SSE : Half Year Presentation Script

SSE PLC HALF-YEAR RESULTS TO 30 SEPTEMBER 2020 - 18 NOV PRESENTATION

'LEADING THE WAY TO NET ZERO'

ALISTAIR PHILLIPS-DAVIES, CHIEF EXECUTIVE

1. TITLE SLIDE - LEADING THE WAY TO NET ZERO
2. OVERVIEW | STRATEGIC PROGRESS, STRONG PERFORMANCE AND SIGNIFICANT OPPORTUNITIES
   Good morning everyone. Once again, we are bringing our results to you remotely due to coronavirus. Despite that difficult backdrop, Gregor, Martin and I are pleased to be able to report strong delivery and good strategic progress during the first half of the financial year.
   There will be time for questions later, but in the meantime, we will cover:
   o Firstly, a summary of recent progress in delivering our clear and focused strategy;
   o Secondly, our financial and operational performance;
   o And, finally, the significant opportunities we see ahead of us to create sustainable value for both shareholders and society through the transition to net zero.
3. PART ONE TITLE SLIDE
4. STRATEGIC PROGRESS SUMMARY | BUILDING A BETTER WORLD OF ENERGY
   Throughout the coronavirus crisis we've been guided by our core purpose - which is to provide energy needed today while building a better world of energy for tomorrow.
   Doing so requires us to ensure the safety and wellbeing of our employees and Total Recordable Injuries in the first six months of the year fell to 27, compared with 35 in the same period last year.
   In these unique times, delivering energy needed today would not have been possible without the commitment and flexibility of our employees - particularly those in operational roles - and I'd like to pay tribute to them.

Thanks to their hard work, operational performance has been strong and we are continuing to establish ourselves as the pre-eminent green energy company in the UK and Ireland.

1. We've made significant progress on our £7.5bn investment plan, especially in renewables. Construction work has started, and key contracts have been awarded at Seagreen and Viking, and we expect to reach financial close on the

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first two phases of the world's largest offshore wind farm at Dogger Bank over the coming days. These projects alone are creating more than 1,000 jobs.

1. Having announced a plan in June to generate over £2bn from disposals, we've already delivered £1.4bn in combined proceeds from Walney, MapleCo and Multifuel Energy, with gains on sale expected to total over £900m, helping to recycle capital into our core green businesses.

1. We have also undertaken prudent activity in financial markets to leave the group well-financed.

1. And we have announced an interim dividend of 24.4 pence per share and reiterated our commitment to delivering our 2023 dividend plan.

More broadly, we've led the industry in making the case for an ambitious green economic recovery from the pandemic. And this week, building on our science-based carbon targets announced in June, we've joined the UN Global Compact's Race to Zero

• committing, for the first time, to achieving net-zero emissions across all scopes by 2050 at the latest.

We were asked to be a principal partner for COP26 and we are committed to supporting the UK presidency's attempts during the next 12 months to reach a more ambitious global climate agreement in Glasgow next November.

And today we become one of the first companies to publish a Just Transition strategy, available on our website, outlining covering the social implications of net zero and our role in supporting fairness for employees, customers and communities.

1. STRATEGIC PROGRESS SUMMARY | A FOCUSED AND HIGHLY COMPLEMENTARY BUSINESSES MIX
   This all adds to the significant progress we've made in recent years to reshape and refocus the group on our core electricity businesses.
   Our Networks and Renewables businesses form the foundational core of SSE. They are central to the transition to net zero and are where we will be investing 90% of our ambitious capex programme.
   Importantly, these businesses share attributes that leverage our core competencies.
   They are low-carbon,asset-rich businesses, requiring world-class skills in developing, building, procuring, operating and owning large-scale, complex electricity infrastructure.
   They play to our strengths in asset management, large capital projects, managing policy and regulatory risk and efficient financing.

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Like many of our European peers, we see a strong logic to holding renewables and networks in the same group and we have a long-term strategy of capital recycling for growth across these core green businesses.

And our ongoing disposals programme will mean we will only retain other businesses where they are highly complementary to that core and where they contribute to the transition to net zero.

For example, Thermal provides firm, flexible capacity to balance the variability of renewables. The business also has a key role to play in delivering net zero with opportunities to develop both carbon capture and storage and hydrogen, which will help pave the way for decarbonisation of heat, transport and industry.

Our energy customer businesses provide a valuable route to market for our generation in both GB and Ireland. In Ireland, vertical integration can mitigate risk while in GB we believe our energy customers will become increasingly important as a route to market as the demand for green corporate PPAs increases.

Enterprise gives us a platform for growth in the growing distributed energy market, where our trading and asset management capabilities will be important.

And through EPM we can deliver commercial synergies and manage risk across all our market-based businesses.

1. STRATEGIC PROGRESS SUMMARY | A WEALTH OF OPPORTUNITIES IN RENEWABLES
   In our Renewables business there are a wealth of opportunities. We have projects already in development that will double our renewables output by 2025; we have an enviable pipeline of longer-term projects, all of which we believe will be required to meet binding government targets, and that could treble our renewables output by 2030.
   SSE is leading the development of more offshore wind than any other developer, with further auctions still to come.
   Furthermore, we continue to see potential to export our end-to-end expertise across the renewables value chain to new geographies in order to extend our portfolio further.
   Delivering on these opportunities will support sustainable, long-term growth and create shareholder value, underpinning our ongoing commitment to remunerating shareholders with dividends.
   Doing so will require us to maintain our strong operational and financial performance - and I'll now hand over to Gregor, who will take us through our results during the first six months.
   GREGOR ALEXANDER

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1. PART TWO TITLE SLIDE
2. PERFORMANCE | MANAGING CORONAVIRUS IMPACTS
   Thanks Alistair. I would echo your thanks to our colleagues who have helped us to maintain the safe and reliable supply of electricity during the pandemic.
   I'm pleased to say that financial performance in renewables, transmission and thermal has not been adversely impacted by coronavirus.
   However, as forecast in June, we have seen adverse impacts elsewhere in the Group with an impact on operating profit for the first six months of around £115m. This is just slightly lower than the guidance we provided in September and none of it has been treated as exceptional.
   Despite recent increases in the infection rate, our view on the likely full-year impact is unchanged and based on our latest assessment we expect it to be towards the middle of the £150-£250m range.
   In summary, compared with many other listed companies, we have been relatively resilient in the face of coronavirus, and we continue to take steps to minimise the impact.
3. PERFORMANCE | RESULTS TO 30 SEPTEMBER 2020 - OVERVIEW
   Coronavirus notwithstanding, we have delivered a very solid set of results for the first six months.
   Excluding the businesses currently held for sale, we have delivered:
4. • adjusted operating profit of £418.3m;
   • adjusted profit before tax of £193.9m; and
   • adjusted earnings per share of 11.9p, within the expected range set out in September.

Reported metrics also include the £260.8m exceptional gains on sale recognised during the period on disposal of Walney and MapleCo, with a further exceptional gain in excess of £650m to be recognised on Multifuel Energy in the second half of the year.

1. PERFORMANCE | CORE BUSINESSES
   Given seasonal impacts on our businesses, our focus is always on results for the full year. However, for the first six months in our core businesses we have seen:
2. • In Transmission, adjusted operating profit increased by 5%, mainly due to phasing of allowed revenue partially offset by increased depreciation charges related to ongoing capital expenditure and operating costs.

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