Ubisoft 2012 Annual Report Download

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Table of contents

  • Page 1
    ANNUAL REPORT 12 12

  • Page 2
    ...Huge opportunities await us as we have an extraordinary line-up, whose diversity and originality aroused great admiration at E3 (Electronic Entertainment Expo) this year. Assassin's Creed 3 is on track to becoming the biggest launch in company history thanks to a new hero, a new engine, new gameplay...

  • Page 3
    ...free-to-play market will allow us to bring our brands to more platforms (PC, tablet and mobile) and to significantly increase the impact and geographical reach of our brands. All this combined should drive an increase in the Average Revenue Per User (ARPU) and profitability of all our games. Ubisoft...

  • Page 4
    ... French version of the Annual Report was recorded on July, 2 2012 in accordance with Article 212-3 of the Autorité des Marchés Financiers General regulation (The French Securities and Exchange Commission). This document is a translation of the Reference document of the Ubisoft group for the year...

  • Page 5
    ... MANAGEMENT REPORT ...2 1 The Group's business activities and results for financial year 2011/2012 ...2 2 Comments on the Ubisoft Entertainment SA Financial Statements for the year ended March 31, 2012 ...42 3 4 Information on the Company and its capital ...44 Corporate governance ...63 FINANCIAL...

  • Page 6
    MANAGEMENT REPORT 2

  • Page 7
    Management Report 2012 1 THE GROUP'S BUSINESS ACTIVITIES AND RESULTS FOR FINANCIAL YEAR 2011/2012 1.1 GROUP PRESENTATION In 2011, Ubisoft was ranked third worldwide among independent publishers in terms of physical game sales (sources: NPD, Chart-Track, GFK etc.). The Group's activities are ...

  • Page 8
    Management Report 2012 1.1.2 HIGHLIGHTS OF THE 2011/2012 FINANCIAL YEAR April 2011 - Opening of a new credit line Ubisoft Divertissements Inc. signed a bilateral credit line for a period of two years and amounting to â,¬25 million. This line is secured by Ubisof t Entertainment SA and follows the ...

  • Page 9
    ... of free-to-play games, notably the hugely successful Howrse , and expert in the management of community games. November 2011 - Acquisition of RedLynx Acquisition of RedLynx, creator of the cult gaming brand Trials. The studio has developed more than 100 titles mainly in digital distribution (PC...

  • Page 10
    ... of euros Sales Gross margin R&D costs SG&A expenses Operating profit (loss) from continuing operations* Non-recurring restructuring expenses Operating profit (loss) Net financial income Share in profit of associates Income tax (credit) Net income (group share) Equity Capital expenditure on internal...

  • Page 11
    ...+/- Share in profit of associates +/- Gaming software amortization +/- Other amortization +/- Provisions +/- Cost of share-based payments +/- Gains/losses on disposals +/- Other income and expenses calculated +/- Internal development and license development costs Cash flows from operating activities...

  • Page 12
    ... TOTAL 2011/2012 96% 2% 2% 100% 2010/2011 96% 3% 1% 100% ® The Development activity benefited this year from the success of the games Assassin's Creed and ® Just Dance . 1.2.3 CHANGE IN THE NUMBER OF TITLES DEVELOPED Number of titles released from internal production, third-party co-production...

  • Page 13
    ...the rise in the number of online/digital titles. 1.2.4 SALES BY PLATFORM 2011/2012 Nintendo DS™ Nintendo 3 DS™ PC PlayStation ®3 PSP™ Wii™ XBOX 360™ PS VITA Other TOTAL 2% 2% 7% 22% 1% 33% 29% 1% 3% 100% 2010/2011 5% 3% 4% 19% 2% 38% 27% 1% 100% Although the market for the Wii continued...

  • Page 14
    Management Report 2012 1.2.6 CHANGES IN THE INCOME STATEMENT The gross profit margin has increased to â,¬718.1 million, up significantly as a percentage of sales at 67.7% compared with 64.8% in 2010/2011. In line with the continued improvement observed in 2010/2011, this increase is mainly due to ...

  • Page 15
    ... (with the exception of one-off operations), market opportunity functions, factoring expenses of rights to Credit Multimedia shares in Canada (September 2011 and March 2012) or research tax credit in France (September 2011). However, the Company does use invoice discounting and receivables factoring...

  • Page 16
    ... up but that teams work on a number of projects. They represented â,¬428 million in 2011/2012; - Cash flows linked to the marketing of games, which are highly seasonal in nature (25% of sales are made in the first half of the year and 75% in the second half), and the lag between production costs and...

  • Page 17
    Management Report 2012 For the financial year 2012/2013, and unless the Company makes a major acquisition, Ubisoft should be able to finance its operations from cash and the lines at its disposal, including â,¬275 million in lines of credit of more than one year (including â,¬180 million from the ...

  • Page 18
    Management Report 2012 1.4 SUSTAINABLE DEVELOPMENT 1.4.1 HUMAN RESOURCES Ubisoft key figures as at March 31, 2012 At 03/31/12 Number of employees Average headcount Number of countries Average age Average seniority 6,927 6,688 29 32.8 years 4.7 years At 03/31/11 6,331 6,289 28 32.1 years 4.9 years At...

  • Page 19
    ..., more than 600 studio staff have been given the opportunity to train, learn and share their experiences. Skill-sharing between sites through personal visits is also commonplace. In the financial year 2011/2012, 196 employees traveled on short- and long-term assignments. A Group training portal with...

  • Page 20
    ...within a flexible environment, a challenge adapted to their desires and skills. As well as local interdepartmental transfers and promotions, the Group's presence in 29 countries offers teams opportunities to work abroad. All international job offers are available in real-time to all employees on the...

  • Page 21
    ...several days in Montreal once a year, bringing together Ubisoft developers from around the world. Through a variety of presentations, round tables and workshops, this event allows developers to present and debate the technological advances of our production teams. The Ubisoft internal social network...

  • Page 22
    ...of 1,159 employees over the financial year 73% men and 27% women 63% on the production side, 19% on the business side and 18% on the support side Average age of 32.75 years Average seniority of 5.42 years Work environment and working conditions  Working hours: Full-time work is 35 hours per week...

  • Page 23
    ..., French employees benefit from a discount on the Company share price on the financial markets. 1.4.2 SOCIAL PROJECTS Ubisoft depends on the talent its teams possess and the human factor has remained a central concern in all its operations since the Company was founded. Entertainment, training and...

  • Page 24
    ...strike a balance between wildlife and humans. 2011 also kicks off a major Group-level program: The annual "Sharing More Than Games" project. As part of this project, each Ubisoft studio and subsidiary has established a partnership of a minimum of one year with a local association. The start of these...

  • Page 25
    ...the general public - Identifying sound environmental practices suited to Ubisoft's sector of activity, and applying them at the Company level - Promoting internal initiatives to help protect the environment and introducing them at other subsidiaries of the Group - Identifying key changes in employee...

  • Page 26
    ...energy savings of almost 30% over the year. In Japan, premises are equipped with a system that automatically shuts off the heating, air-conditioning and lighting when the main door is locked. Ubisoft Montreal, which accounts for more than a third of total Ubisoft staff, has formed a partnership with...

  • Page 27
    ... that this enables an annual saving of 20,000 sheets of paper and the French subsidiary more than 30,000 sheets. In 2011, the Chengdu studio (China) set the objective of reducing its paper consumption by 5% and the Pune office (India) pledged a reduction of 10% in the financial year 2012/2013. 22

  • Page 28
    ... types of plastic electronic media. The products are first ground down and sorted before being transformed into fine particles and resold to the plastic processing sector. LIFE-CYCLE MANAGEMENT AND RECYCLING OF COMPUTER EQUIPMENT For more than half of Ubisoft's studios and subsidiaries, the IT and...

  • Page 29
    ...starch. Ubisoft France includes recycled office supplies in its ordering catalogue. In France, coffee capsules are collected and recycled. PROCESSING WASTE Many subsidiaries have already introduced sorting systems, often in partnership with local authorities. For example, the studio in Montreal has...

  • Page 30
    ... AND SOCIAL IMPACT OF UBISOFT'S ACTIVITIES The Group measures its territorial, economic and social impact in terms of regional development and job creation. For example, The Toronto studio created more than 100 jobs in 2011/2012 and intends to create 80 more new jobs in financial year 2013 to...

  • Page 31
    ...2011. The program will carry on this year, with the teams working on a program to introduce LED lighting that is more energy- and heat-efficient and less harmful to the eyes. When the group changed premises in 2012, a reminder of the main principles of this program was sent to all employees. Ubisoft...

  • Page 32
    ...have to save the organic world of Eden from an unknown virus. Finally, Anno 2070 transports the player to a time in the near future where ecological and environmental changes, such as rising water levels and the reduction of hospitable land, have forced humans to adapt their way of life. Players are...

  • Page 33
    Management Report 2012 1.5 SUBSIDIARIES AND EQUITY INVESTMENTS 1.5.1 INVESTMENTS DURING THE FINANCIAL YEAR Creation of new companies: - December 2011: Creation of the subsidiary Ubisoft Motion Pictures Rabbids SAS in France. Creation of the subsidiary Ubisoft Emirates FZ LLC in the United Arab ...

  • Page 34
    ... to the cash management agreement, guarantees and loans Main subsidiaries: Subsidiary (in thousands of euros) IFRS financial statements Ubisoft Inc. (United States) Ubisoft Ltd (United Kingdom) Ubisoft GmbH (Germany) Ubisoft France SAS Sales 495,348 125,972 03/31/12 Operating profit (loss) 11,826...

  • Page 35
    ...Production Internationale SAS FILM PRODUCTION FRANCE Ubisoft Motion Pictures SARL Ubisoft Motion Pictures Rabbids SAS GERMANY Blue Byte GmbH (2) Related Designs Software GmbH MARKETING FRANCE Ubisoft Emea SAS Ubisoft France SAS BULGARIA Ubisoft EooD CANADA Ubisoft Divertissements Inc. (Montreal...

  • Page 36
    ... POLICY Ubisoft continued its sustained capital expenditure policy, which should enable the Company to gain traction in new platforms, create new licenses in various genres, develop the online activity and more generally increase its market share. Accordingly, in 2011/2012, internal production costs...

  • Page 37
    ...long term, Ubisoft favors a strategy of creating its own brands and producing internally, underpinned by a targeted acquisition strategy. The Company allocates the necessary marketing and sales resources to showcase its products through a distribution network covering over 55 countries. Its position...

  • Page 38
    ... in releasing an expected game may have a negative impact on the Group's income and future results and thus cause a drop in its share price. A game's launch may be delayed by the difficulty in accurately predicting the time required to develop or test it. For example, in 2011/2012, Ubisoft (like...

  • Page 39
    ... production activities. All of the programs established by Human Resources at a local and international level are first and foremost designed to attract, train, retain and motivate employees with strong technical and/or managerial skills: Development opportunities, share purchase plans, stock option...

  • Page 40
    ...1.7.2.4 LICENSING AGREEMENT RISKS Every year, Ubisoft signs a series of partnership agreements with, in particular, prestigious partners such as film studios, music labels etc., enabling it to develop its game catalogue and increase sales. The biggest licensor accounts for nearly 3.8% of sales. The...

  • Page 41
    ... to games developed internally, which account for 90% of sales, the Company may call on outside studios in the context of its development activities in order to work on traditional subcontracting projects by supplying additional and/or specialized production capacity or to take on original projects...

  • Page 42
    ... many areas: mobility solutions, social networking, online services and games, partnerships for development, to mention just a few. Information is a strategic resource that represents considerable value for Ubisoft and must be suitably protected. Hence, Ubisoft's risk management and security team is...

  • Page 43
    ... activity. In order to finance temporary needs related to increases in working capital during especially busy periods, the group has a â,¬180 million syndicated loan, â,¬95 million in confirmed credit facilities and other bank credit facilities totaling â,¬74.3 million at March 31, 2012. The Group...

  • Page 44
    ... and benefits have not been transferred, Gameloft shares have been classified as current financial assets available for sale. The sale of Gameloft shares on the market by Calyon is recorded in the income statement. The Gameloft shares not yet sold by Calyon are measured at fair value. The change in...

  • Page 45
    ...and corporate officers, ï,§ property damage and, where appropriate, trading loss, ï,§ goods in transit, ï,§ vehicles, ï,§ employee health risks and employee benefits, ï,§ business travel, ï,§ expatriate cover, ï,§ etc. Most of the policies currently in place are taken out locally at subsidiary level...

  • Page 46
    ... media brands, like the highly ® successful Free to Play game Howrse from the acquisition of Owlient. ï,· 1.8.2 MARKET OUTLOOK In 2011, the console video games market recorded a drop of 7% in Europe and 7% in North America (sources: NPD, Chart-Track, GFK, etc.). In this segment, the year 2012...

  • Page 47
    Management Report 2012 2 COMMENTS ON THE UBISOFT ENTERTAINMENT SA FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2012 Sales (in thousands of euros) Revenue basically consists of royalties invoicing to subsidiaries. â,¬ thousand Production/sales Operating profit (loss) Net financial income Pre-...

  • Page 48
    Management Report 2012 Income statement for the last five years Financial Year Capital stock (â,¬) Number of ordinary shares Number of preference shares Maximum number of shares to be created through exercise of stock options through the allocation of bonus shares. Sales (â,¬ thousand) Earnings ...

  • Page 49
    Management Report 2012 3 INFORMATION ON THE COMPANY AND ITS CAPITAL 3.1 INFORMATION ABOUT THE COMPANY CORPORATE NAME REGISTERED OFFICE LEGAL FORM UBISOFT ENTERTAINMENT 107, Avenue Henri Fréville - BP 10704 - Rennes (35207) Cedex 2 French corporation (Société Anonyme) with a Board of Directors, ...

  • Page 50
    ... required to inform the Company by registered letter with acknowledgement of receipt sent to the registered office within the period prescribed in Article L 233-7 of the French Commercial Code of the total number of shares, voting rights and securities ultimately granting entitlement to the capital...

  • Page 51
    ... the shareholders of Ubisoft Entertainment SA, with the exception of the Company itself. They represent the totality of shareholders. They shall be convened and deliberate under the conditions prescribed by the French Commercial Code. General Meetings shall be held at the registered office or at any...

  • Page 52
    ... 2012, share capital totaled â,¬7,369,475.16, divided into 95,090,002 fully paid -up shares with a par value of â,¬0.0775 each. The following table outlines the number of shares created between April 1, 2011 and March 31, 2012: At April 1, 2011 Exercise of subscription options Bonus share grants PEG...

  • Page 53
    ... As consideration for contributions in kind Capital increase for the benefit of employees subscribing to the Group savings plan (PEG) Allotment of stock purchase or subscription options Capital increase reserved for subsidiary employees (outside France) Bonus share grants 07/02/10 10th resolution 06...

  • Page 54
    ...average price during the trading days preceding the determination: an increase in maximum nominal capital of â,¬ 728,500 3.3.2.2 SECURITIES GRANTING ENTITLEMENT TO THE CAPITAL OF THE COMPANY/POTENTIAL CAPITAL AS AT MARCH 31, 2012 As at March 31, 2012: ï,· the number of subscription options open but...

  • Page 55
    Management Report 2012 3.3.2.3 BONUS SHARE GRANTS (PLANS OPEN AS AT MARCH 31, 2012) Date of General Meeting Date of board meeting 04/04/07 06/13/08 04/04/07 09/15/08 09/22/08 04/09/09 09/22/08 11/17/09 09/...

  • Page 56
    Management Report 2012 3.3.2.4 SUBSCRIPTION OPTIONS Performance Date of General Options Meeting Plan granted Date of number (1) (2) Board Meeting.../27/11 TOTAL 24 3,220...officers (2) 31/03/12 To be exercised (1) (2) Period Terms and conditions Price (1) (2) Exercised (1) (2) (1) (2) (3) Canceled...

  • Page 57
    ... by the meeting of the Board of Directors of March 9, 2012: stock options â†' purchase options At its meeting of April 27, 2011, the Board of Directors exercised the authorization from the General Shareholders' Meeting of July 2, 2010, allocating share subscription options to corporate officers in...

  • Page 58
    ... 9, 2012 to increase the capital of the Company within a limit of 189,943 shares. The Board of Directors resolved to authorize the Chief Executive Officer to fix both the period and the price of subscription (the average opening price of Ubisoft Entertainment SA shares over the 20 trading days prior...

  • Page 59
    ... 2012 3.3.2.6 VALUE OF CONVERTIBLE OR EXCHANGEABLE SECURITIES OR SECURITIES COMPRISING SHARE WARRANTS Via the delegation of authority granted by the General Meeting of June 30, 2011 in its eleventh and twelfth resolutions (acting pursuant to Articles L. 225-129 et seq. of the French Commercial Code...

  • Page 60
    Management Report 2012 3.3.3 CHANGE IN COMPANY CAPITAL OVER THE PAST THREE FINANCIAL YEARS(1) Date of Board meeting (2) Type of transaction Exercise of subscription options from 11/14/2008 to 03/31/2009 Exercise of subscription options from 04/01/2009 to 06/30/2009 and capital increases (for the ...

  • Page 61
    ... Stock option hedges Portfolio carrying amount Portfolio market value (a) 0.60% N/A 166,584 400,000 2,491,244.35â,¬ 3,092,415.47â,¬ (a) Closing price at March 30, 2012: â,¬5.458 BREAKDOWN OF OWN-SHARE PURCHASES AND SALES OVER THE YEAR (Article L 225-211 of the French Commercial Code) Number...

  • Page 62
    ... the share buyback program that will be submitted for the approval of the Combined General Meeting of September 24, 2012. Shares concerned: ordinary shares in Ubisoft Entertainment SA, listed on Euronext Paris, division B, ISIN code FR0000054470 Maximum percentage of capital: 10% of the total number...

  • Page 63
    Management Report 2012 Total flows (*) Forward Forward Transfers Positions open as of 03/31/2012 Open buy positions Call options bought Forward sales Open sell positions Call options sold Forward sales Number of (1) shares Average maximum term (2) 1,024,577 604,059 Average transaction price ...

  • Page 64
    Management Report 2012 3.3.5.2 Month CHANGE IN THE SHARE PRICE OVER THE LAST 18 MONTHS Highest price (in euros) (1) 9.321 9.963 8.088 8.616 9.303 7.96 7.694 7.053 7.288 7.191 5.962 4.9 4.621 5.339 5.524 5.998 6.471 6.364 Lowest price (in euros) (1) 7.913 7.084 7.284 7.786 7.675 6.765 6.573 6.225 ...

  • Page 65
    ... Other members of the Guillemot family Guillemot Corporation SA 863,874 0.908% 10,595,654 (1) Concert 11.143% 566,584 Ubisoft Entertainment SA 0.596% 918,316 FCPE Ubi Actions 0.966% 83,009,448 Public 87.296% 95,090,002 TOTAL 100% (1) The 10,595,654 shares held by concert, composed of the companies...

  • Page 66
    ... of statements made to the Company and/or AMF and summarized hereafter. FMR LLC is a holding company of an independent group of portfolio management companies, commonly referred to as Fidelity Investments. 3.3.6.4 CROSSINGS OF LEGAL THRESHOLDS During the financial year ended March 31, 2012, and...

  • Page 67
    ...the Company's knowledge there are no disclosed or undisclosed shareholder agreements concerning Ubisoft stock. 3.3.6.7 CONDITIONS REGARDING ALL VESTING RIGHTS OR REQUIREMENTS ASSOCIATED WITH SUBSCRIBED CAPITAL NOT PAID UP N/A 3.3.6.8 SHARE CAPITAL OF UBISOFT GROUP COMPANIES SUBJECT TO AN OPTION OR...

  • Page 68
    ... this. 4.2 MEMBERSHIP AND FUNCTIONING OF THE BOARD OF DIRECTORS AND GROUP MANAGEMENT 4.2.1 MEMBERSHIP OF THE BOARD OF DIRECTORS Name Position in the Company (1) Date of birth Date of taking office Expiry at AGM approving financial statements for FY ended 03/31/12 Number of shares at 03/31/12 Yves...

  • Page 69
    ..., mainly to encourage close relations between managers and shareholders, in the tradition of Ubisoft Entertainment SA. As a result, Yves Guillemot, as Chairman of the Board of Directors, is legally responsible for representing the Company's Board of Directors, organizing its work and reporting on...

  • Page 70
    ... of interest between the Company duties and personal interests of any of the members of the Board of Directors. Michel, Claude, Yves, Gérard and Christian Guillemot are brothers and are members of the Management and Board of Directors of Gameloft SA and Ubisoft Entertainment SA. In this respect...

  • Page 71
    ... to the video games subject to the exclusive license. The license was granted in return for the payment of a license fee proportionate to the sales achieved by Gameloft SA. These agreements are part of regulated agreements as detailed in part 5 of the Financial Statements. 4.2.8 SERVICE PROVISION...

  • Page 72
    ... of corporate officers (fixed and/or variable portion) ï,· giving opinions on the general stock option allocation policy and more specifically the percentage allocated to managers ï,· proposing an overall amount of directors' fees ï,· approving information given to shareholders in the annual report...

  • Page 73
    ...Mobile Applications Ltd (United Kingdom) EXPIRED POSITIONS WITHIN THE GROUP (last 5 financial years) FRANCE ï,§ CHAIRMAN of Ludi Factory SAS, Ubisoft Books & Records SAS, Ubisoft Design SAS, Ubisoft Graphics SAS, Ubisoft Manufacturing & Administration SAS, Ubisoft Organisation SAS, Ubisoft World SAS...

  • Page 74
    ... SAS, Gameloft Partnerships SAS, Gameloft Live SAS ï,§ MANAGER OF Gameloft Rich Games Production France SARL ï,§ EXECUTIVE VICE PRESIDENT AND DIRECOR OF Guillemot Corporation SA, Guillemot Brothers SA ABROAD ï,§ CHAIRMAN of Gameloft Software (Beijing) Company Ltd (China), Gameloft Software (Shanghai...

  • Page 75
    ...OUTSIDE THE GROUP (last 5 financial years) FRANCE ï,§ DIRECTOR of Jeuxvidéo.com SA ï,§ MANAGER of L'Odyssée Interactive Games SARL ABROAD DIRECTOR of Gameloft Ltd. (Malta) Marc FIORENTINO  Director since July 10, 2006  Expiry of term of office March 31, 2012  Main position in the Company...

  • Page 76
    ... Commercial Code; it being specified that the company is not controlled by any other company in the meaning of Article L. 233-16. The total gross compensation paid by the Company to corporate officers during the financial year amounted to â,¬720 thousand. During the 2011/2012 financial year, members...

  • Page 77
    Management Report 2012 Table 1 SUMMARY OF COMPENSATION, STOCK OPTIONS AND SHARES FOR EACH MANAGER AND CORPORATE OFFICER Compensation due Valuation of options granted for the during the financial year (1) financial year (see breakdown in Table 4) (see breakdown in Table 2) Other Other Ubisoft 03/31/...

  • Page 78
    Management Report 2012 Table 2 SUMMARY OF THE COMPENSATION OF MANAGERS HOLDING CORPORATE OFFICES PAID BY THE ISSUER AND BY ANY COMPANY (Article L. 233-16 of the French Commercial Code) 03/31/11 Amounts paid (in euros) (1) 56,080 15,000 71,080 03/31/11 Amounts paid (in euros) (1) 161,373 15,000 176,...

  • Page 79
    ... year from 04/27/2012 to 04/26/2016 TOTAL ALLOCATIONS BY UBISOFT ENTERTAINMENT SA (1) This corresponds to the value of options and financial instruments when granted, as per IFRS 2, after taking into account any discount linked to performance criteria and the likelihood of presence at the Company...

  • Page 80
    Management Report 2012 Table 5 SHARE PURCHASE OR SUBSCRIPION OPTIONS EXERCISED DURING THE YEAR BY EACH CORPORATE OFFICER Plan number and date Number of options exercised during the period N/A Strike price Name of the Director Past share purchase and subscription option grants, and the status of ...

  • Page 81
    FINANCIAL STATEMENTS 76

  • Page 82
    ... of euros Share capital Premiums Consolidated reserves Consolidated earnings Total equity Provisions Employee benefits Long-term borrowings Deferred tax liabilities Non-current liabilities Short-term borrowings Trade payables Other debts Current tax liabilities Current liabilities Total liabilities...

  • Page 83
    Financial Statements 2012 1.2 CONSOLIDATED INCOME STATEMENT In thousands of euros Sales Cost of sales Gross margin R&D costs Marketing costs Administrative and IT costs Current operating income Current operating income before sharebased payments Share-based payments Operating profit (loss) from ...

  • Page 84
    ...) Total equity Balance as of March 31, 2010
 Net profit (loss) Other comprehensive income Profit (loss) Allocation of consolidated earnings in N-1 Change in the share capital of the parent company Options on ordinary shares issued Sales and purchases of treasury stock Balance as of March 31, 2011...

  • Page 85
    ... Changes in scope**** CASH USED IN INVESTING ACTIVITIES Cash flows from financing activities New finance leases contracted New borrowings Refund of finance leases Refund of borrowings Loss carryback refund claim Funds received from shareholders in capital increases Sales/purchases of treasury shares...

  • Page 86
    ..."the Group"). The consolidated financial statements were approved by the Board of Directors on May 14, 2012 and will be presented to the General Meeting on Thursday, September 20, 2012. 1.6.2 HIGHLIGHTS OF THE FINANCIAL YEAR April 2011 - Subscription of a new credit line Ubisoft Divertissements Inc...

  • Page 87
    ... Euronext regulated market in Paris on April 10, 2012. 1.6.3 CHANGES IN CONSOLIDATION SCOPE July 2011: Acquisition of 100% stake in the French studio Owlient SAS On July 12, 2011, Ubisoft acquired a 100% stake in the company Owlient SAS, located in France, a developer of free-to-play games and an...

  • Page 88
    ...2012: Creation of the subsidiary Ubisoft Motion Pictures Assassin's Creed SAS and Ubisoft Motion Pictures Splinter Cell SAS in France. - March 2012: Creation of the subsidiary Ubisoft Music Publishing Inc. in Canada. 1.6.4 DECLARATION OF CONFORMITY The consolidated financial statements for the year...

  • Page 89
    ...2012) 1.6.5 ACCOUNTING PRINCIPLES AND VALUATION METHODS 1.6.5.1 COMPARABILITY OF FINANCIAL STATEMENTS Change in consolidation, valuation and presentation methods N/A Change in estimation N/A Items affecting comparability of financial statements The Group has reclassified the sale of Gameloft shares...

  • Page 90
    ... of internal software. This restatement has no impact on the presentation of the Group's income statement. In financial year 2011/2012, the calculation of video game tax credit income is limited to 9 months of expenditure given the uncertainty, at the time of preparation of the financial statements...

  • Page 91
    ... over which Ubisoft Entertainment SA exercises significant influence on the financial and operational policies but no control. The consolidated financial statements include the Group share in the total amount of profits and losses recognized by the associates, using the equity accounting method...

  • Page 92
    ... a foreign subsidiary, the related translation reserves, recorded in other comprehensive income, are recognized in profit or loss. The Group does not operate in countries considered to be suffering from hyperinflation. Goodwill Business combinations are accounted for under the purchase method on the...

  • Page 93
    Financial Statements 2012 equity. However, for a consideration classified as liabilities, subsequent changes in the fair value of the contingent consideration are recorded in profit or loss. When share-based payment rights (replacement rights) are to be given in exchange for rights held by the ...

  • Page 94
    ...asset Office software Information system costs Commercial software Engines External developments Amortization method Straight-line, 1 year or 3 years Straight-line, 3 years or 5 years 2 or 3 years, starting on the commercial release date Straight-line over the useful life between 3 and 5 years Based...

  • Page 95
    ... changes in sales, profitability levels, exchange rates and final values are reasonable and in line with market data available for each of the CGUs subject to impairment tests. The value in use adopted by Ubisoft corresponds to discounted cash flows determined on the basis of the Ubisoft management...

  • Page 96
    ... companies, short-term and long-term loans and advances, trade receivables, derivatives with a positive market value, investment in securities, and cash. Financial liabilities include bank borrowings, obligations relating to finance lease contracts, other financing (current account advances...

  • Page 97
    ... to the development of commercial software. Any claims on the public body which awarded the grant are classified as loans and receivables as per IAS 39. ï,· Trade receivables (loans and receivables category) Trade and other receivables linked to operating activity are recorded at fair value - in...

  • Page 98
    ... Group holds financial derivatives exclusively to manage its exposure to foreign exchange risks. Ubisoft Entertainment SA hedges these risks with forward sale contracts and currency options. Derivatives are initially recorded at fair value; associated transaction costs are booked in profit or loss...

  • Page 99
    ... the financial year. The Group does not hold any assets or liabilities measured at fair value under level 3. Employee benefits Post-employment obligations Ubisoft contributes to pension, medical and termination benefit plans in accordance with the laws and practices of each country. These benefits...

  • Page 100
    ...price and the share price at the grant date. This expense is recognized immediately on the plan subscription date. Bonus share grants: The cost of this compensation is recognized in profit or loss over the vesting period, allowing for the vesting terms. ï,· ï,· The dilutive effect of stock option...

  • Page 101
    ... commercial software. Marketing costs This item includes all sales and marketing costs, with the exception of editorial marketing costs which are included under research and development costs. Administrative and IT costs This item includes all the expenses of the administrative and IT teams. Current...

  • Page 102
    Financial Statements 2012 Income tax Income tax (income or expense) includes the current tax expense (or income) and deferred tax expense (income).Tax is recognized in profit or loss, unless it relates to items that are recognized directly in other comprehensive income, in which case it is ...

  • Page 103
    ... are not included in this list. COMPANY UBISOFT ENTERTAINMENT SA UBISOFT LTD UBISOFT INC. UBISOFT GMBH UBISOFT SRL SHANGHAI UBI COMPUTER SOFTWARE CO. LTD. UBISOFT DIVERTISSEMENTS INC. UBISOFT FRANCE SAS UBISOFT PRODUCTION INTERNATIONALE SAS RED STORM ENTERTAINMENT INC. UBISOFT CANADA INC. FC = Full...

  • Page 104
    ... financial year is described in paragraph 1.6.3. Net goodwill broke down as follows as at March 31, 2012: Company Ubisoft Inc. Ubisoft Ltd Ubisoft GmbH Red Storm Entertainment Inc. Ubisoft Spa Ubisoft Canada Inc. Ubisoft Montpellier SAS Ubisoft Divertissements Inc. Blue Byte GmbH Ubisoft France SAS...

  • Page 105
    ...at 03/31/2012 (9.62%). Note 2. Other intangible assets Non-current assets At 03/31/12 Gross Released commercial software Released external developments Commercial software and external developments in progress Office software Other intangible assets in progress Brands Movies Other TOTAL 604,575 230...

  • Page 106
    Financial Statements 2012 Depreciation and amortization Released commercial software Released external developments Commercial software and external developments in progress Office software Brands Movies Other Total at 03/31/12 Total at 03/31/11 Opening balance 552,414 231,388 21,000 31,494 235 836,...

  • Page 107
    ... 174 404 393 Goodwill Share of equity Total investments in associates 03/31/12 Total Investments in associates 03/31/11 This is Related Designs Software GmbH in which Ubisoft Entertainment SA indirectly holds a 30% stake. Note 5. Non-current financial assets Non-current financial assets At 03/31...

  • Page 108
    ... 2,110 Changes in Translation scope adjustments (128) (128) 1 43 43 (2) Trade receivables are due in less than one year. The analysis of credit risk appears in note 16. In financial year 2011/2012, the seasonality affected by weaker sales in the last quarter generated a credit balance of accounts...

  • Page 109
    .../31/11 Change 620 25 645 Foreign exchange derivatives whose market value at the year-end is positive are reported at fair value (level 2, IFRS 7 hierarchy), (see analysis in note 16). ** Fair value of Gameloft shares classified as "held-for-sale financial assets": As at March 31, 2012, the price of...

  • Page 110
    Financial Statements 2012 Note 11. Equity Capital As at March 31, 2012, the capital of Ubisoft Entertainment SA was â,¬7,369,475.16 divided into 95,090,002 shares with a nominal value of â,¬0.0775. Each share gives rights to ownership of the corporate assets and the liquidation dividend equal to the...

  • Page 111
    ... to March 31, 2011, essentially due to the acquisition of 400,000 shares allocated to cover stock option plans). Dividends At March 31, 2012, no dividend was paid in respect of 2010/2011 earnings. Note 12. Provisions Opening balance Provision for tax risk Other provisions for risks Total at 03/31/12...

  • Page 112
    ... result in a change of 17% in the amount of the benefit liability. Note 14. Payments based on equity instruments Impact on the financial statements: Equity at 03/31/11 Employee benefits expenses Stock options Bonus share grants Group savings scheme Equity instruments capitalized Equity at 03/31...

  • Page 113
    Financial Statements 2012 15th plan Total number of shares granted (1) Start of exercise period End of exercise period Strike price of options (1) Maturity (years) Volatility Risk-free interest rate Estimated dividend rate Annual turnover rate Fair value of options after stock split(1) (â,¬/share) ...

  • Page 114
    ...,000 subscription options (of the 3,220,748 options granted) changed into purchase options following a decision made by the Board of Directors on March 9, 2012 Bonus share grants Bonus share grants, which are subject to performance conditions, are locked in for a two or four-year period following...

  • Page 115
    Financial Statements 2012 Group savings scheme Ubisoft also offers Group savings schemes, which allow workers to acquire Ubisoft shares as part of reserved capital increases. Workers acquire these shares with a maximum discount of 15% versus the average opening price over the 20 trading days prior ...

  • Page 116
    ... and bilateral credit lines, the Company is required to fulfill certain financial ratios (covenants). The covenants are as follows: 2011/2012 Net debt restated for assigned receivables/equity restated for goodwill < Net debt restated for assigned receivables/EBITDA < 0.80 1.5 2010/2011 0.80 1.5 All...

  • Page 117
    ... in France. No hedging is taken out at subsidiaries in France or abroad. The fair value of foreign exchange derivatives is confirmed by the banking counterparty. It is estimated on the basis of market conditions, using the market price which the Group would have to pay to unwind its positions. 112

  • Page 118
    ... Mark-to-market, level 2 in the hierarchy of fair value under IFRS 7 ï,· The amount of ineffective derivative instruments qualifying for hedge accounting under IAS 39 is accounted for as financial income. Exposure to foreign exchange risk In thousands of currency units USD GBP Net position before...

  • Page 119
    ...,584 treasury shares with a value of â,¬2,491 thousand. Own shares are deducted from equity at cost of sale. Risk to other securities At March 31, 2012, financial assets included â,¬14.6 million in shares in the listed company Gameloft. On July 12, 2007, Ubisoft Entertainment SA signed two contracts...

  • Page 120
    Financial Statements 2012 Reconciliation by accounting class and category 03/31/12 Hierarchy Notes Assets recognized at fair value Foreign exchange derivatives Gameloft shares Equity investments in non-consolidated companies Assets recognized at amortized cost Trade receivables Other trade ...

  • Page 121
    ... type Employee benefits expenses 03/31/12 403,515 (62,021) 9,090 (5,281) 345,303 03/31/11 356,907 (54,585) 13,276 (8,235) 307,363 Salaries and payroll taxes Wage subsidies Share-based payments* Portion of share-based payments capitalized TOTAL * See breakdown in note 14 In financial year 2011/2012...

  • Page 122
    Financial Statements 2012 Grants and tax credits presented as a reduction in personnel costs are as follows: Country Canada Multimedia credit Research tax credit* Other* France Research tax credit Video game tax credit Video game tax credit refund Singapore Economic Development Board tax credit ...

  • Page 123
    ... Foreign exchange losses Result from foreign exchange operations* Other financial income Disposal of the equity swap on Gameloft shares Financial income Other financial expenses Financial expenses TOTAL 2,466 (3,679) * The foreign exchange income is mainly linked to changes in the Canadian dollar...

  • Page 124
    ... and income statement: 03/31/11 Change Change in Carried over Other in other from business reclassifications income comprehensive combinations income 03/31/12 Intangible assets Elimination of margin on intangible assets Available-for-sale financial assets Capitalized losses and tax credits Losses...

  • Page 125
    ...,424 03/31/11 Noncapitalized losses 804 TOTAL Tax group France (1) Ubi Workshop Inc. Hybride Technologies Inc. Quazal Technologies Inc. Shanghai Bi Han Ubisoft Nordic A/S Ubisoft Motion Pictures SARL Ubisoft Singapore Pte Ltd Ubisoft Limited (Hong Kong) Ubisoft SA (Spain) Ubisoft GmbH 9,166 35 230...

  • Page 126
    ... of Article 236 of the French General Tax Code (CGI), Ubisoft Entertainment SA opted to immediately expense software development costs where design commenced during the financial year. Provisions for the financial year amounted to â,¬102.5 million for commercial software, while reversal amounted to...

  • Page 127
    ...to license contracts) The Group's operating activities are organized and managed separately, according to the type of market. 03/31/12 Parent company and rest of world Sales Cost of sales Gross margin R&D costs Marketing costs Administrative and IT costs Intersegment* Current operating income before...

  • Page 128
    ... Board members if they resign or are dismissed without real cause, or if their employment is terminated due to a public offering. 03/31/12 Short-term benefits Post-employment benefits Other long-term benefits Compensation for termination of employment contract Share-based payments (2) TOTAL...

  • Page 129
    ... given by the parent company to: Ubisoft Divertissement Inc. Lease payment guarantee Ubisoft Inc. Guarantee of commercial commitments Ubisoft Ltd Ubisoft Ltd Ubisoft Ltd Ubisoft Reflections Ltd Ubisoft Paris SAS Ubisoft Paris SAS Ubisoft Production Internationale SAS Ubisoft Entertainment Sweden AB...

  • Page 130
    ... down as follows at March 31, 2012: North America Europe and North Africa Asia Pacific TOTAL 03/31/12 3,114 2,846 967 6,927 03/31/11 2,939 2,515 877 6,331 The average headcount in 2011/2012 was 6,688. The Group has no employee profit-sharing programs. 1.6.9.5 EVENTS AFTER THE BALANCE SHEET DATE...

  • Page 131
    Financial Statements 2012 1.6.9.6 PROFESSIONAL FEES OF THE STATUTORY AUDITORS AND MEMBERS OF THEIR NETWORKS (Document prepared in accordance with Article L. 222-8 of the General Regulations of the AMF) In thousands of euros MB Audit Amount (excluding tax) % 2011/2012 2010/2011 2011/2012 2010/2011...

  • Page 132
    ... applicable in France. Dear Shareholders, Pursuant to the assignment entrusted to us by your General Meeting, we hereby present our report for the fiscal year ended March 31, 2012 with regard to the following: ï,· the audit of consolidated financial statements of Ubisoft Entertainment S.A, as...

  • Page 133
    Financial Statements 2012 3- Specific verification We have also carried out the specific verification required by law of the information provided in the Management report of the Group. We have no comments regarding the accuracy of this information and its consistency with the consolidated financial...

  • Page 134
    ... 3 CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA FOR THE YEAR ENDED MARCH 31, 2012 3.1 UBISOFT ENTERTAINMENT SA BALANCE SHEET ASSETS In thousands of euros Intangible assets Property, plant and equipment Non-current financial assets Non-current assets Advances and prepayments made Trade...

  • Page 135
    Financial Statements 2012 3.2 UBISOFT ENTERTAINMENT SA INCOME STATEMENT In thousands of euros Production for the period Other operating income and reinvoiced costs Total operating income Other purchases and external expenses Taxes and duties Employee benefits expenses Other expenses Depreciation, ...

  • Page 136
    ... Statements 2012 3.3 STATEMENT OF CHANGES IN EQUITY In thousands of euros Capital Premiums Legal reserve Other reserves Profit carried forward Earnings for the period Regulated provisions TOTAL Balance at 03/31/11 7,341 455,899 728 84,036 (119,524) (152,117) 241,766 518,129 Allocation of 2010/2011...

  • Page 137
    ... Cash flows from financing activities Capital increase Increase in issue premium Deferred expenses Change in current accounts Net cash generated by financing activities Change in cash and cash equivalents Net cash position at beginning of fiscal year Net cash position at end of fiscal year 9 9 14 14...

  • Page 138
    ... Dhabi. March 2012: Creation of the subsidiary Ubisoft Music Publishing Inc. in Canada. Acquisition of subsidiaries: On July 12, 2011, Ubisoft acquired a 100% stake in the company Owlient SAS, located in France, a developer of free-to-play games and an expert in the management of community web games...

  • Page 139
    ...2011 - Subscription of a bilateral credit line for a period of 2 years in the amount of â,¬25 million. Granted to the Canadian studio Ubisoft Divertissements Inc., this line is secured by Ubisoft Entertainment SA and follows the same covenants as other lines. June 2011 - Extension of Gameloft equity...

  • Page 140
    ... Ubisoft Entertainment SA's annual financial statements comply with the provisions relating to separate financial statements in Regulation CRC no. 99-03, as ratified by the Decree of June 22, 1999. 3.5.4 ACCOUNTING RULES AND METHODS Intangible assets Intangible assets include: - Commercial software...

  • Page 141
    Financial Statements 2012 Subsequent accounting and valuation: Brands: Any brands acquired are recognized at cost. Commercial software and external developments: Commercial software is developed by the Group's own studios, while external software developments are those of studios from outside the ...

  • Page 142
    ...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 accounting value is...

  • Page 143
    .... These costs are deducted in tax terms over 5 years by means of accelerated tax depreciation. Development expenditure of software. The Company decided to adopt immediate deductibility of expenditure for the development of software according to Article 236 of the CGI (French General Tax Code). 138

  • Page 144
    Financial Statements 2012 3.5.5 NOTES TO THE BALANCE SHEET Note 1. Intangible assets At 03/31/12 Gross Released commercial software Released external developments commercial software and external developments in progress Brands and operating licenses Other TOTAL 645,779 140,407 356,681 10,486 5,007...

  • Page 145
    Financial Statements 2012 Note 2. Property, plant and equipment At 03/31/12 Gross Fixtures and fittings Transport equipment Computer hardware and furniture Non-current assets in progress TOTAL 7,226 20 1,177 128 8,551 Cumulative depreciation 4,085 1 1,110 5,196 Net 3,141 19 67 128 3,355 At 03/31/11...

  • Page 146
    ...-group receivables. In financial year 2011/2012, the seasonality marked by weaker sales in the last quarter caused a reduction in the accounts receivable balance. Note 6. Other receivables At 03/31/12 Gross Suppliers - credit notes receivable Government (VAT credit, tax) Associated current account...

  • Page 147
    ... (VAT credit, sundry) Group and associates Other miscellaneous debtors Prepaid expenses TOTAL STATEMENT OF LIABILITIES Bank borrowings and debts Other borrowings and financial liabilities Trade payables Fiscal and social debts Other debts Liabilities on non-current assets Deferred income TOTAL...

  • Page 148
    ... allowing for centralized management at parent company level of the bank accounts of the majority of the Group companies. The five corporate officers of the Company are described as related parties. The only transactions with officers concern their pay, the granting of stock options and directors...

  • Page 149
    ... provided in note 3. Non-current financial assets. Note 14. Equity Capital At March 31, 2012, Ubisoft Entertainment SA had equity of â,¬7,369,475.16 divided into 95,090,002 shares. Number of Ubisoft Entertainment SA shares At 04/01/11 Option exercises Bonus share grants Group savings scheme At 03/31...

  • Page 150
    ... 10, 2011. (3) 417,000 subscription options (of the 3,220,748 options granted) changed into purchase options following a decision made by the Board of Directors on March 9, 2012. The Company has not recognized a liability as the exercise of stock options involves the creation of new shares. 145

  • Page 151
    ... Purchase options outstanding at March 31, 2012 The Company has not recorded a liability because the exercise price exceeds the cost of shares allocated to plan coverage. Bonus share grants Bonus share grants, which are subject to performance conditions, are locked in for a two or four-year period...

  • Page 152
    Financial Statements 2012 Group savings scheme Ubisoft also offers Group savings schemes, which allow workers in France and abroad to acquire Ubisoft shares as part of reserved capital increases. Workers acquire these shares with a maximum discount of 15% versus the average opening price over the ...

  • Page 153
    ...for the period comprises: - Sales, essentially made up of intra-group invoicing of royalties; - Capitalized production reflecting development costs outsourced to subsidiaries and external developers. 03/31/12 Sales Capitalized production costs for commercial software Capitalized production costs for...

  • Page 154
    Financial Statements 2012 Note 19. Other operating income and reinvoiced costs 03/31/12 Reversals of provisions on commercial software developments* Reinvoiced costs Income from other ordinary revenue transactions TOTAL * See details in note 21 247,191 14,151 9,683 271,025 03/31/11 191,314 17,177 59...

  • Page 155
    ... Foreign exchange losses Net financial income (1) The foreign exchange loss of â,¬(1.8) million is mainly related to price fluctuations in the Yen (â,¬(0.8) million), the Australian dollar (â,¬(0.4) million), and the Canadian dollar (â,¬(0.5) million). Foreign exchange risk The Company's exposure...

  • Page 156
    ... for software. Note 24. Income tax At March 31, 2012, the tax group incorporates Ubisoft Entertainment SA (holding company) and all subsidiaries whose head office is in France, with the exception of those created or acquired during the fiscal year. Any tax savings arising from the use of losses at...

  • Page 157
    Financial Statements 2012 3.6 OTHER INFORMATION 3.6.1 STAFF At March 31, 2012, the staff consisted of 5 corporate officers. 3.6.2 FINANCIAL COMMITMENTS AND OTHER INFORMATION 3.6.2.1 Type Commitments given by Ubisoft Entertainment SA Financial guarantees (1): Ubisoft Divertissements Inc. Ubisoft Inc...

  • Page 158
    ... SA has committed to provide financial support to its subsidiaries in order to meet their cash flow requirements. There are no finance leases. 3.6.3 MANAGEMENT REMUNERATION Ubisoft Entertainment SA paid â,¬720 thousand in compensation to its corporate officers during the 2011/2012 fiscal year...

  • Page 159
    ... if their employment is terminated due to a public offering. At its meeting on April 27, 2011, the Board of Directors exercised the authorization from the General Meeting of July 2, 2010, allocating 110,000 share subscription options to corporate officers. Pursuant to the provisions of French Act No...

  • Page 160
    ...and advances granted by the Company and not yet paid Country Currency Capital Percentag e if capital held Accounting value of shares held Sales excluding VAT in thousands of euros Earnings for the last fiscal year In thousand s of currency units Dividends received In thousan ds of currency...

  • Page 161
    ... applicable in France. Dear Shareholders, Pursuant to the assignment entrusted to us by your General Meeting, we hereby present our report for the fiscal year ended March 31, 2012, with regard to the following:  the audit of the annual financial statements of Ubisoft Entertainment S.A., as...

  • Page 162
    ...the annual financial statements. Concerning the information provided pursuant to the provisions of article L. 225-102-1 of the French Commercial Code on the compensation and benefits paid to corporate officers and on the commitments made in their favor, we verified their concordance with accounts or...

  • Page 163
    Financial Statements 2012 5 STATUTORY AUDITOR'S SPECIAL REPORT ON REGULATED AGREEMENTS AND COMMITMENTS FOR THE YEAR ENDED MARCH 31, 2012 This is a free translation into English of the statutory Auditors' special report on regulated agreements and commitments issued in the French language and is ...

  • Page 164
    Financial Statements 2012 ï,· Nature and purpose : On June 30 , 2011, your Board of Directors authorized your company to enter into a contract of order and transfer of rights, pursuant to which your company grants to the company NextVision SARL the conception and development of a free-to-play ...

  • Page 165
    Financial Statements 2012 ï,· Conditions : The license agreement concerns a period from January 28 , 2009 to April 1, 2012. The amount of the royalties booked as turnover by your company as of March 31, 2012 totaled â,¬866,522 excluding tax. th 3. Brand licensing agreement with Gameloft SA ï,· ...

  • Page 166
    ... Ubisoft Pictures SAS, a wholly-owned subsidiary of your company) of all the shares it owned and making of the whole share capital of Tiwak SAS, Ubisoft Castelnau SARL, Ubisoft Production Montpellier SARL, Ubisoft Studios Montpellier SARL and Ubisoft Design Montpellier SARL. th - ï,· Conditions...

  • Page 167
    GOVERNANCE AND INTERNAL CONTROL

  • Page 168
    ... CODE As regards corporate governance, the Company refers to the corporate governance code for listed companies, published by AFEP-MEDEF (Association of French Private-Sector Companies/French Business Confederation) (consolidated code of December 2008 updated in April 2010 and available at www.code...

  • Page 169
    ... Marc Fiorentino is sole manager) on October 18, 2011, pursuant to which NextVision must provide the Company with services relating to the development of an online game, cannot at this time, due to the commitment required and the absence of remuneration for the past financial year, be considered...

  • Page 170
    ... reduce the term of office expiring originally at the Annual General Meeting approving the financial statements for the financial year ended March 31, 2013 to ensure the regular renewal of Board members, namely: renewal during the General Meeting approving the financial statements for the year ended...

  • Page 171
    ... (corporations) and of the Company's Articles of Association and the provisions of the by-laws of the Board of Directors and its committees updated on April 27, 2011 in compliance with the French Commercial Code and the AFEP-MEDEF Code. Shareholders may consult the by-laws at the business address or...

  • Page 172
    ... Development Committee and the Compensation Committee). In accordance with Article L. 823-17 of the French Commercial Code, the auditors were invited to attend the Board meetings approving or examining the financial statements. The Board of Directors met 10 times during the financial year 2011/2012...

  • Page 173
    ... Ubisoft Group's activit ies. WORK DURING THE FINANCIAL YEAR 2011/2012 The Strategy and Development Committee met once during the last financial year, mainly to discuss the development of the technology market and various forms of product distribution. The attendance rate at this committee meeting...

  • Page 174
    ... to employee shareholding. WORK DURING THE FINANCIAL YEAR 2011/2012 The Compensation Committee met twice during the last financial year, mainly to discuss the composition of the Ubisoft teams as at the end of 2011, possibilities of retaining key people and ensuring their loyalty in a market under...

  • Page 175
    ...150 million for a legal term of one year in accordance with Article R. 225-28 of the French Commercial Code. 1.5 RULES AND PRINCIPLES APPLIED BY THE BOARD OF DIRECTORS TO DETERMINE THE COMPENSATION AND BENEFITS OF ALL KINDS GRANTED TO CORPORATE OFFICERS Compensation granted to the Chief Executive...

  • Page 176
    ... IN THE EVENT OF A PUBLIC OFFERING This report refers to section 3.3 of the management report for the year ended March 31, 2012 as regards the publication of information referred to in Article L. 225-100-3 of the French Commercial Code, relating to the Company's capital structure and matters that...

  • Page 177
    ... use of its resources, while enabling the Company to adequately take into account significant operational, financial or compliance risks. Therefore, the internal control system plays a key role in conducting and monitoring its activities. Since 2007, Ubisoft has used a proactive approach in order to...

  • Page 178
    ... with senior management, they are collectively involved in setting the key accounting, finance, legal, tax, IT and human resources policies, and supporting the subsidiaries with their implementation. Specific visits are made to the subsidiaries in order to carry out audits and training and to...

  • Page 179
    ... performance. Human resources policy HR policy is key to the internal control system and its effectiveness. HR teams at subsidiaries establish and implement the policy, programs and systems required to meet recruitment goals set at Group level, whilst ensuring the development of employees' skills...

  • Page 180
    ... to all Group employees since 2007 has provided a permanent and up-to-date information portal on the Group, the market and its developments, and the many internal sites. These frequently updated internal sites facilitate knowledge sharing and discussions in all business activities, for example...

  • Page 181
    ... the Group's accounting policies manual. It ensures compliance with applicable standards and regulations so as to provide a true picture of the Group's business activities and position.  The treasury department arranges foreign exchange derivative contracts and coordinates cash flow management at...

  • Page 182
    ... the Group's activity:   Audit of procedures implemented in subsidiaries; Support for subsidiaries by implementing tool training. The objective is to make sure of the correct application of recommendations and guidelines established during first half of the fiscal year 2010/2011 in line with...

  • Page 183
    ... department. This software supports automatic verification and consistency checking of flows, the balance sheet, specific line items in the income statement, etc. It also allows fast, reliable data reporting and is designed to make the consolidated financial statements secure. The Company has taken...

  • Page 184
    ... the time needed to prepare the consolidated financial statements. At international level, the audit of the accounts in certain subsidiaries is carried out by the KPMG network, co-auditor for the holding company. Their local representative does everything required of him in the respective country as...

  • Page 185
    ... The Group intends to continue strengthening its internal control system on its production and support activities, by specifically focusing on increasing awareness among its teams and managers, systematically reviewing risks and developing effective solutions adapted to the teams' requirements. 180

  • Page 186
    ...of Ubisoft Entertainment SA and pursuant to the provisions of Article L. 225-235 of the French Commercial Code, we hereby present our report on the report prepared by the Chairman of your company in accordance with the provisions of Article L. 225-37 of the French Commercial Code for the fiscal year...

  • Page 187
    ... and Internal control 2012 On the basis of this work, we have no comments regarding the information provided about company's internal control procedures and risk management used to prepare and process accounting and financial information, as contained in the report of the Chairman of the Board of...

  • Page 188
    INFORMATION ABOUT THE COMPANY 183

  • Page 189
    ...2010 2016 Professional fees of the statutory auditors and members of their networks (Document prepared in accordance with Article L. 222-8 of the internal regulations of the Autorité des marchés financiers - AMF) The professional fees for the fiscal year are detailed in part Financial Statements...

  • Page 190
    ...Montreuil-sous-Bois Cedex, France Tel.: (33) 01.48.18.50.00 www.ubisoftgroup.com 2.2 SCHEDULE OF FINANCIAL COMMUNICATIONS FOR FISCAL YEAR 2012/2013 Date First quarter sales Half-yearly results Third quarter sales Year-end results Week of July 16, 2012 Week of November 5, 2012 Week of February 11...

  • Page 191
    ... from Ubisoft's commercial offices : 28, rue Armand Carrel - 93108 Montreuil-sous-Bois cedex - France Games mentioned in the Annual Report © 1995-2012 Ubisoft Entertainment. All Rights Reserved. Rayman, Driver, Just Dance, Tom Clancy, Ghost Recon, Splinter Cell, Splinter Cell Conviction, The...

  • Page 192
    ...HQ Ubisoft Entertainment 28, rue Armand Carrel 93108 Montreuil-sous-Bois Cedex France Phone: +33 (0)1 48 18 50 00 Fax: +33 (0)1 48 57 07 41 Australia Austria Belgium Brazil Bulgaria Canada China Denmark Finland France Germany Hong-Kong India Italy Japan Korea Mexico Morocco Poland Romania Singapore...