ModeLabs Group: Revenue for the 1st half of 2008

Regulatory News: A period devoted to developing mobiles for the luxury market Revenue for the 1st half of 2008: €75m, down by -27% but not representative of the Group’s future prospects for growth An excellent outlook for 2009 as the strategy focused on luxury brands begins to bear its fruit During the 1st half of 2008, ModeLabs Group (Paris:MDL) has concentrated its efforts and investment on the luxury segment of telecoms equipment which represents the vector for lasting growth within the Group. This period will thus have enabled the Group to take a decisive step: the conjunction of our development within the luxury segment and the development of a global selective distribution network are destined to provide us with long-term visibility and an assured level of profitability with effect from 2009. Our level of activity in 2008 will not be representative of this strategic evolution. ModeLabs nevertheless intends to defend its market positions for its historic role as a telecom products distributor, despite an increasingly competitive and difficult economic environment, whilst at the same time focusing on its future deployment of products within the luxury segment. in millions of euros   Q2 2008   Q2 2007   Change   Change %   % change exc. Forex   S1 2008   S1 2007   Change   Change %   % change exc. Forex   Conception 6.0 9.6 -3.5 -36.8% -31.8% 13.4 16.4 -3.0 -18.3% -12.3% Distribution 28.5 40.4 -11.9 -29.5% -29.5% 61.9 86.8 -24.9 -28.7% -28.7%                       Like for like total 34.5 49.9 -15,4 -30.9% -30.0% 75.3 103.2 -27.9 -27.0% -26.1%   Phonix 0 4.7 -4.7 -100.0% -100.0% 0 3.2 -3.2 -100.0% -100.0%                       Total 34.5 54.7 -20.1 -36.9% -36.0% 75.3 106.4 -31.1 -29.2% -28.3% The like for like figures exclude Phonix which was deconsolidated on 1st January 2008 No audited figures Confirmation of our strategy of Mobile on Demand following the signature of contracts with operators and the great success of our first luxury mobiles These activities involve both ModeLabs Manufacture (mobiles on demand) and ModeLabs Technologies (Bluetooth products). Conception                     in millions of euros S1 2008 S1 2007 Change Change % % change exc. Forex   Modelabs Manufacture 7.9 9.6 -1.7 -17.9% -16.3% Modelabs Technologies 5.6 6.8 -1.3 -18.7% -6.6%             Like for like total 13.4 16.4 -3.0 -18.3% -12.3% No audited figures As regards ModeLabs Manufacture, the Group has decided to concentrate its investment on its first luxury segment mobiles the launches for which are planned, as already announced, for the second half of 2008, a strategic choice which has involved limiting the commercialisation of new life style products for mass distribution (3 launches as against 4 during the first half of 2007). As a result, the performance data for this division is not directly comparable with the data for the 1st half of 2007. The life style product launches of the period have nevertheless met with great success and included, for the first time, partnerships with major telecoms operators: our Levi’s 3G mobile for Orange and our MTV 3.3 for SFR. ModeLabs Technologies has accelerated its adaptation to the ever more rapidly changing market for Bluetooth products, pursuing its restructuring and optimisation of its industrial strategy in order to defend its profitability within this segment. This process of adjustment should produce perceptible results with effect from the 2nd half of 2008. The advanced know-how possessed by ModeLabs Technologies in the area of Bluetooth technology means that the Group is capable of investing the more profitable market niches and in this respect, the excellent welcome reserved for My Dior1, the mini handset linked by Bluetooth to the Dior Phone, underlines the relevancy of ModeLabs’ product offering to the luxury segment. Profitability maintained for our Distribution operation Distribution                     in millions of euros S1 2008 S1 2007 Change Change % % change exc. Forex   Accessories & services 21.5 24.0 -2.5 -10.4% -10.44% Mobiles 40.4 62.8 -22.4 -35.7% -35.69%             Like for like total 61.9 86.8 -24.9 -28.7% -28.7% No audited figures As anticipated, the Group’s distribution activity declined by 28.7% during the 1st half of 2008, reflecting a decision to focus on the more profitable market in accessories (France in priority) and increased competition from the kits proposed by the telecoms operators. However our low fixed cost base enabled us to adapt to this situation nevertheless and maintain our profitability. A very positive outlook for 2009 2008 is the year of the Group’s investment in the luxury segment of the market and we have already had some decisive successes, since our total production quota of Dior and TAG Heuer handsets for 2008 has already been sold before the official commercial launch. They both will be available via a selection of luxury outlets to be opened later in the year. "These first two launches have also enabled us to structure our luxury product know-how and to accelerate the development cycle that will be required for our future luxury telecom products. The market trend towards increasing demand for outstanding products underscores the pertinence of our new top of the range strategy which will provide us with long-term visibility and lasting profitability. Given the investment required in ModeLabs Manufacture capacity for developing luxury products and the worldwide launch of our first two luxury handsets, the Group expects to recognise a loss for 2008 as a whole (commencing with an operating loss of the order of -€6.5m for the 1st half of the year) which will nevertheless not affect the Group’s financial stability. With our luxury activity at commercial cruising speed worldwide, we remain our objective to renew with a phase of profitable growth starting in 2009”, declared Stéphane Bohbot, the Chairman of ModeLabs’ executive board. Next dates in our calendar: Publication of our results for the 1st half of 2008 on 31 August 2008 after the close of trading Financial analysts’ meeting at 10am on 1st September 2008 About ModeLabs Group ModeLabs Group, designer of made-to-measure mobile phones and telecom distributor, is a new generation player in the mobile phone sector. The company designs, develops and markets mobile phone handsets, accessories and services in an integrated and flexible manner for mobile phone operators, retailers and brands. Thanks to the combination of its marketing expertise and its technological know-how, ModeLabs Group is meeting the growing demand for Telecom market segmentation by giving brands, operators/MVNO or distributors the opportunity to create their own range of mobile phones, accessories and services. Its activities are organized around two poles: ModeLabs Distribution, specialist in the distribution of mobile telephones and accessories and the number 1 in France. ModeLabs Conception, for design and development activities relating to tailor-made handsets and innovative technological products in the Bluetooth sector. ModeLabs Group is listed on NYSE Euronext-Paris’s Eurolist. Isin: FR 0010060665, Mnemo: MDL, Reuters: MDLB.PA, Bloomberg: MDL: FP, SBF 250 www.modelabs.com 1 Like an intelligent piece of jewellery, My Dior can be attached to your bag. Held in the hand it allows you to receive and make calls or access your directory. My Dior also displays the time and, like a pair of inseparable twins, activates an alarm tone whenever it is more than 10 meters away from the Dior phone. My Dior is subject to various patents worldwide.