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Highlights

• Entered into fuel cell power supply joint product development with leading Asian Original Design
Manufacturer (‘ODM’),
• Strong interest from other ODMs,
• Developed and demonstrated direct methanol fuel cell systems powering notebook computers,
• Excellent progress on platinum free, second generation ‘Alkaline technology’ with several patent
applications made,
• Continued to operate well within budget, with strong cash reserves.

Chairman’s Statement

I am pleased to report that CMR has made good progress over the first half of 2008, building on the direct
methanol fuel cell (‘DMFC’) systems which we have demonstrated powering notebook computers to
potential customers throughout Asia and at major trade shows in Tokyo, Shanghai and Atlanta. CMR’s
demonstrator was noted as the only system shown powering a notebook at all of these shows, winning
praise from industry observers as “the only functioning demonstrator to be found [at the show]” and
“It was an impressive display, and was the closest thing I’ve yet seen to a functional laptop fuel
cell.” (Source: Fuel Cell Today, Event Report, Tokyo Fuel Cell Expo. 2008).

At the world’s leading fuel cell event - FC Expo in Tokyo - CMR showcased its new 25 Watt DMFC,
demonstrator powering a working notebook computer. It was the only working demonstrator on display at
this challenging higher power level and drew significant attention and interest from visitors and trade
press alike. Also, in line with CMR’s progress towards commercialisation, CMR accepted an invitation
from the Intel Corporation Extended Battery Life Working Group to participate in its Spring Developer’s
Forum in Shanghai and also to demonstrate to attending delegates the 25W fuel cell.

Following the highly positive response to these shows – as well as the continuing direct approaches to
OEMs and ODMs – CMR expanded its business development activities, adding operations in China and
Taiwan to the existing Japanese operation. CMR’s position as the leading DMFC expert was recognised
by the signing of a Memorandum of Understanding with a leading Asian ODM to develop a hybrid Lithium-
Ion Battery DMFC Power Charger for notebook computers. I expect to be able to announce more
agreements of this kind in due course.

Whilst our primary focus is on developing fuel cell systems products to our customers’ specifications, we
continue to develop alkaline DMFC technology. This has the potential to replace platinum – used in
today’s fuel cell catalysts - with other materials which are cheaper annd have less price volatility. We have
made a number of significant patent applications in this area. This is a longer term programme, but will
enable the Company to offer a ‘one stop shop’ where customers can get first generation ‘acid technology’
based products as well as an integrated road-map to lower cost, high volume future generation products.
Economic trading conditions are challenging for our target customers, many of whom have moved away
from developing their own fuel cell system towards finding external suppliers to provide them with
integrated system solutions. The Company is well placed to do this – we have developed capabilities in
relevant skills and have always had a very strong ‘customer needs’ focus. As a leading member of Intel's
Extended Battery Life Working Group – whose mission is to realise the power usage ‘holy grail’ of an
eight hour working day away from mains electricity – and having senior management with a strong
background in consumer electronics, the Company is well able to understand and respond to our
customers’ needs.

Collaboration amongst fuel cell companies is essential to bring together all of the complex elements
needed for a complete fuel cell system as well as to develop improved technologies which can reduce the
price and improve the performance of subsequent product generations.

To this end, during the period, we have entered into a new agreement with Acta S.p.A. to accelerate the
development of platinum-free alkaline membrane fuel cells. Our existing DTI-funded development
partnership with Johnson Matthey Plc and Accelrys Software Inc. to identify and develop better fuel cell
components is producing excellent results.

The Company’s finances are tightly managed and CMR continues to operate well within its budget. We
currently anticipate that our cash reserves are sufficient for planned operations until 2010. At 30 June
2008, assets totalled £8.3m (June 2007: £10.3m), of which £7.5m was held in cash and short term
deposits (June 2007: £9.6m).

In accordance with the dividend policy disclosed at the time of the IPO, the Board is not recommending
payment of a dividend.

Finally, once again, I would like to thank all our staff for their commitment, innovation and hard work that
has produced the sustained progress that is central to the success of the business and I look forward to
reporting on their continued success throughout the rest of the year.
 

Tim Curtis
21 August 2008