Ubisoft 2014 Annual Report Download - page 124

Financial statements
2014
119
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.
The Group believes that presenting the “current operating income” sub-total separately on the income
statement makes it easier to understand the recurrent operating performance and provides readers of
the financial statements with useful information in order to analyze this performance.
Financing costs and other financial income and expenses
The cost of net financial debt includes income and expenses linked to cash and cash equivalents,
interest expenses on borrowings which include the sale of investment securities, creditor interest and
the cost of ineffective currency hedging.
Other financial income and expenses include the sale of non-consolidated securities, capital gains or
losses on disposals and impairment of financial assets (other than trade receivables), income and
expenses linked to the discounting of assets and liabilities, and foreign exchange gains and losses on
unhedged items.
The impact on profit and loss of measuring financial instruments used in the management of foreign
exchange risks is recognized in operating income.
Income tax
Income tax (income or expense) includes the current tax expense (or income) and deferred tax
expense (income). Tax is recognized in profit or loss, unless it relates to items that are recognized
directly in other comprehensive income, in which case it is recognized in other comprehensive income.
Current tax
Current tax is the estimated amount of tax owed on taxable income for an accounting period. It is
determined using the tax rates applicable at the closing date.
Deferred tax
Deferred income tax is measured using the balance sheet liability method for all temporary differences
between the carrying amount of the assets and liabilities and their tax basis. The following situations
do not lead to recognition of deferred tax: the recognition of an asset or liability in a transaction that is
not a business combination and which affects neither accounting profit nor taxable profit, and
temporary differences linked to subsidiary holdings insofar as these are unlikely to be reversed in the
foreseeable future. Measurement of deferred tax assets and liabilities depends on the way in which
the Group expects to recover or settle the carrying amount of the assets and liabilities using the tax
rates applicable at the balance sheet date.
A deferred tax asset is only recognized where it is likely that the Group will have future taxable income
against which the asset may be utilized. Deferred tax assets are reduced to the extent that it is no
longer likely 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 current tax assets and liabilities and is
classified as a non-current item.
Deferred tax relating to tax loss carryforwards is capitalized when it is likely that it will be utilized within
a reasonable timeframe, assessed on the basis of tax forecasts.