Retail Offer by PrimaryBid

Pennon is pleased to announce a conditional retail offer via PrimaryBid of new ordinary shares of 61.05 pence each in the capital of the Company (the "Retail Offer Shares" and the "Retail Offer").

The Retail Offer is open to new and existing investors in the UK, including WaterShare+ customers in the UK and Company employees. Further details of the Retail Offer, including how to participate, can be found below.

As separately announced today, the Company is conducting a non-pre-emptive placing of new ordinary shares of 61.05 pence each (the "Placing Shares") in the capital of the Company to both existing institutional shareholders and new institutional investors (the "Placing") through an accelerated bookbuilding process (the "Bookbuilding Process"). The price at which the Placing Shares are to be placed (the "Offer Price") will be determined at the close of the Bookbuilding Process. In addition to the Placing and the Retail Offer, certain directors and executives of the Company intend to subscribe for new ordinary shares of 61.05 pence each in the capital of the Company (the "Subscription Shares") (the "Subscription", together with the Placing and the Retail Offer, the "Equity Capital Raise").

The issue price for the Retail Offer Shares, as well as the Subscription Shares, will be equal to the Offer Price.

Reasons for the Retail Offer

As announced separately today, Pennon has acquired 100% of the issued capital of Sumisho Osaka Gas Water UK Limited, the holding company of Sutton and East Surrey Water plc and certain other ancillary businesses, for £89 million from Sumitomo Corporation and Osaka Gas, with a total enterprise value of £380 million (the "Acquisition"). Further information can be found in the Acquisition announcement released separately by the Company today. Pennon is launching an Equity Capital Raise of up to £180 million in aggregate in connection with the Acquisition, in order to ensure that the pro forma leverage and capital structure for the enlarged Group following the Acquisition remains consistent with Pennon's well-established water business gearing range of 55-65%(1).

Prior to launch of the Equity Capital Raise, the Company consulted with a significant number of its shareholders to assess their feedback as to the purpose of the Equity Capital Raise. Feedback from this consultation was supportive and as a result the Board has concluded that the Equity Capital Raise, including the Retail Offer, is in the best interests of shareholders and wider stakeholders and will promote the long-term success of the Company. Accordingly, the Company has chosen to proceed with the Retail Offer.

The Company values its retail investor base and is therefore pleased to provide retail investors with the opportunity to participate in the Retail Offer.

Details of the Retail Offer

Members of the public in the UK can access the Retail Offer through PrimaryBid's website and on PrimaryBid's app. The PrimaryBid app is available on the UK Apple App Store and Google Play Store.

• AJ Bell;
• Hargreaves Lansdown; and
• interactive investor.

Applications for Retail Offer Shares through participating partners can be made from tax efficient savings vehicles such as ISAs or SIPPs, as well as GIAs. Some partners may only accept applications from existing shareholders.

WaterShare+ customers in the UK can participate in the Equity Capital Raise through the Retail Offer by applying through PrimaryBid's website and on PrimaryBid's app available on the Apple App Store and Google Play.

The Retail Offer will be open to retail investors following publication of this announcement. The Retail Offer will close at the same time as the Bookbuilding Process is completed. The Retail Offer may close early if it is oversubscribed.

Subscriptions under the Retail Offer will be considered by the Company with preference to be given to the Company's existing retail investors. The issue price for the Retail Offer Shares will be equal to the Offer Price and there is a minimum subscription of £250 per investor under the terms of the Retail Offer. The Company reserves the right to scale back any order at its discretion. The Company and PrimaryBid reserve the right to reject any application for subscription under the Offer without giving any reason for such rejection.

Investors who apply for Retail Offer Shares through PrimaryBid's website or PrimaryBid's app will not be charged any fee or commission by PrimaryBid. It is vital to note that once an application for Retail Offer Shares has been made and accepted via PrimaryBid, that application cannot be withdrawn.

Investors wishing to apply for Retail Offer Shares through their investment platform, retail broker or wealth manager using their ISA, SIPP or GIA should contact them for details of their terms and conditions, process and any relevant fees or charges.

It is important to note that once an application for the Retail Offer Shares has been made and accepted via PrimaryBid, that application is irrevocable and cannot be withdrawn.

The Retail Offer Shares, if issued, will be fully paid and free of all liens, charges and encumbrances, and will rank pari passu in all respects with the existing ordinary shares of the Company, the Placing Shares and the Subscription Shares, including the right to receive all dividends and other distributions declared, made or paid after the date of issue.

Applications will be made (i) to the Financial Conduct Authority (the "FCA") for admission of the Placing Shares, the Retail Offer Shares and the Subscription Shares to the premium listing segment of the Official List; and (ii) the London Stock Exchange plc for admission of the Placing Shares, the Retail Offer Shares and the Subscription Shares to trading on its Main Market for listed securities (together, "Admission").

Admission and settlement of the Retail Offer Shares are expected to take place on or before 8.00 a.m. on 12 January 2024. The Retail Offer is conditional, among other things, upon Admission of the Placing Shares becoming effective and the placing agreement entered into by the Company in connection with the Placing not being terminated in accordance with its terms. The Retail Offer will not be completed without the Placing also being completed.

It should be noted that a subscription for the Retail Offer Shares and any investment in the Company carry a number of risks. Investors should make their own investigations into the merits of an investment in the Company. In particular, investors should consider the risk factors set out on www.PrimaryBid.com before making a decision to subscribe for Retail Offer Shares. Nothing in this announcement amounts to a recommendation to invest in the Company or amounts to investment, taxation or legal advice. Investors should take independent advice from a person experienced in advising on investment in securities such as the Company's ordinary shares if they are in any doubt.

The person responsible for releasing this announcement is Andrew Garard, Group General Counsel and Company Secretary.

• Gearing at the regulated water business level, defined as net debt / RCV(2).
• RCV (Regulatory Capital Value) is a measure of a company's market value plus the value of accumulated capital investment.