Ubisoft 2013 Annual Report Download

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ANNUAL REPORT
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Table of contents

  • Page 1
    HEAD OFFICE Ubisoft Entertainment 107, avenue Henri Fréville 35207 Rennes Cedex 2 France COMMERCIAL 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 ...

  • Page 2
    A statement from Yves Guillemot Dear Shareholders, Ubisoft's financial performance in FY 2012-13 was superior to the objectives communicated a year ago. Up 18%, our sales for 2012-13 reached â,¬1.256 billion and translated into an 11% global market share over calendar year 2012. Our non-IFRS ...

  • Page 3
    ...means to take full advantage of all the opportunities offered by next-gen and high-end PC, which hold great potential, as well as the dynamic Free-to-Play market on PC and mobile. There are many challenges ahead, but the opportunities are just as great and look thrilling. I want to thank all Ubisoft...

  • Page 4
    ... of the Annual Report was recorded on June, 25 2013 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 ended March...

  • Page 5
    ... MANAGEMENT REPORT ...1 1 The Group's business activities and results for financial year 2012/2013 ...2 2 Comments on the Ubisoft Entertainment SA Financial Statements for the year ended march 31, 2013 ...52 3 4 Information on the Company and its capital ...54 Corporate governance ...73 FINANCIAL...

  • Page 6
    ... Ubisoft now presents non-IFRS information in its earnings releases as Group Management considers that "Non-IFRS operating income" and "Non-IFRS net income" - which are measures that are not prepared strictly in accordance with IFRS - are relevant indicators of the Group's operating and financial...

  • Page 7
    ... in downloadable games. Closure of the Vancouver studio in 2012. In 2013, acquisition of the THQ Montreal studio and partnership with ® Electronic Arts, Warner Bros and other developers for the distribution of their PC games on Uplay Shop, Ubisoft's online services and distribution platform. 2

  • Page 8
    ... Store Best of 2012" list, Apple named Rayman Jungle Run as the best iPhone game of 2012. February 2012: Arrival of EA, Warner Bros and Square Enix titles on Uplay Shop Ubisoft's digital distribution service will also include blockbusters from other major developers. Ubisoft's PC games will also be...

  • Page 9
    ... SG&A expenses Non-IFRS operating profit (loss) Stock based compensation Non-current expenses and income Operating profit (loss) Net financial income Share in profit of associates Income tax (credit) Net income (group share) Equity Capital expenditure on internal production Staff 03/31/12 1,061,296...

  • Page 10
    Management Report 2013 Cash flow statement no IFRS (unaudited) in thousands of euros 03/31/13 03/31/12 Adjusted cash flows from operating activities Consolidated earnings +/- Share in profit of associates +/- Gaming software amortization +/- Other amortization +/- Provisions +/- Cost of share-...

  • Page 11
    ...of revenue by business line, as % Development Publishing Distribution TOTAL 2012/2013 98% 1% 1% 100% 2011/2012 96% 2% 2% 100% The Development activity benefited this year from the success of the games Assassin's Creed, Far Cry, Tom Clancy's Ghost Recon and Just Dance. 1.2.3 CHANGE IN THE NUMBER OF...

  • Page 12
    Management Report 2013 The number of games launched over the year stabilized, with the increase in the number of online and mobile titles offsetting the reduction in physical games. 1.2.4 REVENUE BY PLATFORM 2012/2013 Nintendo DS™ Nintendo 3 DS™ PC PlayStation ®3 PSP™ Wii™ XBOX 360™ PS ...

  • Page 13
    Management Report 2013 1.2.6 CHANGES IN THE INCOME STATEMENT The gross profit margin totaled â,¬913.5 million (72.7% as a percentage of revenue), a significant increase compared with the gross profit margin of â,¬718.1 million (67.7%) in 2011/2012. The continued improvement in the gross profit ...

  • Page 14
    ... FINANCING POLICY The Company does not use securitization agreements, Daily assignment agreements, sale and repurchase agreements with the exception of one-off operations, depending on market opportunities of factoring regarding the Canadian Credit Multimedia shares (September 2012 and March 2013...

  • Page 15
    ... 2013 1.3 CASH AND CAPITAL 1.3.1 CHANGES IN EQUITY The video game business line calls for investments in development of around 35% of revenue. This capital expenditure takes place over average periods of between 24 and 36 months, which publishers must be able to finance out of their own resources...

  • Page 16
    ... on April 30, 2012 and the â,¬40 million in bonds issued on May 2, 2013). Ubisoft has an equity line, an equity financing mechanism, set up on March 20, 2012, to boost its acquisition capacity. For information purposes, based on the price at the reporting date, the equity contribution that could be...

  • Page 17
    ... whole Group and leave no room for interpretation; Specifies the rules for collecting and calculating indicators. This reporting protocol is used as a reference by the Human Resources Department and the International Communication Department, which are respectively responsible for employee-related...

  • Page 18
    ...on the methods for collecting data:  As regards employee-related indicators, these are collected: Either directly, using the Business Object reporting tool, which makes it possible to exploit data from the human resources management software program (HRTB) used by all the Group's subsidiaries; Or...

  • Page 19
    ... working on a daily basis. 1.4.2.1 EMPLOYMENT 1.4.2.1.1 General change in Group headcount Attracting, developing and retaining the finest talent in the industry is one of the key factors determining Ubisoft's success. The Company is committed to providing the resources that our teams need in order...

  • Page 20
    Management Report 2013 Staff Total staff (1) Breakdown of staff by field Production Business Breakdown of staff by employment type Full-time employment Part-time employment Breakdown of staff by contract type Open-ended contract Fixed-term contract Male/female staff (See 1.4.2.2.1) Men Women 03/31...

  • Page 21
    ...to the fact that 85% of Group staff (See 1.4.2.1.1) are in Ubisoft's core business, video game production, which primarily attracts men. Women hold 39% of the business-related positions (marketing, sales, etc.) within the Group and represent 27% of top management employees. The situation is evolving...

  • Page 22
    Management Report 2013 1.4.2.2.2 Helping young people find employment Ubisoft has an active policy of supporting young people during their initial training or as a complement to this. The number of interns taken on each year is on the increase. In 2012/2013, 193 interns completed an enriching ...

  • Page 23
    Management Report 2013 1.4.2.2.5 Helping disabled people find employment The employment rate of disabled persons within the Group is 0.25%. 61% of employees work at sites with disabled access. In order to encourage the employment of disabled persons, the French sites are developing partnerships ...

  • Page 24
    ... of business lines in the video game industry: 86 e-learning modules are accessible to all Ubisoft salaries via a Group training portal to ensure their continual development. Employees who have been with the Group for more than a year receive an annual appraisal, i.e. 77% of employees in 2012/2013...

  • Page 25
    ... the Company's success. Capital increases reserved for employees and/or bonus share grants regularly take place. For example, in France, a capital increase as part of the Group savings plan (PEG) took place during the year, with a 15% discount on the share price. At end-March 2013, total registered...

  • Page 26
    ... sites have fewer than 200 employees), with open-plan offices encouraging collaborative working and facilitating communication, where managers are available to their teams and HR managers are in close contact with daily operations. In the last internal survey, more than 92.2% of employees said that...

  • Page 27
    Management Report 2013 depending on the legal framework. In 2012/2013, 38% of Group employees had employee representatives (compared with 34% in 2011/2012). In France, members of the Works Councils and employee representatives meet with HR every month to discuss the Company's operations, evolutions...

  • Page 28
    ... and the related social-security regimes. 1.4.2.5.2 Elimination of discrimination in employment and occupation To make the best games on the market, Ubisoft must gather the most talented employees from different backgrounds and profiles. For this reason, the Group's Human Resources policy strives...

  • Page 29
    ...1 there were 13 employees in charge of environmental management at the seven sites . During the 2 year, three sites also decided to train a total of seven employees in environmental protection. In addition, five information campaigns were conducted in 2012/2013 at Ubisoft sites, raising awareness of...

  • Page 30
    ... MANAGEMENT 1.4.3.2.1 Releases into the air, water and soil Since the Company does not manufacture the video games it publishes and distributes (and associated ancillary products), the risk of releases into the air, water or soil issued directly by the Group and seriously harming the environment...

  • Page 31
    Management Report 2013  Paper: most of the sites recycle used paper (21 sites in 2012/2013).  Used computer hardware and electrical and electronic equipment: Ubisoft actively recycles this. Except in a few countries where services of this kind are not available (Morocco), the sites manage the...

  • Page 32
    ... paper per employee per year . 13 In 2012/2013, 24 sites prioritized consumption of recycled paper. 11 Data for 15 sites, representing 29.3% of Group staff. The scope for this indicator is limited because the majority of sites did not have precise information at the reporting date since their water...

  • Page 33
    ...), Sweden (Malmö), the United States (Red Storm Inc. Cary, San Francisco), Canada (Montreal, Quebec), India (Pune), Singapore and Australia. In total, Ubisoft saved 99,554 sheets per year. The Group sites which use external service providers for payroll management favor partners who offer paperless...

  • Page 34
    ...zone to optimize consumption monitoring. The sites actively communicate locally to inform employees and encourage them to make energy savings. The main sites concerned are Japan, Canada (Montreal and Toronto), France, Romania and Bulgaria. In addition to email campaigns, the Abu Dhabi subsidiary has...

  • Page 35
    ... policy of reducing business travel, such as in China (Chengdu), Ukraine, Sweden, Italy, Canada (Montreal), the United Kingdom (Newcastle), France, the United States (San Francisco) and Australia. The vast majority of Group sites have rooms equipped with video/audio-conferencing equipment (19...

  • Page 36
    ... AND SOCIAL IMPACT OF THE COMPANY'S ACTIVITIES 1.4.4.1.1 Employment and regional development The Group measures its territorial, economic and social impact in terms of regional development and job creation. During the year, the Toronto studio created 113 positions, the Shanghai site created 78...

  • Page 37
    ... (Programming, Game Design and Art). The Canadian sites in Montreal and Quebec have just as much to offer when it comes to supporting local development. In 2012, Ubisoft Montreal launched Academia, an ambitious group of four programs aimed at training the people who will work in video games in...

  • Page 38
    ... since the Company was founded. Entertainment, training and development of each individual's potential are central to Ubisoft's mission as a company. For nine years now, the Group has been running a sponsorship program entitled "Sharing More Than Games," providing management and other support for...

  • Page 39
    ... November 2012, raising $44,010 for the cause. In addition to the program launched nine years ago, in 2011 the Group launched a major Group-wide program: The annual "Sharing More Than Games" project. The previous year, Ubisoft sites each formed a minimum one-year partnership with a local association...

  • Page 40
    ... To date, neither the Group nor its sites have engaged in other actions to protect human rights. This subject will be tackled at Group level in the review plan to be implemented during 2013/2014. 21 PEGI (Pan European Game Information) and ESRB (Entertainment Software Rating Board) ratings are...

  • Page 41
    ... line with industry developments and is developing its expertise toward the area of online gaming. Sales and marketing subsidiaries: The sales and marketing subsidiaries are responsible for distributing Ubisoft products throughout the world. Relations between the parent Company and subsidiaries: The...

  • Page 42
    Management Report 2013 Main subsidiaries: Subsidiary (in thousands of euros) IFRS financial statements Ubisoft Inc. (United States) Ubisoft Ltd (United Kingdom) Ubisoft Canada Inc. Ubisoft GmbH (Germany) Ubisoft France SAS Revenue 578,830 128,417 03/31/13 Operating profit (loss) 11,252 2,039 Net ...

  • Page 43
    Management Report 2013 1.5.3 UBISOFT ENTERTAINMENT SA SUBSIDIARIES AND EQUITY (1) INVESTMENTS PRODUCTION FILM PRODUCTION FRANCE FRANCE Ubisoft Annecy SAS Ubisoft Montpellier SAS Ubisoft Paris SAS Ubisoft Production Internationale SAS Ubisoft Motion Pictures SARL Ubisoft Motion Pictures Rabbids SAS ...

  • Page 44
    ... 2013 1.6 GENERAL INFORMATION 1.6.1 CAPITAL EXPENDITURE POLICY Ubisoft continued its capital expenditure policy, in order to enable the Company to gain traction in new platforms, develop the online activity and more generally increase its market share. Accordingly, in 2012/2013, internal production...

  • Page 45
    Management Report 2013 1.6.3 PROPERTY, PLANT AND EQUIPMENT Ubisoft owns the land and building occupied by its Hybride Technologies Inc. subsidiary in Canada, at 111 Chemin de la gare, Piedmont, Quebec, and the first floor of the building at rue de Valmy, Montreuil sous Bois, France. 40

  • Page 46
    ...income in the 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...

  • Page 47
    ...to new generation consoles could impact the Company's performance. Size of the video games market in 2012 Physical game sales: $15.3 billion Digital and online sales: $29.4 billion (including China) Main competitors in the physical game sector: Electronic Arts, Activision, Take-Two and Nintendo Main...

  • Page 48
    ... core 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...

  • Page 49
    ... 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 revenue. The biggest licensor accounts for nearly 1.2% of revenue...

  • Page 50
    .... Share of the main customers in the Group's revenue ex-VAT: Share in % Top customer Top 5 customers Top 10 customers 2012/2013 13% 35% 47% 2011/2012 10% 39% 50% 2010/2011 12% 41% 54% Moreover, in order to protect themselves against the risk of default, the Group's main subsidiaries, which account...

  • Page 51
    ... value of information and takes particular care to protect gamer information. Ubisoft also faces numerous threats in many areas: mobility solutions, social networking, online services and games, partnerships for development, etc. To respond to these challenges, Ubisoft's Security and Risk Management...

  • Page 52
    ... degrees of financial risk (foreignexchange, financing, liquidity, interest-rate), counterparty risk and equity risk. Group policy consists of: ï,· Minimizing the impact of its exposure to market risks on both its income and, to a lesser extent, its balance sheet; ï,· Tracking and managing this...

  • Page 53
    ... used essentially to finance the high year-end working capital requirement engendered by the highly seasonal nature of the business. The sensitivity of debt to a change in interest rates is described in Note 16 to the consolidated financial statements. 1.7.4.2 COUNTERPARTY RISK The Group is exposed...

  • Page 54
    ... the consolidated financial statements and the accounting principles. A 10% change in closing price would have an impact of â,¬0.5 million on shareholders' equity. 1.7.5 INDUSTRIAL OR ENVIRONMENT-RELATED RISKS The Group currently has no knowledge of any industrial or environmental risk. Ubisoft did...

  • Page 55
    ... events that could have an adverse effect on it. This policy falls under the general scope of risk management, downstream of prevention plans and business continuity plans. A civil liability insurance policy for corporate officers has been taken out at Group level. It covers all claims made...

  • Page 56
    ... online media brands, like the highly successful ® free-to-play game Howrse from the acquisition of Owlient. ï,· April 2013 - Acquisition of the remaining capital in Related Designs Now part of Ubisoft, the 65 talented employees at Related Designs will continue to develop Might & Magic Heroes...

  • Page 57
    Management Report 2013 2 COMMENTS ON THE UBISOFT ENTERTAINMENT SA FINANCIAL STATEMENTS FOR THE YEAR ENDED MARCH 31, 2013 Revenue (in thousands of euros) Revenue basically consists of royalties invoicing to subsidiaries. In thousands of euros Production/revenue Operating profit (loss) Net financial...

  • Page 58
    Management Report 2013 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. through exercise of warrants (BSA...

  • Page 59
    ...are made by decision of the Extraordinary General Meeting. 3.2.1 CORPORATE PURPOSE (ARTICLE 3 OF THE ARTICLES OF ASSOCIATION) Ubisoft Entertainment SA has the following purpose, in France and abroad, both directly and indirectly: The creation, production, publishing and distribution of all kinds of...

  • Page 60
    ... 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 or securities ultimately granting entitlement to the Company's share capital, whether said shareholder holds them directly or indirectly...

  • Page 61
    Management Report 2013 3.2.5 GENERAL MEETINGS (ARTICLE 14 OF THE ARTICLES OF ASSOCIATION) The shareholders' general meetings shall consist of all the shareholders of Ubisoft Entertainment SA, with the exception of the Company itself. They represent the totality of shareholders. They shall be ...

  • Page 62
    ... of outstanding fully paid-up shares totaled 96,013,433 with a par value of â,¬0.0775 each, for a share capital of â,¬7,441,041.06. The following table outlines the number of shares created between April 1, 2012 and March 31, 2013: At 04/01/12 Exercise of subscription options Bonus share grants PEG...

  • Page 63
    ...,834 BSA held by Ubisoft Entertainment SA, setting down the number of exercisable BSA to 94,522,168. I.e. 0.1% of the number of shares on the day of the Board of Directors' meeting. Subscription period: Monday June 17, 2013 to Monday July 1, 2013. Issue of shares over the year ending March 31, 2014...

  • Page 64
    ...closing share price at March 28, 2013: â,¬8.43 Number of potential shares 8,517,932 Share subscription warrants (see 3.3.2.6) - "BSA" (3) Number of outstanding warrants (3) Potential dilution 8.15% 93,697,256 Bonus issue to all shareholders whose shares were registered April 5, 2012 after market...

  • Page 65
    .../24/12 02/08/13 TOTAL (1) (2) BONUS SHARE GRANTS (PLANS OPEN AS AT MARCH 31, 2013) Number Number of of shares beneficiaries granted at the grant including corporate officers including top 10 employee beneficiaries Number of shares canceled Over FY Grant date Balance at 03/31/13 Date of Performance...

  • Page 66
    ... 12 Two-for-one stock split taking effect November 14, 2008: Plans concerned - numbers 11, 12, 16, 17 and 18 (3) Number of options canceled or exercised between April 1, 2012 and March 31, 2013 (4) Number and subscription price adjusted following the issue of share subscription warrants on April 10...

  • Page 67
    ..., 2013 Number of share subscription options granted to top 10 beneficiaries 292,000 Average weighted price â,¬6.54 Plan number Expiry date Complete information all Group companies combined Plan 25 Expiry 10/18/17 Options exercised during the financial year between April 1, 2012 and March 31, 2013...

  • Page 68
    ... indicate the number of shares issued and the subscription price. SHARE SUBSCRIPTION WARRANTS (BSA) Under the authorization granted in its ninth resolution by the General Meeting of June 30, 2011, the Board of Directors (i) at its meeting of March 9, 2012, decided on the principle of a free grant of...

  • Page 69
    ... granted to Ubisoft Entertainment SA Position at March 31, 2013 April 10, 2012 Cancellations Exercise of BSA/Creation of shares Balance at March 31, 2013 Number of BSA 95,090,002 567,834 824,912 93,697,256 Shares 8,644,545 51,621 74,992 8,517,932 3.3.2.7 SECURITIES NOT REPRESENTING CAPITAL BOND...

  • Page 70
    Management Report 2013 3.3.3 CHANGE IN COMPANY CAPITAL OVER THE PAST THREE FINANCIAL YEARS Date of Board meeting (2) Type of transaction Number of shares issued 214,322 Amount (in cash) Premiums Cumulative Amount of number of the share shares capital 94,446,494 â,¬7,319,603.29 04/22/10 12/17...

  • Page 71
    Management Report 2013 3.3.4 SHARE BUYBACK PROGRAM 3.3.4.1 AUTHORIZATION IN PLACE AT THE TIME OF THIS REPORT LEGAL FRAMEWORK The Combined General Meeting of September 24, 2012 renewed the authorization previously granted to the Board of Directors by the Combined General Meeting of June 30, 2011, ...

  • Page 72
    ... of the Combined General Meeting of June 27, 2013. 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 of shares making up the capital on the buyback date, in other words...

  • Page 73
    ...COMPANY SHARES 3.3.5.1 UBISOFT SHARE IDENTIFICATION SHEET FR0000054470 Euronext Paris - Division B â,¬0.0775 96,013,433 â,¬8.43 â,¬809,393,240.19 â,¬38.11 â,¬7.62 â,¬3.81 â,¬1.90 ISIN code Place listed Par value Number of shares in circulation as of 03/31/13 (1) Closing price on 03/28/13 (2) Market...

  • Page 74
    Management Report 2013 3.3.5.2 Month 2011 May 2011 June 2011 July 2011 August 2011 September 2011 October 2011 November 2011 December 2011 2012 January 2012 February 2012 March 2012 April 2012 May 2012 June 2012 July 2012 August 2012 September 2012 October 2012 November 2012 December 2012 2013 ...

  • Page 75
    Management Report 2013 3.3.5.3 ENTITY PROVIDING SECURITIES SERVICES BNP PARIBAS Grands Moulins de Pantin - Shareholders' relations - 9, rue du Débarcadère - 93761 PANTIN CEDEX 3.3.6 BREAKDOWN OF CAPITAL AND VOTING RIGHTS 3.3.6.1 CHANGE OVER THE LAST THREE YEARS Number of shares % Guillemot 6,652,...

  • Page 76
    ... statements made to the Company and/or AMF and summarized hereafter FMR LLC is a holding company of an independent group of portfolio companies, acting of behalf funds commonly referred to as Fidelity Investments 3.3.6.4 CROSSINGS OF LEGAL THRESHOLDS During the financial year ended March 31, 2013...

  • Page 77
    Management Report 2013 3.3.6.5 CHANGE OF CONTROL To the best of the Company's knowledge: There are no agreements between shareholders that could lead to restrictions on the transfer of shares or the exercise of voting rights; There are certain agreements reached by the Company that would be amended...

  • Page 78
    ...FUNCTIONING OF THE BOARD OF DIRECTORS AND GROUP MANAGEMENT 4.2.1 MEMBERSHIP OF THE BOARD OF DIRECTORS Name Position in the Company Date of birth Date of taking office Expiry at AGM approving financial statements for FY ended 03/31/16 Number of shares at 03/31/13 Yves Guillemot Director Chairman and...

  • Page 79
    ... 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 it to the Shareholders' General Meeting...

  • Page 80
    ... and logos relating 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 revenue achieved by Gameloft SE. The details are given in the section on regulated agreements in part 5 of the financial statements...

  • Page 81
    Management Report 2013 4.3 MEMBERSHIP, ROLE AND DUTIES OF BOARD COMMITTEES At its meeting of December 14, 2012, the Board of Directors decided not to maintain the Strategy and Development Committee established in November 2007 in order to deal directly with, at meetings of the Board of Directors, ...

  • Page 82
    ... of directors' fees ï,· Approving the information given to shareholders in the annual report regarding management compensation. Consideration and examination of all decisions relating to the major strategic, economic, employment, financial and technological policies of the Company and Group. 77

  • Page 83
    ... Inc. (Canada), Ubisoft Toronto Inc. (Canada), Quazal Technologies Inc. (Canada), 9276-8309 Québec Inc. (Canada), Ubisoft Studio Saint-Antoine Inc. (Canada), Ubisoft Nordic A/S (Denmark), Ubisoft Entertainment India Private Ltd (India), Ubi Games SA (Switzerland), Red Storm Entertainment Inc...

  • Page 84
    ... Guillemot Romania Srl (Romania), Guillemot Spain SL (Spain) ï,§ GENERAL MANAGER of Guillemot GmbH (Germany) EXPIRED POSITIONS WITHIN THE GROUP (last 5 financial years) ABROAD ï,§ VICE-CHAIRMAN AND DIRECTOR of Ubisoft Entertainment Inc. (CanAda) ï,§ VICE-CHAIRMAN of Ubisoft Digital Arts Inc. (Canada...

  • Page 85
    ... Report 2013 EXPIRED POSITIONS OUTSIDE THE GROUP (last 5 financial years) FRANCE ï,§ GENERAL MANAGER of L'Odyssée Interactive Games SARL ABROAD ï,§ CHAIRMAN of Gameloft Software (Shanghai) Company Ltd (China) ï,§ DIRECTOR of Gameloft Ltd (Malta), Gameloft do Brasil Ltda (Brazil) ï,§ GENERAL MANAGER...

  • Page 86
    ... Report 2013 4.5 MANAGEMENT COMPENSATION In accordance with Article L. 225-102-1, paragraphs 1 and 2 of the French Commercial Code, a breakdown of the total compensation and benefits of any kind paid to corporate officers over the financial year appears below. This chapter includes all information...

  • Page 87
    ... 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,¬725 thousand. During the 2012/2013 financial year, members...

  • Page 88
    Management Report 2013 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) Amounts paid in euros (1) Claude Guillemot Executive Vice President Gross fixed compensation before tax Variable...

  • Page 89
    ... OPTION PLANS No share subscription and/or purchase options were granted to corporate officers during the year. Table 5 SHARE PURCHASE OR SUBSCRIPTION OPTIONS EXERCISED DURING THE YEAR BY EACH CORPORATE OFFICER Plan number and date Number of options exercised during the year N/A Strike price Name...

  • Page 90
    Management Report 2013 4.5.4 BONUS SHARE GRANTS The Company did not grant any bonus shares to corporate officers in the last financial year or in previous years. 4.5.5 COMPENSATION AND BENEFITS OWED DUE TO CORPORATE OFFICERS LEAVING THEIR POSITION Corporate office combined with employment contract ...

  • Page 91
    ...15,182 Type of transaction Date of transaction Number of securities Type Unit price Amount of transaction GUILLEMOT CORPORATION SA related legal person managed by Claude Guillemot, Executive Vice President of UBISOFT ENTERTAINMENT SA GUILLEMOT BROTHERS SE related legal person managed by Christian...

  • Page 92
    FINANCIAL STATEMENTS

  • Page 93
    ...,744 6,850 15,987 237,704 420,636 1,257,438 LIABILITIES in thousands 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...

  • Page 94
    ... 68% 1.3 STATEMENT OF COMPREHENSIVE INCOME In thousands of euros Net profit (loss) for the period Translation exchange on foreign operations Fair value adjustment of financial assets Effective part of the change in fair value of cash flow hedges Remeasurement impacts on post-employment benefits Tax...

  • Page 95
    Financial Statements 2013 1.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY In thousands of euros Capital Premiums Consolidated reserves Hedging reserve Fair value Treasury Translation reserve stock adjustments Income for the period Total equity Balance as of March 31, 2011
 Earnings Other ...

  • Page 96
    Financial Statements 2013 1.5 CASH FLOW STATEMENT in thousands of euros Cash flows from operating activities Consolidated earnings Share in profit of associates Net amortization and depreciation on property, plant and equipment and intangible assets * Net provisions Cost of share-based payments ...

  • Page 97
    ... Ubisoft Entertainment and the entities under control (collectively referred to as "the Group"). The consolidated financial statements were approved by the Board of Directors, which authorized publication on May 14, 2013. They will be presented for approval at the General Shareholders' Meeting...

  • Page 98
    ... performance by Ubisoft of a number of obligations. The maximum amount of support is â,¬3.5 million. January 2013: Ubisoft acquires THQ Montreal studio (purchase price detailed in § 1.6.3), and external development rights on South Park Stick of Truth (purchase price 2.5 Mâ,¬) March 2013 - Sale of...

  • Page 99
    ... to the exchange rates used for overseas activities in financial statements have been rebooked under consolidated reserves in the transitional balance sheet. Certain financial instruments have been classed as "financial assets held-for-sale" or "financial assets at fair value through profit and loss...

  • Page 100
    ... published at March 31, 2013 (adopted or being adopted by the European Union) and presented below: Standards IAS 1 amended (applicable to accounting periods starting from July 1, 2012) Improvements to International Financial Reporting Standards Consequences for the Group The changes are designed...

  • Page 101
    ... comprehensive income from March 2012 closing, no comparativ information has been done. Change in estimation: N/A Items affecting comparability of financial statements Business combinations in FY2011-2012 (Owlients SAS and Redlynx Oy) and the business combination of FY2012-2013 (THQ Montreal) have...

  • Page 102
    ... 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 103
    ... the accounting period. The income and expenses of these companies, along with their cash flows, are translated at the average exchange rate over the year. Differences arising on translation are booked directly in consolidated equity, as a separate item. Goodwill and fair value adjustments resulting...

  • Page 104
    .... To assess this amount, the Group compares the values based on the market, acquisition date, replacement awards and rights granted by the acquired business and determining the proportion of services rendered to the date of the merger in relation to services futures remaining to be returned...

  • Page 105
    ... Office software - Development costs related to information systems , - Internal software development Engines External developments Amortization method
 Straight-line, 1 year or 3 years Straight-line, between 3 and 5 years 3 years, straight-line, starting on the commercial release date. Straight...

  • Page 106
    ... are based on assumptions made by management of the Group in terms of variation of sales, level of profitability, and in particular foreign exchange. These are considered reasonable and consistent with market data available at the time of preparation of the Group's financial statements. 101

  • Page 107
    ... annually) by the Group's management of the weighted average cost of capital based on available industry data, especially with regard to the financing structure (gearing) and beta coefficient on the equity market risk premium. It stood at 8.94% at March 31, 2013 (against 9.62% at March 31, 2012...

  • Page 108
    ... objective indicators (third party financial position) that the recoverable value of these assets would be lower than the balance sheet value, and at least on each balance sheet date. ï,· Grants (loans and receivables category) In some countries, video game production operations qualify for public...

  • Page 109
    ... present negligible risks of change in value. Short-term investments are measured at net asset value at each balance sheet date. Changes in this market value are recognized in financial profit or loss. Bank overdrafts repayable on demand are an integral part of the Group's cash management, and are...

  • Page 110
    ... on the balance sheet; - The ineffective portion of the change in fair value is recognized in financial income. When the hedging instrument no longer meets the criteria for hedge accounting, reaches maturity, is sold, cancelled or exercised, hedge accounting is no longer applied. The profit or loss...

  • Page 111
    ... 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 employee savings plan: the accounting expense is equal to the discount granted to employees, i.e. the difference between the share subscription price...

  • Page 112
    ... 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...

  • Page 113
    ... that sufficient taxable income will be available. The impact of possible changes in tax rates on previously recorded deferred tax is recognized in profit or loss except where it relates to an item recognized in other comprehensive income. Deferred tax is shown in the balance sheet separately from...

  • Page 114
    ... to capitalized production costs and their contribution to Group sales. Other subsidiaries and ad hoc entities whose contribution is not significant are not included in this list. COMPANY UBISOFT ENTERTAINMENT SA UBISOFT LTD UBISOFT INC. UBISOFT GMBH UBISOFT SRL SHANGHAI UBI COMPUTER SOFTWARE CO...

  • Page 115
    Financial Statements 2013 1.6.7 NOTES TO THE BALANCE SHEET Note 1. Goodwill Goodwill Gross Net at 03/31/13 Net at 03/31/12 Opening balance 147,773 147,773 108,125 Increase 831 831 147 Decrease (4,774) (4,774) 1,132 Changes in scope 37,525 Translation adjustments 2,089 2,089 3,108 Closing balance 145...

  • Page 116
    ... Released commercial software Released external developments Commercial Software in progress External developments in progress * Office software Other intangible assets in progress Brands Movies Other Total at 03/31/13 Total at 03/31/12 Opening balance Increase Decrease Reclassification Changes...

  • Page 117
    Financial Statements 2013 Depreciation and amortization Released commercial software Released external developments Commercial software and external developments in progress Office software Brands Movies Other Total at 03/31/13 Total at 03/31/12 Opening balance 541,357 222,056 21,100 25,322 269 810,...

  • Page 118
    ... balance Gross 230 186 416 404 Goodwill Share of equity Total Investments in associates 03/31/13 Total Investments in associates 03/31/12 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...

  • Page 119
    Financial Statements 2013 Note 6. Inventory and work in progress Inventory and work in progress Goods Total at 03/31/13 Total at 03/31/12 Provisions Goods Total at 03/31/13 Total at 03/31/12 Opening balance 27,047 27,047 51,198 Opening balance 7,034 7,034 15,980 Changes in inventory (4,862) (4,852) ...

  • Page 120
    ... 25 645 Change -620 1,211 591 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": At March 31, 2013, there were...

  • Page 121
    ...is also conferred at the date of issue on registered shares granted free of charge to a shareholder on the basis of old shares that enjoyed this right. Number of Ubisoft Entertainment SA shares: At 01/04/12 Option exercises Bonus share grants Share subscription warrant exercises Group savings scheme...

  • Page 122
    ... includes the cumulative net change in the fair value of financial assets until these have been derecognised or impaired. Own shares Occasionally, the Group buys its own shares on the market. The timing of these purchases depends on the share price. As at March 31, 2013, the Company held 511,523 own...

  • Page 123
    ... - Employee benefits. A 50-point change in the discount rate would result in a rise of 16.1% in the amount of the benefit liability. Note 14. Payments based on equity instruments Impact on the financial statements: Equity at 03/31/12 Employee benefits expenses Stock options Bonus share grants Group...

  • Page 124
    Financial Statements 2013 Subscription options 7th plan Total number of shares granted 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...

  • Page 125
    ... outstanding at 03/31/13 23rd plan Total number of shares granted Start of exercise period End of exercise period Strike price of options (1) France Maturity (years) Volatility Risk-free interest rate Estimated dividend rate Annual turnover rate Fair value of options after stock split(1) (â,¬/share...

  • Page 126
    ... employees free shares settled in cash, assessed in terms of changes in the value of the share on Euronext Paris and contingent upon attendance and performance conditions. Phantom Plan Grant date Maturity - Vesting period (in years) Total number of shares granted Total number of exercisable shares...

  • Page 127
    ... the average opening price over the 20 trading days prior to the Board of Directors' meeting that approved the capital increase. The difference between the share subscription price and the share price on the grant date (the same as the plan's announcement date) constitutes the benefit awarded to...

  • Page 128
    Financial Statements 2013 03/31/13 Grant date Subscription price (in euros) Data at the time of announcement to employees: Share price (in euros) Number of shares subscribed Fair value of the benefit in â,¬ per share 19/07/2012 4.48 5.15 56,421 0.67 03/31/12 18/07/11 6.12 7.20 50,466 1.08 Note 15...

  • Page 129
    ... bank accounts of the majority of Group companies. Covenants Under the terms of the syndicated loan and bilateral credit lines, the Company is required to fulfill certain financial ratios (covenants). The covenants are as follows: 2012/2013 Net debt restated for assigned receivables/equity restated...

  • Page 130
    Financial Statements 2013 Foreign exchange risk The Group is exposed to foreign exchange risk on its cash flows from operating activities and on its investments in foreign subsidiaries. The percentage of sales generated outside the euro currency area is 70%. The Group only hedges its exposures on ...

  • Page 131
    ... financial year. 400,000 shares were purchased on the market (assigned to employee shareholdings) under the 6th resolution of the General Meeting of 30 June, 2011. As of March 31, 2013, the Company held 511,523 treasury shares with a value of â,¬2,524 thousand. Own shares are deducted from equity...

  • Page 132
    ... Statements 2013 Risk to other securities At March 31, 2013, financial assets included â,¬5.1 million in shares in the listed company Gameloft. On July 12, 2007, Ubisoft Entertainment SA signed two contracts with CACIB. The first concerns the sale of all Gameloft shares held by Ubisoft Entertainment...

  • Page 133
    ... related to the subsidiary in the UK Collection service on behalf of the counterparty N/A N/A N/A N/A N/A â,¬ (0.35) million N/A Reconciliation by accounting class and category 03/31/13 Hierarchy Notes Assets recognized at fair value Foreign exchange derivatives Stock futures Gameloft shares Equity...

  • Page 134
    ...632 116,531 Advances and prepayments received Employee-related liabilities Other tax liabilities Other debts Deferred income* TOTAL Other liabilities include mainly - Supplementary price to pay for the following acquisitions: â,¬3 million for the company Nadeo, â,¬5.1 million for RedLynx and â,¬16...

  • Page 135
    ..., also up to â,¬157.6 million (12.5% of sales), compared to â,¬140 million (13.2%) in 2011/12. This increase is mainly due to the development of our online and IT activities and by different exchange rates. - Note 21. Operating expenses by type Employee benefits expenses 03/31/13 474,911 (79,095...

  • Page 136
    Financial Statements 2013 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 Tax credit for competitiveness and employment *** ...

  • Page 137
    ...Gameloft shares Financial income Other financial expenses Financial expenses TOTAL 3,999 2,466 * The foreign exchange income is mainly linked to changes in the Canadian dollar (â,¬0.1 million), pound sterling (â,¬(0.5) million) and US dollar (â,¬1.4 million). Note 24. Share of profit of associates...

  • Page 138
    ... earnings: cancellation of provisions for impairment Cancellation of studio margin Other permanent differences Impact of permanent differences between corporate income and taxable income: Taxation of foreign companies at different tax rates Other adjustments Tax credit Total income tax Real tax rate...

  • Page 139
    ...of tax on the balance sheet and income statement: 03/31/12 Change in income Change in other comprehensive income Foreign Other exchange reclassifications losses/gains 03/31/13 Intangible assets Elimination of margin on intangible assets Available-for-sale financial assets Capitalized losses and tax...

  • Page 140
    ... the past year were therefore capitalized at March 31, 2013. Because of a transfer price policy implemented by the Group, the distribution companies and companies fulfilling support functions systematically report operating profits; similarly, the studios invoice salaries with a margin that includes...

  • Page 141
    ... company but relate to employees in all geographic regions *** sales from other CGU come from sales of Commercial software developed and sold independently with no action from mother company as editor. Other items in the income statement, particularly other operating income and expenses, financial...

  • Page 142
    ... contracts to Gameloft SA, AMA Studios SA, AMA Ltd and Longtail Studios Inc. totaling â,¬4, 909 thousand. The payable balance at year-end is â,¬2,994 thousand. Balance sheet assets were â,¬16,007 thousand at closing. Ubisoft Divertissement SA has not bought back treasury shares from related parties...

  • Page 143
    ... OFF-BALANCE SHEET COMMITMENTS RELATED TO COMPANY FINANCING Type Commitments given (1) Financial guarantees given by the parent company to: Ubisoft Divertissements Inc. Ubisoft Inc. Ubisoft Ltd Ubisoft Reflections Ltd Ubisoft Paris SAS Ubisoft Production Internationale SAS Ubisoft Entertainment...

  • Page 144
    ... staff at March 31, 2012 comes to 7275 people. The average headcount in 2012/2013 was 7,875. Several incentive contracts were signed during the year with effect from April 1, 2012. 1.6.9.5 EVENTS AFTER THE BALANCE SHEET DATE April 2013: Acquisition of 70% of shares not yet held from Related Design...

  • Page 145
    ... (excluding tax) 2012/2013 2011/2012 % 2012/2013 2011/2012 Audit - Statutory audit, certification, review of the single-entity and consolidated financial statements â-¦ Issuer â-¦ Fully consolidated subsidiaries - Other verifications and services directly related to the auditor's work â-¦ Issuer...

  • Page 146
    ... the assignment entrusted to us by your General Meeting, we hereby present our report for the fiscal year ended March 31, 2013 with regard to the following: ï,· the audit of consolidated financial statements of Ubisoft Entertainment S.A, as attached to this report; ï,· the basis for our assessment...

  • Page 147
    ... financial statements provides an appropriate information. Change in accounting policy for recognizing remeasurement impacts determined through the assessment of employee benefits under defined contribution plan As part of the revision of IAS 19 "Employee Benefits" early applied for annual...

  • Page 148
    Financial Statements 2013 3 CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA FOR THE YEAR ENDED MARCH 31, 2013 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 ...

  • Page 149
    ...Employee benefits expenses Other expenses Depreciation, amortization and provisions Total operating expenses Operating profit (loss) Financial income from shareholdings Other interest received Reversal of provisions Foreign exchange gains Net proceeds on sale of investment securities Total financial...

  • Page 150
    Financial Statements 2013 3.3 STATEMENT OF CHANGES IN EQUITY In thousands of euros Capital Premiums Legal reserve Other reserves Balance at 03/31/12 7,369 184,699 728 84,014 (63,817) 63,817 (8) (30,462) 233,833 5,593 (30,462) 233,833 (158,919) (158,919) Allocation of 2011/2012 earnings Capital ...

  • Page 151
    ... of Gameloft shares Repayment of loans and other non-current financial assets Net cash used by investment activities Cash flows from financing activities Capital increase Increase in issue premium New medium-term borrowings Deferred expenses Change in current accounts Net cash generated by financing...

  • Page 152
    ... with French accounting standards. The financial year is a 12-month period from April 1, 2012, to March 31, 2013. 3.5.1 FINANCIAL YEAR HIGHLIGHTS 3.5.1.1 N/A ACQUISITION/CREATION OF SUBSIDIARIES 3.5.1.2 DISPOSALS AND CONTRIBUTION OF SHARES In November 2012, Ubisoft Entertainment SA sold its...

  • Page 153
    ... - External developments - Information system costs - Office software - Acquired brands - Logo 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...

  • Page 154
    ... below the net accounting value of the software, impairment is recognized. Office software 1 year, straight-line Information system costs Commercial software 5 years, straight-line 2 or 3 years, straight-line, starting on the commercial release date Engines External developments Straight-line...

  • Page 155
    ... date, the market capitalization at the balance sheet date if the company is listed and/or its medium-term earnings prospects. If applicable, the provisional data utilized are discounted using a rate based on a valuation of the average cost of capital: 8.94% at March 31, 2013. Own shares are valued...

  • Page 156
    Financial Statements 2013 Foreign exchange hedges Ubisoft uses financial 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 financial derivatives are recognized as financial income and are ...

  • Page 157
    Financial Statements 2013 3.5.5 NOTES TO THE BALANCE SHEET Note 1. Intangible assets At 03/31/13 Gross Released commercial software Released external developments Commercial software in progress External developments in progress Brands and operating licenses Other TOTAL 645,122 135,919 338,022 40,...

  • Page 158
    ...hardware and furniture TOTAL at 03/31/13 TOTAL at 03/31/12 Opening balance 4,085 1 1,110 5,196 4,574 Increase 11 552 4 29 596 642 Decrease Reclassifications Closing balance 11 4,637 5 498 498 20 - 641 5,294 5,196 Note 3. Non-current financial assets At 03/31/13 Gross Equity investments Other...

  • Page 159
    ... 222 10,735 11,226 17,540 5,100 243 44,844 Receivable on CACIB valued at the closing share price of the Gameloft shares for remaining shares at March 31, 2013, as part of the equity swap. The unrealized gain on the sale of Gameloft shares is "stored" in the balance sheet in other liabilities. 154

  • Page 160
    ... concerning the equity swap agreement on Gameloft shares for â,¬5,100 thousand and credit notes receivable from associated companies for â,¬10,735 thousand. Note 8. Accrued income 03/31/13 Associated companies credit notes receivable Income not yet invoiced Current accounts interests receivable...

  • Page 161
    ..., the granting of stock options and directors' fees. Information relating to these transactions with corporate officers is detailed in note 3.6.3. The other significant related party transactions are as follows: - Licenses invoiced to Gameloft SA for â,¬1,191 thousand over the financial year. Trade...

  • Page 162
    Financial Statements 2013 Note 13. Equity Capital As at March 31, 2013, Ubisoft Entertainment SA had equity of â,¬7,441,041.06 divided into 96,013,433 shares. Number of Ubisoft Entertainment SA shares At 04/01/12 Option exercises Bonus share grants Share subscription warrants Group savings scheme At...

  • Page 163
    Financial Statements 2013 16th plan Total number of shares granted Start of exercise period End of exercise period Strike price of options (1) Options at April 1, 2012 (1) Options granted during the period Options exercised during the period Options canceled during the period Options outstanding at...

  • Page 164
    ... year, Ubisoft decided to allocate to its employees a phantom plan, which is assessed based on the development of the value of the share on Euronext Paris and is contingent upon compliance with the attendance and performance conditions. Phantom plan Grant date Maturity - vesting period Total number...

  • Page 165
    ...discount of 15% versus the average opening price over the 20 trading days prior to the Board of Directors' meeting that approved the capital increase. The lock-in period is five years for French employees. 03/31/13 Grant date Subscription price (in euros) Number of shares subscribed 07/19/12 4.48 56...

  • Page 166
    ... be issued relate to associated companies Other liabilities relate mainly to additional sums to be paid on acquisitions of the following companies: - â,¬3.1 million for Nadeo - â,¬17.1 million for Owlient Note 17. Accrued expenses and deferred income Opening balance Deferred income Conversion rate...

  • Page 167
    Financial Statements 2013 3.5.6 NOTES TO THE INCOME STATEMENT Note 18. Production for the period Production for the period comprises: - Revenue, essentially made up of intra-group invoicing of royalties. - Capitalized production reflecting development costs outsourced to subsidiaries and external ...

  • Page 168
    ... Net financial income
 (1) (1) 2,054 4,755 36,785 43,594 (5,013) 3,253 4,946 32,137 40,336 (6,924) The foreign exchange rate loss of â,¬(1.6) million is mainly related to fluctuations in the price of the US dollar â,¬(1) million and the Japanese Yen â,¬(0.5) million. Foreign exchange risk The...

  • Page 169
    ... depreciation on development expenditure for software. Note 24. Income tax At March 31, 2013, 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 financial year. Any tax...

  • Page 170
    ... Tax income comprises: - Cancelation of tax expense recorded by the subsidiaries of the tax consolidation group in the amount of â,¬2,981 thousand. - Holding company tax credits of â,¬56 thousand. - A tax expense of â,¬35 thousand relating to the charging of fees for the issue of share subscription...

  • Page 171
    Financial Statements 2013 3.6 OTHER INFORMATION 3.6.1 STAFF At March 31, 2013, the staff consisted of five corporate officers. 3.6.2 FINANCIAL COMMITMENTS AND OTHER INFORMATION 3.6.2.1 OFF-BALANCE SHEET COMMITMENTS RELATED TO COMPANY FINANCING Type Commitments given by Ubisoft Entertainment SA ...

  • Page 172
    ...no finance leases. 3.6.3 MANAGEMENT REMUNERATION Ubisoft Entertainment SA paid â,¬725 thousand in compensation to its corporate officers during the financial year 2012/2013. In - very partial - compensation for their work and the time spent preparing and participating in Board Meetings, the General...

  • Page 173
    Financial Statements 2013 3.6.4 CONTINGENT ASSETS AND LIABILITIES To the best of our knowledge, there were no contingent assets or liabilities at March 31, 2013. 3.6.5 EVENTS AFTER THE BALANCE SHEET DATE Pursuant to Article L.228-40 of the French Commercial Code, the Board of Directors, on February...

  • Page 174
    ...Accounting value of shares held Loans and advances granted by the Company and not yet paid Country Currency Capital Percenta ge of capital held In thousands of euros Revenue excludin g VAT Earning s for the last financial year In thousand s of currency units Dividends received In thousan ds...

  • Page 175
    ...to the assignment entrusted to us by your General Meeting, we hereby present our report for the fiscal year ended March 31, 2013, with regard to the following:  the audit of the annual financial statements of Ubisoft Entertainment S.A., as attached to this report;  the basis for our assessment...

  • Page 176
    ...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 177
    GOVERNANCE AND INTERNAL CONTROL 172

  • Page 178
    ... at its meeting held on May 14, 2013. It was also the subject of a report prepared by the statutory auditors, in accordance with Article L. 225235 of the French Commercial Code, on internal control procedures relating to the preparation and processing of accounting and financial information and of...

  • Page 179
    ... years) is a director; ï,§ must not be a customer, supplier, investment banker or commercial banker that is material for the Company or its Group or for which the Company or its Group accounts for a significant part of its business; ï,§ must not be related by close family ties to a corporate officer...

  • Page 180
    ... the General Meeting approving the financial statements for the year ended March 31, 2013: Claude Guillemot, Christian Guillemot and Michel Guillemot. The terms of office to be proposed at the next General Meeting for the renewal of the terms of office of Claude Guillemot, Christian Guillemot and...

  • Page 181
    ...in this way are deemed to be present for quorum purposes, except for Board of Directors' meetings relating to the establishment of the corporate financial statements, consolidated financial statements and the management report. The by-laws provide the operating rules for the permanent committees set...

  • Page 182
    ... Commercial Code, the auditors were invited to attend the Board meetings approving or examining the financial statements. The Board of Directors met 12 times during the financial year 2012/2013, with an attendance rate of 73%. 1.3.3 INFORMATION TO DIRECTORS The Chairman and Chief Executive Officer...

  • Page 183
    ...the Ubisoft Group's activities. WORK DURING THE FINANCIAL YEAR 2012/2013 The Strategy and Development Committee met once during the last financial year (between April 1, 2012, and December 14, 2012), mainly to discuss the development of the technology market and various forms of product distribution...

  • Page 184
    ... relating to employee shareholding. WORK DURING THE FINANCIAL YEAR 2012/2013 The Compensation Committee met twice during the last financial year, mainly to discuss the composition of the Ubisoft teams as at the end of 2012, possibilities of retaining key people and ensuring their loyalty in a market...

  • Page 185
    ... and particularly competitive environment, this arrangement ensures the alignment of operating activities with the strategy, thus supporting and streamlining the decision-making process. Yves Guillemot holds the positions of Chairman and Chief Executive Officer without any limits on his powers...

  • Page 186
    ... by the General Meeting of June 30, 2011, which stipulates, firstly, that the number of options granted to corporate officers may not represent more than 5% of the total number allocated by the Board throughout the duration of the authorization and, secondly, that the exercise of said options by...

  • Page 187
    ... of its resources, while enabling it 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 continuously...

  • Page 188
    ... control system and risk management is highly centralized by the operational departments. Organization The key parties involved in the internal control system are as follows:  The CEO of Ubisoft Entertainment SA: He defines and directs Group strategy. He is responsible for establishing the...

  • Page 189
    ... Human resources policy HR policy is key to the internal control system and its effectiveness. HR teams at each of the subsidiaries are responsible for establishing and implementing the policy, programs and systems required to meet recruitment goals set at Group level, while ensuring the development...

  • Page 190
    ... the video games market Legal risks (lawsuits, regulatory environment, intellectual property, licensing agreements) Operational risks (associated with dependence on customers and suppliers, information security, financial information) Market or financial risks Industrial or environment-related risks...

  • Page 191
    ... as the publication of financial information, and also manages off-balance sheet commitments (bank guarantees relating to purchase financing or L/Cs, comfort letters, share price guarantees, deposits, etc.). It centralizes and verifies the authorizations granted to a limited number of employees, who...

  • Page 192
    ... into account the changes in the Company's priorities and constraints. The risk security and management team is responsible for ensuring and organizing the protection of Ubisoft activities, which include but are not limited to the security of applications, information systems, online games, premises...

  • Page 193
    ... 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 194
    ... financial data. They thus help improve the effectiveness of information processing. Similarly, special attention is paid to the security of IT data and processing. The risk security and management team is constantly working to improve levels of control to ensure:  Availability of online services...

  • Page 195
    ... Control 2013 The consolidation department also collects and verifies the accounting information to be included in the Group's financial releases when this is related to the consolidated financial statements. 1.8.3.4 EXTERNAL FINANCIAL INFORMATION MANAGEMENT PROCESS The financial communications...

  • Page 196
    ... the French Commercial code for the fiscal year ended March 31, 2013 It is the responsibility of the Chairman to draw up and submit to the approval of the Board of Directors a report describing the internal control and risk management procedures implemented by Ubisoft Entertainment SA and providing...

  • Page 197
    ... and risk management procedures relating to the preparation and processing of accounting and financial information contained in the Chairman's report. These procedures consist notably of: ï,· reviewing the internal control procedures for preparing and processing accounting and financial information...

  • Page 198
    CORPORATE INFORMATION 193

  • Page 199
    ..., we are required to provide you with the information stipulated in article R.225-31 of the French Commercial Code relating to the execution, during the past fiscal year, of agreements and commitments previously approved by the Shareholders' Meeting, if any. We conducted the procedures we deemed...

  • Page 200
    ...owned subsidiary of the company) ï,· Persons concerned : Yves Guillemot in his capacity as: - Chairman and Chief Executive Officer of Ubisoft Entertainment SA, - Joint general manager of Ubisoft Entertainment SÃ rl ï,· Nature and purpose: On March 14 , 2011, your Board of Directors authorized your...

  • Page 201
    ... Guillemot) of Ubisoft Entertainment SA, - directors, Chairman and Chief Executive Officer (Michel Guillemot) or Exectuvie Vice President (Claude Guillemot, Gérard Guillemot, Yves Guillemot and Christian Guillemot) of Gameloft SE. ï,· Nature and purpose : On November 18 , 2008, your Board...

  • Page 202
    ... of Ubisoft Entertainment SA, - corporate officer of the concerned subsidiaries ï,· Nature and purpose : On November 17 , 2009, your Board of Directors authorized your company to invoice financial interests of 0.5 % per year to some subsidiaries companies as remuneration of the guarantees granted...

  • Page 203
    ... your company grants to the company NextVision SARL the conception and development of a free-to-play online game relating to finance field, accompanied with the transfer in favor of your company all of the IP and material rights attached thereto. ï,· Conditions : th The contract came into effect on...

  • Page 204
    ...on the employee-related, environmental and social information presented in the management report prepared for the year ended March 31, 2013 pursuant to Article L. 225-102-1 of the French Commercial Code. Responsibility of the Company The Board of Directors of Ubisoft Entertainment is responsible for...

  • Page 205
    ... and the companies it controls pursuant to Article L. 233-3 of the French Commercial Code within the limits presented in the section "Methodology note on employee-related, environmental and social reporting" of this document; In the event of the omission of some consolidated information, we verified...

  • Page 206
    ... and Financial Code, shares and/or securities granting entitlement to the Company's share capital Nineteenth resolution Authorization to the Board of Directors to determine, up to a limit of 10% of the share capital per year, the issue price of ordinary shares or any securities granting entitlement...

  • Page 207
    ... requirements for ordinary general meetings and having read the Board of Directors' management report and Statutory Auditors' report, approves the company financial statements for the financial year ended March 31, 2013 as presented (consisting of the balance sheet, income statement and notes...

  • Page 208
    ... Auditors' special report on the agreements and commitments covered by Articles L. 225-40 et seq. of the French Commercial Code approves the new agreement authorized by the Board of Directors and entered into during the financial year ended March 31, 2013 and notes the information relating to the...

  • Page 209
    ...with the code of ethics recognized by the AMF; - to release shares upon exercise of rights attached to securities giving entitlement to the Company's share capital by any means, whether immediately or in the future; - to grant shares to employees and corporate officers of the Ubisoft Group under any...

  • Page 210
    ..., sold or transferred on one or more occasions and at any time, except during public offerings involving Company shares. At each Annual General Meeting, the Board of Directors shall inform shareholders of the shares purchased, transferred or cancelled in this regard and of the allocation or, where...

  • Page 211
    Corporate Information 2013 3.2.2 RESOLUTIONS WITHIN THE SCOPE OF THE SHAREHOLDERS' EXTRAORDINARY GENERAL MEETING FOURTEENTH RESOLUTION (Authorization granted to the Board of Directors to reduce the share capital by cancelling shares) The General Meeting, deliberating in accordance with the quorum ...

  • Page 212
    ... RESOLUTION (Delegation of authority to the Board of Directors to increase the share capital by issuing, with retention of preferential subscription rights, shares and/or securities granting entitlement to the Company's share capital) The General Meeting, deliberating in accordance with the quorum...

  • Page 213
    ... taking into account the number of ordinary shares that may be issued to reflect adjustments to be made in accordance with applicable legal and contractual provisions in order to uphold the rights of holders of securities or other rights granting entitlement to the Company's share capital, and that...

  • Page 214
    .... Said priority subscription shall not create marketable rights but may be exercised both as of right and on an excess basis should the Board of Directors see fit. 4°) resolves that, should subscriptions from shareholders and the general public not cover the full issue of shares or securities as...

  • Page 215
    ... to which these securities may grant entitlement, whether immediately or in the future, to the share capital of the Company. The Board of Directors may, with the option to further delegate within legal prescribed manners: set the exchange ratio and, where appropriate, the amount of any balance to be...

  • Page 216
    ... share capital by issuing, with waiving of preferential subscription rights by way of an offer as referred to in Paragraph II of Article L.411-2 of the French Monetary and Financial Code, shares and/or securities granting entitlement to the Company's share capital) The General Meeting, deliberating...

  • Page 217
    ... in force on the issue date (for information purposes, on the date of this General Meeting, the issue of shares carried out by way of an offer as referred to in Article L.411-2 II of the French Monetary and Financial Code is limited to 20% of the Company's capital per year), it being stated that...

  • Page 218
    ... shares or any securities granting entitlement to the Company's share capital, in the case of an issue with waiving of preferential subscription rights by way of a public offering and/or an offer as referred to in Article L.411-2 II of the French Monetary and Financial Code) The General Meeting...

  • Page 219
    ... French Employment Code. 5°) resolves to set the maximum discount offered under a savings scheme at 15% of the average opening price of Ubisoft Entertainment SA shares on Euronext Paris during the twenty trading sessions prior to the date of the decision setting the start date for subscriptions; it...

  • Page 220
    ...regards the issue, subscription, settlement, exercise, listing of the created securities, the servicing of the new shares and the exercise of rights attached thereto, (ii) record the completion of the capital increase(s), amending the Articles of Association to reflect said capital increase(s), (iii...

  • Page 221
    ...members or to certain categories of staff it shall select from among eligible employees or corporate officers of the Company or of the companies related to it as per the provisions of Article L. 225-197-2 of the French Commercial Code. 2°) resolves that the Board of Directors shall grant the shares...

  • Page 222
    ... be allotted to corporate officers with respect to the total amount defined under this resolution. Each year, the Board of Directors shall report to the Ordinary General Meeting, in the manner prescribed by law and regulations, in particular Article L. 225-197-4 of the French Commercial Code, on the...

  • Page 223
    INFORMATION ABOUT THE COMPANY 218

  • Page 224
    Information about the Company 2013 1 PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT 1.1 PERSON RESPONSIBLE FOR THE REFERENCE DOCUMENT Yves GUILLEMOT, Chief Executive Officer 1.2 NAMES, ADDRESSES AND PROFESSIONAL FEES OF THE AUDITORS Name Date of 1st appointment Expiration of current term ...

  • Page 225
    ... about the Company 2013 2 FINANCIAL COMMUNICATIONS INFORMATIONS 2.1 DOCUMENTS AVAILABLE TO THE PUBLIC During the validity period of this reference document, the company's Articles of Association, minutes of general meetings, auditors' reports, valuations and declarations drawn up, where applicable...

  • Page 226
    ...financial data evaluated have been presented to the Board of Directors and have not been audited by the Auditors. Copies of this Company Report are available from Ubisoft's commercial offices : 28, rue Armand Carrel - 93108 Montreuil-sous-Bois cedex - France Ubisoft Entertainment French Corporation...

  • Page 227
    ... 2 France COMMERCIAL 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 ANNUAL REPO RT 12 12 Australia Austria Belgium Brazil Bulgaria Canada China Denmark Finland France Germany Hong-Kong India Italy Japan...