Ubisoft 2006 Annual Report Download - page 8

UBISOFT • 2007 ANNUAL REPORT
chairman and chief
executive officer’s
statement
his past year, a successfully executed strategy, coupled
with many highly acclaimed games for new consoles, made it
possible for Ubisoft to outperform the market with annual sales
totaling 680 million, an increase of 24.4% compared to the
previous fiscal year and 27% at constant exchange rates. Our net
income also increased more than 300%, totaling 40.5 million.
In North America, we gained one point compared with last year,
ranking 5th in the United States with 5.5% market share and 3rd
in Canada with 6.8%. In Europe, the group held fast to the #2
position with 7% market share.
This year, we won more than 40 prestigious awards, a testament
to the high quality and entertainment value of our games and
also to the respect that Ubisoft commands within the industry.
Most notably, Tom Clancy’s Ghost Recon Advanced Warfighter®
was chosen 2006 Game of the Year at the BAFTA (British
Academy of Film and Television Arts) Awards Ceremony and
Game Informer, the leading industry magazine, ranked Ubisoft
2nd independent publisher worldwide, just behind Nintendo.
2006/07:
MISSIONS ACCOMPLISHED
These excellent results stem from the successful execution of
seven strategic priorities identified last year:
Position our brands early on next-gen consoles
The investments we made in next-gen development starting
back in 2004 have paid off: 60% of our sales this year came from
games designed for these consoles. As a result, we became the #1
independent publisher for the Wii™ in Europe and the United
States, as well as the #2 independent publisher for Xbox 360™ in
2006-07. Overall, Ubisoft games accounted for 29% of all Wii™
games sold in Europe and 18% of Wii™ games sold in the U.S. On
Xbox 360™, our games represented 14% of overall platform sales.
Expand our revenue sources by working with 3rd party partners
Our publishing and 3rd party activities registered a 10-point
growth and represent 24% of sales this year, in comparison to 14%
in 2005-2006. We plan to reinforce this trend in the coming year
with games like Brothers in Arms Hell’s Highway™ and Haze™.
Reinforce our financial capacities
Our net cash flow from operating activities has sharply risen
to 53.2 million, reflecting strong operational improvements.
Moreover, our positive net cash position reached 55 million as
of March 31, 2007. In addition to the increased cash flow, this
120.3 million improvement can be attributed to two important
capital increases: the conversion of a part of convertible bonds
(Océanes) in November 2006 and of 92% of the 2008 warrant
issue in February 2007. This strong financial position gives
Ubisoft the means and the opportunity to invest in new projects.
Enrich our catalogue and continue to develop strong brands
We pursued our strategy of brand creation this year with
the release of Red Steel™,Heroes of Might & Magic®,Dogz®,
Catz®and Horsez®. In addition to the launch of these new
franchises, we continued to enrich our existing brands with
must-have new titles, such as Rayman Raving Rabbids™ and
Tom Clancy’s Rainbow Six®Vegas.
Reinforce our reputation as a partner of choice for Hollywood
Following the success of Peter Jackson’s King Kong: The
Official Game of the Movie, Ubisoft’s relationship with
Hollywood continued to mature this year with the production of
games inspired by films like Open Season™,Teenage Mutant
Ninja Turtles™ and Star Wars®. Furthermore, we are in the
process of producing the video game version of Robert
Zemeckis’s new feature-length film, Beowulf™, which is set to
come out at the end of the year. Additionally, in order to better
understand and exploit the synergies that exist between video
games and cinema, Ubisoft opened a studio in Montreal last
February dedicated to CGI (Computer Generated Images) movies.
Attract new talents
With 3,950 employees across the globe (3,200 of whom are
dedicated to production), Ubisoft continues to grow and recruit
new talents progressively across all of its sites: 450 people have
joined our team this year alone. Most notably, we opened a stu-
dio in Sofia, Bulgaria and a distribution office in Mexico City,
Mexico. The Sofia studio should make it possible for us to
attract new talents while controlling our development costs and
our presence in Mexico City will enable us to capitalize on a high-
potential market.
Make strategic acquisitions to enter into new segments
The acquisition of the Driver®franchise and the integration
of the talented people from Reflections Interactive enable us
to enter the highly popular driving games segment. Our objective
is to use this hit brand and our team’s know-how to bring Driver®to
next-gen consoles. Furthermore, Ubisoft concluded an agreement
T