Aix-en-Provence, 8th October 2007 - Given the stock price movements following the announcement of its first half-year earnings, THEOLIA has decided to provide further details regarding its 2007 H1 activity.
Rumours regarding a takeover bid
Rumours of a potential takeover bid circulated at the end of September. In compliance with the recommendations from the “Autorité des Marchés Financiers”, THEOLIA issued a statement on 2nd October stating the following: “Mr Jean-Marie Santander, president and CEO of THEOLIA, representing this company, declares that to date he is unaware of any offer for THEOLIA shares.”
At the date of this financial communication, the president and CEO of THEOLIA reiterates the terms of the press release of October 2nd.
THEOLIA announced profitable half-year results.
Seasonal factors effect sale of wind farms
For the first half of 2007, THEOLIA recorded total sales of ¤51mn; sales for the full year should be ¤260mn - ¤300mn, 80% of which should be represented by sales of wind farms to third parties. Sales of wind farms to third parties are the core business of NATENCO which was acquired by THEOLIA in December 2006. This activity is highly seasonal since customers (high net worth individuals in particular) who invest in wind farms in Germany, thereby enjoying significant tax benefits, delay their investment as much as possible within the tax year in order to optimise financial benefits.
The group records reservations of wind farms throughout the year, but only completes the sales (hence recognises the revenues) towards the end of the year. In 2007 H1, this activity recorded sale of 9.5MW (corresponding to a turnover of approximately ¤16mn) out of a projected annual sales of 150 MW. Fifty per cent of the annual structure costs relating to this business have however been fully charged during this period.
Consequently, 94% (140.5MW-150MW) of the sales and gross margin should be recognised during H2 year against the remaining 50% of the annual structure costs. Taking into account the average margin observed on NATENCO’s sales to third parties, THEOLIA considers seasonal variation to have a negative impact of approximately ¤15mn on the first half-year gross margin. This will be compensated for by sales in H2.
THEOLIA’s other business segments (sale of electricity to the grid and its non-wind power business), which amount to approximately 20% of the overall annual turnover, are unaffected by seasonal variations.
1 - Turnover and gross margin
As of 30 th June 2007, the turnover amounts to ¤51.02mn. It is split over three business segments:
|Sales of wind farms to third parties||¤16.05mn|
|Sales of electricity to the grid||¤22.28mn|
|Non wind power business||¤12.68mn|
Purchases and stock effects amount to ¤17.46mn. The cost of electricity purchase sold in the context of wind farm management for third parties which amounts to ¤16.10mn should be added. As a result, the gross margin comes out at ¤17.46mn.
2 - External charges
Total external charges (corrected with the cost of purchase of sold electricity) amounts to ¤13.04mn. This amount includes the overall structure costs of the THEOLIA Group. It includes external services and rents, travel, maintenance of wind farms and insurance. This significant increase of this item is due to the integration of NATENCO and the significant development of THEOLIA’s foreign subsidiaries.
3 - Staff costs
Staff costs increased significantly. The variation comes from a change in perimeter due to recent acquisitions as well as to the implementation of incentives to group management. These incentives - while not being a cash expense - do nevertheless impact income as they have to be recognised over the award period, at a cost equivalent to the quoted share price at the time of award. This amounts to ¤3.75mn for H1.
4 - Taxes, other income and expenses
Taxes, other income and expenses amounting to ¤0.35mn are not considered significant in relation to the current operating income.
5 - Depreciation and provisions
Depreciation amounts to ¤4.02mn for 2007 H1 and mostly concern wind and non wind assets.
6 - Current operating income
Current operating income stands at - ¤11.10mn for 2007 H1. As noted above, a significant part of the gross margin from sales to third parties will carry over to 2007 H2. As a consequence, structure costs are not covered by the gross margin in H1, but will be covered by the margin in 2007 H2.
7 - Operating income
Operating income stands at ¤3.58mn, including a dilution profit generated through the issuance of capital in THENERGO following its listing on Alternext.
A capital increase in a consolidated subsidiary results in a decrease in ownership and is accounted for as a partial sale of shares. This impacts net profit. Given the subscription price of THENERGO’s new shares, the P&L impact for THEOLIA is a ¤19.92mn profit. Although non-recurring, this profit highlights part of the value created for THEOLIA by the listing of THENERGO.
Other operating expenses consist of incentives in particular a ¤5.35mn awarded following the successful listing of THENERGO. This charge is a non cash item.
8 - Net income
2007 H1 net income amounts to ¤6.27mn. It includes a financial result of ¤-0.65mn, ¤0.18mn of THENERGO’s income (accounted for under the equity method since June 14th) and differed tax income of ¤3.16mn.
First half 2007 EBITDA
EBITDA is calculated as current operating income adjusted for non cash items
At June 30th 2007, THEOLIA’s EBITDA amounts to (in million euros):
|Current operating income (6)||-11.10|
|+ Depreciation and provisions (5)||+4,02|
|+ Other non cash items (3)||+3,75|
|First half 2007 EBITDA||= -3,33|
EBITDA outlook for full year 2007
Based on the EBITDA calculation presented above, THEOLIA expects a full year EBITDA of ¤30-¤35mn. Full year gross margin is projected to be between ¤60 - ¤65mn.
THEOLIA considers that the changes in cash balances between H1 2007 and H2 2006 do not accurately reflect the development and the activity of THEOLIA as 2007 accounts include the acquisition of NATENCO and are impacted by the new business of sales of wind farms to third parties whose seasonality has been described above.
The Group cash position has decreased by ¤17.89mn over the period and stands at ¤45.24mn at June 30th 2007. This change is due to the following factors:
Cash flow from operations is negative and stands at minus ¤4.70mn. This situation is the result of seasonality variation in sales. Margin recognition in the second half should reverse this trend;
The increase in working capital amounts to ¤28.77mn due to an increase of NATENCO’s business;
Taking into account a cash tax charge of ¤2.81mn, the business cycle has generated overall a further funding requirement of ¤36.30 million.
This decrease in cash position is mitigated by an excess of cash flow from financing (¤82.62mn) over total investment cash flows of ¤64.23mn, thus generating a ¤18.39mn difference used to finance working capital.
Plant property, equipment and intangible asset acquisitions of ¤23.46mn have been funded through borrowings of ¤20.27mn, consistent with THEOLIA’s policy of funding asset purchases through non-recourse project finance debt.
Tel : +33 (0)4 42 904 904
Société anonyme à Conseil d'Administration. Registered capital 38 235 117 ¤
Head office: Parc de La Duranne - 860, rue René Descartes
Les Pléiades Bât F - 13795 Aix-en-Provence cedex 3
Tel : +33 (0)4 42 904 904 - Fax : +33 (0)4 42 904 905 - www.theolia.com
THEOLIA is listed on Eurolist B by Euronext Paris sous le code Mnemo : TEO © Copyright Actusnews Wire
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