Ubisoft 2016 Annual Report Download - page 16

Group presentation
2Research and development, investment andfi nancing policy
❙ 2.4.3 FINANCING POLICY
Roughly speaking, Ubisoft has two kinds of cash fl ows:
♦
cash fl ows for fi nancing development costs which are spread
evenly throughout the year;
♦
cash fl ows linked to the highly seasonal nature of games marketing
which is particularly signifi cant during the festive season.
These cash fl ows include a lag between production costs and cash
infl ows. The Company must fi rst fi nance product manufacturing,
which is payable at 30 days on average, as well as the marketing
costs before collecting cash infl ows, on average 50 days after games
are released. For this reason, the Group must fi nance signifi cant
cash peaks around Christmas time before seeing its cash climb back
up during February and March. Over this fi nancial year, the launch
of two major titles in the 4th quarter generated signifi cant working
capital requirements.
In addition, progress in the development of digital activity is expected
to relieve fi nancing requirements associated with the physical
production of marketed products.
Equity fi nancing
The video game business line requires substantial capital expenditure
in development, over average periods of between 24 and 36 months,
which publishers must be able to fi nance out of their own resources.
In addition, publishers are required to launch new releases on a
regular basis, and their levels of success cannot always be guaranteed.
For these reasons, signifi cant capitalization is essential to guarantee
the continuous fi nancing of capital expenditure and to deal with
contingencies stemming from the success or failure of games without
endangering the future of the Company.
With equity of €1,018 million, the Ubisoft Group fi nanced investment
expenditure on internal and external game production to the tune
of €587 million for the 2015/2016 fi nancial year.
Furthermore, in order to increase its capacity for external growth,
March 2015 saw Ubisoft set up a new two-year equity line (with the
option to extend by an additional year). For information purposes
only, the equity contribution likely to be made via this equity line
could be as much as €275 million (1).
Other sources of fi nance
Over the 2015/2016 fi nancial year, the Ubisoft Group used the
following resources to meet its operating cash requirements:
♦
a syndicated loan of €250 million signed in July 2012 and
amended in July 2014 (maturing in July 2019);
♦
a Schuldschein type loan of €200 million granted in March 2015
(maturing in March 2020);
♦ two Euro PP type bonds of €20 million and €40 million issued
in December 2012 (maturing in December 2018) and May 2013
(maturing in May 2018) respectively;
♦ bilateral credit lines of €35 million (maturing in 2019);
♦ bilateral credit lines of €15 million (maturing in 2017);
♦ bilateral credit lines of €10 million (maturing in less than one
year);
♦ a loan of €5 million (maturing in September 2018);
♦ two repayment loans:
•€2.2 million due in September 2019,
•€4.6 million due in December 2018;
♦
a commercial paper program with a maximum of €300 million.
The Group also uses:
♦
factoring regarding the Canadian Credit Multimedia titles for
one-off operations such as market opportunities (representing
€42.4 million over the fi nancial year);
♦ invoice discounting and receivables factoring in Germany, the
United Kingdom and occasionally the United States.
(1) Based on the Ubisoft EntertainmentSA share price as at March31, 2016
FACTORING COMMITMENT AND DISCOUNT ON THE CLOSING DATE
(in €millions) 03/31/16 03/31/15 03/31/14
United Kingdom 25 - 5.8
Germany 37.5 - -
FACTORING COMMITMENT 62.5 - 5.8
France 2.7 - -
DISCOUNT 2.7 - -
However, Ubisoft does not use securitization agreements, Daily assignment agreements or sale and repurchase agreements.
(in €millions) 2015/2016 2014/2015 2013/2014
Internal production-related capex €514M €475M €410M
Capex per member of production staff €59,700 €58,738 €55,278
- Registration Document 2016
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