Ubisoft 2004 Annual Report Download - page 33

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UBISOFT > 2005 FINANCIAL REPORT
1
GROUP’S ACTIVITIES AND PERFORMANCE DURING FISCAL YEAR 2004/2005
Fiscal year 2004/2005 2003/2004
(€M) Sales % Sales Sales % Sales
France 53.7 10.0% 52.8 10.3%
Germany 52.0 9.7% 38.4 7.5%
UK 74.6 13.8% 69.4 13.7%
Rest of Europe 108.8 20.2% 89.5 17.6%
Total Europe 289.1 53.7% 250.1 49.2%
United States/Canada 221.3 41.1% 236.6 46.5%
Asia/Pacific 23.6 4.4% 19.7 3.8%
Rest of World 4.0 0.8% 2.1 0.4%
Total 538.0 100% 508.4 100%
This includes:
l€4.2 million savings from previouslyunused tax credits;
l€1.7 million savings from tax credits on research expenses;
l€1.4 million savings due to permanent differences
between consolidated and social results.
If these non-recurring items were excluded, the tax rate
would be approximately 34%.
Before amortization of goodwill and business assets (€7.2
million), net income was €27.2 million under French
accounting standards and €27 million according to pro
forma standards (see Section 1.2.9, Pro forma accounting).
Change in working
capital requirement
(WCR) and indebtedness
While increasing its investment in internal development by
€20 million, Ubisoft generated cash flow of €25.1 million
and continued to improve its working capital requirement
by €33.4 million. WCR now represents 18% of sales,
versus 26% the previous year. Available net cash flow
before acquisitions stood at €50.6 million, versus
€58 million in 2003/2004.
Lastly, net indebtedness after application of bond
redemption premiums fell by € 38 million. As of March 31,
2005, net debt represented 25% of equity capital under
French accounting standards, comparedwith 41% a year
earlier.
1.2.7
The 2004/2005 fiscal year saw a shift in sales from North America to Europe, resulting from two factors:
lthe stronger euro posed a disadvantage for North America, where business remained steady if the impact of the
exchange rate is excluded;
lan unfavorable basis for comparison: in 2003/2004 North America region benefited from the release in April of
Tom Clancy’s Splinter Cell Pandora Tomorrow™ for PlayStation®2, while it had been launched in the previous fiscal
year in Europe.
In Europe, sales increased significantly in every major country, notably Germany where sales rose by 36%.
Change in
income statement
The group’s gross margin increased by 1.5 points to 66.5%
of sales (versus 65% for the 2003/2004 fiscal year). This
improvement results from the group’s policy of focusing
on products with strong potential that generate a higher
margin. It is also a result of finer calibration of sales
projections, which has led to a reduction in returns as well
as inventories.
Gross operating surplus stood at €160.8 million (an increase
of +24%). This higher figure can be attributed to the
increase in sales activity and an improved margin, while
sales costs have remained stable.
Operating income stood at €41.4 million, a €39.9 million
increase. This reflects both the improvement in gross
operating surplus, accounting for €30.8 million, and a
reduction in allocations to amortizations (€9.1 million).
Using the pro forma standard, operating profit totalled
€41.1 million, versus €20.1 million in 2003/2004 (see
Section 1.2.9, Pro forma accounting).
The net financial results break down as follows:
l€8.9 million in financial charges;
l€0.5 million in exchange losses;
l€2.3 million in depreciation of redemption premiums and
expenses relating to bond issues.
Corporate tax represents a €2.8 million charge
corresponding to a 9.5% facial tax rate.
1.2.6
Sales by destination
1.2.5