Ubisoft 2007 Annual Report Download - page 45

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THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008
41
1
Equity investments
made during
the fiscal year
Equity swap agreement for Gameloft stock
On July 12, 2007, Ubisoft Entertainment SA entered into
two agreements with Calyon, the investment bank.
The first agreement dealt with the disposal of all 13,367,923
Gameloft shares held by Ubisoft Entertainment SA (18.73%
of the capital of Gameloft) for €6.08 each.
The second related to Ubisoft Entertainment SA’s ability to
continue participating in upward or downward movements in
the price of Gameloft stock vis-à-vis the €6.08 per share
price set in the first agreement, until such time as Calyon
disposes of the stock to a third party.
Acquisition of new companies
April 2007: purchase of the software publisher Sunflowers
GmbH. Through this acquisition, Ubisoft Entertainment
SA acquired a 30% interest in Related Designs Software
GmbH.
In January 2008, acquisition of 100% of the Japanese stu-
dio Digital Kids Co. Ltd. Ubisoft Entertainment SA already
distributed games developed by Digital Kids for the DS™.
Incorporations
September 2007: establishment of Ubisoft Operational
Marketing SARL.
September 2007: establishment of the studio Chengdu
Computer Software Co. Ltd.
December 2007: establishment of Ubisoft Counsel &
Acquisitions SARL.
February 2008: establishment of the studio Ubisoft
Studios Montpellier SARL.
February 2008: establishment of the development studio
Ubisoft Singapore Pte Ltd.
March 2008: establishment of Ubisoft Limited.
Equity investments
August 2007: acquisition of a 25% interest in the
German company Avator Entertainment GmbH, a studio
created to develop the Anno™ game on line.
March 2008: disposal of the 25% interest in the German
company Avator Entertainment GmbH.
Business activities
of the subsidiaries
Production subsidiaries
They are responsible for the design and development of
the software. They saw their business grow sharply as a
result of the increase in projects carried out internally and
the growth in headcount.
Sales and marketing subsidiaries
The sales and marketing subsidiaries are responsible for distri-
buting Ubisoft products throughout the world and saw marked
growth in America due to the earlier launch of the new consoles.
Relationship between the parent company and
subsidiaries
The relationship between the parent company and the sub-
sidiaries involves:
the production subsidiaries invoicing the parent com-
pany for development costs based on the progress of
their projects. These costs are capitalized at the parent
company and amortized from their commercial launch
date;
the parent company invoicing the distribution sub-
sidiaries for a contribution to development costs.
The parent company also centralizes a certain number of
costs that it then allocates to its subsidiaries, in particular:
IT projects,
the purchase of computer equipment,
general and administrative expenses,
financial expenses, current account interest and cash
pooling interest.
Main subsidiaries
1.7.2
1.7.3
IFRS financial Revenue Operating Earnings Revenue Operating Earnings Revenue Operating Earnings
statements profit profit profit
Subsidiary (in K€) 03.31.08 03.31.07 03.31.06
Ubisoft Inc. (US) 372,156 14,816 10,207 287,402 8,631 6,541 227,601 7,480 3,810
Ubisoft Ltd. (UK) 159,078 3,976 2,840 110,571 2,090 1,140 94,675 1,830 757
Ubisoft GmbH (Germany) 71,313 1,783 1,084 56,847 1,074 907 35,309 1,437 (170)
Ubisoft France SAS 90,824 2,278 2,207 64,129 1,212 1,399 48,499 826 876