SW (FINANCE) I PLC (the "Company")

(LEGAL ENTITY IDENTIFIER: 549300BHN1HB5BNG2R96)

Corporate Update: Improved outlooks from Moody's and S&P alongside Fitch rating upgrade

21 August 2026

Southern Water welcomes the improved credit outlooks announced this week by Moody's Ratings ("Moody's") and S&P Global Ratings ("S&P"), providing further independent recognition of the progress being made to strengthen the business financially and operationally.

The changes in outlook follow the upgrade by Fitch Ratings ("Fitch") of the Company's senior secured debt rating from BBB- to BBB, with a stable outlook, announced on 28 July 2026.

The improved credit assessments from all three independent rating agencies reflect the continuing equity support from Southern Water's shareholders, the improved financial resilience this provides, and the progress in operational performance.

Stuart Ledger, Chief Financial Officer of Southern Water, said:

"We welcome the more positive outlook provided by Moody's and S&P following Fitch's decision last month to upgrade our senior secured debt rating. Together, these actions provide important independent recognition of Southern Water's improving operational performance and of the significant long-term support provided by our shareholders.

The £1.2 billion of new equity committed by our shareholders is being invested directly into Southern Water, strengthening our financial resilience and providing important support for the delivery of our ambitious investment programme.

We are also encouraged that the rating agencies have recognised the progress being made through our operational turnaround. We remain focused on translating that investment and progress into better services for our customers, greater resilience and improved outcomes for the environment."

Moody's

Moody's announced on 18 August 2026 that it had changed its outlook on Southern Water and the Company, to Positive, while affirming its Ba1 rating.

Moody's said its positive outlook reflects a tangible improvement in Southern Water's operational performance and a material reduction in the risk of performance penalties or overspend during the AMP8 regulatory period, alongside ongoing degearing underpinned by strong shareholder support.

Moody's also highlighted that, when excluding service measures, Southern Water's performance on operational water and wastewater metrics has been above sector average, describing the progress as "a clear indication that the turnaround programme is being successful".

The positive outlook also reflects the benefit of the Competition and Markets Authority's ("CMA") redetermination, concluded in March 2026, which provided additional cost allowances for wholesale totex, as well as further contingent allowances, together with the additional £300 million equity commitment announced on 22 June 2026 and largely provided by new minority shareholder Asterion Industrial Partners, bringing total equity commitments for AMP8 to £1.2 billion. Moody's also noted the conclusion, in February 2026, of Ofwat's long-running enforcement investigation into wastewater treatment works performance, and continuing degearing to around 66% of Moody's-adjusted net debt to regulatory capital value at March 2026.

Moody's announcement can be found here: https://ratings.moodys.com/ratings-news/471217

S&P

S&P announced on 20 August 2026 that it had revised its outlook on the 'BBB-' rated senior secured debt issued by the Company from Negative to Stable, while affirming the 'BBB-' rating.

S&P said the stable outlook reflects the significant improvement in Southern Water's operational performance, continued shareholder support and an improving trajectory for credit metrics. S&P expects funds from operations to debt to improve towards 7% by 2029, compared with its previous expectation that the metric would deteriorate towards the end of the decade.

S&P highlighted the marked improvement in a number of key operational measures during the first year of AMP8, including supply interruptions, leakage and external sewer flooding. It also noted a significant reduction in outcome delivery incentive penalties compared with AMP7, while recognising that further progress is required on cost efficiency and some wastewater and customer service measures.

The stable outlook also reflects the benefit of the CMA's redetermination, including a higher allowed cost of capital, changes to the ODI framework and the transfer of certain allowances to large gated schemes. S&P also highlighted the further equity commitment announced in June 2026, bringing total committed equity support for AMP8 to £1.2 billion, and the resulting reduction in Southern Water's gearing, especially compared to a year ago.

S&P's announcement can be found here: Southern Water Services Ltd. Debt Outlook Revised | S&P Global Ratings

Fitch

Fitch announced on 28 July 2026 that it had upgraded SW (Finance) I PLC's senior secured debt rating from BBB- to BBB, with a stable outlook.

Fitch said the upgrade reflected its recognition of the sustained equity support from funds managed by Macquarie Asset Management and, latterly, Asterion Industrial Partners, as announced by the Company on 22 June 2026, against a backdrop of an ongoing operational turnaround, improved outcome delivery incentives and environmental performance, and an uplift in allowances resulting from the Competition and Markets Authority appeal.

Fitch's announcement can be found here: Fitch Upgrades Southern Water's Debt to 'BBB'; Outlook Stable

For further information, please contact Stuart Ledger (Group CFO) at:

Address:       Southern House, Yeoman Road, Worthing, BN13 3NX, United Kingdom

Tel:               01903 272 611

Email:           [email protected]

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