Question
Ubisoft Entertainment SAand 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)
Ubisoft Entertainment SAand 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 SAand 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 SAand 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 and PP&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 Revenue Turnover
Net Operating Cycle (174.2)
Trend Analysis 2019
Sales Growth Rate 2017-2024
(1.05)
Profit Margin
Net Income + (Interest * (1 - Tax Rate)) + Minority Interest 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's based on 2019 numbers
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?
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