Ubisoft 2005 Annual Report Download - page 151

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UBISOFT • 2006 ANNUAL REPORT
FINANCIER
CHAIRMAN OF THE BOARD OF DIRECTORS’ REPORT
its operating cash flow in the major currencies (i.e. the US
dollar, Canadian dollar, pound sterling and Australian
dollar). The strategy is to hedge one fiscal year at a time,
which means that the hedge period does not exceed 15
months.
The Group relies mainly on natural hedges resulting from
two-way transactions (i.e. development expenses in
foreign currencies offset by royalties received from sub-
sidiaries 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-sale contracts or options.
Scope of internal
control
The Ubisoft group is composed of 18 French companies and 28
foreign companies, broken down as follows: 20 distribution
companies, 19 production companies, 6 support companies
and 1 mobile phone company.
Major strategies and objectives are determined by general
management, represented by 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 achieve the objectives
thus defined is handled by each subsidiary.
General organization
of the internal control
procedures at the group
level
7.2.4.1 General organization
The organization and role of the various bodies that
contribute to internal control are described below.
The Ubisoft Entertainment SA’s Chairman and Chief
Executive Officer:
He defines and sets the group’s strategy. He is responsi-
ble for the preparation of the procedures and means
deployed to ensure the operation and monitoring 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.
The group Management Control department coordinates the
network of management controllers for subsidiaries and sets
up projected monthly reporting procedures, adapted to the
various levels of responsibility, and analyzes the disparities
between objectives and achievements. It is responsible for
the compilation of the budget per cost and profit center.
Budget objectives are defined on an annual basis by general
management.
Each Accounting department manager prepares monthly
accounts on the ninth business day of the following month;
the consolidation reporting package is completed on a
half-yearly basis.
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 monthly consoli-
dated accounts for the group on the 18th business day of the
following month; it also tracks the group’s consolidated
sales on a daily 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 coor-
dinates 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 limited number of employees,
who are the only ones authorized by general management
to conduct certain financial transactions on behalf of the
subsidiaries, in accordance with predefined thresholds 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. All financial announcements, as well
as press releases, are reviewed and approved by general
management.
The role of the Human Resources and Benefits departments
is to ensure compliance with the provisions of the Labor
Code, and apply the group’s policies regarding continual
improvement of professional and personal performance
through regular job evaluations, a development plan, allo-
cation of stock options, subscription to the group savings
plan, training initiatives and so on.
Each year, the international HR departments collect data
on a certain number of indicators (training initiatives, staff
etc.) from subsidiaries in order to measure progress made
in the area of human resources and supply the required
information to other departments.
Each subsidiary’s HR department is responsible for des-
igning and implementing its own HR policy, programs and
tools in line with the group’s HR directives, with the objective
of helping local teams create value for the group and
7.2.3
7.2.4