Ubisoft 2012 Annual Report Download - page 143
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Financial Statements
2012
138
Conversion of liabilities and receivables denominated in foreign currencies
Liabilities and receivables denominated in foreign currencies are converted at rates prevailing on
March 31, 2012. Any resulting conversion gains or losses are recognized in the balance sheet under a
specific heading. A provision for foreign-exchange risk is booked if conversion reveals the existence of
unrealized losses.
Foreign currency transactions
Foreign exchange income and expenses are booked using daily exchange rates.
Receivables, liabilities and cash in foreign currencies are converted at the prevailing exchange rates at
the end of the financial year, except for those subject to hedging, which are converted at the hedging
rate.
Unrealized gains and losses on receivables and long-term debt are booked on the balance sheet
under conversion rate adjustments. Unrealized losses that have not been hedged are subject to a
provision for foreign exchange losses.
Conversion rate adjustments on cash and current accounts in foreign currencies are immediately
recognized as foreign exchange income/loss.
Foreign exchange hedges
Ubisoft uses financial derivatives to reduce its exposure to market risks linked to movements in
exchange rates.
For purposes of the hedging thus established, income and expenses on financial derivatives are
recognized as financial income and are offset against the income and expenses arising on the hedged
items.
The transactions attached to hedging derivatives (mostly USD) are recognized in operating income at
the hedging rate. The difference between the historical rate of the hedged transaction and the relevant
hedging rate is recognized in financial income.
Provisions for risks and charges
Provisions for risks and charges are recognized where risks and charges have a clearly
defined purpose but are not certain to arise, made likely by events that have occurred or are
in progress.
A provision for exchange losses is recognized, if applicable, up to the negative fair value of
the non-hedge foreign exchange derivatives.
Regulated provisions
Regulated provisions relate only to the accelerated depreciation on:
- Acquisition costs incorporated in the cost price of participating interests. These costs are
deducted in tax terms over 5 years by means of accelerated tax depreciation.
- Development expenditure of software. The Company decided to adopt immediate deductibility
of expenditure for the development of software according to Article 236 of the CGI (French
General Tax Code).