Financial Performance1

Qantas reported an Underlying Profit Before Tax of $1,401 million in 2016/17 — the second highestperformance in our 97–year history.

  1. Refer to the Review of Operations section in the Qantas Annual Report 2017 for definitions and explanations of non–statutory measures. Unless otherwise stated, amounts are reported on an underlying basis.

This result shows the Qantas Group's margin advantage over local and global competitors, which has been underpinned by completion of its three year Transformation Program.

In the domestic market, Qantas and Jetstar combined reached a record $865 million Underlying EBIT, making them again the two most profitable Australian airlines.

Qantas International, which has faced high levels of capacity growth in the broader market, saw an improvement of conditions in the second half; it posted an Underlying EBIT of $327 million. Continued strength in its core markets helped the Jetstar Group deliver the second highest profit in its 13 years of operation at $417 million of Underlying EBIT. Qantas Loyalty booked a record $369 million Underlying EBIT on a 4 per cent increase in revenue as it continued to diversify its earnings. A drop in the Group's Statutory Profit Before Tax of $243 million reflects that our 2015/16 result included the gain on sale from the Sydney Domestic Terminal. In total, this performance means Qantas is able to reward shareholders, recognise the hard work of its people and invest for customers.

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* Underlying EBIT.

Qantas' Financial Framework continues to guide how we create value for our shareholders. Our overarching goal is to achieve maintainable earnings–per–share growth through the cycle, and in turn deliver total shareholder returns in the top quartile of global airline peers and the ASX100.

The three core objectives of the Framework are:

  • Maintaining an optimal capital structure that minimises the Group's cost of capital.
  • Achieving return on invested capital (ROIC) above 10 per cent through the cycle.
  • Growing invested capital with disciplined investment, returning any surplus to shareholders.

Our performance against each of these objectives in 2016/17 is outlined below.

  • Where debt is within the target range and surplus capital exists, it will be returned to shareholders.

    Optimal Capital Structure

    In 2016/17 the Group further strengthened its capital position through sustained positive free cash flow. Net debt fell by $434 million to $5.2 billion compared to the prior year, which is at the lower end of the target range. More than 60 per cent of the Group’s fleet is now debt–free, representing an unencumbered asset base of around US$3.8 billion.

    Short–term liquidity remains strong at $1.8 billion of cash, plus another $1 billion in undrawn facilities.

  • Improving Return on Invested Capital

    All parts of the Group delivered a return above their weighted average cost of capital. As a whole, the Group achieved a 12–month return on invested capital of 20.1 per cent. This is supported by disciplined capacity management and improved fleet utilisation across Qantas and Jetstar, as well as new businesses within Qantas Loyalty providing new revenue streams.

    Another $470 million in transformation benefits were delivered in 2016/17, completing the three year program and outperforming the $2 billion target by $125 million.

  • Shareholder Returns

    In 2016/17 a total of $627 million was distributed to shareholders through an on–market share buy–back and ordinary dividends.

    In August 2017, the Directors declared an unfranked final dividend of 7 cents per share and announced a further on–market share buy–back of up to $373 million. Once this latest buy–back is completed, the number of Qantas shares is expected to have been reduced by more than 20 per cent since October 2015.


Leigh Clifford, AO

Leigh Clifford, AO

Chairman and Independent
Non–Executive Director

The Qantas Group posted the second highest profit in its long history for 2016/17.

This follows on from the record profit the prior year and comes despite some challenges in our international markets that have pushed some of our global peers into losses.

The result coincides with the successful completion of the Qantas Transformation Program. This three year initiative delivered $2.1 billion in benefits and achieved our goal of putting the Group in a more stable financial position, enabling us to remain sustainably profitable through the economic cycle.

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Alan Joyce, AO

Alan Joyce, AO

CEO Qantas Airways

Three years ago we started an ambitious turnaround plan at the Qantas Group.

It saw us tackle some difficult structural issues, become a lot more efficient and improve what we offer to our customers.

Those efforts – which are an absolute credit to our people – have certainly paid off.

In 2016/17, Qantas Domestic and Qantas Loyalty recorded their best ever financial results. For Jetstar and Qantas International it was their second highest. Qantas Freight, while posting a lower profit than the year prior, performed well in a challenging market.

The Group's strong financial performance was coupled with record levels of customer satisfaction and employee engagement – two key indicators that are deeply linked.

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Building and Protecting Value

The Qantas Group is focused on the long–term sustainability of its business, which relies on being able to manage – as well as capitalise on – changes in the broader environment. Achieving this requires an ability to look ahead, plot a course and make adjustments when things change.

Aviation is often viewed as an industry that is especially susceptible to shocks. From oil prices to economic cycles through to major weather events and geopolitical changes, it has always been true that aviation can be impacted by many different forces.

But it's also true that few industries have proven as resilient, or are more experienced at managing risk.

On top of this is the growing demand for aviation services. This year, more than 3.8 billion people stepped onto an aircraft somewhere in the world. Over the next 20 years this number is expected to double, led by a growing middle class in Asia

Looking Ahead

Through four global forces

Delivering Today

Through clear strategic pillars

Maximising leading domestic position through dual brand strategy

Building a resilient and sustainable Qantas International, growing efficiently with partnerships

Aligning Qantas and Jetstar with Asia's growth

Investing in customer, brand, data and digital

Diversification and growth at Qantas Loyalty

Focus on people, culture and leadership

Acting Responsibly and Transparently

Through our Financial Framework and non–negotiable business principles

Delivering Against Clear Strategic Pillars

  • Maximising Our Leading Domestic Position

    The Qantas Group maintained its strong position in the Australian domestic market in 2016/17.

    Through our dual brand strategy, Qantas continued to service the premium leisure and business market segments, while Jetstar provided low cost fares to millions of customers in the price–sensitive market. Between them, these two airlines have approximately 90 per cent of the domestic profit pool from two–thirds capacity share.

  • Building a Resilient Qantas International

    We have continued to build a more resilient and sustainable Qantas International by transforming the business, as well as leveraging opportunities with key partners including Emirates, China Eastern and American Airlines.

    Through transformation, we have improved our cost base, increased aircraft utilisation and redesigned our network to high–growth markets, largely in Asia. At the same time, we've achieved record customer satisfaction levels and have continued to invest in product and service.

  • Aligning Qantas and Jetstar with Asia's Growth

    Asia remains the world's fastest growing aviation market, and is expected to be bigger than the North America and Europe markets combined by 2035. By 2030, two–thirds of the world's middle class will be in the Asia–Pacific region.

    Our strong partnerships in the region, as well as our geography, ensure we are well placed to capitalise on this growth.

  • Diversification and Growth at Qantas Loyalty

    Qantas Loyalty continues to provide a diversified, stable earnings stream for the Group, while strengthening loyalty to the Qantas brand.

    The core Frequent Flyer program grew its membership by almost 4 per cent to 11.8 million, helped by the addition of 22 new partners (including Airbnb, Jaguar Land Rover and Samsung) as well as a renewed partnership with supermarket chain Woolworths.

  • At the same time as Perth–London flights went on sale, Qantas launched the third wave of our Feels Like Home brand campaign.

    Investing in Customer, Brand and Digital

    The Qantas Group aims to be the first choice among customers in every market we serve.

    Across our airline brands (Qantas and Jetstar) and the world–leading Qantas Loyalty programs, our investment in customer, product and service has translated into a clear premium over our competitors.

    During 2016/17, we have kept investing to maintain this advantage.

    The Qantas Group aims to be the first choice among customers in every market we serve.

    Across our airline brands (Qantas and Jetstar) and the world–leading Qantas Loyalty programs, our investment in customer, product and service has translated into a clear premium over our competitors.

    During 2016/17, we have kept investing to maintain this advantage.

    Investing in New Technology

    Our investment in data and digital transformation has enabled more targeted and personalised communications, and allowed us to realise additional revenue opportunities. Coupled with further enhancements to the Qantas and Jetstar online process, we're able to deliver improved booking flows and a more personalised experience.

    A major upgrade to the Qantas App allows our customers to keep track of their Qantas Frequent Flyer benefits, with a personalised news feed providing additional offers and news features.

    We launched a Facebook Messenger bot called Qantas Concierge to give customers 24/7 personalised travel inspiration, along with faster responses and more relevant information.

    The introduction of free, fast inflight Wi–Fi started midway through 2016/17 with a trial on a Boeing 737. Almost 90 per cent of customers rated their Wi–Fi experience as positive, with reliability of the service at 98 per cent.1 The rollout will ramp up during 2017/18 with around 80 domestic aircraft equipped by the end of calendar 2018.

    Our intention is to extend the service to our regional and international fleets as Wi–Fi technology improves.

    Investing in a New Experience

    We announced or delivered a number of customer improvements during 2016/17:

    • Unveiled cabins for the 787–9 Dreamliner, including a class–leading Premium Economy, an updated Business Suite and an all–new Economy seat.
    • Opened new international and domestic lounges in Brisbane.
    • Announced direct Perth–London flights on the Dreamliner, which will be the first regular direct air link between Australia and Europe when it starts in March 2018.
    • Started construction on a new lounge at London Heathrow, opening in late calendar 2017.
    • Began work on an integrated domestic–international passenger hub at Perth Airport to save passengers significant connection time. This includes construction of a new transit lounge.
    • Announced a refresh of Jetstar A320 cabin interiors with new seating and better overhead storage.

    Investing in a New Brand

    In preparation for the Boeing 787–9 Dreamliner and our centenary in 2020, we are refreshing our iconic kangaroo brand. The new brand symbolises a new era of new destinations, new technology and a new standard of service.

    This change is only the fifth time the red–and–white image on the tail of Qantas aircraft has been updated since it was first introduced in 1944. The last update was in 2007 to coincide with the introduction of the Airbus A380 to the Qantas fleet.

    1. Qantas/ViaSat user data, June 2017
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  • Focus on People, Culture and Leadership

    Airlines rely on multiple tasks and supply chains coming together at the right time to deliver a safe, reliable service for customers. Our people are central to making this happen and that’s why we continue to invest heavily in training, engagement and leadership.

    In 2017, engagement across the Qantas Group reached a record level. Based on our annual independent survey, around 80 per cent of employees understand and support the objectives of the organisation. Nearly 70 per cent said being part of Qantas and Jetstar inspired them to do their best work.

Operating Responsibly and Transparently

Safety and Security

The safety and security of our customers and our people is our first priority, underpinning the trust of our customers and stakeholders, the health and wellbeing of our workforce, and the way we operate. We take a vigilant, proactive and systematic approach to protect the Qantas Group against a range of risks and strive for continuous improvement in our safety and security practices and performance.

Safety and security performance and risks are monitored and reported at all levels of the Qantas Group – from Board–level oversight by the Committee for Health, Environment, Safety and Security through to our business unit safety committees.

Our governance structure allows safety–and–security related information to flow freely throughout the organisation, ensuring that our risks are openly discussed and best practice shared across our businesses.

Qantas Group businesses operate integrated management systems, which have the necessary organisational structures, accountabilities, policies and procedures to ensure risks are identified and mitigated to protect our customers and our people.

Qantas operates within a Security Management System, a systematic approach to managing security, including the necessary organisational structures, accountabilities, policies and procedures.

The system is recognised globally by the industry as an example of best practice and forms the foundation of our risk management approach. To support this, Qantas has a specific focus on proactive collaboration with its stakeholders, our global partners across the industry and the various governments and regulators worldwide.

Qantas is at the forefront of improving security outcomes for our passengers, customers and employees. We work with law enforcement agencies, regulators, major corporates, as well as security suppliers and vendors to build a security framework that is proportionate, agile and responsive to changing threats and risks across our network.

Aviation remains the safest form of travel and, to maintain this, the entire industry needs to continue to work together. We continue to reinvest and build our capability in safety management systems.

As part of a constant drive towards continuous improvement, individual airlines in the Group are now introducing additional technology solutions and tools. These aircraft and ground–based systems will improve the robustness of how we manage operational risk; helping those who interact with, maintain and fly our aircraft to do their work with increasing safety and efficiency. As an example, we are in the final stages of rolling out a new safety database. This will allow our employees and contractors to use mobile devices to communicate any safety issues and potential deficiencies which they observe.

In 2016/17, we hosted a number of industry safety meetings and conferences, including the IATA Safety Meeting and the Qantas Group Safety Conference, which some of our competitors attended. Collaboration across our own businesses supports our philosophy of sharing lessons with a safety benefit or learning. With a focus on standardisation and best practice, liaison groups have been formed covering: Flying Operations, Flying Training, Ground Operations, Cabin Services, plus Engineering and Airworthiness.

Workplace safety was a key area of focus for the Group in 2016/17 and our performance for Total Recordable Injury Frequency Rate improved compared to last year. However, our Lost Work Case Frequency Rate and Duration Rate both rose slightly.

Our frontline leaders and their teams continue to collaborate to drive improvements in safety performance. The Qantas Group has also established a number of new initiatives to improve and enhance workplace health, including:

Fitness for Work Framework

A holistic framework to ensure our staff remain fit for work.

Healthier Places; Healthier Bodies; Healthier Minds; Healthier Culture

Our Health and Wellbeing program.


A risk assessment tool to improve understanding of our ergonomic risks and establishing more effective controls to mitigate them.

Our Minds Matter

A program that supports employees with mental health issues and creates a mentally healthy workplace culture.

MyLife Hub

A 24/7 online platform providing all Group employees with resources and services to support them through key stages of their working life.

In an ever–changing global environment, the ability to identify, assess and effectively respond to risks is the cornerstone of the Qantas Group’s industry–leading business resilience and crisis management frameworks.

Cyber Security

The Qantas Group is constantly improving its cyber and data privacy capabilities. Like many large organisations, we operate in an environment of ever–evolving cyber threat, where external attackers are always adopting new and more sophisticated techniques. Protection from these attacks – and the potential financial and public reputation implications associated with unauthorised access to the Group’s information – is central to our our strategy.

As part of an ongoing cyber transformation initiative and cyber safety educational and cultural program, we work to constantly expand employee awareness of cyber risks, including through simulations.

The Qantas Group continues to support key external initiatives under the Australian Government’s Cyber Security Strategy, the voluntary ASX100 Cyber Health Check,and joint Commonwealth and private sector meetings, including the inaugural Australia–United States Cyber Security Dialogue to discuss ways to collaborate on better security outcomes.

Cyber security risk assessments have also been conducted on our higher risk third party suppliers. Where appropriate, we continue to work with these suppliers to ensure risks identified through this process are addressed.

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Capacity Building

With our partners, Qantas has played a leading role in capacity building programs across the region, resulting in significant improvements. As a consequence, the passenger experience has been significantly enhanced, and importantly, the security outcome has improved. Qantas continues to work with governments and security suppliers to explore additional opportunities in the region.

Climate Change and Environment

We take responsibility for our environmental impact seriously. We also believe we have a responsibility to influence and enable others to act.

As a major consumer of fossil fuels, we recognise our responsibility to reduce our emissions, work with partners, governments and industry, and contribute to the global response to climate change and resource constraints. Our comprehensive environment strategy ensures that we play a positive role in the community while reducing cost and risk.

Four pillars through which we deliver on our commitment to environmental sustainability

Measure our impact with best practice analytics

Reduce our impact with industry–leading innovation

Offset our impact with world leading initiatives

Influence and inspire others to act

  • Measure, Reduce, Offset and Influence

    Environmental performance and risks, including climate change, are monitored and reported at all levels of the Qantas Group – from Board–level oversight by the Committee for Health, Environment, Safety and Security through to our business unit safety committees.

    We continue to work with General Electric to embed enhanced fuel analytics into our operations to reduce fuel consumption. In 2016/17, we are embedding enhanced fuel analytics into our flight planning division to reduce consumption. In 2016/17, we developed the FlightPulse iPad application to deliver individualised fuel use data to pilots to give them better access to data on fuel consumption and fuel efficiency practices.

    While our absolute emissions increased in 2016/17 due to increased flying, our fuel efficiency continues to improve, with initiatives across the Group delivering 30.2 million litres in fuel savings. We are on track to meet our 2020 target of 1.5 per cent per annum average increase in fuel efficiency, and the introduction of the Boeing 787–9 Dreamliners to Qantas International in 2018 will deliver a step change.

  • Environmental Performance

    Fleet age

    • 9.6 years (Qantas Group)
    • 10.6 years (Qantas)
    • 7.4 years (Jetstar)

    Fuel efficiency

    6.2% improvement achieved against 2009 baseline (on track for 2020 target of 16.5%)

    Total emissions
    (scope 1 & 2)

    12,387,666 tonnes CO2–e (0.5% efficiency improvement against prior year)

    Total fuel consumption

    4,873,267 litres (increase of 1.4% against prior year)


    23.1% reduction achieved against 2009 baseline (on track for 2020 target of 35%)


    10.4% reduction achieved against 2009 baseline (on track for 2020 target of 20%)

    Waste to landfill

    24.5% reduction achieved against 2009 baseline (on track for 2020 target of 30%)

  • International Action

    Aviation has been on the front line of the global business response to climate change, becoming the first industry to voluntarily commit to emissions targets out as far as 2050.

    In October 2016, an historic agreement was reached to meet the industry’s commitment of carbon neutral growth from 2020. The Carbon Offset and Reduction Scheme for International Aviation (CORSIA), commencing in 2021 under the United Nations body for aviation, will require airlines to purchase offsets to meet their share of the industry’s growth emissions. Qantas strongly advocated in support of the Australian Government opting into the first phase of the scheme to avoid the alternative patchwork approach to carbon pricing.

    In June 2017, we supported the IATA resolution calling for governments to implement policies to accelerate the deployment of aviation biofuels. We continue to work with Australian federal and state governments on the design of policies to support commercialisation of aviation biofuels in Australia, which is currently sub–scale.

Business Integrity and
Sustainability in our Supply Chain

In response to rapidly evolving regulatory and reputational needs, we have established a dedicated function responsible for managing risks associated with:

  • Bribery and corruption
  • Trade sanctions
  • Human rights
  • Privacy compliance

The function, with Board–level oversight through the Audit Committee, is responsible for the implementation of a coherent and effective strategy for managing corporate compliance and will focus on enhancing the Group’s ability to prevent, detect and address gross unethical conduct whilst meeting the growing expectations of global regulators and stakeholders.

Qantas recognises the wide reaching impact of our business on people in Australia and around the world.

We believe that business has a significant role in ensuring that customers, employees and people within the global supply chain are treated with dignity and respect, as expressed in the International Bill of Rights.

With an estimated 30.4 million people enslaved in the Asia–Pacific region1, the blight of modern slavery is a particular focus of the Qantas Group, and we are committed to meeting our moral and ethical obligation to help end modern slavery.

In 2016, we released our first Modern Slavery Statement in line with the UK Modern Slavery Act. We welcome similar legislation currently under consideration in Australia.

The newly formed business integrity and compliance function will align the UN Guiding Principles on Business and Human Rights and the OECD Guidelines with the Qantas Group's policies and business practices over the next 12 months.

  1. Global Slavery Index 2016

Qantas takes a proactive approach to managing ethical risks in our supply chain.

Where necessary, we have requested independent due diligence or audits for new suppliers and secondary audits for existing suppliers to ensure that the organisations from which we procure, align with our compliance and ethical standards.

In 2016/17, we initiated 90 due diligence reports relating to anti–corruption and bribery, workplace health and safety and environmental and social practices.

To further strengthen confidence that our supply chain matches our ethical standards, we have launched a Supply Chain Assurance (SCA) program. This program aims to formalise risk governance throughout our supply chain and has a clear focus on five key risk areas:

  1. Anti–bribery and corruption
  2. Modern slavery and child labour
  3. Environmental impact
  4. Workplace health and safety
  5. Cyber security (particularly in terms of data protection)

The program will be implemented during financial year 2017/18.

As the national carrier, we are proud to support Australian businesses by showcasing their products across the country and around the world.

We spent $6.6 billion with Australia–based suppliers in 2016/17, representing 65 per cent of total procurement expenditure.

With our origins in outback Australia, we recognise the importance of supporting regional communities. We do business with more than 1,200 suppliers in regional areas.

As a founding member of Supply Nation – an Australian leader in supplier diversity that connects Australian companies and government with Indigenous businesses – we continued to support Indigenous suppliers. We have made great progress towards our Reconciliation Action Plan (RAP) target, having tripled our spend with Indigenous suppliers from last financial year.

We are also proud supporters of small businesses, and have signed up to the Australian Supplier Payment Code. This is a commitment to change our payment terms for small businesses from the standard 45 days to 30 days.

Herb Smith, Founder, Dreamtime Tuka, visits Qantas headquarters as part of National Reconciliation Week 2017. Herb supplies baked slices for QantasLink's morning and afternoon tea services.

Giving Back to the Community

Our community strategy governs the high–level investments we make and the partnerships we form to champion Australia at home and internationally, with four core focus areas...

  • Showcasing the best of Australia
  • Reconciliation Action Plan
  • Supporting communities and engaging our people
  • Demonstrating the intrinsic Australian values of fairness and equality
  • Reconciliation Action Plan

    We are proud to be one of only eight companies in Australia to have achieved Elevate status for our Reconciliation Action Plan – the highest level endorsed by Reconciliation Australia.

    Our plan outlines our commitment to growing economic opportunity for Aboriginal and Torres Strait Islander people, growing Indigenous supply chains and telling the stories of the First Australians.

    We are continuing to achieve our targets in our Reconciliation Action Plan, which are:

    • Lift our proportion of Indigenous employees from 1.2 per cent to 1.8 per cent by 2018.
    • Grow our spend with Indigenous suppliers to $1.75 million over the same period.
    • Create more than 200 internships for young Aboriginal and Torres Strait Islander people over the next 10 years, through partnership with Career Trackers.
  • Helping Power the Australian Economy

    The Qantas Group plays an integral role in the Australian economy, both as the national carrier and as one of the largest employers in the country.

    A Deloitte Economics report found that the Qantas Group had a $22 billion impact on the Australian economy in 2015/16.

    This includes indirect economic impact adding up to $11.6 billion, or 0.7 per cent of Australian GDP, as well as $10.4 billion of tourism spending throughout the country. We also directly and indirectly support almost 60,000 jobs, or 0.6 per cent of total Australian employment.

  • Support for Tourism

    We are the largest investor in Australian tourism, with $80 million in marketing agreements with Tourism Australia and state tourism bodies.

    Following the success of last year’s safety video – which had more than 90 million views across Qantas' in–flight and social media platforms — we launched a new safety video showcasing some of Australia’s most stunning landscapes and locations.

  • Working with Communities and Engaging our People

    The Qantas Group has long–standing partnerships with organisations that have a positive impact on the community.

    For Qantas, these partners include Make–a–Wish–Australia, the National Australia Day Council, the Australian Olympic and Paralympic Committees, and UNICEF Australia. Over the past 25 years, Qantas passengers have raised over $32 million for UNICEF through the Change for Good initiative.

    Jetstar's community activities include StarKids, which has raised more than $9 million for World Vision, and Flying Start, which offers grants of up to $30,000 to charitable initiatives.

    We also re–launched our Side by Side program to support our employees who donate their time and skills to good causes. Through this program, our staff can apply for grants for the organisations they are actively involved with.

    Jetstar's recent field trip to Myanmar (June 2017).

  • Beau Dean Riley Smith, Bennelong, Bangarra 2017
    Photo by Edward Mulvihill

    Championing the best of Australia

    Australia is a sporting nation, and we are proud to support Australian Rugby Union, the Football Federation of Australia and Cricket Australia as they compete on the global stage.

    We also partner with the best Australian arts and cultural organisations including Bangarra Dance Company, Opera Australia, The Australian Ballet, National Gallery of Australia, Museum of Contemporary Art, National Gallery of Victoria and Museum of Old and New Art. The funding for the International Acquisition of Contemporary Australian Art Program established with the MCA and Tate saw further works acquired and the announcement that the first of these acquisitions will be hung in London’s Tate in late 2017.

  • Being there for Australians

    As the national carrier, we have a long and proud history of helping Australians in their time of need. With the devastating impact of Cyclone Debbie throughout Queensland and Northern NSW, we assisted in transporting emergency services personnel to the areas that were hardest hit, as well as transporting residents out of the disaster area.

    A fair go

    Qantas, alongside many other Australian companies, engages on a number of social issues from gender diversity, Indigenous reconciliation and marriage equality. Our identity is the Spirit of Australia, and one of the most fundamental values in this country is the notion of a 'fair go', which is why we speak up on important social issues – just as we do on economic matters.

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