Ofwat's proposals to modify water company licences

Affinity Water Finance (2004) PLC

5.7/8% Guaranteed Notes Due 13/07/2026

Ofwat's proposals to modify water company licences

23 November 2012

On 26 October 2012 Ofwat issued a notice under section 13 of the Water Industry Act 1991 (the "Section 13 Notice"), proposing modifications to water company licences which, if implemented, would allow for changes to be made by Ofwat to the way in which price controls are set.

Affinity Water Limited today responded to the Section 13 Notice, stating that it rejected the proposals made but was willing to accept modifications to its licence which would allow Ofwat to set separate retail and wholesale price controls from 1 April 2015, and conveyed its willingness to engage in further discussions with Ofwat.

Under section 14 of the Water Industry Act 1991, Ofwat has the ability to refer the matter to the Competition Commission, who would determine whether modifications to the licence should be made and, if so, in what form.

For further information, please contact:

Tim Monod, Company Secretary

Affinity Water Finance (2004) PLC

Tamblin Way

Hatfield

Hertfordshire

AL10 9EZ

Phone: +44 1707277196

E-mail: [email protected]

DISCLAIMER - INTENDED ADDRESSEES

This announcement is a communication to the market. Nothing in this announcement constitutes an offer of securities for sale in the United States or any other jurisdiction. This announcement does not constitute a prospectus or a prospectus equivalent document.

This announcement has been delivered to you on the basis that you are a person into whose possession this announcement may be lawfully delivered in accordance with the laws of the jurisdiction in which you are located and you may not, nor are you authorised to, deliver this announcement to any other person. The distribution of this announcement in jurisdictions other than the United Kingdom may be restricted by law and therefore persons into whose possession this announcement comes should inform themselves about, and observe, such restrictions. Any failure to comply with the restrictions may constitute a violation of the securities laws of any such jurisdiction.

Your right to access this service is conditional upon complying with the above requirement.