ANNUAL REPORT 2007 2STRATEGY 02 3BRANDS 03 1PROFILE O1 20 08 08 06 06 28 26 04 04 02 02 24 1 >FINANCIAL REPORT 31 10 18 16 • 2007 ANNUAL REPORT 12 table of contents > > > > > > > > > > > > ENTERTAINMENT TODAY A DYNAMIC MARKETAT THEHEARTOF AN ORGANIZATION WITHAGLOBAL REACH KEY FIGURES TOP MANAGEMENT CHAIRMAN ANDCEO’SSTATEMENT CORPORATE MILESTONES: 1986–2007 BRANDS: FRONTAND CENTER SOMETHING FOR EVERYONE CREATING STRONG BRANDS A PASSION FOR INNOVATION TALENTED PEOPLE CLOSE TO THECONSUMER

RAYMAN® Ubisoft’s cult character since 1995, has been helping to rid the world of raving , and in 2007 he will face off once again against these formidable opponents. ENTERTAINMENT 20 YEARSOF GROWTH AND MORE THAN to itspositionof4 all ofwhichenabled thegrouptoholdfast increased market shareinkey territories, * Excluding Japan. annual salestotaling strategy translated intoconcrete gainswith This year, Ubisoft’s audaciousnext-gen people andinnovation. brands, worldwide direct distribution,talented long-term strategy centered uponstrong attributed totheconsistent applicationofa trendsetter, thegroup’ssuccess canbe From start-updistributortoindustry A at an astonishing pace. games,ubisoft has grown video publisher anddistributor of globe. continue enchantingplayers all over the means tobringgreat gamestolife andto workforce intheindustry, Ubisoft hasthe With thesecond largestinternalcreative worldwide.* PROFILE leading developer, th independent publisher € 680 millionandan

PROFILE 01 2STRATEGY 02 3BRANDS 03 1PROFILE O1 20 08 08 06 06 28 26 04 04 02 02 24 1 >FINANCIAL REPORT 31 10 18 16 UBISOFT • 2007 ANNUAL REPORT 12 table of contents > > > > > > > > > > > > ENTERTAINMENT TODAY A DYNAMIC MARKETAT THEHEARTOF AN ORGANIZATION WITHAGLOBAL REACH KEY FIGURES TOP MANAGEMENT CHAIRMAN ANDCEO’SSTATEMENT CORPORATE MILESTONES: 1986–2007 BRANDS: FRONTAND CENTER SOMETHING FOR EVERYONE CREATING STRONG BRANDS A PASSION FOR INNOVATION TALENTED PEOPLE CLOSE TO THECONSUMER (3,200 DEDICATED TO CREATION) IN 23COUNTRIESWORLDWIDE WORLDWIDE UNIT-SELLING FRANCHISES MILLION INSALES 2006-07 INDEPENDENT PUBLISHER DISTRIBUTION OFFICES ACROSS THEGLOBE 3,950 € TALENTED PEOPLE AND 15STUDIOS (EXCLUDING JAPAN) 680 MUL TIMILLION 4 10 21 th 1 0 PROFILE PROFILE

leading developer, Apublisher and distributor of video games, ubisoft has grown at an astonishing pace. From start-up distributor to industry trendsetter, the group’s success can be attributed to the consistent application of a long-term strategy centered upon strong brands, worldwide direct distribution, talented people and innovation. This year, Ubisoft’s audacious next-gen strategy translated into concrete gains with annual sales totaling €680 million and an increased market share in key territories, all of which enabled the group to hold fast to its position of 4th independent publisher worldwide.* With the second largest internal creative workforce in the industry, Ubisoft has the means to bring great games to life and to continue enchanting players all over the globe.

* Excluding Japan 2007 ANNUAL REPORT 2007 ANNUAL

UBISOFT • corporate milestones: 1986–2007

hroughout the 2006/07 fiscal year, ubisoft continued to bolster its track record with new success stories. a stellar line-up for nintendo’s ™, increased market share and strategic acquisitions Tare just a few of the highlights of this past year.

1996 UBISOFT GOES PUBLIC AND TO ASIA

With a listing on the Paris stock exchange, 1992-93 Ubisoft opens up new IN-HOUSE doors for its development. CREATION The same year, TAKES the group also decides 1986 FRONT-STAGE to expand its production activities into China. UBISOFT Ubisoft opens internal IS BORN development studios in France and Romania, The five Guillemot thus sowing its first brothers join forces 1997-01 creative seeds. to found an edutainment INTERNAL and video game GROWTH publishing and COUPLED WITH distribution company. 1995 STRATEGIC ACQUISITIONS RAYMAN® HITS THE MARKET Ubisoft confirms its internal growth strategy 1989-91 Since its European début, by opening up new UBISOFT GOES the Rayman® franchise studios in 6 different ABROAD has garnered support cities, including from gamers all across Montreal, and by further The USA, Germany the globe, selling more strengthening its global and the UK become than 20 million units distribution network. 86 home to Ubisoft’s worldwide. first international The group acquires Red distribution subsidiaries. Storm, Blue Byte and The Learning Company's games division adding new hit brands to its catalog. In 2001, Ubisoft is catapulted into the Top 10 independent publishers worldwide. 3 0 07PROFILE 2006-07 UBISOFT KICKS IT UP A NOTCH

With seven titles available for the launch of the Wii™ and seven released during the fourth quarter of fiscal 2006-07, Ubisoft offers consumers the largest third-party line-up of games available for Nintendo’s revolutionary console. 2005-06 Ubisoft acquires the rights to the acclaimed Driver® franchise, UBISOFT TURNS and welcomes the team from Reflections Interactive, giving the group 20 AND TAKES a direct point of entry into the lucrative driving games segment. THE NEXT-GEN The acquisition of the rights related to the best-selling Far Cry® HEAD ON brand, as well as the Far Cry® engine, adds yet another proprietary 2002-05 brand to the Ubisoft catalog. Ubisoft celebrates its BRAND 20th anniversary and Ubisoft concludes a deal with German publisher Sunflowers to BUILDING acquire the company and all of its franchises, including the strategy PAYS OFF starts to see the positive results of its early brand, Anno. Armed with The Settlers® and Anno, Ubisoft reinforces Ubisoft more than positioning on next- its position of leadership on the German market, dominating the doubles its number of generation consoles. strategy games segment. hit brands from 3 to 8, The group quickly Ubisoft sees its market share rise in all key markets, ranking #4 increasing its market establishes its leadership worldwide (excluding Japan), #5 in the United States and #2 in Europe. share in key territories. on Microsoft’s Ubisoft expands its global operations into two new territories 360™ video game and by opening a business office in Mexico City, Mexico and a production entertainment system studio in Sofia, Bulgaria. successfully launching four titles, including Tom Ubisoft is ranked second leading international publisher by Clancy’s Ghost Recon , the world’s leading computer and video game Advanced Warfighter®, magazine. and climbing to the top of the charts. UBISOFT • 2007 ANNUAL REPORT Moreover, ourpositive netcashposition reached to Reinforce ourfinancialcapacities with gameslike in 2005-2006.Weplantoreinforce thistrend inthecoming year growth andrepresent 24%ofsalesthisyear, incomparison to14% Expand ourrevenue sourcesbyworkingwith3 ™,ourgamesrepresented 14% ofoverall platform sales. games sold inEurope and18%ofWii™gamessold intheU.S.On 2006-07. Overall, Ubisoft gamesaccounted for 29%ofallWii™ States, aswellthe#2independent publisherfor Xbox 360™in independent publisherfor theWii™inEuropeandUnited games designed for these consoles. Asaresult,webecame the#1 back in2004have paidoff: 60%ofoursalesthisyear camefrom Position ourbrands early onnext-gen consoles seven strategic prioritiesidentified lastyear: These excellent resultsstemfromthesuccessful execution of MISSIONS ACCOMPLISHED 2006/07: 2 Game Informer Academy ofFilmandTelevision Arts)AwardsCeremonyand was chosen 2006GameoftheYear attheBAFTA (British Most notably, also totherespect thatUbisoft commands withintheindustry. to thehighqualityandentertainmentvalue ofourgamesand This year, wewonmorethan40prestigiousawards,atestament position with7%market share. in Canadawith6.8%.InEurope,thegroupheldfast tothe#2 ranking 5 In NorthAmerica,wegained onepointcompared withlastyear, income also increased morethan300%,totaling previous fiscal year and27%atconstant exchange rates. Ournet totaling possible for Ubisoft tooutperform themarket withannualsales with manyhighly acclaimed gamesfor newconsoles, made it T nd € Our netcashflowfromoperating activitieshassharply Our publishingand3 The investments wemade in next-gen development starting independent publisherworldwide, justbehindNintendo. 53.2 million,reflecting strongoperational improvements. his pastyear, asuccessfully executed strategy, coupled € th 680 million,anincrease of24.4%compared tothe in theUnited Stateswith5.5%market shareand3 Tom Clancy’sGhostReconAdvanced Warfighter Brothers inArmsHell’sHighway™ theleadingindustrymagazine,ranked Ubisoft , executive officer’s chairman andchief rd party activitiesregistered a10-point rd party partners € € and 40.5 million. 55 millionas Haze™ . rd ® is to use this hit brand and our team’s know-how to bring is touse thishitbrand andourteam’s know-howtobring to enterthehighly populardrivinggamessegment. Our of thetalented people from Make strategic acquisitionstoenterintonewsegments potential market. high- a on our presence inMexico Citywillenableus tocapitalize attract newtalentswhilecontrolling ourdevelopment co Mexico. The Sofiastudioshould make itpossible for usto dio inSofia,Bulgariaandadistributionoffice inMexico City, joined ourteamthisyear alone.Mostnotably, weopened astu- new talentsprogressively acrossallofitssites:450people have dedicated toproduction), Ubisoft continues togrowandrecruit Attract newtalents February dedicated toCGI (ComputerGenerated Images)movies. games andcinema,Ubisoft opened astudioinMontreallast understand andexploit thesynergies thatexist between video come out attheendofyear. Additionally, inorder tobetter Zemeckis’s newfeature-length film, process ofproducing thevideo gameversion ofRobert etgncnoe.Frhroe bsf ocue an agreement next-gen consoles. Furthermore, Ubisoft concluded the release of Enrich ourcatalogueandcontinuetodevelop strongbrands Ubisoft themeans and theopportunitytoinvest innewprojects. issue inFebruary 2007.This strongfinancialpositiongives (Océanes) inNovember 2006andof92%the2008warrant capital increases: theconversion ofapartconvertible bonds € of March31,2007.Inaddition totheincreased cashflow,this Reinforce ourreputationasapartnerofchoicefor Hollywood Catz Tom Clancy’sRainbowSix must-have newtitles,suchas franchises, wecontinued toenrichourexisting brands with Ninja Turtles™ games inspired byfilmslike Hollywood continued tomaturethisyear withtheproduction of Official GameoftheMovie 120.3 millionimprovement canbeattributed totwoimportant With 3,950employees acrosstheglobe(3,200ofwhomare The acquisition ofthe We pursued ourstrategy ofbrand creationthisyear with Following thesuccess of ® statement and Horsez Red Steel™ and ® In addition tothelaunchofthese new . Driver , ® Heroes ofMight&Magic Vegas Reflections Interactive Open Season™ Peter Jackson’s KingKong: The ® Rayman Raving Rabbids™ Ubisoft’s relationshipwith , ® Furthermore, weareinthe . franchise andtheintegration . Beowulf™ , Teenage Mutant whichisset to , Driver ® enable us , objective Dogz sts and ® and to ® , consoles. motors, inorder tofully exploit the capacities ofnext-gen continuing tobuildoff thesuccess ofthe releasing newtargeted titlessuchas from thismarket next year (as opposed to10%lastyear) by learn whileplaying.Ourobjective istohave 20%ofsalescome the funandintuitive aspects ofgaming,aswelltheabilityto These newaudiences, whichalso include seniors, aredrawn to opened upourmarket toaudiences suchasfemale gamers. Position Ubisoft asareference inthecasualgamesmarket tain consoles, aswedidlastyear with aiming todevelop brands thatarespecifically designed for cer- awaiting therelease of already creatingabigmedia buzz,andcustomers EndWar™ Properties) including returns, andwewillalso belaunchingsixnewIPs (Intellectual Create andlaunchnewbrands whiledeveloping existing ones For theupcoming year, Ubisoft hasidentified five priorities: POSSIBILITIES FOR GROWTH NEW CHALLENGESAND 2007/08: with ciated withthehistoricreal-timestrategy brand with theGermanpublisher sing therightsto Finally, westrengthened ourportfolio ofstrongbrands bypurcha- on thelargestsegment oftheGermanmarket – strat working oninternally-developed 2 length Ubisoft animated film.Inaddition, ourteamsarealready graphics. Inthelong-term, ourgoalistoproduce afeature- our characters and scenes aswellthe qualityofourgame how thatwewillgainfromthese projects willallowustoenrich inspired byourbrands. The technology andthecreative know- beginning, thisstudiowillbedevoted toproducing shortfilms always beattheforefront ofinnovation andcreativity.Inthe R&D investments Remain onthecutting-edge oftechnologythrough This year, seven ofourfranchises willmake highly anticipated The openingofourfirst CGI studioillustrates ourdesire to The success oftheWii™,DS™,andXbox The Settlers YVES GUILLEMOT and Haze™ Far Cry ® , Anno . ® Assassin’s Creed™ Tom Clancy’sEndWar™ Assassin’s Creed™ makes Ubisoft theuncontested leader Sunflowers from . nd Red Steel™ and 3 to acquire therightsasso- “My Life Coach” Petz rd , ® generation game and brand. for theWii™. Tom Clancy's Anno ® are anxiously .also We’re Haze™ Live™ have egy games. Coupled . and by are that willallowustokeep production costs low. looking intothepossibilityofopeningnewoperations interritories and skills,makingeducation andtraining apriority.We’realso plan tocontinue growingourexisting studiosintermsofsize new talentseachyear isnecessary toachieve our ambitions. We competitive production costs Continue tobuildupourproductionteamswhilemaintaining their level. ches enableseveryone toenjoythegame andfindchallengesat Recon Advanced Warfighter putting thisphilosophy intopractice with best waystoprovide technical support.Wehave alreadystarted attitudes andbehaviors ofdifferent typesofgamersaswellthe constantly seek toimprove ourgamingexperiences bystudyingthe challenges for more experienced players. Inorder todo this,we games shouldbeaccessible tobeginners,allthewhileoffering Improve accessibilityofourgames CHAIRMAN &CEO YVES GUILLEMOT consoles: theWii™,DS™, Xbox 360™andPlayStation bytheastoundingincrease inthepowerofnext-gen be marked market expansion towardnewaudiences, andalso ayear that will speed ahead.2007-08isgoingtobeayear of extraordinary We areevolving tokeep upwithamarket thatismoving full- TO TOMORROW LOOKING FORWARD made Ubisoft thesuccess itistoday. the Ubisoft teams,whobytheirpassionandperseverance, have support. Finally, Iwouldlike toextend aspecial thankstoallof who believe inourstrategic visionandprovide uswithinvaluable our shareholders andourcommercial andfinancialpartners to constantly exceed ourownexpectations. Thank you also to In closing,Iwouldlike tothankallofthegamerswhodrive us meet objectives of benefit fromoneofitsmostimpressive line-ups,enablingusto advantage of majorindustryevolutions. This year, Ubisoft will Our company iswell-positioned tocontinue growingand totake Our objective is toobtain100%consumer satisfaction. Our Honing theskillsofourteamsandattracting hundreds of € 800 millioninsalesandanEBITofatleast8%. ® 2 atitlewhose variety ofapproa- , Tom Clancy’sGhost ® 3.

PROFILE 05 UBISOFT • 2007 ANNUAL REPORT emerging expectations.” that appealtothisnewaudience andsatisfy entertainment –tooffer uniqueproducts our industry–theultimateofinteractive and use gamecreationsystems.Itisupto nity websites,writearticlesonWikisites prompts themtomake videos for commu- Their questfor interactive experiences through whichtoexpress themselves. creators andaresearching for newchannels Consumers arebecoming realcontent new audiences andnewgamingexperiences. our industryanopportunitytoopenup “The advent ofnext-gen consoles gives CHAIRMAN &CEO YVES GUILLEMOT E of thegame. changes, enablingthecompany to always stay onestep ahead team has proven its abilityto anticipate major industry xperience, imagination andenergy -ubisoft's top management top management " fun toplay. challenging and that areboth appreciate titles …People regardless ofthestudiobehindtitle.” label represents anexpected level ofquality external studios,ensuringthattheUbisoft processes toourgamesdeveloped by increasingly apply ourinternalproduction ones whenopportunitiesarise. Wewillalso as wellacquiring andestablishingnew continue investing inourinternal studios, again. Asaresult,thefuturewillsee us This strategy hasbeen proven timeand is essential toUbisoft’s growthandsuccess. “I amconvinced thatin-house development EXECUTIVE DIRECTOR, WORLDWIDESTUDIOS BURGESS-QUÉMARD CHRISTINE " quality entertainment.” losing sightofourcommitment to high- exactly whatweintendtodo, andwithout both challengingandfuntoplay.That is game, people appreciate titlesthatare No matterwhatpublicortypeof our parents…andeven ourgrandparents! experiences thatappealtoourchildren, to newaudiences, creatingentertainment mainstream popularity,wewillreachout the sametime,asvideo gamesgainin major brands and explore newgenres.At raw emotions.Wewillcontinue tobuild gaming experiences thattapinto people’s do whatitdoes best–offer immersive willcontinue toenableit development “Ubisoft’s uniqueapproachtogame CHIEF CREATIVE OFFICER SERGE HASCOËT 7 0 PROFILE

…The Ubisoft label represents an expected level of quality regardless "of the studio behind the title."

ALAIN CORRE LAURENT DETOC ALAIN MARTINEZ EXECUTIVE DIRECTOR, EMEA TERRITORIES EXECUTIVE DIRECTOR, NORTH AMERICA CHIEF FINANCIAL OFFICER “Underlying Ubisoft’s success is the “The North American market performed “Fiscal year 2007 was marked by dramatic group’s ability to seize good opportunities exceptionally in 2006. Nintendo made a increases in Ubisoft’s financial position. at the right time. Throughout the EMEA phenomenal comeback with the introduc- The sharp upturn in activity, coupled with territories, the market is following an tion of the Wii™ and generated mass the conversion of the share subscription impressive growth trajectory, expected to market interest in video games fueling warrants issued in 2003, the 2006 conver- continue over the next five years. As market expansion and propelling Ubisoft tible exchangeable bonds (OCÉANES) and video games and new consoles, like the to the top of the charts as the leading the 2008 redeemable share subscription DS™, manage to convert more and more third-party publisher for the console’s warrants totaling €98.2 million, enabled people to casual games, Ubisoft will reap launch. Microsoft’s Xbox 360™ asserted Ubisoft to finish the year with an increase in the benefits of an expanding consumer its commercial dominance and the PS®2 equity from €139 million to €521 million base. Our remarkable work has enabled surprised experts with its staying power. and a net financial position of €55 million, the group to get the best out of each mar- All of these trends and more gave Ubisoft a striking improvement compared with its ket and defend its title of 2nd independent the opportunity to show that our strategy €65 million in net debt the previous year. publisher across all EMEA territories to lead the next generation of video This performance is all the more remarkable over the last 16 months. With a rich and games is the right one. In fiscal year given that it was achieved in a context of a well-balanced portfolio that includes 2007/08 Ubisoft has high hopes for our 22% increase in R&D investments.” hardcore AAAs, such as Assassin’s always innovative Tom Clancy franchises Creed™, Hollywood licenses, such as and for the launches of new industry-lea- Lost™, and games for everyone, such as ding brands, such as Assassin’s Creed™. Jam Sessions, the future indeed belongs This year we’ll also leverage our early to us!” start on the casual gamer segment by lauching new product lines that appeal to a broader group of consumers. Ubisoft’s future looks bright!” UBISOFT • 2007 ANNUAL REPORT fiscal yearwitha soft posted improved financialearningsandsucceeded inendingthe tering anoverall sales progression of24.4%.consequently, ubi- tooutperform its owngrowthforecasts, butalso themarket,regis- A and #2onthexbox 360™for 2006/07.thegroupmanaged not only the top ofthecharts, ranking#1independentpublisheronthewii™ 2006/2007 warfighter investments. titlesliketom clancy’sghost reconadvanced change, ubisoft witnessed thereturnonits next-gen r&d s theindustry prepared itself for yetanother yearofsignificant €38.3 million €38.3 % OFSALES ONNEXT-GENERATION CURRENT OPERATING ® AT AGLANCE € or rayman raving rabbids™propelledthegroupto 55 millionnetcash position. 3,200 INCOME PRODUCTION EMPLOYED IN OF WHOM 60% PLATFORMS €680 million €680 EMPLOYEES IN23COUNTRIES 3,950 SALES key figures €233 million €233 INDEPENDENT PUBLISHER TOTAL DEVELOPMENT €40.5 m €40.5 (EXCLUDING JAPAN) WORLDWIDE NET INCOME 4 EXPENSES th 453

- 2003

6

3

4

1

5

3

2

- FINANCIAL POSITION OF SALES GEOGRAPHIC BREAKDOWN ( EVOLUTION OFSALES

1

5

0

0 €

7

5

5

7

2 508

2

7

0

5

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MILLION)

2004 533 45% AMERICA NORTH 2005 -74,4 547 317,6 33/050/120 03/31/2007 03/31/2006 03/31/2005 2006 6% REST OFTHEWORLD 680 49% EUROPE ( €

-65,3 2007 MILLION) 381,3 55 521,8 1,990

2003 2,500 BY PLATFORM BREAKDOWN OFSALES OF EMPLOYEES EVOLUTION OFNUMBER

2004

3,000

50 %

40

30

20

20

1

0

%

%

%

%

% 0 0

24% OLD GENERATION CONSOLES 2005

3,500

2006 16% PC NET DEBT/NET CASH SHAREHOLDER’S EQUITY 3,950

60% CONSOLES NEXT-GENERATION 2007

PROFILE 09 UBISOFT • 2007 ANNUAL REPORT w (2) AsofMarch31, 2007. (1) Excluding Japan. Source: NPD,ChartTrack, Media Control,GFK,invalue terms,calendaryear 2006. an organization with per country/region Number ofemployees powerful multinational organization. spanning more than50territories, ubisoft has built upa ith subsidiariesin23countriesandadistribution network Ubisoft iscurrently 3950-people strongandgrowing. local needs ofitsconsumers. retailers andbetterunderstand andanticipatethe establish valued commercial relationshipswith over, benefitfromlowercost structures, directly enables thegrouptohirebesttalentsworld constitutes arealcompetitive advantage, for it Ubisoft’s far-reaching, internationalorganization spread across11countries. largest production force intheindustrywith15studios On thedevelopment side, Ubisoft possess thesecond Business offices Development studios a global reach (2) CANADA independent publisher independent publisher USA rd th 1,923 north america MOROCCO 4 1,600 north africa europe + EUROPE independent 2 2 publisher th nd IN THEWORLD INDEPENDENT PUBLISHER UNITED KINGDOM SPAIN FRANCE (1) HQ Paris DENMARK BELGIUM NORWAY NETHERLANDS SWITZERLAND CHINA GERMANY ITALY SWEDEN AUSTRIA BULGARIA AUSTRALIA SOUTH KOREA FINLAND ROMANIA JAPAN 411 asia pacific

PROFILE 11 UBISOFT • 2007 ANNUAL REPORT of theentertainment industry. video gameswereonthemargins and dynamic increasing, the synergies planning for its movie released without buster Source: NewPlatform Quantitative US,April 2007. $28.47 billion the industry registered sales of side filmsandmusicand,in2006, today theystand proudly along- L BY PLATFORM BREAKDOWN OFGAMERS ong gonearethedays when 59% OLD GENERATION CONSOLES making for anexciting market. 40% HANDHELD CONSOLES (1) between mediaare . seldomisablock- of entertainment a dynamic market video gametie-in. 23% CONSOLES NEXT-GENERATION at theheart base of4,975,000) registering particularly strongsalesinNorthAmerica(installed points, have fared wellinkey markets, withtheXbox 360™ easier for users notonly toshareinformation, butalso create adoption ofbroadbandonline connections for PC,makingit past few ofyears with thearrival ofWeb2.0andthewidespread The Internethasundergone remarkable evolutions over the A FAST-GROWING PHENOMENON ONLINE GAMING: market growth(hardwareandsoftware combined) of17% potential gainsfromthecycle andearly forecasts predict overall manufacturers andsoftware developers alike areoptimisticabout upon usandpromises tofuelastronggrowthcycle. Hardware The long-awaited andhighly-anticipated next generation isfinally CONSOLES THE EXPLOSION OFNEXT-GEN (3) Source: Ibid. (2) Source: NPD,March 2007. (1) Source: ReportfromtheInternational Group“The PC&Video Game The Xbox 360™andPS simple machine,offering unparalleled gameplaypossibilities. capabilities. Ontheotherhand,Nintendo designed adeceptively capable ofdelivering stunninggraphic hand, Microsoft andSonyengineered te rent, yet equally innovative, approaches togaming.Ontheone market début. Fromthistransition emerged twostrikingly diffe- to gaingroundwhileSony’sPS This year, Microsoft’s Xbox 360™andNintendo’s DS™continued which bodes wellfor thefuture. growing atanencouraging pace, up6% the rise. Asfor thesoftware market, early figuresshowthatitis all markets ashave handheldconsoles, whose saleshave been on Europe andJapan. Nintendo hasperformed consistently across 1,099,000) akt :North America,Europe,Japan” (April 2007). Markets (4) , andthePS (3) , andGreatBritain(installed base of ® ® 3, thetwomachinesathigherprice 3 quickly gaininggroundthroughout today ® 3 andNintendo’s Wii™made their realism andstrongonline (5) chnological powerhouses compared tolastyear, (2) . 3 1

AVERAGE TIME GAMERS SPEND PROFILE PLAYING PER WEEK

HANDHELD GAMES PC GAMES CONSOLE GAMES 5 hours 7 hours 8 hours

ALL PLATFORMS COMBINED 12 10.5 hours 10

8

6

4

2

0

Source: New Platform Quantitative US, April 2007.

content. With these two evolutions, a whole new era of web The Nintendo Wii™ – communications is ushered in, carrying with it implications for a revolution in gaming the world of gaming. Public interest in various forms of online gaming has flared up Nintendo has been a mainstay of the video game considerably over the past year. Women are among some of the industry for as long as anyone can remember. most avid online players, representing 60% of the total online This year, with the arrival of the Wii™ and the rising population(6). The number of subscribers on platforms such as popularity of the DS™, Nintendo proved that, even Xbox® Live™ has also exploded over the past year (6 million after all these years, it is a force to be reckoned with. subscribers as of March 2007(7)). Innovative and intuitive, the Nintendo Wii™ and DS™, Massive Multiplayer Online Games (MMOs), which bring with their promise of new opportunities for gameplay, together thousands of players simultaneously via the Internet, have managed to capture casual and hardcore gamers represent one such form of online gaming. Despite the signifi- alike. With the Wii™’s revolutionary controller that cant personal investment of time, and sometimes money, that MMOs and online gaming in general require, the possibility to detects gamers’ every movement and the DS™’s compete and interact with people from around the world has double-screen and stylus, gamers are enjoying new converted a large number of Internet-users. types of games in new ways. Whether standing up, sitting down or alongside friends and family, people EMERGING PROFILES are rediscovering the joys of sports or uncovering new games, such as language learning, pet simulation Over the past 25 years, we have seen the market go from niche to and brain teasers. Judging from the commercial mainstream as gamer demographics continue to become more diverse. The growing perception of video games as a mass-market success that both of these machines have encountered form of entertainment has allowed consoles to occupy a more (2 million Wii™ units and 10 million DS™ units sold central place in the home. as of April 2007(8) in the US), traditional gamers, as well as people who didn’t even know they were gamers, Simultaneously, new gamer profiles have emerged; according to recent studies, 40% of today’s gamers are female and 21% of are embracing this change. American gamers are over the age of 46(9). As they search for more casual gaming experiences, these new consumers are lea- ding manufacturers and developers to change their approach to hardware and software conception and development.

(4) Source: Chart Track, March 2007. (5) Source: NPD, Fiscal Year 2006/2007. (6) Source: New Platform Quantitative US, April 2007. (7) Source: "Xbox (R) Live (TM) tops six million users" March 6, 2007 - http://www.gamesindustry.biz/content.page.php?aid=23295. (8) Source: NPD, March 2007. (9) Source: New Platform Quantitative US, April 2007. UBISOFT • 2007 ANNUAL REPORT cycles. benefit from strong growth a challenging industry and has managed to thrive within by its strategic vision, ubisoft F or over twentyyears,fueled

STRATEGY ASSASSIN’S CREED™ Ubisoft’s new action/adventure brand from the group’s award-winning development teams promises an awe-inspiring gaming experience. will continue torelentlessly pursue itswinningstrategy. revenues andtriplingnet income between 2006and2010 The groupiswellonitswaytoreachingobjective ofdoubling blished itself asanindustrygroundbreaker. tivity andinnovation andbuildingstrong brands, Ubisoft hasesta- distribution, recruiting the bestandthebrightest,fostering crea- commitment tofavoring in-house development andglobaldirect with gamesthatexceed expectations. Through anunwavering lities so astoalways stayclose toitsconsumers andprovide them its strategy, ithasalso knownhowtoadaptshifting market rea- While Ubisoft hasalwaysremained faithful tothemainpillarsof

STRATEGY 15 2007 ANNUAL REPORT 2007 ANNUAL UBISOFT •

We continue to believe that Ubisoft is a compelling investment. If our assumptions about market-share gains and contribution margin over the next three years are STRATEGY correct, we think that " the company could substantially exceed our expectations each of the next 12 quarters, driving its share price even higher.

MICHAEL PACHTER, RESEARCH ANALYST, WEDBUSH MORGAN SECURITIES, MAY 2007. WWW.GAMESPOT.COM"

or over twenty years, fueled byF its strategic vision, ubisoft has managed to thrive within a challenging industry and benefit from strong growth cycles. will continue torelentlessly pursue itswinningstrategy. revenues andtriplingnet income between 2006and2010 The groupiswellonitswaytoreachingobjective ofdoubling blished itself asanindustrygroundbreaker. tivity andinnovation andbuildingstrong brands, Ubisoft hasesta- distribution, recruiting the bestandthebrightest,fostering crea- commitment tofavoring in-house development andglobaldirect with gamesthatexceed expectations. Through anunwavering lities so astoalways stayclose toitsconsumers andprovide them its strategy, ithasalso knownhowtoadaptshifting market rea- While Ubisoft hasalwaysremained faithful tothemainpillarsof

STRATEGY 15 teams have made particular UBISOFT • 2007 ANNUAL REPORT “Ubisoft market research ‘non-traditional’ gamers creation to tions, frommarketanalysis to novel gamingexperiences. of theirultimate goal –deliver ubisoft A strides in ll along thechainofopera- teams neverlose sight understanding after-sales service, .” close to the Rainbow Six the “MostInnovative Marketing Strategy Award”for Tom Clancy’s Association ofElectronic Interactive Marketers (AEIM),including eight awardsatthisyear’s MI6AwardsShoworganized bythe Excellence Awards,inLondon. USMarketing teamsbroughthome UK Trade Marketing teamwashonored atthisyear’s MCVIndustry work, receiving awardsinnumerouscountries. For example, the These teamsareconsistently recognized for thequalityoftheir who playacrucialroleinmaintainingconsumer proximity. industry’s foremost operational marketing anddistributionteams, Ubisoft’s businessorganizationisalso made upofsome ofthe AT THERIGHTTIMES IN THERIGHTPLACES women, girlsandseniors. strides inunderstanding “non-traditional” gamers,suchas Recently, Ubisoft market research teamshave made particular variety ofresearch methods, bothqualitative andquantitative. before, duringandafter thedevelopment process –usinga These teamsgatherconsumer feedback atseveral stages– and anticipatetheirfutureneeds. better understand theperceptions anddesires ofconsumers particularly inthedomain ofconsumer studies,helpsteamsto of experienced marketing research experts whose work, order toremainclose togamers,thegroupreliesuponateam Ubisoft isconstantly strivingtomeet consumer expectations. In UNDERSTANDING CONSUMERS to otherdepartments withinthegroup. relationships withretailersand communicating theirlearnings the gamesmake itintothestores,butalso for buildingclose distribution networkisresponsible notonly for ensuringthat Working hand-in-handwith marketing teams,Ubisoft’s consumer ® Vegas “Save-Vegas” Viral Campaign. its overall businessstrategy. continue integrating onlineoperations into gamers andimprove brand loyalty,Ubisoft i customer relationships,foster valuable interactions with such astheabilitytoform lastingandcost-effective Aware oftheuniquebenefitsoffered bythis channel, and toprovide newdownloadable content. to collect gamerfeedback viaforums andsurveys, of 1.4millionuniquevisitorspermonth.This portal reached newheightsthisyear withanaverage on ubi.com, thecompany’s onlinegamingportal, via thismedium. The numberandfrequency ofvisitors form theirfirstimpressionofthegroup’sgames important asitsphysicalone,for manyconsumers Today, Ubisoft considers itsvirtualpresence tobeas virtually everywhere is notonly used topromoteandsell games,butalso Ubisoft, ntends to “self service” technical supportin5 languages. mail service andafree onlineFAQ systemwithroundtheclock group offers multi-channelsupportincludinga has been tacklingthisissueinaproactive fashion. To take intoconsideration whenmakingapurchase decision. Ubisoft Quality after-sales service isamongthefactors thatplayers of asale. the customerrelationshipcontinues longafter theconclusion Ubisoft takes along-termapproachtoservice, convinced that OF THEWAY SERVICE EVERY STEP Building strongrelationships to maintainingconsumer proximity. with retailersisakey hotline, web- day, the

STRATEGY 17 UBISOFT • 2007 ANNUAL REPORT depends upon based industry wheresuccess every day. are also happy to cometo work not only feelchallenged,but an environmentwhereits teams ubisoft iscommittedto fostering at theheartofits strategy. resources human always placed that thegrouphas that reason capacitytoinnovate. it is for U bisoft operates inatalent- people andtheir talented people completed the program andreceived agovernment-recognized In 2005/06,69students from thefirstgraduating classsuccessfully provide educational foundations for futureindustryprofessionals. to attract atalent pool for the video game industryinQuebec and aspects ofvideo gamedevelopment. The mission of thecampusis college- anduniversity-level training programs covering all main ting thisgrowthstrategy. Founded inMay2005,thiscampusoffers The Ubisoft CampusinMontrealplaysanimportant role insuppor- approximately 500people acrossallofitssites. group willcontinue torecruit atthesamepace, integrating increase compared totheprevious fiscal year. Next year, the and Romania.The groupsaw450people joinitsranks, a15% Most ofthese recruitment efforts werefocused inCanada,France This pastyear, Ubisoft continued togrowandrecruit newtalents. AN EXPANDING ORGANIZATION as those found inHollywood’s hitTVseries. niques throughaconstant examination ofemotionalcycles, such the scriptwriter muststayonthecutting-edge ofnarrative tech- and findnovel solutions tostandoutfromthecompetition, justas programmer whodevelops artificialintelligence hastoinnovate garde artistswhoknowhowtoanticipatefuturetrends.The cal experts andcomputer scientists arejustasimportantavant- requires amultitude ofspecialized skills.Highly qualified techni- that willbecome landmarksintheindustry.Video gamecreation their creative talent andtechnological expertise tocreategames 81% ofUbisoft employees workinproduction, bringingtogether whose membersarealldriven bythesamepassion. talents fromallcorners oftheglobeandtoform talented teams nal andstrategic locations enablethegrouptoattract thebest their talentpools andbeneficialcost structures.These internatio- Ubisoft teamsarestationed in22countries, carefully selected for PASSIONATE EXPERTS can triggerinterest.” medium anissueasdistantandinvisible ashunger “Food Force isclear evidence thatwiththeright to NeilGallagher,WFP’sdirector ofcommunications: than 100,000downloads inFrance alone.According already encountered awidespread success withmore website. Since itslaunchinOctober2006,Food Force has it available for free download directly ontheUbisoft help theWFPpromoteanddistributeitstitle,making for suchaworthycause thattheyeven volunteered to motivated tohave theopportunitytolocalize aproject the game,WFPturned toUbisoft. Teams wereso In search ofsupporttocreateaFrenchversion of global hunger. agency, isthefirstfree educational video gameabout Food Program (WFP),theworld’slargesthumanitarian Food Force, developed bytheUnited NationsWorld against hungermeet video gamesandthefight Food Force: where industry andensureitscontinued growthinthese countries. local governments andeducational institutionstopromotethe France andRomania,Ubisoft hasdeveloped strongtieswith As thenumberonevideo gameemployer inChina,Quebec, more than500people over thenext 5years. the Quebec government andUbisoft, thecampusexpects totrain tional diplomaingamedesign. Withfinancialsupportbothfrom Ubisoft. For the2006-07academic year, Ubisoft launched anaddi- diploma. 39ofthose highly trained graduates wentontoworkat group’s employees consider Ubisoft to beagood place to work. teams. According toarecent internalsurvey, close to90%ofthe ronment propitioustothedevelopment and motivation of its current events. The groupthusstrives tocreate aworkingenvi- They areinformed onaregularbasisaboutUbisoft’s strategy and their workandareagentsinthe development ofthe company. employees). Moreover, employees benefitfromautonomyin med withinteams(85%oflocations have fewer than200 dynamic ismostnotably cultivated bytheclose tiesthatarefor- one ofthestrengthsUbisoft’s corporate culture.This group Employees benefitfromafriendly workenvironment, which is sal moves) andalso include internationalopportunities. are numerousthroughoutthegroup(local promotions,transver- this process. Furthermore, thepossibilitiesfor career development employee visitstootherUbisoft locations have allcontributed to tion orotherspecific subjects), collaborative workspaces, and increasing. For example, internationalseminars (based onjobfunc- singly formalized andopportunitiesfor knowledge exchange are ity. Internalandexternal training programs arebecoming increa- group hasmade thedevelopment ofskillsandknowledge aprior- essential tostayingaheadofthecompetition, whichiswhythe In thevideo gameindustry,innovation andtechnical expertise are A PLACE TO LEARNANDGROW One ofUbisoft's Frenchoffices.

STRATEGY 19 UBISOFT • 2007 ANNUAL REPORT recognized for thequality of lopment teamsareconsistently of thebest gamesintheindustry. teams to continueproducingsome sharing arewhat enableubisoft edge technology, andknowledge- innovation, combinedwithcutting- their creations. apassion for U process, manufacturers provided Ubisoft teamswithinvaluable taining itstechnological lead. Allthroughoutthedevelopment console manufacturers also played animportantroleinmain- innovative products. The group’s strongcollaboration with have enabled thecompany tocontinually deliver high-quality, production studiosandsmartinvestments innext-gen technology transition tonewconsoles. Targeted recruitment ininternal anticipate thepotentialchallengesbroughtaboutby the Ubisoft wasoneofthefirstpublisherstopreparefor and and exploit newtechnologies totheirfullestpotential. of development experience hastaughtthegrouphowtomaster to stayonthecutting-edge oftechnology. Nearly twentyyears innovation. Ubisoft therefore provides itsteamswiththemeans investments withlong-termprofitpotentialisoneofthekeys to Ubisoft believes thattheabilitytomake calculated R&D TO FUELCREATIVE MINDS TECHNOLOGICAL TOOLS bisoft’s award-winningdeve- for innovation a whole. terms ofartificialintelligence bothfor Ubisoft andtheindustryas crowd scenes inthisgamerepresent asignificantadvancement in once againsuc Assassin’s Creed™ isarecent example ofhowUbisoft teamshave nal companies tokeep upwithconstantly evolving technologies. to createitsowntools renders thegrouplessreliantonexter- titles. The fact thatUbisoft hasprovided itself withthemeans tools, whichcanbe number of limits. Inrecent y in-house programmers tocontinually pushthetechnological All ofthegroup’sinvestments inR&Dhave made itpossiblefor it possibletodevelop ahitfor the Wii™. them withareference library ofdifferent gestures,whichmade working onthedevelopment ofRed Steel™, Nintendo provided technological support. For example, example, technological support.For how to development experience new technologies “Nearly twenty years of a passion has taughtthegroup proprietary ceeded in master andexploit ears, thegrouphasbothdeveloped acertain fullest potential.” customized internally for use ondifferent engines andbenefited fromexternal uhn h ehooia iis The pushing thetechnologicallimits. when Ubisoft teams to their were To becontinued… Assassin’s Creed™ isalreadyunderway. A first8-minutefilmbased onthehighly anticipated films inspired bygamesofUbisoft brands. The studio’sprimary mission willbetoproduce short major industrymovement. (CGI movies), thuspositioningitself attheheartofthis specialized inthecreationofdigitalcinemacontent announced theopeningofanewstudioinMontreal, its video gameuniverses. LastFebruary, thegroup and acquire newskills,whichcanbeused toenrich Today Ubisoft isdetermined tolearnfromthecinema the cross-over hasbecome allthemoreapparent. and theirunparalleled graphic realism, With thearrival ofthenewgeneration ofconsoles, industries have increased notably over theyears. The synergiesbetween thefilmandvideo game brands tothebigscreen Action! Lights, Camera, Ubisoft takes its best practices andexperiences. nal challenges.Participants have theopportunitytoexchange technical difficulties encountered indevelopment toorganizatio- zed onanadhoc basistoaddress awide variety oftopicsfrom ple ofcollaboration andsharingatUbisoft. Meetings areorgani- the knowledge ofthecompany’s manyexperts, isanotherexam- The Academy ofExperts, aninternalthink-tankthatdraws upon sharing andhelpthegrouprealizeimportantproductivity gains. borative workspaces have been set uptofacilitate information databases (sound, textures, graphics, etc.)andweb-based colla- To supportUbisoft’s knowledge managementstrategy, asset ensure thatbudding ideas become reality. constantlyare looking to improve coll from oneperson toanotherisfundamental.At Ubisoft, teams and skillsofeachindividualensuringtheyaretransferred In thevideo gameindustry,knowinghowtoleverage theknowledge KNOW-HOW MANAGING THECOMPANY’S Ubisoft’s aborative processes to Shanghaï Studio

STRATEGY 21 UBISOFT • 2007 ANNUAL REPORT U main competitive advantages. brands constitutes one of its to consistently create strong bisoft’s remarkableability

BRANDS

TOM CLANCY’S SPLINTER CELL CONVICTION™ is Ubisoft’s latest installment in the Splinter Cell franchise, a break-through in the stealth genre. Discover Sam Fisher like you've never seen him before. brands aswellnewintellectual properties. Ubisoft willactively pursuethedevelopment ofestablished With thegoalofcreatingthree newbrands every twoyears, was generated fromlicense-based titles. out thecatalog,andlastyear, 17%ofthegroup’ssalesrevenue movie andTVlicenses have also helped tocontinue balancing other segments, suchasstrategy andcasualgames.Hollywood action/adventure, andhassuccessfully established itself in Ubisoft isfirmly positioned inmilitary/tacticalshooters and recurrent revenue. two-thirds ofthegroup’sannualturnover, helpingtoensure The company’s multimillion unit-selling brands generate Tom Clancy’sRainbowSix Brothers inArms portfolios ofproprietarybrands includingfranchises suchas Today, thegrouppossesses oneoftheindustry’slargest ® , Far Cry ® , andTom Clancy’sGhostRecon ® , Prince ofPersia ® , Rayman ® ® , . BRANDS 23 2007 ANNUAL REPORT 2007 ANNUAL UBISOFT •

…[Ubisoft] has amassed

BRANDS a number of top brands in recent years and is arguably one of the premier publishers in today’s video game market. "WWW.BIZ.GAMEDAILY.COM, FEBRUARY 14, 2007."

bisoft’s remarkable ability Uto consistently create strong brands constitutes one of its main competitive advantages. brands aswellnewintellectual properties. Ubisoft willactively pursuethedevelopment ofestablished With thegoalofcreatingthree newbrands every twoyears, was generated fromlicense-based titles. out thecatalog,andlastyear, 17%ofthegroup’ssalesrevenue movie andTVlicenses have also helped tocontinue balancing other segments, suchasstrategy andcasualgames.Hollywood action/adventure, andhassuccessfully established itself in Ubisoft isfirmly positioned inmilitary/tacticalshooters and recurrent revenue. two-thirds ofthegroup’sannualturnover, helpingtoensure The company’s multimillion unit-selling brands generate Tom Clancy’sRainbowSix Brothers inArms portfolios ofproprietarybrands includingfranchises suchas Today, thegrouppossesses oneoftheindustry’slargest ® , Far Cry ® , andTom Clancy’sGhostRecon ® , Prince ofPersia ® , Rayman ® ® , . BRANDS 23 UBISOFT • 2007 ANNUAL REPORT from 1to 10. in ubisoft’s catalog has grown multimillion unit-sellingbrands B less than10years,thenumberof of ubisoft’s editorial strategy. in with 5awardsatthe2006edition ofE3. of actionandhighly realisticenvironments andwasrecognized gaming tothenext level throughitsunprecedented freedom units injustunder sixmonths.Assassin’sCreed™ brings specifically for theNintendo Wii™,hasalreadysold onemillion which werehailed for theiroriginality.Red Steel™, designed internally included Red Steel™ andAssassin’sCreed™, bothof This pastyear, thehighly anticipated IPs beingdeveloped totally immerse gamersinitscreative universes. ing environments andinnovative gameplay,Ubisoft By offering lively characters, compelling storylines,breathtak- PEOPLE WANTTO PLAY BUILDING BRANDS rand creation liesat theheart strong brands strives to Six lion units. on eightplatforms andhascollectively sold morethan1.1mil- T Ninja As ofMarch2007,Teenage Mutant consumers withoutaproportionali approach, enablingittoreachanever-increasing numberof instances, thegroupalso continues topursue While single-platform approacheshave proven useful incertain and hadmuchsuccess withfans ofthatconsole. designed especially totake advantage oftheWii™capabilities and novel features offered byeachplatform. Red Steel™ was commercialize gamesthatrespect andoptimizethespecificities Ubisoft teamsworkclosely withmanufacturers todevelop and PLATFORM-ADAPTED GAMES Recon Advanced Warfighter Games suchasRaymanRaving Rabbids™,Tom Clancy’sGhost domain throughthe renewalofseveral classicfranchises. This year, Ubisoft once againproved itsexpertise inthis producing innovative sequels thatlive uptoconsumer expectations. The company seeks tofurtherbuilditsestablished brands by FRANCHISES INVESTING INEXISTING ® Vegas werewarmly received bycriticsandgamers. creating ® 2 andTom Clancy’sRainbow ncrease inproduction costs. urtles™ waslaunched its multi-platform of theraving rabbids, Rayman From nowon,inaddition tobeingtheconqueror and fun,wasjudged anideal mascot for thisprogram. Champion for children and children’srights. as thefirstvirtualambassador offree speech Rayman program, Ubisoft decided tosupportthisworthycause. framework ofthegroup’scorporate c not enrolled inschool. This pastyear, within the a country whereapproximately 60%ofchildrenare action planfor theschooling ofchildreninBrazil, Recently, UNICEFspearheaded athree-year general Rayman ® , whoconjures upnotionsofyouth, education ® : ® will also beknown itizenship Tom Clancy'sEndwar territory explores uncharted games andlaunchesthegenre intothefuture. Tom Clancy'sEndWar as weknowit.Bytakingthisinnovative approach, and defy thenormsofcurrentstrat put Tom Clancy'sEndWar armies againsthundreds ofothersonline,have system feature andallowingplayers toleadtheirown decisions, suchasproviding avoice command Ubisof gaming. unique approach to battle ofepicproportions,butalso a world-wide a EndWar Set onthebattlefieldsofWorldWarIII,Tom Clancy's strategy game. features torival anyconventioned PC-based the gamingexperience withenoughfucntions and advantage ofthepowernext-gen consoles, packing Tom Clancy’sEndWar™isbeingdeveloped totake overseen bystrategy veteran Michaelde Plater, experts inUbisoft’s Shanghaistudioand of team a by the franchise toaplace ithasnever been. Developed Cell in2003,andthisambitiousproject willbring the Tom Clancybrand tobelaunched since Splinter Tom ClancyEndWar™ ™ offers notonly stunningvisuals and ™ ™ is thefirstnewgameunder pushes thelimitsofstrategy ™ in a positiontoredefine in t’s key creative egy gameplay

BRANDS 25 UBISOFT • 2007 ANNUAL REPORT “Ubisoft hasstrengthened profiles becomeincreasingly continues to growandtheir oriented games. expand its catalog into family- particular saw thecompany ment hits oftoday. thisyearin titles inspiredbytheentertain- and developing license-based its portfolio, enteringnewdomains these audiences bydiversifying varied, ubisoft reaches outto A s thenumberofgamers its presence inthe family segment .” something for cessful diversification ofitsportfolio. Ubisoft isarmingitself withtherighttitlestoensure suc- the smash-hitJapanese animeTVseries, also illustrates how The upcoming release ofNaruto™ontheXbox 360™,based on on themovie fromthedirectors ofTarzan and Toy Story2. year withSurf’sUp™,apenguinarcade surfinggamebased collaboration withSonyPicturesAnimationcontinues this Building uponthesuccess ofOpenSeason™, Ubisoft’s book series. remained faithful tothetoneandspiritoforiginalcomic both oldandnewgenerations ofTurtle fans, gamedevelopers movie theatersandconsoles simultaneously. Inorder toseduce for thepopularTeenage MutantNinjaTurtles™ brand tohit 4Kids Entertainment,Mirage GroupandUbisoft made itpossible year. Anexclusive worldwide licensing agreement between Hollywood, generating 17%ofthegroup’stotal revenue this family-friendly segment andfurtherstrengthentieswith important roleinhelpingthegroupreinforce itspositioninthe Games based onfilmandtelevision licenses also played an coordination, creativityandimagination. dren Wii™'s novel features andprovides concrete benefitsfor chil- Composed ofearly-learning mini-games,thistitleexploits the Cosmic Family presence inthefamily segment. Season™ andthePetz license-based games, suchasRaymanRaving Rabbids™,Open Through acombination ofnewintellectual property(IP)and BRANCHING OUT such ashelpingthemtoimprove theirmemory,hand-eye everyone ® offers avirtualspace adventure for children. ® series, Ubisoft hasstrengthened its The Petz also togrowandfeel even betteraboutthemselves. not only tohave funwithfamily andfriends,but concrete benefits;inotherwords,theyenableplayers broad appeal,ease ofplay,flexible duration and For Ubisoft, these games arecharacterized bytheir games for thecasualmarket. of specialized experts toworkondeveloping more This year, thegroupbroughttogetherateam Ubisoft believes thatvideo gamesarefor everyone. Male orfemale, young orold, hardcore ornovice, braingame. teasing series isMyWordCoach,a spelling andvocabulary experiences. The firsttitletobereleased inthe which provides players withawide variety oflearning of beingamusician,andtheMyCoachseries, Sessions, agamethatgives people theexperience commercialize many“casual”titles,includingJam of thissegment. Inthecoming year, Ubisoft will in thepastfiscal year, isatestamenttothepotential for everyone Games ® series, whichhassold 3.5millionunits Driver teams fromitsdeveloper, Reflections Interactive. acquired therightstoDriver in thehistoryofvideo games.This pastyear, Ubisoft to ensurethattheDriver knowledge ingamedevelopment andbrand creation spirit. The grouplooks forward toleveraging its is agamethatremainsfaithful tothebrand’s original world, Driver With morethan14millionunitssold throughoutthe a cultbrand. games segment byrelying onatalented teamand Ubisoft ismakingasuccessful entryintothedriving next-gen gamers. up toitsreputationandsucceeds inwinningover was released inJanuary 2007for thePS ahead withDriver Ubisoft goesfull-speed ® 76, thefirsttitleunder theUbisoft label, ® is oneofthemostsuccessful brands ® brand continues tolive ® and integrated the ® ® P systemand

BRANDS 27 of ubisoft’s interactive universes. U brands: front nique gameplay andcharismatic characters areat theheart

DARK MESSIAH™ MIGHT & MAGIC Action/Adventure and center

BRAND NEW RED STEEL™ Action/Adventure

M

I L L M ® I U O FAR CRY

L N T

A I

I Shooter R

E

BRAND NEW HEROES OF MIGHT & MAGIC® Strategy M

I L L M ® I U O BROTHERS IN ARMS

L N T

A I

I Shooter R

E

M

I L L M ® I U O RAYMAN

L N T

A I

I Family R

E

M

I L L M ® I U O TOM CLANCY’S RAINBOW SIX

L N T

A I

I Shooter R

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BRAND NEW ASSASSIN’S CREED™ Action/Adventure BRAND NEW HAZE™ Shooter

M

I L L M ® I U O THE SETTLERS

L N T

A I

I Strategy R

E

M

I L L M ® I U O DRIVER

L N T

A I

I Action/Driving R

E

M

I L L M ® I U O TOM CLANCY’S GHOST RECON

L N T

A I

I Shooter R

E M

I L L M ® I U O TOM CLANCY’S SPLINTER CELL

L N T

A I

I Action/Adventure R

E

SILENT HUNTER™ Simulation

BLAZING ANGELS™ Simulation

M

I L L M ® I U O

L N T

A I

I Action/Adventure R

E licences

ith a portfolio so wide-ranging that it reaches from the wskate park to the stars, from the crime lab to the beach, and all across the globe, Ubisoft truly offers something for everyone. ® SURF’S UP™ Movie Animated STAR WARS STAR Fiction Movie Science SHAUN WHITE SHAUN Extreme Sports LOST™ TV Series Animated Movie Animated TMNT™ TEENAGE MUTANT MUTANT TMNT™ TEENAGE TURTLES™ NINJA TV Series ™ Anime TV CSI: CRIME SCENE CSI: CRIME SCENE INVESTIGATION™ 2007 FINANCIAL REPORT

< UBISOFT • FINANCIAL REPORT 2007 4 8 3 6 5 7 2 1 lsay171 172 170 150 168 168 170 167 Concordance Table 168 145 glossary Schedule offinancialcommunicationsfor fiscalyear2007/08 Documents availabletothepublic 8.5 addressesandprofessional feesoftheauditors Names, 8.4 Declaration oftheperson responsibleforthereferencedocument 154 8.3 Personresponsibleforthereference document 8.2 156 8.1 and for theaudit oftheaccounts 143 persons responsible for thereferencedocument Resolutionsundertheauthorityofextraordinary generalmeeting Resolutionsundertheauthorityofordinarygeneralmeeting 150 153 7.2 7.1 140 of theCombined General MeetingonJuly 4,2007 Text for draftresolutions subjectedto thevote 134 144 report,preparedpursuanttoArticleL.225-235 Auditor’s Limitationsonthepowersof Chief ExecutiveOfficer 6.5 Outlook 6.4 Internal controlprocedures 6.3 133 140 underwhichtheBoard’sworkispreparedand organized Conditions 6.2 6.1 implemented bythecompany 131 organized andtheinternalcontrolprocedures 108 under whichtheboard’s workisprepared and french commercialcode,concerningtheconditions 118 118 drawn upinaccordance witharticle L225-37ofthe 95 Report ofthechairmanboard ofDirectors referredtoinArticleL621-18-2oftheFrenchMonetary Operations 117 133 contractwiththeissueranditssubsidiaries Services 5.9 96 Compensationofmanagers 5.8 132 OtherofficesheldbytheDirectors 5.7 94 LoansandguaranteesgrantedtomembersoftheBoardDirectors 5.6 5.5 offraudconviction,associationwith Absence FunctioningoftheBoardDirectors 5.4 5.3 92 Rulesapplicabletotheappointmentandreplacement 93 112 ofthegroup'sBoardDirectorsandmanagement Members 5.2 51 5.1 Corporate governance Additionalinformationonthecompany 58 54 51 Generalinformationonthecompany 4.2 47 55 4.1 56 information 53 onthecompany 59 SpecialAuditor’sreportfiscalyearendedMarch31, 91 46 reportonthefiscalyearendingMarch31,2007 General 3.8 information Other 3.7 42 tothecorporateaccounts Notes 3.6 38 Cashflowstatement 52 3.5 Corporatestatementsofchanges 3.4 42 32 EntertainmentSAincomestatement Ubisoft 3.3 44 UbisoftEntertainmentSAbalancesheet 37 3.2 3.1 Entertainment SA as ofMarch31,2007 Corporate accounts ofUbisoft Reportfortheconsolidatedaccountstatements totheconsolidatedfinancialstatements Notes 2.6 cash flowstatement Consolidated 2.5 statementsofchanges Consolidated 2.4 incomestatement Consolidated 2.3 Consolidatedbalancesheet 2.2 2.1 32 as ofMarch31,2007 Consolidated financialstatements Recentevents,outlookandstrategies Insurance 1.12 1.11 Commitments factors Risk 1.10 Generalinformation 1.9 Subsidiariesandequityinterests 1.8 Environmentaldata 1.7 Socialserviceactivities 1.6 Humanresources 1.5 Cashassetsandcapital 1.4 1.3 ofactivityandcommentsonresults Analysis Significanteventsofthe2006-07fiscalyear 1.2 1.1 Introduction for fiscalyear the group'sactivity andresults n rcs conigadfnnilifrain151 and processaccountingfinancialinformation concerning theinternalauditproceduresusedtoprepare of theBoardDirectorsUbisoftEntertainmentS.A. of theFrenchCommercialCode,onreportChairman 133 133 114 141 and FinancialCodeArticle222-15-3oftheAMF’sinternalregulations a bankruptcyorpublicincriminationand/orsanction of themembersBoardDirectors 89 2007 onregulatedagreements 33 for thefiscalyearendingMarch,31,2007 for fiscalyear2006/2007 31 sommaire THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1

The group’s activity and 31 results for fiscal year 1 2006/2007 Introduction 32 1.1 Significant events of the 2006-07 fiscal year 32 1.2 Analysis of activity and comments on results for fiscal year 2006/2007 33 1.2.1 Key figures 33 1.2.2 Quarterly and annual consolidated sales 35 1.2.3 Breakdown of sales by activity 35 1.2.4 Change in production volumes 36 1.2.5 Sales by platform 36 1.2.6 Sales by destination 36 1.2.7 Changes in the income statement 37 1.2.8 Change in working capital requirement (WCR) and debt 37 1.2.9 Asset financing policy 37 1.3 Cash assets and capital 37 1.3.1 Changes in equity 37 1.3.2 Cash flow 38 1.3.3 Borrowing terms and financing structure 38 1.4 Human resources 38 1.4.1 A motivating, friendly work environment 39 1.4.1.1 Direct communication involving each individual in the company’s day-to-day life 39 1.4.1.2 Teams with a wide range of profiles 39 1.4.1.3 Close contact and a friendly environment 39 1.4.2 Valuing performance and autonomy 39 1.4.2.1 Individual autonomy and initiative 39 1.4.2.2 International growth opportunities 40 1.4.2.3 Compensation that seeks to recognize performance and commitment 40 1.4.3 Skills development: a priority 40 1.4.3.1 Ubisoft has opted for in-house production 40 1.4.3.2 An innovative training program adapted to employees’ needs 40 1.4.3.3 Continuous emulation thanks to dialogue among the group’s experts 40 1.4.4 Employment at Ubisoft in France 41 1.4.4.1 Work environment and working conditions 41 1.4.4.2 Skills development 41 1.4.4.3 Employment and non-discrimination 41 1.4.4.4 Compensation 42 1.5 Social service activities 42 1.6 Environmental data 42 1.6.1 Recycling 42 1.6.2 Destruction of non-marketable products 43 1.6.3 Power consumption 43 1.6.4 Water consumption 43 1.6.5 Environmental risks 43 1.7 Subsidiaries and equity interests 44 1.7.1 Organizational structure at March 31, 2007 44 1.7.2 Equity interests during the fiscal year 45 1.7.3 Activities of subsidiaries 45 1.8 General information 46 1.8.1 Investment policy 46 1.8.2 Research and development policy 46 1.8.3 Real estate, plants and equipement 46 1.9 Risk factors 47 1.9.1 Risk related to product strategy and brand positioning and management 47 1.9.2 Risk related to market developments and the success of next-gen consoles 47 1.9.3 Risk related to a top game being delayed or getting off to a poor start 48 1.9.4 Risk related to recruitment and retention of talented employees 48 1.9.5 Risk related to the termination of a contract with a licensing partner 48 1.9.6 Risk related to intellectual property 48 1.9.7 Legal and arbitration proceedings 49 1.9.8 Risk related to dependence on suppliers and subcontractors 49 1.9.9 Risk related to customer dependence 49 1.9.10 Risk related to computer security 49 1.9.11 Financial risk 49 1.9.12 Risk related to future acquisitions and integration of acquired companies 51 1.10 Commitments 51 1.11 Insurance 51 1.12 Recent events, outlook and strategies 52 1.12.1 Recent developments 52 1.12.2 Market outlook 52 UBISOFT • FINANCIAL REPORT 2007   August 2006   July 2006  June 2006   May 2006 teen-fold. Itcurrently hasanextensive catalogueofstrong exchange in1996,thegrouphasincreased itssalesseven- high growthpotential.Since itslistingonthestock internal growthandcarefully targeted acquisitions with continued expansion byimplementingastrategy ofboth Founded in1986,Ubisoft hasexperienced strongand bined (sources NPD,ChartTrack, Media Control,GFK). fourth largest independent publisherinbothregionscom- des Europe,Australia andNewZealand,makingitthe States andwasranked second inthePAL zone,whichinclu- the fifth-largest independent publisherintheUnited interactive gamesoftware worldwide. In2006,Ubisoft was Ubisoft isoneoftheleadingdevelopers andpublishersof Introduction sold morethan14millionunitsthroughouttheworld. ving gamessegment. This prestigiousbrand hasalready giving theGroupadirect pointofentry intothekey dri- of calendar2006according toMicrosoft. the numberofuniqueplayers duringthesecond quarter Tom Clancy’sGhostRecon Advanced Warfighter Rabbids™. Wii™ includingRed Steel™ andRaymanRaving Ubisoft announces 7titlesfor thelaunchofNintendo fication ofMr.MarcFiorentinoasindependent director. Ubisoft announces onJuly 18,2006theelection byrati- Ubisoft acquires theDriver Ubisoft opensaproduction studioinSofia,Bulgaria. Clancy’s RainbowSix Best FirstPerson Shooter for Xbox 360™;andTom 2006; BrothersinArmsHell’sHighway™recognized as Game aspartoftheCriticsAwards:BestE3 Assassin’s Creed™ winningtheBestAction/Adventure Ubisoft emergesvictoriousfromthe2006E3,with warrants issued in2003. €24 millionequity increase following theconversion of on-line gamesservice Xbox Live ked numberonefor solo andmultiplayer gamesonthe Overall BestFirstPerson Shooter awarded byIGN. 1.1 Significant eventsofthe2006/2007fiscalyear ® Vegas pickingupthetitleof ® franchise for €19million, ® . This dataisbased on ® is ran- of gamers. games for agrowingandincreasingly demanding audience common goal:thecreationofextremely high-quality force comprises 3,934individuals,allworkingtowarda force have produced numerousstrongbrands. This work- world, wherethetalentandcreativityofUbisoft's work- these three activitiesat15production sitesaroundthe lers). Over time,Ubisoft hassuccessfully implemented bution (thephysicaldelivery ofthefinalproduct toretai- external licenses, as well asproduct marketing) anddistri- software), publishing(theacquisition ofgamerightsand major fieldsofactivity:development (thecreationofgame consumers. The group'sbusinessisorganized intothree brands, recognized bybothindustryprofessionals and October 2006 Tom Clancy’sGhostRecon Advanced WarFighter -   January 2007   December 2006  November 2006  Tom Clancy’sRainbowSix - Tom Clancy’sSplinterCellDouble Agent - calendar year 2006. the thirdbest-seller intheUnited Statesfor thefull ding seller inOctober; three intermsofsales. of 14.6%and13.4%respectively: 360™ systeminEuropeandtheU.S.,withmarket shares Ubisoft ranked no.2independent publisher for theXbox Rayman with market shares of29.2%and18%respectively. independent publisherfor Wii™inEuropeandtheU.S. During thefiscal thirdquarter,Ubisoft ranked no.1 ding development studiofor 2006. publisher andnamesUbisoft Montrealasthefourth lea- lion, ranks Ubisoft asthesecond leadinginternational video gamemagazinewithacirculationofover twomil- Game Informer, theworld’snumberonecomputer and 2006. A two-for-one stock splitiscarried outonDecember 11, a portionoftheGroup's2006OCEANEbonds. €24.2 millionequity increase following theconversion of to reinforce Ubisoft’s positiononagrowingmarket. A newcommercial subsidiaryopens itsdoors inMexico seller inDecember intheUnited States; ® and Red Steel™ positioned numbertwoand ® Vegas wasthethirdbest- ® was thelea- ® was THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1 33

February 2007

 Ubisoft is honored at the 10th Academy of Interactive Arts & Sciences Achievement Awards (AIAS), winning the award for the First-Person Shooter of the Year for Tom Clancy’s Rainbow Six® Vegas.  Ubisoft announces its new expansion plan in Quebec with the objective of creating 1,000 additional jobs by 2013 and opening a studio specialized in the creation of digital cinema content.  €50 million capital increase following the conversion into shares of 92% of Ubisoft’s 2008 warrants (BSAR).

Analysis of activity and comments 1.2 on results for fiscal year 2006/2007

1.2.1 Key figures

The following selected financial information related to the fiscal years ended March 31, 2006 and March 31, 2007 is taken from the consolidated financial statements and presented in accordance with IFRS standards.

03.31.07 03.31.06 In K€ In K€

Sales 680,348 547,070 Operating result 34,579 - 1,391 Financial Result 18,047 - 9,110 Share in earnings of associates 3,149 19,109 Income tax expense - 15,217 3,324 Net earnings (Group share) 40,558 11,932 Equity 521,819 381,258 Investment related to production 161,196 130,475 Personnel 3,934 3,441 UBISOFT • FINANCIAL REPORT 2007 1 nldn ahpsto fcmaisprhsdadsl 722,697 -17 gible &intangibleassets”. (2) Adjustment at31march2006of1,5M€corresponding totheacquisition ofFar Cryfromtheline“Internaldevelopment expen (1) Includingcashpositionofcompanies purchased andsold Statement ofchangesincashflowfor comparison withotherindustryfirms / ercaino aesfwr 1,9 146,100 -19,109 -183,459 214,499 -3,149 -226,009 +/- Internaldevelopment andlicense development expenses +/- Otherincome andexpenses +/- Capitalgainsorlosses +/- Costofshare-based payments +/- Provisions +/- Otherdepreciation +/- Depreciation ofgamesoftware +/- Shareinearningsofassociates Consolidated netincome Cash flowfromoperating activities e hnei ahadcs qiaet ,6 -7,054 40,786 80,894 90,493 - 4,868 -1,040 7,537 106,551 78,653 80,894 -230 30,740 140 3,787 - 153 Net cashandequivalents positionattheendoffiscalyear -5,871 Exchange gains/losses oncash - 95 16,078 Net cashandequivalents atthebeginningoffiscal year Net changeincashandequivalents - 153 Cash fromfinancingactivities - +/- Othercashflows 7,382 +/- resales/purchases ofownshares + Proceeds fromissueofcapital - Accrued interest - Repaymentofloans - Repaymentoffinancialleasingloans + Newlong-andmedium-term loans + Newfinancialleasingloans Cash flowfromfinancingactivities Cash frominvestment activities +/- Partial saleofassociates + Proceeds fromloansandotherfinancialassets +/- Othercashflowrelated toinvestment operations +/- Purchases/sales offinancialassets + Salesoftangibleandintangibleassets - Purchases oftangible&intangibleassets Cash fromoperating actvities +/- Changeinworkingcapitalrequirement Other liabilities Trade payables Other assets Trade receivables Inventory Operating cashflow (1) 33.703.31.06 03.31.07 7 22,691 170 €K€ K€ ses” totheline“Purchases oftan- 5,3 -24,875 - 151,933 50621,383 - 15,036 3,831 - 42,982 -7,048 - 34,830 ,1 -2,873 - 1,914 56912,692 11,932 15,619 40,558 310-32,268 -18,434 -32,204 53,150 33,429 -26,397 11,539 45,768 578-4,227 -18,407 15,778 43,394 ,4 2,692 3,344 ,2 -2,545 2,627 0 -650 - 807 21-147 -221 8254,688 -842 2- - 42 4 126 2,776 243 884 2 -503 625 0128 60 (2) (2) THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1

1.2.2 Quarterly and annual consolidated sales 35

Sales 2006-2007 2005-2006 Change at current Change at constant (in M€) exchange rates exchange rates

First quarter 70 43 + 62% + 64% Second quarter 102 110 - 7% - 4% Third quarter 311 250 + 24% + 27% Fourth quarter 197 144 + 37% + 42% Total fiscal year 680 547 + 24% + 27%

At current rates, sales increased by 24% over FY 2006/2007; at constant rates, growth was 27%.

1.2.3 Breakdown of sales by activity

The Ubisoft group’s sales are distributed over the three and supervises production in exchange for acquiring the core activities of the : development, license. Ubisoft then handles localization and manufactu- publishing and distribution. ring and is, of course, responsible for marketing and sales. The company receives revenue from product sales and Development covers revenues from titles developed, pro- pays royalties to the brand's developers and/or owners. duced and marketed by Ubisoft's in-house studios. It also includes sales coming from tittles created by third-party Distribution sales correspond to revenue from the sale of developers for which Ubisoft provides supervisory and co- products from publishers with which Ubisoft has signed dis- production services and acts as guarantor of the final pro- tribution agreements and for which it handles marketing duct’s quality. and sales. Such agreements may be local, covering a limi- ted geographical area, or may encompass several regions. Publishing covers revenues from titles designed and pro- duced by third-party developers for which Ubisoft finances

Breakdown of sales by activity is as follows:

Breakdown of sales by activity (%) 2006-2007 2005-2006 Change in volume

Development 76% 85% - 11% Publishing 18% 10% + 124% Distribution 6% 5% + 86% Total 100% 100%

The sharp increase in publishing and distribution activities illustrates the company’s enhanced ability to attract more exter- nal studios and publishers thanks to the quality of its distribution network and the expansion of its publishing teams. UBISOFT • FINANCIAL REPORT 2007 cantly higher. exceed 70andthenumberofproducts shouldbesignifi- In 2007/2008,thenumberoftitlesmarketed isexpected to countries. group, whichnowpositionitasamajorplayer inmost ties, andisaresultofgainsinmarket sharemade bythe demonstrated bythe sharpgrowthindistributionactivi- The stronggrowthofpublishinganddistribution titlesis third parties),publishinganddistribution: Number oftitlesproduced in-house, co-productions (with territories. the benefitofadvance launchesofnewmachinesandstrongergrowth, Europeishelped bytheemergence ofnew develop onanequal basis initstwomajorregions,namely EuropeandNorthAmerica.Thus, whereasNorthAmericahas The geographic breakdown of2006/2007sales isinlinewiththatoftheprevious year andatteststothegroup’sability * A titleisasinglegamethatruns ononeormoreplatforms. For example, oa 73 37 1 9 39 2 18 57 27 4 29 19 Total 24 Distribution Publishing 2004-2005 2005-2006 Development 2006-2007 Number oftitles* saPcfc3 .%2 4.6% 1.2% 25 7 44.8% 19.3% 15.0% 4.8% 1.6% 245 105 82 33 11 45.0% 17.6% 14.3% 306 120 97 % 2005-2006 % 2006-2007 Total Rest oftheworld Asia-Pacific United States/Canada Total Rest ofEurope United Kingdom Germany France Fiscal year (inM€) Nintendo DS™constitute five products butjustonetitle. Rayman Raving Rabbids™PlayStation opouto 0913 14 9 10 10 14 Co-production In-house production 1.2.4 1.2.6 in productionvolumes Change Sales bydestination ® 2, Xbox360™, Nintendo Wii™,PC,and  les, whichaccounted for 60%oftheyear’s sales: The company enjoyed anearly positioningonnewconso-   oa 0%100% 3% 1% 100% 17% 9% 6% 1% 0% 1% 5% 7% 11% 27% 0% 5% 0% 14% 16% 2% 16% Total 14% 28% Miscellaneous G-CUBE™ 16% Xbox ® ®Advance™ PSP™ DS™ PlayStation®2 PlayStation®3 Nintendo Wii™ Xbox 360™ CD-ROM PC as aleader onthisconsole. and Red Steel™ have enabled thegrouptoestablishitself from thesuccess ofthePetz was particularly highfor Nintendo DS™,whichbenefited sented alltogether16%ofsalesduringtheyear. Growth Nintendo DS™andSonyPSP™portable consoles, repre- Wii™: thesuccess ofgameslike Rayman particular asaresultoftheironlinegameplay. success ofthegamesunder theTom Clancybrand, in Microsoft’s Xbox 360™:thisplatform benefited fromthe PSP™ heldsteady. from thatoftheplatform itself, whilesalesonSony 1.2.5 by Platform Sales 8 0%57100% 547 49.4% 100% 270 680 48.6% 330 972 76.7% 8.4% 37 46 7.2% 9.5% 49 64 ® range and,moregenerally, 0620 2005-2006 2006-2007 ® Raving Rabbids THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1

Changes in the income Change in working 37 1.2.7 statement 1.2.8 capital requirement (WCR) and debt The gross margin was 66.5% of sales compared to 66% in FY 2005/2006. This slight increase resulted from a high Working capital requirement fell in absolute value to percentage of sales (60%) on next-gen consoles, which off- €66 million compared to €79 million last year, justified by set the customary fall in prices of games on previous- a €7 million improvement and a €6 million foreign generation consoles. It also stems from the growth in exchange impact. Given the growth in commercial activity, online revenue which, although modest (accounting for this represents only 9.7% of sales compared with 11% the less than 1% of sales), generates a margin of close to 100% previous year. and is expected to increase in the future. The net financial position is now positive by €55 million Current operating result before share-based payments was versus net debt of €65 million in 2006. This €120 million €38.2 million versus €3.1 million in 2005/2006. improvement can be attributed to a number of factors: This increase is the result of:  operating cash flow of €46 million,  a €91 million increase in the gross margin tied to the  improvement in working capital requirement of €7 million, sharp growth in sales (+ €133 million),  share capital increases in the amount of €107 million  an €11 million reduction in marketing and structural essentially resulting of conversion of OCEANE and war- expenses, which represent less than 26% of sales compa- rants, red with 34% the previous year,  investments totaling €43 million, €25 million of which  a €67 million increase in development expenses, which was used to acquire the Far Cry® and Driver® brands. represent 35% of sales, up nearly 4 points. Financial result breaks down as follows:  €7.3 million in financial costs, 1.2.9  €1.7 million in foreign exchange losses, Asset financing policy  €27 million positive impact linked to the equity swap. The company does not use securitization contracts, trans- The €3.1 million profit pertaining to the associates repre- fers of receivables pursuant to France’s Dailly Law, or sales sents the share in Gameloft SA’s earnings. with the option to repurchase, but does rely on factoring The company recognized a tax expense of €15.2 million, and discounts, primarily in Germany and the UK. It also uses which includes research tax credits in the amount of confirmed lines of credit totaling €130 million (including a €1.9 million. €100 million syndicated loan) and short-term lines of cre- dit to finance its cash requirements at peak times. Net income was €40.6 million which translates into net earnings per share of €0.95.

1.3 Cash assets and capital

1.3.1 Changes in equity

The video game business requires investments in develop- With €522 million in equity, up by €141 million, Ubisoft ment in excess of 30% of sales. Publishers must be able to easily finances its game investments, which total €226 mil- finance these investments, which cover average periods of lion. In FY 2006/2007, this equity again increased through around 18 to 24 months, using their equity. Moreover, the exercise of the 2003 share subscription warrants and a publishers must launch new licenses regularly, the success portion of the 2006 OCEANE and 2008 redeemable share rate of which is not guaranteed. subscription warrants (BSAR), which brought in €96 mil- For these reasons, strong capitalization is essential to lion. It also rose by €10 million as a result of increases tied ensure the financing of regular investments and to deal to the stock option plans and the company employees’ with the unpredictability of a given title’s success or failure savings plan. without jeopardizing the company’s continued existence. UBISOFT • FINANCIAL REPORT 2007      Ubisoft keyfiguresatMarch31,2007   Publishers have twotypesofcashflow: period occurring between November andJanuary. ged from-€55millionto€100million, withthepeakdebt Thus infiscal year 2006/2007,thecompany’s netdebt ran- Average seniority of3.5years. An average ageof31years. 81% inproduction activitiesand19%inbusinessactivities. Ubisoft employees in22countries. 3,934 employees (average staff duringtheyear: 3,734),nearly a15%increase since March31,2006. capital requirement maythenbegreater. ter ofthefiscal year isvery strongsince theworking and March.This patternmaychangeifthefourth quar- experiences anincrease incashflowbetween February finance majorcash-flowpeaksaroundChristmasand lable instores.For thisreason, thecompany must an average of80daysafter theproducts aremade avai- (approximately 12%ofsales)before collecting revenue days onaverage, andalso finance marketing expenses which represent 35%ofsalesandarepayablewithin 30 pany mustfirstfinance themanufacture ofproducts, costs andthecollectionofre 75% duringthesecond) andagapbetween production realized duringthefirsthalfofcalendaryear and racterized bystrongseasonal trends(25%ofsalesare cash flowsneeded for themarketing ofgamesarecha- flow amounted tomorethan€226millionin2006/2007; that teamsareallocated toseveral projects. This cash ring inmindthateachproject intensifiesgradually but spread outevenly over an18to24-monthperiod, bea- cash flowsneeded tofinance development costs are 1.3.2 1.4 Human resources Cash flow venues. In deed, the com- lines. from thesyndicated loan)and€93millioninshort-term €130 millioninconfirmed lines(€100millionofwhichis and thevarious linesofcredit extended toit,including should beabletofinance itsoperations usingitscashflow For FY2007/2008,andbarringamajoracquisition, Ubisoft debt toequity ratio of0.9. credit linewhichuses thesamecovenants butwithanet Furthermore thecompany signed in2006/2007a10M€ 2006/2007 for €20millionareasfollows: cated loan,andthebilateral linesofcredit obtained in OBSAR, whichwasredeemed inFebruary 2007,thesyndi- covenants thatmustberespected withregardtothe OCEANE, whichwasredeemed inNovember 2006.The There arenofinancialcovenants limitingtheuse ofthe detail insection 1.9.11. The average cost ofborrowingis6.29%,asexplained in and hasinvested cashsurpluses onaregularbasis. May 2005orthebilateral linesofcredit issued bybanks, not hadtouse the€100millionsyndicated loanobtained in represent morethanthecompany’s netdebt, Ubisoft has bond (€52million).Since boththese bondscombined the 2006OCEANEbond(€89million)andOBSAR In 2006/2007,mostofthefinancingused resulted from sindrcialsEid . 1.5 0.9 1.5 0.85 assigned receivables/Ebitda < Net debt restated toreflect restated toreflect goodwill < assigned receivables/equity Net debt restated toreflect 1.3.3 and financingstructure Borrowing terms 0720 2006/2007 2007/2008 THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1

Distribution of staff by activity (1) 39

Activity At 03.31.07 At 03.31.06 At 03.31.05 Production 3,194 2,729 2,274 Business 740 712 698 Total 3,934 3,441 2,972

Distribution of staff by region

Country Employees Employees Employees at 03.31.07 at 03.31.06 at 03.31.05 North America 1,923 1,795 1,431 Europe and North Africa 1,600 1,188 1,175 Asia-Pacific 411 458 366 Total 3,934 3,441 2,972 (1) These include only permanent employees. The total number of employees therefore excludes trainees and temporary employees: intermittent and short-term staff.

only 20% of Ubisoft’s employees (versus 80% for men). It 1.4.1 A motivating, should be noted, however, that women account for 39% of friendly work senior management and 41% of business personnel.

environment 1.4.1.3 Close contact and a 1.4.1.1 Direct communication friendly environment involving each individual in the Ubisoft is committed to ensuring close contact among its company’s day-to-day life employees by implementing, as much as possible, reasona- bly-sized structures (85% of the sites have fewer than 200 The teams are regularly informed of the company’s stra- employees), with HR managers who are in touch with the tegy and new developments in several ways: a group por- staff and team managers who are available to their team tal, local intranets, a monthly group newsletter, internal members. meetings at all the subsidiaries and team workshops. More generally, the friendliness of the work environment An in-house survey is conducted every two years, on ave- continues to be a strong point of the group’s culture, as rage, to poll all employees on the company’s main strate- noted by 94% of the group’s employees during the last in- gic choices and to determine the teams’ level of house survey. satisfaction (80% participation in the most recent survey conducted in April 2007). Initiatives and programs are put With regard to working conditions, Ubisoft complies with in place based on the survey results and are made known all statutory requirements related to health and safety at to employees at regular intervals. its establishments. In addition, employees are subject to limited occupational hazards. 1.4.1.2 Teams with a wide range of profiles 1.4.2 Valuing performance By definition, the process of creating a game implies strong collaboration among the teams involved, since all and autonomy technical and artistic areas interact from start to finish. The diversity of the employees’ profiles is, in fact, one of 1.4.2.1 Individual Autonomy and the strengths of the company, where multiculturalism and Initiative open-mindedness are part of everyday life: Employees enjoy a high degree of autonomy in their work,  there are some 30 job categories at Ubisoft, ranging as demonstrated by the results of the last in-house survey, from creative personnel to programmers, game des- in which 91% indicated that they could take initiative in igners and product managers, all of whom are united their day-to-day work. through their passion and shared objectives; Employee autonomy is also encouraged through the gra-  Ubisoft’s teams work in 22 countries, which means that dual implementation of IT systems that include user- the group boasts at least as many different nationalities. accessible web tools at all subsidiaries to allow employees Since video games are products that continue to appeal to manage their own absences, expense accounts, profes- primarily to men, it makes sense that women represent sional data and so on. UBISOFT • FINANCIAL REPORT 2007 industry. The internationalandstrategic placement ofits Ubisoft hasthesecond largestin-house design teaminthe employer inthevideo gamesector. Romania, France and China,whereUbisoft isthe largest nearly 15%.Mostrecruitment took place inQuebec, employees joined thegroupduringyear, anincrease of actively pursued its internalgrowthstrategy: 493 Despite anincreasingly competitive market, Ubisoft has Ubisoft has opted for in-house production 1.4.3.1   ire torewardindividualandgroupperformance: Ubisoft hasintroduced abonuspolicythatreflects itsdes- commitment recognize performance Compensation and that seeks to 1.4.2.3    on-site, therearemanyinternationalcareer paths: In addition tomobilityacrossdepartments andpromotions development. review, togetherwiththeHRmanager,potentialareasfor manager, andthisannualmeeting isanopportunityto Each employee isassessed atleastonce ayear byhisorher opportunities International growth 1.4.2.2 options. nearly 15%ofthegroup’semployees hadreceived stock their targets.At March 31,2007,allplanscombined, to employees whohave regularly out-performed against Finally, stock optionsaregranted onadiscretionary basis prise lessthan1%ofcapital. shares owned byUbisoft employees areestimated tocom- mation knownasofMarch31,2007,thetotalregistered today represents 0.924%ofcapitaland,inlightinfor- employee shareholdingviaacompany mutualfund(FCPE) for Canadianemployees bytheendofJuly 2007.Indirect Directors hasscheduled asharecapitalincrease reserved 2001 –andintheUSA inSeptember2006.The Boardof were carried outinFrance –aregularoccurrence since success. Sharecapitalincreases reserved for employees for allUbisoft employees toenjoyashareofthecompany’s Employee stock ownership plansarealso anexcellent way established atthebeginningof year. according totheirattainmentofquantifiableresults the businessteamsreceive abonusthatiscalculated contribution, game’s profitabilityandtheemployee’s individual the production teamsreceive abonusthatisbased onthe world. there arecurrently 117expatriates workingaroundthe China andCanada, the countries receiving themostexpatriates areFrance, in FY2006/2007,therewere181internationaltransfers, 1.4.3 a priority Skills development: needs program adapted Aninnovative to employees’ training 1.4.3.2  tise tobestadvantage: that allowsandencourages itsteamstosharetheirexper- The group makes every effort tocreateanenvironment group’s experts thanks Continuous emulation to dialogue amongthe 1.4.3.3    were characterized asfollows: The training programs thattook place inFY2006/2007 rity. tage, itisonly natural thattraining isavery highHRprio- necessary tocontinuously maintainatechnological advan- In asector whereinnovation andtechnical expertise are nies. ning, andITmaintenance) areprovided byoutside compa- In some countries, auxiliaryservices (e.g.security, clea- employees. artistic services), intermittentworkers andtemporary Ubisoft occasionally uses freelancers (particularly for Austin, Texas. in NorthCarolinabyclosingWolfpackStudiosInc. lopment teamsattheRed StormEntertainmentInc.studio This pastyear, thegroupopted toconsolidate itsUSdeve- this year toenrollinanewGameDesigncurriculum. class thatincludes 116students whohadtheopportunity than 600candidatesapplied for thesecond graduating at thecampus,39graduates have joined thegroup.More game disciplines. Ofthefirstclassof69students trained in May2005,atwhichyoung recruits aretrained invideo In Montreal,Ubisoft also relieson“theCampus”created and 35people, respectively. Bulgaria. At March31,2007,these studiosemployed 73 Interactive LtdstudiointheUKandopened astudioin To supportthisgrowth,Ubisoft acquired theReflections world. attracting themostqualified people fromaroundthe 15 production sitesenablesittobuildtalented teamsby job. They also have onlineaccess totraining materials. have year-round access tothecourse listandschedule by In Montreal,for example, employees enrollonlineand sing training topics. gives teamsacertain degree offlexibility, suchasinchoo- Thus, various local programs arestructured inawaythat means toplayanactive roleintheirowndevelopment. The aimistoempoweremployees andtogive themthe exist atmostofthelargesubsidiaries; new employee integration andsponsorship programs ding salaries)was€1,405,551. the budgetallocated totraining duringtheperiod (exclu- 31% onlanguageinstruction(FrenchandEnglish), technical skillsrequired for production activitiesand a largepartofthese training programs (47%)focused on represents anannualaverage of2.5daysperemployee, 9,730 daysoftraining wereoffered bythegroup,which THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1

 multi-site collaboration projects that involve shared pro- 1.4.4.1 Work environment duction are being developed, requiring even greater dia- and working conditions 41 logue among the studios (e.g. Tom Clancy’s Ghost Recon Advanced Warfighter 2™, which was developed at two Work hours sites); Full-time employees work 35 hours per week. Work sche-  international meetings related to a specific activity or a dules vary depending on each activity’s requirements and specific topic take place on a regular basis; on employees’ preference for a five-day work week or for the granting of overtime compensation days (RTT).  the Academy of Experts, which meets several times a 2.2% of employees work part time. year and is a sort of internal “think tank”, has a two-fold mission: to allow the sharing of information among the Overtime hours during the course of the fiscal year were development studios and to solve complex technical pro- worked in accordance with current legal and union provi- blems; sions. The absenteeism rate in 2006/2007 was 1.5% (1) and  collaborative workspaces and databases are increasing breaks down as follows: in number. Their aim is to facilitate collaboration and the organization and sharing of key information concer-  80% due to illness, ning teams, projects, jobs, sites, etc. 300 new collabora-  15.5% due to exceptional leave, (2) tive web workspaces were created this year. The group  4.5% due to work-related accidents. portal, the display of which is customized according to the activity, is an entry point through which employees (1) The absenteeism rate excludes maternity and paternity leave. can exchange information and best practices with their (2) These include time off for a birth, marriage, moving, etc. peers; Entertainment  exchanges of expertise among sites are on the rise as a The entertainment department offers shows at reduced result of trips made by certain employees on short- or prices (a 40% discount on 2,025 tickets provided by Ubisoft long-term assignments, which increased by 74% over the to its teams in 2006/2007), leisure weekends, events, etc. previous year (181 assignments during the past fiscal year); Its annual budget, excluding salaries of the entertainment coordinators, is €400,000. Associations with related industries (music, film, televi- A sports room open only to employees offers fitness acti- sion, etc.) continue to grow: vities and group classes.  in February 2007, Ubisoft announced the opening in Montreal of a new production center that specializes in 1.4.4.2 Skills development the creation of digital content for the film industry. Its main purpose is to produce short films based on the Ubisoft has incorporated the individual right to training various games to which Ubisoft owns the rights; (DIF) into its occupational training policy. During the period, the budget allocated to training (excluding sala-  exchanges with experts in these industries are also taking ries) increased by nearly 27% compared with the previous place. The form these exchanges take include collabora- year, for a total of €792,045. tions on some of our games, such as on development of Ubisoft also offered positions to several interns and the Lost™ game, between the producers of the TV show apprentices during FY 2006/2007. Internships are often a and the teams at the Montreal studio; bridge to employment. In France, for example, one-third In terms of human resource management, Ubisoft conti- of the junior employees hired this year had previously nues to implement tools and programs firmly aimed at completed an internship at Ubisoft. developing and motivating its teams. According to the latest in-house survey, nearly 90% of the 1.4.4.3 Employment and group’s employees feel that Ubisoft is a good company to non-discrimination work for. Information concerning employment and non-discrimina- tion in France is presented below:  69% of Ubisoft’s workforce in France comprises manage- Employment at Ubisoft ment-level staff, 1.4.4  women account for 29% of all employees, and 78% of in France them hold management positions,

 an average workforce of 755 employees during the year,  in terms of compensation, gender equality is respected,   71% men and 29% women, 75% of personnel are employed under open-ended agreements,  64% in production activities and 36% in business and  employees at Ubisoft in France have representation, support activities,  in FY 2006/2007, Ubisoft had two disabled employees  an average age of 32 years, and contributed €82,700 toward the integration of disa-  average seniority of five years. bled people into the workforce. UBISOFT • FINANCIAL REPORT 2007 recycling ofitsused computer equipment andwaste paper. The group ismindfulofitsresponsibilityconcerning the electronic equipment, aswellwastepaper. Ubisoft actively recycles used computer, electrical, and cardboard orplastic)placed ontheFrenchmarket. based oneachpackage (identified bycategory:paper, In France, Ubisoft contributes totheeco-packaging tax 14001 environmental standard. cess. Onefacility iseven certified compliant withthe ply withthisstandard’s “safety andtheenvironment” pro- and assemblers areISO9001certified andtherefore com- The mainmanufacturing facilities ofUbisoft’s suppliers soil, noise orodor pollution. impact ontheenvironment, whetherintermsofair,water, publishes anddistributes.Ittherefore hasavery low Ubisoft does notmanufacture thevideo gamesthatit the group’scultcharacter, Rayman plan, offering bothfinancialsupportandthechance touse The groupdecided topartnerwithUNICEFsupportthis 60% ofschool-aged childrenarenotenrolled inschool. ling ofchildreninBrazil, acountry whereapproximately ned ofUNICEF’sthree-year general actionplanfor schoo- around theworld.Inlate2006,for example, Ubisoft lear- spearheaded several importantphilanthropiccampaigns Since thecreationofthisprogram lastyear, thegrouphas ture. young people throughaccess togames,education andcul- business, thisprogram aimstohelpdisadvantaged orailing games. Inlinewiththegroup’scorporate values andcore its corporate citizenshipprogram -Sharingmorethan The groupalso participatesincharitableactionsthrough larly intheareasofsportsandentertainment. regular basisandoffers themnumerousbenefits,particu- Ubisoft organizesspecial events for itsemployees ona 2001, Frenchemployees also receive anadditional contri- Moreover, under theGroupSaving Plansset upsince variable amount(cf.Section 1.4.2). In France, compensation consists ofafixed amountanda Compensation 1.4.4.4 sador for free speech andchildren’srights. 1.6 1.5 1.6.1 Environmental data Social serviceactivities Recycling ® , asavirtualambas- ving thecity’smostdisadvantaged populations. which fundsapproximately 350groupsandprojects ser- their continued supportoftheCentraide organization, from Ubisoft Montrealwerealso active thisyear through sitize childrenabouttheissueofglobalhunger.Teams localization ofaneducational video gamedesigned tosen- the United NationsWorldFood Program (WFP)onthe This year, Ubisoft hadtheopportunitytocollaborate with port apreschool program inBangladesh. UNICEF, amountingtoatotaldonation of€67,094to sup- purchase ofaRêves de fillesgame,Ubisoft donated €1to In general, theUbisoft groupisworkingtocombat wasteby Germany, theUS,UKandItaly). recycle theircomputer equipment (for example, in At thesametime,foreign subsidiarieshave made efforts to portable telephonesand/orused Blackberrys. victims ofnon-workrelated accidents for therecycling of The Frenchsubsidiariescollaborate withanassociation of cled some 12tonnesofcomputer equipment. During thepastyear, Ubisoft’s Frenchsubsidiariesrecy- to specific treatmentfacilities. isolate toxic materialsso theycanbepackaged androuted “reclaimed”. This disassembly process makes itpossibleto that itcanbesorted and isolated andeachcomponent recovery, thecompany “de-manufactures” equipment so current lawsregardingwastereduction andmaterials and recycle used equipment. To ensurecompliance with recovery ofcomputer monitorstosalvage, disassemble the processing ofelectrical andelectronic wasteandthe Ubisoft hascontracted withacompany thatspecializes in In order torecycle its computer equipment inFrance, Used computerequipment count) whichwilltake place inthesummerof2007. tion withthisplan(withanadditional contribution anddis- approved thetermsofasharecapitalincrease inconnec- bution fromthecompany. The BoardofDirectors also and creativity.FromFebruary 15 that promotevalues suchasrespect for nature,sharing for girls aged 8to12,thislineiscomposed ofvideo games the launchofanewproduct line–Rêves de filles.Designed another opportunitytosupportUNICEFinconjunction with Shortly thereafter, Ubisoft’s Frenchsubsidiaryidentified th to April15 th , for every THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1 donating equipment to charitable organizations or selling

it to wholesalers or employees instead of discarding it. 43 1.6.2 Destruction of Our Ubisoft Divertissements subsidiary gives some of its non-marketable used equipment to a social services company that works in products the IT field and helps troubled young adults enter the workforce. This company recycles, refurbishes and resells Each subsidiary is directly responsible for disposing of the equipment to social service organizations. inventories at distribution platforms. For the most part, cartridges and toner are returned to During the fiscal year, Ubisoft destroyed approximately suppliers. 165 tonnes of non-marketable products. The various pro- Waste paper ducts were destroyed (by crushing and compacting) under the supervision of official bodies and sent to outside com- In terms of paper recycling, the subsidiaries either: panies to be:  take advantage of municipal or government programs to  burned (in Japan, for anything that cannot be recovered, recycle their paper via selective sorting or collection cen- and in the Netherlands), or ters, as is the case in Germany, Korea, Italy, Switzerland and the UK;  buried (in Italy and the US), or  or rely on specialized outside firms, as is the case in  recycled (in the UK, Germany, Australia, Canada, France Canada, the US (cartons, boxes) and France. and Japan). Nearly one out of every two sites recycles its paper. In France, products are destroyed by a company speciali- zing in the recycling of CDs, DVDs, computer disks and In France, a work group mindful of the issue of environ- plastic electronic media of all kinds. Products are crushed mental protection called RECYCLONS! (Let’s recycle) has and sorted before being transformed into fine particles been in existence for several years. that are resold to the plastics processing sector. Its goal is to promote recycling at Ubisoft’s French subsi- diaries through the recycling of paper products, the pur- chase of recycled paper for printers and copiers, the 1.6.3 distribution of non-disposable plastic cups, and the inclu- Power consumption sion of recycled office supplies in the standard catalogue provided to group subsidiaries in France. The group consumed approximately 13.8 million KWh in FY 2006/2007 for a total cost of roughly €930 thousand As in France, the Canadian studio set up an environment versus 11.2 million KWh in FY 2005/2006 totaling about committee this past year in an effort to implement practi- €870 thousand. cal, environmentally-friendly solutions. Recycling in some countries complies with strict standards set out by environmental regulations: in Germany, Ubisoft holds a “Green License” in connection with the EU direc- tive on packing supplies.

The countries with the highest consumption levels were as follows:

CANADA FRANCE UNITED STATES CHINA ROMANIA

KWh (in thousands) 03/31/2007 6,743 2,767 1,318 904 937 KWh (in thousands) 03/31/2006 4,778 3,064 1,233 920 364

1.6.4 Water consumption

Ubisoft’s amount of water consumption is not significant.

1.6.5 Environmental risks

The group has no knowledge to date of any environmental risks. Ubisoft has not set up any provisions or taken out any coverage on potential environmental risks. It did not pay any indem- nities in this regard during the fiscal year. UBISOFT • FINANCIAL REPORT 2007 (1) These companies areindirectly heldbyUbisoft Entertainment SA. bsf od(ugra 100% (Bulgaria) 100% 100% (UK) 100% (France) (France) 100% Ubisoft Eood 100% Ubisoft Entertainment LTD 100% (France) 100% (France) 100% Ubisoft Castelnau SARL 100% (France) Ubisoft Paris StudioSARL (Germany) 100% (France) 99.35% Ubisoft (France) Production Annecy SARL 99.95% (Canada) (Romania) Ubisoft Production MontpellierSARL (Spain) Ubisoft SupportStudiosSARL 97.50% Ubisoft EditorialSARL (Italy) Ubisoft Development SARL Blue ByteGmbH 99.86% Red StormEntertainmentInc (Morocco) 100% 100% Ubisoft MusicInc (France) Ubisoft SRL (Canada) 100% Ubi StudiosSL 100% 100% Ubisoft StudiosSRL (France) 100% Ubisoft Productions France SAS (Canada) 100% (France) 100% Ubisoft MusicPublishing Inc (France) (China) 100% Ubisoft SARL (France) 100% Shanghai UbiComputerSoftware Co.Ltd 100% (France) Ubisoft Divertissements Inc (France) (France) Ubisoft Graphics SAS Ubisoft PicturesSAS 100% Ubisoft SimulationsSAS (France) Ubisoft ComputingSARL TIWAK SAS Ubisoft DesignSAS Ludi Factory SAS Ubisoft WorldStudiosSAS Production aeotS Fac) 18.89% (France) Gameloft SA Mobile Telephony 1.7 1.7.1 Subsidiaries andequityinterests Organizational structureatMarch31,2007 (1) Uie tts 100% (United States) Ubisoft EntertainmentSA bsf K(aa)100% 100% (Japan) 99.99% 99.97% (Australia) (Italy) 100% (Spain) 100% (UK) (Germany) 100% Ubisoft PTY Ltd Ubisoft KK (France) Ubisoft Inc Ubisoft SpA Ubisoft SA Ubisoft GmbH Ubisoft Ltd Ubisoft France SAS Marketing b otEtranetLd Bai)99% 99.99% (Switzerland) (Brazil) 100% (branch) 100% 100% 100% (S.Korea) (Canada) 98% (France) Ubi Soft EntertainmentLtda (Finland) 99.98% (Norway) Ubi GamesSA 99.50% 100% Ubisoft EntertainmentSA (Sweden) (Netherlands) 100% Ubisoft NorwayAS (HongKong) (Austria) Ubisoft FinlandOY Ubisoft CanadaInc (Denmark) Ubisoft EMEASAS Ubisoft Warenhandels GmbH Ubisoft Sweden AB Ubisoft BV Ubisoft Ltd Ubisoft NordicAS bsf iia rsIc(aaa 100% (Canada) Ubisoft DigitalArtsInc Digital Animation bsf ol A Fac)100% (France) 100% 100% 100% (France) (France) 100% (United States) Ubisoft Marketing international SARL (France) Ubisoft Manufacturing etAdministration SAS (France) Ubisoft WorldSAS Ubisoft OrganisationSAS Ubisoft HoldingsInc Ubisoft Books andRecords SAS Support (1) Uie tts 100% (United States) 100% THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1

Equity interests 45 1.7.2 during the fiscal year 1.7.3 Activities of subsidiaries

Production subsidiaries Creation of companies These subsidiaries are responsible for software design and - May 2006, creation of Ubisoft Entertainment Ltd (United development. Their business has expanded substantially as Kingdom), wholly-owned subsidiary of Ubisoft Ltd, follo- a result of the increasing number of projects completed in- wing the acquisition of Reflections Interactive Ltd’s assets house and a larger workforce. and entire development studio staff.

- Creation of the following French companies: Marketing subsidiaries  April 2006: Ubisoft Editorial SARL and Ubisoft Production Montpellier SARL, These subsidiaries, which are responsible for distributing Ubisoft products throughout the world, have experienced  May 2006: Ubisoft Support Studios SARL and Ubisoft significant growth in America as a result of the advance Production Annecy SARL, release of new consoles.  July 2006: Ubisoft Paris Studio SARL and Ubisoft Castelnau SARL, Parent company-subsidiary relations  January 2007: Ubisoft Marketing International SARL. The existence of these subsidiaries involves: - June 2006, creation of Ubisoft EOOD (Bulgaria), wholly-  billing of the parent company by the production subsidia- owned subsidiary of Ubisoft Entertainment SA. ries for development costs based on the progress of their - February 2007, creation of Ubisoft Digital Arts SA (Quebec), projects. These costs are capitalized at the parent com- wholly-owned subsidiary of Ubisoft Divertissements Inc. pany and amortized starting on the date of the product’s commercial release; Share capital increase  billing of the distribution subsidiaries by the parent com- In February 2007, Ubisoft Entertainment SA increased its pany in order to contribute to the development costs. equity ownership of Ubi Games SA through the capitaliza- The parent company also centralizes certain costs that it tion of the current account totaling CHF 2.5 million or later distributes to its subsidiaries, including for: €1.5 million.  IT projects, Liquidation  purchases of computer equipment,  overhead costs, January 2007, liquidation of Ubi Computer Software Beijing Company Ltd. (China). The impact of this liquida-  financial costs, current account interest and cash pooling tion on equity is €170 thousand. interest.

Main subsidiaries

Subsidiary Sales Operating Net Sales Operating Net Sales Operating Net (in K€) result income result income result income 03.31.07 03.31.07 03.31.07 03.31.06 03.31.06 03.31.06 03.31.05 03.31.05 03.31.05 Ubisoft Inc. (United States) 287,402 8,631 6,541 227,601 7,480 3,810 207,959 6,878 3,888 Ubisoft Ltd (UK) 110,571 2,090 1,140 94,675 1,830 757 83,709 1,792 699 Ubisoft GmbH (Germany) 56,847 1,074 907 35,309 1,437 -170 53,601 2,407 625 Ubisoft France SAS* 64,129 1,212 1,399 48,499 826 876 51,809 979 885

* IFRS accounts. UBISOFT • FINANCIAL REPORT 2007 ping tools for eachproject, incorporating thelatesttech- Ubisoft hasdeveloped apolicyofresearching anddevelo- In anongoingeffort tocreatetop-qualityvideo games, Investment relatedtoaverage workforce % oftotalpre-taxsales Production-related investment €161 million. tion costs increased by24%,risingfrom€131millionto its market share.Thus, inFY2006/2007,in-house produc- licenses indifferent genresand,moregenerally, increase order togainafoothold onnewplatforms, createnew Ubisoft hasmaintained itsinvestment policymomentumin 1.8.2 1.8 1.8.1 0620 0520 2004/2005 2005/2006 2006/2007 0620 0520 2004/2005 2005/2006 2006/2007 2004/2005 2005/2006 2006/2007 11mlin€3 ilo €100million €131million €161 million 5,3 5,5 €50,890 €52,159 €53,531 36%2.5 18.80% 23.85% 23.69% General information development policy Research and Investment policy No basicresearch isconducted. totaled €162thousand. duct. Duringtheyear under review, these depreciations depreciation tofollow theproduct life-cycle ofthepro- amortized over athree-year period alongwithadditional Research anddevelopment expenses arecapitalized and gamers atotalentertainmentexperience. ment isfocused onproducing creative gamesthatoffer technologies suited toahigh-qualityproduct. Develop- therefore focused oninnovation andfunctionalitybased on mercial software, oracombination ofthetwo.Research is ped in-house withaspecific purpose inmindorusingcom- expected results,thetools selected willeitherbedevelo- Depending ontheproblemsinvolved inagameandthe now hasahighly pragmatic approachtoitsprojects. grasp ofthebesttechnology currently available, Ubisoft Thanks toitsin-house teamofengineers, whohave asolid overall financing. required intermsoftime,humanresources andthegame’s directly affect theinnovation potentialandtheinvestment in eachproject, because decisions made atthatpoint and development process take place atavery early stage nological advances. Indeed, theselection ofengines,tools try. Ubisoft does notownthebuildingsitoccupies inanycoun- 1.8.3 plants andequipement Real estate, THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1

1.9 Risk factors 47

Identified risks are as follows (in order of importance):

Risk related to Risk related to 1.9.1 product strategy 1.9.2 market developments and brand positioning and the success of and management next-gen consoles

Like all publishers, Ubisoft depends on the success of its Like all publishers, Ubisoft is reliant on advances in tech- product catalogue. nology, which impact both changes in consumer demand In order to minimize this risk, Ubisoft is particularly care- and publishers’ product offerings. ful to develop its product catalogue by emphasizing the In particular, when a new console is introduced on the mar- creation of innovative, riveting games. ket, sales of previous-generation consoles slow down until In addition, Ubisoft’s strategy focuses on its own brands the new console is made available and gradually picks up and in-house production, which allows it to maintain the slack. This temporary cyclical impact has now ended control over most of the design/development/duplica- with the arrival of Xbox 360™, Nintendo Wii™ and ® tion/manufacturing/delivery chain and to guard against PlayStation 3, and the video games market has clearly inaccurate projections regarding a product's release date. shown its responsiveness to the introduction of next-gen consoles, which promises a period of steady growth in the This strategy, based on strong brands, enables the group years ahead. to minimize its game-related risks since such brands ensure that the group will receive regular income over the At the same time, publishers must plan ahead to adapt long term. their games to the latest technology and make major investments in research and development in order to deve- Today, innovation is a key element of the video games mar- lop titles for next-gen consoles. ket. Ubisoft’s goal is to continuously surprise gamers, the- reby increasing its games’ chances of success. Indeed, all these new consoles promise very high perfor- mance and high-definition graphics, but also require much On the strength of its experience and its knowledge of the larger teams to take full advantage of their technical capa- markets and consumers, Ubisoft is acquiring the resources bilities. it needs to win over other high-potential segments, such as car games, that will enhance its catalogue. In this respect, it is critical that a publisher be able to fore- see and therefore select the proper format in which to Hollywood and TV licenses are strengthening the group’s develop a game. This strategic decision is very important brand creation strategy. given the level of investment required. An inappropriate In the same way, occasional gamers have become an choice, or a delay in the release of a console for which a important target for the group. DS™ and Wii™ have game was developed, could have a negative impact on pro- attracted a new generation of consumers, which includes jected sales. children, women and senior citizens. Understanding their In addition, to manage these cost-related risk factors and expectations in order to develop games that everyone can the temporary slowdown in business, a publisher must have enjoy is one of the group’s top priorities. adequate financial resources. Ubisoft continuously diversifies and enhances its game For Ubisoft, this period has been a real opportunity to catalogue and brand portfolio in an effort to minimize its expand its market share in new consoles and to penetrate risks. market segments in which the group was not yet present. Finally, the company makes full usage of the marketing Ubisoft has a first-rate design staff operating in develop- and sales resources it needs to boost the profile of its pro- ment studios in Canada, China and Romania, where pro- ducts. Its distribution network in more than 50 countries is duction costs are lower. As a result, and thanks to its made up of multi-cultural teams. The group’s ranking as teams’ performance, the group has managed to maintain the second largest independent publisher in Europe, and its standing in the face of competitive pressures that are fifth in the United States, ensures effective distribution of constantly increasing. its catalogue and allows it to maximize the success of its products. Finally, Ubisoft has a firm command of the necessary tech- nology and the resources it needs to adapt to future tech- nological advances. The group’s large initial investment will pay off over the medium term. UBISOFT • FINANCIAL REPORT 2007 Campus inMontreal,established incollaboration with efforts inorder to facilitate recruitment. For example, the Along thesamelines,group isboosting itstraining ple, therebyexpanding itsworkforce by68%. past three years, the company hashired nearly 1,600 peo- best talenttoenhance itsdevelopment teams.Over the sities, thegrouphasconsistently managed toattract the studios andactive recruiting efforts atcolleges anduniver- early presence. Moreover, thankstothereputationofits group islessaffected incountries whereitestablished an Competition intermsofrecruitment exists butvaries: the resources could also leadtodelays intherelease ofgames. expertise toensurethecompany’s growth.Alackof personnel toitsstudioswhohave thespecialized technical Ubisoft could face difficulties inrecruiting experienced up toseveral hundred people over several months. games for next-gen consoles requires theparticipationof singly specific expertise, particularly asdevelopment of duce morecreative andinnovative gamesdemand increa- The development ofnewtechnology andthedesire topro- mance andtraining ofitsproduction teams. The group’ssuccess isbased onsuchfactors astheperfor- be predicted. company canrelease follow-up products whose success can the sametoken, once atitlehasgained recognition, the impact whenreleased, andthenfindsuccess lateron.By their anticipated success. Somemaymake only aminor Despite this,some gamesmaynotimmediately achieve meeting objectives related tocosts anddelivery times. to gamers’expectations intermsoffunctionalitywhile The priorityistodevelop high-qualitygamesthatlive up expertise. its games,Ubisoft banksontheeffectiveness ofitsinternal monitoring ofexternal production orthequalitycontrol of Whether intheorganizationofitsdevelopment teams,the get” isappropriateinmanysenses. essential thatgamesgetoff toagood start.The term“tar- nologies andpenalized byashortproduct lifespan, itis In amarket made cyclical bytheemergence ofnewtech- ded todevelop ortestagamemaydelay itsrelease. The difficulty inforecasting theexact amountoftimenee- group’s shareprice, revenue andfutureearnings. anticipated gamecanhave anegative impactonthe ducts, anyannouncement ofadelay inthelaunchofan that isincreasingly driven bytheneed torelease hitpro- In anintensely competitive andhighly seasonal industry 1.9.4 1.9.3 talented employees retention of recruitment and Risk relatedto to apoorstart or gettingoff top gamebeingdelayed Risk relatedtoa Editeurs de Logicielsde Loisirs(SELL- French trade asso- piracy. The company isamemberoftheSyndicatdes Like allgamepublishers,Ubisoft faces theproblem of any particularpatent. Ubisoft hasnotfiled anypatentsand does notdepend on registered withtheUSCopyrightOffice. international copyright laws.The AAAgamesarealso In addition, gamesdesigned byUbisoft arecovered by D.C.). America: thePatent andTrademark Office inWashington, Intellectual PropertyOrganization;andfinally, for North in theInternalMarket; internationally: theWorld Office] inParis; for Europe:theOffice for Harmonization National de laPropriétéIndustrielle[FrenchPatent Europe andinternationally (for France: theInstitut Ubisoft brands areprotected byregistrations bothin impact isnotoffset byothernewlicenses. revenue andoperating income, totheextent thatthis – could have anegative impactonthecompany's future reason –eitheratUbisoft’s initiative orthatofitspartners The potentialterminationofcertain partnershipsfor any that eachgamehasexcellent salespotential. way, Ubisoft canuse itspartners’reputationstoensure to expand itsgamecatalogueandincrease itssales.Inthis MGM Interactive Inc.These contracts allowthecompany Consumer Products Group,Touchstone Television and Consumer Products, LucasArts, Universal Studios often withprestigiouspartnerssuchas Sony Pictures Each year, Ubisoft signsnumerouspartnershipcontracts, savings plansanddevelopment plans. skills. These programs include stock optionplans,group employees whohave strongtechnical andmanagerial at thegrouplevel istoattract, train, retainandmotivate goal ofalltheprograms introduced byHumanResources databases, collaborative sites,etc.Inaddition, theprimary ensure thepreservation andtransfer ofknow-how,suchas res taken inthisregardarethedevelopment oftools to lability ofkey employees ormanagers.Amongthemeasu- minimize riskrelated tothedeparture orextended unavai- The company iscurrently organized insuchawayasto employees joined thegroup. of hiring500to600people peryear. This pastyear, 493 All these measureswillallowUbisoft toattainitsobjective train young recruits invideo gamedisciplines. 116 in2006/2007.The aimoftheUbisoft Campusisto its numberofstudents increase from69in2005/2006to programs inkey aspects ofvideo gamedevelopment, saw offers aseries ofvocational anduniversity-level training Cegep de MataneandtheUniversity ofSherbrooke, which 1.9.5 1.9.6 licensing partner contract witha termination ofa Risk relatedtothe intellectual property Risk relatedto THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1 ciation of entertainment software publishers) and pursues

all known cases of software piracy both in France and 49 1.9.9 Risk related to abroad (through criminal prosecution, if applicable, or by customer dependence any other existing criminal or civil remedy). It is also a member of the ESA (Entertainment Software Association), The company has no significant dependence on customers the North American equivalent to the SELL. that could affect its development plan. Moreover, with regard to piracy over the Internet, the Ubisoft's distribution network is increasingly centralized. company routinely takes legal action against hackers in order to force the withdrawal of games that have been ille- In fact, in most European countries as well as in the United gally placed online. States and Japan, distribution is centralized, and Ubisoft delivers its products directly to local retail chains, which in turn redistribute products to their stores. Only the smal- lest independent resellers are supplied through distribu- Legal and arbitration tors or wholesalers, mainly in France and the UK. 1.9.7 proceedings Most sales are made to so-called “key accounts”. The risk of non-payment by these clients is relatively low. The lawsuit which pended between the company and a Moreover, the main subsidiaries, which represent some licensee since October 2003 concerning breach of license 92% of group sales, are covered by credit insurance. agreement has been handed down in Ubisoft Entertainment SA favor. The total amount will be known in the next few Ubisoft's 10 largest customers account for 49% of the months. group's pre-tax sales. To the best of the company’s knowledge, there are no other exceptional events or lawsuits that are likely to have or have recently had a significant impact on the business, Risk related to results, financial position or assets of Ubisoft 1.9.10 Entertainment SA or its subsidiaries, other than that reco- computer security gnized in the consolidated financial statements and men- Despite the numerous integrated security systems tioned in part 2.5.4, note 13 – Provisions. deployed, Ubisoft is not totally protected from computer abuse, intrusion, problems with network user identifica- tion, and so on. Changes in legislation, the implementation Risk related to of new mobility solutions, the spread of viruses and the 1.9.8 increased use of the Internet are all factors that support dependence on suppliers the adoption of comprehensive security solutions. and subcontractors Information is a strategic resource of considerable value, and must therefore be protected in an appropriate man- The company has no significant financial dependence on ner. suppliers or subcontractors that could affect its develop- ment plan. Information system security protects information from these threats to ensure business continuity. Ubisoft and its subsidiaries primarily use the products and services of such suppliers as integrators (printers that pro- Security measures are aimed at guaranteeing the confi- duce manuals and package products; CD-ROM and DVD- dentiality, integrity and availability of information. ROM suppliers that provide these media and subcontract their duplication; and assemblers), as well as firms that provide technology and licensing or maintenance services 1.9.11 as part of their business. Financial risk In addition, despite the fact that 67% of the company’s sales are generated by games developed in-house, the Market risk company also makes regular use of the services of outside studios. These studios can either carry out projects on a The group limits its market involvement to the manage- traditional subcontracting basis by providing an additional ment of positions resulting from its commercial activities and/or specialized production capacity, or take on original and does not engage in any speculative transactions. Risk projects in which they have specific skills. These indepen- management is centralized and handled exclusively by the dent studios sometimes have limited financial resources staff of the group’s Finance department on the basis of gui- which can jeopardize the successful completion of a pro- delines approved by the CEO. ject. For this reason, the company limits the number of To limit interest rate and foreign exchange risk resulting games assigned to a particular studio and sees to it that all from business financing needs and international activities, or some of the technology they use is integrated. the group uses certain financial instruments, as described The company is, however, dependent on manufacturers to below. some extent. Like all publishers of console games, Ubisoft purchases game cartridges and media from console manu- Interest rate risk facturers. Supply therefore hinges on prior approval by manufacturers, the production of these media in sufficient The management of interest rate risk is aimed mainly at quantities, and the agreement of royalties. For PC games, minimizing the cost of the group's borrowings and at redu- there is no specific dependence. cing exposure to this risk. To do this, the group gives prio- UBISOFT • FINANCIAL REPORT 2007 investments ofliquidassets. They aretherefore invested in Money market funds:these funds involve temporary 22,059 ofitsownsharesvalued at€795thousand. stock salesandpurchases. At March31,2007,Ubisoft held rent regulationsandareintended toensure liquidityon governed byamarket-making contract pursuanttocur- contract signed withExane BNP:these purchases are Stocks helddirectly under amarket-making andliquidity these shareswas€67millionasofMarch31,2007. consolidated balance sheet, whilethefair market value of investment isvalued at€34milliononthecompany’s Ubisoft owns13,367,923shares, i.e.18.89%ofcapital.This games, suchastheinvestment inGameloft SA, inwhich Long-term strategic investments insectors related tovideo The company hasfour maintypesofequity investments. Equity pricerisk currencies offset byroyaltiesreceived fromsubsidiariesin two-way transactions (i.e.development expenses inforeign The groupreliesmainly onnatural hedges resultingfrom means thatthehedge period does notexceed 15months. The strategy istohedge one fiscal year atatime,which Canadian dollar, poundsterlingandAustralian dollar). ting cashflowinthemajorcurrencies(i.e.USdollar, The groupprotects only itspositionsrelated toitsopera- ting cashflowanditsinvestments initsforeign subsidiaries. The groupisexposed toforeign exchange riskonitsopera- Foreign exchange risk Debts andcashavailability atvariable rates (InK€) variable-rate loanandbankoverdrafts which,given its At March31,2007,thegroup'snetdebt consisted ofa increase inworkingcapitalduringparticularly busyperiods. variable-rate loanstofinance specific needs related toan rity tofixed-rate loansfor long-termfinancingneeds and ah39%-5,8 ,0. -277-552.8 200.0 -307.9 -2,757 1,036 -1,533 -2,204.2 835.8 -1,225.5 -55,281 -30,786 3.99% 20,000 3.98% 4.18% Effective Investments Cash Bank Ioan Variable-rate debt urnyIpc nslsImpactonoperating income Impactonsales -660.7 -3,254 JPY DKK -2,593.9 AUD CAD GBP -66,067 USD Currency Total neetrt withachange interest rate Nominal and short-terminvestment securities) was€55million. lion anditsnetcashflowposition (reflecting liquidassets At March31,2007,thegroup'sfinancialdebt was€71mil- Liquidity risk be €1,436thousand. impact ofareduction intheshareprice ofoneeurowould under theequity swapcontract atMarch31,2007,the the income statement.Given the1,436,274sharessold price inrelationtothesaleprice of€9.33arerecorded on value onthebalance sheet. Anyvariations intheshare Equity swapcontract: thisderivative isrecorded atitsfair volatility. products offering ahighdegree ofsecurity andvery low for FY2006/2007: cies onsalesandoperating income inthousandsofeuros Impact ofachange±1%intheprincipalforeign curren- and loansinforeign currencies. lion andCAD17.8millionthroughforward salescontracts At March31,2007,thecompany hadhedged GBP5mil- or sets upforward salescontracts oroptions. rencies), theparentcompany borrows inthese currencies commercial transactions (i.e.internalloansinforeign cur- the samecurrency).For non-hedged balances andnon- group’s sensitivity tochangesininterestrates isasfollows: Based onitsfinancialpositionatMarch31,2007,the ked tothestrongseasonal variation initsbusiness. finance thegroup’shighyear-end capitalrequirement lin- positive netcashflowposition,aremainly intended to nulitrs Ana neet Difference Annualinterest Annual interest ,8 835 944 1,084 2,830 nK inK€ in K€ 2 183 173 376 225 211 410 527 65 o f 1% THE GROUP'S ACTIVITY AND RESULTS FOR FISCAL YEAR 2006-2007 1

With the exception of a loan in the amount of €20 million, of €55 million and the level of available capital (including financial debt consists mainly of intra-group cash pooling a syndicated loan of €100 million and €30 million in confir- 51 transactions as shown in the accounts. med lines of credit) should minimize the risks related to these operations. In order to finance temporary needs related to the increase in working capital during especially busy periods, However, there is a possibility of certain risks: the group has a syndicated loan in the amount of €100 mil-  the dilution of current share ownership as a result of a lion, confirmed lines of credit for €30 million, and other share-based acquisition, lines of credit with banking institutions totaling €93 million at March 31, 2007.  the creation of significant long-term debt, The syndicated loan and the confirmed bank loans are  possible losses that could have a negative impact on pro- governed by financial covenants that are based on the ratio fitability, of net debt to equity and that of net debt to cash flow from  the setting aside of provisions for goodwill and other operating activities. intangible assets. The possible loss of key staff at the target company must be considered among the risks related to mergers and Risk related to future acquisitions. Such a loss could have a negative effect on the 1.9.12 acquired company’s sales, earnings and/or financial posi- acquisitions and tion. Ubisoft has, however, always demonstrated a high integration of acquired level of proficiency in integrating its acquired companies. companies

The company may undertake external growth operations in the medium and/or long term. The company’s sound balance sheet, which shows a positive net financial position

1.10 Commitments

On April 6, 2007, acquisition of the AnnoTM brand through the buyout of the German publisher Sunflowers Interactive Entertainment Software GmbH for €14.2 million. Through the transaction, Ubisoft will acquire a 30% stake in Related Designs Software GmbH, which developed Anno 1701. Ubisoft reinforces its position in the real-time strategy market. AnnoTM, along with Ubisoft’s The Settlers®, is one of the most well known franchises in Germany. The group’s management has made no firm commitments on other future investments.

1.11 Insurance

Description of insurance The group carries third-party liability insurance held by Ubisoft Entertainment SA which covers the entire world except the United States, Canada and Japan. Each subsidiary has coverage for:  risks related to property damage,  vehicles,  apartments rented to employees on assignment,  inventory,  transport provided to customers, etc. Foreign subsidiaries adapt and manage their local coverage based on their business activity and each country’s specific requirements. Ubisoft has signed a personal assistance contract for employees on business-related assignments in France and abroad. This contract covers all employees of French sites who require assistance and foreign repatriation. The group’s business operations do not in themselves pose an exceptional risk with regard to work-related accidents. Certain companies, particularly those in the US, the UK, Italy and Denmark, are insured against loss of business continuity. UBISOFT • FINANCIAL REPORT 2007  May 2007     April 2007 Summary ofcoverage limitsfor eachtypeofinsurance carried bytheprincipalentities: Coverage netr nuac ,0 ,0 ,5 - 500 6,000 1,250 29,071 18,000 7,000 8,179 4,450 3,000 China 3,712 3,049 Canada United States France Inventory insurance Property insurance General liability Coverage limits John Malkovich. Zemeckis andstarsAngelinaJolie,AnthonyHopkins released inNovember 2007whichisdirected byRobert Entertainment andWarnerBros.Entertainment,tobe “Beowulf”, afilmbyParamount Pictures,Shangri-La Ubisoft develops thevideo gameadapted from prestigious licenses asTom Clancy’sGhostRecon experienced teamwhose membershave worked onsuch EndWar™ isbeingdeveloped atUbisoft Shanghaibyan strategy gameveteran Michaelde Plater,Tom Clancy’s brand, Tom Clancy’sEndWar™.Under thesupervisionof Ubisoft announced thecreationofanewTom Clancy the series, andiscurrently workingonasequel. company thatdeveloped Anno1701,thelatestgamein will also holda30%interestinRelated Designs,the German market. Asaresultofthisacquisition, Ubisoft strategy games andoneofthebest-selling gamesinthe sold worldwide, Anno™isoneofthemostsuccessful Ubisoft acquired theAnno™brand. With5millionunits the second onDS™andXbox 360™. Ubisoft istheleadingindependent publisheronWii™and share of6.7%compared to6.1%theprevious year. third largestindependent publisherandhasamarket 41% inamarket thathasgrownby28%.Ubisoft isthe On thesameperiod salesintheUnited Statesrose by Xbox 360™. number oneindependent publisheronWii™,DS™and 8.6% compared to7.6%theprevious year. Ubisoft isthe largest independent publisherandhasamarket shareof a market thathasgrownby15%.Ubisoft isthesecond Sales inEuropefor thefirstquarter2007rose by31%in led tobereleased some timeinfiscal year 2007/2008. Tom Clancy’sEndWar™onnext-gen consoles isschedu- Clancy’s RainbowSix 1.12 1.12.1 Recent events,outlookandstrategies Recent developments ® and Tom Clancy’sSplinterCell ® , Tom ® . of theReflections Interactive LtdstudioandtheDriver major publishers.Ubisoft, for itspart,purchased theassets 2007 sawanumberofacquisitions ofstudiosandbrands by With regardtoindustryplayers, asinprevious years FY growth prospects. nities for gamedevelopers like Ubisoft, aswellnew These easily accessible gamesareproviding newopportu- taking careofanimals)ordevelop theirmentalfaculties. offer thechance tolive outtheirdreams(for instance, including womenandolder people, for whomvideo games use ofthese consoles isattracting newmarket segments, opened itsdoors toanewcategoryofgamer.The ease of With thesuccess ofWii™andDS™,in2006themarket 43% oftotalsalescompared with14%in2006. with next-gen consoles pickingupspeed andaccounting for In 2007,themarket isexpected togrowbyatleast12%, markets. by thesolid performance ofXbox 360™intheUSandUK was lessaffected bythearrival ofPS3thananticipated, and applications. middleware for PCandconsoles, with afocus ononline the purchase ofDemonware, acompany thatspecializes in wasalso anactive player intechnology through by thevery strongperformance ofPlayStation annual growthrate of202%.The market wasalso helped DS™, Nintendo’s portableconsole, whichenjoyed an thanks inparticulartotheenormoussuccess ofNintendo exceeded theexpectations ofindustryprofessionals, America, Australia andNewZealand.This growthfar ket fared extremely wellwith5%growthinEurope,North a transition between twogenerations, thevideo gamemar- 2005 ofMicrosoft’s Xbox 360™.Inthiscontext marked by gen consoles –Wii™andPS3following thelaunchinlate The year 2006sawtherelease ofNintendo andSonynext- Warhammer dio, creatorandownerofthemassively multiplayer game lops thisbrand. Electronic Artsacquired theMythicstu- brand andMTV acquired Harmonix,thestudiothatdeve- brand fromInfogrames. Activision bought theGuitarHero 1.12.2 nK nKS nKA inKCNY inKCAD inKUSD in K€ Market outlook ® Online: AgeofReckoning™. ® 2, which ® CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2 53

consolidated financial statements 2 as of march 31, 2007 2.1 Consolidated balance sheet 54 2.2 Consolidated income statement 55 2.3 Consolidated statements of changes 56 2.4 Consolidated cash flow statement 58 2.5 Notes to the consolidated financial statements 59 2.5.1 Highlights of the fiscal year 59 2.5.2 Significant accounting policies 59 2.5.2.1 Statement of conformity 59 2.5.2.2 Basis of preparation 59 2.5.2.3 Principles of consolidation 60 2.5.3 Scope of consolidation. 65 2.5.4 Notes to the balance sheet 66 2.5.5 Notes to the income statement 79 2.5.6 Appendix notes 84 2.5.6.1 Segment information 84 2.5.6.2 Business combinations 86 2.5.6.3 Transactions with related parties 86 2.5.6.4 Off-balance-sheet commitments 87 2.5.7 Employees 88 2.5.8 Potential assets and liabilities 88 2.5.9 Events after closing of accounts 88 2.6 Report for the consolidated account statements for the fiscal year ending March, 31, 2007 89 UBISOFT • FINANCIAL REPORT 2007 Deferred income taxassets Financial assets Investments inassociates Tangible assets Other intangibleassets Goodwill in thousandsofeuros ASSETS rd rdtr n eae conspybe1 11871,033 81,178 17 Total liabilities Current income taxliabilities Financial liabilities Sundry creditors Trade creditors andrelated accounts payable Borrowings 23,716 Deferred taxliabilities 24,794 Borrowings Employee benefits Provisions 7 Minority interests Consolidated earnings Consolidated reserves Equity component Additional paid-incapital Capital in thousandsofeuros LIABILITIES Total assets Cash andcashequivalents Current income taxassets Current financialassets Other receivables Trade receivables Inventory andwork-in-progress 2.1 Consolidated balancesheet o-urn iblte 40778,995 54,077 381,258 521,819 381,258 12 521,819 Non-current liabilities Total equity Equity (groupshare) 411,324 440,996 Non-current assets urn iblte 0,5 271,343 208,050 Current liabilities 320,272 342,950 Current assets oe e Net Net Notes oe 33.703.31.06 03.31.07 Notes 33.703.31.06 03.31.07 87,9 52,073 147,354 75,895 22,854 48,874 54,981 4 1,156 18 28,214 15 22,706 1,205 1,952 16 15 14 13 136,991 321 126,552 19,183 11 10 76042,321 2,702 30,034 37,630 22,276 2,458 233,959 33,998 80,032 6 25,510 5 264,026 4 77,374 3 2 1 39962,290 91,246 73,959 87,857 9 8 8,4 731,596 783,946 325,065 435,234 731,596 783,946 05811,932 30,032 40,558 38,990 5,708 10,605 ,0 882 2,103 6,025 7,037 -1 -- 8,204 - CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

2.2 Consolidated income statement 55

in thousands of euros Notes 03.31.07 03.31.06

Sales 19 680,348 547,070 Other operating income 20 166,467 132,965 Cost of sales -229,969 -187,623 Inventory changes in finished products and work-in-progress 2,037 1,186 Wages and social security costs 21 -171,038 -140,674 Other operating expenses 22 -174,275 -186,883 Tax and duty -5,950 -4,906 Depreciation 23 -230,113 -81,302 Provisions 23 -2,568 -79,440 Current operating result 34,939 393 Other operating income and expenses 24 -360 -1,784 Operating result 34,579 -1,391 Cash and cash-equivalent income 1,476 2,183 Cost of gross financial debts -7,067 -10,693 Net borrowings costs -5,591 -8,510 Financial income 38,201 17,369 Financial expenses -14,563 -17,969 Financial result 25 18,047 -9,110 Share in earnings of associates 26 3,149 19,109 Income tax expense 27 -15,217 3,324 Profit for the year 40,558 11,932 Attributable to minority interests share -- Group 40,558 11,932 Net earnings per share 0.95 0.63 Net earnings per share following the 2-for-1 stock split on December 11, 2006 0.95 0.32 Diluted net earnings per share 0.91 0.70 Diluted net earnings per share following the 2-for-1 stock split on December 11, 2006 0.91 0.35 UBISOFT • FINANCIAL REPORT 2007 rate ofMarch31,2007(€1=CDN$1.5366),i.e.-€1,488thousand. 2007 (€1=US$1.3318),i.e.-€9,665thousand,andthefall intheCanadiandollar between theclosingrate ofMarch31,2006( (1) Tr iuto so Mrh3,20 ,9 8,1 10,651 282,018 Equity 5,594 Additional Capital Profit (loss)resultingfromthevaluation andrecorded asequity Income/expense fromthedepreciation andsaleofownshares Tax onitemsrecorded directly asequity ortransferred directly fromequity Fiscal year earnings(Groupshare) Allocation ofconsolidated earningsN-1 Situation asofMarch31,2005 in thousandsofeuros iuto so ac 1 077074524- 435,234 7,037 105,357 8,204 1,012 325,065 Situation asofMarch31,2007 Reclassification related totheendofconvertible bonds 6,025 Other changes Change inscope ofconsolidation 40,355 Conversion ofOBSAR andOCEANE Exchange rate differences resultingfromtranslation offoreign activities Options onordinarysharesissued Change incapitalofmothercompany Total recognizedincomeandexpenses for theperiod 431 Other resultsrecorded directly inequity Dilution inequity ofassociates Profit (loss)resultingfromthevaluation andrecorded asequity Income/expense fromthedepreciation andsaleofownshares Tax onitemsrecorded directly asequity ortransferred directly fromequity Fiscal year earnings(Groupshare) Allocation ofconsolidated earningsN-1 Position atMarch31,2006 Reclassification related totheendofconvertible bonds Reclassification ofexchange rate differences ofmerged companies Exchange rate differences resultingfromtranslation offoreign activities Options onordinarysharesissued Change incapitalofmothercompany Total recognizedincomeandexpenses for theperiod Other resultsrecorded directly inequity Dilution inequity ofassociates 2.3 anslation differences primarily reflect thefall intheUSdollar between theclosingrate ofMarch31,2006(€1=US$1.2104) Consolidated statementsofchanges (1) paid-in component aia of financial capital €1 =CDN$1.4084)andtheclosing and theclosingrate ofMarch31, 1,468 3,344 2,692 instruments -8,204 -2,447 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2 57

Consolidated Translation Fiscal Total Minority Total reserves reserves year equity interests equity earnings Group share

32,453 -37,813 24,732 317,635 - 317,635 24,732 -24,732 - - 11,932 11,932 11,932 -174 -174 -174 -87 -87 -87 101 101 101 358 358 358 27 27 27 225 11,932 12,157 12,157 -416 40,370 40,370 2,692 2,692 8,410 8,410 8,410 -4,143 4,137 -6 -6 2,447 --- 55,298 -25,266 11,932 381,258 - 381,258 11,932 -11,932 - - - 40,558 40,558 - 40,558 -221 -221 - -221 742 742 - 742 -25 -25 - -25 815 815 - 815 130 130 130 1,441 40,558 41,999 - 41,999 -117 106,252 - 106,252 3,344 - 3,344 -11,344 -11,344 - -11,344 -1,286 182 182 168 2 170 170 -42 -42 -42 8,204 -- 75,598 -36,608 40,558 521,819 - 521,819 UBISOFT • FINANCIAL REPORT 2007 / lw rmdsoa ffxdast 4 126 -147 2,692 -19,109 243 3,344 -221 03.31.2006 -3,149 03.31.2007 + interestpaid +/- Othercalculated income andexpenses +/- Flowsfromdisposaloffixed assets +/- Costofshare-based payments +/- Provisions +/- Depreciation +/- Shareinearningsofassociates Consolidated netincome Cash flowfromoperating activities in thousandsofeuros xhnegislse ncs ,2 -2,545 22,697 21,383 -7,054 -503 80,894 2,627 40,786 -17 90,493 -1,040 7,537 -15,036 -4,868 78,653 625 106,551 80,894 -4,227 -230 140 30,740 3,787 -153 -201,866 (1) Includingcashpositionofcompanies purchased andsold 151,191 -15,778 Cash andcashequivalents attheendoffiscalyear Exchange gains/losses oncash 162,143 95 16,077 Cash andcashequivalents atthebeginningoffiscal year -153 Net changeincashandequivalents -5,871 Cash flowfromfinancingactivities +/- Otherflows -269,402 279,159 +/- Resales/purchases ofownshares + Proceeds fromissueofcapital 290,966 + Accrued interest - Repaymentofloans - Repaymentoffinance leasingloans 7,382 + Newlong-andmedium-term loans + Newfinance leasingloans Cash flowfromfinancingactivities Cash flowfrominvestment activities +/- Changeinscope ofconsolidation + Proceeds fromloansandotherfinancialassets +/- Otherflowrelated toinvestment operations - Purchases offinancialassets + Salesoftangibleandintangibleassets - Purchases oftangibleandintangibleassets Cash flowfrominvestment activities Net cashflowfromoperating activities - income taxpaid - interestpaid Cash flowfromoperating activities +/- Changeinworkingcapitalrequirement Other liabilities Trade payables Other assets Trade receivables Inventory + income taxpaid 2.4 Consolidated cashflowstatement (1) (1) 2891-179,628 -268,991 7 22,691 170 1193-24,875 -151,933 3,1 158,792 230,118 3,3 -7,048 -34,830 05811,932 40,558 349-18,434 -32,204 33,429 11,539 719-5,018 -5,934 -7,129 -2,873 -4,678 -1,914 ,7 5,934 4,678 ,2 5,018 7,129 87-650 -807 54,688 -842 8 2,776 884 4 - -42 0128 60 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

2.5 Notes to the consolidated financial statements 59

The figures in the following notes and statements are shown in thousands of euros unless otherwise indicated.

Highlights Significant accounting 2.5.1 of the fiscal year 2.5.2 policies

 Change in the percentage holding in Gameloft SA Ubisoft Entertainment SA is a company domiciled in France. Following the exercise of options by Gameloft SA employees, Ubisoft Entertainment SA’s percentage of The company's consolidated financial statements for the interest decreased from 19.416% to 18.893% at March 31, fiscal year ended March 31, 2007 include the company and 2007. its subsidiaries (together called “the Group”) and group shares in associates.  Sale of assets The financial statements have been approved for issue by On April 1, 2006, Ubisoft Warenhandels GmbH sold its the Board of Directors on May 29, 2007. business assets to Ubisoft GmbH.  Conversion of share subscription warrants issued in May 2.5.2.1 Statement of conformity 2003 The consolidated financial statements to March 31, 2007 In April and May 2006, increase in Ubisoft Entertainment have been prepared in accordance with the IFRS internatio- SA’s share capital of €24 million as a result of the conver- nal accounting standards (“International Financial sion of 12,767,115 of the share subscription warrants Reporting Standards”) applicable at March 31, 2007, as issued in May 2003. approved by the European Union.  Acquisition New standards, amendments to standards and interpreta- On August 3, 2006, acquisition from Atari Inc. and tions are not yet in effect for the fiscal year ending March Reflections Interactive Ltd of the intellectual property and 31, 2007 and have not been applied in preparing the conso- technology rights to the Driver® franchise, as well as most lidated financial statements. of the assets and all of the staff of the Reflections  IFRS 7 “Financial Instruments: Disclosures” and amend- Interactive Ltd development studio for US$ 24 million. ment to IAS 1 “Presentation of Financial Statements: Capital Disclosures”  2-for-1 stock split  IFRIC 7 “Applying the Restatement Approach under IAS On December 11, 2006, 2-for-1 stock split of Ubisoft 29 Financial Reporting in Hyperinflationary Economies” Entertainment SA shares from €0.31 to €0.155.  IFRIC 8 “Scope of IFRS 2, Share-Based Payments”  Performance of Ubisoft's share and unrealized equity swap gain  IFRIC 9 “Reassessment of Embedded Derivatives”  Despite the 2-for-1 stock split in December 2006 through IFRIC 10 “Interim Financial Reporting and Impairment” an increase in the number of shares, the share price rose The application of these new standards should have no by 92% between March 31, 2006 and March 31, 2007. This impact on the consolidated financial statements. explains the increase in the unrealized equity swap gain of €25.2 million, this despite the sale of 200,000 shares which 2.5.2.2 Basis of preparation resulted in a capital gain of €1.9 million. The financial statements have been prepared under the  Conversion of some of the OCEANE historical cost convention, with the exception of the follo- In November 2006, €24.2 million increase in Ubisoft wing assets and liabilities, which are evaluated at fair value: Entertainment SA’s equity through the conversion of Derivative financial instruments, financial instruments 459,013 OCEANE bonds into 475,998 new shares with a held for transaction purposes and financial instruments face value of €0.31 at a rate of €50.84. treated as available for sale.

 Creation of a new studio in Quebec Non-current assets intended for sale are valued at their accounting value or fair value less the costs of the sale, In February 2007, opening of a new studio Ubisoft Digital whichever is less. Arts Inc. specializing in the creation of digital content for the film industry. Preparation of consolidated financial statements according to IFRS requires that the group’s management make esti-  Early conversion of 92% of the 2008 BSAR mates and assumptions that impact the application of the In February 2007, €50 million increase in Ubisoft accounting methods and the amounts recorded in the Entertainment SA’s equity through the conversion of financial statements. 1,313,907 BSAR into 69 shares with a face value of €0.31 These estimates and underlying assumptions are establi- and 2,627,676 shares with a face value of €0.155 at a rate shed and reviewed continuously based on past experience of €19.175. and other factors considered reasonable in light of the UBISOFT • FINANCIAL REPORT 2007 extent thattheyarenotrepresentative ofa lossinvalue. nated inthesamewayasunrealized gains, butonly tothe group interestsintheentity.Unrealized losses areelimi- under jointcontrol areeliminated inproportiontothe resulting fromtransactions withassociates andentities lidated financialstatements.The unrealized gains panies areeliminated duringthepreparation ofthe conso- expenses resultingfromtransactions between groupcom- The balances, losses andunrealized gains,revenue and financial statements Transactions eliminated intheconsolidated method. percentage heldis18.89%,consolidated bytheequity Group arefully consolidated; only Gameloft SA, wherethe As ofMarch31,2007,thecompanies controlled bythe it ended. significant influence wasexercised uptothedateatwhich equity accounting method, startingfromthedatewhen profits andlosses recorded bytheassociates, usingthe statements include thegroupshareintotalamountof tional policiesbutnocontrol. The consolidated financial exercises significantinfluence onthefinancialandopera- Associates areentitiesinwhichUbisoft EntertainmentSA Associates it ceases. control istransferred totheGroup uptothedateatwhich consolidated financialstatementsfromthedateonwhich Subsidiaries’ financialstatementsareincluded inthe exercisable orconvertible aretaken intoaccount. To assess control, potentialvoting rightsthatarecurrently benefits fromitsactivities. entity’s financialandoperational policiesinorder toobtain the powertomanage,eitherdirectly orindirectly, the Entertainment SA. Controlexists whenthecompany has A subsidiaryisanentitycontrolled byUbisoft Subsidiaries Principlesofconsolidation 2.5.2.3 the Groupentities. The accounting methods have been applied consistently by consolidated financialstatements. applied consistently toalltheperiods presented inthe The accounting methods described belowhave been tangible assets. impairment testsongoodwill, otherintangibleassets and sions andestimatesareexplained innotesconcerning risk ofvariations duringsubsequent periods, these deci- financial statementsandthattheestimatespose aserious applying theIFRScanhave asignificantimpact onthe Given thatthedecisions made bymanagementwhen can differ fromestimated values. cannot beobtained fromanyothersources. Actual values tion oftheaccounting values ofassets andliabilitiesthat exercise ofjudgmentmade necessary for thedetermina- circumstances. They therefore serve asabasisfor the equity. ked tothetranslation reserves, asadistinctcomponent of cal rate. The resultingexchange rate differences areboo- rate atthetransaction date.Equityarekept atthehistori- translated intoeurosatarate approximating theexchange exchange rate. The itemsintheincome statementare goodwill, aretranslated intoeurosbyusingtheclosing The assets andliabilitiesofforeign subsidiaries,including statements intoeuros Translation offoreign subsidiaries’financial the market value wasdetermined. translated usingtheexchange rate prevailing atthetime foreign currency, andmeasured atmarket value, are The non-monetaryassets andliabilitiesdenominated in date. translated byusingtheexchange rate atthetransaction foreign currency, andmeasured athistoricalcost, are The non-monetaryassets andliabilitiesdenominated in that resultarerecognized intheincome statement. exchange rate atclosing.Anyexchange rate differences ted inforeign currencyaretranslated intoeurosatthe At year-end, themonetaryassets andliabilitiesdenomina- the exchange rate prevailing atthedateoftransaction. Transactions inforeign currencyaremeasured byapplying Translation offoreign currencytransactions will intheconsolidated financial statements. of thesamenatureasgoodwill, theyare treated asgood- Since businessassets entered inthecorporate accounts are the results. contingent liabilitiesacquired”) arebooked immediately in the netfair value oftheidentifiable assets, liabilitiesand as “theexcess ofthecost over theacquirer's interestsin Negative goodwill (which,according toIFRS3,aredefined SA andtax. to exclude market risksrelated toUbisoft Entertainment The discount rate used isthetreasury bond rate adjusted financial statements. generating unitcorresponds totheGroup’sconsolidated Entertainment Inc.(US)orBlueByte)wherethecash-flow distributed byallthegroup’ssubsidiaries(Redstorm the acquisition ofcompanies whose acquired brands are a singlecountry, withtheexception ofgoodwill related to impairment testscorrespond tothe subsidiariespresent in The cash-flowgenerating unitsused tocalculatethe depreciation isrecorded andisirreversible. or thevalue inuse islessthantheaccounting value, a which thegoodwill areassociated. Whenthemarket value sent value related tothecash-flowgenerating unitswith value orvalue inuse. The value inuse isdefined asthepre- ble value ofgoodwill isthenestimated based eitheronfair impairment testsateachyear-end closing.The recovera- Positive goodwill arenotamortized butaresubject to identified atthedateofacquisition. fair value oftheassets, liabilitiesandcontingent liabilities pond tothedifference between theacquisition cost andthe subsidiaries, associates andjointenterprises andcorres- acquisition method. Goodwill resultfromtheacquisition of All companies reorganizations arerecorded usingthe Goodwill CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Business assets are therefore not amortized but, like good- nature of the fixed assets held, no distinct component of will, are subjected to impairment tests at each year-end the main fixed assets was noted. 61 closing. No borrowing costs are included in the costs of fixed assets. Brands Depreciation, which is calculated using rates standardized Trademarks and patents are recorded at their fair value by throughout the group, is determined on the basis of the applying IFRS 3 concerning business combinations. They methods and periods of use set out below: are not amortized, but annual impairment tests are  equipment: 5 years (straight-line), conducted. The recoverable value of the brand is then esti- mated either on the basis of fair value or on the basis of  fixtures and fittings: 5 and 10 years (straight-line), value in use. The value in use is defined as the present  computer equipment: 3 years (straight-line), value relative to the cash-flow generating units with which the trademark is associated. When the fair value or the  office furniture: 10 years (straight-line). value in use is less than the accounting value, a deprecia- tion is booked. Fixed assets acquired through direct finance leasing arrangements Other intangible assets Lease contracts that transfer nearly all risks and benefits The other intangible assets that were acquired by the inherent to ownership of the asset are considered direct group are recorded at their cost minus the total of amor- finance lease arrangements. tization and losses in value (amortization). In accordance with IAS 38 “Intangible assets”, only elements whose cost Capital assets financed through leasing agreements are can be determined reliably and for which it is probable that restated in the consolidated financial statements as if the future benefits exist are recorded as fixed assets. company had acquired the assets directly using loan finan- cing. No borrowing costs are included as costs of fixed assets. The amount recorded as an asset is equal to the fair value The group companies do not conduct any basic research. of the goods leased or, if this value is less than the present Development costs correspond to the development of value of the minimum lease payments, the fair value less commercial software (video games) and are activated as depreciation cost and the sum of the losses in value. described below. Deferred taxes related to the restatement of finance lease The production costs for commercial software, whether contracts are activited. produced internally or outsourced, are entered in the accounts under “Intangible assets in progress” as the soft- ware development advances. Upon the software’s first Investments in associates commercial release, it is transferred to the “Released soft- Investments in associates include the Group share of equity ware programs” or “External developments” accounts. held in associates, as well as any related goodwill. Other intangible assets are amortized over their expected useful life: Inventory and work-in-progress  office software: amortized over 1 year (straight-line), Inventory is valued at cost or net realizable value, whiche-  ERP-related expenditures: amortized over 5 years ver is lower. (straight-line), Cost includes purchase price plus accessory expenses.  commercial software: amortized over 3 years (straight- Inventory is valued using the FIFO method. line) with additional amortization to adapt to the pro- ducts’ life cycles, Net realizable value is the estimated selling price in the normal course of activity less estimated completion costs  external developments: amortized based on the pro- and estimated selling costs, which include marketing and ducts’ life cycles. distribution costs. Commercial software and external developments are No borrowing costs are included in the costs of invento- amortized starting on the date of the product’s commer- ries. cial release. At the close of each fiscal year and for each program, A provision for depreciation is recorded when the proba- when there are indicators of a loss of value (basically when ble net realizable value is less than the book value. Write- sales are lower than forecast), the present forecast cash backs of inventory depreciation are recognized as a flows are calculated (over a maximum period of three reduction of the amount of inventory recorded as an years). When the latter are below the net book value of the expense during the fiscal year in which the write-back commercial software, a depreciation is applied. occurs.

Tangible assets Trade receivables The gross value of tangible assets includes the cost of Trade receivables are measured at fair value when they are acquisition, minus cash discounts and any investment initially recorded. Since receivables are due in less than grants allowed. This is then reduced by the sum of the one year, they are not discounted. Where applicable, a depreciations and of losses in value (see the accounting provision for depreciation is recorded based on the degree method described in the note on goodwill). Given the of certainty that recovery will ultimately be made. UBISOFT • FINANCIAL REPORT 2007 ble/exchangeable into neworexisting shares)andOBSAR Bond debentures related totheOCEANE(bondsconverti- These include borrowingsandbankoverdrafts. • Borrowingsandotherfinancialliabilities value arerecorded intheincome statement. under currentfinancialassets orliabilities.Changesinfair balance sheet atitsfair value asofthetransaction date contract isaderivative instrument.Itisshownonthe The company hasset upanequity swapcontract. This immediately intheincome statement. resulting fromtherevaluation atfair value isrecorded current financialassets orliabilities.The profitorloss sheet attheirfair value asofthetransaction dateunder These derivative instrumentsareshownonthebalance tion instruments. hedge accounting method, theyarerecorded astransac- tuations. Astransactions do notmeet thecriteriaof currency optionstohedge therisk of exchange rate fluc- Entertainment SA uses forward salescontracts andforeign In order tolimittheGroup'sforeign exchange risk,Ubisoft • Derivative instruments flow statement. of cashandequivalents for thepurposes ofthecash the group’scashflowmanagementconstitute acomponent Reimbursable bankoverdrafts thatareanintegral part of based onearnings. based onthecategoryofassets measured atmarket value not have significantriskoflossinvalue. They arevalued ble onvery shortnotice, canbeconverted intocashanddo than three months,whichcanbeeasily liquidated orsalea- sits heldatcallwithbanks,maturityofgenerally less Cash andcashequivalents include cashonhandanddepo- • Cashandcashequivalents ment. well assubsidiestobereceived fromtheCanadiangovern- Loans andreceivables include deposits andguarantees, as • Loansandreceivables are posted directly toequity. balance sheet attheirfair value andchangesinfair value other categoriesoffinancialassets. They areshownonthe lable for sale”since theydo notmeet thedefinition of Non-consolidated securities areclassified as“assets avai- • Assetsavailable for sale derivative instrumentsandborrowings. sale, loansandreceivables, cashandequivalents, Financial assets andliabilitiesconsist ofassets available for Financial assetsandliabilities icutrt .9 .9 4.49% 3-6% 31.5years 4.49% 1.50% 29years 4.49% 5% 23 years Average remainingyears ofservice Discount rate Rate ofsalarychange aa tl France Italy Japan defined-benefit plans: These plansmaybeeitherdefined-contribution plansor pulsory general schemes. factors, includingseniority, salaryandpaymentstocom- country. These benefitscanvary according toarange of sion plansinaccordance withthelawsandpractices ofeach Ubisoft participatesinretirement,social security andpen- • Retirementbenefitcosts Employee benefits profit orlossfor theperiod. res areapplied directly tothe equity anddo notaffect the deduction fromequity. The resultsofthesalethese sha- Own sharesarerecognized attheiracquisition cost asa Own shares   the costs, fees andredemption premiums. based onanactuarialrate yieldtomaturitythatincludes to theliabilitycomponent. Accrued interestisrecognized value ofthecompound instrumentandthevalue assigned nent isdetermined bythedifference between thetotal on theeffective interestrate method. The equity compo- The liabilitycomponent isvalued atamortized cost based component andanequity component. compound financialinstrumentsthatconsist ofaliability (bonds withredeemable sharesubscription warrants) are are asfollows: retirement. The assumptionsused asofMarch31,2007 future benefitsofeachemployee atthetimeofhis/her involves determining thevalue ofprobablediscounted dures andthedataprovided byeachcountry. This method method”, inaccordance witheachplan’soperating proce- of anactuarialcalculationcalled “the projected unitcredit The employer’s futureobligationsarevalued onthebasis used inFrance, Italy andJapan. compensation level. Withinthegroup,suchplansare of several factors, includingage,years ofservice and pension benefitfromthegroup,determined onthebasis in adefined-benefit plan,theemployee receives afixed (such asa401kplanintheUnited States); retirement plansandspecific defined-contribution plans its employees. For Ubisoft, thisgenerally involves public fiscal year. The Grouphasnosubsequent obligationsto correspond tocontributions paidover thecourse ofthe the company have paidintoexternal funds.The charges determined bythetotalcapitalthatemployee and in defined-contribution plans,thepension supplementis CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

• Share-based payments inherent to ownership of the goods have been transferred

Stock option plans allow the Group’s staff members to pur- to the purchaser. 63 chase the company’s shares. The fair value of the options All sales are measured at the fair value of the considera- granted is recognized in wages and social security costs as tion received or to be received, less rebates, reductions, an offset of an increase in equity. The fair value is measu- trade, volume and financial discounts and provisions for red at the grant date and spread out over the entire ves- returned merchandise. ting period. The fair value of the options is measured using a binomial model based on the terms and conditions of the Current operating result options defined at the grant date:  stock option plans: this compensation is recorded in the Current operating result includes gross margin, adminis- income statement and spread out over the vesting trative and commercial expenses, pension and retirement period; however, the straight-line method is not used, in costs, and the cost of share-based payments. accordance with the vesting terms defined in Ubisoft’s plan rules; Other operating income and expenses  group savings plan: the accounting expense is equal to Other operating income and expenses are items that are the discount granted to employees, i.e., the difference few in number and correspond to infrequent events. between the share subscription price and the share price at the grant date. This expense is recorded immediately as of the plan subscription date. Financing costs and other financial income and expenses • Individual right to training Financial result consists of the cost of net borrowings and France's law of May 4, 2004, grants French employees an other financial income and expenses. individual right to training. Under this law, employees may receive training at their initiative, with their employer's The cost of net borrowings includes: approval.  income from cash and cash equivalents, which includes Full-time employees acquire a right to between 20 and 21 profit on sales of investment securities, interest income hours of training each year, in accordance with the labor and the impact of hedging operations, agreements applicable within each firm.  the cost of gross borrowings, which includes all interest The rights acquired annually may be accrued for up to six charges on financing transactions. years. Other financial income and expenses include income on The assumption made at March 31, 2007 for recognition of sales of non-consolidated securities, changes in fair value these rights is: of financial instruments (assets, liabilities and derivatives), foreign exchange results and other financial income and 15% of the valuation of the hours acquired at March 31, expenses. 2007 (with social security taxes) of companies that are members of FAFIEC (organization that provides professio- nal training) are recorded as a provision. Income taxes Income tax (income or expense) includes current tax Provisions expense (income) and deferred income tax expense (income). Tax is recorded in the income statement, unless A provision is recorded when: it refers to items that are recognized directly in equity, in  the company has a current obligation (legal or implicit) which case it is recognized in equity. resulting from a past event; • Current tax  it is probable that an outflow of resources representing economic benefits will be required to settle the obliga- Current tax is the estimated amount of tax owed on taxa- tion; ble income for an accounting period. It is determined using the tax rates applicable at the balance sheet date.  the amount of the obligation can be measured reliably. If these conditions are not met, no provision is recorded. • Deferred income tax When the effect of the time value is material, the provision Deferred income tax is measured using the asset-liability amount is determined by discounting expected future cash approach of tax allocation for all timing differences bet- flows using a pre-tax discount rate that reflects the cur- ween the book value of the assets and liabilities and their rent market assessments of the time value of money and, tax basis. Valuation of deferred tax assets and liabilities where appropriate, the risks specific to the liability. depends on the way in which the group expects to recover or settle the book value of the assets and liabilities using Trade creditors and related accounts payable the tax rates applicable at the balance sheet date. A deferred tax asset is recognized only if it is probable that Trade creditors and related accounts are valued at amorti- the group will have future taxable profit against which the zed cost. asset may be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that sufficient taxa- Sales ble profit will be available. Proceeds from the sale of goods are recognized in the The effect of possible changes in tax rates on previously income statement when the significant risks and benefits recorded deferred taxes is recognized in equity. UBISOFT • FINANCIAL REPORT 2007 rage numberofoutstandingshareslessownheld. This figureistheratio ofnetincome totheweighted ave- • Earningspershare Earnings pershare earnings. No dividends werepaidatMarch31,2007on2005/2006 Dividends ket inseveral geographic areas. ceed onthebasisthatgroupoperates inasinglemar- commercial linksamongthevarious subsidiaries,wepro- In lightofthegroup'sorganizationalstructureand Segment information fied asnon-currentitems. items fromcurrenttaxassets andliabilitiesare classi- Deferred taxes areshownonthebalance sheet asseparate fottnigsae: 42,481,273 41,542K€ 984K€ Potential shares: 0K€ of outstandingshares: Weighted average number 40,558K€ Restated netresult relating tobonddebenture: After taxfinancialcosts Dividends paidtoshareholders: Net resultatMarch31,2007: rights. convertible instrumentsintosharesandtheexercise of that wouldbecreated asaresultoftheconversion of shares, lessdirectly ownshares,plusthenumberofshares - bytheweighted average numberofordinaryoutstanding of thedilutinginstruments, any savings infinancialcosts resultingfromtheconversion - netearningsbefore dilution,plustheafter-tax amountof This figureisobtained bydividing: • Fully dilutedearningspershare iuigisrmns45,501,275 at March31,2007=€0.91 Diluted netearningspershare diluting instruments after exercise ofrightsrelatingto Weighted average numberofshares tc pin 3,020,002 Stock options CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

2.5.3 Scope of consolidation 65

Companies included in the Ubisoft Group consolidated financial statements at March 31, 2007

Company Country Controlling Percentage Method Activity Founded or percentage held acquired UBISOFT ENTERTAINMENT SA France Parent company Parent company FC 1986 UBISOFT Ltd United Kingdom 100% 100% FC Marketing 1989 UBISOFT INC. United States 100% 100% FC Marketing 1991 UBISOFT GmbH Germany 100% 100% FC Marketing 1991 UBISOFT SRL Romania 100% 99.35% FC Development and marketing 1993 UBISOFT SA Spain 100% 99.97% FC Marketing 1994 UBISOFT KK Japan 100% 100% FC Marketing 1994 UBISOFT PICTURES SAS France 100% 100% FC Graphics and 1995 computer graphics UBISOFT SpA Italy 100% 99.99% FC Marketing 1995 UBISOFT DESIGN SAS France 100% 100% FC Interactivity and ergonomics 1995 UBISOFT BOOKS AND RECORDS SAS France 100% 100% FC Management 1995 and administration UBISOFT COMPUTING SARL France 100% 100% FC Development 1996 UBISOFT SIMULATIONS SAS France 100% 100% FC Development 1996 UBISOFT PTY Ltd Australia 100% 100% FC Marketing 1996 UBISOFT GRAPHICS SAS France 100% 100% FC Graphics and modeling 1996 SHANGHAI UBI COMPUTER SOFTWARE Co LTD China 100% 100% FC Marketing and development 1996 UBISOFT DIVERTISSEMENTS Inc. Canada 100% 100% FC Development 1997 UBISOFT ORGANISATION SAS France 100% 100% FC Computing services 1998 UBISOFT WORLD SAS France 100% 100% FC Global marketing 1998 UBISOFT SARL Morocco 100% 99.86% FC Development 1998 UBISOFT NORDIC AS Denmark 100% 100% FC Marketing 1998 UBISOFT LIMITED Hong Kong 100% 99.50% FC Marketing 1998 UBISOFT BV Netherlands 100% 99.98% FC Marketing 1998 UBI STUDIOS SL Spain 100% 99.95% FC Development 1998 UBISOFT STUDIOS SrL Italy 100% 97.50% FC Development 1998 UBISOFT France SAS France 100% 100% FC Marketing 1998 UBISOFT PRODUCTIONS France SAS France 100% 100% FC Development 1999 UBISOFT SWEDEN AB Sweden 100% 98% FC Marketing 1999 UBISOFT MUSIC INC. Canada 100% 100% FC Creation of music 1999 UBISOFT WARENHANDELS GmbH Austria 100% 100% FC Marketing 2000 UBISOFT WORLD STUDIOS SAS France 100% 100% FC Design and storyline 2000 LUDI FACTORY SAS France 100% 100% FC Graphics and 2000 localization studio UBISOFT EMEA SAS France 100% 100% FC Marketing 2000 UBISOFT HOLDINGS INC. United States 100% 100% FC Management and 2000 administration RED STORM ENTERTAINMENT INC. United States 100% 100% FC Creation and animation 2000 UBISOFT Canada INC. Canada 100% 100% FC Marketing 2000 UBISOFT NORWAY AS Norway 100% 100% FC Marketing 2001 UBISOFT MANUFACTURING ET ADMINISTRATION SAS France 100% 100% FC Manufacturing workflow 2001 UBI GAMES SA Switzerland 100% 99.99% FC Marketing 2002 UBISOFT FINLAND OY Finland 100% 100% FC Marketing 2002 UBISOFT ENTERTAINMENT SA Korea 100% branch FC Marketing 2003 GAMELOFT SA France 16.77% 18.89% EA Mobile telephony 2003 TIWAK SAS France 100% 100% FC Development 2003 BLUE BYTE GmbH Germany 100% 100% FC Development 2005 UBISOFT DEVELOPMENT SARL France 100% 100% FC Development 2006 UBISOFT EDITORIAL SARL France 100% 100% FC Development 2006 UBISOFT SUPPORT STUDIOS SARL France 100% 100% FC Development 2006 UBISOFT PRODUCTION MONTPELLIER SARL France 100% 100% FC Development 2006 UBISOFT PRODUCTION ANNECY SARL France 100% 100% FC Development 2006 UBISOFT PARIS STUDIO SARL France 100% 100% FC Development 2006 UBISOFT CASTELNAU SARL France 100% 100% FC Development 2006 UBISOFT ENTERTAINMENT LTD United Kingdom 100% 100% FC Development 2006 UBISOFT EOOD Bulgaria 100% 100% FC Development 2006 UBISOFT MARKETING INTERNATIONAL SARL France 100% 100% FC International marketing 2007 UBISOFT DIGITAL ARTS INC Canada 100% 100% FC Digital animation 2007

FC = Full consolidation EA = Equity affiliate

The fiscal year of all consolidated companies ends on March 31 of each year, with the exception of Shanghai Ubi Computer Software Co. Ltd. (China), Ubisoft SRL (Romania), Ubisoft EOOD (Bulgaria) and Gameloft SA, which close their accounts on December 31. No ad hoc company belongs to the Ubisoft group. UBISOFT • FINANCIAL REPORT 2007 Change ingrossgoodwill Goodwill breaksdown asfollows, asofMarch31,2007: Note 1 - May 2006,creationofUbisoft- EntertainmentLtd(United • Creationofnewcompanies 26. explained insection 2.5.4-Note4andsection 2.5.5-Note The effects ofthechangeinscope ofconsolidation are interest decreased from19.416%to18.893%. employees, Ubisoft EntertainmentSA’s percentage of Following theexercise ofoptionsbyGameloft SA Changeinpercentage ofinterestinGameloft SA - • ChangeinpercentageofholdingGameloft SA Change inscopeofconsolidation oa 002183-43877,487 1,270 -4,368 -36 435 1,748 1,027 1,823 -40 -159 21 41,388 80,032 -4,150 1,306 2,294 Asof 3 442 760 10,103 Total Ubisoft EntertainmentLtd Exchange rate Ubi GamesSA 3,215 475 1,907 Ubisoft Warenhandels GmbH Ubisoft BV Decreases 1,006 Ubisoft France 12,805 SAS 178 Blue ByteGmbH Increases Ubisoft Divertissements Inc. 45,538 Tiwak SAS Ubisoft CanadaInc. Ubisoft Spa Asof Red StormEntertainmentInc. Ubisoft GmbH Ubisoft Ltd Ubisoft Inc. Existing company and entiredevelopment studiostaff. wing theacquisition ofReflections Interactive Ltd’sassets Kingdom), wholly-owned subsidiaryofUbisoft Ltd,follo- 2.5.4 Notes tothebalancesheet Goodwill (1) 33.6dfeecs03.31.07 differences 03.31.06 ,2 1,819 -4 1,823 - Gross - January 2007,liquidationofUbiComputerSoftware • Liquidation - Creationofthefollowing Frenchcompanies tion onequity is€170,thousand. Beijing CompanyLtd.(China).The impactofthisliquida- - February 2007,creationofUbisoft DigitalArtsInc - June 2006,creationofUbisoft EOOD(Bulgaria), Divertissements Inc. (Quebec), wholly-owned subsidiaryofUbisoft wholly-owned subsidiaryofUbisoft EntertainmentSA, • January • 2007:Ubisoft Marketing International SARL. • July 2006:Ubisoft Paris StudioSARL andUbisoft • May 2006:Ubisoft SupportStudiosSARL and • April 2006:Ubisoft EditorialSARL andUbisoft Castelnau SARL, Ubisoft Production Annecy SARL, Production MontpellierSARL, 10,103 12,805 Gross 2,294 3,215 442 760 178 3 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Amortization of goodwill 67 Existing company As of Increases Decreases Exchange rate As of 03.31.06 differences 03.31.07 Amortization Amortization

Red Storm Entertainment Inc. - 117 - 4 113 Total - 117 - 4 113

Following the closing of Wolfpack Studios Inc., goodwill was fully amortized at March 31, 2007. At March 31, 2007, impairment tests did not result in the recording of any provisions.

Net Goodwill

Existing company Acquired Date As of company holdings 03.31.07 were acquired Net

Ubisoft Inc. Ubisoft Inc. February 1996 178 Ubisoft Ltd Ubisoft Ltd December 1994 130 Blue Byte Software Ltd February 2001 897 Ubisoft GmbH Ubisoft GmbH August 1995 87 Blue Byte Software GmbH CO.KG February 2001 6,929 Distribution in Germany May 2000 5,789 Red Storm Entertainment Inc. Sinister Games Inc. March 2000 3,723 Blue Byte Software Inc. February 2001 8,031 Red Storm Entertainment Inc. September 2000 18,558 Distribution in the USA March 2001 10,963 Ubisoft SpA 3D Planet SPA September 2000 3,215 Ubisoft Canada Inc. Ubisoft Canada Inc. October 2000 189 Distribution in Canada December 2000 1,559 Tiwak SAS Tiwak SAS December 2003 760 Ubisoft Divertissements Inc. Microïds Canada Inc. March 2005 435 Blue Byte GmbH Blue Byte GmbH March 2005 3 Ubisoft France SAS Distribution in France December 2000 10,103 Ubisoft BV Distribution in Belgium April 2001 1,322 Distribution in the Netherlands January 2001 972 Ubisoft Warenhandels GmbH Distribution in Austria April 2000 442 Ubi Games SA Distribution in Switzerland September 2001 1,270 Ubisoft Entertainment Ltd (1) Ubisoft Entertainment Ltd August 2006 1,819 Total 77,374

(1) Cf. details in Note 2.5.6.2 Business combinations. UBISOFT • FINANCIAL REPORT 2007 te 0 4----417 - - - - 14 403 Other (2) Acquisition oftheFar Cry As ofMarch31,2007,impairmenttestsconducted on thebrands heldbythegroup’scompanies didnotresultintherecording of (1) This entryprimarily includes brands obtained fromtheacquisition ofTLC (€8million),Far Cry Reclassifications between accounts areattributabletothetransfer ofintangiblefixed assets inprogress. Tangible assets breakdown asfollows: Note 3 As ofMarch31,2007,impairmenttestsdidnotresultintherecording ofanyprovisions. No intangibleassets wereused asaguarantee for debts. external commercial software, €3,118thousandfor theacquisition ofDriver Software production costs of€161,196thousandconsist therefore ofanincrease of€164,913thousandinreleased commercial sof Software breaksdown asfollows asofMarch31,2007: Note 2 otae35-----355 - - 13,390 - -408 141,955 125,603 38 -19 -1,215 - 213,992 - - -119 - - - -215,117 54,124 1,083 355 160,993 - 2,085 2,226 12,758 226,009 - Others intangibleassets 198,916 Asof software 115,926 Leased office - Office software Exchange 90,076 software inprogress Other external commercial Commercial software and 252,034 commercial software Reclassifications of External Decreases commercial software Increases Released Asof03.31.06 Fixed assets oa 5471,3 ,6 7-20147,040 24 -2,021 8,935 231 1,076 2 -67 - 2 9,569 -70 -225 2,261 -422 - - -27 15,932 151 - 35,457 27,205 - - - 26 146 - -1,533 355 101 60 9 275 185 6,171 265,889 - 2,764 1,685 1,112 247 - Asof03.31.07 8,902 -266 Exchange rate 1,960 8,581 Reclassifications Decreases 7,861 Increases - -337 -243 Total Asof03.31.06 - 22,652 103,508 Fixed assets inprogress and transportation equipment 56 Leased computer hardware -337 152,973 202,184 -18 Transportation equipment 219,008 Development kits - Asof03.31.07 95 - 5 Computer equipment andfurniture 249,668 Exchange rate 1,042 2,775 Plant &machinery Other - 85 529,915 4,368 Fixed assets - - 6,156 -3,172 270 2,226 38 - Net 52,285 198,916 53,467 162,214 of03.31.06 As - 189,680 - Total Other Leased office software Office software External commercial software Released commercial software 202,225 - Amortization 251,647 483,627 2,007 768 Total Brands in progress (1) Tangible assets Other intangibleassets ® trademark for €7.5millionandtheDriver 13721,532 11,307 rs otaeporm els ae03.31.07 rate reclas- software programs Gross (2) uuaieIcessDcessrcasfctosdifferences reclassifications Decreases Increases Cumulative rs ifrne Gross differences Gross ® trademark for €14million. ® ,1 31,428 -1,411 - - - developments and€415thousandinexchange rate differences. npors iiain ifrne Gross differences sifications in progress ® (€9 million)andDriver ® (€14 million). anyprovisions. tware, minus€184thousandin CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Depreciation As of 03.31.06 Increases Decreases Reclassifications Exchange rate As of 03.31.07

Cumulative differences Cumulative 69

Plant & machinery 2,054 1,722 229 - - 108 3,439 Computer equipment and furniture 8,896 6,937 1,709 152 - 651 13,625 Development kits 1,273 2,156 - - - 3,429 Transportation equipment 84 59 - -8 - 135 Leased computer hardware and transportation equipment 874 117 26 - - 63 902 Total 13,181 10,991 1,964 144 - 822 21,530

No tangible assets were used as a guarantee for debts. At March 31, 2007, impairment tests did not result in the recording of any provisions.

Note 4 Investments in associates

Fixed assets As of 03.31.06 Increases Decreases Exchange rate As of 03.31.07 Gross differences Gross Goodwill 25,719 - 65 - - 25,654 Share of equity 4,315 4,029 - - 8,344 Total equity in subsidiaries 30,034 3,964 - - 33,998

Increase Following the exercise of options by Gameloft SA employees, Ubisoft Entertainment SA’s percentage of interest decreased from 19.416% to 18.893% at March 31, 2007. The €3,964 thousand impact on equity in subsidiaries breaks down as follows: - -€275 thousand dilutive effect - €3,149 thousand share of earnings - €1,090 thousand portion of share capital increase Gameloft SA’s contribution to Ubisoft Entertainment SA's earnings was €3,149 thousand as of March 31, 2007.

General information concerning Gameloft SA related to the accounts closed at December 31, 2006: in thousands of euros 12.31.06

Total assets/liabilities 58,390 Sales 68,421 Net income 16,258

Note 5 Financial assets

Fixed assets As of 03.31.06 Increases Decreases Exchange rate As of 03.31.07 Gross differences Gross

Assets available for sale 849 - 148 - 9 692 Other financial assets - 153 - - 153 Deposits and guarantees 2,028 387 539 - 63 1,813 Other long-term receivables 1 15,391 15,390 - 2 Total 2,878 15,931 16,077 - 72 2,660

The increase of €153 thousand in other financial assets pertains to the capitalization of professional fees concerning the acquisition of Sunflowers Interactive Entertainment Software GmbH (cf. section 2.5.9 Events after closing of accounts). The change in other long-term receivables reflects the purchases and sales of securities under the liquidity contract. Due dates of financial assets as of March 31, 2007: short-term: €338 thousand long-term: €2,322 thousand UBISOFT • FINANCIAL REPORT 2007 2.1M€ bytheFrance taxgroup. - 0.9M€ byUbisoft EMEASAS, - 1M€by Ubisoft EntertainmentSA, - The €4.5 milliondecrease intaxassets wastied mainly touse ofdeferred depreciation asfollows: (1) Ubisoft EntertainmentSA’s activated losses before fiscal integration cameto€4,626thousand. Activated/non-activated losses: recovery isprobable,particularly whentaxable profitis Deferred income taxassets arerecognized iftheir Due datesofdeferred taxassets atMarch31,2007: The expiry datesoftaxdeficits breakdown asfollows: Note 6 result ofequity movements. Nofinancialassets wereused asaguarantee for debts. The increase inprovisions pertainstothechangeinvalue ofUbiSoft EntertainmentLtda(Brazil). This changeinvalue isa eprr a ifrne 89619,450 1,008 202 - 202 18,906 1,303 26 - Asof03.31.07 176 Decreases 26 Increases 176 Asof03.31.06 Elimination ofstudios’internalmargin Temporary taxdifferences Activated losses Total Assets available for sale Provisions te 4 4 129 21,365 160 118 146 654 17,736 151 19 - 871 121 93 227 - 553 930 94 199 - - 49 16,865 146 100 172 - 151 - - - 101 121 - - 871 553 - - - 03.31.06 871 - 100 172 - 101 - - Total 03.31.07 Other 15,521 Tiwak SAS Shanghai UbiComputerSoftware Ltd Ubisoft BV Ubisoft GmbH 44 Ubisoft Computing SARL Ubisoft HoldingsInc. Red StormEntertainmentInc. 454 Ubisoft Warenhandels GmbH Ubisoft WorldStudiosSAS Ubisoft EMEASAS Ubisoft EntertainmentSA in thousandsofeuros 117 439 Total Other restatementswithregardtoconsolidation Elimination ofotherinternalresults ogtr: €21,431thousand €16,199thousand €16,446thousand - long-term: - short-term: €88thousand €214thousand - unlimited: €117thousand - morethan5years: - 1to5years: - lessthan1year: Deferred incometaxassets ciae o-ciae oa Activated Total Non-activated Activated osslse losses losses losses uuaieCumulative Cumulative (1) Studios SAS hasnosufficient short-termguarantees. over losses for allthecompanies; only Ubisoft World There istherefore arealprobabilityofrecovery ofcarry- margin thatincludes theircosts structure. ting profit;similarly, thestudiosinvoice salarieswitha Group, retailcompanies systematically reportanopera- Because ofatransfer price policyimplemented atthe assets. expected duringtheperiod ofvalidity ofthedeferred tax 33.703.31.06 03.31.07 15,521 - 68521,365 16,865 76042,321 37,630 (1) 18,693 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Note 7 Inventory and work-in-progress 71 Inventory and work in progress breaks down as follows:

As of 03.31.07 As of 03.31.06 Gross Provision Net Net Goods 28,699 3,905 24,794 23,716 Total 28,699 3,905 24,794 23,716

The provision for inventory decreased from €4.1 million at March 31, 2006 to €3.9 million at March 31, 2007. The are no guarantee on inventory.

Note 8 Trade receivables Trade receivables break down as follows:

As of 03.31.07 As of 03.31.06 Gross Provision Net Net Trade receivables 88,843 986 87,857 91,246 Total 88,843 986 87,857 91,246

Since trade receivables are due in less than one year, the impact of discounting is not significant and not recognized. The provision decreased from €2 million at March 31, 2006 to €1 million at March 31, 2007.

Note 9 Other receivables Other receivables break down as follows:

As of 03.31.07 As of 03.31.06 Gross Provision Net Net Advances and installments received 685 - 685 1,305 Current account advances 119 - 119 34 VAT 32,710 - 32,710 21,239 Subsidy to be received 34,732 - 34,732 34,124 Other tax and social security liabilities 413 - 413 513 Other 1,273 - 1,273 813 Pre-paid expenses 4,027 - 4,027 4,262 Total 73,959 - 73,959 62,290

All other receivables are due in less than one year, with the exception of Canadian subsidies in the amount of €7.2 million, which will be charged against payment of tax.

Note 10 Current financial assets Current financial assets break down as follows:

03.31.07 03.31.06 Net Net Derivatives on exchange rate transactions (1) 182 228 Equity Swap contract (2) 19,001 93 Total 19,183 321

In order to limit the group's foreign exchange risk, Ubisoft Entertainment SA uses forward sales contracts and options contracts to hedge the risk of exchange rate fluctuations. These derivative instruments are shown on the balance sheet at their fair value under current financial assets or liabilities. Losses and gains reflecting a change in the market value of non-hedge derivatives at the balance sheet date are reported on the income statement. UBISOFT • FINANCIAL REPORT 2007 (2) Investment securities made upofUCITS andopen-ended investment trusts pared to€99,732,000atMarch31,2006. Cash onhandincludes balances ofcashand bankaccounts inthenetamountof€95,766thousandonMarch31, 2007, com- (1) Cashonhand (2) Fair value oftheequity swap (1) Fair value offinancialinstruments The cashandequivalents itemincludes: Note 11 sand (1,436,274sharesafter saleand2-for-1 stock split). In lightofthesharessold, theimpactofareduction ofoneeuroinregardstothesale price (€9.33)wouldbe€1,436thou- The overall impactwas€18,038thousandafter tax. ber ofsharesto1,436,274. A gainof€1,886thousandwasrecognized following thesaleof200,000sharesinOctober2006,whichreduced thenum- The changeinvalue recorded ontheincome statementis€25,171thousand. income statement. The equity swapcontract isrecognized at its fair value onthebalance sheet andchangesinfair value arerecorded onthe Calyon willbeabletosell its1,436,274Ubisoft Entertainment SA shares. The equity swapcontract signed with Calyon onSeptember30,2003wasextended untilFebruary 28,2008.Onthatdate, Equity swapcontract increased significantly, theamountoffinancialassets was€19million. balance sheet wasvery low.At March31,2007,given thatthemargincallsarelimited to€20millionandthattheshare At March31,2006,since thefair value oftheequity swapwasvery close tothemargincalls,difference shownonthe The changeinvalue recorded ontheincome statementis-€45thousand. Forward sales Forward purchases/sales Forward sales/purchasese ahadcs qiaet 33.703.31.06 03.31.07 02.28.08 93 Total Cash andcashequivalents 17,803 -17,710 19,001 39,095 -20,094 Total Margin callreceived Fair value Total aho ad()9,6 99,732 37,259 95,766 30,786 (1) (2) Investment securities Cash onhand 39 2 April2007 48 Dec 2006 April2007 73 Mars2007 Sept2007 January 2007 Pounds sterling Canadian dollars Pounds sterling US dollars Canadian dollars Australian dollars Cash andcashequivalents 33.70.10 Expiration date 03.31.06 03.31.07 eray20 et20 3 Sept2007 February 2007 r nato u Mr oMarkto Markto Due Transaction aur 07Arl20 65 April2007 January 2007 aedt aktMarket Market date date 33.703.31.06 03.31.07 2,5 136,991 126,552 8 227 182 117 - 1 63 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

03.31.07 03.31.06

Type Name Number Gross value Fair value Gain/loss Fair value 73 K€ K€ K€ K€ Mutual fund UCITS liquidity contract 654 1,354 1,359 5 759 Mutual fund Etoile MONE EURIBOR 197 21,040 21,040 - 7,030 Open-ended investment trust CPR CASH SI 257 5,197 5,199 2 8,503 Mutual fund CENTRALE PIBOR - - - - 7,498 Mutual fund UCITS - - - - 7,545 Mutual fund SECURITE PLUS 8 1,931 1,932 1 4,910 Mutual fund SGAM 12 1,256 1,256 - 1,014 Total - 30,778 30,786 8 37,259

The change in net cash flow breaks down as follows: During the fiscal year ended March 31, 2007, 851,141 shares with a face value of €0.31 were created following the exer- cise of 12,767,115 share subscription warrants.

Cash breakdown 03.31.07 03.31.06 Cash and cash equivalents 126,552 136,991 Foreign currency advances - 6,508 - 5,432 Bank overdrafts and short-term loans - 41,391 - 50,665 Total 78,653 80,894

Note 12 Equity Number of Ubisoft Entertainment SA shares

• Capital As of 04.01.06 19,434,336 The company’s share capital on March 31, 2007 was €7,036,577.78, consisted of 45,397,276 shares with a face Exercice of options 445,953 value of €0.155, each fully paid up. Conversions of OBSAR 69 Each share gives a right to ownership of the corporate Conversions of OCEANE 475,998 assets and the liquidating dividend equal to the proportion Exercise of subscription warrants 851,141 of the equity that it represents. Group/company savings plan/ Voting rights double those conferred on other shares, Equity issue Reserved share capital increase 46,691 based on the proportion of the share capital they repre- Subtotal (before 2-for-1 stock split*) 21,254,188 sent, are attributed to all fully paid-up shares that are pro- ved to have been registered for at least two years in the Subtotal (after 2-for-1 stock split*) 42,508,376 name of the same shareholder. Exercice of options 261,224 In the event of a share capital increase by the capitalization Exercise of BSAR 2,627,676 of reserves, profits or issue premiums, this right is also As of 03.31.07 45,397,276 conferred at the date of issue on registered shares allotted free of charge to a shareholder in exchange for old shares (*) On December 5, 2006, the Board of Directors decided to carry out a 2-for-1 split of Ubisoft’s share effective December 11, 2006. for which this right was enjoyed. The number of potential shares that may be created by the exercise of financial instruments is as follows: 3,020,002 by exercise of stock options.

Stock purchase warrants

Stock purchase warrants for existing shares and/or subscription warrants for new shares at May 14, 2003 Number: 17,540,082, with 15 warrants needed to subscribe for one share with a face value of €0.31. Exercise period: May 14, 2002 through May 14, 2006 inclusive Strike price: €28 The option to exercise the share subscription warrants expired on May 14, 2006. UBISOFT • FINANCIAL REPORT 2007 Options price risk-free interestrate: yieldrate ofzero-coupon bonds - turnover rate ofbeneficiaries:3% - dividend rate: 0% - volatility rate: 30% - of theoptionsareasfollows: The assumptionsused for thecalculationoffair value as follows: The impactofshare-based paymentsontheaccounts was was €7.61. The average price ofoptionsexercised duringtheperiod price oftheoptionswasreduced byone-half. (2) Asaresultofthe2-for-1 stock spliton December 11,2006,thetotalnumberofsharesallotted andthenumberofoptions (1) Limitationoftheexercise period approved bytheBoardofDirectors onNovember 2,2005toensurecompliance withthemaxi exercise conditions ofthestock optionplansareasfollows: The capitalincreases andissuepremiumsduringthepastfiscal year werepartly driven bytheexercise ofstock options.The Stock options qiy1,6 8,220 - 11,564 30 2,662 26 - 3,318 2,692 Equity 3,344 USA Savings Plan Group Savings Plan Stock options Wages andsocial security costs pin acle uigtefsa er40166680- 48,782 1,307,110 6,820 833,418 99,320 - 02.23.07 10,280 1,656 07.01.05 188,889 16,130 11.17.05 493,824 171,204 2,800 11.17.05 175,855 450 - 01.28.08 10,626 275,657 Options notyet exercised atMarch31,2007 41,542 10.15.07 0 Options cancelled duringthefiscal year 10.14.05 01.29.04 06.15.07 Options exercised duringthefiscal year 400,875 08.15.12 10.16.03 Options onApril1,2006 1,772 10.28.03 12,000 0 04.24.06 01.19.05 Expiration datefor options 52,920 Start datefor exercising options 04.08.06 04.25.02 100,950 Total numberofsharealloted 04.09.02 Options notyet exercised atMarch31,2007 Options cancelled duringthefiscal year Options exercised duringthefiscal year Options onApril1,2006 Options price Expiration datefor options Start datefor exercising options Total numberofsharealloted with five- orten-year maturit,based ontheplanmaturity. (2) (2) (2) (2) (2) (2) 33.703.31.06 03.31.07 4,9 7,0 9,0 1,355,892 992,100 776,300 143,592 268666499581,355,892 939,558 666,684 52,618 .0€77 .6€ .4€ .8€ 15.82€ 6.78€ 7.74€ 7.36€ 7.75€ 4.60 € lnPa lnPlan Plan Plan Plan 10 (1) th 01.41.61 11.406.15.09 11.16.14 11.16.14 10.13.14 5,7 3725670406613,080 480,676 18,440 576,730 706,362 13,772 778,130 153,870 89,210 641,852 72 72 .1€46 5.13€ 4.60€ 6.41€ 17.26€ 17.26 € lnPa lnPa Plan Plan Plan Plan Plan 11 5 th th €36.06 andwerebooked as adeduction fromequity. shares. These sharesarevalued atanaverage price of As ofMarch31,2007,thecompany held22,059ofitsown Own shares Fac)(tl)(USA) (Italy) (France) 6 th 12 7 th th at April1,2006doubled andthe mum period allowed byUSlaw. (1) 8 th 02.22.11 13 9 th th CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Consolidated reserves and translation reserves

The reserves break down as follows: 75

03.31.07 03.31.06 Legal reserve 505 505 Other reserves 65,237 53,025 Translation reserves - 36,608 - 25,266 Own shares held - 795 - 679 Consolidated reserves and translation reserves 28,339 27,585

Like the capital, the legal reserve constitutes a guarantee for third parties dealing with the company. Because of this, it can- not be distributed to shareholders.

Note 13 Provisions The provisions break down as follows:

As of 03.31.06 Appropriations Write-backs Write-backs Exchange As of 03.31.07 (provision (provision rate used) not used) differences Provisions for litigation 4 - 4 - - - Provisions for tax risk - 2,053 - - - 101 1,952 Total 4 2,053 4 - - 101 1,952 Impact Current operating result 2,053 4 - Financial result - - -

Ubisoft Divertissements Inc (Canada) received a notification project of a significant adjustment from Canadian tax authori- ties relating to fiscal years 1999 to 2003. The subsidiary, strengthened by its consultants and lawyer, estimates that the risk is restricted to CAD 3 million, i.e. €2 mil- lion corresponding to the provision for risk recorded in the Canadian subsidiary accounts.

Note 14 Employee benefits

As of 03.31.06 Appropriations Write-backs Exchange rate As of 03.31.07 differences Provisions for retirement 1,156 55 - - 6 1,205 Total 1,156 55 - - 6 1,205

The definition and the accounting and valuation principles are presented in section 2.5.2.3 Principles of consolidation – Employee benefits. UBISOFT • FINANCIAL REPORT 2007 or sets upforward salescontracts oroptions. rencies), theparentcompany borrowsinthese currencies commercial transactions (i.e.internalloansinforeign cur- the samecurrency).For non-hedged balances andnon- currencies offset byroyaltiesreceived fromsubsidiariesin two-way transactions (i.e.development expenses inforeign The groupreliesmainly onnatural hedges resulting from months. which meansthatthehedge period does notexceed 15 lar). The strategy istohedge onefiscal year atatime, dollar, Canadiandollar, poundsterlingandAustralian dol- operating cashflowinthemajorcurrencies(i.e.US ries. The groupprotects only itspositions related toits rating cashflowanditsinvestments initsforeign subsidia- The groupisexposed toforeign exchange riskonitsope- • Foreign exchange risk periods. an increase inworkingcapitalduringparticularly active and variable-rate loanstofinance specific needs related to priority tofixed-rate loansfor long-termfinancingneeds cing exposure tothisrisk.Inregard,thegroupgives minimizing thecost ofthegroup'sborrowings andatredu- The managementofinterestrate riskisaimed mainly at • Interestrate risk certain financialinstruments: from thefinancingneeds ofitsactivities,thegroupuses To limitinterestrate andexchange rate risksresulting Borrowings breakdown asfollows: Note 15 oeg urnyavne 6585,432 316 50,664 6,508 141 41,391 Short-term debt Long-term debt Zero-rate debt Variable-rate debt Fixed-rate debt Borrowings Borrowings resultingfromrestatementofleases Bank loans Bank overdrafts andshort-termloans Foreign currencyadvances Accrued interest Bond debentures Borrowings CAE-89,854 - OCEANE BA 52,079 - OBSAR 2007/2008 fiscal year. all ofthese ratios andexpected toremainso duringthe At March31,2007,thecompany wasincompliance with March 2006. ted year-end financialstatementsbased onIFRSasof All covenants arecalculated onthebasisofconsolida- but withadifferent ratio of0.9for netdebt onequity. for €10millionwhichhastorespect thesamecovenants Besides, thecompany signed in2006/2007,abilateral line The following covenants mustberespected: financial ratios (knownascovenants). for €20million,thecompany isrequired torespect certain Under thetermsofsyndicated loanandbilateral line Covenants sindrcialsEID . 1.5 0.9 1.5 0.85 assigned receivables/EBITDA < Net debt restated to reflect restated toreflect goodwill < assigned receivables/equity Net debt restated to reflect 33.703.31.06 03.31.07 884147,354 54,981 108,636 48,874 22,706 61,677 150202,335 2,840 71,580 23,254 ,5 2,840 90,859 3,254 6,649 8 1,150 286 0720 2006/2007 2007/2008 141,933 - CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Bank overdrafts

Bank overdrafts are used to finance temporary cash requi- The financial position improved by €120,316 thousand 77 rements generated by changes in working capital require- over the fiscal year. ments. They may be offset with existing liquid assets at other The breakdown of borrowings by currency is as follows: group companies as part of a notional cash pooling system.

Leasing 03.31.07 03.31.06 Leases mainly concern computer equipment leased under Euros 61,473 193,949 contracts of a maximum of three years. During the fiscal US dollars 276 79 year, new borrowings totaled €60 thousand and repay- ments totaled €230 thousand. Canadian dollars 9,826 8,277 Pounds sterling 3 17 Net financial surplus Other 2 13 At March 31, 2007, the net financial surplus was €54,972 thousand. Borrowings 71,580 202,335

03.31.07 03.31.06

Borrowings 71,580 202,335 Cash on hand - 95,766 - 99,732 Net investment securities - 30,786 - 37,259 Financial surplus - 54,972 65,344

Chief characteristics of OCEANE (bonds convertible/exchangeable into new and/or existing shares) Number: 3,150,000 bonds. As a result of the adjustment made in connection with the issue of warrants for the purchase of existing shares and/or the subscription of new shares in May 2003, one bond entitles its holder to subscribe for 1,037 shares, each with a face value of €0.31. Nominal issue price: €47.50 Dated date and settlement date: November 30, 2001 Bond term: Five years from the settlement date. Annual yield: 2.5% per year, payable in arrears on November 30 of each year. Gross redemption yield: 4.5% on the settlement date (if no conversion into and/or exchange for shares and no early redemption). Normal redemption: Redemption in full on November 30, 2006, at a price of €52.70, or 110.94% of face value. The settlement date was November 22, 2006. During the fiscal year, 475,998 shares with a face value of €0.31 were created following the conversion of 459,013 OCEANE, and 1,290,288 OCEANE were redeemed. UBISOFT • FINANCIAL REPORT 2007 rest rate risk. As theabove amount isshort-termanddoes notbearinterest,achangeininterestrates does notpose asignificantinte- All trade payableshave aduedateoflessthanoneyear. Trade creditors breakdown asfollows: Note 17 Due dateofdeferred taxliabilities: the company recognizes afuturetaxliabilityfor thisitem. (1) The Canadiansubsidiarybenefitsfrommultimedia credits. Asthese credits aretaxable intheyear inwhichtheyareused b Note 16 and 2,627,676shareswithaface value of€0.155werecreated. The €38.35 BSAR canbeexercised betweenDuring thefiscal December year 3,2003andDecember ended 2,2008, March31,2007,following theexercise of1,313,907BSAR: 69shareswithaface value of€0.31 OneBSAR entitlesitsholder tosubscribe for onenewshare withaface value of in theredemption oftheoutstandingbonds. 1001 ofNovember 14,2003approved bytheAutorité des MarchésFinanciers.The early redemption oftheBSAR resulted the outstandingBSAR andbonds,inaccordance withtheprovisions ofArticles2.2.7.3.2and2.5.6.1securities note03- At itsmeeting ofJanuary 19,2007,theBoardofDirectors voted infavor oftheearly redemption onFebruary 26,2007of 1,433,492(twoBSAR areattached toeachbond). Exercise period: Strike price: Five years fromthesettlement date. The bondswillberedeemed onasingleredemption date–December 2,2008 T Parity: Number ofBSAR: €76.70 Characteristics oftheBSAR (redeemablesharewarrants) Normal redemption: Nominal rate, yield: Bond term: Nominal issueprice: Number: 716,746 Characteristics ofthebonds Meeting ofSeptember12,2002toissueOBSAR bonds(bondswithredeemable sharesubscription warrants). At itsmeeting ofNovember 3,2003,theBoardofDirectors used theauthorizationgranted bytheCombined General Chief characteristics oftheOBSAR (bondswithredeemablesharesubscriptionwarrants): bonds. Total Debts onfixed assets Trade payables Total Other Bond debentures Equity Swap TLC brands Subsidies ogtr: €27,217thousand €997thousand - long-term: - short-term: (1) Trade creditorsand relatedaccountspayables Deferred taxliabilities BSAR maybesuspended. of theissuerandthose concerning circumstances under whichtheexercise of subject totheprovisions governing theearly redemption ofBSAR attheoption €0.31. –at theparrate of€76.70perbond. The annualnominalrate isbased onthe3-monthEuribor. he bondswillbearinterestatavariable rate payablequarterly inarrears. 33.703.31.06 03.31.07 03.31.06 03.31.07 08010,922 10,810 11871,033 65,305 81,178 78,589 22,854 5,934 28,214 13,032 ut arerecorded onafiscal year basis, ,8 5,728 2,589 1,376 3,510 1,182 3,190 1,112 - CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Note 18 Sundry creditors

Other debts breaks down as follows: 79

03.31.07 03.31.06 Advances and installments received 1,734 122 Social security liabilities 27,320 18,199 Other tax debts 33,168 19,640 Other debts 162 120 Deferred income 13,511(1) 13,992 Total 75,895 52,073

(1) Unearned income includes Canadian subsidies totaling €7.8 million, a €0.5 million incentive linked to a lease in Canada and prepaid sales in the amount of €5 million. Other debts have a due date of less than one year.

2.5.5 Notes to the income statement

Note 19 Sales The group had €680 million in sales during the 2006/2007 fiscal year. At current exchange rates, sales increased by 24.4% over the 2005/2006 fiscal year; at constant exchange rates, growth in sales was 27.2%. The breakdown of sales by activity is as follows:

03.31.07 03.31.06 Sale of goods 654,962 514,599 Licences 16,340 18,466 Services 9,046 14,005 Total 680,348 547,070 UBISOFT • FINANCIAL REPORT 2007 Other income The paymentofcertain subsidiesisconditional upontaxable income beinggenerated. miscellaneous subsidiesfor €726thousand. - asubsidyof€1,773thousandfor aportionof training costs, - anR&Dtaxcredit for €3,567thousand,representing 50%ofR&Dcosts, - multimedia credit for €25,398thousand,representing 50%ofthewagesrelated toproduction activity, - The Canadiansubsidiesbreakdown asfollows: A provision for individualrightstotraining wasrecognized intheaccounts ofMarch31,2007for €56thousand. The expenses resultingfromdefined-contribution schemes totaled €5,290thousand. Wages andsocial security costs breakdown asfollows: Note 21 Other operating income breaksdown asfollows: Note 20 Other external expenses consist mainly ofadvertising expenses, royaltiesandleasingoffixed assets and movables. Other operating expenses breakdown asfollows: Note 22 aiaie rdcincsso te otae148488 130,475 1,488 161,196 Total Write-back ofprovisions Capitalized production costs onothersoftware Capitalized commercial software production costs te xenlepne 7,3 183,880 170,836 169,034 Total Other expenses Other external expenses 199,102 Total Share-based payments Subsidies Individual righttotraining Salaries andsocial security taxes Intangible assets Doubtful debts Litigation Wages andsocialsecuritycosts Other operating income Other operating expenses 33.703.31.06 03.31.07 03.31.06 03.31.07 33.703.31.06 03.31.07 144-31,052 - 31,464 6,6 132,965 166,467 7,7 186,883 174,275 140,674 171,038 ,2 600 1,526 ,3 1,137 2,139 ,4 865 1,644 ,3 3,003 3,439 2,692 3,344 1 265 113 6- 56 5- CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Note 23 Depreciation and provisions 81 Depreciation and provisions break down as follows:

Depreciation

03.31.07 03.31.06 Depreciation of intangible assets 219,122 72,981 Released software programs 162,214 48,794 External developments 52,398 19,816 Office software 4,369 4,188 Leased office software 85 135 Other 56 48 Depreciation of tangible assets 10,991 8,321 Plant & machinery 1,722 1,223 Computer equipment and furniture 6,937 5,857 Development kits 2,156 835 Transportation equipment 59 51 Leased computer hardware and transportation equipment 117 355 Total 230,113 81,302

Provisions

03.31.07 03.31.06 Provisions for intangible assets - 77,755 Released software programs - 69,293 External developments - 8,462 Provisions for trade receivables 460 1,266 Provisions for sundry current assets - - Provisions for risks and charges 2,053 - Provision for retirement benefit costs 55 419 Total 2,568 79,440

Note 24 Other operating income and expenses Other operating income and expenses break down as follows:

03.31.07 03.31.06 Sales of fixed assets 243 126 Other operating expenses 117 1,658 Total 360 1,784

The other operating expenses in the amount of €117 thousand correspond to impairment of Wolfpack Studios Inc.’s good- will (cf. section 2.5.4 Notes to the balance sheet - Note 1 Goodwill). UBISOFT • FINANCIAL REPORT 2007 follows: The netincome/expenses ofassociates breakdown as Note 26 - the distributionsubsidiariespayaroyaltyto the parent - when theparentcompany makes aloaninforeign cur- several ways: Entertainment SA hedges exchange rate fluctuationsin In order tolimitthegroup'sforeign exchange risk,Ubisoft Foreign exchange risk Financial resultbreaksdown asfollows: Note 25 oa ,4 19,109 3,149 15,826 2,576 - 707 - 3,149 Total Result ofsales Result ofdilution Share inearnings Total Financial expenses Financial income Cost ofnetborrowings sheet -Note10.Currentfinancialassets). contract details, cf.section 2.5.4Notestothe balance forward salescontracts andoptioncontracts (for time lags.Amountsthatcannotbeoffset arehedged by foreign currencyadvances orinvestments tomanagethe the samecurrency),groupoffsets thisbyusing (for example, royaltiesreceived andcost ofastudioin with regardtoasinglecurrencyinoppositedirections Entertainment SA. Whenforeign exchange riskexists is centralized atUbisoft EMEASAS andUbisoft agreements. Inthisway,alloftheforeign exchange risk and mostofthelicensing andexternal development SA finances alltheproduction studiosaroundtheworld the subsidiaries.At thesametime,Ubisoft Entertainment entire regionandthenresells theminlocal currenciesto centralizes thepurchases offinished products for the incurred bythelatter.Moreover, Ubisoft EMEASAS company ascompensation for thedevelopment costs the parentcompany’s loanintheopposite direction; any gainorlossontheloanisoffset byagainorlosson same currency.Thus, iftheexchange rate rises orfalls, rency toitssubsidiaries,italso takes outaloaninthe te iaca noe 6- -1,438 -1,756 36 7,519 1,764 419 -10,693 27,057 1,521 -7,067 -45 Other financialexpenses Exchange losses Other financialincomes Change infair value andsaleoftheequity swap Exchange gains Dividends Income/expenses fromcashhedging operations Interest paidonfinancingoperations Interests earned onplacements Share inearningsofassociates Financial result 33.703.31.06 03.31.07 Income taxexpense breaksdown asfollows: Note 27 Deferred tax intheUnited States,thegroupincludes three companies: - inFrance, thegroupincludes ninecompanies: Ubisoft - There aretwotaxintegration groups: in force atMarch31,2007,i.e.33.33%. Tax owed byFrenchcompanies wascalculated at therate Current tax Deferred taxliabilities(see details inNote16) Deferred taxassets (see details inNote6) 3,324 -15,217 -5,018 - -7,129 Total Deferred tax tax Current expense of€1,951thousand. Ubisoft Inc.At March31,2007,thetaxgrouphada Ubisoft HoldingsInc.,Red StormEntertainmentInc.and time for itsownpurposes; rary, since thecompany inquestionmayuse thematany the taxgroup’smembercompanies willonly betempo- however, anytaxsavings arisingfromtheuse oflosses at deferred taxassets intheamountof€2,153thousand; SAS. At March31,2007,thetaxgrouphadwrittenback Factory SAS andUbisoft Manufacturing etAdministration SAS, Ubisoft OrganisationSAS, Ubisoft WorldSAS, Ludi SAS, Ubisoft Books andRecords SAS, Ubisoft Graphics Entertainment SA, Ubisoft EMEASAS, Ubisoft France Income taxexpense 33.703.31.06 03.31.07 287-16,531 - 12,807 453-17,969 - 14,563 1189,850 11,108 ,9 -8,510 - 5,591 807-9,110 18,047 17,369 38,201 -- 33.703.31.06 03.31.07 33.703.31.06 03.31.07 82422,854 42,321 28,214 37,630 ,8 8,342 8,088 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Tax proof 83 03.31.07 Consolidated earnings, excluding GW, tax and profit/loss of associates 52,743 Theoretical tax (33.33%) 17,581 Adjustments of deferred taxes from previous fiscal years: Variance between the accounting records and tax returns - 179 Effect of permanent differences between company earnings and consolidated earnings: IFRS2 wage complement 1,115 Cancellation of provisions for impairment of goodwill - 418 Deductibility of the bond redemption premium related to OCEANE - 2,236 Misc. add-backs 464 Other 511 Research tax credit France - 1,570 United States - 345 Taxation of foreign companies at different rates 107 Other restatements 187 Total income tax 15,217 Actual tax rate 28.85%

Adjustments recognized during the fiscal year for tax due from previous years and entered as equity Following the tax adjustments for previous years, the amount impacting equity is -€221 thousand. UBISOFT • FINANCIAL REPORT 2007 tion ofgames,internalandexternal development, royalties)andheadoffice costs. (2) The parentcompany, like Ubisoft EMEASAS, invoices subsidiariesfor acontribution intheform ofroyaltiesthatserve to (1) Invoicing ofproducts purchased onbehalfofsubsidiaries andreinvoiced attheiracquisition cost. 1. Breakdown ofresultbygeographic area basis thatthegroupoperates inasinglemarket inseveral geographic areas. In lightofthegroup'sorganizationalstructureandcommercial linksamongthevarious subsidiaries,weproceed onthe Segment information 2.5.6.1 ot fsls-1,5 361-5 941-080-,1 -229,969 680,348 -6,111 32,085 166,467 -90,810 313,150 15,505 -9,421 97,052 74,518 -359 110,452 11,116 56,426 -3,611 4,239 71,183 -119,657 2,467 58,622 Costs ofsales Other operating income Sales ru 091901191155518240,558 852 5,561 3,149 40,558 23,638 - 18,047 -15,217 1,185 852 - 61 -580 -33 1,149 5,561 - -360 -5,591 68 -113 -2,986 -1,898 900 1,185 -122 19 -7,067 -2,083 1,476 -745 - -245 -18 -148 - 30,911 1,149 34,579 19 117 -206 -451 -515 1,465 -223 900 - 3 -56 173 -5,950 366 -21 -144 10,445 -26 34,939 7 -118 30,911 - 158 -68 47 -86 1,587 -10,311 2,175 -658 Group -1,577 20,764 -232,681 - interests share 23,743 2,037 10,593 Attributable tominority -1,045 2,115 1,878 -661 - -191 3 3,149 Profit for theyear -195 Income taxexpense 278 -9,164 -11,923 2,172 -174,275 - 1,070 Share inearningsofassociates -196 -4,857 -148,506 Financial result -9,070 -312 -7 -171,038 5 434 -757 Inter-company flows 2,201 17,309 and expense -63,555 -12,509 -31,969 -6,086 -5,505 Other financialincome -21 -68,916 Net borrowingscosts 1,070 -608 -49,443 1,229 1,499 5,019 -18,207 Cost ofgrossfinancialdebts Cash andcash-equivalent income -14,577 -3,727 -21,705 17,316 -18,057 Operating -148 result 261 -32,369 and expenses -6,530 263,546 Other operating income -12,227 Current operating result -220,959 -37,442 -590 Reinvoiced contributions (2) -4,566 -53,159 Depreciation andprovisions -14,955 Tax andduty 155 -63,940 Other operating expenses 85,252 Wages andsocial security costs products andwork-in-progress Inventory changesinfinished Inter-company flows(1) 2.5.6 Appendix notes rneGrayU Rs fUie ttsRs f03.31.07 Restof United States Restof UK Germany France ------uoeCnd ol Total world Canada Europe support development costs (deprecia- CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

2. Breakdown of balance sheet by geographic area 85 Net assets France Germany UK Rest of United States Rest of 03.31.07 Europe Canada world Total

Goodwill 21,972 10,840 1,451 3,564 39,547 - 77,374 Other intangible assets 222,626 67 47 126 40,697 463 264,026 Tangible assets 9,765 127 599 1,064 11,333 2,622 25,510 Investments in associates 33,998 - - - - - 33,998 Financial assets 1,184 109 - 147 129 889 2,458 Inter-company flows 116,588 -13,251 -904 -12,168 -85,342 -4,923 - Deferred income tax assets 14,808 644 66 1,122 19,397 1,593 37,630 Non-current assets 420,941 -1,464 1,259 -6,145 25,761 644 440,996 Inventory and work-in-progress 2,856 1,447 4,050 4,366 11,241 834 24,794 Trade receivables 6,115 -5,265 6,706 17,122 56,438 6,741 87,857 Other receivables 19,717 8,819 6,846 1,210 37,095 272 73,959 Inter-company flows 34,405 11,363 21,704 -11,108 -50,954 -5,410 - Current financial assets 19,183 - - - - - 19,183 Current income tax assets 4,481 44 - 694 5,361 25 10,605 Cash and cash equivalents 106,723 307 46 9,436 6,118 3,922 126,552 Current assets 193,480 16,715 39,352 21,720 65,299 6,384 342,950 Total assets 614,421 15,251 40,611 15,575 91,060 7,028 783,946

Liabilities France Germany UK Rest of United States Rest of 03.31.07 Europe Canada world Total

Capital 7,037 - - - - - 7,037 Additional paid-in capital 435,234 - - - - - 435,234 Equity component ------Consolidated reserves 8,534 3,278 4,457 2,843 18,381 1,497 38,990 Consolidated earnings 30,908 903 1,148 1,184 5,561 854 40,558 Equity (group share) 481,713 4,181 5,605 4,027 23,942 2,351 521,819 Minority interests ------Total equity 481,713 4,181 5,605 4,027 23,942 2,351 521,819 Provisions - - - - - 1,952 1,952 Employee benefits 1,066 - - 75 - 64 1,205 Borrowings - - 20,000 103 2,603 - 22,706 Deferred tax liabilities 13,632 3 - 13 14,530 36 28,214 Non-current liabilities 14,698 3 20,000 191 17,133 2,052 54,077 Borrowings 46,965 8 3 908 990 - 48,874 Trade creditors and related accounts payables 42,504 1,886 5,193 4,921 24,483 2,191 81,178 Sundry creditors 28,387 9,147 9,596 4,697 22,512 1,556 75,895 Financial liabilities ------Current income tax liabilities 154 27 215 831 46 830 2,103 Current liabilities 118,010 11,068 15,007 11,357 48,031 4,577 208,050 Total liabilities 614,421 15,252 40,612 15,575 89,106 8,980 783,946 UBISOFT • FINANCIAL REPORT 2007 During the2006fiscal year theMembers oftheBoardDirectors received €135 thousandindirectors’ fees. thousand peryear maximum. of theBoard,General Meeting ofSeptember25,2006authorized thecompany to paydirectors’ fees totalling€250 In –only partial–compensation for their workandthetimespentinpreparingfor, andactively participatingin,meetings thousand paidbyUbisoft EntertainmentSA. by ArticleL233-16andthecompany controlling theoneatwhichthey heldoffice was€1.078thousandincluding€546 The totalgrosscompensation paidtomanagersduringthefiscal year bythecompany, bycontrolled companies asdefined amount andarenotemployed under workcontracts. The Guillemotbrothersarecompensated for theirdutiesasCEOandExecutive Vice Presidents. They arepaidafixed 1. Compensationofmanagersatthecompanyand thecontrollingand/orcontrolledcompanies Transactions withrelated parties 2.5.6.3 nology rightstoDriver On August 3,2006,the group acquired fromAtari Inc.andReflections Interactive Ltdtheintellectual propertyandtech- Business combinations 2.5.6.2 3. Breakdown ofinvestments bygeographic area oa €16,666thousand €3,003thousand(US$4million) €147thousand Total - computer equipment andfurniture - software - theDriver The US$22millioninassets related tothisacquisition correspond to: The netassets acquired andgoodwill aredetailed below: acquisition price ofUS$24million. eeomn is611-----6,171 - 7,861 14 2,009 1,685 1,146 - - - 10 4,171 - 2,085 590 - - 516 21,532 139 255 61,094 6 - 2 - 14 1,353 164,913 - 393 70 - 14,032 - - 54 2,826 - 5 1,703 3,118 105 6,171 - - - - 681 03.31.07 19 - - 2,007 Restof Development kits - United States - furniture Restof 415 Computer equipment and UK Plant &machinery - Other intangibleassets - Brands 7,500 in progress Germany Others intangibleassets 58,268 France Office software 161,795 External commercial software Released commercial software Investissements arvleo h e sesaqie 666US$22million 16,666 368 146 267,579 60 9 1,295 - 26,099 - - 798 - 9 753 146 Goodwill 60 - - Fair value ofthenetassets acquired 94 Total acquisitioncost Direct costs related totheacquisition - Amount paidincash - 238,540 ------Total Fixed assets inprogress and transportation equipment Leased computer hardware Transportation equipment ® rn €13,516thousand(US$18million) brand ® , aswellmostoftheassets andallofthestaff ofthe Reflections Interactive Ltdstudiofor an uoeCnd ol Total world Canada Europe 03.31.07 817US$24million 18,485 18,117 1,819 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Name of manager 03.31.07 03.31.06 Total gross fixed Directors’ Total variable Benefits Total gross fixed Total variable Benefits 87 compensation fees compensation in kind compensation compensation in kind paid on paid paid on paid on paid paid Mr Yves Guillemot 214,800 € 22,500 € None None 204,000 € None None Mr Gérard Guillemot 182,518 € 22,500 € None None 200,200 € None None Mr Michel Guillemot 251,575 € 22,500 € None None 204,000 € None None Mr Claude Guillemot 214,800 € 22,500 € None None 204,000 € None None Mr Christian Guillemot 214,800 € 22,500 € None None 204,000 € None None

Following the resignation of Ms. Yvette Guillemot on June 23, 2006, Mr. Marc Fiorentino was co-opted by the Board of Directors on July 10, 2006. This cooption was approved at the General Meeting of September 25, 2006. No obligation has been undertaken by the company in favour of its corporate officers related to their termination or change in employment, such as in the event of a takeover bid. No loans or advances were made to the company’s managers as provided by Article L225-43 of the French Commercial Code. The members of the Board of Directors did not receive any stock options or share subscriptions during the fiscal year just ended.

2. Transactions with other related parties The transactions with Gameloft SA are related to the rein- Ubisoft Entertainment SA did not buy back any of its own voicing of licenses and services: shares from related parties.

03.31.07

Customer balance 968 Supplier balance 792 Revenues 2,295 Expenses 2,381

2.5.6.4 Off-balance-sheet commitments

1. Sureties and guarantees

03.31.07 Due date 03.31.06 Sureties and guarantees given 50,566 25,209 Debtor (1) Type of guarantee Ubisoft Divertissements Inc. Loan repayment guarantee 2,603 Sept 2007 Ubisoft Ltd Loan guarantee 20,000 12.29.2011 Ubisoft Inc. Guarantee of commercial commitments 2,252 End of commercial relationship Ubisoft Ltd Lease payment guarantee 3,161 June 2016 Red Storm Entertainment Inc. Lease payment guarantee 759 10.31.2009 Ubisoft Divertissements Inc. Lease payment guarantee 573 End of lease contract Ubisoft Inc. Stand-by letter 2,253 09.30.2007 Ubisoft Inc. Stand-by letter 6,007 04.30.2007 Ubisoft Emea SAS Stand-by letter 3,000 05.31.2007 Ubisoft Emea SAS Stand-by letter 3,000 06.30.2007 Ubisoft Emea SAS Stand-by letter 6,000 07.31.2007 Collateral for loans None None Notes receivable discounted None 1,000

(1) Only commitments of more than €500 thousand are detailed. UBISOFT • FINANCIAL REPORT 2007 tem withinthegroup There isnoemployee profit-sharingorshareholdingsys- fiscal year was3,734. The average numberofemployees duringthe2006/2007 employees wasasfollows: As ofMarch31,2007,thenumberpermanent ments. There werenoothersignificantoff-balance-sheet commit- tue ofthisguaranteed minimumamounted to€41.2million. ranteed minimumroyalties.The commitments made byvir- made bythegroupprovided for thefuturepaymentofgua- signed bythegroup.At March31,2007,thecommitments Various products aremarketed under licensing contracts Future guarantee payments 4. Othercommitments million andhadnotbeen used atMarch31,2007. The syndicated loanisconfirmed intheamountof€100 firmed andrevocable with30days’priornotice. bilateral linesofcredit total€93million.They areuncon- Lines ofcredit used amountto€30millionandshort-term 3. Authorizations most 10years. €10,523 thousandfor whichthetermoflease isat these mainly involve leases related topropertyfor - Simpleleases: years. hardware leased under contracts ofamaximumthree Finance leasingarrangements mainly concern computer - Finance leasingarrangements: 2. Leasing oa ,3 3,441 458 3,934 411 1,795 1,188 1,923 1,600 Total Asia-Pacific Europe andNorthAfrica North America 8 6 1 9 0 6 15 10966 194 113 568 Residualvalue Payments stilltobemade Payments made Net value Amortization 681 Initial value 2.5.7 Employees 33.703.31.06 03.31.07 is oneofthemostwellknownfranchises inGermany. On April6,2007,acquisition ofthe Anno Acquisition months. SA favor. The totalamountwillbeknowninthenext few agreement hasbeen handed down inUbisoft Entertainment licensee since October2003concerning breachoflicense The lawsuitwhichpended between thecompany anda Deposition tegy market. Anno 1701. Ubisoft reinforces itspositioninthereal-timestra- in Related DesignsSoftware GmbH,whichdeveloped Anno Through thetransaction, Ubisoft willacquire a30%stake Entertainment Software GmbHfor €14.2million. the buyout oftheGermanpublisherSunflowersInteractive 2.5.9 2.5.8 closing ofaccounts Events after and liabilities Potential assets - 1year +1year TM , alongwithUbisoft’s The Settlers TM brand through ® , CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2007 2

Report for the consolidated account 89 2.6 statements for the fiscal year ending March, 31, 2007

Dear Shareholders,

Pursuant to the assignment entrusted to us by your General Meeting, we have audited the consolidated financial statements of Ubisoft Entertainment SA for the fiscal year ended March 31, 2007, as attached to this report. The consolidated financial statements have been prepared by the Board of Directors. It is our task to express an opinion on these financial statements on the basis of our audit.

I - Opinion regarding the consolidated financial statements We have conducted our audit in accordance with accepted professional standards in France. These standards require due diligence in order to ascertain with reasonable certainty that the consolidated financial statements contain no material ano- malies. An audit consists in examining, on a test basis, evidence relevant to the information contained in the financial sta- tements. It also involves assessing the accounting principles applied, the significant estimates made in preparing the financial statements and their overall presentation. It is our view that the audit we conducted forms a true and fair basis for the opinion expressed below. We hereby certify that, from the standpoint of IFRS standards as adopted in the European Union, the consolidated financial statements give a true and fair view of the assets, financial position and results of the group comprising the consolidated persons and entities.

II - Basis for assessment Pursuant to the provisions of Article L. 823-9 of the French Commercial Code regarding the basis for assessment, we call your attention to the following items:

Commercial software The note relating to “Other intangible assets” in the section of the notes entitled “Consolidation principles” describes the accounting principles for the recognition and amortization of commercial software. As part of our assessment of the accounting rules and principles applied by your company, we have verified the appropria- teness of the accounting methods indicated above and of the information provided in the notes, and have ensured their cor- rect application.

Goodwill and brands The notes relating to “Goodwill” and “Brands” in the section of the notes entitled “Consolidation principles” describes the accounting principles for the recognition and amortization of these intangible assets. As part of our assessment of the accounting rules and principles applied by your company, we have reviewed the procedu- res for conducting this impairment test, as well as the cash flow forecasts and assumptions used, and verified that the above notes provide appropriate information.

Provision for tax risk Ubisoft Divertissements Inc. is subject to a tax inspection under the conditions described in “Note 13 – Provisions” of the notes to the consolidated financial statements. The company, which objected to the tax adjustment, set up a provision in the amount of the estimated risk at closing. As part of our assessment of the significant estimates used to prepare the financial statements, we: - examined the reasons for the adjustment; - reviewed the opinion of the experts and attorneys justifying the grounds for the objection made to the administration. Our assessments were made within the context of our audit of the consolidated financial statements as a whole, and there- fore provided a basis for the opinion expressed in the first part of this report. UBISOFT • FINANCIAL REPORT 2007 Partner Laurent Prévost A divisionofKPMG S.A. with theconsolidated financialstatements. concerning thegroup’smanagement.Wehave nocomments regardingtheaccuracy ofthisinformation anditsconsistency We have also verified, inaccordance withaccepted professional standardsinFrance, theinformation provided inthereport III -Specificverification KPMG Audit Rennes, June14,2007 By theauditors André Métayer Audit AMLD Partner CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3 91

Corporate accounts of Ubisoft Entertainment SA 3 as of March 31, 2007 3.1 Ubisoft Entertainment SA balance sheet 92 3.2 Ubisoft Entertainment SA income statement 93 3.3 Corporate statements of changes 94 3.4 Cash flow statement 95 3.5 Notes to the corporate accounts 96 3.5.1 Highlights of the fiscal year 96 3.5.2 Comparability of accounts 96 3.5.3 Accounting principles 96 3.5.4 Accounting method changes 96 3.5.5 Accounting rules and methods 96 3.5.6 Notes to the balance sheet 98 3.5.7 Notes to the income statement 105 3.6 Other information 108 3.6.1 Personnel 108 3.6.2 Financial commitments and other information 108 3.6.3 Compensation of managers 109 3.6.4 Potential assets and liabilities 109 3.6.5 Events after closing of accounts 109 3.6.6 Subsidiaries and affiliated company (March 31, 2007) 110 3.7 General report on the fiscal year ending March 31, 2007 112 3.8 Special Auditors’ report fiscal year ended March 31, 2007on regulated agreements. 114 UBISOFT • FINANCIAL REPORT 2007 rd eevbe 358-6,3 574124,271 55,794 408,982 2,259 15,520 244,297 63,538 444,197 1,952 9,039 239,180 418,667 - 162,426 1,898 29,898 220,421 255,573 203,065 4,521 63,538 20,807 - 31/03/05 674,240 196,348 03/31/2006 5 241,228 6,419 230,245 03/31/2007 29,898 3 03/31/2007 426,593 2 03/31/2007 4 1 Trade receivables Advances andinstallmentspaid Fixed assets Financial assets Tangible assets Business assets Intangible assets Assets te et 62,5 77012,811 108,209 53,612 17,710 3,967 108,209 44,685 20,150 9,894 173,494 108,209 53,612 287,289 4,133 3,266 30 147,969 50,831 53,612 314,937 44,685 3,918 20,421 - 5,480 32,442 44,685 437,352 308 35,324 69,095 323 35,917 16 31/03/05 03/31/2006 (3) currentaccounts 2,825 03/31/2007 2,791 (2) currentbankcredit facilities 687,183 andcredit balances: (1) dueinlessthanoneyear: 17 Total liabilities 272,585 1,132 15 14 615,327 3,908 Accrued expenses 15 (adjustments accounts) Total debts 166,090 32,038 60,859 619,525 Other debts 15 - 1,150 Debts onfixed assets 199,708 Tax andsocial security liabilities 37,785 37,255 255,573 Trade creditors andrelated accounts payables - Miscellaneous financialdebts (3) - - 875,098 Borrowings (1)(2) 40,792 Notes 30,779 Bond debentures Provisions for risksandcharges - - Equity 1,150 199,708 39,897 - Income for Fiscal Year Reserves Premiums 10 26,217 Capital 40,792 30,779 9 Liabilities 34,701 8 - Total assets Adjustment accounts Bond redemption premium Current assets Cash 34,701 Investment securities Other receivables 3.1 Ubisoft EntertainmentSAbalancesheet oe rs mr/e e e Net Net Net Amort/dep Gross Notes K€ K€ €K €K €K €K €K ----- 1,2 1,2 687,183 395,899 615,327 295,949 619,525 177,931 274,795 315,419 420,775 ,0 ,0 -13,185 6,306 - 6,507 607-1,1 20,085 -12,813 16,047 ,0 ,2 20,239 5,626 2,604 5,594 6,025 7,037 K€ €K €K €K CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

3.2 Ubisoft Entertainment SA income statement 93

Notes 12-month fiscal 12-month fiscal 12-month fiscal year ended year ended year ended 03/31/2007 03/31/2006 03/31/2005 €K €K €K Sales 18 435,190 314,228 294,529 Other operating income and transfers of expenditures 19 17,223 13,495 12,712 Total operating income 452,413 327,723 307,241 Purchases stored and other procurement - - - 25 Other purchases and external charges 20 240,601 206,725 168,285 Tax and duty 1,163 1,118 2,088 Wages and social security costs 761 745 741 Other expenses 21 192 2,632 294 Depreciation and provisions 22 200,861 133,269 116,798 Total operating expenses 443,578 344,489 288,181 Operating result 8,835 - 16,766 19,060 Financial income from equity holdings 25,618 1,338 81 Income from other securities and claims on fixed assets 18 16 - Other interest and related income (1) 3,992 2,550 1,348 Write-back of provisions 2,782 639 12,024 Positive exchange differences 8,842 8,089 8,910 Net proceeds from sales of investment securities 380 1,192 254 Total financial income 41,632 13,824 22,617 Provisions 23,019 2,906 2,396 Other interest and related expenses (2) 7,923 7,551 11,026 Negativ exchange differences 10,399 15,620 7,055 Total financial expenses 41,341 26,077 20,477 Net financial result 23 291 - 12,253 2,140 Ordinary result 9,126 - 29,019 21,200 Extraordinary result 24 6,832 18,509 - 2,375 Result before income tax 15,958 - 10,510 18,825 Corporate tax 25 - 89 2,303 - 1,260 Net earnings for financial year 16,047 - 12,813 20,085 (1) including revenue from affiliated companies: 3,147 1,777 1,121 (2) including expenses related to affiliated companies: 2,658 1,511 806 UBISOFT • FINANCIAL REPORT 2007 te eevs634---6,394 505 - 7,037 - - 16,047 - 420,775 - - 16,047 - - -13,406 1,012 - - 105,356 ------12,813 6,394 - 505 6,025 -12,813 315,419 -12,813 -593 Net earningsfor Fiscal Year Profit andlossaccount reserve broughtforward Other reserves Regulatory reserves Legal reserve Issue premium Capital oa 1,3 0,6 607437,352 16,047 106,368 - 314,937 Total ntosnso aac so loaino aia 20/7 Balance asof 2006/07 Capital Allocation of Balance asof In thousandsof€ 3.3 Corporate statementsofchanges 33/0620/6 nraeerig 03/31/2007 increase earnings 03/31/2006 2005/06 annsincash earnings and bybond conversion CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

3.4 Cash flow statement 95

03/31/2007 03/31/2006 €K €K Flows from operating activities Net earnings 16,047 - 12,813 Depreciation of tangible and intangible assets 200,748 133,004 Changes in provisions 22,624 2,266 Flows from the disposal of fixed assets 170 - 18,473 Total cash flow from operating activities 239,589 103,984 Trade receivables - 7,744 68,477 Advances - 5,559 6,481 Sundry assets - 504 - 7,433 Trade payables - 2,253 290 Sundry liabilities 2,823 - 1,595 Total change in working capital requirement - 13,237 66,220 Flows from investments Acquisitions of intangible assets - 209,048 - 173,194 Acquisitions of tangible assets - 406 - 146 Acquisition of equity securities - 1,739 - 294 Acquisition of other financial fixed assets - 26,226 - 4,816 Charges to be spread over several years - - 768 Disposal of fixed assets - 24,939 Proceeds from long-term loans and other financial assets 26,125 4,129 Other restatements (1) - - 593 Total cash flow from investments - 211,294 - 150,743 Flows from financial transactions Repayment of long- and medium-term loans - 147,162 - 24,875 Capital increase 1,012 431 Increase in issue premium 8,594 12,174 Increase in issue premium of share subscription warrants 23,568 4,222 Increase in issue premium on group savings plan 1,557 - Increase in bond redemption premium 71,637 24,228 Variation in current accounts 36,652 - 18,389 Total cash flow from financial transactions - 4,142 - 2,209 Net change in cash flow 10,916 17,252 Net cash position at the beginning of the fiscal year 10,143 - 7,109 Net cash position at the end of the fiscal year 21,059 10,143

(1) Restatement of brands for €593 thousand. UBISOFT • FINANCIAL REPORT 2007 securities atMarch31,2005. investments, whereasthey wereshownunder investment 22, 2005,ownsharesarerecognized asotherlong-term Since thecreationofliquiditycontract onDecember for asharecapitalincrease of€24million. tion of1,702,282newshareswithaface value of€0.155 12,767,115 warrants wereexercised, resultinginthecrea- expired onMay14,2006.During thefiscal year, The sharesubscription warrants issued onMay14,2003 €0.31 and2,627,676shareswithaface value of€0.155. resulting inthecreationof69shareswithaface value of During thefiscal year, 1,313,907BSAR wereexercised, the early redemption ofoutstandingBSAR andbonds. On February 19,2007,theBoardofDirectors authorized shares withaface value of€0.31. OCEANE, whichresulted inthecreationof475,998new 1,290,288 OCEANEandtheconversion of459,013 2006. The bondwassettled throughtheredemption of The OCEANEbondreached maturityonNovember 22, Co. Ltd.wasliquidated. - Otheritems: under theequity swapcontract. In October2006,200,000sharesweresold byCalyon - Ownshares: €1,537 thousand. of thecurrentaccount totalingCHF2,500thousandor equity ownershipofUbiGamesSA throughthecapitalization In February 2007,Ubisoft EntertainmentSA increased its - Sharecapitalincreases: December 11,2006. carry outa2-for-1 splitofUbisoft’s shareeffective On December 5,2006,theBoardofDirectors decided to - 2-for-1 stocksplit: 2006 toMarch31,2007. The fiscal year covered aperiod of12monthsfromApril1, appendix tothebalance sheet. for thefiscal year ended March31,2007andconstitute an euros, areanintegral partoftheannualfinancialstatements The following notesandtables,presented inthousandsof In January 2007,UbiComputerSoftware BeijingCompany 3.5.2 3.5 3.5.1 Notes tothecorporateaccounts of thefiscalyear Highlights of accounts Comparability the decree ofJune22,1999. dual accounts contained inRegulation99-03,approved by statements comply withtheprovisions relatingtoindivi- try practice. Ubisoft EntertainmentSA’s annualfinancial The accounting methods applied areconsistent withindus- method for thevaluation ofitemsshownintheaccounts. The historicalcost principlewasapplied asthebasic ments. preparation andpresentation ofannualfinancialstate- and inaccordance withthegeneral rulesgoverning the - prudence, - fair presentation, regularityandaccuracy, - time-period concept, - operational continuity, basic rules: dance withtheprincipleofconservatism andthefollowing General accounting conventions wereapplied inaccor- - external developments:- amortized based ontheproducts’ - commercial software: amortized over 3years (straight- - ERP-related expenditures: amortized over 5years - office software: amortized over 1year (straight-line), - logos Intangible assets include: Intangible assets year. earnings for thefiscal year andequity atthestartof life, thechangeinaccounting regulationshasnoeffect on used tocalculatedepreciation isidentical totheuseful identified. Furthermore, since theservice life previously In viewofthenatureassets, nocomponent was Breakdown anddepreciationof fixed assets: since April1,2005. Brand registration costs have been recorded asexpenses Recognition ofbrands: January 1,2005aredescribed below: application ofCRC Regulations2002-10and2004-06asof The changesinaccounting methods resultingfromthe lifecycles. ducts’ life cycles. line) withadditional amortizationtoadaptthepro- (straight-line), 3.5.4 3.5.3 3.5.5 and methods Accounting rules method changes Accounting Accounting principles CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

Commercial software: Advances and installments paid

Development costs of commercial software, whether pro- Advances and installments primarily involve distribution 97 duced in-house or outsourced, are recognized in the and reproduction rights (licenses) acquired from other “Intangible assets in progress” item (account 232) as deve- publishers. The signing of licensing contracts entails the lopment progresses. Once marketing begins, these costs payment of guaranteed amounts, These amounts are are transferred to the "Released software" or “External developments” accounts (accounts 208). recorded in account 409 at their net value (under Conseil d’Etat rules 62547 of February 12, 1988, and 65009 of Development costs of outsourced commercial software are November 25, 1989). recognized under account 232 or advances and install- ments, in accordance with the rules defined by France’s These advances and installments are reported on the Conseil d’Etat (CE 62547 of February 12, 1988, and CE income statement based on the contracts signed with 65009 of November 25, 1989) when they do not come publishers (either by the unit or based on gross margin or under the definition of an asset. sales) or, in the case of flat fees, amortized using the Development costs subcontracted to group subsidiaries straight-line method. are recorded as subcontracting expenses and transferred At the end of the fiscal year, the net book value is to fixed assets via a self-constructed assets account. compared with sales projections in light of the terms and Commercial software and external developments are conditions of the contract. If projected sales are amortized starting on the date of the product’s commer- insufficient, amortization will be recorded on the income cial release. statement accordingly. When actual sales are less than projections and expected return on sales, a provision for impairment is recorded. Trade receivables Return on sales is determined on the basis of operating Trade receivables are valued at their face value. Where result restated to reflect operating depreciation. applicable, a provision for depreciation is recorded based Brands: on the likelihood of their collection at the balance sheet date. Any brands acquired are recognized at their acquisition cost. Investment securities Brands are not amortized. Impairment tests are performed on brands at the close of each fiscal year, or more often if Investment securities consist of interests in investment there are indications of impairment. The recoverable value funds and short-term investments, which are valued at their purchase price or at their market value when this is of brands is then estimated on the basis of the change in lower. sales for the business division in question, its contribution to the consolidated group’s income and its updated cash flow. When this value is less than the book value, amorti- Conversion of debts and accounts receivable zation is recorded. expressed in foreign currencies These were converted at the rates in effect at March 31, Tangible assets 2007. Any resulting translation gains or losses are shown on the balance sheet under a specific heading. A provision These are shown at historical cost. The depreciation rates for foreign exchange risk is recorded if conversion reveals applied are as follows: the existence of unrealized losses. - equipment: 5 years (straight-line), - fixtures and fittings: 5 and 10 years (straight-line), Foreign exchange hedges - computer equipment: 3 years (straight-line), Since hedges are not allocated to specific transactions, Ubisoft Entertainment SA has chosen not to use hedge - office furniture: 10 years (straight-line). accounting to hedge its foreign exchange risk.

Financial assets Provisions for risks and charges Securities are valued at historical cost, excluding acquisi- Provisions for risks and charges are recorded when risks tion expenses. and charges that have a clearly defined object, but which The inventory value of the security is reviewed at the end of are not certain to arise, are made likely by events that have each fiscal year based on the net position of the subsidiary in occurred or are in progress. question on that date, the stock market valuation on the At March 31, 2007, provisions for risks and charges per- closing date if the company is listed on the stock exchange, tained only to foreign exchange risk related to discounting and/or on its medium-term profitability prospects. of receivables and debts expressed in foreign currencies. A provision for depreciation is set up if necessary. Directly held stocks are valued at their purchase price or at market value if this is lower. Deposits and guarantees are recognized on the basis of the amounts paid. UBISOFT • FINANCIAL REPORT 2007 Other intangibleassets Intangible assets breakdown asfollows: Note 1. Tangible assets breakdown asfollows: Note 2. (1) balance oftheacquisition oftheFar Cry R ,9 4 8,743 - 248 71,352 Asof03/31/2007 111,805 - 222,176 28,090 -191,477 163,387 7,501 4,064 - 8,991 230,754 - 1,803 199,541 - 103,741 47,326 Production licenses Asof03/31/2006 289,543 ERP Software programs inprogress External commercial software Released commercial software Fixed assets rdcinlcne 3 8-296 6,697 - 248 438 58 62,776 1,975 Asof03/31/2007 43 4,064 160,328 238 4,970 426,593 2,775 230,754 31,567 166,683 -15,433 - -15,476 35,273 Asof03/31/2006 224,399 235,066 - - 209,049 2,007 Total Other 468,043 395 Production licenses Office software External commercial software 16,244 Released commercial software Depreciation Total Other in progress r npraineupet53-8 1,821 - 6,419 2,692 532 Asof03/31/2007 -43 49 3 11 - 400 583 3,680 12 2,728 - 5 -43 1,953 - 406 Asof03/31/2007 2,729 - Asof03/31/2006 - - 6,639 532 51 - - 386 20 43 11 3,826 Total Computer equipment andfurniture 2,759 Transportation equipment Asof03/31/2006 Fixtures andfittings Depreciation Total Tangible fixed assets inprogress Computer equipment andfurniture Transportation equipment Fixtures andfittings Fixed assets 3.5.6 Notes tothebalancesheet Intangible assets Tangible assets ® brand. rs nrae erae Reclassification Gross Decreases Increases Gross rs nrae erae elsiiainGross Reclassification Decreases Increases Gross (1) uuaieIcessDcessCumulative Decreases Increases Cumulative uuaieIcessDcessCumulative Decreases Increases Cumulative 6,7 0,3 3,6 230,245 235,066 200,333 264,978 ,8 1 8 4,521 581 415 4,687 85 148 - 50 98 9,304 - - CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

Note 3. Financial assets 99 Financial assets break down as follows:

Fixed assets Gross As of Increases Decreases Gross As of 03/31/2006 03/31/2007 Equity holdings 238,529 1,739 170 240,098 Other long-term investments 680 26,151 26,033 798 Deposits and guarantees 349 75 92 332 Total 239,558 27,965 26,295 241,228

The increase in securities is primarily due to the share General information on the listed company Gameloft SA: capital increase of Ubi Games SA (Switzerland) in the amount of €1,537 thousand. Listed company Gameloft SA

It is also linked to the capitalization of professional fees concer- Book value at 03/31/07 (€) 27,343,883 ning the acquisition of Sunflowers Interactive Entertainment Software GmbH in the amount of €153 thousand. Number of shares held by Ubisoft Entertainment SA 13,367,923 The decrease is related to the liquidation of the Value of one share at 03/31/07 (€) 5.03 Ubi Computer Software Beijing Co. Ltd subsidiary in China. Balance sheet date December 31 The change in other long-term investments reflects the purchases and sales of directly held stocks under the Write-back over fiscal year - liquidity contract (cf. section 3.5.2). Depreciation over fiscal year -

Provisions As of 03/31/2006 As of 03/31/2007 Cumulative Increases Decreases Cumulative Equity holdings 378 20,504 88 20,794 Own shares -13-13 Total 378 20,517 88 20,807

The increase in provisions of equity holdings is primarily due to the decrease of the value in use of the securities of Ubisoft EMEA SAS, based on the present value of the cash flows realised on out of group sales and on net cash posi- tion at the end of fiscal year.

Note 4. Advances and installments paid These are primarily guaranteed advances paid on licensing contracts.

As of 03/31/2006 New Reclassification Depreciation As of 03/31/2007 Net guarantees Net Licenses 9,039 26,065 15,476(1) 20,682 29,898 Total 9,039 26,065 15,476 20,682 29,898

(1) The reclassification pertains to outstanding amounts of 409100 at 03/31/2006.

Note 5. Trade receivables The “trade receivables” item breaks down as follows:

As of 03/31/2007 As of 03/31/2006 Gross Provision Net Net Trade receivables 63,538 - 63,538 55,794 Total 63,538 - 63,538 55,794

The trade receivables item consists mainly of intra-group receivables. UBISOFT • FINANCIAL REPORT 2007 Note 8. Note 7. Note 6. oa 3,2 3,1 1,117 - - - - - 134,711 >1year - 483 830 1,117 <1year 36,606 135,828 29,898 63,538 - 483 830 3,356 Gross amount >1year 36,606 29,898 63,538 3,356 1,117 <1year Statements ofdebts Total Prepaid expenses Other debtors Advances andinstallments Group andpartners Grossamount Government (VAT credit, misc.) Trade receivables Receivables oncurrentassets Other financialassets Receivables onfixed assets Statements ofreceivables uulfn GM1 0,7.212614619 1,256 1,931 - - 104,671.92 1,256 241,464.48 1,354 1,931 21,041 - 104,671.92 - 241,385.48 12 8 2,077.14 106,804.17 SGAM 21,041 1,354 Net Provision value SECURITEPLUS Closing - Average Gross 106,804.17 value 2,070.13 Number 197 Name - 654 - Etoile MONE EURIBOR Total - UCITS liquiditycontract Mutual fund Mutual fund Open-ended investment trust Mutual fund 181,788 - Mutual fund - - 3,857 Type - 20,150 2,604 181,788 - 5,480 - 3,857 69,095 - 132,970 20,150 35,917 2,604 10,000 44,685 Amount ofcurrentaccount debts contracted 5,480 24,190 Bank loansrepaidduringtheyear 69,095 Buy-back ofOCEANEconvertible bondsduringtheyear - Bank loanstaken outduringtheyear 35,917 Total Deferred income Debts onfixed assets 44,685 Other debts Tax andsocial security liabilities Trade creditors andrelated accounts Miscellaneous borrowings Borrowings anddebts withcredit institutions Convertible bonddebentures neetrcial ncretacut 0- 1,798 70 4,230 Total Interest receivable Interest receivable oncurrentaccount Income notyet billed Credits receivable fromsuppliers Investment securities Accrued receivables Statements ofreceivables anddebts P AHS 5 0233 ,9 0299 5,197 - 20,229.98 5,197 20,223.39 257 CPR CASHSI ucae€ rc K€K €K price purchase €K price (€) 33/0703/31/2006 03/31/2007 079-30,779 - 30,779 88522,257 20,394 38,825 34,430 565 95 CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

Note 9. Bond redemption premium

The initial amount of the OCEANE redemption premium recorded as assets was €16,380 thousand. 101 This premium is amortized in proportion to accrued interest, i.e. €1,132 thousand at March 31, 2007. The settlement of the OCEANE on November 22, 2006 resulted in a write-back of the amortization of the redemption premium on the converted OCEANE, i.e. €2,387 thousand.

Note 10. Accrued expenses (adjustments accounts)

As of 03/31/2006 As of 03/31/2007 Cumulative Increases Decreases Cumulative Prepaid expenses 2,090 483 2,090 483 Costs of issuing debentures and OCEANE 791 - 791 - Deferred charges on syndicated loan 544 - 257 287 Exchange conversion adjustments to assets 483 380 483 380 Total 3,908 863 3,621 1,150

Note 11. Payables

03/31/2007 03/31/2006 Interest on bond debentures - 807 Bank charges payable 265 282 Total borrowings and financial debts 265 1,089 Trade payables, invoices pending 19,367 12,611 Credit notes to be issued 13,137 8,951 Tax and social security liabilities 750 605 Total 33,519 23,256

Note 12. Items relating to affiliated companies

03/31/2007 03/31/2006 Current assets Securities 239,707 238,290 Trade receivables 63,755 54,913 Other receivables 36,572 35,461 Debts Miscellaneous borrowings 69,095 32,442 Trade creditors and related accounts 25,163 26,934 Debts on fixed assets 184 1 Financial income 3,147 1,777 Financial expenses 2,658 1,511 UBISOFT • FINANCIAL REPORT 2007 exercise of12,767,115warrants. 14,2002throughMay2006. May During thefiscal year ended March31,2007,851,141shareswithaface value of€0.31werecreated following the The optiontoexercise thesharesubscription warrants expired onMay14,2006. Transactions completedduring thefiscalyear ended March31,2007: €28 Term: 17,540,082(15warrants entitletheholder tooneshare). Strike price: of warrants: Initial number of May14,2003: Chief characteristics ofthewarrants for thepurchase ofexisting shares and/or thesubscriptionofnewshares Share subscriptionwarrants €0.155, i.e.€7,036,577.78. consisted of45,397,276shareseachwithaface value of At March31,2007,Ubisoft EntertainmentSA’s capital Capital Note 14. Note 13. oa 8 0803621,130 20,807 13 323 396 88 - 20,794 20,840 323 308 20,517 88 13 686 323 378 308 20,504 - 308 323 378 308 Total Total Of ownshares Of equity holdings Provisions for depreciation Total For exchange risks Provisions for risks Equity Provisions onthebalancesheet so 33/06 Y Y Asof03/31/2007 FY FY As of03/31/2006 Number ofUbisoft EntertainmentSA shares cise ofstock options:3,020,002 Maximum numberofsharesthatmaybecreated byexer- a 2-for-1 splitofUbisoft’s shareeffective December 11,2006. (*) OnDecember 5,2006,theBoardofDirectors decided tocarryout ovrin fOSR69 475,998 445,953 851,141 21,254,188 46,691 Subtotal (before 2-for-1 stocksplit*) Group/company savings plan/Equityissuereserved Exercise ofsubscription warrants Conversions ofOCEANE Conversions ofOBSAR Exercise ofoptions t0/10 45,397,276 2,627,676 261,224 42,508,376 At 03/31/07 Exercice ofBSAR Exercise ofoptions Subtotal (after 2-for-1 stocksplit*) so 10/6 19,434,336 As of01/04/06 rvsoswrite-backs provisions CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

Stock options The increases in share capital and issue premiums during the past fiscal year were partly driven by the exercise of 103 stock options. For the record, the exercise conditions of the stock option plans are as follows:

5th 6th 7th 8th 9th Plan Plan Plan Plan Plan Total number of shares allotted (**) 641,852 89,210 778,130 706,362 18,440 Start date for exercising options 09/04/02 25/04/02 19/01/05 16/10/03 29/01/04 Expiration date for options 08/04/06 24/04/06 15/08/12 15/10/07 28/01/08 Option price (**) € 17.26 € 17.26 € 6.41 € 4.60 € 5,13 Options at 04/01/2006 (**) 153,870 13,772 576,730 480,676 13,080 Options exercised during the fiscal year 100,950 12,000 400,875 275,657 2,800 Options canceled during the fiscal year 52,920 1,772 - 16,130 - Options not yet exercised at March 31, 2007 - - 175,855 188,889 10,280

10th 11th 12th 13th Plan Plan Plan Plan Total number of shares allotted (**) 143,592 776,300 992,100 1,355,892 Start date for exercising options 28/10/03 14/10/05 17/11/05 17/11/05 01/07/05 23/02/07 Expiration date for options 15/06/07* 13/10/14 16/11/14 16/11/14 15/06/09* 22/02/11 Option price (**) 4.60 € 7.75 € € 7.36 € 7.74 € 6.78 15.82 € (France) (Italy) (USA) Options at 04/01/2006 (**) 52,618 666,684 939,558 1,355,892 Options exercised during the fiscal year 41,542 171,204 99,320 48,782 Options canceled during the fiscal year 450 1,656 6,820 - Options not yet exercised at March 31, 2007 10,626 493,824 833,418 1,307,110

(*) Limitation of the exercise period approved by the Board of Directors on November 2, 2005 to ensure compliance with the maximum period allowed by US law. (**) As a result of the 2-for-1 stock split on December 11, 2006, the total number of shares allotted and the number of options at April 1, 2006 doubled and the price of the options was reduced by one-half.

Own shares As of March 31, 2007, the company held 22,059 of its own shares.

Note 15. Borrowings Borrowings break down as follows:

03/31/2007 03/31/2006 Bond debentures - 147,162 OCEANE - 92,188 OBSAR - 54,974 Accrued interest 265 1,089 Foreign currency advances 6,508 5,432 Bank overdrafts 37,912 47,898 Borrowings 44,685 201,581 Fixed-rate debt 25 92,915 Variable-rate debt 44,660 108,666 < 1 year 1 to 5 years > 5 years Amounts payable at March 31, 2007 44,685 - -

Other borrowings, which total €69,095 thousand on the balance sheet, consist of current account advances made by subsidiaries to the parent company. These advances are due in less than one year. UBISOFT • FINANCIAL REPORT 2007 aiy OneBSAR entitlesitsholder tosubscribe for onenewsharewithaface value of€0.31. €38.35 BSAR The 1,433,492BSAR (twoBSAR areattached toeachbond). Exercise period: Strike price: Parity: The bondswillberedeemed ononeoccasion onDecember 2,2008byredemption Five years fromthesettlement date. Number ofBSAR: The bondswillbearinterestatavariable rate payablequarterly inarrears.The annual Characteristics oftheBSAR (redeemablesharesubscriptionwarrants): €76.70 Normal redemption: yield: rate, Nominal Bond term: Nominal issueprice: Number: 716,746 Characteristics ofthebonds: OBSAR (bondswithredeemablesharesubscriptionwarrants). conversion of459,013OCEANE,and1,290,288OCEANEwereredeemed. During thefiscal year ended March31,2007,475,998shareswithaface value of€0.31werecreated following the The settlement datewasNovember 2.5%peryear, payable inarrearsonNovember 22,2006. 30ofeachyear Transactions completedduringthefiscalyear endedMarch31,2007: face of 110.94% Fivei.e. years fromsettlement€52.70, date. of price bonds a Novemberat 30,2006 2006 30, November on full in Redemption 4.5%onthesettlement date(ifnoconversion intoand/or exchange for sharesandno Normal redemption: redemptionGross yield: 3,150,000bonds(asaresultoftheadjustmentmade inconnection withtheissueof €47.50 Annual yield: Expiration date: Bond term: November 30,2001 €172.5million Dated dateandsettlement date: Nominal issueprice: Number: Maximum amount: Chief characteristics ofthisbonddebenture: Bond debenture -Bondsconvertible/exchangeable intonewand/orexisting shares(OCEANE) Bond debentures: The breakdown ofborrowingsbycurrencyisasfollows: Borrowings Danish kroner Canadian dollars Pounds sterling US dollars Euros BSAR may be suspended. the issuerandprovisions concerning circumstances under whichthe exercise of subject totheprovisions governing theearly redemption ofBSAR atthediscretion of at par,i.e.€76.70perbond. nominal rate isbased onthe3-monthEuribor. value. early redemption) May 2003).Onebondentitlesitsholder tosubscribe for 1,037shares. warrants for thepurchase ofexisting sharesand/orthesubscription ofnewsharesin may beexercised between December 3,2003andDecember 2,2008, 33/0703/31/2006 03/31/2007 465201,581 196,117 44,685 37,517 ,9 5,436 7,093 111 17 - 11 46 18 CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

Transactions completed during the fiscal year ended March 31, 2007: At its meeting of January 19, 2007, the Board of Directors voted in favor of the early redemption on February 26, 2007 of the outstanding BSAR and bonds, in accordance with the provisions of Articles 2.2.7.3.2 and 2.5.6.1 of securities note 105 03-1001 of November 14, 2003 approved by the Autorité des Marchés Financiers. The early redemption of the BSAR resulted in the redemption of the outstanding bonds. During the fiscal year ended March 31, 2007, following the exercise of 1,313,907 BSAR: 69 shares with a face value of €0.31 and 2,627,676 shares with a face value of €0.155 were created.

Note 16. Other debts

03/31/2007 03/31/2006 Other debts 20,150 17,710

These consist primarily of margin calls on the equity swap contract (cf. Note 2.6.2 Off-balance-sheet commitments).

Note 17. Accrued expenses (adjustments accounts)

As of 03/31/2006 As of 03/31/2007 Cumulative Increases Decreases Cumulative Unearned income* 3,857 - - 3,857 Exchange conversion adjustments to liabilities 276 61 276 61 Total 4,133 61 276 3,918

(*) Corresponds to deferred sales

3.5.7 Notes to the income statement

Note 18. Sales The breakdown of sales by geographic area is as follows:

03/31/2007 03/31/2006 €K percentage €K percentage Europe 115,051 43% 87,082 48% USA 133,280 50% 80,502 44% Canada 19,641 7% 14,384 8% Rest of the world - - Sales 267,972 181,968 Capitalized production costs 167,218 132,260 Total 435,190 314,228

Capitalized production costs as of March 31, 2007 totaled €167,218 thousand and corresponded to development costs subcontracted to subsidiaries. As of March 31, 2006, capitalized production costs totaled €132,260 thousand. UBISOFT • FINANCIAL REPORT 2007 te ucae n xenlcags2061206,725 240,601 Other operating expenses Other purchases andexternal charges Depreciation andprovisions breakdown asfollows: Note 22 Other operating expenses breakdown asfollows: Note 21 Note 20. Note 19. warrants price granted duringaprevious acquisition. As ofMarch31,2006,otheroperating expenses include thepaymentofaguarantee toRubicon Inc,onthesharesubscription thousand asofMarch31,2006. Production services subcontracted tosubsidiariesrepresented €167,218thousandasofMarch31,2007and€132,260 31, 2007,external chargesincluded intra-group services totaling€183.1million. Other external chargesconsist mainly ofadvertising expenses, royalties andleasingoffixed assets andmovables. At March and so on. Transfers ofexpenditures pertainmainly tothereinvoicing ofgroupcompanies for overhead costs, travel, trade shows, te urn prtn noe131133 265 1,331 113 Total Total Other currentoperating income Transfer ofexpenditures Write-back ofdepreciation andprovisions ercaino agbeast 1 404 132,865 415 200,446 Total Depreciation oftangibleassets Depreciation ofintangibleassets Total Amortization, depreciationandprovisions Other operating expenses Other purchasesandexternal charges Other operating incomeandtransfers ofexpenditures 33/0703/31/2006 03/31/2007 03/31/2006 03/31/2007 03/31/2006 03/31/2007 33/0703/31/2006 03/31/2007 9 2,632 192 4,0 206,725 240,601 0,6 133,269 200,861 72313,495 13,097 17,223 15,779 9 2,632 192 CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

Note 23 Net financial result The net financial result breaks down as follows: 107

03/31/2007 03/31/2006 Financial income: Financial income from equity holdings 25,618 1,338 Income from other securities and receivables from fixed assets 18 16 Other interest and related income 3,992 2,550 Write-back of provisions 2,782 639 Positiv exchange differences 8,842 8,089 Net proceeds from sales of investment securities 380 1,192 41,632 13,824 Financial expenses: Depreciation and provisions 23,019 2,906 Other interest and related expenses 7,923 7,551 Negativ exchange differences 10,399 15,620 41,341 26,077 Financial result 291 - 12,253

Financial income from equity interests mainly include dividends received by Ubisoft Entertainment SA during the fiscal year. They break down as follows: - Ubisoft EMEA SAS: €25,000 thousand. - Other subsidiaries: €618 thousand.

Foreign exchange risk In order to limit the group's foreign exchange risk, Ubisoft SA finances all the production studios around the world Entertainment SA hedges exchange rate fluctuations in and most of the licensing and external development several ways: agreements. In this way, all of the foreign exchange risk - When the parent company makes a loan in a foreign is centralized at Ubisoft EMEA SAS and Ubisoft currency to its subsidiaries, it also takes out a loan in the Entertainment SA. When foreign exchange risk exists same currency. Thus, if the exchange rate rises or falls, with regard to a single currency in opposite directions any gain or loss on the loan is offset by a gain or loss on (for example, royalties received and cost of a studio in the parent company’s loan in the opposite direction. the same currency), the group offsets this by using foreign currency advances or investments to manage the - The distribution subsidiaries pay a royalty to the parent time lags. Amounts that cannot be offset are hedged by company as compensation for the development costs forward sales contracts and option contracts. incurred by the latter. Moreover, Ubisoft EMEA SAS centralizes the purchases of finished products for the At March 31, 2007, the hedged amounts resulting in entire region and then resells them in local currencies to purchases and sales of currencies was €16,090 thousand the subsidiaries. At the same time, Ubisoft Entertainment (cf. Note 3.6.2 Off-balance-sheet commitments).

Note 24. Extraordinary result Extraordinary result is income not related to the company’s normal operations (French decree of 11/29/1983, Article 14). It breaks down as follows:

03/31/2007 Extraordinary income: Extraordinary income from management transactions 7,082 Extraordinary income from capital transactions 2 Extraordinary expenses: Extraordinary expenses from management transactions 143 Extraordinary expense rom capital transactions 109 Exceptional result 6,832

As of March 31, 2007, extraordinary result consisted mainly of the profit on the sale of 200,000 shares under the equity swap contract in the amount of €5,764 thousand. Note 25. Corporate tax FINANCIAL REPORT 2007 FINANCIAL REPORT As of March 31, 2007, the following companies belonged to - Ubisoft World SAS the tax group: - Ubisoft Manufacturing & Administration SAS

UBISOFT • - Ubisoft Entertainment SA (head of the group) The tax savings arising from the use of losses at the tax - Ubisoft France SAS group’s member companies will only be temporary, since - Ludi Factory SAS the company in question may use them at any time for its - Ubisoft Graphics SAS own purposes. - Ubisoft EMEA SAS The data for Ubisoft Entertainment SA, independent of the - Ubisoft Books and Records SAS tax group, are as follows: - Ubisoft Organisation SAS

03/31/2007 03/31/2006 Current result before tax 29,404 - 29,019 Extraordinary result 6,832 18,509 Result before tax 36,236 - 10,510 Corporate tax -89 2,303 Taxable result - - 29,669

Corporate tax consists of the additional 2006 contribution (€54 thousand) and the tax revenue from the subsidiaries (€143 thousand). Under the tax integration scheme, after allocating the fiscal year result to prior year tax losses, the following remained: - Preintegration losses charged to Ubisoft Entertainment SA: €13.9 million. - Losses carried forward that were generated by the tax group: €32.7 million. The last tax inspection of Ubisoft Entertainment SA dates back to 2003 (for the period from April 1, 2000 to March 31, 2003).

3.6 Other information

3.6.1 Personnel

As of March 31, 2007, the workforce consisted of five executive officers.

3.6.2 Financial commitments and other information

03/31/2007 Expiration 03/31/2006 Sureties and guarantees given 49,608 22,091 Debtor Type of guarantee Ubisoft Divertissements Inc. Loan repayment guarantee 2,603 09/30/2007 Red Storm Entertainment Inc. Lease payment guarantee 759 10/31/2009 Ubisoft Divertissement Inc. Lease payment guarantee 573 End of lease Ubisoft Inc. Guarantee of commercial commitments 2,252 End of commercial relationship Ubisoft Ltd Loan guarantee 20,000 12/29/2011 Ubisoft Ltd Lease payment guarantee 3,161 06/15/2016 Ubisoft Inc. Stand-by letter 2,253 09/30/2007 Ubisoft Inc. Stand-by letter 6,007 04/30/2007 Ubisoft EMEA SAS Stand-by letter 3,000 05/31/2007 Ubisoft EMEA SAS Stand-by letter 3,000 06/30/2007 Ubisoft EMEA SAS Stand-by letter 6,000 07/31/2007 Collateral for loans None None Foreign exchange hedges 16,090 82,238 Pounds sterling Forward sale 7,448 April 2007 Canadian Dollar Forward sale 8,642 September 2007 Notes receivable discounted None None CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3

1/ Equity swap contract: - Ubisoft Entertainment SA has pledged to provide financial support to its subsidiaries to meet their cash Under the terms of the transaction concluded with Calyon requirements. 109 on September 30, 2003 and extended on February 28, 2006 for two years, Calyon will sell its shares at the end of the transaction on February 28, 2008. As a result of the 2-for-1 stock split, the contractual sale 3.6.3 Compensation price was set at €9.33 (versus the original price of €18.66) of managers and the number of shares increased to 1,836,274. Any fluctuations in the share price in relation to the sale Ubisoft Entertainment SA paid €546 thousand to its price of €9.33 will be fully recognized by Ubisoft corporate officers during the 2006/07 fiscal year in com- Entertainment SA (changes between the signature date of pensation. the contract and the expiration date are recorded in In –only partial – compensation for their work and the time temporary accounts pending a final adjustment. spent in preparing for, and actively participating in, meetings Unrealized gains are not recorded in the income of the Board, the General Meeting of September 25, 2006 statement. A provision for risks and charges must be authorized the company to pay directors’ fees totalling recorded for any unrealized gains). At March 31, 2007, €250 thousand per year maximum. unrealized gains totaled €39,095 thousand. During the 2006 fiscal year the Members of the Board of During the fiscal year, 200,000 shares were sold under the Directors received €135 thousand in directors’ fees. equity swap contract, which reduced the number of shares Following the resignation of Ms. Yvette Guillemot on June to 1,436,274. 23, 2006, Mr. Marc Fiorentino was co-opted by the Board In light of the shares sold (1,436,274 shares), the impact of of Directors on July 10, 2006. This co-option was approved a reduction in the sale price (€9.33) of one euro would be at the General Meeting of September 25, 2006. €1,436 thousand. No obligation has been undertaken by the company in Calyon may transfer all or a portion of these shares in favour of its corporate officers related to their termination advance at Ubisoft Entertainment SA’s request. or change in employment, such as in the event of a takeover bid. 2/ Authorizations No loans or advances were made to the company’s Short-term bilateral lines of credit amount to €93 million; they managers as provided by Article L225-43 of the French are unconfirmed and revocable with 30 days’ prior notice. Commercial Code. A syndicated loan has been confirmed in the amount of The members of the Board of Directors did not receive any €100 million; it was not in use as of March 31, 2007. stock options or share subscriptions during the fiscal year just ended. The revolving loan in the amount of €10 million is confirmed but had not been used at March 31, 2007.

3/ Other commitments 3.6.4 Potential assets - Since the personnel consists of officers of the company, and liabilities no retirement benefits are owed. - Deposition: - Various products are marketed in accordance with licen- sing contracts signed by Ubisoft Entertainment SA. The lawsuit which pended between the company and a The commitments made by the company provide for the licensee since October 2003 concerning breach of license payment of guaranteed minimum royalties. At March 31, agreement has been handed down in Ubisoft Entertainment 2007, commitments made by virtue of this guaranteed SA favor. The total amount will be known in the next few minimum amounted to €37.8 million. months. - France's law of May 4, 2004 grants French employees an individual right to training. Under this law, employees may receive training at their initiative, with their employer's 3.6.5 Events after approval. closing of accounts Full-time employees acquire a right to between 20 and 21 hours of training each year, in accordance with the labor - Acquisition: agreements applicable within each firm. On April 6, 2007, acquisition of the Anno™ brand through The rights acquired annually may be accrued for up to six the buyout of the German publisher Sunflowers Interactive years. Entertainment Software GmbH for €14.2 million. - During the next fiscal year, reductions in the calculation Through the transaction, Ubisoft will acquire a 30% stake of income tax will be as follows (no increases have been in Related Designs Software GmbH, which developed Anno identified): 1701. Ubisoft reinforces its position in the real-time - Organic €118 thousand strategy market. Anno™, along with Ubisoft’s The Settlers®, is one of the most well known franchises in - Exchange rate fluctuations €868 thousand Germany. €986 thousand UBISOFT • FINANCIAL REPORT 2007 - €2,442,553totheOtherReserves account. - €198,186tothelegalreserve, bringingitto10%ofthelegalminimum. - €13,406,663tosettlement ofthelosses carried forward account. hundred andtwoeuros(€16,047,402) asfollows: The BoardofDirectors proposes allocating thefiscal year earnings,whichtotal16millionforty-seven thousandfour Proposed allocation ofearnings BSF MHGrayEr ,2 ,1 100% 100% 100% 8,416 100 % -2,606 13,718 100% 17,030 9,320 -220 20,623 Euro 11,960 Euro Euro 1,000 Germany 90,405 France Canadiandollar France Canada USdollar UBISOFT DIVERTISSEMENTS INC. United States UBISOFT GMBH UBISOFT FRANCESAS UBISOFT EMEASARL UBISOFT HOLDINGSINC. AT LEAST50%OFCAPITAL HELD SUBSIDIARIES rnhsbiire uo315315- - 7,205 20,876 3,125 27,344 21,393 3,125 27,344 Euro Euro Euro GRAND TOTAL Subtotal Equity interestsinFrenchcompanies BETWEEN 10AND50%OFCAPITAL HELD EQUITY INTERESTS Subtotal Foreign subsidiaries French subsidiaries OTHER SUBSIDIARIES Total 3.6.6 Subsidiaries andaffiliatedcompany(March31,2007) onr urnyCptl eevsadaons Percentage Reserves andamounts Capital Currency Country ntosnso Inthousandsof In thousandsof urnyuiscurrencyunits currency units urnyGosNtLoansand Net Gross Currency are owr eoe ofcapital carried forward before loaino annsheld allocation ofearnings au au advances value value 7342,4 - 7,205 51,345 27,344 7,205 51,862 27,344 24,001 24,518 CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3 111

Book value of Loans and advances Sales Net income Dividends securities held granted by the company excluding for last collected and not yet repaid tax complete year in thousands of euros In thousands of In thousands of In thousands of gross net currency units currency units currency units

96,991 96,991 18,475 254 - 447 none 55,158 55,158 - 250,431 6,758 25,000 22,872 22,872 - 71,319 1,390 none 12,573 12,573 1,772 56,847 907 none 641 641 20,865 105,800 415 none 188,235 188,235 25,000 UBISOFT • FINANCIAL REPORT 2007 provided abasisfor theopinionexpressed inthefirstpartofthis report. Our assessments weremade withinthecontext ofouraudittheannualfinancialstatementsasawhole,andtherefore application. of theaccounting methods indicated above andoftheinformation provided inthenotes,andhave ensured theircorrect As partofourassessment oftheaccounting rulesandprinciplesapplied byyour company, wehave verified theappropriateness the accounting principlesfor therecognition andamortizationofcommercial software. The noterelatingto“Commercialsoftware” inthesection ofthenotesentitled “Accounting rulesandmethods” describes Commercial software correct application. of theaccounting methods indicated above andoftheinformation provided inthenotes,andhave ensured their As partofourassessment oftheaccounting rulesandprinciplesapplied byyour company, wehave verified theappropriateness accounting principlesfor thevaluation anddepreciation ofsecurities. The noterelatingto“Financialassets” inthesection ofthenotesentitled “Accounting rulesandmethods” describes the Securities we callyour attentiontothefollowing items: Pursuant totheprovisions ofArticleL.823-9theFrenchCommercialCode regardingthebasisfor anassessment, II -Basisfor assessment at theendofthisyear. a trueandfair viewoftheresultsobtained for thefiscal year inquestionandofthecompany’s financialpositionandassets We herebycertify that,fromthestandpoint ofFrenchaccounting rulesandprinciples,theannualfinancialstatementsgive nion expressed below. statements andtheiroverall presentation. Itisourviewthattheauditweconducted forms atrueandfair basisfor theopi- It also involves assessing theaccounting principlesapplied, thesignificantestimatesmade inpreparingthefinancial An auditconsists inexamining, onatestbasis,evidence relevant totheinformation contained inthefinancialstatements. diligence inorder toascertain withreasonable certainty thattheannualfinancialstatementscontain nomaterialanomalies. We have conducted ourauditinaccordance withaccepted professional standardsinFrance. These standardsrequire due I -Opinionregardingtheannualfinancialstatements financial statementsonthebasisofouraudit. The annualfinancialstatementshave been prepared bytheBoardofDirectors. Itisourtasktoexpress anopiniononthese • thespecific verifications andinformation required bylaw. • thebasisfor ourassessment; • theauditofannualfinancialstatementsUbisoft EntertainmentS.A.,asattached tothisreport; March 31,2007,withregardtothefollowing: Pursuant totheassignmententrusted tousbyyour General Meeting, weherebypresent ourreportfor thefiscal year ended Dear Shareholders, 3.7 ending March31,2007 General reportonthefiscalyear CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3 113

III - Specific verifications and information In accordance with accepted professional standards in France, we have also carried out the specific verifications required by law. We have no comments regarding: • the accuracy of the information provided in the management report prepared by the Board of Directors or in the documents sent to shareholders concerning the financial position and annual financial statements, or regarding the consistency of this information with the annual financial statements. • the accuracy of the information provided in the management report regarding the compensation and benefits paid to the corporate officers in question and the commitments made in their favor at the time of the assumption, termination or change in employment or subsequent thereto. As required by law, we have ensured that the various information relating to acquisitions of equity holdings and control and to the identity of the holders of share capital was provided to you in the management report.

Rennes, June 14, 2007

By the statutory auditors KPMG Audit Audit AMLD A division of KPMG S.A. Laurent Prévost André Métayer Partner Partner FINANCIAL REPORT 2007 FINANCIAL REPORT Special Auditors’ report fiscal year ended 3.8 March 31, 2007 on regulated agreements UBISOFT •

Dear Shareholders:

In our capacity as auditors of your company, we hereby present our report on regulated agreements and commitments.

I - Agreements and commitments authorized during the fiscal year Pursuant to Article L. 225-40 of the French Commercial Code, we have been advised of the agreements and commitments for which prior authorization was granted by your Board of Directors in fiscal year 2006/07. It is not our responsibility to look for other agreements and commitments that may exist, but to inform you, on the basis of the information provided to us, of the basic features and terms of those of which we have been advised, without passing judgment on their usefulness and validity. According to the provisions of Article R. 225-31 of the French Commercial Code, it is your responsibility to assess whether it is in your interest to enter into these agreements and commitments before approving them. We have carried out our work in accordance with accepted professional standards in France. These standards require due diligence in order to ascertain that the information provided to us is consistent with the source documents from which it was derived.

1) Authorization to lease and construction permit

Persons concerned: Messrs. Yves and Christian Guillemot, Directors

Nature and purpose: On May 31, 2006, your Board of Directors authorized your company to guarantee commitments made by its subsidiary, Ubisoft Ltd., with Sun Life Pension Management Limited in connection with the lease of the premises located at Chertsey Gate, East London Street, Chertsey, Surrey, England, and the construction permit related to said premises.

Terms: The surety bond issued by your company totaled €3,160,791 at March 31, 2007.

2) Authorization related to commitments made by Ubisoft Entertainment SA for Ubisoft EMEA SARL and Ubisoft Inc.

Persons concerned: Messrs. Yves, Michel, Christian, Gérard and Claude Guillemot, Directors

Nature and purpose: On November 13, 2006, your Board of Directors authorized your company to guarantee commitments made by: • Ubisoft Inc. with Nintendo of America Inc., Sony Disc Manufacturing and Microsoft Licensing Inc, companies formed under US law. • Ubisoft EMEA SARL with Nintendo of Europe GmbH, a company formed under German law, Sony DADC Austria AG, a company formed under Austrian law, and Microsoft Licensing Inc., a company formed under US law.

Terms: The limit of the guarantees was set at a combined total of €40,000,000 for both companies. The authorization is valid for 18 months. CORPORATE ACCOUNTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2007 3 115

II - Agreements and commitments approved in previous fiscal years and remaining in force during the past fiscal year Moreover, pursuant to the French Commercial Code, we have been informed that the following agreements, approved during previous fiscal years, remained in force during the past fiscal year.

1) Brand licensing agreement with Gameloft SA

Nature and purpose: Your company signed an exclusive licensing agreement for current and future brands with Gameloft S.A. for the development of interactive video games for telephone, fax and telecommunications devices, personal digital assistants (PDAs) and interactive television.

Terms: The term of the agreement is 10 years starting on April 1, 2002. Royalties invoiced by your company for fiscal year 2006/07 totaled €637,340, excluding tax.

Executed in Rennes on June 14, 2007

By the statutory auditors Audit AMLD KPMG Audit A division of KPMG S.A. André Métayer Laurent Prévost Partner Partner UBISOFT • FINANCIAL REPORT 2007 INFORMATION ON THE COMPANY 4 117

information on the company 4.1 General information on the company 118 4 4.1.1 Company name and registered office 118 4.1.2 Legal status 118 4.1.3 Applicable legislation 118 4.1.4 Company founding date and term 118 4.1.5 Trade and Companies Register 118 4.1.6 Site for consultation of legal documents regarding the company 118 4.1.7 Accounting period 118 4.2 Additional information on the company 118 4.2.1 Incorporating document and Articles of Association 118 4.2.1.1 Corporate purpose (Article 3 of the Articles of Association) 118 4.2.1.2 Statutory distribution of profits (Article 17 of the Articles of Association) 119 4.2.1.3 General Meetings (Article 14 of the Articles of Association) 119 4.2.1.4 Provision establishing the threshold over which shareholdings must be disclosed (Article 6 of the Articles of Association) 119 4.2.1.5 Rights attached to shares (Articles 7 and 8 of the Articles of Association) 119 4.2.1.6 Provision delaying a change in control 120 4.2.1.7 Consent clause 120 4.2.1.8 Provision governing changes in capital when said conditions are stricter than the law 120 4.2.1.9 Amendment of the Articles of Association 120 4.2.2 Share capital 120 4.2.2.1 Subscribed capital 120 4.2.2.2 Comparison between the number of outstanding shares on the start and end dates of the fiscal year 120 4.2.2.3 Share buyback program 120 4.2.2.4 Authorized unissued capital 121 4.2.2.5 Convertible securities, exchangeable securities and securities with share subscription warrants… 122 4.2.2.6 Share subscription warrants 124 4.2.2.7 Employee stock ownership under the Company Mutual Fund (hereafter “FCPE”) 125 4.2.2.8 Securities not representing capital 125 4.2.2.9 Right to acquire or obligation attached to subscribed capital not yet paid up 125 4.2.2.10 Option or unconditional agreement on a member of the group 125 4.2.2.11 Identification of shareholders 125 4.2.2.12 Market in which the company’s stock is traded 127 4.2.2.13 Dividends 127 4.2.2.14 Establishment providing securities services 127 4.2.3 Main shareholders 128 4.2.3.1 Changes in the distribution of capital during the last three fiscal years 128 4.2.3.2 Distribution of capital and voting rights as of April 30, 2007 129 4.2.3.3 Shareholders’ agreement 130 UBISOFT • FINANCIAL REPORT 2007 video games,educational andcultural software, cartoons multimedia, audiovisual and computer products, especially - thecreation,publishinganddistribution ofalltypes whether direct orindirect, isasfollows: Ubisoft EntertainmentSA’s purpose inFrance andabroad, Corporate purpose (Article3 of theArticlesAssociation) 4.2.1.1 99 years, unlessitisextended ordissolved atanearlierdate. The company wasfounded onMarch28,1986for atermof The company issubject toFrenchlaw. of Directors, governed bytheFrenchCommercialCode. A limited liabilityCompany(société anonyme)withaBoard Henri Fréville, BP10704,Rennes,France (35207Cedex 2). The company’s registered office islocated at107Avenue The company nameisUbisoft Entertainment. 4.2 4.1.4 4.1.3 4.2.1 4.1.2 4.1 4.1.1 General informationonthecompany on thecompany Additional information of Association document andArticles Incorporating date andterm Company founding and registeredoffice Company name Applicable legislation Legal status 93100 Montreuilsous Bois)orattheregistered office. consulted atthebusinessaddress (28RueArmandCarrel, and reports,minutesofGeneral Meetings maybe The ArticlesofAssociation, financialstatements APE code: 722A. Register ofRennesunder No.335186094. The company isregistered withtheTrade andCompanies ends onMarch31ofeachyear. The 12-monthaccounting period beginsonApril1and above areas; - consulting, supportandtraining related toanyof the word ortext processing computer programs; - themarketing andmanagementofalldataprocessing and products for reproducing sound and pictures; along withtheiraccessories, aswellanyequipment or wise, ofanycomputer andword-processing equipment including bothimportandexport, throughrentalorother- - thepurchase, saleandtrading ingeneral, inallforms, such asnetworksandonlineservices; products, especially throughnewcommunication technologies - thedistributionofalltypesmultimedia andaudiovisual platform, currentorfuture; and literary, cinematographic andtelevisual worksonany 4.1.6 4.1.5 4.1.7 regarding thecompany of legaldocuments Site forconsultation Companies Register Trade and Accounting period INFORMATION ON THE COMPANY 4

- the company’s participation in any operations that may be These formalities must be completed prior to a date set by the related to its corporate purpose through the creation of Board of Directors in the meeting notice, which may not be 119 new companies, the subscription or purchase of shares or more than five (5) days prior to the meeting date. ownership interests, mergers or other means ; However, any shareholder who has requested an admission - and, in general, operations of any kind related directly or card or already voted by absentee ballot (by mail or elec- indirectly to the above corporate purpose or any similar or tronically) or has granted a proxy by presenting a share- related purpose likely to promote the company’s growth. holding certificate issued by the custodian of the shares may dispose of any or all of the shares for which the vote 4.2.1.2 Statutory distribution or proxy was sent, provided that the shareholder sends to the agent authorized by the company, by no later than of profits (Article 17 3:00 p.m. (Paris time) of the day before the meeting, the of the Articles of Association) information needed to cancel his vote or proxy or to change the number of shares and corresponding votes. The proceeds from the fiscal year, minus operating expenses, depreciation and provisions, constitute the income. The The deadline for returning absentee voting ballots and following sums are deducted from the fiscal year income, proxies is set by the Board of Directors and announced in the minus any losses carried forward from previous years, where notice of meeting published in the Bulletin of Mandatory applicable: Legal Notices. - the sums added to reserves as required by law or by the The Board of Directors may decide that the vote taking Articles of Association and, in particular, at least 5% to form place during the meeting may be cast remotely under the the legal reserve fund. This deduction ceases to be compul- conditions set out in the applicable regulations. sory when said fund reaches an amount equal to 1/10th of the share capital. If, for any reason, the legal reserve falls below 4.2.1.4 Provision establishing the this percentage, the deduction is again made, threshold over which - any sums that the General Meeting, on the recommenda- shareholdings must be disclosed tion of the Board of Directors, deems necessary to allocate (Article 6 of the Articles of to any extraordinary or special reserve or to carry forward. Association) The balance is distributed to shareholders. However, except in case of a reduction in capital, no distribution may be made Any shareholder acting alone or in concert, without prejudice to shareholders if, following this distribution, the equity is or to the thresholds defined in Article L. 233-7 of the French would be less than the amount of capital plus reserves which, Commercial Code, who comes to hold, directly or indirectly, by law or according to the Articles of Association, may not at least 4% of the company’s capital or voting rights, or a be distributed. multiple thereof up to and including 28%, must inform the company, by registered letter with acknowledgment of The General Meeting may, in accordance with the provisions receipt sent to its registered office and within the period of Article L. 232-18 of the French Commercial Code, grant stipulated in Article L. 233-7 of the French Commercial Code, each shareholder the option of receiving all or part of the of the total number of shares, voting rights and securities dividend distributed or the interim dividends in cash or in granting future access to the company’s capital that said shares. shareholder holds directly, indirectly or in concert. The notification referred to in the preceding paragraph for 4.2.1.3 General Meetings (Article 14 exceeding the threshold by a multiple of 4% of the capital or of the Articles of Association) voting rights also applies if the share of capital or voting rights falls below any of the aforementioned thresholds. General Meetings comprise all the shareholders of Ubisoft Entertainment SA, with the exception of the company itself. Failure to declare the attainment of the statutory thresholds They represent the totality of shareholders. shall result in the loss of voting rights under the conditions set forth in Article L. 233-14 of the French Commercial Code, at They are called and deliberate under the conditions stipulated the request, recorded in the minutes of the General Meeting, by the French Commercial Code. of one or more shareholders who together hold at least 5% of General Meetings are held at the registered office or at any the company’s capital or voting rights. other place specified in the notice of meeting. They are chaired by the Chairman of the Board of Directors 4.2.1.5 Rights attached to shares or, in his absence, by a director appointed for this purpose by (Articles 7 and 8 of the Articles of the General Meeting. Association) All shareholders have the right, upon proof of identity, to Each share shall give a right to ownership of the corporate take part in General Meetings by attending in person, by assets and the liquidating dividend equal to the proportion of appointing a proxy or by absentee voting, including by elec- the share capital that it represents. tronic means, subject to the following conditions: Whenever it is necessary to own several shares in order to - holders of registered shares or voting certificates must be exercise a right of any kind, such as in the case of a share-for- listed in the company’s share register under their own name, share exchange or a consolidation or allotment of shares, - for holders of bearer shares, a certificate issued by an or following an equity issue or reduction in capital, regardless authorized agent certifying that said listed shares are not of the terms and conditions thereof, a merger or any other transferable up to the meeting date must be filed at the place operation, the owners of fewer shares than the number indicated in the notice of meeting. required may exercise their rights only if they take it upon UBISOFT • FINANCIAL REPORT 2007 L 225-209oftheFrenchCommercial Code. to launchasharebuybackprogram pursuant toArticle in Resolution Seven, authorized theBoard ofDirectors The Ordinary General Meeting ofSeptember25,2006, Legal framework 4.2.2.3.1 Authorizations Share buyback program 4.2.2.3 December 11,2006. a 2-for-1 split inthenominalvalue ofaUbisoft sharewitheffect from * OnDecember 5,2006,theBoardofDirectors ofUbisoft decided tomake on thestart andenddates Comparison ofthefiscalyear betweenthenumberofoutstanding shares 4.2.2.2 to delete thereference intheArticlesofAssociation tothenominalvalue ofashare. 2006, first,tomake a2-for-1 splitinthenominalvalue ofeachsharewitheffect fromDecember 11,2006,andsecond, 2006, theBoardofDirectors decided, pursuanttopowersdelegated bytheExtraordinary General Meeting ofSeptember25, As ofMarch31,2007,thesharecapitalwas€7,036,577.78representing 45,397,276shares.At itsmeeting onDecember 5, Subscribed capital 4.2.2.1 liquidation ofcommunal property. accounts resultingfromsuccession, inter-family gifts or exception oftransfer ofownershipbetween registration bearer sharesorfor whichownershipistransferred, withthe are automatically revoked for shareswhichareconverted to Commercial Code stipulatesthatdouble voting rights It shouldbenoted thatArticleL225-124oftheFrench enjoyed. shareholder inexchange for oldsharesfor whichthisrightwas time ofissueonregistered sharesallotted free ofchargetoa profits orissuepremiums,thisrightisalso conferred atthe In theevent ofanequity issuebythecapitalizationofreserves, shareholder. been registered for atleasttwoyears inthenameofsame attributed toallfully paid-upsharesthatareproved tohave on theproportionofsharecapitaltheyrepresent, shall be Voting rightsdouble those conferred onothershares,based ded. or sell thenumberofsharesorrightsforming theodd lotnee- themselves topool theirsharesand,ifnecessary, topurchase so 33.7 45,397,276 69 475,998 851,141 2,627,676 445,953 261,224 As of03.31.07 46,691 Exercise ofBSAR 42,508,376 Exercised options Subtotal (after 2-for-1 splitinnominalvalue*) 21,254,188 Subtotal (before 2-for-1 splitinnominalvalue*) PEG-PEE/Increase incapitalreserves Subscription conversions OCEANE conversions 19,434,336 Bond conversions Exercised options As of04.01.06 4.2.2 Share capital decision bytheExtraordinary General Meeting. The ArticlesofAssociation maybeamended based ona of Association AmendmentoftheArticles 4.2.1.9 None than thelaw conditions arestricter changes incapital Provision whensaid governing 4.2.1.8 None Consent clause 4.2.1.7 None Provision delaying a changeincontrol 4.2.1.6 officers. plan for thebenefitofsome orallemployees orcorporate & seq. oftheFrenchLaborCode, or(iii)anystock option established bylaw,andspecifically byArticlesL.443-1 purchase planorstock allotmentplanunder theconditions a company gainsharingplan,(ii)anyemployee stock of theUbisoft Entertainmentgroup, includingaspartof(i) - The allotmentofsharestoemployees andcorporate officers company’s capital. any means,eitherimmediately orsubsequently, tothe rights attached tosecurities granting entitlementby - The delivery ofsharesinconnection withthe exercise of by theAMF. in accordance withacode ofprofessional ethicsrecognized liquidity contract made withaninvestment service provider, - The completion ofsalesorpurchases ofsharesasparta (AMF): accepted bytheFrenchStock Exchange Commission conformity withtheapplicablelawsandmarket practices the ShareBuybackProgram aredefined asfollows, in capital atthedateofmeeting. The various objectives of under theSharebuybackProgram wasfixed at10%ofthe value) andthenumberofsharesavailable tobeacquired was fixed at35euros(following thehalving oftheshare 2008. Pursuant tothatauthorization,themaximumprice months fromthedateofmeeting, ie.untilMarch25 The ShareBuybackProgram wasadopted for aperiod of18 Features oftheShareBuybackProgram INFORMATION ON THE COMPANY 4

- The retention of shares for delivery at a later date 4.2.2.3.2 Liquidity contracts in exchange or as payment for future external growth The company awarded a liquidity contract to Exane BNP 121 operations up to the limit of 5% of the existing capital. PARIBAS, which adheres to the AFEI code of ethics - The cancellation of shares. recognized by the AMF, with effect from January 2, 2006 for a term of one year renewable by tacit agreement. - The implementation of any practice that may be recognized The company allocated a sum of €1,500,000 to implement by law or by the AMF. this contract during the fiscal year just ended. Pursuant to Article 212-13 of the General Rules of the AMF as referred to in Article 241-1 of the General rules of the AMF, a summary of the share buyback program was published online on the company’s website and on the website of the AMF.

4.2.2.3.3 Situation as of March 31, 2007

Percentage of capital held directly and indirectly 0.049% Number of shares cancelled in the last 24 months NONE Number of shares held in the portfolio (a) 22,059 Book value of the portfolio €795,343.59 Market value of the portfolio (b) €806,256

(a) All shares were acquired under the liquidity contract made with Exane BNP PARIBAS. (b) closing price at March 31, 2007: €36.55.

4.2.2.4 Authorized unissued capital

Status of current authorizations to the Board of Directors to increase the capital showing their use during the fiscal year ended on March 31, 2007

Type of authorization Meeting date Term - Authorized amounts Use of the Expiration authorization during the fiscal year Authorization granted to the Board of Directors to issue September 25, 2006 26 months 1% of the amount of the share capital as NONE shares to employees in Resolution 9 (November 24, of the date the authorization used1 by the connection with the company 2008) Board of Directors savings scheme

Authorization granted to the NONE Board of Directors to grant September 25, 2006 38 months 3.5% of the number of shares existing as employees options giving a right Resolution 10 (November 24, of the date the authorization used to new shares and/or stock 2009) options

Delegation of authority to the NONE 2 Board of Directors to proceed with an equity issue reserved for September 25, 2006 18 months 1% of the amount of the share capital as employees of company Resolution 11 (March 24, of the date of the decision by the Board subsidiaries headquartered 2008) of Directors 1 outside France

Authorization granted to the Board of Directors to issue NONE ordinary shares and securities as compensation for contributions September 25, 2006 26 months 10% of the company’s capital as of the in kind made to the company Resolution 12 (November 24, date of the meeting and consisting of equity and/or 2008) (4,120, 471 shares) investment securities granting entitlement to the capital

General authorization granted to Total face value of the shares or securities NONE the Board of Directors to carry September 25, 2006 26 months that can be issued: €2,000,0003 out equity issues with pre- Resolution 13 (November 24, Face value of the debt securities that can emptive rights 2008) be issued: €100,000,000

General authorization granted to Total face value of the shares or securities the Board of Directors to carry September 25, 2006 26 months that can be issued: €2,000,0003 NONE out equity issues without pre- Resolution 14 (November 24, Face value of the debt securities that can emptive rights 2008) be issued: €100,000,000

(1) Charging to the overall ceiling of €2,000,000 fixed by the General Meeting of September 25, 2006 (Resolution 14) authorizing equity issues without pre-emptive rights (2) On August 31, 2006 the Board of Directors, pursuant to the similar authorization voted by the General Meeting of September 21, 2005 (superseded by the authorization voted by the General Meeting in its Resolution 11) decided to issue equity with a nominal amount of €7,736.36. (3) Charging to the overall ceiling of €4,000,000 fixed by the General Meeting of September 25, 2006 (Resolution 15) UBISOFT • FINANCIAL REPORT 2007 conversion of459,013OCEANE,and1,290,288OCEANEwereredeemed. During thefiscal year ended onMarch31,2007,475,998shareswithanominal value of€0.31werecreated following the Redemption infullonNovember 30,2006ataprice of€52.70, i.e.110.94%offace value. The closingdatewasNovember 22,2006. 2.5%peryear, payableinarrears onNovember 30ofeachyear. Bonds exercised duringthefiscal year ended March31,2007: Five years fromsettlement date. Normal redemption: 4.5%onthesettlement date(ifnoconversion intoand/orexchange for sharesandnoearly Gross redemption yield: November 30,2001. Annual yield: 3,150,000bonds(asaresultoftheadjustmentmade inconnection withtheissueofwarrants Term ofbond: €47.50. and settlement date: Dated date Nominal issueprice: €172.5M Number: Total maximumamount: Chief characteristics ofthisbonddebenture: Bond Debentures-Bondswiththeoptionofconversion into and/orexchange for neworexisting sharesof If allthese optionsweretobeexercised, thecapitalofUbisoft EntertainmentSA wouldincrease asfollows: The numberofoptionsopenbutnotexercised asofMarch31,2007was3,020,002. Potential capital effect fromDecember 11,2006,andsecond, todelete thereference to thenominalsharevalue intheArticlesofAssociation. Extraordinary General Meeting ofSeptember25,2006,first,tomake a2-for-1 splitinthenominalvalue ofasharewith At itsmeeting onDecember 5,2006theBoardofDirectors decided, pursuanttotheauthorizationgranted bythe with sharesubscription warrants Convertible securities,exchangeable securitiesand 4.2.2.5 Use madebytheBoardofDirectorssinceclosingfiscalyear endedonMarch31,2007 and/or stock options options givingarighttonewshares of Directors togrant employees Authorization granted totheBoard the company savings scheme to employees inconnection with of Directors toissueshares Authorization granted totheBoard Nature ofauthorization pin osbciea f0.120 ,2,0 oeta nrae€468,100.31 €7,504,678.09 €7,036,577.78 Potential capitalasof03.31.2007 Potential increase Capitalasof03.31.2007 48,417,278 3,020,002 45,397,276 Potential sharesasof03.31.2007 Options tosubscribe asof03.31.2007 Number ofsharesas03.31.2007 the company(OCEANE) redemption). bond entitlesitsholder tosubscribe for 1.037shares. for thepurchase ofexisting sharesand/orthesubscription ofnewsharesinMay2003)one September 25,2006 September 25,2006 Meeting date Resolution Resolution 10 Resolution 9 (November 24, (November 24, Expiration 26 months 38 months Term - 2008) 2009) the BoardofDirectors as ofthedateauthorizationused by 3.5% ofthenumbersharesexisting as ofthedateauthorizationused 1% oftheamountsharecapital Potential capital(6.24%dilution) Authorized amounts on April26,2007 the BoardofDirectors options granted by 1,588,904 sharesubscription of €70,365.66 in themaximumamount approved acapitalincrease 2007, theBoardofDirectors At itsmeeting ofApril26, in financialyear Implemented INFORMATION ON THE COMPANY 4

Issue and allocation, free of charge, of warrants for the purchase of existing shares and/or the subscription of new shares to all shareholders on May 14, 2003 (BSA). Chief characteristics of the warrants for the purchase of existing shares and/or the subscription of new shares of May 14, 123 2003: Initial number of warrants: 17,540,082 (15 BSA entitle the holder to one share). Strike price: €28. Term: May 14, 2002 to May 14, 2006, inclusive. Warrants exercised during the fiscal year ended on March 31, 2007: The closing date for exercise of BSA was May 14, 2006. During the fiscal year ended on March 31, 2007, 851,141 shares with a nominal value of €0.31 were created following the exercise of 12,767,115 BSA.

OBSAR bonds (bonds with redeemable share subscription warrants). Characteristics of the bonds: Number: 716,746 bonds. Nominal issue price: €76.70. Term of bond: Five years from the settlement date. Nominal rate, yield The bonds will bear interest at a variable rate payable quarterly in arrears. The annual nominal rate is based on the 3-month Euribor. Normal redemption: The bonds will be redeemed on one occasion on December 2, 2008 by redemption at par, i.e. €76.70 per bond. Characteristics of the BSAR (redeemable share subscription warrants): Number of BSAR: 1,433,492 BSAR (two BSAR are attached to each bond). Parity: 1 BSAR entitles the holder to subscribe for one new share with a nominal value of €0.31. Strike price: €38.35. Exercise period: The BSAR may be exercised between December 3, 2003 and December 2, 2008, subject to the provisions governing the early redemption of BSAR at the discretion of the issuer and the provisions concerning circumstances under which the exercise of BSAR may be suspended. Warrants exercised during the fiscal year ended on March 31, 2007: At its meeting of 19 January 2007, the Board of Directors decided that the BSAR and bonds in circulation would be subject to early redemption on February 26, 2007, in accordance with Articles 2.2.7.3.2 and 2.5.6.1 of Operational notice 03-001 dated November 14, 2003 by the AMF. The early redemption of the BSAR led to the redemption of the bonds in circulation. During the fiscal year ended on March 31, 2007, following the exercise of 1,313,907 BSAR, 69 shares with a nominal value of €0.31 and 2,627,676 shares with a nominal value of €0.155 were created. UBISOFT • FINANCIAL REPORT 2007 No stock optionsweregranted orexercised bythecorporate officers ofthefirmduringfiscal year. (2) Period for exercise limited bydecision oftheBoardDirectors onNovember 2,2005tobringitintocompliance withthe (1) Nominalvalue wassubject to2-for-1 splitwitheffect fromDecember 11,2006 Share subscription warrants 4.2.2.6 72.41 01.47630010.14.05 10.28.03 01.29.04 10.16.03 0 01.19.05 0 04.25.02 0 09.04.02 0 0 0 776,300 0 143,592 18,440 706,362 10.14.04 778,130 04.28.03 89,210 01.29.03 641,852 10.16.02 11 08.16.02 10 10.25.01 9 04.09.01 8 Startdatefor 7 No.ofoptions 6 07.23.04 09.12.02 5 09.12.02 Total09.12.02 numberof 10.19.01 DateofBoard 10.19.01 09.13.00 Plannumber Meeting date 92.51 22.613582002.23.07 0 (France, Italy) 0 information) 1,355,892 having thelargestnumberofsharesthussubscribed for (global companies exercised duringthefiscal year bythe10employees Options heldagainsttheissuerandaforementioned largest numberofoptionsthusgranted (globalinformation) 02.23.06 company authorized to grant theissuer’soptionshaving the Options granted duringthefiscal year bytheissuerandany 992,100 and optionsexercised bythem employees receiving themostoptions, Stock optionsgranted tothe10non-officer 13 11.17.04 12 09.21.05 07.23.04 ietr’meigotosgatd rne o exercising options granted to optionsgranted Directors’ meeting Number 443,015 - average price 1 corporate officers (1) Weighted €6.68 - maximum allowed byUSlaw. and expiration date Expiration 11.16.14 Expiration 10.13.14 Expiration 06.15.07 Expiration 15.10.09 Expiration 08.15.12 Expiration 04.08.06 Plan no.12 Plan no.11 Plan no.10 Plan no.7 Plan no.5 Plan no. Plan no8 (United States) 11.17.05 07.01.05 INFORMATION ON THE COMPANY 4

Expiration Terms and conditions Strike Number of options (1) 125 date of exercise Price Exercised during Cancelled during Outstanding (1) the year the year as of 03/31/07

08.04.06 25%/year €17.26 100,950 52,920 0 04.24.06 25%/year €17.26 12,000 1,772 0 08.15.12 50% on 01/19/05 €6.41 400,875 0 175,855 75% on 08/16/05 100% on 08/16/06 10.15.07 25%/year €4.60 275,657 16,130 188,889 01.28.08 25%/year €5.13 2,800 0 10,280 06.15.07 (2) 25%/year €4.60 41,542 450 10,626 10.13.14 24% at the end €7.75 171,204 1,656 493,824 of 1 year then 2% per month (France, Italy) (France, Italy) €7.36 99,320 6,820 833,418 11.16.14 24% at the end (France) of 1 year €7.74 then 2% per month (Italy) (United States) (2) (United States) €6.78 06.15.09 26% then by lots (US) of 12 at 13% every 6 months 02.22.11 25% per year €15.82 48,782 0 1,307,110 after 02.23.07

4.2.2.7 Employee stock ownership 4.2.2.9 Right to acquire or under the Company Mutual Fund obligation attached to subscribed (hereafter “FCPE”) capital not yet paid up

As of March 31, 2006, employees held 419,416 shares None (0.924% of share capital) through the Ubi Actions FCPE. The extraordinary portion of the Combined General 4.2.2.10 Option or unconditional Meeting of September 25, 2006 authorized the Board of agreement on a member of the group Directors to proceed, on its own initiative, with an equity issue reserved for French employees, up to a limit of 1% of None the total shares comprising the share capital at the time of use of the authorization by the Board of Directors, speci- 4.2.2.11 Identification fically by means of an FCPE. of shareholders The Board of Directors did not use this authorization during the financial year ended on March 31, 2007. Article 5 of the Articles of Association authorizes the company to implement a procedure for identifying share- holders. 4.2.2.8 Securities not representing capital

None UBISOFT • FINANCIAL REPORT 2007 51.4Eut su 1109€,8,5.5€,4,2.6€.11,8,9 €5,481,851.83 17,683,393 €0.31 €1,349,920.96 €1,381,258.55 101,089 Equityissue 05.18.04 20.6Eut su s 7,1 2,0,7.8€381278 03 12418€6,588,798.28 21,254,188 €0.31 €23,891,297.80 €24,100,575.38 675,218 Equityissueas 12.05.06 42.5Eut su s380€778€4521 03 80480€5,593,900.40 18,044,840 €0.31 €34,582.10 €37,788 €5,592,694.50 18,040,950 3,890 €0.31 Equityissue as €5,032,044.74 €5,142,887.41 357,557 04.20.05 Equityissueon 03.01.05 42.7Eut su s ,8,0 5,4,0.5€196767 0154,9,7 €7,036,577.78 45,397,276 €0.155 €51,996,726.75 €52,444,506.25 2,889,900 Equityissueas 04.26.07 00.5Eut su s ,1,2 3,0,7.1€101349 03 90199€5,909,210.39 19,061,969 €0.31 €31,091,364.92 €31,406,674.91 1,017,129 Equityissueas 10.09.05 42.4Eut su n2,2 33864 36980 03 75234€5,450,514.24 17,582,304 €0.31 €356,988.03 €363,816.40 22,027 Equityissueon 04.26.04 90.6Eut su s11464€984792 949926 03 05890€6,379,480.70 20,578,970 €0.31 €6,024,644.16 29,459,922.68 19,434,336 €29,814,759.27 €0.31 1,114,634 €9,534,755.98 Equityissueas €9,650,189.75 372,367 09.08.06 Equityissueas 04.10.06 Growth inthecompany’s capital over thelast threefiscalyears ae yeo prto Nme f muto Ise hr Ttl Total share Total Share Issue Amount of Numberof Type ofoperation Date for USemployees, exercises conversions ofBSA, BSAR and 3.8%convertible bond and 3.8%convertible bond of optionsandconversions conversions ofBSA, BSAR conversions ofOCEANE the equity issuereserved conversion ofsecurities and exercises ofoptions exercises ofoptionsand the exercise ofoptions Before the2-for-1 splitwitheffect fromDecember11,2006(BoardofDirectors’meeting5,2006) the exercise ofoptions on 05.18.04following After the2-for1 splitwitheffect fromDecember11,2006(BoardofDirectors’meeting5,2006) of 12.04.06following the UbiActions FCPE the UbiActions FCPE of 03.31.05following of 03.31.07following exercised optionsand of 09.06.06following of 03.31.06following of 09.30.05through exercises ofoptions and subscription of and subscription of Ubi Actions FCPE. of BSA andBSAR exercised options, of BSA, BSAR and exercised options 02.25.05 through 03.31.04 through and conversions subscription of hrsise eut su peimfc nme f capital numberof face premium equity issue shares issued contribution ycs au shares value by cash INFORMATION ON THE COMPANY 4

4.2.2.12 Market in which the company’s stock is traded

Ubisoft share fact sheet 127  ISIN code FR0000054470  Listing market Euronext - Paris - Eurolist - Segment B  Par value €0.155  Number of outstanding shares as of 03/31/07 45,397,976  Closing price as of 03/31/07 €36.55  Market capitalization as of 03/31/07 €1,659,296,022.80  Initial listing price on July 1, 1996 €38.11 (before the 5-for-1 stock split on January 11, 2000 and the 2-for-1 split on December 11, 2006)

Month Highest price* Lowest price* Trading volume* (in euros) (in euros) (in shares) June 2005 21.30 18.25 7,575,552 July 2005 23.35 20.42 4,241,458 August 2005 23.75 20.54 2,762,672 September 2005 21.88 20.41 2,150,868 October 2005 22.22 18.96 2,215,438 November 2005 20.50 19.02 1,928,868 December 2005 21.22 18.81 6,253,618 January 2006 20.39 16.75 6,725,914 February 2006 18.00 15.23 5,798,250 March 2006 19.32 16.23 6,863,364 April 2006 20.22 18.50 4,218,042 May 2006 20.71 18.02 5,540,384 June 2006 20.41 18.06 4,586,322 July 2006 19.25 16.76 5,160,776 August 2006 21.05 18.81 4,192,550 September 2006 24.15 19.12 6,050,842 October 2006 24.76 22.15 6,666,466 November 2006 26.15 23.33 6,745,352 December 2006 27.50 22.00 6,138,953 January 2007 31.20 25.44 6,062,659 February 2007 34.65 30.10 4,310,927 March 2007 37.70 30.75 6,078,429 April 2007 38.61 34.20 3,201,874 May 2007

* 2-for-1 split with effect from December 11, 2006 (Source Euronext)

4.2.2.13 Dividends

The company has not distributed dividends during the last three fiscal years and currently does not plan to distribute dividends in the short or medium term.

4.2.2.14 Establishment providing securities services

BNP PARIBAS Securities Services Issuers Department Immeuble Tolbiac 75450 Paris Cedex 09, France UBISOFT • FINANCIAL REPORT 2007 (*) 2-for-1 splitwitheffect fromDecember 112006. held 3,283,166 double voting rightsasofMarch 31,2007. The group, consisting ofGuillemotBrothers SA, GuillemotSuisse SA, GuillemotCorporation SA andtheGuillemot family, during thelast Changesinthedistribution of capital threefiscalyears 4.2.3.1 hita uleo 4,9 .9%43081.035% 1.243% 1.357% 1.301% 403,038 483,866 1.301% 528,382 506,256 506,572 14.570% Voting rights 5,671,556 0.691% 0.848% 0.972% 249,394 0.911% 306,214 350,730 0.911% 328,608 328,926 10.671% 3,851,274 Capital Christian Guillemot Gérard Guillemot Michel Guillemot Yves Guillemot Claude Guillemot Guillemot BrothersSA As of03.31.05(*) oa 5372610 87978100% 48,749,768 - 19.226% - 0.167% 9,372,744 81,184 100% 80.773% 1.114% 0.929% 1.080% 39,377,024 1.115% 45,397,276 1.412% 543,186 452,788 526,428 1.255% 543,526 688,202 0.227% 13.414% 611,852 6,089,578 110,896 0.049% 100% 0.179% 11.928% 86.537% Voting 22,059 rights 81,184 5,814,682 42,214,062 39,285,639 - 1.197% 0.549% 0.586% 0.709% 543,186 249,394 0.891% 266,214 21.818% 321,796 0.725% - 404,608 0.180% 9210428 0.17% 328,926 76,110 77,146 100% 78.182% 8.408% 0.948% 1.073% 1.342% 33,003,634 3,817124 Capital 38,868,672 Total 1.278% 1.450% 400,048 452,788 Public andGroupemployees 566,428 Ubisoft EntertainmentSA 539,460 1.449% 612,202 15.249% In Concert 0.249% 611,852 5,927,262 Guillemot Suisse SA 100% 0.106% Guillemot Corporation SA 105,192 0.196% Other membersoftheGuillemotfamily 13.849% 84.645% 41,000 Christian Guillemot 38,926,260 76,110 Voting rights 32,900,410 5,846,348 - Gérard Guillemot 1.029% 0.642% Michel Guillemot 0.788% Yves 0.817% Guillemot 400,048 249,394 0.845% 22.219% 306,214 Claude Guillemot 317,730 - 328,608 Guillemot BrothersSA 0.846% 0.196% 8649040 0.184% 328,926 76,110 100% 77.781% As of03.31.07 71,442 9.902% 1.028% 30,277,220 36,089,80 3,848,790 Total 400,048 Capital Public andGroupemployees Ubisoft EntertainmentSA 0.188% 16.522% In Concert 5,962,746 Guillemot Suisse SA 0.016% 73,212 Guillemot Corporation SA 0.211% Other membersoftheGuillemotfamily 5,946 83.462% Christian Guillemot 76,110 30,120,988 Gérard Guillemot 1.108% Michel Guillemot Yves Guillemot 400,048 Claude Guillemot Guillemot BrothersSA 0.199% As of03.31.06(*) 71,442 Total Public andGroupemployees Ubisoft EntertainmentSA In Concert Guillemot Suisse SA Guillemot Corporation SA Other membersoftheGuillemotfamily 4.2.3 Main shareholders ubro hrs%Nme fvtn ihs% Numberofvoting rights % Number ofshares ubro hrs%Nme fvtn ihs% Numberofvoting rights % Number ofshares % Numberofvoting rights % Number ofshares INFORMATION ON THE COMPANY 4

4.2.3.2 Distribution of capital and voting rights as of April 30, 2007 129 Capital Voting rights Number of shares % Number of voting rights %

Guillemot Brothers SA(1) 3,859,893 8.500% 5,857,451 12.012% Claude Guillemot 342,622 0.754% 625,548 1.283% Yves Guillemot 418,304 0.921% 701,898 1.439% Michel Guillemot 335,492 0.739% 557,222 1.143% Gérard Guillemot 279,910 0.616% 540,124 1.108% Christian Guillemot 263,090 0.579% 466,484 0.957% Other members of the Guillemot family 77,146 0.170% 110,896 0.227% Guillemot Corporation SA 431,937 0.951% 431,937 0.886% Guillemot Suisse SA 81,184 0.179% 81,184 0.166% In Concert 6,089,578 13.409% 9,372,744 19.221% Ubisoft Entertainment SA 24,136 0.053% - - Public and Group employees 39,298,754 86.538% 39,390,139 80.779% Total 45,412,468 100 % 48,762,883 100 %

(1) Company 100% owned by the Guillemot family

Shareholders holding more than 5% of the capital of the company as of March 31, 2007(2)

Name of shareholder % capital % voting rights Inc 15.406% 14.347% FMR Corp and Fidelity International Limited (FIL)(3) 10.261% 9.555%

(2) Information based on statements made to the company (3) Acting on behalf of mutual funds managed by their subsidiaries

 The US Company Electronic Arts Inc, holder as of March 31, 2006 of 17.99% of the capital and 16.56% of voting rights in the company, informed the company on November 9, 2006 that following the publication by the company on September 21, 2006 of the number of shares and voting rights, it had fallen below the 16% threshold for voting rights and held as of that date 16.95% of the capital and 15.97% of the voting rights.  FMR Corp and Fidelity International Limited (FIL), acting on behalf of the mutual funds managed by their subsidiaries, informed the AMF that as a result of share acquisitions - on May 16, 2006 they had exceeded the 5% capital threshold and held, as of that date, 5.04% of the capital and 4.55% of the voting rights, - on May 18, 2006 they had exceeded the 5% voting rights threshold and held, as of that date, 5.57% of the capital and 5.04% of the voting rights - on October 10, 2006 they had exceeded the 10% capital threshold and held, as of that date, 10.60% of the capital and 9.80% of voting rights, - on October 11, 2006, they had exceeded the 10% voting rights threshold of Ubisoft entertainment, and held, as of that date, 11.13% of the capital and 10.29% of the voting rights. In addition to their declaration of exceeding the 10% capital threshold, and pursuant to Article L. 233-7 of the French Commercial Code, FMR Corp and Fidelity International Limited (FIL) made the following declaration of intent: “FMR Corp and Fidelity International Limited (FIL) make the present notification on behalf of their mutual funds and management companies. The acquisitions were made for portfolio investment purposes. FMR Corp and Fidelity International Limited (FIL) may in future, depending on market conditions, make further acquisitions or sell shares in Ubisoft Entertainment SA. FMR Corp and Fidelity International Limited (FIL) do not intend to acquire shares or voting rights in Ubisoft Entertainment SA in order to take control thereof or be represented on its Board of Directors.” FMR Corp and Fidelity International Limited (FIL), acting on behalf of the mutual funds managed by their subsidiaries, informed the AMF that - on November 22, 2006 they had fallen below the 10% voting rights threshold and held, as of that date, 10.64% of the capital and 9.84% of voting rights as a result of the sale of shares, - on November 27, 2006 they had fallen below the 10% capital threshold and held, as of that date, 9.79% of the capital and 9.07% following the increase in the company’s capital. UBISOFT • FINANCIAL REPORT 2007 To thecompany’s knowledge, thereis nodeclared orundeclared shareholders’ agreement concerning Ubisoft shares. Shareholders’ agreement 4.2.3.3     2006 referred toabove. Code, FMRCorpandFidelity InternationalLimited (FIL)made adeclaration ofintentinsimilartermstothatOctober In addition totheirdeclaration ofexceeding thethresholds,andpursuanttoArticleL.233-7ofFrenchCommercial of voting rights. 2007, andthe10%thresholdfor voting rightsonMarch1,2007,andheld,asofthen,10.92% thecapitaland10.12% informed theAMFthatfollowing shareacquisitions, theyhadexceeded thethresholdof10%for capitalonFebruary 28, FMR CorpandFidelity InternationalLimited (FIL),actingonbehalf of themutualfindsmanaged bytheirsubsidiaries, As ofMarch31,2007,thegroupheld13.414%capitaland19.226%voting rights. - March 14,2007,following themonthly publicationofthenumbersharesandvoting rightsinthecompany, ithad - October 18,2006ithadfallen belowthe15%capitalthresholdandheldasofthatdate14.966% As ofMarch31,2007,GuillemotBrothersheld8.408%thecapitaland11.928%voting rights. - on April17,2007,following therepaymentinUbisoft Entertainmentsharesofthedebt toitonthebooks ofGuillemot - fallen belowthe12%thresholdinArticlesofvoting rightsinthecompany onMarch16,2007,following thesaleof fallen belowthe10%capitalthresholdonApril21,2006,following- anequity issue,andasofthatdateheld9.902%the in thecompany. As ofMarch31,2007,MorganStanley&Co.InternationalLtdheld3.478%thecapitaland3.239%voting rights - on September4,2006exceeded andonSeptember5,2006fallen belowthe5%thresholdofcapitalincompany, and on July 31,2006exceeded- andonAugust 1,2006fallen belowthe5%thresholdofcapitalincompany, andheld5.26% rights inthecompany. As ofMarch31,2007,theCaisse des DépôtsetConsignations(CDC)held4.018%ofthecapitaland3.742%voting 4% ofthevoting rightsinthecompany, andheldasofthatdate4.30%thecapital3.98%voting rights. the company byletterofDecember 8,2006,thatithadonDecember 8,2006,fallen belowthethresholdinArticles of Following achangetothenumberofvoting rightsinthecompany, theCaisse des DépôtsetConsignations(CDC)informed fallen belowthe20%voting rightsthreshold,andheldasofthatdate13.503%thecapital19.310%voting rights. 21.186% ofvoting rights, tal and12.010%ofvoting rights. corporation, exceeded the12%thresholdinArticlesfor voting rightsandasofthatdateitheld8.502%thecapi- shares, andasofthatdateheld8.474%thecapital11.989%voting rights; capital and13.849%ofthevoting rights; held 5.27%ofthecapitalasSeptember4,2006and4.06%5,2006. of thecapitalasJuly 31, 2006and4.52%ofthecapitalasAugust 1,2006; family) informed theAMFthat: The group(consisting ofGuillemotBrothersSA, GuillemotSuisse SA, GuillemotCorporation SA andtheGuillemot Guillemot BrothersSA informed thecompany thatithad: Morgan Stanley&Co.InternationalLtd.stated thatithad: 14, 2006,holdingasofthatdate4.74%thecapitaland4.39%voting rights. as ofMarch31,2006held5.08%thecapitalcompany, fell belowthethresholdof5%capitalonSeptember Following achangetothenumberofsharesincompany’s capital,theCaisse des DépôtsetConsignations(CDC),which CORPORATE GOVERNANCE 5 131

Corporate governance 5 5.1 Members of the group's Board of Directors and management 132 5.2 Rules applicable to the appointment and replacement of the members of the Board of Directors 133 5.3 Functioning of the Board of Directors 133 5.4 Absence of fraud conviction, association with a bankruptcy or public incrimination and/or sanction 133 5.5 Loans and guarantees granted to members of the Board of Directors 133 5.6 Other offices held by the Directors 134 5.6.1 Offices held as of March 31, 2007 134 5.6.2 Expired terms (last five fiscal years) 137 5.7 Compensation of managers 140 5.7.1 Compensation of managers and members of the Board of Directors 140 5.7.2 Stock option and share subscription plan 140 5.8 Services contract with the issuer and its subsidiaries 140 5.9 Operations referred to in Article L621-18-2 of the French Monetary and Financial Code and Article 222-15-3 of the AMF’s internal regulations 141 UBISOFT • FINANCIAL REPORT 2007 Director Executive Vice President Director Executive Vice President Director Director Director their personal interestsorotherobligations. To thecompany’s knowledge, there isnoconflict ofinterestamongtheMembersBoardDirectors asregardsto Bouton's report. The BoardofDirectors ispursuingitsprocess inorder tocomply withcorporate governance principlesset outinthe suited for itspurposes. the practices andinparticulartheworkingmethods oftheBoard,andanassessment whetherthewayitisorganized isbest In order tocomply withrequirements astocorporate governance, theMembersofBoardarecarryingoutastudy appointmentofanindependent BoardMember. - introducing avariable portionofdirector’s fees towhichnewobligationsattach; - following: The membersoftheBoardDirectors have taken stepstoreinforce thetransparency ofthemanagement,including Each BoardMemberisobliged tohold atleastoneshareinthecompany.      Additional information concerningthegroup’smanagement: 3 Subject torenewalbytheGeneral Meeting onJuly 4,2007 2 MarcFiorentino,independent director, wasco-opted bytheBoardofDirectors on07.10.2006.Hisco-option wasratified byth 1 The functionsandpowerseachofthese directors carriesoutineachcompany areset forth in5.6 ihlGilmt0.5 990.8 9803.31.2013 03.31.2013 Number 03.31.2013 02.28.1988 02.28.1988 Expiration 01.15.1959 02.28.1988 10.30.1956 Date ofhiring 07.21.1960 Dateofbirth Michel Guillemot Executive Vice President Operations Claude Guillemot Chief Executive Officer Yves Guillemot Job title Name hita uleo 21.16 22.18 03.31.2013 03.31.2013 02.28.1988 02.28.1988 02.10.1966 07.14.1961 Administrateur Marc Fiorentino Executive Vice President Administration Christian Guillemot Publishing andMarketing Gérard Guillemot Strategy andFinance Editor-in-Chief: Managing DirectorInternationalProduction: Chief FinanceOfficer: Managing Directorfor NorthAmericanTerritories: Managing DirectorEMEATerritories: 5.1 1 of Directorsandmanagement Members ofthegroup'sBoard 2 20.15 71.20 03.31.2013 07.10.2006 12.08. 1959 Mr. SergeHascoet Ms. ChristineBurgess-Quemard Mr. AlainMartinez Mr. LaurentDetoc Mr. AlainCorre etn lsn ok as of03.31.07 Meeting closingbooks aeo riayofshares date ofOrdinary e General Meeting on09.25.2006 3 3 3 3 3 3 249,394 266,214 321,796 328,926 404,608 2 CORPORATE GOVERNANCE 5 Rules applicable to the appointment 5.2 and replacement of the members 133 of the Board of Directors

During the life of the company, directors are appointed or re-appointed by the Ordinary General Meeting; however, in case of a merger or spin-off, appointments may be made by the Extraordinary General Meeting called to approve the operation. In the event of a vacancy occuring through death or resignation between two Ordinary Meetings, the Board of Directors may make temporary appointments, subject to ratification by the next Meeting. When, pursuant to the laws and regulations in effect, a director is appointed to replace another director, he/she performs his/her functions only for the remainder of his/her predecessor’s term. A director’s functions cease at the end of the Ordinary General Meeting that is called to approve the financial statements of the previous year and held during the year in which his/her term expires.

5.3 Functioning of the Board of Directors

The Board of Directors is vested with the fullest powers to on its work to the General Shareholders’ Meeting, ensure determine the policies guiding activities and ensures that the proper functioning of the company’s corporate bodies they are implemented within the limits of the corporate and, in particular, see to it that the directors are fully capable purpose and the powers expressly granted by law to General of performing their duties. As a member of general Meetings. management, conditional upon the powers granted by law to Pursuant to Article L225-51 of the French Commercial General Shareholders’ Meetings and to the Board of Code, the Board of Directors. at its meeting of October Directors, he is vested with the fullest powers to act in all 22. 2001, established the manner in which the company’s situations on the company’s behalf and to represent it in its general management would carry out its duties. It decided relations with third parties. not to separate the Chairman of the Board of Directors’ At its meeting of July 27, 2004, the Board of Directors duties from those of its general management. adopted its rules of procedure enabling it, among other As a result, the statutory role of Mr. Yves Guillemot, as things, to use videoconferencing equipment to conduct its Chairman of the Board of Directors, is to represent the meetings. company’s Board of Directors, organize its work and report The Board of Directors met 12 times during FY 2006-07. Absence of fraud conviction, 5.4 association with a bankruptcy or public incrimination and/or sanction

To the company’s knowledge, over the last five years:  none of the members of the Board of Directors has been convicted of fraud;  none of the members of the Board of Directors has been associated with a bankruptcy, receivership or liquidation while serving on an administrative, management or supervisory body;  no official public incrimination and/or sanction has been delivered against any of the members of the Board of Directors. Loans and guarantees granted 5.5 to members of the Board of Directors

The company has not issued any loans or granted any guarantees to members of the Board of Directors. UBISOFT • FINANCIAL REPORT 2007 Yves Guillemot - Ubisoft MusicInc - Ubisoft CanadaInc - Ubisoft Divertissements Inc President andDirector Canada - Ubisoft PtyLtd Director Australia - Ubisoft Warenhandels GmbH - BlueByteGmbH - Ubisoft GmbH Manager Germany/Austria - Ubisoft Marketing InternationalSARL - Ubisoft CastelnauSARL - Ubisoft SupportStudiosSARL - Ubisoft Paris StudiosSARL - Ubisoft EditorialSARL - Ubisoft Production Annecy SARL - Ubisoft Production MontpellierSARL - Ubisoft Development SARL - Ubisoft ComputingSARL Manager - GuillemotBrothersSA - GuillemotCorporation SA - Gameloft SA Director andExecutive VicePresident - Ubisoft EntertainmentSA President/CEO - Tiwak SAS - Ubisoft WorldStudiosSAS - Ubisoft WorldSAS - Ubisoft France SAS President france - Ubisoft SimulationsSAS - Ubisoft Productions France SAS - Ubisoft PicturesSAS - Ubisoft OrganisationSAS - Ubisoft Manufacturing &Administration SAS - Ubisoft Graphics SAS - Ubisoft EmeaSAS - Ubisoft DesignSAS - Ubisoft Books andRecords SAS which isitself President of: 5.6 - Ludifactory SAS 5.6.1 by theDirectors Other officesheld Offices heldasofMarch31.2007 Director - Red StormEntertainmentInc - Ubisoft HoldingsInc President andDirector - Ubisoft Inc Vice PresidentandDirector United States - ShanghaiUbiComputerSoftware CompanyLtd Vice PresidentandDirector China - GuillemotInc - Gameloft Inc Director - Ubisoft BV Manager The Netherlands - Ubisoft SARL Manager Morocco - Ubisoft KK President andDirector Japan - Ubisoft SpA President andsoleDirector Italy - Ubisoft Ltd President andDirector Hong Kong - Advanced MobileApplicationsLtd - GuillemotLtd - Red StormEntertainmentLtd - Ubisoft EntertainmentLtd Director - Ubisoft Ltd President andDirector Great Britain - Ubisoft SA President andDirector Spain - GuillemotInc - Gameloft Inc - Ubisoft MusicPublishing Inc CORPORATE GOVERNANCE 5

Scandinavia Great Britain President and Director

Director 135 - Ubisoft Nordic AS (Denmark) - Advanced Mobile Applications Ltd President - Guillemot Ltd - Ubisoft Norway AS - Gameloft Ltd - Ubisoft Finland OY - Ubisoft Entertainment Ltd Director hong kong - Ubisoft Sweden AB Switzerland Director - Guillemot Corporation (HK) Ltd President - Ubisoft Ltd - UBI Games SA italy Claude Guillemot Director - Guillemot Srl france Romania CEO - Guillemot Corporation SA Director - Guillemot Romania Srl Director and Executive Vice President - Gameloft SA Scandinavia - Guillemot Brothers SA Director President - Ubisoft Sweden AB (Sweden) - Hercules Thustmaster SAS - Ubisoft Nordic AS (Denmark) Germany Manager Michel Guillemot - Guillemot GmbH france canada CEO and Director President and Director - Gameloft SA - Guillemot Inc President - Guillemot Recherche et Développement Inc - Gameloft Partnerships SAS Vice President Director and Executive Vice President - Ubisoft Digital Arts Inc - Guillemot Corporation SA Director - Guillemot Brothers SA - Gameloft Inc Manager - Ubisoft Canada Inc - Gameloft Rich Games Production France SARL - Ubisoft Music Inc - l’Odyssée Interactive Games SARL - Ubisoft Music Publishing Inc Germany Director and Vice Pesident Manager - Ubisoft Divertissements Inc - Gameloft GmbH Belgium Argentina Director President and Director - Guillemot SA - Gameloft Argentina SA China Bulgaria Director Manager - Shanghaï Ubi Computer Software Company Ltd - Gameloft EOOD United States canada President and Director President and Director - Guillemot Inc - Gameloft Inc Director Director - Ubisoft Holdings Inc - Guillemot Inc - Gameloft Inc - Ubisoft Inc China Spain President - Gameloft Software (Beijing) Company Ltd Director - Gameloft Software (Shanghai) Company Ltd - Gameloft Iberica SA - Gameloft Software (Chengdu) Company Ltd UBISOFT • FINANCIAL REPORT 2007 - Gameloft TOB Manager Ukraine - Gameloft Srl President Romania - Gameloft S.de R.Lde C.V Manager Mexico - Ubisoft KK Director - Gameloft KK President andDirector Japan - Ubisoft StudiosSrl - Gameloft Srl Manager Italy - Gameloft Private India President andDirector India - Ubisoft Ltd Director hong kong - GuillemotLtd - Advanced MobileApplicationsLtd Director - Gameloft Ltd President andDirector Great Britain - Gameloft IbericaSA President andDirector - UbiStudiosSL Manager - Ubisoft SA Director Spain - Ubisoft HoldingsInc - Ubisoft Inc - GuillemotInc Director - Gameloft Inc President andDirector United States - Gameloft CoLtd President andDirector Korea - Ubisoft Ltd Director Hong Kong - UbiComputerSoftware BeijingCompanyLtd - ShanghaïUbiComputerSoftware CompanyLtd Director - GuillemotInc - Ubisoft HoldingsInc - Ubisoft Inc - Gameloft Inc Director - LongtailStudiosInc President United States - ShanghaïUbiComputerSoftware CompanyLtd Director China - GuillemotInc - Gameloft Inc Director canada - GuillemotBrothersSA - GuillemotCorporation SA Director andExecutive VicePresident - Gameloft SA Director france Gérard Guillemot - Gameloft CompanyLtd President andDirector vietnam - GuillemotSA Director Belgium - GuillemotAdministration etLogistiqueSARL Manager - GuillemotCorporation SA - Gameloft SA Director andExecutive VicePresident - GuillemotBrothersSA CEO france Christian Guillemot - Ubisoft KK Director japan - Ubisoft Ltd Director hong kong - GuillemotLtd Director - Advanced MobileApplicationsLtd Director Great Britain - Ubisoft SA Director Spain CORPORATE GOVERNANCE 5 canada Director Director - Jeuxvideo.com SA 137 - Guillemot Inc - Ludimédia SA - Guillemot Recherche et Développement Inc - Guillemot France SA - Gameloft Inc - Hercules Technologies SA - Thrustmaster SA china - Ubi World SA Director Director and CEO - Shanghaï Ubi Computer Software Company Ltd - Ubi Ventures SA spain - Ludigames SA Co-manager Director - Ludi Factory SARL - Gameloft Iberica SA Manager United States - Ubisoft Graphics SARL Director - Ubisoft Organisation SARL - Ubisoft Inc - Ubisoft Simulations SARL - Ubisoft Holdings Inc - Ubisoft Emea SARL - Gameloft Inc - Ubi Color SARL - Guillemot Inc - Ubi Animation SARL - Ubi Administration SARL Great Britain - Ubi Research & Development SARL President and Director - Ubi Marketing Research SARL - Advanced Mobile Applications Ltd - Ubi Info Design SARL Director - Ubi Sound Studio SARL - Guillemot Ltd - Ubi World Studios SARL - Ubisoft Ltd - Ubisoft Books & Records SARL - Gameloft Ltd - Ubisoft Manufacturing & Administration SARL hong kong - Ubisoft Pictures SARL - Ubisoft Design SARL Director - Ubisoft Productions France SARL - Ubisoft Ltd Belgium - Guillemot Corporation (HK) Ltd Manager scandinavia - Ubisoft SprL Director China - Ubisoft Nordic AS (Denmark) - Ubisoft Sweden AB (Sweden) President and Director - Ubi Computer Software Beijing Company Ltd Marc Fiorentino United States france President and Director - Wolfpack Inc Director - Blue Byte Software Inc - Prosodie Director - Olivier SA Group - Hercules Technologies Inc - Jafics SARL - Thrustmaster Inc CEO and Director - Ubi.com Inc - Euroland Finance - Sinister Games Inc - TFJ - Guillemot Online.com Inc - Ludiwap Inc Great Britain 5.6.2 Expired terms (last five fiscal years) Director - Blue Byte Software Ltd - Ubi Studios Ltd Yves Guillemot france Claude Guillemot france President and Director - Ubi.com SA President President - Hercules Technologies SAS - Ubisoft Marketing & Communication SAS - Thrustmaster SAS UBISOFT • FINANCIAL REPORT 2007 - UbiComputerSoftware BeijingCompanyLtd Director China - Ubisoft CanadaInc Director - Ubisoft Divertissements Inc Vice PresidentandDirector canada - Thrustmaster SA - UbiSoft Marketing &CommunicationSA - HerculesTechnologies SA - GuillemotFrance SA - UbiWorldSA - Ubi.com SA - UbiSoft France SA - Jeuxvideo.com SA Director - LudigamesSA CEO france Michel Guillemot - GuillemotB.V. Director The Netherlands - Ubisoft SpA Director italy - UbiStudiosLtd - Gameloft.com Ltd Director Great Britain - GuillemotSA Director spain - LudiwapInc Director - Thrustmaster Inc - HerculesTechnologies Inc - GuillemotOnline.com Inc President andDirector United States - GuillemotRecherche etDéveloppement SARL - GuillemotStudioGraphique SARL - GuillemotSupportTechnique SARL Manager - UbiWorldSA - UbiStudiosSA - Ludimédia SA - UbiSoft France SA Director - LudigamesSA Director andCEO - Jeuxvideo.com SA - UbiWorldSA - UbiStudiosSA - UbiSoft France SA - Thrustmaster SA - HerculesTechnologies SA - GuillemotFrance SA Director - Ludimédia SAS President - LudigamesSA Director andCEO - GameLoft SA Executive VicePresident france Gérard Guillemot - Ubisoft SpA Director - LudigamesSrl Manager Italy - Thrustmaster Inc - HerculesTechnologies Inc - GuillemotOnline.com Inc Director - LudiwapInc President United States - HerculesTechnologies Inc - GuillemotOnline.com Inc Director - UbiVoices Inc - UbiSoft EntertainmentInc President andDirector united-states - Gameloft.com AS President denmark - Ubisoft MusicPublishing Inc - Ubisoft MusicInc. President andDirector - Ubisoft CanadaInc - Ubisoft Divertissements Inc Director canada - Gameloft.com PtyLtd Director australia - Gameloft AG President germany - LudiFactory SARL Co-manager CORPORATE GOVERNANCE 5

- Thrustmaster Inc australia - Ludiwap Inc Director 139 spain - Gameloft.com Pty Ltd President and Director canada - Gameloft.com Espana President and Director great-britain - Guillemot Logistique Inc. Director Director - Gameloft.com Ltd - Ubisoft Divertissements Inc - Ubisoft Canada Inc italy - Ubisoft Music Inc Director china - Ubisoft SpA Director sweden - Guillemot Logistics Ltd President spain - Gameloft.com AB Director Christian Guillemot - Gameloft.com Espana United States france Director Director and Executive Vice President - Guillemot Online.com Inc - Guillemot France SA - Hercules Technologies Inc Director and CEO - Thrustmaster Inc - Hercules Technologies SA - Sinister Games Inc - Thrustmaster SA - Ubi.com Inc Manager - Ludiwap Inc - Guillemot Administration SARL - Guillemot Logistique SARL italia - Guillemot Conditionnement SARL Director - Guillemot Logistique France SARL - Ubisoft SpA Director scandinavia - Jeuxvideo.com SA - Ubisoft France SA Director - Gameloft.com AS (Denmark) - Ludimédia SA - Gameloft.com AB (Sweden) - Ubi Studios SA - Ubi World SA - Ubi.com SA Marc Fiorentino germany France Director Manager - Gameloft AG - V-Prod UBISOFT • FINANCIAL REPORT 2007 subsidiaries under whichbenefitsaregranted. There isnoservice contract made between themembers of theBoardDirectors andtheissuer oranyofthegroup’s ended. The membersoftheBoardDirectors didnotreceive anystock optionsorshare subscriptions duringthefiscal year just No loansoradvances weremade tothecompany’s managersasprovided byArticleL225-43oftheFrenchCommercialCode. in employment,suchastheevent ofatakeover bid. No obligationhasbeen undertaken bythecompany infavour ofitscorporate managersrelated totheirterminationorchange on July 10,2006.This co-option was ratified bytheGeneral Meeting ofSeptember25,2006. Following theresignationofMrs.Yvette GuillemotonJune 23,2006,MrMarcFiorentinowasco-opted bytheBoardofDirectors Entertainment SA. thousand including€546paidbyUbisoft controlling theoneatwhichtheyheldoffice was€1.078 as defined byArticleL233-16andthecompany the fiscal year bythecompany, bycontrolled companies The totalgrosscompensation paidtomanagersduring fixed amountandarenotemployed under workcontracts. as CEOandExecutive Vice Presidents. They arepaida The Guillemotbrothersarecompensated for theirduties rCrsinGILMT€1,0 €250 i i 2400 i Nil Nil 03.31.06 Nil Nil Nil Nil Nil Nil Nil Nil €204,000 €204,000 €204,000 €200,200 €204,000 Nil Nil Nil Nil Nil Nil Nil Nil Nil 03.31.07 Nil €22,500 €22,500 €214,800 €22,500 €214.800 Mr ChristianGUILLEMOT €22,500 €251,575 €22,500 Mr Claude GUILLEMOT €182,518 Mr MichelGUILLEMOT €214,800 Mr Gérard GUILLEMOT Mr Yves GUILLEMOT Manager 5.7.2 5.8 5.7 5.7.1 Compensation ofmanagers and itssubsidiaries Services contractwiththe issuer and membersoftheBoardDirectors Compensation ofmanagers Stock optionandsharesubscriptionplan eueainrmnrto eueainremuneration remuneration remuneration remuneration rs ie fe aibe nkn rs ie vral inkind variable grossfixed inkind variable fees gross fixed oa Drcos Ttl Bnft oa oa Benefits Total Total Benefits Total Directors Total Directors received €135thousandindirectors’ fees. During the2006fiscal year theMembersofBoard totalling €250thousandperyear maximum. 25, 2006authorized thecompany topaydirectors’ fees tings oftheBoard,General Meeting ofSeptember spent inpreparingfor, andactively participatingin,mee- In –only partial–compensation for theirworkandthetime CORPORATE GOVERNANCE 5

Operations referred to in Article L621-18-2 141 5.9 of the French Monetary and Financial Code and Article 222-15-3 of the AMF’s internal regulations Operations involving securities and/or financial instruments

Name, first name Type of Date of Number Price per unit Amount of title at the date of the operation operation operation of shares operation

Operations by managers involving securities Michel Guillemot Souscription 05.17.06 2,033 2 €28.00 €56,924 Director (exercise of 30 500 BSA) Executive Vice President Yvette Guillemot 1 Subscription 05.17.06 1,066 2 €28.00 €29,848 Director (exercise of 15 990 BSA) Yves Guillemot Purchase 09.15.06 38,000 2 €43.47 €1,651,860 Director CEO Gérard Guillemot Sale 03.06.07 40,000 €33.66 €1,346,400 Director Executive Vice President Operations by related persons involving securities Nathalie Guillemot Subscription 05.17.06 800 2 €28.00 €22,400 (exercise of 12 000 BSA) Tiphaine Guillemot Subscription 05.17.06 186 2 €28.00 € 5,208 (exercise of 2 800 BSA) Joëlle Guillemot Subscription 05.17.06 800 2 €28.00 €22,400 (exercise of 12 000 BSA)

Guillemot Brothers Subscription Company managed by (exercise of 100 005 BSA) 05.17.06 6 667 2 €28.00 €186,676 Christian Guillemot, Sale 12.22.06 15,000 €26.06 €390,900.00 Executive Vice President of Sale 03.16.07 6,828 €36.90 €251,953.20 Ubisoft Entertainment SA Sale 03.19.07 5,000 €36.74 €183,700.00 Sale 03.20.07 6,200 €36.72 €227,664.00 Sale 03.21.07 7,700 €36.74 €282,898.00 Sale 03.22.07 4,272 €36.68 €157,551.36

1 Mrs Yvette Guillemot resigned as a Director on June 23, 2006 2 Operations achieved before the 2-for-1 stock split (Board of directors’ meeting on December 5,2006 with effect from December 11,2006) UBISOFT • FINANCIAL REPORT 2007 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6 143

REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS DRAWN UP IN 6 ACCORDANCE WITH ARTICLE L. 225-37 OF THE FRENCH COMMERCIAL CODE, CONCERNING THE CONDITIONS UNDER WHICH THE BOARD’S WORK IS PREPARED AND ORGANIZED AND THE INTERNAL CONTROL PROCEDURES IMPLEMENTED BY THE COMPANY 6.1 Conditions under which the Board’s work is prepared and organized 144 6.1.1 Composition and organization of the Board 144 6.1.2 Information about directors 144 6.1.3 Powers of the Board 144 6.1.4 Rules and principles adopted by the Board of Directors to determine the compensation and benefits of any kind granted to the company’s officers 144 6.1.5 Rules of procedure 145 6.1.6 Main topics discussed during the fiscal year 145 6.2 Internal control procedures 145 6.2.1 Definition and objectives of internal control 145 6.2.2 Principal risks 145 6.2.3 Scope of internal control 146 6.2.4 Components of internal control 146 6.2.4.1 General organization of internal control procedures at the group level 146 6.2.4.2 Implementation of resources 147 6.2.5 Processes related to the organization and preparation of published financial and accounting information 148 6.2.5.1 Financial Control procedures 148 6.2.5.2 Accounting and financial information control procedures 149 6.2.5.3 Cash and financial control procedures 150 6.2.5.4 Other procedures 150 6.3 Outlook 150 6.4 Limitations on the powers of the Chief Executive Officer 150 6.5 Auditor’s report, prepared pursuant to Article L. 225-235 of the French Commercial Code, on the report of the Chairman of the Board of Directors of Ubisoft Entertainment S.A. concerning the internal audit procedures used to prepare and process accounting and financial information 151 UBISOFT • FINANCIAL REPORT 2007 which specify thedirectors’ rightsand obligations. the lawsandstatutesbyits ownrulesofprocedure, The functions oftheBoardDirectors are defined by Chairman oftheBoardDirectors. tion ofaconfidential natureandprovided assuchbythe The directors areboundtosecrecy withregardtoinforma- mation totheBoardofDirectors. at alltimestoprovide significantexplanations andinfor- own initiative, andtheChief Executive Officer isavailable Directors mayalso obtain additional information, attheir Code. pursuant toArticleL.225-35oftheFrenchCommercial of theirdutiesandfor thepreparation ofdeliberations, information anddocuments required for theperformance The ChiefExecutive Officer provides thedirectors withall They maynotbemorethan80years ofage. appointed for atermofsixyears, whichmayberenewed. Each director mustownatleastone share.Directors are its managers. tion ofsubordinationordependence vis-à-visthegroupor assistance orotheragreement, orthroughanyotherposi- pany, eitherbyanemploymentcontract orbyaservice, ciated withUbisoft EntertainmentSA or arelated com- "Independent director” meansanyperson whoisnotasso- Guillemot family andoneindependent director. The BoardofDirectors consists offive membersofthe can befound inatablethatappearssection 5.1. details regardingthecomposition oftheBoardDirectors Directors fromthose ofgeneral management. Complete separate thefunctionsofChairmanBoard On October22,2001,theBoardofDirectors decided notto Executive Officer. of whomarealso Vice Presidents whoassisttheChief The BoardofDirectors iscomposed ofsixmembers,four internal control procedures implemented bythecompany. nization, reportsontheconditions under whichtheworkofBoard of Directors isprepared andorganized, aswellthe by theFinancialSecurity Act 2003-706andamended byLaw2005-842ofJuly 26,2005for economic confidence andmoder- This report,prepared pursuanttoArticlesL.225-37paragraph 6andL.225-68oftheFrenchCommercialCode, introduced 6.1.3 6.1.2 6.1 6.1.1 prepared andorganized Conditions underwhichtheBoard’sworkis directors Information about organization oftheBoard Composition and Powers oftheBoard    any compensation oradvantage. In case ofdeparture the corporate managersdon’t receive General Meeting. only 72%ofthetotalbudget allowance established bythe The BoardofDirectors also decided, asofsaiddate,touse tors’ fees andtoamendtherulesofprocedure accordingly. Directors decided toestablishrulesfor distributingdirec- At itsmeeting ofDecember 5,2006,theBoardof year indirectors’ fees. 25, 2006topaydirectors uptoatotalof€250,000per pany wasauthorized bytheGeneral Meeting ofSeptember Board meetings andtheiractive participation,thecom- assumed, aswellfor thetimespentin preparing for As (very partial)compensation for theresponsibilities Thus, theBoardofDirectors: commit allthedirectors asitisacollegial member. ting notices need nottake anyspecial form. Itsdeliberations or atanyotherlocation chosen bytheChairman;mee- the company's interestsmayrequire, attheregistered office and ensuresthattheyareimplemented. Itmeets asoften as The BoardofDirectors determines thecompany's policies transactions. through thefinancialstatementsorattimeofmajor information provided toshareholders andthemarkets oversees managementandensuresthequalityof Executive Officer orconcurrence ofthese functions); (separation ofthefunctionsChairmanandChief determines general management’sform oforganization with itscultureandvalues; defines thegroup’sobjectives andstrategy inaccordance 6.1.4 company’s officers granted tothe benefits ofanykind the compensationand Directors todetermine adopted bytheBoardof Rules andprinciples REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6

6.1.5 Rules of procedure 6.1.6 Main topics discussed during the fiscal year 145 The Board of Directors adopted its rules of procedure at its meeting of July 27, 2004. The work of the Board of Directors during the fiscal year These procedures provide, among other things, for the abi- primarily consisted of the following: lity to use videoconferencing. The videoconferencing equip-  reviewing and approving the half-yearly and annual ment used must have technical features that ensure genuine financial statements for the fiscal year ended March 31, participation in the Board meeting and allow the Board’s 2006; deliberations to be broadcast continuously.  reviewing and approving the forecast financial state- The rules of procedure were amended on December 5, 2006 ments; in order to add a “compensation” article concerning direc- tors’ fees.  reviewing the Ubisoft group’s strategic issues; The rules of procedure may be consulted by shareholders at  reviewing collective agreements in accordance with the company’s business address or at the registered office. Article L. 225-38 of the French Commercial Code. In accordance with Article L. 823-17 of the French Commercial Code, the auditors were invited to attend Board meetings at which the accounts were drawn up and reviewed. The Board met 12 times during FY 2006/07.

6.2 Internal control procedures

 assessment of risks and of their impact on each of the company’s activities; 6.2.1 Definition and objectives of internal control  classification of risks by priority;  assessment of the quality of the controls and preventa- Ubisoft has adopted the definition of internal control tive measures. contained in the AFEP/MEDEF report on corporate gover- nance in France. According to this definition, the objective of internal This descriptive analysis is part of a dynamic process that, control is to: in the long run, will enable Ubisoft to assess the relevance and effectiveness of its internal control procedures. The  ensure that the actions taken and operations carried out group drew on the recommendations made by the Autorité by the company’s management, as well as the conduct of des marchés financiers (AMF) in its report published on individuals, comply with the existing laws and regulations, January 22, 2007 and on the internal control guidelines for the policies established by the corporate bodies and the listed companies. company's own values, standards and rules; The preparation of this report is based on the control  ensure the accuracy and reliability of the accounting, methods described below and on the verifications carried financial and management data conveyed to the corporate out at the request of the group’s general management by bodies; the Internal Audit Department and other support depart-  prevent and manage risk resulting from the company's ments. activity and the risk of error or fraud.

6.2.2 The procedures put in place form an internal operational Principal risks framework which the company can develop into real risk management tools. In carrying out its activities, the group is exposed to a num- ber of risks. An analysis of the principal risks, their impact The objective of risk management and internal control on the company’s accounts and the main measures taken to procedures is to: manage them is presented in the chapter of the reference  identify potential risks that can impact the company’s document entitled “Risk Factors”. performance and undermine its strategic and financial These risks include: objectives, 1 Risk related to product strategy and brand positioning and  assess the actions that must be taken to control these management risks, 2 Risk related to market developments and the success of  monitor the actions taken and measure their effective- next-gen consoles ness. 3 Risk related to a top game being delayed or getting off to a The main risks identified by general management (cf. 6.2 poor start below) have been mapped out based on the following steps: 4 Risk related to recruitment and retention of talented  identification of all the company’s activities; employees UBISOFT • FINANCIAL REPORT 2007 also obtainadditional information, attheirowninitiative, documents andreportsneeded todo so. Directors may the half-yearly financialstatements.Ithasaccess toallthe drawing uptheannualfinancialstatementsand reviewing are implemented. Itoversees management,particularly by Determines thecompany's policiesandensuresthatthey Board ofDirectors nal control. to ensuretheproperfunctioningandmonitoringofinter- for developing theprocedures andresources putinplace Defines andguides thegroup’sstrategy. Heisresponsible Chairman andCEOUbisoft EntertainmentSA contribute tointernalcontrol aredescribed below: The organizationandroleofthevarious bodies that the grouplevel internal controlproceduresat General organization of 6.2.4.1 the headoffice teams. risk managementarecentralized functionsperformed by even thoughoversight andauditsofinternalcontrol and tives thusdefined areimplemented ateachsubsidiary, The strategies aimed atensuringattainmentoftheobjec- team. Each subsidiaryhasitsownmanagementand the subsidiaries’managementbodies. management (represented bytheBoardofDirectors) and Major strategies andobjectives aredetermined bygeneral mation company. companies, onemobilephonecompany andonedigitalani- tion companies, 28production companies, seven support 32 foreign companies, broken down asfollows: 20distribu- The Ubisoft groupismade upof25Frenchcompanies and 8 7 6 5 ter detail inthisreport. Accounting, financialandITriskwillbeexplained ingrea- acquired companies 12 11 10 9 6.2.4 6.2.3 sing partner Risk related totheterminationofacontract withalicen- tors Risk related tocustomerdependence Risk related todependence onsuppliersandsubcontrac- Legal andarbitration proceedings Risk related tointellectual property Financial risk Risk related tocomputer security Risk related tofutureacquisitions andintegration of control Components ofinternal control Scope ofinternal monthly consolidated financialstatementsonthe18 Administrative Management,preparesthegroup’s The Consolidation Department,whichreportsto processes. lysis andformalization oftheorganizationalandcomputer These departments mayalso oversee andapprove theana- that theyaccurately reflect thefinancialposition. preparation, auditandreview oftheaccounts toensure accounts totheAudit Departments, whichoversee the The accounting managersatthesubsidiariessend the half-yearly basis. the consolidation reporting package iscompleted ona accounts ontheninthbusinessdayoffollowing month; Each Accounting Departmentmanagerpreparesmonthly ral management. Budget objectives aredefined onanannualbasisbygene- compiling thebudgetbycost center andprofitcenter. between objectives andachievements. Itisresponsiblefor various levels ofresponsibility,andanalyzes discrepancies sets upprojected monthly reportingtools adapted tothe network ofmanagementcontrollers for thesubsidiaries, The GroupFinancialControlDepartmentcoordinates the decisions for thesubsidiary. rations managers,enablingthemtomake management relevant numericdata(sales,margins,costs, etc.)toope- Each subsidiary’sFinancialControlDepartmentsupplies panies. These departments arepresent atallofthegroup'scom- mission ofexpert assessment andcontrol. These include staff departments thatperform atwo-fold Accounting andFinanceDepartments internal control. It analyzes risksandmakes recommendations concerning fying operational andfinancialpractices atevery level. nal control process andestablishaframework for clari- quality ofthecontrols inaneffort toformalize theinter- conducts regularauditsatthesubsidiariesandverifies the This department, whichreportstogeneral management, Group InternalAudit Department ting inparticularwiththeConsolidation Department.It includes optimizingthegroup’staxexpense bycollabora- tion, identification andmanagement.Itsfunctionalso ensures thegroup’staxsecurity byorganizingriskpreven- jects. Together withthevarious internal departments, it foreign companies inanalyzing thetax aspects oftheirpro- Management, assistsandadvises thegroup’sFrenchand The Tax Department,whichalso reportstoAdministrative group’s activityandfinancialposition. lations inorder topresent anaccurate pictureofthe It ensurescompliance withtheexisting standardsandregu- accounting principles. the group,particularly viathemanualconcerning group accounts. Itpublishestheaccounting procedures used by expertise intermsofpreparingandanalyzing themonthly This department isthecentral pointofallthegroup’s business dayofthefollowing month. Board ofDirectors. provide significantexplanations andinformation tothe and theChiefExecutive Officer isavailable atalltimesto th REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6 provides fiscal oversight and organizes knowledge sharing of company data. among the group’s other departments. In terms of operations (sales and manufacturing), this 147 The Cash Management and Finance Department handles module has become the common platform used by the operations involving exchange rate derivatives and coordina- EMEA team (Europe/Middle East/Asia Zone) and the tes cash management for the French and foreign subsidiaries. zone's distribution subsidiaries. It ensures that policies governing the management of inte- PeopleSoft is a centralized application built on a single rest rate risk, foreign exchange risk and liquidity risk are database used by all subsidiaries, which allows them to consistent with published financial information. share the same product database, customer and supplier It is the central point for and verifies delegation of autho- files and, most importantly, the same transaction for- rity to a limited number of employees, who alone are mats. This software has multi-language and multi-cur- empowered by general management to process certain rency capabilities. financial transactions, in accordance with predefined This arrangement offers more reliable information for all thresholds and authorizations. participants in the supply chain. The Financial Communications Department provides the Computer data security financial information required for a proper understanding of the group's strategy to shareholders, financial analysts, Ubisoft implements an extensive automation policy. investors and so on. All financial announcements (as well In the area of accounting, the automation of data exchan- as press releases) are reviewed and approved by general ges (interfaces between accounting systems and consolida- management. Financial information is published in strict tion system, daily integration of banking transactions, compliance with the markets’ operational rules and the automated payment processing, etc.) makes processing principle of equality of treatment of shareholders. more secure. Human Resources and Benefits departments Particular attention is paid to the security of computer data and data processing (physical and logical access The role of the Human Resources and Benefits control, back-ups, updates, etc.). Departments is to ensure compliance with the provisions of the French Labor Code and to apply the group’s policies Controls are required to achieve a satisfactory level of regarding improvement of professional and personal per- security in the management and maintenance of computer formance through regular job evaluations, a development networks. plan, allocation of stock options, enrollment in the group These controls must guarantee: savings plan, training programs and so on.  security of data transmitted across the networks, Each year, the international HR departments collect data on a number of indicators (training programs, staff, etc.)  protection of connected departments against unauthori- from the subsidiaries in order to measure progress made in zed access, the area of human resources and supply the required infor-  separation of operational responsibility for networks mation to the other departments. from responsibility for IT operations, Each subsidiary’s HR department is responsible for deve-  definition of the responsibilities of those involved, loping and implementing its own HR policy, programs and tools aimed at satisfying recruitment needs, in accordance  development of management procedures for remote with the group’s HR guidelines, helping local teams create equipment, value for the group, and contributing to the development  controls that may be required to ensure the confidentia- of each employee’s potential at the subsidiary. lity, integrity and authenticity of data transmitted across The group’s Legal Departments (corporate law, contract public networks and to protect connected systems, law, litigation and intellectual property) assist and advise  availability of services and connected systems. the subsidiaries on legal matters. They coordinate com- Ubisoft’s Security Department is responsible for ensuring mon studies, or studies of interest to the group as a whole, and organizing the protection of the information system in and provide support to local entities in the area of legisla- terms of application security, server architecture, facilities tion to optimize the management of a variety of risks. and organization at the group level. The Information Technology Department (ITD) The group has also introduced guidelines concerning the Oversees the development of specific tools for all subsi- use of IT resources for all its employees in France and diaries and participates in the selection of IT solutions. It is Canada to ensure that all employees are aware of their responsible for implementing, coordinating and develo- rights and obligations with regard to these resources, the ping ERP (Enterprise Resource Planning) within the group. network and Internet services. More than a mere user It regularly monitors progress on IT projects and ensures manual, these guidelines serve as a code of ethics designed that the projects satisfy the needs of line personnel. It also to inform all employees of their responsibilities. provides the technical infrastructure and office software As a result, the concepts of confidentiality, intellectual required for the various business functions. property, data protection, resource integrity and so on are no longer just words but values to be embraced. The group 6.2.4.2 Implementation of resources protects itself internally so as to better safeguard its infor- mation systems. An approach focused on product integration In order for it to be applied worldwide in the short term, As a part of overall ERP operations, the purchasing this charter is adapted to reflect local laws as changes are management module is a good example of the integration made to it. UBISOFT • FINANCIAL REPORT 2007 areas: knowledge sharinganddiscussion inanyofthefollowing group’s employees viatheintranet inorder tofacilitate documentation systemthatcanbe accessed byallthe In termsofinternalcontrol, thegroup uses aformalized Shared andpublisheddocumentation    will make itpossibleto: comprehensive, formalized approachtointernalcontrol effectiveness oftheprocesses andrelated controls. This managers askthemselves basic questionsconcerning the and updatingofprocedures but,moreimportantly, tohelp tionnaires, itsgoalisnotonly toassistinthedevelopment Presented intheform ofstandardself-evaluation ques- and gettingtheminvolved init. management andalloperations managersofthisprocess comprehensive internalcontrol project aimed atinforming audit andriskmanagementprocess. Ithasalso launched a The GroupInternalAudit Departmenthasimplemented an Department. through thecreationofGroupInternalAudit nization ofinternalcontrol ofamore operational nature finance departments hasbeen supplemented bytheorga- control between thelocal andgroupaccounting and Since thesecond halfof2006,theorganizationinternal A jointself-evaluation project aspects ofshort-termprojects. the functionaldepartments affected bythemostcostly also approved atbudgetmeetings withtheChairman and Decisions concerning information systemupgrades are problems, etc.). requirements (newdevelopments, changesinpriorities, periodically totake intoaccount local prioritiesandactual be assessed twice ayear andtheplanwillbereviewed with atwo-year budget.The estimated cost ofthisplanwill A medium-term project planwasrecently developed along Planning andSales,depending onthetopic). (Finance, Administration, FinancialControl,HR,Business as themanagersofvarious functionaldepartments ger oftheimplementationteam(project manager),aswell ger oftheareainquestion(project owner)andthemana- to monitorthese projects. They areattended bythemana- Regular meetings (usually monthly) areorganized inorder implementation, includingapplicationdevelopment. The ITDmonitorsprojects fromtheanalysis phase to Ongoing improvements toapplications zations, ITapplicationproject management, etc. rance coverage, cash managementandpurchase authori- Some ofthetopicscovered bythese reviews include insu- regularly ontheprogress oftheactionplans. reviews areroutinely monitored andupdatesaregiven the InternalAudit Departmentinconnection withthese diaries. The recommendations andobservations made by This process entailsregular,targeted reviews atthesubsi- procedures. effectively monitorcompliance withthese controls and any problemareasidentified, rective andoptimizationmeasuresaimed atremedying improve operational andfinancialpractices throughcor- understand thequalityofcontrols atallthesubsidiaries, accounting andfinance departments. are, for themostpart,implemented by thevarious and processing offinancialandaccounting information       tion made available bythemarket andstaff. This plan isreviewed monthly based onthelatestinforma- coming year based onanticipated product release dates. The budget planisprepared bythesubsidiaries for the operations onthebasisofmonthly reporting. The grouphasimplemented aprocedure for monitoring Monthly reporting procedures Financial Control 6.2.5.1 Internal controlpr latest developments. Pre-closing activitiesaretherefore scheduled based onthe schedule andexpected significantaccounting treatments. tors tocoordinate theyear-end closingprocess intermsof Administrative Managementworkstogetherwith theaudi- Coordination withtheauditors information. cally bythevarious departments toensuredisclosure of Training andinformation sessions areorganized periodi- their functionalhierarchy. cally reviewing andupdatingtheprocedures atalllevels of Taxation andITDepartment)areresponsiblefor periodi- Control, Finance, HumanResources, LegalServices, (Consolidation, Accounting, InternalAudit, Financial the local level, managersofsupportfunctions To ensureuniform implementationofgroupprocedures at 6.2.5 recommendations. nal control aswelltargeted access toreportsand Internal audit:asitethatprovides information oninter- accounts, glossaries,ITprojects, etc.); and reportinginformation (rates, schedules, chartof such information asprocedures manuals,groupcontacts base accessible toallconcerned employees provides Accounting, finance andfinancialcontrol: ashared data- concerned; personnel orstaff personnel, depending onthejobs Legal: acommon document database shared withline worldwide; Human Resources: ashared areafor allHRdepartments nical documentation for eachdevelopment; IT: ashared database for retrieving functionalandtech- ments, studies,businessandanalyses; municating inter-siteinformation onprojects, develop- Operations: workareasintended for sharingandcom- accounting information published financialand preparation of the organizationand Processes relatedto ocedures related tothepreparation REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6

This reporting procedure also makes it possible to measure This systematic review process facilitates the early detec- each subsidiary’s performance and contribution to the tion of any problems prior to the year-end closing, and group’s results. For certain operational information, reduces the time needed to prepare the consolidated 149 management has daily access to data. financial statements. Meetings of the group’s general management, which are In an ongoing effort to improve the performance of its attended by the Administrative, Finance and Financial information system and meet the needs of a fast-growing Control departments, among others, are held to review group in terms of efficiency, responsiveness and reliabi- the various reporting indicators, analyze discrepancies lity, the group is considering implementing a new version between the actual accounts and initial forecasts, and fine- of the consolidation software in the near future. tune the half-yearly and annual forecasts on the basis of The Consolidation Department has defined procedures to actual results. allow the subsidiaries to better understand the tools and Responsibilities are distributed among these three divi- use them more effectively: sions in order to facilitate quality control of accounting  establishment of a group-wide chart of accounts, and financial data.  implementation of automatic mapping between the cor- A forecasting tool to support performance porate accounts and the consolidated financial state- The HFM consolidation tool is used for financial forecas- ments, ting.  creation of a user manual for the consolidation reporting Each of the group entities’ earnings forecasts are consoli- package, dated in a centralized application to allow:  development of a consolidation manual,  analysis at the entity level or for a specific line item,  development of a manual of accounting principles.  comparisons between actual results and forecasts, All the significant subsidiaries are integrated under  monthly, quarterly or other analyses. PeopleSoft/Oracle. The group continues to look for solu- tions that will eventually allow it to integrate an accoun- The tool is used by all the group’s entities, which allows a ting ERP system at the other foreign subsidiaries. comprehensive view of the group. The subsidiaries are res- ponsible for sending the group reliable reports that com- This deployment is designed to standardize and formalize ply with the procedures related to the requested financial the various accounting systems and is in keeping with our information. commitment to optimize the efficiency and reliability of strategic information processing. 6.2.5.2 Accounting and This system addresses the local needs of the subsidiaries financial information control and complies with the group’s standards. It provides the procedures ability to access and compare information at every level and to manage cash flows, thereby improving coordination Reliability of accounting and financial information among the departments. Ubisoft's accounting and financial information is prepared Each subsidiary must apply the existing group-wide proce- by Administrative Management under the control of the dures as regards monthly reporting, entry of accounting Chief Executive Officer, with final approval being the pre- data, year-end and half-year closings (schedule and for- rogative of the Board of Directors. mat) and quarterly forecasts. Each subsidiary’s accounts are prepared by the local The objective of all the IT procedures implemented is to accounting departments under their director’s supervi- ensure data integration. sion. The half-yearly financial statements are subject to a The Consolidation Department also collects and verifies limited review and the year-end closing is audited by the the accounting data mentioned in the group’s financial auditors of each entity. Accounting information is sent to announcements as well as data pertaining to the consolida- the Consolidation Department on the basis of a timetable ted financial statements. defined by Administrative Management. This data is verified by the company and the auditors. The company has invested in resources to simplify and increase the reliability of the process of producing the The group provides quarterly reports on sales and half- consolidated financial statements. yearly reports on results. The group uses Hyperion’s HFM tool for the collection and Accounting standards monthly reconciliation of the subsidiaries’ accounting Application of the IFRS standards is mandatory for annual data. This tool is used to automatically perform checks and financial statements published as of January 1, 2005 for tests of reasonableness on cash flows, the balance sheet, listed EEC companies. For Ubisoft, presentation of the certain income statement accounts, and so on. consolidated financial statements in accordance with the It allows fast, reliable data transmission and helps optimize IAS/IFRS standards applies as of the fiscal year ended the security of the consolidated financial statements. March 31, 2006 and includes a comparison with the fiscal year ended March 31, 2005. The consolidated financial statements are subject to a limi- ted review on September 30 and an audit on March 31 by Starting on April 1, 2006, the subsidiaries’ monthly the group's auditors. Periodic reviews throughout the fis- reports are sent in accordance with IFRS and the consoli- cal year allow a preliminary analysis of specific accounting dation reporting packages are audited according to these issues. same standards. UBISOFT • FINANCIAL REPORT 2007 powers expressly granted bylawandthe ArticlesofAssociation totheBoardofDirectors. You areinformed thattheChiefExecutive Officer exercises hisfunctionswithout anyparticularlimitations,subject to the pany’s strategy. gement tools. The objective istherefore toreevaluate riskanalysis eachyear based onchangesintheindustryandcom- The group’sgoalistodevelop adynamicapproachtorisk and control analysis inorder to offer managerseffective mana- ment control procedures. The groupplanstocontinue tomapoutitsrisks,implementanynewactionplans thatmaybeneeded, andidentify anddocu- tial acquisition ofacompany andsubmitsitsassessment to evaluates thestrategic interestofaproposed fullorpar- which reportstotheFinance Department. Itreviews and Acquisitions aremanaged bytheAcquisitions Department, mitting theparentcompany. to place orders withtheirmainsuppliersbydirectly com- Finance Department.Bankguarantees allowsubsidiaries guarantees, suretybonds,etc.)aremanaged bythegroup finance purchases, lettersofcredit, comfort letters,price Off-balance sheet commitments (bankguarantees to cash flowsandforecasts. basis, thusproviding aclearerpictureofthesubsidiaries’ assets byoptimizingliquiditymanagementonaday-to-day provides centralized managementofthegroup’scash By thesametoken, thegroupcashmanagementsoftware resources withinthegroup. management andsupportstheoptimizationoffinancial from acash-pooling system.This systemcentralizes cash financing needs ofthesubsidiaries,manywhichbenefit The CashManagementDepartmentis responsiblefor all Centralized decisionsandcontrolswithsubsidiaries prevention againstfraud, andso on). tory andthepreparerofpaymentensuringeffective rent operations, segregation ofdutiesbetween thesigna- signing authorityfor bankingtransactions, control ofcur- nal control procedures atitsownlevel (delegation of This meansthateachsignificantsubsidiary haslocal inter- signatures, computer access control procedures, etc.). lities, aregularly updated systemofauthorizationsand double signatureprocedure, secure tools for paymentfaci- with regardtocustomerreceipts andsupplierpayments(a and foreign subsidiariesconcerning managers’authority The grouphasestablished strictrulesatbothitsFrench Strict authorizationrules procedures Cash andfinancialcontrol 6.2.5.3 6.4 6.3 Executive Officer Limitations onthepowers of theChief Outlook French andforeign subsidiaries. lized orhave been proposed for 2007/08for boththe Several otherprocedures areintheprocess ofbeing fina- areas. ples ofsegregation ofdutiesand,therefore, control inall of authorizationandapproval, andtohighlighttheprinci- The aimofallthese procedures istodefine the principles dures. Payroll preparation andprocessing ofpost-payrollproce- Corporate veries, collection procedures andcustomerreporting. accounts, resolution ofdisputesregardingcustomerdeli- and customersoutside France, creationofcustomer Invoicing ofsubsidiaries(studios,distributionsubsidiaries) Customers General inventory procedures (internalprocedures). Inventory Each request mustbeapproved bythemanager. group. Purchases aremade based onproject requirements. vel expenses. Travel guidelines have been introduced atthe niture, physicalinventory offurnitureandequipment, tra- management ofdisposalscomputer equipment andfur- purchase orders, tracking ofitemsinstock, fixed assets, Management andaccounting ofpurchases, placement of Purchasing following areas: A numberofprocedures for Frenchsubsidiariesexist inthe Other procedures 6.2.5.4 decision ontheirown. decision. Noneofthegroup’ssubsidiariescanmake this the group’sgeneral management,whichmakes thefinal REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6

6.5 Auditor’s report 151 prepared pursuant to Article L. 225-235 of the French Commercial Code, on the report of the Chairman of the Board of Directors of Ubisoft Entertainment S.A. concerning the internal audit procedures used to prepare and process accounting and financial information

Dear Shareholders,

In our capacity as auditors of Ubisoft Entertainment SA and pursuant to the provisions of Article L. 225-235 of the French Commercial Code, we hereby present our report on the report prepared by the Chairman of your company's Board of Directors in accordance with the provisions of Article L. 225-37 of the French Commercial Code for the fiscal year ended March 31, 2007. The Chairman is required to give an account in his report of, among other things, the conditions under which the Board of Directors’ work was prepared and organized and of the internal control procedures implemented at the company.

Our task is to offer our observations in response to the information provided in the Chairman’s report regarding the inter- nal control procedures used to prepare and process accounting and financial information.

We have carried out our work in accordance with accepted professional standards in France. These standards require due diligence in order to assess the accuracy of the information provided in the Chairman’s report concerning the internal audit procedures used to prepare and process accounting and financial information. Specifically, this due diligence includes:

- Acquiring an understanding of the objectives and general organization of internal control and of the internal control pro- cedures used to prepare and process accounting and financial information, as described in the Chairman's report. - Acquiring an understanding of the work on which the information provided in the report is founded.

On the basis of this work, we have no comments regarding the information provided about the company’s internal control procedures used to prepare and process accounting and financial information, as contained in the report of the Chairman of the Board of Directors, prepared pursuant to the provisions of the last paragraph of Article L. 225-37 of the French Commercial Code.

Executed in Rennes on June 14, 2007 By the auditors AUDIT AMLD KPMG Audit A division of KPMG S.A. André METAYER Laurent PREVOST Partner Partner UBISOFT • FINANCIAL REPORT 2007 TEXT FOR DRAFT RESOLUTIONS SUBJECTED TO THE VOTE OF THE COMBINED GENERAL MEETING ON JULY 4, 2007 7 153

TEXT FOR DRAFT RESOLUTIONS SUBJECTED TO THE VOTE OF THE 7 COMBINED GENERAL MEETING ON JULY 4, 2007 7.1 Resolutions under the authority of the ordinary general meeting 154 7.2 Resolutions under the authority of the extraordinary general meeting 156 UBISOFT • FINANCIAL REPORT 2007 eevsacut€2,442,552.90 €2,640,739.44 €16,047,402.52 paid outduringthepreceding three fiscal years. The General Meeting also notesthatnodividends have been Reserves account Balance posted totheOther thus amountingto10%ofthelegalminimum tothelegal reserve up - Balance tosettlement ofthelosses carried - toprofit - as follows: allocate theprofitfor thefiscal year ended March31,2007 having readtheBoardofDirectors’ report,resolves to conditions required for OrdinaryGeneral Meetings and The General Meeting, having metthequorumandmajority 31, 2007) (Allocation ofprofitfor thefiscalyear endedMarch SECOND RESOLUTION 2007. charge oftheirdutiesfor thefiscal year ended March31, It therefore grants theDirectors fullandunqualified dis- in these reports. the transactions recorded inthese accounts orsummarized appendix), showingaprofitof€16,047,402.52,aswell sented (includingthebalance sheet, income statementand accounts for thefiscal year ended March31,2007,aspre- statutory auditors’report,approves thecorporate read theBoardofDirectors’ managementreportandthe rity conditions for OrdinaryGeneral Meetings andhaving The General Meeting, having metthequorumandmajo- ted tothedirectors) year endedMarch31,2007andfinaldischargegran- (Approval ofthecorporate accountsfor thefiscal FIRST RESOLUTION reports. tions recorded inthese accounts orsummarized inthese income statementandappendix),aswellthetransac- 31, 2007,aspresented (includingthebalance sheet, ted financialstatementsfor thefiscal year ended March consolidated financialstatements,approves the consolida- management andtheauditors’reportregarding read theBoardofDirectors’ reportregardingthegroup’s rity conditions for OrdinaryGeneral Meetings andhaving The General Meeting, having metthequorumandmajo- the fiscalyear endedMarch31,2007) (Approval oftheconsolidatedfinancialstatements for THIRD RESOLUTION oa muto -€198,186.54 -€13,406,663.08 to anamountof forward account 7.1 ordinary generalmeeting Resolutions undertheauthorityof 2013. vote ontheaccounts ofthefiscal year ended March31, Ordinary General Meeting ofShareholders convened to term for sixyears, which willexpire attheendof expiring attheendofthismeeting, resolves torenewsaid noted thatthetermofMr.Yves Guillemot,Director, is rity conditions for OrdinaryGeneral Meetings andhaving The General Meeting, having metthequorumandmajo- (Renewal ofthetermadirector) FIFTH RESOLUTION the previous fiscal year, ascited therein. and theagreements thatcontinued tobeperformed during ments made duringthefiscal year ended March31,2007 conclusions ofsaidreportandapproves thenewagree- ting tothefiscal year ended March31,2007,notesthe 225-40 andseq. oftheFrenchCommercialCode andrela- the agreements andcommitments stipulated inArticlesL. and having readthespecial auditors’reportconcerning rity conditions required for OrdinaryGeneral Meetings The General Meeting, having metthequorumandmajo- Commercial Code) lated inArticlesL.225-40andseq.oftheFrench (Approval oftheagreementsandcommitmentsstipu- FOURTH RESOLUTION noted thatthetermofMr.Gérard Guillemot,Director, is rity conditions for OrdinaryGeneral Meetings andhaving The General Meeting, having metthequorumandmajo- (Renewal ofthetermadirector) EIGHTH RESOLUTION 2013. vote ontheaccounts ofthefiscal year ended March31, Ordinary General Meeting ofShareholders convened to term for sixyears, whichwillexpire attheendof expiring attheendofthismeeting, resolves torenewsaid noted thatthetermofMr.Claude Guillemot,Director, is rity conditions for OrdinaryGeneral Meetings andhaving The General Meeting, having metthequorumandmajo- (Renewal ofthetermadirector) SEVENTH RESOLUTION 2013. vote ontheaccounts ofthefiscal year ended March31, Ordinary General Meeting ofShareholders convened to term for sixyears, which willexpire attheendof expiring attheendofthismeeting, resolves torenewsaid noted thatthetermofMr.Michel Guillemot, Director, is rity conditions for OrdinaryGeneral Meetings andhaving The General Meeting, having metthequorumandmajo- (Renewal ofthetermadirector) SIXTH RESOLUTION TEXT FOR DRAFT RESOLUTIONS SUBJECTED TO THE VOTE OF THE COMBINED GENERAL MEETING ON JULY 4, 2007 7

expiring at the end of this meeting, resolves to renew said the conditions provided by law pursuant to Articles L. 225- term for six years, which will expire at the end of the 209 et seq. of the French Commercial Code and in accor- Ordinary General Meeting of Shareholders convened to dance with the applicable provisions of European 155 Regulation 2273/2003 of December 22, 2003 and the vote on the accounts of the fiscal year ended March 31, General Regulations of the Autorité des Marchés 2013. Financiers (AMF), to purchase, retain and sell shares in the company up to a limit of 10% of the share capital existing NINTH RESOLUTION at any time, with said percentage applying to capital adjus- (Renewal of the term of a director) ted on the basis of the transactions affecting it subsequent to this meeting. It is understood that the maximum buyback The General Meeting, having met the quorum and majo- percentage of shares acquired by the company for the pur- rity conditions for Ordinary General Meetings and having pose of their retention and delivery at a later date in noted that the term of Mr. Christian Guillemot, Director, exchange or as payment for external growth operations is is expiring at the end of this meeting, resolves to renew limited to 5% of the capital, as provided by law. said term for six years, which will expire at the end of the Ordinary General Meeting of Shareholders convened to These share purchases and sales may be made for the pur- vote on the accounts of the fiscal year ended March 31, pose of any allocation allowed by law and the regulations 2013. in force either now or in the future, and particularly in the following cases: TENTH RESOLUTION - to ensure the liquidity of Ubisoft Entertainment S.A.’s share and to stimulate it on the secondary market (Renewal of the term of a director) through an investment service provider acting indepen- The General Meeting, having met the quorum and majo- dently, in accordance with the code of ethics recognized rity conditions for Ordinary General Meetings and having by the AMF; noted that the term of Mr. Marc Fiorentino, Director, is - the delivery of shares in connection with the exercise of expiring at the end of this meeting, resolves to renew said rights attached to securities granting entitlement by any term for six years, which will expire at the end of the means, either immediately or subsequently, to the com- Ordinary General Meeting of Shareholders convened to pany’s share capital; vote on the accounts of the fiscal year ended March 31, 2013. - the allotment of shares to employees and corporate offi- cers of the Ubisoft group in any format allowed by law, including as part of any company gainsharing plan, ELEVENTH RESOLUTION employee savings plan, bonus issue of shares or stock (Renewal of the term of a primary auditor) option plan for the benefit of some or all of the group’s employees or corporate officers; The General Meeting, having met the quorum and majo- rity conditions for Ordinary General Meetings and having - the retention of shares for delivery at a later date in noted that the term of the primary auditor KPMG SA, exchange or as payment for future external growth ope- represented by Laurent Prévost, 15, rue du Professeur rations, up to a limit of 5% of the existing capital; Jean Pecker - CS 14217 - 35042 Rennes cedex, is expiring - the cancellation of shares, subject to the adoption of the at the end of this meeting, resolves to renew said term for Fifteenth Resolution of this General Meeting; six years, i.e. until the end of the Ordinary General Meeting of Shareholders convened to vote on the accounts - the performance of any market practice that may come of the fiscal year ended March 31, 2013. to be recognized by law or by the Autorité des Marchés Financiers. TWELFTH RESOLUTION The maximum authorized unit purchase price, excluding expenses, is €70, or a maximum total of €317,887,276 (Appointment of an alternate auditor) based on the share capital as of April 30, 2007, with the The General Meeting, having met the quorum and majo- understanding that in the event of a share capital increase rity conditions for Ordinary General Meetings and having through the capitalization of reserves, the allocation of noted that the term of Mr. Pierre Berthelot, alternate bonus shares and/or a stock split or consolidation, the auditor, is expiring at the end of this meeting, resolves to maximum unit purchase price and the maximum program appoint as his replacement Mr. Prashant Shah – 7, boule- price will be revised accordingly. vard Einstein – BP 41125 – 44311 Nantes Cedex 3, for a Use of the authorization may not result in the number of term of six years, i.e. until the end of the Ordinary General shares held directly or indirectly by the company excee- Meeting convened to vote on the accounts of the fiscal ding 10% of the number of shares comprising the share year ended March 31, 2013. capital. Shares may be bought, sold or transferred by any means. THIRTEENTH RESOLUTION These means include private transactions, sales of blocks (Authorization for the purchase, retention or sale of of shares, sales with the option to repurchase, the use of Ubisoft Entertainment shares) any derivative financial instrument negotiated on a regu- lated market or by private agreement, and the implemen- The General Meeting, having met the quorum and majo- tation of operational strategies. rity conditions required for Ordinary General Meetings and having read the Board of Directors’ report, authorizes Said shares may be bought, sold or transferred on one or the Board of Directors, with the right of delegation under more occasions and at any time, except during public offe- rings of company shares. UBISOFT • FINANCIAL REPORT 2007 Combined General Meeting ofSeptember25,2006. immediately terminatesthe authorizationgranted bythe With regardtotheunused portion,theGeneral Meeting months fromthedateofthisGeneral Meeting. This authorizationisgranted for a period ofeighteen all decisions andcomplete allformalities. Articles ofAssociation accordingly and,ingeneral, make account, record thecompletion thereof, amendthe charges againstanyreserve, earningsorpremium the termsandconditions thereof, make thenecessary within thelimitsandattimesitdetermines, establish tions provided bylaw,tocarryoutthese transactions Directors, withtherightofdelegation under thecondi- The General Meeting grants allpowers totheBoardof prior orsubsequent tothe dateofthismeeting. by thethirteenth resolution submitted tothismeeting or chases resultingfromsharepurchase programs authorized which thecompany holdsormayhold asaresultofpur- in any24-monthperiod, viathecancellation ofshares capital, uptoamaximumof10%thecompany’s capital and ononeormoreoccasions, withthereduction ofshare Board ofDirectors toproceed, based solely onitsdecisions L. 225-209oftheFrenchCommercialCode, authorizesthe tors’ special report,andrulinginaccordance withArticle having readtheBoardofDirectors’ reportandtheaudi- rity conditions for Extraordinary General Meetings and The General Meeting, having metthequorumandmajo- of shares) reduce thecompany'ssharecapitalviacancellation (Authorization granted totheBoardofDirectors FIFTEENTH RESOLUTION includes these modified objectives. Directors toprepareanamended program description that General Meeting grants allpowerstotheBoardof legislation orbytheAutorité des MarchésFinanciers,the share buybackprograms areexpanded orsupplemented by In addition, intheevent thattheauthorized objectives of take whatever actionmaybenecessary. and make anydeclarations toanyagencyand,ingeneral, dance withlegalrequirements, carryoutanyformalities poses, allocate orre-allocate sharesacquired inaccor- documents includingthose required for informational pur- market orders, signanyagreements, prepareany tions provided bylaw,toplace anystock exchange oroff- Directors, withtherightofdelegation under thecondi- The General Meeting grants allpowerstotheBoardof ired objectives. provided bylaw,ofthesharesacquired tothevarious des- where applicable,thereallocation, under theconditions cancellations thuscompleted andoftheallocation or, annual General Meeting ofsharepurchases, transfers or The BoardofDirectors willinform shareholders ateach 7.2 extraordinary generalmeeting Resolutions undertheauthorityof formalities required bylawwherever necessary. meeting fullpowerstofilealldocuments andcarryoutall grants thebearerofacopy orexcept oftheminutesthis rity conditions required for OrdinaryGeneral Meetings, The General Meeting, having metthequorumandmajo- (Vesting ofpowersfor legalformalities) FOURTEENTH RESOLUTION shareholders ofrecord. above conditions orintheform ofbonussharesissued to warrants maybeissued bysubscription offer under the share capitaltopermitsaidwarrants tobeexercised. Said tal, andauthorizestheBoardofDirectors toincrease the for securities representing ashareinthecompany's capi- (c) warrants granting their holders therighttosubscribe to beissued for thispurpose; representing ashareinthecompany's capitalandissued or tion, atanytimeoronafixed date,ofsecurities nation ofthese meansorinanyotherway,tothealloca- exchange, redemption, presentation ofawarrant, acombi- (b) securities givingaright, bysubscription, conversion, tion warrants; (a) sharesinthecompany, withorwithoutsharesubscrip- ders, bothinFrance and abroad: deems appropriate, withpre-emptive rightsofsharehol- or moreoccasions, intheproportionsandattimesit L. 228-97oftheFrenchCommercialCode, toissue,onone Articles L.225-129,225-129-2and228-91through the applicablelawsandregulationsinparticular 1°) Authorizes theBoard ofDirectors, inaccordance with and theauditors’special report: Meetings andhaving readtheBoardofDirectors’ report rity conditions required for Extraordinary General The General Meeting, having metthequorumandmajo- ting entitlementtothecompany’scapital) emptive rights, ofsharesand/oranysecuritiesgran- increase thesharecapitalthroughissue,withpre- (Delegation ofauthoritytotheBoardDirectors SIXTEENTH RESOLUTION September 25,2006topurchase company shares. tion granted bytheCombined General Meeting of unused portion,itimmediately terminatestheauthoriza- from thedateofthisGeneral Meeting. Withregardtothe This authorizationisgranted for aperiod of18months TEXT FOR DRAFT RESOLUTIONS SUBJECTED TO THE VOTE OF THE COMBINED GENERAL MEETING ON JULY 4, 2007 7

Securities other than shares issued pursuant to this resolu- the prices and terms of the issues; to set the amounts to be tion may be issued either in euros or in a foreign currency issued; to set the subscription dates and dated dates of the

or in any other currency unit established with reference to securities to be issued, including retroactively; to define 157 several currencies. the method of payment for the shares or other securities issued, the listing of the shares created, the servicing of 2°) Resolves that the maximum nominal amount of share the new shares and the exercise of rights attached thereto; capital increases that may be carried out immediately where applicable, to define their buyback terms on the and/or subsequently by virtue of this authorization may stock exchange; in general, to take any necessary action not exceed €2,000,000, with the understanding (i) that this and to sign any agreements needed to successfully com- maximum amount is set without regard to the number of plete said issues; to note the share capital increase(s) ordinary shares that may be issued to reflect any adjust- resulting from any issues completed under this authoriza- ments made, in accordance with the law and applicable tion, and to amend the Articles of Association accordingly. contractual provisions, to preserve the rights of holders of securities or other rights granting entitlement to the com- In addition, the Board of Directors or its Chairman is pany’s shares, and (ii) that the maximum nominal amount empowered, where applicable, to charge to the issue pre- of the share capital increases that may be carried out mium(s) all and any costs, and notably expenses, dues and immediately and/or subsequently by virtue of this resolu- fees arising from the completion of the issues. tion will be included in the total maximum of €4,000,000 set out in this meeting’s twenty-third resolution. In case of issues of debt securities, the Board of Directors 3°) Resolves that shareholders may exercise their pre- will have full powers, including the right of delegation to emptive rights, under the conditions provided by law, on a the Chairman, to decide whether said securities will be non-reducible basis. In addition, the Board of Directors subordinated or not, to set their interest rate, term, fixed will be authorized to grant shareholders the right to subs- or variable redemption price, with or without premium, cribe, on a reducible basis, for a number of shares above amortization terms based on market conditions, and the their basic fixed entitlement, in proportion to the subscrip- conditions under which such securities will give their hol- tion rights they hold and, in any event, up to the limit of ders a right to the company's shares. their application. SEVENTEENTH RESOLUTION If subscriptions on a non-reducible and, where applicable, reducible basis do not absorb the entire issue of shares or (Delegation of authority to the Board of Directors to securities as stipulated above, the Board may use one or increase the share capital through the issue, without more of the following options in the sequence it considers pre-emptive rights, of shares and/or any securities the most appropriate: granting entitlement to the company’s capital) - it may limit the issue to the amount of the subscriptions, The General Meeting, having met the quorum and majo- provided that said amount reaches at least three-fourths rity conditions required for Extraordinary General of the approved issue; Meetings and having read the Board of Directors’ report - it may freely allocate all or some of the shares and/or and the auditors’ special report: other securities not subscribed for; 1°) Authorizes the Board of Directors, in accordance with - it may make a public offering of all or some of the shares applicable laws and regulations and in particular Articles and/or other securities not subscribed for. L. 225-129, L. 225-129-2, L. 225-135, L. 225-136 and L. 228-91 through L. 228-97 of the French Commercial 4°) Notes that, where applicable, the above authorization Code, to issue, on one or more occasions, in the propor- automatically entails, in favor of holders of securities that tions and at the times it deems appropriate, without pre- may be issued granting future entitlement to the com- emptive rights of shareholders, both in France and abroad: pany’s shares, shareholders’ express waiver of their pre- emptive rights to which such securities give a right. (a) shares to which share subscription warrants for the company’s shares may nor may not be attached; 5°) Resolves that the maximum principal nominal amount of debt securities granting entitlement to the capital may (b) securities giving a right, by subscription, conversion, not exceed €100,000,000, or its equivalent value if issued exchange, redemption, presentation of a warrant, a combi- in a foreign currency or any currency unit established nation of these means or in any other way, to the alloca- with reference to several currencies as of the date on tion, at any time or on a fixed date, of securities which the issue is approved, with the understanding that representing a share in the company's capital and issued or said amount applies to all debt securities whose issue is to be issued for this purpose; delegated to the Board of Directors by this General (c) warrants granting their holders the right to subscribe Meeting. for securities representing a share in the company's capi- 6°) Resolves that this authorization is, in accordance with tal, and authorizes the Board of Directors to increase the the provisions of Article L. 225-129-2 of the French company’s share capital to permit said warrants to be exer- Commercial Code, granted to the Board of Directors for a cised. Said warrants may be issued by subscription offer period of 26 months and supersedes any previous authori- under the above conditions or in the form of bonus shares zation having the same purpose. issued to shareholders of record. The Board of Directors will have full powers, with the right Securities other than shares issued pursuant to this resolu- of delegation under the conditions provided by law, to use tion may be issued either in euros or in a foreign currency this authorization, and in particular to determine the dates or in any other monetary unit established with reference to and procedures for such issues, as well as the form and several currencies. characteristics of the securities to be created; to approve UBISOFT • FINANCIAL REPORT 2007 stock for the securities ofanothercompany listed onone Commercial Code, involving theexchange ofcompany the company, pursuanttoArticleL.225-148oftheFrench ment ofsecurities contributed toatakeover bidinitiated by ment toaportionofthecompany’s sharecapitalinpay- and/or securities granting immediate ordeferred entitle- authorization toissue,ononeormoreoccasions, shares 8°) Meeting. is delegated totheBoardofDirectors by this General that saidamountappliestoalldebt securities whose issue date onwhichtheissueisapproved, withtheunderstanding established byreference toseveral currenciesasofthe value ifissued inaforeign currencyora unit securities willnotexceed €100,000,000,oritsequivalent 7°) viously. tely orsubsequently arecomparable tosharesissued pre- regardless ofwhetherthesecurities tobeissued immedia- applicable lawsandregulationsasofthedateissue, rants, beatleastequal totheminimumprice stipulated by warrant issueprice inthecase ofsharesubscription war- under theabove authorizationwill,after inclusionofthe ting entitlementtothecapitalthatareorwillbeissued to thecompany for eachofthesharesandsecurities gran- 6°) emptive rightstowhichsuchsecurities give aright. pany’s shares,shareholders’ express waiver oftheirpre- may beissued granting futureentitlementtothecom- automatically entails,infavor ofholders ofsecurities that 5°) freely allocate allorsome ofthesharesand/orother - whereapplicable, limittheissuetoamountof - most appropriate: more ofthefollowing optionsinthesequence itconsiders as stipulated above, theBoardofDirectors mayuse oneor the publicdo notabsorb theentireshareorsecurities issue 4°) both areducible andnon-reducible basis. if theBoardofDirectors so decides, itmaybeexercised on preferred rightwillnotcreatenegotiablerights;however, the period andunder theconditions set bytheBoard.This preferred subscription righttoanypartoftheissue,for that theBoardofDirectors maygrant theshareholders a ders tothesecurities tobeissued, withtheunderstanding 3°) set outinthetwenty-thirdresolution. zation willbeincluded inthetotalmaximumof€4,000,000 immediately and/orsubsequently byvirtue ofthisauthori- of thesharecapitalincreases thatmaybecarried out pany’s shares,and(ii)thatthemaximumnominalamount securities orotherrightsgranting entitlementtothecom- contractual provisions, topreserve therightsofholders of ments made, inaccordance withthelawandapplicable ordinary sharesthatmaybeissued toreflect anyadjust- maximum amountisset withoutregardtothenumber of not exceed €2,000,000,withtheunderstanding (i)thatthis and/or subsequently byvirtueofthisauthorization may capital increases thatmaybecarried outimmediately 2°) securities notsubscribed for. met, subscriptions iftheconditions provided bylawhave been Resolves thatthesumaccruing toorthatshouldaccrue Resolves that,ifsubscriptions bytheshareholders and Resolves tocancel thepre-emptive rightofsharehol- Notes that,whereapplicable,theabove authorization Resolves thatthemaximumnominalamountofshare Resolves thatthemaximumprincipalamountofdebt Resolves thattheBoardofDirectors mayuse this ders arighttothecompany's shares. conditions under whichsuchsecurities willgive theirhol- amortization termsbased onmarket conditions, andthe or variable redemption price, withorwithoutpremium, subordinated ornot,toset theirinterestrate, term,fixed the Chairman,todecide whethersaidsecurities willbe will have fullpowers,including therightofdelegation to In case ofissuesdebt securities, theBoardofDirectors ted bysuchissues. premium(s), includingtheexpenses, duesandfees genera- where appropriate,chargeallcosts totheissue Furthermore, theBoardofDirectors oritsChairmanmay, tion, andtoamendtheArticlesofAssociation accordingly. resulting fromanyissuescompleted under thisauthoriza- plete saidissues;tonotethesharecapitalincrease(s) and tosignanyagreements needed tosuccessfully com- stock exchange; ingeneral, totake anynecessary action where applicable,todefine their buyback termsonthe the newsharesandexercise ofrightsattached thereto; issued, thelistingofsharescreated, theservicing of the method ofpaymentfor thesharesorothersecurities securities tobeissued, includingretroactively; todefine issued; toset thesubscription datesanddated dates ofthe the prices andtermsoftheissues;to set theamountstobe characteristics ofthesecurities tobecreated; toapprove and procedures for suchissues,aswelltheform and this authorization,andinparticulartodetermine thedates of delegation, under theconditions provided bylaw,touse The BoardofDirectors willhave fullpowers,withtheright preference period toshareholders. rization having thesamepurpose andoptionofgranting a a period of26monthsandsupersedes anyprevious autho- Commercial Code, isgranted totheBoardofDirectors for provisions ofArticleL.225-129-2theFrench 9°) ingeneral, take allnecessary actionandsignallagree- - ifnecessary, chargeallcosts andfees generated bythe - postthedifference between theissueprice ofthenew - establishtheamountstobe issued anddetermine the - record thenumberofsharesexchanged; - establishtheexchange parityand,whereapplicable,the - under theconditions provided bylaw: The BoardofDirectors may,withtherightofdelegation autonomously. convertible bondsandshare subscription warrants issued securities mayentitlethem,whichwillbeintheform of ders oftheirpre-emptive righttotheshareswhich This authorizationincludes anexpress waiver bysharehol- pre-emptive righttosaidsharesandsecurities. favor oftheholders ofthese securities, theshareholders’ 148 oftheCommercialCode, andresolves toeliminate,in of thestock exchanges referred toinsaidArticleL.225- cessfully completed. ments toensurethattheauthorized transaction issuc- authorized transaction tothis“sharepremium”account; which therightsofallshareholders willapply; account ontheliabilitiesside ofthebalance sheet, to shares andtheirface value toa“sharepremium” terms oftheissueandform ofthesecurities; amount ofthebalance tobepaidincash; Resolves thatthisauthorization, inaccordance withthe TEXT FOR DRAFT RESOLUTIONS SUBJECTED TO THE VOTE OF THE COMBINED GENERAL MEETING ON JULY 4, 2007 7

EIGHTEENTH RESOLUTION Each share capital increase may be conducted only up to the number of shares subscribed for by the current and (Delegation of authority to the Board of Directors to former employees, either individually or through com- 159 increase the share capital through the issue of shares pany mutual funds or open-ended investment companies reserved for current and former employees enrolled governed by Article L. 214-40-1 of the French Monetary in a Group savings plan) and Financial Code. The General Meeting, having met the quorum and majo- The Board of Directors will have full powers, with the rity conditions for Extraordinary General Meetings and right of delegation under the conditions provided by law, having read the Board of Directors’ report and the audi- to use this authorization in accordance with the condi- tors’ special report, and in accordance with the provisions tions that have been defined, and in particular to: of Articles L. 225-129, L. 225-129-2, L. 225-129-6 and L. 225-138-1 of the French Commercial Code and Articles - define the characteristics, amount and procedures of any L. 443-1 et seq. of the French Labor Code: issue; 1°) Authorizes the Board of Directors to increase the - decide whether the shares may be subscribed for directly share capital at its sole discretion, on one or more occa- by current and former employees enrolled in a savings sions and at the times and according to the procedures plan or through company mutual funds or open-ended determined by it, under the conditions established by law, investment companies governed by Article L. 214-40-1 through the issue of ordinary shares or securities granting of the French Monetary and Financial Code; entitlement to the company’s existing ordinary shares or those to be issued, to be subscribed for in cash and reser- - determine the companies and current and former ved for current and former employees of the company and employees concerned; affiliated companies or groups, as defined in Article L. - determine the nature of and procedures for the share 225-180 of the French Commercial Code, who are enrol- capital increase, as well as the procedures for the issue; led in a group savings plan. - where applicable, define the seniority conditions that 2°) Resolves (i) that the nominal amount of any immediate must be met by recipients in order to subscribe for new or subsequent increase in the company’s share capital ordinary shares or securities issued as a result of the resulting from all issues carried out by virtue of this autho- share capital increases covered by this resolution; rization is set at 0.05% of the total share capital as of the day on which the decision is made by the Board of - determine the amounts of these issues and define the Directors, with the understanding that this maximum subscription prices, conditions and procedures for any amount is defined without regard to the face value of the issue of shares or securities completed by virtue of this ordinary company shares that may be issued to reflect authorization, including the dated date and payment and adjustments made, in accordance with the law and applica- delivery procedures; ble contractual provisions, to protect the rights of holders - define the start and end dates of the subscriptions; of securities or other rights granting entitlement to the capital, and (ii) that the nominal amount of any immediate - note the completion of the share capital increase or subsequent increase in the company’s share capital through the issue of ordinary shares up to the amount of resulting from issues carried out by virtue of this authori- ordinary shares that will actually be subscribed for; zation is included in the maximum of €4,000,000 set out in - at its own discretion and as it deems necessary, charge the twenty-third resolution. the cost of the share capital increases against the 3°) Resolves to eliminate, in favor of current and former amount of the premiums relating thereto and deduct employees enrolled in a group savings plan, the sharehol- from this amount the sums needed to ensure that the ders’ pre-emptive right to ordinary shares or securities legal reserve is equal to one-tenth of the new capital granting entitlement to ordinary shares issued under this after each increase; authorization. - in general, carry out all acts and formalities, take all 4°) Resolves that the subscription price of the shares or measures or decisions and sign all appropriate or neces- securities issued will be determined under the conditions set sary agreements in order to (i) ensure that the issues forth in Article L. 443-5 of the French Labor Code. under this authorization are successfully completed, spe- 5°) Resolves to set the maximum discount offered under a cifically as regards the issue, subscription, delivery, start savings plan at 15% of the average opening price of Ubisoft of dividend entitlement and listing of the shares created, Entertainment S.A. stock on the Euronext Eurolist market the servicing of the new shares and the exercise of rights during the 20 trading sessions preceding the day of the deci- attached thereto; (ii) note the final completion of the sion establishing the subscription start date, with the unders- share capital increase(s) and amend the Articles of tanding that the Board of Directors may reduce this discount Association accordingly to reflect these share capital as it deems appropriate, and specifically in the event that increases; and (iii) carry out the formalities related to those enrolled in a company savings plan are offered securi- the completion of the share capital increases and, in ties on the international and/or foreign market in order to general, take whatever action may be necessary. meet the requirements of applicable local laws. This authorization is valid for 26 months following the date of 6°) Also resolves that the Board of Directors may, pur- this General Meeting and supersedes any previous authoriza- suant to Article L.443-5 of the French Labor Code, provide tion having the same purpose. for the bonus issue of shares or other securities granting entitlement to the company’s capital under the conditions provided by law and the regulations. UBISOFT • FINANCIAL REPORT 2007  Board ofDirectors: 4°) of Directors pursuanttoapplicablelawsandregulations. other thanfor adjustmentsthatmustbemade bytheBoard shares maynotbemodified duringthetermofoption, The price set for thesubscription orpurchase ofordinary withregardtooptionspurchase ordinaryshares,the - withregardtooptionssubscribe for ordinaryshares, - tations: the optionstorecipients, subject tothefollowing limi- set bytheBoardofDirectors onthedatewhichitgrants ordinary sharespaidbythose receiving theoptionswillbe 3°) tion. set outinthetwenty-thirdresolu-maximum of€4,000,000 ried outbyvirtueofthisauthorizationisincluded inthe tal resultingfromsubsequent issuesofordinarysharescar- nominal amountoftheincrease inthecompany’s sharecapi- rights granting entitlementtothecapital,and(ii)that sions, toprotect therightsofholders ofsecurities orother accordance withthelawandapplicablecontractual provi- shares thatmaybeissued toreflect adjustmentsmade, in without regardtotheface value ofthecompany’s ordinary decision, withtheunderstanding thatthismaximumisset res existing onthedateofBoardDirectors’ grant rization maynotexceed 3.5%ofthenumberordinarysha- options granted bytheBoardofDirectors under thisautho- be subscribed for orpurchased bythose exercising the 2°) 10% ofthesharecapital. L. 225-180oftheCommercialCode whoholdmorethan affiliated companies under theconditions set outinArticle grant optionstoofficers andemployees ofthecompany or the CommercialCode, theBoardofDirectors maynot that, pursuanttotheprovisions ofArticleL.225-182 ordinary sharesinthecompany, withtheunderstanding Commercial Code, optionstosubscribe for orpurchase conditions set outinArticleL.225-180oftheFrench cers ofthecompany orofaffiliated companies under the members chosen byitfromamongtheemployees andoffi- Code, togrant, ononeormoreoccasions, tothestaff Articles L.225-177etseq. oftheFrenchCommercial 1°) and theauditors’special report: Meetings andhaving readtheBoardofDirectors’ report rity conditions required for Extraordinary General The General Meeting, having metthequorumandmajo- nary shares) grant optionstosubscribefor and/orpurchaseordi- (Authorization given totheBoardofDirectors NINETEENTH RESOLUTION grant date. and L.225-179oftheFrenchCommercialCode asofthe than theapplicablelimitset outinArticlesL.225-177 purchase price oftheordinary sharesmaynotbeless of theFrenchCommercialCode asofthegrant date; less thantheapplicablelimitset outinArticleL.225-177 the subscription price oftheordinarysharesmaynotbe ments arepublished; or failing these, the annualcompany financialstate- the dateonwhichconsolidated financialstatements, •during the10trading sessions preceding andfollowing Resolves (i)thatthenumber ofordinarysharesthatmay Resolves thatthesubscription orpurchase price ofthe Notes thattheoptionsmaynotbegranted bythe Authorizes theBoardofDirectors, pursuantto   moregenerally, signallagreements, prepareall docu- - take thenecessary steps,inthecases provided bylaw,to - fixthedated date,includingretroactively, ofthenew - define theconditions under whichtheoptionsmaybe - define thedate(s)orperiod(s) for exercising theoptions, - define thevalidity period oftheoptions,withunders- - determine thelistofoptionrecipients, thenumberof - set, under theconditions andwithinthelimitsestablished - tions provided bylaw,to: Directors, withtherightofdelegation under thecondi- The General Meeting grants fullpowerstotheBoardof offset againstdebts due. form and paymentoftherespective amounteitherincashor the optionwasexercised, accompanied bytheapplication have been duly effected onthesole basisofastatementthat resulting fromtheexercise ofstock optionswillbedeemed to exercised bytherecipients thereof. The sharecapitalincrease ordinary sharesthatwillbeissued asthestock optionsare explicitly waive theirpre-emptive righttosubscribe for the 6°) date. exercised withinamaximumof10years fromthegrant ordinary sharesgranted under thisauthorizationmustbe 5°) ments, noteallsharecapitalincreases resultingfromthe Commercial Code; conditions set outinArticleL.228-99oftheFrench protect theinterestsofoptionrecipients under the options; ordinary sharesresultingfromtheexercise ofthestock date; retained for morethanthree years following theexercise nary shares,butmaynotrequire thatthesharesbe prohibiting theimmediate resaleofanyoralltheordi- options duringoneormoreperiods, aswellclauses tions mayinclude clauses prohibitingtheexercise ofthe concern anyoralloftheoptionrecipients. These condi- sion may(i)apply toany oralloftheoptionsand(ii) during certain periods orasofcertain events; thisdeci- ordinary sharesobtained throughexercise oftheoptions prohibit (a)exercise oftheoptionsor(b)transfer ofthe exercised and,inparticular,limit,suspend, restrict or not besold orconverted tobearershares; which thesharesobtained byexercise oftheoptionsmay exercised, or(c)modify thedatesorperiods during ward, (b)ensurethattheoptionscancontinue tobe (a) move thedatesorexercise periods oftheoptionsfor- with theunderstanding thattheBoard ofDirectors may mum period of10years; tanding thattheoptionsmustbeexercised withinamaxi- under whichtheoptionsmaybeexercised; options granted toeachrecipient, andtheconditions by law,thedatesonwhichoptionswillbegranted; from theshares. holder toadividend orsharecapitalincrease isdetached •within 20trading sessions after acoupon entitlingits information ismade public; the date10trading sessions after thaton which such impact onthemarket price ofthecompany’s sharesand that, ifitweremade public,could have asignificant pany’s corporate officers become privytoinformation •during theperiod between thedateonwhichcom- Resolves thattheoptionstosubscribe for andpurchase Notes that,under thisauthorization,theshareholders TEXT FOR DRAFT RESOLUTIONS SUBJECTED TO THE VOTE OF THE COMBINED GENERAL MEETING ON JULY 4, 2007 7

exercise of options, amend the Articles of Association 3°) Resolves: accordingly, where appropriate, complete all formalities (i) that the bonus issues of shares carried out under this 161 required for the listing of the shares thus issued, make all authorization may not concern a number of existing or new declarations to agencies, and take whatever action may shares in excess of 0.5% of the number of shares compri- otherwise be necessary. sing the company’s capital on the date of the Board of The Board of Directors, with the right of delegation under Directors’ decision to issue shares, with the understanding the conditions provided by law, will, where relevant and that this maximum is set without regard to the face value under the conditions prescribed by law, note the number of the company’s ordinary shares that may be issued to and amount of ordinary shares issued as a result of the reflect adjustments made, in accordance with the law and exercise of stock options and make any necessary amend- applicable contractual provisions, to protect the rights of ments to the Articles of Association concerning the amount holders of securities or other rights granting entitlement of share capital and the number of ordinary shares compri- to the capital, and (ii) that the nominal amount of the sing it, and, if applicable, request that the new ordinary increase in the company’s share capital resulting from shares be admitted for trading on the Euronext Eurolist issues of ordinary shares carried out under this authoriza- market or any other regulated market; complete all forma- tion is included in the maximum of €4,000,000 set out in lities and make all declarations to agencies; at its sole dis- the twenty-third resolution. cretion and as it deems necessary, charge the cost of the 4°) Resolves that the issue of these shares will become share capital increases against the amount of the premiums final at the end of a purchase period, the length of which related to these transactions and deduct from this amount will be set by the Board of Directors; it is understood the sums to be allocated to the legal reserve; and, more that this period may not be less than two years and that generally, take whatever action may be necessary. the recipients must retain said shares for a period set by In the event that options to subscribe for and/or purchase the Board of Directors, with the stipulation that the ordinary shares are granted to persons having legal domi- retention period may not be less than two years from the cile or residing abroad, or to persons having legal domicile final issue date of said shares. However, if the purchase or residing in France but who are subject to a foreign tax period for any or all of one or more issues is at least four system, the Board of Directors may amend the conditions years, the General Meeting authorizes the Board of applicable to the stock options in order to ensure that they Directors to refrain from imposing a retention period comply with the provisions of the respective foreign law for the shares in question. Where appropriate, the Board and allow for the most favorable tax treatment possible. To of Directors may stipulate purchase and retention this end, the Board of Directors may, at its sole discretion, periods that are longer than the minimum periods indi- adopt one or more sub-plans for each category of cated above. employees subject to foreign law. 5°) Resolves that, if the recipient sustains a category two In accordance with Article L. 225-184 of the French or category three disability, as provided by Article L. 341- Commercial Code, the Board of Directors will inform the 4 of the French Social Security Code, the bonus shares will shareholders annually, in a special report to the Annual be issued to said recipient prior to the expiration of the General Meeting, of all transactions carried out pursuant to remainder of the purchase period and will be immediately Articles L. 225-177 et seq. of the French Commercial Code. transferable. This authorization is granted for a period of 38 months 6°) Notes that this authorization automatically entails, in from the date of this General Meeting. Effective immedia- favor of the recipients, the shareholders’ waiver of their tely, the General Meeting cancels the unused portion of pre-emptive rights to the shares issued under this resolu- the authorization granted by the Combined General tion. Meeting of September 25, 2006. 7°) Delegates full powers to the Board of Directors, with the right of delegation under the conditions provided by TWENTIETH RESOLUTION law and the regulations, to use this authorization, under the above conditions and within the limits authorized by the (Authorization granted to the Board of Directors to laws in force, and in particular to: define, where appro- issue ordinary shares of the company free of charge) priate, the terms and conditions of the bonus issues of sha- The General Meeting, having met the quorum and majo- res carried out under this authorization; determine the rity conditions for Extraordinary General Meetings and conditions under which the shares are issued and the dated having read the Board of Directors’ report and the audi- date of the new shares to be issued; set the dated dates of tors’ special report, and in accordance with Articles L. the new shares; note the completion of the share capital 225-197-1 et seq. of the French Commercial Code: increases; amend the Articles of Association accordingly; where appropriate, make adjustments during the purchase 1°) Authorizes the Board of Directors to issue free of period to the number of shares related to any transactions charge, on one or more occasions, existing or new shares involving the company’s capital in order to protect the of the company to staff members or members of certain rights of the recipients, and, more generally, complete all categories of staff of its choice from among the eligible formalities required for the issue, listing and servicing of employees and corporate officers of the company or affi- the shares issued under this resolution and take whatever liates, as provided by Article L. 225-197-2 of the French action is appropriate and necessary pursuant to the laws Commercial Code. and regulations in force. 2°) Resolves that the Board of Directors will issue the sha- Under the conditions provided by law and the regulations res and determine the identity of the recipients, as well as and pursuant to Article L. 225-197-4 of the French the conditions and criteria governing the issue of the sha- Commercial Code, the Board of Directors will inform the res, where applicable. Ordinary General Meeting annually of the transactions UBISOFT • FINANCIAL REPORT 2007 5°) subscription price equal totheopeningprice ofUbisoft- subscription price equal totheaverage openingprice of - wing twomethods, attheBoardofDirectors’ discretion: the subscription startdate,according tooneofthefollo- be set bytheBoardofDirectors onthedatewhichitsets 4°) parties. employees enrolled in thegroupsavings scheme orthird independently ofoneormore issues opentoshareholders, reserved for employees ofSubsidiariestogetherwithor 3°) of €4,000,000set outinthetwenty-thirdresolution. out under thisauthorizationisincluded inthemaximum company’s sharecapitalresultingfromissuescarried and (ii)thatthenominalamountofanincrease inthe rities orotherrightsgranting entitlementtothecapital, tual provisions, toprotect therightsofholders ofsecu- made, inaccordance withthelawandapplicablecontrac- company thatmaybeissued toreflect adjustments regard totheface value ofthe ordinarysharesofthe understanding thatthismaximum isdefined without shing thestartofsubscription period, withthe of thedateBoardDirectors’ decision establi- authorization isset at0.5%ofthetotalsharecapitalas in thecompany’s sharecapitalcarried outunder this 2°) made incashoroffset against debts owed. “the Subsidiaries”)andfor whichpaymentmayeitherbe have theirheadquarters outside ofFrance (hereinafter Article L.233-16oftheFrenchCommercialCode, that rate officers ofthecompany’s subsidiaries,asprovided by may besubscribed for solely bytheemployees andcorpo- more occasions, ordinarysharesofthecompany, which 1°) Code: 225-129-2 andL.225-138oftheFrenchCommercial tors’ special report,andinaccordance withArticlesL. having readtheBoardofDirectors’ reportandtheaudi- rity conditions for Extraordinary General Meetings and The General Meeting, having metthequorumandmajo- that have theirheadquartersoutsideofFrance) Article L.233-16oftheFrenchCommercialCode, officers ofthecompany’ssubsidiaries,asprovided by issue sharesreserved for theemployees andcorporate (Delegation ofauthoritytotheBoardDirectors TWENTY-FIRST RESOLUTION from thedateofthisGeneral Meeting. This authorizationisgranted for aperiod of38months carried outpursuanttothisresolution. increases ortherecipients. count amountmayvary depending on thesharecapital the understanding thatthemethod adopted or thedis- ced, ifapplicable,byamaximumdiscount of15%,with ket onthedateofBoardDirectors’ decision, redu- Entertainment SA’s shareontheEuronext Eurolistmar- by amaximumdiscount of15%,or the BoardofDirectors’ decision, reduced, ifapplicable, Eurolist market duringthe20trading sessions preceding Ubisoft EntertainmentSA’s shareontheEuronext Resolves tocancel shareholders’ pre-emptive rightsto Authorizes theBoardofDirectors toissue,ononeor Resolves thatthesubscription price ofnewshareswill Resolves (i)thatthenominal amountofanincrease Notes thattheBoardofDirectors mayissueshares shares (eachwithaface zation maynotresultintheissue ofanumberordinary be approved bytheBoardofDirectors under thisauthori- 2°) on February 26,2007. former holders of2008BSAR, whichwereredeemed early more occasions, ordinarysharesofthecompany solely to 1°) 138 oftheFrenchCommercialCode: and inaccordance withArticlesL.225-129-2and225- having readtheBoardofDirectors’ andauditors’reports, rity conditions for Extraordinary General Meetings and The General Meeting, having metthequorumandmajo- which wereredeemedearly onFebruary 26,2007) emptive rights,toformer holders of2008BSAR, issue ordinaryshares,withoutshareholders’pre- (Delegation ofauthoritytotheBoardDirectors TWENTY-SECOND RESOLUTION purpose. supersedes anyprevious authorizationhaving thesame 18 monthsfollowing thedateofthisGeneral Meeting and 7°) and,more generally, todetermine thetermsandcondi- - toprotect therightsofholders ofsecurities granting - tosignany agreements needed tosuccessfully complete - torequest, ifapplicable,thatthenewsharesbeadmitted - tocharge,whereappropriate,allexpenses totheissue - todetermine thedated dateofthesharestobeissued; - todecide onthetermsandconditions ofpaymentthe - toestablishthesharesubscription price, according tothe - todraw upthelistofrecipients amongtheSubsidiaries’ - todefine thedates,termsandconditions oftheissue(s), - the following purposes: provided bylaw,touse thisauthorization,particularly for powers, withtherightofdelegation under theconditions 6°) porate officers. the sharesissued totheSubsidiaries’employees andcor- Commercial Code. to ArticlesL.225-129-2and225-138oftheFrench increase, andtocomplete alllegalformalities, pursuant lution, tonotethecompletion of thesharecapital tions governing transactions carried outunder thisreso- pliance withapplicablelawsandregulations; future entitlementtothecompany’s capital,incom- accordingly; said issuesandtoamendtheArticlesofAssociation regulated market; for trading ontheEuronext Eurolistmarket oranyother issues; premium(s) and,inparticular,those generated bythe shares withinthestatutorylimits; resolution; terms andconditions stipulated inparagraph 4ofthis number ofsharesthateachthemmaysubscribe for; employees andcorporate officers andtodetermine the number ofsharestobeissued; with orwithoutapremium,andtodetermine thetotal Resolves thatthisauthorization isvalid for aperiod of Authorizes theBoardofDirectors toissue,ononeor Resolves (i)thatthesharecapitalincreases thatmay Resolves thattheBoardofDirectors willhave full value of€0. 155) thatex ceeds TEXT FOR DRAFT RESOLUTIONS SUBJECTED TO THE VOTE OF THE COMBINED GENERAL MEETING ON JULY 4, 2007 7

238,762 (two hundred thirty-eight thousand seven hun- TWENTY-THIRD RESOLUTION dred sixty-two) shares, with the understanding that this (Total maximum of share capital increases) maximum is set without regard to the number of ordinary 163 shares that may be issued to reflect adjustments made, in The General Meeting, having met the quorum and majo- accordance with the law and applicable contractual provi- rity conditions required for Extraordinary General sions, to protect the rights of holders of securities or other Meetings and having read the Board of Directors’ report, rights granting entitlement to the company’s capital, and and acting in accordance with Article L. 225-129-2 of the (ii) that the nominal amount of any immediate or subse- French Commercial Code, sets the total maximum of the quent increase in the company’s share capital resulting share capital increase that may result, immediately or from issues carried out under this authorization is included subsequently, from all issues carried out under the in the maximum of €4,000,000 set out in the twenty-third authorizations described in this General Meeting’s six- teenth, seventeenth, eighteenth, nineteenth, twentieth, resolution. twenty-first and twenty-second resolutions at a nominal 3°) Resolves that the subscription price of new shares will amount of €4,000,000, with the understanding that, be set by the Board of Directors on the date on which it sets within the limit of this maximum amount: the subscription start date and will, without the subscription - the issue(s) of ordinary shares or securities, with share- price set by the Board of Directors being less than €19.18, holders’ pre-emptive rights, as described in this General be equal to the closing price of Ubisoft Entertainment’s Meeting’s sixteenth resolution, may not result in a maxi- share on the Euronext Eurolist market on the date of the mum nominal amount of a share capital increase in Board of Directors’ decision, reduced by a maximum dis- excess of €2,000,000; count of €12.11. - the issue(s) of ordinary shares or securities granting 4°) Resolves to cancel shareholders’ pre-emptive rights to entitlement to the capital, without shareholders’ pre- the ordinary shares to be issued to former holders of 2008 emptive rights, as described in the seventeenth resolu- BSAR, which were redeemed early on February 26, 2007. tion, may not result in a maximum nominal amount of a 5°) Delegates full powers to the Board of Directors, with share capital increase in excess of €2,000,000; the right of delegation under the conditions provided by - the issue(s) of ordinary shares or securities granting law, to use this authorization, particularly for the following entitlement to the capital, without shareholders’ pre- purposes: emptive rights, to current and former employees enrol- - to determine the terms and conditions of the issue(s) led in a savings plan, as described in the eighteenth and the total number of shares issued; resolution, may not result in a maximum nominal amount of a share capital increase in excess of 0.05% of - to draw up the list of recipients from among the former the share capital on the date of the Board of Directors’ holders of 2008 BSAR that were redeemed early on decision; February 26, 2007 and to determine the number of ordi- nary shares that each of them may subscribe for; - the number of ordinary shares that may be subscribed for or purchased by recipients of options to subscribe for - to establish the share subscription price, according to or purchase shares, as described in the nineteenth reso- the terms and conditions stipulated in paragraph 3 of lution, may not exceed 3.5% of the number of ordinary this resolution; shares existing on the date of the Board of Directors’ - to decide on the terms and conditions of payment of the grant decision; shares to be issued within the statutory limits; - the number of ordinary shares that may be issued free of - to determine the dated date of the shares to be issued; charge to recipients of bonus shares, as described in the twentieth resolution, may not exceed 0.5% of the num- - to limit the amount of the share capital increase(s) car- ber of ordinary shares existing on the date of the Board ried out pursuant to this resolution to the actual amount of Directors’ grant decision; of the subscriptions within the limits provided by law; - the issue(s) of ordinary shares or securities granting - to charge, where appropriate, all expenses to the issue entitlement to the capital, without shareholders’ pre- premium(s) and, in particular, those generated by the emptive rights, to employees and corporate officers of issues; the company’s subsidiaries, as provided by Article L. - to preserve the rights of holders of securities granting 233-16 of the French Commercial Code, that have their future entitlement to the company’s capital, in com- headquarters outside of France, as described in the pliance with applicable laws and regulations; twenty-first resolution, may not result in a maximum nominal amount of a share capital increase in excess of - and, more generally, to note the completion of the 0.5% of the share capital on the date of the Board of share capital increase(s), to amend the Articles of Directors’ decision establishing the start of the subscrip- Association accordingly, to complete all legal formali- tion period; ties, to take all measures and to complete all formalities required for admission of the new shares to trading on - the issue(s) of ordinary shares or securities granting the Euronext Eurolist market or any other regulated entitlement to the capital, without shareholders’ pre- market. emptive rights, to former holders of 2008 BSAR that were redeemed early on February 26, 2007, as described 6°) Resolves that this authorization is valid for a period of in the twenty-second resolution, may not result in the three months from the date of this meeting. issue of a number of ordinary shares that exceeds 238,762. UBISOFT • FINANCIAL REPORT 2007 the company.” together holdatleast5%ofthe capitalorvoting rightsof of theGeneral Meeting, ofoneormoreshareholders who Commercial Code, attherequest, recorded intheminutes the conditions set outinArticleL.233-14oftheFrench holds willresultinthewithdrawal ofvoting rightsunder Failure toreporttheattainmentofthese statutorythres- rights falls belowanyoftheaforementioned thresholds. or voting rightsalso appliesiftheshareofcapitalorvoting exceeding thethresholdbyamultipleof2%capital The notificationreferred tointhepreceding paragraph for directly orindirectly orinconcert. company’s capital,whethersaidshareholder holdsthem rights orsecurities granting futureentitlementtothe Commercial Code, ofthetotalnumbershares,voting period stipulated inArticleL.233-7oftheFrench ledgment ofreceipt sent toitsheadquarters withinthe to inform thecompany, byregistered letterwithacknow- rights ofthecompany, oranymultiple thereof, isrequired or indirectly, atleast2%ofthesharecapitalorvoting French CommercialCode, whomaycome tohold,directly judice tothethresholdsdefined inArticleL. 233-7ofthe “Any shareholder actingaloneorin concert, withoutpre- New version the company.” together holdatleast5%ofthecapitalorvoting rightsof of theGeneral Meeting, ofoneormoreshareholders who Commercial Code, attherequest, recorded intheminutes the conditions set outinArticleL.233-14oftheFrench holds willresultinthewithdrawal ofvoting rightsunder Failure toreporttheattainmentofthese statutorythres- rights falls belowanyoftheaforementioned thresholds. or voting rightsalso appliesiftheshareofcapitalorvoting exceeding thethresholdbyamultipleof4%capital The notificationreferred tointhepreceding paragraph for holder holdsthemdirectly or indirectly orinconcert. entitlement tothecompany’s capital, whethersaidshare- ber ofshares,voting rightsorsecurities granting future 233-7 oftheFrenchCommercialCode, ofthetotalnum- its headquarters withintheperiod stipulated inArticleL. registered letterwithacknowledgment ofreceipt sent to including 28%,isrequired toinform thecompany, by rights ofthecompany, oranymultiplethereof uptoand or indirectly, atleast4%ofthesharecapitalorvoting French CommercialCode, whomaycome tohold,directly judice tothethresholdsdefined inArticleL.233-7ofthe “Any shareholder actingaloneorinconcert, withoutpre- Old version resolves toamendArticle6asfollows: Meetings andhaving readtheBoardofDirectors’ report, rity conditions required for Extraordinary General The General Meeting, having metthequorumandmajo- Association regardingexceedance ofthresholds) (Amendment ofArticle6theArticles TWENTY-FOURTH RESOLUTION pany’s capital. of holders ofsecurities granting entitlementtothecom- and applicablecontractual provisions, toprotect therights to reflect adjustmentsmade, inaccordance withthelaw include thenominalamountofsharesthatmaybeissued It isstipulated thattheaforementioned totaldoes not   tions: including electronically, subject tothefollowing condi- son, byappointingaproxy orbyvoting byabsentee ballot, tity, totake partinGeneral Meetings byattendinginper- “All shareholders have theright,uponproof oftheiriden- Articles ofAssociation, whichcurrently readasfollows: Consequently, paragraphs 4to7ofArticle14the Association. resolves toamendArticle14oftheArticles Meetings andhaving readtheBoardofDirectors’ report, rity conditions required for Extraordinary General The General Meeting, having metthequorumandmajo- 2006-1566 ofDecember11,2006) 67-236 ofMarch23,1967introducedbyDecree French CommercialCode(formerly 136ofDecree holders’ meetingsinlinewithArticleR.225-85ofthe at bringingtherulesgoverning participation inshare- Association regardingshareholders’meetingsaimed (Amendment ofArticle14theArticles TWENTY-FIFTH RESOLUTION all formalities required bylawwherever necessary. this meeting fullpowerstofilealldocuments andcomplete grants thebearerofacopy orexcerpt oftheminutes rity conditions required for OrdinaryGeneral Meetings, The General Meeting, having metthequorumandmajo- (Vesting ofpowersfor legalformalities) TWENTY-SIXTH RESOLUTION tions inforce.” compliance withtheformalities stipulated intheregula- “The righttoparticipateinmeetings iscontingent upon will bereplaced bytheparagraph thatreadasfollows: Mandatory LegalNotices.” the notice ofmeeting published intheBulletinof proxies isset bytheBoardofDirectors andannounced in The deadline for returningabsentee voting ballotsand change thenumberofsharesandcorresponding votes. the information needed tocancel thevote orproxy orto than 3:00p.m.(Paris time)ofthedaybefore themeeting, sends totheagentauthorized bythecompany, bynolater vote orproxy wassent, provided thattheshareholder shares maydispose ofanyorallthesharesfor whichthe share-blocking certificate issued bythecustodian ofthe electronically) orhasgranted aproxy bypresenting a card orhasalreadyvoted byabsentee ballot(bymailor However, anyshareholder whohasrequested anadmission meeting. may notbemorethanfive dayspriortothedateof by theBoardofDirectors inthemeeting notice; saiddate These formalities mustbecompleted priorto thedateset place indicated inthemeeting notice. transferable uptothemeeting datemustbefiled atthe authorized agentcertifying thatthelisted sharesarenot •for holders ofbearershares,acertificate issued by an company’s shareledgers; the shareholder mustbelisted inhis/hernamethe •for holders ofregistered sharesorvoting certificates, TEXT FOR DRAFT RESOLUTIONS SUBJECTED TO THE VOTE OF THE COMBINED GENERAL MEETING ON JULY 4, 2007 7 165 UBISOFT • FINANCIAL REPORT 2007 PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT AND FOR THE AUDIT OF THE ACCOUNTS 8 167

PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT AND FOR THE 8 AUDIT OF THE ACCOUNTS 8.1 Person responsible for the reference document 168 8.2 Declaration of the person responsible for the reference document 168 8.3 Names, addresses and professional fees of the auditors 168 8.4 Documents available to the public 170 8.5 Schedule of financial communications for fiscal year 2007/08 170 UBISOFT • FINANCIAL REPORT 2007 (1) Renewalsubmitted tothe General Meeting ofJuly 4,2007 35042 RennesCedex, France 35700 Rennes,France 35000 Rennes,France have readthereference document infull.” information concerning thecompany’s financialpositionandtheaccounts provided inthisreference document, andthatthey I have obtained anauditcompletion letterfromthestatutoryauditors,inwhichtheyindicate thattheyhave verified the this reference document isfair andaccurate andthatnothinghasbeen omitted thatcould affect itsscope. “After takingallreasonable measuresinthisregard,Icertify that,tothebestofmyknowledge, theinformation contained in Chairman oftheBoardDirectors. Mr. Yves Guillemot, 35042 RennesCedex, France Dateof1 15, rueduProfesseur JeanPecker –CS14217 Mr. PierreBerthelot Alternate auditor: 15, rueduProfesseur JeanPecker –CS14217 represented byMr.LaurentPrévost KPMG SA Primary auditor: 15, rueCharlesLeGoffic Mr. PierreBorie Alternate auditor: 27 ABoulevard Solferino represented byMr.AndréMétayer Audit AMLDSARL Primary auditor: NAME 8.3 8.2 8.1 fees oftheauditors Names, addressesandprofessional for thereferencedocument Declaration ofthepersonresponsible for thereferencedocument Person responsible st ponmn Expiration ofcurrentterm appointment 032007 2007 2010 2010 2003 2003 1996 1986 Chief Executive Officer, Yves Guillemot (1) (1) PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT AND FOR THE AUDIT OF THE ACCOUNTS 8

Professional fees of the statutory auditors and members of their networks (Document prepared in accordance with Article L. 222-8 of the internal regulations of the Autorité des marchés financiers - AMF) 169 Fiscal years covered: April 1, 2005 to March 31, 2007

In thousands of euros Audit AMLD Amount (excluding tax) % 2006-2007 2005-2006 2006-2007 2005-2006 Audit - Statutory audit, certification, review of the individual and consolidated financial statements • Issuer 127 155 44% 62% • Fully consolidated subsidiaries 159 97 56% 38% - Other verifications and services directly related to the auditor’s work • Issuer - - - - • Fully consolidated subsidiaries - - - - Subtotal 286 252 100% 100% Other services rendered by the networks of the fully consolidated subsidiaries - Legal, tax, social - - - - - Other (> 10% of audit fees) - - - - Subtotal - - - - Total 286 252 100% 100%

In thousands of euros Audit KPMG Amount (excluding tax) % 2006-2007 2005-2006 2006-2007 2005-2006 Audit - Statutory audit, certification, review of the individual and consolidated financial statements • Issuer 159 204 34% 54% • Fully consolidated subsidiaries 314 171 66% 46% - Other verifications and services directly related to the auditor’s work • Issuer - - - - • Fully consolidated subsidiaries - - - - Subtotal 473 375 100% 100% Other services rendered by the networks of the fully consolidated subsidiaries - Legal, tax, social - - - - - Other (> 10% of audit fees) - - - - Subtotal - - - - Total 473 375 100% 100% UBISOFT • FINANCIAL REPORT 2007 These datesareprovided for information purposes only andwillbeconfirmed duringtheyear. www.ubisoftgroup.com Tel.: (33)01.48.18.50.00 93108 Montreuil-sous-Bois Cedex, France 28 rueArmandCarrel Chief Executive Officer Yves Guillemot Person responsiblefor information: Regulatory information isavailable onthecompany’s website(www.ubisoftgroup.com). This reference document mayalso beconsulted ontheAMFwebsite(www.amf-france.org). releases andfinancialinformation. these documents areavailable onthecompany’s website(www.ubisoftgroup.com), whichalso contains thegroup’spress registered office orbusinessaddress (28,rueArmandCarrel–93100Montreuil-sous-Bois, France). Inaddition, some of that mustbesent ormade available toshareholders asprovided bythelawsineffect maybeconsulted atthecompany’s for each of thetwofiscal years preceding thepublicationofthisreference document and,moregenerally, alldocuments included orreferred tointhisreference document, historicalfinancialinformation ofthecompany anditssubsidiaries auditors’ reports,valuations anddeclarations drawn up,whereapplicable,atthecompany’s request, some ofwhichare During thevalidity period ofthisreference document, thecompany’s ArticlesofAssociation, minutesofgeneral meetings, Year-end results Annual sales Third quartersales Half-yearly results Second quartersales First quartersales 8.4 8.5 for fiscalyear2007/08 Schedule offinancialcommunications Documents availabletothepublic Week ofNovember 26,2007 Week ofOctober22,2007 Week ofJanuary 21,2008 Week ofApril21,2008 Week ofMay26,2008 Tuesday July 24,2007 Date PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT AND FOR THE AUDIT OF THE ACCOUNTS 8

Glossary 171

Blockbuster: A game that has been highly successful and/or shows very strong sales potential (several million units).

Next Generation Game console: Home consoles or hand- led consoles. Microsoft's XBOX360™ was the first Next Gen home console to be launched at the end of 2005, while Sony's PLAYSTATION®3 was launched in December 2006 in the U.S.A. & Japan and in March 2007 in Europe and Nintendo's WII™ was launched worldwide at the end of 2006. The Sony's PSP™ and Nintendo's DS™ (including the new DS Lite) are the Next Gen handled consoles.

Franchise: Owned intellectual property declined in sequels though many years with more than 1 million units sold each time. Franchises bring visibility and profitability.

Nintendo DS™ (Dual Screen): Nintendo’s newest portable console, which was introduced in the United States and Japan in late 2004 and in Europe in March 2005.

Pay to play: A system in which players can play online only after paying a subscription (usually by the month). They then become part of an international community of fellow players. Players must generally purchase the game package beforehand.

PlayStation® Portable™ (PSP): The first portable console manufactured by Sony, which was introduced in the United States and Europe beginning of 2005.

PLAYSTATION®3 (PS3): Sony's Next Gen console laun- ched in the U.S.A. at the end of 2006 and in Europe in March 2007.

Porting: The process of a program, i.e. adapting a program to a system other than the one for which it was originally developed (and designed) and moving it from one environment to another.

Production: The period during which a game is developed (character animation, integration of the data into the dri- ver etc.).

Time to market: A video game is called “time to market” when its development cycle guarantee a profitable and precise release date (for example to coincide with a pictu- res’ release or a sport event,…).

Xbox360™: Microsoft's Next Gen console. It was launched worldwide end of 2005.

WII™: Nintendo's Next Gen console with a worldwide launch at the end of 2006. UBISOFT • FINANCIAL REPORT 2007 5.2. Investments with theCESR’srecommendations andwithinterpretationsrecommendations ofAMFpublished on01/27/06. This document have been prepared inaccordance withprovisions ofAppendixNr1fromRegulationsCE809/2004"prospectus", Concordance Table ... eitrdnm n rd ae .. 118 4.1.1 118 4.1.5 33 1.2.1 The Companyregistered address andregistration numbers 168 168 Registered nameandtrade name HistoryandGrowththecompany INFORMATION CONCERNING THEISSUER 8.3 8.1 5.1.2. SELECTEDFINANCIALINFORMATION –KEYFIGURES 5.1.1. 5.1. 5. 4. RISKS 3. 2. STATUTORY 1. PERSONS FACTORS AUDITORS RESPONSIBLE 41 Mmeso h or fdrcosadmngmn . 132 N/A 52 38 5.1 N/A 1.12.2 1.3.3 37 46 1.3.1 38 1.8.2 46 Conflictsofinterests 1.3.3 Membersof the Boardofdirectors andmanagement N/A 1.8.3 CORPORATE GOVERNANCE, MANAGEMENT AND EARNINGSFORECASTS ORESTIMATES N/A 14.2. INFORMATION ONMARKETTRENDS 36 14.1. RESEARCH ANDDEVELOPMENT, PATENTS AND LICENCES 48 14. 35-36 1.2.5to1.2.6 Sources offinancingexpected thatwillberequired 44 13. Restrictionon use ofcapital 1.2.3to1.2.4 12. 1.9.5 Information onborrowingtermsandfinancingstructure 11. 1.7.1 Information oncapitalstructure 10.5. CASHASSETS ANDCAPITAL 10.4. 10.3. 10.2. Cash 118 ANALYSIS OFFINANCIALPOSITION ANDRESULT 10.1. Capitalassets andenvironnemental masters 32 10. 4.1.4 Majorexistible capitalinvestment 9.2. Operating REALESTATE, PLANTSANDEQUIPMENTS 9.1. Financial flow 37&47 1.1andthe1 Introduction 9. and1.9.1/2 1.2.7 Description andsituationofthecompany intheGroup. 8.2. 8.1. result 8. position Dependence related tosome contracts 7.2. Main Exceptional events influencingmainoperations andmainmarkets 7.1. MainMarkets 7. ORGANIZATIONAL Mainoperations 6.5. Competitive OVERVIEW OFOPERATIONS 6.4. subsidiaries 6.3. 6.2. Historicalbackground STRUCTURE 6.1. position Registered office, legalstatus,applicablelegislation, 6. Companycreationdateandterm 5.1.5. 5.1.4. 5.1.3. rgnlcuty drs n hn ubr . n . 118&170 4.1and8.4 original country, address andphonenumber SUPERVISORY BODIESANDEXECUTIVEMANAGEMENT ome h omtet ecie npit .. n ..12937 1.2.9 to meet the commitments described inpoints5.2.3and8.1. 0620 nulRpr Page 2006/2007 AnnualReport st ato h eot01&32 part ofthereport .. 46 1.8.1 .. 38 1.3.2 36 37 1.2.7 1.2.8 45 1.7.3 . 47 1.9 . 132 5.1 2006/2007 Annual Report Page

15. COMPENSATION AND BENEFITS 15.1. Compensation and benefits 2.5.6.3 86 15.2. Total amount provided for or determined for payment in connection with pensions, retirement and other benefits 2.5.6.3 86 16. FUNCTIONING OF ADMINISTRATIVE AND MANAGEMENT BODIES 16.1. Offices held by the Directors 5.6 134 16.2. Service agreements of officiers 5.8 140 16.3. Information on the audit committee and compensation committee N/A N/A 16.4. Conformity declaration to the recommendations concerning corporate governance 5.1 132 17. EMPLOYEES 17.1. Number of employees 1.4 38 17.2 Share of capital and stock options 1.4.2 and 5.7.2 40 & 140 17.3. Agreement for employees in share capital 1.4.4 42 18. KEY SHAREHOLDERS 18.1. Distributions of capital and voting rights 4.2.3.1 128 18.2. Different voting rights 4.2.3.1 128 18.3. Control of the issuer 4.2.3.1 128 18.4. Agreements that could lead to a change in control 4.2.3.3 130 19. AGREEMENTS WITH RELATED PARTIES 3.8 114 20. FINANCIAL INFORMATION REGARDING THE ISSUER’S ASSETS, FINANCIAL CONDITION, AND RESULTS OF OPERATIONS 20.1. Historical financial information 2 and 3 53 - 115 20.2. Pro forma financial information N/A N/A 20.3. Financial statements 2 and 3 53 - 115 20.4 Audit of Financial information presented 2 and 3 53 - 115 20.5. Date of the last financial information N/A N/A 20.6. Intermediary financial information and others N/A N/A 20.7. Dividend policy 4.2.2.13 127 20.8. Legal and arbitration proceedings 1.9.7 49 20.9. Significant changes in the financial and trade position 1.12.1 52 21. ADDITIONAL INFORMATION 21.1. Share capital 4.2.2 120 21.2. Incorporated documents and articles of association 4.2.1 118 22. MAIN CONTRACTS N/A N/A 23. INFORMATION COMING FROM THIRD PARTIES, EXPERTS’ DECLARATIONS AND DECLARATIONS OF INTERESTS N/A N/A 24. DOCUMENTS AVAILABLE TO THE PUBLIC 8.4 170 25. INFORMATION ON SUBSIDIARIES AND AFFILIATED COMPANIES 3.6.6 110 UBISOFT • FINANCIAL REPORT 2007 Nintendo Wii™. Wii™ and the Wii logo are trademarks of Nintendo. Nintendo DS™. NIN- is trademarks of Jordan Mechner in the US and/or other countries used under license by TENDO DS IS A TRADEMARK OF NINTENDO. PlayStation®3. " and "PLAYSTATION" Ubisoft Entertainment. Red Steel™. © 2006 Ubisoft Entertainment. All Rights Reserved. are registered trademarks of Sony Computer Entertainment Inc. Xbox 360™. © 2007 Red Steel, Ubisoft and the Ubisoft logo are trademarks of Ubisoft Entertainment in the Microsoft Corporation. All rights reserved. Microsoft, Xbox, Xbox 360, Xbox Live and the U.S. and/or other countries. Rayman Raving Rabbids™. © 2006 Ubisoft Entertainment. Xbox logos are trademarks of the Microsoft group of companies. Driver®. © 2007 Ubisoft All Rights Reserved. Rayman, Rayman Raving Rabbids, the character of Rayman, Ubisoft All Rights Reserved. Driver, Ubisoft and the logo Ubisoft are trademarks of Ubisoft and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other Entertainment in the US and/or other countries. Far Cry®. © 2005 Ubisoft Entertainment. countries. Teenage Mutant Ninja Turtles™. ©2007 Mirage Studios, Inc. Teenage Mutant All Rights Reserved. Far Cry, Ubisoft and the Ubisoft logo are trademarks of Ubisoft Ninja Turtles™ and TMNT are trademarks of Mirage Studios, Inc. All rights reserved. Entertainment in the US and/or other countries. Based on Crytek’s original Far Cry direc- Software ©2007 Ubisoft Entertainment. All Rights Reserved. Ubisoft and the Ubisoft logo ted by . Powered by Crytek’s technology “CryEngine”. PlayStation®2. (add litle are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Tom Clancy's PS2 logo) and “PlayStation 2” are registered trademarks of Sony Computer EndWar™. © 2007 Ubisoft Entertainment. All Rights Reserved. Endwar, Ubisoft, Ubi.com Entertainment Inc. All Rights Reserved. Xbox®. Microsoft, Xbox, the Xbox Logos and and the Ubisoft logo are trademarks of Ubisoft Entertainment in the US and/or other Xbox Live are either registered trademarks or trademarks of Microsoft Corporation in the countries. Open Season™. Open Season: TM & © 2006 Sony Pictures Animation Inc. All U.S. and/or in other countries. Anno. The Settlers ®. ©2007 Ubisoft Entertainment. All rights reserved. Game Software excluding Sony Elements: © 2006 Ubisoft Entertainment. Rights Reserved. The Settlers, Blue Byte and the Blue Byte logo are trademarks of Red All rights reserved. Ubisoft and the Ubisoft logo are trademarks of Ubisoft Entertainment Storm Entertainment in the US and/or other countries. Ubisoft and the Ubisoft logo are in the U.S. and/or other countries. Cosmic Family™. © 2007 Ubisoft Entertainment. All trademarks of Ubisoft Entertainment in the US and/or other countries. Red Storm Rights Reserved. Cosmic Family, Ubisoft, Ubi.com, and the Ubisoft logo are trademarks of Entertainment Inc is a Ubisoft Entertainment company. Developed by Blue Byte Software. Ubisoft Entertainment in the U.S. and/or other countries. Surf's up™. Surf's Up: TM & © Rayman®. © 1995-2006 Ubisoft Entertainment. All Rights Reserved. Rayman, Rayman 2 2007 Sony Pictures Animation Inc. All rights reserved. Game Software excluding Sony The Great Escape, Rayman 3 Hoodlum Havoc, Rayman Raving Rabbids, the character of Elements: © 2007 Ubisoft Entertainment. All rights reserved. Ubisoft and the Ubisoft Rayman, Ubisoft and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. and/or other countries. Tom Clancy's Rainbow Six® Vegas. © 2006 Ubisoft Entertainment. Naruto™ Rise of a Ninja. © 2007 Ubisoft Entertainment. All Rights Reserved. Ubisoft and All Rights Reserved. Persistent Elite Creation, Ubisoft, the Ubisoft logo, Ubi.com and the the Ubisoft logo are trademarks of Ubisoft Entertainment in the US and/or other coun- Soldier Icon are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. tries. © 2002 MASASHI KISHIMOTO. This product is manufactured, distributed and sold Rainbow Six, Red Storm and Red Storm logo are trademarks of Red Storm Entertainment under license from TV TOKYO CORPORATION & SHUEISHA INC. All Rights Reserved. in the U.S. and/or other countries. Red Storm Entertainment, Inc. is a Ubisoft Jam Sessions. © 2007 Plato. All Rights Reserved. Published and distributed by Ubisoft Entertainment company. Tom Clancy's Ghost Recon Advanced Warfighter® 2. © 2007 Entertainment under license from Plato. Video game based on "Sing & Play DS Guitar M- Ubisoft Entertainment. All Rights Reserved. Ghost Recon, Ghost Recon Advanced 06," which is a trademark of Plato. Jam Sessions, Ubisoft and the Ubisoft logo are trade- Warfighter, the Soldier Icon, Ubisoft, Ubi.com and the Ubisoft logo are trademarks of marks of Ubisoft Entertainment in the US and/or other countries. Driver® : 76. © 2007 Ubisoft Entertainment in the US and/or other countries. PC version developed by Grin. Ubisoft Entertainment. Driver, Ubisoft and the Ubisoft logo are trademarks of Ubisoft ASSASSIN'S CREED ™. © 2007 Ubisoft Entertainment. All Rights Reserved. Assassin's Entertainment in the US and/or other countries. Haze™. © 2006 Ubisoft Entertainment creed, Ubisoft, Ubi.com and the Ubisoft logo are trademarks of Ubisoft Entertainment in SA and Limited. All Rights Reserved. Haze is a trademark of Ubisoft the U.S. and/or other countries. Tom Clancy’s Splinter Cell Conviction™. © 2007 Ubisoft Entertainment and Free Radical Design. Free Radical Design and its associated logo are Entertainment. All Rights Reserved. Splinter Cell, Splinter Cell Conviction, Sam Fisher, trademarks of Free Radical Design Limited. Ubisoft and the Ubisoft logo are registered the Soldier Icon, Ubisoft, Ubi.com and the Ubisoft logo are trademarks of Ubisoft trademarks of Ubisoft Entertainment SA. Developed by Free Radical Design Limited. Entertainment in the U.S. and/or other countries. Tom Clancy’s Splinter Cell Double Heroes of Might & Magic®. © 2007 Ubisoft Entertainment. All Rights Reserved. Heroes, Agent™. © 2006 Ubisoft Entertainment. All Rights Reserved. Splinter Cell, Splinter Cell Might and Magic, Heroes of Might and Magic, Ubisoft and the Ubisoft logo are trade- Double Agent, Sam Fisher, the Soldier Icon, Ubisoft, Ubi.com and the Ubisoft logo are marks of Ubisoft Entertainment in the U.S. and/or other countries. Developed by Nival trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Brothers in Arms Interactive. Rayman Raving Rabbids™. © 2006 Ubisoft Entertainment. All Rights Hell's Highway™. © 2007 , L.L.C. All rights reserved. Published and Reserved. Rayman, Rayman Raving Rabbids, the character of Rayman, Ubisoft and the distributed by Ubisoft Entertainment under license from Gearbox Software, L.L.C. Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Brothers in Arms Hell’s Highway is a trademark of Gearbox Software and is used under Star Wars®. LucasArts and the LucasArts logo are trademarks of Lucasfilm Ltd. © 2005 license. Ubisoft, Ubi.com and the Ubisoft logo are trademarks of Ubisoft Entertainment in Lucasfilm Entertainment Company Ltd. or Lucasfilm Ltd. & TM as indicated. All rights the U.S. and/or other countries. Gearbox Software and the Gearbox logo are registered reserved. Beowulf ™. Beowulf: TM & © 2007 Paramount Pictures. All Rights Reserved. trademarks of Gearbox Software, LLC.• GEARBOX sub-credit for developer team – such Game software: © 2007 Ubisoft Entertainment. All Rights Reserved. Ubisoft and the as “Gearbox Combat Series” – to be included in First Game Sequel packaging and in the Ubisoft logo are trademarks of Ubisoft Entertainment in the United States and other First Game Sequel where appropriate pending approval from UBISOFT, not to be reaso- countries. Horsez™. © 2006 Ubisoft Entertainment. All rights Reserved. Horsez, Ubisoft, nably withheld. Brothers in Arms®. © 2007 Ubisoft Entertainment. All rights reserved. Ubi.com and the Ubisoft logo are trademarks of Ubisoft Entertainment in the US and/or Published by Ubisoft Entertainment under license from Gearbox Software. Brothers In other countries. Developed by Lexis Numérique. Catz®. © 2006 Ubisoft Entertainment. Arms is a trademark of Gearbox Software and is used under license. Gearbox Software All Rights Reserved. Catz, Ubisoft, Ubi.com and the Ubisoft logo are trademarks of and the Gearbox logo are registered trademarks of Gearbox Software, LLC. Ubisoft, Ubisoft Entertainment in the US and/or other countries. Developed by Powerhead Ubi.com and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or Games. Dogz®. © 2006 MTO Inc. All Rights Reserved. Published and distributed by other countries. Prince of Persia®. © 2005 Ubisoft Entertainment. All Rights Reserved. Ubisoft Entertainment under license from MTO. Dogz, Ubisoft and the Ubisoft logo are Based on Prince of Persia® created by Jordan Mechner. Ubisoft and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or in other countries. Developed by trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Prince of Persia MTO Inc.

This statement may contain financial data evaluated, information on future projects and transactions and on future economic results/performance. Such valuations are provided for estimation purposes only. They are subject to market risks and uncertainties and may vary significantly with the actual results that shall be published. The financial data evaluated have been presented to the Board of Directors and have not been audited by the Auditors.

The reference document is a free translation of the French Company Report which, in accordance with Article 212-13 of the Autorité des Marchés Financiers General Regulation (the French Securities and Exchange Commission) was recorded on June 27, 2007. It may only be used in conjunction with a financial transaction if it is supplemented by a transaction note issued by the Autorité des Marchés Financiers.

In pursuance of the article 28 from Regulations CE 809/2004, the following informations are included with reference in that French Company Report: - the consolidated financial statements, the corporate financial statements and the declaration by the statutory auditors as of March 31, 2005 presented on the French Company Report at pages 47 to 100 and recorded on September 14, 2005 with the reference D.05-1153; - the consolidated financial statements, the corporate financial statements and the declaration by the statutory auditors as of March 31, 2006 presented on the French Company Report at pages 53 to 122 and recorded on September 20, 2006 with the reference D.06-0863.

Copies of this Company Report are available from Ubisoft’s commercial offices : 28, rue Armand Carrel - 93108 Montreuil-sous-Bois cedex - France Ubisoft Entertainment A limited liability Company with a Board of Directors Capital €7,068,807.70 Registered office : 107 avenue Henri Fréville BP 10704 35207 Rennes cedex 2 N°335 186 094 Rennes companies register tel: 33 (0)1 48 18 50 00 conception and design : avant•garde UBISOFT WORLDWIDE Fax: +4538333449 Tel: +4538320300 DK-2730 Herlev Hoerkaer 201.Floor DENMARK Fax: +85228868152 Tel: +852 2886 8037 Wanchai -HongKong 46 Gloucester Road Room 804,8/F, Jubilee Centre Fax: +862154075156 Tel: +8621 54075666 Shanghai 200031 1010 HuaiHaiMiddle Road, 42F, KwahCenter Fax: +862154075156 Tel: +862154075666 Shanghai 200031 989 ChangLeRoad 13F &15F, The Center CHINA Fax: +1(418)524-1266 Tel: +1(418)524-1222 Québec (QC)–G1K3H4 Bureau 800 390, boulevard CharestEst Édifice Ubisoft Fax: +1(514)4900882 Tel: +1(514)4902000 Montreal H2T1S6,Quebec Suite 5000 5505 boulSaint-Laurent CANADA Fax: +(359)28710033 Tel: + (359)24894606/ 1113 –Sofia 6, Al.Zhendov Str.,1stfloor Geo Milev Residential District BULGARIA Fax: +32(2)7882361/62 Tel: +32(2)7882360 1030 Bruxelles 105 rueColonelBourg BELGIUM Fax: +43180321–14 Tel: +43180321 1120 Wien 76A/12/17A Altmannsdorfer Straße AUSTRIA Fax: +61(2)95186955 Tel: +61(2)85871800 Pyrmont NSW2009 19 HarrisStreet Suite 3,Level 2 AUSTRALIA Fax: +33(1)48570741 Tel: +33(1)48185000 France 93 108MontreuilSousBoisCedex 28 rueArmandCarrel WORLDWIDE HEADQUARTERS + (359)24894607 Fax: +358(9)684185 Tel: +358(9)694180 00101 Helsinki Aleksanterinkatu 17 P.O. Box 800 World Trade CenterHelsinki FINLAND Fax: +31(30)6622306 Tel: +31(30) 6629110 3454 PVDeMeern Rijnzathe 7A4 NETHERLANDS (THE) Fax: +212(2)208586 Tel: +212(2)208587 Casablanca Angle MoulayYoussef, 62, bdd'Anfa MOROCCO Fax: 525591712077 Tel: 525591711351 06600 México D.F. Col. Juárez Paseo de laReforma 350piso 11 Torre del Angel MEXICO Fax: +81(3)54681360 Tel: +81(3)54682751 Tokyo 107-0002 6-11-1, MinamiAoyama, Minato-Ku 3F MinamiAoyama Bldg,1F JAPAN Fax: +39(02)83312306 Tel: +39(02)833121 20143 Milan Viale Cassala22 Fax: +39(02)4886737 Tel: +39(02)4886711 20090 Buccinasco (Milan) Via Enrico Fermi 10/2 ITALY Fax: +49(211)3380050 Tel: +49(211)338000 40211 Düsseldorf Adlerstrasse 74 GERMANY Fax: +33(1)53176503 Tel: +33(1)48185000 75646 Paris Cedex 13 173-179 rueduChevaleret Austerlitz 2000 FRANCE Fax: +40 215690699/ Tel: +40 215690661to63/ 012103 –Bucharest 2, ExpozitieiBLVD., Sector 1 ROMANIA Fax: +4722151461 Tel: +4722 151460 0671 Oslo Tvetenveien 152 NORWAY +40 2130572/73 +40 2130574 Fax: +41(21)6416869 Tel: +41(21)64168 1000 Lausanne8 Ch. d'Entre-Bois31,CP68 SWITZERLAND Fax: +46(8)7040343 Tel: +46(8)86435130 111 30Stockholm Johannesgränd 2 SWEDEN Fax: +34(93)5906253 Tel: +34(93)5441500 Barcelona 08190 SantCugatDelVallés 2 DaPlanta Avenida RagullN°60 Fax: +34(91)6404652 Tel: +34(91)6404600 Madrid 28230 LasRozas Edificio 3Planta2ªOficina12 José Echegaray, 8 Parque EmpresarialAlvia SPAIN Fax: +82(2)60013073 Tel: +82(2)60013070 Gang-nam Gu,Seoul 135-280 943-24 Dae-chiDong, Khan Building, 1715, 17thFloor ShinanMetro SOUTH KOREA Fax: +1(919)4601502 Tel: +1(919) 4601776 Morrisville -NC27560 Suite 100 3200 GatewayCentreBoulevard Red Storm Fax: +1(415)5474001 Tel: +1(415)5474000 San Francisco -CA94107 625 Third Street USA Fax: +441912772223 Tel: +441912772222 NE1 3AZ Newcastle uponTyne Orchard Street Central SquareSouth Reflections Interactive Fax: +44(0)1932578001 Tel: +44(0)1932578000 Surrey, KT168AP London Street, Chertsey UNITED KINGDOM

www.ubisoftgroup.com ubisoft annual report 2007 UBISOFT WORLDWIDE Fax: +4538333449 Tel: +4538320300 DK-2730 Herlev Hoerkaer 201.Floor DENMARK Fax: +85228868152 Tel: +852 2886 8037 Wanchai -HongKong 46 Gloucester Road Room 804,8/F, Jubilee Centre Fax: +862154075156 Tel: +8621 54075666 Shanghai 200031 1010 HuaiHaiMiddle Road, 42F, KwahCenter Fax: +862154075156 Tel: +862154075666 Shanghai 200031 989 ChangLeRoad 13F &15F, The Center CHINA Fax: +1(418)524-1266 Tel: +1(418)524-1222 Québec (QC)–G1K3H4 Bureau 800 390, boulevard CharestEst Édifice Ubisoft Fax: +1(514)4900882 Tel: +1(514)4902000 Montreal H2T1S6,Quebec Suite 5000 5505 boulSaint-Laurent CANADA Fax: +(359)28710033 Tel: + (359)24894606/ 1113 –Sofia 6, Al.Zhendov Str.,1stfloor Geo Milev Residential District BULGARIA Fax: +32(2)7882361/62 Tel: +32(2)7882360 1030 Bruxelles 105 rueColonelBourg BELGIUM Fax: +43180321–14 Tel: +43180321 1120 Wien 76A/12/17A Altmannsdorfer Straße AUSTRIA Fax: +61(2)95186955 Tel: +61(2)85871800 Pyrmont NSW2009 19 HarrisStreet Suite 3,Level 2 AUSTRALIA Fax: +33(1)48570741 Tel: +33(1)48185000 France 93 108MontreuilSousBoisCedex 28 rueArmandCarrel WORLDWIDE HEADQUARTERS + (359)24894607 Fax: +358(9)684185 Tel: +358(9)694180 00101 Helsinki Aleksanterinkatu 17 P.O. Box 800 World Trade CenterHelsinki FINLAND Fax: +31(30)6622306 Tel: +31(30) 6629110 3454 PVDeMeern Rijnzathe 7A4 NETHERLANDS (THE) Fax: +212(2)208586 Tel: +212(2)208587 Casablanca Angle MoulayYoussef, 62, bdd'Anfa MOROCCO Fax: 525591712077 Tel: 525591711351 06600 México D.F. Col. Juárez Paseo de laReforma 350piso 11 Torre del Angel MEXICO Fax: +81(3)54681360 Tel: +81(3)54682751 Tokyo 107-0002 6-11-1, MinamiAoyama, Minato-Ku 3F MinamiAoyama Bldg,1F JAPAN Fax: +39(02)83312306 Tel: +39(02)833121 20143 Milan Viale Cassala22 Fax: +39(02)4886737 Tel: +39(02)4886711 20090 Buccinasco (Milan) Via Enrico Fermi 10/2 ITALY Fax: +49(211)3380050 Tel: +49(211)338000 40211 Düsseldorf Adlerstrasse 74 GERMANY Fax: +33(1)53176503 Tel: +33(1)48185000 75646 Paris Cedex 13 173-179 rueduChevaleret Austerlitz 2000 FRANCE Fax: +40 215690699/ Tel: +40 215690661to63/ 012103 –Bucharest 2, ExpozitieiBLVD., Sector 1 ROMANIA Fax: +4722151461 Tel: +4722 151460 0671 Oslo Tvetenveien 152 NORWAY +40 2130572/73 +40 2130574 Fax: +41(21)6416869 Tel: +41(21)64168 1000 Lausanne8 Ch. d'Entre-Bois31,CP68 SWITZERLAND Fax: +46(8)7040343 Tel: +46(8)86435130 111 30Stockholm Johannesgränd 2 SWEDEN Fax: +34(93)5906253 Tel: +34(93)5441500 Barcelona 08190 SantCugatDelVallés 2 DaPlanta Avenida RagullN°60 Fax: +34(91)6404652 Tel: +34(91)6404600 Madrid 28230 LasRozas Edificio 3Planta2ªOficina12 José Echegaray, 8 Parque EmpresarialAlvia SPAIN Fax: +82(2)60013073 Tel: +82(2)60013070 Gang-nam Gu,Seoul 135-280 943-24 Dae-chiDong, Khan Building, 1715, 17thFloor ShinanMetro SOUTH KOREA Fax: +1(919)4601502 Tel: +1(919) 4601776 Morrisville -NC27560 Suite 100 3200 GatewayCentreBoulevard Red Storm Fax: +1(415)5474001 Tel: +1(415)5474000 San Francisco -CA94107 625 Third Street USA Fax: +441912772223 Tel: +441912772222 NE1 3AZ Newcastle uponTyne Orchard Street Central SquareSouth Reflections Interactive Fax: +44(0)1932578001 Tel: +44(0)1932578000 Surrey, KT168AP London Street, Chertsey UNITED KINGDOM

www.ubisoftgroup.com ubisoft annual report 2007