Sectorwatch: Consulting - FinServices May 2019 Consulting - FinServices May 2019 Sector Dashboard [4]
Public Basket Performance [5]
Operational Metrics [7]
Valuation Comparison [10]
Recent Deals [13]
Appendix [15]
7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in conjunction with a verbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document. All data cited in this document was believed to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations as to the accuracy or completeness of third-party data contained herein. This document should be treated as confidential and for the use of the intended recipient only. Please notify 7 Mile Advisors if it was distributed in error. 2 Overview
7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions, and provide market assessments and benchmarking. As a close knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. We publish our sectorwatch, a review of M&A and operational trends in the industries we focus.
Dashboard Valuation Comparison • Summary metrics on the sector • Graphical, detailed comparison of valuation • Commentary on market momentum by multiples for the public basket comparing the most recent 12-month performance against the last 3-year averages.
Public Basket Performance Recent Deals • Summary valuation and operating metrics for • The most recently announced deals in the a basket of comparable public companies sector
3 Dashboard
Operating Metrics Revenue Growth Momentum 1 - year revenue growth compared to revenue growth Median LTM GP Margin % 33.1% 3.8% average for last 3 years Current revenue growth rate exceeds the average of the last 3 years by this amount, indicating that market momentum is increasing Median LTM EBITDA Margin % 13.2%
Pricing / Gross Margin Momentum Median LTM Rev. Growth % 8.3% 0.6% 1 - year gross profit % compared to gross profit % average for last 3 years 0% 10% 20% 30% 40% Current gross profit margin exceeds the average of the last 3 years gross profit margin by this amount, indicating supplier pricing power Valuation
Profitability Median Price / LTM Earnings 21.6x 1 - year EBITDA % compared to EBITDA % average for -0.4% last 3 years Median TEV / LTM EBIT 14.6x Current EBITDA margin is less than the average of the last 3 years EBITDA margins, which may signal further consolidation Median TEV / LTM EBITDA 11.8x
Median TEV / LTM Revenue 1.7x
0x 10x 20x 30x
4 Public Basket
Rev TEV / LTM Rev Growth EBITDA TEV / EBITDA Rev / Company TEV $m $m YoY GP % % Rev X X # FTEs FTE $k
CRA International, Inc. 450 424 11% 31% 9% 1.1 11.5 687 617 The Hackett Group, Inc. 485 261 -2% 38% 16% 1.9 11.9 1,165 224 Navigant Consulting, Inc. 887 697 9% 29% 9% 1.3 14.1 5,952 117 Huron Consulting Group Inc. 1,440 806 9% 35% 12% 1.8 15.0 3,269 247 FTI Consulting, Inc. 3,317 2,081 12% 35% 14% 1.6 11.7 4,768 437 Capgemini SE 20,495 15,110 5% 27% 13% 1.4 10.8 211,313 72 Cognizant Technology Solutions Corporation 31,588 16,323 8% 39% 20% 1.9 9.9 281,600 58 Accenture plc 107,224 40,840 8% 32% 16% 2.6 16.1 459,000 89
Average 20,736 9,568 8% 33% 14% 1.7 12.6 120,969 232 Median 2,378 1,444 8% 33% 13% 1.7 11.8 5,360 171 share price as of 10May19
5 Public Basket Valuation Trends
16x Public EBITDA Multiples over Time
15x 14x 10x
12x 5x 0x
10x
Feb-15 Feb-16 Feb-17 Feb-18 Feb-19
Aug-15 Aug-14 Aug-16 Aug-17 Aug-18
Nov-14 Nov-15 Nov-16 Nov-17 Nov-18
May-15 May-16 May-17 May-18 May-19
8x 10.8x TEV/EBITDA - Median TEV/EBITDA - Average
6x Public Revenue Multiples over Time
2.0x 4x 1.5x 1.5x 1.0x 2x 0.5x 0.0x
0x
Feb-15 Feb-16 Feb-17 Feb-18 Feb-19
Aug-14 Aug-15 Aug-16 Aug-17 Aug-18
Nov-14 Nov-15 Nov-16 Nov-17 Nov-18
May-15 May-16 May-17 May-18 May-19
Feb-15 Feb-16 Feb-17 Feb-18 Feb-19
Aug-14 Aug-15 Aug-16 Aug-17 Aug-18
Nov-14 Nov-15 Nov-16 Nov-17 Nov-18
May-17 May-16 May-18 May-19 May-15 TEV/Revenue - Median TEV/Revenue - Average
TEV/EBITDA - Median TEV/Revenue - Median TEV/EBITDA - Average TEV/Revenue - Average
6 Operational Metrics
LTM Gross Profit Margin % LTM EBITDA %
Cognizant Technology Cognizant Technology Solutions Corporation Solutions Corporation
The Hackett Group, Inc. Accenture plc
FTI Consulting, Inc. The Hackett Group, Inc.
Huron Consulting Group FTI Consulting, Inc. Inc.
Accenture plc Capgemini SE
Huron Consulting Group CRA International, Inc. Inc.
Navigant Consulting, Inc. CRA International, Inc.
Capgemini SE Navigant Consulting, Inc.
Median Median
- 10% 20% 30% 40% - 10% 20% 30%
7 Operational Metrics
LTM Revenue per LTM Revenue Growth % Full Time Employee x 000’s
FTI Consulting, Inc. CRA International, Inc.
CRA International, Inc. FTI Consulting, Inc.
Huron Consulting Group Huron Consulting Group Inc. Inc.
Navigant Consulting, Inc. The Hackett Group, Inc.
Accenture plc Navigant Consulting, Inc.
Cognizant Technology Accenture plc Solutions Corporation
Capgemini SE Capgemini SE
Cognizant Technology The Hackett Group, Inc. Solutions Corporation
Median Median
(10%) - 10% 20% $- $200 $400 $600 $800
8 Operational Metrics
Average Days Accounts Receivable Turnover Sales Outstanding
Accenture plc Navigant Consulting, Inc.
The Hackett Group, Inc. CRA International, Inc.
Cognizant Technology Solutions Corporation FTI Consulting, Inc.
Huron Consulting Group Inc. Capgemini SE
Capgemini SE Huron Consulting Group Inc.
Cognizant FTI Consulting, Inc. Technology Solutions…
CRA International, Inc. The Hackett Group, Inc.
Navigant Consulting, Inc. Accenture plc
Median Median
0x 2x 4x 6x 8x 10x 0 30 60 90 120 150
9 Valuation
TEV / LTM Revenue TEV / LTM EBITDA
Accenture plc Accenture plc
Cognizant Technology Huron Consulting Solutions… Group Inc.
The Hackett Group, Navigant Inc. Consulting, Inc.
Huron Consulting The Hackett Group, Group Inc. Inc.
FTI Consulting, Inc. FTI Consulting, Inc.
Capgemini SE CRA International, Inc.
Navigant Consulting, Inc. Capgemini SE
Cognizant CRA International, Technology Inc. Solutions…
Median Median
0x 1x 2x 3x 0x 4x 8x 12x 16x 20x
10 Valuation
TEV / LTM EBIT Price / LTM Earnings
Huron Consulting Group Huron Consulting Inc. Group Inc.
Navigant Navigant Consulting, Inc. Consulting, Inc.
Accenture plc Accenture plc
CRA International, Capgemini SE Inc.
The Hackett Group, The Hackett Group, Inc. Inc.
FTI Consulting, Inc. FTI Consulting, Inc.
Cognizant Technology Capgemini SE Solutions Corporation
Cognizant Technology CRA International, Inc. Solutions…
Median Median
0x 10x 20x 30x 0x 20x 40x 60x
11 Valuation
Historical Valuation Multiples Historical Valuation Multiples versus Gross Profit versus Revenue Growth Rate
18x 14% 18x 45% 12.0%
38.7% 16x 11.2% 12% 16x 38.0% 40% 34.8% 34.7% 14x 9.3% 10% 14x 35% 8.5% 30.6% 7.6% 12x 30% 12x 8% 31.5% 8.0% 28.7% 10x 6% 10x 27.1% 25%
5.4% 8x 20% 8x 4%
6x 15% 6x 2%
4x 10% 4x 0%
2x 5% 2x -2% (1.8%)
10x 11x 11x 12x 12x 14x 15x 16x 10x 11x 11x 12x 12x 14x 15x 16x
LTM GP% LTM
EBITDA(x) EBITDA(x)
0x 0% 0x -4% RGR% LTM
EBITDA(x) LTM GP% EBITDA(x) LTM RGR%
12 Recent Transactions
Total Transaction Target TEV / TEV / Date Target Buyer / Investor Value Revenue Revenue EBITDA
2May19 McBee Associates, Inc. Netsmart Technologies, Inc. - - - - 28Feb19 Ohridska banka AD Steiermärkische Bank und Sparkassen AG - 25.53 - - 28Feb19 Ohridska banka AD Steiermärkische Bank und Sparkassen AG - 25.53 - - 31Jan19 Joint Stock Company Bank CenterCredit - 20.53 112.62 - - 15Jan19 A.M.&C. Finance SA Banque Cramer & Cie SA; Norinvest Holding SA - - - - 29Nov18 Hana Financial Investment Co., Ltd. Hana Financial Group Inc. 443.81 2,871.7 - - 22Oct18 Cambridge Consulting Group, LLC NFP Corp. - - - - 6Nov18 Gold Finance Sp z. o o Metrohouse Franchise S.A. 0.93 - - - 10Oct18 Accordion Partners LLC FFL Partners, LLC - - - - 2Oct18 A Youngson (Turriff) Limited Bruce Stevenson Ltd - - - -
26Sep18 DoBe Group - - - - - 25Sep18 21.Finance AG Bank Frick & Co. AG, Asset Management Arm - - - - 31Aug18 Donriver, Inc. Ciena Corporation 71.78 - - -
24Jul18 ZYXR.com Zhejiang Zheshang Chanrong Holdings Co., Ltd. - - - - 24Jul18 Global Index Group, Inc. - - - - - 13Jul18 GFIT Inc. SOLXYZ Co., Ltd. - - - -
12Jun18 Finergy Solutions Pty Ltd/Avantek Pty Ltd Arthur J. Gallagher & Co. - - - - 3May18 Medius Consulting Limited Elixirr Partners LLP - - - - 17Apr18 Visual Risk Pty. Ltd. G Treasury SS, LLC - - - - 28Mar18 Da Nang Securities Company - - - - - 23Mar18 Hana Financial Investment Co., Ltd. Hana Financial Group Inc. 649.07 2,863.49 - -
22Mar18 Thomson Financial Management, Inc. Bloomfield Hills Financial, Inc. - - - - 10Jan18 Screen Group B.V. TRGRP, Inc. - - - - 29Dec17 Hengtai Securities Co., Ltd CITIC Guoan Group Co., Ltd. 1,386.24 486.05 - -
28Dec17 Ohridska banka AD Société Générale Société anonyme 8.71 - - -
13 Consulting - FinServices May 2019 APPENDIX:
Public Basket
Constituents
7 Mile Advisors appreciates the opportunity to present this confidential information to the Company. This document is meant to be delivered only in conjunction with a verbal presentation, and is not authorized for distribution. Please see the Confidentiality Notice & Disclaimer at the end of the document. All data cited in this document was believed to be accurate at the time of authorship and came from publicly available sources. Neither 7 Mile Advisors nor 7M Securities make warranties or representations as to the accuracy or completeness of third-party data contained herein. This document should be treated as confidential and for the use of the intended recipient only. Please notify 7 Mile Advisors if it was distributed in error. 14 Revenue Multiples - CRA International, Inc. 1.5x Public Basket 1.2x 0.9x 0.6x 0.3x CRA International, Inc. 0.0x CRA International, Inc., a consulting company, provides economic, financial, and management consulting services in the United States, the United Kingdom, and internationally. The TEV/Revenue Average company advises clients on economic and financial matters pertaining to litigation and regulatory proceedings; and guides EBITDA Multiples - CRA International, Inc. corporations through critical business strategy and performance- 20x related issues. The company’s consulting services include 15x research and analysis, expert testimony, and support in litigation 10x and regulatory proceedings in the areas of finance, accounting, 5x economics, insurance, and forensic accounting and investigations to corporate clients and attorneys. In addition, its 0x management consulting services comprise strategy development, performance enhancement, corporate strategy and portfolio analysis, estimation of market demand, new product TEV/EBITDA Average pricing strategies, valuation of intellectual property and other assets, assessment of competitors' actions, and analysis of new P/E Multiples - CRA International, Inc. sources of supply. It serves various industries, including 80x agriculture; banking and capital markets; chemicals; 60x communications and media; consumer products; energy; entertainment; financial services; health care; insurance; life 40x sciences; manufacturing; metals, mining, and materials; oil and 20x gas; real estate; retail; sports; telecommunications; 0x transportation; and technology. CRA International, Inc. was founded in 1965 and is headquartered in Boston, Massachusetts.
P/E Average
15 Revenue Multiples - The Hackett Group, Inc. Public Basket 3x 2x
1x
The Hackett Group, Inc. 0x The Hackett Group, Inc. operates as a strategic advisory and technology consulting firm primarily in North America and TEV/Revenue Average European countries. Its executive advisory programs include best practice intelligence center, an online searchable repository of best practices, performance metrics, conference EBITDA Multiples - The Hackett Group, Inc. 20x presentations, and associated research; best practice accelerators that provide Web based access to best practices, 15x customized software configuration tools, and best practice 10x process flows; advisor inquiry, an inquiry service used by clients 5x for access to fact-based advice on proven approaches and methods; best practice research, a research that provides 0x insights into the proven approaches; and peer interaction comprising member-led Webcasts, annual best practice conferences, annual member forums, membership performance TEV/EBITDA Average surveys, and client-submitted content. The company’s benchmarking services conduct studies in the areas of selling, P/E Multiples - The Hackett Group, Inc. general and administrative, finance, human resources, 50x information technology, procurement, enterprise performance 40x management, shared service centers, and working capital 30x management. The company was founded in 1991 and is 20x headquartered in Miami, Florida. 10x 0x
P/E Average
16 Revenue Multiples - Navigant Consulting, Public Basket 3x Inc. 2x
1x
Navigant Consulting, Inc. 0x Navigant Consulting, Inc. provides professional services to corporate executives and senior management, corporate counsel, law firms, corporate boards, special committees, and TEV/Revenue Average governmental agencies worldwide. It operates through four segments: Healthcare; Energy; Financial Services Advisory and EBITDA Multiples - Navigant Consulting, Inc. 15x Compliance; and Disputes, Forensics and Legal Technology. 12x The Healthcare segment offers consulting and business process management services to healthcare providers, payers, and life 9x sciences companies. This segment helps clients respond to 6x market legislative changes, such as the shift to an outcome and 3x value-based reimbursements model, ongoing industry 0x consolidation and reorganization, Medicaid expansion, the implementation of a new electronic health records system, and product planning and commercialization expertise. Navigant TEV/EBITDA Average Consulting, Inc. was founded in 1983 and is headquartered in Chicago, Illinois. P/E Multiples - Navigant Consulting, Inc. 30x
Date Key Development Headline 20x 2/26/19 Navigant To Seek Acquisitions 8/23/18 Ankura Consulting Group, LLC completed the acquisition of 10x Thoreau Holdco, LLC and Navigant Consulting (Europe) Ltd. from Navigant Consulting, Inc. (NYSE:NCI). 0x 6/25/18 Navigant Consulting Seeks Acquisitions 6/24/18 Ankura Consulting Group, LLC entered into a definitive agreement to acquire Thoreau Holdco, LLC and Navigant Consulting (Europe) Ltd. from Navigant Consulting, Inc. P/E Average (NYSE:NCI) for $470 million.
17 Revenue Multiples - Huron Consulting Group 4x Inc. Public Basket 3x 2x
1x Huron Consulting Group Inc. 0x Huron Consulting Group Inc., a professional services firm, provides advisory, technology, and analytic solutions in the United States and internationally. Its Healthcare segment TEV/Revenue Average provides advisory services in the areas of strategy, care transformation, financial and operational performance, EBITDA Multiples - Huron Consulting Group 20x technology and analytics, and leadership development to Inc. national and regional hospitals, integrated health systems, 15x academic medical centers, community hospitals, and medical 10x groups. The company’s Education segment offers management 5x consulting and technology solutions related to business and technology strategy, financial management, operational and 0x organizational effectiveness, research administration, and regulatory compliance for higher education institutions and academic medical centers. Huron Consulting Group Inc. was TEV/EBITDA Average founded in 2002 and is headquartered in Chicago, Illinois.
100x P/E Multiples - Huron Consulting Group Inc. 80x 60x 40x 20x 0x
P/E Average
18 Revenue Multiples - FTI Consulting, Inc. 2.0x Public Basket 1.5x 1.0x
0.5x FTI Consulting, Inc. 0.0x FTI Consulting, Inc. provides business advisory services to manage change, mitigate risk, and resolve disputes worldwide. The company’s Corporate Finance & Restructuring segment TEV/Revenue Average provides turnaround and restructuring, business transformation, interim management, valuation and financial advisory, EBITDA Multiples - FTI Consulting, Inc. 20x transaction, dispute advisory, and tax services, as well as mergers and acquisitions (M&A), and M&A integration services. 15x Its Forensic and Litigation Consulting segment offers anti- 10x corruption investigations and compliance, and data and 5x analytics, as well as compliance, monitoring, and receivership services; cybersecurity, forensic accounting and advisory, and 0x global risk and investigations practice; and construction solutions, dispute advisory, intellectual property, trial, business insurance claims, and health solutions. The company’s TEV/EBITDA Average Economic Consulting segment provides financial, economic, and econometric consulting services; business and expert valuation, P/E Multiples - FTI Consulting, Inc. and expert testimony services. FTI Consulting, Inc. was founded 60x in 1982 and is headquartered in Washington, District of 45x Columbia. 30x
15x Date Key Development Headline 11/30/18 FTI Consulting May Seek Acquisitions 0x 9/9/18 Nuix Pty. Ltd. acquired Ringtail Solutions, Inc. from FTI Consulting, Inc. (NYSE:FCN) for $55 million. 5/18/18 Rex Energy Initiates Sale Process 3/5/18 FTI Consulting May Look At Potential Acquisitions P/E Average
19 Revenue Multiples - Capgemini SE 2.0x Public Basket 1.5x 1.0x
0.5x Capgemini SE 0.0x Capgemini SE provides consulting, technology, and digital transformation services. It addresses clients’ opportunities in the world of cloud, digital, and platforms, as well as enables TEV/Revenue Average organizations to realize business ambitions through an array of EBITDA Multiples - Capgemini SE services from strategy to operations. The company’s Consulting 20x Services segment offers strategy and transformation consulting services primarily in digital transformation that enhance the 15x performance of organizations based on intimate client 10x relationships, and the knowledge of client industries and 5x processes. Its Technology & Engineering Services segment provides assistance and support to internal IT teams of client 0x companies. Capgemini SE was founded in 1967 and is based in Paris, France. TEV/EBITDA Average
Date Key Development Headline P/E Multiples - Capgemini SE 2/20/19 Capgemini SE (ENXTPA:CAP) completed the acquisition of 30x Leidos Cyber, Inc. from Leidos Intermediate Holdings, Inc. and others. 20x 2/14/19 Capgemini To Seek Acquisitions 6/21/18 Capgemini Seeks Acquisitions in India 10x 6/6/18 Capgemini SE (ENXTPA:CAP) entered into an agreement to acquire Leidos Cyber, Inc. from Leidos Intermediate Holdings, 0x Inc. and others. 6/4/18 SAP SE to Team with Accenture, Capgemini and Deloitte to Accelerate Customer Adoption of SAP S/4Hana(R) Cloud in Target Industries P/E Average
20 Revenue Multiples - Cognizant Technology Public Basket 6x Solutions Corporation 4x
2x
Cognizant Technology Solutions Corporation 0x Cognizant Technology Solutions Corporation, a professional services company, provides consulting and technology, and outsourcing services worldwide. The company operates through TEV/Revenue Average four segments: Financial Services; Healthcare; Products and EBITDA Multiples - Cognizant Technology Resources; and Communications, Media and Technology. It 30x offers business, process, operations, and technology consulting Solutions Corporation services; application design and development, and systems 20x integration services; application testing, consulting, and engineering services; and enterprise information management 10x services. The company was founded in 1994 and is headquartered in Teaneck, New Jersey. 0x
Date Key Development Headline 5/7/19 AVEVA and Cognizant Expand R&D Partnership to Build Next- TEV/EBITDA Average Gen Industrial Software 5/2/19 Cognizant Technology Solutions Intends To Seek Acquisitions P/E Multiples - Cognizant Technology 50x 3/31/19 Cognizant Technology Solutions Corporation (NasdaqGS:CTSH) Solutions Corporation completed the acquisition of Oy Samlink AB from Posti Group 40x Oyj, Aktia Bank p.l.c. (HLSE:AKTIA), Oma Säästöpankki Oyj 30x (HLSE:OMASP), Savings Bank Group, Svenska Handelsbanken 20x AB (publ), Asset Management Arm, POP Pankkiliitto osk and other minority shareholders. 10x 3/4/19 Cognizant Technology Solutions Corporation (NasdaqGS:CTSH) 0x acquired Meritsoft from Synova Capital Fund II managed by Synova Capital LLP, 22C Capital and others.
P/E Average
21 Revenue Multiples - Accenture plc Public Basket 3x 2x
1x
Accenture plc 0x Accenture plc provides consulting, technology, and outsourcing services in Ireland and internationally. Its Communications, Media & Technology segment provides professional services TEV/Revenue Average that help clients accelerate and deliver digital transformation, develop industry-specific solutions to seize new opportunities, EBITDA Multiples - Accenture plc and enhance efficiencies and business results for 20x communications, media, high tech, software, and platform 15x companies. The company’s Financial Services segment offers 10x services that address profitability pressures, industry 5x consolidation, regulatory changes, and the need to continually adapt to new digital technologies for banking, capital markets, 0x and insurance industries. Accenture plc was founded in 1989 and is based in Dublin, Ireland. TEV/EBITDA Average Date Key Development Headline 5/6/19 Accenture plc and SAP SE to Co-Develop and Co-Innovate New P/E Multiples - Accenture plc Industry Solutions on SAP® C/4HANA Suite 40x 4/30/19 Accenture plc (NYSE:ACN) completed the acquisition of Enterprise System Partners Limited. 30x 4/29/19 Accenture plc (NYSE:ACN) entered into an agreement to acquire 20x Zielpuls GmbH. 4/10/19 Pitney Bowes Inc. and Accenture Team to Help Clients Take 10x Advantage of Intelligent, Data-Driven Solutions 0x 3/28/19 Accenture plc (NYSE:ACN) agreed to acquire selected assets from Caltec Scube Co., Ltd.
P/E Average
22 CONTACT INFO 7MA provides Investment Banking & Advisory Services to the Business Services and Technology Industries globally. We advise on M&A and private capital transactions and provide market assessments and benchmarking. As a close-knit team with a long history together and a laser focus on our target markets, we help our clients sell their companies, raise capital, grow through acquisitions, and evaluate new markets. Securities offered through 7M Securities LLC.
Leroy Davis, Partner 704.899.5962 [email protected] Tripp Davis, Partner 704.899.5762 [email protected] Andy Johnston, Partner 704.899.5961 [email protected] Ben Lunka, Managing Director 704.496.2995 [email protected] Jeff Stoecklein, Managing Director 312.796.9330 [email protected] Mark Landry, Managing Director 561.972.0609 [email protected] Kristina Sergueeva, Director 704.899.5149 [email protected] Neil Churman, Director 281.742.9340 [email protected] John Cooper, Director 704.973.3996 [email protected] Tim Frye, Director 704.973.3994 [email protected] Nicholas Prendergast, Financial Analyst 704.973.3995 [email protected] Ariail Siggins, Marketing Director 704.981.2908 [email protected] Sydney Larese, Associate 704.973.3998 [email protected] Marty Johnson, Associate 704.973.3999 [email protected] Rory Julyan, Associate 704.981.2520 [email protected] Garth Martin, Associate 704.973.3997 [email protected] Dennis Fox, Associate 704.706.9168 [email protected] Steve Buffington, Associate 704.960.1828 [email protected] Brynne Miller, Associate 704.960.1701 [email protected] Emily Halstenberg, Marketing / Sales Coordinator 704.409.9912 [email protected]
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