WEBVTT 1 00:00:00.100 --> 00:00:03.400 Now we are ready to account for what is going to happen in December 2 00:00:03.400 --> 00:00:06.600 and realize the first accounting closing. 3 00:00:07.600 --> 00:00:10.600 There will be some surprises in December. The 4 00:00:10.600 --> 00:00:14.300 first one is that there is a mismatch between forecast on 5 00:00:13.300 --> 00:00:14.900 reality. 6 00:00:15.500 --> 00:00:18.300 You remember that the actual sales volume in November 7 00:00:18.300 --> 00:00:21.400 wall 400 plus 600 which is 1,000. 8 00:00:22.200 --> 00:00:25.200 And I had anticipated 700 plus 9 00:00:25.200 --> 00:00:28.900 800 in December. This is why I accumulated 10 00:00:28.900 --> 00:00:32.300 inventories of 500 puzzles now 11 00:00:31.300 --> 00:00:34.200 in December. I'm going to make 12 00:00:34.200 --> 00:00:37.500 some purchases to prepare for Generate and I 13 00:00:37.500 --> 00:00:40.500 decide to purchase 1,400 units, but 14 00:00:40.500 --> 00:00:43.200 the actual December sales are going to 15 00:00:43.200 --> 00:00:46.700 be seven hundred as anticipated for b2c. 16 00:00:46.700 --> 00:00:49.600 But only six hundred for B2B. There 17 00:00:49.600 --> 00:00:53.700 is a disappointment and I sell only 1,300 puzzles. 18 00:00:54.400 --> 00:00:57.800 What will be my inventories at the end of December beginning 19 00:00:57.800 --> 00:01:01.200 inventory 500 plus purchases 20 00:01:00.200 --> 00:01:03.500 1,400 minus what 21 00:01:03.500 --> 00:01:08.100 gets out of my warehouse 1,300 unsold 22 00:01:07.100 --> 00:01:11.200 products are 600. That's 23 00:01:10.200 --> 00:01:13.200 clearly a disappointment. But now I 24 00:01:13.200 --> 00:01:16.600 have to prepare my accounts before I visit the 25 00:01:16.600 --> 00:01:19.600 external auditor and do the closing of 26 00:01:19.600 --> 00:01:20.400 my business. 27 00:01:21.800 --> 00:01:24.300 Preparing December is the commercial 28 00:01:24.300 --> 00:01:27.500 disappointment first. Why because the actual sales 29 00:01:27.500 --> 00:01:30.800 are less than the forecast sales but sales are 30 00:01:30.800 --> 00:01:33.500 still 36,000. I make a gross margin 31 00:01:33.500 --> 00:01:38.000 of 10,000 always same kind of calculation admin 32 00:01:36.400 --> 00:01:39.800 expenses and selling expenses are 33 00:01:39.800 --> 00:01:42.400 quite the same fixed cost and then 34 00:01:42.400 --> 00:01:45.700 I make a profit and I make more profit in December 35 00:01:45.700 --> 00:01:48.700 than in November, which is still some 36 00:01:48.700 --> 00:01:49.200 good news. 37 00:01:50.300 --> 00:01:54.400 What about inverteries beginning is 500 and 38 00:01:53.400 --> 00:01:56.600 is 600 as I 39 00:01:56.600 --> 00:01:59.300 calculated before you multiply that by 40 00:01:59.300 --> 00:02:02.300 20 which is a purchasing price and you understand that 41 00:02:02.300 --> 00:02:05.100 my inventory is going to go up from 42 00:02:05.100 --> 00:02:08.900 10,000 to 12,000. You remember 43 00:02:08.900 --> 00:02:12.200 beginning plus minus and 44 00:02:13.200 --> 00:02:16.400 same story for accounts receivable. What we'll do 45 00:02:16.400 --> 00:02:19.200 by my B2B customers was 46 00:02:19.200 --> 00:02:22.200 15,000 and I'm going to collect that and I am 47 00:02:22.200 --> 00:02:25.700 also going to collect the December b2c sales. 48 00:02:25.700 --> 00:02:28.500 What is still outstanding at the end of the bones is 49 00:02:28.500 --> 00:02:32.500 a B2B sales, which is 600 units 50 00:02:32.500 --> 00:02:35.600 multiplied by 25 same story 51 00:02:35.600 --> 00:02:39.100 also for a chance payable. What will 52 00:02:38.100 --> 00:02:41.400 do to my supplier at the end 53 00:02:41.400 --> 00:02:44.900 of November was 15% of November purchases 54 00:02:44.900 --> 00:02:47.600 15,000. Now I decide to 55 00:02:47.600 --> 00:02:50.800 purchase an additional 1,400 puzzles. 56 00:02:50.800 --> 00:02:53.900 It's going to cost me 28 iPad 57 00:02:53.900 --> 00:02:56.100 15% of that. What is you at? The 58 00:02:56.100 --> 00:02:59.700 end is the other 50% which is 14,000. 59 00:03:00.300 --> 00:03:03.900 Then you understand that I cashed out 14 plus 15, 60 00:03:03.900 --> 00:03:06.900 which is 29,000. That's absolutely 61 00:03:06.900 --> 00:03:09.500 the same each and every month now I 62 00:03:09.500 --> 00:03:12.200 can build my second statement, which is a change in 63 00:03:12.200 --> 00:03:15.400 cash position cash from sales is a 64 00:03:15.400 --> 00:03:18.400 36,000 I calculated in your accounts receivable. 65 00:03:19.100 --> 00:03:22.900 Cash, outlay for the supplies is a 29,000. I 66 00:03:22.900 --> 00:03:26.500 calculated in your accounts payable minus Administration 67 00:03:25.500 --> 00:03:27.800 minus sales. 68 00:03:28.700 --> 00:03:31.400 So you understand that here as in virtually 69 00:03:31.400 --> 00:03:34.300 level is quite stable. I don't 70 00:03:34.300 --> 00:03:37.400 generate completely my profit into cash 71 00:03:37.400 --> 00:03:40.600 but I still improve my cash position. It 72 00:03:40.600 --> 00:03:43.500 had dramatically deteriorated in November because I 73 00:03:43.500 --> 00:03:46.800 was building this inventory now I cash in 74 00:03:46.800 --> 00:03:49.200 3,700 and at the 75 00:03:49.200 --> 00:03:53.000 end of the period the cash is 10,400 having 76 00:03:52.400 --> 00:03:56.000 done that job. I visit the external auditor. 77 00:03:55.300 --> 00:03:58.100 I have a surprise and I get an 78 00:03:58.100 --> 00:04:01.200 information from the auditor. The surprise is 79 00:04:01.200 --> 00:04:05.000 that my auditor tells me you forgot something quite important 80 00:04:04.600 --> 00:04:08.100 you forgot to account for income tax 81 00:04:07.100 --> 00:04:10.300 you made a profit you are 82 00:04:10.300 --> 00:04:14.000 going to pay taxes. Now when I calculated my 83 00:04:13.600 --> 00:04:16.800 retain earnings I retain some 84 00:04:16.800 --> 00:04:19.700 earnings, but part of it definitely was 85 00:04:19.700 --> 00:04:22.600 not belonging to me because I forgot to 86 00:04:22.600 --> 00:04:25.800 take into account again tax income tax. 87 00:04:25.800 --> 00:04:28.500 So my retainer earnings are over EV 88 00:04:28.600 --> 00:04:31.300 But I have to recompute everything from the very 89 00:04:31.300 --> 00:04:34.300 beginning in order to introduce the income tax 90 00:04:34.300 --> 00:04:34.600 rate. 91 00:04:35.300 --> 00:04:39.300 That's a bad surprise, but there's an information once 92 00:04:38.300 --> 00:04:41.700 the retainer earnings is properly calculated. 93 00:04:41.700 --> 00:04:44.100 You might consider distribute part of 94 00:04:44.100 --> 00:04:47.700 this retained earnings because it belongs to uses the 95 00:04:47.700 --> 00:04:50.100 accumulated net profit and maybe you want to 96 00:04:50.100 --> 00:04:53.600 return some cash to you as a shareholder through dividend. Then 97 00:04:53.600 --> 00:04:56.100 you have to decide which share of the 98 00:04:56.100 --> 00:04:59.400 profit you're going to distribute which is going to give you the 99 00:04:59.400 --> 00:05:02.500 dividend payout ratio and also the dividend 100 00:05:02.500 --> 00:05:04.800 per share which is going to be distributed. 101 00:05:05.600 --> 00:05:09.000 Let's start first with the income tax. You remember 102 00:05:08.300 --> 00:05:11.500 my profit my operating profit from 103 00:05:11.500 --> 00:05:14.100 September to December the total which is 104 00:05:14.100 --> 00:05:16.200 accumulated is 13,400. 105 00:05:16.900 --> 00:05:19.600 In the parameters tab, you are the 106 00:05:19.600 --> 00:05:22.600 tax rate which is 20% So I 107 00:05:22.600 --> 00:05:25.200 have to pay some income tax which is 20% of 108 00:05:25.200 --> 00:05:28.000 13,400, but it's going to 109 00:05:28.100 --> 00:05:31.700 be paid in January you don't pad before you know, exactly 110 00:05:31.700 --> 00:05:34.600 how much is due of course in real 111 00:05:34.600 --> 00:05:38.400 life when a company's that maturity. It makes adverse 112 00:05:37.400 --> 00:05:40.300 tax payments, but this is the first time we 113 00:05:40.300 --> 00:05:43.600 run the business and obviously we are going to pay later 114 00:05:43.600 --> 00:05:46.700 only when we know exactly how much income 115 00:05:46.700 --> 00:05:49.500 tax is you who's a state as it's 116 00:05:49.500 --> 00:05:52.200 going to be paid later. It is a liability which 117 00:05:52.200 --> 00:05:55.400 comes from the business operations and it is an operating 118 00:05:55.400 --> 00:05:58.500 liability something which is due and 119 00:05:58.500 --> 00:06:01.500 will be paid later. The net earnings is 120 00:06:01.500 --> 00:06:04.200 now accumulated profit throughout the 121 00:06:04.200 --> 00:06:08.200 four month minus tax, which is 10,000 700 122 00:06:07.200 --> 00:06:09.000 and 20 123 00:06:10.200 --> 00:06:13.700 Now I can build my p&l Consolidated for 124 00:06:13.700 --> 00:06:16.300 the four months of activity year one 125 00:06:16.300 --> 00:06:19.500 total sales total cost of sales gross margin 126 00:06:19.500 --> 00:06:22.200 admin expense 1000 plus 127 00:06:22.200 --> 00:06:26.300 1000 plus twice 2000. So salesperson 128 00:06:25.300 --> 00:06:28.900 twice 1,300 operating 129 00:06:28.900 --> 00:06:31.400 profit minus income tax 130 00:06:31.400 --> 00:06:34.200 is net earnings. I insist on 131 00:06:34.200 --> 00:06:36.600 net earnings. Why do we set net? 132 00:06:37.300 --> 00:06:41.600 Look at the p&l my business generated 80,000 of 133 00:06:41.600 --> 00:06:42.400 revenues. 134 00:06:42.800 --> 00:06:45.500 But you know, I have to remunerate first all 135 00:06:45.500 --> 00:06:48.700 the people who contributed to the activity the 136 00:06:48.700 --> 00:06:51.500 stakeholders the suppliers the employees 137 00:06:51.500 --> 00:06:53.700 including myself and the state. 138 00:06:54.300 --> 00:06:58.200 What remains is name a result and 139 00:06:57.200 --> 00:07:00.200 it belongs to in the end 140 00:07:00.200 --> 00:07:03.100 the owners of the company the shareholders of 141 00:07:03.100 --> 00:07:06.900 the company. This is a residue. This is a residual remuneration 142 00:07:06.900 --> 00:07:09.100 which belongs to the shareholders. 143 00:07:10.100 --> 00:07:13.600 Now this is a big difference between stakeholders and 144 00:07:13.600 --> 00:07:16.300 shareholders stakeholders that provide goods 145 00:07:16.300 --> 00:07:20.100 and services to the company suppliers Services 146 00:07:19.100 --> 00:07:23.000 of any guides Etc against a contractual 147 00:07:22.800 --> 00:07:26.200 or illegal tax remuneration, 148 00:07:25.200 --> 00:07:29.000 but it's fixed by contract 149 00:07:28.300 --> 00:07:30.000 or by the law. 150 00:07:30.700 --> 00:07:33.500 What about shareholders shareholders? They 151 00:07:33.500 --> 00:07:36.500 provide fonts, they provide Financial 152 00:07:36.500 --> 00:07:39.600 Capital so that the company can be run 153 00:07:39.600 --> 00:07:43.300 and they are remunerated with what remains after all 154 00:07:42.300 --> 00:07:46.800 stakeholders have been contractually or 155 00:07:46.800 --> 00:07:49.100 legally remunerated. So there are the 156 00:07:49.100 --> 00:07:52.200 last ones to be remunerated. This is why it's name the 157 00:07:52.200 --> 00:07:55.500 bottom line of the p&l now during the 158 00:07:55.500 --> 00:07:58.500 shareholders meetings. The annual meeting shareholders are 159 00:07:58.500 --> 00:08:01.500 going to first approve formally approved by 160 00:08:01.500 --> 00:08:03.600 vote the result of the period. 161 00:08:04.400 --> 00:08:07.200 It's not approved by the external auditory. So the 162 00:08:07.200 --> 00:08:10.400 proved by the board it is formally approved Again by the 163 00:08:10.400 --> 00:08:13.200 shareholders. Then they are going to decide what they 164 00:08:13.200 --> 00:08:16.200 do with their money. So they decide which 165 00:08:16.200 --> 00:08:19.800 amount is distributed back into their pocket versus how 166 00:08:19.800 --> 00:08:23.000 much is rain vested retained in 167 00:08:22.200 --> 00:08:23.600 the company? 168 00:08:24.600 --> 00:08:27.700 Then you understand that shareholders. They do Finance 169 00:08:27.700 --> 00:08:30.500 business operations, but not only by 170 00:08:30.500 --> 00:08:33.500 buying the shares which I should buy The Firm but also 171 00:08:33.500 --> 00:08:36.600 by reinvesting or or part of 172 00:08:36.600 --> 00:08:39.700 the prophets which again belongs to 173 00:08:39.700 --> 00:08:42.700 them. Let's apply that to the income allocation 174 00:08:42.700 --> 00:08:45.400 than any common appeared you remember we calculate 175 00:08:45.400 --> 00:08:47.300 it 10,720. 176 00:08:48.600 --> 00:08:51.700 I decide to declare dividend which is 2000. It's 177 00:08:51.700 --> 00:08:54.700 going to be paired in January. So it's decided after 178 00:08:54.700 --> 00:08:57.400 I know exactly the net income of the period it 179 00:08:57.400 --> 00:09:00.900 will be paid later. It is again an operating liability. 180 00:09:01.700 --> 00:09:04.800 As I declare a dividend, which is 2000 and 181 00:09:04.800 --> 00:09:07.700 as there are 1,000 shares I distribute to 182 00:09:07.700 --> 00:09:10.700 dollars per share. So dividend payout 183 00:09:10.700 --> 00:09:15.300 ratio is 2000 / 10,720, which 184 00:09:14.300 --> 00:09:18.800 is about 20% 19% And 185 00:09:17.800 --> 00:09:21.000 what does it mean I distribute 186 00:09:20.200 --> 00:09:26.000 2000. It means that I retain 8,700 187 00:09:23.000 --> 00:09:26.300 and 188 00:09:26.300 --> 00:09:29.000 20 this dividend has to be 189 00:09:29.900 --> 00:09:32.800 approved formally approved and voted by the general 190 00:09:32.800 --> 00:09:35.800 shareholder meeting. Now. I can close 191 00:09:35.800 --> 00:09:38.900 my balance sheet at the end of your one. I 192 00:09:38.900 --> 00:09:41.300 have inverteries and receivables on cash 193 00:09:41.300 --> 00:09:45.000 which comes from my calculations capital is 194 00:09:44.900 --> 00:09:47.900 10,000. No change retain earnings. 195 00:09:47.900 --> 00:09:50.300 I have to completely recompute and the 196 00:09:50.300 --> 00:09:53.300 income allocation, which I just described gives you the figure 197 00:09:53.300 --> 00:09:57.100 8,720 accounts payable 198 00:09:56.100 --> 00:10:00.100 accounts pay your calculation and dividends 199 00:09:59.100 --> 00:10:01.600 payable is an operating liab. 200 00:10:01.700 --> 00:10:04.400 The 2000 which is going to be paid in January 201 00:10:04.400 --> 00:10:07.400 income tax payable is a new concept as 202 00:10:07.400 --> 00:10:10.100 well 2,680 which is going to 203 00:10:10.100 --> 00:10:13.300 be paid in January. And the good news. Is that for the 204 00:10:13.300 --> 00:10:16.700 first closing the balance? It is balancing which is no more 205 00:10:16.700 --> 00:10:17.400 a surprise. 206 00:10:18.200 --> 00:10:21.400 Now I suggest as an exercise that you move to 207 00:10:21.400 --> 00:10:23.000 the tab December. 208 00:10:23.600 --> 00:10:26.800 And I'm going to ask you a couple of questions what happens 209 00:10:26.800 --> 00:10:29.200 if you don't take at all 210 00:10:29.200 --> 00:10:32.500 in contacts into accounts, then in the 211 00:10:32.500 --> 00:10:35.600 parameters time, which is bottom left 212 00:10:35.600 --> 00:10:38.300 you replace the rate of 20% Which 213 00:10:38.300 --> 00:10:41.600 is a value for the tax rate by 0% You 214 00:10:41.600 --> 00:10:42.600 assume that there is no tax. 215 00:10:43.500 --> 00:10:46.200 Second question what happens if you decide to pay no 216 00:10:46.200 --> 00:10:49.100 dividend then the dividend which is going to be declared is zero. 217 00:10:49.900 --> 00:10:52.700 First let's have a look at no tax. Of course. 218 00:10:52.700 --> 00:10:55.800 The p&l is wrong. Of course, another earnings 219 00:10:55.800 --> 00:10:58.900 are wrong because you did not take into account a 220 00:10:58.900 --> 00:11:01.700 cost, which is absolutely legal. So 221 00:11:01.700 --> 00:11:04.400 your overestimate your net earnings by the 222 00:11:04.400 --> 00:11:07.700 amount of tax, which should show in a p&l you remember the 2000 223 00:11:07.700 --> 00:11:10.300 680 but what is 224 00:11:10.300 --> 00:11:13.200 very interesting is that the balance sheet balances? 225 00:11:14.200 --> 00:11:19.600 You understand that the income tax payable as disappeared 2,680 226 00:11:17.600 --> 00:11:20.300 and has 227 00:11:20.300 --> 00:11:24.200 been perfectly traded of against the 228 00:11:23.200 --> 00:11:26.500 retained earnings which are overestimated by 229 00:11:26.500 --> 00:11:30.000 the 2,680 one 230 00:11:29.200 --> 00:11:32.300 is exactly balancing the other 231 00:11:32.300 --> 00:11:35.200 then you understand that a balance. It 232 00:11:35.200 --> 00:11:38.600 mechanically balances even when it 233 00:11:38.600 --> 00:11:39.300 is wrong. 234 00:11:40.100 --> 00:11:44.100 What happens now? Is this no dividend profit 235 00:11:43.100 --> 00:11:46.700 is unchanged why because the 236 00:11:46.700 --> 00:11:49.800 p&l has not the objective to calculate how 237 00:11:49.800 --> 00:11:52.700 much dividend you're going to return to your shoulders 238 00:11:52.700 --> 00:11:55.400 the p&l as an objective to calculate the bottom 239 00:11:55.400 --> 00:11:59.600 line, which is the earnings attributable distributable 240 00:11:58.600 --> 00:12:01.100 and belonging to the 241 00:12:01.100 --> 00:12:05.200 shareholders. Now the shareholders based on that they decide 242 00:12:04.200 --> 00:12:08.100 what is distributed but your 243 00:12:07.100 --> 00:12:10.400 first calculate the p&l and it's bottom 244 00:12:10.400 --> 00:12:13.800 line before you decide on the dividend. The p&l 245 00:12:13.800 --> 00:12:16.500 is absolutely not affected by the amount 246 00:12:16.500 --> 00:12:19.400 of dividend which is decided now you pay 247 00:12:19.400 --> 00:12:22.900 your taxes, but you decide to pay no dividend what happens 248 00:12:22.900 --> 00:12:25.700 to the cash situation short term 249 00:12:25.700 --> 00:12:28.500 no change why because taxes is going 250 00:12:28.500 --> 00:12:31.500 to be paid in January and dividend is going to be paid 251 00:12:31.500 --> 00:12:34.400 in January. So if you look at the cash situation of 252 00:12:34.400 --> 00:12:37.200 the company at the end of December, of course, it's not affected by 253 00:12:37.200 --> 00:12:39.900 the fact that you pay or you don't pay a dividend. 254 00:12:40.100 --> 00:12:43.500 Because the cash outlay will not happen in December, but later in 255 00:12:43.500 --> 00:12:44.000 January. 256 00:12:44.800 --> 00:12:48.200 So you understand that you have more reinvested Capital 257 00:12:47.200 --> 00:12:50.400 which is traded off 258 00:12:50.400 --> 00:12:53.700 against no payment of any dividend in 259 00:12:53.700 --> 00:12:54.100 January. 260 00:12:54.700 --> 00:12:57.400 Of course, there is no change in the cash position at the 261 00:12:57.400 --> 00:13:00.500 end of December, but there will be an impact in January which I'm 262 00:13:00.500 --> 00:13:02.300 going to discuss in the rapid. 263 00:13:03.200 --> 00:13:06.800 Some fundamental knowledge about December when 264 00:13:06.800 --> 00:13:09.700 you make a profit you pay tax you pay 265 00:13:09.700 --> 00:13:12.700 income tax on the profit. The tax 266 00:13:12.700 --> 00:13:16.000 is a percentage of profit which obviously depends 267 00:13:15.200 --> 00:13:17.800 on the country you're operating in 268 00:13:18.700 --> 00:13:22.600 The net earnings are the residual remuneration 269 00:13:21.600 --> 00:13:24.300 attributed to shareholders. 270 00:13:24.900 --> 00:13:27.400 And as she orders are remunerated with what 271 00:13:27.400 --> 00:13:30.400 is left, it might be up. It might be 272 00:13:30.400 --> 00:13:33.900 down. It might be very volatile. It's risky. 273 00:13:34.700 --> 00:13:37.100 And this not earnings are attributed to 274 00:13:37.100 --> 00:13:41.300 shareholders after the company has contractually or 275 00:13:40.300 --> 00:13:43.900 legally remunerated all the stakeholders. 276 00:13:44.700 --> 00:13:47.300 Then the remuneration is a contract or the 277 00:13:47.300 --> 00:13:50.500 remuneration is what is left. It completely changes the situation 278 00:13:50.500 --> 00:13:53.200 stakeholders versus shareholders. 279 00:13:54.500 --> 00:13:57.700 Now I should decide to increment the retained earnings 280 00:13:57.700 --> 00:14:00.500 of the company. So not distribute the 281 00:14:00.500 --> 00:14:03.900 entire profit but retained part of the profit. The 282 00:14:03.900 --> 00:14:07.200 reason is because you need additional financing to 283 00:14:06.200 --> 00:14:09.600 finance and funds your projects 284 00:14:09.600 --> 00:14:12.800 your growth you remember that grows consumes 285 00:14:12.800 --> 00:14:15.600 Financial Resources, you need financial resources 286 00:14:15.600 --> 00:14:18.300 to financial growth. This is why you decide to 287 00:14:18.300 --> 00:14:22.100 increment retain earnings and not distribute 100% 288 00:14:23.300 --> 00:14:26.500 as a consequence the dividend which you actually distribute to 289 00:14:26.500 --> 00:14:29.300 the shareholders is all the profits which are 290 00:14:29.300 --> 00:14:32.900 generated by the company beyond the financing needs 291 00:14:32.900 --> 00:14:35.900 financing needs means retained earnings 292 00:14:35.900 --> 00:14:39.200 beyond that can be distributed a 293 00:14:38.200 --> 00:14:41.200 little bit of additional knowledge for your 294 00:14:41.200 --> 00:14:42.800 Finance culture. 295 00:14:43.400 --> 00:14:46.900 The distribution rate you remember the 19% is 296 00:14:46.900 --> 00:14:49.800 dividend divided by net earnings what we 297 00:14:49.800 --> 00:14:52.900 named. The retention rate in finals is 298 00:14:52.900 --> 00:14:55.600 the other way around one minus the 299 00:14:55.600 --> 00:14:59.100 dividend power ratio, if I distribute 19, I 300 00:14:58.100 --> 00:15:01.400 keep I retain inside the 301 00:15:01.400 --> 00:15:04.100 company 81% This is 302 00:15:04.100 --> 00:15:06.600 why this is name retained earnings. 303 00:15:07.300 --> 00:15:10.400 Now when you make a profit you can distribute when you 304 00:15:10.400 --> 00:15:14.000 generate losses. You cannot distribute your also. This is absolutely obvious. 305 00:15:13.200 --> 00:15:17.200 But even though sometimes companies 306 00:15:16.200 --> 00:15:20.300 generate losses for period they 307 00:15:19.300 --> 00:15:23.100 still decide to distribute a dividend 308 00:15:22.100 --> 00:15:25.200 and they have the possibility to do 309 00:15:25.200 --> 00:15:28.900 it if they still have some former retained 310 00:15:28.900 --> 00:15:30.600 earnings in the balancing. 311 00:15:31.300 --> 00:15:34.700 Now when a company's making losses and still 312 00:15:34.700 --> 00:15:37.800 pays the dividend to the shareholders, that's a 313 00:15:37.800 --> 00:15:40.700 signal. Of course. This is valid for listed 314 00:15:40.700 --> 00:15:43.700 firm more than for private firm and the 315 00:15:43.700 --> 00:15:46.600 signal which is sent to the market is we don't 316 00:15:46.600 --> 00:15:49.400 interrupt the dividend. We stabilize the dividend 317 00:15:49.400 --> 00:15:52.600 because these laws was an accident and later 318 00:15:52.600 --> 00:15:55.600 on we are going to keep on increasing so they've 319 00:15:55.600 --> 00:15:58.300 done each and every year that's an accident. 320 00:15:58.300 --> 00:16:01.500 That's not a structure or reduction in the 321 00:16:01.500 --> 00:16:04.700 profit. Now you understand that when 322 00:16:04.700 --> 00:16:07.800 the board is setting up the strategy 323 00:16:07.800 --> 00:16:10.300 the dividend policy. It's going to propose to 324 00:16:10.300 --> 00:16:13.600 the shareholders. There's a combination in the 325 00:16:13.600 --> 00:16:16.600 setting of growth what you need to finance 326 00:16:16.600 --> 00:16:19.900 your growth and the signal you want to send to Capital 327 00:16:19.900 --> 00:16:20.500 markets. 328 00:16:21.600 --> 00:16:24.300 December is over. We realize the 329 00:16:24.300 --> 00:16:27.400 first closing of the activity now, I 330 00:16:27.400 --> 00:16:30.300 would like to propose you a quick wrap-up about 331 00:16:30.300 --> 00:16:33.100 what happened during this first year of operations.