Final Results

Braemar Group PLC 13 June 2006 Braemar Group plc Audited Results for the Six Months to 31 March 2006 Braemar Group plc, the manager of tax efficient residential property funds, announces its first set of audited results since completion of the reverse takeover of The Braemar Group Limited by Metrocapital plc. The Directors are pleased to report that good progress has been made in line with the stated strategy at the time of the reverse takeover. Key Points Audited Audited 6 months ended 12 months ended March 2006 September 2005 Turnover £269,277 Nil Net assets £2,408,615 £69,389 Loss before tax £300,980 £163,321 Net cash outflow from operating activities £(290,219) £(149,766) Cash at bank and in hand £557,524 £89,189 Loss per share (basic) 0.42p 0.85p • Financial performance in line with our expectations and reflects the costs involved with the reverse takeover by Metrocapital plc. • Coronation III completed the purchase of a property in Tunbridge Wells as part of a £3.5m development to create 17 apartments during 2006. • The Coronation III fund is on track to providing investors with 40% of their investment returned in the form of capital allowances within 18 months of investment. • Coronation I and II continue to perform in line with management's expectations and occupancy is currently almost 100%. • Funds currently under review include a further tax driven residential property fund, Coronation IV, and other vehicles to invest in residential property schemes. • A number of possible acquisitions have been identified and it is hoped to conclude at least one transaction in 2006/07. • Recurring fee income has increased to an annualised level of £240,000. For further information please contact: Martin Robinson - Chairman Tel: 0161 929 4969 Marc Duschenes - Managing Director Tel: 0161 929 4969 Alex Clarkson - Zeus Capital Limited Tel: 0161 831 1512 Charles Ryland - Buchanan Communications Tel: 0207 466 5000 Financial Results The audited results for the six months to 31 March 2006 report a loss before taxation of £300,980; the comparative loss for the 12 months to 30 September 2005 was £163,321. The net assets of the Group stood at £2,408,617 against £69,389 at 30 September 2005. Cash balances at the balance sheet date were £557,524. The financial performance as reported is in line with our expectations and reflects the costs and senior management time involved in the reverse takeover of The Braemar Group Limited by Metrocapital plc (now renamed 'Braemar Group plc ') on 9 December 2005. Following the reverse takeover, the accounting reference date of the Company was changed to 31 March, in line with the accounting reference date of The Braemar Group Limited and its subsidiaries. Consequently, the results now announced comprise a consolidation of the results for the six months to 31 March 2006 for Metrocapital plc and approximately four months post acquisition for The Braemar Group Limited, together with a consolidated balance sheet at 31 March 2006. It is the Company's policy not to pay any dividends during the initial development and growth of the business. This policy is subject to ongoing review. Key Achievements • Recurring fee income has increased to an annualised level of £240,000. • Coronation III completed the purchase of a property in Tunbridge Wells as part of a £3.5 million development to create 17 apartments in a prime town centre location; generating a one-off fee of £178,000. • Group remains on track to launch several major new residential property funds later in 2006/7. New residential property funds to be launched The directors are preparing for the launch of multiple residential funds that will be suitable for SIPP investment. The directors intend to commemorate the fifth anniversary of the establishment of the Group with the launch of up to five new Braemar branded residential property funds later in the year. The intention is that these will provide investors with a breadth of investment opportunities to aid in investor diversification. The funds currently under review include a further tax driven residential property fund, Coronation IV, and other vehicles to invest in residential property schemes, such as off plan apartments and ground rents. These plans are at an early stage of development and further announcements will be made once the details are finalised. We continue to monitor the developments in the Real Estate Investment Trust (REIT) legislation so that once the rules have been finalised we can decide what opportunities exist for Braemar. Current trading highlights The fund raising for the third tax efficient residential property fund managed by the Group, ('Coronation III Limited Partnership') was closed on 31 March 2006. Coronation III has completed the purchase of a property in Tunbridge Wells. Braemar will manage this £3.5 million project to create 17 apartments during 2006, the largest single transaction by a Coronation fund to date providing the Group with significant one-off fee income of £178,000 and estimated recurring fee income of some £50,000, together with existing recurring fee income of some £190,000. The fund is on track to providing investors with 40% of their investment returned in the form of capital allowances within 18 months of investment. The first two funds continue to perform in line with management's expectations and occupancy is currently almost 100%. Both of these funds will have provided investors with the value of 40% of their investment in the form of capital allowances to offset against their other income. In addition Coronation I was able to return to investors 20% of their investment by way of loan capital repayment within three years of the fund closing. The available capital allowances provide our investors in the Coronation funds with a high level of tax efficiency, which compares very favourably with the reduced rate now on offer from other tax schemes. Investors also benefit from the backing of the value of residential developments. Strategic Acquisitions update At the time of the reverse takeover, the directors stated their intention to seek acquisitions in the property investment management and property services sectors, and to develop or acquire a corporate finance business to act as sponsors to its own fund launches and to provide advice to growing companies. The directors continue to pursue this strategy and have identified a number of possible acquisitions. Discussions with the vendors of these businesses are at an early stage, but the directors hope to conclude at least one transaction in 2006/7. Key Shareholders Wheddon Limited holds a 21.09% stake in the Company. Wheddon Limited is ultimately owned by Investec Trust (Guernsey) Limited as trustees for the Tchenguiz Family Trust. The directors of Braemar meet on a regular basis with other property related businesses in which Wheddon and Vincent Tchenguiz holds stakes. The directors believe that this will create growth and cross-fertilisation opportunities for Braemar's services amongst those businesses. Resignation of a director David Gordon Maclean has decided to leave the Group with immediate effect enabling him to pursue his other business and personal interests. The Board wishes to thank Mr Maclean, particularly for facilitating the reverse takeover of The Braemar Group Limited last year. Outlook We believe the prospects for the sector remain strong with the recently announced changes to the rules allowing collective residential assets to be held within pension schemes. We expect demand for these types of investment schemes to be significant and believe we are well positioned to take advantage of these opportunities and remain optimistic of the future prospects for your company. CONSOLIDATED PROFIT AND LOSS ACCOUNT SIX MONTHS ENDED 31 MARCH 2006 6 months 12 months ended ended 31 March 30 September 2006 2005 Notes £ £ £ TURNOVER 2 Continuing operations - Acquisitions 269,277 269,277 - Cost of sales (113,431) - Gross profit 155,846 - Administration expenses (453,708) (167,510) Operating LOSS 3 Continuing operations (265,916) Acquisitions (31,946) (297,862) (167,510) Interest receivable 6 11,128 4,189 Interest payable and similar 7 (14,246) - charges LOSS ON ORDINARY ACTIVITIES (300,980) (163,321) BEFORE TAXATION TAXATION 8 - - LOSS FOR THE FINANCIAL PERIOD (300,980) (163,321) Loss per share - basic 9 0.42p 0.85p The Group has no recognised gains or losses other than the results for the period as set out above. CONSOLIDATED BALANCE SHEET 31 MARCH 2006 31 March 30 September 2006 2005 Notes £ £ £ £ FIXED ASSETS Intangible assets 11 2,244,174 - Tangible assets 12 30,452 - Investments 13 2,000 - 2,276,626 - CURRENT ASSETS Stock 14 124,700 - Debtors 15 547,792 6,581 Cash at bank and in hand 557,524 89,189 1,230,016 95,770 CREDITORS Amounts falling due within one year 16 (1,098,025) (26,381) NET CURRENT ASSETS 131,991 69,389 TOTAL ASSETS LESS CURRENT LIABILITIES 2,408,617 69,389 NET ASSETS 2,408,617 69,389 CAPITAL AND RESERVES Called up equity share capital 17 1,137,950 191,666 Share premium account 18 1,958,445 264,521 Profit and loss account 18 (687,778) (386,798) SHAREHOLDERS' FUNDS 19 2,408,617 69,389 The financial statements were approved and authorised for issue by the board and were signed on its behalf on Director COMPANY BALANCE SHEET 31 MARCH 2006 31 March 30 September 2006 2005 Notes £ £ £ £ FIXED ASSETS Tangible assets 12 2,824 - Investments 13 2,589,546 - 2,592,370 - CURRENT ASSETS Debtors 15 414,057 6,581 Cash at bank and in hand 512,520 89,189 926,577 95,770 CREDITORS Amounts falling due within one year 16 (1,040,298) (26,381) NET CURRENT (LIABILITIES)/ASSETS (113,721) 69,389 TOTAL ASSETS LESS CURRENT LIABILITIES 2,478,649 69,389 NET ASSETS 2,478,649 69,389 CAPITAL AND RESERVES Called up share capital 17 1,137,950 191,666 Share premium account 18 1,958,445 264,521 Profit and loss account 18 (617,746) (386,798) SHAREHOLDERS' FUNDS 19 2,478,649 68,389 The financial statements were approved and authorised for issue by the board and were signed on its behalf on Director CONSOLIDATED CASH FLOW STATEMENT SIX MONTHS ENDED 31 MARCH 2006 6 months 12 months ended ended 31 March 30 September Notes 2006 2005 Reconciliation of operating profit to net cash £ £ outflow from operating activities Operating loss (297,862) (167,510) Loss on sale of fixed assets - 13,597 Amortisation of intangible assets 34,967 - Depreciation of tangible fixed assets 3,770 - Increase in debtors (132,264) (3,483) Increase in creditors 101,170 7,630 Net cash outflow from operating activities (290,219) (149,766) CASH FLOW STATEMENT Net cash outflow from operating activities (290,219) (149,766) Returns on investments and servicing of finance Interest paid (3,875) - Interest received 11,128 4,189 Net cash inflow from returns on investments and servicing of finance 7,253 4,189 Taxation paid (68,251) - Capital expenditure and financial investment Payments to acquire tangible fixed assets (12,260) - Acquisition of The Braemar Group Limited 13 (592,821) - Receipts from sales of investments - 36,418 Net cash (outflow)/inflow from capital expenditure and financial investment (605,081) 36,418 Net cash outflow before financing (956,298) (109,159) Financing Issue of sahre capital Issue of share capital 1,623,275 - Share issue costs (198,642) - Net cash inflow from financing 1,424,633 - INCREASE/(DECREASE) IN CASH 20 468,335 (109,159) NOTES TO THE FINANCIAL STATEMENTS SIX MONTHS ENDED 31 MARCH 2006 1. ACCOUNTING POLICIES The principal accounting policies adopted by the Group are as follows. (a) Convention The financial statements have been prepared under the historical cost convention and in accordance with applicable United Kingdom Accounting Standards. (b) Basis of consolidation The consolidated profit and loss account and balance sheet includes the financial statements of the Company and its subsidiary undertakings made up to 31 March 2006. The results of subsidiaries sold or acquired are included in the profit and loss account up to, or from, the date control passes. Intra-group sales and profits are eliminated fully on consolidation. A separate profit and loss account for the parent company has not been prepared as permitted by Section 230(2) of the Companies Act 1985. (c) Turnover Turnover comprises the invoiced value of goods and services supplied by the Group net of VAT and trade discounts. (d) Deferred taxation Deferred tax is provided in full in respect of taxation deferred by timing differences between the treatment of certain items for taxation and accounting purposes. Deferred tax assets are recognised to the extent that it is regarded as more likely than not that they will be recovered. The Group has not adopted a policy of discounting deferred tax assets and liabilities. (e) Goodwill For acquisitions of a business, purchased goodwill is capitalised in the year in which it arises and amortised over its estimated useful economic life up to a maximum of twenty years. (f) Tangible fixed assets and depreciation Tangible fixed assets are stated at cost, net of depreciation and any provision for impairment. Depreciation is calculated to write down the cost of assets to their estimated residual values over their estimated useful economic life over a period of 4 years on a straight line basis. (g) Stock Properties held for development and resale are stated at the lower of cost and net realisable value. Cost comprises purchase price, acquisition and development costs but excludes interest, which is written off to the profit and loss account as incurred. (h) Investments Investments are stated at the lower of cost and net realisable value. (i) Leasing and hire purchase Assets obtained under hire purchase contracts and finance leases are capitalised as tangible fixed assets. Assets acquired by finance lease are depreciated over the shorter of the lease term and their useful lives. Assets acquired by hire purchase are depreciated over their useful lives. Finance leases are those where substantially all of the benefits and risks of ownership are assumed by the Company. Obligations under such agreements are included in creditors net of the finance charge allocated to future periods. The finance element of the rental payment is charged to the profit and loss account so as to produce a constant periodic rate of charge on the net obligation outstanding in each period. (j) Operating leases Rentals under operating leases are charged on a straight line basis over the lease term. Benefits received and receivable as an incentive to sign an operating lease are recognised on a straight line basis over the period until the date the rent is expected to be adjusted to the prevailing market rate. 2 TURNOVER The total turnover of the Group for the period has been derived from its principal activity wholly undertaken in the United Kingdom net of value added tax. 3 OPERATING LOSS The operating loss is stated after charging: 6 months 12 months ended ended 31 March 30 September 2006 2005 £ £ Amortisation of goodwill 34,967 - Depreciation of fixed assets 3,770 - Auditors' remuneration 12,000 3,525 Auditors' remuneration for non-audit work 3,000 2,350 Auditor's remuneration for non-audit work of £30,000 has been paid in the period and not reflected in the operating loss above, but in the cost of acquisition and share issue costs. 4 STAFF COSTS (a) Staff costs comprise: 6 months 12 months ended ended 31 March 30 September 2006 2005 £ £ Wages and salaries 219,363 17,678 Social security 16,526 - (b) Employees Number Number The average number of employees including directors, during the period was: 8 2 5 DIRECTORS' EMOLUMENTS 6 months 12 months ended ended 31 March 30 September 2006 2005 £ £ Directors' emoluments 185,796 73,434 No directors were members of a company pension scheme. 6 INTEREST RECEIVABLE 6 months 12 months ended ended 31 March 30 September 2006 2005 £ £ Interest receivable and similar income 11,128 4,189 7 INTEREST PAYABLE 6 months 12 months ended ended 31 March 30 September 2006 2005 £ £ Bank interest 211 - Interest on other loans 14,035 - Total interest payable 14,246 - 8 TAXATION 6 months 12 months ended ended 31 March 30 September 2006 2005 £ £ Tax on ordinary activities - - The differences between the total current tax shown above and the amount calculated by applying the standard rate of UK corporation tax of 30% (2005: 30%) to the profit and loss is as follows: 2006 2005 £ £ Loss on ordinary activities before tax (300,980) (163,321) Loss on ordinary activities multiplied by standard rate of corporation tax in the UK of 30% (90,294) (48,996) Effects of: Expenses not deductible for tax purposes 15,945 9,870 Capital allowances in excess of depreciation (305) - Movement in tax losses 72,580 39,126 Other short term timing differences 2,074 - - - No adjustment has been made to the financial statements to reflect a potential deferred tax asset that would arise from future utilisation of the Group's available losses for tax purposes, due to the uncertainty over the timing of such utilisation. The potential deferred tax asset that would arise on full utilisation would amount to approximately £141,056. 9 LOSS PER SHARE 6 months 12 months ended ended 31 March 30 September 2006 2005 £ £ Loss for the period 300,980 163,321 Weighted average number of 72,454,432 19,166,666 shares Loss per share - basic 0.42p 0.85p Loss per share before goodwill amortisation would be 0.37p. 10 LOSS FOR THE FINANCIAL PERIOD As permitted by section 230 of the Companies Act 1985, the holding company's profit and loss account has not been included in these financial statements. The loss for the period is made up as follows: 6 months 12 months ended ended 31 March 30 September 2006 2005 £ £ Holding company's loss for the 230,948 163,321 period 11 INTANGIBLE FIXED ASSETS - GOODWILL Group 2006 Cost At 1 October 2005 - Additions (see note 13) 2,279,141 At 31 March 2006 2,279,141 Amortisation At 1 October 2005 - Charge for the period 34,967 At 31 March 2006 (34,967) Net book value At 31 October 2005 - At 31 March 2006 2,244,174 12 TANGIBLE FIXED ASSETS Group Group Group Company Company Motor Fixtures, Total Fixtures, Total vehicles fittings fittings and office and office equipment equipment Cost £ £ £ £ £ At 1 October 2005 - - - - - Additions: - acquired (note 13) 15,315 8,647 23,962 - - - post acquisition 5,432 4,828 10,260 3,120 3,120 At 31 March 2006 20,747 13,475 34,222 3,120 3,120 Depreciation At 1 October 2005 - - - - - Charge for the period 3,291 479 3,770 296 296 At 31 March 2006 3,291 479 3,770 296 296 Net Book Value At 1 October 2005 - - - - - At 31 March 2006 17,456 12,996 30,452 2,824 2,824 13 FIXED ASSET INVESTMENTS Group £ Cost - unlisted investments At 1 October 2005 - Additions 2,000 At 31 March 2006 2,000 Company £ Cost At 1 October 2005 - Additions (see below) 2,589,546 At 31 March 2006 2,589,546 The Group has investments in the following subsidiary undertakings, which are all incorporated in England and Wales and are owned 100%: Subsidiaries Principal activity Braemar Investment Management Property and investment managers and Limited investors Braemar Securities Limited Intermediate holding company Coronation General Partner Limited Fund manager Coronation Carried Interest Limited Dormant Coronation Nominee Limited Dormant Coronation General Partner II Fund manager Limited Coronation Carried Interest II Dormant Limited Coronation Nominee II Limited Dormant Coronation General Partner III Fund manager Limited Coronation Carried Interest III Dormant Limited Coronation Nominee III Limited Dormant Acquisition of subsidiary undertaking On 9 December 2005 the Company acquired 100% of The Braemar Group Limited (renamed Braemar Securities Limited) for consideration comprising the issue of 29,628,334 Ordinary Shares at 3p per share (£888,850), £709,000 cash, £262,150 of Loan Notes and £625,000 cash on deferred terms. The fair value of the total consideration was £2,485,000. Acquisition accounting has been used to account for the new subsidiary. Goodwill of £2,279,141 arose on the acquisition. The following table sets out the book values and fair values to the Group of the identifiable assets and liabilities acquired as at 9 December 2005: Total £ Fixed assets Tangible 23,962 Current assets Stocks 124,700 Debtors 75,832 Cash 220,725 Total assets 445,219 Creditors Trade creditors (47,374) Accruals (10,660) Other creditors (76,780) Total liabilities (134,814) Net assets acquired 310,405 Goodwill arising 2,279,141 2,589,546 Satisfied by Shares issued 888,850 Cash 709,000 Loan Notes 262,150 Deferred consideration 625,000 Directly attributable acquisition 104,546 costs 2,589,546 £ Net cash outflows in respect of the acquisition comprised: Cash consideration 709,000 Cash at bank and in hand acquired (220,725) Directly attributable acquisition costs 104,546 Net cash outflow (592,821) Braemar Securities Limited recorded a loss after taxation of £132,188 in the year ended 31 March 2006, of which £97,123 arose in the period from 31 March 2005 to 9 December 2005. 14 STOCK Group Company 2006 2005 2006 2005 £ £ £ £ Property held for resale 124,700 - - - 15 DEBTORS Group Company 2006 2005 2006 2005 £ £ £ £ Trade debtors 78,045 - - - Amounts due from group undertakings - - 67,067 - Corporation tax 15,000 - - - recoverable VAT receivable 17,255 - 8,015 - Other debtors 337,685 - 326,725 - Prepayments and accrued income 99,807 6,581 12,250 6,581 547,792 6,581 414,057 6,581 Other debtors of group and company include £326,725 due for shares placed, which was received after the year end. 16 CREDITORS - amounts falling due within one year Group Company 2006 2005 2006 2005 £ £ £ £ Trade creditors 70,908 16,906 45,671 16,906 Convertible loan notes 637,150 - 637,150 - Deferred consideration 250,000 - 250,000 - Other taxes and social 34,105 - 28,281 - security Other creditors 8,115 - 278 - Accruals and deferred 97,747 9,475 97,747 9,475 income 1,098,025 26,381 1,040,298 26,381 Deferred consideration is payable to Marc Duschenes (Managing Director) and his wife Jennie Duschenes on the achievement of certain performance targets as laid out in the share purchase agreement dated 9 November 2005, which was signed as part of the acquisition of The Braemar Group Limited by Braemar Group plc. Convertible loan notes are redeemable on the earlier of the date on which the Group has sufficient working capital to enable payment and 5 years from the date of issue, subject to the approval of the holders of the loan notes. The loan notes accrue interest at 2% above bank base rate, payable upon redemption or conversion of the loan notes. The loan notes are convertible into ordinary shares at 3p per share at any time or before the 5th anniversary of issue provided the holders of the loan notes and their concert parties do not hold more than 29.99% of the entire issued share capital of the Company. The option to convert to ordinary shares is at the discretion of the holders of the loan notes. 17 SHARE CAPITAL 2006 2005 Authorised £ £ 200,000,000 (2005: 1,000,000) Ordinary shares of 1p 2,000,000 1,000,000 each Allotted, called up and fully paid 113,795,000 (2005: 19,166,666) Ordinary shares of 1p 1,137,950 191,666 each The following issues of ordinary shares of 1p took place in the year: No. of Placement shares price 7 December 2005 (cash issue) 50,000,000 3p 7 December 2005 (consideration re: acquisition note 13)) 29,628,334 3p 1 February 2006 (cash issue) 15,000,000 3p As at 31 March 2006 there were no options granted by the Company. Beaumont Cornish Limited holds a warrant dated 17 May 2004 entitling the holder to subscribe for 333,333 ordinary shares at 3p within the third anniversary of the date of admission on AIM. 18 STATEMENT OF MOVEMENTS ON RESERVES Share premium Profit and account loss account £ £ Group 1 October 2005 264,521 (386,798) Loss for the period - (300,980) Shares issued during the year 1,892,567 - Share issue costs (198,642) - At 31 March 2006 1,958,445 (687,778) Company 1 October 2005 264,521 (386,798) Loss for the period - (230,948) Shares issued during the year 1,892,567 - Share issue costs (198,642) - At 31 March 2006 1,958,445 (617,746) 19 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS 2006 2005 Group £ £ Opening shareholders funds 69,389 232,710 Loss for the financial period (300,980) (163,321) Proceeds from the issues of shares 2,640,208 - Closing shareholders funds 2,408,617 69,389 2006 2005 Company £ £ Opening shareholders funds 69,389 232,710 Loss for the financial period (230,948) (163,321) Proceeds from the issues of shares 2,640,208 - Closing shareholders funds 2,478,649 69,389 20 ANALYSIS OF NET DEBT At 1 Cash Non-cash At 31 October flows changes March 2005 2006 Cash £ £ £ £ Cash at bank and in hand 89,189 468,335 - 557,524 Debt Convertible loan notes - - (647,521) (647,521) Deferred consideration - - (250,000) (250,000) Net Cash/(Debt) 89,189 468,335 (897,521) (339,997) 21 RECONCILIATION OF NET CASH FLOW TO MOVEMENT OF NET DEBT 2006 2005 £ £ Increase/ (Decrease) in cash 468,335 (109,159) Non cash movement in net debt (897,521) - Movement in net (debt)/ funds during the period (429,186) (109,159) Opening net funds 89,189 198,348 Closing net (debt) /funds (339,997) 89,189 22 FINANCIAL COMMITMENTS The Group had no material operating lease commitments at 31 March 2006 (2005 - £Nil). 23 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES The Group had no material capital commitments or contingent liabilities at 31 March 2006 (2005 - Nil). 24 RELATED PARTY TRANSACTIONS The Group during the period received the provision of accommodation and professional services from Minlay Limited, a company controlled by D G Maclean. The amount paid during the period amounted to £20,477 (2005: £67,090). This service agreement was terminated on 7 December 2005. In addition an underwriting agreement between Minlay Limited in relation to the raising of shareholders funds resulted in a payment of £9,500 to Minlay Limited during the year. As at 31 March 2006 £1,375 was due to Minlay Limited. During the period Coronation General Partner III Limited paid £10,000 to Lloyd Street Private Equity Limited, a company in which W M Robinson holds an interest. 25 FINANCIAL INSTRUMENTS The Group's financial instruments comprise borrowings, cash at bank and various items such as debtors and creditors that arise directly from its operations. The main purpose of these investments is to raise finance for operations. The Group has not entered into any derivative transactions and does not trade in financial instruments as a matter of policy. The main future risk relates to interest rate risk as the Group currently benefits from significant surplus cash available for short-term investment. There is no currency risk as the Group trades in Sterling. Operations to date have been financed through a placing of shares and borrowings. The Group has taken advantage of the exemption in Financial Reporting Standard 13 in respect of short-term debtors and creditors. Notes 1. Copies of the Audited Accounts for the Six Months to 31 March 2006 and a notice of the AGM will be posted to shareholders in June 2006. END This information is provided by RNS The company news service from the London Stock Exchange
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