Ubisoft 2005 Annual Report Download - page 65

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UBISOFT • 2006 ANNUAL REPORT
FINANCIER
Ubisoft group’s consolidated accounts as of March 31, 2006
When the time factor has a significant impact, the amount
of the provision is determined by discounting expected
future cash flows at the pre-tax rate that reflects the cur-
rent market assessment of the time value of the money, and
when this is appropriated, the risks specific to this liability.
Trade creditors and related accounts payable
Trade creditors and related accounts payable are valued at
amortized cost.
Sales
Proceeds from the sale of goods are recognized in the
income statement when the significant risks and benefits
intrinsic to ownership of the goods have been transferred
to the purchaser.
Total sales are evaluated at the fair value of the considera-
tion received or receivable, net of rebates, volume discounts,
cash discounts and provisions for the return of goods.
Current operating result
The current operating result includes the gross margin,
administrative and sales costs, the cost of pension and
retirement plans, and the cost of payment in shares.
Other operating expenses/income
There are not many items included in other operating
expenses/income and these correspond to rare events.
Borrowing costs and other financial
expenses/income
Financial result comprises the net borrowing cost and
other financial income and expenses. The net borrowing
cost includes:
- Cash and cash-equivalent income that includes the results
of the sale of investment securities and interest income.
- The gross borrowing cost, which includes all interest
charges on financial operations as well as the results of
hedging operations.
Other financial income and expenses include the results of
the sale of non-consolidated investments, changes in the
fair value of financial instruments (assets, liabilities and
derivatives), foreign exchange results, and other financial
income and expenses.
Income Taxes
The income tax (expense or income) includes the effective
tax expense (income) and the deferred income tax expense
(income). The tax is entered in the results unless it relates
to items that are booked directly as equity; in this case, it
is recorded under equity.
Effective income tax
The effective income tax is the amount of estimated tax
due on the taxable profits for a period, determined by
using the tax rates adopted at closing.
Deferred income tax
Deferred income tax is calculated using the asset-liability
method of tax allocation for all temporary differences arising
between the book value of assets and liabilities and their tax
bases. The evaluation of deferred income tax assets and lia-
bilities is based on the way the group expects to collect or pay
the book value of the assets and liabilities, using the tax rates
adopted at closing.
A deferred income tax asset is recognized only to the extent
that it will be future taxable profits on which this asset can
be charged. Deferred income tax assets are reduced to the
extent that it is no longer likely that a sufficient taxable
benefit will be available.
The effect of any adjustments in tax rates on deferred
income taxes recorded previously is booked under equity.
Deferred taxation is shown on the balance sheet separately
from current tax assets and liabilities and categorized
among non-current items.
Segment information
In light of the Group’s organizational structure and the
commercial links among the various subsidiaries, we pro-
ceed on the basis that the group operates in a single mar-
ket and in several geographical regions.
Earnings per share
- Earnings per share
This figure is the ratio of net income to the weighted
average number of shares in circulation minus own shares
held.
- Fully diluted earnings per share
This figure is obtained by dividing:
- Net earnings before dilution, plus the after-tax amount
of any savings in financial costs resulting from the
conversion of the diluting instruments
- By the weighted average number of ordinary shares in
circulation plus the number of shares that would be crea-
ted as a result of the conversion of convertible instru-
ments into shares and the exercising of rights.
Net earnings as of March 31, 2006 11,932 K€
Dividends paid to shareholders 0 K€
After-tax financial costs relating
to bond debentures 5,276 K€
Restated net income 17,208 K€
Weighted average number of shares
in circulation as of March 31, 2006 19 011 895
Potential shares:
Share subscription warrants 2 321 080
Convertible bonds 0
Bonds exchangeable or convertible
to new or existing shares (OCEANE) 1 814 025
Stock options 1 549 878
Weighted average number of shares after
exercise of rights relating to diluting
instruments 24 696 878
Diluted net earnings per share on March 31, 2006 = €0.70
No dividends were paid over the fiscal year 2005/2006 on
the results for 2004/2005.