Ubisoft 2003 Annual Report Download - page 76

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FINANCIAL REPORT
2004
76
2.2.5 Explanatory notes on
the corporate accounts
The following notes and tables (in which all amounts are
shown in thousands of euros) are an integral part of the
annual accounts for the fiscal year ending March 31, 2004,
and constitute an appendix to the income statement.
The fiscal year covered a period of 12 months from April 1,
2003, to March 31, 2004.
2.2.5.1 Highlights of the fiscal year
Disposal of shares:
Over the course of the fiscal year, Ubisoft Entertainment SA
sold 100% of its Blue Byte Software Ltd. stock to its subsidiary
Ubisoft Ltd., 100% of its Ubi Studios SAS stock to its
subsidiary Ubisoft Computing SARL, and 100% of its Ubi
Sound Studio SARL stock to its subsidiary Ubisoft Design SARL.
Bond buybacks:
During the first half of the year, Ubisoft Entertainment SA
bought back 200,000 convertible bonds (OCEANEs) at an
average price of ¤33.
Share acquisitions:
Following the acquisition of 3.4 million shares in Gameloft SA
on September 15, 2003, Ubisoft Entertainment SA passed the
20% mark in terms of voting rights. As of March 31, 2004,
Ubisoft Entertainment SA held 21.775% of the voting rights.
On December 17, 2003, Ubisoft Entertainment SA
purchased 100% of the stock in Tiwak SAS for K¤1,409.
Transfer of treasury shares:
On September 30, 2003, Ubisoft Entertainment SA signed an
equity swap contract with Crédit Lyonnais. This contract
involves 918,137 Ubisoft Entertainment SA shares, sold at
¤18.66 each.
As of March 31, 2004, Ubisoft Entertainment SA held 40,249
of its own shares, recorded as transferable securities in
accordance with Notice 98D of the Emergency Committee
and acquired for an aggregate value of ¤1,020,000.
Issues of mixed securities:
On May 14, 2003, the company issued new share purchase or
subscription warrants, attributed free of charge for
17,540,082 warrants; 15 warrants were needed to subscribe
for one share.
The subscription warrants attributed to Ubisoft Entertainment
SA, namely 1,169,733 warrants, were cancelled.
On November 17, 2003, Ubisoft Entertainment SA issued
bonds with redeemable share subscription warrants
(OBSARs) in the amount of ¤54,974,418; two redeemable
share subscription warrants were attached to each bond.
2.2.5.2 Accounting principles
General accounting conventions were applied in accordance
with the principle of conservatism and the following
fundamental criteria:
●Continuity.
●Consistency of accounting methods from one fiscal year to
the next.
●Time-period concept.
Plus compliance with the general rules governing the prepa-
ration and presentation of annual financial statements.
The historical cost principle was applied as the basic method
for the valuation of items shown in the accounts.
The accounting methods used are consistent with industry
practice. The annual accounts of Ubisoft Entertainment SA
follow the provisions relating to individual accounts
contained in Regulation 99-03, approved by the decree of
June 22, 1999.
2.2.5.3 Accounting rules and methods
Business assets
The business assets acquired include all the intangible ele-
ments (client base, know-how) needed for the company to do
business and grow. Intangible elements are calculated on the
basis of a multiple of sales and forecast profitability. Business
assets are not amortized.
In the event that business assets are valued at less than their
book value (on the basis of sales and forecast profitability), a
provision for depreciation is applied.
Intangible assets
Intangible assets break down as follows:
●Office software: Amortized over 12 months
using the straight-line method
●Software tools: Amortized over 3 years using
the straight-line method
●ERP-related expenditures: Amortized over 5 years using
the straight-line method
●Commercial software: Amortized over 36 months
using the straight-line method
Software tools:
Software tools, which are a set of complex development
programs that may be used for a number of products,
are amortized over a maximum of 36 months using the
straight-line method.
Commercial software:
The production costs for sales software that are produced
internally are entered in the accounts under “Intangible
assets in progress” (Account 232) as software development
advances. Upon the software’s first commercial release, it is
transferred to the "Released parent software programs"
account (Account 208). It is amortized over 36 months using
the straight-line method, beginning on the date of its