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New Oriental Announces Results for the First Fiscal Quarter Ended August 31, 2020
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Financial Highlights for the First Fiscal Quarter Ended
- Total net revenues decreased by 8.0% year-over-year to
US$986.4 million for the first fiscal quarter of 2021. - Operating income decreased by 38.9% year-over-year to
US$150.3 million for the first fiscal quarter of 2021. - Net income attributable to New Oriental decreased by 16.4% year-over-year to
US$ 174.7million for the first fiscal quarter of 2021.
Key Financial Results
(in thousands US$, except per ADS(1) data) |
1Q FY2021 |
1Q FY2020 |
% of change |
Net revenues |
986,366 |
1,071,777 |
-8.0% |
Operating income |
150,305 |
246,196 |
-38.9% |
Non-GAAP operating income (2)(3) |
166,138 |
257,216 |
-35.4% |
Net income attributable to New Oriental |
174,652 |
208,990 |
-16.4% |
Non-GAAP net income attributable to New Oriental (2)(3) |
184,526 |
230,162 |
-19.8% |
Net income per ADS attributable to New Oriental - basic |
1.10 |
1.32 |
-16.8% |
Net income per ADS attributable to New Oriental - diluted |
1.09 |
1.31 |
-16.5% |
Non-GAAP net income per ADS attributable to New Oriental - |
1.16 |
1.45 |
-20.2% |
Non-GAAP net income per ADS attributable to New Oriental - |
1.15 |
1.44 |
-19.9% |
(1) Each ADS represents one common share. |
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(2) GAAP represents Generally Accepted Accounting Principles in |
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(3) New Oriental provides net income attributable to New Oriental, operating income and net income per ADS |
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(4) The Non-GAAP net income per ADS is computed using Non-GAAP net income and the same number of shares |
Operating Highlights for the First Fiscal Quarter Ended
- Total student enrollments in academic subjects tutoring and test preparation courses increased by 13.5% year-over-year to approximately 2,961,100 for the first fiscal quarter of 2021.
- The total number of schools and learning centers was 1,472 as of
August 31, 2020 , an increase of 211 compared to 1,261 as ofAugust 31, 2019 , and an increase of 7 compared to 1,465 as ofMay 31, 2020 . The total number of schools was 112 as ofAugust 31, 2020 .
Financial Results for the First Fiscal Quarter Ended
Net Revenues
For the first fiscal quarter of 2021, New Oriental reported net revenues of
Total student enrollments in academic subjects tutoring and test preparation courses in the first fiscal quarter of 2021 increased by 13.5% year-over-year to approximately 2,961,100. The lower-than-normal increase in the number of student enrollments is primarily due to the delayed enrollment for summer and autumn classes and the shortening of summer holiday in many major cities by one to two weeks this year, as well as the delayed resumption of offline operation in cities such as
Operating Costs and Expenses
Operating costs and expenses for the quarter were
- Cost of revenues increased by 5.6% year-over-year to
US$464.9 million , primarily due to increases in teachers' compensation and higher rental costs for the increased number of schools and learning centers in operation. - Selling and marketing expenses increased by 15.5% year-over-year to
US$116.9 million , primarily due to the addition of a number of customer service representatives and marketing staff with the aim of capturing the new market opportunity during the COVID-19 period, especially for new initiatives in K-12 tutoring on our pure online education platform, Koolearn.com. - General and administrative expenses for the quarter decreased by 10.5% year-over-year to
US$254.3 million . Non-GAAP general and administrative expenses, which exclude share-based compensation expenses, wereUS$242.6 million , representing an 11.3% decrease year-over-year.
Total share-based compensation expenses, which were allocated to related operating costs and expenses, increased by 43.7% year-over-year to
Operating Income and Operating Margin
Operating income was
Operating margin for the quarter was 15.2%, compared to 23.0% in the same period of the prior fiscal year. Non-GAAP operating margin, which excludes share-based compensation expenses, for the quarter was 16.8%, compared to 24.0% in the same period of the prior fiscal year.
Net Income and EPS
Net income attributable to New Oriental for the quarter was
Non-GAAP Net Income and Non-GAAP EPS
Non-GAAP net income attributable to New Oriental for the quarter was
Cash Flow
Net operating cash flow for the first fiscal quarter of 2021 was approximately
Balance Sheet
As of
New Oriental's deferred revenue balance, which is cash collected from registered students for courses and recognized proportionally as revenue as the instructions are delivered, at the end of the first quarter of fiscal year 2021 was
Outlook for Second Quarter of Fiscal Year 2021
New Oriental expects total net revenues in the second quarter of fiscal year 2021 (
This forecast reflects New Oriental's current and preliminary view, which is subject to change.
Conference Call Information
New Oriental's management will host an earnings conference call at
Please register in advance of the conference, using the link provided below. Upon registering, you will be provided with participant dial-in numbers, passcode and unique registrant ID.
Conference call registration link: https://apac.directeventreg.com/registration/event/4398419. It will automatically direct you to the registration page of "New Oriental First Fiscal Quarter 2021 Earnings Conference Call" where you may fill in your details for RSVP. If it requires you to enter a participant conference ID, please enter "4398419".
In the 10 minutes prior to the call start time, you may use the conference access information (including dial in number(s), direct event passcode and registrant ID) provided in the confirmation email received at the point of registering.
A replay of the conference call may be accessed by phone at the following number until
International: |
+61 2 8199 0299 |
Passcode: |
4398419 |
Additionally, a live and archived webcast of the conference call will be available at http://investor.neworiental.org.
About New Oriental
New Oriental is the largest provider of private educational services in
For more information about New Oriental, please visit http://www.neworiental.org/english/.
Safe Harbor Statement
This announcement contains forward-looking statements. These statements are made under the "safe harbor" provisions of the
About Non-GAAP Financial Measures
To supplement New Oriental's consolidated financial results presented in accordance with GAAP, New Oriental uses the following measures defined as non-GAAP financial measures by the
New Oriental believes that these non-GAAP financial measures provide meaningful supplemental information regarding its performance and liquidity by excluding share-based compensation expenses and gain / (loss) from fair value change of long-term investments that may not be indicative of its operating performance from a cash perspective. New Oriental believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing its performance and when planning and forecasting future periods. These non-GAAP financial measures also facilitate management's internal comparisons to New Oriental's historical performance and liquidity. New Oriental believes these non-GAAP financial measures are useful to investors in allowing for greater transparency with respect to supplemental information used by management in its financial and operational decision making. A limitation of using these non-GAAP measures is that they exclude share-based compensation charge and gain / (loss) from fair value change of long-term investments that has been and will continue to be for the foreseeable future a significant recurring expense in our business. Management compensates for these limitations by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are most directly comparable to non-GAAP financial measures.
Contacts
For investor and media inquiries, please contact:
Ms. |
Ms. |
FTI Consulting |
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Tel: +852 3768 4548 |
Tel: +86-10-6260-5568 |
Email: rita.fong@fticonsulting.com |
Email: zhaosisi@xdf.cn |
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CONDENSED CONSOLIDATED BALANCE SHEETS |
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(In thousands) |
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As of |
As of |
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2020 |
2020 |
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(Unaudited) |
(Audited) |
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USD |
USD |
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ASSETS: |
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Current assets: |
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Cash and cash equivalents |
1,047,605 |
915,057 |
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Term deposits |
291,762 |
284,793 |
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Short-term investments |
2,778,408 |
2,318,280 |
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Accounts receivable, net |
4,939 |
4,178 |
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Inventory, net |
31,093 |
31,324 |
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Prepaid expenses and other current assets, net |
201,298 |
199,404 |
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Amounts due from related parties, current |
29,320 |
3,384 |
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Total current assets |
4,384,425 |
3,756,420 |
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Restricted cash, non-current |
4,874 |
4,367 |
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Property and equipment, net |
743,813 |
672,455 |
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Land use rights, net |
6,249 |
6,037 |
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Amounts due from related parties, non-current |
22,995 |
22,709 |
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Long-term deposits |
65,122 |
62,116 |
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Intangible assets, net |
11,010 |
10,246 |
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90,225 |
80,366 |
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Long-term investments, net |
434,756 |
431,101 |
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Deferred tax assets, non-current, net |
49,085 |
63,324 |
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Right-of-use assets |
1,487,164 |
1,425,466 |
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Other non-current assets |
29,547 |
22,278 |
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Total assets |
7,329,265 |
6,556,885 |
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LIABILITIES AND EQUITY |
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Current liabilities: |
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Accounts payable (including accounts payable of the consolidated variable interest entities without recourse to |
34,432 |
33,147 |
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Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of the |
630,622 |
634,619 |
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Income taxes payable (including income tax payable of the consolidated variable interest entities without recourse to |
135,741 |
101,385 |
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Amounts due to related parties (including amounts due to related parties of the consolidated variable interest entities |
1,817 |
1,590 |
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Deferred revenue (including deferred revenue of the consolidated variable interest entities without recourse to New |
1,563,138 |
1,324,384 |
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Operating lease liability-current (including operating lease liabilities-current of the consolidated variable interest |
411,608 |
384,239 |
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Total current liabilities |
2,777,358 |
2,479,364 |
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Deferred tax liabilities, non-current (including deferred tax liabilities of the consolidated variable interest entities |
13,348 |
11,906 |
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Long term loan (including Long term loan of the consolidated variable interest entities without recourse to New |
- |
117,881 |
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Unsecured senior notes (including unsecured senior notes of the consolidated variable interest entities without recourse |
298,226 |
- |
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Operating lease liabilities (including operating lease liabilities of the consolidated variable interest entities without |
1,091,258 |
1,077,923 |
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Total long-term liabilities |
1,402,832 |
1,207,710 |
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Total liabilities |
4,180,190 |
3,687,074 |
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Equity |
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3,025,064 |
2,733,295 |
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Non-controlling interests |
124,011 |
136,516 |
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Total equity |
3,149,075 |
2,869,811 |
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Total liabilities and equity |
7,329,265 |
6,556,885 |
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CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands except for per share and per ADS amounts) |
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For the Three Months Ended |
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2020 |
2019 |
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(Unaudited) |
(Unaudited) |
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USD |
USD |
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Net revenues |
986,366 |
1,071,777 |
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Operating cost and expenses (note 1) |
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Cost of revenues |
464,866 |
440,229 |
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Selling and marketing |
116,883 |
101,193 |
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General and administrative |
254,312 |
284,159 |
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Total operating cost and expenses |
836,061 |
825,581 |
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Operating income |
150,305 |
246,196 |
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Gain (Loss) from fair value change of long-term investments |
1,246 |
(11,282) |
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Other income, net |
61,572 |
19,953 |
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Provision for income taxes |
(59,122) |
(50,836) |
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Loss from equity method investments |
(3,167) |
(803) |
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Net income |
150,834 |
203,228 |
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Add: Net loss attributable to non-controlling interests |
23,818 |
5,762 |
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Net income attributable to New Oriental Education & Technology |
174,652 |
208,990 |
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Net income per common share / ADS |
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- Basic |
1.10 |
1.32 |
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- Diluted |
1.09 |
1.31 |
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RECONCILIATION OF NON-GAAP MEASURES TO THE MOST COMPARABLE GAAP MEASURES |
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(In thousands except for per share and per ADS amounts) |
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For the Three Months Ended |
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2020 |
2019 |
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(Unaudited) |
(Unaudited) |
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USD |
USD |
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General and administrative expenses |
254,312 |
284,159 |
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Less: Share-based compensation expenses in general and administrative expenses |
11,753 |
10,619 |
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Non-GAAP general and administrative expenses |
242,559 |
273,540 |
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Total operating cost and expenses |
836,061 |
825,581 |
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Less: Share-based compensation expenses |
15,833 |
11,020 |
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Non-GAAP operating cost and expenses |
820,228 |
814,561 |
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Operating income |
150,305 |
246,196 |
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Add: Share-based compensation expenses |
15,833 |
11,020 |
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Non-GAAP operating income(loss) |
166,138 |
257,216 |
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Operating margin |
15.2% |
23.0% |
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Non-GAAP operating margin |
16.8% |
24.0% |
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Net income attributable to New Oriental |
174,652 |
208,990 |
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Add: Share-based compensation expenses |
11,120 |
9,890 |
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Less: Gain (loss) from fair value change of long-term investments |
1,246 |
(11,282) |
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Non-GAAP net income attributable to New Oriental |
184,526 |
230,162 |
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Net income per ADS attributable to New Oriental- Basic (note 2) |
1.10 |
1.32 |
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Net income per ADS attributable to New Oriental- Diluted (note 2) |
1.09 |
1.31 |
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Non-GAAP net income per ADS attributable to New Oriental - Basic (note 2) |
1.16 |
1.45 |
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Non-GAAP net income per ADS attributable to New Oriental - Diluted (note 2) |
1.15 |
1.44 |
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Weighted average shares used in calculating basic net income per ADS (note 2) |
158,930,841 |
158,246,454 |
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Weighted average shares used in calculating diluted net income per ADS (note 2) |
159,769,635 |
159,667,569 |
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Non-GAAP income per share - basic |
1.16 |
1.45 |
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Non-GAAP income per share - diluted |
1.15 |
1.44 |
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Notes: |
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Note 1: Share-based compensation expenses (in thousands) are included in the operating cost and expenses as follows: |
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For the Three Months Ended |
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2020 |
2019 |
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(Unaudited) |
(Unaudited) |
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USD |
USD |
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Cost of revenues |
1,483 |
36 |
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Selling and marketing |
2,597 |
365 |
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General and administrative |
11,753 |
10,619 |
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Total |
15,833 |
11,020 |
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Note 2: Each ADS represents one common share. |
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