Company registration number:
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COMPANY INFORMATION
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CONTENTS
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GROUP STRATEGIC REPORT
FOR THE PERIOD ENDED 29 DECEMBER 2019
The directors present their Strategic Report for the period ended 29 December 2019.
The Group continued its existing strategy of identifying and investing in new stores where there is potential for growth, to supplement its current sites.
During the year, two new sites were introduced at Matlock and Skelmersdale, both are performing well. These new sites, as well as organic growth, led to an overall 5.3% increase in revenue. Gross margins remained largely consistent at 31.1% (2018: 32.4%), resulting in an increased profit before tax of £4.4m (2018 -£4.2m). Based on results dividends of £3.1m were paid to shareholders during the year.
The Group continuously reviews risks and uncertainties.
A key challenge to the business remains the recent growth in aggregators within the market place, offering discounted introductions and driving customer traffic away from traditional take away sites. The franchise continues to be subject to variable wholesale prices, such changes have been highlighted further with the recent exit of the UK from the EU. There remains additional risk, if a trade agreement is not reached, that duties may be introduced and these higher costs may be passed onto the group. Post-year end, the directors are mindful of the potential impact of Covid-19 on both its staff welfare and the group’s ability to operate effectively and retain high quality pizza. In the early part of 2020, it invested heavily in ensuring staff, both onsite and drivers were secure and implemented Covid-safe strategies both in the preparation of food and when delivering. The directors continue to monitor and adapt to the changing advice and appreciate the support of the whole of its staff during this difficult period.
Retaining market share continues to be a KPI – and this is tracked by growth in revenue, by individual site and region.
The Group is committed to ensuring the highest standards and regularly monitors customer feedback and where arising customer complaints are tracked and appropriately followed up.
This report was approved by the board
and signed on its behalf.
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DIRECTORS' REPORT
FOR THE PERIOD ENDED 29 DECEMBER 2019
The directors present their report and the financial statements for the period ended 29 December 2019.
The directors are responsible for preparing the Group Strategic Report, the Directors' Report and the
consolidated
financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year
. Under that law the directors have elected to prepare the financial statements in accordance with applicable law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice), including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland'. Under company law the directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and the Group and of the profit or loss of the Group for that period.
In preparing these financial statements, the directors are required to:
∙
select suitable accounting policies for the Group's financial statements and then apply them consistently;
∙
make judgments and accounting estimates that are reasonable and prudent;
∙
state whether applicable UK Accounting Standards have been followed, subject to any material departures disclosed and explained in the financial statements;
∙
prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Group will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and the Group and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and the Group and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The profit for the period, after taxation, amounted to £
3,530,115
(2018 -
£
3,206,773
)
.
The results for the period are set out on page 7.
Ordinary dividends were paid amounting to £3,100,000 (2018: £2m). The directors do not recommend payment of a further dividend.
The directors who served during the period were:
Mr S Hemsley (resigned 29 December 2019)
Since the year end, the following director has been appointed: Mr D J Paul (appointed 16 July 2020)
The overall business outlook remains positive; the directors are experienced in the takeaway business and are well aware of the challenges that require consistently applied, high quality procedures to minimise risks. The group continues to invest in its operations and maintains high standards in product quality and staff training.
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DIRECTORS' REPORT (CONTINUED)
FOR THE PERIOD ENDED 29 DECEMBER 2019
The group's policy is to consult and discuss with employees, through unions, staff councils and at meetings, matters likely to affect employees' interests.
Information about matters of concern to employees is given through information bulletins and reports which seek to achieve a common awareness on the part of all employees of the financial and economic factors affecting the group's performance. There is no employee share scheme at present.
Each of the persons who are
directors at the time when this Directors' Report is approved has confirmed that:
There have been no significant events affecting the Group since the year end.
The auditors, Menzies LLP, were appointed to fill a casual vacancy and have been appointed as auditors by the directors of the Group and will be proposed for reappointment in accordance with section 485 of the Companies Act 2006.
This report was approved by the board and signed on its behalf.
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INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS, AS A BODY, OF FULL HOUSE RESTAURANTS HOLDINGS LIMITED
We have audited the financial statements of Full House Restaurants Holdings Limited (the 'parent Company') and its subsidiaries (the 'Group') for the period ended 29 December 2019, which comprise the Group Statement of Comprehensive Income, the Group and Company Statements of Financial Position, the Group Statement of Cash Flows, the Group and Company Statement of Changes in Equity
and the related notes, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards,
including Financial Reporting Standard 102 ‘The Financial Reporting Standard applicable in the UK and Republic of Ireland' (United Kingdom Generally Accepted Accounting Practice).
In our opinion the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) (ISAs (UK)) and applicable law. Our responsibilities under those standards are further described in the Auditors' responsibilities for the audit of the financial statements section of our report. We are independent of the Group in accordance with the ethical requirements that are relevant to our audit of the financial statements in the United Kingdom, including the Financial Reporting Council's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
∙
the directors
' use of the going concern basis of accounting in the preparation of the financial statements is not appropriate; or
∙
the directors have not disclosed in the financial statements any identified material uncertainties that may cast significant doubt about the Group's or the parent Company's ability to continue to adopt the going concern basis of accounting for a period of at least twelve months from the date when the financial statements are authorised for issue.
The directors are responsible for the other information. The other information comprises the information included in the Annual Report, other than the financial statements and our Auditors' Report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
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INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS, AS A BODY, OF FULL HOUSE RESTAURANTS HOLDINGS LIMITED (CONTINUED)
In our opinion, based on the work undertaken in the course of the audit:
∙
the information given in the Group Strategic Report and the Directors' Report for the financial period for which the financial statements are prepared is consistent with the financial statements; and
∙
the Group Strategic Report and the Directors' Report have been prepared in accordance with applicable legal requirements.
In the light of the knowledge and understanding of the Group and the parent Company and its environment obtained in the course of the audit, we have not identified material misstatements in the Group Strategic Report or the Directors' Report.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006 requires us to report to you if, in our opinion:
As explained more fully in the Directors' Responsibilities Statement on page 2, the directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the Group's and the parent Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the Group or the parent Company or to cease operations, or have no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditors' Report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the Financial Reporting Council's website at:
www.frc.org.uk/auditorsresponsibilities
. This description forms part of our Auditors' Report.
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INDEPENDENT AUDITORS' REPORT TO THE SHAREHOLDERS, AS A BODY, OF FULL HOUSE RESTAURANTS HOLDINGS LIMITED (CONTINUED)
This report is made solely to the Company's shareholders, as a body,
in accordance with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's shareholders those matters we are required to state to them in an Auditors' Report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's shareholders, as a body, for our audit work, for this report, or for the opinions we have formed.
for and on behalf of
Chartered Accountants
Statutory Auditor
Centrum House
36 Station Road
Surrey
TW20 9LF
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CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 29 DECEMBER 2019
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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT
29 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 13 to 31 form part of these financial statements.
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COMPANY STATEMENT OF FINANCIAL POSITION
AS AT
29 DECEMBER 2019
The financial statements were approved and authorised for issue by the board and were signed on its behalf by
:
The notes on pages 13 to 31 form part of these financial statements.
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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED
29 DECEMBER 2019
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COMPANY STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDED
29 DECEMBER 2019
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CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
Full House Restaurants Holdings Limited (registered number: 08895755) is a private company limited by shares, domiciled and incorporated in England and Wales. The registered office is Centrum House, 36 Station Road, Egham, Surrey, TW20 9LF. The principal place of business is Unit 5, The Forum, Hanworth Lane, Chertsey, Surrey, KT16 9JX.
The Group consists of Full House Restaurants Holdings Limited ("the Company") and all of its subsidiaries. The Group manages and operates pizza delivery franchises in England.
2.
Accounting policies
The financial statements have been prepared under the historical cost convention unless otherwise specified within these accounting policies and in accordance with Financial Reporting Standard 102, the Financial Reporting Standard applicable in
the UK and the Republic of Ireland and the Companies Act 2006
.
The Company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements.
The consolidated financial statements present the results of the Company and its own subsidiaries ("the Group") as if they form a single entity. Intercompany transactions and balances between group companies are therefore eliminated in full.
The consolidated financial statements incorporate the results of business combinations using the purchase method. In the Statement of Financial Position, the acquiree's identifiable assets, liabilities and contingent liabilities are initially recognised at their fair values at the acquisition date. The results of acquired operations are included in the Consolidated Statement of Comprehensive Income from the date on which control is obtained. They are deconsolidated from the date control ceases. In accordance with the transitional exemption available in FRS 102, the group has chosen not to retrospectively apply the standard to business combinations that occurred before the date of transition to FRS 102, being 01 January 2014.
Turnover is recognised to the extent that it is probable that the economic benefits will flow to the company and the revenue can be reliably measured. Turnover is generated via management of fast food outlets and is measured as the fair value of the consideration received or receivable, excluding discounts, rebated, value added tax and other sales taxes.
Rentals paid under operating leases are charged to the Consolidated Statement of Comprehensive Income on a straight line basis over the lease term.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
2.
Accounting policies (continued)
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 profit or loss so as to produce a constant periodic rate of charge on the net obligation outstanding in each period.
Interest income is recognised in the Consolidated Statement of Comprehensive Income using the effective interest method.
Finance costs are charged to the Consolidated Statement of Comprehensive Income over the term of the debt using the effective interest method so that the amount charged is at a constant rate on the carrying amount. Issue costs are initially recognised as a reduction in the proceeds of the associated capital instrument.
All borrowing costs are recognised in the Consolidated Statement of Comprehensive Income in the period in which they are incurred.
Goodwill
consideration given over the fair value of the identifiable assets and liabilities acquired. Goodwill is being written off over twenty years on the basis that the company has the option, as stipulated in its franchise agreements, to renew the exisiting franchises for further ten year terms at the end of the initial ten year term. As the directors are likely to take up the option and due to the company being in a good standing with regards to the terms of the franchise agreement, the directors believe amortisation over the full 20 years reflects the likely consumption of economic benefits.
Other intangible assets
All intangible assets are considered to have a finite useful life. If a reliable estimate of the useful life cannot be made, the useful life shall not exceed ten years.
The Franchise Rights are amortised on a straight line basis over their useful economic life of 10 years.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
2.
Accounting policies (continued)
Depreciation is charged so as to allocate the cost of assets less their residual value over their estimated useful lives, using the straight-line method.
Depreciation is provided on the following basis:
The assets' residual values, useful lives and depreciation methods are reviewed, and adjusted prospectively if appropriate, or if there is an indication of a significant change since the last reporting date.
Gains and losses on disposals are determined by comparing the proceeds with the carrying amount and are recognised in the Consolidated Statement of Comprehensive Income.
The depreciable value of the freehold and leasehold property is £nil because the estimated amount that the entity would expect to obtain from the disposal of the assets, if the properties were already of the age and in the condition expected at the end of its useful economic life, is in excess of the current carrying value. As such no depreciation charge is included within the financial statements.
Investments in subsidiaries are measured at cost less accumulated impairment.
Stocks are stated at the lower of cost and net realisable value, being the estimated selling price less costs to complete and sell. Cost is based on the cost of purchase on a first in, first outbasis.
At each reporting date, stocks are assessed for impairment. If stock is impaired, the carrying amount is reduced to its selling price less costs to complete and sell. The impairment loss is recognised immediately in profit or loss.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
2.
Accounting policies (continued)
Provisions are made where an event has taken place that gives the Group a legal or constructive obligation that probably requires settlement by a transfer of economic benefit, and a reliable estimate can be made of the amount of the obligation.
Provisions are charged as an expense to the Consolidated Statement of Comprehensive Income in the year that the Group becomes aware of the obligation, and are measured at the best estimate at the Statement of Financial Position date of the expenditure required to settle the obligation, taking into account relevant risks and uncertainties. When payments are eventually made, they are charged to the provision carried in the Statement of Financial Position.
Equity dividends are recognised when they become legally payable. Interim equity dividends are recognised when paid. Final equity dividends are recognised when approved by the shareholders at an annual general meeting.
Defined contribution pension plan
The Group operates a defined contribution plan for its employees. A defined contribution plan is a pension plan under which the Group pays fixed contributions into a separate entity. Once the contributions have been paid the Group has no further payment obligations.
The contributions are recognised as an expense in the Consolidated Statement of Comprehensive Income when they fall due. Amounts not paid are shown in accruals as a liability in the Statement of Financial Position. The assets of the plan are held separately from the Group in independently administered funds.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
2.
Accounting policies (continued)
Deferred tax balances are recognised in respect of all timing differences that have originated but not reversed by the Statement of Financial Position date, except that:
Deferred tax balances are not recognised in respect of permanent differences except in respect of business combinations, when deferred tax is recognised on the differences between the fair values of assets acquired and the future tax deductions available for them and the differences between the fair values of liabilities acquired and the amount that will be assessed for tax. Deferred tax is determined using tax rates and laws that have been enacted or substantively enacted by the reporting date.
The preparation of the financial statements requires management to make judgements, estimates and
assumptions that affect the amounts reported. These estimates and judgements are continually reviewed and are based on experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. Significant judgements The Company did not make any judgements that have a significant effect on the amounts recognised in the financial statements. Key sources of estimation uncertainty Accounting estimates and assumptions are made concerning the future and, by their nature, will rarely equal the related actual outcome. The key assumptions and other sources of estimation uncertainty that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are as follows: Useful economic life of fixed assets.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
Page 19
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
12.
Taxation (continued)
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
Profit and loss account
The profit and loss reserve records retained earnings and accumulated losses attributable to the shareholders of the Group. Merger reserve Other reserves' comprises the merger reserve as provided by FRS 102; the movement on this reserve represents existing balances of share capital and share premium that existed in the subsidiaries at the time of the business combination.
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NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 29 DECEMBER 2019
At the period end the group owed the Franchisor and 49% shareholder, Dominos Pizza UK & Ireland Limited, £953,071 (2018 - £1,029,268) in relation to trading activities. The total amount paid to Dominos Pizza UK & Ireland Limited in relation to trading activities was £20,556,948 (2018 - £19,783,025). Trading activities are comprised of the following: cost of sales, rent and service charges, advertising, administration costs and store development costs.
During the period House Special Limited entered into a deferred payment agreement with DP Realty Limited, a fellow group member of Domino's UK & Ireland Limited. The agreement related to funding of lease premium for 2 new store premises. The applicable interest rates are 0% and 3% per annum above the GBP 3 month LIBOR on 28 April 2016 and the loans are repayable monthly over 10 years. The total amount owing at the period end in total was £3,280,123 of which £1,177,813 is due within 1 year. These loans are shown within 'other creditors'. Dividends were paid by this company to Dominos Pizza UK & Ireland Limited in the year, amounting to £1,519,000 (2018: £980,000). At the year end B Shedden owed the company £29,798 (2018: £nil).
The company was under the control of J Shedden and B Shedden throughout the year.
The company has taken advantage of the exemption allowed under section 408 of the Companies Act 2006 and has not presented its own Statement of Comprehensive Income in these financial statements. The profit after tax of the parent company for the year was £3,104,364 (2018 - £1,959,003).
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