Ubisoft 2008 Annual Report Download - page 83

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UBISOFT ANNUAL REPORT 2009
ma n a G e m e n t r e p o r t 01
The possible loss of the target company’s key employees should be considered as an M&A-related risk. This loss could have a
negative impact on the acquired company’s sales, earnings, and/or nancial position. However, to date, Ubisoft has always proven
capable of integrating acquired companies into the Group.
1.1.7.1.6 Risk of dependency on customers
Because it has many large retailer customers in numerous countries, the Company believes it has no signicant dependency on
any customer that could affect its growth plan.
Ubisoft’s largest customer accounts for 10% of Group sales excluding tax. The top ve account for 33% and the top 10 for 46%.
Moreover, in order to protect itself against the risk of default, the Group’s main subsidiaries, which account for approximately 83%
of Group sales, are all covered by credit insurance.
1.1.7.1.7 Risk of dependency on suppliers and subcontractors
The Company has no signicant nancial dependency on subcontractors or suppliers likely to affect its growth plan.
Ubisoft and its subsidiaries mainly use services or products from suppliers such as systems integrators (printers to produce
manuals and product packaging, disk suppliers to subcontract the supply and duplication of CD-ROMs and DVD-ROMs, other
systems integrators), technology providers, suppliers of licences and maintenance in connection with the Company’s operations.
However, there is a dependency on manufacturers. Ubisoft, like all console-game publishers, purchases cartridges and gaming
media from console manufacturers such as Sony, Nintendo and Microsoft. Supply is thus subject to prior approval of the
manufacturers, the production of these media in sufcient quantities and the establishment of royalty rates. Any change in terms
of sale by manufacturers could have a material impact on the Company’s results. For PC games, there is no specic dependency.
Furthermore, despite the priority given to games developed internally, which account for 81% of sales, the Company may call on
outside studios in the context of its development activities in order to work on either traditional subcontracting projects by supplying
additional and/or specialised production capacity or to take on original projects in which they have specic expertise. These independent
development studios may sometimes have a limited capital base that may put the completion of a project at risk.
To limit such risks, Ubisoft has introduced internal monitoring procedures, limited the number of games entrusted to a single
studio, and ensured that it assimilates all or a portion of the technology they use.
1.1.7.1.8 Risks associated with information systems and computer security
Like all international companies connected to the Internet, Ubisoft is exposed to multiple pre-requisites or threats, such as
changes in regulations, mobility solutions and the proliferation of viruses.
Information is a strategic resource that represents considerable value and must be suitably protected. Accordingly, Ubisoft continually
invests in its IT security systems, and in specialised security resources, to protect itself as much as possible from such risks.
Hence, Ubisoft’s security department is responsible for protecting information from external and internal threats in order to
guarantee its condentiality, integrity and availability, and to ensure business continuity.
Ubisoft has implemented several arrangements, including security policies in order to bring itself into compliance with legislation,
security committees in the various ofces to manage local security issues, secure hosting of its data in dedicated centres in order
to reduce physical risks, a centralised anti-virus system ensuring optimal protection, a secure mobility solution to protect its
remote workers and wireless users, etc.