§ | 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. |
In millions of euros | Q2 2006 | Q2 2005 | Year-on-year change | |||||||||
Net sales |
247.3 | 236.2 | +4.7 | % | ||||||||
Adjusted for currency fluctuations, disposals and acquisitions1 |
-2.4 | % | ||||||||||
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 income2 |
15.1 | 21.8 | -30.7 | % | ||||||||
Free cash flow3 |
-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 | % | ||||||||
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). |
| Income statement |
| 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. |
| Balance sheet and cash flow statement |
| Free cash outflow of 34.3 million euros. | ||
| Net cash outflow of 201.6 million euros reflecting distribution of reserves to shareholders. |
4 | After adjusting for currency fluctuations, acquisitions and disposals. | |
5 | Europe, Middle East, Africa |
| Telecom |
| 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 2006 | Q2 2005 | % change | Adjusted4 | ||||||||||||
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 sales |
11.6 | 13.0 | -10.8 | % | ||||||||||||
Prepaid phone cards & scratchcards gross profit |
1.2 | 0.8 | +43.1 | % | ||||||||||||
Prepaid phone cards & scratchcards gross margin |
10.2 | % | 6.4 | % | +3.8 pts |
|||||||||||
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 products & services revenue6 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. |
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). |
| Financial Services |
| Growth driven by the contribution from Setec and the EMV7 deployment. |
In millions of euros | Q2 2006 | Q2 2005 | % change | Adjusted4 | ||||||||||||
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 |
|||||||||||
| Identity and Security |
| Revenue driven by Setec and other Government ID projects. |
In millions of euros | Q2 2006 | Q2 2005 | % change | Adjusted4 | ||||||||||||
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 |
|||||||||||
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. |
| 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 | Adjusted4 | ||||||||||||
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 | % | ||||||||||||
| 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. |
| Telecom |
| Financial Services |
| Identity and Security |
Press
|
Investor Relations | |
Gemplus
|
Gemplus | |
Remi Calvet
|
Céline Berthier | |
Tel: +33 6 22 72 81 58
|
Tel: +41 (0) 22 544 5054 | |
Email: remi.calvet@gemplus.com
|
Email: celine.berthier@gemplus.com | |
Edelman
|
Fineo | |
Frédéric Boullard
|
Tel: +33 (0) 1 56 33 32 31 | |
Tel: +33 (0) 1 56 69 73 95
|
Email: gemplus@fineo.com | |
Email: frederic.boullard@edelman.com |
(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 | ) | 1,327 | (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 | ||||||||||||
(in thousands of euros) | ||||||||
December 31, | ||||||||
June 30, 2006 | 2005 | |||||||
(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 | ||||||
(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 | ) | ||||
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 | 2,612 | ||||||
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 |
(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 activities |
(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 | ||||||
Three months ended | (in millions of euros) | |
Adjusted | ||||||||||||||||
Net sales | June 30, 2006 | June 30, 2005 | % change | change (%) (*) | ||||||||||||
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) | ||
(% of net | (% of net | |||||||||||||||||||
Gross profit | June 30, 2006 | sales) | June 30, 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) | ||
(% of net | (% of net | |||||||||||||||||||
Operating expenses | June 30, 2006 | sales) | June 30, 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) | ||
Change in | ||||||||||||
Operating income | ||||||||||||
Operating income (loss) | June 30, 2006 | June 30, 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 | |||||||||
Three months ended | (in millions of euros) | |
Adjusted | ||||||||||||||||
Net sales | June 30, 2006 | June 30, 2005 | % change | change (%) (*) | ||||||||||||
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 | % | ||||||||||
Six months ended | (in millions of euros) | |
Adjusted | ||||||||||||||||
Net sales | June 30, 2006 | June 30, 2005 | % change | change (%) (*) | ||||||||||||
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 net | (% of net | |||||||||||||||||||
Gross profit | June 30, 2006 | sales) | June 30, 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 net | (% of net | |||||||||||||||||||
Operating expenses | June 30, 2006 | sales) | June 30, 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) | ||
Change in | ||||||||||||
Operating income | ||||||||||||
Operating income (loss) | June 30, 2006 | June 30, 2005 | (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 | |||||||||
Six months ended | (in millions of euros) | |
Adjusted | ||||||||||||||||
Net sales | June 30, 2006 | June 30, 2005 | % change | change (%) (*) | ||||||||||||
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 | % | ||||||||||
GEMPLUS INTERNATIONAL S.A.
|
||||
Date: 28 July, 2006 |
||||
By: | /s/ Frans SPAARGAREN | |||
Name: | Frans SPAARGAREN | |||
Title: | Chief Financial Officer | |||