Ubisoft 2001 Annual Report Download - page 46

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46
3.1.4 Explanatory notes
on the Consolidated Accounts
Highlights of the financial year
In the course of the financial year, Ubi Soft Entertainment
S.A. absorbed its Ubi Ventures subsidiary, of which it owned
100%, and transferred TLC's business assets to its subsi-
diary Red Storm Entertainment Inc.
It also acquired 40% of the company 3D Planet, and sold
its shares in Blue Byte GmbH to its subsidiary Ubi Soft
Entertainment GmbH.
Switzerland and Canada now handle distribution of their
products.
In light of the position adopted by the Compagnie Nationale
des Commissaires aux Comptes (CNCC) [French Institute of
Auditors] regarding the amortization of business assets
acquired since regulation no. 99-02 came into force, the
Group decided to amortize them over 20 years using
the straight-line method, with effect from the 2001/2002
financial year.
The impact on consolidated earnings is 2,021,000.
3.1.4.1 Accounting principles
The consolidated accounts were drawn up in accordance
with Accounting Standards Committee Regulation 99-02 for
the financial year commencing April 1, 2000. The implemen-
tation of this new regulation had no significant impact on
the Group’s earnings compared with previous years.
The figures in the notes and tables which follow are shown
in thousands of Euros.
The preferred methods recommended by Accounting Stan-
dards Committee Regulation 99-02 were applied with the
exception of the evaluation of pension commitments and
similar services, due to their non significant caracter.
Differences in exchange rates relating to a significant mone-
tary element are essentially an integral part of the net
investment of a subsidiary, they are entered as translation
differentials.
a) Consolidation methods
Full consolidation
Companies are fully consolidated when exclusively controlled
as the result of Ubi Soft Entertainment S.A., directly or indi-
rectly holding 50% of their voting rights or at least 40%
if no other shareholder holds a larger percentage.
Equity affiliates
Companies on which Ubi Soft Entertainment S.A. exerts
considerable influence because it holds, directly or indirectly,
20 to 50% of the voting rights, are accounted for using the
equity method.
As of March 31, 2001, all the companies in the Group are
exclusively controlled by Ubi Soft Entertainment S.A., and are
therefore fully consolidated.
Intra-Group transactions are eliminated for all the compa-
nies in the Group according to the applicable consolidation
rules.
All significant transactions between consolidated compa-
nies, and all unrealized internal profits included in the fixed
assets and the stocks of consolidated companies have been
eliminated.
b) Goodwill, business assets, trademarks
In accordance with the regulations on consolidated accounts,
goodwill is the difference between the acquisition price and
the assessment of the total assets and liabilities identified
on the acquisition date. Goodwill is entered:
■where appropriate, to the various balance sheet items of
the companies acquired,
■as “goodwill” on the asset side of the balance sheet in the
case of the sum remaining.
The latter is amortized over a period of no more than 20
years using the straight-line method.
Goodwill is reviewed for each set of Annual Accounts in the
light of changes in the sales of the subsidiary and its contri-
bution to the net income of the consolidated entity as a
whole. Such goodwill may therefore be subject to exceptional
amortization or write-down where appropriate.
As a precaution, negative goodwill is spread over the same
period as positive goodwill (20 years).
The business assets acquired include all the intangible elements
(customers, know-how) needed for the company to do business
and grow. The intangible elements are obtained from the
average of productivity, sales and a sector-based multiple.
In the event that business assets are valued at less than
their book value, a provision for depreciation will be applied.
According to CNCC bulletin no. 123 of September 2001,
business assets must be amortized according to the same
procedure as for goodwill. They are therefore amortized over
20 years using the straight-line method.