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Thursday 19 November 2009: For Immediate Release

PSION PLC

Interim Management Statement

Psion PLC, the mobile computing solutions company, today releases its Interim Management Statement, for the period from 1 July 2009 to the date of this statement.

John Conoley, Psion CEO, said:

"Market conditions are beginning to improve at a time when Psion has delivered on its Change Programme. We have reduced our cost base, brought additional focus to our channel sales activity and delivered strong cash generation. We continue to make sizeable investments in enhancing our product portfolio. Our lower cost base, robust channel relationships and enhanced product portfolio should position us strongly for profitable growth as market conditions improve."

Current year performance overview

The slight improvement in sales activity and order intake reported in August has been maintained, with the re-emergence of some sizeable prospects and orders. The company has won several large new orders in Europe and North America during the second half of the year. September and October's order books were at the highest level since we began to see the effects of the downturn in November 2008.  

The company is making further progress in the second half of 2009 towards its previously stated goal of achieving a 10% adjusted operating margin. We anticipate delivering a small adjusted profit before tax¹ for the full year, which will be broadly in line with market expectations. 

Operating cash generation has continued to improve. We expect to end the year having exceeded our internal targets through improvements in supply chain and debtor management.

The company has maintained a strong balance sheet with net cash balances at the end of October of approximately £45m, up from £38.4m at the end of October 2008, and £39.9m at the end of June 2009. This increase in net cash has been delivered after restructuring costs, capital expenditure, tax, the currency impact on opening balance, and the interim dividend which together have absorbed approximately £7m in the second half of 2009.

¹ profit before tax after adding back exceptional costs and share based payments, pre-capitalisation of development expense under IAS 38

Change Programme

The Change Programme begun in 2008 has delivered the targeted annualised cost savings of £46m after a small adjustment for adverse currency exchange movements since August. 

Reported results for the year will reflect the £2m one-off project expense of the previously announced reorganisation of our European legal structure. The new structure will better reflect our revised operating model and will contribute to the annualised cost savings delivered by our Change Programme.

As a result of the Change Programme, the company's legal structure has been simplified, inventory has been reduced and our working relationships with resellers continue to be strengthened. We remain confident that the actions we have taken in the last twelve months provide a solid base from which we can grow the business profitably over the medium term.   

Product and channel development

In the summer, the company announced that it would be advancing investment in product development and marketing to refresh our customer and channel offerings. To date, we have invested approximately £6m of annualised cost savings to accelerate investment in product development and marketing. 

Psion is now further accelerating its development strategy. As previously stated, a key part of this strategy involves creating a more customer-friendly, "modular", platform for our products. We will invest more heavily in 2010 and 2011 to extend our addressable market, better meet customer requirements and build profitable growth opportunities for our channel partners. This will enable us to target higher rates of positive growth in the medium term.

This investment will be financed out of ongoing improvements in operating profitability and operating cash generation, supported by our existing balance sheet strength. We are confident that it will underpin real market differentiation and deliver positive and profitable growth over the medium term. We look forward to sharing our plans in more detail during the first quarter of 2010.

The investment we are undertaking to develop a "modular" platform will make future development activity more productive. We intend to capitalise our investments in this "modular" platform in 2009 and 2010 to reflect IFRS accounting requirements. It is expected that approximately £1m-£2m will be capitalised in 2009, with a further £4m-£6m capitalised in 2010. Amortisation of capitalised development expense is expected to be zero in 2009 and £1m-£2m in 2010. 

For further enquiries, please contact: 

Brunswick                                                                                                                     +44 (0) 20 7404 5959

psion@brunswickgroup.com

Tom Buchanan, Craig Breheny, Michelangelo Bendandi

  Notes to Editors 

1.	Psion (PON.L) is listed on the London stock market. Its operational business, Psion Teklogix, is a global provider of solutions for mobile computing and wireless data collection. The Group's products and services include rugged mobile hardware, secure wireless networks, robust software, professional services and exceptional support programs. Psion Teklogix is committed to helping its customers reap the benefits of new and emerging technologies, including image capture, voice recognition and RFID. With over three decades of industry experience, Psion Teklogix has customers in more than 80 countries around the world.  For further information, please go to: http://www.psionteklogix.com
2.	The information in this release is based on management information.
3.	Certain statements in this announcement are forward looking statements. Such statements are based on current expectations and by their nature are subject to a number of risks and uncertainties that could cause actual results and performance to differ materially from any expected future results or performance expressed or implied by the forward-looking statement. The information does not assume any responsibility or obligation to update publicly or revise any of the forward-looking statements contained herein.

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