Water for the North West

Impact of inflation Short term timing differences - for 2023/24 year end Regulated revenue Dividends Regulatory capital value (RCV) Index-linked debt4 Price limits are based on the movement in CPIH³ inflation between November 2021 and November 2022 (i.e. 9.3%) Dividends are linked to the same inflation as regulated revenue in order to mirror the inflationary uplift in price limits Opening RCV is inflated by the movement in inflation between March 2023 and March 2024, 50% linked to RPI¹ inflation and 50% linked to CPIH³ inflation Plus RCV additions (from totex) during the year, gives 31 March 2024 RCV (which is used as part of year-end gearing calculation) RPI 3 month lag: Adjustment to principal is based on the movement in RPI¹ inflation between January 2023 and January 2024 RPI 8 month lag: Adjustment to principal is based on the movement in RPI¹ inflation between July 2022 and July 2023 CPI 3 month lag: Adjustment to principal is based on the movement in CPI² inflation between January 2023 and January 2024 1 Retail Prices Index (RPI) 2 Consumer Price Index (CPI) 3 Consumer Price Index adjusted for Housing (CPIH) 4 Indexation of principal is calculated based on monthly movements in RPI / CPI Investor presentation • 40

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