Water for the North West

Weighted average cost of capital (WACC) Aim to at least retain UUW credit ratings to support efficient access to debt capital markets AMP6 Real (RPI) Cost of equity 5.65% Cost of debt 2.59% AMP7 Real (RPI 3%) Cost of debt 1.15%¹ AMP7 Real (CPI 2%) Cost of equity 3.18% Cost of debt 2.14%2 Cost of equity 4.19% Industry average WACC based on notional company with 60% gearing Gearing 62.5% Appointee WACC 3.74% Retail margin adjustment 0.14% Wholesale WACC 3.60% Gearing 60% Gearing 60% Debt indexation to apply for new debt assumed to be 20% of total debt Appointee WACC 1.96% Retail margin adjustment 0.04% Wholesale WACC 1.92% Appointee WACC 2.96% Retail margin adjustment 0.04% Wholesale WACC 2.92% CPIH to be adopted for the indexation of future price controls 1 Cost of debt split: 1.43% embedded debt (assumed to be 80% of total); -0.45% new debt (assumed to be 20% of total) 2 Cost of debt split: 2.42% embedded debt (assumed to be 80% of total); -0.53% new debt (assumed to be 20% of total) Investor presentation 37

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