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