Ian Marchant will issue on Thursday a firm “hands off” warning to potential predators eyeing up Scottish and Southern Energy (SSE). He will then outline his ambitious plans to grow the business in new areas at the same time as announcing a fat dividend increase and a breakthrough in annual profits to above the £1 billion level for the first time. The chief executive, who has already sanctioned a £2bn capital investment programme to produce more clean energy, is due to confirm that the Scottish Hydro operator is interested in joining a consortium to operate nuclear power stations and is talking to regulators about forming a new Scottish retail water company, among other moves. Amid the general optimism, though, the SSE boss is having to abandon one of his pet projects £1bn joint venture with BP to generate carbon-free electricity from hydrogenata revolutionary plant near Peterhead because of government delays. advertisementThe results come at a time when SSE which includes Scottish Hydro and Atlantic Energy and Gas among its trading names has been trading at near peaks in the stock market on continuing speculationthattheUK’sthird-largestenergy company could attract a takeover from the German E.on group or even the Russian Gazprom in further global consolidation following the Spanish capture of Scottish Power. But directors will demonstrate their abilities to thrive as an independent with news that annual profits jumped from £896 million to around £1.07bn last year, helped by a surge in customer numbers as a result of the company’s freeze on prices. Analysts say the figures would have been still better but for an unusually mild winter across much of the UK, and look for profits of more than £1.2bn in the current period, despite the recent dip in energy charges. At the same time, directors are due to confirm that they are hoisting the final dividend by 22% in a move described as “a potential pre-emptive bid defence” by Barclays Wealth analyst Peter Caldwell. WhilesomeofSSE’s7.7million customers are likely to claim that cash for the dividend payment could have beenusedformore price cuts, the group can point to findings by uSwitch that it is stil lScotland’s cheapest provider for most customers, despite two well-publicised price cuts by Scottish Gas. GeoffSlaughter,energyproducts director at uSwitch, believes that there could be one or two more price cuts to be announced as the energy companies jockey for position. But he warned that prices could well be on the rise again by the end of the year as a result of the recent increase in the cost of oil. As things stand, analysts believe that theSSEdirectorswillbeableto announce more gains at thisweek’s results presentation after winning over 1.05 million customers last year – taking its electricity base up to 4.95 million and gas up to 2.98 million. SSE also believes it is attracting new business through its green credentials in producing increased energy from its hydro plants and rapidly expanding wind farm operations. The one major disappointment on renewables, however, is likely to be an SSE decision to abandon plans for the new green plant at Peterhead. It follows partner BP’s warning that storage facilities at its depleted Miller Field in the North Sea would no longer be available by the time the government sorts out funding, some time after 2008. SSE declined to comment on the situation last week In total, the group is now believed to have a total renewable capacity of about 1700 MW, still only about three-quarters of the electricity generation capacity of one of its larger power stations such as its giant Fiddlers Ferry operation near Warrington. Directors stress that this side of the business is growing rapidly and its new hydro plant at Glendoe,nearFort Augustus, alone will produce enough electricity to power a city of the size of Glasgow. Despite the heavy spending, analysts believe that SSE’s net borrowings are unlikely to be much more than £2bn, compared with a current stock market value in excess of £13bn, leaving ample scope for further expansion. One obvious area is in nuclear generation after the Westminster government’s go-ahead formore development ,and SSE is understood to have a team looking at the potential to make its debut as part of a consortium that would include British Energy. At the same time, Ian Marchant is keen to make a splash in the water industry after a test trial down south in supplying a new housing development in Wiltshire.

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