An Equity PerspectivePaul MalanGlobal Markets21 January 2004

2

Global Markets

Discussion Points

1 UK Water Characteristics

2 Financing of Growth

3 UK Water in an International Context

3

Global Markets

5%

6%

7%

8%

9%

10%

11%

12%

13%

'91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04

C.C. Op. Profit / Asset Value

90%

100%

110%

120%

130%

140%

150%

160%

Purchase Price /Asset Value

1. UK Water Characteristics

Asset Returns and Purchase Prices as a % of Asset Value

Sources: Ofwat publications, brokers reports, press releases, company releases and estimates.

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Global Markets

2. Financing of Growth

0 5 10 15 20 25 30 35

Est. AMP4 C.C. Op. Profits

Est. AMP4 Net Capex

Est. AMP4 Gross Capex

Est. Equity ('03)

Debt ('00 vs '03)

Asset Value ('03)

Selected Parameters relating to UK Water Growth (£ billion)

Sources: Ofwat publications, company reports press releases and estimates.

5

Global Markets

3. UK Water in an International Context

0%

50%

100%

150%

200%

UK Water UK Electricity North AmericanEnergy

Australia Energy

Indicative Purchase Prices as a % of Asset Value

Sources: Brokers reports, company releases, press releases and estimates.

6

Global Markets

Conclusion

Tensions facing UK water suggest favourable outlook

Ongoing support required for a range of sources of finance

Attractive in an international context

7

Global Markets

Important Notice

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