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Investor Presentaiton

NOTE 13 STOCKHOLDERS' EQUITY: In 2009 and 2008, the Company repurchased 889,400 and 31,400 shares, respectively, that were outstanding in the Mexican Stock Exchange in the amount of Ps11,474 and Ps442, respectively, generating a capital stock reduction at December 31, 2009 and 2008 of Ps890 and Ps31, respectively. In addition, during 2009 and 2008, the Company placed 41,000 and 16,000 shares, respectively, which had been repurchased in prior years. These placements amounted to Ps658 and Ps218, respectively, generating a capital stock increase of Ps41 and Ps16, respectively. The Company's subscribed and paid-in capital stock totaled Ps427,782, plus an increase of Ps533,266, to express the capital stock in modified historical pesos of December 31, 2009, and is represented by 427,509,963 common nominative shares, with no par value. At the April 2009 Ordinary General Stockholders' Meeting, the stockholders agreed to decree dividends to the majority stockholders to be paid out from retained earnings in the amount of Ps214,045 and to the minority stockholders in the amount of Ps145,000 decreed at the April Ordinary General Stockholders Meeting. At the April 2008 Ordinary General Stockholders' Meeting, the stockholders agreed to decree dividends to the majority stockholders to be paid out from retained earnings in the amount of Ps214,179, and to the minority stockholders in the amount of Ps110,000, decreed at the April Ordinary General Stockholders Meeting. Dividends paid are not subject to IT if paid out from the After Tax Earnings Account (CUFIN for its acronym in Spanish) which balance at December 31, 2009 and 2008 amounting to Ps1,088,227 and Ps1,050,716, respectively, and will be taxed at a rate that fluctuates between 4.62% and 7.69% if paid out from the reinvested CUFIN. Dividends paid in excess of this account are taxable at a rate of 42.86%, if paid in 2010. The current tax is payable by the Company and may be credited against IT for the same year or the following two years or, if applicable, against the Flat Tax (FT) for the period. Dividends paid out from profits previously taxed for IT purposes are not subject to tax withholding or additional tax payment. In the event of a capital reduction, the excess of stockholders' equity over capital contributions, totaling Ps1,299,817 and Ps1,255,014 at December 31, 2009 and 2008, respectively, is accorded the same tax treatment as dividends. a.IT NOTE 14 INCOME TAX (IT) AND FLAT TAX (FT): Book and tax results differ mainly due to items taxed or deducted over time, differently for book and tax purposes, due to recognition of the effects of inflation for tax purposes, as well as to items only affecting either book or tax results. Based on its financial and tax projections, Company management determined that the tax to be paid in the future will be IT, and has therefore recognized deferred IT. IT under the tax consolidation regime: Grupher has authorization, granted by Ministry of Finance on December 30, 1992, to determine its IT under the tax consolidation regime, together with its direct and indirect subsidiaries in Mexico, as per the provisions of the IT Law. In 2009, the Company determined a tax profit of Ps225,181 (consolidated tax loss of Ps544,081 in 2008), which exceeds that determined for FT purpose. Consolidated book and tax results differ mainly due to items taxed or deducted over time, differently for book and tax purposes, due to recognition of the effects of inflation for tax purposes, as well as to items only affecting either consolidated book or consolidated tax results. On December 7, 2009, a decree was published amending, adding to and revoking a number provisions of the IT Law, as shown below: a. The IT rate applicable from 2010 to 2012 is 30%, 29% for 2013 and 28% as from 2014. At December 2009, the aforementioned rate change produced an increase to the deferred IT balance of Ps5,404, with the corresponding effect on income for the year, which was determined based on the expected reversal of temporary items at the rates in effect at that time. b. The possibility of using credits for the excess of deductions on taxable income for FT purposes (credit of tax loss for FT purpsoes) to reduce the IT payable is eliminated, although they can be credited against the FT base. c. The tax consolidation regime was modified to require that IT related to the tax consolidation benefits obtained as from 1999 be paid in installments during the period from the sixth to the tenth year following that in which said benefits were made use of. The aforementioned tax consolidation benefits stem from: i. Tax losses used in tax consolidation that were not authorized on an individual basis by the controlled company that generated them. ii. Special consolidation items arising from operations conducted between the consolidating entities, and that generated benefits. iii. Losses from the sale of shares not yet deducted individually by the controlled company that generated those losses. iv. Dividends distributed by the consolidating controlled companies not paid out from the after tax earnings account (CUFIN) or reinvested CUFIN. 45 45 TRUST IN OUR FUTURE
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