Ubisoft 2013 Annual Report Download - page 112

Financial Statements
2013
107
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.
Licenses
The Group may issue licenses in return for a guaranteed minimum royalty. This royalty is recorded in
revenue when the significant rewards and risks attached to the goods have been transferred to the
buyer.
Additional revenue on sales above the guaranteed minimum royalty is recorded as and when the sales
are completed.
Services
Revenue corresponding to development and publishing services on behalf of third parties includes
royalties and other remuneration which are regarded as acquired and recognized in sales as and
when the service is rendered.
R&D costs
This item includes all research and development costs for production teams including salaries and
other compensation (retirement, payments based on equity instruments, etc.), operating costs, and
other significant research and development costs (royalties, depreciation on tools). This item includes
depreciation on 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 operating income and operating income
Operating income includes all revenues and costs directly linked to Group activities, whether these
revenues and costs are recurrent or resulting from one-off decisions or operations. Extraordinary
items, defined as revenues and expenses that are unusual in their frequency, nature and/or amount,
belong to operating income. Current operating income is equal to operating income before inclusion
of items whose amount and/or frequency are unpredictable by nature.