Increasing revenues and profit with strong cash flow in 3rd quarter and a positive outlook ahead

PSI Group ASA reports an increase in operating revenues and profit in
3rd quarter this year with positive cash flow from operations of NOK
18.9 million and a gross margin of 53.5 percent. Operating revenues
in the quarter rise by 31.8 percent to NOK 120.9 million compared to
same period last year (NOK 91.8 million). At the same time EBITDA
shows an increase of 22.3 percent to NOK 12.6 million (NOK 10.3
million) after consolidating CashGuard into the financial accounts
for the 3rd quarter this year. As a result EBITDA more than doubles
from 1st quarter and increases by 11.8 percent from the 2nd quarter
this year. According to the financial report considerable cost
synergies have been realised and the activity level is high within
all areas with very positive prospects of a strong conclusion of the
year. In 4th quarter a strong increase in operating revenues of as
much as 40-50 percent is expected compared to 3rd quarter with an
EBITDA margin of 14-16 percent.
* Operating revenues increase by 31.8 percent to NOK 120.9 million
  (NOK 91.8 million) in 3rd quarter and reaches NOK 354.2 million
  (NOK 345.6 million) year to date.
* EBITDA increases to NOK 12.6 million (NOK 10.3 million) in 3rd
  quarter 2008 - which gives an EBITDA margin of 10.4 percent (11.3
  percent). Year to date EBITDA is NOK 29.5 million (NOK 40.8
  million) equivalent to a margin of 8.4 percent (11.8 percent).
* The gross margin increases to 53.5 percent (46.0 percent) in 3rd
  quarter and reaches 47.5 percent (43.2 percent) year to date.
* Positive cash flow from operations increases to NOK 18.9 million
  (NOK 5.2 million) in 3rd quarter and reaches NOK 20.5 million (NOK
  45.2 million).
* During the 3rd quarter the company has entered into a range of
  larger agreements related to the business area Cash Management
  CIT/ATM and the activity level in this area is expected to be high
  going forward
* A considerable restructuring effort has been made in CashGuard AB,
  which constitutes the business area Cash Management Retail,
  focussing on cost reductions and increasing the efficiency of
  international sales, which is already starting to yield positive
  results.
* The outlook for 4th quarter 2008 is very positive with a high level
  of activity within all areas.

  PSI Group's rise in operating revenues is mainly due to the merger
  with CashGuard and gradually increasing revenues synergies between
  the various business areas - an impact which is expected to
  increase further in the time to come. Compared to the quarterly
  financial figures for the same period last year, comprising PSI
  Group and CashGuard respectively, the consolidated EBITDA in 3rd
  quarter is improved by approximately NOK 15 million. This
  demonstrates that the synergies for the new company are highly
  considerable. Another evident impact is a considerable improvement
  in gross margin compared to the situation prior to the merger.
  Compared to the same period last year the group's gross margin
  ratio increased by as much as 7.5 percentage points to 53.5 percent
  in 3rd quarter this year.

  - Increasing gross margin and strong cash flow gives us reasons to
  be satisfied with both operating revenues and profit for the 3rd
  quarter. The positive impacts of the merger are evident and the
  entire organisation is now working at high speed. Thus we are
  expecting a strong finish towards year end with good margins. At
  the same time we already see many synergies and good performance
  following the operational optimisation and restructuring efforts
  which are creating a stronger industrial and commercial platform
  for the new group with a positive outlook ahead, says Jørgen
  Waaler, CEO of PSI Group ASA, and adds:

  - As a technology based company with European and international
  growth ambitions it is also important that the activity level is
  increasing both related to SQS and CashGuard - something which is
  confirmed by the recent contract signings. The conditions for
  further success and growth in the international markets are good in
  combination with a very solid business platform in the Scandinavian
  home markets.

  The group's operating revenues and profit are influenced by high
  internal sales between the business areas, which reduce the
  consolidated operating revenues and enhance the profit margins. The
  development within Retail Solutions and Cash Management CIT/ATM is
  good, while the restructuring process within Cash Management Retail
  has advanced well - and is now showing positive results.

  ON STEADY COURSE WITHIN RETAIL SOLUTION
  Within Retail Solutions, which represents the previous operations
  of PSI prior to the merger, the development in operating revenues
  and EBITDA is on a steady course with a positive impact from the
  company's increasing share of recurring revenues from service and
  support agreements. The activity level is good within all parts of
  the business area. 212 CashGuard systems were delivered in Norway
  and Sweden during 3rd quarter of 2008. Both turnover and profit
  within Retail Solutions are being maintained despite a lower
  delivery rate compared to same period last year, when large
  deliveries of CashGuard systems were made in Norway. This
  demonstrates that PSI Group is well equipped to meet potential
  fluctuations in business in the various markets and within the
  various business areas.

  LARGE POTENTIAL WITHIN CASH MANAGEMENT RETAIL
  Within Cash Management Retail, which comprises the previous
  operations of CashGuard, deliveries of significance have mainly
  been made in Norway and Sweden - in addition to a smaller number in
  other markets. A targeted effort has been made to realise
  considerable cost synergies and make the organisation more
  efficient and partner oriented in the international marketplace.
  The impact of this is already reflected in 3rd quarter through
  considerably lower costs and a positive EBITDA for the business
  area.

  - Within Cash Management Retail the activity level is generally
  good and we are very pleased to report a considerable profit within
  this business area. This is a very evident demonstration of the
  good results from the restructuring effort providing synergies and
  improved performance. The activity level in Norway is good and the
  Swedish business is picking up with ongoing deliveries to a wide
  range of customers. The interest in the retail market is generally
  positive and discussions are being held with several players. At
  the same time there is a considerable interest for CashGuard's
  solutions in the other global markets. Recently a contract was
  signed with Coop in Kuwait. This represents an important
  breakthrough in the Middle East. The European and international
  potential is large, says Waaler, and adds:

  - We also see a strong increase in demand related to SQS - which
  shows that PSI Group to an increasing degree is emerging in Europe
  and internationally as a part of the strategy to achieve profitable
  growth.

  HIGH LEVEL OF ACTIVITY WITHIN CASH MANAGEMENT CIT/ATM
  Within Cash Management CIT/ATM, which includes SQS, the development
  is positive with a high level of activity and a good financial
  performance. During the 3rd quarter a range of deliveries has been
  made to customers in Europe - in addition to new contracts being
  won both within the CIT and ATM. The new agreements comprise
  several individual deliveries to large banks and security companies
  in the Nordics, Europe and internationally. It includes deliveries
  of security cases and associated security solutions to Belgium,
  deliveries made in cooperation with Wincor Nixdorf to a large
  Swedish bank to equip part of the bank's ATMs with SQS's security
  solutions for value shredding through dying as well as three
  individual delivery agreements totalling 800 security cases to some
  of the Nordics' and the world's largest valuables transporters. In
  the middle of October the first delivery contract for 250 of SQS's
  relaunced security cases was also entered into on the British
  market. The new and patented security cases - SQS MP (Multi
  Purpose) - are developed during the past year and just made
  available on the British market. SQS has already received numerous
  requests for the new security cases, which eventually will be made
  available in several markets. The potential for the new security
  cases based on SQS' latest technology is expected to be
  significant.

  VERY POSITIVE PROSPECTS FOR 4TH QUARTER
  So far the financial crises have only affected PSI's business to a
  small extent. In the past, the company's markets have been
  resistant to economic recessions, as investments in both retail and
  security markets only to a small extent have been affected by
  financial and economic cycles in the past.

  In 4th quarter 2008 a strong increase in operating revenues
  compared to 3rd quarter 2008 is expected. The increase from 3rd
  quarter is expected to reach as much as 40-50 percent and the
  EBITDA margin to reach 14-16 percent in 4th quarter. In 2009 solid
  growth is expected to continue and profit to increase.

  For additional information please contact:

  Jørgen Waaler
  CEO of PSI Group ASA
  Phone +47 905 90 010

  Facts about PSI Group
  PSI Group is a leading global provider of closed cash handling
  solutions in the society and provider of retail technology for
  improving the efficiency of price, goods and consumer information
  in selected geographical areas.

  PSI Group is head quartered in Rælingen (Norway) and employs around
  360 staff in Scandinavia and Europe. The company is listed on the
  Oslo Stock Exchange and Nasdaq OMX in Stockholm.

  For more information, see www.psi.no.