IPD GROUP LTD — Interim / Quarterly Report 2024

Feb 25, 2024

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IPD GROUP FY23 RESULTS PRESENTATION

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Presenters
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Michael Sainsbury Executive Director & CEO

Jason Boschetti Chief Financial Officer

Mohamed Yoosuff Executive Director Strategic Development

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IPD GROUP - FY24FY24 Hal f Year Resultsf Year Results

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What we’ll share today
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FY24 Half Year Results

– Overview

• Financial Performance

– Market & Business Update

– Strategy & Outlook

– Q&A

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IPD GROUP - FY24FY24 Hal f Year Resultsf Year Results

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IPD GROUP - FY24FY24 Hal f Year Resultsf Year Results 3

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Our Vision

To help build a future where sustainable electrical infrastructure creates a better life for all.

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Our Mission

To enhance every aspect of infrastructure through energy efficiency, automation and secure connectivity while prioritising the safety and wellbeing of people.

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IPD GROUP - FY24 Half Year Results

Successfully evolving

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Increasing our value proposition in a growing energy market

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Power distribution, energy management and automation product distribution with complimentary custom assembly services Specialists in the supply, modification, repair and design of hazardous area electrical equipment

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Complete electrical engineering services for high and low voltage projects with EV charging infrastructure specialisation Manufacturer and distributor of electrical cables and speciality plugs

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IPD GROUP - FY24 Half Year Results

Corporate snapshot

Capital Structure

Capital Structure
ASX Code	IPG
ASX Shareprice	$5.30 ( 1)
IPO Date	17th December 2021
Shares on issue	103,380,078
Net Debt	$23.7M	(2)
Market capitalisation	$547M	(1)

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(1)
Share Price
IPG-ASX share price Small Ords indexed to IPG
6.00
20/Feb/24
$5.30
5.00
4.00
3.00
2.00
1.00
0.00
Dec-21 Mar-22 Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Sep-23 Dec-23
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Board of Directors

David Rafter Non-Executive Chair Andrew Moffat Non-Executive Director Michael Sainsbury Executive Director & CEO Mohamed Yoosuff Executive Director - Strategic Development

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(1)
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Share Holder Breakdown

25% 75% External Board, Management & Employees

1. As at 20 February 2024 2. As at 31 January 2024

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IPD GROUP - FY24 Half Year Results

HY24 Results overview

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Financial performance Continued growth for the Group drives earnings to top end of guidance range

(1) (1) Revenue Underlying EBITDA Underlying EBIT $120.7m $16.5m $14.0m Up 8.8% (PCP $110.9m) Up 23.1% (PCP $13.4m) Up 21.7% (PCP $11.5m)

(1) Underlying NPAT $9.8m Up 22.5% (PCP $8.0m)

Earnings Per Share 10.8 cents Up 16.1% (PCP 9.3cents)

Net Assets Net Cash $142.7m $70.5m

($23.7m of Net Debt as at 31 January 2024)

($72.9m as at 30 June 2023)

Capital Raised $65.0m

Successfully raised in Dec 2023

Products/Services Revenue Split 91% / 9%

Interim Dividend

4.6 cents

Dividend per share fully franked

1. Underlying EBITDA, EBIT and NPAT from ordinary activities is a non-IFRS measure reported to provide a greater understanding of business performance. Underlying EBITDA and EBIT have been arrived at by adding back acquisition related costs totalling $362,000. Underlying NPAT from ordinary activities has been arrived at by adding back acquisition related costs after tax totalling $253,000.

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IPD GROUP - FY24 Half Year Results

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Financial Performance

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IPD GROUP - FY24 Half Year Results

Financial overview

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EX Engineering and growing daily trade business results in strong margin growth

Acquisition of EX Engineering and growing daily trade business delivers strong gross profit, EBITDA, EBIT and NPAT margin growth during 1H.

• EX Engineering was acquired on the 21[st ] of July, contributing to the Group’s expanding gross profit, EBITDA, EBIT and NPAT margins. EX engineering continues to track towards earnout targets for FY24.

• Growing daily trade business has resulted in stronger gross profit margins for the Group.

• $65 million of new capital was raised in December.

• Acquisition of CMI Operations Pty Ltd completed on 31[st ] January 2024.

	Underlying	(1)		Movement %
$m	1H FY24		1H FY23	(vs lastyear)
Revenue	120.7		110.9	8.8%
Gross profit	48.3		41.7	15.8%
EBITDA	16.5		13.4	23.1%
EBIT	14.0		11.5	21.7%
NPAT	9.8		8.0	22.5%
Gross profit margin	40.0%		37.6%	2.4%
Operating expenses as % of revenue	26.7%		25.6%	1.1%
EBITDA margin	13.7%		12.1%	1.6%
EBIT margin	11.6%		10.4%	1.2%
NPAT margin	8.1%		7.2%	0.9%

1. Underlying EBITDA, EBIT and NPAT from ordinary activities is a non-IFRS measure reported to provide a greater understanding of business performance. Underlying EBITDA and EBIT have been arrived at by adding back acquisition related costs totalling $362,000. Underlying NPAT from ordinary activities has been arrived at by adding back acquisition related costs after tax totalling $253,000.

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IPD GROUP - FY24 Half Year Results

Sales & earnings growth

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Record revenue & EBITDA results

Revenue of $120.7million, up 8.8% on pcp

• The acquisition of EX Engineering and growing daily trade has contributed to the Groups revenue growth.

EBITDA of $16.5 million, up 23.1% on pcp

• Timing of some major projects into H2 FY24 has resulted in strong margin recognition in the first half of FY24.

• EX Engineering's high EBITDA margins has contributed to the Group's first half results and strengthening EBITDA margins.

• Operating expense as a % of revenue increased on the pcp as the Group recognises the full cost base of strategic investments made last year.

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(1)
Revenue Underlying EBITDA
$226.9m
$16.5 m
$14.3 m
$176.7m $13.4 m
H2
$116.0m $11.3 m
H2
$118.1m $8.8 m
$95.0m
$6.9 m
H2
$65.0m
13.7%
H1 H1 11.9% 12.1% 12.4%
$120.7m
H1 $110.9m 10.6% 10.8%
H1 $81.7m
$53.1m
FY21 FY22 FY23 FY24 H2 FY21 H1 FY22 H2 FY22 H1 FY23 H2 FY23 H1 FY24
Statutory revenue EBITDA EBITDA margin
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1. Underlying EBITDA is a non-IFRS measure reported to provide a greater understanding of business performance. Underlying EBITDA has been arrived at by adding back acquisition related costs totalling $362,000.

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IPD GROUP - FY24 Half Year Results

Pro-forma financial performance

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Pro-forma sales and earnings demonstrates IPD’s growth

On a comparable pro forma basis, IPD delivers gross profit, EBITDA, EBIT and NPAT growth during 1H FY23

• Pro forma financials include the financial performance of EX Engineering prior to acquisition and excludes acquisition costs.

• Growing daily trade in the traditional IPD business (relative to projects) has resulted in stronger pro forma gross profit margins for the Group.

• Strengthening gross profit margins have offset the 1H FY23 operating cost increases as the Group recognises the full cost base of strategic investments made last year.

• Double digit pro forma NPAT growth, up 11.5% on pro forma pcp.

• EX engineering continues to track towards earn-out targets for FY24.

	Pro forma (1)	Pro forma (1)
$m	1H FY24	1H FY23	Movement %
Revenue	121.0	116.9	3.5%
Gross profit	48.4	44.1	9.8%
EBITDA	16.3	14.5	12.4%
EBIT	13.8	12.6	9.5%
NPAT	9.7	8.7	11.5%
Gross profit margin	40.0%	37.7%	2.3%
Operating expenses as % of	26.8%	25.7%	1.1%
revenue
EBITDA margin	13.5%	12.4%	1.1%
EBIT margin	11.4%	10.8%	0.6%
NPAT margin	8.0%	7.4%	0.6%

1. IPD acquired EX Engineering on 21 July 2023. The Pro forma information presented includes the financial performance of EX Engineering prior to acquisition and excludes acquisition related costs.

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IPD GROUP - FY24 Half Year Results

Strong & flexible financial position

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Balance Sheet

Balance Sheet
	As at	As at
$m	31 Dec 2023	30 Jun 2023
Total current assets	165.6	109.1
Total non-current assets	39.6	30.5
Totalassets	205.2	139.6
Total current liabilities	51.1	55.0
Total non-current liabilities	11.4	11.7
Totalliabilities	62.5	66.7
Net assets	142.7	72.9

• As at 31 December 2023, the Group has $142.7 million of net assets on its balance sheet after additional capital was raised in December for the acquisition of CMI Operations Pty Ltd.

• $70.5 million in net cash as at 31 December 2023. Net cash was available for the acquisition of CMI which completed in January 2024.

• On 31 January 2024 the group utilised $31.1 million from the newly acquired $40.0 million CBA debt facility to partly fund the acquisition of CMI Operations.

Net Assets

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$142.7m
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$72.9m
$68.5m
$63.4m
$57.2m
31 Dec 30 Jun 31 Dec 30 Jun 31 Dec
2021 2022 2022 2023 2023
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IPD GROUP - FY24 Half Year Results

Continued investment for future growth

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Net working capital & dividend

Net working capital (NWC) of $48.2 million

• Inventory increased by $7.6 million on the prior corresponding period, with over $2.5 million of this contributed by EX Engineering.

• The inventory build during H1 will be used to support the ongoing revenue growth into H2.

Dividend of 4.6 cents/share

• $9.5 million in NPAT from ordinary activities after acquisition costs for the first half of FY24, up 18.8% on pcp.

• Fully franked interim dividend of 4.6 cents per share declared for the first half of FY24.

• 4.6 cents per share equates to a payout of $4.8 million and a payout ratio of 50%.

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Net Working Capital (NWC) Dividends
4.7c
4.6c 4.6c
$48.2m
3.7c
$39.4m
$33.5m
$25m
30 Jun 2022 31 Dec 2022 30 Jun 2023 31 Dec 2023
30 Jun 2022 31 Dec 2022 30 Jun 2023 31 Dec 2023
IPD GROUP - FY24 Half Year Results 13
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Market & Business Update

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IPD GROUP – FY24 Half Year Results

Market update

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The first six months saw changes in market dynamics as the supply chain improved and certain market segments rebounded

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Diverse range of technologies

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Data centre infrastructure

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EV charging & infrastructure

• Our diverse technologies and solutions have enhanced Group performance in focused segments.

• Continue to diversify our portfolio to adapt to the next phase of digital transformation and safeguard against market fluctuations.

• Significant digital transformation initiatives are currently underway throughout Australia.

• Notable increase in demand as businesses leverage technology to enhance their competitive edge.

• The market is steadily expanding, especially in new development areas, supported by the National Construction Code (NCC), which requires new buildings to be ready for EV charging.

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IPD GROUP - FY24 Half Year Results

Business update

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Main Focus

Continued investment & expansion of strategic sales team.

Envision : Annual technology roadshow highlighting motor control innovations.

Gemtek's integration is set for completion by 1st July, anticipated to boost operational efficiencies.

Post-integration, Addelec will undergo rebranding to communicate a clear updated message to the market.

Addelec is poised to meet the increasing demand for efficient electrical infrastructure within the sustainable energy sector.

Supplier Additions

ABB : Industry leading high efficiency motors.

Solexy : Wireless technology for hazardous classified areas.

Key Projects

55 Pitt Street, Sydney: Equipped with Busduct, Uninterruptible Power Supply (UPS), and switchgear.

Stack data centre: Supplied low voltage (LV) switchgear.

Transgrid: Supplied communication hardware for the implementation for digital substation automation.

Key Projects

Completed full design and construct of the High Voltage (HV) infrastructure for Cloud Carrier data centre.

Design & construct of 2 x NRMA 350kW rapid EV charge sites in SA. Supplied substations to BP for 16 x EV charging sites.

Secured the design & construct contract for the electrification of Australia’s largest bus depot (170 buses) in NSW.

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IPD GROUP - FY24 Half Year Results

Business update

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Continue to run as a separate organisation.

Main Focus

Expanding nationally using the IPD Group network.

Continue to run as a separate organisation.

Aligning NSW and WA workshops for increased manufacturing and supply.

Key Projects

BARDEX (USA) Floating production storage and offloading mooring system.

CBH Multiple storage wiring modifications.

Woodside's FPSO Dry dock support and crane variable speed drive conversion.

Chevron Crane panel wiring modifications.

Main Focus

Capitalise on extensive government investments in infrastructure in construction, industry, and both state and federal public projects, through its electrical cable operations.

Expanding sales in the Minto line , including the new 11kV couplers, driven by a strong shift towards decarbonisation in Australian mining via equipment electrification.

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IPD GROUP - FY24 Half Year Results

IPD 1H FY24 - Revenue split

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Strong product sales while expanding our complementary services

Products

Services

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Industrial &
motor control
14%
Automation
& industrial
16% comms
Power 53%
distribution $109.8m
7%
Power
8% monitoring
Hazardous area
equipment
Other (2%)
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Calibration
& Testing
24%
Installation &
46%
commissioning $10.9m
9% Maintenance
& repairs
19%
Electric vehicle
solutions
Refurbishment
& other (2%)
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IPD GROUP - FY24 Half Year Results

Diversified revenue stream through CMI acquisition

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Pro forma FY23A revenue ($M) (1)
CMI
31%
~$331m
69%
IPD
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1. Pro forma FY23A metric combines the revenue of IPD Group and CMI operations for the 2023 financial year (excluding any synergies)

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Pro forma FY23A products by revenue (1)
Other
Power monitoring (2%)
Plugs 7%
6%
Automation & industrial Power
communication 32% distribution
9%
Industrial 19%
motor control
25%
Cables
Pro forma FY23A end customer markets (1)
Residential construction (1%) Other
Power utilities
6%
Food & beverage 4%
5%
Data centres
5%
Water & waste water 5% 44% Commercial
construction
14%
Resources & mining
14%
Infrastructure/Industrial
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IPD GROUP - FY24 Half Year Results

Product vendor relationships

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Reducing reliance on single vendors

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Vendor concentration (1)
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Recent acquisitions of Ex Engineering and CMI Operations continue to support diversification.

Contribution of the top 5 vendors would drop from 62% in FY23 to 53% on a Pro Forma FY23 basis with Ex Engineering and CMI.

The company's diverse vendor and technology portfolios offset declines in some segments with growth in others.

1. Pro forma FY23A metric combines the revenue of IPD Group and CMI operations for the 2023 financial year (excluding any synergies)

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Other Other Other
Other
Vendors Vendors Vendors
Vendors
Top 10
Top 10 Top 10 Vendors
Vendors Vendors Top 10
Top 5 Vendors
Vendors
Top 5
Top 5 Vendors
Vendors Top 5
Vendors
ABB
44%
ABB
ABB 35% ABB
31% 38%
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IPD GROUP - FY24 Half Year Results

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Strategy & Outlook

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IPD GROUP - FY24 Half Year Results

Strategic priorities

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Accelerating growth and synergy across IPD Group’s portfolio

Pursue acquisitions that strategically enhance earnings.

Leverage sales synergies within IPD Group companies.

Launch a lead-sharing incentive program for IPD Group businesses.

Achieving organic growth at double the market rate. Expanding the customer base for our existing products. Leveraging new technologies to tap into emerging market trends.

Seek synergies for value creation and increased market share.

Achieve economies of scale by realising cost synergies through the Group's shared services model.

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IPD GROUP - FY24 Half Year Results

Outlook

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The outlook for our markets remains buoyant. The tailwinds from the electrification of the economy continue to have a positive impact and the Group is expecting a number of significant projects to commence in the second half of the year.

The outlook for the business remains positive.

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IPD GROUP - FY24 Half Year Results

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IPD GROUP - FY24FY24 Hal f Year Resultsf Year Results 24

Important notice & disclaimer

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No Reliance

The information contained in this document is not investment or financial product advice and is not intended to be relied upon as the basis for an investment decision, and is not, and should not be assumed to be, complete. The information provided in this presentation may not be suitable for your specific needs and should not be relied upon by you in substitution for obtaining independent advice.

To the maximum extent permitted by law, neither the Company nor any other party guarantees or makes any representations or warranties, express or implied, as to, or takes responsibility for, the accuracy or reliability of the information contained in this document or as to any other matter, or takes any responsibility for any loss or damage suffered as a result of any inadequacy, incompleteness or inaccuracy in any statement or information in this document including, without limitation, any financial information, any estimate or projections or any other financial information.

Past performance information provided in this document may not be a reliable indication of future performance. No representation is being made that any investment will or is likely to achieve profits or losses similar to those achieved in the past, or that significant losses will be avoided. Statements contained in this document that are not historical facts are based on current expectations, estimates, projections, opinions, and beliefs of the Company. Such statements involve known and unknown risks, uncertainties and other factors, and undue reliance should not be placed thereon.

Forward Looking Statements

This document contains certain forward-looking statements and comments about future events. Forward-looking statements involve known and unknown risks, significant uncertainties, assumptions, contingencies, and other factors, many of which are outside the control of the Company, are subject to change without notice, and may involve significant elements of subjective judgement and assumptions as to future events which may or may not be correct, and which may cause the actual results or performance of the Company to be materially different from any results or performance expressed or implied by such forward-looking statements. Such forward-looking statements speak only as of the date of this document. Forward looking statements should not be relied on as an indication or guarantee of future performance. No representation, warranty or undertaking is made that any projection, forecast, assumption or estimate contained in this document should or will be achieved. The Company disclaims any obligation or undertaking to disseminate any updates or revisions to any forward-looking statements in this document to reflect any change in expectations in relation to any forward looking statements or any change in events, conditions or circumstances on which any such statement is based.

Miscellaneous

No person, especially those who do not have professional experience in matters relating to investments, may rely on the contents of this document. If you are in any doubt as to the matters contained in this document you should seek independent advice and/or consult your stockbroker, bank manager, solicitor, accountant, or other financial adviser. A number of figures and calculations in this presentation are subject to the effects of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation. All dollar figures within this document represent Australian Dollars unless otherwise specifically stated.

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IPD GROUP - FY24 Half Year Results

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Thank you