Regulatory Application

THIS ANNOUNCEMENT RELATES TO THE DISCLOSURE OF INFORMATION THAT QUALIFIED OR MAY HAVE QUALIFIED AS INSIDE INFORMATION WITHIN THE MEANING OF ARTICLE 7(1) OF THE MARKET ABUSE REGULATION (EU) 596/2014, AS IT FORMS PART OF DOMESTIC LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 (UK MAR).

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BRISTOL WATER PLC

8 August 2022

Proposed merger of Bristol Water plc with South West Water Limited

Following Pennon's acquisition of Bristol Water plc in June 2021, and subsequent merger clearance from the CMA in March 2022, plans to integrate South West Water and Bristol Water into a single entity operating under one licence are now underway.

South West Water Limited has submitted its application to Ofwat to vary its licence to include Bristol Water. In due course, Ofwat will launch its consultation under the Water Industry Act 1991 to combine the activities of the two businesses into one licence.

As part of the proposed merger, substantially all of Bristol Water plc's business will transfer by means of a statutory transfer scheme under Schedule 2 of the Water Industry Act 1991 to South West Water Limited, subject to Ofwat's agreement on the licence variation and the transfer scheme.

Bristol Water plc currently intends to include its £40,000,000 2.701% Index-Linked Secured Guaranteed Bonds due 2041 (ISIN: XS0609003701) in the integration with South West Water, subject to Ofwat's agreement on the licence variation and transfer scheme. Bristol Water plc will consult with bondholders on its proposals in due course.

Bristol Water plc's 8.75% irredeemable cumulative preference shares and debenture stock (comprising (i) the 4% consolidated irredeemable debenture stock, (ii) the 4% perpetual irredeemable debenture stock; (iii) the 4.25% perpetual irredeemable stock and (iv) the 3.50% perpetual irredeemable stock) will not be transferred as part of the transfer scheme. They will remain ongoing obligations of Bristol Water plc after the implementation of the transfer scheme, and Pennon Group plc and Bristol Water plc are preparing the necessary arrangements to ensure that at all times Bristol Water plc will have sufficient funds and reserves to meet all of its future obligations in relation to the preference shares and debenture stock.

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This announcement is released by Bristol Water plc and contains information that qualified or may have qualified as inside information for the purposes of Article 7 of UK MAR, encompassing information relating to the consent solicitation described above. For the purposes of UK MAR and Article 2 of Commission Implementing Regulation (EU) 2016/1055 as it forms part of domestic law by virtue of the European Union (Withdrawal) Act 2018, this announcement is made by Colin Caldwell, Company Secretary at Bristol Water plc.

About Pennon Group

Pennon is a UK-focused water infrastructure group, comprising South West Water (incorporating Bournemouth Water), Bristol Water, and Pennon Water Services.

Bristol Water is a regulated water only company supplying drinking water to a population of approximately 1.2 million people in the Bristol region.

South West Water provides water and wastewater service to a population of c.1.8 million in Cornwall, Devon and parts of Dorset and Somerset, and water only services to c.0.5 million in parts of Dorset, Hampshire and Wiltshire.