UBISOFT® REPORTS FULL-YEAR 2012-13 SALES AND EARNINGS FIGURES

Ubisoft^® REPORTS FULL-year 2012-13
SALES AND EARNINGS FIGURES

• Performance at the upper end of the recently-raised target ranges 

• Annual sales up 18% to €1,256 million 

• Non-IFRS operating income up 79% to €100 million  

• Initial targets for fiscal 2013-14 

Paris, May 15, 2013 - Today, Ubisoft released its sales and earnings figures for the fiscal year ended March 31, 2013.

Ubisoft now presents non-IFRS information in its earnings releases as Group Management considers that "Non-IFRS operating income" and "Non-IFRS net income" - which are measures that are not prepared strictly in accordance with IFRS - are relevant indicators of the Group's operating and financial performance. Management uses them to run the Group's business as they are the best reflection of its recurring performance and exclude the majority of non-operating and non-recurring items. "Non-IFRS operating income", "Non-IFRS net income" and "Non-IFRS earnings per share" are comparable to the following three previously-used indicators: "Current operating income before stock-based compensation", "Net Income before non-recurring items and stock-based compensation" and "Earnings per share before non-recurring items and stock-based compensation". A reconciliation between the IFRS and non-IFRS measures is provided in the appendices to this press release.

Non-IFRS income statement and key financial data

* Including royalties but excluding future commitments.

Commenting on these results, Yves Guillemot, Chief Executive Officer, stated "In 2012-13 our financial performance outstripped the targets that we had announced a year ago, notably with non-IFRS operating income up 79% and higher-than-expected cash generation. The expertise and talent of our teams enabled Ubisoft to manage the year's difficult market conditions and the drop in the casual segment remarkably well. In addition, the success of Far Cry 3 confirmed our strong comeback in the major segment of shooter games." Guillemot continued "We began fiscal 2012-13 with two major franchises: Assassin's Creed and Just Dance. Twelve months later, we have substantially extended our reach by establishing Far Cry as another major franchise, building upon the great potential for our newest brand, Watch Dogs, and making our online/digital segment an increasingly significant part of our business. The steady rise in our operating and financial performance during the last three years is the direct result of the long-term investments we have made, with the continued development of our creative capacity and the bolstering of our expertise in online activities."

Sales

Full-year sales for 2012-13 totaled €1,256 million, up 18.4% (or 13.5% at constant exchange rates) compared with the €1,061 million recorded for 2011-12.

Sales for the fourth quarter of 2012-13 came to €175 million versus €161 million in the corresponding prior-year period, representing an increase of 8.7% (or 9.9% at constant exchange rates). This fourth-quarter sales figure is at the upper end of the target range of €159 million to €179 million issued when Ubisoft released its sales figures for the third quarter of 2012-13.

Ubisoft's sales performance in fiscal 2012-13 reflects the following:

• €928 million in revenue generated from games for core gamers, up 60% year on year confirming Ubisoft's strong comeback in this category. The increase was fueled by record-breaking sales for Assassin's Creed^® 3 (more than 12.5 million sell-in and digital units) and Far Cry^® 3 (6 million sell-in and digital units), as well as by sustained revenues of the free-to-play game The Settlers^® Online. 

• €328 million in revenue from casual games, representing a year-on-year contraction of 32% and accounting for 26% of total sales (versus 46% in 2011-12). In this context, Just Dance^® 4 confirmed its strength and status as one of the industry's major franchises with 8.5 million units sold in and a revenue decline of just 14% in value terms. 

Online/digital sales leaped 86% to €148 million (included in the core and casual games figures above), which represented 11.7% of the Group's total sales.

In 2012-13, back-catalog sales dipped slightly by 4% to €206 million, thanks to sharp growth in online and digital back-catalog sales that partly offset the decrease for the retail back catalog.

Main income statement items

Gross profit totaled €913.5 million (72.7% of sales) in 2012-13, up significantly on the €718.1 million (67.7% of sales) recorded for 2011-12. Gross margin has risen steadily since 2010-11, with the increase during the past 12 months driven by higher average net selling prices for core gamer titles and Just Dance^® 4, and by a sharp rise in high margins online sales.

Non-IFRS operating income came to €100.3 million versus €56.0 million in 2011-12. The 2012-13 figure is higher than the top end of the guidance announced a year ago of between €70 million and €90 million, and is at the upper end of the recently-raised target of between €90 million and €100 million. This performance reflects a combination of the following factors:

• A €195.4 million increase in gross profit. 

• A €79.8 million rise in R&D expenses, which totaled €428.2 million (representing 34.1% of sales), versus €348.4 million (32.8% of sales) in 2011-12. 

• A €71.3 million increase in total SG&A expenses to €385.0 million (30.6% of sales) from €313.7 million (29.6% of sales) in 2011-12: 

• Variable marketing expenses represented 18.2% of sales (€228.7 million) compared with 16.7% (€177.1 million) in 2011-12. The increase was notably due to the fact that these expenses are always higher at the end of a console cycle.  

• Structure costs corresponded to 12.4% of sales (€156.3 million) compared with 12.9% (€136.6 million) in 2011-12.  

Non-IFRS net income totaled €69.2 million in 2012-13, representing non-IFRS diluted earnings per share of €0.71, versus €37.4 million and €0.39 respectively in 2011-12.

IFRS net income stood at €64.8 million, representing IFRS diluted earnings per share of €0.67, compared with €37.3 million and €0.39 respectively in 2011-12.

Main non-IFRS cash flow statement and balance sheet items  

Non-IFRS Cash flows from operating activities came to €28.4 million compared with €8.2 million in 2011-12. This reflects a positive €58.9 million in non-IFRS cash flow from operations (versus a negative €27.0 million in 2011-12) and a €30.5 million increase in non-IFRS working capital requirement (against a €35.1 million reduction in 2011-12).

At March 31, 2013 Ubisoft had a net cash position of €104.6 million versus €84.6 million at March 31, 2012. This year-on-year change is primarily attributable to:

• The above-mentioned €28.4 million non-IFRS cash inflow from operating activities. 

• €25.0 million in purchases of tangible and intangible assets.   

• €4.6 million in cash outflows for business acquisitions.  

• A €5.6 million inflow from capital increases.  

• €10.7 million from sales of Gameloft shares. 

• A €4.8 million positive currency effect. 

Outlook

Full-year 2013-14
Yves Guillemot stated, "Assassin's Creed and Just Dance have joined the prestigious club of the 20 best-selling brands for the current generation of consoles, ranking fifth and twelfth respectively. This performance was achieved thanks to high quality levels and regular releases - two key characteristics found in each of the highest-performing brands in this console cycle. Our franchises are underpinned by recognized creative know-how and premier development capacity. With more than 7,000 developers, Ubisoft has the necessary caliber to offer its fans exceptionally rich and immersive gaming experiences on a regular basis."

Guillemot concluded, "A new console cycle is beginning and it will offer players an unrivalled experience. They will see a major leap in quality with an extraordinary level of immersion as well as the incorporation of all of the innovations developed in recent years in online and social games, giving players the opportunity to create their own experiences and share them within their communities. In order to reap the full benefit of the strong growth expected from the launch of these new consoles, we are integrating into our next blockbusters all of the expertise we have built up over recent years through our online games such as Settlers Online, Trackmania, Howrse and Trials Evolution, as well as our online services platform Uplay which offers us a strategic link with players. Our experience in connected gaming, the quality of our brands and our ability to regularly release major titles, will be vital strengths for capturing new market share and will serve as key growth drivers for the coming years."

The Company's initial targets for full-year 2013-14 are sales of between €1,420 million and €1,450 million, and non-IFRS operating income of between €110 million and €125 million.

• Revenue generated from games for core gamers is expected to rise strongly, with notably the launch of five major titles versus three last year. This line-up includes Assassin's Creed^® 4 Black Flag^TM, Tom Clancy's Splinter Cell^® Blacklist^TM, Watch Dogs^TM, and two titles that have not yet been announced, including one new creation. 

• Revenue generated from casual games is expected to represent less than 20% of total sales. 

• Online/digital sales are set to see sharp growth, fueled by digital distribution and the launch of new free-to-play titles, including The Mighty Quest for Epic Loot^TM, Anno^® Online and Might & Magic^® Heroes^® Online. 

Sales for the first quarter of 2013-14
The first quarter of 2013-14 will see the following main launches:

• Call of Juarez^® The Gunslinger and Far Cry^® 3 Blood Dragon through digital distribution on PC, PSN and XBLA 

• Trackmania(TM) 2 Stadium through digital distribution on PC 

The Group expects first-quarter 2013-14 sales to amount to approximately €70 million, representing a contraction of 47% compared with the first quarter of 2012-13 - a period that saw the release of Tom Clancy's Ghost Recon Future Soldier^®.

Recent significant events

Market share: In the first three months of calendar 2013, Ubisoft was the number 4 independent publisher in the United States, with 7.7% market share (compared to number 3 and 7.1% one year earlier) and number 3 in Europe with 10.2% market share (compared to number 3 and 8.2%).

Acquisition of the remaining stake in Related Designs: Ubisoft previously owned 29.95% of Related Designs and has acquired the remaining 70.05% in a cash transaction. As part of Ubisoft, Related Designs' experienced 65-person staff will continue development of the browser-based free-to-play MMO game Might & Magic® Heroes® Online, and will work on future titles in partnership with Blue Byte, Ubisoft's studio based in Düsseldorf.

Bond placement: Ubisoft has placed €40 million worth of bonds with a five-year term and a 3.038% coupon.

Contact

Non-IFRS financial information

Ubisoft now presents non-IFRS information in its earnings releases as Group Management considers that "Non-IFRS operating income" and "Non-IFRS net income" - which are measures that are not prepared strictly in accordance with IFRS - are relevant indicators of the Group's operating and financial performance. Management uses them to run the Group's business as they are the best reflection of its recurring performance and exclude the majority of non-operating and non-recurring items. "Non-IFRS operating income", "Non-IFRS net income" and "Non-IFRS earnings per share" are comparable to the following three previously-used indicators: "Current operating income before stock-based compensation", "Net Income before non-recurring items and stock-based compensation" and "Earnings per share before non-recurring items and stock-based compensation". A reconciliation between the IFRS and non-IFRS measures is provided in the appendices to this press release.

Disclaimer
This statement may contain estimated financial data, information on future projects and transactions and future business results/performance. Such forward-looking data are provided for estimation purposes only. They are subject to market risks and uncertainties and may vary significantly compared with the actual results that will be published. The estimated financial data have been presented to the Board of Directors and have not been audited by the Statutory Auditors. (Additional information is specified in the most recent Ubisoft Registration Document filed on July 02, 2012 with the French Financial Markets Authority (l'Autorité des Marchés Financiers)).

About Ubisoft:

Ubisoft is a leading producer, publisher and distributor of interactive entertainment products worldwide and has grown considerably through a strong and diversified line-up of products and partnerships. Ubisoft has offices in 26 countries and has sales in more than 55 countries around the globe. It is committed to delivering high-quality, cutting-edge video game titles to consumers. For the 2012-13 fiscal year Ubisoft generated sales of €1,256 million. To learn more, please visit: www.ubisoftgroup.com.

© 2012 Ubisoft Entertainment. All rights Reserved. Just Dance, Watch Dogs, Uplay Logo, Tom Clancy, Ghost Recon, Ghost Recon Future Soldier, Splinter Cell, Assassin's Creed, Far Cry, , Might & Magic, Heroes, The Mighty Quest for Epic Loot, Ubisoft and the Ubisoft logo are trademarks of Ubisoft Entertainment in the US and/or other countries. countries. Anno and The Settlers are trademarks of Ubisoft GmbH in the U.S. and/or other countries. Trackmania logo is a trademark of Nadeo in the US and/or other countries. Nadeo is a Ubisoft Entertainment company. Howrse is a trademark of Owlient in the U.S. and/or other countries. Owlient is a Ubisoft Entertainment company. Trials Evolution is a trademark of Redlynx in the US and/or other countries. Redlynx is a Ubisoft Entertainment company.
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APPENDICES

The Statutory Auditors have completed their audit of the consolidated financial statements. They will issue their audit report after verifying the Group's annual financial report.

Consolidated income statement (IFRS, audited)

Reconciliation of IFRS Net income and non-IFRS Net income

Consolidated balance sheet (IFRS, audited)

Non-IFRS consolidated cash flow statement (Unaudited)

Consolidated cash flow statement (IFRS, audited)