Business: Theolia pins hopes on new strategy

French firm bids to boost returns.

French renewable energy producer Theolia has settled on a "develop, operate and sell" strategy to try and boost its business. This will help to optimise its return on capital by increasing reinvestment into its projects in development, while at the same time offering its shareholders a fair return on their investment, the group says.

After developing and commissioning projects it will sell them following two to four years of operation. In offering such low-risk assets with a high visibility on cash flows, Theolia says it can access a wide range of potential buyers. It also hopes to ensure long-term recurring revenue streams by offering to manage the plants it sells. Theolia considers this the best option for the group, given the very tight debt markets.

The strategy is backed by a sizeable pipeline of projects in development, according to the group, although it declined to reveal the current total. It stood at 2.58 GW at end 2008. Theolia does say it had 145 MW under construction at the end of June, comprising 60 MW in France, 51 MW in Italy, 25 MW in India and 9 MW in Germany. The group is still considering whether to maintain its presence in India and Brazil, it says.

It currently operates 750 MW of wind plants, 421 MW of which it owns, with the rest managed for third parties.

Meantime the group has announced "solid improvements" in its half-year results to August 31. Its free cash position at the holding level rose from EUR9 million at the end of 2008 to EUR28 million at the end of June, largely thanks to income from the sale of 38 MW of operating capacity in Germany and projects totalling 32 MW in France. In August, it sold a further 100 MW of assets and projects to Rheinernergie, based in Cologne (Windpower Monthly, August 2009).

Revenue from development, construction and sale was EUR57.2 million over the period, while earnings before interest, tax and depreciation increased 177% to EUR25.4 million, up from EUR9 million at end June 2008.

The group is still under-capitalised, Theolia admits. Its net financial debt has only fallen slightly over the period, from EUR498.1 million to EUR487.6 million.