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August 4th - 2006

Consolidated results for the 9 months period of FY 2005/2006

(Oct 2005-June 2006)

In € millions


















3 m

3 m

3 m

9 m

9 m









Operating revenues







Operating expenses







Operating result







Profit before goodwill amortisation







Net result







(*) Non-audited consolidated figures

Operations and results
Revenues for the quarter were 1.50M€. Operating revenues (when in particular R&D grants are added) were 1.69M€. Operating expenses were 1.93M€. Taking into account the impact of currency exchange and goodwill amortization the net loss for the quarter was 0.38M€.

Operating expenses were reduced from Q1 to Q3 by 0.53M€. Q1 is the good reference quarter since this was the historically strong quarter where our financial shortfall became clear. The operating expense comparison shows our cost reduction plan has now had full effect. Please recall that the cost reduction plan consisted in reducing headcount both in France and in Brazil, and in reducing some less critical expenses such as marketing and communication. Q3 Sales were slightly above the Q2 sales, and yet slightly under the historically strong Q1 sales which included the revenue boosting product launch of Mandriva Linux 2006. The results show that Mandriva was successful in significantly decreasing expenses without a material affect in revenues.

The Brazilian subsidiary made definite progress. Its operating loss has been decidedly reduced from -0,17M€ in Q1 to -0,02M€ in Q3, due to both an increase in revenue and a decrease in operating expenses. We are particularly pleased with our OEM sales in this territory, where between 20,000 and 30,000 machines are sold each month with Mandriva Linux.

Note on the BSA operation
The company is receiving many questions and requests for clarification on that process, so we believe a more detailed explanation is needed. As shareholders have been informed, the AMF has granted its visa to our BSA (Warrant) operation. Recall that we had launched this operation in December 2005. It consisted in granting every shareholder one BSA for two shares with an exercise price of 5.25€. At that time, the purpose of the operation was to provide us with funds to pursue our external growth strategy, completely exit our Chapter 11 process, and eventually prepare the company to a transfer to a regulated market. These objectives made sense at that time.

After reviewing our announcement, the AMF asked us to suspend the operation and formally request a visa approval. We complied with the AMF request by filing a prospectus in March 2006. Visa n° 06-221 was formally granted by AMF on June 23, 2006. The approved BSA operation is the same as the initial one, except for the exercise period, which was extended till the end of September. Since the delay introduced by the visa application, the company's stock price has declined. The company therefore does not think that the initial objectives of the operation make sense in the short term.

Instead, we are now focused on bringing the company back to profitability as quickly as possible. The company expects that only the previously committed 1.5M€ will be subscribed because the exercise price exceeds the current market price. The company is expecting a return to positive cash flow in Q1 2006-2007.

About Mandriva

Mandriva is one of the world leading editors of Linux operating systems and open-source software. The company develops and markets the Mandriva Linux operating system. Several hundred developers worldwide contribute to the constant improvement of our product via the Internet and to its internationalisation (it is now available in nearly 70 languages). Mandriva also provides associated off-line services such as consultancy, training and support, alongside on-line services including technical back-up and the Mandriva Users Club.

Mandriva has its headquarters in Paris and offices in the USA and Brazil.

The company is listed on the Marché Libre of Euronext Paris.
For more information go to: mandriva.com/company/investors/newsletter

ISIN: FR0004159382
Reuters: MAKE.PA
Number of shares: 5,606,753

Contact Mandriva:
François Bancilhon / Thierry Bossut
investors at mandriva.com
Tel.: +33 (0)1 40 41 00 41