Helius Energy (23.75p) is an interesting business which was established to install and operate biomass fired renewable electricity generation plants.

Renewable energy legislation, which is being put in place in an attempt to minimise climate change, means there is a very valuable need to be filled. Although the business itself is still relatively young, having only joined AIM on 31 January 2007 through a placing at 26p, it has a strong and experienced management team which should ensure that the opportunity for growth is seized.

Results for the year ended September 30, 2008 have recently been released. These were very impressive and the cash generated from the sale of a key 65MWe plant at the Stallingborough site puts Helius Energy in an enviable position. As at the year end net cash was £24.0 million.

The company appears ambitious and is now clearly well funded although development of further sites will eat through the cash pile. The 100MWe biomass power plant at Avonmouth Dock is potentially lucrative. Terms have been agreed for an 18 acre site at that location.

Over the longer term, the Stallingborough deal provides evidence that Helius Energy could be a very valuable business. Not only are the financial terms of that deal very attractive but it also links the company with a very credible partner in RWE Innogy. Helius Energy's aim is to develop a portfolio of assets in the UK with the potential of generating in excess of 300MWe by 2012. Bearing in mind Stallingborough is a 65MWe site and looking at the cash generated from its sale, then if that target is achieved the share price should surely multiply.

Those investors looking for an interesting smaller company to invest in should certainly consider Helius Energy at the current price. Although there are no guarantees that the business plan will be executed successfully, there is now firm evidence that this is a real business and one which could jump in value over the medium term.

WARNING: Opinions expressed are the writers’ judgments at the time of writing. The information does not constitute a personal recommendation and readers should seek their own professional advice as to the suitability of the investments.