Ubisoft 2006 Annual Report Download - page 71

CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007
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2
Notes to the consolidated financial statements
The figures in the following notes and statements are shown in thousands of euros unless otherwise indicated.
Highlights
of the fiscal year
Change in the percentage holding in Gameloft SA
Following the exercise of options by Gameloft SA
employees, Ubisoft Entertainment SA’s percentage of
interest decreased from 19.416% to 18.893% at March 31,
2007.
Sale of assets
On April 1, 2006, Ubisoft Warenhandels GmbH sold its
business assets to Ubisoft GmbH.
Conversion of share subscription warrants issued in May
2003
In April and May 2006, increase in Ubisoft Entertainment
SA’s share capital of €24 million as a result of the conver-
sion of 12,767,115 of the share subscription warrants
issued in May 2003.
Acquisition
On August 3, 2006, acquisition from Atari Inc. and
Reflections Interactive Ltd of the intellectual property and
technology rights to the Driver®franchise, as well as most
of the assets and all of the staff of the Reflections
Interactive Ltd development studio for US$ 24 million.
2-for-1 stock split
On December 11, 2006, 2-for-1 stock split of Ubisoft
Entertainment SA shares from €0.31 to €0.155.
Performance of Ubisoft's share and unrealized equity
swap gain
Despite the 2-for-1 stock split in December 2006 through
an increase in the number of shares, the share price rose
by 92% between March 31, 2006 and March 31, 2007. This
explains the increase in the unrealized equity swap gain of
€25.2 million, this despite the sale of 200,000 shares which
resulted in a capital gain of €1.9 million.
Conversion of some of the OCEANE
In November 2006, €24.2 million increase in Ubisoft
Entertainment SA’s equity through the conversion of
459,013 OCEANE bonds into 475,998 new shares with a
face value of €0.31 at a rate of €50.84.
Creation of a new studio in Quebec
In February 2007, opening of a new studio Ubisoft Digital
Arts Inc. specializing in the creation of digital content for
the film industry.
Early conversion of 92% of the 2008 BSAR
In February 2007, €50 million increase in Ubisoft
Entertainment SA’s equity through the conversion of
1,313,907 BSAR into 69 shares with a face value of €0.31
and 2,627,676 shares with a face value of €0.155 at a rate
of €19.175.
Significant accounting
policies
Ubisoft Entertainment SA is a company domiciled in
France.
The company's consolidated financial statements for the
fiscal year ended March 31, 2007 include the company and
its subsidiaries (together called “the Group”) and group
shares in associates.
The financial statements have been approved for issue by
the Board of Directors on May 29, 2007.
2.5.2.1 Statement of conformity
The consolidated financial statements to March 31, 2007
have been prepared in accordance with the IFRS internatio-
nal accounting standards (“International Financial
Reporting Standards”) applicable at March 31, 2007, as
approved by the European Union.
New standards, amendments to standards and interpreta-
tions are not yet in effect for the fiscal year ending March
31, 2007 and have not been applied in preparing the conso-
lidated financial statements.
IFRS 7 “Financial Instruments: Disclosures” and amend-
ment to IAS 1 “Presentation of Financial Statements:
Capital Disclosures”
IFRIC 7 “Applying the Restatement Approach under IAS
29 Financial Reporting in Hyperinflationary Economies”
IFRIC 8 “Scope of IFRS 2, Share-Based Payments”
IFRIC 9 “Reassessment of Embedded Derivatives”
IFRIC 10 “Interim Financial Reporting and Impairment”
The application of these new standards should have no
impact on the consolidated financial statements.
2.5.2.2 Basis of preparation
The financial statements have been prepared under the
historical cost convention, with the exception of the follo-
wing assets and liabilities, which are evaluated at fair value:
Derivative financial instruments, financial instruments
held for transaction purposes and financial instruments
treated as available for sale.
Non-current assets intended for sale are valued at their
accounting value or fair value less the costs of the sale,
whichever is less.
Preparation of consolidated financial statements according
to IFRS requires that the group’s management make esti-
mates and assumptions that impact the application of the
accounting methods and the amounts recorded in the
financial statements.
These estimates and underlying assumptions are establi-
shed and reviewed continuously based on past experience
and other factors considered reasonable in light of the
2.5
2.5.1 2.5.2