Pennon Group Plc

It is a payment to shareholders, the level of which is based on the financial results of the Company for the year. It is paid to everyone who holds shares of the Company at the record date. It can be paid in cash or used to buy more Pennon Group Plc shares via the Company's Scrip Dividend Alternative.

Pennon Group currently pays dividends twice a year, usually in April and October.

Before Pennon Group Plc announces a dividend, the Company consults with the London Stock Exchange and sets the ex-dividend date which is the first day of the ex-dividend period. The ex-dividend date was created to allow a period of transactions to be completed before the record date. If an investor does not own the stock before the ex-dividend date, he or she will be ineligible for the dividend payment.

The dividend is paid based on the number of shares on the share register at the record date, which is currently two days after the ex-dividend date. If you receive a dividend and are not sure if you are entitled to it, you should contact the agent who sold your shares for you.

When you are paid a dividend, you are sent a tax voucher which shows the net amount received and the tax which is deemed to have been paid. The tax credit on dividends is 10% of the gross amount.

• Your dividends are treated as if they had been paid after the deduction of income tax at the basic rate. In general, if you are resident in the UK;
  • if you pay tax at the standard or basic rate, you have no further tax to pay
  • if you pay tax at the higher rate, you will be taxed at a special rate of 32.5% of the gross dividend. You will need to pay the amount above the 10% tax credit (an additional 22.5%) with your overall tax bill for the year. Keep the dividend voucher in case your tax office wants to see it.
  • if you pay tax at the additional rate of 50% (applicable from 2010/11 onwards) you will be taxed at a special rate of 42.5% of the gross dividend.  You will need to pay the amount above the 10% tax credit (an additional 32.5%) with your overall tax bill for the year. Keep the dividend voucher in case your tax office wants to see it.
• If you do not pay tax, you will not be able to reclaim the tax credit.
• If you sell any of your shares at a profit, you may have to pay capital gains tax.

You have the option of:

• having them paid direct to your bank or building society account
• electing to use them to buy more Pennon Group Plc shares
• being sent a cheque to your registered address

If dividends are paid direct to your bank or building society account through the BACS system, it avoids the risk of cheques being lost in the post and your dividend will be in your account on the day the payment is made. The Registrar will send you a tax voucher to confirm the amount and to which account it has been paid.

Contact the Registrar as soon as possible and confirm which payment has been lost. They will stop the cheque and will issue a replacement free of charge.

Dividend cheques are currently valid for six months from the date of payment. After this time, return any uncashed cheques to the Registrar; they will issue a replacement free of charge.

If you lose your tax voucher, contact the Registrar, detailing which voucher(s) have been lost. They will issue you with duplicates on payment of an administration charge.