Ubisoft 2001 Annual Report Download - page 37

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FINANCIAL REPORT
Financial Year 2001/2002
37
2.5 Comments on earnings
for the 2001/2002 financial year
Significant Rise in Profitability
During fiscal year 2001/2002, Ubi Soft’s sales, in line with its
forecasts, were up 42% from the previous year. Internal
growth was 18%, twice that of the world video game market.
The contribution of acquisitions in 2000/2001 was higher
than the Group’s target. It represented 108 million Euros. In
the United States, in particular, sales increased 112% and
now represent 37% of Ubi Soft’s business. Sales in Europe
were up 21%, and account for 57% of consolidated sales.
Gross margin has grown 50% in value terms. Expressed as a
percentage of sales, it has risen by 3 points over 2000/2001.
Operating income is up 292%, due to continued gains in pro-
ductivity and good control of operating expenses. Thus, sales
per employee grew 38% to reach 194,000 Euros, after an
increase of 26% between 1999/2000 and 2000/2001. Control
of operating expenses is confirmed by their slower increase
(+34%) vs. sales growth (+42%).
The reduction in financial income is attributable mainly to
greater indebtedness, following acquisitions made in 2000/2001,
and to provisions for depreciation of minority interests (2 million
Euros). The exceptional income is essentially due to a gain of
3.8 million Euros arising from litigation with the American
company Take 2, and to a 1.8 million Euro provision for bad
debts written to account for the bankruptcy of the American
distributor K Mart.
Before amortization of goodwill and business assets, net inco-
me comes to 13.4 million Euros or +168% over fiscal year
2000/2001.
In accordance with the new accounting French standard set
up by the French national accounting board (Bulletin 123,
September 2001), Ubi Soft is now adding the amortization
of business assets (2.1 million Euros) to that of goodwill
(3.3 million Euros on a full year basis). The result is an
increase of this item to 5.4 million Euros, up from 1.4 million
Euro last year.
Steady Progress in Financial Ratios
Ubi Soft’s financial ratios continued to improve. Thus, at
March 31, 2002, working capital requirement stood at 40%
of sales, a 5 point drop from the past year. Inventory decrea-
sed sharply to 3.8 months from the previous figure of 4.8.
Days of sales outstanding were 105 days, down on 112 days
last year. Finally, at 131.7 million Euros, net indebtedness
represents 42% of shareholders’ equity.
Pro Forma Presentation
Along with its consolidated accounts pursuant to French
accounting standards, Ubi Soft will present US Gaap pro
forma accounts, in which internal development costs have
been immediately expensed, as some American video-game
publishers do.
Main differences between standards:
■French standards or “French Gaap”:
• Immobilization, then amortization of in-house research
and development expenses;
• Since April 2001, the new Conseil National de la Comp-
tabilité (CNC) [French National Accountancy Council]
standard governing the amortization of goodwill and
business assets has been applied.
■US Gaap pro forma standard
• In-house research and development costs entered in the
accounts as charges.