Board Of Aldermen

© MELANSON

INDEPENDENT AUDITORS’ REPORT

Board of Directors and Stockholder
Pennichuck Corporation and Subsidiaries

We have audited the accompanying consolidated financial statements of Pennichuck Corporation
and Subsidiaries, which comprise the consolidated balance sheets as of December 31, 2020 and 2019,
and the related consolidated statements of income (loss), comprehensive income (loss), changes in
stockholder’s equity, and cash flows for the years then ended, and the related notes to the
consolidated financial statements.

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

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PENNICHUCK?

PENNICHUCK CORPORATION AND SUBSIDIARIES

Consolidated Financial Statements
December 31, 2020 and 2019

(With Independent Auditors’ Report Thereon)

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¢ Completion and ongoing response and action to PFOA contamination issues in Southern NH, in
cooperation with the NHDES and other State agencies

© Implementation of the new PFAS MCL and Arsenic MCL, as governed by the NHDES

© Continued training, mentoring and succession planning throughout the organization, including
impending retirements occurring 2021-2023 for certain key roles

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Additionally, during 2018 the Company was asked by NHDES to contract for similar design
services with SGPP for expansion of its public water system in southern Bedford. This project
was initiated in 2018, and was slated for completion in the first half of 2019, bringing water to
approximately 90 new customers in that community.

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bond issuance associated with these capital investments and the QCPAC surcharge will be
completed and funded. The Order will allow recoupment of the surcharge from all its customers
based on their actual bills incurred between April 1, 2021 and the final effective date of the
Order.

Directors and the Sole Shareholder. This issuance had previously received NHPUC approval on
Order No. 26,101, dated February 2, 2018, which authorized up to $32.5 million in bonds via
multiple issuances for the years 2018-2021.

Capital Expenditures

Capital expenditures in the fourth quarter of 2020 were $4.9 million compared to $7.2 million
in the fourth quarter of 2019. For the year 2020, capital expenditures were $10.7 million as
compared to $16.6 million in 2019.

The major expenditures for 2020 were as follows:

Locke Lake New Water Source $ 1,923,000

25 Walnut Street Office Building Fit-Up and Relocation 619,000

Peacham Road Pipeline — Locke Lake 591,000

Carbon Filter Media Changeout — 5 & 6 495,000

Merrimack River Intake 485,000

Notes to Balance Sheet

Note 1 (Restricted Cash) — At December 31, 2020, the balance of $8.9 million represents an
increase of $6.9 million from the end of 2019, mainly due to: (1) the cash generated from the
increased revenue levels year-over-year; and (2) the additional proceeds received from
Pennichuck Water’s September 2™ bonding event as a one-time replenishment of the existing
MOERR Rate Stabilization Fund.

Balance Sheet ($000’s)
As of As of
December 31, 2020 December 31, 2019
(Audited) (Audited)
Assets
Property, Plant & Equipment, Net $ 242.469 $ 237,182

Current Assets: