Business Valuation Case

1

ACTG 495

Case 5 – Business Valuation

The following case will utilize your 5 year forecast of Ubisoft Entertainment SA’s (“Ubisoft” or “the

Group”) financial statements to value the business. This case involves a discounted cash flow

approach to value Ubisoft at a total company level as well as a value per share of common stock.

Companies will maintain valuation models to ensure proposed strategies improve value, evaluate

acquisitions and divestitures, sale or repurchase of financial securities, etc.

Requirements

Part I – Weighted Average Cost of Capital (WACC)

Under the Discounted Cash Flow method, the value of a business is the present value of all future

Free Cash Flow. The discount rate applied to the future Free Cash Flow is the WACC. This is the

weighted average return that equity and debt investors expect based on the risk of the business.

A. Calculate the weights (mix) of debt and equity the company is utilizing as of March 31, 2020

(“2020”). The weights can be estimated by using the current market values. For example,

the weight of equity would be the value of equity divided by the sum of value of equity plus

the value of debt. To calculate the value of equity use the total number of shares outstanding

multiplied by the current market price per share. To calculate the value of debt, add the value

of short term financial debt plus the value of long term financial debt from the 2020 balance

sheet.

B. Calculate the cost of equity based on the Capital Asset Pricing Model (CAPM). Estimates for

Risk Free Rate and Market Risk Premium (MRP) and provided in the assumptions section at

the end of the case. (You will need to calculate the ß (beta) for Ubisoft based on comparable

U.S. companies – see PowerPoint slides for formulas.)

C. Calculate the after tax cost of debt. To arrive at a cost of debt for the company use the rate

of return debt investors are currently expecting from the company and then multiply by (1 –

tax rate). Many companies which utilize debt as a source of financing have multiple debt

securities outstanding with each having a different interest rate based on varying maturities or

provisions in each debt agreement.

D. Calculate the WACC based on the estimated rates of return on debt and equity and weights

calculated above.

Part II – Free Cash Flow (FCF)

A. Based upon your 5 year forecast of Ubisoft’s financial statements, calculate FCF for each year

of the forecast period. Feel free to revise your forecast from the prior case as needed.

B. Ubisoft is a strong company and will likely continue to operate and generate FCF after the

forecast period. Analyst’s typically capture the value after the forecast period in a Terminal

Value calculation (also called horizon value or continuing value). Please calculate the terminal

value for Ubisoft.

Part III – Valuation

With estimates in place for WACC and future FCF, you are now able to calculate a discounted cash

flow based valuation for Ubisoft.

2

A. Based on your estimates, what is the total value of Ubisoft? The total value of the firm would

be the present value of all future FCF plus the current value (2020) of any non-operating

assets not included in the forecast. Non-operating assets are typically financial in nature,

such as cash & equivalents, marketable securities, and short and long term investments.

B. What is the estimated value of equity?

C. What is the estimated value per share of common stock?

Part IV – Sensitivity Analysis

The estimated value of Ubisoft is based on many assumptions related to the future performance

of the business and investor return expectations. Analysts spend a lot of time trying to put an

accurate forecasts in place, but the probability of every single input being accurate is virtually

zero. Sensitivity is a form of risk analysis to help identify which forecast assumptions are most

material and how changes to these assumptions impact the valuation.

Perform a sensitivity analysis on the following variables:

• Growth rate of sales

• Operating margin

• Operating cycle

• Choose 1 – 2 other variables

Part V – Recommendation: Market value vs. calculated value

Compare your estimate of per share value of common stock to Ubisoft’s current market price.

• Is your estimate higher or lower than the market price? What factors are likely

contributing to the difference?

• If you were an equity analyst, would you recommend a Buy, Hold or Sell on Ubisoft stock

and why?

Assumptions:

• Yield to Maturity (YTM) on 10 year French government bond (risk free rate): 0.67%

• Market risk premium for France: 5.65%

• Ubisoft’s stock price €70.04 per share

Data

,5

4

3,997

4.8%

,753

3,077)

,972)

)

,680

,969)

6,

4)

4,

9)

,538)

from continuing operations

-22.6%

Operating income

0.2%

)

0

)

0 0

)

)

)

)

)

0 0 0 0 0

99,985 139,452 107,813

87,011

March 31,

(In thousands of euros)

2018

2016 2015

,906

0 0 0 0 0

7 7

0 0

,982

assets

3.7%

2.8%

2.8%

,829

9,374

(125,624) 99,985

107,813 93,408 87,011

attributable to owners of the parent company

0 0 0 0 0

920,018 889,330 1,133,816 1,018,510 979,382

0 0 0 0 0

3,604,841 3,288,759 2,805,122 2,581,995

1,752,374 0

Ubisoft Entertainment SA and Subsidiaries

For the Years Ended March 31,
(In thousands of euros)
2020 2019 2018 2017 2016 2015

Consolidated earnings (124,242) 99,985 139,452 107,813 93,408 87,011
Share in profit of associates 0

224 338 0 0

449

408

64

45,685

69,241 51,457 29,654 53,094

Cash flows from operating activities

Inventory

229

2,020

38 63 65 60 45 39

0 0 0

20 28 40 26 22 19

Current tax

179 25 20

67 122

0

0 0 0

358

0 20

0

(25)

(18) 14 87

650

0 0 0 0

878,612 583,354 632,314 255,688 505,215

2020 2019 2018 2017 2016 2015

Sales

100% 100% 100% 100% 100%

Cost of sales

Gross profit

R&D expenses

Marketing expenses

Administrative and IT expenses

Other non-current operating income and expenses

Operating income

Interest on borrowings

-0.60%

Income from cash

0.15%

Net borrowing cost

Result from foreign-exchange operations

-0.33%

Other financial expenses

-0.37%

Other financial income

0.16%

Net financial income

-0.98%

Share in profit of associates 0.00%

0.00% 0.00%

Total income tax

Consolidated net income

Net income attributable to non-controlling interests 0.09% 0.00% 0.00% 0.00% 0.00% 0.00%
Net income attributable to owners of the parent company

5.42% 8.05% 7.39% 6.70% 5.94%

2020 2019 2018 2017 2016 2015

Sales

18.6%

Cost of sales

Gross profit

9.2%

R&D expenses

7.3%

Marketing expenses

7.1% 3.6% 7.3%

Administrative and IT expenses

Operating income from continuing operations

-20.1% 29.7%

Other non-current operating income and expenses

28.7%

Operating income

28.5%

Interest on borrowings

18.0%

Income from cash

Net borrowing cost

Result from foreign-exchange operations

Other financial expenses

Other financial income

Net financial income

Share in profit of associates

– –

Total income tax

Consolidated net income

7.4%

Net income attributable to non-controlling interests – – – – –
Net income attributable to owners of the parent company

-28.3% 29.3% 15.4% 7.4%

2020 2019 2018 2017 2016 2015

2.6% 11.3%

13.8% 11.2% 11.0%

5.4% 8.1% 7.4% 6.7% 5.9%

3.3% 5.2% 4.7% 5.0% 5.0%

																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																						for the Years Ended		March 31,
	Consolidated Income Statements
			For the Years Ended March 31,
					(In thousands of euros)
2																																																																																																																																																																				0					20			20	19																	2018		201									7																	2016										2015
			Sales		1,594,831	1,8	45	22		1,731,894	1,459,		87	1,	39									–	1,4	63
			Cost of sales	(		25	-1		5.9%	(3	28		-17.8%		(296,820)	-1		7.1%		(270,887)	–		18.6%	(305,0	65		-2				1.9%		(337,073)
			Gross profit		1,341,754		1,516,550		1,435,074		1,188,987		1,088,932	1,1	26
			R&D expenses		(720,829)	-45.198%	(7	40	-40.150%		(690,592)	-39.875%		(548,735)	-37.588%		(509,779)	-36.570%		(580,554)
			Marketing expenses	(	38	60	-24.241%		(410,070)	-22.220%		(339,274)	-19.590%		(316,806)	-21.701%		(305,735)	-21.932%		(284,965)
			Administrative and IT expenses		(193,011)	-12.102%		(157,295)	-8.523%	(		14		64	-8.352%	(		122	-8.394%		(117,296)	-8.414%		(100,051)
				Operating income		41,310	-27.2%		208,216	-2		3.6%		260,559		-2		2.6%		200,908		156,122	-22.3%		161,110
			Other non-current operating income and expenses		(100,806)		(49,231)		(38,242)		(25,094)		(19,334)		(21,717)
	(59,496)		158,985		222,317		175,814		136,788		139,393
			Interest on borrowings		(18,121)	-1.136%		(20,920)	-1.134%		(17,732)	-1.0%		(12,081)	-0.8%		(8,429)		-0.60%		(5,322)
			Income from cash							4,189	0.4%		2,780	0.3%		1,823		0.2%		1,265	0.1%		989		556
			Net borrowing cost		(13,932)		(18,140)		(15,909)		(10,816)		(7,440)		(4,766)
			Result from foreign-exchange operations							(3,787)		(5,311)		(5,747)		(2,288)		(5,168)		1,159
			Other financial expenses								(1,474)		(23,941)		(56)	(5,		449		(3,666)		(1,764)
			Other financial income							132		36,515		8,312		2,348		2,548		6,083
			Net financial income		(19,061)		(10,877)		(13,400)		(16,205)		(13,726)		712
					Share in profit of associates		294	(		224		(339)
			Total income tax	(		45,685		(48,417)	(		69,241	(		51,457	(		29,654	(		53,094
			Consolidated net income				(124,242)								99,985						139,452								107,813				93,		408								87,011
			Net income attributable to non-controlling interests							1,382
			Net income attributable to owners of the parent company				(125,624)				93,408
			Ubisoft Entertainment SA and Subsidiaries
	Consolidated Balance Sheets
														2020													2019															2017
	ASSETS
	Goodwill							334,558	15.1%		290,721	12.0%		259,462	43.6%		180,735	70.2%		106,194	-18.3%		129,906
	Other intangible assets		1,115,283	26.3%		882,925	1		2.8%		782,402	6.2%		736,465	1		3.7%		647,602	1	3.2%		572,225
	Property, plant and equipment		174,393					9.0%		159,958	40.2%		114,116				7.3%		106,375	2		6.7%		83,946		80,983
	Right-of-use assets			229
	Investments in associates		(289)		(69)
	Non-current financial assets							13,710		8,660		106,895		5,478		4,339		4,162
	Deferred tax assets	169,		338		168,443		84,181		88,831		122,193		134,954
	Non-current assets		2,037,195		1,510,714	1,346,7		67		1,117,815		964,274		922,230
			Inventory		12,446	-61.0%		31,880	57.3%		20,264		-20.1%		25,359	30.9%	1							9,374		5.2%		18,425
	Trade receivables		307,060	-35.6%		476,641	9.4%		435,573					7.4%		405,557	–	3.3%		419,577	1655.3%		23,904
	Other receivables							127,456	-2	9.2%			179	–		13.8%		208,778	42.5%		146,467	4		5.0%		100,985	–		11.3%		113,855
	Current financial assets		453	146.2%		184	-97.8%		8,320	635.6%		1,131	-91.8%		13,780	180.1%		4,919
		Current tax		41,034		39,555		38,481	16.7%		32,967	-20.5%		41,464	234.9%		12,380
	Cash and cash equivalents		1,079,197		1,049,803	40.5%		746,939	-12.4%		852,699	84.8%		461,375	–	29.7%		656,661
	Current assets		1,567,646		1,778,045		1,458,355		1,464,180		1,056,555		830,144
	Total assets				3,604,841				3,288,759				2,805,122				2,581,995			2,020				1,752,374
	LIABILITIES AND EQUITY
	Share capital	8,		650		8,652		8,752		8,710		8,478
	Premiums		863,547		335,759		234,123		280,975		215,125		180,515
	Consolidated reserves		567,256		475,624		507,102		736,276		701,267		703,378
			Consolidated earnings		139,453
	Equity		1,314,553				920,018				889,330				1,133,816				1,018,510				979,382
	Non-controlling interests							7,190
	Total equity		1,321,743
	Provisions							3,091		2,469		3,074		4,246		8,888		7,497
	Employee benefit liabilities							15,769		14,382		10,289		9,079		6,618		5,430
	Long-term borrowings and other financial liabilities		1,176,198		890,366		933,629		640,705		277,383		275,739
	Deferred tax liabilities							109,531		127,902		96,047		72,773		47,648		48,944
	Other non-current liabilities							59,568
	Non-current liabilities		1,364,157		1,035,119		1,043,039		726,803		340,537		337,610
	Short-term borrowings and other financial liabilities		246,863		453,299		361,538		293,403		228,218		183,226
	Trade payables		139,208		188,787		176,613		178,283		206,246		94,919
	Other liabilities (includes deferred revenue)		517,730		664,618		321,935		219,818		213,807		149,614
	Current tax liabilities							15,140		26,918		12,667		29,872		13,511		7,623
	Current liabilities		918,941		1,333,622		872,753		721,376		661,782		435,382
	Total liabilities and equity		2,020,829
	Consolidated Cash Flow Statements
			Cash flows from operating activities
	(294)
	Net amortization and depreciation on PP&E		619,429		584,259		544,031		474,635		462,800		510,963
	Net provisions		2,264		22,039		4,052		(2,563)		3,201
	Cost of stock-based-compensation		53,772		54,686		39,558		36,836		12,918		9,609
	Gains/losses on disposals		682		261		308		104
	Other income and expenses calculated		10,650		(5,403)		8,578		(10,655)		24,335		(15,534)
	Tax expense		48,418
	608,240		803,951		805,444		658,269		623,668		648,408
	20,186		(31,326)		(5,381)		(11)		3,007
	Customers (trade receivables)		182,891		(18,031)		(61,544)		31,934		(402,877)		53,783	Operating cycle
	Other assets (excluding deferred tax assets)		58,194	105%		28,408	-135%		(81,048)	-570%		17,240	-156%		(30,588)		(23,503)	2,019	2,018	2,017	2,016	2,015
	Suppliers (trade payables)		(49,199)		3,181		15,243		(45,082)		116,466		(5,292)			(18)	(35)			(25)	(34)	(23)	(20)
	Other liabilities (excluding deferred tax liabilities)		(51,805)		6,389		49,380		24,871		61,635		34,034
	Deferred income and prepaid expenses		(96,525)		248,384		(3,089)
	Change in WCR linked to operating activities		63,742		237,005		(80,829)		23,582		(255,375)		62,029
	(71,624)		(68,582)		(33,460)		(36,140)		(27,586)		(56,362)
	Total cash flow generated by (used in) operting activities	600,		358		972,374		691,155		645,711		340,707		654,075
	Cash flows from investment activities
	Payments for internal and external developments		(651,202)		(587,699)		(521,290)		(496,588)		(489,464)		(421,683)
	Payments for other intangible assets and PP&E		(104,909)		(74,402)		(59,366)		(62,916)		(42,499)		(56,244)
	Proceeds from the disposal of intangible assets and PP&E		603
	Payments for the acquisition of financial assets		(215,697)		(43,816)		(31,493)		(44,373)		(34,391)		(23,709)
	Security deposit CACIB						100,000					(100,000)
	Refund of loans and other financial assets		210,498		42,057		29,790		43,322		34,115		23,373
	Changes in scope		(143,735)		(84,327)		(77,589)		(105,642)		(3,188)
	Cash generated by (used in) investing activities		(904,866)		(648,162)		(759,928)		(665,594)		(531,814)		(481,329)
	Cash flow from financing activities
	New finance leases contracted		5,054		1,416		10,142
	New borrowings		935,241		604,985		893,596		669,165		234,540		622,185
	Accrued interest		(1,324)		1,002
	Refund of borrowings in relation to leases							(35,577)		(1,300)		(1,672)		(898)		(891)		(291)
	Repayment of borrowings		(584,908)		(572,177)		(487,677)		(214,663)		(230,216)		(466,578)
	Funds received from shareholders in capital increases		81,466		131,910		48,951		9,465		21,924		18,054
	Sales/purchases of own shares		35,348		(201,899)		(411,498)		(67,844)		(77,272)
	Associated current accounts		258		(260)
	Cash generated by (used in) financing activities		431,545		(39,785)		47,756		396,623		(51,643)		183,989
	Net change in cash and cash equivalents		127,037		284,427		(21,017)		376,740		(242,750)		356,735
	Cash and cash equivalents at the beginning of the period				878,612				583,354				632,314				255,688				505,215		115,610
	Foreign exchange losses/gains		(18,722)		10,831		(27,943)		(114)		(6,777)		32,870
	Cash and cash equivalents at the end of the period			986,927
Vertical
					100%
-15.87%	-17.83%	-17.14%	-18.56%	-21.88%	-23.03%
84.13%	82.17%	82.86%	81.44%	78.12%	76.97%
-45.20%	-4	0.15%	-39.87%	-37.59%	-36.57%	-39.66%
-24.24%	-22.22%	-19.59%	-21.70%	-21.93%	-19.47%
-12.10%	-8.52%	-8.35%	-8.39%	-8.41%	-6.84%
		Operating income from continuing operations	2.59%	11.28%	15.04%	13.76%	11.20%	11.01%
-6.32%	-2.67%	-2.21%	-1.72%	-1.39%	-1.48%
-3.73%	8.61%	12.84%	12.04%	9.81%	9.52%
-1.14%	–					1.13%	-1.02%	-0.83%	-0.36%
0.26%	0.11%		0.09%	0.07%	0.04%
-0.87%		-0.98%	-0.92%	-0.74%	-0.53%		-0.33%
-0.24%	-0.29%	–	0.16%		-0.37%	0.08%
-0.09%	-1.30%	–								0.00%	-0.26%	-0.12%
0.01%	1.98%	0.48%	0.18%	0.42%
-1.20%	-0.59%	-0.77%	-1.11%	0.05%
0.02%	-0.01%	-0.02%
-2.86%	-2.62%	-4.00%	-3.52%	-2.13%	-3.63%
-7.79%		5.42%		8.05%		7.39%		6.70%		5.94%
-7.88%
	-13.6%		6.6%			4.7%	-4.8%
-23.1%	10.8%	9.6%	–		11.2%	-9.5%
-11.5%	5.7%	20.7%		-3.4%
–				2.7%	25.9%	7.6%	-12.2%
	-5.7%		20.9%
22.7%	8.7%		18.0%		4.5%	17.2%
-80.2%			28.7%	-3.1%
	104.8%		52.4%		29.8%	–		11.0%
-137.4%	–	28.5%	26.5%	-1.9%
-13.4%	46.8%	43.3%	58.4%
50.7%	52.5%	44.1%	27.9%	77.9%
-23.2%	1	4.0%	47.1%	4		5.4%		56.1%
-28.7%	-7.6%	151.2%	-55.7%	-545.9%
-93.8%	42651.8%	-99.0%	48.6%	107.8%
-99.6%	339.3%	2	54.0%	-7.8%	-5		8.1%
75.2%	-18.8%	-17.3%	18.1%	-2027.8%
-10					0.0%	-231.3%	-3	3.9%
-5.6%	-30.1%	34.6%	73.5%	-44.1%
-224.3%		-28.3%		29.3%		15.4%
-225.6%
Profitability:
Gross margin		84.1%		82.2%		82.9%		81.4%		78.1%		77.0%
Operating margin			15.0%
Net margin		-7.9%
Assets turnover	46.3%	60.6%	64.3%	63.4%	73.9%	83.5%
Return on Assets	-3.6%

&P

Base Assumption

2016 2017 2018 2019 2020

-4.8% 4.7% 18.6% 6.6% -13.6%

15.0% 9.0% 9.0% 9.0% 9.0%

2016 2017 2018 2019 2020

-21.9%

-17.8%

7.3% 3.6% 7.1% 20.9% -5.7%

29.8% 52.4% 28.7% 104.8%

2021 2022 2023 2024 2025

COGS 3.2% 1.9% 1.9% 1.9% 1.9%

SGA 4.5% 2.7% 2.7% 2.7% 2.7%
Other non-current op. 0.0% 0.0% 0.0% 0.0% 0.0%

1.13% 1.13% 1.13% 1.13% 1.13%

2016 2017 2018 2019 2020

2021 2022 2023 2024 2025

3.0% 3.0% 3.0% 3.0%

2016 2017 2018 2019 2020

2021 2022 2023 2024 2025

2016 2017 2018 2019 2020

2021 2022 2023 2024 2025

2016 2017 2018 2019 2020

2021 2022 2023 2024 2025

Equity 2016 2017 2018 2019 2020

Assumption:

Revenue historical

Will use this rate to compute projected A/R

Revenue growth

2021

2022

2023

2024

2025

Expenses histo

COGS

-18.6%

-17.1%

-15.9%

% of sales

SGA

This is the change

Other non-current op.

-11.0%

Expenses growth

COGS is 21% of the increase of revenue.Will use this rate to compute projected inventory

This will not have any incease as there is any acquisitions

Interest borrowing

We assume to have the same rate of sales as the last few years

Tax rate (by year)

Hist.

-2.1%

-3.5%

-4.0%

-2.6%

-2.9%

grow.

3.0%

Historically the company had a rate rage of 2-4%, so we are assuming that the company will have a rate of 3% as an average of sales!

Dividends

Operating assets

Operating liability

Debt ratio

Forecast

Consolidated Income Statements
For the Years Ended March 31,

(In thousands of euros)

Forecast

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sales

1,731,894

1,594,831

Cost of sales (337,073)

(270,887) (296,820)

Gross profit

1,088,932 1,188,987 1,435,074 1,516,550 1,341,754

R&D expenses (580,554) (509,779) (548,735) (690,592)

(720,829)

Marketing expenses (284,965) (305,735) (316,806) (339,274) (410,070)

Administrative and IT expenses (100,051) (117,296)

(157,295) (193,011)

Operating income from continuing operations 161,110 156,122 200,908 260,559 208,216 41,310

Other non-current operating income and expenses (21,717) (19,334) (25,094) (38,242) (49,231) (100,806) 0 0 0 0 0
Operating income 139,393 136,788 175,814 222,317 158,985 (59,496) 299,031 343,885 374,836 404,822 433,160
Interest on borrowings (5,322) (8,429) (12,081) (17,732) (20,920) (18,121)

Income from cash 556 989 1,265 1,823 2,780 4,189 4,189 4,189 4,189 4,189 4,189
Net borrowing cost (4,766) (7,440) (10,816) (15,909) (18,140) (13,932)

Result from foreign-exchange operations 1,159 (5,168) (2,288) (5,747) (5,311) (3,787) (3,787) (3,787) (3,787) (3,787) (3,787)
Other financial expenses (1,764) (3,666)

(56) (23,941) (1,474) (1,474) (1,474) (1,474) (1,474) (1,474)

Other financial income 6,083 2,548 2,348 8,312 36,515 132 132 132 132 132 132
Net financial income 712 (13,726) (16,205) (13,400) (10,877) (19,061)

Share in profit of associates 0 0 (339)

294 0 0 0 0 0 0

Total income tax

(48,417)

)

)

)

)

)

Consolidated net income 87,011 93,408 107,813 139,452 99,985 (124,242)

Net income attributable to non-controlling interests 0 0 0 0 0 1,382 1,382 1,382 1,382 1,382 1,382
Net income attributable to owners of the parent company 87,011 93,408 107,813 139,452 99,985 (125,624)

Ubisoft Entertainment SA and Subsidiaries
Consolidated Balance Sheets
March 31,

(In thousands of euros) Forecast

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
ASSETS

Goodwill 129,906 106,194 180,735 259,462 290,721 334,558 334,558 334,558 334,558 334,558 334,558
Other intangible assets 572,225 647,602 736,465 782,402 882,925 1,115,283

Property, plant and equipment 80,983 83,946 106,375 114,116 159,958 174,393

174393 174393 174393 174393

Right-of-use assets 0 0 0 0 0

229,906 229,906 229,906 229,906 229,906

Investments in associates 0 0 (69) (289) 7 7 7 7 7 7 7
Non-current financial assets 4,162 4,339 5,478 106,895 8,660 13,710 13,710 13,710 13,710 13,710 13,710
Deferred tax assets 134,954 122,193 88,831 84,181 168,443

169,338 169,338 169,338 169,338 169,338

Non-current assets 922,230 964,274 1,117,815

1,510,714 2,037,195

Inventory 18,425

25,359 20,264 31,880 12,446

Trade receivables 23,904 419,577 405,557 435,573 476,641 307,060

Other receivables 113,855 100,985 146,467 208,778

127,456 127,456 127,456 127,456 127,456 127,456 Along with revenue

Current financial assets 4,919 13,780 1,131 8,320 184 453

543 543 543 543

12,380 41,464 32,967 38,481 39,555 41,034

41034 41034 41034 41034

Cash and cash equivalents 656,661 461,375 852,699 746,939 1,049,803 1,079,197

Current assets 830,144 1,056,555 1,464,180 1,458,355 1,778,045 1,567,646

Total assets 1,752,374 2,020,829 2,581,995 2,805,122 3,288,759 3,604,841

LIABILITIES AND EQUITY

Share capital 8,478 8,710 8,752 8,652

9,374 9,374 9,374 9,374 9,374 9,374

Premiums 180,515 215,125 280,975 234,123 335,759 863,547

Consolidated reserves 703,378 701,267 736,276 507,102 475,624 567,256

Consolidated earnings 87,011 93,408 107,813 139,453 99,985 (125,624) 184,448

979,382 1,018,510 1,133,816 889,330 920,018 1,314,553

Non-controlling interests 0 0 0 0 0 7,190 7,190 7,190 7,190 7,190 7,190
Total equity 979,382 1,018,510 1,133,816 889,330 920,018 1,321,743

Provisions 7,497 8,888 4,246 3,074 2,469 3,091 3,091 3,091 3,091 3,091 3,091
Employee benefit liabilities 5,430 6,618 9,079 10,289 14,382 15,769 15,769 15,769 15,769 15,769 15,769
Long-term borrowings and other financial liabilities 275,739 277,383 640,705 933,629 890,366 1,176,198

Deferred tax liabilities 48,944 47,648 72,773 96,047 127,902 109,531 109,531 109,531 109,531 109,531 109,531
Other non-current liabilities 0 0 0 0 0 59,568 59,568 59,568 59,568 59,568 59,568
Non-current liabilities 337,610 340,537 726,803 1,043,039 1,035,119 1,364,157

Short-term borrowings and other financial liabilities 183,226 228,218 293,403 361,538 453,299 246,863

100,000 100,000

Trade payables 94,919 206,246 178,283 176,613 188,787 139,208

Other liabilities (includes deferred revenue) 149,614 213,807 219,818 321,935 664,618 517,730

Current tax liabilities 7,623 13,511 29,872 12,667 26,918 15,140 15,140 15,140 15,140 15,140 15,140
Current liabilities 435,382 661,782 721,376 872,753 1,333,622 918,941

Total liabilities and equity 1,752,374 2,020,829 2,581,995 2,805,122 3,288,759 3,604,841

Ubisoft Entertainment SA and Subsidiaries
Consolidated Cash Flow Statements
For the Years Ended March 31,
(In thousands of euros) Forecast
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Cash flows from operating activities

Consolidated earnings 87,011 93,408 107,813 139,452 99,985 (124,242) 184,448 215,465 235,635 257,869 276,263
Share in profit of associates 0 0 338 224 (294) 0 0 0 0 0 0
Net amortization and depreciation on PP&E 510,963 462,800 474,635 544,031 584,259 619,429

Net provisions 3,201 449 (2,563) 4,052 22,039 2,264 0 0 0 0 0
Cost of stock-based-compensation 9,609 12,918 36,836 39,558 54,686 53,772

Gains/losses on disposals 64 104 408 308 261 682 0 0 0 0 0
Other income and expenses calculated (15,534) 24,335 (10,655) 8,578 (5,403) 10,650 0 0 0 0 0
Tax expense 53,094 29,654 51,457 69,241 48,418 45,685 87,449 102,045 111,538 122,001 130,657
Cash flows from operating activities 648,408 623,668 658,269 805,444 803,951 608,240

Inventory 3,007 (11) (5,381) 229 (31,326) 20,186

(1,474)

Customers (trade receivables) 53,783 (402,877) 31,934 (61,544) (18,031) 182,891

Other assets (excluding deferred tax assets) (23,503) (30,588) 17,240 (81,048) 28,408 58,194 0 0 0 0 0
Suppliers (trade payables) (5,292) 116,466 (45,082) 15,243 3,181 (49,199)

Other liabilities (excluding deferred tax liabilities) 34,034 61,635 24,871 49,380 6,389 (51,805) 0 0 0 0 0
Deferred income and prepaid expenses 0 0 0 (3,089) 248,384 (96,525)

35,572

Change in WCR linked to operating activities 62,029 (255,375) 23,582 (80,829) 237,005 63,742

Current tax (56,362) (27,586) (36,140) (33,460) (68,582) (71,624)

Total cash flow generated by (used in) operting activities 654,075 340,707 645,711 691,155 972,374

Cash flows from investment activities

Payments for internal and external developments (421,683) (489,464) (496,588) (521,290) (587,699) (651,202)

Payments for other intangible assets and PP&E (56,244) (42,499) (62,916) (59,366) (74,402) (104,909)

Proceeds from the disposal of intangible assets and PP&E 122 67 603 20 25 179 0 0 0 0 0
Payments for the acquisition of financial assets (23,709) (34,391) (44,373) (31,493) (43,816) (215,697) 0 0 0 0 0
Security deposit CACIB 0 0 0 (100,000) 100,000 0 0 0 0 0 0
Refund of loans and other financial assets 23,373 34,115 43,322 29,790 42,057 210,498 0 0 0 0 0
Changes in scope (3,188) 358 (105,642) (77,589) (84,327) (143,735) 0 0 0 0 0
Cash generated by (used in) investing activities (481,329) (531,814) (665,594) (759,928) (648,162) (904,866)

Cash flow from financing activities

New finance leases contracted 10,142 0 1,416 5,054 20 0 0 0 0 0 0
New borrowings 622,185 234,540 669,165 893,596 604,985 935,241 100,000 100,000

Accrued interest 87 14 (18) 1,002 (1,324) (25) 0 0 0 0 0
Refund of borrowings in relation to leases (291) (891) (898) (1,672) (1,300) (35,577) (35,577) (35,577) (35,577) (35,577) (35,577)
Repayment of borrowings (466,578) (230,216) (214,663) (487,677) (572,177) (584,908)

(100,000)

Funds received from shareholders in capital increases 18,054 21,924 9,465 48,951 131,910 81,466

50,000 50,000 50,000 50,000

Sales/purchases of own shares 650 (77,272) (67,844) (411,498) (201,899) 35,348 (100,000) 0

(100,000)

Associated current accounts (260) 258 0 0 0 0
Cash generated by (used in) financing activities 183,989 (51,643) 396,623 47,756 (39,785) 431,545

(185,577)

Net change in cash and cash equivalents 356,735 (242,750) 376,740 (21,017) 284,427 127,037

Cash and cash equivalents at the beginning of the period 115,610 505,215 255,688 632,314 583,354 878,612 986,927

Foreign exchange losses/gains 32,870 (6,777) (114) (27,943) 10,831 (18,722) 0 0 0 0 0
Cash and cash equivalents at the end of the period 505,215 255,688 632,314 583,354 878,612 986,927 919,660 1,126,531 1,151,644 1,199,279

2015 2016 2018 2017
77.0% 78.1% 81.4% 82.9% 82.2% 84.1%
11.0% 11.2% 13.8% 15.0% 11.3% 2.6%
5.9% 6.7% 7.4% 8.1% 5.4% -7.9%

54.0% 56.1%

4.0% 3.9% 3.7%

3.0% -3.4%

for the Years Ended March 31,
Actual
1,463,753	1,393,997	1,459,874	1,845,522	1,993,539	2,292,570	2,498,901	2,698,813	2,887,730
(305,065)	(328,972)	(253,077)	(338,902)	(389,737)	(424,813)	(458,798)	(490,914)
1,126,680	1,654,637	1,902,833	2,074,088	2,240,015	2,396,816
(740,969)	(777,480)	(894,102)	(974,571)	(1,052,537)	(1,126,215)	As the company stated that in order for them to develop exceptional video games, they are using the most recent technological advances.This means that Ubisoft will continue spending on R&D as they expected to have a stable level of sales.
(386,604)	(418,643)	(481,440)	(524,769)	(566,751)	(606,423)	since the company continued with R&D, they will keep supporting of the Group’s premium games
(122,538)	(144,649)	(159,483)	(183,406)	(199,912)	(215,905)	(231,018)
	299,031		343,885		374,836		404,822		433,160
(24,812)	(24,053)	(25,341)	(22,630)	(23,918)
(20,623)	(19,864)	(21,152)	(18,441)	(19,729)
(5,449)	this both wont have any increase of change since there is no acuisition or gain or loss from foreign exchange
(25,752)	(24,993)	(26,281)	(23,570)	(24,858)
(224)
(53,094)	(29,654)	(51,457)	(69,241)	(45,685)	(	87,449	(	102,045	(	111,538	(	122,001	(	130,657
185,830	216,847	237,017	259,251	277,645
		184,448		215,465		235,635		257,869		276,263
1,225,437	1,341,099	1,462,544	1,490,061	1,723,954
				174393
					229,906
					169,338
1,346,767	2,147,349	2,263,011	2,384,456	2,411,973	2,645,866
19,374	15,558	17,892	19,502	21,062	22,536	along with COGS
383,825	441,399	481,125	519,615	555,988		Along with revenue
179,982
				543
Current tax assets					41034
1,011,930	1,218,801	1,243,914	1,291,549	1,256,919
1,580,346	1,847,125	1,913,574	2,001,259	2,004,476
3,727,695	4,110,136	4,298,030	4,413,232	4,650,342
8,650
980,762	1,108,059	1,242,313	1,383,307	1,530,671
314,632	526,070	441,545	577,180	435,049
215465	235635	257869	276263
Equity attributable to owners of the parent company	1,489,216	1,858,968	1,928,867	2,227,730	2,251,357
1,496,406	1,866,158	1,936,057	2,234,920	2,258,547
1,138,221	702,644	467,067	1,031,490	1,095,913
1,326,180	890,603	655,026	1,219,449	1,283,872
102,400	500,000	800,000
174,010	200,112	218,122	2	35,572	252,062
586,469	638,023	673,595	708,061	740,631
878,019	1,353,275	1,706,857	1,058,773	1,107,833
3,700,605	4,110,036	4,297,940	4,513,142	4,650,252
683,762	717,950	753,848	791,540	831,117
67,215	77,297	84,254	90,994	97,364
1,022,874	1,112,757	1,185,275	1,262,404	1,335,401
(3,112)	(2,334)	(1,610)	(1,560)
(76,765)	(57,574)	(39,726)	(38,490)	(36,373)
34,802	26,102	18,010	17,450	16,490
68,739	51,554	34,466	32,570
23,664	17,748	12,246	11,866	11,213
(87,449)	(102,045)	(111,538)	(122,001)	(130,657)
600,358	959,089	1,028,460	1,085,983	1,152,269	1,215,957
(683,762)	(717,950)	(753,848)	(791,540)	(831,117)
(110,154)	(115,662)	(121,445)	(127,517)	(133,893)
(793,916)	(833,612)	(875,293)	(919,057)	(965,010)
600,000	700,000	200,000
(246,863)	(102,400)	(500,000)	(800,000)
				50,000
(300,000)	(400,000)
(232,440)	12,023		(185,577)	(285,577)
(67,267)	206,871	25,113	47,635	(34,630)
	919,660		1,126,531		1,151,644		1,199,279
1,164,649
67.5%	57.8%	49.7%	43.5%
4.4%

Data

,5

4

3,997

4.8%

,753

3,077)

,972)

)

,680

,969)

6,

4)

4,

9)

,538)

from continuing operations

-22.6%

Operating income

0.2%

)

0

)

0 0

)

)

)

)

)

0 0 0 0 0

99,985 139,452 107,813

87,011

March 31,

(In thousands of euros)

2018

2016 2015

,906

0 0 0 0 0

7 7

0 0

,982

assets

3.7%

2.8%

2.8%

,829

9,374

(125,624) 99,985

107,813 93,408 87,011

attributable to owners of the parent company

0 0 0 0 0

920,018 889,330 1,133,816 1,018,510 979,382

0 0 0 0 0

3,604,841 3,288,759 2,805,122 2,581,995

1,752,374 0

Ubisoft Entertainment SA and Subsidiaries

For the Years Ended March 31,
(In thousands of euros)
2020 2019 2018 2017 2016 2015

Consolidated earnings (124,242) 99,985 139,452 107,813 93,408 87,011
Share in profit of associates 0

224 338 0 0

449

408

64

45,685

69,241 51,457 29,654 53,094

Cash flows from operating activities

Inventory

229

2,020

38 63 65 60 45 39

0 0 0

20 28 40 26 22 19

Current tax

179 25 20

67 122

0

0 0 0

358

0 20

0

(25)

(18) 14 87

650

0 0 0 0

878,612 583,354 632,314 255,688 505,215

2020 2019 2018 2017 2016 2015

Sales

100% 100% 100% 100% 100%

Cost of sales

Gross profit

R&D expenses

Marketing expenses

Administrative and IT expenses

Other non-current operating income and expenses

Operating income

Interest on borrowings

-0.60%

Income from cash

0.15%

Net borrowing cost

Result from foreign-exchange operations

-0.33%

Other financial expenses

-0.37%

Other financial income

0.16%

Net financial income

-0.98%

Share in profit of associates 0.00%

0.00% 0.00%

Total income tax

Consolidated net income

Net income attributable to non-controlling interests 0.09% 0.00% 0.00% 0.00% 0.00% 0.00%
Net income attributable to owners of the parent company

5.42% 8.05% 7.39% 6.70% 5.94%

2020 2019 2018 2017 2016 2015

Sales

18.6%

Cost of sales

Gross profit

9.2%

R&D expenses

7.3%

Marketing expenses

7.1% 3.6% 7.3%

Administrative and IT expenses

Operating income from continuing operations

-20.1% 29.7%

Other non-current operating income and expenses

28.7%

Operating income

28.5%

Interest on borrowings

18.0%

Income from cash

Net borrowing cost

Result from foreign-exchange operations

Other financial expenses

Other financial income

Net financial income

Share in profit of associates

– –

Total income tax

Consolidated net income

7.4%

Net income attributable to non-controlling interests – – – – –
Net income attributable to owners of the parent company

-28.3% 29.3% 15.4% 7.4%

2020 2019 2018 2017 2016 2015

2.6% 11.3%

13.8% 11.2% 11.0%

5.4% 8.1% 7.4% 6.7% 5.9%

3.3% 5.2% 4.7% 5.0% 5.0%

																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																																			for the Years Ended		March 31,
	Consolidated Income Statements
			For the Years Ended March 31,
					(In thousands of euros)
2																																																																																																																																																																				0					20			20	19																	2018		201									7																	2016										2015
			Sales		1,594,831	1,8	45	22		1,731,894	1,459,		87	1,	39									–	1,4	63
			Cost of sales	(		25	-1		5.9%	(3	28		-17.8%		(296,820)	-1		7.1%		(270,887)	–		18.6%	(305,0	65		-2				1.9%		(337,073)
			Gross profit		1,341,754		1,516,550		1,435,074		1,188,987		1,088,932	1,1	26
			R&D expenses		(720,829)	-45.198%	(7	40	-40.150%		(690,592)	-39.875%		(548,735)	-37.588%		(509,779)	-36.570%		(580,554)
			Marketing expenses	(	38	60	-24.241%		(410,070)	-22.220%		(339,274)	-19.590%		(316,806)	-21.701%		(305,735)	-21.932%		(284,965)
			Administrative and IT expenses		(193,011)	-12.102%		(157,295)	-8.523%	(		14		64	-8.352%	(		122	-8.394%		(117,296)	-8.414%		(100,051)
				Operating income		41,310	-27.2%		208,216	-2		3.6%		260,559		-2		2.6%		200,908		156,122	-22.3%		161,110
			Other non-current operating income and expenses		(100,806)		(49,231)		(38,242)		(25,094)		(19,334)		(21,717)
	(59,496)		158,985		222,317		175,814		136,788		139,393
			Interest on borrowings		(18,121)	-1.136%		(20,920)	-1.134%		(17,732)	-1.0%		(12,081)	-0.8%		(8,429)		-0.60%		(5,322)
			Income from cash							4,189	0.4%		2,780	0.3%		1,823		0.2%		1,265	0.1%		989		556
			Net borrowing cost		(13,932)		(18,140)		(15,909)		(10,816)		(7,440)		(4,766)
			Result from foreign-exchange operations							(3,787)		(5,311)		(5,747)		(2,288)		(5,168)		1,159
			Other financial expenses								(1,474)		(23,941)		(56)	(5,		449		(3,666)		(1,764)
			Other financial income							132		36,515		8,312		2,348		2,548		6,083
			Net financial income		(19,061)		(10,877)		(13,400)		(16,205)		(13,726)		712
					Share in profit of associates		294	(		224		(339)
			Total income tax	(		45,685		(48,417)	(		69,241	(		51,457	(		29,654	(		53,094
			Consolidated net income				(124,242)								99,985						139,452								107,813				93,		408								87,011
			Net income attributable to non-controlling interests							1,382
			Net income attributable to owners of the parent company				(125,624)				93,408
			Ubisoft Entertainment SA and Subsidiaries
	Consolidated Balance Sheets
														2020													2019															2017
	ASSETS
	Goodwill							334,558	15.1%		290,721	12.0%		259,462	43.6%		180,735	70.2%		106,194	-18.3%		129,906
	Other intangible assets		1,115,283	26.3%		882,925	1		2.8%		782,402	6.2%		736,465	1		3.7%		647,602	1	3.2%		572,225
	Property, plant and equipment		174,393								9.0%		159,958	40.2%		114,116				7.3%		106,375	2		6.7%		83,946		80,983
	Right-of-use assets			229
	Investments in associates		(289)		(69)
	Non-current financial assets							13,710		8,660		106,895		5,478		4,339		4,162
	Deferred tax assets	169,		338		168,443		84,181		88,831		122,193		134,954
	Non-current assets		2,037,195		1,510,714	1,346,7		67		1,117,815		964,274		922,230
			Inventory		12,446	-61.0%		31,880	57.3%		20,264		-20.1%		25,359	30.9%	1							9,374		5.2%		18,425
	Trade receivables		307,060	-35.6%		476,641	9.4%		435,573					7.4%		405,557	–	3.3%		419,577	1655.3%		23,904
	Other receivables							127,456	-2	9.2%			179	–		13.8%		208,778	42.5%		146,467	4		5.0%		100,985	–		11.3%		113,855
	Current financial assets		453	146.2%		184	-97.8%		8,320	635.6%		1,131	-91.8%		13,780	180.1%		4,919
		Current tax		41,034		39,555		38,481	16.7%		32,967	-20.5%		41,464	234.9%		12,380
	Cash and cash equivalents		1,079,197		1,049,803	40.5%		746,939	-12.4%		852,699	84.8%		461,375	–	29.7%		656,661
	Current assets		1,567,646		1,778,045		1,458,355		1,464,180		1,056,555		830,144
	Total assets				3,604,841				3,288,759				2,805,122				2,581,995			2,020				1,752,374
	LIABILITIES AND EQUITY
	Share capital	8,		650		8,652		8,752		8,710		8,478
	Premiums		863,547		335,759		234,123		280,975		215,125		180,515
	Consolidated reserves		567,256		475,624		507,102		736,276		701,267		703,378
			Consolidated earnings		139,453
	Equity		1,314,553				920,018				889,330				1,133,816				1,018,510				979,382
	Non-controlling interests							7,190
	Total equity		1,321,743
	Provisions							3,091		2,469		3,074		4,246		8,888		7,497
	Employee benefit liabilities							15,769		14,382		10,289		9,079		6,618		5,430
	Long-term borrowings and other financial liabilities		1,176,198		890,366		933,629		640,705		277,383		275,739
	Deferred tax liabilities							109,531		127,902		96,047		72,773		47,648		48,944
	Other non-current liabilities							59,568
	Non-current liabilities		1,364,157		1,035,119		1,043,039		726,803		340,537		337,610
	Short-term borrowings and other financial liabilities		246,863		453,299		361,538		293,403		228,218		183,226
	Trade payables		139,208		188,787		176,613		178,283		206,246		94,919
	Other liabilities (includes deferred revenue)		517,730		664,618		321,935		219,818		213,807		149,614
	Current tax liabilities							15,140		26,918		12,667		29,872		13,511		7,623
	Current liabilities		918,941		1,333,622		872,753		721,376		661,782		435,382
	Total liabilities and equity		2,020,829
	Consolidated Cash Flow Statements
			Cash flows from operating activities
	(294)
	Net amortization and depreciation on PP&E		619,429		584,259		544,031		474,635		462,800		510,963
	Net provisions		2,264		22,039		4,052		(2,563)		3,201
	Cost of stock-based-compensation		53,772		54,686		39,558		36,836		12,918		9,609
	Gains/losses on disposals		682		261		308		104
	Other income and expenses calculated		10,650		(5,403)		8,578		(10,655)		24,335		(15,534)
	Tax expense		48,418
	608,240		803,951		805,444		658,269		623,668		648,408
	20,186		(31,326)		(5,381)		(11)		3,007
	Customers (trade receivables)		182,891		(18,031)		(61,544)		31,934		(402,877)		53,783	Operating cycle
	Other assets (excluding deferred tax assets)		58,194	105%		28,408	-135%		(81,048)	-570%		17,240	-156%		(30,588)		(23,503)	2,019	2,018	2,017	2,016	2,015
	Suppliers (trade payables)		(49,199)		3,181		15,243		(45,082)		116,466		(5,292)			(18)	(35)			(25)	(34)	(23)	(20)
	Other liabilities (excluding deferred tax liabilities)		(51,805)		6,389		49,380		24,871		61,635		34,034
	Deferred income and prepaid expenses		(96,525)		248,384		(3,089)
	Change in WCR linked to operating activities		63,742		237,005		(80,829)		23,582		(255,375)		62,029
	(71,624)		(68,582)		(33,460)		(36,140)		(27,586)		(56,362)
	Total cash flow generated by (used in) operting activities	600,		358		972,374		691,155		645,711		340,707		654,075
	Cash flows from investment activities
	Payments for internal and external developments		(651,202)		(587,699)		(521,290)		(496,588)		(489,464)		(421,683)
	Payments for other intangible assets and PP&E		(104,909)		(74,402)		(59,366)		(62,916)		(42,499)		(56,244)
	Proceeds from the disposal of intangible assets and PP&E		603
	Payments for the acquisition of financial assets		(215,697)		(43,816)		(31,493)		(44,373)		(34,391)		(23,709)
	Security deposit CACIB						100,000					(100,000)
	Refund of loans and other financial assets		210,498		42,057		29,790		43,322		34,115		23,373
	Changes in scope		(143,735)		(84,327)		(77,589)		(105,642)		(3,188)
	Cash generated by (used in) investing activities		(904,866)		(648,162)		(759,928)		(665,594)		(531,814)		(481,329)
	Cash flow from financing activities
	New finance leases contracted		5,054		1,416		10,142
	New borrowings		935,241		604,985		893,596		669,165		234,540		622,185
	Accrued interest		(1,324)		1,002
	Refund of borrowings in relation to leases							(35,577)		(1,300)		(1,672)		(898)		(891)		(291)
	Repayment of borrowings		(584,908)		(572,177)		(487,677)		(214,663)		(230,216)		(466,578)
	Funds received from shareholders in capital increases		81,466		131,910		48,951		9,465		21,924		18,054
	Sales/purchases of own shares		35,348		(201,899)		(411,498)		(67,844)		(77,272)
	Associated current accounts		258		(260)
	Cash generated by (used in) financing activities		431,545		(39,785)		47,756		396,623		(51,643)		183,989
	Net change in cash and cash equivalents		127,037		284,427		(21,017)		376,740		(242,750)		356,735
	Cash and cash equivalents at the beginning of the period				878,612				583,354				632,314				255,688				505,215		115,610
	Foreign exchange losses/gains		(18,722)		10,831		(27,943)		(114)		(6,777)		32,870
	Cash and cash equivalents at the end of the period			986,927
Vertical
					100%
-15.87%	-17.83%	-17.14%	-18.56%	-21.88%	-23.03%
84.13%	82.17%	82.86%	81.44%	78.12%	76.97%
-45.20%	-4	0.15%	-39.87%	-37.59%	-36.57%	-39.66%
-24.24%	-22.22%	-19.59%	-21.70%	-21.93%	-19.47%
-12.10%	-8.52%	-8.35%	-8.39%	-8.41%	-6.84%
		Operating income from continuing operations	2.59%	11.28%	15.04%	13.76%	1	1.20%	11.01%
-6.32%	-2.67%	-2.21%	-1.72%	-1.39%	-1.48%
-3.73%	8.61%	12.84%	12.04%	9.81%	9.52%
-1.14%	–					1.13%	-1.02%	-0.83%	-0.36%
0.26%	0.11%		0.09%	0.07%	0.04%
-0.87%		-0.98%	-0.92%	-0.74%	-0.53%		-0.33%
-0.24%	-0.	29%	–	0.16%		-0.37%	0.08%
-0.09%	-1.				30%	–								0.00%	-0.26%	-0.12%
0.01%	1.98%	0.48%	0.18%	0.42%
-1.20%	-0.59%	–	0.77%	-1.11%	0.05%
0.02%	-0.01%	-0.02%
-2.86%	-2.62%	-4.00%	-3.52%	-2.13%	-3.63%
-7.79%		5.42%		8.05%		7.39%		6.70%		5.94%
-7.88%
	-13.6%		6.6%			4.7%	-4.8%
-23.1%	10.8%	9.6%	–		11.2%	-9.5%
-1	1.5%	5.7%	20.7%		-3.4%
–				2.7%	25.9%	7.6%	-12.2%
	-5.7%		20.9%
22.7%	8.7%		1	8.0%		4.5%	17.2%
-80.2%			28.7%	-3.1%
	104.8%		52.4%		29.8%	–			11.0%
-137.4%	–	28.5%	26.5%	-1.9%
-13.4%	46.8%	43.3%	58.4%
50.7%	52.5%	44.1%	27.9%	77.9%
-23.2%	1	4.0%	47.1%	4		5.4%		56.1%
-28.7%	-7.6%	151.2%	-55.7%	-545.9%
-93.8%	42651.8%	-99.0%	48.6%	107.8%
-99.6%	339.3%	2	54.0%	-7.8%	-5		8.1%
75.2%	-18.8%	-17.3%	18.1%	-2027.8%
-10					0.0%	-231.3%	-3	3.9%
-5.6%	-30.1%	34.6%	73.5%	-44.1%
-224.3%		-28.3%		29.3%		15.4%
-225.6%
Profitability:
Gross margin		84.1%		82.2%		82.9%		81.4%		78.1%		77.0%
Operating margin			15.0%
Net margin		-7.9%
Assets turnover	46.3%	60.6%	64.3%	63.4%	73.9%	83.5%
Return on Assets	-3.6%

&P

Base Assumption

2016 2017 2018 2019 2020

-4.8% 4.7% 18.6% 6.6% -13.6%

15.0% 9.0% 9.0% 9.0% 9.0%

2016 2017 2018 2019 2020

-21.9%

-17.8%

7.3% 3.6% 7.1% 20.9% -5.7%

29.8% 52.4% 28.7% 104.8%

2021 2022 2023 2024 2025

COGS 3.2% 1.9% 1.9% 1.9% 1.9%

SGA 4.5% 2.7% 2.7% 2.7% 2.7%
Other non-current op. 0.0% 0.0% 0.0% 0.0% 0.0%

1.13% 1.13% 1.13% 1.13% 1.13%

(by year)

2016 2017 2018 2019 2020

2021 2022 2023 2024 2025

3.0% 3.0% 3.0% 3.0%

2016 2017 2018 2019 2020

2021 2022 2023 2024 2025

2016 2017 2018 2019 2020

2021 2022 2023 2024 2025

ratio

2016 2017 2018 2019 2020

2021 2022 2023 2024 2025

Equity 2016 2017 2018 2019 2020

Assumption:

Revenue historical

Will use this rate to compute projected A/R

Revenue growth

2021

2022

2023

2024

2025

Expenses histo

COGS

-18.6%

-17.1%

-15.9%

% of sales

SGA

This is the change

Other non-current op.

-11.0%

Expenses growth

COGS is 21% of the increase of revenue.Will use this rate to compute projected inventory

This will not have any incease as there is any acquisitions

Interest borrowing

We assume to have the same rate of sales as the last few years

Tax rate

Hist.

-2.1%

-3.5%

-4.0%

-2.6%

-2.9%

grow.

3.0%

Historically the company had a rate rage of 2-4%, so we are assuming that the company will have a rate of 3% as an average of sales!

Dividends

Operating assets

Operating liability

Debt

Forecast

Consolidated Income Statements
For the Years Ended March 31,

(In thousands of euros)

Forecast

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Sales

1,731,894

1,594,831

Cost of sales (337,073)

(270,887) (296,820)

Gross profit

1,088,932 1,188,987 1,435,074 1,516,550 1,341,754

R&D expenses (580,554) (509,779) (548,735) (690,592)

(720,829)

Marketing expenses (284,965) (305,735) (316,806) (339,274) (410,070)

Administrative and IT expenses (100,051) (117,296)

(157,295) (193,011)

Operating income from continuing operations 161,110 156,122 200,908 260,559 208,216 41,310

Other non-current operating income and expenses (21,717) (19,334) (25,094) (38,242) (49,231) (100,806) 0 0 0 0 0
Operating income 139,393 136,788 175,814 222,317 158,985 (59,496) 299,031 343,885 374,836 404,822 433,160
Interest on borrowings (5,322) (8,429) (12,081) (17,732) (20,920) (18,121)

Income from cash 556 989 1,265 1,823 2,780 4,189 4,189 4,189 4,189 4,189 4,189
Net borrowing cost (4,766) (7,440) (10,816) (15,909) (18,140) (13,932)

Result from foreign-exchange operations 1,159 (5,168) (2,288) (5,747) (5,311) (3,787) (3,787) (3,787) (3,787) (3,787) (3,787)
Other financial expenses (1,764) (3,666)

(56) (23,941) (1,474) (1,474) (1,474) (1,474) (1,474) (1,474)

Other financial income 6,083 2,548 2,348 8,312 36,515 132 132 132 132 132 132
Net financial income 712 (13,726) (16,205) (13,400) (10,877) (19,061)

Share in profit of associates 0 0 (339)

294 0 0 0 0 0 0

Total income tax

(48,417)

)

)

)

)

)

Consolidated net income 87,011 93,408 107,813 139,452 99,985 (124,242)

Net income attributable to non-controlling interests 0 0 0 0 0 1,382 1,382 1,382 1,382 1,382 1,382
Net income attributable to owners of the parent company 87,011 93,408 107,813 139,452 99,985 (125,624)

Ubisoft Entertainment SA and Subsidiaries
Consolidated Balance Sheets
March 31,

(In thousands of euros) Forecast

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
ASSETS

Goodwill 129,906 106,194 180,735 259,462 290,721 334,558 334,558 334,558 334,558 334,558 334,558
Other intangible assets 572,225 647,602 736,465 782,402 882,925 1,115,283

Property, plant and equipment 80,983 83,946 106,375 114,116 159,958 174,393

174393 174393 174393 174393

Right-of-use assets 0 0 0 0 0

229,906 229,906 229,906 229,906 229,906

Investments in associates 0 0 (69) (289) 7 7 7 7 7 7 7
Non-current financial assets 4,162 4,339 5,478 106,895 8,660 13,710 13,710 13,710 13,710 13,710 13,710
Deferred tax assets 134,954 122,193 88,831 84,181 168,443

169,338 169,338 169,338 169,338 169,338

Non-current assets 922,230 964,274 1,117,815

1,510,714 2,037,195

Inventory 18,425

25,359 20,264 31,880 12,446

Trade receivables 23,904 419,577 405,557 435,573 476,641 307,060

Other receivables 113,855 100,985 146,467 208,778

127,456 127,456 127,456 127,456 127,456 127,456 Along with revenue

Current financial assets 4,919 13,780 1,131 8,320 184 453

543 543 543 543

12,380 41,464 32,967 38,481 39,555 41,034

41034 41034 41034 41034

Cash and cash equivalents 656,661 461,375 852,699 746,939 1,049,803 1,079,197

Current assets 830,144 1,056,555 1,464,180 1,458,355 1,778,045 1,567,646

Total assets 1,752,374 2,020,829 2,581,995 2,805,122 3,288,759 3,604,841

LIABILITIES AND EQUITY

Share capital 8,478 8,710 8,752 8,652

9,374 9,374 9,374 9,374 9,374 9,374

Premiums 180,515 215,125 280,975 234,123 335,759 863,547

Consolidated reserves 703,378 701,267 736,276 507,102 475,624 567,256

Consolidated earnings 87,011 93,408 107,813 139,453 99,985 (125,624) 184,448

979,382 1,018,510 1,133,816 889,330 920,018 1,314,553

Non-controlling interests 0 0 0 0 0 7,190 7,190 7,190 7,190 7,190 7,190
Total equity 979,382 1,018,510 1,133,816 889,330 920,018 1,321,743

Provisions 7,497 8,888 4,246 3,074 2,469 3,091 3,091 3,091 3,091 3,091 3,091
Employee benefit liabilities 5,430 6,618 9,079 10,289 14,382 15,769 15,769 15,769 15,769 15,769 15,769
Long-term borrowings and other financial liabilities 275,739 277,383 640,705 933,629 890,366 1,176,198

Deferred tax liabilities 48,944 47,648 72,773 96,047 127,902 109,531 109,531 109,531 109,531 109,531 109,531
Other non-current liabilities 0 0 0 0 0 59,568 59,568 59,568 59,568 59,568 59,568
Non-current liabilities 337,610 340,537 726,803 1,043,039 1,035,119 1,364,157

Short-term borrowings and other financial liabilities 183,226 228,218 293,403 361,538 453,299 246,863

100,000 100,000

Trade payables 94,919 206,246 178,283 176,613 188,787 139,208

Other liabilities (includes deferred revenue) 149,614 213,807 219,818 321,935 664,618 517,730

Current tax liabilities 7,623 13,511 29,872 12,667 26,918 15,140 15,140 15,140 15,140 15,140 15,140
Current liabilities 435,382 661,782 721,376 872,753 1,333,622 918,941

Total liabilities and equity 1,752,374 2,020,829 2,581,995 2,805,122 3,288,759 3,604,841

Ubisoft Entertainment SA and Subsidiaries
Consolidated Cash Flow Statements
For the Years Ended March 31,
(In thousands of euros) Forecast
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Cash flows from operating activities

Consolidated earnings 87,011 93,408 107,813 139,452 99,985 (124,242) 184,448 215,465 235,635 257,869 276,263
Share in profit of associates 0 0 338 224 (294) 0 0 0 0 0 0
Net amortization and depreciation on PP&E 510,963 462,800 474,635 544,031 584,259 619,429

Net provisions 3,201 449 (2,563) 4,052 22,039 2,264 0 0 0 0 0
Cost of stock-based-compensation 9,609 12,918 36,836 39,558 54,686 53,772

Gains/losses on disposals 64 104 408 308 261 682 0 0 0 0 0
Other income and expenses calculated (15,534) 24,335 (10,655) 8,578 (5,403) 10,650 0 0 0 0 0
Tax expense 53,094 29,654 51,457 69,241 48,418 45,685 87,449 102,045 111,538 122,001 130,657
Cash flows from operating activities 648,408 623,668 658,269 805,444 803,951 608,240

Inventory 3,007 (11) (5,381) 229 (31,326) 20,186

(1,474)

Customers (trade receivables) 53,783 (402,877) 31,934 (61,544) (18,031) 182,891

Other assets (excluding deferred tax assets) (23,503) (30,588) 17,240 (81,048) 28,408 58,194 0 0 0 0 0
Suppliers (trade payables) (5,292) 116,466 (45,082) 15,243 3,181 (49,199)

Other liabilities (excluding deferred tax liabilities) 34,034 61,635 24,871 49,380 6,389 (51,805) 0 0 0 0 0
Deferred income and prepaid expenses 0 0 0 (3,089) 248,384 (96,525)

35,572

Change in WCR linked to operating activities 62,029 (255,375) 23,582 (80,829) 237,005 63,742

Current tax (56,362) (27,586) (36,140) (33,460) (68,582) (71,624)

Total cash flow generated by (used in) operting activities 654,075 340,707 645,711 691,155 972,374

Cash flows from investment activities

Payments for internal and external developments (421,683) (489,464) (496,588) (521,290) (587,699) (651,202)

Payments for other intangible assets and PP&E (56,244) (42,499) (62,916) (59,366) (74,402) (104,909)

Proceeds from the disposal of intangible assets and PP&E 122 67 603 20 25 179 0 0 0 0 0
Payments for the acquisition of financial assets (23,709) (34,391) (44,373) (31,493) (43,816) (215,697) 0 0 0 0 0
Security deposit CACIB 0 0 0 (100,000) 100,000 0 0 0 0 0 0
Refund of loans and other financial assets 23,373 34,115 43,322 29,790 42,057 210,498 0 0 0 0 0
Changes in scope (3,188) 358 (105,642) (77,589) (84,327) (143,735) 0 0 0 0 0
Cash generated by (used in) investing activities (481,329) (531,814) (665,594) (759,928) (648,162) (904,866)

Cash flow from financing activities

New finance leases contracted 10,142 0 1,416 5,054 20 0 0 0 0 0 0
New borrowings 622,185 234,540 669,165 893,596 604,985 935,241 100,000 100,000

Accrued interest 87 14 (18) 1,002 (1,324) (25) 0 0 0 0 0
Refund of borrowings in relation to leases (291) (891) (898) (1,672) (1,300) (35,577) (35,577) (35,577) (35,577) (35,577) (35,577)
Repayment of borrowings (466,578) (230,216) (214,663) (487,677) (572,177) (584,908)

(100,000)

Funds received from shareholders in capital increases 18,054 21,924 9,465 48,951 131,910 81,466

50,000 50,000 50,000 50,000

Sales/purchases of own shares 650 (77,272) (67,844) (411,498) (201,899) 35,348 (100,000) 0

(100,000)

Associated current accounts (260) 258 0 0 0 0
Cash generated by (used in) financing activities 183,989 (51,643) 396,623 47,756 (39,785) 431,545

(185,577)

Net change in cash and cash equivalents 356,735 (242,750) 376,740 (21,017) 284,427 127,037

Cash and cash equivalents at the beginning of the period 115,610 505,215 255,688 632,314 583,354 878,612 986,927

Foreign exchange losses/gains 32,870 (6,777) (114) (27,943) 10,831 (18,722) 0 0 0 0 0
Cash and cash equivalents at the end of the period 505,215 255,688 632,314 583,354 878,612 986,927 919,660 1,126,531 1,151,644 1,199,279

Tax rate 29% 30% 30% 30% 30%

8.0% 9.0% 11.0% 9.0% 9.0%

Tax rate

1.20% Debt 1,423,061

1.5%

0.77%

5.60%

2015 2016 2018 2017
77.0% 78.1% 81.4% 82.9% 82.2% 84.1%
11.0% 11.2% 13.8% 15.0% 11.3% 2.6%
5.9% 6.7% 7.4% 8.1% 5.4% -7.9%

54.0% 56.1%

4.0% 3.9% 3.7% 4.4% 3.0% -3.4%

for the Years Ended March 31,
Actual
1,463,753	1,393,997	1,459,874	1,845,522	1,993,539	2,292,570	2,498,901	2,698,813	2,887,730
(305,065)	(328,972)	(253,077)	(338,902)	(389,737)	(424,813)	(458,798)	(490,914)
1,126,680	1,654,637	1,902,833	2,074,088	2,240,015	2,396,816
(740,969)	(777,480)	(894,102)	(974,571)	(1,052,537)	(1,126,215)	As the company stated that in order for them to develop exceptional video games, they are using the most recent technological advances.This means that Ubisoft will continue spending on R&D as they expected to have a stable level of sales.
(386,604)	(418,643)	(481,440)	(524,769)	(566,751)	(606,423)	since the company continued with R&D, they will keep supporting of the Group’s premium games
(122,538)	(144,649)	(159,483)	(183,406)	(199,912)	(215,905)	(231,018)
	299,031		343,885		374,836		404,822		433,160
(24,812)	(24,053)	(25,341)	(22,630)	(23,918)
(20,623)	(19,864)	(21,152)	(18,441)	(19,729)
(5,449)	this both wont have any increase of change since there is no acuisition or gain or loss from foreign exchange
(25,752)	(24,993)	(26,281)	(23,570)	(24,858)
(224)
(53,094)	(29,654)	(51,457)	(69,241)	(45,685)	(	87,449	(	102,045	(	111,538	(	122,001	(	130,657
185,830	216,847	237,017	259,251	277,645
		184,448		215,465		235,635		257,869		276,263
1,225,437	1,341,099	1,462,544	1,490,061	1,723,954
				174393
					229,906
					169,338
1,346,767	2,147,349	2,263,011	2,384,456	2,411,973	2,645,866
19,374	15,558	17,892	19,502	21,062	22,536	along with COGS
383,825	441,399	481,125	519,615	555,988		Along with revenue
179,982
				543
Current tax assets					41034
1,011,930	1,218,801	1,243,914	1,291,549	1,256,919
1,580,346	1,847,125	1,913,574	2,001,259	2,004,476
3,727,695	4,110,136	4,298,030	4,413,232	4,650,342
8,650
980,762	1,108,059	1,242,313	1,383,307	1,530,671
314,632	526,070	441,545	577,180	435,049
215465	235635	257869	276263
Equity attributable to owners of the parent company	1,489,216	1,858,968	1,928,867	2,227,730	2,251,357
1,496,406	1,866,158	1,936,057	2,234,920	2,258,547
1,138,221	702,644	467,067	1,031,490	1,095,913
1,326,180	890,603	655,026	1,219,449	1,283,872
102,400	500,000	800,000
174,010	200,112	218,122	2	35,572	252,062
586,469	638,023	673,595	708,061	740,631
878,019	1,353,275	1,706,857	1,058,773	1,107,833
3,700,605	4,110,036	4,297,940	4,513,142	4,650,252
683,762	717,950	753,848	791,540	831,117
67,215	77,297	84,254	90,994	97,364
1,022,874	1,112,757	1,185,275	1,262,404	1,335,401
(3,112)	(2,334)	(1,610)	(1,560)
(76,765)	(57,574)	(39,726)	(38,490)	(36,373)
34,802	26,102	18,010	17,450	16,490
68,739	51,554	34,466	32,570
23,664	17,748	12,246	11,866	11,213
(87,449)	(102,045)	(111,538)	(122,001)	(130,657)
600,358	959,089	1,028,460	1,085,983	1,152,269	1,215,957
(683,762)	(717,950)	(753,848)	(791,540)	(831,117)
(110,154)	(115,662)	(121,445)	(127,517)	(133,893)
(793,916)	(833,612)	(875,293)	(919,057)	(965,010)
600,000	700,000	200,000
(246,863)	(102,400)	(500,000)	(800,000)
				50,000
(300,000)	(400,000)
(232,440)	12,023		(185,577)	(285,577)
(67,267)	206,871	25,113	47,635	(34,630)
	919,660		1,126,531		1,151,644		1,199,279
1,164,649
Change in operating assets	$190,121	$175,570	$162,781	$67,567	$271,740
Change in operating liabilities	$27,817	$526,810	$389,154	-$613,618	$81,630
Net investment	$162,304	-$351,240	-$226,373	$681,185	$190,110
EBIT	$299,031	$343,885	$374,836	$404,822	$433,160
NOPAT	$212,312	$240,720	$262,385	$283,375	$303,212
Free Cash Flow to Firm	$50,008	$591,960	$488,758	-$397,810	$113,102
Reinvestment Rate	76.0%	-146.0%	-86.0%	240.0%	63.0%
Return on Capital
Valuation
PV of 2019 – 2023	$821,918
Terminal Value	$38,852,929
Cash and cash equivalents (existing cash)	$1,079,197
PV of Debt	-$	1,423,061
Value of equity	$39,330,984
Additional computations and assumptions
30.00%	Equity (market value)	8,471,408
Terminal growth rate. (pg223,2020)
Percent of equity	8	5.60%
Risk free rate	0.67%	Percent of debt	1	4.4%
Beta	1.77%
Risk premium	5.65%	WACC
CAPM (cost of equity)
Number of shares (million)	120,951
Pretax cost of debt	8.10%	Stock price	70.04
After tax cost of debt
67.5%	57.8%	49.7%	43.5%