© Psion 1 CONFIDENTIAL psion.com 2009 preliminary results 4 March 2010
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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
John Hawkins, Chairman
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
Adjusted operating profit
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
Normalized operating profit
Exceptional inventory adjustmentCapitalization of R&D
Adjusted operating profit
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
R&D expensesOther operating expenses
Normalized operating profit
Exceptional inventory adjustmentCapitalization of R&D
Adjusted operating profit
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
GBP million, rounded
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
GBP million, rounded
FY2008
FY2009
-1.5
0.1
-1.4
1.4
-4.8
-3.4
H12009
H22009
FY2008constantcurrency
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Contingent liabilities
GBP million, rounded
16.2
13.6
2.6
2008 Currency and claims 2009
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Agenda
Overview
Financial results
Strategy update
John Hawkins, Chairman
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 open innovation
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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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Innovation through collaboration
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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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Excited about the future
OSMOSMmobilitysourceopen
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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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Appendix: detailed financials
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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
R&D expensesOther operating expenses
Normalized operating profit
Exceptional inventory adjustmentCapitalization of R&D
Adjusted operating profit
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
FY2008constantcurrency
Income statement
GBP million, rounded
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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
GBP million, rounded
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
GBP million, rounded
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