Ubisoft 2003 Annual Report Download - page 35

FINANCIAL REPORT
2004 35
1.3.6 Change in Income statement
The group’s gross margin increased by four points to 65% of
sales (vs. 61% for fiscal year 2002-03) thanks to a higher
percentage of sales on 128-bit consoles (68% in 2003-04,
compared to 62% in 2002-03).
EBITDA stood at ¤130 million (an increase of 16%).
This higher figure can be attributed to the increase in sales
activity and an improved margin. The group as a whole
generated an additional margin of ¤53 million, which was offset
by ¤35 million in higher costs (including ¤19 million in
marketing expenses).
Under French accounting standards, operating profit stood at
¤1.5 million as a result of additional accelerated amortization
and depreciation totaling ¤49 million in comparison with
FY 2002-03. On Pro forma standard, operating profit totaled
¤20.1 million compared to ¤27.1 million for FY 2002-03 (see
Section 1.3.9: Pro-forma accounting).
The net financial results break down as follows:
●¤11.8 million in financial charges.
●¤1.7 million in exchange losses.
●¤1.5 million for amortization of financial investments.
●Capital gains of ¤2.9 million on the buyback of 2006
OCEANE bonds (200,000 shares bought back during the
first quarter of 2003-04 at ¤33 per share).
Extraordinary profit is primarily a result of the sale of directly
held treasury shares for ¤9.5 million.
Corporate tax of ¤1.4 million includes a charge of ¤4.2 million
for canceled or unused tax credits.
Before amortization of goodwill and business assets (¤6 million),
net income was -¤3 million under French accounting standards
and ¤8.8 million according to Pro forma standards.
1.3.7 Change in working capital
requirement (WCR) and
indebtedness
Ubisoft exceeded its target for generating available net cash
flow thanks to a seven-fold increase in operating cash flow
(to ¤39.8 million) and an improved working capital requirement
of ¤31 million, representing 26% of sales compared to
36.5% in 2002-03. Available net cash flow before acquisitions
stood at ¤58 million, compared to -¤29 million
in 2002-03.
Net indebtedness posted a drop of ¤51 million to ¤119 million
and, under French accounting standards, represented 41% of
equity capital as of March 31, 2004.
1.3.8 Asset financing policy
The company does not use lease contracts, securitization,
transfers of receivables pursuant to France’s Dailly Law,
sales with the option to repurchase or the like; it prefers to
obtain financing directly on the market, specifically by means
of bond issues. It occasionally makes use of factoring and
discounts.
01
General overview
1.3.5 Sales by region
Fiscal year 2003-2004 2002-2003
(In millions of euros) sales % of sales sales % of sales
France 52.77 10% 63.68 14%
Germany 38.42 7.5% 45.43 10%
UK 69.42 14% 50.85 11%
Rest of Europe 89.45 17.5% 90.27 20%
TOTAL EUROPE 250.06 49% 250.23 55%
North America (US/Canada) 236.62 46.5% 183.54 40%
Asia-Pacific 19.66 4% 16.40 4%
Rest of world 2.10 0.5% 2.80 1%
TOTAL 508.44 100% 452.97 100%
The group’s sales are now distributed equally between the two major territories: Europe and North America. Sales in North
America were ¤237 million for the year, accounting for nearly 47% of the group’s total sales. Over the fiscal year, the region
posted an increase of 29% at current exchange rates and 49% at constant rates. Europe accounts for 49% of annual sales with
¤250 million, a stable sales figure with respect to the previous year. The UK posted a strong increase in sales (37%).