THIS ANNOUNCEMENT, INCLUDING THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN, INTO OR FROM THE UNITED STATES, AUSTRALIA, CANADA, JAPAN, SOUTH AFRICA OR ANY OTHER JURISDICTION WHERE TO DO SO WOULD CONSTITUTE A VIOLATION OF THE RELEVANT LAWS OR REGULATIONS OF THAT JURISDICTION. PLEASE SEE THE IMPORTANT NOTICE AT THE END OF THIS ANOUNCEMENT.  FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION.

THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION AS STIPULATED UNDER THE MARKET ABUSE REGULATION (EU) NO. 596/2014 AS IT FORMS PART OF UK LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018, AS AMENDED.

THIS ANNOUNCEMENT AMOUNTS TO A FINANCIAL PROMOTION FOR THE PURPOSES OF SECTION 21 OF THE FINANCIAL SERVICES AND MARKETS ACT 2000 ("FSMA") AND HAS BEEN APPROVED BY PRIMARYBID LIMITED WHICH IS AUTHORISED AND REGULATED BY THE FINANCIAL CONDUCT AUTHORITY (FRN 779021).

FOR IMMEDIATE RELEASE

10 January 2024

Pennon Group plc

("Pennon", the "Group" or the "Company")

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.

Investors can also participate through PrimaryBid's extensive partner network of investment platforms, retail brokers and wealth managers, subject to such partners' participation. Participating partners include:

·      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.

It is a term of the Retail Offer that the total value of the Retail Offer Shares available for subscription at the Offer Price does not exceed €8 million equivalent. Accordingly, the Company is not required to publish (and has not published) a prospectus in connection with the Retail Offer as it falls within the exemption set out in sections 86(1)(e) and 86(4) of FSMA. The Retail Offer is only being made in the United Kingdom and is not being made into any jurisdiction where it would be unlawful to do so. In particular, the Retail Offer is being made only to persons who are, and at the time the Retail Offer Shares are subscribed for, will be outside the United States and subscribing for the Retail Offer Shares in an "offshore transaction" as defined in, and in accordance with, Regulation S under the U.S. Securities Act of 1933, as amended (the "Securities Act"). Persons who are resident or otherwise located in the United States will not be eligible to register for participation in the offer through PrimaryBid or subscribe for Retail Offer Shares.

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.

For further information on PrimaryBid, the PrimaryBid Offer or for a copy of the terms and conditions (including the procedure for application and payment for new Ordinary Shares) that apply to registered users of PrimaryBid in addition to the terms and conditions set out in this Announcement, visit www.PrimaryBid.com or email PrimaryBid at enquiries@primarybid.com. 

Brokers wishing to offer their customers access to the Retail Offer and future PrimaryBid transactions, should contact partners@primarybid.com.

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.

This announcement should be read in its entirety. In particular, you should read and understand the information provided in the "Important Notices" section of this announcement.

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

For further information, please contact:

Notes:
⁽¹⁾ Gearing at the regulated water business level, defined as net debt / RCV⁽²⁾.

⁽²⁾ RCV (Regulatory Capital Value) is a measure of a company's market value plus the value of accumulated capital investment.

Important Notices

This announcement has been issued by and is the sole responsibility of the Company.

Persons distributing this announcement must satisfy themselves that it is lawful to do so. This announcement is for information purposes only and shall not constitute an offer to sell or issue or the solicitation of an offer to buy, subscribe for or otherwise acquire securities in any jurisdiction in which any such offer or solicitation would be unlawful. Any failure to comply with this restriction may constitute a violation of the securities laws of such jurisdictions. Persons needing advice should consult an independent financial adviser.

The distribution of this announcement and the offering, placing and/or issue of the Retail Offer Shares in certain jurisdictions may be restricted by law. No action has been taken by the Company, PrimaryBid or any of their respective affiliates, or any person acting on any of their behalves, that would permit an offer of the Retail Offer Shares or possession or distribution of this announcement or any other offering or publicity material relating to such Retail Offer Shares in any jurisdiction where action for that purpose is required. Persons into whose possession this announcement comes are required by the Company to inform themselves about, and to observe, such restrictions.

No offering document or prospectus will be made available in connection with the matters contained in this announcement and no such prospectus is required to be published in accordance with the Prospectus Regulation (EU) 2017/1129 (as it forms part of English law pursuant to the European Union (Withdrawal) Act 2018 (as amended)).

THIS ANNOUNCEMENT, AND THE INFORMATION CONTAINED HEREIN, IS RESTRICTED AND NOT FOR RELEASE, PUBLICATION, TRANSMISSION, FORWARDING OR DISTRIBUTION, IN WHOLE OR IN PART, DIRECTLY OR INDIRECTLY, IN OR INTO THE UNITED STATES OF AMERICA, ITS TERRITORIES AND POSSESSIONS, ANY STATE OF THE UNITED STATES OR THE DISTRICT OF COLUMBIA (COLLECTIVELY, THE "UNITED STATES"), AUSTRALIA, CANADA, THE REPUBLIC OF SOUTH AFRICA, JAPAN OR ANY OTHER JURISDICTION IN WHICH SUCH RELEASE, PUBLICATION, TRANSMISSION, FORWARDING OR DISTRIBUTION WOULD BE UNLAWFUL. FURTHER, THIS ANNOUNCEMENT IS FOR INFORMATION PURPOSES ONLY AND IS NOT AN OFFER OF SECURITIES IN ANY JURISDICTION. THIS ANNOUNCEMENT HAS NOT BEEN APPROVED BY THE LONDON STOCK EXCHANGE, NOR IS IT INTENDED THAT IT WILL BE SO APPROVED.

This announcement is for information purposes only and is not intended to and does not constitute or form part of any offer or invitation to issue or sell, or the solicitation of an offer to acquire, purchase or subscribe for, any securities in the United States, Canada, Australia, the Republic of South Africa, Japan or any other jurisdiction in which the same would be unlawful. No public offering of the securities referred to herein is being made in any such jurisdiction.

The securities referred to herein have not been and will not be registered under the Securities Act, or under the securities laws of any state or other jurisdiction of the United States, and may not be offered, sold, pledged, taken up, exercised, resold, renounced, transferred, or delivered, directly or indirectly, in or into the United States absent registration under the Securities Act, except pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in compliance with any applicable securities laws of any state or any other jurisdiction of the United States.  No public offering of the Retail Offer Shares, the Placing Shares or any other securities is being made in the United States.

The relevant clearances have not been, nor will they be, obtained from the securities commission of any province or territory of Canada; no prospectus has been or will be lodged with, or registered by, the Australian Securities and Investments Commission or the Japanese Ministry of Finance; and the Retail Offer Shares have not been, and nor will they be, registered under or offered in compliance with the securities laws of any state, province or territory of Canada, Australia, the Republic of South Africa or Japan. Accordingly, the Retail Offer Shares may not (unless an exemption under the relevant securities laws is applicable) be offered, sold, resold or delivered, directly or indirectly, in or into Canada, Australia, the Republic of South Africa, Japan or any other jurisdiction outside the United Kingdom or to, or for the account or benefit of any national, resident or citizen of Australia, the Republic of South Africa, Japan or to any investor located or resident in Canada.

Certain statements contained in this announcement constitute "forward-looking statements" with respect to the financial condition, performance, strategic initiatives, objectives, results of operations and business of the Company. All statements other than statements of historical facts included in this announcement are, or may be deemed to be, forward-looking statements. Without limitation, any statements preceded or followed by or that include the words "targets", "plans", "believes", "expects", "aims", "intends", "anticipates", "estimates", "projects", "will", "may", "would", "could" or "should", or words or terms of similar substance or the negative thereof, are forward-looking statements. Forward-looking statements include statements relating to the following: (i) future capital expenditures, expenses, revenues, earnings, synergies, economic performance, indebtedness, financial condition, dividend policy, losses and future prospects; and (ii) business and management strategies and the expansion and growth of the Company's operations. Such forward-looking statements involve risks and uncertainties that could significantly affect expected results and are based on certain key assumptions. Many factors could cause actual results, performance or achievements to differ materially from those projected or implied in any forward-looking statements. The important factors that could cause the Company's actual results, performance or achievements to differ materially from those in the forward-looking statements include, among others, the macroeconomic and other impacts of COVID-19, economic and business cycles, the terms and conditions of the Company's financing arrangements, foreign currency rate fluctuations, competition in the Company's principal markets, acquisitions or disposals of businesses or assets and trends in the Company's principal industries. Due to such uncertainties and risks, readers are cautioned not to place undue reliance on such forward-looking statements, which speak only as of the date hereof. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements in this announcement may not occur. The forward-looking statements contained in this announcement speak only as of the date of this announcement. The Company and its directors each expressly disclaim any obligation or undertaking to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, unless required to do so by applicable law or regulation (including the rules of the London Stock Exchange or the Financial Conduct Authority).

This announcement does not constitute a recommendation concerning any investor's investment decision with respect to the Retail Offer. Any indication in this announcement of the price at which ordinary shares have been bought or sold in the past cannot be relied upon as a guide to future performance. The price of shares and any income expected from them may go down as well as up and investors may not get back the full amount invested upon disposal of the shares. Past performance is no guide to future performance. The contents of this announcement are not to be construed as legal, business, financial or tax advice. Each investor or prospective investor should consult his, her or its own legal adviser, business adviser, financial adviser or tax adviser for legal, financial, business or tax advice.

No statement in this announcement is intended as a profit forecast or estimate for any period and no statement in this announcement should be interpreted to mean that earnings, earnings per share or income, cash flow from operations or free cash flow for the Company, as appropriate, for the current or future years would necessarily match or exceed the historical published earnings, earnings per share or income, cash flow from operations or free cash flow for the Company.

The Retail Offer Shares to be issued or sold pursuant to the Retail Offer will not be admitted to trading on any stock exchange other than the London Stock Exchange.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into or forms part of this announcement.

This announcement has been prepared for the purposes of complying with applicable law and regulation in the United Kingdom and the information disclosed may not be the same as that which would have been disclosed if this announcement had been prepared in accordance with the laws and regulations of any jurisdiction outside the United Kingdom.

If you are in any doubt about the contents of this announcement you should consult your stockbroker, bank manager, solicitor, accountant or other financial adviser.