Gemalto First Half 2007 Results

Regulatory News:

-- Revenue for the first half at EUR 760 million

-- Operating income(1) at EUR 15 million

-- Ongoing adjustments in operating cost structure delivering
benefits

-- Strong net cash position at EUR 291 million after use of EUR
100 million in share buyback program

Gemalto (Euronext NL0000400653 - GTO), the leader in digital
security, today announced its results for the half year ended June 30,
2007.

Highlights of the adjusted income statement(1) (figures below are
at historical exchange rates):

-0-
*T
Year-on-year
EUR in millions H1 2006 H1 2007 change(2)
----------------------------------------------------------------------
Net sales 846 760 (10.2)%
----------------------------------------------------------------------
Gross profit 260 222 (14.6)%
Gross margin (%) 30.7% 29.2% (1.5) ppts
----------------------------------------------------------------------
Operating expenses(3) 227 210 (7.8)%
Operating income 32.7 15.2 (53.6)%
Operating margin (%) 3.9% 2.0% (1.9) ppts
----------------------------------------------------------------------
Profit for the period 28.9 24.5 (15.2)%
----------------------------------------------------------------------
Adjusted basic earnings per
share (euro)(4) 0.30 0.26 (15.3)%
*T

The above mentioned adjusted measures (unaudited) exclude
accounting entries related to the business combination with Gemplus,
as well as one-off expenses and reorganization charges incurred in
connection with this transaction. They are not meant to be considered
in isolation or as a substitute for comparable IFRS measures, and
should be read only in conjunction with the condensed consolidated
interim financial statements prepared in accordance with IFRS
(unaudited) provided in appendix 6. Gemalto believes these adjusted
financial measures are helpful in assessing its past financial
performance and its future results.

Olivier Piou, Chief Executive Officer, commented: "Gemalto's
performance in the first half of 2007 reflects the benefits of our
pricing discipline in Mobile Communication, the first effects of our
cost structure adjustments to better address the market environment,
and good patent licensing activity. During this first semester, we
moved from managing post-merger integration to actively developing our
joint capabilities and winning significant digital security business.
We remain confident that the second half of 2007 will further reflect
the benefits of our strategy, which combines initiatives for
profitable growth with cost reduction programs."

Basis of preparation of financial information

The Company's condensed consolidated interim income statements,
balance sheets, statements of shareholders equity and cash flow
statements (unaudited) presented in appendix 6 were prepared in
accordance with International Financial Reporting Standard (IFRS).

Additional financial information on an adjusted basis (unaudited)
is presented that is not in conformity with IFRS, in particular the
presentation of cost of sales, operating expenses and operating
income, operating margin and earnings per share which exclude one-off
combination related expenses, reorganization charges and charges
resulting from the accounting treatment of the transaction. Charges
resulting from the accounting treatment of the transaction consist of
amortization of inventory step-up, additional stock-based compensation
due to the revaluation of Gemplus' stock options as of combination
date, amortization and impairment of intangible assets. One-off
combination related expenses consist of charges which would have not
been incurred had the transaction not occurred: professional advisory
services incurred in connection with the integration, new Gemalto
brand and logo creation and worldwide registration, as well as
impairment charges related to capitalized development costs on
projects which are redundant with existing products or technologies
available in Gemplus. Most of the combination related expenses were
incurred in 2006. Reorganization charges consist of cost related
headcount reductions in the support functions, the consolidation of
manufacturing and office sites (including asset write-offs and
transfer cost, severance cost, lease termination and building
refurbishment cost) as well as the rationalization and harmonization
of the product and service portfolio. The Company believes that this
information, which is not in conformity with IFRS, is helpful
supplemental information in order to better assess its past and future
performance. In addition, the Company's management uses this
information in its own planning and in assessment of its operating
performance. This information provided by the Company may not be
comparable to similarly titled measures employed by other companies.

Because the business combination between Gemalto and Gemplus took
place as of June 2, 2006, the adjusted financial information presented
for the first half of 2006 was prepared on a pro forma basis, and
reflects the combined activity of the two companies over the period,
assuming that the combination had taken place as of January 1, 2005.

The Company provides reconciliations between the IFRS and adjusted
income statements for the first half of 2007. This reconciliation is
presented in a table in appendix 4. The IFRS consolidated income
statement for the first half 2007 (unaudited) shows an operating loss
of EUR 65.9 million and a loss for the period of EUR 48.4 million,
including amortization and impairment of intangible assets for EUR
23.0 million, reorganization expenses for EUR 55.1 million and
combination related expenses for EUR 1.2 million.

For a more detailed description of adjustments made to the IFRS
consolidated income statement, please refer to DESCRIPTION OF ADJUSTED
MEASURES at the end of this press release.

All comparisons in this document are at historical (reported)
exchange rates, unless stated otherwise, and describe the evolution of
the adjusted first half 2007 information compared to that of the first
half 2006 prepared on a pro forma basis.

Fluctuations in currency exchange rates against the Euro have an
impact on the Euro value of Group revenues. Comparisons at constant
exchange rates aim at neutralizing this translation effect on the
analysis of the Group operations. When Gemalto compares its historical
figures for the current year against the prior year's figures at
constant exchange rates, it assumes that the exchange rate of the Euro
against such other currencies in the prior year would have been the
same as in the current year.

Adjusted income statement(5) analysis

Extract of the adjusted income statement (figures below are at
historical exchange rates):

-0-
*T
Six months ended Six months ended
June 30, 2006 June 30, 2007
----------------------------------------------------------------------
As a % As a %
EUR in of EUR in of
millions sales millions sales % change(6)
----------------------------------------------------------------------
Revenue 846.3 759.9 (10.2)%
----------------------------------------------------------------------
Gross profit 260.2 30.7% 222.1 29.2% (14.6)%
----------------------------------------------------------------------
EBITDA(7) 74.2 8.8% 50.5 6.6% (31.9)%
----------------------------------------------------------------------
Operating expenses(2) 227.3 26.9% 209.5 27.6% (7.8)%
Operating income 32.7 3.9% 15.2 2.0% (53.6)%
----------------------------------------------------------------------
Profit for the period 28.9 3.4% 24.5 3.2% (15.2)%
======================================================================
*T

At constant exchange rates revenue was down 6% reflecting lower
revenue in Mobile Communication and patent licensing, partly offset by
growth in Secure Transactions revenue driven by EMV(8) and contactless
payment volumes and higher pay TV activity.

On a geographic basis and at constant exchange rates revenue was
down 15% in the Americas and down 4% in Asia, mainly due to lower
revenue in Mobile Communication. In EMEA(9) revenue was down 4%, with
growth in Secure Transactions and ID & Security offsetting lower
revenue in Mobile Communication.

Gross margin was 29.2% compared with 30.7% in a first half of 2006
that had benefited from unusually high patent licensing revenue (EUR
24.1 million against EUR 14.1 million in the first half of 2007) and
from a number of positive one-off items. The lower contribution of
Mobile Communication to total revenue and lower margin in Secure
Transactions also accounted for the year-on-year decrease.

Operating expenses decreased by EUR 17.8 million, i.e. 7.8%
year-on-year, reflecting the effects of cost reduction measures
implemented in the support functions after the combination. Compared
with the first half of 2006, General & Administrative expenses were
down by 13.6%.

Consequently, operating income was at EUR 15.2 million with
operating margin at 2.0%. This performance reflects higher margins in
Mobile Communication and to patent licensing revenue recorded earlier
in the year than anticipated.

Financial income was EUR 10.1 million. It comprises net interest
income of EUR 5.0 million, a gain of EUR 3.8 million on the disposal
of an investment held for sale, and foreign exchange gains of EUR 1.4
million. The Company also recognized a gain of EUR 9.4 million in
relation with the sale of an investment in an Associate. Adjusted
pre-tax income was EUR 33.1 million, and income tax charges amounted
to EUR 8.6 million. As a result, adjusted profit for the period was
EUR 24.5 million.

Reorganization charges reported in the IFRS income statement

Charges incurred in connection with headcount reductions in the
support functions, with the consolidation of manufacturing and office
sites, as well as the rationalization and harmonization of the product
and service portfolio, are disclosed under a line named
"Reorganization expenses" in the IFRS income statement and amounted to
EUR 55.1 million. This amount consisted of severance costs for EUR
42.9 million (mainly related to the closure of production facilities
in the Americas, Asia and Europe), to fixed asset and inventory
write-offs for EUR 11.0 million and to other costs, mainly related to
IT integration, for EUR 1.2 million.

The implementation of the related reorganization plans will result
in the curtailment of certain pension obligations. A credit of EUR 2.4
million was recognized in the first half of 2007 in connection with
these curtailments, in reduction of cost of sales and operating
expenses. This credit is reflected in the Adjusted measures.

Balance sheet and cash flow (IFRS measures)

Free cash flow(10) was an outflow of EUR 24.9 million, after
capital expenditure of EUR 29.2 million, of which EUR 17.7 million was
incurred for plant, property and equipment purchases, and
approximately EUR 16 million used in connection with restructuring
measures. The disposal of the investment held for sale and of the
investment in an Associate mentioned above provided EUR 20.5 million
in cash.

Working capital requirements slightly decreased during the first
half by EUR 1 million. Excluding the increase in reserves for
restructuring plans launched in the period, working capital
requirements grew by an estimated EUR 29 million compared with 2006
year-end. This evolution was mainly due to the seasonal increase in
inventory recorded at June 30, 2007 in anticipation of the stronger
activity scheduled for the second half of the year. Compared with June
30, 2006 working capital requirement was down by EUR 28 million, a
year-on-year improvement of 13%.

The share buy-back program effectively started on January 29 and
used EUR 100 million in cash. 5.4 million shares were purchased in the
first half of the year, representing 5.9% of Gemalto's share capital.
This program authorizes the Company to acquire up to 10% of its share
capital. In addition, EUR 4 million in cash were used as part of the
completion of the squeeze-out of Gemplus shares.

Gemalto's net cash position was EUR 291 million at June 30, 2007.
The decrease of EUR 105 million compared with December 31, 2006
corresponds almost exactly to the cash used in the share buy-back and
the acquisition of the remaining Gemplus shares.

Segment information(11)

Extract of the adjusted pro forma income statements are at
historical exchange rates unless otherwise mentioned.

Mobile Communication

-0-
*T
Six months ended Six months ended
June 30, 2006 June 30, 2007
----------------------------------------------------------------------
As a % As a %
EUR in of EUR in of
millions revenue millions revenue % change
----------------------------------------------------------------------
Revenue 490.7 417.8 (14.9)%
----------------------------------------------------------------------
Gross profit 163.9 33.4% 144.1 34.5% (12.1)%
----------------------------------------------------------------------
Operating expenses 133.1 27.1% 109.8 26.3% (17.5)%
Operating income 30.5 6.2% 35.7 8.5% 17.1%
======================================================================
*T

At constant exchange rates, Mobile Communication revenue was down
11%. Deliveries of SIM cards rose 4%, reflecting Gemalto's strict
pricing discipline and selective approach to tenders.

As a result, the year-on-year decrease in average SIM card selling
price was contained to 15% at constant exchange rates, a very
significant improvement compared with 34% a year ago. The average
selling price increased by 7% at constant exchange rates in the second
quarter compared with the first, due to more favorable regional and
product mixes. The purchasing and other manufacturing synergy measures
implemented in the last twelve months have begun to generate
significant savings. Consequently, with lower revenue, gross margin in
the first half was up 1.1 percentage points to 34.5% of revenue.

Operating expenses were reduced by 18%, reflecting the positive
impact of the operating adjustments put in place following the merger,
especially in General & Administrative expenses as well as the
redeployment of Research & Engineering and support resources to other
segments. Accordingly, operating income was EUR 35.7 million with
operating margin at 8.5%. This marks a strong improvement when
compared with the 6.2% reported in the first half of 2006, a figure
that included favorable one-off items.

Secure Transactions

-0-
*T
Six months ended Six months ended
June 30, 2006 June 30, 2007
----------------------------------------------------------------------
As a % As a %
EUR in of EUR in of
millions revenue millions revenue % change(13)
----------------------------------------------------------------------
Revenue 191.3 192.8 +0.8%
----------------------------------------------------------------------
Gross profit 40.4 21.1% 33.4 17.3% (17.3)%
----------------------------------------------------------------------
Operating expenses 44.3 23.1% 43.4 22.5% (2.0)%
Operating income
(loss) (3.9) (2.0)% (9.5) (4.9)% NM
======================================================================
*T

At constant exchange rates revenue was up by 4%, with strong
growth in microprocessor-based payment products, personalization
services as well as pay TV activity offsetting continued pressure on
selling prices. Deliveries of microprocessor cards were up 13%, led
mainly by EMV migration and card renewals in developed markets in
Western Europe, and contactless payment in Asia.

Gross margin in this segment was down by 3.8 percentage points to
17.3%, reflecting the decrease in sales prices and less favorable
product and regional mixes. The cost reductions expected from the
restructuring plans launched should materialize significantly in this
segment only in 2008. Consequently, the segment reported a EUR 9.5
million operating loss.

ID & Security

-0-
*T
Six months ended Six months ended
June 30, 2006 June 30, 2007
----------------------------------------------------------------------
As a % As a %
EUR in of EUR in of
millions revenue millions revenue % change(13)
----------------------------------------------------------------------
Revenue 106.6 98.1 (8.0)%
----------------------------------------------------------------------
Gross profit 47.3 44.3% 34.5 35.1% (27.1)%
----------------------------------------------------------------------
Operating expenses 39.6 37.1% 46.3 47.2% +16.9%
Operating income
(loss) 7.7 7.2% (11.5) (11.7)% NM
======================================================================
*T

At constant exchange rates revenue was down 5%, as a result of
lower patent licensing revenue (EUR 14.1 million) when compared with
the unusually high revenue (EUR 24.1 million) reported in the first
half of 2006. Revenue from Government Programs that includes
e-passports, e-identity and healthcare cards was stable, as many of
the large-scale projects recently won were only in their ramp-up
phase. Security (i.e. Identity & Access Management for on-line
applications) revenue was down slightly due to lower deliveries of
microprocessor devices in the Americas. Transport revenue increased
thanks to higher activity in Latin America.

The lower gross profit and 9.2 percentage point decrease in gross
margin in the segment was mainly due to the lower patent licensing
revenue. In line with Gemalto's strategy to grow the ID & Security
business, operating expenses were driven up by EUR 6.7 million.
Research & Engineering and Sales & Marketing expenses increased by EUR
3.3 million and EUR 2.2 million respectively, following the
reallocation to this growth business of technical and marketing
resources which played a key part in the winning of several
large-scale tenders, such as the German healthcare project.
Consequently, the segment reported an operating loss of EUR 11.5
million for the semester.

Public Telephony

-0-
*T
Six months ended Six months ended
June 30, 2006 June 30, 2007
----------------------------------------------------------------------
As a % As a %
EUR in of EUR in of
millions revenue millions revenue % change(14)
----------------------------------------------------------------------
Revenue 32.9 22.0 (33.1)%
----------------------------------------------------------------------
Gross profit 2.1 6.3% 4.6 20.8% +119.0%
----------------------------------------------------------------------
Operating expenses 3.6 10.8% 2.2 9.8% (38.9)%
Operating income
(loss) (1.5) (4.5)% 2.6 11.6% NM
======================================================================
*T

Memory cards for Public Telephony contribute less than 3% of Group
revenue, as worldwide demand continues to decrease, reflecting the
even more widespread usage of mobile telephony worldwide.

The significant improvement in gross margin and the decrease in
operating expenses reflect the aggressive cost adjustments in
manufacturing and support structure carried out since the merger.
Consequently, the segment reported an operating income of EUR 2.6
million, against a EUR 1.5 million loss in the first half 2006.

Point-of-Sale Terminals

-0-
*T
Six months ended Six months ended
June 30, 2006 June 30, 2007
----------------------------------------------------------------------
As a % As a %
EUR in of EUR in of
millions sales millions sales % change(14)
----------------------------------------------------------------------
Revenue 24.8 29.2 +17.7%
----------------------------------------------------------------------
Gross profit 6.6 26.5% 5.6 19.2% (15.2)%
----------------------------------------------------------------------
Operating expenses 6.7 27.0% 7.8 26.8% +16.4%
Operating income (loss) (0.1) (0.3)% (2.1) (7.3)% NM
======================================================================
*T

The launch of a new range of products developed on a new
technology platform in the fourth quarter of 2006 supported much of
the revenue growth in the first half of 2007. During this period,
strong activity in geographic areas where pricing levels are lower
accounted for the decrease in gross profit compared with the same
period of last year. Research & Engineering resources continued to be
invested in the development of customizations and high end
applications for the new platform, resulting in an operating loss of
EUR 2.1 million.

Outlook

In the second half of 2007, operating margin(15) should reflect
the usual favorable seasonal pattern and the increasing contribution
of the first digital security solutions deployments. It will also
benefit from additional cost synergies from the combination.

Gemalto continues to anticipate sustained demand in all of its key
markets. It will continue to proactively make the necessary
adjustments to its cost base and remains determined to reach its
stated objective of an operating margin(15) above 10% in 2009.

Reporting calendar

Third quarter 2007 revenue will be reported on November 8, 2007,
before the opening of Euronext Paris.

GEMALTO

FIRST HALF 2007 FINANCIAL RESULTS

DESCRIPTION OF ADJUSTED MEASURES

Due to the combination with Gemplus, Gemalto's financial
statements have undergone significant change, due in particular to the
accounting treatment of this transaction in accordance with IFRS 3
"Business Combination". To supplement the financial statements
presented on an IFRS basis, the Group presents the adjusted
information described in the table below.

Adjusted measures exclude certain business combination accounting
entries, and expenses directly incurred in connection with the
combination with Gemplus, that the Group believes are helpful in
understanding its past financial performance and its future results.
Adjusted financial measures are not meant to be considered in
isolation or as a substitute for comparable IFRS measures, and should
be read only in conjunction with consolidated financial statements
prepared in accordance with IFRS. Management regularly uses these
supplemental adjusted financial measures internally to understand,
manage and evaluate the business and take operating decisions. These
adjusted measures are among the primary factors management uses in
planning for and forecasting future periods. Compensation of
executives is based in part on the performance of the business based
on these adjusted measures. Adjusted financial measures reflect
adjustments based on the following items, as well as the related
income tax effect:

-- Amortization of inventory step-up: IFRS 3 "Business
Combination" requires Gemalto to value work-in progress and
finished goods assumed in connection with the combination at
net realizable value (the estimated revenue derived from the
future sale of these goods less expected selling cost).
Therefore, the value of this inventory in the books of Gemplus
on combination date was adjusted accordingly (step-up). Thus,
subsequent sales of the work-in-progress and finished products
carried in Gemplus' inventory at the time of the combination
generate a lower margin than if they were manufactured after
the acquisition, all other factors being equal. The
amortization expense related to this step up is therefore
disclosed in the income statement under a separate line below
Cost of Sales. The adjustment, eliminating amortization of
inventory step-up, is intended to restore the normal margin of
such sales. The Group believes this adjustment is useful to
investors as a measure of the ongoing performance of its
business.

-- Additional stock-based compensation charge: As prescribed by
IFRS 2 "Share-based payment" and IFRS 3 "Business
Combination", vested and unvested stock options or awards
granted by an acquirer in exchange for stock options or awards
held by employees of the purchased company, or any
substantially equivalent commitment by the acquirer to assume
the obligations of the acquiree with regards to stock options
granted to the latter's employees, as is the case for Gemalto
under the Combination Agreement, shall be considered to be
part of the purchase price for the acquirer, and the fair
value (at the effective date of the acquisition or merger) of
the new (acquirer) awards shall be included in the purchase
price. It leads to increase the compensation charge related to
stock-options granted by Gemplus prior to the acquisition. The
adjustment, eliminating the additional stock-based
compensation charge, is intended to reflect the compensation
charge that Gemplus would expense if the company continued to
operate on a standalone basis. The Group believes this
adjustment is useful to investors as a measure of the ongoing
performance of its business.

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

-- Combination related charges: In 2006, Gemalto incurred
material expenses in connection with the combination with
Gemplus, which it would not have otherwise incurred.
Combination related charges consist of professional advisory
services incurred in connection with the integration, new
Gemalto brand and logo creation and worldwide registration, as
well as impairment charges related to capitalized development
costs on projects which are redundant with existing products
or technologies available in Gemplus. Gemalto also determined
that its investment in a listed company was impaired as a
consequence of the combination with Gemplus. The related
impairment charge was recorded in Financial income (loss) in
the first half of 2006. In the first half of 2007, Gemalto
incurred combination related charges for EUR 1.2 million. The
Group may incur further combination related expenses in the
coming months. It believes it is useful for investors to
understand the effect of these expenses on its cost structure.

-- Reorganization charges: charges incurred in connection with
headcount reductions in the support functions, the
consolidation of manufacturing and office sites (including
asset write-offs and transfer cost, severance cost, lease
termination and building refurbishment cost) and the
rationalization and harmonization of the product and service
portfolio.

Summary

Gemalto provides two sets of income statements for the first half
2007:

-- IFRS consolidated income statement, pursuant to its regulatory
obligations

-- Adjusted income statement

-0-
*T
Gemalto IFRS - Includes all charges resulting from the
consolidated income accounting treatment of the combination with
statement Gemplus (amortization and impairment of
intangible assets, additional stock-based
compensation), and one-off expenses and
reorganization charges incurred in connection
with the combination (combination related
charges).
----------------------------------------------------------------------
Gemalto adjusted - Combination assumed to have taken place as of
income statement January 1, 2005.
- Excludes one-off expenses and reorganization
charges incurred in connection with the
combination with Gemplus (combination related
charges) and all charges resulting from the
accounting treatment of the combination.
----------------------------------------------------------------------
*T

In addition, because the business combination between Gemalto and
Gemplus took place as of June 2, 2006, the adjusted financial
information presented for the first half of 2006 was prepared on a pro
forma basis, and reflects the combined activity of the two companies
over the period, assuming that the combination had taken place as of
January 1, 2005.

Conference call

Gemalto will hold an analysts and investors meeting to present its
financial results for the first half year of 2007. The meeting will
take place today at Pavillon Ledoyen (Salon Cocteau), Carre des
Champs-Elysees, 1, avenue Dutuit, 75008 Paris; and will start at 10:00
am Paris time. Prepared remarks will be in French.

The company has also scheduled a conference call in English for
today at 3:00 pm Paris time (2:00 pm London time and 9:00 am New York
time). Callers may participate in the live conference call by
dialling:

+44 (0) 207 806 1967 or +1 718 354 1388 or +33 1 70 99 43 04.

The presentation slide show will be available for download on our
Investor Relations web site (www.gemalto.com/investors) at 9:00 am
Paris time (8:00 am London time).

Replays of the conference call will be available from
approximately 2 hours after the conclusion of the conference call
until September 19, 2007 midnight Paris time by dialling:

+44 (0) 207 806 1970 or +1 718 354 11 12 or +33 1 71 23 02 48,
access code: 4561554#.

About Gemalto

Gemalto (Euronext NL 0000400653 GTO) is the leader in digital
security with pro forma 2006 annual revenues of EUR 1.7 billion,
offices in more than 85 countries and about 10,000 employees including
1,300 R&D engineers.

In a world where the digital revolution is increasingly
transforming our lives, Gemalto's solutions are designed to make
personal digital interactions more convenient, secure and enjoyable.

Gemalto provides end-to-end digital security solutions, from the
development of software applications through design and production of
secure personal devices such as smart cards, SIMs, e-passports, and
tokens to the deployment of managed services for its customers.

More than a billion people worldwide use the company's products
and services for telecommunications, financial services, e-government,
identity management, multimedia content, digital rights management, IT
security, mass transit and many other applications.

As the use of Gemalto's software and secure devices increases with
the number of people interacting in the digital and wireless world,
the company is poised to thrive over the coming years.

Gemalto was formed in June 2006 by the combination of Axalto and
Gemplus.

For more information please visit 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.

This communication contains certain statements that are neither
reported financial results nor other historical information and other
statements concerning Gemalto. These statements include financial
projections and estimates and their underlying assumptions, statements
regarding plans, objectives and expectations with respect to future
operations, events, products and services and future performance.
Forward-looking statements are generally identified by the words
"expects", "anticipates", "believes", "intends", "estimates" and
similar expressions. These and other information and statements
contained in this communication constitute forward-looking statements
for purposes of applicable securities laws. Although management of the
company believes that the expectations reflected in the
forward-looking statements are reasonable, investors and security
holders are cautioned that forward-looking information and statements
are subject to various risks and uncertainties, many of which are
difficult to predict and generally beyond the control of the
companies, that could cause actual results and developments to differ
materially from those expressed in, or implied or projected by, the
forward-looking information and statements, and the companies 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 communication include, but are not limited to: the
ability of the company's to integrate according to expectations; the
ability of the company to achieve the expected synergies from the
combination; trends in wireless communication and mobile commerce
markets; the company's ability to develop new technology and the
effects of competing technologies developed and expected intense
competition generally in the companies' main markets; profitability of
expansion strategy; challenges to or loss of intellectual property
rights; ability to establish and maintain strategic relationships in
their major businesses; ability to develop and take advantage of new
software and services; the effect of the combination and any future
acquisitions and investments on the companies' share prices; changes
in global, political, economic, business, competitive, market and
regulatory forces; and those discussed by the companies in filings,
submissions or furnishings to the SEC, including under the headings
"Cautionary Statement Concerning Forward-Looking Statements" and "Risk
Factors". Moreover, neither the companies nor any other person assumes
responsibility for the accuracy and completeness of such
forward-looking statements. The forward-looking statements contained
in this communication speak only as of the date of this communication
and the companies are under no duty, and do not undertake, to update
any of the forward-looking statements after this date to conform such
statements to actual results, to reflect the occurrence of anticipated
results or otherwise.

(1) The H1 2007 adjusted income statement measures presented in
this press release were prepared on an adjusted basis reflecting the
consolidated activity of the Group over the first half-year, excluding
accounting entries related to the business combination with Gemplus,
as well as one-off expenses and reorganization charges incurred in
connection with this transaction; the H1 2006 adjusted income
statement measures presented for comparison were prepared on the same
adjusted basis and are pro forma measures, reflecting the combined
activity of Gemalto and Gemplus over the period, and assuming that the
combination had taken place as of January 1, 2005.

(2) At historical (reported) exchange rates.

(3) Operating expenses include research & engineering expenses,
sales & marketing expenses and general & administrative expenses; they
do not include other operating income & expenses, net.

(4) The H1 2007 Adjusted basic earnings per share were determined
on the basis of the average number of Gemalto shares outstanding
during the six-month period ended June 30, 2007 i.e. taking into
account the effect of the share buy-back on the average number of
shares outstanding during the period. The H1 2006 Adjusted basic
earnings per share were determined on the basis of the average number
of Gemalto shares issued during the six-month period ended June 30,
2007 less the average number of Treasury shares held by the Company
during the six-month period ended June 30, 2006.

(5) The H1 2007 adjusted income statement measures presented in
this press release were prepared on an adjusted basis reflecting the
consolidated activity of the Group over the first half-year, excluding
accounting entries related to the business combination with Gemplus,
as well as one-off expenses and reorganization charges incurred in
connection with this transaction; the H1 2006 adjusted income
statement measures presented for comparison were prepared on the same
adjusted basis and are pro forma measures, reflecting the combined
activity of Gemalto and Gemplus over the period, and assuming that the
combination has taken place as of January 1, 2005.

(6) At historical (reported) exchange rates.

(7) EBITDA is defined as operating income plus depreciation (EUR
26.7 million in H1 2007 versus EUR 31.2 million in H1 2006) and
amortization expenses (EUR 8.6 million in H1 2007 versus EUR 10.3
million in H1 2006). These amounts exclude amortization and impairment
charges related to the intangible assets of Gemplus identified upon
Combination pursuant to IFRS 3 >.

(8) EMV is a set of specifications adopted by Europay, MasterCard
and Visa Card for the migration of bank cards to smart card technology

(9) Europe, Middle East, Africa

(10) 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).

(11) All segment information provided in this press release is on
an adjusted basis (unaudited), excluding one-off expenses incurred in
connection with the combination with Gemplus, reorganization charges
and charges resulting from the accounting treatment of the
transaction. The segment information related to H1 2006 was prepared
on a pro forma basis, reflecting the combined activity of Gemalto and
Gemplus over the period, and assuming that the combination had taken
place as of January 1, 2005.

(12) At historical (reported) exchange rates.

(13) At historical (reported) exchange rates.

(14) At historical (reported) exchange rates.

(15) Prepared on an adjusted basis, reflecting the consolidated
activity of the Group over the first half year, excluding one-off
expenses incurred in connection with the combination with Gemplus,
reorganization charges and charges resulting from the accounting
treatment of the transaction

Appendix 1

First half 2007 Adjusted income statement by business segment

-0-
*T
EUR in
millions Six months ended June 30, 2007
----------------------------------------------------------------------
Secure Point-of-
Mobile Trans- ID & Public Sale
Communication actions Security Telephony Terminals Total
----------------------------------------------------------------------
Revenue 417.8 192.8 98.1 22.0 29.2 759.9
----------------------------------------------------------------------
Gross
profit 144.1 33.4 34.5 4.6 5.6 222.1
----------------------------------------------------------------------
Operating
expenses 109.8 43.4 46.3 2.2 7.8 209.5
Operating
income
(loss) 35.7 (9.5) (11.5) 2.6 (2.1) 15.2
----------------------------------------------------------------------
*T

First half 2006 Adjusted pro forma income statement by business
segment

-0-
*T
EUR in
millions Six months ended June 30, 2006
----------------------------------------------------------------------
Mobile Secure ID & Public Point-of-
Communication Trans- Security Telephony Sale Total
actions Terminals
----------------------------------------------------------------------
Revenue 490.7 191.3 106.6 32.9 24.8 846.3
----------------------------------------------------------------------
Gross
profit 163.9 40.4 47.3 2.1 6.6 260.2
----------------------------------------------------------------------
Operating
expenses 133.1 44.3 39.6 3.6 6.7 227.3
Operating
income
(loss) 30.5 (3.9) 7.7 (1.5) (0.1) 32.7
----------------------------------------------------------------------
*T

Appendix 2

Deliveries of secure personal devices

-0-
*T
H1 2006
In millions of units pro forma H1 2007 % growth
----------------------------------------------------------
SIM cards 430 445 +4%
----------------------------------------------------------
Secure Transactions 97 111 +13%
----------------------------------------------------------
ID & Security 18 15 (17%)
----------------------------------------------------------
Total 545 570 +5%
----------------------------------------------------------
*T

Appendix 3

First half revenue by region

-0-
*T
Year-on-year Year-on-year
change at change at
EUR in H1 2006 pro historical constant
millions forma H1 2007 exchange rates exchange rates
----------------------------------------------------------------------
EMEA 449.2 427.9 (5%) (4%)
----------------------------------------------------------------------
North &
South
America 212.0 167.2 (21%) (15%)
----------------------------------------------------------------------
Asia 185.1 164.7 (11%) (4%)
----------------------------------------------------------------------
Total
revenue 846.3 759.9 (10%) (6%)
----------------------------------------------------------------------
*T

Appendix 4

-0-
*T
Consolidated Income Statement for the six month period ended June 30,
2007

Reconciliation from IFRS to Adjusted financial information

EUR in
millions

Adjustment
Adjustment relating to
relating to Adjustment amortization
IFRS combination relating to of
financial related reorganization intangible
information expenses expenses assets

Sales 759.9
Cost of sales (538.0)
Inventory
step-up
amortization 0.0
------------ ------------------------------------------
Gross Profit 221.9 0.0 0.0 0.0

Research &
Engineering
expenses (50.8)
Sales &
Marketing
expenses (109.6)
G&A expenses (50.7)
Other
Operating
expenses 2.6
Combination
related
expenses (1.2) 1.2
Reorganization
expenses (55.1) 55.1
Amortization
and
impairment of
intangible
assets (23.0) 23.0
------------ ------------------------------------------
Operating
Income (65.9) 1.2 55.1 23.0
------------ ------------------------------------------

Financial
Income 10.1
Share of
profit (loss)
of associates (0.9)
Gain on sale
of an
Investment in
Associate 9.4
------------ ------------------------------------------
Profit before
taxes (47.3) 1.2 55.1 23.0

Income tax (1.1) (0.6) (6.9)
------------ ------------------------------------------
Profit (loss)
for the
period (48.4) 1.2 54.5 16.1
------------ ------------------------------------------

Attributable
to
shareholders (50.1)
Attributable
to minority
interest (1.7)

EUR in
millions

Adjustment
relating to
Adjustment Management
relating to incentives on Adjusted
stock based investment financial
compensation disposal information

Sales 759.9
Cost of sales 0.2 (537.8)
Inventory
step-up
amortization 0.0
--------------------------------- ---------------
Gross Profit 0.2 0.0 222.1

Research &
Engineering
expenses 0.0 (50.8)
Sales &
Marketing
expenses 0.3 (109.3)
G&A expenses 0.6 0.7 (49.4)
Other
Operating
expenses 2.6
Combination
related
expenses 0.0
Reorganization
expenses 0.0
Amortization
and
impairment of
intangible
assets 0.0
--------------------------------- ---------------
Operating
Income 1.1 0.7 15.2
--------------------------------- ---------------

Financial
Income 10.1
Share of
profit (loss)
of associates (0.9)
Gain on sale
of an
Investment in
Associate (0.7) 8.7
--------------------------------- ---------------
Profit before
taxes 1.1 0.0 33.1

Income tax (8.6)
--------------------------------- ---------------
Profit (loss)
for the
period 1.1 0.0 24.5
--------------------------------- ---------------

Attributable
to
shareholders 22.8
Attributable
to minority
interest (1.7)
*T

Appendix 5

Estimated cash position variation schedule

-0-
*T
EUR in millions H1 2006 * H1 2007
----------------------------------------------------------------------
Cash & cash equivalent, beginning of period 637 430
----------------------------------------------------------------------
Cash generated by (used in) operating activities ** (46) 5
Including cash provided by (used in) decrease
(increase) of working capital (70) 1
Capital expenditure and acquisitions of intangibles (41) (29)
----------------------------------------------------------------------
Free cash flow (86) (24)
----------------------------------------------------------------------
Interest received (paid), net 8 5
Cash generated by disposal of investments 0 21
Other cash generated by (used in) investing
activities (3) (0)
Cash used in connection with the Combination with
Gemplus 0 (4)
----------------------------------------------------------------------
Cash generated by (used in) operating and investing
activities (82) (3)
----------------------------------------------------------------------
June 2, 2006 distribution to Gemplus shareholders (164) 0
Cash used by the share buy-back program 0 (100)
Cash generated (used) by other share purchase or
disposal (3) 2
Other cash used in financing activities (excluding
proceeds and repayments of borrowings) 0 (8)
Other (translation adjustment mainly) (6) (1)
----------------------------------------------------------------------
Cash and cash equivalent, end of period 382 319
----------------------------------------------------------------------
Current and non-current borrowings including
finance lease, end of period (38) (27)
----------------------------------------------------------------------
Net cash, end of period 344 291
----------------------------------------------------------------------

* Prepared on a pro forma basis
** Cash generated by (used in) operating activities takes into account
the use of EUR 16 million in cash in connection with restructuring
actions in H1 2007. There was no such use of cash in H1 2006.
*T