Issue of Shares and Options to Employees

21 October 2010

Ceramic Fuel Cells Limited

Issue of Shares and Options to Employees

Ceramic Fuel Cells Limited (AIM / ASX: CFU) announces that as part of its annual remuneration review it has issued equity to staff under the CFCL Directors and Employee Benefits Plan ("Equity Plan"). Based on the Board's assessment of the Company's performance against agreed milestones over the 2010 financial year, the Board has issued 5,233,400 ordinary shares and 1,479,100 options to staff. This represents approximately 0.6% of the Company's existing issued capital.

Under the Equity Plan, approved by shareholders in November 2009, the Board offers equity to staff as an important component of remuneration. Over the past few years the Board has typically issued share options to staff as part of an annual remuneration review. However, as noted in the Remuneration Report section of the Directors' Report released to the market on 28 September 2010, from 1 July 2009 the rules relating to the taxation of share options changed, and this has had a significant impact on how the Company issues equity to its Australian staff.

After examining the impact of these tax changes on staff remuneration - and the alternative remuneration tools available - for the 2010 financial year Management and the Board concluded that the most appropriate and effective remuneration tool was to issue Australian staff with ordinary shares, rather than options. Accordingly for the 2010 remuneration review, the Board has issued a total of 5,233,400 ordinary fully paid shares, to 78 staff. Half of the shares issued to staff are subject to a voluntary escrow agreement for two years, meaning that if the staff member leaves the Company within that time they forfeit the remaining shares (subject to Board discretion).

The Board will seek shareholder approval to issue shares to Managing Director Brendan Dow as part of the 2010 remuneration review. The details of the proposed share issue are set out in the notice of Annual General Meeting, mailed to shareholders today.

The Board has also issued a total of 1,479,100 share options to staff based outside Australia. These options have a one year waiting period before they vest and an exercise price of 10.5 pence, equal to the issue price of the Company's recent placement and open offer to UK shareholders.

Details of the shares and options issued are also set out in the Form 3B filed with ASX today, and also available on the Company's website.

ENDS

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About Ceramic Fuel Cells Limited:

Ceramic Fuel Cells Limited is a world leader in developing fuel cell technology to provide highly efficient and low-emission electricity from widely available natural gas. Ceramic Fuel Cells is developing fully integrated power and heating products with leading energy companies E.ON UK in the United Kingdom, GdF Suez in France and EWE in Germany. The company has sold BlueGen units to major utilities and other foundation customers in Germany, the United Kingdom, Switzerland, The Netherlands, Japan, Australia and the USA. Ceramic Fuel Cells is listed on the London Stock Exchange AIM market and the Australian Securities Exchange (code CFU).

www.cfcl.com.au