Ubisoft 2013 Annual Report Download - page 106

Financial Statements
2013
101
The amount recognized on the asset side is equal to the fair value of the asset leased or, if this value
falls below the present value of the minimum lease payments, the fair value minus accumulated
depreciation and impairment.
Deferred tax arising from the restatement of finance leases is booked in the accounts.
Non-current-assets impairment tests
Non-current assets with an indefinite useful life (goodwill and brands)
Brands
Brands controlled by the Group have an indefinite life and are tested for impairment annually and
whenever impairment indicators are identified.
The recoverable value of brands is estimated using the royalties method which includes updating on a
5-year horizon potential royalties would come back to the Group if it conceded rights to use the brand
to a third party, taking into account the expected commercialization of games based on the sphere of
the brand itself, and taking into account a residual value resulting from the perpetuity growth rate of
the normative cash flow from royalties.
Goodwill
Goodwill on the balance sheet of the Group may be related to the acquisition of:
x Distribution subsidiaries operating in a given geographical area,
x Production subsidiaries:
x Subsidiaries whose production process and marketing is integrated and autonomous vis-à-vis the
parent acting within the Group as a publisher (concerns only the subsidiary Owlient SAS at March
31, 2013)
As the recoverable amount of this goodwill cannot be determined individually, the Group has identified
for each of them the smallest group of assets (cash-generating unit) generating cash inflows that are
independent of other group assets:
x For goodwill relating to the distribution subsidiaries operating in a given geographical area: the
CGU is the geographical area in which the distribution subsidiary operates;
x For goodwill relating to production subsidiaries: CGU corresponds to the total assets of production
activities (internal studios) and publishing (parent company), these two activities are
interdependent;
x For subsidiaries whose production process and marketing is integrated and autonomous: the CGU
corresponds to the subsidiary
The recoverable value of the CGU is the higher of fair value minus cost of sale (net fair value) and its
useful value in use. The estimated useful value is defined as the sum of projected cash flows with
CGU discounted based on a business plan at 3 years to which the asset belongs (including goodwill),
and the terminal value determined by projection to infinity of normative future cash flows. When the
market value or the useful value in use is less than the carrying value of related assets of the CGU
concerned (including goodwill), an impairment loss is recognized. This is irreversible when it relates to
goodwill.
The business plans used for each CGU being tested for impairment 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.