Ubisoft 2001 Annual Report Download - page 71

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FINANCIAL REPORT
Corporate accounts
71
3.2.4 Explanatory notes
on the Corporate Accounts
The following notes and tables, in which figures are shown in
thousands of Euros, are an integral part of the annual
accounts for the year ending March 31, 2002, and form an
annex to the balance sheet (before distribution of earnings),
which totaled 569.98 million, and to the income statement,
which showed a loss of 24.39 million.
The financial year covered a period of 12 months from April
1, 2001 to March 31, 2002.
Highlights of the financial year
In the course of the financial year, Ubi Soft Entertainment
S.A. absorbed over its Ubi Ventures subsidiary, of which it
owned 100%, and transferred TLC's business assets to its
subsidiary Red Storm Entertainment Inc.
It also acquired 40% of the company 3D Planet, and sold
its shares in Blue Byte GmbH to its subsidiary Ubi Soft
Entertainment GmbH.
3.2.4.1 Accounting principles
General accounting conventions were applied in compliance
with the principle of conservatism and the following funda-
mental criteria:
■continuity;
■consistency of accounting methods from one financial
year to the next;
■time-period concept;
■and compliance with the general rules governing the drawing
up and the presentation of annual financial statements.
The historical cost principle was applied as the basic method
for the valuation of items shown in the accounts.
3.2.4.2 Accounting rules and methods
Business assets
The business assets acquired include all the intangible elements
(customer base, know-how) needed for the company to do
business and grow. The intangible elements are obtained
from the average of productivity, sales and a sector-based
multiple.
If the business assets were to be valued at less than their
book value, a provision for amortization would be applied.
Intangible assets
These mainly consist of software design expenses, i.e.:
■commercial software programs which are in production or
being marketed;
■software tools.
These assets are amortized over the following periods:
■commercial software programs: 3 years maximum;
■software tools: 3 years.
Software production costs are determined in accordance
with the guidelines issued by the Conseil National de la
Comptabilité [French National Accountancy Council] in April
1987. These costs are entered in the accounts under
“intangible assets” (account no. 232) as software develop-
ment progresses. From the date of their first commercial
release they are transferred to the “Released software
programs” or “External developments” (account no. 208).
Parent software programs are amortized with effect from
their commercial release date on the basis of the expected
market life of the product concerned, as assessed at the
account closing date.
The amortization period is between 12 and a maximum of
36 months. Net pre-tax sales of the various products until
the end of their market life are estimated at K742.652
(they came to K643.526 on 31 March 2001). This sum
allows the corresponding parent software programs to be
amortized. The system of amortization used is the straight-line
method. However, if sales are less than estimated, a sup-
plementary amortization will be carried out. Software tools,
which are a set of complex development programs that
may be used for a number of products, are amortized over
a maximum of 36 months using the straight-line method.
Tangible fixed assets
These are shown at historical cost. The depreciation rates
applied are as follows:
■Equipment: 5 years (straight-line).
■Fixtures and fittings: 5 and 10 years (straight-line);
■Computer equipment: 3 years (diminishing balance);
■Office furniture: 10 years (straight-line).