Ubisoft 2006 Annual Report Download - page 119

CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007
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Note 23 Net financial result
The net financial result breaks down as follows:
Note 24. Extraordinary result
Extraordinary result is income not related to the company’s normal operations (French decree of 11/29/1983, Article 14). It
breaks down as follows:
As of March 31, 2007, extraordinary result consisted mainly of the profit on the sale of 200,000 shares under the equity swap
contract in the amount of €5,764 thousand.
Financial income from equity interests mainly include dividends received by Ubisoft Entertainment SA during the fiscal year.
They break down as follows:
- Ubisoft EMEA SAS: €25,000 thousand.
- Other subsidiaries: €618 thousand.
Foreign exchange risk
In order to limit the group's foreign exchange risk, Ubisoft
Entertainment SA hedges exchange rate fluctuations in
several ways:
- When the parent company makes a loan in a foreign
currency to its subsidiaries, it also takes out a loan in the
same currency. Thus, if the exchange rate rises or falls,
any gain or loss on the loan is offset by a gain or loss on
the parent company’s loan in the opposite direction.
- The distribution subsidiaries pay a royalty to the parent
company as compensation for the development costs
incurred by the latter. Moreover, Ubisoft EMEA SAS
centralizes the purchases of finished products for the
entire region and then resells them in local currencies to
the subsidiaries. At the same time, Ubisoft Entertainment
SA finances all the production studios around the world
and most of the licensing and external development
agreements. In this way, all of the foreign exchange risk
is centralized at Ubisoft EMEA SAS and Ubisoft
Entertainment SA. When foreign exchange risk exists
with regard to a single currency in opposite directions
(for example, royalties received and cost of a studio in
the same currency), the group offsets this by using
foreign currency advances or investments to manage the
time lags. Amounts that cannot be offset are hedged by
forward sales contracts and option contracts.
At March 31, 2007, the hedged amounts resulting in
purchases and sales of currencies was €16,090 thousand
(cf. Note 3.6.2 Off-balance-sheet commitments).
03/31/2007
Extraordinary income:
Extraordinary income from management transactions 7,082
Extraordinary income from capital transactions 2
Extraordinary expenses:
Extraordinary expenses from management transactions 143
Extraordinary expense rom capital transactions 109
Exceptional result 6,832
03/31/2007 03/31/2006
Financial income:
Financial income from equity holdings 25,618 1,338
Income from other securities and receivables from fixed assets 18 16
Other interest and related income 3,992 2,550
Write-back of provisions 2,782 639
Positiv exchange differences 8,842 8,089
Net proceeds from sales of investment securities 380 1,192
41,632 13,824
Financial expenses:
Depreciation and provisions 23,019 2,906
Other interest and related expenses 7,923 7,551
Negativ exchange differences 10,399 15,620
41,341 26,077
Financial result 291 - 12,253