Ubisoft 2008 Annual Report Download - page 196

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UBISOFTANNUAL REPORT 2009
Advances and prepayments made
Advances and prepayments primarily involve distribution and reproduction rights (licenses) acquired from other software publishers.
Licence agreements give rise to guaranteed payments. These advances and prepayments are recognised in the income statement
on the basis of the agreements signed with software publishers (either by the unit or based on gross prot or on sales) or,
in the case of at fees, on a straight-line basis.
At the end of the nancial year, the net carrying amount is compared with sales projections on the basis of the terms and conditions
of the agreement. Depreciation is recognised if they are insufcient.
Trade receivables
Trade receivables are carried at their nominal amount. Where applicable, a provision for depreciation is recorded based on
the likelihood of their collection at the balance sheet date.
Investment securities
Investment securities consist of interests in mutual funds and short-term investments, and are measured at the lower of cost
or market value.
Translation of liabilities and receivables denominated in foreign currencies
Liabilities and receivables denominated in foreign currencies were translated at rates prevailing on March 31, 2009. Any resulting
translation gains or losses are recognised in the balance sheet under a specic heading. A provision for foreign-exchange risk is
recorded if translation reveals the existence of unrealised losses.
Foreign currency transactions
Foreign-exchange income and expenses are recorded using daily exchange rates.
Receivables, liabilities and cash in foreign currencies are translated at the exchange rates prevailing at the end of the nancial year.
Unrealised gains and losses on receivables and long-term debt are recorded on the balance sheet under translation adjustments.
Unrealised losses that have not been hedged are subject to a provision for foreign-exchange losses.
Translation adjustments on cash and current accounts in foreign currencies are immediately recognised as foreign-exchange
income/loss.
Foreign-exchange hedges
Ubisoft uses nancial derivatives to reduce its exposure to market risks linked to movements in exchange rates.
For purposes of the hedging thus established, income and expenses on nancial derivatives are recognised as nancial income
and are offset against the income and expenses arising on the hedged items.
The transactions attached to hedging derivatives (mostly USD) are recognised in operating income at the hedge rate. The difference
between the historical rate of the hedged transaction and the relevant hedging rate is recognised in nancial income.
Provisions for risks and charges
Provisions for risks and charges are recognised where risks and charges that have a clearly dened object, but that are not certain
to arise, are made likely by events that have occurred or are in progress.
At March 31, 2009, provisions for risks and charges exclusively concern unrealised losses on non-hedge transactions.
Regulated provisions
The regulated provisions correspond:
• to the acquisitions costs incorporated in the cost price of the non-voting shares. These expenses are amortized over 5 years –
straight line method.
• to the developments expenditures of software. The company decides to adopt the tax option and the immediate deductibility
of the expenditure of developments of software according to the article 236 of the CGI.