Ubisoft 2004 Annual Report Download - page 95

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93
UBISOFT > 2005 FINANCIAL REPORT
2
FINANCIAL REPORT FOR THE FISCAL YEAR ENDING MARCH 31, 2005
1− Includes €60 million of additional amortization reflecting the shortfall in estimated sales and projected operating income on certain games.
3.31.05 3.31.04
Financial income
Financial income from participating interests 81 201
Income from other securities and claims on fixed assets - 50
Other interest and related income 1,348 4,696
Write-back of provisions 12,024 1,827
Positive exchange differences 8,910 10,406
Net proceeds from sales of investment securities 254 8
22,617 17,188
Financial expense
Depreciation and provisions 2,396 5,352
Other interest and relatedexpense 11,026 6,852
Negative exchange differences 7,055 9,291
20,477 21,495
Financial result 2,140 -4,307
Note 22 Net financial result
Net financial result breaks down as follows:
Foreign exchange risk
In order to limit the group's foreign exchange risk, Ubisoft Entertainment SA hedges exchange rate fluctuations in several
ways:
lwhen it makes a loan in a foreign currency to its subsidiaries, the parent company 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;
lthe distribution subsidiaries pay a royalty to the parent company as compensation for the development costs incurred by
the latter. Moreover, Ubisoft EMEA SARL centralizes the purchases of finished products for the entire region and then
resells them in local currencies to the subsidiaries. Atthe same time, UbisoftEntertainment SA finances all the production
studios around the world and most of the licensing and external development agreements. In this way, all of the exchange
rate risk is centralized with Ubisoft EMEA SARL and Ubisoft Entertainment SA. When exchange rate risk exists with regard
to a single currency in opposite directions (for example, royalties received and cost of a studio in the same currency), the
group offsets this by using advances or currency investments to manage the time lags. Amounts that cannot be offset are
hedged by forward sales contracts and option contracts.
As of March 31, 2005, the total hedge amounts resulting in purchases and sales of currencies stood at €64,140 thousand (see
§2.2.6.2 Off-balance-sheet commitments).
Note 21 Amortization, depreciation and provisions
Depreciation and provisions break down as follows:
3.31.05 3.31.04
Depreciation of intangible fixed assets 116,0541108,898
Depreciation of tangible fixed assets 539 923
Provision for charges to be spread over several fiscal years 205 675
Other provisions - 114
Total 116,798 110,610