Ubisoft 2000 Annual Report Download - page 61

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60
Other external expenses consisted mainly of advertising expenses, royalties, and the rental of property
and movables, which represented 2/3 of the total.
>>> IV. DEPRECIATION AND PROVISIONS
Depreciation and provisions break down as follows:
(IN ‘000 FF) 03/31/01 03/31/00
Depreciation of fixed assets 255,793 233,233
Provisions for current assets 12,932 6,831
TOTAL 268,725 240,064
>>> V. OPERATING INCOME
The fall in operating income from FF 90 million on March 31, 2000 to FF 52 million on March 31, 2001
essentially reflects:
>a higher proportion of GameBoy Color sales, which have a lower margin (impact on gross margin of
FF 63 million);
>price pressure on PSX games (lower prices due to the release of PS2, impact on gross margin of
FF 7 million);
>a significant downturn for the first half-year on old-generation consoles (N64 and Dreamcast, impact
on gross margin of FF 32 million).
>>> VI. FINANCIAL INCOME
Net financial income breaks down as follows:
(IN ‘000 FF) 03/31/01 03/31/00
Conversion differentials 19,255 14,392
Conversion differential for assets N (3,265) 0
Conversion differential for liabilities N +7,613 +12,703
Conversion differential for liabilities N-1 (12,703) 0
Interests and revenue from sales of assets (25,696) (23,081)
Net depreciation (5,798) (1,183)
Total financial income (20,594) 2,831
The conversion differential caused by using the historic cost method is not significant.
The total conversion differential taken to share capital amounts to FF -3.8 million.
This total essentially reflects the fall in dollar values between the historic value and the closing rate on
March 31, 2001.
Currency risk:
In order to hold down the Group’s foreign exchange risks, Ubi Soft Entertainment covers currency risks
in several ways:
>when the parent company loans foreign currency to its subsidiaries, it also takes out a loan in the
same currency. Thus if the exchange rate rises or falls, any gain or loss on the loan is offset by a gain
or loss on the parent company’s loan in the opposite direction.
>In the case of risks on currency sales associated with commercial transactions, these are either auto-
matically offset for the year by other transactions in the opposite direction (purchases of goods in a
foreign currency offset by royalty payments by subsidiaries in the same currency) or covered by for-
ward sales contracts.