Okay, so hope you're well. I'm going to get started. My name is Oliver. I am one of the trainers at financial Edge. I want you to be able to access these two spreadsheets, particularly Leases workout Empty, which I'm going to download now.

Okay. And I'm going to open it up.

Here it goes. Okay. So we are going to use about three of these workouts, um, to understand leases in the context of valuation, particularly trading comps, i.e. ratio based analysis. But we'll touch on some other stuff as well. Um, the basic ideas of today are, and I use this deck sometimes, close that one. All right, so the basic idea of today is understanding what leases are. Okay? What are they commercially how does the accounting see them? We're then going to explore how two rival accounting systems see leases, okay? So US GAAP US companies versus IFRS. So things like European companies.

We're then going to sort out the difference between the two systems and how they are subtly different and they cause comparability issues. And then we're going to extend those issues into valuation principally for say, a trading comp. So we're going to say, how would you prepare a trading comp for a company pulling the lease accounting into alignment so comparability doesn't suffer? Okay? So that's what we're going to do today. We've got about 50 minutes or so. Then we can answer some questions at the end. Jump in if you have questions during, I'm absolutely fine with you just saying like, what was that? Or could you repeat that? Or How did you do that formula? All of these are very good questions. Happy to hear from you. You can put your hand up, you can chat in the chat box if that's allowed with your setup. There's all sorts of things you can do. Now we're going to get started then. And the first thing we're going to do is just define, well, it's difficult to define, but we're going to explore the idea of a lease. Okay? So let's say that we are a company like Blix Bus, okay? Which seems to be becoming more and more prevalent in the uk and you may be familiar with if you are from Europe as well. Uh, maybe not. So if you are from other parts of the world, but this is a, a kind of long distance travel company that uses coaches or big buses. Now those buses or big coaches, um, they could be bought outright by Flux FlixBus or they may be leased. And if they're leased, that's an arrangement between Flick bus, okay? And they would arrange a lease maybe three years and they would say, give me the right to use the bus please to the lessor, which is the company arranging the lease, which has the bus currently.

And then they would say, I will pay you a certain amount for three years. Now in this example, we've decided that three years worth of uh, bus is worth about 90 grand, okay? Now given a bus can probably run for about 10 years, that's a very expensive bus, but we'll go with the numbers, okay? Maybe it's a really fancy bus. What we do is we put the bus on our balance sheet and then we recognize a liability on the balance sheet. Now notice we've promised to pay three years worth of 33 and the difference between a 90 and the clear 99 there is the interest element of the arrangement. So the basic idea is the accounting, it sees a lease as an asset or with debt.

So you're going to put the asset on your balance sheet and then you're going to put the debt on your balance sheet as well.

That's the basic idea behind the lease accounting. And that's shared by both rival systems. So there's not that much friction. We'll see there is a little bit, but there's not that much friction between the two.

Now that's the basics of leases. So I'm going to pause there, see if there's any questions, but then I'm going to move on between the types of leases that you could see.

Okay? So if you're still typing, then go for it. I'll continue. But if you've got a question and you're midway through, just keep going and you can interrupt me. Now, there are two types of leases and in the bad old days, pretty much everybody could access these types of leases. Doesn't matter if you were IFRS or operating and the accounting was really, really lax, okay? In the bad old days before 2019. Now since 2019 there has been a pretty seismic shift in the way that this uh, changed, okay? And the way that this is dealt with, and the way it's dealt with now is that IFRS treats all leases the same. Doesn't matter if they're short, all long term, okay? And what it does is it says it's an asset that you bought with debt over in the us They still make the distinction between finance leases, which you may have heard of as capital leases and operating leases.

I'll just extend that block a little.

Now it's much more subtle than this, but a rule of thumb, okay, a rule of thumb is that finance leases are longer term and operating leases are shorter term.

And I'll get to your uh, question in just a second now, okay, so let's say we were to talk through our bus example. Now we've got a bus and we're leasing it for three years and we've endeavored to have the asset on our books for three years and then maintain the asset with a 33 rent. Rent, okay? And it's very likely US GAP would see this as an operating lease. And that's important because that causes some of the problems that we'll see later.

Were this a 13 year lease, then it would be probably be the opposite because we would be substantially taking control of the bus throughout its life and wearing out to nothing. Nobody else could probably use it, okay? I mean it will probably be a finance lease on the US gap.

Alright, so there's been a question. How do you identify the cost of debt? Um, yeah, it's a tricky one. Okay? What you probably have to do is try and figure out what the uh, value of the asset that's underlying it is. So rather than doing it the way we're going to do it in the workout where we're going to input the cost of debt, you probably have to think, well I've got a certain number of payments, okay, over a certain amount of time and I reckon the assets worth 30. Okay? And then what I'd have to do is say, well, if somebody were to give me 30 and then I give them 10, 10, 10, 10, 10, okay, so that's five lots of 10 I could count, right? Yep. You probably have to then IIRR that lot and come to an implied cost of capital, okay? And then you'd have to build up a sort of norm for the cost of debt in the industry or for the sort of asset class you're looking at, and then tend to apply it later if that's what you need to do. The thing is, when you're analyzing company accounts, they'll sometimes reveal that to you or maybe you don't need it because rather than you having to calculate this, they'll just say it in their balance sheet.

Okay, that was a question from uh, aena and I'm probably mangling your name, apologies, but is that okay? Does that make sense? Just looking very, yes. No thumbs up. Yeah. Great. Okay, so we're back to our bus example and we were talking through the idea of a finance lease and an operating lease. Let's take a look at some real companies to just make that really clear. So we'll grab Felix. Okay? And I'm going to grab, uh, firstly I'll grab, uh, Tesla, okay, which is a US company. I'm going to grab their 10 K and I'm going to have a look at their balance sheet.

Okay? And you can see that they've got operating lease vehicles.

All right? So they're telling us what kind of assets they're doing operating lease on, okay? They're also telling us we've got some other operating lease, right of use assets. So here's some other maybe lease stuff. And so they're showing it on the assets side. They haven't mentioned finance leases because they're probably just dumping that stuff straight into pp and e because they see it as fully owned and that's the stuff that they're leasing for such a long time that they uh, they probably just reflect it as their own stuff.

Okay? Now, um, we've got a question. Will we have these slides or recording after the event? We'll have the recording, not the slides. We like to keep the slides current and kind of keep them patchable. So we keep them kind of in videos and um, in a way that we can control a bit more. And so we, we won't give out the slides, but you will have the video afterwards. Um, it will be uploaded onto that website that I've pasted several times onto the chat. So hopefully you can see that. Okay.

Alright, so I've answered that one. Good. And any questions, let me know. Uh, so we've got the asset side here. Now can you see we've got the finance leases and they're showing us the finance leases as part of debt long term and short term. They're not showing us the operating lease liabilities, but if we do a bit of digging and go to the leases, you can see here a breakdown of their operating lease liabilities. And this is one of the issues that we sometimes face with US gap companies. The overall stance on operating leases is that they're still quite operating. And so Tesla's putting the lease liability in with other operating items and we would not generally agree with that because leasing is debt. And so one of the first learning points from today in terms of comparability is that when you're putting together EV, we should include leases as debt, which might involve a bit of digging for US companies where they might embed the debt in operating items and that can be significant. As you can see, they've got 4.6 billion of lease liability within other long-term liabilities, which many people would see as operational. So that's the first learning point of today really apart from just like what is a lease, if you're doing valuation and you're putting together an EV, you may need to dig to find leases if embedded in eg other accounts.

Okay? Now I'm just going to pause. That's our first major learning point. So just give you a chance to respond if you want to or ask a couple questions. And then we'll have a look at an IRS company.

Okay? We've looked at Tesla and again, if you're typing a question, just keep typing. Um, we'll have a look at Stellantis next. Stellantis is one of those colossal companies that you may not have heard of. Uh, they're a account holding company for lots of automotive brands. Um, they're a Dutch company but they hold brands such tojo, which is French, which is a bit better known.

Uh, yeah, sure. Agario has asked a a question there. So let's take a look at Solanis then.

And remember, Solanis is an IFS company. And so let's have a look at their balance sheet. And if we go down notice that unlike Tesla, they don't really say about their leased assets because they just see them as assets.

Remember IFRS sees all leases as assets and debt and makes no distinction between finance and operating leases. So notice on the liabilities, there's no mention of leases that may lead you to believe that solanis is not leasing, but that's not the case. We have a look at leases, you can see there's substantial lease liabilities, but they're neatly put into debt and it's much less likely that an IFS company would jam leasing into operating items, although it's done in check. Okay? And that's because IFRS has a general attitude that leasing is debt, which is what we share with IFRS. We agree with that, okay? As analysts, predominantly there are some US banks that disagree and fair enough, if your outfit does it differently, then I'm all ears. But generally we recommend like we say on this slide, okay, the debt in the bridge should include all types of lease and that's generally the attitude of IRS accounts.

Okay? There was a question on the long-term short-term classification of uh, this, okay, so do you mean um, the way to decide whether it's finance or operating kind of this stuff? So you mean this stuff just um, confirm or, or say no, otherwise I'll, yeah, great. Um, it's much more complicated than this. It's all about um, who bears the risk substantially of the asset. So if I lease a building and the lessor is uh, like still maintaining the building and ensuring the building, then it's probably an operating lease. If I lease a building and it's like for 30 years and I can knock through walls and stuff and do whatever I want, you know, and put a new door in, then it's probably a finance lease.

Okay? So there are lots and lots of rules that sit under this for us gap companies that help 'em to decide. But as a rule of thumb, longer term leases are finance and short term leases are operating because with short term leases, you're going to hand back the asset for somebody else to lease after you. So it's a bit more like rental, which is how the US gap kind of attitude is towards operating leases.

Okay. Uh, I could see you've said thanks, but I just wanna check, is that okay for you? Is that, is that what you wanted? I dunno if you said thanks to that or, yeah. Great. Okay, so critical point aana, we'll get to that. Somebody's asked how would you explain concisely? That's a, that's a word. Um, the i 16 impacts on ebitda, EBIT and net income, we'll get to that. I'm not sure you can concisely because it's complex. Okay? Um, the more concise you get, the less understandable you'll be. So I think we, we'll get to that and then you'll get a handle on it and then you'll have to summarize it in a way that works for you. Okay? So we'll get there.

Now let's take a look at how an IFS company would classify a lease in their accounts. Okay, so we're going to work out one, let me know if you haven't got the workouts and I'll paste the link up again.

And you can see this PLC, the reports here on the IRS, we're going to come up with the present value, okay? To calculate the value of the asset. Okay? The value of the asset isn't 50 'cause that contains an interest element, okay? The value of the asset will contain an interest element, which is the rate.

There's a number of periods and there's the payment.

The rest of the fields are not necessary for today. They'd cover things like payments at the end. Again, timing of payments, if they're okay, I get a negative value. Let's just flip the sign on that. It's a bit of a quirk of the PV function. And so we'd say if you arrange a lease which involves five payments of 10 with the cost of debt of 4%, then the predicted value of the asset today is 44.5. And we're going to put that into our lease asset and we're going to behave as if we borrowed to create that asset.

And so we're going to put it in lease liability, which will generally go in debt in an IRS company.

Now we're going to let that equal the starting for each of the schedules.

And then we're going to first depreciate the asset over five years. So we're going to take the starting value, divide it by five years, both locked, make that negative, okay? So what I've got there is I've got a nice depreciation schedule.

If I then pull that to the right, you can see that five locks of depreciation gets rid of the asset. So we're behaving as if the asset is kind of entirely ours.

Next we go on to the liability. The liability will be lifted up by interest because we'll owe more and the liability will be reduced by the annual payment, which will be a cash flow.

And what we're doing here is effectively modeling an amortizing loan. It's exactly how an amortizing loan would be modeled if I've done the job properly. If I then copy to the right, you'll see that that amortizes really neatly down to zero. And you can see more or less the asset is the same as the liability. There's slight friction because of the difference between the cash flow and the expenses.

But more or less the asset is following the liability.

Okay? Now I wanna put that stuff where it goes in the p and l, just pausing to see if there's any questions so far up.

Okay? Now the depreciation charge, we can just grab from up here and then the interest costs, which in the p and l will be a negative go like that. And then we've got our total lease expense. And if we pull that to the right, you can see the lease expense is initially high and then goes down. And that's because of the timing impact. Okay? The kind of compounding effect. And if we would some left to right, we'll see that it amounts to 50. So the friction between the cash which amounts to 50 and the expense in the end, end fixes itself. So the accounts will balance just fine. It's a temporary difference. So it's nothing to worry about.

Now this lot will go to the cashflow statement.

This lot will go to sg and a. This lot will go to interest in the p and l. And what we've got here is an IFS company that is treating the debt as debt, generating interest and treating the asset as an owned asset. And so putting the depreciation in depreciation, that's IFRS and we need to understand that if we're going to um, contrast it to us gap. So I'm going to pause now and see if there are any questions.

Oops.

Okay. Still just waiting to see if there's any questions.

Wait a couple of seconds more and if you're still typing, keep going.

Alright, now, APP two says we've got basically the same company and it's a little dodgy because this needs to be an American company now. And that's because they decided to uh, report on the US gap. The other thing that we need to assume is we need to assume they'll treat this as an operating lease.

Okay? Now that's quite dodgy.

I wonder if anybody can figure out why it would be, you know, using the kind of logic that we were using before. Okay? Uh, it would require a bit of mental gymnastics. Why is it a bit dodgy? Assuming they're going to classify this as an operating lease, okay? Pay particular attention to that line there.

I wonder if anybody can get it.

Okay, so I'll uh, I'll give the game away. Ah, yeah, that's it. So anonymous, uh, attendee, uh, said we pay it off in full and then uh, agario in the chat. Um, I think it's invisible to most people 'cause you gotta click everybody. Um, you keep the asset until the end of its useful life. Absolutely. So look at the asset. It's going to depreciate down to zero, which means substantially you are going to be the owner of that asset, which means in the real world, it's very unlikely that this would be an operating lease, okay? Very unlikely due to keeping it until the end of its life.

Now we're going to go with it 'cause we want the same numbers and we want it to be simple and we don't want a residual value. Okay? We wanna keep things really simple today, but just be aware that's not exactly real worldly. Now AANA is saying why have we not done interest on an average basis basis? Yeah, that's a good question. I think because the PV hasn't done it on an average basis.

Okay? So because this has treated the embedded interest in that payment as being interesting, okay, try that again. It's treated the embedded interest as being the end of the period, not during the period. Then making that assumption here is safe.

Does that make sense Ana? It's inherent in the way that the kind of the initial kind of working was done. Good. All right. So we are accepting that this is an operating lease even though that might not be totally um, accurate, we can now just pinch the PV from up here because it's basically the same asset isn't it? That's the point of the two workouts. We're comparing what would happen if the company up sticks and went to the us We can then populate the lease asset and lease liability just like we did before and have the schedules starting gate. And now we're actually going to start with interest. So we're going to say whatever's there at the beginning, it's going to accrue interest just like it did before and here that's going to be positive.

And then we'll reduce the interest by the payment. So it's looking very similar to above 'cause it's exactly the same.

Okay, we can then pull that to the right and we'll get again exactly the same as we got above and now is when the fireworks going to start. So feel free to jump in if I'm not making any sense. Now, in US gap, the lease expense equals the cash flows, okay? So whatever comes up down here will equal 10.

Now because of that, the operating expense becomes a missing figure exercise where we can say if interest is 1.8 then depreciation must be 8.2. If the two add up to minus 10 and there's a bit of gymnastics there because of the signage. But hopefully you can see that the end point is that US gap has the rent expense as equal to the cash flow.

Okay? If we pull that to the right, you'll see that it does depreciate down to zero. But it does so in a slightly unusual way because this is now effectively just balancing so that the rent expense just sits at 10.

Now just before you ask questions, if you've got them, this depreciation expense is basically notional. It won't hit sg and a.

Okay? And then this interest cost is notional, it won't hit interest.

But this lease expense, which contains both of them will hit generally SG and a.

And so the US gap company will charge the lease expense to SG and A every year, which causes quite a big divergence because can you see that only the depreciation expense was in SG and A under IFRS, whereas the interest cost was not.

And there's more problems that will meet later, but this is at the core of what's happening today is the difference between these two systems and how they treat the lease operating lease expense.

Do they split it like I-F-R-S-S and try and treat it as debt or do they just put it in rent because they see operating leases more as renting an asset? Okay, these are two rival systems that have two different treatments under the p and l that cause friction. Now feel free to ask questions. That's the end of cap two. Now we'll start talking about comparability and how to deal with EBIT and ebitda.

I don't see any questions. Keep typing if you've got them and I'll come back, don't worry. Just keep typing. Alright, let's have a look at workout five then. And uh, this will be the one last workout we do where we bring everything together and say how does this impact EBIT EBITDA and our valuation multiples. Okay, now imagine instead of YMA, it says Tesla.

Okay? And then imagine it says Alice wishes convey it to and then it says STIs. So maybe you want to create a comp and lift it off Tesla and put it on stellantis. Okay? It's a bit farfetched, but just imagine.

Now that means that we want to drag us gap into alignment with stellantis.

Now we've got Tesla's information and we're going to create comparables for Tesla, which will be helpful for comparison with STIs. i.e. an IRS company. Let's run down here. And we've got EBIT as reported. So this contains rent, which is the whole lease expense for operating leases.

So this EBIT contains the whole of that 2 8 4, okay? It's inside the EBIT and that's 'cause we're looking at a US gap company and we've again got depreciation and amortization. This contains no information about operating leases.

That's 'cause this is a US gap company. And the entire operating lease expense is embedded in the rental expense, which goes to sg and a most likely.

We've then got quite a mysterious fraction, okay? And we've got information from the credit agencies and it says that the general breakdown of the rent expense into depreciation and interest is two thirds, one third.

Now this would be established by looking at other companies. And if you see that the entire expense here is about 10.

And for this company something like 20%, okay, it declines. But something like 20% initially is interest.

Okay? Probably a bit lower actually, isn't it? In fact, why even bother trying to do the maths? So something like 17% is initially interest, which means more like 83% is depreciation. Now we've decided in this sector that's going to be more like a third two thirds.

So when we split US gap rent, we'll use this, we've then got bridge items, ridge items, bridge items, bridge items, bridge items. And then we start our workings. And our objective is to create an IFRS adjusted EBITDA and an IFRS adjusted EBIT.

Okay? So that's the intro, just waiting for questions if you've got them.

So we've got the EBITDA reported. Now we actually have to generate that by adding the EBIT to the D.

We've then gotta think well on the US gap.

And then on the IRS, how would EBITDA look on the US gap? The whole rent was already deducted and that's 'cause it was already in sg and a. So you know, the EBITDA of the US gap company contains the rental as a deduction within it. That's where you can think about it. That 2 8 4 is sat in here.

Now an equivalent IFS company would have split rent into interest and depreciation and then EBITDA would ignore both.

So the IRS equivalent would have no operating lease expenses in it.

And that means that we will add back the entire rent when we arrive at our IFRS comparable ebitda. And that's the easy one.

Okay, now we're going to move on to EBIT. And here we've gotta be really careful. I, I tend to make errors if I try and go too fast here. So in EBIT under US gap actually it's pretty much exactly the same isn't it? So EBIT contains the whole rent expense for a US gap company because it was already deducted as part of SG and A-I-F-R-S Would have split rent into interest and depreciation and EBIT would ignore interest.

So to pull this into alignment, now we need to make our version of EBIT ignore the implied interest that would have been there were we reporting 'em to IRS.

Now Yana, you asked earlier how would you concisely talk about how um, you know IRS 16 has impacted EBIT and ebitda. I reckon you're looking at it there. Okay, that's not a bad concise summary of the entire webinar really. 'cause everything is fumbling towards this adjustment.

Now we've got the EBITDA EBIT as reported and now instead of adding back the entire rental expense, we're going to have to find the implied part of it that's interest from experience effectively and you know, some kind of sector multiple or fraction. So from experience about a third of interest in this sector is um, excuse me, a third of rental is interest. And so we're going to add back a third of rental and now we've got IFRS adjusted EBIT.

Okay, now let's do the bridge. So I tend to draw them out. Okay so we have equity in the bottom left and we have debt, okay? And that would include leases, which we recommend that you treat as debt.

Then we have cash in the top left And then we'll be left with EV in the bottom left. That's generally how I've learned and teach the EV bridge.

So if we are moving okay from equity, then we would add all of the debts including the leases. We don't care what kind of lease it is, we treat everything as debt and then we've hopped over to the left. So we're going to deduct cash. You could think about that as net debt as well if you want. And so our EV is about 75 billion.

Now that means that our EV EBIT as reported is 13.3. And were we to translate that to an IFRS adjusted comparable, Okay? It would be more like 13. That's not a huge difference. But the more prevalent operating leases are in the industry, the more that gap can widen and the more this task becomes important for comparability purposes, the gap will also widen if you do EBITDA based multiples. And that's because EBITDA has a bigger adjustment 'cause it takes the whole of rent into account.

If we do it this way, you can see that the gap is widened slightly and we're not talking 0.3, we're talking more like 0.5 difference, which proportionately is higher because of multiples we're smaller to begin with.

Okay? Again, I'm pausing. I want you to ask questions. If you have any questions about this workout now or about the context or what we're up to in the time we've got left, we'll probably take a look at how we might fix Tesla's account.

Okay? So if I was going to Felix, now I don't know if this will work actually. So if I go stellantis And I then have a valuation because they're an IRS company. So I can't directly show you the stellantis, uh, multiple I probably could on FactSet but I don't wanna fire up fact X it takes ages. So what I'll do instead is I'll act as if I've got the multiple of stellantis and I'm going to Tesla, I'm going to valuation. I see Tesla has a valuation of 78.1.

Okay? As in a multiple, that's a US Gap multiple and it's comparable against other US gap companies, okay? If we look at the way that that's being prepared, we would say EV here, right? And then we would go back and we would find ebitda.

Okay? And there's the uh, I think it's uh, cal one. So let's grab that one.

And so then we get EV over the dark and there's our 78 and that should match that 78 there. So that's how it's being prepared. The problem is this EBITDA contains the rent.

Okay? So if we now just do a quick um, reconciliation to IFRS, we would, now we've got actually the lease data here, but just imagine you have to find it.

You would go and find their lease data and I'm just going to do it from 10 K to simplify a bit And I'm not going to worry too much about timing. You can pick holes in this quite easily and I'm going to go to leases and I'm looking for the lease expense and there it is 1,500.

I'll just hardcode that. Okay? So I could then say IRS EBITDA And I would add that to the US gap ebitda. And then I would say IRS multiple and I've grabbed the same EV assuming that the debt's all in there, which I probably need to check 'cause remember Tesla was hiding arguably some debt within other. Now assuming that's been solved, I would then grab that and you can see it makes an enormous difference.

So this has been a, uh, a big change because their uh, lease expense is actually quite big. And so if you were trying to compare STIs to uh, Tesla, you would need to work to make them align with each other.

Okay? Now we've reached the end of the webinar as such. Um, feel free to stick around and ask questions. Um, if you do then I'm all ears and we can go anywhere you want. You can ask questions about this or you know, anything that's adjacent to it or anything really. You've got me for another 10 minutes or so. If you wanted to log off now and have a nice afternoon, evening and weekend, uh, or morning depending on where you are. I guess it's possible to be morning somewhere. Um, then, uh, have a lovely weekend. I hope it's being useful. Okay? And I hope to see you again in a future webinar. Okay? So if you're sticking around, feel free to ask as many questions you like if you logging off, have a nice wicket.

Yeah. So Agario is asking can we review the payment schedule for the US gap workout too? Yeah. When you say review, what, what, what be you more, what would you like to talk about? Just zoom me in on, on something so I don't just randomly talk through the whole workout again.

Yeah, I mean in, in the end, uh, agario they don't matter that much to us because we are not going to worry too much about how Tesla gets from one PPE to the next.

See what I mean? So looking in Tesla's accounts, sort of their balance sheet, they've got these operating right of use assets and they're moving around 'cause they're buying them and they're depreciating. And so behind the scenes, fair enough, Tesla are doing something like this and they do have a kind of notional depreciation expense that's eroding the value of the asset. But we don't care that much about that because from our point of view, we are not going to do this level of calculation. This is for illustrative purposes. What we care about is knowing that Tesla has everything to do with operating leases baked into one figure that we can generally find somewhere in the footnotes.

I know that's not answering your question directly, but you don't need this level of detail. That's what I'm saying. You won't be performing individual asset calculations like this unless you go and work in like management accounting or something, which may very well be your angle and in which case let me know.

Okay? I've got uh, another question. Uh, what's the impact of IFRS on net income? Um, yeah, Ayana, I guess the, uh, the interest would hit net income.

Okay. And the depreciation would as well.

Uh, let me just think it through so you know, kind of repeat.

So in net income, just think it through. This isn't something I often think through. So if the whole rent was already deducted, fair enough. And then here you would split rent into interest depreciation, which would have hit net income. So can you see, there's no problem between the net income of US gap versus CIP RS.

Okay, there's no comparability issue.

Does that make sense? So that was your question, IANA. So I'm just looking for confirmation from you. I Okay. I am not getting any confirmation.

I'm just going to assume you're okay. Um, now I've got a follow up from agario. Uh, yeah, like I, I'd prefer you to think about it much more like workout five. This is the kind of thing you might be doing as an analyst not working on individual assets. So I think your comment makes complete sense more like workout five. Good. Alright. Fiona has asked, um, more about the macro importance of knowing how to do, now when you say macro, is it, is that kind of fancy language for like overall or something? Or do you mean like economic? Just wanna check, Uh, how do these valuations fit in? So general, so you're using the word macro to mean just like generally? Yeah. Okay. Uh, whenever I see macro, I don't think economics, uh, venture capitalists or private equity analyst would need to, I mean, venture capital, the thing is, um, in my experience, which is relatively limited with venture capital is that most valuation techniques break down for venture capital. And so you're not going to be using this level of detail for venture capital at all because a lot of venture capital valuations are nowhere near the level of detail that we've seen here because this level of detail just isn't possible. They don't have an EBIT, they don't have an ebitda, they might not even have revenue. And so this just is not relevant to venture capital as far as I can tell that there, there might be exceptions. I just don't see it as relevant really. Um, to LBO. Yeah, I guess if you're going to inspire your bid price for a takeover as a fund from multiples, then you're looking at mature enough companies that this would matter if you're going to take a multiple from the US and use it to apply to, uh, uh, an IRS company. So for comparability, you might need to use it, uh, in the context of an LBO. That's true. Fiona, is that kind of tick your, your list there? Does that make sense? Yeah. Okay. Uh, all right. So ya this is more around the introduction of IFS 16 and whether this changes over time. Do you mean historically or in the future? So let's say Yana, you mean the introduction of IRS 16 in like 2019 or do you mean future changes that I being planned to IRS 16? Yeah, I, I don't know. I I I'm not so up to date with Yes, the standards at the moment. You, you one of my colleagues, I would probably know that I, I thought there were some changes coming, but I'm not aware of them, I'm afraid.

Okay. I think I've addressed everybody's questions and either answered them or attempted to answer them. I'm just going to pause for a minute and see if there's anything else that comes in.

Alright, well that's the end of the webinar. It's six o'clock, uh, UK time, so have a nice evening, afternoon, whatever it is, and I'll see you for another webinar, hopefully, uh, and I, I hope you have a nice evening. Okay. The, uh, the recording will become available in due course. Okay. And I appreciate your questions and, uh, participation, it always makes it more entertaining. Okay, so bye-bye.