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Investor Update
18 June 2012
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Disclaimer
This presentation contains forward-looking statements. When used in this presentation, the words such as "could," "plan," "estimate," "expect," "intend," "may," "potential," believe," "continue," "should," “anticipated,” “proposed,” “will”
and similar expressions, and the negative of such expressions, are forward-looking statements. These statements are only predictions. Actual events or results may differ materially. Although NewSat believes that the expectations
reflected in these forward-looking statements are reasonable, such statements involve risks and uncertainties, and no assurance can be given that actual outcomes will be consistent with these forward-looking statements.
This presentation has been prepared by NewSat Limited (ACN 003 237 303) (“NewSat”) for the sole purpose of providing an overview of its Jabiru-1 satellite and associated funding arrangements to recipients (each a “Recipient”).
The presentation is based on information available to NewSat as at the date of the presentation. The presentation contains selected information and does not purport to be all inclusive or to contain all information that may be relevant to
the Recipient. The Recipient acknowledges that circumstances may change and this presentation may become outdated as a result. NewSat accepts no obligation to update or correct this presentation. This presentation should be read
in conjunction with NewSat’s other periodic and continuous disclosure announcements lodged with the ASX, which are available at www.asx.com.au.
No representation or warranty, express or implied, is made as to the fairness, accuracy, reliability, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent
permitted by law, none of NewSat, its directors, employees, agents or advisers, nor any other person accepts any liability for any loss arising from the use of this presentation or its contents or otherwise arising in connection with it,
including, without limitation, any liability arising from fault or negligence on the part of NewSat or its directors, employees, agents or advisers.
Past performance information given in this presentation is given for illustrative purposes only and should not be relied upon as (and is not) an indication of future performance. Nothing in this presentation is a promise or representation
as to the future. Statements or assumptions in this presentation as to future matters may prove to be incorrect and differences may be material. NewSat does not make any representation or warranty as to the accuracy of such
statements or assumptions.
The information in this presentation does not take into account the investment objectives, financial situation and particular needs of any Recipient, and each Recipient is responsible for conducting its own examination of NewSat and
assessment of the merits and risks of investing in NewSat's shares. The Recipient should not make an investment decision on the basis of this presentation alone and the Recipient should conduct its own independent investigation and
assessment of NewSat and the content of this presentation and should seek such legal, financial and taxation advice as it deems necessary or appropriate before making an investment decision. Nothing in this presentation constitutes
financial product, investment, legal, tax or other advice. Nothing in this presentation should be construed as a solicitation or recommendation to buy or sell any security or to engage or refrain from engaging in any dealing in any
security. NewSat is not licensed to provide financial product advice in respect of its shares and no cooling off period applies in respect of any acquisition of its shares.
An investment in NewSat is subject to known and unknown risks, some of which are beyond the control of NewSat, including possible loss of income and principal invested. NewSat does not guarantee any particular rate of return or
the performance of NewSat, nor does it guarantee the repayment of capital from NewSat or any particular tax treatment. Recipients should have regard to NewSat’s other periodic and continuous disclosure documents in addition to the
risk factors outlined in this presentation when making their investment decision and should consult such advisers as Recipients consider necessary before making an investment decision.
This presentation is not an offer or invitation to acquire shares in NewSat and is not a prospectus. It is for information purposes only. This presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any shares
in the United States. Any shares offered and sold by NewSat have not been, and will not be, registered under the US Securities Act of 1933 (“Securities Act”) or the securities laws of any state or other jurisdiction of the United States,
and may not be offered or sold in the United States unless the securities have been registered under the Securities Act, or in a transaction exempt from, or not subject to, the registration requirements of the Securities Act. Offers in
Australia of shares under any Placement of the nature proposed in this presentation would only be made to persons who are "sophisticated investors" or "professional investors" (within the meaning of section 708(8) and section 708(11)
of the Australian Corporations Act respectively) or otherwise pursuant to one or more exemptions under section 708 of the Australian Corporations Act so that it is lawful to offer the shares in Australia without disclosure to investors
under Part 6D.2 of the Australian Corporations Act.
All dollar values are in Australian dollars (A$) unless otherwise stated. Investors should note that this presentation contains pro forma financial information. Such pro forma financial information has been prepared by NewSat in
accordance with the measurement and recognition requirements, but not the disclosure requirements, of applicable accounting standards and other mandatory reporting requirements in Australia. Recipients should also note that the
pro forma financial information does not purport to be in compliance with Article 11 of Regulation S-X of the Rules of the US Securities and Exchange Commission.
Financial data is presented at actual foreign exchange rates unless otherwise stated. A number of figures, amounts, percentages, estimates, calculations of value and fractions are subject to the effect of rounding. Accordingly, the
actual calculations of these figures may differ from figures set out in this presentation.
This presentation includes certain financial data that is a “non-GAAP financial measure” under Regulation G of the U.S. Securities Exchange Act of 1934. NewSat reports its financial results under IFRS. There are certain differences
between U.S. GAAP and IFRS, including with respect to treatment of satellite life.
Photographs, maps, charts, diagrams and schematic drawings appearing in this presentation are owned by and have been prepared by or commissioned by NewSat, unless otherwise stated. Maps and diagrams used in the
presentation are illustrative only and may not be drawn to scale. Unless otherwise stated, all data contained in charts, graphs and tables is based on information available at the date of this presentation.
NewSat’s advisers have not been involved in the preparation of, and have not authorised, permitted or caused the issue, lodgement, submission, dispatch or provision of this presentation and do not make or purport to make any
statement in this presentation. There is no statement in this presentation which is based on any statement made by NewSat’s advisers.
This presentation contains information prepared by third parties. NewSat takes no responsibility for the accuracy, currency, reliability and correctness of any information provided by third parties, or of any third party material included
within this presentation either directly or by reference.
By accepting, viewing, downloading or otherwise accessing this presentation the Recipient agrees to be bound by the foregoing statements.
NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
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NewSat Investment Highlights
Compelling Intersection of High-growth Applications and Geographies
Early Mover in Ka-Band Based on an Established FSS Economic Model
Leveraging Existing Teleport Business Expertise
Balance Sheet to be Anchored by Attractive Export Credit Financing
A Scalable, Leveraged Play on Emerging Market Growth
Veteran Management Team
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Veteran Management Team
Michael Hewins
Chief Operating Officer
>30 years of executive
management experience in
global space industry
Satellite Experience:
AON / International Space
Brokers (Chief Commercial
Officer)
Adrian Ballintine
Founder and CEO
>30 years of global technology
experience
Satellite Experience:
2011 Teleport Executive of the
Year and Director of the World
Teleport Association
David Ball
Chief Technology Officer
20 years of experience in
satellite and communication
sectors
Satellite Experience:
Intelsat (Managing Director Asia
Pacific), PanAmSat
William
Abbott
Corporate
Counsel
>30 years corporate law
experience including capital
raising, commercial
financing, corporate
governance, compliance and
enforcement
Mike
Kenneally
VP – Satellite
Strategy
>30 years global ICT and
satellite experience with
Telecom NZ, Optus, Telstra,
Lockheed Martin
Len
McGoldrick
VP – Engineering
& Operations
25 years experience in
satellite operations with
SES New Skies, British
Telecom
Andrew
Matlock VP – Sales
>25 years experience in the
telco and technology sectors,
including at Calcomp Inc.
(division of Lockheed Martin)
Adam
Shapiro
Chief Financial
Officer /
Company
Secretary
>10 years financial sector
experience at
PriceWaterhouseCoopers and
Ernst & Young in assurance
and advisory
Merv
Kuek VP – Marketing
>10 years marketing and
communications experience,
including Telstra and Crazy
John’s (subsidiary of
Vodafone Australia)
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Growth in FSS still Exists in Emerging Markets and Ka-band Applications
Historical Transponder Usage by Region (1)
Source Euroconsult
0
1,750
3,500
5,250
7,000
2005 2006 2007 2008 2009 2010
Source Euroconsult
(TPE (2))
Americas
’05- ’10
CAGR
3.1%
16.5%
14.5%
4.5%
4.8%
11.6%
10.8%
Jabiru-1 target
markets are high
growth markets
(TPE (2))
0
6,000
12,000
18,000
24,000
2006 2008 2010 2012 2014 2016 2018 2020
C-band
Ka-band
Ku-band
Historical Forecast
42% Ka-band
demand CAGR
’11 – ‘20
Note:
1. Excludes multispot beam Ka-band demand, which has been relatively small historically
2. 36MHz transponder equivalents
Global Capacity Demand by Frequency Band
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NewSat Positioned at the Frontier of High Demand Growth
Application vs. Geographic Demand Growth for Global Satellite Operators
Application Focus (1)
Geo
gra
ph
ic F
ocu
s
Source Euroconsult, NewSat analysis
Note:
1. Applications include one or a combination of TV broadcasting, consumer broadband, mobile broadband, trunking and backhaul, video, telecom,
enterprise, and data
Lower Geographic
Demand Growth
Higher Geographic
Demand Growth
Lower Application
Demand Growth
Higher Application
Demand Growth
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High Bandwidth Data Applications Drive Growth
Enterprise Data Networking Government and Military Operations
Opportunity
Why Satellite
Existing & Potential
Customers / End Users
Source Euroconsult
Reliance on time-sensitive data/connectivity
Growth in remote oil, gas and mining operations
Increased automation and service levels drive data
requirements
Reliable communications for offshore / remote areas
Provides connectivity across multiple sites / operating
locations
Backup for enterprise networks
Accredited to provide services to certain Govt’s / military
Increased utilisation of data-rich technologies (e.g. UAV’s)
Increasing Government reliance on private sector
Ongoing conflicts in Middle East / North Africa region
Small % of operating costs / defence budgets
Reliable, secure and capable
High bandwidth applications
Connectivity across multiple sites (e.g. mobile, airborne,
maritime)
Source Euroconsult
0
80
160
240
2010 2012 2014 2016 2018 2020
Ka-band Satellite Terminals in Jabiru-1 Regions (1)
(‘000s of VSATs)
60% CAGR
to ’11-’20
Middle East / North Africa
0
5
10
15
20
2010 2012 2014 2016 2018 2020
Global Milsatcom Demand for Commercial Capacity (1)
(Gbps) 12% CAGR
to ’11-’20
Americas
’11- ’20
CAGR
11.2%
13.1%
9.9%
Growth
Note:
1. Historical and expected future
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High Bandwidth Data Applications Drive Growth (cont’d)
Note:
1. Historical and expected future
2. Average instantaneous traffic load spread across all cellsites and subscribers
0
250
500
750
2010 2011 2012 2013 2014 2015 2016 2017
2G 3G 4G
3G / 4G Mobile Backhaul
Opportunity
Growth
Why Satellite
Global Mobile Network Traffic Volumes (1)(2)
Broadband Connectivity
(Tbps)
Source Ovum
Middle East /
Africa ’11’-’17
4G CAGR:
133%
Asia Pacific
’11-’17
4G CAGR:
137%
Critical to service delivery
Rapid growth in mobile data volume / smartphones
Customers seek large bandwidth volumes
Reliable connection into fixed/fibre networks
Cost effective
Routing diversity, backup against bottlenecks and
unreliable infrastructure
Increased internet penetration and population growth
(particularly in emerging markets)
Growth in VoIP / audio / video data volumes
Customers seek large bandwidth volumes
Reliable connection into fixed/fibre networks
Cost effective
Ubiquitous rural and remote access
Source Euroconsult
Existing & Potential
Customers / End Users
Satellite Broadband Subscribers in Jabiru-1 Regions (1)
(‘000s)
0
1,300
2,600
3,900
2010 2012 2014 2016 2018 2020
39% CAGR
’11-’20
Middle East / North Africa
’11- ’20
CAGR
53.6%
28.1%
44.1%
39.7%
4G Traffic
124% CAGR
’11-’17
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Fuelling the Larger Opportunity – Geographies & Demographics
Source © Euromonitor International 2012, Informa, ITU
Satellite offers effective, low-cost carriage in NewSat's target markets, which have minimal fixed
network infrastructure, and low 3G mobile and internet penetration
Note:
Values shown are for 2011 (except internet penetration for 2010)
1. Includes Armenia, Azerbaijan, Cyprus, Iran, Iraq, Israel, Jordan, Kuwait, Lebanon, Oman, Saudi Arabia, Syria, United Arab Emirates and Yemen
2. Includes Burundi, Central African Republic, Chad, Democratic Republic of Congo, Djibouti, Egypt, Eritrea, Kenya, Libya, Rwanda, Somalia, Sudan,
Tanzania and Uganda
3. Includes Afghanistan, Kyrgyzstan, Pakistan, Tajikistan, Turkmenistan and Uzbekistan
Worldwide
Total Population: 6.9 billion
Average Age: 32
Forecast Real GDP CAGR (’11-’20): 4.4%
Internet Penetration
30%
3G Mobile Penetration
16%
Middle East (1)
Total Population: 228 million
Average Age: 27
Forecast Real GDP CAGR (’11-’20): 3.9%
Internet Penetration
24%
3G Mobile Penetration
11%
North-East Africa (2)
Total Population: 362 million
Average Age: 23
Forecast Real GDP CAGR (’11-’20): 5.6%
Internet Penetration
14%
3G Mobile Penetration
4%
South-West Asia (3)
Total Population: 267 million
Average Age: 25
Forecast Real GDP CAGR (’11-’20): 4.5%
Internet Penetration
15%
3G Mobile Penetration
0.3%
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NewSat an Early Mover in an Open Ka-Band Playing Field
NewSat Introducing Significant Ka-Band Coverage to Target Regions
NewSat Orbital Slot
MEASAT Orbital Slot
Jabiru-1
91.5°E
Ka-band
(proposed launch 4Q 2014)
Target Geographies:
Middle East, North-East
Africa, South-West Asia
Jabiru-2
91.5°E
Ku-band (hosted payload on
MEASAT-3b satellite)
(targeted launch FY2014)
Target Geographies:
Australia, Timor-Leste and
Papua New Guinea
Jabiru-4
54°E / 89.5°E
Ka-band
(planned – launch FY2017)
Target Geographies:
Africa, the Middle East,
Europe, Asia and Indian
Ocean
Jabiru-3
89.5°E / 54°E
Ka-band
(planned – launch FY2016)
Target Geographies:
Africa, the Middle East,
Europe, Asia and Indian
Ocean
Saturated Ku and C-band
capacity in targeted
geographies
New Ka-band capacity
provides for continued
growth in targeted regions
Accelerated build and
launch of Jabiru-3 and
Jabiru-4
Rights to an additional 6
orbital slots providing for
future growth opportunities
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Existing Teleport Business Provides Unique Springboard
Currently purchase capacity from 7
satellite operators on 10 satellites (1)
Understand service requirements,
transition contracts to owned capacity
Customer Insight / Solutions Oriented
Supply Side Insight
Existing relationships and service
accreditations
Military Accredited & Internationally Recognised
Note:
1. Includes agreement with MEASAT for hosted payload on Jabiru-2
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Ka-Band Supplementary to C- and Ku-Band Markets
Widely used
Broad footprint
Least rain fade
Reliable low bandwidth
Interference from terrestrial
systems
Larger earth station antenna
required
New Spectrum unavailable
C-Band (4-8GHz)
Higher power transmission
More focused beams
Some rain fade / signal attenuation
issues
Spectrum saturated
Ku-Band (12-18GHz)
Offers high capacity bandwidth at
already occupied satellite positions
Greatest user flexibility
Smaller end-user antenna
Higher frequency
New spectrum available
Some rain fade / signal attenuation
issues at the surface
Ka-Band (26-40GHz)
Uses Uses Uses
Full-time TV distribution
Contribution feeds
Backhaul and VSAT
Direct-to-home (DTH) television
Satellite news gathering
Fixed and broadcast services
Backhaul and VSAT
Enterprise communication networks
Military applications
Aeronautical & mobility applications
Fixed and broadcast services
Backhaul and VSAT
Enterprise communication networks
Military applications
High throughput satellite (HTS)
applications
Aeronautical & mobility applications
Ka-band capacity can operate adjacent to C- and Ku-band frequencies with no interference
12
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NewSat – Good Neighbour, Supplementary Offering, Selling Flexible Raw Capacity
Ka-Band Capacity Outline in Jabiru-1 Footprint
Limited overlap by competitors onto Jabiru-1 footprint or target market
Company Service Offering Footprint Ka-band Ku-band NewSat Competitive Assessment
INTELSAT Leased capacity Middle East / North Africa (limited coverage) Single Ka-band transponder being added to some satellites to protect spectrum
filings. Recently announced Intelsat EpicNG project which is believed to include
some multispot beams in C-, Ku- and Ka-band
SES Steerable beam Europe and West Africa Limited Ka-band added to protect filings
May 2012 CEO stated policy to “gently increase” Ka-band capacity
SES / O3B Leased trunking capacity Coverage of visible earth to +/- 45° latitude
Trunking vertical market competitor, particularly in Africa
MEO(1) system, complicated antennas required at each site
Expensive and complex ground segment
EUTELSAT Leased capacity Middle East / North Africa and Central Asia Ka-Sat consumer broadband bundled with TV (not Jabiru target)
Major geographic focus on Europe
INMARSAT Global Express offers
voice & data service
Global Express offering - total cover of Jabiru
catchment, but capacity is spread evenly over
many spot beams
Primarily addressing a different market (maritime) but competitive in some
vertical markets
Global coverage beams offer limited throughput
ARABSAT Leased services Ku coverage Arabian Peninsula. Steerable Ka-
band
Primarily consumer broadband focused
Steerable may compete for limited enterprise clients but not military
AMOS 2012 launch Coverage over Middle East and Central Asia Potential future competitor – consumer focus but also potential enterprise
market player in Middle East / North Africa and Africa
AVANTI DTH & leased capacity West & Central Europe, small Middle East overlap Initial consumer market focus (not Jabiru target)
DTH & leased capacity Europe, South Africa, Kenya, UAE, Afghanistan Some comparable coverage. Spot beams over Iraq and Afghanistan (single,
isolated beams only)
YAHSAT Consumer services & some
leased capacity Arabian Peninsula and Middle East
City focused, less powerful shaped beam than Jabiru
Steerable may compete for limited enterprise clients but not military
Main thrust is managed services not wholesale capacity
ABS Leased capacity Middle East Limited capability
Wide area regional beam low power compared to Jabiru
AsiaSat Leased capacity Limited coverage Single Ka-band transponder added to future satellite to protect spectrum filings
Turksat Leased capacity Middle East and Central Asia Limited capability – geographic focus on Caspian Sea region
Note:
1. Medium earth orbit
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Jabiru-1 Specs – Proven Technology
Jabiru-1 Overview
A highly flexible, high-powered satellite
8.3GHz capacity: one of the largest commercial
communication satellites
― 7.6GHz Ka-band
― 648MHz Ku band
Premium orbital location above high-growth
emerging markets
Highly flexible payload: Spot, regional and
steerable beams
Launch date scheduled for 4Q 2014
Ka-Band Capacity Overview
Ku-band
Ka-band:
spot beams
Ka-band:
regional beams
Ka-band:
steerable beams
(MHz)
Capacity Breakdown
24 Spot Beams
Concentrates power in a specific location
Allow same frequency transmissions in other
locations
Potential to switch 5 spot beams into high
demand regions to provide additional capacity
3 Regional Beams
Coverage tailored to serve coastlines or
specific areas without including unwanted
regions
Wider coverage than traditional Ka-band spot
beams
2 Steerable Beams
Ability to position coverage in areas of high
demand anywhere on the visible earth
65%
19%
8% 8%
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Customers Underpin Commercial Returns
Customer Description Existing Customer(s) Potential Size (US$MM) Status
1 U.S. satellite operator, looking for Ka-band expansion 88 Contract under review
2 Southeast Asian satellite operator 74 Contract under review
3 Pakistani telco, trunking / backhaul service 72 Reviewing proposal
4 Systems integrator providing Government welfare communications 11 Current Jabiru customer, considering extension
5 Australian based, non-Government communications provider 10 Contract under review
6 Systems integrator providing general Government services 8 Reviewing proposal
7 Division of large satellite operator, Maritime / Government applications 7 Reviewing proposal
8 Systems integrator focused on UAV services 5 Reviewing opportunity
9 - 21 13 additional pipeline customers (including 1 existing teleport customer) 107 Various
Sub-total Jabiru-1 382
Jabiru-2, 3 & 4: 19 additional pipeline customers (including 8 existing teleport customers) 163 Various
TOTAL 546
Weighted Toward Telco and Govt.
Telco
Government
Enterprise
(Total Contracts + Sales Pipeline = US$1,147MM)
Sales Pipeline Across Jabiru-1, 2, 3 & 4 – US$546MM
Binding Pre-Launch Contracts – US$601MM
(US$MM)
180
105
134
67
601
30
40
1332
0
175
350
525
700
Middle East
Telco.
GCC
Company
U.S.
Comm’s Co.
Ku-band Ka-band Ka-band Ka-band Ka-band Ka-band Ka-band
~18% of Jabiru-1 life
of satellite capacity
currently pre-sold
Pre
-La
un
ch
Co
ntr
acts
S
ale
s P
ipe
lin
e
To
tal C
on
tra
cts
+ P
ipe
lin
e
Direct-to-Home
(DTH) 16%
26%
36%
22%
South Asian
Reseller
Ka-band
+
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MEASAT Strategic Partnership for Jabiru-1 Satellite
MEASAT Satellite Systems Sdn. Bhd.
MEASAT is the leading Asian satellite operator. With capacity across five communication
satellites, MEASAT has over fifteen years of experience providing satellite communication
services to the region’s international broadcasters, DTH platforms and telecom operators
Partner
Based in Kuala Lumpur, Malaysia
Privately owned
Location /
Ownership
Life-of-satellite take-or-pay contract for a minimum of US$180MM
Option for MEASAT to purchase additional capacity
Capacity will cover South Asia and South East Asia
MEASAT Purchased
Capacity on Jabiru‐1
Jabiru-1 will be operated in MEASAT orbital slot at 91.5°E
MEASAT will perform Telemetry, Tracking & Control (TT&C) services
MEASAT responsible for frequency coordination for slot
Jabiru-1 Operated in
MEASAT Orbital Slot For
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Best-in-Class Experienced Partners to Execute the Project
Source Lockheed Martin, Arianespace, Export-Import Bank of the United States
Note:
1. ECA funding subject to final approvals and NewSat contributing ~US$200MM in equity. Refer to “Funding Risk” in Appendix 2 of this presentation for
further information
2. Weighted average interest rate based on Ex-Im Bank benchmark Commercial Interest Reference Rate (CIRR) of 1.76% as at 15 June 2012. Final
interest rate will be determined with reference to the prevailing CIRR five business days prior to the Financial Close Date for ECA funding
Satellite Builder
Construction contract signed; preliminary design review
(PDR) completed
Jabiru-1 construction commenced and is on schedule
Using proven A2100 series spacecraft platform
Currently 39 A2100 series spacecraft in orbit
Design life 15 years
101 GEO (geosynchronous earth orbit) commercial
communications satellites launched
Launch Provider
Launch Service Agreement signed
Launch window in 4Q 2014
Accounts for over half of all worldwide commercial launches
Using proven Ariane 5 rocket technology
62 launches of Ariane 5 rockets
48 consecutive successful launches
300 primary satellites launched from French Guiana operations
Export Credit Agency (ECA) Debt Financing Providers (1)
(see Appendix 1 for summary term sheet)
~US$380MM expected facility size for Jabiru-1
― ~63% of total project costs
― Referral to congress approved by Ex-Im Bank
― COFACE guarantee approval expected in July
Weighted average fixed interest rate of ~2.5% (2)
8.5 year amortisation period from commencement of operations
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Project Risk Management
Completed preliminary design review (PDR), a major project milestone
Satellite construction commenced and on schedule
Lockheed Martin contract provides for liquidated damages and customary warranties
Build Delay
Arianespace is widely considered the most reputable satellite launcher globally
― Accounts for more than half of the commercial launch contracts worldwide Launch Delay
Jabiru-1 will share a launch vehicle with another payload and therefore requires a partner to launch
Partner is the smaller payload and therefore easier to find
Arianespace account for the majority of commercial launches, therefore high likelihood of identifying partner
Co-Passenger
Lockheed Martin is a proven leader in building of commercial satellites
― The Jabiru-1 spacecraft will utilise Lockheed Martin’s proven A2100 series spacecraft
NewSat plans to purchase in-orbit insurance coverage
― The insurance policy is expected to cover the replacement cost of the assets, revenue and extra expenses
In-Orbit Operation
Launch Failure
Satellite launch insurance arranged via AON, the leading global space insurance broker
― The insurance policy is expected to cover build, launch and insurance costs, although not lost revenues
― Minimum of 50% of needed insurance to be placed prior to financial close of Jabiru-1, and the rest within 1
year from this date
Accelerated build of Jabiru-3 and Jabiru-4 to mitigate failure of Jabiru-1
A summary of risk factors affecting NewSat, its business and operations is set out in Appendix 2
A Demonstrated Awareness of Key Project Risks
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0
150
300
450
600
Use of Proceeds for Jabiru-1
(US$MM, cumulative) 4Q 2014:
Proposed
Launch
Sources of Funds
(US$MM) (1)
Uses of Funds
(US$MM) (1)
Ex-Im Bank Direct
Loan ~280
Spacecraft & Launch
Vehicle 370
COFACE
Guaranteed Facility ~95-100 Insurance 35
Proposed New
Equity Issue ~200
Opex / Non-Satellite
Capex 40
Equity Spent to
Date 25 Upfront Fees 40
Other (2) 65
Contingency & DSRA 50
Total Sources ~600 Total Uses ~600
Lockheed Martin
Arianespace
Insurance Opex & Non-Satellite Capex
Upfront Fees & Other (2)
Contingency & DSRA
Financial
Close
Jun-2013 Jun-2014 Jun-2015
Note:
1. Approximate values shown; ECA funding subject to final approvals and NewSat contributing ~US$200MM in equity. Refer to “Funding Risk” in Appendix
2 of this presentation for further information
2. Includes ongoing commitment fees, premiums paid to ECA lenders and capitalised interest during construction period
Estimated Funding Drawdown Profile Net equity to be held in “locked box”
exclusively for Jabiru-1 build
US$50MM contingency built into
financing
― US$30MM plus US$20MM
Debt Service Reserve Account
(DSRA)
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FSS Revenue Model of Stable Rents and High Fill Rates
Key Economics of Jabiru-1 Industry Fill Rate (1) and EBITDA Margin (2)
Capacity Pricing Over Middle East (3)
(%) Capacity: Jabiru-1 capacity 8.3GHz
Expected Year-1 Fill Rate: >60%
― Industry average 74% (’06 – ’10A)
― Pre-sales at a ~30% discount
― Long-term take-or-pay contracts
― No pre-sales of high value steerable beams – reserved to sell on the spot market, which demands higher premium pricing
Revenue: Jabiru-1 total annual capacity (US$MM p.a.)
Operating Costs: Fixed, marginal costs expected to be in-line with standard FSS operating model. Variable costs include insurance (including in-orbit insurance) and sales commissions
Depreciation: Straight-line over 15 years (deferred until launch)
Teleport & Jabiru-2: Ability to transfer existing supply arrangements to “owned” capacity on Jabiru-2 will expand margins
1.00
1.25
1.50
1.75
2.00
2.25
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Ka-band C-band Ku-band
(US$MM / TPE)
Source Company filings, Euroconsult
Source NewSat analysis, NSR
65%
70%
75%
80%
2006 2007 2008 2009 2010
% Fill Rate % EBITDA MarginCapacity Utilisation (%)
80% 70% 60%
1.2 220 193 165
1.3 239 209 179
1.4 257 225 193 We
igh
ted
Ave
rag
e
Pri
ce
p.a
.
(US
$M
M / T
PE
)
Note:
1. Fill rate of transponders in orbit (excluding HTS capacities)
2. Aggregate EBITDA margin for Intelsat, PanAmSat, SES, Eutelsat and Telesat
3. 2008 to 2011 capacity pricing based on NewSat capacity purchasing and additional research across 14 satellites covering the Middle East region. 2012
to 2018 capacity pricing based on NSR GASSD 2009 research covering the Middle East region
Historical Forecast
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Additional Projects – NewSat’s Opportunity is Scalable
Asset Type Hosted payload (aboard MEASAT-3b) Owned satellite Owned satellite
Target Markets Oil, gas & mining corporates,
government markets
Resources, military, government and
carrier-grade telecom markets
Resources, military, government and
carrier-grade telecom markets
Orbital Slot 91.5°E 89.5°E / 54.0°E 54.0°E / 89.5°E
Capacity 216 MHz
(6 TPE)
3 – 4 GHz
(83 – 111 TPE)
3 – 4 GHz
(83 – 111 TPE)
Bands Ku-band Ka-band Ka-band
Coverage Australia, Timor-Leste and
Papua New Guinea
Africa, the Middle East, Europe, Asia
and Indian Ocean
Africa, the Middle East, Europe, Asia
and Indian Ocean
Jabiru-2 Jabiru-3 Jabiru-4
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NewSat Investment Highlights
Compelling Intersection of High-growth Applications and Geographies
Early Mover in Ka-Band Based on an Established FSS Economic Model
Leveraging Existing Teleport Business Expertise
Balance Sheet to be Anchored by Attractive Export Credit Financing
A Scalable, Leveraged Play on Emerging Market Growth
Veteran Management Team
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Appendix 1
Financing Structure
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Anticipated Financing Structure for Jabiru-1
Estimated total project
cost of ~US$600MM
~US$380MM raised
through ECA funding (1)
~US$200MM raising
via proposed new
equity issue
Net equity to be held in
“locked box” for Jabiru-
1 build
Public
shareholders &
investors
Revolving credit
facility
(undrawn)
Export-Import Bank of the
United States
(Ex-Im Bank)
NewSat Limited
COFACE guaranteed
credit financing (1)
Jabiru Satellite
Limited
~US$280MM
~US$95-100MM
100%
~US$25MM
~US$200MM
Potential New
Ordinary Equity
Note:
1. Approximate values shown; ECA funding subject to final approvals and NewSat contributing ~US$200MM in equity. Refer to “Funding Risk” in Appendix
2 of this presentation for further information
2. Subject to financing approvals
(2)
(1)
Anticipated Financing Structure (1)
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Summary terms and conditions (1)
Borrower: Jabiru Satellite Limited (with guarantee provided by NewSat Limited)
Facility amount: Ex-Im Bank – direct loan: ~US$280MM
COFACE – guaranteed facility: ~US$95-100MM
Drawdown period: Up to 3.5 years from financial close
Repayment period: 8.5 years from starting point of credit (earlier of commencement of operations and 3.5 years from financial close)
Repayment profile: Sculpted repayment of principal on a semi-annual basis (see next page)
Interest rate:
Weighted average ~2.5% interest rate (2)
― Ex-Im Bank facility at CIRR (3)
― COFACE facility at CIRR (3) + 250bps margin
Fixed rate for both facilities (to be fixed at financial close) (4)
Security package: First ranking security over all assets of the borrower and of NewSat Limited, with a security sharing agreement between the
COFACE, Ex-Im and revolving facilities
Covenants:
Customary financial covenants, including Debt Service Coverage Ratio, Contracted Loan Life Coverage Ratio, capex, limitations
on indebtedness
Covenants binding on both Jabiru Satellite Limited and NewSat Limited
Consent required from Ex-Im and COFACE for Jabiru Satellite Limited or NewSat Limited to incur additional indebtedness
Dividend block for first 2.5 years of operation
50% bi-annual free cash flow sweep
Revolving facility: (5) Non-ECA backed revolving credit facility of up to US$25MM
Pari passu seniority and security with ECA facilities
ECA Financing Terms – Attractive Fixed Cost Interest Rate & Repayment Profile
Note:
1. Approximate values shown; ECA funding subject to final approvals and NewSat contributing ~US$200MM in equity. Refer to “Funding Risk” in Appendix
2 of this presentation for further information
2. Weighted average interest rate based on Ex-Im Bank benchmark Commercial Interest Reference Rate (CIRR) of 1.76% as at 15 June 2012
3. Ex-Im Bank benchmark Commercial Interest Reference Rate (CIRR)
4. Final interest rate will be determined with reference to the prevailing CIRR five business days prior to the Financial Close Date for ECA funding
5. Subject to financing approvals
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ECA Scheduled Repayment Profile Terms (1)
Scheduled Principal Repayments (2) Total Debt (2)
(US$MM) (US$MM)
0
15
30
45
60
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
Year9
Ex-Im Bank Direct Loan COFACE Guaranteed Facility
0
80
160
240
320
400
Ope
ning
Year1
Year2
Year3
Year4
Year5
Year6
Year7
Year8
Year9
Ex-Im Bank Direct Loan COFACE Guaranteed Facility
Note:
1. Approximate values shown; ECA funding subject to final approvals and NewSat contributing ~US$200MM in equity. Refer to “Funding Risk” in Appendix
2 of this presentation for further information
2. ECA borrowings for Jabiru-1 project only; excludes impact of free cash flow sweep
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Pro Forma Capital Structure
Type Hurdle Price
(A$ / share)
Exercise Price
(A$ / share) Vesting Date Expiry Date
Shares
Outstanding
Share Dilution
Impact (1)
Cash on Exercise at
Current Share Price (A$)(1)
Cash on Full
Exercise (A$) Comment
Current Ordinary Shares Outstanding 232,401,357 232,401,357
50 cent Warrants
0.50 0.50 May-2011 May-2016 8,373,571 8,373,571 4,186,786 4,186,786 1 warrant issued for every 2 shares purchased in 25 May
2011 placement
Performance Rights Plan
- - n.a. Oct-2016 11,600,000 11,600,000 - - Issued to NewSat employees and Directors
50% vesting on financial close for Jabiru-1 and 50% vesting
on completion of in-orbit testing for Jabiru-1 - - n.a. Jun-2017 11,450,000 11,450,000 - -
Zero Cost Options
- - Apr-2013 Apr-2016 350,000 350,000 - -
Options issued to NewSat employees and Directors - - Aug-2012 Sep-2016 270,000 270,000 - -
- - Aug-2013 Sep-2016 270,000 270,000 - -
- - Aug-2014 Sep-2016 270,000 270,000 - -
Management Incentives
1.00 0.00005 Mar-2013 Mar-2015 5,640,000 - - 282
Options issued to NewSat employees and Directors 1.00 0.00005 May-2013 May-2015 5,260,000 - - 263
1.00 0.00005 Oct-2013 Oct-2015 1,200,000 - - 60
50 cent Options
0.50 0.50 May-2009 Jun-2012 1,290,800 1,290,800 645,400 645,400
Options issued to NewSat employees and Directors
0.50 0.50 Aug-2009 Aug-2012 80,000 80,000 40,000 40,000
0.50 0.50 Oct-2009 Oct-2012 30,000 30,000 15,000 15,000
0.50 0.50 Dec-2012 Dec-2014 500,000 500,000 250,000 250,000
0.50 0.50 Mar-2013 Mar-2015 2,840,000 2,840,000 1,420,000 1,420,000
0.50 0.50 May-2013 May-2015 3,340,000 3,340,000 1,670,000 1,670,000
0.50 0.50 Oct-2013 Oct-2015 400,000 400,000 200,000 200,000
100 cent Options
1.00 1.00 Jun-2008 Jun-2012 1,125,000 - - 1,125,000
Options issued to NewSat employees and Directors 1.00 1.00 Dec-2012 Dec-2014 500,000 - - 500,000
150 cent Options
1.50 1.50 Jun-2008 Jun-2012 1,125,000 - - 1,687,500 Options issued to NewSat employees and Directors
Share Issue to Kypros 2,500,000 2,500,000 - - To be issued on regulatory approval by Cyprus Government
(expected 2H2012)
TOTAL 275,965,728 8,427,186 11,740,291
Note:
1. Assumes conversion of warrants and options with a hurdle price at or below NewSat’s closing share price on 14 June 2012 (A$0.80 / share)
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Risk Factors
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Risk Factors
Introduction:
General Risks:
Global Political Conditions: As NewSat will generate a large portion of its revenue internationally, geopolitical problems and instability could adversely impact the Company’s
revenue. NewSat’s international operations are subject to a number of risks, including changes in domestic and foreign government regulations and licensing requirements;
deterioration of relations between Australia (or the United States) and a particular foreign country or countries; increased tariffs, increased license fees or conditions, taxes and
other trade barriers; changes in political and economic stability; and difficulties in obtaining or enforcing judgements in foreign jurisdictions.
Global Economic Conditions: Any major disruption to, or ongoing deterioration in, the economic climate could adversely impact revenues by affecting employment levels,
consumer and business confidence, government expenditures and business activity. Current or potential customers, including government customers, may delay or decrease
spending which may impact the demand for NewSat’s services. In addition, current or potential customers may be unable to pay NewSat for its services if economic conditions
deteriorate.
Regulatory Risk: The telecommunications industry is highly regulated. NewSat is subject to both international and domestic regulatory and licensing requirements, and its
business is sensitive to regulatory changes in the countries in which it operates. Obtaining and maintaining approvals can involve significant time and expense, and delays in
obtaining approvals or changes to laws and regulations may adversely impact NewSat’s operations.
Market Risks:
Competitive Market Place: The satellite communications market is extremely competitive. Any weakening of NewSat’s competitive position would adversely impact its ability to
generate revenue. NewSat faces competition not only from other satellite services providers but also from providers of terrestrial-based networks, such as DSL and cable, which
have advantages over satellite-based networks. Terrestrial-based networks are offered by telecommunications carriers, other large companies and governments, many of which
have greater financial resources and greater name recognition. Additionally, government agencies are increasingly considering and implementing subsidies for broadband
access in underserved areas which would reduce NewSat’s target market. Pricing pressures from such competition may adversely impact NewSat’s revenues.
Large Contracts: NewSat will rely on key customers for a major portion of its revenue. Whilst contracts are generally long-term, any degradation in the performance of the
satellite or any deterioration in the relationship with, or a reduction in expenditure by, key clients may lead to a significant loss of revenue for NewSat. In addition, some of the
customer contracts involve large financial obligations on the customers relative to the size of their business and they may not have the ability to fulfil their purchase contract
obligations. Defaults by any of NewSat’s larger customers or by a group of smaller customers who, collectively, represent a significant proportion of NewSat’s revenues, could
adversely affect NewSat’s revenue, operating margins and cash flows.
Customer Demand: Demand for satellite services and the Ka-band spectrum may decline or not increase as predicted. Any slow-down of growth in emerging markets or in the
take-up of demand for Ka-band satellite services may adversely impact revenues. NewSat may not be able to retain its existing customers. In addition, general pricing pressures
may have an adverse impact on NewSat’s revenues.
If any of the following risks occur, NewSat’s business, financial performance and operating results could be materially and adversely affected. In that case, the market price of NewSat
securities could decline. The risks described below are not the only ones that NewSat may face. Additional risks that are not currently known to NewSat or that NewSat currently
considers immaterial may also impair NewSat’s business, financial performance and operating results.
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Risk Factors (cont’d)
Operational Risks:
Satellite Operations: Satellites are subject to in-orbit malfunctions, interference or damage caused by solar radiation and debris or micrometeorite collisions. In-orbit satellite
failures or degradations in performance could impair the commercial performance of a satellite, which could have a material adverse effect on operations and the ability to
generate revenue, and could damage customer and distributor relationships.
Satellite Life: A number of factors could affect the useful life of a satellite such as quality of design and construction and durability of components. Any lessening of the useful life
of a satellite as prescribed in its specifications could adversely impact NewSat’s ability to generate revenue from the satel lite.
Coordination Risk: The coordination of satellite orbital slots and associated frequencies is a complex and sometimes lengthy process requiring the cooperation of the involved
satellite operators and their national licensing agencies. Significant delays, or an unfavourable result, in the coordination of the satellite orbital slots and associated frequencies
that NewSat plans to use may adversely affect NewSat’s operations and/or revenues.
Technology Risk: Changes in technology, content distribution methods and demand could impact NewSat’s operations and outlook. For example, implementation of new
technologies could reduce the capacity required on a satellite to transmit data and thereby reduce total demand. In addition, while the satellite industry has historically evolved
slowly, there is the risk in the future that a satellite may not meet the needs of clients and/or that its design could become obsolete.
Design Risk: The design of a satellite may be inadequate for its intended purposes, or the satellite may not meet the technical or operational requirements of NewSat's target
customers, which would have an adverse impact on NewSat's business and financial performance.
Schedule Risk: Delays relating to obtaining financing, satellite and launch vehicle construction and deployment, obtaining and maintaining regulatory approvals and licenses,
including export controls, and/or the periodic unavailability of reliable launch opportunities may extend the time before significant revenues commence. A delay in the future
delivery of a satellite may also impact NewSat’s marketing plan for the satellite and/or financial performance.
Launch Risks: Although the Jabiru-1 satellite launch will be insured, failure, destruction or damage during launch would harm the business by delaying revenues and resulting in
the possible loss of customers.
Derivative Orbital Slot and Frequency Usage Rights: NewSat’s contractual rights to position the Jabiru-1 satellite at 91.5°E and potential future satellites at 54°E or 89.5°/90°E
and make use of associated frequencies at these orbital slots are derivative of licenses and authorisations obtained and maintained by its counterparties. NewSat must rely on
such counterparties to enforce, protect and maintain these licenses and authorisations, and their failure to do so may adversely impact NewSat’s operations and/or revenues.
Orbital Slot Risk: If NewSat does not occupy certain unused orbital locations by specified deadlines, those orbital locations may become available for use by other satellite
operators.
NewSat Business Risks:
Business Plan: NewSat may be unsuccessful in implementing its business plan for both its existing business and for the new satellite business. A failure to attract a sufficient
number of customers for either business would result in lower revenues than anticipated.
Key Personnel: NewSat is dependent on its senior management team, the majority of whom have spent a number of years on the Jabiru Program. Whilst senior managers are
employed on long term contracts with retention incentives, the loss of one of more members of the senior management team could have an adverse impact on the business if
NewSat is unable to find appropriate replacements.
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Risk Factors (cont’d)
NewSat Business Risks (cont’d):
Future Satellites: NewSat may not be able to obtain sufficient customer contracts, consent of ECA lenders or the equity investment necessary to fund future satellites.
Reliance on Contractors: NewSat is dependent on outside contractors for the construction and launch of new satellites. This could result in increased costs and delays relating to
the launch of new satellites, which would materially affect NewSat’s business.
Strategy Risk: There is a risk that the assumptions upon which NewSat’s strategic direction is based are incorrect, that market conditions may change, that the risks generated
exceed expected and approved risk appetite, or that the execution of NewSat’s strategic initiatives proves ineffective.
IT & Communications Risks: Interruption or failure of information technology and communications systems could impact NewSat’s ability to operate its business effectively.
Whilst NewSat has undertaken steps to secure its systems, these measures may not be effective in preventing theft, loss, damage or interruption from a number of possible
events, including security breaches, inclement weather, environmental events, power losses or computer viruses.
Legal proceedings: NewSat may be involved from time to time in legal proceedings arising from the conduct of its business. The aggregate potential liability in respect thereof
cannot be assessed. Any material legal proceedings could have an adverse impact on NewSat’s financial performance and position.
NewSat Financial Risks:
Tax Risk: NewSat is exposed to risks arising from the manner in which the Australian and international tax regimes may be amended, applied, interpreted and enforced. As a
result NewSat may become subject to unanticipated tax liabilities that may have a material adverse effect on NewSat’s operations.
Foreign Exchange Risk: NewSat is exposed to volatility in the US dollar and the Australian dollar, and fluctuations in the exchange rate of these respective currencies may impact
financial performance.
Cost Risks: NewSat may be required to spend in excess of current forecasts for the construction of the satellite, the provision of launch services, the procurement of insurance
and other miscellaneous fees and expenses.
Capital Intensity: NewSat’s business is capital intensive and requires the Company to make long-term capital expenditure decisions. NewSat may be unable to raise adequate
funding on satisfactory terms to support its business plan, which would materially impact its future prospects.
Insurance Risk: The Company intends to purchase satellite launch insurance coverage for Jabiru-1, with a coverage period from launch through one year of operations.
However, NewSat’s financial condition could be materially and adversely affected if it were to suffer loss that was not covered by launch or in-orbit insurance, for example for lost
revenue in the event of total or partial loss of a satellite. In addition, limitations on insurance coverage terms and conditions and availability of sufficient insurance capacity may
prevent NewSat from obtaining adequate insurance.
Debt Risks: NewSat’s ability to make debt repayments and to fund operations will depend on its ability to generate cash. This ability is subject in part to factors that are beyond
NewSat’s control - such as general economic, financial, competitive, regulatory and legislative conditions. There is a risk that NewSat may not be able to make scheduled
payments on its debt obligations and may default. Terms of debt obligations may also restrict NewSat’s current and future operations and its ability to respond to changes in its
business or take certain actions.
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Risk Factors (cont’d)
NewSat Financial Risks (cont’d):
Funding Risk: There is a risk that NewSat will not receive final approval from Ex-Im Bank or COFACE in respect of the secured debt funding for which NewSat has applied.
Furthermore, the provision of this debt funding is conditional on NewSat contributing ~US$200MM in equity. If the approvals are not obtained or NewSat is unsuccessful in
raising the necessary equity, the debt funding will not be provided. If this occurs, the strategic arrangements with MEASAT may not continue, the construction and launch of the
Jabiru-1 Satellite may not proceed and the Company’s access to orbital slots may expire. The occurrence of these events would materially adversely affect the future prospects
of the Company.
Interest Rate Risk: NewSat, as a borrower of money, may be exposed to adverse movements in interest rates which may impact NewSat’s financial position.
NewSat Securities Risks:
Dilution: Future issuances of equity or the perception that such sales may occur, may result in a decrease of the market price of our equity securities and an increase in NewSat’s
issued capital may dilute a person’s existing holding.
Transfer Restrictions Applicable to US Holders: The Shares have not been registered under the U.S. Securities Act of 1933 (the “Securities Act”) and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons (as defined in Regulation S under the Securities Act) except in a transaction registered under the
Securities Act or exempt from the registration requirements of the Securities Act.
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