August dom­i­nated by com­pa­nies’ in­terim re­sults

Monthly Round up Report for August 2017

The Malta Business Weekly - - FRONT PAGE -

In August, the Malta Stock Ex­change launched its new

MSE Eq­uity To­tal Re­turn In­dex,

which in­cludes the div­i­dend pay­ments dis­trib­uted by listed com­pa­nies. The in­dex fell by 1.272 per cent, clos­ing at 8,925.135 points. Turnover amounted to €9.2m spread across 22 equities of which 11 fell, nine gained ground and two closed un­changed.

Si­monds Far­sons Cisk plc

shares reg­is­tered an in­crease for the fifth con­sec­u­tive month hav­ing ad­vanced by €0.24 or 3.1 per cent as a mere 915 shares changed own­er­ship across five deals. The food and bev­er­age eq­uity closed at a record high of €8.

Bank of Val­letta plc (BOV)

shares os­cil­lated be­tween a monthly high of €2.15 and a low of €1.99, to ul­ti­mately close 2.5 per cent lower at €2.097. The eq­uity wit­nessed 355 trades of 892,108 shares. The board of direc­tors of BOV de­cided to vol­un­tar­ily pro­vide early dis­clo­sure of sum­marised fi­nan­cial in­for­ma­tion for the in­terim six-month pe­riod ended June 30, 2017.

The group reg­is­tered a profit be­fore tax of €68m, equat­ing to a Re­turn on Eq­uity (ROE) of 18 per cent – €5m, or 8 per cent higher when com­pared to the same pe­riod last year after ad­just­ing for the one-off gain of €22m, aris­ing on the dis­posal of the bank’s in­ter­est in Visa Europe. This was mainly due to the even lower in­ter­est rate en­vi­ron­ment ex­pe­ri­enced in 2017. Analysing into fur­ther depth the group’s dif­fer­ent seg­ments, the in­crease in profit arose pre­dom­i­nantly as a re­sult of im­proved prof­itabil­ity within the Per­sonal Bank­ing & Wealth Man­age­ment divi­sion (up by 26 per cent) and Cor­po­rate Bank­ing divi­sion (up by 11.1 per cent).

The bank is plan­ning to strengthen its cap­i­tal base by is­su­ing €150m in a fresh is­sue of share cap­i­tal, in or­der to strengthen its cap­i­tal buf­fers, and to en­able the bank to un­der­take new in­vest­ments, sus­tain lend­ing ac­tiv­ity and dis­trib­ute ap­pro­pri­ate div­i­dends to its share­hold­ers.

HSBC Bank Malta plc shares stum­bled by €0.15 or 7.3 per cent as 81 trans­ac­tions of 337,811 shares were struck, clos­ing at €1.90. The bank reg­is­tered a profit be­fore tax of €25.9m for the six months ended June 30, 2017, com­pared to a profit of €41.3m reg­is­tered in the com­pa­ra­ble pe­riod of 2016. On an ad­justed ba­sis, after ex­clud­ing the €10.8m in­vest­ment gain on the sale of Visa Europe last year, profit was down by 15 per cent. Net in­ter­est in­come for the pe­riod un­der re­view amounted to €60.3m – down by 5.6 per cent from 2016. How­ever, all three main busi­ness lines, Re­tail Bank­ing and Wealth Man­age­ment, Com­mer­cial Bank­ing and Global Mar­kets, con­tin­ued to be prof­itable dur­ing the six month pe­riod un­der re­view. Earn­ings per share (EPS) de­creased from €0.075 to €0.047. The bank an­nounced that a net in­terim div­i­dend of €0.03 net of tax per share will be paid on September 11, 2017 to share­hold­ers on the bank’s reg­is­ter as at August 10, 2017 – in-line with the cur­rent div­i­dend pay-out ra­tio of 65 per cent.

Lombard Bank Malta plc

shares fully erased July’s gain hav­ing edged 1.3 per cent over three deals of 3,330 shares, clos­ing €0.03 lower at €2.36. Dur­ing the month the com­pany re­ported that profit be­fore tax for Lombard Bank group – con­sist­ing of Lombard Bank Malta plc and Red­box Lim­ited plc (the com­pany hold­ing the bank’s shares in Mal­taPost plc) in­creased by 7.6 per cent to €4.7m for the first six months of 2017, com­pared to €4.4m in the same pe­riod last year. Net in­ter­est in­come at bank level for the first half of 2017 rose by 1.9 per cent from €7m to €7.1m.

The un­favourable in­ter­est rate en­vi­ron­ment per­sisted, putting fur­ther down­ward pres­sure on the in­ter­est mar­gin. The bank man­aged these rates, which were ab­sorbed and not passed on to its cus­tomers. This cost was mit­i­gated by ad­di­tional in­ter­est earned from a vol­ume in­crease of 13.5 per cent in Cus­tomer Loans and Ad­vances, thus re­sult­ing in a pos­i­tive net in­ter­est mar­gin. EPS in­creased from €0.057 to €0.06. No in­terim div­i­dend pay­ment is be­ing rec­om­mended.

FIMBank plc shares were the only pos­i­tive per­form­ers in the bank­ing in­dus­try, hav­ing gained seven per cent across 13 trades of 502,141 shares, to close $0.05 higher at $0.76. In August the Group an­nounced that it had reg­is­tered a profit be­fore tax of $4.2m for the six months ended June 30, 2017 com­pared to $2.2m reg­is­tered dur­ing the same pe­riod in 2016. Op­er­at­ing in­come for the pe­riod un­der re­view amounted to $25.7m, an in­crease of 17.4 per cent from 2016. Mean­while, EPS in­creased to $1.32 from the $0.38 reg­is­tered in 2016. The direc­tors do not rec­om­mend the pay­ment of an in­terim div­i­dend.

Glob­alCap­i­tal plc shares reg­is­tered the best per­for­mance for the month hav­ing soared by 10 per cent over two trades of 1,540 shares, clos­ing €0.03 higher at €0.33. The com­pany re­ported that Christo­pher J. Pace, the founder share­holder who held 5.04 per cent of the vot­ing rights in the com­pany had dis­posed of all his shares in the com­pany.

Global Cap­i­tal re­ported that it reg­is­tered a profit be­fore tax­a­tion on a con­sol­i­dated ba­sis for the six months ended June 30, 2017 to­talling €2.4m com­pared to the prior pe­riod equiv­a­lent to €1.9m.

Glob­alCap­i­tal Life In­sur­ance Lim­ited’s con­tri­bu­tion to­wards the con­sol­i­dated profit be­fore tax­a­tion amounted to €1.3m, com­pared to a profit of €696,352 for the same pe­riod in 2016. The con­tin­ued ef­forts to reg­is­ter­ing sus­tained lev­els of new busi­ness re­sulted in an in­crease in the value of in-force busi­ness for the pe­riod un­der re­view of €1.2m.

The Glob­alCap­i­tal Fi­nan­cial Man­age­ment Lim­ited also reg­is­tered an im­proved level of ac­tiv­ity and like­wise an in­crease in op­er­a­tional costs. This, to­gether with en­hance­ments to the com­pany’s pro­vi­sion­ing pol­icy, led to a profit be­fore tax­a­tion to €131,607 com­pared to €7,169 for the pe­riod ended June 2016. The direc­tors did not rec­om­mend the pay­ment of an in­terim div­i­dend.

Mapfre Mid­dle­sea plc shares in­creased by €0.039 or 2.1 per cent as 5,902 shares changed own­er­ship across eight trans­ac­tions, clos­ing at €1.939.

Plaza Cen­tres plc shares headed the list of fall­ers hav­ing sagged by 9.5 per cent, to close €0.109 lower at €1.04. The eq­uity was ac­tive on 15 deals of 102,900 shares.

Tigne Mall plc shares fell by €0.07 or 7.2 per cent over the high­est turnover for the month of 17 trades of 3.2m shares, clos­ing at €0.90. The Group re­ported that it reg­is­tered a profit be­fore tax of €1.6m for the six-months ended June 30, 2017 com­pared to €1.4m reg­is­tered dur­ing the same pe­riod in 2016. Rev­enue for the pe­riod un­der re­view amounted to €2.9m, an in­crease of 3.5 per cent from 2016. Mean­while, EPS in­creased to €0.019 from the €0.014 reg­is­tered in 2016.

The direc­tors have de­clared an in­terim net div­i­dend pay­ment of €726,150 (2016: €705,000) equiv­a­lent to €0.0128. The in­terim div­i­dend was paid on August 31, 2017 to share­hold­ers on the com­pany’s reg­is­ter at close of busi­ness on August 17, 2017.

Malita In­vest­ments plc

shares slipped by two per cent as 262,000 shares changed hands over 11 trans­ac­tions, to close at €0.75. The com­pany re­ported that it reg­is­tered a profit be­fore tax of €9.7m for the six months ended June 30, 2017, com­pared to €4.9m reg­is­tered dur­ing the same pe­riod in 2016. Rev­enue for the pe­riod amounted to €3.5m, an in­crease of 1.8 per cent from 2016. Mean­while, EPS de­creased to €1.13 from the €2.66 reg­is­tered in 2016.

The direc­tors of the com­pany ap­proved the pay­ment of a gross in­terim div­i­dend of €0.0132 per share equat­ing to an in­terim net div­i­dend of €0.00858 per share. The in­terim div­i­dend will be paid on September 7, 2017 to the share­hold­ers on the com­pany’s share reg­is­ter at close of busi­ness at the MSE on August 18, 2017.

MIDI plc shares rose by 1.6 per cent across seven deals of 70,000 shares, to close at €0.31.Dur­ing the month the com­pany re­ported that it has reg­is­tered a loss be­fore tax amount­ing to €1.5m for the six months ended June 30, 2017 com­pared to the €1.1m reg­is­tered in the same pe­riod un­der re­view last year.

The re­sults are in line with the com­pany’s pro­jec­tions and are a con­se­quence of hav­ing practically no apart­ments which it could han­dover to their re­spec­tive own­ers. Q2 apart­ments are ex­pected to be de­liv­ered dur­ing 2018 and hence prof­its reg­is­tered from these sales will be ac­counted for in the com­pany’s 2018 fi­nan­cial state­ments. The com­pany is pro­ject­ing an over­all loss for 2017 fi­nan­cial year.

As a re­sult, rev­enue dur­ing the pe­riod un­der re­view de­creased by 52.3 per cent from €3.9m. EPS de­creased from neg­a­tive €0.004 in the first six months of 2016 to neg­a­tive €0.0078 in the same pe­riod last year. No in­terim div­i­dend has been rec­om­mended.

Malta Prop­er­ties Com­pany plc shares closed August

un­changed at €0.51 as 57 trans­ac­tions of 371,743 shares were struck. The group reg­is­tered a profit be­fore tax of €727,774 for the six-month pe­riod ended June 30, 2017 com­pared to €928,358 reg­is­tered dur­ing the same pe­riod in 2016. Rev­enue from leas­ing of prop­erty for the pe­riod amounted to €1.5m, a de­crease of 7.5 per cent from 2016.

PG plc (PG) shares have reg­is­tered an in­crease on every con­sec­u­tive month since their list­ing in May. The eq­uity ad­vanced by 4.5 per cent in August as 39 trades of 135,127 shares were ex­e­cuted, to close €0.06 higher at €1.40.

PG an­nounced that it has reg­is­tered an annual profit be­fore tax of €10.8m for the pe­riod ended April 30, 2017 com­pared to €6.7m reg­is­tered in the same pe­riod in 2016. This surge in annual profit be­fore tax can be ex­plained fur­ther by a num­ber of ma­te­rial changes in the com­po­si­tion of the group. The group in­creased its share­hold­ing in PAVI Su­per­mar­ket from 50 per cent to 100 per cent on August 31, 2015. More­over, PAMA Shopping Vil­lage opened for busi­ness in late Oc­to­ber 2015, and the fi­nan­cial year ended April 30, 2016 ac­cord­ingly only in­cludes six months op­er­a­tion of the su­per­mar­ket and its re­lated re­tail out­lets; whereas a full year’s trad­ing re­sults of this busi­ness are re­flected in the fi­nan­cial year ended April 30, 2017. The re­tail mall within the PAMA Shopping Vil­lage, in­clud­ing the Zara Home out­let sit­u­ated therein, com­menced op­er­a­tions in Novem­ber 2016.

Rev­enue for the pe­riod un­der re­view amounted to €91.7m, a rise of 65.8 per cent from 2016. EPS in­creased to €0.35 from €0.25. In line with the com­pany’s pol­icy as de­clared in the com­pany’s prospec­tus dated March 27, 2017 the first div­i­dends payable will be for the cur­rent fi­nan­cial year end­ing April 30, 2018.

GO plc shares in­creased 0.6 per cent across 65 trans­ac­tions of 217,798 shares, clos­ing at €3.57. The board of direc­tors of the com­pany ap­proved the group in­terim unau­dited fi­nan­cial state­ments for the six month pe­riod ended June 30, 2017. The GO Group re­ports im­proved re­sults, with growth in rev­enue and prof­itabil­ity as well as con­tin­ued ro­bust cash gen­er­a­tion from op­er­a­tions. Dur­ing the pe­riod un­der re­view, rev­enues in­creased by €4.3m to €81m (2016: €76.7m). This led to an im­prove­ment of €2.7m (9 per cent) in earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion EBITDA), which amounted to €32.6m (2016: €29.9m) and an op­er­at­ing profit of €14.6m (2016: €12.3m). No div­i­dends were de­clared.

Malta In­ter­na­tional Air­port plc shares edged 0.7 per cent over 55 deals of 180,714 shares, to close €0.03 lower at €4.17. The num­ber of pas­sen­gers pass­ing through the ter­mi­nal in July in­creased by more than 90,000, sig­ni­fy­ing an up­turn of 15.5 per cent over the same month last year. July’s 675,111 pas­sen­ger move­ments ex­ceeded the air­port’s pre­vi­ous pas­sen­ger traf­fic record, of August 2016, by 12 per cent.

In­ter­na­tional Ho­tel In­vest­ments plc shares slipped by 1.5 per cent as 15 trades of 49,592 shares were ex­e­cuted, clos­ing at €0.61. The com­pany re­ported that dur­ing the first six months of 2017, the IHI group reg­is­tered an in­crease in rev­enue of €44.5m over the cor­re­spond­ing pe­riod last year. The group reg­is­tered a loss be­fore tax of €2.3m, com­pared to a €1.9m profit reg­is­tered in the same pe­riod last year.

A factor be­hind the in­crease in rev­enue and fi­nance costs across the board from all In­ter­na­tional Ho­tel In­vest­ments plc’s (IHI) fully owned subsidiary ho­tels, is the con­sol­i­da­tion of the Lon­don Ho­tel op­er­a­tion as from the be­gin­ning of this year. In the past, as nei­ther of the two equal share­hold­ers in the hold­ing com­pany of this op­er­a­tion could ef­fec­tively ex­er­cise con­trol, in terms of IFRS rules and reg­u­la­tions, IHI could not con­sol­i­date these re­sults but only report the ul­ti­mate bot­tom line item of net profit or loss after tax un­der ‘in­vest­ments ac­counted through the eq­uity method’. With a change in the con­trol pro­vi­sions, ap­proved at the end of last year, the Com­pany is now able to con­sol­i­date the Lon­don Ho­tel re­sults and then ac­count for the 50% share of eq­uity not be­long­ing to IHI through mi­nor­ity in­ter­ests. In con­se­quence of this very sig­nif­i­cant devel­op­ment, it is now pos­si­ble to report rev­enues, di­rect costs, EBITDA, in­ter­est costs and de­pre­ci­a­tion for the Lon­don op­er­a­tion jointly with all the other wholly owned sub­sidiaries of IHI. In sum­mary, this means that it is not pos­si­ble to con­duct a like for like com­par­i­son in the in­di­vid­ual line items on the in­come state­ment be­tween 2017 and 2016.

An­other factor which had a ma­te­rial im­pact on the Com­pany’s re­sults for the six month pe­riod run­ning be­tween January 1, 2017 and June 30, 2017, was the dif­fer­ence on ex­change. While in 2016 IHI re­ported a favourable dif­fer- ence of around €5.3 mil­lion, in 2017 the Com­pany is re­port­ing an ad­verse vari­ance of €2.9 mil­lion – a shift of over €8 mil­lion in ex­change dif­fer­ences from one re­port­ing pe­riod to the other. This is, in the main, all at­trib­ut­able to the rate of ex­change pre­vail­ing be­tween the Euro and the Rou­ble in con­vert­ing the Com­pany’s Euro loan at the pre­vail­ing rate of ex­change at bal­ance sheet date. In 2016, there was an ap­pre­ci­a­tion of the Rou­ble ver­sus the Euro rate be­tween January 1, 2016 and June 30, 2016, while in 2017 the op­po­site oc­curred. The fall in ster­ling also had a neg­a­tive im­pact on the re­sults. EPS de­creased from €0.003 to a neg­a­tive €0.001. No in­terim div­i­dends have been an­nounced.

RS2 Soft­ware plc

shares fell by €0.065 or 3.5 per cent over 57 deals of 342,140 shares, to close at €1.78. The group re­ported that it had gen­er­ated to­tal rev­enues of €10.6m for the first half of 2017, com­pared to €9.7m re­ported in the com­pa­ra­ble pe­riod of 2016. Net in­crease in rev­enue from ser­vices and man­aged ser­vices has partly off­set a de­cline in li­cence fees.

Profit be­fore tax amounted to €2.5m, an in­crease of 38 per cent when com­pared to the same pe­riod last year. In ad­di­tion to the net in­creases in rev­enue when matched to ex­penses, this pos­i­tive re­sult em­anated from the fact that the group was im­pacted by ex­change losses which were lower by 52 per cent com­pared to the pre­vi­ous year, and by manag­ing to dou­ble the amount of devel­op­ment costs which was cap­i­talised over the same pe­riod last year. EPS dur­ing the pe­riod in­creased from €0.008 in 2016 to €0.009 in 2017.

Due to fur­ther sub­stan­tial in­vest­ment in in­fra­struc­ture and busi­ness devel­op­ment, the Board is not declar­ing an in­terim div­i­dend.

Lo­qus Holdings plc shares traded flat at €0.175 over two deals of 1,100 shares.

Grand Har­bour Marina plc (GHM) shares ap­pre­ci­ated by

nine per cent as 700 shares changed own­er­ship over a sole trans­ac­tion, clos­ing €0.074 higher at €0.894. GHM ap­proved the half-yearly report of the com­pany for the six months ended June 30, 2017. The com­bined rev­enues of GHM and IC Cesme fell slightly from €3.1m in the first six months of 2016 to €2.9m in the cor­re­spond­ing pe­riod this year.

Group profit be­fore tax for the pe­riod ended June 30, 2017 which in­cludes the 45 per cent share of the prof­its of IC Cesme, amounted to €0.2m, com­pared to the €0.4m re­ported in the same pe­riod last year. There was no div­i­dend pay­ment dur­ing the six months ended June 30, 2017.

Med­serv Mal­taPost plc

shares fully re­couped July’s loss hav­ing ad­vanced by €0.085 or 6.8 per cent as 33 trades of 257,134 shares were struck, to close at €1.335. The com­pany re­ported that turnover for the six month pe­riod ended June 30, 2017 amounted to €13.6m com­pared to the €17.3m reg­is­tered in the com­par­a­tive pe­riod. This was a re­sult of a slow­down in per­for­mance across the group’s op­er­a­tions, In­te­grated Lo­gis­tics Sup­port Ser­vices (ILSS) and Oil Coun­try Tubu­lar Goods (OCTG). How­ever op­er­a­tions are ex­pected to pick up in both ILSS and OCTG to­wards the end of this year.

The group reg­is­tered a loss be­fore tax of €2.9m, com­pared to the profit be­fore tax of €275,851 reg­is­tered in the same pe­riod in 2016. EPS de­creased to a neg­a­tive €0.061. No in­terim div­i­dends are be­ing rec­om­mended.

plc

shares de­creased by two per cent across 11 trades of 14,024 shares, clos­ing at €1.98.

San­tu­mas Share­hold­ings plc

shares edged 0.4 per cent over 18 trans­ac­tions of 37,856 shares, to close at €2.141. The board of direc­tors of the com­pany ap­proved the au­dited fi­nan­cial state­ments of annual re­sults for the fi­nan­cial year ended April 30, 2017. The com­pany re­ported that the reg­is­tered a profit be­fore tax of €1.83m, com­pared to €2.37m reg­is­tered in 2016. To­tal rev­enue for the pe­riod un­der re­view amounted to €1.96m, a de­crease of 21.2 per cent from 2016. How­ever, the re­sults for the year have been ma­te­ri­ally af­fected by the re­demp­tion of one par­tic­u­lar ground rent which re­sulted in a net in­come of €900,541. De­spite the ma­te­rial re­alised gain from this trans­ac­tion, the re­sults for 2017 are not ma­te­ri­ally dif­fer­ent from the prof­its shown for the fi­nan­cial year ended April 30, 2016 in view of the un­re­alised prof­its booked fol­low­ing the in­crease in fair value of in­vest­ment prop­er­ties in fi­nan­cial year ended April 30, 2016 – part of which has been re­alised in the fi­nan­cial year ended April 30, 2017.

Mean­while, earn­ings per share de­creased to €0.36 from the €0.48 reg­is­tered in 2016. The Board fur­ther re­solved to rec­om­mend that the Annual Gen­eral Meet­ing ap­proves the pay­ment of a bonus share is­sue of one share for every two shares held which will be al­lot­ted to share­hold­ers on the com­pany’s share reg­is­ter as at close of busi­ness on De­cem­ber 1, 2017. The bonus is­sue will be funded by a cap­i­tal­i­sa­tion of re­serves amount­ing to €609,508. The man­age­ment fur­ther high­lighted that the pre­vi­ous two years have both yielded ex­tremely pos­i­tive re­sults, pri­mar­ily as a re­sult of one-off events which are not ex­pected to be re­peated in the short-term. No div­i­dend pay­ment is be­ing pro­posed.

In the cor­po­rate bond mar­ket 43 is­sues were ac­tive of which 14 fell, 23 ad­vanced and six closed un­changed as turnover amounted to €5.5m.

In August, Si­monds Far­sons Cisk plc (SFC) an­nounced that it will be is­su­ing €20m 3.5% SFC Un­se­cured Bonds 2027 while re­deem­ing the €15m 6% SFC Bonds 2017-2020. Pref­er­ence was given to the ex­ist­ing SFC bond hold­ers.

Grand Har­bour Marina plc (GHM)

an­nounced the ba­sis of ac­cep­tance for the €15,000,000

GHM p.l.c. 4.50% Un­se­cured Bonds 2027. Ap­pli­ca­tions for an

ag­gre­gate value of €8,869,200 were re­ceived for the €11,000,000 bonds re­served for the re­demp­tion bond­hold­ers. The bal­ance of the bonds not sub­scribed to by the re­demp­tion bond­hold­ers equal to €2,130,800 was re­served for sub­scrip­tion by se­lected authorised fi­nan­cial in­ter­me­di­aries through an in­ter­me­di­aries’ of­fer. Mean­while, €2,832,300 were re­ceived for the €2,000,000 bonds re­served for the ex­ist­ing share­hold­ers - the first €20,000 were al­lot­ted in full, as well as an ad­di­tional 21.78 per cent on the re­main­ing bal­ance, rounded to the near­est €100. Trad­ing in this bond com­menced on August 23, 2017.

In the sovereign debt mar­ket turnover to­talled to €42.6m spread over 28 is­sues of which 20 gained ground and eight slipped.

The Gov­ern­ment is­sued the 62+ Malta Gov­ern­ment Sav­ings Bond at €100 per bond of­fer­ing a coupon of 3% per an­num ma­tur­ing on September 13, 2022. The ap­pli­ca­tions for the is­sue were heav­ily sub­scribed for as pen­sion­ers jumped at the op­por­tu­nity. This ar­ti­cle, which was com­piled by Jesmond Mizzi, Manag­ing Direc­tor of Jesmond Mizzi Fi­nan­cial Ad­vi­sors Lim­ited, does not in­tend to give in­vest­ment ad­vice and the con­tents therein should not be con­strued as such. The Com­pany is li­censed to con­duct in­vest­ment ser­vices by the MFSA and is a Mem­ber Firm of the Malta Stock Ex­change and a mem­ber of the At­las Group. The direc­tors or re­lated par­ties, in­clud­ing the com­pany, and their clients are likely to have an in­ter­est in se­cu­ri­ties men­tioned in this ar­ti­cle. For fur­ther in­for­ma­tion, con­tact Jesmond Mizzi Fi­nan­cial Ad­vi­sors at 67 Level 3, South Street, Val­letta, or on Tel: 21224410, or email jesmond.mizzi@jes­mond­mizzi.com

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