Ubisoft Entertainment SA and Subsidiaries
Consolidated Income Statements
For the Years Ended March 31,
(In thousands of euros)		Actual
		2019
Sales		1,845,522
Cost of sales		(328,972)
Gross profit		1,516,550
Cost and Expenses
R&D expenses		(740,969)
Marketing expenses		(410,070)
Administrative and IT expenses		(157,295)
Operating income from continuing operations		208,216
Other non-current operating income and expenses		(49,231)
Operating income		158,985
Interest on borrowings		(20,920)
Income from cash		2,780
Net borrowing cost		(18,140)
Result from foreign-exchange operations		(5,311)
Other financial expenses		(23,941)
Other financial income		36,515
Net financial income		(10,877)
Income pre-tax		148,108
Share in profit of associates		294
Total income tax		(48,417)
Income for the period		99,985
Ubisoft Entertainment SA and Subsidiaries
Consolidated Balance Sheets
March 31,
(In thousands of euros)
		2019
ASSETS
Goodwill		290,721
Other intangible assets		882,925
Property, plant and equipment		159,958
Investments in associates		7
Non-current financial assets		8,660
Deferred tax assets		168,443
Non-current assets		1,510,714
Inventory		31,880
Trade receivables		476,641
Other receivables		179,982
Current financial assets		184
Current tax assets		39,555
Cash and cash equivalents		1,049,803
Current assets		1,778,045
Total assets		3,288,759
LIABILITIES AND EQUITY
Share capital		8,650
Premiums		335,759
Consolidated reserves		475,624
Consolidated earnings		99,985
Total equity		920,018
Provisions		2,469
Employee benefits		14,382
Non-current financial liabilities		890,366
Deferred tax liabilities		127,902
Non-current liabilities		1,035,119
Current financial liabilities		453,299
Trade payables		188,787
Other liabilities		664,618
Current tax liabilities		26,918
Current liabilities		1,333,622
Total liabilities and equity		3,288,759
		0
Ubisoft Entertainment SA and Subsidiaries
Consolidated Cash Flow Statements
For the Years Ended March 31,
(In thousands of euros)
		2019
Cash flows from operating activities
Consolidated earnings		99,985
Share in profit of associates		(294)
Net amortization and depreciation on PP&E		584,259
Net provisions		22,039
Cost of stock-based-compensation		54,686
Gains/losses on disposals		261
Other income and expenses calculated		(5,403)
Tax expense		48,418
Cash flows from operating activities		803,951
Inventory		(31,326)
Customers (trade receivables)		(18,031)
Other assets (excluding deferred tax assets)		28,408
Suppliers (trade payables)		3,181
Other liabilities (excluding deferred tax liabilities)		6,389
Deferred income and prepaid expenses		248,384
Change in WCR linked to operating activities		237,005
Current tax		(68,582)
Total cash flow generated by (used in) operting activities		972,374
Cash flows from investment activities
Payments for internal and external developments		(587,699)
Payments for other intangible assets and PP&E		(74,402)
Proceeds from the disposal of intangible assets andPP&E		25
Payments for the acquisition of financial assets		(43,816)
Proceeds from Gameloft disposals		0
Security deposit CACIB		100,000
Refund of loans and other financial assets		42,057
Changes in scope		(84,327)
Cash generated by (used in) investing activities		(648,162)
Cash flow from financing activities
New finance leases contracted		20
New borrowings		604,985
Accrued interest		(1,324)
Repayment of finance leases		(1,300)
Repayment of borrowings		(572,177)
Funds received from shareholders in capital increases		131,910
Sales/purchases of own shares		(201,899)
Associated current accounts		0
Cash generated by (used in) financing activities		(39,785)
Net change in cash and cash equivalents		284,427
Cash and cash equivalents at the beginning of the period		583,354
Foreign exchange losses/gains		10,831
Cash and cash equivalents at the end of the period		878,612
Operating Ratios
Accounts Receivable Turnover (Days)
Average A/R, Net * 365		166,479,055
Sales		1,845,522
A/R Turnover		90
Inventory Turnover (Days)
Average Inventory * 365		9,516,280
Cost of Goods Sold		328,972
Inventory Turnover		29
Gross Operating Cycle (Days)
Accounts Receivable Turnover + Inventory Turnover
Gross Operating Cycle		119.13
Accounts Payable Turnover
Average A/P * 365		66,685,500
Purchases (=End Inv+Product Cost-Beg Inv)		340,588
A/P Turnover		196
Deferred Revenue Turnover
Average Deferred Revenues * 365		180,045,923
Revenues		1,845,522
Deferred Revenue Turnover		98
Net Operating Cycle
Gross Operating Cycle - A/P Turnover - Deferred RevenueTurnover
Net Operating Cycle		(174.2)
Trend Analysis		2019
Sales Growth Rate 2017-2024
(1.05)
Profit Margin
Net Income + (Interest * (1 - Tax Rate)) + MinorityInterest		114,211
Sales		1,845,522
2017: 7.95%		6.19%
2018: 8.74%
Asset Turnover
Sales		1,845,522
Average Total Assets		3,406,194
2017: 0.6343		0.5418
2018: 0.6430
Return on Assets		54.18%
Asset Turnover * Profit Margin		3.35%
2017: 5.04%
2018: 5.62%
Net Operating Cycle		(174)
Gross Operating Cycle - A/P Turnover - Deferred Rev Turnover
2017: -174.4
2018: -162.4
Total Debt to Equity
Total Debt		1,333,622
Equity		920,018
		1.45
Free Cash Flow
CF from Operating
PPE
Prior Year PPE
Amortization Depreciation on PPE
Add back Interest
FCF
Terminal Value		119,832
WACC		50.91%
Growth Rate		11.30%

Estimate of the per-share value of the common stock to Ubisoft’sbased on 2019 numbers
• Is your estimate higher or lower than the market price? Whatfactors are likely contributing to the difference?

• If you were an equity analyst, would you recommend a Buy, Holdor Sell on Ubisoft stock and why?

Answer rating: 100% (QA)

SOLUTION To estimate the pershare value of the common stock for Ubisoft based on the 2019 numbers we need to calculate the free cash flow FCF and the terminal value Lets go step by step 1 Calculate Fr... View the full answer