Ubisoft 2009 Annual Report Download - page 143

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The value in use is measured at the end of each financial year based on the net assets of the
subsidiary in question at that date, the market capitalization at the balance sheet date if the company
is listed, and/or its medium-term earnings prospects.
Provisional data are updated using a rate based on a valuation of the average cost of capital: 8.64 %
at March 31, 2010.
Own shares are valued at the lower of cost or market value (average of the last 20 trading sessions).
Deposits and sureties are recognized on the basis of the amounts paid.
Advances and prepayments made
Advances and prepayments primarily involve distribution and reproduction rights (licenses) acquired
from other software publishers. License agreements committed Ubisoft on amount of guaranteed
royalty. This guaranteed amount is registered in the balance sheet under the heading "advances and
prepayments made" it has been paid or not to the closing date. These guaranteed amounts are
recognized in the income statement on the basis of the agreements signed with software publishers
(either by the unit or based on gross profit or on sales) or amortized on a straight-line basis for
agreements with fixed royalty payments (flat fees).
At the end of the financial year, the net carrying amount is compared with sales projections on the
basis of the terms and conditions of the agreement. If they are insufficient, depreciation is recognized.
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, 2010. Any resulting translation gains or losses are recognized in the balance sheet under a
specific heading. A provision for foreign-exchange risk is recorded if translation reveals the existence
of unrealized 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 financial year, except for those covering by a hedging contract converted covered
during courses.
Unrealized gains and losses on receivables and long-term debt are recorded on the balance sheet
under translation adjustments. Unrealized 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
recognized as foreign-exchange income/loss.
Foreign-exchange hedges
Ubisoft uses financial derivatives to reduce its exposure to market risks linked to movements in
exchange rates.