Ubisoft 2007 Annual Report Download - page 61

CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008
57
2
Notes to the consolidated financial statements
The notes and tables that follow are presented in thousands of euros, unless expressly stated otherwise.
Highlights
of the fiscal year
Sunflowers GMBH Acquisition
On April 6, 2007, Ubisoft acquired the Anno brand as part
of its €14.5 million takeover of Sunflowers GmbH, the
software publisher.
This acquisition also provides Ubisoft Entertainment SA
with a 30% interest in Related Designs Software GmbH,
the developer of Anno 1701 (the latest game in the
series), which is currently working on a new release.
Following this acquisition, Avator Entertainment GmbH
was established, in which Ubisoft Entertainment SA took a
25% interest.
Digital Kids Acquisition
On January 11, 2008, the Group acquired 100% of the
Japanese studio Digital Kids Co. Ltd.
Tom Clancy Property rignts Acquisition
On March 20, 2008, the Group acquired all of the intellec-
tual property rights associated with the name Tom Clancy
for video games and spin-off products, including books,
films and all merchandising products.
Disposal
In March 2008, the Group disposed of its 25% interest in
the German company Avator Entertainment GmbH.
Incorporations
On September 17, 2007, Chengdu Computer Software Co.
Ltd. a wholly-owned development studio subsidiary of
Ubisoft Entertainment SA, was established.
On February 12, 2008, Ubisoft Singapore Pte Ltd., a
wholly-owned development studio subsidiary of Ubisoft
Entertainment SA, was established.
On March 10, 2008, Ubisoft Limited, a wholly-owned Irish
subsidiary of Ubisoft World SAS, which is itself a whol-
lyowned subsidiary of Ubisoft Entertainment SA, was
established.
Equity swap agreement on 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 (representing 18.73% of Gameloft’s capital) for €6.08
each.
The second related to Ubisoft Entertainment SA’s ability
to continue participating in upward or downward move-
ments in the price of Gameloft stock compared to the
€6.08 per share price set in the first agreement, until such
time as Calyon disposes of the stock to a third party.
As not all of the risks and benefits of the shares have been
transferred, the sale agreement with Calyon was not con-
sidered a sale of securities under International Financial
Reporting Standards (IFRS). The participation in Gameloft
is now booked as non current assets held for sale , com-
pliant with IFRS 5.
On March 31, 2008, Calyon’s market sale of the Gameloft
stock was recognized in the income statement under “gain
(loss) on the disposal of discontinued operations” line item,
net of income tax. On March 31, 2008 the remaining
9,178,725 shares (representing 12.58% of Gameloft’s ca-
pital) were reclassified from “investments in associates” to
“assets held for sale”, assets available for sale.
This accounting involves :
As of profit and loss, the net gain on Gameloft’s shares
sold by Calyon during the financial year is shown net of
income tax on the specific line “gain (loss) on the disposal
of discontinued operations”;
As of balance sheet, Gameloft shares not sold by Calyon
are reclassified from “equity participating interests” to
“assets held for sale” and measured at fair value through
equity.
Equity swap agreement on Ubisoft stock.
193,153 shares covered by the equity swap agreement
signed with Calyon on September 30, 2003 were disposed
of during the year.
The disposal generated a capital gain of €5.6 million.
On February 28, 2008, Ubisoft Entertainment SA extended
the equity swap agreement with Calyon for a further period
of 24 months.
The remaining shares have been sold after the closing (see
section 2.5.9).
Lawsuit
The lawsuit initiated in October 2003 by the Company
against a licensee was settled in favor of Ubisoft
Entertainment SA, which was awarded USD13.2 million,
€8.6 million (€5.1 million received on the financial year
and €3.5 milllion to be received in April) in compensation
and late payment penalties.
2008 BSAR (redeemable share subscription warrants)
capital increase
On October 25, 2007, the Company issued new shares,
with waiving of preemptive rights, to the former holders of
the 2008 BSAR, which had been redeemed early on
February 26, 2007. A total of 235,328 ordinary shares
were issued with a par value of €0.155 each, representing
a total par value of €36,475.84, plus a premium of
2.5
2.5.1