Turning to profit

• Strong improvements in gross margin came from better industrialization of projects in Government Programs and higher patent licensing activity.
• Tight control of operating expenses led to a substantial operational leverage.
• Excluding the patent licensing activity contribution, Government Programs and Identity & Access Management combined exceeded the break-even point, in both semesters.

Government Programs

We provide secure documents, identity solutions and services for governments, national printers and integrators. These include:

• Our Sealys range of high-quality, secure and durable solutions comprising physical, visual and electronic security for travel documents, national eID, eHealth cards, electronic driver’s licenses and registration certificates.
• A complete end-to-end solution for highly secure ePassports.
• A range of solutions for enrolment, issuance, border control and eGovernment.
• Our Allynis range of secure operated services including outsourced personalization and delivery, supported by strong industrial and financial engineering capabilities.

Identity and Access Management

We provide secure IAM solutions for enterprises, governments, banks and other organizations, enabling them to better control their physical and IT environments.

• We offer a full suite of products, software and services to protect sensitive company information and prevent data loss, including USB drives with strong levels of built-in security, One Time Password (OTP) tokens and Public Key Infrasructure (PKI) strong authentication with optical devices;
• Our Protiva family of multi-function smart cards, smart card readers, secure tokens, software and services are used in a variety of applications such as physical and network access control, encryption, digital signature, converged badges, secure remote access, pre-boot authentication, employee identity verification and biometric authentication;
• Ezio, our suite of eBanking solutions, delivers digital signature and secure access to retail and corporate bank networks, eCommerce sites and cloud computing services.

Licensing of intellectual property rights

We have a unique portfolio of proprietary technology and patents, and license use of our rights to other players.

• We have a leading set of ePassport and eDocument references worldwide.
• Our experience is unrivalled in compliance with regulatory requirements for electronic documentation and software.
• We have over 50 projects in enrolment, issuance and applications, enabling us to deliver efficient programs managing a wide variety of interactions between citizen and state.
• The leading security and scalability of our products and solutions is a key differentiating factor.
• Our global footprint and efficient operations enable us to address growing market demand.

• We have long-standing expertise in IAM with a roster of customers that includes many in the Fortune 100, such as Shell, Chevron, Pfizer, Boeing, Schlumberger and Microsoft.
• Our advanced solutions minimize total cost of ownership yet maximize convenience without compromising security, ensuring employees, contractors and others can continue to work easily and securely.
• Our products that conform to the FIPS 201 standard (e.g. dual-interface cards for Personal Identity Verification (PIV) allow the identities of government employees and contractors to be verified electronically, while resisting attempts at fraud, tampering or counterfeiting.
• Gemalto is a global leader in eBanking deployments based on EMV-CAP (Chip Authentication Programs).
• We have already achieved major deployments of our Ezio solutions in China, Italy, France, Hungary, Nigeria, the UK and the US, with over 20 million online banking customers worldwide using our solutions.

We saw steady adoption of ePassports by new entrants during 2009. At least 30 more countries are expected to have moved to electronic travel documents during 2009-2010⁽¹⁾ (from a base of 62 countries at the end of 2008). Uptake was aided by a European Commission directive that required all member states to include digital biometric information for passports issued from June 2009. Gemalto piloted and implemented these second generation ePassports with European customers such as Denmark, Estonia, France, Norway, Portugal and Sweden.

An increasing number of countries deployed electronic ID documents (eID) in 2009, attracted by the security benefits for both the state and the individual. Countries including Sweden, Finland, Estonia, Spain, Portugal, Belgium and Austria have demonstrated that eID can provide citizens and businesses with real services and benefits – without infringing on new rules for data protection and civil liberties.

We reached several eID milestones in 2009, with particular activity in the Gulf region. In January, we announced delivery of another batch of one million eID cards, plus related services, to the Kingdom of Bahrain. The high-end cards combine built-in biometrics and contactless technologies. They can also be used as travel documents in the Gulf Cooperation Council (GCC) countries.

In March 2009 we concluded a deal to continue supplying eID to the Kingdom of Saudi Arabia for three years. In April, we issued the one millionth Gemalto eID in the United Arab Emirates. In June, Kuwait deployed its own eID card program using Gemalto technology, again with a million-strong order for multi-application cards for citizens, and two million more for foreign residents.

Gemalto continued to break new ground in 2009. The ePurse functionality in the eID cards we supplied to Oman was ‘post-activated’ in July, allowing users to pay administrative fees for certificates, registrations, licenses and visa applications – as well as topping up cellphones and shopping in many stores. This is the first time on-card functionality has been activated post-deployment. The application uses Gemalto’s turnkey Coesys ePurse solution.

In Europe, Lithuania’s Ministry of Interior commissioned Gemalto to deliver 900,000 Sealys laser-secured cards for the country’s national eID program. Portugal became one of the first countries to fulfill the EU requirement for an electronic European Residence Permit (eERP) from 2010. Gemalto will deliver 150,000 cards per year over the next three years and has also supplied INCM, the country’s mint, with its Coesys Issuance personalization solution.

In July, Gemalto worked with Australia’s Placard Pty Ltd to provide several million Sealys electronic driver licenses to the Department of Transport and Main Roads in Queensland. And in May, Gabon’s national healthcare body chose Gemalto to run its new eHealthcare project, supplying a solution including cards, personalization services and an ID verification system.

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The Keesing Journal, January 2010.

Gemalto’s solutions are used by many public and private organizations to manage access for employees to both physical infrastructure and IT systems. We reach out to markets such as higher education, government, healthcare, banks and corporations.

Higher education is a testing environment for our IAM solutions. At each campus, thousands of staff, students and support workers need secure access to buildings, networks, banking, transportation – even voting in student elections. Our multi-function cards act as a single credential for staff and students that gives them access to their own personal set of services. In 2009, we announced that more than four million students at 200 Santander Universities now use our cards in this way. In Poland more than 115 universities and high schools are issuing our eStudent card, and last year Serbia used Gemalto smart cards to roll out its first eID for students.

Governments make significant demands in matters of IAM. They hold highly personal information about millions of people. Their employees are often engaged on work of great sensitivity. And reliability is paramount – both to protect data and ensure key staff can access secure information and networks wherever they are in the world.

Gemalto’s capacity for innovation has been vital in securing government customers. In 2009, we acquired US Federal Information Processing Standard 140-2 level 3 certification for our new Protiva Smart Guardian personal security USB devices. Not only do they prevent intruders from gaining access to critical security parameters, they also meet US 810-F environmental standards and are now available to secure the mobile data of US government employees. In 2009 we announced we had shipped more than 25 million smart card-based identity credentials to the federal government.

Banks have also turned to our solutions. The most valuable assets for financial services firms today aren’t held in vaults or safes – they’re in databases, and in their employees’ ability to perform secure transactions without delay. Using Gemalto smart cards to give employees access to both physical infrastructure and IT systems ensures banks can secure vital data and buildings with world-class encryption systems.

Our corporate clients have also adopted our personal portable security devices (PPSDs) that offer convenient, affordable and secure remote access. Our smart cards are used widely as identity badges, providing the right blend of visible and digital authorization to access buildings, facilities and networks.

Our expertise in issuance and personalization ensures that each user is properly accredited – and that authorizations, from the most senior decision-makers to the freshest recruits, can be managed centrally for maximum efficiency.

And with our partnerships – including new deals concluded in 2009 – with leading IT suppliers, our solutions are easy for corporate IT departments to deploy. For example, our Protiva .NET Bio solution, available for Windows 7, is already delivering increased levels of corporate security by applying multi-factor authentication with biometrics on the smart card.

Some of the largest and most advanced companies are working with Gemalto IAM solutions. Microsoft itself manages physical and logical access control worldwide using our smart cards with .NET technology.

Online banking has become popular because of its speed and convenience. eBanking also helps financial institutions reduce transaction costs, strengthen their core business and broaden their offerings to customers. But many people are concerned about the improper use of their bank details on the internet. So banks have to offer two things at once: convenience and security.

Today, thanks to Gemalto technology, banks around the world are doing this for more than 20 million web users. Our Ezio range offers end-to-end solutions in four key areas:

• Online retail banking: with solutions using EMV payment cards as well as ultra-secure one-time password tokens;
• Corporate banking: securing transactions including payroll and tax payments. Ezio puts strong authentication, transaction signatures and non-repudiation at the heart of corporate finance;
• eCommerce: Ezio also offers more secure ecommerce transactions, where users can make online purchases with the security of the EMV banking card;
• Cloud computing: cloud customers have access to distributed or hosted IT facilities for their mission-critical applications and data, so security is paramount. That’s why a major provider like Amazon Web Services has chosen a Gemalto solution for its cloud customers.