Principal activities and business review
The Company is a holding company. The principal activities of its operating subsidiary undertakings during
the year were water supply and related activities, scientific services and utilities and engineering
consultancies. Reviews of those activities during the year and of future developments are given in
the Chairman's statement, the Chief Executive's review and the Finance Director's report.

Results and dividends
The results for the year are shown in the profit and loss account. The Board recommends
a final dividend of 21.78p payable on 3 August 2000 to shareholders on the register on 14 July 2000,
making, with the interim dividend of 14.52p paid on 12 January 2000, a distribution of 36.30p for the
year (1999: 36.55p).

Donations
The Group made charitable donations of £42,000 (1999: £19,000).

Employment policies
The Group continues its commitment to the involvement of employees in the decision making process.
This is effected through regular briefings and announcements and presentations about plans and progress.

It is the Group's policy to encourage and assist in the employment, training and career development of
disabled persons bearing in mind their particular abilities and aptitudes and the need to maintain a safe
working environment.

Policy on the payment of creditors
It is the Group's policy to agree contractual terms in advance of receiving goods and services in order to
ensure that suppliers are made aware of the terms of payment and to abide by those terms. The total amount
owed to trade creditors by the Group at 31 March 2000, expressed as a proportion of the total amount
invoiced by suppliers during the year, was equivalent to 47 days (1999: 49 days) of invoicing.

Auditors
A resolution for the reappointment of Arthur Andersen will be proposed at the Annual General Meeting.

Directors
The directors at the date of this report are stated on the Directors and advisers page under the 'Group Structure' button.

Dr G L Baldwin retires from the board on 31 July 2000.

Details of the directors' remuneration and their interests in the Company's shares are given in the Remuneration report.

None of the directors has or had a material interest in any contract of significance in relation to the Group's
business. Mr D O Lloyd was the Chairman and a shareholder of Halcrow Group Limited which has a 49%
equity interest in Mid Kent's 51% owned subsidiary, Halcrow Water Services Limited. He retired from, and
disposed of his shareholding in Halcrow Group Limited on 30 April 1999.

Directors' responsibilities
Company law requires the directors to prepare accounts for each financial period that give a true and fair
view of the state of affairs of the Company and Group and their profit or loss for the period. In preparing
those accounts, the directors are required to:

•select suitable accounting policies and then apply them consistently;
•make judgements and estimates that are reasonable and prudent;
•state whether applicable accounting standards have been followed, subject to any
•material departures disclosed and explained in the accounts; and
•prepare the accounts on the going concern basis unless it is inappropriate to presume that the
•Group will continue in business.

The directors are responsible for keeping proper accounting records which disclose with reasonable
accuracy at any time the financial position of the Company and Group and enable them to ensure that
the accounts comply with the Companies Act 1985. They are also responsible for safeguarding the assets
of the Company and Group and hence for taking reasonable steps for the prevention and detection of fraud
and other irregularities.

Year 2000
The Group's previously announced plans for dealing with potential Year 2000 computer problems were
completed on time and were successful. No such Year 2000 related problems have come to light since
the balance sheet date.

By Order of the Board

P Evan-Cook

Secretary

5 June 2000