Board Of Aldermen

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements referred to above present fairly, in all
material respects, the financial position of Pennichuck Corporation and Subsidiaries as of
December 31, 2018 and 2017, and the results of their operations and their cash flows for the

years then ended in accordance with accounting principles generally accepted in the United
States of America.

Molaro Hoa th

ACCOUNTANTS * AUDITORS [ia

MELANSON ga

121 River Frant Drive
Manchester, NH 03102
(603}669-6130

melansomheath.com

Additional Offices:
Nashua, NH
Andover, MA
Greenfield, MA

Board of Directors and Stockholder Elisworth, ME
Pennichuck Corporation and Subsidiaries

INDEPENDENT AUDITORS’ REPORT

CONTENTS

Independent Auditors’ Report

Consolidated Balance Sheets

Consolidated Statements of Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statement of Changes in Stockholder’s Equity Current Year

Consolidated Statement of Changes in Stockholder’s Equity Prior Year

Consolidated Statements of Cash Flows

Notes to the Consolidated Financial Statements

11

Pennichuck Corporation and Subsidiaries
Consolidated Financial Statements
December 31, 2018 and 2017

(With Independent Auditors’ Report Thereon)

-ll-

¢ Implementation of the new Revenue Recognition standard (ASU No. 2014-09), including
new accounting methodology and reporting.

e Complete the evaluation, design and negotiations relating to the potential move of the
Company’s headquarters facilities to a new location in the City during 2020.

¢ Continued participation in multiple educational outreach efforts within the Company’s
customer coverage radius.

Other detailed information is included in the Company’s financial statements.

Sincerely,

-10-

Other Events

PFOA Contamination Issues

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final permanent rate increase, with the intention that this temporary rate increase would be
approved in early 2018, and with permanent rates being set in the summer or fall of 2018.

Notes to Balance Sheet

Note | (Other Current Assets) — At December 31, 2018, approximately $1.0 million of this
balance is comprised of prepaid property taxes, which will be expensed in the first quarter of
2019, relating to taxes paid in November and December of 2018 for the second half of the
property tax year ended March 31, 2019.

Note 2 (Acquisition Premium) — In accordance with GAAP, the Acquisition Premium is being
written-off over the 30-year life of the principal of the City Acquisition Debt.

Balance Sheet ($000’s)
As of As of
December 31, 2018 December 31, 2017
(Audited) (Audited)
Assets
Property, Plant & Equipment, Net $ 221,860 $ 210,498

Current Assets: