Registration Document 2016 and Annual Report Contents Message from the Chairman 3 4 Corporate social responsibility 77 4.1 Methodology note on employee-related, Statement by the person responsible environmental and social reporting 78 for the Registration Document 4 4.2 Employee-related indicators 80 4.3 Environmental indicators 89 4.4 Societal indicators 96 1 Key fi gures 5 4.5 Independent third party’s report 100 1.1 Quarterly and annual consolidated sales 6 5 Financial statements 103 1.2 Sales by platform 7 5.1 Consolidated fi nancial statements 1.3 Sales by geographic region 8 as at March 31, 2016 104 5.2 Statutory Auditors’ report 2 Group presentation 9 on the consolidated fi nancial statements 152 2.1 Group profi le and strategy 10 5.3 Separate fi nancial statements 2.2 History 10 of Ubisoft Entertainment SA for the year ended March 31, 2016 154 2.3 Subsidiaries and equity investments 11 5.4 Statutory Auditors’ report 2.4 Research and development, on the annual fi nancial statements 180 investment and fi nancing policy 13 5.5 Statutory Auditors’ special 2.5 2015/2016 fi nancial year 15 report on regulated agreements 2.6 Outlook 18 and commitments 182 5.6 Ubisoft (parent company) results for the past fi ve fi nancial years 183 3 Governance, risks, risk management and internal control 19 6 Information on the Company 3.1 Report of the Chairman of the Board of Directors on corporate and its capital 185 governance, internal control 6.1 Legal information 186 and risk management 20 6.2 Share capital and stock ownership 188 3.2 Compensation of corporate offi cers 51 6.3 Securities market 199 3.3 Statutory auditors’ report on the report of the Chairman 6.4 Securities other than equity of the Board of Directors securities 202 of Ubisoft Entertainment SA 75 6.5 Financial communication 203 3.4 Auditors 76 7 Cross-reference tables 205 Registration Document cross-reference table 206 Management report cross-reference table 208 CSR cross-reference table 209 Annual report cross-reference table 211 Registration Document 2016 and Annual Report The French version of this Registration Document was fi led on July 22, 2016 in accordance with Article 212-13 of the French Financial Markets Authority (Autorité des Marchés Financiers – AMF). It may be used in connection with a fi nancial transaction if accompanied by a memorandum approved by the Autorité des Marchés Financiers. This document has been prepared by the issuer and is binding upon its signatories. Pursuant to Article 28 of Commission Regulation (EC) No. 809/2004, the following information is incorporated by reference in this Registration Document: ♦ the consolidated and separate fi nancial statements and the relevant Statutory Auditors’ reports for the fi nancial year ended March 31, 2015, presented in the Registration Document fi led on 07/02/2015 under No. D.15-0692, pages 93 to 171; ♦ the consolidated and separate fi nancial statements and the relevant Statutory Auditors’ reports for the fi nancial year ended March 31, 2014, presented in the Registration Document fi led on 06/26/2014 under No. D.14-0691, pages 98 to 188. Ubisoft considers “Non-IFRS operating income” and “Non-IFRS net income”, measures not prepared strictly in accordance with IFRS, to be relevant indicators of the Group’s operating and fi nancial performance. Management uses these measures to run the Group’s business as they are the best refl ection of its recurring performance and exclude the majority of non-operating and non-recurring items. A reconciliation between the IFRS and non-IFRS measures is provided in the appendices to the annual earnings release published on May 12, 2016. - Registration Document 2016 1 2 - Registration Document 2016 Message from the Chairman Dear Shareholders and Partners, Ubisoft is celebrating its 30-year anniversary. Thirty years in one of generation. The Group’s digital transformation will continue over the most exciting and demanding industries in the world. the fi nancial year, our franchise portfolio will expand further and its Ever since the Group’s creation, we have been tireless in our efforts reach will extend beyond video games. This fi scal year will be marked to transform it into a world leader in the entertainment industry. by the release of the Assassin’s Creed movie over which we have been This expansion was accompanied by signifi cant value creation with very careful to retain creative control via the choice of scenarios, a 17-fold increase (1) in the share price since we were listed in 1996. actors and director, leaving the responsibility for producing and marketing the movie to Fox and New Regency. This innovative The new and remarkable achievements which marked the 2015/2016 approach guarantees that the brand’s DNA remains intact, while fi nancial year were very much along the same lines: limiting the fi nancial risk. In the fi rst instance, we confi rmed our unique capacity for creation After the success of the Rabbids Invasion® television series: Invasion and further expanded our fl agship brand portfolio with the success on Nickelodeon and France Télévision, and the Rabbids Invasion of Tom Clancy’s Rainbow Six® Siege and, above all, Tom Clancy’s attraction at Futuroscope, we are proving, year after year, that we The Division™, the most successful launch by a new brand in the are a world leader in the entertainment industry. history of the video game. Assassin’s Creed®, The Crew®, Tom Clancy’s The Division , Far Cry®, Just Dance®, Tom Clancy’s I am particularly proud of the Group that we have created over the Rainbow Six and Watch Dogs® were also some of the most successful years. We have learned to navigate our way through an unbelievably franchises in the industry, providing us with a broad base combined competitive and demanding industry, unique within the media with great visibility. and entertainment business due to its blend of artistic creations, We also made a great comeback in the multi-player segment. Tom technological revolutions and consoles cycles. Against this backdrop, Clancy’s Rainbow Six Siege is considered to be one of the best multi- independence is a key factor of success in that it ensures agility, player games of this generation and Tom Clancy’s The Division, rapidity and adaptability. We have succeeded in combining in coop mode, has garnered the enthusiasm of players since its innovation, creativity and an extremely strong corporate culture launch. These titles offer our fans long-term experiences with the while delivering high value for our shareholders, employees and fans. regular launch of new online content and daily coordination of The future looks bright for the industry as a whole and for Ubisoft. PC online communities. These successes were refl ected in a signifi cant and console growth, expansion into new continents, including Asia, increase in gamer engagement and, consequently, in record digital billions of new players on mobile phones, the formidable potential of sales, allowing for further improvement in our profi tability and Virtual Reality and eSport and the expansion of our brands beyond greater recurrence of our revenue model. video games are all growth drivers and will enable us to continue These outstanding achievements demonstrate Ubisoft’s ability to our steady pace of value creation over the next thirty years. effectively execute and implement its strategic plan. As announced I would like to wholeheartedly thank and congratulate all Ubisoft on our investor day on February 18, 2016, we are entering a new teams for the outstanding progress that they have made, once again, phase of expansion and high value creation for our shareholders, this year. Lastly, I would like to thank our shareholders for their with a target operating margin of 20% and free cash fl ow of around continued loyalty, support and trust. €300 million for 2018/2019. On a more short-term basis, our ambition is to deliver record performance in 2016/2017, with sales of around €1,700 million, a Yves Guillemot non-IFRS operating profi t of around €230 million and strong cash Chairman and Chief Executive Offi cer (1) At June 1, 2016 - Registration Document 2016 3 Statement by the person responsible for the Registration Document This is a free translation of the statement by the person responsible for the registration document issued in the French lanquage and it is provided solely for the convenience of English speaking readers. I confi rm, after having taken all reasonable measures to this effect, The Statutory Auditors’ report on the consolidated fi nancial that the information contained in this Registration Document is, statements for the fi nancial year ended March 31, 2015 appears on to my knowledge, accurate and free from any omission likely to pages 142 and 143 of the 2015 Registration Document. It contains affect its import. no comment. I confi rm that, to my knowledge, the fi nancial statements have been The Statutory Auditors’ report on the consolidated fi nancial prepared in accordance with the applicable accounting standards statements for the fi nancial year ended March 31, 2016 appears and provide a true and fair view of the assets and liabilities, fi nancial on pages 152 and 153 of this Registration Document. It includes an position and results of the Group and all companies consolidated observation drawing the attention of the reader to the “comparability therein, and that the management report information listed on of fi nancial statements” note in the “Accounting principles and page 208 of Chapter 7 is a true presentation of the evolution of the measurement methods” section of the notes to the consolidated business activity, revenue and fi nancial position of the Group and fi nancial statements which sets out the impacts of IFRIC 21 on levies.