SSE Financial Results Full year to 31 March 2015

Lord Smith of Kelvin

2

Chairman

“SSE is a great company with fantastic people” Lord Smith of Kelvin

3

Capex (£bn)

00.30.60.91.21.51.8

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

0.38 0.50 0.66

0.81

1.28 1.32 1.44

1.71 1.49 1.58 1.48

Dividend growth (p/share)

0

20

40

60

80

100

FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

42.5 46.5 55.0 60.5

66.0 70.0 75.0 80.1 84.2 86.8 88.4

The SSE team

4

Safety comes first

5

Total Recordable Injury Rate*

0.04

0.08

0.12

0.16

FY14 FY15

0.12 0.12

20

30

40

50

FY14 FY15

40 42

Total Recordable Injuries

*TRIR – per 100,000 hours worked

Strategy for long-term success

6

Employees Politicians Customers Regulators

Great Britain Ireland

Our core purpose Our strategy Our financial objective

Provide the energy people need in a reliable and sustainable way

Efficient operation of, and investment in, a balanced range of energy businesses

Annual dividend increases of at least RPI inflation for shareholders

Working for a long-term framework

7

Taking forward energy policy commitments

Concluding its energy market investigation

Positively contributing to emerging market

Delivering solid financial results..

8 ..while extending household energy price freeze

Dividend (p/share)

60

70

80

90

100

FY11 FY12 FY13 FY14 FY15

75.0 80.1

84.2 86.7 88.4

Adjusted PBT (£bn)

1.2

1.3

1.4

1.5

1.6

FY11 FY12 FY13 FY14 FY15

1.32 1.34 1.42

1.55 1.56

Capital Investment (£bn)

1

1.2

1.4

1.6

1.8

FY11 FY12 FY13 FY14 FY15

1.44

1.71

1.49 1.58

1.48

Adjusted EPS (p/share)

90

100

110

120

130

FY11 FY12 FY13 FY14 FY15

113.2 112.9 118.5

123.4 124.1

Gregor Alexander

9

Finance Director

₋ Financial Overview ₋ Networks

Focusing on the key financial results FY14 £m FY15 £m % change

Adjusted profit before tax 1,551.1 1,564.7 +0.9%

Fair value re-measurements (IAS 39) (212.0) (105.3)

Exceptional items (747.2) (674.6)

Interest on net pension liabilities (IAS 19R) (28.2) (14.0)

Tax on JCEs and associates 11.6 (35.6)

Reported profit before tax 575.3 735.2

Adjusted earnings per share 123.4p 124.1p +0.6%

Adjusted effective tax rate 15.3% 14.4%

Full-year dividend 86.7p 88.4p +2.0%

Dividend cover 1.42x 1.40x

10

11

Summarising performance in SSE’s businesses Operating Profit FY14 £m FY15 £m % change

EPM and Generation 496.1 433.3

Gas Production 130.2 36.6

Gas Storage 8.3 3.9

Total Wholesale 634.6 473.8 -25.3%

Electricity Distribution 507.0 467.7

Electricity Transmission 136.7 184.1

Gas Distribution (SGN)* 276.6 285.0

Total Networks 920.3 936.8 +1.8%

Energy Supply 246.2 368.7

Energy Related Services 24.1 17.7

Enterprise 56.8 70.4

Total Retail 327.1 456.8 +39.7%

Corporate Unallocated (1.9) 14.0

Total Operating Profit 1,880.1 1,881.4 +0.1%

*SSE share

Beauly-Denny

Focusing on adjusted earnings per share

12

Adjusted EPS FY (p)

100

110

120

130

FY14 FY15

123.4 124.1

1.20

1.30

1.40

1.50

FY14 FY15

1.42 1.40

Adjusted Dividend Cover

- FY15 adjusted EPS in line with forecast

- EPS subject to key uncertainties

- SSE is currently targeting FY16 EPS which at least matches analyst expectations*

- Adjusted dividend cover could range between around 1.2x to around 1.4x in the 3 years to March 2018

*c.115p at 08/05/2015

Making the right investment decisions (1)

13

FY14 FY15 Change %

Capital expenditure and investment (£m) 1,583 1,475 -6.8%

Adjusted net debt and hybrid capital (£m) 7,643 7,568 -1.0%

Average interest rate 4.71% 4.21%

Over the last 5 years SSE:

- Increased Networks RAV by £2.4bn

- Completed almost 800MW* of new onshore and 350MW** of new offshore wind

- Completed Great Island CCGT

- Issued hybrid bonds at just 4.02% Greater Gabbard windfarm

*83MW sold **SSE share

Making the right investment decisions (2)

14 £5.5bn net capex expected in the period of 2014-2018; significant portfolio of

projects in early development

Committed

− Caithness-Moray (Transmission)

− Clyde extension (Onshore wind)

Optional

− Bhlaraidh (Onshore wind)

− Ferrybridge Multifuel 2 (Thermal generation)

− Beatrice (Offshore wind)

Diverse Projects

50%

30%

10%

10%

Networks

Wholesale

Retail

Other

FY16 c. £1.75bn capex forecast

Focusing on value from disposals

15 Target proceeds and net debt reduction to be achieved

c.£1bn

Wind ‘Recycling’

Langhope Rig (16MW)

Assets Sold (c.£475m)

Disposal Programme Outstanding

Disposals and capital ‘recycling’ programme

Clyde windfarm

FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15

25.7 27.5 30.0 32.4 35.0 37.7 42.5

46.5

55.0 60.5

66.0 70.0

75.0 80.1

84.2 86.7 88.4

Maintaining a platform for dividend growth

16

Dividend Per Share FY (p)

Targeting at least RPI in future

Networks central to SSE strategy

17

0

2

4

6

8

FY10 FY11 FY12 FY13 FY14 FY15

Transmission Distribution SGN

Total Networks RAV, £bn (net)

Operating Profit FY14 FY15 % change

Distribution 507.0 467.7 -7.8%

Transmission 136.7 184.1 +34.7%

Gas Distribution (SGN) 276.6 285.0 +3.0%

Networks Operating Profit 920.3 936.8 +1.8%

Networks RAV increased by almost 50% since April 2010 to £7.35bn

Keeping the lights on for Distribution customers

18

100

200

300

400

FY11 FY12 FY13 FY14 FY15

212 260

289 308 328

Distribution capex (£m)

Electricity distributed (TWh)

30

35

40

45

FY14 FY15

40.4 39.6

400

450

500

550

FY14 FY15

507

468

Operating profit (£m)

Working for customers in ED-1

- New Distribution price control

- Delivering an underlying reduction in household distribution costs

- Stable and transparent regulatory framework

- Base revenues set for 2015/16 despite CMA ED1 appeal

- SSE is focused on:

- Supporting stable and transparent regulatory framework

- Achieving efficiencies

- Ensuring investors receive fair return

19

Increasing the asset base in Transmission

0

50

100

150

200

FY14 FY15

137

184

Operating Profit (£m) Transmission RAV (£bn)

0

0.5

1

1.5

2

FY11 FY15

0.52

1.73

0

100

200

300

400

500

FY11 FY12 FY13 FY14 FY15

117

229

334 349

467

Transmission capex (£m)

20

Achieving efficiencies in Gas Distribution

21 *SSE share

Operating Profit* (£m)

200

225

250

275

300

FY14 FY15

277 285

2.30

2.35

2.40

2.45

2.50

FY14 FY15

2.44 2.46

RAV* (£bn)

0

100

200

300

FY11 FY12 FY13 FY14 FY15

200 202 199 161 170

SGN capex* (£m)

Alistair Phillips-Davies

22

Chief Executive

₋ Business and Political Environment ₋ Retail ₋ Wholesale ₋ Outlook

Ensuring SSE is well-positioned for the future

23 2015 – an important year for energy businesses

SSE 2014/15 goals

- Deliver good operational performance

- Deliver solid financial results

- Ensure SSE is well positioned to succeed

Challenges SSE faced in 2014/15

- Electricity distribution price control

- Auction for generation capacity

- CMA energy market investigation

- UK general election

Working in the interest of customers and investors alike

24

Taking forward energy policy commitments

Completing interim findings which will be subject to more analysis

Seeking to secure a coherent and enduring framework

Managing issues in Energy Supply

25

Operating profit (£m) FY14 FY15 % change

Energy Supply 246.2 368.7 +49.8%

Energy Related Services 24.1 17.7 -26.6%

Enterprise 56.8 70.4 +23.9%

Total Retail 327.1 456.8 +39.7%

Energy Customer Accounts (m) 9.10 8.58 -5.7%

Aged Debt (£m) 117.8 106.2 -9.8%

9.7 9.6 9.5 9.1 8.6

4

6

8

10

FY11 FY12 FY13 FY14 FY15

Customer numbers (m)

89 88 90

118 106

0

50

100

150

FY11 FY12 FY13 FY14 FY15

Aged debt (£m)

GB Ireland

Energy Supply profit margin was 4.6%, equating to £69 on a typical duel-fuel bill

Putting customers first for the long term

26

2 Price Cuts in 15 Months

Price Freeze until July 2016

Brand building Industry-leading broadband offer

‘Treating Customers

Fairly’ principles

Customer service

improvement

Fundamental digital channels

overhaul

£110m Investment in Energy Supply

Building a new business - Enterprise

27

- Dedicated relationship management

- ESG acquisition

- Potential to attract significant and sustainable growth

Profit Growth (£m)

57 70*

0

20

40

60

80

FY14 FY15

Revenue Growth (£m)

595 651

0

200

400

600

800

FY14 FY15

*includes £15.3m gas pipelines disposal

Managing Wholesale business in response to long term trends

28

Operating profit FY14 FY15 % change

EPM and Generation 496.1 433.0 -12.7%

Gas Production 130.2 36.6 -71.9%

Gas Storage 8.3 3.9 -53.0%

Total Wholesale 634.6 473.8 - 25.3%

Exceptional Charges (584.9) (685.9) 0

10

20

30

FY11 FY12 FY13 FY14 FY15

13.6 16.8

20.6 16.6

9.1

Coal-fired output (TWh)

2

4

6

8

10

FY11 FY12 FY13 FY14 FY15

4.4

7.6 7.3

9.0 8.5

Renewable output (TWh)

0

100

200

300

400

500

FY12 FY13 FY14 FY15

177 184

414 398

Gas production output (m therms)

0

10

20

30

40

FY11 FY12 FY13 FY14 FY15

29.3

21.6

8.7 10.1 9.8

Gas- and oil-fired output (TWh)

Taking the right decisions in Generation – coal

29

0

5

10

15

20

25

W-0

6

S-0

7

W-0

7

S-0

8

W-0

8

S-0

9

W-0

9

S-1

0

W-1

0

S-1

1

W-1

1

S-1

2

W-1

2

S-1

3

W-1

3

S-1

4

W-1

4

S-1

5

W-1

5

S-1

6

W-1

6

S-1

7

W-1

7

Actuals Forward Curve*

Baseload Dark Spreads (£/MWh)

- Difficult decision to:

- Not reopen Unit 4 at Ferrybridge

- Close Unit 3 at Ferrybridge by the end of FY16

- Options for Fiddler’s Ferry to be reassessed following next capacity auction

*as at 8th May 2015

Ferrybridge power station

Taking the right decisions in Generation – gas

30

- £15m in Peterhead to improve flexibility

- Over £100m in Medway and Keadby – improved flexibility and reliability

- Bring Keadby out of deep mothball

- No further new CCGT development at present

Investment in Thermal Generation (£m)

0

100

200

300

FY11 FY12 FY13 FY14 FY15

130 130

228 277

161

New gas turbine - Medway

Peterhead CCGT

Investments and investment decisions

Taking the right decisions in Generation – renewables (1)

31

Total Renewable Capacity (MW)

2,295 2,365 2,941 3,161 3,289 3,357

0

1,000

2,000

3,000

4,000

FY10 FY11 FY12 FY13 FY14 FY15

Hydro Onshore wind Offshore wind

In the last 5 years SSE added:

- Just under 800MW* of new onshore wind

- 350MW** of new offshore wind

Walney offshore windfarm

*83MW sold **SSE share

Taking the right decisions in Generation – renewables (2)

32

Decisions take account of:

- Disciplined approach to capital investment

- Avoiding dependency on particular fuels/technologies

- Introduction of competition for CfDs

Total Renewable Output (TWh)

56% 50%

37% 34% 35%

44%

44%

49% 51% 51%

6% 14%

15% 14%

0

2

4

6

8

10

FY11 FY12 FY13 FY14 FY15

Offshore Wind - 2x ROCs

UK onshore wind and hydro - 1x ROCs

Non-ROCable renewable output

Plans and options include:

- Recycling capital

- Over 280MW of onshore wind under construction

- Beatrice offshore wind farm

Completing new assets in Ireland

- Great Island CCGT

- Now in full commercial operation

- Completion costs out-turned on budget

- Cleanest, most efficient and reliable gas power plant on Irish grid

- Reform of Single Electricity Market (SEM)

- Published September 2015

- Dublin based SSE team

- Fully engaged in regulatory and policy process

33

Great Island CCGT

Maintaining Gas Production assets

34

- 5 years since SSE first invested in gas production assets

- Portfolio estimated reserves in excess of 2.2bn therms

- SSE will look at opportunities to increase reserve base

0

100

200

300

400

500

FY12 FY13 FY14 FY15

177 184

414 398

Gas production output (m therms)

0

30

60

90

120

150

FY12 FY13 FY14 FY15

43 40

130

37

Gas production profit (£m)

Sean gas platform

Laying foundations and making progress

Uncertainty continues

- CMA appeals of RIIO-ED1 price control

- New government’s energy policies

- Findings and potential remedies from CMA Energy Market investigation

35

Our priority has been – and continues to be – to ensure SSE is in a good position for the long term

Doing the right things for the long term

36

- Securing £100m of operational efficiencies

- Completing disposals totalling £475m

- Taking difficult decisions in generation

- Commissioning Great Island CCGT

- Reconnecting with Distribution customers

- Securing approval for Caithness-Moray link

- Extending our energy price freeze

- Investing in energy supply business

- Launching SSE Enterprise

- Maintaining strong options for future investment

- Reducing level and cost of our net debt

Delivering dividend growth for the long-term

37

FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 FY15 FY16

25.7 27.5 30.0 32.4 35.0 37.7 42.5

46.5

55.0 60.5

66.0 70.0

75.0 80.1

84.2 86.7 88.4 RPI*

Dividend Per Share FY (p)

*forecast, at least RPI

Value for customers and value for investors Q and A

38