News

November 03, 2008

Ceramic Fuel Cell’s Share Price Slides As It Books A Serious Impairment Charge On Credit-Linked Investments

By Rue Swabey

At the end of September, Aim-traded fuel cell company Ceramic Fuel Cells Ltd (CFCL) announced that its NetGenPlus system had achieved a net electrical efficiency output to the grid of 50 per cent. The NetGenPlus, which is a next-generation micro combined heat and power (m-CHP) unit, was operated in real world conditions for two months using natural gas, and continues to run at the company’s headquarters. This is an important milestone and validates CFCL’s position at the forefront of the fuel cell industry. But the market’s focus has been elsewhere. CFCL has been caught up in the credit crunch and in mid-October management announced that it had taken a £5.2 million impairment charge on an investment that has been put on watch by the S&P’s rating agency. The share price fell 43 per cent to 6p on the news.

Australia-based CFCL had placed some of the funds raised at its March 2006 listing on Aim in what might be considered exotic investments for a pre-revenue technology company. Recent disclosure shows that CFCL owns asset-backed securities, mortgage-backed securities and credit-linked notes. In the current environment it is possible that these investments will be downgraded, resulting in a further fall in value. This is bad news given that the amount represents 35 per cent of the company’s 30th...