2006, Investing in a CGI Studio in Montreal

ANNUAL REPORT 2008 landscape ofthefuture. game industry’sshift towardsothermedia forms, thusshapingtheentertainment With itsextraordinary creationcapacity,Ubisoft isattheforefront ofthevideo ation consoleshave allowedthegrouptoopenupmarket tonewaudiences. of videogamesandintheindustryas awhole.Early investments innext-gener- A companywithavision,Ubisoft hasbeenabletoanticipate evolutions intheuse

CREATOR OF INTERACTIVE ENTERTAINMENT ,, CHAIRMAN AND CEO’S STATEMENT ANOTHER RECORD YEAR ANNUAL REPORT 2008 REPORT ANNUAL

2007-08 was another record year for Ubisoft, with a turnover of €928 million, up 43% at constant exchange rates. Our current operating income is now 14.3% of sales, compared with 5.6% last year. Having successfully conquered rd YVES GUILLEMOT CHAIRMAN & CEO new market share, Ubisoft is now the 3 largest independent video game publisher in the world (1). In the US we’re in 3rd place with a market share of 6.4%, and in Europe we’ve held fast to 2nd place with a market share of 8.1%.

These excellent results can largely be attributed to our ability to meet the 5 key objectives we set out for ourselves last year. continue to create new brands and develop existing ones Assassin’s Creed™ was the happening of 2007-08. Hailed by critics (2), the game set new standards in terms of character animation and graphic quality. With no less than 6 million units sold since its release, it has conquered gamers worldwide, even in Japan, an audience that Western developers have traditionally had difficulty attracting. Another new brand to revolutionize the market was Imagine™, which sold 4 million units. We are very proud of the success of this range which is mainly aimed at young girls. Moreover, the success of new titles based on established brands has worked to strengthen their respective franchises. Sales of the Petz® series have doubled, Tom Clancy’s Rainbow Six® Vegas has sold 3.5 million units – twice as many as ever before – and Rayman® has been met with even more success thanks to those Raving Rabbids. Our core strategy, which depends on our ability to create strong and lasting brands, has not changed, for it is what guarantees Ubisoft recurrent revenue.

(1) In 2007, excluding Asia. (2) E.g. Outstanding Achievement in Animation, AIAS 2008. make ubisoft the reference in the casual gaming market Thanks to our early positioning in the casual games market, we’ve managed to maintain our position as leader, and continue to win over market share. In one year, our turnover in this segment has more than tripled, increasing from €70 to €230 million. In addition to the success of the Imagine™ range, the Petz® line has sold 8 million copies. stay at the cutting edge of technology We’ve continued to invest internally in the development of 3rd generation game engines, which allows us to optimize the capabilities of current consoles and stay at the forefront of technology. This year, for the first time in a FPS (1), gamers will get to experience an unprecedented amount of freedom in a totally open environment with Far Cry® 2. Tom Clancy’s EndWar™ will be the first video game playable entirely by voice, thanks to its voice command system. With its high graphic quality, Assassin’s Creed™ is already a testament to the extraordinary technological progress that has been made. further improve the accessibility of our games Nowadays, every member of the family has become a potential gamer. We’ve therefore developed games with increased accessibility and originality so as to attract a broader audience. Moreover, we’ve worked on the accessibility of games aimed at hardcore gamers to give everyone the chance to progress at their own pace and carry out a multitude of actions, alongside the main mission, in open worlds. continue to enlarge our production ATTRACTING,, capacity while maintaining highly A BROADER competitive development costs AUDIENCE In 2007-08, as well as taking over the Japanese studio Digital Kids (Ubisoft Nagoya), Ubisoft opened two new studios in Asia (Chengdu and Singapore). Three other openings have rounded out that list in Q1 2008-09: Pune (India), Kiev (Ukraine) and Sao Paulo (Brazil).

Building upon this successful track record, once again this year, in order to speed up our growth, we have identified 5 top priorities: continue to enlarge our production capacity, placing emphasis on recruitment and training To accompany its growth, Ubisoft wishes to increase the size of its teams: 900 new creative talents will come on board this year, 500 of whom will be in new studios. In anticipation of these new recruitments, we are developing our training network: Ubisoft will continue to build relationships with local universities and schools specialized in creative multimedia disciplines to attract and train future talents.

(3) First-Person Shooter. (4) Massively Multiplayer Online Games. boost the games for everyone line We are now a reference in this sector, which represents almost 25% of our annual turnover (€230 million). Our aim is to increase this source of revenue to €300 million in 2008-09. continue to pursue our strategy of building strong brands In 2008-09, we will launch five new brands, including Shaun White Snowboarding, Tom Clancy’s EndWar™ and Tom Clancy’s H.A.W.X™. Moreover, our successful franchises will be further strengthened by the highly-anticipated sequels to Prince of Persia®, Far Cry® and Brothers in Arms®. Finally, the casual games market will not be overlooked with the release of titles such as My Health Coach: Weight Management. These multiple launch- es will flesh out our brand portfolio even further. increase investments in the production of digital images Characters and virtual worlds created for video games are now being adapted to other media platforms, such as books, films, TV series, the Internet etc. Ubisoft foresaw multimedia convergence back in 2006, investing in a CGI studio in Montreal. The recent acquisition of Hybride, a production studio specialized in special effects for cinema, is in keeping with our investment strategy in this domain. The purchase of all the intellectual property rights related to the Tom Clancy name for video games and derivative products such as movies, books or television, will further consolidate our efforts. Bringing our creations to other media forms will allow us to pool our resources in production, whilst enriching our franchises, and will represent a substantial new source of income. FORESEEING,, MULTIMEDIA make headway in the mmog market CONVERGENCE and social networks Ubisoft plans to develop its own online gaming communities on PCs and consoles. With Heroes of Might and Magic® Kingdoms and the long-awaited Tom Clancy’s EndWar™, this year Ubisoft will be present on the web-based segment of the market. Moreover, some of our hit brands are already in the pre-production phase in the MMOG (4) sector. Experts in the domain have joined our team in China, and will help us to quickly get our feet off the ground with an operational structure dedicated to online games. 2008-09 looks like it’s going to be another record year, both for the video game industry and for Ubisoft. The challenges are sizeable, but we’ve got some spectacular titles, developed internally and in association with partner studios, that have the potential to become big hits. We plan to continue sur- prising gamers, by offering them ever more innovative titles. I am very con- fident we’ll reach our objective of €1 billion sales figures this year, with an operating margin of at least 12%.

I would like to thank the gamers, our shareholders and all our partners for the trust they place in us. I would also like to thank the Ubisoft teams whose passion, talent, creativity and enthusiasm has made the company what it is today and will enable us to overcome the challenges that lie ahead.

yves guillemot chairman & ceo 4 6 3 1 5

2 top management top

At the head of the group, a unified team, who embodies the values that characterize Ubisoft’s corporate culture: teamwork, creativity, determination and a yearning for challenge.

yves guillemot christine serge hascoët 1 2 3 CHAIRMAN & CEO burgess-quémard CHIEF CREATIVE OFFICER EXECUTIVE DIRECTOR, WORLDWIDE STUDIOS

alain corre laurent detoc alain martinez 4 5 6 EXECUTIVE DIRECTOR, EXECUTIVE DIRECTOR, CHIEF FINANCIAL OFFICER EMEA TERRITORIES NORTH AMERICA production activitiesintoChina. the groupalso decides toexpand its for itsdevelopment. The sameyear, exchange, Ubisoft opens upnewdoors With alistingontheParis stock and toAsia Ubisoft goes public industry, Ubisoft hasmanagedtostandoutinamarket ofdemandinggamers. by thecriticswithoriginalandinnovative titlesthathave never ceasedtosurprisethe In 2007-08,thegroup’sdecisiontoinvest inupandcomingsegmentspaidoff. Hailed

1996 its Europeandebut, the sowing itsfirstcreative seeds. Since studios inFrance andRomania,thus Ubisoft opensinternaldevelopment 1992-95 takes front-stage In-house creation more than22millionunitsworldwide. gamers allacrosstheglobe,selling franchise hasgarnered supportfrom Rayman ®

publishers worldwide. is catapulted intotheTop 10independent brands toitscatalogue.In2001,Ubisoft Company's gamesdivisionadding newhit Red Storm,BlueByteandThe Learning distribution network.The groupacquires and byfurtherstrengtheningitsglobal 6 different cities,includingMontreal, strategy byopeningupnewstudiosin Ubisoft confirms itsinternalgrowth acquisitions coupled withstrategic Internal growth 1997-011997- Ubisoft goes abroad international distributionsubsidiaries. become hometoUbisoft’s first The USA, GermanyandtheUK 1989-91

1986 Ubisoft isborn distribution company. and video gamepublishing and forces tofound anedutainment The five Guillemotbrothersjoin generation consoles. of itsearly positioningonnext- as itbeginstoreapthebenefits and takes thenext-gen headon, celebrates its20thanniversary in key territories.In2006Ubisoft to 8,increasingitsmarket share number ofhitbrands from3 Ubisoft morethandoubles its brands wholly-owned Building 2002-06 markets, ranking #4worldwide (excluding Japan). network. Ubisoft sees itsmarket sharerise inallkey Bulgaria areopened, reinforcing Ubisoft’s global A businessoffice inMexico andaproduction studioin franchises. Buildingon Sunflowers toacquire thecompany andallofits Interactive, andconcludes adeal withGerman publisher 360™. Ubisoft welcomes theteamfrom Reflections independent publisherfor theWii™and#2for Xbox its salesfiguresrise 24.4%,thegroupbecomes the#1 Ubisoft reaffirms itsstatusasakey industryplayer. As Ubisoft speeds upitsgrowth acquires the rightsrelated tothe 2006-07 Driver ® and Far Cry Anno™ ® brand. , thegroup

CORPORATE MILESTONES Rainbow Six Prince ofPersia books, filmsandallmerchandisingproducts. name for video gamesandrelated products including property rights Red Steel™ Brothers inArms Tom Clancy’sGhostRecon game publisherworldwide few years propelUbisoft to Ubisoft, 3 5 its (1) Excluding Asia. in in Asia,withtheopeningof the makes historywhenitbeatssalesrecords, becoming of twonewstudiosin in Japan andtheannouncement oftheopening game publisherworldwide of Maltazard Arthur andtheMinimoys: andtheRevenge distribute video gamesadapted fromsequels of agreement in descending order, in Ubisoft’s portfolio increases from10to games intheUSandUK. th China Finally, Ubisoft closes a Moreover, All ofthesuccesses accumulated over thepast Ubisoft’s expansion picksupsteam,notably Released inNovember 2007, The numberof #2 positioninEurope to

fastest-selling brand 2007-08 3 rd and position intheUnitedStates . with ® Singapore and Ubisoft acquiresalloftheintellectual , rd Tom Clancy’sSplinterCell ® EuropaCorp associated withthe , ® The Settlers Arthur andtheTwo WorldsWar multimillion unit-sellingbrands independent video , Anno™ India Rayman , theacquisition ofstudios , thegroupjumpsfrom ever inthehistoryofvideo (1) worldwide licensing and , 3 ® development studios Imagine™ . Whilereaffirming rd , to develop, publishand ® ® Driver independent Ukraine , , Assassin’s Creed™ Assassin’s Creed™ Tom Clancy’s Tom Clancy , ® . Far Cry , . Petz (1) 14 ® video , ® with, , ®

and ANNUAL REPORT 2008 TIMELINE . , KEY FIGURES ANNUAL REPORT 2008 REPORT ANNUAL 2007–08 AT A GLANCE AT €928 €110 million of Sales million of Net Income 3rd €133 independent publisher worldwide (1) million of Current Operating Income 4,350 €265 employees in 27 countries million of Total R&D Expenses of whom 3,500 employed in production

2007–08 marked a new phase of growth for Ubisoft as the group proved to an industry in full-swing that it was indeed a master of its domain. The group continued to reinforce its role as creator and publisher of multi-media content by focusing on three strategic directions: the strengthening of existing brands (Tom Clancy’s Rainbow Six® Vegas 2), the launch of new hit brands like Assassin’s Creed™, and the rise in popularity of titles in the Games for Everyone line, such as Petz®. In the future, Ubisoft will continue to rely on its brands to grow and dazzle gamers the world over with its truly original and innovative creations. 634.2 8

shareholder’s equity 521. 3

. net debt/net cash 381 149.5 55 million) -65.3 € financial position ( 03/31/2006 03/31/2007 03/31/2008

86% New-Generation Consoles 42% NORTH AMERICA

7% PC 51% EUROPE 7% Others

breakdown of sales by platform geographic breakdown of sales 7% REST OF THE WORLD

2003-04 508 2,500 2003-04 533 2004-05 3,000 2004-05 547 2005-06 3,500 2005-06 680 2006-07 3,950 2006-07 million) € evolution of sales ( 928 2007-08 evolution of number employees 4,350 2007-08

(1) In 2007, in value terms, excluding Asia. Sources: NPD, Chart-Track, Media Control, GfK. development network inthemonthsandyears tocome. close to900peoplethiscomingyear. made upof4,350peoplespreadacross27 countries,andteamsareexpected toincreaseby Ubisoft isthe3 16 countries, thegrouphas2 who once againwerepraised bycriticsin 2007-08(AIAS,IGN…).Withapproximately 20studiosspreadacross different typesofgamers.Ubisoft owesitsbrilliant internationalreputationinlargepartto its creative talents, have also helped thegrouptobetterunderstand andanticipatetheexpectations andcultural specificities of publishers whonowturntothegroupfor thedistribution oftheirtitles.Locally-implanted businesssubsidiaries business teamshave developed long-lastingrelationshipswithlocal partnersandeven wonthetrustofother

BUSINESS OFFICES DEVELOPEMENTSTUDIOS

i BY GEOGRAPHICZONE NUMBER OFEMPLOYEES n

e 3

e n

(1) t ANNUAL REPORT 2008 GLOBAL PRESENCE

WORLDWIDE p u b

l rd i sh er rd independent publisherofvideogamesinthe world.The groupiscurrently nd (2) largest internalcreative workforce inthe industry,andplanstoexpand its

With adistributionnetworkthatcovers 55countries, Ubisoft’s A KEY PLAYER IN THE INTERNATIONAL

ENTERTAINMENT ARENA

i n

e 3

e n

NORTH AMERICA USA p u b

l rd i sh er 2,100

NORTH AMERICA CANADA

BRAZIL (3) 1,750

(3) The openingofthePune, Kiev andSaoPaulo studioswas announced duringthefirsttrimester of2008-09. (2) AsofMarch31, 2008. (1) Excluding Asia.Source: NPD,ChartTrack, Media Control,GFK,invalue terms,calendar year 2007. MOROCCO

EUROPE

i n d

p + NORTH AFRICA

e 2

e n

EUROPE p u b l nd i sh er

SPAIN

UNITED KINGDOM HQ PARIS FRANCE BELGIUM SWITZERLAND NETHERLANDS NORWAY INDIA (3) DENMARK ITALY GERMANY

AUSTRIA SWEDEN

BULGARIA

CHINA ROMANIA FINLAND UKRAINE (3)

SOUTH KOREA

JAPAN AUSTRALIA 500

ASIA PACIFIC ASSASSIN’S CREED™

ASSASSIN’S,, CREED™ EVENT OF THE YEAR 2007-08 COMMAND ANNUAL REPORT 2008 REPORT ANNUAL distribution distribution managing the managing conception to to conception value chain: from value

With over twenty years’ experience, Ubisoft has developed the expertise necessary to manage its entire value chain from conception to sales. The strength of its internal creative workforce and locally-based international distribution network provide the foundations for the group’s success.

In order to break out onto the international scene, the distribution start-up founded in the 1980s, made a strategic decision to create and develop its own games in-house. Twenty-two years later, these bets have paid off. With approximately twenty studios and more than 3,300 creative talents around the world, Ubisoft has the second largest internal creative workforce in the industry. Ubisoft targets gamers of all nationalities while setting down roots on every continent. Today its teams are spread across 21 subsidiaries and its games are distributed in 55 countries. The company has a powerful sales network and continues to open distribution centers all over the world. Ubisoft has been so successful in its distribution activities that other publishers now entrust the group’s business teams with the task of distributing their games. In-house game development and direct distribution remain the cornerstones of the group’s strategy and continue to pay off; Ubisoft is currently the third independent video game publisher in the world*.

*excluding Asia. IMAGINE™ FASHION DESIGNER

ATTRACTING,, NEW AUDIENCES TO EXPAND THE GAMING COMMUNITY ANTICIPATE ANNUAL REPORT 2008 REPORT ANNUAL anticipating trends anticipating

Anticipating industry changes and gamer preferences enables Ubisoft to shape the very market in which it evolves and always stay one step ahead of the competition.

Keen observation of socio-cultural shifts and evolutions in gaming hardware have made it possible for Ubisoft to position itself early on the most dynamic market segments. Ubisoft has been investing in new- generation consoles since 2006, which has generated 86% of the company’s sales this fiscal year 2007-08. Ubisoft anticipated that video games would be able to attract new audiences, particularly with the arrival of increasingly accessible video game consoles. The company was the 1st independent publisher on the Nintendo DS™, the 4th on Wii™, and we designed a customized range of games for these consoles tailored to audiences that go beyond the hardcore gamer. The Games for Everyone line, from the My Health Coach series to Petz® and the Imagine™ series, have helped expand the market to new audiences - younger, older, and more feminine ones. Ubisoft is preparing for its future by making strategic decisions, such as exploring online gaming territory, focusing on downloadable content, and expanding its computer- generated image production business. The company will continue to reinforce its competitive advantage by taking into account all factors likely to affect the market. FAR CRY® 2

FAR,, CRY ® 2 – THE FUTURE OF VIDEO GAMES BECKONS, ALLOWING GAMERS AN UNPRECEDENTED DEGREE OF FREEDOM INNOVATE ANNUAL REPORT 2008 REPORT ANNUAL technology innovation and innovation

Staying on the technological cutting edge is essential to satisfying gamers’ expectations. As these expectations become increasingly demanding, Ubisoft continues to raise the bar on innovation.

The group has often developed the industry’s surprise hit. Regularly praised by critics, Ubisoft’s talent pool is known for its innovative approach and high-quality work. The game engines developed in-house enable teams to take full advantage of the latest consoles’ capabilities. For example, the DUNIA engine of the next Far Cry® 2 brings to life a realistic, completely open environment at the heart of the African savannah. Another innovation is voice recognition, which enables players of Tom Clancy’s EndWar™ to use their voice to command troops on the ground or in the air. Combined with seamless scenarios, this technology paves the way for new gaming experiences in high definition. Equipped with a CGI studio for the production of 3D images, Ubisoft has developed an expertise that is already enabling it to improve the graphic quality of its games. In the future, this advantage will provide the group with the opportunity to transport its brands into the realm of animated films. Ubisoft must place innovation at the forefront of its development if it wants to continue holding its own in a sector of cultural commodities marked by technological innovation. Alongside a policy of sustained investment in R&D, Ubisoft’s teams are on a continuous search for new technical capabilities that make it possible to transform their creative vision into reality with insight and imagination. TOM CLANCY’S GHOST RECON® TOM CLANCY’S SPLINTER CELL® TOM CLANCY’S RAINBOW SIX®

A ,, PORTFOLIO OF HIT BRANDS, INCLUDING 14 MULTIMILLION UNIT-SELLERS CREATE ANNUAL REPORT 2008 REPORT ANNUAL of success brands at the heart brands at

Cult classics or promising, new brands… Shooters, board games, adventure or simulation… Ubisoft games are designed to satisfy the expectations of seasoned gamers as well as attract and win over new types of gamers.

Every other year, Ubisoft’s creative talents add three new intellectual properties to the group’s brand portfolio. This undertaking enables the company to test out its publishing choices with convincing results; Altaïr, for example, the hero of Assassin’s Creed™ became an icon in only six months. As for those Raving Rabbids, they no longer need Rayman® to draw a crowd. The steady rate of brand development is padded out by a policy of thoughtful acquisitions. The recent purchase of the rights related to the Tom Clancy name (Splinter Cell®, Rainbow Six®, etc.) helps Ubisoft expand the famous franchise with new games and derivative products. Strong brands and the capability to revamp them are necessary when it comes to building long-lasting relationships with gamers. New versions of Prince of Persia®, Tom Clancy’s EndWar™, My Health Coach and more are set for release in 2008-09 and promise people the pleasure of playing games that never grow old. ,, 4,350 EMPLOYEES IN 27 COUNTRIES COLLABORATE ANNUAL REPORT 2008 REPORT ANNUAL talented teams talented

Ubisoft teams are made up of gaming enthusiasts recruited for their expertise and potential, who have all of the qualities required to succeed in the entertainment sector including curiosity, imagination and determination.

Ubisoft’s success relies on both its creative and business teams: 4,350 people in 27 countries working together to design, develop, and promote games. Assassin’s Creed™, for example, was showered with prestigious awards that speak to the power of coordination and teamwork. Awarded an Outstanding Achievement in Animation award by the AIAS 2008, the game also won ten M16 awards for its marketing campaigns. Driven by ambitious recruitment objectives set out for itself, the group has developed partnerships with training centers to attract, train, and retain its future talent in anticipation of 900 recruitments in 2008-09. After the success of the first Ubisoft Campus launched in Montreal in 2005, a second Campus will open its doors in Casablanca in October 2008. At Ubisoft, team members improve and develop their skills through essential field work and also training programs. Ubisoft’s corporate culture inspires people to challenge themselves and seek continuous improvement within a friendly atmosphere marked by team spirit. SELLER

BEST- > far cry® Shooter experiences. Think, Act, Feel …Arichandbalancedportfolio ofUbisoft brands for uniquegaming

BRAND > tom clancy’s endwar™ NEW Strategy

> heroes of might ® & magic Stratégie SELLER

BEST- > assassin’s creed™ Action/Adventure

ANNUAL REPORT 2008 CATALOGUE

SELLER

BEST- > rayman® Action/Adventure brands: front and center

SELLER

BEST- > brothers in arms® Shooter

SELLER

BEST- > tom clancy’s rainbow six® Shooter

SELLER

BEST- > the settlers® Strategy

SELLER

BEST- > driver® Action/Driving

SELLER

BEST- > tom clancy’s ghost recon® Shooter SELLER

BEST- > tom clancy’s splinter ® cell Action/Adventure

ANNUAL REPORT 2008 CATALOGUE

SELLER

BEST- > red steel™ Action/Adventure brands: front and center

BRAND > tom clancy’s h.a.w.x™ NEW Air Combat

SELLER

BEST- > prince of persia® Action/Adventure

> shaun white Extreme Sports

> my coach Games for Everyone

> csi: crime scene investigation™ TV Series

> petz® > naruto™ Games for Everyone Animated TV Series

BRAND > imagine™ NEW Games for Everyone

> lost™ TV Series FINANCIAL REPORT 2008 4 7 3 6 2 5 1 . opnaino aaes141 137 145 133 108 135 procedures established bythecompany. of theworkboard andtheinternalcontrol 118 95 118 on theconditionsofpreparation andorganization report ofthechairmanboard ofdirectors 136 TransactionscoveredbyArticleL621-18-2oftheFrenchMonetaryand Compensationofmanagers 117 5.8 OtherofficesheldbyDirectors 5.7 94 Loansandguaranteesgrantedtomembers oftheBoardDirectors 5.6 5.5 Noconvictionforfraud,involvementinabankruptcy 96 134 OperationoftheBoardDirectorsandCommittees 5.4 5.3 92 112 Rulesapplicabletotheappointmentandsubstitutionofmembers 93 MembershipoftheBoardDirectorsandCommittees-GroupManagement 5.2 5.1 corporate governance 49 AdditionalinformationabouttheCompany 43 56 52 GeneralinformationabouttheCompany 4.2 53 4.1 51 information aboutthecompany 91 42 57 SpecialAuditor’s reportfiscalyearendedMarch31,2008 36 54 GeneralreportonthefiscalyearendingMarch31,2008 3.8 Otherinformation 3.7 33 Notestothecorporatefinancialstatements 3.6 49 32 26 Cashflowstatement 3.5 Statementofchangesinequity 3.4 UbisoftEntertainmentSAincomestatement 3.3 40 UbisoftEntertainment SAbalancesheet 3.2 3.1 entertainment sa as ofmarch31,2008 corporate financialstatements ofubisoft Reportfortheconsolidatedaccountstatements Notestotheconsolidatedfinancialstatements 2.6 Consolidatedcashflowstatement 2.5 26 Consolidatedstatementofchangesinequity 2.4 37 Consolidated incomestatement 2.3 Consolidatedbalancesheet 2.2 2.1 as ofmarch31,2008 consolidated financialstatements Recentevents,outlookandstrategy 1.11 Commitments Riskfactors 1.10 Generalinformation 1.9 Subsidiariesandequityinvestments 1.8 25 Environmentaldata:towardsecologicalresponsibility 1.7 27 Socialprojects 1.6 HumanResources 1.5 Cashandcapital 1.4 Analysisofactivityandcommentsonresultsforfiscalyear2007/2008 1.3 Highlightsofthe2007/2008fiscalyear 1.2 1.1 Introduction and results for fiscalyear2007/2008 the group’sbusiness activities ocrac al 162 160 158 149 158 161 157 158 concordance table Schedule offinancialcommunicationsforfiscalyear2008/09 Documentsavailable tothepublic 7.5 Names,addresses andprofessionalfeesoftheauditors 7.4 Declarationoftheperson responsibleforthereferencedocument 154 7.3 Personresponsibleforthe referencedocument 7.2 7.1 and for theaudit oftheaccounts persons responsible for the referencedocument 146 Auditor’sreport,preparedpursuanttoArticleL.225-235oftheFrench LimitsplacedonthepowersofChiefExecutiveOfficer 6.4 Internalcontrolprocedures 6.3 Conditionsofpreparationandorganization oftheworkboard 6.2 6.1 fteBado ietr 135 136 143 Financial CodeandArticle222-15-3oftheGeneralRegulationsAMF 114 and/or officialreprimandorcharges of theBoardDirectors 89 on regulatedagreementsandcommitments... for thefiscalyearendingMarch,31,2008 sdt rpr n rcs conigadfnnilifrain155 used toprepareandprocessaccountingfinancialinformation of UbisoftEntertainmentS.A.concerningtheinternalauditprocedures Commercial Code,onthereportofChairmanBoard Directors

table of contents THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 25 Introduction 26 1.1 Highlights of the 2007-2008 fiscal year 26 1.2 Analysis of activity and comments on results for fiscal year 2007-2008 27 1.2.1 Key figures 27 1.2.2 Quarterly and annual consolidated revenue 29 1.2.3 Revenue by business line 29 1.2.4 Change in production volumes 30 1.2.5 Revenue by platform 30 1.2.6 Revenue by geographic destination 30 1.2.7 Changes in the income statement 31 1.2.8 Change in the working capital requirement and debt levels 31 1.2.9 Asset financing policy 31 1.3 Cash and capital 32 1.3.1 Changes in equity 32 1.3.2 Cash flows 32 1.3.3 Borrowing terms and financing structure 32 1.4 Human Resources 33 1.4.1 An enriching and motivating work environment 33 1.4.2 Valuing performance and innovation 34 1.4.3 Skills development: a strategic focus 34 1.4.4 Employment at Ubisoft in France 35 1.5 Social projects 36 1.6 Environmental data: towards ecological responsibility 37 1.6.1 Electricity consumption 37 1.6.2 Recycling 38 1.6.3 Destruction of unmarketable products 38 1.6.4 Business travel 39 1.7 Subsidiaries and equity investments 40 1.7.1 Organizational chart as of March 31, 2008 40 1.7.2 Equity investments made during the fiscal year 41 1.7.3 Business activities of the subsidiaries 41 1.8 General information 42 1.8.1 Capital expenditure policy 42 1.8.2 Research and development policy 42 1.8.3 Property, plant and equipment 42 1.9 Risk factors 43 1.9.1 Business-related risks 43 1.9.2 Legal Risks 45 1.9.3 Industrial or environment-related risks 45 1.9.4 Financial risks 46 1.9.5 Insurance and risk coverage 48 1.10 Commitments 49 1.11 Recent events, outlook and strategy 49 TS FOR FISCAL YEAR 2007-2008 FISCAL FOR TS 1.11.1 Recent developments 49 1.11.2 Market outlook 49 RESUL THE GROUP’S BUSINESS ACTIVITIES AND ACTIVITIES THE GROUP’S BUSINESS 1 UBISOFT • FINANCIAL REPORT 2008 September 2007 July 2007 June 2007 May 2007 April 2007 business activitiesarefocused onthree majorbusiness by industryprofessionals andconsumers. The Group’s now hasanunmatched portfolio offranchises recognized built aroundcreatingitsownbrands internally, theGroup Chart Track, Media Control,GFK).Thanks toapositioning software publishersinEuropeandtheUS(sources NPD, In 2007,Ubisoft wasranked thirdamongstindependent Introduction 2008. Clancy, available onnew-generation consoles inautumn H.A.W.X™, thenewair-combat franchise fromTom Ubisoft announced thecreationofTom Clancy's 200 developers over thenext twelve months. development studioinChengdu,thegoalbeingto hire Ubisoft expanded itspresence inChinabyopeninga Cameron filmscheduled for release atChristmas2009. video gamebased on"Avatar," theupcoming James Ubisoft and20thCenturyFox teamed uptocreatea swap agreement. Gameloft toCalyon, investment bank,under anequity Ubisoft disposed ofthe18.89%interestitowned in by 2010. for whichanadditional 150employees willberecruited Ubisoft unveiled aplantoexpand itsMoroccan studio, brand. Coach" andtheexpansion ofthevery popularPetz launch oftwonewproduct families, "Imagine™"and"My brand. Amongst thenewteam’sfirstprojects wasthe business withthelaunchofGameFor Everyone (G4E) Ubisoft announced theexpansion of itscasualgames market. tegy gamesandoneofthebestsellers intheGerman units sold worldwide, isoneofthemostsuccessful stra- Ubisoft acquired theAnno™brand, which,with5million 1.1 Highlights ofthe2007-2008fiscalyear ® November 2007 March 2008 February 2008 December 2007 and moredemanding players. goal: todesign gamesofexceptional qualityfor ever more currently employs4,323 people whostrive for acommon very ofthefinalproduct toretailersofalltypes).Ubisoft as product marketing) anddistribution(thephysicaldeli- acquisition ofrightstogamesandexternal licenses aswell lines: development (the creationofgames),publishing(the lin unitsmoved.lin Assassin’sCreed exceeded expectations withapproximately 2millionsel- 2007-2008. SalesofTom Clancy’s RainbowSix Ubisoft revised itsforecasts upwardsfor fiscal year February 28,2010). an additional period of24months(nowexpiring on Extension oftheequity-swap agreement withCalyon for products. products, includingbooks, movies andallmerchandising involve theuse ofthe nameinvideo gamesandancillary petual basisandfree ofallfutureroyaltypayments, and ancillaryproducts: these rights,purchased onaper- Ubisoft acquired theTom Clancynamefor video games next couple ofyears. plan isfor thestudiotohave 300employees withinthe Ubisoft opened adevelopment studioinSingapore.The Assassin's Creed 2007-2008, asaresultoftheexceptional performance of Ubisoft revised itsforecasts upwardsfor fiscal year lize ingamesfor theNintendo DS™. Osaka, DigitalKidsemploys20developers whospecia- Digital Kids.Founded in1996andlocated inNagoyaand Ubisoft acquired theJapanese development studio during thefiscal year, andsolid salesofcasualgames. tions. "Games For Everyone" range continued tobeatexpecta- ® , withover 5millionunitsexpected ® and titlesfromthe ® Vegas 2 THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 27

Analysis of activity and comments 1.2 on results for fiscal year 2007-2008

1.2.1 Key figures

The selected financial information below, relating to the fiscal years ending March 31, 2007 and March 31, 2008, is taken from the consolidated financial statements and presented pursuant to IFRS.

03.31.08 03.31.07 In thousands of euros

Sales 928,307 680,348 Operating profit (loss) 131,520 34,579 Net financial income 12,426 18,047 Share of profit of associates 28 3,149 Income tax (48,957) (15,217) Gain (loss) on the disposal of discontinued operations 14,827 - Group result 109,844 40,558 Equity 634,151 521,819 Production-related investments 186,703 161,196 Headcount 4,323 3,934 UBISOFT • FINANCIAL REPORT 2008 1 nldn aho opne curdaddsoe f(9)(17) (897) (1) Includingcashofcompanies acquired anddisposed of Cash flowstatementfor comparison withotherindustryplayers / mriaino aesfwr 2924214,499 239,284 - (14,827) +/- Otheramortization +/- Amortizationofgamesoftware +/- Gains/losses onthedisposalofdiscontinued operations +/- Shareofprofitassociates Consolidated earnings Cash flowsfromoperating activities In thousandsofeuros e hnei ahadcs qiaet 125(4,868) 78,653 (15,036) 80,894 91,275 173,181 106,551 15,649 30,740 78,653 (42,982) 15,825 268 - (41,162) 16,078 (153) Cash andcashequivalents attheendoffiscalyear Impact oftranslation adjustments 23,735 53,150 Cash andcashequivalents atthebeginningoffiscal year 25,110 Net changeincashandequivalents Cash generated (used)byfinancingactivities (66) (15,778) +/- Otherflows 18,705 95 +/- Salesofstock 34,445 116,788 + Proceeds fromshareholders in capital increases - Accrued interest - Repaymentofborrowings (23,731) - Repaymentoffinance leases 58,095 + Newmedium andlong-termborrowings 58,694 (43,394) 475 + Newfinance leases Cash flowsfromfinancingactivities Cash usedbyinvesting activities (237,332) +/- Partial disposalofassociates + Proceeds fromthedisposalofdiscontinued operations (48,344) + Repaymentofloansandotherfinancialassets +/- Othercashflowsgenerated (used) byinvesting activities (300,849) +/- Proceeds /paymentsfor theacquisition /disposaloffinancialassets + Proceeds onthedisposalofintangibleassets andproperty,plantequipment - Payments for theacquisition ofproperty,plantandequipment andotherintangibleassets Total cashgenerated byoperating activities +/-Change inworkingcapitalfromoperating activities Other liabilities Trade payables Other assets Trade receivables Inventory Cash flowsfromoperating activities +/- Costsofinternaldevelopment andlicense development +/- Otherincome andexpenses +/- Gains/losses ondisposals +/- Costofshare-based payments +/- Provisions (1) 33.803.31.07 03.31.08 1,4)170 (18,342) 2,3)(34,830) (1,914) (27,936) (17,569) 0,4 40,558 109,844 706 (842) (7,096) 52315,619 15,213 99133,429 22,862 49,981 60,714 ,5 2,627 3,253 243 3,344 2,096 8,526 32 625 (392) (221) (600) 2)(3,149) (28) 5)(230) (55) 5884 35 (42) 3 (807) (151,993) - - -60 THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 29

1.2.2 Quarterly and annual consolidated revenue

Revenue 2007-2008 2006-2007 Change at current Change at constant (in millions of euros) exchange rates exchange rates

Q1 134 70 90.5% 94.5% Q2 127 102 25.4% 27.9% Q3 450 311 44.4% 50.1% Q4 217 197 10.0% 20.3% Fiscal year total 928 680 36.4% 42.9%

At current exchange rates, revenue was up 36.4% in fiscal year 2007-2008. At constant rates, revenue growth was 42.9%.

1.2.3 Revenue by business line

Ubisoft Group’s revenue comes from three main business and supervises production in exchange for acquiring the lines in the video game industry, namely Development, licenses. Ubisoft is then responsible for localization, manu- Publishing, and Distribution. facturing, and, of course, sales and marketing. The Development revenue covers income from titles deve- Company collects income from product sales and pays out loped, produced and marketed by Ubisoft’s internal stu- royalties to the developers and/or brand owners. dios. Development also includes revenue posted by Distribution revenue covers income from sales of pro- third-party developers, where Ubisoft provides supervi- ducts from publishers with which Ubisoft has signed distri- sion and co-production and guarantees the quality of the bution agreements and handles sales and marketing. These final product. may be local agreements (only in a specific geographic ter- Publishing revenue covers income from titles designed and ritory) or may cover several regions. produced by third-party developers, where Ubisoft finances

The breakdown of revenue by business line is as follows:

Breakdown of revenue by business line in % terms 2007-2008 2006-2007 Change in volume

Development 85% 76% +53% Publishing 12% 18% -9% Distribution 3% 6% -32% Total 100% 100% +36%

The strong growth in the Development business was due to the success of the major titles developed by the Group’s studios, in particular, Assassin’s Creed®, Rainbow Six® Vegas 2 and Rayman Raving Rabbids®. Meanwhile, the decline in the Publishing business was due to the delay of games such as Haze™ and Brothers in Arms®. Change in production Revenue 1.2.4 volumes 1.2.5 by platform

Number of titles released from internal production, third- 2007-2008 2006-2007 party co-production, publishing and distribution: CD-ROM PC 7% 16% Number of titles* 2007-2008 2006-2007 2005-2006 Xbox 360® 26% 28% Development 35 24 19 Nintendo Wii™ 10% 14% Internal production 21 14 10 PlayStation®3 20% 2% Co-production 14 10 9 PlayStation®2 5% 16% Publishing 20 29 18 DS™ 26% 11% Distribution 12 4 2 PSP™ 4% 5% Total 67 57 39 Game Boy® Advance™ 1% 5% * title = 1 game on one or more platforms (e.g. Rayman Raving Rabbids® Xbox ® 0% 1% PlayStation®2, Xbox360®, Nintendo Wii™, PC, and Nintendo DS™ represent five products but only one title). G-CUBE™ 0% 1% Miscellaneous 0% 0% The strong growth in Development titles coincides with the growth in value of this business. The same is true for the Total 100% 100% Publishing business, which declined both in value and in the number of titles sold. On the other hand, the Distribution The Company accelerated its positioning in new consoles, business saw a rise in the number of titles combined with a which accounted for 86% of sales for the fiscal year: decline in value. This phenomenon was due in part to the Nintendo DS™ and Sony PSP™ portable consoles: in total, strong success of the Pirates of the Caribbean game these accounted for 30% of fiscal year sales. The growth released in 2006-2007. was particularly significant for Nintendo DS™, which be- In 2008-2009, the number of titles marketed should nefited from the success of the Petz®, Imagine™ and My exceed 80. Coach ranges. The Group gained a leadership position amongst independent publishers in this market in 2007. Microsoft Xbox 360® and PlayStation®3: these benefited from the success of Assassins Creed® and the games published under the Tom Clancy brand, thanks in particular to their online gameplay. The Group is ranked third amongst independent publishers for these two consoles. Wii™: the Group continued to see growth in value in this market with, in particular, the success of the Rayman® Raving Rabbids 2® game. The Group is now ranked fourth amongst independent publishers.

1.2.6 Revenue by geographic destination

Fiscal year (in M€) 2007-2008 % 2006-2007 %

France 91 9.8% 64 9.5% Germany 63 6.8% 49 7.2% UK 139 14.9% 97 14.3% Rest of Europe 178 19.2% 120 17.6% Total 471 50.8% 330 48.6% US/Canada 393 42.3% 306 45.0% Asia/Pacific 48 5.2% 33 4.8% Rest of world 16 1.7% 11 1.6% Total 928 100% 680 100% FINANCIAL REPORT 2008 FINANCIAL REPORT UBISOFT • THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 31 The geographic breakdown of sales for fiscal year 2007-2008 reflected strong momentum in Europe, where the Group enjoyed sustained growth, particularly in Nintendo DS™ products, for which it is the market leader, but also the exceptional success of Assassin’s Creed®, which is ranked number 1 on the PlayStation®3 and number 3 on the Xbox 360®. Accordingly, in 2007, the Group saw growth of 58% compared to market growth of only 25%. In North America, the Group’s growth was impacted by the weakening dollar. The other regions continued to grow in importance, accounting for 7% of the Group’s business.

Changes in the income Change in the working 1.2.7 statement 1.2.8 capital requirement and

The gross margin came in at 66.4% of revenue compared debt levels to 64.6% for fiscal year 2006-2007. This strong growth The working capital requirement amounted to (€20) million was expected. It reflects the growing portion of revenue compared to €29 million the previous year. Factoring in posted on new-generation consoles (86% of total revenue translation adjustments and the reclassification of Gameloft compared to 60%), as well as the impact of the major suc- stock (€25 million), this represented a €58 million improve- cesses during the year that performed very well in terms ment. This year, trade payables include €80 million for of returns and discounts. future commitments under external development and Current operating profit before stock-options rose very license agreements compared to €38 million the previous sharply to €133.1 million compared to €38.3 million in year. The strong improvement in debt and tax receivables 2006-2007. should be noted, the positive impact of which was offset by This increase came on the back of: the increase in inventory (+€18 million), trade receivables (+€7 million) and financial assets line item due to the mea- a €177.4 million increase in the gross margin, linked to surement of the equity swap on Ubi stock. strong growth in sales (+€248.0 million) and the improvement in the gross margin; Net financial surplus is €149 million, an improvement of €94 million, on the back of a series of factors: a €31.6 million increase in development expenses, which accounted for 28.5% of revenue, an improvement of cash flow from operating activities of €59 million; nearly 5 points. This significant improvement was down a €58 million improvement in the working capital require- to better than expected performance on products deve- ment; loped internally, for which the bulk of expenses are fixed; capital increases of €16 million resulting from stock option conversions and the exercise of OBSARs (bonds a €51.0 million increase in selling, marketing and admi- with redeemable share warrants); nistrative expenses, which also improved by one point to 23.6% of revenue. capital expenditure of €48 million on property, plant and equipment and intangible assets, including €33 million Net financial income was comprised of: for the Tom Clancy license (€13 million having been paid €1.7 million in financial expenses, a clear improvement in previous years); on the €7.3 million the previous year, the acquisitions of Sun Flowers and Digital Kids for a €14.0 million in foreign exchange losses, a significant total of €18 million; increase on 2006-2007, the disposal of Gameloft stock for €25 million; a positive impact of €27.9 million related to the equity €3 million in translation adjustments. swap. The €14.8 million gain on the disposal of discontinued activities related to the disposal of Gameloft SA stock 1.2.9 under the equity swap agreement signed with Calyon in July Asset financing policy 2007. The Company does not use securitization agreements, Dailly The Company recognized a tax charge of €50.0 million, Act assignment of receivables, or repurchase agreements, which included research tax credits of €3.5 million and a but it uses factoring and discounting, essentially in Germany €2.1 million expense related to a tax audit previously re- and the UK. For the rest, it finances its peak cash require- cognized in provisions. ments using confirmed credit facilities of up to €130 million Earnings amounted to €110 million, representing €2.39 (including a syndicated loan of €100 million) as well as short- per share. term credit facilities. UBISOFT • FINANCIAL REPORT 2008 Video gamepublishershave twokindsofcashflows: level ofsuccess ofwhichcannotbeguaranteed. required tolaunchnewreleases onaregularbasis,the out oftheirownresources. Furthermore, publishersare 18 to24months,whichpublishersmustbeablefinance expenditure takes place over average periods ofbetween development ofaround30%revenue. This capital The video gamesbusinesslinecallsfor investments on high pointofdebt seen between November andJanuary. debt varied from(€148)millionand€20million,withthe Accordingly, infiscal year 2007-2008,theCompany’snet case, workingcapitalrequirements maybehigher. if Q4ofthefiscal year isvery strong,because inthis during February andMarch.This timingmaybedifferent around Christmas-timeandsees itscashclimbbackup reason, theCompanymustfinance significantcashpeaks average 80daysafter thegameshitshelves. For this (around 12%ofrevenue) before receiving income aton at 30daysonaverage, andalso finance marketing costs which accounts for 35%ofrevenue andwhichispayable Company mustfirstfinance product manufacturing, production costs andreceipt ofincome. Infact, the year and75%inthesecond) andhighlightagapbetween sonal (25%ofrevenue isgenerated inthefirsthalfof Cash flowsfromthemarketing ofgames,arehighly sea- represented over €301millionin2007-2008. but thattheteamsworkonanumberofprojects. They months, given thateachproject progressively scales up out onaconsistent basisover aperiod of18to24 Cash flowsfromfinancingdevelopment costs arespread 1.3.2 1.3 1.3.1 Cash andcapital Changes inequity Cash flows 2008) and€76millionfromshort-termfacilities. (including €180millionfromtheSyndicated Loansigned in it, including€210millioninconfirmed credit facilities rations fromcashandthevarious facilities made available to major acquisition, Ubisoft shouldbeabletofinance itsope- For fiscal year 2008-2009,andunlesstheCompanymakes a for thenetdebt/equity ratio. lion line,whichissubject tothesame covenants butuses 0.9 Furthermore, in2006-2007,theCompanysigned a€10mil- 2007 areasfollows: the €20millionbilateral credit facilities signed in2006- relation tothenewsyndicated loanaswellthose for The covenants withwhichtheCompanymustcomply in Average cost ofborrowingswas4.7%. the Companyplaced surpluscashonaconsistent basis. nor thebilateral bankcredit facilities. Ontheotherhand, replaced bya€180millionsyndicated loaninMay2008, use the€100millionsyndicated loansigned inMay2005, medium-term loanof€20million.Ubisoft didnothave to During 2007-2008,mostofthefinancingcamefroma million. finances itscapitalinvestments, whichamounted to€301 With equity of€634million,up€112Ubisoft easily future oftheCompany. or failure ofaparticulartitlewithoutendangeringthe and todeal withcontingencies stemmingfromthesuccess guarantee thecontinuous financingofcapitalexpenditure For these reasons, significantcapitalizationisessential to eevbe/BTA<151.5 0.85 1.5 0.80 receivables/EBITDA < Net debt restated for assigned restated for goodwill < receivables/equity Net debt restated for assigned 1.3.3 structure and financing Borrowing terms 0820 2007-2008 2008-2009 THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 33

1.4 Human Resources Ubisoft’s key figures as of March 31, 2008

4,323 employees (average headcount for the fiscal year: 4,118), namely close to 10% up on March 31, 2007. Ubisoft has employees in 24 countries. 81% on the production side and 19% on the business side. Average age: 31.5 years. Average service with the company: 3.8 years.

Breakdown of headcount by activity (1)

Activity As of 03.31.08 As of 03.31.07 As of 03.31.06 Production 3,481 3,194 2,729 Business 842 740 712 Total 4,323 3,934 3,441

(1) Headcount only includes permanent employees. Interns and temporary employees (intermittent workers and temporary staff) are thus excluded from the total.

Breakdown of headcount by region

Region Headcount Headcount Headcount as of 03.31.08 as of 03.31.07 as of 03.31.06 North America 2,082 1,923 1,795 Europe and North Africa 1,754 1,600 1,188 Asia-Pacific 487 411 458 Total 4,323 3,934 3,441

Team diversity is moreover one of the advantages of the An enriching and Company, which enjoys a multicultural and open environ- 1.4.1 motivating work ment. environment There are approximately 50 areas of expertise at Ubisoft, from 3D graphic artists to heads of product marketing, 1.4.1.1 Direct communication involving every not to mention programmers and game designers, all of employee in the life of the company whom are driven by the same passion and shared goals. Ubisoft teams are located in 24 countries, which means The teams are notified on a consistent basis of the Company’s strategy and news through a series of means: a that there are at least as many different nationalities in Group Portal, local intranets, a monthly Group newsletter, the Group. internal meetings at all subsidiaries, seminars by team. Since video games are products that continue to primarily An internal survey is carried out on average every two appeal to men, it is logical that men account for 78% of years to consult all employees on the Company’s major Ubisoft’s employees, compared to 22% women. However, strategic decisions and to get an idea of the level of team it should be noted that women hold 37% of the top manage- satisfaction (80% participation was reported in the most ment positions and represent 40% of the business staff. recent survey in April 2007). Actions and programs are implemented in response to the results of the survey. They are consistently communicated to employees. 1.4.1.3 A humane work environment Ubisoft is committed to maintaining real proximity within 1.4.1.2 Diversified teams its teams by favoring humane structures as much as possi- The process of creating a game basically requires a high ble. 85% of the sites have under 200 employees, with ma- level of cooperation between the teams since all technical nagers available to their teams and HR heads close to the and artistic fields interact from start to finish. ground. UBISOFT • FINANCIAL REPORT 2008 ment andcontribution ofemployees. Production methods The work practices used strongly encourage theinvolve- able totake theinitiative intheirworkonadaily basis. survey inwhich91%ofthemstated thattheyfeel theyare demonstrated bytheresultsofmostrecent internal Employees enjoysignificantautonomyintheirwork, as at personal level 1.4.2.2 Autonomy andinitiative innovation. and whichplaces increasingimportance oncreativityand into anenvironment thattransmits theGroup’sculture Ubisoft ensuresthatnewteamsaretrained andintegrated Morocco tial experiment, Ubisoft also launched aCampus in training courses. Onthestrengthofsuccess of thisini- curriculum onSoundDesigninaddition totheexisting dents whowereabletotake advantage ofanewly added been enhanced. The mostrecent classhadover 200stu- dents hasrisen every year and theprograms offered have founding inMay2005,thenumberofapplicantsandstu- Group candraw fromitsCampusinMontreal.Since its best recruits inthevideo gameindustry.Accordingly, the with universities inorder toattract, train andretainthe Furthermore, Ubisoft added toitspartnershipagreements as welltheopeningofastudioinKiev, Ukraine. Group announced theacquisition ofastudioinPune, India, the SingaporeandChengdustudios.InApril2008, sition oftheDigitalKidsstudioinJapan andtheopening of tial. Thus, Ubisoft’s growthwasunderpinned bytheacqui- and acquiring studiosthatoffer ambitiousgrowthpoten- The Groupalso spurred itsorganicgrowthbyestablishing what theyarelooking for. Everyone segment tooffer consumers titlesthatmatch amongst thefirsttobepositioned intheGamesfor xible, whicharemajorassets. Ourteamshave thusbeen games produced andmakes theGroupresponsive andfle- lopment studiosin-house guarantees thequalityof ding experts fromallcorners oftheglobe.Having deve- production sitesmeanthattheCompanycanattract lea- workforce. The strategic internationallocations ofits18 Ubisoft hastheindustry’ssecond largestinternalcreative Headcount hasrisen 45%over thepastthree years. joining theGroupduringfiscal year 2007-2008. pursued itsorganicgrowthstrategy with389employees Despite avery competitive labormarket, Ubisoft actively driving innovation 1.4.2.1 Internalcreative workforce 94% ofemployees inthemostrecent internalsurvey. remains astrengthoftheGroup’sculture,asexpressed by More broadly, theopen natureoftheworkenvironment 1.4.2 inOctober2008. innovation performance and Valuing desire torewardpersonal andcollective performance: Ubisoft hasestablished abonuspolicythatreflects its performance andcommitment 1.4.2.3 Compensationthataimstorecognize 2008. (2) Estimatemade onthebasisofinformation available asofMarch31, be summarized asfollows: ning programs provided duringfiscal year 2007-2008can areas ofexpertise. Excluding onthejobtraining, thetrai- and areoccasionally organized internationally for certain Training programs aremainly organized atalocal level, vided internally, includingthroughonthejobtraining. lored toitsconstant changesareinvery largepartpro- Video gamingisanewbusiness,andtraining programs tai- training areakey priority. advances andexpertise are key. Naturally, allforms of In asector whereinnovation isrelentless,technological tailored toneeds 1.4.3.1 Innovative training programs such options. 2008, nearly 16%oftheGroup’semployees have received expectations. Taking allplanstogether, asofMarch31, to employees whohave consistently exceeded performance Lastly, stock optionsareawarded onadiscretionary basis amounted to1.3%ofthecapital. or indirectly throughanFCPE(company mutualfund) ment oftheteams. that encourages innovative ideas, initiative andempower- are constantly evolving andguarantee aworkenvironment Overall, thetotalofregistered sharesheldbyemployees are scheduled between nowandSeptember2008. French, US,Romanian,BritishandGermansubsidiaries Capital increases reserved for employees oftheCanadian, the USinSeptember2006andCanadaJuly 2007. have taken place inFrance onaregularbasissince 2001,in of itsemployees. Capitalincreases reserved for employees means for Ubisoft tosharetheCompany’ssuccess withall Furthermore, employee shareholdingisanexcellent ning oftheyear. basis ofachieving quantifiableresultsset atthebegin- the businessteamsreceive abonuscalculated onthe they worked andtheirindividualcontribution; on thebasisofprofitabilitygamewhich the production teamsreceive abonusthatiscalculated employee; representing anannual average of1.6daysper 6,598 daysoftraining wereprovided withintheGroup, amounted to€1,695,989over theperiod; the budgetallocated totraining (excluding salaries) 1.4.3 a strategicfocus Skills development: (2) THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 35 the majority of this training dealt with the technical 1.4.3.3 Opportunities for international skills required for production work (42%), English and development French language training (24%), and management training (14%). International mobility is one of the aspects that facilitates inter-studio collaboration and exchanges between the teams. Aside from mobility across the company and local 1.4.3.2 Constant emulation promotions, there are multiple international avenues. through exchanges between the teams There are currently 116 expatriates on assignment around the world. The countries that have welcomed the most On the job training takes place through exchanges between expatriate employees are China, Canada and France. the teams. The Group is thus committed to creating an environment that enables and encourages maximum sha- With regard to Human Resources management, Ubisoft ring of expertise: continues to implement tools and programs with a strong team development and motivation content. Integration and sponsorship programs for new employees are available in most subsidiaries. According to the most recent internal survey, close to 90% of Group employees believe that Ubisoft is a good Collaboration between sites is growing with shared pro- company to work for. duction requiring even more exchanges between studios; for example, Tom Clancy’s Ghost Recon Advanced Warfighter® 2 was developed at two sites. 1.4.4 Employment at Ubisoft International domain specific meetings, cross-company in France meetings or meetings dealing with a specific subject are held on a regular basis. Average headcount of 852 employees over the fiscal year. The Academy of Experts, which meets several times a 71% men and 29% women. year, is similar to a strategic think-tank comprised of experts whose mission is to make recommendations on 70% on the production side and 30% on the business side. technological production problems. Average age: 32.5 years. Collaborative areas and domain specific databases continue to be developed while being structured. Their goal Average service with the company: 5 years. is to facilitate collaboration, organization and the sharing of key information on the teams, projects, business 1.4.4.1 Work environment lines, sites, etc. The Group Portal is a gateway for the exchange of information and best practices with peers. and working conditions The use of technologies or applications that facilitate Working time: exchanges is promoted, such as instant messaging, web Full-time work is 35 hours per week. The organization of conferencing and the use of video as a communication this working time varies between distribution over 5 days medium. and the awarding of time off, depending on the constraints There are multiple skills exchanges between sites: during of the activity and the choices expressed by employees. fiscal year 2007-2008 there were 130 employee trips for 2.4% of employees work part-time. short or long-term assignments. Overtime worked during the fiscal year was in compliance Relationships with related industries (music, film, televi- with applicable legal and contractual provisions. sion, etc.) are being developed: Absenteeism in 2007-2008 was 1.43%(3) and broke down as Exchanges with experts from these industries also take follows: place. They are illustrated in particular by collaborations 83.5% of absences were due to illness. on some of our games, such as on the development of Avatar, where the Montreal studio met with James 15.5% were due to special time off(4). Cameron’s team, director of the film of the same name. 1% were due to work-related accidents. Another example is the agreement between Ubisoft and Korn, the metal music group that composed a piece Use of subcontractors(5): inspired by the video game Haze™. This partnership From time to time, Ubisoft employs individuals under free- embodies a new form of exchange with various players in lance contracts (particularly for artistic services) and via the music industry. intermittent and temporary contracts. Moreover, Ubisoft continues its training in 3D images Peripheral activities at certain sites (security, cleaning, com- production techniques through its production center puter maintenance) are outsourced to outside companies. specialized in the creation of digital content for film. Founded last year in Montreal, the main mission of this Heath and safety production center is to produce short features inspired In France(5), Ubisoft complies with legal rules on health and by various games to which Ubisoft has the rights. safety.

(3) Absenteeism does not include maternity and paternity leave. (4) In particular, this includes time off for a birth, marriage, moving, etc. (5) This is the case in all its subsidiaries. UBISOFT • FINANCIAL REPORT 2008 culture orrecreation. affected byillness,andhave limited access toeducation, to underprivileged childrenandadolescents whoare employees and,onthe otherhand,Ubisoft’s commitment includes, ontheonehand,personal initiatives driven by Named “ solidarity andcharity. desire for actiononthepartofteams withregardto thropy program tosupportandencourage thestrong worldwide, in2006Ubisoft launched a corporate philan- Moreover, respondingtodemands fromitssubsidiaries curiosity. teams toopenthemselves to theworldandstimulatetheir employee benefitsarealso opportunities toinvite the and cultural outings.For theGroup,these various employees priorityaccess toarange ofleisure,athletic and thedaytoactivitiesofteams,Ubisoft offers its In addition toseveral internalevents thatmarktheyear France isasfollows: The information onemploymentandnon-discrimination in 1.4.4.3 Employmentandnon-discrimination viously done aninternshipatUbisoft. nior employees whowererecruited thisyear hadpre- pathways tohiring.InFrance, for example, 45%oftheju- ring fiscal year 2007-2008.Internshipsoften represent Furthermore, Ubisoft welcomed internsandtrainees du- ding salaries)amounted to€840,147. year 2007-2008,thebudgetallocated totraining (exclu- Right) intoitsprofessional training policy.Duringfiscal Ubisoft hasintegrated France’s DIF(Personal Training 1.4.4.2 Skillsdevelopment employees offers fitnessactivitiesandgrouplessons. lable toemployees. Asportsfacility reserved for A gameslibrary makes video gamesandconsoles avai- dinating recreational activities,amounted to€475,000. Its annualbudget,excluding salariesoftheteamscoor- events, amongstothers. scriptions, recreational weekends, andvarious social 2007-2008), reductions oncertain cultural andsportssub- kets (2,120tickets weresubsidized upto40%byUbisoft in The recreation department offers reduced price showtic- Recreation: them aremanagers; women account for 29%oftotalemployees and81%of managers; Ubisoft’s workforce inFrance iscomprised of74.4% 1.5 Sharing morethangames Social projects ”, thisprogram dren’s hospitalsinDenmark,theUK andFrance. San Francisco), nottomentionsponsorship programs withchil- Quebec) anddonations ofChristmasgifts (fromBucharestto Canada), blood andbonemarrowdonations (fromtheUKto solidarity campaigns (NitetoUniteintheUS,Centraide in have been implemented withinthesubsidiariesincontext of Handicap InternationalinFrance. Morethanforty programs games withtheUnited Nations’World Food Program andwith grams withUNICEFinBrazil andBangladesh, educational video to createpartnershipsonaninternationalscale: school pro- Over thepasttwoyears, Ubisoft hasthushadtheopportunity promoting learningaswellentertainment. tive laugharetruesources ofself-realization for youth, appetite for challenge,growthinknowledge, andacollec- those whoaremostinneed: imagination,curiosity,an several forms andisdesigned toconvey Ubisoft’s values to and includingthegivingofgames,thiscommitment takes From humanorfinancialcontributions topartnerships, 2008. with anadditional contribution anddiscount for summer the BoardofDirectors hasscheduled acapitalincrease additional contribution fromtheCompany.Inthisregard, implemented in2001,Frenchemployees benefitfroman In addition, under GroupSavings Plansthatwerefirst riable portion(see Section 1.4.2). Compensation inFrance iscomprised ofafixed andava- 1.4.4.4 Compensation the employmentofdisabled persons. sabled employees andcontributed €77,580tofundsfor during fiscal year 2007-2008,Ubisoft employed twodi- staff inFrance have representation withinUbisoft; tracts; 79% ofemployees areemployed under open-ended con- between menandwomenisrespected; with regardtocompensation, professional equality THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 37 Environmental data: 1.6 towards ecological responsibility

The Company does not manufacture the video games that it recycling used computer equipment, publishes and distributes. It therefore has a very limited direct waste from unmarketable products, impact on the environment, whether in terms of air emissions, water effluent or soil pollution or with regard to noise pollu- business travel. tion or foul odors. Each subsidiary manages its own projects depending on the Ubisoft’s water consumption is not material. national regulations as well as the motivation and involvement of its personnel. The Group nevertheless remains very focused on respect for and conservation of the environment. Accordingly, it monitors Ubisoft uses suppliers who respect the environment. its own consumption and seeks to implement initiatives in this The main production facilities of Ubisoft’s suppliers and area. assemblers are ISO 9001 certified. As a result, they are Every year, a survey is carried out internally in the subsidiaries compliant with the “Safety and Quality” process. to assess environmental policies, programs and indicators. Two-thirds of them even have ISO 14001 on the environ- The programs implemented in this field and the awareness ment. raised amongst the teams are also surveyed. This standard covers what the Company does to: The Group's main concerns are: minimize the harmful effects of its activities on the envi- energy consumption, ronment, paper consumption and recycling, continually improve its environmental performance.

1.6.1 Electricity consumption

The Group used approximately 16.2 million KWh in fiscal year 2007-2008 at a total cost of approximately €1,100 thousand compared to 13.8 million KWh in fiscal year 2006-2007 at a total cost of approximately €930 thousand.

The main energy-consuming countries are:

CANADA FRANCE US CHINA ROMANIA

KWh (in thousands) as of 03.31.08 8,000 3,180 1,357 1,118 946 KWh (in thousands) as of 03.31.07 6,743 2,767 1,318 904 937

The rise in consumption is attributable to multiple recruiting efforts carried out this year. Programs were then implemented to raise employee awareness to conserve energy: shutting down PCs on a daily basis like in France, Germany, Australia, Japan, Spain, the Netherlands, Italy, the UK, and the US; using more energy-efficient light bulbs like in Germany, Canada, China and the Netherlands; turning off the air conditioning at night like in the UK, Japan, Germany or Australia; or using timers in certain rooms, amongst others. UBISOFT • FINANCIAL REPORT 2008 Awareness israised atallsubsidiaries: cument archives, adding tocollaborative worksites,etc. downloadable fromwww.ubisoftgroup.com, managingdo- copies ofprinted annualreportsbymakingthemdirectly tally harmfulpapermaterials,reducing thenumberof It triestoeliminatesuperfluous,costly andenvironmen- The Groupencourages employees tosave paper. Used paper suppliers. Toner andcartridgesarefor themostpartsent backtothe ment tosocial entities. partnership recycles, reconditions andresells theequip- computing thatlooks toemploytroubled youths. This of itsused equipment toasocial partnershipworkingin Our Ubisoft Divertissements Inc.subsidiarygives aportion rather thanthrowitaway. give theequipment toassociations, schools, oremployees In general, Ubisoft Groupcombats waste,preferring to in Germany,theUS,andUK). equipment recycled byspecialist companies (for example, Similarly, theforeign subsidiaries have theircomputer ration withanassociation ofpeople inneed. cling mobiletelephonesandused blackberriesincoope- The Frenchsubsidiariesparticipateinaprogram for recy- computer equipment. This year, theFrenchsubsidiariesrecycled over 6tonsof channels. then package themanddirect themtospecial treatment makes itpossibletoisolate toxic products inorder to the reusabilityofeachcomponent. This dismantling rials inorder tosort them andisolate themdepending on materials, these companies “demanufacture” themate- lations ontheeliminationofwasteandrecovery of have been signed. Accordingly, incompliance withregu- which recovery, disassembly andrecycling agreements up ofcomputer screens, arehandled bycompanies with treatment ofelectrical andelectronic wasteandclean- in compliance withapplicablestandardsandlaws.The by companies specialized indismantlingsuch equipment In France, Ubisoft hasitscomputer equipment recycled accredited companies toremove thisspecial waste. The Group’srecycling efforts include usingcertified or Used computerequipment used paper. computer, electrical andelectronic equipment aswell Ubisoft actively participatesinrecycling itswaste:used the USandFrance. The benefitsarethenmeasured in They employ specialist outside companies like inCanada, Australia, Korea, Italy, Switzerland andtheUK. their premises orcollection areaslike in Germany, grams torecycle theirpaperthrough selective sorting at They take advantage ofmunicipalorgovernmental pro- 1.6.2 Recycling to be: trol ofofficial bodies wasoutsourced to outside companies work (grindingorcompacting), carried outunder thecon- tons ofunmarketable products. The various destruction During thefiscal year, Ubisoft destroyed approximately 64 suppliers orbythesubsidiaries’warehouses. inventory inthedistributionplatforms. Itisorganized by The subsidiariesaredirectly responsiblefor thedisposalof puter diskettes, andalltypesofplastic electronic a company specializing inrecycling CDs,DVDs, com- The destruction ofproducts inFrance iscarried outby Italy. packaging. The samepolicyisalso applied inSpainand obtain thegrünePunkt (green dot) labelonitscardboard cardboard orplastic)putontheFrenchmarket inorder to based oneachpackaging unit(listed bycategory:paper, In France, Ubisoft makes eco-packaging taxcontributions on packaging. “Green License” incorrelation withtheEuropeandirective environmental regulations:inGermany,Ubisoft holdsa Recycling efforts incertain countries comply withstrict adopted. pany” thankstothenumberofinternalprograms ithas distribution company hasbecome a“Green-focus com- viding outside places toparkbicycles, etc.Similarly, theUS paper, purchasingbiodegradable platesandutensils,pro- recycling ofused batteries;sorting ofglass,metaland Its multipleprojects include: paperrecycling aswell 3 Rs:reduce, reuse andrecycle. ment oftheprogressmade. The subsidiaryfocuses onthe of andrespect for theenvironment aswelltheassess- actions withinthesubsidiarytopromotepreservation mental committee inorder tocome upwithconcrete Like inFrance, theCanadianstudiocreated anenviron- logue available for allofUbisoft inFrance. cups, offering recycled office suppliesinthemaincata- printers andphotocopiers, distributionofre-usableplastic sidiaries: recycling ofpaper,purchasingrecycled paperfor Its goalistopromoterecycling atUbisoft’s Frenchsub- RECYLONS! (LET’SRECYCLE!). protection oftheenvironment for several years: In France, therehasbeen aworkinggroupfocused onthe Nearly onesiteoutoftwo recycles itspaper. France, Japan, SwitzerlandandtheNetherlands). recycled (intheUK,Germany,Australia, Canada, a minimumof280trees. the numberoftrees saved. Since 2006,Ubisoft hassaved buried (inItaly andintheUS), burned (inJapan for whatever cannotberecovered), 1.6.3 products of unmarketable Destruction THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 39 media. The products are first ground down and sorted before being transformed into fine particles and resold to the plastic processing sector.

Business 1.6.4 travel

As a result of the Group’s international scale, employees are called on to travel on a regular basis to other internal sites. The Group’s policy is designed to control the environmental consequences of its employees’ travel and encourages limiting travel to meetings as much as possible. To do this, we encourage the following arrangements: videoconferences or telephone conferences and other collaborative means; effective management of the agenda for employees so that their travel is limited to the absolute minimum; choosing the least costly and most environmentally con- scious means of transportation. In France, the travel policy put in place encourages employees to ask the following questions: Can I replace my travel with a telephone conference or a videoconference? Can I achieve my goals with less travel than initially anticipated? Can I group together several meetings during the same trip? What is the most efficient solution: should I or should my contact person make the trip? The environment is a key concern for the Group. Accordingly, it has several projects in this area: establishing “green” guidelines in France listing the best ways to save energy and thus to protect the planet as well as a system to manage car-pooling, purchase fair-trade products, purchase recyclable products, etc. UBISOFT • FINANCIAL REPORT 2008 (1) Companiesindirectly heldbyUbisoft EntertainmentSA. Production bsf r Rmna 99.35% 100% 100% (Romania) 97.50% (Singapore) Ubisoft DigitalArtsInc (Japan) Digital animation (Italy) 99.95% Ubisoft SingaporePteLtd (Spain) Ubisoft EntertainmentLtd Ubisoft Srl 100% Ubisoft Sarl 100% 100% Digital KidsKK 100% (Canada) Ubisoft StudiosSrl 100% 100% (Bulgaria) Red StormEntertainmentInc (Canada) 100% (China) Ubisoft StudiosSL (China) Shanghaï UbiComputerSoftware Co.Ltd (Canada) Chengdu UbiComputerSoftware Co.Ltd (Germany) 100% Ubisoft MusicPublishing Inc Ubisoft MusicInc 100% (France) 100% Ubisoft Divertissements Inc 100% Ubisoft Eood (France) Related DesignsSoftware GmbH (France) 100% Blue ByteGmbH (France) 100% 100% Ubisoft WorldStudiosSAS 100% Ubisoft SupportStudiosSARL 100% 100% (France) (France) Ubisoft StudiosMontpellierSARL (France) 100% Ubisoft SimulationsSAS (France) (France) (France) 100% Ubisoft Production MontpellierSARL 100% 100% (France) Ubisoft Productions France SAS 100% Ubisoft Production Annecy SARL (France) 100% (France) Ubisoft (France) PicturesSAS 100% Ubisoft Paris StudioSARL (France) Ubisoft Graphics SAS (France) (France) Ubisoft EditorialSARL Ubisoft Development SARL Ubisoft DesignSAS Ubisoft ComputingSARL Ubisoft CastelnauSARL Tiwak SAS Ludi Factory SAS 1.7 1.7.1 Subsidiaries andequityinvestments Organizational chartasofMarch31,2008 (1) (1 U)100% (UK) ) (1) (1) Gray 29.95% (Germany) Cnd)100% (Canada) Ubisoft EntertainmentSA (Morocco U)100% (US) 99.86% ) bsf aehnesGb Asra 100% 100% 100% (Austria) 100% (Germany) 100% Software Entwikclungs GmbH (France) Max DesignEntertainment (Germany) (France) Ubisoft Warenhandels GmbH Spieleentwicklungskombinat GmbH Entertainment Software GmbH Sunflowers Interactive Ubisoft GmbH Ubisoft France SAS Ubisoft EmeaSARL Sales andMarketing bsf t U)100% 99.99% 98% (UK) (Switzerland) 100% (Sweden) 99.98% 99.99% 100% (Japan) (The Netherlands) (Italy) (Norway) 100% 100% 99.97% Ubi GamesSA Ubisoft Sweden AB (Finland) (HongKong) (Spain) Ubisoft Ltd 100% Ubisoft BV Ubisoft NorwayAS 100% Ubisoft KK (Denmark) Ubisoft 100% SpA Branch Ubisoft FinlandOY (Canada) 99% Ubisoft Ltd (Australia) (SouthKorea) Ubisoft Inc (Brazil) Ubisoft SA Ubisoft NordicAS Ubisoft EntertainmentSA Ubisoft CanadaInc Ubi Soft EntertainmentLtda Ubisoft Ptyltd bsf odnsIc(S 100% 100% (US) (France) 100% (France) 100% Ubisoft Ltd 100% 100% Ubisoft HoldingsInc Ubisoft (France) WorldSAS (France) Ubisoft OrganisationSAS (France) 100% 100% Ubisoft Operational Marketing SARL Ubisoft Marketing InternationalSARL (France) Ubisoft (France) Marketing France SARL (France) Ubisoft Manufacturing &Administration SAS Ubisoft Counsel &Acquisitions SARL Ubisoft Books andRecords SAS Support (1) (1) (1) (1) Gray 60% (Germany) Asra 100% (Austria) Iead 100% (Ireland) U)100% (US) 100% THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 41 Equity investments 1.7.2 Equity investments August 2007: acquisition of a 25% interest in the made during German company Avator Entertainment GmbH, a studio the fiscal year created to develop the Anno™ game on line. March 2008: disposal of the 25% interest in the German company Avator Entertainment GmbH. Equity swap agreement for Gameloft stock On July 12, 2007, Ubisoft Entertainment SA entered into two agreements with Calyon, the investment bank. 1.7.3 Business activities The first agreement dealt with the disposal of all 13,367,923 of the subsidiaries Gameloft shares held by Ubisoft Entertainment SA (18.73% of the capital of Gameloft) for €6.08 each. Production subsidiaries The second related to Ubisoft Entertainment SA’s ability to They are responsible for the design and development of continue participating in upward or downward movements in the software. They saw their business grow sharply as a the price of Gameloft stock vis-à-vis the €6.08 per share result of the increase in projects carried out internally and price set in the first agreement, until such time as Calyon the growth in headcount. disposes of the stock to a third party. Sales and marketing subsidiaries Acquisition of new companies The sales and marketing subsidiaries are responsible for distri- April 2007: purchase of the software publisher Sunflowers buting Ubisoft products throughout the world and saw marked GmbH. Through this acquisition, Ubisoft Entertainment growth in America due to the earlier launch of the new consoles. SA acquired a 30% interest in Related Designs Software GmbH. Relationship between the parent company and In January 2008, acquisition of 100% of the Japanese stu- subsidiaries dio Digital Kids Co. Ltd. Ubisoft Entertainment SA already The relationship between the parent company and the sub- distributed games developed by Digital Kids for the DS™. sidiaries involves: the production subsidiaries invoicing the parent com- Incorporations pany for development costs based on the progress of September 2007: establishment of Ubisoft Operational their projects. These costs are capitalized at the parent Marketing SARL. company and amortized from their commercial launch date; September 2007: establishment of the studio Chengdu the parent company invoicing the distribution sub- Computer Software Co. Ltd. sidiaries for a contribution to development costs. December 2007: establishment of Ubisoft Counsel & The parent company also centralizes a certain number of Acquisitions SARL. costs that it then allocates to its subsidiaries, in particular: February 2008: establishment of the studio Ubisoft IT projects, Studios Montpellier SARL. the purchase of computer equipment, February 2008: establishment of the development studio general and administrative expenses, Ubisoft Singapore Pte Ltd. financial expenses, current account interest and cash March 2008: establishment of Ubisoft Limited. pooling interest.

Main subsidiaries

IFRS financial Revenue Operating Earnings Revenue Operating Earnings Revenue Operating Earnings statements profit profit profit Subsidiary (in K€) 03.31.08 03.31.07 03.31.06 Ubisoft Inc. (US) 372,156 14,816 10,207 287,402 8,631 6,541 227,601 7,480 3,810 Ubisoft Ltd. (UK) 159,078 3,976 2,840 110,571 2,090 1,140 94,675 1,830 757 Ubisoft GmbH (Germany) 71,313 1,783 1,084 56,847 1,074 907 35,309 1,437 (170) Ubisoft France SAS 90,824 2,278 2,207 64,129 1,212 1,399 48,499 826 876 UBISOFT • FINANCIAL REPORT 2008 and technologies centered ontheprojects andwhichuses established aresearch and development policy for tools In order todevelop exceptional video games,Ubisoft has Capital expenditure toaverage productionheadcount % oftotalpre-taxrevenue Production relatedcapitalexpenditure million. internal production costs rose 16%from€161millionto€187 nerally increase itsmarket share.Accordingly, in2007-2008, forms, create newreleases invarious genres,andmorege- which shouldenabletheCompanytogaintraction innewplat- Ubisoft continued itssustained capitalexpenditure policy, 1.8.2 1.8 1.8.1 0720 0620 2005-2006 2006-2007 2007-2008 0720 0620 2005-2006 2006-2007 2007-2008 2005-2006 2006-2007 2007-2008 17mlin€6 ilo €131million €161million €187 million €55,983 €53,531 €52,159 01%2.9 23.85% 23.69% 20.11% General information development policy Research and Capital expenditurepolicy There isnobasicresearch. the fiscal year, theywereamortized by€168 million. losses recognized toreflect theproduct life cycle. During amortized over three years, withadditional impairment Research anddevelopment costs arecapitalized and gies suited toahigh-qualityproduct. focused oninnovation andfunctionality,usingtechnolo- market, oracombination ofthetwo.Research isthus internal development, software alreadyavailable onthe game, thechoice oftools willeitherinvolve specific depending onthechallengesandexpected resultsona now takes avery pragmatic approachtoitsprojects: have mastered thebestavailable technologies, Ubisoft Thanks totheintegration ofitsteamengineers who financing for thegame. sary investment intermsoftime,humanresources and determines thepotentialfor innovation andtheneces- place wellupstreaminaproject, because thischoice choice ofdevelopment engines,tools andprocesses takes the mostrecent technological developments. Infact, the country. Ubisoft does notownanyofthebuildingsitoccupies inany 1.8.3 and equipment Property, plant THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 43 1.9 Risk factors

The identified risks are categorized by risk type.

China or Romania, where production costs are lower. 1.9.1 Business-related risks Nevertheless, Ubisoft depends on substantial subsidies in Canada and any change in the governmental policy could have a significant impact on production costs and the 1.9.1.1 Risks associated with product strategy, Company’s profitability. Ubisoft ensures that it renego- positioning and brand management tiates these agreements on a regular basis and does not anticipate any risk over the next five years. Ubisoft, like all publishers, is dependent on the success of Ubisoft thus continues to invest in its studios in order to its product catalogue and the adequacy of its offering con- ensure mastery of future technologies, while strengthe- sumer demand. ning its production workforce in new countries. In order to meet market demand, Ubisoft takes particular care in building its product catalogue by concentrating on: 1.9.1.3 Risks of a delay or poor start continually strengthening its existing franchises; to the release of a flagship game launching new brands on a regular basis; In what is a very competitive and above all seasonal mar- diversifying into new, profitable segments, such as the ket that is increasingly characterized by the need to casual games segment. release hits, the announcement of a delay in releasing an In order to constantly diversify and enhance its catalogue expected game may have a negative impact on the Group’s and its portfolio of brands and thereby ensure steady income and future results and thus on the performance of income over the long term, Ubisoft favors a strategy of its share price. creating its own brands and internal production, under- The launch of a game may in fact be delayed due to the dif- pinned by a targeted acquisition strategy as well as using ficulty of precisely anticipating the time required to licenses of successful Hollywood films or television series. develop or test it. In a cyclical market as a result of new Lastly, the Company allocates the necessary marketing technologies and penalized by a short product lifetime, a and sales resources to showcase its products through a dis- good start for a game is also essential. tribution network covering over 50 countries. Its position The priority is thus to develop high-quality games meeting as the second largest independent publisher in Europe and the expectations of players in terms of functionality while the third largest in the US thus provides the Group with a satisfying cost targets and deadlines. Ubisoft relies on the high-performance distribution platform for its catalogue effectiveness of its internal expertise in order to anticipate enabling it to maximize the success of its products. these risks and provide the necessary warnings to the management teams, whether with regard to the organization 1.9.1.2 Risks associated with market changes of its teams and the continued effort to improve development processes, the monitoring of external production to Ubisoft operates in a highly competitive market, subject to ensure that it adequately meets Ubisoft’s quality criteria, concentration and marked by rapid technological changes or the quality control or assurance managed by dedicated requiring significant capital expenditure on research and teams throughout the development cycle. development. In order to stay competitive, it is essential for a publisher to correctly anticipate market trends and thus to choose the proper development format for a game. 1.9.1.4 Employee-related risks This selective and strategic choice is very important given The Group’s success largely depends on the talent and the sums invested. An inappropriate choice could have skills of its production and sales and marketing teams in negative consequences on the anticipated revenue. what is a very competitive and international market. If the Group were no longer able to attract and retain new ta- 2007 was marked by greater accessibility to Nintendo con- lented employees, or were no longer capable of retaining soles and the superb visual performance offered by Sony or motivating its key employees, the Company’s growth and Microsoft consoles. Thanks to the technological mas- prospects and financial position could be affected. tery of the new-generation consoles by the production teams and their ability to adapt to market conditions, In order to respond to growing creative and technological Ubisoft was able to take advantage of this transformation challenges, the Company established an active recruiting, and win market share despite facing growing competition. training and international expansion policy, in particular via the following initiatives: Capital expenditure over past years has thus enabled the company to meet technological challenges while managing Opening new studios (Chengdu, Singapore) and acquisi- costs owing to its operations in countries such as Canada, tions (Digital Kids studio, Pune studio in April 2008). UBISOFT • FINANCIAL REPORT 2008 development goals. dependency onanycustomerthatislikely toimpactits countries, theCompanybelieves thatithasnosignificant Because ithasmanylargeretailercustomersin 1.9.1.6 Riskofdependency oncustomers Nevertheless, thefollowing riskscould beincurred: pital shouldminimizetherisksassociated withthese deals. cial surplusof€149millionandthelevel ofavailable ca- Ubisoft’s healthybalance sheet structure,withnetfinan- The Companymakes acquisitions onaregularbasis. regulations. cial, taxorlegalrisksassociated withtherange oflocal the expertise ofitssupportteamsinorder tolimitfinan- ting studios.Similarly, theCompanycontinues todevelop training, particularly throughpartnerships withtheexis- port theteamsthatpromoteinformation sharingand entities, theCompanyestablished several solutions tosup- In order toensurethesuccessful integration ofthese new to meet futuregrowthtargets. these studiosiscriticalfor theCompany’ssuccess inorder production studiosinnewterritories. The integration of reflected inthelastseveral monthsbytheopeningofnew The Companyhasaninternationalexpansion policy, and integration ofnewentities 1.9.1.5 Risksassociated withtheacquisition of integrating acquisitions withintheGroup. However, todate,Ubisoft hasalwaysproven tobecapable company’s revenue, results, and/orfinancialposition. This losscould have anegative impactontheacquired should beconsidered asariskofmergeroracquisition. The possiblelossofthetargetcompany’s key employees ting 900people for fiscal year 2008-2009. All thisshouldenableUbisoft toachieve itsgoalofrecrui- option plans,personal development plans,etc. development opportunities,stock purchase plans,stock employees withstrongtechnical and/ormanagerialskills: foremost designed toattract, train, retainandmotivate Resources atalocal andinternationallevel arefirstand Furthermore, alltheprograms established byHuman intangible assets. the establishmentofprovisions for goodwill orother profitability; possible losses thatriskhaving anegative impacton the creationofasignificantlong-termdebt; result ofashave brand acquisition; the dilutionofcurrentshareholder structureasa rage skillssharing. The addition oftools andcollaborative areastoencou- Group hasoperations. the leadingschools inthevarious countries inwhichthe Casablanca inOctober2008;strongrelationshipswith Ubisoft CampusinMontreal;creationofa Strengthening itspartnershipswithuniversities: the assimilates alloraportionofthetechnology theyuse. games entrusted toasinglestudio, andensuresthatit internal monitoringprocedures, limitsthe numberof In order tocontrol suchrisks,Ubisoft hasimplemented ject atrisk. limited capitalbase thatmayputthecompletion ofapro- independent development studiosmaysometimes have a nal projects inwhichtheyhave specific expertise. These and/or specialized production capacityortotake onorigi- tional subcontracting projects bysupplying additional development activities inorder toworkoneithertradi- Company maycallonoutside studiosinthecontext ofits loped internally, whichaccount for 85%ofrevenue, the Furthermore, despite theprioritygiven togamesdeve- PC games,thereisnospecific dependency. could have amaterialimpactontheCompany’sresults.For yalty rates. Any changeinselling termsbymanufacturers media insufficient quantitiesandtheestablishmentofro- approval ofthemanufacturers, themanufacture ofthis Nintendo andMicrosoft. The supply isthussubject toprior game media fromconsole manufacturers suchasSony, like allconsole-game publishers,purchases cartridgesand However, thereisadependence onmanufacturers. Ubisoft, nection withtheCompany’soperations. providers, suppliersoflicenses andmaintenance incon- DVD-roms, othersystemsintegrators), technology subcontract thesupply andduplicationofCD-roms produce manualsandproduct packaging, disksuppliersto from supplierssuchassystemsintegrators (printersto Ubisoft anditssubsidiariesmainly use services orproducts its development goals. dependency onsubcontractors orsupplierslikely toimpact The Companyalso does nothave anysignificantfinancial and subcontractors 1.9.1.7 Riskofdependency onsuppliers for protecting information fromexternal andinternal Accordingly, Ubisoft’s security department isresponsible order toprotect itself asmuch aspossiblefromsuchrisks. rity systems,andinresources specializing insecurity, in As such,Ubisoft continually invests initscomputer secu- derable value andmustthusbeprotected appropriately. Information isastrategic resource thatrepresents consi- increases inviruses, attacks,etc. such aschangesinregulations,mobilitysolutions, and Ubisoft isexposed tomultiplepre-requisites orthreats, Like allinternationalcompanies connected totheInternet, systems andcomputer security 1.9.1.8 Risksassociated withinformation credit insurance. approximately 85%oftotalrevenue, areallcovered by default, theGroup’slargestsubsidiaries,whichaccount for Moreover, inorder toprotect itself againsttheriskof the Group’spre-taxrevenue. Ubisoft’s 10largestcustomersaccounted for 46.85%of THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 45 threats in order to guarantee its confidentiality, integrity Litigation in copyright infringement and piracy cases in and availability as well as to ensure business continuity. France and abroad by bringing claims for damages where necessary or via any other available criminal or civil Thus, Ubisoft has implemented several arrangements, avenue, measures against hackers in order to obtain the including security policies in order to bring itself into com- removal of games illegally put online, etc. pliance with legislation, security committees in the various offices to manage local security issues, secure hosting of Ubisoft has not filed any patents and has no dependence on its data in dedicated data centers in order to reduce phy- specific patents. sical risks, a centralized anti-virus system ensuring optimal protection, a secure mobility solution to protect its remote 1.9.2.4 Licensing agreement risks workers and wireless users, etc. Every year, Ubisoft signs a series of partnership agreements, particularly with prestigious partners such as film studios, television channels and celebrities, amongst ot- 1.9.2 Legal Risks hers, enabling the Company to develop its game catalogue and growing its revenue. 1.9.2.1 Lawsuits – Legal proceedings The potential interruption of certain partnerships, for and arbitration whatever reason, at the initiative of Ubisoft or of its part- The lawsuit that pitted the Company against a licensor ners, would likely have a negative impact on the revenue since October 2003 was decided in favor of Ubisoft and future performance of the Company as it would not be offset by other new licenses. Entertainment SA. The compensation and late interest penalties amounted to USD13.2 million. Ubisoft has established a series of internal controls both at marketing team and development team level to ensure the There are no other governmental, legal or arbitration proper implementation of licensing agreements and com- proceedings, including any proceedings of which the pliance with the directives of its partners. Company is aware, that are pending or with which it is threatened, that are likely to have or which over the past 12 months have had a material impact on the financial position or profitability of the Company and/or the Group, Industrial or other than the one that is recognized in the consolidated 1.9.3 financial statements and mentioned in the notes to the ba- environment-related lance sheet, Note 13 – Provisions. risks The Group is occasionally subject to tax audits carried out The Group currently has no knowledge of any industrial or by the tax authorities of the countries in which it is located. environmental risk. Ubisoft did not record any provision, purchase any insu- 1.9.2.2 Regulatory environment rance to cover potential environmental risks, or pay any The Company, like all game publishers, must comply with indemnities in this regard during the fiscal year. various national regulations in particular regulating the Nevertheless, the Company remains on the outlook for content of games and consumer protection. Failure to changes in regulations in the countries in which it operates. comply with these regulations may have a negative impact on sales (delayed launch or withdrawal of products from the market, for example). The Company continues to improve its internal controls in order to ensure compliance with these directives and the principles established by professional organizations. In particular, it is a member of the ESA (Entertainment Software Association) and SELL (French Association of Recreational Software Publishers).

1.9.2.3 Risks associated with intellectual property rights Given the importance of the prominence of its brands and the piracy problem faced by all players in the video game industry, the Company has taken the necessary measures to protect its portfolio of commercial brands as well as the other intellectual property rights that it holds:

Registration of trademarks as well as copyright of games designed at European and international level. UBISOFT • FINANCIAL REPORT 2008 The impactofa+/-1%changeinthemaincurrenciesonGroup’srevenue andoperating profit(inK€)asofMarch31, 2008: The Groupfirstuses natural hedges resultingfromtran- the hedging horizonnever exceeds 15months. strategy istohedge only onefiscal year atatime,so that Canadian dollar, poundsterlingandAustralian dollar). Its operating cashflowsinthemaincurrencies(USdollar, The Grouponly hedges itsexposures oninter-company denominated inCAD&sterling. The exchange rislmainly exists onfinancialdebt labeled/ foreign subsidiaries. company operating cashflowsanditsinvestments inits The Groupisexposed toforeign exchange riskonitsinter- Foreign exchange risk result ofthehighly seasonal natureofthebusiness. to finance thehighyear-end capitalrequirement asa the Group’spositive netcashposition,areused essentially variable rate borrowing andbankoverdrafts which,given As ofMarch31,2008,theGroup’snetdebt included a busy periods. related toincreases inworkingcapitalduringparticularly needs and variable rate loanstofinance specific needs primarily uses fixed rate loansfor itslong-termfinancing reduce exposure tothisrisk.Inregard,theGroup minimize thecost oftheGroup'sborrowingsandto Interest rate riskmanagementisprimarily designed to Interest rate risk financing needs generated byitsbusiness: interest rate andforeign exchange risksresultingfromthe The Groupuses certain financialinstrumentstolimitthe urnyIpc nrvneImpactonoperating profit Impactonrevenue JPY DKK (1,531.8) AUD CAD GBP (652.4) 200.0 USD (1,079.4) (2,569.0)(3,221) (6,161.9) Currency 1,143 Difference (5,616) (65,241) 1% (153,181) 943.2 (4,536.1) 3.94% (107,940) Interestp.a. 20,000 Variable Nominal 4.20% 4.716% Rate Variable Variable Type ofrate Net positionbefore hedging Investment securities Cash Bank borrowings Liabilities 1.9.4 Financial risks Ubisoft’s debtstructure(inK€): transaction volumes arehigh. tions, especially onitssalesintheUSandCanadawhere The Companyremainsexposed toexchange rate fluctua- using forwards andforeign currencyborrowings. USD42,925 million,CAD17millionandJPY100 million As ofMarch31,2008,theCompanyhadhedged foreign currencies). commercial transactions (suchasinter-company loansin rency optionstohedge anyresidualexposures andnon- foreign currencyborrowings,forwards andforeign cur- sidiaries inthesamecurrency).The parent company uses foreign currenciesoffset byroyaltiesreceived fromsub- sactions intheotherdirection (development expenses in changes ininterestrates wereasfollows: 2008, financialincome andexpense andsensitivity to In viewoftheCompany’sfinancialpositionasMarch31, ah(65,241) 20,000 23,323 3,323 (107,940) (173,181) Net positionbefore hedging Investment securities Cash Financial assets Canadian bankborrowing UK bankborrowing Borrowings ,9 1,329 1,350 1,590 3,679 4 200 266 506 245 327 505 344 93 er1to5years < 1year change THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 47 Equity risk confirmed credit facilities, and other bank credit facilities totaling €76 million as of March 31, 2008. The Company has main types of equity investments: The option to renew the syndicated loan for one year was Stock held directly pursuant to a market-making and li- not exercised. A new agreement was signed in May 2008 quidity agreement signed with Exane BNP. These purchases for €180 million over 5 years. are made under the terms of a market-making agreement that complies with all applicable regulations, and are The syndicated loan and the confirmed bank loans are go- designed to ensure liquidity of stock purchases and sales. verned by financial covenants that are based on the ratio As of March 31, 2008, the Company had 30,371 shares, of net debt to equity and of net debt to cash flow from worth €1,573 thousand. operating activities. An equity swap agreement on stock: this derivative is re- Liquidity Risk Figures cognized in the balance sheet at fair value. Any fluctuations in the share price compared to the €9.33 disposal 03.31.08 03.31.07 price are recognized in income. Bank Loans 23,323 23,254 A total of 193,153 shares were disposed of during the year, leaving 1,243,121 shares as of March 31, 2008. Trade Payables 177,903 118,950 An equity swap agreement on Gameloft stock: this deri- Derivative Instruments 1,353 - vative is recognized in the balance sheet at fair value. Any fluctuations in the share price compared to the Covenants €6.08 sale price are recognized in equity. A total of Under the terms of the syndicated loan and the €20 million 4,189,198 shares were disposed of during the year, lea- bilateral line, the Company is required to respect certain ving 9,178,755 shares held as of March 31, 2008. A one covenants. euro fall in the share price would thus reduce equity by The covenants are as follows: €9,178 thousand. A potential fall in the price of Ubisoft stock and Gameloft 2008-2009 2007-2008 one would be a risk. Net debt restated for assigned receivables / equity Investment policy restated for goodwill < 0.80 0.85 All cash must remain highly liquid, and the risk to the ca- Net debt restated for assigned receivables / EBITDA < 1.5 1.5 pital must be kept to a minimum. Cash must thus be invested in products that are very secure and have very Furthermore, in 2006-2007, the Company signed a €10 low volatility. All the products in which the Group invests million line, which is subject to the same covenants but are compliant with the criteria established by IAS 7. uses 0.9 for the net debt/equity ratio. Accordingly, certain principles of conservatism regarding the Group’s cash management must be observed: All covenants are calculated on the basis of the consolidated annual financial statements under IFRS. Never place more than 5% of the net assets in a single fund, As of March 31, 2008, the Company was in compliance with all of these ratios and expected to remain so during Never invest more than 20% of total cash in the same the 2008-2009 fiscal year. vehicle. The Group diversifies its investments with top tier coun- Bank overdrafts terparties, using money market vehicles with maturities of Bank overdrafts are used to finance occasional cash short- under three months. falls arising from changes in working capital requirements. As of March 31, 2008, the Group’s cash was invested in They can be offset via notional cash pooling by available money market investment companies and certificates of cash reserves in other Group companies. deposit with maturities of under three months. Finance leases Finance leases mainly relate to computer equipment Liquidity risk leased for terms of at most three years. During the fiscal As of March 31, 2008, the Group had financial debt of year there were no new borrowings and repayments €79.4 million and net cash (including liquid assets and totaled €55 thousand. short-term investment securities) of €149 million. With the exception of a €20 million borrowing, financial debt as of March 31, 2008 consisted mainly of inter-company cash pooling transactions. In order to finance short-term needs related to increases in working capital during especially busy periods, the Group had a €100 million syndicated loan, €30 million in UBISOFT • FINANCIAL REPORT 2008 Summary ofcoverage onthebasis ofthetypeinsurance taken outbythemainentities: Insurance coverage Japan, whicheachhave theirownlocal insurance policies. wide subsidiariesexcept those intheUS,Canada,and by Ubisoft EntertainmentSA whichcovers alloftheworld- The Groupenjoysprofessional liabilitycoverage taken out Description ofinsurance The breakdown ofborrowingsbycurrencywasasfollows: to €149,493thousand. As ofMarch31,2008,thenetfinancialsurplusamounted Net financialsurplus ah(2,7)(95,766) (54,972) (120,973) (149,493) (30,786) (107,940) Financial surplus 71,580 Net investment securities Cash Borrowings 79,420 netr nuac ,0 200150- 29,214 1,000 1,500 9,363 22,050 12,000 China 7,000 11,315 1,500 Canada 3,823 3,140 US France Inventory insurance Property insurance General liability Coverage limits 2 3 71,580 - 276 79,420 61,473 9,826 - 20 75,216 4,184 Borrowings Other Pound sterling Canadian dollar US dollar Euro 1.9.5 coverage Insurance andrisk 33.803.31.07 03.31.08 03.31.07 03.31.08 Each subsidiaryiscovered inparticularfor: ving itsassets. tecting itspersonnel, itsbusiness,clientsandpreser- with andadequate for itsneeds. Itmakes apriorityofpro- The Grouptakes outinsurance policiesthatareconsistent approximately €1,075thousand. during thefiscal year endingMarch31,2008amounted to Total premiumspaidfor alltheinsurance policiesinforce Canada. losses, particularly intheUS,UK,Italy, Denmarkand Some companies areinsured intheevent ofoperating Australia, andJapan, amongst others. applicable legislative requirements, suchasintheUS, compensation policieshave been taken outtomeet various dinary riskofwork-related accidents. However, workers’ In itself, theGroup’sbusinessdoes notincuranyextraor- triation abroad. all employees oftheFrenchsitesfor assistance andrepa- work assignmentsinFrance andabroad.This policycovers Ubisoft took outanassistance policyfor individualson certain subsidiaries. All ofthepolicieswererenewed andeven increased for teristics ofeachcountry. verage depending onitsbusinessandthespecific charac- Each foreign subsidiarytailorsandmanagesitslocal co- transportation tocustomers,etc. inventory; apartments rented toemployees onassignment; property damage; vehicles; nK nKS nKA inKCNY inKCAD inKUSD in K€ THE GROUP’S BUSINESS ACTIVITIES AND RESULTS FOR FISCAL YEAR 2007-2008 1 49

1.10 Commitments

Following the acquisition of the Tom Clancy name for €46 million, Ubisoft still owes €14.8 million on the purchase price. Various products are marketed under licensing agreements signed by Ubisoft Entertainment SA. The commitments undertaken by the Company provide for the payment of guaranteed minimum royalties. As of March 31, 2008, commitments made by virtue of this guaranteed minimum amounted to €80.3 million. The Company has no other future capital expenditure that is already subject to a firm commitment from senior management at the Company. There is no minority interest in the Group’s shareholder structure, so there is no risk associated with the buyout of minority interests.

1.11 Recent events, outlook and strategy

1.11.1 Recent developments 1.11.2 Market outlook

The video game market was particularly strong in 2007, April 2008 with average growth of nearly 26% in Europe, North Ubisoft announced revenue of €928 million for fiscal America, Australia and New Zealand. This increase largely year 2007-08, up 43% at constant exchange rates, and exceeded the expectations of industry professionals, par- confirmed its target for current operating income before ticularly due to the phenomenal success of the Nintendo stock options of roughly 14%. The fiscal year saw the DS™ and Wii™. The market was also sustained by solid sel- solid performance of long-standing franchises such as ling prices, by the high number of games sold on Xbox360® Rayman®, Ghost Recon®, Rainbow Six® and Settlers®, and by the arrival of the PlayStation®3. the sharp growth in the "Games For Everyone" casual 2008 should see growth of at least 15% and continue to games segment, which reported a tripling of revenue impact an increasingly wide public attracted by the ci- over the fiscal year, and the steady launch of new crea- nema-like visual experiences offered by Xbox360® and tions with Assassin's Creed® and Imagine, which were PlayStation®3 and by better accessibility of Nintendo con- highly successful. soles. Ubisoft opened a new development studio in Kiev, in the With regard to market players, as in prior years, 2007 saw Ukraine. The studio team should expand to some fifty a series of studio and brand acquisitions by the major video employees over the next twelve months. game publishers. Accordingly, Ubisoft acquired the Ubisoft signed an agreement with Gameloft to acquire its Anno™ brand and the Digital Kids studio and Electronic development studio based in Pune, India. Established at Arts acquired the Bioware and Pandemic studios. The con- the end of 2006, the studio currently employs 120 deve- solidation phase accelerated with Vivendi’s offer to acquire lopers and testers. The goal is to have 200 employees Activision and the offer by Electronic Arts (in 2008) for over the next 12 months and 500 within a couple of Take-Two, intensifying the race for creativity and talent years. required by the video game industry.

May 2008

Disposal of all Ubisoft stock held in connection with the equity swap agreement on May 12, 2008: the remaining 1,243,121 shares were disposed at an average price of €61.68. UBISOFT • FINANCIAL REPORT 2008 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 51

2.1 Consolidated balance sheet 52 2.2 Consolidated income statement 53 2.3 Consolidated statement of changes in equity 54 2.4 Consolidated cash flow statement 56 2.5 Notes to the consolidated financial statements 57 2.5.1 Highlights of the fiscal year 57 2.5.2 Financials Statements comparability 58 2.5.3 Main accounting methods 58 2.5.4 Scope of consolidation 64 2.5.5 Notes to the balance sheet 66 2.5.6 Notes to the income statement 80 2.5.7 Other notes 84 2.5.8 Personnel 88 2.5.9 Events after the balance sheet date 88 2.6 Report for the consolidated account statements as of march 31, 2008 as for the fiscal year ending March, 31, 2008 89 consolidated financial statements consolidated 2 UBISOFT • FINANCIAL REPORT 2008 (1) See details inSection FinancialStatements comparability. In thousandsofeuros rpry ln n qimn 32,8 25,510 22,480 3 Property, plantandequipment Other intangibleassets Goodwill In thousandsofeuros ASSETS Total liabilitiesandequity Current taxliabilities Current financialliabilities 19,183 Other liabilities Trade payables 39,284 Short-term borrowings Deferred taxliabilities 10 Long-term borrowings Employee benefit Provisions Minority interests Consolidated earnings Consolidated reserves Premiums Capital Total assets Assets heldfor sale Cash andcashequivalents Current taxassets Other currentfinancialassets Other receivables Trade receivables Inventory Deferred taxassets Other financialassets Investments inassociates IBLTE N QIYNts0.10 03.31.07 03.31.08 Notes LIABILITIES ANDEQUITY 2.1 Consolidated balancesheet o-urn ses 2,6 478,768 529,763 Non-current assets qiy(ru hr) 3,5 521,819 634,151 Equity (groupshare) o-urn iblte 083 54,077 70,873 Non-current liabilities o a qiy 26411 521,819 634,151 12 Total equity urn iblte 3498 245,822 344,928 Current liabilities urn ses 2,8 342,950 520,189 Current assets oe e Net Net Notes 33.803.31.07 03.31.08 0133- 1,353 95,50575,895 177,903118,950 20 19 18 43,99028,214 15 56,097 48,874 23,32322,706 1,6991,205 1,8611,952 17 15 14 13 25,058 228,913126,552 10 11 398,378301,798 84,37677,374 2 1 91,68373,959 84,22687,857 39,87924,794 9 8 21,68437,630 2,5172,458 7 32833,998 6 5 4 1,049,952 821,718 821,718 1,049,952 presentation 109,844 40,558 459,457 435,234 14,070 2,103 57,685 38,990 11,146 10,605 7,165 7,037 (1) -- New CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 53 2.2 Consolidated income statement

In thousands of euros Notes 03.31.08 03.31.07 (1) New presentation Sales 21 928,307 680,348 Other operating income 22 191,209 164,823 Cost of sales (329,984) (243,164) Changes in inventories of finished goods and work in progress 18,275 2,037 Employee benefits expense 23 (205,010) (171,038) Other operating expenses 24 (218,182) (161,079) Taxes and duties (6,872) (5,950) Depreciation and amortization 25 (254,492) (230,000) Provisions 25 1,328 (1,038) Operating profit (loss) from continuing operations 124,578 34,939 Other operating income and expenses 26 6,942 (360) Operating profit (loss) 131,520 34,579 Income from cash and cash equivalents 2,605 1,476 Gross borrowing cost (2,926) (7,067) Net borrowing cost (321) (5,591) Financial income 43,521 38,201 Financial expenses (30,774) (14,563) Net financial income 27 12,426 18,047 Share of profit of associates 28 28 3,149 Income tax 29 (48,957) (15,217) Gain (loss) on the disposal of discontinued operations 30 14,827 - Profit (loss) for the period 109,844 40,558 Minority interests -- Group Result 109,844 40,558 Basic earnings per share from continuing operations 2.07 0.95 Diluted earnings per share from continuing operations 1.98 0.92 Basic earnings per share from discontinued operations 0.32 - Diluted earnings per share from discontinued operations 0.31 -

(1) See details in Section Financial Statements comparability. UBISOFT • FINANCIAL REPORT 2008 between theclosingrate asofMarch31,2007(€1=$1.5366)andtheclosingrate asofMarch31,2008(€1=$1.6226),namely - (€1 =$1.3318)andtheclosingrate asofMarch 31,2008(€1=$1.5812),namely -€16,155thousand,thedecline inthevalue of (1) Translation adjustmentsareattributableessentially tothedecline inthevalue oftheUSdollar between theclosingrate (€1 =£0.7958),namely -€1,374thousand. oiina fMrh3,20 ,2 2,6 8,204 325,065 Equity 6,025 Premiums Capital Allocation ofconsolidated N-1earnings Position as ofMarch31,2006 In thousandsofeuros oiina fMrh3,20 ,6 5,5 - 459,457 7,165 - 15,697 128 435,234 7,037 Position asofMarch31,2008 1,468 Impact oftranslation adjustmentsoncompanies deconsolidated inN-1 Options onordinarysharesissued Change inthesharecapitalofparentcompany Total incomeandexpenses recognizedfor theperiod Other itemsrecognized directly inequity Fair value adjustmentoffinancialassets 105,357 Translation adjustmentsonforeign operations Gain (loss)ontheimpairmentorsaleofownshares Fair value gain(loss)recognized inequity Tax onitemsrecognized directly inequity ortransferred directly fromequity Consolidated earningsfor theperiod attributabletoequity holders oftheparent 1,012 Allocation ofconsolidated N-1earnings Position asofMarch31,2007 Restatement duetothematuringofbonds Other changes Changes inscope Conversion ofOBSAR andOCEANEbonds Translation adjustmentsonforeign operations Options onordinarysharesissued Change inthesharecapitalofparentcompany Total incomeandexpenses recognizedfor theperiod Other itemsrecognized directly inequity Dilution inequity ofassociates Fair value gain(loss)recognized inequity Gains (losses) ontheimpairmentordisposalofownshares Tax onitemsrecognized directly inequity ortransferred directly fromequity Consolidated earningsfor theperiod attributabletoequity holders oftheparent and thedecline inthevalue ofthepound sterling between theclosingrate asof March31,2007(€1=£0.6798)andtheclosing 2.3 Consolidated statementofchangesinequity (1) rate asofMarch 31,2008 as ofMarch31,2007 theCanadiandollar €1,704,000, 8,526 3,344 instruments component financial of (8,204) CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 55

Consolidated Translation Group Total Minority Total reserves adjustments Result Equity interests consolidated Group equity Share

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 40,558 (40,558) 109,844 109,844 109,844 17 17 17 6 66 386 386 386 (22,154) (22,154) (22,154) 726 726 726 (67) (67) (67) 1,068 (22,154) 109,844 88,758 88,758 (778) 15,048 15,048 8,526 8,526 (116) 116 - - 116,330 (58,646) 109,844 634,150 - 634,150 UBISOFT • FINANCIAL REPORT 2008 osldtderig 0,4 40,558 (3,149) 230,118 03.31.07 109,844 254,497 (28) - 03.31.08 (14,827) +/- Provisions +/- Depreciation andamortization +/- Gains/losses onthedisposalofdiscontinued operations +/- Shareofprofitassociates Consolidated earnings Cash flowsfromoperating activities In thousandsofeuros mato rnlto dutet ,5 2,627 (17) (4,868) 625 (151,933) 3,253 (15,036) (897) (230) 80,894 91,275 106,551 - 30,740 (392) 15,649 (55) (280,314) 78,653 15,825 268 (7,129) (153) - (1) Includingcashincompanies acquired anddisposed of 16,077 (342,012) Cash andcashequivalents attheendoffiscalyear Impact oftranslation adjustments Cash andcashequivalents atthebeginningoffiscal year (15,778) Net changeincashandequivalents 290,482 (18,891) Cash generated (used)byfinancingactivities (842) +/- Otherflows (66) 23,735 7,129 +/- Sales/purchases ofownshares 25,110 + Proceeds fromshareholders incapitalincreases + Accrued interest (23,731) 302,289 - Repaymentofborrowings 417,638 95 - Repaymentoffinance leases 18,705 (7,096) + Newmedium andlong-termborrowings 243 + Newfinance leases 18,891 Cash flowsfromfinancingactivities Cash usedbyinvesting activities 3,344 (221) 441,760 +/- Changesinscope + Proceeds fromthedisposalofdiscontinued operations 58,095 + Repaymentofloansandotherfinancialassets 475 +/- Othercashflowsfrominvesting activities 2,096 - Payments for theacquisition offinancialassets + Proceeds fromthedisposalofintangibleassets andproperty,plantequipment 8,526 (600) - Payments for theacquisition ofintangibleassets andproperty, plantandequipment Net cashgenerated byoperating activities - Income taxpaid - Interestpaid Total cashflowgenerated byoperating activities +/-Change inworkingcapitalfromoperating activities Other liabilities Trade payables Other assets Trade receivables Inventory + Income taxpaid + Interestpaid +/- Otherincome andexpenses calculated +/- Gains/losses ondisposals +/- Costofshare-based payments (2) See details inSection 2.5.5Note11. 2.4 Consolidated cashflowstatement (1) (2) 3913 (280,725) (349,193) 2,3)(34,830) (1,914) (27,936) (17,569) 1,4)170 (18,342) 7,8 78,653 173,181 521 (4,678) (5,231) 99133,429 22,862 49,981 60,714 ,3 4,678 5,231 5884 35 (42) 3 (807) - -60 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 57 2.5 Notes to the consolidated financial statements

The notes and tables that follow are presented in thousands of euros, unless expressly stated otherwise.

€6.08 per share price set in the first agreement, until such Highlights time as Calyon disposes of the stock to a third party. 2.5.1 of the fiscal year As not all of the risks and benefits of the shares have been transferred, the sale agreement with Calyon was not con- Sunflowers GMBH Acquisition sidered a sale of securities under International Financial Reporting Standards (IFRS). The participation in Gameloft On April 6, 2007, Ubisoft acquired the Anno brand as part is now booked as non current assets held for sale , com- of its €14.5 million takeover of Sunflowers GmbH, the pliant with IFRS 5. software publisher. On March 31, 2008, Calyon’s market sale of the Gameloft This acquisition also provides Ubisoft Entertainment SA stock was recognized in the income statement under “gain with a 30% interest in Related Designs Software GmbH, (loss) on the disposal of discontinued operations” line item, the developer of Anno 1701 (the latest game in the net of income tax. On March 31, 2008 the remaining series), which is currently working on a new release. 9,178,725 shares (representing 12.58% of Gameloft’s ca- Following this acquisition, Avator Entertainment GmbH pital) were reclassified from “investments in associates” to was established, in which Ubisoft Entertainment SA took a “assets held for sale”, assets available for sale. 25% interest. This accounting involves : Digital Kids Acquisition As of profit and loss, the net gain on Gameloft’s shares On January 11, 2008, the Group acquired 100% of the sold by Calyon during the financial year is shown net of Japanese studio Digital Kids Co. Ltd. income tax on the specific line “gain (loss) on the disposal of discontinued operations”; Tom Clancy Property rignts Acquisition As of balance sheet, Gameloft shares not sold by Calyon On March 20, 2008, the Group acquired all of the intellec- are reclassified from “equity participating interests” to tual property rights associated with the name Tom Clancy “assets held for sale” and measured at fair value through for video games and spin-off products, including books, equity. films and all merchandising products. Equity swap agreement on Ubisoft stock. Disposal 193,153 shares covered by the equity swap agreement In March 2008, the Group disposed of its 25% interest in signed with Calyon on September 30, 2003 were disposed the German company Avator Entertainment GmbH. of during the year. Incorporations The disposal generated a capital gain of €5.6 million. On September 17, 2007, Chengdu Computer Software Co. On February 28, 2008, Ubisoft Entertainment SA extended Ltd. a wholly-owned development studio subsidiary of the equity swap agreement with Calyon for a further period Ubisoft Entertainment SA, was established. of 24 months. On February 12, 2008, Ubisoft Singapore Pte Ltd., a The remaining shares have been sold after the closing (see wholly-owned development studio subsidiary of Ubisoft section 2.5.9). Entertainment SA, was established. Lawsuit On March 10, 2008, Ubisoft Limited, a wholly-owned Irish subsidiary of Ubisoft World SAS, which is itself a whol- The lawsuit initiated in October 2003 by the Company lyowned subsidiary of Ubisoft Entertainment SA, was against a licensee was settled in favor of Ubisoft established. Entertainment SA, which was awarded USD13.2 million, €8.6 million (€5.1 million received on the financial year Equity swap agreement on Gameloft stock. and €3.5 milllion to be received in April) in compensation On July 12, 2007, Ubisoft Entertainment SA entered into and late payment penalties. two agreements with Calyon, the investment bank. 2008 BSAR (redeemable share subscription warrants) The first agreement dealt with the disposal of all capital increase 13,367,923 Gameloft shares held by Ubisoft Entertainment On October 25, 2007, the Company issued new shares, SA (representing 18.73% of Gameloft’s capital) for €6.08 with waiving of preemptive rights, to the former holders of each. the 2008 BSAR, which had been redeemed early on The second related to Ubisoft Entertainment SA’s ability February 26, 2007. A total of 235,328 ordinary shares to continue participating in upward or downward move- were issued with a par value of €0.155 each, representing ments in the price of Gameloft stock compared to the a total par value of €36,475.84, plus a premium of UBISOFT • FINANCIAL REPORT 2008 pretations arenotyet applicabletothe12month period Some newstandards,amendments tostandardsandinter- Disclosures.” 1“Presentation ofFinancialStatements: Capital IAS Disclosures andPresentation” andtheamendmentto Union, andnotably IFRS7“FinancialInstruments: cable asofMarch31,2008approved intheEuropean International FinancialReportingStandards(IFRS)appli- 31, 2008have been prepared inaccordance withthe The consolidated financialstatements approved onMarch 2.5.3.1 Declaration ofconformity the BoardofDirectors onMay22,2008. The consolidated financialstatementswereapproved by share ofinvestments inassociates. subsidiaries (togethercalled “the Group”),andGroup’s year ended March31,2008include theCompanyandits The consolidated annualfinancialstatementsfor thefiscal Ubisoft EntertainmentSA isdomiciled inFrance. “provisions”. now included netin“depreciation andamortization” viously recognized under “otheroperating income”, are (€1.644 thousandasofMarch31,2007),whichwerepre- Net reversals ofdepreciation, amortizationandprovisions ting expenses”, arenowincluded in“consumables used”. 2007, whichwerepreviously recognized in“otheropera- Logistics costs, namely €13.196thousandasofMarch31, Profit andloss €80.316 thousand. ment- andsupplierspayableshave been increased for As ofMarch31,2008,intangibleassets –outside develop- commitments. (€ 37.772thousand)werepresented asoff balance sheet As ofMarch31,2007,these unpaidcommitments part. engaged mentionned inthecontract included theunpaid Licensee’s commitments arenowbooked for theamount Balance sheet count of€12.11). the €47.71closingprice onOctober2,2007lessadis- General Shareholders' Meeting onJuly 4,2007(namely €35.60, inlinewiththeframework established bythe €8,377,676.80. The sharesubscription price wasset at €8,341,200.96 bringingthetotalincrease to 2.5.3 2.5.2 methods Main accounting comparability Financials Statements all Groupentities. The accounting methods have been applied consistently by solidated financialstatements. applied consistently toalltheperiods presented inthecon- The accounting methods described belowhave been other intangibleassets andproperty,plantequipment. explained inthenotesonimpairment testsongoodwill, will changeduringthesubsequent period, theyare statements andthatthereisastrongriskestimates applying IFRScanhave amaterialimpactonthefinancial Given thatthejudgmentsmade bymanagementwhen fer fromestimates. not beobtained fromothersources. Actual values maydif- of thecarryingamountsassets andliabilitiesthatcan- for theexercise ofjudgmentnecessary for thecalculation light ofthecircumstances. They therefore serve asabasis experience andotherfactors considered reasonable in blished andreviewed continuously onthebasisofpast These estimatesandtheunderlying assumptionsareesta- gnized inthefinancialstatements. tion oftheaccounting methods andtheamountsreco- make estimatesandassumptionsthatimpacttheapplica- dance withIFRSrequires thattheGroup’smanagement Preparation of consolidated financialstatementsinaccor- rying amountorfair value lessthedisposalcosts. Assets heldfor salearemeasured attheloweroftheircar- financial instrumentsavailable for sale. derivatives, financialinstrumentsheldfor trading and assets andliabilities,whicharemeasured atfair value: torical cost method, withtheexception ofthefollowing The financialstatementshave been prepared usingthehis- 2.5.3.2 Bases ofpreparation the powertomanage,either directly orindirectly, the Entertainment SA. Controlexists wheretheCompanyhas A subsidiaryisanentity controlled byUbisoft Subsidiaries 2.5.3.3 Consolidation principles ments: for thepreparation oftheconsolidated financialstate- ended March31,2008,andhave therefore notbeen used Minimum Funding Requirements andtheirInteraction” IFRIC 14“IAS19–The LimitonaDefined BenefitAsset, IFRIC 13“CustomerLoyaltyProgrammes” IFRIC 12“Service Concession Arrangements” Transactions” IFRIC 11“IFRS2-GroupandTreasury Share IFRIC 10“InterimFinancialReportingandImpairment” IFRIC 8“Scope ofIFRS2” IFRS 8“Operating Segments” revised inSeptember2007) IAS 1“Presentation ofFinancialStatements”(version CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 59 entity’s financial and operational policies in order to obtain a rate approximating the exchange rate at the date of the benefits from its activities. transaction. Equity is reported at the historical rate. The To assess control, potential voting rights that are currently resulting translation adjustments are recognized under exercisable or convertible are taken into account. The translation adjustments, as a distinct component of equity. financial statements of subsidiaries are included in the consolidated financial statements from the date on which Goodwill control is obtained to the date at which such control ends. All business combinations are accounted for using the purchase method. Associates The goodwill stems from the acquisition of subsidiaries, Associates are entities over which Ubisoft Entertainment associates and joint ventures and is defined as the diffe- SA exercises significant influence on the financial and rence between the purchase cost and the fair value of the operational policies but no control. The consolidated assets, liabilities and contingent liabilities identified at the financial statements include the Group share in the total date of the acquisition. amount of profits and losses recognized by the associates, using the equity accounting method, starting from the date Positive goodwill is not amortized but rather tested for when significant influence is exercised to the date at which impairment at each closing date. The recoverable amount such influence ends. of goodwill is then estimated on the basis of either the market value or value in use. Value in use is defined as the As of March 31, 2008, all companies controlled by the present value of the cash flows from the cash generating Group are fully consolidated; only Related Designs units with which the goodwill is associated. When the mar- Software GmbH, in which the Group has a 30% interest, is accounted for under the equity method. ket value or the value in use falls below the carrying amount, an irreversible impairment loss is recognized. Transactions eliminated in the consolidated The cash generating units for the purposes of calculating financial statements the impairment tests correspond to the subsidiaries present in a single country, with the exception of good- Balance sheet amounts, unrealized losses and gains and will on acquisitions of companies whose acquired brands income and expenses resulting from inter-company tran- are distributed by all Group subsidiaries (Redstorm sactions are eliminated during the process of preparing the Entertainment Inc. in the US, or Blue Byte) for which the consolidated financial statements. The unrealized gains cash generating unit corresponds to the Group’s conso- resulting from transactions with associates and entities lidated financial statements. under joint control are eliminated in proportion to the Group’s interest in the entity. Unrealized losses are elimi- The discount rate used is the government bond rate nated in the same way as unrealized gains, but only to the adjusted to exclude market risks related to Ubisoft extent that they are not indicative of an impairment loss. Entertainment SA and tax. Negative goodwill (which IFRS 3 defines as “the excess of Translation of transactions denominated the cost over the acquirer's interests in the net fair value in foreign currencies of the assets, liabilities and contingent liabilities acquired”) Transactions denominated in foreign currencies are mea- is recognized immediately in income. sured by applying the exchange rate prevailing at the date Since the business assets recognized in the corporate of the transaction. financial statements are the same nature as goodwill, At closing date, all monetary assets and liabilities deno- they are treated as goodwill in the consolidated financial minated in foreign currencies are translated into euros at statements. the closing exchange rate. Any resulting translation Business assets are thus not amortized but, like goodwill, adjustments are recognized in profit and loss statement. are subject to annual impairment tests at the balance sheet All non-monetary assets and liabilities denominated in date. foreign currencies and measured at historical cost are translated using the exchange rate at the date of the tran- Brands saction. In accordance with IFRS 3 on business combinations or All non-monetary assets and liabilities denominated in IAS 38 on the acquisition of intangible assets, all brands foreign currencies and measured at fair value are trans- are recognized at their fair value. They are not amor- lated using the exchange rate prevailing on the day the fair tized, but are the subject of annual impairment tests. The value was calculated. recoverable amount of the brand is then estimated on the basis of either the market value or the value in use. Value Translation into euros of the financial in use is defined as the present value of the future cash statements of foreign subsidiaries flows from the cash generating units with which the brand The assets and liabilities of foreign subsidiaries, including is associated. When the market value or the value in use goodwill, are translated into euros at the closing exchange falls below the carrying amount, an impairment loss is rate. Income statement items are translated into euros at recognized. UBISOFT • FINANCIAL REPORT 2008 xenldvlpet Ext External developments leases. inherent inownershipoftheasset areclassified asfinance 10years (straight-line). Leases thattransfer substantially alltherisksandbenefits 5years (straight-line), under financeleases 3years (straight-line), Non-current assetsacquired - Office 5and10years (straight-line), furniture: - Computerhardware: - Fixturesandfittings: - Equipment: useful lives: late depreciation, employingthefollowing methods and The samerates areused throughouttheGrouptocalcu- rent assets. No borrowingcosts areincluded inthecosts ofnon-cur- non-current assets wasnoted. current assets held,nodistinctcomponent ofthemain described inthenoteongoodwill). Given thetypesofnon- depreciation andimpairment(see theaccounting method and anyinvestment grants provided andallaccumulated includes theacquisition cost, lessanypaymentdiscounts The grossamountofproperty,plantandequipment Property, plantandequipment Depreciation andamortizationmethods generate futureeconomic benefits. can bedetermined reliably anditislikely thattheywill are only recognized asnon-currentassets wherethecost ment. Inaccordance withIAS38“IntangibleAssets,” items nized atcost lessaccumulated amortizationandimpair- Other intangibleassets acquired bytheGrouparerecog- Accounting andlaterevaluation - external developments. - commercial software, - Information Systemcosts, - office software, - logo, Other intangibleassets contain : Other intangibleassets Information systemcosts fiesfwr Aotzdoe er(tagtln)No Amortized over 1year (straight-line) Office software omrilsfwr omrilsfwr r mrie vr Whensalesprove lowerthanprojections andexpected Commercialsoftware areamortized over Commercial software ae frylisidctdt h otat profitabilityisdetermined onthebasisofoperating profit rates ofroyaltiesindicated tothecontracts codn otesl uniisado h profitability,animpairmentlossisrecognized. Operating according tothesold quantitiesandofthe ra eeomnsaeaotzd Whensalesprove lowerthanprojections andexpected ernal developments areamortized er srih-ie rmtedt f profitability,animpairmentlossisrecognized. Operating 3 years (straight-line) from thedateof mrie vr5yas(tagtln)No Amortized over 5years (straight-line) mriainmtosDepreciation methods Amortization methods hi omrilrlaeprofitabilityisdetermined onthe basisofoperating profit their commercial release normal course ofbusinesslessestimated completion costs Net realizablevalue istheestimated selling price inthe Inventory isvalued usingtheFIFOmethod. Cost includes thepurchase price plusancillaryexpenses. value. Inventory isvalued atthelowerofcost ornetrealizable Inventory andworkinprogress method, aswellanyrelated goodwill. equity heldincompanies accounted for under theequity Investments inassociates include theGroup’sshareof the Investments inassociates leases iscapitalized. Deferred taxarisingfromtherestatement of finance value lessaccumulated depreciation andimpairment. present value oftheminimumlease payments,thefair value oftheasset leased or,ifthisvalue falls belowthe The amountrecognized ontheasset side isequal tothefair had used borrowed fundstoacquire theassets directly. reflect thepositionthatwouldhave existed iftheCompany restated intheconsolidated financialstatementsso asto Non-current assets financed viafinance leases are the portionnotyet paid. nized for theamountspecified intheagreement including Commitments made under license agreements arerecog- or “external developments.” release, these costs aretransferred to“released software” ment progresses. Uponthesoftware’s initialcommercial “intangible assets inprogress”asthesoftware develop- produced in-house oroutsourced, arerecognized under The development costs ofcommercial software, whether described below. cial software (video games)and are capitalized as Development costs relate tothedevelopment ofcommer- No Groupcompany carriesoutanybasicresearch. rent assets. No borrowingcosts arecapitalized inthecosts ofnon-cur- test ofdepreciation intheabsence ofindex oflossinvalue test ofdepreciation intheabsence ofindex oflossinvalue restated toreflect operating amortization. restated toreflect operating amortization. CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 61 and estimated selling costs, which include marketing and any significant risk of loss in value. They are measured at distribution costs. fair value through income. No borrowing costs are included in the cost of inventory. The closing price of cash equivalents is taken to be their A provision for impairment is recognized when the likely fair value. net realizable value falls below the carrying amount. Bank overdrafts that are repayable on demand are an inte- Reversals of inventory impairment are recognized as a gral part of the Group’s cash management, and are reduction of the amount of inventory expensed during the included in “cash and cash equivalents” for the purposes of fiscal year in which the reversal occurs. the cash flow statement.

Trade receivables Own Shares Trade receivables are defined by IAS 39 as financial instru- Our own shares are recognized at cost as a deduction from ments, and are classified under “Loans and receivables”. equity. Gains or losses on the disposal of this stock is allocated directly to equity and do not affect the income for Trade and other receivables are measured at their fair the period. value upon initial recognition. Since receivables are due in under a year, they are not discounted. Where applicable, a Assets available for sale provision for impairment is recorded based on the like- Non-consolidated securities are classified as non-current lihood of collection at the balance sheet date. “assets available for sale” since they do not meet the definition of other categories of financial assets. Financial assets and liabilities The Gameloft shares that have not yet been disposed of by Financial assets and liabilities consist of assets available for Calyon are classified under current assets held for sale, sale, loans and receivables, cash and cash equivalents, since they satisfy the criteria set out in IFRS 5. derivatives and borrowings. They are recognized at their fair value in the balance The Group uses the following financial assets and liabi- sheet, and changes in fair value are recognized directly in lities. equity. These financial assets and liabilities are classified in cur- The Fair value is the closing price for the Gameloft Stock. rent or non current items in balance sheet following the IFRS 5 rules. Employee benefits Loans and receivables Post-employment obligations They include deposits and sureties, as well as grants to be Ubisoft participates in pension, medical and termination received from the Canadian government. benefit plans in accordance with the laws and practices of Derivatives each country. These benefits can vary depending on a range of factors, including seniority, salary and payments In order to limit the Group's foreign exchange risk, Ubisoft to compulsory general plans. Entertainment SA uses forwards and foreign exchange options to hedge the risk of exchange rate fluctuations. As These plans may be either defined contribution plans or these transactions do not meet the criteria for hedge defined benefit plans: accounting, they are recorded as instruments held for - In defined contribution plans, the pension supplement is trading. determined by the total capital that the employee and the These derivatives are recognized at their fair value on the Company have paid into external funds. The expenses cor- date of the transaction under current financial assets or respond to contributions paid during the period. The liabilities in the balance sheet. The gain or loss resulting Group has no subsequent obligations to its employees. For from their fair value re-measurement is immediately re- Ubisoft, this generally involves public retirement plans and cognized in income. specific defined-contribution plans; The Company has entered into an equity swap agreement. - In defined benefit plans, the employee receives a fixed This agreement is a derivative. It is recognized at its fair pension benefit from the Group, determined on the basis value on the date of the transaction under current finan- of several factors, including age, length of service and cial assets or liabilities in the balance sheet. Changes in fair compensation level. Within the Group, such plans are used value are recognized in income. in France, Italy and Japan. Borrowings and other financial liabilities The employer’s future obligations are measured on the This category includes borrowings and bank overdrafts. basis of an actuarial calculation called the “projected unit credit method,” in accordance with each plan’s operating Cash and cash equivalents procedures and the information provided by each country. Cash and cash equivalents include cash on hand and This method involves determining the value of likely dis- demand deposits, with maturity of generally under three counted future benefits of each employee at the time of months and that can be easily liquidated or sold on very his/her retirement. The following assumptions were used short notice, can be converted into cash and do not bear as of March 31, 2008: UBISOFT • FINANCIAL REPORT 2008 defined atthedateofgrant: model based onthetermsand conditions oftheoptions The fair value oftheoptionsismeasured usingabinomial the grant andspreadoutover theentirevesting period. increase inequity. The fair value ismeasured atthedateof recognized under employee benefitsexpense, offsetting an Company’s shares.The fair value ofthe optionsgranted is A provision isrecorded when: Provisions provides professional training) areprovided for. companies thataremembersofFAFIEC (organizationthat vested asofMarch31,2008(includingpayrolltaxes) of of these rightswas:15%ofthevaluation ofthehours The assumptionmade asofMarch31,2008for recognition years. The rightsacquired eachyear maybeaccrued for uptosix ning agreements applicablewithineachcompany. 21 hoursoftraining eachyear, depending onthebargai- Full-time employees areentitled tobetween 20and employer's approval. receive training attheirinitiative, butsubject totheir personal training right.This rightentitlesemployees to French Act ofMay4,2004,grants Frenchemployees a Personal training right(DIF) Share-based payments When thetimevalue impactismaterial, theamountof If these conditions arenotmet,noprovision isrecorded. icutrt .8 .9 .8 .9 .8 4.49% 4.68% 3-6% 1.5-4.5% 4.49% 4.68% 31.5years 1.50% 31years 1.50% 4.49% 29years 29years 4.68% 5% 3.5% 23years 21.5years Average remainingworkinglife Discount rate Rate ofsalaryincrease Stock optionplansallowGroupemployees topurchase the The amount oftheobligationcanbemeasured reliably. nomic benefitswillberequired tosettle theobligation; It islikely thatanoutflowofresources representing eco- resulting fromapastevent; The Companyhasacurrentobligation(legalorimplicit) over thevesting period, given thevesting terms. Bonus shares:thecost ofthiscompensation isrecognized cognized immediately ontheplansubscription date. share price atthedateofgrant. This expense isre- ference between thesharesubscription price andthe equal tothediscount granted toemployees, i.e.,thedif- Group employee savings plan:theaccounting expense is in thevarious Ubisoft planregulations; line method isnotused, given thevesting termsset out income over thevesting period; however, thestraight- Stock optionplans:thecompensation isrecognized in 33.80.10 33.80.10 33.803.31.07 03.31.08 03.31.07 03.31.08 03.31.07 03.31.08 aa tl France Italy Japan merchandise. refunds, paymentdiscounts andprovisions for returned ration received ortobereceived, lessrebates,reductions, All revenue ismeasured atthefair value oftheconside- of thegoods have been transferred tothepurchaser. where allmaterialrisksandbenefitsinherentinownership Proceeds fromthesaleofgoods arerecognized inincome Revenue recognition, andsubsequently attheiramortized cost. Trade payablesaremeasured attheirfair value uponinitial Trade payables other financialincome andexpenses. and derivatives), foreign exchange gainsandlosses and the fair value offinancialinstruments (assets, liabilities on thedisposalofnon-consolidated securities, changes in Other financialincome andexpenses include gains(losses) rest paidonfinancingtransactions. - The cost ofgrossfinancialdebt, whichincludes allinte- income andthecashimpactofforeign exchange hedging, gains/losses onthesaleofinvestment securities, interest - Income fromcashandequivalents, whichincludes The cost ofnetfinancialdebt includes: and otherfinancialincome andexpenses. Net financialincome includes thecost ofnetfinancialdebt and expenses Financing costsandotherfinancialincome rous andrelatetoinfrequent events. Other operating income andexpenses arenotthatnume- Other operating incomeandexpenses of share-based payments. pensions andotherpost-employmentbenefitsthecost gross profit,administrative andselling expenses, cost of Operating income fromcontinuing operations includes Operating incomefromcontinuingoperations and, whereappropriate,therisksspecific totheliability. current market assessment ofthetimevalue ofmoney cash flowsusingapre-taxdiscount rate thatreflects the provision isdetermined bydiscounting expected future CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 63 Income tax Earnings from continuing operations as of March 31, 2008 €95,017,000 Income tax (income or expense) includes the current tax expense (income) and deferred tax expense (income). Tax Weighted average number is recognized in income, unless it relates to items that are of shares in circulation: 45,874,127 recognized directly in equity, in which case it is recognized Dilutive shares: 2,142,367 in equity. Weighted average number of shares after exercise of the Current tax rights on dilutive instruments: 48,016,493 Current tax is the estimated amount of tax owed on taxable Diluted earnings per share from continuing operations as income for an accounting period. It is determined using the of March 31, 2008: €1.98 tax rates applicable at closing date. Earnings from discontinued operations Deferred tax as of March 31, 2008 €14,827,000 Deferred income tax is measured using the balance sheet Weighted average number liability method for all temporary differences between the of shares in circulation: 45,874,127 carrying amount of the assets and liabilities and their tax Dilutive shares: 2,142,367 basis. Measurement of deferred tax assets and liabilities Weighted average number depends on the way in which the Group expects to recover of shares after exercise of the or settle the carrying amount of the assets and liabilities rights on dilutive instruments: 48,016,493 using the tax rates applicable at the balance sheet date. Diluted earnings per share from discontinued operations A deferred tax asset is only recognized where it is likely as of March 31, 2008: €0.31 that the Group will have future taxable income against which the asset may be utilized. Deferred tax assets are reduced to the extent that it is no longer likely that suffi- New standards and interpretations not applied cient taxable income will be available. Some new standards, amendments to standards and inter- The impact of possible changes in tax rates on previously pretations are not yet applicable to the 12 month period recorded deferred tax is recognized in income except ended March 31, 2008, and have therefore not been used where it relates to an item recognized in equity. for the preparation of the consolidated financial state- Deferred tax is shown in the balance sheet separately from ments: current tax assets and liabilities and are classified as non- IFRS 8 “Operating segments” introduces the “direction current items. approach” to establish the segment reporting. IFRS 8, which will be compulsory for the 2009 group financial Segment reporting statements, requires that the note on segment reporting In light of the Group's organizational structure and the is based on internal reporting regularly examined by the commercial relationships between the various subsidiaries, group main operational decision-maker, in order to eva- we proceed on the basis that the Group operates in a sin- luate each performance sector and allocate recourses. gle market with several geographic regions. As of group organisation and commercial links between all subsidiaries, we consider the group as one market and Dividends work on several geographic zones. No dividend had been paid as of March 31, 2008 in respect IAS 23 revised “borrowing costs” suppress the option of of 2006-2007 earnings. expense the cost of borrowings and impose that an entity activate the cost of borrowings directly attached to the acquisition, the construction or the production of a qua- Earnings per share lified asset. This standard, compulsory for the 2009 Basic earnings per share group financial statements, will be a change in accounting method. Agreed with the transitional measures, the Basic earnings per share are equal to earnings divided by group will apply IAS 23 revised for qualified assets which the weighted average number of shares in circulation less the cost of borrowing will begin with the current stan- own shares. dard date. It might not have any impact on consolidated Diluted earnings per share statements. Diluted earnings per share are equal to: IFRIC 11 “IFRS 2 - Group and Treasury Share Transactions” impose that an agreement which payment is founded on - Earnings before dilution, plus the after-tax amount of shares and for what the entity receive products or services any savings in financial expenses resulting from the con- as compensation of own equities, should be accounted by version of the diluting instruments, divided by the same way as a payment founded on shares and paid by - The weighted average number of ordinary shares in cir- equities, however the group obtain those Equities culation, less own shares, plus the number of shares that Instruments. IFRIC 11 will be retrospectively compulsory in would be created as a result of the conversion of conver- the Group Financial Statements 2009. It might not have tible instruments into shares and the exercise of rights. any impact on consolidated statements. UBISOFT • FINANCIAL REPORT 2008 BSF OK N EOD A rne10 0%F aaeetad 1995 Management and FC 100% 100% France UBISOFT BOOKSANDRECORDS SAS Companies includedintheUbisoft GroupconsolidatedfinancialstatementsasofMarch31,2008 UIFCOYSSFac 0%10 CGahc n 2000 1999 Graphics and 1999 1998 2000 1998 Marketing 1998 1998 2000 Creationofmusic Marketing FC Marketing 1998 Development 1999 1998 Marketing Development 100% Designandstoryline FC FC Marketing FC 100% Development Marketing 1998 FC 98% 100% FC FC 100% FC 1998 100% 1996 FC 99.95% Globalmarketing 100% 97.50% 100% France 1997 99.98% FC 1996 100% FC ITservices 100% Marketing FC 100% 1995 100% 100% 100% 99.50% 1996 Canada FC 1996 100% Development 100% 1994 100% Marketing and 1996 Sweden France 1995 100% Spain 1994 Marketing France Italy 100% Graphics andmodeling Development Austria 100% FC Netherlands Marketing Development FC 100% LUDI FACTORY 1991 SAS Interactivity FC 1995 1989 FC UBISOFT WORLDSTUDIOSSAS FC Marketing 100% 100% UBISOFT WARENHANDELSGmbH 100% HongKong Mor 1993 1991 France 100% UBISOFT MUSIC INC. 100% 100% Denmark Marketing FC UBISOFT SWEDENAB FC Graphics and Marketing France UBISOFT PRODUCTIONS France SAS FC Development 100% Marketing UBISOFT France FC SAS 99.99% 100% 100% FC UBISOFT STUDIOSSrL 100% 100% 100% 100% FC UBI STUDIOSSL 100% 100% UBISOFT BV France 100% 99.97% FC Australia UBISOFT LIMITED FC 100% France UBISOFT NORDICAS FC FC China Canada 100% UBISOFT SARL 100% FC 100% 100% 100% UBISOFT WORLDSAS 99.35% 100% Italy 100% 1986 UBISOFT ORGANISATION SAS France 100% UBISOFT DIVERTISSEMENTS Inc. France SOFTWARE CO.LTD Japan 100% France 100% SHANGHAI UBICOMPUTER 100% Spain 100% UBISOFT GRAPHICSSAS UBISOFT PTY Ltd 100% UBISOFT SIMULATIONS SAS France Romania US UBISOFT COMPUTING SARL UK Germany UBISOFT DESIGNSAS UBISOFT SpA UBISOFT PICTURESSAS FC UBISOFT KK UBISOFT SA Parent company Parent company France UBISOFT SRL UBISOFT GmbH UBISOFT INC. UBISOFT Ltd UBISOFT ENTERTAINMENT SA opn onr ecnaePretg ehdBsns Y Business Method Percentage Percentage Country Company 2.5.4 not have anyimpactonconsolidated statements. pulsory for the2009groupfinancialstatements,would tomers redeem thepoints.IFRIC13,whichwillbecom- or discounted goods orservices ifandwhenthecus- vices, shouldaccount for theirobligationtoprovide free credits (often called ‘points’)whenbuyinggoods orser- how companies, thatgrant theircustomersloyaltyaward IFRIC 13“CustomerLoyaltyProgrammes” ,addresses impact onconsolidated statements. 2009 groupfinancialstatements,wouldnothave any vate sector. IFRIC12,whichwillbecompulsory for the method ofconcession arrangements frompublictopri- cations ontheaccounting method andthevaluation IFRIC 12“Service Concession Arrangements” gives indi- Scope ofconsolidation co100% occo oto fc ptlor ac control of capital not have anyimpactonconsolidated statements. sory intheGroupFinancialStatements2009.Itmight under IAS19.IFRIC11willberetrospectively compul- as aliabilityinaddition tothatotherwise recognised creates anonerousobligationthatshouldberecognised that limitandwhenaminimumfundingrequirement as anasset howaminimumfundingrequirement affects amount ofasurplusinpensionplantheycanrecognise the limitplaced byIAS19Employee Benefitsonthe addresses three issues:howentitiesshoulddetermine Minimum Funding Requirements andtheirInteraction IFRIC 14“IAS19–The LimitonaDefined BenefitAsset 98%F eeomn 1998 Development FC 99.86% computer graphics localization studio and ergonomics administration and marketing development ear founded quired CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 65

Company Country Percentage Percentage Method Business Year founded control of capital or acquired UBISOFT EMEA SAS France 100% 100% FC Marketing 2000 UBISOFT HOLDINGS INC. US 100% 100% FC Management and 2000 administration RED STORM ENTERTAINMENT INC. US 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 France 100% 100% FC Manufacturing workflow 2001 ET ADMINISTRATION SAS UBI GAMES SA Switzerland 100% 99.99% FC Marketing 2002 UBISOFT FINLAND OY Finland 100% 100% FC Marketing 2002 UBISOFT ENTERTAINMENT SA South Korea 100% Branch office FC Marketing 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 France 100% 100% FC Development 2006 MONTPELLIER SARL 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 OPERATIONAL France 100% 100% FC Marketing 2007 MARKETING SARL UBISOFT ENTERTAINMENT LTD UK 100% 100% FC Development 2006 UBISOFT EOOD Bulgaria 100% 100% FC Development 2006 UBISOFT MARKETING France 100% 100% FC International marketing 2007 INTERNATIONAL SARL UBISOFT DIGITAL ARTS INC Canada 100% 100% FC Digital animation 2007 SUNFLOWERS GmbH Germany 100% 100% FC Development and 2007 marketing RELATED DESIGNS SOFTWARE Gmbh Germany 30% 30% EM Development 2007 DIGITAL KIDS CO LTD Japan 100% 100% FC Development 2008 CHENGDU UBI COMPUTER China 100% 100% FC Development 2008 SOFTWARE CO LTD UBISOFT LTD Ireland 100% 100% FC Management and 2008 administration UBISOFT STUDIOS MONTPELLIER SARL France 100% 100% FC Development 2008 UBISOFT COUNCEL France 100% 100% FC Management and 2008 & ACQUISITIONS SARL administration

FC = Fully consolidated. EM = Equity method.

All subsidiaries are held directly by Ubisoft Entertainment SA, with the exception of Ubisoft Inc. and Red Storm Entertainment Inc. (held by Ubisoft Holdings Inc.), Ubisoft Ltd. (held by Ubisoft World SAS) and Related Designs Software GmbH (30%-held by Sunflowers GmbH). The fiscal year of all consolidated companies ends on March 31, with the exception of Shanghai Ubi Computer Software Co. Ltd. (China), Ubisoft SRL (Romania), Ubisoft Eood (Bulgaria), Sunflowers GmbH, Related Designs Software GmbH, Digital Kids Co. Ltd. and Chengdu Ubi Computer Software Co. Ltd., all of which have December 31 as their balance sheet date. No ad hoc company belongs to Ubisoft Group. UBISOFT • FINANCIAL REPORT 2008 Change ingrossamountofgoodwill Goodwill broke down asfollows asofMarch31,2008: Note 1 Acquisitions Note 10. The impactofchangesinscope isexplained inSection 2.5.5 for saleare measured atfair value throughequity. associates” to“assets heldfor sale”.These assets available the unsold stock wasreclassified from“investments in Following thedeal withCalyon described inSection 2.5.1, Gameloft Changes inthescopeofconsolidation 2.5.7.2 Businesscombinations. The impactoftheacquisitions isexplained inSection iia is1161,176 84,471 1,311 (6,945) 12,753 1,607 41 412 1,655 896 (212) (93) 13,929 (23) 34,861 (131) 1,176 77,487 (6,527) 12,753 1,270 Grossasof 2,294 3 1,819 760 Translation 10,103 442 Total 3,215 Sunflowers EntertainmentGmbH Digital Kids Decreases 1,748 Ubisoft 435 EntertainmentLtd 1,027 Ubi GamesSA 178 12,805 Ubisoft Warenhandels GmbH Increases Ubisoft BV Ubisoft France SAS Blue ByteGmbH 41,388 Ubisoft Divertissements Inc. Tiwak SAS Ubisoft CanadaInc. Grossasof Ubisoft Spa Red StormEntertainmentInc. Ubisoft GmbH Ubisoft Ltd Ubisoft Inc. Existing company 2.5.5 DS. distributed thegamesdeveloped byDigitalKidsfor the Digital KidsCo.Ltd.Ubisoft EntertainmentSA already January 2008:acquisition of100%theJapanese studio Related DesignsSoftware GmbH. Entertainment SA acquired a30%shareinterestin Sunflowers GmbH.Asaresultofthisacquisition, Ubisoft April 2007:acquisition ofthesoftware publisher Notes tothebalancesheet Goodwill 33.7ajsmns03.31.08 adjustments 03.31.07 company Avator EntertainmentGmbH. March 2008:disposalofthe25%interestinGerman develop theAnnogameonline. company Avator EntertainmentGmbH,astudiocreated to August 2007:acquisition ofa25%interestintheGerman Equity investments Creations ofnewcompanies: March 2008:establishmentofUbisoft Limited. Singapore PteLtd.; February 2008:establishmentofthestudioUbisoft Montpellier SARL; December 2007:establishmentofUbisoft Studios Acquisitions SARL; December 2007:establishmentofUbisoft Counsel & Computer Software Co.Ltd.; September 2007:establishmentofthestudioChengdu Marketing SARL; September 2007:establishmentofUbisoft Operational 10,103 12,805 2,294 3,215 442 760 178 3 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 67 Impairment of goodwill

Existing company Impairment Increases Decreases Translation Impairment as of adjustments as of 03.31.07 03.31.08

Red Storm Entertainment Inc. 113 (18) 95 Total 113 (18) 95

As of March 31, 2008, no additional impairment provisions had been recognized as a result of depreciation testing.

Net goodwill:

Existing company Company acquired Date Net interest as of acquired 03.31.08

Ubisoft Inc. Ubisoft Inc. February 1996 178 Ubisoft Ltd Ubisoft Ltd December 1994 130 Blue Byte Software Ltd February 2001 766 Ubisoft GmbH Ubisoft GmbH August 1995 87 Blue Byte Software GmbH CO.KG February 2001 6,929 Distribution Allemagne May 2000 5,789 Red Storm Entertainment Inc. Sinister Games Inc. March 2000 3,135 Blue Byte Software Inc. February 2001 6,764 Red Storm Entertainment Inc. September 2000 15,633 Distribution Etats-Unis March 2001 9,234 Ubisoft Spa 3D Planet SPA September 2000 3,215 Ubisoft Canada Inc. Ubisoft Canada Inc. October 2000 178 Distribution Canada December 2000 1,477 Tiwak SAS Tiwak SAS December 2003 760 Ubisoft Divertissements Inc. Microïds Canada Inc. March 2005 412 Blue Byte GmbH Blue Byte GmbH March 2005 3 Ubisoft France SAS Distribution France December 2000 10,103 Ubisoft BV Distribution Belgique April 2001 1,322 Distribution Hollande January 2001 972 Ubisoft Warenhandels GmbH Distribution Autriche April 2000 442 Ubi Games SA Distribution Suisse September 2001 1,311 Ubisoft Entertainment Ltd Ubisoft Entertainment Ltd August 2006 1,607 Sunflowers Entertainment GmbH(1) Sunflowers Entertainment GmbH April 2007 12,753 Digital Kids Digital Kids January 2008 1,176 Total 84,376

(1) See details in Note 2.5.7.2 Business combinations. UBISOFT • FINANCIAL REPORT 2008 te 417 Other Property, plantandequipment break down asfollows: Note 3 As ofMarch31,2008,noimpairmentprovisions hadbeen recognized asaresultoftestingdepreciation. No intangibleassets wereused toguarantee anyliabilities. (2) Acquisition oftheAnno®brand (€6million). and Anno(€6million). (1) This lineitembasically includes thebrands obtained fromtheacquisition ofTom Clancy(€45million),TLC (€7million),F Reclassifications between accounts resultfromthetransfer ofintangibleassets inprogress. tion adjustmentsadded. Software production costs ofK€186,703include theK€185,545increase insoftware, fromwhichK€266inexternal developments is Software breaksdown asfollows asofMarch31,2008: Note 2 npors 15643089(5,2)152(4)170,164 341,922 (841) (474) 1,572 251,958 (1,304) (257,020) 11,142 140,308 (14,926) 116,712 11,904 300,849 - 125,604 39,393 - 213,992 Gross Office productivity in progress Translation Changes external development 179,727 Software and Reclassi- External developments Reclassification software Released commercial Decreases Increases Gross Non-current assets qimn ,7 263(5)8331 0 51,036 8 9,909 (2,283) 130 712 (9) 29,474 11,192 (176) (1,763) (153) 571 (519) (52) 4,272 141 623 (10) 10,015 17 22 23 15 47,040 175 465,119 3,137 11,319 29 Gross 1,076 (594) 309,151 323 (292) 989 93 6,581 Trans- (291) (1,822) Changes 23 Total 24 144,108 Non-current assets inprogress 2,301 8,935 27,205 equipment (11) 231 and transportation 11,096 Reclassi- Leased computer hardware Transportation equipment (1,845) 9,569 Development Decreases kits 157 and furniture 52,222 Increases Computer hardware 36 Plant andmachinery Gross 10,939 242,762 925 3,968 Non-current assets 863,497 265,889 151 39,393 11,904 (8,191) (109) 16,267 3,443 18,927 70,910 168,373 (406) (1,845) 8,902 355 213 - Total 103,508 152,973 Other Leased office software Office software developments External (2,254) software Other 52,259 Released commercial Changes 2,254 Cumulative Net 339,178 Trans- Decreases Amortization 567,687 Cumulative 962 3,556 1,780 2,775 Total 13,390 355 Brands assets inprogress Other intangible productivity software Leased office software (1) Property, plantandequipment Other intangibleassets 33.7pors .Cac cp et 03.31.08 ments scope T. Clancy progress 03.31.07 33.7ajsmns03.31.08 adjustments 03.31.08 adjustments 03.31.07 scope 03.31.07 1483,9 3016,000 13,081 32,993 31,428 so sfwr n iaini dut asof adjust- in fication software in as of so fctosi cp lto asof lation inscope fications as of asof lation reclassifications in increases as of licence ar Cry®(€9million),Driver (€11million) (2) deducted andK€1,158intransla- 507 78,446 (5,057) 417 186 355 355 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 69

Depreciation Gross Increases Decreases Reclassi- Changes Trans- Gross as of fications in scope lation as of 03.31.07 adjustments 03.31.08 Plant and machinery 3,439 1,576 293 (3) 119 (255) 4,583 Computer hardware and furniture 13,624 6,812 2,751 (10) 464 (1,055) 17,084 Development kits 3,429 3,205 - - - - 6,634 Transportation equipment 135 68 147 (10) - (5) 41 Leased computer hardware and transportation equipment 902 69 623 (153) - 18 214 Total 21,530 11,730 3,814 (176) 583 (1,297) 28,556 No property, plant or equipment was used to guarantee any liabilities. As of March 31, 2008, no impairment provisions had been recognized as a result of depreciation testing.

Note 4 Investments in associates

Non-current assets Gross as of Increase Decrease Reclassification Gross as of 03.31.07 03.31.08 Gameloft Goodwill 25,654 217 (25,437) 0 Share of equity 8,344 758 (9,102) 0 Related Designs Software GmbH(1) Goodwill 230 230 Share of equity 98 98 Total investments in associates 33,998 1,086 217 (34,539) 328 (1) See details in Note 2.5.4 Scope of consolidation.

Gameloft Following the exercise of options by Gameloft SA employees, Ubisoft Entertainment SA’s percentage interest was reduced from 18.893% to 18.733% as of June 30, 2007. In addition, the stock was disposed of to Calyon on July 12, 2007 for €6.08 per share, although Ubisoft retained the impact of all share price fluctuations until the date Calyon disposed of the stock to a third party: the impact is described in Section 1.5.3 Scope of consolidation – Changes in scope. As of March 2008, Calyon hold 12.56% of Gameloft.

Related Designs Software GmbH Following the acquisition of Sunflowers GmbH, Ubisoft Entertainment SA holds a 30% interest in Related Designs Software GmbH. The €328 thousand in investments in associates includes: - €70 thousand for the Group’s share of equity, - €28 thousand for the Group’s share of profit, - €230 thousand in goodwill.

Note 5 Other financial assets

Non-current assets Gross as of Increase Decrease Changes Translation Gross as of 03.31.07 in scope adjustments 03.31.08

Assets available for sale 692 65 407 1,164 Other financial assets 153 (153) 0 Deposits and sureties 1,813 314 318 27 (78) 1,758 Other non-current receivables 2 23,418 23,417 7 10 Total 2,660 23,797 23,735 288 (78) 2,932 UBISOFT • FINANCIAL REPORT 2008 oepr: €231thousand €0thousand €175thousand - Noexpiry: - >5years: - 1to5years: The expiry oftaxlosscarry-forwards broke down asfollows: The €16.4 milliondecrease intaxassets reflects essentially Ubisoft Entertainment SA’s use of€15.5million inlosscarry-for Capitalized /uncapitalized deemed deferred depreciation andlosscarry-forwards: during theperiod ofvalidity ofthedeferred taxassets. very islikely, particularly whentaxable profitisexpected €8,682thousand Deferred income taxassets arerecognized iftheirreco- €13,002thousand - Long-term: - Short-term: Expiry ofdeferred taxassets asofMarch31,2008: Note 6 No financialassets wereused toguarantee anyliabilities. The changeinprovisions reflects thechangeinvalue ofUbiSoft EntertainmentLtda(Brazil), Ubisoft MusicInc.,andSEK €2,626thousand €306thousand Long-term: Short-term: Maturity offinancialassets asofMarch31,2008: The changeinothernon-currentreceivables reflects stock purchases andsalesunder theliquidityagreement. Sunflowers GmbHhadrespective interestsof100%and60%. The increase inassets available for salereflects theacquisition ofsharesinMaxDesignGmbHandSEKGmbH,which oa 0 01 5 415 7 156 408 13 156 70 13 7 202 63 Changes Cumulative Decrease 202 Cumulative Increase Total Deposits andsureties Assets available for sale Provisions te 146 16,865 151 121 - 2 553 2,024 77 - 100 1,618 15 172 1,036 - 101 15,521 41 - - 1,036 32 - 406 175 2 - 64 582 - 77 - 03.31.07 - - - 582 15 41 32 0 175 439 03.31.08 64 Total 117 Other 18,906 Sunflowers GmbH Tiwak SAS 1,303 Shanghaï UbiComputerSoftware Ltd Ubisoft BV Ubisoft GmbH Ubisoft ComputingSARL Red StormEntertainmentInc. 783 Ubisoft WorldStudiosSAS 466 Ubisoft EntertainmentSA 11 16,178 16,865 3,840 In thousandsofeuros 406 Total Other consolidation adjustments Foreign exchange transactions Elimination ofotherinternalprofits Elimination ofstudios’internalmargin Temporary taxdifferences Capitalized losscarry-forwards anddeemed deferred depreciation Deferred taxassets so 33.7i cp asof03.31.07 inscope as of03.31.07 and losscarry-forwards eerddpeito dfre ercain deferred depreciation deferred depreciation deferred depreciation aiaie emd naiaie emd oa Capitalized deemed Total Uncapitalized deemed Capitalized deemed and losscarry-forwards term guarantees. SAS andSunflowersGmbHdo notoffer sufficient short- forwards for allthecompanies; only Ubisoft WorldStudios There isthusareallikelihood ofrecovery oflosscarry- with amarginthatincludes theiroverheads. operating profits; similarly, thestudiosinvoice salaries Group, thedistributioncompanies systematically report Because ofatransfer price policyimplemented atthe 33.803.31.07 03.31.08 16437,630 21,684 and losscarry-forwards wards. GmbH. CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 71 Note 7 Inventory and work in progress The inventory of goods break down as follows:

03.31.08 03.31.07 Gross Provision Net Net Goods 43,084 3,205 39,879 24,794 Total 43,084 3,205 39,879 24,794 The provision for inventory went from €3.9 million as of March 31, 2007 to €3.2 million as of March 31, 2008. No inventory was used to guarantee any liabilities.

Note 8 Trade receivables Trade receivables break down as follows: 03.31.08 03.31.07 Gross Provision Net Net Trade receivables 85,327 1,101 84,226 87,857 Total 85,327 1,101 84,226 87,857 Since trade receivables are due in under a year, the impact of discounting is not material and is not recognized.

Risk of dependency on customers Because it has many large retailer customers in many countries, the Company believes that it has no significant dependency on any customer that could impact its development goals. Ubisoft’s 10 largest customers accounted for 45% of Group revenue excluding tax. Moreover, in order to protect itself against the risk of default, the Group’s main subsidiaries, which account for approximately 85% of Group revenue, are all covered by credit insurance.

Note 9 Other receivables Other receivables break down as follows:

03.31.08 03.31.07 Gross Provision Net Net Advances and prepayments received 604 604 685 Current account advances 38 38 119 VAT 40,956 40,956 32,710 Grants receivable 36,411 36,411 34,732 Other tax and employee-related receivables 373 373 413 Miscellaneous 4,263 4,263 1,273 Prepaid expenses 9,038 9,038 4,027 Total 91,683 - 91,683 73,959 All other receivables are due in under a year, with the exception of €10.3 million in grants from the Canadian government that will be offset against the payment of tax.

Note 10 Current financial assets and assets available for sale Current financial assets break down as follows

03.31.08 03.31.07 Net Net Foreign exchange derivatives (1) 445 182 Equity swap derivatives (2) 38,839 19,001 Total 39,284 19,183 Asset available for sale are only composed of Gameloft shares.

31.03.08 31.03.07 Net Net Assets available for sale (Gameloft stock) (3) 25,058 - Total 25.058 UBISOFT • FINANCIAL REPORT 2008 Investment securities The cashandequivalents lineiteminclude: Note 11 lized capitalgainnetoftax(compared totheequity stake value previously used), whichwasrecognized inequity. remaining numberofsharesto9,178,725.At fair value, the9,178,725unsold sharesgenerated a€726thousandunrea- recognized inincome following thedisposalof4,189,198sharesduringfirstsixmonths ofthefiscal year, reducing the sale after theGroupsigned twoagreements withCalyon onJuly 12,2007.A€14,287thousandcapitalgainnetoftaxwas Following thedeal withCalyon described inSection 2.5.1,theGameloft sharesaredisclosed asagroupofassets heldfor 3) Fair value ofGameloft stockavailable for sale: of €10.8millioninstock. AlloftheUbi stock wasdisposed ofafter thebalance sheet date. recognized innetfinancialincome amounted to€22.4million.A€5.6milliongaininincome wasrecognized onthedisposal recognized inthebalance sheet atitsfair value, and allchangesinfair value arerecognized inincome. The fair value gain may dispose ofits1,243,121Ubisoft EntertainmentSA sharesatanytimeuptothatdate.The equity swapagreement is The equity swap agreement signed withCalyon wasextended for afurtherperiod of24monthstoFebruary 28,2010.Calyon Equity swapagreement: 2) Fair value oftheUbisoft equityswap: The changeinfair value recognized innetfinancialincome amounted to€1,091thousand. qualify for hedge accounting, changesinfair value arerecognized inincome. exchange rate fluctuations.These derivatives arerecognized andsubsequently measured attheirfair value. Astheydo not Group's foreign exchange risk,Ubisoft EntertainmentSA uses forwards andforeign exchange optionstohedge theriskof In thislineitem,isregistered currencyderivatives whose market value ispositive asofmarch2008.Inorder tolimitthe 1) Fair value offinancialinstruments: also rose sharply. The 1,243,121remainingsharesasofMarch31,2008hadafair value of€56,239thousand. As ofMarch31,2008,margincallswerereduced to€17millionduethedisposalof193,153shares,whileshareprice Total Forward Sales Forward Purchases Forward Purchases Sales Accumulated boosted forward Forward SalesPurchases arvle5,3 90502.28.10 19,001 Total 39,095 (20,094) 38,839 56,239 (17,400) Total Margin callreceived Fair value ahadcs qiaet 33.803.31.07 03.31.08 Cash andcashequivalents Cash SdlasMrh20 pi 086 (262) April2008 (6) (60) March2008 July 2008 76 April2008 20 March2008 April2008 (861) March2008 March2008 445 April2008 March2009 March2008 March2008 April2008 March2008 US dollars Pound sterling US dollars Canadian dollars US dollars Yen Canadian dollar US dollars Canadian dollars (1) Cash andcashequivalents (2) 33.80.10 Expirydate 03.31.07 03.31.08 aeo h Epr Mr oMarkto Markto Expiry Date ofthe rnato aemre market market date transaction ac 08Jl 09(191) July 2009 March 2008 33.803.31.07 03.31.08 0,4 30,786 95,766 107,940 120,973 2,1 126,552 228,913 99 182 (909) 104 2 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 73 1) Cash Cash on hand includes cash and bank account balances for a net K€ 120,973 as of March 31, 2008, compared to K€ 95,766 as of March 31, 2007.

2) Investment securities comprised of UCITS, investment companies and certificates of deposit:

03.31.08 03.31.07 Type Name Number Gross value Fair value Gain (loss) Fair value in K€ in K€ in K€ in K€ Mutual fund UCITS liquidity agreement 443 954 958 4 1,359 Mutual fund Etoile Mone Euribor 82 8,149 8,149 0 21,040 Investment company CPR Cash SI 877 18,491 18,494 3 5,199 Mutual fund Euribor Gestion 389 15,032 15,034 2 Mutual fund Sécurité Plus 22 5,528 5,529 1 1,932 Mutual fund SGAM 17 1,847 1,853 6 1,256 Mutual fund Centrale Pibor 5,961 18,776 18,778 2 - Mutual fund SGAM Invest Cash 2,043 22,098 22,148 50 - Mutual fund BNP Paribas Mois 555 11,995 11,997 2 Certificate of deposit SG EUR 5,000 5,000 Total - 107,870 107,940 70 30,786

The change in net cash breaks down as follows:

Type of cash item 03.31.08 03.31.07 Cash and cash equivalents 228,913 126,552 Foreign currency advances - (6,508) Bank overdrafts and short-term loans (55,732) (41,391) Total 173,181 78,653

Note 12 Equity Number of Ubisoft Entertainment SA shares

As of 04.01.07 45,397,276 Capital Options exercised 467,989 As of March 31, 2008, the Company share capital amounted to K€ 7,164, consisting of 46,224,592 shares with a par value Capital increase reserved for former BSAR holders 235,328 of €0.15 each, all fully paid up. Group/Company employee savings plans: reserved capital increase 123,999 Each share gives a right to ownership of the corporate assets and the liquidation dividend equal to the proportion of the As of 03.31.08 46,224,592 equity that it represents. The number of potential shares that may be created as a Voting rights double those conferred on other shares, based result of the exercise of stock options is 3,808,907. on the proportion of the share capital they represent, are granted to all fully paid-up shares that are shown to have been registered in the name of the same shareholder for at least two years. In the event of a share capital increase via the capitalization of reserves, earnings or issue premiums, this right is also conferred at the date of issue on registered shares granted free of charge to a shareholder on the basis of old shares that enjoyed this right. UBISOFT • FINANCIAL REPORT 2008 Option Price Option Price - Dividend rate: 0%, - Volatility rate: 30%, Assumptions used tocalculatethefair value ofoptions: is asfollows: The impactofshare-based paymentsonthefinancialstatements price of€7.70. The optionsexercised duringtheperiod hadanaverage strike price oftheoptionswasdivided bytwo. (2) Asaresultofthe2-for-1 stock spliton December 11,2006,thetotalnumberofsharesallotted andthenumberofoptions (1) Limitationoftheexercise period approved bytheBoardofDirectors onNovember 2,2005toensurecompliance withthemaxi The termsandconditions ofexercise ofthestock optionplansareasfollows: The increase incapitalandissuepremiumsover thepastfiscal year waspartly driven bytheexercise ofstock options. Stock options qiy2,9 11,564 20,090 - 26 3,318 528 7,826 172 3,344 8,526 Equity Employee savings plan Bonus sharegrant Stock options Employee benefitsexpense pin xrie uigtepro 5507,1 - 250 - 43,850 63,054 76,118 276,472 22.06.08 44,142 - 104,256 65,570 26.04.08 6,174 23.02.07 15.06.09 113,096 01.07.05 - 4,452 - 16.11.14 Options outstandingasofMarch31,2008 17.11.05 Options cancelled duringtheperiod 10,280 16.11.14 Options exercises duringtheperiod - Options granted duringtheperiod 17.11.05 15.06.07 42,616 14.10.05 Options asofApril1,2007 28.10.03 146,273 28.01.08 28,200 29.01.04 Expiration dateofoptions 95,455 52,200 15.10.07 Start ofexercise ofPeriod Total 16.10.03 NumberofsharesGranted 15.08.12 19.01.05 Options outstandingasofMarch31,2008 Options cancelled duringtheperiod Options exercises duringtheperiod Options granted duringtheperiod Options asofApril1,2007 Expiration dateofoptions Start ofexercise ofPeriod Total NumberofsharesGranted (2) (2) (2) (2) (2) (2) 33.803.31.07 03.31.08 Fac)(tle (USA) (Italie) (France) 73 77 67 1.2€52 €37.54 €35.29 €15.82 €6.78 €7.74 €7.36 9,0 ,5,9 ,7,0 12,036 1,577,400 1,355,892 493,824 10,626 992,100 10,280 776,300 143,592 188,889 18,440 175,855 706,362 778,130 3,1 1,307,110 833,418 64 €4.60€5.13 €7.75 €6.41 lnPa lnPlan Plan Plan Plan lnPa lnPa Plan Plan Plan Plan Plan 12 7 nd th 2,0 ,6,3 ,3,5 11,786 1,533,550 1,167,938 723,706 a totalofK€1,573. €51.79, andarerecognized asadeduction fromequity for stock. They aremeasured attheaverage quoted price of As ofMarch31,2008,theCompanyheld30,371treasury Own shares bonds, depending ontheexpiry date oftheplan. - Risk-free interestrate: yieldon5or10-year zerocoupon for whicharate of10% wasassumed, - Beneficiaryturnover rate: 3%,except for Plans14and15 8 th (1) 20.12.41 21.06.12 25.04.12 22.02.11 13 9 th th as ofApril1,2006doubled andthe mum period allowed byUSlaw. 14 th 10 ,7,0 12,036 1,577,400 (1) th 13.10.14 15 11 th st CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 75 Consolidated reserves and translation adjustments The reserves break down as follows:

03.31.08 03.31.07 Legal reserve 704 505 Other reserves 117,200 75,888 Translation adjustments (58,646) (36,608) Own shares held (1,573) (795) Consolidated reserves and translation adjustments 57,685 38,990

As with share capital, the legal reserve constitutes a guarantee for third parties dealing with the company. Because of this, it cannot be distributed to shareholders.

Note 13 Provisions Provisions break down as follows:

As of Increases Reversals Reversals Translation As of 03.31.07 (provision (provision adjustment 03.31.08 used) not used) Provision for tax risk 1,952 12 (103) 1,861 Total 1,952 12 (103) 1,861

Ubisoft Divertissements Inc (Canada) received a preliminary notification of tax adjustment from the Canadian tax authorities relating to fiscal years 1999 to 2003. No adjustment was assessed as a result of the audit. Consequently, Ubisoft Divertissements Inc, starts to initiate a process regarding transfert prices with both fiscal adminis- trations. Waiting for this agreement the 3 million of CAD provision has been maintained. Ubisoft Entertainment SA’s most recent tax audit dates back to 2003 (for the period from April 1, 2000 to March 31, 2003). A tax audit for the period from April 1, 2004 to March 31, 2007 is currently in progress, but no adjustment has yet been received.

Note 14 Employee benefit liabilities

As of Increases Reversals Translation As of 03.31.07 adjustment 03.31.08 Provisions for post-employment benefits 1,205 494 - 1,699 Total 1,205 494 - 1,699

The definition and the measurement and recognition principles for these benefit liabilities are presented in Section 2.5.3.3 Consolidation principles – Employee benefits. UBISOFT • FINANCIAL REPORT 2008 The Group firstuses natural hedges resultingfrom transac- so thatthehedging horizonnever exceeds 15 months. dollar). Itsstrategy istohedge only onefiscal year atatime, (US dollar, Canadiandollar, poundsterling andAustralian operating cashflowsinthemainmaterialforeign currencies The Group only hedges itsexposures oninter-company denominated inCAD&sterling. The exchange riskmainly exists onfinancialdebt labeled/ reign subsidiaries. company operating cashflowanditsinvestments initsfo- The Groupisexposed toforeign exchange riskonitsinter- Foreign exchange risk: Note 16 the highly seasonal natureofthebusiness. finance thehighyear-end capitalrequirement asaresultof Group’s positive netcashposition,areused essentially to riable rate borrowing andbankoverdrafts which,given the As ofMarch31,2008,theGroup’snetdebt included ava- in workingcapitalduringparticularly busyperiods. riable rate loans tofinance specific needs related toincreases fixed rate loansfor itslong-termfinancingneeds andva- exposure tothisrisk.Inregard,theGroupuses primarily mize thecost oftheGroup'sborrowingsandatreducing Interest rate risk managementisprimarily designed tomini- Interest rate risk financing needs generated byitsbusiness: interest rate and foreign exchange risksresultingfromthe The Groupuses certain financialinstrumentstolimitthe Borrowings breakdown asfollows: Note 15 o neetbaiglaiiis3333,254 141 3,323 41,391 82 55,732 Short-term liabilities Long-term liabilities Non interest-bearingliabilities Variable rate liabilities Fixed rate liabilities Borrowings Borrowings resultingfromrestatementofleases Bank borrowings Bank overdrafts andshort-term loans Advances Accrued interest ahVral .4 6,4)(,6.)(,2)(652.4) 200.0 (3,221) (2,569.0) (1,079.4) 1,143 (65,241) (5,616) 943.2 (4,536.1) 3.94% Nominal 20,000 (107,940) Variable Rate 4.20% 4.716% Variable Type of Variable Total Investment securities Cash Bank borrowings Liabilities Risks management Borrowings aepa change p.a. rate Ubisoft debtstructure(inthousandsofeuros): transaction volumes arehigh. tions, especially onitssales intheUSandCanadawhere The Company remainsexposed to exchange rate fluctua- foreign currencyborrowings. lion, CAD17millionandJPY100 millionusingforwards and As ofMarch31,2008theCompany hadhedged USD43mil- (such asinter-company loansinforeign currencies). any residualexposures andnon-commercial transactions borrowings, forwards orforeign currencyoptionstohedge same currency).The parentcompany uses foreign currency reign currenciesoffset byroyaltiesfromsubsidiariesinthe tions intheoppositedirection (development expenses info- rates wereasfollows: cial income andexpense andsensitivity tochangesininterest In viewofthefinancialpositionasMarch31,2008,finan- ah(65,241) 23,323 20,000 3,323 (107,940) (173,181) Net positionbefore hedging Investment securities Cash Financial assets Canadian bankborrowing UK bankborrowing Financial liabilities 1311 (6,161.9)(1,531.8) (153,181) 33.803.31.07 03.31.08 60748,874 22,706 61,677 23,254 56,097 23,323 76,014 23,323 94071,580 79,420 8 286 283 36,649 83 Interest 1% Interest 1% Diff 6,508 0 er>1year < 1year erence CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 77 The impact of a +/- 1% change in the main currencies on the Group’s revenue and operating profit (in thousands of euros) as of March 31, 2008: Currency Impact on revenue Impact on operating profit USD 3,679 1,350 GBP 1,590 1,329 CAD 505 506 AUD 327 266 DKK 245 200 JPY 93 44 Equity risk: Liquidity risk The Company has main types of equity investments: As of March 31, 2008, the Group had financial debt of €79.4 million and net cash (including liquid assets and Own shares held in connection with a market-making and short-term investment securities) of €149 million. liquidity agreement signed with Exane BNP. These pur- With the exception of a €20 million borrowing, financial chases are carried out under the terms of a market-making debt as of March 31, 2008 consisted mainly of inter-com- agreement that complies with all applicable regulations, pany cash pooling transactions. and are designed to ensure the liquidity of purchases and sales of shares. As of March 31, 2008, the Company held In order to finance temporary needs related to increases in working capital during especially busy periods, the Group 30,371 shares, worth K€ 1,573. had a €100 million syndicated loan, €30 million in con- An equity swap agreement on Ubisoft stock: this derivative firmed credit facilities and other bank credit facilities is recognized in the balance sheet at its fair value. Any totaling €76 million as of March 31, 2008. fluctuations in the share price compared to the €9.33 dis- The Group did not exercise its option of renewing the syn- posal price are recognized in income. A total of 193,153 dicated loan for an additional year: a new agreement was shares were disposed of during the year, leaving 1,243,121 signed in May 2008 for a €180 million five-year loan. shares as of March 31, 2008. The syndicated loan and the confirmed bank loans in place An equity swap agreement on Gameloft stock: this deriva- are governed by financial covenants that are based on the tive is recognized in the balance sheet at its fair value. Any ratio of net debt to equity and that of net debt to cash flow from operating activities. fluctuations in the share price compared to the €6.08 sale price are recognized in equity. A total of 4,189,198 shares Liquidity Risk Figures were disposed of during the year, leaving 9,178,755 shares as of March 31, 2008. A one euro fall in the share price 31.03.08 31.03.07 would thus reduce equity by K€ 9,178. Bank Loans 23.323 23.254 A potential fall in the price of Ubisoft stock and Gameloft Trade Payables 177.903 118.950 one would be a risk. Derivative Instruments 1.353 -

Investment policy Covenants All cash must remain highly liquid, and the risk to the ca- Under the terms of the €20 million syndicated loan and pital must be kept to a minimum. Cash must thus be bilateral line, the Company is required to respect certain invested in products that are very secure and have very covenants: low volatility. All the products in which the Group invests 2008-2009 2007-2008 are compliant with the criteria established by IRFS 7. Accordingly, certain principles of conservatism regarding Net debt restated for assigned receivables / equity restated the Group’s cash management must be observed: for goodwill < 0.80 0.85 - Never place more than 5% of the net assets in a single Net debt restated for assigned fund; receivables / EBITDA < 1.5 1.5 - Never invest more than 20% of total cash in the same In 2006-2007, the Company also signed a €10 million line, vehicle. which is subject to the same covenants but uses 0.9 for the The Group diversifies its investments with top tier coun- net debt/equity ratio. terparties, using money market vehicles with maturities of All covenants are calculated on the basis of the consoli- under three months. dated annual financial statements under IFRS. As of March 31, 2008, the Group’s cash was invested in As of March 31, 2008, the Company was in compliance money market investment companies and certificates of with all these ratios and expected to remain so during the deposit with maturities of under three months. 2008-2009 fiscal year. UBISOFT • FINANCIAL REPORT 2008 rate risk. As theabove amount isshort-termanddoes notbearinterest,achangeininterestrates does notpose amaterialinterest All trade payablesfall duewithinayear. Trade payablesbreakdown asfollows: Note 18 €9,770thousand €34,220thousand - Long-term: - Short-term: Expiry ofdeferred taxliabilities: during theperiod. Inaccordance withIAS12,thecancellation oftheaccelerated taxdepreciation generates adeferred taxlia (2) Aspermitted under Article236oftheFrenchGeneral Tax Code, theCompanyopted toimmediately expense software design cos the Companyrecognizes afuturetaxliabilityfor thisitem. (1) The Canadiansubsidiarybenefitsfrommultimedia credits. Asthese credits aretaxable intheyear inwhichtheyareused b Note 17 to €149,493thousand As ofMarch31,2008,thenetfinancialsurplusamounted Net financialsurplus totaled €55thousand year therewerenonewborrowingsandrepayments leased for termsofatmostthree years. Duringthefiscal Finance leases mainly relatetocomputer equipment Finance leases available cashreserves inotherGroupcompanies. ment. They canbeoffset vianotionalcashpooling by falls arisingfromchangesintheworkingcapitalrequire- Bank overdrafts areused tofinance occasional cashshort- Bank overdrafts mut u ospleso o-urn ses3362,589 3,366 Total Amounts duetosuppliersofnon-currentassets Trade payables Total Other (95,766) Equity swap 71,580 (54,972) Anno brand (120,973) Accelerated taxdepreciation onexpenses /games (149,493) TLC brands 79,420 (30,786) Grants (107,940) Financial surplus Net investment securities Cash Borrowings (1) Trade payables Deferred taxliabilities 33.803.31.07 03.31.08 (2) lows: The breakdown ofborrowingsbycurrencywasasfol- te 2 3 - 276 61,473 9,826 - 20 75,216 4,184 Other Pound sterling Canadian dollars US dollars Euros iaca iblte 94071,580 79,420 Financial liabilities 33.803.31.07 03.31.08 03.31.07 03.31.08 10110,810 11,081 ,9 - 8,393 7,0 118,950 116,361 177,903 174,537 39028,214 13,032 43,990 19,363 bility. ut arerecognized onafiscal year basis, ,0 - 3,190 1,500 2,686 6 1,182 967 ts wheredesign commenced 33.803.31.07 03.31.08 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 79 Note 19 Other liabilities Other liabilities break down as follows:

03.31.08 03.31.07 Advances and prepayments received 725 1,734 Employee-related liabilities 38,972 27,320 Other tax liabilities 32,687 33,168 Other liabilities 15,529 162 Deferred income 7,592(1) 13,511 Total 95,505 75,895

(1) Deferred income includes €941,000 in Canadian grants and €6.6 million in prepaid revenue. Other liabilities mature in under a year, with the exception of €6.5 million on the acquisition of the intellectual property rights to the name Tom Clancy, which matures in July 2009.

Note 20 Current financial liabilities In this part, are booked the derivatives for which the fair value at the closure date is negative. Financial liabilities break down as follows:

03.31.08 03.31.07 Foreign exchange derivatives 1,353 - Total 1,353 -

Details of the foreign exchange derivatives are provided in Section 2.5.5 Notes to the balance sheet - Note 10 Current financial assets.

Financial assets and liabilities

IAS 39 Financial assets Financial assets Loan and Financial liabilities Other accounting at fair value available receivables at fair value liabilities categories through income for sale through income Notes Measurement Fair Fair Amortized Fair Amortized method value value cost value cost 5 Assets available for sale 1,164 5 Other financial assets 5 Deposits and sureties 1,759 5 Other non-current receivables 10 8 Accounts Payables 84.226 10 Foreign exchange derivatives 445 (1.353) 10 Equity swap derivatives 19,001 10 Assets available for sale 25,058 15 Financial liabilities 79,420 17 Trade payables 97,586 UBISOFT • FINANCIAL REPORT 2008 Grants fromthe Canadiangovernment broke down as follows: A €74thousandprovision wasrecognized asofMarch31,2008for thepersonal training right(DIF). The Grouphadtotalexpenses of€6,460thousandonitsdefined contribution plans. Employee benefitsbreakdown asfollows: Note 23 and amortization”“provisions.” March 31,2008),whichwerepreviously recognized under “otheroperating income,” arenowincluded netin“depreciation Reversals ofdepreciation, amortizationandprovisions (€1,644thousandasofMarch31,2007and€3,226 Other operating income breaksdown asfollows: Note 22 The breakdown ofrevenue isasfollows: 2007 fiscal year. At constant exchange rates, revenue growthwas43%. The Groupgenerated €928 millioninrevenue inthe2007-2008fiscal year, 36%uponthe€680millionreported in the 2006- Note 21 recognized under “otheroperating expenses,” arenow included in“consumables used.” Logistics costs (€13,196thousandasofMarch31,2007and€15,155 thousandasofMarch31,2008),whichwerepreviously Other external chargesconsist mainly ofadvertising expenses, royaltiesandpropertyequipment lease payments. Other operating expenses breakdown asfollows: Note 24 Certain grants arecontingent uponthegeneration oftaxable income. te xenlcags2673157,640 216,713 Total Other expenses Other external charges Services Licenses Sales ofgoods aaisadpyoltxs2846199,102 228,466 1,488 161,196 3,354 Total Share-based payments 186,703 Grants Personal training right Salaries andpayrolltaxes Total Other income Capitalized production costs onothersoftware Capitalized commercial software production costs Total 2.5.6 €861 thousandinassorted othergrants. €1,282 thousandfor aportionoftraining costs, €2,738 thousandresearch anddevelopment taxcredit, representing 50%ofR&Dcosts; to 37.5%fromJune30,2007; €27,175 thousandmultimedia credit, representing 50%ofproduction related wages,withthispercentage beingreduced Notes totheincomestatement Employee benefitsexpense Other operating income Revenue Other operating expenses 33.803.31.07 03.31.08 33.803.31.07 03.31.08 03.31.07 03.31.08 33.803.31.07 03.31.08 3,5)(31,464) (32,056) 1,8 161,079 218,182 0,2 654,962 907,628 0,1 171,038 205,010 164,823 191,209 680,348 928,307 56816,340 15,658 ,6 3,439 1,469 ,1 9,046 5,019 ,2 3,344 8,526 2,139 1,152 456 74 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 81 Note 25 Depreciation, amortization and provisions Depreciation, amortization and provisions break down as follows:

Depreciation and amortization:

03.31.08 03.31.07 Amortization of intangible assets 242,762 219,009 Released software 168,373 162,101 External developments 70,910 52,398 Office productivity software 3,443 4,369 Leased office productivity software - 85 Other 36 56 Depreciation of property, plant and equipment 11,730 10,991 Plant and machinery 1,576 1,722 Computer hardware and furniture 6,812 6,937 Development kits 3,205 2,156 Transportation equipment 68 59 Leased computer hardware and transportation equipment 69 117 Total 254,492 230,000

Provisions:

03.31.08 03.31.07 Provisions for trade receivables 224 (1,070) Provisions for other current assets 7 - Provisions for risks and charges (2,053) 2,053 Provision for post-employment liabilities 494 55 Other provisions Total (1,328) 1,038 Reversals of depreciation, amortization and provisions (€1,644 thousand as of March 31, 2007 and €3,227 thousand as of March 31, 2008), which were previously recognized under “other operating income,” are now included net under “depreciation and amortization” and “provisions”. Note 26 Other operating income and expenses Other operating income and expenses break down as follows:

03.31.08 03.31.07 Loss on disposal of non-current assets (21) (243) Other operating income (expense) 6,964 (117) Total 6,942 (360)

Other operating income of €6,964 thousand broke down as follows: €8,431 thousand in compensation received following a dispute with a licensee (see Section 2.5.1 Highlights of the fiscal year); €607 thousand in the settlement of a liability linked to the acquisition of Red Storm Entertainment Inc.; a €2,074 thousand loss on the disposal of the interest in Avator GmbH. UBISOFT • FINANCIAL REPORT 2008 There are twotaxconsolidation groups: contribution for theconsolidated group. vailing rate asofMarch31,2008(33.33%),plusthe3.3% Tax owed byFrenchcompanies wascalculated at thepre- Current tax: Income taxbreaksdown asfollows: Note 29 Section 2.5.5Note10). that wasnotdisposed ofwasrecognized inequity (see tinued operations. The unrealized capitalgainonthestock sold onthemarket wasrecognized inincome under discon- on July 12(see Section 2.5.1),thecapitalgainonstock Following thedisposalofGameloft SA stock toCalyon Designs Software GmbHassociate. Share ofprofitassociates isattributabletotheRelated Share ofprofitassociates breaksdown asfollows: Note 28 Net financialincome breaksdown asfollows: Note 27 oa 4,5)(15,217) (48,957) (8,088) (7,129) (29,976) (18,981) Total Deferred tax Current tax oa 83,149 28 Total Total Financial expenses Financial income Cost ofnetfinancialdebt hr fpoi fascae 83,149 28 Share ofprofitassociates te iaca xess 159 (1,756) 36 (12,807) 1,886 11,108 (45) (1,549) (29,225) (7,067) 25,171 312 5,588 15,220 - (2,926) 22,401 Other financialexpenses Foreign exchange losses Other financialincome Disposal oftheequity swap Fair value adjustmentoftheequity swap Foreign exchange gains Gain (loss)oncashflowhedges Interest onborrowings Income fromcash Income tax Share ofprofitassociates Net financialincome 33.803.31.07 03.31.08 33.803.31.07 03.31.08 Deferred tax: sebekoni oe1)4,9 28,214 37,630 43,990 21,684 (see breakdown inNote16) Deferred taxliabilities (see breakdown inNote6) Deferred tax assets rated ataxexpense of€4,906thousand. Ubisoft Inc.AsofMarch31,2008, thetaxgroupgene- Ubisoft HoldingsInc.,Red StormEntertainmentInc.and In theUnited States,thegroupcovers three companies: them atanytimefor theirownpurposes; temporary, since thecompanies inquestionmayuse losses atthetaxgroup’smembercompanies willonly be tax. Nevertheless, anytaxsavings arisingfromtheuse of tax assets andgenerated €10,940thousandincurrent the taxgrouprecovered €15,522thousandindeferred Marketing InternationalSARL. AsofMarch31,2008, SARL, Ubisoft Manufacturing SARL andUbisoft Organisation SARL, Ubisoft WorldSAS, LudiFactory SAS, Ubisoft Books andRecords SARL, Ubisoft Entertainment SA, Ubisoft EMEASARL, Ubisoft France In France, thegroupcovers ninecompanies: Ubisoft 33.803.31.07 03.31.08 3,7)(14,563) (30,774) 24618,047 12,426 38,201 43,521 ,0 1,521 2,605 31 (5,591) (321) 33.803.31.07 03.31.08 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 83 Tax breakdown:

03.31.08 Consolidated earnings, excluding goodwill, tax, share of profit of associates and excluding earnings of discontinued operations 143,946 theoretical tax (34.43%) 49,561 Adjustment of deferred tax from previous fiscal years: Variance between the accounting records and tax returns 587 Impact of permanent differences between corporate earnings and consolidated earnings: IFRS2 wage adjustment 2,565 Cancellation of provisions for impairment of goodwill 122 Miscellaneous add-backs/deductions (1,514) Taxation of foreign companies at different rates (883) Other restatements : Different tax rates 824 Lost carry-forwards (355) Canadian tax audit 2,053 Taxes not dependant on income (4,018) Miscellaneous 16 Total income tax 48,957 Actual tax rate 34%

Adjustments made during the fiscal year for tax due from previous years and recognized in equity: Following the tax adjustments for previous years, the amount recognized directly in equity was (€17 thousand).

Note 30 Earnings of discontinued operations Earnings of discontinued operations break down as follows:

03.31.08 Earnings from the Gameloft associate until date stock disposed of to Calyon 835 Dilution (295) Disposal of Gameloft stock(1) 14,568 Tax on stock disposal (281) Total 14,827

(1) Capital gain following the sale of 4,189,198 shares during the first half of fiscal year 2007-2008. UBISOFT • FINANCIAL REPORT 2008 Operating profit(loss) of finished goods Changes ininventories of games,internalandexternal development, royalties,etc.)andheadquarters costs. (2) The parentcompany andUbisoft EMEASAS invoice subsidiariesfor acontribution intheform ofroyaltiesthatserve tosupp (1) Invoicing ofproducts purchased onbehalfofsubsidiaries andreinvoiced attheirpurchase price. 1. Breakdown ofearningsbygeographic region ceed onthebasisthatGroupoperates inasinglemarket withseveral geographic regions. In lightoftheGroup'sorganizationalstructureandcommercial relationshipsbetween thevarious subsidiaries,wepro- 2.5.7.1 Segmentreporting ioiyitrss0000000 14,827 0 0 0 28 0 109,844 0 2,281 0 12,746 (48,957) 0 0 109,844 10,211 12,426 297 (824) 2,281 0 0 (321) 2,617 203 (88) 0 2,605 (6,879) 189 10,211 (6) 2,952 6,942 (500) 0 (1,517) 18 (1,522) 0 2,617 (2,926) 415 833 0 (3) (1,106) (14) (434) 2,483 (24) 2,952 235 0 0 277 5 131,520 (607) 607 89,299 16 1,500 598 14,827 2,483 108 2,903 (38,024) 28 4 (66) 142 (103) holders ofGroupresult (1,761) 124,578 89,299 17,590 (234) 0 Earnings attributable toequity (6,872) (253,164) Minority interests 2,906 (1,315) 114 0 (1,761) 4,147 (380) Profit (loss)for theperiod (301) 11,565 401 12,954 operations 18,275 16,983 (8,366) Earnings fromdiscontinued 30 (1,160) (410) 4,042 Income tax 988 (79) 568 Share ofprofitassociates 4,213 (709) Net financialincome (360) (1,226) 3,297 Inter-company items 2,214 5,049 (218,182) 928,307 3,929 6,370 (586) and expenses (205,010) Other financialincome (355) (329,984) (11,356) 48,117 Net borrowingcost 99,541 (11,712) 191,209 3,064 (6,661) (76,164) Gross borrowingcost 3,375 (1,211) (84,938) 401,336 13,924 and cashequivalents (67) (127,588) (26,261) Income fromcash 4,902 (18,194) Operating 151,048 profit(loss) (240,977) 88,074 93,172 (8,021) (22,123) and expenses Other operating income (4,628) (8,660) 158,719 12,948 from continuingoperations 1,368 (2,211) (15,829) Reinvoiced contributions (4,930) 75,145 6,890 and provisions 3,324 (66,448) (4,630) Depreciation, amortization (76,575) Taxes 93,940 andduties (180,873) Other operating expenses 3,503 Employee benefitsexpense and workinprogress 65,870 Inter-company items Cost ofsales Other operating income Sales 2.5.7 Other notes (1) (2) 4,8 2,3)(153 5,9)(8,2)(739 (214,228) (17,339) (185,121) (58,991) 214,228 (71,533) (11,018) (26,633) 5,862 145,389 (50,312) (61,114) (23,341) 354,151 rneGrayU Rs f Sad eto 03.31.08 Restof USand Restof UK Germany France uoeCnd ol Total world Canada Europe ort development costs (amortization CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 85 2. Breakdown of the balance sheet by geographic region

Net assets France Germany UK Rest of US and Rest of 03.31.08 Europe Canada world Total

Goodwill 35,173 10,840 1,240 3,606 33,518 0 84,376 Other intangible assets 330,100 1,735 70 44,850 20,952 670 398,377 Property, plant and equipment 8,417 144 457 1,759 8,658 3,046 22,480 Investments in associates 0 328 0 0 0 0 328 Other financial assets 1,162 314 0 188 103 750 2,517 Inter-company items 161,757 (27,778) (904) (40,613) (85,342) (7,119) 0 Deferred tax assets (1,272) 320 203 1,312 19,540 1,581 21,684 Non-current assets 535,336 (14,097) 1,065 11,102 (2,570) (1,073) 529,762 Inventory 6,180 3,021 7,811 7,437 14,101 1,330 39,879 Trade receivables (679) (2,878) 6,886 19,571 54,057 7,268 84,226 Other receivables 29,687 12,352 6,295 1,730 40,918 700 91,682 Inter-company items 34,481 4,192 18,612 (21,678) (29,682) (5,925) 0 Current financial assets 64,342 0 0 0 0 0 64,342 Current tax assets 7,877 90 (833) 2,194 1,684 135 11,147 Cash and cash equivalents 199,326 1,480 238 12,990 8,913 5,967 228,913 Current assets 341,215 18,256 39,008 22,244 89,992 9,475 520,189 Total assets 876,550 4,159 40,073 33,346 87,422 8,402 1,049,953

Liabilities and equity France Germany UK Rest of US and Rest of 03.31.08 Europe Canada world Total

Capital 7,165 0 0 0 0 0 7,165 Premiums 459,457 0 0 0 0 0 459,457 Consolidated reserves 57,527 (13,654) 4,230 2,896 6,065 621 57,685 Consolidated earnings 89,299 2,483 2,952 2,617 10,211 2,281 109,844 Equity (Group share) Minority interests Total equity 613,448 (11,171) 7,183 5,512 16,276 2,903 634,151 Provisions 10 0 0 2 1,849 0 1,861 Employee benefit liabilities 1,480 0 0 81 0 137 1,699 Long-term borrowings 0 0 20,000 0 3,323 0 23,323 Deferred tax liabilities 29,941 2 0 8 13,979 60 43,990 Non-current liabilities 31,432 2 20,000 92 19,151 198 70,873 Short-term borrowings 55,144 0 0 70 882 0 56,096 Trade payables 131,479 5,363 4,752 6,445 27,217 2,646 177,903 Other liabilities 32,511 9,959 8,138 20,112 22,915 1,870 95,505 Current financial liabilities 1,353 0 0 0 0 0 1,353 Current tax liabilities 11,181 6 0 1,116 981 786 14,070 Current liabilities 231,670 15,328 12,890 27,742 51,995 5,302 344,928 Total liabilities and equity 876,550 4,159 40,073 33,346 87,422 8,402 1,049,952 UBISOFT • FINANCIAL REPORT 2008 than €250.000perannum. The General Shareholders' Meeting ofSeptember25,2006authorized theCompanytopaytotaldirectors’ fees ofnomore During the2007-2008fiscal year, themanagersreceived €94thousandindirectors’ fees. Brothers SA andGuillemotCorporation SA) was€1,381thousand€546ofwhichpaidbyUbisoft EntertainmentSA. meaning ofIAS24.16(Gameloft SA) andbythecompany controlling theoneinwhichtheyheld theirpositions(Guillemot The totalgrosscompensation paidtomanagersduringthefiscal year bytheCompany,controlled companies withinthe do notworkunder employmentcontracts. Messrs Guillemotarecompensated for theirdutiesasCEOandExecutive Vice Presidents. They arepaidafixed amountand 1. CompensationofmanagerstheCompanyand thecontrollingand/orcontrolledcompanies 2.5.7.3 Related partytransactions The breakdown ofnetassets andgoodwill acquired wasasfollows: On April11,2008,Ubisoft EntertainmentSA acquired DigitalKidsCo.Ltd. The breakdown ofnetassets andgoodwill acquired wasasfollows: On April6,2007,Ubisoft EntertainmentSA acquired SunflowersGmbH,thesoftware publisher,andtheAnnobrand. 2.5.7.2 Businesscombinations 3. Breakdown ofinvestments bygeographic region oa 4,4 ,7 9 472774205386,965 2,025 7,764 376,950 10,015 442 34,762 1,584 4,887 493 2,876 03.31.08 33,277 Restof 1,485 1,174 USand 169 324 Restof 340,746 UK 1,086 89 337,090 Germany France 3,656 Total Property, plantandequipment Intangible assets Investments eerdtxo h rn enoprtdit odil(A 2 1,500 Goodwill Total Fair value ofnetassets acquired Total acquisitioncost Direct costs related totheacquisition Amount paidincash Total goodwill Deferred taxonthebrand reincorporated intogoodwill (IAS12) Goodwill Anno brand Total Fair value ofnetassets acquired Total acquisitioncost Direct costs related totheacquisition Amount paidincash uoeCnd ol Total world Canada Europe 03.31.08 03.31.08 (2,725) 12,752 11,252 17,252 14,527 14,208 1,176 1,176 1,666 1,553 6,000 490 112 319 CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 87

Name of manager 03.31.08 Fixed Fixed compensation Total gross fixed Directors’ Total variable Benefits compensation paid by compensation fees paid compensation in kind paid by Ubisoft other companies paid by Ubisoft paid paid Mr Yves Guillemot 109,200 146,760 €255,960 €18,750 None None Mr Gérard Guillemot 109,200 162,960 €272,160 €18,750 None None Mr Michel Guillemot 109,200 231,705 €340,905 €18,750 None None Mr Claude Guillemot 109,200 146,760 €255,960 €18,750 None None Mr Christian Guillemot 109,200 146,760 €255,960 €18,750 None None

Name of manager 03.31.07 Fixed Fixed compensation Total gross fixed Directors’ Total variable Benefits compensation paid by compensation fees paid compensation in kind paid by Ubisoft other companies paid by Ubisoft paid paid Mr Yves Guillemot 109,200 146,760 €255,960 €22,500 None None Mr Gérard Guillemot 109,200 176,116 €285,316 €22,500 None None Mr Michel Guillemot 109,200 183,536 €292,736 €22,500 None None Mr Claude Guillemot 109,200 146,760 €255,960 €22,500 None None Mr Christian Guillemot 109,200 146,760 €255,960 €22,500 None None

Under the terms of the stock option plan approved by the Board of Directors on April 26, 2007, it was decided to grant the Company's corporate officers 75,000 of the 1,577,400 stock options granted (4.75%). The options may be exercised any time between April 26, 2008 and April 25, 2012, inclusive, at an exercise price of €35.29 per share. In accordance with the provisions of the Act of December 30, 2006 establishing new regulations governing options granted to corporate officers, the Board also decided to require all corporate officer beneficiaries to retain 5% of their options until such time as they have given up their positions. No commitments has been made by the Company in favor of its corporate officers related to their termination or change in responsibilities. Pursuant to Article L225-43 of the French Commercial Code, no loans or advances were made to the Company’s managers.

2. Transactions with other related parties Ubisoft Entertainment SA acquired no stock from related parties.

2.5.7.4 Off-balance sheet commitments

1. Guarantees and collateralized guarantees:

03.31.08 Expiry 03.31.07 Sureties & Guarantees given 53,095 50,566 Obligor (1) Type of guarantee Red Storm Entertainment Inc. Lease payment guarantee 361 10.31.09 Ubisoft Divertissement Inc. Lease payment guarantee 542 Expiry of lease Ubisoft Inc. Guarantee of commercial commitments 6,324 End of commercial relationship Ubisoft Ltd. Loan guarantee 20,000 12.29.11 Ubisoft Ltd. Lease payment guarantee 2,521 06.15.16 Ubisoft SA Lease payment guarantee 1,022 07.21.12 Ubisoft Inc. Stand-by letter 3,795 03.31.09 Ubisoft Inc. Stand-by letter 2,530 06.30.08 Ubisoft EMEA SAS Stand-by letter 16,000 08.15.08 Collateralized guarantees given None None Outstanding notes receivable discounted None 1,000

(1) Only commitments of over €500 thousand are shown. UBISOFT • FINANCIAL REPORT 2008 The Grouphasnoemployee profit-sharingprograms. was 4,118. The Group'saverage staff over the2007-2008fiscal year 2008: Permanent staff broke down asfollows asofMarch31, mitments. The Grouphasnoothermaterialoff-balance sheet com- 4. Othercommitments million asofMarch31,2008. credit facilities andotherbankcredit facilities totaling€76 has a€100millionsyndicated loan,€30millioninconfirmed working capitalduringespecially busyperiods, theGroup In order tofinance temporary needs related toincreases in 3. Authorizations 2. Leases: leases, noneofwhichexceed 10years. These primarily include €11,075thousandinproperty three years. and transportation equipment leased for termsofatmost Finance leasingprimarily relatestocomputer hardware oa ,2 3,934 411 4,323 487 1,923 1,600 2,082 1,754 Total Asia-Pacific Europe andNorthAfrica North America 0 4 59 9 4 15 5940 90 75 441 Residualvalue Remaininglease payments Lease paymentsmade Carryingamount Depreciation 507 Initial value 2.5.8 Operating leases: Finance leases: Personnel 33.803.31.07 03.31.08 €61.68. swap agreement weredisposed offor anaverage of As ofMay12,2008,the1,243,121sharesunder theequity signed inMay2008for a€180millionfive-year loan. dicated loanfor anadditional year: anewagreement was The Groupdidnotexercise itsoptionofrenewingthesyn- Ukraine, inthe cityofKiev. On April29,2008,Ubisoft opened itsfirststudiointhe Ubisoft’s testingstaff. games tohandheldconsoles andonstrengthening pers andtesters.They willinitially beworkingonporting studios inAsia.The studiocurrently employs120develo- studio inIndia,allowingtheGrouptocontinue toexpand its On April15,2008,Ubisoft acquired itsfirstdevelopment 2.5.9 balance sheetdate Events afterthe < 1year >1year CONSOLIDATED FINANCIAL STATEMENTS AS OF MARCH 31, 2008 2 89 Report for the consolidated account statements 2.6 for the fiscal year ending March, 31, 2008

Dear Shareholders,

Pursuant to the assignment entrusted to us by your Board of Directors, we have audited the consolidated financial statements of Ubisoft Entertainment S.A. for the fiscal year ended March 31, 2008, 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 anomalies. An audit consists in examining, on a test basis, evidence relevant to the information contained in the financial statements. 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. Without contesting our opinion above, we draw your attention to the note “Comparability of financial statements” which describes the changes in the presentation of financial statements.

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:

Changes in the presentation The note “Comparability of financial statements” describes the changes in the presentation of financial statements issued during the fiscal year. Pursuant IAS 8, the comparative information referring the last fiscal year and presented in the consolidated financial statements, was restated to integrate the application of this new presentation Therefore, the comparative information is different to the consolidated financial statements published for 2006-2007 fiscal year. As part of our assessment of the accounting principles applied by your company, we have examined the correct last fiscal year restatement and of the information provided in the notes.

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 procedures for conducting this impairment test, as well as the cash flow forecasts and assumptions used, and verified that the above notes provide appropriate information.

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. Our work consisted to assess the information and assumptions on which are based these estimates, to review the calcu- lations made by the company, to compare the accounting estimates of the last periods with the reality. As part of our assessment, we have ensured the appropriateness of these estimates. UBISOFT • FINANCIAL REPORT 2008 Partner Laurent Prévost A divisionofKPMG S.A. consistency withtheconsolidated financialstatements. report concerning thegroup’smanagement.Wehave nocomments regardingtheaccuracy ofthisinformation andits We have also verified, inaccordance withaccepted professional standardsinFrance, theinformation provided inthe III -Specificverification therefore provided abasisfor theopinionexpressed inthefirstpartofthisreport. Our assessments weremade withinthecontext ofouraudittheconsolidated financialstatementsasawhole,and - reviewed theopinionofauditorsfirm - reviewed theopinionofexperts andattorneysjustifying thegroundsfor theobjection made totheadministration. - examined thereasons for theadjustment; As partofourassessment ofthesignificantestimates used topreparethefinancialstatements,we: vision intheamountofestimated riskatclosing. provisions totheconsolidated financialstatements.The company, whichobjected tothetaxadjustment,set upapro- Ubisoft Divertissements Inc.issubject toataxadjustmentunder theconditions described intheexplained noteofthe Provision for taxrisk KPMG Audit By thestatutoryauditors Rennes, June30,2008 André Métayer Audit AMLD Partner CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 91

3.1 Ubisoft Entertainment SA balance sheet 92 3.2 Ubisoft Entertainment SA income statement 93 3.3 Statement of changes in equity 94 3.4 Cash flow statement 95 3.5 Notes to the corporate financial statements 96 3.5.1 Highlights of the fiscal year 96 3.5.2 Comparability of financial statements 96 3.5.3 Accounting principles 96 of march 31, 2008 3.5.4 Changes in options 97 3.5.5 Accounting rules and methods 97 3.5.6 Notes to the balance sheet 99 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 Company managers 109 3.6.4 Contingent assets and liabilities 109 3.6.5 Events after the balance sheet date 109 3.6.6 Subsidiaries and associates (March 31, 2008) 110 3.7 General report on the fiscal year ending March 31, 2008 112 3.8 Special Auditor’s report fiscal year ended March 31, 2008 on regulated agreements and commitments... 114 of ubisoft entertainment sa as as sa entertainment of ubisoft corporate financial statements financial statements corporate 3 UBISOFT • FINANCIAL REPORT 2008 o-urn ses989441524742418,667 477,442 196,348 1,898 03.31.07 220,421 441,542 230,303 03.31.08 244,976 2,163 918,984 420,684 03.31.08 15,932 4,926 03.31.08 650,987 260,908 7,089 1 3 2 Non-current assets Non-current financialassets Property, plantandequipment Intangible assets Assets te iblte 1 36120,150 44,685 23,681 3,918 53,176 437,352 4,707 5,480 552,839 44,685 323 14,915 53,176 162 15 03.31.07 16 13 03.31.08 619,525 6 (3) Currentaccounts. 199,708 774,779 (2) Ofwhich,currentbankcredit facilities andbankcredit balances: (1) Ofwhich,currentportionofborrowings: 295,654 Total 1,150 liabilitiesand equity 34,701 12 40,792 441,542 30,779 Accrued expenses anddeferred income 63,538 Total liabilities - 35,194 1,683 1,216,321 76,704 Other liabilities 107,870 Liabilities onnon-currentassets 51,560 Tax andemployee-related liabilities - - - Trade - payables 29,898 Notes 295,654 - Miscellaneous financialliabilities Borrowings 24,326 Provisions for risksandcharges 35,194 Equity 76,704 107,870 1,683 Regulated provisions 51,560 - Earnings for theperiod 8 6 Reserves 9 5 Premiums Capital 24,326 Liabilities andequity 4 Total assets Prepaid expenses anddeferred charges Bond redemption premium Current assets Cash andcashequivalents Investment securities Other receivables Trade receivables Advances andprepaymentsmade 3.1 (1) (2) Ubisoft EntertainmentSAbalancesheet (3) 46,5 69,095 44,685 66,456 53,176 14 14 oe rs mr/erNtNet Net Amort/depr Gross Notes ----- nK nK nK inK€ inK€ inK€ in K€ 7,7 619,525 177,931 774,779 217,071 420,775 436,473 54235,917 55,452 - 16,047 24,448 75,212 ,9 2,604 3,391 (6,507) 7,037 9,541 7,165 nK inK€ in K€ CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 93 3.2 Ubisoft Entertainment SA income statement

Notes For the 12 For the 12 months ended months ended March 31, 2008 March 31, 2007 in K€ in K€ Revenue 17 571,034 435,190 Other operating income and reinvoiced costs 18 10,283 17,223 Total operating income 581,317 452,413 Stored purchases and other supplies -- Other purchases and external expenses 19 295,861 240,601 Taxes and duties 1,689 1,163 Employee benefits expense 750 761 Other expenses 20 35 192 Depreciation, amortization and provisions 21 213,160 200,861 Total operating expenses 511,494 443,578 Operating profit (loss) 69,823 8,835 Share of profits of associates 1,540 25,618 Income from other securities and receivables on non-current assets 11 18 Other interest received(1) 15,281 3,992 Reversal of provisions 6,620 2,782 Foreign exchange gains 8,330 8,842 Net proceeds on sale of investment securities 708 380 Total financial income 32,490 41,632 Provisions 1,842 23,019 Other interest paid(2) 6,103 7,923 Foreign exchange losses 16,495 10,399 Total financial expenses 24,440 41,341 Net financial income (loss) 22 8,050 291 Profit (loss) before tax from continuing operations 77,873 9,126 Non-recurring items 23 (700) 6,832 Profit (loss) before tax 77,173 15,958 Income tax 24 1,961 (89) Profit (loss) for the period 75,212 16,047 (1) Of which income of associates: 3,266 3,147 (2) Of which expenses of associates: 3,621 2,658 UBISOFT • FINANCIAL REPORT 2008 aia ,3 2 7,165 436,473 - - - - 128 15,697 - - Balance as Increase in 2007-2008 7,037 420,775 Capital Allocation of Balance as Premiums Capital in K€ euae rvsos----2,4 24,448 552,839 704 8,837 24,448 24,448 - - - 75,212 75,212 - - - 15,825 - - - - 75,212 - - - - - 437,352 - 198 2,443 - (16,047) 6,394 13,406 505 16,047 (13,406) Total Regulated provisions Earnings for theperiod Retained earnings(losses) Other reserves Legal reserve 3.3 Statement ofchangesinequity f0.10 0620 ices erig euae of03.31.08 regulated earnings increase 2006-2007 of 03.31.07 annsi ahad provisions incashand earnings conversion of bonds through CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 95 3.4 Cash flow statement

03.31.08 03.31.07 in K€ in K€ Cash flows from operating activities Earnings 75,212 16,047 Depreciation and amortization of property, plant and equipment and intangible assets 212,818 200,748 Changes in provisions 19,670 22,624 (Gains) losses on disposal of non-current assets (14,775) 170 Net cash generated by operating activities 292,925 239,589 Trade receivables 11,978 (7,744) Advances 5,611 (5,559) Other assets 1,505 (504) Trade payables 20,283 (2,253) Other liabilities 2,893 2,823 Total change in working capital 42,270 (13,237) Cash flows from investing activities Acquisitions of intangible assets (246,629) (209,048) Acquisitions of property, plant and equipment (679) (406) Acquisitions of equity investments (48,295) (1,739) Acquisitions of other non-current financial assets (42,557) (26,226) Disposals of non-current assets 16,851 - Repayment of loans and other non-current assets 41,753 26,125 Net cash used by investing activities (279,556) (211,294) Cash flows from financing activities Repayment of medium and long-term borrowings - (147,162) Capital increase 128 1,012 Increase in issue premium 11,891 8,594 Increase in issue premium of share subscription warrants - 23,568 Increase in issue premium of the Group employee savings plan 3,806 1,557 Increase in bond redemption premium - 71,637 Change in current accounts (2,639) 36,652 Net cash generated (used) by financing activities 13,186 (4,142) Change in cash and cash equivalents 68,829 10,916 Net cash position at beginning of fiscal year 21,059 10,143 Net cash position at end of fiscal year 89,888 21,059

Analysis of change in net cash and cash equivalents:

Breakdown of cash and cash equivalents 03.31.08 03.31.07

Investment securities 107,870 30,779 Cash 35,194 34,701 Bank overdrafts and short-term loans (53,176) (44,421) Total 89,888 21,059 UBISOFT • FINANCIAL REPORT 2008 rest inUbisoft WorldSAS by€29,985thousand. In March2008,Ubisoft Entertainmentincreased itsinte- Subscription tocapitalincreases Japanese studioDigitalKidsCo.Ltd. On January 11,2008,theGroupacquired 100%ofthe in whichUbisoft EntertainmentSA took a25% interest. acquisition, Avator Entertainment GmbHwasestablished, which iscurrently workingonanewrelease. Following this the developer ofAnno1701(thelatestgameintheseries), with a30%interestinRelated Designs Software GmbH, This acquisition also provides Ubisoft EntertainmentSA software publisher. of its€14.5milliontakeover ofSunflowers GmbH,the On April6,2007,Ubisoft acquired theAnno brand as part Acquisitions the balance sheet date(see Section 3.6.5). of 24months.The remainingshareswere disposed ofafter the equity swapagreement withCalyon for afurtherperiod On February 28,2008,Ubisoft EntertainmentSA extended €10.8 million. of duringtheyear. The disposalgenerated a capital gainof signed withCalyon onSeptember30,2003weredisposed 193,153 sharescovered bytheequity swapagreement Equity swapagreementonUbisoft stock as Calyon disposes oftheshares toathirdparty. per shareprice set inthe firstagreement, untilsuchtime ments intheprice ofGameloft stock vis-à-visthe€6.08 to continue participatinginupwardordownward move- The second related toUbisoft Entertainment SA’s ability each. SA (representing 18.73%ofGameloft’s capital)for €6.08 13,367,923 Gameloft sharesheldbyUbisoft Entertainment The firstagreement dealt withthedisposalofall agreements withCalyon, theinvestment bank. On July 12,2007,Ubisoft EntertainmentSA signed two Equity swapagreementonGameloft stock 31, 2008. covered the12-monthperiod fromApril1,2007toMarch stitute anappendixtothebalance sheet. The fiscal year ments for thefiscal year ended March31,2008andcon- euros, areanintegral partoftheannualfinancialstate- The notesandtablesthatfollow, presented inthousandsof 3.5 3.5.1 Notes tothecorporatefinancialstatements of thefiscalyear Highlights 24,379 thousandsof€. late paymentpenalties. €3.5 milliontobereceived onApril)incompensation and (€8.6 million,€5.1millionreceived onthisfiscal year, and Entertainment SA, whichwasawarded USD13.2 million against alicensee wassettled infavor ofUbisoft The lawsuitinitiated inOctober2003bytheCompany Other events rest inAvator EntertainmentGmbH. On March20,2008,theGroupdisposed ofits25%inte- Disposal Entertainment SA, wasestablished. wholly-owned development studiosubsidiaryofUbisoft On February 12,2008,Ubisoft SingaporePteLtd.,a Ubisoft EntertainmentSA, wasestablished. Ltd., awholly-owned development studiosubsidiaryof On September17,2007,ChengduComputerSoftware Co. Incorporations basic rules: dance withtheprincipleofconservatism andthefollowing General accounting conventions wereapplied inaccor- 449 thousandsof€; described withthe§3.6.4arefollowing: The impactsatMarch31,2008ofthechangesoptions, 2007 lessadiscount of€12.11. July 4,2007,namely the€47.71closingprice onOctober2, work established bytheGeneral Shareholders' Meeting on subscription price wasset at€35.60,inlinewiththeframe- bringing thetotalincrease to€8,377,676.80.The share value of€36,475.84,pluspremiums€8,341,200.96 with aparvalue of€0.155each,representing atotal par 26, 2007.Atotalof235,328ordinaryshareswereissued 2008 BSAR, whichhadbeen redeemed early onFebruary waiving ofpreemptive rights,totheformer holders ofthe On October25,2007,theCompanyissued newshares,with capital increase 2008 BSAR (redeemablesharesubscriptionwarrants) 3.5.3 expenses related tothe acquisition ofequity investments: 3.5.2 accelerated depreciation onthecommercial software: financial statements Comparability of Accounting principles CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 97 going-concern assumption, matching principle, 3.5.5 Accounting rules fair presentation, consistency and accuracy, and methods conservatism, Intangible assets and in accordance with the general rules governing the preparation and presentation of annual financial state- Intangible assets include: ments. logos, The basic method used to measure items in the financial acquired brands, statements was historical cost. office software, The accounting methods applied are consistent with indus- information system costs, try practice. Ubisoft Entertainment SA’s annual financial commercial software, statements comply with the provisions on separate finan- external developments. cial statements in Regulation 99-03, as ratified by the Decree of June 22, 1999. Accounting and later evaluation Brands: 3.5.4 Changes in options Any brands acquired are recognized at cost. Commercial software: In accordance with Ruling 2007-C of June 15, 2007 from the Development costs of commercial software, whether pro- Emergency Committee of the French National Accounting duced in-house or outsourced, are recognized in “intangi- Council (CNC), the Company changed the option of recog- ble assets in progress” as development progresses. Once nizing for tax purposes all transfer taxes, fees and commis- they are released, these costs are transferred to the sion and filing fees relating to the acquisition of equity "released software" or “external developments” accounts. investments, as defined in Article 39-1-5 of the French General Tax Code. These costs are now capitalized along Development costs of outsourced commercial software are with the acquisition cost of the non-current asset. recognized in “intangible assets in progress” or “advances and prepayments,” in line with the rules defined by the On the fiscal year, the Company decided to retain the tax French Conseil d’Etat (CE 62547 of February 12, 1988, and option, as permitted under Article 236 of the French CE 65009 of November 25, 1989) when these costs do not General Tax Code, allowing to amortize the expense soft- answer the definition of an asset. ware design costs where design commenced during the Development costs subcontracted to Group subsidiaries period over one year by the recording of accelerated depre- are recognized as subcontracting expenses and transferred ciation. The accelerated depreciation is recorded for the to non-current assets via a capitalized production costs surplus part the depreciation calculated under the condi- account. tions described with the §3.5.5 on the commercial software.

Depreciation and amortization methods

Amortization methods Depreciation methods Acquired brands Not amortized Impairment tests are carried out on brands at the end of each fiscal year or more often if there are indications of impairment losses. The recoverable amount of brands is then estimated on the basis of the change in sales for the division in question, its contribution to consolidated Group earnings and its discounted cash flows. Impairment is recognized when the discounted cash flows are below the carrying amount Office software Amortized over 1 year (straight-line) No test of depreciation in the absence of index of loss in value Information system costs Amortized over 5 years (straight-line) No test of depreciation in the absence of index of loss in value Commercial software Commercial software are amortized When sales prove lower than projections and expected over 3 years (straight-line) from profitability, an impairment loss is recognized. Operating the date of their commercial release profitability is determined on the basis of operating profit restated to reflect operating amortization External developments External developments are amortized When sales prove lower than projections and expected according to the sold quantities and of the profitability, an impairment loss is recognized. Operating rates of royalties indicated to the contracts profitability is determined on the basis of operating profit restated to reflect operating amortization UBISOFT • FINANCIAL REPORT 2008 they areinsufficient. conditions oftheagreement. Depreciation isrecognized if pared tosalesprojections onthebasisoftermsand At theendoffiscal year, thecarryingamountiscom- a straight-line basis. gross profitoronrevenue) or,inthecase offlatfees, on with software publishers(eitherbytheunitorbased on income statementonthebasisofagreements signed These advances andprepaymentsarerecognized inthe and 65009ofNovember 25,1989). French Conseil d’Etatrules62547ofFebruary 12,1988, amounts ofwhicharerecognized inaccount 409(under gives rise tothepaymentofguaranteed amounts,thenet software publishers.The signingoflicensing agreements and reproduction rights(licenses) acquired fromother Advances andprepaymentsprimarily involve distribution Advances andprepaymentsmade amounts paid. Deposits andsuretiesarerecognized onthebasisof value. Own sharesheldisvalued atthelowerofcost ormarket for depreciation isrecognized ifnecessary. and/or onitsmedium-term earningsoutlook. Aprovision tion atthebalance sheet dateifthecompany islisted, subsidiary inquestionatthatdate,themarket capitaliza- the endofeachfiscal year based onthenetassets ofthe The recoverable amountoftheinvestment isreviewed at including allrelated acquisition costs. Equity investments aremeasured attheirhistoricalcost, Non-current financialassets used: their historicalcost. The following depreciation rates are Items ofproperty,plantandequipment arerecognized at Property, plantandequipment fiefriue 10years (straight-line) 5years (straight-line) 3years (straight-line) 5and10years (straight-line) Office furniture: Computer hardware: Fixtures andfittings: Equipment: Foreign exchange hedges reveals theexistence ofunrealized losses. vision for foreign exchange riskisrecorded iftranslation nized inthebalance sheet under aspecific heading.Apro- 2008. Anyresultingtranslation gainsorlosses arerecog- cies weretranslated attheapplicablerates onMarch31, Liabilities andreceivables denominated inforeign curren- denominated inforeign currencies Translation ofliabilitiesandreceivables lower ofcost ormarket value. and short-terminvestments, andaremeasured atthe Investment securities consist ofinterestsinmutualfunds Investment securities sheet date. based onthelikelihood oftheircollection atthebalance Where applicable,aprovision for depreciation isrecorded Trade receivables arecarried attheirnominalamount. Trade receivables nated inforeign currencies. from thediscounting ofreceivables andliabilitiesdenomi- pertained solely totheforeign exchange riskstemming As ofMarch31,2008,provisions for risksandcharges occurred orareinprogress. not certain toarise, are made likely byevents thathave and chargesthathave aclearly defined object, butthatare Provisions for risksandchargesarerecognized whererisks Provisions for risksandcharges exchange risk. accounting for theinstrumentsituses tohedge itsforeign Ubisoft EntertainmentSA haschosen nottouse hedge As hedges arenotallocated tospecific transactions, CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 99

3.5.6 Notes to the balance sheet

Note 1. Intangible assets Intangible assets break down as follows:

Non-current assets Gross as of Gross as of 03.31.07 Increases Decreases Reclassifications 03.31.08 Released commercial software 222,176 200,937 11,700 (45,340) 366,073 External developments 71,352 42,947 10,267 (11,880) 92,152 Software programs in progress 111,805 - - 57,220 169,025 Information systems 8,743 - - 2,254 10,997 Production licenses(1) 9,304 - - - 9,304 Other intangible assets in progress 2,775 2,745 268 (2,254) 2,998 Other 438 - - - 438 Total 426,593 246,629 22,235 - 650,987

(1) Basically includes the Far Cry® brand.

Amortization and depreciation Cumulative as Cumulative as of 03.31.07 Increases Decreases of 03.31.08 Released commercial software 160,328 173,664 11,700 322,292 External developments 62,776 36,975 10,267 89,484 Information systems 6,697 1,696 - 8,393 Production licenses 296 8 - 304 Other 148 63 - 211 Total 230,245 212,406 21,967 420,684

Note 2. Property, plant and equipment Property, plant and equipment break down as follows:

Non-current assets Gross as of Gross as of 03.31.07 Increases Decreases Reclassifications 03.31.08 Fixtures and fittings 3,680 642 3 11 4,330 Transportation equipment 11 - - - 11 Computer hardware and furniture 2,728 26 6 - 2,748 Property, plant and equipment in progress - 11 - (11) - Total 6,419 679 9 - 7,089

Amortization and depreciation Cumulative as Cumulative as of 03.31.07 Increases Decreases of 03.31.08 Fixtures and fittings 1,821 397 3 2,215 Transportation equipment 8 2 - 10 Computer hardware and furniture 2,692 14 5 2,701 Total 4,521 413 8 4,926 UBISOFT • FINANCIAL REPORT 2008 rd eevbe 150-5,6 63,538 51,560 - 51,560 Trade receivables iess2,9 5413,2 24,326 31,023 25,451 29,898 Licenses Non-current financialassets breakdown asfollows: Note 3. venue andthecashpositionatbalance sheet date. use ofthesharesinUbisoft EMEASAS, calculated onthebasisofpresent value of thecashflowsfromnon-Groupre- The decrease intheprovision for depreciation ofequity investments isprimarily attributabletotheincrease inthevalue in rest inUbisoft Warenhendels GmbH,anAustrian company thatisbeingliquidated. The increase inprovisions for thedepreciation ofequity investments isprimarily attributabletotheimpairmentofinte- €2,075 thousand, Trade receivables basically consist ofinter-company receivables. Trade receivables breakdown asfollows: Note 5. These consist primarily ofguaranteed advances paidonlicense agreements. Note 4. The increase inequity investments basically stemsfrom: thousand. te o-urn netet 3-1 - 15,932 Cumulative as 13 6,284 1,422 - 20,794 260,908 13 Cumulative as 71,172 90,852 241,228 359 Total Grossasof Other non-currentinvestments Equity investments - Diminutions 258,974 Provisions 1,575 Augmentations Grossasof 29,419 27 41,753 332 48,295 42,530 240,098 798 Total Deposits andsureties Other non-currentinvestments Equity investments Non-current assets oa 150-5,6 63,538 51,560 - 24,326 51,560 31,023 25,451 29,898 Total Total the acquisition ofSunflowersGmbH,for €14,375thousand, the acquisition ofDigitalKidsColLtd.,for €1,303thousand, the capitalincrease inUbisoft WorldSAS, for €29,985 the acquisition ofa25%interestinAvator GmbH,for Non-current financialassets Trade receivables Advances andprepaymentsmade so 33.7Nw amnsAsof03.31.08 Payments New As of03.31.07 The decrease stemsfrom: agreement. chases andsalesofownsharesheldunder theliquidity The changeinothernon-currentinvestments reflects pur- rs rvso e Net Net Provision Gross the disposalofAvator GmbHstock, for €2,075thousand. the disposalofGameloft SA stock, for €27,344thousand, 33.703.31.08 03.31.07 e urnesNet guarantees Net f0.10 nrae erae of03.31.08 Decreases Increases of 03.31.07 08714262715,932 6,297 1,422 20,807 so 33.8Asof03.31.07 As of03.31.08 CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 101 Note 6. Statement of receivables and liabilities by maturity

Statement of receivables Gross amount <1 year >1 year Receivables on non-current assets Other non-current financial assets 1,934 - 1,934 Receivables on current assets Advances and prepayments 24,326 24,326 Trade receivables 51,560 51,560 Government (VAT credit, miscellaneous) 8,704 8,704 Group and associates 39,375 39,375 Other miscellaneous debtors(1) 28,625 28,625 Prepaid expenses 991 991 Total 155,515 153,581 1,934 Statement of liabilities Gross amount <1 year > 1 year Bank borrowings and debts 53,176 53,176 Miscellaneous borrowings 66,456 66,456 Trade payables 55,452 55,452 Tax and employee-related liabilities 14,915 14,915 Other liabilities 23,681 23,681 Liabilities on non-current assets 3,391 3,391 Deferred income 3,857 3,857 Total 220,928 220,928 New bank borrowings during the period - Bank borrowings repaid during the period - New current account debt -

(1) Primarily include the cash receive related to the Equity Swap agreement on Gameloft stock (See Section 3.5.1).

Note 7. Accrued income

03.31.08 03.31.07 Supplier credit receivable 1,587 4,230 Income not yet invoiced 32,079 34,430 Interest receivable on current accounts 106 70 Interest receivable 88 95 Miscellaneous debtors – accrued income 3,442 - Total 37,302 38,825

Note 8. Investment securities Investment securities include: a €5,000 thousand certificate of deposit, €102,870 thousand in UCITS.

Type Name Number Average Gross Closing Provision Net purchase amount price amount price in € in K€ in € in K€ in K€ Mutual fund UCITS liquidity agreement 443 2,152 954 2,162 - 954 Mutual fund Etoile Mone Euribor 82 99,383 8,149 99,383 - 8,149 Investment company CPR Cash SI 877 21,084 18,491 21,087 - 18,491 Mutual fund SGAM AI Money +2 17 108,615 1,847 109,015 - 1,847 Mutual fund Sécurité Plus 22 251,291 5,528 251,320 - 5,528 Mutual fund Euribor Gestion 389 38,643 15,032 38,648 - 15,032 Mutual fund Paribas Mois 555 21,613 11,995 21,616 - 11,995 Mutual fund Centrale Pibor 5,961 3,150 18,776 3,150 - 18,776 Mutual fund SGAM Invest Cash 2,043 10,816 22,098 10,840 - 22,098 Total 102,870 102,870 UBISOFT • FINANCIAL REPORT 2008 Bank chargespayable Details ofthechangesinprovisions onequity investments areprovided inNote3Non-currentfinancialassets. Note 12. Note 11. Note 10. Note 9. rpi xess439143991 662 30 483 380 257 991 662 - 483 380 287 Total Translation adjustment(asset) Deferred chargesonsyndicated loan Prepaid expenses w hrshl 3-1 - 13 15,932 162 - 6,284 323 1,422 13 162 20,794 184 323 69,095 4 Total Total Own sharesheld 66,456 750 Equity investments Provisions for impairment Total 19,367 265 Foreign exchange risk Provisions for risks 994 Financial expenses 34,493 Financial income 272 Liabilities onnon-currentassets Trade payables Other borrowingsandfinancialliabilities Liabilities Other receivables Trade receivables Equity investments Current assets Total Tax andemployee-related liabilities Credit notestobeissued Trade payables,invoices pending Total borrowingsandfinancialdebts Provisions inthebalancesheet Items relatingtoassociates Accrued expenses Prepaid expenses anddeferred charges uuaiea Cumulative as Cumulative as f0.10 nrae erae of03.31.08 Decreases Increases of 03.31.07 33.703.31.08 03.31.07 so IcessRvras Asof Reversals Increases As of 11015466016,094 15,932 6,620 6,297 1,584 1,422 21,130 20,807 ,5 ,5 ,2 1,683 1,120 1,653 1,150 2 6 2 162 323 162 323 33.803.31.07 03.31.08 33.803.31.07 03.31.08 7 265 272 5,7 239,707 258,974 49925,163 36,572 63,538 44,959 39,336 33,519 50,253 13,137 50,749 14,990 ,2 2,658 3,147 3,621 3,266 CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 103 Note 13. Equity Number of Ubisoft Entertainment SA shares

As of 04.01.07 45,397,276 Capital Options exercised 467,989 As of March 31, 2008, the capital of Ubisoft Entertainment Capital increase reserved for former BSAR holders 235,328 SA stood at €7,164,811.76 and comprised 46,224,592 shares with a par value of €0.155 each. Group/Company employee savings plans: reserved capital increase 123,999 As of 03.31.08 46,224,592 The maximum number of shares that may be created as a result of the exercise of stock options is 3,808,907.

Stock options The increase in the capital and premiums over the past fiscal year was partly driven by the exercise of stock options. For reference, the terms and conditions of exercise of the stock option plans are as follows:

7th 8th 9th 10th 11st Plan Plan Plan Plan Plan Total Number of shares Granted(2) 778,130 706,362 18,440 143,592 776,300 Start of exercise period 01.19.05 10.16.03 01.29.04 10.28.03 10.14.05 End of exercise period 08.15.12 10.15.07 01.28.08 06.15.07(1) 10.13.14 Option Price(2) €6.41 €4.60 €5.13 €4.60 €7.75

Options as of April 1, 2007(2) 175,855 188,889 10,280 10,626 493,824 Options granted during the period Options exercises during the period 52,200 146,273 10,280 4,452 113,096 Options cancelled during the period 28,200 42,616 - 6,174 104,256 Options outstanding as of March 31, 2008 95,455 - - - 276,472

12nd 13rd 14th 15th Plan Plan Plan Plan Total Number of shares Granted(2) 992,100 1,355,892 1,577,400 12,036 Start of exercise period 11.17.05 11.17.05 07.01.05 02.23.07 04.26.08 06.22.08 End of exercise period 11.16.14 11.16.14 06.15.09 (1) 02.22.11 04.25.12 06.21.12 Option Price(2) €7.36 €7.74 €6.78 €15.82 €35.29 €37.54 (France) (Italie) (USA) Options as of April 1, 2007 (2) 833,418 1,307,110 Options granted during the period 1,577,400 12,036 Options exercises during the period 65,570 76,118 - - Options cancelled during the period 44,142 63,054 43,850 250 Options outstanding as of March 31, 2008 723,706 1,167,938 1,533,550 11,786

(1) 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. (2) 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 as of April 1, 2006 doubled and the price of the options was divided by two. UBISOFT • FINANCIAL REPORT 2008 rnlto dutet(iblt)6 5 1850 61 850 61 Translation adjustment(liability) Note 16. These consist essentially ofmargincallsontheequity swapagreement (see Note3.6.2Off-balance sheet commitments). (1) Consistsofprepaidrevenue. Note 15. Borrowings breakdown asfollows: Note 14. the subsidiariestoparentcompany. These advances allmatureinunder ayear. The €66,456thousandin“miscellaneous financialliabilities”inthebalance sheet consists ofcurrentaccount advances by The breakdown ofborrowingsbycurrencywasasfollows: As ofMarch31,2008,theCompanyheld30,371itsownshares. Own shares Total Deferred income Other liabilities mut aal so ac 1 085,7 - - 53,176 Borrowings Japanese yen Danish kroner Canadian dollars Pounds sterling US dollars Euros Amounts payableasofMarch31,2008 Variable rate Fixed rate Borrowings Bank overdrafts Foreign currencyadvances Accrued interest Other liabilities Accrued expenses anddeferred income Borrowings (1) uuaiea Cumulative as Cumulative as f0.10 nrae erae of03.31.08 Decreases Increases of 03.31.07 ,5 3,857 - - 3,857 ,1 5 14,707 61 850 3,918 33.803.31.07 03.31.08 33.803.31.07 03.31.08 03.31.07 03.31.08 er1t er >5years 1to5years < 1year 36120,150 23,681 31644,685 37,517 53,176 52,072 44,660 44,685 53,176 37,912 53,176 52,904 4 7,093 18 242 781 265 272 411 40 34 746 6,508 - 25 CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 105

3.5.7 Notes to the income statement

Note 17. Revenue The breakdown of revenue by geographic region was as follows:

03.31.08 03.31.07 in K€ Percentage in K€ Percentage Europe 180,691 49% 115,051 43% North America 185,662 50% 152,921 57% Rest of world 656 1% - Revenue 367,009 267,972 Capitalized production costs 204,025 167,218 Total 571,034 435,190

Revenue basically consists of royalties invoicing to subsidiaries. The capitalized production costs reflect development costs outsourced to subsidiaries.

Note 18. Other operating income and reinvoiced costs

03.31.08 03.31.07 Reversal of depreciation, amortization and provisions 341 113 Reinvoiced costs 9,941 15,779 Income from other ordinary revenue transactions 1 1,331 Total 10,283 17,223 Reinvoiced costs primarily include overhead, travel, trade show and similar costs reinvoiced to Group companies.

Note 19. Other purchases and external expenses

03.31.08 03.31.07 Other purchases and external expenses 295,861 240,601 Total 295,861 240,601

Other external expenses primarily include : €245.4 million in inter-company services, including €204 million in production outsourced to the subsidiaries (€167.2 million in 2007), Advertising expenses, royalties and property and equipment lease payments.

Note 20. Other operating expenses Other operating expenses break down as follows:

03.31.08 03.31.07 Other operating expenses 35 192 Total 35 192 UBISOFT • FINANCIAL REPORT 2008 a time,so thehedging horizonnever exceeds 15months. Australian dollar). Itsstrategy istohedge only oneyear at cies (USdollar, Canadiandollar, poundsterlingand operating cashflowsinthemainmaterialforeign curren- The Grouponly hedges itsexposures oninter-company foreign subsidiaries. inter-company operating cashflowsanditsinvestments in The Group’sexposure toforeign exchange riskstemsfrom Foreign exchange risk Warenhandels GmbH,theAustrian subsidiarythatisbeingliquidated. Share ofprofitassociates includes thedividends Ubisoft Entertainment SA received duringthefiscal year fromUbisoft (1) Include 193,153sold sharesrelated totheEquityswapagreement onUbisoft stock for €10.8million. Net financialincome breaksdown asfollows: Note 22. Depreciation, amortizationandprovisions breakdown asfollows: Note 21. ercaino rpry ln n qimn 1 415 200,446 414 212,746 Depreciation ofproperty,plantandequipment Amortization ofintangibleassets mriainadpoiin ,4 23,019 380 1,842 25,618 708 18 1,540 Net financialincome 11 Foreign exchange losses Other interestpaid Amortization andprovisions Financial expenses: Net proceeds onsaleofInvestment securities Foreign exchange gains Reversal ofprovisions Other interestreceived Income fromothersecurities andreceivables onnon-currentassets Share ofprofitassociates Financial income: Total Net financialincome Depreciation, amortizationandprovisions optrhrwr n untr 412 14 Computer hardwareandfurniture eesdcmeca otae1364166,684 173,664 Released commercial software (1) rnpraineupet22 2 Transportation equipment xenldvlpet 73531,679 37,315 External developments itrsadftig 9 401 398 Fixtures andfittings fiesfwr ,0 2,033 1,704 Office software te 350 63 Other thousand (see Note3.6.2Off-balance sheet commitments). chases andsalesofforeign currenciesamounted to€62,223 As ofMarch31,2008,theamountshedged givingrise topur- (such asinter-company loansinforeign currencies). any residualexposures andnon-commercial transactions rowings, forwards orforeign exchange optionstohedge currency). The parentcompany uses foreign currencybor- currency offset byroyaltiesfromsubsidiariesinthesame tions intheotherdirection (development costs inforeign The Groupfirstuses natural hedges provided bytransac- 33.803.31.07 03.31.08 33.803.31.07 03.31.08 24041,632 3,992 32,490 15,281 1,6 200,861 213,160 44041,341 10,399 24,440 16,495 ,5 291 7,923 8,842 8,050 2,782 6,103 8,330 6,620 CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 107 Note 23. Non-recurring items Article 14 of the Decree of November 29, 1983 defines non-recurring items as those that are not related to the normal operations of the Company:

03.31.08 03.31.07 Non-recurring income: Non-recurring income from management transactions(1) 8,588 7,082 Non-recurring income from capital transactions(2) 45,172 2 Non-recurring reversals 2- Non-recurring expenses: Non-recurring expenses on management transactions - 143 Non-recurring expenses on capital transactions(2) 30,012 109 Non-recurring provisions(3) 24,450 - Non-recurring items (700) 6,832

As of March 31, 2008, non-recurring items included: - (1) €8,431 thousand in compensation received following a dispute with a licensee (see Section 3.5.1 Highlights of the fiscal year); - (2) €16,850 thousand in capital gains on the disposal of stock under the Gameloft equity swap agreement; - (2) €2,074 thousand in capital losses on the disposal of Avator GmbH stock; - (3) €24,448 thousand in net allocations for accelerated tax depreciation.

Note 24. Income tax As of March 31, 2008, the following companies were - Ubisoft Manufacturing & Administration SAS included in the tax consolidation Group: - Ubisoft Marketing International SARL - Ubisoft Entertainment SA (head of Group) Any 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 EMEA SAS own purposes. - Ubisoft Books and Records SAS On a standalone basis (disregarding the tax consolidation - Ubisoft Organisation SAS group), Ubisoft Entertainment SA’s revenue was as follows: - Ubisoft World SAS

03.31.08 03.31.07 Profit (loss) before tax from continuing operations 77,873 9,126 Non-recurring items (700) 6,832 Profit (loss) before tax 77,173 15,958 Income tax (credit) 1,961 (89) Taxable income 13,046 -

Income tax includes: €10,940 thousand in tax due for the tax consolidation group in respect of fiscal year 2008; €6,019 thousand in tax income from subsidiaries; €2,900 thousand in research tax credits; €60 thousand in other tax credits. Under tax consolidation, all existing loss carry-forwards were allocated to taxable income for the period. Ubisoft Entertainment SA’s most recent tax audit dates back to 2003 (for the period from April 1, 2000 to March 31, 2003). A tax audit for the period from April 1, 2004 to March 31, 2007 is currently in progress, but no assessment has yet been received. 3.6 Other information

3.6.1 Personnel

As of March 31, 2008, personnel consisted of five officers.

3.6.2 Financial commitments and other information

In thousands of euros 03.31.08 Expiry 03.31.07 Sureties and Guarantees given 53,095 49,608 Obligor Type of guarantee Red Storm Entertainment Inc. Lease payment guarantee 361 10.31.09 Ubisoft Divertissement Inc. Lease payment guarantee 542 Expiry of lease Ubisoft Inc. Guarantee of commercial commitments 6,324 End of commercial relationship Ubisoft Ltd. Loan guarantee 20,000 12.29.11 Ubisoft Ltd. Lease payment guarantee 2,521 06.15.16 Ubisoft SA Lease payment guarantee 1,022 07.21.12 Ubisoft Inc. Stand-by letter 3,795 03.31.09 Ubisoft Inc. Stand-by letter 2,530 06.30.08 Ubisoft EMEA SAS Stand-by letter 16,000 08.15.08 Collateralized guarantees given None None Foreign exchange hedges 62,223 16,090 Canadian dollar Forward sale 11,796 April 2008 Options 19,396 March 2009 US dollar Forward sale 30,389 April 2008 July 2008 July 2009 Japanese yen Forward sale 642 April 2008 Outstanding notes receivable discounted None None

Equity swap agreement on Ubisoft stock Given the number of shares remaining at the balance sheet date, a one euro decrease in the share price versus the €9.33 Under the terms of the agreement signed with Calyon on disposal price would have an impact of €1,243 thousand. September 30, 2003 and expiring on February 28, 2010: 193,153 shares were disposed of during the year, gene- Equity swap agreement on Gameloft stock rating a €10.8 million capital gain and reducing the number of shares to 1,243,121; On July 12, 2007, Ubisoft Entertainment SA signed two agreements with Calyon, the investment bank. the remaining shares were disposed of in April and May. As of May 12, all the shares had been disposed of at an The first agreement dealt with the disposal of all 13,367,923 average price of €61.68. Gameloft shares held by Ubisoft Entertainment SA (representing 18.73% of Gameloft’s capital) for €6.08 each. Any fluctuations in the share price vis-à-vis the €9.33 disposal price are wholly recognized by Ubisoft Entertainment The second related to Ubisoft Entertainment SA’s ability SA. Unrealized gains are not recognized in income, and any to continue participating in upward or downward move- unrealized losses are the subject of a provision for risks ments in the price of Gameloft stock vis-à-vis the €6.08 and charges. As of March 31, 2008, the unrealized gain per share price set in the first agreement, until such time amounted to €56,239 thousand (closing price of €54.57). as Calyon disposes of the shares to a third party. FINANCIAL REPORT 2008 FINANCIAL REPORT UBISOFT • CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 109 A €16,850 thousand capital gain was recognized in income following the disposal of 4,189,198 shares during the half 3.6.4 Contingent assets year, reducing the number of shares to 9,178,725. and liabilities Measured at fair value, the remaining 9,178,725 shares generated an unrealized capital loss of €30,749 thousand. To the best of our knowledge, as of March 31, 2008 there were no contingent assets or liabilities. Authorizations In order to finance temporary needs related to increases in working capital during especially busy periods, the 3.6.5 Events after the Company has a €100 million syndicated loan, €30 million balance sheet date in confirmed credit facilities and other bank credit facilities totaling €76 million as of March 31, 2008. Disposal of shares under the equity swap agreement Other commitments on Ubisoft stock The 1,243,121 shares covered by the equity swap agree- Since all the personnel are officers, no retirement bene- ment signed with Calyon were disposed of during April and fits are owed. May. As of May 12, 2008, all the shares had been disposed Various products are marketed under licensing agree- of at an average price of €61.68. ments signed by Ubisoft Entertainment SA. The commitments undertaken by the Company provide for the Incorporations payment of guaranteed minimum royalties. As of March In April 2008, Ubisoft Entertainment SA opened two new 31, 2008, commitments made by virtue of this guaran- wholly-owned development studios in India and in the teed minimum amounted to €80.3 million. Ukraine. Ubisoft Entertainment SA has pledged to provide financial support to its subsidiaries to meet their cash require- Syndicated loan ments. The Company did not exercise its option of renewing the syndicated loan for an additional year. A new agreement was signed in May 2008 for a €180 million five-year loan. Compensation of 3.6.3 Company managers

Ubisoft Entertainment SA paid €546,000 in compensation to its corporate officers during the 2007-2008 fiscal year. In – only very partial – compensation for their work and the time spent in preparing and actively participating in Board meetings, the General Shareholders’ Meeting of September 25, 2006 authorized the Company to pay directors’ fees totaling a maximum €250,000 per annum. The members of the Board of Directors received €113 thousand in directors’ fees in respect of the fiscal year ended March 31, 2008. No obligation has been undertaken by the Company in favor of its corporate officers related to their termination or change in responsibilities. No loans or advances were made to the Company’s managers, in accordance with Article L225-43 of the French Commercial Code. Under the terms of the stock option plan approved by the Board of Directors on April 26, 2007, it was decided to grant Company officers 75,000 of the 1,577,400 stock options granted (4.75%). The options may be exercised any time between April 26, 2008 and April 25, 2012, inclusive, at an exercise price of €35.29 per share. In accordance with the provisions of the Act of December 30, 2006 establishing new regulations governing options granted to corporate officers, the Board also decided to require all officers to retain 5% of their options until such time as they have given up their positions. UBISOFT • FINANCIAL REPORT 2008 bsf odnsIc SU olr 045(6)100% (668) 90,405 USdollar US Ubisoft HoldingsInc. AT LEAST50%OFCAPITAL HELD SUBSIDIARIES rnhsbiirisEr ,4 ,4 - 9,645 21,587 3,047 23,074 3,047 100% Euro Euro 100% 100% 100% 9,323 100% 100% (3,116) 240 (1,204) 17,446 20,533 9,320 Overall 563 total BETWEEN 10%AND50%OFCAPITAL HELD 20,623 Euro ASSOCIATES 30,024 Subtotal Euro 1,000 11,960 Foreign subsidiaries Euro French subsidiarıies Germany Euro OTHER SUBSIDIARIES Canadiandollar Euro Germany Canada France France France Total Ubisoft Divertissements Inc. Ubisoft GmbH Sunflowers GmbH Ubisoft France SAS Ubisoft WorldSAS Ubisoft EMEASARL 3.6.6 Subsidiaries andassociates(March31,2008) onr urnySae eevsadrtie Shareof Reserves andretained Share Currency Country fcrec nt ofcurrencyunits of currencyunits ntosns inthousands in thousands urnyGrossNet Loans Currency and aia anns(oss,pir capital earnings(losses), prior capital to allocation ofearnings mutaon advances amount amount 6112,3 9,645 9,645 24,634 24,634 26,121 26,121 held COMPTES SOCIAUX D'UBISOFT ENTERTAINMENT SA AU 31 MARS 2008 3 111

Carrying amount Outstanding loans and Revenue net Earnings (losses) Dividends of shares held advances granted of taxes for the most received by the Company recent period in thousands of euros in thousands in thousands in thousands Gross net of currency units of currency units of currency units

96,991 96,991 8,704 42 (2,852) None 55,158 40,713 - 393,677 9,541 None 30,090 30,090 - 7,765 269 None 22,872 22,872 - 90,824 2,207 None 14,528 14,528 4,718 4,228 1,629 None 12,573 12,573 - 71,314 1,084 None 641 641 23,048 134,298 9,133 None 232,853 218,408 None UBISOFT • FINANCIAL REPORT 2008 provided abasisfor theopinionexpressed inthefirstpartofthisreport. Our assessments were made withinthecontext ofouraudittheannualfinancialstatements asawhole,andtherefore their correct application. priateness oftheaccounting methods indicated above andoftheinformation provided inthenotes,andhave ensured As partofourassessment oftheaccounting rulesandprinciplesapplied byyour company, wehave verified theappro- accounting principlesfor thevaluation anddepreciation ofsecurities. The noterelatingto“Financialassets” inthesection ofthenotesentitled “Accounting rulesandmethods” describes the Equity investments have ensured theappropriatenessofthese estimates. made bythefirm,tocompare theaccounting estimatesofthelastperiods withthereality.Aspartofourassessment, we Our workconsisted toassess theinformation andassumptionsonwhicharebased these estimates,tocheck thecalculations the accounting principlesfor therecognition andamortizationofcommercial software. The noterelatingto“Commercialsoftware” inthesection ofthenotesentitled “Accounting rulesandmethods” describes Commercial software priateness ofthepresentation andthechangesinaccounting and taxoptionsmentioned above. As partofourassessment oftheaccounting rulesandprinciples applied byyour company, wehave ensured theappro- Accounting andtaxoptionschanges call your attentiontothefollowing items: Pursuant totheprovisions ofArticleL.823-9theFrenchCommercialCode regardingthebasisfor anassessment, we II -Basisfor assessment ments whichdescribes theaccounting andtaxoptionschanges. Without contesting ouropinionabove, wedraw your attentiontothenoterelating“Changesinoptions”offinancial state- at theendofthisyear. a trueandfair viewoftheresultsobtained for thefiscal year inquestionandofthecompany’s financialpositionandassets We herebycertify that,fromthestandpointofFrenchaccounting rulesandprinciples,theannualfinancialstatementsgive expressed below. ments andtheiroverall presentation. Itisourviewthattheauditweconducted forms atrueandfair basisfor theopinion It also involves assessing theaccounting principlesapplied, thesignificantestimatesmade inpreparingthefinancialstate- An auditconsists inexamining, onatestbasis,evidence relevant tothe information 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 31,2008,withregardtothefollowing: Pursuant totheassignmententrusted tousbyyour General Meeting, weherebypresent ourreportfor thefiscal year ended Dear Shareholders, 3.7 ending March31,2008 General reportonthefiscalyear CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 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. Also, we have no comments regarding 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 30, 2008

By the statutory auditors KPMG Audit Audit AMLD A division of KPMG S.A. Laurent Prévost André Métayer Partner Partner Special Auditor’s report fiscal year 3.8 ended March 31, 2008 on regulated agreements and commitments

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 and until the date of this report 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. 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 judg- ment 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. We were informed about no more new agreement neither new commitment.

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) Authorization to lease and construction permit

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 €2,520,907 at March 31, 2008. FINANCIAL REPORT 2008 FINANCIAL REPORT UBISOFT • CORPORATE FINANCIAL STATEMENTS OF UBISOFT ENTERTAINMENT SA AS OF MARCH 31, 2008 3 115

2) 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 2007/08 totaled €789,485 excluding tax.

Rennes, on June 30, 2008

By the statutory auditors Audit AMLD KPMG Audit A division of KPMG S.A. André Métayer Laurent Prévost Partner Partner UBISOFT • FINANCIAL REPORT 2008 INFORMATION ABOUT THE COMPANY 4 117

4.1 General information about the Company 118 4.1.1 Corporate name and registered office 118 4.1.2 Legal form 118 4.1.3 Applicable legislation 118 4.1.4 Date of incorporation and term of the Company 118 4.1.5 Trade Register 118 4.1.6 Place where Company legal documents may be consulted 118 4.1.7 Fiscal year 118 4.2 Additional information about the Company 118 the company 4.2.1 Articles of Association 118 4.2.2 Share capital 120 4.2.3 Main shareholders 129 information about information 4 UBISOFT • FINANCIAL REPORT 2008 France andabroad,bothdirectly andindirectly: Ubisoft EntertainmentSA hasthefollowing purpose, in (Article 3oftheArticlesAssociation) 4.2.1.1 Corporate Purpose Company isdissolved atanearlierdate. term of99years unlesssuchtermisextended orthe The Companywasincorporated onMarch28,1986for a The Companyissubject toFrenchlegislation. Commercial Code. with aBoardofDirectors andgoverned bytheFrench The company isaFrenchCorporation (Société Anonyme) - Rennes(35207)Cedex 2,France Registered office: 107,Avenue HenriFréville -BP10704 Corporate name:Ubisoft Entertainment. sual worksonanymedia, currentorfuture; ware, cartoons andliterary, cinematographic andtelevi- especially videogames, educational andcultural soft- all kindsofmultimedia, audiovisual andITproducts, the creation,development, publishinganddistribution of 4.2 4.1.4 4.1.3 4.2.1 4.1.2 4.1 4.1.1 Additional informationabouttheCompany General informationabouttheCompany of Association Articles Company and termofthe Date ofincorporation and registeredoffice Corporate name Applicable legislation Legal form Bois, France, oratitsregistered office. address at28,rueArmandCarrel-93100Montreuilsous The legaldocuments maybeconsulted atitsbusiness APE industrycode: 5821Z. under number335186094. The Companyisregistered intheRennesTrade Register The Fiscal year runsfor 12monthsfromApril1toMarch31. relate toitspurpose, by thecreationofnewcompanies, the investment bythecompany inanyoperation thatmay mentioned fields; support, assistance andtraining relatingtotheabove- and wordprocessing computer programs; the marketing andmanagementofalldataprocessing reproducing sound andpictures; their accessories, aswellanyhardwareorproducts for of anycomputer andword-processing hardwarewith ding, in the purchase, saleand,ingeneral way,allforms oftra- nologies suchasnetworksandon-lineservices; products, especially throughnew communication tech- the distributionofallkindsmultimedia andaudiovisual 4.1.6 4.1.5 4.1.7 cluding bothimportandexport, viarentalorotherwise, be consulted legal documentsmay Place whereCompany Register Trade Fiscal year INFORMATION ABOUT THE COMPANY 4 119 the subscription or purchase of shares or corporate 4.2.1.4 Provision establishing the threshold above rights, by mergers or by other means; which any shareholding must be disclosed (Article and in general, any operation related directly or indirectly 6 of the Articles of Association) to the above purpose or similar and related purpose likely Notwithstanding the thresholds provided for in Article L 233-7 to promote the growth of the company. of the French Commercial Code, any shareholder acting alone or in concert with others who directly or indirectly come to own 4.2.1.2 Statutory distribution of profits at least 4% of the capital or voting rights in the Company or a (Article 17 of the Articles of Association) multiple of this amount less than or equal to 28% is required to inform the Company in writing - by registered letter with The income from the financial year after deduction of acknowledgement of receipt sent to the registered office within operating expenses, allowances for depreciation, amorti- the period prescribed in Article L 233-7 of the French zation and provisions constitutes the earnings. From ear- Commercial Code - of the total number of shares, voting rights nings of the financial year after deduction of losses carried and securities ultimately granting access to the capital of the forward from previous year where appropriate, the follo- Company that are held directly or indirectly or in concert. wing items are deducted: The disclosure upon crossing any threshold equaling a multiple the sums to be allocated to reserves in accordance with of 4% of the capital or voting rights provided for in the above the law and the Articles of Association and, in particular, paragraph should also be made when the interest in the capital at least 5% to make up the statutory legal reserve. This or voting rights falls under one of the aforementioned thre- allocation is no longer required when the reserve sholds. reaches one tenth of the share capital. It is once again Non-compliance with disclosure of the crossing of the thre- required when, for any reason, the legal reserve falls sholds specified in the Articles of Association shall result in a below this percentage; and loss of entitlement to voting rights in the manner provided for any amounts which the annual general meeting, on a pro- in Article L 233-14 of the French Commercial Code on a posal from the Board of Directors, deems appropriate to allo- request, recorded in the minutes of the General Shareholders' cate to any extraordinary or special reserves or to carry Meeting, by one or more shareholders together owning at least forward. 5% of the capital or voting rights in the Company. The balance shall be distributed to the shareholders. However, apart from cases of capital reductions, no distri- 4.2.1.5 Rights attached to shares bution may be made to shareholders where the sharehol- (Articles 7 and 8 of the Articles of Association) ders’ equity is, or would be if such distribution were to take Each share shall give rights to ownership of the corporate place, less than the amount of the capital plus reserves assets and the liquidating dividend equal to the proportion that cannot be distributed in compliance with the law or of the share capital that it represents. under the Articles of Association. Whenever it is necessary to own several shares in order to In accordance with Article L 232-18 of the French exercise a right of any kind, especially in the event of the Commercial Code, the annual general meeting may grant exchange, consolidation or allocation of shares, or follo- each shareholder the option between payment in cash or wing a capital increase or reduction of whatever form, shares for all or part of the interim. regardless of the terms and conditions thereof or subsequent to a merger or any other transaction, shareholders 4.2.1.3 General Meetings having fewer than the required number of shares may only (Article 14 of the Articles of Association) exercise their rights on condition they make it their own business to group together and, if applicable, purchase or General Meetings shall consist of all the shareholders of sell the required number of shares of fractionable shares Ubisoft Entertainment SA, with the exception of the Company or rights. itself. They represent the totality of shareholders. A double voting right, over that granted to other shares They shall be convened and deliberate under the conditions having regard to the proportion of the share capital they prescribed by the French Commercial Code. represent, is granted to all fully paid up shares that can be shown to have been registered in the name of the same General Meetings shall be held at the registered office or at shareholder for at least two years. any other place indicated in the meeting notice. This right is also granted from issue to registered shares They shall be chaired by the Chairman of the Board of granted free to a shareholder by virtue of existing shares Directors or, in his absence, by a Director appointed for this for which the shareholder already has this right in the case purpose by the meeting. of capital increases via the capitalization of reserves, ear- The right to participate in meetings is subject to fulfillment of nings or issue premiums. the formalities provided for under applicable regulations. It should be noted that Article L 225-124 of the French The Board of Directors may resolve that the votes taking place Commercial Code provides that this double voting right is during the meetings may be cast by remote display, in the automatically revoked for any share that has been con- manner provided for under applicable regulations. verted to bearer form or for which ownership is trans- UBISOFT • FINANCIAL REPORT 2008 regulations andmarket practices permitted bytheAMF, mum of10%thecapital.Inaccordance withapplicable acquired under theBuybackProgram wasset atamaxi- mum price wasset at€70andthenumberofsharestobe January 3,2009.By virtueofthisauthorization,themaxi- period asfromthedateofmeeting, namely until The BuybackProgram wasadopted for an18-month Terms oftheBuybackProgram AMF (FrenchSecurities andExchange Commission). December 22,2003andtheGeneral Regulationsofthe provisions ofEuropean Regulation2273/2003of Commercial Code andinaccordance withtheapplicable provisions ofArticle L 225-209&seq. oftheFrench program (hereinafter the“BuybackProgram”) under the rized theBoardofDirectors toimplementasharebuyback ordinary meeting under itsthirteenth Resolution autho- Shareholders' Meeting ofJuly 4, 2007deliberating asan The Combined OrdinaryandExtraordinary General Legal framework 4.2.2.3.1 Authorizations 4.2.2.3 Sharebuybackprogram and endofthefiscal year 4.2.2.2 Reconciliation ofthe numberofsharesincirculationatthebeginning The amountofsharecapitalasMarch31,2008was€7,164,811.76divided into46,224,592shares. 4.2.2.1 Subscribed capital None 4.2.1.7 Clause requiring formal approval None 4.2.1.6 Provisions delaying changesincontrol liquidation ofmaritalproperty. tered accounts asaresultofinheritance orfamily gift or ferred, excluding anytransfer ofownershipbetween regis- so 33.846,224,592 235,328 123,999 467,989 45,397,276 As of03.31.08 2008 BSAR holders Capital increase reserved for former reserved toemployees Group/Company savings plans/Capitalincrease Option exercises As of04.01.07 4.2.2 Share capital decision oftheExtraordinary General Meeting. Amendments totheArticlesofAssociation aremade by of Association 4.2.1.9 AmendmentstotheArticles None by law where these arestricterthanthose prescribed 4.2.1.8 Provisions regardingcapitalchanges agreement inlinewiththecode ofethics oftheAFEI by theCompanywithimplementation ofaliquidity Since January 2,2006,Exane BNPParibas hasbeen tasked 4.2.2.3.2 Liquidityagreements defined asfollows: the various aimsoftheBuybackProgram have been the CompanyandofAMF. Buyback Program waspublished onlineonthewebsites of 2 ofthesameregulations,description oftheshare Regulations oftheAMF, andasreferred toinArticle241- Pursuant totheprovisions ofArticle 212-13oftheGeneral Financiers. recognized bylawortheAutorité des Marchés to implementanymarket practice thatmaycome tobe to cancel shares; a limitof5%theexisting capital; as paymentfor futureexternal growthoperations, upto to retainsharesfor delivery atalaterdateinexchange or rate officers oftheGrouporsome ofthem; any sharepurchase optionplanfor employees and corpo- any company savings plan,anybonussharegrant planor particular aspartofanycompany profit-sharingplan, the Ubisoft Groupinanylegally authorized mannerandin to grant shares toemployees andcorporate officers of over timetotheCompany'ssharecapital; to securities givingaccess byany meansimmediately or to handover sharesupontheexercise ofrightsattached code ofethicsrecognized bytheAMF; provider actingindependently inaccordance withthe Entertainment SA stock viaaninvestment service to ensuretheliquidityandmarket-making for theUbisoft INFORMATION ABOUT THE COMPANY 4 121 (French Association of Investment Firms) recognized by the AMF, with a one-year term that is tacitly renewable. The Company allocated €1.5 million for the implementation of this agreement over the past fiscal year.

4.2.2.3.3 Position as of March 31, 2008

Percentage of own shares held directly and indirectly 0.066% Number of shares cancelled over the previous 24 months N/A Number of shares in portfolio(a) 30,371 Portfolio carrying amount €1,572,975.85 Portfolio market value(b) €1,657,345.47

(a) Shares all purchased under the liquidity agreement with Exane BNP Paribas. (b) March 31, 2008 closing price: €54.57.

The own shares held by the Company were all purchased under the liquidity agreement with Exane BNP Paribas acting to ensure trading liquidity and stability of the share price, as well as to avoid price lags unjustified by market trends.

4.2.2.4 Authorized unissued capital

Status of capital increase authorizations in force granted to the Board of Directors, as well as the use thereof during the fiscal year ended March 31, 2008 The following table summarizes the capital increase authorizations in force granted by the General Shareholders’ Meeting to the Board of Directors showing the use made thereof during the fiscal year.

Authorizations used during the fiscal year ended March 31, 2008

Nature of authorization Date of the Term Amounts authorized Date of Board Use in fiscal year meeting - expiry Meeting - Resolution Capital increase for the benefit September 25, 26 months 1% of share capital on date April 26, 2007 97,421 shares issued of Company or Group employees 2006 (November 24, used(1) by the Board of affiliated to the Group 9th Resolution 2008) Directors subscribing to a Company savings plan

Allotment of purchase options September 25, 38 months 3.5% of number of shares on April 26, 2007 1,577,400 subscription or stock subscription 2006 (November 24, the date of the grant by the options granted 10th Resolution(2) 2009) Board of Directors(1) June 22, 2007 12,036 subscription options granted

Capital increase reserved for September 25, 18 months 1% of share capital on the May 29, 2007 26,578 shares issued employees of Company 2006 (March 24, 2008) date of the resolution by the subsidiaries with registered 11th Resolution(2) Board of Directors(1) offices outside France

Capital increase as consideration September 25, 26 months 10% of Company capital on N/A None for contributions in kind 2006 (November 24, the date of the meeting consisting of shares of a Company 12th Resolution 2008) or of securities giving access to the share capital of a ompany

(1) Charging to the overall ceiling of €4,000,000 fixed by the General Meeting of 25th September, 2006 (15th resolution). (2) Authorization expired, as regards the unused portion, on the date of the General Meeting of 4th July, 2007 approving resolutions of the same kind. UBISOFT • FINANCIAL REPORT 2008 (3) Chargingtotheoverall ceiling of€4,000,000fixed bytheGeneral meeting of4 year endedMarch31,2008 Authorizations granted bythegeneral shareholders'meetingofJuly 4,2007inforce duringthefiscal early onFebruary 26,2007) 2008 BSAR holders redeemed category ofpersons (former Capital increase reserved for a offices outside France subsidiaries withregistered employees ofCompany Capital increase reserved for employees charge toCompanyorGroup Allotment ofsharesfree of or stock subscription Allotment ofpurchase options subscription rightswaived Capital increases with subscription rightspreserved Capital increases with Nature ofauthorization 22 20 19 17 21 16 - Resolution Date ofthe July 4,2007 July 4,2007 July 4,2007 July 4,2007 July 4,2007 July 4,2007 nd th th th th meeting st Resolution Resolution Resolution Resolution Resolution Resolution (January 3,2009) (September 3, (September 3, (September 3, (September 3, (October 3, 18 months 38 months 38 months 26 months 26 months - expiry 3 months Term 2007) 2010) 2010) 2009) 2009) issuable Maximum amountofshares Directors resolution bytheBoardof the BoardofDirectors the dateofresolution by 0.5% ofCompanycapitalon of Directors date ofthegrant bytheBoard 3.5% ofsharesexisting onthe €100,000,000 securities issuable: Nominal amountofdebt €2,000,000 securities issuable: shares ortransferable Overall nominalamountof €100,000,000 securities issuable: Nominal amountofdebt €2,000,000 securities issuable: shares ortransferable Overall nominalamountof capital 0.5% ofamountshare th July, 2007(23 Amounts authorized (3) (3) on thedateof : 238,762 (3) (3) (3) rd resolution). (3) October 2,2007 October 2,2007 March 17,2008 Date ofBoard Meeting N/A N/A N/A N/A 235,328 sharesissued Use infiscal year 116,750 61,000 None None None None INFORMATION ABOUT THE COMPANY 4 123 Use made by the board of directors since the end of the fiscal year ended March 31, 2008

Nature of authorization Date of the Term Amounts authorized Date of Board Use made of authori- meeting – expiry Meeting zation since the end - resolution of the fiscal year Capital increase for the benefit September 25, 26 months 1% of amount of share capital April 11, 2008 In progress of company or Group employees 2006 (November 24, on date used(1) by the Board 364,824 shares to be affiliated to the Group 9th Resolution 2008) of Directors issued, equaling 1% of subscribing to a Company number of shares on the savings plan date of the Board Meeting, less 97,421 shares subscribed following use by the Board of Directors on April 26, 2007.

4.2.2.5 Securities granting access to the capital (convertible or exchangeable securities or securities comprising share warrants)

Potential capital The number of options outstanding and not exercised totaled 3,808,907 as of March 31, 2008. If all these options were exercised, the capital of Ubisoft Entertainment SA would be increased as follows:

Potential capital (dilution of 7.61%) Number of shares as of 03.31.2008 46,224,592 Share capital as of 03.31.2008 €7,164,811.76 Options to subscribe as of 03.31.2008 3,808,907 Potential increase €590,380.58 Potential shares as of 03.31.2008 50,033,499 Potential share capital as of 03.31.2008 €7,755,192.35 UBISOFT • FINANCIAL REPORT 2008 01.170.60 7,3 01.19.05 - 778,130 08.16.02 7 10.19.01 registered bycorporate officer beneficiariesuptotheendoftheirmandates. (1) Pursuant totheprovisions introduced byAct 2006-1770ofDecember 30,2006,theBoardofDirectors set at5%theamountof Corporate officers Stock optionsgranted andexercised asofMarch31,2008 (2) Limitationofexercise period adopted bytheBoardofDirectors onNovember 2,2005,tocomply withthemaximumperiod allo (1) 2-for-1 splitoftheparvalue effective onDecember 11,2006. 4.2.2.6 Sharesubscription options ended March31,2008 by corporate officers duringthefiscal year Stock optionsgranted andexercised 72.41 01.47630-10.14.05 10.28.03 01.29.04 10.16.03 - - - - 776,300 143,592 18,440 706,362 10.14.04 04.28.03 01.29.03 10.16.02 Exercisable 11 optionsgranted 10 9 Numberofoptions 8 Meeting Total numberof 07.23.04 DateofBoard 09.12.02 no. 09.12.02 09.12.02 Plan meeting Date ofthe 92.61 62.71,3 06.22.08 04.26.08 02.23.07 - 75,000 - (France, Italy) 12,036 Options granted duringthefiscal year 1,577,400 - 1,355,892 06.22.07 04.26.07 02.23.06 992,100 15 14 13 11.17.04 09.25.06 09.25.06 12 09.21.05 07.23.04 Options exercised duringthefiscal year (1) Christian Guillemot Gérard Guillemot Claude Guillemot Michel Guillemot Yves Guillemot Number ofoptions granted /shares subscribed 50,000 6,250 6,250 6,250 6,250 (1) Strike price rne ocroae asfrom granted tocorporate €35.29 None officers wed byUSlaw. sharesthatmustbekept as Expiry 04.25.2012 and expiry date Plan n Plan n o 14 o . 07.01.05 11.17.05 (US) INFORMATION ABOUT THE COMPANY 4 125

Expiry Terms and Strike Number of options(1) date conditions price(1) Exercised during Cancelled during Outstanding as of of exercise fiscal year fiscal year 03/31/08

08.15.12 50% on 01.19.05 €6.41 52,200 28,200 95,455 75% on 08.16.05 100% on 08.16.06 10.15.07 25% / year €4.60 146,273 42,616 - 01.28.08 25% / year €5.13 10,280 - - 06.15.07(2) 25% / year €4.60 4,452 6,174 - 10.13.14 24% at end of one year €7.75 113,096 104,256 276,472 then 2% / month (France, Italy) (France, Italy) €7.36 65,570 44,142 723,706 11.16.14 24% at end of one year (France) (US)(2) then 2% / month €7.74 06.15.09 (US) (Italy) 26% then by lots €6.78 of 12-13% every (US) six months 02.22.11 25% / year €15.82 76,118 63,054 1,167,938 as from 02.23.07 04.25.12 25% / year €35.29 - 43,850 1,533,550 as from 04.26.08 06.21.12 25% / year €37.54 - 250 11,786 as from 06.26.08

Employees (not corporate officers)

Stock options granted and exercised by the top ten Number of options Weighted Plan no. employees (not corporate officers) during the fiscal granted / shares average price and expiry date year ended March 31, 2008 subscribed Options granted during the fiscal year to the ten employees Plan no14 receiving the most options(1) 295,000 €35.29 Expiry 04.25.2012 (Summary information)

Options exercised during the past fiscal year where the number 150,162 €6.42 Plan no7 of options thereby granted was the highest(1) Expiry 08.15.2012 Plan no8 (Summary information) Expiry 10.15.2007 Plan no10 Expiry 06.15.2007 Plan no11 Expiry 10.13.2014 Plan no12 Expiry 11.16.2014 Plan no13 Expiry 02.22.2011

(1) All Group companies combined. UBISOFT • FINANCIAL REPORT 2008 4.2.2.4). again since theendofaforementioned fiscal year (see the fiscal year ended March31,2008andhasdone so once The BoardofDirectors used thisauthorizationonce during its use bytheBoardofDirectors, inparticularviaanFCPE. total numberofsharesinthesharecapitalattime reserved for employees inFrance uptoalimitof1%the Directors to,asitsees fit,carryoutacapitalincrease ting asanextraordinary meeting authorized theBoardof Shareholders' Meeting ofSeptember25,2006delibera- The Combined OrdinaryandExtraordinary General 0.787% ofthesharecapital,via“FCPEUbiactions”. As ofMarch31,2008,employees held363,861shares, or (company mutualfund) 4.2.2.8 Employee shareholders under theFCPE (2) Four-year vesting period plusa two-year lock-in for Frenchbeneficiaries. (1) Subject toindividualperformance conditions. under the20 Using theauthorizationofCombined OrdinaryandExtraordinary General Shareholders' Meeting ofJuly 4,2007voted 4.2.2.7 Bonussharegrants The termsofthese plansareasfollows: cers wasauthorized over thepastfiscal year. Directors resolved toset uptwobonussharegrant plansfor specific employees. Nobonussharegrant for corporate offi- eiiievsigdt 00/010/621 03/16/2012 03/16/2012 0 0 10/02/2011 0 61,000 55,000 03/17/2008 4,750 10/02/2007 112,000 41,000 Number ofsharesthatcould stillbegranted asof03/31/2008 Grant cancelled between grant dateand03/31/2008 Date transferable Definitive vesting date Number ofbeneficiaries - Ofwhich,totoptenemployee beneficiaries - Ofwhich,tocorporate officers Total numberofsharesgranted Date ofBoardMeeting Date ofthemeeting th Resolution relatingtoallotmentofsharesfree ofchargetocompany orGroupemloyees, theBoardof (1) cedure. Company tocarryoutasecurity holder identification pro- Article 5oftheArticlesAssociation authorizesthe 4.2.2.12 Identification ofsecurity holders None a Groupmember 4.2.2.11 Optionorunconditional agreement over None with subscribed capitalnotpaidup 4.2.2.10 Vesting rightorrequirements associated None 4.2.2.9 Securities notrepresenting capital 1,5 61,000 116,750 00/0103/17/2014 10/03/2011 07/04/2007 912 69 (2) (2) 03/17/2012 INFORMATION ABOUT THE COMPANY 4 127 Change in Company capital over the past three fiscal years

Date Nature of transaction Number of Amount of capital Issue Par value Cumulative Amount of securities increase via premium of share number share capital issued contribution of shares in cash

Before 2-for-1 split of the par value effective on December 11, 2006 (Board Meeting of December 5, 2006) 03.01.05 Capital increase 357,557 €5,142,887.41 €5,032,044.74 €0.31 18,040,950 €5,592,694.50 of 02.25.05 via exercise of options, conversion of securities and subscription to FCPE Ubi Actions 04.20.05 Capital increase 3,890 €37,788 €34,582.10 €0.31 18,044,840 €5,593,900.40 of 03.31.05 following the exercise of options 10.09.05 Capital increase 1,017,129 €31,406,674.91 €31,091,364.92 €0.31 19,061,969 €5,909,210.39 of 09.30.05 following the exercise of options and conversions of BSA (share warrants), BSAR and 3.8% convertible bonds 04.10.06 Capital increase 372,367 €9,650,189.75 €9,534,755.98 €0.31 19,434,336 €6,024,644.16 of 03.31.06 following the exercise of options, conversion of BSA, BSAR and 3.8% convertible bonds 09.08.06 Capital increase 1,144,634 €29,814,759.27 €29,459,922.68 €0.31 20,578,970 €6,379,480.70 of 09.06.06 following the carrying out of a capital increase reserved for US employees, exercise of options and conversions of BSA, BSAR and subscription to FCPE UBI Actions 12.05.06 Capital increase 675,218 €24,100,575.38 €23,891,297.80 €0.31 21,254,188 €6,588,798.28 of 12.04.06 following OCEANE conversion and option exercises

Following the 2-1 split of the par value effective on December 11, 2006 (Board Meeting of December 5, 2006) 04.26.07 Capital increase 2,889,900 €52,444,506.25 €51,996,726.75 €0.155 45,397,276 €7,036,577.78 of 03.31.07 following the exercise of options and conversions of BSA, BSAR 06.12.07 Capital increase 26,578 €798,403.12 €794,283.53 €0.155 45,423,854 €7,040,697.37 of 06.12.07 following the carrying out of a capital increase reserved for employees in Canada 07.06.07 Capital increase 181,357 €3,690,415.61 €3,662,305.28 €0.155 45,605,211 €7,068,807.70 of 07.06.07 following the exercise of options and subscription to FCPE Ubi Actions 10.25.07 Capital increase 404,024 €9,546,805.29 €9,484,181.57 €0.155 46,009,235 €7,131,431.42 of 10.25.07 reserved for former 2008 BSAR holders, redeemed early on February 26, 2007, and via option exercises 04.10.08 Capital increase 215,317 €1,789,697.45 €1,756,317.11 €0.155 46,224,592 €7,164,811.76 following option exercises UBISOFT • FINANCIAL REPORT 2008 1 -o- pi fteprvleefcieo eebr1,20.(Source Euronext). 75450 Paris cedex 09 Immeuble Tolbiac Service Emetteurs Securities Services BNP Paribas 4.2.2.15 Entityproviding securities services the shortterm. The Companyhasnotdistributed anydividend over thepastthree fiscal years anddoes notcurrently envisage doing so in 4.2.2.14 Dividend (1) 2-for-1 split oftheparvalue effective onDecember 11,2006. Ubisoft shareidentificationsheet 4.2.2.13 Market inCompanyshares ot ihLwTrading HighLow volume Month pi 086.05.17,117,681 6,552,532 7,552,656 11,754,333 3,775,717 6,687,082 56.61 7,405,975 47.11 3,944,928 7,716,213 6,268,092 55.05 3,025,901 43.50 4,365,030 59.03 3,201,874 51.01 45.72 6,078,429 66.00 41.34 4,310,927 38.54 38.80 56.30 6,062,659 35.91 66.90 33.05 6,138,953 70.50 6,745,352 34.20 6,666,466 69.49 30.75 60.98 6,050,842 5,160,776 4,192,550 57.78 30.10 4,586,322 25.44 49.74 48.28 April 2008 50.78 5,540,384 March 2008 22.00 39.39 4,218,042 February 2008 23.33 37.80 22.15 January 2008 38.61 December 2007 19.12 16.76 18.81 37.70 November 2007 18.06 October 2007 34.65 18.02 September 2007 31.20 18.50 August 2007 27.50 July 2007 26.15 June 2007 24.76 May 2007 24.15 April 2007 19.25 21.05 March 2007 20.41 February 2007 20.71 January 2007 20.22 December 2006 November 2006 October 2006 September 2006 August 20006 July 2006 June 2006 May 2006 April 2006 a au €0.155 FR0000054470 Euronext Paris –CompartmentA €54.57 €2,522,475,985.44 Market capitalizationasofMarch31,2008 Closing price asofMarch31,2008 46,224,592 Number ofsharesincirculationasMarch31,2008 Par value Listing market ISIN ltto rc nJl ,19 €38.11 (before 5-to-1splitintheparvalue on01.11.2000and Flotation price on July 1, 1996 (€) (1) the 2-for-1 spliton12.11.2006) (€) (1) (in shares) (1) INFORMATION ABOUT THE COMPANY 4 129

4.2.3 Main shareholders

4.2.3.1 Changes in shareholdings over the past three fiscal years

As of 03.31.06 (1) Capital Voting rights Number of shares % Number of voting rights % Guillemot Brothers SA 3,848,790 9.902% 5,846,348 13.849% Claude Guillemot 328,926 0.846% 611,852 1.449% Yves Guillemot 328,608 0.845% 612,202 1.450% Michel Guillemot 317,730 0.817% 539,460 1.278% Gérard Guillemot 306,214 0.788% 566,428 1.342% Christian Guillemot 249,394 0.642% 452,788 1.073% Other Guillemot family members 71,442 0.184% 105,192 0.249% Guillemot Corporation SA 400,048 1.029% 400,048 0.948% Guillemot Suisse SA 76,110 0.196% 76,110 0.180% Concert 5,927,262 15.249% 9,210,428 21.818% Ubisoft Entertainment SA 41,000 0.106% - Public and Group employees 32,900,410 84.645% 33,003,634 78.182% Total 38,868,672 100% 42,214,062 100%

As of 03.31.07 Capital Voting rights Number of shares % Number of voting rights % Guillemot Brothers SA 3,817,124 8.408% 5,814,682 11.928% Claude Guillemot 328,926 0.725% 611,852 1.255% Yves Guillemot 404,608 0.891% 688,202 1.412% Michel Guillemot 321,796 0.709% 543,526 1.115% Gérard Guillemot 266,214 0.586% 526,428 1.080% Christian Guillemot 249,394 0.549% 452,788 0.929% Other Guillemot family members 77,146 0.17% 110,896 0.227% Guillemot Corporation SA 543,186 1.197% 543,186 1.114% Guillemot Suisse SA 81,184 0.179% 81,184 0.167% Concert 6,089,578 13.414% 9,372,744 19.226% Ubisoft Entertainment SA 22,059 0.049% - - Public and Group employees 39,285,639 86.537% 39,377,024 80.773% Total 45,397,276 100% 48,749,768 100%

As of 03.31.08 Capital Voting rights Number of shares % Number of voting rights % Guillemot Brothers SA 3,736,790 8.084% 7,473,580 12.659% Claude Guillemot 342,622 0.741% 625,548 1.060% Yves Guillemot 418,304 0.905% 701,898 1.189% Michel Guillemot 323,626 0.700% 545,356 0.924% Gérard Guillemot 260,214 0.563% 520,428 0.882% Christian Guillemot 254,428 0.550% 457,822 0.775% Other Guillemot family members 54,574 0.118% 88,324 0.150% Guillemot Corporation SA 513,121 1.110% 913,169 1.547% Guillemot Suisse SA - - - - Concert 5,903,679 12.772% 11,326,125 19.184% Ubisoft Entertainment SA 30,371 0.066% - - Public and Group employees 40,290,542 87.162% 47,711,951 80.816% Total 46,224,592 100% 53,038,076 100%

The concert action - consisting of Guillemot Brothers SA, Guillemot Suisse SA and Guillemot Corporation SA and the Guillemot family - held 5,422,446 double voting rights as of March 31, 2008. (1) 2-for-1 split of the par value effective on December 11, 2006. UBISOFT • FINANCIAL REPORT 2008 (3) Acting for themutualfundsmanaged bytheirsubsidiaries. (2) Information provided onthebasisofdisclosures made totheCompany. Shareholders owningmorethan5%ofthesharecapitalasMarch31,2008 (1) This company iswholly owned bytheGuillemotfamily. 4.2.3.2 Breakdown ofcapitalandvoting rightsasofApril30,2008 - FIL declared thatatthesamedateithadcrossed under thethresholdsof10%capitaland5%voting rights, - FMRLLC specified thatasofApril24,2008itowned 10.23%ofthecapitaland8%voting rights. éadGilmt2024052 2,2 0.880% 0.841% 1.187% 520,428 1.058% 497,222 701,898 0.562% 625,548 0.556% 0.903% 260,214 0.740% 257,492 418,304 342,622 Gérard Guillemot Michel Guillemot Yves Guillemot Claude Guillemot Guillemot BrothersSA oa 6281210 91964100% - 59,119,614 100% 19.041% - 11,256,957 46,298,192 80.959% 1.545% 12.563% 0.739% 47,862,657 0.149% 5,816,511 0.038% 913,169 436,788 87.399% 88,324 1.108% 17,560 0.504% 40,464,121 0.119% 513,121 233,394 Lone PipeCapital 54,574 FMR CorpandFidelity InternationalLimited (FIL) Electronic ArtsInc Name ofshareholder Total Public andGroupemployees Ubisoft EntertainmentSA Concert Guillemot Corporation SA Other Guillemotfamily members Christian Guillemot then owning0.56%ofthecapital and0.44%ofthevoting rights. then owned 12.64%ofthesharecapital and9.86%ofthevoting rights. 15, 2008thatasofJanuary 14,2008ithadexceeded thethreshold of12%thecapitalfollowing sharepurchases, and of March31,2007owned 10.261% of thecapitaland9.555%voting rights,declared totheCompanyonJanuary FMR CorpandFidelity International Limited (FIL),actingonbehalfofmutualfundsmanaged bytheirsubsidiariesthatas holding 15.37%ofthecapitaland24.86%voting rights. shares andvoting rightsasofJune30,2008,ithadexceeded thethresholdof20%voting rightsonAugust 3,2007, stated onAugust 6,2007that,following thedoubling ofthevoting rights onitssharesandthebasisofnumber Electronic Arts,asofMarch31,2007owned 15.406%ofthecapitaland 14.347%ofthevoting rightsoftheCompany, the framework ofthetransposition ofthetransparency directive: Upon thedecision ofFILandFMRLLC not toadd totheirrespective shareholdings inthelisted Frenchcompanies, within Entertainment.” of theBoardDirectors, whilereserving thispossibilityintheevent ofmajorchangestothepositionUbisoft In addition, Electronic ArtsNederland BVstatesitdoes notintendtorequest theappointmentofoneormoremembers Ubisoft Entertainmentover thenext 12months. its interestandeven totake control of theCompanyor,ascase maybe,todispose ofallorpartitsinterestin stock since August 3,2005.Secondly, itreserves therightdepending onmarket opportunitiesandconditions toincrease “Electronic ArtsNederland BVfirstly statesitisactingaloneandhas notacquired anyfurtherUbisoft Entertainment wing statementofintent: Pursuant toArticleL233-7oftheFrenchCommercialCode, Electronic Artssupplemented itsdeclaration withthefollo (1) (3) ,3,9 .7%7435012.641% 7,473,580 8.071% 3,736,790 of shares ubrPretg Number Percentage Number Percentage aia Voting rights Capital 259 9.865% 12.599% aia %voting rights % capital 511 23.694% 15.131% .4%4.502% 5.749% (2) INFORMATION ABOUT THE COMPANY 4 131 Lone Pipe Capital LLC reported to the Company: - On November 15, 2007 that as of November 13, 2007 following the acquisition of shares in Ubisoft Entertainment S.A. it had exceeded the threshold in the Articles of Association of 4% of the capital of the Company and then owned 4.08% of the capital and 3.27% of the voting rights. - That on January 24, 2008 after acquiring shares in Ubisoft Entertainment S.A. it had exceeded the legal threshold of 5% of the share capital and then owned 5.76% of the capital and 4.5% of the voting rights. Following a change in the number of shares in the Company's capital, France’s Caisse des Dépôts et des Consignations (hereinafter “CDC”), which as of March 31, 2007 owned 4.018% of the share capital and 3.742% of the voting rights in the Company, declared to the Company on October 29, 2007 that it had crossed under the threshold in the Articles of Association of 4% of the capital in the Company and then owned 3.985% of the capital and 3.20% of the voting rights. As of March 31, 2008, CDC owned 3.946% of the capital and 3.090% of the voting rights of the company. Guillemot Brothers SA has declared that it has crossed the following thresholds: - On April 11, 2007, following the repayment in Ubisoft Entertainment shares of the receivable it had in the accounts of Guillemot Corporation, it exceeded the threshold in the Articles of Association of 12% of voting rights in the Company and then owned 8.502% of the capital and 12.010% of the voting rights. - On May 30, 2007, following the disposal of stock, it had crossed under the threshold in the Articles of Association of 12% of voting rights in the company and then owned 8.434% of the capital and 11.945% of the voting rights. - On October 4, 2007, following a doubling of voting rights, it exceeded the threshold in the Articles of Association of 12% of the voting rights and then owned 8.375% of the capital and 13.003% of the voting rights. As of March 31, 2008, Guillemot Brothers owned 8.084% of the capital and 12.659% of the voting rights. To the best of the Company's knowledge, there are no other shareholders who directly, indirectly or in concert own 5% or more of the capital or voting rights.

4.2.3.3 Shareholder agreement To the best of the Company's knowledge there are no disclosed or undisclosed shareholder agreements concerning Ubisoft stock. UBISOFT • FINANCIAL REPORT 2008 CORPORATE GOVERNANCE 5 133

5.1 Membership of the Board of Directors and Committees – Group Management 134 5.2 Rules applicable to the appointment and substitution of members of the Board of Directors 135 5.3 Operation of the Board of Directors and Committees 135 5.3.1 Board of Directors 135 5.3.2 Board Committees 135 5.4 No conviction for fraud, involvement in a bankruptcy and/or official reprimand or charges 136 5.5 Loans and guarantees granted to members of the Board of Directors 136 5.6 Other offices held by Directors 137 5.6.1 Appointments in force as of March 31, 2008 137

corporate governance corporate 5.6.2 Expired offices (past five fiscal years) 139 5.7 Compensation of managers 141 5.7.1 Compensation of managers and members of the Board of Directors 141 5.7.2 Share purchase and subscription option plans 142 5.7.3 Bonus share grants 142 5 5.7.4 Service provision agreements with the issuer and its subsidiaries 142 5.8 Transactions covered by Article L 621-18-2 of the French Monetary and Financial Code and Article 222-15-3 of the General Regulations of the AMF 143 UBISOFT • FINANCIAL REPORT 2008 éadGilmtMarcFiorentino Christian Guillemot,Secretary Yves Guillemot Additional information on Groupmanagement: Compensation Committee Christian Guillemot Michel Guillemot Gérard Guillemot Claude Guillemot,Secretary Yves Guillemot, Chairman Strategy andDevelopment Committee issues. Over thepastfiscal year, theBoardofDirectors set uptwo specialized committees tosupportitintheexamination of specifi Membership ofCommittees (2) Marc Fiorentino,independent Director, wasco-opted bytheBoardofDirectors onJuly 10,2006.Hisco-option wasratified (1) The offices andpositionsheldinallcompanies byeachoftheDirectors areset outin5.6. Membership oftheBoardDirectors lueGilmt1.015 22.980.121 342,622 418,304 03.31.2013 03.31.2013 Numberof 02.28.1988 02.28.1988 ExpiryinAGM approving Datetook 10.30.1956 07.21.1960 Dateof Director Claude Guillemot Chairman andCEO Director Yves Guillemot Position intheCompany Name hita uleo 21.960.818 33.03254,428 260,214 03.31.2013 323,626 03.31.2013 02.28.1988 03.31.2013 02.28.1988 02.10.1966 02.28.1988 07.14.1961 Director Marc Fiorentino Executive Vice President Administration 01.15.1959 Director Christian Guillemot Publishing andMarketing Executive Vice President Director Gérard Guillemot Development –Strategy andFinance Executive Vice President Director Michel Guillemot Executive Vice President Operations Chief Creative Officer Executive Director,WorldwideStudios Chief FinancialOfficer Executive DirectorNorthAmerica Executive DirectorEMEATerritories Meeting of09.25.2006. 5.1 and Committees-GroupManagement Membership oftheBoardDirectors (2) (1) 20.990.020 33.032 03.31.2013 07.10.2006 12.08.1959 it ppsto h iaca ttmns sharesas thefinancialstatements upposition birth Serge Hascoet Christine Burgess-Quemard Alain Martinez Laurent Detoc Alain Corre o h iclya ne of03.31.08 for thefiscal year ended by theGeneral Shareholders' c CORPORATE GOVERNANCE 5 135 Rules applicable to the appointment 5.2 and substitution of members of the Board of Directors

Over the life of the Company, Directors are appointed or reappointed by the Ordinary General Shareholders’ Meeting. However, in the event of merger or de-merger, the appointment may be made by the Extraordinary General Shareholders' Meeting held to deliberate on the transaction. Between two Meetings and in the event of a vacancy due to death or resignation, appointments may be made on a provisional basis by the Board of Directors. They are subject to ratification at the following Meeting. Pursuant to applicable legislative and regulatory provisions, if a Director is appointed to replace another, he or she shall only hold this position for the remainder of the term of his or her predecessor. The term of office of directors ends following the Ordinary General Shareholders' Meeting called to approve the financial statements for the previous fiscal year and held in the year in which the term of office expires. Operation of the Board of Directors 5.3 and Committees

5.3.1 Board of Directors 5.3.2 Board Committees

The Board of Directors has the broadest possible powers to In its by-laws, the Board of Directors has set out the respon- determine the business policies and ensure their implemen- sibilities and powers of its various permanent Committees, tation within the limits of the corporate objects and the po- these being: wers expressly granted by law to the General Shareholders' the Strategy and Development Committee; and Meeting. the Compensation Committee. Pursuant to Article L 225-51 of the French Commercial Code, the Board of Directors at its meeting of October 22, The Committees meet on the initiative of their Chairman 2001, decided on the manner in which the Company's senior and may be called by any means. The Committees may meet management would be exercised. It decided not to separate at any place and in any way, including by videoconferencing the positions of Chairman of the Board of Directors and that and teleconferencing. They may only meet validly if at least of Chief Executive Officer. half their members are present. The Strategy and Development Committee meets at least twice annually and As a result, Yves Guillemot, as Chairman of the Board of the Compensation Committee at least once a year. Directors, is legally responsible for representing the Company's Board of Directors, organizing its work and The agenda of the meetings is set by their Chairman. The reporting on this to the General Shareholders’ Meeting, Committees report to the subsequent Board Meeting on overseeing the smooth operation of the Company’s corpo- their work in the form of oral statements, opinions, pro- rate bodies and ensuring in particular that the Directors posed recommendations or written reports. are capable of carrying out their responsibilities. With The Committees may not unilaterally decide to look into regard to the position of Chief Executive Officer, and sub- issues that go beyond the scope of their responsibilities. ject to the powers legally attributed to the General They have no decision-making power but only that of making Shareholders’ Meetings and the Board of Directors, he has recommendations to the Board of Directors. the broadest authority to act in all circumstances on behalf of the Company and to represent it in its relations with third parties. At its meeting of July 27, 2004, the Board of Directors approved its by-laws, enabling it in particular to use videoconferencing for holding its meetings. The Board of Directors met nine times in fiscal year 2007- 2008. UBISOFT • FINANCIAL REPORT 2008 To thebestofCompanyknowledge over thepastfive years: The Companyhasnotgranted anyloansorguarantees toanymemberoftheBoardDirectors. corporate officers (fixed andvariable portions); the CompanyandGroup. labor, financialandtechnological policiesof taeyadDvlpetCmiteCompensationCommittee Examination, analysis andcomparison withmarket practices: relating tothemajorstrategic, economic, Consideration andexamination ofalldecisions Strategy andDevelopment Committee The mainresponsibilitiesoftheStrategy andDevelopment Committee andtheCompensationCommittee aresummarized below: 5.4 5.5 no official reprimandand/orchargeshave been made againstanymemberoftheBoardDirectors. administrative, managementorsupervisory body; and no memberoftheBoardDirectors hasbeen involved inabankruptcy,impoundmentorliquidationasmemberofan no memberoftheBoardDirectors hasbeen found guiltyoffraud; of theBoardDirectors Loans andguaranteesgrantedtomembers or charges in abankruptcyand/orofficialreprimand No convictionforfraud,involvement report onthecompensation ofmanagers. approving information given toshareholders intheannual and morespecifically thepercentage allocated tomanagers; giving opinionsonthegeneral stock optionallocation policy examining andsubmittingproposalson thecompensation proposing anoverall amountofdirectors’ fees; CORPORATE GOVERNANCE 5 137

5.6 Other offices held by Directors

5.6.1 Appointments in force as of March 31, 2008

Surname Date first Date term Main position Main position Offices and positions held as of March 31, 2008 First name appointed of office held in held outside expires Ubisoft Company Entertainment

Guillemot 02.28.1988 03.31.2013 Chairman Executive Chairman of Ubisoft France SAS (France), Ubisoft World SAS Yves and CEO Vice President (France), Ubisoft World Studios SAS (France), Tiwak SAS Director and Director (France), Ubisoft Norway A/S (Norway), Ubisoft Finland OY Guillemot (Finland) and Ubi Games SA (Switzerland). Brothers SA Chairman and CEO of Ubisoft Entertainment SA, Chairman of Ludifactory SAS (France), Ubisoft Books and Records SAS (France), Ubisoft Design SAS (France), Ubisoft Graphics SAS (France), Ubisoft Manufacturing & Administration SAS (France), Ubisoft Organisation SAS (France), Ubisoft Pictures SAS (France), Ubisoft Productions France SAS (France), Ubisoft Simulations SAS (France). Executive Vice President and Director of Gameloft SA (France), Guillemot Corporation SA (France). Manager of Ubisoft Computing SARL (France), Ubisoft Development SARL (France), Ubisoft Production Montpellier SARL (France), Ubisoft Production Annecy SARL (France), Ubisoft Editorial SARL (France), Ubisoft Emea SARL (France), Ubisoft Paris Studios SARL (France), Ubisoft Support Studios SARL (France), Ubisoft Castelnau SARL (France), Ubisoft Marketing International SARL (France), Ubisoft Counsel & Acquisitions SARL (France), Ubisoft Marketing France SARL (France), Ubisoft Studios Montpellier SARL (France), Ubisoft Operational Marketing SARL (France), Ubisoft GmbH (Germany), Blue Byte GmbH (Germany), Sunflowers Interactive Entertainment Software GmbH (Germany), Spieleentwiclungskombintat GmbH (Germany), Max Design Entertainment Software Entwicklungs GmbH (Austria), Ubisoft Studios SL (Spain), Ubisoft Studios Srl (Italy), Ubisoft Sarl (Morocco), Ubisoft BV (Netherlands), Digital Kids KK (Japan). Chairman and Director of Ubisoft Divertissements Inc (Canada), Ubisoft Canada Inc (Canada), Ubisoft Music Inc (Canada), Ubisoft Music Publishing Inc (Canada), Ubisoft Digital Arts Inc (Canada), Chengdu Ubi Computer Software Co. Ltd (China), Ubisoft Nordic A/S (Denmark), Ubisoft Holdings Inc (US), Red Storm Entertainment Inc (US), Ubisoft SA (Spain), Ubisoft Ltd (UK), Ubisoft Ltd (Hong Kong), Ubisoft SpA (Italy), Ubisoft KK (Japan) and Ubisoft Singapore Pte Ltd (Singapore). Vice President and Director of Shanghaï Ubi Computer Software Company Ltd (China), Ubisoft Inc (US). Director of Ubisoft Pty Ltd (Australia), Gameloft Inc (Canada), Guillemot Inc (Canada), Ubisoft Entertainment Ltd (UK), Ubisoft Ltd (Ireland), Red Storm Entertainment Ltd (UK), Guillemot Ltd (UK), Ubisoft SA (Spain), Gameloft Inc (US) Guillemot Inc (US) and Ubisoft Sweden AB (Sweden). Liquidator of Ubisoft Warenhandels GmbH (Austria). Director of Advanced Mobile Applications Ltd (UK). UBISOFT • FINANCIAL REPORT 2008 Gérard Guillemot Michel Guillemot Claude Guillemot First name Surname 5.6.1 Appointments inforceasofMarch31,2008 02.28.1988 02.28.1988 02.28.1988 appointed Date first 03.31.2013 03.31.2013 03.31.2013 expires of office Date term Director Vice President Executive Director Vice President Executive Director Vice President Executive Entertainment Ubisoft held in Main position Inc Longtail Studios Chairman Gameloft SA and CEO Chairman Corporation SA Guillemot and CEO Chairman Company held outside Main position Director (UK). Holdings Inc(US),Gameloft SA (France) andGuillemotLtd Gameloft Inc(US),GuillemotUbisoft Inc(US),Ubisoft Shanghaï UbiComputerSoftware CompanyLtd(China), Director Corporation SA (France), GuillemotBrothersSA (France). Executive Vice PresidentandDirector Director Venezuela SA (Venezuela). Ubisoft HoldingsInc(US),GuillemotLtd(UK)andGameloft de Company Ltd(China),GuillemotInc(US),Ubisoft Inc(US), Software Co.Ltd(China),ShanghaïUbiComputerSoftware SA (Belgium),GuillemotInc(Canada),ChengduUbiComputer Director de C.V. (Mexico), Gameloft S.r.o.(Czech Republic). Games SARL (France), Gameloft Srl(Italy), Gameloft S.de R.L. Production France SARL (France), L’Odyssée Interactive (Belgium), Gameloft EOOD (Bulgaria),Gameloft RichGames Manager Corporation SA (France) andGuillemotBrothersSA (France). Executive VicePresidentandDirector (Singapore) andGameloft CompanyLtd(Vietnam). Private India(India),Gameloft KK(Japan), Gameloft PteLtd Gameloft Ltd(UK),Gameloft Ltd(Hong-Kong), Gameloft Korea), Gameloft IbericaSA (Spain),Gameloft Inc(US), (Argentina), Gameloft Inc(Canada),Gameloft Co.Ltd(South Chairman andDirector Gameloft Srl(Romania). Partnerships SAS (France), Gameloft Live SAS (France) and Software (Chengdu)CompanyLtd(China),Gameloft Gameloft Software (Shanghai)CompanyLtd(China),Gameloft Chairman Director Sweden AB(Sweden) andUbisoft NordicAS(Denmark). Guillemot Srl(Italy), GuillemotRomaniaSrl(Romania),Ubisoft Ltd (UK),GuillemotCorporation (HK)Ltd(HongKong), Gameloft Ltd(UK),GuillemotUbisoft Entertainment Gameloft Inc(US),Ubisoft Inc(US),Ubisoft HoldingsInc(US), Software CompanyLtd(China),Gameloft IbericaSA (Spain), Ubisoft MusicPublishing Inc(Canada),ShanghaïUbiComputer Ubisoft CanadaInc(Canada),Ubisoft MusicInc(Canada), Director (Canada). Vice PresidentandDirector Vice President (France), GuillemotBrothersSA (France). Executive VicePresidentandDirector Manager (US). Recherche etDéveloppement Inc(Canada)andGuillemot Chairman andDirector Chairman Offices andpositionsheldasofMarch31,2008 of Advanced MobileApplicationsLtd(UK). of Advanced MobileApplicationsLtd(UK). of Advanced MobileApplicationsLtd(UK). of Gameloft Australia PtyLtd(Australia), Guillemot of GuillemotGmbH(Germany). of GuillemotSA (Belgium),Gameloft Inc(Canada), of Gameloft Inc(Canada),Guillemot(Canada) of Gameloft GmbH (Germany), Gameloft S.P.R.L. of Gameloft Software (Beijing)CompanyLtd(China), of HerculesThrustmaster SAS (France). of Ubisoft DigitalArtsInc(Canada). of GuillemotInc(Canada), of Gameloft ArgentinaS.A. of Ubisoft Divertissements Inc of Gameloft SA of Guillemot of Guillemot CORPORATE GOVERNANCE 5 139

Surname Date first Date term Main position Main position Offices and positions held as of March 31, 2008 First name appointed of office held in held outside expires Ubisoft Company Entertainment

Guillemot 02.28.1988 03.31.2013 Executive Chairman Executive Vice President and Director of Gameloft SA Christian Vice President and CEO (France), Guillemot Corporation SA (France). Director Guillemot Manager of Guillemot Administration et Logistique SARL Brothers SA (France). Chairman Director of Guillemot SA (Belgium), Guillemot Inc (Canada), and Director Guillemot Recherche et Développement Inc (Canada), Advance Mobile Gameloft Inc (Canada), Ubisoft Divertissements Inc (Canada), Applications Ltd Shanghaï Ubi Computer Software Company Ltd (China), Gameloft Iberica SA (Spain), Gameloft Inc (US), Guillemot Inc (US), Ubisoft Inc (US), Ubisoft Holdings Inc (US), Guillemot Ltd (UK), Ubisoft Ltd (UK), Gameloft Ltd (UK), Guillemot Corporation (HK) Ltd (Hong Kong), Ubisoft Nordic AS (Denmark) and Ubisoft Sweden AB (Sweden).

Fiorentino 07.10.2006 03.31.2013 Director Chairman Director of TFJ (France) and Groupe de l'Olivier SA (France). Marc and CEO Euroland Finance

5.6.2 Expired offices (past five fiscal years)

Surname Date first Date term Main position Main position Offices expired over the past five fiscal years First name appointed of office held in held outside expires Ubisoft Company Entertainment

Guillemot 02.28.1988 03.31.2013 Chairman Executive Chairman and Director of Ubi.com SA (France), of Ubi Yves and CEO Vice President Computer Software Beijing Company Ltd (China), Wolfpack Inc Director Guillemot (US) and Blue Byte Software Inc (US). Brothers SA Chairman of Ubisoft Marketing & Communication SAS (France). Co-manager of Ludi Factory SARL (France). Manager of Ubisoft Graphics SARL (France), Ubisoft Organisation SARL (France), Ubisoft Simulations SARL (France), Ubi Sound Studio SARL (France), Ubi World Studios SARL (France), Ubisoft Books & Records SARL (France), Ubisoft Manufacturing & Administration SARL (France), Ubisoft Pictures SARL (France), Ubisoft Design SARL (France), Ubisoft Productions France SARL (France), Ubisoft SprL (Belgium) and Ubisoft Warenhandels GmbH (Austria). Director of Jeuxvidéo.com (France), Guillemot France (France), Hercules Technologies Inc (US), Thrustmaster Inc (US), Guillemot Online.com Inc (US), Ubi.com Inc (US), Sinister Games Inc (US), Blue Byte Software Ltd (UK) and Ubi Studios Ltd (UK).

Guillemot 02.28.1988 03.31.2013 Executive Chairman Chairman of Hercules Technologies SAS (France), Claude Vice President and CEO Thrustmaster SAS (France). Director Guillemot Manager of Guillemot Recherche et Développement SARL Corporation SA (France). Chairman and Director of Guillemot Online.com Inc (US), Hercules Technologies Inc (US), Thrustmaster Inc (US). Director of Ubi Studios SA (France), Ubi World SA (France), Ubi Studios Ltd (UK), Jeuxvidéo.com SA (France), Gameloft.com Espana (Spain), Guillemot SA (Spain), Ubisoft SpA (Italy), Ubisoft Entertainment Ltd (Hong Kong) and Guillemot BV (Netherlands). UBISOFT • FINANCIAL REPORT 2008 Marc Fiorentino Michel Guillemot First name Surname Christian Guillemot Gérard Guillemot 5.6.2 Expired offices(pastfivefiscalyears) 07.10.2006 02.28.1988 02.28.1988 02.28.1988 appointed Date first 03.31.2013 03.31.2013 03.31.2013 03.31.2013 expires of office Date term Director Director Vice President Executive Director Vice President Executive Director Vice President Executive Entertainment Ubisoft held in Main position Euroland Finance and CEO Chairman Applications Ltd Advance Mobile and Director Chairman Brothers SA Guillemot and CEO Chairman Inc Longtail Studios Chairman Gameloft SA and CEO Chairman Company held outside Main position Director Manager Chairman Manager (Australia). Kong), Gameloft.com Espana(Spain)andGameloft.com PtyLtd (Italy), Ubisoft Ltd(HongKong), GuillemotLogisticsLtd(Hong Technologies Inc(US),Thrustmaster Inc(US),Ubisoft SpA (Canada), GuillemotOnline.com Inc(US),Hercules Canada Inc(Canada),Ubisoft MusicInc(Canada),Ubi.com Inc AG (Germany),Ubisoft Divertissements Inc(Canada),Ubisoft Ubi.com SA (France), Jeux.vidéo.com SA (France), Gameloft Director (France). Executive VicePresidentandDirector Chairman andDirector Co-manager (Canada), Ubisoft CanadaInc(Canada)andUbisoft SpA(Italy). Kong), Ubisoft KK(Japan), Ubisoft Divertissements Inc (US), Thrustmaster Inc(US),Ubisoft EntertainmentLtd(Hong Guillemot Online.com Inc(US),HerculesTechnologies Inc Gameloft.com PtyLtd(Australia), Ubisoft SA (Spain), Guillemot France SA (France), Jeuxvidéo.com SA (France), Director Chairman andCEO Chairman (Canada) andUbiVoices (US). Ubisoft MusicInc(Canada),Ubisoft MusicPublishing Inc Chairman andDirector and LudigamesSrl(Italy). Manager Srl (Italy) andUbisoft KK(Japan). Entertainment Ltd(HongKong), Ubisoft SpA(Italy), Ludigames Technologies Inc(US),Thrustmaster Inc(US),Ubisoft Ubisoft SA (Spain),GuillemotOnline.com Inc(US),Hercules (Canada), UbiComputerSoftware BeijingCompanyLtd(China), SA (France), GuillemotFrance SA (France), Ubisoft CanadaInc Soft Marketing &CommunicationSA (France), Jeuxvidéo.com Director (Canada). Vice-President andDirector Offices expired over thepastfive fiscal years of Prosodie (France). of Ubi.com SA (France), UbiWorldSA (France), Ubi of V-Prod (France). of GuillemotAdministration SARL (France). of UbiStudiosSA (France), UbiWorldSA (France), of UbiStudiosSA (France), UbiWorldSA (France), of UbiStudiosSL(Spain),Ubisoft StudiosSrl(Italy) of TFJ(France). of Gameloft AG (Germany). of LudiFactory SARL (France). of GameLoft SA (France). of GuillemotLogistiqueInc(Canada). of Gameloft.com España(Spain), of Ubisoft Divertissements Inc of GuillemotFrance SA CORPORATE GOVERNANCE 5 141

5.7 Compensation of managers

Compensation of managers and members 5.7.1 of the Board of Directors

Messrs Guillemot are remunerated for their positions as In very partial remuneration for the responsibilities under- CEO and Executive Vice Presidents. This is fixed compen- taken but also the time spent preparing Board Meetings sation and they do not have employment contracts. and their active participation, the General Shareholders' Meeting of September 25, 2006 authorized the Company The total gross remuneration paid to the managers over to pay total directors’ fees of a fixed maximum of €250,000 the fiscal year by the Company, by controlled Companies and per annum. The Board of Directors, exercising this as defined in Article L 233-16 and by the company control- authorization, established a fixed portion and a variable ling the one in which they hold their offices, was portion setting out new requirements. €1,381,000 of which €546,000 was paid by Ubisoft Entertainment SA. Members of the Board of Directors received €113 thousand in directors’ fees for the 2008 fiscal year.

Name of manager 03.31.08 Total gross fixed Directors’ fees Benefits compensation Fixed Variable in paid portion portion kind Mr Yves Guillemot €255,960 €18,750 N/A N/A Mr Gérard Guillemot €272,160 €18,750 N/A N/A Mr Michel Guillemot €340,905 €18,750 N/A N/A Mr Claude Guillemot €255,960 €18,750 N/A N/A Mr Christian Guillemot €255,960 €18,750 N/A N/A Mr Marc Fiorentino N/A €18,750 N/A N/A

Name of manager 03.31.07 Total gross fixed Directors’ fees Benefits compensation Fixed Variable in paid portion portion kind Mr Yves Guillemot €214,800 €22,500 N/A N/A Mr Gérard Guillemot €182,518 €22,500 N/A N/A Mr Michel Guillemot €251,575 €22,500 N/A N/A Mr Claude Guillemot €214,800 €22,500 N/A N/A Mr Christian Guillemot €214,800 €22,500 N/A N/A Mr Marc Fiorentino N/A €22,500 N/A N/A

No commitment has been made by the Company to its corporate officers in the event of termination or a change in their responsibilities. Pursuant to Article L 225-43 of the French Commercial Code, no loan or advance has been granted to corporate officers of the Company. UBISOFT • FINANCIAL REPORT 2008 hita uleo ,5 04.25.2012 Expiry Planno.14 €35.29 6,250 6,250 6,250 6,250 50,000 Gérard Guillemot Christian Guillemot Michel Guillemot Claude Guillemot Yves Guillemot No bonussharesweregranted tomembersoftheBoardDirectors over thepastfiscal year. exercise anyoptionsover thepastfiscal year. Corporate officers didnotreceive anyothersharesubscription optiongrants inprevious years. Corporate officers didnot The stock optionstherebygranted areexercisable bytranch of25%over four years fromApril26,2008. up theirpositions. the amountofsharesthatmustbekept asregistered bycorporate officer beneficiariesuntilsuchtimeastheyhave given Pursuant totheprovisions introduced byFrenchAct 2006-1770ofDecember 30,2006,theBoardofDirectors set at5% determined below. Meeting ofSeptember25,2006,allocating sharesubscription optionstoCompanycorporate officers intheproportions At itsmeeting ofApril26,2007,theBoardDirectors exercised theauthorizationfromGeneral Shareholders' of whichprovide for thegranting ofbenefits. There arenoservice agreements linkingmembersoftheBoardDirectors totheissueroranyGroupsubsidiary,terms 5.7.4 5.7.3 5.7.2 and itssubsidiaries Service provisionagreementswiththeissuer Bonus sharegrants Share purchaseandsubscriptionoptionplans rne ocroae rc expiry date price granted tocorporate ubro pin Srk Planno.and Strike Number ofoptions officers CORPORATE GOVERNANCE 5 143 Transactions covered by Article L 621-18-2 5.8 of the French Monetary and Financial Code and Article 222-15-3 of the General Regulations of the AMF Trading in financial instruments and/or securities

Surname, first name, Transaction Date of the Number of Unit Transaction position on the date of the transaction type transaction securities price amount

Securities trading by managers Yves Guillemot Recovery of a receivable by 04.11.07 13,696 €37.41 €512,367 Director Guillemot Corporation SA Chairman and CEO (acquisition by acceptance in lieu of Ubisoft Entertainment stock by Guillemot Corporation SA) Claude Guillemot Recovery of a receivable by 04.11.07 13,696 €37.41 €512,367 Director Guillemot Corporation SA Executive Vice President (acquisition by acceptance in lieu of Ubisoft Entertainment stock by Guillemot Corporation SA) Michel Guillemot Recovery of a receivable by 04.11.07 13,696 €37.41 €512,367 Director Guillemot Corporation SA Executive Vice President (acquisition by acceptance in lieu of Ubisoft Entertainment stock by Guillemot Corporation SA) Sale 03.31.08 11,866 €54.54 €647,172 Gérard Guillemot Recovery of a receivable by 04.11.07 13,696 €37.41 €512,367 Director Guillemot Corporation SA Executive Vice President (acquisition by acceptance in lieu of Ubisoft Entertainment stock by Guillemot Corporation SA) Sale 03.25.08 15,997 €54.03 €864,318 Sale 03.26.08 3,699 €54.76 €202,557 Christian Guillemot Recovery of a receivable by 04.11.07 13,696 €37.41 €512,367 Director Guillemot Corporation SA Executive Vice President (acquisition by acceptance in lieu of Ubisoft Entertainment stock by Guillemot Corporation SA) Sale 12.19.07 1,000 €65.83 €65,830 Sale 12.20.07 1,000 €65.15 €65,150 Sale 12.20.07 100 €64.49 €6,449 Sale 12.21.07 6,562 €65.53 €430,008 UBISOFT • FINANCIAL REPORT 2008 rvt niiulrltdt Sl 1.40 ,0 6.5€86,450 €61.75 1,400 12.04.07 Sale Vice President ofUbisoft Claude Guillemot,Executive Private individualrelated to bsf netimn A GuillemotBrothers) Gérard Guillemotand Claude, Michel,Christian, receivable heldbyYves, Ubisoft EntertainmentSA Executive Vice President of by Claude Guillemot, Related legalentitymanaged N G u a i t l h l e Trading infinancialinstrumentsand/orsecurities a rvt niiulrltdt Sl 32.8158€38 €84,896 €53.80 1,578 03.27.08 Sale Vice President ofUbisoft Michel Guillemot,Executive Private individualrelated to eae ea niymngdSale Executive Vice President of by Claude Guillemot, Related legalentitymanaged unm,frtnm, rnato Dt fte ubro Ui Transaction Unit Numberof Dateofthe Transaction position onthedateoftransaction Surname, firstname, Ubisoft EntertainmentSA Entertainment SA Entertainment SA bsf netimn A byGuillemotCorporation SA) (ac ofUbisoft Entertainmentstock Ubisoft G EntertainmentSA Executive Vice President of by ChristianGuillemot, Related legalentitymanaged G G T m l i i u u e p o i i

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S A ipsl(eoeyo 0.10 1,4 3.1€4,161,825 €37.41 111,249 04.11.07 Disposal (recovery ofa quisition byacceptance inlieu eoeyo eevbeb 0.10 279€74 €1,599,988 €37.41 42,769 04.11.07 Recovery ofareceivable by uillemot Corporation SA Securities trading byrelatedparties ucae0.10 114€80 €2,968,672 €58.00 51,184 02.21.08 Purchase ucae1.10 000€09 €1,827,600 €60.92 30,000 12.11.07 Purchase ae0.20 ,0 5.9€295,450 €59.09 5,000 02.22.08 Sale ae1.40 110€03 €669,330 €60.30 11,100 12.04.07 Sale yetascinscrte rc amount price securities transaction type ae0.60 ,7 5.2€538,795 €54.02 9,974 03.26.08 Sale ae1.10 000€09 €1,827,600 €60.92 30,000 12.11.07 Sale ae1.40 ,0 6.7€90,118 €1,888,960 €104,800 €125,575 €406,312 €59.03 €135,901 €64.37 €65.50 €672,543 €64.93 €223,980 €65.01 €1,264,800 €63.21 €516,600 32,000 1,400 €365,500 €52.67 1,600 €42.16 €37.33 1,934 6,250 €36.90 2,150 02.21.08 €36.55 12.24.07 12,769 12.21.07 30,000 6,000 12.20.07 12.19.07 Sale 14,000 12.18.07 Sale 10,000 11.23.07 Sale 09.18.07 Sale 06.01.07 Sale 05.31.07 Sale 05.30.07 Sale Sale Sale Sale Sale 22.85,8 5.0€2,968,672 €58.00 51,184 02.21.08 REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6 145

Report of the Chairman of the Board of Directors on the conditions of preparation and organization of the work of the Board and the internal control procedures established by the Company 6.1 Conditions of preparation and organization of the work of the board 146 6.1.1 Membership and organization of the Board 146 6.1.2 Possible limits placed on the powers of the Chief Executive Officer 146 6.1.3 Information to Directors 146 6.1.4 The Board’s powers and responsibilities 146 6.1.5 Rules and principles applied by the Board of Directors to determine the compensation and benefits of all kinds granted to corporate Officers 147 6.1.6 By-laws 147 6.1.7 Main issues dealt with during the fiscal year/ Work of the Board of Directors 147 6.1.8 Assessment of the work of the Board of Directors 147 6.1.9 Board Committees 147 6.2 Internal control procedures 149 6.2.1 Internal control definition and goals 149 6.2.2 The components of the internal control system 149 6.2.3 Internal control of the production of financial and accounting information 152

report of the chairman report 6.2.4 Outlook 154 6.3 Limits placed on the powers of the Chief Executive Officer 154 6.4 Auditor’s report, prepared pursuant to Article L. 225-235 of the French Commercial Code, on the report

of the board of directors of directors of the board of the Chairman of the Board of Directors of Ubisoft Entertainment S.A. concerning the internal audit procedures used to prepare and process accounting 6 and financial information 155 UBISOFT • FINANCIAL REPORT 2008 General Shareholders' Meeting. on thespecial powersoftheBoardDirectors orofthe other thanthose provided for under applicablelegislation Chief Executive Officer without anylimitsonhispowers Yves GuillemotholdingthepositionsofChairman andof tive oneandthatsuchaseparation wasnotnecessary with Directors felt thatthecurrentoptionwas mosteffec- Nevertheless, andasmentioned above, theBoardof Association. Executive Officer, isprovided for in the Articlesof Chairman oftheBoardDirectors fromthatofChief Regulations Act, theoptionofseparating thepositionof Pursuant totheprovisions oftheFrenchNewEconomic over eightyyears ofage. appointed for six-year renewableterms.They maynotbe Each Director mustownatleastoneshare.Directors are or dependency towardstheGrouporitsmanagers. port orotheragreement, byanyotherform ofsubordination ciate, eitherbyanemploymentcontract, orbyaservice, sup- who isnotboundtoUbisoft Entertainment SA ortoanasso- pendent Director. “Independent Director” meansanyperson bers oftheGuillemotfamily and,ontheotherhand,oneinde- On theonehand,BoardofDirectors includes five mem- membership oftheBoardDirectors areinsection 5.1. streamlining thedecision-making process. Full details onthe ties areinlinewiththestrategy thusimproving and ment, thismakes itpossibletoensurethatoperating activi- constantly changingandparticularly competitive environ- Directors fromthatofChiefExecutive Officer. Inwhatisa not toseparate thepositionofChairmanBoard In fact, onOctober22,2001,theBoardofDirectors chose the ChairmanandChiefExecutive Officer. of whomarealso Executive Vice Presidents, andwhoassist The BoardofDirectors iscomprised ofsixmembers,four and theinternalcontrol procedures established bytheCompany. ration andorganizationoftheworkBoardDirectors, thelimitsplaced onthepowersofChiefExecutive Officer Pursuant totheprovisions ofSubsection 6ofArticleL225-37,thepurpose ofthisreportistodetail theconditions ofprepa 6.1.2 6.1 6.1.1 of theworkboard Conditions ofpreparationandorganization Chief ExecutiveOfficer on thepowersof Possible limitsplaced organization oftheBoard Membership and Chairman oftheBoardDirectors. confidential information thatisprovided assuchbythe Directors areboundbyadutyofconfidentiality asregards information. Board ofDirectors withexplanations anditemsofmaterial Chief Executive Officer atalltimesreadytoprovide the knowledge athis/herowninitiative, withtheChairmanand Moreover, eachdirector maysupplementhis/herown French CommercialCode. meetings inaccordance withArticleL225-35ofthe sary for them tocarryouttheirdutiesandprepare Directors withtheinformation anddocumentation neces- The ChairmanandChiefExecutive Officer provides the Consequently, theBoardofDirectors: verifications andcontrols itconsiders appropriate. proper functioningoftheCompany.Italso carriesout the Board ofDirectors maydiscuss anyissueaffecting the meetings andwithinthelimitof corporate objects, the Subject tothepowersexpressly bestowed onshareholders’ body, itsdecisions arebindingonallitsmembers. special form isrequired for meeting notices. Asacollegial office oratanyotherplace chosen bytheChairman;no required by theCompany’sbusiness,atregistered and ensurestheirimplementation.Itmeets asoften asitis The BoardofDirectors laysdown theCompany’spolicies out. By-laws, inwhichtherightsanddutiesofDirectors areset scribed bylawandtheArticles ofAssociation aswell asits The responsibilitiesoftheBoardDirectors arepre- tions heldbythesameperson); from thatofChiefExecutive Officer, orboththese posi- Management (separation oftheposition ofChairman chooses theorganizationalarrangements for Senior with itscultureandvalues; sets theGroup’stargetsanddefines itsstrategy inline 6.1.4 6.1.3 to Directors Information and responsibilities The Board’spowers - REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6 147 implements, where it sees fit, the authorizations granted to it by the General Shareholders' Meeting; 6.1.7 Main issues dealt with examines and approves the closing of the financial state- during the fiscal year/ ments; Work of the Board of controls management activities and monitors the quality of the information provided to shareholders and to the Directors markets in the financial statements or when major tran- During the fiscal year, the Board of Directors mainly sactions are carried out. focused on: Since November 19, 2007, the Board of Directors has been examining and approving the interim and annual finan- assisted by two committees. cial statements for the fiscal year ended March 31, 2007;

examining and closing the provisional financial state- Rules and principles ments; 6.1.5 applied by the Board examining the Ubisoft Group’s strategic considerations; examining related-party agreements in accordance with of Directors to Article L 225-38 of the French Commercial Code;

determine the implementing the authorizations granted by the General compensation and Shareholders’ Meeting, in particular as regards employee benefits of all kinds shareholding; establishing corporate governance policies: setting up granted to corporate specialized committees, introducing a self-assessment Officers questionnaire for the Board. In accordance with Article L 823-17 of the French In consideration – albeit very partial – for the responsibi- Commercial Code, the Statutory Auditors were invited to lities assumed and also the time spent in preparing Board attend the Board Meetings approving or examining the Meetings and actively participating therein, the General financial statements. Shareholders' Meeting of September 25, 2006 authorized During the 2007/2008 fiscal year, the Board met 9 times. the Company to pay the Directors total directors’ fees set at a maximum of €250,000 per annum. At its meeting of December 5, 2006, the Board of Directors resolved to set the rules for distributing the 6.1.8 Assessment of directors’ fees and to accordingly amend the By-laws. the work of the Board Moreover, to date, the Board of Directors has only of Directors resolved to use 72% of the overall allowance provided by the General Shareholders' Meeting. As recommended in the AFEP / MEDEF report, at its Corporate officers are not entitled to any indemnity or Meeting of April 29, 2008, the Board of Directors benefit payable in the event that they leave the Company. resolved to carry out an annual assessment of the Board of Directors using a questionnaire sent out to all Directors. 6.1.6 By-laws 6.1.9 Board Committees At its meeting of July 27, 2004, the Board of Directors adopted its By-laws. In particular, they provide for the use of videoconferen- Since November 19, 2007, the Board of Directors has cing. The videoconferencing system used must have tech- been assisted by two specialized committees: the Strategy nical features guaranteeing effective participation in the and Development Committee and the Compensation Board Meeting, with the proceedings being continually Committee. streamed. Both these Committees are comprised exclusively of The By-laws were amended on November 19, 2007 follo- Directors. Committee members are appointed by the Board wing the setting up of specialized committees: the Strategy of Directors which also designates each Committee’s and Development Committee and the Compensation Chairman. Committee. The responsibilities and specific operating procedures of Shareholders may consult the By-laws at the business each Committee were specified by the Board when they address or at the registered office. were established and were added to the By-laws. UBISOFT • FINANCIAL REPORT 2008 risons andmeasurementsonmarket practices, inparticular: corporate officers andfor providing theBoardwithcompa- the compensation andbenefitsenjoyed byDirectors and The CompensationCommittee isresponsiblefor examining Responsibilities is ChairmanoftheCommittee. Christian GuillemotandMarcFiorentino.Yves Guillemot The Committee hasthree members:Yves Guillemot, Membership 6.1.9.2 CompensationCommittee attendance rate was100%. scuss thedevelopment ofthetechnology market. The and Development Committee hasmetonce, notably todi- Since itwascreated onNovember 19,2007,theStrategy Work duringthe2007-2008fiscalyear disposals. ning majorinvestments, acquisitions ordivestments and Board withanopiniononmattersreferred toit,concer- It mayalso beasked tostudyindetail andprovide the both theCompanyandGroup. nomic, corporate, financialortechnological policiesof upon alldecisions concerning themajorstrategic, eco- The Committee isresponsiblefor examining andreflecting Responsibilities Chairman oftheCommittee. Christian Guillemot.Yves Guillemotholdsthepositionof Guillemot, MichelGérard Guillemotand The Committee hasfive members:Yves Guillemot,Claude Membership 6.1.9.1 Strategy andDevelopment Committee licy for granting stock subscription and/orpurchase Providing theBoardwithanopinionongeneral po- Company’s General Shareholders' Meeting. overall amountofdirectors’ fees proposed tothe Making recommendations totheBoard as regardsthe Board Meetings. respect, takingaccount oftheDirectors’ attendance at dual paymentstobemade totheDirectors inthis rules for distributingthedirectors’ fees andtheindivi- Making recommendations totheBoardasregards kind –verifying application ofthese rules. regarding theirpensionsandanyotherbenefitsof received fromanyGroupcompany, arrangements benefits inkind,stock subscription orpurchase options the variable portionofsaidcompensation and(ii)any compensation ofcorporate officers, bothinrespect of(i) Examining andmakingrecommendations asregardsthe was 100%. compensation ofcorporate officers. The attendance rate scuss employee shareholding,directors’ fees andthe Compensation Committee hasmetonce, notably todi- Since itwascreated onNovember 19,2007,the Work duringthe2007-2008fiscalyear cable, theproposalsrelatingtoemployee shareholding. concerning theabovementioned issuesand,whereappli- Examining anymatterreferred toitbytheChairman of suchallocations inadvance. well astheconsequences thereof; setting thefrequency options byexplaining thereasoning behinditschoice as as regardstheallocation ofsubscription orpurchase Management, advisingtheBoardofitsrecommendation on theoptionplan(s)established bytheGroup’sSenior options, whichshouldbereasonable orappropriate, and REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6 149

6.2 Internal control procedures

The preparation of this report is based on the information and control methods reported by the various internal control players within Ubisoft and its subsidiaries, as well as the internal audit work performed at the request of Management.

encouraging the alignment of goals, resources and the 6.2.1 Internal control mechanisms deployed. It is based on the clear identification definition and goals of goals and responsibilities, a human resources policy ensuring that resources and skill levels are sufficient, and information systems and tools that are adapted to each To prepare the current report, Ubisoft chose to use the team and/or subsidiary. internal control reference framework published on January 22, 2007, and drafted by the Working Group set up Each subsidiary is responsible to implement the relevant by the AMF (French Securities and Exchange Commission). strategies to achieve these objectives, although the monitoring of the internal control system and risk management Under this framework, internal control is defined as a sys- is highly centralized by the functional departments. tem designed to ensure:

compliance with laws and regulations; Organization application of the instructions and policies fixed by The various players involved in the internal control system Senior Management; are as follows: the Company’s internal processes are functioning cor- The Chairman and Chief Executive Officer of Ubisoft rectly, in particular, those implicating the security of its Entertainment SA: he defines and drives the Group’s assets; strategy. He is responsible for establishing the procedures the reliability of the financial information published. and mechanisms employed to ensure both the functioning and monitoring of the internal control system. This system must also contribute to the control over its activities, the efficiency of its operations and efficient use The Board of Directors: it defines the policies governing of its resources, as well as enabling the Company to ade- the Company’s business activities and ensures their appli- quately take into account significant operational, financial cation. In particular, it controls management activities, by or compliance significant risks. Therefore, the internal approving the annual financial statements and examining control system plays a key role in conducting and monito- the interim financial statements. To this end, it has access ring its activities. to all documents and reports required to perform this task. In addition, each Director may independently require addi- In order to continuously assess the adequacy and effective- tional information, from the Chief Executive Officer who is ness of its internal control system, Ubisoft introduced a at all times available to provide relevant information and proactive approach. Consequently, the internal control explanations the Board of Directors . system will continue to adapt to the constraints and specificities of the Group and its subsidiaries, and to changes to The Group’s managers and staff: the major policies and its external environment. goals are decided upon by Senior Management and passed on to the subsidiaries. Each subsidiary has its own senior It is applicable to all Group subsidiaries, now comprised of 27 management and management team and is responsible for French companies and 35 foreign companies, broken down as implementing the strategies designed to ensure that these follows: 20 distribution companies, 32 production companies, goals are achieved and for applying the Group internal 10 support companies and 1 digital animation company. control guidelines. However, the Group is aware that the internal control sys- The functional departments: in collaboration with Senior tem cannot provide an absolute guarantee that the com- Management, they are involved in setting the key accoun- pany’s objectives will be met and that all the potential risks ting, finance, legal, tax, IT, operations and human it may face will be controlled. resources policies, and supporting the subsidiaries with their implementation. The finance and accounting teams: present in all sub- The components of the sidiaries, they are responsible for performing analysis and 6.2.2 control functions, including budgeting, financial state- internal control system ments preparation and compliance with internal control over financial reporting. 6.2.2.1 Organization and operating procedures The Internal Audit Department: reporting to Senior Management and working with the head office financial The internal control system relies on a solid foundation of controllers, it carries out regular audits in the subsidiaries autonomy and collaboration within the Group’s teams, and verifies the controls quality in order to formalize the UBISOFT • FINANCIAL REPORT 2008 information data. account thegrowingneeds inmanagingandanalyzing systems. These solutions willevolve inorder to take into wide combines purchased software andin-house developed managed. The range ofsolutions used withintheGroupis information andtoensurethattransactions aresecurely decide ontheinformation systemsrequired toproduce Together withtheoperational andfunctional teams,they systems thatareadapted totheirbusinessactivities. Department, areresponsiblefor providing theteamswith The ITteams,reportingtotheInformation Systems Adapted systemsandoperating procedures collective andindividualperformance. stock purchase plansetc. These policiesaimtoimprove appraisal, appropriatetraining, stock optionsoremployees formance managementpolicies,throughregular with local regulatoryrulesandapplying theGroup’sper- These teamsarealso responsiblefor ensuringcompliance potential andskillsofallemployees. Group level, whilstensuringthedevelopment ofthe systems required tomeet therecruitment goalsset at establishing andimplementingthepolicy,programs and resources teamsinthesubsidiaries areresponsiblefor nal control systemanditseffectiveness. The human The humanresources policyisakey elementtotheinter- Human resourcespolicy actual performance. which analyze thedifferences between objectives and dardized format andconsolidated bytheheadoffice teams, sions. This information isperiodically reported, inastan- to enablethemtake theadequate managementdeci- relevant costs analysis totheoperational managersso as the activity:atsubsidiarylevel, these teamsprovide the teams areresponsiblefor monitoringtheperformance of the accounting andfinance teams.The financialcontrol Senior Managementandmonitored ineachsubsidiaryby Similarly, thebudgetarygoalsaredefined annually by fraud prevention, etc.). son preparingthepaymentinorder toprovide effective segregation ofdutiesbetween thesignatoryandper- ning authority,verification ofday-to-daytransactions, local internalcontrol procedures (delegation ofbanksig- Consequently, atitsownlevel, each majorsubsidiaryhas declined inthesubsidiaries. defines theapplicabledelegations rules,whicharethen in theroleandresponsibilities.SeniorManagement are regularly reviewed andupdated toreflect anychanges may betemporary orpermanent,areestablished. They their goals,operational andbankingauthorizations,which In order toenablethevarious operational teamstoachieve Clear goalsandresponsibilities recommendations regardinginternalcontrols. tional andfinancialpractices. Itanalyses risksandmakes designed toimprove thevisibilityatalllevels ofopera- internal control policyandimplementaframework cussions, for allbusinessactivities,for example: These internalsitesfacilitate knowledge sharinganddis- developments andtoo manyinternalwebsites. all information ontheGroup,market andanymarket employees since 2007isproviding apermanentgatewayto internal communications network,aportalaccessible toall In addition tolocal information meetings andanorganized tive tools. information vianumerousinitiatives usingthecollabora- responsibilities, theCompanyencourages thesharingof provide theteamswithmeansofcarryingouttheir To effectively communicate onthe strategic goalsandto 6.2.2.2 Internalpublicationofinformation and financialinformation aredetailed inpart6.2.3. The procedures relating totheproduction ofaccounting managers oninternalcontrol. awareness andmobilizemanagementalloperational carried outbytheInternalAudit Departmenttoraise These departments arethusactively involved inthework collaborative tools developed bytheGroup. dures aremade available totherelevant teamsthrough and guaranteeing theirutilizationlocally. These proce- regularly reviewing andupdatingtheGroupprocedures ticular, thefunctionaldepartments areresponsiblefor adapted tothebusinessactivitiesandorganizations.Inpar- especially byidentifying theinternalprocedures thatare tion isbeingcarried outbyallthesubsidiariesandteams, Similar workoncontinuous improvement anddocumenta- network. secure connection procedures ofexternal partnerstothe charters inFrance andCanada,onspeeding upthe to comply withlegislation,suchastheintroduction ofIT working ontheimplementationofpoliciesandprocedures Whilst meeting internalneeds, theSecurity Departmentis remotely. & Securit), allowingmanyemployees toconnect andwork access systemwithsecured authenticationsolutions (RSA sites, ortherevamping andstandardizationoftheremote deployment ofasecure WIFIsystemfor several demanding example, these studieshave led tothedevelopment and ture andsolution studiescarried outwithintheISD.For specialists arenowsystematically involved inthearchitec- In order tomeet anincreasingneed for flexibility, security database, accessible toallrelevant employees, providing Accounting, finance andmanagementcontrol: ashared various offices. standardization ofthesecurity levels across Ubisoft’s talogue”, inorder toimprove knowledge sharingand security measuresatthe various sites,the“security ca- Security: roll-outofaforum thatlistsanddetails allthe and ITdepartments projects. tional andtechnical documentation ontheapplications IT: ashared database wherecanbedownloaded func- analyses. site information onprojects, developments, studiesand Operational: workspaces for sharingandproviding inter- REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6 151 procedures manuals, an accounting manual, Group con- casts are analyzed, and the interim and annual forecasts are tacts, information on the financial reporting cycle, etc. able to be fine-tuned on the basis of actual figures and market outlook as received from local and operational teams. The various departments regularly organize training and The financial controllers monitor the whole financial information sessions in order to ensure that the informa- reporting cycle and constantly query the subsidiaries on tion is published. As a result of their success, the Group their performance levels, earnings and business activities. intends to continue investing in these collaborative tools. The Consolidation Department draws up the Group’s monthly consolidated financial statements and centralizes 6.2.2.3 Risk management all expertise with regard to the drawing up and analyzing of In the course of carrying on its business activities, the the monthly financial statements. It publishes the accoun- Group is exposed to a series of risks that could affect its ting procedures applicable within the Group, in particular, performance and the achievement of its strategic and via the Group’s accounting policies manual. It is responsi- financial goals. ble for ensuring compliance with applicable standards and regulations so as to provide a true picture of the Group’s In order to identify and analyze these risks and the me- business activities and position. chanisms deployed to manage them, the Company has introduced a risk mapping, which is updated annually by the The Treasury Department is responsible for implementing Internal Audit Department. It is the result of an upstream exchange rate derivatives and coordinating the cash flow proactive approach with the management teams and down- management of the French and foreign subsidiaries, in stream with the operational and functional teams. particular by overseeing the introduction of cash pooling solutions and cash flow forecasting. It ensures the consis- This risk mapping was carried out in the following steps: tency of the interest rate, exchange rate and liquidity ma- identification of all the Company’s business activities; nagement policies with the published financial information and also manages off-balance sheet commitments (bank assessment and classification of the risks and their impact on each of the Company’s business activities; guarantees relating to purchase financing or L/C, comfort letters, share price guarantees, deposits, etc.). It centra- assessment of the quality of controls and prevention lizes and verifies the authorizations granted to a limited mechanisms. number of employees, who are exclusively authorized by The procedures implemented represent an internal ope- Senior Management to handle certain financial transac- rating framework for the Company and are constantly tions, subject to predefined thresholds and authorization changing so as to ultimately provide effective risk manage- procedures and helps implement tools ensuring effective ment tools, to be used at all organizational levels and, in control (double signature procedure, secure payment particular, for analyzing IT and extra-financial risks. mechanisms, authorization and signature system regularly updated, controlled IT access, etc.). Thus, the Company’s aim is to deepen its systematic risk analysis approach, in particular, by introducing risk indica- Acquisitions are managed by the Acquisitions Department, tors. As much as possible, it plans to use existing reference which reports to the Finance Department, examines and frameworks in order to improve its assessment methods assesses the strategic interest of the planned total or par- and complete the inventory and documentation of control tial takeover of a company and submits this to Senior procedures, as well as the tracking of action plans. Management, which takes the final decision. No Group subsidiary can make this decision. An analysis of the main risks, their impact on the Company’s financial statements and the main measures The Legal Department, which are specialized in company implemented to control them is set out in the 1.9 chapter, law, contract law, litigation and intellectual property, “Risk factors”. assist and advise the subsidiaries on legal matters. They coordinate joint studies or those of interest for the Group and support local entities with regard to legislation so as to 6.2.2.4 Control activities control risks in the various fields. In addition to the risk management system, the Group also The Tax Department assists and advises both the Group’s has many control processes at all levels of the Company. French and foreign companies with the analysis of the tax The functional departments at head office play a critical aspects of their projects. Together with the various inter- role, by ensuring that initiatives of subsidiaries comply nal departments, it ensures the Group’s tax security by with Group guidelines whilst supporting them with regard organizing risk prevention, identification and control. to risk management, especially where the local teams do The Information Systems Department is involved in not have sufficient expertise: selecting IT solutions and ensures their technical and func- The Financial Control Department is responsible for mo- tional compatibility. It favors the integration of these solu- nitoring the Company’s performance, using operational tions and, in particular, oversees changes to the ERP monitoring based on monthly reporting from all Group applications (People Soft – Oracle) deployed in the main subsidiaries. It also coordinates meetings between Senior subsidiaries. It also regularly monitors IT projects and Management and the operational and finance departments ensures that they are in line with the requirements identi- at which the various reporting indicators are reviewed, the fied by the functional teams and the budgets approved by differences between actual performance and initial fore- management. As a result, medium-term project visibility UBISOFT • FINANCIAL REPORT 2008 up, under theresponsibilityoftheirmanager,by The financial statementsofeachsubsidiaryaredrawn and consolidation processes 6.2.3.1 Financialstatement production and finance departments. tion aremainly implemented bythevarious accounting tion andprocessing offinancialandaccounting informa- The internalcontrol procedures relatingtotheproduc- nal control thusenables: The introduction ofaglobalformalized approachtointer- effectiveness oftheprocesses andcontrols inquestion. to askthemselves fundamentalquestionsasregardsthe ting procedures but,mostimportantly, tohelpmanagers its goalisnotonly tocontribute toestablishingandupda- Presented intheform ofaself-assessment questionnaire, tional risks. based onthesystematicanalysis offinancialandopera- annual auditplan,approved bySeniorManagementand The assessment prioritiesandmethods aredefined inthe with thefinancialcontrol teams. toring thesubsidiariesandkey controls, incollaboration Department hasintroduced anannualprocess for moni- control systemanditsoperation, theInternalAudit In order toensuretheongoingsupervisionofinternal 6.2.2.5 Ongoingmonitoring premises oreven organizationatGrouplevel. the various applications,theservers architecture, the information system,whetherthisrelatestothesecurity of sible for ensuringandorganizingtheprotection ofthe security matters.The Security Departmentisthusrespon- the Company’sprioritiesandconstraints, especially for reviewed periodically totake intoaccount thechangesin has been introduced, withbudgetsset for a2year period, action plansisregularly reviewed. ject tosystematicmonitoringandtheprogressof these reviews bytheInternalAudit Departmentaresub- commendations andobservations noted onthebasisof reviews carried outinthevarious Groupentities.The re- This approachiscombined withregularandtargeted 6.2.3 dures andcontrols totake place. effective monitoringofcompliance withthese proce- noted shortcomings tobecorrected; means ofcorrective andoptimizationinitiatives allowing the operational andfinancialpractices tobeimproved by stood; the qualityofcontrols inthesubsidiariestobeunder- information and accounting production offinancial Internal controlofthe published accounting andfinancialdata: the solutions, andtoguarantee thestandardizationof sidiaries tooptimizeunderstanding andeffectiveness of Department hasdrawn upprocedures enablingthesub- make itmorereliable.Asaresult,theConsolidation lidated financialstatementproduction process andto The Companyhastaken measurestoshortentheconso- reporting formats. in order toensurecompliance withthenewinternal tion, ITandfinancialcontrol teamshasbeen putinplace 2008. Supportfor local teams,provided bytheconsolida- A newversion ofthissoftware waslaunched inApril consolidated financialstatementscertain. reporting oftheinformation andisdesigned tomake the income statement,etc.Italso enablesreliableandrapid out ontheflows,balance sheet, specific lineitemsinthe tions andconsistency checks tobeautomatically carried Consolidation Department.This solution allowsverifica- HFM fromHyperion,under theresponsibilityof reconciled andthenconsolidated inacentral solution, The subsidiaries’accounting information isuploaded, are audited under IFRS. Standards) compliant, andtheconsolidation statements have been IFRS(InternationalFinancialReporting Since April1,2006,thesubsidiaries’monthly reports quarterly forecasts. data input,annualandinterimcut-off datesandthe cedures, asregardstomonthly reporting,accounting sidiary musttherefore apply theapplicableGrouppro- approved bytheAdministration Department.Eachsub- dule established bytheConsolidation Departmentand monthly reports,iscarried outonthebasisofasche- Reporting ofaccounting information, instandardized cial statements. an auditbyeachentity’sauditorsfor theyear-end finan- a limited review oftheinterimfinancialstatementsand tive countries. These financialstatementsaresubject to with thetaxandregulatoryconstraints oftheirrespec- local accounting departments thatensurecompliance level. and financialinformation, atbothsubsidiary andGroup lity oftheinternalcontrols over published accounting commendations regardingtheimprovement ofthe qua- The Internal Audit Department also makes regularre- regulatory framework applicabletoGroupcompanies. monitoring so astotrack andanticipatechangestothe The Consolidation Department also carriesoutongoing drawing upanaccounting policiesmanual. drawing upaconsolidation manual; ment; drawing upauser manualfor theconsolidation state- cial statements; rate financialstatementsandtheconsolidated finan- implementing automaticmappingbetween thecorpo- drawing upaGroup chartofaccounts; REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6 153 6.2.3.2 Organization and security have been made redundant in order to increase their of information systems availability rate. With a view to continually improving its information sys- Several security projects are ongoing for the coming tem and in order to ensure the integrity of accounting year such as a security awareness-raising week, the and financial data, the Company continues to invest introduction of security scorecards, an incident data- deploying standardized solutions and procedures, which base, the updating of the Firewall and VPN (Virtual reflect both the requirements and constraints of local Private Network) infrastructure, a project for the ove- teams and the Group. rall monitoring of the infrastructure, supplemented by internal intrusion detection. All the major subsidiaries are integrated into People Soft – Oracle, as regards the accounting and management of The IT teams are also focusing much of their efforts on operational flows (procurement, manufacturing, logis- documentation and training in order to guarantee the tics, etc.). This centralized application, based on a single security, reliability, availability and relevance of the database for all subsidiaries, allows frameworks and accounting and financial information. transaction formats (product database, customer and supplier files, etc.) to be shared. A new version of this ERP solution will be progressively rolled out over the 6.2.3.3 Accounting and financial information coming years in order to meet the growth challenges. validation procedures With a view to integrating and automating the accoun- Ubisoft’s accounting and financial information is pro- ting and financial solutions, the Group also continues to duced by the Administration Department, under the search for solutions, which will ultimately enable to roll supervision of the Chairman and Chief Executive Officer, out an accounting ERP application to the other foreign with the Board of Directors being responsible for final subsidiaries. The computerization of data exchange approval. (interfaces between accounting systems and the consolidation system, daily integration of banking entries, auto- The consolidated financial statements are subject to a mated payment issuing, etc.), does indeed provide secure limited review as of September 30 and an audit as of processing and guarantees greater reliability of the March 31 by the Group’s Statutory Auditors. The accounting processes. Administration Department works with the Statutory Auditors to coordinate the annual year-end process as The Hyperion consolidation and management forecas- regards timing and the major anticipated accounting ting applications are thus used by all Group companies, providing an exhaustive and standardized view of busi- treatments. One-off assignments during the fiscal year ness activities and accounting and financial data. They enable specific accounting issues to be addressed in thus help improve the effectiveness of information pro- advance. cessing. This systematic review allows any issue at the annual Similarly, special attention is paid to the security of IT year-end to be anticipated and the timeframe for pro- data and processing. The Security Department, in coo- ducing the consolidated financial statements to be cut. peration with all the IT teams, is looking to continually Pre year-end assignments are also scheduled depending improve control levels in order to guarantee: on developments. the security of the data on the networks; The Group announces its sales on a quarterly basis and its earnings every six months. the protection of connected services from unautho- rized access; The Consolidation Department also collects and verifies the separation of the networks’ operational responsi- the accounting information to be included in the Group’s bilities from those relating to IT operations; financial releases which relates to the consolidated financial statements. This data is verified by both the the identification of the players’ responsibilities; Company and by the Statutory Auditors. the establishment of management procedures for remote equipment; 6.2.3.4 External financial information the carrying out of the controls necessary to ensure management process the confidentiality, integrity and authenticity of data routed via public networks and in order to protect con- The Financial Communication Department publishes the nected systems; financial information required to correctly understand the availability of the connected services and systems. the Group’s strategy to shareholders, financial analysts, investors, etc. In order to prevent an interruption to operations, a full inventory of all IT resources was prepared in early 2008. All financial releases (and press releases) are reviewed This allows the critical services, in particular accounting and approved by Senior Management. Financial informa- and financial, to be specifically identified, by including tion is published in strict compliance with market regu- all their dependencies so as to be able to restore them as lations and the principle of equality of treatment of rapidly as possible. At the same time, several IT systems shareholders. UBISOFT • FINANCIAL REPORT 2008 ject tothepowersexpressly bestowed ontheBoardofDirectors bylaw andunder theArticlesofAssociation. You areherebyadvised thattheChairmanandChiefExecutive Officer carriesouthisdutieswithoutanyspecific limitations,s adapted totheteams’requirements. ness oftheteamsandmanagement,systematically reviewing risksanddeveloping effective solutions thatare The Groupintendstocontinue strengtheningitsinternalcontrol system,byspecifically focusing onraising theaware- 6.2.4 6.3 of theChiefExecutiveOfficer Limits placedonthepowers Outlook ub- REPORT OF THE CHAIRMAN OF THE BOARD OF DIRECTORS 6 155

6.4 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

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 in accordance with the provisions of Article L. 225-37 of the French Commercial Code for the fiscal year ended March 31, 2008. 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 internal 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 internal control procedures used to prepare and process accounting and financial information on which the information and the provided in the Chairman’s report are founded. - Acquiring an understanding of the work which allowed to draw up these information. - Determine if, in the case we would find during our mission important deficiencies of the internal control used to prepare and process accounting and financial, were appropriateness mentioned in the Chairman’s report. 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 30, 2008 By the auditors AUDIT AMLD KPMG Audit A division of KPMG S.A. André Métayer Laurent Prévost Partner Partner UBISOFT • FINANCIAL REPORT 2008 PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT AND FOR THE AUDIT OF ACCOUNTS 7 157

7.1 Person responsible for the reference document 158 7.2 Declaration of the person responsible for the reference document 158 7.3 Names, addresses and professional fees of the auditors 158 7.4 Documents available to the public 160 7.5 Schedule of financial communications for fiscal year 2008-2009 161 persons responsible for the reference for responsible persons document and for the audit of the accounts the audit document and for 7 UBISOFT • FINANCIAL REPORT 2008 read thereference document infull.” mation concerning thecompany’s financialpositionandtheaccounts provided inthisreference document, andthattheyhave I have obtained anauditcompletion letterfromthestatutoryauditors,inwhichtheyindicatethathave verified theinfo as adescription ofthemain risksanduncertainties towhichtheyareexposed. performance ofthebusinessandfinancialpositionCompanyallundertakings included intheconsolidation aswel included intheconsolidation, andthatthefinancialreportinchapters1,45presents afair review ofthedevelopment a and give afair viewoftheassets, liabilitiesandfinancialpositionprofitorlossoftheCompanyallundertakin I certify, tothebestofmyknowledge, thattheaccounts have been prepared inaccordance withapplicableaccounting standards this reference document isfair andaccurate andthatnothinghasbeen omitted thatcould affect itsscope. “After takingallreasonable measuresinthisregard,Icertify that,tothebestofmyknowledge, theinformation contained in Chairman oftheBoardDirectors. Mr. Yves Guillemot, 15, rueduProfesseur JeanPecker –CS14217 Mr. PierreBerthelot 15, rueCharlesLeGoffic Mr. PierreBorie 35042 RennesCedex, France Dateof1 35042 RennesCedex, France 15, rueduProfesseur JeanPecker –CS14217 represented byMr.LaurentPrévost KPMG SA Primary auditor: 35700 Rennes,France 35000 Rennes,France 27 ABoulevard Solférino represented byMr.AndréMétayer Audit AMLDSARL Primary auditor: Name A A 7.3 7.2 l l 7.1 t t e e r r n n a a t t e e

a a of theauditors Names, addressesandprofessionalfees for thereferencedocument Declaration ofthepersonresponsible for thereferencedocument Person responsible u u d d i i t t o o r r : :

st ponmn Expiration ofcurrentterm appointment 032013 2010 2003 1996 032013 2010 2003 1986 Chief Executive Officer, Yves Guillemot nd gs r- l PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT AND FOR THE AUDIT OF THE ACCOUNTS 7 159 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) Fiscal years covered: April 1, 2007 to March 31, 2008

In thousands of euros Audit AMLD Amount (excluding tax) % 2007-2008 2006-2007 2007-2008 2006-2007 Audit - Statutory audit, certification, review of the individual and consolidated financial statements • Issuer 140 127 43% 44% • Fully consolidated subsidiaries 184 159 57% 56% - Other verifications and services directly related to the auditor’s work • Issuer - - - - • Fully consolidated subsidiaries - - - - Subtotal 324 286 100% 100% Other services rendered by the networks of the fully consolidated subsidiaries - Legal, tax, social - - - - - Other (> 10% of audit fees) - - - - Subtotal - - - - Total 324 286 100% 100%

In thousands of euros Audit KPMG Amount (excluding tax) % 2007-2008 2006-2007 2007-2008 2006-2007 Audit - Statutory audit, certification, review of the individual and consolidated financial statements • Issuer 227 159 40% 34% • Fully consolidated subsidiaries 340 314 60% 66% - Other verifications and services directly related to the auditor’s work • Issuer - - - - • Fully consolidated subsidiaries - - - - Subtotal 567 473 100% 100% Other services rendered by the networks of the fully consolidated subsidiaries - Legal, tax, social - - - - - Other (> 10% of audit fees) - - - - Subtotal - - - - Total 567 473 100% 100% UBISOFT • FINANCIAL REPORT 2008 www.ubisoftgroup.com Tél. :01.48.18.50.00 93108 MONTREUIL-SOUS-BOISCedex, 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). tains thegroup’spressreleases andfinancialinformation. In addition, some ofthese documents areavailable onthecompany’s website(www.ubisoftgroup.com), whichalso con- at thecompany’s registered office orbusinessaddress (28,rueArmandCarrel–93100 Montreuil-sous-Bois, France). all documents thatmustbesent ormade available toshareholders asprovided bythelawsineffect maybeconsulted subsidiaries for eachofthetwofiscal years preceding thepublicationofthisreference document and,moregenerally, which areincluded orreferred tointhisreference document, historicalfinancialinformation ofthecompany andits tings, auditors’reports,valuations anddeclarations drawn up,whereapplicable,atthecompany’s request, some of During thevalidity period ofthisreference document, thecompany’s ArticlesofAssociation, minutesofgeneral mee- 7.4 Documents availabletothepublic PERSONS RESPONSIBLE FOR THE REFERENCE DOCUMENT AND FOR THE AUDIT OF THE ACCOUNTS 7 161 Schedule of financial communications 7.5 for fiscal year 2008-2009

Date First quarter sales Friday July 24, 2008 Second quarter sales Week of October 20, 2008 Half-yearly results Week of November 24, 2008 Third quarter sales Week of January 19, 2009 Annual sales Week of April 20, 2009 Year-end results Week of May 25, 2009

These dates are provided for information purposes only and will be confirmed during the year. UBISOFT • FINANCIAL REPORT 2008 with theCESR’srecommendations andwithinterpretationsrecommendations ofAMFpublished on01/27/06. This document have been prepared inaccordance withprovisions ofAppendixNr1fromRegulationsCE809/2004"prospectus", concordance table . EETDFNNILIFRAIN–KYFGRS .. 27 1.2.1 158 158 7.3 7.1 SELECTEDFINANCIALINFORMATION –KEYFIGURES 4. RISKS 3. 2. STATUTORY 1. PERSON Headings FACTORS AUDITORS RESPONSIBLE 41 Mmeso h or fdrcosadmngmn . 134 N/A 49 32 5.1 N/A 1.11.2 1.3.3 32 42 1.3.1 32 1.8.2 42 Conflitsofinterests 1.3.3 Membersof the Boardofdirectors andmanagement N/A CORPORATE GOVERNANCE, MANAGEMENT AND SUPERVISORY 1.8.3 EARNINGSFORECASTS ORESTIMATES N/A 14.2. INFORMATION ONMARKETTRENDS 30 14.1. RESEARCH AND DEVELOPMENT, PATENTS ANDLICENCES 14. 45 1.2.5to1.2.6 40 29to30 Sources offinancingexpected thatwillberequired tomeet thecommitments 13. Restrictionon use ofcapital 1.2.3to1.2.4 12. Information on borrowingtermsandfinancingstructure 11. 1.9.2.4 1.7.1 Information on capitalstructure 10.5. CASHASSETS ANDCAPITAL 10.4. 10.3. 10.2. Cash 118 ANALYSIS OFFINANCIALPOSITION ANDRESULT 10.1. Capitalbassets andenvironnemental masters 26 10. 118 4.1.4 Majorexistible capitalinversement 9.2. Operating REALESTATE, PLANTSANDEQUIPMENTS 9.1. Financier flow Introduction 4.1.1 9. 31and43 Description andsituationofthecompany intheGroup 1.2.7and1.9.1.1/2 8.2. 8.1. result 118 8. position 1.1 Dependence related tosome contracts 7.2. Main Exceptional events influencingmainoperations andmainmarkets 26 7.1. 4.1.5 MainMarkets 7. ORGANIZATIONAL Mainoperations 6.5. Competitive OVERVIEW OFOPERATIONS 6.4. subsidiaries 6.3. 6.2. STRUCTURE 6.1. position Registered office, legalstatus,applicablelegislation,originalcountry, 6. Companycreationdateandterm 5.2. Investments The Companyregistered address andregistration numbers 5.1.5. Historical Registered nameandtrade name HistoryandGrowththecompany 5.1.4. INFORMATION CONCERNING THE ISSUER 5.1.3. 5.1.2. background 5.1.1. 5.1. 5. BODIES ANDEXECUTIVEMANAGEMENT drs n hn ubr . n . 118and160 4.1and7.4 address andphonenumber ecie npit .. n ..12931 1.2.9 described inpoints5.2.3and8.1. 0720 nulRpr Page 2007-2008 AnnualReport .. 32 1.3.2 31 31 1.2.7 1.2.8 41 1.7.3 42 1.8.1 . 43 1.9 . 134 5.1 Headings 2007-2008 Annual Report Page

15. COMPENSATION AND BENEFITS 15.1. Compensation and benefits 2.5.7.3 86 15.2. Total amount provided for or determined for payment in connection with pensions, retirement and other benefits. 2.5.7.3 86 16. FUNCTIONING OF ADMINISTRATIVE AND MANAGEMENT BODIES 16.1. Offices held by the Directors 5.6 137 16.2. Service agreements of officiers 5.7.4 142 16.3. Information on the audit committee and compensation committee 5.3.2 and 6.1.9 135 and 147 16.4. Conformity declaration to the recommendations concerning corporate governance 4.1 118 17. EMPLOYEES 17.1. Number of employees 1.4 33 17.2 Share of capital and stock options 1.4.3 and 5.7.2 34 and 142 17.3. Agreement for employees in share capital 1.4.4 35 18. KEY SHAREHOLDERS 18.1. Distributions of capital and voting rights 4.2.3.1 129 18.2. Different voting rights 4.2.3.1 129 18.3. Control of the issuer 4.2.3.1 129 18.4. Agreements that could lead to a change in control 4.2.3.3 131 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 51 to 115 20.2. Pro forma financial information N/A N/A 20.3. Financial statements 2 and 3 51 to 115 20.4 Audit of Financial information presented 2 and 3 51 to 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 4.2.2.14 128 20.8. Legal and arbitration proceedings 1.9.2.1 45 20.9. Significant changes in the financial and trade position 1.11.1 49 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 7.4 160 25. INFORMATION ON SUBSIDIARIES AND AFFILIATED COMPANIES 3.6.6 110 and 111

© 2008 Ubisoft Entertainment. All Rights Reserved. Assassin's Creed, Driver, Far Cry, Heroes, Might and Magic, Heroes of Might and Magic, Dark Messiah Might and Magic, Imagine, Léa Passion, Catz, Dogz, Horsez, Bunnyz, Petz, Rayman, Rayman Raving Rabbids, the character of Rayman, Red Steel, EndWar, Ghost Recon, Ghost Recon Advanced Warfighter, the Soldier Icon, H.A.W.X, Sam Fisher, Splinter Cell, the Soldier Icon, Ubisoft, Ubi.com and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. / © 2008 Ubisoft Entertainment. All Rights Reserved. The Settlers, Blue Byte and the Blue Byte logo are trademarks of Red Storm Entertainment in the US and/or other countries. Ubisoft and the Ubisoft logo are trademarks of Ubisoft Entertainment in the US and/or other countries. Red Storm Entertainment Inc is a Ubisoft Entertainment company. Developed by Blue Byte Software. / © 2008 Ubisoft Entertainment. All Rights Reserved. Persistent Elite Creation, Ubisoft, the Ubisoft logo, Ubi.com, and the Soldier Icon are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Rainbow Six, Red Storm and Red Storm logo are trademarks of Red Storm Entertainment in the U.S. and/or other countries. Red Storm Entertainment, Inc. is a Ubisoft Entertainment company. / © 2008 Ubisoft Entertainment. All Rights Reserved. Based on Prince of Persia® created by Jordan Mechner. Ubisoft, Ubi.com, and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Prince of Persia is a trademark of Jordan Mechner in the U.S. and/or other countries used under license by Ubisoft Entertainment. / © 2008 Gearbox Software, LLC. All Rights Reserved. Published and distributed by Ubisoft Entertainment under license from Gearbox Software, LLC. Brothers In Arms Hell’s Highway is a trademark of Gearbox Software and is used under license. Ubisoft, Ubi.com, and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Gearbox Software and the Gearbox logo are registered trademarks of Gearbox Software, LLC. / CSI: CRIME SCENE INVESTIGATION in USA is a trademark of CBS Broadcasting Inc. and outside USA is a trademark of Entertainment AB Funding LLC. CBS and the CBS Eye Design TM CBS Broadcasting Inc. ©2000 - 2008 CBS Broadcasting Inc. and Entertainment AB Funding LLC. All Rights Reserved. © 2007 Ubisoft Entertainment. All Rights Reserved. Ubisoft, Ubi.com, and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. Company logos are trademarks of their respective owners. No celebrity endorsements implied. Game engine © 2007 Telltale Inc. All rights reserved. / LOST Video Game © 2008 Ubisoft Entertainment. All Rights Reserved. Ubisoft, Ubi.com and the Ubisoft logo are trademarks of Ubisoft Entertainment in the U.S. and/or other countries. LOST © ABC Studios. All rights reserved. / © 2002 MASASHI KISHIMOTO This product is manufactured, distributed and sold in North, South and Central American territories under license from VIZ Media, LLC. All Rights Reserved. © 2002 MASASHI KISHIMOTO This product is manufactured, distributed and sold in the rest of the world except Asia under license from TV TOKYO CORPORATION & SHUEISHA INC. All Rights Reserved. / Microsoft, Xbox, Xbox 360, Xbox LIVE, and the Xbox logos are trademarks of the Microsoft group of companies. / Nintendo DS, Wii and the Wii logo are trademarks of Nintendo. / “PSP”, “PlayStation”, “PLAYSTATION”, and the “PS” Family logo are registered trademarks of Sony Computer Entertainment 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 French Reference document was recorded on September 3, 2008 In accordance with Article 212-3 of the Autorité des Marchés Financiers General regulation (The French Securities and Exchange Commission).

Pursuant to Article 28 of European Commission (EC) Regulation 809/2004, the following information is included in this reference document by way of reference: - the consolidated financial statements, the corporate financial statements and the related auditors’ reports for the fiscal year ended March 31, 2006, as presented in the reference document recorded on September 20, 2006 under number D. 06-0863 and appearing on pages 53 to 122; - the consolidated financial statements, the corporate financial statements and the related auditors’ reports for the fiscal year ended March 31, 2007, as presented in the reference document recorded on June 27, 2007 under number D. 07-647 and appearing on pages 33 to 92; It may only be used in conjunction with a financial transaction if is supplemented by a transaction note issued by the Autorité des Marchés Financiers. The Reference document cancels and replaces the one which was recorded on July 25, 2008 on the AMF’s web site. The modifications made concern: - Chapter 7.2 : the declaration of the person responsible for the Reference document was completed by : “I certify, to the best of my knowledge, that the accounts have been prepared in accordance with applicable accounting standards and give a fair view of the assets, liabilities and financial position and profit or loss of the Company and all the undertakings included in the consolidation, and that the financial report in chapters 1, 4 and 5 presents a fair review of the development and performance of the business and financial position of the Company and all the undertakings included in the consolidation as well as a description of the main risks and uncertainties to which they are exposed.”

Copies of this Company Report are available from Ubisoft’s commercial offices : 28, rue Armand Carrel - 93108 Montreuil-sous-Bois cedex - France Ubisoft Entertainment The company is a French corporation (Société Anonyme) with a Board of Directors Capital of € 7.212.301,44 Registered office: 107 avenue Henri Fréville BP 10704 35207 Rennes Cedex 2, France Trade Register 335 186 094 RCS Rennes tél : 33 (0)1 48 18 50 00 conception and design : avantgarde WORLDWIDE HEADQUARTERS Phone: 028-85333 228 Phone: +31 (30) 66 29 110 28 rue Armand Carrel Fax: 028-85333 229 Fax: +31 (30) 66 22 306 93 108 Montreuil Sous Bois Cedex France DENMARK/FINLAND/ ROMANIA Phone: +33 (1) 48 18 50 00 NORWAY/SWEDEN 2, Expozitiei BLVD., Sector 1 Fax: +33 (1) 48 57 07 41 Hoerkaer 20 1. Floor 012103 – Bucharest DK-2730 Herlev Phone: +40 21 569 06 61 to 63 AUSTRALIA Danemark Fax: +40 21 569 06 99 Level 1 Phone: +45 38 32 03 00 2-14 Mountain Street Fax: +45 38 33 34 49 SINGAPORE UBISOFT WORLDWIDE Ultimo NSW 2007 3 Fusionoplis Way Phone: +61 (0) 2 8587 1800 FRANCE #13-22 Symbiosys Austerlitz 2000 Fax: +61 (0) 2 9211 2165 Singapore 138633 173-179 rue du Chevaleret Phone: +65 6408300 AUSTRIA 75646 Paris Cedex 13 Altmannsdorfer Straße Phone: +33 (1) 48 18 50 00 SOUTH KOREA 76A/12/17A Fax: +33 (1) 53 17 65 03 1715, 17th Floor Shinan 1120 Wien Phone: +43 1 803 21 21 GERMANY Metro Khan Building, Fax: +43 1 803 21 21 – 14 Adlerstrasse 74 943-24 Dae-chi Dong, 40211 Düsseldorf Gang-nam Gu, Seoul 135-280 BELGIUM Phone: +49 (211) 33 800 40 Phone: +82 (2) 6001 3070 105 rue Colonel Bourg Fax: +49 (211) 33 800 50 Fax: +82 (2) 6001 3073 1030 Bruxelles Phone: +32 (2) 788 23 60 INDIA SPAIN Fax: +32 (2) 788 23 61/62 2nd floor, Sharada Arcade COMPLEJO EUROPA Pune-Satara Road EMPRESARIAL BRAZIL Pune, 411037 Calle Rozabella, 2 Alameda Santos, 1827 Phone: +91 (20) 66 40 16 75 Edificio Berlín 01419-002 Sao Paulo Fax: +91 (20) 66 40 16 74 Planta 2 - Zona A 28230 Las Rozas Madrid BULGARIA ITALY Phone: +34 (91) 640 46 00 2, Sveti Kiprian blvd., Via Enrico Fermi 10/2 Fax: +34 (91) 640 46 52 bl 254, Sofia 20090 Buccinasco (Milan) Phone: +(359) 2 489 46 06 Phone: +39 (02) 48 867 11 Avenida Ragull N°60 Fax: +(359) 2 871 00 33 Fax: +39 (02) 48 867 37 2 Da Planta 08190 Sant Cugat Del Vallés Viale Cassala 22 CANADA Barcelona 5505 boul Saint-Laurent 20143 Milan Phone: +34 (93) 544 15 00 Suite 5000 Phone: +39 (02) 83 312 1 Fax: +34 (93) 590 62 53 Montreal H2T 1S6, Quebec Fax: +39 (02) 83 312 306 Phone: +1 (514) 490 2000 Fax: +1 (514) 490 0882 JAPAN SWITZERLAND Shibuya Mitake Bldg. 3F Ch. d'Entre-Bois 31, CP 68 Édifice Ubisoft 1-19-5 Shibuya 1000 Lausanne 8 390, boulevard Charest Est Shibuya Mitake Bldg. 3F Phone: +41 (21) 641 68 68 Bureau 800 Shibuya-ku, Tokyo 150-0002 Fax: +41 (21) 641 68 69 Québec (QC) – G1K 3H4 Phone: +81 (3) 5468 2751 Phone: +1 (418) 524-1222 Fax: +81 (3) 5468 1360 UNITED KINGDOM Fax: +1 (418) 524-1266 1st Floor, Chertsey Gate East Aichi Nagoya London Street, Chertsey CHINA 2-9-33 Fukue Surrey, KT16 8AP 13F & 15F, The Center Showa-ku Nagoya Business Incubator Phone: 00 44 (0) 1932 578000 989 Chang Le Road Shiragane 314 Fax: 00 44 (0) 1932 578001 Shanghai 200031 466-0059 Phone: +86 21 5407 5666 Phone: +81 (52) 889-0515 Ubisoft Reflections Fax: +86 21 5407 5156 Fax: +81 (52) 889-0517 Central Square South Orchard Street 42F, Kwah Center MEXICO Newcastle upon Tyne 1010 Huai Hai Middle Road, Torre del Angel NE1 3AZ Shanghai 200031 Paseo de la Reforma 350 piso 11 Phone: +44 191 2772222 Col. Juárez Phone: +86 21 5407 5666 Fax: +44191 2772223 Fax: +86 21 5407 5156 06600 México D.F. Phone: 52 55 91 71 13 51 USA Unit 2301, 23/F Fax: 52 55 91 71 20 77 88 Hing Fat Street 625 Third Street Causeway Bay MOROCCO San Francisco - CA 94107 Hong Kong 62, bd d'Anfa Phone: +1 (415) 547 4000 Phone: (852) 2886 8037 Angle Moulay Youssef, Fax: +1 (415) 547 4001 Fax: (852) 2886 8152 20100 Casablanca Phone: +212 (2) 20 85 87 Ubisoft Red Storm 2F, Building B2 Fax: +212 (2) 20 85 86 3200 Gateway Centre Boulevard Tian Fu Software Park Suite 100 Tian Fu Da Road NETHERLANDS (THE) Morrisville - NC 27560 High Technology Zone, Rijnzathe 7A4 Phone: +1 (919) 460 1776 Chengdu, 610041 3454 PV De Meern Fax: +1 (919) 460 1502 www.ubisoftgroup.com