CSR made good progress in 2010 further strengthening our product portfolio, building on our leading technologies and enhancing our own processes, at the same time as the global economy began to emerge from the worst of the downturn. We continue to look forward with confidence and the introduction during 2011 of a dividend policy is a clear expression of the Board’s confidence in your Company’s strategy, its product portfolio and its future financial performance.
Following a significant uplift in revenue during the first six months of the year, against 2009 we saw a slight downturn in the second half as the global economy slowed to a more sustainable level. Although our performance was positive in the circumstances, it was impacted by falling sales at one of our major customers and exacerbated by a rapid shift in consumer demand from feature phones, where we have proven strengths, towards smartphones, where we are not presently so well-positioned. We are addressing this issue and believe that our product portfolio will win additional smartphone business as we introduce our 40nm multi radio combo chip technology.
As the Business and Financial Review will cover in more detail, the year was characterised by a marked increase in revenue in the non-phone market segments, with both the Automotive & PND and Audio & Consumer businesses performing well.
Total revenue for the year was $800.6 million, up by 33% on 2009 and an increase of 17% when compared to a 2009 revenue comparative which includes SiRF’s first half revenue pre-acquisition of $82.5 million (as derived from SiRF’s accounting records) as well as CSR’s IFRS revenue of $601.4 million. The operating loss for the year was $6.3 million, against a loss of $15.9 million in the previous year. This year’s loss reflects an exceptional charge of $59.8 million arising in the fourth quarter from the litigation settlement with Broadcom Corporation which we announced on 11 January 2011. Underlying operating profit rose from $26.9 million in 2009 to $79.0 million in 2010.
Joep van Beurden and much of his senior team are well established, and the benefits of their continued focus on the Connectivity Centre are feeding through to results, as anticipated. We are continuing to expand the customer segments we address and CSR technology is being adopted by many different consumer electronics segments in increasing volumes, from cameras and TVs to automotive, which includes systems for two-wheeled vehicles as well as for cars.
Reflecting our confidence in the growth prospects and the strong underlying cash generation of the Company, your Board announced its intention to propose a maiden full year dividend in respect of the 2010 financial year. The Board is proposing the Company’s first dividend of $0.065 (£0.04) per share in respect of the 2010 financial year, representing 2/3 of a notional $0.098 (£0.06) per share full year dividend that would have been paid if the Company had commenced payment of dividends sooner. It is the Board’s intention to follow a progressive dividend policy that reflects the underlying growth prospects of the Company as well as the long term outlook for growth in earnings per share and group cash flow. The Board intends to pay dividends on a semi-annual basis.
Subject to shareholder approval at the Annual General Meeting to be held on 18 May 2011, the dividend will be paid on 3 June 2011 to shareholders of record on 13 May 2011. The dividend will be paid in sterling and holders of ordinary shares will receive £0.04 per ordinary share.
In September, we announced the introduction of a share buy-back programme of up to $50 million. By the end of the year, we had used approximately $37.5 million in acquiring approximately 7 million ordinary shares. The decision to initiate a buy back reflected the fact that the Company is significantly cash generative and has the financial flexibility to consider potential acquisitions that meet its strict investment criteria, to drive its organic development and to return capital to our shareholders.
In October, we welcomed Teresa Vega to the Board as a Non-Executive Director. Teresa has over 30 years experience gained working in the technology and telecommunications industries for leading global companies, including Motorola Inc where she was Senior Vice President and led their CDMA handset business. She also served as the Chief Operating Officer of the wireless infrastructure unit at Lucent Technologies Inc. In each of these organisations, Teresa led and built multi-billion dollar divisions and spearheaded major product launches, and her experience will bring invaluable expertise to CSR.
Also in October, Dado Banatao stood down from his position as a Non-Executive Director. A former Executive Chairman and Interim CEO at SiRF, Dado joined our Board at the time of the merger with SiRF and played an important role in the integration of the two businesses. We thank him for his contribution and strategic insight, and wish him well.
James Collier, one of our founders, decided to focus on a new entrepreneurial venture and therefore resigned from his executive role during the year. However, I am pleased to say that James remains on our board as a Non-Executive Director, where his vast experience and unique perspective on our industry will continue to be valued.
Our success would not be possible without the support of our fifteen hundred strong team, which is based at 22 locations worldwide. Their impressive technical ability is a given, but I would also like to pay tribute to their customer focus and enthusiasm. Meeting customer needs is a core capability at CSR, and our people work tirelessly alongside customers to ensure that the products we develop are tailored to their specific requirements, whether they are for handsets or cameras, automotive infotainment systems, audio headsets, games or other applications.
CSR is an integral part of the communities where we operate. From Shanghai to Cambridge, the South of France to the West Coast of the USA, I am proud of the way in which our people give freely of their time and skills in order to help those communities thrive. During the year we introduced a formal Social Responsibility policy for the first time, built on the four pillars of Community, Workplace, Marketplace and Environment. The policy will help us to meet customer and shareholder expectations by providing a clear process by which we can demonstrate that we are “doing the right thing”, an assurance that is as important to the Board as it is to our people.
CSR has a strong track record of delivering innovative solutions that provide our customers with high quality differentiated products. Our objective remains to grow our business through our existing markets while developing new technologies in adjacent areas which we believe complement our focus on connectivity and location and provide opportunities for growth. As part of that commitment we intend during 2011 to further increase our investment in R&D to enhance our product portfolio in areas such as Bluetooth low energy and deep indoors location where we believe we can offer compelling solutions to end consumers. We believe this will help support the extension of our customer base as well as extend our reach into growing markets such as India and China.
The combination of our talented people, our investment in them, our technologies and the successful execution on our strategy gives us considerable confidence for the future.
Ron Mackintosh,
Chairman
