Ubisoft 2005 Annual Report Download - page 77

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2
75
UBISOFT • 2006 ANNUAL REPORT
FINANCIER
Ubisoft group’s consolidated accounts as of March 31, 2006
Note 15 Borrowings
Financial debt breaks down as follows:
(1) Advances in foreign currencies are foreign exchange hedges in Canadian dollars.
To limit interest rate and exchange rate risks resulting from the financing needs of its activities, the group uses certain
financial instruments:
- Interest rate risk
The management of interest rate risk is aimed mainly at minimizing the cost of the group’s borrowings and at reducing
exposure to this risk. In this regard, the group gives priority to fixed-rate loans for long-term financing needs and
variable-rate loans to finance specific needs related to an increase in working capital during particularly active periods.
- Foreign exchange risk
The group is exposed to foreign exchange risk on its ope-
rating cash flow and its investments in its foreign subsi-
diaries. The group protects only its positions related to
its operating cash flow in the major currencies (i.e. US
dollar, Canadian dollar, Pound sterling and Australian
dollar). The strategy is to hedge one fiscal year at a time,
which means that the hedge period does not exceed 15
months.
The group relies mainly on natural hedges resulting
from two-way transactions (i.e. purchases of goods in
foreign currencies offset by royalties received from sub-
sidiaries in the same currency). For non-hedged balances
and non-commercial transactions (i.e. internal loans in
foreign currencies), the parent company borrows in these
currencies or sets up forward-sale contracts or options.
Covenants
Under the terms of the syndicated loan and in the case of
OBSAR bonds, the company is required to respect certain
financial ratios (i.e. covenants).
The following covenants must be respected with regard to
the syndicated loan and OBSAR bonds:
All the covenants are calculated on the basis of the annual
consolidated accounts in 99-02 standards for the consoli-
dated accounts closed up to March 2005 and in IFRS stan-
dards for the consolidated accounts closed from
March 2006 onwards.
As of March 31, 2006, the company was in compliance with
all of these ratios and expects to remain so during the
2006-2007 fiscal year.
03.31.06 03.31.05
Bond debentures 141,933 162,021
CB 3.8% - 24,487
Bonds exchangeable or convertible to new
or existing shares (OCEANE) 89,854 86,499
OBSAR 52,079 51,035
Accrued interests 1,150 1,705
Advances in foreign currencies (1) 5,432 40,930
Bank overdrafts 50,664 70,304
Bank loans 2,840 -
Borrowings resulting from restatement of leases 316 1,169
Financial debts 202,335 276,129
Fixed-rate debt 90,859 113,517
Variable-rate debt 108,636 162,612
Debt without interest rate 2,840 -
Long-term debt 54,981 138,166
Short-term debt 147,354 137,963
Effective Due date
interest rate Under 1 year From 1 to 2 yrs From 2 to 5 yrs
OCEANE 6.29% 89,854 - -
OBSAR 4.26% - - 52,079
Bank overdrafts 2.67% 50,664 - -
Advances in foreign currencies 4.25% 5,432 - -
2006/2007 2005/2006
Net debt restated to reflect
assigned receivables/equity
restated to reflect goodwill < 0.9 1
Net debt restated to reflect
assigned receivables/EBITDA < 1.5 1.5