Munich/Moscow, May 18, 2005–International technology group Giesecke & Devrient (G&D) is expanding its smart card activities in Russia as well as neighboring countries that belong to the Commonwealth of Independent States (CIS) by entering into a joint venture with Russia’s Concern Nauchny Center (KNC). Representatives from both companies gathered today in Moscow to sign the cooperation agreement.

Before the end of this month, joint operations will begin in Zelenograd/Moscow. In addition to production and personalization of smart cards, the enterprise will develop and market smart card-based applications and system solutions. Its product portfolio will comprise SIM cards for mobile telephones, payment cards, and identification cards for industry and government projects.

“G&D has been doing successful business on the Russian market for more than five years now. Together with our partner KNC, we intend to expand our position further and become the leading provider of smart card solutions in Russia and the CIS nations,” says Franz Haniel, member of Giesecke & Devrient’s management board, commenting on the conclusion of the agreement establishing the joint venture. “We have found that KNC, as a subsidiary of industrial group AFK Sistema, is a partner whose positioning in the Russian economy–from the banking industry to the government sector–is ideal,” adds Haniel.

“G&D’s experience as an international technology leader in the field of chip cards and chip card solutions is very valuable to us for carrying out smart card projects in Russia,” explains Alexander Goncharuk, general director of KNC.

The Russian Federation, with its 145 million inhabitants and predicted annual economic growth of 6.5 percent, represents an attractive market, particularly when it comes to smart cards. For example, only one out of every four citizens currently owns a mobile telephone. According to a recent study, by 2008, more than 75 percent of the population will be placing calls using cell phones. The process known as EMV migration, in which payment cards are being converted from magnetic stripe to chip technology, has also barely gotten off the ground. The market volume for Russia alone amounts to over 100 million cards. Also of considerable importance is the fact that a number of major smart card projects in the government sector are expected to begin in coming years.

About KNC/AFK Sistema:

Concern Nauchny Center (KNC), based in Zelenograd/Moscow, is part of the AFK Sistema group (http://www.sistema.ru/_en/). In 2005, the parent company was listed on the London Stock Exchange. The group’s business activities focus on telecommunications, banking, insurance, real estate, retail, mass media, and information technology. In 2003, AFK Sistema reported revenues of €3.79 billion and has a total workforce of over 70,000. The corporation is represented through numerous holdings in Russia as well as other CIS member states. For example, the company holds a majority stake in MTS, Russia’s largest wireless operator.

About Giesecke & Devrient:

Giesecke & Devrient (G&D) is a technology leader in the field of smart cards, providing smart card-based solutions for the fields of telecommunications, electronic payment, health care, ID, transportation, and Internet security (PKI). G&D is also a leading producer of banknotes and security documents and is dominant in the field of currency automation. Based in Munich, Germany, the G&D Group operates subsidiaries and joint ventures around the world. In fiscal 2004, the group employed some 7,300 people and generated revenue of €1.16 billion. For more information, please visit our Web site at http://www.gi-de.com.