Oberthur Card Systems Announces Second Quarter 2005 Sales

Business Wire, July 20, 2005

LOS ANGELES -- Oberthur Card Systems:

Highlights:

--Best Q2 ever: 121.1 million euros

--13.6% increase on a year-on-year basis

Oberthur Card Systems, reported today results for the second quarter ended June 30, 2005. Second quarter sales amounted to EUR 121.1 M, up 13.6% on a year-on-year basis.

Sales for the first half have reached EUR 239.2 M, an improvement of 15.3% compared with the previous year.

Sales                                            Variation  Variation
M(EUR)                                           2005/2004  2005/2004
                                                            at actual
                                2005    2004                  rates
----------------------------------------------------------------------
First Quarter                  118.1    102.8       17.0 %     14.9 %
----------------------------------------------------------------------
Second Quarter                 121.1    108.0       13.6 %     12.1 %
----------------------------------------------------------------------
First Half                     239.2    210.8       15.3 %     13.5 %
----------------------------------------------------------------------

Second Quarter 2005:

Second quarter sales growth is mainly due to the microprocessor cards segment, with 45 million cards delivered, a 34.9% increase versus the previous year. Despite intensified pricing pressure in GSM, sales for this segment are up 18%.

Microprocessor Cards:

--Payment card volumes were up by 38.5% year-on-year, reflecting the gain of market share in UK and France, as well as the first deliveries of contactless cards in the US and EMV(1) cards in Italy. In addition, small overall changes in ASP, mainly due to geographic mix, allowed a 28.2% increase in sales.

--Mobile Communications volumes showed a strong increase, up 29.5%. This growth was mainly driven by new contracts in the US, Mexico, Brazil and Middle East, while sales to European operators was sustained as expected. Although the average selling prices decreased, the high-end oriented product mix - 75% of sales in 64K and higher memory SIM cards - allowed an 11.2% increase of revenue compared to last year. Volumes and sales for the first half of 2005 increased by 45.5% and 29.3%, respectively, compared to last year.

--Identity & Security, segment volumes increased by 44%, due to a combination of significant deliveries of Pay-TV cards and the deployment of e-passport programs in Belgium and Thailand. The slight growth of sales ( 8.6%) is the result of a decrease of ASP, especially in the previous generation of conditional access cards segment.

Other Cards - Services & Solutions:

Sales of "Other Cards" (magnetic stripe cards, scratch cards and memory cards) were very dynamic in spite of expected decline due to EMV migration. With a strong level of activity in the United States, sales were up 10.8% reaching 18.5 million euros.

Sales of "Services & Solutions" are up 2.1% on a year-on-year basis, due to lower activity in Europe. Moreover, the expected activity of US gift cards personalization, which is scheduled for the second half of 2005, is just beginning.

Outlook by market

--Payment market - 56.4% of sales as of June 30, 2005 - should remain the major engine for growth for the company in the years to come as a result of the EMV migration. After a better than expected first half, the company will continue its penetration in Italy, Benelux and Turkey, and will remain focused on the deployment of multi-application cards in countries located in South America, Europe and Asia.

--In the Mobile Communications sector, Oberthur Card Systems' technological leadership position in 3G and its presence within major European operators groups, allows continuous improvement in the product mix. The company is well positioned to benefit from a significant increase in mobile services and solutions to compensate for the expected ASP decrease.

--In the Identity & Security segment, the deployment of Turkish military ID cards is planned for the second half of 2005. With its expertise in high security and its mastery of technology, Oberthur Card Systems will continue to broaden its participation in a growing number of projects, especially for National ID cards and driving license programs.

The company will publish its 2005 first half results on Wednesday, September 14th before the opening of the markets.

Exhibit

Breakdown of sales in M(EUR) by card type and geographical region

M(EUR)                  2Q2005   2Q2004     Variations     Variations
                                            2005 / 2004   2005 / 2004
                                            at constant    at actual
                                              rates          rates
----------------------------------------------------------------------
Microprocessor cards     79.2     67.4          18.0 %         17.5 %
----------------------------------------------------------------------
Payment                  35.8     28.2          28.2 %         26.9 %
----------------------------------------------------------------------
Mobile Communications    35.2     31.6          11.2 %         11.3 %
----------------------------------------------------------------------
Identity & Security       8.2      7.6           8.6 %          8.6 %
----------------------------------------------------------------------
Other Cards              18.5     17.1          10.8 %          8.1 %
----------------------------------------------------------------------
Services & Solutions     23.4     23.5           2.1 %         -0.3 %
----------------------------------------------------------------------
Total                   121.1    108.0          13.6 %         12.1 %
----------------------------------------------------------------------


M(EUR)                       2Q2005     2Q2004         Variations
                                                       2005 / 2004
                                                     at actual rates
----------------------------------------------------------------------
Europe, Middle East, Africa   88.3        79.5            11.1 %
----------------------------------------------------------------------
Americas                      27.9        23.3            19.7 %
----------------------------------------------------------------------
Asia / Pacific                 4.9         5.2            -5.8 %
----------------------------------------------------------------------
Total                        121.1       108.0            12.1 %
----------------------------------------------------------------------