Gemalto First Half 2006 Results

Gemalto, a leader in digital security, today announced its results for the first year

- Amortization and impairment of intangible assets: amortization andimpairment of intangible assets created as a result of the combination withGemplus have been excluded from the adjusted profit for the period. The Groupbelieves this is useful because, prior to this combination in the secondquarter of fiscal 2006, it did not incur significant charges of this nature,and the exclusion of this amount helps investors understand the evolution ofIFRS operating expenses in periods subsequent to the combination withGemplus. Investors should note that the use of intangible assets contributedto revenue earned during the period and will contribute to future revenuegeneration and that these amortization expenses will be recurring.

- Combination related charges: In the last months, Gemalto incurredmaterial expenses in connection with the combination with Gemplus, which itwould not have otherwise incurred. Combination related charges consist ofprofessional advisory services incurred in connection with the integration,new Gemalto brand and logo creation and worldwide registration, as well asimpairment charges related to capitalized development costs on projects whichare redundant with existing products or technologies available in Gemplus.The Group expects to continue to incur integration-related professionalservices in the coming months. Gemalto also determined that its investment ina listed company was impaired as a consequence of the combination withGemplus. The related impairment charge was recorded in Financial income(loss) in the period. Gemalto believes it is useful for investors tounderstand the effect of these expenses on its cost structure.


Gemalto provides three sets of income statements:

- IFRS consolidated income statement, pursuant to its regulatoryobligations

The first half 2005 and 2006 pro forma income statements established inaccordance with IFRS are included in the condensed consolidated interimfinancial statements attached to this press release.

Conference call

The company has scheduled a conference call for Wednesday, September 13,2006 at 3:00 pm CET ( 2:00 pm GMT and 9:00 am New-York time). Callers mayparticipate in the live conference call by dialling:

+44(0)207-138-0816 or +1-718-354-1171 or +33-1-55-17-41-49.

The slide show will be available on the web site at 10:00 CET ( 9:00 GMT ).

Replays of the conference call will be available approximately 3 hoursafter the conclusion of the conference call until September 19, 2006 midnightby dialling:

+44(0)207-806-1970 or +1-718-354-11-12 or +33-1-71-23-02-48, access code:8442332.

Earnings calendar

Third quarter 2006 revenue is scheduled to be reported on October 26,2006 , before the opening of Euronext Paris .

Gemalto (Euronext NL 0000400653 GTO) is a leader in digital security withpro forma 2005 annual revenues of US$2.2 billion (EUR1.7 billion), operationsin 120 countries and 11,000 employees including 1,500 R&D engineers. Thecompany's solutions make personal digital interactions secure and easy in aworld where everything of value -from money to identities - is represented asinformation communicated over networks.

Gemalto thrives on creating and deploying secure platforms, portable andsecure forms of software in highly personal objects like smart cards, SIMs,e-passports, readers and tokens. More than a billion people worldwide use thecompany's products and services for telecommunications, banking,e-government, identity management, multimedia digital right management, ITsecurity and other applications. Gemalto was formed in June 2006 by thecombination of Axalto and Gemplus.

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