Gun-Ho went to work in GH Building, Sinsa Town.
Director Kang and Manager Hong entered Gun-Ho’s office, carrying some documents. It seemed that they were ready to give Gun-Ho the year-end profit and loss report. Gun-Ho called for the secretary—Ms. Yeon-Soo Oh.
“Please bring us three cups of green tea.”
“Yes, sir.”
Director Kang and Manager Hong unfolded the documents that they brought.
Gun-Ho said, “GH Development has a simple profit system. So, I expect to hear a simple financial report concluding the previous year.”
“Yes, sir.”
Director Kang started the report as he handed a summary chart of GH Development’s year-end financial status to Gun-Ho.
“The sales revenue increased to 9.9 billion won. We made 100 million more than last year.”
“We don’t have any vacant space in the building, do we?”
“No, sir. The entire building is currently occupied completely.”
“If any tenant on the 17th floor and 18th floor gives a notice to vacate their office, please let me know before finding another tenant. We might have a use for those offices for ourselves.”
“Yes, sir.”
Manager Kang continued, “Our profit is 100 million won.”
“We are making a profit, huh?”
“The building maintenance reserve and the depreciation are…”
At that point, Gun-Ho stopped Manager Kang by saying, “That would be enough. You don’t have to give me all the details. I’m already aware of those numbers. I want you to get me the officially assessed land price for this building later.”
“Yes, sir. I’m not sure about this year, but it’s very possible that this building’s officially assessed land price will increase next year. The price of real estate in Gangnam District is constantly on the rise. As the price of the property increases, I will have it reflected on the rental price of the offices in this building.”
“Hmm, it will give more burden to our tenants.”
“Once the officially assessed land price increases, the property tax of our building and land will increase accordingly. The government will try to increase its tax revenue by collecting more tax that way. I feel sorry for the tenants, but as we incur more tax to maintain the building, we will have to share the burden with all of the building occupants, which is fair. We can’t lose money to make the tenants’ financial burden less heavy.”
“Yeah, I’m sorry for the tenants as well.”
“We are a for-profit company. Raising the rent is necessary in order to generate profits under the circumstance, sir. Even though we raise the rent, we will still enjoy a 100% occupancy rate since we are located in the middle of Gangnam District which is one of the most desirable locations. If we place an office space available on the market, it will be taken right away.”
“You are getting along with the real estate agents in the area, right?”
“Of course, sir. I was even invited to a wedding last time. The real estate agent in Gangnam Real Estate Office across the street has a daughter, and I attended his daughter’s wedding. He looked very delighted to see me at the wedding.”
“Good. You will have to maintain good connections with our tenants as well.”
“Yes, sir.”
Once Director Kang and Manager Song left Gun-Ho’s office, GH Media’s President Jeong-Sook Shin entered the office. President Jeong-Sook Shin brought a simple chart to Gun-Ho, and she said, “This is the report on our last year’s profit and loss, sir.”
Gun-Ho asked Secretary Yeon-Soo Oh again to bring a cup of tea for President Shin.
“We have achieved a sales revenue of 2.8 billion won last year.”
“That’s very good.”
“2.8 billion won includes the sales revenue from the art gallery and the book café. I can give you the exact number for each business since we have several businesses going on.”
“That won’t be necessary. Can you now tell me about the expenses?”
“The labor cost and all other expenses are 1.1 billion won altogether. We didn’t categorize it with a cost of sales or a general administrative cost as a manufacturing company would.”
At that moment, Secretary Yeon-Soo Oh brought two cups of tea.
“Please have some tea.”
“Thank you.”
President Shin continued as she sipped her tea, “GH Media has no financial debt owed to a financial institution. Therefore, we don’t have non-operating expenses or income as many manufacturing companies do. We have some interest income for the funds in the bank, but I didn’t include it to the chart since it’s an insignificant amount.”
“If we deduct those expenses from the total sales revenue, that would be the net profit?”
“Yes, sir. We made 1.7 billion won profit before tax. After paying 20% corporate tax, we will be left with 1.36 billion won which is our net profit. GH Mobile and Dyeon Korea are probably paying 22% corporate tax since they are large companies with corresponding large profits. But, GH Media is small enough to pay less corporate tax—20%. The companies, which are even smaller than GH Media that make less than 200 million won, pays 10% of corporate tax.”
“The profit system of publishing companies looks way better than the one of manufacturing companies.”
“That’s not entirely true, sir. The publishing industry has its own hardship in doing business. It’s really hard to increase sales, for example. Of course, we can produce good profits, but that’s only if we successfully sell books. If we fail to come up with a best-selling book, the company will have to close its business. It’s a very risky business. That’s why we see a lot of publishing companies opening and also closing the business within a year, just like deep-fried chicken restaurants.”
“Hmm, really?”
“That’s why the government is waving VAT on publishing companies, hoping it would promote businesses in a cultural industry.”
“Hmm, is that so?”
While President Shin was sipping her tea, Gun-Ho asked her, “So, the net profit after tax is 1.36 billion won, right?”
“Yes, sir. So, I was thinking… We want to distribute dividends for the amount of 1.2 billion won.”
“1.2 billion won?”
“Right. You will receive 1.14 billion won while I take 60 million won for my 5% share.”
“Hmm.”
“GH Media now has one more income source—the drama production. We will start making revenue from it starting next year. I’m so excited. Haha.”
“Okay. Let’s distribute the dividend as you just suggested. That’s fine with me.”
“I understand that the dividend of 1.14 billion won from GH Media is not much for you, considering that you have other companies where you make additional income from, but 60 million won is a big money for me. I’m going to pay for my debt with it. Haha.”
“Paying for your debt? I didn’t know you have a debt.”
“I have 300 million won to pay off.”
“300 million won? It’s not an insignificant amount for an individual. Did you run a business before and it went broke?”
“No, sir. I bought a condo, and that’s my mortgage loan. I now live in Nonhyeon Town. I’m a resident in Gangnam District. Hahaha.”
“Really? Congratulations. I guess you purchased a very nice condo, assuming that high amount of loan.”
“I used to live in a 25 pyung large condo in the Raemian Condo Complex in Dangsan Town. It was a lump-sum lease with 450 million won.”
“I see.”
“I had to commute all the way to Sinsa Town here from Dangsan Town, which was not easy, so I looked for a condo around here. I wanted a condo within a walking distance from my work. The condo price in Nonhyeon Town is surprisingly high even considering its location in Gangnam District.”
“Hmm.”
“My real estate agent found one condo for me. It’s the condo in Sindonga Pamillie Condo Complex. He told me that I should buy it when it was still available since it was on the market for a relatively low price. He guaranteed that its price would go up no matter what. He also connected me to a loan officer.”
“How much did you pay for the condo?”
