Ubisoft 2012 Annual Report Download - page 100

Financial Statements
2012
95
Individual training right (DIF)
Full-time employees of French companies are entitled to between 20 and 21 hours of training each
year, depending on the collective agreement provisions applicable within each company. The rights
acquired each year may be accrued for up to six years. The total training acquired amounts to 79,501
hours and is recognized as off-balance-sheet commitments.
Payments based on equity instruments
Stock option plans provide an additional incentive for employees to improve the Group’s performance
by allowing them to purchase a stake in the Company (stock options, bonus shares, Group savings
scheme).
In accordance with IFRS 2, payments based on equity instruments are recognized as staff expenses
in return for equity in the amount of the fair value of the instruments attached. This expense is spread
over the vesting period, assuming presence on the vesting date and possibly performance conditions
attached.
 Stock option plans: The compensation is recognized in income over the vesting period;
however, the straight-line method is not used, given the vesting terms set out in the various
Ubisoft plan regulations. Ubisoft uses a binomial model to estimate the value of such
instruments. This method is based on assumptions updated on the valuation date, such as
estimated volatility of the security concerned, a risk-free discount rate, the estimated dividend
rate and the likelihood of staff remaining in the Group until they can exercise their rights.
 Group savings scheme: The accounting expense is equal to the discount granted to
employees, i.e. the difference between the share subscription 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.
The dilutive effect of stock option plans and bonus share grants when the unwinding of the instrument
involves the issue of Ubisoft shares and the vesting period is in progress, is reflected in the calculation
of diluted earnings per share.
Provisions
A provision is recorded when:
- The Company has a current obligation (legal or implicit) resulting from a past event;
- It is likely that an outflow of resources representing economic benefits will be required to settle
the obligation;
- The amount of the obligation can be measured reliably.
If these conditions are not met, no provision is recorded.
Revenues
Sale of games
Revenue from the sale of gaming software is recorded on the date the products are delivered to
customers. A provision for estimated returns is recorded for the net amount of the sale as a decrease
in revenues. Under the terms of its contracts with customers, the Group does not have to accept
returns, but it may exchange products sold to certain customers. Furthermore, the Group may provide
a return guarantee or grant discounts on unsold products or other benefits to certain customers. In this
case, the Group’s management estimates the amount of future credit notes and books a provision as a
reduction in sales.