Kelda Group plc
Annual Report & Accounts 2003  Contents
01 Kelda Group plc Annual report & accounts 2003
02 Group structure 
03 Financial highlights 
04 Chairman’s statement 
06 Chief Executive’s review
Operating and 
financial review
08 Yorkshire Water
14 Aquarion 
16 Other operations 
18 Financial review
20 Corporate &
social responsibility
28 Board of directors 
29 Directors’ report 
31 Corporate governance 
33 Remuneration report 
Accounts
38 Directors’ responsibilities 
39 Report of the auditors 
40 Group profit and loss 
account 
41 Balance sheets 
42 Group cash flow statement
43 Notes to the group cash 
flow statement 
44 Notes to the accounts 
Other information
69 Group companies 
70 Five year financial 
summary 
71 General information
72 Contact details 02
Group structure
Yorkshire Water 
Yorkshire Water is Kelda’s main UK subsidiary, providing water
and waste water services to more than 4.7 million people and
140,000 businesses.
It was recently ranked second in Ofwat’s Overall Performance
Assessment which compares the levels of service provided by
the UK’s ten major water and sewerage companies.
Every day the company supplies more than 1.3 billion litres
of high quality water to homes and businesses in Yorkshire,
making it one of the ten largest water companies in the world.
Through the efficient operation of its extensive network
of sewers and waste water treatment works it also ensures that
the region’s domestic and industrial waste is returned safely
to the environment.
Aquarion
Aquarion is now one of the ten largest investor owned water
companies in the US and the largest privately owned utility
in New England.
Following Aquarion’s acquisition of four water companies
in April 2002, it now provides water to 213,000 homes and
businesses – the equivalent of approximately 677,000 people
– in 52 communities in Connecticut, New York, Massachusetts
and New Hampshire.
Over the past 12 months, Aquarion has developed its
contract operations business, and has been awarded the
waste water contract in its home town of Bridgeport.
Loop Customer Management
Loop specialises in customer relationship management.
As well as operating customer contact centres in Bradford,
West Yorkshire, and Bangor, North Wales, it also offers a full
financial collection service, from billing and payment processing
to reminders and in-house debt recovery services.
The company’s main contract is to provide customer service
support to Yorkshire Water, however it has recently secured 
a number of new contracts for a series of high profile public
sector and retail organisations.
KeyLand Developments
KeyLand Developments is responsible for managing, developing
and disposing of the group’s surplus property assets, either
on its own or in partnership with outside organisations. 03 Kelda Group plc Annual report & accounts 2003
Group profit before taxation (£m) Dividend per share (p)
Adjusted earnings per share (excluding deferred tax) (p) 
42.4
39.1
2003
2002
2001 34.7
2003 164.3
2002 197 .1
2001 156.4
2003 26.05
2002 25.50
2001 24.80
Group profit before taxation and exceptional items (£m)
2003 
2002 162.7
2001 152.3
175.2
Turnover: group and share of associates and joint ventures (£m)
Financial highlights
Operating profit: group and share of associates and joint ventures (£m)
group associates and joint ventures
2003 277.1
2002 265.3
2001 238.9
2003 
2001
838.1
799.8
774.6
group associates and joint ventures
2002 04
Chairman’s statement
Strong operational and financial performance
in the Yorkshire Water business and the
successful acquisitions in the US by Aquarion
contributed to growth in profit before tax 
and exceptional items of 7.7%.
The final year results maintained and improved the good start
made in the first half. In total, profit before tax and exceptional
items of £175.2m was up 7.7% on prior year. The underlying
adjusted earnings per share excluding deferred tax were 42.4p 
per share an 8.4% increase on prior year. The main source of the
improved result was an excellent second half performance from
Yorkshire Water with further cost and capital efficiencies which 
at the same time delivered best ever drinking water compliance,
environmental and customer service outputs.
The Kelda balance sheet remains strong with gearing 
of 50%. An opportunity was taken in the year to increase long
term debt with a successful offering of £300m bonds which
completed in February. The Board recommend a final dividend
of 18.19p per share which makes a full year dividend of 26.05p, 
an increase of 2.2% compared to prior year.
In the interim results the Board announced important senior
management changes with the appointment of Kevin Whiteman,
Managing Director of Yorkshire Water as Chief Executive, Martin
Towers joined us as Group Finance Director and Rich Schmidt,
President of Aquarion was appointed as an executive director of
Kelda Group plc. These appointments have further strengthened
Kelda management, and are part of a continuing review of
management standards at all levels in the company. 
One of the continuing features of last year was the delivery
of the benefits arising from our focus on water and waste
water. In the US the acquisition of the New England operations
of American Water Works was completed and integrated
into existing operations. The US management responded
well to an integration challenge which coincided with a period
of increased operating complexity caused by water restrictions
due to the low snowfall of the prior year. Aquarion was
successful in winning a major $110m waste water contract
in Bridgeport, Connecticut, and made further investment
in the organic growth of contract operations expertise. 05 Kelda Group plc Annual report & accounts 2003 05
In the UK Yorkshire Water had an excellent year. It delivered
beyond expectations on cost and capital dimensions whilst
achieving best ever standards of performance in crucial
compliance and customer service dimensions. It was also
successful in winning the Midlands, Wales and South West 
region in the national Ministry of Defence contract, one of 
the largest contracts of its type ever put to tender. Yorkshire 
Water was also granted an interim price adjustment from Ofwat
for the period up to April 2005 which covers the needs of
increased investment, increased costs in sewer flooding and 
higher construction costs. It also enables us to meet the 
challenge of increased Drinking Water Inspectorate compliance
and environmental standards. Yorkshire Water had a year of
continuing progress in all aspect of its services and operations.
There was good progress in the results of the supporting
operations of KeyLand (property) and Loop (customer services).
An announcement was made earlier this year regarding our
45.5% holding in Waste Recycling Group plc (WRG) to the
effect that WRG was in discussions which may or may not lead
to an offer for WRG from the private equity firm Terra Firma.
Subsequent to the signing of the 2002/03 accounts, on 9 June
2003 WRG announced a recommended offer from Terra Firma
for 267.5p per share to be effected by a scheme of arrangement.
The continuous delivery of Kelda’s water and waste water
services has a significant environmental dimension. We deal
with environmental issues as diverse as management and access
of water catchment areas, sustainable water management,
river water and bathing water standards. Our performance
affects all our customers and everyone who lives in the region
we serve. Kelda attempts at all times to be environmentally
focused. We have also developed a broad section of community
programmes involving partnerships within local communities
and organisations to help support and deliver community
involvement by programmes of education, amenities, protection
and sustainability on a wide range of environmental matters.
Our staff and management are also involved in a large
number of voluntary programmes supporting broader community
initiatives such as improved reading standards in schools,
improved health and nutrition for children. We also sponsor
and support community initiative programmes. We have actively
supported government schemes to improve countryside access
and amenity by working closely with the competing interests and
increased public access to our important moorland catchment
and nature conservation areas. All these activities constitute
part of what is now termed corporate and social responsibility.
Such activities have and continue to form an essential part
of our day to day actions and responsibilities and are reported
in more detail in this report.
The Board was pleased to see the shareholder support 
that has led to Kelda entering the FTSE 100. Kelda believes 
it has played a part in helping to get greater financial market
recognition of the underlying value of the water sector.
Our strategy of focusing on water and waste water and on service
and efficiency, has resulted in Kelda progressing to become one
of the most efficient companies in the sector. Our objective is
to maintain our focus and emphasis on performance which we
believe to be in the best interests of our shareholders and customers.
In summary, this has been a year of continued progress on 
all fronts. Given the performance of the company, the Board 
would wish to thank the management team and equally
importantly to thank all employees for their positive contribution
to improved results. The world and the water sector remains 
a challenging environment. There is no place for complacency 
if we are to continually meet the demands of increasing 
efficiency, simultaneous improvement of standards of quality 
and environmental compliance. Our goals must be to improve
performance further, expand outsourced and contract
operations, and be responsive to opportunities for further
profitable growth in our core activities, whilst maintaining 
a positive dialogue with government and regulators.
Since the half year we have had the confirmation of the
25 year Aquatrine contract and the interim price determination
which takes us to year March 2005. These are both positive
outcomes since we published our half year results. We said
then and repeat now, that with regard to the possible 2005
price determination we continue to be encouraged by the
dialogue between regulator, government and industry. There
is an increased consensus on the significant achievements of
the industry and on the priorities that need to be addressed
if we are to encourage equity and capital markets to provide
the industry’s long term investment funding, on which all
future quality improvements increasingly depend. In our
view the long term industry outlook remains positive as
long as this dialogue is maintained.
John Napier
Chairman 06
Chief Executive’s review
Kelda continues to be a well managed, 
highly focused business committed to 
delivering sector leading financial, operational 
and environmental performance. 07 Kelda Group plc Annual report & accounts 2003
A year of continuing achievement
The past year has been one of continuing achievement for 
Kelda Group plc. Our strategy to put our primary focus on what
we do best, providing high quality water services, has helped
us to deliver what we believe is sector leading performance.
Our focus will continue.
Our main UK subsidiary, Yorkshire Water, made significant
improvements in its financial, operational and environmental
performance and continued to outperform all of the regulatory
targets set at the last price review.
Aquarion, our US operation, successfully integrated the 
four New England water companies acquired from American
Water Works in April 2002.
Other businesses have performed in line with expectations.
We were particularly pleased that we made the successful
bid for Package A of the Ministry of Defence’s Private Finance
Initiative, in conjunction with Earth Tech Engineering Ltd and
Halliburton KBR. 
The group’s activities are documented in more detail
later in this report. The following summary highlights the
key achievements of 2002/03. 
• Yorkshire Water is now ranked second in Ofwat’s Overall 
Performance Assessment which compares the levels
of service provided by the UK’s ten major water and
sewerage companies. 
• Yorkshire Water’s water supply service was ranked as
the most efficient in Ofwat’s relative efficiency report. 
• Reported water quality in the Yorkshire region was the
best it had ever been, with 99.91% of all samples
complying with relevant regulations, according to the 
Drinking Water Inspectorate’s (DWI) annual report on
drinking water quality in England and Wales for 2001.
• Our US operations continue to grow and develop with
the acquisition of four New England water companies
from American Water Works which have now been
integrated into existing operations, and further
investment in contract operations. 
• Yorkshire Water is a key partner in Brey Utilities – 
a consortium comprising Yorkshire Water, Earth Tech 
Engineering Ltd and Halliburton KBR – which has won
a 25 year £1bn contract to provide water and waste 
water services to more than 1,000 Ministry of Defence 
sites in the Midlands, Wales and South West England.
• In December 2002, Yorkshire Water was awarded
an interim price determination facilitating additional
investment in the services we provide. 
• Kelda was confirmed as the water industry’s leading 
performer based on an external assessment carried
out by the Business in The Environment Index of
Corporate Environmental Engagement. 
• Yorkshire’s rivers and bathing waters are the cleanest
since records began as a direct result of Yorkshire Water’s
ongoing investment and reduction of pollution incidents.
• Loop – Kelda’s customer relationship management business –
continued to win new business and was featured in both
the Financial Times’ Top 50 Best Workplaces in the UK
survey and the Sunday Times’ 100 Best Companies to
Work For awards. 
• Aquarion secured a ten year contract to operate waste
water treatment services in Bridgeport, Connecticut, 
home of the company’s headquarters. 
Periodic review
We believe that the progress Yorkshire Water has made since
the last price determination in 2000, in service, operational and
financial performance, places the company in a good position
for the forthcoming price review. Our objective is to protect the
long term financial and operational sustainability of the business,
which involves balancing the financeability of agreed investment
needs with acceptable prices to customers. This demands 
a joined up process from government, the regulator, environmental
and compliance agencies and finance providers.
Investing in our people
Additional to our focus strategy, a key part of the group’s
continuing success is due to the talent, hard work and enthusiasm
of employees across the business. In the last 12 months we have
successfully introduced new information technology systems
and more flexible working patterns and practices, to better
match our services to customers’ needs. The introduction of
these changes has required a significant investment in our
people to provide them with the necessary training and skills
to implement the changes and deliver the benefits. It has also
involved extensive consultation with employees and the various
trade unions that represent them, whose support and goodwill
has been important in helping deliver change which is already
bringing important benefits to our customers. 
I would like to express my sincere thanks to everyone who 
has played their part in delivering improved services, a key
feature of the group’s success over the past 12 months.
Kevin Whiteman
Chief Executive Yorkshire Water
A strong financial performance, underpinned 
by unprecedented levels of operational and
customer service, has given the company 
a strong platform on which to grow by 
exporting its expertise further afield.
Operating and financial review
01 02
01 Cleaner rivers To raise greater public awareness 
of Yorkshire Water’s ongoing work to clean up the 
region’s rivers and watercourses, a special Valentine’s 
Day competition was staged to give one lucky couple the
opportunity to win a “dirty weekend with a difference”
at the company’s biggest sewage treatment works!
Winners Nikki and Wayne Beazley from South Yorkshire
were joined by the media on a tour of Esholt Sewage
Treatment Works in Bradford where they learned all 
about the sewage treatment process and the company’s
environmental stewardship role.
02 Landholdings To promote greater awareness of
its landholdings, Yorkshire Water is currently running an
internet based photographic competition. Customers are
being encouraged to capture the stunning beauty of the
company’s reservoirs which will be turned into a calendar.
For further details visit www.youvebeenrambled.com
08 09 Kelda Group plc Annual report & accounts 2003
Financial performance
Following an increase in charges in line with inflation of 
1.2% on 1 April 2002, regulated turnover increased by 1.3% 
to £567.0m (2002: £559.8m), just ahead of the 1.1% increase
reported at the interim stage. Revenue growth from new
customers largely offset the effect of domestic metering 
in the full year.
The continuing emphasis throughout the business on
operating efficiency was demonstrated by the 3.6% increase
in operating profit to £233.7m (2002: £225.5m), of which
49% (2002: 47%) accrued in the second half year. Operating
cost savings are now expected to secure outperformance
of £100m in the current price determination period. 
Yorkshire Water was awarded an interim price
determination during 2002. As a consequence customer
prices will rise by 3.4% and 3.5% (previously 1.0%) above 
inflation in 2003/04 and 2004/05, respectively. The interim
determination allows Yorkshire Water to fund additional
investment of around £53m and to recover the additional 
cost of bad debts arising as a consequence of the loss of
the ability to disconnect customers. The additional investment 
will be used principally to reduce the number of incidents 
of sewer flooding and upgrade our sludge incinerators to 
meet the requirements of the Waste Incineration Directive. 
Operational performance
Yorkshire Water is now ranked second in Ofwat’s Overall
Performance Assessment which compares the levels
of service provided by the UK’s ten major water and
sewerage companies. This is a significant improvement
from the company’s ranking of tenth in 1996/97.
Ofwat’s report was published in August 2002. The highlights
included:
• Further reductions in the number of properties experiencing 
inadequate water pressure, which has been reduced to 189. 
This is ahead of the commitment to reduce this to 400 
properties by 2005.
• Significant reductions in the number of properties affected 
by unplanned interruptions to supplies caused by, for 
example, bursts and leaks. This was as a result of better 
incident handling by field teams and contractors.
• Drinking water quality in Yorkshire was the best it had ever 
been, largely as a result of an ongoing mains improvement 
programme.
• Security of water supplies was reported as the best ever, 
with leakage from the company’s and customers’ pipes 
continuing to fall. The extension of the Grid Zone into rural 
North Yorkshire allows more flexibility and increased security 
of supply to customers in these areas. The improvements 
were endorsed by the Environment Agency in its December 
2002 report, the third Annual Review of Water Company 
Water Resource Plans.
• The number of properties flooded with sewage also reduced.
The company’s water supply service was ranked in first place 
for operating cost efficiency in Ofwat’s report “Water and 
Sewerage Service Unit Costs and Relative Efficiency 2001-02” 
published in December 2002. Yorkshire Water
10
Water quality
The Drinking Water Inspectorate (DWI), in its annual report on
drinking water quality in England and Wales for 2001, reported
that 99.91% of all samples had complied with the relevant
regulations. The quality of Yorkshire’s tap water is the best
it has ever been. 
At the same time as the DWI’s report, Yorkshire Water
launched a campaign designed to encourage customers to
bottle their tap water and take it with them wherever they
went. The promotion saw 100,000 water bottles distributed
to customers, contractors, sports clubs, schools and other
community organisations. The DWI’s Chief Inspector urged
other water companies to adopt similar techniques to
promote their product.
Further improvements in the quality and reliability of
customers’ supplies are expected to be delivered as a result
of the company’s ongoing programme of mains renewal
and replacement. By 2010, a further 4,000km of pipes
will be upgraded, leading to better quality drinking water
and a reduction in the number of bursts and leaks.
Improvements to customer service
Significant progress has been made over the past year to
improve not just the level of service afforded to customers,
but also the feel of the service.
The new Integrated Customer and Operations
Management (ICOM) system which became fully functional
in April 2002 is now firmly embedded in the business and
has delivered improvements in operational performance.
The volume of calls from customers is down by 25%, repeat
customer calls are down by 10% and 98% of appointments
offered within a two hour time band have been met. 
An external review recently conducted by Trinity Horne,
a firm of management consultants working within the water
industry, concluded that the implementation of ICOM has
delivered “a class leading system which can enable [Yorkshire Water]
to achieve step change improvements in business performance
and customer experience”.
In October 2002 Yorkshire Water extended its opening
hours to ensure that water customers can now receive visits
until 9pm from Mondays to Fridays and between 8am and 6pm
on Saturdays and Sundays. This new business as usual service
is in addition to the traditional out-of-hours emergency
service provided by the company.
Quarterly research shows that overall customer satisfaction
levels are now consistently around 90%. Satisfaction among
business customers is equally as high, according to a survey
published in September 2002 by the Energy Information Centre
(EIC). The EIC - a business customer trade body that merged
recently with the Utility Buyers Forum - canvassed the views
of 150 water and waste water business customers across the
UK, with Yorkshire Water ranked as the top performer. 11 Kelda Group plc Annual report & accounts 2003
01 02
01/03 Changing image Yorkshire Water has unveiled 
a new corporate logo to reflect the significant changes that
have taken place within the company over recent years. 
The unveiling was performed by Mr Freddie Drabble, the
chairman of a well known local environmental pressure group,
The Sons of Neptune. For many years the group had campaigned
for Yorkshire Water to clean up its discharges into the North Sea.
The company responded with a £120m improvement
programme which has resulted in the cleanest ever bathing
waters along the entire length of the region’s East Coast.
02 Health promotion During the summer four ‘Tap Idols’
were recruited to tour the Yorkshire region and promote the
health benefits of drinking tap water. More than 100,000 bottles
were distributed to local sports clubs, community groups, schools
and the company’s contractors. The initiative was praised by the
Chief Inspector of the Drinking Water Inspectorate, Mr Michael
Rouse, who urged other UK water companies to adopt a similar
high profile approach to promoting their product.
03 12
Yorkshire Water
01
01 Sporting Chance Yorkshire Water sponsored the 
Yorkshire Post newspaper’s “Give Kids A Sporting Chance
Campaign” aimed at promoting sport in schools as an aid to
children’s physical and social development. A mini World Cup
involving some 250 primary school children was staged in 
May 2002, with Sports Minister Richard Caborn on hand
to referee one of the quarter final matches. Every child that
took part was presented with an official replica kit of the
nation their team represented. Kelda Group plc Annual report & accounts 2003 13
Environmental performance
In March 2003, Kelda was confirmed as the water industry’s
leading performer in the Business in The Environment (BiTE) Index
of Corporate Environmental Engagement. Yorkshire Water’s score
of 97% made Kelda eligible for a place in BiTE’s new “Premier
League”, an accolade shared by only 17 of the UK’s largest 250
companies. The survey measured the extent to which companies
understood and managed their impacts on the environment and
examined whether environmental issues were an integral part
of their business strategy. Yorkshire Water scored full marks 
in almost every category.
The report also pointed to the significant improvements
made by the company over the past few years in all areas of
its environmental performance. For example in the autumn
of 2002, the Environment Agency reported that local bathing
waters and rivers were becoming even cleaner and acknowledged
the role played by Yorkshire Water in achieving this success.
As a direct result of the company’s recent investment in
new waste water treatment works on Yorkshire’s East Coast,
last year 14 bathing waters surpassed the EU’s most stringent
guideline quality standards. The result is that for the first time
Bridlington can now apply to fly its own Blue Flag alongside those
of the neighbouring tourist resorts of Scarborough and Whitby.
By working in partnership with local authorities, the target for
2003/04 is to see 16 bathing waters attain guideline standards.
The agency also referred to the continuing revival of the
region’s inland waterways and to the contribution made by
Yorkshire Water’s “massive investment in sewage treatment”
and the company’s success at tackling pollution caused by
its assets and operations. The Environment Agency confirmed
in September 2002 that the company was one of only four
companies in the sector to reduce incidents of pollution
year-on-year.
As a result for example, the River Don in South Yorkshire
has seen substantial improvements in water quality, and in
the River Calder in West Yorkshire, fish populations are on
the increase according to recent studies.
During 2002, the number of Category 1 and 2 pollution
incidents involving the company’s assets was reduced by
more than a third. The number of Category 3 incidents was
also significantly reduced. By the end of 2003/04 we aim
to report an overall reduction of 50% in the number 
of pollution incidents reported in 2000.
Capital investment
Regulated capital investment for the year was £319.5m,
a slight decrease on the previous year’s figure of £324.7m. 
It is now expected that capital cost outperformance in the 
current price determination period will be around 10%.
A substantial part of the work being undertaken during the current
asset management programme (AMP3) is either to replace or reline
old cast iron mains, which can cause discolouration, or to upgrade
sewer overflows deemed unsatisfactory either because of the
frequency at which they discharge or the impact they have on local
watercourses. For example, by 2005 the company will have invested
more than £40m in Bradford. This fundamental overhaul of the water
and waste water infrastructure in Bradford will involve the cleaning
and relining of approximately 125km of trunk main, improvements 
to the city’s biggest water treatment works and the upgrading of 
65 unsatisfactory sewer overflows.
The company is also undertaking work on behalf of the
Passenger Transport Executive to enable the construction of a new
Supertram system in Leeds. In supporting this project, Yorkshire
Water will make more than 500 changes to the water and sewerage
system which are expected to take four years to complete.
Project Aquatrine
In April 2003 Brey Utilities, a consortium in which Yorkshire Water 
has a 45% interest and including Earth Tech Engineering Ltd and
Halliburton KBR, was confirmed by the Ministry of Defence (MoD) 
as the service provider for Project Aquatrine, Package A.
Project Aquatrine is one of the most significant Public Private
Partnership projects in the MoD, and the largest Private Finance
Initiative water project in the UK. It involves the award of three
packages (A, B and C) which will transfer the responsibility for the
operation and maintenance of the MoD’s water and waste water
assets and infrastructure in the UK to private sector providers. 
This will enable the MoD to focus its resources and expertise 
on delivering military capability. 
Under the terms of the 25 year contract for Package A, 
Brey Utilities will provide water and waste water services to over 
1,000 MoD sites in the Midlands, Wales and South West England. 
The £1bn contract is expected to go live in December 2003.
Brey Utilities is the only consortium that has also been
short listed for Packages B and C covering Scotland and the 
rest of England.
Customer communications
To reinforce the significant financial, operational and service
improvements made by the company in recent years, in July 2002
Yorkshire Water unveiled a new corporate logo.
The old Yorkshire Water logo has been replaced with 
a landscape design which presents a more modern image of the
company and better reflects the environmental stewardship role at
the heart of its activities. Customers and employees were consulted
about the new design.
To coincide with the launch of the new logo, a series of 
new, customer led communications campaigns were also unveiled. 
The success of these campaigns resulted in the company’s External
Communications Department being voted the region’s In-House
Team of the Year at the Institute of Public Relations’ Cream Awards 
in November 2002. The team won seven out of the 14 awards
presented on the night. Operating and financial review
01 02
01 Improved services Aquarion has opened a new, 
state of the art call centre to improve on its already 
high standards of customer service. The new call centre
will help meet demand created by Aquarion’s recent
acquisition of four water companies, which resulted 
in a 50% increase in the number of customers served 
by the company.
02 Celebrating diversity Aquarion has a rich tradition 
of celebrating cultural diversity in the communities
in which it operates. Pictured here are employees and
children celebrating National Hispanic Heritage Month, 
a major event in the US calendar which runs from
15 September to 15 October.
14
Aquarion
The company has dealt successfully with 
the challenges of integrating the four 
New England water companies acquired 
in April 2002, while at the same time 
making significant progress in the area 
of contract operations. 15 Kelda Group plc Annual report & accounts 2003
Financial performance
2002/03 was a year of consolidation for Aquarion following 
the acquisition of the New England operations of American 
Water Works at the end of April 2002. The acquisitions increased
the scale of the US operations by around 50%, adding £29.5m 
to turnover and £10.5m to operating profit in the eleven 
month period after acquisition.
Turnover of the continuing US operations decreased to
£64.2m (2002: £70.5m). Operating profit was reduced to 
£24.4m (2002: £28.2m) due to a dry summer in the north 
east region served by Aquarion, a number of other cost 
pressures and pre contract costs in the Aquarion Services 
contract operations business. £9.8m (40%) of the full year
operating profit accrued in the second half year reflecting 
the seasonal influence on water consumption in the US, 
where customers are predominantly metered.
The combined US operations had turnover of £93.7m
(2002: £70.5m) and operating profits of £34.9m (2002: £28.2m).
Timco, the small timber business owned by Aquarion
is being closed at an expected loss of £3.9m and its results
are included within discontinued operations. In 2003, Timco
turnover amounted to £9.7m (2002: £11.2m) and the business
incurred an operating loss of £0.4m (2002: £0.1m).
Operating review
Aquarion has continued to grow its operations through acquisition
and the expansion of its contract water and waste water
operations. The acquisition of four water company subsidiaries
from American Water Works in New York, Connecticut, New
Hampshire and Massachusetts, was completed in April 2002 for
$120m cash and the assumption of $104m of debt. The efficient
integration of the new utilities has now been achieved. The
acquisition increased Aquarion’s water company customer
base by 64,000 accounts or approximately 50%. During the 
year Aquarion also acquired the New England water operations
contract business from AquaSource Inc.
The non regulated water sector business also achieved a significant
success with the award of a 10 year, $110m contract to operate
the Water Pollution Control Authority in Aquarion’s home city
of Bridgeport, Connecticut, commencing in April 2003. It is one
of 11 new water and waste water contracts that Aquarion has
obtained throughout New England and brings the total to more
than 40.
The company continued to make a significant investment
in its infrastructure to improve water service and delivery. The
comprehensive capital improvement plan, which includes supply,
treatment, pumping and distribution improvements, mains
replacements and long range water supply planning was £19.9m
(2002: £17.2m). In the new financial year, the capital budget
is expected to exceed £30m. The improvements will be partly
financed by proceeds from the company’s March 2002 $90m
land sale.
Aquarion has signed a Memorandum of Understanding with 
the Connecticut Department of Environmental Protection not to
sell its water utility subsidiary’s 1,300 acres of land in the newly
acquired service areas of Greenwich and Mystic, Connecticut for
two years - unless it is preserved as open space. 
Customer service
Aquarion opened a new customer call centre in Connecticut to
provide service for existing and new customers throughout the
enlarged operation. The company has maintained high customer
satisfaction marks from the Connecticut Department of Public
Utility Control (DPUC). The DPUC’s 10th Annual Consumer Service
Complaint Scorecard, which documents unresolved complaints
of all Connecticut service utilities that generally concern such
issues as billing disputes, terminations and overall service quality,
in March reported that Aquarion Water received its lowest
number of unresolved customer complaints since 1994. 16
Operating and financial review
Other operations
Loop and KeyLand continue to make 
an important contribution to the
group’s performance.
01 Sunday Times award Its official! Loop is named by 
the Sunday Times as being one of the best companies to 
work for in 2003. 
02 Whitehall Landing A team from York Archaeological 
Trust - one of the world's leading authorities on the Vikings - 
was commissioned to explore Whitehall Landing site prior
to the commencement of building work.
01 02 17 Kelda Group plc Annual report & accounts 2003
KeyLand Developments
KeyLand had a strong second half year as anticipated in
the interim results statement. Turnover (including share of
associates) was ahead of last year at £12.8m (2002: £10.1m)
with operating profit 19% ahead at £4.3m (2002: £3.6m).
This reflects the continued high demand for prime
development land.
The primary source of revenue continues to be through
the development of major brownfield housing development
sites. Three significant properties were successfully brought
to the market during the year with numerous smaller, high
margin properties supplementing the results.
KeyLand’s office park development at Mid Point between
Leeds and Bradford continues to attract strong interest. The
2002/03 financial year saw the completion of two office buildings,
one being pre let to Car Care Plan Ltd. The second building,
Aquarius House, is now being let. Prospects overall for 2003/04
remain encouraging.
In addition to its primary activities, KeyLand has participated
in selected joint venture developments. KeyLand will continue 
to concentrate its resources primarily upon the development 
of the surplus property assets of Yorkshire Water. 
Loop Customer Management
Loop’s turnover increased to £17.3m (2002: £16.0m), including
£1.8m (2002: £0.9m) from external contracts, continuing
the trend of steady growth to date. Loop’s contribution to
group operating profit also increased to £0.4m (2002: £0.2m).
Loop continued to deliver high standards of service to
Yorkshire Water’s customers, including excellent results in the
customer response and debt collection measures monitored
by Ofwat.
Service to Loop’s expanded client list continued by
implementing a contract with the Merseyside Fire and Civil
Defence Authority, helping them with their initiative to save
lives through a programme of fire prevention measures. 
Loop also successfully won an inbound scheme for London Borough
of Lewisham, taking calls from customers who are calling in response
to the local housing association’s weekly newsletter. The contract
with National Blood Service expanded by handling outbound
calls for the North Wales region from Loop’s Parc Menai offices
in Bangor.
The company’s recent placements in the Sunday Times
‘100 Best Companies to Work For 2003’ and in the Financial
Times ‘50 Best Workplaces in the UK 2003’ recognises the
success of our approach, that excellent standards of customer
service is inextricably linked with retention of experienced and
enthusiastic employees working in a supportive environment.
Waste Recycling Group
2002 was a year of consolidation for Waste Recycling Group plc
(WRG) during which business conditions worsened. WRG reported
increased depreciation charges and exceptional items of £15.4m
in its results for the year ended 31 December 2002. The group’s
share of turnover increased to £138.0m (2002: £129.3m) and the
group’s share of operating profit, before exceptional items, was
£16.2m (2002: £18.5m). The group’s share of the exceptional
items, which amount to £4.4m after taxation, has been reported
separately in the group profit and loss account and has been
excluded from the group’s reported adjusted earnings per
share figures.
Kelda announced on 27 March 2003 that it had entered into
an exclusivity agreement, for the period until 5 June 2003, with
Terra Firma regarding the sale of its share at a price not less than
285p per share. WRG announced that it was in talks with the
same third party and that discussions were continuing which may
or may not lead to an offer for the company. Subsequent to the
signing of the 2002/03 accounts on 9 June 2003 WRG announced
a recommended offer from Terra Firma for 267.5p per share
to be effected by a scheme of arrangement. Group operating profit
Group turnover increased by 4.8% to £690.5m (2002: £658.8m)
for the full year, after the 5.2% increase reported in the interim
results. £29.5m of the increase in turnover was a result of
acquisitions by Aquarion in the US. Group turnover (including
share of associates and joint ventures) was £838.1m 
(2002: £799.8m).
Group operating profit increased to £265.3m (2002:
£245.0m), including £10.5m from the US acquisitions. Operating
profit from continuing activities increased 1.9% to £256.6m
(2002: £251.9m), of which 48% (2002: 47%) accrued in the
second half year. The group’s operating results reflect the strong
financial performance of the Yorkshire Water UK regulated
business whose operating profit increased 3.6% to £233.7m
(2002: £225.5m). The combined US operations, which were
adversely affected by the weaker dollar and a number of cost
pressures, now account for 13% (2002:12%) of group 
operating profit.
The group’s share of associates’ and joint ventures’ operating
profit, before the exceptional items reported by WRG in their
results for the year ended 31 December 2002, was £18.8m
(2002: £20.3m). Group operating profit (including share of
associates and joint ventures) was £277.1m (2002: £265.3m).
Group profit before taxation
A number of exceptional items affect the year on year comparison
of the group’s results. The group’s share of the exceptional costs
reported by WRG, amounting to £7.0m before taxation, have 
been adjusted in arriving at the group’s underlying profit before
taxation and exceptional items. Non operating exceptional items
comprise a loss of £3.9m on the closure of the Timco timber
business in the US and, in the prior year, an overall profit of
£34.4m from the major land sale in the US and the disposal 
of the renewable energy business.
The group interest charge increased to £98.1m (2002:
£93.3m) reflecting the continuing regulated capital investment
programme in Yorkshire Water. £71.0m (2002: £64.1m) of the
group total relates to the Yorkshire Water UK regulated business.
Low short term interest rates in the US reduced the cost of
financing both the existing operations and the US acquisitions,
which were earnings enhancing in the period. 
The group’s share of associates’ and joint ventures’ interest increased
to £10.8m (2002: £9.3m). Interest cover was 2.6 times (2002: 2.6)
before exceptional items and 4.2 times (2002: 4.1) on an earnings
before interest, tax, depreciation and amortisation (EBITDA) basis.
Group profit before taxation and the exceptional items
described above increased 7.7% to £175.2m (2002: £162.7m).
Group profit before taxation was £164.3m (2002: £197.1m).
Taxation
The group current taxation charge decreased to £7.0m (2002:
£7.3m) after the inclusion of an £11.7m prior year adjustment,
an effective tax rate of 4.2% (2002: 4.8%). The effective tax rate
will remain sensitive to the value of capital allowances arising from
the Yorkshire Water investment programme. As reported in the
interim results, the deferred tax charge has been affected by the
reduction in gilt rates and, therefore, the discount rate applied
to the deferred tax provision. This has resulted in a significant
increase in the deferred tax charge, which is a non cash item,
to £29.0m (2002: £14.8m).
Earnings per share and dividends
Earnings per share, adjusted to exclude exceptional items and
deferred tax, increased 8.4% to 42.4p (2002: 39.1p). Basic
earnings per share was 32.7p (2002: 39.3p).
An interim dividend of 7.86p (2002: 7.70p) was paid to
shareholders on 28 February 2003. The board is recommending
the payment of a final dividend of 18.19p (2002: 17.80p) per
share, to make a total dividend for the year of 26.05p (2002:
25.50p) per share, an increase of 2.2%. Dividend cover was
1.5 (2002: 1.7) times earnings before deferred tax.
Cash flow
The group’s cash flow reflects the characteristics of the Yorkshire
Water UK regulated and US water businesses. Strong operating
cash flow of £441.4m (2002: £387.8m) was offset by high capital
investment of £389.6m (2002: £323.6m) and interest payments
of £82.1m (2002: £83.7m). In 2003, acquisitions in the US cost
£78.0m together with debt acquired of £82.0m, whereas in
the prior year proceeds from the major land sale in the US
amounted to £57.2m.
Operating and financial review
Financial review
Group profit before tax and exceptional items increased 7 .7%, with adjusted
earnings per share growth of 8.4%. The group’s key balance sheet ratios
continue to be some of the strongest in the sector.
18
838.1
799.8
774.6
Turnover: group and share of associates and joint ventures (£m)
group associates and joint ventures
2003 
2002
2001
Operating profit: group and share of associates and joint ventures (£m)
group associates and joint ventures
2003 277.1
2002 265.3
2001 238.9 19 Kelda Group plc Annual report & accounts 2003
Dividend payments to shareholders, which are funded by the
Yorkshire Water regulated business, were £99.0m (2002: £96.3m).
Group net debt at 31 March 2003 increased by £283.9m
to £1,720.4m (2002: £1,436.5m). Balance sheet gearing
(expressed as the relationship between net debt and net debt
plus shareholders’ funds) increased slightly to 50% (2002: 46%).
Group net debt included £1,170.5m (2002: £1,042.0m) in
respect of the Yorkshire Water UK regulated business. The
increasingly important ratio of Yorkshire Water net debt
compared to the Regulatory Asset Value of 40% (2002: 39%)
is one of the strongest in the sector.
On 21 February 2003 £200m 5.375% fixed rate bonds
maturing in 2023 together with £100m of 30 year index
linked bonds, guaranteed by Yorkshire Water, were issued.
This long term funding will meet Yorkshire Water’s financing
requirements to the end of the current price determination
period in March 2005. 
Pensions
The disclosures required in accordance with the phased
implementation requirements of FRS 17 ‘Retirement Benefits’
are made in note 28 to the group accounts. The disclosed deficit
in the main UK defined benefit scheme at 31 March 2003 is
£111.9m after tax (2002: £17.6m asset). The group’s pension
liabilities are funded on a long term basis based on periodic
actuarial reviews and not the FRS 17 figures that can produce
volatile results over short time periods. An interim actuarial
review at 31 March 2003 has been commissioned as a basis
for reviewing the long term funding of the scheme. 
Accounting policies
The group accounts have been prepared in accordance with
the accounting policies described in note 1 to the accounts.
Aquarion prepares accounts in accordance with Generally
Accepted Accounting Principles in the US (US GAAP). Where
material, adjustments are made to the results of the US operations
to align US GAAP with the group’s accounting policies.
In accordance with FRS 18 ‘Accounting Policies’, the 
director’s have reviewed the group’s accounting policies and
consider that they continue to be the most appropriate to
the group’s operations. As permitted by FRS 19 ‘Deferred Tax’,
which requires provision to be made for deferred tax arising
from timing differences between the recognition of gains
and losses in the accounts and their recognition in the tax
computation, a policy of discounting has been adopted.
This has the effect of significantly reducing the deferred tax
liability shown in the group balance sheet. The requirement
to provide for deferred tax has no effect on the group’s
cash or borrowing position.
Treasury policy
The group’s treasury operations are controlled centrally in
accordance with approved board policies, guidelines and
procedures. Treasury strategy is designed to manage the group's
exposure to fluctuations in interest and currency exchange rates,
preclude speculation and to source and structure the group's
borrowing requirements. Note 21 to the accounts shows details
of the financial instruments held by the group for these purposes.
The group uses a combination of fixed capital, retained
profits, long term loans and finance leases, and bank borrowings
to finance its operations. Any funding required is raised by 
the group treasury department in the name of the appropriate
company and supported by guarantees as necessary. Funds 
raised by the holding company may be lent to operating
subsidiaries at commercial rates of interest. Cash surplus to
operating requirements is invested in short term instruments 
with institutions having a long term rating of at least A- or A3 
and a short term rating of at least A1 or P1 issued by Standard 
and Poor’s and Moody’s respectively.
Shareholder value
The strength of the company’s share price against a negative
market background in the new calendar year resulted in the
company’s promotion to the FTSE 100 index of leading UK
companies on 24 March 2003. The company’s mid market share
price at the close of business on 31 March 2003 was 409.5p
(2002: 389.5p). The yield on the company’s shares at that date,
based on the recommended final dividend, was 6.4% (2002: 6.5%).
Going concern
After making enquiries, the directors have a reasonable expectation
that the company has adequate resources to continue in operational
existence for the foreseeable future. For this reason, they continue
to adopt the going concern basis in preparing the accounts.
Martin Towers
Group Finance Director
42.4
39.1
Adjusted earnings per share (excluding deferred tax) (p) 
2003
2002
2001 34.7
Group profit before taxation and exceptional items (£m)
2003 
2002 162.7
2001 152.3
175.2 20
Operating and financial review
Corporate & social responsibility 
Kelda Group plc plays a key role in the social,
economic and environmental development 
of the communities in which it operates.
As the 24 hour provider of society’s most precious natural
resource we make a significant contribution to society through
the provision of safe and sustainable drinking water supplies.
The processes we use to undertake that role - collecting
the water, treating it and disposing of the waste water generated
in homes and businesses - is leading to marked improvements
in the quality of rivers and bathing waters.
To help deliver these essential services, we employ more
than 3,000 people in the UK and the US, with a further 15,000
people employed by the contract partners and suppliers with
whom we work.
In addition to the services and products we provide to our
domestic and business customers, Kelda is also making a positive
difference to local communities through its involvement with
a wide range of community partnerships and initiatives.
We have well established community programmes in place
which provide financial support and help in kind to a wide variety
of different individuals and organisations.
These partnerships are very important to Kelda in terms
of building a greater understanding of and forging stronger links
with our stakeholders, a concept commonly referred to today
as corporate and social responsibility.
At Kelda, corporate and social responsibility is already well
embedded in the company’s decision making processes.
In simple terms it is about the continuing adoption and
implementation of sound and sustainable policies - be they
of a financial, social or environmental nature - which is an
integral part of our day to day business activities.
We are committed to developing new strategies, policies
and procedures that will help us meet the demands and future
expectations of all our stakeholders - shareholders, customers,
employees, suppliers and local communities - while at the
same time continuing to deliver maximum social and
environmental benefits.
These activities are externally assessed using the
‘Winning With Integrity’ framework developed by Business
in The Community. This enables us to benchmark clearly our
progress against other companies committed to managing,
measuring and reporting their overall impact on society.
Our intention is to use this external framework whilst
developing our own internal agenda for action to ensure we
can not only meet, but also surpass the expectations of our
various stakeholders in the future.
The following few pages are designed to give some
insight into the work we currently have underway.
Further details can be obtained from the following websites:
www.keldagroup.com
www.yorkshirewater.com
www.aquarion.com
www.loop.co.uk Business in The Environment’s (BiTE) Index of Corporate
Environmental Engagement
In March 2003 this independent external agency confirmed
Kelda as the water industry’s leading performer in its highly
regarded Index of Corporate Environmental Engagement.
A score of 97% made Kelda eligible for a place in BiTE’s
new ‘Premier League’, an accolade shared by only 17 other
FTSE 250 companies.
The survey measured the extent to which companies
understood and managed their impacts on the environment
and examined whether environmental issues were an integral
part of their business strategy. Kelda scored full marks in
nearly all categories.
The report also pointed to the significant improvements
made by the company over the past few years in all areas
of its environmental performance.
Environmental policy
Kelda recognises that the long term viability of our water and
waste water business is dependent on environmentally sustainable
operations. We believe sustainable operations are those that
drive efficient resource use and provide a healthy environment,
which in turn facilitates social progress and economic growth.
As a company we therefore act as responsible stewards of the
environment as part of our normal business practices. 
To balance these challenging needs we are committed
to efficient and effective business practices. We recognise that
sustainability is the collective responsibilities of governments,
businesses, individuals and communities and so work in
partnership with our stakeholders to pursue this goal.
Corporate commitments
In pursuit of this policy, Kelda has committed itself to the following:
• Achieve and maintain compliance with the environmental 
legislation in the country of operation of each of our 
subsidiaries and associated companies. Where no regulations 
exist, implement challenging company standards.
• Continue to reduce and where practicable prevent pollutant 
loads entering the environment.
• Seek to use materials efficiently, and promote the application 
of the waste hierarchy.
• Encourage and facilitate the interchange of environmental 
technology throughout the group and promote good practice.
• Conserve and enhance biodiversity wherever practicable
or required, through efficient and effective business practices. 
• Manage our land holdings in a responsible manner and
to provide and encourage sustainable access.
• Develop our employees awareness of environmental issues 
including this policy.
• Foster productive partnerships with our stakeholder groups.
• Take an active and positive role in the community.
The policy applies to Kelda and its subsidiaries. We will also
encourage all other companies in which we have an interest as
either a shareholder or through our supply chain to implement
this policy, or an equivalent.
The policy will be regularly reviewed in light of new
knowledge, changing legislation, public concerns and the
views of our advisory panels. We will report our environmental
performance via our website on a regular basis.
As part of our environmental policy we have refocused
and increased the extent of internal reporting on our water
and waste water services, including regular reporting on relevant
environmental indicators such as energy, CO2 emissions and
biodiversity issues. Such measures are used to continuously
set and review internal targets, in addition to our annual
regulatory targets officially set by Ofwat and the Environment
Agency. These environmental indicators are published in our
on-line Environment & Community Report available at
www.keldagroup.com/environment
Environmental management systems
Environmental matters remain part of the fabric of our operations
and most elements required for a formal environmental
management system (EMS) represent business as usual for the
group. To this end, we have considered in detail the costs and
benefits of gaining an externally certified EMS to ISO14001
standard with a view to obtaining certification by March 2004.
21 Kelda Group plc Annual report & accounts 2003
Environment We aim to deliver service excellence to our customers
and to meet the requirements of our shareholders, whilst recognising
that the greatest commitment we can make to the environment
is through the efficient, effective and proper conduct of our business. 22
Environmental advisory panel
Our environmental advisory panel includes
representatives from both the voluntary
and statutory sectors in Yorkshire.
Meeting quarterly in parallel with
the board environment and community
committee, the aim of the panel is to
provide advice and input to Yorkshire
Water to ensure all future environmental
improvements represent real value for
money to customers. The panel also helps
us ensure that sustainability remains at
the heart of our activities.
Kelda is grateful to the following
organisations for providing their
representation and support:
The Government Office for Yorkshire
and the Humber, the Ramblers’ Association,
the Environment Agency, Business In
The Community, the Forestry Commission,
English Nature, Sheffield City Council,
British Waterways, the Council for the
Protection of Rural England, the Yorkshire
Wildlife Trust, the Regional Assembly for
Yorkshire and Humberside, English Heritage,
the RSPB, the Countryside Agency, the
Yorkshire Dales National Park Authority,
North Yorkshire County Council and Eye
On The Aire.
The panel has the following terms
of reference: 
• To offer advice both proactively and 
reactively to the Kelda board environment
and community committee and the 
executive management team of 
Yorkshire Water.
• To form a communication link between 
key environmental stakeholders and 
groupings in the Yorkshire region
and the company.
• To assist the company in prioritising
and realising its efforts with respect
to environmental matters.
• To support the company in
developing its understanding
of environmental issues.
• To raise the awareness by the
company of the importance of
local environmental issues.
• To provide a platform for areas
of mutual interest regarding the 
environment to be progressed.
• To make public as much information
as practicable.
Further information on Kelda’s
environmental performance is available at
www.keldagroup.com/environment
A green transport plan was recently
produced and implemented by Loop to
minimise the adverse impact of travel 
on the environment. 
The aim was to reduce emissions 
of greenhouse gases, improve local 
air quality, minimise health risks to
employees and reduce congestion, 
noise, dirt and fumes. To produce 
a green transport policy successfully 
it was essential to understand existing
transport links and facilities serving Mid
Point as well as the amount and types 
of travel generated by Loop employees.
To do this, an assessment of the site and
its surroundings was completed and 
a survey of staff journeys to and from
work undertaken. 
On analysing the findings of the
survey and site assessment the following
initiative was introduced: 
Discounted bus and train passes
were made available to Loop employees,
encouraging the use of public transport.
Loop now offers to pay in advance for 
a 12 month bus/train pass for its staff, 
in the form of an interest free loan. 
Deductions are then made direct 
from employees’ salaries each month. 
Environment
Case study:
Loop – green 
transport plan
Green transport plan Reducing car congestion 
on the region’s roads. Loop’s employees are being
encouraged to look at alternative methods of 
travelling to and from work.
Walking for health Members of Keighley’s
community enjoy a stroll round Ogden Reservoir 
near Bradford.
Disadvantaged groups in Keighley, West
Yorkshire, are being prescribed a dose 
of the great outdoors as part of a unique
pilot project aimed at improving 
people’s health.
Yorkshire Water has joined forces
with a local organisation called Walking
for All in Keighley (WALK) to encourage
people with health and social
disadvantages to make more use of the
company’s reservoirs, moorland and
woodland for recreation.
A special fund has been set up
which will be used to fund organised
trips to Yorkshire Water’s local reservoirs
where groups will be given the
opportunity to explore the stunning
scenery, wildlife and architecture on 
offer there.
Walking is an ideal form of exercise -
research shows that someone who does
30 minutes of moderate exercise five
times a week can significantly reduce the
risk of coronary heart disease, diabetes
and obesity and improve their sense of
well being.
As well as improving people’s health,
the scheme is also designed to promote
a greater public awareness of Yorkshire
Water’s many roles and responsibilities 
as the region’s largest landowner.
Environment
Case study:
Yorkshire Water –
walking for health
Corporate & social responsibility 23 Kelda Group plc Annual report & accounts 2003
The Yorkshire red kite restoration 
project began in 1999 with the release
of 20 young birds. 
Since that date – the first time 
red kites had been seen in the skies of
Yorkshire for more than 150 years – 
the population is, thanks to subsequent
releases and three breeding seasons,
steadily increasing.
By the end of July 2003, some 
80 young birds will have been released
into the wild. 
Yorkshire Water is one of three main
partners in this important wildlife project
and its role has been to fund it over the
last four years. The two other key
partners are the RSPB and English Nature,
while the Harewood Estate has thrown its
weight and support to the initiative by
allowing the young birds to be released
from its land.
Yorkshire Water’s involvement isn’t
one of simply handing over the money
and standing well back. It’s quite the
opposite. Yorkshire Water employees sit
on the project’s steering committee and
communications group.
The company’s Eccup reservoir, on
the outskirts of Leeds, is one of the best
places to view red kites and Yorkshire
Water has constructed a viewing platform
from where visitors can see the kites.
Environment
Case study:
Yorkshire Water – 
red kites
4
Sludge disposal
Yorkshire Water
1. Disposal to 
agriculture 19.8%
2. Disposal to land 
redemption 
recycling 27.3% 
3. Disposal to 
landfill 0.6% 
4. Disposal to 
composting 2.6%
5. Disposal to 
incineration 
49.7%
Source of abstraction
Yorkshire Water
1. Rivers 39.6%
2. Boreholes 20.8% 
3. Reservoirs 39.6% 
Red kites Members of the public get a glimpse 
of the red kites from the newly constructed
viewing platform at Eccup reservoir, Leeds.
Waste water treatment works This attractive 
farm style building houses Scarborough’s new,
state of the art waste water treatment works.
During construction over 30 quarries were
investigated to obtain stone typical to that
used in the surrounding area.
In January 2003, the company’s new
£30m waste water treatment works 
in Scarborough won a national award
from the Institute of Civil Engineering 
for its “substantial contribution to
sustainable development.”
The new works, built as part of
Yorkshire Water’s £120m CoastCare
programme, is situated within the
Heritage Coast and near to the North
Yorkshire Moors National Park.
An innovative approach was needed
therefore to ensure it would blend in
with its scenic surroundings.
To achieve this, the plant was
designed to resemble a range of
traditional farm buildings.
A number of different construction
techniques and buildings materials were
used in the construction of the external
buildings in order to create the illusion 
of a farm development that had grown
over time, with all the treatment
processes either contained within the
buildings or situated out of sight within 
a central courtyard.
The local environmental pressure
group, the Sons of Neptune, is delighted
not only with the sympathetic design
of the works but that it also uses ultra-violet
disinfection – the ultimate in terms of
current waste water treatment technology
– ensuring the company’s discharges go
beyond the standards required under
current EU and UK legislation.
Environment
Case study:
Yorkshire Water –
Scarborough
97 / 98
(377) (342) (317) (304) (297)
98 / 99 99 / 00 00 / 01 01 / 02
Leakage reduction
Yorkshire Water
200
ml/day
400
ml/day
97 / 98
(37) (37) (26) (14) (10)
98 / 99 99 / 00 00 / 01 01 / 02
0
40
Number of Category 1 and 2 pollution incidents
Yorkshire Water
1
2
3
4 5
1
2 3 24
Corporate & social responsibility
Kelda challenges itself to make a difference to the quality
of people’s lives over and above the provision of high
quality water and waste water services.
In the UK and the US we have well established
community programmes in place which provide financial
support and help in kind to a wide variety of different
individuals and organisations.
These partnerships are of real importance to Kelda 
in terms of building a greater understanding of and forging
stronger links with the communities in which we operate.
Our community programmes have the following themes:
Education – It is our role to educate people about water,
nature’s most precious resource and build a greater awareness
of our activities and environmental achievements.
Environment – The environment is at the heart of almost
everything we do. As well as being stewards of the land and
providing sustainable water supplies, through the efficient
operation and upgrading of our sewers and waste water
treatment works, we also play a significant role in terms of
preventing pollution and promoting improvements in river
and bathing water quality. 
Empowerment – As well as helping communities to help
themselves, we believe there are benefits to empowering
our employees by giving them the opportunity to get
involved in a wide range of initiatives.
To make the partnerships we forge as strong and productive
as possible, all our employees are actively encouraged to
become involved in community initiatives and act as
ambassadors for the company.
Encouraging employees to take a wider role and more
ownership of our community programmes has given greater
recognition and pride of achievement in the business. It has
generated greater personal development opportunities for
individuals and delivered important benefits for the
communities we serve.
Community We are as reliant on the support, prosperity and well being 
of the communities in which we operate as they are on the products 
and services we provide.
‘Cool Schools’ School children are being given 
ready access to a safe and refreshing supply
of tap water to help boost their well being.
Yorkshire Water’s ‘Cool Schools’ campaign was named community
initiative of the year 2002 at the prestigious Utility Industry
Achievement Awards, beating off stiff competition from some 
of the biggest names in the water, gas, electricity and
telecommunications industries.
‘Cool Schools’ was launched in June 2002 and is the biggest
community initiative ever undertaken by the company.
The aim of the campaign is to combat the problem of
dehydration in local primary schools by making chilled drinking
water more readily available to pupils.
Over the next three years Yorkshire Water plans to install 
mains fed water coolers in every primary school in the region. 
To encourage children to make maximum use of the coolers, 
a special water bottle has also been designed aimed specifically 
at five to 1 1 year olds.
The campaign was launched in response to claims by local
health experts that dehydration in schools is having a damaging
effect on children’s health and education.
Research shows that children are suffering from headaches,
fatigue, irritability and poor concentration because some schools are
failing to provide pupils with adequate access to drinking water. It is
also causing short and long term kidney and urinary tract infections.
Under the terms of the scheme, Yorkshire Water is offering
schools free water coolers, with schools only being asked to pay 
for installation and maintenance.
Community
Case study:
Yorkshire Water –
‘Cool Schools’ 25 Kelda Group plc Annual report & accounts 2003
Aquarion has joined forces with ‘Water 
For People’, a US based charity that helps
improve the availability of quality drinking
water in impoverished countries.
Every year Aquarion supports 
community based and charitable events 
by donating bottles of water.
During 2003 however, the company 
has also agreed that for every bottle it
donates, it will give 10 cents to ‘Water For
People’ to help fund its ongoing work in
developing countries.
Aquarion’s bottles will also carry labels 
that explain ‘Water For People’s’ aims and
objectives and how people can obtain 
even more information by visiting the 
charity’s website.
Aquarion Water’s President and Chief
Executive Janet Hansen said: “Americans have
become so accustomed to drinking water 
that complies with stringent, health related
standards that we often overlook the terribly
unsafe conditions that affect our neighbours’
drinking water throughout the world. 
Aquarion is delighted to be able to help 
‘Water For People’ address this very 
important issue.”
‘Water For People’ executive director Steve
Werner said: “This is a wonderful example of
corporate giving that not only provides us with 
a new source of funding but also helps spread
the word to a much broader audience.”
‘Water For People’ has already supported
more than 500 community based projects in
developing countries, resulting in a dramatic
decline in the number of diseases such as
cholera, typhoid and hepatitis A.
Community
Case study:
Aquarion – 
‘Water For People’
‘Water For People’ Aquarion’s initiative will help
provide improved water supplies in developing
countries.
Yorkshire Water operates a ‘Community
Catalyst Fund’ which is administered by 
a panel of 12 employees drawn from 
all levels of the business.
These volunteers are responsible not
only for considering requests for financial
assistance but also proactively identifying
community based initiatives which align
with the company’s business objectives. 
Donations are predominantly given
as a catalyst to help kick start new
initiatives and help community groups
help themselves.
Members of the panel conduct
regular site visits to see for themselves
the work carried out by potential
beneficiaries and ensure the authenticity
and sustainability of the initiatives we 
are asked to support.
During 2002/03, Yorkshire Water
donated a total of £100,000 to
approximately 50 different projects 
in this way. 
Community
Case study:
Yorkshire Water –
‘Community 
Catalyst Fund’
Yorkshire Water and HSBC are joint lead
sponsors of the North East Sheffield
Education Action Zone (EAZ).
The zone is one of 73 created by
the government to improve performance
in schools in challenging circumstances.
It embraces three secondary and
17 primary schools and one special
needs school.
During the past year Yorkshire Water
has invested more than £45,000 in cash
and support in kind.
As well as funding the EAZ’s award
winning newsletter, Yorkshire Water
provides office accommodation, facilities
support and training and development
courses. Several employees also donate a
considerable amount of time and energy
towards helping the EAZ realise its goals.
Several other large businesses -
including Cadbury Schweppes, Toshiba,
Corus and Sheffield City Council – also
support the zone’s activities.
Yorkshire Water’s Commercial
Director Paul Wynn, who is also chairman
of the EAZ, said: “The EAZ has made a
real difference to the quality of education
provided in local schools and Yorkshire
Water is proud to have played a pivotal
role in delivering these improvements.”
Community
Case study:
Yorkshire Water –
helping schools
Helping schools Prime Minister Tony Blair and
Home Secretary David Blunkett jamming with
young musicians during a fact finding visit to Firth
Park Community Arts College in February 2003.
Community Catalyst Fund Bradford Amateur Rowing
Club was one of the many organisations to benefit from
the fund. A £4,000 donation from Yorkshire Water helped
the club purchase a vitally needed new boat suitable
for junior rowers. The water company’s donation was
match funded through the ‘Sportsmatch’ scheme which
enables the advancement of sport at a grass roots level. Corporate & social responsibility
Workplace We recognise that the morale and motivation of our staff directly
links with how they value the company and how well the business performs.
Our aim therefore is to continually improve all aspects of the workplace.
Loop is officially a great place to work.
During 2002/03, the company picked
up two prestigious accolades which clearly
demonstrates how its positive approach 
to people is appreciated by employees.
Loop was featured as one of the 
100 best companies to work for in the 
well respected Sunday Times’ awards.
Loop competed against an
international list of companies and was
placed at number 70 – ahead of much
larger organisations such as Marks and
Spencer, American Express and Avon
Cosmetics.
It was also featured in the Financial
Times’ Top 50 Best Workplaces in the UK
survey, at number 42. Again this was a
considerable achievement as more than
1,000 companies entered.
Managing Director of Loop Alastair
Thomson said: “One of the most
important ways we ensure high levels of
service on behalf of our clients is to ensure
that the people who work for us are happy
and fulfilled in their working life. To receive
such positive endorsement of our
approach in these nationally recognised
awards is an important measure of how
much we try to get our approach to
people right,” he added.
Workplace
Case study:
Loop –
great place to work
Great place to work Alastair Thomson (right)
is pictured receiving one of the awards from
the Sunday Times Editor John Witherow.
Employee volunteering Yorkshire Water filter
management technician Gerald Leach helps pupils at
Salt Grammar School in Bradford with their work.
Yorkshire Water’s commitment to employee
volunteering is well established.
The company was singled out for praise 
in a discussion document published recently 
by HM Treasury and the Home Office.
Entitled ‘Next Steps On Volunteering 
& Giving In The UK’, the document set 
out how the government proposed to continue
encouraging businesses to forge stronger links
with the communities in which they operate.
Yorkshire Water, which has approximately
20% of its workforce actively engaged in
volunteering schemes, was highlighted as 
an organisation that offers great flexibility,
opportunities and encouragement to its
employees to get involved in community initiatives.
“The strategy is entrenched in the
company’s business plan. The focus is on 
a programme of employee volunteering – 
this helps build close links with community
groups and the business itself benefits as its
people see community engagement as a part 
of their personal development,” said the report.
The company is involved in a range 
of volunteering schemes, such as ‘Right To 
Read’, the national science and engineering
ambassadors initiative and through Bradford’s
Shipley and A+ Education Action Zones.
Employees also donate more than 
£30,000 a year to charity through the
company’s payroll giving scheme.
Workplace
Case study:
Yorkshire Water –
employee volunteering
Working at Kelda
Kelda employs over 3,000 people, of
which around 500 are based in the US.
We strive to improve our reputation
as a good employer. This helps and
encourages people to stay with us
and act as community ambassadors
for the business.
We recognise that work/life balance
is important to many of our employees
and this year we launched a new suite
of family friendly policies to supplement
our existing range of part time working
opportunities, flexible working and
formal job share policies.
A lot of emphasis is placed on
helping employees to understand how
their objectives relate to the company’s
business plan, how they are performing
against their objectives, and how their
performance related pay is determined.
We monitor employee satisfaction
on a regular basis.
Regular communications include
face to face sessions between employees
and the senior management team,
our ‘We’re Listening’ database where
all issues raised are replied to within
seven days and our bi-monthly house
magazine, Connections. Employees are
encouraged to seek out the information
needed to carry out their role to its
full potential, to share learning, expertise
and information with colleagues, to
give feedback which helps the company
to improve and to ensure that they
understand issues.
Through our annual business
excellence awards, we also seek to
celebrate and reward the innovation,
creativity and achievements of our
employees. During 2002/03, almost
200 team and individual entries were
received, giving a clear indication of
the ongoing popularity and success
of the event.
26 Marketplace Our interface with customers, suppliers and contractors is
important to the success of our business. We continually seek to improve
our relationships with our stakeholders and share our expertise and success.
27 Kelda Group plc Annual report & accounts 2003
For the second year running, Yorkshire 
Water has topped a business customer
satisfaction survey commissioned by the
independent Energy Information Centre.
150 businesses nationally were asked
to rate how their local water and sewerage
company performed in a number of key areas.
Yorkshire Water was ranked joint first 
for water supply and was top performer for
the removal of industrial waste and effluent.
The report said: “When compared in
detail against other individual water
suppliers, Yorkshire Water comes top for
water pressure, reducing water usage, 
ease of contact, listening to needs, solving
problems, explaining the industry and
knowing the customer’s company. Many 
of these arise from good account
management.”
Yorkshire Water recently launched 
a major customer care initiative believed 
to be a first for the UK water industry.
Each of the company’s top 30 business
customers now have their own dedicated
customer care teams responsible for
managing their every need.
Following the launch of the new key
account teams, customer satisfaction rose
from 91% to 95% and when compared against
other leading suppliers, from 86% to 89%.
Marketplace
Case study:
Yorkshire Water –
business customer survey
Business customer survey Yorkshire Water provides its
business customers with a range of products and services
to help improve their own performance and profitability.
Contractor awards The successful Morrison Utilities team
pictured with Kelda’s Chief Executive Kevin Whiteman.
Yorkshire Water recently took a major step
forward in being recognised as a contract
centre of excellence when it staged its
inaugural contract partner awards.
Over 180 employees from key
contractors attended the event along 
with representatives from the industry’s
regulatory bodies, the Environment
Agency, Drinking Water Inspectorate, Ofwat
and the Health and Safety Executive.
The aim of the event was to recognise
and reward the achievements of Yorkshire
Water’s contractors who play a crucial 
role in the delivery of services and
improvements to the company’s 4.7
million customers.
Morrison Utility Services was named
best overall performing partner, with AMEC
Utilities taking the title of best overall 
safety provider.
Steve Ryan, contract support manager
for AMEC, said: “Winning the award was
great because we’ve worked so hard to
strengthen our safety record over the past
12 months. As a business we place a lot of
emphasis on employee and public safety.”
Yorkshire Water has also developed 
a ‘Service Charter’ which has been rolled out
to contractors to ensure they understand 
the company’s policies and procedures and
are able to deliver a consistently high
standard of service to customers.
Marketplace
Case study:
Yorkshire Water –
contractor awards
Kelda proactively engages with a wide
range of stakeholder groups and has
forged numerous partnerships aimed
at building a greater understanding of
their diverse needs and aspirations.
This meaningful two way dialogue
helps us to shape our policies and
procedures to ensure that, wherever
practicable, we can tailor our activities
to meet market expectations.
Through regular research we gauge
the views of our customers and their
levels of satisfaction with the products
and services we provide. This has already
led to the development of a range of
added value services.
For example, domestic customers
are provided with free water saving
devices to install in their homes, free
drinking water bottles, a wide range
of flexible payment options and special
tariffs for vulnerable customers.
Yorkshire Water was also one of the
first UK companies to introduce service
plans for its key business customers and
voluntarily commit to enhanced levels
of service over and above regulatory
requirements.
We recognise however that our
reputation for financial efficiency,
service excellence and environmental
improvements is not based solely on our
own efforts but those of our suppliers
and contractors as well.
We have developed contract
partner criteria which balance cost 
and financial efficiency with their desire
and commitment to deliver the same
high standards of customer care as we
as a company strive to achieve and
which our customers expect. 01 John Napier (60)
ABD
Chairman
Joined the Board in June 1999. Appointed Chairman on 1 April 2000.
Chairman of Yorkshire Water Services Limited and a non executive 
director of Waste Recycling Group plc. He was recently appointed
Chairman of Royal & Sun Alliance Insurance Group plc. He has formerly
held senior posts as Chairman of Booker plc and Group Managing 
Director of Hays plc. He is also Chairman of Yorkshire and Humber
Rural Affairs Forum and a member of the Yorkshire Forward Board. 
02 Kevin Whiteman (46)
D
BSc, CEng, MIME 
Chief Executive
Appointed to the Board in September 2000 and appointed Chief
Executive in September 2002. Joined Yorkshire Water Services Limited
in 1997 as Business Director, Waste Water. Formerly Chief Executive
and Accounting Officer of the National Rivers Authority and Regional
Director of the Environment Agency. Previously held senior positions
with British Coal.
03 Martin Towers (50) BA, FCA
Group Finance Director
Appointed to the Board in March 2003. Formerly Finance Director
of Boots The Chemist, McCarthy & Stone plc, The Spring Ram
Corporation plc, Allied Textiles Group plc and Yorkshire Group plc.
04 Richard Schmidt (59) BSc, MSc, Phd, MBA 
President and Chief Executive of Aquarion Company
Appointed to the Board in September 2002. Joined Aquarion 
Company in 1995. Formerly President and Chief Operating Officer 
of Mechanical Technology Inc, President and Chief Executive Officer 
of Gundle Environmental Systems and held senior positions in 
Ecodyne Corporation.
05 Ken Jackson (63)
ABC
Non Executive Director
Joined the company in October 2000. Chairman of PM Group Plc.
Formerly Deputy Chairman and Chief Executive of Carbo plc and
a non executive director of Nightfreight plc, Motorworld Group plc
and Ring plc (Chairman).
06 Derek Roberts (60)
ABC
FCII, FCIB, CIMgt 
Non Executive Director
Joined the company in September 1996. Non executive director 
of Yorkshire Water Services Limited, Chairman of Kelda Group Pension
Trustees Limited. Formerly Chairman of Yorkshire Building Society,
and a non executive director of BWD Securities plc.
07 David Salkeld (47)
BC
BSc(Econ), DipPM 
Non Executive Director
Joined the company in October 2000. Group Chief Executive 
of the Grampian Country Food Group. Formerly Chief Executive 
of Arla Foods plc and held senior posts in Grand Metropolitan plc 
and Northern Dairies.
Board of directors
01 02
03 04
05 06
07
Denotes
A
Member of the audit committee
B
Member of the nominations committee
C
Member of the remuneration committee
D
Member of the environment and 
community committee
28 Directors’ report
Kelda Group plc Annual report & accounts 2003 29
The directors present their report for the year to 31 March 2003.
Result and dividends
The profit attributable to shareholders for the year was £126.1m.
After dividends totalling £100.8m, £25.3m was transferred to the
group’s reserves.
The directors recommend a final dividend of 18.19p per share to be
paid on 1 October 2003, to those shareholders on the register at the
close of business on 29 August 2003. An interim dividend of 7.86p
per share was paid on 28 February 2003. The total dividend for the
year will amount to 26.05p per share (2002: 25.50p).
Principal activities
The directors’ report should be read in conjunction with the operating
and financial review, which includes information about group businesses,
the financial performance during the year and future developments.
The principal activities of the group are the supply of clean water and
the treatment and disposal of waste water. Yorkshire Water Services
Limited (Yorkshire Water), the group’s regulated utility business in the
UK, is responsible for both water and waste water services. Aquarion
Company (Aquarion) the group’s US subsidiary provides water services
and waste water contract services in the states of Connecticut, New York,
Massachusetts and New Hampshire. The group’s other businesses are
KeyLand Developments Limited, a company which primarily develops
surplus property assets of Yorkshire Water and Loop Customer
Management Limited which provides managed customer services.
In addition, the group holds 45.5% of the issued share capital of
Waste Recycling Group plc, a leading waste management company. 
Acquisitions and disposals
In April 2002 Aquarion acquired the New England operations of the
American Water Works Company for $120m in cash and the assumption
of $104m of debt. Further details of the acquisition are given on
page 64. Timco, Aquarion’s small timber business is being closed. 
Directors
The directors are: John Napier, Chairman; Kevin Whiteman, Chief
Executive; Martin Towers, Group Finance Director; Richard Schmidt,
President and Chief Executive, Aquarion; Ken Jackson, Derek Roberts
and David Salkeld, non executive directors. 
Richard Schmidt and Martin Towers have been appointed since the
company’s 2002 annual general meeting, on 2 September 2002
and 1 March 2003 respectively. In accordance with article 82 of the
company’s articles of association they will retire at the forthcoming
annual general meeting and offer themselves for election, which
is recommended by the board, in accordance with article 111.
Details of their service contracts appear in the remuneration report
on page 34. In accordance with article 105, Derek Roberts will
retire at the forthcoming annual general meeting and will offer
himself for re-election, which is recommended by the board in
accordance with article 109. Mr Roberts has no service contract
with the company. Details of the unexpired term of his letter
of appointment appear in the remuneration report on page 34. 
The directors’ service agreements and letters of appointment are
described in the remuneration report on page 34. Additional information
relating to directors who served during the year, including remuneration
and interests in the company’s shares is contained on pages 35 to 37.
The details of directors’ interests in the company’s shares form part
of this report.
Corporate and social responsibility
There are group policies for the Environment, Health and Safety,
Human Resources, as well as a Code of Ethics, and related policies.
The internal control processes described on page 32 take account of
social, environmental and ethical risks. In addition, the board receives
information as part of the normal reporting process to identify and
assess such significant risks where they are relevant to the nature of
the company’s business. Further details are included in the following
sections of the directors’ report and in the Corporate & social
responsibility section on pages 20 to 27.
Employees and employment policies
The group strives to create a positive working environment for its
employees. The company is committed to increasing employee
involvement and places great emphasis on open two way communications.
There is an extensive consultation and communication process with
employees and trade unions to keep employees informed and involved.
Employees have opportunities to express their views including regular
face to face sessions with senior management, and are kept informed
via regular briefings and in-house publications. 
The group’s employment policies go well beyond current legal requirements.
The company recognises that work/life balance is a key factor and offers
a range of part time working opportunities, flexible working for some
jobs, and a formal jobshare policy. UK based employees also have the
opportunity to acquire a direct stake in the success of business through
a sharesave scheme which has been operating since 1989.
The group is committed to treating job applicants and employees in
the same way, regardless of their ethnic origin, gender, disability, race,
colour, religion, sexual orientation or age. An active approach to keeping
employees who become disabled in employment, and a commitment to
equal opportunities for less able job applicants has been recognised with
the ‘double tick’ accreditation from the UK employment service. 
The company’s approach to equal opportunities and diversity applies
to advertisements for jobs, recruitment and selection, training, conditions
of work, pay and to any other aspect of employment. The company
continues to build links with ethnic minority groups, and monitors the
composition of the workforce to track the effectiveness of actions
in relation to issues of diversity. 
Kelda continues to be committed to high levels of training
and employee development through a wide range of in-house and
accredited programmes. Employees are encouraged to seek out the
information, development and training needed to carry out their role
to its full potential and to share learning, expertise and information
with colleagues. The company recognises team and individual
achievements via business excellence events and presentations. Directors’ report
Health and safety
The company is committed to achieving high health and safety
standards throughout its businesses. The management of health
and safety issues operates in the context of the policy adopted
by the board and the system of internal control. The company 
has put in place a number of safety policies and procedures, and
provides such information, instruction, training and supervision
as is appropriate. In addition, the company provides occupational
health, safety and welfare advisory services. 
Health and safety goals are set annually in relation to numbers
of accidents, working time lost as a result of accidents, training
delivery, internal safety audits and the health surveillance programme.
These are monitored and reported monthly to senior managers
and directors. The use of stretching goals, the effective provision
of training and advice, and the continued emphasis by all parties
on the importance of health and safety matters has resulted in
significant reductions in reportable accidents, all accidents, and
working days lost. By the nature of accidents, there can be no
guarantee that they will never occur. The measures taken by
the company are intended to place emphasis on prevention
and continuing vigilance.
In 2002, 14 senior managers were awarded the Institute of
Occupational Safety and Health accredited Safety for Senior
Executives certificate. Yorkshire Water has been awarded a
National Safety Award 2002 from the British Safety Council
and a Silver Award for Occupational Safety 2002 from the
Royal Society for the Prevention of Accidents. 
The company consults with all employees via area and functional
health and safety forum groups and subsidiary company safety
committees. Local safety issues are discussed and resolved
within these groups. 
Environment and community
The environmental policy of the company recognises that
a sustainable water and waste water business is dependent
on environmentally sustainable operations. It is, therefore,
committed to integrating environmental best practice and
continuous improvement in environmental performance
through the efficient, effective and proper conduct of
its business.
Environmental performance is reported through the company’s
web based environment and community report which is
regularly updated and independently verified. This can be
viewed at www.keldagroup.com/environment
The company contributes actively to the communities which 
it serves. One in five employees has volunteered to take part in
a wide range of community activities. These include a community
ambassadors scheme, a speakers panel, and support to local
education ranging from ‘Right to Read’ in junior schools through
to coaching at senior schools, and mentoring university students
from diverse ethnic backgrounds.
Charitable and political contributions
Charitable contributions totalling £0.6m (2002: £0.6m) were
made during the year. No political contributions were made.
Research and development
During the year £3.9m (2002: £3.3m) was committed to research
and development including £3.0m (2002: £2.3m) on fixed assets.
Purchase of own shares
At the forthcoming annual general meeting, the company will
be seeking authority to purchase up to 10% of its ordinary shares.
Authority was previously granted at the annual general meeting
in 2002 in respect of 10% of the company’s issued ordinary share
capital but expires at the close of the forthcoming meeting.
Auditors
A resolution to reappoint Ernst & Young LLP as the company’s auditors
and to authorise the directors to determine their remuneration
will be proposed at the forthcoming annual general meeting. The
company has adopted an auditor independence policy. It establishes
procedures and guidance under which the company’s relationship
with its external auditors is governed so that the audit committee
is able to satisfy itself that there are no factors which may, or may 
be seen to, impinge upon the independence and objectivity of the
audit process. The key features of the policy are:
• Clear accountability of the auditors to the audit committee
and the chairman of the board of the company
• The audit committee considers annually its recommendation 
to reappoint the auditors
• The auditors are required to disclose the safeguards and steps 
taken to ensure independence and objectivity
• Rotation of audit partners and appropriate restrictions on 
appointment of employees of the auditors
• Specific restrictions and procedures in relation to the 
allocation of non audit work to the auditors, which is
controlled and monitored by the audit committee
Payment terms to suppliers
The company’s normal terms are to make payment in accordance
with suppliers’ terms of trade or within 30 days from the receipt
of services or invoices subject to satisfactory performance by the
supplier. Kelda Group plc is a holding company and, at 31 March
2003, had no trade creditors outstanding. The payment terms of
individual operating subsidiaries are disclosed in their accounts.
Major shareholdings
As at 4 June 2003 the company had been notified of the following
interests amounting to 3% or more of the company’s issued
ordinary share capital:
M & G Investment Management Ltd 4.76%
Legal & General Investment Management Ltd 3%
Annual general meeting
The notice convening the company’s 2003 annual general
meeting at the Barbican Centre, York on 31 July 2003 at 11am
is set out in a separate document issued to shareholders.
By order of the board
Philip Hudson
Group Company Secretary
5 June 2003
Registered office:
Western House
Halifax Road
Bradford
BD6 2SZ
Registered in England
No. 2366627
30 Corporate governance
Kelda Group plc Annual report & accounts 2003 31
Corporate governance
The company is committed to high standards of corporate
governance throughout the group and the board is accountable
to the company’s shareholders for maintaining those standards.
This statement describes how the Code provisions identified in
the Combined Code are applied by the company.
The board considers that the company has complied throughout
the accounting period with the Code provisions set out in Section 1
of the Combined Code.
The board of directors
The company is led by a board of directors which maintains control
over the company’s activities. Biographies of the current board
members appear on page 28 of this report. These indicate the high
level and range of experience which they possess.
The board meets at least six times each year and more frequently
where business needs require. The board has a schedule of matters
reserved for its decision and the requirement for board approval
on these matters is communicated widely throughout the senior
management of the group. 
Appropriate briefing and training is available to directors on, and
subsequent to, their appointment. There is an agreed procedure
for directors in the furtherance of their duties to take independent
professional advice at the company’s expense. Directors have
direct access to the group company secretary who is responsible
for ensuring that board procedures are followed. The directors
receive full and timely access to all relevant information. 
The board comprises a chairman, three executive directors and
three non executive directors. All of the non executive directors
are considered by the board to be independent of management
and free from any business or other relationship which could
materially interfere with the exercise of their independent
judgement. Derek Roberts is the senior independent director.
Following the interim appointment of John Napier as executive
chairman, the roles of chairman and chief executive were
separated on 2 September 2002.
Potential appointments of both executive and non executive
directors to the board are, at the request of the board or the
chairman, considered by the nominations committee, which
comprises the chairman and all three non executive directors.
The recommendations of the nominations committee are
ultimately made to the full board, which considers them
before any appointment is made.
Any director appointed during the year is required, under the
provisions of the company’s articles of association, to retire
and seek election by shareholders at the next annual general
meeting. The articles of association of the company require
each director to be subject to re-election at intervals of no
more than three years. 
The board has delegated certain authority to the following
committees. Each committee has formal terms of reference.
The membership of each of the committees is shown on
page 28.
Executive committee
Chaired by the chief executive and comprising of all the executive
directors and the group chairman, it has delegated authority
to supervise the executive and operational management of
the company.
Audit committee
The audit committee reviews the group’s system of internal control,
accounting policies and financial and other reporting procedures.
It makes recommendations to the board relating to the appointment
of the external auditors. It agrees the nature and scope of the audit,
reviews its results and cost effectiveness and the independence and
objectivity of the auditors in accordance with the policy described
on page 30. Ken Jackson is chairman and Derek Roberts and
John Napier are members of the audit committee.
Remuneration committee
The remuneration committee recommends to the board the
remuneration policies for the executive directors and senior
management and determines remuneration packages for those
executives. No director is involved in discussion or voting in
relation to their own remuneration. David Salkeld is chairman
and Derek Roberts and Ken Jackson are members of the
remuneration committee.
Nominations committee
The nominations committee makes recommendations to the
board on the appointment of directors. Derek Roberts is
chairman and Ken Jackson, David Salkeld and John Napier
are members of the nominations committee.
Environment and community committee
The environment and community committee recommends
to the board appropriate environmental policies and procedures.
It is responsible for the publication of the environment and
community report which is available on the internet at
www.keldagroup.com/environment John Napier is chairman
and Kevin Whiteman is a member of the committee.
Directors’ remuneration
Full details of directors’ remuneration and a statement of the
company’s remuneration policy are set out in the remuneration
report appearing on pages 33 to 37.
Communication with stakeholders
The company places a great deal of importance on communication
with its stakeholders. Shareholders have direct access to the
company via the investor relations section of its website at
www.keldagroup.com and its free shareholder information
telephone service. The company responds promptly to enquiries
from shareholders and customers on a wide range of issues.
There is regular dialogue with individual institutional shareholders
as well as general presentations after the interim and preliminary
results. All shareholders have the opportunity to put questions
at the company’s annual general meeting and the company will
make a presentation at the meeting to highlight the key business
developments. The chairmen of all board committees will be
available to answer questions at the annual general meeting. Corporate governance
32
Internal control
The board is responsible for the group’s system of internal control
and for reviewing its effectiveness. There is an ongoing process
for identifying, evaluating and managing the significant risks faced
by the group and this has been in place for the year under review
and up to the date of approval of the annual report and accounts.
Strategic, financial, commercial, operational, social, environmental
and ethical risks fall within the scope of this process. The process
is designed to manage rather than eliminate the risk of failure to
achieve business objectives and can only provide reasonable, not
absolute, assurance against material misstatement or loss. During
the financial year, material joint ventures have been dealt with as
part of the group for the purposes of applying the guidance.
Associates have not been dealt with as part of the group for this
purpose, although, Waste Recycling Group plc has its own process
for compliance with the Code provisions. 
The group’s risk management process is intended to be comprehensive,
systematic and continuous, and based on constant monitoring of
business risk. The key features of the process include the following:
• The main risks facing the group are identified and recorded in 
a strategic risk register together with the control mechanisms 
applicable to each risk. These are collated from risk registers 
maintained by individual businesses.
• There is clear allocation of management responsibility for
risk identification, recording, analysis and control.
• The audit committee generally meets four times each year 
and reviews the effectiveness of the systems which are in 
place and reports to the board.
• A risk management forum, chaired by the group finance 
director, has been established with formal terms of reference 
comprising of senior management from key disciplines and 
operating companies. It advises and assists operational 
managing directors and the board in the implementation
of the risk management process and monitors risk on behalf
of the board. It reports to the audit committee.
• Business units are required to report annually on principal 
business risks and the operation of control mechanisms.
• The group audit and business services department provides 
objective assurance and advice on risk management and 
control, and monitors the risk management process.
• Comprehensive and well defined control policies are formally 
set out in the company’s policies and procedures manual.
The board confirms that it has reviewed the effectiveness of the
system of internal control. It has received the reports of the audit
committee and has conducted a formal annual review covering
all controls including financial, operational and compliance
controls and risk management, in accordance with the Internal
Control: Guidance for Directors on the Combined Code issued
in September 1999. Remuneration report
Kelda Group plc Annual report & accounts 2003 33
Directors’ remuneration report
The members of the remuneration committee during 2002/03
were David Salkeld (Chairman), Derek Roberts, Jamie Pike (resigned
26 July 2002) and Ken Jackson (appointed 26 July 2002). All
members of the committee are regarded by the company as
independent. The group chairman and the chief executive have
provided advice to the committee. For guidance in recommending
remuneration packages, the remuneration committee uses
published surveys carried out by remuneration consultants, as
well as internal research, together with other ad hoc projects
to support the objective of ensuring competitive and sustainable
remuneration. During the 2002/03 financial year, New Bridge
Street Consultants have advised the company on a variety of
remuneration related issues, including assisting the remuneration
committee with a review of the performance related elements of
remuneration packages. The company does not use New Bridge
Street Consultants in any capacity other than as an independent
adviser on remuneration and employee share scheme matters.
Statement of policy
The company’s policy is to establish remuneration packages which
enable the company to attract, retain and motivate people with
the skills and experience necessary to lead and manage a business
of Kelda’s size and complexity. Remuneration packages should
be aligned with the interests of the company’s stakeholders,
in particular its shareholders and customers. In recommending
remuneration packages, the remuneration committee follows
the principle of recognition of the individual’s contribution to
the business. The company intends that remuneration packages
continue to be developed to enable executive directors to receive
remuneration which is clearly related to performance, compared
to relevant market and industry comparators and taking into
account individual performance, responsibilities and experience.
Accordingly, a significant proportion of directors’ remuneration
is performance related through annual and long term incentive
plan awards.
The company treats remuneration strategy and its people resource
as key components in delivering its vision to the shareholders of
Kelda and to the customers of Yorkshire Water and Aquarion.
At the same time, the company recognises fully the sensitivities
of such matters and the need for due care and attention to
be taken when considering such issues.
The current remuneration package for each executive director
comprises the following:-
Annual salary and benefits
The annual salary for each executive director is reviewed each
year. The review takes into account relevant market comparators
and individual performance. Executive directors’ salaries are set
at the level of remuneration appropriate to the country in which
they are based. Benefits in kind include a car and health insurance.
Base salary is pensionable. 
Non executive directors are paid a base fee of £26,000 per annum.
In addition the chairman of the audit committee and the chairman
of the remuneration committee are paid fees of £7,500 per annum
and £5,000 per annum respectively. Derek Roberts also receives
fees of £16,000 per annum in his capacity as a non executive
director of Yorkshire Water Services Limited and £10,000 per
annum as chairman of Kelda Group Pension Trustees Limited.
He does not receive a fee for chairing the nominations committee.
The fees of non executive directors are determined by the board.
Annual incentive plan
During the 2002/03 financial year, each executive director had
the opportunity to earn an annual incentive award of up to 40%
of their salary. Having reviewed the performance related elements
of the executive directors’ remuneration packages, and in order
to provide comparable remuneration packages to those offered
by other UK water companies, the remuneration committee has
determined that with effect from year commencing 1 April 2003
the maximum potential annual incentive award shall be 60% of
salary. Any bonus payment is made in June based on performance
in the year ending on the preceding 31 March. Awards are entirely
performance related and are assessed against demanding
performance targets including a range of Ofwat measures, financial
targets and corporate and personal objectives. Annual incentive
payments are not pensionable for UK based directors. Payments
paid to US based directors are pensionable in accordance with
normal US practice. Non executive directors do not participate
in the annual incentive scheme.
Long term incentive plan (LTIP) 
Under the plan, executive directors may receive, at the discretion
of the remuneration committee, a conditional award of Kelda
Group plc shares each year, with a value of up to 40% of base
salary. The proportion of the award to be vested in the participants
after a period of three years will depend upon the company’s
performance in terms of total shareholder return (i.e. share price
movements and reinvested dividends) during the three year period,
relative to a comparator group of companies. The total shareholder
return of the company is calculated by an independent consultant
and compared with and ranked against the comparator group.
Vesting of 70% of the award is determined by a reference to the
company’s ranking against awg plc, Pennon Group plc, Severn Trent
plc and United Utilities plc, being the UK listed companies which
own and operate regulated water and sewerage companies and
whose characteristics are otherwise most similar to those
of the company. Vesting of the remaining 30% of the award
is determined by reference to the constituents of the FTSE mid
250 index on the date of grant (excluding investment trusts).
The rules of the LTIP provide for the balance between water
company comparators and FTSE 250 comparators to be adjusted
in the event that the number of listed water companies should
fall. The remuneration committee believes that the constituents
of the comparator group (subject to its expansion in accordance
with the proposed variation of the rules of the plan referred
to below) provide the most appropriate comparison for the
company’s performance but keeps this mix of components
under continuous review. 
In respect of the 70% of the award determined by reference to the
four listed water companies, 100% of the award will vest only if the
company is ranked first, 60% of the award vests if the company is
ranked second, 20% of the award vests if the company is ranked
third. All shares are forfeited if the company is ranked below third.
In respect of the 30% of the award determined by reference to
FTSE 250, 100% of the award vests for upper quartile performance.
Between 100% and 20% of the award vests for performance
between upper quartile and median. All shares are forfeited
for below median performance. Remuneration report
34
No benefits under the plan are pensionable.
The non executive directors do not participate in the LTIP.
Having reviewed the performance related elements of the
executive directors’ remuneration packages, the remuneration
committee has decided to replace the existing LTIP with a new
LTIP. Details of the proposal are included with the separate
notice of meeting.
Service contracts
The company’s policy on the duration of contracts with executive
directors is that they should not normally be of fixed duration,
should be subject to twelve months notice by the company and
six months notice by the director. The notice periods have been
selected to be consistent with current corporate governance best
practice. Termination payments are made in accordance with the
terms of the contract. 
The company’s policy in respect of non executive directors is to
make appointments generally of three years duration, the terms
of which do not contain any express provision for notice periods
or termination payments in the event of early termination of
their appointment.
Kevin Whiteman and Martin Towers entered into service
agreements with the company on 2 September 2002 and
12 February 2003, respectively. The contracts are not of fixed
duration and each provide for notice periods of twelve months
by the company and six months by the director. The agreements
do not contain any specific provision for compensation payable
on early termination, and any termination payment would be
calculated to take account of the contractual notice period and
any annual incentive payment which would have been paid,
subject to the achievement of performance objectives.
Richard Schmidt entered into a service agreement with
the company on 8 August 2002. The agreement is for a fixed
duration terminating on 31 July 2004, subject to any agreed
extension or early termination. The agreement provides that
in the event of early termination, Mr Schmidt shall except
in certain specified circumstances, be entitled to receive
an immediate pension and should be compensated for the
amount of any annual incentive award which would have
been paid in respect of both the part of the year prior to
termination, and the unexpired term of the contract, subject
to the achievement of performance objectives.
John Napier’s appointment as chairman of the board of Kelda
Group plc took effect on 2 September 2002 and is for a three
year term. The terms of appointment do not contain any
provisions for notice periods or for compensation in the event
of early termination.
Derek Roberts’ appointment as a non executive director is with
effect from 1 September 2002 and is for a three year term. The
appointments of Ken Jackson and David Salkeld each took effect
on 2 October 2000 for a period of three years. The terms of
appointment do not contain any provisions for notice periods
or for compensation in the event of early termination.
James Newman’s service agreement with the company was
terminated on 6 August 2002. 
The agreement provided for 12 months notice by the company and
6 months notice by Mr Newman and in the event of termination by
the company, for payment of one year’s salary by the company to
the benefit of pension provision. Full details of the termination
payment and pension benefit are contained at pages 35 and 36.
John O’Kane’s service agreement with the company was terminated
on notice by Mr O’Kane with effect from 30 September 2002. The
agreement provided for 12 months notice by the company and 6
months notice by Mr O’Kane. No termination payment was made.
Jamie Pike’s appointment as a non executive director terminated on
25 July 2002 following his resignation. His letter of appointment did
not contain any express provisions for notice periods or termination
payments in the event of early termination, and no termination
payment was made.
The following graph shows the value, by the end of March 2003,
of £100 invested in Kelda on 31 March 1998 compared with the
value invested in a hypothetical market weighted index comprising
six other water companies (awg, Pennon Group, Severn Trent,
United Utilities, Bristol Water and Dee Valley). The other points
plotted are the values at intervening financial year ends. This index
has been selected as it incorporates companies with characteristics
comparable to those of Kelda Group plc.
Kelda Group Market weighted water companies index
120
100
80
60
40
20
0
31-Mar-98 31-Mar-99 31-Mar-00 31-Mar-01 31-Mar-02 31-Mar-03
Performance graphs
The following graph shows the value, by the end of March 2003, of
£100 invested in Kelda on 31 March 1998 compared with the value
invested in the FTSE 350 Index (excluding Investment Companies).
The other points plotted are the values at intervening financial year
ends. This index has been selected as Kelda Group plc is a
constituent of the FTSE 350.
Kelda Group FTSE 350 Index (excluding Investment Companies)
120
100
80
60
40
20
0
31-Mar-98 31-Mar-99 31-Mar-00 31-Mar-01 31-Mar-02 31-Mar-03 Kelda Group plc Annual report & accounts 2003 35
Directors’ emoluments Annual Total Total
incentive Termination emoluments emoluments
Salary/fees award Benefits in kind payments 2003 2002
£000 £000 £000 £000 £000 £000
Chairman
J A Napier 192 – 18 – 210 337
Executive directors
J H Newman (resigned 06.08.02) 65 37 12 207 321 267
J P O’Kane (resigned 30.09.02) 83 41 8 – 132 206
R K Schmidt* (appointed 02.09.02) 102 30 12 – 144 –
M G Towers (appointed 01.03.03) 13 – – – 13 –
K I Whiteman 204 77 19 – 300 221
Non executive directors
K Jackson 28 – – – 28 21
J R P Pike (resigned 25.07.02) 9 – – – 9 26
D F Roberts 50 – 4 – 54 48
D J Salkeld 28 – 7 – 35 32
774 185 80 207 1,246 1,158
*Salary and benefits denominated in US dollars and translated into sterling at an average exchange rate of $1.55 to £1.
(i) Waste Recycling Group plc paid fees of £24,000 in respect of John Napier and £8,000 in respect of James Newman (before his 
resignation) for their services as non executive directors of WRG during the year. The fees were received by the company and
not the individuals.
(ii) The executive directors participated in a profit related pay scheme which is open to all UK employees who have been employed
by the group for a minimum period of employment. In 2002/03 this scheme paid £370 (2002: £350) to each qualified participant
and this is included in the salaries shown in the table above.
(iii) The annual incentive awards referred to above are performance related and are fully described in the narrative section of this report. 
(iv) The amount disclosed in respect of Richard Schmidt relates to his period of appointment as a director of Kelda Group plc.
Pensions
The following directors were members of defined benefit pension arrangements provided by the company during the year. The main
features of the Kelda Group Pension Plan applicable to executive directors are:
(i) a normal retirement age of 60;
(ii) an accrual rate of 1/30th per year of pensionable service up to 20 years;
(iii) four times pensionable pay for death in service;
(iv) spouse’s pension on death
Pension entitlements and corresponding transfer values increased as follows during the year.
Increase Transfer Transfer Transfer
Total Total in value of net value of value of Total change
accrued accrued accrued increase in accrued accrued in transfer
pension pension pension accrued pension pension value
at at net of pension at at during
31/3/02 31/3/03 inflation over period 31/3/02 31/3/03 period
£ £ ££ £ £ £
J A Napier – 22,919 22,919 343,555 – 343,555 343,555
J H Newman (resigned 06.08.02) 25,414 42,727 16,576 605,018 301,929 954,475 648,667
J P O’Kane (resigned 30.09.02) 15,496 19,986 4,041 31,179 125,717 178,855 48,188
R K Schmidt 82,117 157,918 75,801 1,078,638 735,633 1,937,820 1,202,187
M G Towers – 444 444 4,267 – 5,067 4,267
K I Whiteman 18,498 31,307 12,273 102,975 157,286 293,991 124,505
The following sections of the remuneration report, with the exception of the table of directors’ beneficial interests in shares,
have been audited. Remuneration report
36
(i) Accrued pensions shown are the amounts that would be paid annually on retirement based on service to the end of the year,
or date of leaving or retirement if earlier.
(ii) The transfer value of the increase in accrued pension (net of inflation) represents the incremental value to the director of his
service during the year. It is based on the accrued pension increase after deducting the director's contribution. For Mr Newman
and Mr Schmidt, this figure includes the value of the change in payment date for benefits.
(iii) Transfer values have been calculated in accordance with version 8.1 of guidance note GN11 issued by the actuarial profession.
(iv) The change in the transfer value includes the effect of fluctuations in the transfer value due to factors beyond the control of the 
company and directors, such as changes in stockmarket conditions between the valuation dates. It is calculated after deducting
the director's contribution.
(v) Voluntary contributions paid by directors and resulting benefits are not shown.
(vi) In addition to the benefits shown above, Mr Newman received an augmentation to his benefits in 2001 on a money purchase basis. 
The resulting pension on retirement in respect of this augmentation was £1,797 per annum.
(vii) Mr Schmidt’s benefits are payable under the Aquarion pension arrangements in the US. The transfer value figures shown have 
been calculated on a consistent basis to the figures for the UK directors. The benefits are denominated in dollars and have been 
converted to sterling for the purposes of this disclosure using a conversion factor of $1.58 to £1.
The company contributes 12% of salary to the Kelda Group Pension Plan (KGPP) in respect of executive directors, which is an approved
scheme subject to Inland Revenue limits. The company makes separate accounting provision for unfunded liabilities arising from
contractual commitments above the Inland Revenue earnings cap. The figures include the unfunded element.
Directors’ shareholdings
The beneficial interests of the directors, who held office at the end of the year, and their immediate families in the ordinary shares
of the company as at 31 March 2003 and at the beginning of the year (or date of appointment where later) are set out below:
At 31 March At 1 April 
2003 2002
Chairman
J A Napier 30,000 30,000
Executive directors
R K Schmidt (appointed 02.09.02) – –
M G Towers (appointed 01.03.03) – –
K I Whiteman 4,408 1,936
Non executive directors
K Jackson – –
D F Roberts 1,973 1,973
D J Salkeld – –
In addition to the above beneficial interests in the company’s shares, the executive directors are regarded for Companies Act purposes as
being interested in 6,161,506 ordinary shares of the company held by an employee share ownership trust (ESOT) and 34,239 ordinary shares
held by a qualifying employee share ownership trust (QUEST). All employees (including executive directors) are potential beneficiaries of the
trusts, the purposes of which are to provide shares to satisfy options under the company’s save-as-you-earn share option scheme and, in the
case of the ESOT, grants made pursuant to the long term incentive plan.
It is not anticipated that any employee or executive director will be entitled to receive from either trust a greater number of shares than
that to which they are entitled on exercise of options granted to them under the share option scheme or the vesting of awards pursuant
to the long term incentive plan.
There have not been any changes to the shareholdings or options of the directors between 31 March 2003 and 4 June 2003. Kelda Group plc Annual report & accounts 2003 37
Directors’ share options
In common with all eligible employees of the group, executive directors are entitled to participate in the company’s Inland Revenue
approved save-as-you-earn share option scheme. The interest of directors in particular issues under the scheme are:
Market
price at
At 1 Granted Exercised Lapsed At 31 Exercise date of Date Date
April during during during March price exercise options options
2002 year year year 2003 (p) (p) exercisable expire
J H Newman 4,036 – (3,914) (122) – 240.0 421.5 – –
J P O’Kane 3,229 – – (3,229) – –– – –
The market price of the shares subject to these options at 31 March 2003 was 409.5p (2002: 389.5p) and has ranged from 356.75p to
440.0p during the year. The aggregate gain on the exercise of share options during the year was £7,104 (2002: £nil).
Long term incentive plan
Interests of the directors in the plan described on page 33 are:
Market price
At at date Granted Vested Vested Vested Lapsed At Earliest
1 April Date of award during 19 July 12 Sept 24 Oct during 31 March vesting
2002 awarded p year 2002 2002 2002 year 2003 date
J H Newman 13,134 June 1999 443.50 – (10,937) – – (2,197) –
19,101 June 2000 356.00 – – (12,862) (573) (5,666) –
18,379 June 2001 391.75 – – (7,415) (474) (10,490) –
– June 2002 436.00 16,972 – (852) (37) (16,083) –
J P O’Kane 4,853 June 1999 443.50 – (4,041) – – (812) –
14,045 June 2000 356.00 – – – – (14,045) –
13,784 June 2001 391.75 – – – – (13,784) –
– June 2002 436.00 15,138 – – – (15,138) –
R K Schmidt 47,363 June 2001 391.75 – – – – – 47,363 07.06.04
– June 2002 436.00 21,993 – – – – 21,993 11 .06.05
M G Towers – – – – – – – –
K I Whiteman 4,947 June 1999 443.50 – (4,120) – – (827) –
15,169 June 2000 356.00 – – – – – 15,169 21.09.03
14,805 June 2001 391.75 – – – – – 14,805 07.06.04
– June 2002 436.00 16,514 – – – – 16,514 11 .06.05
(i) The market price on 19 July 2002 was 385.0p
(ii) The market price on 12 September 2002 was 390.0p
(iii) The market price on 24 October 2002 was 394.0p
The market price of the shares on 4 June 2003 was 436.0p. The aggregate value of shares vested during the year was £160,201
(2002: £50,674).
By order of the board
Philip Hudson
Group Company Secretary
5 June 2003 Directors’ responsibilities
38
Statement of directors’ responsibilities
The directors are required by the Companies Act 1985 to prepare accounts which give a true and fair view of the state of affairs of the
company and of the group as at the end of the financial year and of the profit or loss of the group for the financial year.
In preparing the accounts of the company and of the group, the directors confirm that they have:
(i) selected and consistently applied appropriate accounting policies;
(ii) made reasonable and prudent estimates and judgements, where appropriate;
(iii) followed applicable accounting standards; and
(iv) prepared the accounts on a going concern basis.
The directors are responsible for ensuring that the company and its subsidiary undertakings keep accounting records which disclose, with
reasonable accuracy, the financial position of the company and the group and which enable them to ensure that the accounts comply
with the Companies Act 1985. They also have general responsibility for taking such steps as are reasonably open to them to safeguard
the assets of both the company and the group and to prevent and detect fraud and other irregularities.
The above statement, which should be read in conjunction with the Report of the auditors, is made with a view to distinguishing for
shareholders the respective responsibilities of the directors and of the auditors in relation to the accounts. Report of the auditors
Kelda Group plc Annual report & accounts 2003 39
Independent auditors' report to the shareholders of Kelda Group plc
We have audited the group's accounts for the year ended 31 March 2003 which comprise the Group profit and loss account, Group
Balance sheet, Company Balance sheet, Group cash flow statement, Statement of group total recognised gains and losses, and the related
notes 1 to 30. These accounts have been prepared on the basis of the accounting policies set out therein. We have also audited the
information in the Remuneration report that is described as having been audited.
This report is made solely to the company's shareholders, as a body, in accordance with Section 235 of the Companies Act 1985. Our audit
work has been undertaken so that we might state to the company's shareholders those matters we are required to state to them in an
auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone
other than the company and the company's shareholders as a body, for our audit work, for this report, or for the opinions we have formed.
Respective responsibilities of directors and auditors
The directors' responsibilities for preparing the Annual report, the Remuneration report and the accounts in accordance with applicable
United Kingdom law and accounting standards are set out in the Statement of directors' responsibilities.
Our responsibility is to audit the accounts and the part of the Remuneration report to be audited in accordance with relevant legal
and regulatory requirements, United Kingdom Auditing Standards and the Listing Rules of the Financial Services Authority.
We report to you our opinion as to whether the accounts give a true and fair view and whether the accounts and the part of the
Remuneration report to be audited have been properly prepared in accordance with the Companies Act 1985. We also report to you
if, in our opinion, the Directors' report is not consistent with the accounts, if the company has not kept proper accounting records, if
we have not received all the information and explanations we require for our audit, or if information specified by law or the Listing
Rules regarding directors' remuneration and transactions with the group is not disclosed.
We review whether the Corporate governance statement reflects the company's compliance with the seven provisions of the Combined
Code specified for our review by the Listing Rules, and we report if it does not. We are not required to consider whether the board's
statements on internal control cover all risks and controls, or form an opinion on the effectiveness of the group's corporate governance
procedures or its risk and control procedures.
We read other information contained in the Annual report and consider whether it is consistent with the audited accounts. This other
information comprises the Directors' report, unaudited part of the Remuneration report, Chairman's statement, Chief Executive’s review,
Operating and financial review, Corporate governance statement and Corporate & social responsibility report. We consider the implications
for our report if we become aware of any apparent misstatements or material inconsistencies with the accounts. Our responsibilities do
not extend to any other information.
Basis of audit opinion
We conducted our audit in accordance with United Kingdom Auditing Standards issued by the Auditing Practices Board. An audit includes
examination, on a test basis, of evidence relevant to the amounts and disclosures in the accounts and the part of the Remuneration
report to be audited. It also includes an assessment of the significant estimates and judgements made by the directors in the preparation
of the accounts, and of whether the accounting policies are appropriate to the group's circumstances, consistently applied and
adequately disclosed.
We planned and performed our audit so as to obtain all the information and explanations which we considered necessary in order to
provide us with sufficient evidence to give reasonable assurance that the accounts and the part of the Remuneration report to be audited
are free from material misstatement, whether caused by fraud or other irregularity or error. In forming our opinion we also evaluated the
overall adequacy of the presentation of information in the accounts and the part of the Remuneration report to be audited.
Opinion
In our opinion the accounts give a true and fair view of the state of affairs of the company and of the group as at 31 March 2003 and
of the profit of the group for the year then ended; and the accounts and the part of the Remuneration report to be audited have been
properly prepared in accordance with the Companies Act 1985.
Ernst & Young LLP, Registered Auditor, Leeds
5 June 2003 2003 2002
£m £m
Turnover: group and share of 
associates and joint ventures 2 838.1 – 838.1 799.8 – 799.8
Share of associates’ and joint 
ventures’ turnover (147.6) – (147.6) (141.0) – (141.0)
Group turnover 690.5 – 690.5 658.8 – 658.8
Continuing operations 651.3 – 651.3 647.0 – 647.0
Acquisitions 29.5 – 29.5 –– –
Discontinued operations 9.7 – 9.7 11 .8 – 1 1 .8
Operating costs 3 (425.2) – (425.2) (413.8) – (413.8)
Group operating profit 265.3 – 265.3 245.0 – 245.0
Continuing operations 256.6 – 256.6 251.9 – 251.9
Acquisitions 10.5 – 10.5 –– –
Discontinued operations (1.8) – (1.8) (6.9) – (6.9)
Share of associates’ and joint ventures’ operating profit 18.8 (7.0) 11.8 20.3 – 20.3
Operating profit: group and share of associates
and joint ventures 2 284.1 (7.0) 277.1 265.3 – 265.3
Net exceptional profit on sale of land (US) 4 –– – – 60.3 60.3
Net exceptional loss on disposal of operations 5 –– – – (25.9) (25.9)
Exceptional loss on closure of operations 6 –(3.9)(3.9) –– –
Profit on ordinary activities before interest 284.1 (10.9) 273.2 265.3 34.4 299.7
Net interest payable
– group 7 (98.1) – (98.1) (93.3) – (93.3)
– associates and joint ventures (10.8) – (10.8) (9.3) – (9.3)
Profit on ordinary activities before taxation 175.2 (10.9) 164.3 162.7 34.4 197.1
Taxation on profit on ordinary activities 8
– current taxation (7.0) – (7.0) (7.3) (19.0) (26.3)
– deferred tax (29.9) 0.9 (29.0) (14.8) – (14.8)
– share of associates’ and joint ventures’ tax (4.6) 2.6 (2.0) (4.7) – (4.7)
Profit on ordinary activities after taxation 133.7 (7.4) 126.3 135.9 15.4 151.3
Equity minority interests (0.2) – (0.2) 0.1 – 0.1
Profit attributable to shareholders 133.5 (7.4) 126.1 136.0 15.4 151.4
Dividends 10 (100.8) – (100.8) (98.3) – (98.3)
Retained profit for the financial year 32.7 (7.4) 25.3 37.7 15.4 53.1
Basic earnings per share 11 32.7p 39.3p
Adjusted earnings per share (excluding deferred tax) 11 42.4p 39.1p
Diluted earnings per share 11 32.6p 39.2p
Statement of group total recognised gains and losses
Profit attributable to shareholders 126.1 151.4
Exchange adjustments 1.5 (1.5)
Total recognised gains and losses relating to the year 127.6 149.9
Prior year adjustment – (138.1)
Total gains and losses recognised since last annual report 127.6 11 .8
Group profit and loss account
Year ended 31 March 2003
40
Before Before
exceptional Exceptional 2003 exceptional Exceptional 2002
items items Total items items Total
Note £m £m £m £m £m £m
Year ended 31 March 2003 Balance sheets
At 31 March 2003
Kelda Group plc Annual report & accounts 2003 41
Group Company
2003 2002 2003 2002
Note £m £m £m £m
Fixed assets
Intangible assets 12 243.8 184.9 – –
Tangible assets 13 3,606.7 3,332.2 – –
Investments 138.1 144.8 1,780.6 1,646.7
Investments in group undertakings 14 1,654.5 1,515.4
Investments in joint ventures 14 3.1 3.4 – –
Share of gross assets 34.9 33.9 – –
Share of gross liabilities (35.1) (33.8) – –
Loans to joint ventures 3.3 3.3 – –
Investments in associated undertakings 14 115.5 116.2 105.8 105.8
Other investments 14 19.5 25.2 20.3 25.5
3,988.6 3,661.9 1,780.6 1,646.7
Current assets
Stocks 15 1.5 3.1 – –
Debtors 16 198.2 214.8 152.1 141.4
Cash and short term deposits 328.0 195.5 229.6 68.0
527.7 413.4 381.7 209.4
Creditors: amounts falling due within one year
Short term borrowings 17 (44.4) (36.9) (12.3) (6.4)
Other creditors 18 (325.9) (373.9) (467.3) (147.0)
(370.3) (410.8) (479.6) (153.4)
Net current assets (liabilities) 157.4 2.6 (97.9) 56.0
Total assets less current liabilities 4,146.0 3,664.5 1,682.7 1,702.7
Creditors: amounts falling due after more than one year
Long term borrowings 19 (2,004.0) (1,595.1) (846.9) (858.7)
Other creditors 18 (237.3) (225.2) (1.9) (1.8)
Provisions for liabilities and charges
- deferred tax 20 (183.1) (149.9) – –
- others 20 (3.7) (3.8) (0.7) (1.0)
Net assets 1,717.9 1,690.5 833.2 841.2
Capital and reserves
Called up share capital 22 61.1 61.1 61.1 61.1
Share premium account 23 16.7 16.7 16.7 16.7
Capital redemption reserve 23 142.6 142.6 142.6 142.6
Profit and loss account 23 1,496.9 1,470.1 612.8 620.8
Equity shareholders’ funds 24 1,717.3 1,690.5 833.2 841.2
Non-equity minority interests 0.6 –
Capital employed 1,717.9 1,690.5 833.2 841.2
Approved by the board of directors on 5 June 2003 and signed on their behalf by:
Martin Towers, Group Finance Director Group cash flow statement
Year ended 31 March 2003
42
2003 2002
£m £m
Net cash inflow from operating activities 441.4 387.8
Dividends received from associated undertakings 2.5 2.7
Returns on investments and servicing of finance
Interest received 7.3 9.1
Interest paid (78.2) (73.0)
Interest element of finance lease rental payments (11.2) (19.8)
Net cash outflow from returns on investments and servicing of finance (82.1) (83.7)
Taxation (34.4) (15.1)
Capital expenditure and financial investment
Purchase of tangible fixed assets (excluding assets financed by leases) (389.6) (323.6)
Capital grants and contributions 19.6 32.8
Proceeds from sale of tangible fixed assets 0.5 0.5
Proceeds from sale of land (US) – 57.2
Loans to associates (2.6) (3.3)
Net cash outflow for capital expenditure and financial investment (372.1) (236.4)
Acquisitions and disposals
Payments relating to acquisitions of subsidiary undertakings (78.0) –
Net cash acquired with subsidiary undertakings 1.6 –
Purchase of associated undertakings and joint ventures – (1.3)
Proceeds (costs) arising from sales of operations 0.5 (0.6)
Purchase of intangibles (0.4) –
Net cash outflow for acquisitions and disposals (76.3) (1.9)
Equity dividends paid (99.0) (96.3)
Net cash (outflow) inflow from management of liquid resources (189.8) 9.0
Financing
Proceeds from transfer of QUEST ordinary shares to option holders 3.9 0.6
Increase in short term borrowings 0.4 12.5
Increase in long term borrowings 347.5 84.5
Capital element of finance lease rental payments (4.2) (5.7)
Net cash inflow from financing 347.6 91.9
(Decrease) increase in cash in the year (62.2) 58.0 Notes to the group cash flow statement
Year ended 31 March 2003
Kelda Group plc Annual report & accounts 2003 43
Reconciliation of operating profit to net cash inflow from operating activities 2003 2002
£m £m
Group operating profit 265.3 245.0
Depreciation 144.8 142.4
Goodwill amortisation 1.0 1.1
Release of grants and contributions (3.3) (3.4)
Exchange rate and other adjustments 23.7 (2.5)
Decrease in stocks – 0.9
Decrease (increase) in debtors 19.9 (1.2)
(Decrease) increase in creditors (10.0) 5.5
Net cash inflow from operating activities 441.4 387.8
Reconciliation of increase in cash to movement in net debt
2003 2002
£m £m
(Decrease) increase in cash in the year (62.2) 58.0
Cash outflow (inflow) from increase (decrease) in liquid resources 189.8 (9.0)
Cash inflow from increase in debt and lease financing (343.7) (91.3)
Change in net debt resulting from cash flows (216.1) (42.3)
Net loans and finance leases acquired with subsidiary undertakings (82.0) –
Exchange and other non cash adjustments 14.2 0.9
Movement in net debt in the year (283.9) (41.4)
Opening net debt (1,436.5) (1,395.1)
Closing net debt (1,720.4) (1,436.5)
Analysis of movement in net debt
At 1 At 31
April Cash Currency March
2002 flow Acquisitions translation 2003
£m £m £m £m £m
Cash 62.6.6 (57.3) – – 5.3
Short term deposits 123.9.6 170.3 – – 294.2
Commercial paper 9.0.6 19.5 – – 28.5
195.5.6 132.5 – – 328.0
Overdrafts – (4.9) – – (4.9)
Debt due within one year (32.7).6 (0.3) – – (33.0)
Finance leases due within one year (4.2).6 (2.3) – – (6.5)
(36.9).6 (7.5) – – (44.4)
Debt due after one year (1,118.1).6 (347.6) (82.0) 14.2 (1,533.5)
Finance leases due after one year (477.0).6 6.5 – – (470.5)
(1,595.1).6 (341.1) (82.0) 14.2 (2,004.0)
Net debt (1,436.5).6 (216.1) (82.0) 14.2 (1,720.4) Notes to the accounts
Year ended 31 March 2003
44
1 Accounting policies
Basis of accounting
The accounts of the group are prepared under the historical cost convention in compliance with the requirements of the Financial Services
Authority, all applicable accounting standards (Financial Reporting Standard ‘FRS’, Statement of Standard Accounting Practice ‘SSAP’ and
Urgent Issues Task Force abstract ‘UITF’) and with the Companies Act 1985.
The accounting policies have been reviewed in accordance with the requirements of FRS 18. The directors consider that the accounting
policies set out below remain most appropriate to the company’s circumstances, have been consistently applied, and are supported by
reasonable and prudent estimates and judgements.
Basis of consolidation
The accounts of the group include the results of the company, its subsidiaries, associates and joint ventures. The results of undertakings
acquired or disposed of during the year are included in the group profit and loss account from the date of acquisition or up to the date
of disposal.
Foreign currencies
In the accounts of the group’s companies, individual transactions denominated in foreign currencies are translated into local currency
at the actual exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies
are translated into local currency at the exchange rates ruling at the balance sheet date, or if appropriate, at the forward exchange rate.
Profits and losses on both individual foreign currency transactions during the year and monetary assets and liabilities are dealt with in
the profit and loss account. 
On consolidation, the profit and loss accounts of overseas subsidiaries are translated at the average exchange rates for the year and the
balance sheets at the exchange rates at the balance sheet date. The exchange differences arising as a result of translating profit and loss
accounts at average rates and restating opening net assets at closing rates are taken to reserves. Exchange differences on foreign currency
borrowings used to finance the group’s equity investments in its foreign subsidiaries are taken to reserves only to the extent of the
exchange differences arising on net investments in foreign subsidiaries.
Goodwill arising on the acquisition of an overseas subsidiary is calculated using exchange rates applicable at the date of acquisition and is
not subsequently re-translated at the balance sheet date.
Turnover
Turnover comprises charges to customers for water and waste water services, excluding value added tax, together with the proceeds from
the sale of commercial and residential properties to third parties.
Pensions
The cost of providing retirement pensions and related benefits is charged to the profit and loss account over the period benefiting from
the employees’ services in accordance with SSAP 24.
Research and development expenditure
Research and development expenditure is written off in the profit and loss account in the year in which it is incurred. Expenditure on
fixed assets relating to research and development projects is written off over the expected useful life of those assets.
Taxation
The taxation charge in the profit and loss account is based on the profit for the year as adjusted for disallowable and non taxable items
using current rates and takes into account tax deferred because of timing differences between the treatment of certain items for taxation
and accounting purposes.
Deferred tax is recognised in respect of all timing differences that have originated but not reversed at the balance sheet date where
transactions or events that result in an obligation to pay more, or a right to pay less, tax in the future have occurred at the balance
sheet date, subject to the following:
provision is made for gains on disposal of fixed assets that have been rolled over into replacement assets only where, at the balance 
sheet date, there is a commitment to dispose of the replacement assets,
provision is made for the tax that would arise on remittance of the retained earnings of overseas subsidiaries only to the extent
that, at the balance sheet date, dividends have been accrued as receivable,
deferred tax assets are recognised only to the extent that the directors consider that it is more likely than not that there will be 
suitable taxable profits from which the future reversal of the underlying timing differences can be deducted. Kelda Group plc Annual report & accounts 2003 45
1 Accounting policies continued
Deferred tax is calculated at the rates at which it is estimated that tax will arise based on tax rates and laws that have been enacted or
substantively enacted by the balance sheet date. Deferred tax is discounted using the post tax yields to maturity that could be obtained
at the balance sheet date on government bonds with maturity dates similar to those of the deferred tax assets and liabilities.
Intangible assets
Goodwill is the excess of the fair value of the consideration paid for a business or an associate over the fair value of the identifiable assets
and liabilities acquired. Goodwill is capitalised and amortised on a straight line basis over its useful economic life, which normally will not
exceed 20 years. Impairment tests on the carrying value of goodwill are undertaken at the end of the first full financial year following the
acquisition and in other periods if events or changes in circumstances indicate that the carrying value may not be recoverable.
A useful economic life in excess of 20 years, or an indefinite life, is assigned to goodwill if the directors are satisfied that its durability can be
demonstrated and that it is capable of continued measurement. Goodwill with a useful economic life in excess of 20 years, or an indefinite
life, is reviewed for impairment at each financial year end.
Prior to 1 April 1998, the group’s policy was to charge the cost of goodwill directly to reserves in the year of acquisition. Goodwill originally
charged against reserves remains eliminated against reserves, to the extent that it has not been charged to the profit and loss account
on the disposal of the business to which it relates.
Infrastructure assets
In the UK regulated water services business, infrastructure assets comprise a network of systems being mains and sewers, impounding
and pumped raw water storage reservoirs, dams and sea outfalls.
Expenditure on infrastructure assets to increase capacity or enhance the network and to maintain the operating capability of the
network in accordance with defined standards of service is treated as a fixed asset addition and included at cost after deducting
grants and contributions.
The depreciation charge for infrastructure assets is the estimated level of annual expenditure required to maintain the operating 
capability of the network based on an independently certified asset management plan.
Infrastructure assets in the US water services business are accounted for as for other tangible fixed assets.
Other tangible fixed assets
Other tangible assets are included at cost less accumulated depreciation. Finance costs incurred in respect of the construction of other
tangible fixed assets are not capitalised.
Freehold land is not depreciated. Depreciation is charged on other tangible fixed assets on a straight line basis over their estimated 
useful economic lives, or the estimated useful economic lives of their individual major components, from the month following 
commissioning.
Useful economic lives are principally as follows:
Buildings 25 - 60 years
Fixed plant 5 - 40 years
Vehicles, mobile plant and computers 3 - 10 years
Assets in the course of construction are not depreciated until commissioned. The carrying values of tangible fixed assets are reviewed
for impairment if events or changes in circumstances indicate that the carrying value may not be recoverable.
Leased assets
Assets which are financed by leasing agreements that transfer substantially all the risks and rewards of ownership to the lessee (finance
leases) are capitalised in tangible fixed assets and the corresponding capital cost is shown as an obligation to the lessor in borrowings.
Depreciation is generally charged to the profit and loss account over the shorter of the estimated useful life and the term of the lease.
If the operational life of an asset is longer than the lease term, and the agreement allows an extension to that term, the asset may be
depreciated over its operational life. The capital element of lease payments reduces the obligation to the lessor and the interest element
is charged to the profit and loss account over the term of the lease in proportion to the capital amount outstanding.
All other leases are operating leases and the rentals are charged to the profit and loss account on a straight line basis over the term
of the lease. Notes to the accounts
46
1 Accounting policies continued
Grants and contributions
Grants and contributions in respect of tangible fixed assets, other than in respect of infrastructure assets as described below, are deferred
and credited to the profit and loss account by instalments over the expected economic lives of the related assets.
Grants and contributions in respect of expenditure enhancing the infrastructure network are applied in reducing that expenditure. This is
not in accordance with Schedule 4 to the Companies Act 1985, which requires tangible fixed assets to be shown at cost and hence grants
and contributions as deferred income. The presentation is adopted because infrastructure assets do not have determinable finite lives and,
therefore, such grants and contributions would remain as liabilities in perpetuity. The directors consider that the group’s presentation
shows a true and fair view of the investment in infrastructure assets.
Grants and contributions received in respect of expenditure charged to the profit and loss account during the year are included in the
profit and loss account.
Investments
Investments in associated undertakings in the group accounts are accounted for using the equity method of accounting where the
directors consider that the group exercises significant influence over the associate. Significant influence is generally presumed to exist
where the group’s effective ownership is 20% or more. Investments in joint ventures are accounted for using the gross equity basis
where the company exercises proportionate control under a contractual arrangement. The consolidated profit and loss account includes
the group’s share of the operating results, interest, pre-taxation results and taxation of the associates and joint ventures for the relevant
reporting period. The consolidated balance sheet includes the group’s share of the net assets of the associates and joint ventures at
the balance sheet date, including any goodwill on acquisition less any provision for impairment in value.
Other fixed asset investments are stated at cost less provision for impairment in value.
Kelda Group plc shares held in an employee share ownership trust (ESOT) and a qualifying employee share ownership trust (QUEST) are
carried at cost as other fixed asset investments, less any provision for impairment in accordance with UITF 17.
Current asset investments are stated at the lower of cost and net realisable value.
Stocks
Stocks are stated at cost less any provision necessary to recognise damage and obsolescence. Work in progress is stated at the lower
of cost and net realisable value. Cost includes labour, materials and an appropriate proportion of overheads.
Provisions
Provision is made in accordance with FRS 12 for self insured third party liability claims incurred but not reported, and other known liabilities
which exist at the balance sheet date.
Financial instruments
Debt instruments Debt instruments are included in borrowings at the net proceeds received after the deduction of issue costs and 
any discount on issue. Discounts and issue costs are charged to the profit and loss account over the term of the debt at a constant 
rate on the balance sheet carrying amount. Realised gains and losses that occur from the early termination of debt instruments are 
taken to profit and loss account in that period.
Forward exchange contracts Forward exchange contracts are used to hedge foreign exchange exposures arising on forecast 
payments and receipts in foreign currencies. Foreign currency assets and liabilities outstanding at the balance sheet date are
re-translated at the forward exchange rate in appropriate cases.
Interest rate swaps Interest rate swaps are used to hedge the group’s exposure to fluctuations in interest rates on its borrowings.
The amounts payable or receivable in respect of interest rate swaps are accounted for on an accruals basis through adjustments
to the interest expense of the corresponding liability.
Currency swaps Currency swaps are used to hedge exposures on foreign currency borrowings and foreign currency assets arising 
from fluctuations in exchange rates. Borrowings hedged through currency swaps are shown in the group’s balance sheet re-translated 
at the swap exchange rate.
The group uses hedge accounting in respect of its interest rate swaps only where the financial instrument does not exceed the underlying
debt, the interest characteristics of the debt are altered and the contractual maturities do not exceed the maturities of the debt. Hedge
accounting is used in respect of currency swaps only where they relate to an existing asset, liability or firm commitment and move
inversely in relation to the foreign currency exposures of the group’s activities. Kelda Group plc Annual report & accounts 2003 47
2 Segmental information
Turnover Operating profit Operating assets
2003 2002 2003 2002 2003 2002
£m £m £m £m £m £m
Business analysis
Water services
– UK regulated 567.0 559.8 233.7 225.5 2,823.0 2,666.9
– US continuing operations 64.2 70.5 24.4 28.2 382.4 356.4
– US acquisitions 29.5 – 10.5 – 148.2 –
Waste Recycling Group plc (associate) 138.0 129.3 16.2 18.5 110.4 114.0
Other activities 22.4 (8.6) 33.8
– group 20.1 16.7 4.4 3.4 17.0 19.2
– associates and joint ventures 9.6 1.1 2.6 0.4 8.2 5.6
Discontinued operations 51.8 –
– group 9.7 11 .8 (1.8) (6.9) – 8.3
– associates – 10.6 – 1.4 –.8 –
838.1 799.8 290.0 270.5 3,489.2 3,170.4
Corporate costs (5.9) (5.2)
Total: group and share of associates and
joint ventures (before exceptional items) 838.1 799.8 284.1 265.3 3,489.2 3,170.4
Exceptional items
– Waste Recycling Group plc (associate) – – (7.0) –
Total: group and share of associates and joint ventures 838.1 799.8 277.1 265.3 3,489.2 3,170.4
Other investments 19.5 25.2
Dividend creditor (70.4) (68.6)
Net debt (1,720.4) (1,436.5)
Net assets 1,717.9 1,690.5
Geographical analysis
United Kingdom 734.7 706.9 244.0 242.6 2,958.6 2,805.7
North America 64.2 70.5 24.4 28.2 382.4 356.4
North America acquisitions 29.5 – 10.5 – 148.2 –
Discontinued operations 9.7 22.4 (1.8) (5.5) – 8.3
Total: group and share of associates and joint ventures 838.1 799.8 277.1 265.3 3,489.2 3,170.4
Trading between geographical and business segments is not material. There is no material difference between turnover by origin and by
destination. The group’s associated undertakings and joint ventures are based in the UK.
The group’s share of Waste Recycling Group’s operating profit is shown after goodwill amortisation.
The weighted average exchange rates used in the translation of profit and loss accounts were £1=$1.55 (2002: $1.43). Exchange rates
used to translate assets and liabilities at the balance sheet date were £1=$1.58 (2002: $1.42). Notes to the accounts
48
Own work capitalised (23.5) (1.1) – (24.6) (24.1) (0.1) (24.2)
Raw materials and consumables 18.8 – 6.3 25.1 19.8 7 .9 27 .7
Other external charges 168.3 13.0 2.8 184.1 172.7 4.9 177.6
Staff costs (see note 29) 96.9 4.4 2.2 103.5 91.7 3.7 95.4
Depreciation of tangible fixed assets:
On owned assets – UK infrastructure 34.7 – – 34.7 32.2 – 32.2
– other assets 92.3 2.7 0.2 95.2 93.1 2.3 95.4
On assets held under finance leases – UK infrastructure 1.3 – – 1.3 1.3 – 1.3
– other assets 13.6 – – 13.6 13.5 – 1 3.5
Operating lease rentals – plant and equipment 2.0 – – 2.0 1.4 – 1.4
– other 0.4 – – 0.4 0.4 – 0.4
Amortisation of grants and contributions (3.3) – – (3.3) (3.4) – (3.4)
Amortisation of goodwill on subsidiary undertakings 1.0 – – 1.0 1.1 – 1.1
Research and development 0.9 – – 0.9 1.0 – 1.0
Other operating income (8.7) – – (8.7) (5.6) – (5.6)
394.7 19.0 11.5 425.2 395.1 18.7 413.8
2003 2002
Auditors’ remuneration £m £m
Audit fees and expenses 0.5 0.4
Assurance work 0.1 0.4
Other services 0.2 –
0.8 0.8
3 Operating costs
Continuing Acquisitions Discontinued 2003 Continuing Discontinued 2002
operations operations Total operations operations Total
£m £m £m £m £m £m £m
4 Net exceptional profit on sale of land (US)
2003 2002
£m £m
Sale of land (US) – 60.3
Taxation – 19.0
The group announced the completion of a $90m land sale to the state of Connecticut and the international conservation organisation,
The Nature Conservancy on 29 March 2002. 7 Net interest payable
2003 2002
£m £m
Interest payable on:
Bank loans and overdrafts 18.8 14.1
Other loans 13.1 12.7
6.625% bond 2031 15.7 12.2
6.875% guaranteed bonds 2010 13.8 13.7
5.25% Eurobond 2006 19.4 23.8
5.375% bond 2023 1.2 –
3.048% Index Linked bond 2033 0.5 –
Amortisation of issue costs in respect of bonds 0.6 0.8
Finance leases 23.9 24.9
Total interest payable 107.0 102.2
Interest receivable (8.9) (8.9)
Net interest payable 98.1 93.3
Kelda Group plc Annual report & accounts 2003 49
6 Exceptional loss on closure of operations
2003 2002
£m £m
Timco (US) 3.9 –
Deferred tax 0.9 –
5 Net exceptional loss on disposal of operations
2003 2002
£m £m
First Renewables – 25.9
Taxation – – Notes to the accounts
50
8 Taxation on profit on ordinary activities
2003 2002
£m £m
Current tax 19.0
UK corporation tax at 30% (2002: 30%) 9.7 2.3
Foreign tax 9.0 26.3
Adjustments in respect of prior years:
UK corporation tax (4.8) (0.1)
US tax (6.9) (2.2)
Total current tax 7.0 26.3
Deferred tax
Charge for timing differences arising and reversing in the year 34.1 39.5
Adjustments in respect of prior years (6.6) (4.8)
Decrease (increase) in discount 1.5 (23.2)
Adjustment to discount in respect of prior years – 3.3
Total deferred tax (see note 20) 29.0 14.8
Share of associates’ and joint ventures’ tax 2.0 4.7
Total tax on profit on ordinary activities 38.0 45.8
The differences between the total current tax charge shown above and the amount calculated by applying the national rates of corporation 
tax (UK 30%, US 39.5%) to the profit on ordinary activities before tax is as follows:
2003 2002
£m £m
Profit on ordinary activities before tax 164.3 197 .1
Less: share of associates’ and joint ventures’ profit before tax 1.0 11 .0
Group profit on ordinary activities before tax 163.3 186.1
Tax on group profit on ordinary activities at standard national tax rates 50.7 63.7
Effects of:
Expenses not deductible for tax purposes 2.2 2.3
Capital allowances in excess of depreciation (34.1) (39.5)
Utilisation of tax losses (0.1) (0.4)
Disallowable loss on disposal of operations – 7.7
Tax benefits arising on US land sale – (5.2)
Adjustments to tax charge in respect of previous periods (11.7) (2.3)
Group current tax charge for period 7.0 26.3
The tax charge in future periods may be affected by the following factors:
(i) capital investment for the UK water services business is expected to remain at similar levels and the group expects to be able to claim 
capital allowances in excess of depreciation in future years at a similar level to the current year,
(ii) the US tax rates are higher than those in the UK, primarily because the profits earned in the US are taxed at a rate of 39.5%, 
(iii) changes in the medium and long term interest rates used to discount deferred tax assets and liabilities will affect the amount
of deferred tax charged in the profit and loss account. Kelda Group plc Annual report & accounts 2003 51
Equity – ordinary
Interim paid: 7.86p (2002: 7.70p) per share 2830.4 29.7
Final proposed: 18.19p (2002: 17.80p) per share 70.4 68.6
100.8 98.3
Dividends amounting to £1.6m (2002: £2.0m) in respect of the company’s shares held by the ESOT and the QUEST (see note 22) have been
waived and are, therefore, excluded from the aggregate of dividends paid and proposed.
11 Earnings per share
Basic earnings per share (EPS) is calculated by dividing the profit attributable to ordinary shareholders by the weighted average number
of ordinary shares in issue during the year. The ordinary shares held in the ESOT and the QUEST are excluded from the weighted average
number of ordinary shares for this purpose.
For diluted EPS, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all dilutive potential ordinary
shares. The group has only one category of dilutive potential ordinary shares: those share options granted to employees where the exercise
price is less than the average market price of the company’s ordinary shares during the year.
Weighted Weighted
average 2003 average 2002
number of Earnings number of Earnings
Earnings shares per share Earnings shares per share
£m m p £m m p
Basic EPS 126.1 385.8 32.7 151.4 385.2 39.3
Effect of dilutive share options 1.3 (0.1) 1.1 (0.1)
Diluted EPS 126.1 387.1 32.6 151.4 386.3 39.2
Adjusted EPS is considered by the directors to give a better and more consistent indication of the group’s underlying performance, and is
calculated as follows:
Basic EPS 126.1 385.8 32.7 151.4 385.2 39.3
Share of associates net exceptional items (WRG) 4.4 1.1––
Net exceptional profit on sale of land (US) –– (41.3) (10.7)
Net exceptional loss on disposal of operations –– 25.9 6.7
Exceptional loss on closure of operations 3.0 0.8––
Deferred tax 29.9 7.8 14.8 3.8
Adjusted EPS (excluding deferred tax) 163.4 385.8 42.4 150.8 385.2 39.1
10 Dividends
2003 2002
£m £m
9 Profit attributable to parent company
The profit of the parent company, after taking account of dividends from subsidiary undertakings, was £94.7m (2002: £38.6m). Advantage
has been taken of the exemption available under Section 230 of the Companies Act 1985 not to present a profit and loss account for the
company alone. The parent company profit and loss account was approved by the board on 5 June 2003. Notes to the accounts 
52
12 Intangible assets
Goodwill
Cost
At 1 April 2002 188.0
Additions 59.9
At 31 March 2003 247.9
Aggregate amortisation
At 1 April 2002 3.1
Charge for the year 1.0
(2.0)
At 31 March 2003 4.1
Net book amount at 31 March 2003 243.8
Net book amount at 31 March 2002 184.9
The goodwill arising on the original acquisition of Aquarion Company of the US in 2000, which amounted to £164.3m has, in the opinion
of the directors, an indefinite life and therefore is not being amortised. Aquarion operates in the stable US market of clean water supply
in which barriers to entry are high due to significant infrastructure requirements. In addition, Aquarion effectively has the rights to operate
in its service territory in perpetuity. Consequently, the goodwill is demonstrated to be ‘durable’ and, is capable of ‘continued measurement’
as defined by FRS 10 ‘Goodwill and Intangible Assets’. In accordance with FRS 10 an impairment review was carried out at 31 March 2003,
which showed that the carrying value of the goodwill was not more than its recoverable amount. The subsequent acquisition by Aquarion
of the New England operations of American Water Works in April 2002 gave rise to goodwill of £59.4m. The directors are also of the opinion
that this goodwill has an indefinite life. This accounting treatment is a departure from the requirements of Paragraph 21 of Schedule 4
to the Companies Act 1985 and is adopted in order to present a true and fair view of the group’s results. If the goodwill arising on the
US acquisitions had been amortised over 20 years, the amortisation charge for the period ended 31 March 2003 would have been £10.9m
and the net book amount of this goodwill at 31 March 2003 would have been £194.3m (2002: £145.8m). Goodwill in respect of the
group’s other acquisitions since 1 April 1998 has been assigned a useful economic life of 20 years.
During the year £0.5m of goodwill was created as a result of the purchase of the New England water operations contract business from
AquaSource Inc in the US.
13 Tangible fixed assets
Land and Infrastructure Plant and Under Group Company
buildings assets equipment construction total total
£m £m £m £m £m £m
Cost
At 1 April 2002 1,261.5 1,694.6 1,587.6 293.2 4,836.9 0.4
Exchange adjustments (10.5) – (35.7) (0.3) (46.5) –
Additions 35.3 34.9 54.3 220.7 345.2 –
Acquisitions 40.3 – 112.5 3.8 156.6 –
Transfers on commissioning 40.4 102.7 103.6 (246.7) – –
Disposals (1.6) – (8.0) (0.5) (10.1) (0.1)
Closure of operations – – (6.2) – (6.2) –
Grants and contributions – – – (17.0) (17.0) –
At 31 March 2003 1,365.4 1,832.2 1,808.1 253.2 5,258.9 0.3
Depreciation
At 1 April 2002 356.5 647.6 500.6 1,504.7 0.4
Exchange adjustments (2.2) – (8.6) (10.8) –
Acquisitions 4.8 – 23.0 27.8 –
Disposals (1.6) – (8.0) (9.6) (0.1)
Closure of operations – – (4.7) (4.7) –
Charge for the year 21.8 36.0 87.0 144.8 –
At 31 March 2003 379.3 683.6 589.3 1,652.2 0.3
Net book amount at 31 March 2003 986.1 1,148.6 1,218.8 253.2 3,606.7 –
Net book amount at 31 March 2002 905.0 1,047.0 1,087.0 293.2 3,332.2 –
Group
£m Kelda Group plc Annual report & accounts 2003 53
13 Tangible fixed assets continued
The assets of the parent company comprise plant and equipment.
Grants and contributions received relating to infrastructure assets are deducted from the cost of tangible fixed assets. The group’s accounting
policy in respect of grants and contributions is a departure from the Companies Act 1985 requirements and is adopted, as explained in
note 1, in order to show a true and fair view of the investment in infrastructure assets. As a consequence, the net book amount of tangible
fixed assets is £241.2m lower than it would have been had this treatment not been adopted.
Assets included above held under finance leases amount to:
Land and Infrastructure Plant and Under Group Company
buildings assets equipment construction total total
£m £m £m £m £m £m
Cost 150.8 59.4 282.9 32.5 525.6 –
Depreciation (19.5) (7.3) (94.8) – (121.6) –
Net book amount at 31 March 2003 131.3 52.1 188.1 32.5 404.0 –
Net book amount at 31 March 2002 134.0 53.4 199.3 32.5 419.2 –
Group
The net book amount of land and buildings comprises:
Freeholds 985.0 903.9
Long leaseholds 0.3 0.3
Short leaseholds 0.8 0.8
986.1 905.0
14 Investments
Share of Total Share of Total
net assets Loans to investments net assets Loans to investments
in associated associated in associated in joint joint in joint Other
Goodwill undertakings undertakings undertakings ventures ventures ventures investments
Group £m £m £m £m £m £m £m £m
Cost and share of post 
acquisition retained profits
At 1 April 2002 66.6 59.2 – 125.8 0.1 3.3 3.4 25.2
Share of retained profits for the year – – – – (0.3) – (0.3) –
Disposals – – – – – – – (5.7)
Movement in the year – – 2.6 2.6 – – – –
At 31 March 2003 66.6 59.2 2.6 128.4 (0.2) 3.3 3.1 19.5
Aggregate amortisation
At 1 April 2002 9.6 – – 9.6 – – – –
Charge for the year 3.3 – – 3.3 – – – –
At 31 March 2003 12.9 – – 12.9 – – – –
Net book amount at 31 March 2003 53.7 59.2 2.6 115.5 (0.2) 3.3 3.1 19.5
Net book amount at 31 March 2002 57.0 59.2 – 116.2 0.1 3.3 3.4 25.2
The group’s share of retained profits for the year in respect of Waste Recycling Group plc (WRG) is based on the published financial statements
of WRG for the year ended 31 December 2002. Goodwill arising on the group’s interest in WRG, totalling £66.6m, is being amortised on a
straight line basis over 20 years.
2003 2002
£m £m Notes to the accounts
54
14 Investments continued
Total
Loans investments Investments
Shares in group to group in group in associated Other
undertakings undertakings undertakings undertakings investments
Company £m £m £m £m £m
Cost
At 1 April 2002 932.2 583.2 1,515.4 105.8 25.5
Disposals – – – – (5.2)
Movement in the year – 139.1 139.1 – –
At 31 March 2003 932.2 722.3 1,654.5 105.8 20.3
Other investments are stated at cost and consist primarily of 6,195,745 ordinary shares of the company with a nominal value of 15
5
⁄9p which
are held in the ESOT and the QUEST, explained in note 22. The market value of the shares held by the ESOT and the QUEST at 31 March 2003
was £25.4m (net book value £20.3m). The market value of the shares held by the ESOT and the QUEST on 4 June 2003 was £27.0m.
Details of principal subsidiary companies, associated undertakings and joint ventures are set out on page 69.
15 Stocks
Group
2003 2002
£m £m
Raw materials and consumables 1.5 3.0
Work in progress – 0.1
1.5 3.1
16 Debtors
Group Company
2003 2002 2003 2002
£m £m £m £m
Trade debtors 57.4 54.9 – –
Amounts owed by subsidiary undertakings 109.3 104.0
Amounts owed by associated undertakings 2.2 2.0 1.7 1.7
Prepayments and accrued income 93.6 109.7 19.5 18.3
Other debtors:
Receivable within one year 41.2 44.5 17.8 13.7
Receivable after more than one year 3.8 3.7 3.8 3.7
198.2 214.8 152.1 141.4 Kelda Group plc Annual report & accounts 2003 55
Bank loans 37.9 27.4 12.3 1.1
Other unsecured loans – 5.3 – 5.3
Finance leases 6.5 4.2 – –
44.4 36.9 12.3 6.4
Short term borrowings are denominated in a number of currencies and bear interest at normal commercial rates appropriate to the country
in which the borrowing is made.
18 Other creditors
Group Company
2003 2002 2003 2002
£m £m £m £m
Amounts falling due within one year:
Trade creditors 60.4 55.6 – –
Capital creditors 48.1 94.8 – –
Amounts owed to subsidiary undertakings 344.0 26.9
Deferred grants and contributions on depreciated fixed assets 3.9 3.8 – –
Taxation 14.8 42.7 – –
Social security and payroll deductions 2.4 2.4 – –
Receipts in advance 37.6 31.2 – –
Other creditors 88.3 74.8 52.9 51.5
Proposed dividends 70.4 68.6 70.4 68.6
325.9 373.9 467.3 147 .0
Amounts falling due after more than one year:
Deferred grants and contributions on depreciated fixed assets 153.2 144.2 – –
Other creditors 84.1 81.0 1.9 1.8
237.3 225.2 1.9 1.8
17 Short term borrowings
Group Company
2003 2002 2003 2002
£m £m £m £m Notes to the accounts
56
20 Provisions for liabilities and charges
Deferred Group Company
tax Other total total
£m £m £m £m
At 1 April 2002 149.9 3.8 153.7 1.0
Additions during the year 29.0 1.3 30.3 0.4
Acquisitions 6.2 – 6.2 –
Exchange difference (2.0) – (2.0) –
Utilised in year – (1.1) (1.1) (0.4)
Released in year – (0.3) (0.3) (0.3) 
At 31 March 2003 183.1 3.7 186.8 0.7
Other provisions are principally in respect of self insurance and vacant properties. Provisions in the parent company are other provisions.
19 Long term borrowings
Group Company
2003 2002 2003 2002
£m £m £m £m
Bank loans 247.1 178.4 – 9.8
6.625% bond 2031 239.8 243.2 239.8 243.2
6.875% guaranteed bonds 2010 198.9 198.8 198.9 198.8
5.25% Eurobond 2006 408.2 406.1 408.2 406.1
5.375% bond 2023 195.8 – – –
3.048% Index Linked bond 2033 98.9 – – –
Other loans 144.7 91.6 – 0.8
Finance leases 470.6 477.0 – –
2,004.0 1,595.1 846.9 858.7
Long term borrowings are repayable as follows:
In more than one year but not more than two years 29.4 38.6 – 10.6
In more than two years but not more than five years 480.0 485.3 408.2 406.1
After more than five years 1,494.6 1,071.2 438.7 442.0
2,004.0 1,595.1 846.9 858.7
Borrowings repayable by instalments after more than five years include £440.6m (2002: £448.7m) in respect of finance leases which have
expiry dates ranging from 2018 to 2033 and carry interest rates based on 12 month LIBOR (London Inter-Bank Offered Rate). Long term
borrowings are denominated in a number of currencies and bear interest at normal commercial rates appropriate to the country in which
the borrowing is made. During the year two new bonds were issued; £200m 5.375% bond due 2023 and £100m 3.048% index linked
bond due 2033. An additional 15 year £100m European Investment Bank facility was also drawn down. The group also entered into interest
rate swaps for notional principal amounts totalling £100m. £50m of the interest rate swaps receive interest at a rate of 12 month LIBOR and
pays interest at an average rate of 4.3% with a maturity of 1 April 2004. The remaining £50m receives interest at 6 month LIBOR and pays
interest at an average rate of 4.7% with a maturity date of July 2006. Kelda Group plc Annual report & accounts 2003 57
21 Financial instruments
Treasury policy is described in the Financial review on page 19. The disclosures below exclude short term debtors and creditors which are
primarily of a trading nature and expected to be settled within normal commercial terms.
(a) Interest rate risk profile of financial liabilities
The interest rate risk profile of the group’s financial liabilities at 31 March, after taking account of the interest rate and currency swaps used
to manage the interest and currency profile, was as follows:
Financial liabilities
Floating rate Fixed rate on which
financial financial no interest
liabilities liabilities Gross debt is paid Total
£m £m £m £m £m
Sterling 579.1 1,203.7 1,782.8 84.1 11,866.9
US dollars 113.9 140.7 254.6 – 254.6
Euros 3.2 7.8 11.0 – 11.0
At 31 March 2003 696.2 1,352.2 2,048.4 84.1 2,132.5
Sterling 454.7 933.5 1,388.2 81.0 1,469.2
US dollars 134.5 86.0 220.5 – 220.5
Euros 16.3 7.0 23.3 – 23.3
At 31 March 2002 605.5 1,026.5 1,632.0 81.0 1,713.0
Financial liabilities on which no interest is charged comprise other creditors falling due after more than one year.
Euro liabilities at 31 March 2002 included the conversion of existing Dutch guilder instruments from the previous year.
Group
2003 2002
£m £m
Accelerated capital allowances 515.8 482.5
Short term timing differences (2.1) (3.8)
Undiscounted provision for deferred tax 513.7 478.7
Discount (330.6) (328.8)
Discounted provision for deferred tax 183.1 149.9
National rates of corporation tax have been used to calculate the amount of deferred tax. Provision has been made for all deferred tax assets
and liabilities in respect of accelerated capital allowances and other material timing differences. These deferred tax assets and liabilities have
been discounted to reflect the time value of money over the period between the balance sheet date and the dates on which it is estimated
that the underlying timing differences will reverse.
No deferred tax is recognised on the unremitted earnings of overseas subsidiaries. As the earnings are continually reinvested by the group,
no tax is expected to be payable in the foreseeable future.
20 Provisions for liabilities and charges continued
Deferred tax is provided as follows: Notes to the accounts
58
21 Financial instruments continued
Floating rate Sterling, US dollar and Euro debt bears interest at rates based on sterling LIBOR (London Inter-Bank Offered Rate), US dollar
LIBOR and EURIBOR (European Inter-Bank Offered Rate), respectively.
The group uses interest rate swaps to fix a proportion of its floating rate sterling debt. 
The weighted average interest rates and periods for borrowings in each of the group’s principal currencies is as follows:
Financial liabilities
on which no
Fixed rate financial liabilities interest is paid
Weighted average Weighted
period for average
Weighted average which rate period until
interest rate is fixed maturity
% Years Years
Sterling 6.1 14 5.5
US dollars 6.9 24 –
Euros 7.1 – –
Weighted average at 31 March 2003 6.2 15 5.5
Sterling 6.7 14 3.6
US dollars 6.4 27 –
Euros 7.1 1 –
Weighted average at 31 March 2002 6.7 14 3.6
(b) Interest rate risk profile of financial assets
The interest rate risk profile of the financial assets of the group at 31 March was as follows:
Cash at bank Short term 2003 Cash at bank Short term 2002
and in hand deposits Total and in hand deposits Total
£m £m £m £m £m £m
Sterling 0.6 283.7 284.3 1.1 120.9 122.0
US dollars 2.2 39.0 41.2 61.5 11.8 73.3
Euros 2.5 – 2.5 –0.2 0.2
At 31 March 5.3 322.7 328.0 62.6 132.9 195.5
Surplus cash is invested in short term instruments at rates based on LIBOR and US dollar LIBOR with institutions rated at least A1 or P1 by
Standard & Poor’s and Moody’s. Kelda Group plc Annual report & accounts 2003 59
Finance Other financial
Debt leases Gross debt liabilities Total
£m £m £m £m £m
In one year, or less, or on demand 37.9 6.5 44.4 – 44.4
In more than one year but not more than two years 6.5 0.2 6.7 7.5 14.2
In more than two years but not more than five years 417.3 – 417.3 38.5 455.8
After more than five years 1,117.3 470.4 1,587.7 38.1 1,625.8
1,579.0 477.1 2,056.1 84.1 2,140.2
Unamortised issue costs (7.7) (7.7) (7.7)
At 31 March 2003 1,571.3 477.1 2,048.4 84.1 2,132.5
In one year, or less, or on demand 32.7 4.2 36.9 – 36.9
In more than one year but not more than two years 10.5 – 10.5 17.3 27.8
In more than two years but not more than five years 430.4 0.3 430.7 47.0 477.7
After more than five years 680.0 476.7 1,156.7 16.7 1,173.4
1,153.6 481.2 1,634.8 81.0 1,715.8
Unamortised issue costs (2.8) (2.8) (2.8)
At 31 March 2002 1,150.8 481.2 1,632.0 81.0 1,713.0
21 Financial instruments continued
(c) Maturity of financial liabilities
The maturity profile of the carrying amount of the group’s financial liabilities at 31 March was as follows:
2003 2002
£m £m
Expiring in one year or less 97.2– –
Expiring in more than one year but not more than two years – 100.0
Expiring in more than two years 100.0 69.5
100.0 169.5
(d) Borrowing facilities
The group has the following undrawn committed borrowing facilities available to it: Notes to the accounts
60
(f) Currency exposures
The group may borrow in appropriate foreign currencies in order to mitigate the effects of the currency exposures arising from its net
investments overseas. The group’s residual investments in Holland were financed by Dutch guilder or Euro borrowings in order to fully
hedge against the impact of movements in the guilder and Euro/sterling exchange rates on the translation of net assets denominated
in Dutch guilders. The proceeds from the Euro 625m bond issue in July 1999, used to fund the acquisition of Aquarion Company, were
also predominantly swapped into sterling. The foreign exchange exposure on the translation into sterling of the net assets of Aquarion,
denominated in US dollars is principally hedged by a US dollar currency swap taken on in March 2001. Funds of $115m to acquire five
companies from American Water Works in April 2002 were borrowed in US dollars.
Gains and losses arising on net investments overseas and the financial instruments used to hedge the currency exposures are recognised
in the statement of total recognised gains and losses.
There are no currency exposures on short term debtors and creditors or monetary assets and liabilities giving rise to a profit and loss
account charge.
2003 2003 2002 2002
Book value Fair value Book value Fair value
£m £m £m £m
Primary financial instruments financing the group’s operations
Short term borrowings (44.4) (45.8) (36.9) (37.7)
Long term borrowings (2,025.9) (2,110.5) (1,566.2) (1,577.7)
Cash and short term deposits 328.0 328.0 195.5 195.5
Derivative financial instruments held to manage
the interest rate and currency profile
Interest rate swaps –5.6 – (9.7)
Interest rate caps and collars –– ––
Currency swaps 21.9 21.9 (28.9) (28.9)
Net debt (1,720.4) (1,800.8) (1,436.5) (1,458.5)
Other financial liabilities (84.1) (84.1) (81.0) (81.0)
Total (1,804.5) (1,884.9) (1,517.5) (1,539.5)
Market values, where available, have been used to determine fair values, otherwise fair values have been calculated by discounting cash flows
at year end interest rates.
21 Financial instruments continued
(e) Fair values of financial assets and financial liabilities
The following table provides a comparison by category of the book values and the fair values of the group’s financial assets and liabilities
at 31 March: Kelda Group plc Annual report & accounts 2003 61
Total net
Gains Losses gains (losses)
£m £m £m
Unrecognised gains and losses on hedges
At 1 April 2001 8.1 (18.3) (10.2)
Gains and losses arising in previous years recognised during the year (1.1) 6.1 5.0
Gains and losses arising in the year that were not recognised (0.4) (4.1) (4.5)
At 31 March 2002 6.6 (16.3) (9.7)
of which:
Gains and losses expected to be recognised during the year ended 31 March 2003 1.8 (3.5) (1.7)
Gains and losses expected to be recognised in later years 4.8 (12.8) (8.0)
The table excludes the fair value of currency swaps maturing in 2005 and 2006 amounting to £21.9m (2002: £(28.9)m) which is recognised
in the book value of long term borrowings at 31 March 2003.
(h) Financial instruments held for trading purposes
The group does not trade in financial instruments.
21 Financial instruments continued
(g) Hedges
The group’s policy is to hedge interest rate risk within approved board policies and guidelines.
Interest rate swaps, interest rate caps and collars and forward rate agreements are used to manage interest rate exposure under a policy 
that requires between 80% and 95% of Yorkshire Water Services Limited’s net debt and 60% and 85% of Kelda Group plc’s net debt to be
held at fixed rates. At the financial year end the proportions were 99% and 79% respectively. The proportion of Yorkshire Water Services
Limited’s net debt held at fixed rates is above the target range at the year end, but is anticipated to fall to within this range during the
year ending 31 March 2004.
Gains and losses on hedges are not recognised until the interest payment that is being hedged is itself recognised. Unrecognised gains
and losses on hedges and the movements during the year are as follows:
Total net 
Gains Losses gains (losses)
£m £m £m
Unrecognised gains and losses on hedges
At 1 April 2002 6.6 (16.3) (9.7)
Gains and losses arising in previous years recognised during the year 8.3 (3.7) 4.6
Gains and losses arising in the year that were not recognised 20.0 (9.3) 10.7
At 31 March 2003 34.9 (29.3) 5.6
of which:
Gains and losses expected to be recognised during the year ending 31 March 2004 11.6 (6.9) 4.7
Gains and losses expected to be recognised in later years 23.3 (22.4) 0.9 Notes to the accounts
62
2003 2002
Date of Number of Number of Option Normal
Options granted and outstanding at 31 March 2003 grant shares shares price exercise date
Sharesave schemes
Three year schemes 7 January 2000 80,728 896,709 240.0p Mar-Aug 2003
5 January 2001 366,829 394,015 299.0p Mar-Aug 2004
4 January 2002 378,301 410,541 275.0p Mar-Aug 2005
10 January 2003 730,531 – 320.0p Mar-Aug 2006
Five year schemes 17 December 1997 – 491 280.3p Feb-Jul 2003
31 December 1997 91,665 243,287 389.0p Mar-Aug 2003
21 December 1998 2,079 2,079 249.7p Feb-Jul 2004
6 January 1999 83,464 91,877 457.0p Mar-Aug 2004
7 January 2000 910,418 942,052 240.0p Mar-Aug 2005
5 January 2001 237,052 246,079 299.0p Mar-Aug 2006
4 January 2002 321,737 340,748 275.0p Mar-Aug 2007
10 January 2003 517,252 – 320.0p Mar-Aug 2008
* Shares under options to be satisfied by the ESOT
** Shares under options to be satisfied by the QUEST
22 Called up share capital
2003 2003 2002 2002
Number Nominal value Number Nominal value
Authorised
Ordinary shares of 15
5
⁄9p each 814,395,257 126,683,707 814,395,257 126,683,707
Allotted, called up and fully paid
Ordinary shares of 15
5
⁄9p each 392,983,317 61,130,738 392,982,517 61,130,614
During the year, 800 ordinary shares of 15
5
⁄9p were issued directly to employees exercising Sharesave options.
The group has both an ESOT and a QUEST, which are trusts used to administer the issue of shares to employees and directors under the
company’s “Sharesave” save-as-you-earn share option scheme and, in the case of the ESOT, the Long Term Incentive Plan. The QUEST, like
the ESOT, is a trust funded by interest free loans from the company. All the administration costs of the trusts are written off to the profit
and loss account as they accrue. The shares held by the trusts are included as fixed assets investments in note 14.
** **
**
**
**
*
*
**
**
**
**
**
**
*
*
**
**
** Kelda Group plc Annual report & accounts 2003 63
23 Reserves
Group Company
£m £m
Share premium account
At 1 April 2002 and 31 March 2003 16.7 16.7 
1.3 1 .3
Capital redemption reserve
At 1 April 2002 and 31 March 2003 142.6 142.6
Profit and loss account
At 1 April 2002 1,470.1 620.8
Exchange adjustments 1.5 (1.8)
Transfer from the profit and loss account 25.3 (6.2)
At 31 March 2003 1,496.9 612.8
The cumulative amount of goodwill written off against reserves is £14.1m (2002: £14.1m).
In accordance with the Institute of Chartered Accountants of England and Wales technical release 7/03 issued in March 2003, £23 1.3m
of the company profit and loss account reserves are classified as non-distributable.
24 Reconciliation of group movements in equity shareholders’ funds
2003 2002
£m £m
Profit attributable to shareholders 126.1 151.4
Dividends (100.8) (98.3)
25.3 53.1
Other recognised gains and losses relating to the year 1.5 (1.5)
Net increase in equity shareholders’ funds 26.8 51.6
Opening equity shareholders’ funds 1,690.5 1,638.9
Closing equity shareholders’ funds 1,717.3 1,690.5
25 Commitments
Group Company
2003 2002 2003 2002
£m £m £m £m
Contracts placed at 31 March 197.7 239.1 – –
The long term investment programme for the UK regulated water services business, which is expected to identify substantial future capital
expenditure commitments in the period 1 April 2005 to 31 March 2010, will be determined as part of the Periodic Review 2004. Final
price limits are due to be announced in November 2004. 26 Acquisitions
On 25 April 2002 Aquarion acquired the business and assets of Connecticut-American Water Company, Massachusetts-American Water
Company, New York-American Water Company and Hampton Water Company. In addition Massachusetts Capital Resource Company, which
owns and leases certain assets to Massachusetts-American Water Company was also acquired. The consideration was $120m in cash and
the assumption of debt of $104m.
The book values of the assets and liabilities of the acquired companies has been adjusted by £27.3m in order to reflect their fair values
and ensure compliance with the group’s stated accounting policies. The acquired companies contributed turnover of £29.5m and operating
profit of £10.5m in the period from the date of acquisition to 31 March 2003. The acquired companies contributed £10.3m to the group’s
net operating cash flows, paid £4.4m in respect of interest, utilised £5.5m in respect of capital expenditure and repaid long term debt
of £12.4m.
Consistency of
Book accounting Fair
Value policy Other Value
£m £m £m £m
Tangible fixed assets 128.8 – – 128.8
Stock 0.5 – – 0.5
Debtors 16.1 – – 16.1
Creditors (30.5) – (9.0) (39.5)
Deferred taxation – (6.2) – (6.2)
Cash 1.6 – – 1 .6
Loans net of deposits (69.9) – (12.1) (82.0)
Minority interest (0.7) – – (0.7)
Net assets acquired 45.9 (6.2) (21.1) 18.6
Goodwill 59.4
Consideration satisfied by cash 78.0
The book values of the assets and liabilities have been taken from the completion accounts of the acquired companies at 25 April 2002
at actual exchange rates on that date. The significant fair value adjustments are:
1
The book value of the pension scheme deficit of the acquired companies has been adjusted to reflect its fair value in accordance
with FRS 7 ‘Fair value in acquisition accounting’. Provision was also made for existing environmental liabilities.
2
The deferred taxation liability in the acquisition balance sheets of the acquired companies is calculated using the undiscounted full 
provision method in accordance with US accounting standards. The fair value adjustment in respect of deferred taxation has been 
calculated in accordance with the requirements of both FRS 7 and FRS 19, which allows discounting of the full provision.
3
An adjustment has been made to reflect the market value of the loans acquired.
1
3
2
Notes to the accounts
64
25 Commitments continued
At 31 March, group companies were committed to making the following payments during the next financial year under non-cancellable
operating leases expiring as set out below:
Group
2003 2002
Land and 2003 Land and 2002
buildings Other buildings Other
£m £m £m £m
Operating leases which expire:
Within one year –0.4 –0.5
Between two and five years 00.3 0.9 0.3 0.9
After five years 0.1 – ––
0.4 1.3 0.3 1.4 Kelda Group plc Annual report & accounts 2003 65
27 Contingent liabilities
The parent company has guaranteed certain subsidiary undertakings’ borrowings of £745.8m (2002: £661.1m).
At the time of completion of the WRG merger, an indemnity was given to WRG by Yorkshire Environmental Solutions Limited, backed by
a Kelda Group plc guarantee, in respect of a landfill site managed by 3C Waste Limited and known as the Rhonda site. The indemnity is
unlimited in amount and the time limit for bringing claims is seven years from 26 January 1999, except for personal injury claims where
the limit is 15 years. The matters covered under this indemnity are any losses arising out of:
(a) non compliance with an Environment Agency notice served in May 1998;
(b) any claims by individuals for personal injury, harm to health, nuisance etc;
(c) liability for negligent performance of the contract between 3C Waste Limited and Rhonda Waste Disposal Limited.
28 Pensions
UK pension scheme
The group sponsors a UK pension scheme, called the Kelda Group Pension Plan (KGPP). The KGPP has a number of benefit categories
providing benefits on a defined benefit basis and one category providing benefits on a defined contribution basis.
The most recent actuarial valuation of the KGPP was carried out as at 31 March 2001 when the market value of assets was £559.9m
and the scheme surplus £22.2m. 
The UK pension cost under SSAP 24 ‘Accounting for Pension Costs’ for KGPP has been assessed in accordance with the advice of Mercer
Human Resource Consulting Limited, using the projected unit method. For this purpose, the actuarial assumptions adopted are based
upon investment growth of 5.4% per annum, pay growth of 4% per annum and increases to pensions in payment and deferred pensions
of 2.5% per annum. The market value of the assets represented 107.5% of the value of the accrued benefits after allowing for expected
future earnings increases. In deriving the pension costs under SSAP 24, the surplus is being spread over the future working lifetime of
the employees.
Contributions over the year ended 31 March 2003 were paid by members at 3%, 4%, 4.5%, 5% or 6% of pensionable pay (depending
on benefit category). The company contributed at 200% of members contributions during the accounting year in respect of the
majority of members. 
An accrual for unfunded benefits of £1.8m (2002: £1.6m) has been included in the group’s accounts at 31 March 2003.
US pension schemes
Aquarion in the US operates a number of non contributory defined benefit retirement plans. The two principal retirement plans relate
to Aquarion Company (acquired in 2000) and employees of the American Water Works companies acquired in April 2002. Aquarion
also provides healthcare benefits for certain categories of employees.
The latest valuations of the US schemes were carried out at 31 December 2002. The market value of assets of the principal retirement
plans was $56.3m and exceeded the benefit obligations (including those acquired during the year) at that date by $3.5m. The benefit
obligation of the post retirement healthcare plans exceeded the market value of assets by $19.7m. The Aquarion pension assets and
liabilities have been recorded at fair value on acquisition and full provision for the post retirement healthcare benefit obligations has
been made in the group’s accounts at 31 March 2003.
The group’s total pension charge for the year was £11.2m (2002: £9.0m). Notes to the accounts
66
28 Pensions continued
The additional disclosures required by FRS 17 are set out below. A qualified independent actuary has updated the most recent valuations of
the principal schemes to 31 March 2003. In calculating the liabilities at 31 March 2003, the following financial assumptions have been used:
The Aquarion retirement plan does not guarantee to increase pensions in payment and there is no pre-funding of pensions increases.
Discretionary increases have been awarded in the past on an ad hoc basis. The rate of increase in healthcare costs in the US varies by
year of projection with an ultimate rate of 5% from 2010.
The market values of the assets and the FRS 17 value of liabilities of KGPP and the principal US defined benefit plans at 31 March 2003,
together with the expected long term rate of returns were as follows:
2003 2003 2002 2002
UK US UK US
Major assumptions %% % %
Inflation 2.5 – 2.8 –
Rate of increase in salaries 3.7 4.0 4.3 5.0
Rate of increase to pensions in payment and deferred pensions 2.5 – 2.8 –
Discount rate for scheme liabilities 5.4 6.3 6.0 7.3
2003
UK US
Expected long Expected long
Market term rate of Market term rate of
value return value return
£m % £m %
Market value of assets
Equities 314.7 7.25 20.0 7.75
Bonds 69.8 4.90 16.9 6.30
Other 22.6 4.50 3.3 5.00
407.1 40.2
Present value of scheme liabilities (566.9) (57.4)
Pension deficit before deferred tax (159.8) (17.2)
Deferred tax 47.9 6.9
Net pension deficit (111.9) (10.3)
2002
UK US
Expected long Expected long
Market term rate of Market term rate of
value return value return
£m % £m %
Market value of assets
Equities 431.8 6.75 21.1 8.0
Bonds 81.9 5.70 11.2 7.3
Other 26.5 5.25 7.2 6.0
540.2 39.5
Present value of scheme liabilities (515.0) (36.7)
Pension asset before deferred tax 25.2 2.8
Deferred tax (7.6) (1.1)
Net pension asset 17.6 1.7
FRS 17 requires that the pension schemes are valued using market conditions at the company’s year end. This produces a volatile figure
for any surplus or deficit as it is largely dependent on the levels of stock markets on one particular date. The group’s pension liabilities are
funded on a long term basis based on the periodic actuarial reviews rather than the FRS 17 disclosures. Kelda Group plc Annual report & accounts 2003 67
Analysis of the amounts that would be charged to the profit and loss account in accordance with FRS 17:
2003 2003
UK US
£m £m
Analysis of amount that would be charged to operating costs:
Current service cost 9.0 1.2
Past service cost 1.8 –
Total charge 10.8 1.2
Analysis of amount that would be credited to other finance income:
Expected return on pension scheme assets 35.2 3.1
Interest on pension scheme liabilities (30.8) (3.4)
Net return 4.4 (0.3)
Amounts charged to the profit and loss account before taxation 6.4 1.5
Analysis of amounts that would be recognised in statement of total recognised gains and losses:
Actual return less expected return on pension scheme assets (162.9) (7.0)
Experience gains and losses arising on the scheme’s liabilities – –
Changes in assumptions underlying the present value of the scheme’s liabilities (23.5) (5.3)
Actuarial loss recognised in the statement of total recognised gains and losses (186.4) (12.3)
Movement in deficit during the year:
Surplus in scheme at beginning of year 25.2 2.8
Movement in year
- acquisitions –(7.2)
- current service cost (9.0) (1.2)
- contributions 7.8 0.8
- past service cost (1.8) –
- other finance income 4.4 (0.3)
- actuarial loss (186.4) (12.3)
Exchange differences –0.2
(159.8) (17.2)
Related deferred tax asset - full provision basis (FRS 19) 47.9 6.9
Net pension deficit at end of year (111.9) (10.3)
History of experience gains and losses:
Difference between the expected and actual return on scheme assets
Amount (£m) (162.9) (7.0)
Percentage of scheme assets 40.0% 19.6%
Experience gains and losses on scheme liabilities
Amount (£m) ––
Percentage of the present value of scheme liabilities – –
Total amount recognised in the statement of total recognised gains and losses
Amount (£m) (186.4) (12.3)
Percentage of the present value of scheme liabilities 32.9% 36.3%
If the amounts in the table above had been recognised in the financial statements the group’s net assets and profit and loss account
reserve at 31 March 2003 would be as follows:
2003
Profit and 2003
loss account Net assets
£m £m
Excluding net pension deficit 1,496.9 1,717.9
Net pension deficit under FRS 17 (122.2) (122.2)
Net assets already recognised in accounts under SSAP 24 reversed (US) (0.8) (0.8)
Including net pension deficit 1,373.9 1,594.9 Notes to the accounts
68
29 Employees Group
2003 2002
Number Number
Average number of people employed
Water services
– UK regulated 2,147 2,103
– US operations 490 41 1
Other activities 621 650
3,258 3, 164
£m £m
Total employment costs
Wages and salaries 85.8 79.9
Social security contributions 6.5 6.5
Other pension costs (see note 28) 11.2 9.0
103.5 95.4
The emoluments, share options and LTIP interests of the directors are described in the Remuneration report on pages 33 to 37.
30 Related parties
Group companies have extended finance to Aberdeen Environmental Services (Holdings) Limited, on a proportionate basis with other
principal shareholders. These loans are included in investments analysed in note 14.
2003 2002
£m £m
Aberdeen Environmental Services (Holdings) Limited 3.3 3.3
The loans carry market rates of interest. Total interest received on loans to associated undertakings and joint ventures was £0.5m
(2002: £0.1m). There were no loans outstanding at 31 March 2003 between the group and Waste Recycling Group plc.
There were no other material transactions between the group and its associated undertakings during the year. Group companies
Kelda Group plc Annual report & accounts 2003 69
Class of Proportion 
Country of shares of class of 
Principal subsidiary companies incorporation in issue share held
Water services
Yorkshire Water Services Limited* England & Wales Ordinary 100%
Aquarion Company US Ordinary 100%
Aquarion Water Company of Connecticut US Ordinary 100%
Aquarion Water Company of New York US Ordinary 100%
Aquarion Water Company of New Hampshire US Ordinary 100%
Aquarion Water Company of Massachusetts US Ordinary 100%
Other activities
KeyLand Developments Limited* England & Wales Ordinary 100%
Loop Customer Management Limited* England & Wales Ordinary 100%
Grampian Wastewater Services Limited Scotland Ordinary 100%
Yorkshire Water Projects Limited* England & Wales Ordinary 100%
Holding and finance companies
Yorkshire Water Services Finance Plc England & Wales Ordinary 100%
Featurepack Limited* England & Wales Ordinary 100%
Kelda Group Inc US Ordinary 100%
YW (Holdings) BV Netherlands Ordinary 100%
Class of Proportion
Country of shares of class of
Principal associated undertakings and joint ventures incorporation in issue share held
Waste Recycling Group plc* England & Wales Ordinary 45.5%
Aberdeen Environmental Services (Holdings) Limited Scotland Ordinary ‘A’ Nil
Scotland Ordinary ‘B’ 100%
Scotland Ordinary ‘C’ Nil
* Shares held by parent company Five year financial summary
70
2003 2002 2001 2000 1999
Turnover: group and share 
of associates and joint ventures £m 838.1 799.8 774.6 782.8 687.1
Water services 
- UK regulated £m 567.0 559.8 542.1 624.0 580.7
- US operations £m 93.7 70.5 77.7 17.0 –
Other activities £m 29.8 28.5 61.4 75.2 90.7
Associates and joint ventures £m 147.6 141.0 93.4 66.6 15.7
Operating profit: group and share of associates
and joint ventures £m 277.1 265.3 238.9 284.5 253.8
Water services 
- UK regulated £m 233.7 225.5 214.8 271.5 250.5
- US operations £m 34.9 28.2 27.1 6.1 –
Other activities £m 2.6 (3.5) (0.2) 5.1 7.9
Associates and joint ventures £m 11.8 20.3 10.9 12.8 0.6
Unallocated costs £m (5.9) (5.2) (13.7) (11.0) (5.2)
Profit before taxation and exceptional items £m 175.2 162.7 152.3 237.4 209.5
Profit before taxation £m 164.3 197.1 156.4 222.1 221.0
Earnings per share p 32.7 39.3 31.7 54.4 55.4
Adjusted earnings per share (excluding deferred tax) p 42.4 39.1 34.7 58.0 52.6
Dividend per share – interim p 7.86 7.70 7.50 7.30 6.75
– final p 18.19 17.80 17.30 16.85 15.60
2003 2002 2001 2000 1999
Assets employed
Fixed assets £m 3,988.6 3,661.9 3,517.6 3,437.1 2,667.0
Net current liabilities, long term creditors and provisions £m (550.3) (534.9) (484.1) (326.2) (207.7)
£m 3,438.3 3,127.0 3,033.5 3,110.9 2,459.3
Financed by
Shareholders’ funds £m 1,717.3 1,690.5 1,638.9 1,698.0 1,576.4
Minority interests £m 0.6 – (0.5) 0.1 0.1
Net debt £m 1,720.4 1,436.5 1,395.1 1,412.8 882.8
£m 3,438.3 3,127.0 3,033.5 3,110.9 2,459.3
The figures for 2001 have been restated to reflect the adoption of deferred tax in accordance with FRS 19 which was implemented
from 2002. Figures prior to 2001 have not been restated.
Yorkshire Water regulated investment programme
Capital expenditure £m 263.3 270.2 226.8 381.9 322.7
Infrastructure renewals £m 56.2 54.5 38.7 70.5 60.1
£m 319.5 324.7 265.5 452.4 382.8
Employees (average number)
Water services
- UK regulated No. 2,147 2,103 2,108 2,884 3,008
- US operations No. 490 411 396 99 –
Other activities No. 621 650 1,542 1,330 1,201
Group total No. 3,258 3,164 4,046 4,313 4,209
Regulatory accounts
The regulatory accounting information of Yorkshire Water Services Limited for the year ended 31 March 2003 published in accordance with
Condition F of the Instrument of Appointment, can be obtained free of charge by writing to the Company Secretary, Western House,
Halifax Road, Bradford BD6 2SZ. Kelda Group plc Annual report & accounts 2003 71
General information
Financial calendar
Announcement of results 5 June 2003
Annual general meeting 31 July 2003
Ex dividend date 27 August 2003
Record date 29 August 2003
Final dividend payment date 1 October 2003
Payment of dividends to mandated accounts
Shareholders who do not currently have their dividends paid directly to a bank or building society account and who wish to do so should
complete a mandate form obtainable from the registrar. Tax vouchers are sent to the shareholder’s registered address under this
arrangement unless requested otherwise.
Annual Report on cassette tape/disk
For the benefit of blind and partially sighted shareholders the text of the annual report 2003 is available on audio cassette tape and disk,
free of charge from the shareholder information office. Anyone knowing a shareholder who could benefit from this service is asked to
draw it to their attention.
Analysis of ordinary shareholders at 31 March 2003 by size of account and category
Number of Number of
holders shares held % of total shares
1 – 100 4,885 121,661 0.03
101 – 1,000 31,433 15,451,002 3.93
1,001 – 10,000 16,841 35,285,083 8.98
10,001 – 100,000 674 22,029,191 5.61
100,001 – 1,000,000 300 94,956,207 24.16
1,000,001+ 66 225,140,173 57.29
54,199 392,983,317 100.00
Number of Number of
holders shares held % of total shares
Individuals 50,108 51,428,033 13.09
Nominee company 3,792 328,304,444 83.54
Insurance company 9 4,705,012 1.20
Pension fund 104 6,843,723 1.74
Other corporate body 186 1,702,105 0.43
54,199 392,983,317 100.00
Share price information
The latest Kelda Group plc share price is available at www.keldagroup.com Ceefax, Teletext and also on the FT CityLine, telephone
0906 003 5492 (calls charged at 60p per minute).
Information on gifting your shares
To transfer your shares to another member of your family as a gift, please ask the company’s registrar for a gift transfer form.
The completed transfer form and relevant share certificate(s) should be returned to the registrar to record the change in ownership.
The company supports a scheme whereby shareholders with small holdings of shares, whose value makes them uneconomic to sell,
can donate them to Wateraid. Details can be obtained from the shareholder information office. Further information about Wateraid
is available at www.wateraid.org.uk Contact details
Secretary and registered office
Philip Hudson
Kelda Group plc
Western House
Halifax Road
Bradford
BD6 2SZ
Telephone: 01274 600 1 1 1
Registrar
Northern Registrars Limited
Northern House
Woodsome Park
Fenay Bridge
Huddersfield
HD8 0LA
Telephone: 01484 600 900
Fax: 01484 600 91 1
www.northernregistrars.co.uk
Auditors
Ernst & Young LLP
PO Box 61
Cloth Hall Court
14 King Street
Leeds
LS1 2JN
Principal bankers
National Westminster Bank plc
City Office
Park Row
Leeds
LS1 2QS
Financial advisers
Greenhill & Co
Regent Gate
56-58 Conduit Street
London
W1S 2YZ
Joint stockbrokers
UBS Warburg 
1/2 Finsbury Avenue
London
EC2M 2PP
Cazenove & Co. Ltd
20 Moorgate
London
EC2R 6DA
Shareholder information office
Freephone: 0800 919 303
Website addresses
www.keldagroup.com
www.yorkshirewater.com
www.aquarion.com
www.loop.co.uk
Water supply and
general enquiries
Customer helpline: 0845 1 24 24 24
Waste water enquiries
Customer helpline: 0845 1 24 24 29
Billing enquiries
Customer helpline: 0845 1 24 24 20
72 Designed and produced by BRAHM Design, Leeds
Printed by The Cavendish Press Ltd, Leicester
Printed on 100% Elemental Chlorine Free (ECF) wood pulp.
Only from replanted sources.
Totally recyclable and biodegradable. Kelda Group plc
Western House
Halifax Road
Bradford  BD6 2SZ
www.keldagroup.com