Ubisoft 2013 Annual Report Download - page 155

Financial Statements
2013
150
Equity investments are valued at their historical cost, plus all related acquisition costs and any additional
payments. If the value of the investments exceeds their value of use, a provision for depreciation is
recognized for the difference.
The value of use is assessed at the end of each financial year based on the net assets or the retreated net
assets of the subsidiary in question at that 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 at the lower of cost or market value (average of the last 20 trading sessions).
Deposits and sureties are recognized on the basis of the amounts paid.
Advances and prepayments made
Advances and prepayments primarily involve distribution and reproduction rights (licenses) acquired from
other software publishers. License agreements commit Ubisoft to an amount of guaranteed royalties. This
guaranteed amount is booked in the balance sheet under the heading “advances and prepayments made”,
whether or not it has been paid at the year-end date. These guaranteed amounts are recognized 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 revenue) 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 compared with sales projections on the basis of
the terms and conditions of the agreement. If they are insufficient, depreciation is recognized.
Trade receivables
Trade receivables are carried at their nominal amount. Where applicable, a provision for depreciation is
recorded based on the likelihood of their collection at the year-end date.
Investment securities
Investment securities consist of interests in mutual funds and short-term investments and are measured at
the lower of cost or market value.
Conversion of liabilities and receivables denominated in foreign currencies
Liabilities and receivables denominated in foreign currencies are converted at rates prevailing on March 31,
2013. Any resulting conversion gains or losses are recognized in the balance sheet under a specific heading.
A provision for foreign-exchange risk is booked if conversion reveals the existence of unrealized losses.
Foreign currency transactions
Foreign exchange income and expenses are booked using daily exchange rates.
Receivables, liabilities and cash in foreign currencies are converted at the prevailing exchange rates at the
end of the financial year, except for those subject to hedging, which are converted at the hedging rate.
Unrealized gains and losses on receivables and long-term debt are recognized in the balance sheet under
conversion rate adjustments. Unrealized losses that have not been hedged are subject to a provision for
foreign exchange losses.
Conversion rate adjustments on cash and current accounts in foreign currencies are immediately recognized
as foreign exchange income/loss.