16th Aug 2005 16:03
Stagecoach Theatre Arts PLC 16 August 2005 Stagecoach Theatre Arts plc - Final Results 16th August 2005 Stagecoach Theatre Arts plc ("Stagecoach Theatre Arts", "Stagecoach" or the "Group") Preliminary Announcement of Final Results for the year ended 31st May 2005 Stagecoach Theatre Arts reports on a year of strong growth within its core UKdivision, whilst developing further its new business opportunities. Stagecoach Theatre Arts was founded in 1988 and operates the UK's largestfranchise network of part-time performing arts schools for young people agedbetween 4 and 16. A summary of the Group's results and achievements during the year is as follows: Franchise network turnover up 17% to £21.9m Group turnover £5.7m (2004: £5.3m) Profit before tax £60,000 (2004: £329,000) Total students up 11% to 33,432 (2004: 30,195) 553 Stagecoach schools and 592 Early Stages classes (2004: 502 schools and 505Early Stages) Launch of the first Early Sporties class in April 2005 Sale of the first eight Mini Stages franchises during the year First two German franchises opened in September 2004 Six new US franchise schools started during the year Stagecoach students performed at the Lord Mayor's Show in London David Sprigg, Joint Managing Director, commented: "We have achieved another year of strong growth in the number of schools andstudents within the core UK business, resulting in a 17% increase in Groupnetwork turnover to £21.9m. We further developed our emerging divisions ofSportsCoach, Mini Stages, Stagecoach USA and Germany. In the year ahead weexpect to see more growth in the core UK business and significant sales of MiniStages franchises, whilst focussing on increasing average student numbers acrossthe emerging divisions." Enquiries: Stagecoach Theatre Arts: Tel: 01932 254 333 David Sprigg, Joint Managing Director Richard Dawson, Finance Director Evolution Securities: Tel: 020 7071 4300 Tom Price Henry Turcan JB Public Relations: Tel: 01629 825 777 John Burley Chairman's Statement I am pleased to report on the Group's results for the year ended 31 May 2005.Stagecoach Theatre Arts was founded in 1988 and operates the UK's largestnetwork of part-time performing arts schools for young people aged between 4 and16. Overview The business once again showed strong growth over the year, in terms of schoolopenings and student numbers, as reflected in a 17 per cent increase in networkturnover to £21.9 million (2004: £18.7 million). The network turnover reflectstotal school fees earned over the year by our franchisees, from the 33,432students that now attend Stagecoach, SportsCoach and Mini Stages schools. Since flotation, over the past four years, annual network turnover has increasedby 113 per cent from £10.3 million to £21.9 million. The core Stagecoach UK business continued to perform strongly with approximately10 per cent growth in schools and student numbers for the year, and is the maincontributor to the increase in annual network turnover. Stagecoach UK reported divisional profit of £918,000 for the year. However, theoverall profitability of the Group, combining all divisions, was £60,000 for theyear, due to the losses of the emerging divisions of SportsCoach, Mini Stages,Stagecoach USA and Stagecoach Germany, as well as the costs of the newStagecoach Agency. Each of these emerging divisions reported a loss for the year. The businessmodel of each division is the same as the core Stagecoach business, based oneconomies of scale, requiring a certain number of franchised schools to generatesufficient income to cover a predominantly fixed administrative cost base. YourBoard's objective is that each division should be profitable as soon as possiblewithin the overall strategy. Steps have been taken by your Board to assist Surrey Performing Arts Limited(the Group's largest franchisee) to increase its average student numbers, tosell a substantial proportion of its schools to other new franchisees (resultingin better operational performance of individual schools) and to reduce itsoperational costs. The Group launched its new nationwide Stagecoach Agency in August 2004,providing a variety of agency services to its Stagecoach students. This hasproved very popular across the network, with 2,257 of the students joining theagency. Other significant milestones achieved during the year were the sale of the firsteight Mini Stages franchises in the UK, the opening of the first two franchiseschools in Germany, and the opening of the first Early Sporties class(SportsCoach for 4 to 6 year olds). The Group continues to support the Stagecoach Charitable Trust, which runsInterAct Theatre Workshops, providing inclusive performing arts tuition tochildren of all abilities and needs. Further details of the operations of the business are set out in the JointManaging Directors' Operating Review. The core Stagecoach Theatre Arts UKbusiness still represents over 90 per cent of the Group's turnover, schools andstudents. This year, for the first time, we report in the Operating Review morefinancial detail on the emerging divisions of SportsCoach, Mini Stages,Stagecoach USA and Stagecoach Germany. Loss per share was 0.2 pence (2004: Earnings per share was 1.9 pence). YourBoard does not propose the payment of a final dividend (2004: 2 pence pershare). It is the intention of your Board to return to a progressive annualdividend policy when one or more of the emerging divisions goes intoprofitability, such that the Group generates sufficient profit to permit this. Strategy for growth We have seen further results of our strategy for growth this year, with an 11per cent increase in the total number of students attending Stagecoach,SportsCoach and Mini Stages schools, from 30,195 to 33,432 students, and a 17per cent increase in network turnover to £21.9 million. As set out in my Chairman's Statement last year, your Board remains committed toproviding resources to enable growth within the UK Stagecoach franchise network,focussing on increasing the number of schools and Early Stages classes perexisting franchisee. The success of this strategy has been seen this year withthe increase to 2.3 schools per franchisee (excluding Surrey Performing Arts)from 2.2 last year, and an increase to 2.5 Early Stages classes per franchiseefrom 2.2 last year. Post year-end, your Board has undertaken a strategic and financial review ofeach of the divisions. The focus for growth over next year will be the coreStagecoach UK business, particularly subsequent school sales, and the roll-outof Mini Stages franchises. The primary focus for the emerging divisions for next year will be to increaseaverage student numbers across the schools, so as to facilitate the expansion oftheir franchise networks. The strategy over the medium term is to take each ofthe emerging divisions into profitability. Employees On behalf of the Directors, I would like to take this opportunity to thank allthe staff for their continued hard work throughout the year. During the year wereviewed our Employee Share Option Scheme, resulting in all employees of theCompany being granted further share options as reward and incentive. Prospects The emerging divisions of SportsCoach, Mini Stages, USA and Germany, aredemanding upon short-term cash resources and profitability. However, the mediumto long term earnings potential of the Group is being enhanced through thecurrent development and expansion plans of these divisions. A sustained period of growth of new franchises, schools and students, and henceprofitability, from any one of these emerging divisions would have a significantimpact on the future earnings of the Group. Thus the prospects of the Groupremain encouraging. Graham Cole Chairman 16 August 2005 Joint Managing Directors' Operating Review We report on the principal operations and results for the year ended 31 May2005. As the emerging divisions impact upon the results, we report on morefinancial detail of each division of the Group for the first time. Operations The Group comprises the core Stagecoach Theatre Arts business in the UK and fouremerging divisions in other disciplines or countries. Stagecoach Theatre Arts isthe clear market-leader in the UK, and the emerging divisions are based upon thesame franchise business model. The Group also runs a Montessori school at itsHead Office in Walton-on-Thames. The core Stagecoach UK business still accounts for 94 per cent of the network'sstudents and 93 per cent of network turnover. The principal indicator of the Group's growth is the number of schools openedduring the year and the number of students attending those schools. Ourfranchisees open new schools only at the beginning of the Summer Term in Apriland the Autumn Term in September each year. As set out in the Strategy for Growth in the 2004 Chairman's Statement, yourBoard focused on increasing the number of schools per existing franchisee withinthe core Stagecoach UK business, whilst continuing to develop and expand theother emerging divisions. During the year 43 new Stagecoach UK main schools opened, of which 31 weresubsequent schools opened by existing franchisees and 12 were sales to newfranchisees. In contrast, all but two new schools opened across the emergingdivisions were sales to new franchisees. The strategy for growth of the Groupover the medium to long term is to significantly increase the number of schoolopenings by the emerging divisions. In addition to the above, 81, 4 and 3 new Early Stages classes were openedduring the year in the UK, Germany and USA respectively, and the first EarlySporties class opened in the UK. The core Stagecoach UK business has funded the development costs of Mini Stagesand the operational losses of each of the emerging divisions during the year.The operational and financial results of each division within the Group are setout in more detail within this Operating Review. Stagecoach Theatre Arts UK The number of UK Stagecoach Theatre Arts main schools (for 6 to 16 year olds)and of students attending them has increased over the year to 534 schools at theyear end with 23,188 students (2004: 491 schools and 21,600 students). The number of franchisees increased over the period under review from 204 to220, demonstrating that the growth in schools has come from both new franchiseesjoining the network and existing franchisees expanding their individualbusinesses. The growth within the core Stagecoach UK business has resulted in an increase ofthe number of main Stagecoach schools per franchisee from 2.2 to 2.3 schools(excluding Surrey Performing Arts Limited). Three franchisees in the StagecoachUK network run six schools, while 61 franchisees operate only one school,highlighting the potential for further growth within the existing UK network. The average occupancy rate as at the year end date is 43.4 students per school,or 96.4 per cent (2004: 98.0 per cent). Although a small decrease from lastyear, the percentage occupancy rate throughout the core Stagecoach UK network isvery strong. We are committed to ensuring the highest standards of educationthroughout the network, with strategies for additional franchisee and teachertraining, and more national and regional events. Such measures should have apositive impact on the average occupancy rate across the network. The number of Early Stages classes increased substantially over the year by 81classes to 574 at the year-end with 7,655 students attending (2004: 493 EarlyStages classes and 6,900 students). Early Stages classes are an importantintroduction to Stagecoach schools, and have become a significant part of thecore Stagecoach UK business. For the core Stagecoach UK business, both main schools and Early Stages, therehas been an increase over the year of 8.3 per cent in the number of studentsattending from 28,633 to 30,843 students. The core Stagecoach UK business showed strong growth in all areas and reportedan increase in network turnover, representing the total student fees chargedacross the network for the year, of 12 per cent to £20.3 million (2004: £18.2million). The divisional profit before tax of the core Stagecoach UK business was£918,000. Mini Stages Mini Stages, musical fun for six months to four-year-olds accompanied by theparent, was launched in the UK in September 2003 and complements the Group'sexisting core business of teaching the performing arts. This year under reviewrepresents Mini Stages' first full financial year. We commenced franchising the Mini Stages system in September 2004 with threepilot franchisees. The concept and franchise model was a success, and a total ofeight franchisees started their Mini Stages businesses during the year. At year end there were 13 Mini Stages schools (or venues), from which 35teaching sessions were held, and a total of 370 students attending (2004: 5venues, 11 sessions and 156 students). Each Mini Stages class comprises up to 15 students. The average occupancy ratefor the Mini Stages network as at the year end date was 10.6 students per class,or 71 per cent capacity. The network turnover of Mini Stages, representing the total student fees chargedacross the network for the year, was £73,000. During its first year of franchising, the Mini Stages concept had only beenoffered within the existing UK Stagecoach Theatre Arts network. Since year endthe Group has extended the Mini Stages franchise to the whole UK market place,and post year end has already trained two new franchisees, one of whom is fromoutside the network. The Mini Stages business model is such that new schools canopen continuously throughout the academic year. This year represented one of considerable investment of time and resources inthe completion of the Mini Stages concept and launch of the franchise. Thedevelopment costs of Mini Stages have been written off in the year as incurred.The Mini Stages division therefore reported a loss of £267,000 for the year. SportsCoach schools There was further expansion within the SportsCoach franchise network during theyear, with the launch of 10 more schools, taking the total to 33 schools. However, the number of new school openings was less than expected. A significantreason was that the low occupancy per SportsCoach school (71.7 per cent comparedto Stagecoach's 96.4 per cent) which makes the business less attractive toprospective franchisees. Post year-end we have reviewed the advertising andmarketing material of SportsCoach, so as to educate the market place thatSportsCoach is for children of all abilities and those who wish to have fun insports, and not just children with sporting ability. We expect that this willhave a positive impact on occupancy levels. Furthermore, when seeking future SportsCoach franchisees we are now targetingsales and marketing people with a sporting background, as opposed to sportsteachers who may have no marketing experience or ability. A significant milestone has been the development and launch of Early Sporties, afun introduction to sports for 4 to 6 year olds, with the first Early Sportiesclass having started successfully in April 2005. This is equivalent to thehugely successful Early Stages classes for the main Stagecoach Theatre Artsbusiness. The first Early Sporties class started with 13 students, and theconcept is to be offered to the SportsCoach network from September 2005. As at the year-end, there were 1,134 SportsCoach students attending the 33SportsCoach schools across the UK (2004: 842 students and 23 schools). The network turnover of SportsCoach, representing the total student fees chargedacross the network for the year, increased by 67 per cent to £806,000 (2004:£483,000). The SportsCoach division reported a loss of £233,000 for the year. We expect theSportsCoach division to be the first new division to contribute a profit to theGroup. Stagecoach Theatre Arts USA This year represented the first full year of franchising in the USA for theStagecoach Group. During the year a further six main schools and two EarlyStages classes opened in the USA. Having completed the legal requirements to offer Stagecoach franchises in otherUS States outside Minnesota, where Stagecoach was launched in the US, andfollowing an initial advertising and marketing campaign for franchisees, threefranchises opened in New York City in September 2004, and two franchises openedin Chicago in April 2005. This represents the start of the Stagecoach franchise network in the UnitedStates, and gives the Group the opportunity to emulate the success of the UKfranchise business model. As at the year end there were 479 students attending Stagecoach USA's 12 schoolsand 9 Early Stages classes (2004: 330 students attending 6 schools and 6 EarlyStages classes). Stagecoach USA also runs a successful Summer Workshopprogramme, with eleven weeks of workshops scheduled over the Summer 2005. Although one new franchise school in Chicago opened full with 45 students, theaverage student numbers per school across the US network decreased over the yearfrom 39.7 students to 32.4 students (or 72 per cent occupancy). The main focus for the year ahead will be to increase the average studentnumbers across the US network, so as to ensure maximum profitability forexisting franchisees, enabling them to open subsequent schools, and attract newfranchisees to the network. The network turnover of Stagecoach USA, representing the total student feescharged across the network for the year, was £241,000. The wholly-owned Stagecoach USA subsidiary reported a loss of £154,000 for theyear. Stagecoach Theatre Arts Germany The development and preparation of the franchise system for Germany wascompleted at the start of this year under review. A significant milestone wasachieved during the year with the opening of the first two Stagecoach Germanyfranchise schools, ahead of schedule, in Frankfurt and Stuttgart. As at the year end there were 334 students attending Stagecoach Germany's 7schools and 9 Early Stages classes (2004: 250 students attending 5 schools and 5Early Stages classes). The average student numbers per school across the Germannetwork were 34.7 students at year end (2004: 39.4 students). As with the other emerging divisions, the main focus for the year ahead will beto increase the average student numbers across the German network, so as toensure maximum profitability for existing franchisees and attract newfranchisees to the network. The network turnover of Stagecoach Germany, representing the total student feescharged across the network for the year, was £197,000. The 90 per cent owned Stagecoach Germany subsidiary reported a loss of £112,000for the year. Other overseas operations The Group continues to provide support for its other overseas operations andinterests in Stagecoach Theatre Arts schools in Spain, Malta, Gibraltar,Australia and the Republic of Ireland. Collectively, these operations provide asmall profit to the Group. Stagecoach Agency The Group launched its new nationwide Stagecoach Agency in August 2004,providing a variety of agency services to its Stagecoach students. The agency seeks work on behalf of Stagecoach students in TV and Film,Commercials and Corporate Videos, Theatre, Radio Dramas, Photo Shoots andPromotions, Musicals and Voice-Overs. It is the agency's aim to provide a broadbase of talented students aged between 4 and 18 years to its many new andestablished clients of Casting Directors and Production Companies. The new nationwide Stagecoach Agency has proved very popular across the network.With 2,257 students enrolled, it is the largest children's agency in the UK. The Stagecoach Agency (UK) Limited subsidiary broke-even for the ten-monthperiod from incorporation. However other associated agency costs and the cost ofthe previous regional agency businesses at the start of the year resulted in aloss to the Group of £92,000 for the year. Financial Review There was an increase in the number of schools and total students across theGroup network of 11 per cent for the year, and a 17 per cent increase in Groupnetwork turnover to £21.9 million. Group turnover for the year increased to £5.7 million (2004: £5.3 million). Profit before tax for the year has decreased to £60,000 (2004: £329,000). Thereduced profit was primarily due to fewer SportsCoach school openings thanexpected, and a reduction in income from our largest franchisee SurreyPerforming Arts Limited. The divisional results making up the Group profit havebeen highlighted in the Operating Review above. Despite a decrease in profitsfor this year, the core UK Stagecoach business remains strong. For the Autumn Term 2005 the Group has already contracted to open a further 24Stagecoach schools, two SportsCoach schools and two Mini Stages in the UK, aswell as two Stagecoach schools in Germany and one in the USA. As at 31 May 2005, the net cash balances of the Group stood at £0.5 million(2004: £0.4 million). The Group has relatively little capital expenditurerequirements, however the expansion of the emerging divisions remains a draw onthe Group's cash resources. As a consequence your Board has arranged an increasein the UK Company's overdraft facility from £0.8 million to £1.1 million. In line with the strategy for growth, the cash flow position of the Group willimprove as each division goes into profitability, and crosses over from cashconsumption to cash generation. The Group has increased its number of employees (full time equivalents) to 67 asat 31 May 2005 from 56 as at 31 May 2004. Creative and Educational Department Your Board is dedicated to continuing to provide the highest standards ofstudent education and opportunity throughout the Stagecoach network. TheCreative and Education Department is committed to being at the forefront ofstandards of education in the performing arts. One of the unique features of Stagecoach is that it provides students withopportunities to participate in special performances and events each year. Overthe last year these included: The annual "Easy Stages" show-case production in August 2004, being "Pirates ofPenzance", featured 70 Stagecoach students from schools across the country andoverseas. In September, over 100 Stagecoach students performed at the Cresset Theatre inPeterborough in a charity concert in aid of the NSPCC. 50 Stagecoach students took part in the Lord Mayor's Show in November. Also in November, 300 Stagecoach students performed a selection of dance andsinging routines at Her Majesty's Theatre, London, celebrating sixteen years ofStagecoach Theatre Arts success. In December, 100 Students staged a charity concert at The Guildhall in Derby inaid of the Treetops Hospice. In December, more than 400 students performed choral pieces in Christmasconcerts in ten cathedrals across the UK. In April 2005, over 400 Stagecoach students in the North East performed acharity concert at the Newcastle City Hall in aid of InterAct. Stagecoach's training, together with these extra-curricular performingopportunities, offers immense benefits to students in the growth of confidenceand self-esteem as well as fostering enjoyment and well being. Stagecoach Charitable Trust The Group continues to support and provide management time to the StagecoachCharitable Trust, which amongst other activities runs InterAct TheatreWorkshops, providing inclusive performing arts tuition to children of allabilities and needs. The feedback from the children attending InterAct and theirparents has been overwhelmingly positive. There are 5 InterAct schools in theUK. Stephanie Manuel David Sprigg Joint Managing Directors 16 August 2005 Consolidated Profit and Loss AccountYear ended 31 May 2005 Notes 2005 2004 £'000 £'000 Restated Turnover 2 Continuing activities 5,746 5,124 Acquired activities - 157 5,746 5,281 Cost of sales (3,480) (2,916) Gross profit 2,266 2,365 Administrative expenses (2,246) (2,095) Other operating income 38 46 Operating profit 58 316 Continuing activities 58 384 Acquired activities - (68) Interest receivable 14 17 Interest payable and similar charges (12) (4) Profit on ordinary activities before taxation 60 329 Tax on profit on ordinary activities 3 (79) (142) (Loss)/profit on ordinary activities after taxation (19) 187 Minority interest 7 6 Dividends 4 - (195) Retained loss for the year (12) (2) (Loss)/earnings per share, pence - Basic 5 (0.2) 1.9 - Diluted 5 (0.2) 1.9 A Statement of Recognised Gains and Losses is not presented as all recognisedgains and losses are included in the profit and loss account. Consolidated Balance SheetAs at 31 May 2005 2005 2004 £'000 £'000 £'000 £'000 Fixed assets Intangible fixed assets 794 835 Tangible fixed assets 112 142 906 977 Current assets Stocks 262 278 Debtors 2,208 2,004 Cash at bank and in hand 504 416 2,974 2,698 Creditors Amounts falling due within one year (1,362) (1,199) Net current assets 1,612 1,499 Total assets less current liabilities 2,518 2,476 Capital and reserves Share capital 494 486 Share premium 1,601 1,545 Profit and loss account 435 450 2,530 2,481 Minority interests (12) (5) Equity shareholders' funds 2,518 2,476 The financial statements were approved by the Board on 16 August 2005. Consolidated Cash Flow StatementYear ended 31 May 2005 Notes 2005 2004 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 6 417 5 Returns on investments and servicing of finance Interest received 14 17 Interest paid and interest element of finance lease rental repayments (12) (4) 2 13 Taxation Corporation tax paid (148) (277) Capital expenditure Proceeds on disposal of fixed assets 25 Payments to acquire tangible fixed assets (35) (63) Payments to acquire intangible fixed assets - (35) (10) (98) Acquisitions and disposals Purchase of subsidiary (16) - Purchase of trades - (75) Net cash acquired with subsidiary / trades - 3 (16) (72) Equity dividends paid (195) (194) Net cash inflow/(outflow) before financing 50 (623) Financing Gross proceeds from the issue of shares 64 15 Capital element of hire purchase payments (26) (5) 38 10 Increase/(decrease) in cash at bank and in hand 88 (613) Capital element of hire purchase payments 26 5 114 (608) Opening balances of net funds 390 998 Closing balances of net funds 7 504 390 Stagecoach Theatre Arts plc Year ended 31st May 2005 Notes to the Financial Statements 1 Accounting Policies Basis of preparation The financial statements have been prepared in accordance with applicableAccounting Standards under the historical cost convention. The consolidatedfinancial statements include the audited financial statements of the company andits subsidiary undertakings. Subsidiary undertakings acquired are consolidatedusing the acquisition method of accounting from the effective date ofacquisition. The financial information presented in this preliminary announcement does notconstitute statutory accounts within the meaning of the Companies Act 1985. Theinformation has however been extracted from the Group's statutory accounts forthe year ended 31st May 2005 which were approved by the Board on 16th August2005 and on which the Group's auditors have given an unqualified opinion. 2 Turnover by geographical location 2005 2004 £'000 £'000 UK 5,340 4,866 Europe 238 179 Rest of the world 168 236 Total turnover 5,746 5,281 Turnover is analysed on an origination basis and is all derived from externalcustomers. It is not material or practical to provide a similar analysis ofoperating profit and net assets. 3 Taxation a) Analysis of the tax charge The tax charge on the profit on ordinary activities for the year was as follows: 2005 2004 £'000 £'000 UK corporation tax - current year tax 76 142 - prior year tax (2) - - deferred tax 8 - Germany corporation tax - prior year tax (3) - 79 142 UK corporation tax has been charged at 30% (2004: 30%). b) Reconciliation of the tax charge 2005 2004 £'000 £'000 Profit on ordinary activities before tax 60 329 Profit on ordinary activities at standard rate 18 99 of UK corporation tax of 30% Effects of: Unrelieved losses of overseas subsidiaries 43 25 Expenses not deductible for tax purposes 18 19 Adjustment to tax charge in previous periods 3 - Marginal relief (3) - Capital allowances for period in excess of depreciation - (1) Current tax charge for year 79 142 4 Dividends Your Board does not propose the payment of a final dividend (2004: 2 pence pershare). 5 (Loss)/earnings per share Basic loss per share, calculated in accordance with FRS14 (Earnings per share)is 0.2 pence (2004: Earnings per share of 1.9 pence). This is based on the losson ordinary activities after tax of £19,273 (2004: Profit of £186,685)apportioned over the weighted average number of ordinary shares that were inissue for the period of 9,773,723 (2004: 9,712,243). Fully diluted loss pershare is calculated at 0.2 pence (2004: Earnings per share of 1.9 pence), basedupon weighted average number of ordinary shares, including options granted toemployees, of 9,842,631 (2004: 9,855,634). 6 Reconciliation of operating profit to operating cash flows 2005 2004 £'000 £'000 Operating profit 58 316 Depreciation and amortisation of goodwill 103 92 Profit on disposal of fixed assets (6) - Decrease/(increase) in stocks 15 (72) Increase in debtors (198) (333) Increase in creditors 443 11 Foreign exchange differences 2 (9) Net cash inflow from operating activities 417 5 7 Analysis of changes in net funds Cash Hire purchase contracts and loans Total net funds at bank and in hand £'000 £'000 £'000 At 1 June 2004 416 (26) 390 Cash flow 88 26 114 At 31 May 2005 504 - 504 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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