Ubisoft 2004 Annual Report Download - page 130

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UBISOFT > 2005 FINANCIAL REPORT
Currency risk
The group is exposed to foreign exchange risk on its cash
flows arising from operating activities as well as on its
investments in its foreign subsidiaries.
The group protects only its positions related to its
operating cash flows in the main significant currencies (i.e.
the US dollar, Canadian dollar, pound sterling and the
Australian dollar). The strategy is to hedge one fiscal year
at time and as a result, the hedge period does not exceed
15 months.
The group relies mainly on natural hedges resulting from
two-way transactions (i.e. purchases of goods in foreign
currencies offset by royalties received from subsidiaries in
the same currency). For non-hedged balances and
non-commercial transactions (i.e. internal loans in foreign
currencies), the parent company borrows in these currencies
or sets up forward sales contracts or options.
Scope of internal
control
The Ubisoft group is composed of 17 French companies and
29 foreign companies, broken down as follows: 21 distribution
companies, 18 production companies, six support companies
and one mobile phone company.
Major strategies and objectives are determined by General
Management, representedby the Board of Directors and
the General Management of each subsidiary.
Each subsidiary has its own management and management
team.
The implementation of strategies to achievethe objectives
thus defined is handled by each subsidiary.
General organization
of the internal control
procedures at the
group level
6.2.4.1 General organization
The organization and role of the various bodies that
contribute to internal control are describedbelow.
The group's Chairman and Chief Executive Officer
This person is responsible for developing the procedures
and measures put in placeto ensure the proper functioning
and follow-up of internal control.
Accounting and Finance departments
These include staff departments that play a dual role of
expert evaluation and control.
These departments exist in all of the group's companies:
Each subsidiary's Financial Controlling department supplies
relevant numeric data (sales, margins, costs, etc.) to
operations managers, enabling them to make management
decisions for the subsidiary. Its objective is to provide
monthly forecasting reporting tools, adapted to the various
6.2.4
6.2.3
levels of responsibility, and to analyze discrepancies between
targets and actual figures.
Each Accounting department manager prepares monthly
accounts on the 10th day of the following month and
completes the consolidation reporting package.
The accounting managers of the French subsidiaries send
the accounts to the Audit and Review Department, which
oversees the preparation, audit and review of the accounts
to ensure that they accurately reflect the financial position.
This department also oversees and approves the analysis and
formalization of the organizational and computer processes.
The Consolidation department, which reports to the
Administration department, prepares the group's monthly
consolidated accounts on the 20th of the following month;
it also monitors the group's consolidated sales figures on a
day-to-day basis.
This department is the central point of all the group's
expertise in terms of preparing and analyzing monthly
accounts. It publishes the accounting procedures used by
the group, particularly via the consolidation manual.
It ensures compliance with the existing standards and
regulations in order to present an accurate picture of the
group's activity and financial position.
The Treasury and Finance department handles operations
involving interest and exchange rate derivatives and
coordinates cash flow management for the French and
foreign subsidiaries.
It ensures that policies governing the management of
interest rate, foreign exchange and liquidity risk are
consistent with the financial information published.
It delegates authority to a limitednumber of employees,
who are the onlyones authorizedby General Management
to conduct certain financial transactions on behalf of the
subsidiaries, in accordancewith predefinedthresholds and
authorizations.
The Financial Communications department provides the
financial information required for a proper understanding
of the group's strategy to shareholders, financial analysts,
investors and so on.
The Information Technology department (ITD)
manages the development of specific tools for all
subsidiaries and participates in the selection of
IT solutions. It is responsible for implementing,
coordinating and developing ERP (Enterprise Resource
Planning) at the group. It continuously monitors the
progress of the various IT projects and sees to it that they
are in line with the operational staff's requirements.
6.2.4.2 Implementation of resources
An approach focused on product integration
As a part of overall ERP operations, the purchasing
management module is a good example of the integration
of company data.
In terms of operations (sales and manufacturing), this
module has become the common platform used by the
EMEA team (Europe/Middle East/Asia Zone) and the
zone's distribution subsidiaries.
People Soft is a centralized application built on a single
database used by all the subsidiaries, which allows them to