Atari 2011 Annual Report Download - page 97

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
97
On this basis, the Group has applied the going concern principle in preparing its parent company financial statements,
based on the following assumptions:
• Disposal of the Cryptic Studios;
• Extension of the credit facility line granted by BlueBay until December 30, 2011 for €49 million (for more
information, refer to note 27.3), and
• Operating cash flows for of the Fiscal Year 2011/2012 in line with the Business plan.
Group management believes that its projections are reasonable. However, in light of the uncertainties inherent in
financial negotiations and strategic refocusing under adverse economic circumstances, results may differ from forecasts.
Those circumstances could restrict the Group’s ability to finance its current operations and result in adjustments in the
value of the Group’s assets and liabilities.
Based on the above-described measures and assumptions, as well as the Budget for the next 12 months, the
management of the Group believes that the Group's financial resources – including the extension of the credit facility-
will be sufficient to cover the Group's operating expenses and capital expenditure for the 12-month period ending as of
March 31, 2012. In the case the financial resources of the Group would not be sufficient, the management believes that
the BlueBay credit facility would be extended beyond December 30, 2011.
2.2. Accounting principles
The basic method used to measure accounting items is the historical cost method.
The principal approaches used are as follows:
• Intangible assets and property, plant and equipment
Intangible assets and property, plant and equipment are measured at cost (purchase price and incidental expenses).
They are depreciated over periods which vary according to the nature of the asset:
- Software 1 to 3 years
- Machinery and tools 1 to 4 years
- Improvements and fittings 10 years
- Furniture 2 to 10 years
Property, plant and equipment is depreciated on a straight-line basis.
• Financial assets
The gross value of investments in subsidiaries and associates corresponds to the historical cost of the corresponding
securities, including costs directly attributable to the acquisition.
Securities acquired subject to an earn-out are adjusted according to the definitive price.
An impairment provision is recognized whenever the carrying amount exceeds the recoverable amount of the assets.
The recoverable amount is calculated using a variety of criteria, including those applied when the asset was originally
acquired (including stock market multiples), market values, expected returns based on discounted future cash flows, and
adjusted net worth.
If applicable, in the event that the recoverable amount is negative, in addition to recognizing an impairment loss, the
other assets held are also written down and, if necessary, a contingency provision is recognized.
• Receivables
Receivables are recognized at their nominal value. The Company recognizes a provision for impairment whenever their
gross carrying amount exceeds fair value.
• Transactions in foreign currencies
Income and expense items denominated in foreign currencies are recognized at their equivalent value in euros at the
transaction date. Liabilities, receivables and cash denominated in foreign currencies are translated using the exchange
rate at the balance sheet date. Differences arising on the translation of liabilities and receivables in foreign currencies
are recorded in the balance sheet under “Unrealized foreign exchange gains (losses)”.
A contingency provision is recognized for unrealized foreign exchange losses not offset by gains.
• Bond issue costs, premiums, discounts and redemptions
Bonds are recognized at the issue's nominal value. Costs and premiums are recognized in assets under “Accruals” and
are amortized in financial income over the life of the bonds, unless the redemption risk is hedged.
• Stock options
Stock options are accounted for as and when the options are exercised, as share issues with a value equal to the
exercise price paid by the option holders. Any difference between the exercise price and the nominal value of shares is
recognized as a premium over par.