1




2009 preliminary results
4 March 2010




© Psion              CONFIDENTIAL   psion.com
2



Agenda




      Overview                   John Hawkins, Chairman


      Financial results          Fraser Park, CF...
3



 Shifting gears in 2010




Continued          Shifting focus to        Sustainable
margin
improvement
 © Psion
     ...
4



Agenda




      Overview                   John Hawkins, Chairman


      Financial results          Fraser Park, CF...
5



Adjusted operating profit
GBP million


               Analyst consensus                                             ...
6



 Highlights
 FY, GBP m, except dividend, rounded
                                            2009       2008    Chang...
7



Operating performance
GBP million, rounded
Constant currency comparisons are made between 2009 reported
income statem...
8



Margin development
                                                  FY          FY      H2      H1      FY
% of reve...
9



Revenues declined as recession hit
Revenues, GBP million, rounded
                                                   ...
10



Gross margin
Gross margin, % of net revenues, rounded


          43.3%
                                            ...
11



Significant cost reductions
GBP million                                                                  Opex
      ...
12



Operating cash flow
GBP million, rounded


                                               31.7          Adjusted


 ...
13



Working capital
          DSO’s                  DSI’s




© Psion           CONFIDENTIAL           psion.com
14



 Platforms: capitalization of R&D




2010           Longer product life time



 © Psion                CONFIDENTIA...
15



Tax expense
GBP million, rounded

                                FY        FY           H2     H1     FY
          ...
16



Contingent liabilities
GBP million, rounded


                                       2.6




                       ...
17



Agenda




      Overview                   John Hawkins, Chairman


      Financial results          Fraser Park, C...
18




          Earning the right to grow




© Psion             CONFIDENTIAL      psion.com
19



Progress, but still in transition




                                  Cost and cash            
                 ...
20



Expanding our partner program

                                             “Psion tops 2nd annual “Best Channel Ven...
21



Expanding our partner program

Further progress in US

          • One third of US resellers transferred to distribu...
22



Other operational improvements

70 supply chain projects
                                        Beyond
Revision of ...
23



First preview of new products




© Psion              CONFIDENTIAL   psion.com
24




          Our growth challenge




© Psion           CONFIDENTIAL   psion.com
25



Customer needs are diverse



  Customer   Customer                  Customer   Customer
   picture    picture      ...
26



Today’s devices: the opposite of diverse...




© Psion               CONFIDENTIAL            psion.com
27



A complicated starting position


                            Not meeting
                            market needs

...
28




          Our path to growth




© Psion         CONFIDENTIAL   psion.com
29



Two drivers of growth




© Psion             CONFIDENTIAL   psion.com
30



A new business model




                OSM
                open source mobility




© Psion             CONFIDENTI...
31



Defining modularity


Defined interfaces and
modules



Platforms




Modular, flexible
development process


© Psio...
32



The impact of modularity
    # variations       # parts         Time to market
                                     ...
33



Leveraging open innovation




© Psion             CONFIDENTIAL   psion.com
34



Leveraging resources

                                               Psion
                                         ...
35



Innovation through collaboration




© Psion              CONFIDENTIAL   psion.com
36



Everyone wins


Lower                               Upgrading and changing functions
customer TCO                   ...
37



OSM: sustainable advantage

          Larger                                        Smaller
          competitors   ...
38



Excited about the future




                  OSM
                   open source mobility




© Psion              ...
39



Current trading and outlook


          Modest improvement in market conditions continuing




          Greater sal...
40




          Appendix: detailed financials




© Psion               CONFIDENTIAL        psion.com
41


Income statement
                                                      FY          FY       H2      H1       FY
GBP m...
42



Segment analysis
GBP million
                      226.0        -25%

                                              ...
43



Balance sheet
GBP million, rounded                     December          June     December    December
             ...
44



Inventory analysis
GBP million, rounded
                                 42.3

                                     ...
45



Cash flow
GBP million, rounded                                     FY      FY      H2       H1
                     ...
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Psion Preliminary Results Presentation

  1. 1. 1 2009 preliminary results 4 March 2010 © Psion CONFIDENTIAL psion.com
  2. 2. 2 Agenda Overview John Hawkins, Chairman Financial results Fraser Park, CFO Strategy update John Conoley, CEO © Psion CONFIDENTIAL psion.com
  3. 3. 3 Shifting gears in 2010 Continued Shifting focus to Sustainable margin improvement © Psion X revenue growthCONFIDENTIAL = long-term profits psion.com
  4. 4. 4 Agenda Overview John Hawkins, Chairman Financial results Fraser Park, CFO Strategy update John Conoley, CEO © Psion CONFIDENTIAL psion.com
  5. 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. 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. 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. 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. 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. 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. 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. 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. 13 Working capital DSO’s DSI’s © Psion CONFIDENTIAL psion.com
  14. 14. 14 Platforms: capitalization of R&D 2010 Longer product life time © Psion CONFIDENTIAL psion.com
  15. 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. 16 Contingent liabilities GBP million, rounded 2.6 16.2 13.6 2008 Currency and claims 2009 © Psion CONFIDENTIAL psion.com
  17. 17. 17 Agenda Overview John Hawkins, Chairman Financial results Fraser Park, CFO Strategy update John Conoley, CEO © Psion CONFIDENTIAL psion.com
  18. 18. 18 Earning the right to grow © Psion CONFIDENTIAL psion.com
  19. 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. 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. 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. 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. 23 First preview of new products © Psion CONFIDENTIAL psion.com
  24. 24. 24 Our growth challenge © Psion CONFIDENTIAL psion.com
  25. 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. 26 Today’s devices: the opposite of diverse... © Psion CONFIDENTIAL psion.com
  27. 27. 27 A complicated starting position Not meeting market needs Outgunned by larger competitors Poor financial results © Psion CONFIDENTIAL psion.com
  28. 28. 28 Our path to growth © Psion CONFIDENTIAL psion.com
  29. 29. 29 Two drivers of growth © Psion CONFIDENTIAL psion.com
  30. 30. 30 A new business model OSM open source mobility © Psion CONFIDENTIAL psion.com
  31. 31. 31 Defining modularity Defined interfaces and modules Platforms Modular, flexible development process © Psion CONFIDENTIAL psion.com
  32. 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. 33 Leveraging open innovation © Psion CONFIDENTIAL psion.com
  34. 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. 35 Innovation through collaboration © Psion CONFIDENTIAL psion.com
  36. 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. 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. 38 Excited about the future OSM open source mobility © Psion CONFIDENTIAL psion.com
  39. 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. 40 Appendix: detailed financials © Psion CONFIDENTIAL psion.com
  41. 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. 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. 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. 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. 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

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