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Company : Business Wire 
Wednesday, September 15, 2004 1:46PM IST (8:16AM GMT)
 
(BW)(AXALTO)(AXL.P)(AXAL.P)
Axalto: First Half 2004 Earnings Release
Excellent Performance: Earnings of USD 51 Cents Per Share and Operating Profit Multiplied by Five
 
Amsterdam, Netherlands, United States

Smart card company Axalto (Euronext: NL0000400653 - AXL), the world leader in microprocessor cards according to Gartner Dataquest, reports today its results for the six months ended 30 June 2004, the first since its initial public offering on the Paris stock market on May 18, 2004:

-- Earnings Per Share of USD 51 cents

-- Revenue of USD 430 million, up 28% compared with the 2003 first half

-- Gross margin increases by 2.1 percentage points, to 31.6%

-- Operating profit increases fivefold, to USD 27.9 million

-- Net income of USD 20.5 million

-- USD 62 million free cash flow generated in the period.

Commenting on these results, Axalto Chief Executive Officer, Olivier Piou, said:

Axalto delivered an excellent performance in the first semester. Since the beginning of 2004 opportunities have increased in all market segments and in all regions. Axalto was able to address them with a good product mix. Our successful IPO boosted further Axalto employees' energy to fulfill customers demand. These factors, combined with discipline on expenses, enabled the results that Axalto is reporting today.


Variation
First Half First Half at
Axalto 2003 2004 Variation constant
exchange
rates
----------------------------------------------------------------------
USD million
Revenue 335.2 430.3 + 28% + 21%
Gross Profit 98.8 136.1 + 38% + 40%
Gross Margin (%) 29.5 % 31.6 %
Operating Income 5.4 27.9 x 5 -
-------------------
Operating Margin (%) 1.6 % 6.5 %
Income Before Taxes (incl.
Minority interests) (5.4) 29.5
As a percentage of
Revenue (%) - 6.9 %
Net Income (1.6) 20.5
Net margin (%) - 4.8 %
===================================================
Not 40.1
Average number of shares applicable million
Earnings Per Share 51 cents
----------------------------------------------------------------------



The successful Initial Public Offering of Axalto, the world leader in microprocessor cards, on the Paris stock market in May 2004 went in hand with successful business development. In the first six months of the year, Axalto revenue reached USD 430 million, a 28% growth compared with the same period last year.

Axalto posted a very sharp improvement in profitability, with an operating profit of USD 28 million, more than five times the level seen in the year-earlier period, and a net profit of USD 20.5 million. With an average number of shares in circulation of 40.1 million, this leads to a solid USD 51 cent per share earnings for the period.

Axalto also managed to generate USD 62 million of cash during the period, substantially higher than the USD 11 million in the first half of 2003 and USD 69 million for the full year in 2003. Axalto cash position improved to USD 111 million at the end of June 2004.

All business segments contributed to the growth, led by the strength of the Mobile Communication and Financial Services segments, and an excellent performance by the Public Sector and Patent licensing activity.

Furthermore, all regions contributed to the momentum. The Americas experienced the fastest revenue increase in terms of percentage, +46% compared with the same period last year. The Europe Middle East Africa area posted the strongest growth in absolute terms, with a USD 67 million improvement compared with first half of 2003, reaching revenue of USD 242 million. Asia moved up 3% compared to the same period of 2003, representing 26% of Axalto total revenue.

Axalto microprocessor cards shipments rose by 33% in volume when compared with the 2003 first half.

It delivered 106 million SIM cards, and 36 million microprocessor financial cards.

Overall, adding Identity, Health, Pay-TV, Transport and other high-end cards, Axalto shipped practically ten microprocessor cards every second around the clock of this semester to its customers all over the world!

The considerable increase in profit generation was mainly due to higher revenue, improved gross margin in particular in the Public Sector and patent licensing segment, and lower currency exchange losses. Gross profit increased 38% on the year-earlier period, and gross margin rose by 2.1 percentage points to 31.6%. This performance was mainly due to higher microprocessor cards sales volumes, a higher proportion of high-end cards in Mobile Communication and in all geographical areas, and strong revenue from licensing.

Operating expenses represented 25.1% of revenue, down 2.8 percentage points when compared with the first half of 2003. At USD 108 million, operating expenses rose by 16%, and by 7% at constant exchange rates, to provide higher sales, marketing and technical support to prop up the growth of sales in the field.

Strong net income from operations, capital expenditures lower than depreciation, and strict control over working capital requirements despite the very high revenue growth produced the solid cash-flow generation performance.

During the period Gartner Dataquest confirmed Axalto's leading position in the microprocessor cards market for the year 2003.

Axalto also delivered and secured large and visible contracts for its high-end value-added smart cards, at the Department of Defense and at the Transportation Security Agency - a division of the Homeland Security Administration in the USA, for the TransLink project in Holland, with large financial institutions in the UK, with 3G mobile telephony operators in Europe and in Asia, and with new licensees for the Group intellectual property portfolio.

FOR FULL RELEASE, PLEASE VISIT http://www.axalto.com/Company/press/news.asp?id=191

About Axalto

Axalto (Euronext: NL0000400653 - AXL) is the world's leading provider of microprocessor cards (Gartner Dataquest 2004)-- the key to digital networks -- and a major supplier of point-of-sale terminals. Its 4500 employees come from 70 nationalities and serve customers in more than 100 countries, with worldwide sales reaching 3 billion smart cards to date. The company has 25 years' experience in smart card innovation and leads its industry in security technology and open systems.

Axalto continuously creates new generations of products for use in a variety of applications in the telecommunications, finance, retail, transport, entertainment, healthcare, personal identification, information technology and public sector markets. Microprocessor cards provide convenience, security and privacy to public and private services operators, their customers and end users. For more information, visit us at www.axalto.com.

 
 
 
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