        (74.1)       24.7
    Creditors                                   67.3          64.5       (11.3)
                                       ----------------------------------------
                                               (43.8)         12.6        10.4
                                       ----------------------------------------
    Net cash inflow from operating         
    activities                                 217.8         231.4       465.1
                                       ----------------------------------------




(b)  Acquisition of subsidiary            Six months    Six months        Year
     undertakings                              ended         ended       ended
                                        30 September  30 September    31 March  
                                                2003          2002        2003
                                         (unaudited)   (unaudited)   (audited) 
                                                  #m            #m          #m
                                       ----------------------------------------
     Net assets acquired:
     Tangible fixed assets                         -           0.5         2.8
     Stock                                         -           2.3         2.9
     Debtors                                       -           3.8         6.6
     Cash at bank and in hand                      -           0.1         0.1
     Overdrafts                                    -          (3.6)       (3.6)
     Other short-term creditors                    -          (2.8)       (8.7)
     Loans and other borrowings                    -          (0.1)       (0.1)
                                       ----------------------------------------
     Group share of net assets acquired            -           0.2           -
     Goodwill                                      -           3.8        15.1
                                       ----------------------------------------
     Net consideration                             -           4.0        15.1
                                       ----------------------------------------

     Satisfied by:
     Cash                                          -           2.2        11.7
     Deferred consideration                        -           1.8         3.4
                                       ----------------------------------------
                                                   -           4.0        15.1
                                       ----------------------------------------

Analysis of the net cash outflow in respect of the acquisition of subsidiary
undertakings:

Total cash paid                                    -           2.2        11.7
- cash at bank and in hand of
    acquired subsidiary undertakings               -          (0.1)       (0.1)
- overdrafts of acquired subsidiary
    undertakings                                   -           3.6         3.6
                                       ----------------------------------------
Net outflow of cash in respect of the 
acquisition of subsidiary undertakings             -           5.7        15.2
                                       ----------------------------------------



(c) Disposal of businesses                Six months    Six months        Year
                                               ended         ended       ended
                                        30 September  30 September    31 March 
                                                2003          2002        2003
                                         (unaudited)   (unaudited)   (audited) 
                                                 #m            #m           #m
                                       ----------------------------------------
    Net assets disposed of:
    Tangible fixed assets                          -           0.1         0.1
    Fixed asset investments                        -           0.1         0.1
    Stock                                       72.5           1.3         1.3
    Debtors                                      1.2           3.4         3.4
    Cash at bank and in hand                     0.2           1.0         1.0
    Creditors                                   (2.1)         (3.8)       (3.8)
    Intercompany loan                          (71.8)            -           -
                                       ----------------------------------------
                                                   -           2.1         2.1
    Unamortised goodwill                           -           0.2         0.2
    Goodwill previously written off, now
    reinstated                                     -           3.5         3.5
    Loss on disposal                               -          (1.2)       (1.2)
                                       ----------------------------------------
    Total consideration                            -           4.6         4.6
                                       ----------------------------------------

    Analysis of the net cash inflow in respect of the disposal of businesses:
    Consideration receivable upon   
    completion                                     -           4.6         4.6
    Accrued consideration, not yet 
    received                                       -          (0.3)       (0.3)
    Repayment of intercompany loan              54.3             -           -
    Cash at bank of disposed                  
    businesses                                  (0.2)         (1.0)       (1.0)
                                       ----------------------------------------
    Net cash inflow in respect of the        
    disposal of businesses                      54.1           3.3         3.3
                                       ----------------------------------------

    AWG Plc disposed of 50% of the shares of Morrison Merlin Limited in the
    period. Subsequent to the disposal of the business into a joint venture the
    joint venture repaid #54.3 million of an intercompany loan from the group.
    AWG Plc retains the remaining 50% of the shares.



(d) Analysis of                                 Acquisitions                   Currency   
    net debt           1 April    Cash flows   and disposals     Non cash   translation   30 September
                          2003                                  movements    difference           2003       
                            #m           #m              #m            #m            #m             #m
                     ----------------------------------------------------------------------------------
    Cash                 201.3        138.7               -             -             -          340.0
    Bank overdrafts       (3.2)         1.0               -             -             -           (2.2)
                     ----------------------------------------------------------------------------------
                         198.1        139.7               -             -             -          337.8
    Deposits and 
    investments          212.9        100.6               -             -             -          313.5
    Debt due    
    within one year      (57.3)        26.7               -         (23.3)         (0.1)         (54.0)
    Debt due     
    after one year    (3,574.8)      (458.2)              -           3.6          (3.4)      (4,032.8)
                     ----------------------------------------------------------------------------------
                      (3,221.1)      (191.2)              -         (19.7)         (3.5)      (3,435.5)
                     ----------------------------------------------------------------------------------

    Non-cash movements comprise amortisation of discounts and expenses relating to debt issues, issues of
    loan notes as deferred consideration, indexation of loan stock and transfers between categories of debt.
    Management of liquid resources shown in the cashflow statement comprises movements in short-term
    deposits, which have maturity dates of up to one year.

    Included within deposits and investments above are #301.9 million (30 September 2002: #340.8 million; 31
    March 2003 #194.1 million) of short-term deposits which are included in cash in the balance sheet.


(e) Movement in group net debt                                 Six months    Six months         Year
                                                                    ended         ended        ended
                                                             30 September  30 September     31 March     
                                                                     2003          2002         2003
                                                              (unaudited)   (unaudited)    (audited)  
                                                                       #m            #m           #m
                                                           -------------------------------------------

    At beginning of period                                       (3,221.1)     (2,612.1)    (2,612.1)
    Net increase in cash                                            139.7         585.5         66.9
    Increase in short-term bank deposits and investments            100.6         352.8         97.6
    Loans assumed within subsidiary undertaking                         -          (0.1)        (0.1)
    Loan notes issued                                                (1.2)         (0.5)        (2.5)
    Increase in loans                                              (459.7)     (2,276.1)    (2,302.2)
    Finance costs capitalised under FRS 4                             1.0          23.8         23.8
    Repayment of amounts borrowed                                     9.2       1,263.7      1,473.9
    New finance leases                                                  -             -         (7.5)
    Indexation of loan stock                                        (16.9)         (1.5)       (21.3)
    Amortisation of discount and expenses relating to debt  
    issues                                                           (1.6)         (0.9)        (4.4)
    Currency translation difference                                  (3.5)         50.2         32.4
    Capital element of finance lease rental payments                 18.0          16.9         34.4
                                                           -------------------------------------------
    At end of period                                             (3,435.5)     (2,598.3)    (3,221.1)
                                                           -------------------------------------------

Notes to the financial statements

1   Accounting policies

    The accounting policies used for the audited financial statements at 31 March 2003 have
    been used in the preparation of the interim financial statements. These interim results
    were approved by the Directors on 4 December 2003. The results for the two half years have
    not been audited. PricewaterhouseCoopers LLP have reviewed the results for the six months
    ended 30 September 2003 and their report is attached. The results for the year to 31 March
    2003 are an abridged statement of the group financial statements for that year which have
    been delivered to the Registrar of Companies, and on which the auditors' report was unqualified.
    The financial information contained in the interim financial statements does not constitute
    statutory accounts as defined in Section 240 of the Companies Act 1985. All shareholders
    will receive a copy of the interim results.


2   Segmental analysis
    
    Segmental analysis by class of business
    Six months ended 30 September 2003 (unaudited)

                                                                                                              
                             Profit before interest,                         
                              exceptional items and                         
                                           goodwill  Exceptional      Goodwill  Profit before    
                            Turnover   amortisation    items (a)  amortisation       interest
                                  #m             #m          #m             #m             #m
                           --------------------------------------------------------------------

    Anglian Water Services     387.7          166.3            -              -          166.3
    Utility Services           139.9            3.2            -           (1.2)           2.0
    Government Services         95.5            3.3         (0.1)          (2.3)           0.9
    Construction Services      179.8           (1.4)        (2.5)          (2.6)          (6.5)
    Developments and     
    Commercial Services         53.0            1.8            -              -            1.8
    International Services      76.1           11.8        (80.5)          (1.1)         (69.8)
    Other (b)                   22.8           (5.0)        (2.6)             -           (7.6)
    Less: intersegmental  
    trading (c)                (30.1)          (0.3)           -              -           (0.3)
                           --------------------------------------------------------------------
                               924.7          179.7         (85.7)          (7.2)          86.8
                           --------------------------------------------------------------------
    Total
    - Group                    862.1                                                      82.3
    - Joint ventures (d)        62.6                                                       4.5
                           -----------                                               -----------


    Segmental analysis by class of business
    Six months ended 30 September 2002 (unaudited)


                             Profit before interest,                         
                              exceptional items and                         
                                           goodwill  Exceptional      Goodwill  Profit before    
                            Turnover   amortisation    items (a)  amortisation       interest
                                  #m             #m          #m             #m             #m   
                           --------------------------------------------------------------------
    Anglian Water Services     364.0          143.3       (13.2)             -          130.1
    Utility Services           133.2            4.7           -           (1.4)           3.3
    Government Services         51.2            3.9        (2.1)          (1.5)           0.3
    Construction Services      201.2              -           -           (2.8)          (2.8)
    Developments and    
    Commercial Services        109.0            1.0        (0.6)             -            0.4
    International Services      99.4            5.9        (0.9)          (1.6)           3.4
    Other (b)                   21.7           (4.5)      (16.0)             -          (20.5)
    Less: intersegmental 
    trading (c)                (33.9)          (0.3)          -              -           (0.3)
                           --------------------------------------------------------------------
    
                               945.8          154.0       (32.8)          (7.3)         113.9
                           --------------------------------------------------------------------
    Total
    - Group                    889.9                                                    111.3
    - Joint ventures (d)        55.9                                                      2.6
                           -----------                                               -----------
         


    Segmental analysis by class of business
    Year ended 31 March 2003 (audited)


                             Profit before interest,                         
                              exceptional items and                         
                                           goodwill  Exceptional      Goodwill  Profit before    
                            Turnover   amortisation    items (a)  amortisation       interest
                                  #m             #m          #m             #m             #m   
                           --------------------------------------------------------------------

    Anglian Water Services     726.8          287.4       (18.0)             -          269.4
    Utility Services           278.6           10.2        (0.9)          (2.5)           6.8
    Government Services        119.9           10.0        (5.5)          (3.0)           1.5
    Construction Services      391.8            0.6        (0.9)          (5.2)          (5.5)
    Developments and         
    Commercial Services        181.2            2.1        (1.5)             -            0.6
    International Services     209.5           26.2        (8.5)          (3.1)          14.6
    Other (b)                   46.1           (9.0)      (29.3)             -          (38.3)
    Less: intersegmental      
    trading (c)                (71.1)          (1.6)          -              -           (1.6)    
                           --------------------------------------------------------------------
                             1,882.8          325.9       (64.6)         (13.8)         247.5
                           --------------------------------------------------------------------
    Total
    - Group                  1,740.0                                                    243.6
    - Joint ventures (d)       142.8                                                      3.9
                           -----------                                               -----------


    Segmental analysis by geographical origin

                           Turnover                                Profit before interest
                   Six months    Six months        Year    Six months    Six months        Year
                     ended 30      ended 30    ended 31      ended 30      ended 30    ended 31
                    September     September       March     September     September       March
                         2003          2002        2003          2003          2002        2003
                  (unaudited)   (unaudited)   (audited)   (unaudited)   (unaudited)   (audited)       
                           #m            #m          #m            #m            #m          #m
                  ----------------------------------------------------------------------------------

    United Kingdom      840.9         863.4     1,707.9         152.2         106.1       224.5
    Europe               50.5          42.2        96.3         (29.3)          2.6         4.5
    Rest of world        33.3          40.2        78.6         (36.1)          5.2        18.5
                  ----------------------------------------------------------------------------------
                        924.7         945.8     1,882.8          86.8         113.9       247.5
                  ----------------------------------------------------------------------------------

    (a)    An analysis of exceptional items is shown in note 4.

    (b)    The other segment comprises Powermarque, AWG Rail and head office costs.

    (c)    All intersegmental trading originates from the United Kingdom.

    (d)    The joint venture results are within the Developments and Commercial Services, Government
           Services and International Services segments and are stated after exceptional items of
           #nil (30 September 2002: #nil; 31 March 2003: #3.6 million). Group share of joint venture
           net assets at 30 September 2003 was #7.6 million (30 September 2002: #15.5 million; 31
           March 2003: #9.9 million).


3   Discontinuing activities

    At 30 September 2003 AWG plc was in the process of selling its international operations.

    On 12 November 2003 contracts for sale of AWG plc's 49.8% holding of ESVAL to Consorcio Financiero
    and the Moneda Chile Fund for a total of #55.0 million were completed.

    On 4 November 2003 contracts for sale of AWG plc's 54.3% holding in SmVAK to Penta for #38 million,
    and its holdings of 95.2% in VAK JC and 58.7% in VAK Beroun to Energie AG for #13 million were
    agreed, subject to formal consent by the Czech Competition Authority.

    The sales of all the above companies are expected to be completed by 31 March 2004 and therefore
    the activities of these companies will likely be disclosed as discontinued operations in the group's
    annual report and financial statements for the year ended 31 March 2004.


4   Exceptional items and goodwill amortisation

                                      Six months    Six months        Year
                                           ended         ended       ended         
                                    30 September  30 September    31 March
                                            2003          2002        2003
                                     (unaudited)   (unaudited)   (audited)
                                              #m            #m          #m
                                    ---------------------------------------

     Refinancing project costs                 -          26.1        26.1
     Restructuring and other costs           3.6           5.5        22.6
     Contract rectification costs            2.5             -           -
     Goodwill amortisation                   7.2           7.3        13.8
     Asset impairments                         -             -        11.1
                                    ---------------------------------------
                                            13.3          38.9        73.6

     Joint venture impairments                 -             -         3.6
                                    ---------------------------------------
     Charged against operating profit       13.3          38.9        77.2
     Provision for loss on
     business disposals and closures
     - Impairment losses                    67.1             -           -
     - Disposal costs                        1.2             -           -
     - Costs of business closures  
       and loss on disposal        
       of businesses                        11.3           1.2         1.2
     Charged after operating profit         79.6           1.2         1.2
                                    ---------------------------------------
     Charged against profit  
     before interest                        92.9          40.1        78.4

     Interest and finance charges              -          38.0        38.0
     Coupon enhancement                        -          32.0        32.0
                                    ---------------------------------------
     Exceptional interest charge               -          70.0        70.0
                                    ---------------------------------------
     Total exceptionals and goodwill  
     amortisation before tax                92.9         110.1       148.4
     Tax credit thereon                     (0.4)        (20.7)      (27.8)
                                    ---------------------------------------
     Total exceptionals and         
     goodwill amortisation                  92.5          89.4       120.6
                                    ---------------------------------------



    Restructuring and other costs of #3.6 million include bid defence, Morrison litigation and redundancy costs.

    Contract rectification costs of #2.5 million are in respect of adjudication of a claim in relation to
    Rockingham Motor Speedway.

    The impairment losses of #67.1 million represents the difference between the carrying value of the net
    assets of the Chile and Czech businesses at 30 September 2003 and the expected proceeds from the
    subsequently announced disposal of these businesses. The impairment loss includes #37.2 million in respect
    of goodwill. The actual losses on disposal will be reported in the annual report and will include the
    effects of exchange rate movements up to the date of completion and all related costs of disposal incurred
    in the second half of the financial year.

    Disposal costs of #1.2 million are the costs of disposal incurred in the half year and do not include
    any costs which will be incurred in the second half of the year.

    Costs on business closures of #11.3 million relate to redundancy and other costs associated with the closure
    of operations in Germany (Purac GmbH) and the AWG Rail Labour Hire business. Included in these costs is
    #6.1 million of goodwill relating to Purac GmbH previously written off to reserves (see statement of movement
    on shareholders' funds). This has no effect on the group net assets as there is a corresponding credit in reserves.



5  Taxation 
                                          Six months    Six months        Year
                                               ended         ended       ended         
                                        30 September  30 September    31 March
                                                2003          2002        2003
                                         (unaudited)   (unaudited)   (audited)
                                                  #m            #m          #m
                                        ---------------------------------------
    Tax on loss on ordinary activities
    comprises:
    
    Corporation tax                             5.3          (2.0)         7.9
    Deferred tax                                2.4          12.9         15.3
    Adjustments relating to prior years         0.7           5.4        (13.5)
                                        ---------------------------------------
    Tax on loss on ordinary activities          8.4          16.3          9.7
                                        ---------------------------------------
    Analysed as:
    - before exceptional items                  8.8          37.0         37.5
    - exceptional items                        (0.4)        (20.7)       (27.8)
                                        ---------------------------------------
    Total                                       8.4          16.3          9.7
                                        ---------------------------------------


6    Dividends and other payments to shareholders

    In order to enable the group to continue to realise value for its surplus Advance Corporation Tax,
    no cash dividends were paid on ordinary shares during the year.

    AWG Plc made the following issues of redeemable shares of 0.1 pence each during the period:

    (a)  177,451 million redeemable shares were issued on 16 June 2003 at the rate of 1,000 redeemable
         shares per ordinary share held, equivalent to #1.00 per share. The value of shares issued was
         #177.4 million. Shareholders are given the opportunity to redeem at par the redeemable shares
         twice per annum. During the period 169,388 million shares were redeemed resulting in a return
         of #169.4 million of cash to shareholders.

    (b)  57,494 million (23 September 2002: 88,291 million) redeemable shares were issued on 4 August
         2003 at the rate of 324 (23 September 2002: 312) redeemable shares per ordinary share held,
         equivalent to 32.4 (23 September 2002: 31.2) pence per ordinary share, with a total value of
         #57.5 million (23 September 2002: #88.3 million). Shareholders are given the option to redeem
         at par the redeemable shares twice per annum. During the period a total of 58,421 million
         (2002: nil) shares were redeemed.

    There were 16,911 million (2002: 96,307 million) redeemable shares in issue at 30 September 2003.

    It is proposed that a further issue of redeemable shares will be made in December 2003 at the
    rate of 140 redeemable shares per ordinary share held, equivalent to 14.0 pence per ordinary share.
    During the period a dividend of #0.1 million was paid on the redeemable shares (30 September 2002:
    #0.1 million; 31 March 2003: #0.3 million).



7   Earnings per share     

                                          Six months    Six months        Year
                                               ended         ended       ended         
                                        30 September  30 September    31 March
                                                2003          2002        2003
                                         (unaudited)   (unaudited)   (audited)
                                      -----------------------------------------     
    Basic
    Loss for the financial period          (#58.2m)       (#74.3m)     (#61.6m)
    Less: Redeemable share dividends        (#0.1m)        (#0.1m)      (#0.3m)
                                      -----------------------------------------
    Loss attributable to ordinary  
    shareholders                           (#58.3m)       (#74.4m)     (#61.9m)
                                      -----------------------------------------
    Weighted average number of ordinary 
    shares in issue                         156.6m         283.0m       234.4m
                                      -----------------------------------------
    Basic loss per share                    (37.2p)        (26.3p)      (26.4p)
                                      -----------------------------------------

    Basic (before exceptional items and
    goodwill amortisation)
    Basic loss per share                    (37.2p)        (26.3p)      (26.4p)
    Exceptional items (after tax)            54.4p          29.0p        45.5p
    Basic earnings per    
    share (before exceptional items)         17.2p           2.7p        19.1p 
    Goodwill amortisation                     4.6p           2.6p         5.9p
                                      -----------------------------------------
    Basic earnings per share (before  
    exceptional items and goodwill
    amortisation)                            21.8p           5.3p        25.0p
                                      -----------------------------------------


    On 13 June 2003 AWG Plc consolidated its share capital by issuing 201 ordinary shares of 19.9 pence
    each for every 250 existing ordinary shares of 16 pence each. For the period from 1 April 2003 to
    13 June 2003 the weighted average number of shares in issue was 177.3 million, and for the period
    from 13 June 2003 to 30 September 2003 the weighted average number of shares in issue was 142.6 million.
    The overall weighted average number of shares in issue was therefore 156.6 million.

    Basic earnings per share before exceptional items and goodwill amortisation is disclosed as the
    directors consider it to be an appropriate reflection of the group's normalised performance.

    In accordance with Financial Reporting Standard 14 'Earnings per share' the diluted earnings per share
    for the six months ended 30 September 2003, 30 September 2002 and the year ended 31 March 2003 is taken
    as being equal to basic earnings per share as the group recorded a loss and the effect of including
    potential ordinary shares is anti-dilutive.


8   Movements in group shareholders' funds

                               Ordinary                  Share    Capital  Profit and         Total
                                  share   Redeemable   premium redemption        loss  shareholders'
                                capital       shares   account    reserve     account         funds
                                     #m           #m        #m         #m          #m            #m

    At 1 April 2003                28.4          9.8       6.0      352.3       520.9         917.4
    Total recognised gains and  
    losses relating to the
    period                            -            -         -          -       (56.0)        (56.0)
    Dividends paid and proposed 
    on non-equity shares              -            -         -          -        (0.1)         (0.1)
    Goodwill written back on
    disposal                          -            -                    -         6.1           6.1
    Issue of shares                 0.1            -       0.7          -           -           0.8
    Redeemable share issues           -        234.9         -          -      (234.9)            -
    Redemption of shares              -       (227.8)        -      227.8      (227.8)       (227.8)
    Share issue costs                 -            -      (0.3)         -           -          (0.3)
                            --------------------------------------------------------------------------------     
    At 30 September 2003             28.5       16.9       6.4      580.1         8.2         640.1
                            --------------------------------------------------------------------------------     

9   Subsequent events

    The disposals of the businesses in Chile and the Czech Republic are referred to in note 3.

    On 14 October 2003 AWG sold its 50% interest in MPA Utilities Pte Ltd, a joint venture operating in Vietnam.
    The net cost of disposal was #0.2 million and the gain arising on disposal was approximately #0.5 million.
    This gain has not been recognised in these accounts as the transaction concluded subsequent to 30 September 2003.



Supplementary information


(a) Capital payments to shareholders
    In order to accelerate the recovery of surplus ACT from prior accounting periods no cash dividend
    is being paid.
    Set out below is a table which summarises actual payments to ordinary shareholders in relation to
    the years ended 30September 2002 and 30 September 2003.


                                                        Issued and   Equivalent price
                                                         partially          per share
                                                          redeemed
    Share issue date                                            #m
                                                       --------------------------------

    11 February 2002 - redeemable shares                      37.9              13.42p
    23 September 2002 - redeemable shares                     88.3              31.20p
                                                       ------------
    Issues in the year ended 30 September 2002               126.2
                                                       ------------

    16 October 2002 - ordinary 'C' shares returned
    as capital (1)                                           500.9             177.00p
    6 January 2003 - redeemable shares                        24.1              13.60p
    16 June 2003 - 'special' redeemable shares (2)           177.4             100.00p
    4 August 2003 - 'ordinary' redeemable shares (2)          57.5              32.40p
                                                       ------------      
    Issues in the year ended 30 September 2003               759.9
                                                       ------------


    Share price on the first day of trading following the
    issue of redeemable shares or ordinary 'C' shares     

                                              16 June  6 January  16 October  23 September  11 February 
                                                 2003       2003        2002          2002         2002

    redeemable shares or ordinary 'C' shares    0.090p     0.095p        177p        0.090p       0.090p
    ordinary shares                               507p       415p        353p          426p         498p


(b) Apportionment figures
    For Capital Gains Tax calculations the base cost of the redeemable shares and return of
    capital will be taken as a proportion of the shareholders' original base cost in their
    existing ordinary shares. The apportionment figures to apply by reference to market values
    are:

                                          16 June  6 January  16 October  23 September  11 February 
                                          2003(2)       2003     2002(1)          2002         2002
                                          ----------------------------------------------------------
    ordinary 10p shares                         -          -           -       93.8161%     97.6310%
    ordinary 16p shares                         -      96.98%    55.4857%            -            -
    ordinary 19181/201p shares              77.38%         -           -             -            -
    return of capital at #1.77 per share        -          -     44.5143%            -            -
    'ordinary' redeemable shares             5.54%      3.02%          -        6.1839%      2.3690%
    'special' redeemable shares             17.08%         -           -             -            -
    redeemable shares for apportionment  1,324.0      136.0            -      312.0        134.2


    (1) On 15 October 2002 AWG plc issued one 'C' share of 177p each for every ordinary share of 10p
        each. On the same day AWG Plc consolidated its share capital by issuing five consolidated
        ordinary shares of 16p each for every eight ordinary shares of 10p each. On 16 October 2002
        all 'C' shares were cancelled, returning #1.77 per share in cash to shareholders.
    (2) From the record date of 13 June 2003 1,000 'special' redeemable shares were issued on 16 June
        2003 and 324 'ordinary' redeemable shares were issued on 4 August 2003 for every ordinary
        share of 16p each. 'Special' and 'ordinary' redeemable shares are the same class of share;
        the prefixes were used to differentiate the two issues from the same record date. On 16 June
        2003 AWG Plc consolidated its share capital by issuing 201 ordinary shares of 19181/201p each
        for every 250 ordinary shares of 16p each.

        Shareholder enquiries
        Shareholders with enquiries about AWG Plc or shareholder matters can contact the shareholder
        enquiry unit by telephoning +44 (0)1480 323104.

        Share register
        The company's share register is maintained by Lloyds TSB Registrars. Shareholders may check
        their holdings and find practical help and useful information at www.shareview.co.uk, or may
        write to The Registrar, Lloyds TSB Registrars, The Causeway, Worthing, West Sussex, BN99 6DA
        or telephone +44 (0)870 606 0382.

        Registered office
        AWG Plc, Anglian House, Ambury Road, Huntingdon, Cambridgeshire, PE29 3NZ, United Kingdom.
        Telephone +44 (0)1480 323000.

        Website
        www.awg.com



    Independent review report to AWG plc
    Introduction
    We have been instructed by the company to review the financial information which
    comprises the profit and loss account, the balance sheet, the cash flow
    statement and the related notes. We have read the other information contained in
    the interim report and considered whether it contains any apparent misstatements
    or material inconsistencies with the financial information.

    Directors' responsibilities
    The interim report, including the financial information contained therein, is
    the responsibility of, and has been approved by the directors. The directors are
    responsible for preparing the interim report in accordance with the Listing
    Rules of the Financial Services Authority which require that the accounting
    policies and presentation applied to the interim figures should be consistent
    with those applied in preparing the preceding annual accounts except where any
    changes, and the reasons for them, are disclosed.

    Review work performed
    We conducted our review in accordance with guidance contained in Bulletin 1999/4
    issued by the Auditing Practices Board for use in the United Kingdom. A review
    consists principally of making enquiries of group management and applying
    analytical procedures to the financial information and underlying financial data
    and, based thereon, assessing whether the accounting policies and presentation
    have been consistently applied unless otherwise disclosed. A review excludes
    audit procedures such as tests of controls and verification of assets,
    liabilities and transactions. It is substantially less in scope than an audit
    performed in accordance with Auditing Standards and therefore provides a lower
    level of assurance than an audit. Accordingly we do not express an audit opinion
    on the financial information. This report, including the conclusion, has been
    prepared for and only for the company for the purpose of the Listing Rules of
    the Financial Services Authority and for no other purpose. We do not, in
    producing this report, accept or assume responsibility for any other purpose or
    to any person to whom this report is shown or into whose hands it may come save
    where expressly agreed by our prior consent in writing.

    Review conclusion
    On the basis of our review we are not aware of any material modifications that
    should be made to the financial information as presented for the six months
    ended 30 September 2003.

    PricewaterhouseCoopers LLP
    Chartered Accountants
    Birmingham
    4 December 2003









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