Ubisoft 2001 Annual Report Download - page 48

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48
k) Cash
Cash consists of cash and bank accounts.
l) Deferred taxation
Deferred taxes are entered in the income statement and
the balance sheet to reflect the difference between financial
years when certain expenditures and revenues are entered
into the consolidated accounts and the financial years when
they are used to calculate taxable revenue.
Deferred taxes are entered in the income statement and
the balance sheet to reflect deficits carried forward in the
year when it seems likely they will be recovered.
In accordance with the liability method of tax allocation, the
effect of any changes in tax rates on deferred taxes recor-
ded earlier is entered into the income statement for the
financial year in which the changes in rates become known.
m) Conversion of items expressed in foreign currencies
Conversion into Euros of transactions of French
companies carried out in foreign currencies
Charges and revenue for foreign currency transactions are
entered at their equivalent value on the transaction date.
Assets and liabilities are usually converted at the closing
rate, with any exchange variations resulting from this
conversion being recorded in the income statement.
Conversion of the financial statements of foreign
subsidiaries into Euros
A distinction must be made according to whether the
foreign subsidiary is autonomous or non-autonomous:
A subsidiary is said to be autonomous:
■if it is economically and financially autonomous with respect
to the consolidating company or the other consolidated
companies,
■and if the monetary items in its balance sheet and most
of its income statement relate to a currency other than
the Euro.
In such cases the closing rate method is used. This involves
converting the assets and liabilities of foreign subsidiaries
at the exchange rate in force at the closure of the financial
year, while the income statement is converted at the average
annual rate. Share capital is kept at the historical rate.
A subsidiary is considered to be non-autonomous if it consti-
tutes an extension of the overseas activities of the consoli-
dating subsidiary. This means that most of its commercial
or financial activities are conducted with the consolidating
company. In this case, the historical rate method is used.
This being the case, the monetary items in its balance sheet
are converted at the closing rate, while the non-monetary
items are converted at the historical rate. The income sta-
tement is converted at the average annual rate.
n) Provisions for risks and charges
Provisions for risks and charges are made when risks and
charges which relate to a clearly determined object, but which
are not certain to arise, are made more likely by events
which have occurred or are in progress.
As of March 31, 2002, provisions for risks and charges
covered:
■risks relating to a tax inspection,
■risks relating to the closure of certain subsidiaries with
low levels of activity.
o) Fully diluted earnings per share
This figure is obtained by dividing:
■net earnings before dilution, plus the amount after tax of
any savings in financial costs resulting from the conversion
of the diluting instruments
■by the average weighted number of ordinary shares in cir-
culation plus the number of shares which will be created
following the conversion of convertible instruments into
shares and the exercising of rights.