Ceramic Fuel Cells Investment Report

17 October 2008

Ceramic Fuel Cells Limited, a world leading developer of high efficiency and low emission microgeneration products for homes, today provided an update to investors on the Company’s holdings of cash and investments.  The Company announced that one of our investments is likely to be impaired.  The full announcement is at www.cfcl.com.au

The investment currently retains its original AA rating but due to recent defaults among many financial firms, it is now on negative watch by Standard & Poors.  Based on advice from our external investment advisor it is likely that we will take an impairment charge of up to A$13.1 million in our accounts to 31 December 2008.

At 30 September 2008 the Company held A$8.4 million in cash and A$22.1 million in investments, after deducting the full amount of this potential impairment charge.  The Company continues to receive interest payments on all investments, including the two impaired investments.

It is naturally very disappointing that the Company’s investments have been caught up in the global market meltdown.  We are actively managing our finances, including planning for further financing.  We are also pursuing a range of strategic options for the Company’s Powder Plant operation in the UK.

In the meantime the business of turning our technology into valuable products is going very well.  The Company has six units operating with partners in Europe, and one unit being installed in Japan.  We are on track to deploy fully integrated mCHP units with European partners in early 2009, and complete our volume manufacturing plant in Germany in June 2009.   We have also recently achieved a key target for commercial mCHP products by exporting power to the grid at 50% electrical efficiency.

We remain confident that that this strong progress will continue over the coming year.

CHANGE OF DIRECTOR’S INTEREST

CFCL also recently announced that its non-executive Chairman Mr Jeff Harding had purchased 100,000 CFCL shares on-market.  The full announcement is at www.cfcl.com.au

Source: Ceramic Fuel Cells Limited