Card Systems[1] :

During the third quarter, the Card Systems activity, without the Identity activity, which became a completely separate division on 1st July 2008, actively posted sharp growth in sales: up 29,2% to €182,5 m or 34% at constant rates. Evidently, this growth in the third quarter of 2008 is partially due to the integration of XPonCard into Oberthur's perimeter.

At constant perimeter, sales rose €157,3 m, up 11,4% at current rates and up 16% at constant rates. This performance is essentially due to the sustained growth in Mobile with 137 million microprocessor cards delivered, which represents a 38% increase compared to Q3 2007.

Mobile Communications:

Mobile sales reached €92,2m, a 48% increase at current rate.

Excluding XPonCard, Oberthur experienced a growth of 30% to €81m in mobile sales. This growth was sustained by dynamic markets in the Asian region and in the EMEA region outside of Europe. The volume in SIM cards progressed by 47% in all regions, achieving sales of €75m.

Price pressure remains globally moderate, with a drop in the constant exchange rate of 8% of average prices, explained essentially by the geographic mix: delivery volumes in Asia accounted for 30% of SIM cards sold versus 24% in Q3 2007.

All regions gave good performances:

• Growth in the EMEA region essentially came from the emerging regions.
• Growth in the Americas was contrasted. Sales continued to rise in South America, especially in Brazil, while the dollar exchange rate continued to penalise sales revenue in the USA.
• In Asia, volumes rose 83% versus Q3 2007, which compensated the reduction in the average sales prices.

However, the scratch card activity fell back by 10% in comparison with Q3 2007, despite an increase in volumes of 24% over this period, with 115 million units delivered.

Payment[2]

With sth sales of €80,1m, the banking business grew 16,4% at current rates, especially in the Scandinavian market which benefited from the integration of XPonCard.

Excluding XPonCard, total revenues of €66,7m were posted, a drop of 3,1% at current rates, but progressing at 2,1% at constant rates, owing to the negative impact of the UK pound and US dollar exchange rates. 30 million microprocessor payment cards were sold during the quarter which represents an increase of 20% over the period.

Growth by geographic areas was contrasted:

• The EMEA region and in particular Europe, suffered the joint effect of a drop in volumes, especially in UK, and in the average sales price, with stability in the personalization services segment activity. EMV migration is continuing to progress in Spain, Italy and Hungary.
• In the USA, the magnetic stripe card market is depressed, affected by both the deterioration in economic conditions in the banking sector and price pressure.
• In Asia, linked to a new steady activity, sales are showing strong growth.
• Pay TV and others

The activity remains stable in comparison with Q3 2007.

Fiduciary and Cash Protection:

In the Fiduciary segment, the order book remains at a high level. Q3 sales, without the volumes of the passport products that were transferred to the Identity division, reached €24,9m, up 10,7% versus Q3 2007. Annual growth targets remain unchanged.

In the Cash Protection segment, Q3 2008 was negatively impacted by postponement of anticipated renewals in France and Export rollouts. Q3 sales came to €3,4m a decrease of 33% over the period.

Overall, Fiduciary and Cash Protection sales came to 28,3 M€, up 2,5% versus Q3 2007.

Identity:

On 1st July 2008, the Group created a new division centralizing all its activities in the Identity field that previously had been part of the Card and Fiduciary divisions.

In Q3 2008, this activity attained sales of €14,8m, up 13,8% at current exchange rate, confirming a steady growth rate, especially with the start of sales of the Taiwanese electronic passports.

Economic results

As expected, the company maintained its gross margin level in Q3 2008.

Outlook

Card Systems anticipates continued growth in Q4 2008 with the seasonality tendencies. The company remains nevertheless attentive to possible deterioration in market conditions.

Fiduciary should maintain a good level of activity and Identity should continue to develop. Cash Protection may be behind its objectives.

[1] Identity division's sales are reported from hereafter separately
[2] Payment, loyalty & transit

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