SSE PLC (SSE) 2018年年度報告「LSE」.pdf

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1、RENEWINGCREATING VALUE IN A SUSTAINABLE WAYSSE plc Annual Report 2018CREATING VALUE IN A SUSTAINABLE WAYStrategic ReportHighlights of 2017-18 2Our story 4Market overview 10Our strategy 12Our business explained 16Chairmans statement 22Chief Executives review 24Delivering our strategy 26Risk report 28

2、Financial overview 34Wholesale 46Networks 52Retail 60Enterprise 65SSEs non-financial impacts summary 2017/18 70Environment and climate 72Social contribution 76People 80Culture 83Directors ReportChairmans Corporate Governance Statement 88Board of Directors 90Leadership 90Effectiveness 102Accountabili

3、ty 109Stakeholder engagement and responsible stewardship 116Remuneration 120Other statutory information 138Statement of Directors responsibilities 140Financial StatementsAlternative Performance Measures 141 Consolidated income statement 146 Consolidated statement of comprehensive income 147Consolida

4、ted balance sheet 148Consolidated statement of changes in equity 149Consolidated cash flow statement 150Notes to the consolidated financial statements 151Accompanying information 200Company balance sheet 228Company statement of changes in equity 229Notes to the Company financial statements 230Indepe

5、ndent Auditors Report 240Consolidated segmental statement 244Shareholder information IBCImportant note:planned SSE Energy Services transactionOn 8 November 2017,the Board of Directors of SSE plc announced it had entered into an agreement with innogy SE in respect of a proposed demerger of SSEs house

6、hold energy and services business in Great Britain(now named SSE Energy Services)and immediate combination of that business with innogy SEs subsidiary npower to form a new independent UK-based group to be held by SSE shareholders(following the demerger)and(following the combination)with minority sha

7、reholding participation by innogy SE(approximately 65.6%and 34.4%respectively).Following the combination,the new independent business will be separately listed on the London Stock Exchange.SSE shareholders will retain their existing SSE shares and will also hold one share in the newly-listed busines

8、s for every existing SSE plc share they hold at the demerger record date.In this Annual Report this demerger of SSE Energy Services,combination with npower and listing on the London Stock Exchange is described as the planned SSE Energy Services transaction.Resolutions relating to the planned SSE Ene

9、rgy Services transaction will be proposed at a General Meeting at 2pm on 19 July 2018 at the Perth Concert Hall.A Shareholder Circular in relation to this is being issued on 27 June 2018 and details will also be available at .The transaction is also subject to regulatory approval.On 8 May 2018,the C

10、ompetition and Markets Authority referred the proposed combination of SSE Energy Services and npower for a so-called Phase 2 investigation,by a group of independent panel members.The deadline for the final report from that investigation is 22 October 2018.SSE plc Annual Report 20181SSE is rEnewing 4

11、for a low-carbon futurecreating 12value for shareholders AND societydelivering 34on its financial objectivecontributing 68to the world around it in a sustainable wayleading 86through responsible governanceSSE provides the energy and related services needed now and in the future,and it does so in a r

12、esponsible way that benefits shareholders and society more widely.This Annual Report is a detailed summary of the value created by SSE for all of its stakeholders in 2017/18,and the steps it is taking in the best long-term interests of energy customers to adapt to a fast-changing sector.Chairman Ric

13、hard Gillingwater CBE2SSE plc Annual Report 2018OUR VISIONTo be a leading provider of energy and related services in a low-carbonworld.OUR PURPOSETo responsibly provide the energy and related services needed now and in the future.OUR STRATEGYTo create value for shareholders and society from developi

14、ng,owning and operating energy and related infrastructure and services in a sustainable way.Delivery of this strategy is dependent on the shared talent,skills and values of people throughout SSE.The financial objective of this strategy is to remunerate shareholders investment through the payment of

15、dividends.For 2017/18,the Board is recommending a final dividend of 66.3 pence per share.This will make a full-year dividend of 94.7 pence per share.SSE has also set out a plan for the dividend for the five years to 2023,described in the Financial Overview on page 44.HIGHLIGHTS OF 2017-18Strategic R

16、eport About SSESSE is a public listed company that seeks to work in the public interestIt does this by being transparent in the way it does business,responsible in the way it works with stakeholders and sustainable in the way it makes decisions.Read more on page 14.SSE plc Annual Report 2018394.7pen

17、ceAdjusted*PBT1,453.2mReported PBT1,086.2mAdjusted*capital and investment expenditure1,503.0mReported capital and investment expenditure2,248.2mAdjusted*EPS 121.1pReported EPS81.3pContribution to UK GDP8.6bnContribution to Irish GDP806mTax paid in the UK484.1mTax paid in Ireland22.6mDIVIDENDRecommen

18、ded full-year dividend PROFIT BEFORE TAXEARNINGS PER SHARETAXECONOMIC CONTRIBUTION INVESTMENT#APM *Adjusted figures used in this report refer to measures used for internal performance management.As such,they are not defined or specified under International Financial Reporting Standards(IFRS)and are

19、considered to be Alternative Performance Measures(APMs).4SSE plc Annual Report 2018OUR STORYPreparing SSE for the challenges of the futureSSE has a rich heritage to draw on as it plays its part in reshaping the energy sector for a low-carbon future.Over the course of a history spanning more than 70

20、years,change has been the one constant for SSE,and a proven ability to adapt stands it in good stead as it enters its next chapter.Strategic Report About SSESSE plc Annual Report 201856SSE plc Annual Report 2018OUR STORY CONTINUEDSSE has a proud past and is focused on a strong futureA proud pastThis

21、 year,2018,marks the 75th anniversary of the Hydro Electric Development(Scotland)Act,which paved the way for the North of Scotland Hydro Electric Board to construct hydro electric schemes across the north of Scotland and to connect homes,crofts and farms to the electricity network for the first time

22、.This Board later became Scottish Hydro Electric.It also marks the 70th anniversary of the formation of the Southern Electricity Board,which combined almost 50 companies and local authority undertakings to create a regional electricity distribution and supply company,providing electricity(sometimes

23、for the first time)to people across central southern England.This Board later became Southern Electric.In addition,2018 marks the 20th anniversary of Scottish Hydro Electric and Southern Electric coming together to create SSE(previously Scottish and Southern Energy),which became and remains one of t

24、he leading energy companies in the UK.And it marks the 10th anniversary of Airtricity,the Irish electricity generator and supplier,becoming part of the SSE Group,since when SSE has operated throughout the UK and Ireland.SSE is proud of what it has achieved over many years and has always sought to dr

25、aw on experience to build a strong future.This means it has been,and remains committed to,taking the right decisions in each of its businesses to secure the right outcomes for energy customers and other stakeholders who have an interest in SSE and in the wider energy sector.A strong futureEach of th

26、e anniversaries occurring in 2018 is the result of past decisions to embrace change and to adapt to the economic,social and technological requirements of energy customers and of society as a whole.The extent of change now taking place in the energy sector is unprecedented;and the needs of customers

27、and society are evolving rapidly.It was SSEs continuing commitment to embrace change and adapt to the needs of customers that led to its decision in November 2017 to enter into an agreement with innogy SE in respect of a proposed demerger of SSEs household energy and services business in Great Brita

28、in(now named SSE Energy Services)and immediate combination of that business with innogy SEs subsidiary npower to form a new independent UK-based group.This transaction is subject to necessary shareholder and regulatory approvals,but it is designed to renew SSE in a way that will bring benefits to SS

29、E and to energy customers,enabling SSE to draw on its past and build for the future.Strategic Report About SSESSE plc Annual Report 20187SSE is helping to create a new market modelThe planned SSE Energy Services transaction will create an efficient new independent energy supply and services business

30、 and help create a new market model by combining the resources and experience of two established players with the focus and agility of an independent supplier.A standalone retail business will be able to benefit from its own dedicated board of directors and specialist management team,supported by sk

31、illed employees.It will be focused entirely on strategic and operational developments in the GB retail sector,including the competitive and regulatory environments.It will also have the ability to access and allocate its own capital,allowing day-to-day decision-making to be more closely aligned with

32、 strategy,and thereby facilitating the delivery of greater benefits to all stakeholders,including customers and employees.This is what embracing change and adapting to the requirements of energy customers and society as a whole means.A Shareholder Circular in respect of the proposed demerger of SSE

33、Energy Services and its combination with npower,plus Notice of General Meeting,will be published on 27 June 2018.This is what embracing change and adapting to the requirements of energy customers and society as a whole means.8SSE plc Annual Report 2018SSE is going to focus on energy and related infr

34、astructure and servicesFollowing the planned SSE Energy Services transaction,SSEs strategy will focus on creating value for shareholders and society from developing,owning and operating energy and related infrastructure and services in a sustainable way.Delivery of this strategy is dependent on the

35、shared talent,skills and values of people throughout SSE.For SSE this means being focused on earning returns for shareholders and making a positive economic and social contribution to the countries in which it operates;being efficient in developing,owning and operating infrastructure and related ser

36、vices and being agile in creating and securing value from them;maintaining a range of complementary business activities with a depth of insight into a core sector and doing things responsibly.OUR STORY CONTINUEDStrategic Report About SSESSE plc Annual Report 20189ExcellenceTeamworkSustainabilityEffi

37、ciencyServiceSafetySSE is changing,but staying the sameFor 75 years,SSE and its predecessor companies and boards have kept at their core a fundamental belief that energy provision is an essential part of modern life,on which people,organisations and businesses depend.This means that as a public list

38、ed company,SSE must act in the public interest.It has a social contract that it adheres to by being transparent in the way it does business,responsible in the way it works with stakeholders and sustainable in the way it makes decisions.SSE invests in modern infrastructure,supports and creates sustai

39、nable jobs and pays its fair share of tax.In return,SSE benefits from public services,is able to borrow human capital and has the right to pay dividends to shareholders.So as SSE changes over the next year,it will remain the same:focused on improving energy infrastructure for the future;committed to

40、 being a transparent,responsible company that makes good decisions for the long term;and guided by the SSE SET of values(Safety,Service,Efficiency,Sustainability,Excellence and Teamwork).It will also remain committed to remunerating shareholders investment through the payment of dividends.SSE invest

41、s in modern infrastructure,supports and creates sustainable jobs and pays its fair share of tax.10SSE plc Annual Report 2018MARKET OVERVIEWSSE operates in a fast-changing industry.As it supports the drive towards decarbonisation of the economy,electrification of transport and modernisation of critic

42、al infrastructure,it does so with a commitment to maintaining and growing a range of complementary businesses that have energy and related services at their core.Decarbonisation remains a driver of changeThe need to meet carbon targets remains a fundamental driver of change across the energy sector

43、in both GB and Ireland.The Climate Change Act celebrates its 10th birthday in 2018 and the UK Governments Clean Growth Strategy(published 2017)sets out plans for an 80%reduction in power sector emissions to 2032,so the pace of change remains fast.Increasingly these carbon targets can be met at a low

44、er cost to customers.Auctions for long-term offshore wind contracts(CfDs)are now well established and there has been very strong competition.These mechanisms work and SSE is well placed to play its part in this growth market,with first power from Beatrice wind farm expected in Summer 2018 and strong

45、 new project options in the UK(Dogger Bank,Seagreen)and beyond in Ireland(Arklow).Onshore wind costs have fallen significantly since 2009 and it remains one of the lowest-cost forms of energy for customers.Eligibility for onshore wind to compete in the UK auctions remains on hold but the case for fu

46、ture build is strong and policies may follow.In Ireland,EU renewables targets continue to drive the need for new onshore wind and a new support scheme is expected to be announced this year.Onshore wind development and operation are core SSE strengths,so it is well placed to take advantage of this.El

47、ectrification creates new opportunitiesElectrification will also drive major change in the sector.The trend to electrification of vehicles is clearly illustrated by changes in the transport sector and the UK Governments moves to ban the sale of new diesel and petrol cars from 2040.By 2030 there may

48、be nine million electric vehicles connecting into the distribution networks helping to reduce carbon emissions and improve air quality in urban areas.As an electricity generator,distributor and utilities services operator,SSE sees a major role for itself in this shift and is already positioning its

49、businesses to optimise the likely opportunities.At the same time,small-scale,distributed energy continues to decentralise the energy system.Distribution networks are critical in connecting and managing these new forms of demand and supply.This will create new opportunities and challenges for SSEs el

50、ectricity distribution business,in particular in becoming a Distribution System Operator(DSO)with greater active management of its networks.In addition,SSE Enterprise is well positioned to prosper from these trends by providing bespoke decentralised energy services,including EV charging infrastructu

51、re.Infrastructure investment is key to security of supplyThe UKs Industrial Strategy is set on upgrading the critical infrastructure that drives the economy.Public infrastructure investment is expected to double over the decade to 2023.This presents opportunities for SSE and aligns with its commitme

52、nt to playing its part in maintaining security of supply as the energy system is transformed.SSEs diverse current and future portfolio has a large role in this.Its fleet of hydro(“natures batteries”),thermal generation and gas storage provides crucial flexibility to the system,while its transmission

53、 and distribution networks ensure this flexibility connects and matches demand.Looking ahead,a range of options exist to help ensure electricity and gas customers across the UK and Ireland benefit from a secure and progressive system of energy provision.THE ENERGY SECTOR IS TRANSFORMINGStrategic Rep

54、ort About SSESSE plc Annual Report 201811While SSE meets the challenges of a transforming sector it also faces major political pressures.Political debate about affordability and the role of the state in energy provision means the need to show how private utilities operate clearly in the public inter

55、est is as great as ever.The next set of price controls for networks(RIIO2)are also being developed in this political context.SSE is well set up for this environment with a clear conviction to act in the interests of all stakeholders,as explained elsewhere in this Annual Report.The domestic energy ma

56、rket is not what it wasA market that once featured the so-called “Big 6”is now populated by closer to around 80 suppliers of varying scale competing to provide a range of new products and services to GB household energy customers.This is good for customers and it means the market is extremely fluid,

57、with customer switching at historically high levels and further change expected with the roll-out of smart meters.This,combined with SSEs operating profit increasingly coming from economically regulated networks and from renewable energy,and the conviction that a new market model would be in the bes

58、t interest of all,including customers,led to the proposal to combine the resources and experience of SSEs household energy supply and services business in GB with those of another established player in the market.At the same time,the economy is becoming increasingly digitalised.Energy customers expe

59、ct a seamless digital interaction with their provider and SSE has made gains in this area in recent years while investing heavily to meet the UK Governments smart meter targets.Market trends have lowered financing costsEnergy is a capital-intensive sector and therefore a low cost of capital is criti

60、cal to reducing costs for consumers.In recent years,the low interest rate environment has helped to lower the cost of financing energy infrastructure with particular benefits in reducing the cost of renewables.In addition,there has been an increased supply of capital and entry by infrastructure fund

61、s,institutional investors and private equity.This has implications for the valuations placed on assets and for the returns that can be earned from investment.At the same time,it has also created strong financial partnering opportunities for SSE.Climate change and the policies to mitigate this are in

62、creasingly being factored into the financial value of firms.The Task Force on Climate-related Financial Disclosures will formalise this helping to ensure risks and opportunities are properly accounted for and enabling capital flows to the most sustainable investments.As a business positioned to thri

63、ve in the transition to a low-carbon future,SSE stands to benefit from this shift in financial markets.AFFORDABILITY AND LEGITIMACY ISSUES PERSISTA market that once featured the so-called“Big 6”is now populated by closer to around 80 suppliers.12SSE plc Annual Report 2018OUR STRATEGYCREATING value i

64、n energy and related infrastructure and servicesSSE is clear about the core purpose of the business,about its overall scope and direction,about how it fulfils its purpose and achieves its goals,and about its primary financial objective.Strategic Report About SSESSE plc Annual Report 20181314SSE plc

65、Annual Report 2018Read more on page 44.OUR STRATEGY CONTINUEDSSEs purpose is to responsibly provide the energy and related services needed now and in the future.It aims to be a leading provider of energy and related services in a low-carbon world.Its strategy is to create value for shareholders and

66、society from developing,owning and operating energy and related infrastructure and services in a sustainable way.These are the four pillars of the SSE strategy.Delivery of this strategy is dependent on the shared talent,skills and values of people throughout SSE.Creating valueCreating value means fo

67、cusing on earning returns for shareholders,sustaining skilled jobs and making a positive economic and social contribution to the countries in which SSE operates.SSE believes there are significant opportunities to do this as a responsible provider of energy and relatedservices.SSEs focus is not on ma

68、ximising short-term profits but on creating value for shareholders,customers and society,including earning returns for shareholders investment through the payment of dividends.SSE believes that dividend payments should be at a level that is sustainable,and that dividend targets should reflect the qu

69、ality and nature of its assets and operations,the earnings derived from them and the longer-term financialoutlook.SSE also believes it should be a well-financed company that maintains a strong balance sheet,illustrated by its commitment to robust ratios for retained cash flow and funds from operatio

70、ns/debt.Such financial strength enables SSE to secure funding from debt investors at competitive and efficient rates and take decisions that are focused on the long term all of which supports the dividend.SSE seeks to deliver on this strategy through making the most of the opportunities presented by

71、 the transformation in the sector driven by electrification,decarbonisation and the upgrade of critical infrastructure.Strategic Report About SSESSE plc Annual Report 201815Being sustainableSSE aims to create value for shareholders and society in a sustainable way.That means that to be successful ov

72、er the long term,SSE must operate responsibly.For this reason,SSE operates under a set of core values known as the SSE SET.The definitions for each of the SSE SET of values were renewed in 2017/18,following consultation with employees across SSE.SafetyIf its not safe,we dont do it.ServiceWe are a co

73、mpany customers can rely on.EfficiencyWe focus on what matters.SustainabilityWe do things responsibly to add long-termvalue.ExcellenceWe continually improve the way we dothings.TeamworkWe work together,respect each other and make a difference.SSE is a responsible employer that recognises that its st

74、rategy is dependent on the shared talent,skills and values of the people within the organisation.SSE employees are given opportunities for development and progression within a flexible,family-friendly working environment.Difference,inclusion and diversity are actively encouraged and everyone at SSE

75、is given a voice on workplace issues.Focusing on energy and related infrastructure and servicesFocusing on energy and related infrastructure and services means maintaining a range of complementary business activities with a depth of insight into a core sector and related infrastructure.The SSE Group

76、 of businesses is evolving,so there is a greater focus on infrastructure and related services that are more aligned to SSEs core competences.SSEs core businesses will be economically regulated energy networks and renewable sources of energy,complemented by other flexible powergeneration.SSE will als

77、o have a range of other complementary businesses,which benefit from direct and indirect synergies and in so doing have options for the future.In a fast-changing energy and infrastructure sector,optionality will remain key and it is for this reason that SSE believes it makes sense to retain core and

78、complementary businesses and in so doing maintain a view of other long-term considerations and options.Read more on page 17.Read more on page 77.Read more on page 40.Developing,owning and operatingDeveloping,owning and operating means being efficient in the provision of infrastructure and services a

79、nd being agile in creating and securing value from them.Subject to the completion of the planned SSE Energy Services transaction,SSE will have an ownership interest in five economically regulated energy networks,four classes of renewable energy capacity,three types of thermal electricity generation,

80、two B2B businesses and a telecoms network extending to 13,700km.SSE seeks to be an efficient operator of assets,putting safety first and being a company that energy customers and users can rely on.It is also committed to disciplined investment in assets that complement its business and secure return

81、s which are clearly greater than the cost of capital and enhance adjusted earnings per share.In developing,owning and operating assets,SSE retains the option of realising value from those assets where it is in the interests of shareholders and other stakeholders,and where it presents opportunities t

82、o support future investment.ER16SSE plc Annual Report 2018GDETEDESESE6.8MSSE Energy Services customer accounts GB0.49mSSE Business Energy accounts GBRead more about our businesses from page 46.Delivery of SSEs strategy is dependent on the shared talent,skills and values of the people in its balanced

83、 range of core and complementary businesses.In Retail,the household energy supply and services business in GB is the subject of a planned demerger;but SSE intends to continue to supply energy and provide energy and infrastructure services to business and public sector customers throughout the UK and

84、 Ireland and to household customers in Northern Ireland and Ireland.The economically regulated Networks businesses transmit electricity in Scotland and distribute electricity and gas to homes and work places in Scotland and the south of England.And Wholesale produces energy that powers the UK and Ir

85、ish economies,as well as providing gas storage facilities for the UK.ES Energy supplyRetailing domestic electricity and gas to GB households as part of the SSE Energy Services subsidiary.ER Energy-related servicesProviding energy-related products and services to GB households as part of SSE Energy S

86、ervices.RETAIL(demerger proposed)Supplying energy and services to household customers in GBSSE supplies energy and other services to the GB household market through SSE Energy Services,a wholly-owned subsidiary formed in early 2018 in preparation for the proposed merger with npower.This is intended

87、to create an efficient new independent energy supply and services business in GB and help develop a new market model by combining the resources of and experience of two established players with the focus and agility of an independent supplier.WHAT SSE DOESDEVELOPING,OWNING AND OPERATINGOUR BUSINESS

88、EXPLAINEDStrategic Report About SSE17SSE plc Annual Report 2018GPEMGSED Electricity distributionUsing low voltage overhead lines and underground cables to deliver electricity to around 3.8m GBcustomers.ET Electricity transmissionUsing high voltage overhead lines and underground and subsea cables to

89、carry electricity from generating plant to the distribution network.GD Gas distributionUsing pipes to distribute gas from the transmission network to homes and businesses in Scotland and southernEngland.Delivering energy safely to homes and businessesSSE owns and operates electricity distribution ne

90、tworks in the north of Scotland and central southern England,and the electricity transmission network in the north of Scotland.SSE also has an ownership interest in gas distribution in Scotland and southern England.These businesses are regionally defined and subject to regulatory controls set byOfge

91、m.NetworksES Energy supply(Business)Supplying electricity and gas to business,commercial and public sector organisations across GB.ES Energy supply(SSE Airtricity)Supplying energy and related services to customers across the island of Ireland.E EnterpriseProviding innovative energy solutions to busi

92、ness and the public sector.Supplying energy and infrastructure services to businesses and the public sector and to households across IrelandSSE supplies energy and provides infrastructure services to business and public sector customers through its Business Energy and Enterprise divisions.It also su

93、pplies energy and related services to household customers on the island of Ireland through SSE Airtricity.Business Energy and Enterprise work closely with customers to meet their specific requirements in innovative and sustainable ways.SSE Airtricity provides a range of related services to customers

94、,including green energy.EG Electricity generationUsing turbines to convert energy from water,wind,gas,coal,oil and multi-fuel to generate electricity.EPM Energy portfolio managementManaging energy procurement and contracts.GP Gas productionExtracting natural gas from fields in the North Sea and west

95、 of Shetland,on the outer margins of the Atlantic.GS Gas storagePlaying a role in security of supply by storing natural gas underground in large caverns for future use.Creating value by sustainably sourcing and producing energySSE is a leading generator of electricity from renewable sources in the U

96、K and Ireland.It provides sustainable energy and related services for wholesale customers through energy portfolio management and electricity generation,gas production and gas storage.WholesaleRETAIL(demerger proposed)RETAIL(to remain in SSE)3,826MW Renewable generation capacity8.3bn Networks Regula

97、ted Asset Value18SSE plc Annual Report 2018OUR BUSINESS EXPLAINED CONTINUEDFinancial capitalDelivering returns for shareholders.94.7p(2017:91.3p)Full-year dividend price per share.Public servicesPaying a fair share of tax supports good public services.484.1m/22.6m(2017:385.0m/16.5m)Total taxes paid

98、in the UK and Ireland.Human capitalDeveloping our people.25.2m(2017:18.9m)Investment in pipeline programmes and employee learning and development.THE LONG-TERM VALUE WE CREATEwe Develop,own and operateStrategic Report About SSEFinancial capitalSSE requires funds to produce goods or provide services.

99、This is obtained through investors and profits generated byoperations.Public servicesPublic services enable SSE to function and thrive.It relies on the provision of good emergency services,public infrastructure and health and education services.Human capitalThe success of SSE depends on the people w

100、ho work for it and their innate abilities and learned skills:the human capital embodied in each of its direct employees and those in its supply chain.The resources and STAKEHOLDER relationships we rely onSSE Has over 300,000Shareholders SSEs shareholders own the company and expect to earn a return o

101、n their investment.SSE WORKS WITHGovernment and regulatorsGovernments and regulators play a central role in shaping the energy sector.SSE Employs around 21,000 directEmployees SSE depends on the shared talent,skills and values of its employees.HOW SSE CREATES VALUE19SSE plc Annual Report 2018Infrast

102、ructureCreating wider economic impacts.8.6bn/806m(2017:9.3bn/779m)Contribution to UK and Irish GDP(PwC analysis).Natural environmentAddressing climate change.307gCO2e/KWh(2017:304gCO2e/KWh)Carbon intensity of electricity generated.Goods and servicesSupporting sustainable supply chains.c.2.9bn(2017:c

103、.3.0bn)Total procurement expenditure.InfrastructureSSE invests significantly in the building of assets and infrastructure,such as power stations and networks,which support its operations and the delivery of energy throughout the UK and Ireland.Natural environmentNatural resources are essential to su

104、pport SSEs business operations and value creation from using wind and water to produce energy,to the resources used to build its assets.Goods and servicesBeyond expenditure on capital projects,SSE relies on a wide range of goods and services to support its business operations.SSE Has Millions OfEner

105、gy CustomersSSEs electricity distribution and energy supply customers expect a quality service that they can rely on.SSE Engages withNGOs and civil societyNGOs and civil society bring specialist and distinctive perspectives,contributing to business decision-making.SSE works with over 8,000 directSup

106、pliers and ContractorsSSE relies on its supply chain to deliver projects and ensure it operates successfully.20SSE plc Annual Report 2018SSEPROVIDING ENERGY RESPONSIBLYInteracting with stakeholders in this way is consistent with the ethos of Section 172 of the Companies Act 2006 which sets out that

107、a director should have regard to stakeholder interests when discharging their duty to promote the success of the company.Detail of key stakeholder engagement carried out by SSEs Board is set out on page 116.SSE engages with six key stakeholder groups shareholders,government and regulators,employees,

108、energy customers,NGOs and civil society,and suppliers and contractors.There are multiple methods of engagement,for example,at the most strategic level the SSEN Stakeholder Advisory Panel advises Scottish and Southern Electricity Networks on its business plans.Whereas in Retail,Customer Forums provid

109、e guidance to the business as it maintains its focus on meeting day-to-day requirements of energy users,whilst ensuring the interests of vulnerable customers are protected.SSES StakeholdersSSEs success depends on its ability to engage effectively and work constructively with stakeholders who have an

110、 interest in SSE and the wider industry.Listening and responding to their views and needs helps SSE better achieve its business objectives and deliver the best outcomes for customers,shareholders and wider society.Strategic Report About SSEGOVERNMENT AND REGULATORSSSE works constructively with the g

111、overnments and regulators in the UK and Ireland in order to protect the long-term interests of energy customers.Engagement methodsSSEs approach to public and regulatory affairs is to directly engage with policymakers and pursue positive and constructive relationships.SSE employs dedicated teams resp

112、onsible for engaging with governing and regulatory bodies.The key issues for engagement include SSEs business strategy and investment decisions,particularly for large capital projects,and the development of regulation and policies that could impact on SSEs customers and the energy system.Material is

113、sues Security of energy supplies Cost effective decarbonisation Fair treatment of customers Economic impact of investments Conduct of large businessesSHAREHOLDERSSSE is committed to maintaining constructive dialogue with shareholders and engages with them regularly to understand their concerns and e

114、nsure these are considered in its decision making.Engagement methodsSSEs extensive investor relations programme includes meetings and roadshows,as well as correspondence on a reactive basis.It has ongoing dialogue with key institutional investors,analysts and ratings agencies around financial and op

115、erational matters,and increasingly around the management of environmental,social and governance(ESG)issues.Material issues Financial performance Investment plans Operational performance ESG performanceOUR BUSINESS EXPLAINED CONTINUED21SSE plc Annual Report 2018SSEs ongoing customer engagement allows

116、 it to gain a better understanding of customer needs,as well as how it can deliver continuous improvement in customer service.ENERGY CUSTOMERSEngagement methodsIn the provision of its services,SSE engages with customers daily through customer calls and social media activity.To engage at a deeper lev

117、el,SSE undertakes qualitative research and detailed surveys,and holds customer forums and consultation events to better understand its customers needs and expectations,and gain their feedback on SSEs initiatives.Material issues Affordable and accessible energy Responsiveness to need and vulnerabilit

118、y Quality customer service Using energy efficiently Impact of industry changeSUPPLIERS AND CONTRACTORSSSE aims to build strong relationships with suppliers and contractors so it can maximise cost efficiencies and enhance positive economic,social and environmental outcomes.Engagement methodsSSE has a

119、 structured approach to engaging with its most strategic supply chain partners,to establish long-term relationships which create sustainable value for both SSE and its suppliers.In addition to regular engagement and audits,SSEs procurement function also engages directly with suppliers around key iss

120、ues to ensure its values are upheld throughout its supply chain.Material issues Fair expectation in the delivery of projects Manage and mitigate health and safety risks on sites Deliver economic opportunities to local supply chains Ensure social and environmental impacts,such as modern slavery,Livin

121、g Wage and resource use,are managed and mitigatedEMPLOYEESSSE has a framework for continuous engagement and feedback between itself and employees on employee matters as well as SSEs operations and performance.This helps ensure SSE creates an engaging and supportive environment where people want to w

122、ork.Engagement methodsSSE seeks to create an engaging working environment in which employees have the opportunity to provide feedback on employment issues and SSEs business activities.It does this through continued and structured career conversations,all-employee engagement surveys and internal comm

123、unication channels such as its intranet news and blog feed,the SSE employee app and employee conferences.SSE recognises,and has positive relationships with,four recognised trade unions and its Joint Negotiating and Consultative Committee(JNCC)which provides the structure by which industrial relation

124、s are conducted.Material issues Opportunities for development and progression Flexible,agile and family-friendly working patterns Inclusion and diversity The opportunity to have a say and make a difference within SSENGOS AND CIVIL SOCIETYSSE engages with a number of key NGOs and civil society groups

125、 that focus on social,environmental and other energy-and business-related issues on behalf of energy customers and wider society.Engagement methodsSSE works,and has ongoing dialogue,with a wide variety of NGOs and civil society groups with interests in energy,the environment and wider social issues.

126、In recognition that more can be achieved to solve key societal issues by working with these stakeholders,SSE actively seeks their engagement through means including direct feedback on reports,participation in public events and responses to surveys and consultations.Material issues Environmental prot

127、ection and decarbonisation Customer vulnerability and fuel poverty Employment standards including the real Living Wage and the gender pay gap SSEs economic contribution and its approach to tax22SSE plc Annual Report 2018CHAIRMANS STATEMENTStrategic Report A strategy for long-term successBeing transp

128、arent in the way SSE does businessThis Strategic Report seeks to meet Financial Reporting Council and EU regulations and non-binding guidelines on disclosure of non-financial reporting.Accordingly,the following pages detail the inputs to the SSE Group of businesses,their outcomes,associated policies

129、 and risks,key performance indicators and the environmental,societal and employee matters that rightly resonate with public opinion.Indeed,SSE is a leader among FTSE 100 companies when it comes to material disclosure of its impact on the world around it.SSEs gender pay gap was published nearly two y

130、ears before required by the UK Government and I am pleased that the Board has endorsed an ambitious plan to increase significantly the proportion of women in senior roles between now and 2021,having considered the Hampton-Alexander review of gender balance in FTSE companies.You can read more about t

131、his on page 81.The openness SSE applies to its tax affairs is evident in its record as the first FTSE 100 company to be awarded the Fair Tax Mark,which has now been secured four years running.This transparency is underpinned by the Board and executive management teams firm belief that rather than a

132、penalty on profit,tax is a way for responsible companies to invest in the communities that they rely on to do business and to achieve growth.There is more about SSEs transparency on tax on page 78.SSEs total tax contribution in the UK and Ireland is just one of several indicators of responsibility a

133、nd contribution to society that are disclosed annually in the Sustainability Report that is published alongside this Annual Report.It provides data on the number of people injured while working for SSE and its contractors;SSEs overall contribution to GDP in the UK and Ireland;employee productivity(s

134、o-called human capital)in the UK;and carbon emissions produced by SSEs operations.SSE is a public listed company that works in the public interest with a commitment to being transparent in the way it does business,responsible in the way it works with stakeholders and sustainable in the way it makes

135、decisions.It has a proud past and the SSE we see today is the product of long-standing values and prevailing principles that will continue to inform its responses to the challenges and opportunities presented by the energy market of tomorrow.The energy landscape has changed out of all recognition si

136、nce SSEs formation 20 years ago.The sector has evolved and SSE has evolved with it thanks to a clear purpose to responsibly provide the energy and related services needed now and in the future,and an unflinching focus on what it has always done best:the efficient operation of,and disciplined investm

137、ent in,a balanced range of energy businesses.Faced with the opportunities that are emerging through decarbonisation,electrification and the need to upgrade the UKs infrastructure,our focus needs to be keener than ever.This will mean making the most of SSEs core competencies and creating value for sh

138、areholders and society from developing,owning and operating energy and related infrastructure and services in a sustainable way.I am of the firm belief that this strategy will produce a meaningful contribution to a low-carbon future.Its delivery will be dependent on the shared talent,skills and valu

139、es of the people at SSE,and the continuation of the progress made in recent years.The foundations for this lie in SSEs performance in 2017/18.That performance,and the economic,environmental and social impact of SSEs activities,are summarised in this Strategic Report.The following pages also look ahe

140、ad in more detail to what will be a period of renewal for the SSE Group of businesses in 2018/19 and beyond.SSE is creating value in a low-carbon world by focusing on earning returns for shareholders and contributing to society.BUILDING23SSE plc Annual Report 2018Working responsibly with stakeholder

141、sSSE takes seriously the responsibility that comes with providing an essential service that drives the UK and Ireland economies and touches the lives of millions.A set of six well-established core values known as the SSE SET Safety,Service,Efficiency,Sustainability,Excellence and Teamwork have,over

142、the years,become a useful shorthand at SSE for being responsible and doing the right thing.These values guide the complex interplay with various stakeholders whose input influences the way SSE conducts itself and who are,in turn,affected by the output of SSEs decisions and actions.This Strategic Rep

143、ort explores,in greater detail than ever before,the complex interaction between SSE and its primary stakeholder groups.In the Directors Report,I set out the work done by the Board to ensure SSE upholds the highest standards of corporate governance and culture in the interests of shareholders and oth

144、er stakeholders,particularly customers.Elsewhere,dedicated sections describe the importance SSE places on customer service,its engagement with employees,the way it works with its supply chain partners for wider economic benefit and the impact NGOs and civil society have in decision making.Government

145、s and regulators have a central role in the energy sector and while SSE respects the democratic process,it has a responsibility to proactively engage with policymakers to balance the long-term interests of energy users with shorter-term political priorities.SSE has actively engaged in the UK Governm

146、ent-commissioned Cost of Energy Review,making the case that a whole system view that meets the challenges of decarbonisation across the power,heat and transport sectors,coupled with an effective Capacity Market to ensure security of supply,will best meet the needs of customers.At the same time,SSE s

147、ees a case for the reform and modernisation of electricity networks but believes the challenges of delivering a low-carbon UK economy are best met by a secure,cost-effective energy system that is privatised and well-regulated.And while Brexit poses no immediate risk,SSE will continue to engage with

148、government to maintain existing policy frameworks,retain access to European energy markets and protect the interests of Northern Ireland energy customers within the all-island Single Energy Market.Making sustainable decisions for shareholdersThe SSE described in this report has been built with the s

149、upport of shareholders,and their ongoing backing will be key to our contribution to a low-carbon future.SSE rewards that support by taking a long-term view to ensure its financial and operational decisions deliver dividends to shareholders and sustainable outcomes for all stakeholders.Those decision

150、s are of course coloured by the prevailing market and policy trends in the energy sector in the UK and Ireland,and it was against this backdrop that we entered into an agreement with innogy SE in respect of a proposed demerger of SSEs household energy and services business in Great Britain(now named

151、 SSE Energy Services)and immediate combination of that business with innogy SEs subsidiary npower to form a new independent UK-based group.I am confident that a new market model that creates the focus and agility of a standalone supplier is the right response to the future direction of the GB energy

152、 supply sector.I am equally confident that the energy-and infrastructure-focused business that will take shape after the demerger will optimise SSEs core competencies and play a leading role in the transition to a lower-carbon world for future generations.The SSE Group of businesses is being renewed

153、 in this way to provide each entity with a sustainable platform for success and to create long-term value for investors.Making the right investment decisions to support payment of dividends to shareholders continues to be a key focus.A capital investment programme valued at more than 1.5bn was deliv

154、ered over the course of the year.Much of this spend was in economically regulated electricity networks and in renewable energy projects.The past year shows how index-linked earnings from projects combined with a commitment to recycling capital through strategic disposals when the right opportunities

155、 arise can add real value.We have also taken an innovative approach to financing investments through instruments like SSEs ground-breaking 600m Green Bond.Contributing to a low-carbon futureSSE responsibly provides the energy and related services people need and it will continue to do so as it goes

156、through this current period of renewal.It will continue to pay dividends to shareholders,continue to invest in vital energy infrastructure and continue to boost the UK and Irish economies.Above all,by being transparent in the way it does business,responsible in the way it works with stakeholders and

157、 sustainable in the way it makes decisions,SSE will contribute fully to the creation of a low-carbon future.This Strategic Report is approved by the Board of Directors as a document of record for you,the shareholder,of SSEs past performance and future strategy.Richard Gillingwater CBEChairman24 May

158、201824SSE plc Annual Report 2018Central to our strategy is developing,owning and operating assets that bring scale,diversity and balance to the business.Will a successful transaction reduce the risk profile of the SSE Group?The risk profile will certainly change,but how exactly remains unclear.The r

159、isks associated with the decision need to be seen in the context of the benefits for the Group outlined in November,namely:a greater focus on assets and infrastructure will be more aligned to SSEs core competences;SSE will be more agile and responsive;and we will have a clearer investment propositio

160、n,with the majority of earnings coming from regulated and quasi-regulated sources.A dedicated project team within SSE is managing the demerger transaction process as well as the risks directly associated with it and is reporting to the Board and Executive Committee on a regular basis.The risk factor

161、s directly associated with the transaction will be set out in the Shareholder Circular which will be published on 27 June 2018 ahead of a vote on the proposal on 19 July.In the meantime,the Group Risk and Group Strategy teams are working closely with the project team and the Board to ensure that any

162、 material changes to the current Group Principal Risks continue to be well managed in line with the FRC Corporate Governance Code.Are you concerned about increased political and regulatory risk?Political and regulatory change are a fact of life in our business and we will work constructively with go

163、vernment and the regulator to introduce reforms that are intended to benefit customers,while cautioning against any unintended consequences from pricing intervention.In response to Labour Party proposals for a much greater role for the state in energy provision,we argue that modernisation is best de

164、livered by a competitive,cost-effective,privatised system that is well-regulated.Brexit is,of course,a continuing source of uncertainty and SSEs three key concerns are stability of existing policy frameworks,access to European energy markets and continued inclusion of Northern Ireland customers in t

165、he all-island Single Electricity Market.CHIEF EXECUTIVES REVIEWWhat,for you,were SSEs highlights of 2017/18?There are two high points for me:we were disciplined in meeting our primary financial objective for the year of rewarding shareholders with dividend growth,and decisive in responding to the ch

166、anges we are seeing in the energy sector.That financial discipline can be seen in the execution of a 1.5bn capital investment programme that has added to an already significant portfolio of quality assets.That 1.5bn spend is part of an ongoing commitment to investment,mainly in economically regulate

167、d networks and renewable energy,in support of the dividend.Im also pleased that we managed to complete over the course of the year a promised return of value to shareholders in the form of a share buy-back of around 34 million shares at a value of around 500m.and what were the lows?The low point for

168、 me was reviewing the safety data that showed 45 direct employees and 59 contingent workers were hurt while working for SSE in 2017/18.One injury is too many,but a combined total of 104 is something we are fully committed to tackling and for this reason SSE has set bolder performance targets,revisit

169、ed its Safety,Health and Environment strategy to 2020 and placed a new emphasis on mental health initiatives.Does the planned SSE Energy Services transaction still feel like the right thing to do?The rationale has not changed.I remain convinced that demerging our GB household retail business and mer

170、ging it with npower is the right thing for customers,the energy market and SSE;and that a refocused energy and related infrastructure and services business is in the best long-term interest of the SSE Group of businesses and our shareholders.Strategic Report A strategy for long-term successrespondin

171、g25SSE plc Annual Report 2018What are your predictions for the future of the energy industry?The sector is undergoing a revolution driven by decarbonisation,electrification and the need to upgrade major public infrastructure in the UK.That revolution is not without its challenges,not least ongoing s

172、crutiny of the cost of energy to end users,but the opportunities are significant.By focusing on core competencies of energy infrastructure and related services,and by staying true to our commitment to creating value for shareholders and society as a whole,we can deliver results that are fair to cust

173、omers and be a leading energy provider in a low-carbon world.The challenge is to make sure we continue to have the capability and agility to succeed as the energy system changes;and Im confident that we do.What role will SSE have in a low-carbon world?Our vision is to be a leading provider of energy

174、 and related services in a low-carbon world.This is supported by our new,longer term carbon intensity ambitions.We aim to reduce the carbon intensity of SSEs electricity generation by a further 50%by 2030,based on 2018 levels.I think SSEs intentions in this area are amply demonstrated by ongoing com

175、mitment to renewable energy in our plans to build a complementary new gas-fired power station at Keadby in Lincolnshire which will be the most efficient plant of its kind in the UK.What benefit has there been to society from two decades of dividend growth?As a public listed company working in the pu

176、blic interest,I believe SSE has greater obligations and higher standards to meet than other organisations of comparable size.I am proud of SSEs standing as a responsible company that has a keen social conscience.Shareholders finance our operations,customers create revenue through payment of bills,re

177、gulators trust us to provide critical services and maintain vital infrastructure and talented people give their time and skills to us as employees.In exchange,we pay dividends,we work hard to reliably and safely provide the energy and services that people need,we give customers value for money,we en

178、gage with government and respect the democratic process,we make a major contribution to the UK and Ireland economies and we give employees a voice and opportunities to develop.I see this as our social contract.There are further examples of this active stakeholder engagement throughout this Annual Re

179、port and in its sister publication,the Sustainability Report.Can SSEs dividend growth be sustained?SSE remains committed to remunerating shareholders investment and thats why we have formulated a five-year dividend plan.In 2019 we intend to pay a full-year dividend of 97.5p per share;in the first ye

180、ar after completion of the planned SSE Energy Services transaction the full-year dividend is planned to be 80p per share;and in each of the three years to 2023 we are targeting dividend growth that at least matches RPI inflation.In addition to all this,Im pleased we delivered a 94.7p per share full-

181、year dividend in 2017/18,which was our 20th successive dividend increase since SSEs formation.How confident are you that SSE has its ethical house in order?We have a saying within SSE:“Bad things can happen in good organisations.”In a large organisation such as SSE,with many decisions being made by

182、many people every day,things can and do go wrong and this has caused us to reflect internally and redouble our efforts to build a culture where people feel empowered to speak up when they spot wrongdoing.Since 2015 SSE has provided a confidential,third party Speak Up hotline,backed up by a dedicated

183、 investigations team that deals with issues sensitively.From 41 reports made in 2015,the independent line has seen traffic grow to 105 over the course of 2017.We see that as a sign not of increased wrongdoing,but rather a clear indication that we now have a safe environment for people to raise conce

184、rns in the knowledge that they will be acted on.What is being done to address the looming skills shortage and the gender pay gap?Our strategic aims are wholly dependent on the knowledge,skills and commitment of people.We are working hard to encourage young people into Science,Technology,Engineering

185、and Maths careers and we continue to invest in apprentices.A key area of focus for the executive team and the Board is creation of a truly inclusive and diverse SSE.We published our gender pay gap nearly two years ahead of a UK Government requirement to do so.We have also considered the Hampton-Alex

186、ander review of gender balance in FTSE leadership and have clear ambitions and plans to increase significantly the proportion of women in senior roles in SSE by 2021(see page 81).Finally,what is your ambition for SSE in 2018/19?The year will be one of major transition for SSE,and I hope it is one in

187、 which we are seen as being a safe and responsible company that does a good job for everyone who depends on what we do and contributes positively to the countries we work in.Alistair Phillips-DaviesChief Executive24 May 201826SSE plc Annual Report 2018Being efficient in developing,owning and operati

188、ng energy and related infrastructure and services and being agile in creating and securing value from them.Developing,OWNING AND OPERATINGSSE has continued its programme of investment and project management in capital and investment expenditure,and over the past 10 years has invested around 11bn in

189、regulated electricity networks and renewable energy.Through continued investment,SSEs asset base in regulated energy networks and renewable energy has continued to grow,with major projects such as the new Caithness-Moray transmission link and Beatrice offshore wind farm continuing to make progress.T

190、hrough discipline in investment decision-making and efficiency in the development and construction of new assets,SSEs investment programme is designed to secure returns that are significantly greater than the cost of capital.SSE is currently expecting its capital and investment expenditure to total

191、around 6bn across the five years to March 2023,focused on new and upgraded energy and related infrastructure in the UK and Ireland.Around 1.3bn of SSEs capital and investment expenditure over the next five years is currently expected to be in renewables and 2.8bn in networks.By 2020,SSEs diverse por

192、tfolio of renewables will comprise over 4.2GW of capacity and by 2023,it expects to own and operate networks with a total Regulated Asset Value of 10bn.DELIVERING OUR STRATEGYmeeting our objectivesCreating wider value for stakeholders by doing things responsibly.SSE launched an extensive and endurin

193、g programme of employee engagement on safety,built around a licence to ensure safe working:“If its not safe,we dont do it”.It also supported more than 100,000 jobs in the UK and Ireland over the course of the year.SSE continued to be the only FTSE 100 company to have been awarded the Fair Tax Mark,w

194、hich requires companies transparency on tax affairs to be well beyond the requirements of UK company law.SSE commissioned over 500MW of new capacity for generating electricity from renewable sources,in support of its vision to be a leading energy provider in a low-carbon world.SSE is seeking to embe

195、d its focus on“if its not safe,we dont do it”through the effective cascade of a simplified,engaging and encouraging language around safety to be used by all employees.SSE will maintain its focus on tax transparency,seeking to retain the Fair Tax Mark for the fifth consecutive year.SSE has adopted a

196、new ambition to reduce the carbon intensity of the electricity it generates by a further 50%between 2018 and 2030,building on the 50%reduction already achieved since 2006.BEING SustainableStrategic Report A strategy for long-term successStrategic pillarsProgress during the yearOutlookFocusing on ear

197、ning returns for shareholders and making a positive economic and social contribution to the countries in which we operate.CREATING valueSSE maintained its focus on creating value for shareholders through the payment of dividends,completing two decades of annual dividend growth since it was formed.SS

198、Es adjusted earnings per share was lower than in 2016/17,but higher than expected at the start of the financial year as a result of good operational performance.SSE continued to assess the value it creates for society as a whole with analysis of its total contribution to the economies of the UK and

199、Ireland.SSE paid a full-year dividend of 94.7p per share in 2017/18.In 2018/19 it intends to pay a full-year dividend of 97.5p per share;in the first year after completion of the SSE Energy Services transaction the full-year dividend is planned to be 80p per share;and in each of the three years to 2

200、023 it is targeting dividend growth that at least matches RPI inflation.SSE believes that its dividends should be sustainable,based on the quality and performance of its assets and operations,the earnings derived from them and the longer-term financial outlook.SSE will retain its focus on creating v

201、alue for society through its economic contribution,commitment to transparency in its tax affairs and ongoing focus on creating and sustaining skilledjobs.Maintaining a range of complementary business activities that have energy and related services at their core.FOCUSING ON Energy and related infras

202、tructure and servicesSSE announced its intention to demerge what is now SSE Energy Services and merge it with npower,but reaffirmed its commitment to remaining a balanced group of related businesses,specialising in energy and related infrastructure and services.SSE has adapted the presentation of it

203、s results within its Retail and Wholesale segments in anticipation of changes to the SSE Group and in support of greater transparency.SSE is involved in a range of core and complementary businesses specialising in the energy,infrastructure and services needed to support the transition to a lower car

204、bon future.SSE expects to complete the planned SSE Energy Services transaction in the final quarter of 2018 or the first quarter of2019.Following completion of the SSE Energy Services transaction,the SSE Group is expected to benefit from a clearer investment proposition,with greater visibility of fu

205、ture assets and earnings.The majority of the reshaped SSE Groups assets and earnings are expected to come from regulated energy networks and renewable energy.27SSE plc Annual Report 2018103,520108,440118,5502016201720183073043972016201720180.200.220.232016201720181%22%42%35%Wholesale NetworksRetailO

206、ther-2%24%49%29%Wholesale NetworksRetailOther51%20%18%11%48%20%20%12%806m8.6bn779m9.3bn805m8.9bn20162017201822.6m484m16.5m385m15.2m454m2016201720181,086.21,453.21,776.61,545.9593.31,513.52016201720186.807.237.352016201720183,8263,3093,2752016201720188,3047,6797,9572016201720181,503.01726.21,618.7201

207、62017201881.3121.1158.4125.746.1119.520162017201894.791.389.4201620172018Central to SSEs strategy is efficient and disciplined investment in developing energy and related infrastructure assets needed by energy and utility customers.SSE has an ownership interest in five economically-regulated network

208、s,each of which has a Regulatory Asset Value or RAV.SSE owns and operates four types of capacity for generating electricity from renewable sources,including pumped storage.SSE supplies energy and other services to the GB household market through its wholly-owned subsidiary SSE Energy Services.Adjust

209、ed capital and investment expenditure(m)Energy networks RAV(m)Capacity for renewable energy(MW)SSE Energy Services customer accounts(m)As well as the direct jobs SSE creates across the UK and Ireland,it is responsible for supporting thousands of additional jobs in these countries through supply chai

210、n and employee wage spending.SSE supports the move to a low-carbon economy and has set ambitions for further reductions in the carbon intensity of the electricity it generates.Total Recordable Injury Rate per 100,000 hours worked(SSE employees and contractor combined)Taxes paid UK/IrelandJobs suppor

211、ted in the UK and IrelandCarbon intensity of electricity generated(gCO2e per kWh)Safety is SSEs first value and SSE assesses the rate of injuries sustained by its direct employees and employees of contractors working on its sites.KPIsThe first financial objective of SSEs strategy is to remunerate sh

212、areholders investment through payment of dividends.To provide a meaningful measure of underlying financial performance,SSE focuses on adjusted earnings per share.SSEs objective is not to maximise profit in any one year but to earn a sustainable level of profit over the medium term.SSEs economic cont

213、ribution is significantly more than the profits it makes,so SSE measures this by calculating its total contribution to GDP in the UK and Ireland.SSE contributes to society through paying the right amount of tax in the right place and at the right time.Dividend per share(pence)Earnings per share(penc

214、e)Profit Before Tax(m)Economic contribution UK/Ireland Adjusted Reported Adjusted Reported UK Ireland UK Ireland SSE maintains a balanced range of complementary businesses focused on energy and related infrastructure.SSE maintains a balanced range of complementary businesses focused on energy and re

215、lated infrastructure.The main focus of SSEs capital and investment expenditure is economically regulated networks and renewable energy.The main focus of SSEs capital and investment expenditure is economically regulated networks and renewable energy.Adjusted operating profit by segment 17/181,828.7mA

216、djusted capital and investment expenditure by segment(five-year average)7,905.7mReported operating profit by segment 17/181,379.2mAdjusted capital and investment expenditure by segment 17/181,503.0m Networks Renewables Retail Other Networks Renewables Retail Other28SSE plc Annual Report 2018Renewing

217、 our businessSustainable and risk informed strategic decision makingWhen setting strategic objectives the Board considers all material influencing factors,including those relating to climate change,technological developments and customer expectations.During the course of the year,the Board made the

218、proposal to merge SSEs household energy supply and services business in Great Britain(now named SSE Energy Services)with npower,the retail business of innogy SE,to form a combined independent retail company.As highlighted by the Chief Executive on page 24,a dedicated project team has been put in pla

219、ce to manage this transaction and the risks associated with it and is reporting on its progress to the Board and Executive Committee on a regular basis.Material changes in the nature and impact of SSEs Group Principal Risks are continuously assessed with mitigating actions implemented wherever neces

220、sary.The risk factors directly associated with the transaction will be set out in the Shareholder Circular which will be published on 27 June 2018.The Executive Committee and sub-committees have responsibility for overseeing SSEs Principal Risks.During the third quarter of SSEs financial year,an ass

221、essment of each Principal Risk is completed by the assigned oversight committee.This assessment requires committee members to provide commentary on contextual changes to the risks and whether they consider them to have become more or less material during the year.These responses are then consolidate

222、d into reports,one for each Principal Risk,which are presented back to the committees along with the results of provisional viability testing and analysis of relevant,current management information and key information relating to interconnecting risks.These reports form the basis for the committees

223、to discuss and confirm risk trend(more,less or equally material),overall effectiveness of the risk control and monitoring environment,and whether any additional actions are required to improve the control environment.The outputs from these 10 committee assessments are then presented to the Executive

224、 Committee for full review,with any emerging risks or additional material changes resulting from this being proposed to the Board for approval.Following the 2017/18 annual review process,SSEs 10 existing Group Principal Risks remain unchanged.Important revisions have however been made to the descrip

225、tions of each to take account of key developments and corresponding mitigations during the year.Full Principal Risk descriptions can be found overleaf.Risk Appetite StatementNo business is risk free and indeed the achievement of SSEs strategic objectives necessarily involves taking risk.SSE will how

226、ever only accept risk where it is consistent with its core purpose,strategy and values;is well understood and can be effectively managed;and offers commensurate reward.The sectors in which SSE operates are inherently subject to a high degree of political,regulatory and legislative risk.Furthermore,e

227、ach of SSEs business divisions has differing levels of exposure to additional risks.For example,the Networks business is largely economically regulated and is characterised by relatively stable,inflation-linked cash flows while the Wholesale business benefits from cash flows linked to government-man

228、dated renewables.In fulfilling its core purpose,the Wholesale business is however also exposed to significant energy market and commodity risk in its operational and investment decision making.The key elements of SSEs strategic framework including the range and nature of the energy businesses and as

229、sets within the SSE Group and its financial objective in relation to dividend growth are fully reflective of its risk appetite.Fundamentally:SSE maintains a balanced range of economically regulated and market-based energy businesses and assets ranging from energy production and delivery to the provi

230、sion of energy and complementary services.These provide a diversified portfolio of business activities whilst keeping the depth of focus on a single sector energy;SSE has a clear understanding of the risks and opportunities in the Great Britain and Ireland energy markets and these markets therefore

231、continue to provide the Groups geographic focus.In areas where SSE is exposed to risks for which is 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 f

232、or specific risks,the Board is guided by three key principles:1.Risks should be consistent with SSEs core purpose,financial objectives,strategy and values.In particular,safety is SSEs first value and it has no appetite for risks brought on by unsafe actions;2.Risks should only be accepted where appr

233、opriate reward is achievable on the basis of objective evidence and in a manner that is consistent with SSEs purpose,strategy and values;and3.Risks should be actively controlled and monitored through the appropriate allocation of management and other resources,underpinned by the maintenance of a hea

234、lthy business culture.The Board has overall responsibility for determining the nature and extent of the risk it is willing to take and for ensuring that risks are managed effectively across the Group.RISK REPORTDuring 2017/18,the Board sought to continue to mature SSEs Risk Management Framework to f

235、urther enhance flexibility and decision-making throughout SSE,in support of creating value in a sustainable way.SSEs Strategic Framework is part of the wider System of Internal Control (as described on page 114 of the Directors Report)and is used to support the setting of objectives for the SSE Grou

236、p and its businesses.managing sses risksStrategic Report A strategy for long-term success29SSE plc Annual Report 2018HighSelf Assessment OutputLowLessPotential Impact on Group ViabilityMore*Safety remains SSEs most important value,and management of this risk remains SSEs highest priority.*It should

237、be noted that Energy A ordability is particularly closely linked to and therefore impacted by Politics,Regulation and Compliance and Commodity Prices.Group Principal RisksSSE operates in fast moving markets that are subject to a high degree of political,regulatory and legislative intervention.It is

238、therefore essential that SSEs Risk Management Framework is dynamic and flexible,allowing decision makers to focus on material risk information that may have an impact,whether positive or negative,on strategic objectives.The Board and Executive Committee look for as complete a perspective as possible

239、 when assessing the Principal Risks that face the Group.This graphic illustrates SSEs 10 Group Principal Risks positioned on a relative basis against the output of the Principal Risk Self Assessment process(based on changes in the context and current prevalence of each risk)and potential impact on G

240、roup Viability based on critical risks scenarios developed in conjunction with business experts.In addition,Principal Risks that were considered by their oversight committees to have increased in materiality during the year are shown in red,those that have not changed significantly are shown in blue

241、,and those that were deemed to have decreased in materiality are shown in green.Politics,regulation and complianceCyber security and resilienceEnergy a ordability*Development and changeSafety and the environment*Commodity pricePeople and cultureEnergy infrastructure failureMajor projects qualityFina

242、ncial liabilitiesViability StatementAs required within provision C.2.2 of the UK Corporate Governance Code,the Board has assessed the prospects of the Company over the next 3 financial years to the period ending March 2021.The Directors have determined that as this time horizon is consistent with th

243、e Groups current capital programme and is within the strategy 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 Pr

244、incipal Risks facing the Group and the control measures in place to mitigate each of them.In particular the Directors recognise the significance of the strong balance sheet,and committed lending facilities of 1.5bn which could be drawn down in most circumstances.The Group also has a number of highly

245、 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 was demonstrated in the successful sale during the 2016/17 financial year of a 16.7%shar

246、e of Scotia Gas Networks Ltd.To help support this Statement,over the course of the year a suite of severe but plausible scenarios has been developed against each of SSEs Principal Risks.These scenarios are based on relevant real life events that have been observed either in the markets within which

247、the Group operates or related markets globally.Examples include persistently low commodity prices(for Commodity Prices);changes to key government energy policies(for Politics,Regulation&Compliance);and the impact of the loss of key systems(for Cyber Security and Resilience).Analysis relating to reve

248、rse stress testing is also incorporated into the assessment.Scenarios that most have the potential to adversely affect SSEs ability to deliver its core purpose to responsibly provide the energy and related services needed now and in the future are stress tested against forecast available financial h

249、eadroom.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 and those that are most heavily interconnected with SSEs other Principal Risks.This year,neither re

250、gulatory or shareholder approval have yet been received in respect of the proposal to merge SSEs household energy supply and services business in Great Britain(SSE Retail)with the retail business of innogy SE to form a combined independent retail company.As such two assessments have been carried out

251、 for the Group one on the assumption that the approval is received and the other assuming not.On 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,the Directors h

252、ave a reasonable expectation that the Group will be able to continue to meet its liabilities as they fall due in the period to March 2021.30SSE plc Annual Report 2018GROUP PRINCIPAL RISKSCommodity pricesKey developments in 2017/18Key mitigationsWhat is the risk?The risk associated with the Groups ex

253、posure to fluctuations in both the physical volumes and price of key commodities,including electricity,gas,CO2 permits,oil and related foreign exchange values.Material influencing factors:Weather associated seasonal fluctuations in demand,supply and generation capabilities which may or may not be in

254、 line with historical trends both in GB and across Europe.Further detail is available on page 33 of the Strategic Report.Fluctuations in foreign exchange markets.Fluctuations in demand.Generation technology advancements.Geopolitical events and domestic political change.Global economic growth.Europea

255、n generation outputs.International and national agreements on climate change.International inflows of fuel.Managing increased market volatility related to current geopolitical events including the impact of,and uncertainty relating to,Brexit.SSE uses VaR measures to monitor and control exposures.Tra

256、ding limits are set by the Board and managed through separate Retail and Wholesale Risk Committees.Commodity positions are assessed on a daily basis by a Risk Management team.SSEs Energy Economics team provide commodity price forecasts which are used to inform decisions on trading strategy and asset

257、 investment.SSE utilises a number of hedging instruments to minimise exposure to fluctuations in commodity prices and foreign exchange markets,details are available in the Financial Statements section of this Annual Report.OversightWholesale Risk CommitteeCyber Security and ResilienceKey development

258、s in 2017/18Key mitigationsWhat is the risk?The risk that key infrastructure,networks or core systems are compromised or are otherwise rendered unavailable.Material influencing factors:Software or hardware issues,including telecoms network and connectivity and power supplies.Malicious cyber-attack.I

259、neffective 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.The global profile,prevalence and sophistication of malicious cyber-attack continues

260、 to increase.Changes to reporting regulatory requirements generated by the introduction of the General Data Protection Regulation(GDPR)and the Networks and Information Systems(NIS)Directive.Continuously evolving technological environment.Key technology and infrastructure risks are incorporated into

261、the design of systems and are regularly appraised with risk mitigation plans recommended.SSE conducts regular internal and third party testing of the security of its IT networks and systems.Further strengthening and embedding of the cyber risk and controls framework which seeks to continue to identi

262、fy threats and reduce exposures through,for example,improved use of data analytics and further migration from unsupported systems.Significant longer term Security Programme investment and planning which seeks to strengthen the resilience of the systems on which SSE relies.IT Service Assurance works

263、with individual business units to form and agree appropriate service level agreements for business critical IT services.Business continuity plans are in place and are regularly tested and reviewed.OversightInformation Security and Privacy CommitteeDevelopment and ChangeKey developments in 2017/18Key

264、 mitigationsWhat is the risk?The risk of failing to recognise and react appropriately to competition,technological advancements and changes in customer expectations.Material influencing factors:Fast developing customer needs in relation to efficient,innovative and flexible products and services.Clim

265、ate change and the necessity to generate the energy required in modern society in a responsible and sustainable way which includes ensuring value is shared with those impacted by SSEs operations.The size,scale and number of change programmes underway,including those relating to regulatory or legisla

266、tive requirements.Longer term capital investment plans and budgets.Geopolitical events.Governance and decision making frameworks within the Group.The planned SSE Energy Services transaction represents the most significant strategic change to the SSE Group since its creation in 1998.An increasingly f

267、lexible energy infrastructure network,including the transition in the Networks business from Distribution Network Operator to Distribution System Operator.Identifying innovations and cost reductions in renewable technologies as research and development continues apace.The Board sets the risk appetit

268、e of the Group and approves and regularly reviews the Groups commercial strategy,business development initiatives and long term options,ensuring alignment of risk appetite and strategic objectives.The Executive Committee is responsible for ensuring that divisional strategies are consistent and compa

269、tible with the overarching Group strategy.A dedicated project team is managing the planned SSE Energy Services transaction process as well as the risks directly associated with it and is reporting to the Board and Executive Committee on a regular basis.OversightExecutive CommitteeStrategic Report A

270、strategy for long-term success31SSE plc Annual Report 2018Energy AffordabilityKey developments in 2017/18Key mitigationsWhat is the risk?The risk that the combination of the cost of providing reliable and sustainable energy and the level of customers incomes means that energy becomes unaffordable to

271、 a significant number of SSEs customers.This risk is directly connected to political interventions and commodity price exposure.Material influencing factors:Fluctuations in the cost of fuels.Generation technology changes.Macro economic impacts on household and business incomes.Supply chain cost mana

272、gement.Public policies,including those aimed at reducing carbon emissions and energy consumption.Required investment in the upgrading of the UK energy infrastructure.Continued uncertainty surrounding Brexit and its longer-term economic impact,including on households and businesses.The extension of t

273、he price cap previously introduced to pre-payment meter customers to those receiving warm home discount and the announcement of Government plans for the introduction of a time limited cap on all standard variable energy tariffs.SSEs Customer Charter sets out the steps it takes to support customers w

274、ho are having difficulty paying their bills,encouraging early engagement to work together on arrangements that allow payments to be appropriately managed.In March 2018,SSE attained the British Standard for Inclusive Service Provision,which represents the gold standard in recognising and catering for

275、 vulnerability.SSE has a series of programmes,partnerships,funds and schemes in place to support vulnerable customers,including identifying and referring customers for benefits entitlement checks.SSE continues to advocate its belief that modernisation of the energy market is best delivered by a cost

276、-effective,privatised system that is properly regulated.OversightRetail Risk CommitteeEnergy Infrastructure FailureKey developments in 2017/18Key mitigationsWhat is the risk?The risk of national energy infrastructure failure,whether in respect of assets owned by SSE or those owned by others which SS

277、E relies on,that prevents the Group from meeting its obligations.Material influencing factors:Severe adverse weather that causes damage or interrupts energy supply or generation.Appropriate asset management and necessary upgrading works of both generation and network assets.Energy network balancing

278、mechanisms.Government policy regarding the operation of the energy network which relate to security of supply,including the implications of Labour Party proposals for a much greater role for the state in energy provision.Failures in any aspect of the GB national critical infrastructure.Malicious att

279、ack on the GB energy infrastructure.Ongoing efficient investment and the associated risks of upgrading networks assets.Continued investment in a diversified range of generation assets.SSEs dedicated Engineering Centre of Excellence reviews and develops plans to ensure the ongoing integrity of its ge

280、neration assets is maintained.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 energy infrastructure failure events.Where there are material changes in infrastructure(or the m

281、anagement of it)additional plans are developed.SSE continues to be an active participant in national security forums such as the Centre for the Protection of National Infrastructure(CPNI).OversightExecutive CommitteeFinancial LiabilitiesKey developments in 2017/18Key mitigationsWhat is the risk?The

282、risk that funding is not available to meet SSEs 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.Material influencing factors:Glob

283、al macro economic changes and subsequent volatility within foreign exchange markets.Fluctuations in interest rates and inflation which influence borrowing costs.Defined benefit pension scheme investment and performance.The impact of fluctuations in gilt yields on the value of defined benefits pensio

284、n scheme liabilities.Ongoing commitment to maintain credit rating criteria.Ongoing uncertainty and volatility in financial markets due to potential macro economic factors,such as the impact of Brexit.Material reduction in defined benefit pension scheme deficit levels.Issuing of a 600m Green Bond,an

285、innovative approach to financing renewable energy infrastructure investment,achieving a coupon of 0.875%,SSEs lowest ever for a senior bond.The Group approach is to ensure that committed borrowings and facilities are available at all times equal to at least 105%of forecast borrowings over a rolling

286、6 month period.SSE seeks to maintain a diverse and innovative portfolio of debt to avoid over-reliance on any one market.This allows it to build relationships with,and create competition between,debt providers.Each of SSEs defined benefit pension schemes has a Board of Trustees which acts independen

287、tly of the Group.OversightTax and Treasury CommitteeMajor Projects QualityKey developments in 2017/18Key mitigations What is the risk?The risk that major assets that SSE builds do not meet the quality standards required to support economic lives of typically 15 to 30 years.Material influencing facto

288、rs:Availability of competent contractors.Appropriate contractual arrangements.New or unproven technology.Appropriate and effective budget management.All aspects of supply chain management,including those relating to human rights and labour standards The Group continues to manage the challenges assoc

289、iated with large capital projects such as the Caithness-Moray high voltage transmission link and the Beatrice Offshore Windfarm.In 2018,SSE became a signatory to the United Nations Global Compact the worlds leading sustainability initiative.Signatories must align their strategies and operations with

290、 ten guiding principles,six of which are around human rights and labour standards.SSEs Large Capital Project Governance Framework ensures that all major capital investment projects for the Group are governed,developed,approved and executed in a consistent and effective manner,with full consideration

291、 of best practice project delivery.The manual provides common standards across the Group and incorporates continuous improvement practices.The Large Capital Projects Services function employs dedicated quality and assurance teams who perform in-depth quality reviews.In major projects,SSE generally m

292、anages insurance placement by organising owner controlled insurance.This strategy allows it to have greater control and flexibility over the provisions in place.SSE also sees the insurance market as an important source of information on the reliability of technology and uses this to inform the desig

293、n process of major projects.SSEs strategy supports the transition to a low-carbon electricity system.As part of this,SSE is investing significantly in renewable energy,and is expecting to increase its renewable energy capacity to over 4GW by 2020.OversightGroup Large Capital Projects Governance Comm

294、ittee32SSE plc Annual Report 2018People and CultureKey developments in 2017/18Key mitigationsWhat 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 encoura

295、ges and supports ethical behaviours and decision making.Material influencing factors:Rewarding employee contributions through fair pay and benefits.Recognition of the value and benefit of having an inclusive and diverse workforce.A responsible employer ethos(see page 81 for further detail).Clearly d

296、efined roles,responsibilities and accountabilities for all employees.Availability of career development opportunities and appropriate succession planning that recognises potential future skills shortages.Clear personal objectives and communication of the SSESET of values.A focus on ethical business

297、conduct and creating a culture in which employees feel confident to speak up when they suspect wrongdoing.Recognising the value of inclusion,SSE has reviewed its inclusion strategy which will be supported by a refined and more targeted delivery plan.An Employee Communication Forum and a detailed com

298、munications plan have been put in place to ensure that all staff impacted by the planned SSE Energy Services transaction can raise questions,issues and concerns.SSE has a detailed inclusion and diversity policy and plan which is sponsored by the Executive Committee.This policy ensures that candidate

299、s from as wide a talent pool as possible are considered for all relevant vacancies.For more details regarding the progress of these please see the Sustainability Report.Group policies including“Doing the Right Thing,a guide to ethical business conduct”,explicitly outline the steps employees should t

300、ake to ensure their day-to-day actions and decisions are consistent both with SSEs values and ethical business principles.SSE employees can report incidents of wrongdoing through both internal and external mechanisms.SSE uses an independent Speak Up phone line and email service,hosted externally by

301、SafeCall,through which incidents can be reported.The Audit Committee reviews all key accounting judgements made as part of the preparation of the Annual Report and Accounts.SSEs business leaders are required to undertake regular succession planning reviews.At a Group level,SSE continues to develop i

302、ts approach to the management of talent and strategies to strengthen this.OversightGroup Governance,Culture and Controls CommitteePolitics,Regulation and ComplianceKey developments in 2017/18Key mitigationsWhat is the risk?The risk from changes in obligations arising from operating in markets which

303、are subject to a high degree of regulatory,legislative and political intervention or uncertainty.Material influencing factors:Constitutional uncertainty relating to Brexit.Changes in financial,employment,safety and consumer legislation and regulation and the impact of these changes on business as us

304、ual activities.Government intervention into the structure of the energy sector including renationalisation of any aspect of the UKs energy infrastructure.Changes to corporate governance requirements.International and national agreements such as the 2015 Paris Agreement on Climate Change.UK Governmen

305、ts continuing focus on energy supply markets including further potential interventions.UK Government policy evolution in key areas such as carbon price support and the capacity market.SSE continues to focus advocacy efforts on maintaining a long-term collaborative and cooperative UK-EU relationship

306、relating to energy issues.The Group has dedicated Corporate Affairs,Regulation,Legal and Compliance departments that provide advice,guidance and assurance to each Division regarding the interpretation of political,regulatory and legislative change.These teams take the lead in engagement with regulat

307、ors,politicians,officials,and other such stakeholders.The Group has a dedicated project team to manage all aspects of the regulatory and legislative change impacts of Brexit.There is regular engagement with the Board and Executive Committee on political and regulatory developments which may impact S

308、SEs operations or strategy.SSE has a long-term strategy to reduce the carbon intensity of the electricity it generates.OversightGroup Governance,Culture and Controls CommitteeSafety and the EnvironmentKey developments in 2017/18Key mitigationsWhat is the risk?The risk of harm to people,property or t

309、he environment from SSEs operations.Material influencing factors:Clear and appropriately communicated safety processes.Safety culture “if it isnt safe,we dont do it”.Clear,effective and regular communication of all relevant safety updates.Competent employees and contractors.Regular and documented tr

310、aining.Adverse weather.Challenging geographic locations.Appropriate task and asset risk assessment.Introduction of the 50/20 Safety family initiative which targets a 50%reduction in injury rate and 50%of our people active on health by 2020.In 2018,SSE set a new,longer term ambition to 2030 for the c

311、arbon intensity of the electricity it generates.Safety is the Groups No 1 value and is overseen by the Group Safety,Health and Environment Committee,supported by the Boards Safety Health and Environment Advisory Committee.Crisis management and business continuity plans are in place across the Group.

312、These are tested regularly and are designed for the management of,and recovery from,significant safety and environmental events.SSEs dedicated Engineering Centre of excellence reviews and develops plans to ensure that the integrity of its assets is maintained.Full environmental impact assessments ar

313、e carried out for all major projects,to ensure adverse environmental impacts are well understood and minimised.OversightGroup Safety,Health and Environment CommitteeGROUP PRINCIPAL RISKS CONTINUEDStrategic Report A strategy for long-term success33SSE plc Annual Report 2018Much of what SSE does is af

314、fected by the weather.It has an impact on the production of renewable energy(Wholesale),the operation of the transmission and distribution networks and the amount of gas and electricity used by customers(Retail).The weather is an important contributor to business performance that is strongly interco

315、nnected to identified Principal Risks such as Energy Affordability,Commodity Prices and Energy Infrastructure Failure(see page 29).SSE has crisis management and business continuity plans to deal with severe weather events that can damage energy infrastructure,and these were successfully implemented

316、in February and March 2018 in response to the“Beast from the East”cold weather front that presented challenges for the UKs energy system.Short-and long-term weather conditions are monitored by SSE so that it can manage and respond to conditions for the benefit of customers and to support the fulfilm

317、ent of its business objectives.This includes:Rainfall Hydro-electric generation in the north and west of Scotland is directly affected by rainfall.Over the course of 2017/18 a total of 1,646.5mm of rain fell over North of Scotland.Despite February and March 2018 being uncharacteristically dry(65%and

318、 47%drier respectively compared to the Met Office 1981-2010 climatology),2017/18 was around 10%wetter than 2016/17 overall.Output from SSEs hydro-electric assets,excluding from pumped storage,was up slightly at 3,171GWh in 2017/18 compared with 3,101GWh in the previous year.Wind The wind drives much

319、 of SSEs renewable generation,but too much can damage networks.Across the UK and Ireland wind speeds in 2017/18 were very close to the 1981-2010 climatology,and only fractionally higher than those seen in 2016/17.Year-on-year,output from SSEs onshore and offshore wind farms increased over the course

320、 of 2017/18 to 5,908GWh,up from 4,529GWh the previousyear.Temperature Fluctuations in temperature can influence total energydemand.In 2017/18 the UK was marginally warmer than the 1981-2010 climatology with a mean temperature of 9.0C.The year-on-year comparison,however,shows 2017/18 was 0.5C colder

321、than 2016/17 and two of the harshest winter months,February and March,were considerably colder than the previous year.+0.2CAbove the 1981-2010 climatology average for UK temperatures-4%Below the 1981-2010 climatology average for the North of Scotland0%The wind speed deviation from the 1981-2010 clim

322、atology average was negligible in 2017/18 Predicting how forecast temperatures might affect demand for gas and electricity,and whether daily fluctuations in temperature require a response from SSEs generation assets.Forecasting the temperature to inform how SSEs energy portfolio managers buy power a

323、nd gas in advance,thereby improving SSEs procurement.Determining short-,medium-and long-term wind forecasts and the electricity generation output from renewable generation assets.Assessing how rainfall patterns could impact SSEs hydro-electric generation output and storage capabilities.Preparing for

324、 how extreme weather,such as high winds or excess rainfall,could impact the resilience of the transmission and distribution assets that SSEs customers rely on.Managing the impact of the weather on SSE34SSE plc Annual Report 2018SSEs financial results for 2017/18 were ahead of expectations at the sta

325、rt of the financial year.All three of its reportable segments Wholesale,Networks and Retail contributed to adjusted operating profit.As expected,2017/18 involved a number of significant challenges,but SSE is a robust,sustainable business that keeps a strong operational focus on meeting the needs of

326、energy customers.It also keeps its focus on efficient investment in the energy assets needed now and in the future.It is encouraging that financial results for 2017/18 were ahead of expectations at the start of the financial year.Looking ahead,SSE will do the best possible job for customers and othe

327、r stakeholders,and build options and opportunities for the future,while delivering on its dividend commitment to shareholders.Gregor AlexanderFinance DirectorRecommended full year dividend pence per share94.7 The first financial objective of SSEs strategy is to remunerate shareholders investment thr

328、ough payment of dividends.Adjusted/reported earnings per share pence121.1/81.3 To provide a meaningful measure of underlying financial performance,SSE focuses on adjusted earnings per share.Adjusted/reported operating profit m1,828.7/1,379.2 SSE seeks to earn a sustainable level of operating profit

329、from each of its reportable segments.Adjusted/reported profit before tax m1,453.2/1,086.2 SSEs objective is not to maximise profit in any one year but to earn a sustainable level of profit over the medium term.Adjusted capital and investment expenditure m1,503.0 Central to SSEs strategy is efficient

330、 and disciplined investment in developing energy and related infrastructure assets needed by energy and utility customers.Adjusted net debt and hybrid capital m 9,221.8 SSE seeks to maintain a strong balance sheet,with adjusted net debt and hybrid capital supporting investment to earn returns.Fair t

331、axSSE is committed to open-ness and transparency about its tax disclosures and has been an accredited Fair Tax Mark company since 2014.Green BondIn September 2017,SSE successfully issued its inaugural Green Bond,helping it support the transition towards a low-carbon future.FINANCIAL OVERVIEWDELIVERI

332、NG SOLID FINANCIAL RESULTSStrategic Report Financial and operational performanceSSE plc Annual Report 20183536SSE plc Annual Report 2018Group financial overviewThe following tables provide a summary of Group Financial Performance.The definitions SSE uses for adjusted measures are consistently applie

333、d and are explained in the Alternative Performance Measures section of this document,before the Financial Statements.Key Adjusted Financial Metrics March 18 mMarch 17 mMarch 16 mAdjusted Operating Profit1,828.71,874.01,824.4Adjusted Net Finance Costs(375.5)(328.1)(310.9)Adjusted Profit before Tax1,453.21,545.91,513.5Adjusted Current Tax Charge(130.7)(157.7)(193.4)Adjusted Profit after Tax1,322.51,