Final Results

Scottish & Southern Energy PLC
18 May 2005


                        Scottish and Southern Energy plc

                                                                     18 May 2005

               PRELIMINARY RESULTS FOR THE YEAR TO 31 MARCH 2005

                          Chief Executive's Statement


'Scottish and Southern Energy delivered an excellent financial performance in
2004/05, achieving results well in excess of expectations at the start of the
year. These results were supported by a strong operational performance.
Consequently, the company has continued to meet its core objective, which is to
deliver sustained real growth in the dividend. In summary:
     
•    The Board is recommending a final dividend of 30.3p per share, making a 
     full-year dividend of 42.5p - an increase of 12.7%. This is well ahead of 
     our target of at least 4% real growth for the year to March 2005 and 
     reflects the underlying strength of the business and its prospects. It also 
     represents a significantly higher base from which to grow the dividend in 
     future.

•    Profit before tax grew by 17.2%, from £609.7m to £714.8m, before goodwill, 
     net finance income from pension assets and exceptional items.

•    Earnings per share increased by 15.0%, from 54.1p to 62.2p, before 
     goodwill, net finance income from pension assets, deferred tax and 
     exceptional items.

•    SSE had 6.1m energy supply customers at 31 March 2005, having gained 
     850,000 during the year, including 300,000 acquired from Atlantic Electric 
     & Gas.  In line with its policy of responsible pricing, SSE delayed price 
     rises for domestic customers until the end of the winter. It has now 
     committed to keeping electricity prices for domestic customers at their 
     current levels until at least the start of 2006. It will seek to do the 
     same with gas prices, but this will be determined by trends in wholesale 
     gas prices.

•    SSE has the second largest, and most diverse and flexible, generation
     portfolio in the UK following the acquisition of 4,000MW of generation 
     capacity at Ferrybridge and Fiddler's Ferry power stations and their coal 
     stocks for £136.0m.

•    The investment programme achieved important milestones in gas storage and 
     renewable energy in particular, with SSE in the process of applying for
     consent to develop an additional 318MW of new wind farm capacity.

•    There were two exceptional items: the successful progress of SSE's claim on 
     the administration of TXU businesses, which resulted in a first
     distribution of £159.1m being received from the administrator, plus a share 
     of the distribution to Barking Power Ltd; and the decision, following the 
     end of a 'structural' agreement, to write down certain parts of the 
     original Peterhead Power Station, resulting in an exceptional impairment of 
     £61.0m being taken as a charge to the results for the year.

•    The agreement reached with Ofgem on the Distribution Price Control for 
     2005-10 will allow SSE to deliver a quality service for customers while
     achieving a reasonable return for investors.

•    SSE's joint venture investment in the Scotland and the South of England gas 
     distribution networks, which will make it the second largest energy
     distributor in the UK, is on course for completion on 1 June 2005.

SSE's focus has always been, and remains, the delivery of sustainable long-term
real dividend growth.  We have assessed the value that we expect to create
through operational excellence, the successful integration of our
recently-acquired assets and the delivery of our programme of investment in
renewable electricity generation, electricity networks and gas storage. On this
basis, we are recommending a final dividend of 30.3p per share, an increase of
14.8%, leading to a full-year dividend of 42.5p, an increase of 12.7%.

This is designed to provide a significantly higher base for future dividend
growth. From this new, higher base our new target is to deliver at least 4% real
growth in the dividend paid to shareholders in each of the three financial years
to March 2008, with sustained real growth thereafter.

Our carefully-maintained financial strength, and our continuing focus on the
delivery of strong operational performance, means we are in a good position to
deliver the new dividend growth target for our shareholders in the years to
come.'


Ian Marchant
Chief Executive



FINANCIAL OVERVIEW

Note:  This preliminary results statement describes profits and earnings before
goodwill, net finance income from pension assets ('FRS 17') and the impact of
deferred tax.

In 2004/05, SSE again achieved increases in profit before tax, earnings per
share and the dividend.

Profit before tax, before goodwill, net finance income from pension assets and
exceptional items, grew by 17.2%, from £609.7m to £714.8m. There was profit
growth in Power Systems, Generation and Supply, Gas Storage and Telecoms. The
most significant growth was achieved in Generation and Supply, reflecting SSE's
success in delivering value from its growing customer base and its investment
in, and acquisition of, generation assets in recent years.

                                                2004/05                2003/04                   Change
                                                     £m                     £m                        %

PBT                                               785.3                  607.3                     29.3
  -    TXU distribution                         (133.5)                      -                        -
  -    Peterhead write down                        61.0                      -                        -
  -    Property disposal                              -                 (10.2)                        -

PBT before exceptionals                           712.8                  597.1                     19.4
  -    FRS 17 income                             (13.4)                  (2.2)                        -
  -    Goodwill                                    15.4                   14.8                     -

Underlying Profit Before Tax                      714.8                  609.7                     17.2


To monitor financial performance over the medium-term, SSE continues to focus on
earnings per share before the non-cash items of goodwill, the impact of deferred
tax and net finance income from pension assets. On this basis, and after
excluding the impact of the exceptional items, earnings per share increased by
15.0%, from 54.1p to 62.2p.

The Board is recommending a final dividend of 30.3p, an increase of 14.8%,
making a full-year dividend of 42.5p, an increase of 12.7%. This compares with
27.5p five years ago, in 2000, since when the dividend has increased by 54.5%,
which represents a compound annual growth rate of 9.1%.

The dividend increase for 2004/05 is significantly ahead of SSE's target for the
year of 4% real growth, reflecting the underlying performance of the business
and its prospects. It is also being recommended to establish a new, higher base
from which the dividend is expected to grow in future years.

The continuing delivery of strong performance in SSE's businesses, allied to the
prospects for securing benefits from recent acquisitions and investment
opportunities, means SSE is in a position to target at least 4% real growth in
the dividend payable to shareholders in each of the three years to March 2008,
with sustained real growth thereafter.


ENERGY SYSTEMS


Power Systems Overview

Operating profit in Power Systems increased by 2.3%, from £317.5m to £324.7m,
contributing 40.3% of SSE's total operating profit.
          
     •    Southern Electric Power Distribution's operating profit fell by 2.8%
          to £193.9m, following the over-recovery of allowable revenues that 
          occurred in 2003/04.
          
     •    Operating profit for Scottish Hydro Electric Power Distribution and
          Scottish Hydro Electric Transmission increased by 10.8% to £130.8m. 
          This followed the under recovery of allowable revenues that occurred 
          in the previous year.

The key responsibility of SSE's Power Systems businesses is to maintain safe and
reliable supplies of electricity, and to restore supplies as quickly as possible
following interruptions. In line with that, SSE has invested £760m in its
electricity networks since 2000, including £172m in 2004/05.

Ofgem's valuation of the physical assets of the transmission, distribution and
metering businesses (the Regulated Asset Base) was £2.47 billion on 1 April 2005
and is expected to grow by around £120m over the next five years, excluding any
major transmission investment, thus supporting the ongoing value of the Power
Systems businesses.


Southern Electric Power Distribution

In 2004/05, Southern Electric Power Distribution distributed 34.1TWh of
electricity, an increase of 0.36TWh.  The average number of minutes of lost
electricity supply per customer was 83.9, which was within the target set by
Ofgem under its Information and Incentives Project (IIP), which gives financial
benefits to distribution network operators that deliver good performance for
customers. The number of supply interruptions per 100 customers was 97.6.
Subject to the outcome of the forthcoming Ofgem review of exceptional events,
which should reduce these figures, this performance is expected to lead to
additional revenue of around £5m.

The programme to upgrade and refurbish the network continued during 2004/05,
with 1,680km of high voltage overhead lines and 775km of low voltage lines
refurbished. The substantial programme of network automation continued, with
another 86 urban substations completed, together with 220 new radio-controlled
automated switching units in rural areas, allowing for faster restoration of
supply to customers. There has also been significant investment in the
underground network, with 50km of high voltage cable replaced.


Scottish Hydro Electric Power Distribution and Scottish Hydro Electric
Transmission

In the Scottish Hydro Electric area, 8.748TWh of electricity were distributed
during 2004/05, compared with 8.743TWh in the previous year. Excluding the 11
January storm, the average number of minutes of lost electricity supply per
customer was 86, which was within the IIP target, as was the number of
interruptions per 100 customers, which was 89. Subject to the Ofgem review of
exceptional events, which should reduce these figures, this should lead to
additional revenue of around £3m under IIP.

The January storm was described as the worst to affect the north of Scotland for
20 years. It resulted in more than 2,000 separate instances of damage being
inflicted on the electricity network in the Scottish Hydro Electric area and
around one in five customers losing their electricity supply.  The company's
response to it drew praise from, amongst others, the First Minister of Scotland.

The ongoing programme of investment in the Scottish Hydro Electric area
continued during 2004/05, with another 1,990km of high voltage overhead lines
being refurbished, along with 245km of low voltage lines. The programme of
network automation has also continued, with another 16 urban substations
completed, together with 315 new radio-controlled automated switching units in
rural areas.


Distribution Price Control Review

Throughout the process for determining the new electricity distribution price
control for 2005 to 2010, SSE's objective was to reach agreement with Ofgem on
an overall package of measures in respect of Southern Electric Power
Distribution and Scottish Hydro Electric Power Distribution which would allow it
to deliver a quality service for customers while achieving a reasonable return
for investors.  Agreement was reached in December 2004.

Ofgem's review confirmed that SSE is the most efficient operator in electricity
distribution in Great Britain. Looking forward, SSE believes that, taken
together, the arrangements for future allowed operational and capital
expenditure, operational expenditure efficiency assumptions, the treatment of
pensions costs and rising tax charges, the level of real post-tax cost of
capital, the incentive framework for delivery of better than expected
performance and the treatment of other company-specific issues meet its
objective.

For example, during the review, SSE argued that the incremental costs associated
with balancing electricity generation and demand on Shetland should become a
liability of Scottish Hydro Electric Power Distribution under BETTA (the new
British Electricity Trading and Transmission Arrangements - see below) and that
these costs, of around £7m a year, should in future be recoverable from all
electricity customers. Ofgem agreed, and this outcome confirms the importance of
adopting a thorough and constructive approach to engagement with the regulator
and other stakeholders.

More broadly, the review resulted in significantly increased allowances for
capital expenditure to maintain and improve electricity networks. As a result,
SSE's regulated capital expenditure in Power Systems is likely to increase by
over 20%, to around £210m, in 2005/06.

Overall, SSE expects the outcome of the distribution price control review to
enable it to increase the revenue earned by its electricity distribution
businesses in future years. The priority now is to maintain the highest
standards of customer service and efficiency within the new price control
framework.


Transmission

SSE also reached agreement with Ofgem on the price control for Scottish Hydro
Electric Transmission for the two years to 31 March 2007. This will enable a new
five-year price control to be set for Great Britain's three electricity
transmission companies at the same time.

Since BETTA was introduced on 1 April 2005, National Grid Transco has become
Great Britain System Operator, responsible for balancing the supply and demand
of electricity across Great Britain.  Scottish Hydro Electric Transmission
remains responsible for operating, maintaining and investing in the transmission
network in its area, which covers around 70% of Scotland.  These new
arrangements have worked well so far.

In August 2004, Ofgem stated that investment had been approved to allow the
replacement of the electricity transmission line connecting Beauly in the
Highlands with Denny in the Central Belt of Scotland to go ahead. This work has
to take place if the government's targets for the generation of electricity from
renewable sources are to be achieved.  It is likely that the construction of the
replacement line will require an investment of around £250m. SSE expects to
submit within the next few weeks an application to Scottish Ministers for
consent to build the line. On this basis, and subject to the timely progress of
the planning application, the replacement line could be operational in 2008/09.

In addition, a preliminary public consultation document on options for
connecting possible renewable generation in the Western Isles to the
transmission infrastructure on the Scottish mainland has led to the
identification of three options which require further technical and
environmental study.  While this work remains at a relatively early stage, it
could require investment of around £400m towards the end of this decade.


Gas Distribution Networks

In August 2004, a consortium (now named Scotia Gas Networks) in which SSE holds
50% of the equity entered into an agreement to acquire the Scotland and the
South of England gas distribution networks from National Grid Transco.  In
total, they comprise 73,000km of gas mains, delivering gas to around 5.6m
industrial, commercial and domestic customers.

The total value of the acquisitions will be £3,162m, of which £2,082m is
expected to be funded by already-committed non-recourse borrowings, with the
balance being funded by equity. This means that, in return for a cash
consideration of £540m, SSE will receive 50% of the distributable earnings from
the networks.  Upon completion of the acquisitions, SSE will also provide
certain corporate and management services for the gas networks under an
agreement with Scotia Gas Networks. When completed, the acquisitions will make
SSE the second largest energy distributor in the UK.

The acquisitions received approvals from the Department of Trade and Industry
and Ofgem in January 2005 and from the Office of Fair Trading in April 2005, and
the two networks became separate companies within the NGT group on 1 May 2005.
Final approvals from Ofgem and the Health and Safety Executive are still
required, but the acquisitions are on course for completion at the start of June
2005.

A programme of work to complete the acquisition process, and to put in place all
the necessary arrangements for the change of ownership, is now well advanced.
Payroll, materials management, finance, billing and human resources systems have
been developed for the two gas networks.  To support the implementation of these
systems, a major training programme, involving over 2,000 Scotia Gas Networks
staff and over 1,000 staff of contractors, is now close to completion.

Longer-term, it is clear that there are significant opportunities to create
value through delivering efficiencies.  The acquisitions may also provide other
business opportunities, such as in gas metering and in the provision and
maintenance of gas equipment. The first priority will, of course, be to deliver
gas safely and reliably.

SSE will equity account for the networks as a joint venture and its Accounts
will show SSE's share of profit. As their borrowings will be non-recourse, they
will not be consolidated on SSE's balance sheet. The networks are expected to
enhance SSE's earnings from the first year.


GENERATION AND SUPPLY


Generation and Supply Overview

Operating profit in Generation and Supply rose by 29.5%, from £298.5m to
£386.5m, contributing 48.0% of SSE's total operating profit. Within SSE's
integrated business model, the use of generation assets supports performance in
energy supply and value in Generation and Supply is, therefore, assessed as a
single value chain.

During 2004/05, SSE's power stations (wholly-owned and owned by joint ventures)
generated 37.9TWh of electricity, an increase of 14.7TWh on the previous year.
SSE supplied 47.5TWh of electricity to industrial, commercial and domestic
customers, an increase of 8.1TWh on the previous year.

With the acquisition of Ferrybridge and Fiddler's Ferry, SSE now owns and
operates nearly 10,000MW of electricity generation. Comprising a balanced mix of
baseload, mid-merit and peaking plant, SSE's portfolio of power stations is now
the second largest and the most diverse in the UK.

Growth in operating profit was achieved mainly as a result of benefits from five
main factors.  These were: the first full year of ownership of Medway Power; the
ending of the contract under which SSE took output from Scottish Power's
coal-fired power stations in Scotland, resulting in lower capacity costs; the
acquisition of the Ferrybridge and Fiddler's Ferry power stations; increased
output from hydro electric stations, including more output qualifying for
Renewable Obligation Certificates (ROCs); and sustained growth in energy supply
customer numbers. These benefits were partly offset by the impact of rising
wholesale gas prices.

In addition, SSE's flexible generation assets continued to perform well in NETA
(the New Electricity Trading Arrangements), with success in the balancing market
contributing £24m to operating profit during the year. NETA has now been
superseded by BETTA.

Generation and Supply accounted for almost all of the £2.3bn increase in SSE's
turnover in 2004/05. This was mainly due to: retail sales to the significantly
increased number of electricity and gas customers; higher wholesale and retail
prices; and new businesses acquired.  Around one third of the increase reflects
additional wholesale trading of both electricity and gas necessary to optimise
the short-term position in volatile energy markets.


EU Emissions Trading Scheme and BETTA

The electricity generation market in the UK was the subject of two important
developments in the first few months of 2005: the launch of the EU Emissions
Trading Scheme (EU ETS) and the introduction of BETTA.

It is regrettable that, despite the launch of the EU ETS on 1 January 2005,
there remains a dispute between the UK government and the European Commission
about the total number of carbon emissions allowances to be issued to operators
of participating installations in the UK. It is very disappointing that any
shortfall between the UK government's proposed National Allocation Plan and that
agreed by the EC will be met by reducing the number of allowances given to the
electricity generating sector. Nevertheless, SSE's allocation of emissions
allowances, of around 20 million tonnes, is reasonable in comparison to the rest
of the UK generation sector, although less than the level of emissions that is
likely to be required in practice.

The BETTA arrangements were successfully introduced on 1 April 2005. As
expected, the establishment of the England-Scotland interconnector as part of
the wider transmission system has made it easier for the output from SSE's
flexible power stations in Scotland to be deployed to meet demand from the
electricity market in England and Wales.


Gas-fired Generation

SSE now owns 4,300MW of gas-fired electricity generation capacity, including its
share of joint ventures. The 120MW power station in Fife was acquired for £12.5m
in February 2004, and during the year SSE invested £4.0m in upgrading the plant
to support its operational performance. It returned to full service on schedule,
in December 2004.

SSE's acquisition of the balance of the equity interests which it did not
already own in Medway Power for £241.1m in November 2003 added another modern,
flexible and efficient power station to its group of generation assets and gave
SSE the economic benefit from having a 100% interest in Medway's contracts to
supply power.  As a result of this acquisition, Medway Power contributed an
additional £41.0m operating profit in 2004/05, an increase of £25.0m on the
operating profit achieved, also as a result of the acquisition, in the final
five months of 2003/04.

As with NETA, good performance in BETTA will be dependent on plant reliability,
and the number of unplanned outages at SSE's wholly-owned gas-fired power
stations was slightly fewer than in 2003/04 and around 50% lower than in the
year before that. SSE believes that this is a good performance, but one which
can be improved in future years.


Coal and Biomass Generation

SSE acquired the Ferrybridge and Fiddler's Ferry power stations, with a total
capacity of almost 4,000MW, and associated coal stocks, for £136.0m on 30 July
2004. This equates to around £20 per kilowatt of installed capacity. Fuel in
transit and contracts to supply fuel for the power stations were acquired for
£43.0m and £80.3m respectively.

Both are flexible, mid-merit stations which have added to the diversity of SSE's
generation portfolio and help it to meet peak demand for electricity. They also
allow SSE to manage its exposure to changes in fuel prices by balancing its gas
portfolio with a coal portfolio. In the first eight months of ownership, the two
power stations contributed around £50m to operating profit after amortising
£53.0m of the payment for the contracts to supply fuel.

One of the benefits arising from the acquisition of the stations was that SSE
received with them a significant allocation of carbon emissions allowances.  In
addition, they also 'co-fire' fuels from renewable sources in order to displace
fossil fuels, thus reducing the level of carbon emissions resulting from their
operation. This output qualifies for ROCs.  From the date of the acquisition,
their output qualifying for ROCs was 573GWh, an increase of 79% on the same
period in the previous year, when they were under their former ownership.

At the time of the acquisition, SSE undertook to examine all options for
maximising the longer-term value of the assets, particularly with regard to
biomass. In line with this, SSE is now investing around £20m in the development
of additional facilities to increase further the ability to co-fire fuels from
renewable sources at both power stations. The installation of new 'direct
injection' burners at the stations is expected to give them the ability to
generate around 1,500GWh per year of output qualifying for ROCs.  The work to
install the burners is expected to be completed by the end of the financial year
2005/06.

Having experienced the benefits arising from owning a mix of gas-fired and
coal-fired capacity in its generation portfolio, SSE is also examining in detail
the case for opting in to the Large Combustion Plant Directive some of the
capacity at Fiddler's Ferry and/or Ferrybridge. To do this would require the
installation of Flue Gas Desulphurisation (FGD) equipment and an investment
estimated to be in the range of £75m-£90m per GW of capacity. A detailed tender
exercise is now under way and, in line with the Directive, a final decision on
this must be made by the end of 2005.

More broadly, it is becoming increasingly recognised that coal and other fossil
fuels will play a central part in meeting future energy needs. New technologies
will have to be developed to reduce and capture carbon dioxide emissions caused
by the use of all of these fuels and SSE is actively involved in developments in
this field.


Hydro Generation

Performance in Generation and Supply during 2004/05 benefited from the increase
in SSE's electricity output qualifying for ROCs, which attracted a premium price
of around £45/MWh. The increase was attributable to the growing proportion of
SSE's hydro electric capacity which has been refurbished, so that its output
qualifies for ROCs, and to higher than average 'run-off' of water flowing into
SSE's reservoirs.

The output of refurbished hydro electric stations with capacity of up to 20MW
qualifies for ROCs, and, in total, SSE has 394MW of capacity in its sub-20MW
stations.  During 2004/05, refurbishment was completed on 95MW of hydro
capacity, taking the overall total of refurbished capacity to 370MW. The
refurbishment of the remaining 24MW will be completed by the end of December.

Water running off into reservoirs during 2004/05 was 14% above the long-term
average and the 6th highest in over 30 years. This unusually high level of
run-off added around £15m to operating profit compared with an average year.
Total hydro output was 3,544GWh, compared with 2,640GWh in the previous year.
As a result of this and of the investment in refurbishing hydro capacity, SSE's
ROC-qualifying hydro output increased to 1,448GWh, compared with 916GWh in 2003/
04. Assuming average 'run-off', SSE's ROC-qualifying output from hydro electric
stations is again expected to be over 1,400GWh in 2005/06.

The new 3MW hydro electric station at Kingairloch, near Fort William, began
generating electricity earlier this year and work on the development of the 7MW
of ROC-qualifying capacity at Fasnakyle is well under way.

The planning application for consent to build a new 100MW hydro electric station
at Glendoe near Loch Ness is still being considered and the initial tendering
process for the project has now been completed. The project is unique, and SSE
will determine whether to proceed with the development following a full risk/
reward analysis, focusing on: any conditions which must be met as part of the
planning consent; the outcome of the tendering process; and further assessments
of the income which the station would be likely to generate.

The abolition of Hydro Benefit on 1 April 2005, announced by Ofgem in 2003, and
its replacement by a separate scheme to assist customers with the high costs of
distributing electricity in the north of Scotland, means SSE's profit from its
generation activities will increase by around £37m a year from 2005/06. The
profitability of its distribution businesses will be unaffected.


Wind Generation

The increase in the UK's target for electricity generated from renewable
sources, to 15% by 2015, emphasises the important part that wind generation will
have to play in helping to reduce emissions of carbon dioxide and in increasing
the amount of electricity that can be generated from the UK's indigenous
resources. The framework for investment in renewable energy remains encouraging.

SSE's first wind farm, at Tangy in Argyll, has been operating successfully for
over two years and SSE is seeking consent to add another 6MW (Tangy 2) to its
capacity. Its second wind farm, at Spurness on the Orkney Islands, was
officially opened in March, taking SSE's operational wind farm capacity to 22MW.
Construction work at the 20MW wind farm at Artfield Fell in Wigtownshire, and on
the 120MW wind farm at Hadyard Hill in Ayrshire, is advancing well and both
should begin to generate electricity during 2005/06.

The progress of other applications for consent to build wind farms, including
those proposed by SSE, is proving to be slow, reflecting a planning regime which
the Scottish Executive itself has described as 'stringent'.  The applications to
build wind farms at Drumderg (32MW) and Gordonbush (87MW) have been in the
planning process for 21 months and two years respectively, but have yet to be
finally determined.

These seven developments comprise the first phase of SSE's wind energy
development plans and around £80m has now been invested at Tangy, Spurness,
Artfield Fell and Hadyard Hill.  An additional £140m will be required to
complete Artfield Fell and Hadyard Hill and to develop Drumderg, Gordonbush and
Tangy 2.

SSE is also continuing to develop plans for the second phase of its investment
in wind energy and is in the process of applying for consent to develop a
further 318MW of capacity at four sites in Scotland. The development of these
four sites, if consented, will require investment of around £250m over the next
few years. Other sites are also being developed with a view to seeking planning
consent in future years.

As a result of its ongoing programme of investment in renewable energy, SSE
remains on course to have around 1,000MW of ROC-qualifying wind and hydro
generating capacity by 2008. Of this, it already has in place, or has secured
consent to develop, 566MW of capacity (395MW in operation and 171MW in
construction or refurbishment).


New Technologies

Investment in the research, development and demonstration of new technologies
for generating electricity is a key part of the government's energy policy, and
is part of SSE's strategy to remain the UK's leading generator of electricity
from renewable sources.
          
     •    In August 2004, SSE and Talisman Energy (UK) announced plans to
          construct a £28m wind farm demonstrator project, with a capacity of up 
          to 10MW, adjacent to the Beatrice Oil Field, 25km off the coast of 
          Scotland, in deep water in the Moray Firth. The project is being 
          funded by the Scottish Executive, Department of Trade and Industry and 
          the European Commission, in addition to the two companies. SSE is 
          contributing £7m to the project.  Electricity from the demonstrator 
          project should begin to be generated by 2007.
          
     •    Renewable Technology Ventures Ltd (RTVL), the joint venture between
          SSE and The Weir Group, has invested £2.4m on the development of a 
          tidal power generating device.  Following this work, RTVL is now 
          seeking to build a full-sized commercial demonstrator device, with a 
          capacity of 2.4MW, and hopes to deploy the device at the European 
          Marine Energy Centre in Orkney. This is subject to ongoing discussions 
          with the Department of Trade and Industry and the Scottish Executive, 
          and could require investment by SSE of around £2m. The device would be 
          the largest of its kind in the world and includes unique design
          features.
          
     •    SSE entered into an agreement with Renewable Devices Swift Turbines
          Ltd, a technology company providing accessible renewable energy 
          solutions, in October 2004. It has developed what is believed to be 
          the world's first feasible rooftop-mountable wind energy system, which 
          is capable of delivering significant amounts of energy to businesses, 
          offices and homes.  Under the agreement, SSE is investing almost 
          £300,000 in Renewable Devices to acquire 20% of the share capital and 
          will also provide opportunities to market its rooftop wind system to a 
          wide range of customers.  Devices are being installed at a number of 
          locations around the country, including the NaRECentre in Newcastle 
          and a zero-emissions property development at Bow in London.
          
     •    SSE has acquired a 7.5% stake in solarcentury, the largest independent
          solar photovoltaics company in the UK, for £1m. The two companies have 
          also entered into a collaboration agreement. As a result of this, 
          solarcentury's expertise in solar energy will be brought together with 
          SSE's electrical contracting business to market the provision and 
          installation of solar energy solutions to a growing number of 
          customers throughout the UK.  They have already combined to provide 
          and install solar PV for a variety of organisations, including the 
          National Trust in Swindon and Spitalfields market in London.

With growing interests in emerging technologies, allied to its established
capability in generating electricity from the more mature technologies of hydro,
onshore wind and biomass, SSE is now a genuinely pan-renewables company, and is
well-placed to maintain its current position as the UK's leading generator of
electricity from renewable sources.


Energy Supply

SSE's energy supply business had 6.1m customers at 31 March 2005.  It grew by
16% in 2004/05, with a net gain of 850,000 customers, including over 300,000
customers from Atlantic Electric and Gas (Atlantic) in April 2004. Growth in
customer numbers has continued at a similar rate since the end of March.
Overall, SSE now has 1.5m more customers than at the start of 2002, an increase
of one third.

The final acquisition cost of the Atlantic customers and the customer debt book
was £85.2m.  Since April 2004, £60m from the debt book has been collected. A
year on from the acquisition, the number of customers with Atlantic is still
over 300,000.

Growth achieved during the year also includes a net gain of business customers
covering around 85,000 sites throughout Great Britain. SSE won the tender to
supply electricity to the NHS's 800 large sites in England in a three-year deal
worth over £220m. In total, SSE's business customers now cover 415,000 sites
throughout Great Britain.

The increase in customer numbers has been aided by growing success in retaining
existing customers. By the end of 2004/05, the number of customers leaving SSE
for other suppliers had fallen by around 20% compared with the previous year.

Although all the other major energy supply companies raised their prices for
domestic customers at least twice during 2004, SSE made just one increase, in
line with its policy of responsible pricing. It eventually raised prices for
most customers in March 2005 but, in doing so, gave a commitment to hold
electricity prices at their revised levels until at least the start of 2006. SSE
aims to do the same with gas prices, but its ability to do so will be determined
by trends in wholesale gas prices.

SSE remains the most efficient energy supplier in the UK, incurring the lowest
cost when serving customers, according to a study by Datamonitor published in
January 2005. The study said that SSE's 'cost to serve' is between 10% and 23%
lower than that of other suppliers.


Customer Service

Equally important to success in energy supply is maintaining the highest
possible standards of customer service.

SSE's 'one-stop' fully integrated customer service system continues to offer one
of the broadest range of functions in the sector and was enhanced during 2004/05
to improve further standards of service while at the same time keeping pace with
changing technology. Since December 2004, on-line billing services have been
available to SSE energy supply customers, allowing them to view and pay their
bills, submit meter readings and raise enquiries. Already, around 25,000
customers have registered for this new service.

Despite the significant growth in customer numbers, SSE secured during 2004/05 a
reduction of 48% in the number of customer complaints sent to energywatch for
resolution, to fewer than 1,400 (excluding Atlantic).  This follows the 23%
reduction achieved during the previous year.  In the statistics published by
energywatch in March 2005, SSE had the lowest rate of complaints in respect of
all three categories: account and billing matters, transfers between companies
and direct selling.

The leading independent study, by JD Power, published in November 2004, found
that SSE has the highest level of customer satisfaction among UK gas suppliers
and the third highest among electricity suppliers.


Product Development

During the year, SSE launched new products, demonstrating the strength of its
commitment to product development as a key contributor to long-term success in
energy supply.
          
     •    power2 is a unique package which offers customers a commitment that
          electricity will be generated from SSE's hydro electric schemes along 
          with a tree-raising scheme to offset carbon emissions resulting from 
          their consumption of gas and disposal of household waste.  It has 
          already attracted almost 20,000 customers.
          
     •    easywarm is a fixed-price energy product for customers aged over 50
          which has been piloted in south Wales.  It has attracted over 20,000 
          customers. SSE is assessing whether to offer easywarm to customers in 
          other parts of the country.
          
     •    energyplus care is a new tariff and package of services for SSE's most
          vulnerable customers which should enable a qualifying family living in 
          a three-bedroom semi-detached house to reduce their total energy bills 
          by around 30%, or £200 a year.  It was described by energywatch as 'a 
          big stride forward in the development of effective and innovative 
          social tariffs'.

The energyplus care product is designed to help customers with multiple
problems: a low income that needs to be supported by particular benefits;
special needs such as a disability; and a home that has particularly poor energy
efficiency. While SSE does not believe that the energy supply industry is
responsible for fuel poverty, it does believe that it is in the long-term
interests of the industry to make a real effort to play its part in dealing with
the problem.

Overall, SSE believes that its work on product development, emphasis on customer
service and its policy of responsible pricing means that its energy supply
business should be able to extend further the period of growth which began at
the start of 2002.


Energy Services

An increasing number of supply customers are likely to seek a wider range of
energy-related services, covering renewable, sustainable and energy efficient
products. With well-established Contracting, Connections and Appliance Retail
businesses, and a growing portfolio of micro-generation technologies, SSE is
very well-positioned to capture a significant proportion of this developing
market.

SSE's ability to provide a broad energy services offering should also increase
its scope to secure additional business opportunities in electrical contracting,
'local' electricity networks, street lighting and energy supply to major
customers.

With that aim in mind, SSE's Energy Services Unit was established during 2004 to
provide a comprehensive range of 'beyond the meter' services. The work of the
unit will focus initially on public sector organisations such as local
authorities, and then extend to customers in the commercial sector such as
housebuilders and other developers. In due course, the aim is to market SSE's
package of energy services to domestic customers.


CONTRACTING AND CONNECTIONS

Contracting and Connections delivered operating profit of £47.5m during 2004/05,
compared with £48.7m in the previous year.

The Contracting businesses are already leaders in their sector and their plans
for future growth are continuing to develop effectively.
          
     •    Southern Electric Contracting acquired the electric contracting
          division of what was previously Eastern Contracting in January 2005, 
          in a transaction with a value of around £2m.  As part of the deal, SEC 
          also acquired the Eastern Contracting name.  The acquired business is 
          based in Bury St Edmunds, employs around 200 staff and extends 
          significantly SEC's area of operation.
          
     •    A joint venture comprising SEC and Interserve was awarded the Ministry
          of Defence's 'Prime' contract covering London and the south-east of 
          England. The contract is to provide mechanical and electrical 
          maintenance for over 100 MoD sites, and is worth around £400m over an 
          initial seven years.  Work started in April 2005.
          
     •    In partnership with the asset finance division of The Royal Bank of
          Scotland, SEC has contracts worth around £350m to replace and maintain 
          street lights for three local authorities in England under the Private 
          Finance Initiative.  These contracts are progressing well.
          
     •    Thermal Transfer has significantly increased its presence in the
          healthcare sector, acting as a specialist contractor in the design and 
          build of laboratories, containment areas, cleanrooms and support 
          facilities at major hospitals throughout the country.

The Connections business completed around 42,000 electrical connections during
2004/05, a similar number to the previous year. In addition, it has continued to
expand its portfolio of electricity networks outside the Southern Electric and
Scottish Hydro Electric Power Distribution areas.  SSE's Connections business
now owns and manages 16 electricity networks outside SSE's two electricity
distribution areas.

It is also a licensed gas transporter, owning and operating gas mains and
services in many parts of  the country. The rate of connecting new premises to
its gas networks continued to grow, and during the year, it connected a further
7,000 premises, up 20% on the previous year, taking the total number of
connections to more than 27,000.

An illustration of the business' progress is its success in winning a major
contract to provide, own and operate the electricity and gas networks for the
Braehead development at Renfrew, part of the Clydeside area regeneration
project. The development consists of around 2,000 residential units, with retail
and commercial accommodation, including a large indoor ski slope and leisure
centre.  Preliminary work has started on site and the first connection is
expected in the second half of this year.


GAS STORAGE

Gas Storage delivered an operating profit of £18.3m, an increase of 60.5%
compared with the previous year. Demand for gas storage facilities in the UK
remains high and, in a volatile gas market, SSE has continued to enter into new
contracts to provide storage at a significantly higher value than the contracts
they replace.

The onshore gas storage facility at Hornsea, which SSE acquired in 2002, is
currently the largest in the UK and has a good record of reliability. It
therefore provides customers with a means of managing their changing supply/
demand position.  In this respect, meeting customers' nominations is vital and
Hornsea has continued to be 100% available to customers except in instances of
planned maintenance. Looking ahead to the 2005/06 winter, all of the capacity at
Hornsea has already been sold.

SSE's joint venture with Statoil (UK), in which SSE is investing £150m, to
develop what will become the UK's largest onshore gas storage facility at
Aldbrough, is continuing to make good progress.  With a total new capacity of
around 420 million cubic metres, of which SSE will have the ownership interest
in 280 million cubic metres, Aldbrough will provide essential additional gas
storage for the UK energy industry.

Consent was received in March 2005 from DEFRA to begin 'leaching' the nine
caverns that will be used to store gas. Leaching at the first cavern is now well
under way and work on other caverns will follow during 2005/06. The process will
take around four years to complete, with the first cavern expected to be ready
to store gas in 2007.


TELECOMS

SSE's combined Telecoms business (SSE Telecom and Neos) achieved an operating
profit of £10.6m in 2004/05, compared with £3.5m in the previous year. The
benefits from establishing in 2003/04 a national telecoms network, a UK-wide
sales force and a competitive range of products targeted at commercial and
public sector customers are now being realised. As part of SSE, Neos is also
able to position itself as one of the UK's most financially secure telecoms
network operators

The improvement in performance is partly the result of higher sales, and
important contracts have recently been signed with major companies including
Opal Telecom and O2. In addition, an improvement in gross margins and a
reduction in overhead costs has been achieved, partly through synergy savings
achieved by combining the SSE Telecom and Neos businesses.


EXCEPTIONAL ITEMS


TXU Europe Group plc

On 31 March 2005, SSE received its first distribution, of £159.1m, from the
administrators of TXU Europe Group plc and certain of its subsidiaries, with
regard to its agreed claim of £294.2m in respect of a 14-year contract
originally entered into in 1997.

After extinguishing a debtor balance, the net receipt of £111.2m was taken as an
exceptional credit to the results for 2004/05. To this has been added SSE's
share (£22.3m) of the distribution paid by the administrator to Barking Power
Ltd, the operators of Barking Power Station.

SSE expects to receive further distributions of up to a total of £100m from the
administration, in the autumn of 2005 and the spring of 2006, but these have not
been recognised in the results to date as the value and precise timing of the
receipts are uncertain. Overall, SSE now expects that over 85% of its agreed
claim will be settled.


Peterhead Power Station

In line with the decision announced in November 2003, the 'structural' agreement
under which ScottishPower paid a capacity fee each year for the use of part of
the capacity of Peterhead Power Station ended on 31 March 2005.  The agreement
was in respect of the original station, which was not re-powered in 2001, and
had been intended to run until 2012. Its end has led to a reappraisal of the
power station and, in particular, the carrying value of the assets which were
subject to the contract.  This concluded that certain parts of the original
station ought to be written-down. Consequently an exceptional impairment of £61m
has been taken as a charge to the results for the year.

The re-powered station, which comprises three combined cycle gas turbines and a
steam turbine, with a total capacity of 1,140MW, continues to be held at its
full net book value as it remains one of the most flexible power stations in
Europe and is considered to be an asset with very significant future economic
life.


GROUP CAPITAL EXPENDITURE

Group investment and capital expenditure, excluding acquisitions, totalled
£383.5m during 2004/05, compared with £289.7m in the previous year.

Capital expenditure in Power Systems was £176.7m, compared with £147.9m in the
previous year. Of this, £100.3m was invested in network refurbishment and £76.4m
on network expansion.  Following the distribution price control review for
2005-10, SSE's capital expenditure in Power Systems is likely to increase to
around £210m in 2005/06.

Another important feature of capital expenditure in 2004/05 was investment of
£119.3m for growth in generation, with the refurbishment work being carried out
at hydro electric power stations and the development of new hydro electric and
wind energy schemes which will lead to the production of ROC-qualifying energy.
In addition, £31.7m was invested in the ongoing development of the new gas
storage facility at Aldbrough.

Within the overall total, capital expenditure for growth was £174.0m during 2004
/05. This mainly comprised renewable energy and gas storage. As previously
stated, capital expenditure will be significantly higher in the next few years,
with investment in renewable energy, electricity networks and gas storage, and
is expected to be around £500m in 2005/06. All investments are expected to
achieve returns which are greater than the cost of capital and are expected to
enhance earnings.


NET DEBT AND CASH FLOW

During 2004/05, SSE's net debt increased by £31.7m to £1,448.8m, following
acquisitions totalling £339.0m and capital expenditure for growth, principally
in renewable energy and gas storage, totalling £174.0m.

The fact the increase in net debt was small reflects the strong underlying free
cash flow generated by SSE and the inflows of: £159.1m cash from the TXU
administration; the recovery of £60m from the debt book of Atlantic; and the
cash generation of £53m from the contract book purchased with Fiddler's Ferry
and Ferrybridge.  As already stated, these positive benefits were offset by cash
outflow on higher capital expenditure for growth and the acquisitions of the two
power stations and Atlantic.


FINANCIAL MANAGEMENT


Treasury Policy

SSE's operations are financed by a combination of retained profits, bank
borrowings, long-term debt issuance and commercial paper. As a matter of policy,
a minimum of 50% of SSE's interest rate exposure is kept at fixed rates of
interest. Within this policy framework, SSE borrows as required, at both fixed
and floating rates, with interest rate swaps and forward rate agreements being
used to achieve the desired profile. All borrowings in foreign currencies are
swapped back into Sterling.

At 31 March 2005, 97.6% of SSE's borrowings were at fixed rates, after taking
account of interest rate swaps.

Liquidity policy requires SSE to ensure that it has committed borrowings and
facilities equal to at least 105% of forecast borrowings over a rolling 12 month
period. As at 31 March 2005, SSE had undrawn committed bank facilities of £650m,
with a weighted average period, until maturity, of 4.7 years.

There is relatively little direct exposure to foreign currency risk as the
United Kingdom is SSE's main area of operation. If either fuel or plant are
contracted in foreign currency, SSE's policy is to hedge all material purchases
through the use of forward purchases of foreign currency and derivative
instruments. Indirect foreign exchange exposures created through SSE's gas
purchases are similarly hedged on an ongoing basis.


Borrowings and Facilities

The objective for SSE is to maintain a balance between continuity of funding and
flexibility, with a range of maturity dates.  Its average debt maturity profile
as at 31 March 2005 was 12.0 years, compared with 13.9 years as at 31 March
2004.

The maturity profile continues to reflect the medium to long term nature of
SSE's underlying assets and means its debt structure is in a strong position
going forward, with around £1.65bn of borrowings in medium to long-term funding
in the form of issued Bonds and European Investment Bank borrowings. A total of
1.7% of SSE's total borrowings will mature in the 12 months to March 2006.

SSE issued its first convertible bond, of £300m, in October 2004.  Holders of
the Bond may elect to convert their holdings into ordinary shares of SSE at a
conversion price of 900p per share until its final maturity date in October
2009. In return, SSE benefits from a low interest coupon of 3.75%, contributing
to the reduction in its average interest rate payable. The net proceeds of the
Bond were partly used to reduce SSE's existing borrowings, with the balance held
as cash on deposit to contribute to the funding of the gas networks acquisition.

In November 2004, a new five-year £650m committed Revolving Credit Facility was
signed to provide standby liquidity and to backstop SSE's commercial paper
programme which was increased to Euro 1.5bn during the year. This facility
replaced more expensive facilities at both SSE plc and Southern Electric Power
Distribution plc, while an increase in the total size of available committed
funding reflects the larger potential borrowing requirements of SSE going
forward.


Interest

SSE's net interest charge in 2004/05 was £90.9m, compared with £85.5m in the
previous year. This reflects the acquisitions made during the period, offset by
continuing strong cash flow. The average interest rate for SSE during the year
was 5.91%, compared with 5.96% in the previous year. Underlying interest cover
was 9.0 times, compared with 8.4 times the previous year.


TAX

The effective current tax rate, before exceptional items, was 25.5%, compared
with 24.1% in the previous year. As deferred tax liabilities are only a
potential exposure, discounting has been applied to reflect the long-term nature
of the assets and this impacts on both the profit and loss account and on the
balance sheet.  An additional discounted liability of £21.5m has been recognised
on the balance sheet as at 31 March 2005. The tax charge, before exceptional
items,  including the deferred tax element, was 30.1%, compared with 26.3% in
the previous year.


BALANCE SHEET

SSE continues to maintain one of the strongest balance sheets in the global
utility sector, which continues to give it significant competitive advantage in
terms of cost of funding and supporting new developments. In February 2005, the
rating agency Moody's re-affirmed SSE's credit rating as Aa3 (or 'strong').

In line with the FRS 17 treatment of pension scheme assets, liabilities and
costs, a net pension scheme liability of £143.6m is recognised in the balance
sheet at 31 March 2005, including, for the first time, £19.6m of deficit in
respect of the scheme for employees at Ferrybridge and Fiddler's Ferry.

During 2004/05, employer cash contributions to the Scottish Hydro Electric
scheme amounted to £8.9m and £3.0m was contributed to the scheme for employees
at Ferrybridge and Fiddler's Ferry.  Contributions to the Southern Electric
pension scheme amounted to £10.0m during 2004/05.

The actuarial valuation of the Southern Electric scheme as at 31 March 2004 was
finalised. As expected, the results showed a gross deficit of £275.5m, compared
with the FRS 17 deficit on the same date of £253.0m.  The FRS17 gross deficit on
31 March 2005 was £282.0m. Following discussions with the Trustees on how this
deficit might be repaired, a contribution towards the deficit of £29.5m per year
(increasing each year in line with RPI) was agreed in March 2005, in addition to
an ongoing contribution rate of 19.9% of salaries. As part of the Distribution
Price Control for 2005-2010, it was agreed that allowances for 76% of deficit
repair contributions should be included in price controlled revenue.

Similar discussions have been concluded with the Trustees of the pension scheme
that exists for the benefit of employees at Fiddler's Ferry and Ferrybridge
power stations where a gross deficit of £13.7m had been calculated as at 31
March 2004. An additional contribution of 8% of salary (around £1.3m per year)
has been added to the employer's contribution rate in order to repair the
deficit.


PURCHASE OF OWN SHARES

During 2004/05, the Directors of SSE did not exercise their authority to
purchase, in the market, the company's own shares. In the previous year,
1,760,000 of the Company's 50p ordinary shares were purchased and cancelled at
an average price of 633p per share. The Directors will seek renewal of their
authority to purchase, in the market, the Company's own shares at the Annual
General Meeting on 28 July 2005. It remains the policy of the Board of SSE to
take opportunities to return value to shareholders through the purchase of the
Company's own shares should the conditions be appropriate.


INTERNATIONAL FINANCIAL REPORTING STANDARDS

SSE's interim results for 2005/06, to be published in November 2005, will comply
with International Financial Reporting Standards (IFRS), as adopted by the
European Union. In advance of that, SSE will re-state its accounts for 2004/05
in accordance with IFRS, and make the re-stated accounts available via its
website.  A seminar for analysts and investors on the transition to IFRS will be
held in September, and the presentation will also be made available on SSE's
website. SSE does not believe that the adoption of IFRS will have any impact on
its dividend policy. A description of the issues in respect of IFRS will appear
in SSE's Annual Report and Accounts 2005.


SAFETY AND THE ENVIRONMENT

SSE aims to create value for shareholders by running the business with a strong
emphasis on safety and on caring for the environment. During 2004/05, the number
of lost time and reportable accidents within the company was 17, which was the
lowest ever and which compared with 27 in the previous year. The number of
serious, or potentially serious, road traffic accidents involving employees
driving company vehicles fell from 0.52 per 100 vehicles to 0.42 in 2004/05.

To benchmark its environmental activities, SSE took part in Business in the
Community's Environment Index, the results of which were published in April
2005. Its score was 98.8, making SSE the joint top performing company in its
sector and placing it in BitC's 'Premier League' of participating companies.

The Environment Index is part of a wider Corporate Responsibility Index, in
which SSE participated in full for the first time. Its score was 93%, which
positioned it joint 14th out of 144 participating companies.


EMPLOYEES

The progress made by SSE is largely due to the outstanding work done by
employees in every part of the business. There is no doubt that 2004/05 was the
most eventful year so far in the development of SSE. At the same time, one of
SSE's eight principles of corporate responsibility is to provide opportunities
for employees to become shareholders in the company.

In support of this principle, and in the light of a wish to give additional
recognition to employees' performance in the year, the Board has decided to make
a special award of 50 free shares in the company to everyone employed by SSE on
31 March 2005 and still in employment on the date the shares are awarded. Under
the arrangements for the award, the shares will be held in trust for three
years.


STRATEGY AND OUTLOOK

SSE has consistently set out four areas in which it can enhance and create value
for shareholders: maintaining and investing in energy networks; adding to its
leading-edge generation portfolio; growing its energy supply business; and
developing its growing presence in businesses such as contracting, connections,
telecoms and gas storage. This focus on energy and energy-related businesses in
the UK has delivered growth in the dividend of 54.5% between 2000 and 2005, and
it will continue, with the clear objective of delivering the new dividend target
in the years ahead.

In practice, this means that SSE's emphasis during 2005/06 will continue to be
on the effective day-to-day management of its businesses and on securing value
from its acquisitions and investment programme. Following a period in which the
scale and scope of SSE's activities has increased significantly, the highest
importance during 2005/06 will be attached to delivering significant value for
shareholders from the opportunities that have been created over the past two
years.


Investor Timetable
24 May 2005*                    Publication of Annual Report on website
28 July 2005                    Annual General Meeting - Pitlochry
24 August 2005                  Shares go ex-dividend
26 August 2005                  Date for recording transfers to receive dividend
23 September 2005               Dividend payable
16 November 2005 *              Announcement of Interim Results
* provisional date


Enquiries to:

Scottish and Southern Energy plc
Alan Young - Director of Corporate Communications     + 44 (0)870 900 0410
Denis Kerby - Investor and Media Relations Manager    + 44 (0)870 900 0410

Financial Dynamics
Andrew Dowler                                         + 44 (0)20 7831 3113


There will be an analysts' presentation starting at 09:30GMT at the offices of
Financial Dynamics, Holborn Gate, 26 Southampton Buildings, London WC2A 1PB.


Webcast facility: This is available by going to: www.scottish-southern.co.uk


Telephone conference call:              Wednesday, 18 May
                                        UK: 0845 146 2004
                                        International: [phone]

                                        Replay facility (for one week)
                                        UK: 0845 245 5205
                                        International: [phone]
                                        Pin number: 6339569 #



Group Profit and Loss Account
for the year ended 31 March 2005
                                                         2005                                            2004
                                                                Before   Exceptional
                                                           Exceptional         items
                                                                 items      (note 3)       Total        Total
                                              Note                  £m            £m          £m           £m

Turnover
     Group and share of joint ventures                         7,482.8             -     7,482.8      5,184.2
     Less: share of joint ventures                                58.2             -        58.2         59.8

Group turnover                                4                7,424.6             -     7,424.6      5,124.4
Cost of sales                                                (6,256.1)        (61.0)   (6,317.1)    (4,100.1)

Gross profit                                                   1,168.5        (61.0)     1,107.5      1,024.3
Distribution costs                                             (225.0)             -     (225.0)      (229.1)
Administrative costs                                           (204.0)             -     (204.0)      (166.1)
Other operating income                        3                      -         111.2       111.2            -

Operating profit
     Group                                                       739.5          50.2       789.7        629.1
     Share of joint ventures                                      28.9             -        28.9         30.6
     Share of associates                                          21.9          22.3        44.2         20.6

Total operating profit                            4              790.3          72.5       862.8        680.3
Gain on disposal of property                                         -             -           -         10.2
Income from fixed asset investments                                  -             -           -          0.1

Net interest payable                          5
     Group                                                      (73.7)             -      (73.7)       (63.3)
     Joint ventures                                             (10.3)             -      (10.3)       (11.5)
     Associates                                                  (6.9)             -       (6.9)       (10.7)
     Other finance income                                         13.4             -        13.4          2.2

Profit on ordinary activities before taxation                    712.8          72.5       785.3        607.3
Taxation                                      7                (215.0)        (27.2)     (242.2)      (159.5)

Profit on ordinary activities after taxation                     497.8          45.3       543.1        447.8
Equity minority interests in subsidiary
undertaking                                                        0.1             -         0.1          0.1

Profit attributable to ordinary shareholders                     497.9          45.3       543.2        447.9
Dividends                                     8                (364.7)             -     (364.7)      (322.9)

Retained profit                                                  133.2          45.3       178.5        125.0

Earnings per share (p)                            9
- basic                                                           58.1                      63.4         52.3
- adjusted                                                        62.2                      67.5         54.1
- diluted                                                         57.4                      62.6         52.2



Balance Sheets
as at 31 March 2005
                                                      Group                   Company
                                                             2005        2004        2005        2004
                                            Note               £m          £m          £m          £m
Fixed Assets
      Intangible assets                                     268.8       274.0           -           -
      Tangible assets                                     4,383.8     4,139.1           -           -
      Investments in subsidiaries                               -           -       777.9       777.9
      Investments in joint ventures
           Share of gross assets                            200.5       195.9           -           -
           Share of gross liabilities                      (31.2)      (19.8)           -           -

                                                            169.3       176.1           -           -
      Investments in associates                              43.1        20.7           -           -
      Other investments                                       1.4         0.2           -           -

                                                            213.8       197.0           -           -

                                                          4,866.4     4,610.1       777.9       777.9

Current assets
      Stocks                                                134.1        46.0           -           -
      Debtors                                             1,073.7       736.9     3,093.7     2,753.4
      Investments                                           218.5        21.8       199.1         8.6
      Cash at bank and in hand                               13.7         6.5         0.5         0.4

                                                          1,440.0       811.2     3,293.3     2,762.4

Creditors: amounts falling due within one
year                                                    (1,700.8)   (1,307.8)   (2,121.9)   (1,813.9)

Net current (liabilities)/assets                          (260.8)     (496.6)     1,171.4       948.5

Total assets less current liabilities                     4,605.6     4,113.5     1,949.3     1,726.4

Creditors: amounts falling due after more
than one year including convertible debt                  1,918.4     1,652.3       982.6       684.8
Provisions for liabilities and charges
      Deferred taxation                                     530.4       512.7           -           -
      Other provisions                      10              111.3        96.0           -           -

Net assets excluding pension asset/                       2,045.5     1,852.5       966.7     1,041.6
(liability)
Net pension asset                               6            70.9        52.7        70.9        52.7
Net pension liability                           6         (214.5)     (177.1)           -           -

Net Assets including pension asset/
(liability)                                               1,901.9     1,728.1     1,037.6     1,094.3

Capital and reserves
      Called up share capital                               429.4       428.7       429.4       428.7
      Share premium account                                  81.6        72.6        81.6        72.6
      Capital redemption reserve                             13.7        13.7        13.7        13.7
      Profit and loss account                             1,377.6     1,213.4       512.9       579.3

Total shareholders' funds                                 1,902.3     1,728.4     1,037.6     1,094.3

Equity minority interests in subsidiary
undertaking                                                 (0.4)       (0.3)           -           -

                                                          1,901.9     1,728.1     1,037.6     1,094.3



Group Cash Flow Statement
for the year ended 31 March 2005
                                                                                            2005          2004
                                                                          Note                £m            £m

Net cash inflow from operating activities                                 11             1,150.7         800.3
Dividends received from joint ventures and associates                                       12.5          11.5
Returns on investments and servicing of finance                                           (72.0)        (53.5)
Taxation                                                                                 (152.9)       (142.7)

Free cash flow                                                                             938.3         615.6
Capital expenditure and financial investment                                             (309.9)       (259.9)
Acquisitions and disposals                                                               (339.0)       (244.5)
Equity dividends paid                                                                    (330.8)       (306.7)

Net cash outflow before management of liquid resources and financing                      (41.4)       (195.5)
Management of liquid resources                                                           (196.7)        (12.8)
Financing                                                                                  242.7         219.5

Increase in cash in the year                                                                 4.6          11.2


Notes to the Group Cash Flow Statement
for the year ended 31 March 2005

Reconciliation of net cash flow to movement in net debt
                                                                                             2005          2004
                                                                                               £m            £m

Increase in cash in the year                                                                  4.6          11.2
Cash inflow from increase in debt and lease financing                                     (233.0)       (224.1)
Cash outflow from increase in liquid resources                                              196.7          12.8

Movement in net debt in the year                                                           (31.7)       (200.1)
Net debt at 1 April                                                                     (1,417.1)     (1,217.0)

Net debt at 31 March                                                                    (1,448.8)     (1,417.1)



Analysis of net debt

                                                                As at                (Increase)/         As at
                                                              1 April     Increase      decrease      31 March
                                                                 2004      in cash       in debt          2005
                                                                   £m           £m            £m            £m

Cash at bank and in hand                                          6.5          7.2             -          13.7
Overdrafts                                                      (1.8)        (2.6)             -         (4.4)
Other debt due within one year                                 (80.6)            -          56.1        (24.5)

Net borrowings due within one year                             (75.9)          4.6          56.1        (15.2)
Net borrowings due after more than one year                 (1,363.0)            -       (289.1)     (1,652.1)
Current asset investments                                        21.8            -         196.7         218.5

 Net debt                                                   (1,417.1)          4.6        (36.3)     (1,448.8)




Group Statement of Total Recognised Gains and Losses
for the year ended 31 March 2005

                                                                                        2005             2004
                                                                                          £m               £m

Profit for the financial year
     Group                                                                             502.6            425.5
     Share of joint ventures                                                            13.5             16.3
     Share of associates                                                                27.1              6.1

     Profit for the financial year                                                     543.2            447.9
     Actuarial (loss)/gain recognised in respect of pension fund                      (14.3)            153.8

Total recognised gains and losses relating to the financial year                       528.9            601.7



Group Reconciliation of Movement in Shareholders' Funds
as at 31 March 2005

                                                                                          2005             2004
                                                                                            £m               £m

Profit for the financial year                                                            543.2            447.9
Dividends                                                                              (364.7)          (322.9)

Retained profit for the year                                                             178.5            125.0
Actuarial (loss)/gain recognised in respect of the pension fund                         (14.3)            153.8

                                                                                         164.2            278.8
New share capital subscribed                                                               9.7              6.6
Transfer on acquisition of subsidiary                                                        -           (27.8)
Repurchase of ordinary share capital for cancellation                                        -           (11.2)

Net addition to shareholders' funds                                                      173.9            246.4
Opening shareholders' funds                                                            1,728.4          1,482.0

Closing shareholders' funds                                                            1,902.3          1,728.4



Notes on the Financial Statements


1. Financial Statements

The financial information set out in this announcement does not constitute the
Group's Statutory Accounts for the years ended 31 March 2005 or 2004 but is
derived from those Accounts.  Statutory Accounts for 2003/04 have been delivered
to the Registrar of Companies, and those for 2004/05 will be delivered following
the Company's Annual General Meeting on 28 July 2005.  The Auditors have
reported on those Accounts and their reports were unqualified and did not
contain statements under section 237(2) or (3) of the Companies Act 1985. This
Preliminary Announcement was approved by the Board on 17 May 2005.


2. Basis of consolidation

The Group Accounts consolidate the Accounts of Scottish and Southern Energy plc
and its subsidiary undertakings together with the Group's share of the results
and net assets of its joint ventures and associates.

The results of subsidiary undertakings acquired or sold are consolidated from
the date of acquisition, using the acquisition method of accounting. The results
of joint ventures and associates are included using the equity method of
accounting.


3.  Exceptional items


(i)  Cost of sales depreciation

At 31 March 2005 the contract which provided Scottish Power with rights over a
part of the original Peterhead Power Station until 2012 was ended. This contract
was put in place at privatisation as part of a suite of contracts known as the
structural contracts. The end of Scottish Power's interest in Peterhead has
triggered a reappraisal of the power station and in particular the carrying
value of the assets which were subject to the contract. Scottish Power did not
have rights over the re-powered station but their contractual interest was
limited to the original station. As a result of these events, an impairment
review was carried out on the income generating unit affected using a discount
rate of 5% which concluded that the value in use of the original station was
impaired. Consequently an exceptional impairment of £61.0M has been taken as a
charge to the results for the year. In view of the size and nature of this
amount, this is disclosed separately as an exceptional item. The re-powered
station continues to be held at its full net book value. The impairment charge
had no impact on group cash flow.


(ii) Other operating income

On 30 March 2005 a net dividend of £159.1M was received in relation to the
administration of TXU Europe Energy Trading Limited which had been placed into
administration in 2002. After extinguishing debtor balances the net receipt of
£111.2M was taken as an exceptional credit to the results for the year-ended 31
March 2005. In addition to this, the group's share of the exceptional credit
recognised as income by an associate company, Barking Power Limited, amounting
to £22.3M, is shown separately within share of operating profit from associates.
  Further dividends, of up to £100m, are expected from this administration, but
these have not been recognised in the results to date as the value and the
timing of the receipts are uncertain.



Notes on the Financial Statements


4. Segmental analysis

All turnover and profit before taxation arise from operations within Great
Britain and Ireland and relate to continuing operations.

The Group's principal business is the generation, distribution and supply of
electricity and sale of gas in Great Britain and Ireland and the transmission of
electricity in the north of Scotland. Analysis of turnover and operating profit
by activity is provided below:

Turnover
                                 Total turnover          Internal turnover     External turnover
                                        2005        2004        2005      2004        2005        2004
                                          £m          £m          £m        £m          £m          £m

Power Systems
     Scotland                          258.9       243.3       188.1     180.9        70.8        62.4
     England                           369.2       378.5       185.5     187.7       183.7       190.8

                                       628.1       621.8       373.6     368.6       254.5       253.2
Generation and Supply                6,766.1     4,505.6        15.7      16.4     6,750.4     4,489.2
Other Businesses                       645.5       576.5       225.8     194.5       419.7       382.0

                                     8,039.7     5,703.9       615.1     579.5     7,424.6     5,124.4


Operating profit

                             2005                                                  2004
                                        Before       Exceptional             Total
                                   exceptional             items
                                         items
                                            £m                £m                £m                 £m

Power Systems
     Scotland                            130.8                 -             130.8              118.1
     England                             193.9                 -             193.9              199.4

                                         324.7                 -             324.7              317.5
Generation and Supply                    374.1              72.5             446.6              286.5
Other Businesses                          91.5                 -              91.5               76.3

                                         790.3              72.5             862.8              680.3



The total operating profits relating to joint ventures of £28.9m (2004 - £30.6m)
and associates of £44.2m (2004 - £20.6M), including exceptional income of
£22.3M, are included in Generation and Supply.

The gain on disposal of property in 2004 separately disclosed on the face of the
Profit and Loss Account relates to the sale of land and buildings at Amersham
Road, Reading.

Income and costs have been allocated specifically to the activity to which they
relate wherever possible. Certain costs have been apportioned or recharged
between businesses.



Notes on the Financial Statements


5. Net interest payable

                                             Group               Joint Ventures      Associates
                                                  2005      2004      2005      2004      2005      2004
                                                    £m        £m        £m        £m        £m        £m

Interest receivable:
      Interest from short-term deposits            3.2       2.2         -         -         -         -
      Other interest receivable                   16.5      17.4       0.6       0.4       0.7       1.0

                                                  19.7      19.6       0.6       0.4       0.7       1.0

Interest payable and similar charges:
      Bank loans and overdrafts                   33.6      27.1         -         -       6.9      11.0
      Other loans                                 56.5      46.9      10.9      11.9       0.7       0.7
      Other financing charges                      3.7       7.7         -         -         -         -

                                                  93.8      81.7      10.9      11.9       7.6      11.7
      Interest capitalised                       (3.4)     (2.0)         -         -         -         -

                                                  90.4      79.7      10.9      11.9       7.6      11.7

Amortisation of discount                           3.0       3.2         -         -         -         -

Net interest payable                              73.7      63.3      10.3      11.5       6.9      10.7


Included within other financing charges is the net interest charge relating to
the quasi-subsidiary companies, £1.8m (2004 - £0.2m).


6. Pensions

                                                                                    Value at     Value at
                                                                                    31 March     31 March
                                                                                        2005         2004
                                                                                          £m           £m

Total market value of schemes' assets                                                1,653.3      1,499.8
Present value of schemes' liabilities                                              (1,858.4)    (1,677.5)

(Deficit) in the schemes                                                             (205.1)      (177.7)
Deferred tax thereon                                                                    61.5         53.3

Net pension liability                                                                (143.6)      (124.4)

                                                                                        2005         2004
                                                                                          £m           £m
Movements during the year:
Total gross (deficit)/surplus at beginning of the year                               (177.7)      (402.2)
Acquired deficit on acquisition of KGL pension scheme                                 (26.0)            -
Movement in year:
     Current service costs                                                            (20.9)       (16.7)
     Contributions paid                                                                 21.9         19.0
     Curtailment costs charged to reorganisation provision                             (1.0)        (1.2)
     Other finance income                                                               13.4          2.2

Profit before tax impact                                                                13.4          3.3

Actual return less expected return on pension scheme assets                            (0.9)        190.5
Experience gain arising on pension scheme liabilities                                      -         60.3
Changes in financial assumptions underlying pension scheme liabilities                (13.9)       (29.6)

Variance between pension fund actuarial assumptions and actual experience             (14.8)        221.2

Total gross (deficit) in schemes at end of the year                                  (205.1)      (177.7)



Notes on the Financial Statements


7. Taxation


                                                   2005                                      2004
                                                            Before     Exceptional     Total        Total
Analysis of charge in the year                         exceptional           items
                                                             items        (note 3)
                                                                £m              £m        £m           £m

Current tax:
     UK corporation tax on profits of the year               176.1            33.3     209.4        154.9
     Adjustments in respect of previous years                (4.0)               -     (4.0)       (15.5)
     Joint Ventures                                            5.1               -       5.1          2.8
     Associates                                                4.8             6.7      11.5          3.8

Total current tax                                            182.0            40.0     222.0        146.0

Deferred tax:
     Origination and reversal of timing                       27.1          (12.8)      14.3         23.9
     differences
     Increase in discount                                      0.5               -       0.5       (18.7)
     Adjustments in respect of prior year                      6.7               -       6.7          8.3
     Origination and reversal of timing
     differences - Associates                                (1.3)               -     (1.3)            -

Total deferred tax                                            33.0          (12.8)      20.2         13.5

Tax on profit on ordinary activities                         215.0            27.2     242.2        159.5


8. Dividends
                                                                                         2005         2004
                                                                                           £m           £m

Dividends on ordinary shares:
     Interim of 12.2p (2004 - 11.3p)                                                    104.7         96.8
     Proposed final of 30.3p * (2004 - 26.4p)                                           260.0        226.1

                                                                                        364.7        322.9


* Payable on 23 September 2005 to shareholders on the register at close of
business on 26 August 2005.


Notes on the Financial Statements


9. Earnings per share
                                                          2005        2004 2005 Earnings 2004 Earnings
                                                      Earnings    Earnings     per Share     per Share
                                                            £m          £m         pence         pence

Basic                                                    543.2       447.9          63.4          52.3
Exceptional items                                       (45.3)           -         (5.3)             -

                                                         497.9       447.9          58.1          52.3
Adjusted  - amortisation of goodwill                      15.4        14.8           1.8           1.7
          - deferred tax                                  33.0        13.5           3.8           1.6
          - finance income                              (13.4)       (2.2)         (1.5)         (0.3)

                                                         532.9       474.0          62.2          55.3
          - disposal of property                             -      (10.2)             -         (1.2)

Adjusted                                                 532.9       463.8          62.2          54.1
Exceptional items                                         45.3           -           5.3             -

Adjusted including exceptional items                     578.2       463.8          67.5          54.1

Diluted before convertible debt                          543.2       447.9          63.2          52.2
Convertible debt interest (net of tax)                     3.3           -             -             -
Dilutive effect of convertible debt                          -           -         (0.6)             -

Diluted                                                  546.5       447.9          62.6          52.2
Exceptional items                                       (45.3)           -         (5.2)             -

Diluted excluding exceptional items                      501.2       447.9          57.4          52.2

The weighted average number of shares used in
each calculation is as follows:
                                                                                    2005          2004
                                                                               Number of     Number of
                                                                                  shares        shares
                                                                              (millions)    (millions)

For basic and adjusted earnings per share                                          857.2         856.8
Effect of exercise of share options                                                  1.9           1.3

                                                                                   859.1         858.1
Effect of dilutive convertible debt                                                 14.2             -

For diluted earnings per share                                                     873.3         858.1



10. Group Provisions for liabilities and charges

                                                Onerous
                                                 Energy
                              Restructure     contracts       Decommissioning      Other         Total
                                       £m            £m                    £m         £m            £m

At 1 April 2004                      12.4          66.4                   3.0       14.2          96.0
Acquired in the year                    -          12.8                  32.4        1.0          46.2
Profit and loss account                 -           1.3                   1.7        2.7           5.7
Utilised during the year            (7.7)        (27.1)                     -      (1.8)        (36.6)

At 31 March 2005                      4.7          53.4                  37.1       16.1         111.3


The restructure provision is in relation to expected costs associated with the
continuing rationalisation of the business. The costs mainly comprise employee
related costs, principally redundancy and early retirement costs. The majority
of the expenditure is expected to be incurred in the next two years.

The onerous energy contracts provision relates to the present value of 'out of
money' purchase contracts and will be utilised over a maximum period to 2011
when the contracts terminate.  Decommissioning provisions cover the future cost
of decommissioning coal-fired power stations and certain other assets. Other
provisions include insurance/warranty claims and the costs of various committed
expenditures relating to hydro civil assets.


Notes on the Financial Statements


11. Reconciliation of operating profit to operating cash flows

                                                                                          2005         2004
                                                                                            £m           £m

Group operating profit                                                                   789.7        629.1
FRS 17 pension charge less contributions paid                                            (1.0)        (2.3)
Depreciation and impairment charges                                                      269.5        183.1
Amortisation of goodwill and other intangible assets                                      16.2         14.8
Customer contributions and capital grants released                                      (35.9)       (20.4)
(Profit) on disposal of tangible fixed assets                                            (7.7)        (1.3)
Decrease/(Increase) in working capital and provisions                                    119.9        (2.7)

Net cash inflow from operating activities                                              1,150.7        800.3



12.  Amortisation of goodwill

The goodwill amortisation charge for the year can be analysed across business
segments as follows:

                                                                                          2005         2004
                                                                                            £m           £m

Power Systems                                                                                -            -
Generation and Supply                                                                     12.4         12.0
Other Businesses                                                                           3.0          2.8

                                                                                          15.4         14.8




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