Strong earnings increase predicted -- Loss on paper only says Theolia

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French renewable energy development company Theolia reports a net loss of EUR 48.81 million in 2007 compared with an adjusted profit of EUR 4.06 million the previous year, despite record sales of EUR 306 million, almost double that achieved in 2006. But the loss is purely on paper, says Theolia.

The group explains the net loss was because of a "goodwill impairment" following the acquisition of 165 MW of capacity from GE Energy Financial Services last year in an assets-for-equity swap. At the time of the deal in February, Theolia shares were at EUR 16.50, but had risen to EUR 27.26 by the closing date of July 2. This led to an exceptional write-off of EUR 56.49 million. "This impairment represents an accounting treatment with no impact on either the value or the profit outlook of the assets acquired," says Theolia.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) more than doubled in 2007 to EUR 26.93 million from an adjusted EUR 10.95 million in 2006. This was thanks largely to a strong increase in electricity sales, although poor winds in Germany in the second half of the year meant production was lower than forecast. While EBITDA fell short of the group's guidance figure of EUR 30-35 million, it was roughly in line with what analysts were expecting.

Sales of wind plant by Theolia's German subsidiary Natenco, acquired in 2006, also saw strong growth last year, with the company selling projects with a combined capacity of 133 MW in 2007, compared to 54 MW in 2006. Theolia says it has already identified 210 MW for resale as of March 31.

The group reports a development pipeline of 2996 MW and confirms its target of 2000 MW in operation by 2012, with ownership of at least 1100 MW of that. Targets for 2008 are sales of EUR 370-400 million and EBITDA of EUR 55-65 million. "We are confident for a very strong increase in our earnings in 2008," says CEO Jean-Marie Santander.

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