SSE : Annual Report 2020

SSE PLC ANNUAL REPORT 2020

ABOUT THIS REPORT

SSE plc is a UK-listed energy company and this Annual Report 2020 comprises a Strategic Report, a Directors' Report and Financial Statements for the year ended 31 March 2020. In so far as possible, it also seeks to address trends and factors that could affect the future development, performance and position of SSE's businesses.

This includes taking account of events between

31 March 2020 and 16 June 2020, the date on which the Board of Directors approved this report. That period was dominated by the coronavirus emergency and the Board recognised on 16 June that it was difficult to forecast with accuracy the full extent of the pandemic's human, social, economic and business impact.

AT A GLANCE

Sale of SSE Energy Services page 17

Operating profit AdjustedEarnings per share Adjusted

SSE completed the sale of its GB household energy supply business.

£1,488.4m

83.6p

Reported

Reported

Progress in offshore wind page 19

£963.4m

40.6p

SSE was successful in UK auctions for offshore wind capacity contracts.

Dividend

Recommended full-year dividendEBITDA Adjusted

A commitment to decarbonisation page 21

80p

£2,191.4m

SSE adopted a new target to cut carbon intensity of electricity by 60% by 2030.

Alternative Performance MeasuresEconomic contribution

UK

£7.7bn

Ireland

€650m

SSE assesses the performance of the Group using a variety of performance measures. These measures are not all defined under IFRS and are therefore termed "non-GAAP" measures. A reconciliation from these non-GAAP measures to the nearest prepared measure in accordance with IFRS is presented on pages 164 to 169 . The alternative performance measures SSE uses might not be directly comparable with similarly titled measures used by other companies.

The SSE plc Annual Report 2020 is complemented by SSE's Sustainability Report 2020 and Risk Report 2020, which can be found online at sse.com .

•  online at sse.com/annualreport2020

•  in other SSE publications

•  within another section of this report

Non-Financial Information statement

SSE welcomes focus from regulators, shareholders and other stakeholders on its non-financial performance and recognises that the non-financial reporting requirements of the Companies Act 2006 necessitates transparent disclosure of non-financial information. SSE seeks to disclose information in an open and accessible manner. The table below signals where detailed disclosure on non-financial information can be found within SSE's Annual Report 2020, in addition to the non-financial information embedded throughout the document. Further disclosure can also be found in SSE's Sustainability Report 2020 .

Reporting requirement and SSE's material areas of impactRelevant Group Principal Risks, pages 28 to 36 

Environmental matters

• • Managing climate-related issues

• • Delivering net zero

• • Wider environmental performanceClimate Change

Safety and the Environment

Employees

• • Health and Safety

• • Training and learning

• • Inclusion and diversity

• • Reward

• • Employee voice

• • Culture and ethics

• • Support during the coronavirus crisisPeople and Culture

Safety and the Environment

Social matters

• • Contributing to the economy

• • Responsible approach to tax

• • Sharing value with communities

• • Advocating for a just transition in the green recoveryPeople and Culture

Speed of Change

Energy Affordability

Human rights, anti-corruption and anti-bribery

• • Reinforcing an ethical business culture

• • Prevention of financial crime and corruption

• • Approach to human rights and modern slaveryPeople and Culture

Large Capital Projects QualityRelevant Group Policies on sse.com 

Policy embedding, due diligence, outcomes and key performance indicatorsGroup Climate Change Policy

Group Environment PolicyAligning business and social objectives, pages 74 and 75 

Taking climate action, pages 82 to 85 

Safety, Health and Environment Advisory Committee Report, pages 132 to 135 

Group Employment Policy

Group Safety and Health PolicyAligning business and social objectives, pages 74 and 75 

Committing to decent work, pages 78 to 81 

Group Sustainability Policy

Group Taxation Policy

Group Procurement PolicyAligning business and social objectives, pages 74 and 75 

Fulfilling SSE's social contract, pages 76 and 77 

Group Human Rights Policy

Group Corruption and Financial Crime Prevention Policy

Group Whistleblowing Policy

Aligning business and social objectives, pages 74 and 75 

Culture and ethics, page 81 

Strategic Report

Chair's introduction and s172 statement 4

Our business explained 6

Chief Executive's view 10

Our stakeholders 12

Strategy in action 16

Sector review 24

Risk-informed decision making 28

Principal risks and uncertainties 31

Meteorological impact 37

Key Performance Indicators 38

Financial review 40

Operating review 56

Core businesses 58

Complementary businesses 68

A sustainable approach 74

Directors' Report

Chair's introduction to the Directors' Report 88

Compliance with the UK Corporate

Governance Code 2018 89

Board of Directors 90

Corporate governance 94

Nomination Committee report 114

Audit Committee report 120

Energy Markets Risk Committee report 130

Safety, Health and Environment Advisory

Committee report 132

Remuneration Committee Chair's statement 136

Remuneration at a glance 138

Annual report on remuneration 140

Directors' Remuneration Policy summary 154

Other statutory information 158

Statement of Directors' responsibilities 161

Financial Statements

Alternative Performance Measures 164

Consolidated income statement 171

Consolidated statement of

comprehensive income 172

Consolidated balance sheet 173

Consolidated statement of changes in equity 174

Consolidated cash flow statement 175

Notes to the consolidated

financial statements 176

Accompanying information 240

Company balance sheet 272

Company statement of changes in equity 273

Notes to the Company financial statements 274

Independent Auditor's report 285

Consolidated segmental statement 300

Shareholder information 308

SSE PLC ANNUAL REPORT 2020 For a better world of energy

Completion of Beatrice wind

farm, off the Caithness coast, in May 2019 confirmed SSE's capability as a developer and operator of world-class renewables assets.

SSE plc Annual Report 2020 1

STRATEGIC REPORT

FOR A BETTER WORLD OF ENERGY

SSE is an energy company that operates and invests across the UK and Ireland. Its purpose is to provide energy needed today while building a better world of energy for tomorrow; its vision is to be a leading energy company in a net-zero world; and its strategy is to create value for shareholders and society in a sustainable way through the successful development, efficient operation and responsible ownership of energy infrastructure and businesses. The following Strategic Report sets this out in more detail.

Strategic Report

Chair's introduction and s172 statement 4

Our business explained 6

Chief Executive's view 10

Our stakeholders 12

Strategy in action 16

Sector review 24

Risk-informed decision making 28

Principal risks and uncertainties 31

Meteorological impact 37

Key Performance Indicators 38

Financial review 40

Operating review 56

Core businesses 58

Complementary businesses 68

A sustainable approach 74

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SSE plc Annual Report 2020

SSE plc Annual Report 2020

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