SSE plc Annual Report 2024

Powering

su stainable

growth

STRATEGIC REPORT 1–109

Our story 2

How we create value – our business model 6

Chair’s statement 8

Chief Executive’s review 10

Our strategy 12

Our stakeholders 14

Our strategy in action 16

Key Performance Indicators (KPIs) 20

Chief Sustainability Officer’s review 24

Sustainability 26

Chief Financial Officer’s review 54

Financial review 56

Operating review 68

Risk 84

Disclosure statements 96

GOVERNANCE REPORT 110–187

Chair’s introduction 112

Governance at a glance 114

Board of Directors 116

Group Executive Committee 121

The Board’s year 122

Stakeholders and Section 172 Statement 132

Assessing Board performance 136

Nomination Committee Report 138

Audit Committee Report 144

Energy Markets Risk Committee Report 152

Safety, Sustainability, Health and

Environment Advisory Committee Report 154

Remuneration Committee Report 158

– Remuneration at a glance 160

– Annual report on remuneration 163

– Directors’ Remuneration Policy – a summary 178

Compliance with the UK Corporate

Governance Code 2018 181

Other statutory information 184

Statement of Directors’ responsibilities 187

FINANCIAL STATEMENTS 188–341

ADDITIONAL INFORMATION 342-343

Glossary 342

Shareholder information 343

2024 at a glance

SSE met its financial objectives in 2023/24 with the

value-generating nature of its diversified business

mixoffsetting the impact of weather and market

conditions. SSE also invested £2.5bn in the vital

infrastructure needed for net zero. With a world-class

project pipeline and strong balance sheet, the Group

ison course to meet its 2026/27 growth targets.

ABOUT OUR REPORTING

The Annual Report is the centrepiece of SSE’s communications to

shareholders and wider stakeholders. It aims to give a fair, balanced

and understandable overview of progress during the year, meeting

the spirit as well as the letter of all reporting requirements.

SSE supports the evolving sustainability reporting standards, which

aim to ensure companies tell an integrated story, and the Company’s

sustainability disclosures are based on the ‘double materiality’

principle. SSE’s material sustainability disclosures are included here,

with additional detail in the separate Sustainability Report, published

at the same time. The reporting suite below is available on sse.com

– Annual Report

– Sustainability Report

– Net Zero Transition Report

– Just Transition Report

– Risk Report

– Inclusion and Diversity Report

– Annual Report in Single Electronic Format (ESEF)

APM

ALTERNATIVE PERFORMANCE MEASURES

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 and

described from page 190

. The Alternative Performance Measures

SSE uses might not be directly comparable with similarly titled

measures used by other companies.

There’s more online

Stay up to date with news from SSE

and its operations at sse.com

Group operating profit/loss

Earnings Per Share

£2,426.4m

Adjusted

£2,608.2m

Reported

158.5p

Adjusted

156.7p

Reported

Dividend

Adjusted investment

and capex

60.0p £2,476.7m

Safety (TRIR) per

100,000 hours worked

Economic contribution

UK/ROI

0.20 £5.96bn/

€1.06bn

Turn to page 56 for

more information

HELP US CUT PAPER

Printing of this Annual Report is carbon balanced, with

trees planted to help offset the climate impact of its

production. While SSE has sought to reduce the

environmental impact of this publication as far as

possible, it encourages readers to opt out of receiving

printed copies and make use of SSE’s digital reporting

suite at sse.com/investors , in order to reduce

material and resources used.

Strategic Report

SSE is a leading generator of renewables and

flexible energy in the GB and Ireland markets,

and one of the world’s fastest-growing electricity

networks companies.

Our purpose is to provide energy needed

today while building a better world of energy

for tomorrow.

Our vision is to be a leading energy company

in a net zero world.

Our strategy is to create value for shareholders

and society in a sustainable way by developing,

building, operating and investing in electricity

infrastructure and businesses needed in the

transition to net zero.

Our

purpose

Financial Statements

Governance

1SSE plc Annual Report 2024

We have a rich

heritage in clean

energy …

… a purpose and

culture in which

people believe …

… and a balanced

portfolio of assets

and businesses.

The SSE story stretches back to the

earliest days of hydro-electricity

and today the Company is a

leading generator of renewable

and flexible energy and one of the

world’s fastest growing electricity

network operators.

SSE’s purpose is delivered by highly

capable employees and contractor

partners who are building a better

world of energy, guided by a

culture of “Doing theRight Thing”

for people and the planet.

SSE’s very deliberate mix of

market-based generation assets,

regulated electricity networks and

customer-facing businesses gives

the Group resilience across the

clean energy value chain.

80 years

Experience in renewable energy

91.3%

Employee retention rate

90%

Capex dedicated to

renewables and networks

Visit www.sseheritage.com

for more information

See our business model on

page6 and our Business Unit

operating review on page 68

Turn to pages 38 to 45 for

moreinformation

Leading the

energy transition

The shift to net zero affects us all. It is urgent, gathering pace and

itwill transform people’s lives. At SSE, we have a clear focus on

electricity infrastructure as the key to unlocking decarbonisation.

Our growth helps power (and is powered by) society’s drive to

develop a clean, secure and affordable energy system.

Our story

2 SSE plc Annual Report 2024

Strategic Report

Our strategy is

tackling climate

change head-on …

… creating lasting

value for our

stakeholders …

… while ensuring

ajust transition

tonet zero.

The NZAP Plus investment plan

isSSE’s strategy in action. It is

accelerating the build-out of

renewables, system flexibility and

electricity networks that will be

needed to reach net zero.

Alongside generating returns

for investors, SSE makes a major

contribution to society through

paying taxes, creating jobs and

providing critical national

infrastructure.

SSE recognises that decarbonising

the economy will be disruptive,

soit is creating job opportunities

while working with policymakers

and communities to make sure

no one is left behind.

c£11m

Expected daily spend on

infrastructure to 2027

£679.2m/€68.0m

Taxes paid in UK and

Ireland in 2023/24

35%

Of new recruits are former

high-carbon workers

For more on our strategy in action

turn to page 16

For more on our engagement

with stakeholders turn to page 14

Turn to page 38 for more on

our Just Transition Strategy

Financial Statements

Governance

3SSE plc Annual Report 2024

The future energy system

The building

blocks of a better

world of energy

At SSE, we’re helping to create a new type of power

system that is dominated by clean renewable energy,

flexible generation and net zero ready grids...

To ensure a just transition to a

decarbonised world, society

needs energy that is...

Flexibility

Efficient gas-fired power stations,

hydrogen and carbon capture and

storage technologies, alongside

pumped storage hydro and,

increasingly, batteries will play an

important role in meeting electricity

demand. They are key to an orderly

transition, balancing the system when

the wind doesn’t blow, or the

sundoesn’tshine.

Affordable

Because it is provided by

cost-effective electricity

generation and transportation

technologies, meaning that

no-one is priced out ofthe

transition to net zero

Sustainable

Because it is generated in a

way that helps meet ambitions

to maintain a 1.5°C global

warming pathway

Secure

Because it is resilient and

adaptive in the face of system

variability, market volatility

and geopolitical events

Networks

Regulated networks businesses are

critical to meeting the exponential

rise in electricity demand. Our

transmission network is the fastest

growing in Europe, connecting the

wealth of renewables in the north

ofScotland with urban centres of

demand, while our distribution

business’s localised grids are key

to an electrified energy system.

Renewables

The future is electric, and our

renewables generation – onshore

and offshore wind, hydro power, and

solar – is replacing energy formerly

generated using high-carbon

emittingfossilfuels.

4 SSE plc Annual Report 2024

Strategic Report

Assessing the impact of

future climate scenarios

Supporting a just transition to net zero by

developing, building, operating and investing

inlow-carbon electricity infrastructure is at the

heart of everything SSE does. Accordingly,

climate-related matters are fundamental to the

Company’s activities and its future is intrinsically

linked to likely global warming scenarios.

To reflect this, and to meet the spirit as well as

the letter of the Task Force on Climate-related

Disclosures (‘TCFD’) framework, SSE has

changed how it reports against it. TCFD-related

content provided in previous annual reports as

aseparate subsection has been embedded

throughout the Strategic Report and

Governance sections.

SSE’s compliance statement and summary of

reporting against the TCFD disclosures, with

cross-references to relevant information, can

befound on page 98

~6.5GW flexible generation capacity

Semi-flexible

capacity

Intermittent

capacity

~6.5GW

Flexible

capacity

>£16bn Gross RAV by FY27

~£8bn

Distribution Transmission

Transmission Minority Interest

>15%

CAGR

FY27FY22

>£16bn

5GW net renewable capacity additions

~4GW

~9GW

Offshore Onshore Hydro Solar Battery

Up to

>15%

FY27FY22

Onshore wind

Offshore wind

Hydro Thermal

Financial Statements

Governance

5SSE plc Annual Report 2024

How we are structured What we do The value we create

How we create value

Our business model

We are developing, building, operating and investing in our

unique portfolio of assets across the electricity value chain.

Key:

Market-focused businesses

Economically-regulated businesses

SSE has a very deliberate mix of

market-based and economically-

regulated businesses that span

theclean energy value chain.

TheGroup’s synergies and natural

hedges, along with our world-class

assets and balance sheet strength,

enable us to create lasting value

inahighly complex operating

environment.

Index-linked earnings from economically-regulated

networks offset inherent risk in market-facing businesses

Energy Customer Solutions

SSE Airtricity and SSE Business Energy

provide a shopfront for the Group’s

renewable generation output

Renewables Flexibility Networks

SSE

Renewables

Providing clean and

affordable home-grown

energy

SSE

Thermal

Balancing the market

with flexible generation

SSEN

Transmission

Enabling net zero by

connecting renewables

to centres of demand

SSEN

Distribution

Bringing net zero

tothedoorstep by

decarbonising streets

and homes

M R R

Energy products and services

SSE Enterprise

Bringing low-carbon solutions

to business-to-business markets

SSE Energy Markets

Trading commodities, securing value

for SSE’s assets and managing volatility

Corporate services

Providing cost-effective shared services and strategic direction across the Group

6 SSE plc Annual Report 2024

Operate

Develop

vest Buil

Strategic Report

How we are structured What we do The value we create

c14,000

Direct employees

Turn to page 38

£12.2m

Investment in

communities

Turn to page 40

£2.5bn

Investment in net zero

infrastructure

Turn to page 59

c5m

Customers served

(Networks and supply)

Turn to page 33

£5.5bn

Supplier spend

Turn to page 36

60p

Dividend (full year)

Turn to page 60

£679m/€68m

Taxes paid UK/ROI

Turn to page 39 and 67

£18bn

Market capitalisation

(as at 29 March 2024)

* Excludes 1,089 employees related to the reacquisition of

Enerveo (formerly SSE Contracting) in March 2024.

Employees

Our strategy and success are

dependent on the shared talent,

diversity, innovation and values

ofthe people we employ.

Energy customers

Consumers create demand

for our energy and services.

NGOs, communities and society

We need the support of the

communities we work in and the

backing of civil society to pursue

ajust transition to net zero.

Natural environment

From wind and water used to

produce energy, to materials used

tobuild energy infrastructure,

natural resources are essential

towhat SSE does.

Shareholders and debt providers

SSE must be well financed, with the

ability to remunerate shareholders

for their investment, secure debt at

competitive rates and invest in

growing the business.

Government andregulators

We rely on policy frameworks

andpublic services that support

investment in critical national

infrastructure, are fair on customers

and maintain the momentum

behind net zero.

Suppliers, contractors

and partners

We rely on a healthy supply chain

and work with partners whose

capabilities offer synergies for

innovative project development

andefficient ownership structures.

The relationships and resources we rely on

We drive progress towards net zero by developing,

building, operating and investing in clean, secure

and affordable electricity infrastructure needed

forthe energy system of tomorrow.

7SSE plc Annual Report 2024

Governance Financial Statements

Chair’s statement

Delivering on

our promise

The objective of this Annual Report is to

provide the disclosures that meet our

statutory reporting requirements and to

describe how our actions have aligned to

our purpose to provide energy needed

today while building a better world of

energy for tomorrow.

Our business is linked to international market

forces, and the domestic and international

policy environment. The decisions we made

andthe actions we took in the year were

influenced by societal, environmental,

commercial and political factors. Society

expects a future energy system that is clean,

secure and affordable, and we are working

tohelp deliver that outcome.

Our place in the world

SSE is providing renewables, flexible

generation and storage technologies,

andstrengthened networks that will help

address the threat posed by global warming.

The climate emergency is at the very heart

of SSE’s net zero-focused strategy. It is also

the impetus behind our 2030 Goals and the

science-based targets that support them.

Inthis report we have set out the climate-

related opportunities and risks to our

business and, specifically from page 98 ,

where we have used global warming

scenarios between 1.5°C and 4°Cto assess

and illustrate our strategic resilience. The

conclusion of that scenario analysis is very

clear: These scenarios show that for SSE

theopportunities are greater than the risks,

and are greater under 1.5°C scenarios than

any of the less ambitious emission

reduction pathways.

The commodity market turmoil that

followed Russia’s invasion of Ukraine

receded in 2023/24, despite conflict in the

Middle East, with power and carbon prices

softening, creating a more challenging

operating environment. Against this

backdrop, our very deliberate mix of

market-facing and economically-regulated

businesses continues to offer stable

economic returns for the Group as a

whole,while providing multiple options

forcontinued investment.

In March 2023 we noted publication of the

UK Government’s long-awaited Review of

Electricity Market Arrangements (REMA),

which contains many proposals to help

accelerate the market transition. We remain

concerned that proposals for zonal pricing

in the UK wholesale energy market, which

We can look back on 2023/24

asanother year in which SSE’s

integrated portfolio delivered on

our promise to create value for

our shareholders and society.

Atthe same time, while delivering

significant investment through

ournet zero-focused strategy,

wecontinued to play our part in

transforming the energy system

while leaving no one behind.

Our values:

Safety

If it’s not safe we

don’tdo it

Service

We can be relied upon

to deliver

Efficiency

We focus on adding value

Sustainability

We do the right thing for

peopleand the planet

Excellence

We innovate to improve

the way we do things

Teamwork

We work together

in an inclusive and

collaborative way

8 SSE plc Annual Report 2024

Strategic Report

are among the options under consideration,

risk increasing uncertainty and hence

delaying investment at the moment we

need to accelerate. But we welcomed

recognition of the pressing need for new

flexible capacity from the end of the

decade, while making the case that the

Government must establish concrete tests

to ensure any new development is capable

of rapid decarbonisation to avoid locking

incarbon emissions.

A healthy business culture

Against this backdrop we performed well in

the year. This is testament to our delivery-

focused management team and a highly

capable, engaged employee base. Their

commitment, and their belief in the value

ofdoing the right thing in pursuit of our

purpose, is the secret to SSE’s success. Our

thanks go to all our employees, contracting

partners and their families for their

dedication and hard work over the last year.

At SSE we define a healthy, ethical business

culture as Doing the right thing. This is tied

to six core values: Safety, Service, Efficiency,

Sustainability, Excellence and Teamwork

(the “SSE SET”), that underpin the execution

of our vision, purpose and strategy, and

guide our decision-making and interactions

with stakeholders.

Our values are well established but we

recognise that in a changing world it is

important – particularly for a growing

business with an evolving employee base

– that they continue to inspire the

behaviours we expect. It was gratifying,

therefore, that an exercise in the year to test

the relevance of the SSE SET found that it

still resonates with colleagues. In response

to what we heard we refreshed the way we

talk about what the values mean in practice

and the descriptors shown on the opposite

page are now more focused and better

reflect our ethical ways of working. See

page 40

for more on our values.

Safety is our number one value and we are

deeply saddened by the loss of Richard Ellis,

the employee of a contract partner, who

died in an offsite incident in October 2023.

Our thoughts remain with Richard’s family,

friends and colleagues. Among the direct

SSE workforce, there was a marked

improvement in safety performance in

2023/24, with a Total Recordable Injury

Rate(TRIR) measure of 0.07 matching our

best performance year. Combining our

contractor and direct workforce, the TRIR

was 0.20, up from 0.19 in the previous year.

We are refocusing our efforts to ensure

everyone on an SSE site is kept safe.

The Board monitors culture closely and

engages frequently with employees to

understand how well it is embedded. We

believe that the workplace we provide

should be safe and the teams within it

should be inclusive and reflective of the

community. SSE’s Inclusion and Diversity

Strategy provides a voice for under-

represented groups and invests in

leadership programmes that set an inclusive

tone from the top, among other measures,

and I am heartened by the progress we are

making in creating a workplace that

welcomes people from all walks of life.

Working for all stakeholders

The close reciprocal relationship between

employees and the Company gives them a

critical role in delivering our strategy, but

they are not the only group we rely on.

Wevalue the ongoing support of our

shareholders who have voted in favour

ofour Net Zero Transition Plan for three

consecutive years. We actively and

constructively engage with politicians and

regulators as a partner in developing and

advocating for a policy environment which

can deliver the best and fastest transition

tonet zero for customers, society and the

environment. We work closely with our

development and construction partners to

address ongoing supply chain constraints

and contractor safety performance.

And we engage actively with communities

to balance the necessary infrastructure

investment with local concerns and with

theimpact of our work on the natural

environment. See page 14 for more

onour stakeholder engagement.

This engagement is guided by our

commitment to leaving no-one behind in

what should be a just transition to net zero.

Job creation is part of that, particularly for

people moving from careers in high-carbon

industries, with 35% of our new recruits

coming from such backgrounds last year.

More broadly, we believe the economic

prosperity stemming from delivery of our

strategy, coupled with our environmental,

social and governance (ESG) impacts

– from our carbon targets, contribution to

GDP, supply chain support, and payment of

Fair Tax and the Living Wage – reflect the

needs of our stakeholders.

Good governance at work

The Board’s deliberations in the year

werefocused on areas including safety

performance; progress of NZAP Plus

investments; strategic direction and

opportunities at home and abroad; the

policy environment, and the impact of

innovation, AI and cyber risk on our plans.

Good governance benefits from fresh

perspectives and I was pleased to welcome

two new Board members, Maarten

Wetselaar and Barry O’Regan, in the course

of 2023. As a non-Executive Director,

Maarten has significantly enhanced our

energy sector capabilities with his global

outlook while Barry, as Chief Financial

Officer, has already proved to be a worthy

successor to Gregor Alexander who stood

down as Finance Director in December

2023. Our thanks go to Gregor for a

remarkable 32 years with the Company, and

we wish him the best for the future. Thanks

too go to Peter Lynas who stepped down

having served nine years on the Board.

These and other Board movements,

including General Counsel Liz Tanner’s

appointment as Company Secretary, are set

out in detail on page 120

. They join a

Board that is committed to exercising its

duty under Section 172 of the Companies

Act 2006 to promote the long-term success

of SSE while considering all stakeholders.

The Board is proud of the work SSE does

inpursuit of its purpose, and confident that

the Company will continue to be central

tothe transition to net zero, and hence

contribute to a sustainable future for

oursocieties.

Sir John Manzoni

Chair, SSE plc

21 May 2024

I confirm that this Strategic Report and the S172 Statement on page 132 have been

approved by the Board. We have sought to maximise transparency and improve our

disclosures in a number of areas within this Strategic Report. This includes the

integration of TCFD reporting and providing greater visibility of the correlation of KPIs

and Directors’ remuneration. We hope that you find these changes helpful and, as

always, we welcome any feedback on the report and the matters covered within it

aswe continue the work of taking the Company forward.

SSE is providing the renewables, flexible generation

and storage technologies, and strengthened

networks that will help address the existential

threat posed by global warming.”

Sir John Manzoni

9SSE plc Annual Report 2024

Governance Financial Statements

Chief Executive’s review

A year of strategic

acceleration

As the task of decarbonisation becomes

ever more urgent in our warming world, so

does the demand for what SSE has to offer

in building a clean, secure and affordable

energy system. I’m pleased to be able to say

that in 2023/24 we were able to go further

in our response to that demand with an

acceleration of our plans and projects –

investing with discipline and at scale in a

decarbonised energy future.

The practical application of our strategy, the

Net Zero Acceleration Programme Plus, was

upgraded twice in the course of the year,

most recently in November 2023 when

capital investment expectations for the

five-year plan to FY27 were lifted to a

fully-funded £20.5bn. Some 90% of that

figure is earmarked for renewables and

electricity networks, with greater visibility of

growth opportunities in SSEN Transmission

accounting in large part for the forecast

increase in spending. The agility of the

Group business model and the issuance of

sustainable finance in the form of Green

Bonds has enabled us to pivot capital to

where it will have the biggest impact on net

zero and create the greatest value.

The progress described on these pages was

thanks in large part to the commitment

of14,000 highly talented colleagues and

contract partners to a purpose that is having

a positive impact on people and the planet.

Providing a safe, inclusive working

environment for those colleagues and

contractors will always be our top priority.

We are still feeling the sad loss of Richard

Ellis, the employee of a contract partner,

who died in October. The efforts we are

making to keep everyone on an SSE site safe

are explained in more detail on page 41

Closing in on our goals

While the resilience of our integrated

business model ensured we met our

financial expectations in 2023/24, our

ultimate focus is on delivery of our plans

to2026/27. If we are to reach net zero, the

power system of tomorrow will need to

bedominated by renewables, supported

byflexible generation that can be switched

on and off as needed, and enabled by

strengthened electricity networks.

We measure our progress through

stretching 2030 Goals and NZAP Plus

targets. While the requirements of a future

energy system mean there is noguarantee

of a perfectly straight line between now and

the end of the decade, we were pleased

The actions SSE is taking now

will be part of the foundation

of a transformed energy

system aligned to the sector’s

1.5°C global warming

pathway – one that is cleaner,

more affordable and more

secure. As a national clean

energy champion we are

accelerating renewables,

providing vital flexible

generation back-up, and

transforming electricity

networks.

Progress against the

NZAP Plus in2023/24

Capital investment

£2.5bn

Adjusted EPS

158.5p

Dividend per share

60p

Ratio of net debt to EBITDA

3.0x

Total electric networks RAV

£11bn

Total renewable

generation capacity MW

4,457

1 Inc. pumped storage

10 SSE plc Annual Report 2024

Strategic Report

that last year we achieved a significant

reduction in our greenhouse gas (GHG)

emissions. Performance against our climate

targets represented the lowest value on

record for SSE’s total GHG emissions, scope

1 GHG emissions and carbon intensity,

mainly due to a reduction in thermal

generation output in the year.

SSE is a long-term business and we always

look to the future. We are progressing the

projects that will provide our forecast NZAP

Plus earnings growth, but targets and goals

are ultimately dependent on delivery of

assets that are part of multi-year capital

programmes. While there were challenges,

good progress was made in 2023/24, as

highlighted elsewhere on this page and

detailed among the key performance

indicators on page 20

Building renewables

We reached a number of strategic

milestones in the year while navigating the

supply chain challenges that have become a

feature of the energy sector in recent years.

Working with our joint venture partners, the

construction of SSE Renewables’ flagship

projects continued at pace, with Scotland’s

largest offshore wind farm, Seagreen,

completed in the Firth of Forth.

We have made good progress at Viking, on

Shetland, and Yellow River and Lenalea in

Ireland, while construction is under way

atonshore sites in France and Spain.

In-principle planning permission was

secured for Berwick Bank’s onshore grid

connection, but the project – at 4.1GW one

of the world’s largest offshore wind farms

– awaits consent for the offshore array,

which is expected in the course of 2024.

These are highly complex projects,

however, and not without risk, as illustrated

off the Yorkshire coast at Dogger Bank A,

the world’s largest offshore wind farm

under construction, where poor North Sea

weather and installation vessel availability

resulted in short-term delays.

It was a good auction year for SSE

Renewables. In the GB capacity auctions

46units across 35 sites provisionally

secured contracts for 1.1GW of hydro,

pumped-storage, battery storage and

onshore wind energy. This followed 605MW

of onshore wind capacity secured in the

earlier Contracts for Difference Allocation

Round 5 (AR5), and Yellow River winning a

contract in the third RESS process.

Providing flexibility

There were auction successes for SSE

Thermal, too, with 1,365MW of derated

capacity secured for CCGT generation

fromour power stations at Keadby in

Lincolnshire, and Isle of Grain and Medway

in Kent for 2024/25. Looking to the longer

term, meeting our target of an 80% cut in

the carbon intensity of SSE’s generation

portfolio by 2030 is contingent on lower-

carbon alternatives to existing gas-fired

fleet, and this will be a key focus for our

new Thermal MD, Finlay McCutcheon.

Carbon capture and storage (CCS) and

hydrogen offer opportunities for us in the

GB market. While CCS and hydrogen form

part of UK Government plans for a net zero

economy, we have advocated for it to go

further, with bolder capacity targets.

Likewise, we have long called for supportive

policy for long-duration electricity storage

projects such as our 1,500MW pumped-

storage hydro project at Coire Glas in the

Scottish Highlands. Battery storage is

another source of flexibility and we now

have a secured battery pipeline of 1.1GW,

including 620MW already in construction.

Strengthening networks

The opportunities arising from Ofgem’s

Accelerated Strategic Transmission

Investment (ASTI) programme and Large

Onshore Transmission Investment (LOTI)

Uncertainty Mechanism, are game

changing. With combined costs for 11 major

projects estimated at £20bn, and a further

£5bn identified under Ofgem’s “Beyond

2030” plan, SSEN Transmission is now at the

centre of the Group’s growth plans.

Meanwhile, we are getting on with

delivering critical grid infrastructure that is

so vital to the future energy system. Good

progress has been made on enabling work

for the Eastern Green Link 2, or EGL2, which

is the HVDC undersea link from Peterhead

to Yorkshire. Elsewhere, excellent progress

was made on major RIIO-T2 projects,

notably with the pioneering High Voltage

Direct Current (HVDC) Shetland link where

all 260km of the subsea cable was laid in

2023 and the project remains on track for

full energisation in summer 2024.

Delivering in Distribution

The immediate impact of climate change

iskeenly felt in SSEN Distribution, where

increasingly extreme weather events test

network resilience. The business has met

this immediate challenge with operational

improvements that have significantly

reduced restoration times, while putting net

zero at the heart of a strategic investment

programme focused on system flexibility.

In December, power was restored to 99%

ofcustomers in the north of Scotland within

48 hours during Storm Gerrit. In January,

Storm Henk impacted 60,000 customers

inthe south of England, with our engineers

outperforming estimates to restore all

supplies within 48 hours. This commitment

to keeping the lights on is a source of pride

to SSE, but so too is the work being done to

design and implement a flexible electricity

system fit for net zero. SSEN Distribution

contracted more than 700MW of flexibility

services in the year and pushed ahead with

pioneering forecasting technologies that

are helping local governments prepare for

increases in clean energy demand.

Supporting customers

Our customer businesses provide a

shopfront and valuable route to market

forthe clean energy we produce. These

businesses operate in a highly dynamic

market that bore the brunt of the 2022/23

cost of living crisis which, while easing,

continues to be felt by many customers.

Itwas therefore pleasing that we were able

to respond swiftly with price cuts and pass

through lower costs.

Looking to the future

Responding to the needs of energy users in

this way is important if we are to take them

with us on the journey to net zero. We are

determined to make sure a just transition

leaves no-one behind, and we actively

engage with all of our stakeholders – from

customers, and communities living

alongside our assets, to elected

representatives in our home markets and

climate leaders through our involvement at

COP28. In doing so we seek outcomes that

fit with our high standards for corporate

responsibility and create the greatest

possible value for all concerned.

SSE’s portfolio of regulated and market-

based businesses gives us excellent

prospects for the coming decade. We have

a fully-funded investment plan to FY27

guided by strict capital discipline, a

defensive earnings mix indexed to inflation

and a strong balance sheet with the

majority of debt held at fixed rates.

Furthermore, our strategy has the benefit

ofstrong policy tailwinds and we remain

committed to going further and faster.

Aswe approach elections in the UK, Ireland,

the EU and elsewhere, broad consensus

remains on the need to slow climate change

and SSE stands ready to play its part.

Alistair Phillips-Davies

Chief Executive, SSE plc

21 May 2024

The agility of the Group business model ... has

enabled us to pivot capital to where it will have

the biggest impact on net zero.”

Alistair Phillips-Davies

11SSE plc Annual Report 2024

Governance Financial Statements

Operate

Develop

vest Buil

Delivering on our purpose

Our strategy

A climate-focused strategy, backed by broad societal consensus on the need for

action, and underpinned by clear investment plans and ambitious growth targets.

Our strategy is to create value for

shareholders and society in a

sustainable way by developing,

building, operating and investing …

… in electricity infrastructure and

businesses needed in the transition

tonet zero …

The NZAP Plus is our strategy in action

andincludes £20.5bn of planned capital

expenditure, with around 90% for investment

in renewables and electricity networks.

Our balanced portfolio gives

us optionality and flexibility

– so we can invest where we

see most value …

Market-focused businesses ~45%

Economically regulated businesses ~55%

* Investment over five years under the NZAP Plus.

£20.5bn

net capex

RenewablesTransmission

Distribution

Thermal and

other businesses

Net Zero Acceleration

Programme Plus (NZAP Plus)

12 SSE plc Annual Report 2024

Strategic Report

… and in doing so, we

are delivering on our

2030 Goals …

... that underpin

a purpose ...

… which contributes to a

decarbonised future.

To provide

energy needed

today while

building a better

world of energy

for tomorrow.

… supporting climate solutions

aligned to a 1.5°C pathway, and

setting clear medium-term

targets for ...

… 2027 …

~9GW

renewables net capacity

>15%

networks gross RAV CAGR

13–16%

adjusted EPS CAGR

5%–10%

forecast annual dividend growth

… and with its world-

class assets and

development

pipeline, sector

expertise and

delivery record, SSE

will be central to a

decarbonised energy

system post-2030.

See our progress against our KPIs

on page 20 and 2030 Goals on

page 25

Cut carbon

intensity by 80%

See pages

25 and 28

Increase renewable

energy output fivefold

See pages

25 and 74

Enable low-carbon

generation and

demand

See pages

25, 70 and 72

Champion a fair and

just energy transition

See pages

25 and 38

Renewables

Energy

that is:

Sustainable

Affordable

Secure

Networks

Flexibility

13SSE plc Annual Report 2024

Governance Financial Statements

Creating

societal value

Our stakeholders

Partnering with

people who have

astake in SSE

Identifying

our stakeholders

SSE cannot fulfil its purpose without the

support of its stakeholders. Under an

unwritten social contract, society provides

the Company with human capital and

grants it the right to earn a profit. In return,

SSE strives for a just transition to net zero

through safe and reliable provision of

energy, critical infrastructure, jobs and tax.

The reciprocal nature of this relationship

informs SSE’s definition of stakeholders

asthe people, communities and

organisations that have an interest in, or

might be affected by, its decisions, actions

and operations. By this measure, there are

six key stakeholder groups that are the

focus of the Company’s engagement

activities.

The purpose

of engagement

The purpose of stakeholder engagement

in SSE is to ensure that the perspectives,

insights and opinions of stakeholders are

understood and taken account of when

key operational, investment or business

decisions are being taken. This makes

those decisions more robust and

sustainable, and supports SSE’s strategy.

A range of engagement methods is

adopted within a strategic framework of

business-led and Group-level interaction

that seeks to reflect legislative and

regulatory requirements while ensuring

stakeholder influence on operational plans

and strategic objectives.

SSE acknowledges that scenarios do arise

where not every stakeholder interest can

be addressed completely, but it strives to

consider all perspectives.

Our stakeholder relationships

Policy and regulatory

frameworks

Delivery of energy

security and net zero

ambitions

Social and

environmental context

Local investment and

job creation

Supportive

supply chain

Value creation and

economic stimulus

Capability and

strategic delivery

Safe, inclusive

workplace

Provision of finance

Sustainable return

oninvestment

End-user perspective

and billing revenue

Inclusive supply of

energy and services

Shareholders

and debt

providers

Employees

Energy

customers

NGOs,

communities

and civil

society

Suppliers,

contractors

and partners

Government

and regulators

Constructive engagement with communities is

part and parcel of SSEN Transmission’s plans

SSE plc Annual Report 202414

Strategic Report

SSE directly employs around 14,000

people in the UK, Ireland and selected

overseas markets.

Why we engage

Engagement helps retain existing talent

and attract recruits to what is a rapidly

expanding workforce as the Company

grows to meet the challenge of

decarbonisation.

c14,000

Direct SSE employees

Read our engagement

in action case study

onpage 40

SSE has a large and diverse shareholder

anddebt provider base.

Why we engage

To ensure strategic decisions are properly

informed by those with a financial stake in

SSE’s long-term success.

£18bn

Market cap as at 29 March 2024

For more on our

relationship with

shareholders, see page 130

SSE directly serves energy supply

customers in the domestic all-island

Ireland market and the business-to-

business markets in both GB and the island

of Ireland. Italso provides grid connection

to non-direct networks customers in its

Distribution and Transmission operating

licence areas.

Why we engage

To understand customer expectations

andto ensure they are supportive of, and

supported in, a just transition to net zero.

c5m

Networks and supply customers

Read our engagement

in action case study

onpage 35

SSE has a non-partisan Political

Engagement Policy under which it

engages with the institutions of

government in a way that is consistent with

its purpose and climate-focused strategy.

Why we engage

Constructive engagement with elected

representatives and regulators aims to

ensure fair and effective policy frameworks

that support investment in critical national

infrastructure and serve the best interests

of energy customers and the environment.

£2.5bn

Capex invested in infrastructure

in 2023/24

For more on engagement

with policymakers,

see page 19

SSE works in close partnership with

numerous third-party organisations.

Why we engage

SSE relies on the support of communities it

works in and the backing of civil society as

it plays its part in the transition to net zero.

£12.2m

Investment in communities

in2023/24

Read our engagement

inaction case study

onpage 37

SSE relies on a robust supply chain and

specialist JV partners to meet its

objectives.

Why we engage

Fostering good relationhips and

committing to measures such as the

Prompt Payment Code helps SSE secure

partnership expertise and achieve greatest

value from its investments.

c6,825

Number of active suppliers

Read our engagement

in action case study

onpage 41

Shareholders and

debtproviders

NGOs, communities

and civil society

Employees

Government

and regulators

Energy customers

Suppliers, contractors

and partners

More on our stakeholders

The role that society has in the transition to net zero puts SSE’s stakeholders at the very heart of what SSE does and

they are referred to throughout this Annual Report. Disclosures that relate specifically to stakeholders, and case

studies of specific engagement activities, are signposted with the icon shown here on the right. A Section 172

Statement and further details of how stakeholder considerations have influenced principal decisions made in the year

by the Board can be found from page 132 of the Governance Report.

* Excludes 1,089 employees related to the reacquisition of Enerveo (formerly SSE Contracting) in March 2024.

Financial Statements

Governance

15SSE plc Annual Report 2024

Our strategy in action

Powering the

transition to net zero

An unwavering focus on developing, building, operating and

investing in low-carbon electricity infrastructure drives the

long-term value that we create for shareholders and society.

providing significant local and national

economic opportunities, including legacy

benefits such as a commitment to

support the delivery of 200 new homes

across its network area and the

development of a new and ambitious

networks community benefit fund.

Key projects include the Eastern Green

Link 2 (EGL2), a 525kV, 2GW high voltage

direct current (HVDC) subsea

transmission cable from Peterhead in

Scotland to Drax in England. A joint

operation with National Grid, EGL2 will be

the longest HVDC cable in the UK and the

UK’s single largest electricity transmission

project ever, providing enough electricity

to power 2 million UK homes.

In building EGL2, SSEN Transmission will

draw on lessons learned from the success

of its pioneering 260km Shetland HVDC

link. On course for completion in

summer 2024, the Shetland link will

connect 600MW of clean, renewable

electricity generation – including from

the 443MW Viking wind farm –

supporting national net zero and energy

security targets.

In March 2024, SSEN Transmission

welcomed National Grid ESO’s

upweighted Beyond 2030 plan, which

confirmed the need for an additional

£5bn investment out to 2035 to unlock

afurther tranche of ScotWind output.

For more detail, turn to the

Business Unit Operating Review

on page 70

Ofgem’s strategic infrastructure frameworks will create some

20,000 UK supply chain jobs, 9,000 of them in Scotland

Connecting power

for future generations

Link to strategy:

Building

Transmission infrastructure is critical to

bringing renewable energy to the people

and businesses that need it – so SSE

Transmission is investing £20bn in a

transformational programme to connect

output from the ScotWind offshore wind

project and help power millions of homes.

As part of the UK Government’s Accelerated

Strategic Transmission Infrastructure (ASTI)

programme, this work will create billions in

value for the UK and Scottish economies

and enable over a fifth of the UK’s 50GW

offshore wind goal, a key element of

Ofgem’s Pathway to 2030 and Beyond

2030initiatives.

SSE is committed to a just transition and

SSEN Transmission has engaged with

communities and other key stakeholders

across the north of Scotland. One of the

largest public consultation processes ever

seen in Scotland, this exercise is seeking to

ensure that all views are heard and factored

into decision-making prior to planning

applications being lodged for this critical

national infrastructure to be developed.

Thisengagement has resulted in a number

of changes to construction plans in direct

response to community feedback.

The Pathway to 2030 programme will

support 20,000 UK supply chain jobs –

9,000 of which will be in Scotland –

16 SSE plc Annual Report 2024

Strategic Report

Building renewables

needed for net zero

Link to strategy:

Building

Large capital projects that spur renewable

electricity generation are at the heart of

building the energy system of the future

– and working with contract partners,

stakeholders and communities, SSE made

significant progress in 2023/24.

SSE Renewables led the development and

construction of Seagreen, partnered by

Total Energies, and will operate the offshore

wind farm during its lifetime. First power

was achieved in August 2022 and Seagreen

became fully operational in October 2023,

with 114 turbines on the 1.1GW site

generating enough clean, renewable energy

to power almost 1.6 million homes annually.

The world’s largest offshore wind farm

under construction, Dogger Bank, started

producing electricity for the first time in

Bringing the energy

transition to life

Link to strategy:

Operating

SSEN Distribution plays a vital bridging role

between low-carbon generators and the

consumers they are seeking to supply as the

electrification of heat and transport gathers

pace. Within its current price control,

RIIO-ED2, the business is identifying parts

October 2023. The 3.6GW wind farm is

being constructed 130km off the coast of

Yorkshire and in three 1.2GW phases known

as Dogger Bank A, B and C. While the

project has experienced delays due to

availability of support vessels, the

installation of foundations, 95 monopiles,

transition pieces and inter-array cables are

all going well at Dogger Bank A and power

is being transmitted via a high-voltage

direct current (HVDC) system in a

technological first for the UK offshore

windsector.

Elsewhere, the last of 103 turbines was

installed on Shetland at Viking, which at

443MW will be the UK’s most productive

onshore wind farm, powering around

500,000 homes. Good progress was made

on Yellow River, a 29-turbine, 101MW wind

farm development in central Ireland. Also in

Ireland, the 30MW Lenalea wind farm in

County Donegal saw the installation of its

seventh and final turbine.

Outside of SSE’s home markets in GB and

Ireland, construction also started in 2023/24

on two onshore wind farms in Europe:

Chaintrix-Bierges (28MW) in northern

France and Jubera (64MW) in Spain.

Battery energy storage systems (BESS) will

have an increasingly important role to play

in the energy mix and good progress was

made by SSE Renewables with a combined

670MW under construction at Fiddlers

Ferry, Ferrybridge, Salisbury and Monk

Fryston, with the latter set to be the largest

plant of its kind in the UK.

For more detail, turn to the

Business Unit Operating

Review on page 74

of its north and south licence areas where

solutions on the network can mitigate

constraints on new generation capacity

coming onto the system and accelerate

the transition.

SSEN Distribution’s Distribution System

Operations (DSO) team is leading the way

in designing and implementing a smart,

flexible, electricity system which will be

fit-for-purpose for future needs.

Through its Distribution Future Energy

Scenarios SSEN Distribution forecasts future

demand growth and the uptake of low-

carbon technologies, renewables and other

distributed energy resources (DERs).

Forecasting ensures the approach is tailored

to individual communities by reflecting local

environmental influences, the existing local

network infrastructure and societal

influences such as age demographics,

employment and economic factors.

SSEN Distribution has also onboarded the

first group of five local authorities to have

signed up to its innovative new Local Energy

Net Zero Accelerator (LENZA) demand

forecasting tool.

LENZA empowers local authorities to make

better decisions about where to put new

energy assets like electric vehicle (EV)

chargers, or where to roll out low-carbon

programmes. It uses a traffic-light system to

show whether a new energy asset could be

accommodated on the existing network or

if further development is required.

For more detail, turn to the

Business Unit Operating Review

on page 72

LENZA empowers local

authorities to make better

decisions about where to

put new energy assets.”

Seagreen, in the Firth of Forth, can power

almost 1.6 million homes annually

Through its LENZA initiative, SSEN Distribution is

helping to bring net zero a step closer

17SSE plc Annual Report 2024

Governance Financial Statements

OUR STRATEGY IN ACTION – CONTINUED

SSE Thermal secured provisional

agreements for 1,365MW of de-rated

electricity generation capacity for the

delivery year 2024/25 at the GB T-1

auction. This includes the Keadby 1

Power Station in North Lincolnshire

(692MW) and the Medway Power

Station on the Isle of Grain (673MW).

Agreements were awarded at an

auction clearing price of £35.79/kW.

Further value was unlocked by

hydroelectric, pumped storage, battery

storage and onshore wind assets in

theT-4 auction for the delivery year,

2027/28. SSE plant in Scotland and

England secured agreements for

1,148MW of de-rated electricity

generation capacity. These include

one-year contracts for 1,074MW of

de-rated hydro-electricity generation

and pumped storage capacity, and

15-year agreements for battery storage

at Monk Fryston, Ferrybridge and

FiddlersFerry.

There were auction wins too for SSE

Thermal in the GB four-year ahead

capacity market, with all of the

business’s wholly-owned and Joint

Venture CCGTs securing contracts

atarecord-high clearing price.

Securing such long-term contracts

underpins SSE’s stable index-linked

earnings and supports its business

model as it creates lasting value.

For more detail, turn to the

Business Unit Operating

Review page 75 and 77

Leading the way on

sustainable finance

Link to strategy:

Investing

The strategic progress described in these

pages is made possible by a capital

expenditure programme that has been

increasingly funded by sustainable finance

in recent years.

SSE is the UK’s largest issuer of Green

Bonds, issuing seven in the past eight years

that have been well received by the market

and routinely oversubscribed.

Green Bonds offer an attractive proposition

to investors looking to channel finance

intoinfrastructure that will help meet net

zero targets.

In the course of 2023/24 two such

instruments – an eight-year €750m Green

Bond issued on behalf of SSE plc and a

20-year £500m Green Bond issued on

behalf of SSEN Transmission – took the

total value of outstanding Green Bonds

issued by the Group to £3.7bn.

Most of the proceeds from the €750m

bond, issued in August 2023, were used to

fund SSE Renewables’ Viking wind farm

project on Shetland.

Green finance will also help to finance and/

or refinance SSEN Transmission’s substantial

pipeline of critical national infrastructure

projects, planned for delivery by 2027.

The £500m bond was issued in January

2024 in response to greater visibility over

future growth through Ofgem’s Large

Onshore Transmission Investments (LOTI)

reopener and the Accelerated Strategic

Transmission Investment (ASTI) framework,

with proceeds earmarked to finance and/or

refinance work being done by SSEN

Transmission to reinforce and grow the

electricity network in the north of Scotland.

For more on green finance,

seepages 30 and 64

Winning contracts in

a competitive market

Link to strategy:

Developing

The critically important role that SSE’s

assets have to play in the wider energy

system was underlined by a string of

capacity auction successes in 2023/24.

SSE Renewables was successful in the

UK’s fifth Contract for Difference (CfD)

Allocation Round (AR5) and is set to be

awarded 15-year contracts for low

carbon power for over half a gigawatt of

new onshore wind generation.

Viking wind farm, along with the Strathy

South, Aberarder and Bhlaraidh project

extensions secured CfDs for a total of

605MW of new renewable energy. Each

project will receive the guaranteed strike

price of £52.29/MWh, based on 2012

prices but annually indexed since then

forCPI inflation.

SSE did not bid for offshore contracts

under AR5, however – a decision taken

in line with a firm commitment to capital

discipline and a determination to

optimise returns from what is a world-

class development pipeline.

In Ireland, Yellow River secured a CfD for

a maximum of 16.5 years under the Irish

Government’s Renewable Electricity

Support Scheme (RESS-3) auction.

Viking wind farm is among the

successful recipients of contracts

from the AR5 round

18 SSE plc Annual Report 2024

Strategic Report

Supporting the

push for faster

climate action

Link to strategy:

Investing

At a time of widespread political consensus

on the need to speed up deployment of

large-scale clean energy infrastructure,

SSEregularly engages with the UK and Irish

governments on delivering its NZAP Plus

investment programme.

In the UK, SSE has continued to engage

stakeholders across the political spectrum

on the steps needed to bolster energy

security, create green jobs and meet

climategoals. SSE published a set of policy

proposals in a document titled, From

Ambition to Action: A delivery plan for

cleaner, homegrown energy which provided

the foundation for SSE’s political advocacy

over the past year.

SSE has established a reputation as a clean

energy champion and a trusted voice

amongst political stakeholders; as reflected

in Chief Executive Alistair Phillips-Davies’s

role as energy sector adviser to the UK

Prime Minister and his seat on the

government’s Net Zero Council.

Alongside domestic engagement, SSE was

part of the Global Renewables Alliance

campaign that took part in the Conference

of the Parties (COP28) at which 130

countries signed up to a pledge to triple

renewable energy capacity and double

energy efficiency by 2030.

For more on the interaction

between individual Business

Units and policymakers, turn

to pages 70, 72, 74 and 77

Hosted in Dubai, COP28 marked the

year of the global stock-take of the Paris

Agreement – a pivotal point in the COP

process to ensure the world gets back

on track and nations are held to account

for delivering on their environmental

targets. A last-minute agreement

pledged to ‘transition away from fossil

fuels’ for the first time, helping to

shiftthe dial.

It is non-state actors, including regional

and local governments, and businesses

like SSE, that will ultimately implement

climate pledges. SSE remains committed

to supporting the COP process and

willcontinue to call for more

ambitiouspolicy.

To help accelerate conversations, and

widen its stakeholder reach, SSE has also

grant-funded work by the Oxford Smith

School looking at how to deploy clean

energy in the global south.

The Labour leadership team was among a

range of political visitors to SSE in the year

It is non-state actors, including

regional and local governments, and

businesses like SSE, that will ultimately

implement climate pledges.”

19SSE plc Annual Report 2024

Governance Financial Statements

How we performed

Our KPIs

We use a number of key measures to track our financial and operational performance,

progress against UN-aligned goals and efforts to keep people safe.

Financial performance

Dividend per share

(pence)

60.0

96.7

85.7

2024

2022

2023

Performance

The recommended full-year dividend, rebased in

2023/24, is in line with SSE’s growth-enabling, five-year

dividend plan to 2027.

Adjusted and reported

earnings/losses per share

(pence)

APM

158.5

156.7

166.0

(14.7)

94.8

241.2

2022

2023

Adjusted Reported

Performance

Results in 2023/24 are attributable to the resilience

of SSE’s balanced business mix. Adjusted EPS gives

a meaningful measure of performance over the

medium term.

Adjusted and reported

profit before tax

(£m)

APM

2,174.7

2,495.1

2,183.6

(205.6)

1,158.1

3,476.3

2022

2023

Adjusted Reported

Performance

The reported figure for 2023/24 reflects positive

movement in operating and financial derivatives,

combined with favourable movement in commodity

stocks held at fair value.

Adjusted EBITDA

(£m)

APM

3,295.6

3,382.1

2,251.3

2024

2022

2023

Performance

Extracting interest, tax, depreciation and amortisation

from earnings offers a good measure of operational

performance, which was strong in the year thanks to

abalanced mix of businesses.

Adjusted and reported

operating profit by

business

(£m)

419.3

Transmission

272.1

Distribution

833.1

Renewables

Transmission Distribution

Renewables

Adjusted

2024

Reported

2024

Adjusted

2023

Reported

2023

419.3 272.1 833.1

372.7 382.4 561.8

559.1 272.1 630.3

405.5 382.4 428.1

Performance

Combined, SSE’s renewables and electricity networks

businesses accounted for more than 60% of Group

adjusted operating profit.

Combined networks

Regulated Asset Value

(£bn)

10.9

9.6

8.2

2024

2022

2023

Performance

Accelerated build-out and reinforcement of SSE’s three

economically-regulated electricity networks contributed

to higher RAV values in the year.

Adjusted investment,

capital and acquisitions

(£m)

2,476.7

2,803.3

2,067.8

2024

2022

2023

Performance

A year-on-year reduction in was due to prior-period

acquisition expenditure related to the purchase of the

Southern European onshore wind development platform

and Triton Power Holdings.

Adjusted and reported

capex by core business

(£m)

595.6

Transmission

505.1

Distribution

1 ,097.1

Renewables

Transmission Distribution

Renewables

595.6 505.1 1,097.1

495.5 421.0 911.5

797.5 657.1 788.9

543.8 502.0 1,072.0

Adjusted

2024

Reported

2024

Adjusted

2023

Reported

2023

Performance

Regulated electricity networks and renewables are SSE’s

primary growth engines, accounting for the bulk of capex

in the year.

Linking performance to pay

SSE’s Remuneration Policy is linked to both operational and financial performance. The individual targets and

measures used by the Remuneration Committee to inform decisions on Directors’ pay have been indicated on

these pages with the symbol shown here on the right. See the Remuneration Report in full from page 158

Key:

KPI linked to remuneration

20 SSE plc Annual Report 2024

Strategic Report

Performance against 2030 Goals

Cut carbon intensity by 80%

UNSDG 13

Scope 1 GHG intensity

(gCO

e/kWh)

205

254

259

2024

2022

2023

Performance

SSE saw a 19% reduction in scope 1 GHG intensity,

its lowest recorded, largely due to a drop in thermal

generation output.

Increase renewable energy output fivefold

UNSDG 7

Renewable generation

output

(GWh)

11,158

10,227

9,496

2024

2022

2023

Performance

Output growth reflected additional operating capacity

which more than offset lower wind speeds in Scotland.

* Includes pumped storage, biomass and constrained off

wind in GB.

Enable low-carbon generation and demand

UNSDG 9

Renewable capacity

connected within

SSENTransmission

network area

(GW)

9.3

9.2

7.8

2022

2023

Performance

SSEN Transmission is on track to exceed its RIIO-T2

goal to deliver an electricity network in the north

of Scotland with the capacity and flexibility to

accommodate 10GW of renewable generation by 2026.

Pure electric or plug-in

hybrid vehicles registered

in SSEN Distribution’s

licence areas

c. 284,000

c. 208,500

2024

2022

2023

c. 130,000

Performance

SSEN Distribution continued to progress several key

innovation projects with partners to support flexible

markets and future infrastructure provision for the

mass adoption of electric vehicles.

Champion a fair and just energy transition

UNSDG 8

Contribution to GDP UK

(£bn/€bn)

5.96/1.06

5.96

1.06

6.04

0.4 3

5.82

0.4 4

2022

2023

UK Ireland

Performance

SSE’s GDP contribution in the UK remained fairly

consistent between 2022/23 and 2023/24, and saw a

significant increase in Ireland over the same period.

Jobs supported in UK

and Ireland

56,500

42,370

47,130

2024

2022

2023

Performance

An increase in SSE’s activity over the financial year

has resulted in a rise in total jobs supported, with

SSE supporting 53,230 and 3,270 jobs in the UK

and Ireland respectively.

Safety performance

Total Recordable Injury

Rate per 100,000 hours

worked (employees and

contractors)

0.20

0.19

0.17

2024

2022

2023

Performance

Contractor performance continued to impact SSE’s

combined safety measure in the year.

21SSE plc Annual Report 2024

Governance Financial Statements

22 SSE plc Annual Report 2024

Strategic Report

Chief Sustainability Officer’s review 24

Advancing climate action 28

Providing affordable and clean energy 33

Investing in industry, innovation and infrastructure 36

Committed to decent work and economic growth 38

Protecting and restoring the natural environment 46

Sustainability

Governance Financial Statements

23SSE plc Annual Report 2024

Chief Sustainability Officer’s review

Short-term progress

with long-term

goals in sight

Helping to build a future energy system based

on renewables, flexibility and networks is the

most important contribution to a sustainable

future that SSE can make. Doing that in a way

that delivers high-quality careers, and an

enhanced natural environment, supports SSE’s

own long-term sustainability too.

The achievement of social, economic and

environmental sustainability is a long-term,

multiyear pursuit of value and balanced

impact. With SSE’s key business goals to

2030 getting closer, important progress

was made in the financial year 2023/24.

Perhaps the most important of which was a

significant reduction in the carbon intensity

of electricity generated down to 205 grams

of carbon dioxide equivalent per kilowatt

hour of electricity generated. Of course,

we know that emissions trajectories are

unlikely to follow a straight line downwards,

nevertheless the achievement of SSE’s

lowest recorded climate impact from the

generation of electricity is something to

be welcomed.

As SSE ramps up its capital delivery

programme, there are many social and

environmental issues to be carefully

managed. The expansion of SSE’s direct

workforce, up by over 1,700 year-on-year,

to support that programme is very positive

and we are particularly pleased to see the

increasing numbers of colleagues joining

from former high-carbon industries.

SSE deliberately seeks to attract those

from high-carbon industries, making our

contribution to an economy-wide ‘just’

transition to net zero and, in 2023/24,

35% of SSE’s new recruits originated from

high-carbon roles. Their skills and

enthusiasm are making an important

contribution to SSE’s culture and growth.

The development of large capital projects

– from renewables to transmission

infrastructure – means we are engaging

and consulting with communities and

stakeholders at an unprecedented scale.

Levels of engagement are high, so too is

the multitude of perspectives to respond

and adapt to. We aspire to the maximum

transparency possible, and at all times

seek constructive relationships with an

array of important stakeholders – from

host communities, to regulators and

conservationists. The achievement of the

‘advanced’ rating by SSEN Transmission

and Distribution in 2023/24 under the

independent AccountAbility audit is an

important proof point in that approach.

An important characteristic of SSE’s energy

assets relates to where they are located.

With hydro, wind, distribution and

transmission infrastructure often located in

rural and remote places, our co-existence

with Scotland, England and Ireland’s natural

heritage is something we are acutely aware

of. It is for this reason that we are pleased to

be able to report progress against

our commitment to ensure that future

infrastructure projects leave the natural

environment in a healthier state than it was

before construction.

At SSE we’ve set four 2030 Goals aligned

to the UN Sustainable Development Goals

(SDGs) most material to our business.

The past 12 months within SSE have

seen important milestones towards the

achievement of these long-term goals.

There remains, nevertheless, much yet to

do and we look forward to making further

progress in the year ahead.

Rachel McEwen

Chief Sustainability Officer, SSE plc

21 May 2024

24 SSE plc Annual Report 2024

Strategic Report

Progressing towards 2030 Goals

Cut carbon intensity by 80%

Reduce Scope 1 carbon intensity by 80% by 2030, compared to 2017/18 levels, to 61gCO

e/kWh.

SSE’s scope 1 GHG intensity

2017/18

307gCO

e/kWh

2030

61gCO

e/kWh

2023/24

205gCO₂e/kWh

on pages

28 to 32

Increase renewable energy output fivefold

Build a renewable energy portfolio that generates at least 50TWh of renewable electricity a year by2030.

Total renewable generation output

2030

50TWh

2023/24

11.2TWh

on pages

33to 35

Enable low-carbon generation and demand

Enable at least 20GW of renewable generation and facilitate around 2million

EVs and 1million heat pumps onSSEN’s electricity networks by 2030.

2030

20GW

2023/24

9.3GW

on pages

36 to 37

c. 284,000

pure electric or plug-in

hybrid vehicles registered

c. 45,300

heat pumps connected

Champion a fair and just energy transition

Be a global leader for the just transition to net zero, with a guarantee of fair work

and commitment to paying fair tax and sharing economic value.

£6.86bn

contribution to

UK and Irish GDP

consecutive years as an accredited

Living Wage employer

on pages

38 to 45

* Includes pumped storage, biomass and constrained off wind in GB.

** SSEN Distribution now uses source data from the UK Government’s Microgeneration Certification Scheme (MCS) to measure progress against this goal. Restated 2022/23

figures can be found in SSE’s Sustainability Report 2024.

25SSE plc Annual Report 2024

Governance Financial Statements

SSE’s sustainability hierarchy

Strategy

driver

To create value for shareholders and society in a sustainable way by

developing, building, operating and investing in electricity infrastructure and

businesses needed in the transition to net zero.

Framework

to share value:

aligned to UN’s

Sustainable

Development

Goals (SDGs)

SSE’s 2030

Goals

Four core business goals linked to highly material SDGs

Cut carbon intensity by 80%

Increase renewable energy output fivefold

Enable low-carbon generation and demand

Champion a fair and just energy transition

SSE’s

Environment

Strategy

Linked to three further material SDGs

Resource used

Environmental management

SUSTAINABILITY – CONTINUED

Driving sustainability

at SSE

A framework for a

sustainable business

Due to the essential nature of SSE’s

activities, sustainability has naturally been a

long-standing feature of its business model,

embedded at the heart of its strategy. It

provides a framework that guides decisions

as it transitions to net zero, ensuring it is

done in a way that creates and shares value

with stakeholders.

Sustainability is articulated at the highest

level, with SSE’s business strategy aligned to

the UN’s Sustainable Development Goals

(SDGs). To embed this approach throughout

the organisation, SSE has identified four

SDGs which are highly material to the

business, and to which it has linked its four

core business goals for 2030. These 2030

Goals are focused on addressing the

challenge of climate change in a way that

is fair to working people, consumers and

communities. SSE has identified a further

three material SDGs, which are focused on

the environment and guide the pillars of

SSE’s Environment Strategy.

This framework allows SSE to navigate

complex of economic, social and

environmental impacts and address

them ina balanced way to ensure the

best outcomes for stakeholders.

Ensuring

accountability

for sustainability

Reinforcing SSE’s commitment to

sustainability, sustainability-linked metrics

and targets form part of executive

performance-related pay. Progress against

SSE’s 2030 Goals is linked to the longer-

term Performance Share Plan, and the

Annual Incentive Plan is linked to average

performance across three independent

external ESG ratings. These measures mean

that accountability for sustainability is held

at the most senior levels in the Company.

A summary of progress against these

performance measures can be found in the

Remuneration Committee’s Report from

page 168

26 SSE plc Annual Report 2024

Strategic Report

Understanding

what matters

A double materiality approach

A credible approach to sustainability is one

that is focused on the most significant

issues faced by the Company. Through its

activities, SSE inevitably impacts on the

world around it, with implications for

society, the environment and wider

stakeholders. In recognition of this, SSE

adopts the ‘double materiality’ approach,

which not only takes into account

sustainability matters that have a material

impact on SSE’s business value, but also

considers the impact SSE has on the

environment and society.

A comprehensive double materiality

assessment was undertaken in 2022/23 with

support from an independent third-party.

This confirmed the five issues most material

to SSE: carbon emissions; sustainable

energy generation; affordable and reliable

energy; supply chain management; and,

skilled workforce.

In addition, the process highlighted three

areas of opportunity for greater impact:

just transition; circularity; and, nature

and biodiversity

In early 2024, SSE undertook a ‘pulse

check’on the materiality assessment which

re-confirmed that these top material issues

and areas of opportunity remain highly

relevant. Information around SSE’s

performance in each of these areas can

befound throughout the following pages

ofthese sustainability disclosures

(pages 24 to49

The impact of the

stakeholderperspective

SSE has identified six key stakeholder

groups, outlined on page 15 , which

represent the people, communities and

organisations with an interest in its purpose,

strategy, operations and actions and

who may be affected by them. Strategic

stakeholder engagement underpins the

understanding and includes a combination

of business-led and Board-level interaction

SSE undertakes extensive engagement to

understand the issues material to each of its

key stakeholder groups and take these into

consideration in decision making. Different

stakeholders can often have competing

priorities and, in these instances, SSE works

to ensure that the best possible outcomes

are reached.

For more detail on the range of

engagement methods SSE adopts with its

key stakeholders, see pages 132 to 134

Throughout the following pages, examples

of strategic stakeholder engagement, and

the impact it has on SSE’s decisions and

actions during 2023/24 are provided.

Aligning to external frameworks

Aligning to external sustainability

frameworks supports the adoption of

common national and international

normative standards. These frameworks

are created through robust independent

processes, capturing the views of a wide

variety of stakeholders, and as such

also provide insight into issues of

particular interest.

SSE is a signatory to the UN’s Global

Compact (UNGC) incorporating the

Ten Principles of the UNGC into its

approach to business. In addition, SSE aligns

sustainability disclosures to international

non-financial reporting frameworks,

including the Global Reporting Initiative

(GRI) and the SASB Standards, and actively

engages with key investor ESG ratings

agencies and investor-led initiatives.

Fulldetail can be found in SSE’s

Sustainability Report 2024 and at

sse.com/sustainability

While SSE is not yet subject to recent

mandated sustainability-related disclosure

standards in Europe, it is seeking to

adopt the most relevant aspects of the

International Sustainability Standards Board

(ISSB) Standards and the EU Corporate

Sustainability Reporting Directive (CSRD).

SSE is currently preparing for complete

adoption of these standards as and when

they become mandated for its business.

Collaborating for

sustainableoutcomes

Partnerships and collaboration are integral

to SSE’s approach, as it understands that

the scale and complexity of the net zero

challenge cannot be addressed acting

alone. SSE has several well-established

partnerships that allow it to collaborate and

share knowledge to drive progress on key

sustainability-related issues. These include

decade-long partnerships with the Living

Wage Foundation and the Fair Tax

Foundation, working to address two issues

which SSE believes are at the heart of

sharing value with society.

SSE has also developed industry

collaborations which focus on key

challenges facing the energy sector,

and how these can be addressed through

collective action. Examples of these include:

the Powering Net Zero Pact, a supply chain

initiative working to address key challenges

to bringing about a fair and just transition

to net zero; and, the Coalition for Wind

Industry Circularity, which seeks to bring

together the UK wind sector to create a

supply chain for the refurbishment and

reuse of wind turbine components

withinthe UK.

More detail about SSE’s key partnerships

and collaborations can be found in SSE’s

Sustainability Report 2024.

SSE’s most material

sustainabilitytopics

1 Carbon emissions

2 Sustainable energy generation

3 Affordable and reliable energy

4 Supply chain management

5 Skilled workforce

Opportunities for

enhanced impact

1 Just transition

2 Circularity

3 Nature and biodiversity

SSE’s most material sustainability topics

SSE’s double materiality assessment process has highlighted the issues most material

to the Company, as well as areas where it has an opportunity to enhance impact.

27SSE plc Annual Report 2024

Governance Financial Statements

SSE’s Net Zero Transition Plan pathway

Scope 1

Scope 2

Scope 3

Advancing

climate action

Delivering climate action through a credible pathway to net

zero legitimises SSE’s licence to operate and is fundamental

to its strategy to decarbonise power, contributing to national

and international targets.

A strategy

for net zero

The appetite for accelerated climate action

presents significant opportunity for SSE. Its

business model and strategy are wholly

aligned to supporting the energy transition.

For more information on SSE’s business

model, see pages 6 to 7 and strategy,

seepages 12 to 13 .

In 2023/24, SSE experienced a strong year

of performance, recording its lowest scope

1 GHG emissions, maintaining its trajectory

towards its science-based carbon targets

aligned to a 1.5°C pathway. However, there

is still much work needed to remain on

thistrajectory in the coming years, and

emerging trends, including an increasing

focus on security of supply towards the

endof this decade, are focusing SSE’s

interventions as it balances both social

andenvironmental requirements.

NZAP Plus investment plan

SSE’s £20.5bn five-year capital investment

plan to 2027, the NZAP Plus, is seeing SSE

accelerate the build-out of the renewables,

system flexibility and electricity networks

that will be needed to reach net zero. With

around 90% of the NZAP Plus expected to

be invested in either renewables or

networks, the substantial majority of the

investment plan is directly focused on

climate solutions to achieve SSE’s 2030

Goals, and is aligned to the Technical

Screening Criteria of the EU Taxonomy.

Targeting net zero

SSE aims to achieve net zero across scope 1

and 2 GHG emissions by 2040 at the latest

(subject to security of supply requirements)

and for remaining scope 3 GHG emissions

by 2050 at the latest. On the pathway to

these long-term net zero ambitions, SSE has

a series of interim carbon targets, verified by

the Science Based Targets Initiative (SBTi)

and aligned to a 1.5°C pathway (see Figure

3). Progress against SSE’s science-based

targets in 2023/24 can be found on

page31 .

A pathway to net zero

For SSE's net zero ambitions to be credible,

they must be supported by a transparent

and robust climate transition plan, against

which it can be held accountable. In March

2022, SSE published its Net Zero Transition

Plan, available at sse.com/sustainability ,

which sets out clearly and transparently for

stakeholders the key actions SSE will take

todrive progress towards its long-term net

zero ambitions and its interim science-

based carbon targets.

To ensure accountability for progress

against the plan, SSE has established a

commitment through its shareholder

resolution for shareholders to receive its

Net Zero Transition Report annually. SSE’s

Net Zero Transition Report is published

each year in June, alongside SSE’s full-year

corporate reporting suite, and summarises

SSE’s progress against the targets and

actions set out in its Net Zero Transition

Plan. SSE’s Net Zero Transition Report 2023

was received by shareholders at the Annual

General Meeting in July 2023, with 97.63%

of votes cast in favour.

2025 2035 2050

TARGET

SHORT TERM (TO 2025) MEDIUM TERM (2025–2035) LONG TERM (2035–2050)

Engage with 50% of

suppliers by spend

to set an SBT by

2024

Reduce the carbon

intensity of scope 1

GHG emissions by

80% by 2030, from

2017/18 baseline

Reduce absolute

scope 1 and 2 GHG

emissions by 72.5%

by 2030 from a

2017/18 base year

Reduce absolute

GHG emissions from

use of products sold

by 50% by 2034

from a 2017/18 base

year

Net zero for SSE’s

scope 1 and 2

emissions by 2040

Net zero for all SSE’s

remaining scope 3

emissions by 2050

S3 S1 S1

S2 S3 S1

S2 S3

Note: for definitions of Scopes 1, 2 and 3 SSE follows the GHG Protocol.

For further inforamtion on SSE's GHG and Environmental Reporting Criteria 2024 see sse.com/sustainability

SUSTAINABILITY – CONTINUED

28 SSE plc Annual Report 2024

Strategic Report

Figure 1: Summary of SSE’s key climate-related opportunities and risks

The below table provides a summary of SSE's material climate-related opportunities and risks, alongside time horizon assessed and the

scenario sensitivity. For full, detailed climate-related opportunity and risk tables, see pages 102 to 105 .

Time horizon of opportunity or risk:

SSE considered different warming scenarios over three time

horizons to assess the financial impact in each time period.

Scenario sensitivity:

Scenario sensitivity indicates the financial significance

indicated by the scenario modelling.

Period of opportunity or risk Most material impact

High

sensitivity

Low

sensitivity

Warming scenario

not assessed

Time horizon Scenario sensitivity

2030 2050 2080 1.5°C 2.5°C 4°C

Transition

opportunities

Accelerated wind investment

Accelerated transmission growth

Valuable flexible hydro

Valuable flexible thermal

Driving distribution transformation

Transition

risks

Accelerated gas closure

Wind generation price

Physical

risks

Variable renewable generation risk

Extreme weather network damage

The important role of medium-

term carbon targets

There are several factors outside of SSE’s

control, which have potential to impact its

carbon performance in the short term. For

example, in a tight electricity system, SSE

has a social and economic obligation to

support security of supply for homes and

businesses, when a mix of renewable and

non-renewable generation is needed. This

reiterates the crucial nature of medium-

term carbon targets, which provide clear

pathways within the boundaries of which,

companies can balance the impact of

short-term influences.

SSE’s Net Zero Transition Plan is focused on

actions to deliver the steep cuts needed in

the medium term, on the pathway to net

zero, and provides clarity for stakeholders

around the elements within SSE’s control.

Climate-related opportunities

and risks

Climate change represents both an

opportunity and a risk to the energy sector,

and as such directly influences SSE’s

strategy. Since 2018, SSE has been aligning

its disclosures to the Task Force on

Climate-related Financial Disclosures

(TCFD) recommendations. These

disclosures provide a structure to elevate

climate challenges, informing decisions

anddriving change to deliver a net zero

economy. Through this process, SSE

hasidentified five key climate-related

opportunities and four key climate-related

risks. A summary of these opportunities and

risks, and how they impact the strategy,

canbe found in Figure 1.

Climate-related financial disclosures are

mandatory in the UK where the Financial

Conduct Authority (FCA) listing rule LR 9.8.6

R(8) requires organisations to report

againstthe TCFD recommendations,

recommended disclosures and the Annex

and guidance (published 2021) in annual

reports. SSE has integrated its disclosures

against the TCFD recommendations

throughout this Annual Report, providing

stakeholders with a holistic picture of how

itis thoroughly embedded through its

business processes. Pages 98 to 99

provides a summary of how to navigate

theTCFD-aligned disclosures throughout

this report.

Leading management

of climate-related

opportunities and risks

SSE continues to prioritise

engagement with CDP, the world’s

largest database of climate

information. In 2024, SSE was

awarded an ‘A’ leadership rating for

the third consecutive year, for its

2022/23 submission to the CDP

Climate Change questionnaire. This

saw SSE included in CDP’s Climate

A-List, which recognises the world’s

leading companies based on their

level of transparency and

performance on climate change.

SSEis one of around 350 companies

worldwide which achieved an ‘A’

grade, placing the Company in the

top 2% of all scored companies.

29SSE plc Annual Report 2024

Governance Financial Statements

Engagement in action

Informing best practice

transitionplanning

The UK HM Treasury led Transition Plan

Taskforce (TPT) is working to develop best

practice guidance for private sector climate

transition plans. SSE has been actively

supporting this work and, because of its

experience as an early adopter of climate

transition planning, was invited to join the

TPT Delivery Group in 2023/24.

Having previously supported the Transition

Plan sandbox (testing) exercise, SSE joined

three Working Groups: Electric Utility

andPower Generators; Adaptation; and,

Just Transition. SSE supported these

Working Groups with developing topic

andsector-specific guidance on

transitionplans.

The TPT published its Disclosure

Framework in October 2023, followed by

its final Sector Deep Dive Guidance in

April2024, which provides sector-specific

guidance on interpreting the Disclosure

Framework for seven sectors, including

Electric Utility and Power Generators.

Whilst recognising the scale of the

disclosures proposed by the TPT Guidance,

the TPT Disclosure Framework represents

the gold-standard for transition planning.

SSE remains committed to best practice

planning and disclosure and will review this

latest guidance as part of the TPT’s

recommendation to update standalone

transition plans on a three-yearly cycle.

Figure 2: SSE’s taxonomy

aligned activities 2023/24

Taxonomy-eligible aligned

Taxonomy-eligible not aligned

Taxonomy-non-eligible

Revenue £10,457.2m

31%

18%

51%

Adjusted operating profit

£2,426.4m

65%

33%

Adjusted investment and

capital expenditure £2,476.7m

89%

Aligning investment

to sustainable

finance frameworks

The emergence of statutory and normative

frameworks defining economic activity

under robust sustainability criteria supports

the financing of SSE’s investments that are

wholly focused on the transition to netzero.

Taxonomy aligned activities

SSE supports the integration of standardised

sustainability criteria into investment

decisions. Its own internal investment

criteria ensures alignment of capital

investment plans to its core 2030 Goals

which includes targeted reductions in GHG

emissions consistent with a 1.5°C Paris

Agreement pathway.

To voluntarily provide stakeholders with

anindication of the scale of SSE’s green

economic activities, SSE has taken a

best-efforts approach to consider the

alignment of its 2023/24 activity to the EU

taxonomy, the high-level results of which

are outlined in Figure 2.

Key strategic activities (i.e. onshore wind,

offshore wind, transmission, distribution)

from SSE’s reportable segments were

assessed against the technical screening

criteria. While an internal assessment

against the Do No Significant Harm and

minimum safeguards criteria was

undertaken, a second party opinion has

notyet been sought.

A full breakdown of SSE’s taxonomy eligible

activities and the assumptions used can be

found in Table 3 in the Disclosure Statement

on page 107

Issuance of two new

GreenBonds

In 2023/24, SSE issued two new Green

Bonds: a €750m eight-year Green Bond

inAugust 2023, earmarked for flagship

onshore and offshore wind projects

recently completed or under construction;

and, a £500m 20-year Green Bond in

January 2024, to finance and/or refinance

transmission infrastructure projects.

These represent SSE’s sixth and seventh

Green Bonds and bring the total

outstanding Green Bonds issued by SSE and

subsidiaries to £3.7bn, reaffirming SSE’s

status as the largest issuer of Green Bonds

in the UK corporate sector.

Sustainability-linked Revolving

Credit Facilities for networks

In 2023, SSEN Transmission and SSEN

Distribution both signed their first

sustainability-linked Revolving Credit

Facilities (RCFs). The existing RCFs, originally

signed in November 2022, were upgraded

in May and July 2023 respectively to include

key performance indicators, covering

environmental and social metrics, and

aligned to the sustainability strategies of

thetwo networks businesses.

Carbon pricing

As a generator of electricity, SSE is subject

to policies that impact the price of carbon,

which makes it an explicit consideration

inmany investment decisions.

SSE’s generation activities in GB are subject

to the UK Emissions Trading Scheme (UK

ETS), which is a cap-and-trade emissions

scheme. In addition, SSE’s generation assets

in GB are subject to the Carbon Price

Support mechanism which sets a price per

tonne of carbon emitted and, combined

with the UK ETS allowance price, makes up

the Total Carbon Price paid by electricity

generators. In Ireland SSE’s generation

assets are subject to the EU Emissions

Trading Scheme (EU ETS). At the time of

reporting, SSE used carbon prices of £64/

tCO

in GB and €78/tCO

in the EU. SSE’s

future plans include assumptions on low,

central and high carbon range forecasts.

SUSTAINABILITY – CONTINUED

30 SSE plc Annual Report 2024

Strategic Report

Figure 3: SSE’s performance against its science-based carbon targets

Target Unit 2017/18 2022/23 2023/24 Target Progress against target

Reduce the GHG intensity

of scope 1 GHG emissions

by 80% by 2030, from a

2017/18 base year

gCO

e/kWh 307 254 205 61

80%33%

2023/24 2030 target

41% of targeted reduction achieved

Reduce absolute scope 1

and2 GHG emissions by

72.5% by 2030 from a

2017/18 base year

MtCO

e 11.06 6.52 4.81 3.04

72.5%57%

2023/24

2030 target

78% of targeted reduction achieved

Reduce absolute GHG

emissions from use of

products sold by 50%

by2034 from a 2017/18

baseyear

MtCO

e 2.53 2.16 2.01 1.27

50%21%

2023/24 2034 target

41% of targeted reduction achieved

Engage with 50% of

suppliers by spend to set

an SBT by2024

% 0 51 51 50

51%

2023/24

2024 target (50%)

102% of target achieved

Measuring SSE’s

carbon performance

Measuring and disclosing SSE’s year-on-

year carbon performance and progress

against targets keeps SSE accountable to

itsstakeholders for delivery against its Net

Zero Transition Plan. Full detail of SSE’s GHG

inventory can be seen in Table 2 in the

Disclosure Statement on page 106 . Detail

of SSE’s progress against specific actions in

its Net Zero Transition Plan can be found in

SSE’s Sustainability Report 2024, alongside

information around how different elements

of SSE's strategy impact progress against

carbon targets.

Performance against science-

based carbon targets

SSE’s 2023/24 progress against its SBTi-

verified carbon targets is outlined in Figure

3. A strong year of performance means SSE

remains on track to achieve these targets,

having exceeded its supplier engagement

target since 2022/23. Information around

trends in SSE’s performance can be found

inthe following discussion across pages

31and 32 .

SSE’s scope 1 GHG intensity

The scope 1 GHG intensity of electricity

generated in 2023/24 was the lowest

recorded by SSE, falling by 19% to

205gCO

e/kWh, from 254gCO

e/kWh the

previous year. This represents 41% progress

against SSE’s scope 1 GHG carbon intensity

targets for 2030.

SSE’s intensity performance is calculated

based on two elements – total generation

output, comprising thermal and renewable

generation source, and total scope 1 GHG

emissions (99% of which is from thermal

generation).

Output from SSE’s renewable generation

portfolio (incl. pumped storage and

biomass, and excl. constrained off wind

inGB) in 2023/24 increased slightly to

10.0.TWh in 2023/24, from 9.7TWh the

previous year. Output for the period was

driven by capacity additions during the year,

principally from Seagreen offshore wind

farm which reached full commercial

operations in October 2023, which were

partially offset by lower year-on-year wind

speeds. Output from SSE’s thermal

generation decreased by 22%, principally

reflecting a normalisation of the market

environment over the course of the year.

This meant that the proportion of total

generation output contributed to by

renewable generation increased to 47% in

2023/24, compared to 40% the previous

year. This, coupled with a significant

reduction in GHG emissions arising from

thermal generation resulted in the

considerable improvement in scope 1

GHGintensity performance for 2023/24.

Absolute GHG emissions

performance

In 2023/24, SSE’s total reported GHG

emissions consisted of 47% scope 1

emissions, 5% scope 2 emissions and 48%

from scope 3 emissions measured. Overall,

SSE’s total reported GHG emissions fell by

18% between 2022/23 and 2023/24.

Figure 4 shows SSE’s changing carbon

footprint over time and shows scope 1

emissions decreasing as a result of strategic

intervention but is also balanced by an

increase in scope 3 emissions over time.

Forthe first year, SSE’s scope 3 emissions

represented the largest portion of SSE’s

total GHG emissions in 2023/24.

GHG emissions arising from thermal

generation activities represents the single

most material contribution to SSE’s total

reported GHG emissions, making up 99%

ofSSE’s scope 1 emissions and 36% of its

scope 3 emission through its joint venture

investments.

The following discussion focuses on SSE’s

scopes 1 and 3 emissions, as they represent

95% of SSE’s total carbon footprint.

Discussion on SSE’s scope 2 emissions can

be found in SSE’s Sustainability Report 2024.

31SSE plc Annual Report 2024

Governance Financial Statements

Scope 3: Gas sold (Category 11), Joint Venture investments (Category 15), well-to-tank

emission from raw fuels purchased and transmission and distribution emissions from

electricity used in non-operational and operational buildings (Category 3), SSEN Transmission

network losses (Category 9), contractor vessels (Category 4), and business travel (Category 6)

Scope 2: Electricity consumption in operational and non-operational buildings and SSEN

Distribution network losses

Other scope 1: Operational vehicles and fixed generation, sulphur hexafluoride and gas

consumption in buildings

Scope 1: Electricity generation carbon emissions

2023/242022/232021/222020/212019/202018/192017/18

4.1

0.9

10.1

3.9

0.7

8.8

3.6

0.6

8.2

3.4

0.5

7.1

3.7

0.5

5.7

4.8

0.4

6.0

4.5

0.5

4.3

Figure 4: SSE’s GHG emissions by scopes between 2017/18 and

2023/24 (million tonnes CO

SSE’s scope 1 GHG emissions

Absolute scope 1 GHG emissions in 2023/24

was the lowest recorded by SSE. Between

2022/23 and 2023/24, GHGemissions

arising from electricity generation,

decreased by around 29%. This was

predominantly a result of a decrease in

output from SSE’s thermal generation plant

by 22% compared to the previous year, as

explained on page 31 . An additional factor

was that SSE's Tarbert oil-fired power

station ceased generation before April 2023,

in line with environmental licence

requirements, which is a more carbon

intensive generation type compared to

gas-fired generation. The impact of

weather, demand and availability of plant

creates variation in the pathway of

emissions reduction.

SSE’s scope 3 GHG emissions

SSE’s reported scope 3 emissions

represented the largest portion of SSE’s total

GHG emissions inventory in 2023/24. The

largest contributors to SSE's scope 3 GHG

inventory for the year were gas sold to

customers (45%) and emissions associated

with Joint Venture thermal generation (36%).

SSE's total scope 3 emissions decreased by

around 7% between 2022/23 and 2023/24.

The two material contributing factors

included:

– A 30% reduction in GHG emissions

arising from the processing and

transport of fuel used in energy

generation, due to the reduction in

thermal generation output over the year.

– A 7% reduction in GHG emissions arising

from gas sold to customers, due to a fall

in Business Energy customer accounts.

For more information see the Energy

Customer Solutions business operating

review on page 80 to 81

With scope 3 emissions increasingly

becoming a greater proportion of SSE’s

GHG emission inventory as a result of the

approach it is taking to deliver its strategy,

SSE is working with its Joint Venture

partners to ensure each put in place their

own Net Zero Transition Plans.

A decarbonised energy sector enables a net

zero world and while work has been done

to further understand SSE’s scope 3

emissions arising from its supply chain

activities, they are set to increase while

delivering crucial net zero infrastructure

over the coming years. SSE is working to

better understand the GHG emissions

arising from purchased goods and services

in order to better manage its supply chain

emissions. More information can be found

in SSE's Sustainability Report 2024.

Climate adaptation

and resilience

The physical impacts of climate change

have the potential to adversely impact SSE’s

operations and interrupt the supply of

energy to its customers. SSE is focused on

ensuring it is resilient to a changing climate

by anticipating and adapting to climate-

related impacts. The physical impacts of

climate change are considered within SSE’s

Task Force on Climate-related Disclosures

(TCFD) and SSE’s network businesses have

set out resilience strategies with climate

adaptation actions in their price control

business plans.

Over 2023/24, SSEN Distribution increased

operational resource to respond to 10

named storms. Six of these took place

between October 2023 and January 2024,

which saw SSEN Distribution restore supply

to around 257,000 affected customers over

the period. See the engagement in action

case study on page 35

for more

information.

SSE continues to implement climate risk and

adaptation actions to prepare for extreme

weather events, including monitoring

short- and long-term weather patterns,

using climate projections, crisis

management and business continuity plans

and investment programmes to improve

infrastructure resilience.

SUSTAINABILITY – CONTINUED

Installation work under way at Dogger Bank A wind farm

32 SSE plc Annual Report 2024

Strategic Report

Providing

affordable and

clean energy

SSE is supporting the transition towards a net-zero

energy system through the provision of clean and secure

energy, ensuring this is delivered in a way that does not

adversely impact reliability and affordability of energy

for the end consumer.

Delivering a cheaper,

cleaner and more

secure energy system

SSE is at the forefront, supporting the

delivery of a power system that is

dominated by clean renewable energy,

flexible generation and net zero-ready grids.

While SSE supports energy customers with

the short-term impacts of rising energy

costs, affordability in the long term remains

a key focus, and its planned investment over

the next decade of up to £40bn is aimed at

addressing the underlying causes of high

costs. Creating more low-carbon

generation that can be produced at lower

costs will protect energy users in the

longrun as well as reducing exposure to

imported fossil fuels.

Targeting an increase

in renewables

One of the key ways in which SSE ensures

the provision of clean and affordable energy

for customers is through the generation of

renewable energy. Progress was made over

2023/24 towards SSE’s target to grow

renewable electricity generation output

fivefold between 2017/18 and 2030/31, with

output increasing to 11.2TWh, compared to

10.2TWh in 2022/23 (inc. pumped storage,

biomass and constrained off wind in GB).

SSE Renewables continued to make

progress on key flagship projects over

theyear and reached some important

milestones. This included Scotland’s largest

offshore wind farm, Seagreen, becoming

fully operational in October 2023, and, in

the same month, first energy being

produced at Dogger Bank, which will be

theworld’s largest offshore wind farm

whencomplete.

SSE Renewables continues to focus on

developing a strong pipeline of renewable

energy projects to meet its own, as well as

national, ambitions. Through the NZAP Plus

investment programme, SSE Renewables is

targeting an installed capacity (net) of up to

9GW of renewable generation, including

battery storage, by 2027. It has a current

pipeline of around 16.8GW of renewable

energy projects, 2.8GW of which was in

construction at 31 March 2024.

For more detail on SSE Renewables progress

over 2023/24, see pages 74 to 76

Supporting

customers with the

cost of energy

SSE recognises the careful balance needed

between decarbonisation and the

challenging circumstances that many

energy customers have faced in recent

years. That’s why Energy Customer

Solutions has continued to support its

home and business customers as they deal

with the lingering impact of the pandemic

and energy crisis.

SSE Airtricity has been supporting customers on the

Island of Ireland with the cost of energy

33SSE plc Annual Report 2024

Governance Financial Statements

Supporting business

customersin Great Britain

In September 2023, Energy Customer

Solutions established a £15m support fund

for its business customers in Great Britain.

This fund helped customers who had

signed up to fixed contracts at the peak

ofwholesale energy prices in late 2022.

Thefund was in addition to the continued

availability of alternative contracts and

payment arrangements as well as price

reductions through the period.

SSE Airtricity price reductions

Following its commitment to use all

2022/23 profit to aid customers, £7.6m

(€8.6m) arising at financial year-end was

redistributed to domestic customers

through household credits in April 2023.

Support for financially vulnerable customers

continued in 2023/24 under the €25m

customer support fund announced in

2023/24. A further €5m Community Fund

was announced in May 2024 to help

communities on their path to net zero. The

business also introduced two consecutive

domestic tariff reductions in Ireland and

regulated tariffs were reduced in Northern

Ireland. These reductions mean many

customers’ tariffs have been reduced by

almost 20%.

Low carbon solutions delivering

better energy pathways

Along with aiding customers through

turbulent energy markets, Energy Customer

Solutions is equally committed to providing

the solutions that help customers reduce

energy consumption and their carbon

footprint. This growth area had performed

well in 2023/24 with Energy Customer

Solutions well established as a reputable

supplier of quality solutions across Great

Britain and Ireland.

Delivering smart building solutions

In Great Britain, Energy Customer Solutions

continued its smart buildings growth

through propositions, including asset

installations and technology platforms,

which save carbon, energy and money for

customers. This included the delivery of

advanced building controls at the Scottish

Parliament buildings, which are designed to

achieve an energy reduction of 10%. Energy

Customer Solutions was also awarded the

decarbonisation project to install heat

pumps across 11 South London and Kent

schools for the Harris Federation.

Supporting vulnerable residents through

retrofit projects in Ireland

In Ireland, progressive government policies

continued to stimulate strong growth in

2023/24 with Energy Customer Solutions

delivering 2,700 rooftop solar installations

alongside its partner Activ8, and almost

1,000 EV chargers. In addition, Energy

Customer Solutions continued to be

recognised by local councils for its

innovative solutions, such as Dun Laoghaire

Rathdown County Council, for retrofitting

100 residential units and a daycare centre

with a first-of-its-kind district heating

system, allowing residential units to be

heated by lower capacity heat pump.

Energy Customer Solutions also continued

its commitment to support home

decarbonisation and delivered 500 home

energy retrofits including working in

partnership with Northern Ireland’s Bryson

Charitable Group to deliver solutions for

financially vulnerable groups.

Supporting

distribution

customers

SSEN Distribution works to enable the net

zero transition at a local level , at the same

time as ensuring customers have secure

andreliable energy.

Providing an inclusive service

to network customers

SSEN Distribution’s Priority Service Register

(PSR) provides adapted services and

additional support to customers who are in

potentially vulnerable situations, and who

may be particularly affected in the event of

supply interruptions. People’s situations

change over time, so SSEN ensures that it

continually raises awareness around its PSR

to ensure it captures as many people in

need as possible. It does this through a

range of activities including running

awareness campaigns, partnering with

other service providers and through the

dedicated website launched in early 2023,

thepsr.co.uk. In 2023/24, the number of

customers on SSEN Distribution’s PSR was

925,349 – an increase of over 70,000

compared to the previous year.

SUSTAINABILITY – CONTINUED

SSEN Distribution raises awareness around the

additional support it can provide customers

34 SSE plc Annual Report 2024

Strategic Report

Vulnerable customers

at the heart of strategy

In March 2024, SSEN Distribution was the

first electricity network operator to enshrine

the needs of its most vulnerable customers

at the heart of its plans for developing the

electricity networks of the future. Through

the delivery of its innovation project, known

as Vulnerability Future Energy Scenarios

(VFES), it predicts when and where

communities are less resilient, less affluent,

and more seriously affected by prolonged

or frequent interruptions to supply.

VFES also predicts the likelihood of

customers missing out on the benefits

low-carbon technologies. The level of

understanding that VFES brings will help

enhance plans for network investment

strategies, not just in regions which will see

a high uptake in low-carbon technologies,

but also communities where customers rely

on energy more than most and who may

need more support with using low-carbon

solutions.

A refreshed Consumer

Vulnerability Strategy

SSEN Distribution is acutely aware of how

itsbusiness can help a society currently

tackling the rising costs of living, climate

change and the impacts of the net zero

transition. In March 2024, it refreshed its

Consumer Vulnerability Strategy to further

enhance the role it plays in assisting

customers who are in, or are experiencing,

vulnerable situations.

The refresh includes a renewed approach

to collaboration, partnerships, and

innovation, meaning SSEN can do more

to meet the changing needs of customers,

communities, and society. SSEN

Distribution’s partnership framework is

focused on building meaningful and strong

partnerships that deliver more through

collaborations. Through the use of metrics,

such as Social Return on Investment (SROI)

and PSR reach, SSEN Distribution is working

with existing partners to maximise support

and onboard new partnerships to ensure it

funds initiatives where they will have the

biggest impacts on customers, in the

communities where the need is greatest.

Itsambition is to deliver £23m in consumer

benefits as a direct result of the targeted

investments it will make.

Engagement in action

Supporting customers, no matter theweather

The increasing severity and regularity of

extreme weather events can pose

significant disruption to SSE’s operations,

particularly in its electricity distribution

business which is at the forefront of

responding to these impacts. Between

mid-October 2023 and the end of January

2024, SSEN Distribution responded to six

named storms – Babet, Ciaran, Gerrit,

Henk, Isha, and Jocelyn. SSEN Distribution

deploys increased operational capacity in

events like these and the teams worked in

challenging conditions, with a clear focus

on restoring customers’ electricity supplies

as safely and quickly as possible. As well as

restoring electricity supplies, SSEN

Distribution supported affected

communities by proactively contacting

vulnerable customers on the Priority

Services Register, providing hot meals and

handling large volumes of calls in its

Customer Contact Centre.

By the end of January, SSEN Distribution’s

response teams had restored supply to

around 257,000 affected customers, and

received recognition in the UK and

Scottish Parliaments for their efforts and

resilience. SSE continues to implement

mitigation methods it has in place to

prepare for extreme weather events such

as these, including monitoring short- and

long-term weather patterns, crisis

management and business continuity

plans and investment programmes to

improve infrastructure resilience.

OCTOBER 2023 NOVEMBER 2023 DECEMBER 2023

Storm Babet

Aberdeenshire,

Angus and Perthshire

Storm Ciarán

Central southern England

Storm Gerrit

North of Scotland

37,000

customers restored

35,000

customers restored

48,000

customers restored

JANUARY 2024

Storm Henk

Central southern England

Storm Isha

Central southern England

and north of Scotland

Storm Jocelyn

North of Scotland

60,000

customers restored

70,000

customers restored

7,000

customers restored

SSEN Distribution’s response teams support local communities

during supply interruptions

35SSE plc Annual Report 2024

Governance Financial Statements

Investing in industry,

innovation and

infrastructure

SSE’s significant investment in net zero infrastructure must be done

in a way that fosters innovation and collaboration, and ensures social

and environmental impacts are carefully managed to create lasting

positive impacts in local communities.

A strategic approach

to innovation

Innovation has a central role in the delivery

of SSE’s strategic objectives, allowing it to

accelerate the readiness of the technologies

needed to support the net zero transition.

Establishing a Group-wide

approach

In early 2024, SSE established an internal

cross-Group Innovation Advisory Council

which sets out SSE’s strategic vision and

direction for innovation. While each of SSE’s

Business Units are supported to define their

own innovation priorities and integrate new

technologies, the new council serves to

identify promising new technologies

relevant to clean energy and acts as a forum

for SSE’s Business Units to share knowledge.

This Group-centred approach supports the

consideration of innovation in a whole

energy system context, ensuring maximum

benefits can be realised by the business.

Collaboration at the core

SSE has strategic partnerships with

academic institutions, designed to ensure

mutual knowledge transfer between

academia and industry to drive forward the

energy transition. It has well-established

partnerships with Imperial College London

and the University of Strathclyde, in the UK,

and also partners in one of Ireland’s leading

all-island energy research programmes,

‘NexSys’, hosted by University College Dublin.

In December 2023, SSE announced a new

partnership with the University of Highlands

and Islands (UHI), in Scotland. With the

Highlands and Islands at the heart of an

accelerated transition to net zero, it is

important that the scale of the coming

investments benefits the region. The overall

objective of the partnership is to ensure

that as many of the job and economic

opportunities in the Highlands and Islands

as possible will benefit its people and

communities, supporting environmentally

sustainable economic development.

Sustainable supply

chains

SSE considers the principles of sustainable

procurement as a vital tool in managing

risks, maximising opportunities, assessing

value and monitoring performance, while

enabling stronger relationships with its

supply partners.

A Sustainable Procurement Plan

In February 2024, SSE sought to increase

transparency around its commitment to

sustainable procurement through the

launch of its Sustainable Procurement Plan.

The new Plan, which is available at

sse.com , communicates SSE’s sustainable

procurement initiatives from both a Group

and Business Unit perspective, and outlines

its future ambitions to SSE’s suppliers and

other stakeholders. The plan consists of six

key pillars with objectives mapped against

them, as well as a goal setting plan for SSE’s

tier one suppliers which represent 90% of its

supply chain by spend, called the 90% Club.

Progress against these ambitions will be

monitored annually through a range of data

capture methods.

Over the course of 2023/24, SSEN

Distribution published its business-specific

Sustainable Supplier Code chain code

and SSEN Transmission launched its

new Delivery Charter, both seeking to

encourage collaborative work with

supply chain partners to achieve joint

sustainability ambitions.

Strategic supply

chain engagement

Over 2023/24, SSE further strengthened its

supply chain engagement on sustainability

through partnering with EcoVadis, a

well-established business sustainability

ratings platform, to understand and monitor

supplier performance. SSE set an ambition

to have 70% of its supply chain by spend

achieve a valid EcoVadis scorecard by April

2024. At 31 March 2024, 51% of its suppliers

by spend had been engaged and were

evaluated or undergoing an evaluation.

Scorecards support strategic engagement

with suppliers on targeted sustainability

topics, goals, and performance. SSE’s own

EcoVadis performance is gold rated with a

scorecard of 71, and it performs in the 95th

percentile within its industry.

Driving sustainable

outcomes through

SSE’s businesses

SSE’s Business Units are at the forefront

ofdelivering the infrastructure needed for

net zero, and work to deliver this in a

sustainable way for the benefit of local

communities and wider society.

Leaving a lasting local legacy

SSEN Transmission’s £20bn Pathway to

2030 programme represents the largest

investment programme in the north of

Scotland grid since the 1950s and is critical

to meet UK and Scottish climate targets.

SSEN Transmission aims to ensure this scale

of investment creates lasting, meaningful

benefits for the local communities in

theregion.

SUSTAINABILITY – CONTINUED

36 SSE plc Annual Report 2024

Strategic Report

As part of this work, SSEN Transmission

announced in December 2023, that

it will create long-term, skilled, green

employment opportunities across the

region with the recruitment of 400 new

employees over 2024. It also announced

plans to develop a housing strategy, with

acommitment to deliver 200 new homes

across the north of Scotland which,

following completion of the projects, will

support local housing requirements. Further

benefits will include the establishment of

aCommunity Benefit Fund in the north

ofScotland, which is expected to be

worthin excess of £100m over its lifetime

subject to UK Government guidance, and

money off bills for those located closest

tonew infrastructure.

These initiatives, alongside placing

multi-million-pound contracts with local

supply chain partners, will create billions of

economic value for Scotland.

Delivering world firsts in

partnership at Dogger Bank

In October 2023, the world’s largest

offshore wind farm under construction,

Dogger Bank, started producing electricity

for the first time. Situated 130km off the

coast of Yorkshire, Dogger Bank is a joint

venture between SSE Renewables (40%),

Equinor (40%) and Vårgrønn (20%). SSE is

the lead operator for the development and

construction for the 3.6GW wind farm,

which is being constructed in three 1.2GW

phases known as Dogger Bank A, B and C.

First power followed the installation of the

first of GE Vernova’s Haliade-X 13MW

turbines in June 2023, one of the largest

and most powerful globally. This is the first

time Haliade-X units have been energised

offshore anywhere in the world. Each

rotation of the 107m long blades on Dogger

Bank’s first operational turbine can produce

enough clean energy to power an average

British home for two days. Installation of

theturbine was undertaken by the largest

offshore jack-up installation vessel ever

built, called Voltaire, which is also the first

seagoing installation vessel to be an

Ultra-Low Emission vessel.

The development also involves the

installation of the world’s first unmanned

High Voltage Direct Current (HVDC)

offshore substations, the first of which

wasinstalled in April 2023.

Principles for sustainable

biofuel use

SSE Thermal’s Tarbert site in County Kerry

has a proud history of power generation.

With the former oil-fired station closing at

the end of 2023 due to environmental

requirements, SSE’s focus is now on

repurposing the site for a net zero future.

Over 2023/24, plans were progressed for

anew 350MW Open Cycle Gas Turbine

(OCGT) at Tarbert which would run on

100% sustainable biofuels, specifically

Hydrotreated Vegetable Oil (HVO). With the

potential to convert to hydrogen in the

future, Tarbert Next Generation Power

Station can support both short-term

security of supply needs and long-term

decarbonisation efforts.

HVO has a lower greenhouse gas emissions

profile across its lifetime when compared to

alternatives such as diesel or natural gas

combustion. To ensure the HVO sourced is

sustainable, SSE has established a set of

standards which requires the HVO to:

– be sourced from 100% waste feedstocks,

the raw materials for which are grown on

a seasonal basis so there is no long-term

‘carbon debt’;

– be certified to both International

Sustainability and Carbon Certification

and Renewables Fuel Assurance Scheme

as well as meeting the EU’s RED II

sustainability requirements.

SSE Thermal will source HVO from one of

the multiple suppliers in Ireland certified in

line with RED II. Due diligence will be

conducted in accordance with SSE’s Human

Rights and Modern Slavery statement

andpolicy.

Enabling net zero

at the local level

Local electricity networks are key in the

transition to net zero and SSE has been

supporting local authorities to identify

thechanges and resources needed to

achieve net zero at a community level.

InOctober 2023, SSEN Distribution

launched its innovative Local Energy

NetZero Accelerator (LENZA) tool,

designedto help local councils accelerate

the development of holistic and efficient

local area energy plans.

The LENZA tool shows live capacity on the

network and predicted constraints, allowing

local authorities to make better decisions

on where to put new energy assets or roll

out low-carbon programmes. This enables

these technologies to be sited in cost-

effective locations in places for the benefit

of all people in local communities. SSEN

Distribution has onboarded the first group

of five local authorities to the tool, which is

now available to all local authorities across

SSEN’s licence areas, and will be deployed

on a staged basis.

Engagement in action

Taking a stakeholder-led

approach to project

development

SSEN Transmission is undertaking

significant community and stakeholder

engagement to consult on plans for its

Pathway to 2030 projects, seeking to

address concerns raised at a local level.

In December 2023, SSEN Transmission

published the results of the first round of

community consultation events,

confirming several stakeholder-led

changes to the development of its plans

which have included moving locations

andpreferred sites of two key substations.

SSEN Transmission also held over 40

community consultation events in

February and March 2024 to allow

members of the public to engage with

project teams and directly influence

ongoing project refinement.

As the development of SSEN

Transmission’s Pathway to 2030 projects

progresses, ahead of planning submissions

later in 2024, it will continue to take a

proactive approach in seeking feedback

and is committed to work constructively

with all key stakeholders and local

communities to maximise legacy benefits

and find balanced solutions for

projectdelivery.

37SSE plc Annual Report 2024

Governance Financial Statements

Powering a just

transition

SSE deliberately seeks to manage the social

impacts of the transition to net zero in a

way that is fair to working people,

communities and consumers. It is guided by

its Just Transition Strategy – a framework of

principles designed to guide SSE’s decisions

and actions as it transitions from high-

carbon activity to net zero.

A strategic approach

to a just transition

SSE’s Just Transition Strategy is based on

20 principles that sit under five key themes:

good green jobs, consumer fairness,

building and operating new assets, looking

after people in high-carbon jobs and

supporting communities. The principles

are deliberately comprehensive, taking a

whole-system perspective of the impact of

the net zero transition, to ensure the best

possible outcomes for all stakeholders.

SSE’s approach is to ensure that the

practical, real-world action it takes is

informed by research and learnings,

creating meaningful impacts. It does this

through observations from its own

experience and activities, as well as through

external partnerships and collaborations.

A targeted worker transition

Three years of targeted research is giving

SSE important insight into the nature of

theworker transition already under way.

The most recent all employee survey in

September 2023, shows that just over 1 in 4

employees had already transitioned from a

high-carbon role to a low-carbon career

with SSE, up from 1 in 5 in 2021. Analysis of

SSE’s new recruits in 2023/24 identified that

35% are former high-carbon workers

overall. SSE Renewables and SSEN

Transmission are the most popular

destination for former high-carbon workers

which combined account for over 1,000

such employees. The survey also showed

that they are more engaged than other

employees, particularly with SSE’s net zero

strategy, and have a strong focus on health

and safety, which is a number one priority

for SSE.

> 1 in 4

employees have transitioned

from high-carbon roles to a

low-carbon career with SSE

This internal research builds on further

activity SSE commissioned from the

University of Edinburgh in 2023/24. The

research specifically looked at sunset

(decline) and sunrise (growth) industries

over time, the skills make up of these

workers and identifying overlaps with the

energy industry, exploring opportunities

for ensuring that the transition from sunset

and competition with sunrise industries is

managed in a just and sustainable way.

35%

of new recruits are former

high-carbon workers

The report findings include outlining

possible risks of an unjust transition and

highlighting opportunities to reskill and

attract new recruits into SSE. SSE will use

the key findings to inform more targeted

future recruitment and workforce

strategies, as well as in developing a better

understanding of the external landscape

which will inform SSE’s wider work around

the just transition.

A strategy aligned

to best practice

The importance of carefully managing

the social consequences of net zero and

the consideration of a just transition is

increasingly becoming mainstream.

SSEdeliberately seeks to participate in

shared learnings and, in February 2024,

itsupported the Grantham Research

Institute Just Transition Finance Lab.

A key point noted byinvestors is the

importance of using indicators and

metricsto measure progress against

strategies. As a result, areview of the SSE’s

Just Transition Principles is under way,

withthe objective ofidentifying a basket

ofkey performance Indicators to support

stakeholder engagement on SSE’s

performance in meeting its just

transitionobjectives.

Committed to

decent work and

economic growth

SSE is embedded in the communities and places in which it

operates. Through the operation of long-term assets and

the delivery of new investment, it works to create and share

enduring value with communities and wider society.

SUSTAINABILITY – CONTINUED

38 SSE plc Annual Report 2024

Strategic Report

Contributing to regional

just transition discussions

SSE has considerable practical experience

of the just transition, with valuable industry

and region-specific insight. In November

2023, SSE was invited to provide oral

evidence to the Scottish Parliament

Economy and Fair Work Committee for its

inquiry into a just transition to net zero in

the North East and Moray regions of

Scotland. The oil and gas sector is a large

employer across these regions and the

inquiry seeks to explore how, as the country

transitions to net zero and the industry

transforms, good outcomes are achieved

for these workers and companies.

One of the themes covered in the session

focused on the skills transformation

required for the transition, and how existing

local workforce skills can be harnessed and

developed. It also considered the advantage

the region has in renewable technologies

and how a wider renewables supply chain

can be built to facilitate a just transition.

SSE welcomed the final report published

in March 2024, which provided a range

of recommendations to the Scottish

Government around how policies and

workstreams could better support a

just transition.

Creating social and

economic value

Through its activities SSE works to ensure

itshares value with society by generating

economic value, contributing to the public

purse and creating lasting benefits for local

communities.

Creating economic

value andjobs

Since 2012, SSE has commissioned an

independent assessment each year to

estimate the value it contributes through

GDP and the jobs it supports across the UK

and Irish economies. Over 2023/24, SSE

contributed an estimated £5.96bn to UK

and €1.06bn to Irish GDP, compared to

£6.04bn and €429m respectively in 2022/23

(not adjusted for current prices). In the same

period, jobs supported in these countries

increased by around 33%, to 56,500 from

42,370 the previous year, largely as a result

of increased supply chain activity.

More detail on SSE’s contribution to GDP

and jobs supported in 2023/24 and

discussion around trends can be found in

SSE’s Sustainability Report 2024. The

Sustainability Report and all of SSE’s

economic contribution reports can be

found at sse.com/sustainability

Paying it back: the

importance oftax

With fair tax the cornerstone of SSE’s

approach to sharing value, 2024 will mark

the 10th anniversary since SSE was first

accredited as a Fair Tax Mark company

representing SSE’s enduring commitment

to paying its fair share of tax, at home

and abroad. This was reinforced by SSE’s

move to the Fair Tax Foundation’s Global

Multinational Business Standard in 2022/23.

Over 2023/24, SSE’s total tax contribution

was £1.47bn, consisting of £739m taxes

paid (including £375m in profit taxes) and

£727m taxes collected. Further information

on SSE’s taxes can be found on pages 231

to 233

of this report, and in the

Sustainability Report 2024.

In November 2023, SSE published its eighth

Talking Tax Report, disclosing SSE’s tax

affairs in a simple, transparent, and

understandable way for its stakeholders.

SSE’s Talking Tax reports can be found at

sse.com/sustainability

SSE’s economic contribution in the UK and Ireland 2023/24

Ireland

Contribution to GDP

€1.06bn

(2022/23: €429m)

Jobs supported

3,270

(2022/23: 2,430)

Taxes paid

€68.0m

(2022/23: €53.8m)

Investment in communities

€0.9m

(2022/23: €4.0m)

Contribution to GDP

£5.96bn

(2022/23: £6.04bn)

Jobs supported

53,230

(2022/23: 39,940)

Taxes paid

£679.2m

(2022/23: £502m)

Investment in communities

£11.5m

(2022/23: £13.3m)

39SSE plc Annual Report 2024

Governance Financial Statements

Long-term investment

in local communities

One of the most direct ways SSE shares

value is through the year-on-year

investment in the communities that host

many of its assets. During 2023/24, SSE

invested a total of £12.2m in communities

across the UK and Ireland. The largest

contributor to this was £10.3m awarded

through SSE Renewables Community

Investment Funds in the UK and Ireland.

In 2023/24, SSE achieved important

milestones in its community investment,

including:

– Marking a decade of its first-of-a-kind

regional Community Investment Fund,

the Sustainable Development Fund,

which has awarded £13.5m since

itscreation.

– The launch of SSEN Transmission’s first

Community Benefit Fund for

communities in the north of Scotland,

which is expected to be worth in excess

of £100m over its lifetime (see more on

page 37

SSE recognises that this investment must

bedone in a responsible way that supports

community cohesion and creates lasting

legacies. SSE’s Group-wide community

investments adhere to a consistent set

ofprinciples based on transparency,

co-creation, maximising impact, and good

governance. More detailed disclosure on

SSE’s community investment can be found

in SSE’s Sustainability Report 2024.

Reinforcing a healthy

business culture

SSE works hard embedding its healthy

workplace culture where all employees

aretreated with fairness and respect.

Doing the right thing

SSE’s healthy ethical business culture is

inextricably linked to its six core values.

Called the SSE SET – Safety, Service,

Efficiency, Sustainability, Excellence and

Teamwork – they are the behaviours

expected of all those who work for, and on

behalf of SSE.

To help embed the standards that promote

better outcomes, SSE’s employees are

guided by its Doing the right thing guide to

good business ethics. The guide applies to

direct employees and those that work on

SSE’s behalf, and covers a wide range of

topics from staying safe and secure, trading

fairly and transparently to working together

and engaging with stakeholders. It is

available publicly at sse.com/about-us/

our-culture

and is promoted to all

employees as well as being highlighted

tosuppliers in SSE’s Sustainable

Procurement Code.

SSE has a suite of mandatory ethics and

compliance training including annual

modules on cyber security, data protection,

inclusion and diversity, as well as bribery

and anti-corruption which all employees

must complete biennially. Additional

modules on competition law, business

separation and REMIT are required for

selected employees. A review of cultural

metrics is undertaken twice annually by the

Board supported by a cultural dashboard

(see page 127

Supporting employees

to speak up

The foundation of a healthy business culture

is one where everyone feels confident to

report any concerns of wrongdoing without

fear of repercussion, and where issues

identified are dealt with quickly and

appropriately. Those who work for or on

behalf of SSE are encouraged to speak up

and are protected from any adverse impact

of doing so. In addition to internal reporting

channels, SSE has an independent

whistleblowing channel, hosted by Safecall,

with the option to report anonymously.

The number of reports of suspected

wrongdoing has increased in 2023/24, with

73 reports made through SSE’s speak up

channels, compared to 50 the previous

year. This increase is partly a result of a

concerted effort to make the reporting

process more simple and accessible, and is

to be expected with a growing employee

population. Recognising the detrimental

impact of an investigation on all parties

involved, a further focus over 2023/24 year

was limiting the duration of the investigation

period to a maximum of 45 days.

Detailed information around the categories

of reported incidents and the outcomes of

investigations, alongside how SSE supports

employees who have spoken up, can be

found in SSE’s Sustainability Report 2024,

available at sse.com/sustainability

Valuing employee voice

A key way to measure how healthy a

business culture is, is through listening to

employee feedback. Through this, SSE can

take appropriate action to improve

employee experience where possible. SSE

undertakes an in-depth all employee survey

every two years and a shorter ‘pulse’ survey

on alternate years. 88% of employees

provided feedback in the 2023 in-depth

survey, SSE’s highest response rate in recent

years. The engagement score increased to

85% from 84% in last year’s pulse survey.

Three core themes were identified from the

2023 survey: Strategic engagement,

Cultural engagement and Ways of working.

SSE’s Business units are developing action

plans, based on local results, to prioritise

enhanced engagement across these areas.

SSE’s 2023 employee

engagement results

Sustainable Engagement Score

85%

(2022/23: 84%)

Engagement in action

Resetting the

SSE SET

SSE has six well-established core values,

but in a changing environment it is

important that they continue to inspire the

behaviours expected. This is particularly

important for SSE as a growing business

with an evolving employee base. Focus

groups hosted by the Institute of Business

Ethics (IBE) tested the relevance of the SSE

SET with colleagues from across all levels

of the Company. As SSE’s number one

value, Safety was excluded as it was

considered an area of unwavering focus.

Results were clear that the values still

resonate with colleagues but the

underlying descriptors could focus more

on SSE’s innovative and inclusive

approach, better reflecting its ethical ways

of working. SSE received positive feedback

from IBE for the fact that all colleagues

who took part could easily articulate what

their team did and outline how it

connected back to SSE’s purpose, values

and doing the right thing.

The new, simpler wording, endorsed by

the Board, makes it clear to everyone what

is expected no matter their role. The SSE

SET descriptions were launched over the

course of a week in November 2023

which focused on key topics associated

with doing the right thing, which saw

around 6,750 colleagues joining the series

of employee calls held.

SUSTAINABILITY – CONTINUED

40 SSE plc Annual Report 2024

Strategic Report

Looking after safety

and wellbeing

Safety and wellbeing is at the heart of SSE’s

culture and is ingrained in the way it does

business. Safety is SSE’s number one

Company value, with the objective that

“everyone gets home safe”.

Monitoring health and safety

performance

Everyone at SSE operates to the licence

“Ifit’s not safe, we don’t do it”. That focus is

all the keener following the tragic fatality

ofRichard Ellis, one of SSE’s contractors’

employees who died in an offsite incident.

SSE’s performance expectation for 2023/24

was set as a Total Recordable Injury Rate

(TRIR) of 0.11 for SSE employees, and 0.31

for contractors. SSE’s TRIR for employees

exceeded the performance expectation,

with a marked improvement as it fell to

0.07from 0.10 in 2022/23.

SSE’s contractor TRIR performance fell well

short of this performance expectation and

the high standards SSE seeks to uphold.

TheTRIR for contract partners increased

to0.41 from 0.34 in 2022/23. This reflects

asignificant increase in investment and

construction activity, and the associated rise

in contract partner hours worked. Whilst the

outturn highlights an increase in Contractor

TRIR, the severity of injuries has reduced,

namely a reduction of 11% in contractor

RIDDOR Reportable incidents

Taking into account performance in

2023/24 and the expected trend in

operational and construction activity, SSE

has set a TRIR performance expectation for

2024/25 of 0.09 for direct employees, and

0.40 for contractors. Considering the

increased activities and workload within all

Business Units, this will be a challenging

task but is believed to be achievable.

Focusing on contractor safety

SSE recognises that the increase in

investment and construction required to

achieve its business goals results in the

associated increase in contractor hours

worked in activities that often have a higher

risk profile than day-to-day operational

activities. In response to this, in 2022/23,

SSE formed a new central Contractor Safety

Team supported by dedicated Contractor

SHE Managers and Assurance Auditors to

focus on contractor safety performance.

SSE benefits from relationships with

professional contract partner organisations

to support its operations and projects.

Building on these relationships to

sethighstandards on Safety, Health and

Environment has been a key focus over

2023/24. SSE is working to ensure it gets

everyone home safe as it embarks on an

increased level and pace of project activity.

Table 1: Total Recordable Injury Rates for SSE’s employees and

contractpartners

Unit 2023/24 2022/23

Total Recordable Injury Rate –

employees and contractors

Per 100,000 hours worked 0.20 0.19

Total Recordable Injury Rate –

employees

Per 100,000 hours worked 0.07 0.10

Total Recordable Injury Rate –

contract partners

Per 100,000 hours worked 0.41 0.34

Tracking attitudes to safety and wellbeing

Where I work, we make it easy for

people to do the right thing on

safety, health and environment

94%

(2022/23: 94%)

I am able to balance my

work and my personal

responsibilities

87%

(2022/23: 85%)

Over the course of 2023/24, a core focus

ofthe Contractor Safety Team was on large

capital projects, which is an area where

most of SSE’s capital and construction

activity is taking place. This focus has

brought about continued improvement

across large capital projects with a

reduction in severity of incidents recorded.

In November 2023, SSE also held its first

Safer Together contractor event, attended

by over 130 contractor partners, to talk

about how it can collaborate more with

contractors on safety.

Throughout 2024/2025, SSE will update

itsSHE Specification to help standardise

how itworks with partners, introduce a

performance measurement platform and

continue the positive collaboration.

More information on SSE’s approach to

governing health and safety is provided

inthe Safety, Sustainability, Health and

Environment Advisory Committee Report

on pages 154 to 157

An immersive training

experience

Over 2023/23, SSE has been rolling out an

immersive training experience to help

colleagues and partners gain a deeper level

of emotional connection when something

goes wrong. This multimillion-pound

programme included building SSE’s own

centre, the Faskally Safety Leadership

Training Centre in Perth, a first of its kind for

Scotland. At 31 March 2024, around 1,700

employees and contract partners had been

trained and, with the launch of SSE’s own

new facility in April 2024, over 39,000

employees and contract partners will

experience this immersive training over

thenext three years.

Engagement in action

Supporting workers

inconstruction

In November 2023, SSE partnered with

the Lighthouse Construction Industry

Charity (LCIC), which is the only charity

solely dedicated to the emotional,

physical and financial wellbeing of

construction workers and their families.

Support provided includes a 24/7

Construction Industry Helpline which

offers a range of free and confidential

wellbeing support services. This is

complemented by a free app and online

portal which offer expert guidance on a

variety of wellbeing issues. Workers and

their families can also access LCIC’s

Wellbeing Academy which covers a

variety of courses supporting industry

workers, from soft skills training through

to Mental Health First Aider accredited

qualifications.

SSE’s activities are highly focused on the

construction and delivery of low-carbon

infrastructure assets, and its ambitious

NZAP Plus investment plan will mean this

increasing over the coming years.

Through its partnership with the LCIC, all

of SSE’s employees, contractor partners

and their families, will have access to

essential physical and mental wellbeing

support, free of charge.

* As classified in the Reporting of Injuries, Diseases and

Dangerous Occurrences Regulations (RIDDOR).

41SSE plc Annual Report 2024

Governance Financial Statements

Fair and decent

work for all

Providing good and meaningful

employment should be a minimum

commitment for any employer and is a

priority for SSE. At the cornerstone of this

commitment is a fundamental respect for

human rights and fair remuneration for

those working on SSE’s behalf.

Paying it fair

In September 2023, SSE celebrated 10 years

of being a real Living Wage accredited

employer in the UK. Since first being

accredited in 2013, SSE has continuously

strengthened its commitment to the living

wage over the decade.

Recognising that aliving income requires

regularity and certainty of work, SSE was

one of the first companies in the UK to

become a Living Hours employer. In

November 2023, SSE built on its

commitment by becoming a Living

Pensions accredited employer, which seeks

to provide stability and security for workers

now and in the future.

Furthering its commitment to fair reward, in

March 2023, SSE announced an enhanced

approach to its Personal Contract Pay for

employees in the UK and Ireland. The new

approach ensures faster progression

through salary bands and faster progression

for high performers. More information can

be found in SSE’s Sustainability Report 2024,

available at sse.com/sustainability

Respecting fundamental

humanrights

Human rights abuses and modern slavery

inall its forms are unacceptable to SSE.

SSEis fully committed to upholding key

international frameworks around

fundamental human rights, which are set

out in SSE’s Group Human Rights Policy,

available at sse.com .

Everyone in SSE has the fundamental right

to freedom of association and to join a trade

union. SSE has four recognised trade union

partners which it works with through the

Joint Negotiating and Consultative

Committee and through regular ongoing

dialogue. In 2023/24, 47.6% of SSE’s total

direct workforce was covered by collective

bargaining agreements.

Projects like SSE’s Viking wind farm are providing quality, low-carbon jobs

SUSTAINABILITY – CONTINUED

42 SSE plc Annual Report 2024

Strategic Report

Investing in a

workforce for

net zero

SSE seeks to provide attractive employment

opportunities with meaningful, long-term

careers. SSE’s recruitment strategy seeks

tobring new talent into the organisation,

at the same time asinvesting in the

development ofits existing workforce.

A growing workforce

Over 2023/24, SSE continued with its

commitment to create at least 1,000 jobs

every year until 2025 to meet the demands

of its growing Business Units. A total of

4,381 positions were filled across internal

and external recruitment and SSE’s overall

headcount increased by 1,711 at 31 March

2024, representing a 14% rise compared to

the previous year. Headcount growth was

seen across all of SSE’s Business Units but

most notably in its transmission and

renewables businesses.

SSE’s headcount includes 131 employees in

locations outside the UK and Ireland. The

data excludes 1,089 employees related to

the reacquisition of Enerveo (formerly SSE

Contracting) in March 2024.

In 2023/24, SSE’s employee retention

rateimproved slightly to 91.3%, whilst its

voluntary turnover rate was 5.5%, compared

to 7.0% in 2022/23. This continues the trend

of a return to pre-pandemic labour market

conditions. SSE’s retention and turnover

rates also reflect the results of the 2023

allemployee survey, in which scores for

overall employee engagement and for

reward and retention themes were higher

than both the Energy and Utilities and UK

national averages.

Developing SSE’s talent

Over 2023/24, SSE invested a total of

£32.0m in learning and development

and pipeline programmes, compared

to £23.3m the previous year. This

risewas largely due to increased

investment in SSE’s pipeline

programmes, the vast majority

ofwhich was due to a significant

increase in investment in SSE’s

graduate programme.

Advancing pipeline programmes

In 2023/24, the number of people on

one of SSE’s pipeline programmes

increased by 36% compared to the

previous year. This consisted of 345

apprentices, 322 graduates, along

with 76 trainee engineers and 26

individuals on an employability

programme.

SSE’s graduate programme has grown

considerably in recent years, and in

2023/24 a strategic refresh was

undertaken to ensure it fully met the

needs of the graduates and SSE’s

business. More information can be

found in SSE’s Sustainability Report

2024 available at sse.com/

sustainability

Enabling the best performance

Since April 2022, SSE has made

significant investment and focused

efforts on enabling the best

performance of its people and

retaining its top talent. In August

2023, as part of this commitment, SSE

introduced Performance Edge – an

evolved approach to leading and

managing performance. Performance

Edge is designed to equip employees

to focus on the delivery of SSE’s

strategic priorities through agile

conversations and continuous

learning, feedback, and coaching.

SSE’s workforce 2023/24

Total headcount

at 31 March

13,891

(2022/23: 12,180)

Employees joining SSE

3,286

(2022/23: 3,226)

Positions filled (internal

and external recruitment)

4,381

(2022/23: 4,401)

Retention rate

91.3%

(2022/23: 89.5%)

Investing in a skilled

workforce2023/24

Investment in learning,

training and development

£12.5m

(2022/23: £10.4m)

Investment in pipeline

programmes

£19.5m

(2022/23: £12.8m)

Total number of people

on a pipeline programme

769

(2022/23: 564)

Cumulative

totalinvestment in

Performance Edge

£1.9m

(2022/23: £0.8m)

Average training hours

per full-time equivalent

employee

21.1

(2022/23: 19.8 )

SSE is creating at least

1,000 jobs a year until 2025

* Employee statistics exclude information for 1,089 employees related to

the reacquisition of Enerveo (formerly SSE Contracting) in March 2024.

43SSE plc Annual Report 2024

Governance Financial Statements

SUSTAINABILITY – CONTINUED

Driving inclusion

and diversity

To deliver SSE’s ambitious investment plans,

a workforce with diversity of thought,

experience, and skills is required. SSE’s

Inclusion and Diversity Strategy includes

arange of targeted initiatives, designed

toembed a culture of inclusion with rich

diversity as a result.

Measuring inclusion

and diversity progress

To enable positive progress, SSE sets

stretching and measurable ambitions that

align with best practice and monitors

progress against them. SSE’s diversity

ambitions for all employees and senior

leadership are outlined in Tables 2 and 3

respectively.

SSE’s workforce diversity

Through concerted efforts, SSE has

significantly increased the proportion of

employees disclosing their diversity data,

soit can better understand its workforce.

Over 2023/24, the employee diversity

datadisclosure rate increased from 39% in

2022/23 to 65%. This allows SSE to disclose

more accurate information around its

workforce diversity.

SSE has a wide range of initiatives to drive

progress for representation across all

diversity categories. Information on these

initiatives, alongside actions taken to

improve the quality of diversity data

gathered, can be found in its Inclusion

andDiversity Report 2024.

Table 2: SSE’s progress against diversity ambitions for all employees

Employee representation Ambition Year Ambition 31 March 2024 31 March 2023

Women 2030 33% 31.0%

(9,586 men/

4,305 women)

30.0%

(8,525 men/

3,655 women)

Employees with a disability 2030 8% 11.6% 8.9%

Ethnic minority 2030 15% 10.1% 8.1%

LGBTQIA+ 2030 8% 4.1% 3.8%

* Data is collected on SSE’s HR data reporting system. Gender has a 100% completion rate, and is based on biological

sex. Disability, ethnic minority, and LGBTQIA+ data is voluntarily disclosed by employees, with a 65% disclosure rate

at 31 March 2024 and a 39% disclosure rate at 31 March 2023. Data excludes those without facility to share data

electronically.

Employee sentiment on

inclusion and diversity

I can be myself at work without

worrying about how I will be

accepted by colleagues

89%

(2022/23: 91%)

SSE’s Inclusion and

Diversity Report 2024

Information around SSE’s Inclusion and Diversity

Strategy, and further detail around initiatives

and performance canbe found in SSE’s Inclusion

and Diversity Report 2024, available at

sse.com/sustainability .

Apprentices get to grips with safety

procedures at SSE’s Perth Training Centre

44 SSE plc Annual Report 2024

Strategic Report

Diversity in senior leadership

SSE’s senior leadership gender diversity

ambitions are outlined in Table 3. Senior

leadership gender ambitions are set in line

with the FTSE Women Leaders Review. In

2023, SSE established a new ambition to

achieve 6% ethnic minority representation

within its Group Executive Committee and

direct reports by 2027. This new ethnicity

target was set in line with the Parker Review

recommendations. All senior leadership

diversity ambitions are approved by the

Group Executive Committee (GEC) and

Board-level Nomination Committee.

When working towards ethnicity targets for

senior leadership, all companies will have

different starting points, and SSE believes

that disclosing the baseline performance as

well as the ambition is important to allow

stakeholders to understand the specific

context for different companies. When

setting the target in December 2023, the

representation of ethnic minorities in the

GEC and direct reports was 1.2% (based

onan 80% disclosure rate). This base line

performance, combined with industry and

geographical averages were all taken into

account when setting the new ethnicity

target. At 31 March 2024, representation

ofethnic minorities had increased to 2.5%

(based on an 88% disclosure rate).

In 2023/24, the Group Executive Committee

and direct reports and SSE’s Leadership

Group saw increases in the proportion of

women represented while there was a

decline in the proportion of women

represented on its Board and GEC. Changes

in Board diversity reflect the stepping down

of Sue Bruce after nine years tenure and is

in line with the planned Board changes set

out in the Annual Report 2023.

Full details of changes across membership

of the Board and GEC, alongside the

Nomination Committee focus are set out

onpages 120 and 138 to 143

Table 3: SSE’s progress against senior leadership diversity ambitions

Diversity category Ambition Year Ambition 31 March 2024 31 March 2023

Proportion of women represented on:

Board Group Ongoing 50% with no less

than40%

41.7%

(7 men/5 women)

46.2%

(7 men/6 women)

Group Executive Committee (GEC)

10.0%

(9 men/1 women)

27.0%

(8 men/3 women)

GEC

and direct reports

(excl. administrative roles)

2025 40% 37.5%

(50 men/30 women)

34.1%

(54 men/28 women)

Leadership Group

2030 40% 26.4%

(948 men/340 women)

25.2%

(812 men/274 women)

Proportion of ethnic minorities represented on:

GEC

and direct reports

(excl. administrative roles)

2027 6% 2.5%

–

1 The GEC comprises all committee members and the committee secretary. The data reflects Catherine Raw stepping down from the GEC in January 2024 prior to her leaving SSE

in April 2024. Finlay McCutcheon succeeds Catherine in the role of Managing Director, SSE Thermal and will join the GEC in September 2024.

2 Employees in SSE’s senior level pay grades.

3 Based on an 88% disclosure rate at 31 March 2024.

SSE’s gender pay gap

Between 2023 and 2024, SSE saw a positive

trend in both its UK median and mean

gender pay gap performance. SSE saw a

drop of 3.3 percentage points in its median

UK gender pay gap, which is the measure

that SSE believes best reflects performance.

This is the largest proportional drop in SSE’s

median UK gender pay gap since 2020,

when SSE’s workforce composition

significantly changed after the sale of its

domestic retail business in GB.

This reduction can be partly attributed

tothe impact of a targeted recruitment

strategy and practice, through which SSE

saw the ratio of women hired into senior

level roles increase compared to the

previous year. The gender pay gap for these

senior level joiners was markedly lower than

the gender pay gap for existing employees

at the same level, and this has helped drive

the overall gap downwards.

Further detail and discussion on SSE’s

gender pay gap statistics, including

additional data, analysis, and disclosure of

the wide range of actions taken to reduce

the pay gap, is provided in SSE’s Inclusion

and Diversity Report 2024, available at

sse.com/sustainability

. SSE will publish its

Ireland Gender Pay Gap Report 2024 later in

the year, in line with the Irish Government

requirements.

SSE’s UK gender pay

gap performance 2024

UK median gender pay gap

12.0%

(2023: 15.3%)

UK mean gender pay gap

10.5%

(2023: 12.1%)

* Data at 5 April in each year.

45SSE plc Annual Report 2024

Governance Financial Statements

A strategic approach

to environmental

protection

The nature of SSE’s activities means it has

significant interactions with some of the

most rich and remote environments in the

UK and Ireland. SSE’s Environment Strategy

provides the framework to manage its

environmental impacts. Underpinned by

robust environmental management and

governance, the strategy has two additional

pillars focused on responsible consumption

and production and the natural

environment, aligned to three UN

Sustainable Development Goals (SDGs)

focused on the environment. The strategy

is underpinned by an ethos of compliance

and ensures that SSE is held accountable

to its stakeholders for performance.

Due to the varied nature of operations and

geographical locations, SSE’s Business Units

oversee their own tailored approaches to

protecting and enhancing the natural

environment, to support Group strategy.

Protecting and

restoring the natural

environment

Nature plays an integral role in the transition to net zero. SSE carefully

manages the interactions it has with the environment, aiming to

mitigate any negative environmental consequences of its activities

and ultimately to have a positive overall impact.

SSE’s Environment Strategy

Environmental management and governance

Providing a framework for the careful risk

management ofenvironmental impacts

Responsible consumption and production

Working towards more sustainable patterns of

resource consumption; reducing reliance on

nonrenewable and single use products

Natural environment

Supporting the conservation, restoration and

sustainable use of land and water resources

SUSTAINABILITY – CONTINUED

46 SSE plc Annual Report 2024

Strategic Report

Table 4: SSE’s environmental incident performance

2023/24 2022/23

Number of major incidents 0 1

Number of serious incidents 40 31

Number of minor incidents 103 77

Environmental prosecutions and civil penalties 0 0

Permit/Licence breach 19 9

SSE’s environmental

performance

To ensure effective environmental

management, SSE operates an

environmental management system

which sets controls, processes and

procedures. All of SSE’s businesses are

now certified to ISO14001.

The number of environmental incidents in

2023/24, increased by 31% compared to the

previous year, see Table 4. There were no

major incidents, and the majority of

incidents are minor, with an increased

awareness of environmental issues helping

to drive focus and action. The key serious

incident areas included SF₆ leaks, oil related

leaks, fluid filled cable leaks, and silt

releases. A deep dive into these incident

areas has been endorsed, see the Safety,

Sustainability Health and Environment

Advisory Committee Report on page 154

The number of environmental permit

breaches as a result of SSE’s activities

totalled 19, compared to nineincidents in

2023/24, all self-reported and dealt with

quickly when identified.

SSE’s nature-related

targets

SSE targets no ‘net loss’ in biodiversity on

onshore large capital projects consented

from 2023 and ‘net gain’ in biodiversity on

those consented from 2025 onwards.

In 2023/24, SSE assessed that 33 of its

onshore large capital projects consented

from 1 April 2023 fell into the scope of this

target. It has been assessed that all of these

projects meet or exceed the target, with

two having no net loss measures and

31having biodiversity net gain measures

included in the project design. More detail

on progress against this target is outlined

inSSE’s Sustainability Report 2024 available

at sse.com/sustainability

In early 2024, SSE set a new commitment

for woodland conservation, that all onshore

large capital projects consented from

1 April 2024 onwards will achieve no net

loss of native woodland.

For all onshore large capital projects,

SSE has committed to delivering:

no ‘net loss’

in biodiversity

on those consented from

2023 onwards

‘net gain’

in biodiversity

on those consented from

2025 onwards

SSE’s efforts to protect the natural environment

stretch back to the earliest days of hydro

47SSE plc Annual Report 2024

Governance Financial Statements

Aligning to nature-

related disclosure

frameworks

Over 2023/24, SSE took initial steps towards

aligning nature-related disclosures to the

Taskforce on Nature-related Financial

Disclosures (TNFD) recommendations.

Inearly 2024, it worked with third-party

specialists to identify SSE’s most material

nature-related impacts and dependencies

at a Group-level, and map SSE’s key assets

and their proximity to relevant ecosystems

or specified nature-related locations. This

work represents the ‘Locate’ and ‘Evaluate’

phases of TNFD’s Locate, Evaluate, Assess

and Prepare (LEAP) framework, paving the

way for a longer-term approach to

identifying SSE’s most material nature-

related risks and opportunities. Further

detail on this work can be found in SSE’s

Sustainability Report 2024 available at

sse.com/sustainability .

Responsible

resource use

Embedding sustainable patterns of resource

consumption, underpinned by circular

economy principles is a key strategic

environmental objective.

Managing water use

SSE recognises that water resources and

climate are inextricably linked. Water plays

asignificant role in SSE’s operations, being

used primarily as a source for power

generation in hydroelectric generators and

as a coolant in thermal power stations.

Figure 6: Total water

abstracted by SSE

(excluding hydro

generation) (million m

)

2023/24 2022/23

4.5

2.2

Fresh water (rivers and groundwater)

Brackish and estuarine water

592 729

Table 5: SSE’s water data

Unit 2023/24 2022/23

Total water abstracted Million m

23,135

(a)

23,354

(b)

Total water abstracted (exc. hydro generation) Million m

597 731

Freshwater abstracted (rivers and groundwater)

(exc. hydro generation)

Million m

4.5 2.2

Total water returned Million m

23,133

(a)

23,353

(b)

Total water consumed Million m

2.4

(a)

1.4

(b)

(a) This data is subject to external independent limited assurance by PricewaterhouseCoopers LLP (‘PwC’).

For the results of that assurance, see PwC’s assurance report and SSE’s GHG and Environmental Reporting Criteria

2024 on sse.com/sustainability

(b) This data is subject to external independent limited assurance by PricewaterhouseCoopers LLP (‘PwC’).

For the results of that assurance, see PwC’s assurance report and SSE’s GHG and Water Reporting Criteria 2023

on sse.com/sustainability

SSE has policies and processes in place,

and works closely with environmental

regulators, to ensure that it uses water in a

sustainable way in its operations. None of

SSE’s thermal or hydro generation assets

impact on water stressed areas, as defined

by the relevant environmental regulators

in the jurisdictions in which they operate.

In 2023/24, total water abstracted by SSE

slightly decreased to 23,135 million m

from 23,354 million m

the previous year.

The vast majority (97%) of water abstracted

in 2023/24 was used in SSE’s hydro

generation operations, and a similar volume

of water passed through the hydro plant

compared to the previous year. This water

is technically recorded as abstracted,

but it passes through turbines to

generate electricity and is returned to the

environment almost immediately, and

therefore has minimal environmental impact.

SSE’s total water abstracted excluding hydro

operations decreased by 18% between

2022/23 and 2023/24, mainly as a result

of a22% reduction in thermal generation

output. While water abstracted reduced,

water consumed increased by 71% over

the same period. This is due to a higher

proportion of generation output from

thermal power stations that use cooling

towers, which recirculate water. While these

power stations are more efficient and

abstract less water than plant that uses

once-through cooling systems, they

consume more water due to evaporative

losses as part of the cooling process.

SUSTAINABILITY – CONTINUED

48 SSE plc Annual Report 2024

Strategic Report

Managing air emissions

In 2023/24, emissions of nitrogen oxides

(NOx) and sulphur dioxide (SO

) both

reduced compared to the previous year, as

outlined in Table 6. This was predominantly

due to a reduction in thermal generation

output which resulted in a corresponding

fall in air emissions. Tarbert oil-fired power

station in Ireland ceased generation before

April 2023 contributing to a significant

reduction in SO

emissions of 67% in

2023/24 compared to 2022/23.

In previous years, SSE would disclose data

for particulate matter (PM10) and mercury

emissions from thermal generation plant,

above a de-minimum threshold of 10

tonnes and 1kg respectively. In 2023/24,

no plant produced emissions above those

thresholds, and therefore were considered

immaterial in terms of impact. More

information can be found in SSE’s

Sustainability Report 2024 available at

sse.com/sustainability

SSE’s energy consumption

Between 2022/23 and 2023/24, the energy

SSE purchased for use in its assets (offices,

depots, thermal power stations, gas storage

facilities, and data centres) slightly increased

by 1%. This increase was due to a reduction

in output from thermal generation plant

meaning SSE’s plant was generating less

energy for its own use, and therefore

required it to purchase more electricity from

the grid. Electricity consumption in SSE’s

gas storage assets remained relatively stable

at 72% of the total electricity used from

renewable sources.

Energy consumed in SSE’s offices,

depots and data centres increased by 15%

compared to 2022/23. This was due to

building occupancy rates increasing after

the COVID-19 pandemic.

In 2023/24, SSE purchased 100% of its

electricity for use in its directly managed

offices from renewable sources, backed by

Data and assurance

SSE takes an integrated approach

towards assurance utilising internal

audit and external assurance

providers to ensure accurate,

complete disclosures. Where data has

been externally and independently

assured, this has been noted in the

relevant tables. In all other areas, data

is identified and disclosed according

to SSE’s internal processes, guided by

environmental regulations where

appropriate.

renewable guarantees. In 2023/24, around

48% of the electricity that SSE purchased for

its assets (offices, depots, thermal power

stations, gas storage facilities, and data

centres) was from renewable sources,

down from around 52% the previous year.

SSE is a member of the Climate Group’s

EP100 initiative to encourage businesses to

double energy productivity associated with

office and depot buildings by 2030 from

a2011 baseline.

Embedding circular economy

principles

Over 2023/24, SSE diverted 97% of waste by

tonnage from landfill and recycled 67% of

waste by tonnage, exceeding the target it

set for 95% and 50% respectively. SSE’s

2024/25 performance target is to divert

95% of waste by tonnage from landfill and

recycle 55% of waste by tonnage. SSE will

continue to review its waste target to

ensurethat it remains stretching. For SSE’s

detailed waste data see the Sustainability

Report 2024 .

SSE is also working to embed circularity

principles into its operations to minimise its

environmental impact, enhance operational

efficiency, strengthen resilience to resource

shortages and create value for stakeholders.

Over 2023/24, SSE continued to collaborate

with stakeholders to create solutions for

industry-wide challenges and support

circular supply chains. An example of this

is SSE Renewables’ work with partners

through the Coalition for Wind Industry

Circularity (CWIC), which seeks to create

asupply chain for the refurbishment and

reuse of wind turbine components

withinthe UK.

Table 6: SSE’s air emissions from thermal generation assets

Unit 2023/24 2022/23

Sulphur dioxide (SO

) Tonnes 440 1,336

Nitrogen oxide (NOx) Tonnes 3,646 3,870

Table 7: SSE’s energy use data

Unit 2023/24 2022/23

Purchased heat from non-renewable sources –

UK/Ire

GWh 4.8/0.06 3.3/0.06

Purchased electricity from renewable sources –

UK/Ire

GWh 96.1/0.9 103.7/1.1

Purchased electricity from non-renewable sources

– UK/Ire

GWh 105.3/0 97.9/0

* This table, in combination with the carbon performance information in table 2 on page 106 , represents SSE’s

disclosures in line with the UK Government Streamlined Energy and Carbon Reporting requirements.

49SSE plc Annual Report 2024

Governance Financial Statements

50 SSE plc Annual Report 2024

Strategic Report

Review of the year

Energy market review 52

Chief Financial Officer’s review 54

Financial review 56

Segmental overview 68

Business Unit operating review

– SSEN Transmission 70

– SSEN Distribution 72

– SSE Renewables 74

– SSE Thermal 77

– Energy Customer Solutions 80

– SSE Enterprise 82

– SSE Energy Markets 83

Financial Statements

Governance

51SSE plc Annual Report 2024 51SSE plc Annual Report 2024

Energy market review

Opportunity and risks

in a shifting landscape

Societal expectations, policy direction and market sentiment – combined

withthe overarching issues posed by climate change – present both risks and

opportunities to SSE. Ultimately, these factors inform the strategic decisions we

make and provide the backdrop to the operational and financial performance

described in the review of the year that appears on the following pages.

A year of climate extremes

The climate emergency continued to

worsen in 2023, with the warmest year on

record creating more extreme weather

across the globe. For the first time, global

warming exceeded 1.5°C across an entire

calendar year and sea temperatures set heat

records for more than 365 days in a row due

to climate change and the cyclical El Nino

weather phenomenon that warms the

Pacific Ocean.

For SSE, this reinforces the importance of a

strategy to decarbonise, while continuing to

ensure it builds and maintains assets that

will withstand the changing weather patterns

we’re all experiencing. Deployment of

renewables and low-carbon technologies at

scale and speed is needed to combat further

worsening of the impacts of climate change.

2023’s weather events had an impact on

SSE’s generation fleet and output (see

page57

). Managing electricity network

resilience in the face of worsening weather

events is crucial (see page 35 ), while

diversifying the Group’s renewables assets

geographically to account for shifts in

weather patterns is a key part of its strategy.

Consensus on climate

Key global stakeholders continue to support

measures to combat climate change, with

broad consensus on the need for action

reflected in the deal reached at COP28.

While the agreement in Dubai could have

gone further on phasing out carbon, an

important step was made to “transition

away” from fossil fuels in energy systems.

The agreement included targets to triple

renewable capacity, and to accelerate the

development of low and zero emissions

technologies, like carbon capture

andstorage.

While a positive step forward, the

agreement is not a binding requirement and

is left to individual nations to implement.

But some constructive policy progress has

been made – for example, the European

Commission has now set out ambitious

climate targets for 2040.

Geopolitical volatility

There is ongoing geopolitical volatility from

Russia’s invasion of Ukraine and the crisis

inthe Middle East. However, last year

themarket reaction was less extreme due

tolower demand, the build-out of home-

grown infrastucture improving national

energy security and a refocusing on

domestic supply chains. This has prevented

further significant sectorshocks, leading to

reduced inflation globally, and economists

forecast falling interest rates from 2024.

In February, the US gas price reached a

30-year low, and power prices have hit

pre-pandemic levels in some places. While

both remain highly susceptible to weather

events and further geopolitical uncertainty

that could be exacerbated by the outcomes

of upcoming elections in leading

economies, there is a measure of

confidence in a global downward-trend

from a very high-cost environment.

Stretched supply chains

The energy sector has felt the impact of

supply chain issues in recent years, and this

has had an impact on renewables

construction – withsignificant impairments,

delays and cancellations announced across

the sector.

Cost increases and supply chain constraints

have particularly affected the offshore wind

sector, where costs have significantly

outstripped expectations, leading to some

projects no longer being viable under their

agreed terms. Across the US and the UK,

15GW of offshore wind projects were

cancelled or postponed in 2023.

The global supply chain has also been

slowto recover from the after-effects

ofCovid-19 as ithas struggled to meet

post-pandemic surges in demand. This has

led to supply chain capacity challenges

across the sector, alongside increases due

to rising commodity costs.

The renewables sector had shifted to a

focus on volume and price, rather than

value, whichhas resulted in an erosion of

returns and challenges in delivering

projects. Therehas since been a ‘resetting’

of the market and a more realistic cost-base

The component parts of one of the

turbines at Viking wind farm

365 days

of record sea temperatures in 2023

52 SSE plc Annual Report 2024

Strategic Report

environment, helping to ensure projects

generate returns that reflect the levels of

risk involved.

This shift in focus away from sheer volume

has suited SSE’s approach to capital

discipline, and its focus on value and

delivery. This will continue to be SSE’s

strategy, as it ensures it creates value for

society through deployment of vital assets,

in a way that fairly remunerates

shareholders for their risk and investment.

50%

2023 rise in global renewables capacity

The march of renewables

Even with the sector’s challenges, an

additional 50% of renewable capacity was

added globally in 2023, driven by China, but

with record growth rates also seen across

Europe and the US.

The IEA highlights that there is now at least

510GW of renewables being built across the

globe annualy, and this is expected to grow

to 7,300GW by 2028. Renewables are also

expected to overtake coal as the largest

source of electricity generation globally

by2025. However, further developments

are needed to hit the tripling of capacity

required by 2030 to meet the targets agreed

at COP28.

In the UK, the annual growth rate has

slowed, and now lags other countries. 2023

was also a particularly challenging year for

offshore wind with capacity auctions

attracting no offshore bids, and projects

cancelled or postponed. While there are

indications that the next auctions will attract

more participation due to better terms,

more needs to be done to ensure the

Government hits its 2030 targets.

The year of networks

Energy demand is expected to increase

two-fold or more by 2050 as different

sectors – including transport, heat and

industry – electrify. Meeting that demand is

estimated to require around US$21 trillion

ofinvestment worldwide.

Against this backdrop, 2023 was widely

recognised as ‘the year of networks’ with

numerous publications highlighting

theimportance of rapid build-out,

particularly in GB.

The release of theIndependent

recommendations by the UK’s Electricity

Networks Commissioner, Nick Winser,

highlighted the importance of accelerating

transmission infrastructure to enable more

low-carbon generation to be built.

This, and the wider acknowledgement by

government and regulators that electricity

networks are vital to net zero, has

beenwelcomed by SSE, and led to a

significant upweighting of capex plans.

US$21 trillion

Global investment needed in networks

Policy pinch-points

In the UK, the Conservative Government

rolled back on some of its key climate

change commitments in 2023 – delaying

the phase-out of petrol and diesel cars and

heatdecarbonisation commitments – but

continued to pursue a decarbonised power

system by 2035. Similarly, the Labour

Opposition scaled back its green spending

commitments, butheld firm on its target of

a decarbonised power sector by 2030.

While it is disappointing that targets have

been scaled back, the ambitions to

decarbonise remain, and SSE will continue

to work constructively with current and

future governments, advocating viable

market design for the deployment of

renewables, greater ambition on flexible

generation technologies and streamlined

planning andconsenting frameworks

fornetworks.

Focus on affordability

2023/24 was another challenging year for

households, with affordability continuing to

be a key concern. Energy costs remained

higher than pre-pandemic levels, although

other forms of inflation began to drop.

The Consumer Prices Index including

owner occupiers’ housing costs (CPIH) rose

by 4.2% in the 12 months to January 2024,

down from a recent peak of 9.6% in October

2022. Ofgem announced that the energy

price cap would drop by 12% from April 2024.

This, alongside the falling inflation rate,

should relieve pressure on consumers.

However, for SSE, affordability remains a key

priority regardless of the environment and it

remains focused on the underlying causes

of high costs, rather than the short-term

symptoms. Creating more low-carbon

generation that can be produced at lower

costs will cushion energy users from the

impact of market shocks and strengthen the

domestic economy and environment.

Energy market outlook

SSE has confidence in an improving policy

and investment environment for renewables

deployment and low-carbon thermal

development. At the same time, there is

momentum behind the UK’s build out of

transmission networks – a transformation

inwhich SSE has a role to play.

While there is likely to be a period of

instability globally in 2024’s “year of

elections”, there continues to be broad

international commitment to decarbonise

the energy sector as quickly as possible and

SSE stands ready to play its part while

creating lasting value for shareholders and

societies in the markets in which it operates.

There continues to be broad international

commitment to decarbonise the energy sector

as quickly as possible and SSE stands ready to

play its part while creating lasting value.”

The critical role of transmission and

distribution networks in the future

energy system is now clearer than ever

53SSE plc Annual Report 2024

Governance Financial Statements

A degree of uncertainty

and volatility is an

enduring feature of our

sector, but we have

shown in recent years

that SSE continues to

perform in a wide range

of different market

conditions.

Chief Financial Officer’s review

Powering

sustainable growth

To report such a strong performance in my

first Full-year Results as Chief Financial

Officer is gratifying, but perhaps not

particularly surprising given the strength of

our business and the clarity of our purpose.

We finished the year at the higher end of

our pre-close guidance thanks once again

to the value-generating nature of our

diversified business mix offsetting the

impact of market and adverse weather

conditions.

In 2023/24 that balanced business mix,

combined with efficient operational

delivery, provided earnings resilience and

balance sheet stability in market conditions

that were very different to the preceding

two years.

Adjusted operating profits in our regulated

networks businesses fell – mainly due to an

inflationary lag on regulated tariffs which

will be recovered in the coming year – while

our market-based businesses proved their

resilience by remaining broadly flat year-on-

year. Combined with other businesses and

corporate costs, this net result saw our

adjusted operating profit dip slightly. We

were pleased, however, to deliver adjusted

Earnings Per Share of 158.5p, which was at

the upper end of the guidance we provided

to the market at pre-close.

Business performance

The performance of our individual

businesses is described in detail in the

following pages, so I will only summarise

here. Increases in allowed revenues under

the RIIO-T2 price control and a positive

timing impact from tariffs saw SSEN

Transmission’s headline adjusted operating

profit increase. SSEN Distribution’s

operating profit was lower year-on-year due

to the timing of tariff setting mentioned

above, meaning allowed revenues did not

rise in line with inflation, a position that will

reverse in FY25.

For the energy businesses, profitability in

SSE Renewables reflected higher hedged

prices combined with lower requirement for

hedge buybacks, while higher year-on-year

output reflected Seagreen offshore wind

farm reaching full power. However, lower

wind speeds in Scotland, and the affect of a

number of named storms, resulted in lower

onshore wind volumes year-on-year.

We saw strong financial performance in SSE

Thermal with capacity from Triton Power

and Keadby 2 power stations offering

increased flexibility to the market alongside

strong capacity auction results for

futureyears.

Overall performance in 2023/24 was

attributable to everyone at SSE – from

senior management to the delivery teams

edging us closer to net zero with each

project milestone. And our financial

standing today is attributable in no small

part to the platform built by my

predecessor, Gregor Alexander, who served

as Finance Director for 21 years.

Exercising capital discipline

I came into the job of Chief Financial Officer

with a clear objective of building on that

platform and maintaining capital discipline

as we respond to the exciting mix of

opportunities and challenges that is coming

through as we transition to net zero.

Indoing so, we will work to a rigorous

investment criteria that places a premium

on value that we will not compromise in

pursuit of volume.

We have applied that discipline over the past

year while investing £2.5bn, around 90% of

which was directly focused on achieving

our 2030 Goals. Our five-year £20.5bn Net

Zero Acceleration Programme Plus capex

plan is focused on renewables, flexible

generation and electricity networks.

54 SSE plc Annual Report 2024

Strategic Report

Theseare the three pillars of the future

energy system, and they present a structural

growth opportunity that SSE is well-placed

to optimise.

The diversity of our portfolio enables us

toallocate capital to where the best

opportunities lie across the electricity value

chain. The combination of must-build

transmission projects and a renewables

development pipeline that promises

additional capacity volumes over the

coming months and years creates two

powerful sources of value for both

shareholders and society.

Balance sheet strength is key to this ability

to pivot investment to the high-quality,

long-term infrastructure that offers the best

long-term returns. Last year, adjusted net

debt increased to £9.4bn with 93% held at

fixed rates, providing stability and

predictability. This represents a Net Debt to

EBITDA ratio of only 3 times, well within our

strong investment grade ceiling of 4.5

times. We expect to be below this ceiling

looking out to 2027, meaning that the NZAP

Plus investment plan is comfortably funded

within existing means. All of this is reflected

in strong investment grade credit ratings.

Financial outlook

For 2024/25 we expect average operating

profits will fall in SSEN Transmission,

reflecting timing differences in cost

recovery, offset by SSEN Distribution which

is expected to benefit as tariffs catch up

with recent inflation, correcting the slight

lag in revenue.

We fully expect our renewables project

pipeline will come to fruition, creating value

from additional capacity volumes from a full

year of operation at Seagreen wind farm as

well as the commissioning of Viking

onshore wind farm during the year. We also

expect to see strong returns from Dogger

Bank wind farm, despite the short-term

delays described elsewhere in this report.

The ongoing impact of lower power prices

is likely to be felt by SSE Thermal and Gas

Storage, although it is worth noting that

thermal operating profits are expected to

remain above historical averages. This

outlook once again reflects a resilient

business mix that is capable of delivering in

a range of different market scenarios.

Five-year focus

Our primary focus, however, is on achieving

the targets we set ourselves for 2026/27

under the five-year NZAP Plus. We have full

confidence in our 175-200p EPS guidance

for 2027, based on the strength and

resilience of our earnings growth, given the

significant investment opportunities we are

seeing across networks and renewables.

In networks, we have already agreed Ofgem

capital programmes which will see SSE’s

annual capex spend more than triple from

where it is today, generating significant “fast

money” revenues upfront and RAV growth

over the longer-term. When combined with

a doubling of renewables output across the

plan – and the reduction in tax rate from

the extension of capital allowances – we

are confident these growth drivers will

offset any impact on our market-facing

businesses from the prevailing energy

commodity price environment and enable

us to create value from investment in much-

needed energy infrastructure.

Growth-enabling dividends

We are committed to remunerating

shareholders with a dividend plan that

givesus room to pursue the wealth of

opportunities that are arising from the

transition to net zero. In line with that

commitment, we are recommending a final

dividend of 60.0 pence per share and we

continue to target dividend growth of

between 5-10% per year over the final three

years of the NZAP Plus.

The following pages, which contain greater

detail on our performance in 2023/24, and

more on our outlook for the remainder of

the five-year plan, underline the success

SSE is having in powering sustainable

growth and provide further context for

theconfidence we have in our 2026/27

earnings forecast.

Barry O’Regan

Chief Financial Officer, SSE plc

21 May 2024

Delivering targeted EPS growth

Key financial metrics

(continuing operations)

Adjusted Reported

Mar 2024

£m

Mar 2023

£m

Mar 2024

£m

Mar 2023

£m

Operating profit/(loss)

2,426.4 2,529.2 2,608.2 (146.3)

Net Finance (costs)/income

(251.7) (345.6) (113.1) (59.3)

Profit/(loss) before tax

2,174.7 2,183.6 2,495.1 (205.6)

Current tax (charge)/credit

(371.0) (358.8) (610.7) 110.0

Effective current tax rate (%)

17.1 16.4 25.6 (12.7)

Profit/(loss) after tax

1,803.7 1,824.8 1,884.4 (95.6)

Less: hybrid equity coupon payments

(73.1) (38.8) (73.1) (38.8)

Less: profits attributable to non-

controlling interests – – (100.8) (23.6)

Profit/(loss) after tax attributable to

ordinary shareholders 1,730.6 1,786.0 1,710.5 (158.0)

Earnings/(loss) per share (pence)

158.5 166.0 156.7 (14.7)

Number of shares for basic/reported

and adjusted EPS (million) 1,091.8 1,075.6 1,091.8 1,075.6

Shares in issue at 31 March (million)

1,093.4 1,090.3 1,093.4 1,090.3

1 Excluded discontinued operation relates to the disposal of the Gas Production business which contributed

£nil to Reported profit for the year ended 31 March 2024 (2023: £35.0m profit).

2 Excludes Treasury shares of 2.8m in March 2024 and 3.6m in March 2023.

Dividend Per Share (pence)

March 2024 March 2023

Interim dividend

20.0 29.0

Final dividend

40.0 67.7

Full Year dividend 60.0 96.7

94.8p

20%

35%

45%

Networks Renewables Flexibility

13-16%

CAGR

FY27FY24FY22

158.5p

~35%

~30%

200-175p

~15%

~45%

~40%

55SSE plc Annual Report 2024

Governance Financial Statements

FINANCIAL REVIEW – CONTINUED

Group financial

review

Year ended 31 March 2024

This Group Financial Review sets out the

financial performance of the SSE Group for

the year ended 31 March 2024. See also the

separate sections on Group Financial

Outlook, 2024/25 and beyond, and

Supplemental Financial Information.

In order to present the financial results and

performance of the Group in a consistent

and meaningful way, SSE applies a number

of adjusted accounting measures

throughout this financial report. These

adjusted measures are used for internal

management reporting purposes and are

believed to present the underlying

performance of the Group in the most

useful manner for shareholders and

otherstakeholders.

The SSE Renewables and SSE Business

Energy comparative results have been

restated to reflect the transfer of

responsibility for the Solar and Battery

business to SSE Renewables and Building

Energy Management Systems to SSE

Business Energy. These businesses both

transferred from SSE Enterprise, where

comparative results are also restated.

The definitions SSE uses for adjusted

measures are consistently applied and

areexplained – including a detailed

reconciliation to reported measures –

intheAlternative Performance Measures

section of this document before the

Financial Statements.

As announced alongside the NZAP Plus

capital investment plan, and following

completion of the Group’s previous

commitments to dividend growth, the

2023/24 dividend was rebased to 60.0

pence per share to support SSE’s ongoing

ambitions to accelerate investment in the

assets required to reach net zero.

Operating profit performance for the Year to 31 March 2024

Operating profit

Adjusted and reported operating profits/

losses in SSE’s business segments for the

year to 31 March 2024 are set out below;

comparisons are with the same period to

31March 2023 unless otherwise stated.

SSEN Transmission: Adjusted operating

profit increased by 13% to £419.3m from

£372.7m in the prior year. 25% of this

business was divested on 30 November

2022 and the prior year comparative

therefore includes 100% of the operating

profit for the business for the first eight

months of the year and 75% thereafter,

whilst the current year includes 75% of the

operating profit for the full year. If the prior

year comparative was normalised for this

basis difference of £(68.6)m, adjusted

operating profit would have increased

by38%.

SSEN Transmission saw a significant

increase in allowed revenues during the

year, reflecting both the increased portfolio

of works under the RIIO-T2 price control

aswell as inflation uplifts in line with the

regulatory framework, together with a

positive timing variance following under-

recovery of revenues in the previous year.

These were partially offset by increases in

operating costs as the business continues

togrow its operational capabilities and

depreciation as the asset base expands.

Reported operating profit increased by

38%to £559.1m compared to £405.5m,

reflecting all of the movements above

except for the non-controlling interest basis

difference, as non-controlling interests are

fully consolidated for all profit metrics

underIFRS.

SSEN Distribution: Adjusted and reported

operating profit decreased by 29% to

£272.1m compared to £382.4m in the

prioryear.

The price control allowed revenue for

2023/24 is based on tariffs which were set

in December 2021 and therefore over this

period do not reflect the inflationary

increases to the operating cost base since

that date, which will be recovered in the

2024/25 financial year. As a result, the

decrease in operating profit during the year

principally reflects the increase in the

operating cost base due to inflation

alongside higher network costs due to

maintenance volumes. The operating result

also includes around £18m of additional

Business-by-business segmental

(continuing operations)

Adjusted Reported

Mar 2024

£m

Mar 2023

£m

Mar 2024

£m

Mar 2023

£m

Operating profit/(loss)

SSEN Transmission 419.3 372.7 559.1 405.5

SSEN Distribution 272.1 382.4 272.1 382.4

Electricity networks total 691.4 755.1 831.2 787.9

SSE Renewables 833.1 561.8 630.3 428.1

SSE Thermal 736.1 1,031.9 644.4 1,089.5

Gas Storage 82.8 212.5 (42.2) 249.2

Thermal Total 818.9 1,244.4 602.2 1,338.7

SSE Business Energy 95.8 15.7 95.8 15.7

SSE Airtricity (NI and Ire) 95.0 5.6 94.5 5.2

Energy Customer Solutions Total 190.8 21.3 190.3 20.9

SSE Energy Markets (formerly EPM) 38.9 80.4 590.0 (2,626.0)

SSE Enterprise (formerly Distributed

Energy) (25.6) (7.0) (25.6) (13.1)

Neos Networks (32.3) (39.8) (116.1) (56.0)

Corporate unallocated (88.8) (87.0) (94.1) (26.8)

Total operating profit/(loss) 2,426.4 2,529.2 2,608.2 (146.3)

Net finance (costs)/income (251.7) (345.6) (113.1) (59.3)

Profit/(loss) before tax 2,174.7 2,183.6 2,495.1 (205.6)

Notes: 2022/23 segmental numbers above restated to reflect movement of Solar and Battery business to SSE

Renewables and Building Energy Management Systems to SSE Business Energy, both previously reported under

SSE Enterprise. Excluded discontinued operation relates to the disposal of the Gas Production business which

contributed £nil to Reported profit for the year ended 31 March 2024 (2023: £35.0m profit).

Segmental EBITDA results are included in Note 5 to the Financial Statements.

56 SSE plc Annual Report 2024

Strategic Report

fault and repair costs as the business

reacted to a year with ten named storms as

well as additional depreciation charges as

the asset base expands under RIIO-ED2.

SSE Renewables: Adjusted operating profit

increased by 48% to £833.1m from £561.8m

in the prior year. The increase in profitability

was largely driven by the growth in revenues

during the year due to a combination of the

higher power price environment combined

with additional operating capacity which

more than offset the lower wind speed

environment in Scotland. Renewables

forward hedged prices at the start of the

year were between 35 – 40% higher than

the previous year, reflecting forward

hedging activity in a higher price

environment. The increase in operational

capacity as Seagreen offshore wind farm

reached full commercial operations during

October 2023, combined with the prior year

reflecting a £(143)m one-off buy-back costs

relating to Seagreen volumes hedged but

not delivered, further improved the

year-on-year result. However, this was

partially offset by 4% lower wind speeds in

Scotland which, when combined with the

impact of ten named storms, meant

onshore wind volumes were c.6% down

year-on-year. Finally, at the operating cost

level, the cessation of Balancing Services

Use of System (BSUoS) charges as part of

the network charging reform was offset by

an increase in staff costs driven by inflation

and increased headcount due to organic

growth of the business.

Reported operating profit increased by 47%

from £428.1m to £630.3m. In addition to

the factors above, this is reflective of an

increase in the share of Joint venture

interest and tax of £(42.7)m and a £(37.4)m

remeasurement on SSE’s affiliate CfD

arrangements which are classified as

derivative contracts.

SSE Thermal: Adjusted operating profit

decreased by 29% to £736.1m, compared to

£1,031.9m in the prior year. This decrease is

largely driven by the lower spark spread and

lower volatility market environment, as

energy commodity prices normalise down

during the second half of the year from the

peaks reached in 2022/23. This decrease

was partially offset by a full year of financial

contribution from 893MW Keadby 2 which

entered full operations in March 2023 and

therefore contributed to overall gross

margin improvements.

Reported operating profit decreased by

41%to £644.4m, compared to £1,089.5m

inthe prior year which included a net gain

of£128.0m from a number of exceptional

items and remeasurements. Lower forward

power prices has meant the current year

result includes a £(15.4)m net

remeasurement on Triton Power operating

derivatives reflecting lower levels of

in-the-money hedges compared to prior

year. The power price environment also

meant a £(63.2)m impairment was

recognised on the Triton Power investment,

as the previous years have seen strong

realised cashflows from the asset. The

reported result also reflects SSE’s share of

Joint Venture Interest and Tax expenditure

decreasing from £(60.4)m in the prior year

to £(13.1)m in the current year.

Gas Storage: 61% to £82.8m, compared to

£212.5m of profit in the prior year. The prior

year result reflected a more volatile gas

market as well as an inversion of the typical

spread between higher-priced winter gas

and lower-priced summer gas due to low

Russian gas supplies and high demand as

gas stores were built up. Whilst the year saw

increased volumetric trading, this was offset

by less overall volatility in the gas market

and lower gas prices which therefore

decreased trading profits.

Reported operating loss decreased 117% to

£(42.2)m from a profit in the prior year of

£249.2m. In addition to the movements

above, the prior year included an

impairment reversal of £45.7m compared to

an impairment charge in the current year of

£(134.1)m, reversing prior write-backs and

reflecting a lower point-in-time estimate of

future gas prices and lower volatility

assumptions. In addition, the reported

results include a £9.1m revaluation gain on

gas held in storage, compared to a £(9.0)m

loss in the prior year.

SSE Business Energy: Adjusted and reported

profitability increased to £95.8m in the year

compared to £15.7m in the prior year. The

business has seen a challenging three years

of profits below expectations due firstly to

the global pandemic and then followed

byaperiod of extreme commodity price

volatility which affected consumer demand.

The current year has seen the business

return to a higher level of profitability,

reflecting the well-established competitive

pricing and hedging controls. However, it

still remains a challenging environment for

consumers and customer-facing businesses

with bad debt expenses increasing by £5m

on the prior year. During the year, the

business established a £15m customer

support fund for small businesses, voluntary

and charitable organisations. The business

has also seen an increase in its operating

cost base during the year reflecting the

implementation of a new customer

management system called Evolve.

SSE Airtricity: Adjusted profitability

increased to £95.0m from £5.6m in the

prior year. This was aided by an increase in

income from wind farms contracted to SSE

Airtricity which rose from £28m in the prior

year to £74m in the current year. The prior

year saw Airtricity respond to the

challenging circumstances faced by its

domestic energy customers during the year

by committing to not make a profit through

tariff delays, price freezes for vulnerable

customers and a €25m customer fund.

Residual profits from the previous financial

year of £5.6m were also redistributed in

April 2023 via customer credits Supporting

customers continued to be the main focus

during the current year, with two tariff

reductions implemented and continuation

of financial supports for vulnerable

customers. Increased consumer demand

combined with reduced commodity price

volatility has meant supply margins have

returned towards more normalised

levelsthis year.

Reported operating profit increased to

£94.5m compared to £5.2m in the prior

year reflecting a £(0.1)m change in the share

of interest and tax from Joint Ventures, in

addition to the movements above.

SSE Energy Markets (formerly Energy

Portfolio Management): Adjusted operating

profit has decreased to £38.9m from a

£80.4m profit in the prior year. Energy

Markets continues to generate a relatively

low level of baseline operating earnings

through service provision to those SSE

businesses requiring access to the Energy

Markets. In addition, the business is

permitted to take optimisation opportunities

whilst managing liquidity and shape on

external trades, but these optimisation

opportunities are subject to strict internal

VAR limits and controls. The business also

looks to add value through contracting for

third party PPA and route to market

contracts and significant value is also

generated from the optimisation of green

certificates such as ROCs and REGOs.

Thedecrease in year-on-year profitability is

mainly due to a lower level of volatility and

price of power and gas trades in the market,

which has driven lower profits from

trading,optimisation activities and wind

PPAcontracts.

Reported operating profit increased to

£590.0m from £(2,626.0)m in the prior year.

In addition to the movements above, the

reported operating result includes the net

remeasurement gain on forward

commodity derivatives in the year relative to

loss on the same remeasurement in the

prior year. In line with previous years, these

IFRS 9 remeasurements exclude any

remeasurement of ‘own use’ contracts and

are unrelated to underlying operating

performance.

SSE Enterprise (formerly Distributed

Energy): An adjusted operating loss of

£(25.6)m was recognised, compared to a

loss of £(7)m in the prior year. The business

continues to incur planned losses as it

invests to support business growth in

localised and flexible, smart energy

infrastructure.

Reported operating losses increased to

£(25.6)m from £(13.1)m, with the prior year

reflecting an exceptional charge of £(6.1)m

which mainly related to provisions in

connection with the sale of the Contracting

and Rail business in June 2021.

57SSE plc Annual Report 2024

Governance Financial Statements

FINANCIAL REVIEW – CONTINUED

Neos Networks: SSE’s remaining 50% share

in the Telecoms business Neos Networks

Limited recorded an adjusted operating loss

of £(32.3)m compared to £(39.8)m in the

prior year, reflecting planned losses incurred

to support future business growth, and a

reported operating loss of £(116.1)m

compared to a loss of £(56.0)m in the

prioryear.

The reported result in the current year

includes an exceptional impairment of

£(73.6m), reflecting the wide range of

reasonably probable valuations for

thisbusiness.

Corporate Unallocated: Adjusted operating

loss of £(88.8)m compares against a loss of

£(87.0)m in the prior year. The result reflects

lower revenue recovered from disposed

businesses following the cessation of

transitional service contracts established as

part of the strategic disposal programme

completed in 2022, which have been offset

by gains on disposal of £9m, and the

unwind of liabilities associated with financial

and performance guarantees.

Reported operating losses rose from

£(26.8)m in the prior year to £(94.1)m, with

the prior year benefiting from a £50.5m

positive revaluation adjustment on legacy

Gas Production decommissioning

provisions relative to a £(9.9)m downward

adjustment to the same provision in the

current year. This is partially offset by an

exceptional credit of £4.6m relating to the

reacquisition of Enerveo Limited – the

Contracting and Rail business that was

previously sold by SSE in June 2021. SSE is

currently conducting a review to develop

and then implement a longer-term strategy

for each part of the Enerveo business.

Further details of the transaction are

contained in the Financial Statements.

Adoption of IFRS 17

“Insurance Contracts”

On 1 April 2023, the Group adopted IFRS 17

‘Insurance Contracts’ on a modified

retrospective basis from the earliest

periodpresented.

The Group provides guarantees in respect

of certain activities of former subsidiaries

and to certain current joint venture

investments. Prior to adoption of IFRS 17,

these contracts were designated as

insurance contracts under IFRS 4 ‘Insurance

Contracts’ (‘IFRS 4’). Under IFRS 4, existing

accounting practices were grandfathered

and the contracts were treated as

contingent liabilities until such time as it

became probable the Group would be

required to make payment to settle the

obligation. The adoption of IFRS 17 from

1April 2022 resulted in a reassessment of

these contracts and the Group elected to

apply the valuation principles of IFRS 9 to

these contracts. Adoption resulted in the

recognition of financial guarantee liabilities

of £54.9m; a £22.7m increase in equity

investments in joint ventures and associates;

and a £32.2m adjustment to retained

earnings. On 1 September 2022, the Group

acquired a 50% joint venture investment in

Triton Power Holdings Limited (‘Triton’) and

provided parent company guarantees to

Saltend Cogeneration Company Limited, a

subsidiary of Triton. In the comparative year

to 31 March 2023, the Group has therefore

recognised a further £16.0m increase to the

Group’s financial guarantee liabilities to

reflect this guarantee and a £16.0m increase

to the Group’s equity investment in Triton.

During the current year to 31 March 2024,

the Group recognised a net decrease in

financial guarantee liabilities of £31.4m, a

reduction in the value of its joint venture

investments of £6.9m and a settlement of

£12.0m resulting in a net income statement

credit of £12.5m, of which £5.1m has been

treated as exceptional. The reduction in the

year is primarily due to the expiration of

guarantees provided to joint ventures.

Adjusted Earnings Per Share

To monitor its financial performance

overthe medium term, SSE reports on its

adjusted earnings per share measure.

Thismeasure is calculated by excluding the

charge for deferred tax, interest on net

pension liabilities, exceptional items,

depreciation on fair value adjustments,

revaluation adjustments to the retained 60%

Gas Production decommissioning

obligation, results attributable to non-

controlling interest holders and the impact

of certain remeasurements.

SSE’s adjusted EPS measure provides an

important and meaningful measure of

underlying financial performance. In

adjusting for these items, adjusted EPS

reflects SSE’s internal performance

management, avoids the volatility

associated with mark-to-market IFRS 9

remeasurements and means that items

deemed to be exceptional due to their

nature and scale do not distort the

presentation of SSE’s underlying results.

Formore detail on these please refer to the

Adjusted Performance Measures section

ofthis statement.

In the twelve months ended 31 March 2024,

SSE’s adjusted earnings per share was

158.5p. This compares to 166.0p for the

previous year and reflects the movements

inadjusted operating profit outlined in the

section above in addition to lower year-on-

year net finance costs which were largely

offset by higher taxation charges and

coupon payments on hybrid bonds as set

out in the Supplemental Financial

Information section below.

Financial outlook –

2024/25 and beyond

Financial outlook for 2024/25

SSE continues to focus on delivering

long-term sustainable financial performance

through implementation of its five-year

NZAP Plus capex plan. And whilst energy

prices have normalised from the highs seen

over the last 24 months, SSE remains

confident that its balanced business mix will

continue to deliver strong and sustainable

operating profit over the coming years.

In line with historical practice, and consistent

with the approach taken before the period of

extreme market volatility seen over the last

couple of years, SSE is not providing full

earnings guidance for 2024/25 at this stage of

the financial year reflecting the inherent

seasonality within its business. However, the

Group has set out the following expectations

for the forthcoming year:

– SSEN Transmission – It is expected that

operating profit will be lower than the

prior year as the taxation benefit from

“full expensing” for qualifying capital

expenditure is passed through to

consumers through reduced tariffs. This

is accompanied by an increase in the

operational cost base as the business

prepares to deliver over £20bn of capital

investment in LOTI and ASTI projects

over the rest of the decade.

– SSEN Distribution – It is anticipated that

operating profit will be significantly

higher than the prior year outturn, with

the expected inflationary catch-up in

tariffs expected to more than double

operating profit.

– SSE Renewables – The c.30% increase in

hedged prices during the year combined

with additional volumes from key capital

projects such as Seagreen (full year

impact), Viking (operations expected in

summer 2024) and Dogger Bank A

(phased towards the end of the year)

means that operating profits are

expected to increase significantly

year-on-year.

– SSE Thermal and Gas Storage – It is now

expected that operating profit will be

significantly lower than the prior year

outturn, reflecting the continued

normalisation of energy commodity

prices seen in current forward price

curves. However operating profit is

expected to be higher than historical

averages, and even with a low-case

volatility scenario which limits the

amount of extrinsic value the operating

plant can capture, more than £200m.

– Energy Customer Solutions – It is

expected that the stabilisation in customer

margins seen through 2023/24 will

continue into the 2024/25 financial year.

These expectations are subject to normal

weather conditions, current market

conditions and plant availability.

58 SSE plc Annual Report 2024

Strategic Report

Following this increase, SSE anticipates the

investment will be focused on:

– SSEN Transmission (~37% or ~£7.5bn)

tocontinue to comprise the majority of

expected investment in regulated

electricity networks. With the RIIO-T2

baseline investment programme

continuing at pace, there is ever increasing

visibility over incremental investment

across three Large Onshore Transmission

Investment (‘LOTI’) projects that have

received approval of need from Ofgem,

inaddition to the early construction costs

required for the eight Accelerated

Strategic Transmission Investment (‘ASTI’)

framework projects. These eleven

projects – which are currently estimated

to require a gross nominal investment of

c.£20bn to deliver by 2030 – continue to

progress and are expected to drive gross

RAV for this business to at least £10bn by

the end of 2026/27.

– SSEN Distribution (~17% or ~£3.5bn)

remains on track to deliver its £3.6bn

RIIO-ED2 investment programme. This

baseline investment – alongside growth

opportunities from Uncertainty

Mechanisms which are already being

secured – is expected to increase gross

RAV to between £6 – 7bn by the end

of2026/27.

– SSE Renewables (~34% or ~£7bn) is

continuing to deliver on its ambitious

construction programme, with critical

milestones achieved in the year such as

full power from Seagreen offshore wind

farm and first power from Dogger Bank

offshore wind farm. Whilst the target to

reach around 9GW of installed capacity

by 2026/27 remains, the business

continues to focus on financial discipline

and selective renewables growth only

where it is value accretive. With that

focus, the allocation of capital continues

to move across a diverse mix of

renewable technologies such as battery

storage projects where almost 700MW

of capacity is currently in operation or

under construction.

– SSE Thermal and other businesses

(~12% or ~£2.5bn) comprise the

remaining expected investment, with SSE

Thermal’s pipeline of lower-carbon

generation projects – such as

sustainable biofuels, carbon capture and

ultimately hydrogen – continuing to

make progress over the last 12 months.

With around 90% of the upweighted

investment plan expected to be invested in

electricity networks and renewables, the

substantial majority is focused on climate

solutions to achieve SSE’s 2030 Goals which

are linked to its most highly-material UN

Sustainable Development Goals (SDGs) and

aligned to the Technical Screening Criteria

of the EU Taxonomy.

Fully-funded investment plan, with

continued strong balance sheet

SSE has demonstrated its ability to realise

value from disposals, create sustainable

earnings growth and raise capital at highly

attractive terms. In the current period,

£1.1bn of long-term debt was issued at

attractive, fixed coupons.

The Group’s business mix, capital

investment and funding plans are designed

to ensure that it retains an investment grade

credit rating which provides capacity to

reach a 4.5x net debt/EBITDA ratio.

And the financial strength of the Group and

continued earnings growth means that it

expects to still be within or below the target

range of 3.5 – 4.0x net debt/EBITDA over

the course of the plan to 2026/27.

Maintaining disciplined

investment andreturns

SSE maintains its focus on allocating capital

based on clear internal investment criteria

intended to maximise investment returns

whilst ensuring delivery of its strategy.

Against the backdrop of a changing

macroeconomic environment, SSE remains

fully committed to its disciplined approach

of focusing investment on high-quality

assets where its capabilities can deliver

favourable risk-adjusted project returns,

namely continuing to target:

– Solar: returns between 50-300 bps over

WACC for unlevered projects, depending

on the balance of merchant, technology

and construction risk for each project;

– Onshore wind: returns between

100-300 bps over WACC for unlevered

projects, also depending on the balance

of merchant, technology and

construction risk for each project;

– Offshore wind: more than 11% equity

returns (excluding developer profits but

including seabed lease fees) for project

financed developments;

Following the rebase of the dividend to 60p

for 2023/24, the 2024/25 financial year is

expected to see the dividend increase by

between 5 – 10%, in line with a

commitment to aligning future dividends

with SSE’s ambitious growth profile.

Capital expenditure and investment in

2024/25 is expected to significantly increase

to over £3bn, reflecting a ramping up of

project delivery during the year, with the net

debt to EBITDA ratio expected to be

towards the lower end of the 3.5 – 4.0x

targeted range.

Net Zero Acceleration

Programme Plus

Since releasing SSE’s original Net Zero

Acceleration Programme – or NZAP – in

November 2021, energy market and wider

economic disruption has amplified the

shareholder and societal benefit that comes

from a balanced energy business with a

strategic focus aligned with the transition

tonet zero.

In an operating environment impacted by

geopolitical conflict, abnormal

meteorological patterns and economic

volatility, SSE’s purpose to provide energy

needed today while building a better world

of energy for tomorrow continues to enjoy

broad political and societal consensus.

The progress made in delivery of a strategy

that creates value for shareholders and

society in a sustainable way by developing,

building, operating and investing in the

electricity infrastructure and businesses

needed in the transition to net zero,

coupled with growing momentum behind

the global green transition, saw SSE

upgrade the targets, ambitions and

investment mix twice in the 24 months

since the original NZAP was released.

NZAP Plus – an upweighted £20.5bn

FiveYear Investment Programme

SSE’s strategy is built on the knowledge that

the three pillars of networks, renewables

and flexibility will be the foundations of the

future energy system. The optionality and

balance of the Group’s business mix means

that investment will pivot across the value

chain, reacting to visibility of growth

opportunities as well as relative

attractiveness of returns. As ever, this

optionality will be exercised in line with

SSE’s commitment to rigorous capital

discipline.

The update to the NZAP presented in May

2023 reflected the strong progress made in

delivering the original investment plan,

whilst recognising the impact from a

changing macroeconomic environment.

And, in November 2023, the Group

announced a further revision to increase

itsinvestment programme as a result of

theincreased visibility over the scale of

investment opportunities available to

SSENTransmission.

This increase, which will now see the Group invest around £20.5bn over the five years to

2026/27, has the effect of upweighting the proportion of regulated electricity networks

spend as outlined below:

Investment Plan (5 years) NZAP (Nov 2021) NZAP+ (May 2023) NZAP+ Nov 23 update

Total adjusted investment ~£12.5bn ~£18.0bn ~£20.5bn

– Electricity networks ~40% ~50% ~55%

– Market based ~60% ~50% ~45%

59SSE plc Annual Report 2024

Governance Financial Statements

FINANCIAL REVIEW – CONTINUED

– Networks: between 7 – 9% return on

equity assuming a level of

outperformance, CPIH inflation of 2% p.a.

and an average gearing ratio of 60%; and

– Emerging technologies (principally

Batteries, CCS and Hydrogen): between

300-500 bps over WACC for unlevered

projects, reflecting the expected

increased operating and technology risk

from newer, first-of-a-kind technologies.

These investment criteria – and targeted

returns – continue to be applied in both

domestic and overseas markets.

Updating segmental earnings

guidance to 2026/27

The enhanced NZAP Plus capex plan was

first announced in a period of extreme

market volatility which saw individual

businesses such as SSE Thermal and Gas

Storage successfully navigate rapidly

changing market condition. Whilst the

market has begun to normalise, the strength

and resilience of our balanced mix of

businesses means we continue to have

confidence in the long term earnings

growth for the Group.

Taking into account the current forward

price curves as well as progress made on

key capital projects, we therefore set out

the following updated expectations for

segmental earnings to 2026/27:

– SSEN Transmission – The upweighting

of investment towards Networks is also

expected to upweight the adjusted

operating profits (net of 25% Non-

Controlling Interest) to more than

£500m per annum on average across

the five-year plan. The profile of earnings

growth is expected to largely follow the

profile of increased capital expenditure

as the business receives an upfront

revenue benefit through the regulatory

mechanism.

– SSEN Distribution – In line with previous

expectations, and reflecting the

predictability of the regulatory

businesses, we continue to expect to

deliver expected adjusted operating

profits of around £450m per annum on

average across the five-year plan.

– SSE Renewables – Reflecting a lower

baseload power price assumption for

2026/27 of c.£65/MWh, this business is

now forecast to deliver a ~19% adjusted

profit CAGR across the five-year plan,

subject to weather and plant availability.

– SSE Thermal and Gas Storage –

Following the continued normalisation of

energy commodity prices seen in current

forward price curves, it is now expected

that the existing efficient, flexible thermal

fleet will deliver adjusted operating

profits of around £400m on average for

the four financial years to 2026/27.

Theprofile of earnings are expected to

significantly rise towards the end of the

plan, reflecting the upweighted revenue

from contracted and index linked

Capacity Market payments which are

expected to increase by ~2.5x from

2024/25 to 2026/27.

– Energy Customer Solutions – Following

an extended period of challenging

conditions with a global pandemic

followed by the extreme commodity

price volatility, the stabilisation in

margins seen during 2023/24 for the

SSEBusiness Energy and SSE Airtricity

businesses are expected to continue

throughout the medium term.

Reaffirming expected earnings

growth and dividend plan

Taking account of the Group’s latest view of

renewables and networks project delivery

out to 2026/27, in addition to the

normalisation of market prices seen over

the course of the last few months, SSE

continues to have confidence in reaching

its175 – 200p adjusted earnings per share

guidance range for 2026/27. The increased

visibility over investment through regulatory

approvals for network upgrades, the

progress made on the 2.8GW of renewable

projects under construction and the

extension of “full expensing” capital

allowances

more than offset the current

normalisation of market prices.

This view assumes a ~£65/MWh nominal

baseload power price for renewable output

in 2026/27; no assumed developer profits

on project sell-downs; normal weather and

plant availability; a ~4.5% average cost of

debt across the plan which in turn assumes

a 5.5% coupon on new debt issuance; and

a~12% average effective tax rate across the

five-year plan.

Reflecting the SSE plc Boards’ confidence in

delivering this future earnings growth, the

commitment to target dividend increases of

between 5 to 10% per year across 2024/25,

2025/26 and 2026/27 – following the

rebase to 60 pence per share in 2023/24 –

remains unaffected. This plan retains the

scrip dividend option for shareholders, with

the cap on take-up still set at 25% and

implemented (if necessary) by means of

ashare buy-back.

Supplemental financial information

Adjusted Investment and Capex Summary

Mar 2024

Share %

Mar 2024

£m

Mar 2023

£m

SSEN Transmission (excluding 25% MI

from 1 Dec 2022) 24% 595.6 495.5

SSEN Distribution 21% 505.1 421.0

Regulated networks total 45% 1,100.7 916.5

SSE Renewables 45% 1,097. 1 911.5

SSE Thermal 4% 99.6 153.2

Gas Storage – 0.8 6.3

Thermal Energy Total 4% 100.4 159.5

Energy Customer Solutions 2% 58.5 49.8

SSE Energy Markets (formerly Energy Portfolio

Management) – 8.6 4.7

SSE Enterprise (formerly Distributed Energy) 2% 51.0 50.3

Corporate unallocated 2% 60.4 68.3

Adjusted investment and capital expenditure 100% 2,476.7 2,160.6

Acquisitions – 642.7

Adjusted investment, capital and acquisitions

expenditure 2,476.7 2,803.3

Note: 2022/23 segmental numbers above restated to reflect movement of Solar and Battery business to

SSERenewables and Building Energy Management Systems to SSE Business Energy, both previously reported

under SSE Enterprise

1 On 22 November 2023, as part of the 2023 Autumn Statement, the UK Government announced they would make

permanent their first year “full expensing” capital allowances regime. This regime, which was previously set to expire

on 1 April 2026, means that companies are able to claim a 100% allowance for short-life assets (less than 25 years)

and a 50% allowance for long-life assets (more than 25 years). Within SSE’s Electricity Transmission and Distribution

businesses, the regulatory agreements mean that any reduction in tax payable from full expensing will be passed

through to consumers through lower regulated revenues with no net earnings impact for SSE. However, SSE’s

unregulated businesses will benefit from this permanent change in tax relief, as capital allowances on new

investment will be received quicker than under the previous regime.

SSE’S capital expenditure

programme

During the 12 months to 31 March 2024,

SSE’s adjusted investment, capital and

acquisitions expenditure totalled £2,476.7m,

compared to £2,803.3m in the same period

last year. The reduction is driven largely by

prior period acquisition expenditure relating

to the purchase of the Southern European

onshore wind development platform, and

60 SSE plc Annual Report 2024

Strategic Report

the acquisition of Triton Power Holdings,

inseparate transactions which both

completed on 1September 2022.

Investment in the reporting period was driven

mainly by SSE’s renewables and electricity

networks divisions, with limited deployment

of capital in thermal and other businesses,

and no acquisitions expenditure.

In SSEN Transmission, £595.6m net capex

was delivered, including £102m on the final

stages of the Shetland connection with

offshore works now complete and the

project in the final commissioning phase.

The East Coast Upgrade to 400kv also

progressed well with a further £117m

invested during the period, which sees

thefirst of three phases complete and

successfully energised. A further £41m was

also invested as part of the Eastern Green

Link 2 and 3 preliminary works.

The first year of SSEN Distribution’s

RIIO-ED2 saw capex increase by 20% to

£505.1m, with a continued focus on

network resilience and future proofing for

the expected consumer-led uptake in

low-carbon technology. £210m of this was

delivered in the North in a wide variety of

projects with £53m of this invested in

subsea cables, including the Pentland Firth

East cable which energised during the

period. Inthe South, £295m of capex was

delivered during the period across a broad

range of projects, with significant

investment in Bramley Thatcham and Iver

Reinforcement.

SSE Renewables invested a total of £1,097.1m

during the period, including £219m on Viking

onshore wind farm on Shetland, where all

turbines have now been installed and

commercial operations are expected in

Summer 2024. In Ireland, £90m of capex was

delivered on the construction of the 101MW

Yellow River wind farm, which is targeting

commissioning in early 2025. In the North

Sea, Seagreen offshore wind farm reached

commercial operations in October 2023 and

£86m equity was drawn down to fund the

final stages of construction. £158m of

combined equity and shareholder loans were

drawn to fund construction works which are

underway at Dogger Bank A, which has

previously been funded by non-recourse

project financing in the Joint Venture.

In SSE Thermal, investment totalled £100.4m

in the period, £30m of which was incurred on

Slough Multifuel station, a joint venture with

CIP, which achieved first fire in March 2024.

SSE’s hedging position

at31March 2024

SSE has an established approach to hedging

through which it generally seeks to reduce

its broad exposure to commodity price

variation at least 12 months in advance of

delivery. SSE continues to monitor market

developments and conditions and alters its

hedging approach in response to changes

in its exposure profile.

A summary of the hedging position for

eachof SSE’s market-based businesses is

setout below.

SSE Renewables – GB wind and hydro:

Energy output hedges are progressively

established through the forward sale of

either:

– Electricity – where market depth and

liquidity allows;

– Gas and carbon equivalents –

recognising that spark spread exposures

remain; or

– Gas equivalents only – recognising that

carbon and spark spread exposures

remain.

This approach was developed in response

to lower levels of available forward market

depth and liquidity for certain energy

products. Whilst some basis risk or

commodity exposure will remain under this

approach, it does facilitate the reduction of

SSE Renewables’ overall exposure to

potentially volatile spot market outcomes.

For transparency, the table above notes

both the proportion of hedges and prices of

those hedges for electricity and equivalents

(i.e. where gas and carbon equivalents have

been hedged) and for gas alone (i.e. where

the carbon leg has been unable to be

hedged).

The table excludes additional volumes and

income for Balancing Mechanism activity,

ROCs, ancillary services, capacity

mechanism and shape variations and

optimisations. It also excludes volumes

and income relating to Irish wind output,

pumped storage and CfDs.

The hedged volumes include SSE’s equity

share of forecast pre-CFD volumes from

Seagreen offshore wind farm and Viking

onshore wind farm. No volumes have been

included for Dogger Bank offshore wind

farm as hedging for this asset has not yet

commenced.

For renewable energy output, SSE’s

established approach seeks to minimise the

volumetric downside risk by targeting a

hedge of less than 100% of its anticipated

wind energy output for the coming 12

months. The targeted hedge percentage is

reviewed and adjusted as necessary to reflect

any changes in market and wind capture

insights. The last such revision occurred in

September 2023, setting a baseline target

hedge of around 80% of the anticipated

energy output from wind and hydro for the

coming twelve months from that date.

Energy output hedges for both wind and

hydro are progressively established over the

36 months prior to delivery (although the

extent of hedging activity for future periods

also depends on the level of available

market depth and liquidity).

Target hedge levels are achieved through

the forward sale of either electricity or a

combination of gas or carbon equivalents

as outlined above. When gas-and-carbon

hedges are converted into electricity

hedges a “spark spread” is realised which

can lead to changes in the average hedge

price expected. This can increase the

previously published average hedge price or

decrease it. Likewise, when gas hedges are

subsequently converted into electricity

hedges ahead of delivery, a carbon-and-

spark spread value is realised which will

alsolead to changes in the average hedge

price expected.

2023/24 2024/25 2025/26 2026/27

Wind

Total energy output volumes

hedged– TWh 5.5 6.4 5.2 1.5

– Hedge in electricity & equivalents

– TWh 5.5 4.1 2.0 0.7

– Electricity hedge price – £MWh £75 £91 £93 £80

– Hedge in Gas – TWh – 2.3 3.2 0.8

– Gas hedge price – £MWh – £122 £77 £56

Hydro

Total energy output volumes

hedged– TWh 3.0 2.9 1.9 0.6

– Hedge in electricity & equivalents

– TWh 3.0 1.8 0.6 0.2

– Electricity hedge price – £MWh £86 £96 £90 £74

– Hedge in Gas – TWh – 1.1 1.3 0.4

– Gas hedge price – £MWh – £120 £82 £56

Note: where gas and carbon trades have been used as a proxy for electricity, a constant 1 MWh:69.444 th and

1MWh:0.3815 te/MWh conversion ratio between commodities has been applied. These same ratios have been

used to convert underlying commodity prices into electricity £MWh and therefore no assumptions have been

made on either spark or carbon.

61SSE plc Annual Report 2024

Governance Financial Statements

FINANCIAL REVIEW – CONTINUED

GB Thermal: In the 6 months prior to

delivery, SSE aims to hedge all of the

expected economic output of its CCGT

assets, having progressively established this

hedge over the 18 months prior to delivery.

This hedging approach is adjusted to take

into account any changes in exposures as a

result of current market conditions, such as

the plant availability exposure, counterparty

credit risk, and changes to cost of capital

forcollateral.

Hedging activity also depends on the

availability of sufficient market depth and

liquidity, which can be limited, particularly

for periods further into the future.

Gas Storage: The assets are being

commercially operated to optimise value

arising from changes in the spread between

summer and winter prices, market volatility

and plant availability.

At 31 March 2024, 40mTh of gas inventory

was physically held which represents c.21%

of SSE’s share of gross capacity (at 31 March

2023, 126mTh of gas inventory representing

c.65% of SSE’s share of gross capacity).

SSE Business Energy: The business supplies

electricity and gas to business and public

sector customers. Sales to contract

customers are hedged: at point of sale for

fixed contract customers; upon instruction

for flexi contract customers; and on a

rolling hedge basis for tariff customers.

Given the pricing and macro-economic

context, SSE Business Energy is dynamically

monitoring nearer term consumption

actuals for early signs of demand variability

and adjusting future volumes hedged

accordingly.

SSE Energy Markets: This business provides

the route to market and manages the

execution for all of SSE’s commodity trading

outlined above (spark spread, power, gas,

oiland carbon). This includes monitoring

market conditions and liquidity and

reporting net Group exposures. The

business operates under strict position

limits and VAR controls.

There is some scope for position-taking to

permit this business to manage around

shape and liquidity whilst taking

optimisation opportunities. This has been

contained within a total daily VAR limit of

£5m, which will be increased to £9m from

1April 2024 to reflect growing optimisation

opportunities as the SSE portfolio expands.

Ireland: Vertical integration of the

generation and customer businesses in

Ireland limits the Group’s commodity

exposure in that market.

Summarising movements on exceptional

items and certain remeasurements

Exceptional items

In the year ended 31 March 2024, SSE recognised a net exceptional charge within

continuing operations of £(266.0)m before tax. The following table provides a summary

ofthe key components making up the net charge:

Exceptional credits/(charges) within continuing operations

Total

£m

Triton Power impairment (63.2)

Gas Storage impairment (134.1)

Neos Networks impairment (73.6)

Enerveo reacquisition (previously SSE Contracting) 4.6

Other 0.3

Total exceptional charge (266.0)

Note: The definition of exceptional items can be found in Note 3.2 of the Financial Statements.

For a full description of exceptional items, see Note 7 of the Financial Statements.

Certain remeasurements

In the year ended 31 March 2024, SSE recognised a favourable net remeasurement within

continuing operations of £513.5m before tax. The following table provides a summary of

the key components making up the favourable movement:

Certain remeasurements within continuing operations

Total

£m

Operating derivatives (including share from jointly controlled entities

netof tax)

498.3

Commodity stocks held at fair value 9.1

Financing derivatives 6.1

Total net favourable remeasurement 513.5

Operating derivatives

SSE enters into forward purchase contracts

(for power, gas and other commodities) to

meet the future demands of its energy

supply businesses and to optimise the value

of its generation assets. Some of these

contracts are determined to be derivative

financial instruments under IFRS 9 and as

such are required to be recorded at their

fairvalue as at the date of the financial

statements.

SSE shows the change in the fair value of

these forward contracts separately as this

mark-to-market movement does not reflect

the realised operating performance of the

businesses. The underlying value of these

contracts is recognised as the relevant

commodity is delivered, which for the large

majority of the position at 31 March 2024 is

expected to be within the next 6 – 18

months.

The change in the operating derivative

mark-to-market valuation was a £498.3m

positive movement from the start of the

year, reflecting a £452.2m positive

movement on fully consolidated operating

derivatives combined with a £46.1m share

of positive movement on derivatives in

jointly controlled entities (net of tax) driven

by commodity contract revaluations.

The positive movement of £452.2m on fully

consolidated operating derivatives includes:

– Settlement during the year of £1,025.3m

of previously net “out-of-the-money”

contracts in line with the contracted

delivery periods; and

– An adverse net mark-to-market

remeasurement of £(573.1)m on

unsettled contracts including affiliate

CfDs, largely entered into during the

course of 2022/23 and 2023/24 and in

line with the Group’s stated approach

tohedging. This mark-to-market

remeasurement – which compares to a

£(2,980.2)m adverse movement in the

prior period – reflects the reduced

volatility seen in commodity markets

during the year.

As in prior years, the reported result does

not include remeasurement of ‘own use’

hedging agreements which do not meet the

definition of a derivative financial instrument

under IFRS 9 “Financial Instruments”.

62 SSE plc Annual Report 2024

Strategic Report

Commodity stocks held at fair value

Gas inventory purchased by the Gas Storage

business for secondary trading opportunities

is held at fair value with reference to the

forward month market price. The £9.1m

favourable movement in the year reflects

the combination of a higher forward market

price at the period end when compared to

the actual weighted average cost of gas

stored at that time and the decrease in the

amount of gas physically held.

However, whilst this movement reflects the

net change in fair value of physical gas

inventory held at the period end, it does not

take into account any positive or negative

mark-to-market movement on forward

contracted sales. Therefore, similar to

derivative contracts held at fair value,

SSEdoes not expect that this valuation

movement will reflect the final result

realised by the business.

Financing derivatives

In addition to the movements above, a

positive movement of £6.1m was recognised

on financing derivatives in the year ended

31March 2024, including mark-to-market

movements on cross-currency swaps and

floating rate swaps that are classed as

hedges under IAS 39. These hedges ensure

that any movement in the value of net debt

is predominately offset by a movement in

the derivative position. The recognised gain

reflects a slight increase in the UK long term

interest rates which means that the net “out

of the money” position on these hedges has

reduced slightly during the year.

These remeasurements are presented

separately as they do not represent

underlying business performance in the

year. The result on financing derivatives will

be recognised in adjusted profit before tax

when the derivatives are settled.

Reported profit before tax

andearnings per share

Taking all of the above into account, reported

results for the twelve months to 31March

2024 are significantly higher than the

previous year. In addition to the £513.5m

net gain on forward commodity, gas

inventory and financing derivative fair value

remeasurements and the £(266.0)m net

pre-tax exceptional charge noted above –

reported results also include, primarily,

£26.2m of interest income on the net pension

asset; £134.4m share of profits attributable to

non-controlling interests; a£(9.9)m

adjustment to legacy gas production

decommissioning provisions; £(19.0)m

depreciation on fair value uplifts; and a £(74.1)

m share of joint venture interest and tax.

Reported results in the prior period reflected

pre-tax certain re-measurement losses of

£(2,351.9)m mainly driven by the significant

volatility in commodity markets in the prior

period, as well as pre-tax exceptional items

of £(0.4)m reflecting various offsetting

impairments, asset write-ups and a gain on

sale, and £16.2m net interest income on the

net pension asset.

Financial management and balance sheet

Debt metrics

Mar 2024

£m

Sep 2023

£m

Mar 2023

£m

Net Debt/EBITDA

3.0x N/A 2.7x

Adjusted net debt and hybrid capital (£m) (9,435.7) (8,943.8) (8,894.1)

Average debt maturity (years) 6.4 5.9 6.4

Adjusted interest cover 8.9x 3.9x 7.6x

Average cost of debt at period end (including all

hybrid coupon payments) 3.90% 4.02% 3.92%

* Note: Net debt represents the group adjusted net debt and hybrid capital. EBITDA represents the full year

group adjusted EBITDA, less £179.6m at March 2024 (March 2023: £146.9m) for the proportion of adjusted

EBITDA from equity-accounted Joint Ventures relating to project financed debt.

Net finance costs reconciliation

Mar 2024

£m

Mar 2023

£m

Adjusted net finance costs 251.7 345.6

Add/(less):

Lease interest charges (25.8) (29.4)

Notional interest arising on discounted provisions (25.2) (22.1)

Hybrid equity coupon payment 73.1 38.8

Adjusted finance costs for interest cover

calculation 273.8 332.9

Principal Sources of debt funding

Mar 2024

£m

Sep 2023

£m

Mar 2023

£m

Bonds 58% 54% 54%

Hybrid debt and equity securities 18% 18% 18%

European investment bank loans 5% 5% 5%

US private placement 8% 8% 10%

Short-term funding 8% 11% 9%

Index –linked debt 3% 4% 4%

% of which has been secured at a fixed rate 93% 91% 92%

Rating Agency Rating Criteria Date of Issue

Moody’s

Baa1 ‘stable outlook’

‘Low teens’ Retained

Cash Flow/Net Debt 19 December 2023

Standard

andPoor’s BBB+ ‘outlook positive’

About 18% Funds From

Operations/Net Debt 5 September 2023

Maintaining a strong

balance sheet

A key objective of SSE’s long-term approach

to balancing capital investment, debt

issuance and securing value and proceeds

from disposals is by maintaining a strong

net debt/EBITDA ratio. SSE calculates this

ratio based on a methodology that it

believes best reflects its activities and

commercial structure, in particular its

strategy to secure value from partnering

byusing Joint Ventures and non-recourse

project financing.

SSE considers it has the capacity to reach

aratio of up to around 4.5x, comparable

with private sector utilities across Europe,

whilst remaining above the equivalent

ratiosrequired for an investment grade

credit rating.

Given the strength of the Group’s Balance

Sheet, the current net debt/EBITDA ratio is

well below this threshold at 3.0x. However it

is expected that this ratio will trend upwards

to around, 4.0x as the Group delivers on its

£20.5bn investment plan to 31 March 2027.

63SSE plc Annual Report 2024

Governance Financial Statements

FINANCIAL REVIEW – CONTINUED

SSE’s Standard and Poor’s credit rating was

re-affirmed in September 2023 at BBB+

with ‘outlook positive’ and its Moody’s rating

was reaffirmed in December 2023 at Baa1

with ‘stable outlook’.

Adjusted net debt and

hybridcapital

SSEs adjusted net debt and hybrid capital

was £9.4bn at 31 March 2024, an increase of

£0.5bn from 31 March 2023. With no

significant acquisitions or divestments in the

period, the debt movement relates to

capital investment expenditure and

revaluation of currency debt as well as

various working capital movements being

offset by operating cash flows less dividend

payments.

Debt summary as at

31March2024

The Group issued £1.1bn of new long-term

debt in the financial year whilst also

continuing to roll Commercial Paper at a

broadly similar level as 31 March 2023:

Further details on each hybrid bond can be found in Note 22

to the Financial Statements and a table noting the amounts, timing and

accounting treatment of coupon payments is shown below:

Hybrid coupon payments

2024/25 2023/24

HYe FYe HYa FYa

Total equity (cash) accounted £73m £73m £73m £73m

Total debt (accrual) accounted – – – –

Total hybrid coupon £73m £73m £73m £73m

bonds – were (£251.7m) in the year ended

31March 2024, compared to (£345.6m) in

theprevious year. The lower level of finance

costs in the year is driven by lower swap

interest arising from higher short term

interest rates on fixed rate swaps, the impact

of lower inflation on index linked debt, and

higher capitalised interest costs reflecting

increasing construction activity. These were

partially offset by a higher share of JV costs,

predominantly due to Seagreen becoming

fully operational during the year.

Reported net finance costs were (£113.1m)

compared to (£59.3m) in the previous

period. Higher interest charges incurred in

Joint Ventures combined with a £195.8m

decrease in beneficial movement on

financing derivatives as previously

referenced more than offset the reduction

seen in adjusted net finance costs.

Summarising cash and

cash equivalents

At 31 March 2024, SSE’s adjusted net debt

included cash and cash equivalents of

£1.0bn, which is slightly higher than the

£0.9bn at March 2023.

The cash collateral balance at 31 March 2024

was a net liability of £353.2m, consisting of a

liability of £362.5m and an asset of £9.3m

(2023: £nil liability and £316.3m asset). This

reflects the lower levels of initial margin

required for commodity contracts traded on

exchanges following a reduction in risk

factors and the Group replacing cash

collateral with £100m of letters of credit.

SSE’s July 2020 and April 2022 hybrid bonds

are perpetual instruments and are therefore

accounted for as part of equity within the

Financial Statements but, consistent with

previous years, have been included within

SSE’s ‘Adjusted net debt and hybrid capital’

to aid comparability.

The coupon payments relating to the equity

accounted hybrid bonds are presented as

distributions to other equity holders and are

reflected within adjusted earnings per share

when paid.

Managing net finance costs

SSE’s adjusted net finance costs – which

included interest on debt accounted hybrid

bonds but not equity accounted hybrid

– In September 2023, SSE plc issued an

eight-year €750m green bond at a fixed

coupon of 4.0% with an all-in cost of

funding rate of just above 4% once fees

have been included. The bond was left in

Euros as a net investment hedge for the

Group’s Euro denominated subsidiaries.

– In January 2024, Scottish Hydro Electric

Transmission plc issued a 20 year £500m

green bond at a fixed coupon of 5.5%

with an all-in funding cost of 5.575%

once fees have been included.

– Over the course of the year, SSE plc

rolled maturing short-term debt which

takes the total outstanding Commercial

Paper at 31 March 2024 to €990m

(£852m

). Commercial Paper has been

issued in Euros and swapped back to

Sterling at an average cost of debt of

5.75% and matures between April 2024

and May 2024.

In the year ended 31 March 2024, £0.7bn of

medium-to-long-term debt has matured

comprising £155m of US Private Placements

which matured in April 2023 and September

2023, €700m (£514m) of Eurobonds which

matured in September 2023 and £50m of

European Investment Bank fixed rate loans

which matured in September 2023.

Over the next financial year, there is a

further £0.2bn of medium-to-long-term

debt maturing being the £204m US Private

Placement maturing in April 2024. As noted

above, €990m (£852m) of short-term debt

in the form of Commercial Paper is also due

to mature in the first half of 2024/25,

however the current intention is to roll this

maturing short-term debt forward

throughout the 2024/25 financial year.

Hybrid bonds summary

as at 31March 2024

Hybrid bonds are a valuable part of SSE’s

capital structure, helping to diversify SSE’s

investor base and most importantly to

support credit rating ratios, as their 50%

equity treatment by the rating agencies is

positive for SSE’s credit metrics.

A summary of SSE’s hybrid bonds as at

31March 2024 can be found below:

Issued Hybrid Bond Value

All in rate

First Call Date Accounting Treatment

July 2020 £600m 3.74% Apr 2026 Equity accounted

July 2020 €500m (£453m) 3.68% July 2027 Equity accounted

April 2022 €1bn (£831m) 4.00% Apr 2028 Equity accounted

1 Sterling equivalents shown reflect the fixed exchange rate on date of receipt of proceeds and is not subsequently revalued.

2 All in rate reflects coupon on bonds plus any cost of swap into sterling which currently only applies to July2020 Hybrid.

1 Commercial Paper issued has a face value of €990m (£852m) and a fair value of £840m as at 31 March 2024.

64 SSE plc Annual Report 2024

Strategic Report

Additionally, variation margin positions for

March 2024 have moved to being ‘in the

money’ due to lower commodity prices

versus the ‘out the money’ positions

experienced in the prior year.

Cash collateral is only required for forward

commodity contracts traded through

commodity exchanges and comprises an

‘initial margin’ element based on the size

and period of the trade and a ‘variation

margin’ element which will change from

day to day depending on the fair value of

that trade each day. The level of cash

In November 2022, SSEN Transmission

entered a three-year £750m facility,

including two one-year optional extensions

with the first year’s option exercised in

September 2023. A £250m facility on the

same terms has been entered into by SSEN

Distribution. These facilities support the

ongoing capital expenditure investment

programmes that are required to deliver

their ambitious future growth plans and will

be drawn on as required.

The £1bn facility signed in February 2023

(and subsequently extended for a further

year in February 2024) was executed to

cover potential cash collateral balances

required to cover commodity positions on

exchanges or via credit support annexes on

bilateral contracts.

The facilities can also be utilised to cover

short-term funding requirements –

however they remain undrawn for most of

the year and were undrawn as at 31 March

2024 (2023: £100m drawn on the £750m

SHET plc facility).

The two SSE plc facilities totalling £1.5bn

that mature in 2026 are classified as

sustainable facilities with interest rate and

fees paid dependant on SSE’s performance

in environmental, social and governance

matters, as assessed independently by

Moody’s ESG Solutions. The £750m

Transmission facility is also classified as a

sustainable facility with interest rate and

fees paid dependant on four ESG-related

KPI’s being achieved.

In addition to the above, a $300m private

placement shelf facility exists with NY Life

which can be drawn in approximately two

equal tranches 12 months apart over the

next three years. At 31 March 2024, no

drawings have been made on this facility.

The Group also has access to a £15m

overdraft facility.

Maintaining a prudent

treasury policy

SSE’s treasury policy is designed to be

prudent and flexible. In line with that, cash

from operations is first used to finance

regulatory and maintenance capital

expenditure and then dividend payments,

with investment and capital expenditure for

growth generally financed by a combination

of cash from operations, bank borrowings

and bond issuance.

As a matter of policy, a minimum of 50% of

SSE’s debt is subject to fixed rates of

interest. Within this policy framework, SSE

borrows as required on different interest

bases, with financial instruments being used

to achieve the desired out-turn interest rate

profile. At 31 March 2024, 93% of SSE’s

borrowings were at fixed rates (2023: 91%).

Borrowings are mainly in Sterling and Euros

to reflect the underlying currency

denomination of assets and cash flows

within SSE. All other foreign currency

borrowings are swapped back into either

Sterling or Euros.

Transactional foreign exchange risk arises in

respect of procurement contracts, fuel and

carbon purchasing, commodity hedging

and energy portfolio management

operations, and long-term service

agreements for plant.

SSE’s policy is to hedge any material

transactional foreign exchange risks using

forward currency purchases and/or financial

instruments. Translational foreign exchange

risk arises in respect of overseas

investments; hedging in respect of such

exposures is determined as appropriate to

the circumstances on a case-by-case basis.

Ensuring a strong debt structure

through medium- and long-term

borrowings

The ability to raise funds at competitive

rates is fundamental to investment. SSE’s

fundraising over the past five years,

including senior bonds, hybrid capital and

term loans, now totals £5.8bn and SSE’s

objective is to maintain a reasonable range

of debt maturities.

A key objective of the Group’s NZAP Plus

five-year investment plan is to strike the

right balance between capital investment,

long-term debt issuance and securing value

through disposals, all whilst maintaining a

strong net debt/EBITDA ratio. Whilst this

investment will naturally require a level of

incremental debt issuance – in addition to

refinancing of existing debt – the Group

considers the plan to be fully-funded given

expected continued access to debt markets

and with SSE retaining a strong investment

grade credit rating.

At 31 March 2024, the average debt

maturity, excluding hybrid securities, at

31March 2024 was 6.4 years, consistent

with the position at 31 March 2023. This

position reflects the £1.1bn of new

long-term debt issued in the last year, which

has been offset by maturing long term debt.

SSE’s average cost of debt is now 3.90%,

compared to 3.92% at 31 March 2023. The

small decrease relates to higher swap

income on fixed rate swaps due to higher

floating rates in the period.

Going concern

The Directors consider that the Group

hasadequate resources to continue in

operational existence for the period to

31December 2025. The financial

statements are therefore prepared on

agoing concern basis.

Date Issuer Debt type Term Value

March 19 SSE plc Syndicated Revolving Credit Facility with 10 Relationship Banks 2026 £1.3bn

October 19 SSE plc Revolving Credit Facility with Bank of China 2026 £200m

November 22 SHET plc Syndicated Revolving Credit Facility with 11 Relationship Banks 2026 £750m

November 22 SHEPD plc and SEPD plc Syndicated Revolving Credit Facility with 11 Relationship Banks 2026 £250m

February 23 SSE plc Syndicated Revolving Credit Facility with 10 Relationship Banks 2025 £1.0bn

collateral either provided or received

therefore depends on the volume of trading

through the exchanges, the periods being

traded and the associated price volatility. As

collateral is only required on a portion of

trades, the movement in collateral provided

or received will not correlate to the IFRS 9

fair value movement recognised, which also

only covers a portion of the total Group

trading activity. The decrease in cash

collateral reflects the lower forward power

and gas price environment, alongside

reduced-price volatility in those markets.

Revolving Credit Facility/

short-term funding

SSE has £3.5bn of committed bank facilities

in place to ensure the Group has sufficient

liquidity to allow day-to-day operations and

investment programmes to continue in the

event of disruption to Capital Markets

preventing SSE from issuing new debt for a

period of time. These facilities are set out in

the table below.

65SSE plc Annual Report 2024

Governance Financial Statements

FINANCIAL REVIEW – CONTINUED

In reaching their conclusion, the Directors

regularly review the Group’s funding

structure (see note 21 of the Financial

Statements ) against the current economic

climate to ensure that the Group has the

short- and long-term funding required. The

Group has performed detailed going

concern testing, including the consideration

of cash flow forecasts under stressed

scenarios for the period to December 2025.

The Group has an established €1.5bn Euro

commercial paper programme (paper can

be issued in a range of currencies and

swapped into Sterling) and as at 31 March

2024 there was £840m commercial paper

outstanding. In the year ended 31 March

2024, the Group has issued new long-term

debt instruments totalling £2.0bn and has

redeemed £0.7bn of maturing medium-

long-term debt. The Group also continues

to have access to its £3.5bn of revolving

credit facilities. As at 31 March 2024 there

were no drawings against these committed

facilities. The details of the five committed

facilities at 31 March 2024 are:

– a £1.3bn revolving credit facility for SSE

plc maturing March 2026;

– a £0.2bn bilateral facility for SSE plc

maturing October 2026;

– a £0.75bn facility for Scottish Hydro

Electric Transmission plc maturing

November 2026;

– a £0.25bn facility for Scottish Hydro

Electric Power Distribution plc and

Southern Electric Power Distribution plc

maturing November 2026; and

– a £1.0bn committed facility for SSE plc

maturing February 2025.

The £1.3bn revolving credit facility and

£0.2bn bilateral facility are both in place to

provide back-up to the commercial paper

programme and support the Group’s capital

expenditure plans. The Transmission and

Distribution related facilities, both of which

have a further one year extension option at

the borrower’s discretion, were entered into

to help cover the capital expenditure and

working capital of those businesses. The

one year extension option on the £1bn

committed facility for SSE plc was exercised

in February 2024, and was entered into to

provide cover for potential cash collateral

requirements if periods of extreme volatility

return to the commodity markets. There

were no drawings against these facilities at

31 March 2024 compared to £100m drawn

on the £750m Transmission facility at

31March 2023.

Operating a Scrip

DividendScheme

SSE’s Scrip Dividend Scheme was last

renewed for a three-year period at the 2021

AGM and will be proposed for renewal for

afurther three-year period at the 2024

AGM. As part of the Group’s dividend plan

to 2026/27, it is intended that take-up from

the Scrip Dividend Scheme will be capped

at 25%. This cap would be implemented by

means of a share repurchase programme,

or ‘buyback’, in October each year following

payment of the final dividend. The scale of

any share repurchase program would be

determined by shareholder subscription to

Scrip Dividend Scheme across the full year,

taking into account the interim and final

dividend elections.

Following approval of the dividend at the

Annual General Meeting on 20 July 2023,

and receipt of the final dividend scrip

elections on 24 August 2023, the overall

scrip dividend take-up for the 2022/23

financial year was less than the 25%

threshold and therefore no buy-back to

limit scrip dilution was required.

SSE believes limiting the dilutive effect of

the Scrip in this way strikes the right balance

in terms of giving shareholders choice,

potentially securing cash dividend payment

savings and managing the number of

additional shares issued.

SSE principal JVs and associates

Asset type SSE holding SSE share of external debt SSE Shareholder loans

Marchwood Power Ltd 920MW CCGT 50% No external debt £12m

Seabank Power Ltd 1,234MW CCGT 50% No external debt No loans outstanding

SSE Slough Multifuel Ltd 50MW energy-from-waste facility 50% No external debt £158m

Triton Power Holdings Ltd 1,200MW CCGT & 140MW OCGT 50% No external debt No loans outstanding

Beatrice Offshore Windfarm Ltd 588MW offshore wind farm 40% £623m Project financed

Dogger Bank A Wind Farm 1,200MW offshore wind farm 40% £928m £88m

Dogger Bank B Wind Farm 1,200MW offshore wind farm 40% £785m Project financed

Dogger Bank C Wind Farm 1,200MW offshore wind farm 40% £619m Project financed

Ossian Offshore Windfarm Ltd ScotWind seabed 40% No external debt No loans outstanding

Seagreen Wind Energy Ltd 1,075MW offshore wind farm 49% £661m £995m

Seagreen 1a Ltd Offshore wind farm extension 49% No external debt £22m

Lenalea Wind Energy Ltd 30MW onshore wind farm 50% No external debt £14m

Clyde Windfarm (Scotland) Ltd 522MW onshore wind farm 50.1% No external debt £127m

Dunmaglass Windfarm Ltd 94MW onshore windfarm 50.1% No external debt £47m

Stronelairg Windfarm Ltd 228MW onshore wind farm 50.1% No external debt £89m

Cloosh Valley Wind Farm 105MW onshore wind farm 25% No external debt £25m

Neos Networks Ltd Private telecoms network 50% No external debt £58m

Notes:

1 Greater Gabbard, a 504MW offshore windfarm, is proportionally consolidated and reported as a Joint Operation with no loans outstanding.

2 For accounting purposes, £309m of the £995m of SSE shareholder loans advanced to Seagreen Wind Energy Limited have been classified as equity.

SSE’S principal joint ventures and associates

SSE’s financial results include contributions from equity interests in joint ventures (“JVs”) and associates, all of which are equity accounted.

The details of the most significant of these are included in the table below. This table also highlights SSE’s share of off-balance sheet debt

associated with its equity interests in JVs which totals around £3.6bn as at 31 March 2024.

66 SSE plc Annual Report 2024

Strategic Report

Taxation

SSE is one of the UK’s biggest taxpayers, and

in the 2023 PwC Total Tax Contribution

survey published in December 2023 was

ranked 17th out of the 100 Group of

Companies in 2023 in terms of taxes borne

(those which represent a cost to the

company, and which are reflected in its

financial results).

SSE considers being a responsible taxpayer to

be a core element of its social contract with

the societies in which it operates and seeks to

pay the right amount of tax on its profits, in

the right place, at the right time. While SSE

has an obligation to its shareholders,

customers and other stakeholders to

efficiently manage its total tax liability, it does

not seek to use the tax system in a way it

does not consider it was meant to operate or

use tax havens to reduce its tax liabilities.

Under its social contract SSE has an

obligation to the society in which it operates,

and from which it benefits – for example, tax

receipts are vital for the public services SSE

relies upon. Therefore, SSE’s tax policy is to

operate within both the letter and spirit of the

law at all times.

SSE was the first FTSE 100 company to be Fair

Tax Mark accredited and has now been

accredited for ten years. The group’s overseas

expansion presented the opportunity to

move to Fair Tax Foundation’s Global

Multinational Business Standard

Accreditation, which was launched in late

2021. SSE was the first company to transition

from the UK headquartered accreditation to

the global accreditation in 2022.

In November 2023, SSE published its ‘Talking

Tax 2023: tax matters for net zero’ report. It

did this because it believes building trust with

stakeholders on issues relating to tax is

important to the long-term sustainability of

the business. SSE won PwC’s Building Public

Trust Award for Tax Reporting in the FTSE 350

for the second consecutive year for the

quality of its tax reporting.

In the year to 31 March 2024, SSE paid

£679.2m of profit taxes, property taxes,

environmental taxes, and employment taxes

in the UK, compared with £501.7m in the

previous year. The increase in total taxes paid

in 2023/24 compared with the previous year

was primarily due to higher levels of

corporation tax being paid on UK profits,

together with higher employment taxes and

property taxes due to the expansion of the

Group’s activities.

In the year to 31 March 2024 SSE also paid

€68.0m of taxes in Ireland, compared to

€53.8m the previous year, due to increased

profits in SSE’s Irish businesses and a general

increase in business activities. Ireland is the

only country outside the UK in which SSE

currently has significant trading operations

– activities elsewhere are still at an early

stageand are not yet paying material

amounts of tax.

As with other key financial indicators, SSE’s

focus is on adjusted profit before tax and, in

line with that, SSE believes that the adjusted

current tax charge on that profit is the tax

measure that best reflects underlying

performance. SSE’s adjusted current tax rate,

based on adjusted profit before tax, was

17.1%, compared with 16.4% in 2022/23 on

the same basis. The increase in rate is

primarily as a result of the increase in UK

corporation tax rate from 19% to 25% from

1April 2023, partly mitigated by increased

capital allowances as noted below.

On 23 March 2023, the Group’s case

concerning the availability of capital

allowances on Glendoe Hydro Electric

Station was heard at the Supreme Court. On

17 May 2023, the Supreme Court released its

decision, which rejected HMRC’s appeal in

full. The matter is now concluded and is not

subject to further appeal.

The adoption during the period of the

“Deferred Tax related to Assets and Liabilities

arising from a Single Transaction”

amendment to IAS 12 “Income Taxes”

resulted in an increase of £50.1m (2023:

£45.5m) to the Group’s gross deferred tax

assets and gross deferred tax liabilities

recognised in relation to the Group’s

decommissioning obligations and a

reclassification between deferred tax

categories of £79.5m. Adoption had no

impact on retained earnings or profits

recognised in presented periods.

The UK Spring Budget in March 2023

introduced “full expensing” for qualifying

capital expenditure incurred during the

period from 1 April 2023 to 31 March 2026,

that measure then being made permanent in

the November 2023 Autumn Statement.

Capital allowances rates of 100% and 50%

replace the existing rates of 18% and 6%

respectively for qualifying capital expenditure,

significantly increasing the amount of capital

allowances available on SSE’s capital

investment programme.

The UK has now introduced legislation in

respect of Multinational Top-up Tax in line

with OECD BEPS pillar 2 principles. The

Group has applied the exemption from

recognising and disclosing information about

deferred tax assets and liabilities related to

Pillar Two income taxes as required by the

amendments to IAS 12 – International Tax

Reform—Pillar Two Model Rules, which were

issued in May 2023.The legislation will come

into force for the year ended 31 March 2025.

Similar draft legislation has been introduced

in the Republic of Ireland and other EU

jurisdictions. The Group has undertaken

modelling and does not expect a material

impact to arise as tax rates, including deferred

tax, in the countries in which the Group

operates are expected to exceed 15%.

Pensions

Contributing to employees’ pension schemes – IAS 19

March 24

£m

March 23

£m

Net pension scheme asset recognised in the balance sheet before deferred tax £m 421.6 541.1

Employer cash contributions Scottish Hydro Electric scheme £m 1.0 1.0

Employer cash contributions Southern Electric scheme £m 27. 1 52.1

Deficit repair contribution included above £m 16.3 38.0

In the year to 31 March 2024, the surplus

across SSE’s two pension schemes

decreased by £119.5m, from £541.1m to

£421.6m, primarily due to actuarial losses

of£155.2m, offset partially by contributions

to the schemes.

The valuation of the SSE Southern scheme

decreased by £92.2m in 2023/2024 primarily

due to actuarial losses of £118.1m driven by

losses on plan assets, offset partially by

contributions to the scheme of £27.1m.

The decrease in contributions in the year is

driven by the new schedule of contributions

agreed by the Group following finalisation of

the scheme’s most recent triennial valuation.

The Scottish Hydro Electric Pension

scheme has partially insured against

volatility in its deferred and pensioner

members through the purchase of ‘buy-in’

contracts meaning that the Group only

retains exposure to volatility in active

employees. During the year the scheme’s

surplus decreased by £27.3m. This decrease

was also mainly driven by actuarial losses

relating to losses on plan assets.

Additional information on employee

pension schemes can be found in note 23

to the Financial Statements.

67SSE plc Annual Report 2024

Governance Financial Statements

SSE Renewables

Who SSE Renewables serves

Electricity customers across GB,

Ireland and selected overseas markets

who are increasingly seeking

lower-carbon sources of energy.

How it supports SSE’s strategy

SSE Renewables is driving the net

zero transition through the

development, financing, construction

and operation of world-class

renewables in domestic and selected

international markets. It also operates

and develops pumped hydro storage

that provides the flexible and

dispatchable electricity needed for

a smooth transition to netzero.

How it is remunerated

Through the wholesale electricity market,

ancillary services market, Capacity Market,

Balancing Mechanism revenue from hydro

output, power purchase agreements, and

government support schemes for

renewable energy.

SSE Energy Markets

Who SSE Energy Markets serves

SSE’s individual Business Units

and the SSE Group.

How it supports SSE’s strategy

The work SSE Energy Markets does is key to managing risk associated with the operations

behind SSE’s Net Zero Acceleration Programme Plus. It trades the principal commodities

to which SSE’s asset portfolios are exposed, as well as the spreads between two or more

commodity prices (e.g. spark spreads); power (baseload and other products); gas; and

carbon (emissions allowances). Each commodity has different risk and liquidity

characteristics, which impacts the quantum of hedging possible.

How it is remunerated

It receives fees for providing energy

trading services to the constituent

parts of the SSE Group.

Business Unit operating review

Segmental overview

SSE has a very deliberately diversified business mix that spans the

clean energy value chain. These businesses, and the world-class

assets they maintain, operate alongside each other to optimise

growth and create long-term value.

SSEN

Transmission

Who SSEN Transmission serves

Electricity generators, large electricity

demand customers and ultimately all

electricity customers across the north

of Scotland and beyond.

How it supports SSE’s strategy

SSEN Transmission invests in the

critical infrastructure needed for a

network fornet zero that connects

sources of renewable electricity to

the national grid and transports it to

areas of demand. The business is 75%

owned bySSE plc and 25% by

investment partner the Ontario

Teachers’ Pension Plan Board.

How it is remunerated

Through economically regulated

returnsrecovered from generators and

customers that are potentially enhanced

through efficient delivery. In addition to

Certain View expenditure, Uncertainty

Mechanisms permit recovery of additional

revenue in a given price control period to

reflect additional investment requirements.

These Uncertainty Mechanisms fund

network upgrades during the price

controlperiod.

R M

SSEN

Distribution

Who SSEN Distribution serves

Over 3.9m homes and businesses in

two large, diverse licence areas in

southern central England, and the

north of Scotland.

How it supports SSE’s strategy

SSEN Distribution drives the growth

of net zero connections for the

communities it serves. It does this

through a combination of strategic

network investment and the targeted

deployment of flexible solutions.

Together, these support increased

connections to the network, and the

increasing take-up of low-carbon

technologies.

How it is remunerated

Through economically regulated returns

recovered from customers and connecting

parties. Additional earnings come through

efficient delivery of investment and

performance-related incentives.

68 SSE plc Annual Report 2024

Strategic Report

Energy Customer

Solutions

Who Energy Customer

Solutions serves

750,000 domestic and business

customers in the all-island Ireland

energy supply market, and around

380,000 non-domestic customers

inGB.

How it supports SSE’s strategy

Energy Customer Solutions is

responding to the climate emergency

as a route to market for SSE’s

low-carbon energy generation and

through the provision of a suite of

energy solutions to customers who

are increasingly focused on the

transition to net zero.

How it is remunerated

By competing for customers and direct

billing to them and third party

intermediaries, and through state-

supported schemes.

SSE Enterprise

Who SSE Enterprise serves

The public sector and commercial

markets in GB and the island of

Ireland. Through its Distributed

Energy division it provides smart

solutions for assets deployed and for

businesses, buildings and cities.

How it supports SSE’s strategy

Distributed energy, solar and battery

storage assets have an increasingly

important role to play in the GB energy

system as electrification accelerates

and generation is increasingly led by

intermittent wind output. They also

provide valuable diversity and

optionality to the SSE portfolio.

How it is remunerated

By winning bids and contracts, and earning

revenue from them.

SSE Thermal

Who SSE Thermal serves

Electricity suppliers, traders and other

generators through the energy

market; the national grid, and

ultimately electricity customers.

How it supports SSE’s strategy

SSE Thermal is providing critical

flexibility to offset renewables

variability as the energy system

transitions to net zero. The strategic

importance of its Gas Storage assets

has been highlighted by recent world

events and the increasing focus on

national energy self-sufficiency.

How it is remunerated

The wholesale energy market,

CapacityMarket and ancillary services

market provide the core revenue streams.

The fleet also responds to forward market

volatility and within day demand, providing

flexible generation and storage.

SSE Energy Markets

Who SSE Energy Markets serves

SSE’s individual Business Units

and the SSE Group.

How it supports SSE’s strategy

The work SSE Energy Markets does is key to managing risk associated with the operations

behind SSE’s Net Zero Acceleration Programme Plus. It trades the principal commodities

to which SSE’s asset portfolios are exposed, as well as the spreads between two or more

commodity prices (e.g. spark spreads); power (baseload and other products); gas; and

carbon (emissions allowances). Each commodity has different risk and liquidity

characteristics, which impacts the quantum of hedging possible.

How it is remunerated

It receives fees for providing energy

trading services to the constituent

parts of the SSE Group.

M M M

Key:

Market-focused businesses

Economically regulated businesses

See Our business model on

page6 for further details

on our business assets

69SSE plc Annual Report 2024

Governance Financial Statements

SSEN Transmission

connect the HVDC link to the new Gremista

Grid Supply Point. Following a well-

publicised incident at the site earlier this

month, which resulted in no injuries, work is

expected to recommence in stages and the

project remains on track to be complete by

the end of 2025.

Progress has also been made on increasing

the capacity of the North-East Scotland

transmission network to 400kV, with all

circuits in the first phase completed and

energised in February 2024. Work to

increase incrementally the voltage in this

area of the network continues with the

next phase due to be completed towards

the end of 2026, in line with RIIO-T2

commitments. Further 400kV infrastructure

is expected to enter construction as part

SSEN Transmission’s ASTI projects, from

2026 onwards.

As of 31 March 2024, the total installed

capacity of the north of Scotland network

was almost 10.6GW, of which just over

9.3GW is from renewable and other low

carbon sources, including 0.6GW of

pumped storage and batteries. Several

large renewable schemes are scheduled

to connect during FY25, and SSEN

Transmission is on track to exceed its

RIIO-T2 goal to deliver an electricity

network in the north of Scotland with the

capacity and flexibility to accommodate

10GW of renewable generation, enough

to power more than 10m homes by 2026.

For financial performance commentary

please refer to the Group Financial Review.

Other regulatory investments

The business has made significant progress

over the course of the last few years in

securing the regulatory approvals required

to take forward several major investments

over and above its baseline investment case

secured at the start of RIIO-T2. Initially,

large onshore transmission projects were

taken forward through Ofgem’s Large

Onshore Transmission Investment (LOTI)

Uncertainty Mechanism, with SSEN

Transmission currently progressing three

projects through that framework. However,

to accelerate the regulatory process and

facilitate delivery of the required offshore

and onshore network reinvestments

required for the energy transition, Ofgem

introduced the Accelerated Strategic

Transmission Investment (ASTI) regulatory

framework in December 2022 with SSEN

Transmission currently progressing a further

eight projects through that framework.

To support the timely delivery of ASTI

projects, SSEN Transmission is actively

advocating for a maximum 12-month

Business Unit operating review

Capital investment programme

SSEN Transmission’s RIIO-T2 capital

investment programme continues, with

progress being made across major projects.

This includes the Shetland High Voltage

Direct Current (HVDC) Link, with all offshore

cable works now complete including

seabed rock placement. The onshore

cable works are also complete following

a successful high voltage test in January

2024. The project is now in the final

commissioning stage, remaining on track

for completion and full energisation in

summer 2024. Work has also progressed

to connect Shetland’s existing electricity

distribution network to the Shetland HVDC

link, connecting Shetland’s homes and

business to the GB electricity network for

the first time via the new Grid Supply Point

being constructed at Gremista. The

Kergord-Gremista 132kV circuits will then

RIIO-T2 operational delivery

SSEN Transmission continues to deliver

strong operational performance in 2023/24,

achieving 95% of the available reward

through the ‘Energy Not Supplied’ (ENS)

incentive, equating to £730k additional

income in the year (18/19 prices). This slight

reduction in performance relates to one

brief outage which was quickly resolved,

while overall performance has earned 98.3%

of available reward since the beginning of

RIIO-T2 and £2.3m additional incentive

income (18/19 prices). This performance

is underpinned by a robust and ongoing

programme of inspection, maintenance,

refurbishment and replacement of SSEN

Transmission’s assets, keeping the lights

on for communities across the north of

Scotland and ensuring reliable network

access for electricity generators to support

security of supply in Great Britain.

Members of the public discuss transmission plans at Tealing Village

Hall in the Highlands

Our £20bn ‘Pathway to 2030’ investment programme

positions us as one of Europe’s fastest growing

transmission networks. We’re delivering the critical

infrastructure required to enable renewable energy and

deliver on government energy security and net zero

targets, all whilst leaving a positive lasting legacy for

communities, at an affordable cost for consumers,

while providing a fair return for shareholders.”

Rob McDonald

Managing Director, SSEN Transmission

70 SSE plc Annual Report 2024

Strategic Report

determination of all Section 37 overhead

line planning applications. This is in line

with the recommendations of the UK

Government’s Electricity Networks

Commissioner, and others.

LOTI projects

In July 2023, Ofgem approved the Final

Needs Case for the Orkney transmission

link, the final piece in connecting all three

of Scotland’s main island groups to the

GB electricity network. The Orkney

transmission link will accommodate around

220MW of renewable electricity generation,

helping further unlock Orkney’s vast

renewable potential alongside supporting

the continued development and growth

of Orkney’s marine energy sector. Main

construction works are due to commence

in summer 2024, with full energisation

expected in 2028.

In August 2023, Ofgem also approved the

Final Needs Case for the Skye reinforcement

project, which will see the replacement

and upgrade of the existing Fort Augustus

to Skye transmission line. This is required

to maintain security of supply and enable

the connection of renewable electricity

generation along its route. Both substation

applications were granted consent by the

Highland Council in early 2024 with a

decision on the Section 37 overhead line

planning application expected during 2024

with construction works ready to begin

and full energisation expected in 2028.

In October 2023, Ofgem approved the

FinalNeeds Case for the Argyll and Kintyre

275kV Reinforcement, subject to all material

planning consents being secured. The

reinforcement is required to upgrade the

local transmission network from 132kV to

275kV operation, supporting the forecast

growth in renewables in the region. With

allsubstation planning consents for the

Argyll and Kintyre 275kV Reinforcement

now secured, SSEN Transmission awaits

theoutcome of the Inveraray to Creagh

Dhubh 275kV connection Section 37

planning application and the Public Local

Inquiry for the Creag Dhubh to Dalmally

275kV connection, both of which are

expected during 2024. Construction is

planned to commence later in 2024, with

full energisation expected during 2028.

ASTI projects

As part of the National Grid Electricity

System Operator’s NGESO Holistic Network

Design (HND), eight projects were identified

for SSEN Transmission to progress through

Ofgem’s ASTI framework which included

several subsea cables, overhead line and

substation installations and upgrades to

support the connection of offshore wind

and onshore electricity generation. These

ASTI projects are wholly owned by SSEN

Transmission, with the exception of the

Eastern Green Link 2 (EGL2) and Eastern

Green Link 3 (EGL3) which are being jointly

developed with National Grid. The estimate

of gross nominal investment required to

deliver these projects is around £17bn.

The EGL2 project – which will see the

installation of a 2GW subsea superhighway

of electricity transmission between the

north east of Scotland and Yorkshire – has

made progress during the year with Marine

Scotland granting a Marine Licence for

cable protection measures in May 2023. The

project also reached contract award status

in February 2024 with Prysmian Group to

supply around 1,000km of cable as well as

Hitachi Energy and BAM to supply the

converter stations at either end of the link.

With the onshore works now underway in

Peterhead, the project remains on track for

targeted completion in 2029.

The other ASTI projects also continue to

progress, with SSEN Transmission reaching

‘preferred bidder’ status with its supply

chain partners for its North of Scotland ASTI

subsea HVDC projects, Spittal to Peterhead

and the Western Isles, in May 2023. In

August 2023, SSEN Transmission entered

into Capacity Reservation Agreements with

the supply chain for the HVDC cable and

converter stations, securing supply chain

manufacturing capacity in what is an

extremely competitive and constrained

global supply chain market. Also in August

2023, SSEN Transmission also reached

‘preferred bidder’ status for all of its key

onshore ASTI projects, a significant

milestone in securing the supply chain for

the delivery of all overhead line, cabling

andsubstation components.

SSEN Transmission has also concluded its

first round of public consultation across its

100% owned onshore and subsea ASTI

projects. Further consultation will take place

throughout 2024 in advance of submitting

consent applications to the relevant

consenting authorities.

Finally, work to progress EGL3 – which

will see the installation of a 2GW subsea

superhighway of electricity transmission

between the north east of Scotland and

south Lincolnshire/West Norfolk – is also

progressing with the supply chain now

engaged with the tender process.

RIIO-T3 price control

The process to determine the parameters

of the RIIO-T3 price control for SSEN

Transmission commenced during the year

with the publication in October 2023 by

Ofgem of their Future Systems and

Networks Regulation consultation, which

confirmed the framework for the new

price controls.

While the signals from Ofgem to support

investment in the SSMC were positive, the

unprecedented level of investment required

to deliver the SSEN Transmission’s £20bn

plus of LOTI, ASTI and RIIO-T3 projects

means the final RIIO-T3 framework must be

attractive to both equity and debt providers.

SSEN Transmission will work constructively

with Ofgem and wider stakeholders to

ensure the future regulatory framework

provides the flexibility and agility required

to deliver the unprecedented level of

required investment.

Work progresses to develop the SSEN

Transmission Business plan, which will be

submitted to Ofgem, currently scheduled

for December 2024.

Future growth opportunities

‘Beyond 2030’ report

Further investment beyond the Pathway to

2030 is required to unlock the North of

Scotland’s full renewable potential and to

deliver energy security and net zero targets.

These additional onshore and offshore

network reinforcements were set out by

National Grid Electricity System Operator

through the publication of the second

transitional Centralised Strategic Network

Plan (tCSNP), titled ‘Beyond 2030’ in March

2024. This will connect another tranche of

ScotWind whilst also setting out options to

deliver the remainder. For the north of

Scotland, the ESO’s plan confirms the need

for a number of projects to proceed now for

delivery by 2035, which combined represent

a potential estimated investment of over

£5bn for SSEN Transmission. This includes a

second HVDC link to Shetland and in May

2024, the Sumitomo Electric Van Oord

Consortium was selected as preferred

bidder for the proposed 1.8GW subsea

cable, the anchor project enabling

Sumitomo Electric Industries investment in

its new cable manufacturing facility at Nigg.

SSEN Transmission key performance indicators

March 2024 March 2023

SSEN Transmission

Transmission adjusted operating profit

– £m 419.3 372.7

Transmission reported operating profit – £m 559.1 405.5

Transmission adjusted investment and capital

expenditure – £m 595.6 495.5

Gross Regulated Asset Value (RAV) – £m 5,676 4,836

SSE Share Regulated Asset Value (RAV)

– £m 4,257 3,627

Renewable Capacity connected within SSEN Transmission

Network area – MW

9,312 9,208

1 Excludes 25% minority interest from 1 December 2022

2 Transmission and distribution connected capacity within the SSEN Transmission Network area includes

300MW (2022/23: 300MW) of pumped storage and 334MW (2022/23: 285MW) of battery storage.

71SSE plc Annual Report 2024

Governance Financial Statements

SSEN Distribution

BUSINESS UNIT OPERATING REVIEW – CONTINUED

through the recording of the number of

Customer Interruptions (CI) and Customer

Minutes Lost (CML). These include planned,

as well as unplanned, interruptions.

SHEPD’s Customer Interruption (CI)

performance has improved in the first year

of RIIO-ED2 compared to the last year of

RIIO-ED1, by 5%. SEPD has seen a decrease

in its CI performance by 12%. Both SHEPD

and SEPD’s Customer Minutes Lost (CML)

performance has decreased from 2022/23

by 11% and 17% respectively. In the first year

of RIIO-ED2, a penalty of ~£13.7m was

incurred across both SEPD and SHEPD

under the Interruptions Incentive Scheme

(IIS). This penalty arose from the

introduction of tougher targets under the

IIS compared to RIIO-ED1. In addition to

this, adverse weather had an impact on

CIand CML performance.

To put these figures in context, SSEN

Distribution’s licence areas have been

severely affected by several named storms.

Investment of £35m in automation across

network areas has had a tangible, positive

impact on SSEN Distribution’s ability to

reconfigure the system quickly and

remotely, if a storm-related fault occurs.

This, alongside cable replacement work

to reinforce the network, has mitigated

service interruptions in what has been an

unsettled winter period.

As SSEN Distribution’s investment in

network renewal and reinforcement

increases, there is a need to initiate Planned

Service Interruptions to enable the business

to carry out the necessary works safely and

efficiently. This investment will significantly

improve the performance of the network.

SSEN Distribution’s Customer Satisfaction

performance is a clear focus for the

business, and the service improvements

being made are making a positive

difference. In SHEPD, our score increased

by 0.67%; in SEPD it is up by 0.4%. For SSEN

Distribution as a whole, there is a 0.54%

increase: in line with the industry average

of 0.56%.

In the first year of this current price-control

period, SSEN Distribution is delivering

ongoing efficiencies. £2m a year is already

being saved through redesigned tenders

for plant and materials, including for SSEN’s

extensive subsea maintenance and

inspection programme.

Capital investment programme

The first year of the current price control

period has featured an acceleration of

SSENDistribution’s major capital investment

programme across both its networks. This is

Networks apprentices under instruction at SSE’s

Perth Training Centre

growing the asset base to underpin the net

zero transition and as a consequence the

Regulatory Asset Value (RAV) will increase;

by driving targeted improvements in

customer performance and operational

efficiency; and by continuing SSEN

Distribution’s lead role in developing

the future flexible energy system.

Improving customer performance

Targets for improving service levels for

customers are set for SSEN Distribution

through the regulatory framework.

Incentive rewards will typically be collected

two years after they are earned. In RIIO-

ED2, the ability to secure higher incentive

returns has been tightened, compared

with previous price controls. Within the

Interruptions Incentive Scheme (IIS), SSEN

is offered an incentive on its performance

against the loss of electricity supply,

RIIO-ED2 operational delivery

SSEN Distribution has completed the first

year of operating in the RIIO-ED2 price

control period. This price control, which

will run until March 2028, identified the

need for £3.6bn of baseline expenditure,

representing an increase of 22% on the

previous price control, alongside the

opportunity to trigger up to £0.7bn in

additional funding under Uncertainty

Mechanisms. This will include investment to

satisfy new demand and generation growth,

and to improve subsea cable resilience

for connections to Scottish islands.

SSEN Distribution is working closely with

Ofgem, and its stakeholders, to ensure the

price control has the agility and flexibility

needed to deliver the infrastructure needed

for net zero requirements, supported by

a three-point strategy. This is centred on

The first year of RIIO-ED2 has been one ofgreat

significance. We’ve worked hard toenable greater uptake

of low-carbon technologies, making thebig decisions on

howwe’ll strengthen our network. We’re also pushing

forward with plans to develop a smart, fair, net zero

electricity system.”

Chris Burchell

Managing Director, SSEN Distribution

72 SSE plc Annual Report 2024

Strategic Report

delivering performance improvements, an

improved service for customers, and future

earnings through RAV growth.

In 2023/24, capital expenditure has

increased to £505m. This compares to

£421m in 2022/23. In the past year, SSEN

has spent £14.7m to upgrade the network

from Aultbea to Ullapool. The £44m

Pentland Firth East subsea cable was

energised in September. This investment is

now strengthening supplies in Orkney.

In the central southern England (SEPD)

licence area, a new contracting system

withthree partners is now in place. A £1bn

programme of investment, representing

25% of the total ED2 figure, is under way

following the largest contract awards issued

by SSEN Distribution. Three UK companies,

Keltbray Energy Limited, OCU Services

Limited and The Clancy Group Limited,

areeach responsible for a regional delivery

zone. This new approach is reducing supply

chain risk in delivering upgrades to the

network in support of SSEs Net Zero

Acceleration Plan, and is expected to deliver

material efficiency benefits for customers

through a collaborative approach to project

delivery. The joint regional delivery teams

are now well established, and are mobilised

to accelerate the programme of capital

delivery, including creating capacity for

more new connections.

In the SHEPD licence area, in April 2024,

SSEN Distribution issued opportunities to

tender for a £320m programme of investment

and infrastructure development in the north

of Scotland. The investment will create

greater network capacity, enable more

connections, and increase network

resilience. The change to award Framework

Agreements based on geographical areas

for underground cable works, substations,

and overhead line projects gives a

commitment to contract partners,

whichwill help facilitate growth, and the

development of locally-based workers,

thus strengthening their own ability to

deliver projects.

For financial performance commentary

please refer to the Group Financial Review.

Other regulatory investments

SSEN Distribution has successfully triggered

its first uncertainty mechanism with Ofgem

approving over £30m in additional funding

for cyber security following a submission in

April 2023. A further submission was made

in the October 2023 reopener window and

is awaiting Ofgem’s determination.

SSEN Distribution continued to work

proactively with its stakeholders and the

regulator to prepare robust, evidence-based

submissions for a range of uncertainty

mechanisms which were triggered in

January 2024. These include security of

supply on Shetland with a request for

additional funding of £38m, the first phase

of whole system investment for Hebrides

and Orkney (HOWSUM) with a request of

£59m and a request of £14m for an

investment programme to enhance network

resilience following the impact of Storm

Arwen. Consultations and decision on

these reopeners are still to take place.

Looking further ahead to load-related

uncertainty mechanisms which will open

for submissions in January 2025, SSEN

Distribution is leading the way in taking a

‘Net Zero First’ approach to investment in

distribution infrastructure to meet future

generation and demand needs.

Leading on the future system

SSEN Distribution’s goal is to facilitate

the connection of around two million

EVs and one million heat pumps by 2030.

The growth in the take-up of low carbon

technologies is needed in order to get to

net zero, and demand is increasing sharply;

there has been a 13-fold increase in the

number of electric vehicles connected

in the past six years. In addition to more

demand-side connections to the network,

an increasing number of generation

projects like solar and battery are seeking to

connect too. SSEN Distribution is working

with transmission companies, NGESO, and

other DNOs to modernise the connections

system to connect more projects which are

ready, while also reducing the impact of

‘first come, first served’ queueing.

In West London, SSEN Distribution and

National Grid – in partnership with

Electricity System Operator and Greater

London Authority – have devised innovative

solutions to unlocking electricity network

capacity. By enabling ramped connections

that deliver increased electricity supply over

time, housing developments in parts of the

London boroughs of Hounslow, Hillingdon

and Ealing have had their connection dates

brought forward. This means that project

developments totalling 7,800 homes have

had their connection dates accelerated.

SSEN’s strong support for net zero planning

at a local level, is also borne out by its

proactive relationships with local

authorities. This is epitomised by SSEN’s

sector-leading Local Energy Net Zero

Accelerator (LENZA) Tool. LENZA is a

geospatial planning tool, which empowers

local authorities to make effective, efficient

net-zero plans. It is designed to bring

together a range of datasets, including

SSEN’s network data, to assist with strategic

energy planning, and ensure that local plans

are incorporated into SSEN’s longer-term

strategic network investment. LENZA also

provides SSEN with the robust evidence for

regulatory funding of future investment.

SSEN has onboarded more than half the

applicable local authorities in how to use

this tool. LENZA complements SSEN’s

support for local authorities in developing

their own Local Area Energy Planning

programmes.

Future growth opportunities

Smart. Fair. Now.

SSEN Distribution is at the forefront of

sector-wide development around smart,

flexible, electricity systems. Over the past

year, it has published detailed plans for how

its Distribution System Operations (DSO) will

operate. These plans are based on SSEN’s

‘Smart, Fair, Now’ principles, committing it

to developing the smart electricity system

of the future, in a way that is fair for all

users, quickly.

Over the past few months, the DSO team

has been following through on its

overarching action plan with details on

how and why decisions will be made, on

the flexibility roadmap for between now

and the end of the decade, on how data

will be responsibly harnessed to make the

electricity system smarter, and about how

the network will develop through capital

investment, and the efficient use of

Flexibility Services.

On a practical level, SSEN Distribution

continues to increase the tendering of

Flexibility Services in areas where localised

high demand can be offset to extend overall

network capacity. During 2023/24, SSEN

contracted 703MW of flexibility services for

dispatch in ED2, and our network-wide call

for flexibility is targeting a total of 5GW of

flexible capacity by end of RIIO-ED2.

SSEN Distribution key performance indicators

March 2024 March 2023

SSEN Distribution

Distribution adjusted and reported operating profit – £m 272.1 382.4

Regulated Asset Value (RAV) – £m 5,301 4,720

Distribution adjusted investment and capital

expenditure – £m 505.1 421.0

Electricity Distributed – TWh 37 36

Customer minutes lost (SHEPD) average per customer 66 59

Customer minutes lost (SEPD) average per customer 58 46

Customer interruptions (SHEPD) per 100 customers 57 60

Customer interruptions (SEPD) per 100 customers 51 44

Customer minutes lost and Customer interruptions figures estimated and subject to outturn of annual

regulatory process

73SSE plc Annual Report 2024

Governance Financial Statements

SSE Renewables

was 3,071GWh, with normal storage

levels ahead of the drier spring and

summer months.

As part of standard practice, SSE

Renewables periodically reviews its P50

production estimates (the forecast average

measure of output over the project’s life)

across the fleet, updating assumptions for

the latest data including weather conditions.

The last four years have seen lower-than-

expected weather resource, which has

triggered a more detailed review of these

assumptions. Whilst that review highlighted

some small immaterial changes to expected

output on an asset-by-asset basis, there was

no net material effect across the whole

fleet. The detailed review also validated the

use of long-term wind speed averages –

around 30 years – in the P50 production

estimates, as a more accurate estimate of

expected long-term profitability of these

assets over their useful lives.

For financial performance commentary

please refer to the Group Financial Review.

Delivering world-class assets

Seagreen formally entered into commercial

operations in October 2023 with all

114 Vestas V164-10MW turbines now fully

operational. Seagreen is now Scotland’s

largest wind farm as well as the world’s

deepest fixed-bottom offshore wind farm,

with its deepest foundation installed at

58.7m below sea level.

Construction remains ongoing at all three

phases of the world’s largest offshore

wind farm at Dogger Bank (each 1,200MW,

SSE share 40%) off the coast of England.

All monopiles and transition pieces have

now been installed at Dogger Bank A,

with inter-array cable installation also well

progressed. However, turbine installation

has been affected by challenging weather

conditions with vessel availability and supply

chain delays further impacting progress.

The return of the installation vessel back

to site in early May has meant that turbine

installation has now resumed and, assuming

continued clear weather conditions, it is

expected that installation activity will

continue uninterrupted over the summer

months, with the project targeting full

commercial operations during the first half

of 2025. With the HVDC Transmission

system fully commissioned, it is expected

that turbine commissioning and export

will happen in conjunction with installation.

It is not expected that the delays noted

will materially affect project returns.

Operational delivery

In onshore wind, the lower-than-expected

wind speeds in early summer led to the

accelerated delivery of normal maintenance

campaigns which were all completed ahead

of plan. Asset availability has remained high

throughout the year, particularly given

the busy winter period which included

10 named storms. The second half of the

year saw a return towards more normal

wind speeds, albeit still below long-term

averages, resulting in output around 6%

down year-on-year.

In offshore, Beatrice (588MW, SSE share

40%) and Greater Gabbard (504MW, SSE

share 50%) maintained high levels of

availability throughout the year, however,

Beatrice output was impacted by a wider

transmission network fault during part of

December. Greater Gabbard experienced

higher than anticipated wind resource,

whilst Beatrice was lower than expected,

demonstrating the value of geographical

diversity in the fleet.

Whilst there were some commissioning

delays at Seagreen (1,075MW, SSE share

49%), the asset has since achieved

significant stable and reliable generation

towards the end of the financial year.

The addition of Seagreen – which has

more than doubled the installed offshore

wind capacity – more than offset lower

than average wind speeds, with output

around 34% up year-on-year.

In hydro, teams managed extremely

challenging weather conditions well

throughout a number of major named

storms. Plant availability was strong

throughout 2023/24 and production

BUSINESS UNIT OPERATING REVIEW – CONTINUED

Final preparations are made to one of the turbine blades

at Viking wind farm

We continue to diversify our portfolio across wind,

hydro, solar and battery technologies in our core and

select new markets. Our focus remains on optimising the

value of our existing assets through skilled operation and

maintenance, while accelerating growth to deliver more

of the green energy the world needs to sustainably meet

climate and energy security commitments.”

Stephen Wheeler

Managing Director, SSE Renewables

74 SSE plc Annual Report 2024

Strategic Report

SSE Renewables key performance indicators

March 2024 March 2023

SSE Renewables

Renewables adjusted operating profit – £m 833.1 561.8

Renewables reported operating profit – £m 630.3 428.1

Renewables adjusted investment & capital expenditure

before acquisitions – £m 1 ,097. 1 911.5

Generation capacity – MW

Onshore wind capacity (GB) – MW 1,285 1,285

Onshore wind capacity (NI) – MW 117 117

Onshore wind capacity (ROI) – MW 582 567

Total onshore wind capacity – MW 1,984 1,969

Offshore wind capacity (GB) – MW 1,014 487

Conventional hydro capacity (GB) – MW 1,159 1,159

Pumped storage capacity (GB) – MW 300 300

Total renewable generation capacity

(inc. pumped storage) – MW 4,457 3,915

Contracted capacity 2,792 2,792

Generation output – GWh

Onshore wind output (GB) – GWh 2,461 2,770

Onshore wind output (NI) – GWh 251 286

Onshore wind output (ROI) – GWh 1,352 1,357

Total onshore wind output – GWh 4,064 4,413

Offshore wind output (GB) – GWh 2,477 1,846

Conventional hydro output (GB) – GWh 3,071 3,037

Pumped storage output (GB) – GWh 315 301

Total renewable generation

(inc. pumped storage) – GWh 9,927 9,597

Total renewable generation

(also inc. constrained off GB wind) – GWh 11,158 10,159

Note 1: Capacity and output based on 100% of wholly owned sites and share of joint ventures

Note 2: Contracted capacity includes sites with a CfD, eligible for ROCs, or contracted under REFIT

Note 3: Onshore GB wind output excludes 530GWh of compensated constrained off generation in 2023/24

and456GWh in 2022/23; Offshore GB wind output excludes 701GWh of compensated constrained off

generation in 2023/24 and 106GWh in 2022/23

Note 4: Biomass capacity of 15MW and output of 78GWh in 2023/24 and 68GWh 2022/23 is excluded, withthe

associated operating profit or loss reported within SSE Enterprise

Note 5: Offshore capacity increased by 527MW with Seagreen offshore windfarm fully operational in

October2023

Note 6: ROI Onshore capacity increased by 15MW with Lenalea fully operational December 2023

On Dogger Bank B, all monopiles, transition

pieces and cables have been fabricated,

with monopile installation having

commenced in early May. An offshore

substation platform utilising HVDC

technology has also been successfully

installed. It is expected that the delays seen

on Dogger Bank A will impact the Dogger

Bank B timetable, with completion of that

phase expected in early 2026. Dogger Bank

C works remains on track offshore and

onshore with fabrication of components

under way with completion of that phase

expected in early 2027.

Onshore, construction of Viking (443MW)

in Shetland is nearing completion. Turbine

commissioning was completed throughout

the winter months and the project is

expected to be fully operational by

Summer 2024 following energisation

of the associated transmission link. When

complete, Viking is expected to be the UK’s

most productive onshore wind farm.

In hydro, SSE Renewables continues to

make progress with the Tummel Bridge

power station refurbishment project,

reaching a significant milestone in April

2024 with the successful commissioning

and energisation of the first bespoke

turbine. Full focus is now on the installation

and commissioning of the second turbine,

which is expected to be complete by

mid-summer 2024 increasing the station’s

potential output to 34–40MW and

extending its life by 30 years.

SSE Renewables continues to advance

technology diversity as it progresses

grid-scale solar and battery storage

technology projects. In England, SSE’s first

50MW battery energy storage system at

Salisbury in Wiltshire is now fully operational

while a second 150MW battery storage

project at Ferrybridge in Yorkshire is

due to reach completion within the next

12months, located at the site of SSE’s

former coal power station. Construction

is also under way at SSE’s 320MW battery

energy storage project at Monk Fryston,

alsoin Yorkshire, which will be completed

in 2025/26. In December 2023, SSE

Renewables took a final investment

decisionand started construction of a

150MW/300MWh battery energy storage

system project in Warrington, Cheshire,

atthe site of SSE’s former Fiddler’s Ferry

coal-fired power station. The asset is

expected to be operational in summer 2025.

In Ireland, the 30MW Lenalea onshore wind

farm in Donegal (SSE share 50%) became

fully operational in December 2023.

Together with co-development partners

FuturEnergy Ireland, the business has

entered into a multi-year Corporate Power

Purchase Agreement (CPPA) with Microsoft

which will see the renewable electricity

produced at Lenalea contributing towards

Microsoft’s goal of powering its data centre

operations with 100% renewable energy by

2025. This is the first long-term CPPA which

SSE Renewables has entered into for one

of its assets. In the country’s Midlands,

turbine installation at the 29-turbine,

101MW Yellow River wind farm is on track

to be completed by Summer 2024, with

commercial operations expected in early

2025. It secured a 16.5-year RESS 3

contract for low carbon power for all

installed capacity.

Good progress is also being made at the

first of SSE’s onshore Continental Europe

wind projects with Chaintrix (28MW) in

France and Jubera (64MW) in Spain under

construction and targeting commissioning

at the end of 2024 and 2025, respectively.

Domestic opportunities

Onshore wind

SSE Renewables has maintained its focus on

growing its onshore wind portfolio in home

markets. It was the biggest winner in the UK

Government’s fifth Contracts for Difference

(CfD) Allocation Round. Strathy South,

Aberarder, and Bhlaraidh Extension

onshore wind farm projects in the Scottish

Highlands, and the Viking wind farm project

secured CfDs for a total of 605MW at a

guaranteed strike price of £52.29/MWh,

based on 2012 prices but annually indexed

for CPI inflation. A final investment decision

was announced on Aberarder (50MW) in

May 2024, and enabling works on Bhlaraidh

Extension (101MW) are scheduled to

complete in June 2024 with main

construction due to commence in early

2025, subject to a final investment decision.

In addition, SSE Renewables, together with

Bord na Móna, announced in March 2024

one of the largest ever joint venture

renewable energy deals in the Irish market

to accelerate delivery of up to 800MW (SSE

share 50%) of new onshore wind generation

over the next decade. The joint venture

includes three projects already in pre-

planning development (c.250MW) as well as

a portfolio of 550MW of future prospects.

Offshore wind

Turning to offshore wind, SSE Renewables

did not enter offshore bids for AR5 because

the process did not meet SSE’s investment

criteria. However, progress continues to be

75SSE plc Annual Report 2024

Governance Financial Statements

made on a number of development

opportunities that could deliver significant

volumes of offshore wind needed to help

the UK achieve energy security targets.

Located in the North Sea, in the outer Firth

of Forth, Berwick Bank wind farm has the

potential to deliver up to 4.1GW of installed

capacity, making it one of the largest

offshore opportunities in the world. In

December 2023, East Lothian Council

granted planning permission in principle

forthe project’s onshore transmission

infrastructure and grid connection at

Branxton. However, the project continues

to await consent for the offshore array

from the Scottish Government, which is

now expected during 2024.

In partnership with Equinor, SSE Renewables

is also actively developing a fourth phase of

Dogger Bank wind farm, Dogger Bank D (up

to 2GW, SSE share 50%). In March 2024,

National Grid ESO published the Transitional

Centralised Strategic Network Plan (tCSNP2)

which included confirmation that Dogger

Bank D will connect into Birkhill Wood, a

proposed new 400kV substation located in

the East Riding of Yorkshire. The tCSNP2

publication also included details of the

onshore design requirements for SSE

Renewables 3.6GW floating offshore

wind project, Ossian, (SSE share 40%)

which will be located in Lincolnshire.

In Ireland, the business remains committed

to delivering Arklow Bank Wind Park 2 (up to

800MW), despite being unsuccessful in

Ireland’s first Offshore Renewable Energy

Support Scheme (ORESS) auction in May

2023. It will proceed to submit a planning

application in Spring 2024 to Ireland’s

planning board, An Bord Pleanála, and will

continue to demonstrate discipline whilst

it considers alternative routes to market.

The next ORESS auction (ORESS 2.1) will be

for a 900MW site within the South Coast

Designated Maritime Area Plan (DMAP)

announced in May 2024 and is expected

totake place in the first half of 2025.

Subsequent auctions, within this and new

DMAPs are expected to follow annually

to2030.

Hydro/pumped Storage

In January 2024, the UK Government

published a consultation on how it intends

to support the deployment of long-duration

electricity storage projects, a process with

which SSE has actively engaged. Subject

to being successful in the administrative

allocation of an investable cap and floor

mechanism, SSE Renewables hopes to

make a final investment decision on Coire

Glas (1,300MW) in late 2025 or early 2026,

allowing for main construction to

commence in the second half of 2026.

Construction is expected to last up to seven

years, which means the project could be

operating in 2032 and fully completed

during 2033. Plans are also progressing to

convert the existing plant at Sloy power

station into pumped storage hydro.

Solar and batteries

SSE Renewables continues to view solar

andbattery technologies as key net zero

enablers. Its ~2GW secured pipeline of

projects across the UK and Ireland includes

a recently-acquired and fully-consented

100MW/200MWh battery storage project in

County Tyrone, Northern Ireland, on which

SSE hopes to make a final investment

decision in the next 12 months.

Overall, the deliverability of the future

prospects pipeline is being assessed in

light of the ongoing NGESO Connections

Reform proposals.

International opportunities

Continental Europe

SSE Renewables is progressing its Southern

European onshore wind development

portfolio of ~4.5GW. It is currently expected

that over 120MW of projects will aim for a

final investment decision in the next 12

months, with a total of 220MW in operation

by March 2027. In Northern Europe, the

business is progressing a 959MW portfolio

of solar photovoltaics (‘solar PV’) projects

in Poland. This early-stage pipeline will be

progressed under Developer Services

Agreements with local development partners.

SSE Renewables also has other selective

offshore wind opportunities in Northern

Europe. In the Netherlands, it has bid into

the Dutch Government’s Ijmuiden Ver zone

tender (2 x 2GW), with its joint venture

partner APG (acting on behalf of Dutch

pension fund ABP), with winning bids

expected to be announced in Summer

2024. The business will continue to assess

participation in offshore leasing rounds

across selected markets in Northern

Europe, where they offer attractive returns.

Japan

SSE Renewables is continuing to pursue

offshore wind opportunities in Japan

through its joint venture SSE Pacifico

(80% stake) and its dedicated team in Tokyo

where it has both self-developed sites

alongside targeted bid partnerships with

which to enter auctions.

SSE Renewables project pipeline

Project

Capacity

(MW)

SSE Share

(MW)

In construction

Offshore wind 3,600 1,440

Onshore wind 686 686

Solar and battery 650 651

Total in construction – GW 2.8GW

Late-stage development

Offshore wind 500 245

Onshore wind 892 861

Solar and battery 250 250

Pumped storage 1,300 1,300

Total late-stage development – GW 2.6GW

Early-stage development

Offshore wind 9,004 6,592

Onshore wind 3,431 2,782

Solar and battery 1,950 2,009

Total early-stage development – GW 11.4GW

Total secured pipeline – GW 16.8GW

Other future prospects

Offshore wind ~8,000 ~6,000

Onshore wind ~3,000 ~3,000

Solar and battery ~3,000 ~2,300

Hydro ~1,800 ~900

Total future prospects ~12GW

Notes: Table reflects ownership and development status as at 31 March 2024. All capacities are subject to

change as projects refined. Onshore includes solar and battery hybridisation. Late-stage is consented in GB and

Ireland and grid or land security elsewhere, early-stage has land/seabed rights in GB and Ireland and some

security over planning or land elsewhere. Future prospects are named sites where non-exclusive development

activity is under way.

BUSINESS UNIT OPERATING REVIEW – CONTINUED

76 SSE plc Annual Report 2024

Strategic Report

SSE Thermal

In February 2024, the GB four-year ahead

Capacity Market auction cleared at a record

high clearing price of £65/kW, with all of SSE

Thermal’s wholly-owned and Joint Venture

CCGTs securing agreements. A similar trend

was seen in Ireland T-4 auction results, with

a record high clearing price for delivery in

2027/28. Great Island (374MW derated) and

SSE Thermal’s two smaller peaking plant

(89MW derated) secured agreements in this

auction. Keadby 1 (692 MW) and Medway

(673MW) also secured one-year ahead

agreements commencing in October 2024,

having not taken agreements in the

four-year ahead auction. These auction

results demonstrate the enduring need

for flexible capacity on the GB and

Ireland system.

In Ireland, Great Island (464MW) continued

to see increased output year-on-year,

demonstrating the ongoing need for

dispatchable plant in that constrained

marked. Tarbert oil-fired power station

(620MW) closed at the end of December

2023, in line with requirements under the

Industrial Emissions Directive.

SSE Thermal has now secured ISO 55001

certification across its portfolio – an

international asset management standard

which underlines the approach we take

to ensure effective management of

plant availability across the lifecycle

of our portfolio.

For financial performance commentary

please refer to the Group Financial Review.

Construction programme

Final commissioning is continuing at Slough

Multifuel (55MW), the energy-from-waste

facility which is a 50:50 Joint Venture with

Copenhagen Infrastructure Partners.

First fire was achieved in March 2024

and the project is on track to enter

commercial operations ahead of schedule

in summer 2024.

In Ireland, construction is ongoing on a

Temporary Emergency Generation unit

at our Tarbert site in County Kerry. This is

being delivered at the request of Irish

authorities, with the 150MW plant to run

on distillate oil. The unit is scheduled for

delivery in September 2024. Under

legislation from the Irish Government,

it will cease operations when the temporary

electricity emergency has been addressed

and no later than March 2028. Until then,

it would only be utilised when it is clear

that market-sourced generation will not be

sufficient to meet system needs and with a

maximum duration of 500 hours per year.

Operational delivery

SSE Thermal’s fleet delivered another strong

year of performance in GB and Ireland,

despite lower spark prices and less volatility

compared to 2022/23. Value has been

secured by selling output to the market

and contracting forward ahead of delivery,

using the fleet’s inherent flexibility to

optimise the value received.

In GB, the impact of unplanned outages,

most notably at Keadby 2 and a one-off

extended outage at Marchwood, were

offset by value captured during pockets

of volatility throughout the year. This

demonstrates the importance of asset

availability in line with system needs,

where the ability to efficiently flex output

isbecoming more valuable. Managing

availability responsibly, both within year

and taking a view of future system needs,

continues to be a priority for SSE Thermal.

Keadby 2 (893MW), which entered

commercial operation in March 2023, is

Europe’s most efficient CCGT, displacing

older more carbon intensive plant on the

system. A planned outage was successfully

delivered across the summer, alongside

unplanned outages, both recognising the

first-of-a-kind nature of this plant. In

October 2023, Keadby 2’s 15-year Capacity

Market agreement commenced in line with

expectations, with all milestones having

been met.

SSE is continuing to develop options for hydrogen blending

technology at Keadby 2 in Lincolnshire

Our assets remain integral to the decarbonising energy

systems in GB and Ireland, reflecting the value of

flexibility to both SSE and society. Our teams are also

driving progress on the next generation of low carbon

flexible energy generation and storage through

technologies like carbon capture, hydrogen and biofuels.”

Finlay McCutcheon

Managing Director, SSE Thermal

77SSE plc Annual Report 2024

Governance Financial Statements

SSE Thermal capacity contract awards

The following agreements have been awarded through competitive auctions:

Station

Asset

type

Station

Capacity

SSE

share of

contract Capacity obligation

Medway (GB) CCGT 735MW 100% To September 2028

Keadby (GB) CCGT 755MW 100% To September 2028

Keadby 2 (GB) CCGT 893MW 100% 16 years commencing

October 2022

Peterhead (GB) CCGT 1,180MW 100% To September 2028

Seabank (GB) CCGT 1,234MW 50% To September 2028

Marchwood (GB) CCGT 920MW 100% To September 2028

Saltend (GB) CCGT 1,200MW 50% To September 2028

Indian Queens (GB) OCGT 140MW 50% To September 2028

Slough Multifuel (GB) Energy from Waste 50MW 50% 15 years commencing

October 2024

Burghfield (GB) OCGT 45MW 100% To September 2028

Chickerell (GB) OCGT 45MW 100% To September 2028

Great Island (Ire) CCGT 464MW 100% To September 2028

Rhode (Ire) Gas/oil peaker 104MW 100% To September 2028

Tawnaghmore (Ire) Gas/oil peaker 104MW 100% To September 2028

Tarbert (Ire) Biofuel 300MW 100% 10 years commencing

October 2026

Platin (Ire) Biofuel 150MW 100% 10 years commencing

October 2026

Platin (Ire) Biofuel 150MW 100% 10 years commencing Oct 2026

Capacity contracts are based on de-rating factors issued by the delivery body for each contract year, therefore

will not directly match SSE’s published station capacity.

Capacities stated reflect Transmission Entry Capacity

Marchwood (SSE equity share 50%) tolling arrangement means SSE receives 100% of economic benefit from

capacity contract

Medway has capacity obligation in 2023/24 and 2026/27 but none in 2025/26.

Keadby 2 16 year obligation comprised of a T-1 and a 15 year contract

The Tarbert oil-fired station previously reported was closed in September 2023.

SSE Thermal key performance indicators

March 2024 March 2023

SSE Thermal

Thermal adjusted operating profit – £m 736.1 1,031.9

Thermal reported operating profit – £m 644.4 1,089.5

Thermal adjusted investment and capital expenditure,

before acquisitions – £m 99.6 153.2

Generation capacity – MW

Gas- and oil-fired generation capacity (GB) – MW 5,538 5,538

Gas- and oil-fired generation capacity (ROI) – MW 672 1,292

Total thermal generation capacity – MW 6,210 6,830

Generation output – GWh

Gas- and oil-fired output (GB) – GWh 13,597 16,781

Gas- and oil-fired output (ROI) – GWh 1,650 1,532

Total thermal generation – GWh 15,247 18,313

Note 1: Capacity is wholly owned and share of joint ventures, and reflects Transmission Entry Capacity

Note 2: ROI capacity in March 24 reflects closure of Tarbert oil-fired station

Note 3: Output is based on SSE 100% share of wholly owned sites and 100% share of Marchwood PPAs due to

the contractual arrangement.

Note 4: Output in GB in year to March 2023 excludes 1,184GWh of pre-commissioning output from Keadby

2CCGT which commissioned 15 March 2023

Growth opportunities

Flexibility, along with renewables and

networks, is a core pillar of the future

energy system and there is a critical need

for new low-carbon flexible power in both

GB and Ireland this decade. SSE Thermal

continues to progress its low-carbon plans

to help meet this urgent requirement while

working to decarbonise its CCGT fleet

where possible – vital actions for delivering

our goal of an 80% reduction in carbon

intensity by 2030.

In GB, there is cross-party support on

the need for both CCS and hydrogen,

underlining the strategic rationale of

SSE’s growing low-carbon portfolio. To

enable these technologies, Government

intervention is needed both in terms of

relevant policies and in building the shared

and hydrogen pipeline infrastructure

that new assets will connect to and rely on.

However, policy progress has been slow.

For CCS, the Government is expected to

launch the Track 2 process during 2024/25,

which will allow projects within the Scottish

Cluster and Viking Cluster the opportunity

to connect to shared infrastructure.

Progress is also expected on the Track 1

Expansion process, which would support

projects within existing Track 1 clusters in

the north-east and north-west of England.

This could create opportunities for SSE

Thermal’s CCS projects being developed

ina 50/50 collaboration with Equinor –

Keadby Carbon Capture Power Station

(910MW) in North Lincolnshire and

Peterhead Carbon Capture Power Station

(900MW) in Aberdeenshire to secure

Dispatchable Power Agreements. FEED

studies have been completed at Keadby

Carbon Capture, which has planning

consent in 2022. At Peterhead, FEED studies

continue while a planning decision is

expected in the current financial year.

Recognising that progress to decarbonise

is slower than expected, SSE Thermal

has evolved its CCGT strategy to ensure

new projects can meet the short-term

capacity challenge while driving long-term

decarbonisation efforts. In 2024/25,

Keadby Hydrogen Power Station will

go into planning with the application being

‘dual fuel’ in nature. This means that the

900MW plant – being developed on a

50/50 basis with Equinor – could either run

on hydrogen or natural gas whilst being

operational by 2030. While the ambition

would be to run on 100% hydrogen from

inception, Keadby Hydrogen would have

the capability to run on natural gas for an

initial period if the necessary hydrogen

infrastructure is not fully in place, while also

utilising market-leading turbine technology

to ensure maximum efficiency.

BUSINESS UNIT OPERATING REVIEW – CONTINUED

78 SSE plc Annual Report 2024

Strategic Report

To minimise the risk of locking-in unabated

emissions, SSE has set clear criteria against

which it will evaluate whether to enter

potential hydrogen-ready CCGT projects

into planning. This includes proximity to

planned national or regional hydrogen

networks, location within an established

cluster, grid connection access and

compatibility with SSE’s Net Zero Transition

Plan. SSE will assess whether a project

has a clear pathway to full decarbonisation

by 2035, within a supportive regulatory

framework, before taking any Final

Investment Decision.

In addition, development continues on

other projects across the hydrogen value

chain. A strategic investment has been

made to acquire 50% of H2NorthEast,

a proposed blue hydrogen production

facility in Teesside co-owned with Kellas

Midstream. Blue hydrogen production will

Gas Storage

Gas Storage overview

SSE holds around 40% of the UK’s

conventional underground gas storage

capacity at two sites on the East Yorkshire

coast. The Atwick facility, near Hornsea, is

wholly-owned by SSE, while the Aldbrough

facility is operated as a joint venture with

Equinor. These two sites offer flexibility

and hedging services to the UK and

interconnected gas markets.

As part of the transition to a net zero future,

opportunities to convert gas storage

facilities to store low-carbon hydrogen,

which can be used to decarbonise power

generation, industry, heat, transport and

other key sectors are being explored.

Operational Delivery

SSE’s Gas Storage assets continue to

respond to market needs, optimising assets

to help ensure security of gas supply for the

UK whilst providing important liquidity to

the market. These assets are an important

risk management tool to the Group’s

generation portfolio by offering short-

notice flexibility, as a result of their technical

ability to cycle quickly, to mitigate exposures

from wind speeds and demand variability.

Positive spreads between summer and

winter, combined with trading optimisation,

supported a year of strong performance.

In Aldbrough, after successfully returning

toservice ahead of winter 2022/23, Caverns

6 and 9 have performed well, providing

valuable additional capacity and

be essential to scaling up broader hydrogen

production efforts and providing volumes

required to decarbonise power generation.

As part of the East Coast Cluster,

H2NorthEast is expected to participate

in the Track 1 Expansion process.

SSE Thermal also continues to progress

green hydrogen production projects into

UK Government’s HAR2 allocation round,

which aims to provide revenue support to

850MW of green hydrogen production

capacity. This includes Aldbrough Hydrogen

Pathfinder, which in addition to hydrogen

production also includes hydrogen

storage and hydrogen power generation.

Additionally, SSE is continuing to develop

options for hydrogen blending into Keadby

2, with pre-FEED activity under way, and at

Saltend Power Station, part of the Triton

Power portfolio co-owned by SSE Thermal

and Equinor.

deliverability to the UK system. And with

the equivalent of two caverns being added

over the past three years at Atwick, work to

optimise maximum and minimum operation

pressures also continues. Work is also under

way to rewater Aldbrough Cavern 4Z, which

has been operating at a reduced level due

to cavern instability, with completion of this

work expected in 2024.

In April 2023, Gas Storage secured ISO

55001 certification, an international asset

management standard, for Atwick and

Aldbrough facilities.

For financial performance commentary

please refer to the Group Financial Review.

Growth opportunities

In December 2023, an updated view of gas

security of supply and demand was

published by the UK Government alongside

an exploration of the future role that flexible

sources of gas supply, including storage,

might play in gas security over the medium

In Ireland, the business continues to

advance new power stations which would

utilise sustainable biofuels (in accordance

with EU sustainability standards) and would

be capable of converting to hydrogen in the

future. A decision is expected from An Bord

Pleanála this summer on planning consent

for the 300MW Tarbert Next Generation

power station. Initial consent is secured on

the 170MW Platin power station from Meath

County Council, with the decision now

referred to An Bord Pleanála and a decision

also expected this summer. This will allow

final investment decisions to be made this

year, with both projects holding 10-year

Capacity Market agreements due to

commence in the 2026/27 delivery year.

to long term. This concluded that natural

gas will continue to play a role in delivering

energy security to 2050, as part of a net

zero emissions trajectory, with additional

requirements for flexibility. The UK

Government intends to issue a call for

evidence on gas flexibility, to explore

potential roles and policy frameworks. SSE

Thermal remains committed to working

with UK Government departments and

Ofgem to ensure the critical role of UK

storage is properly valued, and low-carbon

options can be delivered in tandem.

Following the publication of a minded-to

position on Hydrogen Storage Business

Model support, the UK Government has

undertaken further market engagement on

allocation of support. The first allocation

round is expected to open later in 2024, to

support investments in nationally strategic

hydrogen storage assets. SSE is developing

Aldbrough Hydrogen Storage, a new build

hydrogen storage facility, with a view to

participating in this allocation round.

SSE Gas Storage key performance indicators

March 2024 March 2023

SSE Gas Storage

Gas Storage adjusted operating (loss)/profit – £m 82.8 212.5

Gas Storage reported operating profit – £m (42.2) 249.2

Gas Storage adjusted investment and capital expenditure

– £m 0.8 6.3

Gas Storage level at period end – mTh 40 126

Gas Storage level at period end – % 21 65

79SSE plc Annual Report 2024

Governance Financial Statements

SSE Business Energy

Operational delivery

The current year has seen the business

return to a higher level of profitability,

reflecting the well-established competitive

pricing and hedging controls in the

business. However, it still remains a

challenging environment for consumers

and customer-facing businesses which has

led to a customer support fund of £15m

being established in the period to support

customers including small businesses,

voluntary and charitable organisations.

Enabling customers to optimise their energy

consumption remains a key focus with

the development of data tools and a 26%

increase in smart meter installations year

on year. The business has also invested

considerably to improve customer

experience and to meet future needs

by upgrading its legacy billing platform

and implementing digital technologies.

Connecting customers with SSE

Renewables assets continues to grow with

additional corporate customers taking CPPA

products during the year. SSE Business

Energy has also trialled a new flexibility

service called EnergiFlex, enabling

customers to participate in National Grid’s

Demand Flexibility Service (DFS) and

incentivising businesses to reduce demand

during peak hours to help balance the grid.

For additional financial performance

commentary please refer to the Group

Financial Review.

Growth opportunities

The strength of the BE book and the strong

portfolio mix means the business is well

positioned to expand its product suite.

Under the SSE Energy Solutions brand,

the business is delivering solutions to

help customers reduce carbon emissions

and energy costs across multiple sectors.

Ourdigital capability is rapidly expanding,

enabling us to offer increased flexibility

andenergy optimisation.

Energy Customer

Solutions

SSE Business Energy key performance indicators

March 2024 March 2023

SSE Business Energy

SSE Business Energy adjusted & reported

operating profit – £m 95.8 15.7

Electricity Sold – GWh 10,693 12,108

Gas Sold – mtherms 168 200

Aged Debt (60 days past due) – £m 336 167

Bad debt expense – £m 113 108

Energy customers’ accounts – m 0.38 0.43

BUSINESS UNIT OPERATING REVIEW – CONTINUED

SSE Business Energy is helping customers optimise their energy usage

Supporting customers still feeling the effects of the

energycrisis has remained a priority for the business.

Strengthening our digital and system capabilities is

alsoa key focus, enabling SSE to grow and develop

ourcustomer offering in green and low carbon

energysolutions.”

Nikki Flanders

Managing Director, Energy Customer Solutions

80 SSE plc Annual Report 2024

Strategic Report

SSE Airtricity key performance indicators

March 2024 March 2023

SSE Airtricity

Airtricity adjusted operating profit – £m 95.0 5.6

Airtricity reported operating profit – £m 94.5 5.2

Aged Debt (60 days past due) – £m 18.3 11.0

Bad debt expense – £m 13.7 7.8

Airtricity Electricity Sold – GWh 6,400 5,795

Airtricity Gas Sold – mtherms 199 193

All Ireland energy market customers (Ire) – m 0.75 0.74

SSE Airtricity

Operational delivery

Maintaining SSE Airtricity’s commitment

to help its customers remains a key focus

for the business with consecutive tariff

reductions taking effect in October 2023

and February 2024.

Continuation into 2023/24 of support

for financially vulnerable customers was

provided under the terms of the €25m

customer support fund established

in 2022/23. A further €5m all-island

Community Fund was announced in

May 2024 to support communities on

the path to net zero.

SSE Airtricity continued its focus on

enabling access to low carbon solutions

for its customers including the delivery of

500 home energy upgrades during the year.

Thebusiness strives to continually improve

customer experience, including through

the expansion of digital tools such as AI

toenhance the offering.

For additional financial performance

commentary please refer to the Group

Financial Review.

Growth opportunities

SSE Airtricity remains focused on

continued growth of its energy efficiency

and low-carbon solutions offering with

planned expansion into the Northern

Ireland’s domestic and business markets.

Investment in innovations such as demand

side management and the further expansion

of low-carbon solutions provides additional

avenues for growth.

SSE Airtricity remains

focused on continued

growth of its energy

efficiency and low-carbon

solutions offering.”

Energy Customer Solutions MD Nikki Flanders spends time

with a customer in Dublin

81SSE plc Annual Report 2024

Governance Financial Statements

Progression of the businesses’ EV

infrastructure growth strategy continues,

with 13 electric charging hubs either

completed or built during the period.

This includes the upcoming launches of

Scotland’s most powerful EV charging hub

in Myrekirk, Dundee (2.5MVA) and SSE’s first

EV hub in the Republic of Ireland in Lough

Sheever (800kVA).

The smart digital energy solutions business

continues to support value creation within

SSE, working with the Energy Markets team

to optimise the front of meter battery

trading activity for the Group. Externally, the

business also secured contracts to provide

optimisation services for a 500MW battery

energy storage system project in Coalburn,

Scotland, one of the largest of its kind

inEurope.

For additional financial performance

commentary please refer to the Group

Financial Review.

Growth opportunities

The size and scale of the pipeline of

opportunities for SSE Enterprise has

continued to increase during the year, as the

business looks to develop its whole-system

approach to local networks, including

behind-the-meter solar, and battery and

energy optimisation services.

The business has seized a number of

opportunities to help local authorities

execute local energy projects, signing

several strategic energy partnerships with

Greater Manchester Combined Authority,

West Midlands Combined Authority and

Newcastle City Council, with an ambition

togo further.

In December 2023, the UK Government

published a consultation on proposals for

anew regulatory and zoning regime to

support investment in heat networks in

England. The legislative passage of these

proposals would help unlock an ambitious

heat project pipeline under development by

the business that is pioneering innovation in

heat distribution. This includes capturing

heat from data centres, deep geothermal,

electricity network transformers and energy

from waste plants.

SSE Enterprise

SSEN Enterprise key performance indicators

March 2024 March 2023

SSEN Enterprise

SSE Enterprise adjusted operating (loss) – £m (25.6) (7.0)

SSE Enterprise reported operating (loss) – £m (25.6) (13.1)

SSE Heat Network Customer Accounts 12,104 11,431

Biomass, heat network and other capacity – MW 26 26

Biomass, heat network and other output – GWh 105 96

BUSINESS UNIT OPERATING REVIEW – CONTINUED

SSE Enterprise has a strategic partnership with Greater Manchester

Combined Authority

Operational delivery

Operational availability across the portfolio

of 18 heat networks across Scotland and

England has remained strong during the

year, with Slough Heat and Power in

particular benefiting from additional

connections to deliver electric, water and

steam services across Slough Trading Estate.

SSE Enterprise has continued to advance

itsIDNO capabilities, including the

development of a 150MVA private

network connection trial at Imperial Park,

bringing the total capacity at that site to

around 400MVA.

SSE Enterprise aspires to be the UK and Ireland’s leading

provider of local energy infrastructure. Ourstrategic

energypartnerships with local authorities will unlock

newcommercial opportunities for the SSE Group to

accelerate thenet zero transition and create social value.”

Neil Kirkby

Managing Director, SSE Enterprise

82 SSE plc Annual Report 2024

Strategic Report

Operational delivery

SSE Energy Markets continues to optimise

the flexibility of the Group, maximising

benefits from the diverse portfolio while

mitigating risk around natural market

turbulence. Having successfully optimised

energy assets in the short-term, Energy

Markets is now also the primary decision

maker for longer term trading periods,

allowing decisions to be made quickly

from one Centre of Excellence.

The value Energy Markets secured for SSE’s

asset portfolio continues to be reported

against individual Business Units.

For additional financial performance

commentary please refer to the Group

Financial Review.

Growth opportunities

As well as taking on a leading role in

optimising SSE’s market-based assets,

SSEEnergy Markets is also expanding the

ways in which it independently adds value

to the Group.

This includes contracts being secured

with Copenhagen Infrastructure Partners

and Sheaf Energy Limited to deliver

trading and optimisation services for their

respective energy storage projects. It also

includes an increase in trading in European

power and gas markets which will also

support the wider group’s ambition of

international growth.

In addition, Energy Markets continues to

develop its data and advanced analytics

capabilities setting it up well for future

developments in the markets.

SSE Energy Markets

SSE Energy Markets key performance indicators

March 2024 March 2023

SSE Energy Markets

SSE Energy Markets adjusted operating profit/(loss) – £m 38.9 80.4

SSE Energy Markets reported operating profit/(loss) – £m 590.0 (2,626.0)

SSE Energy Markets is

expanding the ways in

which it independently

adds value to the Group.”

Traders at work in SSE Energy Markets’ offices

in the heart of Edinburgh

The Energy Markets business continues its development

into a market leading energy trading business. This

included taking on the role as optimiser for all of the SSE

energy businesses allowing a consolidated view of all

market risks and opportunities. In addition, we have

added value through third-party contracts and our

increased trading in European markets which will also

support the Group’s international ambitions in the future.”

Gordon Bell

Managing Director, SSE Energy Markets

83SSE plc Annual Report 2024

Governance Financial Statements

84 SSE plc Annual Report 2024

Strategic Report

Risk informed decision making 86

How SSE manages risk 87

Group Principal Risks 89

Risk

Governance Financial Statements

85SSE plc Annual Report 2024

The energy transition

and the rapid pace of

change mean that our

understanding of risks

and how we manage

them must be

dynamic, to ensure

wecan continue to

deliver our strategy

and create value for

allour stakeholders.”

Barry O’Regan

Chief Financial Officer and Chair of

Group Risk Committee, SSE plc

21 May 2024

SSE has continued to manage significant

societal, environmental, commercial and

political factors this year amidst a changing

energy landscape. SSE’s ambition, strategy

and mix of businesses mean it is well placed

to meet the challenges associated with net

zero, while maximising opportunities.

Critical to this is ensuring robust risk

management is in place enabling an

approach that can be adapted and flexed to

meet the changing nature of the business.

At the core of SSE’s risk management is a

strong risk culture that ensures everyone

inthe Company is empowered to make

considered decisions.

Continued geopolitical unrest, an increased

number of named storms and dilution of

some of the UK Government’s climate

change commitments are just a few issues

that have influenced SSE’s risks exposures in

the past 12 months. SSE’s Energy Market

review on pages 52 and 53

provides more

detail on the range of external factors that

influenced the risk exposures to the Group

over the course of the year.

This year the Group Executive Committee

and relevant sub-committees have

continued to oversee the Group’s Principal

Risks, with particular consideration given to

those that have high materiality, namely:

Cyber Security and Resilience, Portfolio

Exposure, Political and Regulatory Change

and ongoing reviews of climate-related risks

that have the potential to threaten delivery

of SSE’s strategy.

The increased global demand for

renewables has caused a tightening of the

supply chains on which SSE relies. This

combined with supply chain issues already

being felt across the Large Capital Projects

Programme, has resulted in a new “Supply

Chain” risk being included following the

recent assessment of the Group Principal

Risks.

While managing the risks associated with its

supply chain has always been a priority, and

intrinsic to some of the other Principal Risks,

securing reliable, sustainable supply chains

has emerged as a greater risk for both SSE

and the wider energy sector.

More forward looking, geopolitical unrest

such as Russia’s invasion of Ukraine, war in

the Middle East, and the potential outcomes

of elections in leading economies, including

the UK, are kept under review to understand

their potential impacts. While inflation is

easing, the cost of living continues to

impact energy affordability in the short

term, with consideration given to the

longer-term implications of the cost

associated with the net zero transition.

Internally, the large workforce expansion

required to meet net zero targets needs

careful consideration to ensure successful

onboarding of new employees and critically,

maintain SSE’s cultural values that are

integral to the success of the Group.

In the longer-term, emerging risk themes

include the future consequences of

geopolitical change, the potential risk and

opportunities created by new technologies

including AI, market conditions and changes

to the regulatory environment.

Full details of our Principal Risks can be

found on pages 89 to 95

Risk informed

decision making

Risk

86 SSE plc Annual Report 2024

Strategic Report

How SSE manages risk

At the heart of SSE’s Risk Management

Framework is a strong risk culture enabling

everyone in SSE to take accountability and

responsibility for managing risk. This

overarching framework provides Business

Units the ability to manage risk exposures

against their individual strategic objectives

and operations whilst allowing the Group

tomaintain a holistic view of the Group

riskprofile.

The Risk Management Framework forms

part of SSE’s System of Internal Control

(further details can be found on page 151

)

and sets the foundation for how risks are

managed across the Group. SSE’s risk

management process consists of four

stages (as shown below), which support

considered decision making.

Risk Management Process

Risk

monitoring

Risk

identification

Risk

response

Risk

assessment

Assessing Principal Risks

The Principal Risk assessment process

provides a risk rating based on how likely

risks are to occur and what the subsequent

impacts would be, considering the

effectiveness of controls in place to mitigate

should the risk materialise. Ongoing

oversight from the Group Executive

Committee and its sub committees

ensuresthat risks are regularly assessed

with appropriate mitigations implemented

where necessary.

The Group Executive Committee and

itssubcommittees (as detailed on page

114

) have responsibility for overseeing the

Principal Risks. An annual assessment of each

Principal Risk requires committee members

and subject matter experts to provide

commentary on:

– contextual changes to the risks;

– consideration whether over the course

of the year the risks have increased or

decreased in materiality; and

– confirm effective mitigations are in place

for managing the risks.

The responses are consolidated forming

Principal Risk reports, including provisional

viability testing and current management

information and presented back to each

committee for endorsement. The

committees confirm the risk trend (more,

less or equally material), overall

effectiveness of the risk control and

monitoring environment, and whether any

additional control improvement actions

arerequired.

The outputs from these committee

assessments are then presented to the

Group Executive Committee for full review,

following which, final approval is obtained

from the Board. This is an inclusive and

iterative process that results in considered

and objective outputs and a robust

assessment of the Principal Risks.

The outcome of the Principal Risk

assessment can be found on

pages89to95

Identifying Emerging risks

Throughout the year, emerging risks are

considered on an ongoing basis, in

response to changing operating

environments or events that have the

potential to impact SSE. The Group will

assess risks that emerge and take the

appropriate action ensuring a dynamic

riskprofile.

Consideration is also given to emerging

risks which have the potential to become

aPrincipal Risk in the medium to long term

aspart of the Principal Risk assessment

process. Any common themes that emerge

from stakeholder engagement are defined,

assessed and presented for discussion with

the Group Risk Committee, agreement at

the Group Executive Committee and final

ratification at Board.

Evolving Risk Management

As SSE’s risk profile changes, there is a need

to evolve the Group risk management

approach to maintain pace and continue

toimprove risk maturity. This is critical to

ensure that the underlying risk culture

continues to provide an environment where

everyone feels empowered to take risk, in

line with SSE’s risk appetite and strategy.

This year, the Group is enhancing the risk

management framework and adopting

anew technology solution. Both will

provide improved awareness and oversight,

enabling enhanced holistic risk reporting

both across the Group and for each of the

individual Business Units.

Looking ahead

In the coming year the Group will review

how risk appetite can be more effectively

articulated and applied, to provide greater

confidence and certainty over authority

anddecision making.

Additionally, in acknowledgement of the

ever-changing nature of the markets in

which SSE operates, the Group will look to

evolve and strengthen the approach to

identify emerging risks. The addition of a

formal Group wide, longer term horizon

scanning exercise will enable a more

forward looking view of risk trends and

assessment of potential impact, both

positive and negative to SSE’s strategy.

Management of risk is key to delivery

of SSE’s Large Capital Projects

87SSE plc Annual Report 2024

Governance Financial Statements

Identifying and assessing climate

opportunities and risks

SSE’s Group Risk Management Framework is

complemented by a specialist TCFD climate

assessment that identifies and assesses

climate opportunity and risk in the short

(to2030), medium (to 2050) and long term

(to 2080). These three climate-related time

horizons are chosen to align with the

investment, capital and regulatory time

horizons that govern SSE’s financial,

operational and capital plans

The climate risk assessment involves senior

business leader interviews supported by

ongoing Business Unit risk assessments

tocapture and understand climate

opportunities and risks. A materiality test

iscompleted, and a final list of significant

climate opportunities and risks defined.

SSE then identifies the climate impact on its

operations over the short and medium term

from the perspective of market, policy or

regulatory transition opportunities and risks,

and over the medium and long term from

the perspective of the physical risks of

climate change.

Materiality is tested for each climate

opportunity or risk based on its ability to

have a substantive potential financial impact

on SSE’s strategy or its significant impact

onSSE’s stakeholders. In 2023/24, the

assessment process reconfirmed that the

material climate-related opportunities and

risks (outlined on pages 100 to 105

SSE’s Annual Report 2023) remained

relevant to SSE.

Managing climate

opportunities and risks

SSE’s System of Internal Control defines the

policy, standards and governance for the

management of all risks, including those

relating to climate. The system involves the

critical controls that are in place to manage

risk including climate risk. Controls include

business continuity plans, crisis

management and incident response, large

capital project governance and internal and

external assurance.

The climate-related opportunities and risks

(pages 100 to 105

), combined with SSE’s

Sustainability Report 2024 and CDP

Climate Change response provides further

information on these actions and controls.

Integrated climate-related

riskassessment

SSE’s Group Risk Management Framework

(page 151 ) manages risks that can

threaten the achievement of SSE’s strategic

objectives, including climate change.

Climate change is a Group Principal Risk to

SSE and has the ability to affect the

achievement of agreed strategic objectives

and the long term success of SSE (see page

). Scenarios related to physical risks

associated with climate change form part of

SSE’s viability assessment (page 109 ).

Climate-related influencing factors and key

developments are also considered against

all relevant Group Principal Risks.

RISK – CONTINUED

Risk Appetite

The Group risk appetite aligns to the

achievement of SSE’s strategic objectives.

SSE will only accept risk where it is

consistent with its core purpose, strategy

and values; is well understood; can be

effectively managed; is in line with

stakeholder expectations and offers

commensurate reward.

The key elements of SSE’s Strategic

Framework – including SSE’s Purpose,

Strategy, Goals and Values, as well as

thefocus of its business model, are fully

reflective of its risk appetite.

Fundamentally:

– SSE has a clear strategy to create value

for shareholders and society in a

sustainable way by developing,

building, operating, and investing in

the electricity infrastructure and

businesses needed in the transition

tonet zero.

– SSE has a good understanding of the

risks and opportunities in the Great

Britain and Ireland energy markets and

a strong associated knowledge of EU

and further international markets,

augmented by its acquisitions.

Expansion into other new international

markets is subject to rigorous scrutiny

and ensuring the appropriate

governance arrangements, consistent

with the Group’s values and strategic

goals, are in place.

– Safety is SSE’s first value, and it has no

appetite for risks brought on by unsafe

actions, nor does it have any appetite

for risks brought on by insecure

actions including those relating to

cyber security. In areas where SSE is

exposed to risks for which it has little

or no appetite, even though it has

implemented high standards of control

and mitigation, the nature of these

risks mean that they cannot be

eliminated completely.

In determining its appetite for specific

risks, the Board is guided by three key

principles:

1. Risks should be consistent with SSE’s

core purpose, financial objectives,

strategy and values;

2. Risks should only be accepted where

relevant approvals have been attained

through the Governance Framework

toconfirm appropriate reward is

achievable on the basis of objective

evidence and in a manner that is

consistent with SSE’s purpose, strategy

and values; and

3. Risks should be actively controlled and

monitored through the appropriate

allocation of management and other

resources, underpinned by the

maintenance of a healthy business

culture.

The Board has overall responsibility for

determining the nature and extent of the

risk it is willing to take to achieve strategic

objectives and for ensuring that risks are

managed effectively across the Group.

88 SSE plc Annual Report 2024

Strategic Report

The nature of the world and operating

environment means that SSE’s Principal

Risks are intrinsically linked. Acknowledging

the interconnectivity of the risks validates

the need to holistically manage and monitor

the Group Risk profile and to ensure the

System of Internal Control (page 151 )

continues to support the delivery of

SSE’sstrategy.

Developments this year

As previously highlighted, the number of

Principal Risks has increased to 12 this year,

with the inclusion of the newly formed

“Supply Chain” risk. A higher global demand

for renewable technology, combined with

rising commodity prices, has the potential

to drive both increased costs and supply

chain capacity constraints, leading to

project feasibility implications or impacting

delivery timescales. Additionally, SSE must

ensure the ethics and quality within the

supply chain are not compromised. All of

these factors have the potential to affect

anumber of the other Principal Risks.

Cyber Security and Resilience remains

unchanged with a high likelihood and

impact. Whilst a strong and continuously

evolving control environment is in place,

protecting SSE from the threat of cyber

attack remains a top priority. Evolving the

Group’s technology practices to mitigate

this is essential in continuing to manage

thisrisk.

The Portfolio Exposure risk also remains

unchanged with a high likelihood and

impact. In comparison to the previous year

where high commodity prices resulted in

increases to collateral requirements,

ultimately gave rise to high returns. This year

while price volatility has reduced, ongoing

geopolitical unrest, conflicts, upcoming

elections and supply chain restrictions

mean the potential return of increased

volatility still remains.

The actions taken this year around the

Principal Risks of Energy Affordability and

Climate Change has resulted in a reduction

to materiality. Both these risks are closely

linked with Political and Regulatory Change.

Whilst the potential likelihood of political

and regulatory change has increased due

topotential outcomes of elections in the

coming year, the impact of this risk has

reduced. SSE has confidence that the

strategy is aligned with the UK government

decarbonising ambitions, and this is

therefore reflected in the risk ratings.

A minor change has also been made to the

definition of Speed of Change Principal Risk

acknowledging that change within SSE is

now a constant that requires continuous

adaptation and resilience to ensure the

Group’s strategic direction is maintained.

The Principal Risks are mapped below

providing insight to the relative impacts

andlikelihoods of each.

Further detail of SSE’s Principal Risks

including the material influencing factors,

key mitigations and the developments

throughout this year that have driven risk

scoring can be found on pages90 to 95

Group Principal Risks

Principal Risks

Risk trend key

Increased in materiality

Not changed significantly

Reduced in materiality

New risk

High

LIKELIHOOD

7 11

1 43

6 10 12

2 9

Low

Less IMPACT More

1. Climate Change

2. Cyber Security and

Resilience

3. Energy Affordability

4. Energy Infrastructure

Failure

5. Financial Liabilities

6. Large Capital Projects

Management

7. People & Culture

8. Political and Regulatory

Change

9. Portfolio Exposure

10. Safety and the

Environment

11. Speed of Change

12. Supply Chain

89SSE plc Annual Report 2024

Governance Financial Statements

Climate Change

Risk trend What is the risk?

The risk that SSE’s strategy, investments or operations

are deemed to have an unacceptable future impact

on the natural environment and on national and

international targets to tackle climate change.

Link to strategy

Oversight

Group Risk Committee

Material influencing factors

– Adverse weather events causing damage or interrupts energy supply

orgeneration.

– Speed of technological developments.

– Politicisation of climate issues for the UK General Election, coupled

withslow incumbent Government policy decision making and

implementation.

– Global and domestic policies including those published by the UK’s

Committee on Climate Change relating to the Sixth Carbon Budget

forthe period 2033 to 2037.

Key mitigations

– Climate Change Policy and Sustainability Policy.

– Clear commitment to our strategy, driving climate-related performance

programmes across the organisation.

– SSE assesses the climate impact on its operations over the short,

medium and long term from the perspective of market, policy or

regulatory transition risks and opportunities and the physical risks of

achanged climate.

– Political and regulatory engagement.

– SSE is investing in decarbonising infrastructure over a five-year period

to FY27 as part of its NZAP Plus.

– SSE’s Net Zero Transition Plan sets out the key actions SSE will take to

drive progress towards its long term net zero ambitions.

– SSE provides transparent disclosures of its governance around

climate-related risks and opportunities.

– SSE’s approach to executive remuneration reflects the role of

sustainability and climate-related considerations within SSE’s purpose

and strategy, with sustainability-linked metrics and targets an element

of performance related pay. See page 158

Developments this year

– Over the year controls across adaptation planning and reporting,

sustainability assessment criteria within Large Capital Projects

programs, and sustainable procurement processes have been

strengthened. These improvements have subsequently driven a

reduction in the potential impact of this Principal Risk to the Group.

– NZAP Plus investment plan for five years to 2026/27 upgraded to

£20.5bn (from £18bn) based on increasing visibility over Transmission

spend and associated supply chain costs.

– Continued lobbying for a supportive environment encouraging

investment in low carbon generation.

– 2023/24 was SSE’s lowest scope 1 green house gas emissions.

– Further detail of our climate opportunity and risk management can

befound on pages 100 to 105

Cyber Security and Resilience

Risk trend What is the risk?

The risk that key infrastructure, networks or core

systems are compromised or are otherwise rendered

unavailable.

Link to strategy

Oversight

Group Risk Committee

Material influencing factors

– Software or hardware issues, including telecoms networks, connectivity

and power supply interruption.

– Heightened threat of cyber-attacks due to geopolitical events.

– Increased sophistication and likelihood of ransomware attacks.

– International expansion.

– Ineffective operational performance, for example, breach of

information security rules or poor management of resilience expertise.

– Employee and contractor understanding and awareness of information

security requirements.

– Malicious cyber attack.

– Increase in third party suppliers and joint venture heightening our risk

Key mitigations

– Cyber Security Policy and Data and Information Management Policy.

– Key technology and infrastructure risks are incorporated into the

designof systems.

– Regular internal and third-party testing of the security of information

and operational technology networks and systems.

– Continued strengthening and embedding of the cyber risks and

controls framework to continue to identify threats and reduce

exposures.

– Service level agreements for business-critical IT services in place.

– Business continuity plans are reviewed in response to changes in the

threat to the Group and regularly tested.

Developments this year

– Geopolitical unrest resulting in continued heightened threat level.

– Significant longer-term Security Programme investment to strengthen

the resilience of SSE systems.

– Thorough review of Business continuity and Disaster Recovery plans.

– Implementation of Network Information Systems (NIS) Directive for

ourregulated businesses.

– Continued focus to modernise the IT estate.

Risk trend key:

Increased in

materiality

Not changed

significantly

Reduced in

materiality

New risk

RISK – CONTINUED

90 SSE plc Annual Report 2024

Strategic Report

Energy Affordability

Risk trend What is the risk?

The risk that energy customers’ ability to meet the

costs of providing energy, or their ability to access

energy services is limited, giving rise to negative

political or regulatory intervention that has an impact

on SSE’s regulated networks and energy businesses.

Link to strategy

Oversight

Group Executive Committee

Material influencing factors

– Technology changes and innovations to develop sustainable

infrastructure and energy solutions.

– Supply chain cost management.

– Public policies, including those aimed at reducing carbon emissions

and energy consumption.

– Accessibility to energy and related services for all.

– Increased focus on energy security in response to current geopolitical

events.

– Required investment in the upgrading of the UK’s energy infrastructure

to achieve net zero.

– Fluctuations in the cost of fuels.

– Supplier and customer failures and related bad debt.

Key mitigations

– SSE Sustainability Policy.

– Robust stakeholder engagement across government, regulators,

customers and relevant counterparties.

– Adopting and implementing government support mechanisms across

multiple jurisdictions.

– Affordability schemes to support financially vulnerable customers.

– Long-term price forecasting.

Developments this year

– Energy prices, whilst historically high, have seen a reduction in

consumer prices this year.

– Continuing to advocate for progressive policies will help bring forward

necessary investment in low-carbon infrastructure at lowest cost to

reduce customers’ exposure to energy price volatility and deliver net

zero affordability.

– SSE Airtricity introduced two consecutive domestic tariff reductions in

Ireland and regulated tariff reductions have been introduced in

Northern Ireland.

– SSE Business Energy established a £15m targeted support fund for

business customers in Great Britain.

– SSEN Distribution refreshed its Consumer Vulnerability Strategy in

March 2024.

Energy Infrastructure Failure

Risk trend What is the risk?

The risk of national energy infrastructure failure,

whether in respect of assets owned by SSE or those

owned by others which SSE relies on, that prevents

the Group from meeting its obligations.

Link to strategy

Oversight

Group Executive Committee

Material influencing factors

– Longer-term changes in climate patterns cause sustained higher

temperatures that may result in lower rainfall and reduced wind

impacting renewable generation output.

– Government policy regarding the operation of the energy network

relating to security of supply.

– Failures in any aspect of the Great Britain national critical infrastructure.

– Appropriate asset management and necessary upgrading works of both

generation and network assets.

– Energy network balancing mechanisms to balance supply and demand

on Great Britain network.

– Malicious attack on energy infrastructure.

– Continued availability of technical skillset and competency.

Key mitigations

– Recruitment strategies to attract technical skillset and experience to

operate, maintain & build assets.

– Business Unit Asset Management Policies.

– Dedicated Engineering Centres of Excellence review and develop plans

to ensure the ongoing integrity of its generation assets.

– Targeted investment plans to ensure the ongoing health and integrity of

network assets.

– Crisis management and business continuity plans are tested regularly

and are designed for the management of, and recovery from, significant

energy infrastructure failure events.

– Active participant in national security forums such as the Centre for the

Protection of National Infrastructure (CPNI).

– SSE plans to deliver flexible new low-carbon capacity, to play a critical

role to back up wind and solar generation, ensuring security of supply

across the UK.

Developments this year

– Elevating geopolitical unrest potentially leading to global security

threats, cyber threats and supply chain challenges.

– SSEN Distribution responded to six named storms to restore customers’

electricity supplies as safely and quickly as possible.

– Regulatory and political consensus around the importance and benefit

of more strategic investment to ensure capacity and resilience in the

energy system.

Link to strategy:

Develop Operate Build Invest

91SSE plc Annual Report 2024

Governance Financial Statements

Financial Liabilities

Risk trend What is the risk?

The risk that funding is not available to meet SSE’s

financial liabilities, including those relating to its

defined benefit pension schemes, as these fall due

under both normal and stressed conditions without

incurring unacceptable costs or risking damage to its

reputation.

Link to strategy

Oversight

Group Risk Committee

Material influencing factors

– Ongoing commitment to an investment grade credit rating.

– Global macroeconomic changes and subsequent volatility in foreign

exchange markets.

– Fluctuations in interest rates and inflation which influence borrowing

costs.

– Defined benefit pension scheme performance including the impact

offluctuations in gilt yields on the value of scheme liabilities.

– Counterparty credit limit exposures.

– Operational and trading collateral requirements.

Key mitigations

– SSE Financial Management Policy.

– Committed borrowings and facilities are always available equal to at

least 105% of forecast borrowings over a rolling six-month period.

– Detailed and continuous financial modelling and forecasting on a

Group and Business Unit basis.

– SSE seeks to maintain a diverse and innovative portfolio of debt to

avoidover-reliance on any one market.

– Each of SSE’s defined benefit pension schemes has a Board of Trustees

which acts independently of the Group.

– The approval of all material counterparty credit limits is a matter

reserved for the Board.

– The Collateral Committee meet weekly to monitor ongoing collateral

requirements.

– SSE has a proven ability to maintain access to capital markets during

stressed economic conditions.

Developments this year

– Ongoing impact of high UK interest rates and higher than usual cash

collateral requirements for trading have resulted in a marginal increase

in this risk.

– Capital markets have shown strong demand for SSE Bonds and good

liquidity.

– Short- and longer-term funding supported by existing facilities and

forecasts.

– SSE issued a €750m eight-year Green Bond in August 2023, earmarked

for flagship onshore and offshore wind projects which have recently

been completed or are under construction.

– SSE issued a £500m 20-year Green Bond in January 2024, to finance

and/or refinance critical national transmission infrastructure projects.

– SSEN Transmission and SSEN Distribution both signed their first

sustainability-linked Revolving Credit Facilities (RCFs).

Large Capital Projects Management

Risk trend What is the risk?

The risk that SSE develops and builds major assets

that do not realise intended benefits or meet the

quality standards required to support economic lives

of typically 25 to 60 years within forecast timescales

and budgets.

Link to strategy

Oversight

Large Capital Projects Committee

Material influencing factors

– Appropriate contractual arrangements which meet the requirements

ofany jurisdiction in which SSE operates.

– New or unproven technology.

– Appropriate and effective budget management.

– Supply chain impacts associated with new entities, new assets and a

new network structure created by joint ventures and Brexit.

– Availability and capacity of competent contractors in any jurisdiction

inwhich SSE operates.

Key mitigations

– Large Capital Projects Governance Framework manual ensures all

major capital investment projects are governed, developed, approved

and executed in a consistent and effective manner.

– Dedicated Large Capital Project quality and assurance teams perform

in-depth quality reviews.

– Ongoing interaction with key suppliers through SSE’s Supplier

Relationship Management Programme.

– SSE generally manages insurance placement by organising owner-

controlled insurance for major projects, allowing greater control and

flexibility over the provisions in place.

– Appropriate governance arrangements, including those relating to

JoinVenture and Partner Management

Developments this year

– The impacts to our Large Capital Projects associated with supply

chainmanagement are now captured within the new “Supply Chain”

Principal Risk.

– Continued high pace of required growth through a large number

ofongoing projects.

– Development of bespoke governance and assurance controls for

international project development.

RISK – CONTINUED

Risk trend key:

Increased in

materiality

Not changed

significantly

Reduced in

materiality

New risk

92 SSE plc Annual Report 2024

Strategic Report

People & Culture

Risk trend What is the risk?

The risk that SSE is unable to attract, develop and

retain an appropriately skilled, diverse and

responsible workforce and leadership team, and

maintain a healthy business culture which

encourages and supports ethical behaviours and

decision making.

Link to strategy

Oversight

Group Executive Committee

Material influencing factors

– Rewarding employee contributions through fair pay and benefits.

– Acquisition of competent skills and resources to support growth plans

in international markets.

– SSE embraces cultural diversity in the workplace and recognition of

thevalue and benefit of having an inclusive and diverse workforce.

– A responsible employer ethos. For full details please see the

Sustainability Report

– Clearly defined roles, responsibilities and accountabilities.

– Availability of career development opportunities and appropriate

succession planning.

– Clear personal objectives and communication of the SSE set of values.

– A focus on ethical business conduct and creating a culture in which

employees feel confident to speak up when they suspect wrongdoing.

– The health and wellbeing of all employees see the Sustainability

Report

for further detail.

– Clear and well-structured employee engagement and communications.

– High demand for recruitment may cause culture dilution.

Key mitigations

– SSE Employment Policy and SSE Whistleblowing Policy.

– Inclusion and Diversity plan, further details are available on pages

44and 45

– SSE Governance arrangements, including those relating to JV and

Partner Management.

– Employee support for mental health and wellbeing, including those

provided as part of the Employee Assistance Programme. Further

details on careers.sse.com/employee-benefits

– ‘Doing the Right Thing, a guide to ethical business conduct’, explicitly

outlines steps employees should take to ensure their day-to-day

actions and decisions are consistent both with SSE’s values and ethical

business principles.

– Incidents of wrongdoing can be reported through both internal and

external mechanisms, including an independent ‘Speak Up’ phone line

and email service.

– SSE’s business leaders undertake regular succession planning reviews.

At a Group level, SSE continues to develop its approach to the

management of talent.

– Introduction of Performance Edge, an evolved approach to leading

andmanaging performance.

– SSE invested a total of £32.0 m in learning and development and

pipeline programmes.

Developments this year

– While the developments this year are positive, the increase in risk trend

reflects the need to ensure culture is protected and maintained while

large numbers of employees are joining the organisation.

– SSE saw a 14% increase in headcount at 31 March 2024 compared to the

previous year. SSE continued with its commitment to create at least

1,000 jobs every year until 2025 and filled a total of 4,381 positions

across internal and external recruitment.

– SSE’s employee retention rate improved slightly to 91.3%.

– Positive GPTW Employee engagement (see page 40

– Review of SSE’s six core values resulting in new simpler descriptions to

better reflect its ethical ways of working.

– SSE announced an enhanced approach to its Personal Contract Pay for

employees in the UK and Ireland.

Political and Regulatory Change

Risk trend What is the risk?

The risk associated with operating in a fast-paced,

highly regulated environment which is subject to

constantly changing political, regulatory and

legislative expectations and interventions.

Link to strategy

Oversight

Group Executive Committee

Material influencing factors

– SSE aligns with the Paris Agreement goal and aim to achieve net zero

greenhouse gas emissions by at least 2050.

– Material changes to regulatory frameworks in any jurisdiction in which

SSE operates.

– Government intervention into the structure of the energy sector in any

jurisdiction in which SSE operates.

– Constitutional uncertainty in any jurisdiction in which SSE operates.

– Changes in financial, employment, safety and consumer legislation

and/or regulation and the impact of these changes on business-as-

usual activities in any jurisdiction in which SSE operates.

Key mitigations

– SSE Political and Regulatory Engagement Policy.

– Dedicated Corporate Affairs, Regulation, Legal and Compliance

departments provide advice, guidance and assurance to each business

area regarding the interpretation of political, regulatory and legislative

change. These teams take the lead in engagement with regulators,

politicians, officials, and other such stakeholders. Full details of SSE’s

Stakeholder Engagement can be found on page 14

– SSE Governance arrangements, including those relating to JV and

Partner Management.

– Dedicated project teams to manage all aspects of significant regulatory

and legislative change.

– Regular engagement with the Board and Group Executive Committee

on political and regulatory developments which may impact SSE’s

operations or strategy.

Developments this year

– While the likelihood of political and regulatory change occurring has

increased due to uncertainty associated with potential outcomes of

elections in the coming year, there is confidence that SSE’s strategy is

aligned with support for net zero shown by all political parties,

therefore the impact of this risk has reduced, accounting for an overall

reduction in risk trend.

– SSE has strong engagement with government and regulators resulting

in strong support for net zero from all political parties.

Link to strategy:

Develop Operate Build Invest

93SSE plc Annual Report 2024

Governance Financial Statements

Portfolio Exposure

Risk trend What is the risk?

The risk to the Group’s portfolio value associated

with fluctuations in both the price and physical

volume of key energy market indices or drivers –

primarily gas, carbon and electricity – as well as

foreign exchange values, CO

permits and oil.

Link to strategy

Oversight

Group Risk Committee

Material influencing factors

– Global geopolitical events.

– Fluctuations in demand, supply and generation capacity and availability

both in Great Britain and globally.

– Generation technology advancements.

– Government intervention into the structure of the energy sector in any

jurisdiction in which SSE operates.

– International and national agreements on climate change.

– International flows of fuel.

– Stability and availability of supply chains.

Key mitigations

– Asset-by-asset approach to hedging strategy ensuring trading positions

cannot have a material impact on SSE Group earnings.

– The Group Energy Markets Exposure Risk Committee has operational

oversight of commodity positions; reporting to the Board Energy

Markets Risk Committee that monitors the ongoing effectiveness of

Group hedging arrangements. For further details please see pages 152

to 153

– SSE uses VaR and PaR measures to monitor and control exposures.

Trading limits are reviewed regularly by the Energy Markets Risk

Committee, before being approved by the Board.

– SSE’s Energy Economics team provides commodity price forecasts

which are used to inform decisions on trading strategy and asset

investment.

– SSE utilises hedging instruments to minimise exposure to fluctuations in

foreign exchange markets, details of which are available in the Financial

Statements section of the Annual Report and Accounts.

– Energy Markets can maximise and mitigate risks across the Group

through leveraging the portfolio of Business Units.

Developments this year

– Counterparty risk exposure have reduced but remain high.

– This year while price volatility has reduced, ongoing geopolitical unrest,

conflicts, upcoming elections and supply chain restrictions mean the

potential return of increased volatility still remains.

Safety and the Environment

Risk trend What is the risk?

The risk of harm to people, property or the

environment from SSE’s operations.

Link to strategy

Oversight

Safety, Health & Environment

Committee

Material influencing factors

– Safety culture and SSE’s commitment to getting everyone home safe.

– Clear and appropriately communicated safety processes.

– Regular and documented training.

– The size, scale, complexity and number of projects under way.

– Adverse weather.

– Challenging geographic locations.

– Appropriate task and asset risk assessment.

– Clear, effective and regular communications of all relevant safety

updates.

– Competent employees and contractors.

Key mitigations

– SSE Safety and Health Policy and SSE Environment Policy.

– Safety is the Group’s number one value with Board oversight being

provided by the Safety, Sustainability, Health and Environment Advisory

Committee (SSHEAC).

– SSE has a central Contractor Safety Team supported by dedicated

Contractor SHE Managers and Assurance Auditors to improve

contractor safety performance. For full details please see the

Sustainability Report

– Crisis management and business continuity plans are in place across

the Group. These are tested regularly and are designed for the

management of, and recovery from, significant safety and

environmental events.

– Each business carries out regular SHE assurance reviews of the risks

faced, the controls in place and the monitoring that is undertaken.

– SSE’s dedicated Engineering Centres of excellence review and develop

plans to ensure that the integrity of its generation assets is maintained.

– SSE Net Zero Transition Plan sets out the key actions SSE will take to

drive progress towards its long term net zero ambitions.

Developments this year

– Total Recordable Injury Rate (TRIR) among direct employees of 0.07

matching the Company’s best performance year.

– Slight increase in Total Recordable Injury Rate to 0.20 for direct

employees and contract partners reflecting a significant surge in

investment and construction activity, and the associated rise in contract

partner hours worked.

– SSE has been rolling out an immersive training experience, to help

colleagues and partners gain a deeper level of emotional connection

when something goes wrong. The programme also includes building

SSE’s own centre, the Faskally Safety Leadership Training Centre in

Scotland.

– SSE has partnered with the Lighthouse Construction Industry Charity

(LCIC), a charity solely dedicated to the emotional, physical and

financial wellbeing of construction workers and their families. Support

includes a 24/7 Construction Industry Helpline offering a range of free

and confidential wellbeing support services.

RISK – CONTINUED

Risk trend key:

Increased in

materiality

Not changed

significantly

Reduced in

materiality

New risk

94 SSE plc Annual Report 2024

Strategic Report

Speed of Change

Risk trend What is the risk?

The risk that SSE is unable to keep pace with or

adequately manage the impacts of the speed of

change affecting the sector and markets in which it

operates. In doing so, it fails to meet the evolving

expectations of its stakeholders or achieve its

strategic objectives.

Link to strategy

Oversight

Group Executive Committee

Material influencing factors

– Geopolitical events.

– Fast developing customer needs and expectations in relation to

efficient, innovative and flexible products and services.

– Technological developments and innovation, including AI.

– Net-zero strategic goals.

– Increased competition from market entrants including international

oilcompanies.

– Longer-term capital investment plans and budgets.

– The size, scale and number of change programmes under way,

including those relating to regulatory or legislative requirements in

anyjurisdiction in which SSE operates.

– Governance and decision-making frameworks, including those

relatingto JV and Partner Management.

Key mitigations

– SSE Operating Model Policy.

– The Board sets the risk appetite of the Group and approves and

regularly reviews the Group’s commercial strategy, business

development initiatives and long-term options ensuring alignment of

risk appetite and strategic objectives.

– SSE’s Group operating model has been designed to ensure dynamic

and efficient decision-making, empowered and accountable delivery of

Business Unit strategies and to fulfil SSE’s purpose to provide energy

needed today while building a better world of energy for tomorrow.

Details of SSE’s decision making context are available on page 135

ofthe Directors’ Report.

– The Group Executive Committee is responsible for ensuring that

Business Unit strategies are consistent and compatible with the

overarching Group strategy and its vision to be a leading energy

provider in a net zero world.

Developments this year

– A minor change has been made to the definition of Speed of Change

Principal Risk acknowledging that change within SSE is now a constant

that requires continuous adaptation and resilience to ensure strategic

direction is maintained.

– Establishment of an internal cross-Group Innovation Advisory Council

to identify promising new technologies relevant to clean energy and

acts as a forum for SSE’s Business Units to share knowledge.

Supply Chain

Risk trend

What is the risk?

The risk that SSE is unable to secure a viable,

competent and sustainable supply chain to meet the

growth required to deliver the strategy and NZAP

Programme Plus.

Link to strategy

Oversight

Group Risk Committee

Material influencing factors

– High global demand renewable and low carbon technology.

– Fluctuations in the cost of resources.

– Ensuring sustainable and ethical supply chains.

– Scarcity of critical raw materials.

– Identifying viable supply chains to meet development pipeline.

– Global financial markets impacting availability of capital and in-turn

OEM & contractor liquidity.

– Shipping constraints restricting the movement of goods.

– Geopolitical factors requiring SSE to seek alternative suppliers from

another jurisdiction.

– Shortage of skilled labour; availability and capacity of competent

contractors in any jurisdiction in which SSE operates.

Key mitigations

– Group Procurement Policy.

– Supply chain partnering.

– Strategic supplier relationship management tailored for each

BusinessUnit.

– Third party due diligence.

– Robust commercial terms in place.

– Category management surveillance of markets and environments

toanticipate and develop proactive response to constraints e.g.

pull-through demand, increase stocks, take greater control of

shippingterms.

– Procurement and Commercial teams ensure effective demand

management via dedicated business partners.

Developments this year

– Higher global demand for renewable technology, combined with rising

commodity prices, has the potential to drive both increased costs and

supply chain capacity constraints, leading to project feasibility

implications or impacting delivery timescales.

– SSE published its Sustainable Procurement Plan detailing the ambition

to pioneer sustainable and responsible procurement practices.

– Publication of SSE’s Human Rights and Modern Slavery Statement

setting out steps taken to identify and prevent human rights abuses

andmodern slavery existing within its business and supply chains.

Link to strategy:

Develop Operate Build Invest

95SSE plc Annual Report 2024

Governance Financial Statements

96 SSE plc Annual Report 2024

Strategic Report

TCFD disclosure statement 98

SSE’s carbon performance disclosures 106

SSE’s taxonomy eligible activities 107

Non-financial and sustainability information statement 108

Viability statement 109

Disclosure

statements

Financial Statements

Governance

97SSE plc Annual Report 2024

SSE’s climate-related

financial disclosures

This statement, along with the relevant

disclosures throughout the Annual Report,

summarise how SSE fulfils its requirements

under relevant mandatory climate-related

financial disclosures. SSE’s business strategy

is wholly focused on addressing the

challenge of climate change through the

decarbonisation of the power system.

Theconsideration of climate-related

opportunities and risks is, therefore,

naturally embedded into its policies and

practices. Considering this, SSE has

integrated its climate-related disclosures

throughout this Annual Report to give

stakeholders a holistic understanding of

how climate-related impacts are managed.

Mandated climate-related

financial disclosure in the UK

SSE is compliant with the Financial

Conduct Authority (FCA) listing rule

LR9.8.6 R(8) requiring organisations

toreport against the Task Force on

Climate-related Financial Disclosures

(TCFD) recommendations,

recommended disclosures and the

Annex and guidance (published 2021)

inannual reports.

These disclosures also satisfy UK

Mandatory Climate-related Financial

Disclosure requirements under the

Companies Act 2006 sections 414CA

and 414CB.

Climate change has been considered

inthe preparation of the Group’s

Consolidated Financial Statements for

the year ended 31 March 2024 on pages

199 to 309

and further information

hasbeen included in note 4.1(v) to

thefinancial statements on pages 210

to 211 .

Navigating SSE’s climate-related disclosures

TCFD recommended

disclosures

SSE’s summary

position More information can be found:

Governance

a) Describe the Board’s

oversight of climate-

related risks and

opportunities.

Responding to the challenge of

climate change is central to

SSE’s strategy, and as a result,

the SSE Board considers

climate change as it establishes

SSE’s purpose, vision and

strategy.

Governance

– Governance of climate-related matters page 115

– More on climate-related work in the year page 115

Remuneration Committee Report

– Strategically aligned remuneration on page 160

b) Describe management’s

role in assessing and

managing climate-

related risks and

opportunities.

There are clearly defined

climate-related responsibilities

assigned to SSE committees

and key positions, including the

Chief Executive and Chief

Sustainability Officer.

Governance

– Governance of climate-related matters page 115

– More on climate-related work in the year page 115

Sustainability

– Ensuring accountability for sustainability page 26

Strategy

a) Describe the climate-

related risks and

opportunities the

organisation has

identified over the short,

medium, and long term.

Opportunities relate to the role

that SSE Renewables, SSEN

Transmission, SSEN

Distribution and SSE Thermal

play in supporting the

transition to net zero.

Material risks are associated

with the physical impacts of

extreme or changing weather

conditions on renewable and

network operations, alongside

transition risks related to

renewable wholesale prices

and resilience of thermal

power generators to changing

policy.

TCFD disclosure statement

– Assessing SSE’s climate-related opportunities and risks

pages 100 to 101

– Detailed opportunity and risk tables pages 102 to 105

b) Describe the impact of

climate-related risks and

opportunities on the

organisation’s

businesses, strategy, and

financial planning.

SSE’s net zero ambitions place

climate action front and centre

of its strategy. SSE’s climate-

related risks and opportunities

are directly linked to its 2030

business goals and capital

plans.

Strategic report

– SSE’s strategy, climate actions and capital plans pages 12 to 13

– Performance against 2030 goals page 25

– Our strategy pages 12 to 13

– SSE’s taxonomy eligible activities page 107

TCFD disclosure statement

– Assessing SSE’s climate-related opportunities and risks

pages 100 to 101

– Detailed opportunity and risk tables pages 102 to 105

Financial Review

– Note 4.1(v)

Impact of climate change and the transition to net

zero, pages 210 to 211

TCFD disclosure statement

98 SSE plc Annual Report 2024

Strategic Report

Useful information

– Further information is presented in SSE’s Net Zero Transition Plan, SSE’s Net Zero Transition Report and SSE’s

Sustainability Report and can be found at sse.com/sustainability .

– For information on SSE’s GHG emissions data and how it is produced, see SSE’s GHG and Environmental Reporting Criteria 2024

at sse.com/sustainability .

– Information on SSE’s CDP submission can be found at sse.com/sustainability .

TCFD recommended

disclosures

SSE’s summary

position More information can be found:

Strategy

continued

c) Describe the resilience

of the organisation’s

strategy, taking into

consideration different

climate-related

scenarios, including a

2°C or lower scenario.

Scenario analysis has assessed

the resilience of SSE, its

strategy and financial plans

under a range of climate-

related scenarios, including a

1.5°C, 2.5°C and 4°C

temperature pathway.

TCFD disclosure statement

– Scenario analysis page 101

– SSE’s opportunities and risks pages 102 to 105

Disclosure statement

– Viability statement page 109

Risk

management

a) Describe the

organisation’s processes

for identifying and

assessing climate-

related risks.

To identify and assess

climate-related opportunities

and risks, SSE conducts a

specialist TCFD climate

assessment that complements

its Group Risk Management

Framework.

Risk

– Identifying and assessing climate opportunities and risks

page 88

Governance

– Audit Committee, Group Risk Committee, TCFD Steering Group

and TCFD Working Group page 115

TCFD disclosure statement

– Assessing SSE’s climate-related opportunities and risks pages

100 to 101

b) Describe the

organisation’s processes

for managing climate-

related risks.

SSE’s System of Internal

Control defines the policy,

standards and governance for

the management of all risks,

including those relating to

climate.

Risk

– Managing climate opportunities and risks page 88

TCFD disclosure statement

– Detailed opportunity and risk tables pages 102 to 105

Governance

– Governance of climate-related matters page 115

c) Describe how processes

for identifying,

assessing, and managing

climate-related risks are

integrated into the

organisation’s overall

risk management.

Climate change is a Group

Principal Risk to SSE. Scenarios

on physical climate risks form

part of SSE’s viability statement

and climate-related influencing

factors are considered across

all relevant Group Principal

Risks.

Risk

– Integrated climate related risk assessment page 88

Disclosure statement

– Viability statement page 109

Governance

– Governance of climate-related matters page 115

Metrics and

targets

a) Disclose the metrics

used by the organisation

to assess climate-related

risks and opportunities

in line with its strategy

and risk management

process.

SSE uses its 2030 Business

Goals, Net Zero Transition Plan,

science-based carbon targets,

and other metrics to measure

and manage climate-related

opportunities and risks.

Strategic report

– Performance against 2030 goals page 25

Sustainability

– SSE’s Net Zero Transition Plan pathway page 28

– Measuring SSE’s carbon performance pages 31 to 32

– Managing water use page 48

– Managing air emissions page 49

– SSE’s energy consumption page 49

– Carbon pricing page 30

Remuneration Committee Report

– PSP the measures for the 2024 pay award on page 169 to 170

b) Disclose Scope 1, Scope

2, and, if appropriate,

Scope 3 greenhouse gas

(GHG) emissions, and

the related risks.

SSE measures and discloses

year-on-year carbon

performance and progress

against targets.

Sustainability

– Measuring SSE’s carbon performance pages 31 to 32

Disclosure statement

– SSE’s carbon performance disclosures page 106

c) Describe the targets

used by the organisation

to manage climate-

related risks and

opportunities and

performance against

targets.

SSE has long-term net zero

ambitions which are supported

by interim science-based

targets on a 1.5°C pathway.

Strategic report

– Performance against 2030 goals page 25

Sustainability review

– SSE’s performance against its science-based carbon targets

page 31

99SSE plc Annual Report 2024

Governance Financial Statements

TCFD DISCLOSURE STATEMENT – CONTINUED

Assessing SSE’s

climate-related

opportunities

andrisks

SSE has a well-established approach to the

identification of material climate-related

opportunities and risks, which is informed

by climate-scenario analysis. The results of

this exercise are provided in the detailed

opportunities and risks table on pages

102to 105 .

SSE’s approach to climate

scenario analysis

SSE undertakes an exercise to identify the

material climate-related opportunities and

risks every two years, or sooner if a material

business change occurs, with the next due

in the year to 31 March 2025.

Each year, SSE reviews the scenario analysis

process, incorporating updates from

external scenario providers and relevant

economic and political factors affecting the

Group’s operations. SSE currently assesses

different scenarios with temperature

outcomes of 1.5°C, 2.5°C and 4°C over

timehorizons to 2030, 2050 and 2080.

The financial impact change from the

prior period provides an indication of the

potential change in scenario analysis

outcomes from the prior year’s assessment,

allowing SSE to assess and manage

potential changes in risk exposures as part

of the integrated Group Risk Management

Framework and to provide strategic insights

into potential changes in climate-related

opportunities.

Time horizons for scenario analysis

SSE’s time horizons for assessing climate-

related opportunities and risks are aligned

with its business practice time horizons.

Thethree climate-related time horizons are

chosen to align with the investment, capital

and regulatory time horizons that govern

SSE’s financial, operational and capital

plans. Figure 1 sets out the relationship

between TCFD time horizons and SSE’s

Going Concern Statement and Viability

Statement time horizons. SSE periodically

reviews the appropriateness of these

timehorizons.

Assessing financial impacts of climate-

related opportunities and risks

Climate-related opportunities and risks

continue to be assessed relative to an

operating profit measure, expressed as

earnings before interest and tax (EBIT),

withthe exception of the accelerated gas

closure risk which remains on a projected

net present value basis. The scenario

analysis used the financial quantification

pathways along with internal and external

data sources to quantify each of the

material opportunities and risks under the

different scenarios. Additional sensitivity

analysis is also used to provide further

insights into the impact of climate-related

risks and opportunities on the Group’s

business operations.

Figure 1: SSE’s Going Concern Statement,

Viability Statement and TCFD time horizons

2025

2028

2030 2050 2080

Going Concern Statement

Time horizon to

December 2025

Viability Statement

4 year time horizon toMarch 2028

TCFD Disclosure Statement

Time horizons:

– Short term to March 2030

– Medium term to March 2050

– Long term to March 2080

100 SSE plc Annual Report 2024

Strategic Report

SSE’s approach to

scenarioanalysis

Material opportunities

andrisks

Identified through TCFD

assessment prioritisation process

Impact pathways

Developed for each opportunity

and risk, considering the

business and financial impacts of

possible climate-related events

Financial quantification

pathways

Developed for each opportunity

and risk, with identification of

data points and external

scenarios

Scenario selection

Relevant scenarios selected

foreach opportunity and risk,

considering temperature

outcomes, time horizons

andother factors

Quantification

Using internal data and publicly

available data from TCFD

recommended providers

Assessment

Quantification output assessed,

considering resilience of

business model and strategy

tothe opportunities and risks

across the time horizons and

warming scenarios

Scenario selection and assumptions

Climate scenarios help assess how the

impact of the opportunities and risks

identified may change in different warming

scenarios, however they are scenarios and

not forecasts. The scenario analysis SSE

performs extends beyond normal business

forecasting cycles and beyond the

operating life of the majority of the

Group’sassets.

External scenario datasets for each material

opportunity and risk remain consistent with

the prior year and were selected in relation

to the relevant characteristics of each risk

oropportunity.

SSE uses external scenarios from the IEA

World Energy Outlook 2023, National Grid

FES 2023, IPCC models and Met Office UK

Climate projections in its scenario analysis

modelling. The specific scenarios within

these models and the warming scenarios

they relate to are outlined in Table 1. The

scenario inputs remain consistent with prior

year, though have been updated for the

latest data published by the relevant

external provider.

Assessment of outcomes

The outcome of the updated scenario

analysis work conducted in the year

indicates that the material climate-related

opportunities and risks remain generally

stable when compared to the prior year’s

assessment. The following tables on pages

102 to 105 provide the detail of the

assessment outcomes.

SSE considers that these outcomes do

notalter its strategy or the key controls it

uses to manage and mitigate climate risk.

The refreshed scenario analysis confirms

that SSE is resilient to the material

climate-related risks, and is well placed to

benefit from the material climate-related

opportunities under each scenario pathway.

Table 1: External models and scenarios used in SSE’s climate scenario

analysis 2023/24

Warming

scenario Transition scenarios Physical scenarios

1.5°C – International Energy Agency

(IEA) World Energy Outlook

2023 Net Zero Emissions (NZE)

by 2050

– National Grid 2023 Future

Energy Scenarios (FES) Leading

the Way & Consumer

Transformation

– International Panel on Climate

Change (IPCC) Representative

Concentration Pathway –

RCP2.6

– UK Met Office Climate

projections (UKCP18) tool

2.5°C – IEA World Energy Outlook

2023 Stated Policies (STEPS)

– National Grid 2023 FES

FallingShort

4°C – IPCC Representative

Concentration Pathway –

RCP8.5

– UK Met Office Climate

projections (UKCP18) tool

101SSE plc Annual Report 2024

Governance Financial Statements

TCFD DISCLOSURE STATEMENT – CONTINUED

Detailed climate-related opportunity and risk tables

The following tables describe the key scenario and assumptions applied; the potential financial impact; the geographical and asset

impact; the impact on the business strategy and mitigation; and the related 2030 Goal for each of the material climate-related

opportunities and risks.

Transition opportunities

The potential financial impact of all scenarios for transition opportunities is stated in GBP billion (£bn) based on one-year annualised

earnings before interest and tax (EBIT) and presented as a range to reflect sensitivities applied to each scenario.

Financial impact change from prior period:

Increase in financial

impact of

opportunity

Stable

Decrease in financial

impact of

opportunity

Accelerated wind

investment

Scenario inputs

– 2023 IEA NZE and STEPS

scenarios for wind

capacity;

– Electricity capacity

projections for SSE’s

existing and pipeline

windportfolio;

– Internal projections of

price adjustments arising

in a renewables dominated

electricity system.

Financial impact

Based on the scenarios, investment in wind assets at scale

could result in significant increases to EBIT under both

temperature scenarios and timeframes. The NZE scenarios

utilised in the current year indicate lower growth in the

2030 timeline than the comparable scenario applied in the

prior year. However, this is reflective of short-term delays

toprojects rather than a decline in the overall opportunity,

with growth being rephased beyond 2030. By 2050 the

growth opportunity is higher in the current year scenario

than it was in the prior year and supports SSE’s NZAP Plus

plan to deliver its wind pipeline in line with a 1.5°C scenario.

Scenario 2030 (£bn) 2050 (£bn)

1.5°C 0.5 to 0.7 1.3 to 1.7

2.5°C 0.5 to 0.6 0.8 to 1.1

UK and International climate policies present

an opportunity to invest in installed onshore

and offshore wind generation capacity.

Geographical and asset impact

GB and Ireland, Southern Europe

and Japanese windfarm portfolios.

Strategy

SSE Renewables develops and generates onshore and offshore wind. SSE’s NZAP Plus

strategic investment programme targets up to 5GW of additional net capacity across

the five years to 2027, the majority of which will come from onshore and offshore wind.

This investment strategy aligns to the opportunities arising from a 1.5°C scenario.

Related 2030 Goal

Increase renewable energy output fivefold.

Accelerated

transmission growth

Scenario inputs

– 2023 FES Leading the Way

and Falling Short scenarios

for wind generation

capacity;

– The projected share of

renewable capacity

connected to SSEN’s

network.

Financial impact

Based on scenarios, the opportunity to invest in the

expansion of SSEN Transmission’s network presents a

potentially significant increase to EBIT. The outcomes

indicate considerable growth in both scenarios in

connected renewable capacity which continues out

to2050.

Scenario 2030 (£bn) 2050 (£bn)

1.5°C 0.4 to 0.6 1.3 to 1.7

2.5°C 0.2 to 0.3 0.9 to 1.2

Increased renewable investment presents

anopportunity to generate returns from

required investment in SSEN’s electricity

transmission network.

Geographical and asset impact

SSEN Transmission network assets

in the north of Scotland.

Strategy

SSEN Transmission owns, operates, and develops the transmission network in the north

of Scotland. The Electricity System Operator (ESO) ‘Pathway to 2030’ identified £5bn of

further investment required in the north of Scotland Transmission network to enable

the forecast growth in renewable electricity and support the UK offshore wind and net

zero commitments. This is in addition to the Accelerated Transmission Investment

(ASTI) to 2030. SSEN Transmission’s growth is forecast to closely align with the

‘Leadingthe way’ climate scenario.

Related 2030 Goal

Enable low-carbon generation and demand.

102 SSE plc Annual Report 2024

Strategic Report

Valuable flexible hydro

Scenario inputs

– 2023 IEA NZE and STEPS

scenarios for hydro

generation;

– SSE’s projected output

from existing and pipeline

hydro portfolio;

– Internal projections of

price adjustments arising

in a renewable dominated

electricity system.

Financial impact

Based on these scenarios, the opportunity to provide

flexible low-carbon hydro generation that balances

intermittent electricity generation from wind assets has the

potential to increase EBIT in the longer term, where SSE has

an opportunity to build a new pumped storage asset. The

outcomes indicate negligible growth in both scenarios in

the short term, where activities are focused on optimising

existing asset output and upgrades to existing assets.

Scenario 2030 (£bn) 2050 (£bn)

1.5°C No impact up to 0.2

2.5°C No impact 0.1 to 0.2

An increasing reliance on intermittent wind

generation, presents an opportunity to invest

in new low-carbon hydro assets that earn

returns from flexible balancing of the

electricity system.

Geographical and asset impact

Hydro assets in the north of Scotland.

Strategy

SSE Renewables operates and develops pumped hydro storage that provides flexible

and dispatchable electricity. SSE seeks to invest in and upgrade its existing 1.5GW of

hydro capacity as well as develop pumped storage capacity at Coire Glas as part of

SSE’s NZAP Plus programme. This investment strategy is aligned to the opportunities

arising from a 1.5°C scenario.

Related 2030 Goal

Increase renewable energy output fivefold.

Valuable flexible thermal

Scenario inputs

– 2023 IEA NZE and STEPS

scenarios for CCUS and

Hydrogen generation;

– SSE’s projected output

from its pipeline of

low-carbon thermal

generation assets.

Financial impact

The opportunity to repurpose SSE’s existing CCGTs and to

invest in new low-carbon thermal generation assets has the

potential to increase EBIT in the longer term. The outcomes

indicate more growth in low-carbon thermal generation in

the longer term scenarios.

Scenario 2030 (£bn) 2050 (£bn)

1.5°C Up to 0.2 0.8 to 1.1

2.5°C No impact 0.2 to 0.3

Intermittent weather patterns present an

opportunity to invest in low-carbon thermal

assets that will generate returns from

providing flexible capacity, security of supply,

and price stability to the electricity system.

Geographical and asset impact

GB CCGTs (including investments in Joint Ventures)

and Great Island CCGT in the Republic of Ireland.

Strategy

SSE Thermal owns and operates conventional flexible thermal generation and energy

storage assets in GB and Ireland. These assets are providing critical flexibility to offset

renewables variability as the energy system transitions to net zero. SSE is actively

developing options to decarbonise its fleet, including carbon capture and storage

projects as part of the UK cluster sequencing programme at Keadby in the Humber and

Peterhead in the north of Scotland, alongside hydrogen projects at Keadby and Saltend

and the repurposing of SSE’s Aldbrough gas storage site for the safe storage of

hydrogen.

Related 2030 Goal

Cut carbon intensity by 80%.

Driving distribution

transformation

Scenario inputs

– 2023 FES Consumer

Transformation and

FallingShort scenarios

forelectricity consumer

demand;

– SSE’s projected electricity

distributed on the existing

and pipeline network.

Financial impact

Increased expansion of SSEN Distribution’s network has the

potential to increase EBIT in the longer term. The outcomes

indicate considerable growth in consumer demand in the

UK, with more significant growth in the 1.5°C scenario.

Scenario 2030 (£bn) 2050 (£bn)

1.5°C Up to 0.1 0.3 to 0.4

2.5°C Up to 0.1 0.2 to 0.3

UK climate policy presents an opportunity for

the transformation of SSEN Distribution’s

networks to meet the potential five- to

ten-fold increase in consumer demand.

Geographical and asset impact

SSEN Distribution network assets in the north of

Scotland and central southern England.

Strategy

SSEN Distribution is the distribution network operator for central southern England and

the north of Scotland and a key enabler of the local and national transition to a net zero

future. While its RIIO-ED2 business plan 2023-2028 sets out the flexibility and network

investment required to accelerate net zero, preparations are being made for the next set

of investments expected to be required in the next price control period from 2028-2033.

This investment strategy aligns to the opportunities arising from a 1.5°C scenario.

Related 2030 Goal

Enable low-carbon generation and demand.

103SSE plc Annual Report 2024

Governance Financial Statements

TCFD DISCLOSURE STATEMENT – CONTINUED

Transition risks

The potential financial impact for the accelerated gas closure transition risk is stated in GBP billion (£bn) based on projected Net Present

Value for each gas-fired power station. The potential financial impact of the wind generation price risks is stated in GBP billion (£bn) based

on one-year annualised earnings before interest and tax (EBIT) and presented as a range to reflect risk applied to the scenario.

Financial impact change from prior period:

Increase in

financial impact

of risk

Stable

Decrease in

financial impact

of risk

Accelerated gas closure

Scenario inputs

– 2023 FES Leading the Way

and Falling Short for

Installed unabated

naturalgas;

– SSE’s in scope CCGT assets

with useful economic lives

(UELs) ending post 2030.

Financial impact

Early closure of unabated gas generation may expose SSE

to potential lost EBIT post 2030 for in scope CCGTs. The

outcomes of both scenarios indicate a decline in installed

unabated natural gas, with the Leading the Way scenario

ceasing from 2035 onwards.

Scenario 2030 (£bn)

1.5°C (0.4) to (0.6)

2.5°C (0.2) to (0.3)

More aggressive climate change policy may

bring forward the closure of unabated gas

generation from 2030.

Geographical and asset impact

GB CCGTs (including investments in Joint Ventures)

and Great Island CCGT in the Republic of Ireland.

Mitigations

SSE Thermal assets are providing critical flexibility to offset renewables variability as

theenergy system transitions to net zero. SSE recognises the critical need for sufficient

generation capacity in GB in the early 2030s to meet demand. To deliver low-carbon

flexibility in the power system, SSE needs access to the necessary carbon capture and

storage and hydrogen infrastructure. SSE is actively developing options to align with

thedeployment of, and plug into, this infrastructure. It is also developing projects

whichare being designed to run on 100% hydrogen and natural gas, if there is a system

and security of supply need. SSE has set criteria to assess which projects should be

progressed through planning and design stages on this basis to mitigate the risk of

carbon lock-in and/or phase of out of unabated gas.

Related 2030 Goal

Cut carbon intensity by 80%.

Wind generationprice

Scenario inputs

– 2023 IEA NZE and STEPS

scenarios for wind

generation;

– SSE’s projected merchant

wind output from existing

and pipeline wind

portfolio;

– Internal projections of

price adjustments arising

in a renewable dominated

electricity system.

Financial impact

Increased wind generation capacity will likely result in the

wind capture price being lower than the baseload price in

the future for non-contracted assets. The outcomes of

both scenarios indicate considerable growth in total wind

generation and a subsequent impact to the achievable

price for wind assets. This is most evident in the 1.5°C 2050

scenario where total wind generation growth is forecast to

be highest.

Scenario 2030 (£bn) 2050 (£bn)

1.5°C (0.1) to (0.2) (0.4) to (0.6)

2.5°C up to (0.1) up to (0.2)

As an increasing number of renewables

projects are commissioned to meet net zero

targets, it is expected that the average price

for wind-generated electricity, known as the

wind capture price, will decline.

Geographical and asset impact

GB and Ireland, Southern Europe and Japanese

wind farm assets with no revenue support contracts

(e.g. contracts for difference).

Mitigations

SSE’s balanced portfolio of generation capacity (across wind, hydro, solar, battery

andthermal), power hedging strategies and inclusion of wind capture price into its

long-term price forecasts are key to the mitigation of future low wind prices.

Related 2030 Goal

Increase renewable energy output fivefold.

104 SSE plc Annual Report 2024

Strategic Report

Physical risks

The potential financial impact of all scenarios for physical risks is stated in GBP billion (£bn) based on one-year annualised earnings before

interest and tax (EBIT) and presented as a range to reflect sensitivities applied to each scenario.

Financial impact change from prior period:

Increase in

financial impact

of risk

Stable

Decrease in

financial impact

of risk

Variable renewable

generation

Scenario inputs

– 2023 IEA NZE scenario for

wind generation;

– UK Met Office climate

projections (UK CP18)

toolaligned to IPCC RCPs

2.6 & 8.5 for average wind

speeds;

– Projected output of SSE’s

existing and pipeline wind

portfolio.

Financial impact

Predicted lower wind speeds and rainfall levels have the

potential to reduce renewable electricity generation and

related EBIT. The outcomes of both scenarios indicate a

marginal decline in wind speeds and rainfall along with

significant growth in wind generation.

Scenario 2050 (£bn) 2080 (£bn)

1.5°C (0.1) to (0.2) up to (0.2)

4°C (0.1) to (0.2) (0.2) to (0.3)

Climate change models predict sustained

higher temperatures in the future that may

translate to lower rainfall and lower average

wind speeds. These predictions could result

inlower renewable electricity generation and

a fall in earnings.

Geographical and asset impact

GB and Ireland; Southern Europe; and Japanese

wind farm portfolios; and hydro assets in the north

of Scotland.

Mitigations

SSE continues to review climate projections using the Met Office UK Climate Projection

(UKCP18) to understand the potential impact on renewable generation assets and

infrastructure. The technical and geographical nature of SSE’s renewable capacity

alongside meteorological monitoring, crisis management and business continuity plans

are some of the ways that SSE manages and mitigates its business against this risk.

Related 2030 Goal

Increase renewable energy output fivefold.

Extreme weather

network damage

Scenario inputs

– 2023 FES scenarios for

consumer demand;

– UK Met Office climate

projections (UK CP18) tool

aligned to IPCC RCPs 2.6 &

8.5 for average winter

wind speeds and mean

summer temperature;

– Storm and heat costs to

SSE’s existing and pipeline

network assets.

Financial impact

This risk has the potential to cause physical damage to

network assets, increasing repair and maintenance costs

and cause disruption of supply to customers, increasing

exposure to regulator penalties and reputational issues,

negatively impacting EBIT. The outcomes of both scenarios

indicate a marginal decline in wind speeds and an increase

in average temperatures along with significant growth in

the electrification of the system. Although uncertainty in

climate models prevails, particularly for wind storms, SSE

considers adverse weather to be a material risk, particularly

in relation to customers. In the financial year to 31 March

2024, SSE experienced 10 UK Met Office named storms

which had an impact on customers and network assets.

Scenario 2050 (£bn) 2080 (£bn)

1.5°C up to (0.1) (0.1) to (0.2)

4°C up to (0.1) (0.1) to (0.2)

Increased frequency and intensity of storm

events may cause physical damage to SSEN

Distribution’s network assets and result in

supply issues to customers.

Geographical and asset impact

SSEN Distribution network assets in the north of

Scotland and central southern England.

Mitigations

SSE has mitigation methods in place, such as monitoring short- and long-term weather

patterns, crisis management and business continuity plans and investment programmes

to improve infrastructure resilience. SSEN Distribution has set out resilience strategies

with climate adaptation actions in its current price control business plan.

Related 2030 Goal

Enable low-carbon generation and demand.

105SSE plc Annual Report 2024

Governance Financial Statements

SSE’s carbon performance disclosures

The table on this page, in combination with the energy use information in Table 7 on page 49 , represents SSE’s disclosures in line with the

UK Government Streamlined Energy and Carbon Reporting requirements. SSE takes an operational control consolidation approach to

define its organisational boundary for GHG emissions.

SSE’s inventory details its direct and indirect GHG emissions (scopes 1, 2 and 3) performance (measured in million tonnes of carbon dioxide

equivalent – MtCO

e), provided as total emissions as well as split out by UK and Irish activity. It also provides a carbon intensity measure

based on direct GHG emissions released for each unit of electricity SSE produced.

SSE’s GHG inventory is prepared in accordance with the UK Government’s environmental reporting guidelines (BEIS, March 2019); aligned

to the Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard (revised edition) developed by the World Resources

Institute and the World Business Council for Sustainable Development (2004); and ISO 14064-1:2018 Specification with Guidance at the

Organization Level for Quantification and Reporting of Greenhouse Gas Emissions and Removals.

For more information on SSE’s GHG emissions data and how it is produced, see SSE’s GHG and Environmental Reporting Criteria 2024

available at sse.com/sustainability

Table 2: SSE’s carbon performance

Unit 2023/24 2022/23

Total reported GHG emissions MtCO

e 9.27 11.33

(b)

Scope 1 GHG emissions Total MtCO

e 4.34

(a)

6.08

(b)

UK/Ireland MtCO

e (3.64/0.70) (5.35/0.73)

Scope 2 GHG emissions

Total MtCO

e 0.47

(a)

0.44

(b)

UK/Ireland MtCO

e (0.47/<0.01) (0.44/<0.01)

Scope 3 GHG emissions

(Categories 3, 4, 9, 11 and 15 only)

Total MtCO

e 4.46

(a)

4.81

(b)

UK/Ireland MtCO

e (3.73/0.73) (4.12/0.69)

Scope 1 GHG emissions intensity Total gCO

e/kWh 205.0

(a)

254

(b)

Renewable generation output

Total GWh 10,004 9,665

UK/Ireland GWh (8,652/1,352) (8,308/1,357)

Non-renewable generation output

Total GWh 11,159 14,302

UK/Ireland GWh (9,509/1,650) (12,770/1,532)

Generation output Total GWh 21,164 23,967

UK/Ireland GWh (18,162/3,002) (21,078/2,889)

(a) This data is subject to external independent limited assurance by PricewaterhouseCoopers LLP (‘PwC’). For the results of that assurance, see PwC’s assurance report and

SSE’sGHG and Environmental Reporting Criteria 2024 on sse.com/sustainability

(b) This data was previously reported in the SSE plc Sustainability Report 2023 where it was subject to external independent limited assurance by PricewaterhouseCoopers LLP

(‘PwC’). For the results of that assurance, see PwC’s assurance report and SSE’s GHG and Water Reporting Criteria 2023 on sse.com/sustainability

1 SSE Scope 2 emissions are calculated using the location-based method described in the Greenhouse Gas Protocol.

2 SSE Scope 3 GHG emissions reported consist of Category 11 – Use of Sold Products (Gas Sold) of 2.01 MtCO

(A)

; Category 15 – Investments (Joint Venture investments);

Category 3 – Fuel- and Energy-Related Activities; Category 9 – Downstream Transportation and Distribution; Category 4 – Upstream Transportation and Distribution; and

Category 6 – Business Travel. Category 1 – Purchased Goods & Services and Category 2 – Capital Goods are excluded as SSE continues to develop and refine its accounting

approach to calculate these figures to an acceptable level of accuracy.

3 Total includes pumped storage and biomass output and excludes constrained-off wind in Great Britain.

4 Total excludes output from joint venture power stations where SSE does not have operational control (Seabank Power Limited and Triton Power Limited), and includes 100% of

output from joint venture power stations where SSE has full operational control under Power Purchase Agreements (Marchwood Power Limited).

106 SSE plc Annual Report 2024

Strategic Report

SSE’s taxonomy eligible activities

Key strategic activities (i.e. onshore wind, offshore wind, transmission, distribution) from SSE’s Reporting

Segments were voluntarily assessed against the technical screening criteria. While an internal assessment

against the DoNo Significant Harm and minimum safeguards criteria was undertaken, a second party opinion

has not yetbeen sought.

The financial metrics disclosed continue to be classified based on SSE’s reportable segments. Table 3 provides the output from this

principle-based assessment of SSE’s taxonomy aligned activities.

Taxonomy eligible and aligned activities in 2023/24 are from SSE’s onshore and offshore wind generation, hydro (run of river and pumped

storage aswell as its networks transmission and distribution activities. The taxonomy eligible but not aligned activities are associated with

SSE’s thermal generation and gas storage businesses. As these businesses continue their decarbonisation pathways, it is expected that

emerging activities such as low-carbon flexible generation or hydrogen storage will qualify in the future as eligible and aligned activities.

Activities that have not been identified in the taxonomy as they either do not significantly contribute to climate change mitigation or could

yet be integrated into the Taxonomy at a laterdate are considered taxonomy-non-eligible. They comprise SSE’s Business Energy, Airtricity,

Energy Markets, Enterprise and Corporate businesses. These activities either operate ascustomer-focused businesses, a route to market

forgeneration, or do not contain material activities at this time.

Assumptions

SSE’s accounting policies for these calculations are based on the current EU Taxonomy Regulation 2020/852, and delegated acts.

Linkage principle

In calculating each taxonomy-eligible aligned proportion, a ‘linkage principle’ has been applied, stipulating that any revenue, operating

profit/loss or capital expenditure that can be justifiably linked to an identified taxonomy economic activity can be classified as taxonomy-

eligible aligned. Using this principle, revenue and operating profits from SSE’s balancing activities, hedging, and trading can be linked to

theEU taxonomy-eligible aligned activities when the activity is undertaken to directly support the eligible aligned activities.

Proxies

Where financial results are not appropriately split into taxonomy eligible activities (namely Energy Markets trading and power sale activities),

revenue has been allocated based on purchased power volumes from renewable versus non-renewable assets, andoperating profit/loss

has been apportioned based on internal contractual trading agreements.

Materiality

The analysis has been prepared by applying a top-down review of SSE’s activities and the alignment with existing segmental reporting

within taxonomy eligible activities. There are some activities that fall below specified thresholds which are not taxonomy eligible. As

SSE’sreporting processes and controls will be refined ahead of implementation of the UK Green Taxonomy, it is expected that some

reclassification of activities may occur due to changes in materiality thresholds or clarification on eligible activity criteria.

Table 3: Assessment of SSE’s taxonomy aligned activities

SSE’s reported segments (a) Taxonomy eligible activity (a)

Revenue (b) Adjusted operating profit (c)

Adjusted

investment and

capital expenditure (d)

£m % £m % £m %

SSEN Transmission Transmission of electricity 885.2 8.5 419.3 17.3 595.6 24.0

SSEN Distribution Distribution of electricity 1,004.0 9.6 272.1 11.2 505.1 20.4

SSE Renewables Electricity generation 335.5 3.2 833.1 34.4 1,097.1 44.3

SSE Energy Markets As route to market for SSE Renewables 1,043.8 10.0 46.7 2.0 2.1 0.1

Total taxonomy-eligible aligned activities 3,268.5 31.3 1,571.2 64.9 2,199.9 88.8

SSE Thermal

Electricity generation from fossil

gaseousfuels 571.0 5.5 736.1 30.4 99.6 4.0

Gas Storage Storage of hydrogen 11.2 0.1 82.8 3.4 0.8 –

SSE Energy Markets As route to market for SSE Thermal 1,245.4 11.9 (6.3) (0.3) 2.1 0.1

Total taxonomy-eligible not aligned activities 1,827.6 17.5 812.6 33.5 102.5 4.1

GB Business Energy 3,183.2 30.4 95.8 3.9 43.7 1.8

SSE Airtricity 2,021.2 19.3 95.0 3.9 14.8 0.6

SSE Energy Markets – – (1.5) (0.1) 4.4 0.2

SSE Enterprise 91.9 0.9 (25.6) (1.1) 51.0 2.1

Corporate unallocated 64.8 0.6 (121.1) (5.0) 60.4 2.4

Total taxonomy-non-eligible activities 5,361.1 51.2 42.6 1.6 174.3 7.1

Total continuing operations 10,457.2 100.0 2,426.4 100.0 2,476.7 100.0

Notes:

(a) Alignment is based on segmental reporting in SSE’s financial year end statements.

(b) Revenue: derived from the disaggregation of revenue from contracts by customers, in line with the requirements of IFRS 15 ‘Revenue from Contracts with Customers’ (see note 5.1.(i)).

(c) Adjusted operating profit/loss: calculated as adjusted operating profit/loss related to the businesses aligned with the taxonomy categories (see note 5.1.(ii)).

(d) Adjusted investment and capital expenditure: calculated as adjusted capital expenditure related to assets or processes associated with taxonomy-eligible economic activities that

is accounted for based on IAS 16, IAS 38 and IFRS 16 and thereby included within adjusted capital expenditure (see note 5.1.(iii)).

107SSE plc Annual Report 2024

Governance Financial Statements

Non-financial and sustainability information statement

SSE reports extensively on its non-financial impacts within its Annual Report and welcomes continued

increasing focus from regulators, shareholders and other stakeholders. This table outlines how SSE meets the

Non-financial Information and Sustainability reporting requirements contained within the Companies Act

2006. For more information on SSE’s business model in Section 414CB (2)(a) see pages 6 to 7 . Further

disclosure can also be found in SSE’s Sustainability Report 2024.

Reporting requirement and SSE’s

material areas of impact

Relevant Group Principal

Risks, pages 87 to 93

Relevant Group Policies

on sse.com

Policy embedding, due

diligence, outcomes and key

performance indicators

Climate matters

– Delivering net zero

– Managing climate- related

issues

– Carbon performance,

metricsand targets

– Climate-related financial

disclosures

Climate Change Group Climate Change Policy 2030 Goals progress,

page 25

Our strategy in action,

pages 16 to19

Advancing climate action,

pages 28 to 32

TCFD disclosure statement,

pages 98 to 105

Environmental matters

– Responsible resource use –

water and energy use,

airemissions

– Managing impacts on the

natural environment and

biodiversity

Safety and the Environment Group Environment Policy Protecting and restoring the

natural environment,

pages 46 to49

Safety, Sustainability, Health and

Environment Advisory Committee

Report, pages 154 to 157

Employees

– Protecting health, safety

andwellbeing

– Investing in training

andlearning

– Culture and ethics

– Reward and benefits

– Employee voice

– Promoting inclusion

anddiversity

People and Culture

Safety and the Environment

Group Employment Policy

Group Safety and Health Policy

2030 Goals progress,

page 25

Powering a just transition,

pages 38 to 39

Reinforcing a healthy business

culture, page 40

Valuing the employee voice,

page40

Safety, Sustainability, Health and

Environment Advisory Committee

Report, pages 154 to 157

Social matters

– Ensuring a just transition

– Contributing to jobs and GDP

– Sustainable procurement and

supporting local supply chains

– Paying a fair share of tax

– Supporting customers through

the cost-of-living crisis

– Sharing value with local

communities

People and Culture

Speed of Change

Energy Affordability

Group Sustainability Policy

Group Taxation Policy Group

Procurement Policy

2030 Goals progress,

page 25

Powering a just transition,

pages 38 to 39

Human rights, anti-corruption

and anti-bribery

– Reinforcing an ethical

businessculture

– Speaking up against

wrongdoing

– Prevention of bribery

andcorruption

– Approach to human rights

People and Culture

Large Capital Projects

Management

Group Human Rights Policy

Group Corruption and Financial

Crime Prevention Policy

Group Whistleblowing Policy

Creating social and economic

value, pages 39 to 40

Reinforcing a healthy business

culture page 40

108 SSE plc Annual Report 2024

Strategic Report

Viability statement

SSE provides the energy needed today

whilebuilding a better world of energy for

tomorrow through creating value for

shareholders and society in a stainable way

by developing, building, operating and

investing in the electricity infrastructure and

businesses needed in the transition to net

zero. The delivery of SSE’s purpose and

execution of its strategy depends on the

skills and talent of a diverse workforce,

thequality of its assets and the effective

identification, understanding and

mitigationof risk.

As required within provision 31 of the UK

Corporate Governance Code, the Board has

formally assessed the prospects of the

Company over the next four financial years

to the period ending March 2028. The

Directors have determined that as this time

horizon aligns with the financial planning

period, a greater degree of confidence over

the forecasting assumptions modelled can

be established.

In making this statement the Directors have

considered the resilience of the Group

taking into account its current position, the

Principal Risks facing the Group and the

control measures in place to mitigate each

of them. The Directors recognise the

significance of the strong balance sheet

with total undrawn committed lending

facilities as shown below:

£bn Matures Comment

SSE plc 1.30 March

2026

SSE plc 0.20 October

2026

SSE plc 1.00 February

2025

Collateral

facility

SSEN

Transmission

0.75 November

2026

1 year

extension

option (in

favour of

the Group)

SSEN

Distribution

0.25 November

2026

1 year

extension

option (in

favour of

the Group)

3.50

1 The Transmission facility is available to that Business

Unit only.

The Group is an owner and operator of

critical national infrastructure and has a

proven ability to maintain access to capital

markets during stressed economic

conditions. The Group has demonstrated

this through securing £4.1bn of funding

since April 2021 including the issuance of a

€750m bond in September 2023 and a

£500m bond in January 2024. Further detail

relating to planned funding is available in

A6.3 Accompanying Information to the

Financial Statements in the Annual Report

and Accounts.

The Group has a number of highly attractive

and relatively liquid assets – including a

regulated asset base which benefits from a

strong regulated revenue stream as well as

the operational wind portfolio – which

provide flexibility of options. This has been

demonstrated through the success of

recent disposals including the sale of a

25%stake in the Transmission business.

To help support this Statement, over the

course of the year a suite of severe but

plausible scenarios has been developed for

each of SSE’s Principal Risks. These

scenarios are based on relevant real life

events that have been observed either in the

markets within which the Group operates or

related markets globally. Examples include

critical asset failure impacting generation

assets (for Energy Infrastructure Failure);

changes to key government energy policies

(for Political and Regulatory Change); and

the physical impacts of climate change on

distribution assets through more frequent

and increasingly severe storm events (for

Climate Change).

Scenarios are stress tested against forecast

available financial headroom and in addition

to considering these in isolation, the

Directors also consider the cumulative

impact of different combinations of

scenarios, including those that individually

have the highest impact.

Upon the basis of the analysis undertaken,

and on the assumption that the

fundamental regulatory and statutory

framework of the markets in which the

Group operates does not substantively

change, and the Group continues to be able

to refund its debt at maturity, the Directors

have a reasonable expectation that the

Group will be able to continue to meet its

liabilities as they fall due in the period to

March 2028.

109SSE plc Annual Report 2024

Governance Financial Statements

We’re a leading builder of

world-class renewables assets

– unlocking acleaner, more

secure andmore affordable

energysystem.

Powering sustainable growth

Leading

Discover how

we’re powering

sustainable growth

Governance

Chair’s introduction 112

Governance at a glance 114

Board of Directors 116

Group Executive Committee 121

The Board’s year 122

Stakeholders and Section 172 Statement 132

Assessing Board performance 136

Nomination Committee Report 138

Audit Committee Report 144

Energy Markets Risk Committee Report 152

Safety, Sustainability, Health and

Environment Advisory Committee Report 154

Remuneration Committee Report 158

– Remuneration at a glance 160

– Annual report on remuneration 163

– Directors’ Remuneration Policy – a summary 178

Compliance with the UK Corporate

Governance Code 2018 181

Other statutory information 184

Statement of Directors’ responsibilities in respect

of the Annual Report and the Financial Statements 187

Leading

111SSE plc Annual Report 2024

Strategic Report Financial Statements

Chair’s introduction

Overseeing

sustainableaction

SSE’s role in society is embedded across

ourpurpose, vision and strategy, which

form the backdrop for all of the Board’s

considerations. We maintain an active

process to assess evolving environmental,

political, regulatory and market

developments in order to incorporate them

into our discussions and decisions. The

purpose of this governance report is to

provide an account of the information we

have reviewed and demonstrate how our

actions underpin SSE’s long-term success.

Focused on delivery

The Net Zero Acceleration Programme

(NZAP) Plus sets out SSE’s medium-term

investment plans. Since initial approval in

November 2021, we have reviewed and

refined the targets, resulting in two

upgrades in May and November 2023. The

current projections for fully-funded £20.5bn

of capital investment to 2027 confirms

additional growth prospects, particularly

in our regulated networks business.

Meeting our targets requires a clear view

of project delivery, and strategic work has

therefore continued to include detailed

progress updates and oversight of Business

Unit pipelines. This is achieved through

monthly executive reports, a quarterly NZAP

Plus tracker and project-specific sessions.

Driving discipline

We maintain discipline in our capital

allocation by reviewing our investment

criteria to reflect changing macroeconomic

conditions. Within a wider framework of

controls, these practices have contributed

to delivery of our financial objectives and

achievement of significant milestones

in the year despite the headwinds described

in the Strategic Report.

Strategic progress and discipline are

pursued through a dynamic approach to

appraising risk, and we have taken a number

of supporting actions in the year. Reporting

has been refined within business and

strategic updates to provide a consistent

assessment of the risk profile for each

business area; we have identified a new

supply chain Principal Risk due to the supply

chain’s role as a key enabler for the NZAP

Plus; and we are evolving the practical

application of our Risk Appetite across key

decision making. This sits within a broader

package of work to continually develop our

existing risk management framework.

Our established approach to

corporate governance has

continued to provide sharp focus to

SSE’s performance and long-term

direction; ensuring the outcomes of

Board work promote a sustainable

future for the Company and value

for key stakeholders.

Annual General

Meeting (AGM)

2024

SSE’s AGM will take

place on 18 July 2024.

To allow full shareholder

participation we have

retained a hybrid meeting

format, with the Notice

of AGM setting out the

options to join. With my

fellow Board members,

Ilook forward to speaking

and answering your

questions in person and

over virtual channels on

the day.

112 SSE plc Annual Report 2024

Governance

In relation to our energy markets activities,

we have updated the controls overseen

bythe Energy Markets Risk Committee

aligned to volatility and opportunity within

dynamic energy markets, while maintaining

an acceptable overall risk exposure for

theGroup.

Supported by our stakeholders

To fully understand the impacts of the

decisions we take – on people and the

planet – we work constructively with our

stakeholders. Through a combination of

direct and indirect engagement we remain

informed of material issues and priorities.

Across the year, activity has taken place on

aglobal scale and at a local level. There

have been discussions with shareholders

covering strategy, performance,

sustainability, and governance. Work with

policymakers has been shaped by clear

advocacy priorities and included

representation at COP28, and sessions

on domestic frameworks and the reform

required to ensure a secure and affordable

energy transition. Across the supply chain,

we have reviewed the approach to securing

capacity for future projects, supporting

local investment, and collaborating on

environmental and social issues. For the

communities and customers we serve,

focus remains on creating positive benefits

and assisting with the reliable provision of

essential and energy efficient services.

The effect of climate change on SSE is

linked to all areas of Board work. The issue

has an impact on the technologies we

deploy and the investments we are making

all reflect the realities of a warming world.

We have also overseen a response to

an increased number of storm events,

particularly within the distribution business.

Our actions to mitigate the ongoing

climate emergency are illustrated across

our science-based targets, 2030 Goals,

and Net Zero and Just Transition Plans.

A safe and ethical culture

SSE is a product of the people who work

for and with us, and their safety is at the

top of every Board agenda. The Safety,

Sustainability, Health and Environment

Advisory Committee has an unwavering

focus on the risks associated with our

operations and construction work,

including how these may continue to

evolve as the NZAP Plus is delivered.

Although performance for direct employees

was as good as it has ever been, it was

overshadowed by the loss of Richard Ellis,

the employee of a contract partner. The

increase in contractor injuries, and the

initiatives implemented to improve safety

performance among our partners, have

been directly reported at Board level. We

remain committed to improving our safety

performance across our entire workforce.

Safety is just one pillar of our culture, which

has six values at its core: Safety, Service,

Excellence, Sustainability, Efficiency and

Teamwork. A biannual health-check guides

monitoring and shaping of cultural plans,

and drives improvements in areas identified

by a range of employee listening activities.

As part of this, in November 2023, we

found that while the values resonate with

employees, there could be greater clarity in

the way we talk about them. We responded

by approving refreshed descriptors that now

better reflect our unified view of culture.

Direct interaction with the workforce

offers clear feedback on how people feel

connected to, and supported by, SSE. This is

a full Board activity and is enriched by the

structured programme of work carried out

by Lady Elish Angiolini, our non-Executive

Director for Employee Engagement.

With a proportion of our engagement

occurring across site visits, we maintain a

deep appreciation of SSE’s diverse working

environments and overall employee

experience, which adds perspective to the

wide range of employee data we review,

including our all-employee survey which

received an 88% response rate.

I am pleased we were able to maintain our

conversations, and in line with employee

feedback, will continue to explore the

themes of contributing to net zero, SSE’s

ethical and inclusive business culture,

andways of working.

Developing a strong Board

The appraisal of our performance was again

facilitated by Lintstock, being the second

follow-up review since our external

evaluation in 2021/22. Our objective to

continuously improve has identified focus

areas for the coming months, with an

overall finding that the Board operates

very effectively. An external evaluation

will take place in 2024/25 and we will

engage an independent reviewer to carry

out this process.

The composition of the Board is carefully

assessed to provide relevant skills and

strong leadership which is tailored to SSE’s

needs. In line with succession plans, and as

previously reported, a number of changes

were successfully completed in the year.

On 20 July 2023, Peter Lynas stepped down

after nine years tenure, and was succeeded

by John Bason in the role of Audit

Committee Chair. This was followed on

1September 2023 by Maarten Wetselaar

joining as a non-Executive Director – an

appointment which extended our energy

markets and international experience at

Board level.

After 32 years with the Company and

21 years as Finance Director, Gregor

Alexander stepped down on 1December

2023. As announced last year, we were

delighted to welcome Barry O’Regan as

Gregor’s successor in the role of Chief

Financial Officer.

On behalf of the Board, Iwould like to thank

Peter Lynas for his non-Executive service,

and GregorAlexander for his commitment

to the financial leadership of SSE over his

tenure. We wish both every success for the

future, including Gregor’s continued role as

Chair of the SSEN Transmission Board.

We also welcomed Liz Tanner, who

assumed the role of Company Secretary,

inaddition to her existing position as Group

General Counsel, upon the retirement of

Sally Fairbairn on 1 August 2023.

We believe the above changes support

the depth and breadth of expertise on

the Board, but we remain committed to

measuring balance holistically across a

number of diversity measures. Female

representation is 42% of membership and

we have ethnic minority representation

in line with the recommendations of the

Parker Review. Following the appointment

of Helen Mahy to the position of Senior

Independent Director on 1 November 2023

we now also fully align with the voluntary

Board recommendations within the FTSE

Women Leaders Review.

Governance milestones

We welcomed the publication of the UK

Corporate Governance Code 2024 by the

Financial Reporting Council following

engagement in the consultation process.

The impact of the final changes has been

reported at Board level and we will oversee

work to respond in a proportionate way.

I hope the following account of Board

work conveys and demonstrates our

commitment to meaningful governance.

Sir John Manzoni

Chair, SSE plc

21 May 2024

113SSE plc Annual Report 2024

Strategic Report Financial Statements

Governance at a glance

Approach to reporting

The objective of this report is to

demonstrate the Board’s approach to

corporate governance within SSE, which

is underpinned by continued reporting

against the UK Corporate Governance

Code 2018. To allow clear assessment

ofhow the Code’s Principles have been

applied, a Compliance Statement is set

out on pages 181 to 183

. This confirms

where relevant information is located

across the Annual Report and details

adherence to the Code Provisions.

The aim of the disclosures outside of the

Compliance Statement is to provide an

account of Board and Board Committee

work across the year, including outcomes

of considerations and decision making.

To support this intent, the report has been

restructured around the thematic areas

the Board has reviewed in the year and

the material stakeholder factors which

have been integrated across discussions.

SSE plc Board

Remuneration

Committee

See pages 158 to 180

Safety,

Sustainability,

Health and

Environment

Advisory Committee

(SSHEAC)

See pages 154 to 157

Energy Markets

Risk Committee

(EMRC)

See pages 152 to 153

Audit Committee

See pages 144 to 151

Nomination

Committee

See pages 138 to 143

SSEN

Transmission

SSEN

Distribution

Energy

Customer

Solutions

SSE

Enterprise

SSE

Renewables

SSE Energy

Markets

SSE

Thermal

SSEN Transmission Board

75%

SSEN Distribution Board

Business Unit Executive Committees

Group Executive Committee

Group Safety,

Health and

Environment

Group

Disclosure

Group

Investment

Group Risk

Group Energy

Markets

Exposure Risk

Group Large

Capital

Projects

Group Committees

Board oversight

Management accountability

SSE’s Governance Framework

SSE’s Governance Framework is set out

above and is led by the Board, whose

primary responsibility is to ensure the

long-term success of SSE. Thisis achieved

through setting SSE’s purpose, vision and

strategy, and the parameters in which

culture is set and monitored and risk

assessed and managed.

The Governance Framework confirms the

primary forums which have delegated

authority and accountability, on behalf of

the Board, for aspects of SSE’s operations.

Its design is specific to SSE’s business areas,

risk profile and operating context, as

illustrated by the presence of certain

Committees, which have been agreed by

the Board, inaddition to those required by

alisted company.

The agreed roles and responsibilities of

each Committee are formally set out in

Terms of Reference and support decision-

making and oversight at all levels within SSE.

Separately, the Board retains a Schedule of

Reserved Matters for its own decision.

An overview of what is unique across the

different levels of SSE’s Governance

Framework is as follows.

114 SSE plc Annual Report 2024

Governance

Board Committees. The Board is directly

supported by five Board Committees who

each provide a separate report on pages

138 to 180 . Unique to SSE are the Energy

Markets Risk Committee (EMRC) and Safety,

Sustainability, Health and Environment

Advisory Committee (SSHEAC). The EMRC

reviews the governance to support SSE’s

energy market trading activities and

associated risk exposures, with the SSHEAC

providing dedicated support and challenge

to SSE’s strategy, initiatives and performance

on safety, sustainability, health, and

environment matters.

Group Executive Committee. The Group

Executive Committee is responsible for the

implementation of SSE’s strategy and

day-to-day operations through its oversight

of business performance and delivery. It is

responsible for the executive management

of SSE’s Business Units and corporate

support services, and is led by SSE’s Chief

Executive. The full membership of the

Group Executive Committee can be found

on page 121

Regulated networks. Dedicated Boards

oversee the strategy, performance and

regulatory approvals required under the

electricity network licences held by SSE’s

regulated networks companies. In line with

the applicable licence conditions, Board

membership comprises a combination

of Executive Directors and sufficiently

independent non-Executive Directors.

Each of the Transmission and Distribution

Executive Committees report directly to the

relevant dedicated oversight Board with an

information flow to the Group Executive

Committee where appropriate, and where

no business separation concerns apply.

Business Unit Executive Committees.

Seven Business Unit Executive Committees

lead the delivery of Business Unit strategy,

performance, and targets aligned with

Board-set objectives. More on each

Business Unit can be found on pages 68

to83

Group Committees. Six Group Committees

develop and recommend policy, controls

and frameworks for areas material to SSE

asa whole. They work with SSE’s Business

Units and report to the Group Executive

Committee.

More on SSE’s Governance

Framework and supporting

governance practices can be

found in the UK Corporate

Governance Code Compliance

Statement on pages 181 to 183

Governance of

climate-related matters

Given the alignment of SSE’s purpose,

vision and strategy with net zero, the

physical and transitional risks and

opportunities associated with climate

change are embedded across multiple

areas of Board, Committee and senior

leadership work within SSE; with the

assessment of SSE’s position set against

the possible pathways to a low-carbon

future. Disclosure of how the Board

oversees climate-related risks and

opportunities is therefore present

throughout this report.

To ensure climate considerations

arefirmly integrated within SSE’s

Governance Framework, agreed roles

and responsibilities are set out in writing

at aCommittee and individual level.

These can be found in the Board’s

Schedule of Reserved Matters,

Committee Terms of Reference, and

thedivision of responsibilities across

Board roles.

An overview of these roles and

responsibilities is set out below.

Board. The Board reviews and approves

priorities surrounding SSE’s material

sustainability impacts including in

relation to climate change. These

priorities are integrated into decision-

making parameters and frameworks to

ensure actions are sustainable in the

long term and the approach to climate

change is addressed through work on

strategy, operations, and risk. The Board

further sets SSE’s Group Sustainability

and Climate Change Policies and

approves climate-related financial

disclosures.

Audit Committee, Group Risk

Committee, TCFD Steering Group and

TCFD Working Group. These forums

govern the different stages of production,

development, review, and assurance

of SSE’s climate-related financial

disclosures. Recommendations are made

to the Board as to whether they are fair,

balanced and understandable, with the

Audit Committee further considering the

impact of climate change on SSE’s

financial statements.

Nomination Committee. The

Nomination Committee considers the

skills and experience the Board needs to

support assessment of SSE’s operating

context, which includes the impact of

aclimate change on SSE’s position now

and in the future.

SSHEAC. The SSHEAC oversees the

implementation of key SSE Group

Policies, including in relation to

environmental and climate adaptation

matters.

Remuneration Committee. The

Remuneration Committee agrees the

integration of climate factors within

SSE’s policy on executive remuneration.

Group Executive Committee. The

Group Executive Committee identifies

SSE’s material sustainability impacts and

oversees implementation and delivery

of supporting strategy. This includes the

management of climate interventions,

targets and plans set by each of SSE’s

Business Units and relevant corporate

functions.

Chief Sustainability Officer. SSE’s

Chief Sustainability Officer reports to

the Chief Executive and advises senior

management and relevant Committees

on climate-related matters.

More on climate-related work in the year

– Climate expertise within Board skills

on pages 116 to 120 .

– Board work on setting strategy and

the parameters for delivery on

pages 123 to 125 .

– A top-down approach to sustainability

on page 126 .

– Audit Committee work on climate-

related financial disclosures on

page146 .

– SSHEAC work on sustainability and

environment, social and governance

matters on page 156 .

– Remuneration Committee approach

to executive pay on pages 168 and

170 .

115SSE plc Annual Report 2024

Strategic Report Financial Statements

Board of Directors

Sir John Manzoni

Chair

Alistair Phillips-Davies

Chief Executive

Barry O’Regan

Chief Financial Officer

Committee membership

Committee membership Committee membership

Date of appointment

Non-Executive Director since September

2020 and Chair from April 2021

Career and experience

Sir John has wide-ranging experience across

the energy industry and private and public

sectors. Through a 24-year career at BP he

held a number of senior roles including Chief

Executive, Refining and Marketing and was a

main Board member. This was followed by

President and Chief Executive Officer at

Talisman Energy Inc before a move to UK

Government where he was Chief Executive

of the Civil Service and Permanent Secretary

of the Cabinet Office. He has previously been

a non-Executive Director of SABMiller plc

and Chair of Leyshon Energy Limited.

Skills relevant to the SSEBoard

– Dynamic and engaging leader with diverse

perspectives from multiple sectors,

organisational settings and geographies.

– Experienced in the governance of

large-scale business operations, leading

reform, the management of complex

projects and driving business

performance.

– Strong communicator with insight into the

management and development of

stakeholder relations.

– Working knowledge of energy regulation,

government and policy considerations

which underpin achieving net zero.

– Brings sharp focus to people leadership,

succession planning and inclusion and

diversity.

Key external appointments

– Non-Executive Director and Chair

designate of Diageo plc.

– Chair of the Atomic Weapons

Establishment.

– Non-Executive Director of KBR Inc.

Date of appointment

Executive Director since January 2002 and

Chief Executive from July 2013

Career and experience

Alistair joined SSE in 1997 and possesses

extensive knowledge of the Group, having

held senior roles across multiple business

areas. Prior to joining the Board in 2002 as

Energy Supply Director, Alistair was Director

of Corporate Finance and Business

Development. In 2010, he became

Generation and Supply Director, before his

appointment as Deputy Chief Executive in

2012 then Chief Executive in 2013. Alistair is

Chair of the SSEN Distribution Board, a fellow

of the Energy Institute and a chartered

accountant.

Skills relevant to the SSEBoard

– Sound executive leadership and a

considered approach to strategy; central

to the delivery of the Net Zero

Acceleration Programme Plus and SSE’s

sustainability plans and targets.

– Broad knowledge of the energy markets in

Great Britain and Ireland and across Europe.

– Proactive understanding of SSE’s

stakeholder priorities.

– Detailed understanding of policy, politics,

and regulation, enabling constructive

engagement in these areas.

– Focused on people development to

support culture and capabilities for future

growth.

Key external appointments

– Non-Executive Director of Anglian Water

Services Limited.

– Member of the Scottish Energy Advisory

Board.

– Member of the UK Government’s

Hydrogen Delivery Council.

– Member of the Net Zero Council.

– Business Fellow at Smith School for

Enterprise and Environment.

Date of appointment

Executive Director and Chief Financial Officer

since December2023

Career and experience

Barry joined SSE in 2008 and became Chief

Financial Officer in December 2023. Prior to

becoming Chief Financial Officer, Barry was

Finance Director for SSE Renewables as well

as having responsibility for corporate finance

across the whole of the SSE Group. In his

previous role of Director of Treasury and

Corporate Finance he oversaw group funding

and treasury operations. He is a chartered

accountant and trained with PwC in Dublin

before joining Airtricity in 2005.

Skills relevant to the SSEBoard

– Financial expert with 19 years of energy

value chain knowledge, driving the

disciplined delivery of SSE’s capital

investment and growth plans.

– Skilled in the development of financial

strategy, which has been integral to the

reshaping of SSE over the last decade.

– Experienced in leading corporate financial

projects and teams, covering corporate

modelling, funding strategy and debt

issuance.

– Active understanding of investment

community views.

– Supports SSE’s approach to partnering,

having served on joint venture boards.

Key external appointments

– None

Key for Board Committees

Nomination Committee

Safety, Sustainability, Health and

Environment Advisory Committee

Audit Committee

Remuneration Committee

Energy Markets Risk Committee

Committee Chair

116 SSE plc Annual Report 2024

Governance

Martin Pibworth

Chief Commercial Officer

Helen Mahy CBE

Senior Independent Director

Rt.Hon. Lady Elish Angiolini

LTDBE KC

Independent non-Executive Director of

the Board and for Employee Engagement

Committee membership

RN S

Date of appointment

Non-Executive Director since

September2021

Career and experience

Lady Elish has an extensive public sector legal

career, serving as Lord Advocate of Scotland

from 2006 to 2011, across two government

administrations, having previously been

Solicitor General for Scotland. She has carried

out independent public inquiries and reviews

for the UK and Scottish Governments and held

positions in academia, serving as Principal of

St Hugh’s College Oxford since 2012. She is a

Pro-Vice Chancellor of Oxford University,

previous Chancellor of the University of West

of Scotland and Chair of the Board of Trustees

for the legal action non-governmental group

Reprieve.

Skills relevant to the SSEBoard

– Significant understanding of UK and

Scottish governance and practical

experience of working with government

through independent public reviews,

whilst maintaining no political affiliation.

– Strong ambassadorial skills acquired

through an international stakeholder

network in judicial, governmental,

diplomatic, and academic fields.

– Exercises a strong sense of social purpose

and adds depth of perspective to Board

considerations, including being an

advocate for employee views.

Key external appointments

– Pro-Vice Chancellor of the University

of Oxford.

– Principal of St Hugh’s College Oxford.

– Chair of the Angiolini Inquiry.

– Chair of Board of Trustees of Reprieve.

Committee membership

N A

Date of appointment

Executive Director since September 2017

andChief Commercial Officer from

November 2020

Career and experience

Martin joined SSE in 1998 as an energy trader,

which was followed by a series of

commercial roles before becoming

Managing Director, Energy Portfolio

Management, and a member of SSE’s then

Management Board in 2012. In 2014, he was

appointed Managing Director, Wholesale,

and a member of SSE’s Group Executive

Committee. In 2017 he joined the Board as

Group Energy Director, this was expanded to

Group Energy and Commercial Director in

November 2020, and re-titled Chief

Commercial Officer in March 2022.

Skills relevant to the SSEBoard

– Literacy in complex energy and

commodity markets, supported by

technical and operational expertise.

– End-to-end experience in large capital

projects including joint venture

engagement and governance, integral to

the development of SSE’s diverse and

flexible generation portfolio.

– Commercially minded in seeking future

growth within SSE’s market-based

businesses, including internationally,

having supported key capital recycling

opportunities and transactions.

– Understanding of change management

and sources of commercial risk.

Key external appointments

– Member of Energy UK Board.

– Vice Chair of the CBI Scottish Council.

Date of appointment

Non-Executive Director since March

2016and Senior Independent Director

fromNovember 2023

Career and experience

Helen is a former Company Secretary and

General Counsel of National Grid plc. She is

an experienced non-Executive Director with

previous directorships at Bonheur ASA, Aga

Rangemaster plc, Stagecoach Group plc, SVG

Capital plc, Chair of MedicX Fund Limited,

Deputy Chair and Senior Independent Director

of Primary Health Properties PLC, and Chair of

The Renewables Infrastructure Group Limited.

She was a member of the Parker Review

steering committee and is a patron of the

Social Mobility Business Partnership.

Skills relevant to the SSEBoard

– Long-standing energy and regulatory

expertise, spanning legal, compliance,

governance and risk frameworks, with

over a decade of experience overseeing

renewables infrastructure investment.

– Extensive insight into investor and

stakeholder perspectives and trends from

cross-sectoral, international and external

Board interests that enable wider

discussion and debate.

– A balanced sounding board and advocate

of a strong safety and employee wellbeing

culture, extensive knowledge of

sustainability, and applies focus to

social equity, inclusion and diversity.

Key external appointments

– Non-Executive Director of Gowling WLG

(UK) LLP.

– Chair of NextEnergy Solar Fund.

– Chair of the charity the Global Media

Campaign to end FGM.

Board changes 2023/24

– Gregor Alexander was succeeded by Barry O’Regan as Chief Financial Officer on 1 December 2023.

– Peter Lynas stepped down after nine years’ service on 20 July 2023.

– Maarten Wetselaar joined as a non-Executive Director on 1 September 2023.

– Helen Mahy succeeded Tony Cocker as Senior Independent Director on 1 November 2023.

117SSE plc Annual Report 2024

Strategic Report Financial Statements

John Bason

Independent non-Executive Director

Tony Cocker

Independent non-Executive Director

Debbie Crosbie

Independent non-Executive Director

Committee membership

EA SN

Committee membership

EN A

Date of appointment

Non-Executive Director since June 2022

Career and experience

John is a chartered accountant and brings

significant listed company and international

experience, through a career in global

businesses. He was Finance Director of

Associated British Foods plc (ABF) between

1999 and 2023 where its diverse businesses

employed 128,000 people and operated in

53 countries worldwide. In 2023 he became

Chair of Primark’s Strategic Advisory Board

and Senior Advisor to the retail business.

Prior to ABF, John was Finance Director of

the international distribution and services

group Bunzl plc. Prior non-Executive

experience includes Senior Independent

Director and Audit Committee Chair of

Compass Group PLC.

Skills relevant to the SSEBoard

– Recent and relevant financial experience,

with a proven track record of developing

financial and commercial strategy,

including M&A, corporate transactions

and large capital projects.

– Extensive leadership experience and

international perspective, gained from

global companies and complex

operations.

– Understanding of the listed company

context with practical experience of

investor relations and ESG strategy,

placing upmost importance on the role

of sustainability.

Key external appointments

– Non-Executive Director of Bloomsbury

Publishing Plc.

– Chair of the charity FareShare.

– Primark Strategic Advisory Board Chair.

Date of appointment

Non-Executive Director since May2018

Career and experience

Tony possesses detailed knowledge of the

energy sector through a 20-year career with

E.ON SE and Powergen plc, encompassing

responsibility for: thermal generation;

onshore and offshore wind (including Scroby

Sands and the London Array, the world’s

largest offshore wind farm when built);

commodity trading and risk management;

and retail. Latterly, he held the position of

CEO and Chair of E.ON UK plc. Previous roles

include CEO of E.ON Energy Trading SE and

Managing Director of E.ON UK Energy

Wholesale. He has served on the Board

ofEnergy UK.

Skills relevant to the SSEBoard

– Extensive CEO and MD experience across

renewables, generation, commodity

portfolio management and energy trading.

– Wide-ranging technical and operational

insight, surrounding energy infrastructure

and assets including the delivery of major

thermal and renewable energy projects.

– UK and European energy industry and

non-Executive experience enhances

understanding of trends relevant to SSE’s

operations and of utilities regulation.

– Experience in strategic consultancy

andenergy and utility stakeholder

management.

Key external appointments

– Chair of Infinis Energy Management

Limited.

– Visiting Professor at Aston University.

– Chair of Future Biogas Limited.

– Chair of Energy Systems Catapult.

Date of appointment

Non-Executive Director since

September2021

Career and experience

Debbie brings over 25 years of financial

services leadership and became the first

female Chief Executive Officer of Nationwide

Building Society in 2022. Prior to this, Debbie

served as CEO of TSB and was previously

an Executive Director and Chief Operating

Officer of Clydesdale Bank, where she led

preparations for its successful demerger

from National Australia Bank and subsequent

IPO. Debbie is a fellow of the Chartered

Institute of Bankers.

Skills relevant to the SSEBoard

– Experience of strategy implementation,

including execution of transformation

projects within large consumer-facing

organisations, and the critical role of

digital and data.

– Understanding of capital allocation,

optimisation and investment appraisal.

– Responsible for efficient and effective

operations in a heavily regulated sector,

requiring a compliance-driven approach

and proficiency in IT and cyber security,

risk management and internal controls.

– Business leader with expert understanding

of the wider organisational responsibilities

to employees and society.

Key external appointments

– Chief Executive Officer of Nationwide

Building Society.

– Member of the Glasgow Economic

Leadership Board.

– Member of the Business School Advisory

Board of Strathclyde University.

– Member of the FCA Practitioner Panel.

– Director of UK Finance.

– Member of the Prime Minister’s Business

Council 2024.

BOARD OF DIRECTORS – CONTINUED

External appointments

The proposed and actual new external commitments taken on by Sir John Manzoni, Melanie

Smith, Dame Angela Strank and Tony Cocker were considered and approved by the Board.

Further details of the considerations surrounding time commitment andindependence can be

found on pages 140 to 141

118 SSE plc Annual Report 2024

Governance

Melanie Smith CBE

Independent non-Executive Director

Dame Angela Strank DBE

Independent non-Executive Director

Maarten Wetselaar

Independent non-Executive Director

Committee membership

REN

Committee membership

RN S

Committee membership

EN A

Date of appointment

Non-Executive Director since January 2019

Career and experience

Melanie is the Chief Executive Officer of the

NEC Group and a leading UK consumer

retail executive. She brings over 20 years of

strategy and transformation experience,

with previous roles including CEO of Ocado

Retail, the online grocer and retail company,

and Strategy Director for Marks & Spencer

where she had responsibility for group

strategy, M&S Bank and M&S Services.

Prior to this she held the positions of Global

Strategy and Marketing Director at Bupa,

Chief Operating Officer at TalkTalk and a

Partner in McKinsey’s Consumer practice.

Skills relevant to the SSEBoard

– Highly qualified to appraise strategy

development and execution, having

advised and led growth, brand and

business transformation in the consumer

and retail sectors worldwide.

– Deep commercial and digital experience

across multiple goods and services

categories, including insurance, telco and

energy.

– Has a people centric style and wide-

ranging experience in a global context

including a strong cultural appreciation.

– An entrepreneurial organisational leader,

actively engaging with stakeholder views

to create high performing organisations.

Key external appointments

– Chief Executive Officer of the NEC Group.

– Advisory Board member of Manaia.

– Deputy Chair of Sadler’s Wells.

– Founder of Mokaraka Trust.

Date of appointment

Non-Executive Director since May2020

Career and experience

Dame Angela has held a long-standing

international career in energy, including 38

years’ service at BP. She was a member of the

Executive Management team as BP Group

Chief Scientist and Head of Downstream

Technology. This followed international

business and technical leadership roles

spanning R&D, engineering, digital, product

development and innovation, business

development, finance and renewable energy.

She is a Fellow of the Royal Society, the Royal

Academy of Engineers, and an Honorary

Fellow of the UK Energy Institute. Her DBE

recognises services to the energy industry

and pioneering STEM careers, especially

forwomen.

Skills relevant to the SSEBoard

– Expert in technology and science within

the broader energy and manufacturing

industries.

– Knowledge of leading and collaborating

on a large scale and with international

outlook, having worked extensively in

culturally diverse environments.

– Corporate social responsibility and

sustainability experience through

involvement in climate science research,

the energy transition, reputation and safety

management, and inclusion and diversity;

having chaired the Corporate Sustainability

Committee, and Safety, Ethics and

Sustainability Committee in two FTSE 100

companies.

Key external appointments

– Non-Executive Director of Rolls Royce plc.

– Non-Executive Director of Mondi plc.

– Member of Rio Tinto’s Innovation Advisory

Council.

Date of appointment

Non-Executive Director since

September2023

Career and experience

Maarten brings over 28 years’ experience

in the energy sector and is currently Chief

Executive Officer of CEPSA (Compania

Espanola de Petroleos, S.A), the Spanish

multinational energy company involved in oil,

chemicals, biofuels and green hydrogen.

Prior to his current role, Maarten spent over

26 years at Shell, where he held positions

within general management, finance,

strategy, and business development and

led the establishment of the company’s

renewables activities. His last six years at

Shell were spent as a member of the

Executive Committee in charge of the

Integrated Gas and New Energies business.

Skills relevant to the SSEBoard

– Wide-ranging and international experience

in the energy industry, having lived and

worked in South America, Africa, Asia,

the Middle East, and Europe.

– Energy transition leadership, supported by

experience in renewable, low-carbon, and

green hydrogen capital projects globally as

well as developing, communicating and

engaging in energy transition strategies.

– Extensive experience in commodity

markets, particularly relating to liquefied

natural gas.

– Working knowledge of the listed company

context including capital markets and

investor relations experience from

previous executive committee and

finance roles.

Key external appointments

– Chief Executive Officer of CEPSA.

119SSE plc Annual Report 2024

Strategic Report Financial Statements

Board Composition

BOARD OF DIRECTORS – CONTINUED

As at 21 May 2024

Skills to support long-term success

The below matrix sets out the expertise the non-Executive Directors have assimilated outside of their SSE roles, mapped to the specific

skills required of the Board to support SSE’s long-term success. The collective position continues to be enhanced by the innate differences

in approach and thinking styles, which result from the diverse background and experience of each individual as indicated in the respective

Board biographies.

Board gender balance

Rolling three-year female representation

Non-Executive Director tenure

42% female membership 45% rolling female membership

Sir John

Manzoni

Lady Elish

Angiolini

John

Bason

Debbie

Crosbie

Tony

Cocker

Helen

Mahy

Melanie

Smith

Dame Angela

Strank

Maarten

Wetselaar

3 years 11 months average tenure

3y 8m

2y 8m

1y 11m

2y 8m

6y 0m

8y 2m

5y 4m

4y 0m

0y 8m

Female .................... 5

Male ..........................7

45%43%37%

31 March

2022

31 March

2023

31 March

2024

Board independence

Board ethnicity

73% independent excluding the Chair 1 Director from an ethnic

minority background

Independent

non-Executive

Directors ................ 8

Executive

Directors................. 3

Non-Executive

Chair.........................1

White British

or other White .... 11

Other ethnic

group (Māori) .........1

Sir

John

Manzoni

Lady

Elish

Angiolini

John

Bason

Tony

Cocker

Debbie

Crosbie

Helen

Mahy

Melanie

Smith

Dame

Angela

Strank

Maarten

Wetselaar

Experience of operating context and disruptive trends

Energy sector, energy regulation and energy markets

Government and public policy

Clean energy, renewables and climate science

Global business, scale and complexity

Digital and data

Stakeholders and social impact

Skills to challenge and set a sustainable strategy

Large capital project management

Financing, economics and capital markets

Partnering, M&A and transactions

Risk management

Consumer insight

Responsible leadership of a large organisation

Corporate governance and leadership

Culture, safe working and people development

120 SSE plc Annual Report 2024

Governance

Group Executive Committee

Alistair Phillips-Davies

Chief Executive

Barry O’Regan

Chief Financial Officer

Martin Pibworth

Chief Commercial Officer

Chris Burchell

Managing Director,

SSEN Distribution

Chris has been MD, SSEN

Distribution since November 2020,

following an extensive career in

transport where he held several

MD and Group level operational

and commercial leadership

positions, including with Arriva,

The Go-Ahead Group and

Railtrack. Chris also brings wider

sector experience having been a

non-Executive Director with Ofwat

and as Chair of the Rail Delivery

Group trade body.

Rob McDonald

Managing Director, SSEN

Transmission

Rob has been MD, SSEN

Transmission since January 2019,

having joined SSE in 1997 and

holding a number of senior roles

within the Group Regulation

function. Prior to his current

position, he was MD, Corporate

and Business Services covering

Legal, Regulation, Compliance,

Safety and Large Capital Projects

Services across SSE.

Sam Peacock

Managing Director, Corporate

Affairs, Regulation and Strategy

Sam joined the Group Executive

Committee in April 2020 and

leadsSSE’s teams overseeing

corporate strategy, government

and regulatory affairs,

communications, brand, and

localproject communications.

Prior to joining SSE in 2011, he

directed government affairs at

Ofgem andworked at leading

communications agency Edelman,

as well as in Parliament and

inGovernment.

John Stewart

Director of HR

John has been Director of HR

since joining SSE in July 2009.

Prior to this he worked in a broad

range of senior management roles

in the energy and water sectors

and has experience of working

in both the UK and in the US.

He oversees all areas in relation

to SSE’s people including talent

andcapability, training and

development, employee

engagement, and inclusion

anddiversity.

Liz Tanner

Company Secretary and

Group General Counsel

Liz is a Barrister and joined SSE in

2002 with the acquisition of Neos

Networks. Since then, she has held

a variety of legal and commercial

roles and was appointed to the

Group Executive Committee as

Group General Counsel in March

2019, in advance of becoming

Company Secretary and Group

General Counsel in August 2023.

Liz leads SSE’s Company

Secretariat and the corporate

functions of Legal, Ethics and

Compliance, Data Protection,

andLarge Capital Project Services.

She is also a member of the

GC100 Executive Committee.

Stephen Wheeler

Managing Director,

SSE Renewables

Stephen has been MD, SSE

Renewables since January 2022

having previously held the roles of

MD, SSE Thermal and MD, SSE

Ireland. Prior to SSE, he was part of

the management team that grew

the Airtricity renewable energy

platform before SSE acquired it in

2008. Before joining Airtricity, he

spent over 10 years working with

ABB and Siemens internationally.

Peter Lawns

Deputy Company Secretary,

Secretary to the Committee

Peter is a Fellow of the Chartered

Governance Institute. He joined

SSE in 2005 and has held a variety

of finance and company secretarial

roles. Peter has been Deputy

Company Secreatry since 2013

and oversees the delivery of the

Group company secretarial service

with responsibility for corporate

governance, entity management,

corporate reporting, and share

registration and share plans. Peter

was appointed Secretary to the

Group Executive Committee in

August 2023.

121SSE plc Annual Report 2024

Strategic Report Financial Statements

The Board’s year

The following section sets out some of the key topics which the

Board has focused on within its meetings and Board sessions

in2023/24. These reflect a commitment to progress under the

NZAP Plus, SSE’s dynamic operating environment andwork

toset the conditions for long-term success.

Board

Nomination

Committee

Audit

Committee EMRC SSHEAC

Remuneration

Committee

Number of meetings held 6 7 4 4 4 5

Sir John Manzoni 6/6 7/7 – 4/4 4/4 5/5

Alistair Phillips-Davies 6/6 – – – – –

Barry O’Regan

3/3 – – 1/1 – –

Martin Pibworth 6/6 – – 4/4 4/4 –

Helen Mahy 6/6 7/7 4/4 – 4/4 –

Lady Elish Angiolini 6/6 7/7 – – 4/4 5/5

John Bason

6/6 6/7 4/4 – – 3/3

Tony Cocker 6/6 7/7 4/4 4/4 4/4 –

Debbie Crosbie

6/6 7/7 3/4 4/4 – –

Melanie Smith 6/6 7/7 – 4/4 – 5/5

Dame Angela Strank 6/6 7/7 – – 4/4 5/5

Maarten Wetselaar

3/4 3/4 2/2 2/3 – –

Gregor Alexander

4/4 – – 3/3 – –

Peter Lynas

2/2 3/3 1/1 – – 3/3

1 Barry O’Regan joined the Board and EMRC on 1 December 2023.

2 John Bason notified a prior executive conflict with the date of a Nomination Committee meeting in April 2023.

3 Debbie Crosbie provided prior notification that the meeting of the Audit Committee in May 2023 coincided with the financial results for her Chief Executive Officer role.

4 Maarten Wetselaar confirmed prior to appointment on 1 September 2023, that the Board, Nomination Committee and EMRC meetings in November were on the same date as his

executive Boardmeeting.

5 Gregor Alexander stepped down on 1 December 2023.

6 Peter Lynas stepped down from the Board on 20 July 2023.

In each instance of non-attendance papers were provided in advance of the meeting and comments provided to the respective Chair where appropriate.

Meetings and attendance

Safety is SSE’s number one value and the

first item on every Board agenda. The Board

was pleased the Total Recordable Injury

Rate (TRIR) for SSE’s employees exceeded

the agreed performance expectation for the

year, but was disappointed with the increase

in TRIR for contractors.

The Board reviewed key safety metrics and

targets, and challenged work being carried

out by the Group Safety Team and Business

Units to ensure strategy and plans were

delivering anticipated outcomes, with

specific focus on contractor engagement

and the initiatives which were being

deployed to support performance.

Understanding the root causes behind SSE’s

metrics, helps the Board ensure that the

actions being taken address key issues

and support continuous improvement.

Board engagement with SSE’s safety culture

continued through site visits, participation

in the newly developed immersive safety

training, and attendance at SHE

conferences. To help set joint standards and

a commitment to get everyone home safe,

the Board received feedback on a contract

partner safety event, organised by SSE,

which was attended by over 80 companies

and 200 participants in November 2023.

Overseeing actions on safety

0.07

SSE employee TRIR

(versus 0.10 in 2022/23)

0.41

Contract partner TRIR

(versus 0.34 in 2022/23)

More on SHE matters can be

found in the SSHEAC Report on

pages 154 to 157

122 SSE plc Annual Report 2024

Governance

Assessing

theexternal

environment

Reviewing the

NZAP Plus

Exploring

future growth

To prepare for the

strategy review days,

the Board discussed

key macro-operating

developments and trends,

including:

– Global and geopolitical

volatility, including

inflation, interest rates,

policy and supply

chain.

– Growth and costs of

current and emerging

technologies.

– The competitor

landscape.

– Stakeholder

perspectives of SSE.

Through the strategy

review sessions, the

Board assessed NZAP

Plus progress and

enablers for its delivery,

including:

– Business Unit progress

against targets and

identified risks and

dependencies.

– The interaction and

role of SSE’s key

stakeholders within

NZAP Plus plans.

– SSE’s current position

and options in

selectedmarkets.

The Board explored

long-term risks and

opportunities to continue

to maximise shareholder

and stakeholder value,

including:

– The growth landscape

and risk-adjusted

returns of the existing

pipeline, new projects

and technologies.

– Financial strategy and

the ways to fund

accelerated growth.

– The shape of SSE and

its business mix.

Outcomes

The Board confirmed the NZAP Plus as

the correct strategic trajectory; approved

Business Unit priorities and growth areas;

and confirmed SSE’s people, culture,

organisational skills and capabilities as

key enablers. A programme of strategic

questions and topics was agreed to

shape inputs to the Board agenda over

the next 12 months and support ongoing

strategic discussion. Through this work,

in November 2023, the Board made an

upgrade to its capex plans following the

assessment of the additional growth

opportunities available in its regulated

networks businesses.

The Board sets and reviews SSE’s strategic

direction through a programme of work

which includes dedicated strategy days,

Business Unit strategic updates and

assessment of the external environment.

Reviewing strategic direction

The objective of strategic work in the year

was to assess the impact of external

developments on SSE’s agreed capex plan

(the NZAP Plus), review strategic progress,

and debate further options for growth. The

matters considered under each of these

areas, and the outcomes of in-depth

discussion, are set out opposite.

Setting financial parameters

forstrategic delivery

Each year, the Board reviews SSE’s financial

and investment strategy to ensure its

Business Units and corporate functions

have the necessary resources to deliver

against agreed objectives. To ensure

strategic plans are delivered within agreed

parameters, the Board agrees key financial

and investment criteria and reviews projects

which meet its financial approval thresholds.

The annual budget was set by the Board in

consideration of NZAP Plus investment, new

projects and capacity coming online, and the

impact of commodity prices on SSE’s market

facing businesses. To safeguard a disciplined

approach to investments, it agreed investment

criteria and targeted returns, by technology

and geography, to reflect the cost of

financing, inflation, and interest rates. In

conjunction with the Audit Committee, the

Board received updates on funding work and

market liquidity to ensure SSE retains an

investment-grade credit rating. In recognition

of the scale of each of SSE’s Business Units

strategic plans and given the range of controls

which exist in relation to project investment,

the Board further approved an increase in its

delegated financial authorities and a number

of supporting matters within its Schedule of

Reserved Matters, to support effective

progress and delivery of the NZAP Plus.

Monitoring markets and policy

Two key areas which impact SSE’s

performance and long-term plans are

energy markets conditions and the

requirement for clear energy policy.

The Board’s oversight of energy markets

has been informed by monthly updates

on commodity pricing and the work of

the EMRC surrounding the governance

arrangements to manage SSE’s portfolio

exposures. Following recommendation by

the EMRC, the Board approved changes to

Setting strategy and the parameters for delivery

the governance controls and risk metrics

which the Committee oversees, so that

they remain aligned to the external

market environment and continue to be

operationally effective.

The Board monitored policy developments,

and actively engaged with policymakers and

SSE’s policy teams, on achieving practical

reforms to accelerate the delivery of the

infrastructure that the net zero transition

requires. Key developments covered,

include: the Review of Electricity Market

Arrangements (REMA), the license

conditions to support Accelerated Strategic

Transmission Investment, the Contract for

Difference framework required for offshore

wind, and the criteria to build out low-

carbon thermal at scale.

123SSE plc Annual Report 2024

Strategic Report Financial Statements

THE BOARD’S YEAR – CONTINUED

Reviewing strategic progress

Through the Board’s review, discussion and debate surrounding strategic opportunities and challenges to NZAP Plus delivery, it has

continued to reflect on the needs of SSE’s key stakeholder groups. The following examples demonstrate how stakeholder factors

were integrated within a number of the key developments which have formed part of the Board agenda in 2023/24.

Setting strategy and the parameters for delivery continued

Delivering value through

volatility in Renewables

Delivering flexibility in the

netzero transition

The Board regularly appraised growth opportunities for SSE

Renewables across Great Britain, Ireland, and international

markets, to support the development of its project pipeline.

Thisincluded reviewing Contract for Difference (CfD) auction

strategies, bids for new seabed, and overseeing the acquisition of

a major new onshore wind pipeline in Ireland, and a new solar

pipeline in Poland. New renewable projects are critical for the

delivery of a low-carbon energy system, and SSE, and the Board,

must work constructively with key stakeholders to successfully

deliver these.

The Board has reviewed opportunities to enable SSE to build

a platform for future flexibility through low-carbon thermal

and hydrogen-ready projects to deliver the long-term

decarbonisation of the UK power system. Viable, flexible,

low-carbon projects are needed to support security of supply

and grid stability, for customers and society, and relies on policy

and low carbon infrastructure to support economic

development. Key areas of stakeholder influence, which the

Board has reviewed in its work, include Government ambitions

and the requirement for supportive policy, and continuing an

approach to partnering to progress work on new technologies.

Balancing stakeholder interests

– Delivering energy security and affordability. The Board

oversaw decisions to develop and deliver new renewable

energy infrastructure, and provided approvals to progress

projects which are needed to deliver long-term energy

security and affordability for consumers.

– Maintaining financial discipline. The Board focused on the

need to maintain financial discipline within its pipeline growth

to ensure shareholder value through a volatile period for the

sector. This resulted in the decision not to bid for offshore

capacity in the UK’s Allocation Round 5 (AR5) CfD auction.

– Safeguarding supply chains. The Board considered supply

chain capacity and discussed the challenges of supply chain

constraints in the sector. This resulted in monitoring of the

business’ procurement and engagement strategy to secure

supply chain for future projects and regular updates on

supplier engagement on current large capital projects.

Balancing stakeholder interests

– Security of supply for society. The Board has supported the

progression of Keadby Hydrogen through the design and

planning process to help support security of supply challenges

in the shorter term, and align with decarbonisation goals in

themedium and longer term. Within this, it recognised the

reliance on, and associated delays with government policy,

todeliver the low-carbon infrastructure required for hydrogen

and CCS projects.

– Centralising expertise and enabling collaboration. The

Board received updates on the establishment of a Hydrogen

Centre for Excellence to facilitate collaboration across

SSE’s business units and unite expertise across disciplines.

It confirmed this would better enable SSE to deliver against

its own and governments’ hydrogen strategies, and engage

with stakeholders as projects, policy and technology develop.

– Broadening technology base. The Board considered the

strategic role of blue hydrogen production to support the

decarbonisation of the power sector, through provision of

low-carbon hydrogen as a fuel. This saw the H2NorthEast

acquisition and assessments to understand the associated

GHG emissions of the project and its alignment with the UK’s

Low Carbon Hydrogen Standard and EU Taxonomy criteria,

and delivery against SSE’s Net Zero Transition Plan.

Potential future opportunities

– Securing long-term value in selected markets. The Board

will continue to review SSE Renewables’ approach to

establishing itself in selected markets and consider the

required approach to stakeholder engagement within any

new projects and plans.

– Futureproofing market design. The Board will retain

constructive engagement with policymakers and regulators,

surrounding market frameworks that promote renewable

generation, prioritise sustainability, and deliver fair returns

for investors.

Potential future opportunities

– The role of low-carbon thermal. The Board will continue to

consider the role of new low-carbon flexible generation in the

transition to net zero, and will engage with the appropriate

stakeholders on opportunities to develop projects.

– Supporting local economies. The Board will remain updated

on engagement with local communities, and what can be

done to support the creation of low-carbon economies in

areas impacted by the decline of carbon intensive activity.

124 SSE plc Annual Report 2024

Governance

The SSE Board possesses a diverse skillset and depth of

knowledge aligned to SSE’s needs as set out in the skills

matrix on page 120 . Every year, the Board looks for

opportunities to deepen its understanding of specialist

topics through dedicated sessions which are both

internally and externally facilitated. Internal sessions are

attended by a range of SSE senior leaders, allowing the

Board to fully engage with subject matter experts and

the talent pipeline.

Below are two examples of topics discussed in 2023/24.

Deepening Board

knowledge

Setting strategy and the parameters for delivery continued

Powering accelerated growth

inthe transmission network

Under the NZAP Plus, the Board approved a doubling of investment

from £10bn to £20bn in SSEN Transmission. This investment in the

growth of the transmission network is critical for the Scottish and UK

Government to reach their 2030 renewable energy targets and is

reflective of the Accelerated Strategic Transmission Investment

projects (ASTI) identified by Ofgem. These projects and the existing

RIIO-T2 Business Plan touch many stakeholders, from communities

to society at large, and it is therefore essential SSEN Transmission

continues to engage widely and share stakeholder feedback with

the Board.

Balancing stakeholder interests

– Community-led changes. The Board remained appraised

ofcomprehensive and meaningful engagement with communities,

including the approach to project consultation events, as SSEN

Transmission continued to refine project routes. A number of

proposed changes to project design and substation locations

resulted from local and wider stakeholder feedback.

– Powered by people. The Board reviewed the approach to

workforce planning and recruitment, focusing on critical talent

and targeted programmes for diversity, pipelines and training.

Asaresult, it provided views on the continued development and

the importance of SSE’s safety culture to support the pace of

required network growth.

– Collaboration with supply chain. The Board considered the

requirement to secure supply chain capacity to deliver the

identified growth opportunities within SSEN Transmission, which

saw a number of businesses and contractors committing to a new

ASTI Delivery Charter. This commits all those working on ASTI

projects to a series of key working principles, including leaving

alegacy and positive impact in the communities where

infrastructure will be hosted.

Potential future opportunities

– A network for net zero. The Board will continue to monitor the

delivery of a price control business plan that protects customers’

interests and supports the building of national critical

infrastructure, including development with stakeholders, of the

business plan for the next price control period under RIIO-T3.

– Beyond 2030. National Grid ESO’s Beyond 2030 plan confirms

the need for a number of additional projects to proceed now, for

delivery by 2035, which combined represent a potential estimated

investment of over £5bn for SSEN Transmission. The Board will

review the stakeholder engagement required to ensure an

appropriate regulatory framework, secure planning and the

required regulatory approvals.

Large capital projects

Senior leaders presented sessions on the unique

aspects of some of the large capital projects

which define the NZAP Plus, to provide clear

oversight of project-specific milestones, risks and

critical dependencies. Areas covered, included

project topography, technologies, construction

plans, and consenting and supply chain needs,

allowing the Board to deepen its understanding

of the individual project considerations, and ask

questions of the project teams and offer its

ownperspective.

Carbon capture

and storage

SSE Thermal’s strategy and engineering team

hosted a deep dive session into carbon capture

and storage (CCS) to help the Board deepen its

understanding of this technology. The team

explained how CCS can help decarbonise the

power sector by tracing the journey of a carbon

dioxide molecule from fuel combustion, through

its capture, and onto final storage, and provided

an overview of the key technical processes at

different stages of a CCS plant to explain the

intricacies of managing this type of facility.

External speaker sessions

Deep dives

125SSE plc Annual Report 2024

Strategic Report Financial Statements

THE BOARD’S YEAR – CONTINUED

The actions SSE is taking to support energy

system transformation aligned to the

sector’s 1.5°C global warming pathway are

reinforced by Board-approved sustainability

and climate-related priorities. These

priorities are integral to the delivery of SSE’s

sustainability and climate ambitions (see

pages 24 to 49 ) and are embedded within

decision making across SSE.

Reviewing climate science

The Board’s understanding of the impact of

climate change on SSE’s strategy and

business model is supported by a range of

inputs. In the year, the Board received an

update from SSE’s meteorologist covering

the latest climate science and weather

pattern projections.

Committing to transparent

sustainability reporting

Given growing stakeholder interest in

sustainability-based disclosures, the Board

reviewed emerging reporting frameworks,

including the EU Corporate Sustainability

Reporting Directive, International

Sustainability Standards Board

requirements, and Taskforce on Nature-

related Financial Disclosures (TNFD)

recommendations. In the spirit of remaining

progressive, a key action endorsed by the

Board was the approach to preparing for

sustainability-related financial disclosures

and the integration of emerging areas into

SSE’s existing ESG governance. In advance

of publication, the Board approved SSE’s

Human Rights and Modern Slavery

Statement and supporting Action Plan.

Collaborating on climate

Prior to SSE’s participation in COP28,

the Board considered the approach to

stakeholder engagement across the key

themes of renewables deployment, future

electricity networks, and low-carbon

flexibility, underpinned by the view that

a unified approach across countries,

industries and society is imperative to

tackling climate change. It also continued to

support SSE’s role in the Powering Net Zero

Pact – a supply chain initiative to address

challenges in bringing about a fair and just

transition to net zero (see page 27

) – as

the key vehicle to drive change with supply

chain partners.

Supporting climate

solutions aligned to a

1.5°C pathway

A top-down approach to sustainability

Rapid growth in digital tools and computing

power presents both risks and opportunities

for SSE. To stay abreast of this important

topic, the Board received updates on

artificial intelligence (AI), cyber security

and data protection, led by senior leaders

in each specialism. It also took part in an

external session with Gartner to explore

the use of AI in business and a digital

energy system.

Approving a new AI framework

As part of its work to review the

opportunities of AI, the Board approved a

new group-wide AI framework to support

the development of new use cases. The

framework outlines several areas of focus,

including how AI will support SSE’s strategic

vision and how the group will assess and

govern its unique risk profile. The Board will

periodically review the framework to ensure

that, as AI matures, SSE’s approach remains

a responsible one.

Understanding the evolving

cyber landscape

The Board reviewed SSE’s cyber risks – and

the steps being taken to mitigate them – in

light of ongoing geopolitical instability,

regulatory changes, emerging technologies

and the industry wide challenges of

workingwithin a global supply chain.

The Board also considered external

assurance over key areas of SSE’s cyber

resilience, and agreed SSE’s approach to

meeting Network and Information Systems

(NIS) Regulation obligations. It was further

updated on regulator driven changes to

NIScompliance and the introduction of

NIS2 in Europe.

Protecting data

To ensure that SSE’s data protection

framework remains fit for purpose in light of

ongoing digital and regulatory changes, the

Board reviewed SSE’s key privacy metrics

and the plans to continue strengthening its

privacy programme. The Board concluded

that the proposals would reinforce SSE’s

privacy and data standards.

Governing digital and data

Showcasing digital

innovation

Dedicated sessions were held for the

Board to learn about some of the

digital solutions being developed by

teams across SSE. These showcased

the potential and identified the

challenges of digital platforms,

AIassistants, and data-driven

forecasting and optimisation models,

and provided clear insight on how

digital ambitions were being pursued.

Understanding these issues will help

the Board continue to assess SSE’s

approach to information governance

and strengthen its oversight of digital

engagement and skills.

126 SSE plc Annual Report 2024

Culture Dashboard extract 2023/24

Our culture is shaped and determined by the way we

Attract and retain

people

Work

together

Look after

each other

See

ourselves

Make

decisions

Lead from

the top

Reflected in employee feedback and key metrics

Employee

engagement

85%

Inclusion

87%

Safety

90%

Our strategy

83%

Doing the

right thing

91%

Senior leaders

68%

Employee survey results relative to 2022/23

Supported by Board action

Held sessions with

people new to SSE and

early in their career to

understand SSE’s

offering to prospective

employees (see page

129

)

Considered the

continued role of SSE’s

Just Transition in

supporting jobs for

people in high-carbon

roles

Engaged with all

Belonging in SSE

community co-leads to

understand employee

priorities and promote

inclusion across all areas

(see page 142

)

Approved updates to

the Board Inclusion

and Diversity Policy

and a senior leadership

ethnicity ambition

(see page 142

)

Engaged directly in

SSE’s safety culture

(see page 122

) and

continued regular

operational site visits

(see page 157

)

Considered the

monitoring conducted

by the SSHEAC (see

pages 154 to 157

)

Identified that

employees wanted

more engagement

around the NZAP Plus

Visited various

SSElocations to

understand

employees’

connection to strategy

(see page 129

)

Approved refreshed

SSE SET value

descriptors

Continued to monitor a

range of reports and

feedback including

following employee

engagements, survey

results, monthly people

updates, compliance

reporting, and the

Culture Dashboard

Listened to feedback

on topics employees

wanted senior leaders

to engage on, and

engaged with

allareas of the

workforce on these

(see page 129

)

Participated in talent

programmes (see

page 142

)

Governance

Assessing culture and values

Setting the tone

The Board sets the culture and values of SSE

and views these as integral to everything it

does. It takes both a strategic and cultural

lens to its deliberations and works to guide

a healthy and ethical business culture across

the organisation.

To lead by example, the Board seeks to

demonstrate the application of SSE’s values

through its own actions, with senior leaders

responsible for supporting the desired

culture and making sure the values are

embedded in their business areas.

More specifically, culture is reinforced at

Board-level through:

– SSE’s governance framework and

practices (see pages 114 to 115

– SSE’s Doing the right thing guide

profiling values and behaviours

(see page 40 ).

– SSE’s Group Whistleblowing Policy and

whistleblowing arrangements

(see page 40 ).

– People matters, appointments and

succession planning (see the

NominationCommittee Report on

pages138 to 143 ).

– SSE’s risk, controls and compliance

approach (see pages 86 to 95 and the

Audit Committee and EMRC Reports on

pages 144 to 153 ).

– Focus on safety, sustainability, health and

the environment (see the SSHEAC

Report on pages 154 to 157 ).

– Attitudes towards reward and

remuneration (see the Remuneration

Committee Report on pages 158

to 180 ).

Updating the value descriptors

During the year, the Board approved the

outcomes of a project to review SSE’s values.

This assessed employee views of the

continued role of the SSE SET within SSE’s

culture and included focus groups led by the

Institute of Business Ethics (IBE) to gather

employee feedback. This was considered by

an internal working group and resulted in

refreshed value descriptors that more

accurately reflect SSE’s purpose and vision –

and which emphasise innovative and

inclusive ways of working. The meaning of

the updated value descriptors to SSE and

colleagues was discussed through a full

communication programme – see page 40

for more information on this work.

Measuring culture

The Board assesses the strength and health

of SSE’s culture in a number of ways,

ranging from interacting directly with

employees, to regular reports and updates.

Twice a year, the Board reviews the Culture

Dashboard, which is reflective of SSE’s

values and the way they inform cultural

strands and indicators. The Dashboard

includes employee survey data, people

metrics and key performance indicators

provided by Group HR and Group Ethics

and Compliance, allowing the Board to

see where there are differences between

aims and reality and to support and track

initiatives aimed at engaging with

employees and enhancing SSE’s culture.

Our values and Doing

the right thing

SSE defines a healthy, ethical business

culture as ‘Doing the right thing’

which is underpinned by the ‘SSE SET’

of six core values:

– Safety

– Service

– Efficiency

– Sustainability

– Excellence

– Teamwork

Strategic Report Financial Statements

127SSE plc Annual Report 2024

Hearing and responding to employees

THE BOARD’S YEAR – CONTINUED

Non-Executive Director for

Employee Engagement

Lady Elish Angiolini was appointed

Non-Executive Director for Employee

Engagement in April 2023, following

agreement that her rich stakeholder

experience would support the core

purpose of the Board-employee link

andallow true connection with employee

needs. This dedicated role follows an

agreed plan of work which builds on

existing channels of communication and

fosters new engagement opportunities.

It complements full-Board engagement

activities by strengthening the depth of

employee sentiment and representing

relevant concerns within discussions

anddecision making.

Over the last year I’ve heard from all

areas of SSE’s workforce as well as

employee-led Belonging in SSE

communities and trade unions

representing SSE employees. This

provided me with a wide range of

views and I am grateful for the open

and candid conversations I’ve been

able to have. The views and insights

gained have been discussed with the

Board, to ensure they are channelled

into action where required.”

Lady Elish Angiolini

Engagement highlights

Board site visits

and engagements

Board-led virtual sessions

Non-Executive Director for

Employee Engagement sessions

c.27,000

Total employee attendance

atBoardcalls

3,820

Largest audience size

How the Board engages

The Board is committed to ensuring everyone has a voice and access to the appropriate

channels to share their views. The framework shown below demonstrates how the Board

actively engages with employees across a range of different working environments, roles

and locations, to capture employee experiences and views and understand how these

differor align.

Board engagement format and value created

Engagement carried out by the Board and enhanced by SSE’s

Non-Executive Director for Employee Engagement

Face-to-face and

virtual employee

sessions

To understand

employee

perspective and

gain insight

Digital and

written

communications

To share key

messages, progress

and values

All-employee

surveys

To measure

employee

sentiment and

inform actions

and initiatives

Roadshows

and

conferences

To discuss and

embed SSE’s

purpose and

strategy

Site visits

To enhance

understanding of the

business and operational

culture

Focus groups

To gather a range of

employee views on

specific topics

Trade union

representative

engagement

To conduct meaningful

consultation and

engagement with

employee representatives

128 SSE plc Annual Report 2024

Governance

Hearing and responding to employees

Taking action onemployeefeedback

SSE’s all-employee survey is an important tool to help the Board understand the issues

that matter most to employees. In the 2023/24 survey, employees said they wanted

more senior leader engagement on strategy and net zero, culture and ways ofworking.

Some examples of how the Board responded to these topics is set out below.

Strategy and

net zero

Why the Board engaged

The Board acts in response to

all-employee survey and engagement

feedback, which cited a want to engage

further with senior leaders on SSE’s

strategy and the drive to net zero.

– Sir John Manzoni, John Bason,

DebbieCrosbie and Helen Mahy

visitedthe Iver 132kV primary

substation construction site to meet

SSEN Distribution and contractor

teams and explore areas including

progress, challenges, technical

innovation, skills and recruitment.

– Melanie Smith met SSE Thermal

engineering teams to discuss

innovation in low-carbon solutions

and digital technology for Keadby 2

Power Station to support safety,

maintenance and performance.

– Dame Angela Strank met senior

leaders representing all of SSE’s

Business Units to consider and

reinforce the NZAP Plus, strategic

messaging, development opportunities

and succession planning.

Culture

Why the Board engaged

The Board engages to deepen

understanding of culture, promote

adoption and embedding of company

values, and gain insight into employee

sentiment.

– The results of the 2023 all-employee

survey and key takeaways were shared

on an all-employee virtual call,

attended by Lady Elish Angiolini, to

offer her views on the survey results

and respond to employee questions.

– Sir John Manzoni, Dame Angela

Strank, Tony Cocker and Maarten

Wetselaar attended a session with

managers from a range of business

areas and discussed communication

and understanding of culture, and

leading on values and strategic

priorities.

– Following the Annual General Meeting

2023, Lady Elish Angiolini, Melanie

Smith, Martin Pibworth, Tony Cocker,

Debbie Crosbie and John Bason met

employees who had been with SSE for

less than 12 months. This provided

understanding of views and potential

improvements to the appeal of SSE as

an employer, including in the areas of

career advancement, flexible working,

values and onboarding. The other

Directors participated in a live

all-employee call to allow discussion

of topics material to employees.

Ways of working

Why the Board engaged

The Board seeks views of employee

needs to drive culture and meet

expectations surrounding working

practices, career progression and

widersupport.

– Helen Mahy attended SSE’s

Engineering Professional Development

Forum Engineering Awards, to hear

from SSE’s engineers, celebrate

success, and reinforce the Board’s

commitment to SSE’s engineering

population and STEM career paths.

– Alistair Phillips-Davies, Barry O’Regan

and Martin Pibworth led a hybrid

Leadership Conference from Perth,

todiscuss the role of effective and

efficient leadership in delivering key

work and initiatives. The conference

was simultaneously held and shared

virtually in Dublin with Tony Cocker

inattendance and in Reading with

Helen Mahy.

– Lady Elish Angiolini connected with

SSEN Distribution teams who were

engaged in a change programme, to

learn more about their experiences

and progress on new ways of working.

This was attended by employees with

varying lengths of service including

apprentices, who shared insights and

views on career pathways, skills

development and knowledge transfer.

Members of the Board during their

visit to the Iver primary substation

129SSE plc Annual Report 2024

Strategic Report Financial Statements

THE BOARD’S YEAR – CONTINUED

Understanding shareholder views

Board engagement with a wide range of investors reflects the

importance of recognising the views of those that invest in SSE,

whenmaking and implementing strategic decisions, communicating

sustainable business plans, and reporting on environmental, social

andgovernance (ESG) andfinancial performance.

Institutional investors

A comprehensive engagement programme

underpins discussions with institutional

investors surrounding their investment

priorities and views of SSE’s position

and plans. Within this, results-based

engagement is typically led by SSE’s

Executive Directors, with the Chair leading

discussion on corporate governance

matters with the support of the Senior

Independent Director. Board Committee

Chairs conduct engagement in response to

investor requests or to canvas opinion on

a development within Committee work.

Retail shareholders

In December 2023, Computershare Investor

Services plc (Computershare) was

appointed as SSE’s Registrar, with

responsibility for day-to-day management

of the register of members and related

Re-affirming

investor support for

the NZAP Plus

Response to Full-year Results

In May 2023, the Board confirmed SSE’s

NZAP Plus, which rolled the original NZAP

forward by 12 months whilst also upgrading

the associated targets, ambitions, and

investment mix. This decision reflected the

available growth opportunities across SSE’s

portfolio of net-zero aligned businesses

and was consistent with investor feedback

surrounding SSE’s strategic and investment

plans. The comprehensive post-results

roadshow across May and June 2023

canvassed opinion on the upgrade, which

continued to align with the Board’s views

of disciplined investment and executing

on growth.

The Board noted forward-looking investor

priorities focused on the returns associated

with international opportunities, the

challenging UK policy environment, and

thecomplexity of thermal earnings in

volatile commodity markets.

Progressing the Net Zero

Transition Plan

An ESG investor event, with the Chief

Executive, Chief Commercial Officer,

Chief Sustainability Officer and Director of

Investor Relations took place in June 2023.

The purpose of the online event,

‘Progressing the Net Zero Transition Plan’,

was to confirm the position of climate

targets at the core of SSE’s strategy, and to

update on progress against them. Questions

were invited to be submitted ahead of the

event to ensure focus on areas of investor

interest. The Board was updated on investor

support for continued clarity around SSE’s

actions to achieve its net zero ambitions.

This support was illustrated at the Annual

General Meeting (AGM) 2023, where the

advisory vote on SSE’s Net Zero Transition

Report received almost 98% votes in favour.

Responding to the

macroeconomic context

Following a further revision to the NZAP

Plus in November 2023 – confirming an

expected increase in capital investment to

£20.5bn over the five years to 2026/27 –

aglobal investor roadshow was undertaken

and meetings attended by at least one of

SSE’s Executive Directors. The Board

received feedback on emerging investor

consensus surrounding identifying the right

investment opportunities within SSE’s

business mix and in line with any changes

inthe macro-operating context.

98%

Votes in favour for SSE’s Net Zero

Transition Report

NZAP Plus upgrades

shareholder services (see page 343

Withsupport from Computershare, the

Investor Relations team and the Company

Secretariat engage with retail shareholders

in response to private shareholding queries.

In addition, SSE’s investor website provides a

source of equivalent information for SSE’s

retail shareholders, housing regulatory news

announcements and published financial

and non-financial reports.

Sharing and interpreting

feedback

The Board remains appraised of investor

sentiment through feedback following

eachengagement, monthly investor

andmarket reports covering share price

performance and sell-side analyst

commentary, and independent reports

fromSSE’s brokers.

Engagement highlights

During 2023/24 the Board, senior

management and the investor

relations team participated in:

225

one-to-one and 37 group meetings

Global

meetings physically across

Europe, Australia and Asia,

with virtual engagements in

North America

results-based roadshows

Pre-AGM

Chair-led governance meetings

industry conferences

130 SSE plc Annual Report 2024

Governance

Understanding shareholder views

For more on the Board’s

engagement with shareholders

and debt providers, including key

matters ofimportance raised,

see page 132

For more of the integration of

investor views within Board

considerations see pages 124

to125

Focus on

environmental,

social and

governance (ESG)

Seeking views on corporate

governance and sustainability

The annual Chair roadshow in July 2023

reinforced Board priorities and sought

feedback across corporate governance

and sustainability topics, covering Board

and senior leadership composition and

succession planning, the importance of

accredited science-based targets to

underpin SSE’s decarbonisation pathway,

as well as an increased focus on tracking

and targeting reductions in Scope 3

emissions. Views received remained

aligned to the Board agenda and areas

of Board focus.

Engagement with ESG

ratings agencies

Active engagement with ESG ratings

agencies during 2023/24, underpinned

by SSE’s 2030 Goals, Net Zero Transition

Plan, Just Transition Strategy and

science-based targets, resulted in stable

or improved performance in relevant

ESGindices. The SSHEAC reviewed

performance in the year and more

information can be found on page 156 .

Green debt financing

Recognising investor demand for debt

used to fund sustainable assets, SSE

issued a new €750m Green Bond in

August 2023 and, via SSEN Transmission,

a new £500m Green Bond in January

2024. The issuances were overseen by

theAudit Committee and Board, and

supported by regular engagement

between SSE’s Treasury function and

debtinvestors. For more information

see page 18 .

£3.7bn

SSE’s total Green Bond issuance to date

The Board answering shareholder questions at SSE’s

Annual General Meeting 2023

131SSE plc Annual Report 2024

Strategic Report Financial Statements

Stakeholders and Section 172 Statement

Through delivery of its strategy

SSE fulfils an unwritten social

contract, at the centre of which,

are SSE’s key stakeholders. These

are identified as the people,

communities and organisations

that have an interest in, or might

be affected by, its decisions,

actions and operations.

The relationship with key stakeholders is

two-way and an overview of the reciprocal

nature is set out in SSE’s business model on

pages 6 to 7 and the introduction to SSE’s

stakeholders on pages 14 to 15 .

Strategic stakeholder engagement

underpins the understanding of issues

material to each of SSE’s six key stakeholder

groups and includes a combination of

business-led and Board-level interactions.

This approach is reflective of legislative and

regulatory requirements and is designed to

ensure all views are heard.

The result is stakeholder influence across

business plans and supporting objectives.

Situations will exist where not every

stakeholder interest can be addressed in

full, however stakeholder regard continues

to the greatest extent possible in decision-

making across SSE.

This statement, and the following pages,

summarise how the Board has upheld SSE’s

social contract through the discharge of its

duties under Section 172 of the Companies

Act 2006.

How we engage with key stakeholders and what we’ve learnt

Stakeholder group How we engage What we’ve learnt was important

Employees

SSE’s strategy and

success are

dependent on the

shared talent,

diversity, innovation,

and values of the

people it employs.

See pages 38

to45

Board engagement

– Employee-focused work by the non-Executive Director

for Employee Engagement.

– Site visits and attendance at face-to-face and virtual

events, allowing employees to engage directly with

Executive and non-Executive Directors.

– Regular assessment and review of SSE’s culture.

See pages 128 to 129

Group engagement

– Employee voice soundings through the annual all-

employee survey.

– Group-wide multi-channel employee listening and

engagement strategy, which assesses employee

sentiment at touchpoints through the employee life cycle.

– Analysis of data from exit surveys.

– Engagement with trade unions.

– Employee safety, mental wellbeing, support

and resilience.

– SSE’s employee offering, including reward,

benefits, inclusivity, flexibility and career

progression.

– Understanding of employee contribution to

SSE’s net zero strategy, ambitions and just

transition approach.

– Giving all employees a voice and taking

action in response to the all-employee

survey findings.

– Continued engagement with senior leaders.

Shareholders and debt providers

SSE must be

well-financed, with

the ability to

remunerate

shareholders for

their investment,

secure debt at

competitive rates

and grow the

business.

See pages 130

to131

Board engagement

– A programme of physical and virtual Director-investor

meetings and roadshows.

– Direct engagement with the Board at the Annual General

Meeting providing shareholders with the opportunity to

ask questions via the hybrid meeting format.

– A dedicated virtual environmental, social and governance

(ESG) seminar.

– Executive Director engagement with credit rating

agencies used by debt providers.

See pages 130 to 131

Group engagement

– Responding to queries from shareholders and debt

providers and holding meetings with all types of investors.

– Engagement with equity research analysts and brokers.

– Engagement with ESG ratings agencies used by investors

and debt providers to gauge sustainability credentials.

– Financial and ESG performance compared

tomarket expectations.

– The effect of competition, cost pressures,

and supply chain constraints on returns from

renewables investments in GB, Ireland and

new markets.

– Progress in delivering on the construction

of large and complex capital projects.

– Political and regulatory risks and

opportunities including the outcome of

theUK General Election.

– Refinancing requirements, liquidity and the

level of protection against interest rates.

– SSE’s hedging position and exposure of

theGroup’s earnings to energy

commodityprices.

– Optimising capital allocation across SSE’s

Business Units.

– Understanding of the key drivers for SSE

Thermal earnings over the medium term.

132 SSE plc Annual Report 2024

Governance

Stakeholder group How we engage What we’ve learnt was important

Energy customers

Consumers create

demand for the

energy and services

SSE provides and set

the tone for our

purpose.

See pages 33

to35

Board engagement

– Updates from SSE’s customer facing Business Units

on the influence of customer factors driving business

direction and propositions.

– Monitoring of performance to ensure deliveryof an

appropriate level of customer service andinvestment.

– Updates on the response, and support being provided

to customers, during storm events.

Group engagement

– Dedicated panels to consider the perspectives of

vulnerable customers and forums to engage with

largebusiness customers.

– Monitoring of a wide range of performance indicators

and customer sentiment.

– Working with third parties to actively identify and make

provision for customer vulnerability, including through

encouraging eligible customers to be added to the

Priority Services Register.

Networks customers

– The impact of increased severe weather

events with a focus on investment,

communication, and vulnerable

customersupport.

– Improved customer services and connection

processes in SSEN Distribution.

– Driving efficiency in the execution of

RIIO-ED2.

– The outcome of work by the regulator to

identify, assess and confirm transmission

investment options to support offshore

wind development.

– Engagement in SSEN Transmission’s

Customer Experience Strategy.

Energy supply customers

– Energy efficiency and decarbonisation

measures for business and domestic

customers.

– Energy affordability and the available funds

and support mechanisms.

– Customer service experience including

waittimes and support.

Government and regulators

SSE relies on policy

frameworks and

public services that

support investment

in critical national

infrastructure, are

fair on customers

and maintain the

momentum behind

net zero.

See pages 19

and30

Board engagement

– Direct constructive engagement with UK Government,

regulatory bodies and political stakeholders.

– Overseeing the implementation of SSE’s Political

Engagement Policy and corresponding advocacy

priorities.

– Monitoring engagement activity and responses to

regulators to ensure that strategic, financial, investment

and operating frameworks remain aligned to the external

landscape.

Group engagement

– Consistent engagement with senior government

ministers, wider political stakeholders and regulatory

officials in SSE’s home markets of GB and Ireland,

and in new jurisdictions where the development

pipelineis expanding.

– Contributing to policymaking process through responses

to material consultations launched by government,

parliamentary bodies and the regulator.

– Regular engagement with EU policy makers and EU

sector industry associations to provide feedback on key

energy policies and respond to EU consultations.

– Accelerating infrastructure delivery to

improve energy security and decarbonise

the sector.

– Strategic investment in networks to facilitate

net zero and improve energy resilience.

– Evolution of the electricity market and

support mechanisms to continue to deliver

investment in UK energy infrastructure.

– Evolution of the EU electricity market design

and investment framework for renewables,

including key principles to design national

auctions.

133SSE plc Annual Report 2024

Strategic Report Financial Statements

Stakeholder group How we engage What we’ve learnt was important

NGOs, communities and civil society

SSE needs the

support of the

communities it

works in and the

backing of civil

society in pursuit of

a just transition to

net zero.

See pages 36

to 40

Board engagement

– Approves and receives updates on SSE’s 2030 Goals

aligned to the UN Sustainable Development Goals.

– Considers the community impact and benefit of large

capital projects including the approach to consultation.

– Deepens understanding of local community priorities

through site visits.

– Oversees SSE’s community investment model in GB

and Ireland and approves underlying investment

fund principles.

Group engagement

– Active promotion of key sustainable development

frameworks, such as the UN’s Sustainable Development

Goals.

– Partnerships with key NGOs which deliver additional

social and environmental benefits for the communities

in which SSE operates, some of which are publicly

supported by senior leaders within SSE.

– Supporting community projects to enhance the social

economy.

– Holding community consultation events to gather

feedback on projects and business plans.

– Sharing best practice and learnings with a range of

stakeholders, including the Department for Energy

Security and Net Zero (DESNZ) for onshore wind best

practice guidelines.

– Net zero transition planning, considering

both social and nature interdependencies.

– The cost of energy, particularly in the

context of a cost-of-living crisis that is easing

but nonetheless still felt by energy users.

– Restoring nature, adding value to natural

capital, and preventing harm to species and

eco-systems.

– The socio-economic impact of SSE’s

investments in communities that host low

carbon infrastructure.

– Policies and practices that support a just and

fair transition to net zero.

– Employment standards, including Living

Wage, safe workplaces and inclusion

anddiversity.

– Responsible behaviour of large businesses

including tax policies and tax transparency.

– Allocation and impact of SSE’s community

investments.

Suppliers, contractors and partners

SSE relies on a

healthy supply chain

and works with

partners whose

capabilities offer

synergies for

innovative project

development and

efficient ownership

structures.

See pages 27, 36

and 41

Board engagement

– Executive Director meetings with strategic partners

andsuppliers.

– Updates on joint venture project strategy and progress.

– Reports on contractor safety performance and initiatives.

Group engagement

– Meetings with strategic suppliers to discuss material

issues through SSE’s well-established Supplier

Relationship Management (SRM) programme.

– Collaboration with suppliers and government on

attracting inward investment.

– Continued engagement through the CDP Supply Chain

engagement programme.

– The launch of the first report of the Powering Net Zero

Pact initiative established with supply chain partners.

– The management and mitigation of health

and safety risks on SSE’s sites.

– The impact of supply chain constraints on

large capital project delivery.

– Economic opportunities in local supply

chains.

– Ensuring supply chain resilience and

sustainability through the mitigation and

management of key environmental and

social impacts.

– The approach to project decision and

innovation.

– Fair expectation in the delivery of projects

and prompt payment.

STAKEHOLDERS AND SECTION 172 STATEMENT – CONTINUED

134 SSE plc Annual Report 2024

Governance

Stakeholder views

Employees

Shareholders and

debt providers

Energy

customers

Government and

regulators

NGOs,

communities and

civil society

Suppliers,

contractors and

partners

Our purpose

To provide energy needed today,

while building a better world of

energy for tomorrow.

Our vision

To be a leading energy company in

a net zero world.

Our strategy

To create value for shareholders

and society in a sustainable way

bydeveloping, building, operating

and investing in the electricity

infrastructure and businesses

needed in the transition to

netzero.

Our culture

See pages 40 and 127

The Board context

The Board has a duty to lead by example and set the correct tone

to ensure fair and responsible decision-making across SSE. SSE’s

Governance Framework represents the backdrop to this, through

which the Board confirms ambitions, parameters and expectations

to drive long-term success. These expectations are further

embodied across SSE’s purpose, vision, strategy, and culture,

and the belief that stakeholder views should be considered within

long-term plans and day-to-day decisions.

Given the societal role of SSE’s operations, a set of engagement

priorities which cover the cross-cutting issues of energy security

and affordability, the climate emergency, and the societal impact of

net zero are approved by the Board each year to frame supporting

activity across SSE. Those identified for 2024/25 are set out below.

– Continue to execute against NZAP Plus targets and support

stakeholder value creation.

– Advocate for policy frameworks which support investment in

netzero-infrastructure, seeking clarity during a UK General

Election year.

– Garner societal support for, and continue to champion, a just

transition to net zero.

How we consider the long term

As a long-term business, SSE’s actions have far-reaching impact

which is recognised in SSE’s strategic approach of creating value

for shareholders and society. The general principles laid out in

Section 172 are therefore intrinsic to how SSE operates and are

firmly embedded within SSE’s culture. Four 2030 Goals and a clear

net zero-focused strategy frame decision-making, and provide

important interim milestones to 2050. These parameters, set by

the Board, are reflected within strategy work and objectives, which

extends to: capital investment; the Group budget; dividend plans;

and future resourcing requirements. SSE’s Risk Management

Framework, including the Group’s Principal Risks, the identification

of emerging risks, and the Group’s Risk Appetite statement further

shape long-term perspectives.

How we consider our operations and the

environment

SSE recognises the serious threat that climate change poses to the

natural world. Climate change features across many areas of the

Board agenda, and SSE commits to open and transparent disclosure

to allow proper assessment of its environmental performance and

the potential impact of various climate scenarios on future financial

performance. More can be found on pages 24 to 32, 46 to 49 and

98 to 108 .

How we consider business conduct

The Board leads and monitors SSE‘s culture, by setting the tone and

framework within which agreed values and accepted behaviours

can be embraced by employees. This includes doing the right thing,

through responsible business conduct and making a positive

difference for stakeholders. Supporting Board work is discussed

onpage 127 .

How we consider our key stakeholders

A description of how the Board considered stakeholder

factors within a number of the key developments in 2023/24

is set out on pages 124 to 125 .

135SSE plc Annual Report 2024

Strategic Report Financial Statements

How we take decisions

2023/24 Board performance review process

STAGE 1

Design of

evaluation

STAGE 2

Review

methodology

STAGE 3

Findings

and actions

– A session took place with

Lintstock and the Company

Secretary and Group General

Counsel to discuss the proposed

process for 2023/24.

– To ensure the process remained

engaging and effective it was

agreed to adopt a succinct

questionnaire, complemented

by a review of the Board’s

skills matrix.

– The questionnaire was sent to

each Board and Board Committee

member and structured around

the topics of:

– Board dynamics

– Stakeholder oversight

– The Chair

– Board operations and support

– Strategic oversight

– Risk management

– Priorities for change

– A skills assessment aligned to

SSE’s skills matrix was issued

alongside the questionnaire.

– Based on the responses, Lintstock

produced Board and Board

Committee evaluation reports for

review at the respective meetings.

– The finalised report of findings

was provided to the Board and,

through discussion, actions

were agreed.

Assessing Board performance

The Board monitors and improves

performance by reflecting on the

continuing effectiveness of its

activities, the quality of its

decisions and by considering

theindividual and collective

contribution made by each

Boardmember. This is assessed

annually through the Board

performance review.

The 2023/24 Board and Board Committee

reviews were facilitated by Lintstock Ltd

(Lintstock). The re-engagement of Lintstock

for two years following the 2021/22 external

performance review was agreed to provide

consistent oversight of the actions and

themes identified over a three-year time

frame, and in advance of the next external

process in 2024/25.

The methodology of the follow-up reviews

were aligned to an internal evaluation and

structured to allow areas requring increased

Board focus to be identified. In 2023/24,

specific consideration was also provided to

confirming SSE’s skills matrix which is set

out on page 120

Outside of the Board and Board Committee

performance review work, there is no other

contractual connection between SSE or the

individual Directors and Lintstock.

2022/23 Findings and progress

Opportunities for refinement Examples of outcomes

Enhancing contact with SSE’s

culture, senior teams, Business

Units and strategic context

– Pro-active scheduling and a forward-planner of site visits has been implemented and is available

for the Board to view and attend (see page 128

– Deep dives into projects and specific business areas remain a valued and key Board activity

(see page 123 ).

– A review of the external environment based on sector performance and trends is prepared and

presented by the Group Strategy Team as a standing item in the year.

Continued consideration

ofpeople issues

– Diversity progress and ambitions continues to be reviewed by the Nomination Committee,

and theBoard agreed a target for ethnic minority representation for SSE’s senior leadership

(see page 143

– The Board attended talent events (see pages 141 to 142 ) and conducted a programme

ofemployee engagement (see pages 128 to 129 ).

Board composition – Barry O’Regan and Maarten Wetselaar joined the Board on 1 December 2023 and 1 September

2023 respectively, both of which have been supported by an agreed induction programme

(see page 141

– Helen Mahy assumed the role of Senior Independent Director on 1 November 2023

(see page 140 ).

136 SSE plc Annual Report 2024

Governance

Opportunities for refinement Commentary and actions

NZAP Plus execution

andgrowth

The results affirmed the critical objective of executing agreed plans and retaining a deeper

understanding of future domestic and international markets.

Actions agreed by the Board

– Continue to enhance oversight and engagement with management on NZAP Plus

performanceand execution.

– Use project specific deep dives to assess how large capital project execution is being

deliveredagainst plan.

Enhancing stakeholder

engagement

Connecting with stakeholders was highlighted as a top priority, with feedback exploring further

opportunities for Board engagement.

Actions agreed by the Board

– Further evolve reporting on supply chain challenges within project deep dives and consider

an appropriate opportunity for direct Board-supplier engagement.

– Ensure exposure, discussion and debate surrounding policy and political developments

ismaintained.

Continued support for

Board succession and

changes

Following a number of Board changes, it was agreed to maintain ongoing support for transitions

inmembership.

Actions agreed by the Board

– Continue to review and ensure the effectiveness of short-, medium-, and long-term

successionplans.

– Continue to map Board skills, diversity and tenure with the support of the Nomination

Committee to allow any potential gaps to be identified.

2023/24 Findings and actions

The Board performance review identified progress across a

number of key areas. To provide deeper insight into relative

performance and the responses provided, the results were

measured against an available external benchmark and the

following areas highly rated: the support provided by the

non-Executive Directors, the atmosphere in the Boardroom,

andemployee engagement and culture.

Whilst the Board was confirmed to be operating effectively,

some opportunities for continued improvement and refinement

were identified. A suite of actions was therefore agreed, against

which progress will be tracked across 2024/25.

Board Committees

Each Board Committee was confirmed as

providing effective Board support.

Specific findings and the agreement of

actions was overseen by each Committee

Chair, with consideration of the overall

findings of the Board. Details of actions

and progress are set out in the reports

across pages138 to 180 .

Individual Director

performance

Individual Director performance and

contribution was assessed through

one-to-one meetings with the Chair.

These sessions allowed reflection on

personal development and discussion of

matters relevant to Boardroom culture

and process. The findings, in combination

with the individual skills (see page 120 ),

time commitment and independence

assessments (see pages 140 and 141 )

confirmed each Director continues to

contribute positively.

Chair performance

The performance of the Chair was

evaluated by the Senior Independent

Director based on individual feedback

and collective discussion from the

non-Executive and Executive Directors.

This recognised the strength of inclusive

leadership provided by the Chair; the safe

environment he creates for authentic

debate; and the enthusiasm he holds

for the sector, making him a dedicated

ambassador for SSE. His collegiate

approach was noted to support

engagement with the wider workforce

and a constructive working relationship

with the Executive Directors.

The outcome was agreement that the

Chair continued to devote sufficient time

to the role and demonstrated effective

leadership of the Board.

137SSE plc Annual Report 2024

Strategic Report Financial Statements

Focus areas in 2023/24

– Reviewed Board composition

andtime commitment.

– Recommended an internal change

in Senior Independent Director.

– Recommended adoption of an

ethnicity target for senior

leadership.

– Recommended updates to the

Board’s Inclusion and Diversity

Policy.

Nomination Committee Report

we will continue to appraise how Board

skills and membership should evolve in

response to the operating environment

and SSE’s long-term direction.

Within our Board Committees, John Bason

became Audit Committee Chair on

21July2023 and Melanie Smith became

Remuneration Committee Chair on

1April2023. Both positions have been

supported by a comprehensive induction

and handover process.

Guided by our Board Inclusion and

Diversity Policy, we have continued

to assess how diversity is represented

across Board membership. Currently,

the Board comprises 42% women and

we have one Director from an ethnic

minority background. To further progress,

we considered options to meet the FTSE

Women Leader’s Review recommendation

for female representation within key Board

roles. This gave rise to a change in the

Board member appointed as Senior

Independent Director with Helen Mahy

assuming the role on 1November 2023.

In line with this change, and to further

evidence our existing approach to diversity

within the Board Committees, a number of

corresponding updates were made to the

targets within our Board Inclusion and

Diversity Policy.

We remain equally focused on progress

within our senior leadership population

and have reviewed talent pipelines and

the actions which continue to be pursued

to enhance diversity below Board level.

A key area of discussion was an appropriate

ambition for ethnic minority representation

within the Group Executive Committee and

its direct reports for achievement by 2027,

to sit alongside our existing gender target

for this group. A level of 6% was endorsed

by the Committee and was agreed in

consideration of the current position within

SSE, the industry, and operating geographies.

Further detail on the above developments

and the work of the Committee in 2023/24

is detailed in the report which follows,

which I hope provides a clear account of

how we have continued to fulfil our

responsibilities in respect of people matters.

Sir John Manzoni

Chair of the Nomination Committee

21 May 2024

Dear Shareholder

The Committee has continued to provide

focus on maintaining strength of leadership

for SSE, aligned to the skills, experience and

diversity needed to support growth and

delivery. Our skills matrix is tailored to SSE’s

strategic situation and was reaffirmed

through the Board performance review

as the correct view of the capabilities the

Board requires. These skills are mapped to

tenure and key Board roles to inform plans

for orderly succession and any required

changes to Board composition.

A number of successful transitions in Board

membership were made across the year,

which followed on from succession

planning and Board recruitment work in

2022/23. We were pleased to welcome

Barry O’Regan as Chief Financial Officer on

1 December 2023, when Gregor Alexander

retired from the role of Finance Director.

Maarten Wetselaar joined us as a new

non-Executive Director on 1 September

2023. And Liz Tanner became Company

Secretary in addition to her role as Group

General Counsel on 1 August 2023 upon

the retirement of Sally Fairbairn as Company

Secretary and Director of Investor Relations.

Following nine years’ service, Peter Lynas

stepped down from the Board on

20July2023. We thank Gregor, Sally

andPeter for their contribution to SSE over

their respective careers and Board tenure.

We believe the changes which have been

completed maintain depth of financial

and energy leadership and bolster our

international outlook. Looking forward,

Role of the Committee

The Nomination Committee provides

dedicated focus to the following

people-led matters.

– Board leadership. Identifies the skills,

knowledge and experience required

for the effective leadership and

long-term success of SSE, managing

the balance of competencies through

succession planning, knowledge

development and recruitment.

– Board Committees. Reviews the size,

structure and composition of the

Board’s Committees to ensure

appropriate support now, and

goingforward.

– Talent pipeline. Monitors the senior

leadership pipeline and initiatives to

develop internal capability, engaging

in leadership programmes.

– Inclusion and diversity. Through

the Board’s Policy, considers the

perspectives and attributes across

the Board and senior leadership

and confirms ambitions and work

to drive progress.

The Committee’s Terms of Reference

areavailable on sse.com

Membership and attendance

The membership of the Committee

comprises the non-Executive Directors

and the Chair of the Board, who is

Chairof the Committee. The Company

Secretary and Group General Counsel

is Secretary. Where appropriate, the

Executive Directors are invited to

attend meetings.

Biographical details of the Committee

members can be found on pages 116

to119 .

The Committee met seven times

in2023/24 with attendance on

page 122

138 SSE plc Annual Report 2024

Governance

Board leadership

Ensuring strength of composition

The composition of the Board is informed

by plans for orderly Board succession

across Board and Committee roles. Across

2023/24, the skills, experience and diversity

of the Board continued to be assessed

against the criteria the Committee believes

is needed to set and challenge strategy and

understand changes in SSE’s complex

operating context. The Board’s skills matrix

confirms what these attributes are and is

supplemented by the view of Board diversity

– both of which are set out on page 120 .

Skills and diversity continue to be mapped

against the view of Board tenure, to

understand the impact of any planned

departures on Board balance.

A number of key succession planning

activities were agreed in 2022/23 that came

into effect in the year, as a result, there was

no new recruitment activity completed by

the Committee in 2023/24. The main

objectives were instead to identify what

future Board skills and recruitment may

be required, and to ensure a successful

transition across the changes in Board

membership which have taken place.

Previously agreed changes 2023/24

On 1 September 2023, Maarten Wetselaar

joined the Board as a non-Executive

Director. This followed a search centred

on experience of large capital projects;

operation, development, or construction of

renewable energy; international business

and mergers and acquisitions; and

engagement with capital markets.

Maartenbrings distinct and additive

international energy leadership and related

perspectives to the Board, with breadth and

depth of experience across conventional

and new energy projects. His expertise

across business growth and portfolio

transformation, and working knowledge

across capital and commodity markets,

remain key to SSE’s growth and strategy.

On 1 December 2023, the transition in the

role of Finance Director to Chief Financial

Officer saw Barry O’Regan join the Board

and Gregor Alexander retire after 32 years’

service with SSE and 21 years as Finance

Director. This change was supported by a

comprehensive selection process which

involved both internal succession plans and

an external search. Barry was previously

Finance Director, SSE Renewables and had

responsibility for corporate finance across

the SSE Group. He possesses substantive

financial and energy sector experience

from a 19-year career and brings his own

strengths to the financial leadership and

growth of SSE, having been integral to the

reshaping of the Group and overseeing

many of SSE’s large capital investments.

On 20 July 2023, following completion

of nine years’ tenure, Peter Lynas stepped

down from the Board. The succession plan

for the role of Audit Committee Chair was

addressed through the appointment of

John Bason on 1 June 2022.

On 1 August 2023, Liz Tanner assumed the

role of Company Secretary in addition to

her General Counsel responsibilities. This

followed the retirement of Sally Fairbairn

as SSE’s Company Secretary and Director

of Investor Relations, at which time, the

position of Director of Investor Relations

became a separate role within the Investor

Relations Team.

Board appointment process

A considered process supports directorate

appointments to the Board and is set out

below. It is bolstered by SSE’s Board

Inclusion and Diversity Policy, which drives

action to promote diverse appointments

and inclusive recruitment. This includes

using gender neutral language to ensure

role specifications are accessible to a wide

range of candidates and engaging those

who are signatories to the enhanced

voluntary code of conduct for executive

search firms. AsSSE champions a culture

Committee evaluation

The annual review of Committee performance was facilitated by Lintstock (see pages 136 to 137 ) and the outputs considered by

the full Committee. This confirmed the Committee’s continued effective operation and agreement of actions for 2024/25.

Evaluation

confirmed

– The Committee has continued to progress and strengthen work on areas within its remit.

– A strong balance of skills and experience has been achieved across Board membership.

– Good challenge has been applied to work on talent pipelines with an enhanced focus on diversity.

Actions for

2024/25

– Board composition. Continue to build optionality and depth across succession plans through internal

pipelines and understanding of the external market.

– Talent engagement. Maintain engagement with the internal talent pool and provide time for this

population to connect with Board members.

– Inclusion and diversity. Prioritise diversity for continuous improvement with a focus on ethnicity and

understanding of wider diversity characteristics where possible.

Board appointment process

Stage 1 Stage 2 Stage 3 Stage 4 Stage 5

Confirm objective of

the process and role

specification.

Engage an external

recruitment firm and

set out process.

Assess howthe

specification can

bemet through

alonglist.

Review technical

andcultural fitto

agreeashortlist.

Identify the

preferred candidate

to recommend

tothe Board.

139SSE plc Annual Report 2024

Strategic Report Financial Statements

NOMINATION COMMITTEE REPORT – CONTINUED

which embraces difference, organisational

fit remains a key parameter in addition to

technical capability. More on inclusion and

diversity, and the Board’s Policy can be

found on pages 142 to 143 .

Details of how this process resulted in the

appointment of Maarten Wetselaar and

Barry O’Regan can be found in the

Nomination Committee Report 2023.

Board Committees and key roles

Board Committee membership and the

appointment of key Board roles is designed

around the following principles:

– to ensure alignment between skills and

specific Committee and individual

responsibilities;

– to prevent undue reliance on the

capacity of any Director; and

– to comply with recognised guidance

including the UK Corporate Governance

Code (the Code).

Changes can be recommended to support

succession plans, in line with new Board

appointments, or in response to the annual

review of Board composition. In 2023/24,

the following changes which had been

previously approved by the Board

tookplace.

Under the succession plan for the Board

roles held by Dame Sue Bruce, on

1April2023, Melanie Smith assumed the

role of Remuneration Committee Chair

andLady Elish Angiolini became SSE’s

non-Executive Director for Employee

Engagement.

In line with his appointment as Audit

Committee Chair designate, John Bason

took on the role of Audit Committee

Chair on 21 July 2023, and joined the

Remuneration Committee in advance

of this date on 22 May 2023.

On appointment, it was agreed Maarten

Wetselaar would join the Nomination

Committee, Audit Committee and Energy

Markets Risk Committee.

Senior Independent

Director change

A recommendation was made in the

year to make an internal change in

SSE’s Senior Independent Director,

with Helen Mahy taking on the

position in a handover from

TonyCocker.

This resulted from continued work

oninclusion and diversity and

assessment of stakeholder

perspectives surrounding female

representation within Board roles.

The approval provided by the Board

isconsistent with SSE’s desire to

support progress under the Board

Inclusion and Diversity Policy, and is

reflective of the strength of SSE’s

Board composition which provides

optionality for the role.

Helen possesses depth of

understanding of SSE’s operations

and is supported by an executive legal

career in the sector, alongside an

extensive portfolio of non-Executive

listed company experience. Rising

investor interest in sustainability

matters aligns with Helen’s role as

Chair of the SSHEAC, and her

involvement in external equality,

inclusion and diversity initiatives.

The change in Senior Independent

Director took effect from 1 November

2023, with Helen and Tony’s other

Board and Committee roles

remaining unchanged.

Time commitment

The expected time commitment of the

Chair and non-Executive Directors is agreed

and set out in writing in a Letter of

Appointment. This is issued following

confirmation of an individual’s capacity to

take on the role and involves an assessment

of existing external commitments and

demands on time. On joining the Board,

additional external appointments require

Board approval, and remain subject to

review of the individual circumstances of

the request being made. The acceptance of

an external appointment by an Executive

Director also requires Board consent.

In the year, approvals were provided for

SirJohn Manzoni, Melanie Smith, Dame

Angela Strank and Tony Cocker. In each

case, the Committee sought a declaration

of Director capacity, assessed the time

commitment the position would require,

and reviewed relevant proxy guidance and

investor policies. For Sir John Manzoni, it

was agreed that until he assumed the

position of Chair of Diageo plc, which is

expected to be around 5 February 2025,

there would be no change in his current

roles nor the time expended across them.

The Board was satisfied that in advance of

February 2025, changes would be made

across John’s portfolio of commitments, to

allow him to proceed with the new position.

All of the above appointments were

approved, with it agreed there would be no

impact on any individual’s SSE Board role.

To enhance continued monitoring, and

as an extension to existing process, the

Committee further evolved its annual

review of external appointments to include

the time commitment associated with

each role. This continues to be supported

by the assessment of Director and

Board performance within the annual

performance review process. Together,

this concluded there were no concerns

with the overall portfolio of any Director.

Director re-appointment

All non-Executive Directors undertake a

fixed term of three years subject to annual

re-election by shareholders. The fixed term

can be extended, and consistent with best

practice, does not exceed nine years subject

to defined circumstances as identified by

the Committee.

Extensions recommended, and approved in

the period, were a third three-year term for

Tony Cocker and a second three-year term

for Sir John Manzoni. In line with standing

practice, each decision was supported by

the continuing independence, experience,

and contribution that each Director brings

to both Board and Committee work. Each

Director abstains from discussion and

approval of their own re-appointment.

Conflicts of interest and independence

Each Director has a duty to disclose any

actual or potential conflict of interest

situations, as defined by law, for

consideration and approval by the Board.

This requirement is supported by an annual

authorisation process, in which the

Committee reviews SSE’s Conflicts of

Interest Register, and seeks confirmation

from each Director of any changes or

updates to their position.

140 SSE plc Annual Report 2024

Governance

To accompany the changes in Audit and

Remuneration Committee Chair in the year,

meetings were arranged with key personnel

who would interface with each role.

Sessions covered pertinent inputs to

Committee business, current trends and

issues in the areas relevant to the work of

each Committee, and allowed time to

discuss the approach to Committee ways

of working.

Board knowledge and training

Any Director can request further

information to support their individual

duties or collective Board role. The

arrangements are overseen by the

Company Secretary and Group General

Counsel, and can be internally or externally

facilitated. More information on sessions

held in 2023/24 are on page 125

Through SSE’s mandatory training

programme, all Directors are requested

to refresh their understanding of current

obligations and recent developments in

areas pertinent to their role. These modules

address, among other matters: Directors’

Duties; competition law; anti-money

laundering and financial sanctions; data

protection; and inclusion and diversity.

To remain abreast of, and connected to,

broader societal trends, expectations and

issues, the Directors are encouraged to

participate in seminars and events hosted

by external organisations. Discussion

with peers, other sectors, and individuals

in different professional and personal

situations, is viewed as an opportunity

to develop broader perspectives and

insights, which can translate into different

thinking styles and new debate within

Board discussions.

Organisational capability and

development

With Group HR, the Committee assesses

talent and succession across two key areas.

Succession planning. The Committee

reviews the existing internal pipeline of

talented individuals for ‘ready now’ and

medium- to longer-term movement into

key leadership and functional roles –

including the Executive Directors, Group

Executive Committee and Business Unit

and Corporate Function leadership teams.

This is subject to routine challenge to

understand timing and readiness, alongside

the breadth of internal potential, and

experience represented by recent hires

and external talent pools.

Building capability and capacity. The

Committee considers targeted development

and investment to build capability for the

future, alongside the improvements in

succession depth which are being delivered

across tailored leadership interventions.

This process informs the simultaneous

assessment of a non-Executive Director’s

independence, as following the absence of

any conflict, the Committee reflects upon

the outcome of each individual Director’s

performance evaluation (see page 137

)

and the circumstances set out in the

Code which could compromise an

individual’s position.

Following review in 2023/24, and to the

exclusion of the interested Director in each

case, the Committee recommended, and

Board confirmed: updates to the Conflicts

of Interest Register; the continuing

independence and objective judgement

of each non-Executive Director; and the

overall independence of the Board in line

with the recommendations of the Code.

Additional safeguards to support Director

independence continue through:

– Meetings between the Chair and the

non-Executive Directors, individually

and collectively, without the Executive

Directors present.

– Separate and clearly defined roles for

the Chair, as head of the Board, and the

Chief Executive, as head of executive

management (see page 182

). This

division of responsibility is supported by

a degree of contact outside of Board

meetings to ensure an effective ongoing

dialogue and channel for the timely

escalation of external or internal

developments.

Director induction

All Directors receive a comprehensive

induction programme. This is tailored

through discussion with the Chair and the

Company Secretary and Group General

Counsel, and considers existing expertise

and any prospective Board or Board

Committee roles.

The agreed induction for Maarten Wetselaar

comprised a balance of knowledge-based

sessions with internal functions and

external advisors, in addition to employee

engagements to provide exposure to

SSE’s culture and working environment.

Delivery has been in phases with

information material to the non-Executive

Director role provided in the early stages.

Barry O’Regan’s induction to the Board

and role of Chief Financial Officer was an

externally-facilitated session with SSE’s

legal advisors. Recognising Barry’s in-depth

knowledge of SSE and the relationship

with the investment community, brokers

and the External Auditor, the session

focused on: the role and duties of a listed

company Director; pertinent legal and

regulatory frameworks and developments;

and an overview of the corporate

governance landscape.

Maarten Wetselaar induction programme

Areas covered Sessions by

SSE’s purpose, strategy, operating

context, and business model

Chief Executive

Director of Corporate Affairs, Regulation

and Strategy

MD of each Business Unit

Financial performance and strategy,

funding, assurance, and investment

community

Finance Director and incoming

ChiefFinancial Officer

Director of Investor Relations

Energy sector and trends, SSE’s energy

portfolio and long-term energy markets

Chief Commercial Officer

Corporate affairs, policy and

stakeholder engagement

Director of Corporate Affairs,

Regulationand Strategy

Group Director ofCorporate Affairs

Net zero transition, sustainability

andESG

Chief Sustainability Officer

Safety, health and the environment,

andSSE’s people and culture

Group Safety, Health and Environment

Manager

Director of HR

Corporate governance, Board

operations, and legal and regulatory

views of the external environment

Company Secretary and Group General

Counsel

Deputy General Counsel

Deputy Company Secretary

IT and cyber security Group Chief Information Officer

Chief Information Security Officer

Chief Technology Officer

141SSE plc Annual Report 2024

Strategic Report Financial Statements

With strong support for the enhanced and

increased frequency of contact with the

executive teams, actions were reset through

the 2023/24 Board evaluation for further

work across the coming year.

Committing to enhanced

ethnic minority

representation

In response to the Parker Review

recommendation for FTSE 100

companies to establish a target for

ethnic minority representation within

senior management, to be achieved

by December 2027, the Committee

reviewed SSE’s position and an

appropriate ambition to work

towards. Considering existing

baselines within SSE, the industry,

andoperating geographies, a level

of6% was endorsed. Progress will

bemonitored to ensure this target

remains both credible and

appropriately stretching. More detail

on how this level was set can be

found on page 45 .

Board engagement on inclusion

anddiversity

Committee members have proactively

engaged with all of the co-leads of

SSE’s employee-led Belonging in SSE

communities and responded to requests

for Board-level views and engagement

on inclusion and diversity issues and

approaches. This included a virtual Equity,

Diversity and Inclusion (EDI) session with

the Chair and employees from the SSEN

Distribution business. The Chair shared his

experiences of the approach and progress

made in other organisations and listened

to employee views on their personal

experiences in SSE and areas for continued

focus and improvement. Committee and

Board endorsement for initiatives in this

space was reconfirmed during the session,

which included support for plans to recruit

additional SSEN Distribution employees to

act as EDI ambassadors. Feedback was also

shared around the focus needed to ensure

key messages and initiatives reach

employees working across diverse

operational and office locations.

Inclusion and diversity

SSE’s Group-wide inclusion and diversity

strategy is explained across pages 44

to 45 and in SSE’s Inclusion and Diversity

Report 2024 available on sse.com .

Board Policy

The Board operates under a standalone

inclusion and diversity policy which can be

found on sse.com

. Its objective is to set a

Board-led culture which is inclusive to all

views, perspectives and experiences, and

which fosters diversity as a norm. Across

Board membership, the policy drives

balance and alignment with SSE’s purpose,

strategy, and values, through agreed

principles and targets which reflect the

measures the Board will take when

considering its membership and that

of its Committees.

Policy implementation is assessed through

the specific review of the diversity

characteristics which are present across

Board and Board Committee membership,

and by assessing progress and compliance

against the targets it has set. More on SSE’s

Board Policy and targets is set out opposite.

Through standing review of the policy

during the year, a number of updates were

approved. These centred on maintaining

progress surrounding female representation

in key Board roles and bringing alignment

with pre-existing work on diversity within

the Board Committees.

Senior leadership ambitions

Below Board-level, the Committee provides

specific focus to the diversity of SSE’s senior

leadership and pipelines, including the

recommendations of external initiatives

and shareholder views. To identify levers

for progress, close work has continued

with the Executive Directors and Group HR

to develop clear action plans which are

underpinned by stretching ambitions.

Moredetail on these ambitions and

progress can be found on page 45

In a commitment to providing counsel on

SSE’s approach, the Nomination Committee

has reviewed diversity strategy and

scorecards, covering:

– progress across ambitions and steps

being taken to further an integrated

business and leader-led approach to

SSE’s inclusion and diversity strategy;

– the foundations and strategic pillars

of the two-year strategic inclusion

and diversity plan;

– assurance activities which had been

completed surrounding SSE’s inclusion

and diversity strategy; and

– continued focus on improving

disclosure rates.

Anumber of external providers continue

to support the above initiatives, which are

designed to deliver the education, exposure,

and experience required to deliver SSE’s

NZAP Plus. The Committee has continued

to oversee talent programme participation

and internal moves to stretch and develop

future leaders, with an area of emerging

focus being increased emphasis on learning

and supporting career aspirations. This has

resulted in the roll-out of a new SSE-wide

performance management framework and

learning pathways to support the critical

capabilities SSE requires now and in

the future.

Across the year, each member of the

Committee attended talent sessions to

share leadership experience with the talent

pipeline and to allow the opportunity to

engage in an informal setting. Outside of

these sessions, engagement and exposure

occurs through inviting colleagues to

present at Board-level meetings, and

through non-Executive attendance at

business-led sessions and internal

conferences. The open two-way dialogue

is a key tool for observing and informally

coaching emerging talent.

Coaching SSE’s talent

pipeline

Lady Elish Angiolini and SSE’s Chief

Commercial Officer participated in

SSE’s 2023/24 Career Development

Programme, which is designed to

develop leadership readiness and

involves participation from individuals

across all of SSE. Within the initial

stages, the Chief Commercial Officer

provided a leader’s perspective of

SSE’s strategic situation as part of a

session which explored the dynamic

external landscape. Then together,

with members of the Group Executive

Committee, Lady Elish and the Chief

Commercial Officer participated in an

informal panel discussion on career

pathways, followed by break-out

discussions surrounding candidate

experiences of SSE and current

leadership challenges. Feedback

provided insight into the SSE

leadership journey and the impact

of talent interventions.

NOMINATION COMMITTEE REPORT – CONTINUED

142 SSE plc Annual Report 2024

Governance

Compliance against LR 9.8.6

As at the Company’s chosen reference date, 31 March 2024, SSE confirms it

has met the targets set out under FCA Listing Rule 9.8.6(9). In line with LR

9.8.6(10), as at the reference date, the composition of the Board and Executive

Management was as follows.

Gender (sex)

Number of

Board

members

Percentage

of the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

Executive

Management

Percentage of

Executive

Management

Man 7 58% 3 9 90%

Woman 5 42% 1 1 10%

Ethnic background

Number of

Board

members

Percentage

of the Board

Number of senior

positions on the

Board (CEO, CFO,

SID and Chair)

Number in

Executive

Management

Percentage of

Executive

Management

White British

or other White

(including

minority-white

groups)

11 92% 4 10 100%

Mixed/Multiple

Ethnic Groups

– – – – –

Asian/Asian

British

– – – – –

Black/African/

Caribbean/

Black British

– – – – –

Other ethnic

group,

including Arab

1 8% – – –

Not specified/

prefer not to say

– – – – –

1 Executive management within SSE is the Group Executive Committee including the Committee

Secretary.

Gender is captured as sex for all employees at the onboarding stage and held

on SSE’s secure Enterprise Resource Management system, Harmony. SSE has

100% completion of sex data andthis is what is used when reporting the

gender diversity of the Board and executive management. Recognising that

for some, gender identity can differ from that assigned at birth, all employees

are offered the opportunity to volunteer their gender identity directly within

Harmony, or by completing a diversity data form that is electronically uploaded

onto the system. Ethnicity data is also provided voluntarily and can be offered

in the same was asgender identity. SSE has 100% voluntary completion of

ethnicity data at Board and executive management level. All diversity data

reporting is completed securely and in a way that protects anonymity so that

no one person can be identifiable. All information is strictly confidential in

accordance with SSE’s Privacy Notice in line with the UK and ROI General Data

Protection Regulations (UK GDPR and GDPR 2018 and DPA 2018).

Board Policy

How the policy links to strategy

People are at the heart of the

transformational change needed to achieve

net zero, and SSE believes innovative

solutions to climate change require diverse

perspectives, experiences, and skills. The

principles of equality, fairness, inclusion

and diversity must be at the centre of

everything it does, with SSE’s teamwork

value confirming we work together in an

inclusive and collaborative way.

Policy principles

– Identify Board and Committee needs

and the balance of diversity

characteristics.

See page 139

– Adopt a formal and inclusive Board

recruitment process.

– Engage executive search firms who are

signatories to the enhanced code of

conduct and discuss ambitions for

diverse candidate lists.

– Recruit on an objective and shared

understanding of merit.

See page 139

– Nurture an inclusive Board and

Committee culture.

– Oversee work to develop a diverse

talentpipeline.

– Be aware of stakeholder expectations

and challenge targets in wider strategy.

See pages 127, 141 and 142

Policy targets

– An ultimate goal of enduring gender

parity, whereby the Board commits to

female representation of not less than

40%, with the aim to maintain as close to

50% male and female representation as

possible on a rolling basis.

Target met. 42% women on the Board as

at 21 May 2024. 45% rolling three-year

female representation as at 31March 2024.

– Have at least one woman in the roles

of Chair, Senior Independent Director,

Chief Executive or Chief Financial Officer.

Target met. The role of Senior

Independent Director is held by a woman.

– The Board should have at least one

Director from an ethnic minority

background.

Target met. One ethnic minority

represented across Board membership.

– Have at least one woman as a member

of each of the Board Committees.

Target met. At least two women sit on

each of the Board’s Committees.

Board inclusion anddiversity

143SSE plc Annual Report 2024

Strategic Report Financial Statements

144 SSE plc Annual Report 2024

Focus areas in 2023/24

– Ensured business performance

was fairly presented in financial

reporting.

– Oversaw delivery of the internal

control framework for financial

reporting.

– Supported the transition in Audit

Committee Chair and Chief

Financial Officer.

– Established an assurance

framework over non-financial

reporting.

– Monitored SSE’s GB Business

Energy’s transition to a new

billingplatform, Evolve.

Audit Committee Report

strong leadership of the EY audit team and

for providing visible and effective oversight

of the external audit.

This report details the Group’s Risk

Management Framework and System of

Internal Control, highlighting the progress

made to enhance the assurance provided to

the Committee and the Board. It also

outlines the Committee’s work to assure the

integrity of the Annual Report and Financial

Statements for the year ending

31March2024.

We recognise the importance of non-

financial reporting and its value in providing

insight to shareholders and other

stakeholders into SSE’s performance.

As outlined further in this report, this year,

the Committee has assumed responsibility

for the monitoring of the key non-financial

reporting performance metrics and

ensuring that appropriate assurance of

these metrics is in place.

We are committed to enhancing internal

controls to protect SSE’s shareholder

interests now and in the future. During

the year, we oversaw the design and

implementation of a programme to assess

and strengthen our financial controls, and

which will enable us to comply with the

regulatory reform which will apply to SSE’s

financial year ending 31 March 2027.

TheCommittee will oversee the ongoing

implementation and the maturity of the

financial reporting controls framework. This

will be a key focus area in the years ahead.

The Committee also monitored the

processes and controls relating to SSE’s GB

Business Energy’s transtion to a new billing

platform, Evolve. Further details on the

Committee’s role is set out within this report.

Finally, I would like to welcome Maarten

Wetselaar who joined as a Committee

member in September 2023.

The report which follows is split by the

following areas:

– Governance;

– Financial reporting;

– External audit;

– Internal audit; and

– Internal control and risk management.

I hope you find this report informative and

reflective of the Committee’s work this year.

John Bason

Chair of the Audit Committee

21 May 2024

Dear Shareholder

I’m pleased to present my first Audit

Committee report as Committee Chair,

having taken on the role from Peter Lynas

on 20 July 2023. I joined the Board, and

became a member of the Committee in

June 2022, and during the period prior

tomy appointment as Chair, I focused

onfamiliarising myself with SSE and its

financials. I would like to not only thank

Peter for his support during this transition,

but also especially recognise his 9-year

service to the Audit Committee in his role

asChair.

The full contribution of Gregor Alexander,

who stood down as Finance Director in

December 2023, is detailed in the Chair’s

statement. The Audit Committee for many

years has had the benefit of his in-depth

knowledge of SSE, the external environment

in which it operates, and his many years of

experience in finance. He was succeeded

byBarry O’Regan as Chief Financial Officer.

Barry is a hugely capable successor and

brings with him a breadth of knowledge

and experience of both SSE and 19 years

of experience in the energy sector

and finance.

This was the fifth year that EY served as the

External Auditor, and it was Annie Graham’s

last year as the lead audit partner. I oversaw

the audit partner rotation process with Will

Binns appointed as lead audit partner from

the 2024/25 audit. I thank Annie for her

Role of the Committee

The Audit Committee provides dedicated

focus in the following areas.

Financial reporting

– Ensures the integrity of the Financial

Statements.

– Assesses the appropriateness of

accounting policies and practices.

– Evaluates significant financial

judgements and estimates.

– Advises the Board on the fairness,

balance, and comprehensibility of

the Annual Report and Accounts.

External audit

– Monitors the independence of

theexternal auditor.

– Oversees the non-audit

servicespolicy.

– Assesses the external audit.

– Recommends to the Board actions

relating to the external audit contract,

appointment, remuneration and

engagement terms.

Internal audit

– Approves and oversees the

implementation of the Internal

Audit Plan.

– Assesses the effectiveness of

theInternal Audit function.

Internal control and risk management

– Monitors risk management and SSE’s

System of Internal Control.

– Reviews the going concern and

long-term viability statement.

The Committee’s terms of reference

areavailable on sse.com

Membership and attendance

The membership of the Committee

comprises five non-executive Directors.

John Bason and Debbie Crosbie are

considered by the Board to have recent

and relevant financial experience. The

Committee as a whole has competence

relevant to the sector, with three

members having significant experience

in the energy sector.

Biographical details of the Committee

members are found on 116 to 119

The Committee met four times in 2023/24

with attendance set out on page 122

145SSE plc Annual Report 2024

Strategic Report Financial StatementsGovernance

Governance

Meeting process

The Committee has a structured plan of

meeting topics, which maps to the Group’s

yearly financial reporting cycle. It reviews

the plan and updates it as needed to adjust

the focus of meetings. Committee work is

concentrated on the key areas of financial

reporting, external audit, internal audit,

internal control and risk management.

To support effective governance and quality

reporting, each meeting follows a set

process:

– Before each meeting, the Committee

Chair meets with the Chief Financial

Officer, Director of Group Risk and Audit,

EY (the ‘External Auditor’), and the

Deputy Company Secretary (the

Committee Secretary). This pre-meeting

ensures the Committee meetings are

focused on key and emerging issues.

– Each Committee meeting is joined by

the Board Chair, Chief Financial Officer,

Director of Group Risk and Audit, the

External Auditor and Committee

Secretary. Senior finance and business

managers are invited to some meetings

to provide insight about specific business

matters.

– All Committee meetings are scheduled

before Board meetings to enable the

Committee Chair to report to the Board

and ensure an efficient and timely

reporting process.

The Committee also has private meetings

with the Director of Group Risk and Audit

and with the External Auditor at least two

times a year, in line with the financial

reporting schedule. These allow open

dialogue and feedback without

management being present.

Financial reporting

Financial statements

This Annual Report aims to provide the

information needed to assess SSE’s position

and performance, business model and

strategy. The Finance Team worked

alongside the External Auditor to make sure

the level of disclosure was adequate and the

alternative performance measures (APMs)

were appropriate and consistent with IFRS.

The Committee reviewed the Half- and

Full-year Financial Statements and

considered several areas of significant

financial judgement. It considered and

discussed detailed reporting by

management and the External Auditor to

apply appropriate rigour to these areas.

The Committee recommended to the Board

the approval of the Financial Statements,

thegoing concern statement, and the letter

of representation to the External Auditor.

The Independent Auditor’s Report on pages

324 to 335

sets out the approach to key

audit matters.

Enhancing the approach toassuring non-financial information

The Committee continues to oversee

work to enhance SSE’s integrated

assurance approach over non-financial

information asa number of voluntary

reporting frameworks transition into

regulatory requirements. A dedicated

update in the year confirmed:

– the assurance activities currently

adopted across SSE’s principal

non-financial reporting topics; and

– ongoing work to understand

changing stakeholder expectations

and needs in relation to non-financial

disclosures.

This dynamic approach will ensure

futureand emerging developments

areunderstood and implemented in an

enduring and proportionate way across

existing risk, governance and assurance

processes. Forthe year ahead, the

Committee will:

– continue to monitor the ever-

changing regulatory landscape and

any implications it has for SSE; and

– oversee the development and

strengthening of a pragmatic and

proportionate approach to SSE’s

governance, controls and integrated

assurance over non-financial

reporting.

Further details on non-financial

andsustainability information, can

befound in the related statement

onpage 108

Financial reporting and

audit cycle

External

audit

planning

Full-year

Results

Half-year

Results and

internal audit

planning

External

audit control

testing

Committee evaluation

The annual review of Committee performance in 2023/24 was facilitated by Lintstock (see pages 136 to 137 ), and the Committee

considered its output and agreed follow-up actions for 2024/25.

Actions identified by the 2022/23 evaluation included supporting the new Audit Committee Chair and further developing risk

management and internal controls. These actions have advanced well in the year and will stay on the Committee’s agenda for the

year ahead.

Evaluation

confirmed

– The evaluation confirmed that the Committee was operating effectively to meet its responsibilities,

and the Board endorsed this view.

Actions for

2024/25

– Internal Audit. To make the reporting of the work of Internal Audit and its plans more accessible.

– Knowledge. To increase the awareness and knowledge of Business Unit Finance Teams through

presentations and reports from different Business Unit Finance Directors.

– Non-financial metrics. To review, enhance and assure metrics for non-financial reporting.

146 SSE plc Annual Report 2024

AUDIT COMMITTEE REPORT – CONTINUED

Climate-related disclosures

The Committee plays a key role in

overseeing and challenging SSE’s climate

related disclosures in both Half- and

Full-year Financial Statements.

Senior management briefed the Committee

on climate-related risks and opportunities

and assurance arrangements in relation to

climate-related disclosures.

The Committee makes recommendations

to the Board as to whether these disclosures

are fair, balanced and understandable in the

context of SSE’s Annual Report.

The Committee approved SSE’s approach

tointegrate its climate-related disclosures

throughout the Annual Report 2024 to

make them more accessible and reflective

of SSE’s holistic approach to managing

climate-related issues.

For further details, please see the Disclosure

Statements outlined on pages 98 to 109

The Committee also considered climate

change and SSE’s NZAP Plus in the

preparation of the Financial Statements in

order for it to approve the significant

financial judgements and estimates.

Viability statement and going concern

The Committee reviewed and challenged

management’s assessment of SSE’s

long-term viability. The Committee was

satisfied that the viability assessment

process was robust and a 4-year

assessment period remained appropriate.

The Committee also examined the

supporting information to make a

recommendation to the Board on Going

Concern. The Directors concluded that

both the Group and SSE plc as the parent

company have sufficient headroom to

shown during their audit of these areas.

Thisincluded the adequacy of disclosures

inthe financial statements.

GB Business Energy’s system transition

A significant area of focus for the

Committee was monitoring the transition to

a new billing platform, Evolve, for SSE’s GB

Business Energy which was successfully

completed in 2024. Throughout the year,

the Committee examined the controls and

key business processes, which included the

migration of data (customer accounts and

balances). Updates were provided by both

senior management on progress and the

External Auditor on testing carried out. The

Committee was satisfied that no significant

audit or control deficiencies were identified.

The Committee also considered in the

preparation of the Financial Statements

theestimates in relation to the accrual for

unbilled sales due to the timing of the data

migration. The migration occurred in the

second half of the financial year for the

majority of SSE’s GB Business Energy

customers. This resulted in a high level of

unbilled sales and required a level of

judgement applied in determining the sales

accrual for these customers was higher than

in previous years. The Committee approved

that the Group recognised a provision

against this accrual to reflect that customer

billing delays may result in poorer collection

performance. Further details are set out in

the Significant financial judgement and

estimates table opposite.

For the year ahead, the Committee will

continue to monitor the processes and

controls to ensure they are operating

effectively given the high volume of

datamigrated.

Assuring that this report is fair, balanced and understandable

Process

The Committee advise the Board and help the Directors to make sure the Annual

Report is fair, balanced and understandable.

To evaluate whether the Annual Report is fair, balanced and understandable,

andgives shareholders the necessary information to assess SSE’s performance,

business model and strategy, the following actions were taken:

– Factual content was thoroughly verified;

– The External Auditor reported on any material inconsistencies; and

– Comprehensive reviews were undertaken during the drafting processby:

– The Directors and senior management team to make sure key messages in

the Annual Report were in line with the Company’s performance and strategy

and that narrative sections were consistent with the Financial Statements;

– Independent senior management to consider messaging and balance; and

– SSE’s brokers to ensure consistency and balance.

Conclusion

Management confirmed to

the Committee that they

hadfollowed the assurance

framework when preparing

the Annual Report.

The Committee advised the

Board that they considered

the Annual Report, when

taken as a whole, to be fair,

balanced and understandable.

continue as a Going Concern. In coming to

this conclusion, the Directors considered

sensitivities on future cashflow projections.

In the unlikely event of not being able to

access the revolving credit facility or

otherwise refinance as required, the Group

would be able to defer uncommitted capex,

delay or defer dividend payments, and

implement further cost reductions.

The Financial Statements are therefore

prepared on a Going Concern basis

(seeA6.3

Accompanying Information

tothe Financial Statements).

Significant financial judgements and

estimates

In applying the Group’s accounting policies,

management necessarily makes judgements

and estimates that have a significant effect

on the amounts recognised in the Financial

Statements. Throughout the year,

management presents its up-to-date view

ofkey accounting issues and its resulting

judgements to the Committee.

In consultation with the External Auditor,

the Committee reviewed the significant

financial judgement areas and identified

fivespecific areas for 2023/24.

The Group’s most significant financial

judgement areas, some of which are also

areas of estimation uncertainty, are outlined

on pages 147 to 148

The Committee considered the key facts

and judgements outlined by management;

and the External Auditor gave its

professional view of the appropriateness of

the judgements.

The Committee particularly considered how

management’s judgement and assertions

were challenged by the External Auditor and

the degree of professional scepticism

147SSE plc Annual Report 2024

Strategic Report Financial StatementsGovernance

Significant financial judgements and estimates for the year ended 31 March 2024

Matters considered How these were addressed by the Committee Committee

conclusions

Impairment testing and valuation of certain non-current assets (financial judgement and estimation uncertainty)

The Group reviews the carrying amounts of its goodwill, other

intangible assets and certain property, plant, equipment and

investment assets to determine whether any impairment or reversal

of impairment of the carrying value of those assets needs be

recorded. In the year ended 31 March 2024, as well as goodwill

balances, the specific assets reviewed were intangible development

assets and specific property, plant and equipment assets related to

thermal power generation and gas storage.

In addition, the Group also performed an impairment review over

the carrying value of its equity investments in Neos Networks

Limited and Triton Power Holdings Limited.

An annual impairment testing and valuation of certain

non-current assets exercise is carried out by SSE

Finance, with management presenting the outcome of

this review to the Committee.

In conducting its reviews, the Group makes

judgements and estimates in considering both the level

of cash generating unit (CGU) at which common assets

such as goodwill are assessed against, as well as the

estimates and assumptions behind the calculation of

recoverable amount of the respective assets or CGUs.

Changes to the estimates and assumptions on factors

such as regulation and legislation changes (including

the Electricity Generator Levy and climate change

related regulation), power, gas, carbon and other

commodity prices, volatility of gas prices, plant

running regimes and load factors, discount rates and

other inputs could impact the assessed recoverable

value of assets and CGUs and consequently impact

theGroup’s income statement and balance sheet.

Further detail of the calculation basis and key

assumptions used in the impairment review, the resulting

impairment and the sensitivity of this assessment to key

assumptions is disclosed at note 15

. Detail on the

accounting policies applied is included in the

Accompanying Information at A1

The Committee reviewed

and challenged the

assumptions and

projections in the

management paper and

considered the External

Auditor’s reporting and

findings. Following this

review, the Committee

supported the judgements

made and the

recommendation to

recognise an impairment

of £134.1m in relation

toGas Storage Assets,

£63.2m in relation to the

Group’s investment in

Triton Power Holdings

Limited and £73.6m in

relation to the Group’s

investment in Neos

Networks.

Retirement benefit obligations (estimation uncertainty)

The assumptions in relation to the cost of post-retirement benefits

during the period are based on the Group’s best estimates and set

after consulting qualified actuaries.

While the assumptions are believed to be appropriate, a change in

these would affect both the level of retirement benefit obligation

recorded and the cost to the Group of administering the schemes.

The assets and liabilities of the Group’s defined benefit

retirement schemes are regularly reviewed and advice

is taken from independent actuaries on the IAS 19

valuation of the schemes.

The Committee considered how the schemes were

valued and the External Auditor’s findings on the

scheme’s key assumptions relative to market practice.

Following this review, the

Committee supported the

judgements made.

See note 23

for details of

the calculation basis and

key assumptions, resulting

movements in obligations,

and the sensitivity of key

assumptions to the

obligations.

Revenue recognition – customers unbilled supply of energy (estimation uncertainty)

Revenue from the energy supply activities of the Business Energy and

Airtricity businesses includes an estimate of the value of electricity or

gas supplied to customers between the date of the last meter reading

and the year end. See note 4.1 (iii)

for details of the estimation.

During the year, the Group’s GB Business Energy segment completed

the implementation and migration of customers to a new billing

system. Due to the timing of the migration, which occurred late in

the financial year for the majority of customers, the level of unbilled

and the level of judgement applied in determining the sales accrual

for these customers is higher than in previous years. The Group has

recognised a provision against this accrual to reflect that customer

billing delays may result in poorer collection performance. The

migration of customer accounts and balances to the new billing

system has also increased the level of estimation required in

determining the recoverability of billed debt. This has been

documented in note 4.3 (iii)

of the Financial Statements.

In recent years the impact of customer support schemes has been

material to the judgement applied, though in the current year the

level of judgement applied has reduced to an immaterial level. The

accounting policy for customer support schemes and the balances

claimed from government is explained in the Accompanying

Information at A1.2

A change in the assumptions underpinning the calculation would

affect the amount of other income recognised in any given period.

This unbilled estimation is subject to an internal

corroboration process which compares calculated

unbilled volumes to a theoretical ‘perfect billing’

benchmark measure of unbilled volumes (in GWh and

millions of therms) derived from historical

consumption patterns and aggregated metering data

used in industry reconciliation processes. Furthermore,

unbilled revenue is compared to billings in the period

between the balance sheet date and the finalisation of

the Financial Statements which has provided evidence

of a catch-up of post implementation billings and

hence support to the accrual recognised.

Given the requirement of management to apply

judgement particularly in the current year in relation to

the impact of the data and process migration referred

to above, unbilled revenue is considered a significant

estimate made by management in preparing the

Financial Statements. A change in the assumptions

underpinning the unbilled calculation would have an

impact on the amount of revenue recognised in any

given period.

The Committee reviewed the process, issues and

assumptions in determining the estimation uncertainty

and also considered the findings of the External Auditor.

The Committee

considered the Group’s

processes for recognising

bad debt provisions which

are based on historic

collection performance

adjusted for expected

future improvement or

decline against this

performance. In the

current year, an estimate

ofexpected deterioration

in debt collection due

tobilling and collection

delays has been included

within the recognised

provision.

The Committee supported

the estimate for revenue

recognition from energy

supply activities.

Note 18

details the

sensitivity associated with

this judgement.

148 SSE plc Annual Report 2024

AUDIT COMMITTEE REPORT – CONTINUED

External audit

Following a competitive tender process,

EYwas appointed by shareholders as

SSE’sexternal auditor for the financial

yearcommencing 1 April 2019. EY was

re-appointed by shareholders at the 2023

AGM and has continued to serve as SSE’s

External Auditor. The audit for 2023/24 was

EY’s fifth for SSE, with Annie Graham as lead

audit partner since it’s appointment. Annie

Graham will rotate off as lead audit partner

and will be replaced by Will Binns for the

financial year ending 31 March 2025.

During the year, the Committee received a

comprehensive audit plan from the External

Auditor setting out the proposed scope

andkey audit matters (included in the

Independent Auditor’s Report outlined

onpages 324 to 335

), as well as their

assessment of the key areas of risk. The

audit plan and key risk assessment were

reviewed and given appropriate challenge

by the Committee to make sure underlying

judgements were robust.

In relation to the external audit, the

Committee:

– considered updates from the External

Auditor on the 2023/24 audit plan and

related actions;

– assessed the External Auditor’s

performance, independence and

objectivity; and

– monitored the non-audit services

provided by the External Auditor.

The Committee also reviewed the Group’s

Non-Audit Services Policy and approved, in

advance, the non-audit services to be

provided by EY during the financial year and

related fees.

Finally, the Committee reviewed a report on

the disclosure of information to the External

Auditor and were satisfied that disclosure

arrangements were appropriate.

Significant financial judgements and estimates for the year ended 31 March 2024

Matters considered How these were addressed by the Committee Committee

conclusions

Impact of climate change and transition to net zero (financial judgement and estimation uncertainty)

Climate change and the transition to net zero have been considered

in the preparation of these Financial Statements. Where relevant,

assumptions have been applied that are consistent with a

Paris-aligned 1.5°C 2050 net zero pathway. The Group has a clearly

articulated NZAP Plus capex plan (set out on pages 12 to 13

Thisplan is supported by the Group’s Green Bond framework under

which the Group’s sixth and seventh Green Bonds were issued

during the year (see note 21

). The proceeds of these Green Bonds

were allocated to fund Renewable wind farm and Transmission

network projects.

The impact of future climate change regulation could have a

material impact on the currently reported amounts of the Group’s

assets and liabilities. In preparing these Financial Statements, the

following climate change related risks were considered (see note

4.1(v)

for further details):

– Valuation and useful economic life of property, plant and

equipment, and impairment assessment of goodwill;

– Valuations of decommissioning provisions;

– Defined benefit scheme assets; and

– Funding requirements and impact on going concern and

viabilitystatements.

The Committee reviewed:

– The disclosures relating to the implications of

climate change, the NZAP Plus and related

significant accounting judgements.

– The approach taken by the TCFD Steering Group

inthis area – and was briefed by EY on the audit

requirements associated with TCFD. This included

the need for consistent disclosure throughout

theAnnual Report and the technical basis for

thosedisclosures.

After a presentation on the

proposed disclosures and

the External Auditor’s

report on SSE’s approach,

the Committee approved

the basis of reporting

andrelated financial

judgement disclosures

included in the Financial

Statements for the year

ended 31 March 2024.

See note 4.1 (v)

for

details of the sensitivity

associated with this

judgement.

Valuation of other receivables (financial judgement and estimation uncertainty)

The Group continues to hold a £100m loan note due from Ovo

Energy Limited following the disposal of SSE Energy Services on

15January 2020. Due to accumulated interest, the loan is carried

at£170.1m, which includes a small provision for expected credit

losses recognised in accordance with the requirements of IFRS 9.

The recoverability of this loan note continues to be a signiﬁcant

ﬁnancial judgement.

The Group has assessed the recoverability of this loan note and

recognised a provision for expected credit loss in accordance

withthe requirements of IFRS 9.

The Committee considered the steps taken by

management in assessing the significant financial

judgements associated with the recoverability of

theOvo loan note including:

– the assessment of publicly available and recent

financial information; and

– discussions with Ovo Energy Limited management.

The External Auditor explained the work done to

corroborate and challenge the position taken by

management.

Following management’s

assessment of the

recoverability of the loan

note, the Committee

considered the judgement

to be appropriate.

While the carrying value

isconsidered to be

appropriate, changes

ineconomic conditions

could lead to a change in

the expected credit loss

incurred by the Group

infuture periods.

149SSE plc Annual Report 2024

Strategic Report Financial StatementsGovernance

External audit fees

Audit and audit-related services Non-audit services

0 1 2 3 4 5 6

2023/24

2022/23

2021/22

£3.8m £0.1m

£3.9m

£3.9m £0.1m

£4.0m

£6.0m

£5.8m £0.2m

arrangements with the External Auditor.

Audit fees in the current year include scope

changes of £0.9m related to the prior year

audit. Assurance and tax service fees

incurred in the year were £0.3m. Audit

related assurance services included fees

incurred which mainly related to regulatory

accounts and returns required by Ofgem

and comfort letters in connection with

funding and debt issuance. Non-audit

services amounted to £0.2m.

The Committee was satisfied that the

non-audit services were best handled by

the External Auditor because of its

knowledge of the Group and there was no

threat to its independence. All non-audit

services were approved in line with the

Non-Audit Services Policy and the FRC

Ethical Standard.

See note 6

to the Financial Statements

for fees paid to the External Auditor during

the year.

A summary of external audit fees is set out

in the chart above.

Independence and objectivity

In addition to the annual review of the

effectiveness of the external audit, the

Committee considered the independence and

objectivity of the External Auditor through:

– a combination of assurances provided

bythe External Auditor on the safeguards

in place to maintain independence;

– oversight of the Non-Audit Services

Policy and fees paid; and

– oversight of SSE’s policy on employing

former auditors.

The External Auditor confirmed that all

partners and staff complied with their ethics

and independence policies and procedures

and that no employees working on the audit

held shares in SSE plc.

External audit fees

At its meeting in September 2023, the

Committee reviewed the audit fee proposal

for the year to 31 March 2024 and discussed

the factors driving the fee level increase

with the External Auditor. The Committee

considered benchmarking data for audit

fees of peer companies and efficiency plans

when agreeing fair commercial

External audit process and effectiveness

The Committee oversees the Group’s relationship with EY to make sure the independence, quality, rigour and challenge of the

external audit process is upheld. How the Committee reviews the effectiveness of the audit throughout the year is set out below:

Feedback to inform the review of the effectiveness of the external audit

External Auditor

– The External Auditor provided confirmation of its policies and procedures to maintain

independence and points raised by the FRC’s Annual Quality Review Inspection Report and any

resultant remedial actions taken.

– The Committee also considered the FRC’s Audit Quality Review report on EY’s audit of the

Financial Statements of Southern Electric Power Distribution plc for the year ended 31 March 2023,

in which there were no key findings and only limited improvements required.

Conclusion

The Committee concluded

that the External Auditor

had delivered an effective

external audit in line with

the audit plan. The

Committee was satisfied

that the External Auditor

had shown depth of

knowledge and an

appreciation of complex

issues while bringing

constructive, independent

and objective challenge

tomanagement.

The Committee requested

that debrief sessions were

held between the External

Auditor and the finance

management teams across

SSE to consider any areas

to enhance the audit

process and environment

going forward.

Audit Committee

– Reviewed the output from the yearly Audit Committee evaluation.

– Assessed the results of a survey of Audit Committee members, regular

attendees andGroup Finance.

– Considered the insights and quality of reporting from the External Auditor behind key accounting

andaudit judgements and the skill with which it had applied robust challenge and professional

scepticism in dealing with management.

Management

– Assessed the feedback from a management survey of individuals subject to the external

auditprocess.

– Received assurance on the disclosure process for providing information to the External Auditor.

Audit process

– Assessed delivery of the audit strategy and Independent Auditors’ Report.

– Assessed the results of a survey completed by the audit partners on the external audit process.

– Assurance on the effectiveness of the audit quality processes at EY.

150 SSE plc Annual Report 2024

AUDIT COMMITTEE REPORT – CONTINUED

Non-Audit Services Policy

The Non-Audit Services Policy governs

certain non-audit services provided by the

External Auditor to SSE, specifying which

services are allowed and its approval

process. The policy was updated by the

Committee in 2023 to comply with the

International Ethics Standards Board for

Accountants and the policy is due to be

reviewed in 2025.

SSE imposes a 70% cap on non-audit fees

paid to the External Auditor – this is based

on average audit fees paid over the previous

three consecutive financial years.

The Committee monitors compliance with

the policy and the cap on non-audit fees by

receiving reports at each meeting detailing

all approved non-audit services.

Re-appointment of the External Auditor

The external audit contract is put out to

tender at least every 10 years. This will

occur no later than 2029 in line with good

practice. The Committee confirms ongoing

compliance with the Statutory Audit

Services for Large Companies Market

Investigation (Mandatory Use of

Competitive Tender Processes and Audit

Committee Responsibilities) Order 2014.

The Committee also concluded that given

EY’s capabilities, the effectiveness of the

external audit and the relationship with SSE,

it was in the best interests of the Company

and shareholders to continue with EY, and

did not currently anticipate that a tender

process would be conducted before such

aprocess is required, in 2029.

The Committee proposed to the Board that

it seeks shareholder approval to re-appoint

EY as External Auditor for the financial year

ending 31 March 2025

Internal Audit

Internal Audit provides independent and

objective assurance to management, the

Committee and Board on the effectiveness

of SSE’s risk management activities, internal

controls and corporate governance. Led

bythe Director of Group Risk and Audit,

Internal Audit reports to the Committee and

functionally to the Chief Financial Officer.

The purpose, scope and authority of

Internal Audit is defined in its charter, which

is approved each year by the Committee.

The Committee was updated on the work

ofInternal Audit and reviewed, challenged

andmonitored the implementation of the

2023/24 Internal Audit Plan. It considered

findings, audit actions, and challenged

management to ensure remedial actions

were delivered in a timely manner. The

Committee was satisfied with the progress

of the Internal Audit Plan in 2023/24.

The Committee regularly meets

independently with the Director of Group

Risk and Audit to discuss the results of

audits and additional insights on the risk

management and control environment

across the organisation.

Internal Audit Plan

The Internal Audit Plan is structured to align

with SSE’s operating model, risk profile,

control environment and assurance

arrangements. The Internal Audit Plan is

split between a one-year plan and a

three-year strategy setting out the broader

areas of Internal Audit focus, together with

the vision and resource for the function.

External providers may be engaged to

support delivery of the Internal Audit Plan

where specific skills and expertise require

tobe co-sourced. An integrated assurance

mapping and planning process is

undertaken to ensure that Internal Audit

work is appropriately aligned to, and

coordinated with, the activities of other

relevant assurance providers across

theGroup.

Internal Audit effectiveness

The Committee assesses and reviews the

independence and effectiveness of Internal

Audit using a variety of inputs. These

include receiving reports at each meeting,

interacting with the Director of Group Risk

and Audit, and reviewing the function’s

effectiveness each year.

During the year, Internal Audit was assessed

using feedback received through a

questionnaire to senior stakeholders across

SSE, including the Committee, Group

Executive and Directors of functions.

Responses were consistently favourable,

and the External Auditor also provided

informal and supportive feedback. SSE

carries out an independent, external quality

assessment of Internal Audit every three

years, with the most recent by PwC in

November 2023. Considering all of this,

theCommittee concluded that the Internal

Audit function effectively provided

assurance over SSE’s risks and controls.

Internal control and

risk management

The Committee oversees and reviews

theeffectiveness of SSE’s internal control

system on behalf of the Board. This covers

all material controls including financial,

operational and compliance, as well as

thefinancial reporting process.

Throughout the year, the Committee

received updates on areas of financial

controls, fraud risk effectiveness, cyber

security and IT resilience, and ethics

andcompliance. Some examples of the

areas considered, are:

– Financial controls. The Committee

oversaw the design and implementation

of a controls programme to assess and

strengthen the financial reporting

control framework which is aligned to

the regulatory reform in the UK that will

apply to SSE’s financial year ending

31March 2027. This involved establishing

a process to update, monitor and report

on the control framework and creating

aControls Centre of Excellence to lead

on maintaining the controls

environment. Transition to this model

began on 1April2024. The Committee

was pleased with the progress in this

area and will oversee the ongoing

maturity of the financial controls

framework. This will be a key focus area

for the Committee in the years ahead.

– IT controls. The Committee received

regular updates on steps taken to deliver

IT control improvements and resilience

in order to build a strong controls

framework in this crucial area. This

included a review of the IT controls in

relation to the migration of SSE’s GB

Business Energy to a new billing system.

The Committee was pleased with the

progress made on IT controls and will

continue to monitor this area to ensure

alignment with the coming regulatory

requirements and to achieve a mature

controls environment and sustainable

compliance future at SSE.

– Cyber security. As part of an increased

focus on cyber security controls, SSE has

had a Security Culture Programme in

place since 2018 to identify how to

improve the assessment and maturity

ofits cyber controls. The strengths and

weaknesses of SSE’s cyber processes, as

well as their ability to manage cyber risk

and contribute to SSE’s strategy, are

continuously evaluated. The Committee

monitored and assessed the key

controls, risks and mitigations in place

relating to SSE’s cyber security and

resilience. The Committee recognised

this as an important area for SSE due to

ongoing geopolitical instability and

regulatory changes. The Committee was

pleased with the progress made by the

Cyber Team to create a strong culture

and to embed a cyber controls

framework to allow the identification of

cyber threats and help reduce exposures.

151SSE plc Annual Report 2024

Strategic Report Financial StatementsGovernance

During the year, the Committee endorsed

several improvements to the engagement

and reporting of risks to the Board. These

include an annual horizon scanning session

facilitated by Group Risk and Group

Strategy, and the inclusion of enhanced risk

content in Board papers – all of which are in

place as part of the 2024 Board reporting

timetable. For details on SSE’s Risk

Management, see pages 179 to 181 of

theCompliance Statement.

The Energy Markets Risk Committee

oversees internal control and risk

management in relation to SSE’s energy

market related exposures – see pages 150

to 151

for more.

Governance framework

Ensures focus on the key components

ofeffective decision-making: clarity,

accountability, transparency and efficiency.

For details, see page 114 of the

GovernanceReport.

Strategic framework

Includes SSE’s Purpose, Strategy, goals,

values, and business model and is the basis

for all activity under the Risk Management

Framework. For details, see pages 1 to 7

of the Strategic Report.

Risk management framework

Supports each Business Unit in managing

risks and helps to ensure that the Board

meets its obligations. This framework is

underpinned by the fundamental principle

that everyone at SSE is responsible for

managing risk. See pages 85 to 86

fordetails.

Assurance framework

An integrated programme of audit and

assurance activity that’s independent of

theday-to-day operations of the Business

Units and corporate functions. It’s made up

of Internal Audit, Group Compliance, Large

Capital Projects Services and Group Safety,

Health and Environment.

Standards and quality framework

Sets out the expected standards and

guidelines to be followed when delivering

the Group’s core purpose.

Internal control and risk management

effectiveness

The Committee was satisfied that SSE’s

internal controls operated effectively

throughout the year. This conclusion

wasinformed by an evaluation by key

stakeholders of each of the frameworks of

SSE’s System of Internal Control. The Chief

Financial Officer assessed these evaluations

and provided the Committee with a letter

summarising work done in the year to

improve the control environment and

arecommendation on the overall

effectiveness of the system. The Committee

also considered the assurance evaluations

done each year by the Managing Directors

of SSE’s seven Business Units. These

evaluations consider each framework of

theSystem of Internal Control from a

Business Unit perspective and include any

planned improvements to controls. These

improvements are tracked, with updates

regularly given to the Group Risk

Committee.

Following the Committee’s review and

recommendation, the Board agreed that

SSE’s System of Internal Control continues

to be effective and was in line with the

requirements of the FRC Guidance on Risk

Management, Internal Control and related

Financial and Business Reporting. The

Board also confirmed that no significant

failings or weaknesses were identified

during the financial year. Processes are

inplace to make sure necessary action is

taken, and progress is monitored where

areas for improvement are identified.

System of Internal Control

GOVERNANCE

FRAMEWORK

STRATEGIC

FRAMEWORK

RISK MANAGEMENT

FRAMEWORK

ASSURANCE

FRAMEWORK

STANDARDS AND

QUALITY FRAMEWORK

Board and Board

Committees

Strategic

Objectives

Financial

Objective

Sustainability

Goals

Group Risk Policy

External Audit

Internal Audit

Group Policies

Group Executive

Committee and

Executive sub-

Committees

Principal Risk

Self-Assessment

Risk Appetite Statement

Viability Assessment

Key Risk Indicators

Group Compliance

Group Safety, Health

and Environment

Large Capital

Projects Services

Governance

Manuals

Business Unit Executive

Committees and

Corporate Support

Functions

Business Unit Principal

Risk Self-Assessment

Assurance Evaluation

Risk Blueprint

Business

Assurance

Business Unit,

Policies, Procedures,

Processes and

Systems

Focus areas in 2023/24

– Oversaw arrangements and

recommended actions in

relationto SSE’s approach to

managing portfolio exposures,

with focus onentering new

geographical markets.

– Reviewed and recommended

changes to certain SSE Energy

Markets risk and control metrics.

– Reviewed and recommended

actions in relation to SSE’s approach

to hedging to reduce exposure to

commodity price variation and

capture additional value.

Energy Markets Risk Committee Report

Shouldcircumstances lead to any change

inapproach being required, these will be

fully discussed, challenged, and

appropriately reported.

The EMRC believes that SSE is well

supported by its approach to hedging and

that it continues to effectively manage

changing credit and collateral requirements.

To this effect, we also reviewed the related

SSE Energy Markets governance controls

and risk metrics to ensure that they

remained appropriate. As a result,

changeswere recommended by the

EMRCand approved by the Board.

We continue to be supported by an

executive forum, the Group Energy Markets

Exposure Risk Committee. This meets

monthly andallows SSE’s senior

management to discuss and consider

energy markets risks and exposures.

The Committee’s performance was

considered as part of the annual Board

performance review, and I am pleased

to report this found that we function

effectively and that the Board takes

assurance from thequality of our work.

The Board further sees EMRCmembers

as bringing a wealth of recent and relevant

experience from across various industries.

Looking to the year ahead, the EMRC will

continue to provide oversight of Group

energy markets risk exposures, including

those associated with any expansion into

new markets. The EMRC will continue to

monitor route to market and optimisation

as well as SSE’s trading capability, both to

support SSE’s asset portfolios and to manage

volatility through risk-managed trading.

Dear Shareholder

I am pleased to present the Energy

Markets Risk Committee (EMRC) Report for

31 March 2024, which details the work of

the Committee in overseeing SSE’s energy

market risk exposures, by ensuring an

effective system of risk management

controls and related processes in this area.

During the year, the EMRC’s core duties

remained unchanged, as we continue

tohave a central role in overseeing the

governance arrangements in relation to

SSE’s approach to managing portfolio

exposures. At each meeting, we examine

and discuss reports of these exposures,

consider any proposals from the Executive

Team, and, where required, changes are

recommended to the Board.

As a Committee, we reviewed analysis of

SSE’s approach to hedging, with the aim of

confirming whether the hedge approach for

the Group remained optimal. The EMRC

supported and recommended to the Board

the implementation of a revised approach

to hedging. The updates were reflected in

the hedging approach statement which

was published as part of SSE’s interim and

preliminary results statements. The latest

hedging approach statement can be

found on pages 61 to 62

. TheEMRC

will continue to assess any market

developments and conditions andmonitor

exposures as they arise.

Given the ever-changing external

environment, we will also focus on the

impact, management, and mitigation of

relevant macroeconomic and geopolitical

events. This will include:

– the impact of any geopolitical risk

arising from conflicts;

– commodity prices, volatility and

inflationary pressures; and

– changes to regulatory requirements.

I would like to thank the members of the

Committee for their dedication throughout

the year, and the contribution they all

provide in support of our work.

Tony Cocker

Chair of the EMRC

21 May 2024

Role of the Committee

The Committee monitors SSE’s energy

market risk exposures through work in

the following areas.

– Hedge approach. Oversees and

reviews SSE’s hedging approach.

– Energy market risk. Assesses any

potential emerging energy market

issues and risks.

– Internal control and risk

management. Reviews SSE’s related

internal control and risk management.

The Committee’s Terms of Reference

areavailable on sse.com

Membership and attendance

The membership of the EMRC comprises

five non-Executive Directors and two

Executive Directors. The Chief Executive,

the Managing Director of SSE Energy

Markets, and the Committee Secretary

routinely attend Committee meetings.

Biographical details of the EMRC

members are set out on pages 116

to 119 .

The Committee met four times in

2023/24 with meeting attendance

onpage 122

152 SSE plc Annual Report 2024

Governance

Actions identified by the previous evaluation

in 2022/23 have been addressed and

closed, including an action to further

enhance the EMRC’s forward plan to

align with SSE’s strategy and the macro-

environment in which it is operating.

Meeting process and focus in

2023/24

The work of the EMRC is informed by a

forward plan of business, which ensures

theCommittee carries out its

responsibilities in line with its Terms of

Reference. The forward plan is subject to

review to capture any emerging issues and

risks to SSE in respect of energy markets.

In advance of the scheduled meetings,

the EMRC Chair meets with the Chief

Commercial Officer, the Managing Director

of SSE Energy Markets, and the Committee

Secretary to ensure key and emerging

issues are brought to the EMRC’s attention

as appropriate. Relevant senior managers

can be invited to present certain items of

business and provide additional levels of

insight to technical areas of work.

SSE approach to hedging

SSE has an established approach to hedging through which it generally seeks to

reduce its broad exposure tocommodity price variation at least 12 months in advance

of delivery. SSEcontinues to monitor market developments and conditions and alters

its hedging approach in response to changes in its exposure profile.

In September 2023, the hedge approach was revised with the aim to confirm whether

the hedge approach for the Group remained optimal and reflected current market

conditions. As a result, the baseline target hedge for renewable output was reduced

from 85% to 80%, in addition to allowing gas-only forward hedging as an equivalent

to electricity in periods of poor market liquidity.

Details of SSE’s hedging approach and position are set out on pages 61 to 62

Supporting growth and

managing risk

During the year, the EMRC oversaw

the transition of the SSE Energy

Markets Business Unit to the primary

decision maker for longer term

trading periods, having successfully

optimised SSE’s energy assets in the

short-term. The EMRC considered

therelated control environment and

metrics to ensure that appropriate

measures were in place to manage

energy markets risk exposures.

The EMRC reviewed SSE Energy

Markets’ strategy to expand the ways

that it independently adds value to

the Group. This included proposals to

increase trading in European power

and gas markets to support the

Group’s growth ambitions and risk

manage exposures in the UK.

In the year ahead, the EMRC will

continue to play a key role in

overseeing controls relating to

trading and to manage energy

markets risk exposures.

Further details of how SSE Energy

Markets supports SSE’s strategy,

and its performance during the year,

are set out on page 83

Committee membership changes

Two changes in membership took place

in 2023/24. Maarten Wetselaar joined

on 1September 2023, following his

appointment to the Board, and brings

extensive knowledge of capital and

commodity markets from his career in the

energy industry. In line with the transition of

Finance Director to Chief Financial Officer,

Barry O’Regan joined on 1 December 2023

succeeding Gregor Alexander. Barry brings

a wealth of relevant knowledge and

experience from his previous roles in SSE.

Committee evaluation

The EMRC’s performance was reviewed

in 2023/24 as part of the annual Board

performance review (see pages 136 to

137 ). The results found the EMRC was

highly effective, with the support it provides

to the Board on energy markets risks,

external energy markets developments

and trading governance highly rated.

The action identified from this evaluation

was to ensure the forward business planner

continued to include updates on energy

markets risk exposure related to new markets.

Key EMRC focus areas in 2023/24

Areas of focus How these were considered by the EMRC

Overseeing SSE’s

hedging approach

– Monitored hedging arrangements, risk control metrics, counterparty credit risk exposures, and the liquidity

of energy markets.

– Supported the implementation of the revised hedging approach.

– Received a report on the development of the Renewable Energy Guarantees of Origin (REGO) market and

the hedging and risk management of the portfolio across SSE.

– Endorsed the hedging approach and position on 31 March 2024.

Energy Markets Risks – Provided with reports on emerging energy market issues and risks.

– Considered key energy market risks, risk appetites and risk management controls and governance.

– Received a report on reviews of GB and ROI energy markets.

– Reviewed SSE Energy Markets’ strategy to support entry to international markets for the asset businesses

by providing route to market and optimisation services.

Internal Controls and

Risk Management

relating to Energy

Market Exposures

– Considered a report on the key risks and control metrics arising from operations within SSE Energy Markets

and recommended changes to the Board.

– Received an in-depth review of risk control metrics.

– Received reports from Internal Audit and details of resulting action plans related to SSE Energy Markets.

– Reviewed minutes from the Group-level Energy Markets Exposure Risk Committee which provides

executive level oversight of SSE’s energy market exposures and their associated management.

The table below sets out details of the key

focus areas and how these were considered

by the EMRC during the year.

153SSE plc Annual Report 2024

Strategic Report Financial Statements

154 SSE plc Annual Report 2024

Key focus areas in 2023/24

– Supported concerted efforts

toimprove contractor safety

andstandards.

– Reviewed employee health

andwellbeing programmes

andsupport.

– Reviewed SSE’s ESG ratings and

developments in sustainability

reporting.

– Participated in and shared

feedback from operational

engagements.

Safety, Sustainability, Health and Environment

Advisory Committee Report

implementation of SSE’s safety, health

andenvironment (SHE) strategy, including

the roll out of initiatives and technology

toreduce SHE risks and support SSE’s

overarching goal – that our people are safe,

and we protect the environment whilst

doing so, each and every day. This is

underpinned by our commitment to

ensuring that our Safety Family approach

is a key driver of SSE’s culture, and we

regularly receive, and discuss with

management, reports on safety

performance, including safety incidents,

audits and cultural assessments. I was

also pleased to attend the SSE Safety

Conference in June 2023 that looked

at our SHE vision for the year ahead.

Good progress has been made in advancing

employees’ health and wellbeing with

numerous new health and wellbeing

services launched in 2022/23. A key focus

for 2023/24 was to ensure that employees

are aware of, and use, the available support.

Wewould like to take the opportunity to

recognise the work of SSE’s wellbeing

champions and mental health first aiders

who play an important role in promoting

the wellbeing agenda.

SSE operates in places that are home to a

variety of valuable ecosystems and habitats.

SSE’s environment strategy is designed

toensure that environmental impacts and

the natural environment areconsidered,

and carefully managed. From creating

suitable habitats at operational sites,

supporting salmon on their impressive

migrations along Scotland’s rivers, to

contributing to vital research – SSE’s

businesses have been playing their part in

working sustainably with local partners to

improve biodiversity.

SSE has a responsibility to influence the

social impacts as the world transitions out

of high-carbon activities and into a net zero

world, and we’re committed to a fair and

just transition. SSE was the first company to

publish a Just Transition Strategy in 2020,

and progress updates in this area are

published externally, including in the annual

Sustainability Report which is reviewed

and approved by the SSHEAC.

The SSHEAC continued to conduct a

programme of site visits in 2023/24,

supporting oversight of SSE’s safety

cultureand enabling Committee

understanding of the day-to-day safety

challenges. This provided an opportunity

toshare feedback and agree actions to

enhance working environments.

On behalf of the SSHEAC, I would like to

thank all employees and those who work

with SSE for their sustained effort, hard

work, and commitment. I hope you find

the report a useful explanation of how the

Committee has supported, and provided

oversight to the matters which form part

of its remit.

Helen Mahy CBE

Chair of the SSHEAC

21 May 2024

Dear Shareholder

I am pleased to present the Safety,

Sustainability, Health and Environment

Advisory Committee (SSHEAC) Report for

2023/24. This report explains the work of

theSSHEAC during the year, alongside the

progress that has been made in relation

tosafety, sustainability, health, and the

environment. A more in-depth review of

these areas can be found on pages 23 to

49 and in SSE’s Sustainability Report 2024,

whichis available on sse.com/sustainability .

Very regrettably, there was a fatality in

2023/24 involving one of our contract

partner’s employees. The background to,

andlearnings from this incident, were fully

examined by the SSHEAC and discussed

withmembers of the Executive Team.

Thisincident, SSE’s current growth phase,

and the resulting increase in contractor

hours worked, has reinforced focus on

ourcommitment to keep ours, and our

partners’employees safe.

In support of this commitment, we have

overseen the rollout of a new immersive

training experience in which I was able to

participate this year. The experience will

help colleagues and contract partners to

gain a deeper insight into the emotional

impact of when something goes wrong.

To allow maximum participation, SSE has

invested in a dedicated training centre in

Perth, Scotland, and has access to two

facilities in London, Vauxhall and

Immingham, Hull.

The SSHEAC’s role in the delivery

of SSE’s NZAP Plus, is to monitor the

Role of the Committee

The SSHEAC provides dedicated focus

tothe following matters.

– Performance. Reviews and monitors

the Key Performance Indicators and

other reporting measures being

adopted by the Group in relation to

safety, health and the environment

and sustainability.

– Leadership. Supports and advises

theBoard on matters relating to

safety, sustainability, health, and

theenvironment.

– Strategy and targets. Reviews the

effectiveness of SSE’s strategy,

initiatives, training, and targets,

andthe implementation of SSE’s

Group Policies relating to safety,

sustainability, health and wellbeing,

the environment, and climate change.

– Competence and resources.

Monitors the resource, competence,

and commitment in the management

of safety, sustainability, health, and

environmental issues to ensure

continuous improvement.

The Committee’s Terms of Reference are

available on sse.com

Membership and attendance

The membership of the SSHEAC

comprises four non-Executive Directors;

the Chair of the Board; the Chief

Commercial Officer; the Chief

Sustainability Officer; the MD, SSEN

Distribution; the MD, SSE Distributed

Energy; and the Safety, Health and

Environment Director. An Assistant

Company Secretary is the Secretary and

the Chief Executive attends themeetings.

155SSE plc Annual Report 2024

Strategic Report Financial StatementsGovernance

Meetings and focus in 2023/24

Committee agendas are structured around

a pre-agreed annual plan of business

which has been designed to support the

Committee discharge its responsibilities.

Toensure new and emerging topics can

be covered as they arise, the plan remains

flexible and is supported by close work with

the Group Safety, Health and Environment

Committee which reports to the Group

Executive Committee. The Committee

invites operational managers and specialists

to attend certain meetings to gain a

deeper level of insight on particular items

of business.

In addition to Committee meetings, and to

supplement the understanding of SHE and

sustainability matters across operational

sites, the members undertake an annual

programme of site visits. The following

pages provide an overview of the work

and considerations of the Committee

aligned to its key areas of responsibility.

SHE performance

Safety

The SSHEAC oversees SSE’s safety

performance using a number of different

measures including ‘Safe Days’ and the

rolling Total Recordable Injury Rate (TRIR).

The concept of ‘Safe Days’ is used to

monitor and track safety progress and

performance. On a ‘Safe Day’, for SSE or

contract partners, there are no minor,

serious, or major safety incidents; serious

ormajor environmental incidents; or any

incident with a high potential for harm to

people or the environment. 231 Safe Days

were achieved during 2023/24, compared

to 255 in the previous year.

TRIR for employees’ and contract partners’

is used to conduct benchmarking and trend

analysis. In 2023/24, the combined TRIR

increased to 0.20 per 100,000 hours

Committee evaluation

The annual review of Committee performance was facilitated by Lintstock (see pages 136 to 137 ) and the outputs considered

bythe full Committee. This confirmed the Committee’s continued effective operation and agreement of actions for 2024/25.

Evaluation

confirmed

– The Committee has retained effective oversight of policies, targets and strategies; performance;

risks;anddisclosures and reporting, relating to safety, sustainability, health and the environment.

– The breadth of topics covered by the Committee’s agendas have evolved positively based on matters

discussed within meetings.

– A strong balance has been achieved between oversight, challenge, and support on key risk areas SSE’s

businesses are facing across safety, sustainability, health and the environment.

Actions for

2024/25

– Contract partners. Support effective communication of SSE safety standards to contract partners.

– Shared learning and best practice. Share learnings from safety improvements in other sectors and

ensurebest practice is effectively communicated across Business Units so that it influences operations

andforward plans.

– Reporting. Review performance metrics in order to simplify management papers presented to

theSSHEAC.

worked, compared to 0.19 in the previous

year. SSE’s TRIR has reduced from last year’s

level of 0.10 to 0.07. This reduction in SSE

colleague incidents is indicative of SSE’s

efforts to ensure safety is everyone’s priority

and that we’re all responsible for taking

care of ourselves and each other. Contract

partners’ TRIR increased to 0.41, compared

to 0.34 in the previous year. This reflects

a significant increase in investment and

construction, and the associated rise in

contract partner hours worked building

on the increases in the previous year.

There will be a separate TRIR performance

expectation for 2024/25 for SSE of 0.09,

and for contractors of 0.40.

As well as Business Unit plans and Group-

wide safety activities, the SSHEAC noted

specific actions throughout the year to

support safety performance, such as hand

safety, and annual summer and winter

campaigns. The SSHEAC supported the

“Take 10 for Safety” initiative, which was

designed to ensure colleagues take

dedicated time out to consider safety

within the working day.

SSE’s investment in an immersive training

experience will see colleagues and contract

partners getting a fresh insight into safety,

the consequences of when things go

wrong, their role in getting people home

safe and the tools they can use to influence

others to make that happen. The SSHEAC

received updates on the rollout of the

experience which has been well received,

with 1,700 colleagues and contract partners

having attended the immersive experience

in London, Vauxhall and Immingham, Hull

atthe end of 2023/24. The opening of SSE’s

dedicated centre in Perth will now see an

increase in the number of employees and

contract partners who have access to the

immersive facilities.

Contractor safety

With the fatality of one of SSE’s contractor’s

employees, and in the context of contract

partner incidents and the TRIR being higher

than SSE’s, the SSHEAC discussed how SSE

can provide more rigour and support for

contract partner focused safety initiatives,

especially as the level of project delivery

through partners has been increasing.

The SSHEAC received regular updates on

contractor safety performance, as

effectively managing contract partner safety

is critical for SSE to meet its goal of having

no life changing injuries. A key initiative,

which the SSHEAC noted positive feedback

from, was a Group-level event for contract

partners, hosted by SSE, in November 2023.

This event has been reinforced by a

sustained Business Unit and SSE-wide

engagement programme.

SSE’s Contractor Safety Team, with

feedback from the SSHEAC, has also been

working to continually improve SSE’s SHE

specifications and standards for contractor

partners and provide guidance for project

management teams.

Over the coming year, the SSHEAC will

support continued focus on building strong

relationships with contract partners, and

maintaining and reinforcing SSE’s Safety

Family approach and tools in the face of

growth, new joiners and increased

contractor hours.

Health and wellbeing

The SSHEAC has had a particular focus on

expanding SSE’s approach to physical and

mental health and wellbeing to ensure that

the challenges faced by colleagues across

SSE are being addressed. To support this,

the SSHEAC reviewed SSE’s health and

wellbeing strategy which is based on three

key areas: 1. making it easier to do the right

thing (ensuring that there are no barriers to

people being able to access the help that

156 SSE plc Annual Report 2024

they need); 2. service and support (ensuring

that SSE efficiently operationalises the

services it provides); and 3. making the

uncomfortable, comfortable (continuing to

use colleagues’ stories to support others).

To support the implementation of SSE’s

health and wellbeing strategy, the SSHEAC

also reviewed medium-term and longer-

term priorities.

To ensure that SSE works with organisations

that support its health and wellbeing

strategy and priorities, internal teams

engaged with several external partners,

such as British Heart Foundation, WeCare,

and Samaritans. Initiatives to support

employees’ physical and mental health

continue to be provided through Nuffield,

SSE’s Employee Assistance Programme

andThrive. An overview of the partnership

initiatives was provided to the SSHEAC.

The SSHEAC has received regular updates

and monitored fatigue management

progress in SSEN Distribution, alongside

the associated working hours controls.

This includes managing fatigue risk during

storms, given the different risk profile of

these unique working conditions. Within

its considerations, the SSHEAC recognises

the business must be in a position to safely

provide 24/365 cover, given the critical

nature of its work and potential impacts

on SSE’s customer needs and vulnerabilities.

Environment Strategy

SSE’s environment strategy provides a

framework for SSE to manage and mitigate

impacts to terrestrial, freshwater, and

marine ecosystems, and build a business

that uses resources efficiently and embraces

the principles of a circular economy. Since

the strategy is built into SSE’s strategic

hierarchy of sustainability, the SSHEAC

reviewed SSE’s environment strategy for

2023/24 and an environmental plan for

each Business Unit. The review of SSE’s

environment strategy considered wider

environmental impacts under three pillars

inspired, in part, by the UN Sustainable

Development Goals: 1. environmental

management and governance;

2.responsible consumption and

production; and 3. the natural environment.

An example of the review for the natural

environmental pillar can be found below.

To support SSE’s environment strategy and

hold SSE accountable for performance, the

SSHEAC also agreed a set of targets

for 2024/25.

Performance

SSE’s environmental incidents are

categorised as major, serious, and minor

incidents. In 2023/24, the total number of

environmental incidents as a result of SSE’s

activities totalled 143 compared to 109 the

previous year, the majority of which were

minor. There were no major environmental

incidents.

There was an increase in serious

environmental incidents in 2023/24,

increasing to 40 from 31 the previous year.

The key serious incident areas included

SF6leaks, oil related leaks, fluid filled cable

leaks, and silt releases. The Group Safety,

Health and Environment Committee

endorsed a decision to conduct a deep dive

into these incident areas with the outcomes

andactions discussed by the SSHEAC.

Minorenvironmental incidents increased

to 103 from 77 in the previous year.

The increase in incidents reflects the increase

in project and contractor activity, alongside

improved incident reporting and a focus on

maintaining SSE’s governance processes to

analyse reported incidents data.

The number of environmental permit

breaches increased to 19 in 2023/24

from 9the previous year, the majority of

which were self-reported to the relevant

environmental agencies. All incidents

were dealt with quickly when identified.

Sustainability and environment,

social and governance (ESG)

Climate adaptation and resilience

The SSHEAC considered the annual review

of climate adaptation which discusses the

Group-level approach to climate adaptation

planning and reporting.

On a strategic level, the SSHEAC

understands the desire from a wide range of

stakeholders to understand SSE’s resilience

and management of the physical impacts of

climate change on its assets and activities.

The Committee also recognises that

adaptation assessments and reporting are

crucial to ensure that critical infrastructure

is available even when weather and climate

patterns change. The SSHEAC reviewed

current and upcoming reporting

requirements and the climate scenarios

SSE is testing itself against.

Sustainability Report

In the reporting year, the SSHEAC reviewed

the approach and plan for the Sustainability

Report 2024. In light of increasing

sustainability reporting requirements, this

was considered in the context of the wider

sustainability disclosures across SSE’s

corporate reporting suite. The SSHEAC

reaffirmed the importance of the

Sustainability Report, and the enhanced

disclosures it provides surrounding SSE’s

performance against its key economic,

social, and environmental impacts and

goals. The SSHEAC continues to approve

the report in advance of publication.

ESG ratings

One of the ways in which SSE’s sustainability

performance is assessed is through investor

ESG ratings, which are of strategic

importance to SSE and its stakeholders.

TheSSHEAC continues work to understand

how the rating agencies judge SSE’s

performance and reviewed SSE’s current

ESG ratings performance in the year.

Through this review, a number of actions

and priorities were agreed to support

continuous improvement.

ESG Gap analysis

The SSHEAC supported the first

comprehensive ESG Gap analysis, against

SSE’s position, in 2022/23. To build on this,

the Group Sustainability team carried out a

follow up ESG Gap analysis in 2023/24 that

looked at how the actions from the previous

year were addressed, alongside their impact

on SSE’s ESG rating performance. Through

SAFETY, SUSTAINABILITY, HEALTH AND ENVIRONMENT

ADVISORY COMMITTEE REPORT – CONTINUED

Natural environment

The review of SSE’s environment strategy considered wider environmental impacts

under three pillars. The natural environment pillar relates to the conservation,

restoration and sustainable use of the world’s land and water resources; and

promoting the integration of amenity, ecosystem and biodiversity improvement into

business activities,

The SSHEAC reviewed the following Group goals for 2023/24.

– For onshore large capital projects, all SSE Business Units commit to delivering

no‘net loss’ in biodiversity on those consented from 2023 onwards, and ‘net gain’

in biodiversity on those consented from 2025 onwards.

– Data will be reported monthly and via a Power BI Report against projects in scope,

to confirm compliance with the above target.

– Business Units will be supported in the development of natural capital toolkits

toevidence compliance and to capture good practice.

– SSE’s Environment Sub-group will support development of SSE’s approach

anddeliverables on the natural environment.

157SSE plc Annual Report 2024

Strategic Report Financial StatementsGovernance

this work, the SSHEAC agreed additional

areas of focus and 13 recommendations

for2024/25.

Nature related disclosures

The SSHEAC reviewed the planned

Group-level approach to nature related

disclosures in the context of developments

in sustainability-related reporting

requirements and SSE’s current nature-

related disclosures. The Committee

endorsed the steps being taken to monitor

and work towards future reporting

developments in this area.

SHE strategy 2024/25

The SSHEAC reviewed SSE’s SHE strategy

2024/25 and the safety, health and

wellbeing, and environmental priorities and

plans for the upcoming year, supported by

the SHE risk matrix and SHE assurance plan.

The strategy is built on three pillars: 1. safety

(occupational and process safety);

2.occupational health and wellbeing; and

3.the environment. The SSHEAC continues

to review activities under these pillars as

well as the effectiveness of the strategy,

initiatives, training, and targets. As part of

the SHE plan 2024/25, the SSHEAC

reviewed Business Unit SHE plans for

2024/25.

Site visits

The SSHEAC continue to conduct an

agreed programme of site visits to

support and engage with colleagues

indifferent operating environments.

For2023/24, the programme covered

the following locations.

– Keadby 1 & 2 sites and Control

Room. The station represents a vital

next step in the UK’s journey to net

zero, with plans already in place for

the next generation of low-carbon

power stations situated at Keadby.

– Salisbury Solar and Battery site.

The project is part of SSE’s ambitious

capital investment plan to accelerate

progress to net zero in its role as the

UK and Ireland’s clean energy

champion.

– Stronsay 33kV. Located on the

remote island of Stronsay on the

Orkney Islands, the project is at

anearly stage of execution with

civils/ground works only recently

underway.

– Medway. The power station is a

gas-fired combined cycle gas turbine

(CCGT) power station on the Isle of

Grain in Kent. SSE is exploring options

to decarbonise its energy generation

at Medway through emerging CCS

and hydrogen solutions to ensure the

site can continue to provide essential

flexible power in a net-zero world.

– Orkney Stores Yard and Power

Station; Stronsay 33kV project

(see opposite). The Orkney Islands

are home to some of the world’s

greatest resources of renewable

electricity, from established onshore

wind, to emerging marine

technologies.

TheSSHEAC site visits for 2024/25

arealready agreed and will be reported

on next year.

A dedicated feedback template which is

completed following each visit ensures

that feedback is collected, acted upon,

and reported back to the SSHEAC;

andsupports the adoption of best

practice and shared learning across

SSE’sBusiness Units.

The feedback from visits was

encouraging with teams working hard to

have a positive impact on SSE’s culture,

the environment, and local communities.

Detailed safety briefings were also

received on arrival at each site.

A report of the visit to Orkney, which

illustrates a summarised feedback

template, is provided below.

Visit to Orkney

Helen Mahy (Chair of the SSHEAC), Tony

Cocker (non-executive Director), and

Chris Burchell (MD, SSEN Distribution)

visited Orkney Power Station and Stores

Yard in August 2023. The purpose of the

visit, was to gain insight into the

maintenance of technical and service

support for remote populations on

islands distant from Orkney and the main

island itself. Below is a summary of the

takeaways from the visit.

If it’s not safe, we don’t do it

The team was confident in using

theirsafety licence and that local

management would take their concerns

seriously and act appropriately. An

improvement opportunity was identified

and acted upon, resulting in a SHE risk

board being updated and Safety Family

Language and golden rules being more

visible across the site.

We take pride in our work

and our environment

The site is of historical significance

whichis a source of great pride to the

team working there.

We take care of ourselves

and each other

The team is well integrated, with close

working relationships. A good degree of

engagement and relaxed conversation

indicated a positive culture on the site.

We plan, scan and adapt

Local teams must regularly demonstrate

flexibility in how they approach work

given the remote location. Efficient

teamwork and engagement were

visibleacross the site, with a town hall

session between the team and SSHEAC

members providing for good and

opendiscussion.

What would make it easier for people

to do the right thing?

Digitisation of work schedules is

underway with a plan to utilise the same

digital screen to share key SHE messages

and important information.

Members of the SSHEAC during their

visit to Orkney

Key focus in 2023/24

The key areas of focus in the year

included:

– Understanding the market and

governance landscape.

– Setting and reviewing annual and

long-term incentive plan targets.

– Confirming appointment terms

forthe new Chief Financial Officer

and agreeing retirement terms for

the out-going Finance Director.

– Reviewing below-Board pay

arrangements.

– Agreeing base salary and fee levels

forDirectors.

Remuneration Committee Report

Sustainable Development Goals. Progress

against these goals, which are detailed on

page 25 , are linked to the vesting of

awards made under the PSP from the 2022

grant onwards. Shareholders also approved

‘strategic’ incentive measures in 2022 which

assess progress towards the successful

delivery of the Net Zero Acceleration

Programme Plus (NZAP Plus). This means

that 30% of the shares awarded under the

new PSP, vesting for the first time next year,

are linked to sustainability, either directly

through sustainability measures orthrough

strategic measures by virtue ofthe NZAP

Plus. The in-year focus on sustainability

continues through measures which have a

weighting of 40% within the 2023/24 AIP,

with 10% assessed against sustainability

indices and 30% relating to operational

performance linked to the NZAPPlus.

Alongside sustainability and operational

excellence, we encourage a strong focus

onfinancial performance and value

creationacross our incentives.

The expansion of the business into new

geographies means we are increasingly

exposed to international pay trends and our

policy needs to be able to adapt

accordingly. Our current remuneration

policy is structured to ensure that we have

enough flexibility to attract world-class

talent. This is particularly important as SSE

isincreasingly exposed to growing and

competitive markets, and the deployment

of new technologies requiring specific skills.

Delivery and performance

SSE met its financial objectives in 2023/24

with the value-generating nature of its

diversified business mix offsetting the

impact of unfavourable weather on

renewables output, and the normalisation

of trading conditions for thermal

generation. SSE also invested £2.5bn in

theclean energy infrastructure needed for

net zero. Withquality assets, a world-class

project pipeline and a strong balance sheet,

the Group remains on course to meet

growth targets culminating in Adjusted

Earnings Per Share of 175-200 pence at the

end of the five-year NZAP Plus in 2026/27.

Annual incentive outcomes

The AIP is determined against a broad

rangeof financial, operational, personal

andsustainability performance targets

collectively designed to reflect financial and

non-financial business performance each

year. We reviewed the measures in 2022 to

support the delivery of the NZAP Plus and

longer-term goals. During the year, the

operational measures have been

strengthened with further key performance

objectives within each of the businesses

identified in conjunction with SSE’s leaders.

Financial objectives were met in 2023/24

and progress was made in respect of

operational performance related to the

NZAP Plus. Performance against external

sustainability indices has, once again,

beenstrong with upper quintile ranking

achieved across all indices for the second

year running.

The Committee was saddened by the death

of Richard Ellis, the employee of a contract

partner, in an offsite incident, and our

thoughts are with his family, friends and

colleagues. This incident overshadowed

animprovement in safety among direct

employees, with a Total Recordable Injury

Rate (TRIR) matching our best performance

year. Contractor safety continues to be an

area of focus for us with performance in the

year resulting in contractor TRIR falling

Dear Shareholder

The Directors’ Remuneration Report aims

toset out clearly and simply the rationale

for and detail of Directors’ remuneration

and covers:

– Linking remuneration to strategy

– Delivery and performance

– Annual incentive outcomes

– Long-term incentive outcomes

– Changes to base salary

– Board changes in the year

– Remuneration Policy review

Linking remuneration to strategy

The current Directors’ Remuneration Policy

was approved at the July 2022 Annual

General Meeting with over 91% support.

Our approach to pay is designed to support

execution of SSE’s purpose to provide

energy needed today while building a

betterworld of energy for tomorrow.

Theperformance measures and targets

forthe Annual Incentive Plan (AIP) and the

longer-term Performance Share Plan (PSP)

are directly linked to SSE’s strategy to create

value for shareholders and society in a

sustainable way by developing, building,

operating and investing in the electricity

infrastructure and businesses needed in

thetransition to net zero.

Sustainability is at the heart of SSE’s strategy.

Progress is measured by business goals for

2030 that align with four specific UN

Role of the Committee

The Remuneration Committee

determines and agrees SSE’s broad

policyfor executive remuneration,

ensuring that it is appropriate, enhances

personal performance and rewards

individual contributions towards the

long-term sustainable success of SSE.

In addition, the Committee is responsible

for linking remuneration to SSE’s strategy,

purpose and values.

The Committee’s Terms of Reference

areavailable on sse.com

Membership and attendance

The membership of the Committee

comprises four non-Executive Directors

and the Chair of the Board. The

Company Secretary and Group General

Counsel is Secretary, and the Director of

HR and Director of Reward provide

advice to the Committee. The Chief

Executive may also attend the meetings

but is not present for any discussion

about his own remuneration

arrangements. Biographical details of the

Committee members can be found on

pages116 to 119 .

The Committee met three times in

2023/24 with attendance on page122

158 SSE plc Annual Report 2024

Governance

below SSE’s expected standards. As a result,

the Committee decided to reduce overall

outturns to 40% of the maximum 10%

achievable in this area.

The outturn for the 2023/24 AIP is 69% of

the maximum. The Committee believes that

the outcome is a fair representation of

overall performance and the stakeholder

experience. In line with the policy, 33% of

the award is deferred into shares for three

years. The AIP scorecard is shown on pages

166 to168

Long-term incentive outcomes

The PSP awards granted in June 2021 are

due to vest following the 2023/24 financial

year, subject to financial, operational, and

value-creation performance conditions

measured over the three-year performance

period ending 31 March 2024.

We objectively assessed the vesting

outcome against the performance

measures and targets set. Total Shareholder

Return against a European utilities peer

group performed particularly well over the

three-year period, as did the Adjusted

Earnings Per Share growth targets, with

both elements paying out in full. A formulaic

assessment resulted in an outturn of 62%

ofthe maximum award. We agreed that

thevesting outcome for these awards was

appropriate and no discretion was required.

More details on the performance measures,

targets, and performance outturns are set

out on page 169 and 170

Changes to base salary

In reviewing the base salaries of Executive

Directors, we considered SSE’s performance

and shareholder returns, progress against

the NZAP Plus, and the changing

responsibilities of their roles. We also

considered the pay arrangements of the

wider employee population and the

increase to the pay budget which was just

over 6% including pay progression costs.

We take a broad approach to benchmarking

and in recent years have used the FTSE

20-50 (excluding financial services) as our

main comparator group where our market

capitalisation is in the upper quartile.

Committee evaluation

The annual review of Committee performance was facilitated by Lintstock (see pages 136 and 137 ) and the outputs considered by

the full Committee. This confirmed the Committee’s continued effective operation and agreement of actions for 2023/24.

Evaluation

confirmed

– The Remuneration Committe’s performance was highly rated overall.

– It continues to function well and receives expert input.

Actions for

2023/24

– Continue to ensure SSE’s Remuneration Policy aligns to its leadership needs now and in the future.

– Maintain oversight of the approach to wider workforce pay and continue to consider this, as appropriate,

within Committee work.

Ourmarket capitalisation is within the range

of the median of the FTSE 50 (excluding

financial services) and total pay potential

compared to this group is in the lower

quartile. As our growth plans unfold, we

willcontinue to monitor pay trends and

levels across the FTSE 50.

Taking these factors into consideration,

weagreed that the base salary increase

forAlistair Phillips-Davies should be 4.5%.

Martin Pibworth’s role has increased in

scope following Gregor Alexander’s

retirement from the Board. In particular,

heis now responsible for the Procurement

and Logistics function, which oversees a

very large capital spend relative to others

inour industry across Europe with an

anticipated spend of £4 billion per annum

for the next five years. His base salary

willincrease bythe same 4.5% as other

executives, plus an additional 4.5% to

recognise the expansion of his role.

Barry O’Regan’s salary increase upon

appointment to the Board was set out in

the2023 Annual Report and further details

areprovided below.

Board changes in the year

After 21 years on the Board and 33 years’

service with SSE, Gregor stepped down

from the Board as Finance Director on

30November 2023 before retiring from

SSEon 31 March 2024. He continues to be

the Chair of SSEN Transmission’s Board and

aDirector on the Board of Neos Networks

Limited. His leaving arrangements with

regards to pay were in line with policy and

he was treated as a ‘good leaver’. He was

paid in the usual way up to the point that

hestepped down from the Board. His AIP

has been pro-rated and he received no

grant in respect of the PSP in 2023. He

willbe required to retain a shareholding

forat leasttwo years following the date

ofcessation of employment in line with

thepolicy.

Barry joined the Board as Chief Financial

Officer on 1 December 2023. Last year in

this report, we set out his proposed pay

arrangements. His home base remains in

Ireland and on joining the Board, he was

initially paid a Euro base salary of the

equivalent of £600,000 a year. His base

salary will increase by 8.3% to the equivalent

of £650,000 with effect from 1 April 2024

and to the Euro equivalent of £700,000 (an

increase of 7.7% of salary) with effect from

1April 2025, subject to review. Even once

these increases have been implemented,

base salary will be c.9% lower than Gregor’s

2023/24 annual salary equivalent. All other

pay arrangements are in line with policy.

Remuneration Policy review

The current Director’s Remuneration Policy

will expire at the end of its normal three-

year lifespan at next year’s AGM. We will

consider if the policy is appropriate and

flexible enough to recognise the planned

growth and ambitions of the business and

will also take into account developments in

market practice, corporate governance and

changes within our own business.

I look forward to engaging with

shareholders and their representatives to

understand their views on any potential

changes in approach.

Summary

In the meantime, we plan to continue to

apply SSE’s core principles of transparency

of decision making and clarity of reporting

and to be fully cognisant of the perspectives

of SSE’s stakeholder groups. I very much

welcome any comments on the 2024

Directors’ Remuneration Report or on any

remuneration matters. I can be reached

through SSE’s Company Secretary and

Group General Counsel, LizTanner, at

liz.tanner@sse.com .

Melanie Smith CBE

Chair of the Remuneration Committee

21 May 2024

159SSE plc Annual Report 2024

Strategic Report Financial Statements

Remuneration at a glance

Strategically aligned remuneration

Across SSE, remuneration is simple, transparent and aligned with our strategic Net Zero Acceleration Programme Plus (NZAP Plus).

Itincentivises and rewards performance in a sustainable way while creating value for shareholders and society. Sustainability is at its

heartand it is underpinned by our core values which promote doing the right thing.

In setting remuneration policy for Executive Directors, the Remuneration Committee seeks to ensure that pay is equitable, competitive and

appropriate. It thoroughly considers incentive performance measures to ensure strong strategic alignment and a balance of financial,

strategic, operational and sustainability measures with stretching targets. The diagram below illustrates how Annual Incentive Plain (AIP)

and Performance Share Plan (PSP) performance measures link to strategy.

Our strategy is to create value for shareholders and society in a sustainable way by developing, building, operating and investing in the

electricity infrastructure and businesses needed in the transition to net zero.

Incentive measure Link to strategy

Annual Incentive Plan

Adjusted Earnings Per Share

Underlying measure of financial performance

A strategic KPI and a measure of value creation

Cashflow

Net debt-to-EBITDA ratio

Measures financial stability and the ability to make future

investments critical to the NZAP Plus

Personal

Individual objectives for each Executive Director

A range of objectives specific to each individual Executive Director

set in order to support NZAP Plus delivery

Operational

Safety performance

Operational performance

Capital delivery

Considers safety and wellbeing performance for both employees

and contract partners

Considers delivery against SSE’s key operational targets

Considers progress in relation to SSE’s significant capital projects

Sustainability

Ranking in three external sustainability indices

Scored against a range of factors that support the transition to

NetZero and our culture of ‘Doing the right thing’

Performance Share Plan (from 2022 onwards)

Total Shareholder Return

Relative to FTSE 100

Relative to MSCI European Utilities index

Measures of value creation relative to relevant peer groups across

the UK and Europe

Adjusted Earnings Per Share growth

Compound annual growth plans based on SSE’s three-year plan

A strategic KPI and a measure of value creation over the longerterm

Strategic

Performance in relation to progress against the NZAP Plus

The NZAP Plus is our strategy in action

Sustainability

Cut carbon intensity by 80%

Increase renewable energy output fivefold

Enable low-carbon generation and demand

Champion a fair and just energy transition

Four core business goals linked to the UN Sustainable Development

Goals which support SSE’s transition to net zero

Directors’ Remuneration Policy in action

The current Directors’ Remuneration Policy was approved in 2022 with over 91% shareholder support. It will be renewed in 2025 at the end

of its three-year life span in line with reporting regulations. The Remuneration Committee is responsible for ensuring the effective

operation of the Policy and the illustration below shows how it is intended to operate in 2024/25.

Element Max 2024/25 2025/26 2026/27 2027/28 2028/29 2029/30

Fixed

pay

Salary Set with

reference to pay

increases to the wider

employee population

Salary paid

Benefits Market competitive Benefits paid

Pension Final salary and

top up/pension

allowance

Pension

accrual/

allowance

paid

Variable

pay

Annual

Incentive

Plan (AIP)

CEO 150% of salary

CCO and CFO 130%

of salary

67% cash,

33% deferred shares

Performance

period

AIP cash paid

AIP deferred

share awards

granted

Holding period

Deferred AIP

awards vest

Performance

Share Plan

(PSP)

CEO 250% of salary

CCO and CFO 225%

of salary

PSP awards

granted

Performance/holding period

PSP awards

vest

Holding

period

Holding

period ends

160 SSE plc Annual Report 2024

Governance

Setting and measuring performance

The Remuneration Committee is responsible for designing and determining measures and targets for variable pay for Executive Directors, and for

approving payouts. It follows a clear process annually which is used for both the Annual Incentive Plain (AIP) and the longer-term Performance

SharePlan (PSP). This is described in the diagram below.

Setting new operational targets

When planning for 2023/24 and beyond,

the Committee took a fresh look at all the

incentive measures and felt there was a

possible gap with how success was

measured in the Annual Incentive Plan.

The NZAP Plus plan has created new

opportunities and demands on the

business and it is important that key areas

of delivery within the plan are fairly

targeted. With this in mind, the

Committee felt that a new suite of

operational measures were required.

SSE management were tasked with

identifying key operational performance

areas within each of the businesses, and

defining measures showing threshold and

maximum outcomes. These were

discussed in detail with the Committee

leading to further refinement before a

final suite of measures was agreed. The

new measures have a greater focus on

project delivery, capital spend and safety.

A report was produced at year-end

detailing performance outcomes

supplemented with details explaining how

performance was achieved and noting

any other areas which proved important

during the year not captured in the

metrics. This report covered both areas

ofsuccess and disappointment. The

Committee considered both quantitative

and qualitative information and had

arobust discussion before reaching

aconclusion on overall outcomes.

Ascanbe seen on page167 the final

outcome of the Operational section of

the AIP was 53%.

1. Set measures

The Committee agrees a set of performance measures aligned

to strategy as described on the previous page. AIP measures are

financial, operational and sustainability-focused, and PSP

measures are designed to encourage sustainable value creation,

consistent with effective stewardship and encouraging good

decision-making for the long term.

2. Set targets

Stretching performance targets are set at the beginning of the

performance period and are disclosed in the Annual Report

unless commercially sensitive. The performance range is set

ona realistic basis but requires true outperformance for the

maximum to be achieved. See the case study below for an

example of target setting in action.

3. Performance assessment

Performance is assessed at the end of the performance period.

Formulaic assessment is carried out where possible, and any

measures requiring judgement use an objective scoring

framework to mitigate any bias.

4. Consider wider environment

While the range of performance measures used ensures

performance is assessed using a balanced approach without

undue focus on a single measure which could be achieved at

the expense of wider initiatives, the Committee also considers

the wider environment including but not limited to, wider

market factors and company performance in the round. It is

also mindful that some of the wider group performance

measures for employees are influenced by overall performance

assessments and that this should feel fair and proportionate.

5. Apply discretion

Should the Committee believe that the performance outturn

following assessment is not appropriate in the context of the

wider environment, it will use discretion to adjust the outturn.

The Committee has used discretion to reduce the value of

incentives in four out of the last eight years however, this year,

ithas decided that the formulaic assessment of incentive plans

is appropriate and has not applied discretion.

Setting and

measuring

performance

Set

measures

Apply

discretion

Consider wider

environment

Performance

assessment

Set

targets

161SSE plc Annual Report 2024

Strategic Report Financial Statements

Single total figure of remuneration outcomes in 2023/24

In 2023/24 there has been a reduction in remuneration of 23% compared to the previous year. While base salaries were increased by 5%,

theoverall pension figure is lower due to the valuation of the Chief Executive’s defined benefit pension, and incentive outturns are

alsolower following very strong performance in the previous year.

The charts below provide an illustration of the single total figure of remuneration for 2023/24 for the Chief Executive and Chief

Commercial Officer (i.e. the Executive Directors with two full years pay) relative to the maximum remuneration available over the same

period.

Chief Executive

Base salary Benefits Pension AIP PSP

0 1,000 2,000 3,000 4,000 5,000 6,000

£000s

2023/24

Max

2023/24

Chief Commercial Officer

Base salary Benefits Pension AIP PSP

0 1,000 2,000 3,000 4,000 5,000 6,000

2023/24

Max

£000s

Incentive performance

The Annual Incentive Plan (AIP) requires broad performance across a range of financial and strategic metrics which are set at the beginning

of the financial year. For 2023/24, performance was assessed at 69% of the maximum opportunity.

Under the 2021 Performance Share Plan (PSP), which matures in 2024, a range of value creation, financial and operational performance

metrics are assessed. Performance has been assessed at 62% of the maximum opportunity. The charts below summarise performance

against the metrics for each of the plans.

Annual Incentive Plan

0 10 20 30

Sustainability

Operational

Personal

Cashflow

Adjusted EPS

Maximum Actual

30%

20%

15%

20%

16%

10%

30%

Performance Share Plan

0% 10% 20% 30%

Customer

DPS growth

EPS growth

TSR v MSCI

TSR v FTSE100

Maximum Actual

20%

16%

20%

REMUNERATION AT A GLANCE – CONTINUED

Executive shareholding

Executive Directors are required to maintain a holding of SSE shares in order to align their interests with those of SSE’s shareholders.

TheChief Executive is expected to have a shareholding equivalent to 250% of base salary. Other Executive Directors are expected to

maintain a shareholding of 225% of base salary. As a newly appointed Executive Director, the Chief Financial Officer is expected to build

uphis shareholding over a reasonable period of time.

Shareholding (% of base salary)

0% 100% 200% 300% 400% 500% 600% 700%

800%

Chief Financial

Officer

Chief Commercial

Officer

Chief

Executive

Shareholding Shareholding requirement

162 SSE plc Annual Report 2024

Governance

This section sets out what each Executive Director was paid for the financial year ending 31 March 2024 and explains what they will be paid

for the 2024/25 financial year.

1. Single total figure of remuneration (audited)

The table below shows the single total figure of remuneration for each Executive Director over the last two years. There has been a

year-on-year reduction in remuneration of 23%.

There was a reduction in total fixed pay due to the valuation of defined benefit pension for Alistair Phillips-Davies. The figure is based on

the capitalised pension accrual during the period. Due to the high CPI figure required in the calculation, this value was negative, and the

amount shown in the table is zero in line with reporting regulations. Gregor Alexander was also an active member of a defined benefit

pension scheme up until his 60th birthday, a matter of days into the 2023/24 financial year.

Variable pay has also reduced as a result of lower Annual Incentive Plan (AIP) and Performance Share Plan (PSP) outturns compared to

theprevious year when performance was very strong.

Gregor Alexander stepped down from the Board as Finance Director on 30 December 2023 and Barry O’Regan joined the Board as Chief

Financial Officer on 1 December 2023. In line with the disclosure in the 2023 Annual Report, Gregor’s salary, benefits and AIP have been

pro-rated to reflect his Board service, and any outstanding PSP awards are pro-rated to reflect the elapsed time between the start of the

performance period and the date of cessation of employment on 31 March 2024.

Barry’s pay is determined in sterling and then converted into euros for payment. The table shows his remuneration in sterling and where

applicable, an exchange rate of £1:€1.1492 has been used. This was the 12-month average exchange rate preceding his appointment.

Gregor and Barry have each received additional remuneration for roles fulfilled outside their Board service which is not shown in the

tablebelow.

AUDITED

Fixed pay Variable pay

£000s Base salary Benefits Pension

Total

fixed pay AIP PSP

Total

variable pay Total

Alistair Phillips-Davies 2023/24 999 20 0 1,019 1,034 1,472 2,506 3,525

2022/23 952 27 367 1,346 1,256 2,174 3,430 4,776

Gregor Alexander 2023/24 515 18 0 533 462 995 1,457 1,990

2022/23 736 24 260 1,020 841 1,470 2,311 3,331

Martin Pibworth 2023/24 688 19 103 810 617 887 1,504 2,314

2022/23 655 18 127 800 750 1,100 1,850 2,650

Barry O’Regan 2023/24 203 7 24 234 179 – 179 413

2022/23 – – – – – – – –

Total 2023/24 2,405 64 127 2,596 2,292 3,354 5,646 8,242

2022/23 2,343 69 754 3,166 2,847 4,744 7,591 10,757

The following sections provide more detail on each element of pay including any underlying assumptions, calculations and narrative to

explain the figures.

Annual report on remuneration

Key:

AUDITED

Table content that sits under the

amberAudited rule has been

subject to audit.

IMPLEMENTATION

Table content that sits under the

tuquoise Implementation rule is

planned for implementation in 2024.

163SSE plc Annual Report 2024

Strategic Report Financial Statements

Base salary

In setting base salary, the Remuneration Committee takes into account a range of internal and external factors including performance,

progress against the NZAP Plus, total shareholder returns over the year, wider workforce pay, the increasingly competitive market for talent

and relativity to the FTSE 20-50 peer group.

In 2022/23, salaries were increased by 5% and with effect from 1 April 2024, the Chief Executive’s base salary is to be increased by 4.5%.

This is lower than the pay budget for the wider workforce which was typically increased in the range of 6% to 6.5%.

The Chief Commercial Officer’s role has increased in scope following the Finance Director’s retirement from the Board. In particular, he is

now responsible for the Procurement and Logistics function, which oversees a capital spend which is currently one of the largest in Europe

and growing in line with the NZAP Plus. His base salary will increase by 9% which includes a normal salary increase of 4.5% and a further

increase of 4.5% to recognise the expansion of his role.

Ahead of his appointment to the Board on 1 December 2023, it was agreed that the new Chief Financial Officer’s salary would be £600,000

increasing to £650,000 from 1 April 2024, and to £700,000 from 1 April 2025, subject to review.

AUDITED IMPLEMENTATION

£000s 2022/23 % increase 2023/24 % increase 2024/25

Alistair Phillips-Davies 952 5.0% 999 4.5% 1,044

Gregor Alexander 736 5.0% 515 n/a n/a

Martin Pibworth 655 5.0% 688 9.0% 750

Barry O’Regan n/a n/a 203 8.3% 650

Benefits

Appropriate benefits are provided to Executive Directors taking into account market practice at similarly sized companies and the level

ofbenefits provided to the wider workforce. Core benefits include car allowance or company car, private medical insurance and health

screening. They can also participate in SSE’s all-employee share schemes on the same terms as other employees.

The values shown in the table below represent the cost to the Company of providing benefits to Executive Directors. In line with the choice

available to the wider employee population, part way through the year, the Chief Executive opted to participate in the Company’s car

scheme which has a lower associated cost than the car allowance he was in receipt of previously. This resulted in a reduction in the overall

benefits value for the year.

No changes are proposed to benefits in 2024/25.

AUDITED IMPLEMENTATION

£000s 2022/23 2023/24 2024/25

Alistair Phillips-Davies 27 20 In line with 2023/24

Gregor Alexander 24 18 n/a

Martin Pibworth 18 19 In line with 2023/24

Barry O’Regan n/a 7 In line with 2023/24

ANNUAL REPORT ON REMUNERATION – CONTINUED

164 SSE plc Annual Report 2024

Governance

Pension

SSE’s pension arrangements for all employees depend on when they joined the Company. This is also true for Executive Directors whose

arrangements align to other employees with similar levels of service.

The Chief Executive is a member of the Southern Electric Pension Scheme, and his plan membership predates his Board appointment.

Heparticipates in the same defined benefit pension arrangements that were available to all employees recruited at that time. The scheme

closed in 1999 and the service costs are 32.5% of salary. This is a funded final salary pension scheme and the terms of the scheme apply

equally to all members. The Chief Executive’s service contract provides for a possible maximum pension of two thirds final salary from the

age of 60. An approved pension is payable from the scheme, with the balance of the pension entitlement met directly by the Company

through an Unapproved Unfunded Retirement Benefits scheme (UURBS).

The former Finance Director was an active member of the Scottish Hydro-Electric Pension Scheme (SHEPS) up to his 60th birthday in

April2023, on the same terms as described above.

The Chief Executive and former Finance Director, in common with all other employees who joined at the same time (27 and 33 years ago

respectively), have the following pension provisions relating to leaving the Company:

– for retirement through ill-health an unreduced pension based on service to expected retirement is paid;

– in the event of any reorganisation or redundancy an unreduced accrued pension is paid to a member who is aged 50 or above,

withatleast five years’ service or, for a member who has not yet reached that age, it will be payable with effect from 50;

– and from the age of 55, a member is entitled to leave the Company and receive a pension, reduced for early payment, unless the

Company gives consent and funds this pension on an unreduced basis.

The former Finance Director retired from employment with SSE on 31 March 2024 after stepping down from the Board on

30November2023.

His terms of employment provided for a pension of around £491,000 payable from age 60. This pension is provided by two schemes,

SHEPS and an UURBS. He had the option to request that the SHEPS element of his pension (£118,000) be payable from the date he left

employment. As noted above, he had the option to request that a portion of his pension provided through the UURBS (£306,000) be paid

as a commuted lump sum, with £67,000 being put into payment. As with previous similar requests (including that of the former Chief

Executive in 2014), the Committee considered this request and, in light of the financial health of the Company and the circumstances

surrounding his departure, agreed a commuted payment of £6.9m. In the Committee’s judgement, and that of its actuaries, this was

deemed to be cost neutral to SSE. The calculation reflected the fact that his UURBS pension was paid later than his normal retirement

ageof 60.

The pension values shown in the single total figure of remuneration table for the Chief Executive and the former Finance Director represent

the increase in capital value of pension accrued over one-year times a multiple of 20 (net of CPI and Directors’ contributions) in line with

statutory reporting requirements. The value of the defined benefit pension for the Chief Executive is based on the capitalised pension

accrual (net of CPI inflation) during the period, less the direct employee contribution of £22,400. Due to the high CPI figure required to be

used in the calculation, the outcome of this calculation was negative £164,800. As the aggregate value of these elements is negative, in line

with the Directors’ Remuneration Report regulations, the amount included is zero.

The actual pension accrued by the Chief Executive and former Finance Director during the year is shown in the table below:

£000s 2022/23 2023/24

Alistair Phillips-Davies 549 597

Gregor Alexander 461 1

The Chief Commercial Officer, who has been with SSE since 1998, receives a cash allowance in lieu of pension contributions at 15% of base

salary which is in line with the employer contribution for the majority of SSE’s employees, taking into account length of service. This follows

a phased reduction from 30% of base salary.

The new Chief Financial Officer participates in the SSE Ireland Pension Scheme which is a defined contribution arrangement. The Company

makes contributions equivalent to 12% of base salary aligned to the policy for new appointments and that of the majority of employees.

AUDITED IMPLEMENTATION

£000s 2022/23 2023/24 2024/25

Alistair Phillips-Davies 357 0 No change

Gregor Alexander 260 0 n/a

Martin Pibworth 127 103 No change

Barry O’Regan n/a 24 No change

165SSE plc Annual Report 2024

Strategic Report Financial Statements

Annual Incentive Plan

The Annual Incentive Plan (AIP) requires broad performance across a range of financial and strategic metrics which are set at the beginning

of the financial year. For 2023/24, performance was assessed at 69% of the maximum opportunity for Executive Directors other than the

Chief Financial Officer who received a lower outturn for the personal element of the AIP on account of his recent appointment, resulting

inan award of 68% of the maximum opportunity. A detailed performance scorecard is shown on the following pages.

The total award is made up of 67% paid in cash, and the remaining 33% as shares deferred for a period of three years. The former Finance

Director’s and the new Chief Financial Officer’s awards have been pro-rated to reflect their respective Board service.

AUDITED

AIP award for 2023/24

£000s

Maximum

opportunity as

% of base salary AIP cash

AIP deferred

as shares AIP total

Alistair Phillips-Davies 150% 693 341 1,034

Gregor Alexander 130% 462 0 462

Martin Pibworth 130% 414 204 617

Barry O’Regan 130% 120 59 179

AIP Performance Scorecard

AIP measures and a summary of performance are shown in the table below. The outturns have been arrived at by applying formulaic

assessment (where possible), judgement, logic, and relativity to past performance. Further details of the performance of each measure

isprovided beneath the scorecard.

As part of their performance assessment, the Remuneration Committee has also considered SSE’s performance in the round and against

our pay principles. It is satisfied that the outcomes noted below are appropriate and reflective of performance in the year, and agreed that

no further discretion should be applied.

Measure Weighting Threshold Maximum Outcome

Performance

(% of max)

Outturn

(% of

total

bonus))

Financial

(50%)

Adjusted Earnings Per Share (EPS)

Underlying measure of financial

performance and a strategic KPI

30% 143p

175p

158.5p 49% 15%

49%

Cashflow

Net debt to EBITDA.

20% 3.5

3.0

3.0 100% 20%

100%

Personal

Assessment against a range of

personal objectives set at the

beginning of the year

10% Rating 1

Rating 5

Rating 4+

(Rating 4

for new CFO)

80%

(70%)

(7%)

80%

Strategic

(50%)

Operational

Operational goals relating to safety,

capital delivery and operational

performance

30% See details below Majority of

goals at or

above target

53% 16%

53%

Sustainability

Sustainability performance

independently assessed relative

topeer groups

10%

Median ranking

Upper quintile ranking

Average 91st

percentile

100% 10%

100%

Total 69%

(68% for CFO)

Adjusted Earnings Per Share (30%)

Adjusted Earnings Per Share for 2023/24 were just below budget for the year resulting in a 49% outturn for this measure using a formulaic

assessment.

Cashflow (20%)

The Cashflow metric for 2023/24 has performed well at 3.0 resulting in a 100% outturn for this measure based on a formulaic assessment.

ANNUAL REPORT ON REMUNERATION – CONTINUED

166 SSE plc Annual Report 2024

Governance

Personal (10%)

Executive Directors have detailed personal objectives which are set and agreed by the Committee at the start of the year, and subsequently

assessed at year-end based on judgement, logic, and relativity to past performance. As a substantial majority of objectives set were at or

above target, the Chief Executive and Chief Commercial Officer were rated 4+ on a 1 to 5 rating scale. This resulted in an 80% outturn for

this measure. As the Chief Financial Officer is new in role, the Committee determined a rating of 4 and an outturn of 70% would be

appropriate. The table below provides a summary.

Summary of objectives set Summary of performance assessment

Safety, financial performance, strategy and

transformation, operational performance,

stakeholder management, team and personal

development, and inclusion and diversity.

Overall, a good performance year. Financial performance was in line with expectations despite a tougher

operating environment. Seagreen was delivered and first power achieved at Slough Multifuel. Construction

underway in onshore Europe. Strong progress made in SSEN Transmission with the ASTI projects and a major

supplier framework arrangement put in place. Good progress made in SSEN Distribution to set it up for the

future. Astrong year for Energy Customer Solutions with a new billing system implemented. Progress at

Dogger Bank was slower than anticipated and progress remains a key area of focus. Safety was strong for SSE

staff and a disappointing start for contract partners was improved in the second half of the year. The flagship

immersive safety training was delivered to over 1,300 staff with a purpose built centre launched in Perth.

Operational (30%)

At the beginning of the year the Committee reviewed and set key operational measures which come under one of three distinct areas

worth 10% each; safety; capital delivery; and operational performance. The Committee reviews both targets set and also considers broader

performance in each of these areas when determining overall outturns. In 2023/24 most goals were assessed at being at or above target

and this resulted in a 53% outturn. The table below provides a summary.

Measure Factor Summary performance Weighting

Performance

outcome Outturn

Safety

Overall employee and

contractor safety

performance including

TRIR

Despite strong SSE employee safety performance

well ahead of target TRIR and a lowest ever sickness

absence level of 4.2 days per year, the Committee

decided that overall outturns should be reduced as

aresult of both a below target contract partner TRIR

and the contract partner employee fatality (described

in more detail on page 154 onwards

10%

40% 4%

Capital

delivery

Large capital project (LCP)

performance, SSEN

Distribution capex, SSEN

Transmission RAV, SSE

Renewables pipeline,

Energy Customer Solutions

(ECS)billing system

LCP performance – Seagreen completed, Dogger

Bank construction slower than planned, Viking and

Slough Multifuel progressing well. SSEN Distribution

capex increased by 20% on previous year. SSEN

Transmission RAV significantly outperformed. SSE

Renewables pipeline – 1GW in Poland, 500MW in

Ireland, 400MW in Scotland. ECS billing system

fullyimplemented.

10% 65% 7%

Operational

performance

SSEN Distribution incentive

performance, SSEN

Transmission network

reliability, SSE Renewables

availability andproduction,

SSE Thermal availability and

reliability

SSEN Distribution incentive performance below

target against a backdrop of 10 named storms.

Achieved 95% of the available reward through the

‘Energy Not Supplied’ (ENS) incentive. Challenging

year for SSE Renewables availability and production.

Lower than expected SSE Thermal availability/

reliability offset by strong performance from Great

Island, Medway andPeterhead.

10% 54% 5%

Total 30% 53% 16%

167SSE plc Annual Report 2024

Strategic Report Financial Statements

Sustainability (10%)

Since 2022, SSE has linked AIP to sustainability through a measure which assesses performance against three external sustainability indices

which rank SSE against a peer group based on a number of ESG metrics. High thresholds were set with a maximum outturn only available

for upper quintile performance. SSE’s average performance is in the 91st percentile (an increase from the 85th percentile the previous year),

and so the outturn is 100%. The table below provides details.

Measure Factors considered in ESG assessment Assessment Weighting

Performance

outcome Outturn

Moody’s ESG

Assessment

(Electric & Gas Utilities

– European peer group

consisting of 65

companies)

Environment; Human Resources; Human

Rights; Community Involvement; Business

Behaviour; Corporate Governance.

Score: 71/100;

91st percentile;

Upper quintile (Oct 23)

Sustainalytics ESG

Risk Rating

(Electric Utilities

subindustry – global

peer group consisting

of c.270 companies)

Carbon – own operations; Emissions,

Effluents and Waste; Resource Use; Land

Use and Biodiversity; Business Ethics;

Corporate Governance; Product

Governance; Community Relations; Human

Capital; Occupational Health and Safety.

Score: 20.4;

90th percentile;

Upper quintile (Aug 23)

S&P Global CSA

(Electric Utilities peer

group – global peer

group consisting of

c.270 companies)

26 different categories which cover all the

above and additional issues such as Policy

Influence, Information and Cyber Security,

Talent Attraction and Retention, Stakeholder

Engagement, and Climate Strategy.

Score: 72/100;

91st percentile;

Upper quintile (Mar 24)

Average Ranking; 91st percentile; Upper quintile 10% 100% 10%

IMPLEMENTATION

AIP – performance measures for 2024/25

There will be no changes to AIP quantum for 2024/25.

AIP measures in 2024/25 will remain largely unchanged. Adjusted Earnings Per Share and cashflow remain key measures for the AIP.

Targetsare set annually and are aligned with the NZAP Plus and take into account wider market factors. These will be disclosed in next

year’s Directors’ Remuneration Report.

Measure Weighting

Financial

(50%)

Adjusted Earnings Per Share (EPS)

Underlying measure of financial performance and a strategic KPI

30%

Cashflow

Net debt divided by EBITDA

20%

Strategic

(50%)

Personal

Assessment against a range of personal objectives set at the beginning of the year

10%

Operational

Operational targets relating to safety, capital delivery and operational performance

30%

Sustainability

Sustainability performance independently assessed relative to peer groups by three

external ratings agencies – Moody’s, Sustainalytics and S&P Global

10%

Examples of the operational measures that will be considered are as follows:

– Safety: employee and contractor safety performance

– Capital delivery: LCP performance, SSEN Distribution capex, SSEN Transmission RAV, SSE Renewables pipeline

– Operational performance: SSEN Distribution incentives, SSEN Transmission network reliability, SSE Renewables availability and

production, SSE Thermal availability and reliability

ANNUAL REPORT ON REMUNERATION – CONTINUED

168 SSE plc Annual Report 2024

Governance

Performance Share Plan

The Performance Share Plan (PSP) is a long-term incentive plan whereby a grant of shares is made to Executive Directors before vesting

tothem three years later subject to performance conditions which are designed to encourage sustainable value creation, consistent with

effective stewardship and encouraging good decision-making for the long term. Under the 2021 PSP, which matures in 2024, a range of

value creation, financial and operational performance metrics are assessed. Performance has been assessed at 62% of the maximum

opportunity. Shares awarded are subject to an additional two-year post-vesting holding period.

The table below provides details of the 2021 PSP award vesting in 2024. The estimated value is based on the average share price in the

three months up to 31 March 2024 of £16.70 and the proportion of the award associated with share price appreciation is 10%. As the

awardwill not vest until after publication of this report, the actual value on vesting will be restated in next year’s report.

AUDITED

2021 PSP Award Vesting

Maximum

opportunity as

% of base salary

Share awards

available

Additional awards

in respect of

accrued dividends

Total number

of shares vesting

Estimated value

of awards vesting

£000s

Share price

appreciation

£000s

Alistair Phillips-Davies 200% 122,131 20,009 88,126 1,472 138

Gregor Alexander 175% 82,597 13,531 59,599 995 94

Martin Pibworth 175% 73,597 12,055 53,104 887 84

Barry O’Regan n/a – – – – –

The new Chief Financial Officer will receive his first grant under the PSP in 2024 which will vest in 2027. In the interim, he will continue to

receive awards which were granted before he joined the Board under the below-Board LTIP, the Leadership Share Plan (LSP). As this award

does not relate to his Board service, it has not been reported in the total single figure of remuneration table. The value of the award vesting

under the LSP in 2024 will be £212,424.

PSP Performance Scorecard

PSP measures and a summary of performance are shown in the table below. The outturns have been arrived at by applying formulaic

assessment which the Remuneration Committee have reviewed taking into account the wider environment. They believe that the

outcomes are fair in the context of wider performance over the three-year period, in particular the value created for shareholders

andtaking shareholder interest into account.

Measure Weighting Threshold Maximum Outcome

Performance

(% of max)

Outturn

(% of

total

award)

Value creation

(40%)

TSR FTSE 100

Relative share price (plus

dividends) performance

against FTSE 100

20%

Median

ranking

Upper quartile

ranking

Rank

31 of 95

79% 16%

79%

TSR MSCI

Relative share price

performance against the MSCI

European Utilities Index

20%

Median

ranking

Upper quartile

ranking

Rank

6 of 24

100% 20%

100%

Financial

(40%)

EPS growth

Real growth in EPS over the

three-year performance

period

20%

Growth

equal to RPI

Growth in excess

of RPI + 10%

In excess

of RPI+ 10%

100% 20%

100%

DPS growth

Real growth in DPS over the

three-year performance period

20%

Growth

equal to RPI

Growth in excess

of RPI + 5%

Below RPI

(in line with

policy)

0% 0%

Operational

(20%)

Customer – SSEN Distribution

Customer service ranking in

theDNO customer service

leaguetables

10%

Median

ranking

Upper quartile

ranking

Below

median

0% 0%

Customer – SSE Business

Energy

Customer service ranking in the

Citizens Advice non-domestic

energy supplier league table

10%

Median

ranking

Upper quartile

ranking

Average

rank 5 out

of 16

60% 6%

60%

Total 62%

169SSE plc Annual Report 2024

Strategic Report Financial Statements

IMPLEMENTATION

PSP – performance measures for the 2024 award

There will be no changes made to PSP quantum for the 2024 award.

In 2022, the PSP measures were amended, and the first award assessed under the new measures will reach maturity in 2025. There are

nochanges proposed to the measures at this stage, and the award granted in 2024 will use the same measures as the previous two years.

These are shown below.

Measure Description Weighting Threshold Maximum

TSR FTSE 100 Relative share price performance against FTSE 100 20% 50th percentile

(20% outturn)

80th percentile

(100% outturn)

TSR MSCI Relative share price performance against the MSCI European

Utilities Index

30% 50th percentile

(20% outturn)

80th percentile

(100% outturn)

Adjusted

Earnings Per

Growth targets in line with SSE’s plan over three years linked

tothe NZAP Plus

20% 165p

(20% outturn)

200p

(100% outturn)

Strategic Performance in the four main areas of the implementation

of the NZAP Plus

15% Details below

Sustainability Performance linked to SSE’s UN Sustainable Development

Goals 2030

15% Details below

The Strategic measure will be based on the Remuneration Committee’s assessment of SSE’s performance in relation to the following:

Strategic area of the NZAP Plus Measures and targets

Renewables Aiming to achieve around 9GW of development pipeline subject to sell downs, consenting and

achievable returns while maintaining financial discipline

Networks growth Achieve RAV growth in SSEN Transmission at or above £7.5bn (on current 75% ownership basis) and

SSEN Distribution above £6.5bn subject to adjustment for any Board approved sell downs

Energy businesses Solar and battery installed capacity to meet 1GW by FY27

Customer On course to be a leading PPA player in the market by FY27

The Sustainability measure will be linked to SSE’s 2030 business goals which are aligned to four of the UN’s Sustainable Development Goals

as follows:

UN SDG Measures and targets

SDG 13 Climate Action Reduce scope 1 carbon intensity by 80% by 2030, compared to 2017/18 levels, to 61gCO

e/kWh

– Scope 1 carbon intensity reduction to 61gCO

e/kWh

SDG 7 Affordable and

Clean Energy

Build a renewable energy portfolio that generates at least 50TWh of renewable electricity a year by 2030

– SSE Renewables output TWh tracked to 2027/28

– SSE Renewables output TWh by 2030/31

SDG 9 Industry, Innovation

and Infrastructure

Enable at least 20GW of renewable generation and facilitate around 2 million EVs and 1 million heat

pumps on SSEN’s electricity networks by 2030

– GW renewable generation capacity connected within SSEN’s electricity transmission network area

by2027

– Low-carbon technologies connected to SSEN’s local electricity distribution networks area by 2028

SDG 8 Decent Work and

Economic Growth

Be a global leader for the just transition to net zero, with a guarantee of fair work and commitment to

paying fair tax andsharing economic value

– Achieve continued thought leadership on just transition, as recognised in external benchmarks

ANNUAL REPORT ON REMUNERATION – CONTINUED

170 SSE plc Annual Report 2024

Governance

Non-Executive Directors’ Remuneration

This table below sets out what each non-Executive Director was paid for the financial year ending 31 March 2024 relative to the previous

financial year.

There have been a number of changes to the Board and it’s Committees over the course of the year, as follows:

– Sue Bruce and Peter Lynas stepped down from the Board on 31 March 2023 and 20 July 2023 respectively

– Elish Angiolini was appointed as non-Executive Director for Employee Engagement and Melanie Smith became Remuneration

Committee Chair on 1 April 2023, succeeding Sue Bruce who previously held both roles

– John Bason was appointed as the Audit Committee Chair on 20 July 2023, succeeding Peter Lynas

– Maarten Wetselaar joined the Board on 1 September 2023

– Helen Mahy was appointed as Senior Independent Director from 1 November 2023, succeeding Tony Cocker who remains on the Board

as a non-Executive Director and Chair of the Energy Markets Risk Committee.

AUDITED

£000s 2022/23 2023/24

Elish Angiolini 75 96

John Bason 62 93

Sue Bruce 104 n/a

Tony Cocker 109 107

Debbie Crosbie 75 79

Peter Lynas 94 30

Helen Mahy 90 104

John Manzoni 412 433

Melanie Smith 75 99

Angela Strank 75 79

Maarten Wetselaar n/a 46

IMPLEMENTATION

Non-Executive Directors’ Fees 2024/25

Fees are typically reviewed annually in a way that is consistent with wider remuneration policy, and relative to other companies of a similar

size and complexity. In 2023/24, the Chair’s fee and the base non-Executive Director fees were increased by 5%, in line with Executive

Directors’ salary increases. Fees for Committee Chair roles and the non-Executive Director for Employee Engagement were slightly larger

to reflect the increased time commitment required of these roles.

Once again, the Chair and base non-Executive Director fee will increase in line with Executive Directors at 4.5% for 2024/25. A review of

independently sourced benchmark data suggested that fees for the various Committee Chair roles and the Non-Executive Director for

Employee Engagement had fallen behind the FTSE 20-50 peer group and as such, further increases were recommended to reflect the

timecommitments associated with these roles.

Fee levels for 2024/25 are shown in the table below.

£000s 2023/24 2024/25

Chair fee 433 450

Base fee 79 82

Senior Independent Director 20 25

Audit Committee Chair 20 25

Remuneration Committee Chair 20 25

Energy Markets Risk Committee Chair 17 20

Safety, Sustainability, Health and Environment Advisory Committee Chair 17 20

Non-Executive Director for Employee Engagement 17 20

171SSE plc Annual Report 2024

Strategic Report Financial Statements

Share interests and share awards (audited)

Directors’ share interests

The table below shows the share interests of the Executive and non-Executive Directors at 31 March 2024.

Number of shares Number of options

*Shareholding

requirement as

a % of salary

(Actual/% met)

Shares owned

outright at

31 March 2024

Interests in

shares, awarded

without

performance

conditions at

31 March 2024

(DBS Awards)

Interests in

shares, awarded

subject to

performance

conditions at

31 March 2024

(PSP Awards)

Interests in

shares, awarded

subject to

performance

conditions at

31 March 2024

(LSP Awards)

Interests in

share options,

awarded

without

performance

conditions at

31 March 2024

Interests in

share options,

awarded subject

to performance

conditions at

31 March 2024

Shares owned

outright at

31 March 2023

Director

Alistair Phillips-Davies 712%

(250% – met) 431,416 64,564 391,986 – – – 359,184

Gregor Alexander

(Resigned 01/12/23)

729%

(225% – met) 341,488 43,249 176,789 – – – 292,815

Martin Pibworth 418%

(225% – met) 166,083 3 7,229 240,859 – 2,338 – 130,006

Barry O'Regan

(Appointed 01/12/23)

111%

(below 225%) 40,294 8,682 0 48,156 – – 0

Elish Angiolini 2,000 – – – – – 2,000

John Bason 2,117 – – – – – 0

Tony Cocker 5,000 – – – – – 5,000

Debbie Crosbie 2,000 – – – – – 2,000

Peter Lynas

(Resigned 20/07/23) 5,000 – – – – – 5,000

Helen Mahy 3,310 – – – – – 3,310

John Manzoni 2,622 – – – – – 2,519

Melanie Smith 2,174 – – – – – 2,174

Angela Strank 2,152 – – – – – 2,152

Maarten Wetselaar

(Appointed 01/09/23) 4,000 – – – – – 0

* Shareholding requirement:

The Shareholding requirement is 250% of base salary for the Chief Executive and 225% for other Executive Directors.

Price used to calculate shareholding requirement as % of salary as at 28/03/24 £16.5000

Shares owned outright include holdings of any connected persons.

Directors’ Long-term Incentive Plan interests

Deferred Bonus awards granted in 2023 and PSP awards granted in 2023

The tables below shows the Deferred Bonus awards and PSP awards granted to Executive Directors in 2023.

Deferred Bonus Awards Granted 2023

(in relation to the AIP payable for 2022/23)

Recipient Date of Grant Shares Granted

Market Value on

date of award Face Value

Gregor Alexander 01/06/2023 14,945 £18.80 £280,966

Barry O'Regan 01/06/2023 2,783 £18.80 £52,320

Alistair Phillips-Davies 01/06/2023 22,310 £18.80 £419,428

Martin Pibworth 01/06/2023 13,316 £18.80 £250,341

£1,003,055

PSP Awards Granted 2023

Recipient Date of Grant Shares Granted

Market Value on

date of award Face Value

Gregor Alexander 01/06/2023 0 £18.80 £0

Alistair Phillips-Davies 01/06/2023 134,448 £18.80 £2,527,622

Martin Pibworth 01/06/2023 83,334 £18.80 £1,566,679

£4,094,302

ANNUAL REPORT ON REMUNERATION – CONTINUED

172 SSE plc Annual Report 2024

Governance

Directors’ Long-term Incentive Plan interests

The table below details the Executive Directors’ Long-term Incentive Plan interests.

Share Plan Date of Award

Normal Exercise

Period (or

Vesting Date)

No. of shares

under award as

at 1 April 2023

Option

Exercise

Price

Additional

awarded

during the year

No. of shares

lapsed during

the year incl.

dividend shares

No. of shares

realised during

the year incl.

dividend shares

No. of shares

under award at

31 March 2024

Gregor Alexander DBP 2016

26/06/2020 26/06/2023 12,494 – – – 12,494

–

DBP 2016

06/07/2021 06/07/2024 13,832 – – – – 13,832

DBP 2016

22/07/2022 22/07/2025 14,472 – – – – 14,472

DBP 2016

01/06/2023 01/06/2026 – – 14,945

– – 14,945

PSP

26/06/2020 26/06/2023 88,761 – – 25,061 79,351

–

PSP

06/07/2021 06/07/2024 82,597 – – – – 82,597

PSP

22/07/2022 22/07/2025 94,192 – – – – 94,192

Sharesave 21/07/2020 01/10/23

– 31/03/24 –130 1,107p – – 130 –

Barry O’Regan DBP 2016

06/07/2021 06/07/2024 2,534 – – – – 2,534

DBP 2016

22/07/2022 22/07/2025 3,365 – – – – 3,365

DBP 2016

01/06/2023 01/06/2026 – – 2,783

– – 2,783

LSP

06/07/2021 06/07/2024 15,616 – – – – 15,616

LSP

22/07/2022 22/07/2025 13,864 – – – – 13,864

LSP

01/06/2023 01/06/2026 – – 18,676

– – 18,676

Alistair

Phillips-Davies

DBP 2016

26/06/2020 26/06/2023 18,652 – – – 18,652

–

DBP 2016

06/07/2021 06/07/2024 20,650 – – – – 20,650

DBP 2016

22/07/2022 22/07/2025 21,604 – – – – 21,604

DBP 2016

01/06/2023 01/06/2026 – – 22,310

– – 22,310

PSP

26/06/2020 26/06/2023 131,244 – – 37,057 117,330

–

PSP

06/07/2021 06/07/2024 122,131 – – – – 122,131

PSP

22/07/2022 22/07/2025 135407 – – – – 135,407

PSP

01/06/2023 01/06/2026 – – 134,448

– – 134,448

Martin Pibworth DBP 2016

26/06/2020 26/06/2023 9350 – – – 9,350

–

DBP 2016

06/07/2021 06/07/2024 11,174 – – – – 11,174

DBP 2016

22/07/2022 22/07/2025 12,739 – – – – 12,739

DBP 2016

01/06/2023 01/06/2026 – – 13,316

– – 13,316

PSP

26/06/2020 26/06/2023 66,430 – – 18,758 59,384

–

PSP

06/07/2021 06/07/2024 73,597 – – – – 73,597

PSP

22/07/2022 22/07/2025 83,928 – – – – 83,928

PSP

01/06/2023 01/06/2026 – – 83,334

– – 83,334

Sharesave 12/07/2019 01/10/24

– 31/03/25 1,664 901p – – – 1,664

Sharesave 13/07/2022 01/10/25

– 31/03/26 674 1,335p – – – 674

Shares which are released under the DBP 2016, LSP and PSP Awards attract additional shares in respect of the notional reinvestment of dividends. In addition to the shares released

under these schemes, as indicated in the table above, the following shares were realised arising from such notional reinvestment of dividends. (Note no awards under the DBP 2016

granted to the Executive Directors in the 2019 award year):

Gregor Alexander received 14,093 shares, Alistair Phillips-Davies received 20,871 shares and Martin Pibworth received 10,544 shares.

1 The performance conditions applicable to awards under the PSP are described on page 169 and 170. The 2020 awards under the PSP vested at 76%.

2 33% of annual bonus payable to Executive Directors and Senior Managers is satisfied as a conditional award of shares under the DBP 2016. Vesting of shares under the DBP 2016 is

dependent on continued service over a three-year period.

3 The market value of a share on the date on which these awards were made was 1,880p.

4 The market value of a share on the date on which these awards were realised was 1,880p.

The closing market price of shares at 28 March 2024 was 1,650p and the range for the year was 1,508p to 1,900p. Awards granted during the year were granted under the DBS and PSP.

The aggregate amount of gains made by the Directors on the exercise of share options and realisation of awards during the year was (before tax) £5,627,470 (2023 – £4,715,794).

173SSE plc Annual Report 2024

Strategic Report Financial Statements

2. The wider context of remuneration

In this section, Executive Directors’ remuneration is considered in the wider context, including relativity to the wider workforce,

shareholder returns and other financial dispersals. These are some of the factors taken into account by the Remuneration Committee

insetting pay for Executive Directors.

Relativities to wider workforce pay

Similar pay principles apply to all employees across SSE and there are commonalities between executive pay and below-Board pay.

Whilethe Remuneration Committee’s responsibilities focus on the pay arrangements for Executive Directors and the Group Executive

Committee, it is fully briefed on pay arrangements for the wider workforce and take this into account in its decision making. Thetable

below shows how pay is aligned across employee groups.

Executive Directors and Group Executive Committee (GEC) Wider workforce

Base salary Base salaries are reviewed annually taking into account:

skills, experience and performance; salary levels at other

UK listed companies of a similar size and complexity;

wider internal pay arrangements; and the overall policy

objective of setting competitive, but not excessive

remuneration against benchmarks.

There are two main groups of employees. Around half of

employees are subject to collective bargaining through

our recognised trade unions. Annual increases are based

on the attainment of skills.

The other half of employees have salaries set with

reference to market requirements. Annual increases are

based on a performance pay matrix.

Benefits Voluntary benefits are provided in line with the wider

workforce plus contractual entitlements to car and

privatemedical benefits.

Some employees receive contractual car and medical

benefits.

All employees have access to a comprehensive suite of

voluntary benefits including private medical benefits, a

salarysacrifice car scheme, holiday purchase, financial

wellbeing benefits and a range of family friendly benefits.

Pension Pensions arrangements are aligned with the wider

workforce.

All employees are members of a defined contribution

pension scheme, or one of our legacy defined benefit

pension schemes, unless they have opted out.

Thearrangements are diverse and the employer costs

typically range from 3% to 32.5% of salary when both

defined contribution and defined benefit schemes are

taken into account.

Annual

incentive

Executive Director’s AIP is linked directly to Group

performance and structured 50% financial and 50%

non-financial. The award is delivered as 67% cash and

33%deferred shares.

GEC members participate on the same basis as other

eligible employees.

Around half of the wider employee population is eligible

for AIP. Awards are linked to performance of the Group

(per the Executive Directors), the employee’s business or

function, and the employee’s individual performance

rating. Those in leadership roles may have a portion of

their award deferred as shares.

Long term

incentive

Executive Directors participate in the PSP which is a share

award over three years with performance linked to value

creation, financial, strategic and sustainability measures

(from the 2022 grant onwards).

GEC members participate in the below-Board Leadership

Share Plan on the same basis as others in leadership roles.

Those in senior leadership roles are eligible for the

Leadership Share Plan, which is a share award over three

years with part focused on retention and the remainder

performance linked to both Group and business strategic

progress in relation to the NZAP Plus.

All employees may participate in a Share Incentive Plan

and SAYE.

Chief Executive pay ratio

SSE’s remuneration policy is designed with fairness in mind – fairness to Executive Directors in recognition of the extent of their

responsibilities, and fairness relative to the rest of the SSE team. Taking this into account, a Chief Executive to employee pay ratio has been

disclosed in the Annual Report since 2016, before reporting became mandatory in 2019.

The following table shows the Chief Executive pay ratio over time based on methodology C which uses Gender Pay Gap data as the basis

but also includes other important components of pay at SSE such as overtime and employer’s contribution to pension, and excludes salary

sacrifice arrangements. The 2023/24 pay ratio will be recalculated next year in line with the restating of the Chief Executive’s total single

figure of remuneration which will be revised based on the actual value of the PSP award on vesting. Previous ratios may have been restated

for the same reason.

Year

Calculation

Methodology

25th percentile

ratio

Median

ratio

75th percentile

ratio

2023/24 C 94:1 65:1 48:1

2022/23 C 136:1 100:1 73:1

2021/22 C 141:1 106:1 76:1

2020/21 C 95:1 73:1 52:1

2019/20 C 83:1 59:1 44:1

2018/19 C 57:1 42:1 30:1

ANNUAL REPORT ON REMUNERATION – CONTINUED

174 SSE plc Annual Report 2024

Governance

The table below sets out base salary, and total pay and benefits for the Chief Executive and UK employees at the 25th, 50th and 75th

percentile. The total pay figures have been used to determine the pay ratios above.

UK employees

Chief Executive 25th percentile Median 75th percentile

£000s Base salary Total pay Base salary Total pay Base salary Total pay Base salary Total pay

2023/24 999 3,525 31 38 42 54 57 73

2022/23 952 4,776 29 35 37 48 51 65

2021/22 924 4,655 28 33 36 44 49 61

2020/21 915 3,045 28 32 35 42 48 59

2019/20 890 2,418 – 29 – 41 – 55

2018/19 866 1,639 – 29 – 39 – 54

A large proportion of the Chief Executive’s pay is based on performance and the flow through to variable pay, and so the pay ratio could

vary significantly from year to year. The Chief Executive’s total pay has reduced by 26% as a result of a reduced pension valuation and lower

incentive outturns relative to the previous year. Conversely, there has been an increase in employee base salary and total pay as a result of

salary increases linked to CPI at a time when supporting employees through the cost of living crisis was a priority. This has resulted in a

change in the headline ratio from 100:1 in 2023 to 65:1 in 2024.

Further information on below-Board pay including the Gender Pay Gap can be found on pages 42 to 45

and in the Sustainability Report .

Change in remuneration of Directors and employees

The table below shows the percentage change in the annual remuneration of Directors and UK employees over the past four years,

asrequired by the reporting regulations. These changes reflect the information provided in the single total figure of remuneration table.

2020/21 v 2019/20 2021/22 v 2020/21 2022/23 v 2021/22 2023/24 v 2022/23

Director

Base

salary/fee Benefits Bonus

Base

salary/fee Benefits Bonus

Base

salary/fee Benefits Bonus

Base

salary/fee Benefits Bonus

Non-Executive Directors

Elish Angiolini – – – – – – – – – 28% – –

John Bason – – – – – – – – – 48% – –

Tony Cocker 13% – – 11% – – 3% – – -1% – –

Debbie Crosbie – – – – – – – – – 5% – –

Helen Mahy 2% – – 1% – – 3% – – 16% – –

John Manzoni – – – – – – 3% – – 5% – –

Melanie Smith 3% – – 1% – – 3% – – 32% – –

Angela Strank – – – – – – 3% – – 5% – –

Executive Directors

Alistair Phillips-Davies 3% 0 20% 1% 4% 21% 3% 3% 9% 5% -27% -18%

Martin Pibworth 11% 6% 30% 11% 0% 32% 3% 1% 11% 5% 5% -18%

All employees 6% 8% 10% 6% 3% 51% 22% 16% 6% 25% 11% 36%

Relative importance of the spend on pay

The table below indicates how the earnings of Executive Directors compare with SSE’s other financial dispersals. For every £1 spent

onExecutive Directors’ earnings by SSE in 2023/24, £83 was paid in tax, £114 was spent on employee costs and £302 was spent on

capitaland investment expenditure. In addition, £117 was made in dividend payments to shareholders for every £1 spent on Executive

Directors’ earnings.

2017/18

£m

2018/19

£m

2019/20

£m

2020/21

£m

2021/22

£m

2022/23

£m

2023/24

£m

Executive Directors’ earnings 5.3 3.6 5.1 6.8 10.4 10.4 8.2

Dividends to shareholders 926.1 973.0 948.5 836.4 862.3 955.8 956.4

Adjusted investment, capital

andacquisition expenditure 1,503.0 1,422.9 1,371.9 912.0 2,067.8 2,803.3 2,476.7

Total UK taxes paid (profits, property,

environment and employment taxes) 484.1 403.7 421.6 379.0 335.3 501.7 679.2

Staff costs 665.6 653.5 684.7 700.4 688.7 771.8 938.4

175SSE plc Annual Report 2024

Strategic Report Financial Statements

Total shareholder return (TSR)

The graph below shows SSE TSR performance over the last ten years relative to FTSE 100 performance. The FTSE 100 index has been

chosen because SSE has been a constituent member throughout the period.

March

2014

March

2015

March

2016

March

2017

March

2018

March

2019

March

2020

March

2021

March

2022

March

2023

March

2024

SSE FTSE 100

TSR (rebased to 100)

100

120

140

160

180

200

220

The table below shows the Chief Executive’s annual remuneration over the same period.

Directors

Single total figure

of remuneration

(£’000)

Annual variable

element award

(% of maximum)

Long-term

incentive vesting

(% of maximum) Application of discretion

2023/24 (Alistair Phillips-Davies) 3,525 69 62

2022/23 (Alistair Phillips-Davies) 4,776 88 76 Downward discretion applied to AIP

2021/22 (Alistair Phillips-Davies) 4,655 83 66

2020/21 (Alistair Phillips-Davies) 3,045 69 28 Downward discretion applied to AIP

2019/20 (Alistair Phillips-Davies) 2,418 59 27

2018/19 (Alistair Phillips-Davies) 1,639 0 26 Downward discretion applied to AIP

2017/18 (Alistair Phillips-Davies) 2,693 78 30

2016/17 (Alistair Phillips-Davies) 2,917 72 46 Downward discretion applied to AIP

2015/16 (Alistair Phillips-Davies) 1,696 54 0

2014/15 (Alistair Phillips-Davies) 2,311 64 0

3. Governance

External appointments

Executive Directors are able to accept non-Executive appointments outside SSE with the consent of the Board, as such appointments

canenhance their experience and value to SSE. Any fees received are retained by the Director.

The Chief Executive is a non-Executive Director of Anglian Water Services Limited for which he receives an annual fee of £59,177.

Noneofthe other Executive Directors hold any paid external appointments.

Payments for loss of office and payments to past Directors

There were no payments for loss of office or to former Directors during the year.

ANNUAL REPORT ON REMUNERATION – CONTINUED

176 SSE plc Annual Report 2024

Governance

Advice to the Remuneration Committee

The Chief Executive, the Director of HR and Director of Reward advised the Committee on certain remuneration matters forthe Executive

Directors and senior executives although they were not present for any discussions related to their own remuneration.

The Director of HR and Director of Reward advised on HR strategy and the application of HR policies across the wider organisation.

FIT Remuneration Consultants LLP (FIT) provided a range of information to the Committee which included market data drawn from

published surveys, governance developments and their application to SSE, advice on remuneration disclosures and regulations and

comparator group pay. FIT received fees of £97,950 in relation to their work for the Committee, calculated on a time and materials basis.

FIT are founding members of, and adhere to, the Remuneration Consultants’ Group Code of Conduct. The Code defines the roles of

consultants, including the requirement to have due regard to the organisation’s strategy, financial situation, pay philosophy, the Board’s

statutory duties and the views of investors and other stakeholders. The Committee reviews the advisers’ performance annually to

determine that it is satisfied with the quality, relevance, objectivity and independence of advice being provided. FIT provides no other

services and has no other connection to SSE or individual Directors.

Freshfields LLP also provided advice on legal matters, such as share plan rules, during the year.

Shareholder voting in 2023

On 20 July 2023, shareholders approved the Annual Remuneration Report for the year ended 31 March 2023. On 21 July 2022,

shareholders approved the current Directors’ Remuneration Policy. The results of the resolutions are shown below.

Annual report on remuneration – shareholder voting in 2023 Directors’ Remuneration Policy – shareholder voting in 2022

For................ 94.93%

Against ........... 5.07%

For.................91.43%

Against ........... 8.57%

Total votes cast: 728,166,346

Votes withheld: 398,119

Total votes cast: 678,277,304

Votes withheld: 7,750,651

Employee engagement

The Board actively seeks opportunities for two-way dialogue with SSE’s employees. Engagement activity is diverse and includes face-to-

face meetings, site visits, attendance at employee events and virtual meetings. During the year, feedback has been gathered on a wide

range of topics including pay. Further information on ‘Hearing and responding to employees’ can be found on pages 128 and 129 .

Ahead of the Remuneration Policy renewal in 2025, the Remuneration Committee Chair will be seeking views on executive remuneration

from a range of stakeholders including employees.

Remuneration Committee

The Terms of Reference for the Committee were reviewed during 2023/24 and are available on SSE’s website (sse.com

). A summary of

the role of the Committee can be found on the first page of the Directors’ Remuneration Report. No material changes were made to the

Terms of Reference during the year.

The members of the Committee and the meetings attended are set out on page 122

. The focus of each of the meetings was as follows:

May 2023 Confirmed AIP and PSP performance outcomes

Set AIP and PSP performance measures for the year ahead

Reviewed below-Board pay arrangements

November 2023 Received a post-AGM season market and governance update

Reviewed how AIP and PSP measures were tracking against performance

Agreed the leaving arrangements of the Finance Director

Carried out a remuneration risk assessment

March 2024 Reviewed how AIP and PSP measures were tracking against performance

Agreed salary and fee increases for Executive Directors and the Chair

Reviewed Committee Terms of Reference and evaluation outcomes

177SSE plc Annual Report 2024

Strategic Report Financial Statements

Directors’ Remuneration Policy – a summary

Introduction

SSE’s Directors’ Remuneration Policy (the ‘Policy’) was approved with over 91% of shareholders’ support at the AGM on 21 July 2022. It is

intended that the Policy will apply for a period of up to three years and will need to be re-approved at the 2025 AGM at the latest. The full

Policy is provided in the 2022 Annual Report .

Principles

The Committee believes it is essential that our overall Remuneration Policy is strongly aligned to SSE’s purpose and strategy. The

Committee also believes that SSE’s Directors’ Remuneration Policy, practice and engagement with employees and shareholders

compliesfully with the UK Corporate Governance Code which encourages a description of how the policy addresses the following:

Clarity

– Our Directors’ Remuneration Policy is designed to be

sustainable and simple and to support and reward diligent and

effective stewardship that is vital to the delivery of SSE’s core

purpose of providing energy needed today while building a

better world of energy for tomorrow, and our strategy of

creating value for shareholders and society in a sustainable way.

– The current Policy updates the previous Policy with minimal

structural changes so is embedded into the business and is well

understood by participants and shareholders alike.

– The Policy clearly sets out the terms under which it can be

operated including appropriate limits in terms of quantum, the

measures which can be used and discretions which could be

applied if appropriate.

– Transparency in approach has been a cornerstone of our Policy.

Detailed disclosure of the relevant performance assessments

and outcomes is provided for shareholders to consider.

Simplicity

– Our pay arrangements include a market standard annual incentive

and long-term share plan, each of which is explained in detail in

our Policy.

– No complex or artificial structures are required to operate the

plans.

– We explain our approach to pay clearly and simply.

Risk

– Appropriate limits are stipulated in the Policy and within the

respective plan rules.

– The Committee also has appropriate discretions to override

formulaic outturns under the assessment of the variable

incentive plans.

– The Committee undertakes an annual risk review of the Policy

and its operation. Identified risks are considered with

appropriate mitigation strategies or tolerance levels agreed.

– Regular interaction with the Audit Committee and the SSHEA

Committee ensures relevant risk factors are considered when

setting or assessing performance targets.

– Clawback and malus provisions are in place across all incentive

plans and the ‘triggers’ were reviewed and strengthened as part

of the last policy review.

Predictability

– The possible reward outcomes can be easily quantified, and these

are reviewed by the Committee.

– The graphical illustrations provided in the Policy clearly show the

potential scenarios of performance and pay outcomes which

would result.

– Performance is reviewed regularly so there are no surprises when

performance is assessed at the end of the period.

Proportionality

– Variable incentive pay outcomes are clearly dependent on

delivering the strategy.

– Performance is assessed on a broad basis, including a

combination of financial, operational and sustainability

measures which ensures there is no undue focus on a single

metric which may be at the detriment of other stakeholders.

– The Committee also has the discretion – which it has used – to

override formulaic outcomes if they are deemed inappropriate

in light of the wider performance of the Company and

considering the experience of stakeholders.

Alignment to culture

– At the heart of the Policy is a focus on the long-term sustainability

of the business.

– This reflects the whole business culture which is aligned to

effective stewardship which creates value for all stakeholders.

– Our incentive plans and, in particular the approach to measuring

performance, reflects our values which means doing the right

thing, promoting fairness at work and paying our fair share.

178 SSE plc Annual Report 2024

Governance

Policy summary

The Policy is summarised in the table below. There are no changes to the operation of the Policy for 2024/25.

Base Salary

Purpose and link to strategy Supports the retention and recruitment of Executive Directors of the calibre required to develop the

Company’s strategy.

Operation and maximum

opportunity

Base salary is normally reviewed annually with changes effective from 1 April.

Salary increases will normally be capped at the typical level of increases awarded to other employees in

theCompany, although increases may be above this level in certain circumstances.

Performance measures Broad review of performance is included in the annual review process.

Pension

Purpose and link to strategy Pension planning is an important part of SSE’s remuneration strategy because it is consistent with the

long-term goals of the business.

Operation and maximum

opportunity

For the Chief Executive, funded final salary and top-up unfunded arrangements up to the maximum

oftwo-thirds of final salary at age 60. From 1 April 2017, future pensionable pay increases are capped at

RPI + 1%.

The Chief Commercial Officer receives a pension contribution of 15% of base salary which reflects the

wideremployee population taking length of service into account.

The Chief Financial Officer receives a pension contribution of 12% of base salary which reflects the

majorityof employees irrespective of service and in line with the policy for new appointments.

For new appointments, employer’s pension contributions are capped at 12% of base salary in line with

arrangements for SSE employees.

Performance measures Not applicable.

Benefits

Purpose and link to strategy To provide a market-competitive level of benefits for Executive Directors.

Operation and maximum

opportunity

Core benefits – currently include car allowance, private medical insurance and health screening.

Participation in the Company’s all-employee share plans on the same terms as UK colleagues.

Relocation assistance if required.

Reimbursement of travel and business-related expenses incurred.

The cost will depend on the cost to the Company of providing individual items and the individual’s

circumstances and there is no maximum benefit level.

Performance measures Not applicable.

Annual Incentive Plan (AIP)

Purpose and link to strategy Reward Executive Directors for achievement of performance targets linked to SSE’s strategy and

corepurpose.

Operation and maximum

opportunity

Maximum annual incentive opportunity is 150% of base salary for the Chief Executive and 130% of

basesalary for the Chief Financial Officer and Chief Commercial Officer.

The award will normally be delivered:

– 67% in cash; and

– 33% in deferred shares.

Subject to malus and/or claw back provisions.

Performance measures The annual incentive is normally based on a mix of financial, operational, strategic and stakeholder

measures reflecting the key values and priorities of the business.

A minimum of 50% of the annual incentive will be based on financial performance.

179SSE plc Annual Report 2024

Strategic Report Financial Statements

Performance Share Plan (PSP)

Purpose and link to strategy Reward Executive Directors for their part in delivering the sustained success of SSE and to ensure that their

interests are aligned with those of the shareholders.

Operation and maximum

opportunity

Maximum value of award is 250% of base salary for the Chief Executive and 225% of base salary for the

ChiefFinancial Officer and Chief Commercial Officer.

Shares are awarded which normally vest based on performance over a period of three years with an

additional two-year post-vesting holding period during which time the Executive must retain the post-tax

number of shares vesting under the award.

Subject to malus and/or claw back provisions.

Performance measures Awards vest based on relative total shareholder return, financial, operational, strategic, or stakeholder-based

measures.

At least 70% of the award will be based on financial and relative total shareholder return measures.

Share Ownership Policy

Purpose and link to strategy Align the interests of Executive Directors with those of shareholders who invest in the Company.

Operation and maximum

opportunity

The Chief Executive is expected to maintain a shareholding equivalent to 250% of base salary. The Chief

Financial Officer and Chief Commercial Officer will be expected to maintain a shareholding of 225% of base

salary. Shareholding should be built up within a reasonable timescale.

Normally built up via shares vesting through the PSP, deferred shares from the AIP and all employee share

schemes and Executive Directors may also choose to buy shares.

The requirement to retain shares continues after employment and Executive Directors are required to hold

their in-employment shares for a further two years following cessation of employment.

Performance measures Not applicable.

Chair and non-Executive Directors’ Fees

Purpose and link to strategy Fees are set at a level which provides reward for undertaking the role and are sufficient to attract and retain

individuals with the calibre and experience to contribute effectively at Board level.

Operation and maximum

opportunity

The aggregate level of non-Executive Director fees shall not exceed the maximum limit set out in the

Articles of Association.

Fees are reviewed at appropriate intervals against companies of a similar size and complexity. Fees are set

ina way that is consistent with the wider remuneration policy.

The fee structure may be made up of:

– a basic Board fee or Chair fee;

– an additional fee for any committee chairship or membership; and

– an additional fee for further responsibilities e.g. Senior Independent Director, non-Executive Director

forEmployee Engagement or periods of increased activity.

Reasonable travelling and other expenses for costs incurred in the course of the non-Executive Directors

undertaking their duties are reimbursed (including any tax due on the expenses).

It is also expected that all non-Executive Directors should build up a minimum of 2,000 shares in the

Company.

Performance measures There are no direct performance measures relating to Chair and non-Executive Director fees.

The full Policy also includes further information on:

– Performance measures and targets.

– Committee discretion.

– Legacy commitments.

– Directors’ service contracts and non-Executive Directors’

letters of appointment.

– Loss of office policy.

– Recovery provisions.

– Recruitment policy.

– Shareholders’ views.

– Remuneration engagement across the Group.

– Illustration of the Policy.

Melanie Smith CBE

Chair of the Remuneration Committee

21 May 2024

DIRECTORS’ REMUNERATION POLICY – A SUMMARY – CONTINUED

180 SSE plc Annual Report 2024

Governance

Compliance with the UK Corporate

Governance Code 2018

The Board continues to assess its approach

to corporate governance through

application of the FRC’s UK Corporate

Governance Code (the Code) and reports

against the 2018 Code for the year ended

31March 2024. A copy of the Code can be

found at www.frc.org.uk .

For 2023/24, the Board confirms

compliance against the Code Provisions,

with the application of the Principles and

overall spirit of the Code being upheld

through the work of the Board and its

Committees. This statement provides detail

of this approach and confirms where

supporting disclosures can be found within

the Annual Report.

1. Board leadership and company

purpose

A. Board’s role

The primary role of the Board is to lead SSE

in a way that ensures its long-term success,

whilst generating value for shareholders

and wider stakeholders. SSE’s Governance

Framework, the composition of the Board,

the annual plan of Board work, and a

programme of Group-wide strategic

stakeholder engagement continue to

support the Board’s oversight of internal

and external developments and its ability

to effectively challenge and take informed

decisions for the longer-term.

Further details can be found on:

– SSE’s Governance Framework,

see pages 114 to 115

– Board composition,

see pages 116 to 119

– Board work in 2023/24,

see pages 122 to 131 .

– SSE’s stakeholders,

see pages 132 to 134 .

B. Purpose, culture and strategy

The Board sets and considers the

cornerstones of SSE’s purpose and vision on

an ongoing basis, which underpin a strategy

focused on clean energy infrastructure and

energy security in the transition to net zero.

SSE’s strategy is agreed and monitored by

the Board through a continuing programme

of work and is supported by a fully-funded

capex plan to 2027 – SSE’s Net Zero

Acceleration Programme (NZAP) Plus. SSE’s

business model confirms how the Board

has determined the Group’s deliberate mix

of market-based and economically-

regulated businesses create lasting value

within SSE’s complex operating

environment.

The definition of a healthy corporate culture

for SSE is set by the Board and supports

SSE’s purpose, vision, and strategy by setting

a baseline for cultural guidance and

indicators to be developed. Culture is

viewed as a shared deliverable which starts

with the Board leading by example and

instilling the correct tone to underpin a fair

workplace and ethical business practices.

Dedicated cultural updates and employee

engagement activities frame the Board’s

assessment of culture in practice.

Further details can be found on:

– SSE’s purpose, vision, strategy, values

and business model,

see pages 1 to 6

– Board work on strategy,

see pages 123 to125 .

– Board focus on culture,

see page 127 .

C. Resources and controls

SSE’s strategy and NZAP Plus are supported

by a suite of agreed targets and 2030

business goals which represent the

framework the Board adopts to monitor

progress against agreed objectives. Key

parameters set by the Board include SSE’s

financial and investment and strategy,

comprising the annual operating and capital

expenditure budgets, and the delegated

authorities across SSE’s Governance

Framework. These delegations support

day-to-day operations and implementation

of strategy which is overseen by the Group

Executive Committee.

To safeguard areas material to the delivery

of SSE’s purpose, vision and strategy, the

Board retains a Schedule of Reserved

Matters for its decision, alongside a wider

Board Charter which governs Board

operations and pertinent Group-wide

matters. The Schedule of Reserved Matters

can be accessed on sse.com

alongside

SSE’s key corporate governance documents.

Reporting to the Board provides oversight

of delegated matters and includes a

combination of verbal updates at Board

meetings, the provision of sub-Committee

minutes, written reports, and dashboards

covering agreed financial and non-financial

key performance indicators.

The Board sets the approach to risk

management and oversees the effectiveness

of SSE’s System of Internal Control with

support from the Audit Committee.

D. Stakeholder engagement

SSE’s approach to stakeholder engagement

is directed by a Board-agreed framework

which confirms: SSE’s key stakeholder

groups; the purpose of meaningful

stakeholder relations; and how stakeholder

views should be considered at Business Unit

and Group level.

Given the societal impact and scale of SSE’s

business operations, breadth and depth of

stakeholder engagement is required to

ensure decisions demonstrate appropriate

stakeholder awareness. A mature executive

and business-led stakeholder network

supports this work, with Board oversight

and understanding of views achieved

through both direct Board engagement

and reporting of below-Board activity. This

allows the timely recognition of emerging

stakeholder considerations, with the Board’s

own engagement guiding the expectation

that senior leadership and SSE’s Business

Units take demonstrable account of

stakeholder opinion in their decisions

and longer-term objectives.

Further details can be found on:

– SSE’s stakeholders,

see pages 14 to 15

– Stakeholders and Section 172 Statement,

see pages 132 to 134 .

E. Workplace policies

SSE has established processes and

procedures to embed a healthy and

consistent view of culture across the Group.

Key pillars approved by the Board include

SSE’s values, SSE’s Group Policies, and an

employee guide ‘Doing the right thing; SSE’s

guide to good business ethics’. The Policies

and employee guide translate SSE’s values

into accepted attitudes and behaviours and

are supported by mandatory training for

everyone in SSE. The Board Committees

provide dedicated focus to supporting

policy within their own remit.

To ensure everyone in SSE is empowered

to speak-up in relation to wrongdoing,

the Board receives biannual reports on

SSE’s whistleblowing arrangements

covering performance, case trends,

and employee confidence in the agreed

speak-up mechanisms and protections.

These updates support the Board’s

assessment of the continued and effective

operation of these arrangements.

181SSE plc Annual Report 2024

Strategic Report Financial Statements

COMPLIANCE WITH THE UK CORPORATE

GOVERNANCE CODE 2018 – CONTINUED

2. Division of responsibilities

F. Chair

The Chair leads the Board and nurtures a

culture in which informed and transparent

decision-making takes place. This is

supported by clearly defined Board roles

and constructive dialogue within and

outside of meetings. To allow the non-

Executive Directors to raise matters directly

with the Chair, time is set aside at each

Board meeting to discuss areas of business

without the Executive Directors present.

The current Chair, Sir John Manzoni was

deemed independent on appointment, with

performance in the role, assessed annually

through the Board performance review.

Further details can be found on:

– Assessing Board performance,

see pages 136 to 137

G. Board composition, independence

and division of responsibilities

The Board comprises the Chair, eight

independent non-Executive Directors and

three Executive Directors; excluding the

Chair over half of its membership is deemed

independent. Through the Board Charter,

the Board approves the clear division of

responsibilities between the Chair and Chief

Executive and sets out what is expected of

the non-Executive Directors, recognising

the defined roles of Senior Independent

Director and Non-Executive Director for

Employee Engagement. The division of

responsibilities across the Board can be

accessed on sse.com

Each Director has a duty to disclose any

actual or potential conflict of interest

situations, as defined by law, for

consideration and approval, if appropriate,

by the Board. This requirement is supported

by an annual authorisation process

overseen by the Nomination Committee,

which informs the simultaneous and

ongoing assessment of a non-Executive

Director’s independence.

Further details can be found on:

– Board composition,

see pages 116 to 120

– Board independence and conflicts,

see pages 140 to 141 .

H. Non-Executive Directors’ role and

time commitment

The expected time commitment of the

Chair and non-Executive Directors is

agreed and set out in writing in the Letter

of Appointment for the respective roles.

This is issued following confirmation of an

individual’s capacity to join the Board and

involves an assessment of existing external

commitments and demands on time.

Any changes, such as additional external

appointments, can only be accepted

following approval of the Board. The

Nomination Committee monitors Director

time commitment, with the annual Board

performance evaluation considering the

performance of each individual Director

in this regard.

To support the non-Executive Directors in

providing both challenge and counsel, it is

deemed appropriate that relationships can

be built across SSE. The Board therefore

has unfettered access to senior leadership,

their teams and specialist functions, with

individuals from different levels across the

organisation invited to present at Board

meetings and deep dive sessions.

Further details can be found on:

– Board external commitments,

see pages 116 to 119

– Annual Board performance review,

see pages 136 to 137 .

– Time commitment, see page 140 .

I. Company Secretary

The Company Secretary and Group General

Counsel safeguards compliance with Board

procedures and supports the development

of meeting agendas with the Chair and

Chief Executive. These are structured

around a pre-agreed annual plan of

business, with consideration for the status

of projects, strategic workstreams, and the

overarching operating context. Adequate

time is allocated to support effective and

constructive discussion, and guidance is

available to the authors and presenters of

Board materials. An electronic meeting

portal allows efficient navigation of papers,

information and requests. In addition, any

Director can request further information to

support their individual duties or collective

Board role. This can be internally or

externally facilitated, and can originate from

technical Board discussions, an identified

training opportunity, or area of general

interest relating to SSE.

Further details can be found on:

– Deep dives, see page 125

3. Composition, succession

andevaluation

J. Appointments and succession

planning

The composition of the Board is informed

by plans for orderly succession across

Board and Committee roles which is

overseen by the Nomination Committee.

This work considers the length of tenure

of the non-Executive Directors and the

talent pipeline for the Executive Directors.

Succession for senior leadership roles is

considered by the Committee with support

from Group HR. To provide direct exposure

to the talent pool, members of the

Nomination Committee and Board engage

in core talent programmes and meet

potential future leaders through structured

and informal engagement activities.

Appointments to the Board follow an

agreed process which starts with the

agreement of a role specification and

any external search firm support that may

be required. The Board’s Inclusion and

Diversity Policy confirms the practices

that are adopted to ensure an inclusive

recruitment process which promotes

diversity and equal opportunity. The

outcomes of any Board succession planning

or recruitment work are reported in the

Annual Report each year.

Further details can be found on:

– Nomination Committee work,

see pages 138 to 143

K. Skills, experience and knowledge

The Nomination Committee identifies the

skills, knowledge and experience required

for the effective leadership and long-term

success of SSE, managing the balance of

competencies through succession planning,

knowledge development and recruitment.

This is supported by a standing assessment

of the Board’s skills matrix and composition

metrics to identify where a gap or further

work is required. With cognisance for the

overall tenure of the Board, non-Executive

Directors undertake a fixed term of three

years subject to annual re-election by

shareholders. The fixed term can be

extended, and consistent with best practice,

does not exceed nine years subject to

defined circumstances as identified by

the Committee.

Further details can be found on:

– Board composition,

see pages 116 to 120

– Nomination Committee considerations,

see pages 138 to 143 .

182 SSE plc Annual Report 2024

Governance

L. Board performance

The Board monitors and improves

performance by reflecting on the

continuing effectiveness of its activities, the

quality of its decisions, and by considering

the individual and collective contribution

made by each Board member. This is

assessed annually through the Board

performance review process which is

reported on each year, with this facilitated

externally at least every three years.

Further details can be found on:

– Assessing Board performance,

see pages 136 to 137

4. Audit, risk and internal control

M. Internal and external audit

The Audit Committee assesses the role of

Internal Audit, reviewing the independence

and effectiveness of its function and work.

SSE’s Internal Audit plays an important role

in helping the organisation deliver its vision

and objectives by providing independent

and objective assurance to management,

the Audit Committee and Board on the

effectiveness of SSE’s risk management

activities, internal controls and corporate

governance framework. The Audit

Committee further oversees SSE’s

relationship with EY, appointed by

shareholders as SSE’s External Auditor, to

ensure that the independence, quality,

rigour, and challenge of the external audit

process is maintained. The Audit Committee

reviews significant financial judgements to

monitor the integrity of the financial and

narrative statements.

Further details can be found on:

– Audit Committee work,

see pages 144 to 151

N. Fair, balanced and understandable

assessment

The Board considers the annual report

and accounts, taken as a whole, is fair,

balanced and understandable and provides

the information necessary for shareholders

to assess the Group’s position and

performance, business model and strategy.

This assessment is supported by an agreed

assurance framework which the Board

and Audit Committee consider each year,

alongside reports confirming it has been

adhered to.

Further details can be found on:

– Fair, balanced and understandable

framework, see page 146

O. Risk management

SSE’s Risk Management Framework is

designed to manage rather than eliminate

the risk of failure to achieve business

objectives. It can only therefore provide

reasonable and not absolute assurance

against material misstatement or loss.

In addition to the ongoing review of

emerging risks, the Board carries out a

robust assessment of the Principal Risks

facing the Group, being those that have the

potential to threaten its business model,

future performance, solvency or liquidity.

Further details can be found on:

– Group Principal Risks, see page 89

5. Remuneration

P. Remuneration policies and practices

The Remuneration Committee focuses on

determining and agreeing SSE’s broad

policy for executive remuneration and

reviewing its ongoing appropriateness

and relevance. It ensures remuneration is

strongly aligned to SSE’s purpose and

strategy, encourages long-term stewardship

and rewards individual contributions

towards the success of SSE.

SSE’s Directors’ Remuneration Policy (the

‘Policy’) was approved with over 91% of

shareholders support at the AGM on 21 July

2022. It is intended the Policy will apply for

a period of up to three years and will need

to be re-approved at the 2025 AGM at the

latest. The full Policy is provided in the 2022

Annual Report and a summary is provided

on pages 160 to 162

. This also includes

details of how the factors set out in the

Code (clarity, simplicity, risk, predictability,

proportionality and alignment to culture)

are addressed.

Further details can be found on:

– Remuneration Committee work,

see pages 158 to 180

Q. Developing executive remuneration

policy

The Policy is structured to ensure that SSE

has enough flexibility to attract world-class

talent. This is particularly important as SSE

is increasingly exposed to new markets

and technologies.

In setting pay policy and practice, the views

of a range of stakeholders is taken into

account, including those of shareholders

through effective investor dialogue, and

employees through a calendar of Board

engagement activities.

R. Remuneration outcomes and

independent judgement

The Remuneration Committee has a history

of setting stretching targets which reward

true outperformance and has used its

discretion on several occasions in recent

years to reduce formulaic outcomes where

they have deemed it necessary.

The Chief Executive, Director of HR, and

Head of Reward, advise the Committee

oncertain remuneration matters for the

Executive Directors and senior executives.

No Director or senior executive is present

for any discussions related to their own

remuneration to ensure independent

judgement. In addition, external

remuneration advisors provide advice

totheCommittee, and they adhere to

theRemuneration Consultants’ Group

CodeofConduct.

183SSE plc Annual Report 2024

Strategic Report Financial Statements

Other statutory information

The Directors submit their Annual Report and Accounts for SSE plc, together with the consolidated Financial Statements of the SSE Group

of companies, for the year ended 31 March 2024.

The Strategic Report is set out on pages 1 to 109

and the Governance Report, which is SSE’s Directors’ Report is set out on pages 111

to187 . The Strategic Report and the Governance Report together constitute the management report as required under Rule 4.1.8R of

the Disclosure Guidance and Transparency Rules.

As permitted by section 414C (11) of Companies Act 2006 the below matters have been disclosed in the Strategic Report:

Page reference

An indication of likely future developments in the business of the Company pages 1 to 109

Particulars of important events affecting the Company since the financial year end page 186

Greenhouse gas emissions page 106

Energy consumption page 49

Energy efficiency action page 49

Employee engagement and involvement pages 128 to 129 and 132

Engagement with suppliers, customers and others in a business relationship with the Company pages 33 to 45 and 133 to 134

A summary of the principal risks facing the Company pages 85 to 95

Information required to be disclosed under Listing Rule 9.8.4R is contained on the pages detailed below.

Page reference

Statement of amount of interest capitalised by the Group during the financial year pages 230 to 231

Details of any long-term incentive schemes pages 160 to 162

Results and dividends

The Group’s results and performance highlights for the year are set out on pages 20 to 21 and 54 to 67 . An interim dividend of 20 pence

per Ordinary Share was paid on 8 March 2024. The Directors propose a final dividend of 40 pence per Ordinary Share. Subject to approval

at the AGM 2024, the final dividend will be paid on 19 September 2024 to shareholders on the Register of Members at close of business on

26 July 2024.

Board of Directors

Director appointment and retirement

The Company’s Directors who served during the financial year ending 31 March 2024 are provided within the attendance table on

page 122 . The biographies of those individuals who were Directors of the Company on 21 May 2024 are on pages 116 to 119 .

Detailsof Board changes are confirmed on page 140 .

The rules governing the appointment and retirement of Directors are set out in the Company’s Articles of Association, the UK Corporate

Governance Code, the Companies Act 2006 and other related legislation.

Indemnification of Directors and insurance

The Directors have the benefit of an indemnity provision contained in the Company’s Articles of Association. In addition, the Directors

havebeen granted a qualifying third-party indemnity provision which was in force throughout the financial year and remains in force.

Also,throughout the financial year, the Company purchased and maintained Directors’ and Officers’ liability insurance in respect of itself

and for its Directors and Officers.

Political donations and expenditure

SSE operates on a politically neutral basis and does not make any donations to political parties, political organisations, or independent

election candidates. During the year, no political expenditure was incurred, and no political donations were made by the Group.

Accounting policies, financial instruments, and risk

Details of the Group’s accounting policies, together with details of financial instruments and risk, are provided in note 25 to the Financial

Statements and notes A6 to A8 of the Accompanying Information.

Research and development

SSE is involved in a range of innovative projects and programmes which are designed to progressively transform the energy system.

Anumber of these projects and programmes are referred to in the Strategic Report on pages 1 to 109 .

Employment of disabled people

SSE has a range of employment policies which clearly detail the standards, processes, expectations and responsibilities of its people and

the organisation. These policies were in place for the duration of the year, and are designed to ensure that everyone, including those with

existing or new disabilities and people of all backgrounds, are dealt with in an inclusive and fair way from the recruiting process on through

their career at SSE. This includes access to appropriate training, development opportunities and job progression. Further details of this

approach can be found on pages 42 to 45 .

184 SSE plc Annual Report 2024

Governance

Share capital

The Company has a single share class which is divided into Ordinary Shares of 50 pence each. The issued share capital of the Company

asof 31 March 2024, together with details of any changes during the year, is set out in note 22 to the Financial Statements. As of

31March2024, the issued share capital of the Company consisted of 1,096,238,489 Ordinary Shares. This figure includes 2,793,923

ordinary shares which are held in treasury (representing 0.25% of the Company’s issued share capital), with these shares voting and

dividend rights automatically suspended.

The Company was authorised at the AGM 2023 to allot shares or grant rights over shares up to an aggregate nominal amount equal

to£181,722,739 (representing 363,445,478 Ordinary Shares of 50 pence each excluding Treasury Shares), representing one-third of its

issued share capital. A renewal of this authority will be proposed at the AGM 2024.

The Company was authorised at the AGM 2023 to allot up to an aggregate nominal amount of £27,258,410 (representing 54,516,820)

Ordinary Shares of 50 pence each and 5% of issued share capital) for cash without first offering them to existing shareholders in proportion

to their holding. A renewal of this authority will be proposed at the AGM 2024.

Transfer of Ordinary Shares

There are no restrictions on the transfer of Ordinary Shares in the Company other than certain restrictions which may from time-to-time

be imposed by law. The Company is not aware of any agreements between shareholders that may result in restrictions on the transfer of

securities and/or voting rights.

Substantial shareholdings

At 31 March 2024, the following percentage interests in the Ordinary Share capital of the Company, had been notified under Rule 5 of the

Disclosure Guidance and Transparency Rules, (‘DTR 5’). The Company is not aware of any changes in the interests disclosed under DTR 5

between 31 March 2024 and 21 May 2024.

Shareholder

Date of receipt of

notification

Voting rights

attached to shares*

Voting rights through

financial instruments* Total of both in % Nature of holding

BlackRock, Inc.

17 January 2024 64,875,144 5.93% 15,511,903 1.51% 7.4 4%

Indirect, ADR, Securities

Lending, CFD

The Capital Group

Companies, Inc.

17 September

2020 50,981,817 4.90.% – – 4.90% Indirect, ADR

Invesco Limited 7 May 2014 45,775,918 4.69% – – 4.69% Indirect

Caisse de dépôt et

placement du Québec 7 January 2021 41,492,159 3.98% – – 3.98% Direct

Barclays Bank Plc

1 August 2022 35,834,843 3.35% 19,978,657 1.87% 5.22%

Indirect, ADR, Options,

Right to Recall (loan and

collateral)

JPMorgan Chase & Co.

19 January 2023 54,673,418 5.06% 374,155 0.14% 5.2%

Indirect, Depository

Receipt, Physically Settled

Call Option

Bank of America

Corporation 1 August 2023 4,713,063 0.43% – – 0.43% Indirect

* At date of disclosure by relevant entity.

Authority to purchase shares

At the AGM 2023, the Company obtained shareholder approval to purchase up to 109,033,643 of its own Ordinary Shares (representing

10% of its issued share capital) up until the earlier of the conclusion of the AGM 2024 and close of business on 30 September 2024.

The Company did not undertake any share repurchase programmes during the financial year ending 31 March 2024.

During the financial year, and up until 31 March 2024, the Company used 824,816 of the treasury shares acquired under the 2016/17 share

repurchase programme to satisfy the requirements of the all-employee Sharesave scheme.

The Directors will, again, seek renewal of their authority to purchase in the market the Company’s own shares at the AGM 2024.

185SSE plc Annual Report 2024

Strategic Report Financial Statements

Voting

Each Ordinary Share of the Company carries one vote at general meetings of the Company. Any Ordinary Shares held in treasury have

novoting rights.

A shareholder entitled to attend, speak and vote at a general meeting may exercise their right to vote in person or electronically, by proxy,

or in relation to corporate members, by corporate representatives. To be valid, notification of the appointment of a proxy must be received

not less than 48 hours before the general meeting at which the person named in the proxy notice proposes to vote. The Directors may

in their discretion determine that in calculating the 48-hour period, no account be taken of any part of a day which is not a working day.

Employees who participate in the Share Incentive Plan whose shares remain in the schemes’ trust give directions to the trustees to vote

on their behalf by way of a Form of Direction. SSE also has a Share Plan Account service with Computershare available to employees with

shares arising from a SAYE option maturity, which are voted through the nominee.

Annual General Meeting (AGM)

The AGM of the Company will be held at the Perth Concert Hall, Mill Street, Perth PH1 5HZ on Thursday 18 July 2024 at 12.30pm.

Shareholders will also be able to attend the meeting electronically via the use of an electronic platform and submit questions and vote

in real time. Details of the full arrangements for the AGM, resolutions to be proposed, how to vote and ask questions are set out in the

Notice of Annual General Meeting 2024 which accompanies this report for shareholders receiving hard copy documents, and is available

at sse.com for those who have elected to receive documents electronically.

Articles of Association changes

The Company’s latest Articles of Association were adopted at the AGM 2021. Any amendments to the Articles of Association can only be

made by a special resolution at a general meeting of shareholders.

Change of control

The Company is party to several agreements that take effect, alter or terminate upon a change of control of the Company following a

takeover. At 31 March 2024, change of control provisions were included in agreements for committed credit facilities, EIB debt, US Private

Placements, Senior Bonds and Hybrid instruments. The Company is not aware of any other agreements with change of control provisions

that are significant in terms of their potential impact to the business.

Disclosure of information to the auditor

Each of the Directors who held office at the date of approval of this Directors’ Report confirms that, so far as each Director is aware, there

is no relevant audit information of which the Company’s Auditors are unaware and each Director has taken all the steps that ought to have

been taken in his or her duty as a Director to make himself or herself aware of any relevant audit information and to establish that the

Company’s Auditors are aware of that information.

Related party transactions

Related party transactions are set out in note A5 of the Accompanying Information.

Post-balance sheet events

There are no post-balance sheet events to report.

The Directors’ Report set out on pages 111 to 187

has been approved by the Board of Directors in accordance with the Companies

Act2006.

By order of the Board

Liz Tanner

Company Secretary and Group General Counsel, SSE plc

21 May 2024

OTHER STATUTORY INFORMATION – CONTINUED

186 SSE plc Annual Report 2024

Governance

The Directors are responsible for preparing the Annual Report and the Group and parent Company financial statements in accordance

with applicable law and regulations.

Company law requires the Directors to prepare Group and parent Company financial statements for each financial year. Under that law

they are required to prepare the Group financial statements in accordance with UK-adopted international accounting standards (“IFRS”),

and have elected to prepare the parent Company financial statements in accordance with United Kingdom Generally Accepted

Accounting Practice (United Kingdom Accounting Standards and applicable law) including Financial Reporting Standard 101, “Reduced

Disclosure Framework”.

Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of

the state of affairs of the Group and parent Company and of their profit or loss for that period. In preparing each of the Group and parent

Company financial statements, the Directors are required to:

– select suitable accounting policies in accordance with IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors and then

apply them consistently;

– make judgements and accounting estimates that are reasonable, relevant and reliable;

– present information, including accounting policies, in a manner that provides relevant, reliable, comparable and understandable

information;

– provide additional disclosures when compliance with the specific requirements in IFRSs (and in respect of the parent Company financial

statements, FRS 101) is insufficient to enable users to understand the impact of particular transactions, other events and conditions on

the Group and parent Company financial position and financial performance;

– in respect of the Group financial statements, state whether UK-adopted international accounting standards have been followed, subject

to any material departures disclosed and explained in the financial statements;

– in respect of the parent Company financial statements, state whether applicable UK Accounting Standards, including FRS 101, have been

followed, subject to any material departures disclosed and explained in the financial statements;

– assess the Group and parent Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going

concern; and

– use the going concern basis of accounting unless they either intend to liquidate the Group or the parent Company, or to cease

operations, or have no realistic alternative but to do so.

The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the parent Company’s

transactions and disclose with reasonable accuracy at any time the financial position of the parent Company and enable them to ensure

that its financial statements comply with the Companies Act 2006. They are responsible for such internal control as they determine is

necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error, and

have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Group and to prevent and

detect fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors’ Report, Directors’

Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company’s

website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other

jurisdictions.

Responsibility statement of the Directors in respect of the annual financial report

We confirm that to the best of our knowledge:

– the financial statements, prepared in accordance with UK-adopted international accounting standards give a true and fair view of

theassets, liabilities, financial position and profit or loss of the Company and the undertakings included in the consolidation taken as

awhole; and

– the annual report, including the Strategic Report, includes a fair review of the development and performance of the business and the

position of the issuer and the undertakings included in the consolidation taken as a whole, together with a description of the principal

risks and uncertainties that they face.

We consider the annual report and accounts, taken as a whole, is fair, balanced and understandable and provides the information

necessary for shareholders to assess the Group’s position and performance, business model and strategy.

Alistair Phillips-Davies Barry O’Regan

Chief Executive Chief Financial Officer

21 May 2024

Statement of Directors’ Responsibilities in respect of

the Annual Report and the financial statements

187SSE plc Annual Report 2024

Strategic Report Financial Statements

188 SSE plc Annual Report 2024

We’re enabling more people

working in high-carbon

sectors to move into low-

carbon careers at SSE –

ensuring we have the skilled

workforce needed for a

cleaner energy world.

Discover how we’re

supporting a just

transition to net zero

Powering sustainable growth

Growing

189SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Financial

Statements

Alternative Performance Measures 190

Consolidated income statement 199

Consolidated statement of comprehensive income 200

Consolidated balance sheet 201

Consolidated statement of changes in equity 202

Consolidated cash flow statement 204

Notes to the consolidated financial statements 205

Accompanying information 271

Company balance sheet 310

Company statement of changes in equity 311

Notes to the Company financial statements 312

Independent auditor’s report 324

Consolidated segmental statement 336

Independent auditor’s report to the

Consolidated Segmental Statement 340

Glossary 342

Shareholder information 343

Growing

190 SSE plc Annual Report 2024

When assessing, discussing and measuring the Group’s financial performance, management refer to measures used for internal

performance management. These measures are not defined or specified under International Financial Reporting Standards (‘IFRS’) and as

such are considered to be Alternative Performance Measures (‘APMs’).

By their nature, APMs are not uniformly applied by all preparers including other participants in the Group’s industry. Accordingly, APMs used

by the Group may not be comparable to other companies within the Group’s industry.

Purpose

APMs are used by management to aid comparison and assess historical performance against internal performance benchmarks and across

reporting periods. These measures provide an ongoing and consistent basis to assess performance by excluding items that are materially

non-recurring, uncontrollable or exceptional. These measures can be classified in terms of their key financial characteristics:

– Profit measures allow management to assess and benchmark underlying business performance during the year. They are primarily

used by operational management to measure operating profit contribution and are also used by the Board to assess performance

against business plan. The Group has six profit measures, of which adjusted operating profit and adjusted profit before tax are the main

focus of management through the financial year and adjusted earnings per share is the main focus of management on an annual basis.

In order to derive adjusted earnings per share, the Group has defined adjusted operating profit, adjusted net finance costs, and adjusted

current tax charge as components of the adjusted earnings per share calculation. Adjusted EBITDA is used by management as a proxy

for cash derived from ordinary operations of the Group.

– Capital measures allow management to track and assess the progress of the Group’s significant ongoing investment in capital assets

and projects against their investment cases, including the expected timing of their operational deployment and also to provide a

measure of progress against the Group’s strategic Net Zero Acceleration Programme Plus objectives.

– Debt measures allow management to record and monitor both operating cash generation and the Group’s ongoing financing and

liquidity position.

There have been no changes to the way the Group calculates its APMs in the current year.

The following section explains the key APMs applied by the Group and referred to in these statements:

Profit measures

Group APM Purpose

Closest equivalent

IFRS measure Adjustments to reconcile to primary financial statements

Adjusted EBITDA

(earnings before

interest, tax,

depreciation and

amortisation)

Profit

measure

Operating profit – Movement on operating and joint venture operating derivatives (‘certain

re-measurements’)

– Exceptional items

– Adjustments to retained Gas Production decommissioning provision

– Share of joint ventures and associates’ interest and tax

– Depreciation and amortisation before exceptional charges (including

depreciation and amortisation expense on fair value uplifts)

– Share of joint ventures and associates’ depreciation and amortisation

– Non-controlling share of operating profit

– Non-controlling share of depreciation and amortisation

– Release of deferred income

Adjusted

Operating Profit

Profit

measure

Operating profit – Movement on operating and joint venture operating derivatives (‘certain

re-measurements’)

– Exceptional items

– Adjustments to retained Gas Production decommissioning provision

– Depreciation and amortisation expense on fair value uplifts

– Share of joint ventures and associates’ interest and tax

– Non-controlling share of operating profit

Adjusted Profit

Before Tax

Profit

measure

Profit before tax – Movement on operating and financing derivatives (‘certain re-

measurements’)

– Exceptional items

– Adjustments to retained Gas Production decommissioning provision

– Non-controlling share of profit before tax

– Depreciation and amortisation expense on fair value uplifts

– Interest on net pension assets/liabilities (IAS 19)

– Share of joint ventures and associates’ tax

Adjusted Net

Finance Costs

Profit

measure

Net finance costs – Exceptional items

– Movement on financing derivatives

– Share of joint ventures and associates’ interest

– Non-controlling share of financing costs

– Interest on net pension assets/liabilities (IAS 19)

ALTERNATIVE PERFORMANCE MEASURES

191SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Group APM Purpose

Closest equivalent

IFRS measure Adjustments to reconcile to primary financial statements

Adjusted Current

Tax Charge

Profit

measure

Tax charge – Share of joint ventures and associates’ tax

– Non-controlling share of current tax

– Deferred tax including share of joint ventures, associates and non-

controlling interests

– Tax on exceptional items and certain re-measurements

Adjusted Earnings

Per Share

Profit

measure

Earnings per share – Exceptional items

– Adjustments to retained Gas Production decommissioning provision

– Movements on operating and financing derivatives (‘certain re-

measurements’)

– Depreciation and amortisation expense on fair value uplifts

– Interest on net pension assets/liabilities (IAS 19)

– Deferred tax including share of joint ventures, associates and non-

controlling interests

Rationale for adjustments to profit measure

1 Movement on operating and financing derivatives (‘certain re-measurements’)

This adjustment can be designated between operating and financing derivatives.

Operating derivatives are contracts where the Group’s SSE Energy Markets (formerly Energy Portfolio Management (‘EPM’) function enters

into forward commitments or options to buy or sell electricity, gas and other commodities to meet the future demand requirements of

the Group’s SSE Business Energy and SSE Airtricity operating units, or to optimise the value of the production from SSE Renewables and

Thermal generation assets or to conduct other trading subject to the value at risk limits set out by the Energy Markets Risk Committee.

Certain of these contracts (predominantly purchase contracts) are determined to be derivative financial instruments under IFRS 9 and as

such are required to be recorded at their fair value. Changes in the fair value of those commodity contracts designated as IFRS 9 financial

instruments are reflected in the income statement (as part of ‘certain re-measurements’). The Group shows the change in the fair value of

these forward contracts separately as this mark-to-market movement is not relevant to the underlying performance of its operating

segments due to the volatility that can arise on revaluation. The Group will recognise the underlying value of these contracts as the relevant

commodity is delivered, which will predominantly be within the subsequent 12 to 24 months. Conversely, commodity contracts that are

not financial instruments under IFRS 9 (predominantly sales contracts) are accounted for as ‘own use’ contracts and are consequently not

recorded until the commodity is delivered and the contract is settled. Gas inventory purchased by the Group’s Gas Storage business for

secondary trading opportunities is also held at fair value with gains and losses on re-measurement recognised as part of ‘certain re-

measurements’ in the income statement. Finally, the mark-to-market valuation movements on the Group’s contracts for difference

contracts entered into by SSE Renewables that are not designated as government grants and which are measured as Level 3 fair value

financial instruments are also included within ‘certain re-measurements’.

Financing derivatives include all fair value and cash flow interest rate hedges, non-hedge accounted (mark-to-market) interest rate

derivatives, cash flow foreign exchange hedges and non-hedge accounted foreign exchange contracts entered into by the Group to

manage its banking and liquidity requirements as well as risk management relating to interest rate and foreign exchange exposures.

Changes in the fair value of those financing derivatives are reflected in the income statement (as part of ‘certain re-measurements’).

The Group shows the change in the fair value of these forward contracts separately as this mark-to-market movement is not relevant

to the underlying performance of its operating segments.

The re-measurements arising from operating and financing derivatives, and the tax effects thereof, are disclosed separately to aid

understanding of the underlying performance of the Group.

2 Exceptional items

Exceptional charges or credits, and the tax effects thereof, are considered unusual by nature or scale and of such significance that separate

disclosure is required for the underlying performance of the Group to be properly understood. Further explanation for the classification of

an item as exceptional is included in note 3.2.

3 Adjustments to retained Gas Production decommissioning provision

The Group retains an obligation for 60% of the decommissioning liabilities of its former Gas Production business which was disposed

in October 2021. The revaluation adjustments relating to these decommissioning liabilities are accounted for through the Group’s

consolidated income statement and are removed from the Group’s adjusted profit measures as the revaluation of the provision is not

considered to be part of the Group’s core continuing operations.

4 Share of joint ventures and associates’ interest and tax

This adjustment can be split between the Group’s share of interest and the Group’s share of tax arising from its investments in equity

accounted joint ventures and associates. The Group is required to report profit before interest and tax (‘operating profit’) including its share

of the profit after tax from its equity accounted joint ventures and associates. However, for internal performance management purposes

and for consistency of treatment, SSE reports its adjusted operating profit measures before its share of the interest and/or tax on joint

ventures and associates.

192 SSE plc Annual Report 2024

Rationale for adjustments to profit measure continued

5 Share of joint ventures and associates’ depreciation and amortisation

For management purposes, the Group considers EBITDA (earnings before interest, tax, depreciation and amortisation) based on a sum-of-

the-parts derived metric which includes a share of the EBITDA from equity accounted investments. While this is not equal to adjusted cash

generated from operating activities, it is considered useful by management in assessing a proxy for such a measure, given the complexity

of the Group structure and the range of investment structures utilised. For the purpose of calculating the ‘Net Debt to EBITDA’ metric

referred at page 63 , ‘adjusted EBITDA’ is further refined to remove the proportion of adjusted EBITDA from equity-accounted joint

ventures relating to off-balance sheet debt (see note 5.1(v)).

6 Depreciation and amortisation expense on fair value uplifts

The Group’s strategy includes the realisation of value (developer gains) from divestments of stakes in SSE Renewables’ offshore and

international developments. In addition, for strategic purposes the Group may also decide to bring in equity partners to other businesses

and assets. Where SSE’s interest in such vehicles changes from full to joint control, and the subsequent arrangement is classified as an

equity accounted joint venture, SSE may recognise a fair value uplift on the remeasurement of its retained equity investment. Those

non-cash accounting uplifts will be treated as exceptional gains in the year of the relevant transactions completing. Furthermore, SSE may

acquire businesses or joint venture interests which are determined to generate an exceptional opening gain on acquisition and accordingly

will record an accounting fair value uplift to the opening assets acquired. These uplifts create assets or adjustments to assets, which are

depreciated or amortised over the remaining life of the underlying assets or contracts in those businesses with the charge being included

in the Group’s depreciation and amortisation expense. The Group’s adjusted operating profit, adjusted profit before tax and adjusted

earnings per share are adjusted to exclude any additional depreciation, amortisation and impairment expense arising from the fair value

uplifts given these charges are derived from significant one-off gains, which are treated as exceptional when initially recognised.

7 Release of deferred income

The Group deducts the release of deferred income in the year from its adjusted EBITDA metric as it principally relates to customer

contributions against depreciating assets. As the metric adds back depreciation, the income is also deducted.

8 Interest on net pension assets/liabilities (IAS 19 “Employee Benefits”)

The Group’s interest income relating to defined benefit pension schemes is derived from the net assets of the schemes as valued under

IAS19. This will mean that the credit or charge recognised in any given year will be dependent on the impact of actuarial assumptions such

as inflation and discount rates. The Group excludes these from its adjusted profit measures due to the non-cash nature of these charges or

credits.

9 Deferred tax

The Group adjusts for deferred tax when arriving at adjusted profit after tax, adjusted earnings per share and its adjusted effective rate of

tax. Deferred tax arises as a result of differences in accounting and tax bases that give rise to potential future accounting credits or charges.

As the Group remains committed to its ongoing capital programme, the liabilities associated are not expected to reverse and accordingly

the Group excludes these from its adjusted profit measures.

10 Results attributable to non-controlling interest holders

The Group’s structure includes non-wholly owned but controlled subsidiaries which are consolidated within the financial statements of the

Group under IFRS. The most significant of those is SSEN Transmission, a 25% stake in which was divested on 30 November 2022 (see note

12.2 in the financial statements). In the current and prior year the Group has removed the share of profit attributable to holders of non-

controlling equity stakes in such businesses from the point when the ownership structure changed (i.e. for SSEN Transmission, with effect

from 1 December 2022) from all of its profit measures, to report all metrics based on the share of profits items attributable to the ordinary

equity holders of the Group. The adjustment has been applied consistently to all of the Group’s adjusted profit measures, including

removing proportionate non-controlling share of operating profit and depreciation and amortisation from the Group’s adjusted EBITDA

metric; removing the non-controlling share of operating profit from the Group’s adjusted operating profit metric; removing the non-

controlling share of net finance costs from the Group’s adjusted net finance costs metric; and removing the non-controlling interest share

of current tax from the Group’s adjusted current tax metric. There is no impact to disclosures for 31March 2022.

ALTERNATIVE PERFORMANCE MEASURES – CONTINUED

193SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

March 2024

Continuing operations

Reported

£m

Movement on

derivatives

£m

Exceptional

items

£m

Adjustments

to Gas

Production

decommissioning

provision

£m

Depreciation

on FV uplifts

£m

Joint

venture

interest

and tax

£m

Interest on

net pension

asset

£m

Deferred

tax

£m

Share of

profit

attributable

to non-

controlling

interests

£m

Adjusted

£m

Operating profit 2,608.2 (522.7) 266.3 9.9 19.0 184.8 – – (139.1) 2,426.4

Net finance costs (113.1) (6.1) (0.3) – – (110.7) (26.2) – 4.7 (251.7)

Profit before taxation 2,495.1 (528.8) 266.0 9.9 19.0 74.1 (26.2) – (134.4) 2,174.7

Taxation (610.7) 130.3 (23.3) – – (74.1) – 198.8 8.0 (371.0)

Profit after taxation 1,884.4 (398.5) 242.7 9.9 19.0 – (26.2) 198.8 (126.4) 1,803.7

Attributable to other

equity holders (173.9) – – – – – – (25.6) 126.4 (73.1)

Profit attributable to

ordinary shareholders 1,710.5 (398.5) 242.7 9.9 19.0 – (26.2) 173.2 – 1,730.6

Number of shares for

EPS 1,091.8 – – – – – – – – 1,091.8

Earnings per share 156.7 – – – – – – – – 158.5

EBITDA

Adjusted

operating profit

from continuing

operations

£m

Share of joint

ventures and

associates’

depreciation and

amortisation

£m

Release of

deferred income

£m

Depreciation

on FV uplifts

£m

Depreciation,

impairment and

amortisation

before

exceptional

charges

£m

Share of

depreciation,

impairment and

amortisation

before exceptional

items attributable

to non-controlling

interests

£m

Adjusted

EBITDA

£m

Adjusted operating profit from

continuing operations 2,426.4 208.8 (13.0) (19.0) 724.9 (32.5) 3,295.6

March 2023

Continuing operations

Reported

£m

Movement on

derivatives

£m

Exceptional

items

£m

Adjustments to

Gas Production

decommissioning

provision

£m

Depreciation

on FV uplifts

£m

Joint

venture

interest

and tax

£m

Interest on

net pension

asset

£m

Deferred

tax

£m

Share of

profit

attributable

to non-

controlling

interests

£m

Adjusted

£m

Operating (loss)/profit (146.3) 2,514.3 0.6 (50.5) 28.8 213.2 – – (30.9) 2,529.2

Net finance costs (59.3) (201.9) (0.2) – – (70.1) (16.2) – 2.1 (345.6)

(Loss)/profit before

taxation (205.6) 2,312.4 0.4 (50.5) 28.8 143.1 (16.2) – (28.8) 2,183.6

Taxation 110.0 (460.5) 34.1 – – (143.1) – 99.6 1.1 (358.8)

(Loss)/profit after

taxation (95.6) 1,851.9 34.5 (50.5) 28.8 – (16.2) 99.6 (27.7) 1,824.8

Attributable to other

equity holders (62.4) – – – – – – (4.1) 27.7 (38.8)

(Loss)/profit attributable

to ordinary

shareholders (158.0) 1,851.9 34.5 (50.5) 28.8 – (16.2) 95.5 – 1,786.0

Number of shares for

EPS 1,075.6 – – – – – – – – 1,075.6

(Losses)/earnings per

share (14.7) – – – – – – – – 166.0

194 SSE plc Annual Report 2024

Rationale for adjustments to profit measure continued

March 2023 continued

EBITDA

Adjusted

operating profit

from continuing

operations

£m

Share of joint

ventures and

associates’

depreciation and

amortisation

£m

Release of

deferred income

£m

Depreciation

on FV uplifts

£m

Depreciation

impairment and

amortisation

before

exceptional

charges

£m

Share of

depreciation,

impairment and

amortisation

before exceptional

items attributable

to non-controlling

interests

£m

Adjusted

EBITDA

£m

Adjusted operating profit

from continuing operations 2,529.2 201.1 (13.9) (28.8) 704.2 (9.7) 3,382.1

March 2022

Continuing operations

Reported

£m

Movement on

derivatives

£m

Exceptional

items

£m

Adjustments to

Gas Production

decommissioning

provision

£m

Depreciation

on FV uplifts

£m

Joint

venture

interest

and tax

£m

Interest on

net pension

asset

£m

Deferred

tax

£m

Adjusted

£m

Operating profit 3,749.5 (2,097.8) (301.8) 13.1 20.6 147. 3 – – 1,530.9

Net finance costs (273.2) (21.0) (3.2) – – (67. 8) (7.6) – (372.8)

Profit before taxation 3,476.3 (2,118.8) (305.0) 13.1 20.6 79.5 (7.6) – 1,158.1

Taxation (881.3) 408.0 323.7 – – (79.5) – 122.0 (107.1)

Profit after taxation 2,595.0 (1,710.8) 18.7 13.1 20.6 – ( 7.6) 122.0 1,051.0

Attributable to other equity holders (50.7) – – – – – – – (50.7)

Profit attributable to ordinary

shareholders 2,544.3 (1,710.8) 18.7 13.1 20.6 – ( 7.6) 122.0 1,000.3

Number of shares for EPS 1,055.0 1,055.0

Earnings per share 241.2 94.8

EBITDA

Adjusted

operating profit

from continuing

operations

£m

Share of joint

ventures and

associates’

depreciation and

amortisation

£m

Release of

deferred income

£m

Depreciation

on FV uplifts

£m

Depreciation,

impairment and

amortisation

before

exceptional

charges

£m

Adjusted

EBITDA

£m

Adjusted operating profit

from continuing operations 1,530.9 146.6 (17.6) (20.6) 612.0 2,251.3

Debt measure

Group APM Purpose

Closest equivalent

IFRS measure Adjustments to reconcile to primary financial statements

Adjusted Net Debt

and Hybrid Capital

Debt

measure

Unadjusted

net debt

– Hybrid equity

– Cash held and posted as collateral

– Lease obligations

– Non-controlling share of borrowings and cash

Rationale for adjustments to debt measure

11 Hybrid equity

The characteristics of certain hybrid capital securities mean that they qualify for recognition as equity rather than debt under IFRS.

Consequently, their coupon payments are presented within equity rather than within finance costs. As a result, the coupon payments are

not included in SSE’s adjusted profit before tax measure. In order to present total funding provided from sources other than ordinary

shareholders, SSE presents its adjusted net debt measure inclusive of hybrid capital to better reflect the Group’s funding position.

12 Cash held and posted as collateral

Cash held and posted as collateral refers to cash balances received from and deposited with counterparties including trading exchanges.

Collateral balances mostly represent initial and variation margin, required as part of the management of the Group’s exposures on

commodity contracts, that will be received on maturity of the related trades. Loans with a maturity of less than three months are also

included in this adjustment. The Group includes this adjustment in order to better reflect the immediate cash resources to which it has

access, which in turn better reflects the Group’s funding position.

13 Lease obligations

SSE’s reported loans and borrowings include lease liabilities on contracts within the scope of IFRS 16, which are not directly related to

external financing of the Group. The Group excludes these liabilities from its adjusted net debt and hybrid capital measure to better reflect

the Group’s underlying funding position with its primary sources of capital.

ALTERNATIVE PERFORMANCE MEASURES – CONTINUED

195SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

14 Debt and cash attributable to non-controlling interests

The Group’s structure includes non-wholly owned but controlled subsidiaries which are consolidated within the financial statements of the

Group under IFRS. The most significant of those is SSEN Transmission, a 25% stake in which was divested on 30 November 2022 (see note

12.2 in the financial statements for more details of that transaction). Following completion of the transaction, the Group has removed the

share of external debt and cash in these subsidiaries proportionately attributable to the non-controlling interest holders from its adjusted

net debt and hybrid capital metric. While legal entitlement to these items has not changed, the Group makes this adjustment to present net

debt attributable to ordinary equity holders of the Group.

March 2024

£m

March 2023

£m

March 2022

£m

Unadjusted net debt (8,097.8) (8,168.1) (8,015.4)

Cash (held)/posted as collateral (353.2) 316.3 74.7

Lease obligations 407.5 405.9 393.5

External net debt attributable to non-controlling interests 490.2 434.2 –

Adjusted Net Debt (7,553. 3) (7,011.7) (7,547.2)

Hybrid equity (1,882.4) (1,882.4) (1,051.0)

Adjusted Net Debt and Hybrid Capital (9,435.7) (8,894.1) (8,598.2)

Capital measures

Group APM Purpose

Closest equivalent

IFRS measure Adjustments to reconcile to primary financial statements

Adjusted

Investment and

Capital

Expenditure

Capital

measure

Capital additions

to intangible assets

and property, plant

and equipment

– Customer funded additions

– Allowances and certificates

– Additions acquired through business combinations

– Joint ventures and associates’ additions funding

– Non-controlling share of capital expenditure

– Lease asset additions

Adjusted

Investment,

Capital and

Acquisition

Expenditure

Capital

measure

Capital additions

to intangible assets

and property, plant

and equipment

– Customer funded additions

– Allowances and certificates

– Additions acquired through business combinations

– Joint ventures and associates’ additions funding

– Non-controlling share of capital expenditure

– Lease asset additions

– Acquisition cash consideration

Rationale for adjustments to capital measures

15 Customer funded additions

Customer funded additions represents additions to electricity and other networks funded by customer contributions. Given these are

directly funded by customers, these additions have been excluded to better reflect the Group’s underlying investment position.

16 Allowances and certificates

Allowances and certificates consist of purchased carbon emissions allowances and generated or purchased renewable obligations

certificates (ROCs) and additions in the year are not included in the Group’s ‘capital expenditure and investment’ APM to better reflect the

Group’s investment in enduring operational assets.

17 Additions acquired through business combinations

Where the Group acquires an early-stage development company, which is classified as the acquisition of an asset, or group of assets and

not the acquisition of a business, the acquisition is treated as an addition to intangible assets or property, plant and equipment and is

included within ‘adjusted investment and capital expenditure’. Where the Group acquires an established business or interest in an equity-

accounted joint venture requiring a fair value assessment in line with the principles of IFRS 3 ‘Business Combinations’, the fair value of

acquired consolidated tangible or intangible assets are excluded from the Group’s ‘adjusted investment and capital expenditure’, as they are

not direct capital expenditure by the Group. However, the fair valuation of consideration paid for the business or investment is included in

the Group’s ‘adjusted investment, capital and acquisition expenditure’ metric, see 23 below. Please refer to note 12 for detail of the Group’s

acquisitions in the year.

18 Additions subsequently disposed or impaired

For consistency of presentation, any capital additions in the year that are subsequently written-down or disposed are removed from the

APM.

19 Joint ventures and associates’ additions funding

Joint ventures and associates’ additions included in the Group’s capital measures represent the direct loan or equity funding provided by

the Group to joint venture and associate arrangements in relation to capital expenditure projects. This has been included to better reflect

the Group’s use of directly funded equity accounted vehicles to grow the Group’s asset base. Asset additions funded by project finance

raised within the Group’s joint ventures and associates are not included in this adjustment.

196 SSE plc Annual Report 2024

Rationale for adjustments to profit measure continued

20 Non-controlling share of capital expenditure

The Group’s structure includes non-wholly owned but controlled subsidiaries which are consolidated within the financial statements

of the Group under IFRS. The most significant of those is SSEN Transmission, a 25% stake in which was divested on 30 November 2022

(see note12.2 in the financial statements for more details of that transaction). In the current year, the Group has removed the share of

capital additions attributable proportionately to these equity holders from the point when the ownership structure changed (i.e. for SSEN

Transmission, with effect from 1 December 2022) from its “adjusted investment and capital expenditure” and “adjusted investment, capital

and acquisition expenditure” metrics. This is consistent with the adjustments noted elsewhere related to these non-controlling interests.

This has no impact on the metrics for March 2022.

21 Refinancing proceeds/refunds

The Group’s model for developing large scale capital projects within joint ventures and associates involves project finance being raised

within those entities. Where the Group funds early-stage capex which is then subsequently reimbursed to SSE following the receipt of

project finance within the vehicle, the refinancing proceeds are included in the Group’s net adjusted investment and capital expenditure

metric. This is consistent with the inclusion of the initial investment in the metric as explained at 17 above. There were no refinancing

proceeds in the year ended 31 March 2024 (2023: £nil). In the year ended 31 March 2022, Doggerbank windfarm reimbursed SSE for

previous funding of £136.7m. These receipts have been deducted from the Group’s adjusted investment and capital expenditure metric.

22 Lease additions

Additions of right of use assets under the Group’s IFRS 16 compliant policies for lease contracts are excluded from the Group’s adjusted

capital measures as they do not represent directly funded capital investment. This is consistent with the treatment of lease obligations

explained at 13, above.

23 Acquisition cash consideration in relation to business combinations

The Group has outlined a significant investment programme which will partly be achieved through the acquisition of businesses with

development opportunities for the Group. The cash consideration paid for these entities is included within the Group’s adjusted

investment, capital and acquisition expenditure metric as it provides stakeholders an accurate basis of cash investment into the Group’s

total development pipeline and is consistent with the reporting of the Group’s Net Zero Acceleration Programme Plus.

March 2024

£m

March 2023

£m

March 2022

£m

Capital additions to intangible assets 1,314.2 1,688.6 921.0

Capital additions to property, plant and equipment 1,971.4 1,500.1 1,392.9

Capital additions to intangible assets and property, plant and equipment 3,285.6 3,188.7 2,313.9

Customer funded additions (152.0) (80.9) (91.3)

Allowances and certificates (774.5) (805.2) (544.5)

Additions through business combinations – (515.2) (197.8)

Additions subsequently disposed/impaired – – (13.9)

Joint ventures and associates’ additions 390.0 498.4 682.5

Non-controlled interests share of capital expenditure (199.4) (46.7) –

Refinancing (proceeds)/refunds – – (136.7)

Lease asset additions (73.0) (78.5) (85.7)

Adjusted Investment and Capital Expenditure 2,476.7 2,160.6 1,926.5

Acquisition cash consideration – 642.7 141.3

Adjusted Investment, Capital and Acquisition Expenditure 2,476.7 2,803.3 2,067.8

ALTERNATIVE PERFORMANCE MEASURES – CONTINUED

197SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Impact of discontinued operations on the Group’s APMs

The following metrics have been adjusted in all years presented to exclude the contribution of the Group’s investment in Scotia Gas

Networks Limited (‘SGN’) which was disposed on 22 March 2022 and the Group’s Gas Production operations which were disposed on

14October 2021:

– Adjusted EBITDA;

– Adjusted operating profit;

– Adjusted net finance costs;

– Adjusted profit before tax;

– Adjusted current tax charge; and

– Adjusted earnings per share.

‘Adjusted net debt and hybrid capital’, ‘adjusted investment and capital expenditure’, and ‘adjusted investment, capital and acquisition

expenditure’ have not been adjusted as the Group continues to fund the discontinued operations until the date of disposal. The following

table summarises the impact of excluding discontinued operations from the APMs of the continuing activities of the Group in the year

ended 31 March 2022:

March 2024

£m

March 2023

£m

March 2022

£m

Adjusted EBITDA of SSE Group (including discontinued operations) 3,295.6 3,382.1 2,384.8

Less: Gas Production profit – – (101.4)

Less: SGN profit – – (32.1)

Adjusted EBITDA of continuing operations

APM

3,295.6 3,382.1 2,251.3

Adjusted operating profit of SSE Group (including discontinued operations) 2,426.4 2,529.2 1,653.3

Less: Gas Production profit – – (101.4)

Less: SGN profit – – (21.0)

Adjusted operating profit of continuing operations

APM

2,426.4 2,529.2 1,530.9

Adjusted net finance costs of SSE Group (including discontinued operations) 251.7 345.6 377.6

Less: Gas Production – – (0.1)

Less: SGN – – (4.7)

Adjusted net finance costs of continuing operations

APM

251.7 345.6 372.8

Adjusted profit before tax of SSE Group (including discontinued operations) 2,174.7 2,183.6 1,275.7

Less: Gas Production profit – – (101.3)

Less: SGN profit – – (16.3)

Adjusted profit before tax of continuing operations

APM

2,174.7 2,183.6 1,158.1

Adjusted current tax of SSE Group (including discontinued operations) 371.0 358.8 109.4

Less: SGN current tax charge – – (2.3)

Adjusted current tax of continuing operations

APM

371.0 358.8 107.1

Adjusted earnings per share of SSE Group (including discontinued operations) 158.5 166.0 105.6

Less: Gas Production earnings per share – – (9.6)

Less: SGN earnings per share – – (1.2)

Adjusted earnings per share of continuing operations

APM

158.5 166.0 94.8

The remaining APMs presented by the Group are unchanged in all periods presented by the discontinued operations.

198 SSE plc Annual Report 2024

Primary statements

Consolidated income statement 199

Consolidated statement of comprehensive income 200

Consolidated balance sheet 201

Consolidated statement of changes in equity 202

Consolidated cash flow statement 204

Notes to the consolidated financial

statements

1. General information and basis of preparation 205

2. New accounting policies and reporting changes 206

3. Adjusted accounting measures 207

4. Accounting judgements and estimation uncertainty 209

5. Segmental information 212

6. Other operating income and cost 224

7. Exceptional items and certain re-measurements 225

8. Directors and employees 229

9. Finance income and costs 230

10. Taxation 231

11. Dividends and earnings per share 234

12. Acquisitions and disposals 235

13. Intangible assets 238

14. Property, plant and equipment 240

15. Impairment testing 241

16. Investments 250

17. Inventories 252

18. Trade and other receivables 253

19. Trade and other payables 253

20. Provisions 254

21. Sources of finance 256

22. Equity 261

23. Retirement benefit obligations 264

24. Financial instruments 269

25. Commitments and contingencies 270

CONTENTS

Accompanying information

A1. Basis of consolidation and significant

accounting policies

271

A2. Taxation 282

A3. Related undertakings 284

A4. Joint ventures and associates 293

A5. Related party transactions 296

A6. Financial risk management 296

A7. Fair value of financial instruments 306

A8. Hedge accounting 309

Company financial statements

Company balance sheet 310

Company statement of changes in equity 311

Notes to the Company financial statements

1. Principal accounting policies 312

2. Supplementary financial information 313

3. Investments in associates and joint ventures 313

4. Subsidiary undertakings 314

5. Trade and other receivables 314

6. Trade and other payables 314

7. Taxatio n 314

8. Loans and borrowings 315

9. Equity 317

10. Retirement benefit obligations 318

11. Financial instruments 320

12. Financial guarantee liabilities 321

13. Commitments and contingencies 322

14. Provisions 323

Strategic Report Governance Financial Statements

CONSOLIDATED INCOME STATEMENT

FOR THE YEAR ENDED 31 MARCH 2024

			2024			2023
		Before	Exceptional		Before	Exceptional
		exceptional	items and		exceptional	items and
		items and	certain		items and	certain
		certain	re-		certain	re-
		re-	measurements		re-	measurements
		measurements	(note 7)	Total	measurements	(note 7)	Total
	Note	£m	£m	£m	£m	£m	£m
Continuing operations
Revenue	5	1 0 , 4 5 7. 2	–	1 0 , 4 5 7. 2	1 2,490.7	–	12,490.7
Cost of sales	6	(6 ,5 68. 3)	461 . 3	(6 , 1 0 7. 0)	(9 ,933 . 2)	(2,717 .2)	(1 2,650.4)
Gross profit/(loss)		3,888.9	461 . 3	4,35 0.2	2 , 5 5 7. 5	(2,717 .2)	(1 59.7)
Operating costs	6	(1 , 5 7 7. 7 )	(270. 9)	(1 , 848 .6)	(1, 431 .6)	(230.4)	(1 ,662.0)
Debt impairment charges	A6.2	(128.8)	–	(12 8.8)	(91.0)	–	(91.0)
Other operating income	6	116 .7	4.6	1 21 .3	1, 015. 0	8 9.1	1 ,10 4. 1
Operating profit/(loss) before joint ventures
and associates		2 , 2 99. 1	195 .0	2,494.1	2 ,0 49.9	(2,85 8. 5)	(8 08.6)
Joint ventures and associates:
Share of operating profit		2 3 7. 5	–	2 3 7. 5	5 31 .9	14 0.7	67 2.6
Share of interest		(110 .7)	–	(1 10.7)	(70 .1)	–	(70. 1)
Share of movement in derivatives		–	61 .4	61 .4	–	2 02.9	202.9
Share of tax		(58. 8)	(1 5. 3)	(74 . 1)	(104.0)	(39. 1)	(143 . 1)
Share of profit on joint ventures and associates	16	68.0	46. 1	114. 1	357 .8	304. 5	662 .3
Operating profit/(loss) from continuing operations	5	2 , 3 6 7. 1	241 . 1	2 ,608 . 2	2,407 .7	(2, 554.0)	(146 . 3)
Finance income	9	198. 8	6 .4	20 5.2	135 .3	202 .1	3 3 7. 4
Finance costs	9	(318 .3)	–	(31 8. 3)	(396 .7)	–	(396 .7)
Profit/(loss) before taxation		2 , 2 4 7. 6	2 4 7. 5	2 ,495. 1	2,146. 3	(2, 35 1 .9)	(205.6)
Taxation	10	(519.0)	(91 .7)	(610.7)	(35 5. 5)	4 65.5	1 10. 0
Profit/(loss) for the year from continuing operations		1 ,728 .6	1 55.8	1 ,884.4	1,790.8	(1 ,8 86.4)	(95 .6)
Discontinued operations
Profit from discontinued operation, net of tax	12	–	–	–	–	35 .0	35.0
Profit/(loss) for the year		1,7 28.6	155 .8	1 ,884.4	1,790.8	(1 ,851 . 4)	(60.6)
Attributable to:
Ordinary shareholders of the parent	11	1 ,55 4.7	1 55.8	1 ,710.5	1 ,7 28.4	(1, 851 .4)	(12 3.0)
Non-controlling interests		100.8	–	10 0.8	2 3.6	–	2 3.6
Other equity holders		73.1	–	73.1	38.8	–	38.8
Earnings/(losses) per share
Basic (pence)	11			156.7			(1 1 .4)
Diluted (pence)	11			156. 5			(11 .4)
Earnings/(losses) per share – continuing operations
Basic (pence)	11			156.7			(14 .7)
Diluted (pence)	11			156. 5			(14. 7)

The accompanying notes are an integral part of these financial statements.

SSEplcAnnualReport2024199

200 SSE plc Annual Report 2024

	2024	2023
	£m	£m
Profit/(loss) for the year
Continuing operations	1 ,884.4	(95. 6)
Discontinued operations	–	35.0
	1 ,884.4	(60.6)
Other comprehensive income:
Items that will be reclassified subsequently to profit or loss:
Net gains on cash flow hedges	6.5	43 . 3
Transferred to assets and liabilities on cash flow hedges	2.1	(1 2.7)
Taxation on cashflow hedges	(0. 3)	(8 .1)
	8.3	22. 5
Share of other comprehensive (loss)/income of joint ventures and associates, net of taxation	(4 0. 9)	342.4
Exchange difference on translation of foreign operations	(66 .6)	72.5
Gain/(loss) on net investment hedge	30.9	(43 .1)
	(68 .3)	394 .3
Items that will not be reclassified to profit or loss:
Actuarial loss on retirement benefit schemes, net of taxation	(116 .4)	(59.4)
Gains/(losses) on revaluation of investments in equity instruments, net of taxation	3.5	(0.4)
	(11 2 .9)	(59. 8)
Other comprehensive (loss)/gain, net of taxation	(181 . 2)	334. 5
Total comprehensive income for the year	1 ,7 03. 2	27 3 .9
Total comprehensive income for the year arises from:
Continuing operations	1 ,7 03. 2	2 3 8.9
Discontinued operations
Profit from discontinued operations	–	35 .0
Total comprehensive income from discontinued operations	–	35.0
Total comprehensive income for the year	1 ,7 03. 2	27 3 .9
Attributable to:
Ordinary shareholders of the parent	1 , 52 9. 3	20 6.4
Non-controlling interests	100. 8	28 .7
Other equity holders	73.1	38.8
	1 ,7 03. 2	27 3 .9

The accompanying notes are an integral part of these financial statements.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 MARCH 2024

201SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

			2023
		2024	£m
	Note	£m	(restated*)
Assets
Property, plant and equipment	14	16,61 1 . 5	15 , 395 .9
Goodwill and other intangible assets	13	2 ,3 24.6	1 ,9 60. 3
Equity investments in joint ventures and associates	16	1 ,963. 2	1,975.7
Loans to joint ventures and associates	16	1 ,352 .9	1,115. 4
Other investments	16	3.2	2 7. 4
Other receivables	18	170. 1	149. 5
Derivative financial assets	24	64.2	24 6 . 0
Retirement benefit assets	23	421 .6	5 41 . 1
Non-current assets		22 ,911 . 3	2 1 , 411 . 3
Intangible assets	13	754 .7	4 54 .9
Inventories	17	343 .0	3 94 .9
Trade and other receivables	18	2 ,65 4. 1	3 , 24 5 . 1
Current tax asset	10	35. 1	1 9.9
Cash and cash equivalents	21	1 ,035 .9	891 .8
Derivative financial assets	24	536. 1	759. 2
Current assets		5, 358.9	5,76 5.8
Total assets		28, 270 .2	27,177.1
Liabilities
Loans and other borrowings	21	1, 128 .0	1 , 820.6
Trade and other payables	19	3,3 22.5	2,65 8.6
Current tax liabilities	10	9. 3	9.1
Financial guarantee liabilities	24	3.1	4.4
Provisions	20	52 .7	2 9.4
Derivative financial liabilities	24	345. 2	1 ,021 .0
Current liabilities		4,860. 8	5,543.1
Loans and other borrowings	21	8,00 5.7	7, 2 3 9 . 3
Deferred tax liabilities	10	1 ,536 .8	1 , 29 9. 1
Trade and other payables	19	1 ,092 .8	959.9
Financial guarantee liabilities	24	36.4	66.5
Provisions	20	71 2.4	74 2 . 7
Derivative financial liabilities	24	222 .2	243 . 3
Non-current liabilities		11 ,6 06 . 3	10,550. 8
Total liabilities		1 6 , 4 6 7. 1	16 , 093 . 9
Net assets		11 ,8 03 .1	1 1,08 3. 2
Equity:
Share capital	22	5 48.1	5 4 7. 0
Share premium		820. 1	82 1.2
Capital redemption reserve		52 .6	52 .6
Hedge reserve		4 0 7. 6	44 1.2
Translation reserve		(2 .6)	32 .1
Retained earnings		7, 3 4 5 . 0	6 , 6 5 7. 6
Equity attributable to ordinary shareholders of the parent		9, 1 70. 8	8, 551.7
Hybrid equity	22	1 , 882 .4	1 ,882 .4
Attributable to non-controlling interests	22	74 9 . 9	6 49. 1
Total equity		11 ,8 03 .1	1 1,08 3. 2

* The comparative Consolidated Balance Sheet has been restated. See notes 1.2 and 2.1.

The accompanying notes are an integral part of the financial statements.

These financial statements were approved by the Board of Directors on 21 May 2024 and signed on their behalf by:

Barry O’Regan Sir John Manzoni

Chief Financial Officer Chairman

SSE plc

Registered No: SC117119

CONSOLIDATED BALANCE SHEET

AS AT 31 MARCH 2024

202 SSE plc Annual Report 2024

									Total equity
							Total		before
			Capital				attributable		non-	Non-
	Share	Share	redemption	Hedge	Translation	Retained	to ordinary	Hybrid	controlling	controlling
	capital	premium	reserve	reserve	reserve	earnings	shareholders	equity	interests	interests	Total
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	equity
At 1 April 2023 (restated * )	5 4 7. 0	821 .2	52 .6	4 41 . 2	32 . 1	6 , 6 5 7. 6	8, 551 .7	1 , 882. 4	10,43 4. 1	6 49. 1	11 ,083. 2
Profit for the year	–	–	–	–	–	1 ,710.5	1,7 10.5	73.1	1 ,783 .6	100.8	1 ,884.4
Other comprehensive loss	–	–	–	(33. 6)	(3 4.7)	(11 2 .9)	(181 . 2)	–	(181 . 2)	–	(181 . 2)
Total comprehensive income for the year	–	–	–	(33.6)	(34.7)	1,597 .6	1 , 529. 3	73. 1	1 ,6 02 .4	100.8	1 , 703. 2
Dividends to shareholders	–	–	–	–	–	(956 .4)	(956 .4)	–	(956 .4)	–	(956 .4)
Scrip dividend related share
issue	1 .1	(1 . 1)	–	–	–	38.6	38 .6	–	38.6	–	38 .6
Issue of treasury shares	–	–	–	–	–	9.2	9. 2	–	9. 2	–	9. 2
Distributions to Hybrid
equity holders	–	–	–	–	–	–	–	(73.1)	(73. 1)	–	(73.1)
Credit in respect of employee share awards	–	–	–	–	–	20. 2	20. 2	–	2 0.2	–	2 0.2
Investment in own shares	–	–	–	–	–	(21 .8)	(21 .8)	–	(21 .8)	–	(21 . 8)
At 31 March 2024	548. 1	820. 1	52 .6	4 0 7. 6	(2 .6)	7, 3 4 5 . 0	9,1 70. 8	1 , 882 .4	1 1 ,053. 2	74 9. 9	11 , 803 . 1

* The comparative Statement of Changes in Equity has been restated. See note 2.1.

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2024

203SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2023

									Total equity
							Total		before
			Capital				attributable		non-	Non-
	Share	Share	redemption	Hedge	Translation	Retained	to ordinary	Hybrid	controlling	controlling	Total
	capital	premium	reserve	reserve	reserve	earnings	shareholders	equity	interests	interests	equity
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
At 1 April 2022	536. 5	835.1	4 9. 2	7 7. 5	6.6	6 , 57 2.9	8 , 0 7 7. 8	1 ,0 51. 0	9 ,128.8	40.6	9, 169.4
Impact of adoption of IFRS
17 (see note 2.1)	–	–	–	–	–	(32. 2)	(32. 2)	–	(32. 2)	–	(32. 2)
At 1 April 2022 (restated * )	536. 5	835.1	49. 2	7 7. 5	6.6	6,5 40.7	8,045 .6	1 ,0 51 .0	9,09 6 .6	40.6	9 , 1 3 7. 2
Profit for the year	–	–	–	–	–	(1 23.0)	(123.0)	38.8	(84. 2)	2 3.6	(60.6)
Other comprehensive income/(loss)	–	–	–	36 3.7	25. 5	(59. 8)	32 9.4	–	32 9.4	5. 1	33 4.5
Total comprehensive income for the year	–	–	–	363.7	25. 5	(182. 8)	20 6. 4	38.8	24 5 . 2	28 .7	27 3.9
Dividends to shareholders	–	–	–	–	–	(955. 8)	(955 .8)	–	(955 .8)	–	(955. 8)
Scrip dividend related
share issue	13 .9	(13 .9)	–	–	–	481 . 5	4 81. 5	–	481 . 5	–	4 81 .5
Issue of treasury shares	–	–	–	–	–	18 .0	18 .0	–	18.0	–	18 .0
Distributions to Hybrid
equity holders	–	–	–	–	–	–	–	(38.8)	(38.8)	–	(38.8)
Issue of Hybrid equity
(note 22.5)	–	–	–	–	–	–	–	831 .4	831 .4	–	831 . 4
Share buy back (note 22.1)	(3 .4)	–	3 .4	–	–	(1 0 7. 6)	(1 0 7. 6)	–	(1 0 7. 6)	–	(1 0 7. 6)
Disposal of stake in SSEN
Transmission (note 12)	–	–	–	–	–	868. 3	868. 3	–	868. 3	5 79. 8	1 ,4 48. 1
Credit in respect of employee share awards	–	–	–	–	–	18 .7	18.7	–	18 .7	–	18 .7
Investment in own shares	–	–	–	–	–	(2 3.4)	(23 .4)	–	(2 3.4)	–	(23 .4)
At 31 March 2023 (restated * )	5 4 7. 0	82 1.2	52.6	44 1.2	32 .1	6 , 6 5 7. 6	8 ,551 .7	1, 882.4	10,434.1	6 49. 1	11 ,083. 2

* The comparative Statement of Changes in Equity has been restated. See note 2.1.

204 SSE plc Annual Report 2024

		2024	2023
	Note	£m	£m
Operating profit/(loss) – continuing operations		2 ,608 . 2	(14 6 . 3)
Less share of profit of joint ventures and associates		(114. 1)	(6 62. 3)
Operating profit/(loss) before jointly controlled entities and associates		2,494. 1	(80 8.6)
Pension service charges less contributions paid	23	(9. 5)	(1 9. 2)
Movement on operating derivatives	24	(4 43. 4)	2,691 .6
Depreciation, amortisation, write downs and impairments		85 9.0	6 40.7
Impairment of joint venture investment including shareholder loans	7,16	1 36.8	32 9. 3
Charge in respect of employee share awards (before tax)		20. 2	18.7
Profit on disposal of assets and businesses	7,12,16	(9. 0)	(89. 1)
Charge/(release) of provisions	20	14.6	(1 14 .9)
Credit in respect of financial guarantees		(12 . 5)	–
Release of deferred income	6	(13 .0)	(1 3.9)
Cash generated from operations before working capital movements		3 , 0 3 7. 3	2 ,634 .6
Decrease/(increase) in inventories		39.6	(137 .3)
Decrease/(increase) in receivables		763 . 1	(996.0)
Increase in payables		243. 0	16 6. 7
Decrease in provisions		(33. 9)	(1 5. 3)
Cash generated from operations		4,049. 1	1 ,652.7
Dividends received from investments	16	223.7	29 6.5
Interest paid		(6 7. 0)	(1 99.9)
Taxes paid		(345 .8)	(255. 3)
Net cash from operating activities		3,860.0	1 ,494 .0
Purchase of property, plant and equipment	5	(1 ,970 . 3)	(1,479.7)
Purchase of other intangible assets	5	(5 4 2.2)	(336 .4)
Receipt of government grant income	5	93 .4	–
Deferred income received		1 7. 4	1 3 .9
Proceeds from disposals	12,16	14.9	60.0
Purchase of businesses, joint ventures and subsidiaries	12,16	(42 . 9)	(642. 7)
Loans and equity provided to joint ventures and associates	16	(44 3. 6)	(621 . 8)
Loans and equity repaid by joint ventures	16	14.6	61 .4
Decrease/(increase) in other investments	16	0.4	(19. 1)
Net cash from investing activities		(2,858. 3)	(2 ,96 4 .4)
Proceeds from issue of share capital	22	9. 2	18.0
Dividends paid to company’s equity holders	11	(9 1 7. 8)	(474.3)
Share buy backs	22	–	(1 0 7. 6)
Proceeds from divestments	12	–	1 ,448 .1
Hybrid equity dividend payments	22	(73. 1)	(38.8)
Employee share awards share purchase	22	(21 . 8)	(2 3.4)
Issue of hybrid instruments	22	–	831 .4
New borrowings	21	1,9 82.2	1,914 .7
Repayment of borrowings	21	(1 ,842 .7)	(2 , 242 . 5)
Settlement of cashflow hedges		6.4	(12.7)
Net cash from financing activities		(8 5 7. 6)	1,312.9
Net increase/(decrease) in cash and cash equivalents		14 4. 1	(1 5 7. 5)
Cash and cash equivalents at the start of year	21	891 . 8	1 , 049. 3
Net increase/(decrease) in cash and cash equivalents		14 4. 1	(1 5 7. 5)
Cash and cash equivalents at the end of year	21	1 ,035 .9	891 .8

The accompanying notes are an integral part of these financial statements.

CONSOLIDATED CASH FLOW STATEMENT

FOR THE YEAR ENDED 31 MARCH 2024

205SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

1. General Information and basis of preparation

1.1. General information

SSE plc (the Company) is a company domiciled in Scotland. The address of the registered office is given on the back cover. The Group’s

operations and its principal activities are set out in the Strategic Report. The consolidated financial statements for the year ended 31 March

2024 comprise those of the Company and its subsidiaries (together referred to as the Group). The Company financial statements present

information about the Company as a separate entity and not about the Group, these can be seen on pages 310 to 323 .

1.2. Basis of preparation

Statement of compliance

The financial statements were authorised for issue by the directors on 21 May 2024. The financial statements have been prepared in

accordance with UK adopted International Accounting Standards (‘IAS’).

Going concern

The Directors consider that the Group has adequate resources to continue in operational existence for the period to 31 December 2025.

The financial statements are therefore prepared on a going concern basis.

In addition, further details of the Group’s liquidity position and going concern review are provided at note 21 and in A6

Accompanying

Information to the Financial Statements on page 296

Basis of measurement

The financial statements of the Group are prepared on the historical cost basis except for certain gas inventory, derivative financial

instruments, financial instruments designated at fair value through profit or loss or other comprehensive income on initial recognition,

assets of the Group pension schemes, all of which are measured at their fair value, and liabilities of the Group pension schemes which are

measured using the projected unit credit method. The directors believe the financial statements present a true and fair view. The financial

statements of the Group are presented in pounds sterling. The basis for including operations and transactions conducted in currencies

other than pounds sterling is provided in A1

Accompanying Information to the Financial Statements on page 271 .

Use of estimates and judgements

The preparation of financial statements conforming with adopted IFRS requires the use of certain accounting estimates. It also requires

management to exercise judgement in the process of applying the accounting policies. The areas involving a higher level of judgement or

estimation are summarised at pages 209 to 211

Changes to presentation and prior year adjustments

The prior year comparatives at 31 March 2023 have been restated following the adoption of IFRS 17 ‘Insurance Contracts’ (‘IFRS 17’) and the

amendment to IAS 12 ‘Deferred Tax relating to Assets and Liabilities arising from a Single Transaction’ (‘IAS 12’), as disclosed in the section

below 2.1.

Segments

In accordance with the requirements of IFRS 8 ‘Operating Segments’ the Group has aligned its segmental disclosures with its revised

internal reporting following changes to the Group’s structure and operations. These segments are used internally by the Group Executive

Committee in order to assess operating performance and to make decisions on how to allocate capital. Consequently, the segmental

results reported in the Group’s operating segments have been restated with effect from 1 April 2022. During the year to 31 March 2024,

SSE Renewables assumed responsibility for the development, delivery and operation of battery storage and solar assets in Great Britain

from SSE Enterprise (formerly Distributed Energy), aligning that activity with its international operations. In addition, the Building Energy

Management Systems (‘BEMS’) activity has been assumed by SSE Business Energy. Accordingly, the result from the Group’s battery and

solar business and BEMS will now be reported within SSE Renewables and Energy Customers Solutions respectively. Comparative

segmental information in note 5 has been re-presented to reflect the change to these segments. The impacts of the restatements are a

decrease to the adjusted operating profit of SSE Renewables (2023: £18.2m), a decrease to the adjusted operating profit of SSE Business

Energy (2023: £2.2m) and a decrease to the adjusted operating loss of SSE Enterprise (2023: £20.4m). Additionally, adjusted capital

expenditure has been re-presented with an increase to SSE Renewables (2023: £74.0m), an increase to SSE Business Energy (2023: £0.4m)

and a decrease to SSE Enterprise (2023: £74.4m). Revenue has been re-presented with an increase to SSE Business Energy (2023: £46.0m)

and a decrease to SSE Enterprise (2023: £46.0m). Finally, note that there were two changes to the names of segments in the year: 1)

Distributed Energy was renamed SSE Enterprise and 2) EPMI was renamed SSE Energy Markets.

Derivative financial liabilities prior year adjustment

A prior year adjustment has been made to reflect the restatement of derivative financial liabilities as a result of an incorrect classification

split in the prior year. The adjustment has been to present non-current derivative financial liabilities as £243.3m (previously £1,021.0m) and

current derivative financial liabilities as £1,021.0m (previously £243.3m). This adjustment has no impact on retained earnings, net assets or

adjusted performance measures of the Group, at any reporting date.

Investments presentation change

In the current year the classification of an investment of £24.1m has been reassessed and reclassified from ‘Other investments’ to ‘Equity

investments in joint ventures and associates’. The investment has been recognised as an associate reflecting the Group’s level of ownership

and influence over the investee; comparative amounts have not been re-presented.

Changes to estimates

On 31 March 2024, the Group’s Thermal business unit reviewed the useful economic life of the Peterhead, Keadby and Medway CCGT

assets and extended their useful lives to 2030 following the award of capacity mechanism contracts. The change in useful economic life

had no impact on the depreciation charge for the year ended 31 March 2024, but will reduce the depreciation charge for the year ending

31 March 2025 by £16.4m.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024

206 SSE plc Annual Report 2024

2. New accounting policies and reporting changes

The principal accounting policies applied in the preparation of these financial statements are set out below and in the A1 Accompanying

Information to the Financial Statements on pages 271 to 281 .

2.1. New standards, amendments and interpretations effective or adopted by the Group

On 1 April 2023, the Group adopted IFRS 17 and the amendments to IAS 12 on a modified retrospective basis from the earliest period

presented in these financial statements.

The Group provides guarantees in respect of certain activities of former subsidiaries and to certain current joint venture investments. Prior

to adoption of IFRS 17, these contracts were designated as insurance contracts under IFRS 4 ‘Insurance Contracts’ (‘IFRS 4’). Under IFRS 4,

existing accounting practices were grandfathered and the contracts were treated as contingent liabilities until such time as it became

probable the Group would be required to make payment to settle the obligation. The adoption of IFRS 17 from 1 April 2022 resulted in a

reassessment of these contracts and the Group elected to apply the valuation principles of IFRS 9 to these contracts. Adoption resulted

in the recognition of financial guarantee liabilities of £54.9m; a £22.7m increase in equity investments in joint ventures and associates;

and a £32.2m adjustment to retained earnings. On 1 September 2022, the Group acquired a 50% joint venture investment in Triton Power

Holdings Limited (‘Triton’) and provided parent company guarantees to Saltend Cogeneration Company Limited, a subsidiary of Triton. In

the comparative year to 31 March 2023, the Group has therefore recognised a further £16.0m increase to the Group’s financial guarantee

liabilities to reflect this guarantee and a £16.0m increase to the Group’s equity investment in Triton.

During the current year to 31 March 2024, the Group recognised a net decrease in financial guarantee liabilities of £31.4m, a reduction in

the value of its joint venture investments of £6.9m and a settlement of £12.0m resulting in a net income statement credit of £12.5m, of

which £5.1m has been treated as exceptional. During the six month period to 30 September 2023, the Group recognised an exceptional

expense of £50.5m in relation to guarantees provided to its former subsidiary Enerveo Limited. During the second half of the financial year

the Group completed the reacquisition of Enerveo and reversed the entries arising from the adoption of IFRS 17 that eliminate on

consolidation (see note 7 for further details).

The Group has identified that IFRS 17 impacts the results of its captive insurance subsidiary as it issues insurance contracts, however only

the subsidiary’s reinsurance contracts do not eliminate on consolidation. The accounting for these contracts under IFRS 17 is immaterial to

the Group’s consolidated financial statements.

The adoption of the amendments to IAS 12 resulted in an increase of £50.1m (2023: £45.5m) to the Group’s gross deferred tax assets and

gross deferred tax liabilities recognised in relation to the Group’s decommissioning obligations and a reclassification of £79.5m of gross

deferred tax assets. Adoption had no impact on retained earnings or profits recognised in presented periods.

In the year, the Group also adopted the amendments to:

– IAS 1 ‘Presentation of Financial Statements’ and IFRS Practice Statement 2 ‘Making Materiality Judgements’ in relation to disclosure of

accounting policies;

– IAS 8 ‘Accounting Policies, Changes in Accounting Estimates and Errors’ in relation to the definition of accounting estimates; and

– Pillar Two Model Rules (Amendments to IAS 12) as issued on 23 May 2023, was substantively enacted in the UK from 20 June 2023.

The amendments to IAS 12 introduce a temporary mandatory relief from accounting for deferred tax that arises from legislation

implementing OECD Pillar Two. SSE has applied the exception to recognising and disclosing information about deferred tax assets and

liabilities related to Pillar Two income taxes.

Adoption of these other amendments had no material impact on these Financial Statements. There were no other standards, amendments

to standards or interpretations relevant to the Group’s operations which were adopted during the year.

2.2. New standards, amendments and interpretations issued, but not yet adopted by the Group

On 9 April 2024, subsequent to the balance sheet date, the IASB issued IFRS 18 ‘Presentation and Disclosure in Financial Statements’.

The Group will assess the expected impact of the adoption of the standard during the forthcoming year. A number of other standards,

amendments and interpretations have been issued but not yet adopted by the Group within these financial statements, because application

is not yet mandatory or because UK adoption remains outstanding at the date the financial statements were authorised for issue. These

amendments are not anticipated to have a material impact on the Group’s consolidated financial statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

207SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

3. Adjusted accounting measures

The Group applies the use of adjusted accounting measures or alternative performance measures (‘APMs’) throughout the Annual Report

and Financial Statements. These measures enable the Directors to present the underlying performance of the Group and its segments to

the users of the statements in a consistent and meaningful manner. The adjustments applied and certain terms such as ‘adjusted operating

profit’, ‘adjusted earnings per share’, ‘adjusted EBITDA’, ‘adjusted investment and capital expenditure’, ‘adjusted investment, capital and

acquisition expenditure’ and ‘adjusted net debt and hybrid capital’ that are not defined under IFRS and are explained in more detail below.

In addition, the section ‘Alternative Performance Measures’ at page 190 provides further context and explanation of these terms.

3.1. Adjusted measures

The Directors assess the performance of the Group and its reportable segments based on ‘adjusted measures’. These measures are used

for internal performance management and are believed to be appropriate for explaining underlying performance to users of the accounts.

These measures are also deemed to be the most useful for ordinary shareholders of the Company and for other stakeholders.

The performance of the reportable segments is reported based on adjusted profit before interest and tax (‘adjusted operating profit’). This is

reconciled to reported profit before interest and tax by adding back exceptional items and certain re-measurements (see note 3.2 below),

depreciation and amortisation expense on fair value uplifts, the share of operating profit attributable to non-controlling interests,

adjustments to the retained Gas Production decommissioning provision and after the removal of interest and taxation on profits from

equity-accounted joint ventures and associates.

The performance of the Group is reported based on adjusted profit before tax which excludes exceptional items and certain re-

measurements (see note 3.2 below), depreciation and amortisation expense on fair value uplifts, the share of profit before tax attributable

to non-controlling interests, the net interest costs associated with defined benefit schemes, adjustments to the retained Gas Production

decommissioning provision and taxation on profits from equity-accounted joint ventures and associates. The interest charges or credits on

defined benefit schemes removed are non-cash and are subject to variation based on actuarial valuations of scheme liabilities.

The Group also uses adjusted earnings before interest, taxation, depreciation and amortisation (‘adjusted EBITDA’) as an alternative

operating performance measure which acts as a management proxy for cash generated from operating activities. This does not take into

account the rights and obligations that SSE has in relation to its equity-accounted joint ventures and associates. This measure excludes

exceptional items and certain re-measurements (see note 3.2 below), the depreciation charged on fair value uplifts, the share of EBITDA

attributable to non-controlling interests, adjustments to the retained Gas Production decommissioning provision, the net interest costs

associated with defined benefit schemes, depreciation and amortisation from equity-accounted joint ventures and associates and interest

and taxation on profits from equity-accounted joint ventures and associates. For the purpose of calculating the ‘Net Debt to EBITDA’ metric

referred at page 63

, ‘adjusted EBITDA’ is further adjusted to remove the proportion of adjusted EBITDA from equity-accounted joint

ventures relating to off-balance sheet debt (see note 5.1 (v)).

The Group’s key performance measure is adjusted earnings per share (EPS), which is based on basic earnings per share before exceptional

items and certain re-measurements (see note 3.2 below), depreciation and amortisation on fair value uplifts, adjustments to the retained

Gas Production decommissioning provision, the net interest costs/income associated with defined benefit schemes and after the removal

of deferred taxation and other taxation items. Deferred taxation is excluded from the Group’s adjusted EPS because of the Group’s

significant ongoing capital investment programme, which means that the deferred tax is unlikely to reverse. Adjusted profit after tax is

presented on a basis consistent with adjusted EPS except for the non-inclusion of payments to holders of hybrid equity.

The financial statements also include an ‘adjusted net debt and hybrid capital’ measure. This presents financing information on the basis

used for internal liquidity risk management. This measure excludes obligations due under lease arrangements and the share of net debt

attributable to non-controlling interests, and includes cash held and posted as collateral on commodity trading exchanges, and other short

term loans. The measure represents the capital owed to investors, lenders and equity holders other than the ordinary shareholders. As with

‘adjusted earnings per share’, this measure is considered to be of relevance to the ordinary shareholders of the Group as well as other

stakeholders and interested parties.

Finally, the financial statements include an ’adjusted investment and capital expenditure’ and an ‘adjusted investment, capital and

acquisition expenditure’ measure. These metrics represent the capital invested by the Group in projects that are anticipated to provide a

return on investment over future years or which otherwise support Group operations and are consistent with internally applied metrics.

They therefore include capital additions to property, plant and equipment and intangible assets and also the Group’s direct funding of joint

venture and associates capital projects. The Group has considered it appropriate to report these values both internally and externally in this

manner due to its use of equity-accounted investment vehicles to grow the Group’s asset base and to highlight where the Group is

providing funding to the vehicle through either loans or equity. The Group does not include project funded capital additions in these

metrics, nor does it include other capital invested in joint ventures and associates. Where initial capital funding of an equity accounted joint

venture is refunded, these refunds are deducted from the metrics in the year the refund is received. In addition, the Group excludes from

this metric additions to its property, plant and equipment funded by Customer Contributions and additions to intangible assets associated

with Allowances and Certificates. The Group also excludes the share of investment and capital expenditure attributable to non-controlling

interests in controlled but not wholly owned subsidiaries, disposed or impaired additions and refinancing proceeds and refunds. The

‘adjusted investment, capital and acquisition expenditure’ measure also includes cash consideration paid by the Group in business

combinations which contribute to growth of the Group’s capital asset base and is considered to be relevant metric in context of the

Group’s Net Zero Acceleration Programme Plus. As with ‘adjusted earnings per share’, these measures are considered to be of relevance to

management and to the ordinary shareholders of the Group as well as to other stakeholders and interested parties.

Reconciliations from reported measures to adjusted measures along with further description of the rationale for those adjustments are

included in the “Adjusted Performance Measures” section at pages 190 to 197

APM

Where the Group have referred to an adjusted performance measure in the financial statements the following sign is presented to

denote this.

208 SSE plc Annual Report 2024

3. Adjusted accounting measures continued

3.2. Exceptional items and certain re-measurements

Exceptional items are those charges or credits that are considered unusual by nature and/or scale and of such significance that separate

disclosure is required for the financial statements to be properly understood. The trigger points for recognition of items as exceptional

items will tend to be non-recurring, although exceptional charges (or credits) may impact the same asset class or segment over time.

Examples of items that may be considered exceptional include material asset, investment or business impairment charges; reversals of

historic exceptional impairments; certain business restructuring and reorganisation costs; significant realised gains or losses on disposal;

unrealised fair value adjustments on acquisition or disposals; and provisions in relation to significant disputes and claims.

The Group operates a policy framework for establishing whether items should be considered to be exceptional. This framework, which is

reviewed annually, is based on the materiality of the item, by reference to the Group’s key performance measure of adjusted earnings per

share. This framework estimates that any qualifying item greater than £40.0m (2023: £40.0m) will be considered exceptional, with a

potentially lower threshold applied to strategic restructuring of activities or discontinued operations, which will respectively be considered

on a case by case basis or will always be treated as exceptional. The only exception to this threshold is for gains or losses on disposal, or

divestment of early-stage SSE Renewables international or offshore wind farm development projects within SSE Renewables, which are

considered non-exceptional in line with the Group’s strategy to generate recurring gains from developer divestments. Where a gain arises

on a non-cash transaction, the gain is treated as exceptional.

Certain re-measurements are re-measurements arising on certain commodity, interest rate and currency contracts which are accounted

for as held for trading or as fair value hedges in accordance with the Group’s policy for such financial instruments; remeasurements on

stocks of commodities held at the balance sheet date; or movements in fair valuation of contracts for difference not designated as

government grants. The amount recorded in the adjusted results for these contracts is the amount settled in the year as disclosed in

note 24.1.

This excludes commodity contracts not treated as financial instruments under IFRS 9 where the contracts are held for the Group’s own use

requirements; the fair value of these contracts is not recorded and the value associated with the contract is not recognised until the

underlying commodity is delivered.

The impact of changes in Corporation Tax rates on deferred tax balances are also included within certain remeasurements.

3.3. Other additional disclosures

As permitted by IAS 1 ‘Presentation of financial statements’, the Group’s income statement discloses additional information in respect of

joint ventures and associates, exceptional items and certain re-measurements to aid understanding of the Group’s financial performance

and to present results clearly and consistently.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

209SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

4. Accounting judgements and estimation uncertainty

In the process of applying the Group’s accounting policies, management is necessarily required to make judgements and estimates that will

have a significant effect on the amounts recognised in the financial statements. Changes in the assumptions underlying the estimates

could result in a significant impact to the financial statements. The Group’s key accounting judgement and estimation areas are noted

below, with the most significant financial judgement areas as specifically considered by the Audit Committee highlighted separately.

The Group has made no changes to its significant financial judgement areas during the year. In the year ended 31 March 2024 the Group

completed the implementation and migration of customers to a new billing system within the Group’s SSE Business Energy segment. The

migration of customers late in the financial year has resulted in the level of judgement applied in the SSE Business Energy revenue accrual

increasing year on year (see 4.1 (iii) below).

4.1. Significant financial judgements and estimation uncertainties

The preparation of these financial statements has specifically considered the following significant financial judgements, some of which are

also areas of estimation uncertainty as noted below.

i. Impairment testing and valuation of certain non-current assets – financial judgement and estimation uncertainty

The Group reviews the carrying amounts of its goodwill, other intangible assets, specific property, plant and equipment and investment

assets to determine whether any impairments or reversal of impairments to the carrying value of those assets requires to be recorded.

Where an indicator of impairment or impairment reversal exists, the recoverable amount of those assets is determined by reference to

value in use calculations or fair value less cost to sell assessments, if more appropriate. As well as its goodwill balances, the specific assets

under review in the year ended 31 March 2024 are intangible development assets and specific property, plant and equipment assets related

to gas storage and thermal power generation. In addition, the Group performed an impairment review over the carrying value of its equity

investments in Neos Networks Limited and Triton Power Holdings Limited.

In conducting its reviews, the Group makes judgements and estimates in considering both the level of cash generating unit (CGU) at which

common assets such as goodwill are assessed against, as well as the estimates and assumptions behind the calculation of recoverable

amount of the respective assets or CGUs.

Changes to the estimates and assumptions on factors such as regulation and legislation changes (including the Electricity Generator Levy

and climate change related regulation), power, gas, carbon and other commodity prices, volatility of gas prices, plant running regimes and

load factors, discount rates and other inputs could impact the assessed recoverable value of assets and CGUs and consequently impact the

Group’s income statement and balance sheet.

Further detail of the calculation basis and key assumptions used in the impairment review, the resulting impairment and the sensitivity of

this assessment to key assumptions is disclosed at note 15. Detail on the accounting policies applied is included in the Accompanying

Information section A1

ii. Retirement benefit obligations – estimation uncertainty

The assumptions in relation to the cost of providing post-retirement benefits during the year are based on the Group’s best estimates and

are set after consultation with qualified actuaries. While these assumptions are believed to be appropriate, a change in these assumptions

would impact the level of the retirement benefit obligation recorded and the cost to the Group of administering the schemes.

Further detail of the calculation basis and key assumptions used, the resulting movements in obligations and the sensitivity of key

assumptions to the obligation is disclosed at note 23.

iii. Revenue recognition – Customers unbilled supply of energy – estimation uncertainty

Revenue from energy supply activities undertaken by the SSE Business Energy and SSE Airtricity businesses includes an estimate of the

value of electricity or gas supplied to customers between the date of the last meter reading and the year end. This estimation comprises

both billed revenue and unbilled revenue and is calculated based on applying the tariffs and contract rates applicable to customers against

aggregated estimated customer consumption, taking account of various factors including tariffs, consumption patterns, customer mix,

metering data, operational issues relating to the billings process and externally notified aggregated volumes supplied to customers from

national settlements bodies. During the year, the Group’s SSE Business Energy segment completed the implementation of a new billing

system which included the migration of customer accounts and balances. Due to the timing of the data migration, which occurred in the

second half of the financial year for the majority of customers, the level of unbilled sales and hence the level of judgement applied in

determining the sales accrual for these customers is higher than in previous years. The Group has recognised a provision against this

accrual to reflect that customer billing delays may result in poorer collection performance.

In recent years the impact of government-backed customer support schemes has been material to the judgement applied. However, in the

current year the level of judgement required is significantly less material. The accounting policy for customer support schemes and the

balances claimed from government is explained at A1.2

This unbilled estimation is subject to an internal corroboration process which compares calculated unbilled volumes to a theoretical

‘perfect billing’ benchmark measure of unbilled volumes (in GWh and millions of therms) derived from historical consumption patterns and

aggregated metering data used in industry reconciliation processes. Furthermore, unbilled revenue is compared to billings in the period

between the balance sheet date and the finalisation of the financial statements which has provided evidence of a catch-up of post

implementation billings and hence support to the accrual recognised.

Given the requirement of management to apply judgement particularly in the current year in relation to the impact of the data and process

migration referred to above, unbilled revenue is considered a significant estimate made by management in preparing the financial

statements. A change in the assumptions underpinning the unbilled calculation would have an impact on the amount of revenue

recognised in any given period. The sensitivity associated with this judgement factor is disclosed at note 18.

210 SSE plc Annual Report 2024

4. Accounting judgements and estimation uncertainty continued

4.1. Significant financial judgements and estimation uncertainties continued

iv. Valuation of other receivables – financial judgement and estimation uncertainty

The Group holds a £100m loan note due from Ovo Energy Limited following the disposal of SSE Energy Services on 15 January 2020.

The loan is repayable in full by 31 December 2029, carries interest at 13.25% and is presented cumulative of accrued interest payments,

discounted at 13.25%. At 31 March 2024, the carrying value (net of expected credit loss provision of £1.6m (2023: £1.5m)) is £170.1m

(2023: £149.5m).

The Group has assessed recoverability of the loan note receivable and has recognised a provision for expected credit loss in accordance

with the requirements of IFRS 9. The Group’s assessment of the recoverability of the loan note is considered a significant financial

judgement. The Group has taken appropriate steps to assess all available information in respect of the recoverability of the loan note.

Procedures included reviewing recent financial information of Ovo Energy Limited, including the 31 December 2022 statutory financial

statements; and discussions with Ovo management. While the carrying value is considered to be appropriate, changes in economic

conditions could lead to a change in the expected credit loss incurred by the Group in future periods.

v. Impact of climate change and the transition to net zero – financial judgement and estimation uncertainty

Climate change and the transition to net zero have been considered in the preparation of these financial statements. Where relevant

assumptions have been applied that are consistent to a Paris-aligned 1.5°C 2050 net zero pathway. The Group has a clearly articulated

Net Zero Acceleration Programme Plus (‘NZAP Plus’) to lead in the UK’s transition to net zero and aligns its investment plans and business

activities to that strategy. These plans are supported by the Group’s Green Bond framework under which the Group’s sixth and seventh

green bonds were issued during the year (see note 21). The proceeds of these green bonds were allocated to fund Renewable wind farm

and Transmission network projects.

The impact of future climate change regulation could have a material impact on the currently reported amounts of the Group’s assets and

liabilities. In preparing these financial statements, the following climate change related risks have been considered:

Valuation of property, plant and equipment, and impairment assessment of goodwill

In the medium term, the transition to net zero may result in regulation restricting electricity generation from unabated gas fired power

stations. The Group’s view is that flexible generation capacity, such as the Group’s fleet of CCGT power stations, will be an essential part

of the net zero transition in order to provide security of supply to a market increasingly dependent upon renewable sources, which are

inherently intermittent. The majority of the Group’s GB CCGT fleet is nearing the end of its economic life and it is not currently expected

that regulation to require abatement would be introduced before the planned closure of most of those power stations. Of the net book

value held at 31 March 2024, only four assets are forecast to continue to operate beyond 2030 being: Great Island; Keadby 2; Marchwood

(which is operated by SSE under a lease); and Saltend Power Station within the Triton joint venture. The Group has assessed that the useful

economic lives of Peterhead, Keadby and Medway power stations now extend to March 2030, and these changes in end of life assumptions

have been reflected in the annual impairment process. The Group’s view is that Great Island will continue to be essential to providing

security of supply in the Irish electricity market. Keadby 2 commenced commercial operation on 15 March 2023 and has an efficiency of

around 63% making it the most efficient plant of its type in the UK and Europe. Work is also underway to explore how to decarbonise

Keadby 2 further with the potential to blend hydrogen into the plant. Marchwood is a 50% equity accounted joint venture and is considered

one of the most efficient CCGTs in the UK. Saltend was acquired as part of Triton Power 50% equity accounted joint venture and supports

the long-term decarbonisation of the UK’s power system, and also contributes to security of supply and grid stability. Initial steps are

underway at Saltend, targeting abatement by 2027 through blending up to 30% of low-carbon hydrogen. Therefore, the Group considers

that other assets operating in the market would be more likely to close before Keadby 2, Marchwood and Saltend and the plants will

continue to be required to balance the UK electricity market beyond 2030. As a result, the useful economic lives of these assets have not

been shortened when preparing the 31 March 2024 financial statements. The Group assesses the useful economic life of its property, plant

and equipment assets annually.

A significant increase in renewable generation capacity in the Group’s core markets in the UK and Ireland could potentially result in an

oversupply of renewable electricity at a point in the future, which would lead to a consequential decrease in the power price achievable for

the Group’s wind generation assets. The Group has not assessed that this constitutes an indicator of impairment at 31 March 2024 as the

Group’s baseline investment case models assume a centrally approved volume of new build in these markets over the life of the existing

assets. The Group’s policy is to test the goodwill balances associated with its wind generation portfolio for impairment on an annual basis

in line with the requirements of IAS 36 ‘Impairment of Assets’. Through this impairment assessment (see note 15.1), a sensitivity to power

price, which may arise in a market with significant new build, was modelled. This scenario indicated that, despite a modelled 10% reduction

in power price, there remained significant headroom on the carrying value in the Group’s wind generating assets.

Changes to weather patterns resulting from global warming have also been considered as a potential risk to future returns from the

Group’s wind and hydro assets. Changes to weather patterns could result in calmer, drier weather patterns, which would reduce volumes

achievable for the Group’s wind and hydro generation assets (although noting that this would likely lead to capacity constraints and hence

higher prices). This has not been assessed as an indicator of impairment for operating assets in the UK and Ireland at 31 March 2024,

as there is no currently observable evidence to support that scenario directly. The Group has performed a sensitivity to its impairment

modelling and has assessed that a 15% reduction in achievable volume would result in significant headroom on the carrying value of the UK

and Ireland assets at 31 March 2024 (see note 15.1). The TCFD physical risk scenarios modelled a 4% to 8% change in average mean wind

speeds in the longer term across the wind portfolio, consistent with the impairment sensitivity performed.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

211SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Valuations of decommissioning provisions

The Group holds decommissioning provisions for its Renewable and Thermal generation assets and has retained a 60% share for the

decommissioning of its disposed Gas Production business. As noted above, the Group’s view at 31 March 2024 is that climate change

regulation will not bring forward the closure dates of its CCGT fleet, many of which are expected to close before 2030. Similarly, it is

expected that fundamental changes to weather patterns, or the impact of new wind generation capacity will not bring forward the

decommissioning of the Group’s wind farm portfolio.

The discounted share of the Gas Production provision is £219.7m (2023: £201.4m). At 31 March 2024, the impact of discounting of this

retained provision is £68.3m (2023: £64.5m), which is expected to be incurred across the period to 31 March 2040. If the decommissioning

activity was accelerated due to changes in legislation, the costs of unwinding the discounting of the provision would be recognised earlier.

Defined Benefit scheme assets

The Group holds defined benefit pension scheme assets at 31 March 2024 which could be impacted by climate-related risks. The Trustees

of the schemes have a long term investment strategy that seeks to reduce investment risk as and when appropriate and takes into

consideration the impact of climate-related risk.

Going concern and viability statement

The implications of near term climate-related risks have been considered in the Group’s going concern assessment and viability statement

assessment.

4.2. Accounting judgements and estimation uncertainties – changes from prior year

On 31 March 2024, the Group’s Thermal business unit reviewed the useful economic life of the Peterhead, Keadby and Medway CCGT

assets and extended their useful lives to 2030 following the award of capacity mechanism contracts. The change in useful economic life

has been applied prospectively and had no impact on the results for the year ended 31 March 2024. The depreciation charge for the year

ending 31 March 2025 will be reduced by £16.4m. There were no other changes to accounting judgements and estimation uncertainties

during the year.

4.3. Other areas of estimation uncertainty

i. Tax provisioning

In the financial statements to 31 March 2024, the Group has no provision for uncertain tax positions included in current tax liabilities

(2023: £nil).

The Group applies IFRIC 23 ‘Uncertainty over Income Tax Treatments’ in respect of uncertain tax positions. Where management makes a

judgement that an outflow of funds is probable, and a reliable estimate of the dispute can be made, provision is made for the best estimate

of the most likely liability.

In estimating any such liability, the Group applies a risk-based approach, taking into account the specific circumstances of each dispute

based on management’s interpretation of tax law and supported, where appropriate, by discussion and analysis by external tax advisors.

These estimates are inherently judgemental and could change substantially over time as disputes progress and new facts emerge.

Provisions are reviewed on an ongoing basis, however, the resolution of tax issues can take a considerable period of time to conclude

and it is possible that amounts ultimately paid will be different from the amounts provided.

ii. Decommissioning costs

The calculation of the Group’s decommissioning provisions involves the estimation of quantum and timing of cash flows to settle the

obligation. The Group engages independent valuation experts to estimate the cost of decommissioning its Renewable, Thermal and Gas

Storage assets every three years based on current technology and prices. The last independent assessment for the majority of the Group’s

Renewable and Thermal generation assets was performed in the year to 31 March 2022. The last formal assessment for Gas Storage assets

was performed in the year to 31 March 2023. Retained decommissioning costs in relation to the disposed Gas Production business are

periodically agreed with the field operators and reflect the latest expected economic production lives of the fields.

The dates for settlement of future decommissioning costs are uncertain, particularly for the disposed Gas Production business where

reassessment of gas and liquids reserves and fluctuations in commodity prices can lengthen or shorten the field life.

Further detail on the assumptions applied, including expected decommissioning dates, and movement in decommissioning costs during

the year are disclosed at note 20.

iii. Valuation of SSE Business Energy trade receivables

During the financial year, the Group’s SSE Business Energy segment completed the implementation of a new billing system which included

the migration of customer accounts and balances. The migration has resulted in delays to billings (as noted in note 4.1(iii) above) and delays

to collection activities, meaning that aged debt balances and provisions recognised against these balances are higher than would normally

be expected. The Group’s processes for recognising bad debt provisions are based on historic collection performance adjusted for

expected future improvement or decline against this performance. In the current year, an estimate of expected deterioration in debt

collection due to billing and collection delays has been included within the recognised provision. Further details on the Group’s credit risk

provisions are provided within note A6.

212 SSE plc Annual Report 2024

5. Segmental information

The changes to the Group’s segments in the year are explained in note 1.2 and includes the realignment of the activities of the Distributed

Energy (now SSE Enterprise) business. Comparative information has been re-presented to reflect the change to these segments. The

Group’s “Corporate unallocated” segment contains the Group’s residual corporate central costs which are not allocated to individual

segments, and includes the contribution from the Group’s joint venture investment in Neos Networks Limited. Any impact of the

acquisition of Enerveo Limited on 22 March 2024 has been recognised within “Corporate unallocated”.

The types of products and services from which each reportable segment derives its revenues are:

Business Area Reported Segments Description

Continuing operations
Transmission	SSEN	The economically regulated high voltage transmission of electricity from generating plant to the
	Transmission	distribution network in the North of Scotland. Revenue earned from constructing, maintaining and
		renovating our transmission network is determined in accordance with the regulatory licence, based on an
		Ofgem approved revenue model and is recognised as charged to National Grid. The revenue earned from
		other transmission services such as generator plant connections is recognised in line with delivery of that
		service over the expected contractual period and at the contracted rate. On 25 November 2022 the Group
		sold a 25.0% non-controlling interest in this business to the Ontario Teachers’ Pension Plan.
Distribution	SSEN	The economically regulated lower voltage distribution of electricity to customer premises in the North of
	Distribution	Scotland and the South of England. Revenue earned from delivery of electricity supply to customers is
		recognised based on the volume of electricity distributed to those customers and the set customer tariff.
		The revenue earned from other distribution services such as domestic customer connections is
		recognised in line with delivery of that service over the expected contractual period and at the contracted
		rate.
Renewables	SSE	The generation of electricity from renewable sources, such as onshore and offshore windfarms and run of
	Renewables	river and pumped storage hydro assets in the UK and Ireland and the development of similar wind assets in
		Japan and Southern Europe and the development of wind, solar and battery opportunities. Revenue from
		physical generation of electricity in Great Britain is sold to SSE Energy Markets and in Ireland is sold to SSE
		Airtricity and is recognised as generated, based on the contracted or spot price at the time of delivery.
		Revenue from national support schemes (such as Renewable Obligation Certificates or the Capacity
		Market in Great Britain or REFIT in Ireland) may either be recognised in line with electricity being physically
		generated or over the contractual period, depending on the underlying performance obligation.
		During the year ended 31 March 2024, Renewables has taken responsibility for the development, delivery
		and operation for battery storage and solar assets in Great Britain from SSE Enterprise, aligning that activity
		with its international operations.
Thermal	SSE	The generation of electricity from thermal plants including CCGTs and the Group’s interests in multifuel
	Thermal	assets in the UK and Ireland. Revenue from physical generation of electricity in Great Britain and Ireland is
		sold to SSE Energy Markets and is recognised as generated, based on the contract or spot price at the time
		of delivery. Revenue from national support schemes (such as the Capacity Market) and ancillary
		generation services may either be recognised in line with electricity being physically generated or over the
		contractual period, depending on the underlying performance obligation.
	Gas Storage	The operation of gas storage facilities in Great Britain, utilising capacity to optimise trading opportunity
		associated with the assets. Contribution arising from trading activities is recognised as realised based on
		the executed trades or withdrawal of gas from caverns.
Energy	SSE Business	The supply of electricity and gas to business customers in Great Britain and smart buildings (BEMS) activity.
Customer	Energy	Revenue earned from the supply of energy is recognised in line with the volume delivered to the customer,
Solutions		based on actual and estimated volumes, and reflecting the applicable customer tariff after deductions or
		discounts.
	SSE Airtricity	The supply of electricity, gas and energy related services to residential and business customers in the
		Republic of Ireland and Northern Ireland. Revenue earned from the supply of energy is recognised in line
		with the volume delivered to the customer, based on actual and estimated volumes, and reflecting the
		applicable customer tariff after deductions or discounts. Revenue earned from energy related services
		may either be recognised over the expected contractual period or following performance of the service,
		depending on the underlying performance obligation.
SSE	SSE Enterprise	The provision of low carbon energy solutions to customers; behind-the-meter solar and battery solutions,
Enterprise		EV charging activities, private electric networks and heat and cooling networks. As noted above, during
		the year, the front of the meter battery storage and solar asset activity in Great Britain was transferred to
		SSE Renewables and smart buildings (BEMS) activity was transferred to SSE Business Energy.
SSE Energy	SSE Energy	The provision of a route to market for the Group’s Renewable and Thermal generation businesses and
Markets	Markets	commodity procurement for the Group’s energy supply businesses in line with the Group’s stated hedging
		policies. Revenue from physical sales of electricity, gas and other commodities produced by SSE is
		recognised as supplied to either the national settlements body or the customer, based on either the spot
		price at the time of delivery or trade price where that trade is eligible for “own use” designation. The sale of
		commodity optimisation trades is presented net in cost of sales alongside purchase commodity
		optimisation trades.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

213SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

As referred to in note 3, the internal measure of profit used by the Board is ‘adjusted profit before interest and tax’ or ‘adjusted operating

profit’ which is arrived at before exceptional items, the impact of financial instruments measured under IFRS 9, share of profits attributable

to non-controlling interests, the net interest costs/income associated with defined benefit pension schemes, adjustments to the retained

Gas Production decommissioning, the impact of depreciation on fair value uplifts and after the removal of taxation and interest on profits

from joint ventures and associates.

Analysis of revenue, operating profit, capital expenditure and earnings before interest, taxation, depreciation and amortisation (‘EBITDA’) by

segment is provided on the following pages. All revenue and profit before taxation arise from operations within the UK and Ireland.

5.1. Segmental information disclosure

i. Revenue by segment

(i)

				Reported		Segment
	Reported	Inter-segment	Segment	revenue	Inter-segment	revenue
	revenue	revenue	revenue	(restated*)	revenue	(restated*)
	2024	2024	2024	2023	2023	2023
	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	885.2	–	885.2	656.1	–	656.1
SSEN Distribution	1,004.0	45.9	1,049.9	1,102.7	81.0	1,183.7
SSE Renewables	335.5	876.3	1,211.8	334.8	602.7	937. 5
SSE Thermal	571.0	3,123.9	3,694.9	740.4	3,863.8	4,604.2
Gas storage	11.2	2,948.4	2,959.6	12.2	5,147. 5	5,159.7
Energy Customer Solutions
SSE Business Energy	3,183.2	48.5	3,231.7	3,359.5	59.4	3,418.9
SSE Airtricity	2,021.2	170.0	2,191.2	1,776.9	233.1	2,010.0
SSE Enterprise	91.9	23.6	115.5	93.1	20.1	113.2
SSE Energy Markets:
Gross trading	15,074.3	7,951.4	23,025.7	24,700.6	11,972.4	36,673.0
Optimisation trades	(12,785.1)	(2,674.2)	(15,459.3)	(20,351.8)	(937.3)	(21,289.1)
SSE Energy Markets	2,289.2	5, 27 7.2	7,566.4	4,348.8	11,035.1	15,383.9
Corporate unallocated	64.8	250.9	315.7	66.2	232.1	298.3
Total SSE Group	10,457.2	12,764.7	23,221.9	12,490.7	21,274.8	33,765.5

(i)

(i) Significant inter-segment revenue is derived from the sale of power and stored gas from SSE Renewables, SSE Thermal, Gas Storage and SSE Enterprise to SSE Energy Markets;

use of system income received by SSEN Distribution from SSE Business Energy; SSE Business Energy provides internal heat and light power supplies to other Group companies;

SSE Energy Markets provides power, gas and other commodities to SSE Business Energy and SSE Airtricity; and Corporate unallocated (SSE Services and related parties) provides

corporate and infrastructure services to all segments as well as third parties. All are provided at arm’s length.

* The comparative segment revenue has been restated. See note 1.2.

214 SSE plc Annual Report 2024

5. Segmental information continued

5.1. Segmental information disclosure continued

i. Revenue by segment continued

Disaggregation of revenue

Revenue from contracts with customers can be disaggregated by reported segment, by major service lines and by timing of revenue

recognition as follows:

							Revenue from contracts with customers
							Goods or services transferred
				Goods or services transferred over time			at a point in time
								Total
								revenue
		Supply of						from
	Use of	energy and	Construction	Other				contracts	Other
	electricity	ancillary	related	contracted	Physical		Other	with	contract
	networks	services	services	services	energy	Gas storage	revenue	customers	revenue	Total
	2024	2024	2024	2024	2024	2024	2024	2024	2024	2024
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	854.1	–	–	18.8	–	–	12.3	885.2	–	885.2
SSEN Distribution	951.2	–	–	14.0	–	–	16.9	982.1	21.9	1,004.0
SSE Renewables	–	58.6	–	104.0	169.5	–	3.4	335.5	–	335.5
SSE Thermal	–	531.5	–	–	–	–	39.5	571.0	–	571.0
Gas Storage	–	–	–	–	–	11.2	–	11.2	–	11.2
Energy Customer Solutions
SSE Business Energy	–	3,135.4	–	–	–	–	47.8	3,183.2	–	3,183.2
SSE Airtricity	–	1,999.2	–	–	–	–	22.0	2,021.2	–	2,021.2
SSE Enterprise	18.6	30.7	4.7	–	–	–	32.1	86.1	5.8	91.9
SSE Energy Markets	–	–	–	–	2,136.5	–	152.7	2,289.2	–	2,289.2
Corporate unallocated	–	–	–	–	–	–	64.8	64.8	–	64.8
Total SSE Group	1,823.9	5,755.4	4.7	136.8	2,306.0	11.2	391.5	10,429.5	27.7	10,457. 2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

215SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

						(restated*)
					Revenue from contracts with customers
					Goods or services transferred
				Goods or services transferred over time			at a point in time
								Total
								revenue
		Supply of						from
	Use of	energy and	Construction	Other				contracts	Other
	electricity	ancillary	related	contracted	Gas	Physical	Other	with	contract
	networks	services	services	services	storage	energy	revenue	customers	revenue	Total
	2023	2023	2023	2023	2023	2023	2023	2023	2023	2023
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	634.0	–	–	20.4	–	–	1.7	656.1	–	656.1
SSEN Distribution	1,054.0	–	–	12.3	–	–	17.9	1,084.2	18.5	1,102.7
SSE Renewables	–	49.7	–	87. 5	–	184.3	13.3	334.8	–	334.8
SSE Thermal	–	736.9	–	–	–	–	3.5	740.4	–	740.4
Gas Storage	–	–	–	–	12.2	–	–	12.2	–	12.2
Energy Customer Solutions
SSE Business Energy	–	3,313.5	–	–	–	–	46.0	3,359.5	–	3,359.5
SSE Airtricity	–	1,756.7	–	–	–	–	20.2	1,776.9	–	1,776.9
SSE Enterprise	16.4	29.5	14.4	–	–	–	27.0	87. 3	5.8	93.1
SSE Energy Markets	–	–	–	–	–	4,158.7	190.1	4,348.8	–	4,348.8
Corporate unallocated	–	–	–	–	–	–	66.2	66.2	–	66.2
Total SSE Group	1,704.4	5,886.3	14.4	120.2	12.2	4,343.0	385.9	12,466.4	24.3	12,490.7

* The comparative disaggregated segment revenue has been restated. See note 1.2.

Included within trade and other receivables (note 18) is £663.7m (2023: £666.1m) of unbilled energy income. Included within trade and

other payables (note 19) is £253.6m (2023: £215.4m) of contract related liabilities. Contract related assets reflect the Group’s right to

consideration in exchange for goods or services that have transferred to the customer, and contract related liabilities reflect the Group’s

obligation to transfer future goods or services for which the Group has already received consideration. Contract related assets and

liabilities principally arose in the SSE Enterprise reporting segment with changes during the periods reflecting ongoing contract progress,

offset by cash receipts or customer invoicing.

The Group has not disclosed information related to the transaction price allocated to remaining performance obligations on the basis that

the Group’s contracts either have an original expected duration of less than one year, or permit the Group to recognise revenue as

invoiced.

Revenue by geographical location on continuing operations is as follows:

	2024	2023
	£m	£m
UK	8,797.6	10,899.8
Ireland	1,659.6	1,590.9
	10,457.2	12,490.7

216 SSE plc Annual Report 2024

5. Segmental information continued

5.1. Segmental information disclosure continued

ii. Operating profit/(loss) by segment

				2024
	Adjusted					Before
	operating profit		Joint Venture/	Adjustments to		exceptional	Exceptional
	reported to the	Depreciation	Associate	Gas Production	Non-	items and	items and
	Board	on fair	share of	decommissioning	controlling	certain re-	certain re-
	APM	value uplifts	interest and tax	provision	interests	measurements	measurements	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	419.3	–	–	–	139.8	559.1	–	559.1
SSEN Distribution	272.1	–	–	–	–	272.1	–	272.1
SSE Renewables	833.1	(19.0)	(145.7)	–	(0.7)	667.7	(37.4)	630.3
SSE Thermal	736.1	–	(13.1)	–	–	723.0	(78.6)	644.4
Gas Storage	82.8	–	–	–	–	82.8	(125.0)	(42.2)
Energy Customer Solutions
SSE Business Energy	95.8	–	–	–	–	95.8	–	95.8
SSE Airtricity	95.0	–	(0.5)	–	–	94.5	–	94.5
SSE Enterprise	(25.6)	–	–	–	–	(25.6)	–	(25.6)
SSE Energy Markets	38.9	–	–	–	–	38.9	551.1	590.0
Corporate
Corporate unallocated	(88.8)	–	–	(9.9)	–	(98.7)	4.6	(94.1)
Neos Networks	(32.3)	–	(10.2)	–	–	(42.5)	(73.6)	(116.1)
Total SSE Group	2,426.4	(19.0)	(169.5)	(9.9)	139.1	2,367.1	241.1	2,608.2

The adjusted operating profit of the Group is reported after removal of the Group’s share of interest, fair value movements on operating

derivatives, the depreciation charged on fair value uplifts and tax from joint ventures and associates, Gas Production decommissioning

costs, operating profit from non-controlling interests and after adjusting for exceptional items and certain re-measurements (note 7).

The Group’s share of operating profit from joint ventures and associates has been recognised in the SSE Renewables, SSE Thermal, SSE

Airtricity and Corporate segments.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

217SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

(ii) Operating profit/(loss) by segment

					2023 (restated*)
	Adjusted			Adjustments		Before
	operating profit			to Gas		exceptional	Exceptional
	reported to	Depreciation	JV/ Associate	Production	Non-	items and	items and
	the Board	on fair value	share of	decommissioning	controlling	certain re-	certain re-
	APM	uplifts	interest and tax	provision	interests	measurements	measurements	Total
	£m	£m	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	372.7	–	–	–	32.8	405.5	–	405.5
SSEN Distribution	382.4	–	–	–	–	382.4	–	382.4
SSE Renewables	561.8	(18.8)	(103.0)	–	(1.9)	438.1	(10.0)	428.1
SSE Thermal	1,031.9	(10.0)	(60.4)	–	–	961.5	128.0	1,089.5
Gas Storage	212.5	–	–	–	–	212.5	36.7	249.2
Energy Customer Solutions
SSE Business Energy	15.7	–	–	–	–	15.7	–	15.7
SSE Airtricity	5.6	–	(0.4)	–	–	5.2	–	5.2
SSE Enterprise	(7.0)	–	–	–	–	(7.0)	(6.1)	(13.1)
SSE Energy Markets	80.4	–	–	–	–	80.4	(2,706.4)	(2,626.0)
Corporate
Corporate unallocated	(87.0)	–	–	50.5	–	(36.5)	9.7	(26.8)
Neos Networks	(39.8)	–	(10.3)	–	–	(50.1)	(5.9)	(56.0)
Total SSE Group	2,529.2	(28.8)	(174.1)	50.5	30.9	2,407.7	(2,554.0)	(146.3)

* The comparative operating profit by segment information has been restated. See note 1.2.

218 SSE plc Annual Report 2024

5. Segmental information continued

5.1. Segmental information disclosure continued

iii. Capital and investment expenditure by segment

				Capital additions
		Capital additions	Capital additions	to property,
	Capital additions	to property,	to intangible	plant and
	to intangible	plant and	assets	equipment
	assets	equipment	2023	2023
	2024	2024	£m	£m
	£m	£m	(restated*)	(restated*)
Continuing operations
SSEN Transmission	12.8	784.7	7.2	536.6
SSEN Distribution	20.3	636.8	15.2	486.8
SSE Renewables	355.1	433.8	731.5	340.5
SSE Thermal	83.3	24.6	20.8	44.5
Gas Storage	–	0.8	–	6.3
Energy Customer Solutions
SSE Business Energy	43.7	–	38.9	0.4
SSE Airtricity	14.1	0.7	10.5	–
SSE Enterprise	26.4	32.4	16.2	37.0
SSE Energy Markets	723.4	–	809.9	–
Corporate unallocated	35.1	57.6	38.4	48.0
Total SSE Group	1,314.2	1,971.4	1,688.6	1,500.1
Increase in prepayments related to capital expenditure	–	215.1	–	6.8
Tarbert temporary generation additions	–	93.4	–	–
Decrease/(increase) in trade payables related to capital expenditure	2.5	(84.6)	(31.8)	132.2
Customer funded additions	–	(152.0)	–	(80.9)
Lease asset additions	–	(73.0)	–	(78.5)
Less non-cash items:
Allowances and certificates	(346.6)	–	(208.4)	–
Assets acquired through acquisitions	–	–	(515.2)	–
Net cash outflow	970.1	1,970.3	933.2	1,479.7

* The comparatives have been restated. See note 1.2.

Capital additions do not include assets acquired in acquisitions, assets acquired under leases or assets constructed that the Group were

reimbursed by way of a government grant. During the year construction commenced on a temporary generation plant at the Group’s

Tarbert site for which the Group received reimbursements totalling £93.4m from government bodies (presented separately on the cash

flow statement). Capital additions to intangible assets includes the cash purchase of emissions allowances and certificates (2024: £427.9m;

2023: £596.8m). These purchases are presented in the cash flow statement within operating activities since they relate to the obligation to

surrender the allowances and certificates in line with operating volumes of emissions. Other non-cash additions comprise self-generated

renewable obligation certificates.

No segmental analysis of assets requires to be disclosed as this information is not presented to the Board.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

219SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

iii. Capital and investment expenditure by segment

			Capital					Adjusted
	Capital	Capital	Investment					Investment and
	additions to	additions to	relating to				Share of	Capital
	intangible	property, plant	Joint Ventures	Allowances	Customer		non-	Expenditure
	assets	and equipment	and	and	funded	Lease asset	controlling	2024
	2024	2024	Associates	certificates	additions (iii)	additions	interests (v)	APM
At 31 March 2024	£m	£m	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	12.8	784.7	–	–	–	(2.5)	(199.4)	595.6
SSEN Distribution	20.3	636.8	–	–	(152.0)	–		505.1
SSE Renewables	355.1	433.8	324.5	–	–	(16.3)	–	1,097.1
SSE Thermal	83.3	24.6	51.4	(59.7)	–	–	–	99.6
Gas Storage	–	0.8	–	–	–	–	–	0.8
Energy Customer Solutions
SSE Business Energy	43.7	–	–	–	–	–	–	43.7
SSE Airtricity	14.1	0.7	–	–	–	–	–	14.8
SSE Enterprise	26.4	32.4	–	–	–	(7.8)	–	51.0
SSE Energy Markets	723.4	–	–	(714.8)	–	–	–	8.6
Corporate unallocated	35.1	57.6	14.1	–	–	(46.4)	–	60.4
Total SSE Group	1,314.2	1,971.4	390.0	(774.5)	(152.0)	(73.0)	(199.4)	2,476.7

(i)

(ii)

(iv)

(i) Represents equity or debt funding provided to joint ventures or associates in relation to capital expenditure projects.

(ii) Allowances and Certificates consist of purchased carbon emissions allowances and generated or purchased renewable obligations certificates (ROCs) and are not included in the

Group’s Capital Expenditure and Investment alternative performance measure.

(iii) Represents removal of additions to electricity and other networks funded by customer contributions.

(iv) Represents removal of additions in respect of right of use assets recognised on the commencement date of a lease arrangement.

(v) Represents the share of capital additions attributable to non-controlling interests.

220 SSE plc Annual Report 2024

5. Segmental information continued

5.1. Segmental information disclosure continued

iii. Capital and investment expenditure by segment continued

					(restated*)
		Capital	Capital						Adjusted
	Capital	additions to	Investment						Investment
	additions to	property,	relating to			Acquired		Share of	and Capital
	intangible	plant and	Joint Ventures	Allowances	Customer	through		non-	Expenditure
	assets	equipment	and	and	funded	business	Lease asset	controlling	2023
	2023	2023	Associates	certificates	additions	combinations	additions (v)	interests	APM
At 31 March 2023	£m	£m	£m	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	7. 2	536.6	–	–	–	–	(1.6)	(46.7)	495.5
SSEN Distribution	15.2	486.8	–	–	(80.9)	–	(0.1)	–	421.0
SSE Renewables	731.5	340.5	391.8	–	–	(515.2)	(37.1)	–	911.5
SSE Thermal	20.8	44.5	87.9	–	–	–	–	–	153.2
Gas Storage	–	6.3	–	–	–	–	–	–	6.3
Energy Customer Solutions
SSE Business Energy	38.9	0.4	–	–	–	–	–	–	39.3
SSE Airtricity	10.5	–	–	–	–	–	–	–	10.5
SSE Enterprise	16.2	37.0	–	–	–	–	(2.9)	–	50.3
SSE Energy Markets	809.9	–	–	(805.2)	–	–	–	–	4.7
Corporate unallocated	38.4	48.0	18.7	–	–	–	(36.8)	–	68.3
Total SSE Group	1,688.6	1,500.1	498.4	(805.2)	(80.9)	(515.2)	(78.5)	(46.7)	2,160.6

(i)

(ii)

(iii)

(iv)

(vi)

* The comparatives have been restated. See note 1.2.

(i) Represents equity or debt funding provided to joint ventures or associates in relation to capital expenditure projects.

(ii) Allowances and Certificates consist of purchased carbon emissions allowances and generated or purchased renewable obligations certificates (ROCs) and are not included in the

Group’s Capital Expenditure and Investment alternative performance measure.

(iii) Represents removal of additions to electricity and other networks funded by customer contributions.

(iv) Represents removal of additions achieved through business combination; for SSE Renewables additions of £515.2m refer to note 12. Note that the Group’s Adjusted Investment,

Capital and Acquisitions metric includes the £642.7m cash consideration paid for Business Combinations and totals £2,803.3m.

(v) Represents removal of right of use assets recognised on the commencement date of a lease arrangement.

(vi) Represents the share of capital additions attributable to non-controlling interests.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

221SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

(iv) Items included in operating profit/(loss) by segment

			Depreciation/impairment on property,	Amortisation/impairment
			plant and equipment	of intangible assets
	Before	Impairment		Before	Impairment
	exceptional	charges/		exceptional	charges/
	charges	(credits)	Total	charges	(credits)	Total
	2024	2024	2024	2024	2024	2024
	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	123.8	–	123.8	6.3	–	6.3
SSEN Distribution	182.8	–	182.8	12.0	–	12.0
SSE Renewables	159.7	(4.8)	154.9	1.6	15.4	17.0
SSE Thermal	100.8	–	100.8	3.2	–	3.2
Gas Storage	12.4	134.1	146.5	–	–	–
Energy Customer Solutions
SSE Business Energy	0.3	–	0.3	8.8	–	8.8
SSE Airtricity	0.1	–	0.1	5.0	–	5.0
SSE Enterprise	7. 2	0.1	7. 3	2.9	–	2.9
SSE Energy Markets	–	–	–	5.1	–	5.1
Corporate unallocated	41.5	4.0	45.5	18.4	18.3	36.7
Total SSE Group	628.6	133.4	762.0	63.3	33.7	97.0

			Depreciation/impairment on property,	Amortisation/impairment
			plant and equipment	of intangible assets
	Before	Impairment		Before	Impairment
	exceptional	charges/		exceptional	charges/
	charges	(credits)	Total	charges	(credits)	Total
	2023	2023	2023	2023	2023	2023
	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	109.4	–	109.4	4.7	–	4.7
SSEN Distribution	172.0	–	172.0	10.2	–	10.2
SSE Renewables	161.1	12.5	173.6	2.0	4.2	6.2
SSE Thermal	103.3	(7. 2)	96.1	0.6	–	0.6
Gas Storage	16.5	(45.7)	(29.2)	–	–
Energy Customer Solutions
SSE Business Energy	0.2	–	0.2	4.5	–	4.5
SSE Airtricity	0.1	–	0.1	6.8	–	6.8
SSE Enterprise	4.7	0.4	5.1	1.7	–	1.7
SSE Energy Markets	–	–	–	6.0	–	6.0
Corporate unallocated	38.4	1.6	40.0	18.1	14.6	32.7
Total SSE Group	605.7	(38.4)	567. 3	54.6	18.8	73.4

222 SSE plc Annual Report 2024

5. Segmental information continued

5.1. Segmental information disclosure continued

(v) Earnings before interest, taxation, depreciation and amortisation (‘EBITDA’)

			Depreciation/			Share of
	Adjusted		Impairment/	Joint Venture/		non-
	operating		amortisation	Associate share		controlling
	profit reported		before	of depreciation	Release of	interest
	to the Board	Depreciation	exceptional	and	deferred	depreciation	Adjusted
	(note 5.1 (ii))	on fair	charges	amortisation	income	and	EBITDA
	APM	value uplifts	(note 5.1 (iv))	(note 16.4)	(note 6)	amortisation	APM
	2024	2024	2024	2024	2024	2024	2024
	£m	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	419.3	–	130.1	–	(2.0)	(32.5)	514.9
SSEN Distribution	272.1	–	194.8	–	(9.9)	–	457.0
SSE Renewables	833.1	(19.0)	171.9	121.6	–	–	1 ,107.6
SSE Thermal	736.1	–	104.0	40.6	–	–	880.7
Gas Storage	82.8	–	12.4	–	–	–	95.2
Energy Customer Solutions
SSE Business Energy	95.8	–	9.1	–	–	–	104.9
SSE Airtricity	95.0	–	5.1	–	–	–	100.1
SSE Enterprise	(25.6)	–	10.2	–	(0.5)	–	(15.9)
SSE Energy Markets	38.9	–	5.1	–	–	–	44.0
Corporate
Corporate unallocated	(88.8)	–	82.2	–	(0.6)	–	(7. 2)
Neos Networks	(32.3)	–	–	46.6	–	–	14.3
Total SSE Group	2,426.4	(19.0)	724.9	208.8	(13.0)	(32.5)	3,295.6

Note that the Group’s ‘Net Debt to EBITDA’ metric is derived after removing the proportionate EBITDA from the following debt-financed

Beatrice and Seagreen joint ventures. This adjustment is £179.6m (2023: £146.9m) resulting in EBITDA on continuing operations for

inclusion in the Debt to EBITDA metric of £3,116.0m (2023: £3,235.2m).

For 31 March 2024 the £724.9m (2023: £704.2m) combined depreciation, impairment and amortisation charges included non-exceptional

impairments net of reversals totalling £33.0m (2023: £43.9m).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

223SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

(v) Earnings before interest, taxation, depreciation and amortisation (‘EBITDA’)

				(restated*)
			Depreciation/
	Adjusted		Impairment/	Joint Venture/		Share of
	operating		amortisation	Associate share		non-controlling
	profit reported		before	of depreciation	Release of	interest
	to the Board	Depreciation	exceptional	and	deferred	depreciation	Adjusted
	(note 5.1 (ii))	on fair	charges	amortisation	income	and	EBITDA
	APM	value uplifts	(note 5.1 (iv))	(note 16.4)	(note 6)	amortisation	APM
	2023	2023	2023	2023	2023	2023	2023
	£m	£m	£m	£m	£m	£m	£m
Continuing operations
SSEN Transmission	372.7	–	114.1	–	(2.1)	(9.7)	475.0
SSEN Distribution	382.4	–	182.2	–	(10.6)	–	554.0
SSE Renewables	561.8	(18.8)	179.8	92.8	(0.1)	–	815.5
SSE Thermal	1,031.9	(10.0)	114.5	60.8	–	–	1,197.2
Gas Storage	212.5	–	16.5	–	–	–	229.0
Energy Customer Solutions
SSE Business Energy	15.7	–	4.7	–	–	–	20.4
SSE Airtricity	5.6	–	6.9	–	–	–	12.5
SSE Enterprise	(7.0)	–	6.8	–	(0.2)	–	(0.4)
SSE Energy Markets	80.4	–	6.0	–	–	–	86.4
Corporate
Corporate unallocated	(87.0)	–	72.7	–	(0.9)	–	(15.2)
Neos Networks	(39.8)	–	–	47.5	–	–	7.7
Total SSE Group	2,529.2	(28.8)	704.2	201.1	(13.9)	(9.7)	3,382.1

* The comparative adjusted operating profit by segment information has been restated. See note 1.2.

224 SSE plc Annual Report 2024

6. Other operating income and cost

Group operating profit on continuing operations is stated after charging/(crediting) the following items:

	2024	2023
	£m	£m
Depreciation of property, plant and equipment on continuing operations (i) (note 14)	628.6	605.7
Net exceptional gains on acquisitions and disposals (note 7)	(4.6)	(89.1)
Exceptional charges (continuing operations) (note 7)	270.9	230.4
Research costs	12.7	10.8
Lease charges (ii)	11.2	11.7
Release of deferred income in relation to capital grants and historic customer contributions	(13.0)	(13.9)
Government grant income	(107.7)	(1,012.6)
Amortisation of other intangible assets	–	0.3

(iii)

(i) Does not include exceptional impairment charges.

(ii) Represents the expense of leases with a duration of 12 months or less and leases for assets which are deemed “low value” under the principles of IFRS 16. In addition, variable lease

payments, which are not included within the measurement of lease liabilities as they do not depend on an index or rate, of £6.2m (2023: £10.4m) were charged in the current year.

(iii) During the year the Group received £107.7m (2023: £1,012.6m) of income from government funded customer support schemes. All amounts received were passed to the Group’s

energy customers in the UK and Republic of Ireland. Amounts received have been classed as other operating income in line with the Group’s accounting policies for government

grants.

Auditor’s remuneration

	2024	2023
	£m	£m
Audit of these financial statements	0.4	0.4
Amounts receivable by the Company’s auditor and its associates in respect of:
Audit of financial statements of subsidiaries of the Company	5.1	3.2
Audit related assurance services	0.3	0.3
Other services fees	0.2	0.1
	5.6	3.6
Total remuneration paid to auditor	6.0	4.0

Audit fees incurred in the current year include scope changes for non-recurring items and overruns of £0.9m (2023: £0.4m) related to the

prior year audit. Assurance and Tax service fees incurred in the year were £0.5m (2023: £0.5m). Audit related assurance services include

fees incurred in relation to regulatory accounts and returns required by Ofgem and comfort letters in connection with funding and debt

issuance. A description of the work of the Audit Committee is set out on pages 144 to 151

and includes an explanation of how auditor

objectivity and independence is safeguarded when non-audit services are provided by the auditors.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

225SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

7. Exceptional items and certain re-measurements

	2024	2023
	£m	£m
Continuing operations
Exceptional items (note 7.1)
Asset impairments and related charges	(270.9)	(233.6)
Net gains on acquisitions/disposals of businesses and other assets	4.9	233.2
Total exceptional items	(266.0)	(0.4)
Certain re-measurements
Movement on operating derivatives (note 24)	452.2	(2,708.2)
Movement in fair value of commodity stocks	9.1	(9.0)
Movement on financing derivatives (note 24)	6.1	201.9
Share of movement on derivatives in jointly controlled entities (net of tax)	46.1	163.8
Total certain re-measurements	513.5	(2,351.5)
Exceptional items and certain re-measurements on continuing operations before taxation	247.5	(2,351.9)
Taxation
Taxation on other exceptional items	23.3	(34.1)
Taxation on certain re-measurements	(115.0)	499.6
Taxation	(91.7)	465.5
Total exceptional items and certain re-measurements on continuing operations after taxation	155.8	(1,886.4)
Discontinued operations
Exceptional items and certain re-measurements
Gas production asset impairments and related credits	–	35.0
Total exceptional items and certain re-measurements on discontinued operations after taxation	–	35.0

Exceptional items and certain remeasurements are disclosed across the following categories within the income statement:

	2024	2023
	£m	£m
Continuing operations
Cost of sales:
Movement on operating derivatives (note 24)	452.2	(2,708.2)
Movement in fair value of commodity stocks	9.1	(9.0)
	461.3	(2,717.2)
Operating costs:
Asset impairments and reversals	(270.9)	(233.6)
Other exceptional provisions and charges	–	3.2
	(270.9)	(230.4)
Operating income:
Net gains on acquisition/disposals of businesses and other assets	4.6	89.1
	4.6	89.1
Joint ventures and associates:
Net gains on acquisition of a joint venture	–	140.7
Share of movement on derivatives in jointly controlled entities (net of tax)	46.1	163.8
	46.1	304.5
Operating profit/(loss)	241.1	(2,554.0)
Finance income
Movement on financing derivatives (note 24)	6.1	201.9
Interest income on deferred consideration receipt	0.3	0.2
	6.4	202.1
Profit before tax on continuing operations	247.5	(2,351.9)
Discontinued operations
Gas Production asset impairments and related credits	–	35.0
Profit before tax on discontinued operations	–	35.0

226 SSE plc Annual Report 2024

7. Exceptional items and certain re-measurements continued

7.1. Exceptional items

Exceptional items in the year ended 31 March 2024

In the year to 31 March 2024, the Group recognised a net exceptional charge of £266.0m arising from its continuing operations. The net

exceptional charge is primarily due to an exceptional impairment charge relating to the Group’s gas storage assets of £134.1m, an

exceptional impairment of £63.2m against the carrying value of the Group’s investment in Triton Power Holdings Limited and an

exceptional impairment charge of £73.6m against the Group’s investment in Neos Networks.

The net exceptional charges/(credits) recognised can be summarised as follows:

	Property,
	plant and	Provisions
	equipment	and other	Investment in	Other	Total charges/
	(note 14)	charges	joint ventures	assets	(credits)
	£m	£m	£m	£m	£m
Triton Power 50% joint venture – investment impairment charge (i)	–	–	63.2	–	63.2
Gas Storage – impairment charge (ii)	134.1	–	–	–	134.1
Neos Networks 50% joint venture – impairment charge (iii)	–	–	73.6	–	73.6
Enerveo acquisition (iv)	–	(18.3)	–	13.7	(4.6)
Other credits (v)	–	–	–	(0.3)	(0.3)
Total exceptional items continuing operations	134.1	(18.3)	136.8	13.4	266.0

(i) Triton Power 50% joint venture – investment impairment charge

The Group has recognised an impairment charge of £63.2m, against the carrying value of the Group’s investment in Triton Power Holdings

Limited, reflecting future market price assumptions. The impairment was recognised in the first half of the year and, due to indicators of

impairment existing at 31 March 2024, a formal impairment review was also performed as at that date (see note 15.2). As a result of this

assessment, the Group has not recognised any further charges or reversals to the investment carrying value of the Group’s investment in

Triton Power Holdings Limited.

(ii) Gas Storage – impairment charge

The Group performed a formal impairment review at 31 March 2024 to reassess the carrying value of its Gas Storage operations at

Aldbrough and Atwick (see note 15.2). As a result of the assessment, the Group recognised an exceptional impairment charge of £85.7m

to the carrying value of the assets at Aldbrough and £48.4m to the carrying value of the assets at Atwick.

(iii) Neos Networks 50% joint venture – impairment charge

At 31 March 2024, the Group has performed a formal impairment assessment on the carrying value of its 50% joint venture investment,

including shareholder loan balances, in Neos Networks Limited. The assessment indicated that the recoverable amount of the investment

and shareholder loan receivable balances are impaired by £73.6m. See note 15.2 for further details of this impairment.

(iv) Enerveo acquisition

On 22 March 2024, the Group purchased the entire share capital of Enerveo Limited from Aurelius Antelope Limited for cash consideration

of £1.0m. Enerveo Limited is a former subsidiary of SSE plc and the reacquisition reduces the Group’s potential exposure to risk arising from

performance guarantees provided by the Group. At 30 September 2023, the Group had recorded an exceptional charge of £50.5m in

relation to its projected exposure in relation to these guarantees as part of its adoption of IFRS 17. On reacquisition this risk has been

reduced and the exceptional charge recognised in the 6 months to 30 September 2023 has been reversed. Due to provisions that the

Group had previously recognised for amounts due from Enerveo and Aurelius, the completion of the transaction has resulted in an

exceptional credit of £4.6m being recognised on acquisition. Further detail on the transaction is included in note 12.1.

(v) Other credits

At 31 March 2024, the Group recognised further exceptional credits of £0.3m relating to the unwind of discounting on deferred

consideration recognised on the part disposal of SSE Slough Multifuel Limited in the year ending 31 March 2021.

Taxation

The Group has separately recognised the tax effect of the exceptional items summarised above.

Exceptional items in the year ended 31 March 2023

In the year to 31 March 2023, the Group recognised a net exceptional charge of £0.4m arising from its continuing operations. The net

exceptional charge was primarily due to a net impairment of £150.9m in relation to the Group’s 50% investment in Triton Power Holdings

Limited (see note 7.1.iv below for further analysis of amounts recognised in relation to Triton), offset by an exceptional gain of £89.1m from

the sale of land at Fiddler’s Ferry, an impairment reversal of £45.7m related to the Group’s Gas Storage operations at Aldbrough and an

impairment reversal of £17.8m in relation to the Group’s Great Island combined cycle gas turbine (‘CCGT’) plant in Ireland.

In discontinued operations, the Group recognised an exceptional gain of £35.0m relating to a provision release associated with the disposal

of its Gas Production assets, which completed on 14 October 2021.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

227SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

The net exceptional charges/(credits) recognised can be summarised as follows:

	Property,
	plant and	Provisions	Investment	Cash and
	equipment	and other	in joint	cash	Other	Total charges/
	(note 14)	charges	ventures	equivalents	receivables	(credits)
	£m	£m	£m	£m	£m	£m
Thermal Electricity Generation (i)	(17.8)	–	–	–	–	(17.8)
Gas storage (ii)	(45.7)	–	–	–	–	(45.7)
Fiddler’s Ferry (iii)	24.1	(53.2)	–	(60.0)	–	(89.1)
Triton Power 50% joint venture – investment
acquisition and impairment (iv)	–	–	150.9	–	–	150.9
Neos Networks 50% joint venture – investment
impairment charge (v)	–	–	5.9	–	–	5.9
Other credits (vi)	–	(1.5)	–	(2.1)	(0.2)	(3.8)
Total exceptional items continuing operations	(39.4)	(54.7)	156.8	(62.1)	(0.2)	0.4
Gas Production (vii)	–	(35.0)	–	–	–	(35.0)
Total exceptional items discontinued operations	–	(35.0)	–	–	–	(35.0)
Total exceptional items	(39.4)	(89.7)	156.8	(62.1)	(0.2)	(34.6)

(i) Thermal Electricity Generation – impairment reversal

At 31 March 2023, the Group carried out a formal impairment review to reassess the carrying value of its GB CCGT power stations and the

Group’s Great Island CCGT plant in Ireland. As a result of the review, the Group recognised an exceptional impairment reversal of £17.8m to

the carrying value of the Group’s Great Island CCGT plant.

(ii) Gas Storage – impairment reversal

At 30 September 2022, the Group recognised an impairment reversal of £201.1m on its Aldbrough Gas Storage facility due to future

market price assumptions observable at that time. The Group also performed a formal impairment review at 31 March 2023 to reassess the

carrying value of its Gas Storage operations at Atwick and Aldbrough. As a result of the assessment, the Group recognised an exceptional

impairment of £155.4m to the carrying value of the assets at Aldbrough, resulting in a net impairment reversal for the year of £45.7m.

The impairment previously recognised in relation to Atwick was fully reversed in the year ended 31 March 2022, and no impairment was

required for the financial year ended 31 March 2023.

(iii) Fiddler’s Ferry – land sale

On 30 June 2022, the Fiddler’s Ferry site was sold to Peel NRE Developments Limited for cash consideration of £60.0m. The Group carried

a decommissioning provision for the site of £53.2m and a residual asset of £24.1m, both of which were disposed of as part of the sale. As a

result, the Group recognised an exceptional gain of £89.1m on disposal.

(iv) Triton Power 50% joint venture – acquisition and impairment

On 1 September 2022, the Group acquired 50% of the share capital of Triton Power Holdings Limited from Energy Capital Partners for

headline consideration of £341.0m, shared equally with co-venturers Equinor (see note 12). The purchase price was agreed based on prices

prevalent in the market during the summer, prior to completion of the transaction on 1 September 2022. The Group assessed that, due to

movements in near term observable power prices between the transaction agreement date and the completion date, the fair value of the

acquisition was £140.7m greater than the acquisition price. This bargain purchase was recognised as an exceptional gain in the Group’s half

year results to 30 September 2022. During the second half of the year ended 31 March 2023, the Group realised a significant proportion

of the acquired fair value of the business through trading operations of the joint venture. As a result, the future recoverable value of the

investment was lower at 31 March 2023 than at 1 September 2022 and the Group therefore recognised an impairment charge at 31 March

2023 of £291.6m (see note 15.2). A summary of exceptional items recognised in relation to Triton in the financial year to 31 March 2023 is

set out below:

		Exceptional
		items and
		certain
	Financial statement line item	re-measurements
	charge/(credit) is included within	£m
Recognition of bargain purchase	Joint venture and associates share of profit	(140.7)
Impairment of investment	Operating costs	291.6
Total exceptional items		150.9
Mark-to-market movement on operating derivatives	Joint venture and associates share of movement on derivatives	(213.9)
Share of tax on mark-to-market
movement on operating derivatives	Joint venture and associates share of tax	41.9
Total certain remeasurements		(172.0)
Total exceptional items and certain re-measurements		(21.1)

(v) Neos Networks 50% joint venture – investment impairment and adjustments to consideration

At 31 March 2023, the Group assessed that the recoverable amount of its investment in Neos Networks was impaired by £37.7m, of which

£5.9m was treated as exceptional. £5.9m of the impairment related to the fair value gain previously recognised on acquisition of the joint

venture investment in March 2019, which was treated as an exceptional item. This reversal was recognised separately within exceptional

items for consistent presentation. The balance of the impairment charge, being £31.8m, was recognised as part of adjusted operating profit.

228 SSE plc Annual Report 2024

7. Exceptional items and certain re-measurements continued

7.1. Exceptional items continued

vi. Other credits

At 31 March 2023, the Group recognised further exceptional credits of £3.8m relating to reversal of previously recognised exceptional

charges or judgements. These included i) reassessment of separation cost provisions associated primarily with the disposals of SSE Energy

Services and SGN (credit of £9.7m) ii) credit of £0.2m in relation to the unwind of discounting on deferred consideration recognised on

the part disposal of SSE Slough Multifuel Limited in the year ending 31 March 2021, iii) reassessment of impairments associated with Heat

Networks assets credit of £0.4m, partially offset by iv) £6.5m charge recognised in relation to provisions in connection with the sale of the

Contracting and Rail business in June 2021.

Exceptional items within discontinued operations in the year ended 31 March 2023

vii. Gas Production – gain on disposal

On 4 November 2022, RockRose Energy Limited received HMRC clearance in respect of tax treatment in relation to the Group’s disposal of

its Gas Production business to Viaro Energy (through its subsidiary RockRose Energy Limited), which completed on 14 October 2021. The

Group had indemnified RockRose Energy Limited in relation to certain tax liabilities that it might suffer as a result of the transaction, and

this formed part of the provision which was recognised on the disposal of the Gas Production business. The HMRC clearance indicated that

no such tax liabilities arise for RockRose Energy Limited and as a result the Group released the £35.0m provision relating to the indemnity

as an adjustment to the loss on disposal recognised. The adjustment was recognised in discontinued operations in the year ended

31 March 2023.

Exceptional items in the year ended 31 March 2022

In the year to 31 March 2022, the Group recognised a net exceptional credit of £305.0m arising from its continuing operations. The net

exceptional credit was primarily due to impairment reversals of £331.6m in relation to the Group’s GB CCGT power stations and the

Group’s Great Island CCGT plant in Ireland and impairment reversals of £97.3m related to the Group’s Gas Storage operations at Atwick and

Aldbrough. These credits were offset by an impairment loss of £106.9m recognised in relation to the Group’s investment in Neos Networks,

a further £18.9m loss was recognised on completion of the disposal of SSE Contracting on 30 June 2021 and £6.2m consideration

adjustment associated with the disposal of the Group’s 50% stake in Neos Networks, which completed in the year ended 31 March 2019.

In discontinued operations, the Group recognised an exceptional gain on the disposal of the Group’s 33.3% investment in SGN of £576.5m,

offset by an exceptional charge of £120.8m associated with the disposal of its Gas Production assets, which completed on 14 October 2021.

The net exceptional charges/(credits) recognised can be summarised as follows:

	Property,
	plant and		Provisions	Investment		Total
	equipment		and other	in joint	Other	charges/
	(note 14)	Held for sale	charges	ventures	receivables	(credits)
	£m	£m	£m	£m	£m	£m
Thermal Electricity Generation	(331.6)	–	–	–	–	(331.6)
Gas storage	(97.3)	–	–	–	–	(97. 3)
SSE Contracting	–	–	18.9	–	–	18.9
Neos Networks	–	–	6.2	106.9	–	113.1
Other credits	(0.6)	–	–	–	(7. 5)	(8.1)
Total exceptional items continuing operations	(429.5)	–	25.1	106.9	(7. 5)	(305.0)
SGN disposal gain	–	–	–	–	(576.5)	(576.5)
Gas Production	–	120.8	–	–	–	120.8
Total exceptional items discontinued operations	–	120.8	–	–	(576.5)	(455.7)
Total exceptional items	(429.5)	120.8	25.1	106.9	(584.0)	(760.7)

7.2. Certain re-measurements

The Group, through its SSE Energy Markets business, enters into forward commodity purchase (and sales) contracts to meet the future

demand requirements of its SSE Business Energy and SSE Airtricity supply businesses, to optimise the value of its SSE Renewables and

SSE Thermal power generation assets or to conduct other trading subject to the value at risk limits set out by the Energy Markets Risk

Committee. Certain of these contracts (predominantly electricity, gas and other commodity purchase contracts) are determined to be

derivative financial instruments under IFRS 9 “Financial Instruments” and as such are required to be recorded at their fair value. Conversely,

commodity contracts that are not financial instruments under IFRS 9 (predominantly electricity sales contracts) are accounted for as

‘own use’ contracts and are not recorded at their fair value. Inventory purchased to utilise excess capacity ahead of an optimised sale

in the market by the Gas Storage business is held as trading inventory at fair value with changes in value recognised within ‘certain

re-measurements’. In addition, the mark-to-market valuation movements on the Group’s contracts for difference contracts entered into by

SSE Renewables that are not designated as government grants, and which are measured as Level 3 fair value financial instruments are also

included within ‘certain re-measurements’.

Changes in the fair value of those commodity contracts designated as financial instruments and trading inventory are therefore reflected in

the income statement. The Group shows the change in the fair value of these forward contracts and trading inventory separately as ‘certain

re-measurements’, as the Group does not believe this mark-to-market movement is relevant to the underlying performance of its businesses.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

229SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

At 31 March 2024, changes in global commodity markets and in SSE’s contractual positions have resulted in a positive net mark-to-market

remeasurement on commodity contracts designated as financial instruments, contracts for difference contracts and trading inventory of

£461.3m (gain) (2023: £2,717.2m (loss)). It should be noted that the net IFRS 9 position on operating derivatives at 31 March 2024 is an asset

of £51.4m (2023: £386.9m liability).

The mark-to-market gain in the year has resulted in a deferred tax charge of £115.0m (2023: £499.6m credit), which has been reported

separately as part of certain re-measurements. In addition, the Group has recognised gains of £6.1m (2023: £201.9m gain) on the

remeasurement of certain interest rate and foreign exchange contracts through the income statement, gains on the remeasurement of

cash flow hedge accounted contracts of £6.5m (2023: £43.3m gain) in other comprehensive income and a loss on the equity share of the

remeasurement of cash flow hedge accounted contracts in joint ventures of £40.9m (2023: £342.4m gain).

The re-measurements arising from IFRS 9 and the associated deferred tax are disclosed separately to aid understanding of the underlying

performance of the Group.

8. Directors and employees

8.1. Staff costs

	2024	2023
	£m	£m
Staff costs:
Wages and salaries	722.5	587.6
Social security costs	84.8	69.6
Share-based remuneration	22.0	20.6
Pension costs (note 23)	109.1	94.0
	938.4	771.8
Less: capitalised as property, plant and equipment or intangible assets	(238.0)	(179.6)
	700.4	592.2

8.2. Employee numbers

	2024	2023
	Number	Number
Numbers employed at 31 March	14,980	12,180
	14,980	12,180

(i)

(i) The number of employees at 31 March 2024 includes 1,089 employees of Enerveo, the contracting business purchased by the Group on 22 March 2024 (see note 7.1.iv) (2023: none).

The average number of people employed by the Group (including Executive Directors) during the year was:

	2024	2023
	Number	Number
SSEN Transmission	1,568	1,136
SSEN Distribution	4,463	4,197
SSE Renewables	1,933	1,591
SSE Thermal	586	458
Gas Storage	92	84
Energy Customer Solutions
SSE Business Energy	950	843
SSE Airtricity	953	845
SSE Enterprise	974	855
SSE Energy Markets	317	256
Corporate Services	1,422	1,211
Total SSE Group	13,258	11,476

230 SSE plc Annual Report 2024

8. Directors and employees continued

8.3. Remuneration of key management personnel

The remuneration of the key management personnel of the Group (excluding amounts equivalent to pension value increases as set out in

the Remuneration Report), is set out below in aggregate.

		2024			2023
	Executive			Executive
	committee	Executive		committee	Executive
	members	directors	Total	members	directors	Total
	£m	£m	£m	£m	£m	£m
Salaries and short term employee benefits	4.7	4.7	9.4	4.0	5.2	9.2
Social security costs	1.0	0.9	1.9	0.9	1.0	1.9
Post-employment benefits	1.0	0.2	1.2	0.7	0.7	1.4
Share based benefits	1.8	5.9	7.7	1.7	4.4	6.1
	8.5	11.7	20.2	7.3	11.3	18.6

Key management personnel are responsible for planning, directing and controlling the operations of the Group and are designated Persons

Discharging Management Responsibilities (‘PDMRs’) in line with the market abuse regulation definition. The Group has three (2023: three)

Executive directors. Executive committee members included in the table above at 31 March 2024 are the Managing Director of SSEN

Distribution; the Managing Director of SSEN Transmission; the Managing Director of SSE Renewables; the Managing Director of Thermal;

the Director of Corporate Affairs and Strategy; the Director of Human Resources and the Group’s General Counsel.

Further information about the remuneration of individual directors is provided in the audited part of the Remuneration Report.

Information regarding transactions with post-retirement benefit plans is included in note 23.

Non-executive directors were paid fees of £1.3m during the current year (2023: £1.3m).

9. Finance income and costs

		2024			2023
	Before			Before
	exceptional	Exceptional		exceptional	Exceptional
	items and	items and		items and	items and
	certain re-	certain re-		certain re-	certain re-
	measurements	measurements	Total	measurements	measurements	Total
Recognised in income statement	£m	£m	£m	£m	£m	£m
Finance income:
Interest income from short term deposits	60.3	–	60.3	17. 5	–	17. 5
Interest on pension scheme assets	26.2	–	26.2	16.2	–	16.2
Other interest receivable:
Joint ventures and associates	78.4	–	78.4	67.6	–	67.6
Other receivable	33.9	0.3	34.2	34.0	0.2	34.2
	112.3	0.3	112.6	101.6	0.2	101.8
Total finance income	198.8	0.3	199.1	135.3	0.2	135.5
Finance costs:
Bank loans and overdrafts	(7 7.4)	–	(77.4)	(50.1)	–	(50.1)
Other loans and charges	(274.3)	–	(274.3)	(339.1)	–	(339.1)
Notional interest arising on discounted provisions	(25.2)	–	(25.2)	(22.1)	–	(22.1)
Lease charges	(25.8)	–	(25.8)	(29.4)	–	(29.4)
Less: interest capitalised	84.4	–	84.4	44.0	–	44.0
Total finance costs	(318.3)	–	(318.3)	(396.7)	–	(396.7)
Changes in fair value of financing derivative assets or liabilities at fair value through profit or loss	–	6.1	6.1	–	201.9	201.9
Net finance costs	(119.5)	6.4	(113.1)	(261.4)	202.1	(59.3)
Presented as:
Finance income	198.8	6.4	205.2	135.3	202.1	337.4
Finance costs	(318.3)	–	(318.3)	(396.7)	–	(396.7)
Net finance costs	(119.5)	6.4	(113.1)	(261.4)	202.1	(59.3)

(i)

(ii)

(i) The interest income on net pension assets for the year ended 31 March 2024 of £26.2m (2023: £16.2m) represents the interest earned under IAS 19.

(ii) The capitalisation rate applied in determining the amount of borrowing costs to capitalise in the year was 4.20% (2023: 4.11%) .

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

231SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Adjusted net finance costs are arrived at after the following adjustments:

	2024	2023
	£m	£m
Net finance costs	(113.1)	(59.3)
(add)/less:
Share of interest from joint ventures and associates	(110.7)	(70.1)
Interest on pension scheme liabilities	(26.2)	(16.2)
Movement on financing derivatives (note 24)	(6.1)	(201.9)
Exceptional item	(0.3)	(0.2)
Share of net finance cost attributable to non-controlling interests	4.7	2.1
Adjusted net finance costs	(251.7)	(345.6)
Notional interest arising on discounted provisions	25.2	22.1
Lease charges	25.8	29.4
Hybrid coupon payment (note 22.5(iii))	(73.1)	(38.8)
Adjusted net finance costs for interest cover calculations	(273.8)	(332.9)

APM

Recognised in other comprehensive income

	2024	2023
	£m	£m
Gain on effective portion of cash flow hedges (before tax)	6.5	43.3
Share of joint venture/associate (loss)/gain on effective portion of cash flow hedges (before tax)	(54.5)	456.5
Total recognised in other comprehensive income	(48.0)	499.8

10. Taxation

10.1. Analysis of charge recognised in the income statement

		2024			2023
	Before			Before
	exceptional	Exceptional		exceptional	Exceptional
	items and	items and		items and	items and
	certain re-	certain re-		certain re-	certain re-
	measurements	measurements	Total	measurements	measurements	Total
	£m	£m	£m	£m	£m	£m
Current tax
Corporation tax	366.1	(36.5)	329.6	292.3	(20.9)	271.4
Adjustments in respect of previous years	(25.6)	31.8	6.2	(22.0)	5.3	(16.7)
Total current tax	340.5	(4.7)	335.8	270.3	(15.6)	254.7
Deferred tax
Current year	155.3	128.2	283.5	72.9	(444.6)	(371.7)
Adjustments in respect of previous years	23.2	(31.8)	(8.6)	12.3	(5.3)	7.0
Total deferred tax	178.5	96.4	274.9	85.2	(449.9)	(364.7)
Total taxation charge/(credit)	519.0	91.7	610.7	355.5	(465.5)	(110.0)

The Group has separately recognised the tax effect of the exceptional items and certain re-measurements summarised above.

SSE continues to be accredited with the Fair Tax Mark. As a consequence, these financial statements include a number of areas of

enhanced disclosure which have been provided in order to develop stakeholder understanding of the tax the Group pays and the reported

total taxation charge along with additional commentary on the main reconciling items.

These can be seen at section A2

The majority of the Group’s profits are earned in the UK, with the standard rate of UK corporation tax being 25% for the year to 31 March

2024 (2023: 19%). Profits earned by the Group in the Republic of Ireland are taxable at either 12.5% or 25%, depending upon the nature of

the income. While the Group has activities in other jurisdictions outside of the UK and Republic of Ireland, tax paid on those development

activities is currently immaterial.

232 SSE plc Annual Report 2024

10. Taxation continued

10.1. Analysis of charge recognised in the income statement continued

Change in UK corporation tax rates

There are no announced or enacted changes in corporation tax rates in the year ended 31 March 2024.

Finance Bill 2023 introduced legislation, initially as a temporary measure but then being made permanent in the Autumn Statement, to

allow ‘Full Expensing’ of 100% General Pool plant and machinery, alongside 50% for Special Rate Pool plant and machinery. These changes

significantly increase the deductions for Capital Allowances on capital expenditure incurred from 1 April 2023.

Finance Act (No.2) 2023 also introduced legislation in respect of Multinational Top-up Tax in line with OECD BEPS pillar 2 principles. The

Group has applied the exemption from recognising and disclosing information about deferred tax assets and liabilities related to Pillar Two

income taxes as required by the amendments to IAS 12 – International Tax Reform—Pillar Two Model Rules, which issued in May 2023. The

legislation will come into force for the year ended 31 March 2025. Similar draft legislation has been introduced in the Republic of Ireland

and other EU jurisdictions. The Group had undertaken modelling and does not expect a material impact to arise as tax rates in the countries

in which the Group operates are expected to exceed 15%.

The ‘adjusted current tax charge’ and the ‘adjusted effective rate of tax’, which are presented in order to best represent underlying

performance by making similar adjustments to the ‘adjusted profit before tax’ measure, are arrived at after the following adjustments:

	2024	2024	2023	2023
	£m	%	£m	%
Continuing operations
Group tax charge/(credit) and effective rate	610.7	25.6	(110.0)	12.7
Add: reported deferred tax (charge)/credit and effective rate	(274.9)	(11.5)	364.7	(42.0)
Reported current tax charge and effective rate	335.8	14.1	254.7	(29.3)
Effect of adjusting items		1.3		41.0
Reported current tax charge and effective rate on adjusted basis	335.8	15.4	254.7	11.7
add:
Share of current tax from joint ventures and associates	38.5	1.8	89.6	4.1
less:
Current tax credit on exceptional items	4.7	0.2	15.6	0.7
Share of current tax attributable to non-controlling interests	(8.0)	(0.3)	(1.1)	(0.1)
Adjusted current tax charge and effective rate	371.0	17. 1	358.8	16.4

APM

Tax (credit)/charge recognised in other comprehensive income/(loss):

	2024	2023
	£m	£m
Relating to:
Pension scheme actuarial movements	(38.8)	(19.8)
Cash flow and net investment hedge movements	0.3	8.1
	(38.5)	(11.7)

All tax recognised through other comprehensive income is deferred tax.

See further Taxation disclosures at A2

10.2. Current tax assets and liabilities

	2024	2023
	£m	£m
Corporation tax assets	(25.8)	(10.8)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

233SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Uncertain tax positions

The Group invests heavily in infrastructure, on which significant amounts of capital allowances are potentially available, including through

the ‘full expensing’ regime. The extent to which capital allowances are available on any single asset is, however, very much dependent

upon the fact pattern for the asset involved, and there will often be an element of uncertainty as to how capital allowances legislation

applies in those circumstances. Therefore, reaching agreement with tax authorities as to the amount of capital allowances available can

take a number of years and sometimes can only be resolved through a formal legal process.

The calculation of the Group’s total tax charge therefore necessarily involves a degree of estimation and judgement in relation to certain

items for which the tax treatment cannot be finally determined until resolution has been reached with the tax authorities or, if required,

through a formal legal process. At 31 March 2024, the Group has not recognised provisions in respect of uncertain tax positions (2023: £nil).

On 23 March 2023, the Group’s case concerning the availability of capital allowances on Glendoe Hydro Electric Station was heard at

the Supreme Court. On 17 May 2023, the Supreme Court released its decision, which rejected HMRC’s appeal in full. The matter is now

concluded and is not subject to further appeal. Accordingly, the Group’s provision was released as an adjusting post balance sheet event

in the year ended 31 March 2023.

10.3. Deferred taxation

The following are the deferred tax liabilities and assets recognised by the Group and movements thereon during the current and prior

reporting periods:

	Accelerated	Fair value gains/	Retirement
	capital	(losses) on	benefit	Decommissioning
	allowances	derivatives	obligations	liabilities	Other	Total
	£m	£m	£m	£m	£m	£m
At 31 March 2022	1,141.6	378.5	146.2	–	(22.2)	1,644.1
Charge/(credit) to income statement	112.0	(476.7)	8.9	–	(8.9)	(364.7)
Charge/(credit) to other comprehensive income/(loss)	–	8.1	(19.8)	–	–	(11.7)
Charge to equity	–	–	–	–	2.0	2.0
Recognised on acquisition (note 12)	(0.1)	–	–	–	27. 1	27.0
Exchange adjustment	1.6	–	–	–	0.8	2.4
At 31 March 2023	1,255.1	(90.1)	135.3	–	(1.2)	1,299.1
Charge/(credit) to income statement	145.2	123.3	8.9	–	(2.5)	274.9
Decommissioning asset and liability presentation
under IAS 12	79.5	–	–	(79.5)	–	–
Charge/(credit) to other comprehensive (loss)/
income	–	0.3	(38.8)	–	–	(38.5)
Charge to equity	–	–	–	–	1.8	1.8
Exchange adjustment	(0.5)	–	–	–	–	(0.5)
At 31 March 2024	1,479.3	33.5	105.4	(79.5)	(1.9)	1,536.8

The Group has adopted the amendment to IAS 12 in respect of deferred tax relating to assets and liabilities arising from a single transaction.

In line with the amendment the Group now recognises deferred tax assets and liabilities in respect of decommissioning responsibilities

separately. This has resulted in an increase to both deferred tax assets and deferred tax liabilities of £50.1m (2023: £45.5m) and a

reclassification of £79.5m of gross deferred tax assets. As a result of the change deferred tax liabilities relating to decommissioning assets

are now presented in “Accelerated capital allowances” with deferred tax assets relating to decommissioning liabilities being presented in

“Decommissioning liabilities”.

Certain deferred tax assets and liabilities have been offset, including the asset balances analysed in the tables above. The following is an

analysis of the deferred tax balances (after offset) for financial reporting purposes:

		2023
	2024	£m
	£m	(restated*)
Deferred tax liabilities	1,692.3	1,530.6
Deferred tax assets	(155.5)	(231.5)
Net deferred tax liabilities	1,536.8	1,299.1

In total there are £9.3m (2023: £6.1m) of unrecognised deferred tax assets. The Group has not recognised a deferred tax asset of £5.6m

(2023: £5.6m) on trading losses of £44.5m (2023: £44.8m) in the Republic of Ireland. The Group has not recognised deferred tax assets

of £3.5m (2023: £0.5m) in respect of losses of £14.4m (2023: £2.3m) in Spain, France, Italy and Greece. These assets have not been

recognised as the Group is uncertain that there will be sufficient future profits against which to utilise the assets. There is no time limit for

expiry of the losses or allowances to which they relate.

No deferred tax is recognised on the unremitted earnings of overseas subsidiaries, associates and joint ventures. As the earnings are

continually reinvested by the Group, no tax is expected to be payable on them in the foreseeable future. Total unremitted earnings at

31 March 2024 were £827.8m (2023: £468.8m).

* The comparative has been restated. See note 2.1.

234 SSE plc Annual Report 2024

11. Dividends and earnings per share

11.1. Ordinary dividends

			Settled via	Pence per			Settled via	Pence per
	2024	Total	scrip	ordinary	2023	Total	scrip	ordinary
		£m	£m	share		£m	£m	share
Interim – year ended 31 March 2024		218.3	8.8	20.0		–	–	–
Final – year ended 31 March 2023		738.1	29.8	6 7. 7		–	–	–
Interim – year ended 31 March 2023		–	–	–		313.2	159.0	29. 0
Final – year ended 31 March 2022		–	–	–		642.6	322.5	60. 2
		956.4	38.6			955.8	481.5

The final dividend of 67.7p per ordinary share declared in respect of the financial year ended 31 March 2023 (2022: 60.2p) was approved

at the Annual General Meeting on 20 July 2023 and was paid to shareholders on 21 September 2023. Shareholders were able to elect to

receive ordinary shares credited as fully paid instead of the cash dividend under the terms of the Company’s scrip dividend scheme.

For dividends paid in relation to the financial year ended 31 March 2022 and in relation to the subsequent years to 31 March 2026, the

Group’s approved policy is to repurchase shares to reduce the scrip’s dilutive effects, if the scrip take-up exceeds 25% of the full year

dividend in any given year. The overall scrip dividend take-up for the financial year ended 31 March 2023 was 18.0%, and SSE has therefore

not initiated a share buy-back in the current year. For the financial year ended 31 March 2022 the overall scrip take-up was 38.3% and

therefore under the share buyback programme 6.9m of shares were repurchased and cancelled during the year ended 31 March 2023 for

total consideration of £107.6m (including stamp duty and commission).

An interim dividend of 20.0p per ordinary share (2023: 29.0p) was declared and paid on 8 March 2024 to those shareholders on the SSE plc

share register on 12 January 2024. Shareholders were able to elect to receive ordinary shares credited as fully paid instead of the interim

cash dividend under the terms of the Company’s scrip dividend scheme.

The proposed final dividend of 40.0p per ordinary share based on the number of issued ordinary shares at 31 March 2024 is subject to

approval by shareholders at the Annual General Meeting and has not been included as a liability in these financial statements. Based on

shares in issue at 31 March 2024, this would equate to a final dividend of £438.5m.

11.2. Basic and adjusted earnings/(losses) per share

The calculation of basic earnings/(losses) per ordinary share at 31 March 2024 is based on the net profit/(loss) attributable to ordinary

shareholders and a weighted average number of ordinary shares outstanding during the year ended 31 March 2024.

Adjusted earnings/(losses) per share has been calculated by excluding the charge for deferred tax, interest on net pension liabilities under

IAS 19, retained Gas Production decommissioning costs, the depreciation charged on fair value uplifts, the share or profit attributable to

non-controlling interests and the impact of exceptional items and certain re-measurements (note 7).

	2024	2024	2023	2023
				(Losses)/
		Earnings	(Losses)/	earnings
	Earnings	per share	earnings	per share
	£m	pence	£m	pence
Continuing operations
Earnings/(losses) attributable to ordinary shareholders	1,710.5	156.7	(123.0)	(11.4)
Less: earnings attributable to discontinued operations	–	–	(35.0)	(3.3)
Basic earnings/(losses) on continuing operations used
to calculate adjusted EPS	1,710.5	156.7	(158.0)	(14.7)
Exceptional items and certain re-measurements (note 7)	(155.8)	(14.3)	1,886.4	175.4
Basic excluding exceptional items and certain re-measurements	1,554.7	142.4	1,728.4	160.7
Adjusted for:
Decommissioning Gas Production	9.9	0.9	(50.5)	(4.7)
Depreciation charge on fair value uplifts	19.0	1.7	28.8	2.7
Interest on net pension scheme assets/(liabilities) (note 9)	(26.2)	(2.4)	(16.2)	(1.5)
Deferred tax	178.5	16.3	85.2	7.9
Deferred tax from share of joint ventures and associates	20.3	1.9	14.4	1.3
Deferred tax on non-controlling interest	(25.6)	(2.3)	(4.1)	(0.4)
Adjusted	1,730.6	158.5	1,786.0	166.0
Basic	1,710.5	156.7	(158.0)	(14.7)
Dilutive effect of outstanding share options	–	(0.2)	–	–
Diluted	1,710.5	156.5	(158.0)	(14.7)

APM

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

235SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Reported earnings/(losses) per share

	2024	2024	2023	2023
				(Losses)/
		Earnings	(Losses)/	earnings
	Earnings	per share	earnings	per share
	£m	pence	£m	pence
Basic
Earnings/(losses) per share on continuing operations	1,710.5	156.7	(158.0)	(14.7)
Earnings per share on discontinued operations	–	–	35.0	3.3
Earnings/(losses) per share attributable to ordinary shareholders	1,710.5	156.7	(123.0)	(11.4)
Diluted earnings/(losses) per share on continuing operations	1,710.5	156.5	(158.0)	(14.7)
Diluted earnings per share on discontinued operations	–	–	35.0	3.3
Diluted earnings/(losses) per share attributable to ordinary shareholders	1,710.5	156.5	(123.0)	(11.4)

The weighted average number of shares used in each calculation is as follows:

	31 March	31 March
	2024	2023
	Number	Number
	of shares	of shares
	(millions)	(millions)
For basic and adjusted earnings per share	1,091.8	1,075.6
Effect of exercise of share options	1.5	1.7
For diluted earnings per share	1,093.3	1,077.3

11.3. Dividend cover

The Group’s adjusted dividend cover metric is calculated by comparing adjusted earnings per share on continuing operations to the

projected dividend per share payable to ordinary shareholders.

	2024	2024	2024	2023	2023	2023
				(Losses)/
	Earnings	Dividend	Dividend	earnings per	Dividend	Dividend
	per share	per share	cover	share	per share	cover
	(pence)	(pence)	(times)	(pence)	(pence)	(times)
Reported earnings/(losses) per share
(continuing operations)	156.7	60.0	2.61	(14.7)	96.7	(0.15)
Adjusted earnings per share
(continuing operations)	158.5	60.0	2.64	166.0	96.7	1.72

APM

12. Acquisitions and disposals

12.1. Acquisitions

Current year acquisitions

Enerveo acquisition

On 22 March 2024, the Group completed the acquisition of Enerveo Limited (‘Enerveo’) from Aurelius Antelope Limited (‘Aurelius’) for

cash consideration of £1.0m. Enerveo (formerly named SSE Contracting Limited) is a former subsidiary of the Group that was disposed to

Aurelius on 30 June 2021. Under the terms of the sale agreement in 2021, SSE retained performance guarantees over certain contracts

delivered by Enerveo. In the six months ended 30 September 2023, the Group recognised an exceptional charge of £50.5m in relation to its

estimated settlement costs in relation to these guarantees in accordance with IFRS 9, which included cash advances to Enerveo of £12.3m.

In the previous financial year the Group had also recognised provisions for amounts due from Enerveo and Aurelius totalling £12.2m.

On completion of the transaction on 22 March 2024, the Group reversed the exceptional charge of £50.5m recognised in the first half

of the financial year. Due to the consolidation of liabilities retained by Enerveo which SSE had made provision against, the reacquisition

of Enerveo resulted in a gain of £4.6m, which has been recognised as an exceptional item in the year. Following completion, SSE has

restructured and settled external liabilities totalling £15.2m and settled certain balances of £30.9m due to SSE companies which are

included in the acquired balances below. At 31 March 2024, the goodwill balance of £5.6m implied by the transaction was written off.

This write-off has been included within the total gain of £4.6m referred above. SSE is currently conducting a review to develop and then

implement a longer-term strategy for each part of the business. The following table summarises the assets and liabilities acquired in

the transaction.

236 SSE plc Annual Report 2024

12. Acquisitions and disposals continued

12.1. Acquisitions continued

	Fair value at
	22 March 2024
	£m
Assets acquired and liabilities assumed
Property, plant and equipment	11.7
Intangible assets	2.5
Inventories	3.9
Trade and other receivables	40.1
Prepayments and accrued income	55.1
Cash	13.2
Trade and other payables	(91.0)
Deferred income	(20.0)
Lease liabilities	(12.8)
Provisions	(7.3)
Total net liabilities acquired	(4.6)
Goodwill	5.6
Cash consideration	1.0

Prior year acquisitions

European onshore renewables development platform

On 1 September 2022 the Group completed the 100% acquisition of a European onshore renewable energy development platform from

Siemens Gamesa Renewable Energy (“SGRE”) for cash consideration of £519.5m. The SGRE portfolio is mainly located in Spain with the

remainder across France, Italy and Greece.

The intangible development assets acquired were late-stage windfarm development costs. The goodwill recognised represents early-stage

intangible development costs that do not qualify for separate recognition as set out in the table below.

	Fair value at
	1 September
	2022
	£m
Assets acquired and liabilities assumed
Intangible development assets	104.4
Inventories	3.0
Trade and other receivables	20.3
Cash	11.5
Trade and other payables	(3.5)
Deferred tax liability (note 10)	(27.0)
Total net assets acquired	108.7
Goodwill	410.8
Cash consideration	519.5

Triton Power – 50% joint venture acquisition

On 1 September 2022, the Group announced that SSE Thermal and Equinor had completed the acquisition of Triton Power Holdings

Limited from Energy Capital Partners for headline consideration of £341.0m shared equally. The headline consideration included £96.0m

of loans which were settled on completion of the transaction and replaced with shareholder loans of £48.0m each from SSE and Equinor.

The Group’s share of the cash consideration paid for the equity investment was therefore £123.2m after completion adjustments. Triton

Power operates the 1.2GW Saltend Power Station in the Humber along with two smaller plants, Indian Queens Power Station, a 140MW

OCGT in Cornwall, and Deeside Power Station, a decommissioned CCGT in north Wales. See note 7 for details of the exceptional gain

recognised in the prior year.

Other asset acquisitions

During the year ended 31 March 2023, the Group made other smaller asset acquisitions (of special purpose vehicles as opposed to

businesses) for cash consideration of £19.8m and deferred consideration of £34.9m. The total cash consideration for business

combinations of £642.7m is included in the Group’s Adjusted investment, capital and acquisition metric.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

237SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

12.2. Disposals

i. Significant disposals

Current year disposals

There have been no significant disposals in the current year.

Prior year disposals

During the year ended 31 March 2023 the Group recognised a gain of £868.3m within equity from the sale of a 25% non-controlling equity

stake in its SSEN Transmission business (being the company Scottish Hydro Electric Transmission plc) and an exceptional income statement

gain of £89.1m from the disposal of the Fiddler’s Ferry site.

25% non-controlling equity stake in Scottish Hydro Electric Transmission plc: On 30 November 2022, the Group completed the

disposal of a 25% non-controlling equity stake in Scottish Hydro Electric Transmission plc (‘SHET’) to Ontario Teachers’ Pension Plan

(‘OTPP’) for cash consideration of £1,465.0m, less transactions costs of £16.9m, at which time the consolidated carrying value of SHET’s

net assets was £2,319.3m. As the transaction did not result in a loss of control, the Group recognised a gain of £868.3m within equity

attributable to owners of the parent company. The Group considered the rights and obligations and operating protocols arising from the

disposal and has determined that the non-controlling interest in SHET has the characteristics of equity and has classified the non-

controlling interest as such.

	30 November
	2022
	£m
Carrying value of non-controlling interests disposed	(579.8)
Cash consideration paid by non-controlling interest holder	1,465.0
Transaction costs	(16.9)
Excess of consideration received recognised in equity	868.3

Fiddler’s Ferry land sale: On 30 June 2022, the Fiddler’s Ferry site was sold to Peel NRE Developments Limited for cash proceeds of £60m.

The Group released a decommissioning provision related to the site, which resulted in an exceptional gain on disposal of £89.1m.

ii. Prior year disposal reconciliation

The following table summarises disposals of subsidiaries, businesses and assets during the prior financial year, including other assets and

investments disposed of as part of the normal course of business but before recognition of impairment charges, which are noted in the

relevant respective notes to the financial statements.

	2023
	£m
Net assets disposed:
Property, plant and equipment	24.1
Provisions	(88.2)
Net assets	(64.1)
Proceeds of disposal:
Consideration	60.0
Net proceeds	60.0
Gain on disposal	124.1
Presentation:
Continuing operations
Income statement exceptional gain	89.1
	89.1
Discontinuing operations
Income statement exceptional credit	35.0
SSE Group	124.1

	2023
	£m
Net proceeds of disposal	60.0
Net cash proceeds	60.0
Plus net cash proceeds from sale of non-controlling interest in SHET	1,448.1
Net cash proceeds	1,508.1

238 SSE plc Annual Report 2024

13. Intangible assets

		Allowances
		and	Development	Other	Software
	Goodwill	Certificates	assets	intangibles	Assets	Total
	£m	£m	£m	£m	£m	£m
Cost:
At 31 March 2022	704.9	686.8	354.4	115.9	912.2	2,774.2
Additions	–	805.2	235.9	–	132.3	1,173.4
Acquired through business combinations	410.8	–	104.4	–	–	515.2
Transfer (to)/from property plant
and equipment (note 14)	–	–	(2.6)	–	45.5	42.9
Disposals/utilised	–	(810.1)	(18.4)	–	(6.4)	(834.9)
Exchange adjustments	34.8	0.5	7.9	–	–	43.2
At 31 March 2023	1,150.5	682.4	681.6	115.9	1,083.6	3,714.0
Additions	–	774.5	369.7	2.5	167.5	1,314.2
Transfer (to)/from property plant and equipment
(note 14)	–	–	(50.7)	–	1.7	(49.0)
Disposals/utilised	–	(474.3)	(3.9)	–	(1.1)	(479.3)
Exchange adjustments	(19.9)	(0.4)	(6.1)	–	–	(26.4)
At 31 March 2024	1,130.6	982.2	990.6	118.4	1,251.7	4,473.5
Aggregate amortisation and impairment:
At 31 March 2022	(192.9)	(227. 5)	(153.3)	(114.6)	(498.8)	(1 ,187.1 )
Charge for the year	–	–	–	(0.3)	(54.3)	(54.6)
Transfer from property plant and equipment (note 14)	–	–	–	–	(41.6)	(41.6)
Disposals/utilised	–	–	–	–	3.3	3.3
Non-exceptional impairment charge	–	–	(4.2)	–	(14.6)	(18.8)
At 31 March 2023	(192.9)	(227.5)	(157.5)	(114.9)	(606.0)	(1,298.8)
Charge for the year	–	–	–	–	(63.3)	(63.3)
Transfer to property plant and equipment (note 14)	–	–	1.5	–	–	1.5
Disposals/utilised	–	–	–	–	0.1	0.1
Non-exceptional impairment charge	–	–	(15.4)	–	(18.3)	(33.7)
At 31 March 2024	(192.9)	(227. 5)	(171.4)	(115.9)	(687.5)	(1,394.2)
Carrying amount:
At 31 March 2024	937.7	754.7	819.2	3.5	564.2	3,079.3
At 31 March 2023	957.6	454.9	524.1	1.0	477.6	2,415.2
At 1 April 2022	512.0	459.3	201.1	1.3	413.4	1, 587.1

(i)

(i) The non-exceptional impairments in both years relate to assets where future development became uncertain or untenable in the year. The impairment of these items does not

meet the Group’s definition of an exceptional item, therefore they are included in the adjusted and reported results of the Group.

Intangible assets have been analysed as current and non-current as follows:

	2024	2023
	£m	£m
Current	754.7	454.9
Non-current	2,324.6	1,960.3
	3,079.3	2,415.2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

239SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

i. Goodwill

At inception, goodwill arising from business combinations is allocated to cash-generating units (CGUs) or groups of CGUs for impairment

testing purposes. Certain goodwill valuations have changed in the current year following retranslation. Commentary on the impairment

testing of the related CGUs, with the exception of two historic balances totalling £8.2m, is included in note 15.

A summary of the goodwill allocated to CGUs and the Group’s operating segments is presented below:

		2024	2023
CGU group	Operating Segment	£m	£m
Great Britain and Ireland windfarms	SSE Renewables	288.8	292.3
SSE Pacifico	SSE Renewables	191.5	196.0
SSE Southern Europe	SSE Renewables	416.8	428.7
Energy Solutions	SSE Business Energy & SSE Enterprise	32.4	32.4
Ireland Supply	SSE Airtricity	8.2	8.2
		937.7	957.6

1 Relates to the acquisition on 29 October 2021 of an 80% equity interest in an offshore wind development platform from Pacifico Energy.

2 SSE Southern Europe relates to the acquisition on 1 September 2022 of the SGRE renewable platform in Spain, France, Greece and Italy (see note 12.1). The Group has assessed

that the four CGUs support the carrying value of the goodwill.

3 Energy Solutions includes goodwill balances arising from the historic acquisitions of The Energy Solutions Group Limited (TESGL) of £31.7m (2023: £31.7m) and a further £0.7m

(2023: £0.7m) in relation to the acquisition of SSE Airtricity Energy Services (NI) Limited (formerly Fusion Heating Limited). The amount of goodwill associated with the historic

businesses is not significant in context of the aggregate carrying value of the business units or the aggregate value of goodwill held by the Group.

4 The value associated with the Ireland supply goodwill represents the difference between the fair value attributed to the Northern Ireland based Phoenix Energy business acquired

in 2012 and the book value of those assets. No impairment has been recognised during the year on this balance.

ii. Allowances and certificates

Allowances and Certificates consist of purchased carbon emissions allowances and generated or purchased renewable obligations

certificates (ROCs). These allowances and certificates will be utilised in settlement of environmental obligations incurred by the Group’s

SSE Thermal and SSE Business Energy supply business and are therefore distinct from allowances and certificates held in excess of the

Group’s environmental obligations which are recorded within inventories.

iii. Development assets

Development costs primarily relate to the design, construction and testing of Thermal, Renewable and Solar and Battery assets, which the

Group believes will generate probable future economic benefits. Costs capitalised as development intangibles include options over land

rights, planning application costs, environmental impact studies and other costs incurred in bringing windfarms and other development

projects to the consented stage. These may be costs incurred directly or at a cost as part of the fair value attribution on acquisition.

At the point the development reaches the consent stage and is approved for construction, the carrying value is transferred to property,

plant and equipment (note 14). At the point a project is no longer expected to reach the consented stage, the carrying amount of the

project is impaired.

iv. Other intangible assets

Included within other intangible assets are brands, customer lists and contracts.

No exceptional or non-exceptional impairment charges have been recognised in the year (2023: £nil).

v. Software assets

Software assets include application software license fees, software development work, software upgrades and purchased PC software

packages. The Group also has a number of contracts for Software as a Service (SaaS) and Platform as a Service (PaaS) Cloud Computing

Arrangements which permit access to vendor-hosted software and platform services over the term of the arrangement. Where the Group

does not control the underlying assets in these arrangements, costs are expensed as incurred. The Group also incurs implementation costs

in respect of these contracts. Implementation costs are capitalised as intangible assets where costs meet the definition and recognition

criteria of an intangible asset under IAS 38 by being separable and controlled by the Group. During the current and prior year the Group

has capitalised costs in relation to its new Business Energy billing system.

240 SSE plc Annual Report 2024

14. Property, plant and equipment

	Thermal	Renewable
	power	power		Distribution	Transmission		Assets
	generation	generation		network	network	Land and	under	Other
	assets	assets		assets	assets	buildings	construction	assets	Total
	£m	£m		£m	£m	£m	£m	£m	£m
Cost:
At 31 March 2022	3,863.1	4,686.0		9,499.6	5,110.5	554.1	853.6	1,422.3	25,989.2
Additions	–	–		95.8	–	45.4	1,323.5	35.4	1,500.1
Adjustment to decommissioning asset	(11.1)	(89.5)		–	–	–	–	(44.9)	(145.5)
Transfer (to)/from intangible assets (note 13)	–	–		–	–	–	2.6	(45.5)	(42.9)
Transfer from assets under construction	433.8	22.5		402.3	531.6	4.8	(1,412.5)	17.5	–
Disposals	(638.9)	(4.8)		–	–	(13.5)	(0.1)	(40.2)	(697.5)
Exchange rate adjustments	24.6	38.5		–	–	0.6	1.6	2.7	68.0
At 31 March 2023	3,671.5	4,652.7		9,997.7	5,642.1	591.4	768.7	1, 347. 3	26,671.4
Additions	–	–		91.3	1.0	34.3	1,803.1	41.7	1,971.4
Adjustment to decommissioning asset	(5.5)	1.7		–	–	–	–	(2.4)	(6.2)
Transfer from intangible assets (note 13)	–	–		–	–	–	49.0	–	49.0
Transfer from assets
under construction	2.9	44.7		489.9	773.9	5.2	(1,352.8)	36.2	–
Transfer between categories	(19.1)	–		–	–	–	–	19.1	–
Disposals (iv)	–	–		(15.0)	–	(2.6)	(0.8)	(13.3)	(31.7)
Exchange rate adjustments	(15.9)	(26.0)		–	–	0.8	(3.3)	(0.3)	(44.7)
At 31 March 2024	3,633.9	4,673.1		10,563.9	6,417.0	629.1	1,263.9	1,428.3	28,609.2
Depreciation:
At 31 March 2022	(3,004.4)	(1,915.6)		(4,376.8)	(771.8)	(224.0)	(10.8)	(1,073.0)	(11,376.4)
Charge for the year	(106.3)	(153.9)		(163.2)	(97.7 )	(17.0)	–	(67.6)	(605.7)
Impairment reversals
(note 7)	17.8	–		–	–	–	–	45.7	63.5
Non-exceptional
impairment charges	(10.6)	(12.5)		–	–	(1.0)	(0.3)	(0.7)	(25.1)
Transfer to intangible assets
(note 13)	–	–		2.3	–	–	6.0	33.3	41.6
Transfers	4.1	–		–	–	–	(4.1)	–	–
Disposals	612.8	3.1		–	–	5.5	–	35.6	657.0
Exchange rate adjustments	(11.1)	(16.4)		–	–	(0.6)	(0.2)	(2.1)	(30.4)
At 31 March 2023	(2,497.7)	(2,095.3)	(4,53	7.7)	(869.5)	(237.1)	(9.4)	(1,028.8)	(11,275.5)
Charge for the year	(103.5)	(150.9)		(173.8)	(116.0)	(17.2)	–	(67. 2)	(628.6)
Transfer between categories	1.2	–		–	–	–	–	(1.2)	–
Exceptional impairment
charges	–	–		–	–	–	–	(134.1)	(134.1)
Non-exceptional
impairment reversals/
(charges)	–	4.8		–	–	(1.1)	–	(3.0)	0.7
Transfers to intangible assets	–	–		–	–	–	(1.5)	–	(1.5)
Disposals	–	–		6.7	–	1.0	–	12.5	20.2
Exchange rate adjustments	8.1	12.0		–	–	0.5	–	0.5	21.1
At 31 March 2024	(2,591.9)	(2,229.4)		(4,704.8)	(985.5)	(253.9)	(10.9)	(1,221.3)	(11,997.7)
Net book value
At 31 March 2024	1,042.0	2,443.7		5,859.1	5,431.5	375.2	1,253.0	207.0	16,611.5
At 31 March 2023	1,173.8	2, 557.4		5,460.0	4,772.6	354.3	759.3	318.5	15,395.9
At 1 April 2022	858.7	2,770.4		5,122.8	4,338.7	330.1	842.8	349.3	14,612.8

(i)

(ii)

(iii)

(ii)

(iii)

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

241SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

(i) Thermal and Renewable generation assets include generation plant and machinery and related land and buildings. The net book value of power generation assets renewables and

thermal includes decommissioning costs with a net book value of £119.0m and £68.1m (2023: £89.6m and £88.6m) respectively. Additionally, Other assets includes £55.3m in

relation to decommissioning costs for Gas Storage assets (2023: £55.5m).

(ii) Represents the carrying value of development assets transferred from intangible assets (note 13) which have reached the consent stage and have been approved for construction

and also includes reclassification of software assets to intangible assets.

(iii) Impairment (charges)/reversals relate to exceptional impairment charges of £134.1m relating to the Group’s gas storage operations at Aldbrough and Atwick (see note 7) (2023:

exceptional impairment reversals of £63.5m (relating to Great Island CCGT and Aldbrough)) and non-exceptional impairment reversals of £0.7m (2023: £25.1m charges).

Included within property, plant and equipment are the following right of use assets for leased assets:

	Thermal
	power
	generation	Land	Distribution	Other
	assets	and buildings	network assets	assets	Total
	£m	£m	£m	£m	£m
Cost
At 31 March 2022	369.6	203.1	12.2	95.7	680.6
Additions	–	45.4	–	33.1	78.5
Disposals	–	(1.0)	–	(12.9)	(13.9)
At 31 March 2023	369.6	247. 5	12.2	115.9	745.2
Additions	–	32.4	–	40.6	73.0
Disposals	–	(1.8)	(6.7)	(10.6)	(19.1)
Exchange rate adjustments	–	4.3	–	–	4.3
At 31 March 2024	369.6	282.4	5.5	145.9	803.4
Depreciation
At 31 March 2022	(233.6)	(31.1)	(4.8)	(36.3)	(305.8)
Charge for the year	(18.5)	(11.9)	(7.4)	(19.8)	(57.6)
Disposals	–	0.3	–	12.2	12.5
Impairment reversal	–	(0.5)	–	–	(0.5)
At 31 March 2023	(252.1)	(43.2)	(12.2)	(43.9)	(351.4)
Charge for the year	(11.9)	(11.3)	–	(23.8)	(47.0)
Disposals	–	0.5	6.7	10.0	17.2
At 31 March 2024	(264.0)	(54.0)	(5.5)	(57.7)	(381.2)
Net book value
At 31 March 2024	105.6	228.4	–	88.2	422.2
At 31 March 2023	1 17. 5	204.3	–	72.0	393.8
At 1 April 2022	136.0	172.0	7.4	59.4	374.8

15. Impairment testing

Goodwill and intangible assets that are not amortised are reviewed at least annually for impairment. Property, plant and equipment,

investments and other intangibles are assessed annually for impairment (or impairment reversal) triggers.

The Group’s accounting policies and methodologies for impairment testing are described at Accompanying Information sections A1.2.

The key operating and valuation assumptions, specific considerations and outcome of tests for all impairment reviews are noted in the

following sections. The discount rates used are pre-tax real, except where noted, and reflect specific risks attributable to the relevant assets

subject to impairment review. The recoverable amounts derived from the VIU or FVLCS calculations are compared to the carrying amount

of each asset or CGU to determine whether an impairment charge requires to be recognised. The reviews carried out for the 2024 financial

statements were carried out in the fourth quarter of the year, which is consistent with previous reviews. Note that the actual outcomes may

differ from the assumptions included in the assessments at the balance sheet date.

15.1. Goodwill impairment reviews – CGUs testing

The Group has determined that it has three goodwill balances within its SSE Renewables business (GB and Ireland, SSE Southern Europe

and SSE Pacifico) that are subject to annual goodwill impairment reviews. In addition, the Group has a legacy goodwill balance within the

Energy Customer Solutions business. The recoverable amounts of the CGUs supporting the goodwill balances are determined by reference

to value-in-use (‘VIU’) calculations. The VIU calculations use, as a starting point, pre-tax cash flow projections based on the Group’s ten

year Corporate Model as approved by the Board. The Group’s Corporate Model is based both on past experience and reflects the Group’s

forward view of markets, prices, risks and its strategic objectives. Commodity prices used are based on observable market data and, where

this is not available, on internal estimates.

242 SSE plc Annual Report 2024

15. Impairment testing continued

15.1. Goodwill impairment reviews – CGUs testing continued

	Cash flow period
Assets/CGUs	assumption	Operating and other valuation assumptions	Commentary and impairment conclusions
Great Britain	Period to end	Modelling methodology and assumptions	Impairment conclusion
(GB) and Ireland	of life of	The VIU assessment is used to test the carrying	The recoverable amount of the GB and Ireland
windfarm CGUs	portfolio assets	value of £288.8m (2023: £292.3m) of goodwill	CGUs at 31 March 2024 is significantly in excess
		related to the Group’s GB and Ireland windfarm	of the carrying value of the goodwill and
		CGUs. The assessment is based on the	tangible and intangible assets attributed to
		discounted pre-tax cash flows expected to be	the CGUs. Therefore no impairment has
		generated by the specific wind farm assets	been recognised.
		included in the CGU across the remaining useful	Sensitivity analysis
		lives of those assets.
			The principal assumptions impacting the
		The GB and Ireland CGU includes cashflows for	valuation model of the GB and Ireland CGU
		operational assets only, being over 50 individual	are discount rate, generation volume and
		windfarms across Great Britain and Ireland,	electricity price.
		given the risk and uncertainty associated with	While cash flow projections are subject to
		projects in the development stage. Significant	inherent uncertainty, a 10% power price
		developments at Viking, Aberarder, Yellow River,	decrease and a 15% decrease in projected
		Strathy South and Dogger Bank A and B are	generation volumes were modelled, both of
		currently under construction and continue	which indicated significant headroom on the
		to be excluded from the analysis.
			carrying value of the assets.
		Cash inflows for the CGUs are based on the	A 0.5% increase in the pre-tax real discount
		expected average annual generation output	rate to 7.7% for GB and 5.7% for Ireland, also
		based on technical assessment and past	indicated significant headroom on the carrying
		experience and are valued based on forward	value of the assets.
		power prices. These factors are subject to
		management review on an annual basis. The	TCFD related sensitivity analysis
		prices applied to projected outputs are based	A significant increase in renewable generation
		either on observable market information during	capacity in the Group’s core markets could
		that period, which is deemed to be 3 years, or	result in an oversupply of renewable electricity
		on internal estimations beyond the observable	at a point in the future, which would lead to a
		market period (a Level 3 basis as defined by IFRS	consequential decrease in the power price
		13 Fair Value Measurement). The projections are	achievable for the Group’s GB and Ireland wind
		also dependent on the UK and Irish governments’	generation assets. A downside power price
		continuing support for existing qualifying wind	sensitivity, which may arise in a market with
		assets through CFD subsidies and ROCs or REFIT.	significant new build wind was modelled. This
		Cash outflows are based on planned and	scenario indicated that, despite a modelled 15%
		expected maintenance profiles and other	reduction in forecast wind power price, there
		capital or replacement costs.	remained significant headroom on the carrying
		The cash flow projections are based on UK and	value in the Group’s GB and Ireland wind
			generation assets.
		Irish power prices between £63 – £117 per MWh
		(2023: £55 – £169 per MWh) and have been	Changes to weather patterns resulting from
		discounted applying a pre-tax real discount rate	global warming could result in calmer weather,
		between 7.2% for GB and 5.2% for Ireland (2023:	which may reduce volumes achievable for the
		between 6.9% for GB and 5.8% for Ireland) based	Group’s GB and Ireland wind generation assets
		on technology and market risks.	(although noting that a reduction in volume
			would likely lead to capacity constraints and
			hence higher prices). A 4–8% reduction in
			projected volume continued to show significant
			headroom on the carrying value in the Group’s
			GB and Ireland wind generation assets. This is in
			line with the TCFD “variable wind generation
			risk” scenario which indicated a reduction to
			average wind speed changes of 4% to 8% over
			the longer term.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

243SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

	Cash flow period
Assets/CGUs	assumption	Operating and other valuation assumptions	Commentary and impairment conclusions
SSE Southern	Period to end	Modelling methodology and assumptions	Impairment conclusion
Europe	of life of	The VIU assessment is used to test the carrying	The recoverable amount of the Southern
	portfolio assets	value of £416.8m of goodwill (2023: £428.7m)	Europe windfarm CGUs has been calculated at
		and £120.5m of intangible development assets	£572.8m (2023: £591.7m) and exceeds the
	(2023:	£116.1m) related to the Group’s Southern	carrying value of the goodwill and intangible
		Europe windfarms for impairment. As the	development assets. Therefore, no impairment
		Southern Europe platform is in early-stage	has been recognised at 31 March 2024.
		development, the assessment was based on	During the year the Group recorded a non-
		the discounted pre-tax cash flows based on a	exceptional impairment of €18.0m (£15.4m)
		comparable methodology to the acquisition	in respect of two early-stage development
		model but updated to reflect changes	projects projects where the probability of
		to specific project circumstances and wider	success had decreased
		market developments since acquisition.
		The Southern Europe CGU model includes	Sensitivity analysis
		cashflows for early-stage development assets,	The principal assumptions impacting the
		being c65 individual windfarm and co-located	valuation model of the Southern Europe
		solar projects across Spain, France, Italy and	windfarm CGU are discount rate, generation
		Greece. Due to the early stage nature of the	volume, electricity price and development
			probability of success.
		portfolio, each project has been attributed a
		probability of development success.	While cash flow projections are subject to
		Cashflows for the CGUs are based on the	inherent uncertainty, a 10% reduction in
		expected average annual generation output	greenfield generation volume was modelled
			which indicated continued headroom.
		based on technical assessment valued using
		forward power price projections. These factors	A 5% reduction in the probability of success
		are subject to management review on an annual	attributed to the development projects would
		basis. The prices applied to projected outputs are	result in a marginal impairment of £2.6m on the
		based on observable market information during	carrying value.
		the period. Assumptions have also been made on	An increase of 0.1% in the respective pre-tax
		the Spanish, French, Italian and Greek	real discount rates (Spain: 6.2% France: 6.3%,
		government’s support for the development of	Italy: 6.7% and Greece: 6.5%) results in nil
		wind projects and expected governmental	headroom and a 0.5% increase in the respective
		support under CFD subsides. Cash outflows are	pre-tax real discount rates indicates an
		based on planned and expected maintenance	impairment of £100.0m.
		profiles and other capital or replacement costs.
		The cash flow projections are based on European	Within the base case model the Group has
		power prices between €38 – €141 per MWh	assessed that many of the projects in Spain,
		(2023: €33 – €209 per MWh) and have been	Italy and France will obtain a revenue support
		discounted applying a pre-tax real discount rate	contract. If this assumption were changed and
		between 6.2% and 6.7% (2023: 6.4% and 7.3%)	the projects were developed on a merchant
		based on technology and market risks.	basis, the price assumptions applied in the
			model would increase, although would likely
			be offset by a compensatory increase in the
			discount rate. An impairment would be
			recognised as a result of a 1.4% decrease in the
			merchant price if the projects were developed
			on a merchant basis.

244 SSE plc Annual Report 2024

	Cash flow period
Assets/CGUs	assumption	Operating and other valuation assumptions	Commentary and impairment conclusions
SSE Pacifico	Period to end	Modelling methodology and assumptions	Impairment conclusion
	of life of	The VIU assessment is used to test the carrying	While the assessed VIU of £290.0m (2023:
	portfolio assets	value of £191.5m of goodwill (2023: £196.0m)	£316.9m) exceeds the carrying value at
		and £26.9m of intangible development assets	31 March 2024, the early stage of the
	(2023:	£30.8m) relating to SSE Pacifico. SSE	development investment means that the model
		Pacifico is an early-stage Japanese offshore wind	is sensitive to changes in key assumptions. The
		portfolio acquired on 29 October 2021. The	Group’s base case model, reflecting the Group’s
		projects in SSE Pacifico remain at an early stage.	best estimate of observable inputs to the
		Therefore, the assessment was based on the	model, indicates headroom on the carrying
		discounted pre-tax cash flows prepared on	value of the asset. Therefore, no impairment
		comparable basis to the acquisition model,	has been recognised at 31 March 2024.
		updated to reflect changes to specific project	Sensitivity analysis
		circumstances and wider market developments	As noted above, the value in use model is
		since acquisition.
			sensitive to changes in key input assumptions.
		Cash inflows for the CGU model are based on	The principal assumptions impacting the
		the Group’s latest projections for expected	valuation model of the SSE Pacifico CGU are:
		average annual generation output based on	revenue support contract price; generation
		technical assessment and are valued based on	volumes; the proportion of external funding
		the Group’s internal projections of forward power	achievable; discount rate; and project
		prices under revenue support contracts available	probability of success.
		in Japan. The projections are dependent on the	A 10% decrease in forecast power price to
		Japanese government’s continued support for	between ¥10 – ¥27 per kWh under revenue
		the development of offshore wind projects.
			support scheme results in a full impairment of
		Cash outflows are based on forecast asset costs,	carrying value.
		planned and expected maintenance profiles and	A 1 percentage point reduction to the
		other capital or replacement costs.
			generation capacity factor results in an
		For the purposes of the impairment test, the VIU	impairment of £25.4m.
		model includes cashflows for three early-stage	A 0.25% increase to the Group’s assumption on
		offshore wind projects (2023: four) out of a total	external funding proportion decreases the
		of 11 acquired by the Group.
			headroom to £30.1m.
		The cash flow projections are based on Japanese	A 0.5% increase to the discount rate assumption
		power prices, per foundation type, between ¥12	decreases the headroom to £41.2m.
		– ¥30 per kWh (2023: ¥15 – ¥28 per kWh) and
		have been discounted applying a pre-tax real	A decrease of project probability from three to
		discount rate of 9.7% (2023: 8.5%) based on	two early stage projects results in a range of
		technology and market risks. The discount rate is	outcomes from headroom of £6.3m to an
		based on assumptions of the capital cost of the	impairment of £68.1m.
		project and the proportion of external project
		funding available in the local market.
Energy	5 years	Modelling methodology and assumptions	Conclusion
Customer		The Group has capitalised goodwill of £31.7m	At 31 March 2024, the impairment review
Solutions	(2023:	£31.7m) in relation to the acquisition	indicates headroom of £16.8m on the carrying
		of the Energy Solutions Group in 2016. The	value of £31.7m. A decrease in forecast
		business designs, installs and optimises building	cashflows of 20% would result in headroom of
		management technologies which deliver efficient	£7.1m. An increase in the discount rate of 2.5%
		operating environments for its customers.	would result in an impairment of £0.3m.
		The VIU of the business CGU has been based on
		an 8.0% (2023: 5.6%) pre-tax real discount rate.

15. Impairment testing continued

15.1. Goodwill impairment reviews – CGUs testing continued

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

245SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

15.2. Property, plant and equipment, other intangibles and investment impairment reviews – asset testing

Where an indicator of impairment exists, the recoverable amounts of the Group’s property, plant and equipment, other intangible assets

and interests in joint ventures and associates are determined by reference to VIU or, where appropriate, fair value less costs to sell

calculations. The calculations use, as their starting point, pre-tax cash flow projections based on the Group’s ten year Corporate Model as

approved by the Board. The Group’s Corporate Model is based on past experience and reflects the Group’s forward view of markets, prices,

risks and its strategic objectives. Commodity prices used are based on observable market data and, where this is not available, on internal

estimates. Fair value less costs to sell valuations are derived from market analysis for similar transactions, adjusted to specific circumstances

of the Group’s investment to reflect the amount the Group believes will be recoverable in a sale transaction. Note that the Group will

expense any individual asset, investment or development asset, should it clearly be damaged, obsolete or economically impaired, as part

of its normal course of business.

Changes from prior year

The specific assets and investments identified for impairment reviews in the prior year (being the GB CCGTs; Great Island CCGTs;

Gas Storage facilities at Aldbrough and Atwick; 50% joint venture investment in Triton Power; and 50% joint venture investment in Neos

Networks) continued to display indicators of impairment and all remained subject to impairment testing at 31 March 2024. No new assets

were identified as displaying indicators of impairment or impairment reversal.

246 SSE plc Annual Report 2024

	Cash flow
Assets	period assumption	Operating and other valuation assumptions	Commentary and impairment conclusions
GB CCGTs	Period to end	Modelling methodology and assumptions	Conclusion
(Keadby, Medway,	of life	The VIU of the Group’s GB combined cycle gas	At 31 March 2024 the fair valuation exercise
Peterhead and		turbine (‘CCGT’) power stations were based on	indicated reduced, but still significant,
Marchwood (PPA		pre-tax discounted cash flows expected to be	headroom above the carrying value, therefore
Right of use lease		generated by each plant, based on	no impairment was recognised.
asset) power		management’s view of operating prospects and	Sensitivity analysis
stations)		operational flexibility within the GB wholesale	A 20% decrease in gross margin would continue
		market, including capacity market clearing prices.	to result in significant headroom for each asset.
		Cash flows are subject to a pre-tax real discount
		rate between 10.0% and 15.3% (2023: between	Due to many of the assets nearing the end of
	10.0% and	19.4%).	their useful lives, the impairment models are
		Changes from prior year	not sensitive to the discount rate, therefore no
		Certain assets within the Group’s GB CCGT fleet	sensitivity analysis on the discount rate was
			performed.
		are nearing the end of their operational life and
		are therefore more sensitive to fluctuations in	The assets which have had their useful lives
		market assumptions. During the year, a technical	extended in the period have done so due to
		assessment has been performed which resulted	being awarded capacity mechanism contracts
		in an extension change to end of life assumptions	in the T-4 auction. These assets would be more
		for Keadby, Medway and Peterhead, from March	sensitive to fluctuations in non-contracted
		2028 to March 2030.	capacity mechanism prices, however a
		At 31 March 2024, decreases in short-term gas	sensitivity has not been performed as the assets
		and carbon prices have resulted in a decrease in	subject to impairment testing are contracted
			into future periods.
		UK power prices. As a result, the observable spark
		margins assumed for the GB CCGT assets has	TCFD related sensitivity analysis – GB CCGTs
		decreased, which was considered an indicator	The future introduction of legislation restricting
		of impairment at 31 March 2024.	power generation from unabated gas fired
			power stations beyond 2030 has been identified
			as a potential risk the Group could be exposed
			to as the UK transitions to a net zero economy.
			This has not been treated as an indicator of
			impairment at 31 March 2024 as legislation has
			not been introduced or enacted by the balance
			sheet date and therefore has not been factored
			into the impairment analysis above.
			Despite the extension of the useful lives for
			Keadby, Peterhead and Medway, most of the
			Group’s GB CCGTs are nearing the end of their
			economic life and are projected to cease
			operations by 2030. Of the Group’s GB CCGTs,
			only Keadby 2, Marchwood and Saltend (Triton)
			are projected to operate beyond this date. If
			legislation was introduced requiring the closure
			of these assets by 2030, it would result in an
			impairment of £155.3m to Keadby and an
			impairment of £54m to the equity investment in
			Marchwood at 31 March 2024. The sensitivity
			for Saltend (Triton) is included later in this note.
			Under the TCFD Accelerated Gas Closure risk
			risk	2030	1.5°C scenario, the indicative potential
			present value of the future economic benefit
			lost from early closure of Keadby 2 and
					Marchwood by 2030 was in the range of £0.3bn
				– £0.4bn.

15. Impairment testing continued

15.2. Property, plant and equipment, other intangibles and investment impairment reviews – asset testing

continued

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

247SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

	Cash flow
Assets	period assumption	Operating and other valuation assumptions	Commentary and impairment conclusions
Great Island	Period to end	Modelling methodology and assumptions	Conclusion
CCGT	of life	The VIU of the Group’s Great Island CCGT power	The VIU assessment performed on the asset
		station was based on pre-tax discounted cash	at 31 March 2024 indicated no impairment.
		flows expected to be generated by the plant	The carrying value of the Great Island asset at
		based on management’s view of the plant’s	31 March 2024 is £251.6m (2023: £269.9m)
		operating prospects. Cash flows are subject to a	against an assessed recoverable value of
		pre-tax real discount rate of 11.2% (2023: 12.4%)	£320.2m (2023: £280.4m).
		reflecting the specific risks in the Irish market.
			Sensitivity analysis
			A 0.5% increase in the discount rate would
			continue to result in significant headroom.
			A 20% decrease in gross margin would result in
			an impairment of £14.5m.
			A €10/KW decrease in projected non-
			contracted capacity market prices would
			continue to result in significant headroom.
			TCFD related sensitivity analysis – Great
			Island CCGTs
			The future introduction of legislation restricting
			power generation from unabated gas fired
			power stations beyond 2030 has been identified
			as a potential risk the Group could be exposed
			to as Ireland transitions to a net zero economy.
			This has not been treated as an indicator of
			impairment at 31 March 2024, as legislation has
			not been introduced or enacted by the balance
			sheet date and therefore has not been factored
			into the impairment analysis above.
			Great Island is projected to operate beyond
			2030,	and so while legislation has not been
			introduced requiring the shortening of the
			economic life to this date, the Group has
			performed a sensitivity analysis to the
			impairment test noted above. If legislation was
			introduced requiring the closure of Great Island
			by	2030,	it would result in an impairment of
			£60.8m at 31 March		2024.
			Under the TCFD Accelerated Gas Closure risk
			2030		1.5°C scenario, the indicative potential
			present value of future economic benefit lost
			from early closure of Great Island by 2030 was
			less than £0.1bn.

248 SSE plc Annual Report 2024

	Cash flow
Assets	period assumption	Operating and other valuation assumptions	Commentary and impairment conclusions
Gas Storage	Period to end	Modelling methodology and assumptions	Conclusion
assets (Atwick	of life	The VIU of the Group’s Gas Storage assets at	The VIU assessment performed on the assets
and Aldbrough)		Aldbrough and Atwick were based on pre-tax	indicated an impairment of £85.7m (2023:
		discounted cash flows expected to be generated	£45.7m reversal) to Aldbrough and an impairment
		by the storage facilities based on management’s	of £48.4m to Atwick (2023: £nil).
		view of the assets’ operating prospects. Cash	Following the impairment assessment at
		flows are subject to a pre-tax real discount rate of	31 March 2024, the carrying value of Aldbrough is
		11.7% (2023: 18.8%) for Atwick and 10.4% (2023:	£3.0m (2023: £92.6m) and the carrying value of
		13.8%) for Aldbrough reflecting risks specific to	Atwick is £6.3m (2023: £62.3m). Both carrying
		the assets.
			values represent the net book value of the
		The key assumptions applied in the valuation of	storage assets and exclude the carrying value of
		the assets are gas price volatility and the mean	cushion gas volumes.
		reversion rate (‘MRR’). The gas price volatility	Sensitivity analysis – Atwick
		assumption reflects management’s view of price	A sensitivity performed with a high gas price
		fluctuations between periods where the Group	assumption (represents an increase in the price
		can purchase gas at a low price, store it and sell	by 10%) would reduce the impairment recognised
		during periods of peak prices. The assumption is	at the Atwick facility at 31 March 2024 from
		based on market observed volatility in the last	£48.4m to £38.1m. A low gas price assumption
		five years adjusted to remove periods of extreme	(represents a decrease in the price by 10%) would
		volatility and management’s view on projected	increase the impairment recognised at 31 March
		volatility in future periods. MRR represents the	2024 from £48.4m to £54.7m and would
		time taken for the market to return to average	represent a full impairment.
		after a period of increase or decline. The MRR
		combined with absolute gas price and volatility	A sensitivity performed with a high volatility
		rate derives management’s estimate of	assumption would reduce the impairment
		recoverable value of the assets. Management	recognised at the Atwick facility at 31 March 2024
		assessed that the decrease in gas prices observed	from £48.4m to £28.6m.
		during the year was a trigger for a formal	A low volatility assumption would increase the
		impairment review.
			impairment recognised at 31 March 2024 from
		The Group recorded exceptional impairments	£48.4m to £54.7m and would represent a full
		of £85.7m at 31 March 2024 (2023: £45.7m	impairment.
		impairment reversal) on its Aldbrough asset and	A high sensitivity of the MRR assumption
		£48.4m (2023: nil) on its Atwick asset, based	(represents an increase in the rate by 1.0) would
		largely on decreases to short term observable	reduce the impairment recognised at 31 March
		gas prices and lower volatility assumptions.	2024 from £48.4m to £26.0m.
			Sensitivity analysis – Aldbrough
			A sensitivity performed with a high gas price
			assumption (represents an increase in the price
			by 10%) would reduce the impairment recognised
			at 31 March 2024 from £85.7m to £67.5m. A low
			gas price assumption (represents a decrease in
			the price by 10%) would increase the impairment
			recognised at 31 March 2024 from £85.7m to
			£88.7m and would represent a full impairment.
			A sensitivity performed with a high volatility
			assumption would reduce the impairment
			recognised at 31 March 2024 from £85.7m to
			£49.7m.
			A low volatility assumption would increase the
			impairment recognised at 31 March 2024 from
			£85.7m to £88.7m and would represent a full
			impairment.
			A high sensitivity of the MRR assumption
			(represents an increase in the rate by 1.0) would
			reduce the impairment recognised at 31 March
			2024 from £85.7m to £43.7m.

15. Impairment testing continued

15.2. Property, plant and equipment, other intangibles and investment impairment reviews – asset testing

continued

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

249SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

	Cash flow
Assets	period assumption	Operating and other valuation assumptions	Commentary and impairment conclusions
Investment in	Period to end	Modelling methodology and assumptions	Conclusion
Triton Power	of life	The Group has valued its 50% joint venture	The Group has recorded an exceptional
Holdings Limited		investment Triton Power Holdings Limited	impairment of £63.2m (2023: £291.6m) on its
		(‘Triton’) based on projected cashflows that will	investment in Triton during the year. The
		be derived from the investment on a VIU basis.	impairment was recognised in the Group’s
		The VIU assessment of the Triton power stations	results for the six months ended 30 September
		(Saltend, Indian Queens and Deeside) were based	2023	. At 31 March 2024, the Group performed a
		on pre-tax discounted cash flows expected to be	no further impairment or impairment reversal	further impairment assessment which indicated
		generated by each plant, based on	existed at 31 March 2024.
		management’s view of operating prospects and
		operational flexibility within the GB wholesale	The Group acquired its investment in Triton on
		market, including capacity market clearing prices.	1 September 2022 during a period of significant
		Cash flows are subject to a pre-tax real discount	volatility in the UK power market. On acquisition
		rate of 13.2% (blended) (2023: 15.6% (blended)).	the Group recorded an exceptional gain on
		The decreases in short-term gas and carbon	acquisition due to movements in short term gas
		prices and the resultant decrease in UK power	and power prices between the purchase
		prices described in the GB CCGT impairment	agreement and completion dates. The Group’s	investment in Triton has been carried at fair value
		note above also acted as an indicator of	since acquisition and is therefore susceptible to
		impairment for Triton.
			movements in market observable assumptions.
			The Group’s carrying value of equity investment
			at 31 March 2024 is £152.5m (2023: £253.9m).
			Sensitivity analysis
			A 0.5% increase in the discount rate would
			increase the impairment recognised at 31 March
			2024 from £63.2m to £66.1m. A 0.5% decrease in
			the discount rate would reduce the impairment
			recognised from £63.2m to £57.4m.
			A 20% increase in gross margin would result in a
			reduction in the impairment charge to £39.6m,
			and a 20% decrease in gross margin would
			increase the impairment to £84.1m.
			A £10/KW increase in non-contracted capacity
			market price would decrease the impairment
			charge to £43.6m and a £10/KW decrease would
			increase the impairment charge to £80.2m.
			TCFD related sensitivity analysis – Triton
			The future introduction of legislation restricting
			power generation from unabated gas fired
			power stations beyond 2030 has been identified
			as a potential risk the Group could be exposed
			to as the UK transitions to a net zero economy.
			This has not been treated as an indicator of
			impairment at 31 March 2024, as legislation has
			not been introduced or enacted by the balance
			sheet date and therefore has not been factored
			into the impairment analysis above.
			Triton is projected to operate beyond this date,
			and so while legislation has not been introduced
			requiring the shortening of the economic life to
			this date, the Group has performed a sensitivity
			analysis to the impairment test noted above. If
			legislation was introduced requiring the closure
			of Triton by 2030, it would result in a further
			impairment to the investment in Triton of
			£78.2m at 31 March	2024.
			Under the TCFD Accelerated Gas Closure risk
			2030	1.5°C scenario, the indicative potential
			present value of the future economic benefit
			lost from early closure of Triton by 2030 was
			less than £0.1bn.

250 SSE plc Annual Report 2024

	Cash flow
Assets	period assumption	Operating and other valuation assumptions	Commentary and impairment conclusions
Investment in	n/a	Modelling methodology and assumptions	Conclusion
Neos Networks		The Group has valued its 50% joint venture	The valuation exercise resulted in a wide range
Limited		investment in Neos Networks Limited (‘NNL’)	of reasonably probable valuations for the
		based on projected valuations that could be	business from an impairment of £49.5m to an
		achieved in a market transaction, using earnings	impairment of £113.4m.
		multiples observable from recent similar	The Group has assessed that within this range
		transactions. Due to the nature of the valuation	of valuations, a point valuation resulting in an
		technique, which was performed to approximate	impairment of £73.6m (2023: £37.7m) best
		an achievable fair value less costs to sell, a wide	represents the recoverable value of the
		range of valuations were derived from this	investment.
		exercise. The Group has used a point estimate
		valuation within the range of possible valuations	Following the impairment, the Group’s carrying
		based on earnings targets and multiples that the	value of equity investment, shareholder loans
		Group believes are achievable. The Group has	and receivables due from NNL is £92.2m (2023:
		assessed that this is a Level 3 valuation in the fair	£174.8m).
		value hierarchy, with the key inputs being EBITDA	Sensitivity analysis
		and the transaction multiple.
			Sensitivity analysis was performed in relation to
			the EBITDA and the multiple applied in deriving
			the valuation. A 10% increase in the EBITDA
			assumption would reduce the impairment to
			£62.8m, whereas a 33% decrease in the EBITDA
			assumption would result in an impairment
			of £105.8m.
			A 10% decrease to the multiple assumption
			would result in an impairment of £85.1m,
			whereas a 10% increase to the multiple
			assumption would decrease the impairment
			to £61.6m.

16. Investments

16.1. Joint Ventures and associates

		2024			2023 (restated*)
	Equity	Loans	Total	Equity	Loans	Total
Share of net assets/cost	£m	£m	£m	£m	£m	£m
At 1 April	1,975.7	1,115.4	3,091.1	1,262.2	736.9	1,999.1
Additions	280.6	244.7	525.3	263.6	489.7	753.3
Repayment of shareholder loans	–	(14.6)	(14.6)	–	(61.4)	(61.4)
Dividends received	(223.7)	–	(223.7)	(294.1)	–	(294.1)
Share of profit after tax (i) – continuing operations	115.9	–	115.9	663.6	–	663.6
Share of other comprehensive income	(40.9)	–	(40.9)	342.4	–	342.4
Disposals	(3.0)	–	(3.0)	(0.2)	–	(0.2)
Transfer – Loans to Equity	(54.4)	54.4	–	50.0	(50.0)	–
Transfers – Other Investments	24.1	–	24.1	–	–	–
Impairments	(90.8)	(46.0)	(136.8)	(329.3)	–	(329.3)
Investment (decrease)/increase in respect of financial
guarantees	(18.9)	–	(18.9)	16.0	–	16.0
Exchange rate adjustments	(1.4)	(1.0)	(2.4)	1.5	0.2	1.7
At 31 March	1,963.2	1,352.9	3,316.1	1,975.7	1,115.4	3,091.1

(ii)

(iii)

(i) Of the £115.9m (2023: £663.6m) share of profits from continuing operations, only £114.1m (2023: £662.3m) is recognised through the income statement. The £1.8m (2023: £1.3m)

difference relates to profits earned from SSE Group companies where the costs have been capitalised. This profit has been eliminated on consolidation.

(ii) Impairments of £136.8m (2023: £329.3m) include charges of £63.2m (2023: £291.6m) in relation to the Group’s Triton joint venture, and £73.6m (2023: £37.7m) in relation to the

Group’s investment in Neos Networks, of which £73.6m (2023: £5.9m) has been treated as exceptional and £nil (2023: £31.8m) has been treated as non-exceptional, see note 7.

(iii) The investment (decrease)/increase in respect of financial guarantees relates to £22.2m (2023: £nil) of unwind and expiry of guarantee contracts, less £3.3m (2023: £16.0m) for the

fair value of fees receivable on guarantees granted to joint venture investments during the year.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

15. Impairment testing continued

15.2. Property, plant and equipment, other intangibles and investment impairment reviews – asset testing

continued

251SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

16.2. Additions and disposals of equity in the current year

Additions in the year

On 21 March 2024 the Group completed the purchase of 50% of the equity in eight onshore wind development projects in Ireland from

Bord na Mona Powergen Limited for cash consideration of £41.9m.

During the year ended 31 March 2024 the Group provided equity and loans to its existing joint venture investments of £237.9m and £235.9m

respectively, primarily in relation to Seagreen Wind Energy Limited and Dogger Bank A Offshore Wind Farm.

Disposals in the year

There were no significant disposals in the current year, the Group has received £14.9m of cash and recognised a gain in the income

statement of £9.0m in relation to investments in associates.

16.3. Acquisitions and disposals of equity in the previous year

Additions in the previous year

On 1 September 2022, the Group announced that SSE Thermal and Equinor had completed the acquisition of Triton Power Holdings

Limited from Energy Capital Partners for total consideration of £341.0m shared equally. Further detail on the Group’s acquisitions in the

year ended 31 March 2023 is provided in note 12.1.

Additionally, during the year ended 31 March 2023 the Group provided equity and loans to its existing joint venture investments of £141.4m

and £441.7m respectively, primarily in relation to Seagreen Wind Energy Limited and Doggerbank A Offshore Wind Farm.

Disposals of equity in the previous year

There were no significant disposals of equity in the prior year.

16.4. Principal joint ventures and associates

Under IFRS 12 Disclosure of Interests in Other Entities, the Group has evaluated the key joint ventures and associates it holds with the

purpose of disclosing any which are materially significant in order to identify the impact on the Group’s financial position, performance and

cash flows, whilst identifying the nature of the risks associated with these interests. A full listing of the Group’s incorporated joint ventures,

joint operations, associates and investments are included in the Accompanying Information (A3

Share of results of joint ventures and associates

	2024	2024	2024	2024	2023
		Thermal
	Windfarms	Generation	Other	Total	Total
	£m	£m	£m	£m	£m
Revenue	359.9	563.7	80.0	1,003.6	1,564.8
Other income	88.1	–	–	88.1	10.2
Depreciation and amortisation	(121.6)	(40.6)	(46.6)	(208.8)	(201.1)
Other operating costs	(91.6)	(490.5)	(63.3)	(645.4)	(700.0)
Operating profit	234.8	32.6	(29.9)	237.5	673.9
Interest expense	(103.2)	2.7	(10.2)	(110.7)	(70.1)
Changes in fair value of derivatives	82.0	(20.6)	–	61.4	202.9
Corporation tax	(63.5)	(10.5)	(0.1)	(74.1)	(143.1)
Share of post taxation results	150.1	4.2	(40.2)	114.1	663.6
Recognised in other comprehensive income
Cashflow hedges	(54.6)	0.1	–	(54.5)	456.5
Taxation	13.6	–	–	13.6	(114.1)
Total comprehensive income	109.1	4.3	(40.2)	73.2	1,006.0

(i)

Share of joint ventures and associates’ assets and liabilities

	2024	2024	2024	2024	2023
		Thermal			Total
	Windfarms	Generation	Other	Total	£m
	£m	£m	£m	£m	(restated*)
Non-current assets	6,171.5	427.7	310.5	6,909.7	6,093.0
Current assets	156.9	153.8	19.5	330.2	486.9
Cash and cash equivalents	309.3	50.0	13.7	373.0	263.3
Current liabilities	(355.6)	(72.3)	(68.1)	(496.0)	(484.1)
Non-current liabilities	(5,335.8)	(216.6)	(172.9)	(5,725.3)	(5,013.4)
	946.3	342.6	102.7	1,391.6	1,345.7
Other adjustments	593.8	9.0	(31.2)	571.6	630.0
Share of net assets of joint ventures and associates	1,540.1	351.6	71.5	1,963.2	1,975.7
Shareholder loans	1,121.6	173.6	57.7	1,352.9	1,115.4
Interest in joint venture and associate	2,661.7	525.2	129.2	3,316.1	3,091.1

(i)

(i) Other comprises the investments the Group holds in Neos Networks Limited and Marron Activ8 Energies Limited.

* The comparatives have been restated. See note 2.1.

Information on Group’s investments in joint ventures and associates is provided at A3, A4 and A5 .

252 SSE plc Annual Report 2024

16. Investments continued

16.5. Joint operations

Listed are the incorporated joint operations that have a material impact on the financial position and financial results of the Group.

	Principal	Country of	Class of	Proportion of	Group
	activity	incorporation	shares held	shares held (%)	Interest (%)	Year end
Greater Gabbard Offshore Winds Limited	Offshore Windfarm	UK	Ordinary	50.0	50.0	31 March
Eastern Green Link 2 Limited	Power Transmission	UK	Ordinary	50.0	37. 5	31 March

The Group’s interest in Greater Gabbard Offshore Winds Limited is that of a joint operation designed to provide output to the parties

sharing control. The liabilities of the arrangement are principally met by the parties through the contracts for the output of the windfarm.

Eastern Green Link 2 Limited is a joint operation between SHET and National Grid Electricity Transmission plc to install a 2GW subsea

high-voltage connection.

The Group also has an unincorporated arrangement with Equinor under which it accounts for its 66.7% share of the Aldbrough gas storage

facility owned by SSE Hornsea Limited.

16.6. Other investments held at fair value through other comprehensive income

	Total
	£m
At 31 March 2022	8.7
Additions in year	19.1
Fair value adjustment through other comprehensive income	(0.4)
At 31 March 2023	27.4
Disposals in year	(0.4)
Transfers to investments in joint ventures and associates	(24.1)
Fair value adjustment through other comprehensive income	0.3
At 31 March 2024	3.2

In the current year the classification of an investment of £24.1m (2023: £nil) has been reassessed and reclassified from ‘Other investments’

to ‘Equity investments in joint ventures and associates’. The investment has been recognised as an associate reflecting the Group’s level of

ownership and influence over the investee; comparative amounts have not been re-presented.

17. Inventories

	2024	2023
	£m	£m
Fuel and consumables	155.3	179.3
Certificates and allowances	205.1	125.4
Gas held in storage	23.1	142.2
Less: provisions held	(40.5)	(52.0)
	343.0	394.9

Where Renewables Obligation Certificates (‘ROCs’) and Renewable Energy Guarantees of Origin (‘REGOs’) certificates are self-generated or

purchased to fulfil the Group’s environmental obligations, they are recorded within intangible assets. The value of ROCs and REGOs held in

excess of the Group’s environmental obligations are recorded within inventories.

The Group has expensed inventories of £562.8m within cost of sales in the year (2023: £601.5m).

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

253SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

18. Trade and other receivables

	2024	2023
	£m	£m
Non-current assets
Loan note receivable	170.1	149.5
Current assets
Trade receivables	1,305.5	1,404.0
Unbilled energy income	663.7	666.1
Other receivables	82.6	226.0
Cash posted as collateral	9.3	316.3
Other prepayments and accrued income	593.0	632.7
	2,654.1	3,245.1
Total trade and other receivables	2,824.2	3,394.6

The non-current loan note receivable relates to £170.1m (2023: £149.5m) payable by Ovo Energy by 2029. The Ovo loan note carries

interest of 13.25% and is presented cumulative of accrued interest repayments, discounted at 13.25%.

Unbilled energy income represents an estimate of the value of electricity or gas supplied to customers between the date of the last meter

reading and the year end. Detail of the calculation applied to estimate this balance is included at note 4.1(iii). A 5% sensitivity on the unbilled

energy accrual would equate to an increase or decrease in the receivable balance of £20.7m (2023: £19.4m).

Included in other prepayments and accrued income is £11.9m (2023: £347.3m) in relation to government funded customer support schemes.

Cash posted as collateral relates to amounts deposited on commodity trading exchanges of £9.3m (2023: £316.3m).

Trade receivables and other financial assets are part of the Group’s financial exposure to credit risk as explained in accompanying

information note A6

19. Trade and other payables

	2024	2023
	£m	£m
Current liabilities
Trade payables	656.7	694.6
Contract related liabilities	95.2	54.1
Cash held as collateral	362.5	–
Other creditors	473.0	560.8
Other accruals	1,735.1	1,349.1
	3,322.5	2,658.6
Non-current liabilities
Contract related liabilities	158.4	161.3
Deferred income and other accruals	934.4	798.6
	1,092.8	959.9
Total trade and other payables	4,415.3	3,618.5

(i)

(ii)

(i)

(ii)

(i) Current contract related liabilities includes customer contributions of £15.7m (2023: £14.5m) and non-current contract related liabilities includes customer contributions of

£158.4m (2023: £161.3m).

(ii) Non-current other accruals includes government grants of £6.0m (2023: £7.9m).

Cash held as collateral relates to amounts received from commodity trading exchanges of £362.5m (2023: £nil).

254 SSE plc Annual Report 2024

20. Provisions

		Legal and	Employee
	Decommissioning	restructuring	related	Other	Total
	£m	£m	£m	£m	£m
At 31 March 2022	940.1	94.0	39.5	37.6	1,111.2
Charged in the year	6.8	16.9	4.5	21.7	49.9
Decrease in decommissioning provision	(196.0)	–	–	–	(196.0)
Unwind of discount	22.1	–	–	–	22.1
Released during the year	–	(45.2)	(11.0)	(43.2)	(99.4)
Disposed during the year	(56.7)	–	–	–	(56.7)
Utilised during the year	(12.2)	(51.0)	(2.0)	–	(65.2)
Transfers	1.8	5.6	(10.1)	2.7	–
Exchange rate adjustments	6.2	–	–	–	6.2
At 31 March 2023	712.1	20.3	20.9	18.8	772.1
Charged in the year	–	–	1.2	4.0	5.2
Increase in decommissioning provision	2.2	–	–	–	2.2
Unwind of discount	25.2	–	–	–	25.2
Acquired during the year	–	–	–	7. 3	7. 3
Released during the year	–	–	–	(4.3)	(4.3)
Utilised during the year	(5.3)	(16.9)	(9.3)	(7.6)	(39.1)
Transfers	5.0	(3.0)	–	(2.0)	–
Exchange rate adjustments	(3.5)	–	–	–	(3.5)
At 31 March 2024	735.7	0.4	12.8	16.2	765.1
At 31 March 2024
Non-current	688.8	0.4	12.5	10.7	712.4
Current	46.9	–	0.3	5.5	52.7
	735.7	0.4	12.8	16.2	765.1
At 31 March 2023
Non-current	686.0	19.9	18.6	18.2	742.7
Current	26.1	0.4	2.3	0.6	29.4
	712.1	20.3	20.9	18.8	772.1

Decommissioning provisions

Provision has been made for the estimated net present value of decommissioning the Group’s Thermal and Renewable power generation

assets, Gas Storage facilities and the retained 60% share of decommissioning costs of the disposed Gas Production business. Cost

estimates are based on the forecast remediation or clean-up costs based on current technology and prices for Renewable, Thermal and

Gas Storage assets and are reviewed by independent valuation experts every three years. In the intervening years, management update cost

estimates based on factors arising since the last formal valuation date. Retained decommissioning costs in relation to the disposed Gas

Production business are periodically agreed with the field operators. The cost estimates include a risk adjustment and are inflated to the

projected decommissioning date using a market observable inflation rate. This projection is discounted using a risk-free discount rate

based on UK gilt rates with maturity date similar to the expected decommissioning date.

There is a wide range of assumed decommissioning dates across the obligation due to the number of assets and their varying ages, which

is summarised in the table below. Decommissioning dates are based on the useful economic lives of the individual assets based on

technology and price forecasts at the balance sheet date. It is possible that the forecast decommissioning dates will change due to

technology advances or decisions to repower wind farms when the current turbines reach the end of their respective lives. The date of

decommissioning of the Gas Production business can vary based on hydrocarbon reserve estimates and market commodity prices, which

can shorten or lengthen the economic life of the field.

	Value of Provision	Number of	Forecast
	31 March 2024	decommissioning	decommissioning
Business Unit	£m	sites	dates
Renewables	230.7	52	2025 – 2065
Thermal	161.7	16	2024 – 2050
Gas Storage	115.4	18	2024 – 2049
Gas Production	219.7	4	2024 – 2040
SSE Enterprise	8.2	1	2027
Total	735.7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

255SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Decommissioning provisions continued

	Value of Provision	Number of	Forecast
	31 March 2023	decommissioning	decommissioning
Business Unit	£m	sites	dates
Renewables	218.5	55	2025 – 2049
Thermal	165.0	14	2023 – 2051
Gas Storage	119.4	18	2023 – 2050
Gas Production	201.4	4	2023 – 2038
SSE Enterprise	7.8	1	2027
Total	712.1

1 The Group has two Gas Storage assets at Aldbrough and Atwick. In total there are 18 caverns with varying economic lives, therefore the number of sites has been disclosed to

more accurately reflect the scale and expected timing of decommissioning activities.

2 The Group has retained a 60% share of the decommissioning obligation for four Gas Production fields, though each field has multiple wells and shared infrastructure that the

Group retains an obligation to remediate.

The Group’s decommissioning provision has increased during the year from £712.1m to £735.7m, primarily due to the increase in base cost

estimates and inclusion of the decommissioning provisions for Solar and Battery assets for the first time. While the long term inflation rate

remains stable at 3.2% (2023: 3.2%), the increase in the risk free discount rates applied of between 3.9%-4.4% (2023: 3.5%-3.8%) has partially

negated the increase in the closing provision due to base cost estimate increases. The £2.2m increase in decommissioning provision

primarily relates to a revaluation of £6.2m recognised as an opposing reduction to decommissioning assets and £9.9m income statement

charge in relation to the Group’s share of gas production decommissioning liabilities. During the year, the Group incurred £5.3m of

decommissioning spend, primarily related to the Aldbrough site included within Gas storage and the Fiddler’s Ferry and Ferrybridge sites,

included within Thermal above. Based on work completed to date, provisions accrued for the decommissioning of these power stations are

expected to be sufficient for the final cost of the works.

Impact of climate change on the Group’s decommissioning provisions

The Group has assessed that the most likely impact of climate change on its decommissioning provisions would be the enactment of

legislation that would result in the earlier closure of its unabated gas fired power stations. The decommissioning provision included in the

table above for these assets is based on forecast closure dates under legislation enacted at the balance sheet date and therefore forecast

closure dates have not been accelerated. In the sensitivity analysis below, a scenario has been included assuming legislation is enacted that

would result in closure of these assets from 2030.

Sensitivity analysis

Sensitivity analysis reflecting reasonably probable fluctuations to the main assumptions used in the calculation of the decommissioning

provisions is set out below:

	2024	2023
Estimated decommissioning provision including:	£m	£m
Increasing the projected cost estimate by 10%	804.8	781.4
Increasing the inflation rate by 1.0%	808.7	793.2
Decreasing the discount rate by 0.5%	764.4	747.1
Closure of unabated gas CCGTs from 2030	732.6	714.5

Legal and restructuring provisions

Provisions have been made for ongoing legal and regulatory disputes. Where outcomes are unknown, a range of possible scenarios is

calculated, with the most likely being reflected in the provision. The timing of settlement for legal provisions is more uncertain as it is

dependent upon legal resolution being achieved.

Employee related provisions

Employee related provisions include the Group’s employer financed retirement benefit provision for certain directors and former directors

and employees, which is valued in accordance with IAS 19 using assumptions consistent with the Scottish Hydro Electric Pension Scheme

(see note 23 for assumptions applied). In addition, the Group has legal obligations arising from severance payments due to employees,

which are measured based on length of service. At 31 March 2024, the reduction in the provisions relates to payments from the pension

scheme and payments for severance.

Other provisions

Other provisions include onerous contract provisions, mutualisation obligations and other contractual obligations and are calculated based

on a best estimate basis. The timing of settlement of these provisions varies by obligation between 2024 and 2028.

256 SSE plc Annual Report 2024

21. Sources of finance

21.1. Capital management

The Board’s policy is to maintain a strong balance sheet and credit rating to support investor, counterparty and market confidence in the

Group and to underpin future development of the business. The Group’s credit ratings are also important in maintaining an efficient cost of

capital and in determining collateral requirements throughout the Group. As at 31 March 2024, the Group’s long-term credit rating was

BBB+ positive outlook for Standard & Poor’s and Baa1 stable outlook for Moody’s.

The maintenance of a medium-term corporate model is a key control in monitoring the development of the Group’s capital structure and

allows for detailed scenarios and sensitivity testing. Key ratios drawn from this analysis underpin regular updates to the Board and include

the ratios used by the rating agencies in assessing the Group’s credit ratings.

The Group’s debt requirements are principally met through issuing bonds denominated in Sterling and Euros as well as private placements

and medium-term bank loans including those with the European Investment Bank.

During the year SSE plc issued an 8 year €750m Green Bond at a coupon of 4.0%. The bond has been left in Euros as a net investment

hedge for the Group’s Euro denominated subsidiaries. In the year, SSE plc also redeemed US Private Placement debt of combined £155.0m

and a €700m Eurobond with coupon at 1.75%. In January 2024 Scottish Hydro Electric Transmission plc issued a 20 year £500m Green

Bond at a coupon of 5.5%.

SSE’s adjusted net debt and hybrid capital was £9.4bn at 31 March 2024, compared with £8.9bn at 31 March 2023.

Adjusted net debt and hybrid capital is stated after removing lease obligations, external net debt attributable to non-controlling interests

and cash held and posted as collateral in line with the Group’s presentation basis which is explained at note 3(i). The adjustment relating to

the non-controlling interest share of Scottish Hydro Electric Transmission plc external net debt is £490.2m at 31 March 2024 (2023:

£434.2m) and relates to 25% of external loans of £2,088.0m (2023: £1,744.8m) net of cash and cash equivalents of £127.4m (2023: £7.8m).

Cash held and posted as collateral refers to amounts received and deposited on commodity trading exchanges which are reported within

‘Trade and other payables’ and ‘Trade and other receivables’ respectively on the face of the balance sheet.

At 31 March 2024 the collateral balance was a net liability of £353.2m, consisting of a liability of £362.5m and an asset of £9.3m (2023:

£316.3m asset). This reflects the lower levels of initial margin required for commodity contracts traded on exchanges following a reduction

in risk factors and the Group replacing cash collateral with £100m of letters of credit. Additionally, variation margin positions for March

2024 are ‘in the money’ due to lower commodity prices, compared to the ‘out the money’ positions experienced in the prior year.

The Group has an established €1.5bn Euro commercial paper programme (paper can be issued in a range of currencies and swapped into

Sterling) and as at 31 March 2024 there was £840m commercial paper outstanding (2023: £919m). During the year ended 31 March 2024,

the Group issued new debt instruments totalling £1,982m and redeemed £1,744m of maturing debt in the year. The Group also continues

to have access to £3.5bn of revolving credit facilities (2023: £3.5bn), (see note 21.3), which includes £750m relating to Scottish Hydro

Electric Transmission plc (2023: £750m). As at 31 March 2024 there were no (2023: £100m) drawings against these committed facilities

(2023: 3% utilisation).

The Group capital comprises:

	2024	2023
	£m	£m
		(restated*)
Total borrowings (excluding lease obligations)	8,726.2	8,654.0
Less: Cash and cash equivalents	(1,035.9)	(891.8)
Net debt (excluding hybrid equity)	7,690.3	7,762 . 2
Hybrid equity	1,882.4	1,882.4
External net debt attributable to non-controlling interests	(490.2)	(434.2)
Cash held/(posted) as collateral and other short term loans	353.2	(316.3)
Adjusted net debt and hybrid capital	9,435.7	8,894.1
Equity attributable to shareholders of the parent	9,170.8	8,551.7
Total capital excluding lease obligations	18,606.5	17,4 45. 8

APM

* The comparative has been restated. See note 2.1.

Under the terms of its major borrowing facilities, the Group is required to comply with the following financial covenant:

– Interest Cover Ratio: The Group shall procure that the ratio of Operating Profit to Net Interest Payable for any relevant period is not less

than 2.5 to 1.

The following definitions apply in the calculation of these financial covenants:

– “Operating Profit” means, in relation to a relevant period, the profit on ordinary activities before taxation (after adding back Net Interest

Payable) of the Group for that relevant period but after adjusting this amount to exclude any exceptional profits (or losses) and, for the

avoidance of doubt, before taking account of any exceptional profits (or losses) and excluding the effect of IFRS 9 remeasurements.

– “Net Interest Payable” means, in respect of any relevant period, interest payable during that relevant period less interest receivable

during that relevant period .

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

257SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

In summary, the Group’s intent is to balance returns to shareholders between current returns through dividends and long-term capital

investment for growth. In doing so, the Group will maintain its capital discipline and will continue to operate within the current economic

environment prudently. There were no changes to the Group’s capital management approach during the year.

Under the SSE plc’s articles of association, the borrowings of the Company are limited so as to ensure that the aggregate amount of all

borrowings by the Group outstanding at any time is not more than three times the capital and reserves of the Group.

21.2. Loans and other borrowings

	2024	2023
	£m	£m
Current
Short-term loans	1,044.5	1,738.5
Lease obligations	83.5	82.1
	1,128.0	1,820.6
Non-current
Loans	7,681 .7	6,915.5
Lease obligations	324.0	323.8
	8,005.7	7, 239. 3
Total loans and borrowings	9,133.7	9,059.9
Cash and cash equivalents	(1,035.9)	(891.8)
Unadjusted net debt	8,097.8	8,168.1
Add/(less):
Hybrid equity	1,882.4	1,882.4
External net debt attributable to non-controlling interests	(490.2)	(434.2)
Lease obligations	(407.5)	(405.9)
Cash held/(posted) as collateral and other short term loans	353.2	(316.3)
Adjusted net debt and hybrid capital	9,435.7	8,894.1

APM

Cash and cash equivalents (which are presented as a single class of asset on the face of the balance sheet) comprise cash at bank and short

term highly liquid investments with a maturity of three months or less.

21.3. Borrowing facilities

The Group has an established €1.5bn Euro commercial paper programme (paper can be issued in a range of currencies and swapped into

Sterling) and as at 31 March 2024 there was £840m commercial paper outstanding (2023: £919m).

The Group also continues to have access to £3.5bn of revolving credit facilities (2023: £3.5bn). As at 31 March 2024 there were no drawings

against these committed facilities (2023: £100m). The details of the five committed facilities as at 31 March 2024 are:

– a £1.3bn revolving credit facility for SSE plc maturing March 2026 (2023: £1.3bn);

– a £0.2bn bilateral facility for SSE plc maturing October 2026 (2023: £0.2bn);

– a £0.75bn facility for Scottish Hydro Electric Transmission plc maturing November 2026 (2023: £0.75bn);

– a £0.25bn facility for Scottish Hydro Electric Distribution plc and Southern Electric Power Distribution plc maturing November 2026

(2023: £0.25bn); and

– a £1.0bn committed facility for SSE plc maturing February 2025 (2023: £1.0bn).

The £1.3bn revolving credit facility and £0.2bn bilateral facility are both in place to provide back-up to the commercial paper programme

and support the Group’s capital expenditure plans. The Transmission and Distribution related facilities, both of which have 1 year extension

options at the borrower’s discretion, were entered into to help cover the capital expenditure and working capital of those businesses. Both

facilities were extended to November 2026 in the year and have a further year option. The £1bn committed facility for SSE plc was entered

into to provide cover for potential cash collateral requirements, if periods of extreme volatility return to the commodity markets. The facility

had a 1 year extension option at the lender’s discretion that was extended for a year to February 2025. There were no drawings on the SSE

plc and Distribution facilities at 31 March 2024 and 31 March 2023 and no drawings on the £750m Transmission facility at 31 March 2024

compared to £100m at 31 March 2023.

During the year SSE plc issued an 8 year €750m Green Bond at a coupon of 4.0%. The bond has been left in Euros as a net investment

hedge for the Group’s Euro denominated subsidiaries. Additionally Scottish Hydro Electric Transmission plc issued a 20 year £500m bond

at a coupon of 5.5%. In the year, SSE plc also redeemed US Private Placement debt of combined £155m and a €700m Eurobond with

coupon at 1.75%, and Scottish Hydro Electric Transmission plc repaid £100m of facility advances.

258 SSE plc Annual Report 2024

21. Sources of finance continued

21.3. Borrowing facilities continued

Analysis of borrowings

	2024	2024	2024	2024	2023	2023	2023	2023
	Weighted				Weighted
	average	Face	Fair	Carrying	average	Face	Fair	Carrying
	interest	value	value	amount	interest	value	value	amount
	rate	£m	£m	£m	rate	£m	£m	£m
Current
Bank Loans – non amortising	–	–	–	–	2.6%	50.0	49.4	50.0
Other Short term loans – non amortising	5.8%	852.4	855.7	840.4	4.5%	1,029.4	1,033.5	1,019.2
US Private Placement 28 April 2023	–	–	–	–	2.8%	35.0	35.3	35.0
US Private Placement 6 September 2023	–	–	–	–	2.9%	120.0	118.8	119.8
1.75% €700m Eurobond repayable 8 September
2023	–	–	–	–	1.8%	514.6	510.8	514.5
US Private Placement 16 April 2024	4.4%	204.1	257.9	204.1	–	–	–	–
Total current borrowings		1,056.5	1,113.6	1,044.5		1,749.0	1,747.8	1,738.5
Non-Current
Bank loans – non amortising (i)	3.5%	500.0	484.2	499.9	3.4%	500.0	479.5	499.9
US Private Placement 16 April 2024	–	–	–	–	4.4%	204.1	259.6	204.1
1.250% Eurobond Repayable 16 April 2025	1.3%	531.4	518.8	531.4	1.3%	531.4	508.3	531.4
0.875% €600m Eurobond Repayable
8 September 2025	0.9%	513.0	493.0	512.2	0.9%	527.5	495.3	526.2
US Private Placement 8 June 2026	3.1%	64.0	48.7	63.6	3.1%	64.0	59.9	63.5
US Private Placement 6 September 2026	3.2%	247. 1	242.1	245.6	3.2%	247.1	257.4	245.0
US Private Placement 6 September 2027	3.2%	35.0	25.9	34.7	3.2%	35.0	31.7	34.7
1.375% €650m Eurobond repayable
4 September 2027	1.4%	591.4	553.7	590.7	1.4%	591.4	545.8	590.5
1.50% Eurobond repayable 24 March 2028	1.5%	250.0	221.5	249.3	1.5%	250.0	212.8	249.1
8.375% Eurobond repayable on 20 November 2028	8.4%	500.0	573.3	498.1	–	–	–	–
Between two and five years		3,231.9	3,161.2	3,225.5		2,950.5	2,850.3	2,944.4
8.375% Eurobond repayable on 20 November 2028	–	–	–	–	8.4%	500.0	575.0	497.6
2.875% Eurobond repayable 1 August 2029	2.9%	555.7	543.3	554.3	2.9%	571.5	548.3	569.8
1.750% Eurobond repayable 16 April 2030	1.8%	442.9	403.5	442.9	1.8%	442.9	388.1	442.9
5.50% Eurobond repayable on 7 June 2032	5.5%	350.0	368.1	350.1	5.5%	350.0	364.1	350.1
Private Placement 30 June 2032	3.1%	175.0	148.0	175.0	3.1%	175.0	152.8	175.0
2.25% Eurobond repayable 27 September 2035	2.3%	350.0	266.3	347.6	2.3%	350.0	255.9	347.4
2.125% Eurobond repayable 24 March 2036	2.1%	250.0	184.7	248.5	2.1%	250.0	17 7.7	248.4
4.625% Eurobond repayable on 20 February 2037	4.6%	325.0	312.4	324.3	4.6%	325.0	301.2	324.2
Private Placement 30 June 2037	3.2%	175.0	146.2	175.0	3.2%	175.0	142.2	175.0
6.25% Eurobond repayable on 27 August 2038	6.3%	350.0	386.3	347.7	6.3%	350.0	372.0	347.5
4.454% Index linked loan repayable on 27 February 2044	4.5%	169.4	212.6	169.0	4.5%	165.9	190.4	165.5
1.429% Index linked bond repayable on 20 October 2056	1.4%	188.8	145.5	188.8	1.4%	173.1	140.4	173.1
4.00% €750m Eurobond repayable 5 September
2031	4.0%	641.2	661.7	639.5	–	–	–	–
5.50% £500m Eurobond maturing 15 January
2044	5.5%	500.0	500.8	492.6	–	–	–	–
Over five years		4,473.0	4,279.4	4,455.3		3,828.4	3,608.1	3,816.5
Fair value adjustment				0.9				154.6
Total non-current borrowings		7,704.9	7,440.6	7,681 .7		6,778.9	6,458.4	6,915.5
Total borrowings		8,761.4	8,554.2	8,726.2		8, 527.9	8,206.2	8,654.0

(iv)

(i)

(ii)

(vi)

(ix)

(v) (ix)

(ix)

(vii)

(ix)

(viii) (ix)

(ix)

(iii)

Note: The Sterling-equivalent fair value reflects the fair value of non-Sterling denominated borrowings, post the impact of the hedges noted below.

(i) Balances include term loans and EIB debt and is a mixture of fixed and floating rate debt.

(ii) Balances include Commercial Paper and facility advances (£840m of Commercial Paper and £nil of facility advances outstanding at 31 March 2024).

(iii) The fair value adjustment relates to the change in the carrying amount of the borrowings as a result of fair value hedges that are in place. The movement in the fair value

adjustment is recognised in the income statement with a corresponding movement on the hedging instrument also being recognised in the income statement.

(iv) The weighted average interest rates (including the effect of interest rate swaps) for the year ended 31 March 2024 was 3.40% (2022: 3.35%).

(v) The 1.375% €650m Eurobond maturing 4 September 2027 has been swapped to Sterling giving an effective interest rate of 2.56%.

(vi) The 1.250% €600m Eurobond maturing 16 April 2025 has been swapped to Sterling giving an effective interest rate of 2.43%.

(vii) The 1.750% €500m Eurobond maturing 16 April 2030 has been swapped to Sterling giving an effective interest rate of 2.89%.

(viii) The 4.0% €750m Eurobond maturing 5 September 2031 has been left in Euros as a net investment hedge for the Group’s Euro denominated subsidiaries.

(ix) Bonds have been issued under the Group’s Green Bond Framework.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

259SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Lease liabilities

Amounts charged under lease arrangements are detailed within note 6, and right of use assets recognised under lease arrangements are

detailed within note 14.

	£m
At 31 March 2022	393.5
Additions during the year	79.9
Disposals during the year	(1.4)
Unwind of discount	28.3
Repayment in the year	(94.4)
At 31 March 2023	405.9
Additions during the year	75.6
Disposals during the year	(1.9)
Unwind of discount	25.8
Repayment in the year	(97.9)
At 31 March 2024	407.5

(i)

(i) Additions include lease liabilities recognised following acquisitions during the year.

The weighted average incremental borrowing rate applied to lease liabilities during the year was 4.98% (2023: 5.02%). Incremental

borrowing rates applied to individual lease additions in the year ranged between 3.70% to 5.25% (2023: 4.03% to 5.06%).

The Group has additional committed payments under short term and low value leases at 31 March 2024 of £11.2m (2023: £11.7m).

The maturity of future lease liabilities are as follows:

	2024	2023
	£m	£m
Within one year	91.8	94.5
Between one and five years	196.3	202.4
After five years	328.4	316.1
	616.5	613.0
Less: future finance charge	(209.0)	(207.1)
Present value of lease obligations	407.5	405.9

21.4. Reconciliation of net increase in cash and cash equivalents to movement in adjusted net debt and

hybrid capital

	2024	2023
	£m	£m
Increase/(decrease) in cash and cash equivalents	144.1	(157.5)
(Less)/add:
New borrowing proceeds	(1,982.2)	(1,914.7)
New hybrid equity proceeds	–	(831.4)
Repayment of borrowings	1,744.0	2,148.1
Non-cash movement on borrowings	166.0	(216.2)
Increase in external net debt attributable to non-controlling interests	56.0	434.2
(Decrease)/increase in cash held/posted as collateral and other short term loans	(669.5)	241.6
Increase in adjusted net debt and hybrid capital	(541.6)	(295.9)

APM

Cash held and posted as collateral refers to amounts received and deposited on commodity trading exchanges which are reported within

‘Trade and other payables’ and ‘Trade and other receivables’ respectively on the face of the balance sheet, as well as loans provided with

less than three months’ maturity.

260 SSE plc Annual Report 2024

21. Sources of finance continued

21.5. Reconciliation of movements in financing liabilities

			Financing cash flows						Non-cash movements
	At		Disposal	Repayment	Repayment		Foreign				At
	31 March	New	of	of	of lease	Fair value	exchange	Lease	Re-		31 March
	2023	borrowings	borrowings	borrowings	creditor	movements	movements	liabilities	classification	Other	2024
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Financing
liabilities
Bank loans	499.9	–	–	–	–	–	–	–	–	–	499.9
Private
placement	978.1	–	–	–	–	(4.5)	–	–	(204.1)	0.7	770.2
Fixed rate
Eurobonds	5,098.9	1,141.8	–	–	–	(143.3)	(30.7)	–	–	(7.0)	6,059.7
Index linked
loans	338.6	–	–	(5.2)	–	–	–	–	–	24.4	357.8
Total long term
borrowings	6,915.5	1,141.8	–	(5.2)	–	(147.8)	(30.7)	–	(204.1)	18.1	7,687.6
Bank loans	50.0	–	–	(50.0)	–	–	–	–	–	–	–
Fixed rate
Eurobonds	514.5	–	–	(514.6)	–	–	–	–	–	0.1	–
Other short term
loans – non
amortising	1,019.2	840.4	–	(1,019.2)	–	–	–	–	–	–	840.4
US private
placement	154.8	–	–	(155.0)	–	(5.9)	–	–	204.1	0.2	198.2
Total short term
borrowings	1,738.5	840.4	–	(1,738.8)	–	(5.9)	–	–	204.1	0.3	1,038.6
	8,654.0	1,982.2	–	(1,744.0)	–	(153.7)	(30.7)	–	–	18.4	8,726.2
Lease liabilities	405.9	–	–	–	(97.9)	–	–	99.5	–	–	407.5
Total loans and borrowings	9,059.9	1,982.2	–	(1,744.0)	(97.9)	(153.7)	(30.7)	99.5	–	18.4	9,133.7
Assets held to hedge long
term
borrowings	(129.3)	–	–	–	–	147.8	–	–	–	–	18.5
	8,930.6	1,982.2	–	(1,744.0)	(97.9)	(5.9)	(30.7)	99.5	–	18.4	9,152.2

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

261SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

			Financing cash flows				Non-cash movements
	At		Disposal	Repayment	Repayment	Fair	Foreign				At
	31 March	New	of	of	of lease	value	exchange	Lease	Re-		31 March
	2022	borrowings	borrowings	borrowings	creditor	movements	movements	liabilities	classification	Other	2023
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Financing
liabilities
Bank loans	549.8	–	–	–	–	–	–	–	(50.0)	0.1	499.9
Private placement	784.5	350.0	–	–	–	(3.2)	–	–	(154.8)	1.6	978.1
Fixed rate
Eurobonds	4,945.0	545.5	–	–	–	75.1	47.4	–	(514.5)	0.4	5,098.9
Index linked loans	299.3	–	–	–	–	–	–	–	–	39.3	338.6
Hybrid debt	973.9	–	–	(1,029.4)	–	51.1	4.1	–	–	0.3	–
Total long term
borrowings	7, 552. 5	895.5	–	(1,029.4)	–	123.0	51.5	–	(719.3)	41.7	6,915.5
Bank loans	150.0	–	–	(150.0)	–	–	–	–	50.0	–	50.0
Fixed rate
Eurobonds	299.9	–	–	(299.9)	–	–	–	–	514.5	–	514.5
Other short term
loans – non
amortising	506.1	1,019.2	–	(506.1)	–	–	–	–	–	–	1,019.2
US private
placement	162.7	–	–	(162.7)	–	–	–	–	154.8	–	154.8
Total short term
borrowings	1,118.7	1,019.2	–	(1,118.7)	–	–	–	–	719.3	–	1,738.5
	8,671.2	1,914.7	–	(2,148.1)	–	123.0	51.5	–	–	41.7	8,654.0
Lease liabilities	393.5	–	–	–	(94.4)	–	–	106.8	–	–	405.9
Total loans and borrowings	9,064.7	1,914.7	–	(2,148.1)	(94.4)	123.0	51.5	106.8	–	41.7	9,059.9
Assets held to hedge long
term
borrowings	242.1	–	–	–	–	(371.4)	–	–	–	–	(129.3)
	9,306.8	1,914.7	–	(2,148.1)	(94.4)	(248.4)	51.5	106.8	–	41.7	8,930.6

22. Equity

22.1. Share capital

	Number
	(millions) £m
Allotted, called up and fully paid:
At 31 March 2022	1,073.1	536.5
Issue of shares (i)	27.7	13.9
Shares repurchased (ii)	(6.9)	(3.4)
At 31 March 2023	1,093.9	5 47.0
Issue of shares (i)	2.3	1.1
At 31 March 2024	1,096.2	548.1

The Company has one class of ordinary share which carries no right to fixed income. The holders of ordinary shares are entitled to receive

dividends as declared and are entitled to one vote per share at meetings of the Company.

i. Shareholders were able to elect to receive ordinary shares in place of the final dividend of 67.7p per ordinary share (in relation to year ended 31 March 2023) and the interim

dividend of 20.0p (in relation to the current year) under the terms of the Company’s scrip dividend scheme. This resulted in the issue of 1,779,529 and 493,654 new fully paid

ordinary shares respectively (2023: 18,241,941 and 9,413,103). In addition, the Company issued 0.8m (2023: 1.9m) shares during the year under the savings-related share option

schemes (all of which were settled by shares held in Treasury) for a consideration of £9.2m (2023: £18.0m).

ii. Under the share buyback programme in the year to 31 March 2023, 6.9m of shares were repurchased and cancelled for a total consideration of £107.6m (including stamp duty and

commission). The nominal value of share capital repurchased and cancelled is transferred out of share capital and into the capital redemption reserve. The scrip dividend take-up

for the financial year ended 31 March 2023 was 18.0%, which is below the 25.0% required by the share buyback programme, therefore there have been no share buybacks in the

current financial year ended 31 March 2024.

262 SSE plc Annual Report 2024

22. Equity continued

22.1. Share capital continued

Of the 1,096.2m shares in issue, 2.8m are held as treasury shares. These shares will be held by the Group and used to award shares to

employees under the Sharesave scheme in the UK.

During the year, on behalf of the Company, the employee share trust purchased 1.3m shares for a total consideration of £21.8m (2023:

1.4m shares, consideration of £23.4m) to be held in trust for the benefit of employee share schemes. At 31 March 2024, the trust held 6.9m

shares (2023: 6.5m) which had a market value of £113.9m (2023: £118.0m).

22.2. Capital redemption reserve

The capital redemption reserve comprises the value of shares redeemed or purchased by the Company from distributable profits.

22.3. Hedge reserve

The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedge derivative instruments

related to hedged transactions that have not yet occurred.

22.4. Translation reserve

Comprises exchange translation differences on foreign currency net investments offset by exchange translation differences on borrowings

and derivatives classified as net investment hedges under IAS 39.

22.5. Hybrid Equity

	2024	2023
	£m	£m
GBP 600m 3.74% perpetual subordinated capital securities (i)	598.0	598.0
EUR 500m 3.125% perpetual subordinated capital securities (i)	453.0	453.0
EUR 1,000m 4.00% perpetual subordinated capital securities (ii)	831.4	831.4
	1,882.4	1,882.4

i. 2 July 2020 £600m and €500m Hybrid Capital Bonds

The hybrid capital bonds issued in July 2020 have no fixed redemption date, but the Company may, at its sole discretion, redeem all but not

part of the capital securities at their principal amount. The date for the first potential discretionary redemption of the £600m hybrid bond is

14 April 2026 and then every 5 years thereafter. The date for the first potential discretionary redemption of the €500m hybrid capital bond

is 14 July 2027 and then every 5 years thereafter. For the £600m hybrid the discretionary coupon payments are made annually on 14 April

and for the €500m Hybrid the coupon payments are made annually on 14 July.

ii. 12 April 2022 €1,000m Hybrid Capital Bonds

The hybrid capital bond issued in April 2022 has no fixed redemption date, but the Company may, at its sole discretion, redeem all but not

part of the capital securities at their principal amount. The date for the first potential discretionary redemption is 21 April 2028 and then

every 5 years thereafter. The discretionary hybrid coupon payments are made annually on 21 April.

iii. Coupon Payments

In relation to the £600m hybrid equity bond a discretionary coupon payment of £22.4m (2023: £22.4m) was made on 14 April 2023 and for

the €500m hybrid equity bond a discretionary coupon payment of £16.5m (2023: £16.4m) was made on 14 July 2023. The first discretionary

coupon payment on the €1bn hybrid equity bond of £34.2m was paid on 21 April 2023.

The coupon payments in the year to 31 March 2024 consequently totalled £73.1m (2023: £38.8m).

The Company has the option to defer coupon payments on the bonds on any relevant payment date, as long as a dividend on the ordinary

shares has not been declared. Deferred coupons shall be satisfied only on redemption; or on a dividend payment on ordinary shares, both

of which occur at the sole option of the Company. Interest will accrue on any deferred coupon.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

263SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

22.6. Equity attributable to non-controlling interests

This relates to equity attributable to non-wholly owned but controlled subsidiaries which are consolidated within the financial statements

of the Group. At 31 March 2024 the amount attributable to non-controlling interests is £749.9m (2023: £649.1m), which relates to SHET of

£709.1m (2023: £606.5m) and SSE Pacifico £40.8m (2023: £42.6m). The profit and loss attributable to non-controlling interests for the year

ended 31 March 2024 is £100.8m gain (2023: £23.6m gain), which relates to SHET £101.5m gain (2023: £25.5m gain) and SSE Pacifico

£0.7m loss (2023: £1.9m loss).

Details regarding SHET’s principal activity and country of incorporation are included in A3

SHET’s summary financial information is as follows:

	31 March	31 March	25 November
	2024	2023	2022
	£m	£m	£m
Non-current assets	5,579.2	4,907.1	4,717.0
Current assets	337.0	16.5	2.0
Current liabilities	(509.0)	(370.3)	(384.3)
Non-current liabilities	(3,370.4)	(2,909.4)	(2,795.4)
	2,036.8	1,643.9	1,539.3

		1 April	26 November
		2022 to	2022 to
	31 March	25 November	31 March	Total
	2024	2022	2023	2023
	£m	£m	£m	£m
Revenue	885.2	435.4	220.4	655.8
Operating profit	565.0	274.5	131.0	405.5
Net finance costs	(35.0)	(31.7)	(14.9)	(46.6)
Profit before taxation	530.0	242.8	116.1	358.9
Taxation	(132.5)	(59.1)	(19.6)	(78.7)
Profit after taxation	397. 5	183.7	96.5	280.2

The summary financial information provided above is presented without Group eliminations, including £780.0m (2023: £780.0m) of

internal loans with related interest of £16.2m (2023: £6.5m), other consolidation adjustments of £5.9m and related taxation, which have

been eliminated to calculate the non-controlling interest for adjusted profit.

		26 November
		2022
	31 March	to 31 March
	2024	2023
	£m	£m
Net profit	397.5	96.5
add/(less):
Interest elimination	16.2	6.5
Current taxation on consolidation adjustments	(7.1)	(1.1)
Deferred taxation	102.0	16.5
	508.6	118.4
Adjusted net profit attributable to 25% non-controlling interests	127.1	29.6

264 SSE plc Annual Report 2024

23. Retirement benefit obligations

Defined benefit schemes

The Group has two funded final salary pension schemes which provide defined benefits based on final pensionable pay. The schemes are

subject to independent valuations at least every three years. The future benefit obligations are valued by actuarial methods on the basis of

an appropriate assessment of the relevant parameters.

The Group provides pension benefits to most UK colleagues through SSE Pensions+, a defined contribution master trust agreement with

Aviva. The Group generally matches employee contributions up to 6%, and provides additional contributions of 3% after two years and a

further 3% after ten years continuous Group service. The Group also operates other pension arrangements, including a defined

contribution master trust agreement with Zurich in the Republic of Ireland and an Unfunded Unapproved Retirement Benefit Scheme.

The Group presents its pension scheme valuations under two different measurement bases, an actuarial valuation and an IAS 19 valuation

as required by accounting standards. The IAS 19 valuation is used to determine the assets and obligations recognised in the Group’s

consolidated balance sheet and is calculated annually by scheme actuaries, whereas the formal actuarial valuation is used to determine the

contributions the Group makes to each scheme. The actuarial valuation is recalculated for each scheme every three years.

Actuarial valuations

The individual pension scheme details based on the latest formal actuarial valuations are as follows:

	Scottish Hydro Electric	SSE Southern
Latest formal actuarial valuation	31 March 2021	31 March 2022
Valuation carried out by	Hymans Robertson	Aon Hewitt
Value of assets based on valuation	£2,050.5m	£2,395.6m
Value of liabilities based on valuation	£1,782.2m	£2,475.2m
Valuation method adopted	Projected Unit	Projected Unit
Average salary increase	RPI+0.50%	RPI+0.25%
Average pension increase	RPI	RPI
Value of fund assets/accrued benefits	115.1%	96.8%

Future contributions

Scottish Hydro Electric Pension Scheme

The last triennial actuarial valuation of the scheme was carried out at 31 March 2021 and showed a surplus of £268.3m on a projected unit

basis. Following this valuation, the Group agreed to a new schedule of contributions which does not require contributions to be paid to the

scheme, unless there is a deficit on the valuation basis for two successive quarterly valuations. Consequently, the Group has not made

contributions to the scheme in the year ending 31 March 2024. The next triennial funding valuation will be carried out as at 31 March 2024.

This process began during the year and is expected to be finalised by the end of 2024. As part of that process the Trustee and Group will

agree any required future contributions to the scheme based on the valuation.

SSE Southern Group of the Electricity Supply Pension Scheme

The last triennial actuarial valuation of the scheme was carried out as at 31 March 2022 and showed a deficit of £79.6m on a projected unit

basis. Following this valuation, the Group agreed to a new schedule of contributions which, along with investment returns from return-

seeking assets, are expected to make good this shortfall by 31 March 2027. The next funding valuation will be carried out as at 31 March

2025. The Group also pays contributions in respect of current accrual. Total contributions of approximately £28.2m are expected to be paid

by the Group during the year ending on 31 March 2025, including deficit repair contributions of £15.6m. The deficit repair contribution will

be made until March 2027, increasing in line with inflation each year.

During the year ending 31 March 2024 the Group paid deficit contributions of £16.3m.

Pension summary as measured under IAS 19:

			Net actuarial (loss)/gain
			recognised in respect of the
			pension asset in the statement
	Scheme type		of comprehensive income	Net pension asset
		2024	2023	2024	2023
		£m	£m	£m	£m
Scottish Hydro Electric	Defined benefit	(37.1)	(152.0)	339.3	366.6
SSE Southern	Defined benefit	(118.1)	72.8	82.3	174.5
		(155.2)	(79.2)	421.6	541.1

IFRC 14 surplus restrictions

The value of Scottish Hydro Electric Pension Scheme assets recognised was previously impacted by the asset ceiling test which restricts the

surplus that can be recognised to assets that can be recovered through future refunds or reductions in future contributions to the scheme,

and may increase the value of scheme liabilities where there are minimum funding liabilities in relation to agreed contributions. IFRIC 14

‘IAS 19 – The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’ clarifies that future refunds may be

recognised if the sponsoring entity has an unconditional right to a refund in certain circumstances.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

265SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

In 2016/17 the Group agreed with the trustees to the Scottish Hydro Electric Pension Scheme an amendment to the scheme rules to clarify

that the Company has a clear right to any surplus upon final winding up of the scheme. This amendment removes the previous restriction

on recognition of any surplus and as such the previously applied restriction is no longer recognised. The net pension asset of the Scottish

Hydro Electric Scheme at 31 March 2024 was equal to £339.3m (2023: £366.6m).

At 31 March 2024, the SSE Southern Pension Scheme has a net surplus of £82.3m (2023: £174.5m), and unrecognised future contributions

of £46.8m (2023: £50.9m), subject to increases in line with inflation. The Group has assessed that it has the right to recognise the current

and any future surpluses on the scheme, therefore has not recognised a liability for future unrecoverable contributions.

Other matters

On 16 June 2023 the High Court issued a ruling in respect of Virgin Media v NTL Pension Trustees II Limited (and others) calling into

question the validity of rule amendments made to defined benefit pension schemes contracted-out on a Reference Scheme Test basis

between 6 April 1997 and 5 April 2016. Amendments to these pension schemes over this time required confirmation from the Scheme

Actuary that the Reference Scheme Test would continue to be met. In the absence of such a confirmation, the Rule amendment would be

void. This ruling could have wide ranging implications for many UK pension schemes and will be subject to an Appeal in 2024.

The Trustees of the Scottish Hydro Electric Pension Scheme and the SSE Southern Pension Scheme have not performed a detailed

assessment over the impact of this ruling. The Trustees believe it is appropriate to await the outcome of the appeal process in 2024 before

taking any further action, and the Group supports their position. Due to the uncertainty, it is not possible to assess the potential impact of

the Virgin Media High Court ruling on the Scottish Hydro Electric Pension Scheme or the SSE Southern Pension Scheme.

23.1. Pension scheme assumptions

Both schemes have been updated to 31 March 2024 by qualified independent actuaries. The valuations have been prepared for the

purposes of meeting the requirements of IAS 19. The major assumptions used by the actuaries in both schemes were:

	At 31 March	At 31 March
	2024	2023
Rate of increase in pensionable salaries	3.4%	3.5%
Rate of increase in pension payments	3.1%	3.2%
Discount rate	4.8%	4.8%
Inflation rate	3.1%	3.2%

The assumptions relating to longevity underlying the pension liabilities at 31 March 2024 are based on standard actuarial mortality tables,

and include an allowance for future improvements in longevity. The assumptions, equivalent to future longevity for members in normal

health at age 65, are as follows:

Scottish Hydro Electric

		At 31 March 2024		At 31 March 2023
	Male	Female	Male	Female
Currently aged 65	22	24	22	24
Currently aged 45	24	26	24	26

SSE Southern

		At 31 March 2024		At 31 March 2023
	Male	Female	Male	Female
Currently aged 65	22	25	22	24
Currently aged 45	24	26	24	26

23.2. Sensitivity analysis

The impact on the schemes’ liabilities of changing certain of the major assumptions is as follows:

Scottish Hydro Electric

		At 31 March 2024		At 31 March 2023
	Increase/	Effect on	Increase/	Effect on
	decrease in	scheme’s	decrease in	scheme’s
	assumption	liabilities	assumption	liabilities
Rate of increase in pensionable salaries	0.1%	+/- 0.1%	0.1%	+/- 0.1%
Rate of increase in pension payments	0.1%	+/- 0.7%	0.1%	+/- 0.7%
Discount rate	0.1%	+/- 0.7%	0.1%	+/- 0.7%
Longevity	1 year	+/- 2.0%	1 year	+/- 1.9%

SSE Southern

		At 31 March 2024		At 31 March 2023
	Increase/	Effect on	Increase/	Effect on
	decrease in	scheme’s	decrease in	scheme’s
	assumption	liabilities	assumption	liabilities
Rate of increase in pensionable salaries	0.1%	+/- 0.1%	0.1%	+/- 0.1%
Rate of increase in pension payments	0.1%	+/- 1.2%	0.1%	+/- 1.2%
Discount rate	0.1%	+/- 1.3%	0.1%	+/- 1.3%
Longevity	1 year	+/- 3.5%	1 year	+/- 3.3%

266 SSE plc Annual Report 2024

23. Retirement benefit obligations continued

23.3. Valuation of combined pension schemes

			Value at			Value at
			31 March			31 March
	Quoted	Unquoted	2024	Quoted	Unquoted	2023
	£m	£m	£m	£m	£m	£m
Equities	196.9	–	196.9	94.3	–	94.3
Government bonds	1,215.3	–	1,215.3	1,381.6	–	1,381.6
Corporate bonds	–	–	–	122.8	–	122.8
Insurance contracts	–	500.3	500.3	–	532.4	532.4
Other investments	1,102.7	–	1,102.7	1,057.5	–	1,057.5
Total fair value of plan assets	2,514.9	500.3	3,015.2	2,656.2	532.4	3,188.6
Present value of defined benefit obligation			(2,593.6)			(2,647.5)
Surplus in the schemes			421.6			541.1
Deferred tax thereon			(105.4)			(135.3)
Net pension asset			316.2			405.8

(i)

(ii)

(i) See details of valuations of insurance contracts in note 23.7(ii).

(ii) Deferred tax rate of 25% applied to net pension surplus position (2023: 25%).

23.4. Movements in the combined defined benefit assets and obligations during the year:

		2024			2023
	Assets	Obligations	Total	Assets	Obligations	Total
	£m	£m	£m	£m	£m	£m
At 1 April	3,188.6	(2 ,647.5)	541.1	4,311.2	(3,726.3)	584.9
Included in Income Statement
Current service cost	–	(16.2)	(16.2)	–	(28.2)	(28.2)
Past service cost	–	(2.4)	(2.4)	–	(5.7)	(5.7)
Interest income/(cost)	148.5	(122.3)	26.2	114.8	(98.6)	16.2
	148.5	(140.9)	7.6	114.8	(132.5)	(17.7)
Included in Other Comprehensive Income
Actuarial gain/(loss) arising from:
Demographic assumptions	–	29.3	29.3	–	71.7	71.7
Financial assumptions	–	53.7	53.7	–	1,099.8	1,099.8
Experience assumptions	–	(46.2)	(46.2)	–	(135.1)	(135.1)
Return on plan assets excluding interest income	(192.0)	–	(192.0)	(1,115.6)	–	(1,115.6)
	(192.0)	36.8	(155.2)	(1,115.6)	1,036.4	(79.2)
Other Contributions paid by the employer	28.1	–	28.1	53.1	–	53.1
Scheme participant’s contributions	0.1	(0.1)	–	0.1	(0.1)	–
Benefits paid	(158.1)	158.1	–	(175.0)	175.0	–
	(129.9)	158.0	28.1	(121.8)	174.9	53.1
Balance at 31 March	3,015.2	(2,593.6)	421.6	3,188.6	(2,647.5)	541.1

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

267SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

23.5. Pension scheme contributions and costs

Charges/(credits) recognised:

	2024	2023
	£m	£m
Service costs (charged to operating profit)	18.6	33.9
(Credited)/charged to finance costs:
Interest from pension scheme assets	(148.5)	(114.8)
Interest on pension scheme liabilities	122.3	98.6
	(26.2)	(16.2)

The return on pension scheme assets is as follows:

	2024	2023
	£m	£m
Return on pension scheme assets	(43.5)	(1,000.8)

Defined contribution scheme

The total contribution paid by the Group to defined contribution pension schemes was £90.5m (2023: £58.7m).

Unfunded Unapproved Retirement Benefit Scheme (UURBS) pension costs

The decrease in the year in relation to UURBS was £6.1m (2023: decrease of £8.9m). This is included in Employee related provisions (note 20).

Staff costs analysis

The pension costs in note 8 can be analysed as follows:

	2024	2023
	£m	£m
Service costs	18.6	33.9
Defined contribution scheme payments	90.5	60.1
	109.1	94.0

23.6. Pension scheme risk assessment and mitigation

Risks to which the Pension Schemes exposes the Group

The nature of the Group’s defined benefit pension schemes expose the Group to the risk of paying unanticipated additional contributions

to the schemes in times of adverse experience. The most financially significant risks are likely to be:

i. Asset volatility

The liabilities are calculated using a discount rate set with reference to corporate bond yields; if assets underperform this yield, this will

create a deficit. The schemes hold a proportion of growth assets (equities and property) which, though expected to outperform corporate

bonds in the long-term, create volatility and risk in the short-term. The allocation to growth assets is monitored to ensure it remains

appropriate given the schemes’ long term objectives. The SHEPS has a much lower proportion of growth assets than the SSE Southern

Pension Scheme reflecting the maturity of each scheme.

ii. Changes in bond yields

A decrease in corporate bond yields will increase the value placed on the schemes’ liabilities for accounting purposes. However, this will be

partially offset by an increase in the value of the schemes’ bond holdings and its interest rate hedging in both schemes.

iii. Inflation risk

The majority of the schemes’ benefit obligations are linked to inflation, and higher inflation will lead to higher liabilities (although, in most

cases, caps on the level of inflationary increases are in place to protect against extreme inflation). However, this will be partially offset by

inflation hedging in both schemes.

iv. Life expectancy

The majority of the schemes’ obligations are to provide benefits for the life of the members, so an increase in the life expectancy will result

in an increase in the liabilities. The sensitivity analysis disclosed is intended to provide an indication of the impact on the value of the

schemes’ liabilities of the risks highlighted.

v. Liability versus asset risk

The risk that movement in the value of the schemes’ liabilities are not met by corresponding movements in the value of the schemes’ assets

will expose the Group to movements in the overall funding surplus.

268 SSE plc Annual Report 2024

23. Retirement benefit obligations continued

23.7. Risk mitigation

i. De-risking

The Trustees have taken a number of steps to control the level of investment risk including reducing the Schemes’ exposures to higher risk

assets and increasing the level of protection against adverse movements in interest rates and inflation. The Trustees of both schemes

continue to review the risk exposures in light of the longer term objectives of the respective schemes, including consideration of the

impact of climate-related risk. Detailed below are further details on the hedging of pensioner longevity risk.

ii. Asset buy-in

On 1 October 2019, the Scottish Hydro Electric Pension Scheme entered into an asset buy-in, transferring the risk of volatility in the

assumptions used to calculate the obligation for 1,800 pensioners and 567 dependants (covering c£800m of the scheme’s funding

liabilities) to a third party. The asset buy-in is valued under the accounting principles of IFRS 13 and is considered a Level 3 instrument in the

fair value hierarchy. This is in addition to a previous buy-in completed during the year ended 31 March 2018 when c.£250m of the scheme’s

assets and liabilities related to 617 pensioners and 190 dependants were transferred to a third party. The Group has now insured against

volatility in obligations related to pensioners who retired before 1 October 2019 to third parties (insurer PIC) and is now only exposed to

valuation fluctuations related to active and deferred members and any members who retired after 1 October 2019.

iii. Asset-liability matching strategies used by the Scheme

The Group and trustees of the schemes have agreed a long term investment strategy that seeks to reduce investment risk as and when

appropriate. The asset-liability matching strategy is part of this approach which aims to reduce the volatility of the funding level of the

pension schemes by investing in assets which perform in line with the liabilities of the schemes so as to protect against inflation being

higher than expected. This has been adopted for a proportion of the schemes’ assets, which is designed to provide partial protection

against adverse movements in interest rates and inflation. The trustees of the respective schemes review the schemes’ asset allocation on

an ongoing basis in light of changes in the funding position and market opportunities.

23.8. Risk assessment

i. Maturity profile of the defined benefit obligations

The weighted average duration of the defined benefit obligation is 17 years (2023: 17 years) for the Scottish Hydro Electric Pension Scheme

and 13 years (2023: 14 years) for the SSE Southern Pension Scheme.

ii. Information about the defined benefit obligations

Status of members is weighted by the liabilities of each scheme

	Scottish
	Hydro Electric	SSE Southern
	%	%
Active members	23	16
Deferred members	14	8
Pensioners	63	76
	100	100

23.9. Pension scheme policies

i. Recognition of gains and losses

The Group recognises actuarial gains and losses in the Statement of Other Comprehensive Income following the re-measurement of the

net defined benefit liabilities of the schemes.

ii. Methods and assumptions used in preparing the sensitivity analyses

The sensitivities disclosed are calculated using approximate methods taking into account the duration of the schemes’ liabilities. While

these have been calculated consistently with the previous financial year, the method applied may change over time with financial

conditions and assumptions.

iii. Asset recognition

The Group has recognised net pension assets in relation to the Scottish Hydro Electric and SSE Southern pension schemes due to a surplus

existing under IAS 19 accounting. The Group will only recognise a surplus should it have rights to that surplus under the rules of the

pension scheme. The Group no longer applies the ‘asset ceiling’ restriction mandated by IFRIC 14. Details on this key accounting

consideration are provided above.

iv. Fair value assessment of scheme assets

The Group seeks to assess whether there is a quotable market value (referenced as “quotable” above) in relation to pension scheme assets

held. This assessment is based on regular reviews conducted in conjunction with the trustees of the schemes. For assets where no

quotable market value exists, these assets will be valued based on a set methodology agreed by trustees and scheme advisors and then

regularly assessed.

Currently only one unquotable value exists within the two pension schemes of the Group, this being insurance contracts (or ‘buy-in’) held

by the Scottish Hydro Electric Pension Scheme. These assets are currently valued consistently with the scheme’s liabilities with the

expected return on these assets being set equal to the discount rate.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

269SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

24. Financial instruments

For financial reporting purposes, the Group has classified derivative financial instruments into two categories, operating derivatives and

financing derivatives. Operating derivatives include all qualifying commodity contracts including those for electricity, gas, oil, and carbon

and the post-day 1 fair value movements on non-government backed contracts for difference in SSE Renewables. Financing derivatives

include all fair value and cash flow interest rate hedges, non-hedge accounted (mark-to-market) interest rate derivatives, cash flow foreign

exchange hedges and non-hedge accounted foreign exchange contracts. Non-hedge accounted contracts are treated as held for trading.

The Group provides guarantees in respect of certain activities of former subsidiaries and to certain current joint venture investments. Prior

to adoption of IFRS 17, these contracts were designated as insurance contracts under IFRS 4, where existing accounting practices were

grandfathered and the contracts were treated as contingent liabilities until such time as it became probable the Group would be required to

make payment to settle the obligation. The adoption of IFRS 17 from 1 April 2022 resulted in a reassessment of these contracts and the

Group elected to apply the valuation principles of IFRS 9 to these contracts.

24.1. Financial instruments – income statement

	2024	2023
	£m	£m
Operating derivatives
Total result on operating derivatives	(573.1)	(2,980.2)
Less: Amounts settled	1,025.3	272.0
Movement in unrealised derivatives	452.2	(2,708.2)
Financing derivatives (and hedged items)
Total result on financing derivatives	370.6	81.3
Less: Amounts settled	(364.5)	120.6
Movement in unrealised derivatives	6.1	201.9
Financial guarantee liabilities
Total result on financial guarantee liabilities	12.5	–
Net income statement impact	470.8	(2,506.3)

(i)

(ii)

(i)

(ii)

(iii)

(i) Total result on derivatives in the income statement represents the total amounts (charged) or credited to the income statement in respect of operating and financial derivatives,

and is shown as certain re-measurements in note 7.

(ii) Amounts settled in the year represent the result on derivatives transacted which have matured or been delivered and have been included within the total result on derivatives, and

is shown as certain re-measurements in note 7.

(iii) Total result on financial guarantee liabilities in the income statement represents the total amounts credited or (charged) to the income statement in respect of the unwind of the

financial liabilities and new or expiring contracts.

The movement in unrealised operating derivative excludes a £8.8m loss (2023: £16.6m gain) on proprietary trades, which has been

recognised in the underlying profit of the Group.

24.2. Financial instruments – balance sheet

The derivative financial assets and (liabilities) are represented as follows:

		2023
	2024	£m
Derivative financial assets	£m	(restated*)
Non-current	64.2	246.0
Current	536.1	759.2
Total derivative assets	600.3	1,005.2
Derivative liabilities
Non-current	(222.2)	(243.3)
Current	(345.2)	(1,021.0)
Total derivative liabilities	(567.4)	(1,264.3)
Net derivative asset/(liability)	32.9	(259.1)

The financial guarantee liabilities are represented as follows:

	2024	2023
Financial guarantee liabilities	£m	£m
Non-current	(36.4)	(66.5)
Current	(3.1)	(4.4)
Total guarantee liabilities	(39.5)	(70.9)

* The comparative has been restated. See note 1.2.

Information on the Group’s financial risk management and the fair value of financial instruments is available at A6 and A7 .

270 SSE plc Annual Report 2024

25. Commitments and contingencies

25.1. Capital commitments

	2024	2023
	£m	£m
Capital expenditure:
Contracted for but not provided	1,389.2	1,035.6

Contracted for but not provided capital commitments include the fixed contracted costs of the Group’s major capital projects. In practice

contractual variations may arise on the final settlement of these contractual costs. The increase from the prior year relates primarily to

Transmission projects.

25.2. Contingent assets and liabilities

At 31 March 2024, the Group has unrecognised contingent assets in relation to the part disposal transaction of SSE Slough Multifuel Limited.

In the prior year, the Group had further unrecognised contingent assets in relation to the part disposal transactions of Neos Networks

Limited, Seagreen and Doggerbank C, which have lapsed during the current year. In total, contingent consideration receivable has

decreased to £19.1m (2023: £149.1m), for which the Group has recognised a net receivable of £4.1m (2023: £4.1m). The payments of the

remaining £15.0m (2023: £145.0m) are subject to various earn outs or contract and planning milestones, some of which the Group has

assessed are unachievable or are out of the Group’s control. At 31 March 2024, the Group has assessed that there is neither the required

certainty of receipt, nor the ability to accurately assess the amounts receivable for recognition of these amounts.

Contingent liabilities for the Group solely relate to SSE plc, and have been disclosed within note 13 to the Company Financial Statements.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

271SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

A1. Basis of consolidation and significant accounting policies

A1.1. Basis of consolidation

The financial statements consolidate the results of the Company and its subsidiaries together with the Group’s share of the results and net

assets of its interests in joint arrangements and associates. Where necessary to ensure consistency, the accounting policies of the

subsidiaries, joint arrangements or associates have been adjusted to align to the accounting policies of the Group. Intra-Group balances

and any unrealised gains and losses or income and expenses arising from Intra-Group transactions are eliminated in preparing the

consolidated financial statements. Unrealised gains and losses arising from transactions with joint arrangements and associates are

eliminated to the extent of the Group’s interest in the entity. Non-controlling interests represent the equity in subsidiaries that is not

attributable, either directly or indirectly, to SSE plc shareholders.

Subsidiaries (Accompanying Information A3

)

Subsidiaries are those entities controlled by the Group or the Company. Control exists when the Group has the power, directly or indirectly,

to govern the financial and operating policies of an entity in order to obtain variable returns from its activities. In assessing control, potential

voting rights that are currently exercisable or convertible are taken into account. The financial statements of subsidiaries acquired are

consolidated in the financial statements of the Group from the date that control commences until the date control ceases. Transactions

with non-controlling interests that relate to their ownership interests and do not result in a loss of control are accounted for as equity

transactions.

Interests in joint arrangements and associates (note 16 and Accompanying Information A3

)

Joint arrangements, as defined by IFRS 11 “Joint Arrangements”, are those arrangements that convey to two or more parties ‘joint control’.

Joint control exists when decisions about the ‘relevant activities’, being the financial, operational or strategic policies of the arrangement,

are made with the unanimous consent of the parties sharing control. Whilst this assessment is principally focused on any ‘reserved matters’,

being the material activities that typically require all significant shareholders to approve, other contractual agreements such as Power

Purchase Agreements and Management Services Agreements are also considered. The Group’s investments in joint arrangements are

classified as either joint operations or joint ventures depending on the investee’s legal form and the investor’s contractual rights and

obligations over the assets and liabilities of the investee.

Associates are those investments over which the Group has significant influence but neither control nor joint control.

The Group’s interests in its joint operations are accounted for by recognising its share of the assets, liabilities, revenue and expenses of the

operation. In these arrangements, the Group’s share of the revenue will be eliminated as it relates to its purchased share of the output from

the arrangement.

The Group’s joint ventures and associates are accounted for using the equity method of accounting where the joint venture and associate

net investments (comprising both equity and long term loans) are carried at historical cost plus the Group’s share of post-acquisition

results, less any impairment in value. Where an impairment is recognised against the carrying value of an investment, it is recognised within

the operating costs line of the consolidated financial statements. For those investments that were formerly subsidiaries of the Group, this

will also include any fair value uplift arising from loss of control. The Group recognises its share of the results of these equity-accounted

operations after tax and interest in the income statement.

Foreign currencies

The consolidated financial statements are presented in pounds sterling, which is the functional currency of the parent. Each entity in the

Group determines its own functional currency and items included in the financial statements of each entity are measured accordingly.

Transactions in foreign currencies are recorded at the rate ruling at the date of the transaction. Monetary assets and liabilities denominated

in foreign currencies are translated at the rate of exchange ruling at the balance sheet date. Any gain or loss arising on the restatement of

such items is taken to the income statement as a finance cost, with the exception of exchange gains or losses on foreign currency

borrowings that provide a hedge against a net investment in a foreign entity or exchange gains or losses incurred as part of a qualifying

cash flow hedge. These exchange gains or losses are transferred to the translation reserve to the extent the hedge is effective. Non-

monetary assets that are measured in terms of historical cost in a foreign currency are translated at the historic rate at the date of

transaction.

For the purpose of presenting the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are

translated into pounds sterling at the balance sheet closing rate. The results of these operations are translated at the average rate in the

relevant period. Exchange differences on retranslation of the opening net assets and the results of foreign operations are transferred to the

translation reserve and are reported in the consolidated statement of comprehensive income.

The average and spot rates for the principal functional currencies that the Group’s foreign operations are denominated in are shown in the

table below.

		2024	2023	Change
EUR v GBP	Year end spot rate	1.1697	1.1374	2.8%
	Average spot rate	1.1694	1.1564	1.1%
US$ v GBP	Year end spot rate	1.2623	1.2337	2.3%
	Average spot rate	1.2710	1.2050	5.5%
JPY v GBP	Year end spot rate	191.0290	163.8230	16.6%
	Average spot rate	190.4400	163.2888	16.6%

ACCOMPANYING INFORMATION

272 SSE plc Annual Report 2024

A1. Basis of consolidation and significant accounting policies continued

A1.2. Significant accounting policies

Revenue (notes 2 and 5)

Revenue from contracts with customers is recognised to the extent that it reflects the expected consideration for goods or services

provided to the customer under contract, over the performance obligations they are being provided. For each separable performance

obligation identified, the Group determines whether it is satisfied at a “point in time” or “over time” based upon an evaluation of the receipt

and consumption of benefits, control of assets and enforceable payment rights associated with that obligation. If the criteria required for

“over time” recognition are not met, the performance obligation is deemed to be satisfied at a “point in time”.

Revenue principally arises as a result of the Group’s activities in energy production, storage, transmission, distribution, supply and related

services in the energy markets in Great Britain and Ireland. The key policies applied by each Business Unit are as follows:

Transmission

Use of electricity transmission networks

Revenue from use of electricity transmission networks is derived from the allowed revenue as defined by the parameters in the relevant

electricity transmission licence, which informs the tariffs set.

Electricity transmission revenue is determined in accordance with the regulatory licence, based on an Ofgem approved revenue model

and is recognised “over time” as charged to National Grid. Where this revenue differs from the allowed revenue, there may be an over-

or under-recovery of revenue which will be reflected in future financial years’ allowed revenue as set out in the regulatory licence. No

accounting adjustments are made for over- or under-recoveries in the year that they arise as they are contingent on future events (being

the transmission of electricity in a future period). The over or under recovery adjustment is recognised in the subsequent period when

included within the tariffs that form allowed revenue under the regulatory agreement.

Transmission network contracted services

Where the Group has an ongoing obligation to provide contracted services (transmission network connections), revenues are recognised

“over time” consistent with the customer receiving and consuming the benefits of that service across the expected contractual service

period. Any assets constructed in order to deliver the service are capitalised and depreciated over their useful life. Payments are typically

received from customers in advance of providing the contracted service and are deferred on balance sheet. No extended warranty periods

are offered.

Distribution

Use of electricity distribution networks

Revenue from use of electricity distribution networks is derived from the allowed revenue as defined by the parameters in the relevant

electricity distribution licence, which informs the tariffs set.

Electricity distribution revenue recognised is based on the volume of electricity distributed “over time”, as use of distribution service is

determined by the customer, and the set customer tariff. As with electricity transmission revenue, any over- or under-recovery of revenue

is reflected in future financial years’ allowed revenue as set out in the regulatory licence. No accounting adjustments are made for over- or

under-recoveries in the year that they arise as they are contingent on future events (being the distribution of electricity in a future period).

The over or under recovery adjustment is recognised in the subsequent period when included within the tariffs that form allowed revenue

under the regulatory agreement. The policy also applies to the Group’s independent network business reported within SSE Enterprise.

Distribution network contracted services

Where the Group has an ongoing obligation to provide contracted services (such as for distribution network connections), revenues are

recognised “over time” consistent with the customer receiving and consuming the benefits of that service across the expected contractual

service period. Any assets constructed in order to deliver the service are capitalised and depreciated over their useful life. Payments are

typically received from customers in advance of providing the contracted service and are deferred on balance sheet. The release of deferred

income on customer funded additions is removed from the Group’s adjusted EBITDA measure. No extended warranty periods are offered.

Renewables

Electricity generation

Revenue from the physical generation of electricity is recognised “point in time” as generated and supplied to the national settlements

body. Revenue is measured at either the spot price at the time of delivery, or trade price where that trade is eligible for “own use”

designation.

ACCOMPANYING INFORMATION – CONTINUED

273SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Renewables contracted services

Revenue from national support schemes, such as Renewable Obligation Certificates, is recognised at the point the performance obligation

has been met. This is typically considered to be either at the point electricity has been physically generated or over the contractual period,

depending on the underlying performance obligation. Revenue is measured either at the market rate at the point of generation, or at the

fixed contractual consideration, depending on the individual scheme mechanic.

Revenue from other ancillary generation services is recognised “over time” consistent with the customer receiving and consuming the

benefits of those services across the expected contractual service period, and at the contracted consideration.

Thermal

Electricity generation

Revenue from the physical generation of electricity is recognised “point in time” as generated and supplied to the national settlements

body. Revenue is measured at either the spot price at the time of delivery, or trade price where that trade is eligible for “own use”

designation. This policy is also applied to the Group’s Slough Heat & Power assets within the Enterprise business.

Gas storage

Revenue from gas storage trading activities is recognised “point in time” as injected back into the gas network. Revenue is measured at

either the spot price at the time of delivery, or trade price where that trade is eligible for “own use” designation.

Thermal Generation contracted services

Revenue from national support schemes, such as the Capacity Market mechanism, is recognised at the point the performance obligation

has been met. This is typically considered to be either at the point electricity has been physically generated or over the contractual period,

depending on the underlying performance obligation. Revenue is measured either at the market rate at the point of generation, or at the

fixed contractual consideration, depending on the individual scheme mechanic.

Revenue from other ancillary generation services is recognised “over time” consistent with the customer receiving and consuming the

benefits of those services across the expected contractual service period, and at the contracted consideration.

Customers

Supply of energy

Revenue on the supply of energy comprises sales to domestic (in Ireland) and business end-user customers (in GB and Ireland) is based on

actual energy consumption including an estimate of the value of electricity and gas supplied to customers between the date of the last

meter reading and the year end. Revenue is recognised “over time” consistent with the delivery of energy to the customer as we consider

the receipt and consumption of the benefits of the energy to be simultaneous. Revenue is measured based on the applicable customer

tariff rate and after deduction of any applicable contractual discounts.

Details of the judgements involved in the estimation process for the value of electricity and gas supplied to customers is given within

note 4.1(iii).

Payments from customers may be received in advance of providing the contracted service and are deferred on balance sheet. Amounts

received from customers in relation to energy management services provided by Third Party Intermediaries (‘TPIs’) are offset against

payments to those TPIs, reflecting the responsibility for providing the energy management service.

Energy related services

Where the Group has an ongoing obligation to provide contracted energy related services, revenues are recognised “over time” consistent

with the customer receiving and consuming the benefits of that service across the expected contractual service period at the fixed

contracted rate. Where the Group has an obligation to perform a specific service, revenues are recognised “point in time”, following

performance of the service at the fixed contracted consideration. No extended warranty periods are offered.

274 SSE plc Annual Report 2024

A1. Basis of consolidation and significant accounting policies continued

A1.2. Significant accounting policies continued

SSE Energy Markets

Commodity optimisation and other services

Income from sales commodity optimisation trading occurring in any business unit is presented net in cost of sales alongside purchase

commodity optimisation trades. Revenue on physical power and gas supplies recognised “point in time” as delivered to the national

settlements body or third parties. Revenue is measured at either the spot price at the time of delivery, or trade price where that trade is

eligible for “own use” designation.

Revenue arising on commodities purchased in excess of the Group’s requirements and recorded as inventory assets, such as Renewables

Obligation Certificates, REGOs or carbon allowances, is recognised “point in time” on disposal of these inventory assets to third parties.

Revenue from other ancillary services is recognised “over time” consistent with the customer receiving and consuming the benefits of

those services across the expected contractual service period, and at the contracted consideration.

Aside from where specifically noted above, consideration is due when the performance obligation has been satisfied. As the period

between satisfaction of the performance obligation and receipt of consideration from the customer is expected to be less than a year, the

Group has applied the practical expedient not to adjust revenue for the effect of any financing components.

Revenue from sources other than the Group’s contracts with customers principally comprise meter rental income within the SSE Enterprise

business, and Contract for Difference income within certain Joint Venture arrangements.

Income on meter rental agreements, which are classified as operating leases, are presented as revenue where they relate to the core

operating activities of that business. Lease payments are recognised as income on a straight-line basis over the lease term.

Where the Group earns income from an asset during the commissioning period, the income is recognised in the income statement as

revenue accordance with the relevant asset accounting policy set out above.

Other operating income – Government Grants (note 6)

Under UK and Irish governments’ customer support schemes licensed energy suppliers are required to provide a discount on gas and

electricity prices to customers. The level of discount applied to each customer varies dependent upon energy tariff and support scheme

applicable to each customer. Where SSE provided a discount to customer through reduction of energy bill, the cost of applying these

discounts is recovered from the Government. The amounts reclaimed under this scheme are recognised as government grant income

within Other Operating Income in the consolidated income statement.

For the year ended 31 March 2024 the most significant customer support scheme administered by the Group was the Energy Bills Discount

Scheme (‘EBDS’), applicable to eligible non-domestic gas and electricity customers in GB and Northern Ireland during the period from

1 April 2023 to 31 March 2024. In the prior year the most significant scheme was the Energy Bill Relief Scheme (‘EBRS’), applicable to GB

commercial gas and electricity customer usage during the period 1 October 2022 to 31 March 2023. These schemes impact SSE Business

Energy with discounts made to SSE’s billings to customers and the unbilled income accrual, and a separate asset is recognised in respect of

claimed or to-be-claimed receipts from the UK government.

Contract for Differences (‘CfD’) are agreements between a low carbon electricity generator and the Low Carbon Contracts Company

(‘LCCC’), a UK Government owned entity responsible for delivering support mechanisms for low-carbon electricity generation. These

agreements are not considered to be contracts with a customer, as the LCCC does not receive any goods or services from the generator.

These arrangements are instead considered to be Government Grants, with income arising from these grants recognised in the income

statement in the period in which generation takes place. In the year, the Group recognised no income or expense (2023: none) related to

Contracts for Difference with the LCCC within its wholly owned subsidiaries. The Group’s joint venture investment, Beatrice Offshore

Windfarm Limited, has a CfD with the LCCC which resulted in payments from the LCCC of £217.3m in the year with SSE’s share of £86.9m

recognised within share of profit (2023: £25.6m, with SSE’s share of £12.8m recognised within share of profit). The Group’s wholly owned

Viking windfarm and joint venture investment Seagreen Wind Energy Limited also have a CfD arrangement in place with the LCCC.

The LCCC government agreements for Viking and Seagreen are not yet effective and as such no income or cost was recognised during

the year.

Where the CfD strike price falls below the spot price of generation and payments are made to the LCCC, these payments are expensed as

incurred within operating costs. See ‘financial instruments’ below for the Group’s policy in relation to commercial Contracts for Difference.

Presentation of grants related to assets

Income received from Government towards the capital cost of an asset are deducted from the carrying value presented in the financial

statements.

Cost of sales (note 6)

Cost of sales includes fuel and energy purchases, direct employee benefits, and depreciation of property, plant and equipment.

The net result from sales and purchases of commodity optimisation trades – comprising both realised and unrealised gains and losses

arising from optimisation trading activities – is also presented within cost of sales, reflecting the underlying economic purpose of this

trading activity.

ACCOMPANYING INFORMATION – CONTINUED

275SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Finance income and costs (note 9)

Interest income and costs are recognised in the income statement as they accrue, on an effective interest method. The issue costs and

interest payable on bonds and all other interest payable and receivable is reflected in the income statement on the same basis.

Interest on the funding attributable to major capital projects is capitalised during the period of construction and depreciated as part of the

total cost over the useful life of the asset.

The accounting policy for foreign exchange translation of monetary assets and liabilities is described on page 271

and for lease liability

charges on page 278 .

Taxation (note 10)

Taxation on the profit for the year comprises current and deferred tax. Taxation is recognised in the income statement unless it relates to

items recognised directly in equity, in which case it is recognised in other comprehensive income.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the balance

sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax is calculated using the balance sheet liability method, providing for temporary differences between the carrying amounts of

assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The following temporary differences are

not provided for: goodwill not deductible for tax purposes, the initial recognition of assets or liabilities other than in business combinations

that affect neither accounting nor taxable profit, and differences relating to investments in subsidiaries to the extent that they will probably

not reverse in the foreseeable future. The amount of deferred tax provided is based on the expected manner of realisation or settlement of

the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax assets and liabilities are offset where there is a legally enforceable right of offset within the same tax authority and where the

Group intends to either settle them on a net basis, or to realise the asset and settle the liability simultaneously. A deferred tax asset is

recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred

tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

During the year to 31 March 2024 Finance (No.2) Act 2023 was enacted, bringing Electricity Generator Levy (“EGL”) into force, which is

effective for periods from 1 January 2023 to 31 March 2028. The Group has assessed that the EGL has the characteristics of a levy rather

than an income tax. The Group therefore recognises an accrual for the year within cost of sales.

Business Combinations (note 12)

The acquisition of subsidiaries, and joint operations that meet the definition of a business, is accounted for under the acquisition method as

defined by IFRS 3 “Business Combinations”.

The cost of acquisition is measured as being the aggregate fair value of consideration to be transferred at the date control is obtained.

Goodwill is measured at the acquisition date as the fair value of consideration transferred, plus non-controlling interests, less the net

recognised amount (which is generally fair value) of the identifiable assets and liabilities assumed. Goodwill is subject to an annual review

for impairment (or more frequently if necessary) in accordance with the Group’s impairment accounting policy.

Contingent consideration is classified as a liability and subsequently re-measured through the income statement. Acquisition costs are

expensed as incurred.

Changes in ownership that do not result in a change of control are accounted for as equity transactions.

Held for sale assets and liabilities and discontinued operations

Non-current assets are classified as held for sale if their recoverable value is likely to be recovered via a sale or distribution as opposed to

continued use by the Group. In order to be classified as assets held for sale, assets must meet all of the following conditions: the sale is

highly probable; it is available for immediate sale; it is being actively marketed; and the sale is likely to occur within one year.

Assets that qualify as held for sale and related liabilities are disclosed separately from other assets and liabilities in the balance sheet

prospectively from the date of classification. Non-current assets determined as held for sale are measured at the lower of carrying value

and fair value less costs to sell, no depreciation is charged in respect of these assets after classification as held for sale.

Assets or groups of assets and related liabilities that qualify as held for sale are classified as discontinued operations when they represent a

separate major line of business or geographical area, are part of a single plan to dispose of a separate major line of business or

geographical area or are acquired exclusively with a view to resale. Income and expenses relating to these discontinued operations are

disclosed in a single net amount after taxes in the income statement, with comparative amounts re-presented accordingly.

Intra-Group balances and any unrealised gains and losses or income and expenses arising from trading between continuing and

discontinued operations continue to be eliminated in preparing the consolidated financial statements.

276 SSE plc Annual Report 2024

A1. Basis of consolidation and significant accounting policies continued

A1.2. Significant accounting policies continued

Intangible assets (note 13)

Goodwill and impairment testing

Goodwill arising on a business combination represents the excess of the cost of acquisition over the Group’s interest in the fair value of the

identifiable assets, liabilities and contingent liabilities of a subsidiary, associate or joint venture at the date of acquisition. Following initial

recognition, goodwill is measured at cost less any accumulated impairment losses. Goodwill is reviewed for impairment at least on an

annual basis.

For the purpose of impairment testing, goodwill is allocated on initial recognition to the cash-generating units (CGUs) or groups of CGUs

expected to benefit from the combination’s synergies. The CGUs (or groups of CGUs) used for goodwill impairment testing purposes will

represent how goodwill was attributed but may not represent reportable business segments.

Goodwill may also arise upon investments in joint arrangements and associates. Goodwill arising on a joint operation is recorded as a

separate asset and any impairment loss is recognised in the income statement. Goodwill arising on a joint venture or associate is recorded

within the carrying amount of the Group’s investment and any impairment loss is included within the share of result from joint ventures and

associates. On disposal or closure of a previously acquired investment or business, any attributed goodwill will be included in determining

the profit or loss on disposal.

Allowances and certificates

Allowances and certificates consist of purchased carbon emissions allowances and generated or purchased obligations certificates. These

allowances and certificates will be utilised in settlement of environmental obligations incurred by the Group’s Thermal and SSE Business

Energy businesses.

The EU Emissions Trading Scheme (EU ETS) has been in operation since 1 January 2005, with the Group operating under the established

EU ETS carbon pricing system from that date. Since 1 January 2021, following Brexit, the UK Government has established a UK Emissions

Trading Scheme (UK ETS) to replace the EU ETS with the Group’s UK generation assets now operating under the UK ETS carbon pricing

system. The Group continues to hold EU ETS certificates to settle obligations arising through the activities of its Irish Thermal generation

assets. Carbon allowances purchased are recorded at cost within intangible assets. Forward carbon contracts are measured at fair value

with gains or losses arising on re-measurement being recognised in the income statement. A liability is recognised based on the level of

emissions recorded. Up to the level of allowances held, including forward carbon contracts, the liability is measured at the cost of

purchase. When the carbon emission liability exceeds the carbon allowances held, the difference is measured at market value selling price.

Subsequent movements in market value are prospectively recognised in operating profit.

The carbon allowance intangible asset is surrendered at the end of the compliance period to the extent requested reflecting the

consumption of the economic benefit and is recorded as being utilised. As a result, no amortisation is booked but an impairment charge

may be recognised should the carrying value of allowances exceed market or fair value.

Under the Renewable Obligations Certificates (ROCs) scheme, certificates obtained from own generation are awarded by a third party,

Ofgem. ROCs can be traded with third parties and are ultimately used by suppliers to demonstrate to Ofgem that they have met their

obligation to source a set proportion of the electricity they supply from renewable sources. The value of a ROC to a supplier comprises

two elements: the “buy-out” price which is set annually in advance of the compliance period by Ofgem; and the “recycle” price which is

determined after the compliance period by Ofgem. The recycle price element is estimated at the balance sheet date based on assumptions

at that point in in time around likely levels of renewable generation and supply over the remaining compliance period, and is therefore

subject to possible future variation.

Where ROCs are self-generated or purchased to fulfil the Group’s liability under the renewable obligation, they are recorded at market

value at the point of generation or purchased within intangible assets. The Group can hold ROCs in excess of the Group’s renewables

obligation, which, due to limited evidence of liquidity or net settlement for ROC trades, are recorded at the lower of cost or net realisable

value within inventories. Similarly, the fair value of any forward contracts entered into at the balance sheet date for the purchase or sale of

ROCs in future periods are not recognised, as there is insufficient liquidity for net settlement. The Group’s liability under the renewable

obligation is recognised based on electricity supplied to customers, the obligation level set by Ofgem and the prevailing market price.

The Group’s SSE Business Energy segment has a requirement under certain customer supply agreements to demonstrate the origin

of electricity supplied to customers generated by renewable sources. Renewable Energy Guarantees of Origin (‘REGO’) certificates are

procured from third parties or generated by the Group’s Renewable accredited assets and retained for surrender under the scheme. Tickets

that are held to be surrendered are recorded as intangible assets are recorded at cost, in line with the expense recognised by SSE Business

Energy during the period. Excess tickets held by the Group are held in inventories at the lower of cost or net realisable value.

The ROCS and REGO intangible assets are surrendered at the end of the compliance period reflecting the consumption of economic

benefit and release of the associated liability. As a result, no amortisation is recorded during the period.

Research and development

Expenditure on research activities is charged to the income statement as incurred.

Expenditure on development activities is capitalised as intangible assets if the project or process is considered to be technically and

commercially feasible and the Group intends to complete the project or process for use or for sale. Development projects include wind

farm developments, battery storage and solar developments, thermal generation projects and other developments relating to proven

technologies. Costs incurred in bringing these projects to the consent stage include options over land rights, planning application costs

and environmental impact studies and may be costs incurred directly or part of the fair value exercise on acquisition of an interest in a

project. At the point that the project reaches the consent stage and is approved by the Board, the carrying value of the project is transferred

ACCOMPANYING INFORMATION – CONTINUED

277SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

to property, plant and equipment as assets under construction. Revenue and costs incurred through pre-commissioning testing activities

are reflected in the income statement. Once in operation, depreciation will be charged over the expected useful life of the asset. The asset

is derecognised on disposal, or when no future economic benefits are expected to arise.

Other intangible assets

Other intangible assets that have been acquired separately by the Group are stated at cost less accumulated amortisation and impairment

losses. Expenditure on internally generated brands or customer lists are expensed as incurred. Expenditure on internally developed software

assets and application software licences includes contractors’ fees and directly attributable labour and overheads. Amortisation is charged

to the income statement on a straight-line basis over the estimated useful life of these assets. The amortisation periods utilised are as follows:

	Years
Brands	10
Customer lists	Contract term
Developed software assets and application software licences	3–15

The useful lives of all the intangible assets are reviewed annually and amended, as required, on a prospective basis. Intangible assets are

derecognised on disposal, or when no future economic benefits are expected from their use.

Cloud computing arrangements

The Group has contracts for Software as a Service (SaaS) and Platform as a Service (PaaS) Cloud Computing Arrangements. Where the

Group does not control the underlying assets in these arrangements, costs are expensed as incurred. Implementation costs in respect of

these contracts are capitalised when the definition and recognition criteria of an intangible asset under IAS 38 are met.

Property, plant and equipment (note 14)

Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation and impairments. The cost of self-constructed

assets includes the cost of materials, direct labour and other directly attributable costs. Where the asset is a qualifying asset, for which a

considerable period of time is required to prepare the asset for use or sale, borrowing costs will be capitalised as part of the asset’s cost.

Where an item of property, plant and equipment comprises major components having different useful lives, the components are

accounted for as separate items of property, plant and equipment, and depreciated accordingly. An item of property, plant and equipment

is derecognised on disposal or when no future economic benefits are expected to arise from the continued use of the asset.

Right of use assets

Right-of-use assets are measured at cost, less any accumulated depreciation and impairment losses, and adjusted for any remeasurement

of lease liabilities. The cost of right-of-use assets includes the amount of lease liabilities recognised, initial direct costs incurred, and lease

payments made at or before the commencement date less any lease incentives received. Where a modification to a lease agreement

decreases the scope of the lease, the carrying amount of the right of use asset is adjusted and a gain or loss is recognised in proportion to

the decrease in scope of the lease. All other modifications to lease agreements are accounted for as a reassessment of the lease liability

with a corresponding adjustment to the right of use asset.

Hydro civil assets

The Group is obliged under the Reservoirs Act 1975 to maintain its hydro infrastructure network, including its dams, tunnels and other

hydro civil engineering structures (hydro civil assets). All items of property, plant and equipment within hydro civil assets, with the exception

of land, are subject to depreciation.

In accordance with the transition provisions of IFRS 1 “First-time Adoption of IFRS”, the Group identified the carrying value of these assets

at privatisation and has treated this value as deemed cost. Following this assessment, the assets, and all subsequent enhancement and

replacement expenditure, has been subject to depreciation over a useful economic life of 75 years. All subsequent maintenance

expenditure is chargeable directly to the income statement.

Depreciation

Depreciation is charged to the income statement to write off cost, less residual values, on a straight line basis over their estimated useful

lives. Heritable and freehold land is not depreciated. Depreciation policy, useful lives and residual values are reviewed at least annually, for

all asset classes to ensure that the current method is the most appropriate. Depreciation commences following the asset commissioning

period and when the asset is available for commercial operation. The estimated useful lives for assets depreciated on a straight line basis

are as follows:

	Years
Hydro civil assets (classified within Renewable power generation assets)	75 to 100
Thermal and hydro power stations including electrical and mechanical assets
(classified within Thermal power generation assets)	20 to 60
Onshore wind farms (classified within Renewable power generation assets)	20 to 25
Offshore wind farms (classified within Renewable power generation assets)	23 to 30
Gas storage facilities (classified within Other assets)	25 to 50
Overhead lines, underground cables and other network assets (classified within Distribution or Transmission network assets)	5 to 80
Office buildings (classified within Land and buildings)	30 to 40
Fixtures, IT assets, vehicles and mobile plant (classified within Other assets)	3 to 15

Assets held under leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, over the

term of the relevant lease agreement.

278 SSE plc Annual Report 2024

A1. Basis of consolidation and significant accounting policies continued

A1.2. Significant accounting policies continued

Property, plant and equipment (note 14) continued

Subsequent expenditure

It is the Group policy to capitalise qualifying replacement expenditure and depreciate it over the expected useful life of the replaced asset.

Replaced assets are derecognised at this point and the costs recorded as costs of disposal. Where an item of property, plant and equipment

is replaced and it is not practicable to determine the carrying amount of the replaced part, the cost of the replacement adjusted for

inflation will be used as an approximation of the cost of the replaced part at the time it was acquired or constructed.

Expenditure incurred to replace a component of an item of property, plant and equipment that is accounted for separately is capitalised.

Other subsequent expenditure is capitalised only when it increases the future economic benefits of the item of property, plant and

equipment to which it relates. Maintenance and repair costs are expensed as incurred.

Derecognition

An item of property, plant or equipment is derecognised upon disposal or when no future economic benefits are expected to arise from

the continued use of the asset. Gains and losses on disposals are determined by comparing the proceeds received with the carrying

amount of the asset and are included in the income statement. Any gain or loss on derecognition of the asset is included in the income

statement in the period of derecognition.

Lease arrangements (note 21)

Lease arrangements are separately distinguished from service contracts based on whether the contract conveys the right to control the use

of an identified asset for a period of time in exchange for consideration. If the Group is deemed to control the use of an identified asset, a

right of use asset and a corresponding lease liability are recognised on the balance sheet.

Right of use assets are capitalised and held as part of property, plant and equipment. The accounting policy for such arrangements is

described on page 277

Lease liabilities are initially measured at the present value of the future lease payments discounted using the rate implicit in the lease if that

can be readily determined. If the interest rate implicit in the lease cannot be readily determined the incremental borrowing rate is used.

Where the interest rate implicit in the lease is not readily determinable, the Group has applied the intercompany borrowing rate which is

based on the Group’s external medium-term borrowing rates with premia adjustments for any subsidiary specific risk factors.

In determining whether any break and/or extension clauses should be included within the lease term, the Group has considered that where

an internal decision has been made to break or extend the lease agreement, that decision shall be applied in determining the appropriate

lease term. Where an internal decision has not been made, and where the non-cancellable element of the lease term has longer than five

years remaining, it is considered that any clauses will not be triggered as any decision beyond that date is not reasonably certain. For all

leases with less than five years remaining, an assessment is made at each reporting period on a lease-by-lease basis on whether the clause

is reasonably certain to be triggered. Reassessment of break and/or extension judgements made in prior periods could result in

recalculation of the lease liability and adjustments to associated balances.

The lease liability is subsequently adjusted for the unwind of discounting, repayments and other modifications to the underlying

agreement. Lease modifications are accounted for as a separate lease where the scope of the lease increases through the right to use one

or more underlying assets and where the consideration of the lease increases by an amount that is equivalent to the standalone price of the

increase in scope. Where a modification decreases the scope of the lease, the carrying amount of the right of use asset is adjusted and a

gain or loss is recognised in proportion to the decrease in scope of the lease. All other modifications are accounted for as a reassessment

of the lease liability with a corresponding adjustment to the right of use asset.

Leases with a duration of 12 months or less and leases for assets which are deemed “low value” are expensed to the income statement on a

straight-line basis over the lease term.

Impairment review (note 15)

The carrying amounts of the Group’s property, plant and equipment and other intangible assets and the Group’s investments in joint

ventures and associates, are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may

not be recoverable, or where there are indications that a previously recognised impairment loss has reduced. For property, plant and

equipment assets that have previously been identified as exhibiting indications of impairment, the review of impairment will be performed

annually until there is sufficient evidence to confirm that any potential impairment loss has been appropriately recognised, or until

previously recognised impairment losses have been fully written back. For goodwill and other intangible assets with an indefinite life or

which are not yet ready for use, the test for impairment is carried out annually. In addition, financial assets measured at amortised cost are

also reviewed for impairment annually.

For assets subject to impairment testing, the asset’s carrying value is compared to the asset’s (or cash-generating unit’s, in the case of

goodwill), recoverable amount. The recoverable amount is determined to be the higher of the fair value less costs to sell (‘FVLCS’) and the

value-in-use (‘VIU’) of the asset or cash-generating unit (‘CGU’). For financial assets measured at amortised cost the impairment is

measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows discounted at the

financial asset’s original effective interest rate.

If the carrying amount of the asset or CGU exceeds its recoverable amount, an impairment charge will be recognised immediately in the

income statement. Reversals of previous impairment charges are recognised if the recoverable amount of the asset or CGU significantly

exceeds the carrying amount. Previous impairments of goodwill are not reversed.

ACCOMPANYING INFORMATION – CONTINUED

279SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Value in use (‘VIU’) calculations require the estimation of future cash flows to be derived from the respective assets (or CGUs) and the

selection of an appropriate discount rate in order to calculate their present value. The VIU methodology is consistent with the approach

taken by management to evaluate economic value and is deemed to be the most appropriate for reviews of property, plant and equipment

assets and the Group’s identified goodwill-related CGUs. The methodology is based on the pre-tax cash flows arising from the specific

assets, underlying assets or CGUs, and discounted using a pre-tax discount rate based on the Group’s cost of funding and adjusted for any

specific risks. The estimation of the timing and value of underlying projected cash flows and the selection of appropriate discount rates

involves management judgement. Subsequent changes to these estimates or judgements may impact the carrying value of the assets.

The fair value less costs to sell methodology also uses a present value technique, unless there is a quoted price in an active market for that

asset. The methodology is based on the post-tax cash flows arising from the specific assets, underlying assets or CGUs, and discounted

using a post-tax discount rate determined in the same manner as the rates used in the VIU calculations, adjusted for the relevant taxation

rate.

Any impairment charge identified will initially be adjusted against the goodwill allocated to the cash-generating unit. Any excess charge will

be allocated against the remaining assets of the cash-generating unit. Reversals of previous impairment charges are allocated against the

carrying value of assets previously subject to an impairment charge.

Inventories (note 17)

Inventories – aside from inventory purchased by the Gas Storage business for trading activities – are valued at the lower of cost and net

realisable value. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion

and selling expenses.

Gas inventory purchased by the Gas Storage business for trading activities is held at fair value with reference to the forward month market

price. Gains and losses on remeasurement at fair value are recognised within the Income Statement, as a “certain remeasurement” item.

Provisions (note 20)

A provision is recognised in the balance sheet when the Group has a present legal or constructive obligation as a result of a past event, it

can be measured reliably, and it is probable that an outflow of economic benefits will be required to settle the obligation.

If the effect is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current

market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Decommissioning

The Group engages independent experts to estimate the cost to decommission its Renewable, Thermal and Gas Storage assets every three

years. In the intervening years, management updates the external valuation based on factors arising since the last formal valuation date.

Provision is made for the net present value of the estimated cost of decommissioning gas storage facilities, wind farms and power stations

at the end of the useful life of the facilities. This includes development assets, where if a present obligation exists, a provision is recognised

during construction and prior to commencement of operations from the site. The estimates are based on technology and prices at the

balance sheet date and exclude any salvage value related to those assets. A corresponding decommissioning asset is recognised and is

included within property, plant and equipment when it gives access to future economic benefits, and is depreciated on a straight-line basis

over the expected useful life of the asset. Changes in these provisions are recognised prospectively. The unwind of discounting of the

provision is included in finance costs.

The Group retained a decommissioning obligation following the disposal of its Gas Production business. The decommissioning cost

estimates are updated periodically by field operators based on current technology and prices. Field operators also provide estimated end of

field life dates for each field, which can change based on market commodity prices.

Retirement benefit obligations (note 23)

Defined benefit pension schemes

The Group operates two defined benefit pension schemes, one of which is operated by the Company. Pension scheme assets are

measured using bid market values. Pension scheme liabilities are measured using the projected unit credit actuarial method and are

discounted at the current rate of return on a high quality corporate bond of equivalent term and currency to the liability.

Any increase in the present value of liabilities within the Group’s defined benefit pension schemes expected to arise from employee service

in the year is charged as service costs to operating profit.

Net interest costs are based on net scheme assets or liabilities, adjusted for minimum funding requirement and pension surplus restrictions

under IFRIC 14 ‘IAS 19—The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction’. Actuarial gains and

losses are recognised in full in the consolidated statement of comprehensive income. Pension scheme surpluses, to the extent that they are

considered recoverable, or deficits are recognised in full and presented on the face of the balance sheet.

Defined contribution pension schemes

The Group also operates a number of defined contribution pension schemes. The assets of the schemes are held separately from those of

the Group in independently administered funds. The amounts charged represent the contributions payable to the schemes in the year and

are charged directly to the income statement.

280 SSE plc Annual Report 2024

A1. Basis of consolidation and significant accounting policies continued

A1.2. Significant accounting policies continued

Retirement benefit obligations (note 23) continued

Equity and equity-related compensation benefits

The Group operates a number of employee share schemes as described in the Remuneration Report. These schemes enable Group

employees to acquire shares of the Company.

The exercise prices of the sharesave scheme are set at a discount to market price at the date of the grant. The fair value of the sharesave

scheme option granted is measured at the grant date by use of a Black-Scholes model. The fair value of the options granted is recognised

as an expense on a straight-line basis over the period that the scheme vests. Estimates are updated for non-market conditions at each

balance sheet date with any adjustment in respect of the current and prior years being recognised in the income statement. The costs

associated with the other main employee schemes are recognised over the period to which they relate. The charge related to the equity

shares in the Company awarded under the share schemes is treated as an increase in the cost of investment held by the Company in the

subsidiary companies of the Group. The disclosures on equity and equity-related compensation benefits have been removed on the

grounds of materiality in relation to the Group.

Financial instruments (note 24)

The Group uses a range of financial instruments to hedge exposures to financial risks, such as interest rate, foreign exchange and energy

price fluctuations in its normal course of business and in accordance with the Group’s risk management policies. The Group’s risk

management policies are further explained in A6

The Group’s review of the IFRS 9 hedge accounting model concluded that, whilst adoption would not change the treatment of existing

hedging arrangements, the changes made would not result in any additional hedge designations either. As such, the existing hedge

accounting model under IAS 39 appropriately reflects the Group’s risk management activities in the financial statements. Therefore, as

permitted by IFRS 9, the Group has elected to continue to apply the hedge accounting requirements of IAS 39. This policy choice will be

periodically reviewed to consider any changes in our risk management activities.

Interest rate and foreign exchange derivatives

Financial derivative instruments are used by the Group to hedge interest rate and currency exposures. All such derivatives are recognised at

fair value and are re-measured to fair value each reporting period. Certain derivative financial instruments are designated as being held for

hedging purposes. The designation of the hedge relationship is established at the inception of the hedge and procedures are applied to

ensure the derivative is highly effective in achieving its objective and that the effectiveness of the hedge can be reliably measured. The

treatment of gains and losses on re-measurement is dependent on the classification of the hedge and whether the hedge relationship is

designated as either a ‘fair value’ or ‘cash flow’ hedge. Derivatives that are not designated as hedges are treated as if held for trading, with

all fair value movements being recorded through the income statement.

A derivative classified as a ‘fair value’ hedge recognises gains and losses from re-measurement immediately in the income statement. Loans

and borrowings are measured at cost except where they form the underlying transaction in an effective fair value hedge relationship. In

such cases, the carrying value of the loan or borrowing is adjusted to reflect fair value movements with the gain or loss being reported in

the income statement.

A derivative classified as a ‘cash flow’ hedge recognises the portion of gains or losses on the derivative which are deemed to be effective

directly in equity in the hedge reserve. Any ineffective portion of the gains or losses is recognised in the consolidated income statement.

When hedged cash flows result in the recognition of a non-financial asset or liability, the associated gains or losses previously recognised in

equity are included in the initial measurement of the asset or liability. For all other cash flow hedges, the gains or losses that are recognised

in equity are transferred to the income statement in the same period in which the hedged cash flows affect the income statement.

Hedge accounting is discontinued when the hedging instrument expires, or is sold, terminated or exercised, or no longer qualifies for

hedge accounting. At the point of discontinuation, any cumulative gain or loss on the hedging instrument recognised in equity remains

in equity until the forecast transaction affects profit or loss. On settlement, the cumulative gain or loss recognised in equity is recognised

in the income statement.

Commodity derivatives

Within its regular course of business, the Group routinely enters into sale and purchase derivative contracts for commodities such as

electricity, gas, carbon allowances and oil. Where the contract was entered into and continues to be held for the purpose of receipt or

delivery in accordance with the Group’s expected sale, purchase or usage requirements, the contracts are designated as ‘own use’

contracts and are measured at cost. These contracts are not within the scope of IFRS 9.

Derivative commodity contracts which are not designated as own use contracts are accounted for as trading derivatives and are

recognised in the balance sheet at fair value. Where a hedge accounting relationship is designated and is proven to be effective, the

changes in fair value will be recognised in accordance with the rules noted above. There are currently no designated hedge relationships

in relation to commodity contracts.

Other commodity contracts, where own use is not established and a hedge accounting relationship is not designated, are measured at fair

value with gains and losses on re-measurement being recognised in the income statement in cost of sales.

ACCOMPANYING INFORMATION – CONTINUED

281SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Embedded derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives where the characteristics of

the derivatives are not closely related to those of the host contracts.

Net investment hedges

Hedges of net investments in foreign operations are accounted in a manner similar to effective cash flow hedges. Any gain or loss on the

effective portion of the hedge is recognised in equity, in the translation reserve, and any gain or loss on the ineffective portion of the hedge

is recognised in the income statement. On disposal of the foreign operation, the cumulative value of any gains or losses recognised directly

in equity is transferred to the income statement.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable on demand and form an integral

part of the Group’s cash management are included as a component of cash and cash equivalents for the purpose of the statement of

cash flows.

Trade receivables

Trade receivables do not carry any interest and are measured at cost less an appropriate allowance for lifetime expected credit losses.

At the end of each reporting period a review of the allowance for impairment of trade receivables (or bad debt provision) is performed

by the respective businesses. Trade receivables do not contain a significant financing element, and therefore expected credit losses are

measured using the simplified approach permitted by IFRS 9, which requires lifetime expected credit losses to be recognised on initial

recognition. A provision matrix is utilised to estimate the lifetime expected credit losses, based on the age, status and risk of each class of

receivable, which is updated periodically to include changes to both forward-looking and historical inputs.

Interest-bearing loans and borrowings

All such loans and borrowings are initially recognised at fair value including transaction costs and are subsequently measured at amortised

cost, except where the loan or borrowing is the hedged item in an effective fair value hedge relationship.

Commercial (and affiliate) contracts for difference

The Group has commercial Contracts for Difference (CfD) arrangements in place where the Group has agreed to provide a revenue

support contract. Where the Group has entered into these arrangements and there is no relationship with a government entity, the

instruments are classified as derivatives and accounted for under IFRS 9. The Group has assessed that due to the valuation complexity of

these arrangements, they are Level 3 financial instruments in the fair value hierarchy. On day 1, the Group recognises no gain or loss arising

from the instrument, but instead defers this gain or loss and recognises it progressively over the life of the instrument. At each balance

sheet date the fair value of the instrument is assessed with any movement in fair value recognised in the income statement in the period

it arises.

Seagreen Wind Energy Limited entered commercial operation in the current year and the day 1 gain on the commercial CfD arrangements

is being recognised on a straight-line basis over the life of the instrument.

Financial guarantee liabilities

On 1 April 2023, the Group adopted IFRS 17 on a modified retrospective basis from the earliest period presented in these financial

statements.

The Group issues financial guarantee contracts to make specified payments to reimburse holders for losses incurred if certain former

subsidiaries and certain current joint venture investments fail to make payments when due in accordance with the original or modified

terms of a debt instrument.

Prior to adoption of IFRS 17, these contracts were designated as insurance contracts under IFRS 4, where the contracts were treated as

contingent liabilities until such time as it became probable the Group would be required to make payment to settle the obligation.

On transition to IFRS 17, the Group elected to apply IFRS 9 “Financial Instruments” to these contracts, as available under the transition

arrangements of the new standard.

The financial guarantee contract is initially measured at fair value and subsequently measured at the higher of:

1. the loss allowance for expected credit losses, and

2. the initial fair value less any income recognised.

Share capital

Ordinary shares are accounted for as equity. Incremental costs directly attributable to the issue of new shares are shown in equity as a

deduction from the proceeds received. Own equity instruments that are reacquired are deducted from equity. No gain or loss is recognised

in the Group Income Statement on the purchase, sale, issue or cancellation of the Group’s own equity instruments.

Hybrid equity

Hybrid equity comprises issued bonds that qualify for recognition as equity. Accordingly, any coupon payments are accounted for as

dividends and are recognised directly in equity at the time the payment obligation arises. This is because the coupon payments are

discretionary and relate to equity. Coupon payments consequently do not have any impact on the income statement. Coupon payments

are recognised in the cash flow statement in the same way as dividends to ordinary shareholders. Tax credits in relation to the coupon

payments are linked to the past transactions or events that support the coupon payments and consequently the tax credits are reported

in the income statement.

282 SSE plc Annual Report 2024

A2. Taxation

The Group’s primary tax disclosures are included at note 10. The following tables represent enhanced disclosures adopted in order to assist

stakeholder understanding of the Group’s tax position and policies as part of the Group’s commitment to its Fair Tax Mark accredited status.

Reconciliation of tax charge to adjusted underlying current tax

	2024	2024	2023	2023
	£m	%	£m	%
Group profit/(loss) before tax	2,495.1		(205.6)
Less: share of results of associates and jointly controlled entities	(114.1)		(662.3)
Profit/(loss) before tax	2,381.0		(867.9)
Tax on profit/(loss) on ordinary activities at standard UK corporation
tax rate of 25% (2023: 19%)	595.3	25.0	(164.9)	19.0
Tax effect of:
Capital allowances less than depreciation	(55.7)	(2.3)	(41.6)	4.8
Movement in restructuring and settlement provisions	(0.6)	–	(1.6)	0.2
Non-taxable gain on sale of assets	(4.5)	(0.2)	–	–
Fair value movements on derivatives (including prior period adjustment)	(123.3)	(5.2)	448.8	(51.7)
Pension movements	(8.9)	(0.4)	(6.7)	0.8
Relief for capitalised interest and revenue costs	(38.0)	(1.6)	(27.5)	3.2
Hybrid equity coupon payments	(18.3)	(0.8)	(7.4)	0.9
Expenses not deductible for tax purposes	54.9	2.3	79.7	(9.3)
Utilisation of tax losses brought forward	(3.7)	(0.2)	0.1	–
Impact of foreign tax rates	(36.8)	(1.5)	(0.1)	–
Permanent benefit of super-deduction capital allowances	–	–	(5.1)	0.6
Adjustments to tax charge in respect of previous years	(25.6)	(1.0)	(16.7)	1.9
Other items	1.0	–	(2.3)	0.3
Reported current tax charge and effective rate	335.8	14.1	254.7	(29.3)
Depreciation in excess of capital allowances	74.5	3.1	34.3	(4.0)
Movement in provisions	0.6	–	1.6	(0.2)
Fair value movements on derivatives (including prior period adjustment)	123.3	5.2	(448.8)	51.7
Pension movements	8.9	0.4	6.7	(0.8)
Relief for capitalised interest and revenue costs	38.0	1.6	27.5	(3.2)
Impact of foreign tax rates	1.8	0.1	(12.8)	1.5
Adjustments to tax charge in respect of previous years	23.2	0.9	7.0	(0.8)
Change in rate of UK corporation tax	–	–	9.0	(1.0)
Tax losses utilised	5.1	0.2	1.9	(0.2)
Other items	(0.5)	–	8.9	(1.0)
Reported deferred tax credit and effective rate	274.9	11.5	(364.7)	42.0
Group tax charge/(credit) and effective rate	610.7	25.6	(110.0)	12.7

Included within ‘Expenses not deductible for tax purposes’ is £65m in respect of impairment of investments in joint ventures.

As noted at note 3 to the accounts, the Group’s results are reported on an ‘adjusted’ basis in order to allow focus on underlying business

performance. The following table explains the adjustments that are made in order to arrive at adjusted profit before tax. This is the measure

utilised in calculation of the Group’s ‘adjusted effective rate of tax’.

	2024	2023
	£m	£m
Profit/(loss) before tax	2,495.1	(205.6)
Add/(less):
Exceptional items and certain re-measurements	(262.8)	2,312.8
Share of tax from jointly controlled entities and associates before exceptional items
and certain re-measurements	74.1	143.1
Depreciation charge on fair value uplifts	19.0	28.8
Share of profit attributable to non-controlling interests	(134.4)	(28.8)
Adjustment to Gas Production decommissioning provision	9.9	(50.5)
Interest income on pension scheme assets/(liabilities)	(26.2)	(16.2)
Adjusted profit before tax	2,174.7	2,183.6

APM

ACCOMPANYING INFORMATION – CONTINUED

283SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

The adjusted current tax charge can therefore be reconciled to the adjusted profit before tax as follows:

	2024	2024	2023	2023
	£m	%	£m	%
Adjusted profit before tax	2,174.7		2,183.6
Tax on profit on ordinary activities at standard UK corporation tax rate	543.7	25.0	414.9	19.0
Tax effect of:
Capital allowances in excess of depreciation	(107. 5)	(4.9)	(41.7)	(1.9)
Non-taxable gain on sale of assets	(4.7)	(0.2)	(0.6)	–
Non qualifying depreciation	12.5	0.5	5.7	0.2
Adjustment for profit on internal trading	2.5	0.1	6.3	0.3
Movement in restructuring and settlement provisions	0.8	0.1	6.0	0.3
Pension movements	(2.4)	(0.1)	(3.6)	(0.2)
Relief for capitalised interest and revenue costs	(23.2)	(1.1)	(12.7)	(0.6)
Hybrid equity coupon payments	(18.3)	(0.8)	(7.4)	(0.3)
Expenses not deductible for tax purposes	23.6	1.1	24.1	1.1
Permanent benefit of super-deduction capital allowances	1.4	0.1	(7.0)	(0.3)
Losses carried back to earlier years	7.2	0.3	3.9	0.2
Adjustments to tax charge in respect of previous years	(25.6)	(1.2)	(22.0)	(1.1)
Impact of foreign tax rates	(37.9)	(1.7)	(9.4)	(0.4)
Other	(1.1)	(0.1)	2.3	0.1
Adjusted current tax charge and effective rate	371.0	17.1	358.8	16.4

APM

The above reconciling adjustments differ from those analysed in the Group tax charge reconciliation above because they include SSE’s

share of associates and joint ventures, and are based on adjusted profit before tax.

The majority of the Group’s profits are earned in the UK, with the standard rate of UK corporation tax being 25% for the year to 31 March

2024 (2023: 19%). Profits earned by the Group in the Republic of Ireland are taxable at either 12.5% or 25%, depending upon the nature of

the income.

Capital allowances are tax reliefs provided in law for the expenditure the Group makes on property, plant and equipment. The rates are

determined by Parliament annually and spread the tax relief due over a number of years. This contrasts with the accounting treatment for

such spending, where the expenditure on property, plant and equipment is treated as an asset with the cost being depreciated over the

useful life of the asset, or impaired if the value of such assets is considered to have reduced materially.

The different accounting treatment of property, plant and equipment for tax and accounting purposes means that the taxable income of

the Group is not the same as the profit reported in the financial statements. The substantial reversals of impairments and impairments

undertaken in previous years in relation to certain property, plant and equipment assets, result in the depreciation or impairment charge

to profit for the year differing to the amount of capital allowances due to the Group.

Short term temporary differences arise on items such as provisions for restructuring costs and onerous contracts, and retirement benefit

obligations, because the treatment of such items is different for tax and accounting purposes. These differences usually reverse in the

year following that in which they arise, as is reflected in the deferred tax charge in these financial statements. Where interest charges

or other costs are capitalised in the accounts, tax relief is either given as the charges are incurred or when the costs are taken to the

income statement.

As explained at Accompanying Information A1

and A6 , the Group measures its operating and financing derivatives at fair value under

IFRS 9. As a result of the Group’s subsidiaries applying the HMRC’s “disregard regulations”, the vast majority of the re-measurement

movements have no current tax effect impacting only the deferred tax position.

As detailed at note 22 and explained in the Accompanying Information A1

, the Group has issued Hybrid equity securities which are

treated as a component of equity. While the coupon payments relating to these securities are treated as distributions to the holders of the

equity instruments, tax relief is allowed on the amount paid in the year. These tax credits are linked to the past transactions or events that

support the coupon payments and consequently the tax credits are reported in the income statement.

284 SSE plc Annual Report 2024

A3. Related undertakings

A3.1.1. Subsidiary undertakings

Details of the Group’s subsidiary undertakings at 31 March are as follows:

			Registered	2024	2023
			address	Holding	Holding
Company		Country of incorporation	(key)	%	%	Principal activity
Aberarder Wind Farm (Scotland) Limited		Scotland	A	100.0	100.0	Renewable Development
Aberarder Wind Farm LLP		England and Wales	B	100.0	100.0	Renewable Development
Abernedd Power Company Limited		England and Wales	B	100.0	100.0	Holding Company
Aichi Offshore Wind Power No. 1 G.K.		Japan	Y	80.0	80.0	Renewable Development
Aichi Offshore Wind Power No. 2 G.K.		Japan	Y	80.0	80.0	Renewable Development
Airtricity Windfarm Finance Limited		Ireland	C	100.0	100.0	Holding Company
Aldbrough Pathfinder Limited		England and Wales	B	100.0	–	Power Generation
Arklow Offshore Phase II Company Limited		Ireland	C	100.0	100.0	Dormant
Beithe (HK) Limited		Hong Kong	V	–	100.0	Holding Company
Berwick Bank A Limited		England and Wales	B	100.0	100.0	Renewable Development
Berwick Bank B Limited		England and Wales	B	100.0	100.0	Renewable Development
Berwick Bank C Limited		England and Wales	B	100.0	100.0	Renewable Development
Berwick Bank Holdings A Limited		England and Wales	B	100.0	100.0	Holding Company
Berwick Bank Holdings B Limited		England and Wales	B	100.0	100.0	Holding Company
Berwick Bank Holdings C Limited		England and Wales	B	100.0	100.0	Holding Company
Berwick Bank Wind Farm Limited		Scotland	A	100.0	100.0	Renewable Development
Bhlaraidh Extension Wind Farm Limited		Scotland	A	100.0	–	Power Generation
Bhlaraidh Wind Farm Limited		Scotland	A	100.0	100.0	Power Generation
Bindoo Windfarm (ROI) Limited		Ireland	C	100.0	100.0	Power Generation
BOC1234	Limited	Scotland	A	–	100.0	Dissolved
Brickmount Limited		Ireland	C	100.0	100.0	Power Generation
Building Automation Solutions Limited		England and Wales	D	100.0	100.0	Dormant
By-Pass Farm Solar Limited		England and Wales	B	100.0 *	100.0 *	Power Generation
Coire Glas Hydro Pumped Storage Limited		Scotland	A	100.0	100.0	Power Generation
Comhlacht Gaoithe Teoranta		Ireland	C	100.0	100.0	Power Generation
Coomacheo Wind Farm Limited		Ireland	C	100.0	100.0	Power Generation
Coomatallin Windfarm (ROI) Limited		Ireland	C	100.0 *	100.0 *	Power Generation
Curragh Mountain Windfarm Limited		Ireland	C	100.0	100.0	Power Generation
Dedondo Limited		Ireland	C	100.0	100.0	Power Generation
Dromada Windfarm (ROI) Limited		Ireland	C	100.0	100.0	Power Generation
Drumnahough Wind Farm Designated Activity		Ireland	C	100.0	100.0	Power Generation
Company
Enerfarm 3 Single Member S.A. Renewable		Greece	AB	100.0	100.0	Renewable Development
Energy Sources
Energia Levante S.r.l.		Italy	AC	100.0	100.0	Renewable Development
Energiaki Kleidi Single Member S.A.		Greece	AB	100.0	100.0	Renewable Development
Energiaki Mavrovouniou Single Member Private		Greece	AB	100.0 *	100.0 *	Renewable Development
Company
Energiaki Mesovouniou Single Member S.A.		Greece	AB	100.0	100.0	Renewable Development
Energiaki Platorrachis Single Member S.A.		Greece	AB	100.0 *	100.0 *	Renewable Development
Energiaki Velanidias Single Member S.A.		Greece	AB	100.0	100.0	Renewable Development
Enerveo Ireland Limited		Ireland	Z	100.0	–	Contracting
Enerveo Limited		England and Wales	AN	100.0	–	Contracting
Enshunada Offshore Wind Power No. 1 G.K.		Japan	Y	80.0	80.0	Renewable Development
Ferrybridge Hydrogen Limited		England and Wales	B	100.0	–	Power Generation
Fibre Fuel Limited		England and Wales	B	100.0	100.0	Dormant
Fibre Power (Slough) Limited		England and Wales	B	100.0	100.0	Power Generation
Galway Wind Park Phase 3 Designated Activity		Ireland	C	100.0	100.0	Renewable Development
Company
Ganderoy Limited		Ireland	C	100.0	100.0	Power Generation
Gartnaneane Limited		Ireland	C	100.0 *	100.0 *	Power Generation
Glenora Wind Farm Designated Activity		Ireland	C	100.0	100.0	Renewable Development
Company
Goto-Fukue Offshore Wind Power G.K.		Japan	Y	80.0	80.0	Renewable Development

ACCOMPANYING INFORMATION – CONTINUED

285SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

		Registered	2024	2023
		address	Holding	Holding
Company	Country of incorporation	(key)	%	%	Principal activity
Green Wind Energy (Wexford) Limited	Ireland	C	100.0 *	100.0 *	Renewable Development
Griffin Wind Farm Limited	Scotland	A	100.0	100.0	Power Generation
Hadyard Hill Wind Farm Limited	Scotland	A	–	100.0	Dormant
Hydro Electric Pension Scheme Trustees Limited	Scotland	A	100.0	100.0	Dormant
Izu Islands Offshore Wind Power No. 1 G.K.	Japan	Y	80.0	80.0	Renewable Development
Keadby Developments Limited	England and Wales	E	100.0	100.0	Dormant
Keadby Generation Limited	England and Wales	E	100.0	100.0	Power Generation
Keadby Wind Farm Limited	England and Wales	B	100.0	100.0	Power Generation
Leanamore Wind Farm Limited	Ireland	C	100.0	100.0	Power Generation
Limerick West Windfarm Limited	Ireland	C	100.0	100.0	Power Generation
Littleton Pastures Solar Limited	England and Wales	B	100.0	100.0	Power Generation
March Winds Limited	Ireland	C	100.0	100.0	Power Generation
Medway Power Limited	England and Wales	B	100.0	100.0	Power Generation
Meentycat Limited	Ireland	C	100.0	100.0	Power Generation
Milane Holdings Limited	Ireland	C	100.0	100.0	Dormant
Minami-Izu Offshore Wind Power No. 1 G.K.	Japan	Y	80.0	80.0	Renewable Development
Mullananalt Wind Farm (ROI) Limited	Ireland	C	100.0	100.0	Power Generation
Niigata Offshore Wind Power No. 1 G.K.	Japan	Y	80.0	80.0	Renewable Development
Oki Islands Offshore Wind Power G.K.	Japan	Y	80.0	80.0	Renewable Development
Optimal Power Networks Limited	England and Wales	B	100.0	100.0	Construction of utility
					projects
Platin Power Limited	Ireland	C	100.0	100.0	Dormant
Pomerania PV sp z.o.o. (formerly Optisol 4 sp	Poland	AJ	100.0	–	Renewable Development
z.o.o)
Power from Waste Limited	England and Wales	B	100.0	100.0	Dormant
Richfield Windfarm (ROI) Limited	Ireland	C	100.0	100.0	Power Generation
Scottish and Southern Energy Power	Scotland	A	100.0	100.0	Holding Company
Distribution Limited
Scottish Hydro Electric Power Distribution plc	Scotland	A	100.0	100.0	Power Distribution
Scottish Hydro Electric Transmission plc	Scotland	A	75.0	75.0	Power Transmission
Sheskin South Renewables Power Designated	Ireland	C	100.0	100.0	Renewable Development
Activity Company
Sistemas Energéticos Ábrego S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Ariel S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Boreas S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Carril S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Céfiro S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos del Sur S.A.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Eolo S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Erbania 1 S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Erbania 2 S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Gregal S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Júpiter S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Ladera Negra, S.A. U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Loma del Reposo S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Marte S.L. U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Mercurio S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Neptuno S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Oberón S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Plutón S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Tablero Tabordo, S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Terral S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Titán S.L.U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Tomillo S.A. U.	Spain	AD	100.0	100.0	Renewable Development
Sistemas Energéticos Urano S.L. U.	Spain	AD	100.0	100.0	Renewable Development
Slough Domestic Electricity Limited	England and Wales	B	100.0	100.0	Dormant
Slough Electricity Contracts Limited	England and Wales	B	100.0	100.0	Electricity Contracting
Slough Energy Supplies Limited	England and Wales	B	100.0	100.0	Dormant
Slough Heat & Power Limited	England and Wales	B	100.0	100.0	Power Generation

286 SSE plc Annual Report 2024

		Registered	2024	2023
		address	Holding	Holding
Company	Country of incorporation	(key)	%	%	Principal activity
Slough Utility Services Limited	England and Wales	B	100.0	100.0	Distribution of Electricity
Société d’Exploitation de l’Installation de	France	AE	100.0	–	Electricity Storage
Stockage (SEIS) D’orchamps
Société d’Exploitation de l’Installation de	France	AE	100.0	–	Electricity Storage
Stockage (SEIS) de la Cuesta
Société d’Exploitation de la Centrale	France	AE	100.0	–	Power Generation
Photovoltaïque (SECPV) de Vireaux
Société d’Exploitation de la Centrale	France	AE	100.0	–	Power Generation
Photovoltaïque (SECPV) des Jacquessons
Société d’Exploitation du Parc Eolien de	France	AE	100.0	100.0	Renewable Development
Chaintrix Bierges SARL
Société d’Exploitation du Parc Eolien de	France	AE	100.0	100.0	Renewable Development
Champeaux SARL
Société d’Exploitation du Parc Eolien de	France	AE	100.0	100.0	Renewable Development
Germainville SAS
Société d’Exploitation du Parc Eolien de la Belle	France	AE	100.0	100.0	Renewable Development
Dame SARL
Société d’Exploitation du Parc Eolien de la Brie	France	AE	100.0	100.0	Renewable Development
des Etangs SARL
Société d’Exploitation du Parc Eolien de la	France	AE	100.0	100.0	Renewable Development
Monchot SARL
Société d’Exploitation du Parc Eolien de la Tête	France	AE	100.0	100.0	Renewable Development
des Boucs SARL
Société d’Exploitation du Parc Eolien (SEPE) de	France	AE	100.0	–	Power Generation
la Voie Pouçoise
Société d’Exploitation du Parc Eolien de Moulins	France	AE	100.0	100.0	Renewable Development
du Puits SAS
Société d’Exploitation du Parc Eolien de Pringy	France	AE	100.0	100.0	Renewable Development
SARL
Société d’Exploitation du Parc Eolien de Saint	France	AE	100.0	100.0	Renewable Development
Loup de Saintonge SAS
Société d’Exploitation du Parc Eolien (SEPE) de	France	AE	100.0	–	Power Generation
Salon Sud
Société d’Exploitation du Parc Eolien de Souvans	France	AE	100.0	100.0	Renewable Development
SARL
Société d’Exploitation du Parc Eolien de	France	AE	100.0	100.0	Renewable Development
Vernierfontaine SARL
Société d’Exploitation du Parc Eolien de Villiers	France	AE	100.0	100.0	Renewable Development
aux Chênes SARL
Société d’Exploitation du Parc Eolien des	France	AE	100.0	100.0	Renewable Development
Fontaines SARL
Société d’Exploitation du Parc Eolien des Six	France	AE	100.0	100.0	Renewable Development
Communes SARL
Société d’Exploitation du Parc Eolien des Voies	France	AE	100.0	100.0	Renewable Development
de Bar SARL
Société d’Exploitation du Parc Eolien du Mont	France	AE	100.0	100.0	Renewable Development
Égaré SARL
Société d’Exploitation du Parc Eolien du Vireaux	France	AE	100.0	100.0	Renewable Development
SAS
Société du Poste Privé (SPP) de la Cuesta SARL	France	AE	100.0	100.0	Renewable Development
(formerly Société d’Exploitation du Parc Eolien
de la Pièce du Moulin SARL)
Société du Poste Privé (SPP) d’Orchamps SARL	France	AE	100.0	100.0	Renewable Development
(formerly Société d’Exploitation du Parc Eolien
d’Orchamps SARL)
Société du Poste Privé (SPP) du Tonnerrois	France	AE	100.0	–	Power Generation
Southern Electric Power Distribution plc	England and Wales	B	100.0	100.0	Power Distribution

A3. Related undertakings continued

A3.1.1. Subsidiary undertakings continued

ACCOMPANYING INFORMATION – CONTINUED

287SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

		Registered	2024	2023
		address	Holding	Holding
Company	Country of incorporation	(key)	%	%	Principal activity
SPV Parco Eolico Libeccio S.r.l.	Italy	AC	100.0	100.0	Renewable Development
SPV Parco Eolico Maestrale S.r.l.	Italy	AC	100.0	100.0	Renewable Development
SPV Parco Eolico Tramontana S.r.l.	Italy	AC	100.0	100.0	Renewable Development
SSE Airtricity Distributed Energy Limited	Ireland	C	100.0	100.0	Power Distribution
SSE Airtricity Energy Services Limited	Ireland	C	100.0	100.0	Energy Supply
SSE Airtricity Energy Services (NI) Limited	Northern Ireland	Q	100.0	100.0	Energy Related Services
(formerly Fusion Heating Limited)
SSE Airtricity Energy Supply (NI) Limited	Northern Ireland	F	100.0	100.0	Energy Supply
SSE Airtricity Gas Supply (NI) Limited	Northern Ireland	F	100.0	100.0	Energy Supply
SSE Airtricity Limited	Ireland	C	100.0	100.0	Energy Supply
SSE Battery Monk Fryston Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Battery Salisbury Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Beatrice Offshore Windfarm Holdings Limited	Scotland	A	100.0	100.0	Holding Company
SSE BTM HoldCo Limited	England and Wales	B	100.0	100.0	Holding Company
SSE BTM Operational Assets Limited	England and Wales	B	100.0	–	Holding Company
SSE Contracting Group Limited	England and Wales	B	100.0	100.0	Holding Company
SSE Cottered Solar Limited	England and Wales	B	100.0	–	Power Generation
SSE Cumarsáid Teoranta	Ireland	C	100.0	100.0	Telecommunications
SSE Daines BESS Limited	England and Wales	B	100.0	–	Power Generation
SSE DE EV Holdco Limited	England and Wales	B	100.0	100.0	Holding Company
SSE DE Solar Holdco Limited	England and Wales	B	100.0	100.0	Holding Company
SSE Derrymeen BESS Limited (formerly Heron	Northern Ireland	F	100.0	–	Renewable Development
Storage No. 1 Limited)
SSE Digital Services Limited	England and Wales	B	100.0	100.0	Holding Company
SSE Eggborough Limited	England and Wales	B	100.0	–	Power Generation
SSE Energy Markets Limited (formerly SSE EPM	England and Wales	B	100.0	100.0	Energy Trading
Limited)
SSE Energy Supply Limited	England and Wales	B	100.0	100.0	Energy Supply
SSE Enterprise Limited	England and Wales	B	100.0	100.0	Corporate Services
SSE EV M7 Limited	England and Wales	B	100.0	100.0	Power Generation
SSE EV Operational Assets Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Ewerby Solar Holdco Limited	England and Wales	B	100.0	–	Holding Company
SSE Ewerby Solar Limited	England and Wales	B	100.0	–	Power Generation
SSE Fancott BESS Limited	England and Wales	B	100.0	–	Power Generation
SSE Ferrybridge Battery Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Fiddlers Ferry Battery Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Foxholes Solar Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Galloper Offshore Windfarm Holdings	England and Wales	B	–	100.0	Holding Company
Limited
SSE Generation Ireland Limited	Ireland	C	100.0	100.0	Power Generation
SSE Generation Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Group Limited	Scotland	A	100.0	100.0	Dormant
SSE Heat Networks (Battersea) Limited	England and Wales	B	100.0	100.0	Dormant
SSE Heat Networks Limited	Scotland	A	100.0	100.0	Utility Services
SSE Hornsea Limited	England and Wales	B	100.0	100.0	Gas Storage
SSE Hydrogen Holdings Limited	England and Wales	B	100.0	–	Holding Company
SSE Hydrogen Developments Limited	England and Wales	B	100.0	–	Power Generation
SSE IAMP Microgrid Limited	England and Wales	B	100.0	–	Utility Services
SSE Imperial Park PN Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Insurance Limited	Isle of Man	G	100.0	100.0	Insurance
SSE Knapthorpe Solar Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Low Carbon Developments Limited	England and Wales	B	100.0	–	Power Generation
SSE Low Carbon Holdings Limited	England and Wales	B	100.0	–	Holding Company
SSE Maple Limited	England and Wales	B	100.0	100.0	Investment Holding
SSE Medway Operations Limited	England and Wales	B	100.0	100.0	Holding Company
SSE Micro Renewables Limited	Scotland	A	100.0	100.0	Energy Related Services
SSE Multifuel Generation Holdings Limited	England and Wales	B	100.0	100.0	Holding Company
SSE Muskham Solar Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Newchurch Solar Limited	England and Wales	B	100.0	–	Power Generation

288 SSE plc Annual Report 2024

		Registered	2024	2023
		address	Holding	Holding
Company	Country of incorporation	(key)	%	%	Principal activity
SSE OWS Glasgow Limited	Scotland	A	100.0	100.0	Property Holding
SSE Pacifico K.K.	Japan	Y	80.0	80.0	Renewable Development
SSE Private Networks Holdco Limited	England and Wales	B	100.0	–	Holding Company
SSE Production Services Limited	England and Wales	B	100.0	100.0	Maintenance Services
SSE Renewables France SARL (formerly Société	France	AE	100.0	100.0	Renewable Development
d’Exploitation du Parc Eolien de Broyes SARL)
SSE Renewables (Ireland) Limited	Ireland	C	100.0	100.0	Holding Company
SSE Renewables Iris Solar 1 sp. z o.o.	Poland	AJ	100.0	–	Renewable Development
(formerly IBC SE PL3 sp. z o.o.)
SSE Renewables Iris Solar 2 sp. z o.o.	Poland	AJ	100.0	–	Renewable Development
(formerly IBC SE PL20 sp. z o.o)
SSE Renewables Iris Solar 3 sp. z o.o.	Poland	AJ	100.0	–	Renewable Development
(formerly IBC SE PL22 sp. z o.o.)
SSE Renewables Iris Solar 4 sp. z o.o.	Poland	AJ	100.0	–	Renewable Development
(formerly IBC SE PL23 sp. z o.o.)
SSE Renewables Iris Solar 5 sp. z o.o.	Poland	AJ	100.0	–	Renewable Development
(formerly IBC SE PL24 sp. z o.o.)
SSE Renewables Iris Solar 6 sp. z o.o.	Poland	AJ	100.0	–	Renewable Development
(formerly IBC SE PL34 sp. z o.o.)
SSE Renewables (Netherlands) Holdings B.V.	Netherlands	AA	100.0	100.0	Holding Company
SSE Renewables Developments (Germany)	Germany	U	100.0	100.0	Renewable Development
GmbH
SSE Renewables Developments (The Netherlands) B.V.	Netherlands	AA	100.0	–	Renewable Development
SSE Renewables Generation Ireland Limited	Ireland	C	100.0	100.0	Power Generation
SSE Renewables Hellas Single Member S.A.	Greece	AB	100.0	100.0	Renewable Development
(formerly Energiaki Voursana Single Member
S.A.)
SSE Renewables Holdings (Europe) Limited	Ireland	C	100.0	100.0	Holding Company
SSE Renewables Holdings (UK) Limited	Northern Ireland	F	100.0	100.0	Holding Company
SSE Renewables Holdings Germany GmbH	Germany	H	–	100.0	Dormant
SSE Renewables Holdings Limited	Ireland	C	100.0	100.0	Holding Company
SSE Renewables International Holdings Limited	Scotland	A	100.0	100.0	Holding Company
SSE Renewables Limited	Scotland	A	100.0	100.0	Holding Company
SSE Renewables North America Inc.	United States	W	100.0	100.0	Renewable Development
SSE Renewables North America Offshore	United States	W	100.0	100.0	Renewable Development
Wind LLC.
SSE Renewables North America Services Inc	United States	W	100.0	100.0	Renewable Development
SSE Renewables Off Shore Limited	Ireland	C	100.0	100.0	Holding Company
SSE Renewables Offshore Windfarm Holdings	Scotland	A	100.0	100.0	Holding Company
Limited
SSE Renewables Onshore Windfarm Holdings	Northern Ireland	F	100.0	100.0	Holding Company
Limited
SSE Renewables Poland Holdings Limited	Scotland	A	100.0	100.0	Holding Company
SSE Renewables Poland sp z.o.o.	Poland	X	100.0	100.0	Renewable Development
SSE Renewables Services (UK) Limited	Northern Ireland	F	100.0	100.0	Renewable Development
SSE Renewables Solar & Battery Holdings	England and Wales	B	100.0	100.0	Holding Company
Limited (formerly SSE DE Battery Holdco
Limited)
SSE Renewables UK Limited	Northern Ireland	F	100.0	100.0	Power Generation
SSE Renewables Wind (Ireland) Holdings Limited	Ireland	C	100.0	100.0	Holding Company
SSE Renewables Wind Farms (Ireland) Limited	Ireland	C	100.0	100.0	Power Generation
SSE Renewables Wind Farms (UK) Limited	Scotland	A	100.0	100.0	Power Generation
SSE Retail Limited	Scotland	A	100.0	100.0	Energy Related Services
SSE Seabank Investments Limited	England and Wales	B	100.0	100.0	Dormant

A3. Related undertakings continued

A3.1.1. Subsidiary undertakings continued

ACCOMPANYING INFORMATION – CONTINUED

289SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

		Registered	2024	2023
		address	Holding	Holding
Company	Country of incorporation	(key)	%	%	Principal activity
SSE Seabank Land Investments Limited	England and Wales	B	100.0	100.0	Dormant
SSE Services plc	England and Wales	B	100.0	100.0	Corporate Services
SSE Southern Group Trustee Limited	England and Wales	B	100.0	100.0	Dormant
SSE Staythorpe Battery Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Staythorpe Power Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Staythorpe SGT Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Staythorpe Solar Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Southery Solar Limited	England and Wales	B	100.0	–	Power Generation
SSE Stock Limited	Scotland	A	100.0	100.0	Stock Holding
SSE Sunflower Offshore Wind Holdco B.V.	Netherlands	AA	100.0	100.0	Renewable Development
SSE Sunflower Offshore Wind Limited	Netherlands	AA	100.0	100.0	Renewable Development
Partner 1 B.V.
SSE Sunflower Offshore Wind Limited	Netherlands	AA	100.0	100.0	Renewable Development
Partner 2 B.V.
SSE Sunflower Offshore Wind Limited	Netherlands	AA	100.0	100.0	Renewable Development
Partner 3 B.V.
SSE Sunflower Offshore Wind Limited	Netherlands	AA	100.0	–	Renewable Development
Partner 4 B.V.
SSE Thermal Energy Holdings Limited	England and Wales	B	100.0	100.0	Holding Company
SSE Thermal Energy Operations Limited	England and Wales	B	100.0	100.0	Power Generation
SSE Thermal Generation (Scotland) Limited	Scotland	A	100.0	100.0	Power Generation
SSE Thermal Generation Holdings Limited	England and Wales	B	100.0	100.0	Holding Company
SSE Toddleburn Limited	Scotland	A	100.0	100.0	Power Generation
SSE Trading Limited	England and Wales	B	100.0	100.0	Energy Trading
SSE Trustees Limited	England and Wales	B	100.0	100.0	Dormant
SSE Tulip Offshore Wind Holdco B.V.	Netherlands	AA	100.0	100.0	Renewable Development
SSE Tulip Offshore Wind Limited Partner 1 B.V.	Netherlands	AA	100.0	100.0	Renewable Development
SSE Tulip Offshore Wind Limited Partner 2 B.V.	Netherlands	AA	100.0	100.0	Renewable Development
SSE Tulip Offshore Wind Limited Partner 3 B.V.	Netherlands	AA	100.0	100.0	Renewable Development
SSE Utility Solutions Limited	England and Wales	B	100.0	100.0	Utility Services
SSE Venture Capital Limited	Scotland	A	100.0	100.0	Investment Holding
SSE Viking Limited	England and Wales	B	100.0	100.0	Renewable Development
SSE(SE) Quest Trustee Limited	England and Wales	B	100.0	100.0	Dormant
SSE Yuza Offshore Wind Power G.K. (formerly	Japan	Y	80.0	–	Renewable Development
SSE Happo-Nishiro Offshore Wind Power
G.K.)
SSEN Distribution Limited	Scotland	A	100.0	100.0	Holding Company
SSEPG (Operations) Limited	England and Wales	B	100.0	100.0	Power Generation
Strathy Wind Farm Limited	Scotland	A	100.0	100.0	Power Generation
Sure Partners Limited	Ireland	C	100.0	100.0	Renewable Development
S + S Limited	Scotland	A	100.0	100.0	Dormant
Tealing Solar Park Limited	England and Wales	B	100.0	100.0	Power Generation
TESGL Limited	England and Wales	D	100.0	100.0	Building Energy
					Management
The Energy Solutions Group Bidco Limited	England and Wales	D	100.0	100.0	Dormant
The Energy Solutions Group Midco Limited	England and Wales	D	100.0	100.0	Dormant
The Energy Solutions Group Topco Limited	England and Wales	D	100.0	100.0	Dormant
Tokushima Offshore Wind Power G.K.	Japan	Y	80.0	–	Renewable Development
Tournafulla Windfarm (ROI) Limited	Ireland	C	100.0	100.0	Power Generation
Viking Energy (Scottish Partnership)	Scotland	I	100.0	100.0	Renewable Development
Viking Energy Wind Farm LLP	Scotland	A	100.0	100.0	Renewable Development
Wakayama-West Offshore Wind Power No. 1	Japan	Y	80.0	80.0	Renewable Development
G.K.
Wakayama-West Offshore Wind Power No.2	Japan	Y	80.0	80.0	Renewable Development
G.K.

All shares in subsidiary companies are ordinary share capital, unless otherwise stated.

* 100% of voting rights held

290 SSE plc Annual Report 2024

A3. Related undertakings continued

A3.1.1. Subsidiary undertakings continued

Statutory audit exemptions

SSE plc parent company has provided guarantees under section 479C of the Companies Act 2006 over the liabilities of the following

companies, which are therefore exempt from audit under the requirements of s479A-479C of the Companies Act 2006.

	Registered
Company	number
Aberarder Wind Farm (Scotland) Limited	SC746968
Aberarder Wind Farm LLP	OC398487
Bhlaraidh Wind Farm Limited	SC663027
Fibre Fuel Limited	02902165
Fibre Power (Slough) Limited	02902170
Keadby Wind Farm Limited	06852112
Slough Utility Services Limited	03486590
SSE Airtricity Energy Services (NI) Limited (formerly Fusion Heating Limited)	NI056373
SSE Beatrice Offshore Windfarm Holdings Limited	SC436255
SSE BTM HoldCo Limited	14413957
SSE BTM Operational Assets Limited	14885059
SSE DE EV Holdco Limited	14278443
SSE DE Solar HoldCo Limited	14189570
SSE Eggborough Limited	14939853
SSE Enterprise Limited	10060563
SSE EV M7 Limited	14418288
SSE EV Operational Assets Limited	14401537
SSE Group Limited	SC126049
SSE Imperial Park PN Limited	02631510
SSE Maple Limited	10604848
SSE Medway Operations Limited	02647585
SSE Micro Renewables Limited	SC386017
SSE OWS Glasgow Limited	SC228283
SSE Private Networks Holdco Limited	14921243
SSE Production Services Limited	02499702
SSE Renewables Holdings (UK) Limited	NI043239
SSE Renewables Offshore Windfarm Holdings Limited	SC436251
SSE Renewables Onshore Windfarm Holdings Limited	NI049557
SSE Renewables Poland Holdings Limited	SC723844
SSE Renewables Solar & Battery Holdings Limited (formerly SSE DE Battery Holdco Limited)	13561962
SSE Renewables UK Limited	NI048447
SSE Renewables Wind Farms (UK) Limited	SC654502
SSE Retail Limited	SC213458
SSE Seabank Investments Limited	02631512
SSE Seabank Land Investments Limited	07877772
SSE Southery Solar Limited	14953142
SSE Staythorpe Battery Limited	14046860
SSE Staythorpe Power Limited	14043534
SSE Staythorpe SGT Limited	14046946
SSE Staythorpe Solar Limited	14046913
SSE Thermal Energy Holdings Limited	12650549
SSE Toddleburn Limited	SC259104
SSE Viking Limited	06021053
SSE(SE) Quest Trustee Limited	03487059
SSEPG (Operations) Limited	02764438
Strathy Wind Farm Limited	SC663103
Tealing Solar Park Limited	08783684

ACCOMPANYING INFORMATION – CONTINUED

291SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

A3.1.2. Joint arrangements (incorporated)

		Registered	2024	2023
		address	Holding	Holding
Company	Country of incorporation	(key)	%	%	Principal activity
AtlasConnect Limited	Scotland	A	50.0	50.0	Dormant
Baglan Pipeline Limited	England and Wales	K	50.0	50.0	Dormant
Beatrice Offshore Windfarm Holdco Limited	Scotland	A	40.0	40.0	Holding Company
Beatrice Offshore Windfarm Limited	Scotland	A	40.0	40.0	Power Generation
Bellair Wind Farm Designated Activity Company	Ireland	AM	50.0	–	Renewable Development
Cloosh Valley Wind Farm Designated Activity
Company	Ireland	L	25.0	25.0	Power Generation
Cloosh Valley Wind Farm Holdings Designated
Activity Company	Ireland	L	25.0	25.0	Holding Company
Clyde Windfarm (Scotland) Limited	Scotland	A	50.1	50.1	Power Generation
Coolnagun Wind Farm Designated Activity
Company	Ireland	AM	50.0	–	Renewable Development
Cornafulla Wind Farm Designated Activity
Company	Ireland	AM	50.0	–	Renewable Development
					Warehousing and storage
DB Operational Base Limited	England and Wales	J	40.0	40.0	facilities
Deeside Power (UK) Limited	England and Wales	AF	50.0	50.0	Power Generation
Deeside Power Operation Limited	England and Wales	AF	50.0	50.0	Power Generation
Derryfadda Wind Farm Designated Activity
Company	Ireland	AM	50.0	–	Renewable Development
Digital Reach Partners Limited	Scotland	A	50.0	50.0	Telecommunications
Doggerbank Offshore Wind Farm Project 1
Holdco Limited	England and Wales	B	40.0	40.0	Holding Company
Doggerbank Offshore Wind Farm Project 1 Projco
Limited	England and Wales	B	40.0	40.0	Renewable Development
Doggerbank Offshore Wind Farm Project 2
Holdco Limited	England and Wales	B	40.0	40.0	Holding Company
Doggerbank Offshore Wind Farm Project 2 Projco
Limited	England and Wales	B	40.0	40.0	Renewable Development
Doggerbank Offshore Wind Farm Project 3
Holdco Limited	England and Wales	B	40.0	40.0	Holding Company
Doggerbank Offshore Wind Farm Project 3 Projco
Limited	England and Wales	B	40.0	40.0	Renewable Development
Doggerbank Offshore Wind Farm Project 3 And 4
Leaseco Limited (formerly Gatroben Offshore
Developments 3 Limited)	England and Wales	B	50.0	50.0	Renewable Development
Doggerbank Offshore Wind Farm Project 4
Holdco Limited (formerly Gatroben Offshore
Developments 1 Limited)	England and Wales	B	50.0	50.0	Renewable Development
Doggerbank Offshore Wind Farm Project 4 Projco
Limited (formerly Gatroben Offshore
Developments 2 Limited)	England and Wales	B	50.0	50.0	Renewable Development
Dunmaglass Wind Farm Limited	Scotland	A	50.1	50.1	Power Generation
Eastern Green Link 2 Limited	England and Wales	AI	50.0	–	Power Transmission
Everwind Limited	Ireland	S	49.0	49.0	Power Generation
Fearna PSH Limited	England and Wales	B	50.0	–	Renewable Development
Garryhinch Wind Farm Designated Activity
Company	Ireland	AM	50.0	–	Renewable Development
Greater Gabbard Offshore Winds Limited	England and Wales	B	50.0	50.0	Power Generation
Green Energy Company Limited	Ireland	M	47.5	47.5	Dormant
Green H2 Developments Hold Co Limited	England and Wales	B	50.0	50.0	Holding Company
Green H2 Developments Project Co Limited	England and Wales	B	50.0	50.0	Renewable Development
Green Way Energy Limited	Ireland	M	50.0	50.0	Holding Company
H2NE Parentco Limited	England and Wales	AL	50.0	–	Holding Company
H2Northeast Limited	England and Wales	AL	50.0	–	Renewable Development
ICE Santa Engracia, S.L.U.	Spain	AO	44.6	–	Renewable Development
Indian Queens Power Limited	England and Wales	AF	50.0	50.0	Power Generation
Kerry Power Limited	Ireland	M	49.0	49.0	Power Generation
Kilberry Wind Farm Designated Activity Company	Ireland	AM	50.0	–	Renewable Development

***

292 SSE plc Annual Report 2024

		Registered	2024	2023
		address	Holding	Holding
Company	Country of incorporation	(key)	%	%	Principal activity
Lely Alpha Offshore Wind General Partner B.V.	Netherlands	AA	50.0	–	Renewable Development
Lely Alpha Offshore Wind Projco C.V.	Netherlands	AA	50.0	–	Renewable Development
Lely Beta Offshore Wind General Partner B.V.	Netherlands	AA	50.0	–	Renewable Development
Lely Beta Offshore Wind Projco C.V.	Netherlands	AA	50.0	–	Renewable Development
Lemanaghan Wind Farm Designated Activity
Company	Ireland	AM	50.0	–	Renewable Development
Lenalea Wind Farm Designated Activity Company Ireland		C	50.0	50.0	Renewable Development
Littleton Wind Farm Designated Activity Company Ireland		AM	50.0	–	Renewable Development
Marchwood Power Limited	England and Wales	N	50.0	50.0	Power Generation
Marron Activ8 Energies Limited	Ireland	R	50.0	50.0	Energy Related Services
Midas Energy Limited	Ireland	M	49.0	49.0	Power Generation
Neos Networks Limited	Scotland	A	50.0	50.0	Telecommunications
NNXYZ Limited	England and Wales	B	50.0	50.0	Telecommunications
North Falls Offshore Wind Farm Holdco Limited *** England and Wales		AG	50.0	50.0	Holding company
North Falls Offshore Wind Farm Limited	England and Wales	AG	50.0	50.0	Renewable Development
Ossian Offshore Wind Farm Holdings Limited	Scotland	A	40.0	40.0	Holding company
Ossian Offshore Wind Farm Limited	Scotland	A	40.0	40.0	Renewable Development
Poseidon Offshore Wind Holdco Pty Limited	Australia	AK	50.0	–	Holding company
Poseidon Offshore Wind Pty Limited	Australia	AK	50.0	–	Renewable Development
Pride (SERP) Limited	England and Wales	AP	50.0	–	Contracting
Saltend Cogeneration Company Limited	England and Wales	AF	50.0	50.0	Power Generation
Saltend Operations Company Limited	England and Wales	AF	50.0	50.0	Power Generation
SCCL Holdings Limited	England and Wales	AF	50.0	50.0	Holding Company
Seabank Power Limited	England and Wales	O	50.0	50.0	Power Generation
Seagreen 1A (Holdco) Limited	England and Wales	B	49.0	49.0	Holding company
Seagreen 1A Limited	England and Wales	B	49.0	49.0	Renewable Development
Seagreen Alpha Wind Energy Limited	England and Wales	B	49.0	49.0	Renewable Development
Seagreen Bravo Wind Energy Limited	England and Wales	B	49.0	49.0	Renewable Development
Seagreen Holdco 1 Limited	England and Wales	B	49.0	49.0	Holding company
Seagreen Wind Energy Limited	England and Wales	B	49.0	49.0	Renewable Development
SSE Slough Multifuel Holdco Limited	England and Wales	B	50.0	50.0	Holding company
SSE Slough Multifuel Limited	England and Wales	B	50.0	50.0	Power Generation
Stronelairg Wind Farm Limited	Scotland	A	50.1	50.1	Power Generation
Sunflower Offshore Wind General Partner B.V.	Netherlands	AA	–	50.0	Renewable Development
Sunflower Offshore Wind Projectco C.V.	Netherlands	AA	–	50.0	Renewable Development
Triton Power Holdings Limited	Jersey	AH	50.0	50.0	Holding company
Triton Power Intermediate Holdings Limited	Jersey	AH	50.0	50.0	Holding company
Triton Power Limited	Jersey	AH	50.0	50.0	Power Generation
Tulip Offshore Wind General Partner B.V.	Netherlands	AA	–	50.0	Renewable Development
Tulip Offshore Wind Projectco C.V.	Netherlands	AA	–	50.0	Renewable Development

***

** 50.1% of voting rights held

*** Joint Operation

A3.1.3. Associates

		Registered	2024	2023
		address	Holding	Holding
Company	Country of incorporation	(key)	%	%	Principal activity
Corran Environmental LP	Scotland	AQ	100.0	100.0	Renewable Development
Corran Environmental II LP	Scotland	AR	12.5	–	Renewable Development
St Clements Services Limited	England and Wales	P	25.0	25.0	Utilities Software

A.3.1.4. Registered address key

Reference	Company registered address
A	Inveralmond House, 200 Dunkeld Road, Perth PH1 3AQ
B	No 1 Forbury Place, 43 Forbury Road, Reading RG1 3JH

A3. Related undertakings continued

A3.1.2. Joint arrangements (incorporated) continued

ACCOMPANYING INFORMATION – CONTINUED

293SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Reference	Company registered address
C Red Oak South, South County Business Park, Leopardstown, Dublin 18
D Ocean Court, Caspian Road, Atlantic Street, Altrincham, WA14 5HH
E	Keadby Power Station, Trentside, Keadby, Scunthorpe, North Lincs DN17 3AZ
F	3 rd Floor, Millennium House, 17–25 Great Victoria Street, Belfast, BT2 7AQ
G	Tower House, Loch Promenade, Douglas, Isle of Man
H	Büro München, Elektrastrasse 6, 81925, München, Germany
I The Gutters’ Hut, North Ness Business Park, Lerwick, Shetland ZE1 0LZ
J	One Kingdom Street, London, United Kingdom, W2 6BD
K	10 Fleet Place, London, EC4M 7QS
L 6th Floor, South Bank House, Barrow Street, Dublin 4
M Lissarda Industrial Park, Lissarda, Macroom, County Cork
N	Oceanic Way, Marchwood Industrial Park, Marchwood, Southampton SO40 4BD
O	Severn Road, Hallen, Bristol, BS10 7SP
P	4 –6 Church Walk, Daventry, NN11 4BL
Q	Unit 14 Maryland Industrial Estate, Ballygowan Road, Belfast
R	Dunoge, Carrickmacross, Co. Monaghan, Ireland
S	Gorthleahy, Macroom, Co Cork, Ireland
T	c/o Fiduservice SA, Route de Beaumont 20, 1701 Freiburg, Switzerland
U	c/o Bird & Bird LLP, Maximiliansplatz 22, Munich 80333
V	Rm	1901	, 19/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong
W		United Agent Group Inc, 1521 Concord Pike, Suite 201, Wilmington DE 19803
X Towarowa no.28, suite 00–839, Warsaw, Poland
Y	Roppongi Grand Tower, 3-2-1 Roppongi, Minato-ku, Tokyo, Japan
Z	Unit 42 Block 528, Grants View, Greenogue Business Park, Rathcoole, Dublin, Ireland
AA	Hofplein 20, Rotterdam, 3032 AC, Netherlands
AB	16	Kifissias Ave, 11526, Athens, Greece
AC	Viale Luca Gaurico, 9/11, 00143, Rome, Italy
AD	Spain: calle Buenos Aires, 12, 48.001, Bilbao, Spain
AE			97 allée Alexandre Borodine, Immeuble Cèdre 3, 69800, Saint Priest, France
AF	Saltend Power Station Saltend Chemicals Park, Hedon Road, Hull, East Riding of Yorkshire, England, HU12 8GA
AG	Windmill Hill Business Park, Whitehill Way, Swindon, Wiltshire, United Kingdom, SN5 6PB
AH	22 Grenville Street, St Helier, Jersey, JE4 SPX
AI	Cannon Place, 78 Cannon Street, London, United Kingdom, EC4N 6AF
AJ	Plac Marszałka Józefa Piłsudskiego 2 00-073 Warsaw
AK	Ground Floor, 36 Esplanade, Brighton, VIC 3186
AL	Suite 1 7th Floor, 50 Broadway, London, United Kingdom, SW1H 0BL
AM	Main St, Newbridge, Kildare, Ireland
AN	Second Floor Eagle Court 2, Hatchford Way, Birmingham B26 3RZ
AO	Portalada, 50, 26.006, Logroño (La Rioja), Spain
AP	Level 12, The Shard, 32 London Bridge Street, London, SE1 9SG
AQ	4th Floor, 7 Castle Street, Edinburgh, EH2 3AH
AR	10c Wester Coates Gardens, Edinburgh, EH12 5LT

A4. Joint ventures and associates

The Directors have assessed that the investments in the following equity accounted joint ventures and associates are of a sufficiently

material impact to warrant additional disclosure on an individual basis. Details of the financial position and financial results of the Group:

		Country			Group
		of	Class of	Proportion of	Interest	Year	Consolidation
Company	Principal activity	incorporation	shares held	shares held %	%	end date	basis
Seabank Power Limited	Power Generation	UK	Ordinary	50.0	50.0	31 December	Equity
Marchwood Power Limited	Power Generation	UK	Ordinary	50.0	50.0	31 December	Equity
SSE Slough Multifuel Limited	Power Generation	UK	Ordinary	50.0	50.0	31 March	Equity
Clyde Windfarm (Scotland) Limited	Power Generation	UK	Ordinary	50.1	50.1	31 March	Equity
Seagreen Wind Energy Limited	Power Generation	UK	Ordinary	49.0	49.0	31 March	Equity
Beatrice Offshore Windfarm Limited Power Generation		UK	Ordinary	40.0	40.0	31 March	Equity
Dunmaglass Wind Farm Limited	Power Generation	UK	Ordinary	50.1	50.1	31 March	Equity
Stronelairg Wind Farm Limited	Power Generation	UK	Ordinary	50.1	50.1	31 March	Equity
Triton Power Holdings Limited	Power Generation	Jersey	Ordinary	50.0	50.0	31 December	Equity
Neos Networks Limited	Telecoms	UK	Ordinary	50.0	50.0	31 March	Equity

294 SSE plc Annual Report 2024

A4. Joint ventures and associates continued

Summary information for material joint ventures and associates from unaudited financial statements is as follows:

													Doggerbank
													Offshore
				Clyde			Seagreen		Beatrice			Triton		Wind Farm
	Seabank	Marchwood	SSE Slough	Windfarm			Holdco 1	Offshore	Dunmaglass	Stronelairg	Power	Neos	Project 1
	Power	Power	Multifuel	(Scotland)			Energy	Windfarm	Wind Farm	Wind Farm	Holdings	Networks	Projco
	Limited	Limited	Limited	Limited			Limited	Limited	Limited	Limited	Limited	Limited	Limited	Other	Total
	2024	2024	2024	2024			2024	2024	2024	2024	2024	2024	2024	2024	2024
	£m	£m	£m	£m			£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	258.8	56.3	0.9	168.3			282.0	155.1	37. 1	90.7	811.5	122.3	0.5	69.3	2,052.8
Other income	–	–	–	–				220.3	–	–	–	–	–	–	220.3
Depreciation and amortisation	(6.9)	(39.7)	–	(29.0)			(81.5)	(87.8)	(7.7)	(13.7)	(34.6)	(93.2)	(0.4)	(26.7)	(421.2)
Other operating
costs	(197.0)	(28.8)	(4.4)	(38.3)			(36.1)	(112.1)	(7.3)	(19.5)	(750.9)	(93.7)	(2.8)	(28.0)	(1,318.9)
Movement on Derivatives	–	–	–	–			167.4	–	–	–	(41.2)	–	–	–	126.2
Operating profit	54.9	(12.2)	(3.5)	101.0			331.8	175.5	22.1	57.5	(15.2)	(64.6)	(2.7)	14.6	659.2
Interest expense	0.8	(3.2)	(0.5)	(16.8)			(121.0)	(62.2)	(5.8)	(10.8)	8.4	(20.4)	–	(8.0)	(239.5)
Profit before tax	55.7	(15.4)	(4.0)	84.2			210.8	113.3	16.3	46.7	(6.8)	(85.0)	(2.7)	6.6	419.7
Corporation tax	(13.9)	1.0	(4.1)	(21.9)			(55.3)	(38.8)	(4.2)	(12.0)	(4.2)	–	(0.7)	(3.8)	(157.9)
Profit after tax	41.8	(14.4)	(8.1)	62.3			155.5	74.5	12.1	34.7	(11.0)	(85.0)	(3.4)	2.8	261.8
Recognised in other comprehensive income
Cash flow hedges	–	–	0.2	–			(46.3)	(1.4)	–	–	–	–	(31.9)	(46.6)	(126.0)
Taxation	–	–	(0.1)	–			11.6	0.4	–	–	–	–	8.0	11.7	31.6
Total	–	–	0.1	–			(34.7)	(1.0)	–	–	–	–	(23.9)	(34.9)	(94.4)
comprehensive income/(loss)	41.8	(14.4)	(8.0)	62.3			120.8	73.5	12.1	34.7	(11.0)	(85.0)	(27.3)	(32.1)	167.4
SSE share of profit (based
on % equity)	20.9	(7. 2)	(4.0)	31.2			76.2	29.8	6.1	17.4	(5.5)	(42.5)	(1.4)	(6.9)	114.1
Dividends paid to shareholders	38.0	14.3	–	146.0			42.8	34.3	33.0	70.0	65.0	–	–	18.4	461.8
Non-current assets	89.5	124.1	192.5	537.9			3,556.6 1,873.1		173.3	316.3	432.9	538.0	3,115.0	4,866.1	15,815.3
Current assets	37.3	37.4	229.2	80.8			47.8	70.9	19.3	41.9	3.6	32.0	34.2	57.8	692.2
Cash and cash
equivalents	70.8	19.6	5.0	40.6			245.7	102.3	8.6	29.1	4.6	22.0	87.4	187.8	823.5
Current liabilities	(14.0)	(34.6)	(77.3)	(12.7)			(309.0)	(181.3)	(3.1)	(10.6)	(18.6)	(131.0)	(65.6)	(225.1)	(1,082.9)
Non-current
liabilities	(46.0)	(37.7)	(20.6)	(434.4)	(3,0	05.	8)	(1,752.9)	(145.4)	(261.4)	(328.9)	(346.0)	(2,726.1)	(4,138.2)	(13,243.4)
Net assets	137.6	108.8	328.8	212.2			535.3	112.1	52.7	115.3	93.6	115.0	444.9	748.4	3,004.7
Group equity
interest	50.0%	50.0%	50.0%	50.1%			49.0%	40.0%	50.1%	50.1%	50.0%	50.0%	40.0%	–	–
Net assets	137.6	108.8	328.8	212.2			535.3	112.1	52.7	115.3	93.6	115.0	444.9	748.4	3,004.7
Group’s share of ownership
interest	68.8	54.4	164.4	106.1			262.3	44.8	26.4	57.8	46.8	57.5	178.0	324.3	1,391.6
Other adjustments	(20.4)	(0.3)	(79.1)	32.6			224.8	(16.0)	66.9	208.3	108.8	(22.9)	2.3	66.6	571.6
Carrying value of Group’s equity
interest	48.4	54.1	85.3	138.7			487.1	28.8	93.3	266.1	155.6	34.6	180.3	390.9	1,963.2

(i)

(i) In addition to the above the following joint ventures and associates have an equity carrying value that constitutes a material investment of the group: Doggerbank Offshore Wind

Farm Project 2 Projco Limited £119.2m (2023: £129.8m): Doggerbank Offshore Wind Farm Project 3 Projco Limited £87.3m (2023: £86.2m) and Ossian Offshore Wind Farm Limited

£55.3m (2023: £41.3m).

ACCOMPANYING INFORMATION – CONTINUED

295SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

							(restated*)
				Clyde	Seagreen	Beatrice			Triton
	Seabank	Marchwood	SSE Slough	Windfarm	Wind	Offshore	Dunmaglass	Stronelairg	Power	Neos
	Power	Power	Multifuel	(Scotland)	Energy	Windfarm	Wind Farm	Wind Farm	Holdings	Networks
	Limited	Limited	Limited	Limited	Limited	Limited	Limited	Limited	Limited	Limited	Other	Total
	2023	2023	2023	2023	2023	2023	2023	2023	2023	2023	2023	2023
	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Revenue	274.5	103.8	–	297.5	95.2	376.5	68.7	151.5	1,628.7	159.2	62.3	3,217.9
Other income	–	–	–	–	–	25.5	–	–	–	–	–	25.5
Depreciation and amortisation	(6.9)	(30.7)	–	(29.1)	(17.9)	(89.6)	(7.7)	(13.7)	(84.0)	(95.0)	(30.4)	(405.0)
Other operating
costs	(216.5)	(21.0)	–	(56.8)	(40.8)	(94.8)	(12.6)	(28.0)	(415.1)	(80.3)	(40.1)	(1,006.0)
Operating profit	51.1	52.1	–	211.6	36.5	217.6	48.4	109.8	1,129.6	(16.1)	(8.2)	1,832.4
Interest expense	(0.7)	(5.2)	–	(18.4)	(20.7)	(65.4)	(6.1)	(12.1)	(2.4)	(20.7)	(3.0)	(154.7)
Profit before tax	50.4	46.9	–	193.2	15.8	152.2	42.3	97.7	1,127.2	(36.8)	(11.2)	1,67	7.7
Corporation tax	(10.6)	(6.1)	–	(35.6)	(3.8)	(26.0)	(8.1)	(19.1)	(179.2)	–	(4.2)		(292.7)
Profit after tax	39.8	40.8	–	157.6	12.0	126.2	34.2	78.6	948.0	(36.8)	(15.4)		1,385.0
Recognised in other comprehensive income
Cash flow hedges	–	–	6.2	–	141.0	152.4	–	–	–	–	807.6		1,107. 2
Taxation	–	–	(1.6)	–	(35.3)	(38.1)	–	–	–	–	(201.8)		(276.8)
	–	–	4.6	–	105.7	114.3	–	–	–	–	605.8		830.4
Total
comprehensive income/(loss)	39.8	40.8	4.6	157.6	117.7	240.5	34.2	78.6	948.0	(36.8)	590.4		2,215.4
SSE share of profit (based
on % equity)	19.9	20.4	–	78.9	5.9	50.5	17.1	39.3	474.0	(18.4)	(24.0)		663.6
Dividends paid to shareholders	47.0	22.4	–	169.1	–	146.5	35.2	93.6	101.4	–	2.0		617.2
Non-current
assets	96.2	154.1	353.5	560.4	3,229.8	1,906.0	175.0	330.2	189.6	626.2	6,288.3		13,909.3
Current assets	48.8	53.5	10.0	119.0	19.4	50.5	27.5	58.2	507.0	41.9	59.9		995.7
Cash and cash
equivalents	69.3	32.8	8.4	83.4	86.4	91.3	19.0	48.3	16.7	23.3	86.1		565.0
Current liabilities	(19.1)	(38.3)	(23.6)	(20.4)	(57.2)	(176.3)	(4.6)	(19.8)	(301.7)	(144.0)	(246.8)		(1,051.8)
Non-current
liabilities	(61.6)	(65.9)	(265.2)	(437.3)	(2,870.7)	(1,800.4)	(139.3)	(259.0)	(18.0)	(353.1)	(5,241.9)		(11,512.4)
Net assets	133.6	136.2	83.1	305.1	407.7	71.1	77.6	157.9	393.6	194.3	945.6		2,905.8
Group equity
interest	50%	50%	50%	50.1%	49%	40%	50.1%	50.1%	50%	50%
Net assets	133.6	136.2	83.1	305.1	407.7	71.1	77.6	157.9	393.6	194.3	945.6		2,905.8
Group’s share of ownership
interest	66.8	68.1	41.5	152.8	199.8	28.4	38.8	79.1	196.8	97.2	376.4		1,345.7
Other adjustments	(20.3)	0.3	40.8	27.4	149.9	(15.3)	68.1	214.7	73.1	(22.5)	113.8		630.0
Carrying value of Group’s equity
interest	46.5	68.4	82.3	180.2	349.7	13.1	106.9	293.8	269.9	74.7	490.2		1,975.7

* The comparatives have been restated. See note 2.1.

296 SSE plc Annual Report 2024

A4. Joint ventures and associates continued

In addition to the above at 31 March 2024, the Group was owed the following loans from its principal joint ventures: Marchwood Power

Limited £12.2m (2023: £25.7m); Clyde Windfarm (Scotland) Limited £127.1m (2023: £127.1m); Dunmaglass Wind Farm Limited £46.6m

(2023: £46.6m); Stronelairg Wind Farm Limited £88.7m (2023: £88.7m); Neos Networks Limited £57.7m (2023: £56.0m); Seagreen Wind

Energy Limited £686.4m (2023: £593.1m); SSE Slough Multifuel Limited £157.8m (2023: £128.0m) and Doggerbank A Offshore Windfarm

Limited £87.7m (2023: £nil).

This represents 93% (2023: 96%) of the loans provided to equity-accounted joint ventures and associates.

A5. Related party transactions

The immediate parent and ultimate controlling party of the Group is SSE plc (incorporated in Scotland). Balances and transactions between

the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed

in this note. Details of transactions between the Group and other related parties are disclosed below.

Trading transactions

The following transactions took place during the year between the Group and entities which are related to the Group, but which are not

members of the Group. Related parties are defined as those in which the Group has control, joint control or significant influence over.

	2024	2024	2024	2024	2023	2023	2023	2023
		Purchase of				Purchase of
	Sale of goods	goods and	Amounts	Amounts	Sale of goods	goods and	Amounts	Amounts
	and services	services	owed from	owed to	and services	services	owed from	owed to
	£m	£m	£m	£m	£m	£m	£m	£m
Joint ventures:
Marchwood Power Limited	42.6	(63.2)	–	(13.0)	122.4	(228.5)	–	(16.8)
Clyde Windfarm (Scotland) Limited	5.6	(153.9)	–	(48.7)	4.8	(280.5)	0.1	(49.5)
Beatrice Offshore Windfarm Limited	4.8	(75.5)	2.0	(6.8)	4.7	(176.5)	1.0	(8.7)
Stronelairg Windfarm Limited	2.5	(75.6)	–	(20.8)	2.4	(146.2)	–	(21.7)
Dunmaglass Windfarm Limited	1.1	(32.2)	–	(8.6)	1.1	(66.4)	–	(9.1)
Neos Networks Limited	3.8	(28.5)	6.1	(4.7)	3.8	(23.8)	46.2	(5.8)
Seagreen Wind Energy Limited	19.8	(113.4)	11.3	(11.7)	35.2	(44.4)	22.9	(7.5)
Doggerbank A, B, C and D	36.5	–	10.7	–	25.4	–	7.6	–
Other Joint Ventures	18.0	(209.4)	6.7	(63.9)	14.0	(219.2)	1.1	(50.8)

The transactions with Marchwood Power Limited relate to the contracts for the provision of energy or the tolling of energy under power

purchase arrangements.

Details of the Group’s 15-year Affiliate Contract for Difference agreement with Seagreen Wind Energy Limited are included in note A7. 2.

The amounts outstanding are trading balances, are unsecured and will be settled in cash. No provisions have been made for doubtful debts

in respect of the amounts owed by related parties. Aggregate capital loans to joint ventures and associates are shown in note 16.

A6. Financial risk management

This note presents information about the fair value of the Group’s financial instruments, the Group’s exposure to the risks associated with

those instruments, the Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of

capital. Further qualitative disclosures are included throughout these consolidated financial statements.

The Group has exposure to the following risks from its use of financial instruments:

– Credit risk

– Liquidity risk

– Commodity risk

– Currency risk

– Interest rate risk

The Board has overall responsibility for the establishment and oversight of the Group’s risk management framework. The Group’s policies

for risk management are established to identify the risks faced by the Group, to set appropriate risk limits and controls, and to monitor risks

and adherence to limits. Exposure to commodity, currency and interest rate risks arise in the normal course of the Group’s business and

derivative financial instruments are entered into to hedge exposure to these risks.

SSE has a Group wide Risk Committee reporting to the Group Executive Committee, which is responsible for reviewing the strategic,

market, credit, operational and liquidity risks and exposures that arise from the Group’s operating activities. In addition, the Group has two

dedicated Energy Market risk committees reporting to the Group Executive Committee and Board respectively, with the Group Executive

Sub-committee chaired by the Chief Financial Officer (the “Group Energy Markets Exposures Risk Committee”) and the Board Sub-

committee chaired by Non-Executive Director Tony Cocker (the “Energy Markets Risk Committee (EMRC)”). These Committees oversee

the Group’s management of its energy market exposures, including its approach to hedging.

ACCOMPANYING INFORMATION – CONTINUED

297SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

During the year ended 31 March 2024, the Group continued to be exposed to the economic conditions impacting the primary

commodities to which it is exposed (Gas, Carbon and Power). The Group’s approach to hedging, and the diversity of its energy portfolios

(across Wind, Hydro, Thermal and Customers) has provided certain mitigation of these exposures.

At 31 March, the Group’s collateral position was as follows:

		2024	2023
	Note	£m	£m
Collateral posted included within trade and other receivables	18	9.3	316.3
Collateral held included within trade and other payables	19	(362.5)	–
Net collateral posted		(353.2)	316.3

Exposure to the commodity, currency and interest rate risks noted arise in the normal course of the Group’s business and derivative

financial instruments are entered into to hedge exposure to these risks. The objectives and policies for holding or issuing financial

instruments and similar contracts, and the strategies for achieving those objectives that have been followed during the year are explained

below.

A6.1. Credit risk

Credit risk is the risk of financial loss to the Group if a customer or counterparty fails to meet its contractual obligations.

Credit risk arising from the Group’s normal commercial operations is controlled by individual business units operating in accordance with

Group policies and procedures. Generally, for significant contracts, individual business units enter into contracts or agreements with

counterparties having investment grade credit ratings only, or where suitable collateral or other security has been provided. Counterparty

credit validation is undertaken prior to contractual commitment.

Credit risk management for the Group’s SSEN Transmission and SSEN Distribution businesses is performed in accordance with industry

standards as set out by the Regulator and is financially controlled by the individual business units. The Group’s greatest credit risks lie

with the operations of the Customers business, the wholesale procurement activities conducted by SSE Energy Markets under a trust

arrangement and the activities carried out by the Group’s Treasury function. In all cases, specific credit risk controls that match the risk

profile of those activities are applied. Exposure to credit risk in the retail supply of electricity and gas to end user customers arises from

the potential of a customer defaulting on their invoiced payables. The Group exposure to domestic retail supply customers is limited to

customers of the Group’s Airtricity business. The creditworthiness of these customers is reviewed from a variety of internal and external

information. The financial strength and creditworthiness of business customers is assessed prior to commencing, and for the duration of,

their contract of supply.

Exposure to credit risk in the procurement of wholesale energy and fuel is managed by reference to agreed transaction credit limits which

are determined by whether the counterparty:

– holds an investment grade credit rating; or

– can be assessed as adequately creditworthy in accordance with internal credit rules using information from other external credit

agencies; or

– can provide a guarantee from an investment grade rated entity or post suitable collateral or provide other acceptable assurances in

accordance with group procedures where they have failed to meet the above conditions; or

– can be allocated a non-standard credit limit approved by the relevant authority as delegated by the Group Board.

Credit support clauses and Master Netting Agreements are typically included or entered into in order to mitigate the impact to the Group

against counterparty failure or non-delivery. As part of its normal activities, SSE Energy Markets transacts significant volumes of commodity

derivative products through cleared exchanges to mitigate credit risk. Such exchanges are subject to strict regulation by the UK Financial

Conduct Authority (FCA) and participants in these exchanges are obliged to meet rigorous capital adequacy requirements.

Individual counterparty credit exposures are monitored regularly and are subject to approved limits. At 31 March 2024, SSE Energy Markets

had pledged no cash collateral (2023: £316.3m) and £459.9m (2023: £443.6m) of letters of credit, and had received £353.2m (2023: none)

of cash collateral and £130.8m (2023: £110.8m) of letters of credit principally to reduce exposures on credit risk.

Bank credit exposures, which are monitored and reported on daily, are calculated on a mark-to-market basis and adjusted for future

volatility and probability of default. Any issues relating to these credit exposures are presented for discussion and review by the Tax and

Treasury Committee.

Credit exposure also exists in relation to financial guarantees issued by Group companies under which the total outstanding exposure

at 31 March 2024 was £684.9m (2023: £869.7m) in respect of liabilities of joint ventures and associates and £479.3m (2023: £633.3m) in

respect of the liabilities of former subsidiaries. An amount of £39.5m (2023: £70.9m) is recorded as a liability at 31 March 2024 in respect of

the carrying value of these guarantees. Expected loss allowances for financial guarantee contracts have been reviewed at the balance sheet

date and will be reviewed on an annual basis.

298 SSE plc Annual Report 2024

A6. Financial risk management continued

A6.1. Credit risk continued

Cash and cash equivalents comprise cash in hand and deposits which are readily convertible to cash. These are subject to insignificant risk

of change in value or credit risk.

Derivative financial instruments are entered into to cover the Group’s market risks – commodity risk, interest rate risk, currency risk – and

are consequently covered elsewhere in this note.

Trade receivables represent the most significant exposure to credit risk and are stated after an allowance for impairment.

A6.2. Concentrations of risk

Trade receivables recorded by reported segment held at the 31 March were:

	2024	2023
	£m	£m
SSEN Transmission	5.9	8.0
SSEN Distribution	133.5	137.2
SSE Renewables	97.9	88.3
SSE Thermal	39.1	41.0
Gas Storage	1.0	1.5
Energy Customer Solutions
SSE Business Energy	545.4	386.9
SSE Airtricity	115.5	125.1
SSE Enterprise	12.3	31.8
SSE Energy Markets	311.7	567.5
Corporate Unallocated	43.2	16.7
Total SSE Group	1,305.5	1,404.0

Energy Customers Solution (SSE Business Energy and SSE Airtricity) accounts for 50.6% (2023: 36.5%) of the Group’s trade receivables from

continuing operations. Trade receivables associated with the Group’s 1.1 million electricity and gas customers are recorded within this

business unit. The Group also has significant trade receivables associated with its SSE Energy Markets activities which are generally settled

within two to four weeks from invoicing. The Group’s exposure to credit risk is therefore subject to diversification with no exposure to

individual retail customers totalling >10% of trade receivables. The largest customer balance, due from a SSE Energy Markets customer (also

a SSE Energy Markets supplier), is 3% (2023: 8%) of the total trade receivables.

The ageing of trade receivables at the reporting date was:

	2024	2023
	£m	£m
Not past due	962.6	1,229.0
Past due but not individually impaired:
0 – 30 days	132.5	116.3
31 – 90 days	119.9	65.6
Over 90 days	343.9	162.3
	1,558.9	1,573.2
Less: allowance for impairment	(253.4)	(169.2)
Net trade receivables	1,305.5	1,404.0

The Group has past due debt which has not had an impairment allowance set aside to cover potential credit losses. The Group has certain

procedures to pursue customers in significant arrears and believes its impairment policy in relation to such balances is appropriate. The

increased ageing of the trade receivables results in an increase in provisions held in respect of them under the provision matrix approach

employed. The increase in aged debt across all periods is predominantly due to factors associated with the migration of SSE Business

Energy customer accounts and balances to a new billing system and associated issues relating to collection activities alongside other wider

economic factors such as lower levels of government support to customers. This factor and the associated increase in subjectivity related

is commented upon in Note 4.3(iii). The Group also considers various risk factors when assessing the level of provision to recognise.

Trade receivables and contract assets are written off when there is no reasonable expectation of recovery.

The Group has other receivables which are financial assets totalling £4.1m (2023: £12.8m).

ACCOMPANYING INFORMATION – CONTINUED

299SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

The movement in the allowance for impairment of trade receivables (continuing operations only) was:

	2024	2023
	£m	£m
Balance at 1 April	169.2	78.2
Increase/(decrease) in allowance for impairment	121.5	116.8
Impairment losses recognised	(37.3)	(25.8)
Balance at 31 March	253.4	169.2

A6.3. Liquidity risk and Going Concern

Liquidity risk, the risk that the Group will have insufficient funds to meet its liabilities, is managed by the Group’s Treasury function. The

Group can be exposed to significant movements in its liquidity position due to changes in commodity prices, working capital requirements,

the impact of the seasonal nature of the business and phasing of its capital investment and recycling programmes.

Treasury is responsible for managing the banking and liquidity requirements of the Group, risk management relating to interest rate and

foreign exchange exposures, and for managing the credit risk relating to the banking counterparties with which it transacts. Short term

liquidity is reviewed daily by Treasury, while the longer-term liquidity position is reviewed on a regular basis by the Board. The department’s

operations are governed by policies determined by the Board and any breaches of these policies are reported to the Tax and Treasury

Committee and Audit Committee.

In relation to the Group’s liquidity risk, the Group’s policy is to ensure, as far as possible, that it will always have sufficient liquidity to meet

its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the

Group’s reputation.

During the year, the Group’s internal approach to managing liquidity was to seek to ensure that the Group had available committed

borrowings and facilities equal to at least 105% of forecast borrowings over a rolling 6 month period.

The Group uses cash flow forecasts to monitor its ongoing borrowing requirements. Typically, the Group will fund any short-term

borrowing positions by issuing commercial paper or borrowing from committed and uncommitted bank lines and will invest in money

market funds when it has a cash surplus. Details of the Group’s borrowings are disclosed at note 21. In addition to the borrowing facilities

listed at note 21.3, the Group has a £15m overdraft facility.

The refinancing requirement in the 24/25 financial year is £1.1bn, being the £852m of short-term Commercial Paper that matures between

April and May, and $320m (£204m) of US Private Placement maturing 16 April 2024. The Directors are confident in the ability of the Group

to maintain a funding level above 105% for the going concern assessment period based on the strong credit standing and borrowing

history of the Group for both fixed debt and commercial paper, as discussed more fully below.

Given the committed bank facilities of £3.5bn, £2.75bn excluding Scottish Hydro Electric Transmission plc facilities, maintained by the

Group and the current commercial paper market conditions, the Directors have concluded that both the Group and SSE plc as parent

company have sufficient headroom to continue as a going concern. In coming to this conclusion, the Directors have taken into account

the Group’s credit rating and the successful issuance of £15.5bn of medium to long term debt and Hybrid equity since February 2012,

including £1.1bn of long term funding in the 23/24 financial year being a €750m 8 year Eurobond at 4.0% in August 2023 for SSE plc and a

20 year £500m Eurobond at a coupon of 5.5% for Scottish Hydro Electric Transmission plc.

The Group’s period of Going Concern assessment is performed to 31 December 2025, 21 months from the balance sheet date, which is

at least 12 months from the filing deadline of its subsidiary companies. As well as taking account of the factors noted, the Going Concern

conclusion is arrived at after applying stress testing sensitivities to the Group’s cash flow and funding projections including removal of

proceeds from unconfirmed future divestments, negative and positive sensitivities on operating cash flows and uncommitted capex and

other adjustments. The Group has also considered its obligations under its debt covenants. There have been no breaches of covenants in

the year and the Group’s projections support the expectation that there will be no breach of covenants over the period to 31 December

2025. The statement of going concern is included in the Audit Committee Report.

As at 31 March 2024, the net value of outstanding cash collateral held in respect of mark-to-market related margin calls on exchange

traded positions was £353.2m (2023: cash posted £316.3m).

The contractual cash flows shown in the following tables are the contractual undiscounted cashflows under the relevant financial

instruments. Where the contractual cashflows are variable based on a price, foreign exchange rate or index in the future, the contractual

cashflows in the following tables have been determined with reference to the relevant price, foreign exchange rate, interest rate or index as

at the balance sheet date. In determining the interest element of contractual cashflows in cases where the Group has a choice as to the

length of interest calculation periods and the interest rate that applies varies with the period selected, the contractual cashflows have been

calculated assuming the Group selects the shortest available interest calculation periods. Where the holder of an instrument has a choice

of when to redeem, the amounts in the following tables are on the assumption the holder redeems at the earliest opportunity.

300 SSE plc Annual Report 2024

A6. Financial risk management continued

A6.3. Liquidity risk and Going Concern continued

The following are the undiscounted contractual maturities of financial liabilities, including interest and excluding the impact of netting

agreements:

	2024	2024	2024	2024	2024	2024
	Carrying	Contractual	0 – 12	1–2	2–5	> 5
	value	cash flows	months	years	years	years
Liquidity risk	£m	£m	£m	£m	£m	£m
Financial liabilities
Loans and borrowings
Commercial paper and cash advances	840.4	(852.4)	(852.4)	–	–	–
Loans – floating	200.0	(244.3)	(11.1)	(11.1)	(222.1)	–
Loans – fixed	1,367.0	(1,883.2)	(255.7)	(47.1)	(445.5)	(1,134.9)
Unsecured bonds – fixed	6,317.9	(8,964.7)	(218.8)	(1,174.7)	(856.4)	(6,714.8)
Fair value adjustment	0.9	–	–	–	–	–
	8,726.2	(11,944.6)	(1,338.0)	(1,232.9)	(1,524.0)	(7,849.7)
Lease liabilities	407.5	(616.5)	(91.8)	(54.1)	(142.1)	(328.5)
	9,133.7	(12,561.1)	(1,429.8)	(1,287.0)	(1,666.1)	(8,178.2)
Derivative financial liabilities
Operating derivatives designated at fair value	428.4	(904.4)	(1,239.2)	(73.2)	90.2	317.8
Interest rate swaps used for hedging	57.4	(57.4)	(26.1)	(10.6)	(16.9)	(3.8)
Interest rate swaps designated at fair value	38.4	(38.4)	(5.2)	(5.2)	(9.8)	(18.2)
Forward foreign exchange contracts held for hedging	30.5	(1,340.9)	(557.7)	(99.8)	(647.6)	(35.8)
Forward foreign exchange contracts designated
at fair value	12.7	377.1	352.2	22.1	2.8	–
	567.4	(1,964.0)	(1,476.0)	(166.7)	(581.3)	260.0
Other financial liabilities
Trade payables	656.7	(656.7)	(656.7)	–	–	–
Financial guarantee liabilities	39.5	(39.5)	(2.9)	(2.7)	(7.8)	(26.1)
	696.2	(696.2)	(659.6)	(2.7)	(7.8)	(26.1)
Total	10,397. 3	(15,221.3)	(3,565.4)	(1,456.4)	(2,255.2)	(7,944.3)
Derivative financial assets
Financing derivatives	(120.5)	(168.3)	(179.7)	(1.3)	12.7	–
Operating derivatives designated at fair value	(479.8)	761.6	756.7	6.6	(1.7)	–
	(600.3)	593.3	577.0	5.3	11.0	–
Net total	9,797.0	(14,628.0)	(2,988.4)	(1,451.1)	(2,244.2)	(7,944.3)

(i)

ACCOMPANYING INFORMATION – CONTINUED

301SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

			(restated*)
	2023	2023	2023	2023	2023	2023
	Carrying	Contractual	0 – 12	1 – 2	2 – 5	> 5
	value	cash flows	months	years	years	years
Liquidity risk	£m	£m	£m	£m	£m	£m
Financial liabilities
Loans and borrowings
Commercial paper and cash advances	1,019.2	(1,029.8)	(1,029.8)	–	–	–
Loans – floating	200.0	(253.4)	(10.7)	(10.7)	(232.0)	–
Loans – fixed	1,574.7	(2,064.5)	(96.5)	(194.3)	(917.7)	(856.0)
Unsecured bonds – fixed	5,705.5	(7,596.0)	(182.8)	(681.3)	(2,040.7)	(4,691.2)
Fair value adjustment	154.6	–	–	–	–	–
	8,654.0	(10,943.7)	(1,319.8)	(886.3)	(3,190.4)	(5,547. 2)
Lease liabilities	405.9	(613.0)	(94.5)	(55.8)	(146.6)	(316.1)
Derivative financial liabilities	9,059.9	(11,556.7)	(1,414.3)	(942.1)	(3,337.0)	(5,863.3)
Operating derivatives designated at fair value	1,152.8	(1,841.9)	(1,770.2)	(97.5)	1.0	24.8
Interest rate swaps used for hedging	37.4	(37.4)	(8.5)	(8.5)	(17.2)	(3.2)
Interest rate swaps designated at fair value	55.2	(55.2)	(5.0)	(4.9)	(13.2)	(32.1)
Forward foreign exchange contracts held for hedging	11.5	(337.7)	(292.0)	(42.3)	(3.4)	–
Forward foreign exchange contracts designated
at fair value	7.4	2.0	(50.7)	66.4	(13.7)	–
Other financial liabilities	1,264.3	(2,270.2)	(2,126.4)	(86.8)	(46.5)	(10.5)
Trade payables	694.6	(694.6)	(694.6)	–	–	–
Financial guarantee liabilities	70.9	(70.9)	(4.4)	(4.0)	(11.7)	(50.8)
	765.5	(765.5)	(699.0)	(4.0)	(11.7)	(50.8)
Total	11,089.7	(14,592.4)	(4,239.7)	(1,032.9)	(3,395.2)	(5,924.6)
Derivative financial assets
Financing derivatives	(239.3)	638.9	518.2	82.1	37.0	1.6
Operating derivatives designated at fair value	(765.9)	1,445.5	970.5	40.9	127.9	306.2
	(1,005.2)	2,084.4	1,488.7	123.0	164.9	307.8
Net total	10,084.5	(12,508.0)	(2,751.0)	(909.9)	(3,230.3)	(5,616.8)

(i)

* The comparatives have been restated. See note 2.1.

(i) The Group believes the liquidity risk associated with out-of-the-money operating derivative contracts needs to be considered in conjunction with the profile of payments or

receipts arising from derivative financial assets. It should be noted that cash flows associated with future energy sales and commodity contracts which are not IFRS 9 financial

instruments are not included in this analysis, which is prepared in accordance with IFRS 7 “Financial Instruments: Disclosures”.

302 SSE plc Annual Report 2024

A6. Financial risk management continued

A6.4. Commodity risk

The Group’s Energy Markets business implements the hedging policy through trading in the commodity markets and manages the

requirement for the delivery of the Group’s physical commodity needs as part of its normal course of business. The risk management

activity carried out by SSE Energy Markets arises from the Group’s requirement to source gas, electricity or other commodities such as

renewable obligation certificates for SSE Business Energy and SSE Airtricity, and to procure fuel and other commodities and provide a

route-to-market and risk management services for SSE Renewables, SSE Thermal, and Gas Storage.

Current hedging approach

The Group has traded in three principal commodities during the year, as well as the spreads between two or more commodity prices:

power (baseload and other products); gas; and carbon (emissions allowances). Each commodity has different liquidity characteristics,

which impacts on the degree of hedging possible. Similarly, each of the Group’s assets carries different exposures to the commodity

market and thus requires a different approach to hedging. As such, the Group’s current hedging approach varies by each class of asset

as follows:

Asset class	Minimum Hedge Target	Principal Commodity Exposures
GB Wind	Target to hedge less than 100% of anticipated wind energy output for the	Power, Gas, Carbon
	coming 12 months, progressively establishing the hedge over the 36 months
	prior to delivery. From September 2023, this has been around 80%.
Hydro	80% of forecast generation 12 months in advance of delivery, progressively	Power, Gas, Carbon
	established over the 36 months prior to delivery.
GB Thermal	100% of expected output 6 months in advance of delivery, progressively	Power, Gas, Carbon
	established over the 18 months prior to delivery.
Gas Storage	The assets were commercially operated throughout the year and the business	Gas
	managed its exposure to changes in the spread between summer and winter
	prices, market volatility and plant availability.
SSE Business Energy	Sales to contract customers are 100% hedged: at point of sale for fixed, upon	Power, Gas
	instruction for flexi and on a rolling basis for tariff customers.

However, there are three principal areas where significant variations in earnings cannot be fully mitigated through hedging:

– The impact of the weather on the volume of electricity produced from renewable sources;

– The impact of operational matters such as unplanned outages; and

– The ability of flexible thermal power stations to earn extrinsic income by providing services to the electricity system and by responding

to shorter-term electricity market conditions.

Hedging is carried out by each asset class trading internally with SSE Energy Markets to effect these hedges and SSE Energy Markets then

trading onwards with external counterparties and markets. SSE Energy Markets is only able to accept internal trades when there is sufficient

liquidity to offset them in the external market or they can be offset with internal trades from other asset classes. In this way, the commodity

risks to which SSE Energy Markets is individually exposed, are minimised.

The volumetric extent to which assets are hedged are reported monthly to the Group Energy Markets Exposures Risk Committee, and to

the Energy Markets Risk Committee (‘EMRC’) on at least a quarterly basis. Variations to the hedging approach above will be required as

markets and other factors (such as asset disposals) change. The EMRC also receives reporting on credit risk, other risk measures, and

market liquidity in assessing whether any variations to the hedging approach are required.

The Group measures and manages the Commodity Risk associated with the financial and non-financial commodity contracts it is exposed

to. However, within the Group’s financial statements only certain commodity contracts are designated as financial instruments under IFRS

9. As a result, it is only the fair value of those IFRS 9 financial instruments which represents the exposure of the Group’s commodity price

risk under IFRS 7. This is a consequence of the Group’s accounting policy which stipulates that commodity contracts which are designated

as financial instruments under IFRS 9 should be accounted for on a fair value basis with changes in fair value reflected in profit or equity.

Conversely, commodity contracts that are not designated as financial instruments under IFRS 9 will be accounted for as ‘own use’

contracts. As fair value changes in own use contracts are not reflected through profit or equity, these do not represent the IFRS 7

commodity price risk. Furthermore, other physical contracts can be treated as the hedging instrument in documented cash flow hedging

relationships where the hedged item is the forecast future purchase requirement to meet production or customer demand. The accounting

policies associated with financial instruments are explained in the Accompanying Information section A1

Sensitivity analysis

The Group’s exposure to commodity price risk according to IFRS 7 is measured by reference to the Group’s IFRS 9 commodity contracts.

IFRS 7 requires disclosure of a sensitivity analysis for market risks that is intended to illustrate the sensitivity of the Group’s financial position

and performance to changes in market variables impacting upon the fair value or cash flows associated with the Group’s financial

instruments.

Therefore, the sensitivity analysis provided discloses the effect on profit or loss and equity at the balance sheet date assuming that a

reasonably possible change in the relevant commodity price had occurred and been applied to the risk exposures in existence at that date.

The reasonably possible changes in commodity prices used in the sensitivity analysis were determined based on calculated or implied

volatilities where available, or historical data.

ACCOMPANYING INFORMATION – CONTINUED

303SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

The sensitivity analysis has been calculated on the basis that the proportion of commodity contracts that are IFRS 9 financial instruments

remains consistent with those at that point. Excluded from this analysis are all commodity contracts that are not financial instruments

under IFRS 9.

		2024		2023
		Reasonably		Reasonably
		possible		possible
		increase/		increase/
		decrease in		decrease in
	Base Price	variable	Base Price	variable
Commodity prices
UK gas (p/therm)	91	+73/-54	113	+90/-71
UK power (£/MWh)	72	+43/-34	149	+89/-72
UK carbon (£/tonne)	37	+31/-22	74	+54/-39
EU emissions (€/tonne)	40	+20/-16	98	+69/-54
UK oil (US$/bbl)	–	–	597	+290/-244
IRL power (€/MWh)	106	+86/-63	172	+138/-108
EU power (€/MWh)	24	+12/-10	–	–

(i)

(i) The base price represents the weighted average forward market price over the duration of the active market curve used to calculate the sensitivity analysis. The reasonably

possible increase/decrease in market prices has been determined via SSE Energy Markets price model simulations and the volatility assumptions of the model have been calibrated

from a look-back analysis over the previous 12 month period.

The impacts of reasonably possible changes in commodity prices on profit after taxation based on the rationale described are as follows:

	2024
	Impact on	2023
	profit and	Impact on profit
	equity	and equity
Incremental profit/(loss)	(£m)	(£m)
Commodity prices combined – increase	(7.1)	399.3
Commodity prices combined – decrease	(0.4)	(306.3)

The sensitivity analysis provided is hypothetical and is based on the exposure to energy-related commodities, and their corresponding

valuation under IFRS 9, that the Group has at each period end. This analysis should be used with caution as the impacts disclosed are not

necessarily indicative of the actual impacts that would be experienced given it does not consider all interrelationships, consequences and

effects of such a change in those prices.

A6.5. Currency risk

The Group publishes its consolidated financial statements in Sterling but also conducts business in foreign currencies. As a result, it is

subject to foreign currency exchange risk arising from exchange rate movements which will be reflected in the Group’s transaction costs or

in the underlying foreign currency assets of its foreign operations.

The Group’s policy is to use forward contracts, swaps and options to manage its exposures to foreign exchange risk. All such exposures are

transactional in nature, and relate primarily to procurement contracts, commodity purchasing and related freight requirements, commodity

hedging, long term plant servicing and maintenance agreements and the purchase and sale of carbon emission certificates. The policy is to

seek to hedge 100% of its currency requirements arising under all committed contracts excepting commodity hedge transactions, the

requirements for which are significantly less predictable. The policy for these latter transactions is to assess the Group’s requirements on a

rolling basis and to enter into cover contracts as appropriate.

The Group has foreign operations with significant Euro-denominated and JPY-denominated net assets. The Group’s policy is to hedge its

net investment in its foreign operations by ensuring the net assets whose functional currency cash flows are denominated in foreign

currencies are matched by borrowings in the same currency. For SSE Pacifico, whose functional currency is JPY but which presently has

limited capital commitments, SSE has no JPY denominated borrowings and hence has no current net investment hedge. For the acquired

net assets whose functional cash flows are in Sterling, the Group will ensure Sterling denominated borrowings are in place to minimise

currency risk.

Significant exposures are reported to, and discussed by, the Tax and Treasury Committee on an ongoing basis and additionally form part of

the bi-annual Treasury report to the Audit Committee.

At the balance sheet date, the total nominal value of outstanding forward foreign exchange contracts that the Group has committed to is:

	2024	2023
	£m	£m
Forward foreign exchange contracts	3,197.1	2,516.5

304 SSE plc Annual Report 2024

A6. Financial risk management continued

A6.5. Currency risk continued

The Group’s exposure to foreign currency risk was as follows:

			2024				2023
	SEK	$	€	CNH	CHF	SEK	$	€	CNH
	(million)	(million)	(million)	(million)	(million)	(million)	(million)	(million)	(million)
Loans and borrowings	–	564.0	3,750.0	–	–	–	564.0	3,700.0	–
Purchase and commodity
contract commitments	5,344.7	10.7	1,296.1	530.0	10.4	420.9	7.9	123.9	334.2
Gross exposure	5,344.7	574.7	5,046.1	530.0	10.4	420.9	571.9	3,823.9	334.2
Forward exchange/swap
contracts	5,344.7	574.7	2,671.3	530.0	10.4	420.9	571.9	2,266.1	334.2
Net exposure (in currency)	–	–	2,374.8	–	–	–	–	1,557.8	–
Net exposure (in £m)	–	–	2,030.2	–	–	–	–	1,369.6	–

This represents the net exposure to foreign currencies, reported in pounds Sterling, and arising from all Group activities. All sensitivity

analysis has been prepared on the basis of the relative proportions of instruments in foreign currencies being consistent as at the balance

sheet date. This includes only monetary assets and liabilities denominated in a currency other than Sterling and excludes the translation of

the net assets of foreign operations but not the corresponding impact of the net investment hedge.

The sensitivity analysis is indicative only and it should be noted that the Group’s exposure to such market rate changes is continually

changing. The calculations are based on linear extrapolations of rate changes which may not reflect the actual result which would impact

upon the Group.

The majority of these contracts are held to limit exposure to foreign currency movements on asset procurement contracts. A 10% change

in foreign currency exchange rates would have had the following impact on profit after taxation, based on the assumptions presented

above:

	Equity		Income statement
	At	At	At	At
	31 March 2024	31 March 2023	31 March 2024	31 March 2023
	£m	£m	£m	£m
US Dollars	–	–	–	–
Euro	142.5	98.9	26.7	24.4
SEK	–	–	–	–
CHN	–	–	–	–
CHF	–	–	–	–
	142.5	98.9	26.7	24.4

The impact of a decrease in rates would be an identical reduction in the annual charge.

A6.6. Interest rate risk

Interest rate risk derives from the Group’s exposure to changes in the value of an asset or liability or future cash flows through changes in

interest rates.

The Group’s policy is to manage this risk by stipulating that a minimum of 50% of Group borrowings be subject to fixed rates of interest,

either directly through the debt instruments themselves or through the use of derivative financial instruments. The floating rate borrowings

are provided by banks including the European Investment Bank (EIB). Such instruments include interest rate swaps and options, forward

rate agreements and, in the case of debt raised in currencies other than Sterling, cross currency swaps. These practices serve to reduce the

volatility of the Group’s financial performance.

Although interest rate derivatives are primarily used to hedge risk relating to current borrowings, under certain circumstances they may also

be used to hedge future borrowings. Any such pre-hedging is unwound at the time of pricing the underlying debt, either through cash

settlement on a net present value basis or by transacting offsetting trades. The floating rate borrowings mainly comprise cash advances

from the European Investment Bank (EIB), however the Group is currently carrying a surplus cash position of £1,035.9m (2023: £891.8m).

ACCOMPANYING INFORMATION – CONTINUED

305SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

The impact of a change in interest rates is dependent on the specific details of the financial asset or liability in question. Changes in fixed

rate financial assets and liabilities, which account for the majority of cash, loans and borrowings, are not measured at fair value through the

income statement. In addition to this, changes to fixed-to-floating hedging instruments which are recorded under cash flow hedge

accounting also do not impact the income statement. Changes in hedged items and hedging instruments recorded under fair value hedge

accounting are recorded through the income statement. The exposure measured is therefore based on variable rate debt and instruments.

The net exposure to interest rates at the balance sheet date can be summarised thus:

	2024	2023
	Carrying	Carrying
	amount	amount
	£m	£m
Interest bearing/earning assets and liabilities:
– fixed	(8,766.1)	(8,473.9)
– floating	685.5	441.0
	(8,080.6)	(8,032.9)
Represented by:
Cash and cash equivalents	1,035.9	891.8
Derivative financial liabilities	17.2	135.2
Loans and borrowings	(8,726.2)	(8,654.0)
Lease liabilities	(407.5)	(405.9)
	(8,080.6)	(8,032.9)

Following from this, the table below represents the expected impact of a change of 100 basis points in short term interest rates at the

reporting date in relation to equity and income statement. The analysis assumes that all other variables, in particular foreign currency rates,

remain constant. An increase in exchange rates would be a change to either the income statement or equity. The assessment is based on a

revision of the fair value assumptions included in the calculated exposures in the previous table.

All sensitivity analysis has been prepared on the basis of the proportion of fixed to floating instruments being consistent as at the balance

sheet date and is stated after the effect of taxation.

The sensitivity analysis is indicative only and it should be noted that the Group’s exposure to such market rate changes is continually

changing. The calculations are based on linear extrapolations of rate changes which may not reflect the actual result which would impact

upon the Group.

	2024	2023
	£m	£m
Income statement	2.6	3.7

The impact of a decrease in rates would be an equal reduction in the annual charge. There is no impact on equity as the analysis relates to

the Group’s net exposure at the balance sheet date. Contracts qualifying for hedge accounting are, by definition, part of the Group’s

covered position.

306 SSE plc Annual Report 2024

A7. Fair value of financial instruments

A7.1. Fair value of financial instruments within the Group

The fair values of the primary financial assets and liabilities of the Group together with their carrying values are as follows:

	2024	2024	2024	2024	2023	2023	2023	2023
						FVTPL/	Total
	Amortised	FVTPL/	Total carrying	Fair	Amortised	FVTOCI	carrying value	Fair
	cost	FVTOCI	value	value	cost	£m	£m	value
	£m	£m	£m	£m	£m	(restated*)	(restated*)	£m (restated*)
Financial assets
Current
Trade receivables	1,305.5	–	1,305.5	1,305.5	1,404.0	–	1,404.0	1,404.0
Other receivables	4.1	–	4.1	4.1	12.7	–	12.7	12.7
Cash collateral and other short term loans	9.3	–	9.3	9.3	316.3	–	316.3	316.3
Cash and cash
equivalents	1,035.9	–	1,035.9	1,035.9	891.8	–	891.8	891.8
Derivative financial assets	–	536.1	536.1	536.1	–	759.2	759.2	759.2
	2,354.8	536.1	2,890.9	2,890.9	2,624.8	759.2	3,384.0	3,384.0
Non-current
Unquoted equity
investments	–	3.2	3.2	3.2	–	27.4	27.4	27.4
Loan note receivable	170.1	–	170.1	170.1	149.5	–	149.5	149.5
Loans to associates and jointly controlled
entities	1,352.9	–	1,352.9	1,352.9	1,114.6	–	1,114.6	1,114.6
Derivative financial assets	–	64.2	64.2	64.2	–	246.0	246.0	246.0
	1,523.0	67.4	1,590.4	1,590.4	1,264.1	273.4	1,537.5	1,537.5
	3,877.8	603.5	4,481.3	4,481.3	3,888.9	1,032.6	4,921.5	4,921.5
Financial liabilities
Current
Trade payables	(656.7)	–	(656.7)	(656.7)	(694.6)	–	(694.6)	(694.6)
Outstanding liquid funds	(362.5)	–	(362.5)	(362.5)	–	–	–	–
Loans and borrowings	(1,044.5)	–	(1,044.5)	(1,113.6)	(1,738.5)	–	(1,738.5)	(1,747.8)
Lease liabilities	(83.5)	–	(83.5)	(83.5)	(82.1)	–	(82.1)	(82.1)
Financial guarantee
liabilities	–	(3.1)	(3.1)	(3.1)	–	(4.4)	(4.4)	(4.4)
Derivative financial
liabilities	–	(345.2)	(345.2)	(345.2)	–	(1,021.0)	(1,021.0)	(1,021.0)
	(2,147.2)	(348.3)	(2,495.5)	(2,564.6)	(2,515.2)	(1,025.4)	(3,540.6)	(3,549.9)
Non-current
Loans and borrowings	(7,680.8)	(0.9)	(7,681 .7)	(7,440.6)	(6,760.9)	(154.6)	(6,915.5)	(6,458.4)
Lease liabilities	(324.0)	–	(324.0)	(324.0)	(323.8)	–	(323.8)	(323.8)
Financial guarantee
liabilities	–	(36.4)	(36.4)	(36.4)	–	(66.5)	(66.5)	(66.5)
Derivative financial
liabilities	–	(222.2)	(222.2)	(222.2)	–	(243.3)	(243.3)	(243.3)
	(8,004.8)	(259.5)	(8,264.3)	(8,023.2)	(7,084.7)	(464.4)	(7,549.1)	(7,092.0)
	(10,152.0)	(607.8)	(10,759.8)	(10,587.8)	(9,599.9)	(1,489.8)	(11,089.7)	(10,641.9)
Net financial liabilities	(6,274.2)	(4.3)	(6,278.5)	(6,106.5)	(5,711.0)	(457.2)	(6,168.2)	(5,720.4)

(i)

(ii)

(i)

(ii)

* The comparative information has been restated. See notes 1.2 and 2.1.

(i) Financial assets and liabilities that are measured at amortised cost.

(ii) Financial assets and liabilities that are measured at either Fair Value through Profit and Loss (Derivative Financial Assets and Liabilities) or Fair Value through Other Comprehensive

Income (Unquoted Equity Investments)

ACCOMPANYING INFORMATION – CONTINUED

307SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

A7.1.1. Basis of determining fair value

Certain assets and liabilities have been classified and carried at amortised cost on inception in line with IFRS 9 criteria. The carrying value

of these assets are approximately equivalent to fair value due to short term maturity aside from loans and borrowings which are subject to

longer maturity dates.

All other financial assets and liabilities are measured at either Fair Value through Profit and Loss (‘FVTPL’) or Fair Value through Other

Comprehensive Income (‘FVTOCI’). Fair values for energy derivatives are based on unadjusted quoted market prices, where actively traded.

For energy derivatives that are not actively traded, interest rate instruments, foreign currency hedge contracts and cross currency swap

contracts associated with foreign currency denominated long-term fixed rate debt, the fair values are determined by reference to closing

rate market prices for similar instruments. Fair values for unquoted equity instruments are derived from venture capital or growth equity

firm valuation statements. Fair values for financial guarantee contracts are equal to the premium or fee received/charged.

The fair values are stated at a specific date and may be different from the amounts which will actually be paid or received on settlement of

the instruments. The fair value of items such as property, plant and equipment, internally generated brands or the Group’s customer base

are not included as these are not considered financial instruments.

A7.2. Fair value hierarchy

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped

into Levels 1 to 3 based on the degree to which the fair value is observable.

– Level 1 fair value measurements are those derived from unadjusted quoted market prices for identical assets or liabilities.

– Level 2 fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for

the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices)

– Level 3 fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are not

based on observable market data.

	2024	2024	2024	2024
	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
Financial assets
Energy derivatives	357.7	121.6	0.5	479.8
Interest rate derivatives	–	113.0	–	113.0
Foreign exchange derivatives	–	7.5	–	7.5
Unquoted equity investments	–	–	3.2	3.2
	357.7	242.1	3.7	603.5
Financial liabilities
Energy derivatives	–	(327. 1)	(101.3)	(428.4)
Interest rate derivatives	–	(95.8)	–	(95.8)
Foreign exchange derivatives	–	(43.2)	–	(43.2)
Loans and borrowings	–	(0.9)	–	(0.9)
	–	(467.0)	(101.3)	(568.3)

The table above excludes financial guarantee liabilities measured in accordance with IFRS 17. There were no significant transfers out of

Level 1 into Level 2 and out of Level 2 into Level 1 during the year ended 31 March 2024. There were no significant transfers out of Level 2

into Level 3 or out of Level 3 into Level 2 during the year ended 31 March 2024.

In December 2023, the Group entered into an additional Affiliate Contract for Difference (“ACfD”) agreement with Seagreen Wind Energy

Limited (“SWEL”) with a 5 year term. SWEL is a wholly owned subsidiary of Seagreen Holdco 1 Limited, a joint venture between the Group

(49%) and TOTAL SE (51%) and TOTAL SE entered into a equivalent ACfD with SWEL on the same day. The Group also has some smaller

commercial CfD arrangements entered into with non-government third parties that are also classified as derivatives. The ACfD and the

commercial CfDs meet the definition of financial instruments and are classified as Level 3 on the fair value hierarchy due to significant

unobservable inputs in the determination of fair value.

The fair value measurement impact in the income statement attributable to Level 3 CfDs was a loss of £99.0m (2023: £1.8m). The fair value

was determined using the income approach with reference to future market prices which are beyond the liquid period in the forward market.

The non-government CfDs were issued for £nil consideration, being the deemed transaction price. The Group has calculated that the

contracts had a fair value on day 1, being the difference between the strike price per the contract and the forward market spot price. This

valuation is based on unobservable inputs and is considered judgemental. Key assumptions applied when deriving the fair value are related

to discount rates; electricity volumes; and electricity prices. In line with IFRS 9, the day 1 gain is deferred and will be recognised over the life

of the contract.

Seagreen Offshore Wind Farm reached full commercial operations during October 2023. The deferred day 1 fair value across all Seagreen

contracts commenced amortisation in December 2023 with a £7.4m deferred measurement gain recognised during the year.

308 SSE plc Annual Report 2024

A7. Fair value of financial instruments continued

A7.2. Fair value hierarchy continued

The following table represents the difference between the Level 3 financial instruments at fair value at the start of the reporting period and

at the reporting date:

	£m
Level 3 financial instrument fair value as at 31 March 2022	8.7
Additions (cash contributions)	19.1
Remeasurement loss recognised in income statement	(1.8)
Remeasurement loss recognised in other comprehensive income	(0.4)
Additions – new instruments entered in the year	400.1
Deferred day 1 gains on instruments entered in the year	(400.1)
Level 3 financial instrument fair value as at 31 March 2023	25.6
Additions (cash contributions)
Transfer from financial assets (note 1.2)	(24.1 )
Cash settlement	(0.4)
Disposals in year	(0.4)
Remeasurement loss recognised in income statement	(106.0)
Remeasurement loss recognised in other comprehensive income	0.3
Additions – new instruments entered in the year	11.5
Deferred day 1 gains on instruments entered in the year	(11.5)
Amortisation of day 1 gains in the year	7.4
Level 3 financial instrument fair value as at 31 March 2024	(97.6)

The following table details the valuation technique, significant unobservable inputs and the range of values for the energy derivatives

measured at fair value on a recurring basis and classified as Level 3.

				Market price range
	Carrying value (net)	Valuation	Significant	(min-max)
	£m	technique	unobservable input	£/MwH
			Electricity prices,
31 March 2024	100.8	Discounted cash flow	Generation volumes	53 – 147
			Electricity prices,
31 March 2023	1.8	Discounted cash flow	Generation volumes	68 – 147

Deferred measurement differences

	£m
Deferred measurement difference as at 31 March 2022	–
Deferred measurement difference arising during the year on new instruments	400.1
Deferred measurement difference as at 31 March 2023	400.1
Deferred measurement difference adjustment in the year	9.3
Deferred measurement difference arising during the year on new instruments	11.5
Deferred measurement difference recognised during the year	(7.4)
Deferred measurement difference as at 31 March 2024	413.5

The following table shows the impact on the fair value of the Level 3 energy derivatives when applying reasonably possible alternative

assumptions to the valuation obtained using the discounted cash flow model.

		At 31 March 2024		At 31 March 2023
		Effect on fair		Effect on fair
		value of		value of
		deferred		deferred
	Increase/	measurement	Increase/	measurement
	decrease in	differences	decrease in	differences
Assumption	assumption	£m	assumption	£m
Discount rate	+1%/-1%	22.2/(19.9)	+1%/-1%	(29.5)/35.3
Volumes	+10%/-10%	29.3/(31.3)	+10%/-10%	39.8/(39.8)
Prices	+10%/-10%	135.7/(135.7)	+10%/-10%	108.7/(108.7)

ACCOMPANYING INFORMATION – CONTINUED

309SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

The following table provides an analysis of financial instruments that are measured subsequent to initial recognition at fair value, grouped

into Levels 1 to 3 based on the degree to which the fair value is observable for the year ended 31 March 2023.

	2023	2023	2023	2023
	Level 1	Level 2	Level 3	Total
	£m	£m	£m	£m
Financial assets
Energy derivatives	–	743.9	22.0	765.9
Interest rate derivatives	–	227.8	–	227.8
Foreign exchange derivatives	–	11.5	–	11.5
Unquoted equity investments	–	–	27.4	27.4
	–	983.2	49.4	1,032.6
Financial liabilities
Energy derivatives	(189.6)	(939.4)	(23.8)	(1,152.8)
Interest rate derivatives	–	(92.6)	–	(92.6)
Foreign exchange derivatives	–	(18.9)	–	(18.9)
Loans and borrowings	–	(154.6)	–	(154.6)
	(189.6)	(1,205.5)	(23.8)	(1,418.9)

There were no significant transfers out of Level 1 into Level 2 and out of Level 2 into Level 1 during the year ended 31 March 2023.

A8. Hedge accounting

A8.1. Cash flow hedges

The Group designates contracts which qualify as hedges for accounting purposes either as cash flow hedges or fair value hedges. Cash

flow hedges are contracts entered into to hedge a forecast transaction or cash flow risk generally arising from a change in interest rates or

foreign currency exchange rates and which meet the effectiveness criteria prescribed by IFRS 9. The Group’s accounting policy on cash

flow hedges is explained in the Accompanying Information section A1 .

The following table indicates the contractual maturities of the expected transactions and the qualifying cash flow hedges associated.

Non-Sterling denominated contractual cash flows have been converted at the forward foreign exchange rate.

	2024	2024	2024	2024	2024	2024	2023	2023	2023	2023	2023	2023
	Carrying	Expected	0 – 12	1–2	2–5	> 5	Carrying	Expected	0 – 12	1–2	2–5	> 5
	amount	cash flows	months	years	years	years	amount	cash flows	months	years	years	years
Cash flow hedges	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m	£m
Interest rate swaps:
Assets	19.7	21.4	7.3	5.3	8.8	–	25.2	28.1	6.5	5.5	15.8	0.3
Liabilities	–	–	–	–	–	–	–	–	–	–	–	–
	19.7	21.4	7. 3	5.3	8.8	–	25.2	28.1	6.5	5.5	15.8	0.3
Cross currency swaps:
Assets	71.7	72.4	51.4	1.5	19.5	–	178.9	194.0	110.1	56.0	27.9	–
Liabilities	(57.4)	(57.6)	(19.3)	(23.3)	(30.6)	15.6	(37.4)	(30.3)	(17.8)	(17.6)	(10.6)	15.7
	14.3	14.8	32.1	(21.8)	(11.1)	15.6	141.5	163.7	92.3	38.4	17.3	15.7
Forward foreign exchange contracts:
Assets	0.5	35.0	34.6	0.4	–	–	2.4	(120.4)	(106.9)	(11.7)	(1.8)	–
Liabilities	(30.5)	(1,340.9)	(557.7)	(99.8)	(647.6)	(35.8)	(11.5)	(337.7)	(292.0)	(42.3)	(3.4)	–
	(30.0)	(1,305.9)	(523.1)	(99.4)	(647.6)	(35.8)	(9.1)	(458.1)	(398.9)	(54.0)	(5.2)	–

A8.2. Net investment hedge

The Group’s net investment hedge consists of debt issued in the same currency (€) as the net investment in foreign subsidiaries with €

denominated functional currencies being the Airtricity Supply business, the thermal plants in Ireland and wind farms in Ireland and

Southern Europe. The hedge compares the element of the net assets whose functional cash flows are denominated in € to the matching

portion of the € borrowings held by the Group. This therefore provides protection against movements in foreign exchange rates. There is

no net investment hedge in relation to SSE Pacifico as the Group has no JPY denominated debt.

Gains and losses in the hedge are recognised in equity and will be transferred to the income statement on disposal of the foreign operation

(2024: £30.9m gain, 2023: £43.1m loss). Gains and losses on the ineffective portion of the hedge are recognised immediately in the income

statement (2024:£nil, 2023: £nil).

310 SSE plc Annual Report 2024

Note

2024

£m

2023

£m

(restated*)

Assets

Equity investments in joint ventures and associates 3 34.6 50.4

Loans to joint ventures and associates 3 69.8 81.6

Investments in subsidiaries 4 1,963.6 1,958.1

Trade and other receivables 5 10,948.8 11,382.6

Derivative financial assets 11 35.7 48.2

Retirement benefit assets 10 339.3 366.6

Non-current assets 13,391.8 13,887.5

Trade and other receivables 5 1,056.1 1,002.1

Current tax asset 7 – 1.4

Cash and cash equivalents 8 796.9 788.9

Derivative financial assets 11 67.3 167.1

Current assets 1,920.3 1,959.5

Total assets 15,312.1 15,847.0

Liabilities

Loans and other borrowings 8 1,044.5 1,588.5

Trade and other payables 6 2 ,827. 2 2,667.1

Current tax liability 7 26.3 –

Financial guarantee liabilities 12 9.3 12.2

Provisions 14 19.7 5.3

Derivative financial liabilities 11 32.7 13.5

Current liabilities 3,959.7 4,286.6

Loans and other borrowings 8 4,561.7 4,307.8

Deferred tax liabilities 7 82.5 78.3

Financial guarantee liabilities 12 107.3 125.4

Provisions 14 200.0 196.5

Derivative financial liabilities 11 64.1 79.2

Non-current liabilities 5,015.6 4,787.2

Total liabilities 8,975.3 9,073.8

Net assets 6,336.8 6,773.2

Equity:

Share capital 9 548.1 547.0

Share premium 820.1 821.2

Capital redemption reserve 52.6 52.6

Hedge reserve 17.0 (3.0)

Retained earnings 3,016.6 3,473.0

Equity attributable to ordinary shareholders of the parent 4,454.4 4,890.8

Hybrid equity 9 1,882.4 1,882.4

Total equity 6,336.8 6,773.2

Result for the year

The profit for the year attributable to ordinary shareholders dealt with in the financial statements of the Company was £554.6m

(2023:£2,006.4m restated) including dividends received from subsidiaries of £992.6m (2023: £1,669.7m).

* The comparative Company balance sheet and result for the prior year have been restated. See note 1.2.

These financial statements were approved by the Board of Directors on 21 May 2024 and signed on their behalf by

Barry O’Regan Sir John Manzoni

Chief Financial Officer Chairman

SSE plc

Registered No: SC117119

COMPANY BALANCE SHEET

AS AT 31 MARCH 2024

311SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Statement of changes in equity

capital

£m

premium

account

£m

Capital

redemption

reserve

£m

Hedge

reserve

£m

Retained

earnings

£m

Total

attributable

to ordinary

shareholders

£m

Hybrid

Capital

£m

Total

£m

At 1 April 2023 (restated

) 547.0 821.2 52.6 (3.0) 3,473.0 4,890.8 1,882.4 6,773.2

Profit for the year – – – – 481.5 481.5 73.1 554.6

Other comprehensive

income – – – 20.0 (27.7) (7.7) – (7.7)

Total comprehensive

income for the year – – – 20.0 453.8 473.8 73.1 546.9

Dividends to shareholders – – – – (956.4) (956.4) – (956.4)

Scrip dividend related

shareissue 1.1 (1.1) – – 38.6 38.6 – 38.6

Issue of treasury shares – – – – 9.2 9.2 – 9.2

Distributions to Hybrid

equity holders – – – – – – (73.1) (73.1)

Credit in respect of

employee share awards – – – – 20.2 20.2 – 20.2

Investment in own shares

(i)

– – – – (21.8) (21.8) – (21.8)

At 31 March 2024 548.1 820.1 52.6 17.0 3,016.6 4,454.4 1,882.4 6,336.8

capital

£m

premium

account

£m

Capital

redemption

reserve

£m

Hedge

reserve

£m

Retained

earnings

£m

Total

attributable

to ordinary

shareholders

£m

Hybrid

Capital

£m

Total

£m

At 1 April 2022 536.5 835.1 49.2 13.3 2,278.3 3,712.4 1,051.0 4,763.4

Impact of adoption of

IFRS17 (see note 1.2) – – – – (90.6) (90.6) – (90.6)

At 1 April 2022 (adjusted) 536.5 835.1 49.2 13.3 2,187.7 3,621.8 1,051.0 4,672.8

Profit for the year – – – – 1,967.6 1,967.6 38.8 2,006.4

Other comprehensive

income – – – (16.3) (113.7) (130.0) – (130.0)

Total comprehensive

income for the year – – – (16.3) 1,853.9 1,837.6 38.8 1,876.4

Dividends to shareholders – – – – (955.8) (955.8) – (955.8)

Scrip dividend related

shareissue 13.9 (13.9) – – 481.5 481.5 – 481.5

Issue of treasury shares – – – – 18.0 18.0 – 18.0

Distributions to Hybrid

equity holders – – – – – – (38.8) (38.8)

Issue of Hybrid – – – – – – 831.4 831.4

Share buy back – – – – (107.6) (107.6) – (107.6)

Credit in respect of

employee share awards – – – – 18.7 18.7 – 18.7

Investment in own shares

(i)

(3.4) – 3.4 – (23.4) (23.4) – (23.4)

At 31 March 2023

(restated

) 547.0 821.2 52.6 (3.0) 3,473.0 4,890.8 1,882.4 6,773.2

(i) Investment in own shares is the purchase of own shares less the settlement of Treasury shares for sharesave schemes.

* The comparative Company statement of changes in equity has been restated. See note 1.2.

COMPANY STATEMENT OF CHANGES IN EQUITY

FOR THE YEAR ENDED 31 MARCH 2024

312 SSE plc Annual Report 2024

1. Principal accounting policies

1.1. General information

SSE plc (the Company) is a company domiciled in Scotland. The address of the registered office is given on the back cover. The Company

financial statements present information about the Company as a separate entity and not about the Group.

1.2. Basis of preparation

The financial statements have been prepared in accordance with United Kingdom Generally Accepted Accounting Practice (United

Kingdom Accounting Standards and applicable law) including Financial Reporting Standard 101, “Reduced Disclosure Framework”.

Under section 408 of the Companies Act 2006 the Company is exempt from the requirement to present its own income statement and

related notes.

It has also taken advantage of the following disclosure exemptions available under FRS 101.

– A Cash flow statement and related notes;

– Related party disclosures;

– Disclosures in respect of capital management; and

– The effects of new but not yet effective IFRSs.

As the consolidated financial statements of SSE plc include the equivalent disclosure, the Company has also taken advantage of the

exemptions, under FRS 101, available in respect of the following disclosure:

– Certain disclosures required by IFRS 13 Fair value measurement and the disclosures required by IFRS 7 Financial instrument disclosures

The Company previously assessed that, on the basis of materiality, the disclosures required under IFRS 2 Share-based Payment should be

removed. The Company has assessed that at 31 March 2024 these disclosures continue to be immaterial to the Company’s financial

statements.

New standards, amendments and interpretations effected or adopted by the Company

On 1 April 2023, the Company adopted IFRS 17 on a modified retrospective basis from the earliest period presented in these financial

statements.

The Company provides guarantees in respect of certain activities of subsidiaries, former subsidiaries and to certain current joint venture

investments both held directly and indirectly by the Company’s subsidiaries. Prior to adoption of IFRS 17, these contracts were designated

as insurance contracts under IFRS 4, where existing accounting practices were grandfathered and the contracts were treated as contingent

liabilities until such time as it became probable the Company would be required to make payment to settle the obligation. The adoption of

IFRS 17 from 1 April 2022 resulted in a reassessment of these contracts and the Company elected to apply the valuation principles of IFRS 9

to these contracts. Adoption resulted in the recognition of financial guarantee liabilities of £140.6m; a £50.0m increase in investments; and

a £90.6m adjustment to retained earnings. In the year to 31 March 2023, the Company recognised a decrease in financial guarantee

liabilities of £3.0m; an increase in investments of £4.0m and net income statement credit of £7.0m.

During the financial year to 31 March 2024, the Company recognised a net decrease in financial guarantee liabilities of £21.0m, a reduction

in the value of its subsidiary investments of £16.6m and a net income statement credit of £4.4m.

The Company provides guarantees of £10.4bn (2023: £10.4bn) to certain subsidiaries, in order to maintain the stand-alone credit ratings

and to support licence conditions. These contracts are out of scope for IFRS 17 and IFRS 9 and are accounted for under IAS 37.

There were no other standards, amendments to standards or interpretations relevant to the Company’s operations which were adopted

during the year.

Going concern

The Directors consider that the Company has adequate resources to continue in operational existence for the foreseeable future (further

details are contained in A6

Accompanying Information of the consolidated financial statements). The financial statements are therefore

prepared on a going concern basis.

Basis of measurement

The financial statements of the Company are prepared on the historical cost basis except for derivative financial instruments and assets

of the Company pension scheme which are stated at their fair value, and liabilities of the Company pension scheme which are measured

using the projected unit credit method. The directors believe the financial statements present a true and fair view. The financial statements

of the Company are presented in pounds sterling.

Critical accounting judgements and estimation uncertainty

In the process of applying the Company’s accounting policies, management necessarily makes judgements and estimates that have a

significant effect on the amounts recognised in the financial statements. Changes in the assumptions underlying the estimates could result

in a significant impact to the financial statements. The Group’s key accounting judgement and estimation areas are noted in note 4.1 of the

consolidated financial statements, with the most significant financial judgement areas as specifically discussed by the Audit Committee

being highlighted separately. In particular, note 4.1 (ii) Retirement benefit obligations, and the related disclosures in note 23, note 4.1 (iv)

Valuation of other receivables and note 4.3 (ii) Decommissioning costs, of the consolidated financial statements are relevant to the Company.

NOTES TO THE COMPANY FINANCIAL STATEMENTS

FOR THE YEAR ENDED 31 MARCH 2024

313SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Significant accounting policies

The significant accounting policies applied in the preparation of these individual financial statements are set out below. These policies have

been applied consistently to all the years presented, unless otherwise stated.

Investments

Investments in subsidiaries are carried at cost less any impairment charges.

Interests in joint arrangements and associates

Associates are those investments over which the Company has significant influence but neither control nor joint control.

The Company’s joint ventures and associates are stated at cost less any impairment.

Applicable Group accounting policies

The following significant accounting policies are consistent with those applied for the Group consolidated financial statements:

– Equity and equity-related compensation benefits (Supplementary information A1.2

)

– Defined benefit pension scheme (Supplementary information A1.2 )

– Taxation (Supplementary information A1.2 )

– Financial instruments (Supplementary information A1.2 and A6 )

– Financial guarantee liabilities (Supplementary information A1.2 )

2. Supplementary financial information

2.1. Auditor remuneration

The amounts paid to the Company’s auditor in respect of the audit of these financial statements was £0.4m ( 2023: £0.4m).

Amounts paid to the Company’s auditor in respect of services to the Company other than the audit of the Company’s financial statements

have not been disclosed as the information is required instead to be disclosed on a consolidated basis.

2.2. Employee numbers

The average number of people employed by the Company (including Executive Directors) during the year was 3 (2023: 3).

The costs associated with the employees of the Company, who are the Executive Directors of the Group, are borne by Group companies.

No amounts are charged to the Company.

2.3. Directors’ remuneration and interests

Information concerning Directors’ remuneration, shareholdings, options, long term incentive schemes and pensions is shown in the

Remuneration Report on pages 158 to 180

. No Director had, during or at the end of the year, any material interest in any other contract

of significance in relation to the Group’s business.

3. Investments in associates and joint ventures

2024 2023

Equity

£m

Loans

£m

Total

£m

Equity

£m

Loans

£m

Total

£m

Share of net assets/cost

At 1 April 50.4 81.6 132.0 12.7 129.2 141.9

Additions 30.0 47.7 77.7 19.5 15.8 35.3

Transfers – – – 50.0 (50.0) –

Repayment of shareholder loans – (13.4) (13.4) – (13.4) (13.4)

Impairment (45.8) (46.1) (91.9) (31.8) – (31.8)

At 31 March 34.6 69.8 104.4 50.4 81.6 132.0

The impairment recognised in the year related to the equity investment in Neos Networks Limited. The transfer in the prior year related to a

Neos Network Limited debt for equity swap of £50.0m.

314 SSE plc Annual Report 2024

4. Subsidiary undertakings

Details of the Company’s subsidiary undertakings are disclosed in the Accompanying Information section (A3 ).

Investment in subsidiaries

2024

£m

2023

£m

(restated*)

At 1 April 1,958.1 1,933.6

Increase/(decrease) in existing investments

(i)

22.1 20.5

Investment (decrease)/increase in respect of financial guarantees

(ii)

(16.6) 4.0

At 31 March 1,963.6 1,958.1

(i) The overall increase in investments held by the Company primarily relates to equity shares in the Company awarded to the employees of the subsidiaries of the Group under the

Group’s share schemes, which are recognised as an increase in the cost of investment in those subsidiaries as directed by IFRIC 11 (2024: £22.1m; 2023: £20.7m (both before tax)).

(ii) The investment (decrease)/increase in respect of financial guarantees relates to £19.6m (2023: £12.0m) of unwind and expiry of guarantee contracts, less £3m (2023: £16.0m) for

the fair value of fees receivable on guarantees granted to subsidiary investments during the year.

* The comparative has been restated see note 1.2.

5. Trade and other receivables

The balances of current and non-current trade and other receivables in the current and prior financial year predominantly consists of

amounts owed by subsidiary undertakings. At 31 March 2024 the Company assessed its exposure to expected credit losses on related party

receivables under IFRS 9 and held a provision against future losses of £59.2m (2023: £137.8m).

During the year ended 31 March 2024 the Company waived £624m (2023: £nil) of intercompany funding receivables due from other SSE

Group companies, with the related charge being expensed in the income statement.

6. Trade and other payables

The balances of current trade and other payables in the current and prior financial year predominantly consists of amounts due to

subsidiary undertakings.

7. Taxation

Current tax liability/(asset)

2024

£m

2023

£m

Corporation tax liability/(asset) 26.3 (1.4)

Deferred taxation

The following are the deferred tax liabilities and assets recognised by the Company and movements thereon during the current and prior

reporting periods:

Fair value gains

/(losses)

on derivatives

£m

Retirement

benefit

obligations

£m

Other

£m

Total

£m

At 31 March 2022 (56.7) 129.4 (7.7) 65.0

Charge to income statement 50.0 0.2 – 50.2

Credit to other comprehensive income/(loss) (0.9) (38.0) – (38.9)

Charge to equity – – 2.0 2.0

At 31 March 2023 (7.6) 91.6 (5.7) 78.3

Charge to income statement 3.3 2.5 – 5.8

Charge/(credit) to other comprehensive income/(loss) 5.9 (9.3) – (3.4)

Charge to equity – – 1.8 1.8

At 31 March 2024 1.6 84.8 (3.9) 82.5

Certain deferred tax assets and liabilities have been offset, including the asset balances analysed in the tables above. The following is an

analysis of the deferred tax balances (after offset) for financial reporting purposes:

2024

£m

2023

£m

Deferred tax liabilities 86.8 92.1

Deferred tax assets (4.3) (13.8)

Net deferred tax liability 82.5 78.3

The deferred tax assets/liabilities disclosed include the deferred tax relating to the Company’s pension scheme liabilities.

NOTES TO THE COMPANY FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

315SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

8. Loans and borrowings

Current

2024

£m

2023

£m

Other short-term loans 1,044.5 1,588.5

1,044.5 1,588.5

Non-current

Loans 4,561.7 4,307.8

4,561.7 4, 307.8

Total loans and borrowings 5,606.2 5,896.3

Cash and cash equivalents (796.9) (788.9)

Unadjusted Net Debt 4,809.3 5,107.4

Add:

Hybrid equity (note 9) 1,882.4 1,882.4

Adjusted net debt and hybrid capital 6,691.7 6,989.8

Cash and cash equivalents (which are presented as a single class of assets in the face of the balance sheet) comprise cash at bank and short

term highly liquid investments with a maturity of three months or less.

8.1. Borrowing facilities

The Company has an established €1.5bn Euro commercial paper programme (paper can be issued in a range of currencies and swapped

into Sterling) and as at 31 March 2024 there was £840m commercial paper outstanding (2023: £919m).

During the year to 31 March 2024 SSE plc issued an 8 year €750m Green Bond at a coupon of 4.0%. The bond has been left in Euros as a

net investment hedge for the Group’s Euro denominated subsidiaries. In the year, SSE plc also redeemed US Private Placement debt of

combined £155.0m and a €700m Eurobond with coupon at 1.75%.

The Company also has £2.5bn of revolving credit facilities (see note 21.3). These facilities continue to provide back-up to the commercial

paper programme and, as at 31 March 2024 these facilities were undrawn (2023: undrawn).

316 SSE plc Annual Report 2024

8. Loans and borrowings continued

8.1. Borrowing facilities continued

Analysis of borrowings

2024 2024 2024 2024 2023 2023 2023 2023

Weighted

average

interest rate

Face

value

£m

Fair

value

£m

Carrying

amount

£m

Weighted

average

interest rate

Face

value

£m

Fair

value

£m

Carrying

amount

£m

Current

Other short term loans –

non-amortising

(ii)

5.8% 852.4 855.7 840.4 4.5% 929.4 933.5 919.2

US Private Placement 28 April 2023 – – – – 2.8% 35.0 35.3 35.0

US Private Placement

6 September 2023 – – – – 2.9% 120.0 118.8 119.8

1.75% €700m Eurobond repayable

8September 2023 – – – – 1.8% 514.6 510.8 514.5

US Private Placement 16 April 2024 4.4% 204.1 257.9 204.1 – – – –

Total current borrowings 1,056.5 1,113.6 1,044.5 1,599.0 1,598.4 1,588.5

Non-current

Bank loans – non amortising

(i)

5.5% 100.0 102.5 100.0 5.3% 100.0 102.4 100.0

US Private Placement 16 April 2024 – – – – 4.4% 204.1 259.6 204.1

1.25% Eurobond repayable 16 April

2025

(iv)

1.3% 531.4 518.8 531.4 1.3% 531.4 508.3 531.4

0.875% €600m Eurobond repayable

8September 2025

(viii)

0.9% 513.0 493.0 512.2 0.9% 527.5 495.3 526.2

US Private Placement 8 June 2026 3.1% 64.0 48.7 63.6 3.1% 64.0 59.9 63.5

US Private Placement

6 September 2026 3.2% 247.1 242.1 245.6 3.2% 247.1 257.4 245.0

US Private Placement

6 September 2027 3.2% 35.0 25.9 34.7 3.2% 35.0 31.7 34.7

1.375% €650m Eurobond repayable

4September 2027

(v)(viii)

1.4% 591.4 553.7 590.7 1.4% 591.4 545.8 590.5

8.375% Eurobond repayable on

20November 2028 8.4% 500.0 573.3 498.1 – – – –

Between two and five years 2,581.9 2,558.0 2,576.3 2,300.5 2,260.4 2,295.4

8.375% Eurobond repayable on

20November 2028 – – – – 8.4% 500.0 575.0 497.6

2.875% Eurobond repayable on

1August 2029

(viii)

2.9% 555.7 543.3 554.3 2.9% 571.5 548.3 569.8

1.750% Eurobond repayable

16 April 2030

(vi)

1.8% 442.9 403.5 442.9 1.8% 442.9 388.1 442.9

6.25% Eurobond repayable on

27August 2038 6.3% 350.0 386.3 347.7 6.3% 350.0 372.0 347.5

4.00% €750m Eurobond repayable

5September 2031

(vii) (viii)

4.0% 641.2 661.7 639.6 – – – –

Over five years 1,989.8 1,994.8 1,984.5 1,864.4 1,883.4 1,857.8

Fair value adjustment

(iii)

0.9 154.6

Total non-current borrowings 4,571.7 4,552.8 4,561.7 4,164.9 4,143.8 4,307.8

Total borrowings 5,628.2 5,666.4 5,606.2 5,763.9 5,742.2 5,896.3

(i) Balances include term loans and EIB debt and is a mixture of fixed and floating rate debt.

(ii) Balances include Commercial Paper and facility advances (£840m of Commercial Paper outstanding at 31 March 2024).

(iii) The fair value adjustment relates to the change in the carrying amount of the borrowings as a result of fair value hedges that are in place. The movement in the fair value

adjustment is recognised in the income statement with a corresponding movement on the hedging instrument also being recognised in the income statement.

(iv) The 1.250% €600m Eurobond maturing 16 April 2025 has been swapped to Sterling giving an effective interest rate of 2.43%.

(v) The 1.375% €650m Eurobond maturing 4 September 2027 has been swapped to Sterling giving an effective interest rate of 2.56%.

(vi) The 1.750% €500m Eurobond maturing 16 April 2030 has been swapped to Sterling giving an effective interest rate of 2.89%.

(vii) The 4.0% €750m Eurobond maturing 5 September 2031 has been left in Euros as a net investment hedge for the Group’s Euro denominated subsidiaries.

(viii) Bonds have been issued under the Group’s Green Bond Framework.

NOTES TO THE COMPANY FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

317SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

9. Equity

Share capital

Number

(millions) £m

Allotted, called up and fully paid:

At 1 April 2022 1,073.1 536.5

Issue of shares

(i)

27.7 13.9

Share repurchases

(ii)

(6.9) (3.4)

At 31 March 2023 1,093.9 547.0

Issue of shares

(i)

2.3 1.1

At 31 March 2024 1,096.2 548.1

The Company has one class of ordinary share which carries no right to fixed income. The holders of ordinary shares are entitled to receive

dividends as declared and are entitled to one vote per share at meetings of the Company.

(i) Shareholders were able to elect to receive ordinary shares in place of the final dividend of 67.7p per ordinary share (in relation to year ended 31 March 2023) and the interim

dividend of 20.0p (in relation to the current year) under the terms of the Company’s scrip dividend scheme. This resulted in the issue of 1,779,529 and 493,654 new fully paid

ordinary shares respectively (2023: 18,241,941 and 9,413,103). In addition, the Company issued 0.8m (2023: 1.9m) shares during the year under the savings-related share option

schemes (all of which were settled by shares held in Treasury) for a consideration of £9.2m (2023: £18.0m).

(ii) Under the share buyback programme announced in the year to 31 March 2023, 6.9m of shares were repurchased and cancelled for a total consideration of £107.6m (including

stamp duty and commission). The nominal value of share capital repurchased and cancelled is transferred out of share capital and into the capital redemption reserve. The scrip

dividend take-up for the financial year ended 31 March 2023 was 18.0%, which is below the 25.0% required by the share buyback programme, therefore there have been no share

buybacks in the current financial year ended 31 March 2024.

Of the 1,096.2m shares in issue, 2.8m are held as treasury shares. These shares will be held by the Group and used to award shares to

employees under the Sharesave scheme in the UK.

During the year, on behalf of the Company, the employee share trust purchased 1.3m shares for a total consideration of £21.8m (2023:

1.4m shares, consideration of £23.4m) to be held in trust for the benefit of employee share schemes. At 31 March 2024, the trust held 6.9m

shares (2023: 6.5m) which had a market value of £113.9m (2023: £118.0m).

Capital redemption reserve

The capital redemption reserve comprises the value of shares redeemed or purchased by the Company from distributable profits.

Hedge reserve

The hedge reserve comprises the effective portion of the cumulative net change in the fair value of cash flow hedge derivative instruments

related to hedged transactions that have not yet occurred.

Hybrid equity

2024

£m

2023

£m

GBP 600m 3.74% perpetual subordinated capital securities 598.0 598.0

EUR 500m 3.125% perpetual subordinated capital securities 453.0 453.0

EUR 1,000m 4.00% perpetual subordinated capital securities 831.4 831.4

1,882.4 1,882.4

Further details regarding the hybrid equity can be found in note 22 of the Group consolidated financial statements.

318 SSE plc Annual Report 2024

10. Retirement benefit obligations

Defined benefit scheme

The Company has a funded final salary pension scheme (‘Scottish Hydro Electric Pension Scheme’) which provides defined benefits based

on final pensionable pay. The scheme is subject to an independent valuation at least every three years. The future benefit obligations are

valued by actuarial methods on the basis of an appropriate assessment of the relevant parameters.

Pension summary:

Scheme type

Net actuarial loss recognised

inrespect of the pension asset

inthe statement of

comprehensiveincome Net pension asset

2024

£m

2023

£m

2024

£m

2023

£m

Scottish Hydro Electric Defined benefit (37.1) (152.0) 339.3 366.6

Net actuarial loss (37.1) (152.0) 339.3 366.6

IFRIC 14 surplus restrictions

The value of Scottish Hydro Electric Pension Scheme assets recognised was previously impacted by the asset ceiling test which restricts the

surplus that can be recognised to assets that can be recovered through future refunds or reductions in future contributions to the schemes,

and may increase the value of scheme liabilities where there are minimum funding liabilities in relation to agreed contributions.

In 2016/17 the Group agreed with the trustees to the Scottish Hydro Electric Pension Scheme an amendment to the scheme rules to clarify

that the Company has a clear right to any surplus upon final winding up of the scheme. This amendment removes the previous restriction

on recognition of any surplus. The net pension asset of the Scottish Hydro Electric Pension Scheme at 31 March 2024 was equal to

£339.3m (2023: £366.6m).

The individual pension scheme details based on the latest formal actuarial valuations are as follows:

Scottish Hydro Electric

Latest formal actuarial valuation 31 March 2021

Valuation carried out by Hymans Robertson

Value of assets based on valuation £2,050.5m

Value of liabilities based on valuation £1,782.2m

Valuation method adopted Projected Unit

Average salary increase RPI +0.5%

Average pension increase RPI

Value of fund assets/accrued benefits 115.1%

Other matters

On 16 June 2023 the High Court issued a ruling in respect of Virgin Media v NTL Pension Trustees II Limited (and others) calling into

question the validity of rule amendments made to defined benefit pension schemes contracted-out on a Reference Scheme Test basis

between 6 April 1997 and 5 April 2016. Amendments to these pension schemes over this time required confirmation from the Scheme

Actuary that the Reference Scheme Test would continue to be met. In the absence of such a confirmation, the Rule amendment would be

void. This ruling could have wide ranging implications for many UK pension schemes and will be subject to an Appeal in 2024.

The Trustees of the Scottish Hydro Electric Pension Scheme have not performed a detailed assessment over the impact of this ruling.

The Trustees believe it is appropriate to await the outcome of the Appeal process in 2024 before taking any further action, and the

Company supports their position. Due to the uncertainty, it is not possible to assess the potential impact of the Virgin Media High Court

ruling on the Scottish Hydro Electric Pension Scheme.

NOTES TO THE COMPANY FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

319SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

10.1. Pension scheme assumptions

The scheme has been updated to 31 March 2024 by qualified independent actuaries. The valuations have been prepared for the purposes

of meeting the requirements of IAS 19. The major assumptions used by the actuaries in the scheme were:

At 31 March

2024

At 31 March

2023

Rate of increase in pensionable salaries 3.4% 3.5%

Rate of increase in pension payments 3.1% 3.2%

Discount rate 4.8% 4.8%

Inflation rate 3.1% 3.2%

The assumptions relating to longevity underlying the pension liabilities at 31 March 2024 are based on standard actuarial mortality tables,

and include an allowance for future improvements in longevity. The assumptions, equivalent to future longevity for members in normal

health at age 65, are as follows:

At 31 March

2024

Male

At 31 March

2024

Female

At 31 March

2023

Male

At 31 March

2023

Female

Currently aged 65 22 24 22 24

Currently aged 45 24 26 24 26

The impact on the scheme’s liabilities of changing certain of the major assumptions is as follows:

At 31 March 2024 At 31 March 2023

Increase/

decrease in

assumption

Effect on

scheme

liabilities

Increase/

decrease in

assumption

Effect on

scheme

liabilities

Rate of increase in pensionable salaries 0.1% +/-0.1% 0.1% +/-0.1%

Rate of increase in pension payments 0.1% +/-0.7% 0.1% +/-0.7%

Discount rate 0.1% +/-0.7% 0.1% +/-0.7%

Longevity 1 year +/-2.0% 1 year +/-1.9%

These assumptions are considered to have the most significant impact on the scheme valuations.

Asset buy-in

On 1 October 2019, the Scottish Hydro Electric Pension Scheme entered into an asset buy-in, transferring the risk of volatility in the

assumptions used to calculate the obligation for 1,800 pensioners and 567 dependents (covering c£800m of the scheme’s funding

liabilities) to a third party. The asset buy-in is valued under the accounting principles of IFRS 13 and is considered a Level 3 instrument in the

fair value hierarchy. This is in addition to a previous buy-in completed during the year ended 31 March 2018 when c£250m of the scheme’s

assets and liabilities related to 617 pensioners and 190 dependents were transferred to a third party. The Company has now insured against

volatility in obligations related to all pensioners to third parties (insurer PIC) and is now only exposed to valuation fluctuations related to

active and deferred members.

10.2. Valuation of pension scheme

Quoted

£m

Unquoted

£m

Value at

31 March 2024

£m

Quoted

£m

Unquoted

£m

Value at

31 March 2023

£m

Equities 30.7 – 30.7 34.3 – 34.3

Government bonds 333.5 – 333.5 441.8 – 441.8

Insurance contracts – 500.3 500.3 – 532.4 532.4

Other investments 464.1 – 464.1 381.0 – 381.0

Total fair value of plan assets 828.3 500.3 1,328.6 857.1 532.4 1,389.5

Present value of defined benefit obligation (989.3) (1,022.9)

Surplus in the scheme 339.3 366.6

Deferred tax thereon

(i)

(84.8) (91.7)

Net pension asset 254.5 274.9

(i) Deferred tax is recognised at 25% (2023: 25%) on the surplus

320 SSE plc Annual Report 2024

10. Retirement benefit obligations continued

10.3. Movements in the defined benefit assets and obligations during the year:

2024 2023

Assets

£m

Obligations

£m

Total

£m

Assets

£m

Obligations

£m

Total

£m

At 1 April 1,389.5 (1,022.9) 366.6 1,921.0 (1,403.5) 517.5



Included in income statement

Current service cost – (7.3) (7. 3) – (11.1) (11.1)

Past service cost – (1.4) (1.4) – (2.8) (2.8)

Interest income/(cost) 64.7 (47. 2) 17.5 51.0 (37.0) 14.0

 64.7 (55.9) 8.8 51.0 (50.9) 0.1



Included in other comprehensive income

Actuarial (loss)/gain arising from:

Demographic assumptions – 13.4 13.4 – 23.3 23.3

Financial assumptions – 14.1 14.1 – 416.9 416.9

Experience assumptions – 3.7 3.7 – (74.2) (74.2)

Return on plan assets excluding interest income (68.3) – (68.3) (518.0) – (518.0)

 (68.3) 31.2 (37.1) (518.0) 366.0 (152.0)



Other

Contributions paid by the employer 1.0 – 1.0 1.0 – 1.0

Benefits paid (58.3) 58.3 – (65.5) 65.5 –

 (57.3) 58.3 1.0 (64.5) 65.5 1.0

Balance at 31 March 1,328.6 (989.3) 339.3 1,389.5 (1,022.9) 366.6

10.4. Pension scheme contributions and costs

Charges/(credits) recognised:

2024

£m

2023

£m

Current service cost (charged to operating profit) 7.3 11.1

Past service cost 1.4 2.8

8.7 13.9

Charged/(credited) to finance costs:

Interest from pension scheme assets (64.7) (51.0)

Interest on pension scheme liabilities 47.2 37.0

(17.5) (14.0)

The return on pension scheme assets is as follows:

2024

£m

2023

£m

Return on pension scheme assets (3.6) (467.0)

Unfunded Unapproved Retirement Benefit Scheme (“UURBS”) pension costs

The decrease in the year in relation to UURBS was £6.1m (2023: decrease of £8.9m). This is included in other provisions.

Further discussion of the pension scheme assets, liabilities, polices, risk and strategy can be found in note 23 of the Group consolidated

financial statements.

11. Financial instruments

For financial reporting purposes, the Company has classified derivative financial instruments as financing derivatives. Financing derivatives

include all fair value and cash flow interest rate hedges, non-hedge accounted (mark-to-market) interest rate derivatives, cash flow foreign

exchange hedges and non-hedge accounted foreign exchange contracts. Non-hedge accounted contracts are treated as held for trading.

NOTES TO THE COMPANY FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

321SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

The derivative financial assets and liabilities are represented as follows:

2024

£m

2023

£m

Derivative Assets

Non-current 35.7 48.2

Current 67.3 167.1

Total derivative assets 103.0 215.3

Derivative Liabilities

Non-current (64.1) (79.2)

Current (32.7) (13.5)

Total derivative liabilities (96.8) (92.7)

Net asset/(liability) 6.2 122.6

Information on the Group’s Financial risk management and the fair value of financial instruments is available at A6

and A7

12. Financial guarantee liabilities

2024

£m

2023

£m

Non-current liabilities

Financial guarantee liabilities 107.3 125.4

Current liabilities

Financial guarantee liabilities 9.3 12.2

Total financial guarantee liabilities 116.6 137.6

SSE plc has provided guarantees in respect of certain activities of subsidiaries, former subsidiaries and to certain current joint venture

investments both held directly and indirectly by the Company’s subsidiaries with carrying values as follows:

2024 2023

SSE on behalf

of subsidiary

£m

SSE on behalf

of joint

operations

and ventures

£m

SSE on behalf

of 3rd parties

£m

Total

£m

Total

£m

Financial guarantee liabilities 77.9 27.2 11.5 116.6 137.6

On 1 April 2023, the Company adopted IFRS 17 ‘Insurance Contracts’ on a modified retrospective basis from the earliest period presented in

these financial statements.

Where the Company issued financial guarantee contracts to guarantee indebtedness of the other companies within its Group, prior to

adoption of IFRS 17, the Company considered these contracts to be insurance arrangements, and accounted for them as such.

In this respect, the contracts were treated as contingent liabilities until such time as it became probable the Company would be required to

make payment to settle the obligation.

On transition to IFRS 17, the Company elected to apply IFRS 9 “Financial Instruments” to these financial guarantee contracts, as available

under the transition arrangements of the new standard and they are valued on initial recognition and subsequently measured at the higher

of the loss allowance for expected credit loss and the initial value less any income recognised.

The Company provided a new guarantee with a value of £3.3m on behalf of its joint ventures Saltend Cogeneration Company Limited and

Indian Queens Power Limited, replacing a previous guarantee with a value of £15.4m and a guarantee with a value of £5.0m on behalf of

SSE Renewables Developments (UK) Limited in relation to Seagreen Wind Energy Limited expired.

Additionally, the Company continues to provide a guarantee to Group Trustee Independent Trustees in respect of SSE Southern Group of

the Electricity Supply Pension Scheme in respect of funding required by the scheme.

On behalf of Scottish Hydro Electric Transmission plc, SSE plc continues to provide a guarantee to ABB Limited in connection with the use

of HVDC Replica Control Panels for Caithness-Moray Project.

On behalf of SSE Contracting Limited (which was disposed on 30 June 2021), SSE plc continues to provide a guarantee to Tay Street

Lighting (Leeds) Limited, Tay Valley Lighting (Newcastle & North Tayside) Limited and Tay Valley Lighting (Stroke on Trent) Limited in respect

of provision and maintenance of public street lighting and illuminated traffic signage. Furthermore, on behalf of SSE E&P (UK) Limited,

previously a wholly owned subsidiary of the Company, now owned by a third party, SSE plc has provided the following 3 guarantees: a

guarantee to Hess Limited in respect of decommissioning liabilities, a guarantee to Britoil Limited and Arco British Limited in respect of the

acquisition of the Sean Field and also a guarantee to Perenco UK Limited in respect of a Sale and Purchase Agreement for the Minerva,

Apollo and Mercury Fields.

322 SSE plc Annual Report 2024

13. Commitments and contingencies

Guarantees, indemnities and other contingent liabilities

Internal guarantees

The Company has in issue perpetual and long term guarantees of £10.4bn (2023: £10.4bn) in order to maintain the stand-alone credit

ratings of certain subsidiaries and to support electricity distribution licence conditions. These guarantees are not expected to be called.

Letters of credit

The Company indemnifies letters of credit issued to the following:

2024

£m

2023

£m

UK subsidiaries and certain joint ventures 849.9 739.3

European subsidiaries and certain joint ventures 119.7 119.4

Former UK subsidiaries 189.3 22.7

1,158.9 881.4

Letters of credit in substitution of cash collateral

The Company provides standby letters of credit in substitution for cash covering initial and delivery margins for exchange traded products

and is repayable on demand. As at 31 March 2024, there were letters of credit covering £100.0m (2023: £nil) of initial and variation margins.

Subsidiaries have provided guarantees on behalf of the Company as follows:

2024

£m

2023

£m

Bank borrowings 656.0 811.6

NOTES TO THE COMPANY FINANCIAL STATEMENTS – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

323SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

14. Provisions

Decommissioning

£m

Legal and

restructuring

£m

Total

£m

At 31 March 2022 249.4 77.5 326.9

Decrease in decommissioning provision (50.5) – (50.5)

Unwind of discount 6.7 – 6.7

Released during the year – (38.3) (38.3)

Utilised during the year (4.2) (38.8) (43.0)

At 31 March 2023 201.4 0.4 201.8

Increase in decommissioning provision 9.9 – 9.9

Unwind of discount 8.9 – 8.9

Utilised during the year (0.5) (0.4) (0.9)

At 31 March 2024 219.7 – 219.7

At 31 March 2024

Non-current 200.0 – 200.0

Current 19.7 – 19.7

219.7 – 219.7

At 31 March 2023

Non-current 196.5 – 196.5

Current 4.9 0.4 5.3

201.4 0.4 201.8

Decommissioning provision

The Company recognises a provision for the estimated net present value of decommissioning of Gas Production assets (retained as part

of the disposal agreement for this business). Estimates are based on the forecast remediation or clean-up costs at the projected date

of decommissioning and are discounted for the time value of money. Within the agreement for the disposal of its Gas Production

assets to Viaro Energy through its subsidiary RockRose Energy Limited on 14 October 2021, the Company agreed to retain 60% of

the decommissioning provision within the business. £9.9m (2023: £50.5m released) has been added to decommissioning during the

current year due to reassessment, movements in inflation and discounting assumptions. It is expected that the costs associated with

decommissioning of these Gas Production assets will be incurred between 2024 and 2040.

Legal and restructuring provisions

The Company holds provisions related to reorganisation of the Group and certain provisions arising on disposal of subsidiaries or

investments. The 31 March 2023 provision was fully utilised in the current year.

324 SSE plc Annual Report 2024

Opinion

In our opinion:

– SSE plc’s group financial statements and parent company financial statements (the “financial statements”) give a true and fair view of the

state of the group’s and of the parent company’s affairs as at 31 March 2024 and of the group’s profit for the year then ended;

– the group financial statements have been properly prepared in accordance with UK adopted international accounting standards;

– the parent company financial statements have been properly prepared in accordance with United Kingdom Generally Accepted

Accounting Practice, including FRS101 “Reduced Disclosure Framework”; and

– the financial statements have been prepared in accordance with the requirements of the Companies Act 2006.

We have audited the financial statements of SSE plc (the ‘parent company’) and its subsidiaries (the ‘group’) for the year ended 31 March

2024 which comprise:

Group Parent company

Consolidated income statement for the year ended 31 March 2024

Consolidated statement of comprehensive income for the year then ended

Consolidated balance sheet as at 31 March 2024 Balance sheet as at 31 March 2024

Consolidated statement of changes in equity for the year then ended Statement of changes in equity for

the year then ended

Consolidated cash flow statement for the year then ended

Related notes 1 to 25 and A1 to A8 to the group financial statements,

including material accounting policy information

Related notes 1 to 14 to the financial statements

including material accounting policy information

The financial reporting framework that has been applied in the preparation of the group financial statements is applicable law and UK

adopted international accounting standards. The financial reporting framework that has been applied in the preparation of the parent

company financial statements is applicable law and United Kingdom Accounting Standards, including FRS 101 “Reduced Disclosure

Framework” (United Kingdom Generally Accepted Accounting Practice).

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities

under those standards are further described in the Auditor’s responsibilities for the audit of the financial statements section of our report.

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

Independence

We are independent of the group and parent in accordance with the ethical requirements that are relevant to our audit of the financial

statements in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have fulfilled our other ethical

responsibilities in accordance with these requirements.

The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the group or the parent company and we remain

independent of the group and the parent company in conducting the audit.

Conclusions relating to going concern

In auditing the financial statements, we have concluded that the directors’ use of the going concern basis of accounting in the preparation

of the financial statements is appropriate. Our evaluation of the directors’ assessment of the group and parent company’s ability to

continue to adopt the going concern basis of accounting included:

– Confirming our understanding of management’s Going Concern process as well as the review controls in place over the preparation of

the group’s Going Concern model and the memoranda on going concern;

– Engaging early with management to ensure all key matters were considered in their assessment;

– Obtaining management’s board approved forecast cash flows, covenant forecasts and sensitivities prepared by management to

31December 2025, ensuring the same forecasts are used elsewhere within the group for accounting estimates and that the forecasts

reflect the spend to come on the committed part of the NZAP+ programme. We tested the models for arithmetical accuracy, as well as

checking the net debt position at the year-end date which is the starting point for the model. We assessed the reasonableness of the

cashflow forecast by analysing management’s historical forecasting accuracy. We also ensured climate change considerations were

factored into future cash flows. We performed reverse stress testing to understand how severe the downside scenarios would need be

to result in negative liquidity or a covenant breach and how plausible were the scenarios. The EY assessment included consideration of

all maturing debt through to 31 March 2026;

– Reviewing management’s assessment of mitigating options potentially available to the group to reduce cash flow spend in the Going

Concern period, to determine their plausibility and whether such actions could be implemented by management. We have obtained

support to determine whether these were within the control of management and evaluated the impact of these mitigations in light of

our understanding of the business and its cost structures;

– Reading the borrowing facilities agreements to assess their continued availability to the group and to ensure completeness of covenants

identified by management;

– Reviewing market data for indicators of potential contradictory evidence to challenge the company’s going concern assessment

including review of profit warnings within the sector and review of industry analyst reports. We held discussions with the Audit

Committee to confirm the going concern position prepared by management; and

– Considering whether management’s disclosures in the financial statements sufficiently and appropriately reflect the going concern

assessment and outcomes.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SSE PLC

325SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

The audit procedures performed in evaluating the director’s assessment were performed by the group audit team. We also considered the

financial and non-financial information communicated to us from our component teams for sources of potential contrary indicators which

may cast doubt over the going concern assessment.

Our key observation

The group is forecast to continue to be profitable and generate positive cashflows during the going concern period. Our reverse stress test

scenario indicated that the group would need to be exposed to severe downside events impacting profitability and cash flows in order to

breach liquidity or covenants. The severe downside scenario assumed full repayment of debt maturing over the going concern period, no

new refinancing over the going concern period, no uncommitted disposal proceeds, a £500m group contingency to mitigate any

downside performance against budget, offset by mitigating actions within managements control. We consider such a scenario to be highly

unlikely, however, in unlikely events, including the business not performing in line with budget, management consider that the impact can

be mitigated by further cash and cost saving measures, which are within their control, or through external fund raising, or a combination of

both during the going concern period.

Having considered our severe downside and reverse stress test scenarios, we have not identified a plausible scenario where the group

would be unable to maintain cash flow liquidity and covenant headroom during the going concern period.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually

or collectively, may cast significant doubt on the group and parent company’s ability to continue as a going concern for a period to 31

December 2025.

In relation to the group and parent company’s reporting on how they have applied the UK Corporate Governance Code, we have nothing

material to add or draw attention to in relation to the directors’ statement in the financial statements about whether the directors

considered it appropriate to adopt the going concern basis of accounting.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this

report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to

continue as a going concern.

Overview of our audit approach

Audit scope – We performed an audit of the complete financial information of 20 components and audit procedures on

specific balances for a further 15 components.

– The components where we performed full or specific audit procedures accounted for 91% of Adjusted Profit

before tax, 99% of Revenue and 90% of Total assets.

Key audit matters – Impairment of specific non-current assets

– Group and parent pension obligation

– Accounting for estimated revenue recognition

– Business Energy Evolve system transition

Materiality – Overall group materiality of £115.3m which represents 5% of adjusted profit before tax.

An overview of the scope of the parent company and group audits

Tailoring the scope

Our assessment of audit risk, our evaluation of materiality and our allocation of performance materiality determine our audit scope for

each company within the group. Taken together, this enables us to form an opinion on the consolidated financial statements. We take into

account size, risk profile, the organisation of the group and effectiveness of group-wide controls, changes in the business environment, the

potential impact of climate change and other factors such as recent Internal audit results when assessing the level of work to be performed

at each company.

In assessing the risk of material misstatement to the group financial statements, and to ensure we had adequate quantitative coverage of

significant accounts in the financial statements, of the 252 (2023: 220) reporting components of the group, we selected 35 (2023: 38)

components covering entities within the UK and Ireland, which represent the principal business units within the group.

Of the 35 components selected, we performed an audit of the complete financial information of 20 (2023: 19) components (“full scope

components”) which were selected based on their size or risk characteristics. For the remaining 15 (2023: 21) components (“specific scope

components”), we performed audit procedures on specific accounts within that component that we considered had the potential for the

greatest impact on the significant accounts in the financial statements either because of the size of these accounts or their risk profile.

The reporting components where we performed audit procedures accounted for 91% (2023: 95%) of the group’s Adjusted profit before tax,

99% (2023: 95%) of the group’s Revenue and 90% (2023: 94%) of the group’s Total assets. For the current year, the full scope components

contributed 70% (2023: 82%) of the group’s Adjusted profit before tax, 97% (2023: 94%) of the group’s Revenue and 62% (2023: 48%) of the

group’s Total assets. The specific scope component contributed 21% (2023: 13%) of the group’s Adjusted profit before tax, 2% (2023: 1%) of

the group’s Revenue and 28% (2023: 46%) of the group’s Total assets. The audit scope of these components may not have included testing

of all significant accounts of the component but will have contributed to the coverage of significant accounts tested for the group. We also

instructed 4 locations to perform specified procedures over certain aspects of Cash & Bank, Goodwill and Equity Investments in associates

and jointly controlled entities, due to significant balances held within each location.

Of the remaining 217 (2023: 182) components that together represent 9% (2023: 5%) of the group’s Adjusted profit before tax, none are

individually greater than 1% (2023: 1%) of the group’s Adjusted profit before tax. For these components, we performed other procedures,

including analytical review, intercompany eliminations and obtaining audit evidence to respond to any potential risks of material

misstatement to the group financial statements.

326 SSE plc Annual Report 2024

The charts on the left illustrate the coverage obtained from the work performed by our

audit teams.

Changes from the prior year

There have been minimal changes in scoping from the prior year, other than Seagreen

coming into full scope given it started trading during the year. There were some minor

changes to specific scope components to maintain appropriate coverage.

Involvement with component teams

In establishing our overall approach to the group audit, we determined the type of work

that needed to be undertaken at each of the components by us, as the primary audit

engagement team, or by component auditors from other EY global network firms operating

under our instruction. Of the 20 full scope components, audit procedures were performed

on 2 of these directly by the primary audit team. For the 18 remaining full scope

components and 15 specific scope components, where the work was performed by

component auditors, we determined the appropriate level of involvement to enable us to

determine that sufficient audit evidence had been obtained as a basis for our opinion on the

group as a whole.

The majority of full and specific scope components were led by the lead audit engagement

partner, Annie Graham. For the remaining entities there were regular calls held between the

lead audit engagement partner and component partners, with either file reviews performed

by the primary team over audit documentation that has not been retained within the group

audit file, or retention of key audit documentation on the group audit file.

This was the second year where a non-EY auditor was involved in a specific scope

component, following the acquisition of Triton. We issued instructions, held regular calls

with them and attended an on site file review and closing meeting. Other than the Irish

Airtricity and Triton entities in scope, all other entities in scope were based within Scotland

(Perth and Glasgow), where lead audit partner Annie Graham visited UK divisions

throughout the year-end audit. Management meetings were held in person and remotely

throughout the year across both the UK and Ireland. Members of the primary team also

visited the non-EY component auditors of Triton.

The division and non-EY component visits involved discussion of audit approach, attending

planning and closing meetings (some of which were held virtually), meeting with local

management and reviewing relevant audit working papers on risk areas. The primary team

interacted regularly with the component teams where appropriate during various stages of

the audit, reviewed relevant working papers and were responsible for the scope and

direction of the audit process. This, together with the additional procedures performed at

group level, gave us appropriate evidence for our opinion on the group financial

statements.

Climate change

The financial statement and audit risks related to climate change and the energy transition

remain an area of audit focus in FY24. Stakeholders are increasingly interested in how

climate change will impact SSE plc. SSE operates principally within the UK and Ireland and

both are seeking to achieve net zero across their economies by 2050.

SSE has determined that the most significant future impacts from climate change on its

operations will be from variable wind generation risk caused by changes in climate patterns,

storm damage network risk through increased severity of extreme weather events,

accelerated gas closure risk through climate change and wind-capture market risk where

the average wholesale power prices are lower as a result of more zero marginal cost

wind generation coming on to the electricity system. These are explained on pages 104 to

105

in the required Task Force on Climate Related Financial Disclosures and on pages 89

to 90 in the principal risks and uncertainties. These disclosures form part of the “Other

information,” rather than the audited financial statements. Our procedures on these

unaudited disclosures therefore consisted solely of considering whether they are materially

inconsistent with the financial statements, or our knowledge obtained in the course of the

audit or otherwise appear to be materially misstated, in line with our responsibilities on

“Other information”. As described in note 4, the financial statement impact of climate is

considered to have most impact on the valuation of property, plant and equipment

impairment assessment of goodwill, valuations of decommissioning provisions, defined

benefit schemes and going concern and viability statement.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SSE PLC – CONTINUED

Adjusted profit before tax

Full scope

components .....70%

Specific scope

components .....21%

Other

procedures..........9%

Revenue

Full scope

components .....97%

Specific scope

components .......2%

Other

procedures.......... 1%

Total assets

Full scope

components .... 62%

Specific scope

components .... 28%

Other

procedures........10%

327SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

In planning and performing our audit we assessed the potential impacts of climate change on the group’s business and any consequential

material impact on its financial statements.

The group has explained in their Basis of Preparation how they have reflected the impact of climate change in their financial statements

including where assumptions applied align with their commitment to the aspirations of the Paris Agreement to achieve net zero emissions

by 2050.

Significant judgements and estimates relating to climate change are included in note 4.

Government and societal responses to climate change risks are still developing, and are interdependent upon each other, and

consequently financial statements cannot capture all possible future outcomes as these are not yet known. The degree of certainty of

these changes may also mean that they cannot be taken into account when determining asset and liability valuations and the timing of

future cash flows under the requirements of IAS 36. Budgets and forecasts for SSE plc reflect the spend to come on the NZAP + investment

programme. In notes 15 and 20 to the financial statements supplementary sensitivity disclosures reflecting the impact of climate with

regards to valuation of property, plant and equipment, impairment assessment of goodwill and valuation of decommissioning provisions

and the impact of reasonably possible changes in key assumptions have been provided and significant judgements and estimates relating

to climate change have been described within the aforementioned notes. We have ensured the completeness of climate consideration as

part of our impairment and going concern audit procedures, including those referred to within our impairment KAM below.

In order to respond to the impact of climate change, we ensured we had the appropriate skills and experience on the audit team. Our audit

team included professionals with significant experience in climate change and energy valuations. Our audit procedures were carried out by

the group and component teams, with the component teams working under the direction of the group team.

Our audit effort in considering climate change focused on ensuring that the effects of material climate risks disclosed on pages 104

to 105

have been appropriately reflected within the going concern cashflows, asset values and useful life and associated disclosures

where values are determined through modelling future cash flows, being impairment considerations over Intangible assets and PP&E and in

the timing and nature of liabilities recognised, being decommissioning provisions. In addition, we performed detailed testing of the

sensitivities noted in the accounts. Details of our procedures and findings on impairment are included in our key audit matters below.

In FY24 as in the previous year SSE conducted scenario analysis of its material climate related opportunities and risks. With the support of

our climate change internal specialists, we considered managements scenario planning and modelling of these four risks and five

opportunities disclosed on pages 98 to 105

. We reviewed and challenged the impact pathways developed and basis of the key

assumptions included within these scenarios. We verified the transition risk scenario frameworks used within the modelling to challenge

the appropriateness, applicability to SSE current and future business model to ensure the accuracy of the financial impact ranges disclosed

on pages 102 to 105 .

We challenged the Directors’ considerations of climate change in their assessment of going concern and viability and associated

disclosures. We also read the Other information in the annual report, and in doing so, considered whether the Other information, which

includes SSE’s climate targets, is materially consistent with the financial statements. We also considered consistency to other areas of

assumptions, judgements and estimates and where applicable the procedures performed have been included within our KAMs below.

Based on our work, whilst we have not identified the impact of climate change on the financial statements to be a standalone key audit

matter, we have considered the impact on the following key audit matters: Impairment of specific non-current assets. Details of the impact,

our procedures and findings are included in our explanation of key audit matters below.

Key audit matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the financial statements of

the current period and include the most significant assessed risks of material misstatement (whether or not due to fraud) that we identified.

These matters included those which had the greatest effect on: the overall audit strategy, the allocation of resources in the audit; and

directing the efforts of the engagement team. These matters were addressed in the context of our audit of the financial statements as a

whole, and in our opinion thereon, and we do not provide a separate opinion on these matters.

328 SSE plc Annual Report 2024

Risk Our response to the risk

Key observations communicated to the

Audit Committee

Impairment of specific non-

current assets (Impairment

charge £212.7m; Impairment

reversal 2023: £63.5m)

Refer to the Audit Committee

Report (page 147 ); Accounting

policies – significant judgements

(page 209 ); and Note 15

of the Consolidated Financial

Statements (page 241 )

Thermal power plants and gas

storage assets

Certain power stations and gas

storage assets are at risk of

impairment or impairment reversal.

This is due to a number of global

and national factors reducing or

increasing their value in use or

fair value less costs of disposal,

triggering an impairment

assessment. Our risk focussed on

the following power stations:

Peterhead, Keadby, Keadby 2,

Medway, Marchwood, Great Island

CCGT and Triton assets and Gas

Storage facilities (Atwick and

Aldbrough).

The key assumptions include future

power prices, price volatility, mean

reversion rate, forecast power

demand, carbon prices, load factors,

discount rate, useful economic life

and operating expenditure.

The estimated recoverable amount

is subjective due to the inherent

uncertainty involved in forecasting

and discounting future cash flows

as a result of the above factors.

Renewables developments

We have expanded the impairment

significant risk to also include the

risk of impairment in the SSE

Pacifico and SSE Southern Europe

goodwill and intangible

development assets valuations.

This has been included due to the

early stages of development and

passage of time from the

acquisition date and the high

sensitivity of models to changes

in key assumptions.

For SSE Pacifico, the key

assumptions include pricing for

revenue support contracts,

generation volumes, the

proportion of external funding

achievable, discount rate and

projected probability of success.

For SSE Southern Europe, the key

assumptions are discount rate,

generation volume and the

development probability

of success.

Scoping:

Testing was performed over this risk area, covering both full and

specific scope components (covering nine components), which

represented 100% of the risk amount.

All audit work in relation to this key audit matter was undertaken

by the component audit teams, with oversight from the group

audit team.

We obtained management’s assessment of potential impairment

indicators in accordance with IAS 36 for powerplants and for gas

storage assets.

Audit procedures included:

We have understood management’s process and methodology for

assessing assets for indicators of impairment, including indicators

of reversal and, where applicable, we have understood

management’s modelling of value in use cash flows including the

source of the key input assumptions.

We checked the historical accuracy of management’s forecasting

and verified that the assumptions are consistent with those used in

other areas such as fixed asset useful life and decommissioning

provision.

Thermal power plants and gas storage assets

We considered prior period impairments for indication of reversal.

This involved considering indicators of reversal, focussed on

demand, load factors and prices.

We involved two EY specialists in our assessment: a discount rate

specialist and a specialist with industry experience of assessing

forward energy prices. Using our sector experience and our

specialists, we assessed any unusual or unexpected trends

identified within the cashflows year on year and assessed the

impact on the overall forecasted position.

We considered incremental repairs and committed capital

expenditure on commenced projects and obtained management’s

assessment of the technical feasibility of useful life extensions and

reviewed the extensions to contracted power contracts.

We assessed the appropriateness of the model parameters and

clerical accuracy of the models used.

We considered load factors relative to the UK Governments as yet

unlegislated target of no unabated gas post 2030 and reviewed

impact on carrying values included within the disclosures should

this legislation arise.

We applied sensitivities to management’s models to evaluate

headroom, including sensitivities relating to climate change

reflecting useful life assessment versus climate commitments and

price and margin sensitivities.

Thermal power plants and gas

storage assets

We confirmed that the

impairment charge of £134.1m

recognised for Gas Storage assets

and the charge of £63.2m in the

Triton investment were

appropriate. Gas Storage

impairment was driven

predominantly by market

conditions and a significant

decline in gas prices in the period,

reflecting prices returning to

normal following a period of high

volatility. The Triton investment is

carried at fair value and highly

sensitive to changes in prices.

Market prices have declined from

their peak at the date of

acquisition.

We communicated that the

pricing assumptions applied were

appropriate. We concluded that,

while the discount rates used

were above the top end of EY

accepted range, any adjustment

to bring in line with EY

independent range would only

increase the headroom (previous

impairments have already fully

reversed). We also communicated

that certain aspects of the pricing

were deemed to be optimistic

compared to the EY view,

however still within our

acceptable range.

We also noted that we are

satisfied with the adequacy of

disclosure within the group

financial statements including

climate related disclosures.

Renewables developments

We confirmed that the

impairment charge of £15.4m

recognised for SSE Southern

Europe was appropriate, with no

impairment charge recorded for

SSE Pacifico, which we also

concluded was appropriate.

While our sensitivities applied

supported the remaining

headroom on both CGUs, we

note that both are highly sensitive

to incremental changes in

assumptions which could

extinguish headroom.

We also noted that we are

satisfied with the adequacy of

disclosure within the group

financial statements including

climate related disclosures.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SSE PLC – CONTINUED

329SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Risk Our response to the risk

Key observations communicated to the

Audit Committee

Impairment of specific non-

current assets (Impairment

charge £212.7m; Impairment

reversal 2023: £63.5m)

continued

Renewables developments

We considered the infancy of the Japanese renewable market in

our SSE Pacifico considerations, and due to this, the model is

highly sensitive to the key assumptions.

As the Southern Europe platform is in early-stage development,

the assessment was based on the discounted pre-tax cash flows

from the acquisition model with updates to underlying

assumptions, to reflect changes in the market and the projects

since the acquisition.

We involved two EY specialists in our assessment: a discount rate

specialist and a specialist with experience of assessing forward

prices in the overseas market. We consulted with colleagues in

Japan, with deep experience of the renewables sector. Using our

sector experience and our specialists, we assessed any unusual or

unexpected trends identified within the cashflows year on year

and assessed the impact on the overall forecasted position.

We applied sensitivities to management’s models to evaluate

headroom. For SSE Pacifico, this included sensitivities relating to

discount rate, fixed prices, volumes and financing costs. For SSE

Southern Europe, this included sensitivities relating to discount

rate, merchant exposure, volumes and probability of success of

each project.

Key assumptions:

Using our sector experience and our specialists we benchmarked

to industry sources, where appropriate, the directors’ judgement

on the key assumptions.

For Thermal assets, this included future power prices, power

volatility, forecast power demand, carbon prices, load factors,

discount rate, useful economic life and operating expenditure.

For SSE Pacifico, this included revenue support contract price,

generation volumes, the proportion of external funding

achievable, discount rate and projected probability of success.

For SSE Southern Europe this included non-contract revenue

price, discount rate, generation volume and the development

probability of success.

We verified that the assumptions are consistent with those used in

other areas.

Disclosures

We assessed the accuracy and adequacy of the disclosures in line

with IAS 36, ensuring key assumptions are included and that the

disclosures adequately reflect the risks inherent in the valuation of

non-current assets and the impact of changes in assumptions on

the impairment booked.

330 SSE plc Annual Report 2024

Risk Our response to the risk

Key observations communicated to the

Audit Committee

Group and parent pension

obligation (2024: £421.6m

surplus, 2023: £541.1m surplus)

Refer to the Audit Committee

Report (page 147 ); Accounting

policies – significant judgements

(page 209 ); and Note 23 of the

group financial statements

(page264 )

Subjective valuation:

Small changes in the assumptions

and estimates used to value the

group and parent company

pension obligations (before

deducting scheme assets) would

have a significant effect on the

carrying value of those pension

obligations.

The effect of these matters is that,

as part of our risk assessment, we

determined that the group and

parent company’s pension

obligation has a high degree of

estimation uncertainty, with a

potential range of reasonable

outcomes greater than our

materiality for the financial

statements as a whole.

The principal assumptions

considered include rate of increase

in pensionable salaries and pension

payments, discount rate and

mortality rates.

There has been no change in this

risk from the prior year.

Scoping:

We performed audit procedures over this risk area centrally

by the group team, which covered 100% of the risk amount.

Our procedures included:

Assessing management process:

We have understood management’s process and methodology

for calculating the pension liability for each scheme, including

discussions with management’s external actuaries, walkthrough

of the processes, understanding the key inputs and the design and

implementation of key controls. We performed a fully substantive

audit approach rather than testing the operating effectiveness of

key controls.

Assessing management experts:

We have assessed the independence, objectivity and competence

of the group’s external actuaries, which included understanding

of the scope of services being provided and considering the

appropriateness of the qualifications of the external actuary.

Assessing source data:

We tested a sample of the membership data used by the actuaries

to the group’s records.

Benchmarking assumptions:

With the support of our pension actuarial specialists, we assessed

the appropriateness of the assumptions adopted by the directors

by comparing them to the expectations of our pension actuarial

specialists which they derived from broader market data.

Disclosure:

We considered the adequacy of IAS 19 disclosures, including

presentation of commitments associated with deficit recovery

plans and in respect of sensitivity of the defined benefit obligation

to changes in the key assumptions.

We conclude that management’s

actuarial assumptions are

appropriate and sit within our

independently determined range.

We are satisfied with the

adequacy of disclosure within

the financial statements.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SSE PLC – CONTINUED

331SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Risk Our response to the risk

Key observations communicated to the

Audit Committee

Accounting for estimated

revenue recognition

Unbilled energy income (2024:

£663.7m, 2023: £666.1m)

Refer to the Audit Committee

Report (page 147 ); Accounting

policies – significant judgements

(page 209 ); and Note 18 of the

group financial statements (page

253 )

Subjective estimate:

62% of the unbilled revenue is

recognised within the Business

Energy division and is based on

estimates of values and volumes

of electricity and gas supplied

between last meter date and year

end date.

The method of estimating such

revenues is complex, judgemental

and significant for UK business

customers. There is elevated

estimation complexity in the

current year due to the increase in

the operational backlog on billing

as a result of the Evolve billing

system migration.

The key estimates and assumptions

are in relation to:

1. the volumes of electricity and

gas supplied to the customers

between the meter reading and

year-end;

2. the value attributed to those

volumes in the range of tariffs;

and

3. embedded impairment risk over

the unbilled revenue.

As a result of the estimation

uncertainty this has been identified

as a significant risk.

Scoping:

This balance relates to one component, Business Energy. Testing

was performed covering 100% of the unbilled balance in GB

Business Energy which accounts for 62% of the unbilled balance

at 31 March 2024. Unbilled energy income in Airtricity in Northern

Ireland was not included in the scope of this KAM due to reduced

estimation complexity and materiality respectively.

All audit work in relation to this key audit matter was undertaken

by the component audit team with oversight from the group

audit team.

Audit methodology:

Our response to the assessed risk included understanding the

process for estimating unbilled revenue, testing selected IT

general and application key controls, substantive audit procedures

and revenue data analytics.

Tests of detail:

We agreed the opening unbilled accrued income to the closing

31 March 2023 balance sheet.

We agreed the volume data for customer usage of energy in the

year used in the calculation to external settlement systems and

agreed the volume data in relation to customer billings for the

year to SSE’s internal billing systems to assess for consistency and

to understand remaining estimation risk.

We have tested the unbilled unit pricing by agreeing historical

pricing to sample bills, tested a sample of billing dates from the

listing to confirm billing frequency and agreeing to post year end

billing prices. We have understood and tested the historical

accuracy of management’s forecasting of final settlement volumes.

We considered contra indicators to management’s assumptions

by assessing the impact of macro-economic conditions on

demand and consumption volatility and benchmarked

assumptions in the underlying unbilled calculations to external

publications from the industry.

We have obtained and tested post year end billings.

We estimated the impact on bills still to come as a result of

operational billing delays, considering unbilled MPAN’s (Meter

Point Administration Number) and apportioning volumes of the

day sales outstanding and price to estimate expected billing.

Analytical Review:

We set expectations as to the likely level of total unbilled revenue,

and compared this with actual unbilled revenue accrual, obtaining

explanation for significant variances.

We compared the unbilled revenue estimation to benchmark

expectation. Benchmark expectation was derived from the

external settlements data combined with billing frequency, usage

and price movement from last billing date to year end. We have

analysed and assessed explanations for variances arising from the

benchmark expectation. We also tested the appropriateness of

manual adjustments made by management.

Evolve system migration:

We have understood the reporting from the Evolve system which

support the unbilled estimate and performed integrity testing.

Full details of work performed around the billing system migration

is disclosed within the subsequent KAM.

Disclosure:

We assessed the adequacy of the group’s disclosures about the

degree of estimation and judgement involved in arriving at the

estimated revenue.

In performing our procedures we

independently calculated an

estimated range for accrued

income of £408m – £413m with

SSE’s position being within the

top end of our acceptable range.

Overall, through procedures

performed over accrued revenue

within the Business Energy

business, we are satisfied that the

accrued revenue recognised by

management in relation to

unbilled revenue is appropriate.

332 SSE plc Annual Report 2024

Risk Our response to the risk

Key observations communicated to the

Audit Committee

Business Energy Evolve system

transition

Refer to the Audit Committee

Report (page 147 )

We have introduced a new KAM

relating to the transition from CS

Live to the new Evolve billing

system within Business Energy

during the current year.

Our risk focused on the

completeness and accuracy of the

migrated data and the whether the

IT General Controls underpinning

the new system were designed and

operating effectively over the

reliance period.

Impacts of the system migration on

unbilled revenue calculations have

been separately considered within

the unbilled KAM.

Scoping:

The data migration audit testing has been performed by the

Business Energy component, alongside support from the IT audit

team.

All audit work in relation to this key audit matter was undertaken

by the component audit team with oversight from the group audit

team.

Data Migration

We understood management’s approach for the data migration

and review procedures performed by internal audit.

We performed each of the following procedures for each tranche

of customer data migrations throughout the year:

– Obtained management’s reconciliations of the data points and

retested the reconciliations over all relevant customer data

verifying the CS Live input to the final Evolve extracts.

– Performed specific integrity testing over the input reports in

excel back to the CS Live system.

– Performed specific integrity testing over new and existing

customers from CS Live to Evolve.

IT General Controls (ITGCs)

We assessed the design and operating effectiveness of Evolve

ITGCs, focussing on change management, manage access and IT

general operations.

We concluded on controls reliance over ITGCs from 1 September

2023 to 31 March 2024, with only £7m of billings raised in the

system prior to 1 September. Separate integrity testing has been

performed over these billings prior to ITGC reliance.

We tested the controls and access throughout the “hypercare”

period (a period of heightened support after a system

implementation).

We understood and tested key automated controls over billed

receivables to cash receipts business processes and augmented

with substantive testing where there was not evidence of the

controls operating throughout the period.

We confirmed appropriate report configuration as used in our

testing and performed integrity testing over each key report relied

upon for financial reporting purposes.

Impact on audit approach:

We performed detailed walkthroughs with management over

changes to their revenue and debtors’ processes as a result of the

new Evolve system. We understood the impact this has on key

estimates and judgements, including unbilled revenue and bad

debt provisioning.

We are satisfied with the

completeness and accuracy of

the data migrations between the

CS Live and Evolve systems with

no material findings arising.

Testing evidenced ITGC in

operation, upon which we relied

from 1 September 2023, with

additional integrity procedures

performed over billings of £7m in

the period from 31 March 2023 to

31 August 2023.

In the current year, we have included a new KAM on the Business Energy Evolve system transition, given the level of audit effort and focus

required in this year during year ended 31 March 2024.

Our application of materiality

We apply the concept of materiality in planning and performing the audit, in evaluating the effect of identified misstatements on the audit

and in forming our audit opinion.

Materiality

The magnitude of an omission or misstatement that, individually or in the aggregate, could reasonably be expected to influence the

economic decisions of the users of the financial statements. Materiality provides a basis for determining the nature and extent of our audit

procedures.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SSE PLC – CONTINUED

333SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

We determined materiality for the group to be £115.3m (2023: £85.2m), which is 5% (2023: 5% of normalised adjusted profit before tax) of

adjusted profit before tax. Our key criterion in determining materiality remains our perception of the needs of SSE’s stakeholders. We

consider which earnings, activity or capital-based measure aligns best with their expectations. With the volatility in the energy market in the

prior year we used normalised profit before tax, as we believed it provided us with a consistent measure of underlying year-on-year

performance as it excluded the impact of non-recurring items which can significantly fluctuate year-on-year and do not provide a true

picture of the profit benchmark that would affect the decisions of the users of the financial statements. Given the volatility has settled this

year, we returned to our previous measure of adjusted profit before tax.

We determined materiality for the Parent Company to be £127.1m (2023: £137.1m), which is 2% (2023: 2%) of net assets. The materiality has

been capped at the group materiality of £115.3m.

– Profit before tax – £2,495.1m

– Totals £2,306.4m adjusted profit before tax

– Materiality of £115.3m (5% of materaility basis)

– Movement on operating and financing derivatives – (£513.5m)

– Non-recurring exceptional items – £266m

– JV Tax – £58.8m

Starting basis

Materiality

Starting

basis

Adjustments

Materiality

During the course of our audit, we reassessed initial materiality and amended it for final adjusted profit before tax figures.

Performance materiality

The application of materiality at the individual account or balance level. It is set at an amount to reduce to an appropriately low level the

probability that the aggregate of uncorrected and undetected misstatements exceeds materiality.

On the basis of our risk assessments, together with our assessment of the group’s overall control environment, our judgement was that

performance materiality was 75% (2023: 75%) of our planning materiality, namely £86.5m (2023: £63.9m). We have set performance

materiality at this percentage due to a low number and value of corrected and uncorrected misstatements in the prior year audit.

Audit work at component locations for the purpose of obtaining audit coverage over significant financial statement accounts is undertaken

based on a percentage of total performance materiality. The performance materiality set for each component is based on the relative scale

and risk of the component to the group as a whole and our assessment of the risk of misstatement at that component. In the current year,

the range of performance materiality allocated to components was £12.8m to £30.2m (2023: £8.9m to £21.0m).

Reporting threshold

An amount below which identified misstatements are considered as being clearly trivial.

We agreed with the Audit Committee that we would report to them all uncorrected audit differences in excess of £5.8m (2023: £4.3m),

which is set at 5% of planning materiality, as well as differences below that threshold that, in our view, warranted reporting on qualitative

grounds.

We evaluate any uncorrected misstatements against both the quantitative measures of materiality discussed above and in light of other

relevant qualitative considerations in forming our opinion.

Other information

The other information comprises the information included in the annual report set out on pages 1 to 187 , including the strategic report

and the directors’ report (Governance section) set out on pages 1 to 109 and 110 to 187 respectively, other than the financial statements

and our auditor’s report thereon. The directors are responsible for the other information contained within the annual report.

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in this

report, we do not express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with

the financial statements or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify

such material inconsistencies or apparent material misstatements, we are required to determine whether this gives rise to a material

misstatement in the financial statements themselves. If, based on the work we have performed, we conclude that there is a material

misstatement of the other information, we are required to report that fact.

We have nothing to report in this regard.

334 SSE plc Annual Report 2024

Opinions on other matters prescribed by the Companies Act 2006

In our opinion, the part of the directors’ remuneration report to be audited has been properly prepared in accordance with the Companies

Act 2006.

In our opinion, based on the work undertaken in the course of the audit:

– the information given in the strategic report and the directors’ report for the financial year for which the financial statements are

prepared is consistent with the financial statements; and

– the strategic report and the directors’ report have been prepared in accordance with applicable legal requirements.

Matters on which we are required to report by exception

In the light of the knowledge and understanding of the group and the parent company and its environment obtained in the course of the

audit, we have not identified material misstatements in the strategic report or the directors’ report.

We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in

our opinion:

– adequate accounting records have not been kept by the parent company, or returns adequate for our audit have not been received from

branches not visited by us; or

– the parent company financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with

the accounting records and returns; or

– certain disclosures of directors’ remuneration specified by law are not made; or

– we have not received all the information and explanations we require for our audit.

Corporate Governance Statement

We have reviewed the directors’ statement in relation to going concern, longer-term viability and that part of the Corporate Governance

Statement relating to the group and company’s compliance with the provisions of the UK Corporate Governance Code specified for our

review by the Listing Rules.

Based on the work undertaken as part of our audit, we have concluded that each of the following elements of the Corporate Governance

Statement is materially consistent with the financial statements or our knowledge obtained during the audit:

– Directors’ statement with regards to the appropriateness of adopting the going concern basis of accounting and any material

uncertainties identified set out on page 65

– Directors’ explanation as to its assessment of the company’s prospects, the period this assessment covers and why the period is

appropriate set out on page 109 ;

– Director’s statement on whether it has a reasonable expectation that the group will be able to continue in operation and meets its

liabilities set out on page 187 ;

– Directors’ statement on fair, balanced and understandable set out on page 146 ;

– Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks set out on pages 86 to 95 ;

– The section of the annual report that describes the review of effectiveness of risk management and internal control systems set out on

page 150 ; and;

– The section describing the work of the audit committee set out on page 144 .

Responsibilities of directors

As explained more fully in the directors’ responsibilities statement set out on page 187 , the directors are responsible for the preparation

of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine

is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the financial statements, the directors are responsible for assessing the group and parent company’s ability to continue as a

going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the

directors either intend to liquidate the group or the parent company or to cease operations, or have no realistic alternative but to do so.

Auditor’s responsibilities for the audit of the financial statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,

whether due to fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance,

but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be

expected to influence the economic decisions of users taken on the basis of these financial statements.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is

higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or

intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including

fraud is detailed below.

INDEPENDENT AUDITOR’S REPORT TO THE MEMBERS OF SSE PLC – CONTINUED

335SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

However, the primary responsibility for the prevention and detection of fraud rests with both those charged with governance of the

company and management.

– We obtained an understanding of the legal and regulatory frameworks that are applicable to the group and determined that the most

significant are IFRS, FRS101, the Companies Act 2006 and UK Corporate Governance Code and relevant tax compliance regulations in

the jurisdictions in which the group operates. We also considered non-compliance of regulatory requirements, including the Office of

Gas and Electricity Markets (Ofgem) and regulations levied by the UK Financial Conduct Authority and Prudential Regulatory Authority.

We confirmed our understanding with the Internal Head of Regulation.

– We understood how SSE plc is complying with those frameworks by making enquiries of management, internal audit, those responsible

for legal and compliance procedures and the company Secretary. We verified our enquiries through our review of board minutes and

papers provided to the Audit Committee.

– We assessed the susceptibility of the group’s financial statements to material misstatement, including how fraud might occur by meeting

with management from various parts of the business to understand where it considered there was susceptibility to fraud. We also

considered performance targets and their propensity to influence on efforts made by management to manage earnings. We considered

the programmes and controls that the group has established to address risks identified, or that otherwise prevent, deter and detect

fraud; and how senior management monitors those programmes and controls. Where the risk was considered to be higher, we

performed audit procedures to address each identified fraud risk.

– Based on this understanding we designed our audit procedures to identify non-compliance with such laws and regulations. Our

procedures involved: journal entry testing, with a focus on manual consolidation journals and journals indicating large or unusual

transactions based on our understanding of the business; enquiries of legal counsel, group management, internal audit, business area

management at all full and specific scope management; and focused testing. In addition, we completed procedures to conclude on the

compliance of the disclosures in the annual report and accounts with all applicable requirements.

A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council’s website

at https://www.frc.org.uk/auditorsresponsibilities

. This description forms part of our auditor’s report.

Other matters we are required to address

– Following the recommendation from the audit committee we were appointed by the company on 18 July 2019 to audit the financial

statements for the year ending 31 March 2020 and subsequent financial periods.

– The period of total uninterrupted engagement including previous renewals and reappointments is 5 years, covering the years ending

31March 2020 to 31 March 2024.

– The audit opinion is consistent with the additional report to the audit committee.

Use of our report

This report is made solely to the company’s members, as a body, in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our

audit work has been undertaken so that we might state to the company’s members those matters we are required to state to them in an

auditor’s report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other

than the company and the company’s members as a body, for our audit work, for this report, or for the opinions we have formed.

Annie Graham (Senior statutory auditor)

for and on behalf of Ernst & Young LLP, Statutory Auditor

Glasgow

21 May 2024

336 SSE plc Annual Report 2024

Electricity

supply

Gas

supply

Aggregate

Supply

businessYear ended 31 March 2024 Unit Non-domestic Non-domestic

Total revenue £m 2,862.9 330.1 3,193.0

Sales of electricity and gas £m 2,857.1 326.7 3,183.8

Other revenue £m 5.8 3.4 9.2

Total operating costs £m 2,826.2 261.2 3,087.4

Direct fuel costs £m 1,486.7 165.4 1,652.1

Transportation costs £m 565.8 41.4 607.2

Environmental and social obligation costs £m 532.1 (0.6) 531.5

Other direct costs £m 10.9 1.9 12.8

Indirect costs £m 230.7 53.1 283.8

EBITDA £m 36.7 68.9 105.6

Depreciation and amortisation £m 6.4 1.2 7.6

EBIT £m 30.3 67.7 98.0

Volume

TWh/

mTherms 10.7 167.5 –

WACOE/G £/MWh/p/th 139.0 98.8 –

Customer numbers ‘000s 335.7 60.9 396.6

Basis of preparation and disclosure notes

The Group’s operating segments are those used internally by the Board to run the business and make strategic decisions. The types of

products and services from which each reportable segment derives its revenues are:

Business Area Reported Segments Description

Continuing operations

Transmission SSEN Transmission The economically regulated high voltage transmission of electricity from generating plant to

the distribution network in the North of Scotland. Revenue earned from constructing,

maintaining and renovating our transmission network is determined in accordance with the

regulatory licence, based on an Ofgem approved revenue model and is recognised as

charged to National Grid. The revenue earned from other transmission services such as

generator plant connections is recognised in line with delivery of that service over the

expected contractual period and at the contracted rate. On 25 November 2022 the Group

sold a 25.0% non-controlling interest in this business to the Ontario Teachers’ Pension Plan.

Distribution SSEN Distribution The economically regulated lower voltage distribution of electricity to customer premises in

the North of Scotland and the South of England. Revenue earned from delivery of electricity

supply to customers is recognised based on the volume of electricity distributed to those

customers and the set customer tariff. The revenue earned from other distribution services

such as domestic customer connections is recognised in line with delivery of that service

over the expected contractual period and at the contracted rate.

Renewables SSE Renewables The generation of electricity from renewable sources, such as onshore and offshore

windfarms and run of river and pumped storage hydro assets in the UK and Ireland, and the

development of similar wind assets in Japan and Southern Europe and the development of

wind, solar and battery opportunities. Revenue from physical generation of electricity in

Great Britain is sold to SSE Energy Markets and in Ireland is sold to SSE Airtricity and is

recognised as generated, based on the contracted or spot price at the time of delivery.

Revenue from national support schemes (such as Renewable Obligation Certificates or the

Capacity Market in Great Britain or REFIT in Ireland) may either be recognised in line with

electricity being physically generated or over the contractual period, depending on the

underlying performance obligation.

Thermal SSE Thermal The generation of electricity from thermal plants including CCGTs and the Group’s interests

in multifuel assets in the UK and Ireland. Revenue from physical generation of electricity in

Great Britain and Ireland is sold to SSE Energy Markets and is recognised as generated, based

on the contract or spot price at the time of delivery. Revenue from national support schemes

(such as the Capacity Market) and ancillary generation services may either be recognised in

line with electricity being physically generated or over the contractual period, depending on

the underlying performance obligation.

Gas Storage The operation of gas storage facilities in Great Britain, utilising capacity to optimise trading

opportunity associated with the assets. Contribution arising from trading activities is

recognised as realised based on the executed trades or withdrawal of gas from caverns.

SSE CONSOLIDATED SEGMENTAL STATEMENT

FOR THE YEAR ENDED 31 MARCH 2024

337SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Business Area Reported Segments Description

Energy

Customer

Solutions

SSE Business Energy

(covered by CSS)

The supply of electricity and gas to business customers in Great Britain and smart buildings

(BEMS) activity. Revenue earned from the supply of energy is recognised in line with the

volume delivered to the customer, based on actual and estimated volumes, and reflecting

the applicable customer tariff after deductions or discounts.

SSE Airtricity The supply of electricity, gas and energy related services to residential and business

customers in the Republic of Ireland and Northern Ireland. Revenue earned from the supply

of energy is recognised in line with the volume delivered to the customer, based on actual

and estimated volumes, and reflecting the applicable customer tariff after deductions or

discounts. Revenue earned from energy related services may either be recognised over the

expected contractual period or following performance of the service, depending on the

underlying performance obligation.

SSE Enterprise SSE Enterprise The provision of low carbon energy solutions to customers; behind-the-meter solar and

battery solutions, EV charging activities, private electric networks and heat and cooling

networks. During the year, smart buildings (BEMS) activity was transferred to SSE Business

Energy.

SSE Energy

Markets

SSE Energy Markets The provision of a route to market for the Group’s Renewable and Thermal generation

businesses and commodity procurement for the Group’s energy supply businesses in line

with the Group’s stated hedging policies. Revenue from physical sales of electricity, gas and

other commodities produced by SSE is recognised as supplied to either the national

settlements body or the customer, based on either the spot price at the time of delivery or

trade price where that trade is eligible for “own use” designation. The sale of commodity

optimisation trades is presented net in cost of sales alongside purchase commodity

optimisation trades.

Amendments to licence conditions became effective from 29 March 2024, removing the financial reporting provisions relating to Ofgem’s

Standard condition 16B of Electricity Generation licence. The Group’s Electricity Generation reported segments, SSE Renewables and SSE

Thermal, which were previously reported in the Consolidated Segmental Statement (‘CSS’) are therefore not included in the Group’s CSS

for the year ended 31 March 2024.

The modified financial reporting requirements are still applicable to the Group’s electricity and gas supply businesses included in the

Group’s ‘SSE Business Energy’ reporting segment as noted above. This reporting operating segment is substantially aligned to ‘SSE Business

Energy’ as reported in the CSS. However, it should be recognised that there are differences between the two disclosures, primarily driven

by the Licence requirements - these are described in the notes below and shown in the table reconciling the CSS to the financial

statements.

How the accounts are presented

The financial information presented in the CSS is based on operating activities of the Group’s non-domestic electricity and gas supply

business (“SSE Business Energy” segment described above) in Great Britain. The paragraphs that follow describe how SSE’s SSE Business

Energy (non-domestic supply) interacts with SSE Energy Markets, which is the Group’s energy markets business. The basis of preparation

defines the revenues, costs and profits of the business and describes in more detail the transfer pricing arrangements in place for the

financial year ended 31 March 2024. The CSS has been prepared on a going concern basis as set out in note A6.3 of SSE plc’s Annual Report.

Summary

‘SSE Business Energy’ sells electricity and gas to circa 0.2m business customer accounts in Great Britain and procures electricity, gas

REGOS, RGGOs and ROCs from SSE Energy Markets.

SSE Energy Markets acts as a counterparty with the external market for the procurement of electricity and gas for SSE Energy Services and

SSE Business Energy. SSE Energy Markets does not form part of the CSS as it is not within the scope defined by Ofgem. The policies

governing the forward hedging activity undertaken by SSE Energy Markets are overseen by Energy Markets Risk Committee, whose

responsibilities and roles are described on page 152

of SSE Annual Report for the year ended 31 March 2024.

SSE Business Energy (Non Domestic)

Revenue from Sales of Electricity and Gas – revenues are the value of electricity and gas supplied to business customers in Great Britain

during the year and includes an estimate of the value of units supplied between the date of the last bill and the year end. Non-domestic

volumes are expressed at customer meter point. Government Scheme Support (Energy Bills Discount Scheme) of £9.2m is included in

‘Other revenue’.

Direct Fuel Costs – SSE Business Energy does not engage in the trading of electricity and gas and procures all of its electricity and gas from

SSE Energy Markets. The method by which SSE Energy Markets procures energy is at an arm’s length arrangement on behalf of SSE Business

Energy, and is governed by SSE Business Energy’s forward hedging policy. The forward trades between SSE Business Energy and SSE Energy

Markets are priced at wholesale market prices at the time of execution and any differences in volume and reconciliation at the time of

delivery is marked to the spot price on the day. WACOG (weighted average cost of gas) also includes all Allocation reconciliations and

Unidentified Gas. The WACOE (weighted average cost of electricity) and WACOG also consist of trades marked to wholesale prices when

committed at the point of sale for fixed price customer contracts or when a customer instructs SSE to purchase energy in respect of

flexi-priced contracts. This transfer pricing methodology reflects how SSE Business Energy actually acquired its energy. There have been no

material changes in the transfer pricing policy in respect of SSE Business Energy since the CSS for the financial year ending 31 March 2023.

338 SSE plc Annual Report 2024

Transportation Costs – these include transportation, transmission and distribution use of system costs and balancing services use of

system costs.

Environmental and Social Obligation Costs – relate to policies designed to modernise and decarbonise the energy system in Great Britain

and include ROCs, Feed in Tariff, charges under the Capacity Mechanism and CfD schemes and charges in relation to ‘assistance for areas

with high electricity distribution costs’ (AAHEDC). REGO, RGGOs and GOO costs related to these schemes are also included in this section

of the CSS.

Other Direct Costs – include: industry settlement costs, management and market access charges from SSE Energy Markets and other

miscellaneous costs.

Indirect Costs – include: sales and marketing, customer service, bad debts and collections, metering costs, commercial costs, central

costs - including information technology, property, corporate, telecoms costs and costs incurred to meet Smart Metering rollout

obligations for the year. Where costs cannot be directly allocated to a fuel (electricity/gas), they have been allocated using costing models

based on activity, customer revenue or customer numbers – whichever is the most appropriate.

SSE Business Energy’s profit and loss account bears the risk and rewards arising from the volatility in demand for energy, caused by the

weather, consumption per customer and customer churn. It is also exposed to swings in wholesale costs and the uncertainty surrounding

its share of government environmental and social schemes.

SSE Energy Markets

SSE Energy Markets is responsible for optimising the Group’s electricity, gas and other commodity requirements. The hedging activity

undertaken by SSE Energy Markets is governed by the Group’s Energy and Markets Risk Committee.

Business Functions

The business functions in SSE have already been described in this document. The column headed ‘Other’ principally relates to

SSE Energy Markets.

Business function Note

Generation

(not covered

by CSS)

Supply

(covered by

CSS)

Other

(not covered

by CSS)

Operates and maintains generation assets

Responsible for scheduling decisions 1 P/L F

Responsible for interactions with the Balancing Market 2 P/L F

Responsible for determining hedging policy 3

Responsible for implementing hedging policy/makes decisions to buy/sell energy 4 P/L P/L F

Interacts with wider market participants to buy/sell energy 5

Holds unhedged positions (either short or long) 3

Procures fuel for generation P/L F

Procures allowances for generation P/L F

Holds volume risk on positions sold (either internal or external)

Matches own generation with own supply 6

Forecasts total system demand 7 P/L P/L F

Forecasts wholesale price P/L P/L F

Forecasts customer demand 8 P/L F

Determines retail pricing and marketing strategies

Bears shape risk after initial hedge until market allows full hedge 9 P/L P/L F

Bears short term risk for variance between demand and forecast 10

Key:

function and P&L impacting that area;

P/L profit/losses of function recorded in that area;

F function performed in that area.

Glossary and notes

1 “Scheduling decisions” means the decision to run individual power generation assets.

2 “Responsible for interactions with the Balancing Market” means interactions with the Balancing Mechanism in electricity.

3 Hedging policy was the responsibility of the Energy Markets Risk Committee which is a sub committee of the SSE Executive Committee.

4 SSE Energy Markets implements the hedging policy determined by the Energy Markets Risk Committee on behalf of SSE Business Energy and SSE Energy Services.

5 “Interacts with wider market participants to buy/sell energy” means the business unit responsible for interacting with wider market participants to buy/sell energy, not the entity

responsible for the buy/sell decision itself, which falls under “Responsible for implementing hedging policy/makes decisions to buy/sell energy”.

6 Matches own generation with own supply” means where there is some internal matching of generation and supply before either generation or supply interact with the wider

market. The total electricity demand for SSE Business Energy and SSE Energy Services (expressed at NBP) was 11.5TWh and the total UK Generation output was 18.7TWh (61%).

7 “Forecasts total system demand” means forecasting total system electricity demand or total system gas demand.

8 “Forecasts customer demand” means forecasting the total demand of own supply customers.

9 “Bears shape risk after initial hedge until market allows full hedge” means the business unit which bears financial risk associated with hedges made before the market allows fully

shaped hedging.

10 “Bears short term risk for variance between demand and forecast” means the business unit which bears financial risk associated with too little or too much supply for own

customer demand.

SSE CONSOLIDATED SEGMENTAL STATEMENT – CONTINUED

FOR THE YEAR ENDED 31 MARCH 2024

339SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Reconciliation of CSS to SSE Financial Statements 2023/24

The table below shows how the CSS reconciles with the adjusted earnings before tax in the SSE financial statements (note 5 of SSE’s

financial statements):

Reconciliation of CSS to Financial Statements Note

Revenue

£m

EBIT

£m

SSE Business Energy

CSS Supply – SSE Business Energy 3,193.0 98.0

Government support scheme income 1 (9.2) –

Smart buildings (BEMS) activity 2 47.9 (2.2)

Total SSE Business Energy in SSE Financial Statements 3,231.7 95.8

There are some differences between SSE’s financial statements and the CSS. There are items which are in the financial statements and not

in the CSS.

Notes

1 Income from the Energy Bill Discount Scheme to support non-domestic customers is recognised in ‘Other operating income’ in the SSE Financial Statements.

2 As noted in the description of operating segments above, smart buildings (BEMS) activity is reported within the SSE Business Energy operating segment in the SSE Financial

Statements, but is not in scope for reporting within the CSS.

Adjustments to reported profit before tax.

SSE focuses its internal and external reporting on ‘adjusted profit before tax’ which excludes exceptional items, re-measurements arising

from IFRS 9, depreciation on fair value uplifts and removes taxation on profits of joint ventures and associates, because this reflects the

underlying profits of SSE, reflects the basis on which it is managed and avoids the volatility that arises out of IFRS 9. Therefore, these items

have been excluded from the CSS.

340 SSE plc Annual Report 2024

Opinion

We have audited the Consolidated Segmental Statement financial statements of SSE plc (the Company) for the year ended 31 March 2024,

which comprise the Consolidated Segmental Statement (CSS), Basis of preparation, Reconciliation of CSS to the Annual Report of SSE plc

and the related disclosure notes. The financial reporting framework that has been applied in their preparation is a special purpose

framework comprising the financial reporting provisions of Ofgem’s Standard condition 19A of Electricity and Gas Supply Licenses.

In our opinion, the accompanying CSS of the Company for the year ended 31 March 2024 is prepared, in all material respects, in

accordance with the requirements of Standard condition 19A of Electricity and Gas Supply Licenses and the basis of preparation on

pages336 to 338

Basis for Opinion

We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) including ‘ISA (UK) 800 (Revised) Special

Considerations – Audits of Financial Statements Prepared in Accordance with Special Purpose Frameworks’. Our responsibilities under

those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are

independent of the Company in accordance with the ethical requirements that are relevant to our audit of the CSS financial statements in

the UK, including the FRC’s Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements.

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

Conclusions relating to going concern

In auditing the CSS, we have concluded that the directors’ use of the going concern basis of accounting in the preparation of the CSS is

appropriate.

Based on the work we have performed, we have not identified any material uncertainties relating to events or conditions that, individually

or collectively, may cast significant doubt on the Company’s ability to continue as a going concern for a period of 19 months through to

31December 2025.

Our responsibilities and the responsibilities of the directors with respect to going concern are described in the relevant sections of this

report. However, because not all future events or conditions can be predicted, this statement is not a guarantee as to the group’s ability to

continue as a going concern.

Emphasis of Matter – Basis of Accounting and Restriction on Distribution and Use

We draw attention to pages 336 to 338 of the CSS, which describes the basis of accounting. The CSS is prepared to assist the Company

in complying with the financial reporting provisions of the contract referred to above. As a result, the CSS may not be suitable for another

purpose. Our report is intended solely for the Company, in accordance with our engagement letter dated 14 April 2023, and should not be

distributed to or used by parties other than the Company. Our opinion is not modified in respect of this matter.

Other information

The other information comprises the information included in the annual report, other than the CSS and our auditor’s report thereon. The

directors are responsible for the other information contained within the annual report.

Our opinion on the CSS does not cover the other information and, except to the extent otherwise explicitly stated in this report, we do not

express any form of assurance conclusion thereon.

Our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with

the CSS or our knowledge obtained in the course of the audit or otherwise appears to be materially misstated. If we identify such material

inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the CSS

itself. If, based on the work we have performed, we conclude that there is a material misstatement of the other information, we are required

to report that fact.

We have nothing to report in this regard.

Responsibilities of directors

Management is responsible for the preparation of the CSS in accordance with the financial reporting provisions of Section Z of the

contract, and for such internal control as management determines is necessary to enable the preparation of the CSS that is free from

material misstatement, whether due to fraud or error.

In preparing the CSS, management is responsible for assessing the Company’s ability to continue as a going concern, disclosing, as

applicable, matters relating to going concern and using the going concern basis of accounting unless management either intends to

liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company’s financial reporting process.

INDEPENDENT AUDITOR’S REPORT TO THE CONSOLIDATED

SEGMENTAL STATEMENT

341SSE plc Annual Report 2024

Strategic Report Governance Financial Statements

Auditor’s Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the CSS as a whole is free from material misstatement, whether due to

fraud or error, and to issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a

guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements

can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence

the economic decisions of users taken on the basis of the CSS.

Explanation as to what extent the audit was considered capable of detecting irregularities, including fraud

Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design procedures in line with our

responsibilities, outlined above, to detect irregularities, including fraud. The risk of not detecting a material misstatement due to fraud is

higher than the risk of not detecting one resulting from error, as fraud may involve deliberate concealment by, for example, forgery or

intentional misrepresentations, or through collusion. The extent to which our procedures are capable of detecting irregularities, including

fraud is detailed below. However, the primary responsibility for the prevention and detection of fraud rests with both those charged with

governance of the entity and management.

– We obtained an understanding of the legal and regulatory frameworks that are applicable to the Company and determined that the

most significant to the CSS is consideration of any non-compliance of regulatory requirements, including the Office of Gas and

Electricity Markets (Ofgem) and regulations levied by the UK Financial Conduct Authority and Prudential Regulatory Authority. We have

spoken with the SSE head of regulation to confirm our understanding.

– We understood how SSE plc is complying with those frameworks by making enquiries of management, internal audit, those responsible

for legal and compliance procedures and the company Secretary. We verified our enquiries through our review of board minutes and

papers provided to the Audit Committee.

– We assessed the susceptibility of the Company’s CSS to material misstatement, including how fraud might occur by meeting with

management from various parts of the business to understand where it considered there was susceptibility to fraud. We also considered

performance targets and their prosperity to influence on efforts made by management to manage earnings. We considered the

programmes and controls that the Group has established to address risks identified, or that otherwise prevent, deter, and detect fraud;

and how senior management monitors those programmes and controls. Where the risk was considered to be higher, we performed

audit procedures to address each identified fraud risk.

– Based on this understanding we designed our audit procedures to identify noncompliance with such laws and regulations. Our

procedures involved: enquiries of legal counsel, Group management, internal audit, and focused testing. In addition, we completed

procedures to conclude on the compliance of the disclosures in the CSS with all applicable requirements.

A further description of our responsibilities for the audit of the CSS financial statements is located on the Financial Reporting Council’s

website at https://www.frc.org.uk/auditorsresponsibilities

. This description forms part of our auditor’s report.

Other matter

We have reported separately on the statutory financial statements of SSE plc.

Ernst & Young LLP

Glasgow

21 May 2024

342 SSE plc Annual Report 2024

Glossary

AIP

Annual Incentive Plan, a short-term bonus paid to employees

APM

Alternative Performance Measures used to track financial

performance

ASTI

Ofgem’s Accelerated Strategic Transmission Investment framework

CAGR

Combined Annual Growth Rate

CCGT

Combined Cycle Gas Turbine

CCS

Carbon capture and storage

CfD

Contract for Difference

COP28

The 28th Conference of Parties climate summit held in Dubai in

November 2023

DNO

Distribution Network Operator

DSO

Distribution System Operator

EBITDA

Earnings before interest, taxes, depreciation, and amortisation

EBRS

The UK Government’s Energy Bill Relief Scheme

EGL

The UK Government’s Energy Generator Levy

EGL2

The planned HVDC undersea transmission link from Peterhead to

Yorkshire

EPS

Earnings per share

Electric Vehicle

FID

Final Investment Decision

FFO

Funds From Operations

GHG

Greenhouse gas, used in relation to GHG emissions

Gigawatt

HVDC

High Voltage Direct Current

HVO

Hydrotreated Vegetable Oil, a fossil-free alternative to diesel

IEA

International Energy Agency

IRA

The US Government’s $250bn Inflation Reduction Act

Kilovolt

LOTI

Ofgem’s Large Onshore Transmission Investment plan

Megawatt

Net zero

Cutting greenhouse gas emissions to a level that is equal to or less

than the emissions removed from the environment

NZAP

SSE’s Net Zero Acceleration Programme, updated in May 2023 to

“NZAP Plus”

OCGT

Open-cycle Gas Turbine

ORESS

Ireland’s Offshore Renewable Energy Support Scheme

PSP

Performance Share plan, a long-term incentive paid to

Executive Directors

PSR

Priority Services Register

RAV

Regulated Asset Value as applies to SSE’s networks businesses

RCF

Retained Cash Flow

REFIT

Renewable Energy Feed-in Tariffs

REMA

The UK Government’s Review of Electricity Market Arrangements

RIIO

The “Revenue = Incentives + Innovation + Outputs” regulatory

framework by which SSE’s networks businesses are remunerated

Scope 1, 2 and 3 emissions

Scope 1 and 2 are those emissions that are owned or controlled by

SSE. Scope 3 emissions are from sources not directly owned or

controlled by SSE

Spark spread

The difference between the price received by SSE for electricity

produced and the cost of the natural gas needed to produce that

electricity

TCFD

Task Force on Climate-related Financial Disclosures

Totex

Total expenditure

TRIR

Total Recordable Injury Rate (SSE’s preferred measure of safety

performance)

TWh

Terawatt-hour

VaR

Value at Risk

WACC

Weighted Average Cost of Capital

Shareholder enquiries

The Company’s register of members is

maintained by our appointed Registrar,

Computershare Investor Services PLC

(“Computershare”). Shareholders with

queries relating to their shareholdings

should contact Computershare directly at:

Computershare Investor Services PLC,

The Pavilions, Bridgwater Road, Bristol

BS99 6ZZ

Telephone: +44 (0) 345 143 4005

Web: www-uk.computershare.com/

investor/#contact/enquiry

Investor Centre

Manage your sharers online at

www.sse-shares.com

Shareholders can manage their holdings

online using Investor Centre, the free and

secure online portal provided by

Computershare. It’s easy for shareholders

toregister for Investor Centre by logging

onto www.sse-shares.com , entering

their Shareholder Reference Number (SRN)

which can be found on any recent

communications from SSE and their

postcode, and following the instructions

online. Once registered, shareholders can:

– View, update and calculate the market

value of their shareholdings;

– Change address details and dividend

payment instructions; and

– View share price data and trading

graphsof listed companies.

Website

SSE’s website, sse.com , provides ease of

shareholder access to information about

the Company and its performance. It

includes a dedicated ‘Investors’ section

where shareholders can find electronic

copies of Company reports and a wide

range of other information including:

– share price information;

– regulatory news;

– dividend history and trading graphs;

– terms and conditions of the Scrip

Dividend Scheme; and

– Registrar contact details.

Digital news

SSE uses a dedicated news and views

website (available at www.sse.com/

news-and-views ) and X (formerly Twitter)

(www.twitter.com/sse ) to keep

shareholders, investors, journalists,

employees and other interested parties

up-to-date with news from the Company.

It is also possible to sign up to receive email

alerts for regulatory news and press releases

relating to SSE at www.sse.com/investors/

regulatory-news/

Elect to receive electronic

communication today

In line with SSE’s commitment to

sustainability and for cost efficiency,

allnewshareholders are automatically

registered as opting to access shareholder

documentation through the Investors

section of our website, meaning

shareholders will receive notification, by

post, when new relevant documentation

has been placed on the website. SSE only

sends printed copies of documentation

where shareholders specifically request

acopy.

Alternatively, shareholders can, and are

encouraged to, elect to receive electronic

communications from SSE because of the

benefits for shareholders, SSE and the

environment:

– Fast access: shareholders will receive

immediate notification by email once

shareholder documentation is available

online. Documentation cannot get lost

or delayed in the post.

– Cost-effective: reduced printing and

postage costs will save the Company,

and therefore its shareholders, money.

– Environmentally friendly: using less

paper and reducing the environmental

impact of printing and delivery of paper

documents aligns with SSE’s

commitment to sustainability.

Shareholders can easily elect to receive

electronic communications or change their

communication preference on the online

Investor Centre, www.sse-shares.com

orby contacting Computershare.

Financial calendar

Publication of Annual Report 14 Jun 2024

Q1 Trading Statement 18 Jul 2024

AGM 18 Jul 2024

Ex-dividend date for final

dividend

25 Jul 2024

Record date for final dividend 26 Jul 2024

Final date for Scrip elections 22 Aug 2024

Payment date 19 Sept 2024

Notification of Close Period

for six months to

30September

Around

30 Sept 2024

Results for six months to

30September

13 Nov 2024

Dividend payments direct to

your bank account

The Company typically pays dividends twice

yearly. Interim dividends are paid in March,

and final dividends are paid in September

once approved by shareholders at the AGM.

All dividends are credited to a shareholder’s

nominated UK bank/building society

account. Shareholders can register or

amend their UK bank/building society

account details on the online Investor

Centre, www.sse-shares.com , or by

contacting Computershare.

Shareholders who do not have a UK bank

orbuilding society account, can receive

their dividends directly into a bank account

outside of the UK using Computershare’s

International Payment Service (IPS). For

further information on IPS please visit

www.sse-shares.com

or contact

Computershare.

Scrip dividend

Shareholders may elect to participate in

SSE’s Scrip Dividend Scheme (the “Scheme”)

to receive future dividends in the form of

additional new shares. Further details of the

Scheme can be found at https://www.sse.

com/investors/shareholder-services/

dividends-and-scrip-scheme/

Shareholders who elect to participate in

theScheme should also complete a bank

mandate to ensure they can receive future

dividend payments should they ever

withdraw from the Scheme.

Share dealing

Please go to www.computershare.com/

dealing/uk for a range of dealing services

provided by Computershare. If you would

like to speak to the Computershare Dealing

Services team directly, please call

+44 (0) 370 703 0084.

American Depositary Receipts

SSE has established a sponsored Level I

American Depositary Receipt (ADR)

program with Deutsche Bank Trust

Company Americas (Deutsche Bank).

EachADR represents one SSE Ordinary

Share. Further information and Deutsche

Bank’s contact details can be found at

https://www.sse.com/investors/adrs .

Shareholder information

343SSE plc Annual Report 2024

Printed by Think Solutions.

Printed on material from well-managed, FSC®-certified

forests and other controlled sources.

This publication was printed with vegetable oil based inks

by an FSC®-recognised printer that holds an ISO 14001

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The outer cover of this report has been laminated with a

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an additive within the film within the film will initiate the

process of oxidation.

Designed and produced by

SSE PLC

344 SSE plc Annual Report 2024

For further information

about SSE, please contact:

SSE plc

Corporate Affairs

Inveralmond House

200 Dunkeld Road

Perth PH1 3AQ

+44 (0)1738 456000

info@sse.com

Registered in Scotland No. 117119

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