Pennon : Notice of Annual General Meeting 2023

Dear Shareholder

I am pleased to invite you to attend the Company's AGM, which will be held at 11.00am on Thursday 20 July 2023 at The Courtyard, Sandy Park, Sandy Park Way, Exeter, EX2 7NN. The notice of AGM (the Notice) is set out on pages 2 to 4 of this document.

We have listened to feedback from our shareholders, and in light of this, we have decided to move back to meeting all of our shareholders in person this year.

Business of the AGM

The business to be considered at this year's AGM is set out below and an explanation of the business appears on pages 8 to 10 of this document.

To demonstrate the Company's commitment to shareholders, the Board is again putting the Company's climate-related financial disclosures before shareholders and is seeking a non-binding advisory vote on them at the AGM this year. The disclosures represent the Company's response to the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD) and, in particular, set out the Company's climate strategy to reduce emissions within its operations and through its supply chain, in order to get to Net Zero by 2030.

Board changes

As outlined in the Annual Report, we had two appointments to the Board this year. Dorothy Burwell and Loraine Woodhouse were appointed 1 December 2022 and will be standing for election at this year's AGM. Details of their skills and experience can be found on pages 6 to 7. All other Directors are standing for re-election including Neil Cooper, ahead of his stepping down in September 2023, see page 3 of the Annual Report.

The new Policy which shareholders will be asked to vote on focuses on refining the incentive measures within the existing structure of the annual bonus arrangements; increasing the weighting on measures linked to delivery for customers, communities and the environment with a lower weighting on financial measures; and greater alignment between the LTIP metrics and strategic priorities, to drive long-term sustainable performance and improved financial reward for investors, whilst responding to both Ofwat guidance and shareholder feedback.

If approved, this new Policy will come into effect from the date of the AGM for a period of up to three years. Further information is available in the Directors' Remuneration Report on pages 136 to 151 of the Annual Report.

Voting at the AGM

In line with best practice, we continue to encourage the use of electronic proxy voting. You may register your proxy votes via www.signalshares. com. Registering your vote electronically is entirely secure and ensures the privacy of your personal information.

If you wish to vote by post, you will find a proxy form enclosed with this document. Please submit your completed proxy appointment and voting instruction forms as soon as possible, but no later than 11:00am on

8 July 2023 for ordinary shareholders, to the Company's Registrar, Link Group, PXS1, Central Square, 29 Wellington Street, Leeds, LS1 4DL.

If you attend the AGM, you will be provided with a poll card on the day.

WaterShare+ participants are reminded that the deadline for giving their voting instructions to the registered shareholder, Link Market Services Trustees (Nominees) Limited, is 11:00am on 17 July 2023. You will need to give your voting instructions via Signal Shares (www.signalshares. com). Your views are very important to us and we encourage you to give your voting instructions.

Any WaterShare+ participants who would like to attend the AGM in person must make a request to obtain a letter of representation to Link Market Services Trustees (Nominees) Limited by 11:00am on 17 July 2023, so that the required paperwork can be processed. We may be unable to permit entry to the meeting to any WaterShare+ participants who have not made appropriate arrangements.

Further details on the WaterShare+ Scheme can be found at www.pennon-group.co.uk/investor-information/watershare

Shareholder Questions

The AGM is an opportunity to ask your Board questions relating to the business of the Company. Questions will be answered during the meeting where possible, and a summary of responses will be published on our website following the meeting.

Recommendation

The Board considers that all resolutions to be proposed at the AGM are in the best interests of and promote the success of the Company and our shareholders as a whole and accordingly unanimously recommends that you vote in favour of the resolutions, as your Directors intend to do in respect of their own shareholdings.

Directors' Remuneration Policy

The current Directors' Remuneration Policy (the Policy) was approved in 2020 with the normal three-year renewal due this year. Following a review of the Policy by the Remuneration Committee it was concluded that the current remuneration framework, which had overwhelming support from stakeholders, remained appropriate and would be largely rolled forward, with no material changes.

Gill Rider

Chair

19 June 2023

Resolutions

The Resolutions numbered 1 to 18 are proposed as Ordinary Resolutions, which must each receive more than 50% of the votes cast in order to be passed.

Resolutions numbered 19 to 22 are proposed as Special Resolutions, which must receive at least 75% of the votes cast in order to be passed.

Re-election of Directors

Resolution 7 - Gill Rider

To re-elect Gill Rider as a Director.

Read biography on page 5

Resolution 1 - Annual Report and Accounts

That the Annual Report and Accounts for the year ended 31 March 2023 be received and adopted.

Resolution 8 - Susan Davy

To re-elect Susan Davy as a Director.

Read biography on page 5

Resolution 2 - Dividend

That a final dividend of 29.77p per ordinary share, as recommended by the Directors for the financial year ended 31 March 2023, be declared for payment by 4 September 2023 to ordinary shareholders whose name appears on the register of members as at the close of business on

21 July 2023.

Resolution 3 - Directors' Remuneration Report

That the Directors' Remuneration Report for the financial year ended 31 March 2023, as contained in the Company's Annual Report 2023 (excluding the Directors' Remuneration Policy set out on pages 152 to 157 of the Annual Report 2023) be approved.

Resolution 4 - Directors' Remuneration Policy

That the Directors' Remuneration Policy for the financial year ended 31 March 2023, as set out on pages 152 to 157 of the Annual Report 2023, be approved.

Election of Directors

Resolution 5 - Election of Dorothy Burwell

To elect Dorothy Burwell as a Director.

Read biography on page 6

Resolution 6 - Election of Loraine Woodhouse

To elect Loraine Woodhouse as a Director.

Read biography on page 7

Resolution 9 - Paul Boote

To re-elect Paul Boote as a Director.

Read biography on page 5

Resolution 10 - Jon Butterworth

To re-elect Jon Butterworth as a Director.

Read biography on page 7

Resolution 11 - Neil Cooper

To re-elect Neil Cooper as a Director.

Read biography on page 5

Resolution 12 - Iain Evans

To re-elect Iain Evans as a Director.

Read biography on page 6

Resolution 13 - Claire Ighodaro

To re-elect Claire Ighodaro as a Director.

Read biography on page 6

Resolution 14 - Reappointment of Auditor

That Ernst & Young LLP be reappointed as Auditor of the Company to hold office until the conclusion of the next AGM at which accounts are laid before the Company.

Resolution 15 - Auditor's remuneration

That the Audit Committee be authorised to determine the remuneration of the Auditor, for and on behalf of the Board.

Resolution 16 - Political donations

That in accordance with Section 366 of the Companies Act 2006 (the Act), the Company, and all companies that are subsidiaries of the Company at any time during the period for which the resolution has effect, be generally and unconditionally authorised to:

1. make political donations to political parties and/or independent election candidates not exceeding £75,000 in total;
2. make political donations to political organisations other than political parties not exceeding £75,000 in total; and
3. incur political expenditure not exceeding £75,000 in total,

during the period from the date of this resolution to the date of the next AGM of the Company in 2024, or if earlier to the close of business on 1 October 2024, provided that the aggregate amount of any such donations and expenditure shall not exceed £75,000 in total and that for the purpose of this resolution the terms 'political donations', 'political parties', 'independent election candidates', 'political organisations' and 'political expenditure' have the meanings set out in Sections 363 to 365 of the Act.

Resolution 17 - Authority to allot shares

That:

1. the Directors be generally and unconditionally authorised, in accordance with Section 551 of the Act, to exercise all powers of the Company to allot shares in the Company and grant rights to subscribe for, or convert any security into, shares in the Company:
2. 1. up to a maximum nominal amount of £53,171,464 (such amount to be reduced by the nominal amount of any equity securities (as defined in Section 560 of the Act) allotted under paragraph
   2. 1. below in excess of £53,171,464); and
   3. comprising equity securities (as defined in Section 560 of the Act) up to a maximum nominal amount of £106,342,928 (such amount to be reduced by any shares allotted or rights granted under paragraph (i) above) in connection with an offer by way of a rights issue:
   4. 1. to holders of ordinary shares in proportion (as nearly as may be practicable) to their existing holdings; and
      2. to holders of other equity securities if this is required by the rights of those securities or, if the Directors consider it necessary, as permitted by the rights of
         those securities,

and so that the Directors may impose such exclusions, limits or other restrictions and make any other arrangements as they consider expedient, necessary or appropriate in relation to treasury shares, fractional entitlements, record dates, shares represented by depositary receipts, legal, regulatory or practical problems under the laws in any territory or the requirements of any relevant regulatory body or stock exchange or any other matter, provided that:

1. this authority shall expire at the conclusion of the next AGM of the Company after the passing of this resolution or, if earlier, at the close of business on 1 October 2024;
2. the Company may, before this authority expires, make an offer, or enter into an agreement which would or might require shares to be allotted or rights to be granted after it expires, and the Directors may allot shares or grant rights in pursuance of such offer or agreement as if this authority had not expired; and
3. all previous unutilised authorities under Section 551 of the Act shall cease to have effect (save to the extent that the same are exercisable pursuant to Section 551(7) of the Act by reason of any offer or agreement made prior to the date of this resolution which would or might require shares to be allotted or rights to be granted on or after that date).

Resolution 18 - Climate-related financial disclosures

To consider and approve the Company's climate-related financial disclosures as set out on pages 74 to 95 of the Annual Report 2023.

Resolution 19 - General authority to disapply pre-emption rights

That:

1. the Directors be given power subject to the passing of Resolution 17 above, to allot equity securities (as defined in Section 560 of the Act) for cash pursuant to the authority conferred on them by that resolution under Section 551 of that Act and/or to allot equity securities as defined in Section 560(3) of that Act (sale of treasury shares) for cash in either case as if Section 561 of the Act did not apply to the allotment or sale, but so that this power shall
   be limited:
2. 1. to the allotment of equity securities in connection with an offer, invitation to apply for, or issue of equity securities (but in the case of the authority granted under Resolution 17(a) (ii), by way of a rights issue only) to or in favour of:

1. holders of ordinary shares in proportion (as nearly as may be practicable) to their existing holdings;

and

1. holders of other equity securities if this is required by the rights of those securities or, if the Directors consider it necessary, as permitted by the rights of those securities;

and so that the Directors may impose such exclusions, limits or restrictions and make any other arrangements as they consider expedient, necessary or appropriate in relation to treasury shares, fractional entitlements, record dates, shares represented by depositary receipts, any legal, regulatory or practical problems under the laws in any territory or the requirements of any relevant regulatory body or stock exchange or any other matter;

1. to the allotment of equity securities pursuant to the authority granted under Resolution 17(a)(i) and/or by virtue of Section 560(3) of the Act (in each case otherwise than under paragraph (A) above) up to a maximum nominal amount of £15,953,034; and
2. to the to the allotment of equity securities or sale of treasury shares (otherwise than under paragraph (A) or paragraph (B) above) up to a nominal amount equal to 20% of any allotment of equity securities or sale of treasury shares from time to time under paragraph (B) above, such power to be used only for the purposes of making a follow-on offer which the Directors determine to be of a kind contemplated by paragraph 3 of Section 2B of the Statement of Principles on Disapplying Pre-Emption Rights most recently published by the Pre- Emption Group prior to the date of this notice,

provided that:

1. this power shall apply until the conclusion of the next AGM of the Company after the passing of this resolution or, if earlier, until the close of business on 1 October 2024; and
2. the Company may, before this power ends, make an offer or enter into an agreement, which would or might require equity securities to be allotted after the power ends, and the Directors may allot equity securities in pursuance of such offer or agreement as if this power had not ended.