Gemplus Reports Further Sales Growth in the Second Quarter 2006
Luxembourg (ots/PRNewswire)
Second quarter 2006 highlights:
- Net sales up 4.7% showing good growth in ID & Security and Financial Services.
- Gross margin at 32.0% reflecting strong price pressure in wireless.
- Operating margin at 6.4%, sustained by good control of operating expenses.
- Attributable net income: 15.1 million euros.
- Distribution of reserves for 164.4 million euros to shareholders.
- Gemalto combination ongoing: tender offer open until August 14, 2006.
- Gemalto integration process well on-track.
Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP), a world leading provider of secure card solutions, today reported results for the second quarter ended June 30, 2006.
In millions of euros Q2 2006 Q2 2005 Year-on-year change Net sales 247.3 236.2 +4.7% Adjusted for currency fluctuations, -2.4% disposals and acquisitions[1] Gross profit 79.0 80.0 -1.3% Gross margin 32.0% 33.9% - 1.9 pt Operating expenses 63.2 57.6 +9.7% Operating income 15.8 22.4 -29.4% Operating margin 6.4% 9.5% -3.1 pts Attributable net income[2] 15.1 21.8 -30.7% Free cash flow[3] -34.3 41.9 NM Cash and cash equivalents 208.3 373.5 -44.2% Per share data (in euros) Earnings per share (fully diluted) 0.02 0.04 -33.5%
Creation of a global leader in digital security: the combination of Axalto and Gemplus to create Gemalto is effective since June 2, 2006, and the integration process is well on-track. The tender offer filed by Gemalto N.V. for the remaining securities issued by Gemplus will remain open until August 14, 2006.
Second quarter 2006 financial review
- Income statement
Second quarter 2006 highlights:
- Net sales up 4.7% showing good growth in ID & Security and Financial Services.
- Gross margin at 32.0% reflecting strong price pressure in wireless.
- Operating margin at 6.4%, sustained by good control of operating expenses.
- Attributable net income: 15.1 million euros.
Growth was driven by ID & Security and Financial Services, including good contribution from Setec.
On a geographical basis, ID & Security and Financial Services drove a 8.3% year-on-year revenue growth in the Americas, after adjusting for currency fluctuations, acquisitions and disposals. Adjusted[4] net sales in Asia increased by 0.9%, year-on-year, and were down 10.4% in EMEA[5], due to Wireless.
Gross margin was influenced by strong wireless price pressure, a shift in the business mix and the release of a provision for a patent claim.
Operating margin was 6.4%, sustained by good control of operating expenses. Excluding the reversal of a 5.2 million euros litigation provision booked last year, operating expenses were up only 0.6% year-over-year despite the Setec acquisition; as a percentage of sales, they actually decreased by 1.0 percentage point year-over-year.
- Balance sheet and cash flow statement
Second quarter 2006 highlights:
- Free cash outflow of 34.3 million euros.
- Net cash outflow of 201.6 million euros reflecting distribution of reserves to shareholders.
The Group's cash position remains strong at 208.3 million euros. Compared to March 31, 2006, cash is down 201.6 million euros, largely due to a 164.4 million euros outflow related to the distribution of reserves (share premium) to shareholders. Free cash outflow of 34.3 million euros reflects an increase in accounts receivable due to strong sales in June and increased capital expenditures of 19.0 million euros in anticipation of strong volumes for the second half 2006.
Segment analysis
- Telecom
Second quarter 2006 highlights:
- Record shipments in wireless: volumes up 40% year-on-year, to 120 million units, driven by Asia.
- Wireless ASP down 29.3% year-on-year, currency adjusted, reflecting fiercer competition following the announcement of the Gemalto combination.
In millions of euros Q2 Q2 % Adjusted(4) 2006 2005 change change (%) Wireless products & services net sales 150.6 150.2 +0.3% -1.7% Wireless gross profit 57.7 60.6 -4.7% Wireless gross margin 38.3% 40.4% -2.1 pts Prepaid phone cards & scratchcards net 11.6 13.0 -10.8% sales Prepaid phone cards & scratchcards 1.2 0.8 +43.1% gross profit Prepaid phone cards & scratchcards 10.2% 6.4% +3.8 pts gross margin Telecom net sales 162.3 163.2 -0.6% -1.9% Telecom gross profit 58.9 61.4 -4.1% Telecom gross margin 36.3% 37.6% -1.3 pt Telecom operating expenses 38.6 40.3 -4.3% As a % of sales 23.8% 24.7% -0.9 pt Telecom operating profit 20.3 21.1 -3.7% Operating margin 12.5% 12.9% -0.4 pt
Wireless revenue:
- Wireless products & services revenue[6] was up 0.3% year-on-year (down 1.7%, currency adjusted), to 150.6 million euros.
- Wireless shipments grew 40% year-on-year, to 120 million units, largely driven by Asia, notably in China.
- High-end card shipments (3G and above) grew 165%. They accounted for 14% of the second quarter total, compared to 7% a year ago. However, 3G remains concentrated on a limited number of operators.
- Wireless average selling price (ASP) was down 4.8% quarter-on-quarter and 29.3% year-on-year, both currency adjusted. Improvement in product mix was fully offset by regional mix and heavy price pressure which intensified following the announcement of the Gemalto combination.
The decline in Wireless gross margin reflects strong price pressure and regional mix. Wireless gross profit included a 6.1 million euros reversal of a provision for a patent claim.
- Financial Services
Second quarter 2006 highlights:
- Growth driven by the contribution from Setec and the EMV[7] deployment.
In millions of euros Q2 2006 Q2 2005 % change Adjusted(4) change (%) Net sales 55.1 50.3 +9.5% -1.2% Gross profit 12.0 10.2 +18.0% Gross margin as a % of sales 21.8% 20.3% +1.5 pt Operating expenses 12.3 7.3 +69.4% As a % of sales 22.3% 14.4% +7.9 pts Operating profit -0.3 2.9 NM Operating margin as a % of sales -0.5% 5.8% -6.3 pts
Payment microprocessor cards continued to grow very strongly, driven by broad activity in EMV deployment, particularly in Latin America and, to a lesser extent, Southern Europe and Asia.
In total, Gemplus shipped 20.8 million units of payment microprocessor cards, up 24% year-on-year. Payment microprocessor card revenue rose 2% year-on-year. The decline in ASP reflects price pressure as well as a shift in the regional mix.
Gross margin improved 1.5 percentage point due to lower chip purchasing prices.
Excluding a reversal of a 5.2 million euros litigation provision booked last year, operating expenses were stable. As a result, operating profit was almost breakeven.
- Identity and Security
Second quarter 2006 highlights:
- Revenue driven by Setec and other Government ID projects.
In millions of euros Q2 2006 Q2 2005 % change Adjusted(4) change (%) Net sales 29.9 22.7 +31.7% -9.9% Gross profit 8.1 8.4 -4.1% Gross margin as a % of sales 26.9% 37.1% -10.2 pts Operating expenses 12.3 10.0 +22.7% As a % of sales 41.2% 44.3% -3.1 pts Operating profit -4.3 -1.6 NM Operating margin as a % of sales -14.2% -7.3% -6.9 pts
Revenue was driven by Setec and other Government ID projects. However, very strong sales in the second quarter 2005 led to a comparative decrease in sales, after adjusting for currency fluctuations, acquisitions and disposals.
Gross margin was influenced by a less favourable business mix.
The increase in operating expenses is mainly due to Setec.
First half 2006 financial review
- Net sales up 11.3%, driven by ID and Security and Financial Services.
- Gross margin at 31.2% reflecting strong price pressure in wireless.
- Operating margin at 5.1%, sustained by good control of operating expenses.
In millions of euros H1 2006 H1 2005 % change Adjusted(4) change (%) Net sales 477.6 429.3 +11.3% +1.1% Of which Telecom 310.6 307.5 +1.0% -2.2% Of which Financial Services 111.5 88.2 +26.5% +12.2% Of which ID & Security 55.5 33.6 +65.0% +3.1% Gross profit 149.2 141.9 +5.2% NA Gross margin 31.2% 33.1% -1.9 pt NA Operating expenses 125.0 112.0 +11.6% NA As a % of sales 26.2% 26.1% +0.1 pt NA Operating profit 24.2 29.9 -19.1% Operating margin 5.1% 7.0% -1.9 pt NA Attributable net income 21.3 29.0 -26.4%
Sales in the first half 2006 grew 11.3% compared to a year ago, driven by ID and Security and Financial Services.
On a geographical basis, all core activities drove a 15.8% revenue growth in the Americas, after adjusting for currency fluctuations, acquisitions and disposals. Adjusted revenue was down 3.1% in EMEA, and 8.9% in Asia, mainly due to Telecom.
Gross margin was influenced by strong price pressure in wireless, a shift in the business mix, and Setec purchase accounting, despite the reversal of a provision for a patent claim for a total amount of 9 million euros.
Operating margin was 5.1%, sustained by good control of operating expenses. Excluding the reversal of a 5.2 million euros litigation provision booked last year, operating expenses grew 6.7% year-over-year reflecting the Setec acquisition. As a percentage of sales, operating expenses decreased by 1.1 percentage point year-over-year.
Outlook
The Group continues to see strong momentum in its core segments and will maintain its focus on cost efficiency.
Gemplus confirms that it is actively working to achieve 10% operating margin in 2007, before taking into account the effects of the combination with Gemalto.
The Group remains confident in its ability to further improve its operating income in 2006 taking into account the usual seasonality effect of stronger organic growth in the second half than in the first half.
Creation of Gemalto
On June 2, 2006, Axalto and Gemplus announced a major step of their combination project to create Gemalto. The contribution in kind, by Texas Pacific Group and the Quandt family entities, of their interests in Gemplus International S.A. (in aggregate 43.4% of Gemplus share capital) to Axalto Holding N.V. was completed on the basis of 2 Axalto shares for every 25 Gemplus shares. On the same day, Axalto Holding N.V., renamed Gemalto N.V., filed a public exchange tender offer for the remaining shares and warrants issued by Gemplus. Prior to the contribution in kind, Gemplus had initiated the distribution of reserves (share premium) of EUR0.26 per share to all of its shareholders on record upon market close of the same day.
On July 6, 2006, the offering document filed by Gemalto received the visa no. 06-252 from the "Autorité des Marchés Financiers" (AMF) in Paris, the French stock market authority. The public exchange tender offer initiated by Gemalto for the shares and warrants issued by Gemplus was opened on July 11, 2006, at the same exchange ratio of 2 Gemalto shares for every 25 Gemplus shares.
This tender offer will remain open until August 14, 2006. The result of the offer should be published at the latest on August 25, 2006. On the basis of the current indicative timetable, it is envisaged that the settlement will occur on or about August 30, 2006.
More information is available at: www.gemalto.com.
This communication does not constitute an offer to purchase or exchange or the solicitation of an offer to sell or exchange any securities of Gemalto or an offer to sell or exchange or the solicitation of an offer to buy or exchange any securities of Gemplus.
The exchange offer described above will not be made, directly or indirectly, in or into the United Kingdom, Italy, Netherlands, Canada, Australia, or Japan or in or into any other jurisdiction in which such offer, solicitation, sale or exchange would be unlawful prior to the registration or qualification under the laws of such jurisdiction. Accordingly, persons who come into possession of this communication should inform themselves of and observe these restrictions.
You are strongly advised to read the offering circular relating to the exchange offer and related exchange offer materials regarding the transaction, as well as any amendments and supplements to those documents because they will contain important information. The prospectus/offer to exchange and the other documents are available are available from the Internet websites of the AMF (www.amf-france.org), of Gemalto N.V. (www.gemalto.com) and of Gemplus International S.A. (www.gemplus.com). You can obtain a free paper copy of the prospectus/offer to exchange and other related documents filed by Gemalto (ex-Axalto) upon request to the following:
- Gemalto N.V.: Koningsgracht Gebouw 1, Joop Geesinkweg 541-542, 1096 AX Amsterdam, the Netherlands.
- Axalto International S.A.S: 6 rue de la Verrerie, 92190, Meudon, France.
- Deutsche Bank: 3 avenue de Friedland, 75008, Paris, France.
- Gemplus International S.A.: 46A, avenue J.F. Kennedy, L-1855 Luxembourg, Grand Duchy of Luxembourg.
US investors can obtain a copy of the US prospectus/offer to exchange and related offer materials from Mellon Investors Services LLC by telephoning to: +1-866-768-4951 (Call Toll Free) or: +1-201-680-6590 (Call Collect).
Notice to US investors
Any solicitation of offers to buy any Gemplus shares in the United States in the exchange offer will only be made pursuant to a prospectus/offer to exchange and related offer materials that Gemalto will make available to holders of Gemplus securities. Investors and security holders are strongly advised to read the prospectus/offer to exchange and related exchange offer materials, as well as any amendments and supplements to those documents because they will contain important information.
The Gemalto securities referred to herein that will be issued in connection with the exchange offer have not been, and are not intended to be, registered under the U.S. Securities Act of 1933 (the "Securities Act") and may not be offered or sold, directly or indirectly, into the United States except pursuant to an applicable exemption. The Gemalto securities are intended to be made available within the United States in connection with the exchange offer pursuant to an exemption from the registration requirements of the Securities Act.
The exchange offer will relate to the securities of a non-U.S. company and will be subject to disclosure requirements of a foreign country that are different from those of the United States. Financial statements included in the prospectus/offer to exchange will be prepared in accordance with foreign accounting standards that may not be comparable to the financial statements of United States companies.
It may be difficult for you to enforce your rights and any claim you may have arising under U.S. federal securities laws, since Gemalto and Gemplus have their corporate headquarters outside of the United States, and some or all of their officers and directors may be residents of foreign countries. You may not be able to sue a foreign company or its officers or directors in a foreign court for violations of the U.S. securities laws. It may be difficult to compel a foreign company and its affiliates to subject themselves to a U.S. court's judgment.
Business Highlights
- Telecom
Gemplus has been selected by 3 Italia as its exclusive supplier for USIM cards for the first world commercial Mobile TV service which was launched prior to the 2006 FIFA World Cup. GemXplore Generations cards provide high security for TV content delivered to mobile phones and therefore protect 3 Italia's Mobile TV revenue streams.
Oi is delivering 128Kb SIM cards from Gemplus to all new subscribers in their Brazilian GSM network. Oi launched their GSM network in 2002 and the SIM has always played a key role in marketing their brand and value added services to all their customers which now number more than 9 million. This SIM offers new applications and content that optimize mobile phone use and promote Oi's products and services. 45% of Oi's data traffic now comes from easy-to-use SIM menus.
- Financial Services
Gemplus has been chosen by Commonwealth Bank of Australia for Australia's first MasterCard PayPass pilot. The six-month trial will be rolled out in New South Wales, with the first phase involving 33,000 cardholders who will be able to use their MasterCard PayPass cards at more than 150 participating merchants.
- Identity and Security
Gemplus has been selected as one of the main suppliers to deliver smart cards and personalization services for next generation e-healthcare nationwide patient cards in France. The contract calls for the supply of a minimum of 8 million cards over two years, with possible extension over two more years.
Gemplus also won a contract for 3.7 million secure healthcare ID cards, software and services to Seguro Popular, one of the Mexican government's social security organizations, for patient data storage.
Gemplus launched its SafesITe Government solution compliant with the US federal government's FIPS 201 regulations. Gemplus' SafesITe(TM) smart cards and software were first to receive US government certification. They are now ready to help US federal agencies to meet the HSPD-12 requirements for interoperability for government employees and contractors to access federal buildings and IT networks. As set forth in the presidential directive and regulations, all federal agencies must start to issue FIPS 201 compliant identity credentials by October 26 2006.
Earnings calendar
Third quarter 2006 results are scheduled to be reported on October 25, 2006, before the opening of Euronext Paris.
Conference Call:
The Company has scheduled a conference call for Thursday, 27 July 2006 at 2:00 pm CET (1:00 pm GMT and 8:00 am New-York time). Callers may participate in the live conference call by dialing:
+44-(0)207-365-1847 or +1-718-354-1153 or +33-(0)1-71-23-04-17
access code: 1752146
The slide show will be available on the web site at 12:30 CET (11:30 GMT). The webcast will also be available on the IR section of www.gemplus.com.
Replays of the conference call will be available approximately 3 hours after the conclusion of the conference call until August 10th, 2006 midnight by dialing:
+44-(0)207-806-1970, or +1-718-354-1112 or +33(0)1-71-23-02-48
access Code: 1752146#
About Gemplus
Gemplus International S.A. (Euronext: LU0121706294 - GEM and NASDAQ: GEMP) is a world leading player in the secure card industry in both revenue and total shipments (source: Gartner-Dataquest, Frost & Sullivan, Datamonitor).
Gemplus delivers a wide range of portable, personalized solutions in areas including Identity, Mobile Telecommunications, Public Telephony, Banking, Retail, Transport, Healthcare, WiFi, Pay-TV, e-government, and access control.
Gemplus's revenue in 2005 was 939 million euros.
In June 2006, Gemplus and Axalto initiated their combination to form Gemalto, a leader in digital security.
www.gemplus.com
www.gemalto.com
For more information:
Press Gemplus Investor Relations Remi Calvet Gemplus Tel: +33-6-22-72-81-58 Céline Berthier Email: remi.calvet@gemplus.com Tel: +41-(0)-22-544-5054 Email: celine.berthier@gemplus.com Edelman Frédéric Boullard Fineo Tel: +33-(0)-1-56-69-73-95 Tel: +33-(0)-1-56-33-32-31 Email: Email: gemplus@fineo.com frederic.boullard@edelman.com
(c)2006 Gemplus. All rights reserved. Gemplus, the Gemplus logo, are trademarks and service marks of Gemplus S.A. and are registered in certain countries. All other trademarks and service marks, whether registered or not in specific countries, are the property of their respective owners.
Some of the statements contained in this release constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activities, performance, or achievements expressed or implied by such forward-looking statements. Actual events or results may differ materially. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Factors that could cause actual results to differ materially from those estimated by the forward-looking statements contained in this release include, but are not limited to: trends in wireless communication and mobile commerce sectors; our ability to develop new technology, and the effects of competing technologies developed and expected intense competition generally in our main segments; profitability of our expansion strategy; challenges to or loss of our intellectual property rights; our ability to establish and maintain strategic relationships in our major businesses; our ability to develop and take advantage of new software and services; and the effect of future acquisitions and investments on our share price. Moreover, neither we nor any other person assumes responsibility for the accuracy and completeness of such forward-looking statements. The forward-looking statements contained in this release speak only as of this release. We are under no duty to update any of the forward-looking statements after this date to conform such statements to actual results or to reflect the occurrence of anticipated results.
References:
[1] Setec is consolidated starting June 1st, 2005
[2] Net income attributable to equity holders
[3] Free cash flow is defined as net cash flow from operating activities less the purchase of property, plant and equipment and other investments related to the operating cycle (excluding acquisitions and financial investments).
[4] After adjusting for currency fluctuations, acquisitions and disposals.
[5] Europe, Middle East, Africa
[6] Wireless products & services revenue comprises wireless microprocessor cards and related applications (embedded software and Over The Air platforms) and services (system integration and operated services).
[7] EMV is a jointly defined set of specifications adopted by Europay, MasterCard and Visa for the migration of bank cards to smart card technology.
Gemplus International SA Press Release - Financial statements For the quarterly period ended June 30, 2006 Gemplus International SA Consolidated Statements of Income (in thousands of euros, except shares and per share amounts) Three months ended Six months ended June 30, June 30, 2006 2005 2006 2005 (unaudited) (unaudited) Net sales 247,265 236,158 477,597 429,260 Cost of sales -168,263 -156,129 -328,367 -287,339 Gross Profit 79,002 80,029 149,230 141,921 Research and development expenses -16,186 -16,421 -32,144 -29,403 Selling and marketing expenses -31,284 -28,679 -62,292 -54,387 General and administrative expenses -16,775 -12,352 -32,386 -28,453 Restructuring expenses 404 478 471 916 Other operating income (expense), net 636 -666 1327 -718 Goodwill amortization and impairment - - - - Operating income 15,797 22,389 24,206 29,876 Financial income (expense), net 2,300 1,681 4,551 3,477 Share of profit (loss) of associates -57 -9 63 -833 Other non-operating income (expense), net 432 -266 -147 98 Income before taxes 18,472 23,795 28,673 32,618 Income tax expense -3,619 -1,242 -6,738 -2,946 NET INCOME 14,853 22,553 21,935 29,672 Attributable to: Equity holders of the Company 15,092 21,760 21,344 29,003 Minority interest -239 793 591 669 Net income per share attributable to equity holders of the Company (in euros) Basic 0.02 0.04 0.03 0.05 Diluted 0.02 0.04 0.03 0.05 Shares used in net income per share calculation: Basic 631,327,771 611,014,686 630,367,494 609,027,112 Diluted 650,564,398 624,130,718 650,367,494 623,269,017
Consolidated Balance Sheets
(in thousands of euros) June 30, December 31, 2005 2006 (unaudited) ASSETS Current assets: Cash and cash equivalents 208,336 418,365 Trade accounts receivable, net 201,045 183,022 Inventory, net 119,093 107,673 Derivative financial instruments 7,403 4,187 Other current receivables 55,028 82,128 Total current assets 590,905 795,375 Non-current assets: Property, plant and equipment, net 167,747 158,284 Goodwill, net 92,160 90,826 Deferred development costs, net 21,215 21,227 Other intangible assets, net 18,240 23,600 Deferred income tax assets 27,151 32,788 Investments in associates 13,603 16,309 Available-for-sale financial assets, net 2,469 2,469 Other non-current receivables, net 44,407 40,846 Total non-current assets 386,992 386,349 TOTAL ASSETS 977,897 1,181,724 LIABILITIES Current liabilities: Accounts payable 109,331 106,085 Derivative financial instruments 2,592 2,592 Salaries, wages and related items 46,800 62,641 Current portion of provisions and other liabilities 39,550 73,434 Current income tax liabilities 4,727 5,228 Other current tax liabilities 17,188 20,821 Current obligations under finance leases 5,397 5,539 Total current liabilities 225,585 276,340 Non-current liabilities: Non-current obligations under finance leases 23,695 26,425 Non-current portion of provisions 15,111 23,482 Other non-current liabilities 12,090 13,417 Deferred income tax liabilities 2,693 4,354 Total non-current liabilities 53,589 67,678 Shareholders' equity: Ordinary shares 134,001 133,466 Additional paid-in capital 903,535 1,063,145 Retained earnings (342,769) (365,940) Other comprehensive income (6,904) (4,407) Less, cost of treasury shares (1,395) (1,395) Equity attributable to equity holders of the Company 686,468 824,869 Minority interest 12,255 12,837 Total shareholders' equity 698,723 837,706 TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY 977,897 1,181,724
Consolidated Statements of Cash Flows
(in thousands of euros) Six months ended June 30, 2006 2005 (unaudited) Cash flows from operating activities: Net income 21,935 29,672 Adjustments to reconcile net income to net cash from operating activities: Depreciation, amortization and impairment 21,305 18,990 Changes in non-current portion of provisions and other liabilities, excluding restructuring (8,636) 484 Deferred income taxes 3,335 (1,478) (Gain) / loss on sale and disposal of assets - 418 Share of (profit) loss of associates ,210 772 Share-based compensation 1,828 1666 Other, net (,124) (1,471) Changes in operating assets and liabilities: Trade accounts receivable and related current liabilities (24,946) (10,161) Trade accounts payable and related current assets (,347) 4,375 Inventories (13,094) 16,248 Value-added and income taxes (6,243) (2,653) Salaries, wages and other (14,773) (13,111) Restricted cash 2,000 23,427 Restructuring reserve payable (2,224) (9,226) Litigation expense payable - - Management severance expense - - Provision for a loan to a former director and executive - - Net cash (used for) from operating activities (19,774) 57,952 Cash flows from investing activities: Sale / (Purchase) of activities net of cash disposed / acquired 4,632 (60,123) Other investments (2,513) (758) Purchase of property, plant and equipment (27,582) (8,981) Purchase of other assets (1,584) (850) Change in non-trade accounts payable and other ,878 2612 Net cash used for investing activities (26,169) (68,100) Cash flows from financing activities: Proceeds from exercise of share options 5,321 1,256 Payments on long-term borrowings Payments on long-term borrowings (60) (,138) Proceeds from sales-leaseback operations - - Principal payments on obligations under finance leases (2,872) (2,952) Increase (decrease) in bank overdrafts (979) (241) Dividends paid by subsidiaries to minority shareholders (1,881) (1,048) Changes in non-trade accounts payables on financing activities 35 133 Change in treasury shares - - Interests receivable on loans to senior management - - Cash paid to Shareholders (164,396) Net cash (used for) from financing activites (164,832) (2,990) Effect of exchange rate changes on cash ,746 (1765) Net increase (decrease) in cash and cash equivalents (210,775) (13,138) Cash and cash equivalents, beginning of the period 418,365 388,430 Cash and cash equivalents, end of the period 208,336 373,527
1) Accounting principles:
The consolidated financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS).
2) Segment information
2.1) Second Quarter 2006 compared with Second Quarter 2005
2.1.1) Operating Segments
Three months ended (in millions of euros) June 30, June 30, Net sales 2006 2005 % change Adjusted change (%) (1) Telecommunications 162.3 163.2 -1% -2% Financial Services 55.1 50.3 10% -1% Identity and Security 29.9 22.7 32% -10% Total 247.3 236.2 5% -2% (in millions of euros) June 30, (% of net June 30, (% of net Gross profit 2006 sales) 2005 sales) % change Telecommunications 58.9 36% 61.4 38% -4% Financial Services 12.0 22% 10.2 20% 18% Identity and Security 8.1 27% 8.4 37% -4% Total 79.0 32% 80.0 34% -1% (in millions of euros) June 30, (% of net June 30, (% of net Operating expenses 2006 sales) 2005 sales) % change Telecommunications (38.6) 24% (40.3) 25% -4% Financial Services (12.3) 22% (7.3) 14% 69% Identity and Security(12.3) 41% (10.0) 44% 23% Total (63.2) 26% (57.6) 24% 10% (in millions of euros) June 30, June 30, Change in Operating income Operating income (loss) 2006 2005 (loss) Telecommunications 20.3 21.1 (0.8) Financial Services (0.3) 2.9 (3.2) Identity and Security (4.3) (1.6) (2.7) Total 15.8 22.4 -6.6 (1) Adjusted for currency fluctuations, disposals & acquisitions
2.1.2) Geographical Segments
Three months ended (in millions of euros) June June 30, 30, Adjusted change (%) Net sales 2006 2005 % change (1) Europe, Middle East and Africa 122.7 121.0 1% -10% Asia 43.0 41.6 3% 1% Americas 81.6 73.6 11% 8% Total 247.3 236.2 5% -2%
2.2) First-half 2006 compared with First-half 2005
2.2.1) Operating Segments
Six months ended (in millions of euros) June 30, June 30, Adjusted change (%) Net sales 2006 2005 % change (1) Telecommunications 310.6 307.5 1% 2% Financial Services 111.5 88.2 26% 12% Identity and Security 55.5 33.6 65% 3% Total 477.6 429.3 11% 1% (in millions of euros) (% of (% of June 30, net June 30, net Gross profit 2006 sales) 2005 sales) % change Telecommunications 111.0 36% 113.7 37% -2% Financial Services 22.5 20% 16.0 18% 41% Identity and Security 15.7 28% 12.2 36% 29% Total 149.2 31% 141.9 33% 5% (in millions of euros) (% of (% of June 30, net June 30, net Operating expenses 2006 sales) 2005 sales) % change Telecommunications (76.9) 25% (76.1) 25% 1% Financial Services (23.7) 21% (17.7) 20% 34% Identity and Security (24.4) 44% (18.2) 54% 34% Total (125.0) 26% (112.0) 26% 12% (in millions of euros) June 30, June 30, Change in Operating Operating income (loss) 2006 2005 income (loss) Telecommunications 34.1 37.6 (3.5) Financial Services (1.2) (1.7) 0.5 Identity and Security (8.7) (6.0) (2.7) Total 24.2 29.9 -5.7 (1) Adjusted for currency fluctuations, disposals & acquisitions
2.2.2) Geographical Segments
Six months ended (in millions of euros) June June 30, 30, Adjusted change (%) Net sales 2006 2005 % change (1) Europe, Middle East and Africa 244.7 220.4 11% -3% Asia 84.2 87.9 -4% -9% Americas 148.7 121.0 23% 16% Total 477.6 429.3 11% 1%
(1) Adjusted for currency fluctuations, disposals & acquisitions
Contact:
Press Gemplus, Remi Calvet, Tel: +33-6-22-72-81-58, Email:
remi.calvet@gemplus.com, Edelman, Frédéric Boullard, Tel:
+33-(0)-1-56-69-73-95, Email: frederic.boullard@edelman.com, Investor
Relations, Gemplus, Céline Berthier, Tel: +41-(0)-22-544-5054, Email:
celine.berthier@gemplus.com, Fineo, Tel: +33-(0)-1-56-33-32-31,
Email: gemplus@fineo.com