Ubisoft reports fiscal year 2006-07 results

• Sales 1 up 24% versus market growth of 5%.

• Current operating income 2 in line with target recently revised upwards: €38.3 million, or 5.6% of sales.

• Net income reaches record level of €40.5 million.

• Cash flows from operating activities up €85.5 million to €53.2 million.

• Positive net cash position: €55.0 million, up €120.3 million.

• Outlook for 2007-08 confirmed.

Paris, May 29, 2007 – Today , one of the world’s largest video games publishers, reported its results for the 2006-07 fiscal year ended March 31, 2007.

Key financial data

In € millions 2006/07 % 2005/06 % Sales 680.3 547.1

Gross profit 452.4 66.5% 360.7 65.9%

R&D expenses 233.0 34.2% 170.4 31.1%

Sales, marketing, G & A expenses 181.1 26.6% 187.2 34.2%

Current operating income before stock options 38.3 5.6% 3.1 0.6% Operating income/(loss) 34.6 5.1% (1.4) -0.3% Net income 40.5 6.0% 11.9 2.2%

Basic earnings per share (in €) 0.95 0.32*

Diluted earnings per share (in €) 0.91 0.35*

Cash flows from R&D investments 226.0 185

Net cash/(debt) 55.0 (65.3) * after stock split by 2.

Yves Guillemot, Chief Executive Officer of Ubisoft stated "The sharp improvement in our operating profitability in fiscal 2006-07 reflects the diversity and strong performance of our games portfolio as well as tight control over SG&A fixed costs and marketing expenses. Thanks to our solid results and the effective containment of working capital requirements during the year, we were able to generate €53 million in cash flows from operating activities while at the same time continuing to implement our growth strategy, with R&D investments up 22%. With the best games line-up in its history, Ubisoft has laid the foundation for starting 2007-08 in excellent conditions and is well-positioned to continue to gain market share and further increase its profitability in a high-growth sector."

1 Sales figures for fiscal 2006-07 were released on April 26, 2007. 2 Before the impact of stock-based compensation ("before stock options").

Main income statement items:

• Gross profit up €92 million (66.5% of sales).

• SG&A expenses down €6.1 million (26.6% of sales).

• R&D expenses up 62,6 M€ (34.2% of sales).

• Net financial income of €18.0 million, due to a €27.1 million gain arising from the Equity Swap 3.

• Diluted earnings per share: €0.91

Sales for full-year 2006-07 came to €680.3 million, up 24.4%, or 27.2% at constant exchange rates.

Gross profit advanced €91.7 million to €452.4 million, representing 66.5% of sales, versus 65.9% in 2005-06. This rise was fueled by sales of new generation games (74% gross margin), which accounted for 60% of the total sales figure. The contribution of these games offset the expected decreasing margins of old generation games (56% margin), as well as the impact from growing distribution activities and back-catalog sales, which traditionally generate lower margins.

Current operating income before stock options surged to €38.3 million from €3.1 million in 2005-06, representing 5.6% of sales versus 0.6%. This increase was primarily attributable to a combination of the following factors: • The €91.7 million rise in gross profit. • A decrease in SG&A expenses to €181.1 million (26.6% of sales) from €187.2 million the previous year (34.2% of sales), achieved due to a reduction in marketing expenditure and logistic costs to €87.3 million from €95.5 million, as well as tight control over fixed costs which only edged up to €93.8 million from €91.7 million the previous year. • Partially offset by the expected increase in R&D expenses to €233.0 million (34.2% of sales) from €170.4 million (31.1% of sales) in 2005-06.

Net financial income came to €18.0 million (compared with a net financial charge of €9.1 million reported in 2005-06), breaking down as follows: • €7.0 million in financial charges (€10.3 million in 2005-06), including €1 million related to compound financial instruments, recorded in accordance with IFRS. This reduction reflects the year-on-year decrease in the Group’s debt. • €1.7 million in foreign exchange losses (€6.3 million in 2005-06). • A €27.1 million positive impact attributable to the Equity Swap (€7.5 million in 2005-06).

The contribution of equity accounted companies (Gameloft) amounted to €3.1 million, compared with €19.1 million in 2005-06.

Ubisoft ended the fiscal year with net income of €40.5 million, versus €11.9 million one year earlier. Diluted earnings per share amounted to €0.91.

Main cash flow statement and balance sheet items:

Cash flows from operating activities jumped from a negative €32.3 million in 2005-06 to a positive €53.2 million in 2006-07, reflecting the impact of the robust increase in operating income, coupled with the €7.4 million decrease of working capital requirement.

3 Operation concluded with Crédit Lyonnais on September 30, 2003.

On March 31, 2007, Ubisoft had a net cash position of €55.0 million compared with a net debt position of €65.3 million at March 31, 2006. This €120.3 million improvement was driven by the rise in cash flows from operating activities as well as: • Capital increases totaling €107.2 million. • €2.9 million in translation adjustments. • Investments of €43 million, including €25 million for the acquisition of the ® and ® brands.

Outlook for 2007-08 confirmed

In 2007-08, Ubisoft will have the best line-up in its history with the new titles launched for 7 of its successful franchises (including Brothers in Arms ®, Tom Clancy’s Splinter Cell ® and ®), 6 new brands (including Assassin's Creed TM , Tom Clancy’s EndWar TM and Haze TM ) and 4 licensed games (Surf's Up™, Lost TM , Naruto TM , Beowulf TM ). Ubisoft also expects to see a considerable ramp-up of games for the TM and DS TM systems thanks to a highly pro-active strategy in the casual gaming segment.

As a result, Ubisoft is maintaining its previously announced targets: • First-quarter sales of approximately €120 million. • Full-year 2007-08 sales of around €800 million and current operating income before stock options representing at least 8% of total sales.

Financial calendar Release/event Date Annual General Meeting July 4, 2007 First-quarter 2007-08 sales July 24, 2007 These dates are subject to change and will be confirmed at a later stage.

Contacts Investor relations Jean-Benoît Roquette Head of Investor Relations + 33 1 48 18 52 39 [email protected] / [email protected]

Disclaimer

This statement may contain estimated financial data, information on future projects and transactions and future business results/performance. Such forward-looking data are provided for estimation purposes only. They are subject to market risks and uncertainties and may vary significantly compared with the actual results that will be published. The estimated financial data have been presented to the Board of Directors and have not been audited by the Statutory Auditors. (Additional information is specified in the most recent Ubisoft Registration Document filed on September 20, 2006 with the French Financial Markets Authority ( l’Autorité des marchés financiers ).

About Ubisoft

Ubisoft is a leading producer, publisher and distributor of interactive entertainment products worldwide and has grown considerably through a strong and diversified line-up of products and partnerships. Ubisoft has offices in 21 countries and sales in more than 50 countries around the globe. It is committed to delivering high-quality, cutting-edge titles to consumers. Ubisoft generated sales of €680.3 million for the 2006-07 fiscal year. To learn more, please visit www.ubisoftgroup.com .

Significant events of the 2006-07 fiscal year

May 2006 - €24 million equity increase following the conversion of warrants issued in 2003. - Ubisoft emerges victorious from the 2006 E3 , with Assassin’s Creed™ winning the Best Action/Adventure Game as part of the Game Critics Awards: Best of E3 2006; Brothers in Arms Hell’s Highway™ recognized as Best First Person Shooter for Xbox 360™; and Tom Clancy’s Rainbow Six® Vegas picking up the title of Overall Best First Person Shooter awarded by IGN.

June 2006 - Ubisoft opens a production studio in Sofia, Bulgaria.

July 2006 - Ubisoft acquires the Driver® franchise for €19 million, giving the Group a direct point of entry into the key driving games segment. This prestigious brand has already sold more than 14 million units throughout the world. - Marc Fiorentino is appointed to the board of Directors.

August 2006 - Ubisoft announces 7 titles for the launch of Nintendo Wii™ including Red Steel™ and Rayman Raving ™. - Tom Clancy’s Ghost Recon Advanced Warfighter® is ranked number one for solo and multiplayer games on the on-line games service Xbox Live®.

October 2006 - A new commercial subsidiary opens its doors in Mexico.

November 2006 - €24.2 million equity increase following the conversion of a portion of the Group's 2006 OCEANE bonds.

December 2006 - A two-for-one stock split is carried out on December 11, 2006. - GameInformer, the world’s number one computer and video game magazine with a circulation of over two million , ranks Ubisoft as the second leading international publisher and names as the fourth leading development studio for 2006.

January 2007 - Ubisoft reports third-quarter 2006-07 sales  Ubisoft ranked no. 1 independent publisher for Wii™ in Europe and the U.S. with market shares of 29.2% and 18% respectively. Rayman ® and Red Steel™ positioned number two and three in terms of sales.  Ubisoft ranked no. 2 independent publisher for the Xbox 360™ system in Europe and the U.S., with market shares of 14.6% and 13.4% respectively. Tom Clancy’s Rainbow Six® Vegas was the third best-seller in December in the United States and Tom Clancy’s Splinter Cell Double Agent® was the leading seller in October. In addition, Tom Clancy’s Ghost Recon Advanced War Fighter® was the third best-seller in the United States for the full calendar year 2006.

February 2007 - Ubisoft is honored at the 10 th 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).

April 2007 - Further market share gains in the fourth quarter of the fiscal year.  Second independent publisher in Europe, with sales growth of 31% (compared with market growth of 15%), and market share of 8.6% versus 7.6% the previous year. Ubisoft was ranked number one independent publisher for Wii™, Nintendo DS™ and Xbox 360™.  Third independent publisher in the United States, with sales growth of 41% (compared with market growth of 28%) and market share of 6.7% versus 6.1% the previous year. Ubisoft was ranked number one independent publisher for Wii™ and number two for the Nintendo DS™ and Xbox 360™. - Ubisoft acquires ®. With 5 million units sold to date, Anno® is one of the most successful strategy games and a best-seller in the German market. This acquisition will strengthen Ubisoft’s leading position for strategy games, Germany’s most important segment, and will consolidate its number 2 position in the country. - Announcement of Tom Clancy’s EndWar™ , a new brand in the Tom Clancy series of video games. Led by strategy veteran and Ubisoft creative director Michael de Plater, Tom Clancy’s EndWar™ is being developed by a world-class team at Ubisoft’s Shanghai studio whose members have experience developing Ubisoft’s hit franchises including Tom Clancy’s Ghost Recon ®, Tom Clancy’s Rainbow Six ® and Tom Clancy’s Splinter Cell ®.

May 2007 - Ubisoft will develop “ Beowulf ", the video game based on Paramount Pictures’ and Shangri-La Entertainment’s movie, from Academy Award®-winning director Robert Zemeckis, with Angelina Jolie, Anthony Hopkins and John Malkovich.

© 2006 Ubisoft Entertainment SA and Free Radical Design Limited. All Rights Reserved. Haze is a trademark of Ubisoft Entertainment and Free Radical Design. Free Radical Design and its associated logo are trademarks of Free Radical Design Limited. Developed by Free Radical Design Limited. © 2007 Ubisoft Entertainment. All Rights Reserved. Anno, Driver, Red Steel, Splinter Cell, Splinter Cell Double Agent, Assassin’s Creed, Endwar, Rayman, Rayman Raving Rabbids, Ghost Recon, Ghost Recon Advanced Warfighter, Far Cry, Ubisoft, Ubi.com, and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Rainbow Six, Red Storm and the Red Storm logo are trademarks of in the U.S. and/or other countries. Red Storm Entertainment, Inc. is a Ubisoft Entertainment company. Surf's Up: TM & © 2007 Sony Pictures Animation Inc. All rights reserved. Game software excluding Sony elements: © 2007 Ubisoft Entertainment. All rights reserved. © 2006 Gearbox Software, L.L.C. All rights reserved. Published and distributed by Ubisoft Entertainment under license from Gearbox Software, L.L.C. Brothers in Arms Hell’s Highway is a trademark of Gearbox Software and is used under license. © 2007 Ubisoft Entertainment. All Rights Reserved. Ubisoft and the Ubisoft logo are trademarks of Ubisoft Entertainment in the US and/or other countries. Under license by © Touchstone Television. All Rights Reserved. Beowulf: TM & © 2007 Paramount Pictures. All Rights Reserved. Game software: © 2007 Ubisoft Entertainment. All Rights Reserved. Naruto Rise of a Ninja © 2007 Ubisoft Entertainment. All Rights Reserved. © 2002 MASASHI KISHIMOTO. This product is manufactured, distributed and sold under license from TV TOKYO CORPORATION & SHUEISHA INC and from VIZ Media, LLC. All Rights Reserved. Microsoft, Xbox, Xbox 360, Xbox Live, and the Xbox, Xbox 360, and Xbox Live logos are either registered trademarks or trademarks of Microsoft Corporation in the U.S. and/or other countries. NINTENDO, GAME BOY, GAME BOY ADVANCE, NINTENDO GAMECUBE, THE NINTENDO DS LOGO, Wii AND THE SEAL OF QUALITY ICON ARE TRADEMARKS OF NINTENDO.

CONSOLIDATED FINANCIAL STATEMENTS FOR THE FISCAL YEAR ENDED MARCH 31, 2007

Consolidated income statement

in € thousands 31.03.07 31.03.06

Sales 680,348 547,070 Other operating income 166,467 132,965 Cost of sales -229,969 -187,623 Inventory changes 2,037 1,186 Wages and social security costs -171,038 -140,674 Other operating expenses -174,275 -186,883 Tax and duty -5,950 -4,906 Depreciation -230,113 -81,302 Provisions -2,568 -79,440 Current operating income/(loss) 34,939 393 Other current operating expenses -360 -1,784 Operating income/(loss) 34,579 -1,391 Income from cash and cash equivalents 1,476 2,183 Gross borrowings cost -7,067 -10,693 Net borrowings cost -5,591 -8,510 Financial income 38,201 17,369 Financial expense -14,563 -17,969 Net financial income/(expense) 18,047 -9,110 Share of profit/(loss) of associates 3,149 19,109 Income tax expense -15,217 3,324 Net income/(loss) of consolidated companies 40,558 11,932 Minority interests - - Net income/(loss) 40,558 11,932

Basic earnings/(loss) per share 0.95 0.63 Basic earnings/(loss) per share after stock split (11 th December 2006) 0.95 0.32 Average shares outstanding (after stock split) 42,481 38,024 Diluted earnings/(loss) per share 0.91 0.70 Diluted earnings/(loss) per share after stock split (11 th December 2006) 0.91 0.35 Diluted average shares (after stock split) 45,501 49,394

Consolidated balance sheet

ASSETS Net Net in € thousands

31.03.07 31.03.06

Goodwill 77,374 80,032 Other intangible assets 264,026 233,959 Tangible assets 25,510 22,276 Investments in associates 33,998 30,034 Non-current financial assets 2,458 2,702 Deferred income tax assets 37,630 42,321

Total non-current assets 440,996 411,324

Inventories 24,794 23,716 Trade receivables 87,857 91,246 Other receivables 73,959 62,290 Financial assets 19,183 321 Income tax receivable 10,605 5,708 Cash and cash equivalents 126,552 136,991

Total current assets 342,950 320,272

Total Assets 783,946 731,596

EQUITY AND LIABILITIES 31.03.07 31.03.06 in € thousands

Capital 7,037 6,025 Share premiums 435,234 325,065 Component of equity 10,651 10,651 Consolidated reserves 28,339 27,585 Net income/(loss) for the period 40,558 11,932 Equity (Group share) 521,819 381,258 Minority interests - - Total equity 521,819 381,258

Provisions 1,952 4 Employee benefits 1,205 1,156 Borrowings 22,706 54,981 Deferred tax liabilities 28,214 22,854 Total non-current liabilities 54,077 78,995

Borrowings 48,874 147,354 Trade payables 81,178 71,033 Other payables 75,895 52,073 Financial liabilities - 1 Income tax payable 2,103 882 Total current liabilities 208,050 271,343

Total equity and liabilities 783,946 731,596

Consolidated cash flow statement

in € thousands 31.03.07 31.03.06

Cash flows from operating activities Net income/(loss) 40,558 11,932 +/- Share of profit/(loss) of associates -3,149 -19,109 +/- Depreciation 230,118 158,792 +/- Provisions 884 2,776 +/- Cost of stock-based compensation 3,344 2,692 +/- Disposal gains and losses 243 126 +/- Other adjustments -221 -147 Inventories -1,914 -2,873 Trade receivables -842 54,688 Other receivables -34,830 -7,048 Trade payables 11,539 -32,204 Other payables 33,429 -18,434 +/-Change in working capital requirement 7,382 -5,871 CASH FLOWS FROM OPERATING ACTIVITIES 279,159 151,191

- Acquisition of intangible and tangible fixed assets -269,402 -201,866 + Proceeds from sale of intangible and tangible fixed assets 95 140 +/- Disposals of financial fixed assets -15,778 -4,227 +/- Other flows related to investing activities -153 -153 + Proceeds from long-term loans and other financial assets 16,077 3,787 +/- Changes in Group structure (1) 170 22,691 CASH FLOWS FROM INVESTING ACTIVITIES -268,991 -179,628

Cash flows from financing activities + New financial lease loans 60 128 + New long- and medium-term loans 30,740 7,537 - Repayments of financial lease borrowings -230 -1,040 - Repayments of borrowings -151,933 -24,875 + Accrued interest -807 -650 + Proceeds from issue of capital 106,551 40,786 +/- Purchase/sale of own shares 625 -503 +/- Other -42 - CASH FLOWS FROM FINANCING ACTIVITIES -15,036 21,383

Net change in cash and cash equivalents -4,868 -7,054 Cash and cash equivalents at beginning of period 80,894 90,493 Effect of exchange rate fluctuations 2,627 -2,545 Cash and cash equivalents at end of period 78,653 80,894

(1) including cash from companies acquired or sold -17 22,697

Cash flow statement for comparison with other industry players – unaudited.

in € thousands 31.03.07 31.03.06

Cash flows from operating activities Net income/(loss) 40,558 11,932 +/- Share of profit/(loss) of associates -3,149 -19,109 +/- Depreciation of games software 214,499 146,100 +/- Other depreciation / amortization 15,619 12,692 +/- Provisions 884 2,776 +/- Cost/income of stock-based compensation 3,344 2,692 +/- Disposal gains and losses 243 126 +/- Other adjustments -221 -147 +/- Costs related to internal development and development of licenses -226,009 -183,459 OPERATING CASH FLOW BEFORE WORKING CAPITAL 45,768 -26,397 Inventories -1,914 -2,873 Trade receivables -842 54,688 Other receivables -34,830 -7,048 Trade payables 11,539 -32,204 Other payables 33,429 -18,434 +/-Change in working capital requirement 7,382 -5,871 CASH FLOWS FROM OPERATING ACTIVITIES 53,150 -32,268 - Acquisition of intangible and tangible fixed assets -43,394 -18,407 + Proceeds from sale of intangible and tangible fixed assets 95 140 +/- Acquisitions/disposals of non-current financial assets -15,778 -4,227 +/- Other flows related to investing activities -153 -153 + Repayment of long-term loans and other financial assets 16,078 3,787 +/- Disposals of equity interests (1) 170 22,691 CASH FLOWS FROM INVESTING ACTIVITIES -42,982 3,831

Cash flows from financing activities + New financial lease loans 60 128 + New long- and medium-term loans 30,740 7,537 - Repayments of financial lease borrowings -230 -1,040 - Repayments of borrowings -151,993 -24,875 + Accrued interest -807 -650 + Proceeds from issue of capital 106,551 40,786 +/- Sale of own shares 625 -503 +/- Other -42 CASH FLOWS FROM FINANCING ACTIVITIES -15,036 21,383

Net change in cash and cash equivalents -4,868 -7,054 Cash and cash equivalents at beginning of period 80,894 90,493 Effect of exchange rate fluctuations 2,627 -2,545 Cash and cash equivalents at end of period 78,653 80,894 (1) including cash from companies acquired or sold -17 22,697