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Photon Kathaas (PKP)

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Tuesday 18 September, 2012

Photon Kathaas

Interim Results

RNS Number : 4709M
Photon Kathaas Productions Ltd
18 September 2012
 



 

Photon Kathaas Productions

 

Interim results

 

Chennai, 18 September 2012.  Photon Kathaas Productions Ltd. (AIM: PKP, "Photon Kathaas", "the Company") the South Indian film company has published its results for the six months ended 30 June 2012.

 

Highlights

 

·      Further progress in developing portfolio of South Indian language films and associated properties

Completed fifth filmThanga Meengal

Ekk Deewana Tha, a Hindi Co-production with Fox-Star Studios released in Feb 2012

Commenced production of Tamilselvanum Thaniyaar Anjalum (TTA) bi-lingual (Tamil/Telugu) in June 2012

The online trailer  for Tamil (title:"NETP")/Telugu (title:"YETO") bilingual was launched on 2 September 2012 and had record views of over two million (to date) on You Tube  thereby becoming one of the Top Five Most Viewed Videos on YouTube (Entertainment).

Five films due for release in second half of 2012

·      Financial Summary:



30-Jun-2012

30-Jun-2011

31-Dec-2011

Revenue

US$

           1,372,368

           1,410,679

           4,138,711

Gross profit

US$

             368,455

             573,388

             789,374

Profit before tax

US$

             114,621  

               38,071

            (348,396)

Profit after tax

US$

               84,515  

               32,957

            (348,055)

 

Michael Rosenberg, PKP Chairman said: 

 

"I am happy to report that in first half year of the second full year of the company since it listed on AIM, PKP has not only demonstrated its ability to be a serious player in the Southern India Film production industry, but has also started to make inroads into the television (TV) market in South India.  

 

"The first six months have been profitable and our expectation is that 2012 will continue to be a profitable year underpinned by the current production schedule and the output deals that we have put in place with leading production houses which have also substantially reduced our risks."

 

Enquiries

Photon Kathaas


Michael Rosenberg

+  44 (0)20 7938 4026

Venkat Somasundaram, Chief Executive

+65 6224 4991

Reshma Ghatala, Head of Marketing

+91 44 2820 2988



Seymour Pierce Limited (Nomad & broker)

020 7107 8000

Richard Thompson /Tom Sheldon (Corporate Finance)

David Banks (Corporate Broking)




College Hill

020 7457 2020

Adrian Duffield/Jon Davies


 

About Photon Kathaas Productions

 

Photon Kathaas Productions (PKP) is a South Indian motion picture company which invests in the creation, production and exploitation of media content through a diverse portfolio of South Indian language films across different genres and budgets.

 

PKP benefits from a special creative relationship with its chief creative officer, Gautham Vasudev Menon. Gautham is one of the leading directors and producers in South Indian cinema. He has been involved in nine films to date, not only as a director but also as a screenplay writer, an executive producer and a producer. His earlier films include: Minnale (2000), Rehna He Tera Dile Mein (2001), Kaaka Kaaka (2003), Gharshana (2004), Vettaiyadu Vellaiyadi (2006), Pachaikili Muthucharam (2007), Vaaranam Aayiram (2008) Vinnaithaandi Varuvaayaa (2010), Ye Maaya Chesave (2010) and Nadunissi Naaygal (2011).

 

A. R. Rahman is PKP's creative adviser. He is an Indian film composer, record producer, musician and singer and is credited for totally overhauling the style in which music is made in India. A. R. Rahman has won two Academy Awards (Slumdog Millionaire), Twenty five Filmfare Awards, four Indian National Film Awards, a Bafta Award, two Golden Globes and two Grammy Awards.

 

Operational review

 

During the first half of the year PKP made further progress in developing its portfolio of South Indian language films (and associated properties) and diversified into television production with a contract for a new format reality TV show.  The Company now has five films due for release in the second half of the year.

 

During the period, the Company released its previously announced Hindi co-production with Fox Star Studios "Ekk Deewana Tha". As indicated in the full year results dated 28 May 2012, the film did not perform to expectations at the box office. As a result, PKP had recorded impairment against "Ekk Deewana Tha" in its results for the year end 31 December 2011. Revenues of US$ 355,617 were recognised in first half of 2012 relating to this film release.

 

PKP's fifth filmThanga Meengal, a small budget Tamil film, directed by Mr. Ram, was completed during the first half of 2012 and is now ready for release (expected in the second half of 2012). The audio rights have been sold to Sony Music for approximately US$ 10,000 and the TV rights sold to Sun TV for approximately US$ 272,000. The revenue from these rights will be recognised in the last quarter of the second half of 2012 when the film is released.

 

Further progress was made with the filming of Nee Thane Enn Ponn Vasantham "NETP" a Tamil / Telugu bi-lingual (Telugu title "YETO") which is being directed by Gautham Vasudev Menon, PKP's Chief Creative Officer.  Approximately 80% of the movie is now complete. These productions have been fully financed by third parties and PKP will receive production fees plus a share in profits.  Total production costs are approximately US$2,585,000. The music of this bi-lingual film was launched on a grand scale on 1 September 2012 with a live performance at Jawaharlal Nehru Indoor Stadium, Chennai by the Anglo-Indian Music Production, the London orchestra that recorded the original soundtrack. The online trailer of these films was released on 2 September 2012 and has received record views of over two million (to date) on YouTube, thereby becoming one of the Top Five Most Viewed Videos on YouTube (Entertainment). The film is currently slated for release in both languages in the second half of 2012. 

 

In June 2012 PKP commenced production of Tamilselvanum Thaniyaar Anjalum (TTA) a medium budget bi-lingual (Tamil/Telugu) film (with a budget of approximately US$ 2,545,000) being directed by Mr.Prem Sai. The audio rights of the film have already been sold to Sony Music (for approximately US$ 50,000) and the TV rights of the Tamil version have been sold to Sun TV for approximately US$ 636,000. The Telugu TV rights are still under negotiation. PKP has not recognised these revenues in these half yearly numbers. The film is expected to be released in both languages in the last quarter of the second half of 2012.

 

PKP has signed actor Suriya, a leading South Indian actor, for a large budget Tamil film (currently untitled) to be directed by Gautham Vasudev Menon. This film is expected to go into production during the first half of 2013.

 

Yohan: Adhyaayam Ondru - the large budget Tamil film earlier announced by PKP (as a co-production with Eros) has been shelved due to script and scheduling issues.  PKP is in discussions with the actor on an alternate script and a formal announcement is expected during the first week of October 2012.

 

On 29 May 2012 PKP announced its first foray in Television with a contract for a new format TV reality show called "Sitaara". The show is a search for the next South Indian star (actress) and is a co-production between PKP and Big Daddy Productions. The show is in pre-production and will commence production during the second half of 2012 with a TV telecast during the first half of 2013. The show will be telecast on Sun TV (the leading television channel in South India). Plans are to launch regional versions of the show in other South Indian languages. PKP expects to launch other television shows in partnership with other prominent TV channels (for 2013). PKP will receive a production fee and share in the revenues but will take no financial risk on costs.

 

Financial review

 

Revenue of US$ 1,372,368 was generated during the period compared with revenue of US$ 1,410,679 in the same period of the previous year.

 

A gross profit margin of US$ 368,445 (27%) was achieved as against US$ 573,388 (41%) in the same period of the previous year.

 

By keeping a very tight control on costs, Photon Kathaas reported profits before tax of US$ 114,621 (8% of total revenue) as against US$ 38,071 (3% of total revenue) in the same period of the previous year.

 

Earnings per share more than doubled and stood at 0.393 cents as compared to 0.154 cents in the same period of the previous year.

 

Net assets were US$ 625,012 compared to US$ 1,093,328 in the same period of previous year.

 

Cash as at 30 June 2012 was US$ 102,366 (30 June 2011 - US$ 161,366) but trade receivables as at that date were US$ 765,760 (30 June 2011 - US$ 945,328). There was a net current asset surplus over current liabilities of approximately US$ 590,773 as at the accounting date (30 June 2011 - US$ 1,046,412). Inventory, which is the value of work in progress of two movies, amounted to US$ 570,362 (30 June 2011 - US$ 1,346,454) from Thanga Meengal US$ 362,359 (30 June 2011- US$ 264,030) and bilingual TTA US$ 208,003 (30 June 2011 - nil).

 

Current trading and outlook

 

The second half of the current financial year is expected to see increases in revenues and profits from the release of the ongoing productions outlined above.

 

The profile of PKP as a listed company with a proven high quality management and creative team has already begun to attract many potential new projects.  On the back of the recently signed agreements and other new projects currently under discussion, Photon Kathaas has a strong production pipeline which should ensure continued good progress during the second half of 2012 and a good start to 2013.  

 

Venkat Somasundaram

Chief Executive

Consolidated interim statement of financial position

 

 


Notes

 

(Unaudited)

30 June 2012

(Unaudited)

30 June 2011

(Audited)

31 December 2011



US $

US $

US $

ASSETS





Non-current assets





Property, plant and equipment


2,554

3,535

2,349

Intangible assets


10,000

10,827

10,000

Prepaid expenses


21,802

37,894

20,665

Deferred tax asset

3

-

-

115

Total non-current assets


34,356

52,256

33,129






Current assets





Trade receivables


765,760

945,238

556,912

Other current assets


1,064,905

136,678

486,552

Inventories


570,362

1,346,454

576,758

Cash and cash equivalents


102,366

161,336

114,076

Total current assets


2,503,393

2,589,706

1,734,298






Total Assets


2,537,749

 

2,641,962

 

1,767,427






EQUITY AND LIABILITIES










SHAREHOLDERS' EQUITY





Share capital

2

1,454,884

1,402,016

1,442,395

Retained earnings


(570,198)

(273,700)

(654,712)

Foreign exchange reserve


(286,756)

(45,763)

(249,225)

Other reserves


27,082

10,775

18,917

Total Shareholders' equity


625,012

1,093,328

 557,375






LIABILITIES





Non-current liabilities





Deferred tax liability

3

117

5,340

-



117

5,340

-

Current liabilities





Trade and other payables


1,912,620

1,543,294

1,210,052



1,912,620

1,543,294

1,210,052






Total Liabilities


1,912,737

 

1,548,634

1,210,052






Total Equity and Liabilities


2,537,749

 

2,641,962

 

1,767,427

 

 

 

 

 

 

Consolidated interim statement of comprehensive income

For the six month period ended 30 June 2012

 


(Unaudited)

Six months ended

30 June 2012

 

 

(Unaudited)

Six months ended

30 June 2011

(Audited)

Year ended 

          31 December 2011


US $

US $

US $

CONTINUING OPERATIONS




Revenue


1,372,368

1,410,679

4,138,711






Cost of sales


(1,003,923)

(837,291)

(3,349,337)





Gross profit


368,445

573,388

789,374

Distribution costs


-

(148,656)

(314,947)

Administrative expenses

 

 

(253,824)

(386,661)

 

(822,823)






Profit / (loss) before tax


114,621

38,071

(348,396)

Income tax (expense) / benefit

 

3

(30,106)

(5,114)

341

 

Profit / (loss) for the period attributable to the owners of the parent


84,515

32,957

(348,055)

Other comprehensive income





Foreign exchange translation differences


(37,531)

(6,344)

(209,806)






Total comprehensive profit / (loss) for the period attributable to the owners of the parent


46,984

26,613

(557,861)






Earnings / (loss) per share





(a) Basic

 

4

0.004

0.002

 

(0.016)

(b) Diluted

 

4

0.004

0.002

 

(0.016)

 

 

 

 

 

 

 

Consolidated interim statement of cashflows

For the six month period ended 30 June 2012

 


(Unaudited)

Six months ended

30 June 2012

 

 

(Unaudited)

Six months ended

30 June 2011

(Audited)

Year ended

31 December 2011


US $

US $

US $





Net cash used in operating activities

(10,322)

(966,146)

 

(984,832)





Cash flow from investing activities




Purchase of property, plant and equipment


(532)

(1,649)

 

(934)

Net cash used in investing activities


(532)

(1,649)

 

(934)






Net change in cash and cash equivalents

(10,854)

(967,795)

 

(985,766)

Cash and cash equivalents at the beginning of the period


114,076

1,116,254

 

1,116,254

Effect of foreign exchange rate changes


(856)

12,877

(16,412)

Cash and cash equivalents at the end of the period


102,366

161,336

 

114,076

 

Notes to the consolidated interim financial statements

 

For the six month period ended 30 June 2012

 

 

1.      Profile and basis of preparation

 

Photon Kathaas Productions Limited ("PKP" or "the Company") is a Singapore registered company. The Company's registered office is situated at 31 Cantonment Road, Singapore 089747.

 

The principal activities of the Company and its subsidiaries (the "Group") are those relating to the business of production and co-production of films primarily targeted at the South Indian audience of varying genre, language and budget.

 

The interim financial statements for the period ended 30 June 2012 and comparative numbers have been prepared using accounting policies as are applied in the Company's annual financial statements and in accordance with International Financial Reporting Standards (IFRS). These interim financial statements do not contain sufficient information to constitute an interim financial report as that term is defined in International Accounting Standard 34. The IFRS that will be effective in the financial statements to 31 December 2012 are still subject to change and to the issue of additional interpretation(s) and therefore cannot be determined with certainty. Accordingly, the accounting policies for that annual period that are relevant to the interim financial information will be determined only when the IFRS financial statements are prepared at 31 December 2012.   

 

The consolidated interim financial statements have been prepared on the historical cost basis and going concern basis of accounting which assumes adequate financial resources are available to the Group for the period of twelve months from the date of issue of these interim financial statements. The Directors have prepared forecasts and projections which show that the Group will be able to operate within the existing cash available and generated through the future release of movies.

 

The financial information set out herein is based on the transactions of the Group, which consists of the Company and its subsidiaries: Photon Kathaas International Productions Limited, Singapore and Photon Kathaas Production Private Limited, India. The transactions and balances between the entities have been eliminated in the preparation of the consolidated interim financial statements.

 

The consolidated interim financial statements of the Group for the six months to 30 June 2012 and comparative numbers, unless indicated, are unaudited and do not comprise the Group's statutory accounts within the provision of the Singapore Companies Act, Chapter 50.

 

The numbers pertaining to 31 December 2011 were audited and the accounts approved by the shareholders on 28 May 2012.

 

 

2.      Share capital

 

PKP which is incorporated in Singapore is not required to have authorised share capital under the national jurisdiction. There is also no concept of a par value for the shares. For all matters submitted to vote in the shareholders meeting, every holder of the equity shares, as reflected in the records of the company on the date of the shareholders meeting has one vote in respect of each share held. All shares are equally eligible to receive dividends and the repayment of capital in the event of liquidation of companies.

 

 

Issued, paid up and allotted share capital:

 

Issued, allotted and fully paid

Number of shares

US $

Subscribers shares

10,000

                100

Allotment of shares on 26 April 2010

1,088,900

           10,889

Allotment of shares on 17 September 2010

401,800

             4,018

Allotment of shares on 17 September 2010

139,409

             1,394


1,640,109

           16,401

Split ratio of 10:1 on 17 September 2010

16,401,090

           16,401

Allotment of shares on 4 November 2010

4,894,301

     2,398,208

As at 31 December 2010                                                              

21,295,391

         2,414,609

Allotment of shares on 17 February 2011

68,071

33,355

Allotment of shares on 16 June 2011

47,665

23,356

Allotment of shares on  4 August 2011

34,182

16,750

Allotment of shares on  8 December 2011

48,223

23,628

As at 31 December 2011                                                              

21,493,532

2,511,698

Allotment of shares on 8 February 2012

25,487

12,489

As at 30 June 2012                                                              

21,519,019

2,524,187

 

The allotments made during the period were all in lieu of salary to non-executive director Nathalie Schwartz (5,781 shares) and Eastkings Ltd on behalf of non-executive director Michael Rosenberg (19,706 shares). No cash consideration has been received for the shares issued to the directors.

 

 

3.      Income tax

 

The income tax expense comprises:

 

a.       Current tax

b.       Deferred tax

 

The current tax expense for the period is US$ 29,989 on the profits of the Indian subsidiary after setting off of the carry forward of losses from the previous year.

 

The deferred tax liability is on account of:

 

 

Six months ended

30 June 2012

Six months ended

30 June 2011

Year ended

 31 December 2011

 

US$

US$

US$

Liability

 

 

 

Difference between tax and book written down value of tangible assets

 

(117)

 

(5,340)

 

-

Deferred tax liability

(117)

(5,340)

-

 

The deferred tax asset not recognised comprises of US$ 29,032 relating to the Singapore entities all relating to tax losses. The Singapore entities have an indefinite period of carry forward benefit of the losses. The tax on the India entity is after setting off the carry forward benefit of loss of previous years.

 

The tax expense on the results of the period varies from the amount of income tax determined by applying the statutory rates of income tax applicable in the various jurisdictions in which the group operates and result of the following:

 

 

           

Six months ended

30 June 2012

Six months ended

30 June 2011

 

Year ended

31 December 2011

 

 

 

 

Income / (loss) before tax

114,621

38,071

(348,396)

 

 

 

 

Tax at statutory rate

59,156

34,130

 (62,829)

Tax effect on non-deductible expenses

-

-

 1,878

Deferred tax asset not recognised

29,032

27,353

61,292

Deferred tax recognised

(58,082)

(56,369)

-

 

30,106

5,114

 341

 

Income tax is based on tax rates applicable on the consolidated Statement of Comprehensive Income in various jurisdictions in which the Group operates. The effective tax at the domestic rates applicable to profits in the country concerned as shown in the reconciliation above have been computed by multiplying the accounting profits with effective tax rate in each jurisdiction in which the group operates. The individual entity amounts have then been aggregated for the consolidated financial statements. The effective tax rate applied in each individual entity has not been disclosed in the tax reconciliation above as the amounts aggregated for individual group entities would not be a meaningful number.    

 

 

4.      Earnings per share

 

(a) Basic

 

Basic earnings per share is calculated by dividing the profit attributable to equity holders of the company by the weighted average number of ordinary shares in issue during the period.

 

 

           

Six months ended

30 June 2012

Six months ended

 30 June 2011

Year ended

 31 December 2011

 

US$

US$

US$

Profit / (loss) attributable to equity holders of the company

84,515

 

32,957

(348,055)

 

 

 

 

Weighted average number of ordinary shares in issue

 

21,513,698

 

21,349,736

 

21,397,902

 

 

(b) Diluted

 

Diluted earnings per share is calculated by adjusting the weighted average number of ordinary shares outstanding to assume conversion of all dilutive potential ordinary shares. The Company's average share price for the period ended 30 June 2012 was lower than the exercise price of stock options in issue during the period. As a result, the stock options are not considered to be dilutive.

 

 

           

Six months ended

30 June 2012

Six months  ended 

30 June 2011

Year ended

 31 December 2011

 

US$

US$

US$

Profit / (loss) attributable to equity holders of the company

84,515

 

32,957

(348,055)

 

 

 

 

Weighted average number of ordinary shares in issue

 

21,513,698

 

21,349,736

 

21,397,902

 

 

5.      Cash generated from / (used in) operations

 

 


Six months ended

30 June 2012

Six months 

ended

30 June 2011

Year ended

31 December 2011


US $

US $

US $

Operating profit / (loss) before tax

114,621

38,071

(348,396)





Foreign exchange loss

1,699

-

3,859

Depreciation of property, plant and equipment

328

722

1,193

Amortisation of intangible assets

-

828

1,655

Share based payment expense

8,165

8,143

16,285

Issue of share capital in lieu of salary payable

12,489

56,710

97,089

Increase in receivables

(267,383)

(904,112)

              (717,200)

Increase in inventory

(52,461)

(891,028)

           (233,224)

Increase in trade and other payables

751,294

859,845

            661,877 

Increase  in other current assets

(578,353)

(120,328)

           (470,202)

(Increase) / decrease in other non-current assets

( 721)

(14,997)

2,232


 

 


Cash used in operations

(10,322)

(966,146)

(984,832)

 

 

6.      Segment information

 

Management has determined the operating segments based on the reports reviewed by the board of directors that is charged with the strategic decision making process for the Group. Management has considered the basis of reports that are expected to be reviewed by the board when the business enters the revenue earning stage of its business cycle.

           

The board of directors considers the business to be made up of only one segment, being revenues from films and film production and therefore business segmental reporting is not considered necessary. The board of directors also considers the revenue from various types as follows:

 

 

Revenue

Six months ended

30 June 2012

US$

Six months ended

30 June 2011

US$

Year ended 

31 December 2011

US$

Own production

-

881,222

806,108

Co-production

355,617

528,156

480,769

First copy basis

943,321

1,301

2,848,833

Others

73,430

-

3,001

 

1,372,368

1,410,679

4,138,711

 

All revenues are in relation to the production, co-production, first copy production, or sale of films.

 

 

In addition to this, the board also considers segmental information from a geographic perspective. Geographically, management reviews performance of the business based on India and Rest of the World ('RoW'). Management has determined the operating segments based on the reports reviewed by the board of directors that is charged with the strategic decision-making process for the Group.

 

 

The segment information based on geography as of and for the period ended 30 June 2012 is as follows:

 

 

India

US$

   RoW

US$

Total

US$

Revenue 

1,372,368

-

1,372,368

Direct expenses 

(1,003,923)

-

(1,003,923)

Gross profit

368,445

-

368,445

 

 

 

 

Indirect expenses

(75,916)

(177,908)

(253,824)

 

Profit / (loss) before tax

292,529

(177,908)

114,621

Income tax expense

(30,106)

-

(30,106)

Profit / (loss) for the period

262,423

(177,908)

84,515

Other comprehensive expense

(37,531)

-

(37,531)

Total comprehensive profit / (loss)

224,892

(177,908)

46,984

 

           

India

US$

   ROW

US$

Total

US$

 

 

 

 

Cash and cash equivalents

26,293

76,073

102,366

Non-current assets

2,798

31,558

34,356

Current assets

2,367,099

33,928

2,401,027

 

2,396,190

141,559

2,537,749

 

 

 

 

Trade and other payables

(1,356,123)

(556,497)

(1,912,620)

Deferred tax liability

(117)

-

(117)

Net assets

1,039,950

(414,938)

625,012

 

 

 

The segment information based on geography as of and for the period ended 30 June 2011 is as follows:

 

 

 

India

US$

   RoW

US$

Total

US$

Revenue 

1,376,489

34,190

1,410,679

Direct expenses 

(815,397)

(21,894)

(837,291)

Gross profit

561,092

12,296

573,388

 

 

 

 

Indirect expenses

(357,318)

(177,999)

(535,317)

 

Profit / (loss) before tax

203,774

(165,703)

38,071

Income tax expense

(5,114)

-

(5,114)

Profit / (loss) for the period

198,660

(165,703)

32,957

Other comprehensive expense

(6,344)

-

(6,344)

Total comprehensive profit / (loss)

192,316

(165,703)

26,613

 

           

India

US$

   ROW

US$

Total

US$

 

 

 

 

Cash and cash equivalents

73,996

87,340

161,336

Non-current assets

4,362

47,894

52,256

Current assets

2,323,684

104,686

2,428,370

 

2,402,042

239,920

2,641,962

 

 

 

 

Trade and other payables

(975,528)

(567,766)

(1,543,294)

Deferred tax liability

(5,340)

-

(5,340)

Net assets

1,421,174

(327,846)

1,093,328

 

 

 

 

 

 

The segment information based on geography as of and for the year ended 31 December 2011 is as follows:

 

 

India

US$

   ROW

US$

Total

US$

Revenue 

4,104,213

            34,498

       4,138,711

Direct expenses 

 (3,327,443)

          (21,894)

(3,349,337)

Gross Profit

776,770

12,604

789,374

Intercompany income / (expenses)

(150,000)

150,000

-

Distribution costs

(314,947)

-

(314,947)

Indirect expenses

(338,939)

     (483,884)

(822,823)

Loss before tax

(27,116)

(321,280)

(348,396)

Income tax benefit

341

-

 341

Loss for the period

(26,775)

(321,280)

(348,055)

Other comprehensive income

(209,806)

-

(209,806)

Total comprehensive loss

(236,581)

(321,280)

(557,861)

 

 

India

US$

   ROW

US$

Total

US$

 

 

 

 

Cash and cash equivalents

82,962

31,114

114,076

Non-current assets

2,349

30,665

33,014

Deferred tax asset

115

-

115

Current assets

1,581,703

38,519

1,620,222

 

1,667,129

100,298

1,767,427

 

 

 

 

Trade and other payables

(686,553)

        (523,499)

(1,210,052)

Net assets

980,576   

(423,201)

557,375

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
END
 
 
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