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Psion Preliminary Results Presentation

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A presentation I designed which is in the public domain: the Psion 2009 preliminary results presentation to the analyst community.

A presentation I designed which is in the public domain: the Psion 2009 preliminary results presentation to the analyst community.

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  • 1. 1 2009 preliminary results 4 March 2010 © Psion CONFIDENTIAL psion.com
  • 2. 2 Agenda Overview John Hawkins, Chairman Financial results Fraser Park, CFO Strategy update John Conoley, CEO © Psion CONFIDENTIAL psion.com
  • 3. 3 Shifting gears in 2010 Continued Shifting focus to Sustainable margin improvement © Psion X revenue growthCONFIDENTIAL = long-term profits psion.com
  • 4. 4 Agenda Overview John Hawkins, Chairman Financial results Fraser Park, CFO Strategy update John Conoley, CEO © Psion CONFIDENTIAL psion.com
  • 5. 5 Adjusted operating profit GBP million Analyst consensus 3.2 Normalized operating profit 4.0 Additional inventory provision -5.6 Capitalization of R&D +3.5 Adjusted operating profit 2.0 Restructuring, -5.0 share-based payments Reported operating profit -3.1 © Psion CONFIDENTIAL psion.com
  • 6. 6 Highlights FY, GBP m, except dividend, rounded 2009 2008 Change Revenues 170.0 199.4 -15% Normalised op profit 4.0 6.0 -33% Operating cash inflow 31.7 7.0 +353% 2nd interim / final dividend 2.6p 2.5p +4% Closing cash balance 45.3 41.3 +10% © Psion CONFIDENTIAL psion.com
  • 7. 7 Operating performance GBP million, rounded Constant currency comparisons are made between 2009 reported income statement items and those of 2008 by applying the average exchange rates for 2009 to the 2008 local currency amounts Constant Reported currency 2009 2008 +/- 2008 +/- Revenues 170.0 199.4 -15% 226.0 -25% GP before inventory adjustment 66.1 86.4 -23% 97.2 -32% R&D expenses -11.9 -13.7 -13% -15.1 -21% Other operating expenses -50.2 -66.7 -25% -75.2 -33% Normalized operating profit 4.0 6.0 -33% 6.9 -42% Exceptional inventory adjustment -5.6 - - - - Capitalization of R&D 3.5 - - - - Adjusted operating profit 2.0 6.0 -67% 6.9 -71% Restructuring, share-based pmts. -5.0 -14.9 -66% -18.9 -74% Reported operating profit -3.1 -8.8 -65% -12.0 -74% © Psion CONFIDENTIAL psion.com
  • 8. 8 Margin development FY FY H2 H1 FY % of revenues, rounded 2009 2008 2009 2009 2008 constant currency Revenues 100.0 100.0 100.0 100.0 100.0 COGS -61.1 -56.7 -60.9 -61.3 -57.0 GP before inventory adjustment 38.9 43.3 39.1 38.7 43.0 R&D expenses -7.0 -6.9 -6.3 -7.7 -6.7 Other operating expenses -29.5 -33.5 -26.2 -32.9 -33.3 Normalized operating profit 2.4 3.0 6.6 -1.9 3.1 Exceptional inventory adjustment -3.3 - - -6.6 - Capitalization of R&D 2.1 - 4.1 - - Adjusted operating profit 1.2 3.0 10.7 -8.5 3.1 Restructuring, share-based payments -2.9 -7.5 2.0 -7.9 -8.4 Reported operating profit -1.8 -4.5 12.7 -16.4 -5.3 Net finance income 0.1 0.6 - 0.1 0.4 Taxation -2.8 -1.3 -4.0 -1.7 -1.3 Net income -4.5 -5.2 8.7 -18.0 -6.2 © Psion CONFIDENTIAL psion.com
  • 9. 9 Revenues declined as recession hit Revenues, GBP million, rounded % change 226.0 -25% Total 19.3 -38% 199.4 -15% Asia 16.3 -26% 170.0 71.9 -26% 12.0 Americas 62.7 -15% 53.0 EMEA 134.8 -22% 120.4 -13% 105.0 2008 constant 2008 reported 2009 currency © Psion CONFIDENTIAL psion.com
  • 10. 10 Gross margin Gross margin, % of net revenues, rounded 43.3% Adjusted 38.7% 39.1% 38.9% Additional inventory 3.3% 6.6% adjustment 35.6% Reported 32.1% 2008 2009 2009 2009 H1 H2 average © Psion CONFIDENTIAL psion.com
  • 11. 11 Significant cost reductions GBP million Opex COGS 2008 cost as reported 81 31 112 Savings 35 10 -46 Currency 7 3 +10 52 24 76 Investments in growth 11 2009 exit rate 63 24 87 © Psion CONFIDENTIAL psion.com
  • 12. 12 Operating cash flow GBP million, rounded 31.7 Adjusted 9.9 Exceptional items 21.8 Reported 7.0 5.9 1.1 2008 2009 © Psion CONFIDENTIAL psion.com
  • 13. 13 Working capital DSO’s DSI’s © Psion CONFIDENTIAL psion.com
  • 14. 14 Platforms: capitalization of R&D 2010 Longer product life time © Psion CONFIDENTIAL psion.com
  • 15. 15 Tax expense GBP million, rounded FY FY H2 H1 FY 2009 2008 2009 2009 2008 constant currency Current -0.1 -3.3 1.4 -1.5 -3.6 Deferred -4.7 0.6 -4.8 0.1 0.6 Total -4.8 -2.7 -3.4 -1.4 -3.0 © Psion CONFIDENTIAL psion.com
  • 16. 16 Contingent liabilities GBP million, rounded 2.6 16.2 13.6 2008 Currency and claims 2009 © Psion CONFIDENTIAL psion.com
  • 17. 17 Agenda Overview John Hawkins, Chairman Financial results Fraser Park, CFO Strategy update John Conoley, CEO © Psion CONFIDENTIAL psion.com
  • 18. 18 Earning the right to grow © Psion CONFIDENTIAL psion.com
  • 19. 19 Progress, but still in transition Cost and cash  Channel progress  Improving culture  Investing in growth  Op margin improving  © Psion CONFIDENTIAL psion.com
  • 20. 20 Expanding our partner program “Psion tops 2nd annual “Best Channel Vendors” “Psion tops 2nd annual “Best Channel Vendors” Product sales breakdown issue in the data collection and mobility issue in the data collection and mobility category” category” Indirect - Business Solutions Magazine - Business Solutions Magazine Direct 36% 40% 40% “Logistics Professionals Hail Psion partner “Logistics Professionals Hail Psion partner 50% CLEOR as the "King of the Supply Chain” CLEOR as the "King of the Supply Chain” 64% 60% 60% 50% “Psion teams with Ingram Micro to bring more “Psion teams with Ingram Micro to bring more value and business support to channel value and business support to channel partners” partners” H1 08 H2 08 H1 09 H2 09 © Psion CONFIDENTIAL psion.com
  • 21. 21 Expanding our partner program Further progress in US • One third of US resellers transferred to distribution so far • 60 net new resellers signed by Ingram in 2009 • $550k through US resellers in Q1 09 forecast to treble in Q1 10 Supply agreement signed with BT Global Services €1.2m order from European distributor this week Launch of our first Global Partner Programme © Psion CONFIDENTIAL psion.com
  • 22. 22 Other operational improvements 70 supply chain projects Beyond Revision of incentive plans cost cutting Enhanced new product introduction process Improved sales and operations planning New sales management tools (pilot implementation) Modularity © Psion CONFIDENTIAL psion.com
  • 23. 23 First preview of new products © Psion CONFIDENTIAL psion.com
  • 24. 24 Our growth challenge © Psion CONFIDENTIAL psion.com
  • 25. 25 Customer needs are diverse Customer Customer Customer Customer picture picture picture picture Customer Customer Customer Customer picture picture picture picture © Psion CONFIDENTIAL psion.com
  • 26. 26 Today’s devices: the opposite of diverse... © Psion CONFIDENTIAL psion.com
  • 27. 27 A complicated starting position Not meeting market needs Outgunned by larger competitors Poor financial results © Psion CONFIDENTIAL psion.com
  • 28. 28 Our path to growth © Psion CONFIDENTIAL psion.com
  • 29. 29 Two drivers of growth © Psion CONFIDENTIAL psion.com
  • 30. 30 A new business model OSM open source mobility © Psion CONFIDENTIAL psion.com
  • 31. 31 Defining modularity Defined interfaces and modules Platforms Modular, flexible development process © Psion CONFIDENTIAL psion.com
  • 32. 32 The impact of modularity # variations # parts Time to market 15-24 13,000 600 months 6-12 7,000 400 months Today Tomorrow Today Tomorrow Today Tomorrow © Psion CONFIDENTIAL psion.com
  • 33. 33 Leveraging open innovation © Psion CONFIDENTIAL psion.com
  • 34. 34 Leveraging resources Psion + Large partners players tomorrow Innovation MM OS OS Psion, the rest yesterday R&D resources © Psion CONFIDENTIAL psion.com
  • 35. 35 Innovation through collaboration © Psion CONFIDENTIAL psion.com
  • 36. 36 Everyone wins Lower Upgrading and changing functions customer TCO Rapid / easy serviceability Best possible Buy exactly what you need, today customer fit Adjust if you need to, tomorrow Create new Innovative business model partner business opportunities Differentiated market offer © Psion CONFIDENTIAL psion.com
  • 37. 37 OSM: sustainable advantage Larger Smaller competitors competitors Limited Why change? resources • Organizational and cultural resistance • R&D • Potential 2-year journey Psion from deciding to • Partner network compete on same basis opportunity • Might want to join rather • Existing strategy working than combat OSM or half working • Lots to lose, less to win © Psion CONFIDENTIAL psion.com
  • 38. 38 Excited about the future OSM open source mobility © Psion CONFIDENTIAL psion.com
  • 39. 39 Current trading and outlook Modest improvement in market conditions continuing Greater sales activity 2010 - a year of evolution: - Launch of first new products on modular platform - Continued attention to costs and cash generation Previously stated goal of 10% operating margin still stands © Psion CONFIDENTIAL psion.com
  • 40. 40 Appendix: detailed financials © Psion CONFIDENTIAL psion.com
  • 41. 41 Income statement FY FY H2 H1 FY GBP million, rounded 2009 2008 2009 2009 2008 constant currency Revenues 170.0 199.4 85.5 84.5 226.0 COGS -103.9 -113.0 -52.1 -51.8 -128.8 GP before inventory adjustment 66.1 86.4 33.4 32.7 97.2 R&D expenses -11.9 -13.7 -5.4 -6.5 -15.1 Other operating expenses -50.2 -66.7 -22.4 -27.8 -75.2 Normalized operating profit 4.0 6.0 5.6 -1.6 6.9 Exceptional inventory adjustment -5.6 - - -5.6 - Capitalization of R&D 3.5 - 3.5 - - Adjusted operating profit 2.0 6.0 9.1 -7.2 6.9 Restructuring, share-based payments -5.0 -14.9 1.7 -6.7 -18.9 Reported operating profit -3.1 -8.8 10.8 -13.9 -12.0 Net finance income 0.1 1.2 - 0.1 1.0 Taxation -4.8 -2.7 -3.4 -1.4 -3.0 Net income -7.8 -10.3 7.4 -15.2 -14.0 Adjusted EPS -3.18 2.58 Reported EPS -5.52 -7.34 © Psion CONFIDENTIAL psion.com
  • 42. 42 Segment analysis GBP million 226.0 -25% 199.4 -15% 46.0 -12% 40.6 0% 170.0 Customer service 40.6 and support Hardware, 180.0 -28% software, and 158.8 -19% professional 129.4 services 2008 constant 2008 reported 2009 © Psion CONFIDENTIAL psion.com
  • 43. 43 Balance sheet GBP million, rounded December June December December 2009 2009 2008 2008 constant currency Goodwill and intangibles 105.4 99.4 113.9 105.4 Fixed assets 9.9 9.5 11.2 11.4 Deferred tax and prepayments 7.5 10.0 10.9 11.5 Total long term assets 122.9 118.9 136.0 128.3 Inventory 18.4 17.5 37.1 35.8 Trade and other receivables 45.6 39.6 57.6 54.1 Current tax 3.7 1.6 1.9 1.1 Cash 45.3 39.9 41.3 40.0 Total current assets 113.0 98.6 137.9 131.0 Trade and other payables -51.2 -41.2 -53.8 -53.5 Current tax liabilities -2.2 -2.3 -2.4 -0.3 Total current liabilities -53.4 -43.5 -56.2 -53.8 Total long term liabilities -4.9 -5.9 -7.3 -7.3 Net assets 177.6 168.1 210.4 198.2 © Psion CONFIDENTIAL psion.com
  • 44. 44 Inventory analysis GBP million, rounded 42.3 37.1 Finished goods 8.8 1.3 8.5 Work in progress 1.3 17.5 18.4 2.5 2.7 Components 32.2 0.8 1.3 27.3 14.2 14.4 December December June December 2008 2008 2009 2009 constant currency © Psion CONFIDENTIAL psion.com
  • 45. 45 Cash flow GBP million, rounded FY FY H2 H1 2009 2008 2009 2009 Normalised operating profit 4.0 6.0 5.1 -1.1 Depreciation and amortization 4.8 5.0 2.3 2.5 Loss on sale of fixed assets 0.2 0.1 0.1 0.1 Provision movement -1.4 1.1 1.0 -2.4 Discontinued -0.8 -0.1 -0.2 -0.6 Working capital excluding exceptionals 24.9 -5.1 8.2 16.7 Continuing operating cash flow 31.7 7.0 16.5 15.2 Cash spend on exceptionals -9.9 -5.9 -2.9 -7.0 Tax and financing -3.2 -3.2 -1.8 -1.4 Capital expenditure -4.1 -4.0 -2.0 -2.1 Capitalized costs -3.5 - -3.5 - Proceeds of disposals 0.1 6.6 0.1 - Dividends paid -5.2 -5.2 -1.7 -3.5 Share issued - 1.0 - - Cash flow before FX adjustment 5.9 -3.7 4.7 1.2 FX adjustment -1.9 6.6 0.6 -2.5 Net cash flow 4.0 2.9 5.3 -1.3 © Psion CONFIDENTIAL psion.com