Keeping both customers and shareholders content is rarely easy for a power utility, as yesterday’s full-year figures from Scottish & Southern Energy attest.

By being the last of the six retail energy suppliers to increase its tariffs – by some 15 per cent in March – the owner of Southern Electric and Scottish Hydro Electric gained an additional 700,000 customers in the past year, swelling its tally to 8.45 million domestic accounts and making it the country’s second-biggest supplier behind Centrica.

The rub for shareholders is that surging energy prices – wholesale electricity and gas prices are up 31 per cent and 35 per cent respectively since March – mean the success of SSE’s tariff stance is in danger of backfiring. Those hard-won new customers may prove loss-making in the short term, and effectively wipe out the company’s supply profits this year. Such concerns, together with worries over the severity of forthcoming regulatory reviews, have sent SSE’s shares down more than 11 per cent since January, belying their safe-haven status that had hitherto enabled them to outperform.

But yesterday’s numbers show SSE’s investment case to remain intact. First, although current-year profits from generation and supply, up 13 per cent last year, will partly depend on further tariff increases, SSE also benefits from higher energy prices through its coal-fired power stations. With coal prices having risen less than gas prices – to which wholesale power prices are pegged – stronger generating margins should offset weakness in supply. SSE’s spread of generating assets helps in other ways. Some 10 per cent of its portfolio comprises renewable generation, against 5 per cent for the UK as a whole, for which higher wholesale prices are also positive.

Second, SSE has lost none of its obsession with raising its dividend, which was yesterday increased by 10 per cent to 60½p – providing a prospective yield of 4.2 per cent – and has doubled over the past seven years. The public stance is of a 4 per cent real annual increase – 7 per cent at current levels – for the next two years, but on most projections there is no reason to believe that a nominal 10 per cent should not be sustainable, despite plans to increase capital expenditure to £1.3 billion from £810 million last year.

Jitters over a potential political backlash – from a perception that utilities are profiting from high energy prices – are likely to persist. However, with SSE continuing to invest heavily in renewable energy to meet government objectives, not least in the £1.1 billion purchase of Airtricity, the wind farm operator, that threat should be kept at bay. At £14.66, or 13 times current-year earnings, SSE is a solid hold.

Caledonia Investments

There are few substitutes for a reliable dividend track record. Caledonia, the investment trust, raised its payout for the 41st successive year yesterday, up 4.5 per cent to 32.5p. It also posted a better than average performance, curbing the decline in net assets to 4.6 per cent, against a 10.9 per cent slide in its benchmark, the FTSE all-share index. This was no glory year. The value of Caledonia’s stake in Close Brothers shrank by £70 million and its Quintain Estates holding was £53 million lighter. But investment gains from sectors such as insurance broking, aerospace and gas engineering offset much of the pain.

Reducing losses further was an astute bet on falling stock markets. A series of put options on the FTSE 250 made from last June acted as an insurance policy against tumbling second-liners, Caledonia’s stock in trade. Caledonia is confident of finding new unquoted investments. It is at this point in the economic cycle that good unlisted tiddlers discover conventional sources of finance closed to them and flock to deep-pocketed, long-term backers. Caledonia is preparing to take on modest borrowings of as much as £100 million to be ready to clinch such opportunistic deals.

Now may not be the best time to buy. After yesterday’s 28p rise to £20.38, the discount to net assets – which historically has oscillated between about 4 per cent and 9 per cent – is only 5 per cent. But there is no reason to believe that Caledonia has lost any of the flair that has served shareholders so well to date. Buy on any widening of that discount.

Blacks Leisure

Anything that could go wrong did go wrong for Blacks Leisure last year. Summer’s rain wiped out sales in its boardwear division; a spat with Mike Ashley, its 29.4 per cent shareholder, distracted management and when Neil Gillis, the new chief executive, finally took charge he discovered that margins had been overstated. It’s been a busy five months since, and yesterday’s full-year results, accompanied by a dividend cut, suggest that there will little respite for Mr Gillis in the coming year.

Initial signs are encouraging. The consumer downturn aside, Mr Gillis’s three-pronged strategy of cost-cutting, boosting sales with new store formats and range rationalisation seems to be making modest headway. For the past 12 weeks like-for-like sales are down 4.1 per cent but gross margins are up 3.5 percentage points. Sales are up significantly in the two new-format stores in London and the look will be rolled out to a further three by autumn.

The critical second-quarter trading period still lies ahead and despite Mr Gillis’s longer-term aim of reducing Blacks’s vulnerability to the weather, another wet summer would hurt. However, a weaker economy and a strong euro – which promise a resurgence of interest in domestic camping holidays – should help. At 151p, the shares are far from last summer’s 367p high but at 22 times current-year earnings, they have already priced in recovery. Further evidence of turnaround is needed before buying back in.

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