SSE PLC AGM 2019 CHAIRS PRESENTATION SCRIPT SLIDE 1 SSE PLC AGM - - PDF document

SSE PLC AGM 2019 – CHAIR’S PRESENTATION SCRIPT

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SLIDE 1 – SSE PLC AGM 2019 SLIDE 2 – RICHARD GILLINGWATER CBE, CHAIR Good afternoon everyone. My name is Richard Gillingwater and it’s my pleasure to welcome you to the Perth Concert Hall for SSE’s Annual General Meeting. SLIDE 3 – INTRODUCING BEATRICE OFFSHORE WIND FARM The film you’ve just seen highlighted the work done by this Company to deliver the new Beatrice offshore wind farm in the Moray Firth. It’s a quite outstanding project, completed on time and below budget. Its completion marks another step towards our vision of being a leading energy company in a low carbon world. SLIDE 4 – SAFETY I would like to start by highlighting the safety information in the shareholder guide you received when you arrived. There are no fire drills planned for today. If the alarm sounds, you’ll be asked to evacuate the building immediately via the marked fire exits. SLIDE 5 – FOCUSING ON SAFETY PERFORMANCE Safety is the first of SSE’s six core values; and is the first item on the agenda for Board meetings. In the last financial year, the Total Recordable Injury Rate among people working on behalf of SSE went down significantly, to 0.16 per 100,000 hours worked. SLIDE 6 – CREATING A LICENCE FOR SAFE WORKING By many standards, this is a very good performance and clearly represents important progress; but our ultimate goal is injury-free

• working. That’s why we have a simple licence for every employee

working on our behalf: If it’s not safe, we don’t do it. SLIDE 7 – THE BOARD I’d now like to introduce the members of the Board. With me on the platform, from my left are:

• Sally Fairbairn, our Company Secretary; and
• Crawford Gillies, our Senior Independent Director.

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On my right are:

• Chief Executive, Alistair Phillips-Davies;
• Finance Director, Gregor Alexander;
• Energy Director, Martin Pibworth and then our team of non-

Executive Directors:

• Sue Bruce;
• Tony Cocker;
• Peter Lynas;
• Helen Mahy; and
• Melanie Smith.

I would like to welcome Mel to her first AGM since joining the Board in January, and to thank all of the Directors for their hard work and

• contribution. Subject to the normal shareholder approvals, I’m looking

forward to continuing to work with them for my remaining time as Chair, which will come to an end no later than March 2021. SLIDE 8 – INDEPENDENTLY EVALUATING THE BOARD As you may have seen in the Annual Report, the performance and effectiveness of the Board has recently been independently evaluated by Schneider Ross. The evaluation concluded that the Board is effective, with many features reflective of best practice and indicative of an engaged and high- performing Board. At the same time, some areas for further focus in support of continuous improvement were identified. These include reinforcing the constructive challenge in the Board Room; and challenging management to continually improve SSE’s ability to manage change. We have in place an action plan to take forward these and other

• pportunities for development, and will report on progress in the 2020

Annual Report. SLIDE 9 – QUESTIONS Very shortly I’ll look at SSE’s performance and future priorities. After that, you may have questions for the SSE team.

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If you have a question about the performance of the Company, or a matter relating to the AGM business, please make sure you’re seated close to the Question Point, towards the back of the hall. If you have a question related to your shareholdings, please direct them to our Shareholder Information Desk. If you have a question about your energy account, please direct it to our Customer Enquiry Desk. The teams at these desks will be available after today’s meeting. Towards the end of this Meeting, voting on the resolutions will be done by way of a poll. You should all have received a handset at Registration and your shareholder guide explains how it should be used when it’s time to vote. SLIDE 10 – MEETING THE CHALLENGES There are always challenges in business, but SSE is a long-term business with a clear strategy to create value for shareholders and society from developing, operating and owning energy and related infrastructure in a sustainable way. With a focus on core businesses of regulated energy networks and renewable energy, it is well-set to realise its vision of being a leading energy company in a low carbon world. There is, however, no doubt that the period following last year’s AGM presented significant challenges for SSE. A substantial operating loss was incurred in the Energy Portfolio Management division. As you would expect, the Annual Report addresses these issues in depth and the Board believes that the response to them has been pragmatic, comprehensive and appropriate. Separately, it became apparent that the planned Energy Services merger with npower would not be in the interests of customers, employees or

• shareholders. We’re delighted that Katie Bickerstaffe last month took

up the role of Executive Chair of the Energy Services business. She will

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work with the very strong management team in that business with a mandate to secure for it the best future outside of SSE. SLIDE 11 – CREATING VALUE FROM ASSET DEVELOPMENT AND OPERATION The challenges we confronted last year should not obscure the Company’s successes. These include creating value from asset development and operation. In the five years to March 2019, we’ve actively disposed of over £3.bn of assets with gains on sale including fair value uplift of £1.4bn. As we explained when we presented our results to the City in May, this is a considered response to changing capital markets - and to the clear appetite that potential financial partners have for working with leading developers and operators like SSE. SLIDE 12 – ENSURING SSE IS A PURPOSE-LED COMPANY Looking ahead, and in considering what type of company SSE should be in a changing world, I have had the opportunity to contribute to a British Academy study on the future of the corporation. This is a critical question for SSE and other large companies, given the speed and extent of political, economic, social and technological change. It’s already clear to me that the future of the corporation lies in being purpose-led. That purpose cannot simply be to earn money; it must be to provide profitable and sustainable solutions to social or environmental problems. Perhaps the greatest problem of all is climate change, and it is for this reason that our purpose at SSE is to provide the energy needed today while building a better world of energy for tomorrow. SLIDE 13 – CREATING VALUE THROUGH THE LOW CARBON TRANSITION It is this core purpose that underpins our commitment to creating value for shareholders and society through the low carbon transition.

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And it is this core purpose that led us to advocate the adoption by the UK government of a net zero emissions target for 2050. We are pleased that this target has since been adopted; and we believe

• ur core businesses of regulated electricity networks and renewables

have a huge part to play in helping the UK to achieve it. SLIDE 14 – FOCUSING ON THE CORE: TRANSMISSION Take electricity Transmission. Last year we successfully completed the new £1bn Caithness-Moray link to accommodate more renewable energy on the electricity system. It was also a record year for connecting renewable sources of energy to

• ur transmission network, taking the total to over 6 gigawatts of

capacity. And just last month, we published an ambitious Business Plan that makes a powerful case for further investment in Transmission, right the way through to 2026. SLIDE 15: FOCUSING ON THE CORE: DISTRIBUTION Then there’s electricity Distribution. There is no doubt that electrification of heat and transport will lead to an increased role for our distribution networks. We have adopted a long-term target to help accommodate 10 million electric vehicles on Britain’s roads. And we are also leading the way in the development of a local, flexible and responsive electricity network. This is illustrated by our Project LEO,

• r Local Energy Oxfordshire.

It will receive almost £14m of funding from the UK government’s Industrial Strategy Challenge Fund. SLIDE 16: FOCUSING ON THE CORE: RENEWABLES Our other core business is generation of electricity from renewable sources. The completion of the Beatrice offshore wind farm that you saw earlier has confirmed our position as the leading generator of renewables

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across the UK and Ireland, with over 4 gigawatts of capacity. But our ambitions don’t end there. We have a pipeline of renewable energy developments that extends to a further 8 gigawatts of capacity in the UK and Ireland alone. And we have a target to treble renewable energy output to over 30 terawatt hours by 2030. This, in turn, will support a further significant reduction in the carbon dioxide intensity of the electricity generated by SSE as a whole. And we have ambitions to take our capabilities in developing, building and operating renewable energy schemes to new markets, where the risk/reward balance makes sense and where we can work effectively with stakeholders in those markets. SLIDE 17: RESPONDING TO REGULATION AND POLITICS It is these three businesses that will be core to achieving our vision of being a leading energy company in a low carbon world. But we should not under-estimate the challenges, particularly in relation to sector regulation and politics. In response to these challenges, we will continue to make a strong case for a regulatory and policy framework that supports the drive to net zero emissions. As you know, the Labour Party advocates nationalisation of energy

• networks. We maintain an open dialogue with the party’s

representatives to better understand its proposals; and we are actively working to demonstrate that nationalisation would seriously jeopardise the achievement of a decarbonised and decentralised electricity system. SLIDE 18 – FOCUSING ON OUR SOCIAL CONTRACT In dealing with politicians, regulators and other stakeholders, we are very focused on our social contract with the societies in which we

• perate.

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In return for: the right to earn returns for shareholders; the human capital we borrow; and the public services and infrastructure on which we depend to do business; SSE:

• invests in climate action, clean energy and infrastructure for the

benefit of customers;

• creates and maintains decent jobs directly and in the supply chain;

and

• pays a fair share of tax.

SLIDE 19 – RECOMMENDING A FINAL DIVIDEND OF 68.2P Honouring our social contract enables us to create and unlock value for

• shareholders. Our first financial objective is to remunerate shareholders’

investment through the payment of dividends. I’m therefore pleased that the Board is recommending a final dividend of 68.2p per share, making a full-year dividend of 97.5p. In line with shareholder approval granted last year we are again intending to offer a Scrip alternative. SLIDE 20 – CREATING VALUE THROUGH THE LOW CARBON TRANSITION This 97.5p dividend is the first in our five-year dividend plan through to 2023. The 80p dividend we intend to recommend for this financial year clearly reflects the fact we expect the future of the Energy Services business to be outside the SSE group. Over the five years, our dividend plan should result in dividend payments totalling around £4.25 per share. We are already creating value through the low carbon transition from developing and operating, as well as owning, energy assets and businesses; and we have set ourselves up for success as a networks- and renewables-focused business working towards a decarbonised electricity system.

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SLIDE 21 – DELIVERING FOR SHAREHOLDERS AND SOCIETY IN A CHANGING WORLD The world around us is changing fast, and the next few years will continue to present significant challenges for SSE. In meeting these challenges, we will be clearly focused on our vision of SSE being a leading energy provider in a low carbon world. We have summarised the start to this financial year in the trading statement released to the Stock Exchange this morning. Looking ahead, our objectives are clear. We will:

• take forward our strategic focus on regulated electricity networks

and renewables;

• enable our key businesses to fulfil their huge opportunities;
• create value through the low carbon transition; and
• deliver our five-year dividend plan.

This is a dividend plan which the Board and management team are committed to delivering in a responsible, sustainable way. ENDS