CSR Reports Record Results for 1H2007

CSR plc has announced its unaudited financial results for the quarter and half year ended 29 June 2007. Revenues for the half year amounted to $376 million, an increase of 19 percent year-on-year. Gross profits for the same period were also up by 14 percent to $170.4 million compared to a year ago. CSR's net cash inflow from operating activities grew to $137 million, up from $34.1 million in the first half of 2006.

CSR anticipates an average annual revenue growth of 15 percent to 20 percent over the next five years implying annual revenues of $2 billion by 2012. The company continues to see a growth in the diversification of consumer applications using Bluetooth and in the medium term forecasts a substantial proportion of Bluetooth volume will be directed at non-cellular markets. In particular, CSR has identified MP3 and MP4 players, digital TV, gaming consoles, PCs, cars and cameras with additional applications continuously being identified.

In the music segment, wireless connectivity is now widely demanded by customers and end-users. CSR has recently announced Personal Music Players (PMP)/MP3 partnerships for Bluetooth and Wi-Fi-enabled music player designs with Actions Semiconductor, Austria Micro Systems, Freescale and Telechips.

In the automotive segment, Bluetooth is increasingly being incorporated into a growing range of new build cars. Ford has introduced Ford Sync in 12 models in its 2008 model range. Ford Sync is a hands-free in-car communications system based on Bluetooth technology. CSR expects the proportion of new build cars that incorporate Bluetooth ("attach rate") to increase from the 6 percent to 8 percent seen today towards 30 percent in the medium term. Aftermarket car-kit solutions remain an attractive segment and one where CSR again has a leadership position. Latest generation satellite navigation systems incorporating CSR's Bluetooth include the TomTom1 XL.

Beyond Bluetooth, CSR is employing its vision and expertise to bring a broader range of short-range technologies to market. Through internal research and development and through selected acquisitions, CSR is now well positioned to lead the markets for GPS, Ultra-Wide Band (UWB), embedded Wi-Fi and Ultra Low Power (ULP) Bluetooth. CSR plans to integrate combinations of these technologies with Bluetooth and FM into its BlueCore for Bluetooth products.

In Q2 2007, CSR also announced that the company will sample the industry's first ULP Bluetooth silicon with a number of lead customers this year. Previously known as Wibree, ULP Bluetooth is a new complementary Bluetooth technology that can be used to transfer simple data sets between compact devices and can run for up to ten years on one button cell battery. ULP Bluetooth creates a new market for Bluetooth connectivity, addressing products such as watches, training shoes, TV remote controls and lifestyle medical sensors, to enable them to communicate with mobile phones and PCs.

Following the purchase of Nordnav Technologies and Cambridge Positioning Systems in January 2007, CSR continues to make progress with the development of its software-based high-performance enhanced GPS on a Bluetooth chip. CSR successfully completed the first pre- determined technical milestones for the development of GPS this quarter. The company continues to see a considerable market opportunity for GPS in mass-market mobile handsets.

CSR expects its first single-chip UWB product to launch in 2008.

Handset market sales in 2006 were around 1 billion units and sales are expected to continue rising driven by rapid penetration growth in China, India, Russia and Latin America. The proportion of mobile phones that incorporate Bluetooth ("attach rate") is also increasing. The 2007 attach rate is expected to be at the upper end of the 40 percent to 50 percent range, up from around 35 percent in 2006. Bluetooth continues to be specified in lower end handsets as a result of cost reductions. CSR believes the attach rate of Bluetooth in handsets will rise to over 70 percent over the medium term. This will in turn drive a substantial increase in the headset market as low cost and stereo headsets gain further traction and the attach rate increases from its current level of around 20 percent.

CSR's CEO, John Scarisbrick commented: "We have achieved a record first half for revenues and operating cash flow. These results demonstrate that CSR continues to consolidate its position as the clear Bluetooth market leader and we have the capacity to grow the company quickly while maintaining profitability. We continue to see numerous future growth opportunities for Bluetooth as well as for the broader range of short range wireless technologies that are part of our portfolio. The combination of these opportunities gives us confidence that we will achieve average revenue growth of 15 percent to 20 percent over the next five years which implies CSR will reach $2 billion revenues by 2012."

CSR's headcount also breached the 1000 mark this quarter (now 1,004) as a result of continued investment in research, sales, marketing, applications, engineering and operations. This is expected to increase in the second half of 2007 to support CSR's continued business growth.

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