Ubisoft 2005 Annual Report Download - page 39

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1
37
UBISOFT • 2006 ANNUAL REPORT
FINANCIER
The group’s activities and performance for fy 2005-06
Fiscal year (in millions of €) 2005-06 % 2004-05 %
France 46 8.4% 53 10.0%
Germany 37 6.7% 52 9.7%
United Kingdom 82 15.0% 73 13.8%
Rest of Europe 105 19.3% 109 20.2%
Total 270 49.4% 287 53.7%
United States/Canada 245 44.8% 219 41.1%
Asia-Pacific 25 4.6% 23 4.4%
Rest of World 7 1.2% 4 0.8%
Total 547 100% 532 100%
FY 2005-06 saw a shift in favor of North America, which benefited from the advanced launch of Nintendo DSTM and Sony
PSPTM, as well as a larger Xbox 360TM market.
Growth in the UK stemming from the success of Peter Jackson King Kong: The Official Game of The Movie at Christmas
and the fast acceptance of Xbox 360TM should also be noted.
The Asia-Pacific and Rest of World regions profited from strong economic growth in these areas and the growing success
of the video game market; they now represent nearly 6% of the company’s sales.
Sales by destination
1.2.6
- €0.7 million, which represents the company’s share in
Gameloft’s earnings.
- €2.6 million in income from dilution.
- €15.8 million in profits from sales of shares.
The company recorded a net tax credit of €3.3 million.
This net tax resulted from:
- A tax credit of €3.2 million for losses during the year,
excluding the share of equity-accounted companies.
- Research tax credits equal to €2.5 million.
- Tax in the amount of €2.4 million on capital gains from
sales of Gameloft SA shares.
Net income was €11.9 million according to IFRS standards
a net earnings per share of €0.63.
Change in working capital
requirement (WCR) and
indebtedness
Working capital requirement held steady at €59 million, or
11% of annual sales.
Net indebtedness was €65.3 million, down by €9 million
compared to the previous year, and represented 17% of
the company’s equity.
Several factors contributed to this change:
Equity issues in the amount of €40 million.
Sales of Gameloft SA shares for €23 million.
A €54 million increase in investments, mainly in production.
Changes in the income
statement
The gross margin was 66% of sales compared to 66.5% in
FY 2004-05. This slight decrease resulted from a fall in
prices of games on previous-generation home consoles, a
higher share of Game Boy Advance sales and a drop in PC
sales, which was offset by an improvement in sales of
games on new portable consoles (Sony PSPTM and
Nintendo DSTM) and Xbox 360TM, which are sold at a much
higher price.
The current operating result and before compensation
paid in shares was €3.1 million versus €38.9 million in
2004-05. This decrease was due mainly to increases in
development costs (up €12.8 million), advertising and
marketing expenses (up €18.4 million), and depreciation
and provisions, excluding games (up €3.9 million), which
were offset by an additional gross margin of €6.5 million
linked to the increase in sales. These increases in expenses
stemmed from both the additional resources invested in
the development of new-generation games and a highly
competitive market in 2005 marked by an overall increase
in advertising spending by all publishers.
Net financial income/expense breaks down as follows:
- €10.3 million in financial costs, 1.7 million of which had
no impact on cash flow, corresponding to the accounting
treatment of convertible bonds, OCEANE bonds and
OBSAR bonds.
- €6.3 million in foreign exchange losses.
- €7.5 million linked to the positive impact of the equity
swap.
The €19.109 million income related to the share in ear-
nings of equity-accounted companies includes:
1.2.7
1.2.8