Ubisoft 2005 Annual Report Download - page 48

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Ubisoft has maintained its stated investment policy in an
effort to gain a foothold on new platforms, create new
licenses in different genres and, more generally, increase
its market share. Thus, in FY 2005-06, in-house production
costs increased by 31%, rising from €100 million to
€131 million.
Investment related to production
(in million of euros)
Percentage of total pre-tax sales
Average cost in relation to production personnel average
Research and
development policy
In an ongoing effort to create top-quality video games,
Ubisoft has developed a policy of researching and deve-
loping tools for each project, incorporating the latest
technological advances. The selection of tools takes place
at a very early stage in each project, because decisions
made at that point directly affect the investment required
in terms of time, human resources and the game’s overall
financing.
Thanks to its in-house team of engineers, who have a solid
grasp of the best technology currently available, Ubisoft
now has a highly pragmatic approach to its projects.
Depending on the problems involved in a game and the
expected results, the tools selected will either be develo-
ped in-house with a specific purpose in mind or using com-
mercial software, or a combination of the two. Research
is therefore focused on innovation and functionality
based on technologies suited to a high-quality product.
Development is focused on producing creative games that
offer gamers a total entertainment experience.
Research and development expenses are capitalized and
amortized over a three-year period along with additional
depreciation, if necessary. During the year under review,
these depreciations totaled €118,087 thousand.
No basic research is conducted.
Legal and arbitration
proceedings
Since October 2003, a lawsuit has been pending between
Ubisoft and a licensor concerning breach of a license
agreement. Arbitration will take place in July 2006.
To the best of the company’s knowledge, there are no
other exceptional events or disputes that are likely to
have or have recently had a significant impact on the
business, results, financial position or assets of Ubisoft
Entertainment SA or its subsidiaries.
Real estate,
plants and equipment
Ubisoft does not own the buildings it occupies in any
country.
2005-06 2004-05 2003-04
131 100 80
2005-06 2004-05 2003-04
23,85% 18,8% 15,7%
2005-06 2004-05 2003-04
€53.179 €52.840 €56.338
General information
Investment policy
1.7
1.7.1
1.7.2
1.7.3
1.7.4