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CMR Fuel Cells

  • BY: Andrew Hore |
  • POSTED: 19/12/2008 |

CMR Fuel Cells wants to return cash to shareholders and leave Aim.

It is almost exactly three years since CMR joined Aim at 176p a share. The share price has fallen to 16p, up 6p on the day, which values CMR at £3.25m. The shares are trading at a discount to forecast cash at the end of 2008 so there is no value put on the technology already developed.

Shareholders can tender all or some of their shares to be purchased by CMR for 20p each. Any shares which are not tenders will receive a special dividend of 17p a share. The maximum amount payable will be £3.8m.

It is questionable if it is wise to give so much cash back to shareholders at this stage in the company’s development. However, some of the larger shareholders appear to be keen to get their cash.

CMR will save some money by cancelling its Aim quotation. The shares have been trading well below cash let alone CMR’s net asset value. Management believes that there will be less short-term pressure on the business as a private company. 

Additional cash should be saved by focusing on developing hybrid direct methanol fuel cells.

A circular will be published in the New Year.

Unsurprisingly, given the investment being made in the technology, CMR is losing money. The loss was £1.73m in the six months to June 2008. Edison Investment Research forecast a year end cash balance of £5.58m. That is expected to fall to £1.92m at the end of 2009. Revenues are expected to be around £500,000 in 2009. If revenues don’t rise significantly then CMR was expected to run out of cash in 2010 – and that is before any cash returned to shareholders.

CMR admits that it will have to raise more cash in the medium-term. That is likely to mean next year. Management believes that if CMR can show further progress then it will be able to raise money in the future.

CMR is targeting the market for rechargeable batteries for portable electronic equipment, which has significant potential over the medium-term. It will not set up manufacturing facilities but will instead generate revenue from each component used by manufacturers.  It will also consider licensing deals.

The rechargeable batteries market is estimated to be worth around $4.5bn and is expected to grow to $5.7bn in 2010. Visiongain reckons that the fuel cell part of the battery market could be worth $1.4bn in 2011.

CMR has technology that is still not fully commercial but it has made solid progress. Demonstration models have been well received at fuel cell trade shows and a deal with an Asian manufacturer that was signed on the back of one of these trade shows should help CMR to produce a prototype of a direct methanol fuel cell charger within 12 months.

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