Psion Preliminary Results Presentation

CONFIDENTIAL psion.com

2009 preliminary results4 March 2010

Agenda

Overview

Financial results

Strategy update

John Hawkins, Chairman

Fraser Park, CFO

John Conoley, CEO

Shifting gears in 2010

Continuedmarginimprovement

Shifting focus torevenuegrowth

Sustainablelong-termprofitsX =

Agenda

Overview

Financial results

Strategy update

Fraser Park, CFO

John Conoley, CEO

Adjusted operating profit

GBP million

Analyst consensus

Normalized operating profit

Additional inventory provision

Capitalization of R&D

Restructuring,share-based payments

Reported operating profit

Highlights

Revenues

Normalised op profit

Operating cash inflow

2nd interim / final dividend

Closing cash balance

170.0 -15%

4.0 -33%

31.7 +353%

2.6p +4%

45.3 +10%

FY, GBP m, except dividend, rounded2009 Change

-15%-23%

-13%-25%-33%

-66%-65%

Operating performance

199.486.4

-13.7-66.7

-14.9-8.8

RevenuesGP before inventory adjustment

R&D expensesOther operating expenses

Exceptional inventory adjustmentCapitalization of R&D

Restructuring, share-based pmts.Reported operating profit

170.066.1

-11.9-50.2

-5.63.52.0

-5.0-3.1

-25%-32%

-21%-33%-42%

-74%-74%

226.097.2

-15.1-75.2

-18.9-12.0

ReportedConstantcurrency

20082009 2008

GBP million, rounded

Constant currency comparisons are made between 2009 reportedincome statement items and those of 2008 by applying the averageexchange rates for 2009 to the 2008 local currency amounts

100.0-57.043.0

-6.7-33.3

-8.4-5.3

0.4-1.3-6.2

Margin development

% of revenues, rounded

100.0-56.743.3

-6.9-33.5

-7.5-4.5

0.6-1.3-5.2

RevenuesCOGS

GP before inventory adjustment

Restructuring, share-based paymentsReported operating profit

Net finance incomeTaxation

Net income

FY2008

FY2009

H12009

H22009

100.0-61.338.7

-7.7-32.9

-7.9-16.4

0.1-1.7

100.0-61.138.9

-7.0-29.5

-3.32.11.2

-2.9-1.8

0.1-2.8-4.5

100.0-60.939.1

-6.3-26.2

2.012.7

--4.08.7

FY2008constantcurrency

Revenues declined as recession hit

134.8120.4

2008 constantcurrency

2008 reported 2009

Americas

Revenues, GBP million, rounded

% change

Gross margin

Gross margin, % of net revenues, rounded

6.6%3.3%

2008 2009H1

2009H2

2009average

38.7% 38.9%

32.1%35.6%

Adjusted

Additional inventoryadjustment

Reported

Significant cost reductions

2008 cost as reported

GBP million

Savings

Currency

Investments in growth

2009 exit rate

Operating cash flow

2008 2009

31.7Adjusted

Exceptional items

Reported

Working capital

DSO’s DSI’s

Platforms: capitalization of R&D

Longer product life timeLonger product life time20102010

Tax expense

Current

Deferred

FY2008

FY2009

H12009

H22009

Contingent liabilities

2008 Currency and claims 2009

Agenda

Overview

Financial results

Strategy update

Fraser Park, CFO

John Conoley, CEO

Earning the right to grow

Progress, but still in transition

Cost and cash

Channel progress

Improving culture

Investing in growth

Op margin improving

Expanding our partner program

64% 60% 60%50%

36% 40% 40%50%

H1 08 H2 08 H1 09 H2 09

Product sales breakdown“Psion tops 2nd annual “Best Channel Vendors”issue in the data collection and mobilitycategory”- Business Solutions Magazine

“Psion tops 2nd annual “Best Channel Vendors”issue in the data collection and mobilitycategory”- Business Solutions Magazine

“Logistics Professionals Hail Psion partnerCLEOR as the "King of the Supply Chain”

“Psion teams with Ingram Micro to bring morevalue and business support to channelpartners”

Direct

Indirect

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

Expanding our partner program

Other operational improvements

70 supply chain projects

Revision of incentive plans

Enhanced new product introduction process

Improved sales and operations planning

New sales management tools (pilot implementation)

Modularity

Beyondcost cutting

First preview of new products

Our growth challenge

Customer needs are diverse

Customerpicture

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

A complicated starting position

Not meetingmarket needs

Outgunned by largercompetitors

Poorfinancial results

Our path to growth

Two drivers of growth

A new business model

OSMOSMmobilitysourceopen

Defining modularity

Defined interfaces andmodules

Platforms

Modular, flexibledevelopment process

The impact of modularity

Today Tomorrow

# parts

Today Tomorrow

Time to market

15-24months

6-12months

# variations

TomorrowToday

13,000

Leveraging open innovation

Leveraging resources

R&D resources

Largeplayers

Psion,the rest

yesterday

Psion+

partnerstomorrow

Innovation through collaboration

Everyone wins

Lowercustomer TCO

Best possiblecustomer fit

Create newpartner business opportunities

Upgrading and changing functionsRapid / easy serviceability

Buy exactly what you need, todayAdjust if you need to, tomorrow

Innovative business modelDifferentiated market offer

PsionPsionopportunityopportunity

OSM: sustainable advantageOSM: sustainable advantage

Why change?

• Organizational andcultural resistance

• Potential 2-year journeyfrom deciding tocompete on same basis

• Existing strategy workingor half working

• Lots to lose, less to win

Limitedresources

• R&D

• Partner network

• Might want to join ratherthan combat OSM

Largercompetitors

Smallercompetitors

Excited about the future

OSMOSMmobilitysourceopen

Greater sales activity

Current trading and outlook

Modest improvement in market conditions continuing

Previously stated goal of 10% operating margin still stands

2010 - a year of evolution:- Launch of first new products on modular platform- Continued attention to costs and cash generation

Appendix: detailed financials

226.0-128.8

-15.1-75.2

-18.9-12.0

1.0-3.0

199.4-113.0

-13.7-66.7

-14.9-8.8

1.2-2.7

2.58-7.34

RevenuesCOGS

GP before inventory adjustment

Restructuring, share-based paymentsReported operating profit

Net finance incomeTaxation

Net income

Adjusted EPSReported EPS

FY2008

FY2009

H12009

H22009

84.5-51.832.7

-6.5-27.8-1.6

-6.7-13.9

0.1-1.4

170.0-103.9

-11.9-50.2

-5.63.52.0

-5.0-3.1

0.1-4.8-7.8

-3.18-5.52

85.5-52.133.4

-5.4-22.4

-3.59.1

1.710.8

--3.47.4

Income statement

Segment analysis

180.0158.8

2008 constant 2008 reported 2009

Hardware,software, and

professionalservices

Customerservice

and support

GBP million

99.49.5

10.0118.9

17.539.6

1.639.998.6

-41.2-2.3

Goodwill and intangiblesFixed assets

Deferred tax and prepaymentsTotal long term assets

InventoryTrade and other receivables

Current taxCash

Total current assets

Trade and other payablesCurrent tax liabilities

Total current liabilities

Total long term liabilities

Net assets

113.911.210.9

37.157.6

1.941.3

-53.8-2.4

105.49.97.5

18.445.6

3.745.3

-51.2-2.2

105.411.411.5

35.854.1

1.140.0

-53.5-0.3

Balance sheetDecember

2008December

2009June2009

GBP million, rounded December2008

constant currency

Inventory analysis

32.227.3

14.2 14.4

0.8 1.3

2.5 2.7

17.5 18.4

December2008

December2009

June2009

Components

Work in progress

Finished goods

December2008

constant currency

6.05.00.11.1

-0.1-5.17.0

-5.9-3.2-4.0

-5.21.0

6.62.9

5.12.30.11.0

-0.28.2

-2.9-1.8-2.0-3.50.1

0.65.3

-1.12.50.1

-2.4-0.616.715.2

-7.0-1.4-2.1

-2.5-1.3

4.04.80.2

-1.4-0.824.931.7

-9.9-3.2-4.1-3.50.1

-1.94.0

Cash flow

Normalised operating profitDepreciation and amortization

Loss on sale of fixed assetsProvision movement

DiscontinuedWorking capital excluding exceptionals

Continuing operating cash flow

Cash spend on exceptionalsTax and financing

Capital expenditureCapitalized costs

Proceeds of disposalsDividends paid

Share issuedCash flow before FX adjustment

FX adjustmentNet cash flow

FY2008

FY2009

H12009

H22009

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