Psion Preliminary Results Presentation

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CONFIDENTIAL psion.com

2009 preliminary results4 March 2010

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Agenda

Overview

Financial results

Strategy update

John Hawkins, Chairman

Fraser Park, CFO

John Conoley, CEO

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Shifting gears in 2010

Continuedmarginimprovement

Shifting focus torevenuegrowth

Sustainablelong-termprofitsX =

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Agenda

Overview

Financial results

Strategy update


Fraser Park, CFO

John Conoley, CEO

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Adjusted operating profit

GBP million

3.2

4.0

-5.6

+3.5

2.0

-5.0

-3.1

Analyst consensus

Normalized operating profit

Additional inventory provision

Capitalization of R&D


Restructuring,share-based payments

Reported operating profit

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199.4

6.0

7.0

2.5p

41.3

2008

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

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-15%-23%

-13%-25%-33%

--

-67%

-66%-65%

Operating performance

199.486.4

-13.7-66.7

6.0

--

6.0

-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

4.0

-5.63.52.0

-5.0-3.1

-25%-32%

-21%-33%-42%

--

-71%

-74%-74%

226.097.2

-15.1-75.2

6.9

--

6.9

-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

+/-

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100.0-57.043.0

-6.7-33.3

3.1

--

3.1

-8.4-5.3

0.4-1.3-6.2

Margin development

% of revenues, rounded

100.0-56.743.3

-6.9-33.5

3.0

--

3.0

-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

-1.9

-6.6-

-8.5

-7.9-16.4

0.1-1.7

-18.0

100.0-61.138.9

-7.0-29.5

2.4

-3.32.11.2

-2.9-1.8

0.1-2.8-4.5

100.0-60.939.1

-6.3-26.2

6.6

-4.1

10.7

2.012.7

--4.08.7

FY2008constantcurrency

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Revenues declined as recession hit

134.8120.4

105.0

71.9

62.7

53.0

19.3

16.3

12.0

226.0

199.4

170.0

2008 constantcurrency

2008 reported 2009

EMEA

Americas

Asia

Total

Revenues, GBP million, rounded

-25%

-26%

-38%

-22%

-15%

-15%

-26%

-13%

% change

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Gross margin

Gross margin, % of net revenues, rounded

6.6%3.3%

2008 2009H1

2009H2

2009average

38.7% 38.9%

43.3%

39.1%

32.1%35.6%

Adjusted

Additional inventoryadjustment

Reported

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Significant cost reductions

81

52

63

31

24

24

35

7

11

10

3

2008 cost as reported

GBP million

Savings

Currency

Investments in growth

2009 exit rate

Opex

COGS

112

-46

+10

76

87

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Operating cash flow


1.1

5.9

21.8

9.9

2008 2009

31.7Adjusted

Exceptional items

Reported

7.0

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Working capital

DSO’s DSI’s

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Platforms: capitalization of R&D

Longer product life timeLonger product life time20102010

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-3.6

0.6

-3.0

Tax expense

-3.3

0.6

-2.7

-0.1

-4.7

-4.8

Current

Deferred

Total


FY2008

FY2009

-1.5

0.1

-1.4

1.4

-4.8

-3.4

H12009

H22009


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Contingent liabilities


16.2

13.6

2.6

2008 Currency and claims 2009

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Agenda

Overview

Financial results

Strategy update


Fraser Park, CFO

John Conoley, CEO

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Earning the right to grow

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Progress, but still in transition

Cost and cash

Channel progress

Improving culture

Investing in growth

Op margin improving

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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”

“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”

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

Direct

Indirect

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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

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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

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First preview of new products

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Our growth challenge

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Customer needs are diverse

Customerpicture

Customerpicture

Customerpicture

Customerpicture

Customerpicture

Customerpicture

Customerpicture

Customerpicture

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

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A complicated starting position

Not meetingmarket needs

Outgunned by largercompetitors

Poorfinancial results

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Our path to growth

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Two drivers of growth

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A new business model

OSMOSMmobilitysourceopen

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Defining modularity

Defined interfaces andmodules

Platforms

Modular, flexibledevelopment process

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The impact of modularity

Today Tomorrow

# parts

Today Tomorrow

Time to market

15-24months

6-12months

600

400

# variations

TomorrowToday

7,000

13,000

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Leveraging resources

R&D resources

Inn

ova

tion

Largeplayers

Psion,the rest

yesterday

Psion+

partnerstomorrow

OSM

OSM

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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

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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

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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

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226.0-128.8

97.2

-15.1-75.2

6.9

--

6.9

-18.9-12.0

1.0-3.0

-14.0

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

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

-5.6-

-7.2

-6.7-13.9

0.1-1.4

-15.2

170.0-103.9

66.1

-11.9-50.2

4.0

-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

5.6

-3.59.1

1.710.8

--3.47.4


Income statement


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Segment analysis

180.0158.8

129.4

46.0

40.6

40.6

226.0

199.4

170.0

2008 constant 2008 reported 2009

Hardware,software, and

professionalservices

Customerservice

and support

0%

-19%

-15%

GBP million

-12%

-28%

-25%

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99.49.5

10.0118.9

17.539.6

1.639.998.6

-41.2-2.3

-43.5

-5.9

168.1

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

136.0

37.157.6

1.941.3

137.9

-53.8-2.4

-56.2

-7.3

210.4

105.49.97.5

122.9

18.445.6

3.745.3

113.0

-51.2-2.2

-53.4

-4.9

177.6

105.411.411.5

128.3

35.854.1

1.140.0

131.0

-53.5-0.3

-53.8

-7.3

198.2

Balance sheetDecember

2008December

2009June2009

GBP million, rounded December2008

constant currency

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Inventory analysis

32.227.3

14.2 14.4

1.3

1.3

0.8 1.3

8.8

8.5

2.5 2.7

42.3

37.1

17.5 18.4

December2008

December2009

June2009

Components

Work in progress

Finished goods


December2008

constant currency

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6.05.00.11.1

-0.1-5.17.0

-5.9-3.2-4.0

-6.6

-5.21.0

-3.7

6.62.9

5.12.30.11.0

-0.28.2

16.5

-2.9-1.8-2.0-3.50.1

-1.7-

4.7

0.65.3

-1.12.50.1

-2.4-0.616.715.2

-7.0-1.4-2.1

--

-3.5-

1.2

-2.5-1.3

4.04.80.2

-1.4-0.824.931.7

-9.9-3.2-4.1-3.50.1

-5.2-

5.9

-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

Psion Preliminary Results Presentation

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