Gemplus Investors 2004

September 2004

Alex Mandl – President & CEOFrans Spaargaren – Executive Vice-President & CFO

Jacques Seneca – Executive Vice-President R&D, Identity & Security

GemplusInvestors Presentation

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Investors presentation September 2004Investors presentation September 2004

Disclaimer

Some of the statements contained in this presentation 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 presentation include, but are not limited to: trends in wireless communication and mobile commerce markets; our ability to develop new technology, and the effects of competing technologies developed and expected intense competition generally in our main markets; 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 presentation speak only as of this presentation. 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.

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Highlights

• Security as key driving force in current environment

• Gemplus is the leader in smart card based technologies and solutions

• Strong momentum in core markets:

−SIM card as core element of wireless ecosystem

−Financial services growth driven by need for secure platforms

−Multiple attractive emerging growth markets in ID & Security

• Strong leadership in place to realize those opportunities

• Strongest balance sheet in our industry

• Profitable growth strategy supported by emphasis on R&D investment

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Secured solutions for the real world

Smart cards efficiently procures security, intelligence and convenience, benefiting to many different markets

Mobile Telecommunications& Public Telephony

Banking & Retail

Transport Electronic Transactions

Identity& Privacy management& Access control

HealthCareE-government

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Gemplus: key enabler of secured platforms

• The Worldwide leader in the smart card industry: 30% market share globally (source: Gartner April 2004)

#1 in shipment and revenue#1 in SIM revenue

• Revenue €749 m in 2003 (US$846 m), 25% growth in 1st half 2004 vs. 1st half 2003

• Market capitalization: approximately €900 m / US$1.1 bn

• Listed on Euronext Paris and NASDAQ (US-GAAP and IAS/IFRS compliant)

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ID / Security(5% of revenues)

ID / Security(5% of revenues)

Financial Services(21% of revenues)Financial Services

(21% of revenues)Telecom

(74% of revenues)Telecom

(74% of revenues)

Three Core MarketsLeveraging leading position

to realize opportunities in growth markets

Opportunities:

• Evolving strategic role of the SIM card for telecom operators

• Increasing SIM penetration

Opportunities:

• EMV migration gaining momentum

Opportunities:

• Emerging high growth market

• Many evolving projects

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Our Added Value

• Gemplus provides from smart card components to complete end-to-end solutions

Solution Discovery Development & Deployment

Advisory Services

Consulting/ Diagnostic/ PlanningSolution Definition/Implementation

Smart Cards & Smart Card Interface

Cards Issuance Solutions

Front & Back-end Systems

Training Services

Project Management

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The SIM CardA relationship tool

• Over one billion SIM HoldersMigration to high end cards in GSMW-CDMA in Japan SIM adoption in Americas

Worldwide+16% Per Year** Source: Gemplus market analysis

Worldwide AnnualAv. Growth 03-06:+10% Per Year*

0

500

1000

1500

2000

2500

2003 2006

Sim Subs Non Sims

0100200300400500600700

2003 2006

Voice DataM units$bn

Cellular carriers revenue

73%

84%

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The SIM CardAn asset in the core network

A relatively small investment for the carriers driving tremendous revenue opportunities

Supports end-user relationship for carriersThe only 100% operator-managed network element in the hands of the end-

user

A response to carriers’ challenges for next generation wirelessManage the growing complexity of the handset platform

Stimulate the adoption of mobile data services

Strengthen brand awareness

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The SIM CardAn Incremental Revenue Source for Cellular Carriers

Carrier Admin FilesServices Access MenusPhone Book ServicesRoaming

64KCarrier Admin FilesServices Access MenusPhone Book ServicesRoamingHandset provisioningCall completionEnterprise ServicesSMS based gamesLocation Based Sves

128KCarrier Admin FilesServices Access MenusPhone Book SvesRoaming Handset provisioningCall completionEnterprise ServicesSMS Based gamesLocation Based Sves3G Phone BookPersonal CredentialsQuality of Service

256K

The SIM Card facilitates the transition towards data/3G

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Results improvement driven by migration to high-end products

0

10

20

30

40

50

60

70

Q2 02

Q3 02

Q4 02

Q1 03

Q2 03

Q3 03

Q4 03

Q1 04

Q2 04

Low end Mid range High-end

• Ongoing migration towards higher-end cards

• High-end cards (64Kb and above, 3G) account now for 33.4 % of total shipments (vs. 22.4 % in Q1 04)

Low endLow end(8Kb &16Kb)(8Kb &16Kb)

Mid-range(32Kb)

High endHigh end(64Kb and above, 3G)(64Kb and above, 3G)

% S

hipm

ents

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A profitable growth strategy:Two pronged market approach

• Run efficiently the commodity segment:

Improve manufacturing utilizationIncrease buying powerServe efficiently: providing competitive costs, on-time delivery, and high quality

• Differentiate in value on high end:

First to market with rapid cycle timeValue added to enable customer’s differentiationPremium on R&D/ innovation capacitiesEncouraged long term customer partnerships

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Achievements: Delivering steady results improvement

•Financial result consistently improved last 5 quarters in a row

•Q2 2004:•Group revenue up 22.1 % year-on-year

•Highest gross margin in 3 years: 32.3% (up 1.3 ppt QoQ)

•Operating profit before restructuring and goodwill: €8.5 m (from €4.8 m in Q1 04)

•Net profit: €1.1 m (from €0.3 m in Q1 04)

•Strongest balance sheet of the industry:cash position end Q2 04: €383 m (US$463 m)

Revenue

210.5197.3232.6

190.0172.4

154.2

Q103

Q203

Q303

Q403

Q104

Q204

Operating Result (excl. restruct. & goodwill)

8.54.8

1.80.0

-13.9

-27.3

Q103

Q203

Q303

Q403

Q104

Q204

In €m

In €m

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9.4 9.8 11.1 10.3 11.847.838.8 45.2 40.4 44.7

132.3124.2

176.3

146.6 154.0

Q2 03 Q3 03 Q4 03 Q1 04 Q2 04

ID/ Security Fin. Services Telecom

Revenue by business segment

• Year-on-year change*: Q2 04 Group revenue up 25.0 %

• Telecom up 27.4 %, of which Wireless up 45.5 %• Financial Services up 16.7 %• Identity & Security up 26.9 %

• Quarter-on-quarter change*: Q2 04 Group revenue up 4.3 %

• Telecom up 2.6 %• Financial Services up 8.6 %• Identity & Security up 12.1 %

172.4190.0

232.6 210.5197.3

* After adjusting for currency fluctuations, discontinued operations and acquisitions

In € m

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New Management leadership (1)

• Alex Mandl (President & CEO since September 2002): Previously, Chairman & CEO of Teligent, a telecommunication and internet services company.AT&T (91-96): President and COO, prior to this, CFO.Sea-Land Services Inc. (87-91): Chairman and CEOBoard member of Dell Computer Corporation

• Frans Spaargaren (Executive VP & CFO since June 2004):Philips Electronics: Executive VP of Philips International (01-04), with responsibility for its joint venture operations (combined revenue of US$10 bn), CFO (98-01) of Philips Components (€5 bn)Varta Batteries: various financial and general management positions in the Benelux and Germany (87-01)

• Jacques Seneca (Executive VP, R&D, ID & Security):Joined Gemplus in 1989, then held several management positions including General Manager for the Telecom Division, Executive VP Marketing & Technology, and Head of R&D.

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New Management leadership (2)

• Philippe Combes (Executive VP Operations and Financial Services since January 2003):

Philips Electronics (99-02): Chairman & CEO, LG-Philips Displays joint venture (Hong-Kong), previously, CEO, Display Components Business Group.Thomson Multimedia (88-99): VP Europe & Asia, Tube Operations ; previously, held various management positions in manufacturing.

• Philippe Vallée (Executive VP Telecom Business Unit):Joined Gemplus in 1991, held various management positions including VP, Marketing and Executive VP, Gemplus Technologies Asia.Previously, he was with Matra Communication in France.

• Ernie Berger (President, North America since January 2004):15 years of experience in the financial services sector with American Express and First USA, where he held senior management positions. More recently, he was instrumental in the start-up of new business ventures.

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Summary

• Security as key driving force in current environment

• Gemplus is the leader in smart card based technologies and solutions

• Strong momentum in core markets:

− SIM card as core element of wireless ecosystem

− Financial services growth driven by need for secure platforms

− Multiple attractive emerging growth markets in ID & Security

• Strong leadership in place to realize those opportunities

• Strongest balance sheet in our industry

• Profitable growth strategy supported by emphasis on R&D investment

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Appendix

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What is a contact smart card…

Communication by direct electrical contact with a readerTwo types: Memory or Microprocessor

Card body

Module(contact)

Micro computer

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And a contactless smart card?

Communication with a remote reader

Card body(front)

Card body(back)

Micro computer

Antenna

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Microprocessor smart card: a computer inside a card

Operating System + Applications

ROM RAMCPU

EEPROMSECURITY

FLASH

• OS: designed by Gemplus / loaded by chip manufacturers• CPU: 8-16-32 bit• ROM code: 50 Kb to 400 Kb• EEPROM: 1Kb to 256Kb and above

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Global reach, local presence

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Our profitable growth strategy:Supported by R&D Investment

• Differentiation: high-end solution and services, global offeringWireless:

3G card efficiencyOver The Air high performance platforms for remote card managementCard issuing and card management flexibility

Financial ServicesMulti-applications cards: loyaltyHigh end personalization solutions

ID: subsystems approachCombi and contactless cards: security and flexibility (Java based)Issuing solutionsCards management system partnerships

• IT: cards and environment• High end cards (Pki based, contact/contactless)• Cards Applets• Readers & middleware

• IP status:• Gemplus owns 2400 patents

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• More than 630 R&D engineers around the world

• 4 Research & Development centersOrganization based on expertise centers:

• Research & Security• Operating systems Platform• Product Development Center

And proximity to customers combining R&D and Integration Services resources

• Europe, Asia-Pacific, China, USA

• An incubation group for emerging market and technologies

• An extra 300 technical consultants throughout the world for integration and customer support

R&D highlights

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• Control support costs• Provide the best user experience• Limit Telco R&D for Handset

• Service promotion• Service discovery

• Make service portfolio and brand visible on any device

• Device personalization• Non subsidized devices

Manage Complexity

Stimulate Service Adoption

Manage Brand

The SIM CardA Service Enabling Platform: the SIMfrastructure

Device Agnostic

Interoperable

Automatic Device

Detection

NetworkAccessEnabler

Secure Provisioning &

Control

The SIM requires a suite of software in the carrier back-end

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Share Ownership Structure

39.0%

26.2%

19.0%

5.4%

2.6%

3.7%4.0%

Free float

Texas Pacific Group

Raffeisen Centro Bank

Brunei Investment Agency

General Electric Capital Corporation

Dassault Group

Quandt family

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Board of Directors

Mr. Dominique Vignon (56) Chairman of the Board Mr. Alex Mandl (60) Chief Executive Officer

Mr. David Bonderman (61) Vice-Chairman of the Board / Managing Partner, Texas Pacific Group

Mr. William S. Price (48) Managing Director, Texas Pacific Group Mr. Geoffrey Fink (34) Principal, Texas Pacific GroupMr. Johannes Fritz (49) Managing Director, Quandt family office

Dr. Peter Kraljic (64) Member of the Mc Kinsey Advisory CouncilMr. Werner Koepf (62) Board member, Marconi Corporation plc Mr. Daniel Le Gal (53) Partner and Managing Director, Finadvance

Since April/June 2004:Michel Akkermans (44) Founder and Chairman, Clear2PayJohn Ormerod (55) Former Senior Partner, Deloitte & Touche LLP Kurt Hellström (60) Former President and CEO of Ericsson

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Gemplus Investors 2004

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