During the first quarter, the card activity posted a +11.6% strong growth in sales, reaching EUR149.4M. At historical currency exchange rates, the growth would have reached 16.9%.

115 million microprocessor cards were delivered, a 45% increase in volume compared to Q1 2007.

Mobile Communications segment:

Demand in the SIM market was sustained with 71 million SIM cards delivered during the quarter, a 58% increase compared to the same period a year ago. Sales in the SIM card sub-segment amounted to EUR51.5M, up 29% year-on-year.

All regions grew strongly.

In EMEA, demand was high in the Middle East and Africa.

The Americas grew by almost 50% in volume, in particular in South America with strong demand in Brazil and Peru.

Asia once again experienced strong year-on-year growth. Card deliveries more than doubled in units compared to the same period a year go. Again this quarter in Asia, the ASP was stable year-on-year. Migration towards higher end products is in progress: all 16K cards have been converted to 32K or higher.

Due to an increasing mix of Asian business, the average selling price for the segment was down 19% year-on-year, while region per region the decrease of ASP was in average limited to 9%. OberthurTechnologies has once again confirmed its strong position in the high-end segment with 61% of its sales coming from Java product.

The scratch card activity was in slight decrease year-on-year with sales at EUR4.2M in the first quarter. Volumes were up 5% at 108 million units delivered.

In total, sales in Mobile Communications reached EUR57.4M in Q1 2008.

Payment segment(1):

Q1 2008 represented the best quarter ever for the company in the Payment smart card segment with 8% year-on-year growth in value at EUR40.5M. 35 million smart cards were sold, a 28% increase in volume compared to Q1 2007.

The UK & French markets were stable at an already high level. In Spain, Italy and Switzerland, the company experienced good market conditions notably thanks to the on-going migration to EMV. In the US, contactless demand was buoyant: volumes more than doubled compared to a year ago.

Year-on-year, the ASP decreased by 16% essentially due to the currency rate impact, in particular US dollar and UK Pound.

With the shift to chip cards, conventional cards sales decreased by 22% at current rate and by 15% at constant rate compared to Q1 2007.

Personalization services grew significantly by 11% year-on-year, with a stronger pace in Europe than in the US.

In Q1 2008, the payment segment amounted to EUR76M, a 3% increase year-on-year.

Identity & Security(2) segment:

Quarterly revenue for this product line was up 9.8% at EUR16M. Volumes of smart cards for the Identity and Security segment increased by 28% pushed by strong demand in the Pay TV sector, which is also the main reason for the 24% ASP decrease, year-on-year.

Fiduciary & Cash Protection:

With sales at EUR32.4M in Q1 2008, the company experienced a sustained activity in the fiduciary business: Banknotes and security documents printing demonstrated a good performance. The activity was particularly sustained in the Americas during the period. Product mix improved over Q4 2007 and the order book remains strong.

In the Cash Protection segment, Q1 2008 compared unfavourably to a strong Q1 2007. Some expected renewals in France were postponed which impacted revenue for the first quarter. Quarterly sales were booked at EUR3.9M, down 23%.

Oberthur Cash Protection focuses its efforts on geographical expansion and product range development.

Overall in Q1 2008, sales of Fiduciary and Cash Protection amounted to EUR36,3M, a 2% increase versus 2007.

Economic results

As expected, the company kept on improving its gross margin in Q1 2008 compared to Q1 2007. The increase in sales provided additional operational leverage. EBIT should improve accordingly, compared to last year.

Outlook

The company anticipates good market conditions to continue over the first half of 2008.

In Q2 2008, Card Systems forecasts sustained demand in the mobile segment and fair price conditions. The payment activity should remain at the already good level of Q1.

Q2 activity will remain strong in Fiduciary, operating at good capacity utilization, while renewal will still be the bulk of Cash Protection sales.

Public offer for XponCard has been successful. At the end of the acceptance period extension, Oberthur owns 98.7% of the company. XponCard shall be consolidated into Oberthur financial statements as of May 1st 2008.

The integration plan has started to be implemented. The company will exploit as fast as possible all the identified synergies previously announced.

With its strong organic growth and this acquisition, Oberthur is now the second largest smart card player in the industry. It has strongly reinforced its presence in Northern Europe with 5 service bureaus (Sweden, Norway, Finland, Latvia, and Poland) to be added to the 20 bureaus current worldwide network.

(1) Payment, loyalty & transit
(2) Governmental programs, Health care, Pay-TV...

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