Atari 2012 Annual Report Download - page 52

ANNUAL FINANCIAL REPORT – REGISTRATION DOCUMENT
52
2.1.1. Change in presentation
The management of the Company decided, in conjunction with the Company’s evaluation of its segments, to change the
presentation of the “digital revenues”, and that the mobile and social portions of the “Digital” segment should be reflected
on a gross basis, with corresponding costs reflected in cost of goods sold. For purposes of presentation consistency, the
Company has restated FY 2010/2011 digital distribution revenues in the same manner, with no impact to the gross
margin or the rest of the P&L.
Fiscal year 2011/2012 is the first year revenues of "digital business" are significant. As such the Company evaluated its
revenue recognition policy as required by IAS 18.8. Contracts with the various market players, including Apple, Android
and Facebook, stipulate that these actors are agents in the transaction, and that all significant risks and rewards
associated with the transaction are still supported by Atari. On the other hand, the selling price of applications is set by
the company, not by the agent. Based on these facts, Atari decided to treat income distribution "mobile, social, and
digital" in gross basis, with the related costs reflected in the cost of goods sold.
The group also searched on the treatment of such income by its competitors. The majority of peers are private
companies that do not publish their financial statements, but in informal conversations that took place, it was noted that
there was no consistency in treatment.
The impact of this change on the revenue and gross margin of the group is as follows:
These financial statements and the related notes are presented in euros. They were approved by the Board of Directors
on May 8, 2012. They will be submitted for approval at Atari’s Annual General Shareholders’ meeting in September
2012.
2.1.2. Application of the going concern principle
During and prior to Fiscal Year 2009/2010, the Group made significant losses that have eroded its equity and cash
position. In Fiscal Year 2010/2011, the group recorded a loss of €6.2 million reduced to €3.7 million in Fiscal Year
2011/2012. As of March 31, 2012, shareholders’ equity (net of minority interests) was negative at minus €7.5 million. On
that same date, the Group’s net debt was €20.8 million and the Group does not have a drawdown capacity under its
credit facility.
In order to ensure that it has the requisite funds to finance its operations in 2012/2013 (and after) and to improve its
capital structure, the Group’s strategy focused on 4 main priorities:
 build and monetize Atari’s digital games: Atari’s strategy is focused on the digital segment, the fastest growing
segment of the gaming industry, with a specific focus on mobile games as a core business and also a re-focus
on online games as part of cross platform initiatives
 leverage Atari’s brand and IP portfolio through licensing and strategic partnerships
 remain opportunistic on the retail market to promote Atari’s IPs
 focus on profitability
On this basis, the Group has applied the going concern principle in preparing its consolidated financial statements,
based on the following assumptions:
 Extension of the maturity of the credit facility line granted by BlueBay after December 31, 2012 at the then
current balance, and
 Operating cash flows for the Fiscal Year 2012/2013 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 as
mentioned above- will be sufficient to cover the Group's operating expenses and capital expenditure for the next
12 months (i.e.: for the 12-month period ending as of March 31, 2013. In the case the financial resources of the Group
would not be sufficient, the management believes that the credit facility would be extended beyond December 31, 2012.
Exemptions to the retrospective application of IFRS opted for on the first-time adoption of IFRS (April 1, 2004)
The Group chose to use the following exemptions permitted under IFRS 1 for its opening IFRS balance sheet on April 1,
2004:
(in € million)
Net Gross Net Gross
Revenue 34,8 39,6 56,7 60,1
COGS (4,6) (9,4) (22,2) (25,6)
Gross Margin 30,2 30,2 34,5 34,5
31-Mar-12
31-Mar-11